HC Deb 10 March 1976 vol 907 cc254-6W
Mr. Nott

asked 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 Davies

The 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 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

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.

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