HC Deb 02 December 1947 vol 445 cc195-7
55. Mr. Palmer

asked the Chancellor of the Exchequer if, in view of the Government's revised capital programme, he proposes to make any change in the instructions to the Capital Issues Committee.

Sir S. Cripps

Yes, Sir. I have today addressed a Special Memorandum to the Capital Issues Committee, drawing their attention to the principles set out in the White Paper on Capital Investment in 1948, and instructing them not to recommend consent to the raising of money for fresh capital outlay, except where the reports received by them from Government Departments show that the scheme is in full accord with the revised general programme. The Committee have for some time, with my predecessor's approval, been adopting a more restrictive attitude towards applications, and the purpose of the new memorandum is to give clear and formal expression to the revision of emphasis required by our economic position. I propose, with the permission of the House, to circulate the text of the Special Memorandum in the OFFICIAL REPORT. For convenience of reference it will be reprinted as a Command Paper at an early date.

As regards bank advances, the banks having during and since the war given most valuable help in restricting credit facilities to conform with the general policy of the Government. It is more important than ever that this co-operation should be continued, and the banks will be asked to observe the intentions of the new memorandum to the Capital Issues Committee.

Following is the text referred to:

The Memorandum of Guidance issued to the Committee on 31st May, 1945 (Cmd. 6645) laid down the general conditions governing the grant of Treasury consent to new issues of capital (other than overseas issues). That Memorandum has been re-examined in the light of current conditions. It is not proposed at the present time to lay down a revised list of eligible categories of issues, but the serious changes in the balance of payments position and the consequent need for internal economic adjustments call for a considerable revision of emphasis in the instructions upon which the Committee work.

The capital programme of the country as a whole has been reviewed by the Government in the White Paper on Capital Investment in 1948 (Cmd. 7268). It has been decided that substantial modifications must be made. The main objectives are:

  1. (a) to reduce the total demands of capital projects upon manpower and upon steel, coal, and other materials in order that the requirements of the export industries and other vital purposes may be met;
  2. (b) to ensure that there is a concentration of effort on completing as rapidly as possible the most important schemes.
Much of the reduction in the programme will fall on schemes which are directly or indirectly within the field of national and local government. But the same principles will be applied to private industry, with which the Capital Issues Committee is mainly concerned. The general rule must be postponement of capital outlay, whether on building or on plant and machinery, except where the project gives a considerable return, directly or indirectly, in increasing exports or saving imports from difficult sources, or is of importance to such basic industries as agriculture, coal and steel production.

The various Government Departments will of course be responsible for implementing the revised programme. It has always been a cardinal feature of the administration of Capital Issues Control that the Committee should refer applications for advice to the appropriate Departments and should take account of any advice that may be so received. This consultation is of even greater importance in present circumstances, and the Committee is asked, when considering applications to raise money for fresh capital outlay, not to recommend consent, except to the extent to which they are definitely assured by the terms of the Departmental reports that the scheme is in full accord with the revised general programme of capital investment.