HC Deb 19 October 1989 vol 158 cc251-2
3. Mr. Moss

To ask the Chancellor of the Exchequer if he will make a statement on the level of business investment for the latest full year for which figures are available.

Mr. Lawson

Business investment increased by 17½ per cent. in 1988 and now stands at a record level as a proportion of GDP.

Mr. Moss

I warmly welcome those excellent figures for 1988, but does my right hon. Friend agree that they serve to underline the basic strength of the economy? Can he give the House the latest investment projections, particularly for manufacturing industry, for 1989?

Mr. Lawson

I can tell my hon. Friend the latest figures that we have for manufacturing industry investment. They were for the second quarter of 1989 and were 7.8 per cent. above those of a year ago. Of course, the figure for the second quarter of 1988 was particularly high, so manufacturing industry investment is still forging ahead, and that is very important in ensuring that we have good prospects of continuing growth in the future and continuing export growth in the future after the current slowdown is over.

Mr. Pike

Why does not the Chancellor recognise that those figures are only part of the story? Is it not a fact that in a key manufacturing region such as the north-west investment in manufacturing is still 36 per cent. below its level of 1979 in real terms? Is it not true that until the Government put that right we shall continue to import more than we export, with a resulting massive deficit?

Mr. Lawson

The hon. Gentleman will be glad to know that, taking the nation as a whole, manufacturing investment is at an all-time high.

Mr. Anthony Coombs

Total investment in Britain over the past 10 years has risen by nearly 40 per cent. in real terms. Is my right hon. Friend aware that only this morning the biggest carpet manufacturing company in my constituency, Brintons, announced a £50 million five-year investment programme in its manufacturing capability? Is that not the clearest possible evidence of the strength of the real manufacturing economy and does it not show the confidence of manufacturers in the prospects brought about by the Government's policies?

Mr. Lawson

I am glad to learn what my hon. Friend said and I wholly endorse the conclusion which he drew from it. The plain fact is that manufacturing industry is more efficient, more competitive, more productive arid more profitable than it has been for a very long time. That is why it has the confidence to go on investing and that is what it is doing, and this investment augurs well for our future. Also, of course, we have to bear in mind the quality of investment. Not only is the quantity of business investment as a percentage of GDP higher than since recorded figures began, but the quality of investment is very much higher, too, and that is equally important.

Mr. Gordon Brown

On business investment and the impact on it of high interest rates and exchange rate stability, Sir Alan Walters has said that the European monetary system is half-baked. He said in an article that the arguments for it have never even attained a minimum level of plausibility and that the Prime Minister concurs with his view. In the light of that, will the Chancellor tell us who is now in charge of economic policy in the Government? Is it the Chancellor or Professor Walters who should be giving the Mansion House speech this evening?

Mr. Lawson

I am not sure, Mr. Speaker, what that has to do with the question, but I will gladly answer it. The views which the hon. Gentleman quoted on the EMS from Sir Alan Walters are clearly not the views of the Government. The Government have made their views clear and the Prime Minister has made them clear: we are committed fully to joining the EMS as part of stage one of economic and monetary union. As for investment, which actually is the subject of the question, I am not surprised that the hon. Gentleman shied away from it because, unlike the sharp growth in investment that we have had during the period of this Government, during the period of the Labour Government investment did not grow at all.

Mr. David Davis

I should like to return to investment. My right hon. Friend has given us the latest new figures in a long series of investment figures for Britain. Can he tell us how those compare with the growth of consumption in the United Kingdom over the same period?

Mr. Lawson

Yes, I can. For the past seven years investment had grown twice as fast as consumption in this country, and for the whole of our period of office it has grown by getting on for twice as fast as consumption. That compares with the Labour Government where there was a small growth in consumption and no growth in investment whatever. Also, of course, the international comparisons are not without interest. I am sure they will be of interest to my hon. Friend even though they may not be to hon. Members opposite. During the period of the last Labour Government our investment growth was one of the lowest in the European Community. During the period of this Government our growth in investment has been the highest in the whole of the European Community.