Brown commits to NHS spending boost

Alongside a £1bn increase in NHS funding next year, Mr Brown said during his pre-Budget report that a "significantly higher share of national income" would have to be spent on the NHS - seen by some commentators as a signal of future tax rises.

The chancellor, who also delivered an upbeat analysis of Britain's economy despite a downgraded growth forecast, expressed hope that an "enduring" political consensus could be forged on the long term future for the NHS.

But the reaction of opposition parties immediately made that appear doomed.

Shadow chancellor Michael Howard accused Mr Brown of again making "phoney" promises on improving public services, helping business and encouraging enterprise.

Click here to see the key pre-Budget announcements at-a-glance

Now the whole country had joined passengers, patients and parents on the waiting list, "waiting in vain for this government to deliver on its promises", said Mr Howard.

Liberal Democrat health spokesman Evan Harris saying: "Honest politicians own up to the cost of a decent health service, and the tax implications, before an election and not six months afterwards."

The Lib Dems also attacked what they said was an over-complex tax system, and accused the chancellor of ignoring the troubles of UK manufacturing.

BBC political editor Andrew Marr said taxes would rise "pretty substantially" if Mr Brown meant his comments on the NHS - it was a big gamble for a chancellor with a reputation for prudence.

Away from the NHS, Mr Brown made more optimistic than expected forecasts for the British economy, predicting growth of 2.25% this year, compared with his estimate earlier this year of 2.25% to 2.75%.

For next year, he forecast growth at between 2% and 2.5% and for 2003 at between 2.75% and 3.25%.

'Stronger Britain'

Opening his statement to MPs in the Commons, the chancellor said his aim was a "stronger and fairer Britain", even in an uncertain world where the final impact of 11 September was still unknown.

"In the period ahead there are, of course, real risks for both Britain and the world," he said.

"But it is because of the decisive action taken on monetary and fiscal policy that I remain cautiously optimistic about the prospects for the British economy."

He said the government had now reduced national debt to its lowest level since World War I, which meant borrowing could be raised to pay for public spending plans while remaining within its own tight fiscal rules.

Pensioners gain

Elsewhere in the chancellor's statement, the biggest gainers were pensioners - with the announcement of a new tax credit for modest savers, extension of the winter allowance and new minimum annual increases to the basic pension.

There was some cheer for business with reform of capital gains tax, an extension of the 10p corporation tax band and confirmation that research and development tax credits were being extended to large firms.

Mr Brown announced the abolition of football pools tax and boosted property markets in deprived areas with the scrapping of stamp duty for properties worth less than £150,000.

The chancellor disclosed that the extra cost to the UK of the war on terrorism was £150m so far, with £120m earmarked for military equipment, plus £20m for the intelligence services and £30m for various police forces.

NHS commitment

But the most attention-grabbing section of Mr Brown's statement came when he committed the government to creating a "world class health service that meets the needs of the people of Britain and puts patients first".

The chancellor pointed to an interim report - being published simultaneously - by former NatWest Bank chief executive Derek Wanless on the future funding of the NHS.

The conclusion, MPs heard, was that public spending was the most efficient way of funding the NHS.

But with the report also highlighting a "decisive difference" in the level of resources devoted to health by Britain's European neighbours, Mr Brown insisted the NHS would need "significantly" more public money.