HC Deb 23 March 1970 vol 798 cc952-5
9. Mr. Hordern

asked the Minister of Technology what is his latest estimate of the trend in investment by manufacturing industry in 1970.

14. Mr. Ridsdale

asked the Minister of Technology whether he will revise his estimate of the increase in investment in manufacturing industry in 1970, in view of the recent report from the Confederation of British Industry, details of which nave been submitted to him.

16. Mr. Blaker

asked the Minister of Technology what is his latest estimate of the effect on manufacturing industry's new investment of the current credit squeeze.

17. Mr. Speed

asked the Minister of Technology if he is satisfied with the current level of capital investment by manufacturing industry; and if he will make a statement.

Mr. Alan Williams

The investment intentions published on 13th January indicated that manufacturers were expecting their investment to rise in 1970 by about 10 per cent. in real terms: a satisfactory increase given other claims on resources, particularly those of exports. The forecasts were made by manufacturers in the light of the many factors affecting future economic prospects but it is not possible to isolate the effect on investment of individual factors. It would be premature to conclude from the recent C.B.I. survey that manufacturers have significantly altered their investment intentions.

Mr. Hordern

Does the Minister appreciate that the C.B.I. survey shows that the majority of manufacturers are content to spend less than they did last year, and bearing in mind the high rate of corporation tax, the high level of interest rates and the credit squeeze, from where does he think manufacturers will get the money?

Mr. Williams

Any doubt there may have been about the future of investments was probably expressed at about the time it looked possible that hon. Gentlemen opposite might end up in Government. As for the differences between the C.B.I. and the Government surveys, the C.B.I. works on authorisations, whereas we work on intended expenditure. In any case, the survey by the C.B.I. conflicts with known information from the chemical and steel industries.

Mr. Ridsdale

When will the Government make another review, in view of recent wage increases which far exceed increases in productivity?

Mr. Williams

Those factors are common to many of our competitors overseas. It is the relative marketing position of the British product which will dictate the level of investment.

Mr. Speed

Are the Government in favour of the large current wage demands in the expectation that they will stimulate consumptiton so that that in turn will stimulate manufacturing investment?

Mr. Williams

That is not a question for my Department. So far as we are concerned, we still think that the economy is well in balance, as is demonstrated by the balance of payments figures.

Mr. Blaker

Has the hon. Gentleman observed from the Government's own figures that between January, 1966, when investment grants were introduced and the last quarter of 1969 investment in the distribution and service industries, which do not qualify for investment grant, has been twice as buoyant as investment in manufacturing industries?

Mr. Williams

The hon. Gentleman must know, after numerous questions both to myself and to the President of the Board of Trade, that questions or distribution are matters for the Board of Trade.

Hon. Members

Oh.

Mr. Molloy

Could my hon. Friend confirm on this question of investment that in 1966 the C.B.I. forecast a fall of 25 per cent. when in fact it was only 3 per cent.?

Mr. Williams

I thank my hon. Friend for reminding me of that fact. It was suggested at one time that this might have been due to the fact that during that year the extra 5 per cent. for investment grants was introduced. That is a notable tribute to the impact of investment grants.

Sir K. Joseph

But, objectively speaking, is it not true that the C.B.I. forecasts have been more realistic than the Government's forecasts?

Mr. Williams

The right hon. Gentleman has always shown a marked partiality to support whatever set of forecasts are politically most suitable to him at any given time. In view of his complete reluctance to base any decisions on investment on objective facts, and since he will not await a decision before doing away with investment grants, I am surprised that he has asked that question.

Sir K. Joseph

On a point of order. The hon. Gentleman did not answer the Question.

Mr. Speaker

That has happened before.

Mr. Williams

I still maintain that our figures tend to be more reliable—and 1966 showed that to be so.