§ 17. Mr. Sheldon
asked the Secretary of State for Trade and Industry what further estimate he has now made of the level of industrial investment in 1971; and what action he intends to take to stimulate it.
§ Mr. John Davies
As the hon. Member knows, the last investment intentions survey forecast a small fall in investment. since then we have given a powerful stimulus to investment through the Budget and the cut in Bank Rate as well as improving incentives in the assisted areas. We are confident that these measures will have a progressive effect on the prospects for industrial investment.
§ Mr. Sheldon
As the results of the Financial Statement show that the Treasury's forecast is that investment will be no more than ½per cent. in the coming financial year after taking account of the Budget changes, how can the right hon. Gentleman talk about a "powerful stimulus"?
§ Mr. Davies
The hon. Gentleman's supplementary question indicates a certain absence of knowledge about the trend of industrial investment. I mentioned in my reply that there would be a progressive effect. Those who have cause to know about these matters know that industrial investment has a profound timelag built into it. Thus, the normal effect of the Budget will be felt progressively over a longer period than the hon. Gentleman infers.
§ Mr. Pentland
Despite the right hon. Gentleman's remarks about the effect of the Budget, is he aware that more and more firms in the North-East of England are reducing their labour forces every week by substantial numbers, and that this goes for a large industrial concern in my constituency? What does he intend to do to stimulate industrial activity in this area?
§ Mr. Davies
One of the principal causes of the increase in unemployment in that and other areas has been the low state of the economy, which I confidently feel will be assisted by the Budget. This does not necessarily entail an investment effect, though increased activity in existing facilities could have, and I hope will have, a powerful result on unemployment.