HC Deb 12 June 1975 vol 893 cc647-9
11. Mr. MacFarquhar

asked the Chancellor of the Exchequer when he next intends to meet the CBI.

Mr. Healey

I meet representatives of bath the CBI and the TUC regularly at NEDC. The next meeting of the council is on 17th June. I also meet representatives of these organisations separately on occasion, but have no immediate plans to do so.

Mr. MacFarquhar

When my right hon. Friend next meets the CBI will he discuss with it the evidence put forward in a recent article in the Economic Journal, to the effect that British manufacturing companies pay very little tax? Is he aware that in 1973 British manufacturing companies apparently paid only 14 per cent. tax on their profits, and, in view of this, will he inquire of the CBI why these companies continually complain that they have no incentive to invest, when this low rate of tax is due to their ability to defer tax with investment?

Mr. Healey

I shall certainly read the article to which my hon. Friend has referred, and if it seems suitable to do so I shall draw it to the attention of the CBI. However, the tax burden which has fallen on British manufacturing industry in recent years has been very substantial. This was one reason why I arranged for tax relief on stock appreciation, both in the last Finance Bill and in the one now passing through Committee.

Mr. Body

When the Chancellor next meets the CBI will he confess to it that he now discerns a connection between the appalling rate of increase of inflation since he became Chancellor and the appalling increase in the net borrowing requirement since he became Chancellor, which now works out at 50p per week per man, woman, and child?

Mr. Healey

I think that there is a connection between the two, but not in the direction that the hon. Member suggests. The fact is that the very high borrowing requirement is largely a consequence of inflation, and has not been its cause.

Mr. Dalyell

Is my right hon. Friend yet in a position to say anything to industry about budgetary proposals in respect of the ferrous foundry industry?

Mr. Healey

There is a wide welcome in the ferrous foundry industry and in the industry served by it for the scheme of investment assistance which I announced in my last Budget.

Sir G. Howe

When the Chancellor meets the CBI will he take the opportunity of making clear the Government's overriding determination to fight inflation, of spelling out the implications of that policy, of making it clear that a continued link between price increases and wage increases will pave the way to further inflation, and of securing his own understanding of the fact that a large public sector deficit, now increased by £20 billion over two years, is one of the most significant causes of inflation, that it must be reduced, that the consequences of that must be carried through in cash limits on Government spending and in the acceptance by the Government of their own role as a major employer in the British economy?

Mr. Healey

I do not think the CBI has any doubt about the priority which I give to the struggle against inflation—but if I may attempt to straighten out the right hon. and learned Gentleman in his rather confused supplementary question, he must recognise that a large public sector deficit, such as we now have, is damaging to the economy in many respects. I am seeking to reduce that deficit. It is not primarily damaging because of its effect on inflation. West Germany currently has a public sector deficit—and, indeed, is planning for a deficit as large as we have in Britain—yet its rate of inflation is scarcely one third as high.