HC Deb 24 October 1984 vol 65 cc686-7
16. Mr. Norman Atkinson

asked the Secretary of State for the Environment if he intends to extend his restrictions on the borrowing requirement of local authorities to those private companies now contracting for local authority work.

Mr. Kenneth Baker

My right hon. Friend the Secretary of State announced on 26 September that in the light of the latest figures the present restraint on local authority capital expeniture would have to continue. This leaves authorities free to place new contracts within certain limits. We are asking authorities which have entered into commitments up to or beyond those limits not to let further contracts, to the private sector or otherwise, but there is no question of any authority having to withdraw from existing contracts.

Mr. Atkinson

Does the Minister recollect a circular issued by his Department advising local authorities that investment in contractors' plant and machinery is inflationary and therefore should be cut? Why then is investment in contractors' plant and machinery in private undertakings deflationary?

Mr. Baker

If I may say so without appearing discourteous, the hon. Gentleman has got hold of the wrong end of the stick. If a local authority wishes to let a capital contract, it can do so either to the private sector or to its own direct labour organisation. The direct labour organisation is, of course, free to compete for the contract.