House of Commons Hansard Debates for 19 Apr 1994

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I pointed out in response to an intervention from the right hon. Member for Berwick-upon-Tweed (Mr. Beith). The PSBR will not go away, but I believe that we need more transparency. The Government should separate their accounts to show their trading activities and investment borrowing as opposed to the borrowing that they undertake to maintain their core activities.We should bear in mind Sir Leo Pliatzky's observation that the PSBR is merely what the Treasury says it is. A far wider debate is needed about the definition of the PSBR. We accept that it will not go away, but people should be able to see what the Government are borrowing for.

The cost of borrowing itself must also be considered. The rate of return demanded by the Government has been unreasonably high in some cases--higher even than that in the private sector. That has stopped much rail investment, for example. Then there is the question of the status of public bodies such as the Post Office which find it very difficult to operate in the market because the Government will not let them do so--although many believe that the Post Office could compete very adequately if it were freed of the plundering by the Treasury each and every year.

It is significant that many local authorities--particularly Labour authorities, I am glad to say--have been at the forefront of imaginative development in metro schemes and various public sector developments. That should be encouraged. The whole issue of the public-private sector initiative must be part of an overall strategy for manufacturing investment and economic development. Yet we hear nothing from the Government. Such developments are happening all over the world--in the far east, in Europe and in the United States--yet in this country we have seen very little. We see merely continuing decay and decline.

The Government say that there is no alternative to their policies--just as they said that there was no alternative in the last 15 years which saw Britain's gradual decline in economic performance. I accept that there are problems, but these problems are there to be tackled and not used as an excuse for doing nothing. The Government need to broker agreements where agreements need to be reached. There is a willing private sector, there are people who want work and there is work that needs to be done. Britain should not be condemned to a second-class economic existence because of the triumph of Government dogma over common sense.

Mr. Beith : During the period of grim recession that we have just experienced the Government, along with the private sector, could have productively engaged in promoting infrastructure investment. In doing so, they would have allowed contracts to be placed at a time when the private sector was in a particularly weak position and when excellent prices could have been obtained. That would have created employment, thereby increasing the return from tax revenue and decreasing expenditure on social security benefits. At the end of the day, there would have been assets that we need desperately : an improved transport system and improvements in housing and other aspects of public investment.

The fact that this has not occurred will count very heavily against us. If there is an economic recovery, there will come a point when it will be difficult for the Government to promote more investment and activity in this area because the private sector may be quite active elsewhere and engaging in such investment could generate more inflation.

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But the gaps will still be there. The deficiencies in the transport system will remain. They will produce bottlenecks which will create further problems, such as inflation, in particular, because of scarce capacity. People will have difficulty getting to work--a problem which is particularly evident in London where the transport system is not equal to the task of getting people to work. Business faces huge losses because of that inefficiency.

There will be problems not just in London, but in other parts of the country as well. The Government have missed a great opportunity and, in so doing, have made it a great deal more difficult for us to succeed and to be competitive in the future.

The opportunity has been missed partly for the reasons of dogma which have been mentioned already in the course of the debate. But let us get one thing clear : there is no free lunch ; the kind of investment that we are talking about will cost the public sector some money. Partnership with the private sector can reduce the total amount of public sector commitment as well as bring other advantages. Private sector project management and private sector operation of activities can, in many cases, bring benefits and qualities which are sometimes absent from the public sector.

But the public purse will have to provide certain elements, or the projects would have gone ahead long ago. As a speculative investment, the private sector would have built railways and done other work for which there was a prospect of a reasonable return--particularly if economic conditions had been better managed than they have been in the past few years. But we are talking about areas where the risk is too great, where the return is too uncertain, or where, by the very nature of the scheme, there is not the means of securing the return which the private sector requires.

So we need a contribution by the public sector in the form of money up front or in the bearing of risk. Either way, the Treasury believes that it should appear on the public sector borrowing requirement. I was pleased to hear the hon. Member for Edinburgh (Mr. Darling) accept that as a fact of life ; it is no use pretending otherwise. The logical conclusion is to say, "Right, we may well be justified in adding to the public sector borrowing requirement in that way because by doing so we improve public investment, we improve our competitiveness for the future and we ensure that, in some respect, we can lower future public borrowing because we have an efficient and competitive economy".

It is extraordinary that, as a result of our not having a public sector balance sheet, we have this curious ideological argument. Just like any company, we should make a regular assessment of our community assets. The lack of a public sector balance sheet puts all the emphasis on revenue accounting. A public sector balance sheet would show where our assets were declining and where we were not renewing them and would set in context the debate about the PSBR. 9.15 pm

As I said, we must recognise that there has to be a contribution from the public sector to get some of these projects under way. The hon. Member for Edinburgh, Central said that the new clause was technical, and indeed it is --to any eligible company, it would mean only £100 relief from corporation tax. The Labour party's care not to make any public spending pledges could scarcely be clearer. I take it that the new clause was a device to secure a debate, but there is an important point underlying it.

