HC Deb 25 October 1966 vol 734 cc815-7
27. Sir G. Nabarro

asked the Chancellor of the Exchequer, in view of the investment slump in the private sector of British industry, and calculated decline in productivity in ensuing years resulting from this investment slump, what steps he proposes immediately to take to encourage increased investment in the private sector.

Mr. Callaghan

This matter is under continuous review and the Government will be ready to consult with industry at all times.

Sir G. Nabarro

Has the right hon. Gentleman observed that the Board of Trade itself has postulated a reduction of 7 to 10 per cent. in investment in the private sector next year, and that the C.B.I. has now said that it estimates it at 15 to 25 per cent.? As these are grave figures, cannot the right hon. Gentleman expedite his incentives for increasing industrial investment?

Mr. Callaghan

I did not indicate in my Answer that there are to be incentives for increasing industrial investment. I said that we were ready to consult with industry.

Mr. Barnett

While accepting that, in the present circumstances, any incentives could only be of marginal effect, may I ask my right hon. Friend to bear in mind that there would be a very important psychological effect if he brought forward the payment of the cash grants?

Mr. Callaghan

I will certainly take that into account, but it is primarily a matter for my right hon. Friend the President of the Board of Trade. There are, of course, administrative problems concerned with this, but, although there is clearly some difficulty about liquidity, the real problem for industry is that it must have some belief that there is going to be a long-term market in which to sell its goods. That is why some of the measures proposed would not necessarily achieve the objectives that those who want to stimulate investment have in mind.

Mr. Iain Macleod

Will the Chancellor accept that the aspect of the present economic situation causing most concern is the question of investment, and if, as he indicated in answer to an earlier Question, he sees something of a slide coming in 1967, more serious perhaps than we have seen before, how soon can we expect a statement on the Government's intentions?

Mr. Callaghan

I agree that this is the matter that the House and the country should concentrate on. We need, in present circumstances, to maintain a high level of investment, and it is the Government's desire to encourage this by adopting measures which will successfully stimulate it and will not just mean the expenditure of more public money. I cannot go further today than my original Answer. The matter is under continuous review, and I am ready to consult with industry about it at any time.