HC Deb 09 November 1970 vol 806 cc12-4
6. Mr. Sheldon

asked the Secretary of State for Trade and Industry if he will now make a statement on the future of investment grants.

8. Mr. Emery

asked the Secretary of State for Trade and Industry whether he will now make a statement about investment incentives.

Mr. John Davies

I would refer the hon. Members to the statement made on 27th October by my right hon. Friend the Chancellor of the Exchequer.

Mr. Sheldon

Since the Government have accepted that there has been a reduction in incentives for investment in plant and machinery in both the development and non-development areas, what action does the right hon. Gentlemen propose to take to stimulate investment, here and now, in what is today a crucial field in the British economy?

Mr. Davies

The Government do not recognise that there has been a reduction in incentives. On the contrary—

Mr. Sheldon

Answer the question.

Mr. Davies

On the contrary, we believe that the broad spread of arrangements which the Government are putting forward will act as an additional inducement to investment in the areas concerned.

Mr. Emery

Is it not true that with the reduction in corporation tax certain firms, as long as they are highly profitable, will obtain a better return than the present method of investment incentives affords?

Mr. Davies

I know that in certain cases this can, indeed, be the case.

Mr. Varley

Can the right hon. Gentleman tell us what steps his Department is taking to collect information about the number of firms in development areas, for instance, that are not going ahead with new projects, and thereby providing new jobs, as a result of the replacing of the investment grant scheme?

Mr. Davies

Yes, Sir. This will form part of an extensive and continuous study that we are making of our regional policies, and we shall at the same time be registering those firms which decide, because of these arrangements, to go into the areas in question.

Mr. Biffen

Will not my right hon. Friend agree that we now have sufficient data to indicate that wholesale subsidising of investment leads to an improvement neither in the overall level of investment nor in profitable investment?

Mr. Davies

Certainly our overall appreciation of the situation on the investment grants was that it secured an inadequate advantage in relation to the amount of public money expended.

Mr. Dell

Will the right hon. Gentleman try to persuade the Chancellor of the Exchequer to publish the calculations upon which his statement is based—that the differential in favour of development areas is not impaired? What reply has been given to the C.B.I. in respect of transitional arrangements, which I understand the Confederation considers to be inadequate?

Mr. Davies

I will certainly put that point to the Chancellor. As regards the C.B.I. representations, questions about transitional arrangements are satisfactorily answered, and they will be the more satisfactorily answered when a statement is produced detailing precisely on what terms investment grants will be paid on contracts entered into up until 26th October

Mr. Sheldon

On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that answer, I beg to give notice that I shall try to raise the matter on the Adjournment at the earliest possible opportunity.