Brown's family pledge

Gordon Brown sprinkled money on mothers and children in a "family friendly" pre-Budget report this afternoon.

The Chancellor took off his hair shirt to extend maternity leave, promise more free pre-school nursery education for three- and fouryearolds and pledge a million new childcare places.

For the first time, fathers will be allowed to transfer their partner's maternity leave to take extended time off instead. Mr Brown also gave an extra £50 winter fuel bonus to pensioners and unveiled a package which he claimed would slash £1billion from rocketing council tax bills next year.

His largesse, although falling far short of a giveaway, set the scene for next year's general election and put policies for the family at its heart. He declared his ambition was for "a welfare state that is truly family friendly for the first time". But Mr Brown's spending was far more tame than his buoyant stream of announcements to the Commons suggested.

The winter bonus for the old was half the amount given last year, indicating how severely he has been squeezed.

Although he appeared to write a £1billion cheque to local authorities to rescue council tax payers, the fine print of his announcements revealed it actually involved just over £100 million of extra spending. The rest was a transfer of cash from squeezing Whitehall departments and allowing councils to raid other parts of their own budgets. By far the biggest spending was not for families but an extra £520 million to cover the costs of the wars in Iraq and Afghanistan.

But Mr Brown was on super-confident form as he confounded yet again the City doom-mongers who had been predicting a £10billion black hole in his accounts.

With a grin, he told MPs that borrowing would be £34billion this financial year rather than the £42billion millstone estimated by some analysts, while growth and inflation were all bang on target. Unveiling the increased £102 maternity pay and child benefits for new mothers he hailed it as "the most generous maternity support and support for young children ever in the history of our country".

Lone parents will get a £40 a week bonus if they move from living off benefits alone to working for a living. So too will people lingering on Incapacity Benefit when they are healthy enough to get a job.

Mr Brown used the afternoon to map out an extraordinary long-term vision of his personal manifesto for Britain,

delivering a clear signal that he is determined to win the

Labour leadership after Tony Blair retires. As well as a decade-long plan for childcare, he offered a 10-year plan for improving skills among workers.

The timespan, twice as long as Mr Blair's five-year plans for Whitehall departments, left no doubt he aims to stamp his imprint.

In his speech he even cocked a snook at the Prime Minister and Mr Blair's close ally, European Commissioner Peter Mandelson. Boasting of lower debt, he joked that "for those that are interested" the economy was well within the Maastricht Treaty rules for countries hoping to join the euro. That was a clear jibe at Mr Blair's avowed wish to join the currency against his own scepticism.

As expected Mr Brown ditched the planned 1.92p a litre rise in fuel duty, saving motorists almost £700 million next year and ensuring that petrol will be at its cheapest level in five years when Labour goes into the general election.

Overall the announcements were described by the Treasury as "broadly neutral" meaning that Mr Brown believes tax rises will not be needed to fund his mini-splurge.

Shadow chancellor Oliver Letwin accused Mr Brown of being "Sir Wastealot".

He accused Mr Brown of breaking a key rule on borrowing only to invest and accused him of having "black hole" in the budget.