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Last Updated: Monday, 12 July, 2004, 16:13 GMT 17:13 UK
Brown spending review: Full text

Here is the full text of Chancellor Gordon Brown's spending review 2004.

In the Budget I reported that, with inflation low, Britain is now enjoying the longest period of sustained economic growth on record.

Mr Speaker, in this Spending Review I can report that, with debt low, Britain can continue with historically high and rising investments in hospitals, schools and our public services - so combining the longest period of sustained economic growth for a generation with the longest sustained investment in public services for a generation.

Investment made possible because since 1997: our monetary policy has met our inflation target - now 2 per cent - with stability achieved; our fiscal policy has reduced the national debt from 44 per cent of national income to 34 per cent - our national debt today the lowest of our main competitors; our discipline has reduced debt interest payments - which consumed, in 1997, 3.6 per cent of national income - and now cost just 2 per cent, the lowest since 1915; unemployment which, in 1997, cost 1 per cent of national income, now costs a third of that, just 0.3 per cent - the lowest of our major European competitors; and it is because unemployment and debt interest payments now consume just 2.3 per cent of national income - half the 4.6 per cent of national income of 1997 - releasing £26 billion for investment - that we are today able to allocate substantial extra resources to our front line public services.

A decade ago, Mr Speaker, three quarters of all new spending went to debt and social security costs and just a quarter of new spending could go to health, education, transport, defence, and law and order.

In this spending round three quarters of all new spending is going to these vital front line public services.

So let me tell the House the detailed figures.

Holding strictly each year to the discipline of the total spending envelope, and fully affordable as we meet and will continue to meet all our fiscal rules, departmental spending which is £279.3 billion this year will rise to £301.9 billion next year, to £321.4 billion in 2006-07, and £340.5 billion in 2007-08.

So while overall spending in 2006-08 grows by 2.8 per cent in real terms, low debt and low unemployment mean that departmental spending - spending on front line services - will enjoy a real terms rise averaging over the three years of this Spending Review 4.2 per cent.

And by insisting on further reform we are able to do even more to get more money to the front line and raise public investment substantially in all our priority areas.

It is to ensure new resources yield the best results that we have already introduced independent audit and inspection, strict three year budgets, the devolution of funding direct to the front line and more flexibility and choice in delivery.

And now, following the work the Prime Minister and I instructed more than a year ago under Sir Peter Gershon - whom I thank - and after a rigorous review of procurement, back office services, and work practices, Departments are today publishing new plans to implement efficiency agreements with the Treasury.

Alongside Sir Peter Gershon, I want to put on record my appreciation of the work of our civil service and their commitment to the ethic of public service. But it is precisely because the public sector has invested £6 billions in new technology, modernising our ability to provide back office and transactional services, that I can announce, with the detailed plans Departments are publishing for the years to 2008, a gross reduction in civil service posts of 84,150 - to release resources from administration to invest in the front line.

And with, in addition, the Devolved Administrations in Scotland and Wales and the Northern Ireland Office also having announced that they are engaged in Spending Review efficiency and evaluation exercises as ambitious as those in England --- with reductions also in back office and related areas; and with the 2.5 per cent annual efficiency savings applied to the settlement for local government in England, this allows for - in addition to the 84,150 posts - a reduction of a further 20,000.

Following further detailed work, the merged Inland Revenue and Customs and Excise are announcing today that the gross reduction in their posts which was provisionally set at 14,000 is now set at 16,000.

And because of the scale of the overall reductions I can tell the House that in each area of the country public servants asked to change jobs will be offered support with retraining and we are ready to work with the workforce and their unions to provide that help.

Today I am also publishing department-by-department plans to relocate further civil service jobs out of the south east: including 5,000 staff posts relocated from the Treasury's Departments, 4,000 from the Department for Work and Pensions, 3,900 from Defence and just under 1,000 each from the Departments of Health, Education and Industry.

And I can already announce the first sites for location including 600 jobs from the Office of National Statistics moved to South Wales or Bristol, 250 posts from the Department of Rural Affairs to Yorkshire and just under 100 from the Department of International Development to East Kilbride. And I know that for the remainder of posts being relocated, towns and cities across the country will want to make their case.

I can also announce that for all Departments making future job decisions our policy will be a presumption in favour of location in the regions. And I can tell the House that after Departments make their announcements today the numbers of posts relocated to the regions will be a total of 20,030 civil service jobs.

