HC Deb 10 January 1977 vol 923 cc1023-5
2. Mr. Marten

asked the Secretary of State for Trade how much industrial investment has been made by the eight Common Market countries in the United Kingdom since 1973; and how much United Kingdom investment has been made in the eight Common Market countries in the same period.

The Under-Secretary of State for Trade (Mr. Michael Meacher)

In 1973 and 1974 EEC net direct investment in the United Kingdom, excluding oil and insurance, totalled £177 million, of which £53 million was in manufacturing industry. In the same period United Kingdom net direct investment in the EEC, excluding oil, totalled £886 million, of which £440 million was in manufacturing industry. Similar information for 1975 will become available later this year, and for 1976 in 1978.

Mr. Marten

On a quick calculation, does not that mean that Britain has invested in the Community five times as much as the Community has invested in this country? Does not that mean that, apart from our appalling EEC trade deficit, we are also putting into the EEC employment which might well have been put into this country to help to reduce unemployment?

Mr. Meacher

The hon. Gentleman is right in his quick arithmetic. The differential is of the order of five to one. I must point out that there was a significant adverse differential in investment flows before 1973. It was then of the order of four to one, but it is true that it has become somewhat worse. As for the effect on employment in the United Kingdom, no doubt there has been some impact on jobs but much of the investment has been in areas which will not affect employment to the same degree—notably distribution, finance, mining, construction and transport. I wish to make the point strongly that the issue is whether if we blocked investment to the EEC it would necessarily take place in the United Kingdom.

Mr. Jay

Does my hon. Friend think that the figures he has given demonstrate one of the benefits to this country of Common Market membership?

Mr. Meacher

In the short term they certainly do not, but it is only fair to say that it was expected that there would be disadvantages in the short term. The question is whether the long-term benefits actually materialise.

Mr. Parkinson

Is the Minister aware that many of my right hon. and hon. Friends think it is a tribute to the good sense of British business men that they are seeking to invest in one of the major and fastest-growing trading areas in the world? Will he confirm that dividends on overseas investments have played an important part in invisible exports, which have gone a long way to propping up Britain's financial situation?

Mr. Meacher

It is true that the proportionate rate of return on investments in the EEC by British companies is higher than the rate of return on investments in the United Kingdom. I emphasise that while that is true there have been substantial reverse flows of disinvestment, which mean that the effect on the reserves has been positive. In terms of jobs, employment and growth, it is much more questionable where the balance of advantage lies, and we must examine these matters closely in future.

Mr. Skinner

Does my hon. Friend recall that during the referendum campaign some Ministers, and one notably, forecast that if we remained inside the Common Market there would be a substantial loss of jobs which would arise primarily from the massive investment that would take place inside the Common Market? As my hon. Friend was closely allied with the campaign to get across the message about the loss of jobs, will he tell me whether it was his calculator that was used to find out how many jobs would be lost?

Mr. Meacher

It is true that it was calculated during the campaign that there would be a net loss of jobs as a result of the flow of investment. To some extent this is less than the figures indicated because of the type of investment, but no doubt that has been the net effect in the short term. We now look for the longer-term effects, which may seek to balance that situation.

Mr. Dykes

Is the Minister aware that he is giving a completely misleading series of answers to these questions and, therefore, acting irresponsibly when manufacturers and industrialists will be considering relative investment decisions? Will he give the unemployment figures in the other major economies of the EEC—for example, Italy, France and Germany? Will he tell us how much was invested in this country in £ sterling in 1973 by countries other than members of the EEC?

Mr. Meacher

I have been asked a series of detailed questions that I cannot possibly answer straight away. The hon. Gentleman is wrong to neglect the concern that the Government and most reasonable and thinking people have in this country about the balance effects in terms of growth and employment.