Brown fires election starting gun with £43bn give-away

Gordon Brown pumped an extra £11.9bn into the education budget yesterday as he firedthe starting gun for a general election in which voters will be offered higher spending under Labour and tax cuts by the Tories.

Gordon Brown pumped an extra £11.9bn into the education budget yesterday as he firedthe starting gun for a general election in which voters will be offered higher spending under Labour and tax cuts by the Tories.

Unveiling the Government's three-year spending programme, the Chancellor announced that an extra £43bn will be spent on public services by 2003-04 - the biggest expansion in modern times. The big winners were education, public transport and the police.

The Tories accused Mr Brown of going on a pre-election "spending splurge" which would put up taxes. But the Chancellor said Labour needed to tackle decades of under-investment in services to reap the rewards of putting the economy on a sound footing.

The education budget will soar from £45.8bn this year to £57.7 bn by 2003-04. The 6.6 per cent annual rise on top of inflation dwarfs the 5.4 per cent annual growth for the NHS, which received an extra £13bn in the Budget in March.

Mr Brown will double the amount of money channelled directly to schools, bypassing local authorities by handing up to £9,000 a year to primary and £50,000 to secondary schools.

Spending on public transport in England will rise by 20 per cent, as the Government tries to improve rail and bus services and ease road congestion.

Following a big rise in violent crime, the Home Office budget will grow from £7.5bn to £10.6bn over five years. An extra £1.6 bn a year will go to the police.

Labour MPs welcomed the spending boost but were disappointed Mr Brown kept them waiting until November for measures to help pensioners following the 75p-a-week rise in the basic state pension in April.

Tony Blair hopes the spending blueprint will provide the springboard for a fightback after his worst month since becoming Prime Minister. Whitehall departments will announce new performance targets and detailed spending plans over the next two weeks, starting with the Home Office today, as ministers try to regain the political initiative. The plans will form the core of Labour's programme as it seeks a second term.

Despite the huge injection to spending, Mr Brown did not trumpet the figures in the same way as he announced an extra £40 bn for health and education in the last spending review in 1998, when he was accused of "double counting" and including money already in the pipeline. The Treasury refused to provide comparable figures for the current review, following criticism that the 1998 programme raised expectations of improved services which the Government could not fulfil.

Mr Blair and Mr Brown are gambling that the public will vote for investment in services rather than the tax cuts promised by the Tories. "This is a watershed for us, and the defining moment for the next election," said an aide to the Chancellor. Mapping out the electoral battleground, Mr Brown said: "We have made our choice. It is now for those who oppose our spending plans to state clearly to state clearly where their cuts would fall."

In heated Commons exchanges, Mr Brown outgunned Michael Portillo, the shadow Chancellor, saying: "He lost the last general election with 22 tax rises. He will lose the next election with £16bn of public spending cuts." But Mr Portillo attacked Labour's spending plans as unsustainable. He said the £40bn extra announced in 1998 had not improved public services, and nor would the extra £43bn announced yesterday. "Labour's spending isn't working," he said. "It taxes more and delivers less."

Economists did not support the Tory charge that Mr Brown had abandoned prudence. Nor was there much concern that a downturn in the economy could throw the public finances seriously off course. There was some concern, however, that faster government spending growth, especially this year, could force the Bank of England to raise interest rates.

Ian Peters, deputy director-general of the British Chambers of Commerce, said: "The commitment to raise spending over the next three years ata faster rate than growth in the economy could have inflationary consequences. These could force interest rates and sterling higher."