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Labour and Government Front Benchers are trying to escape the reality. The Government are trying to pretend that a great many public and private sector co-operative ventures are about to appear. The fact that they have not done so year after year, despite successive changes of policy by Chancellors, supposedly to make it easier, makes it clear that the Government are not facing reality. As for the Labour party, it refuses to admit that such projects cost money and that we shall have to fork out some public money to get them under way. I should expect the Labour party to argue that not only do they cost money but that it is money well spent and a reasonable expenditure. I agree with all that the hon. Member for Edinburgh, Central said about the desirability of the projects in question and their long-term cost-effectiveness.

The Government should come clean and admit that their efforts thus far to achieve public-private sector partnership have been woefully unsuccessful. If that were not so, there would not, in almost every Budget and in almost every autumn statement, have been another Government commitment to make new changes to move the culture so that the projects were easier to mount. Every year, we have questioned Ministers and civil servants in Committee about what they were going to do next and what other changes they were going to make, but we get nowhere because the Government will not face the fact that there has to be a significant contribution in the form of funds up front or guarantees to enable some of the projects to go ahead. For their part, the Opposition need to recognise that the projects involve justified commitment of public resources because they will make our economy much more efficient in the future.

There is so much agreement on the general desirability of some of these projects and such wide acceptance of the principle of partnership between the public and private sectors that it is extraordinary that we should still have to argue about it and that we should be making so little progress. I therefore call on the Government to make it clear that the projects that we are debating are necessary and important and will justify a commitment of public resources.

Public sector borrowing is not all bad. Public sector borrowing that is designed to create assets for the future can be fully justified if we can show a return on it in the future. In their understandable attempt to cope with the borrowing that has resulted from recession and from what I would describe as the mismanagement of recent years, the Government should not throw out the baby with the bath water. They must not convince their supporters, let alone the public in general, that it is always wrong for the public sector to borrow. It is not wrong if we are creating assets that will make our economy more efficient in the future.

There is a long list of such projects and there is considerable private sector interest in getting involved in them, but we cannot escape the need for a degree of public sector commitment if they are to go ahead. So far, the Government's attempts to promote public and private sector co-operation have not been equal to the task. The Ryrie rules, which originally covered this matter, have been relaxed at least three times in my recollection without any noticeable effect on projects coming to fruition. Successive Chancellors have said what they were going to do, but still too little has been done. Let us proceed--these projects are needed and they will make our economy more successful in the future.

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Mr. Nicholas Winterton (Macclesfield) : I rise to speak because I have been fascinated by the contributions to the debate so far. I have immense sympathy with the views expressed by the Opposition Front-Bench spokesman and by the right hon. Member for

Berwick-upon-Tweed (Mr. Beith)--except for his reference to what he called the Government's "mismanagement" over the past 15 years. I suspect that in a quiet moment, and perhaps only privately to me and not on the Floor of the House, the right hon. Gentleman would confess that what has happened over the past 15 years would probably have happened whatever Government had been in power. [Hon. Members :-- "No."]

I say to the right hon. Gentleman and to the right hon. Member for Ashton- under-Lyne (Mr. Sheldon) that they have only to look back at what has happened in the past 50 years, since the war. Because of the damp hand of the Treasury, which is the real problem, Governments have not made the investment either in public infrastructure or in private industry which the country required. As the right hon. Member for Ashton-under-Lyne knows only too well, such investment has been made in the countries that are our major competitors--in Japan, Germany and even France.

We should look just across the channel at the huge infrastructure that has been put into the channel tunnel project. We should consider the huge investment that the French, including their Government, have made on the other side of the tunnel at Calais and Sangatte, and in the rail infrastructure right the way through to Paris and elsewhere. I believe that this country should follow that example.

It is a pity that debates of this nature are not held more frequently, and on occasions other than debates on amendments or new clauses when the Finance Bill is on Report. If the House debated more seriously and legislated less frequently we should get a better answer at the end of the day. I am sure that the right hon. Members for Berwick-upon-Tweed and for Ashton-under-Lyne share my view that if all-party committees of the House considered proposed legislation--not least on joint ventures between the public and private sectors for infrastructure investment--the legislation that ultimately came before the House would have considerable cross-party support, and we should be able to counter the damp hand of the Treasury, which seems to bring to a halt in one way or another investment in both the public and the private sectors.

