John Swinney yesterday used the first SNP Budget to deliver a historic deal with local authorities ahead of a council tax freeze, but ditched some of his party's key manifesto commitments.
In a speech which trod the tightrope between promises and delivery, the Finance Secretary signalled funding for free prescription charges, a tax cut for small businesses and NHS waiting list guarantees.
However, the Scottish Government was forced to drop pledges on student debt and there were high-profile losers such as universities and housing.
Mr Swinney also raised his planned public-sector efficiency savings from 1.5% to 2% to balance the books and left nothing in the government's reserves for contingencies.
He said the Budget "heralds a new era of optimism, opportunity and delivery for all of Scotland", adding: "With investment in our public services, matched by lower and fairer tax, I believe this Budget matches the aspirations of the people."
However, it left question marks over the timescale for major transport infrastructure projects, such as the M74 extension into Glasgow, with Alex Salmond confirming only a commitment to completion by 2014 and stressing that a competitive bidding process was required.
On housing, Mr Swinney said last night that an admittedly poor capital spend in the first year of his proposals rose dramatically in subsequent years. He added that, on a tight settlement from Westminster, there was simply no way to give as much money to higher education as ministers would have wished. Universities will receive less than one- quarter of what they had demanded.
"We are in a tough financial climate and will not be able to deliver on all of our commitments just as we would have liked," said Mr Swinney, pointing out parliamentary arithmetic forced the minority government to drop its pledge to take over student loans and replace loans with grants.
"I know there is insufficient parliamentary support for student debt servicing or for loans to grants, and we must therefore prioritise funding on policies that we can deliver and which will be supported to parliament."
But the jewel in the crown was Mr Swinney's "concordat" with the Convention of Scottish Local Authorities (Cosla).
Although not binding on individual councils, it allowed him to come to parliament with SNP pledges on a council tax freeze intact and those on primary class sizes not entirely killed off.
While the deal with councils does not absolutely guarantee a council tax freeze, the signatures of the five cross-party members of the presidential team at Cosla carry considerable weight.
As well as the extra funding carrot, Mr Swinney has the stick of denying that money to any authority that goes ahead with a rise. A meeting tomorrow will decide if a deal can be finalised.
Mr Swinney's historic speech rattled through a mixture of announcement and admissions which brought cheers from the Nationalist benches and an initially muted response from opponents.
Labour finance spokesman Iain Gray said the SNP had dumped its manifesto commitments on student debt.
"For 18 months the SNP told Scottish students that it would write off their debt immediately," he said. "This pledge took Mr Swinney 18 seconds to ditch this afternoon."
He accused the SNP of backtracking on its pledge of lower class sizes in primary schools.
Tory finance spokesman Derek Brownlee called for an independent assessment of the local government deal to see if council tax could be frozen without cutting services.
LibDem leader Nicol Stephen said: "This is a Budget of sham promises, shifty auditing, a Budget of deception, spin and half-truths.
"And on the public services that people care about most, this Budget deceives the most."
He added: "They promised everything to everyone and now they cannot deliver."
Ups and downs
High points
- Finding the money to freeze council tax, and an agreed concordat which will see councils given more freedom to spend their money as they wish.
- A cut in business rates for 150,000 small firms, with some seeing their rates scrapped altogether over time.
- £97m to scrap prescription charges in the lifetime of this parliament.
- A £350m package of health improvement measures, including £85m to reduce the harm done by alcohol and £35m to improve the nation's diet and encourage more physical activity.
- Record investment in public transport, including £2.65bn for railways and £740m for bus services.
Low points
- Pledge to service all student debt ditched, with a commitment instead to a "phased transition" from loans to grants, starting with part-time students.
- Election pledge to cut class sizes watered down, with a firm commitment replaced by a desire to "move as quickly as possible" to a maximum of 18 in P1-P3.
- Confirmation that the SNP manifesto commitment to put 1000 new police on the streets has been ditched, with £54m being made available to recruit an additional 500 officers.
- Pledge to increase free nursery places by 50% watered down, although the government says it is "well on the way" to achieving the aim.
- No new transport projects announced, with doubts remaining over the completion of the M74.
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