HC Deb 29 October 1970 vol 805 cc416-7
Q5. Mr. Barnett

asked the Prime Minister if he will appoint a Minister with sole responsibility for industrial investment.

The Prime Minister

No, Sir. Industrial investment is rightly the joint concern of the Chancellor of the Exchequer and the Secretary of State for Trade and Industry.

Mr. Barnett

Would not the Prime Minister agree that a major cause of our poor economic performance since the war has been low industrial investment? Would he not confirm that the gains to the Exchequer which are to be presumed from Tuesday's statement are bound to fall hard on company liquidity and even harder now that the additional bank squeeze has been announced today? Is he telling companies, therefore, that the only way in which they can get increased liquidity for investment is to increase prices while resisting wages?

The Prime Minister

No, Sir. One has to take into account the resources which these firms themselves will be able to retain from their earnings as a result of the change in corporation tax. I understand that the banks themselves have already stated that the special deposits are unlikely to bear on firms and corporations.

The argument about lack of investment is powerful, but there is an equally powerful argument that what we also lack is the efficient use of existing investment and that we could gain a great deal if we used our existing investment more effectively, as well as making new investment.

Mr. Maclennan

Does the Prime Minister's failure to refer to any rôle of the Secretary of State for Scotland in this Question and in a previous Question about the co-ordination of regional policy explain why the Secretary of State has played so little part in the production of the recent package of the Chancellor of the Exchequer and why this package is regarded throughout Scotland by the C.B.I., the T.U.C. and all other responsible bodies as totally irrelevant to Scotland's needs?

The Prime Minister

The Secretary of State for Scotland and the Secretary of State for Wales played a very important part in the whole of these discussions. I do not accept the view that the changes which we are making will be damaging to these areas; in fact, they will be exactly the reverse.

Sir G. Nabarro

Would my right hon. Friend not agree that the only correct arbiter for successful investment policy, whether in nationalised or in private industry, is a profitable and viable rate of return on the capital employed in the industries concerned?

The Prime Minister

I agree with my hon. Friend. This is one of the major purposes of making the change-over from a grant system, which operates regardless of profit or loss, to one of allowances, which encourage profitability.

Mr. Duffy

Does the right hon. Gentleman not think, in view of the disturbingly low level of net new foreign investments, that there ought to be some measure as a matter of urgency, in addition to the attendant cut in corporation tax, to act as a carry-over for industry until it begins to feel the benefits of tax allowances against depreciation?

The Prime Minister

The hon. Gentleman knows from my right hon. Friend's statement that the arrangements made up to 26th October will continue and, at the same time, the new allowances arrangement will begin. The interim period will be helped by the change in corporation tax on 1st January which gives companies an extra £60 million of liquidity.

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