§ Mr. Nottasked the Chancellor of the Exchequer whether, further to his repiy to the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) in c. 68 et seq. of the Official Report for 23rd February, he will publish figures for gross and net investment in Order IV and MLH 104 (Petroleum and Natural Gas) of the Standard Industrial Classification (1968).
§ Mr. Denzil DaviesThe following tables show estimates of gross and net domestic fixed capital formation at current and at constant 1970 prices annually from 1948 to 1974 in respect of Order IV of the Standard Industrial Classification (SIC) and from 1964 to 1974 in respect of MLH 104 of the SIC. Investment was negligible in the latter industry for years prior to 1964. The estimates of constant prices at this level of industrial disaggregation should be interpreted with particular caution because of the problems of measuring changes in the prices of capital goods. There are special problems with the price indices used for MLH 104 255W because many of the fixed assets purchased in recent years are of a kind which were not in existence in the base year of 1970.
The estimates of net domestic fixed capital formation should also be treated with caution. They depend upon "perpetual inventory" estimates of capital stock and capital consumption which rest on a number of assumptions subject to possible error. In addition it has been necessary to make further assumptions about the allocation of investment between Orders III and IV for the years prior to 1948 for which only combined data are available. Furthermore, the conventional
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GROSS DOMESTIC FIXED CAPITAL FORMATION (GDFCF) AND NET DOMESTIC FIXED CAPITAL FORMATION (NDFCF) IN ORDER IV AND MLH 104 OF THE STANDARD INDUSTRIAL CLASSIFICATION £ million Current prices Constant (1970) prices GDFCF NDFCF GDFCF NDFCF Coal and petroleum products (Order IV) 1948 … … … … 9 4 21 10 1949 … … … … 21 16 49 37 1950 … … … … 38 32 84 71 1951 … … … … 43 36 88 73 1952 … … … … 49 40 91 74 1953 … … … … 46 35 84 64 1954 … … … … 32 20 57 36 1955 … … … … 32 19 54 32 1956 … … … … 41 26 65 41 1957 … … … … 60 43 90 64 1958 … … … … 56 37 82 54 1959 … … … … 37 17 54 24 1960 … … … … 28 7 40 9 1961 … … … … 31 9 43 11 1962 … … … … 23 0 32 0 1963 … … … … 31 7 42 9 1964 … … … … 36 10 47 13 1965 … … … … 38 10 48 13 1966 … … … … 65 34 78 41 1967 … … … … 103 70 124 85 1968 … … … … 111 74 128 86 1969 … … … … 92 52 103 58 1970 … … … … 83 36 83 36 1971 … … … … 131 77 119 70 1972 … … … … 119 58 102 50 1973 … … … … 52 −16 41 −12 1974 … … … … 73 −11 45 −8 Petroleum and natural gas (MLH 104) 1964 … … … … 1 1 1 1 1965 … … … … 12 11 14 13 1966 … … … … 25 21 29 25 1967 … … … … 35 27 41 32 1968 … … … … 35 23 39 25 1969 … … … … 35 18 38 19 1970 … … … … 40 16 40 16 1971 … … … … 67 36 62 34 1972 … … … … 119 80 101 68 1973 … … … … 182 127 128 88 1974 … … … … 672 559 345 283 NDFCF is equal to GDFCF less capital consumption; capital consumption relates to reproducible fixed assets only and does not include the depletion of natural resources. assumption that capital consumption begins as soon as capital expenditure has taken place (rather than from the time the asset is used in production) needs to be taken into account when interpreting the estimates of net capital formation for MLH 104.
Estimates of capital consumption, and therefore net domestic fixed capital formation, are among the least reliable of those published in the national accounts. The reliability and methods and calculation of these estimates are described in Chapter XII of "National Accounts Statistics: Sources and Methods" HMSO 1968.