Public Assets: Investment of Sale Proceeds (Hansard, 16 November 1983)

§ Lord Beswick
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Chancellor of the Duchy of Lancaster (Lord Cockfield)
My Lords, in accordance with Section 1 of the Consolidated Fund Act 1816, receipts are not hypothecated to a particular purpose. Receipts from sales are used in accordance with the Government's overall economic policy.

§ Lord Beswick
My Lords, I am much obliged to the noble Lord the Minister for his historical review. He puts a persuasive case to cover a most unsatisfactory state of affairs. I wonder whether the noble Lord has been able to read of that most interesting conference held yesterday, organised by The Times and a leading firm of accountants, the report of which in this morning's issue of The Times starts: The drive to cut public spending has fallen most heavily on capital projects, which are easiest to cut. Everyone agrees this is the wrong way round". Did the noble Lord see the headline to that report, which was: It's time to rebuild Britain"? Is it not a fact that the noble Lord and his Government are not rebuilding Britain, but are selling it off?

§ Lord Cockfield
My Lords, so far as the first supplementary question asked by the noble Lord, Lord Beswick, is concerned, the position is that the Consolidated Fund Act 1816 has now lasted 167 years. So far as his second supplementary question is concerned, public sector expenditure in the current year is estimated at £11¼ billion. The noble Lord will find the figures in Volume 1 of the Public Expenditure Survey Paper, at paragraph 31. Compared with this, disposals this year are estimated at £1¼ billion only. Public sector investment is therefore many times the amount of disposals. So far as the noble Lord's point about The Times newspaper is concerned, I read not only the report which appeared in this morning's paper, but also the long, informative and interesting article which appeared in yesterday's newspaper as well.

Lord Morris
My Lords, does my noble friend not agree that as the original acquisition of these assets was either directly or indirectly by way of taxation of earned income or the spending of taxed income, to suggest, as the Question does, that the proceeds of realisation be tied to capital projects is nothing if not spurious?

§ Lord Cockfield
My Lords, I am grateful to my noble friend for his observations. The money to acquire those assets came, of course, from the general flow of Government receipts, whether revenue receipts or capital receipts. The position is as I explained it to the noble Lord, Lord Beswick: one cannot attribute any particular item to any specific item on the other side of the account.

§ Lord Beswick
My Lords, can the noble Lord tell me of one year in those 167 years that he reviewed in which the Government of the day sold off assets at the rate at which they are now being sold off?

§ Lord Cockfield
Not without notice, my Lords. But it is not at all clear from the noble Lord's Question whether he thinks we ought to be selling public sector assets at a greater or lesser amount.

§ Lord Diamond
My Lords, although one accepts what the noble Lord the Minister has said about non-hypothecation of one item on one side of the national accounts to one item on the other, is it not the case that the Government are now embarking on a totally new policy which requires completely new thinking in terms of housekeeping? Is it not the case that the Government ought to regulate their housekeeping in the same way as everyone else does—by having regard to money coming in from the sale of assets in relation to current spending? Is it not the case that the Minister has once more given us only a partial answer? He has not indicated at all what the other side of the capital account is—theloss of capital from depreciation, and so on, which is not shown. Nor has he said that the amount which the Government are currently bringing in of £ 1¼ billion bears any relation whatever to the £40 billion which the Government propose to sell if they can.

§ Lord Cockfield
My Lords, the noble Lord holds a number of extremely interesting and somewhat controversial views on this matter, as indeed he does on a number of other subjects. I realise that the noble Lord is very dissatisfied with the state of public accounts—a matter to which perhaps he ought to have directed his attention during the years when he was Chief Secretary to the Treasury. But I think the most important point is that there is a fundamental difference of philosophy between the noble Lord and his noble friends on that side of the House and noble Lords on this side of the House. Noble Lords opposite believe that there is something particularly meritorious in public ownership. We take the view that, while in certain circumstances public ownership may be unavoidable, assets ought so far as possible to be held by private citizens.

§ Lord Shinwell
My Lords, may I ask the noble Lord for further clarification so that we can understand the position? When an industry is privatised the Government divest themselves of economic responsibility; that is what the noble Lord the Minister has said. In those circumstances, when an industry leaves the national sphere and is invested in private hands should not the general public—we and the people generally—have a right to ask the Government how the money is being distributed, and not to be told that the money is used in a general way by the Government without knowing exactly to what use it is being put?

§ Lord Cockfield
My Lords, the point the noble Lord raises is, of course, basically the same point raised by the noble Lords, Lord Beswick and Lord Diamond. The simple truth of the matter is that there are large flows into the public accounts and large flows out of the public accounts, and it simply is not possible to attribute an income flow and match it with a specific expenditure flow.

§ Lord Underhill
My Lords, as the Minister has stated that in his view assets should be in the hands of the private sector, could he explain to the House why the Government propose to nationalise London Transport?

§ Lord Cockfield
My Lords, the Government do not propose to nationalise London Transport.

§ Baroness Gardner of Parkes
My Lords, is the Minister aware of the situation in the National Health Service whereby assets cannot be realised to their full value due to planning restrictions, and yet these funds are badly needed? Could he inform me whether he knows of any action that is being taken to remedy that situation?

§ Lord Cockfield
My Lords, I think the point my noble friend raises strays somewhat far from the Question on the Order Paper.

§ Lord Taylor of Gryfe
My Lords, could the noble Lord the Minister tell us whether the figure quoted of £11 billion of capital expenditure in the public sector represents an increase on previous years in view of the requirements in the public sector for substantial capital expenditure to keep industry going?

§ Lord Cockfield
My Lord, it is an increase in cash terms, yes. But the figure is in fact the public sector capital expenditure; it does not include the expenditure by the nationalised industries, which for the current year is estimated to account for a further £6.9 billion.