Finance Secretary hails his budget 'best deal' for Scots

Mr MacKay said measures set out in the 2017-18 Budget Bill will result in ''£900 million of additional investment in our public services, our people and our communities''.

It was passed by 68 to 57 after the SNP Finance Secretary did a deal with the Greens which will see councils get an additional £160 million of funds while the threshold for the 40p rate of income tax in Scotland will be frozen at £43,000.

This is the first year that Holyrood has had power over income-tax rates and bands, with ministers opting to keep the basic rate at 20p despite calls from Labour and the Lib Dems for a 1p rise to raise more cash for public services.

The Scottish Government also rejected calls to restore the 50p top rate of income tax for those earning more than £150,000 a year.

Conservatives said freezing the threshold for the higher rate while it is being increased to £45,000 for the rest of the UK made Scotland the highest-taxed part of the country

Finance spokesman Murdo Fraser said: ''We should have had a Budget to boost economic growth and, as a result, boost our tax revenues.

Instead, the Finance Secretary has presented us with a Budget that will do nothing to promote Scotland as an attractive place to do business.

He is introducing, for the first time, an income-tax differential that will make Scotland the most highly-taxed part of the United Kingdom.''

SNP ministers, however, stressed the Budget will provide a record £12.7 billion for the NHS, an increase of £120 million above the rate of inflation.

In addition, £60 million will go towards expanding early learning and childcare while £120 million will be handed directly to headteachers to help them close the attainment gap.

Further and higher education will receive £1.6 billion while a cap on business rates increases is being brought in for some, following widespread concerns about the impact of a revaluation on firms.

Mr Mackay said: ''This budget secures Scotland's social contract with investment in public services on a massive scale, support for our economy and help for those on low incomes.

With £900 million of additional investment we are putting in place the foundations to transform and reform our public services and to deliver on our commitments over the next five years.

We are providing the funding for education to close the attainment gap, double childcare and protect higher and further education.

We are investing record amounts in our frontline NHS, in social care and protecting free prescriptions and free personal care for the elderly.''

He continued: ''Business has the full backing of the Scottish Government with a £500 million Scottish Growth Scheme, £4 billion of infrastructure investment and over 100,000 properties paying no business rates at all.

We are helping those on low incomes by freezing the basic rate of income tax, backing first-time buyers and mitigating the impact of UK welfare reform.

This is a budget that delivers for every part of Scotland and it is one that ensures taxpayers all across the country get more for their money than anywhere else in the UK.''

Labour leader Kezia Dugdale, whose MSPs voted against the Budget, accused ministers of joining up with the Greens to; impose #170 million worth more cuts to vital public services''

She said: ''These cuts will harm everybody but they will hurt the poorest the most.''

Labour had proposed an ''alternative plan'' which ''says we don't have to accept the austerity imposed by the Tories, that we have the powers in this parliament to chart a different course'', Ms Dugdale argued.

Labour's plans would stop the cuts to public services we all value and allow us to invest in those public services instead.''

Liberal Democrat leader Willie Rennie branded it a ''timid, tinkering budget''.

He said: ''We've got new tax powers, the tax powers we've been wanting for years so we could do something different from the rest of the UK, so we can chart our own path to mark a different way, to boost the economy, to improve our education system, to improve mental health services.

And what do we do with it? We tinker with it, we tinker at the edges. We're not making a big difference.''

Green co-convener Patrick Harvie defended his deal with the SNP and told other parties: ''Don't just throw a tantrum, make a difference.''

He stated: ''I have never said that this budget is perfect and I won't today. But this is the biggest budget concession that any administration since devolution has given to any opposition party.

It will make a difference in every single local government area.''

• scottish budget
• derek mackay