HC Deb 12 November 1980 vol 992 cc466-9
11. Mr. Canavan

asked the Secretary of State for the Environment whether he will arrange to meet representatives of the construction industry to discuss the effects of his moratorium on the building of council houses.

Mr. Heseltine

I met the Group of Eight last week.

Mr. Canavan

At the next meeting will the Secretary of State explain why he is crippling the construction industry when there are thousands of families on the waiting lists for a home and 300,000 construction workers on the dole? In view of the strong possibility, especially after yesterday's CBI conference, that such a meeting might end up in a bare-knuckle fist fight with the captains of British industry, will Tarzan be taking along the Mace to defend himself?

Mr. Heseltine

It is apparent that the CBI is trying to take lessons from the Labour Party conferences. I do not need to wait until the next time, because I explained to the Group of Eight exactly what were the difficulties for the Government in trying to find the cash to fund the level of pay increases for which the last Government were responsible as a result of the Clegg commission. As long as we have to meet bills of that sort, capital programmes are likely to come under pressure.

Mr. Squire

Will my right hon. Friend confirm, as the question referred to the moratorium, that it is of no long-term advantage to the construction industry, or to the homeless or the less fortunate, for Governments, national or local, to live beyond their budgets?

Mr. Heseltine

My hon. Friend will remember that the Labour Party when in power was continually forced to come back to a realisation of that, usually at the behest of an outside organisation that forced reality on it. The truth is that its attempts to increase public expenditure by going in for extra borrowing, which is what it is now suggesting I should advise my colleagues to do, led to declining levels of public expenditure in real terms whilst it was in office.

Mr. Heffer

Will the right hon. Gentleman explain what the Group of Eight, including the trade unions, said to him? Did its members say, as some of them have been saying in the press, that the Government's policy in relation to construction was lunacy? Is it not time the Government recognised that if they go on as they are the construction industry will come to a total halt?

Mr. Heseltine

What the Group of Eight said to me, with which I have great sympathy, was that broadly speaking the country was increasing its consumption faster than its wealth, and that as a consequence it was squeezing its capital programmes. If the House has not realised that, it has not studied what happened in the last few years under the Labour Government.

Mr. Dover

Is my right hon. Friend aware that many building companies do not mind the moratorium on council house building? Does he realise that they would prefer to be building housing for sale, as well as factories and investments that pay for themselves, instead of uneconomic housing?

Mr. Heseltine

I am sure that there is much in what my hon. Friend says, but the one thing that the Group of Eight impressed upon me above all else was that it wanted to see the levels of interest rates brought down. That cannot be done unless we control public expenditure.

Mr. Kaufman

Is the right hon. Gentleman aware that Mr. Ron King, president of the House-Builders Federation, has said that the private sector as a whole—whether manufacturing industry, the construction industry at large, or the house building industry—has been slimmed down to danger point? Is he further aware that that same gentleman said that the present Government had brought private industry almost to its knees? Can the Secretary of State say whether that has come about deliberately or by mistake?

Mr. Heseltine

It has come about entirely as a consequence of the economic inheritance for which the present Government assumed responsibility, including the fact that the Clegg award cost the country £1.6 billion in extra wages, which has to be funded in the public sector without any increase in wealth to achieve it.

Mrs. Renée Short

There is no wealth now.

12. Mr. Hooley

asked the Secretary of State for the Environment what estimate has been made by his Department of the loss of business to private contractors arising from the moratorium imposed by him on local authority housing.

Mr. Stanley

My right hon. Friend's action is designed to hold local authority housing investment to its originally planned level for the year, not to cut it. He is now considering the latest figures, and the effects on the construction industry will depend on the nature and timing of those decisions.

Mr. Hooley

When will it penetrate the collective mind of the Cabinet that public authorities and public corporations are the major customers of private industry, and that to decimate public expenditure, so far from being any help to the private sector, is undermining its very existence?

Mr. Stanley

If the hon. Gentleman looks at the figures, he will see that a great deal of the work of the construction industry is generated by the private sector. I am interested to note his concern for the future of private contractors in Sheffield. In view of the great deal of new house building work that in the past has been carried out by the direct labour organisation of Sheffield council, I look forward to his enthusiastic support for the direct labour provisions of the Local Government, Planning and Land (No. 2) Bill when they come into effect next year.

Mr. Best

Whilst I accept that the moratorium applies only to public sector building and not to other capital expenditure, may I ask my hon. Friend whether he is aware that many local authorities are now not giving improvement grants other than statutory grants, as a result of the reduction in HIP allocations? Does he not think that that is regrettable? I appreciate that improvement grants now come within the single block allocation, but will my hon Friend do everything in his power to encourage local authorities to give improvement grants as one of the most beneficial ways in which money can be spent?

Mr. Stanley

I am sure that my hon. Friend will be interested to know the figures. Private sector improvement grants paid in the year to September 1980, were higher than in any year since 1975.

Mr. Hardy

As the Minister has told the House during Question Time of the amount of money that he will be saving by his cuts in housing expenditure, will he tell the House how much money he has caused to be spent through higher unemployment? Does he not think it ridiculous that in regions such as Yorkshire and Humberside, if things go on as they are, 1981 will not be far advanced before more building workers are on the dole than in employment?

Mr. Stanley

I hope that the hon. Gentleman will take comfort from the fact that our overall capital expenditure on housing in the course of his financial year is about £2¾ billion.