Public Investment

Part of the debate – in the House of Commons at 12:00 am on 28th November 1961.

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Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton 12:00 am, 28th November 1961

That may be theoretically true, but I do not think that happens at all in the way British industry is organised now. The bigger the firm one is operating, the wider may be the range of one's activities. But it is possible for private industry to make a lot of unintelligent investment decisions and still continue in business. What the hon. Gentleman said, while theoretically true, does not represent the real position.

I turn to what the Minister said about long-term planning. My hon. Friends and I are, naturally, very intrigued to see this wholesale conversion on the part of hon. Members opposite to the principles of planning. While the right hon. Gentleman was not talking about planning the economy as a whole, he got as far as having five-year plans for public investment. That is the sort of thing that we have been pressing on the Government for a long time.

The right hon. Gentleman said that, once the plans were settled, it was very important that there should be the minimum of interference with them. I could not agree more. A great deal of attention was paid to this in the White Paper on public investment about a year ago, but in practice the Government are not really following out that principle in what they proposed to do during the summer to meet the present economic crisis.

The Minister said that it was necessary to have the five-year plans as flexible as possible. Again, I agree with him. I also agree with him when he says that it might be necessary for them to be revised every year to take account of changes in circumstances. But there is a great deal of difference between revising a long-term plan because of changes in real physical and economic circumstances and having to change it because of the vagaries of Government policy.

The trouble of the Government with the nationalised industries over the last five or ten years has been that the Government's economic policies as a whole have been such a failure that they have had to interfere constantly in the public investment programmes of those industries. Last year's White Paper made it clear, as the right hon. Gentleman admitted today, that this is an extremely wasteful and inefficient way of dealing with public investment. It is true that the Government have said this year that they will interfere, at least as far as the nationalised industries are concerned, not with major programmes but only with what I imagine they will call "marginal items."

The main point about such items, however, is that if they are truly marginal the amount of economic effect that any sort of monkeying about with them can have is very little. I suspect that once the Government start interfering with a nationalised industry investment programme on the basis of going after marginal items which may reasonably be deferred, they will be doing nothing at all because the economic effect will be absolutely negligible.

However, figures can be adjusted either by the nationalised industries themselves—there are always devices open to them to put a better face on figures—or by the Government, I do not believe that this is, economically speaking, significant, and I wish the Government would give up the idea altogether of interfering in this way with the investment programmes of the nationalised industries. All this would not be necessary if we had a long-term plan for the economy as a whole. If we had such a plan—and this point has been made many times in the debate—it would have to cover the private sector as well as the public sector.

I shall not go into details about the sort of planning we need, because some of them have already been mentioned and I want to say other things later. But the very least we should be trying to get through investment is that the publicly-owned industries and the privately-owned industries make the same sort of estimates about the growth of the economy over the next five years or so. They are not doing that now. Each industry—and, in private industry, each individual concern—makes its own assumptions about the probable trend of the economy over the next five or ten years.

These estimates obviously vary very widely between one sector and another. We shall not get any sort of planning, as I hope the Government appreciate, unless, on this very important question of investment, we at least try to get the private as well as the public sector making the same sort of assumptions about the growth of the economy.

If they are to do that, and if planning is to be significant, then obviously the Government must play a direct part in the allocation of resources so that the needs of public investment in the nationalised industries and the social services bear some sort of relation to the needs of private industry. If the Government do this, then they must seriously look at the point put to them about, for example, the so-called strain on our building industry at the present time.

It has not seemed to occur to any speaker today that if there is a strain on the capacity of that industry it might be rather a good idea to increase the proportion of national resources allocated to it. After all, there is no sort of magical limit to the resources which can be allocated. It would be both possible and fair to increase the industry's resources. But the Government abdicated all responsibility on this question.

Figures have been quoted about office building, and figures can also be quoted for commercial building generally. There is a certain validity in these figures, but there are a whole lot of other things about building that the Government ought to consider. One of the simplest—and it affects me as a Scottish Member very much—is that the strain on the industry does not apply to Scotland. It is symptomatic of the maldistribution of our industrial capacity throughout the country.

