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Mr. Osborne: My hon. Friend is absolutely right: the Government do recognise that fact, but sadly, they are not doing what they said they would do. I am sure that my hon. Friend is an assiduous reader of The Guardian, so he will have seen the article on page 14 of today's edition, entitled "Axing Whitehall jobs is smoke and mirrors". It begins:

That is because the Chancellor has not implemented his proposals. We accept the Gershon recommendations, but the difference between us and the Government is that we would implement them.

Mr. Stephen McCabe (Birmingham, Hall Green) (Lab): Did the hon. Gentleman also read the front-page story in The Guardian today about the Maypole nursing home in my Hall Green constituency? Twenty-eight
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elderly people died there in the space of 12 months in what can best be described as unusual circumstances. I understand that the Conservative strategy on value for money would do away with strategic health authorities and the Commission for Social Care Inspection. We would not know about the situation at the Maypole nursing home were it not for the diligent work by those bodies, so could he tell us what plans he has to replace them with other organisations?

Mr. Osborne: I do not know the exact details of the case, although I have read about the nursing home in the hon. Gentleman's constituency, and heard about it on the radio this morning. If the hon. Gentleman seriously believes that a strategic health authority would do wonders for the patients of that home, I am afraid he is under a delusion. Strategic health authorities are a hugely bureaucratic waste of money. They do nothing to put money into front-line services, and when taxpayers in our constituencies pay their taxes to fund the NHS they do not expect it to end up in the hands of bureaucrats. The public, I suspect, do not even know that strategic health authorities exist.

Mr. Bailey: Will the hon. Gentleman give way?

Mr. Osborne: I have already given way to the hon. Gentleman, and if he will allow me to proceed, I shall certainly do so again later.

Returning to the consensus that I am trying to establish, as well as saying that taxes had gone up a great deal the Financial Secretary said that a lot of money had been spent. That is true, as Government spending has increased by 60 per cent. from £320 billion to £520 billion. The proportion of gross domestic product spent by the Government has increased from 37 per cent. to 42 per cent. I very much agree with the Financial Secretary that

Those remarks were endorsed by the hon. Member for Glasgow, Anniesland earlier. I salute his candour, and I also salute the candour of the Labour members of the Select Committee on Education and Skills, which produced a report this month on public expenditure in education. I recommend it to hon. Members, as it makes interesting reading. In the first paragraph of conclusions it says:

Miss Julie Kirkbride (Bromsgrove) (Con): To add to the very good case that my hon. Friend is making, I can tell him that my own constituency in Worcestershire receives one of the lowest Government grants for education and schools, yet achieves some of the highest
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results, which merely proves what the Education and Skills Committee has finally and commendably put on the record.

Mr. Osborne: I congratulate the schools in my hon. Friend's constituency. I agree that it is good that the Education and Skills Committee is telling us the truth, as is the Organisation for Economic Co-operation and Development.

Mr. Henry Bellingham (North-West Norfolk) (Con): Is my hon. Friend aware that my local education authority, too, is doing extremely well and getting good results? A number of small schools in Norfolk want to use their own capital funds for doing minor building works, but Government rules prevent them from doing so, and they have to use the county council property services, which cost far more. Could my hon. Friend could look into that?

Mr. Osborne: Under our right to choose, almost all the money in the education system will be directed through parents, so there will be no need for the huge bureaucratic layer of local education authorities in their current form to decide such things. Money will go where parents want it to go and where pupils go, which will dramatically improve standards in our schools still further.

The OECD—I am still trying to tell the House what it said—is an august organisation; the Chancellor often quotes it with approval at the Dispatch Box. The OECD said recently that the UK education system had fallen from fourth to 11th place in the world for science, from seventh to 11th for reading and from eighth to 18th for maths. On the extra spending in the NHS, the OECD said that growth in the volume of health care output had slowed down, compared with the first half of the 1990s. The OECD, the Education and Skills Committee and the Financial Secretary are all right when they say that a lot of money has been spent but little has been achieved.

What is the reason for that failure? It is that the extra money has not been accompanied by reform. The Government have stumbled around in the dark, not knowing what to do with the public services. They have been through several phases. When they first arrived in Whitehall after the 1997 election, they immediately abolished the previous Government's public service reforms. Out went GP fundholding, trust hospitals and grant-maintained schools. The Government actually believed their own election propaganda—that simply getting rid of those things would improve public services.

Kali Mountford (Colne Valley) (Lab): On public expenditure reform, when the hon. Gentleman's party was in government why did it not make the successful changes that Labour has made? I refer to planned expenditure in education. In my own area, heads of schools and colleges tell me that being able to plan ahead and have properly planned expenditure has not only allowed them to increase general expenditure on the education of their pupils, but has vastly improved standards and allowed them to make capital investment. That situation has come about thanks to important reform. Why did not his party do that?
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Mr. Osborne: I think that I have just had a glimpse of the speech that the hon. Lady is planning to give later. Perhaps she should have listened more carefully to what I was saying; I do not deny that the Government have increased the money going into education, but the point I was trying to make is that the money they have spent has not delivered the increased performance that they told us it would. In fact, when people look at the education system they see precious little evidence that it has delivered improved results, and that is borne out by the OECD and the Education and Skills Committee. That is because, as I was saying, we have been through these phases.

First, the Government got rid of the public service reforms introduced by the Conservative Government. That did not work so they were frustrated, and in the late 1990s they decided to centralise everything and run it from Whitehall. It was like a tractor factory in the Urals; in came targets, task forces, 10-year plans and that kind of stuff. They called it modernisation. Things still did not improve, so the Government now declare that targets are dead and centralisation was a mistake. Decentralisation has become the Government's new buzzword—at least for the Prime Minister and the Chancellor of the Duchy of Lancaster, if not for the Chancellor of the Exchequer.

In have come foundation hospitals, funding flows and earned autonomy for schools, which all—on paper at least—look suspiciously like the trust hospitals, GP fundholding and GM schools that the Government abolished in the first place. So after seven years of new Labour, they are back to square one, except of course that this lot cannot really let go.

The experience of foundation hospitals showed that they are not actually prepared to hand over control to the professionals. The earned autonomy promised to successful schools in the Government's flagship Education Act 2002 has never been given to a single school. In other words, we sat through all the debates on that flagship Act, which was part of Labour's main manifesto at the last general election, yet not one school has achieved the earned autonomy that we had all those debates about.

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