'You're a snake oil salesman' jibe at Forsyth

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Political Correspondent

An 11th-hour pounds 98m lifeline to Scottish local authorities was yesterday dismissed by MPs and councils as a panic U-turn that would fail to tackle underlying financial problems.

Michael Forsyth, Secretary of State for Scotland, also drew vitriolic criticism from a nationalist MP as he outlined the package at the Commons Scottish Grand Committee sitting in Kilmarnock, Strathclyde.

Mr Forsyth came forward with a rescue package 24 hours before Scotland's new unitary councils were due to meet to set their budgets and tax levels for the coming year. Authorities had warned of massive council tax rises and spending cuts.

Mr Forsyth told MPs it would allow a Band D council tax cut of at least pounds 84 in the planned level for Glasgow and a pounds 35 reduction for Caithness.

But in the stormiest so far of the peripatetic Grand Committee sessions recently introduced by the Government, Andrew Welsh, SNP MP for East Angus, denounced Mr Forsyth as a "snake oil salesman telling his lies".

The outburst came after no nationalist MPs were called in the debate. When ordered to apologise by John Maxton, the committee's Labour chairman, Mr Welsh declared: "You haven't seen fit to call me, so I can't express my opinion." Mr Maxton suspended the session for five minutes when Mr Welsh refused to withdraw the remark or leave the meeting.

Under the Government's package, councils will be allowed to switch pounds 58m from capital budgets to revenue spending for priority areas such as education. They will also get a pounds 38m package specifically designed to lessen council tax increases after warnings of rises averaging 15 per cent.

Mr Forsyth said: "I am sympathetic to the argument which was put to us by many of the councils concerned that they needed time to bring their spending levels into line with their grant-aided expenditure assessments." The effect would be that council tax payers in the areas concerned would be protected from the turbulence created by boundary changes, "but not from the spending decisions taken by the new councils themselves".

Scornful Labour MPs were quick to spotlight earlier government suggestions that no new money was to be made available. George Robertson, the shadow Scottish secretary, said: "This is not so much a U-turn as a somersault. This is a victory for the people of Scotland, but only a partial one."

In a counter-attack, Mr Forsyth mocked Labour's support of council pleas for an extra pounds 395m without saying where the money would come from.

Councils reacted coolly, with Rosemary McKenna, president of the Convention of Scottish Local Authorities, saying: "This is a panic measure."

She added: "We have been saying for six months that there is a serious problem. This will do nothing to protect services, and councils will still have a serious problem about the level of services, and there will still be cuts."