Brown sets the fiscal scene for the next three years

Gordon Brown's big speech to the Commons on Monday was vital listening, mainly because it set out the Government's spending plans for the three fiscal years to 2007/8. But there was more to it than that. As Andrew Grice points out in The Independent, it also clearly set out Labour's battle plan for the next general election: extra money for the under-fives and for fighting street crime and global terrorism, and a plan to axe 104,000 civil-service jobs to divert cash into frontline services. It was a "classic text for the Blairite era", said Larry Elliott in The Guardian; more money for the kiddies, but a crackdown on sickies (see below). There was extra money, too, for science, homeland security, the armed forces, international development and community policing - all areas in which Labour aims to wrong-foot the Tories by painting them as short-sighted skinflints.

The key to this surpisingly munificent spending round (the Treasury had skilfully managed to down expectations in the run-up to Brown's speech) is low unemployment and Government debt. "Labour's record here is impressive," said Elliott in 1997, the Tories were forking out 1% of GDP on unemployment benefit and 3.6% on servicing the national debt. Labour has slashed those figures to 0.3% and 2% respectively (this latter the lowest debt costs since 1915). That's why, although overall Government spending will not change much, Brown still has an extra £26bn to invest on frontline services. All in all, this was a masterly, vote-winning performance from Brown, said The Guardian, and one that fused his "social conscience with his finely tuned political antennae". The serious problems of Britain's social infrastructure are at last being addressed "with a zeal unprecedented among recent politicians".

Up to a point, said Anatole Kaletsky in The Times. Gordon Brown has done a fine job of managing public finances so far. But the big question remains: can the huge spending rises being shovelled into the public sector actually produce the expected improvements in services. The answer is probably not - unless and until Labour embraces "wide-ranging administrative reforms based on the introduction of competition". And of that there's little sign.

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It's a mixed report card for the Chancellor this year, agreed the FT. There's a question hanging over Brown's planned efficiency savings, under which Sir Peter Gershon expects the Government to save £21.5bn and slash 100,000 jobs. These savings are "critical for Brown. He can meet his own fiscal rules on borrowing without banking a penny from the Gershon programme. But the more Sir Peter saves, the more room for manoeuvre the Treasury will have if, after the election, it comes close to breaching them. Brown's surprise announcement that he wants to raise £30bn by disposing of Government assets over the next ten years shows that (like everyone else) he's not confident his efficiency targets are do-able. This is a safety net: "asset sales may be the last defence against tax rises if borrowing soars". Brown's room for fiscal manoeuvre is fast disappearing, so he is lucky his Tory opponents are so confused and tactically inept. And that his Labour opponent, Tony Blair, is so "impotent and uneasy", said Peter Oborne in the Daily Mail. After Brown demonstrated his command of policy-making with his "panoramic and audacious performance" on Monday, the question "rings out louder than ever: what is Tony Blair for?"