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Mr. McFall: I speak from experience here, after a lifetime in teaching. We have to progress the priorities. I do not know about the hon. Gentleman, but I have visited every primary school in my constituency since 1997. Without exception, every head teacher has told me that they have extra resources and that they are happy with them. The step change is taking place in primary schools, and I urge the Government to ensure that it also takes place in the secondary schools and elsewhere.

Mr. Salmond: Public spending as a proportion of gross national product might not be discussed in the Dog and Duck, but the hon. Gentleman is undoubtedly correct in what he is saying. I am not altogether sure, however, whether it places a Labour Member in a comfortable position to say that Baroness Thatcher was spending a higher percentage of GNP on public spending. The hon. Gentleman also talked about the trend growth rate of 2.5 per cent. being met. Is he saying that the bulk of the evidence before his Committee suggests that, in the current international environment, that trend growth rate is likely to be met in the next three years?

Mr. McFall: On the hon. Gentleman's first point about the previous Conservative Government's spending, this Government have increased employment by 1.5 million and cut the national debt, giving us the opportunity to spend on things that were previously a burden. On his point about the 2.5 per cent. growth trend, the Chancellor has historically always underachieved in his growth targets. This is the first occasion on which people have said that he is getting near his target. Certainly, from a macro-economic point of view, the economists who have come to the Treasury Committee have said that that target represents a reasonable proposition. We are aware that the global situation is not favourable but, as one of the economists said to us, the money is in the books until 2006; that is reassuring.

James Purnell: Does the Chairman of the Select Committee agree that the key difference between spending under Margaret Thatcher and spending now is that, under Margaret Thatcher, the money was being spent on 3 million unemployed people? Does he remember the hon. Member for Buckingham (Mr. Bercow) writing in The Guardian that he accepted that it was desirable to underspend on welfare payments so that more money could be spent on hospitals and schools? That is exactly what we have done.

Mr. McFall: Those points have been well made.

Tony Cunningham (Workington): I have listened to all this and reached the conclusion that many people on the Front Bench just do not live in the real world—

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[Interruption.] I meant people on the Conservative Front Bench, not that there are very many of them there at the moment. I visited a primary school recently, and the headmistress told me that, five years ago, the only extra resources that they had were felt tip pens. She said that they now had new buildings, new computers and nine classroom assistants, and that standards were rising all the time. She said, "If that's spin, can we have more of it?"

Mr. McFall: That is a very good anecdote. And talking of felt tip pens, I give way to the hon. Member for Buckingham.

Mr. Bercow: I am grateful to the Chairman of the Select Committee for giving way; he has been extremely generous. I am glad that the hon. Member for Stalybridge and Hyde (James Purnell) reads my articles in The Guardian. That is flattering, but I do not think that it greatly advances the debate. I asked the hon. Member for Dumbarton (Mr. McFall) what the effect of increased education expenditure would be on the truancy problem and on the problem of assaults on staff. Asked what the effect would be, he said that the spending was welcome. I hope that he will forgive me, but I want to ask him the question again, because this is important. How will the increased expenditure serve to reduce truancy or assaults by pupils on staff? Those two matters are of pre-eminent concern to thousands of teachers and parents.

Mr. McFall: Speaking of The Guardian, I read about the hon. Gentleman in that newspaper, and about his fiancée who has different political views from him. Perhaps she will balance him from here on, and perhaps that will help him with his new portfolio.

I shall refer again to my own experience. For a while, I was in charge of a truancy unit in a Glasgow school, and it was very hard keep the kids in school. One way of doing so was to enhance the status of the truancy unit, and to get more resources, teachers and classroom assistants into it. The only way to achieve that was through extra resources. The hon. Gentleman asks me how the extra resources will help. They will help in modifying behaviour by providing adequate staffing for young people; that is a good way forward.

David Wright: Is my hon. Friend aware that, in Buckinghamshire, about 220 more teachers have been employed under this Government since 1997?

Mr. McFall: My hon. Friend makes a good point. I think that that must be the last intervention that I take. It is not often that someone from the Back Benches says that, but I shall say it just in case. Other hon. Members want to speak tonight and it is important that they should be able to do so.

I welcome a number of aspects of the Government's commitment. One relates to the aid budget. I know that some of my colleagues will devote a large part of their speeches to that subject tonight. It is reassuring to find that the aid budget will be increased by £1.5 billion to reach the target of 0.4 per cent. of GNP by 2005. I am one of those who wish to achieve the target of 0.7 per cent., but we will have to do that in stages. To come from 0.2 per cent. to 0.4 per cent. in seven or eight years is a welcome development.

