Scottish budget: Income and council tax rates frozen but councils face 'catastrophic' cuts

Finance Secretary John Swinney’s budget also included increases in health spending and protects the policing budget

Scotland's Deputy First Minister, John Swinney (Getty Images)

Scots will see no increase in income or council tax next year, the Finance Secretary has pledged - but councils have warned that £350m in cuts to their services will prove “catastrophic”.

John Swinney’s budget for Scotland also included increases in health spending and protects the policing budget, along with tax rises on many second homes and buy-to-let properties.

However, local authorities are set to take a 3.5 per cent reduction in funding, which council leaders warned could cost 15,000 jobs and would hit services for children and the elderly.

Setting out the first budget in which Holyrood ministers have had some say in setting the income tax rate for Scotland, Mr Swinney announced it would remain fixed at 10p. Council taxes would also be frozen for the ninth year in a row in 2016/17, he said.

Spending on health will increase to nearly £13bn – up 6.5 per cent between 2015/16 and 2016/17.

However, Jackie Baillie MSP, Labour's spokeswoman for public services and wealth creation, said Mr Swinney had set out an "election only" budget.

"With major new tax and welfare powers coming to Scotland, the Finance Secretary could have used today to outline detailed plans to end austerity and close the gap between the richest and the rest in Scotland,” she said.

"The Finance Secretary claims to have delivered on that in his statement but he's not rejecting austerity, he is simply managing it.”

Planned cuts were also condemned by the council leaders’ group Cosla.

"Whatever way they spin it, this is an 'austerity' budget of straight political choice - how else could you describe a low spend, low tax budget that will cost 15,000 council jobs,” said the group's president David O'Neill. Council leaders had told Cosla the cuts coming their way were “totally unacceptable”, he said.

"A cut of 3.5% is catastrophic for jobs and services within Scottish local government because the harsh reality is that it actually translates to real job cuts that hit real families, in real communities throughout Scotland. Everyone will be hurt by this,” he added.

Russell Gunson, director of the think tank IPPR Scotland, said: "The cuts facing Scotland over the next five years will pose fundamental questions over the size and role of the state, and the route Scotland takes in the future. Without question, by the end of the next five years Scotland will have been reshaped in many important ways.”