HC Deb 12 July 1984 vol 63 cc1352-3
15. Mr. Nellist

asked the Chancellor of the Exchequer when he expects investment in manufacturing industry to return to the level of 1979.

Mr. Moore

Investment in manufacturing industry is recovering strongly. The June DTI investment intentions survey suggests that total non-North sea industrial investment will run close to the 1979 level this year and will set a new record in 1985.

Mr. Nellist

As opposed to the Tory backwoodsman's comments earlier in Question Time, is not the real reason for the decline of the British manufacturing economy that manufacturing investment is less than 80 per cent. of what is necessary merely to cover the depreciation of the machinery that is being worn out? It is not workers who are to blame for the lack of competitiveness with Europe, Japan or America, but the Chancellor's friends in industry and in the banks who refuse to invest in Britain.

Mr. Moore

I know that the hon. Gentleman will not need to be reminded of the wise words of the Wilson committee, that lack of profitable opportunities is the main obstacle to investment. I know that the hon. Gentleman, revelling in good news, will be happy to know that manufacturing investment is strongly rising and is up by 11 per cent. in the six months to March.

Mr. Budgen

Will my hon. Friend confirm that, though there may be disadvantages for other sectors of the economy, manufacturing industry, particularly in the west midlands, will benefit from a lower sterling exchange rate and also from lower oil prices?

Mr. Moore

My hon. Friend is right to draw attention to the reality of the way in which currencies reflect markets and, to the extent that they do and are properly recorded, benefits may accrue to our manufacturing industry.

Mr. Bermingham

Does the Minister agree that the increase in bank rate must perforce affect the amount that industry can invest in new machinery and thus increase investment? Has not the time come for the Government to consider whether there should be differential interest rates, especially where investment is involved?

Mr. Moore

The hon. Gentleman should remember what my right hon. Friend the Chancellor said about the appalling levels of profitability when the Labour Government were in office. The increase in profitability of industry, combined with the increase in liquidity, ensures that the manufacturing sector, as well as other sectors of the economy, can bear the strain of the current higher interest rates.