HC Deb 01 December 1969 vol 792 cc896-8
11. Mr. Bruce-Gardyne

asked the Minister of Technology what was the proportionate share of manufacturing investment in the gross domestic product over the latest quarter for which figures are available; and what was the corresponding proportion during the calendar year 1961.

Mr. Benn

At current prices fixed capital expenditure by manufacturing industry accounted for 4.4 per cent, of gross domestic product in the second quarter of 1969 compared with 5.1 per cent. in 1961.

Mr. Bruce-Gardyne

In the light of that most interesting reply, may I ask how the Minister would answer a taxpayer who asked how he could justify the expenditure of £500 million a year on investment grants to promote investment?

Mr. Benn

There are many aspects, as the hon. Gentleman knows, which would need to be studied if such a question were put. But there is reason to believe that the investment grant system may have checked the down-turn which would otherwise have occurred during the intervening period. In 1961 there was a sustained increase of investment for cyclical reasons.

Mr. Ridley

Since industrial development is declining sharply in real terms under this Government, what do they intend to do about it?

Mr. Benn

The underlying figures for increasing investment in 1968–69 and 1969–70 revealed by the trend suggest a 10 per cent. increase in both years.

Mr. Sheldon

Will my right hon. Friend consider consulting the Chancellor of the Exchequer with a view to effecting earlier repayment of investment grants? Something immediate is required and this could well produce that.

Mr. Benn

I regularly discuss with the Chancellor of the Exchequer and others of my colleagues the investment position. This proposal has been considered, as my hon. Friend will appreciate, over a long period.

12. Mr. Bruce-Gardyne

asked the Minister of Technology what is his latest estimate of the level of manufacturing investment during the first two quarters of 1970; and how such an estimate compares with the out-turn, in constant money terms, in the first two quarters of each of the immediately preceding five years.

Mr. Benn

Information is collected, in the Investment Intentions Inquiry, only for calendar years as a whole. The latest inquiry indicated an increase in the volume of manufacturers' investment between 1969 and 1970 in the region of 10 per cent. Past figures of manufacturers' investment in the first two quarters of each year have been at constant (1963) prices: £647 million in 1969, £608 million in 1968, £647 million in 1967, £649 million in 1966 and £628 million in 1965.

Mr. Bruce-Gardyne

Was not the latest inquiry, to which the Minister refers, conducted before the Government announced that they would not create a prior deposit scheme? Has that not changed the whole pattern completely? Is it not clear that the credit squeeze, the liquidity squeeze, which will apply with great severity in the spring, will have a disastrous effect on investment?

Mr. Benn

It is a bit too simple to put it in the hon. Gentleman's extreme terms. Obviously changes in the environment and in conditions make a difference to investment intentions. Although the Government are interested in an increase in manufacturing investment, I do not take the alarmist view taken by the hon. Gentleman.

Sir K. Joseph

But will the right hon. Gentleman bear in mind that the rate of profit to British industry has been squeezed and that the fear of price control haphazardly imposed by the Government has a great influence on investment trends?

Mr. Benn

From my experience of administering prices policy with the engineering industries over a period, I can say that there has been no difficulty in our relations with the firms with which we have dealt on this aspect. I might remind the right hon. Gentleman that all these surveys that we make reflect differently on his plea a moment ago to abandon all the surveys which the Government undertake to study the developing position.