HC Deb 29 October 1987 vol 121 c443
10. Mr. Jack

asked the Chancellor of the Exchequer if he will make a statement on the net real rate of return in the company sector.

Mr. Lilley

The net real rate of return of non-North sea industrial and commercial companies in 1986 is estimated to have been 8.9 per cent. This is the highest level of prifitability recorded since 1973.

Mr. Jack

Does my hon. Friend agree that that excellent result shows the fallacy of criticism of our economic policies by the Labour Benches and the validity of the recent CBI report on the economy? Does he further agree that the key to those good results is the retention of profits within companies, occasioned by the Government's successive reductions in corporation tax?

Mr. Lilley

My hon. Friend is right to highlight the importance of profit, which is the lifeblood of industry and stimulates its pulse and fuels its investment. He is also right to point to the fact that investment is rising along with profitability, and the DTI survey shows investment intentions up 8 per cent. this year and next.

Ms. Armstrong

Does the Minister agree that, despite the good figures that he gives for manufacturing industry, there is 7 per cent. less investment in manufacturing industry now than there was in 1979, and that areas such as the one that I represent still have enormous problems in building up industry? Despite all the wonders of which the Minister tells us, there is still less investment in manufacturing now, and the prospect of even less in the future.

Mr. Lilley

I am glad that the hon. Lady welcomes the improvement in profitability. Unfortunately, she is not unanimously joined in that by other members of her party. She will be pleased to know that profitability in manufacturing has also increased substantially, and that is the pre-condition for growing investment. Profitability in manufacturing is also at a record figure, only previously achieved in 1973.