Quoted from official Government sources:

I now turn to our proposals.

Mr Speaker, the foremost duty of any government is protecting our country.

The whole House will want to join me in acknowledging the dedication and courage of our armed forces in action overseas, including in Iraq and Afghanistan.

To support our armed forces in all they do, I am today allocating an additional £400 million for operations this year.

This is on top of the increase in the defence budget to £37 billion by 2010, which will provide over £500 million worth of investment for improvements in accommodation for members of the armed forces and their families.

In the mid-1990s defence spending was cut by 20 per cent.

This settlement is the longest period of rising investment in the defence of our country for almost 30 years.

Matching our commitment to international security with international diplomacy, we will increase the Foreign Office budget, including spending £460 million in 2010 on the British Council, the BBC World Service, and the launch of BBC Farsi and Arabic TV channels.

Mr Speaker, the terrorist attacks in July 2005 and attacks since, remind us all of the constant threat to our security here in Britain and of the critical importance of our police and security services.

Since 2001 spending on security and intelligence has more than doubled to £2 1/2 billion a year.

I can now announce a new single budget that brings together the work of the police, the security services and all parts of the Government responsible for addressing the threat from terrorism.

The budget of the intelligence agencies will continue its historic real terms growth since 2001, with real growth over this period of 9.6 per cent a year. I can announce the single budget will rise every year over the next three years, a rise of £1 billion in total, to £3 1/2 billion a year in three years time. This is a trebling in cash terms in a single decade.

Mr Speaker, this includes £700 million over the next three years for the Home Office for its work in combating the terrorist threat.

Overall, I am allocating additional resources to the Home Office and Ministry of Justice that will now rise to £20 billion by 2010, as we guarantee neighbourhood policing in every community, build 9,500 extra prison places and finance over £400 million in technology to strengthen our border security.

Mr Speaker, our ability to compete and succeed in the global age will depend on our competitiveness and continuing investment in the economy.

Britain's future success will depend not just on investment in physical capital but also skills, innovation and intellectual property.

And I am publishing today a new analysis, which shows that Britain could now be investing as much in these areas as the United States of America. This means almost £250 billion a year, up to quarter of today's income, is being invested in the priorities essential for securing tomorrow's prosperity.

Lord Sainsbury's science review reported last week. I can confirm investment in science and university research will rise to over £6 billion a year in three years time, helping ensure British research and industry are brought closer together to develop the new products and services the world wants to buy.

Britain has more Nobel prize winners than any country outside the USA. Yesterday another prize was awarded for medical research, which is testament to Britain's continued scientific success, recognised across the world.

And so more British medical discovery can be translated into new health drugs, treatments and preventions, I can announce today I am funding in full the recommendations of Sir David Cooksey's review. We will expand the single fund for health research to £1.7 billion by 2010.

Mr Speaker, in the past we paid a heavy price as a country for failing to invest when it was necessary, particularly on transport.

We are putting that right and will double investment.

By 2010 investment will rise to £14.5 billion a year, providing: * extra money for strategic road schemes, like the M1 and M25 widening; * £1.3 billion a year for improving local and regional transport across the country; * and doubling the amount we spend over the next two years on upgrading the national rail network, ahead of a further £15 billion for railways over the following five years.

This also provides for the construction of Crossrail - the largest transport project since the Channel Tunnel and essential for the competitiveness of not just the City of London but for the whole country.

And, because transport requires investment year after year and decade after decade, I am extending to 2018, the long term funding guideline of annual growth of 21/4 per cent above inflation. This is only possible because of our commitment and ability to fund long term improvements.

I am also today publishing proposals to give local authorities the power to set a business rate supplement for investment and local economic development, so that with their support they can provide opportunities for business expansion.