I turn to further reforms in work practices. 80 per cent of sickness absences in the civil service are self certified, not subject to formal medical certification - and because the current arrangements for sickness leave across the civil service and public services are open to abuse, I am also today publishing plans we propose to implement to curtail uncertified absences. The Secretary of State for Work will report by the autumn on future management of public sector sickness absence - and on measures to help those signed off for the long term back into attendance at work.

Mr Speaker, I can now announce that by 2008 there will be real terms fall in administration costs in the Department for Work and Pensions by 9 per cent, the Department of Trade and Industry by 15 per cent, Department of Health administration by 18 per cent; that Sir Peter Gershon has laid down plans that will deliver £6 billion in procurement savings by 2008; and that total annual efficiency savings that now exceed 2.5 per cent a year will boost effective front line service delivery by a figure higher than the original Gershon plan of, by 2008, £20 billion. And I can announce that the savings available for front line services now amount to £21.5 billion a year. And we have also accepted Sir Peter Gershon's recommendation that to go beyond this figure would put the delivery of front line services at risk.

As a result of this relocation and rationalisation I can now make a further reform. I will also today set a new objective for the disposal of Government assets for the period from now to 2010. And I have asked Sir Michael Lyons to work with each Department to rationalise their use of property and land and, where necessary, arrange sales and disposals. I can tell the House that the objective I am setting is an overall total of £30 billions of asset sales.

So it is because of the three major drivers of change, the three sources of new resources I have highlighted - a cut in debt, a cut in unemployment and now a cut in administrative posts - the three drivers of change releasing substantial new money for front line services - that we can now take the next steps in a decade of rising investment for Britain and fund our priorities, the country's priorities - firstly to meet the security and defence needs of the nation; secondly to equip our economy technologically and educationally to meet the global challenge ahead; and thirdly to renew our public services and the public realm in this generation.

And in each of these services we have agreed, in return for investment, further reform to achieve better results and a better service to the public.

Mr Speaker, our first duty is the defence and protection of all citizens of our country.

Since the tragic events of September 11th, the needs of national security at home and action against terrorism abroad have rightly assumed a new importance.

Recent events demand we strengthen not just our national security, our capacity to prevent terrorist incidents, but our national resilience, our capacity to respond.

And to bridge the security gap identified by the Prime Minister and the Government after September 11th, we have, with the Home Secretary leading, reviewed our security needs in depth and, for the first time, our Spending Review brings together all security costs and sets out the responsibilities our national security budgets must discharge.

Before September 11th, spending on security at home was £950 million a year. Having agreed a set of reforms that modernise our border security, our counter terrorism capabilities, our radio communication systems, our arrangements in respect of nuclear and chemical decontamination, and added 1,000 staff to our intelligence services, overall security spending will rise from £950 million in 2001 and £1.5 billion this year to reach, by 2007-08, £2.1 billion - a 10 per cent annual average real terms rise.

And I can also inform the House that in place of the old system of civil defence, we are establishing and funding a new framework of civil protection with a doubling of current provision for local authority emergency planning.

In the last Spending Review the Ministry of Defence and our Armed Forces - upon whom the defence of our country depends and to whom we owe, especially in this recent period, a debt of gratitude - was awarded the largest spending increase for twenty years.

In this Spending Review I have matched that increase. Indeed in this Spending Review the increase is higher.

To enable the Ministry of Defence also to modernise for the long term - and to increase its efficiency and to make the changes that are now necessary to continue to adapt technologically and strategically to the threats posed by international terrorism, the proliferation of weapons of mass destruction and the rapidly changing global environment - I propose to increase the Defence Modernisation Fund so that over the period to 2008 it will be worth £1 billion.

The Secretary for Defence will set out the detailed allocations of the full budget for our Armed Forces which will rise from £29.7 billion this year to £33.4 billion by 2007-08 - £3.7 billion a year higher than now. An annual average real terms increase of 1.4 per cent for defence. In addition, I will continue to meet the additional costs of military operations in full from the Reserve - and to meet the costs of Iraq and Afghanistan we have provided, to date, an additional £4.4 billion.

To meet other pressures which may arise - aside from operations - in the future, we will provide the Ministry of Defence with guaranteed access to up to £300 million in 2007-08.

Taken together, these rises provide for a faster rate of real terms growth in this spending round than the last and ensures the longest sustained real terms increase in defence spending for 20 years.

