Manufacturing Investment (Hansard, 18 January 1990)

7. Mr. Leigh ton
To ask the Chancellor of the Exchequer what percentage of business investment was represented by manufacturing investment in (a) 1978 and (b) 1988.

§ 10. Ms. Harman
To ask the Chancellor of the Exchequer what percentage of business investment was represented by manufacturing investment in (a) 1978 and (b) 1988.

§ Mr. Ryder
Twenty nine per cent, and 22 per cent.

Mr. Leigh ton
Does not that show that the Government have presided over a collapse in manufacturing investment? How does the Minister intend to close the yawning trade gap caused by our deficit in exports of manufactures, which is now about £17 billion per annum—equivalent to £32,000 per minute—unless investment is increased? Does the Minister have any policies for dealing with that situation?

§ Mr. Ryder
At the tail end of the last Labour Government, manufacturing output was at a low. Since then it has increased by 12½ per cent. Also, the United 398 Kingdom enjoyed a higher average growth rate in the 1980s than West Germany, France and Italy. In the 1970s, our growth rate was lower than all three of those countries.

§ Mr. Forman
Has my hon. Friend studied the recent Peat Marwick survey showing that manufacturing industry is even now intending to increase by about 68 per cent, its investment in new products and services, and by about 46 per cent, its investment in further training? Is not that completely convincing evidence that this country has not lost the investing habit?

§ Mr. Ryder
My hon. Friend is correct. Business investment in 1989 is likely to have reached a record level as a percentage of gross domestic product. In 1987 and 1988, we saw the fastest growth in investment over a two-year period since the war.

§ Mrs. Beckett
Despite the Minister's optimism, he is surely aware of the Confederation of British Industry's recent survey of investment intention, which implies that the country may be about to hit serious problems in that regard. At least the figures he gave earlier answered the original question of my hon. Friend the Member for Newham, North-East (Mr. Leighton), which is more than can be said for his answer to my hon. Friend's supplementary question. Do not the figures signify a substantial shift away from investment in real wealth creation during the period of the present Government? Does not that create anxiety in respect of Britain's long-term economic future?

§ Mr. Ryder
The CBI forecast still predicts that investment will continue. As my right hon. Friend the Chief Secretary to the Treasury has already made clear, the 1980s saw record levels of growth and investment. After two or three particularly strong years at the end of the 1980s, growth is likely to slow a little over the next 12 months.

§ Mr. Hind
Does my hon. Friend agree that in order to sustain the growth in manufacturing industry that has been achieved over the past few years, it must be encouraged to invest? When he and his colleagues prepare for the next Budget, will they consider the view of the north-west CBI that tax allowances on machinery for purely manufacturing purposes would be of great assistance and help to sustain the investment that is necessary?

§ Mr. Ryder
I shall ensure that that suggestion is borne in mind when we come to prepare the next Budget. I remind my hon. Friend that profitability levels are now the highest for 20 years.