HC Deb 02 May 1974 vol 872 cc1297-8
4. Mr. Duffy

asked the chancellor of the Exchequer if he is satisfied with the effect of his current policies on the level of industrial investment in the private sector.

The Chancellor of the Exchequer (Mr. Denis Healey)

Yes Sir, my Budget strategy is for resumption of growth at a good steady pace. This in itself is the best incentive for investment.

Mr. Duffy

Has my right hon. Friend yet adopted a view on the question whether the level of industrial investment is governed primarily by the reluctance of loanable funds or the shortage of them, or merely a secular tendency for the rate of reward for capital to decline, which has been dealt with in many talks, notably in NEDC? Is my right hon. Friend sure that his current policies are equal to all these contingencies?

Mr. Healey

Successive Governments have found it so difficult to stimulate investment that I cannot claim to be certain on these matters. However, there is a wide degree of agreement, which was expressed in the meeting of the NEDC which I chaired yesterday, first, that shortages of funds are not likely to be an obstacle to investment this year, and, secondly, that the future rate of return on capital determines investment rather than the level of profits in the past. Thirdly, it is a registered fact that the decline of profitability which we have witnessed in Britain over the last 15 years is equally notable in Western Germany, which has achieved a much higher rate of investment.

Mr. Tom King

The right hon. Gentleman will be aware of the importance of inward investment in total investment growth in this country. In that connection, how does he feel his proposals for tax on overseas management working in this country will help him with investment?

Mr. Healey

I think that they will be neutral in that regard.

Mr. Robert Carr

In view of the confidence that the Chancellor expresses in the effect of his policies on the future growth rate, will he now publish his forecast for the first half of next year, which he withheld from the House at the time of the Budget?

Mr. Healey

No, Sir—for the reasons I explained in the Budget debate, which appeared to commend themselves to the House, as the Opposition did not divide the House against the Budget.