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The Scottish Government's decision to axe a range of capital projects could hold lessons for how the next Westminster administration could cut spending.
Finance secretary John Swinney presented his draft Scottish budget for 2010/11 to the Edinburgh parliament on Thursday.
Amongst the casualties was theflagship Glasgow airport rail link project, dropped as part of a cost-cutting budget that aims to protect frontline services.
Swinneytold MSPs that the government "must act now to ensure the capital budget is sustainable in the years to come".
Axing investment in major projects rather than frontline services is an option likely to be considered whatever the outcome of the next UK general election.
Big ticket items such as Trident renewal and a range of IT programmes are likely to face budgetary scrutiny.
The need to axe significant projects also highlights the impossibility of making big savings through administrative efficiencies alone.
But Swinney said it is possible to balance cuts with protection for frontline services, an argument the three main Westminster parties are also likely to reiterate.
"The Scottish Government's departmental expenditure limit budget - the money over which we have direct control - will reduce in real terms by 0.9 per cent compared to this year," he said.
"This is the first real terms cut in the Scottish Budget since devolution. We have taken decisions - supported across this parliament - to accelerate capital expenditure to counter the effects of the recession."
Swinney said the Budget was designed to deliver "maximum benefits to the people of Scotland, at a time of unprecedented economic and financial challenges".
He added: "It is designed to minimise the impact of the reductions imposed upon us on frontline services and Scotland's economy."
Funding for the NHS will be maintained “even though the chancellor has cut the Department of Health capital baseline”, which means a cut in Scotland's capital budget of £129m.
"I do not believe it would serve the interests of the people of Scotland to pass on the chancellor's cut to the Department of Health baseline to the NHS in Scotland and the Scottish Government has taken the decision not to do this," Swinney told MSPs.
"We will therefore be drawing down all of our unspent end-year flexibility balances held by HM Treasury.
"This will enable us to ensure that the health budget bears no part of the £129m reduction."
Swinney added that in order to deal with the £500m cut across the government’s budget, departments have been asked to look for savings that will not impact on frontline services.
The government's administration costs will be cut by £14m in 2010/11 and local government will take a pro-rata share of the cuts.
Some£20m set aside next year to prepare for the introduction of a local income tax will now be reallocated.
"We have had to face difficult choices about where to reduce planned spending next year," Swinney said.
"We will meet this challenge while continuing to work with our partners to achieve our priorities and protect programmes that matter most to the people of Scotland.
"Crucially that will mean protecting spending on frontline public services, such as schools and hospitals."
Scottish Labour's Andy Kerr, shadow finance secretary, claimed the budget had in fact grown by £600m "in cash terms and in real terms".
"We heard a lot about cuts in Mr Swinney's statement, so I ask him to address this question," he said.
"Is it not the case that, even if the United Kingdom efficiency savings are taken into account, the Scottish Government's budget continues to grow?
“Is it not therefore perverse for Mr Swinney to argue that the budget has been cut by Westminster?
"Any cut to the budget was carried out by Mr Swinney himself. If any cut has occurred, it is Mr Swinney's prints that are on the knife."
Conservative MSP Derek Brownlee said his party welcomed the decision to protect the business rates cuts, maintain the council tax freeze and recruit additional police officers.
"Reducing the first minister's advertising budget by half is a start, too," he added.
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