Scotland will get “significant increases” in cash for major projects, Chancellor George Osborne said as he warned Holyrood ministers new powers heading their way meant they would have to make “hard choices” too.
Capital spending north of the border will rise by £1.9 billion in the years to 2021, with the Scottish block grant to be more than £30 billion in 2019-20, he said.
The Scottish Government will now have to make the hard choices that we have had to in order to protect frontline services for the people of Scotland.George Osborne
Mr Osborne announced the sums in his spending review and autumn statement - which also included a u-turn on plans to cut tax credits.
He said he could abandon the controversial tax credit cuts of £4.4 billion because of improvements in public finances.
Scottish Tory leader Ruth Davidson praised Mr Osborne for listening to concerns about the impact of reductions in tax credits.
“He has shown once again that it is the Conservative Party, north and south of the border, which is on the side of working families,” she said.
SNP depute leader Stewart Hosie said that it was a “complete and humiliating u-turn” by the Chancellor.
He added: “The Chancellor has finally realised that the changes would have had a devastating impact on the incomes of thousands of low-paid families - as we have consistently said.”
But Mr Hosie claimed the UK Government “has still not backed down on cutting £12 billion from the welfare budget and is seeking to now take money from those on housing benefit”.
He stated: “We do not want the Chancellor to have solved one problem by creating another as he continues to hit the same low-income families who rely on housing benefit as he continues to pursue his ideological-driven austerity agenda.”
Scotland’s First Minister Nicola Sturgeon said on Twitter: “Well done to all who kept pressure on Chancellor to drop tax credit cuts. Now need to scrutinise housing benefit cuts #AutumnStatement.”
From April 2017 Holyrood will have power over income tax rates and bands north of the border, with MSPs also being handed powers over some benefits.
The changes are being brought in following the Smith Commission on devolution, which was set up in the wake of last year’s independence referendum.
Mr Osborne said: “We have delivered our vow to implement the Smith Commission agreement in full.
“The Scottish Government will now have to make the hard choices that we have had to in order to protect frontline services for the people of Scotland.”
He also signalled the UK Government was “ready to reach an agreement” with SNP ministers over the funding framework, which will determine how much cash Scotland receives from Westminster in years to come.
Talks on this are taking place between the two administrations, although the Scottish Government has warned it could block the new powers if it believes the deal is unfair.
The Chancellor told MPs the devolution legislation “meets the vow made by the parties of the union when the people of Scotland voted to remain in the United Kingdom”.
He added: “It must be underpinned by a fiscal framework that is fair to all taxpayers and we are ready now to reach an agreement - the ball is in the Scottish Government’s court. Let’s have a deal that’s fair to Scotland, fair to the UK and that’s built to last. “