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Swinney warns of Scots budget cut Swinney warns of Scots budget cut
(29 minutes later)
Scotland's budget could be cut by £500m after Chancellor Alistair Darling's pre-Budget statement, it is claimed. The Scottish Government has expressed "deep concern" that its budget could be cut by £500m, in the wake of the Chancellor's pre-Budget statement.
The development was described as a "serious issue" by Scottish Finance Secretary John Swinney. Alistair Darling's plan to get the economy moving again included an extra £5bn in efficiency savings - which will have an impact north of the border.
Mr Darling's plan to get the economy moving again included an extra £5bn in efficiency savings - which will have an impact north of the border. Scots Finance Secretary John Swinney said it could cause "real difficulty".
Scottish Secretary Jim Murphy said the pre-Budget report would boost the Scottish economy by £2bn.Scottish Secretary Jim Murphy said the pre-Budget report would boost the Scottish economy by £2bn.
He conceded there would be future ''belt tightening'' in UK Government expenditure and that would include Scotland. Mr Swinney welcomed the general direction of the UK Government's plan, including a cut in VAT, from 17.5% to 15%.
The Labour Government has decided to act Jim MurphyScottish secretary That, he said, could conceivably impact on future block grant payments from the UK Treasury to Scotland. The Labour Government has decided to act Jim MurphyScottish secretary class="" href="/1/hi/scotland/7746932.stm">In quotes: Pre-Budget reaction class="" href="/1/hi/scotland/7744829.stm">Keeping tabs on the cost of living He also told BBC Scotland that the pre-Budget statement would allow Scottish ministers to bring forward its programme for building infrastructure, such as roads and schools.
The Scottish secretary told BBC Scotland that the UK could not resolve the effects of the global financial crisis by itself, but added: "We're taking enormous measures to try our best to stave off the worst consequences of it, but it does rely on international co-operation. "It will have a consequential beneficial impact on the construction sector and a variety of other sectors within the Scottish economy, at a time when that's required the most," he added.
"We're faced with a choice - do we sit on the sidelines as spectators and watch more people loose their jobs, their homes, their businesses, or take this action? The Labour Government has decided to act." But the finance secretary said that the UK efficiency savings drive could cause "real difficulty at a time when we're trying to get the economy to recover".
The Scottish budget cut could apply by 2010-11, Mr Swinney said. "I'm deeply concerned by the changes in efficiency savings that the UK Government has brought forward, because that looks to me as if there is the possibility that the Scottish Government's budget could be reduced by the actions of the UK Government by up to £500m in 2010-11," he said.
But he also welcomed changes which would allow capital expenditure to be brought forward, as well as the cut in VAT, from 17.5% to 15%. Mr Murphy conceded there would be future ''belt tightening'' in public spending and said the UK could not resolve the effects of the global financial crisis by itself.
He added: "We're faced with a choice - do we sit on the sidelines as spectators and watch more people lose their jobs, their homes, their businesses, or take this action? The Labour Government has decided to act."
'Black hole'
Under the contents of the pre-Budget report, Scottish ministers will be able to accelerate capital investment of some £260m - mirroring the £3bn effort for England.
In terms of current spending, Scotland can expect an extra £10m from the increase in energy efficiency spending and £1m from the boost to advice services.
The Scottish Conservatives claimed the pre-Budget report would increase the "black hole" in the Scottish Government's plans to replace council tax with local income tax by £300m.The Scottish Conservatives claimed the pre-Budget report would increase the "black hole" in the Scottish Government's plans to replace council tax with local income tax by £300m.
The party's finance spokesman, Derek Brownlee, said: "The SNP cannot hide from reality any longer.The party's finance spokesman, Derek Brownlee, said: "The SNP cannot hide from reality any longer.
"It is time to kill off local income tax and concentrate on the Conservative solution of cutting and reforming council tax.""It is time to kill off local income tax and concentrate on the Conservative solution of cutting and reforming council tax."