Since September 11th, international diplomacy has also assumed an even greater importance. And because of this and the security risk faced by our Foreign Office and consular staff in overseas embassies, the Foreign Secretary's budget will rise from £1.5 billion this year to £1.6 billion by 2007-08 - a 1.4 per cent annual average real terms rise. I can also announce that, despite all our other pressures, we will not cut the British Council's budget but increase it from £173 million this year to £197 million by 2007-08. And the budget for the BBC World Service - whose 150 million a week audience is now its largest ever - will not be cut but will be increased from £225 million this year to - by 2007-08 - £252 million, £27 million more.

2005 is the year where, as the Prime Minister has said, the needs of Africa will be the focus of the UK's G7 Presidency as a Presidency for Development. And as we play our part in addressing global injustices, our country's obligation is not to cut overseas aid but to increase it.

In 1997 Africa received just £450 million of UK bilateral aid. By 2007-08 Africa will receive one thousand two hundred and fifty million to fund health, education and anti poverty programmes. To promote treatments and cures for HIV/AIDS across the whole developing world we will allocate in each of the next three years £450 million, £500 million and £550 million - £1.5 billion in total to tackle this scourge.

So to meet all our international obligations - including recommendations from the Prime Minister's Africa Commission - the Secretary of State for International Development is announcing that we will increase his budget for aid from £3.8 billion this year to £5.3 billion by 2008 - an average annual real terms increase of 9.2 per cent.

Total UK aid which fell in real terms by 23 per cent in the eighties and early nineties will - by 2008 - have risen since 1997 by 140 per cent in real terms to nearly £6.5 billion. For every pound of UK aid spent in 1997, we will be spending by 2008 three pounds¿ along with debt relief, raising UK Official Development Assistance from the 0.26 per cent of national income we inherited to 0.39 per cent next year, 0.42 per cent in 2006-07, to 0.47 per cent in 2007-08.

We wish to maintain those rates of growth in the overseas aid ratio which on this timetable would rise beyond 0.5 per cent after 2008 and reach 0.7 per cent by 2013. And I can also state that if Britain's plan - the new Finance Facility - is agreed internationally, the objective of 0.7 per cent could be achieved earlier, by 2008-09.

But Mr Speaker, today, the humanitarian tragedy in Sudan is deeper than at the time of Live Aid - which started in Sudan twenty years ago - and we must act now. The International Development Secretary is today announcing that he is setting aside now - to be made available immediately a peace agreement is signed - emergency and other relief to address Sudan's crisis - a total over the next three years of at least £150 million more.

And I thank the churches, faith groups and NGOs for their representations - to date, and to the Treasury, over 15,000 representations for this Spending Review - that we raise spending on aid and not cut it.

Mr Speaker, our determination to protect and defend the people of Britain is matched by our determination to equip Britain for the global economy.

The future of the British economy depends on the future of British science.

The ten year framework for science and innovation that the Secretaries of State for Industry and Education and I are publishing today is designed to make Britain the best and most attractive location for science and innovation in the world.

And after rigorous selection of priorities within the industry budget, after a reduction of 1010 DTI headquarters posts and further reductions in its agencies, we are able to announce substantial new funding to support science teaching in our schools, improve salaries and stipends for graduate scientists and engineers, and support technology transfer and university-business link ups.

Government funding for science will rise from £3.9 billion this year to £5 billion by 2008: one billion extra for science by 2008 - a 5.8 per cent average annual real terms rise¿ representing a doubling of cash spending on science since 1997.

And as a result of our investment, the Wellcome Trust is today announcing a partnership with the UK Government to invest in UK research. They will match our commitment, investing over five years at least £1.5 billion.

With these two new investments - an extra £2.5 billion being invested for British science - and now the largest sustained increase in science spending for a generation, our objective is to raise overall spending in Britain on private and public Research and Development from 1.9 per cent of national income - amongst the lowest of our competitors - to, by 2014, 2.5 per cent of GDP - among the best of our competitors, the best guarantee of a successful economic future for our country.

I can tell the House that in preparing our Spending Review I have consulted not just with the scientific community but with the CBI, business organisations, trade unions and regional organisations in every part of the UK, among whom there is a remarkable agreement, a shared consensus and determination, that it is in the national interest not to cut science, transport, housing or infrastructure investment but to press ahead with sustained long term investment.

To finance the detailed reforms in the rail industry and our road programme the transport budget will rise faster than originally set out in the Ten Year Transport Plan, from £10.4 billion this year to £12.8 billion by 2007-08 - an average real terms increase of 4.5 per cent a year. Total cash spend by the Department over the Spending Review will be £2.9 billion more than set out in the Ten Year Plan. By 2008, transport spending - even after inflation - will be 60 per cent higher than in 1997.

