Labour points to a future of cuts

Mr Kelly was defending Scottish Labour leader Johann Lamont who has come under increasing fire over her big set-piece speech on Tuesday, which appeared to ditch commitment to universal services in favour of means testing.

"The SNP are being dishonest about cuts," Mr Kelly told BBC Radio Scotland. "We have seen this week the effect of the council tax freeze, with job losses and care budgets being cut."

Ms Lamont has set up a commission on public finances that "will look at spending forensically" Mr Kelly said.

Flagship policies, many of which were introduced by Labour in the Scottish Parliament, such as free prescriptions, scrapping tuition fees, and free bus travel for elderly are all up for reconsideration by Labour's commission.

"We will not shirk at looking at cutting waste and we will not shirk from looking at benefits to people on six-figure salaries," Mr Kelly said.

Scottish Labour's left grouping the Campaign for Socialism (CfS) called instead for "an end to the long tax holiday for the rich."

CfS secretary Mike Cowley said the SNP's approach was inadequate but "low corporation taxes and savage cuts do not offer a way out of the crisis.

"The poorest are paying for tax breaks for the richest, we are not all in this together."

Mr Cowley called on the Scottish Labour leadership to consider the radical idea that "income tax powers be devolved to Scotland to allow for more effective redistribution."