§ 21. Mr. Canavan
asked the Secretary of State for Industry what estimates he has made of the amount of investment in British industry in the first six months of 1977.
Mr. Alan Williams
Investment by manufacturing industry in the first quarter of 1977 was £414 million and by all index of production industries £756 million, both expressed at 1970 prices, seasonally adjusted. Provisional figures for the second quarter of manufacturing industry will be available on 25th August and for the other industries in early October.
§ Mr. Canavan
Does my right hon. Friend remember how, almost a year ago, the Cabinet accepted an NEDC prediction that investment in manufacturing industry would increase by over 20 per cent. in 1977? As there has been a continuing investment strike in the private sector, the result is that we have no hope of reaching that target. As the measures announced on Friday by my right hon. Friend the Chancellor of the Exchequer amount to only £70 million of additional investment for industry, will the Government take immediate steps to increase the budget and investment powers of the NEB and of the Scottish and Welsh Development Agencies?
It is wrong to talk of an investment strike in this context. The recession worldwide has been slower in turning than most authorities thought. As I have indicated previously, by the fourth quarter of last year investment was up 5 per cent. on the first quarter. This year, on our own Department's assessment, the increase in investment will be between 6 per cent. and 10 per cent., and there will be an additional 20 per cent. next year. According to the CBI, whose assessments run from the middle of this year to the middle of next year, the increase will be of the order of between 10 per cent. and 15 per cent. We are, therefore, seeing a reflection domestically by industry of the rather slow recovery internationally in the world economy.
§ Mr. Tebbit
Will the Minister accept, even if his hon. Friend does not, that the 20 per cent. increase in investment was no doubt predicated on the assumption that the Government would keep inflation down to 10 per cent. this year? It is understandable in those circumstances that the investment has not taken place. Will the Minister turn his attention to cases of lack of investment which affect even such established bodies as the British Rail Pension Fund, which now finds it necessary to put money into Louis XIV commodes and French impressionist paintings? What sort of hope is that for the NEB's investment policy?
The level of investment throughout Western Europe has been lower, and it will respond with confidence only when there is confidence in the future pattern of world demand. Opposition hon. Members have shown no enthusiasm for any success in negotiating a further stage of the pay agreement, and they have given no support to the Government's efforts for reducing inflation.
Mr. loan Evans
Will my right hon. Friend look at the suggestion of my hon. Friend the Member for West Stirlingshire (Mr. Canavan) and ensure that, now that the proceeds are flowing from offshore oil, he will look at the possibility of the National Enterprise Board and the Scottish and Welsh Development Agencies making more investment in manufacturing industry?
The National Enterprise Board and the Scottish and Welsh Development Agencies already have powers to encourage such investment. Certainly at present the NEB has assured the Department that funds are no constraint upon its activities.
§ Mr. David Price
Will the Minister bear in mind that I warned the Government at the time of the publication of the Treasury's scenario 2, accepted by the NEDO Council, that this was putting hope beyond expectation? In an Adjournment debate before Christmas I raised the matter and the Treasury Minister agreed with my revised figures. Therefore, it is hardly surprising that the scenario 2 target has not been reached because it was wrong from the beginning.
I am sorry that I missed the hon. Member's momentous analysis of the economic situation. There are one or two factors involved which go slightly wider than those that he has suggested.