Public Investment

Part of the debate – in the House of Commons at 12:00 am on 9 November 1960.

Alert me about debates like this

Photo of Mr Frederick Lee Mr Frederick Lee , Newton 12:00, 9 November 1960

The nine years since 1950.

This cannot give the Government or their supporters any great satisfaction, especially when we consider that as an investing nation we are more dependent on industrial efficiency than practically any other nation because of the large percentage of manufactured exports required if we are to live decently. That picture, inadequate as it is, which I have presented, shows perhaps a slightly different picture of the record of the Tory Government than that contained in the "You have never had it so good" approach which we hear so often from the Prime Minister and other Ministers.

Appendix I of the White Paper, page 30, covers that which does and which does not appear. The only capital formation of private bodies financed from public funds which appears in the White Paper are those of the University Grants Committee, but we see what a vast sector the public one is. In 1958–59, the total extent of public investment was £1,470 million and in 1959–60, £1,618 million. The attitude of the Government on which I have already commented appears very clearly in the various parts of the White Paper. If we look, for instance, at paragraph 10, it says: In recent years there have been adjustments in both directions. In 1957 steps were taken to moderate a rate of public investment which would otherwise have imposed an excessive strain on resources; late in 1958 circumstances had changed and the Government took action to stimulate the rate of expenditure in certain programmes. Paragraph 14 states: In the summer of 1960 it was apparent that a state of excessive demand was developing. The Government therefore decided … the approved level of total public investment in 1961–62 would be held to that of 1960–61. Paragraph 6 states: Public investment is thus an important element in total demand on the resources of the country and the long-term aims of economic policy could be jeopardised in periods of high demand if it were allowed to place too much strain on resources, in particular those of the industries directly concerned. In other words, the moment their own policies get us into the position in which they feel that the economy is overloaded the question must be resolved by cuts in the programmes of the public sector.

Again, there is the fluctuation which we see in these programmes. In July, 1955, reductions were announced in the capital programmes of nationalised industries, local authorities and central government. These were given in the autumn Budget of 26th October, which we all remember came after the General Election. In February, 1956, public investment programmes were reduced by a further £70 million. In 1957, public investment was held down to 1957–58 level. It had been intended to allow it to rise substantially in 1958–59. In May, 1958, the September, 1957, programme for the railways was modified, and the limits for 1958 and 1959 together were raised by £25 million. In 1958, it was announced that the Government envisaged a rise of £125 million to £150 million, following on the 1957 squeeze which had got the economy into an awful mess, and in June of this year the Government announced that they intended to keep investment in 1961–62 down to the 1959–60 level.

Seldom before, when we look at the phrases which I have used from this report, have the Government so blatantly paraded prejudice as a policy. What this amounts to is that the private sector investment will be decided by what industrialists happen to fancy, and the public sector investment decided by whatever there is left over after all other claims have been satisfied. What the economic situation needs in the way of investment does not seem to enter into their consideration at all. It appears that national need will continue to be sacrificed to the Government's doctrinaire prejudice against the public sector.

This attitude not only prejudices and negatives. It implies certain assumptions which, I should have thought, even Government supporters must know are quite unsound. The automatic priority of private sector investment over public sector investment just will not stand serious examination. No one can seriously suggest that when resources are short locomotives should make way for lawn mowers. That is just the kind of ludicrous scale of values applied by the Government's manipulation of public investment to balance uncontrolled fluctuations in private investment.

This attitude of the Government implies that not only private investment, but private consumption, also, should have automatic priority over public investment. Is there anything that could be more irresponsible and short-sighted than to allow carefully worked out, important long-term investment programmes to be arbitrarily boosted up and beaten down again to fit in with electoral convenience?

I am trying to show that when we have a difficult economy, such as this, we cannot possibly leave one huge sector entirely free concerning investment, and, at the same time, restrict the investment policies and programmes in the huge public sector without doing very great harm to the whole of the economy. My conviction is that much of this is political cowardice.