There is no doubt that the Government will never be able to find purely from public resources the means to fund, finance and resource the infrastructure projects. As the hon. Member for Edinburgh, Central (Mr. Darling), who led for the Opposition, and the right hon. Member for Berwick -upon-Tweed both said, we need those infrastructure projects because they are an investment for the future which will provide medium and long-term returns for the country.

We shall never be in a position to compete, especially in manufacturing, unless we have the infrastructure in the United Kingdom that will provide the best way for British industry to connect with the continent. Is it not crazy that the tunnel is about to open, yet British Rail does not have the infrastructure to enable the north-west--and, indeed, the north-east, but I am especially concerned with the north-west, because it is my region--to link up with the tunnel ? That would enable us to channel immense investment and immense amounts of goods and manufacturing production towards the continent.

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I hope that the Minister who responds to the debate will say that proposals such as those of the official Opposition and the Liberal Democrat party will not fall on deaf ears. I hope that he will realise that there are Conservative Members who are sick and tired of the Government's finding excuses not to advance resources for vital infrastructure projects. If they do not provide the actual resources for those projects, they should provide guarantees which would make it attractive and possible for the private sector to come forward with its expertise and its funds to make those projects possible. The Government are currently toying with the idea of privatising the Post Office. What they do not say very often is that the Post Office in Britain is the most profitable, effective and efficient post office in the world. All that the Post Office needs is to be released from the restrictions under which it is operating at the present time. We will have to let the Post Office loose from those restrictions, or the Dutch or the Germans, for instance, will come into the country and cream off the corporate business of our Post Office to the detriment of the Post Office, to the detriment of employment in the country and to the detriment of the country as a whole. With the relaxation of restrictions on our Post Office, I believe that it will be able not only to continue to provide a universal service to all parts of the country, but will be able to make technological advances in Britain and look abroad for additional business. It requires action from Government and action from the Treasury.

The Government are concerned about public expenditure, but, as the hon. Member for Edinburgh, Central said, we must separate the types of public expenditure. For instance, we must separate the core activities of government, to use the phrase of the hon. Member for Edinburgh, Central, from that expenditure which would be an investment in the future, which could include investment in some of the public infrastructure projects to which the hon. Member for Edinburgh, Central and the right hon. Member for Berwick-upon-Tweed referred. It is stupid for the Government to pile up huge, additional expenditure for themselves by way of social security and other benefits when, by some modest investment, we could get people back to work, thereby reducing unemployment and reducing the pressure on the social security benefit budget.

I say that to my hon. Friend the Financial Secretary because I know that he has a very successful business background. I am sad because he has so far failed to manage to persuade the Treasury mandarins to do things that he would practise as a private business man. It is to my mind crazy that the present Government, who are supposed to represent business and private enterprise, so clearly fail to do just that through their policies. How would it be wrong for the Government to create the right environment in which those major projects could go ahead, either by providing a guarantee or by providing some climate in which it would be worth the private sector taking the risk and making the investment ?

My hon. Friend knows, as do Labour Members, that in the House I have sought to speak for manufacturing industry for all the 23 years that I have represented my constituency. Just over a year ago, we formed the all-party manufacturing and construction industries alliance, which has had a little influence, not only in the House, but, dare I say it, on organisations outside the House such as the CBI. Sadly, from time to time, the CBI does not positively

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enough encourage the Government to take the right decision in the area of joint ventures by the public and private sector. That is the way in which to proceed.

I share some of the views that I think will be expressed by Opposition Members. I do not think that privatisation in itself is the solution to all the problems of the country. We are able to have highly efficient public organisations. I think that I was one of only two Conservatives who voted against water privatisation. I do not regret that decision and I believe that I have been proved right. What is the point of exchanging a public monopoly for a private monopoly, especially when it trebles the salaries of top executives and screws industry and the private house owner when everyone is going through a deep recession, because it is able to do so from its position of monopoly ?

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I am not in favour of privatising the Post Office, but I am in favour of putting in, as we have, the best management and releasing it from the Treasury shackles within which it now operates. I hope that my hon. Friend the Financial Secretary will confess that the Post Office is making a substantial contribution to the Government's budget each and every year. Indeed, that contribution will increase this year over last year. Yet the Post Office is unable to compete in the free market.

I accept that there are not many Conservative Members in their places. I am ashamed that so many of my right hon. and hon. Friends are not present because this is a critical debate about our country's future.

The involvement of the private sector with the public sector in major construction projects could do much for the advantage of industry and for employment. It could do a great deal also to reduce the huge social security and benefit budget, which has caused many of the problems that the Government are now facing. If only--dare I say this where the Government and the Treasury are concerned--it were realised that we should take a gamble. The Government and the Treasury should, with the expert advice that is available to them, be able to identify many infrastructure projects upon which public money should be spent, and spent now. With the provision of guarantees we could make even more private money available to fund infrastructure projects.

