The government ought only to invest in those businesses which are both beneficial to the economy and unlikely to be invested in by the private sector. And since education is pretty much the definition of such areas, cutting spending to it shouldn't really be a priority.
Spending on schools is pretty much THE supply side economic policy, so it's not a matter of monetarism vs. Keynesianism. In any case, certainly not with the monetarists on the side of the cuts. If Osbourne feels that it's money being spent inefficiently then it's fair enough if he wants to cut it, but personally I'd prefer he reallocated it. I find it difficult to support any cuts in education really, even if there is a deficit. There's a lot more to be said for the positive economic impact of cuts in, say, the postal service.