The results of the comprehensiv e review of Government spending are higher spending on health and education. More than half of the increase in central government spending is to be targeted at Labour's two priority areas.
The figures reveal that the cost of reducing the size of classes at the lower end of primary schools is likely to cost far more than the pre-election estimate. Extra funding will allow the class size pledge to be redeemed in 2001, 18 months earlier than promised.
According to David Blunkett, the Education and Employment Secretary, #163;620 million is to be provided to adapt or build an extra 2, 000 classrooms and employ an extra 6, 000 teachers.
However, Mr Blunkett appeared to suggest that limits on class size would not be extended to other age groups. In his speech in the Commons on Wednesday, he said the Government intended to use additional funding to employ more classroom assistants.
He said: "We intend to improve dramatically the adult to pupil ratio in primary classrooms to ensure children have the attention they need to succeed."
Overall, education spending will rise yearly by an average of 5 per cent. Spending will rise from #163;38.2 billion in 1998-99 to #163;47.8bn in 2002. The Treasury is predicting that by 2001-02, education will rise to 5 per cent of GDP - up from 4.8 per cent in the final year of the Conservative government.
Education authority spending is set to increase by #163;1.1bn in the next year and spending in the two subsequent years will grow by 6.1 per cent in cash terms, 3.5 per cent in real terms. The more generous treatment than in previous years of local authorities opens the way for teacher increases above the rate of inflation. The education standard spending assessment will increase in cash terms from #163;19.3 billion in 1998-99 to #163;23 billion in 2001-2002.
The Government is to pilot maintenance allowances to encourage teenagers to stay at school beyond the age of 16, but the Treasury has yet to produce details of plans to restrict child benefit payments to the age group.
Most of the extra spending on education is to be provided in the last two years of the three-year settlement. According to Stephen Byers, the standards minister, the Treasury has been persuaded that funding did not need to be dependent on achieving targets in literacy and numeracy. However, it would be possible, he said, to take action where it could be judged targets would not be met by 2002.
For the first time, there is to be a service development fund, whereby #163;1. 3bn of funding over two years is conditional on agreements between central and local government.
The Government has also promised more for heads' training and a doubling of spending on capital on schools. Education maintenance allowances are to be piloted from September 1999. They are to be means tested and linked to attendance at school or college.
The extent of extra funding took much of the education sector by surprise.David Mallen, chair of the Association of Chief Education Officers, and Philip Hunter, president of the Society of Education Officers, expressed approval for the extra money that is to be spent on pre-school education.
There was criticism of spending to cut class sizes from the National Association of Schoolmasters Union of Women Teachers, which said building classrooms in some schools, while others have surplus places, is hugely inefficient.