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Earl Russell: My Lords, in the light of last week's report from the Audit Commission, would the Minister care to withdraw that claim?

Lord Macdonald of Tradeston: My Lords, is the noble Earl referring to the claim that we have produced 1.3 million more jobs?

Earl Russell: My Lords, the Audit Commission's figure is that 35,000 jobs have been created through the New Deal.

Lord Macdonald of Tradeston: My Lords, as I said, the New Deal has helped to cut youth unemployment. When I was the Minister with responsibility for industry in Scotland, I was involved in New Deal schemes and saw at first hand its powerful effect in helping young people back to work.

As well as low unemployment rates, we have very low interest rates, and mortgage rates are the lowest in a generation. We have also introduced the minimum wage and the working families tax credit to help make work pay and to tackle the problems of poverty to which the noble Lord, Lord Saatchi, referred. We believe that the best route out of poverty is a job.

The Government's next imperative in this Parliament is to create more accessible, high-quality and properly funded public services. Our public services symbolise our belief that the individual does best in a strong community. Comprehensive public services available to all have a place in our lives today just as they did more than half a century ago when the National Health Service was created and when the 1944 Education Act was passed. Collective provision continues to be the best way of ensuring that the majority get the opportunity and security that was once denied to them and available only to a privileged few.

The ethos of those working in public services, working unselfishly for the common good is embodied in millions of people who enter public service animated by a sense of that common and public good which they then pursue in a disinterested way. Their ethos is based on a concept of service, on a shared sense of common purpose and a belief that we can together make a difference for that greater good.

That is not to say that I do not appreciate the social responsibility of many in the private sector. The pursuit of the common good is not confined to the public sector: simply, it finds its most explicit expression there.

But as we pay from the public purse, from the rates and taxes of hard-working families, we must also seek to provide the best public services for our people. That is why our public services cannot languish and why we must invest, reform and modernise to give the public value for money.

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Because we have one of the best performing economies today, the country can now afford record sustained investment in our public services, and it has to be sustained. For decades public services have suffered from erratic and inefficient stop-go investment resulting from boom and bust policies. That sustained investment helps our dedicated public servants deliver higher quality services across the country. For example, 140,000 additional public servants have been employed since 1997 and recruitment continues with more nurses, more doctors, more teachers in training and more police.

However, it is clear that our public services must change from overly centralised bureaucracies and become locally accountable, more transparent and built around the needs of the users, the customers, the consumers, our citizens.

The vulnerability of the public service ethos is that it can too easily slip into self-protectiveness, that the producer interest knows best and that the users need not be consulted. Just as importantly, public services cannot have the right to a blank cheque. We need responsive, high quality accessible public services that visibly provide value for money.

That is why the policy driving our changes to the public service is built around the needs of the user. This vision is increasingly a reality. Some 30,000 more nurses have been recruited ahead of schedule. We have also offered greater choice in the National Health Service through innovative schemes such as NHS Direct, which has 98 per cent customer satisfaction. That is a great step forward in ensuring that people in all parts of society are able to take full advantage of health advice on call.

The Government's search for the common ground mentioned by the noble Lord, Lord Howell, is guided by four principles that will help ensure that our public services are brought up to the standard we already see in the best. Our first principle is that we should have national systems of standards and real accountability. We need national standards because we cannot tolerate local failure which blights lives and shuts off opportunities. We are against two-tier services and it is wrong to suggest the opposite.

Thus in education we have national standards in numeracy and literacy and a powerful system of inspection which has seen standards rise substantially in recent years. We have also worked to improve the performance of police forces around the country. We have set up the Police Standards Unit. In health, we are putting an end to postcode lotteries in the interests of greater fairness via the National Institute for Clinical Excellence. We also try to tackle the inequalities that we see around us through various frameworks to attack heart disease, cancer and other killers in our society. We want services which are accountable to users. That is why we have introduced inspection regimes.

Our second principle is to devolve and delegate more power locally to deliver those high standards. Budgets have been delegated to frontline staff. For instance, head teachers in schools now control almost

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90 per cent of their own budgets. They know what their schools need so they are in charge of providing it. And in health, once primary care trusts are set up in April, they will move to take control of up to 75 per cent of NHS spending. So, Douglas Jay was wrong to say that the man in Whitehall knows best. We believe that we should not pretend that we in government know best and that we should try to delegate to people working in the front line to ensure that they can respond more flexibly and work to keep pace with constant change—our third principle.

In a fast-changing world services need to be more responsive to customer demands and technological advance. That is why we have a target for all government services to be available online by 2005. We want to advance e-government in order to give people more access to information and to release resources that are presently taken up in more old-fashioned jobs. That flexibility will also make best use of the human potential of our increasingly well-qualified workforce.

We believe, too, that advancement must be open to all on merit, ensuring that we move from rigid professional hierarchies towards a partnership of extended families of specialist and support staff. Flexibility means flexibility of rewards, too, so that we reward success whether in schools, in the health service or in the police.

Our fourth principle is that people must have more choice. I hope that the noble Lord, Lord Harris of High Cross, will be comforted to know that we also believe that there should be more contestability in the market. In that way we shall bring more choice to citizens. In every other part of our lives we take choice for granted. We do not see why it should be withheld in the public services where lives can hang on the quality of the services available. Therefore, we cannot tolerate chronic underperformance or failure; alternatives have to be made available and choice has to be expanded. We have to work to realise the potential that we shall need in our public services in the economy of the 21st century which we are entering, which will be a very competitive economy.

We believe that this is a far-reaching strategy for radical reform which will be achieved through common-sense solutions. A noble Lord opposite predicted that I would point towards the pragmatism of this Government in tackling some of these problems. I make no excuse for that. As the noble Lord, Lord Smith of Clifton, pointed out, I come originally from a tradition which decreed that it was for philosophers to explain the world but for us to try to change it. I believe that the experience of this Government is to be as pragmatic as possible and to approach matters in partnership, including the partnerships with the private sector that we have developed through the PPP and PFI processes. For all the excoriation from the noble Lord, Lord Smith of Clinton, I thought from what I had read of the debate going on—

Lord Smith of Clifton: My Lords, I am flattered by the noble Lord's reference, but it is Clifton, not Clinton.

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Lord Macdonald of Tradeston: My Lords, I apologise for my Glaswegian accent. I tried to say, "Clifton".

I thought from what I had read of the debate going on within the Liberal Democrats that there was indeed a strong school of Liberal thinking which believed that they had gone perhaps too far in a reactionary approach to any change in the public sector. Indeed, some of the comments from the Liberal Democrat Benches showed ill-concealed hostility to the private sector, which I remind the noble Lord employs 80 per cent of our workforce in what is, I repeat, currently the most successful major economy in Europe.

Earl Russell: My Lords, I happen to be a member of the working group on that. No one in that group has an ideological hostility to the public or private sector. We are ready to consider any scheme that will marry them up but we recognise that the purposes of the scheme are different and that to get the marriage to work is a matter of considerable difficulty. We have been thinking about some of those questions for 10 years—they are quite difficult questions.

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