Mr Brown told the Treasury select committee that Britain had to make a choice about how to spend the £60bn boost allocated to Whitehall departments over the next three years.
"If money were to be used in public sector pay, which couldn't then be used to recruit new people or improve services, that would be a loss to the country as a whole," he told the committee. "Just as private sector pay has to be linked to performance, so too those people looking at local authorities and the rest of the public sector have to be responsible too."
Flanked by Treasury officials, and his chief economic adviser, Ed Balls, Mr Brown fought off sceptical questioning from Labour and opposition members about whether his generous spending plans outlined on Monday were sustainable, and could deliver results.
The chancellor insisted he was confident the extra spending was affordable, even in the face of the panic sell-offs in the markets over recent weeks, which have dented confidence about the strength of Britain's economic recovery. "We believe we have built a system ... capable of withstanding the difficulties facing us," he said.
Mr Brown defended the Treasury's role in setting detailed targets to assess how the extra funds will be spent. "It is important that the department that writes the cheques has a role in monitoring whether performance has improved."
