JOHN Swinney is facing calls for a fundamental overhaul of his spending plans after unveiling a package of measures to boost the economy that was dismissed as "timid" by political opponents.

Union leaders urged him to abandon sacred cows of Government policy, including the continued council tax freeze and the £150 million "small business bonus" rates discount scheme, and use the cash to stimulate growth.

They spoke out after the Finance Secretary announced new spending of £200m in what was billed as a Budget for jobs. Measures included a £40m injection for affordable housing, designed to help the ailing construction industry, and a £30m home insulation scheme.

New proposals to accelerate the Government's school-building programme are expected to generate £80m of investment over the next three years.

Mr Swinney also announced a £15m scheme to subsidise wages which, he claimed, would encourage small businesses to hire up to 10,000 unemployed youngsters.

But the package – amounting to less than 1% of the Government's total £34 billion budget – was condemned by opposition MSPs and union leaders, who were also frustrated by Mr Swinney's refusal to increase public-sector pay by more than 1% next year.

STUC general secretary Grahame Smith said the wage offer undermined the Finance Secretary's bid to boost the economy. Dismissing the new measures, he added: "A harder but better choice would have been to invest the £150m currently earmarked for the wasteful, economically useless small business bonus scheme to provide genuine incentives to create quality sustainable jobs for Scotland's unemployed young people."

Mike Kirby, of public-sector union Unison, urged Mr Swinney to make radical changes to the Budget, warning: "At a time when Scottish councils are facing huge financial pressures, with severe cuts to services and jobs, a council tax freeze is bad news for everyone who relies on essential council services."

Mr Swinney's public-sector wage offer, in line with Chancellor George Osborne's plans for south of the Border, will end a two-year pay freeze for about 30,000 civil servants, NHS managers and quango staff. It will also set the tone for pay talks for nurses, council workers and teachers.

However, the Budget dealt Scotland's 32 local authorities a real-terms cut in their handout from Holyrood next year, making it hard for them to deliver even a 1% pay rise.

The Budget, Mr Swinney's sixth, set out spending plans for the financial year starting in April, the last full financial year before the independence referendum in November 2014.

It is the second year of a three-year programme and the Finance Secretary deviated little from plans outlined last year when he said the "big decisions" were taken. Among the other new measures was a £17m injection for Scotland's colleges, partly reversing deep cuts last year, and £6m to improve cycle routes.

Scotland's elite athletes will benefit from an extra £1m in the run-up to the 2014 Commonwealth Games, taking the taxpayer's investment in their training to £9m.

Tourism agency VisitScotland received a £1.5m boost and £1m was set aside to restore historic buildings.

Addressing MSPs, Mr Swinney said the UK's growth forecast had been downgraded from 2.8% to 0.2%, but he vowed: "This administration will continue to do all we can within our powers to deliver growth and support jobs."

Later he gave a more blunt assessment, insisting: "This is my toughest year."

He said he would stick with his three-year spending plan outlined last year, adding: "We've made a commitment to the people of Scotland."

Of Scotland's £34bn budget, Mr Swinney has £28.4bn directly under his control, compared with £28.6bn in the current financial year.

Adjusted for inflation, he faces a 3% year-on-year cut.

Between 2010/11 and 2014/15, the budget will have been cut by 11.2% in real terms, according to Government figures.

Cash for the new programmes

came from a combination of extra funding from Westminster – Scotland's share of new spending announced by Chancellor George Osborne – and unspent money from this year.

Mr Swinney also withdrew funding from Scottish Water, confirming that bills will rise with inflation next year after a four-year freeze.

Labour finance spokesman Ken Macintosh said: "This is yet again another pass the buck budget from John Swinney. The unfortunate result of this budget is likely to be the loss of more public-sector jobs, but with very little to kick-start the Scottish economy."

Scottish Tory finance spokesman Gavin Brown added: "This budget simply does not put the economy and jobs front and centre."

Scots LibDem leader Willie Rennie said: "Mr Swinney said he wanted a 'relentless pursuit of economic growth' but this is a timid budget proposed by a Government more focused on independence than economic growth."

l Vince Cable has said the LibDems will not agree to a benefits freeze or more cuts in public spending as part of the Coalition's austerity drive.