Private Sector Investment (Hansard, 11 November 1982)

§ 3. Mr. Craigen
asked the Chancellor of the Exchequer what is his forecast of investment in the private sector in 1982–83.

§ Sir Geoffrey Howe
The Industry Act forecast projects an increase in total fixed investment of 3 per cent. in 1982 654 and 5 per cent. in 1983. This total reflects a recovery in both private sector industrial investment and in private new housing investment.

§ Mr. Craigen
As the Government set such store by the private sector for the country's economic recovery, is the Chancellor satisfied with that level of increase? Does it imply that the real increase will be in the service sector rather than in the manufacturing sector and that he may yet outdo his predecessor, now Lord Barber, in sucking more imports into the country if and when an economic upturn occurs?

§ Sir Geoffrey Howe
In most economies a great deal of expansion is in the distributive and service sectors, and in the housing sector. If we are to avoid sucking in an undue proportion of imports, we need to improve our competitiveness.

§ Mr. Richard Wainwright
Is the Chancellor of the Exchequer aware that there will be no significant increase in private investment until orders as well as lower interest rates and a lower rate of inflation are forthcoming? What is he prepared to do to stimulate the flow of orders to the private sector?

§ Sir Geoffrey Howe
The hon. Gentleman must appreciate that, world-wide, orders cannot be manufactured out of the air. There is a given level of demand in the world economy and in our economy. We must improve our performance by quality, productivity and price competitiveness to increase our share of that market.

§ Mr. John Wells
Will my right hon. and learned Friend consider the particular problems of certain areas in the private sector that have had difficulty? I have in mind the need to redevelop within the private sector the Chatham dockyard, and the need to consider private sector investment in motorways and in the Channel tunnel.

§ Sir Geoffrey Howe
All those matters deserve consideration.

§ Mr. Cook
Does the fact that manufacturing investment in plant and machinery has fallen by one-third during the right hon. and learned Gentleman's period in office do nothing to prick his complacency? What is the point of constantly lecturing the British work force to restore competitiveness through wage cuts when he cannot persuade British management that his policies should give them the incentive to restore competitiveness through investment?

§ Sir Geoffrey Howe
Improvement in our performance depends upon achieving higher productivity and lower increases in unit labour costs as a result of action by management at least as much as by the work force.

§ Mr. Foulkes
Speak up.

§ Sir Geoffrey Howe
Even during the recession investment by the distributive and service industries has grown, and we expect further growth in 1983.