/ 6 December 2006

UK’s Brown pledges schools boost as top job looms

Britain’s prime minister-in-waiting Gordon Brown pledged on Wednesday to use faster economic growth to fund a £36-billion rise in education spending to help the nation compete with India and China.

Throwing down the gauntlet to opposition Conservative leader David Cameron, Finance Minister Brown set out the priorities for his likely premiership: reducing inequality, making Britain more competitive and tackling global warming rather than cutting tax.

”I propose to increase the cash we give to every school and every head teacher,” said Brown. ”Money I could use for tax cuts, but I say invest in education first.”

Dogged by the Iraq war and a series of financial scandals, Prime Minister Tony Blair has said he will step down within the year and Brown is the overwhelming favourite to replace him, perhaps as soon as May.

Raising his growth forecast for this year to 2,75%, Brown also upped fuel duty after years of freezes and doubled tax on airline flights to £10 on short hops and £40 on long-haul destinations.

But his 10th pre-budget report fell short of environmental campaigners’ demands for a big rise in green taxes following a government-sponsored report that painted a catastrophic future unless action is taken to combat climate change.

”The chancellor’s response has been feeble. Key green initiatives have been ignored and those that he has introduced are inadequate,” said Tony Juniper, director of Friends of the Earth.

‘Sound and sustainable basis’

Brown left his growth forecast for next year at 2,75% to 3,25% but unexpectedly cut the outlook for 2008. He revised up his borrowing forecasts slightly and said it would take longer for the current budget balance to move out of the red.

”The country’s public finances are on a sound and sustainable basis for the long term and stronger than other countries,” he told a packed House of Commons.

A big rise in immigrants from Eastern Europe helped Brown to raise his estimate for the economy’s potential growth rate, giving more leeway to put cash into areas such as education in the run-up to the next election, expected in 2009.

Brown said that thanks to an expanding labour force, Britain’s economy could sustain non-inflationary growth of 2,75% from 2007, up from 2,5% previously.

”Higher growth in the long-term effectively is good news for public finances. It should ensure a slightly higher stream of receipts.”

But Brown maintained the overall spending limits post-2008 that envisage expenditure growth of about 2% each year after 2008, well below predicted economic growth.

That effectively boxes the Conservatives in so that they would find it hard to come up with money for tax cuts without making unpopular spending cuts. — Reuters