Economy: Capital Expenditure

Lord Barnett Excerpts

Tuesday 4th October 2011 Lords Chamber

Asked by

[Lord Barnett]

To ask Her Majesty’s Government, following announcements by the Deputy Prime Minister on capital expenditure programmes, what consideration they are giving to increasing capital expenditure beyond the amounts included in the Chancellor’s deficit reduction plan.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the Government are sticking to the spending plans set out in the 2010 spending review. Within this, however, we have been able to fund additional, targeted capital expenditure from otherwise unspent funds. This includes £500 million for the Growing Places initiative and £250 million on broadband access and support for world-leading computer technology.

--- Later in debate ---

[Lord Barnett]

I am sure that that will not please Nick too much. My Question asks whether any money has been spent beyond the deficit plan: the answer is clearly no. In any case, the hundreds of millions of pounds which I am happy to see was found in Manchester will surely be overshadowed by the IMF results, which recently forecast that growth of our economy will be not much more than 1 per cent. That in turn will lead to a much higher rather than lower deficit. Indeed, as I am sure the Minister is aware, the Financial Times recently forecast, based on OBR methodology, that the deficit will be £12 billion higher than previously thought. In those circumstances, will the Minister tell us the Treasury's estimate of the deficit at the end of the five-year term?

[Lord Sassoon]

My Lords, as the noble Lord, Lord Barnett, knows very well, we have set up the Office of Budget Responsibility to keep track of all the forecast numbers and we will get its update later in the autumn. The critical point is, as my right honourable friend the Prime Minister said at the weekend, we are spending over £3 trillion of public money in four years and we are not going to wreck what we now have in a very low interest-rate environment for the sake of spending a few more billion. We will stick to our spending plans.