HC Deb 23 February 1970 vol 796 cc800-3
12 and 13. Mr. Silvester

asked the Minister of Technology (1) what was the value of the physical increase of manufacturing industry's stocks at 1963 prices in 1964; and what was the comparable figure for 1969;

(2) what percentage of the gross domestic product was represented by stock accumulation of manufacturing industry in 1964; and what was the comparable figure for 1969.

14. Mr. Michael Shaw

asked the Minister of Technology what percentage of the gross domestic product was represented by the stock accumulation of manufacturing industry in the last half of 1968; and what was the comparable figure for the last half of 1969.

16. Mr. Ridsdale

asked the Minister of Technology what was the level of stocks in 1964 and 1969, respectively, at current market prices and as a percentage of the gross national product; and how this compares with the level of investment in the manufacturing and construction industries for both these years.

24. Mr. Blaker

asked the Minister of Technology to what he attributes the fall in the value of stocks held by manufacturing industry in the third quarter of 1969.

The Joint Parliamentary Secretary to the Ministry of Technology (Mr. Alan Williams)

With permission I will circulate the figures requested in the OFFICIAL REPORT. There was no fall in the value of manufacturers' stocks in the third quarter of 1969. The fall in the volume of stocks is likely to have been caused by several factors, including, probably, liquidity constraints, adjustments to counteract high stockbuilding in the first quarter of 1969 and expectations of future falls in the prices of certain raw materials.

Mr. Silvester

Is it not a matter of concern that the fall in the real value of stocks should have occurred, as there is likely to be a a strain on the balance of payments when the economy picks up again, as we hope it will soon?

Mr. Williams

Stock-building is highly cyclical and fluctuates very considerably. Preliminary information suggests that it may have risen again during the last quarter of 1969—the actual figures are not yet available—at the very time when the balance of payments figures were also improving rapidly.

Mr. Shaw

Does the Minister consider that when import deposits are raised and the credit squeeze limitations are removed, this will have a very marked effect on the position?

Mr. Williams

The hon. Gentleman is entitled to that interpretation. It may well be that industry is learning to manage with lower ratios of stock. In the past we have tended to have rather high stock levels in this country.

Mr. Ridsdale

As the level of the value of stocks today is half what it was in 1964 as a proportion of the gross national product, will the Minister say what the likely trend is in 1970?

Mr. Williams

According to the information I have, that was certainly not the case. The total value of stocks—manufacturing, distribution and merchants'—was 41.2 per cent. of G.D.P. at current prices in 1964 and is 40.9 per cent. at current prices today.

Mr. Blaker

To what extent does the Minister believe that the favourable balance of payments of the past six months is connected with a rate of stock accumulation below the average?

Mr. Williams

Hardly at all, since the actual import content of stock-building is in any case quite small. It is hard to give a precise figure as it depends on the precise stocks being built up, but it ranges between one-fifth and one-third. The figures we are talking about are not very material in relation to the size of balance of payments improvement we have achieved.

Mr. Barnett

Is not the stock reduction something to be welcomed? Should not we ignore some of the underlying party political points made by hon. Gentlement opposite, with the implication on the balance of payments? Would not it be better to look at our stock ratios in relation to international ratios, rather than just our own, when we have carried much higher stocks than were warranted by good management in this country?

Mr. Williams

Yes, my hon. Friend is quite right in indicating that there has been a considerable improvement in methods of stock control in this country. This is a highly desirable development which I am sure hon. Members on both sides will welcome.

Sir K. Joseph

We would all welcome the fall in the secular proportion of stocks held to output, but is the hon. Gentleman telling the House that, in the Government's view, no upturn in stockbuilding is expected during the current year, even if the G.N.P. turns up?

Mr. Williams

I am not telling the House any such thing. I have already said that in the last quarter—and as yet we have not had the actual figures—it may well be that there has been a rise, but, because of the ratio to which I referred of one-third to one-fifth of import content, it still should not be significant in relation to a balance of payments surplus at the current level. I am surprised that the right hon. Gentleman did not volunteer that the opposite would have been the case when the balance of payments situation was good in 1968; then he could have made the same point in our favour.

Following is the information:

MANUFACTURERS' STOCKS
Value of physical increase at constant (1963) prices
£million As percentage of gross domestic product at 1963 factor cost
1964 411 1.5
1968—Second half, seasonally adjusted 30 0.2
1969—First three quarters, seasonally adjusted* 122 0.5
1969—Third quarter, seasonally adjusted* -30 -0.4
TOTAL STOCKS
The value of total stocks held in the economy (by manufacturers, distributors and merchants etc.) was £12,103 million at the end of 1964, 41.2 per cent. of gross national product during 1964; corresponding figures for the year ended 30th September, 1969* are £15,533 million and 40.9 per cent.
INVESTMENT
Investment by manufacturing and construction industries was £1,346 million in 1964; in the year ended 30th September, 1969* investment by manufacturing industry was £1,702 million; the latest available figure of investment in the construction industry is £161 million in 1968.
*Information for the fourth quarter of 1969 is not yet available.