HC Deb 20 March 1980 vol 981 cc623-4
6. Mr. Allan Roberts

asked the Chancellor of the Exchequer when he expects his economic policies to result in an increase in manufacturing investment.

Mr. Biffen

I expect manufacturing investment to increase in due course when the rate of inflation is reduced.

Mr. Roberts

Does not the Chief Secretary agree—without anticipating his right hon. and learned Friend's Budget—that the tax cuts introduced in the last Budget have not released investment into manufacturing industry? Will he deny the rumours that the Chancellor of the Exchequer, in his Budget, will establish enterprise zones in areas such as Merseyside, which the people there do not want? Will he agree that the only way in which we can achieve investment in manufacturing industry in such areas is through public investment?

Mr. Biffen

It is no part of my task this afternoon to comment upon my right hon. and learned Friend's Budget next week—

Mr. Canavan

Why not?

Mr. Biffen

Because I have a vested interest in personal survival.

On the more general proposition of Government aid as a means of promoting investment, regional aid under the previous Administration covered 40 per cent. of the population. That regional policy was wholly indiscriminate. I do not believe that the sheer provision of public funds is any guarantee of success. If it were, Merseyside would be the flower of industry today.

Mr. Richard Wainwright: Is the Chief Secretary aware that during the indefinite period—which was all that he could hold out in his answer to the hon. Member for Bootle (Mr. Roberts)—British industry is desperately concerned about the many forecasts from a wide range of authorities stating that investment in real terms in manufacturing industry will fall heavily this year, and even more heavily in 1981? What action does he intend to take to correct that grim prospect?

Mr. Biffen

The first thing that I shall try to do is correct the innate pessimism of the hon. Gentleman. Although it is perfectly true that both the CBI and the Treasury forecast a fall in manufacturing investment, it is less than that which has been experienced hitherto in this period of the cycle. The Government's policy will be vindicated, and well before the next general election.

Mr. Bruce-Gardyne

Has my right hon. Friend noticed that the latest survey of investment intentions carried out by the CBI suggested that the greatest obstacle to investment intention was not the level of the exchange rate nor the level of interest rates, but the scale of industrial disturbance and strife? Is it not conceivable that those who respond to a CBI survey are a little more "clued-up" about the motivations for investment than is the hon. Member for Bootle (Mr. Roberts)?

Mr. Biffen

That is undoubtedly true. Though it goes against myself, it is true to say that the CBI's forecast of the fall in manufacturing investment is lower than that projected by the Treasury.

Mr. Denzil Davies

The Chief Secretary said that the level of inflation has an effect on the level of manufacturing investment. What level of inflation does he consider to be acceptable? At what level of inflation would there be an increase in manufacturing investment?

Mr. Biffen

It would be absurdly presumptions of me to try to answer that question. The rate of inflation will have fallen tangibly and demonstrably come the next election.