Brown lays down spending plans

Giveaway Gordon Brown today flung money in all directions - above all to education - while promising to continue to run the economy with "a steady hand".

But even as the Chancellor was speaking, shares were plummeting by 230 points in another grim day for the stock market.

Up went schools spending, to hit an extra £13billion a year by 2005/6. In a warning of election battles to come, the Chancellor challenged the Tories to accept his aim to raise funding to £4,900 a year for every pupil in the state system. Up went defence spending, by more than £1 billion a year, partly to counter the terrorism threat. Up went the cash for childcare, transport, housing, science, the arts and much more.

The comprehensive spending review, covering the Government's plans for the next three years, will hand an extra £60 billion-plus directly to spending departments with the increase overall totalling more than £90 billion.

But Mr Brown also named his price: a demand to the unions to step back from big pay demands and an explicit threat that he will scythe through failing schools, social services, local councils and jails, with the culprits sacked or replaced. The

Tories were quick to challenge both Mr Brown's figures and his pledge that investment coupled with reform would at last deliver the goods in the shape of better schools, hospitals and public transport for all to see.

And there were signs of trouble to come on a series of fronts, not least a pledge that the Government will oversee a sharp increase in the number of homes in the South-East along with a big expansion of air traffic.

The increase for transport to counter what the Chancellor called "long term under-investment and neglect" will amount to a 12 per cent rise above the inflation rate over the next three years with the overall budget rising from £7.7 billion to £11.6 billion.

To some uneasy murmurs from his own side Mr Brown added that Transport Secretary Alistair Darling will soon begin consultation "on the long-term need to increase air traffic capacity in this country".

On the building of new homes, the Chancellor moved to fend off trouble by saying that the plan would be aimed to meet "housing needs, south and north, to make more use of space in towns and cities while protecting the valuable countryside around them".

The budget for David Blunkett's Home Office was another apparent winner with a rise of almost £3 billion to take the eventual total to £13.5 billion. Mr Blunkett had taken his case for more cash direct to Tony Blair.

In an acknowledgement of the discomfort and delays suffered daily by millions of commuters and the fear of rampant street crime, not least in London, it was made clear that most of the increases for transport and to fund the police will be rushed through in the first year of the threeyear cycle, clear evidence that ministers are desperate for quick results.

Mr Brown moved at the start of his statement in the Commons to counter charges from the City and elsewhere that he had cast aside the prudence of earlier years to take a multi-billion pound gamble.

He insisted that a massive repayment of government debt coupled with big falls in unemployment had left him with room to increase spending without putting the economy at risk.

The rate of debt, which amounted to 44 per cent of the national income when Labour came to power in 1997, had shrunk this year to 30.4 per cent, well below the level of most of this country's competitors. But Mr Brown also moved, ferociously, to tackle the charge that the extra money would dribble away in waste and incompetent management.

"Failing institutions," he warned, would be "dealt with early and decisively". And, listing the details he warned:

? Poorly performing schools will be subject to takeover either by "new leadership" or a neighbouring school, or shut down and reopened as a new school.

? Failing local education authorities subject to takeover by high performing authorities.

? Poorly performing colleges threatened first with loss of funding, eventually with merger.

? Poorly performing social services and housing departments to be given new directors and senior managers. Shadow Chancellor Michael Howard said the Government had failed to deliver "real reform", adding: "Is not the lesson of the last five years that real money without real reform will not work?"

He said of the Government: "They are the masters of promising the earth, trying to spin their way out of failure, substituting subterfuge for substance."

Fighting to be heard over jeers from Labour MPs, he welcomed the increase in spending on defence and overseas aid, and said the Tories were not automatically opposed to the idea of spending more across-theboard. But he said "We are not going to endorse this failed approach to public services. We are not going to support this policy of money without change."