Local Authority Capital Expenditure (Hansard, 7 December 1982)

§ Baroness Elliot of Harwood
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

§ The Earl of Avon
My Lords, at the end of October we wrote to all local authorities in England offering to make additional expenditure allocations where these would enable additional work to be undertaken this financial year. By inviting applications, we hoped to secure better use of resources, following a forecast of a substantial underspend on capital investment by English local authorities in the current year. I am pleased to say that many authorities have seized the opportunity to identify and press ahead with projects, and as a result we expect a considerable amount of extra capital investment to be achieved.

§ Baroness Elliot of Harwood
My Lords, I thank the Minister very much for his most encouraging Answer. I hope that every possible opportunity will be taken to urge capital expenditure in the areas where much still needs to be done and can be done. I understand that both the labour and materials are there. What is required is a certain amount of drive. I hope that the Government will put that drive behind their policy.

§ The Earl of Avon
My Lords, I am grateful for my noble friend's response. That is the sort of drive we are trying to put in.

§ Lord Beswick
My Lords, I wonder whether the noble Earl could give to the House the approximate date within the Government's lifetime when it ceased to be an intolerable burden on the taxpayer for local authorities to spend money and became a welcome addition to their economic enterprise?

§ The Earl of Avon
My Lords, I hope that the policies now coming to fruition are doing exactly what the noble Lord says.

§ The Earl of Lauderdale
My Lords, can my noble friend say whether the action to which he referred includes Scotland? He referred only to England and Wales.

§ The Earl of Avon
My Lords, I did indeed refer only to England, in spite of the fact that my noble friend Lady Elliot of Harwood asked the Question. The position in Scotland is rather different. The capital control system in Scotland is not statutory and there is less of a problem about underspending. A few additional allocations are, however, being made and extra spending upon improvement grants is being authorised.

§ Lord Molloy
My Lords, is the noble Lord aware that what made a massive contribution to overcoming the slump of the 1930s and getting the unemployed employed was the building of technical colleges, schools and hospitals by local authorities, and that many of our most famous town halls were built during that period? This made a massive contribution to overcoming the slump which we were then enduring. Would it therefore not be prudent for the Government to increase what they are doing and to give even more encouragement to local authorities to spend and prosper?

§ The Earl of Avon
My Lords, I am grateful to the noble Lord for bringing me back to the time of my birth. The very policies which we are putting forward at the moment are offering greater freedom to local authorities. I am glad to be able to say that, of the recent extra allocation, £60 million has been given to such projects.

§ Lord Kaldor
My Lords, is the noble Earl aware that in the 1930s when these highly desirable events took place the Bank Rate was 2 per cent. and that the Government converted the largest long term War Loan from 5 per cent. to 3½ per cent.? They brought down the whole structure of long term interest rates. Would the noble Earl agree that the reduction of interest rates may be the most efficacious method of increasing desirable capital investment?

§ The Earl of Avon
My Lords, I am grateful to the noble Lord for underlining what the noble Lord, Lord Molloy, said about the 1930s and for giving me that interesting lesson. I agree that the reduction of interest rates is of vital importance.

§ Lord Evans of Claughton
My Lords, while welcoming the increased expenditure on capital projects, would not the noble Earl the Minister agree that one of the problems about encouraging capital expenditure is that often there are revenue implications and that many local authorities are discouraged from going in for capital expenditure because of the extremely heavy controls which central Government have imposed on local authority independence?

§ The Earl of Avon
My Lords, the answer is to tackle the real problems relating to revenue expenditure. It would just be pretending to say that some of the items do not count. There is an overriding need to achieve real cuts in total levels of local authority revenue expenditure. There is still scope for restraining wasteful recurrent expenditure, thus leaving room for revenue consequences on capital projects.

§ Baroness Fisher of Rednal
My Lords, would not the Minister agree that local authority building and housing programmes take longer than a few months to plan and implement? May I also ask the Minister whether he realises that the Government's policy of cut and spend makes it almost impossible for local authorities to plan ahead on capital programmes with any degree of certainty?

§ The Earl of Avon
My Lords, we are aware of the problems to which the noble Baroness has referred, and we are working towards their end. We hope, as I said in an earlier reply, that the greater freedom we have given to local authorities to use all resources, including capital receipts, will encourage local authorities to go ahead and use this added freedom.

§ Baroness Trumpington
My Lords, would my noble friend the Minister agree that any decent local authority automatically plans ahead its capital expenditure? It is when local authorities have the capital that they can implement their plans.

§ The Earl of Avon
My Lords, I am grateful to my noble friend for that additional question.

§ Lord Beswick
My Lords, can the noble Earl say whether this U-turn on local authority expenditure on capital projects is now to be applied to public corporations?

§ The Earl of Avon
My Lords, I do not think that this really is a U-turn. It is as a result of the 1980 Act, which came into effect in 1981, the consequences of which we are now seeing.

§ Lord Leatherland
My Lords, when the Minister spoke of councils spending money on what he called "wasteful projects", what exactly did he have in mind?

§ The Earl of Avon
My Lords, that is an excellent question. I shall try to find some examples for the noble Lord.

§ Lord Leatherland
My Lords, may I ask the Minister to do that within the lifetime of the present Parliament?

§ The Earl of Avon
My Lords, I shall be happy to write tomorrow to the noble Lord with some examples.