§ 3.45 p.m.
§ LORD SHEPHERDMy Lords, it may be convenient to your Lordships if I now repeat a Statement which has just been made in another place by my right honourable friend the Chancellor of the Exchequer. I use his own words:
"On July 27 last, I announced the deferment of certain programmes affecting public investment and expenditure. These measures have achieved their purpose. In particular, the rate of expenditure on capital projects has been appreciably reduced. I estimate that in the six months since the arrangements were announced about £200 million worth of capital projects have 663 been deferred for six months. I am grateful to all those who have made the result possible.
"There can be no doubt that this deferment has reduced the pressure of demand below the excessively high level which it would otherwise have reached, has reduced the load on the building industry, and has contributed to the improvement in our balance of payments. The Government now propose to replace the deferment of individual projects by the more normal system of control by expenditure limits. Under the new arrangements revised annual expenditure limits are being fixed in such a way that they will in general be no greater than they would have been under the deferment arrangements. But Departments will now be free to re-programme their investment.
"The limits within which Government Departments will work will apply both to their own spending and in their control of capital expenditure programmes by local authorities. As before, housing, schools, hospitals and projects in development districts will be unaffected.
"Estimates for 1966–67 are being prepared on this basis. Circulars will be sent to local authorities, as necessary, notifying them of the new arrangements. Loan sanction and grants for miscellaneous local authority projects outside the main programmes will continue to be given only for projects which are urgently required."
§ My Lords, that is the end of the Statement.
§ THE EARL OF DUNDEEMy Lords, I am grateful to the noble Lord for repeating the Statement. The Statement says that under these arrangements expenditure will be no higher than it has been under the deferment arrangements. That is a little obscure. I take it to mean that expenditure will not be increased over the rate at which it has been proceeding for the last six months since July 27 and that, although some of the £200 million worth of deferred works have a chance of being started again, they will have to take their chance in competition with other measures, provided that all expenditure does not exceed this reduced rate at which expenditure 664 has been held since July 27 last. So that, in fact, there is no resumption of the former rate of expenditure on public works. There is only a slight elasticity introduced into the kind of work which will now be undertaken. I should be grateful if the noble Lord could confirm that I am right in this.
Can the noble Lord also tell us, if he knows, what is going to happen about roads? Will any of the deferred road expenditure which was stopped last July, some of it in Scotland and some in England, be resumed? Will there be any encouragement to resume it? The noble Lord mentioned that schools and hospitals were not included in the deferred expenditure. We have all heard of instances of expenditure on hospitals which has in fact been deferred since then. Will any direction be given by the Government to give a prospect of the resumption of these projects? Finally, will any priority be given to the resumption of expenditure on the programme of university buildings under the Robbins Report, the interruption of which was a matter of so much regret, I think, to all of us?
§ LORD SHEPHERDMy Lords, I think I should be foolish to say that the noble Earl, in his first supplementary question, was right. He gave a rather involved exposition.
§ THE EARL OF DUNDEEIt was an involved Statement.
§ LORD SHEPHERDI hope to be able to simplify it, if I may. As the noble Earl will be aware, the Government decided that they would have to limit the expenditure of Departments for the next two or three years. As the noble Earl will remember, the Government set the guiding line of a global figure of 41 per cent. There are elements within Departments involving capital expenditure. The Government in July instructed the Departments to defer capital expenditure for six months. If there were deferment of a project costing, say, £10 million, on which £2 million would have been incurred in the present financial year, £5 million in the next financial year, and £3 million in the next, the effect would be that during the period 1966–67, for which the expenditure was to be £5 million, the amount that would be available from the global expenditure for the 665 Department concerned would be reduced by £5 million. The object of this scheme is to enable Departments to plan, within the limits set upon them, the various projects which they have in mind, naturally being able to take into account degrees of priority.
I should not like at this stage to be led into the question of roads in Scotland. As I have explained, in Scotland it will be a matter, I presume, for the Secretary of State, and in England for the Ministry of Transport, to decide how the sums available will be utilised, deciding priorities one against another. With regard to hospitals, I can only repeat—and I have no reason to believe to the contrary—that hospitals have not been affected by the deferment requested by the Government in July. If the noble Earl has in mind a particular hospital which he thinks has been deferred, and will let me know, I will have inquiries made. But, according to my understanding, hospitals, schools and housing were not involved in this deferment.
§ THE EARL OF DUNDEEMy Lords, I was thinking of St. Thomas's Hospital. I do not want to press the noble Lord for any details, but may I ask him this? Would it be not too involved to say that the global expenditure will still be held down to the rate to which it has been held down over the last six months, since July 27?
§ LORD SHEPHERDNo, my Lords; I would not accept that. I told the noble Earl the manner in which this will be done on the basis of what has been deferred. What would have been capital expenditure for the coming year, the amount that was deferred by the policy decision in July, will be taken from what is the global figure of that Department for the coming year.
§ LORD LUCAS OF CHILWORTHMy Lords, may I ask the noble Lord this question? Within recent weeks the Minister of Transport has announced an expansion of the road programme up to 1970 of some millions of pounds. Does that remain unaltered by anything the noble Lord has said this afternoon?
§ LORD SHEPHERDMy Lords, I will certainly take note of that question with regard to a Ministry for which I do not speak. But the Minister of Transport will be tied, as will every other Minister, 666 within the global figure which the Government have set down for capital expenditure in the coming year.
§ LORD LUCAS OF CHILWORTHWith all respect to the noble Lord, I may be dim witted, but I do not understand at all what the noble Lord has said. It is only a fortnight or three weeks ago that the right honourable Lady the Minister of Transport, with a great flourish of trumpets, said that millions of pounds were going to be spent. I can only assume that that was within the programme laid down by the Government. Does anything that the noble Lord has said this afternoon alter this?
§ LORD SHEPHERDMy Lords, I would not suggest—and I am sure nobody would join with me if I did—that the noble Lord is dim witted. If the Minister of Transport has announced sums which are going to be spent, one would expect that this was a figure that had been authorised. If that is so, it is not affected by the Statement I have made, except within the context as to the amount that had been deferred on previous projects.
§ LORD CARRINGTONMy Lords, the noble Lord has referred on several occasions to the global amount to be spent next year. What I should like to know is what is the global amount to be spent next year. Is it at the same ratio as the deferred amount that was spent this year?
§ LORD SHEPHERDMy Lords, if the noble Lord reads my remarks (I apologise if I have not made myself clear to him) he will be aware that the Government have said that in the economic situation that confronts the country they took the view—and I thought most noble Lords agreed with this—that we should have to contain public expenditure within an average increase of 41¼ per cent. per annum. That is the global figure to which I was referring.
§ LORD STRATHCLYDEMy Lords, I thought I heard the noble Lord say that these restrictions would not apply in development districts. My noble friend Lord Dundee has asked a question in relation to the road programme for Scotland. Practically the whole of Scotland is now a development district. Could the noble Lord say whether or not these restrictions will apply to Scotland?
§ LORD SHEPHERDMy Lords, the noble Lord is quite right. I should have appreciated that Scotland is a development district and is, therefore, in a more privileged position than other parts of the country.
§ THE EARL OF DUNDEEMy Lords, it is a development district now, but it was not on July 27 last year. What I wanted to know was whether roads in the districts that were not development districts on July 27 last will now get the privilege.
§ LORD SHEPHERDMy Lord, Scotland is a designated development district. It will become a development district when the piece of legislation is presented to Parliament at an early date.
§ THE EARL OF DUNDEEWhen will that be?
§ LORD SHEPHERDMy Lords, I will not be led there.