CAB129-53 — Page 248

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C. (52) 249

CABINET OFFICE RECORD COPY

COPY NO.

22nd JULY, 1952.

CABINET

INVESTMENT IN 1953.

Memorandum by the Chancellor of the Exchequer.

As my colleagues are aware I advocate further adjustment of the Defence programme in order to assist our balance of payments. But it is clear that we cannot solve the balance of payments difficulties entirely at the expense of the defence of the country. I therefore ask my colleagues to consider further the investment programme for 1953. We must take decisions on this before the forthcoming debate.

2.

In spite of full discussions in the Cabinet and elsewhere it has not so far been possible to agree upon a programme of less than £94 millions of new building work for 1953, broadly composed as follows:-

All civil investment other than housing and manufacturing

Manufacturing industry

Housing

Defence

Defence investment of civil departments

industry

£ millions

329

100

416

120

18

983

These amounts represent a severe pruning of requirements in all cases except housing.

3

To meet all these requirements would mean carrying out £110 millions more new building work in 1953 than the programme for this year, with a correspondingly increased drain on resources. Whether or not this would be feasible, the attempt to achieve it wold draw resources away from exports. From this point of view we ought not to attempt more than £900 millions of new building work in 1953. All possible resources should be devoted to making secure our immediate balance of payments position. must have some guide as to what we can afford and as to how our resources are to be distributed, and therefore we must take decisions on the total size of the future programme and on the allocations to be made within it.

The choices before us are:-

(a) to decontrol building;