HC Deb 24 January 1985 vol 71 cc1115-6
3. Mr. Dixon

asked the Chancellor of the Exchequer how many representations he has received regarding the level of public expenditure on the infrastructure.

The Chief Secretary to the Treasury (Mr. Peter Rees)


Mr. Dixon

Bearing that reply in mind, what possible justification can the Government have for slashing almost £1 billion from capital expenditure next year when every objective report has suggested that our infrastructure is crumbling? Has the right hon. and learned Gentleman seen the latest report by the committee chaired by the Duke of Edinburgh, which suggests that we should spend £50 billion to put our housing stock in order?

Mr. Rees

Perhaps the hon. Gentleman overlooks the fact that public and private sector investment is running at a record level of £55 billion this year. If we are to bandy about reports, I should like to remind the House of the OECD survey of the United Kingdom, which said, that the main problem for the United Kingdom is unlikely to stem from an insufficient quantity of investment but rather from the inefficient use of capital or poor quality of investment.

Mr. Hayes

Does my right hon. and learned Friend believe that the modest proposals of the Henley Centre for Forecasting on selective investment in the infrastructure, based on the Treasury model, are in conflict with Government policy? They suggest that £1 billion invested per year over a five-year period would create between 70,000 and 100,000 jobs in construction, would cost £8,000 a job, would have an input content of 7 per cent. and, most important of all, would increase the money stock per year by less than 0.5 per cent.

Mr. Rees

In the long term, we feel that the efficiency and prosperity of the economy, and therefore sustainable jobs, would be better created by cuts in income tax.

Mr. Wainwright

Will the Chief Secretary tell the House to what degree Government spending on the infrastructure falls short of the annual depreciation and obsolescence of it?

Mr. Rees

No, I cannot, because we are dealing with a myriad of assets. However, I can tell the House that expenditure on national roads, for example, has increased since 1979–80 by 16 per cent., which is £104 million.

Mr. John Townend

Will my right hon. and learned Friend accept that in the past there have been numerous capital projects in the public sector which have made no adequate return on investment; in particular, tower blocks of flats which are now being pulled down, and projects which have overrun costs, such as the Humber bridge and the Isle of Grain power station?

Mr. Rees

My hon. Friend makes a sound point. Not all capital projects necessarily show a good rate of return. Each project has to be assessed on its merits.

Mr. Hattersley

If we are right to assume from the Chief Secretary's answer that he accepts the judgment of those independent inquiries that something needs to be done about Britain's infrastructure, how does he justify tables 2.9 and 2.10 of the White Paper, which makes it clear that the Government are to cut capital expenditure in these sectors?

Mr. Rees

The right hon. Gentleman overlooks the fact that there is a private sector, an error into which his party frequently falls. The main thrust of our policy is to give more scope for manoeuvre in the private sector, which is increasing its investment every year.