DAVID Cameron has hit out at Scottish Labour plans to increase income tax, as the proposal was voted down by MSPs following a hot-tempered budget showdown at Holyrood.

The Prime Minister said the proposal for a 1p increase, which is also backed by the Scottish Liberal Democrats, would hit "hard working people" including health workers and that it proved Labour had "learned nothing" over the last decade.

The Herald: Prime Minister David Cameron speaks during Prime Minister's Questions in the House of Commons, London. Photo credit: PA Wire

The SNP also rounded on the policy during a fiery debate over John Swinney's budget at Holyrood, with the Deputy First Minister saying it would "punish" the low paid and attacking a proposal to protect poorer workers with a £100 rebate as a "back of a fag packet" suggestion.

Mr Cameron, making his intervention at Westminster, said: "What are they going to do to radiographers in Scotland? Put up their taxes. What are they going to do to nurses in Scotland? Put up their taxes. What are they going to do to dentists in Scotland? Put up their taxes. We now know Labour’s plan higher taxes for more welfare."

It came as hundreds of Trade Unionists and council representatives mounted a protest outside the Scottish Parliament against cuts outlined in Mr Swinney's draft budget, which they predicted would lead to thousands of redundancies and hit public services including schools and nurseries.

While Labour and Liberal Democrats voted for a motion advocating increasing tax by 1p across all bands, a measure that could be implemented under existing Holyrood powers and is predicted to raise almost £500m, they found themselves outnumbered from the SNP and Tory benches. The general principles of Mr Swinney's budget were backed with the support of his SNP colleges by 63 votes to 46, with the 15 Conservatives choosing to abstain.

The finance secretary hit out at Labour for neglecting to explain in detail how its rebate scheme would work in practice and suggested that any payment may count at taxable income. The suggestion was refuted by Labour sources, who claimed that local authorities already make payments to individuals and that councils had said it would be relatively simple to introduce.

Mr Swinney said the 1p increase would hit charity workers, teachers, police officers and bus drivers, adding: "This government will freeze income tax and we will deliver a pay rise to around 50,000 of the lowest-paid workers in Scotland. The uprating of the living wage, its extension to social care workers and an uplift of £400 for those covered by public sector pay policy earning £22,000 or less will see tens of thousands better off because of this budget.

"That's the difference between the SNP and Labour - we want to give the lowest-paid a pay rise, Labour want to give them a tax rise."

Opposition to the increase was backed up by Tory finance spokesman Murdo Fraser, who said his party would stand "shoulder to shoulder" with the SNP to oppose those who sought to hike taxes.

The Herald: MSP Murdo Fraser, and councillor Ellen Forson.

He added: "The Scottish Conservatives believe that people in Scotland should not pay more annual tax than those in the rest of the UK. Sometimes that is a lonely message, but no more.

"It gladdens my Tory heart to hear these self-proclaimed social democrats and progressives on the SNP benches arguing so vigorously and so passionately against increases in taxes. These Conservative benches are happy to stand shoulder to shoulder with the SNP against the tax grabbers on the Labour and LibDem benches.

"To coin a phrase, we are happy to be better together with the SNP, because the SNP can hardly complain about Tory austerity when they had the choice to do otherwise."

Following the debate, Labour's finance spokeswoman Jackie Baillie said the Scottish Government's position was "bitterly disappointing".

She added: "Nicola Sturgeon promised that more powers meant we could be different from the Tories. Today she voted not to use the powers alongside the Tories. It is our children’s schools that will pay the price in cuts the SNP Government don’t need to make.

"When faced with a choice between using the powers of the Parliament to invest in the future or more cuts to our children's schools, Labour backs more investment. By voting with the Tories against using our powers, the SNP are backing more cuts.

"It is not too late to stop these cuts. The Budget process will continue until the end of the month and we will be appealing directly to individual SNP MSPs who have campaigned against austerity."