§ 3.8 p.m.
§ The Question was as follows:
§ To ask Her Majesty's Government whether they accept the conclusions reached in the CBI's report on the Fabric of the Nation published in June 1984.
The Earl of GowrieMy Lords, the Government welcome this report as a contribution to the debate on public expenditure in the longer term. We will consider the detailed proposals, but it is important to note the emphasis given by the CBI to demonstrating that projects yield a satisfactory return. Also, the CBI's proposals are not intended to divert the Government from their aims of reducing inflation still further and holding down public spending as a whole.
§ Lord EzraMy Lords, in view of the sympathetic reception which the Government are apparently giving to the CBI report, may I ask whether the proposal for increasing the essential road-building programme by the modest extent of £300 million per annum over the next decade is acceptable to the Government?
The Earl of GowrieMy Lords, in 1979–80 the Government halted the massive cuts made by the previous Government in trunk road spending. We are now spending 12 per cent. more in cash terms for trunk roads this year than last year. Roads are indeed long-term investments, but generally the way forward must be in reducing unit labour costs and in the removal of obstacles to the free functioning of markets, not by a wholesale increase in investments which inevitably would have to be financed by higher taxation and higher interest rates. We have a big programme at present, and I should be delighted to 290 consider or recommend a higher one so long as the noble Lord can suggest how we should finance it and what we should cease to fund as a result.
§ Lord UnderhillMy Lords, does the noble Earl agree that the CBI report, while it concentrates on the road programme, treats this as only part of the necessary work on the infrastructure in order to achieve the very economic aims with which the noble Lord dealt in reply to the previous Question? Does he accept the statement made by the CBI that it is absolutely vital that this work on the infrastructure should be started before the revenues from North Sea oil and gas start to run out? Are these proposals not completely in line with the recent report of the British Road Federation and also the economic report of the TUC? In view of those joint statements, should there not be a well-thought-out and considered response?
The Earl of GowrieMy Lords, there will indeed be a well-thought-out and considered response, but it is important to realise, I think, that there already is a large capital programme, not on roads alone, but roads form a substantial part of it. You do not necessarily add to employment by indulging in extended programmes unless you are quite clear how to pay for them. I have cited before—I apologise for using the example again, but the noble Lord will be aware of it—that Northern Ireland has had a great deal of capital spending, and relatively few sustained jobs have come out of that programme.
§ Lord EzraMy Lords, in view of the fact that the Department of Transport have estimated that road traffic could increase by no less than 48 per cent. between now and the end of the century, is the noble Earl going to tell us he is satisfied that the road building programme is going to be adequate to meet that increased need?
The Earl of GowrieMy Lords, I think the way to tackle roads in the modern economy is steadily, and within the resources that are available to finance them.