§ Mr. Michael Forsyth
asked the Chancellor of the Exchequer what are the financial effects of local authorities undertaking capital projects and arranging leaseback deals with other public sector organisations or companies in which they have a majority interest.
§ Mr. MacGregor
[pursuant to his reply, 9 December 1986, c. 137]: Such schemes will in general boost nominal demand in the economy, implying higher interest rates than would otherwise be the case. This will tend to displace capital projects elsewhere in the economy. Whether the net effect is beneficial depends on the commercial viability of the initial project.