I ask my hon. Friend the Financial Secretary why the north Birmingham relief motorway has not already been constructed. It is vital. The hon. Member for Liverpool, Broadgreen (Mrs. Kennedy) knows the M6 well as she uses it to travel down from her constituency to London. I know it, too, because I use it when I travel down to London from Macclesfield. It is crazy that the relief road, which could have been partially funded by the private sector, has not been constructed and put into operation, thereby reducing the tremendous road and other problems that are faced on the M6.

Ridiculous excuses have been trotted out by the Department of Transport and Treasury Ministers. I am sick and tired of them. We want action from the Government. I say to my hon. Friend the Financial Secretary, and through him to some of the highly paid and well-pensioned mandarins who sit in the Treasury, that it is about time they got out of London and started to use some of our infrastructure so that they come to realise how inadequate it is. It would not cause a run on the pound if we were to invest in solid, sensible and well-assessed infrastructure

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projects involving both the public and private sectors. The Government would get cross-party support. Indeed, there would be support in the City. The trouble is that the City pays itself too much money and does not realise what is happening at the grass roots.

As the hon. Member for Edinburgh, South said from the Opposition Front Bench, too much money is being invested again in property. Why is it that people are investing in property ? The answer is that in the past it has provided a much better return than investment in other sectors. But it has not created any real jobs in the long term. As a result, manufacturing industry has not been able to provide a return by way of dividends to its shareholders and has suffered a reduction in its investment.

We must invest in jobs. What is the most competent area of our economic activity in which we shall get that process going ? The answer is the construction industry. What does the construction industry do ? It carries out vital infrastructure projects. If we were to give the construction industry a fillip, it would undertake more work, provide more jobs in the United Kingdom and provide itself with a good base for undertaking the fantastic projects that are available to construction companies throughout the world. We have a fine history of carrying out some of the most successful infrastructure and civil engineering projects overseas.

Sadly, I shall be voting with the Government-- [Interruption.] To be fair, the failings of new clause 13 have already been pointed out admirably by the right hon. Member for Berwick-upon-Tweed. I am sure that the hon. Member for Edinburgh, Central realises that the new clause was tabled to achieve a debate on Report of the Finance Bill. It has enabled me--I thank the hon. Gentleman for this--to say to my party in the House and publicly what I often say privately : let us get on with it, Minister. There is a hell of a lot to be gained. You can take a lead here. You have a business background, unlike many of your colleagues in the Treasury.

Madam Deputy Speaker : Order. The hon. Gentleman has forgotten that he should be addressing the Chair.

Mr. Winterton : Madam Deputy Speaker, I could never forget that. We have seldom had a more colourful Deputy Speaker. You are always in my eye, especially today because of the bright colours that you are wearing. [Interruption.] Madam Speaker, will I have to repeat the compliments that I have passed to Madam Deputy Speaker, who is just vacating the Chair ?

My final comments are directed at my hon. Friend the Financial Secretary. I ask him whether the Treasury can give much more serious consideration to the sort of concept that is highlighted in new clause 13. I pray that he will understand the sincerity with which I have spoken. I come from a business background. There are many Tory Members who would like to see a better understanding by the Treasury of the important role that such infrastructure projects can play. They understand that the Government cannot do it on their own and it is vital to involve the private sector. That is what is behind the new clauses. I hope that my hon. Friend will do more than simply respond to them ; I hope that he will give a commitment that the Government will take them seriously.

Mr. Hoon : We have heard three different speeches in the debate representing three different political parties. It is fair to say that, apart from slight differences in detail, there

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has been no difference in substance between any of the speeches. Perhaps it will be left to the Financial Secretary to inject a note of controversy in our debate on the new clauses.

That is typical of the problems that the country faces when the majority of public opinion is united in calling for new public investment but, sadly, is unable to persuade Ministers of the necessity for it. Indeed, the new clauses were designed to open up debate as to how we can best promote partnership in the provision of investment finance from the public and private sectors working together, as the new clauses emphasise, to improve the infrastructure in our society.

There is little doubt--the hon. Member for Macclesfield (Mr. Winterton) put the point forcefully, and perhaps even more radically than some Labour Members would do on occasions--about the chronic need for new capital investment in our infrastructure if we are to compete effectively with other advanced economies in Europe and, indeed, throughout the world.

