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Mr. Prescott: I am afraid that he has not looked very carefully--
Madam Deputy Speaker (Dame Janet Fookes): Order. I deplore seated interventions, especially given the fact that the hon. Member for Mid-Staffordshire (Mr. Fabricant) has already been allowed to make certain interventions quite properly.
Mr. Prescott: Basically, investors come here because of the access to markets, especially Europe. Of course, the devaluation of the pound by 25 per cent. has been attractive too.
Investors come, and they are welcome, but we cannot rely only on inward investment for future growth. We have to boost the indigenous investment--that is another thing that the Budget has failed to do. It has failed to provide any additional incentive for private investment in manufacturing. Industry has made that absolutely clear. Indeed, my hon. Friend the Member for Dunfermline, East (Mr. Brown) has made it clear that we would do more on allowances. Again, there is disagreement between the parties on the allowances that investors get against tax, but at least we argue the case.
The Budget has certainly failed to provide any additional incentive for small and medium firms. They clearly do not think that there has been much in the Budget to help them. There has not been any additional incentive for private investment in plant, training and public investment, on which much of the private sector is dependent, especially in construction and manufacturing. It is often not understood, and rather unfortunate, that much private investment is very much dependent on public sector investment, whether in housing or in various other industries. It is very important for manufacturing companies.
Yet the Government have been pursuing cuts in public expenditure--by 6 per cent. this year and 11 per cent. for 1996. It is hardly a Budget for investment. Given that investment is crucial to the development of prosperity and to moving up that league of prosperity, the Budget had to be designed to deal with investment. Frankly, it failed to do so.
The only argument given by the Government is that of the private finance initiative. We have heard it in every Budget since the Tories stumbled on the idea. I have spent a number of years at the Dispatch Box opposite various Chancellors and Secretaries of State for Transport arguing that there was a role for a private finance initiative-- indeed, a very good role. I think that the Chancellor concedes that. I wish him well, so that public and private finance meet in investment.
Such investment should be in addition, but the Government's problem is that such investment often hides cuts in public expenditure; it is used as a smokescreen. It is often suggested that extra money through private finance will replace cuts in public expenditure, but, frankly, that does not happen. The Chancellor knows that to be true; the figures are very clear on it. Nevertheless, the idea is sound--it should be: it came from the Labour party. But the Government have ruined it through incompetence, sheer ignorance and blind ideological prejudice.
On transport, it was Labour's plan to bring public-private leasing into British Rail that forced the Government into a £150 million leasing deal two years ago. It was in our manifesto, after all. The Chancellor must have read it at the time. It was a good idea. They used to tell me that it could not be done. Yes, it was a leasing agreement, but leasing deals can be involved in private finance. We showed them that it could be done, but now it has been ruined. The whole process is being undermined by a Treasury still wedded to arcane principles and run by people who do not understand what they are doing.
I know that the Chancellor has sent a number of his civil servants away for training and education to break the cultural logjam in attitude, and I wish him well. That is absolutely right. Indeed, it was one of the recommendations made by my hon. Friend the Member for Dunfermline, East and myself on changes in private finance.
The Economist said that the Government's proposals were a "dog's breakfast". The PFI has replaced actual investment with expressions of intent. We have seen the growth of the PFI in the Government's wish list--from 78 projects in 1993 to 1,500 today, worth almost £27 billion. But only 64 of those projects have been completed, and less than £500 million of private finance has been levered into public investment. The private finance initiative has been a smokescreen for the Treasury, behind which it can cut hundreds of millions from public investment, which is set to be cut by a further 18 per cent. over the next three years.
Mr. Bernard Jenkin (Colchester, North):
The right hon. Gentleman has made many disparaging references to cuts in public expenditure. He has also said that he fundamentally questions the whole Budget judgment. In the view of the Labour party, what percentage of gross domestic product is it appropriate for the Government to take?
Mr. Prescott:
At the time of the general election, the hon. Gentleman promised that the Government would cut taxes. I do not know how he answers that point now. The quality of public expenditure is as important as the quantity. We suggest that, instead of wasting money on keeping people on the dole--about £20 billion--we should use it to put people back to work. I will come back to that point in a second.
The real point about private finance is that our transport infrastructure is crumbling and our construction industry is on its knees. Our businesses are not getting proper access to the markets in the United Kingdom and abroad. The Birmingham northern relief road should have been built in 1992. It has been delayed, and is still not being built, despite all the arguments about private finance.
Good, modern railway works in York were closed down, simply because the Treasury would not approve any more leasing agreements, which would have enabled the carriage works to produce the trains. Yet more than 50 per cent. of the trains on Network SouthEast are over 25 years old. The leasing agreements were a simple way in which to finance new trains, which would have kept people in work instead of putting them on the dole. If people are in work, they can pay taxes and contribute to providing other services. That is the question we face today.
The east coast main line is more modern than the west coast main line, which is falling down, because it has had the investment. When the Chancellor and I were walking to another place, I said to him that, yet again, there was a Bill on the channel tunnel rail link. There has been a Bill on the channel tunnel rail link every year since 1986. Why is that? It is purely because the Government could not deal with the problems involved in financing the link.
The Secretary of State for Transport at that time, Lord Parkinson, told us that the link would not be built if the Government could not find private money, yet he is leading one of the consortiums bidding for about £2 billion of taxpayers' money to pay for the link. In the meantime, we have lost the benefits that come from a modern transport infrastructure.
That kind of disaster has plagued Britain in dealing with these matters, and one hopes that there will be a sensible compromise on the problems, with which I know the Chancellor is dealing. The issue is how we deal with sharing the risk between the public and private sectors. I had intended to say more about that, but time prevents me from doing so. It is an important question, and unless we solve the problem, we shall not be able to unlock the tremendous amount of private funds that are available to help us build the infrastructure. The infrastructure must be modernised, so that our regions can compete as they desperately need to do.
Regions are important, yet they are not mentioned in the Budget statement. We need to expand investment in training, jobs and regional economic development. We believe that that can be done, and that public and private finance can play their part. The release of local authority housing receipts must be a classic way in which to release funds. The Government admit that £4 billion or £5 billion is still held in the accounts.
We are paying about £2 billion to keep a quarter of a million building workers on the dole. We have record levels of homelessness. Why can we not release people from the dole, provide jobs, train our youngsters in
apprenticeships, and meet the requirements of jobs and social justice? That is what we think needs to be done. Construction jobs are real jobs--one can give many more examples.
The Government's only contribution to employment has been to propose the workfare scheme. This is the Government who told us in 1979 that Labour was not working. Unemployment has now grown to 2.5 million even on the Government's fiddled figures, yet all they offer is a workfare scheme. That came about as a panic measure. After the Budget was received badly, the Chancellor and the Deputy Prime Minister went on an assault over the weekend to improve people's attitude toward the Budget.
There were two proposals. The first was workfare-- chain gangs--which does not mean proper jobs. There will be no education, no training and no connection with the real jobs my hon. Friend the Member for Dunfermline, East talked about when introducing our welfare-to-work proposals. The Government are forcing people to depend on the welfare services.
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