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The Scots finance secretary has warned that public sector pay is in line for a hit, as spending cuts take hold.

John Swinney told the ´óÏó´«Ã½ the prospect of £1bn of cuts to his next budget meant there will have to be "significant constraint" on salaries.

The scale of cuts will be outlined by the chancellor in the UK Spending Review next Wednesday.

Mr Swinney also warned he would not rescue the troubled Edinburgh trams, if the project hit the financial buffers.

Speaking during a webcast interview for ´óÏó´«Ã½ Scotland at the SNP conference in Perth, Mr Swinney said salaries made up 60% of the costs of the public sector.

He said: "We're going to have to go into a period of very significant restraint on public sector salaries.

"I can see no way that we can work our way through the period going forward without that significant restraint on public sector pay."

Work on the Edinburgh tram network has been brought to a virtual standstill due to a contractual dispute between the city's transport agency, Tie, and contractor Bilfinger Berger.

Mr Swinney has personal concerns over the £500m project, but decided to go ahead after MSPs backed a parliamentary motion to proceed with the trams.

"A lot of houses can be built for £500m, a lot of schools," he said.

"What the project involves is essentially replacing a very successful and profitable bus route, from the west of Edinburgh to Leith, with a tram line."

Despite the problems facing the project, Mr Swinney said he would give it "not a penny more", adding: "Not even to rescue it."

"People took a little bit of exception to the strength of the view I took back in June 2007 when I said, 'do not come knocking on my door for any more money'," said the finance secretary.

He warned: "It's crystal clear - that was my position then and it remains my position now."