Sadly, one comment that is made by people returning from visits abroad is how disappointed they are in the state of our public buildings--they seem to be run down and tired, and in need of new investment and new developments. People are also disappointed in how poor many of our public services have become in comparison with our immediate continental neighbours, and how low is the quality of our public environment. The vast majority of the population recognise that we need urgently new investment to restore our public facilities. However, to bring that about we need a Government who are prepared to take the lead. The present Government-- although apparently committed in principle to the idea of attracting new private investment to public projects--appear incapable of getting involved, again for ideological reasons.

Management consultants Ernst and Young put it in this way in a pamphlet called "Project Finance in the 1990s" :

"One of the chief deterrents to the private sector is Government's hands off' policy with regard to privately financed projects". The pamphlet continued :

"Government should act as the primary promoter of projects rather than as the arbitrator between different consortium bids." The limited role which the Government have set for themselves goes a long way to explaining why their own private finance initiative has enjoyed such modest success--if success is the right word to use in that context. Some 96 projects were apparently identified, only 12 of which are under construction. Eleven have been completed, but each of those was started long before the initiative was announced. A further 43 apparently are no more than paper proposals which have not reached any stage of activity.

Mr. Dorrell : The hon. Gentleman has argued that the Government should set out clearly the projects which are available to be developed on a joint basis. I agree, and he has quoted from the list which was published by the Chancellor in September. Some of those projects have been completed, some are under construction and some are precisely what he is asking for-- projects which the Government want delivered and where we are looking for private sector partners. The hon. Gentleman cannot have it both ways. Either the list is suspect because some of the things on it have not

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been done yet, or he wants a list of projects for which the private sector can bid. I agree with the latter proposition : some of the projects have been included in the list about which he is talking.

Mr. Hoon : I intended my points to be taken together, and not chopped quite so logically as the Financial Secretary sought to do. Many more than 96 projects around the country could be identified by a Government who were prepared to lead the way. That is precisely the criticism which was made by Ernst and Young, and that firm is hardly likely to be advancing propositions such as those made by the hon. Member for Macclesfield or by the Opposition.

It is said that many more projects would be possible than the 96 that have so far been identified. I hope that the Financial Secretary will address his remarks to that and explain why more has not been done by the Government. We must identify projects because, without them, we will not be able to compete effectively.

I want to consider one area--my hon. Friends will want to look at other areas--in which I believe that we must bring together public and private finance to take advantage of the technological advances which are available to us. We have talked a lot lately in this country and in the United States about information super-highways. My hon. Friend the Member for Edinburgh, Central (Mr. Darling) touched on that. We know about the possibility of the technology which is available to establish networks which would allow information to be exchanged around this country, Europe and the rest of the world. Eventually, those networks will be based on systems of comprehensive fibre-optic cabling, not only throughout this country but in a way which will enable us to transfer information instantly around the world. It is recognised that fibre-optic cabling will be used to improve our information exchange systems, and projects for our main trunk routes are to be cabled fibre-optically. As for taking the benefits of that technology along every street, we are engaged in cabling our streets with some of the oldest technology available in the field. We are not even contemplating the way in which the technology will reach every home. If we are to take full advantage of the interactivity which will be available from the new technology for work and education, we must look at ways in which the full benefits of the technology which is well established can reach every house, every workplace and every public institution. Consider the benefits that that would bring to our society. Every place of work, every home, every public institution and every educational facility could have access to such sophisticated computer links. Working from home would become an entirely practical proposition, not only for the self-employed in particular types of job but for many employees who currently travel to and from work every day at roughly the same time in the morning and in the evening. Eventually it would be possible to extend the use of such facilities to the generality of employees. That would ease congestion on our roads, reduce the stress on public transport and eliminate the cost to businesses of providing expensive office accommodation in prime sites in big cities.

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Similar arguments can be applied to educational provision. People could enjoy educational courses at home at a time of their choosing, but with access to teaching on line that would allow them to ask questions. At present remote teaching does not always provide for that. Many people have concentrated on the benefits to entertainment of such a system. It could provide every home with access to the latest films, television and music. Indeed, the provision of that entertainment is seen by many as the key to providing the capital investment that will be required for the network.

For the moment, the along-the-street cabling that we are considering as a society is based on comparatively limited and rather old-fashioned technology. We need a financial structure that will allow us to take advantage of the latest in technology. In a sense, that problem is typical of the difficulties faced by Government in keeping pace with technological changes and harnessing those changes for the benefit of their citizens. Given the parlous state of Government finances, indeed the state that any new Government will inherit, no Government is likely to commit itself to the massive public expenditure involved in fibre-optic cabling every home, public building and workplace.

Moreover, despite the attractions of supplying paid-for entertainment and services down such fibre-optic cables, no private company will be in a position to take the enormous long-term risk involved in providing the large-scale fibre-optic linking, even if it was allowed to provide and charge for the comprehensive range of services.

