OPAFF REL FF BUILDING
CONT
5.
The first choice is to have no money limits to the building programme. This would leave Departments free to authorise any building work they chose. The amount approved would clearly far exceed what is feasible, as the requirements given in paragraph 2 are already severely pruned. If this happened we should soon be forced either to re-establish the investment programme, or to abandon altogether the control of building work, which would have become pointless and useless. We should be driven into conditions in which building resources would go to the highest bidders, often for inessential purposes. New resources. of men and materials would be sucked into building by these conditions at the expense of exports. Building costs and profits would rise and wage increases could not be resisted, with general inflationary consequences. I believe it is a delusion to suppose that such a situation could be controlled by allocations of steel and timber. These operate on a quarterly or six monthly basis.
To allow a building to start and then refuse the necessary materials for its completion would be a futile and absurd method of control. Nor is it clear how an allocation system could operate effectively without control of building work. To counter such a situation by using monetary and credit restriction to reduce the demand for building night well require measures which would cause increased unemployment in other fields, and which would most sharply affect building by manufacturing industry, which it is generally agreed ought to be encouraged. I cannot recommend this course.
DRASTIC REDUCTION OF OTHER CIVIL INVESTMENT
6.
To restrict new building work to £900 millions and accept the housing and defence requirements in full would involve cutting the already pruned requirements for other civil investment by one-sixth to £346 millions. So large a cut could not be made to fall equally on all programmes. It would mean allowing no new work whatever to start in 1953 in any programme, except for defence and housing. This would have to apply even to the most essential programmes such as coal, electricity, coke ovens, iron and steel, and manufacturing industry, and would have severe consequences in 1954, when the restriction of new starts in 1952 and 1953 would have its full effects, and cause a substantial decline in the level of investment. I am convinced that this course is impracticable.
CONTRIBUTION ALL ROUND
7.
There remains the possibility of an all round contribution by the main component heads of the programme set out in paragraph 3. This appears to me the most practicable solution. An all round reduction of 5% on these heads, would give the following totals for the different items:-
Civil investment other than housing and
manufacturing industry
Manufacturing industry
Housing
Defence
Defence expenditure by civil departments
£ millions
312
95
395
114
17
:
933
AlthPugeth50 fogges a total of £33 millions more than Pagen of 253
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