Cabinet minister Andrew Smith has hit back at a left-wing challenger to his Oxford East seat, defending the Government's record on reforming public services.

John Lister, of the Socialist Alliance, is calling for greater investment in public services and opposes the Private Finance Initiative (PFI) for rebuilding the John Radcliffe Infirmary in Headington.

Andrew SmithMr Lister said: "The Government's plans to rebuild the Radcliffe Hospital using a PFI represent rotten value for money. It's like a mortgage where the NHS will be paying private operators to use the hospital for 30 years but at the end of that time the NHS won't own the building."

He also criticised the Labour Government for "lacking the courage" to renationalise Railtrack, claiming that 76 per cent of voters supported the idea.

But Mr Smith, the Chief Secretary to the Treasury, said Mr Lister's "fringe revolutionary politics" would wreck the economy and endanger future investment in public services.

He said: "Mr Lister is interested in state control of the NHS and what I'm interested in is the highest standards of care for patients and getting the investment needed.

"If private finance can do that it has got to be a good thing."

Mr Smith said renationalising Railtrack would cost taxpayers money that was needed to renovate the Rail network.

He added class sizes for five- six- and seven-year-olds had fallen below 30 in Oxfordshire under Labour and GCSE results had improved.