HC Deb 06 December 1990 vol 182 cc437-8
4. Mr. Fraser

To ask the Chancellor of the Exchequer what measures were announced in the autumn statement to help improve the supply side of the United Kingdom economy.

The Economic Secretary to the Treasury (Mr. John Maples)

The Government's supply side policies are designed to improve the performance of the economy by removing barriers and creating incentives.

Mr. Fraser

Given that unemployment is rising rapidly, that we continue to have a horrific deficit in trade in manufactured goods and that industrial investment is still only at the same level as it was in 1979, are not those measures wholly inadequate to enable us to produce from our own resources the things that people in this country need?

Mr. Maples

That is absolutely wrong. It completely ignores the fact that during the 1980s the United Kingdom was top of the league for productivity, top of the league for growth, top of the league for investment and created 2½ million more jobs, so we must have been doing something right.

Mr. David Shaw

Does my hon. Friend agree that the improvements in the supply side of the economy have been most satisfactory under the Government? Does he further agree that the low rates of direct taxation have contributed towards making sure that the labour market has settled down and fewer strikes have helped to free productivity and improve the supply side of the economy?

Mr. Maples

My hon. Friend is quite right. Our supply side policies have been designed to improve competition, remove barriers and improve incentives. We have done that by cutting tax, deregulating the economy, improving competition and reforming the labour market. To me, and to many of my hon. Friends, it is laughable to suggest that there is such a thing as supply side socialism.

Mr. Robert Sheldon

As the latest figures show a serious financial deficit among large companies in Britain and it is therefore plain that those companies will reduce investment, will the Minister further consider an increase in capital allowances, possibly a short-term one, to encourage continued investment?

Mr. Maples

On the first part of the right hon. Gentleman's question, many companies have substantial debts because they have been investing on an unprecedented scale in the past few years. The right hon. Gentleman also asked about depreciation and capital allowances. As he knows, we reformed corporation tax in 1984. There is now a generous system for depreciation and capital allowances and the accumulation of those 25 per cent. allowances over the past few years has meant that many companies are protected from a large amount of what would otherwise be corporation tax liability.

Mr. Batiste

Will my hon. Friend confirm the Government's commitment to encouraging further savings so that investment in industry can expand in the 1990s in the same way as it expanded in the 1980s under the Government's policies?

Mr. Maples

I can assure my hon. Friend of that. Both of the last two Budgets have contained measures designed to encourage savings. They have been very successful, and we hope that they will enable industry to continue to fund the kind of investment programmes that it has funded for the past few years when, as I have said, we saw record growth in business investment.