Chancellor Gordon Brown cranked up taxes in his Budget today to pay for increased spending on the National Health Service.

He raised national insurance contributions by one per cent and froze personal tax allowances.

The two moves would mean a full-time earner on the average £21,400 a year would pay £3.70 a week more, Mr Brown told MPs.

The Chancellor said the measures were needed "to fund the National Health Service that we want".

Mr Brown said his was "a Budget to make our NHS the best insurance policy in the world".

From April next year there will be additional one per cent National Insurance contributions from employers, employees and the self-employed on all earnings above £4,615.

Duties on beer, spirits and wine were frozen but that on cigarettes, the old Budget faithful, will go up by 6p on a pack of 20.

There will be cuts in the licence fee for the least polluting vehicles, and Mr Brown said working families with children would have a guaranteed income of £237 by October.

Beginning his Budget speech at 3.31pm, the Chancellor said there would be new incentives for business to encourage enterprise.

And he promised to secure a "long-term financial foundation" for the National Health Service.

Mr Brown said he would release an extra £4bn for public services next year.

Among a number of measures aimed at helping small firms, the Government will provide new funding to help them get online.

Mr Brown said that the small companies' tax rate would be cut from 20p to 19p with immediate effect for this tax year.

The starting rate of corporation tax will be cut with immediate effect from 10p to zero.

In a series of measures designed to boost the environment, Mr Brown announced a £55 cut in the licence fee for the least polluting vans, £30 for the least polluting cars and £35 for the least polluting motorcycles.

Tax on bingo will be abolished, and duty on small brewers' own beer will be halved in time for the World Cup.

Mr Brown introduced a new flat rate calculation for VAT payments for 500,000 small businesses with a turnover of up to £100,000-a-year.

He said: "Rather than filling forms we will introduce a flat rate calculation and save a typical small business hours of administration a year."

Mandatory work preparation courses will be introduced for the long-term unemployed.

Mr Brown said that he would seek state aid approval to abolish stamp duty on commercial transactions.

Building on the increase in the minimum wage from October, working families with children will have a guaranteed income of £237. Lone parents working 16 hours will be guaranteed £179 a week, and those working full-time £237.

A single person with a disability working 35 hours will be guaranteed £194 a week. A couple with no children in full-time work will be guaranteed £183 a week and single person £154.

TV licences for over-75s will remain free and winter fuel allowance will be £200 for the remainder of this parliament.

The Child Tax Credit will be available to families with incomes up to £58,000 for the first year of a child's life. Families earning up to £66,000 to get some help.

For all families with overall incomes of £50,000 or less, the Child Tax Credit with child benefit will be £1,400 a year.

The Chancellor said he was proposing £2.5 billion extra support for families, "one of the biggest single additional investments in children and families since the welfare state was formed in the 1940s".

All estates below £250,000 will be exempt from inheritance tax.

Fuel duties and licences for cars, vans and lorries will be frozen.

UK health spending will be increased from this year's £65.4 billion to £72.1 billion and by 2007-8 to £105.6bn.

Tory leader Iain Duncan Smith accused the Chancellor of breaking Labour's election pledge not to increase income tax, by putting 1p on National Insurance, which the Tory leader said was a tax on income.

He said someone on average earnings would be £15 a month worse off.

But union leaders praised the Budget. Dave Prentis, general secretary of Unison, said: "The Chancellor has given the NHS the kiss of life."

There will be a teatime special Budget edition of The Argus in the Brighton and Hove area today. Tomorrow's county-wide morning edition will have four pages of comment and analysis.