Economic Situation

Part of the debate – in the House of Commons at 12:00 am on 20th December 1956.

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Photo of Mr Derek Walker-Smith Mr Derek Walker-Smith , Hertfordshire East 12:00 am, 20th December 1956

I have frequently given way. I want to deal with the issues which the right hon. Member and his hon. Friend so interestingly made and I think the House would wish me to deal with what they said about investment.

The right hon. Member rightly said that we want to increase our investment and become a high investment country and I am sure that he has in mind the difficulties which a heavy defence burden expenditure has imposed on the country in this context. The fact is that fixed investment at home, in 1955, equalled £2,865 million, 17 per cent. of our gross national product. If right hon. and hon. Members opposite want comparisons, that is 31 per cent. over 1950, when right hon. Gentlemen opposite were in office.

Following on the 1950 position, capital investment remained fairly static in 1951 and 1952. Why? Because of two legacies inherited from the Labour Administration—the rearmament legacy, on which the right hon. Member for Huyton split from his right hon. and hon. Friends, and the balance of payments crisis, which united them all in an attitude of retreat. Those two things kept capital investment static over those two years, but afterwards it resumed its forward advance. Initial allowances, suspended by the Finance Act, 1951, of a Labour Chancellor of the Exchequer, were restored in 1953. Investment allowances, never introduced by a Labour Government, were introduced, albeit only temporarily, for most industries in 1954.

Right hon. and hon. Members opposite sought to chide me on a previous occasion, and again tonight, for not answering their question with a monosyllable, "up" or "down". It seems a little unreasonable to expect somebody with nearly a quarter-of-a-century's experience in the courts to be so readily impaled on the horns of this elementary dilemma. It is precisely like asking, "Have you stopped beating your wife?" I answered the question and I will answer it again in terms of which the hon. Member for Stechford, from the tenor of his speech, should approve: we wish to advance capital investment in industry, but we wish to advance it in a discriminating way and in those sectors which favour the country's balance of payments position.

Investment in the manufacturing sector is of prime importance for the expansion of exports and also for the future maintenance of a high level of investment. That is the type of investment which we wish primarily to see, and that was the point of my answer in the House.

I can tell the House that capital investment in the manufacturing sector is, in fact, rising. As to 1956, the Board of Trade inquiry shows that capital expenditure by the manufacturing industry in the first half of this year as against the first half of last year shows an increase of 26 per cent. It is certain that the manufacturers' share of total investment will again increase.

Our debate started late, but a great number of very interesting questions have arisen and I have done my best, within the limits of time, to deal faithfully and fairly with them. The debate has necessarily been focussed on the immediate situation on which so much of our present effort and attention is necessarily directed, but, though the difficulties which have been brought forward are real enough, they are not insurmountable and they should be seen in the context of past achievement and future potential.

I agree with the hon. Member for Stechford that complacency would obviously be very wrong in this context, but I believe that a solid and sober confidence is both seemly and appropriate. I believe that the traditional skill and ingenuity of the British people will get us over the hill of our present difficulties and that, on the far side, the pace of our forward movement will be soon and successfully resumed.

I beg to ask leave to withdraw the Motion.