Nationalists are promising cuts totalling £1.3bn in local tax and business rates over the next four years.

Their proposed local income tax would also be capped at 3p in every pound on top of income tax paid to the Treasury.

The SNP's finance spokesman, John Swinney, yesterday set out key elements of its Holyrood manifesto, with £3bn, or 70% of savings, being reallocated into other spending programmes and 30% given away in tax cuts.

He hopes this will counter opponents' attacks that the SNP is over-committed on spending, while stressing a prudent approach, and a desire to work alongside Whitehall departments rather than wrangle over devolved powers.

"There will be absolutely no desire to engage in arm-wrestling over current responsibilities," he said. "An SNP government will deliver fresh thinking and a new approach while operating within the current framework."

Although it has heavily criticised private finance of hospitals and schools, it emerged the SNP would do nothing to block councils that sign up to the long-term Public-Private Partnership deals. Mr Swinney hopes, instead, to persuade councillors and health boards that a different system for financing new projects through issuing bonds would be more attractive.

Other plans set out by the former SNP leader included the promise to reduce executive costs, with a cut in the cabinet to only six members. The housing quango Communities Scotland would be abolished, and local enterprise companies would also go, with their functions given to local councils.

The Scottish Environment Protection Agency and Scottish Natural Heritage would be merged, as they are seen as duplicating regulation at local level, and SportScotland would be axed. There are no plans to change the status of Scottish Water, health boards or council boundaries.

The policies come ahead of a three-year share-out of Treasury cash later this year, which will be much tighter than the last two spending reviews. It was reported yesterday the Treasury was preparing to announced a slow-down in annual spending growth from 6% more than inflation to 2% above.

On the local tax and business rate cuts, detail is to be unveiled later this week, but the £1.3bn comes from roughly £16bn that would otherwise be raised over the next four years.

Mr Swinney claimed the local tax cut, allied to the replacement of council tax with local income tax, would reduce the average pensioner couple's local tax bill by £500. Until the SNP could abolish council tax, its levels would be frozen.

Labour contests the SNP figures, arguing it would take more money to keep local income tax to 3p in the pound, and saying it would hit hard at families on two modest incomes.

Health Minister Andy Kerr ridiculed the SNP financial platform, saying: "It appears failed SNP leader John Swinney is now taking a leaf out of failed Tory leader Michael Howard's Mickey Mouse maths book, by promising more spending alongside vague tax cut pledges. This latest SNP gimmick will convince nobody."