The increased room for manoeuvre stems from lower interest payments on the national debt and reduced welfare payments as a result of falling unemployment, and curbs on benefit fraud.
The Treasury has so far indicated that annual spending will increase by£40bn by the end of the spending review's third year in 2003-04. And Mr Brown will say today that higher spending can be achieved without breaching the 3.3% a year real terms increase in overall spending set out in the Budget.
In a speech to the Royal Economic Society, the chancellor will say he can 'devote more to the country's priorities - spending on education, health, transport and policing, [and] extra public investment' without breaking is golden rule.
But it isn't good news for everyone. The Guardian (p2) reports that a furious last-minute battle is raging between Mr Brown and culture secretary Chris Smith over a£60m rescue package to save up to 50 of the nation's regional theatres from closure.
Mr Smith is said to have made a minimum£20m a year emergency funding package for regional theatres the centrepiece of his bid for more arts cash in this year's spending round.
But huge demands from health, education, transport, environment and defence have meant that the Treasury has put the bid from the Department for Culture, Media and Sport last in line for a settlement.
And the government's plans for transport will not include extra money for local safety schemes, BBC Radio Four's Today programme said this morning.
The programme predicted that the£6m child safety campaigners had been calling for will not be forthcoming. Instrad local authorities will be expected to allocate funds to traffic safety schemes.