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Baroness Blatch: My Lords, the Minister has completely misunderstood the point. Over the lifetime of the last Parliament, the average increase in percentage of GDP was 5.1 per cent. The level of GDP spending at this moment is only 4.7 per cent. It will take four years to get back to the level that was inherited. Taking exactly the same methodology that the Government used--not simply the cash but all the other expenditure

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which is counted as an increase in spending--will the noble Baroness confirm the figures I gave in my response?

Baroness Blackstone: My Lords, the noble Baroness seems to have forgotten how many questions she asked. She indeed asked a question about GDP and I was going to come to that. But before that question, the noble Baroness asked about the per annum increase in expenditure under the last government and how it compared with what is being proposed. I have just given the answer.

Perhaps I may give the noble Baroness the answer to the GDP question that she raises. Under these proposals, on a resource accounting basis--

Noble Lords: Oh!

Baroness Blackstone: My Lords, if it assists I can give the answer on a cash basis. There is little difference in the figures. In 1997-98, the expenditure of the last government on education as a proportion of GDP was 4.7 per cent. Under our proposals, by the year 2001-2002 it will be 5.1 per cent. On a resource accounting basis the figures are 4.8 per cent. under the Conservative Government and 5 per cent. under the Labour Government's proposals. I sought to be helpful to the noble Baroness's case in giving the resource accounting basis but she does not seem to be aware of that.

It is true that at one point earlier in the 1990s the Conservative Government's spending was rather higher as a proportion of GDP. My noble friend Lord Peston is not present. But as any economist will tell us, if one is in the middle of a recession when one's GDP goes down the proportion of expenditure on one's public services will automatically appear to go up.

Baroness Blatch: My Lords, the noble Baroness really cannot get away with that. Let me give the GDP figures for the whole of the last Parliament. The figure went from 707, 725, 757, 775 and 793. Those were increased GDP figures in each of those five years. The percentage of GDP spent on education was 5.2 per cent. in the first year, 5.2 per cent. in the second year, 5.2 per cent. in the third year, 5 per cent. in the fourth year and 4.9 per cent. in the fifth year. So for four out of the five years it was 5 per cent. or more as opposed to the Government's plans which will not reach 5 per cent. until the last year of this Parliament.

Baroness Blackstone: My Lords, the noble Baroness has conveniently left off the last year of the expenditure under her government. I have the figures in front of me. Under the noble Baroness's plans, the figures fell. The plans were of course inherited; we did not take office until May 1997. It was impossible to change the spending plans for a year in which we took office. We could hardly alter the spending that had already begun in that year. It fell to 4.7 per cent. I have already indicated that I am perfectly clear that in the earlier period the proportion spent was as the noble Baroness has given, but I have also explained to her that there

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was the biggest recession that we have had for a long time during the early 1990s and that explains why the figures seem rather higher.

I turn to some of the later questions asked by the noble Baroness. She asked about spending on class size reductions in 1998-99. During the coming year, we shall be spending £22 million from savings from the assisted places scheme. We shall be spending an additional £40 million on capital, which the noble Baroness will remember we announced in the March Budget. That comes to a total of £62 million.

The noble Baroness went on to ask about provision for three and four year-olds and claimed that the Government's proposals will reduce the number of private sector providers. She also denied that the Berkshire scheme had any effect on that. I am afraid that I cannot agree with her; I believe that it did have an effect. The noble Baroness will need to wait for our more detailed announcements on this later in the year. The proportion for private sector providers will depend on plans put forward by local partnerships. The Government have already made it clear that they want these partnerships to work. We want the private and public sectors to work together. I see no reason why those predictions should come true.

The noble Baroness went on to mention teacher recruitment and retention, a point also raised by the noble Baroness, Lady Maddock. Of course, it is vitally important that we both recruit and retain good teachers. But anyone considering entering the teaching profession, or anyone who is presently a member of the profession, will be pleased with what has been announced today. I cannot believe that these large increases in educational expenditure and in our spending on schools will discourage or lower the morale of teachers. On the contrary, I believe that there will be many cheers in school staff-rooms when teachers hear what we propose.

