HC Deb 16 January 1992 vol 201 cc1090-1
10. Mr. Hind

To ask the Chancellor of the Exchequer what assessment he has made of the likely impact of the Maastricht agreement on future inward investment into the United Kingdom.

12. Mr. David Nicholson

To ask the Chancellor of the Exchequer what assessment he has made of the likely impact of the Maastricht agreement on future inward investment into the United Kingdom.

Mrs. Gillian Shephard

We expect to continue our excellent record in attracting inward investment. Latest available estimates are that between 1984 and 1988 the United Kingdom received about one third of all inward direct investment to the EC—higher than any other member state.

Mr. Hind

My right hon. Friend the Chancellor of the Exchequer said that the success of inward investment depends on availability of markets. In my hon. Friend the Minister's view, what would be the effect on the economy and inward investment if she abolished the ceiling on national insurance, increased the ordinary rate and basic rate of tax for a third of the population in the south-east and introduced a higher rate of value added tax on luxury products—all measures proposed by the Labour party?

Mrs. Shephard

The attraction of the United Kingdom to inward investment is the skilled labour force, low unit costs compared with other EC countries and, of course, the competitive tax system with the lowest rate of corporation tax in industrialised countries. I fear that many of those features would be threatened by the policies of the Labour party.

Mr. David Nicholson

The effects of the Maastricht agreement will be extremely beneficial for inward investment into Britain, but does my hon. Friend not agree that all the paraphernalia that would be inflicted on industry by a Labour Government would be disastrous for inward investment? Will she also emphasise that we are building on success and, to this end, will she give the House the figures for 1988, 1989 and 1990 on the proportion of American and Japanese investment in the EC which came to Britain?

Mrs. Shephard

In 1988–89, 62 per cent. of all United States inward investment in the EC came to the United Kingdom and 42 per cent. of all Japanese direct investment in the EC came to the United Kingdom.

Mr. Enright

If the Minister is so keen on inward investment, why are she and her hon. Friends blocking the inward investment that would come from RECHARbonisation?

Mrs. Shephard

For a moment, I rather wondered if the hon. Gentleman was following in the footsteps of his colleagues in the trade union movement who regard inward investment as an alien culture. Perhaps I might say that the problems with RECHAR, the Government consider, are entirely in the court of the European Commission.

Mr. Chris Smith

For every £1 of inward investment that might conceivably be attracted by inadequate employment conditions and inadequate rights for employees, are there not £2 or £3 of inward investment that will be deterred by the absence of any positive contribution from Britain to the growing economic and monetary integration of Europe? Is not the greatest threat to inward investment the uncertainty that the Government have deliberately created by their opt-out on a single currency?

Mrs. Shephard

As I said before, the key factors in the determining foreign investment are a stable economic environment, a commitment to a free and open market and a lack of intrusive social and industrial regulation. The United Kingdom's right to decide for itself on the merits of a single currency is not an important factor in investment decisions.