Health and education are winners in budget

The battle lines are being drawn for a long British election campaign after a budget in which Chancellor of the Exchequer Mr …

The battle lines are being drawn for a long British election campaign after a budget in which Chancellor of the Exchequer Mr Gordon Brown minimised tax cuts in favour of a massive boost to public spending on health and education.

Having been "prudent for a purpose", the Chancellor hailed his fourth budget statement as being one "for a stronger, fairer Britain".

Its centrepiece was an immediate £2 billion sterling (€3.2 billion) cash boost for the National Health Service (NHS), and a commitment to increase spending on the NHS over the next four years by 6.1 per cent over and above the rate of inflation.

The Chancellor's £4 billion overall spending injection also included £1 billion for education, an additional £285 million to fight crime, and £280 million in a "ring-fenced" fund for transport.

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In addition, Mr Brown promised a fresh package of measures which would leave one million pensioners better off than when Labour took office in 1997.

Taking full advantage of a £17 billion surplus, the Chancellor delighted the Labour benches with a package promising to repay national debt while increasing spending on public services, extending the `new deal' project to the older long-term unemployed and targeting fresh help at poorer families.

In a magisterial performance, Mr Brown linked welfare-to-work policies with help for small business and those investing in new technology, a boost for savers and reward for enterprise with increases in the Working Families' Tax Credit, together with tax breaks for charities and the government's commitment to eliminate child poverty in a crusading call for a "strong civic society and patriotism".

Proclaiming unemployment at its lowest for 20 years and social security spending running at £2 billion less than when Labour came to power, the Chancellor declared: "This Budget is built on the realities of the new economy - that we will meet and master a new tide of unprecedented technological change by continuing to remove the old barriers to business investment and by continuing to expand employment opportunity for hard-working families."

The Chancellor's spending commitments on health and education laid to rest continuing speculation at Westminster that he and the Prime Minister, Mr Tony Blair, were at odds over government priorities.

And, having shaped his package with a clear eye on potentially alienated supporters in the Labour heartlands, Mr Brown cheered Labour MPs with his dismissal of Tory demands for tax cuts which would "benefit the few and not the many".

However, the Conservative leader, Mr William Hague, was swiftly on the attack, insisting that the tax burden was continuing to rise under Labour and that the Chancellor's "stealth taxes" already amounted to the equivalent of an 8p rise in the basic rate of tax.

In a punchy performance, Mr Hague said the Opposition "unambiguously welcomed" the new money announced for health and education. But he said the Opposition had "learned from experience not to heed budget soundbites" and would be examining the Chancellor's "Red Book" figures closely.

Charging the government with a tendency to double accounting and triple announcing, he told Mr Brown: "Nothing you said . . . will stop the £4.5 billion of new taxes set to hit people next month, which have already been announced in previous budgets."

Mr Hague said the Chancellor "curiously" omitted to mention that the balance of payments deficit was set to grow to £28.25 billion over the next three years, while the savings ratio was again down, contributing to the strength of the pound.

Mr Hague said changes in the tax rules last year governing personal service companies were driving abroad the very hightechnology companies he had pledged to support. And he said the Chancellor was penalising families by introducing the children's tax credit next year, one year after the abolition of the married couple's allowance.

To laughter on the Tory benches, Mr Hague likened the Chancellor to "a mugger who takes your money and wants you to thank him for giving you your bus fare home".