HC Deb 18 January 1989 vol 145 cc323-5
10. Mr. Harry Greenway

To ask the Chancellor of the Duchy of Lancaster what were the levels of investment and profitability in manufacturing industry (a) in the past year, (b) five years ago, (c) 10 years ago, and (d) 15 years ago; and if he will make a statement.

Mr. Atkins

The figures on profitability are as follows: In 1972 the net rate of return was 8.1 per cent.; in 1977–5.7 per cent.; in 1982–4 per cent.; in 1987, the latest year for which figures are available, it was 9.2 per cent.

Investment in 1972 was £8.8 billion; in 1977, £9.8 billion; in 1982, £7.6 billion; and in 1987, £10.1 billion.

Mr. Greenway

In each case are not those excellent figures and do they not give the lie to the Labour party's constant assertion that there is under-investment in manufacturing industry with the consequent loss of jobs? Is it not time for us to put that back down the throats of the Labour party? Will my hon. Friend say what the future prospects are for profitability and investment in British industry? Will he include in that answer the level of investment by the Japanese and what safeguards there are for our future investment levels to be maintained alongside this?

Mr. Atkins

There is every sign that the trends to which I have referred, which so eloquently speak of the success of the Government's economic policy, will continue. The Department of Trade and Industry does a regular survey of investment intentions. The most recent one in December showed that the figure for 1988 would be 12 per cent—a record level of investment—11 per cent. in 1989 and yet further increases in 1990. That has been confirmed by the CBI, which has done a similar investigation. Investment intentions remain extremely buoyant.

I cannot give my hon. Friend details of Japanese investment, although I shall endeavour to give him that information. However, Japan invests more in this country than in any other country, other than the United States.

Mr. Kennedy

Does the Minister agree that obviously the level of investment and profitability in our manufacturing industry is heavily influenced by and dependent upon its ability to sell abroad? In that context, does he agree that there are rather worrying signs from those about to occupy senior positions within the new Bush Administration, as well as from the rather protectionist sentiments which are developing on Capitol hill at the moment that the Americans are wrongly perceiving 1992 and the single European market as some kind of "fortress Europe" mentality on the part of this country and our European partners? Will the Minister say what efforts the Government are making to disabuse the Americans of that misguided notion and to preserve and strengthen our manufacturing export market as a result?

Mr. Atkins

The hon. Gentleman is right to draw attention to that concern. I am cautious about predicting what a new Administration yet to be inaugurated will do, but my noble Friend the Secretary of State and I, let alone Ministers in other Departments, have spent a lot of time in the United States making sure that it realises that the concept of a fortress Europe is not one that we see as the future. The United States has a great interest in ensuring that its substantial and welcome investment in Britain will benefit it here just as much as it will in its own country.

Mr. Batiste

Will my hon. Friend confirm that employees of profitable companies should rightly expect to share in the increase of profits of those companies, but that their improved prospects today can be maintained only if increased earnings come out of improved productivity and lower unit labour costs?

Mr. Atkins

Yes, Sir.

Mrs. Mahon

May I draw the Minister's attention to a press release, issued earlier this week by the textile, hosiery and clothing industries, which talks about the bad agreement that we have just made with China? What does the Minister have to say to people in my constituency whose jobs are threatened—as it says in the press release—by that agreement? I should add that I do not think that any of those people are members of the Labour party.

Mr. Atkins

The hon. Lady has raised a point which, as she knows, is as much a matter for the Commission as for Britain. I shall look into the detail of the matter and write to her. I hope that I shall be able to reassure her.

Mr. Roger King

Is my hon. Friend aware that businesses need an open world market in order to remain profitable and to increase their profitability? Will he join me in expressing anxiety about the United States' attitude towards the Range Rover product manufactured in Britain on which penal import duties are due to be levied as a result of it being restructured in the United States' market place? That will have a substantial effect on the work people in the west midlands.

Mr. Atkins

My hon. Friend makes an excellent point, which is troubling us at the moment. My hon. Friend the Minister for Trade has the matter in hand and, in his own inimitable fashion, will take what action he believes to be necessary to ensure that that extremely popular and first-rate vehicle continues to sell in large numbers in the United States.

Dr. Bray

May I suggest that the Under-Secretary checks his figures? Is he aware that by their neglect and manipulation of statistics about which the Government do not care, they have lost credibility on those about which they do care and which have substantial effects in the market? Is he aware that of some £9 billion increase in profits since 1979, only some £400 million has gone into increased investment in manufacturing industry, and that the supply side response of manufacturing industry to improve its competitiveness is completely inadequate to remedy the enormous gap in the current balance of payments? May I suggest that the Department of Trade and Industry thinks again?

Mr. Atkins

The hon. Gentleman has confused himself with his figures, so he would not expect me to follow him down that winding path. The figures that I have given are absolutely right and we are proud of the success that they represent.

Mr. Redwood

As the most recent investment figures include substantial sums on car and video assembly capacity in Britain and as there are now moves to tax such products or to block their export to other member countries in the EC, can my hon. Friend assure me that the Government will try to roll back those protectionist moves in order to encourage more inward investment in the United Kingdom in such assembly activity?

Mr. Atkins

We spend a lot of time encouraging inward investment in Britain, although it is such a popular place to come to that many countries want to invest here anyway. My hon. Friend the Minister of Trade has heard my hon. Friend's comments and I am sure that he will enjoy pursuing this, as he does every other issue.