This budget was expected to be Gordon Brown's last

Cardiff Bay ministers will decide after May how to spend the extra cash, which is less than two per cent of their total budget for the next four years.

The budget has been welcomed by the unions who represent the 800 Allied Steel and Wire (ASW) workers who lost pensions when the firm folded in 2002.

A compensation fund for workers losing their pensions has been quadrupled.

Welsh Secretary Peter Hain said increasing the fund to �8bn would provide justice.

"Workers such as those at ASW will now be able to claim back up to 80 per cent of their lost pensions to a maximum �26,000 a year, up from �12,000," he said.

In a joint statement, trade unions Community and Amicus described the move as a "major step forward to achieving pensions justice".

I welcome the cut in the basic rate of income tax by 2p as it will make life easier for hard pressed working families, but my concern is whether this is affordable Plaid Cymru parliamentary leader Elfyn Llwyd

Increases in education spending in England, announced by Chancellor Gordon Brown, will feed into the assembly government's budget.

How much of that money will go to education will be decided by the new administration in Cardiff Bay, elected on 3 May.

The total budget for Wales, currently �14bn, will increase in the coming year by just an extra half a million pounds, then in 2008-9 by �166m, in 2009-10 by �320m more and in 2010-11 by an additional �510m.

Mr Hain said the total package of budget measures was "brilliant news for the people of Wales, with the governments in Westminster and Cardiff Bay working together for a prosperous Wales".

But Plaid Cymru parliamentary leader Elfyn Llwyd accused Mr Brown of "cutting tax everywhere" and "drowning in a sea of debt."

Mr Llwyd said the Chancellor was trying to boost his popularity before becoming Prime Minister, as is widely expected when Tony Blair stands down.

The Plaid MP said: "I welcome the cut in the basic rate of income tax by 2p as it will make life easier for hard pressed working families, but my concern is whether this is affordable."

'Superficially attractive'

Conservative assembly group leader Nick Bourne said he was happy to make Labour's economic record a key part of the assembly election campaign.

Mr Bourne said: "After 10 years of Labour, Wales is the poorest part of the United Kingdom - economic inactivity is high, average wages are rising at a slower rate than any other part of the country, and businesses are becoming less competitive."

The Liberal Democrat assembly finance spokeswoman Jenny Randerson said it was "a superficially attractive budget, but it isn't one which builds a fairer or greener Wales."