Brown to face challenge over jobs boost

The Government is planning to increase the number of public-sector jobs by 360,000 over the next three years, according to a report by its efficiency adviser which was leaked yesterday.

The Government is planning to increase the number of public-sector jobs by 360,000 over the next three years, according to a report by its efficiency adviser which was leaked yesterday.

The Tories will challenge the Chancellor, Gordon Brown, over the draft report by Sir Peter Gershon when he delivers his Budget today. It will fuel the Tories' claims that the billions Labour has injected into the public sector have not improved frontline services.

Sir Peter's report, due to be published this summer, has identified potential savings of £15bn. His proposals include selective recruitment freezes and a redeployment scheme across the public sector. He said: "This is in the context of a planned growth in public-sector jobs of 360,000 between 2003 and 2006."

Oliver Letwin, the shadow Chancellor, who has been leaked a copy of the report, said the jobs figure was much higher than the increase of "over 200,000" that Mr Brown included in his Budget a year ago. He claimed the new posts would cost about £9bn a year.

Mr Letwin said: "This is an astonishing revelation. Is Gordon Brown going to come clean in the Budget and say how many of these jobs are frontline professionals? How many are teachers, doctors, nurses, armed forces personnel and others - and how many are being added to the vast administrative overhead? That is something every taxpayer will want to know."

Paul Boateng, the Chief Secretary to the Treasury, insisted Mr Letwin was "completely wrong". He said the NHS had 80,000 more nurses, 25,000 more doctors and more than 20,000 extra therapeutic and technical staff, while there were 11,000 more police officers, 3,000 more community support officers, 25,000 more teachers, 80,000 more support staff in schools, 3,000 extra New Deal staff and 4,000 staff to deal with asylum applications.

He said: "Oliver Letwin has exposed the truth behind his £18bn cuts plan. He wants to cut the numbers of nurses, doctors, teachers and police."

In his Budget, Mr Brown will play down hopes of early British entry into the euro by saying he will not carry out another assessment of whether his five tests for joining have been met. Although he will not formally rule out a referendum before the next general election, there is now no prospect of one being held. Mr Brown will announce that he will review the issue of euro entry each year.

Mr Brown suffered an eve of Budget embarrassment as official EU figures put Britain in breach of the deficit rules governing membership of the single currency. Statistics for 2003 from Eurostat, the EU's official agency, showed the UK running the third biggest budget deficit in the EU at 3.2 per cent of gross domestic product - in clear breach of the 3 per cent ceiling. Only France and Germany recorded higher figures.

But the Government looked set to escape censure from the European Commission, which said that special circumstances apply because the published figures cover the calendar year, rather than the British financial year which runs from April.

Gerassimos Thomas, the spokesman for the European commissioner for economic and monetary union, Pedro Solbes, said: "The figures published do not imply any automatic triggering of [the EU's excessive deficit] procedures. We have to look at the accumulated data for the financial year."

Britain is not a member of the eurozone but has still agreed to abide by its 3 per cent budget deficit ceiling. While it cannot be fined for breaches - as euro countries theoretically can - the UK could face formal reprimands and recommendations on how to manage its economy.

The Treasury projects a rapid decline in the deficit to below 3 per cent, something that would avert the need for any action by the European Commission. Nevertheless, the deficit figures weaken Mr Brown's ability to present the British economy as a model for the rest of Europe.