Brown's blueprint: fewer civil servants, more spending on health and security

Gordon Brown set the battleground for the general election yesterday by allocating extra money for the under-fives and for combating street crime and global terrorism, and axing 104,000 civil service jobs to divert resources to frontline services.

Gordon Brown set the battleground for the general election yesterday by allocating extra money for the under-fives and for combating street crime and global terrorism, and axing 104,000 civil service jobs to divert resources to frontline services.

Unveiling his three-year spending blueprint, the Chancellor challenged the Tories to match his extra spending in areas outside health and education, where they have promised to outspend Labour. The Tories have promised to freeze other budgets, and last night Labour claimed this would mean cutting £2.6bn from the Government's defence plans, £4.8bn from local government, £1.8bn from transport, £794,000 from international development and £520,000 from trade and industry.

Labour will fight the election, expected next May, by contrasting the "investment" under the programme published yesterday and the "cuts" planned by the Tories. Mr Brown said his own investments were "possible only because I have rejected the proposals of those who would cut spending on important services". He taunted the Tories over demands by some of their frontbench spokesman for more money in their areas when the party is committed to a freeze.

The most controversial element of the Chancellor's package was his sweeping job cuts throughout Whitehall. He more than doubled the 40,000 target he announced in his March Budget to 84,150, plus 20,000 in the devolved administrations in Scotland and Wales and the Northern Ireland Office. A further 20,000 civil servants will be relocated from London to save money.

The actual job losses will be smaller. Under the drive to switch resources to the front line, 13,500 of the 84,150 posts in England will be reallocated, giving a net loss of 70,600. Mr Brown said the cuts in "back office" jobs would save £21.5bn a year, helping to fund "the longest sustained investment in public services for a generation".

The shake-out follows a review headed by Sir Peter Gershon, the Government's former efficiency adviser. It brought immediate condemnation by trade unions. The Public and Commercial Services Union (PCS) said that cutbacks on an such a large scale would cause "carnage" and warned that it could not rule out industrial action.

Brendan Barber, the TUC general secretary, condemned the "sudden escalation and arbitrary manner" of the way in which the job cuts were announced. "These cuts cannot be made without hitting the quality of public services. They will deal civil service morale a bitter blow just as staff support is needed for change," he said.

Mr Brown said a further £30bn would be raised from asset sales, which could involve sell-offs of land owned by local authorities and the Ministry of Defence and the sale and leasing back of government-owned buildings such as Somerset House in the Strand, London.

The Chancellor's room for manoeuvre had been limited in a tight spending round in which he did not want to raise the prospect of further tax rises after the general election. He had already allocated £37.5bn of the Government's extra £61.2bn spending to health and education. Of the remaining £23.7bn at his disposal, he managed to find more cash for crime and anti-social behaviour, through the appointment of 20,000 community support officers to back up the police; an above-average 4.5 per cent a year rise in transport spending; 5.8 per cent for science; a £1.3bn boost for housing; a significant 9.2 per cent increase in the overseas aid budget; and a 10 per cent rise in spending on national security and anti-terrorism measures.

Mr Brown's main pre-election sweetener came on services for young children. He promised a pilot scheme for nurseries for two year-olds in 500 areas and raised the number of children's centres to be opened by 2008 from 1,700 to 2,500. They will eventually be provided in every community.

The MoD budget will grow by an average of 1.4 per cent on top of inflation over the next three years - a smaller rise than enjoyed by the "winners" when the Government's spending - which will rise from £487.6bn this year to £580bn in 2007-08 - is shared out. But Mr Brown insisted he had ensured "the longest sustained real-terms increase in defence spending for 20 years".

Other departments with a small real-terms budget rise included the Foreign Office (1.4 per cent) and Environment, Food and Rural Affairs (1.2 per cent). Two had a real-terms cut: Work and Pensions (down 2.8 per cent) and the Northern Ireland Office (down 2.7 per cent).

Oliver Letwin, the shadow Chancellor, described the review as "a manifesto for fat government and fake savings". He said: "What this review really means is more bureaucracy, more targets, more initiatives, more task forces, more centralisation, more regulation, more borrowing and more taxes."

Vincent Cable, the Liberal Democrats' Treasury spokesman, said the "slash and burn" approach to cutting civil service jobs could be highly damaging to public services. He added: "Gordon Brown has been Chancellor for the last seven years. If there is so much waste, why wasn't it tackled earlier?"

THE MAIN POINTS

* More than 100,000 civil service job losses: 84,150 in England and 20,000 in Wales, Scotland and Northern Ireland

* Health spending to reach European average with 7.1% average annual rise over three years

* Free nursery education for two-year-olds in 500 areas of the country. Education spending up from £63bn to £77bn

* International development budget up from £3.8bn to £5.3bn.

* Defence spending up from £29bn to £33bn

* Spending to fight terrorism doubles to £2.1bn