Tories would privatise schools, warns Labour

William Hague's plans to free Britain's universities from state control could be followed by moves to privatise schools and hospitals, Labour warned last night. The Tory leader's launch of his draft manifesto for the next general election has been undermined because his "free universities" scheme is revealed as part of a right-wing blueprint to slash public spending by tens of billions of pounds.

William Hague's plans to free Britain's universities from state control could be followed by moves to privatise schools and hospitals, Labour warned last night. The Tory leader's launch of his draft manifesto for the next general election has been undermined because his "free universities" scheme is revealed as part of a right-wing blueprint to slash public spending by tens of billions of pounds.

The idea of giving universities endowments to free them from government control, one of the "big ideas" in yesterday's mini-manifesto, was proposed in 1995 by Alan Duncan, a Tory frontbench industry spokesman and a close ally of Mr Hague's.

In Saturn's Children, a book written with Dominic Hobson, Mr Duncan said: "The idea of endowing institutions to secure their independence from the state is capable of extension beyond the schools and universities. Hospitals are an obvious example... the gradual liquidation of the state in this way will be a prolonged business. It will be necessary to make radical cuts in public expenditure elsewhere to finance the initial endowments."

He suggested a long-term target to cut public spending to between 15 and 20 per cent of gross domestic product, about half its level of 37 per cent.

In a section called "The Liquidation of State Education," Mr Duncan said: "Educational standards and diversity cannot be recovered until the state withdraws from education." But he conceded this could take three decades. Mr Duncan said endowment funds for universities should be combined with "an increase in fee-paying by parents and students". The Tories denied last night that they planned to levy fees or create endowment funds for schools or hospitals.

But Labour claimed Mr Hague's university funding shake-up was part of "a hidden agenda to dismantle the state". John Prescott, the Deputy Prime Minister, said: "The mini-manifesto... is long on extremism and short on detail."