Business Investment (Hansard, 20 February 1991)

§ 11. Mr. Charles Wardle
To ask the Secretary of State for Trade and Industry if he will make a statement on business investment.

§ Mr. Redwood
Business investment grew by 8 per cent. in 1989 and by 43 per cent. over the three years to 1989. Since 1980 business investment in the United Kingdom has grown faster than in any of our major industrial competitors except Japan.

§ Mr. Wardle
If industry is to resume the record levels of investment achieved between 1987 and the middle of last year, is not it essential that the Government first defeat inflation?

§ Mr. Redwood
I agree that reducing inflation is very important to business confidence and investment. The House may like to remember that investment was running at well over £55 billion in 1989, compared with a level under the Labour Administration that never got anywhere near £40 billion in real terms.

§ Mr. Haynes
Where was the Minister yesterday when my hon. Friend the Member for Dunfermline, East (Mr. Brown) made a marvellous speech at the Dispatch Box about trade and industry? It is a shocking state of affairs when we have a Minister standing at that Dispatch Box talking about how much the Government have invested in British industry when those Conservative organisations, the CBI and the chambers of commerce, do not agree with what he is saying. Will the Minister get up and tell us what he is going to do about it?

§ Mr. Redwood
I was present for the first part of the speech by the hon. Member for Dunfermline, East (Mr. Brown). Then I went off to make a speech to a group of business men and hear for myself what is happening in British business.
The hon. Member for Ashfield (Mr. Haynes) asked what we are going to do about it. My right hon. Friend the Secretary of State and my hon. Friend the Under-Secretary of State for Industry and Consumer Affairs made it clear: having a sound economic policy is vital to investment confidence.

§ Mr. Hill
Does my hon. Friend agree that it is very difficult for a British company to compete against overseas companies in this country when it comes to investment? There are not enough offsets for the investor, who is tempted to leave his money on deposit rather than risk it. We need a fresh impetus from the Treasury to make sure that British investors will invest in this country.

§ Mr. Redwood
In the early 1980s corporation tax was cut substantially and investment allowances were withdrawn. The result was a surge in investment, taking it to levels much higher than any achieved in the 1970s and early 1980s. I will, however, make sure that my right hon. Friend the Chancellor of the Exchequer hears of my hon. Friend's ideas because he will regard them as important in the run-up to the Budget, although he will want to make his own decisions on that and other matters that come before him.

§ Ms. Abbott
Do not current interest rate levels make it very difficult for business to invest? Should not Trade and Industry Ministers be pressing their colleagues in the Treasury to call for a realignment in the exchange rate mechanism?

§ Mr. Redwood
Interest rates and the level of the currency are matters for the Chancellor of the Exchequer and have been exhaustively debated in the House.