John Swinney: the Budget is a series of con tricks

As he announced the measure, Mr Osborne told MPs in the House of Commons: "Britain deserves a pay rise and Britain is getting a pay rise."

While around 140,000 low-wage workers in Scotland are expected to benefit from the move, it has been dismissed by campaigners and rival politicians.

First Minister Nicola Sturgeon insisted the move does not amount to the introduction of a living wage, pointing out this is already set at £7.85 everywhere but London.

The SNP leader tweeted: "£7.20ph next year and £9 by 2020 is increase in minimum wage (though offset by cuts in tax credits) but it's not living wage - LW is already £7.85."

And Deputy First Minister John Swinney said: "This Budget is a series of con tricks to try and hide the fact that individual households will now bear the brunt of austerity cuts.

"I support a meaningful living wage paid for by business - one that pays what people need to live, not one that fails to compensate for cuts to valuable tax credits.

"The Chancellor has not even promised to meet the current living wage of £7.85 and under 25s will face the brunt of cuts but receive no increase in wages.

"As the Resolution Foundation - cited by the Chancellor - make clear, the real living wage is based on people receiving tax credits and housing benefit so any new living wage must be far higher to compensate for it.

"The Chancellor's con trick does not come close to meeting those costs.

"The Chancellor is cutting from the poor whilst paying out to the rich, he is short changing those on low incomes whilst giving tax breaks to the better off.

"The reality is that in delivering his emergency Budget the Chancellor has simply exacerbated the emergency situation faced by many on low pay and low incomes."

The Budget included £12 billion of cuts in welfare spending. Mr Osborne took an axe to tax credits, declaring that families will only receive the handouts and Universal Credit payments for the first two children.

People under the age of 21 will no longer be automatically entitled to housing benefit, and all working age benefits will be frozen for four years. The Chancellor also confirmed the benefits cap is being reduced from £26,000 to £23,000 in London and £20,000 in the rest of the country.

Mr Osborne conceded that "difficult but necessary decisions" had been required, but added: "'This is a one-nation Government that does the best thing for the economy and the right thing for the country.''

Susan McPhee, of Citizens Advice Scotland, said for most people the national living wage "will not be enough to offset the impact of the wider cuts".

Grahame Smith, general secretary of the Scottish Trades Union Congress (STUC), was also critical, saying: "The Chancellor's so-called national living wage, pitched at £7.20 next year, will be nothing of the kind and is simply a cheap gimmick aimed at undermining the successful work we have undertaken to promote a meaningful living wage that genuinely helps people out of in-work poverty."

But Scottish Secretary David Mundell said the "national living wage is an essential part of the move from a low-wage, high-tax, high-welfare society to a higher-wage, lower-tax, lower-welfare society".

He added: "It ensures that work pays and reduces reliance on the State topping up wages through the benefits system."

In the run-up to May's general election, the SNP backed an increase in the minimum wage to £8.70 an hour by 2020.

Scottish Tory finance spokesman Murdo Fraser said: "Here we have a Conservative Government going much further to help working people in Scotland than the SNP ever would have.

"It's humiliating for the Scottish Government to demand devolution of the minimum wage, only to set it at a lower rate than the rest of the UK.

"That would have penalised low-paid workers north of the border, and provides more evidence of why Scotland is so much better off as part of the UK."

Liz Cameron, chief executive of Scottish Chambers of Commerce, said the creation of a mandatory national living wage "will come as a bolt from the blue for many employers".

She said while most businesses already pay this rate or more, for some firms "wages of this level do not fit within current commercial models".

Mr Mundell defended welfare changes, saying: "The UK currently has 1% of the world's population but 7% of the world's welfare bill. That cannot be right and is not sustainable.

"Work is the best route to a secure future and the peace of mind which that brings. We are making sure we have a welfare system which always rewards work, while making sure the most vulnerable are protected."

The Budget also included an increase in the income tax threshold to £11,000 from next April, when the point at which people start to pay the higher rate of income tax will also be upped to £43,000.

Mr Mundell said: "This is a Budget for the whole of the UK. It rewards work, backs aspiration and ensures fairness for taxpayers across the UK.

"We're moving towards a lower tax, higher wage and lower welfare economy. And within the welfare system, we continue to protect the most vulnerable.

"The economy is growing. We are taking more people out of tax. Jobs are being created. The deficit is coming down . Our economic plan is working."

But Labour's shadow Scottish secretary Ian Murray insisted: "This is not a Budget for the working poor, the young or the sick. No amount of Tory spin can hide the fact that this is a bad Budget for working families, our most vulnerable and our young people.

"The Chancellor has decided to cut vital support for working families, whilst slashing reducing inheritance tax for the most well off.

"Labour fought for and introduced the minimum wage, and we welcome any increase, but in today's Budget the Chancellor is giving with one hand and taking away with the other.

"Cuts to tax credits will mean many working people will be worse off, and with under-25s not benefiting from the increase in the minimum wage, this will have a disproportionate impact on employees in low paid sectors."

Liberal Democrat MP Alistair Carmichael also criticised the Chancellor, saying: "If anyone had doubts, the Budget today shows that the nasty party is well and truly back."

In coalition government, the Lib Dems had "forced the Conservatives to ensure that we balanced the books fairly, protecting spending in key areas while getting the economy back on track," the former Scottish secretary said:

"Now we are seeing the true face of the Tory Party and it is not a pretty sight. These welfare reforms are an assault on the young and the poor."

Campaigners were also critical, with Mary Taylor, chief executive of the Scottish Federation of Housing Associations, warning the cuts "have the potential to be just as damaging as the 'bedroom tax'."

She said: "Freezing working age benefits for four years and restricting tax credits and Universal Credit to two children, affecting those born after April 2017, will only serve to make it harder to escape the poverty trap."

Tam Baillie, Scotland's Commissioner for Children and Young People, said the Budget "penalises working families for having more than two children".

He blasted: "Today's changes appear to ignore that parents and caregivers must feed and clothe all of their children - not just the first two."

John Downie, director of public affairs at the Scottish Council for Voluntary Organisations, said: "This is the work of an economically-illiterate Chancellor who is dead set on cutting, freezing and scrapping welfare to reach his target of £12 billion cuts.

"He's demonstrating a cruel disregard for the impact this will have on hundreds of thousands of people's lives. The sad truth is that far too many people can't afford to feed and clothe themselves and their families, or keep a roof over their heads.

"Taking money from the pockets of our poorest people will only plunge them deeper into poverty and increase inequality which will be a drag on the economy."