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More or less? SNP and Tories clash over £2bn budget boost for Scotland

Philip Hammond on his way to deliver the 2017 Budget Credit: PA

Always read the small print. Good advice if you're buying a new car, or selling your house. Good advice too when it comes to analysing budgets.

There are usually plenty of details in the Chancellor's statement which, when you look at the detail, are not quite as they might have been presented at first.

Already, for example, there seems to be some doubt over whether first-time-buyers in England will actually benefit from abolition of stamp duty for properties costing up to £300,000.

There's a good chance that there will be plenty more doubts and questions raised over the content of Philip Hammond's red box in the hours and days ahead.

But what do we know so far, and in particular what do we know about the claims and counter-claims, the spin and counter-spin, over what the budget means for Scotland?

The Tory UK government, in the form of the Scotland Office, say its great news. The SNP-run Scottish government say it's terrible. So far, so predicable.

The truth, or as near to the truth as we can get, lies somewhere in between.

There is more money coming north from the Treasury over the next three to four years. Yet it's also clear that money will be too tight to mention when it comes to meeting the SNP's spending aspirations.

According to the Scotland Office, run by Scottish Secretary, south of Scotland MP David Mundell, there is just over £2 billion coming to Scotland as a result of spending increases in England in policy areas devolved to Holyrood.

That includes some £346 million over three years in what is known as revenue - money that can be use to pay for day-to-day spending on schools or hospitals or the police force, for example.

Given the demands on the Scottish government in those key areas - highly visible services used by voters - most reasonable observers believe that this is a modest increase.

But there is also a chunky increase in the amount which the Treasury has given Scotland for capital spending - some £1,683 million over four years, a share of the UK drive to invest in infrastructure.

However, as always, there is a complication. A significant proportion of that spending is on what are called 'financial transactions' - for example, a share of money used in England on schemes like Help to Buy.

First Minister Nicola Sturgeon was fast out of the blocks as always on social media to point this out and say, correctly, that these are funds which cannot be used for day-to-day spending.

Ms Sturgeon did not go so far as her finance minister Derek Mackay who has just told me this is "funny money".

Mr Mackay accepted they were funds he can use, but only in a limited way, and they have to be repaid, he said.

In terms of the politics, sources close to Mr Mundell suggest this increase in funds - in revenue and capital - raise questions over whether the SNP will press ahead with the expected income tax rises in Mr Mackay's own budget in December.

Final decisions have not been taken, and the SNP as a minority government need support from other parties, but my sense is that with everyone except the Tories in favour of tax rises, tax rises there will be.

The question is how much the SNP feel they will be able to alter the tax rates and bands to get in the money they need to do at least some of things they want to do, including ending the public sector 1% pay cap?

Mr Mackay is also faced with a decision on what to do about the higher rate personal allowance, going up to £46,350 in England and Wales next year, but which was frozen at £43,000 in Scotland this year, giving the Scottish government some extra financial gain.

If he keeps this at £43,000 again for next year - assuming he does not change tax bands, which he has the power to do and may well do - the income tax differential between Scotland and England will widen even further.

Yet even if there are tax rises in Scotland, the government still faces serious challenges, not only on pay but on funding the NHS, closing the education attainment gap and the need to cater for an ageing population.

From all of this it is reasonable to conclude that even with the extra money from Westminster and some cash coming in from tax rises, things are going to remain tricky for the Scottish government, though their Tory opposition will dispute that.

This is largely the conclusion of most experts and economists. For example, Graeme Roy, Director of the respected Fraser of Allander Institute at the University of Strathclyde takes this view.

He says: “The challenge remains for Derek Mackay as to how best to balance the resource budget with major commitments like additional support for the NHS, more money for childcare and public sector pay uplifts all to be paid for.”

There is so much in a budget this blog could be double or treble the length but two other issues are worth mentioning. I'll spare you too much more.

The first is the Chancellor's commitment to the Borderlands Growth deal.

Although it got a brief (some might say passing) reference in his speech Mr Mundell is adamant that it is all systems go for this version of the City deals, in this case involving councils north and south of the Border and the two governments.

The Secretary of State, who is also the MP for Dumfriesshire, Clydesdale and Tweeddale, told my colleague Joe Pike the project, centred on economic development, has the capacity to be "a game changer" for the areas north and south of the Anglo-Scottish border.

Mr Mackay was equally positive and said the Scottish government would contribute fully to the process.

Far from positive was South Scotland Labour MSP Colin Smyth who says “The budget was a huge missed opportunity for the South of Scotland.

"Despite all the hype about supporting a Borderlands Growth Deal, the Chancellor failed to allocate a single penny for such a deal which is deeply disappointing.

"With economic growth forecasts down and no new investment, it is clear that the economy of the south of Scotland is going to continue to lag behind the rest of the UK as a result of this budget."

Second, as expected, the Chancellor said that Scotland's single police and fire services would no longer have to pay VAT, which they have been up to now.

Mr Hammond said this was all down to lobbying by the now 13-strong group of Tories MPs elected at the last UK election, and now in a powerful position given their party's precarious minority status at Westminster.

The SNP say it was all down to the pressure they put on over the issue over many years.

The question is would the Treasury have changed its mind on this - it had previously argued the Scottish government knew a single force would be subject to VAT when it was created - had the Conservative MPs not put pressure on?

That's possible of course, it might have in the end given in to SNP pressure.

But on the other hand, why change course unless you can give you feel the force of argument from your own side, and can see political advantage in terms of putting one over on the SNP?

Perhaps we might find a definitive answer in that budget small print. But don't count on it.