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While we continue to work internationally to seek a global agreement on reducing aviation emissions, each country must take action domestically. From February 1 we will double air passenger duty. For most journeys — over 75 per cent of them — duty will rise from £5 to £10, securing extra resources in the coming spending round for our priorities, such as public transport and the environment.

A priority for vehicles, responsible for 25 per cent of emissions, is to promote cleaner fuels through fiscal incentives. And while I will go ahead with an inflation rise in fuel duty from midnight tonight, of 1.25p per litre, I will not restore the fuel duty escalator and I have rejected a real-terms increase in fuel duty.

And I can also announce that to incentivise the use of cleaner fuels in trains in the same way we do for cars, vans and lorries, the tax rate for piloting rebated fuels mixed with biofuels will be reduced from 53p to 8p.

Our two fiscal rules for the economic cycle are the golden rule that current spending is paid for by tax revenues, and the sustainable investment rule that, with debt at a prudent level, we can invest in our education, the NHS, infra- structure and other essential priorities.

These rules are demanding. And no other major economy — neither America nor Japan nor the euro area — meets them today. But I can report that even after the new commitments, I am announcing our current deficit falls from 15 billion to 8 to 1 and then we record a surplus in successive years to 2011 of 4, 7, 10 and 14 billion.

So, Mr Speaker, with an overall surplus in this economic cycle of £8 billion, we meet the golden rule and already we are on course to meet it in the next. As recently as the mid-1990s, 75 per cent of all new public spending went to debt interest and social security benefits. Today it is down to less than 20 per cent. And the purpose of all these savings is to ensure frontline services will have the resources they need.

I have become convinced that for Britain to rise to the global challenge, we should commit now to year-by-year improvements in investment in our schools and educational establishments.

Our goal is 12,000 new or completely refurbished schools — half of all primary schools and 90 per cent of all secondary schools, benefiting four million children each year; in addition 100 colleges rebuilt, serving one million students; and, in total, 3,500 new children’s centres for nearly three million boys and girls.

I propose to increase the cash we give to every school and every head teacher to be used in the way local schools think best. The typical secondary school received £150,000 this year; for April next year I propose it be £200,000.

Mr Speaker, this is the equivalent of £200 for every pupil, paid three months from now, direct to the school. Money I could use for tax cuts. But I say invest in education first. Mr Speaker, stability our foundation. Education our No 1 priority. Education first, now and into the future. And I commend this statement to the House.

Buzz words

investment used 35 times

tax used 11 times

deficit used twice

spending used 14 times

growth used 13 times

borrowing used once

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