The strain is in the south-east and the Midlands of England, and the reason why it cannot be met by adding to its labour force is simply that in these areas there is a strain on industry generally. If the Government had shown any real determination and vigour in the use of the Local Employment Act much of this strain could be reduced.

Again, an important question arises about immigrants in this connection. My hon. Friend the Member for Blackburn gave some striking figures about what has been happening in France, particularly in the building industry and its work in housing. The significant thing, which I hope the Government appreciate, about these very fine figures—which have been achieved not only by France but by West Germany and other countries—is that in France at any rate a good deal of the expansion has come from the use of Italian immigrant labour. A considerable number of Italian immigrants are working in France and a large proportion are in the building industry.

All we have had from our Government in dealing with immigrants is the detestable Commonwealth Immigrants Bill which they are trying to put through. These other countries are welcoming immigrants. A lot of their economic progress in building and every other way has come from large numbers of immigrants. Yet we have a net emigration rate. But the only answer of the Government is to introduce this Bill.

The strain on our resources is obviously not, principally, public capital expenditure. The Chief Secretary to the Treasury said that it represented only about one-thirteenth between 7 per cent. and 8 per cent.—of the total economic activity of the total gross national product. Certainly that represents a big figure when taken as a proportion of investment as a whole, but it does not by itself—I am not here talking about public expenditure generally but of public capital expenditure—impose some sort of unique strain on our resources, as some Members opposite seem to think. Nor is there some natural level beyond which public capital expenditure cannot go without imposing strain on the economy, as I believe the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) seemed to imagine. Nor should the same criteria be applied to each unit of public capital expenditure.

I was glad to see, in the White Paper, that some division of public capital expenditure has been made between the nationalised industries on the one hand and the social services and public services on the other.

Some hon. Members opposite seem to think that capital expenditure in the nationalised industries is a form of some sort of social service, but that is absolutely untrue. Capital expenditure in the nationalised industries is part of the industrial investment and is extremely important from that point of view. To talk, as some hon. Members have, about that capital expenditure having to be borne, or having to be carried, by private industry completely misrepresents the position.

Some hon. Members have said that the nationalised industries have had an unfair share of the nation's capital resources. If the Government believe that to be so, will they say which industries in the nationalised sector have had an unfair share of the country's resources? It is noticeable that when hon. Members opposite talk in this sense—and the leader of the Liberal Party did the same thing—they almost invariably talk about the transport industry. There was a remarkable comment in the speech of the hon. Member for Weston-super-Mare (Mr. Webster) who began by saying that the transport industry—the railways—had been starved of capital since 1918 and who finished his speech by complaining that too much capital investment was going into the British Transport Commission.

Both those propositions are unlikely to be true. Taking the nationalised industries one by one, it will be found that they have not been getting an unfair proportion of the country's capital expenditure resources over the last few years. As a matter of fact, there have been many years in which the Government have been very glad of the capital expenditure of the nationalised industries, at periods when the capital expenditure of private industry has been extremely sluggish when the Government have wanted expansion of capital investment as a whole.

On the other hand, generally speaking, I do not believe that the nationalised industries have been starved of capital since they became nationalised. There may be one or two exceptions to that and I am not happy—nobody is—about what has happened in the transport industry. However, the trouble with the nationalised industries is not so much a starving of capital as the fact that they have been continual victims of the failure of the Government's economic policy as a whole. They have had continually to change their programme and have been continually compelled by the Government to change their programmes because of the Government's failure to deal with the economy as a whole.

If the economy as a whole were prospering, the nationalised industries would be bound to get a fair allocation of whatever capital expenditure was going, because the economy could not run efficiently without their getting a fair share of the nation's capital resources. To talk, as some hon. Members opposite do, about having to be financed by the Government, and so on, is completely missing the point. They are talking about financing the capital expenditure and that involves pricing policy, and so on. Their criticisms and what criticisms of the nationalised industries can be made—and we agree with a number of them—are criticisms of that and not of the level of capital expenditure itself, which is an entirely different matter. I repeat that the nationalised industries have certainly not been bleeding the economy white by getting an unfair proportion of capital resources.

