Measures announced in the Chancellor's pre-Budget report will allow the Scottish Government to spend £260m on new capital projects in the next two years, Finance Secretary John Swinney said yesterday.

He stressed that school building projects would be the highest priority, both to provide new facilities and to improve the condition of the existing estate, particularly in terms of its energy efficiency.

The specific details of the investment are yet to be confirmed, but will also include boosts to housing, regeneration, transport infrastructure and fuel efficiency projects. This will follow a consultation period with local authorities.

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"For some time, we have been making the case for the UK Government to deliver a package of tax cuts and increase public expenditure to respond to the current economic conditions," Swinney said.

"That is why we welcome the general direction the UK Government has now taken to get the economy moving.

"For our part, we will put this money to maximum use in Scotland – providing crucial work for our construction sector. It will complement both the substantial capital investment already underway and our economic recovery programme."

He added that "the highest priority" would be given to "capital spending on new and improved school buildings".

However, the SNP administration also raised concerns over the future of the public finances, suggesting that Scotland's budget could be cut by £500m in 2010-11.

"We already have a stringent efficiency programme designed to deliver two per cent savings annually. These are savings that we can re-invest in public services," Swinney noted.

"In contrast, this crude cut in Scotland's budget is a matter of deep concern. It is a decision this Government will work tirelessly to reverse."

(GK/KMcA)