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The shadow Chancellor and other Members referred to targets. The Treasury Committee has looked at that issue, and I want to ask the Government whether the services will improve, now that we have the funding. Vast sums of money have been mentioned in the spending review. The individual in the local pub might not recognise those sums, but they will want to see the improvement in their services at local level. They will want to see a transformation involving shorter waiting lists, better education for young people, criminals being locked up and social nuisances on housing estates being eliminated. That is the key for the Government. Targets are extremely important.

If I have one criticism of the Government, it is that they have perhaps inflated expectations, and that the end result has been less than it was expected to be. These processes will be undertaken using targets. I note that, when the Chancellor introduced his spending review, he introduced 130 public sector agreements. That is down from 160 in 2000, and from more than 300 in the comprehensive spending review of 1998. I have described the targets as a bit vague and, perhaps, bland. Is the Chancellor satisfied that these targets will allow Parliament properly to monitor Departments' performance? Until we have a clear and unambiguous answer, we will ensure that the monitoring process takes place.

On the Treasury's public service agreements to achieve year-on-year improvements in public services' value for money, the latest Treasury annual report simply states that matters are on course, without providing any measurement. Table A2, on page 67 of the report, merely states:

I suggest to Ministers that we need to do more to ensure that those targets are met. If they are to be of value, they need to be simply expressed, transparent, believable and credible. Some hon. Members have mentioned poppy growing in Afghanistan, but are the Government going to report on progress on making the world a safer place—one of the seven Foreign Office targets—daily, hourly, or every five minutes? Let us ensure that the targets have a wee bit more credibility.

Do centrally determined targets that rely on command and control work? I want the Government to confirm that the targets are not centrally imposed and do not rely on command and control. Central Government must allow local initiatives to engage in diversity, but historically, Governments have not been good at that. I am talking about Whitehall and the associated culture, which must be broken. Devolution of power is essential if we are to ensure that long-term goals and proper accountability arrangements are put in place.

The targets also depend on the credibility of independent audits. We must ensure that the money does not disappear down black holes. One issue is public sector pay increases. Public sector workers have rightly made some demands, but if we allow most of the money to be spent on extra pay, we will not achieve the targets. Let us strike a healthy balance. It is important that we ensure that the money is put in, that we bring about reform, and that we achieve the required outcomes.

The Chancellor also placed a great deal of emphasis on productivity. In the past, productivity has been somewhat disappointing, with a figure of 1.3 per cent for the past

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four years. Public sector productivity has lagged behind the private sector. Value added per employee in the public sector was almost £30,000, but in the private sector it was £41,000. In the past six years, productivity in the private sector has been running at 25 per cent., compared with only 17 per cent. in the public sector. In transforming the public services, we must be very aware of productivity issues. Otherwise, international competitiveness, profitability and investment will be eroded.

When the Prime Minister appeared before the Liaison Committee, he spoke of three tough long-term issues: transport, housing and pensions. He said that he would like all-party support on those issues, and I echo that sentiment. If we are to bring about improvements in these three crucial areas, there must be some political consensus. On pensions, we have the combination of an ageing population and a trend towards economic growth in future years. However, the clash that will arise between an ageing population and the demands of the public is not peculiar to the United Kingdom.

A few months ago, I was fortunate enough to attend a meeting involving the budget chairman of the Organisation for Economic Co-operation and Development, in Washington. David Walker, of the general accounting office, said that every country in the world will experience such problems. There are several things that can be done. There could be a reduction in the provision of services, but that is very hard for politicians of whatever party to accept. [Interruption.] I note that Liberal Democrats are nodding furiously. Taxes could be increased—again, that is unpleasant medicine—or growth could be increased, and that is where productivity comes in.

I shall leave Ministers and the House with a sense of the difficulties involved. When I pressed the general accounting officer in Washington for the growth figure that will ensure that American targets will be met within 25 years, he mentioned figures of 8 to 10 per cent. Our current annual growth figure, however, is about 3 per cent., which shows the scale of the problem. This is an issue not merely for the Government, but for the entire political process and the country as a whole. Such tough long-term decisions need cross-party support, and I seek the support of the shadow Chancellor and others. Would he like to respond?

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