UNIONS reacted with fury to the decision by the Scottish Government to continue with a public sector pay freeze and enforce poorer pension terms.

The PCS union spoke of “anger as never before” even although in his Budget speech John Swinney expressed hope of a “modest” pay increase in 2013 and regret that the Treasury was forcing the rise in pension contributions.

While Mr Swinney chose not to insist on local authorities applying changes to their pension scheme, he spoke of having to “reluctantly” increase employee pension contributions for NHS, teachers, police and fire schemes in Scotland.

On the latter, the Westminister Government had warned the SNP administration that it would take money away if the UK deficit-reducing measure, as unsavoury as it is, was not followed through.

Mike Kirby, Scottish secretary of Unison, said: “While we welcome the news on public sector pensions as it applies to local government, the Finance Secretary had the discretion to carry this across the public services and chose not to do so.

“Although his announcement removes the threat of industrial action in local government, we still have serious issues across the public sector with many thousands of our members still facing unprecedented attacks on their pensions.

“We’re angry at the continuation of the pay freeze which will affect hundreds of thousands of low-paid workers, who have already faced a real-term pay cut for the past two years. There’s also no evidence that the £250 payment for workers earning under £21,000 will be universally applied.”

Grahame Smith, general secretary of the STUC, said: “The big minus is Mr Swinney’s treatment of public service workers. Having criticised the UK Government for combining a pay freeze with a pension contributions cash-grab, Mr Swinney has proceeded to take the same path in Scotland.”

For his fifth Budget, the first commanding a Holyrood majority, the Finance Secretary has less need of a concordat with local government.

The patience of councils appears to have run out, following his decision to continue freezing the council tax and his “reprofiling” of local authority finance to pressure them into taking on increased capital borrowing.

While they will still get the same long-term capital allocations they expected, less of this will come over the next two years in an attempt to force councils to make greater use of their borrowing powers, thus boosting overall capital spending in a bid to maintain employment.

Mr Swinney also insisted he would continue pushing for a council tax freeze, with penalties for any breach.

Cosla finance spokesman Kevin Keenan said: “We are disappointed but not surprised with the very unhelpful level of spin put on the Government’s discussions with us ahead of today’s announcement.”

Citing protection of police and teacher numbers, he said: “It has to be fully understood that none of the things the Government wants to prioritise come without a cost attached -- and that by prioritising some areas you are immediately damaging others even further.

“The hard-nosed facts are that in reality Scottish local government is going to be 7% down over the period of this spending review. When you add in £1 billion worth of demand on the vital services we provide that takes us to 15% down, and that can mean only a significant reduction in local services and local spend.”

Labour finance spokesman Richard Baker accused Mr Swinney of “sleight of hand” over council borrowing. “Scotland’s councils are facing real terms cuts in spending and far from protecting them from financial pain they’re seeking to pass on to local authorities the responsibility for their pledges too, on council tax freeze, police numbers and teacher numbers. If councils are to meet these costs, more council workers will lose their jobs, there will be further service cuts and some of the most vulnerable in our society will be denied services they depend on.”

Tory spokesman Gavin Brown said: “This Government ought to be judged by what it does, as opposed to just what it says. They’ve said the economy is the most important thing but the reality and rhetoric do not match together.”

Willie Rennie, leader of the Liberal Democrats, said the Scottish Government had “dodged and delayed endlessly” on taking tough decisions. He called on Mr Swinney to rethink the council tax freeze for the entire Parliament, and look at the LibDems’ election pledges on reforming Scottish Water.

For the Greens, Patrick Harvie said: “There is something fundamentally wrong with a spending plan where the motorways budget is over three times the size of the housing and regeneration budget, and these figures are moving in opposite directions every year.”

Scotland Office Minister David Mundell said: “It’s high time Scottish ministers accepted that tough decisions come with being in Government and stop constantly trying to blame others.”