HC Deb 20 March 1972 vol 833 cc1060-2
15. Mr. John Hannam

asked the Secretary of State for Trade and Industry what was the level of seasonally-adjusted investment by manufacturing industries in the third quarter of 1971 as compared with the second quarter of 1971.

17. Mr. Tom Boardman

asked the Secretary of State for Trade and Industry what was the level of seasonally-adjusted investment by the distributive and service industries in the third quarter of 1971 as against the second quarter of 1971.

Mr. John Davies

Capital expenditure by manufacturing industries, at 1963 prices and seasonally adjusted, in the second and third quarters of 1971 was £372 million and £386 million, respectively; the corresponding figures for distribution and services were £408 million and £411 million. Figures for the fourth quarter issued last week show a small further rise for distributive and service industries but a fall for manufacturing industries.

Mr. Hannam

Does my right hon. Friend agree that the slight decline in industrial investment in the last quarter is rather disappointing, but in view of the likelihood tomorrow of a further reflationary Budget can he tell us the investment indications for 1972?

Mr. Davies

I am somewhat disappointed with the fall in manufacturing investment in the fourth quarter. The prospects for 1972 on the basis of the previous analyses show that we should be due for something of an upturn—3 per cent. is the expected figure—though there may be other factors, as my hon. Friend mentioned, that will influence the level of investment this year.

Mr. Boardman

Are not the figures for the distributive and service industries more encouraging? Do not they show that those important industries are recovering from the penal discrimination they suffered under the previous Government?

Mr. Davies

Certainly they have responded to the clear upturn in consumer expenditure which took place in the latter part of 1971 and early this year.

Mr. Dell

On the contrary, does not the right hon. Gentleman realise that the investment record of distribution services has been very poor? Will he explain why in view of the reintroduction of investment incentives in this area by the present Government?

Mr. Davies

The reason lay in what I said in response to my hon. Friend, namely, that consumer expenditure was at a low level until the middle of last year. It is only with the pickup of consumer expenditure that we have seen a resumption of a higher level of investment in the services sector.

Mr. Alan Williams

If the right hon. Gentleman is right in his suppressed optimism, how does he explain why tomorrow's Budget is almost certain to include yet another desperate investment gimmick and why the economic development council for the chemical industry has indicated that new investors in the industry were 25 per cent. worse off under the investment allowance system than they were under the grants system? Will he also explain how in Wales last year so little foot-loose industry was created that industrial development certificates were a mere 40 per cent. of those issued during our last full 12 months in office?

Mr. Davies

None the less, the investment forward appraisal carried out by my Department regularly, and for years past, shows an upturn in investment during the coming year, and the most recent C.B.I. trend survey also seems to bear out that modest degree of optimism.