Manufacturing Industry

HC Deb 02 June 1980 vol 985 cc1034-5

16. Mr. Wigley

asked the Secretary of State for Industry what is his most recent estimate of the effect of interest rates on manufacturing industry.

The Under-Secretary of State for Industry (Mr. Michael Marshall)

I am unable to give any estimate of the effect of interest rates on manufacturing industry because the relationship between the two depends on many uncertain factors.

Mr. Wigley

Did the Under-Secretary see the reports in the weekend press indicating a severe drop in the liquidity of manufacturing companies? Is he aware of the large number of companies, particularly the smaller ones, which are now facing bankruptcy, mostly because of the high rates of interest? Will the right hon. Gentleman press upon his colleagues the need to reconsider the question of interest rates in order to try to bail these companies out before they all go to the wall?

Mr. Marshall

I am aware of the factors that the hon. Gentleman describes, but a premature move on interest rates would be at the expense of curbing inflation, and that still has to be the prime target.

Mr. Aitken

Is my hon. Friend aware that throughout the country manufacturing industry is squealing with pain under the pressure of these high interest rates? Is he further aware that business men are looking to the Department of Industry to fight their corner for them against some of the other pressures that come from the Treasury?

Mr. Marshall

I take note of my hon. Friend's point. In respect of investment and stockbuilding the problem he describes is real. However, premature movement would be at the cost of beating inflation.

Mr. Alan Williams

Does not the nder-Secretary recognise that the combination of high interest rates, a high sterling rate and high inflation is presenting many manufacturing companies with a liquidity problem such as they have never faced before? Will he explain how the Chief Secretary, when in opposition, was able to describe the lower rates of interest then prevailing as usury and to claim that they would destroy jobs in manufacturing industry, and why he is unable to tell us today the effects of the current higher rates of interest upon industry?

Mr. Marshall

In his comparisons the right hon. Gentleman should bear in mind that the Government of whom he was a member did not give these facts. There are many imponderables. If the right hon. Gentleman wishes to pursue the matter he may well wish to follow the advice that he gave as a Minister, which was to go to the House of Commons Library, put his input into the Treasury model available there, and see what conclusions he comes up with.