To pay for his £40 billion NHS bonanza, the chancellor yesterday announced across-the-board national insurance increases and froze the lower-end income tax rate.

Employees, employers and the self employed will all pay an extra one per cent in national insurance following Gordon Brown's gamble.

Prompting fresh claims of tax by "stealth", higher earners will pay the additional one per cent on all their earnings - rather than simply up to the £30,000 payments ceiling.

The much-trailed increase in national insurance will cost £3.70 per week for those earning £21,400.

Business, which will also pay an extra penny in the pound on wage bills, has accused the chancellor of levying a "tax on jobs".

Manufacturing warned that labour intensive firms, such as Corus, could be forced into making job losses.

The Tories accused Brown of breaking a pre-election pledge by raising national insurance.

The government is today embarking upon a major PR exercise to persuade the public that the money is essential to improve a failing NHS.

Money will be allied to reform and a new inspections and audit regime is to be established to ensure the new cash is not simply disappearing into a black hole.

To sweeten the tax pill, the chancellor announced plans for a new tax credit for families earning up to £58,000 where one parent does not work.

Brown also fleshed out plans for the new child tax credit, which will integrate all means-tested and income-related support for children into one payment for the main carer.

Budget-hardened smokers were dealt their annual budget blow - with cigarettes rising by six pence.

Drinkers were raising their glasses - with a freeze on duty on wine, spirits and beer and a 14 pence a pint reduction in beer brewed in small "micro breweries".

Small businesses received a series of tax breaks, although business leaders fear that they will be more than swallowed up by the increase in employers' national insurance liability.