§ Mr. Whitehead
asked the Chancellor of the Exchequer if he will publish his estimate of the percentage increase compared with the previous year in the yield of all central Government receipts from (a) taxes and other duties, (b) the public sector borrowing requirements and (c) all income saving in the financial years 21979–80, 1980–81 and 1981–82.
§ Mr. Brittan
[pursuant to his reply, 23 December 1981, c. 437]: The percentages requested are given in the following table preceded by the information from which they are derived.
municipal and state loans in the United States of America for investment by the public in nationally beneficial 95W projects, with a view to legislation to provide for the introduction of bonds for funding specific capital construction projects; and if he will make a statement;
(2) whether he will introduce legislation to introduce bonds for national construction projects with varying maturity dates over periods of about 10 years with some degree of dividend tax exemption; and if he will make a statement;
(3) whether he will undertake full discussions with a wide range of financial institutions with a view to examining whether the introduction of bonds for specified national construction and infrastructure projects would be a positive inducement to people and organisations to invest in the long-term future of the United Kingdom;
(4) whether he will investigate the practicalities of issuing index-linked bonds for specific and carefully chosen capital construction projects as a method to attract private funds in order to reduce public expenditure; and if he will make a statement.
§ Mr. Brittan
[pursuant to his reply, 23 December 1981, c. 437]: All the suggestions referred to are aimed at finding new ways of financing additional capital expenditure by the public sector. But unless current expenditure can be restrained the additional expenditure will tend to add to inflationary pressures and raise the interest rates faced by 96W the private sector. Recourse to new financial instruments in general does little to escape these constraints of macro-economic policy.
The Government are prepared to consider new financing instruments where funds can be raised on terms of fair competition with the private sector and where the benefits in terms of increased pressure for improved efficiency are commensurate with any extra cost which is associated with such instruments.
The Government already issue index-linked securities, but do not consider it appropriate to hypothecate such funds to particular capital construction projects as this would seriously limit the flexibility of expenditure and revenue decisions and would distort priorities. If such construction projects are undertaken by parts of the public sector they will add to, not reduce, public expenditure.
I have considered the tax exempt bonds issued by states and municipalities in the United States, but these do not in general offer cheaper funding when the erosion of the tax base is taken into account. Similar considerations apply to bonds with tax exempt dividends.
The Government keep their methods of funding under review and have made a number of changes over the past two years. I have no plans to make a statement. Many of the issues raised by these questions were covered in my speech of 8 December on nationalised industries and private finances, a copy of which has been deposited in the Library.