Pre-Budget Report

Can I just press on? In that sense, our proposals underline what the Conservative party has acknowledged on funding. The first thing that has to happen, which I do not think the Conservatives are recommending, is that public investment must be maintained, or preferably increased. What is so worrying about the IFS analysis that came out yesterday is that the Government are proposing a cut of 16 per cent. in public investment over the next three years. How on earth is this supposed to stimulate the economy and maintain infrastructure so that it can handle the increased demand when the economy recovers? That makes absolutely no sense. Let me just take a couple of examples of how this is working through. Housing is the obvious area. The Government make a great deal of the fact that they propose to bring forward £800 million of expenditure on social housing. We want to see more expenditure on housing; it is highly appropriate in this context, and that kind of money would buy about 6,000 houses in the current economic environment. However, the Government said two years ago that they had a plan for social housing costing £8 billion. What happened to it? Where did it go? The truth is that it is stuck, as many of the housing associations are on the brink of bankruptcy because they entered into strange deals with developers at the peak of the market to build shared housing and they cannot progress on that, and the Treasury is quibbling with the housing associations about the funding formula, so nothing is happening. There is, therefore, a wholly inadequate response in terms of public investment. What the Government can and should be doing by way of stimulus is making sure that this public investment does happen.