Public Sector Capital Investment (Hansard, 9 December 1982)

§ 8. Mr. Hicks
asked the Chancellor of the Exchequer if he is satisfied with the present levels of capital investment in the public sector of the United Kingdom economy; and if he will make a statement.

§ Mr. Ridley
Public sector capital investment was planned to be £13.8 billion in 1982–83. The Prime Minister has expressed her disappointment that local authorities' and nationalised industries' expenditure is likely to fall well short of these plans. Since these bodies decide their own capital programmes, we cannot ensure that they make full use of the planned provision.

§ Mr. Hicks
Does my hon. Friend agree that a programme of enhanced, but selective, capital investment, particularly for the building and construction industry, would help reverse the unemployment trend and stimulate the economy? Does he further agree that such a programme would not run contrary to the Government's counter-inflation programme but would help the PSBR and stimulate the private sector, as 90 per cent. of such contracts go straight to the private sector?

§ Mr. Ridley
My hon. Friend should address those remarks, with which I have much sympathy, to the local authorities and the nationalised industries, because they could spend a great deal more during the current financial year without even reaching the ceilings imposed by the Government. It would help if they did so.

§ Mr. Skinner
The problem with the local authorities' and nationalised industries' spending that so-called capital allocation is that the Secretary of State for the Environment and other Ministers insist that those bodies 969 spend that money only when there are no revenue implications. Yesterday another Minister came to the House and told us that nearly £50 million was to be spent on the Falklands. That will have serious revenue implications for those 1,500 people. Why cannot the rest of Great Britain be treated in the same way? The money would then be spent and the unemployment figures would go down.

§ Mr. Ridley
The hon. Gentleman is wrong on two counts. First, the revenue implications of increased capital investment by local authorities are taken into account—

§ Mr. Skinner
No, they are not.

§ Mr. Ridley
—in setting their targets. Secondly, local authorities have received about £1½ billion during the current financial year from the sale of council houses. That money is available without any servicing costs at all.

§ Mr. John Townend
Can my hon. Friend understand the surprise of Humberside ratepayers where the Labour council, having spent money like water, increased the rates by 60 per cent. and spent all its capital allocation and receipts, is now being asked by the Government to put forward applications for further allocations? Can he understand why the ratepayers feel that it is a prize for a profligate spender?

§ Mr. Ridley
I cannot answer for any local authority which has overspent its revenue account and robbed its capital account to do so. I cannot comment on Humberside.

§ Mr. Cook
Is it not pure effrontery to lecture local authorities on failing to invest, after three years during which they and nationalised industries have seen their cash limits screwed down? Is the Minister aware that the combined figure for central and local government investment is half the 1979 level? Those cuts have crippled industries such as construction, which depend on public sector investment. Would the hon. Gentleman care to comment on the speech last week by Mr. Chetwood, Wimpey's chief executive, when he predicted that it would take the construction industry the next 10 years to recover from the past three years of Conservative Government?

§ Mr. Ridley
The hon. Gentleman must particularise. There are two ways in which capital expenditure takes place. First, there are those grants made by the Government to local authorities and nationalised industries. Secondly, there is what those bodies spend. If the hon. Gentleman looks at the figures of what they spend, he will find that his figure is not correct. It is perfectly correct for the Government to draw attention to the shortfall in capital spending by those bodies, since the criticism of my hon. Friend the Member for Bridlington (Mr. Townend), which has great validity, is that they have not spent what they could.