There will be many improvements in the quality of the facilities which teachers have available to them. We have stated that we shall also be providing more teacher assistants to work in classrooms with them. That is important and it is an aspect into which we must put a great deal of effort.

I heard the noble Lord, Lord Pilkington, mention pay. Yes, pay is also important and in no way do I suggest otherwise. There is no question of a pay freeze as regards teachers. We have already announced a new category of advanced skills teachers whom we intend to reward for their success and high performance in the classrooms not only by status but by an improvement in their pay.

The noble Baroness asked about educational maintenance allowances and child benefit. Yesterday my right honourable friend the Chancellor of the Exchequer announced that we would be running a pilot scheme on educational maintenance allowances in which we will look at the whole issue. When we have monitored its success--if such a scheme is successful; our hypothesis is that it will be--in terms of retaining young people who might otherwise drop out of

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education altogether, we will then move forward. However, I can say no more about that scheme, other than that it is a pilot scheme, the long-term intention of which is to consider whether there should be a shift from child benefit expenditure to those aged over 16 into educational maintenance allowances to target those most in need.

The noble Baroness asked about the 500,000 additional students in further and higher education. She is a little confused. I understand that confusion because I know that it is difficult to make the distinction between numbers and places. The pledge the Prime Minister made was for extra people in further and higher education, not extra places. In the year 1999-2000 there will be 35,000 more students in higher education and 150,000 more students in further education.

The noble Baroness also asked about planned expenditure on universities. She mentioned the sale of the student loans debt. That proposal had been made by her government in order to plug a gap in the PSBR. The new Government, having pledged before the election that for the first two years they would accept the public expenditure commitments of the previous government, have already started the sale of the student loans debt. But that was to plug a hole and it cannot be used for additional expenditure.

The noble Baroness also asked about the extra funding that will be raised from fees and from the abolition of the maintenance grant. I must remind her that in abolishing the maintenance grant the Government are making loans available to more people and increasing the size of those loans through an additional hardship loan. We shall also be doubling access funds.

I have pledged on a number of occasions--I repeat it now--that the moneys from the charges which are to be made to students in respect of fees will be available for further and higher education. They will be put back into the system.

I believe that I have more or less covered the questions which the noble Baroness asked, other than the final question in which I was asked to guarantee that the level of expenditure we are announcing today will last, whatever happens. The assumptions on which these expenditure proposals have been made are cautious and carefully constructed. The Government have every intention of ensuring that they will be met.

Lord Renton of Mount Harry: My Lords, I thank the noble Baroness for giving way. In answer to my noble friend, she said something that I did not understand.

Baroness Blackstone: My Lords, I am responding to the Front Bench speakers and I have not yet dealt with the noble Baroness, Lady Maddock. I do not believe that the rules of the House allow a Back-Bencher to intervene.

I am grateful to the noble Baroness, Lady Maddock, for her welcome of the Statement, and in particular the fact that it covers all sectors. We are determined to support not only pupils at school, but also students in further and higher education and those institutions. The

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noble Baroness said that she did not believe that we had done enough during the past two years. Perhaps I may remind her that we went into the general election making it clear that we would have a comprehensive spending review, that that would take some time, and that until it was complete we would stick with the public expenditure proposals of the previous government.

The noble Baroness also raised questions about school building. We are greatly increasing the amount of capital available for school building. I believe that that will achieve many of the changes for which she has asked. She is right in saying that we have inherited a very unsatisfactory position as regards the accommodation in which our children must operate and learn. We must do something about that.

I have dealt with the point about teachers. The final point raised by the noble Baroness related to our statement that we were setting demanding targets for every pound of new funding. That is right. We will make a further announcement in the Autumn about those targets, extending them into the older age groups which are not yet covered by post-school provision. Of course, we will want to monitor our performance against those targets. There would not be a great deal of sense in having them unless we were to do so.

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