Page 218 This assumes that the output of the building industry can feach £900 millions, excluding repairs and maintenance which are estimated to take £700 millions. This is considerably more than it has ever done before as the following figures show:-
£m
1948
1949
1950
1951
1952
Value of new
building work
750
775
825
810
874 (estimated)
(end 1951 prices)
235
4.
My colleagues ha ve agreed that the "other civil investment" (civil investment other than housing) shown in this table should not take more than £420 millions, of which £100 millions should be for building for productive industry. This allows an increase in industrial building over the present rate of £77 millions for 1952. This is certainly a move in the right direction. If we are to develop our exporting power and improve our competitive efficiency we must clearly expand our industrial investment. There is no doubt that industry would be prepared to do more than is possible with an allocation of £100 millions, but it would be impracticable to make cuts elsewhere big enough to allow more for manufacturing industry. To make the expansion to £100 millions possible it is necessary to limit development in the nationalised industries and other civilian fields and, as I am suggesting later, to reduce or postpone the requirements of the services. Even so it will be necessary for the economic Departments to concentrate industrial building on those projects which are likely to help our exports most,
5.
The first table in paragraph 3 above shows in Column 2 that with other civil investment lin:ited to £420 millions and with civil defence investment reduced to £18 millions, there is still a deficit of £87 millions. The Minister of Housing has suggested that we should expand the building industry and so have a larger output from it. If economic health alone were our objective, we ought at this moment to be doing less building for social purposes, not more. If we do not solve our balance of payments problem, this course will be forced upon us by events. I well realise that we are publicly committed to building 300,000 houses. I come later to my suggestions for reaching this as best we can considering the resources available. Meanwhile, in order to fill the deficit of £87 millions in 1953, I propose that both the Defence Works programme and the Housing programme should be rolled forward, so that expenditure in 1953 does not exceed that approved for 1952.
Defence
6.
I have already discussed with the Service Ministers, who have been very helpful, a proposal on which I think we may be able to reach agreement together, for a Defence Works Programme amounting to £110 millions, which includes the full programme for the United States Air Force. This would contribute a saving of £23 millions towards meeting the deficit. I have agreed with them that a final decision on the defence figure can wait until we have the report on the costings of the Forces, which will be ready shortly.
Housing
7.Page 218bf pasing investment figure for 1952 is £3milisf 25 which £330 millions is for England and Wales and £42 millions for Scotland.
With the same quantities of steel and timber as are appropriate to this figure
--2-
236
Page 219e money limit the Minister of HousinPage 21 of 253 to build
in 1953 as many houses as he can. He has already shown great ingenuity in the economical use of materials, By building a larger proportion of smaller houses, or by reducing standards and by encouraging the use of economical methods of construction to save imported materials, and without reducing exports of cement below 1.9 million tons, I do not doubt that the Minister of Housing would find ways of building in 1953 more than 230,000 houses with the money, men and imported materials we can afford.
8.
If these proposals are agreed, then I could meet the Minister of Housing on another of his points, and would recommend that he should have a single investment programme for all the purposes for which his Ministry is responsible, and should have discretion to sub-divide the total in the proportions he thinks fit. This would give him a figure of £366 millions for investment in England and Wales in 1953.
9.
The Minister also makes the point that where houses have been started, they cannot be stopped, and I agree; but I hope that he will help to meet the emergency by matching his future programme to the resources available, in the way I have suggested above. I recognise that he will need to explain to local authorities that they will have to expect the tenders for new houses submitted by them to be approved at a slower rate for some months.
10.
I ask my colleagues to agree that:-
(i) The overriding importance of the balance of payments makes it
necessary to restrict new building investment in 1953 to £900 millions.
(ii) The Defence Works Programme should be rolled forward so that expendi-
ture in 1953 does not exceed that approved for 1952, i, e. Defence £110 millions (including £20 millions for the U.S. A. F.) and
Civil Defence £14 millions. The defence figure would be provisional, and subject to further scrutiny when the report on the costings of the Forces is available.
(iii) The Housing Programme should be rolled forward so that expenditure
in 1953 does not exceed £330 millions in England and Wales (subject to (iv) below) and £42 millions in Scotland.
(iv) The Minister of Housing should be free to treat his share of the
total Housing programme (i. e. £330 millions) together with his share of investment in "other civil building" (i. e. £36 millions), as a single programme (totalling £366 millions) and should have discretion to sub-divide this total in the proportions he thinks fit.
(v) "Other civil Lew Building" should be £420 millions, of which
£100 millions should be for building for productive industry.
7
Treasury Chambers, S.W.1.,
15TH JULY, 1952.