What the Chancellor is likely to reveal

THE CITY'S main concern is that the Chancellor takes some heat out of the consumer boom in Wednesday's Budget. Analysts judge that the much-touted tax increase of up to £8bn to pay for better public services will not harm the economy. They feel that the bigger the tax increase, the less pressure there will be on the Bank of England to start raising interest rates from their current 4% to curb rising consumer spending.

Higher personal taxation - for example, increasing the 10% rate of National Insurance contributions or raising the ceiling on NI taxed salary from £29,900 to £34,000 - would also help rebalance an economy where consumer spending is strong and manufacturing output remains weak. The City would also like to see the removal of stamp duty on share purchases but dealers accept the Chancellor is unlikely to do this, even though it would be a boost for depressed stock markets.

Industry has already had a sneak preview of what to expect in Gordon Brown's speech. Just before Easter, he made two separate announcements of upcoming tax measures for business. Large companies will benefit from a tax credit for research and development spending, tax exemptions for companies disposing of substantial shareholdings and tax relief against the costs of patents. Smaller companies will be eligible for a community investment tax credit to encourage them to start up business in deprived areas.

Health

NHS staff are encouraged by the £8bn that Gordon Brown is expected to commit to public services - most of which will go to the health service. But they say that previous headline-grabbing cash injections have failed to make a perceptible difference to the quality of care in hospitals. Nurses and doctors now want the money to be carefully targeted in key areas.

Nurses say £3bn is needed to overhaul the NHS pay and career structure to keep experienced staff in the long term. They claim a 'glass ceiling' in the current structure is causing thousands of nurses to leave the profession, with London the worst affected, and only better promotion opportunities and salaries will solve the problem.

With thousands of vacancies and 24% of nurses eligible for retirement in the next five years, the Royal College of Nursing says retention of staff is a 'critical' issue for the health service. At the same time, it claims, the Government needs to invest money to make nursing more attractive to new recruits. A newly registered nurse on grade D earns £15,445 - compared with £17,133 for a police constable and £17,001 for a teacher. The RCN is calling for the pay gap between the nurses and other professions to be narrowed so more are attracted to the job.

The high cost of living in London is another major problem for recruitment. Nurses want the present £2,365 annual London weighting allowance raised to £3,340. Frontline doctors want to see an end to 'bed-blocking' by providing more intermediate care for patients, particularly the elderly, who cannot go home but do not need the level of treatment provided by acute NHS hospitals.

A spokeswoman for the British Medical Association said: 'There should be more decentralisation of power, so that decisions can be made locally rather than nationally. This is the most efficient way to spend the money given to the health service.'

Education

SCHOOLS and universities are looking for reassurance from the Chancellor that as health has risen up the Government's agenda, education has not slipped back. They want more money to be spent on recruiting the large number of new teachers and teaching assistants needed to make good the Government's pledge to cut teachers' working hours.

The workload is blamed for the crisis in recruiting staff - in London, there are about 61,700 teachers but this is 2,160 short of the required total, a vacancy rate of 3.5%. The shortfall condemns thousands of children to a procession of temporary teachers and a poorer standard of education.

London schools also have some of the worst problems with decaying buildings in the country - the bill for urgent repairs in the capital's schools is £104m out of a national total of £754m. Discipline in London schools is also among the worst in the country. Ministers have promised hundreds more in-school 'sin bins' for disruptive children. That too will require heavy spending.

Universities also want nearly £10bn over the next four years to fund the Government's target to expand higher education to half those under 30 by 2010.

The major teaching unions will be hoping that - as Tony Blair signalled in an interview last Sunday - some of the anticipated £8bn tax increase to pay for public services will find its way into education.

Travel

RAIL, Tube and road chiefs will be looking at the Budget for any hint that the Chancellor is to increase their share of the financial cake when he announces his spending review later in the year.

He has already let it be known that he intends to freeze duty on petrol for the second successive year. He is also expected to cut the road tax for smaller-engined motorcycles. However, industry chiefs will be looking for an indication of the money the Government will commit, in real terms, to improve the national rail system. The 10-year plan to improve the railways involves £65bn but there are claims this is not nearly enough.

Law and order

WITH police in open revolt and public anxiety over street crime soaring, David Blunkett wants a major cash boost from the Chancellor for law and order.

Police numbers are at record levels but the Home Secretary wants to see the Met's strength eventually grow to match the New York Police Department, which has 42,000 officers compared with London's 26,500 though New York is a similar-sized city.

Major investment is needed for initiatives to combat street robbery. The Safer Streets scheme in London has put 300 traffic patrol police back on the beat and cut the rise in street crime from 33% to 5%.

Plans to speed up court cases, cope with record prison numbers and step up supervision of offenders when they leave jail also require substantial funds. Reform of the asylum system is also planned, with more reception and detention centres as well as further hi-tech security controls at ports and airports.

Last year, Gordon Brown more than doubled the immigration budget from £260m a year to £594m. However, after providing an extra £1.6bn a year for policing before the General Election, and now that Blunkett is overseeing the fourth major overhaul of asylum in a decade, Brown may feel the Home Office is not offering good value for the money it receives. Against this background, the Home Office may well be disappointed by tomorrow's announcement and may have to wait until the Chancellor's Comprehensive Spending Review in July for details of any substantial investment.

Reports by Jane Padgham, Maxine Frith, Tim Miles, Dick Murray and David Taylor