HC Deb 21 February 1985 vol 73 cc1183-4
3. Mrs. Clwyd

asked the Chancellor of the Exchequer how many representations he has received concerning the need for more public spending on the infrastructure.

Mr. Peter Rees


Mrs. Clwyd

The Minister has already accepted that tax cuts will not necessarily create jobs, but does he realise that there is evidence to show that money spent on the infrastructure would create two and a half times as many jobs as money spent in tax cuts? Will he accept that public spending is a necessary part of job creation?

Mr. Rees

I certainly accept that public spending can create jobs, but if the hon. Lady reflects for a moment she will realise that economies, such as the economy of Japan, which carry a low rate of public expenditure and a low tax burden are performing rather well, and are therefore creating more jobs.

Mr. Neil Hamilton

When considering public expenditure on the infrastructure, will my right hon. and learned Friend bear in mind the return produced thereby? The last thing that we want is more fiascos like that of the Humber bridge, which act as a drain on the economy and destroy jobs in the long term?

Mr. Rees

My hon. Friend is absolutely right. Capital projects are bound to be looked at on an individual basis. There can be no absolutely correct level of capital expenditure on infrastructure projects. Each project must be looked at on a case-by-case basis to see whether it is likely to yield a proper return.

Dr. McDonald

Is the Minister aware that capital investment has fallen as a proportion of gross domestic product from an average of 19 per cent. under Labour to an average of 17 per cent. over the past four years? Is he further aware that Britain is now at the bottom of the investment league of major industrial countries? Is it not high time that he listened to the voices of industry, the unions and Members of Parliament of both parties and stepped up investment in our decaying infrastructure in order to provide real jobs and to make our economy more efficient?

Mr. Rees

If the hon. Lady was not mesmerised by the public sector—we all know her penchant for an East European economy — she would realise that capital investment is running at an all-time high.

Sir William Clark

Will my right hon. and learned Friend remind the House that if our public sector borrowing requirement were increased to provide more infrastructure investment it would put an added strain on the nation's finances, since the national debt costs taxpayers about £17 billion a year to service? Consequently, does he agree that anybody asking for increased public expenditure must realise that it would put further strain on taxpayers?

Mr. Rees

I accept my hon. Friend's analysis. He appreciates, just as I and other Government Members do, that by giving more scope for manoeuvre in the private sector we are creating scope for investment in that sector which can make for a more effective economy.

Mr. Donald Stewart

If, as is alleged, the main sewers are collapsing in all our main cities, does that not take care of all the dogmatic theories on both sides of the House?

Mr. Rees

I have to confess that I cannot talk with authority about the main sewers in Portree on the Isle of Skye, but I can tell the right hon. Gentleman that nearly £1 billion of public investment will be spent on water and sewerage services in 1985–86.

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