A spending increase for the NHS should help achieve the Prime Minister's aim of raising the amount spent on health to average European levels.
The NHS budget will rise from £69bn this year to £92bn in 2008. Rises of 7.1 per cent a year over the next three years will be channelled into meeting the Government's pledges on reducing waiting times and delivering patient choice.
John Reid, the Health Secretary, said: "This historic increase in resources allows us to maintain an NHS, free at the point of use, but increasingly personal and responsive to the needs of individual patients. This is a National Health Service to meet the expectations of all for the 21st century."
Labour has promised that by 2008, patients will wait a maximum of 18 weeks from the time they see their GP and are told they need an operation, to the day when they are admitted for surgery. Another key pledge is to allow all patients an unlimited choice of which hospital they are treated at.
Much of the extra money will go on treating chronic conditions such as asthma and diabetes.
With waiting times for in-patient treatment now falling year on year, delays and bottlenecks are occurring at an earlier stage, around diagnostic and scanning services.
Niall Dickson, chief executive of the King's Fund, a health policy think-tank, said: "Things are slowly getting better. But the NHS has to keep its eye on the ball if these improvements are to be sustained and there is still much to be done.
"The problem the Government still has is how to prove the extra money being pumped into the NHS is making a difference to patients' health," he said.
Spending on social services will also rise by 2.7 per cent a year, from £10.6bn at the moment to £12.5bn in 2008.
The Chancellor said some of the extra money for social services will go towards installing care alarms in the homes of 160,000 pensioners. Alarm buttons will be linked to medical services in a scheme to allow more older people to remain in their own houses rather than go into care homes.
But with strategic health authorities and hospital trusts now increasingly responsible for elements of social care, there are concerns that the the big gap in spending increases between health and social services could lead to tensions.
Local authorities already face fines if there are delays in discharging elderly people from hospital into care, but social services managers may argue that they simply do not have the capacity or the budgets to improve their performance.
Extra allocations to local authorities, the NHS and social services will also have to be aimed at achieving Labour's pledge of eliminating poverty among the elderly by 2010.
Department of Health Spending 1996-97: £33.9bn
Spending in 2002-03: £55.9bn (up 64.9 per cent)
Civil servants: 4,280
Future spending: To increase by 7.1 per cent a year in real terms, to £92bn by 2008
Where the money will go: Reducing waiting times for operations to 18 weeks and delivering patient choice. Spending on social services to rise by 2.7 per cent a year, to £12.5bn in 2008. 160,000 pensioners will have care alarms installed in their homesReuse content