Brown puts back spending shake-up

Mr Brown is planning for the transition of power

Gordon Brown is to postpone next year's planned review of public spending.

It will be moved to 2007 to coincide with a longer, 10 year plan that completely reassesses how the government spends taxpayers' money.

The move will tighten Mr Brown's grip on the public finances, turning summer 2007 into what could be a crucial transition period for the government.

The two spending reviews are likely to set the tone of Labour policy for the next general election and beyond.

Boosting skills

Tony Blair is likely to insist the decision to delay the planned reallocation of cash to government departments to 2007 will not affect his plans to reform the public services - or to serve a full third term.

The move was agreed after consultation between Mr Brown and Mr Blair, who have both insisted they want a smooth and orderly transition of power when Mr Blair steps down.

But it will set the direction of Labour policy under what is widely expected to be Mr Brown's leadership.

Mr Brown said next year's planned spending reallocations, which will cover the years 2008/09, 2009/10 and 2010/11, will be informed by decisions for the longer, 10 year plan.

The 10 year plan, which coincides with tenth anniversary of Labour coming to power, will look at all areas the government needs to spend money on - from boosting skills to putting money into transport.

Mr Brown told the Treasury Select Committee: "To ensure we are equipped to meet the challenges of the next 10 years, we are now instituting a second Comprehensive Spending Review to consider from a zero base the next stage of meeting our public service objectives.

"With this long termist approach, which rejects the short termism of the past, a report will be made on these public spending challenges in 2006, the government will report on the next three year spending review covering 2008 to 2011 in 2007, we will hold departmental allocations to the agreed figures already announced for 2007-8."