By Steve Bargeton, political editor

SCOTLAND IS facing a £1 billion cut in public services as a direct result of the measures announced by the Labour UK Government this week.

At Holyrood yesterday SNP Finance Secretary John Swinney warned MSPs that the “crude cut” in Scotland’s budget “poses a real threat to vital public services in Scotland”.

In his pre-budget statement in Westminster this week Chancellor Alistair Darling announced plans to reduce capital spending on health in England and Wales which, through the Barnett Formula, reduces Scotland’s own baseline by £129 million in 2010-11.

He also announced that he was top splicing £5 billion from public spending programmes across the UK over the same period and that the Treasury would keep the savings.

Mr Swinney said it was the “biggest cut in Scottish spending since devolution”.

“Taken together this will mean a cut of up to £500 million in Scottish spending in the financial year 2010 or approaching £1 billion over the next two years as proposed by the UK Government,” he told parliament.

“What was already the tightest settlement from Westminster since devolution has just become tighter still.

“We remain deeply concerned that these proposals could cause difficulty for Scotland at a time when we’re trying to get the economy to recover.”

Mr Swinney vowed that the Scottish Government would fight the cuts.

“This government will do all it can to overturn this decision by the UK Government—a decision that will put at risk projects in every part of Scotland,” he said.

Mr Swinney did welcome moves by the UK Government to bring forward spending on capital projects.

He said £260 million of money which would have been spent in 2010-11 would now be spent this year and next to help boost the Scottish economy.

Much of the new spending being brought forward will be earmarked for schools.

“I can say today that we intend to give the highest priority to capital spending on new and improved school buildings, helping to create a 21st century environment in which Scottish children can learn and where we can provide greater classroom capacity,” said Mr Swinney.

He said ministers will choose spending proposals that “maximise a positive impact on jobs, business and the economy, that promote excellent public services, and that contribute to our sustainability objectives”.

Individual projects would be announced in the near future.

However, Labour’s Andy Kerr said the Scottish Government’s response to the economic crisis had been “shameful and inadequate.”

“John Swinney’s lacklustre statement contrasts sharply with the decisive action announced on Monday by the UK Government,” he said.

“We learned nothing new, we have no further detail and we still don’t know which capital projects the Scottish Government will bring forward to get the economy moving.

“In fact, the only certainty is that the SNP continue to pursue two policies that will cost jobs and do further damage to the Scottish economy—the Scottish Futures Trust and the Local Income Tax. They should dump them now.”

Scottish Lib Dem leader Tavish Scott said that despite the economic storm the Scottish Government have hardly altered their plans.

“We needed more than just a whinge about the Westminster Government today,” he said.

“The SNP should remember that they are the government in Scotland. They can take their own action to support families and individuals hit hard by this recession.”

However, the Scottish Tories trained their fire on Westminster, finance spokesman Derek Brownlee accusing Gordon Brown’s government of being “the most incompetent and expensive Labour government in history.”