Chancellor Gordon Brown has unveiled the government's pre-election bid to placate fuel protesters and pensioners with a �4bn package of measures containing a boost to pensions and a freeze on fuel duty.

Delivering his long-awaited "mini-budget" setting out the framework on which the spending plans on which the government hopes to win a second term, Mr Brown announced changes to excise duties equivalent to a 4p-a-litre cut in fuel duty for motorists - or 8p per litre off diesel for hauliers.

Pensions measures

�5 a week rise for single pensioners �8 a week rise for couples Winter fuel allowance up from �150 to �200 MIG rises to �92 a week by 2001 MIG rises to �100 a week by 2003

And next year the basic state pension will rise by �5 a week for single pensioners and �8 for married couples. The following year it would be further boosted by �3, and �4.80 for couples.

The annual winter fuel allowance for pensioners, to be sent out next week, rises from �150 to �200.

Bid to appease fuel lobby

In his pre-Budget statement to the Commons, Mr Brown told MPs: "I recognise and I understand the very genuine concerns of motorists and hauliers."

As well as fuel duty being frozen to 2002, he announced a cut of 3p per litre in "green" ultra low sulphur petrol (ULSP) and diesel, to be available in every garage next year.

Fuel measures

Fuel duty frozen to 2002 2p-a-litre cut in excise duties on low-sulphur petrol next spring Display disc to be placed on all foreign lorries using British roads Vehicle excise duty rate for lorries cut

Mr Brown insisted that the measures allowed the government to meet its environmental obligations, as well as addressing motorists' concerns.

The government's hope is that Mr Brown will have conceded enough to head off a repeat of September's fuel blockades which paralysed fuel supplies.

The chancellor said that in total, his changes on fuel and excise duty for cars and lorries would cost �1bn.

Sweetener for pensioners

As had been anticipated, pensioners emerged key winners from Mr Brown's statement.

He rejected campaigners' central demand for a restoration of the link between earnings and the state pension.

But as well as the rises in the state pension, he announced that the minimum income guarantee would rise to �100 a week for single pensioners and to �154 for couples in 2003.

It is this minimum income guarantee, however, which has to be applied for by pensioners and is means-tested, leading to frustration and resentment for many.

Mixed reaction

Fuel protest leader Brynle Williams described the chancellor's package as "an insult"

Mr Brown's statement met with a mixed reaction from the two lobbies the government was most anxious to appease.

Pensioners' leaders gave the measures affecting them a broad welcome, though they renewed their demands for a higher basic pension instead of means-tested support.

But leaders of the fuel protests which brought the UK to a near-standstill angrily accused the chancellor of failing to do enough.

Protest organisers complained Mr Brown had not gone far enough to meet their demands. They threatened to go ahead with a planned protest in London next Tuesday.

Brynle Williams, the Welsh farmer who led the last fuel protest, described Mr Brown's concessions as "an insult" to industry and the public.

Prudence vs politics

Mr Brown opened his statement by telling MPs the present healthy state of the economy gave the country an opportunity it could either "seize or squander".

The chancellor predicted solid economic growth and pledged to give families the lowest direct tax burden for 30 years through targeted tax cuts "when it is affordable to do so".

Addressing a packed House of Commons, Mr Brown said: "We have steered a course of stability but we are not satisfied.

"We want to see all citizens sharing in rising prosperity."

Responding for the Conservatives, shadow chancellor Michael Portillo said it was plain from Mr Brown's statement that he was in retreat, adding: "This was indeed a statement the chancellor told us he would never be able to make."

He reminded MPs that in the run-up to Mr Brown's statement, ministers had repeatedly claimed that giving concessions to pensioners and fuel protesters would mean closing hospitals and schools.

He challenged Mr Brown to say how many would now shut.