Public Expenditure: Review of Commitments

Baroness Farrington of Ribbleton Excerpts

Thursday 17th June 2010 Lords Chamber

[Lord Sassoon]

I am grateful to my noble friend Lady Noakes for taking us back to what is in fact the basis of this and I share completely her analysis of how important it is to get a grip on the deficit. Let me try to help her with some of the numbers. The total of spending decisions that have been found as a result of this exercise to be unaffordable and bad value for money is £10.5 billion. Those have been put into either the “cancelled” or the “suspended” category. We have cancelled projects with a total value of just under £2 billion, so the rest—approximately £8.5 billion-worth—have been suspended and will go into the process that I have described. I hope that this helps to reconcile the numbers.

[Baroness Farrington of Ribbleton]

My Lords, will the Minister go into more detail about the cancellation of BIS’s loan to Sheffield Forgemasters and any implications that that may have for future development? Can he also give us a guarantee that, by the time we have the details of the impact assessments, he will be able to tell us what the implications are, in particular for the construction industry and the many small firms that will now not have work to do?

[Lord Sassoon]

I am grateful to the noble Baroness for that question. On Sheffield Forgemasters, the problem with the loan is simply that it is unaffordable. In the context of tighter resources, we have had to focus support in areas where market failures are clearest and, where we can, we need to look to the private sector and private investment to provide solutions. I know that my right honourable friend the Chief Secretary to the Treasury has spoken to my right honourable friend the Secretary of State for Business, Innovation and Skills about this project and we hope very much that there will be a private sector investment solution.

The noble Baroness made a point about the connection between jobs and investment. There is a particular connection between Sheffield Forgemasters and the nuclear industry and we are of course continuing to support collaborative projects such as the nuclear Advanced Manufacturing Research Centre, which is led by Sheffield University, so we remain absolutely sensitive to the job creation priority to which she referred. She also talked about the construction industry. In respect of all industries, I go back to where we start on this, which is that we have to keep interest rates low and show that we are getting a grip on the deficit. We also have to provide a basis on which the private sector can lead the economy forward.