§ 8. Mr. LivingstoneTo ask the Chancellor of the Exchequer what is the proportion of gross domestic product devoted to investment in (a) the United Kingdom and (b) other G7 nations; and what plans he has to improve the United Kingdom levels of investment. [28497]
§ 13. Mr. Geoffrey RobinsonTo ask the Chancellor of the Exchequer if he will make a statement on investment levels in (a) the United Kingdom and (b) other Organisation for Economic Co-operation and Development countries. [28502]
§ Mr. WaldegraveDetailed comparative figures for investment by G7 nations and others are available in the OECD's national accounts statistics in the Library. Since 1979, business investment as a percentage of GDP has been higher in the UK than in the US, Germany, France and Italy.
§ Mr. LivingstoneDoes the Chief Secretary agree that manufacturing investment in Britain is still lower than it was in 1979? He invokes business investment. Does he remember that the Budget projections in November 1994 expected that there would be a 10 per cent. increase in business investment? Did it not turn out to be 2.3 per cent.? Is it not the case that investment in Britain is still being squeezed out by dividend payments that, in the last quarter of the past year, were running at an annual rate of 6.6 per cent. of GDP?
§ Mr. WaldegraveI have been reading the hon. Gentleman's views on this because, unlike his Front-Bench colleagues, he has some coherent ideas. 1065 His piece in the Socialist Economic Bulletin shows that he has a coherent theory about how the economy works. His theory is wrong because he believes that increasing profits and dividends are inimical to the development of investment, which is contrary to common sense. The fact that we are top of the business investment league table, regardless, of the figures for one month—which he may find will be revised—is an earnest of the fact that we will get more jobs in future. However, his Front-Bench colleagues take a different view. The hon. Member for Hartlepool (Mr. Mandelson), in delivering what the Financial Times called a robust defence of income inequalities to KPMG—not the favourite firm of the hon. Member for Dunfermline, East (Mr. Brown)—takes a different view from the hon. Gentleman. [HON. MEMBERS: "Too long."] That is why the Financial Times described—
§ Madam SpeakerOrder. Ministers must give brisk answers. I call Mr. Geoffrey Robinson. [HON. MEMBERS: "Come on; get up!"] I call Mr. Geoffrey Robinson. The hon. Gentleman's question was linked to Question 8. The Minister has answered the supplementary question to that and the hon. Gentleman can now put his supplementary to Question 13.
§ Mr. RobinsonIt is a disgraceful performance by the Government that manufacturing investment is still below what it was in 1979. The Chancellor could improve the situation by dealing with capital allowances as has been proposed by my hon. Friend the shadow Chancellor.
§ Mr. WaldegraveI apologise, Madam Speaker. I gave too long an answer to the previous question because I was trying to give the hon. Member for Coventry, North-West (Mr. Robinson) time to collect his wits. Unfortunately, you cut me off before he could. He asked a question that I had already answered and he should read Hansard to find the answer.
§ Mr. StephenDoes my right hon. Friend agree that the best way for a business to finance future investment is to retain in that business the profits that it has generated? Will he therefore undertake to abolish inheritance tax and restructure capital gains tax to enable businesses to retain profits for future investment?
§ Mr. WaldegraveConservative Members understand the importance of lifting the burden of capital taxation to the overall long-term performance of the economy. That is one of the things that divides us from the Labour party. We will do it only when it is safe to do so in economic terms, but my hon. Friend must be right.
§ Mr. Quentin DaviesI am sure that my right hon. Friend agrees that what is important for future output, and therefore prosperity, is the level of business investment as a whole. Will he set out the figures for business investment in Britain and compare them with those of our major competitor countries?
§ Mr. WaldegraveWe have put ourselves at the top of the business investment league table. I will place the full table in the Library because it is rather long. It would greatly benefit Labour Members to realise that one of the major achievements since 1979 has been to turn round the fact that Britain used to lag on business investment when 1066 compared with other European countries in the 1960s and 1970s, but that has now changed, which is a fact of fundamental importance.