Tories to delay cuts for year in Scotland

The Scottish Government's 30 billion budget for 2010/11 will be excluded from the round of cuts that the Conservatives will impose on the rest of the UK if they win the election.

This week the shadow chancellor is expected to identify areas where draconian savings will be made in the emergency budget that a Conservative government has pledged within 50 days of coming to power.

In the first concession of its type to be given by the Treasury to Scotland, the shadow chancellor said he was prepared to postpone the cuts in Scotland for a year out of "respect" for the Holyrood budget.

Osborne warned, however, that in the long run Scotland would still have to bear its share of the pain, raising the prospect of savage cuts to the public sector after the 2011 Scottish election.

Although the Scottish Government will be given the option of sticking to its original budget for 2010/11, the savings would eventually have to be found the following financial year in 2011/12.

Last night the SNP claimed that Osborne's plan would result in "double the pain" in 2011/12.

Usually, cuts in spending at Westminster automatically have a knock-on effect at Holyrood as a result of the Barnett Formula, the mechanism that determines the size of the grant Scotland receives from the Treasury. Osborne's offer, however, would allow the Scottish Government to postpone those cuts.

"Because the Scottish Government and Holyrood has passed a budget for 2010/11, any savings that are going to be required in the Scottish budget… can be delayed until 2011/12," Osborne said.

"They (Scottish ministers] will still have to make those savings, and Scotland, like the rest of the country, has to do its bit to live within our means. But because of Scottish devolution, because we have a settled budget for 2010/11, we are going to respect that and if they want to (they can] delay the savings they would have made in 2010/11 to 2011/12."

Osborne and First Minister Alex Salmond will meet on 30 March in London to discuss the proposal, which has been suggested by the Conservatives after Salmond sought assurances from them that they would not cut the 2010/11 Scottish budget passed by MSPs earlier this year.

The shadow chancellor's offer risks stirring up more anti-Scottish feeling south of the Border if Scotland is perceived to be escaping the savage cuts that the Tories believe are required in order to claw back Britain's forecast record 178bn deficit.

From a political point of view, Osborne's proposal could prove advantageous to the SNP. It would allow Salmond's administration to delay the tough spending decisions required to make savings in the public sector until after the 2011 Scottish Election.

The SNP would go into the poll with the Scottish electorate having been sheltered from job losses experienced elsewhere in the UK.

Osborne said that whoever was in power at Holyrood after 2011 would have to deal with the "reality" of the UK's "massive budget deficit".

Assuming the Tories win the general election, Osborne also said that the Scottish Government would be allowed to keep its underspend – the unspent money from the Scottish block grant left over at the end of the financial year. Currently, the Scottish Government has to give the cash, 31 million last year, back to the Treasury.