Full details of the rail reforms - and the long term transport strategy - will be announced in statements by the Transport Secretary later this month.

For decades our country has also seriously neglected investment in housing - in building and improvement. Forty years ago we built 400,000 homes a year, since the early 1990s we have built only 200,000 a year. So I reject proposals that would freeze or cut investment in housing.

Following consultation over the Barker Report and the announcement of 200,000 extra homes for the South East, the Deputy Prime Minister will tomorrow announce the next stage in increasing the supply and affordability of housing.

For England, the housing budget will rise from £5.9 billion this year to, by 2007-08, £7.2 billion, a 4.1 per cent average annual real terms rise. It means that since 1997 cash investment in housing has more than doubled.

The Deputy Prime Minister will give details of a new £150 million fund to finance infrastructure around new housing developments, new money to speed up planning, and - urgently needed in our country - a 50 per cent increase in social housing by 2008 and a trebling of investment in renewal and renovation in low demand areas in the North and the Midlands.

Investment not just in science, transport and housing but in enterprise, skills and economic development hold the key to modern manufacturing strength and balanced economic growth in every region.

And to meet new and additional commitments to improve small business services, to meet adult skills needs, to support inward investment and better business-university links, and to promote enterprise in disadvantaged areas including supporting the Northern Way, and to further devolve decision-making out of Whitehall, funding will rise from £1.8 billion this year to - by 2007-08 - two and a quarter billion a year shared between our nine Regional Development Agencies.

To meet our environmental improvement targets for 2010 - a 20 per cent cut in carbon dioxide emissions, 10 per cent of electricity from renewable sources and a reduced reliance on landfill - the Spending Review will provide additional funding for low carbon technologies; more support through recycling landfill tax revenues for businesses that are energy efficient and minimise waste; and - with additional PFI credits worth £155 million a year by 2008 - support for better waste management by local councils.

And to also take forward the Haskins Report on the rural economy, the budget of the Secretary of State for Environment, Food and Rural Affairs will rise from £3.2 billion this year to £3.5 billion in 2007-08 - an annual average real terms rise of 1.2 per cent a year.

To tackle one of the biggest problems of poverty - the problem many elderly people face heating their homes - we have extended the Winter Fuel Allowance now worth £300 for the over 70s, introduced the Pension Credit now paid to 3 million pensioners and improved the energy efficiency of 600,000 homes over the last three years.

A further £140 million will now be set aside to enable pensioners and poor families to insulate and heat their homes. Our objective is that by 2010 we eliminate fuel poverty amongst the elderly and by 2016 we eliminate fuel poverty in its entirety.

I turn to public services and new Public Service Agreements which we are publishing today for the period to 2008. They set out the performance targets and reforms expected of our public services. Since 1998 we have offered every Government Department three year budgets and three year funding. Today the Deputy Prime Minister will answer a persistent complaint of local authorities. For the first time, they too will have three year budgets allowing local authorities to plan ahead. Public Service Agreements will also offer high performing local authorities greater freedom and flexibility.

In the last four years of the last Government, local authorities' grants were cut by 7 per cent. In the most recent four years of this Government they have been raised by 23 per cent and later the Deputy Prime Minister will set out the full details of the real terms rise in the annual grant to local authorities at an average of 2.7 per cent a year - substantially above the average settlements received by local authorities in all the last three decades.

I can also announce the settlements for the Devolved Administrations and Northern Ireland.

The last spending round awarded the Welsh Assembly an additional £492 million to ensure funding of Objective One and European Social Fund allocations for the economic regeneration of Wales. I can now announce that over and above the Barnet additions, Wales will receive even more for the coming three years, in total an additional £555 million. The Welsh Assembly and the Scottish Executive will publish full details of their funds.

Overall for Wales - by 2007-08 - an extra £2.5 billions - raising the Welsh budget from £11.1 billion to £13.6 billion. With Objective One funding an annual average real terms rise of over 4 per cent.

And for Scotland - by 2007-08 - a total of £4.2 billion more raising the Scottish budget from £21.3 billion to £25.5 billion. An annual average real terms rise of 3.5 per cent.

With additional funding for the EU Peace Programme, Northern Ireland will receive by 2007-08 an additional £1.2 billion a year. An annual average real terms rise of 3 per cent.

Mr Speaker, in the Budget in 2001 we made a decision to open national museums free to the public. Since then museums that have abolished charges have seen their attendances rise by 70 per cent - from 7.7 million a year to 13.3 million.

