Whitehall told to seek private investment first

The Treasury will block all capital spending by Whitehall departments unless they have first considered whether the projects could be financed by the private sector, Kenneth Clarke, the Chancellor, announced yesterday.

Mr Clarke, in a speech to the annual CBI conference in Birmingham, said the order would mean that public money would be concentrated on the areas where it was most needed.

He made his announcement just before a Cabinet meeting which all but agreed public spending plans for the next three years. Downing Street said confidently that the details would be settled at a further Cabinet tomorrow.

Initial signs were that the Chancellor had been able to reduce the pounds 263bn planning total by pounds 5bn or more because of the faster than predicted fall in unemployment and lower than forecast inflation.

With Whitehall sources insisting that most of the path to a deal tomorrow had been cleared, the main hitch was still thought to be the social security budget. Earlier problems which had emerged between the Treasury and Gillian Shephard, Secretary of State for Education, were thought to have been overcome.

A big cut in the roads programme and a tight settlement for local authority expenditure are expected to be features of the deal when it is announced on 29 November.

John Major's weekly audience with the Queen was delayed for 30 minutes as the Cabinet attempted to complete its deliberations, which took almost four hours. But Downing Street said that the Cabinet had had ``a detailed and very productive examination'' of the spending totals between 1995-6 and 1997-8.

The Treasury was thought to have been taking a tough line with Peter Lilley, the Secretary of State for Social Security, insisting on a cap on housing benefit payments in the private rented sector and limits on modifications to the Child Support Act to deal with the grievances of fathers.

On private finance for public sector projects, Mr Clarke said that by the end of this financial year half a billion pounds will have been brought in under the Private Finance Initiative launched last year. Although most projects have been in transport, Mr Clarke said: ``The opportunities for private finance are almost limitless and spread right across government. Those departments who take up the challenge will be able to deliver more projects than those who do not.''

Projects already under way range from privately financed prisons and water and sewage projects to the pounds 150m replacement of the National Insurance Recording System, one of the largest computer systems in the country. Mr Clarke said that expansion of private financing would mean fewer ``scandalous'' over-runs.

He said that in PFI projects, the private sector must genuinely assume risk without guarantees that the taxpayer will foot the bill if things go wrong but that the returns would be greater than in traditional public sector projects.

Howard Davies, director general of the CBI called for a private finance Bill in place of the aborted attempt to privatise the Post Office. It would allow motorway tolls and give grant-maintained schools more borrowing powers.

Scheme reborn, page 2

Start your day with The Independent, sign up for daily news emails
News
A poster by Durham Constabulary
news
Arts and Entertainment
books New York Times slammed over summer reading list
Sport
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
music
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Guru Careers: Software Developer

£35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...

SThree: Trainee Recruitment Consultant / Resourcer

£18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...

Ashdown Group: UI Developer - (UI, HTML, CSS, JavaScript, AngularJS)

£25000 - £40000 per annum: Ashdown Group: UI Developer - (UI, JavaScript, HTML...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine