HL Deb 02 February 1982 vol 426 cc1198-200

2.41 p.m.

Lord Orr-Ewing

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether the accounts of the nationalised industries separate revenue and capital expenditure, so that taxpayers' money allocated for capital expenditure is not used for revenue expenditure, increased wages and redundancy payments.

The Minister of State, Treasury (Lord Cockfield)

My Lords, the published accounts of the nationalised industries do distinguish revenue from capital expenditure. In addition, the public expenditure White Paper shows every year planned capital expenditure for each of the industries, and how it will be financed. Out-turn figures on the same basis are given for each of the two preceding years.

Lord Orr-Ewing

My Lords, while thanking my noble friend for that reply, may I ask him whether he is aware that capital expenditure on fixed assets for the nationalised industries in the current financial year are due to be some £7,000 million, and that over 60 per cent. of this was to come from self-generated funds? Is it not a fact that if the nationalised industries give wage awards which are not matched by increased productivity then the capital programme just has to be cut, and that this affects the whole planning, the whole efficiency and the whole viability of the private sector, and the jobs which go with the products that they are producing?

Lord Cockfield

My Lords, I entirely understand the point that my noble friend is making. It is very important, both from the point of view of the nationalised industries themselves and from the point of view of the private sector, that they should maintain their agreed capital programmes for which finance is available either from internal resources or through their external borrowing limits. This means, in turn, that the nationalised industries must continue their drive to increase their level of efficiency, to reduce their level of costs, and, inter alia, to ensure that wage settlements are reasonable.

Lord Taylor of Gryfe

My Lords, would the noble Lord accept that, while it is desirable for the nationalised industries to distinguish between capital and revenue expenditure, it is equally desirable on the part of the Treasury to distinguish between capital and expenditure projects in calculating the PSBR and the external finance limits? Would the noble Lord agree that if such a distinction were made it would enable the nationalised industries to invest substantially and to relieve unemployment?

Lord Cockfield

My Lords, I do not agree with the noble Lord's conclusion. It is quite wrong to believe that all capital expenditure is good and all revenue expenditure is bad or questionable. A very large proportion of revenue expenditure consists of pensions and other transfer payments, to which, naturally, a high priority would be given. For example, a great deal of capital expenditure on defence, or what people would regard as capital expenditure, is classified as revenue expenditure; and one cannot, therefore, draw the rather simple distinction that the noble Lord is endeavouring to draw.

Lord Nugent of Guildford

My Lords, may I ask my noble friend whether he would agree that the effect of excessive wage awards in a nationalised industry, and particularly one which is a monopoly, is that the prices of its products go up excessively?

Lord Cockfield

My Lords, what my noble friend has said is entirely true. If any sector of the community behaves in an unreasonable manner, it imposes burdens on the other sectors of the community.

Lord Jenkins of Putney

My Lords, does the noble Lord agree that it would be equally wrong to draw the simplistic conclusion that all public expenditure is bad and that all private expenditure is good?

Lord Cockfield

My Lords, no such conclusion has ever been drawn by this Government, nor, I suspect, by previous Governments either.

Lord Duncan-Sandys

My Lords, will the Government at all costs try to avoid switching money which is earmarked for technological advance to current costs?

Lord Cockfield

My Lords, I am not aware of the particular point that my noble friend has in mind. It would not appear to arise directly from the Question on the Order Paper.

Lord Orr-Ewing

My Lords, could my noble friend confirm that last year there had to be a cut-back in the nationalised industries' capital programme because of a short-fall in self-generated funds? Would he predict that this year there will also have to be a cut-back with a similar short-fall in funds?

Lord Cockfield

My Lords, I should not like to enter into any predictions of the kind that my noble friend has suggested. What I would say is that if the nationalised industries could reduce their costs by only 1 per cent. that would release another £300 million for investment.

Lord Jacques

My Lords, in condemning any sector which acted unreasonably, would the Minister include the Government themselves?

Lord Cockfield

My Lords, the noble Lord has got his premises wrong, as usual. The Government are not behaving irresponsibly and have not done so.