§ 19. Mr. Laneasked the President of the Board of Trade what representations he has received regarding the continuation of the temporary increase in investment grants after the end of the current year; and what reply he has sent.
§ 30. Mr. John Biffenasked the President of the Board of Trade what proposals he has to change the existing rates of investment grants.
§ Mr. CroslandI have received a number of representations from the C.B.I, and other bodies asking that the temporary increase in the rates of investment grant should be continued beyond the end of 1968. I have, however, stated on a number of occasions, most recently 874 in reply to my hon. Friend the Member for Glasgow, Springburn (Mr. Buchanan) on 23rd October, that the rates will revert to 40 per cent. and 20 per cent. on 1st January, 1969.—[Vol. 770, c. 292.]
§ Mr. LaneWhile I agree with that decision, may I ask whether the right hon. Gentleman has considered the very healthy prospective increase in investment next year in the service and distributive trades, quite apart from manufacturing industry, and does not this cast some doubt on the value of investment grants as a stimulus to manufacturing investment?
§ Mr. CroslandI am obliged to the hon. Gentleman for his opening remark. As to the prospects for 1969, which are encouraging generally in both sectors—manufacturing and service and distribution—I should not like to draw any conclusions from the surveys of investment intentions which the Board of Trade carries out because, while I think they are an invaluable general guide to the trend of investment, the particular figures cannot be relied upon as a totally accurate indication of what will occur.
§ Mr. BiffenWill not the right hon. Gentleman reflect a little more sympathetically on the point made by my hon. Friend the Member for Cambridge (Mr. Lane) and accept that investment grants are an area of public expenditure which could well be capable of very severe reduction as part of the strategy of tax reduction?
§ Mr. CroslandNo, Sir; I would certainly not accept that. On the contrary, I think that investment grants were one of the major reasons why investment held up very much better in the last year or two in a period of relatively low demand than it has held up in any similar period since the end of the war.
§ Mr. CroninIs it not the case that a substantial proportion of these investment grants are used for importing plant and machinery from abroad, and, bearing in mind the extent to which imports are bedevilling our balance of payments situation, is it not undesirable that the Government should subsidise them to this extent?
§ Mr. CroslandNo, Sir. It is not a question of subsidy. The fact is that 875 investment grants apply to all eligible machinery, whether bought at home or abroad. This must be true of any system of grants like this. We could not under any of our international obligations have a system of grants which differentiated between home production and imports.