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Third, transport. British Rail's and London Transport's investment programmes will be maintained at levels substant...
Third, transport. British Rail's and London Transport's investment programmes will be maintained at levels substantially higher than in the 1980s.

But to make room for this continuing investment in public transport there will be modest reductions in the previous planned provision for the roads programme. In the last five years, real expenditure on roads has grown on average by more than 10% a year. With construction prices next year over 25% lower than when the roads programme was announced in 1989, the new plans will sustain the recent improvements in our roads network - at less cost to the taxpayer.

Finally, defence. In the next two years, spending will be some £250 million and £500 million lower than previously planned. In 1996-97, it will be about the same in cash terms as in the previous year.

The new plans will be delivered in part by lower procurement and employment costs, and through the planned sale to a private sector housing trust of married quarters for service personnel.

In addition, my RHF the Defence Secretary has set in hand a major review of all aspects of support, right back to the headquarters in Whitehall. Savings can and will be made without affecting our foreign policy commitments.

Mr Deputy Speaker, the new method of controlling the total of public spending has brought big improvements in the system of cabinet government. The Cabinet decides its priorities collectively and brings to the House a single package that reflects our key policy objectives. Savings identified in a number of programmes have allowed the Government to meet in full the priorities and promises set out in our Manifesto. I turn now to those priorities.

We are all proud of the contribution that the National Health Service makes to the quality of life in this country. Even in a very tough year, we have decided to increase once again the level of real resources going into the health service. NHS spending will be over £1.5billion higher next year in cash terms and over 1 1/2 per cent higher in real terms than this year's plans. Indeed, the programme is set to rise in real terms in each of the next three years.

To ensure that these very substantial extra resources are translated into more and better health care, my RHF the Secretary of State for Health will be insisting on substantial increases in efficiency and firm containment of pay and the drugs budget. The NHS will be able to maintain the steady improvement of recent years in treating more patients, better.

Second, education. Increased educational opportunities and better standards are an essential investment in the future. Over the next two years, we will therefore be adding more than £1 billion to the plans for the education programme. This will ensure record levels of participation in further and higher education. Our Manifesto predicted that one in three young people would be in full-time higher education by the year 2000. With seven years to go we have virtually reached that target already.

But with a third of our young people now going to university, the ordinary taxpayer cannot be expected to pay for all their costs. Tuition is free; but why should the bus driver or the pensioner also pay higher taxes to finance the living costs of tomorrow's lawyers?

I am glad to say that the recent explosion in student numbers has revealed as ridiculous the fears that the student loan scheme might deter students from poorer families.

My RHF will therefore be bringing forward proposals to reduce the level of the means-tested grant for student maintenance and replace it with an expanded loan entitlement for students. Even taking this into account, spending on education will still be no less than £1.5billion higher in 1996-97 than this year.

Third, training. My RHF the Secretary of State for Employment plans to introduce a new apprenticeship scheme. This will provide a major boost to work-based training and increase substantially the number of young people obtaining the technical and craft skills which the economy has been lacking, as both employers and trades unions agree. There will also be an increase in training opportunities for the adult unemployed.

Fourth, science. The plans fully protect the real value of spending on basic science and technology next year.

Finally, the vital area of criminal justice. Previous plans for Home Office spending will be maintained in full. Next year, spending on the police service will increase by over 4%. And, over time, the management reforms and reduction in paperwork announced by my RH and LF the Home Secretary, could put over 5,000 more police officers on frontline duty. A re-ordering of priorities will also allow for extra provision to be made for more prison places and for victim support. Efficiency improvements will meet in full the costs of new policies, including our proposals to deal with juvenile offenders.

Mr Deputy Speaker, spending on health, education, training and science contributes significantly to the long-term economic performance of the economy, by improving the nation's stock of human capital - the health, knowledge and skills of the population as a whole.

Important as it is, this contribution is very difficult to quantify. This year, however, as promised last autumn, the public sector accounts will identify separately the amount the Government plans to spend on physical capital projects, including improvements in the nation's infrastructure.

Overall, the new plans provide for total public sector capital spending over the next three years of around £22 billion a year. But just as that figure takes no account of the massive investment programmes of the former nationalised industries which are now thriving in the private sector, so too it ignores the very large amount of investment which is stimulated by government policies, including investment in housing and urban regeneration. On top of this, the private finance initiative is now adding to spending in areas for which thepublic sector has traditionally taken responsibility.

To make a success of this initiative - and to deliver the increase in capital spending within the public services that I want to see - will require a complete change of culture within government, together with imagination and innovation on the part of the private sector. This cannot be expected to happen overnight. Even so the flow of private finance projects to date has still, in my view, been disappointingly small.

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