CAB129-53 — Page 216

Page 216

233

234

(THIS) PageNTOS25ME PROPERTY OF HER BRITANNIC Mag£317 of 25VERNMENT)

SECRET

C. (52) 240

15TH JULY, 1952

CABINET OFFICE RECORD COPY

CABINET

COPY NO,

No.68

INVESTMENT IN NEW BUILDING IN 1953

Memorandum by the Chancellor of the Exchequer

I realise that some of my colleagues find the idea of an investment programme temperamentally unappetising. Twits about the similarity of present techniques to those used by the previous Administration do not deter me from the duty of holding the ring fairly between some Ministers who are ready to face the undoubted fact that our resources are limited and that our need for exports is absolutely vital and others who would make unlimited calls on those resources for reasons which may be perfectly honourable but which are not consistent with our aim of paying our way. The recent trade returns show how essential it is that our exports should be increased. If we are to carry out our recent undertaking that Balance of Payments comes first we must adhere to a method of measuring our resources and assessing how much of them can be spared for investment at home. A bigger investment programme may be superficially attractive but the hard fact is that it would add to our import bill and draw away more resources of man-power and materials from exports and uses which would increase exports. It would also mean a heavier taxation and strain on the Budget or an increase in inflationary pressure. In either event, the balance of payments which I think we all agree is vital at the present time would inevitably suffer.

2.

M

We have already agreed that productive investment must be raised above its present level, and so investment in the social sector will have t be moderated until we have gathered more strength.

3.

The size of the problem is indicated in the following table, which shows in column 1 the substantial gap between the probable output of new building work and the screened requirements submitted by Departments (the full requirements would be much bigger):

New Building Work:

Requirements

£m.

Col. 1

Col. 2

Defence (a) Ministry of Defence

133

133

(b) Civil Departments

33

18

Housing

416

416

Other Civil Investment

480

420

Availability