Another section of public capital expenditure has certainly not been getting its fair share of expenditure in the last few years and it is to that that I now want to turn. I was very glad that this afternoon the Minister recognised that this talk of public services is not necessarily to imply that these other forms of public expenditure are in the way of welfare or social security, and so on. For example, when we talk of roads there is not an hon. Member opposite who does not want to see a very large expansion in the roads programme, and most of us on this side would agree. In the White Paper that is given as public service capital expenditure, but it is not a welfare payment but something which economically, apart from other reasons, is absolutely indispensable. The same is largely true of education. We are not building more universities, or expanding present universities, or building more technical colleges, or improving the quality of our schools simply as a sort of welfare or social service measure, but because, apart from anything else, they are economically indispensable if the country is to have the sort of prosperity which we should all like it to have.

There are other parts of the public service expenditure which are being very badly treated, and among the many which have been mentioned the worst is housing. It does not require a Scottish Member—at least, it ought not to require a Scottish Member—to impress upon the Government the seriousness of the housing position. We know that this is especially so in Scotland, but that it also applies— and I do not want to take too parochial an outlook—all over the country, particularly to the big cities.

We are not at the moment building a sufficient number of houses to provide anything like a solution of the housing problem within a generation. The Alliance Building Society has recently calculated that we ought to be building 400,000 houses a year for the next 20 years to give us an extra 8 million houses to allow for slum clearance, the natural forces of decay, and so on. Other calculations have also been made, but I have not yet seen a calculation by an authoritative source which has been satisfied with the present rate of house building in this country.

What is more, this is not something which can be left to private enterprise. It ought to be pointed out to hon. Gentlemen opposite that when private enterprise spends money on building houses, the strain or drain on the resources of the economy is the same as when the building is carried out by public authorities. It does not matter whether the houses are built by public or private authorities. There is the same expenditure of money, and the same drain or strain on the country's resources.

It is no answer to say that we must leave this to private enterprise. We know that private enterprise will be unable to solve the housing problem. This is true in England and Wales, and it is demonstrably true in Scotland. Last week we had the Housing (Scotland) Bill which contained a number of complicated financial provisions, which even the Government admitted would not add one house to the number of houses that would be built in Scotland during the next few years. Last Session there was a Housing Bill for England and Wales, but the Government have no policy for increasing the number of houses built by public authorities. As a matter of fact, the whole emphasis in the policy has been against the building of house.; by public authorities, and, so far as there is to be an increase at all—and none is really projected—it is to be in private house building.

The Government will probably say that this is a question of looking at the resources of the country as a whole and seeing what we can afford. They will probably say that we must not forget that they are putting up hospitals and building schools, and that we must not forget, too, that if we strain the country's resources too much these things will be impossible. This is the general line of the Government's argument.

If one looks at public capital expenditure in isolation, if one does not consider the economy as a whole, and if one considers that public capital expenditure has some sort of natural limit beyond which it must not go, there is a certain amount of substance in the argument; but our argument is that there is no natural limit of that sort, and that if the Government were to plan the resources of this country in an intelligent way the amount of money available for public investment would be considerably increased. This is not an economic question. It is not a question only of economic priorities. It is a question of social priorities.

The Government are unable to solve this problem. They are not able to increase the amount of public investment in housing and do all these other things because their policies are circumscribed by the sort of general principles upon which they have been operating over the last few years. If the Government were to be serious about planning—not just about investment but as regards the whole economy—and if they were serious about taking an active part in the allocation of resources among the varying demands made on it, it would be possible to increase considerably the amount of resources given to public housing. I believe that this, more than anything else, is detracting from the quality of life in this country.

It is as simple as that. Do the Government place the same emphasis and the same importance on housing as we on this side of the House do? If they do not, and if they continue as at present, the housing problem of this country will never be solved, certainly not within the next generation.