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The chancellor has unveiled plans for a two per cent cut in basic income tax in a Budget which he claimed would "expand prosperity and fairness for Britain's families".

Speaking in what is widely expected to be his last Budget, Gordon Brown delivered his 11th set of economic plans to parliament, focussing on families, business prosperity, home security and the environment.

In a sweeping range of measures funded by extra asset sales - including the sale of the £6 billion-student loan book – efficiency gains, lower debt and lower employment in line with his economic predictions, the chancellor sought to outline an ambitious Budget which hinted at his policy plans were he to become prime minister.

His last statement before commending the Budget to the house was among the most eyecatching – a surprise cut in the basic rate of income tax from 22p to 20p from next year – the lowest basic rate for 75 years according to Mr Brown.

The chancellor did also scrap the 10p lower rate, however, which could erode the gains for many individuals.

Among the other key initiatives were plans for business, which heralded the much-anticipated cut in corporation tax, down from 30 per cent to 28 per cent, which he said was the "lowest of all major economies".

On foreign policy the chancellor said he would increase spending on the armed forces, allocating an extra £400 million for the coming year, as well as releasing an extra £86 million for intelligence and counterterrorism.

Touching upon the environment, the chancellor revealed financial support of £50 million for a ten-country initiative across central Africa to prevent rainforest destruction, which he said affected 50 million people's livelihoods.

For the individual he outlined discussions with leading banks for a new market for mortgages designed to promote energy efficiency, with the Treasury offering grants of £4,000 to pensioners for insulation and central heating, as well as exemption from stamp duty on all zero carbon homes.

On the roads he outlined a future in which Britain would "lead in next generation of low and no carbon producing fuels", with a rise in road tax on so-called 'gas guzzlers' up from £220 to £400.

The chancellor also detailed education plans which would focus on the early years sector, including the provision of six children centres in a typical constituency and the expansion of free nursery education. Spending as a whole would rise to £64 billion next year and up to £74 billion by 2010 – five per cent annual hikes.

An emphasis on community will see school sports facilities at city academies made available to all local children, as well as an £80 million fund for small local and community organisations.

Meanwhile, the chancellor also focussed on the creation of the "high-tech" economy, promising to invest £5 billion in science this year and £6.3 billion by 2010 – a 25 per cent increase.

The Department of Trade and Industry has been charged with establishing a £100 million competition to lead in the sector, encouraging universities and businesses to work together to ensure the fruits of the laboratory could be translated into commercial success.

Elsewhere the chancellor said he would look to business to help improve employment prospects for the disenfranchised, with Tesco, Sainsbury's, Asda and the British Retail Consortium agreeing to consider all unemployed men and women who pass work trials for jobs, potentially helping people find work.

On the thorny issues of pensions, he said he would allocate a further £6 billion to those whose scheme has gone bankrupt.

Finally, he also announced plans to freeze duty on spirits for the tenth year in a row, while the price of a packet of cigarettes rose in line with annual inflation, up 11p.

In his opening to what was an extensive but complicated series of measures, Mr Brown alluded to William Gladstone as the last man to deliver an 11th and then 12th Budget, who he also noted combined the position of prime minister and chancellor.

Going on to offer his "thanks to the civil servants and comrades" who he had worked with in the past – after a week in which the former head of the civil service had savaged his style as "Stalinist" - Brown struck a humorous note in his opening address before embarking on his expected final Budget.