§ 1. Ms. Harman
asked the Chancellor of the Exchequer what was the total of overseas investment in the last 12 months.
§ 7. Mr. Leighton
asked the Chancellor of the Exchequer what has been the total overseas outward flow of capital in the last 12 months; and what estimate he can make for the next 12 months.
§ The Economic Secretary to the Treasury (Mr. John Moore)
Net identified private and official investment and other capital transactions abroad in the 12 months to 1983, quarter one, totalled £2.4 billion. One very beneficial result has been an increase in income-earning assets abroad and a marked improvement in the balance between overseas assets and liabilities. Because of the uncertainties involved it is not the practice to publish detailed forecasts of the capital account.
§ Ms. Harman
Is it not clear that the flood of British money abroad is a major factor in the collapse of 390 investment in British industry? Therefore, in allowing this flood of money to go abroad, are not the Government directly responsible for the resulting loss of jobs in British industry?
§ Mr. Moore
The hon. Lady is confused. The percentage of institutional funds that go into investment in United Kingdom company securities is little different today from 1978. The hon. Lady is unaware of the major success story for Great Britain. Freedom from exchange controls has meant the creation overseas of enormous assets for Britain, which will be useful for our children and grandchildren.
§ Mr. Leighton
Is it not frightening, and damaging to our national interest, that, at a time when manufacturing investment in United Kingdom industry has gone down by one third since 1979, there is this massive haemorrhage of investments overseas, enabling our overseas competitors the better to compete against us? Is it not clear that the abolition of exchange controls did not mean just a once-and-for-all increase in that haemorrhage, but that this kind of investment is increasing every year? W ill the Government look at this again with a view to exercising some control over it?
§ Mr. Moore
As I said, the abolition of exchange controls has created enormous opportunities for pensioner investment institutions to create overseas assets that are of long-term benefit to our country. As to industrial investment, the percentage of institutional investment in Great Britain is little changed from what it was in 1978 when the Labour party was in Government.
§ Mr. Stanbrook
Has not the committee on investment exports recently reported that the surplus of investment income from abroad in 1981 was nearly $3.5 billion, which shows the advantage to this country of the abolition of exchange controls?
§ Mr. Moore
My hon. Friend is right. Not only does it show that we have a net short-term advantage, hut, compared with £8.5 billion in assets overseas in 1978, because of the wise investment of pensioners' assets we now have £37.5 billion investment assets overseas, which in years to come will replace the loss of revenue from North sea oil, for the benefit of our children and grandchildren.
Mr. J. Enoch Powell
Will the Minister endeavour to bring comfort to hon. Members, particularly those on the Opposition Benches, by explaining to them that outward investment is the inevitable and necessary concomitant of a surplus on current account?
§ Mr. Beaumont-Dark
Does my hon. Friend agree that direct investment overseas can make British goods more acceptable in those countries? Does it not also encourage investment in Britain from overseas? Surely that is good for British industry in the end. Does my hon. Friend agree that Labour Members are very shortsighted?
§ Mr. Moore
My hon. Friend is correct. Exports are closely associated with outward investment. About 30 per cent. of exports are by United Kingdom firms to associated 391 companies overseas. I know that Labour Members, wanting to concern themselves with jobs, will appreciate the fact that in the last three years there has been £12 billion worth of direct investment into the United Kingdom from overseas to help the creation of jobs in Britain.
§ Mr. Shore
As it is widely reported that the Government are short of finance to maintain existing public expenditure—a subject on which we are to hear later from the Chancellor of the Exchequer—and as this year we have no balance of payments surplus on current account, does the Economic Secretary agree that it is time the Government changed their strategy on the unhibited export of capital and reintroduced sensible exchange controls?
§ Mr. Moore
The right hon. Gentleman ignores entirely the success story for Britain and the economic realities which the right hon. Member for Down, South has tried to illustrate to him. I remind him that the intelligent use of our assets over the last four years has reduced our total overseas debts from £22 billion to £12 billion, the lowest figure in relation to our trade at any time since the second world war.