Brown commits Britain to major increase in public spending

BRITAIN: The British government has committed itself to a massive increase in public spending, refusing to scale back record…

BRITAIN: The British government has committed itself to a massive increase in public spending, refusing to scale back record investment plans despite weakness in the economy and turmoil in stock markets.

The Chancellor of the Exchequer, Mr Gordon Brown, told the House of Commons yesterday that public spending would total £511 billion in three years' time - £93 billion up on this year and more than the entire national income of Spain.

Mr Brown said the money would not be threatened, no matter what happened to the economy, because "a margin for prudence even under the most cautious assumptions" had been built into his plan.

Government expenditure will increase on average in real terms by 4.3 per cent in each of the next three years on everything from schools to roads, marking the biggest sustained public spending in a generation.


"In this period in global financial markets of greater instability, our task and our determination, as always, is to remain vigilant, committed to sustaining monetary and fiscal stability, with the strength to take the right long-term decisions," said Mr Brown .

A skilled parliamentary operator, Mr Brown sought to satisfy all comers, announcing hefty funding increases for education, transport, defence, crime-fighting, agriculture and international aid, as well as a house-building programme.

But that is only one problem solved.

Having tied its electoral fortunes to improving schools and hospitals, the government must deliver after getting off to a slow start in winning credibility on spending restraint.

Conservative leader Mr Iain Duncan Smith picked on that theme.

"Year in year out we've seen problems in each of these services where the quality of treatment has got worse," he said.

"There is no correlation between spending more and getting better services if the system itself is not reformed."

To that end, Mr Brown wielded both carrot and stick: failing local authorities could be taken over by successful ones, managers of poor performing social services could be sacked, and prisons could also have new managers drafted in.

"But in every case at the same time we will also incentivise and reward success with high-performing institutions receiving new resources and greater autonomy, new freedoms and more flexibility," Mr Brown said, in a departure from Labour's traditional unquestioning backing for public services.

He said that in his next budget, the state-run National Health Service would get the lion's share of the extra money.

Education, another of Prime Minister Tony Blair's key priorities, is now top of the class, with spending rising from £45 billion this year to £58 billion in 2005/2006.

Mr Brown also announced a major package to boost house-building in parts of Britain, having woken up to the fact that low-earning nurses, teachers and police cannot afford sky-high property prices in London and the southeast.

Recognising Britain's military commitments since the September 11th attacks on the United States, the defence budget also swelled.

It was "the largest sustained real terms increase in defence spending in 20 years", Mr Brown said.

Veteran Westminster watchers could not remember a similar statement from a centre-left Labour government. - (Reuters)