Today, after discussions led by the Chief Secretary, I can announce an extension of free access - to include all university museums.

And with increased funding for arts organisations, local creative arts partnerships and to revitalise regional museums - and with increased funds nationally and regionally for sports and sports facilities - the budget of the Secretary for Culture Media And Sports will rise from £1.4 billion this year to over £1.6 billion by 2007-08, a real terms average annual rise of 2.3 per cent. And looking ahead, and to ensure a far better coordination of national sports effort and resources, Pat Carter will report on the proposal to involve private and public sectors in a new National Sports Foundation.

Today, I am announcing funding for social services, especially to improve community care for the elderly. The social services budget will increase - by 2007-8 - by just under £2 billion - from £10.6 billion this year to £12.5 billion by 2007-08. A real terms average annual rise of 2.7 per cent a year.

And as a result of the Spending Review the Social Services Secretary is also extending, in every area of the country, the provision of care alarm systems, so that elderly and disabled people can stay in their own homes and yet have access to the support they need. An additional 160,000 of the very elderly will be able to install these care alarm systems. In total we expect that, by 2008, 1.5 million pensioners will benefit. And I can confirm that, as announced in the Budget, funds for the NHS will increase from £69 billion this year to £92 billion by 2007-08 - an annual average real terms rise of 7.1 per cent allocated to health that will go to and be spent through the NHS and by the NHS on patients treated free at the point of need and not to subsidise private medicine.

Mr Speaker, for decades this country neglected investment not only in hospitals and social services and in schools but investment in our criminal justice system, in policing, in tackling anti social behaviour and in improving the quality of life in our neighbourhoods.

So the final obligation of this Spending Review is to make the investments today to create, in our country, safer, stronger communities today and tomorrow.

Since 1997 there has been a 25 per cent reduction in crime, a 40 per cent reduction in domestic burglary and for persistent young offenders, we have cut the average time from arrest to sentence from 142 to 66 days, and in contrast to a cut in police numbers of 1,100¿under the last Conservative Home Secretary, there has been, under this Government, a rise of 11,000 policemen and women.

And today this Government will not cut the budget for law and order; we will increase it substantially: first, to tackle crime; second, to prevent crime; and thirdly, to reduce the fear of crime.

First, there will be new resources to tackle crime to fund the Home Secretary's decisions to create a new National Offenders Management Service bringing together prison and probation; a reformed charging and sentencing system; and a new Serious Organised Crime Agency.

For those treated, drugs rehabilitation has succeeded in cutting re-offending by 50 per cent - and so the Home and Health Secretaries will also increase the numbers in drug rehabilitation from just 100,000 six years ago to 200,000 a year by 2008.

Just as our society must make it clear that no crime is acceptable and no criminal act excused, so our society must also acknowledge that in past decades our society has not done enough to tackle the sources of crime - particularly among young people. And the Home Secretary and I are agreed that we must provide new resources and that all Government Departments play their part in an alliance with local, voluntary and community organisations to prevent crime.

The Deputy Prime Minister will announce details tomorrow of the Safer Stronger Communities Fund to finance community-based solutions that, on the one hand, tackle anti social behaviour and, on the other, build and develop the facilities and public spaces that are the bedrock of our local communities.

It is right to expect responsibility from young people and every community knows that the answer to young people hanging around street corners is to provide other places for them to go. Later this year, starting from three year allocations in this spending round, the Education Secretary will publish a Green Paper on the reform of services for young people in our country. And next week the Home Secretary will announce plans to extend the support provided to troubled teenagers at risk of re-offending.

The Neighbourhood Renewal Fund - under the Office of the Deputy Prime Minister - is designed to improve the safety and quality of previously run down neighbourhoods, to tackle the causes of crime, and to address deep seated inequalities in our country.

Results now show that following the agreed four year programme of sustained investment, Neighbourhood Renewal Areas are seeing faster improvements in job creation and in educational attainment and greater reductions in property crime than other parts of the country.

So the Deputy Prime Minister will not abolish the Neighbourhood Renewal Fund but extend it, with a budget each year of £525 million until 2008.

With the Home Secretary leading, our increased support for the work of community, charitable and voluntary organisations will, in this spending round, also be focused on building stronger, more stable local communities and on engaging, most of all, the young - with money for initiatives to support volunteering and voluntary and community organisations and to encourage a national framework for mentoring; and considering the recommendations of the Russell Commission on youth volunteering and proposals for bursaries to stimulate gap year engagement by young people. And a £30 million pound a year fund is being established by the Home Secretary to support the victims of crime, not least the crime of domestic violence.

