HC Deb 05 April 1971 vol 815 cc17-8
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.