HC Deb 27 October 1966 vol 734 cc1285-7
22. Mr. Patrick Jenkin

asked the President of the Board of Trade what proposals he has to arrest the decline in the level of industrial investment.

31. Mr. Stratton Mills

asked the President of the Board of Trade if he will make a statement on the estimated drop in investment in manufacturing industry of 7 per cent. to 8 per cent. in real terms in 1967, as disclosed in the recent survey of investment prepared by his Department.

38. Mr. Hooley

asked the President of the Board of Trade whether he will consider providing a special premium rate of investment grants to industry during the period of the prices and incomes freeze to encourage re-equipment and capital investment in manufacturing industry against the period of renewed economic expansion.

48. Mr. Dickens

asked the President of the Board of Trade what further proposals he has for increasing the rate of private capital investment in manufacturing industry.

52. Mr. Bruce-Gardyne

asked the President of the Board of Trade whether in view of the effect of the replacement of investment allowances and free depreciation in development districts by grants under the Industrial Development Act, as demonstrated by the report of the Confederation of British Industry's latest survey of manufacturers' investment intentions, a copy of which has been sent to him, he will now take steps to reintroduce free depreciation in development areas, increase the value of investment grants and accelerate their payment.

Mr. Darling

As my right hon. Friend the Chancellor of the Exchequer said in answer to a Question by the hon. Member for Worcestershire, South (Sir G. Nabarro) on the 25th October the Government are watching the trend of investment in industry very closely and are ready to discuss the situation with representatives of industry at any time.

Mr. Jenkin

Will not the right hon. Gentleman recognise that one of the surest ways of making industry put off its plans and delay its investment decisions is to delay a decision on the question whether they will introduce grants and at what time, whether they will increase them, and whether they are to give some extra inducement? It is the delay that is causing failure to reach decisions.

Mr. Darling

I am not sure that that is entirely correct.

Mr. Stratton Mills

Would not the right hon. Gentleman agree that the Board of Trade survey is really much too optimistic in showing a turndown of 6 per cent. to 7 per cent., in conflict with the Confederation of British Industry which shows a 15 per cent. to 25 per cent. turndown in manufacturing industry? Is it not clear that we are heading for the greatest slump in manufacturing industry investment since the 'thirties, and will the right hon. Gentleman say whether he is studying a proposal for increasing or speeding up the cash grants?

Mr. Darling

The C.B.I. survey does not necessarily suggest a greater decline in investment than the Board of Trade survey, and both of them are examined very carefully in the Board of Trade Journal published today, which is well worth studying. The speeding up of the payment of grants is one of the matters which is being considered during the talks which the Chancellor mentioned.

Mr. Bruce-Gardyne

As the Minister's Department has told me that the new system of investment grants is worth about one-third less than the old system, would not the right hon. Gentleman agree that there is a case for reintroducing free depreciation in the development areas, for a temporary period at any rate, to prevent this appalling decline in manufacturing investment to which my hon. Friend referred?

Mr. Darling

The Board of Trade has not told the hon. Gentleman that the investment grants will produce a lower yield, so to speak, than the investment allowances. The answer given to him yesterday was that a comparison between these figures was, however, not meaningful, and went on to explain why.

Mr. Manuel

With regard to investment grants for new plant and machinery, would it be possible, until the 40 per cent. grant is paid in development areas, for firms, and especially small firms, to receive loans from my right hon. Friend's Department to tide them over until the grant is available?

Mr. Darling

That is one of the suggestions which will be considered in the discussions with industry.

Mr. Barber

As the Board of Trade's own forecast for next year suggests a drop in industrial investment of between 7 per cent. and 8 per cent., what on earth does the right hon. Gentleman mean by saying that he is watching the trend? Are not he and his hon. Friends concerned about the present and prospective fall in capital investment in industry, and if so, what are they going to do about it? Does the right hon. Gentleman realise that the impression which he and his colleagues give is of floundering about with no idea what to do next, apart from increasing the pool of unemployed?

Mr. Darling

Of course we are concerned about these estimates of a possible turndown of investment in industry. Of course we are concerned about what may be a lack of confidence in markets in the future, but these matters will be dealt with by my right hon. Friend the Chancellor when he makes a statement on them.

Mr. Jenkin

In view of the thoroughly unsatisfactory nature of that reply, I beg to give notice that I shall raise the matter on the Adjournment at the earliest possible opportunity.