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Mr. Bernard Jenkin (North Essex) (Con): On the question of earned autonomy, does it occur to my hon. Friend, as it does to me, what a falsehood that phrase actually is? The concept of earned autonomy merely corroborates the omniscience of the centre and the sovereignty of the Secretary of State over everything that happens in every school and every hospital.

Mr. Osborne: My hon. Friend is absolutely right. The very concept of earned autonomy is that it is something handed down from on high as a reward rather than being integral to the system. Schools should have autonomy, parents should be able to send their children to the schools they want, and the money should follow each child. That is the way in which an education system should be run.

Of course, the Government's instincts are to interfere and meddle, and the vast bureaucracy that they have created—the 300,000 extra bureaucrats in countless new quangos, agencies, units and so on—have a vested interest in keeping power out of the hands of the users
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of public services: the patients and the parents. Sir John Stevens, the Metropolitan Police Commissioner, said recently:

If people want an explanation of why they do not see police officers on the street and why there are now more than 1 million violent crimes a year, they should perhaps listen to the Metropolitan Police Commissioner.

Of course, the failure to reform means a failure to deliver. Public sector productivity has fallen for the past three years of published figures. The European Central Bank recently published a paper that found that if the UK public sector were as productive and efficient as others in the developed world, outputs would be 25 per cent. higher. Instead of reform and delivery, we have had waste on a huge scale. Of the 88,000 people employed to work in the education system in one year, just 14,000 are teachers and teaching assistants. The number of tax inspectors is rising twice as fast as the number of new doctors and nurses. There are more officials in the Department for Environment, Food and Rural Affairs than there are dairy farmers.

We have seen two examples in the newspapers today—two reports from the National Audit Office. The NAO has again qualified the accounts of the Department for Work and Pensions because it says that benefit and fraud mistakes are costing taxpayers £3 billion a year. The report on the NHS IT system for patient choice—a multi-billion pound system that was supposed to make 200,000 bookings last year—shows that it only made 63 bookings last year.

It is not just the big ticket items that tell the story of waste under the Government; sometimes the small examples can be just as illuminating: the £1,000 chairs in the Ministry of Defence and the Cabinet Office taxi bill, which has gone up 1,000 per cent. under the Government. The Secretary of State for Trade and Industry said recently that

One can see why when one looks at her own backyard. According to recent written answers, the Department of Trade and Industry has in the past few years spent £23 million on office refurbishment, £7.9 million on furniture, £30 million on overseas trips, £10 million on first-class travel and £120,000 on flowers. At least with the four-fifths reduction in the number of DTI civil servants, there will be less need for pot plants.

Rarely in the history of politics have a Government spent so much and achieved so little. That has an economic consequence, and hon. Members do not have to take my word for it.

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

Mr. Osborne: I am happy to give way, but perhaps the hon. Gentleman will tell me—he is versed in these economic matters—whether he agrees with the International Monetary Fund, the OECD and so on that taxes will go up if Labour wins.

Mr. Bailey: Perhaps the hon. Gentleman will answer my question. I understand that he was at school for a large proportion of this time, but previous Conservative
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Governments received a largesse of £87 billion from North sea oil and gas tax revenues, slashed public expenditure and raised taxes. What sort of example and what sort of credibility do the Conservatives have in arguing for value for money on that basis?

Mr. Osborne: I was taught at school that Conservative Governments took the sick man of Europe and transformed the country into the most successful economy in the world.

Let me talk about the present, rather than the past. I should like to quote the Prime Minister's chief economic adviser—the man who gave the Prime Minister his economic advice for seven years. Derek Scott says:

I agree with the chief economic adviser to the Prime Minister—more cross-party consensus. Britain cannot carry on down the path of spend, waste and tax without storing up huge problems for the economy. That is what almost every independent observer of the British economy thinks, too. I have mentioned them already and I will mention them again. The IMF, the OECD, the ITEM Club, the National Institute of Economic and Social Research, the CBI, the chambers of commerce and the independent Institute for Fiscal Studies all now believe that the Government have created a structural deficit of anywhere between £8 billion and £12 billion.

Mr. David Laws (Yeovil) (LD): I want to find out how far we can press the consensus that the hon. Gentleman talks about. He has just cited the Institute for Fiscal Studies. Does he agree with the following comments, which it made yesterday:

So given the plans announced on Monday, would the tax burden still not rise, even under his plans?

Mr. Osborne: I seem to remember that the IFS said that under a Labour or Liberal Democrat Chancellor taxes would go up, and under a Conservative Chancellor taxes would go down. That is a fair assessment. Indeed, the Liberal Democrats have a list of strange taxes on pets and all sorts of other things, but their proposal for a 50 per cent. top rate of income tax would give us a higher top rate of tax than France, Italy, Spain or Belgium. Perhaps the hon. Gentleman, who has worked in the City, will explain in his speech how he thinks that Britain could compete with a higher top rate of income tax than those countries, let alone many of the English-speaking economies of the world.

Of course, it is an historic achievement to have a structural deficit after seven years of tax rises. I have to take my hat off to the Chancellor. He now faces a choice, as indeed does the country: higher taxes or spending that
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the country can afford. Which will it be? This week, we gave our answer. We would spend £12 billion less than the Government by the year 2007–08, and we could use that money to fill the budget deficit and to cut taxes on hard-working families. We would achieve that by making the specific savings identified by David James and his team of independent experts. I heard the Prime Minister earlier casting aspersions on David James. That is rather strange, as the Prime Minister hired him to sort out the mess of the millennium dome.

I stress that the savings that David James and his team have found in the NHS and schools—every penny saved on bureaucracy, waste and unnecessary quangos—will be reinvested in the NHS and schools. We will radically reform those services so that they are driven by the right of parents and patients to choose, rather than by the diktats of Ministers, so people will get real value for money and see real improvements in standards. The same goes for the savings found in transport, the police, defence and international development; they will be re-spent in those areas, to improve the quality of service that people receive.

Kali Mountford: The hon. Gentleman is extremely gracious and generous in giving way again, but is he not aware that the Gershon review is duplicating a lot of what is recommended by James? Has he not yet realised that money cannot be spent twice, so that money cannot be saved twice? What extra saving that is not a myth can he point to?

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