The constraints placed on British Telecom are a good illustration of the difficulties under which private companies have to operate. Privatised by a Conservative Government who trumpeted the virtues of free market forces, the company is nevertheless prevented by law from competing with cable companies in the provision of entertainment down the line, even though the same cable companies provide telephone services in direct competition with British Telecom.

Moreover, in developing and using the technology, companies such as British Telecom are forced to do so subject to the constraints imposed on them by our existing relatively limited telephone network based, as I have said, on relatively old technology. Surely it ought to be possible to imagine a project agreed jointly between the public and private sectors in which the Government would lead the way in the provision of fibre-optic cabling subject to a significant private sector involvement in the provision of services paid for perhaps by long-term leases on the use of the basic equipment. The price of those leases would assume a significant return on the capital injected by the Government.

Mr. Dorrell : The hon. Gentleman makes an important point. He argues that the cabling that is currently being done by the private sector is an obsolete technology and that it would be a better business decision for those companies to invest in a different technology that allowed all the benefits that he describes. He will recognise that that is essentially a business decision. Why does the hon. Gentleman think that I--my hon. Friend the Member for Macclesfield (Mr. Winterton) kindly referred to my expertise in business from the textile industry, perhaps not the obvious background to make a judgment--or indeed

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anyone else in Whitehall, am better placed to make the type of judgment that he describes than the companies currently putting their shareholders' shirts on investing in the technology that the hon. Gentleman describes as obsolete ?

Mr. Hoon : With the greatest respect, the Financial Secretary has demonstrated the Government's limited horizons on such projects. He has shown that he is considering the matter in the terms in which the Government established the system.

The Government are saying that small-scale cable companies will have a monopoly to provide such facilities, free from competition from British Telecom--free market forces only go so far where Government philosophy is concerned. Small companies cannot compete to provide the investment that will be necessary to bring fibre-optic cabling to our doors. That is what I was saying when the Financial Secretary interrupted me.

The Government are big enough to lead the way, and with private finance it could be done. Small-scale private operators are constrained to use older technology to provide cable systems and essentially that is what we have. Market forces mean that small companies can cable a relatively limited area using limited technology. That is the result when the Government opt out of their responsibility for leading the way.

That is not the reaction in other countries, where Governments recognise that they have a responsibility to establish those projects and create the conditions in which the private sector can participate. If the Financial Secretary considers the problem in that detail, he may reach some different conclusions.

I see no reason why the Government cannot take the lead. Providing leadership for a project and finding ways in which the private sector might become involved would be a perfectly proper role for the Government to play. I can imagine equally ingenious ways in which the private sector could pay for access to such computer networks. The Government's scheme for computerising the Inland Revenue seems to have dragged on for an inordinate time. I understand the difficulties involved. The system will leave many people who are claiming state benefits still subject to the existing haphazard and rather abitrary system which, sadly, tends to dehumanise those involved on both sides of the exchange.

One only has to compare the scene in a typical social services department office, where a queue of claimants are trying to establish their rights and dealing with hard-pressed and often overworked officers, with that in a typical high street retail store where someone is paying with a charge card. The store has the technology to show that the card has been used on a certain number of occasions, subject to a credit limit. The card can facilitate shopping in all manner of ways.

It can also facilitate borrowing, with no social stigma involved. When people claim social security, they are subject to significant social stigma, notwithstanding the fact that they are exercising their legal right to funds to which they are clearly entitled. People who borrow money can do so in a socially acceptable way, but people who are exercising their rights to benefits are treated as second-class citizens.

Computerisation of the benefits process could make a significant difference, especially if private sector companies were involved in designing software packages.

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Such packages could, for example, show the best package available and how claimants could maximise their entitlement.

The Government need to use only a little imagination to envisage the possible revolution in the use of technology. I have given only one illustration of the way in which they could promote contact between the public sector and private finance. They might then recognise that such an exchange would have benefits for society. I hope that the new clauses will force the Government to think more clearly about the ways in which private sector finance can be involved in large-scale capital projects which require their leadership. I hope that we can thus encourage the Government to think more carefully about the link between their initiatives and private sector finance and to take a lead in that respect.

Mr. Peter Snape (West Bromwich, East) : I have listened with interest to the debate. My hon. Friend the Member for Ashfield (Mr. Hoon) will forgive me if I do not follow him down the road that he has taken.