But there is one further investment that the Home Secretary and I believe is essential for stronger safer communities.

There is a clear consensus among the people of this country that to modernise the way we tackle crime and the fear of crime we need, on our streets, not just policemen and women but Community Support Officers at the heart of each neighbourhood who can also patrol our streets, build links with local people and prevent anti social behaviour.

So just as reform in education means we are strengthening the effectiveness of teachers by matching them with classroom assistants, and in the NHS the effectiveness of doctors by matching them with nurse practitioners - a country proud of our public servants, investing in our public services - so too the Home Secretary proposes that reform in the criminal justice means strengthening the effectiveness of police by matching our record number of police achieved by the Home Secretary - now 138,000 in total - with a new group of community based officers.

Scotland and Northern Ireland will make their own announcements. Today the Home Secretary is announcing that he will fund Community Support Officers and Neighbourhood Wardens - numbers that will rise year on year to 2008.

So to pay for these and his other responsibilities, the budget of the Home Secretary will rise from £12.7 billion this year to £14.9 billion by 2007-08 - an increase of nearly £2.2 billion a year, an annual real terms rise of 2.7 per cent. But with the Immigration and Nationality Department budget now flat, the rest of the Home Office budget will see an annual real terms increase of 4 per cent.

So next week the Home Secretary will announce the detail, with money now available to finance the numbers of police officers - now at a record level of 138,000 -- matched with finance available to increase neighbourhood policing including by providing 20,000 Community Support Officers by 2008.

Mr Speaker, the Budget set out the education settlement. Today I can confirm the rise in UK spending on education from £63 billion this year to £77 billion by 2007-08 - that has led to the Five Year Strategy announced last Thursday by the Prime Minister and the Secretary of State for Education.

So over the whole ten year period to 2008, in addition to policing, overall spending on education will have risen in real terms by an average of 5.2 per cent a year, transport by 5 per cent a year and health by 6.5 per cent a year - a decade of rising investment which is giving us: more staff - teachers and teaching assistants - in our classrooms than ever before; more doctors and nurses in our hospitals than ever before; and more police and support officers in our communities than ever before. But because of low unemployment, low debt and lower administrative costs we have been able, at the same time, to fund the best defence settlement for twenty years, and in this Spending Review a 4 per cent average annual real terms rise in housing, a 5.8 per cent annual real terms rise in science, and 10 per cent a year average real term rises in security spending. A Britain that can succeed because of stability, hard choices and rising investment.

But there is one additional reform that has the potential to transform opportunity for every child and be a force for renewal in every community, and on which the Government wishes to make further progress today.

While the nineteenth century was distinguished by the introduction of primary education for all and the twentieth century by the introduction of secondary education for all, so the early part the twenty first century should be marked by the introduction of pre-school provision for the under fives and childcare available to all.

Since 1997 we have introduced Sure Start for the under fives, nursery education for three and four year olds and 1 million new childcare places - and are meeting our target - set by the Prime Minister - to cut child poverty. And today I can announce that, having already achieved nursery education for every three and four year old - and having achieved this six months ahead of plans - we will pilot, in an innovative experiment in 500 areas of the country, the extension of nursery education to two year olds.

And because it is our basic belief that every child should have the opportunities today available only to some, we will extend the Bookstart scheme and - at 9 months, then at 18 months, then at age two, provide free books universally for every child. For almost 2 million children a year, their first introduction to learning -- an investment not just in every child but an investment in the future of our country.

I can inform the House that this Spending Review will ensure that by 2008 we create at least 120,000 more childcare places.

The challenge I set today goes beyond this spending round so we will publish in the Pre Budget Report a plan for the years from now to 2015 to make a reality of our vision of choice for parents and high quality provision for the under fives.

Today, as a first step, I can announce that in order to bring forward the building of new Children's Centres in our country I can now allocate from the Capital Modernisation Fund an extra £100 million.

So that from the 269 Children's Centres this year and the 1,700 proposed in the Budget, we can now move the number of Children's Centres we build and open between now and 2008 up to 2500 Children's Centres - as we advance further and faster towards our goal of a Children's Centre in every community and in every constituency in our country.

Investments only possible only because I have rejected the proposals of those who would cut spending on important services.

More investment not less
Now and into the next Parliament
Rebuilding our communities
There is such a thing as society
Our prudence is for a purpose
And I commend this statement to the House.

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