Gordon Brown said "the priority must be in promoting excellence"

Across the UK, funding for education is to rise to £77bn by 2007-08, up from £37bn in 1997 and £59bn this year.

The growth in funding slows from the annual 6% in real terms he announced in the spending review two years ago, to 4.4% a year in the three years to 2008.

But he said it meant that, in England, spending per pupil would rise from an average £4,500 to £5,500, twice the 1997 figure.

EDUCATION SPENDING 6% more for 2005-06 announced already 3.6% more for 2006-07 3.5% more for 2007-08 total: £59bn this year rises to £77bn in 2007-08 5.6% of national wealth (GDP) England's share £64bn £5,500 per pupil by 2007-08 - £1,000 more than now DfES jobs cut by 31%

The allocations would rise from £49bn this year to £52bn, £60bn and £64bn in the next three years.

Mr Brown said separate announcements would be made for Wales, Scotland and Northern Ireland.

Overall capital investment in England would rise from the £6bn promised already for next year to £8.1bn by 2008, again with similar announcements for the other home nations.

As part of a general drive to make Whitehall more efficient, the Department for Education and Skills would reduce its headquarters staff by 31% by 2008.

Every young person would have the offer of education or training to the age of 18, Mr Brown said. The Sure Start budget would rise by 17%.

Higher education was promised a maintenance of real terms funding per head.

We can now build on the progress we have made since 1997 at every stage of learning, from early years to adult skills Charles Clarke Education Secretary

The Education Secretary, Charles Clarke, would designate up to 1,000 more specialist schools, alongside more City Academies.

In a statement, Mr Clarke welcomed the early announcement of the spending review settlement - which had been due this summer.

"We can now build on the progress we have made since 1997 at every stage of learning, from early years to adult skills," he said.

"It locks in the increased investment we have made each year. And it gives us the stability we need to raise standards further and open-up opportunity for every citizen."

There simply is not enough money in the system to meet the targets which government has set John Brennan Association of Colleges

Liberal Democrat spokesman Phil Willis said that despite the Chancellor's rhetoric towards early years education, significant numbers of children would be left without essential early years services even by 2008.

"The Chancellor was also alarmingly silent about any new resources for further education colleges, which are the engine room for the skills agenda."

The Association of Colleges said it had been pointing out to the government for some time the disparity between its ambition to drive up skills levels and the resources available.

"There simply is not enough money in the system to meet the targets which government has set," said its chief executive, Dr John Brennan - with colleges having to cut courses for adults which the Chancellor was "guaranteeing".

Union cautious

The biggest classroom union, the National Union of Teachers, reacted warily in view of the funding problems in England's schools over the past year.

The 4.4% increase is unlikely to make good the deficit and at the same time equip schools adequately Doug McAvoy National Union of Teachers

Its general secretary, Doug McAvoy, said: "The Chancellor appears to have responded to the needs of the education service. But in the past, what looked like an increase resulted in schools continuing to be underfunded."

The increases were applied to a "woefully inadequate" base.

"The 4.4% increase is unlikely to make good the deficit and at the same time equip schools adequately to enable them to meet the demands made on them."

The leader of the National Association of Head Teachers, David Hart, said the Budget was "a reasonable deal for schools providing we do not have a repetition of this year's fiasco with the government creating inflationary increases in wages, pensions and National Insurance."

And at the Secondary Heads Association, John Dunford said: "The last spending review, when early joy turned to later grief for many schools facing unprecedented budget cuts, taught us a lesson that we have to wait for the small print".