The hon. Member for Macclesfield (Mr. Winterton) referred to his 23-year career in this place. He will probably be aware that I spent some time, in a minor capacity, doing my best, 23 years ago, to prevent him getting here. Indeed, one of the narrowest escapes of my political life was not being selected as his opponent in the subsequent general election. He has mellowed considerably in the 23 years that he has been here. [Interruption.] Those Conservative Members who scoff should have seen him in those days.

Few of us would argue with the very relevant arguments that the hon. Member for Macclesfield made, especially about what he called the "damp hand" of the Treasury--what many of us would term the "dead hand" of the Treasury-- which always seems to fall across any infrastructure project. Of course the circumstances--the economic situation--are never right for the expenditure of public moneys on major infrastructure projects.

Had the Ryrie rules been in Germany, the rubble of world war two would still disfigure most German cities. The German Government are a little more intelligent in their approach to public transport and infrastructure projects generally, and much more intelligent than successive Governments have been in the United Kingdom. I shall refer specifically to a project dear to my own heart in the west midlands, a light rail project--the midland metro.

My hon. Friend the Member for Edinburgh, Central (Mr. Darling) referred to some of the work that was done before the last election by the Labour party transport team in considering ways in which private sector capital could be attracted to some infrastructure projects. That initiative, led by my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), was widely rubbished by some Conservative Members--not by the hon. Member for Macclesfield, I am glad to say, but especially by one of the many Transport Secretaries who occupied, for a fleeting few moments, it seemed, that post in the previous Conservative Government.

It is perhaps a poignant commentary on present-day politics that one of those Transport Secretaries, now Lord Parkinson, finds himself leading a consortium that is anxious to bid and to involve private sector money in work

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of the type that has been mentioned in the debate. He will have one great advantage that some of his colleagues might not possess--he will be able to refute all the arguments that he used to make against such projects when he was Secretary of State for Transport.

It appears that the lessons have not been learnt by the present Administration, and especially by the Treasury. One would have thought that the midland metro was the type of project that would appeal 100 per cent. to the Conservative party. The private sector is accepting a great deal of the risk. I will make comparisons later between the risk that has been accepted by the private sector in the midland metro and in other light rail schemes--in Manchester and Sheffield, for example.

When one considers projects such as the channel tunnel rail link, the west coast main line, the Heathrow express and the Northern line of the London underground, one is scarcely filled with optimism about the likely detail of the response of the Financial Secretary to the Treasury.

It seems to many of us that the Government's only idea about private sector involvement is to cloud and confuse the issue with a series of supposed competitions between supposedly interested companies at such length that interest in the matter dies away and the decision-making processes are postponed year after year. Line 1 of the midland metro, which runs through your constituency, Madam Speaker, as it does through mine, has had the toughest appraisal ever given to any transport project by the Department of Transport. It is the No. 1 transport priority for the west midlands, supported by all seven metropolitan councils, two of which, at least for another couple of weeks, are in the hands of the Conservative party. I think that all Members of Parliament from the west midlands, Labour and Conservative, have supported that project, as have the chambers of commerce and industry, business groups such as Birmingham City 2000, and many others. Yet the net cost to the public purse of line 1 is just over £100 million. Government approval is needed right now to spend that, and Government grants of around £50 million are needed towards the total cost.

I listened with interest to my hon. Friend the Member for Edinburgh, Central. We in the Labour party are being a little timid at the moment about how we propose any public sector involvement in projects such as this. We shall never satisfy the Conservative party about our fiscal abilities, and it is pretty pointless trying to do so. But if we have a public debate about how much public money goes into projects such as the midland metro, our arguments will stand the test when set against the lack of progress in such projects by the Conservative party.

Despite the fact that the awful negative campaigning in which the present- day Conservative party indulges the whole time will enable it to go round accusing us of all sorts of fiscal sins, it is well worth while that a project such as the midland metro, and some of the others that I have already mentioned in which public and private sector finance is involved, should go ahead.

I referred to the other light rail projects for which the Government have given the go-ahead--the Manchester metrolink and the Sheffield supertram. Neither has been subject to the same fiscal appraisal as the midland metro. None of the private sector people involved in those projects has given the sort of guarantees that the John Laing/Ansaldo joint venture companies have given to the financial initiatives involved in the midland metro. Yet they have been given the go-ahead.

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The Manchester metrolink has been up and running for some years, and the Sheffield supertram started a few weeks ago. We all know that the Treasury has the weird view that somehow public sector projects are less worthy than, for example, road building.

Mr. Dorrell indicated dissent .

Mr. Snape : The Financial Secretary shakes his head, but he should listen to the speeches of some of his colleagues in the Department of Transport. They talk of massive rates of return on road building projects, but they refer to the midland metro as an expensive project.

