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Further efficiency savings mean there is no need for public service cuts, the chancellor has said.
Alistair Darling said the government would continue to invest in public services and help the country out of the recession.
"Some have argued that we should cut public services immediately rather than invest and grow our way out of a recession," he said in his Budget announcement on Wednesday. "I believe that would be the wrong thing to do."
Instead, he told the Commons, the government would stick to its promise to save £30bn during this comprehensive spending review period and save an additional £9bn a year in the three year period from 2010/11.
Those additional savings, set out in five Treasury-commissioned reviews published on Tuesday, would come from back office functions, IT spending, better procurement, better collaboration and innovation at the local level, Darling said.
"Just as every family is looking closely at their own budget to ensure they get the best value for money, so should the government," he said.
"This will allow us to protect frontline services whilst keeping current spending growth in real terms at an average of 0.7 per cent a year from 2011/12 onwards," Darling told MPs. Local health services would see increases in spending of five per cent, and schools four per cent, he said.
Capital investment, which had so far "transformed services", would also continue, the chancellor promised, with public sector net investment to equal 1.25 per cent of GDP by 2013/14, twice as high as it was in 1997.
There would be sale of £16bn worth of property and assets in the three years after 2011/12, he said, the profits of which will be ploughed into new capital investment.
Capital spending was "essential to help create jobs, to boost recovery and deliver economic success in the long-term," Darling said.
"As a result of the measures I have announced today I can afford to make further investment in the future of this country. These funds will be invested now to help ensure we seize the opportunity that will come from a world economy that is expected to double in size," he said.
Dods Parliamentary Communications Ltd