HC Deb 15 February 1990 vol 167 cc378-9
4. Mr. David Marshall

To ask the Chancellor of the Exchequer what has been the level of manufacturing investment in each of the last two quarters.

The Chief Secretary to the Treasury (Mr. Norman Lamont)

Manufacturing investment was £3,163 million and £2,784 million at 1985 prices in the third and fourth quarters of 1989 respectively. Manufacturing investment reached a record level in 1989, after six years of growth averaging 8 per cent.

Mr. Marshall

Notwithstanding the Minister's answer, does he accept that the Government have an appalling investment record? The share of manufacturing investment in GDP fell by one quarter between 1978 and 1988. Does not that prove the Government's utter contempt for the nation's manufacturing prospects and their preference to grab what they can from the sinking ship?

Mr. Lamont

The hon. Gentleman says notwithstanding my answer, as if somehow he did not want to hear the facts in it. The facts are that between 1983 and 1989 investment grew by 8 per cent. on average, but under the previous Labour Government manufacturing investment grew by 1½ per cent. per annum. Manufacturing investment is now 7¼ per cent. above the level in 1979. It grew by 5½ per cent. last year and it is now at a record level. It may surprise Opposition Members to hear that manufacturing output in the 1980s grew faster in Britain than in Germany.

Mr. Burt

Has my right hon. Friend had the opportunity to calculate the effect of the strike at Ford on manufacturing investment? Does he agree that it behoves all parties in the House that want to see manufacturing investment to support companies such as Ford, which want to invest in Britain, not those who are striking and so putting at risk future investment in Britain?

Mr. Lamont

Two factors are important for manufacturing investment. One is increased profitability and the other is improved industrial relations. Both have improved enormously under the Government and in the teeth of opposition from the Labour party.

Mr. Strang

What effect are interest rates that are much higher than those of any of our European competitors having on investment intentions? Is falling manufacturing investment consistent with an on-going economic miracle? When does the Chief Secretary expect interest rates to start falling?

Mr. Lamont

It is expected that manufacturing will continue to grow faster than non-oil GDP. Obviously, investment will, to some extent, be affected by interest rates, but it is important that we should reduce demand of which investment is part. The fact remains that in recent years we have had extremely strong investment growth, including strong manufacturing investment growth.