The Prime Minister came to the west midlands a couple of weeks ago. Between infuriating the city of Birmingham with some of his more inflammatory comments, he talked about the specific project. Unfortunately, he gave us no great hope that we would get the go-ahead before the next financial year. But what more can the city of Birmingham, the west midlands, the constituency authorities and Members of Parliament do collectively to convince the Treasury of the worthwhile nature of the project ?

If we cannot get the Prime Minister to give the go-ahead two or three weeks before local elections when the Conservative party chairman has promised to win the city of Birmingham--that is another promise that looks as though it is being junked the nearer we get to the day of the election--what can we do to convince the Financial Secretary of the necessity for the project in order to prevent the west midlands conurbation from seizing up altogether ?

The Financial Secretary might consult his fellow Ministers in the Department of Transport, and they might say that there already exists some public transport along the Wolverhampton/West

Bromwich/Birmingham corridor. It is true that there is an existing heavy rail line along part of that corridor, but since the closure of the former Great Western Railway line in 1972, constituencies such as ours, Madam Speaker, have been poorly served by public transport. The congestion along that corridor grew worse throughout the 1980s and 1990s. The alternative to the A41 Holyhead road are the M5 and M6 motorways. No hon. Member who uses that alternative--particularly those of my hon. Friends who advocate the swift completion of the Birmingham northern relief road--is under any illusion about the congestion it produces.

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I am at a loss to know how best we can convince the Financial Secretary of the worth of that project, particularly after the rigorous selection process to which it was subject. I hope that the Minister will say that the Government not only pledge their continued support and commitment to the project but will give it the go-ahead sooner rather than later. Unless that is done, all the talk from the Treasury Benches about commitment to public and private sector projects is so much hot air. That project is a priority for the west midlands.

We heard a great deal tonight about the Financial Secretary's business expertise, although we discovered subsequently that it was gained in the textile industry rather than in the people-moving industry. The hon. Gentleman is none the worse for that. It makes a pleasant and refreshing change for a Treasury Minister to have any sort of business experience. If the Financial Secretary is to live up to the blandishments heaped on him by the hon. Member for Macclesfield, he will put us out of our misery and give the go-ahead for the midland metro.

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Mrs. Jane Kennedy (Liverpool, Broadgreen) : The new clauses do not pretend to offer a panacea for the overall problems of investment, but suggest changes to the Income and Corporation Taxes Act 1988, to allow joint funding of projects of the sort mentioned tonight to be placed on the agenda. They are not at present, because the fiscal regime does not encourage it.

The hon. Member for Macclesfield (Mr. Winterton) mentioned our shared sorrow at regularly having to use the M6 motorway. Another consequence for me of entering Parliament to represent a Liverpool constituency is that I must closely study changes in employment patterns in my own constituency and the constituencies of my hon. Friends, as well as throughout the world.

A recent study of Pacific rim countries revealed that they are investing heavily in labour-intensive manufacturing industries to compete with this country in attracting capital investment and custom. We no longer have to compete in the world market for capital--that is freely available.

We can beat other countries on the skills of our work forces. When we on these Benches talk about the need to invest in skills, we are not trotting out tired old phrases but advocating real investment, to give Britain a competitive edge in the world.

We can also beat our competitors in the developing world through our infrastructure. Tonight's debate has concentrated on large-scale projects of the kind that Pacific rim countries are taking seriously. They are investing a great deal of public and private money in developing their road and rail systems, to enable them to compete with us even at that level.

Unless we recognise that our competitors are achieving the same levels of skill and investment that we achieved in the past but are failing to achieve now, we shall fall behind. It will not matter that we are a member of the European Union. That issue needs to be taken seriously by the Government and, so far, they have not done so. My hon. Friends and the hon. Member for Macclesfield have made that point forcefully.

I want to talk briefly about one small area in which the public and private sectors could invest together. I also want to challenge some of the arguments advanced by the Financial Secretary during the previous debate.

Last week, I had the honour of opening the Rocking Horse day nursery in my constituency. It provides 40 places, largely for the children of the employees of Alder Hey children's hospital. It represents a public sector investment by an NHS trust. A beautiful building, it has been built right next door to Ronald McDonald house, so named because McDonald's food chain invested £1 million in a charitable project to provide accommodation for families visiting their children while they are in hospital.

Why did not the public and private sectors together consider investing in the nursery itself ? Could not McDonald's or Burger King have been persuaded on to the site to invest alongside the health authority so that 80, not 40, places could have been provided ? The Financial Secretary has said that there is no problem with child care, because the need for it is being met by child minders. I know from personal experience that child minders offer an invaluable service. Not only do they provide a flexible service for working mums and dads ; they also offer an easy way for women to return to the labour market, so they serve two purposes. But I challenge

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