A temporary increase in the rates of investment grant was announced by my right hon. Friend, the President of the Board of Trade, on 1st December last. The reduction in Bank Rate on 26th January, the fall in interest rates generally, and the special aids given to the development areas should also be helpful to industrial investment, and hence to the prospect for industrial production.
Is my right hon. Friend aware that in the last six months the Index of Industrial Production has fallen from 135 to 131 and that investment this year is not expected to be better than 10 per cent. behind last year and that, despite the many burdens which my right hon. Friend has to bear, the House expects him to accord the highest priority to investment and output of industry in this country?
He will soon be my right hon. Friend. He will certainly be right hon. before the hon. Gentleman is. I agree with my hon. Friend's general philosophy on this matter and it is for this reason that special aids have been given for investment. We must ensure, however, that there will be a reasonable return on capital when an investment has taken place and that there will be a market for the product; and the Government's policy on this matter has been clearly stated.
Does the Chancellor of the Exchequer appreciate that even special aids when not—as I think they are—wrongly directed, will not affect this issue as long as industry and commerce do not see any reasonable sign of consumer demand? They will not be bribed merely into producing.
The Government's policy is not to have a general consumer reflation. It is to encourage investment through greater exports, which, I am very glad to say, is already taking place, and through increasing investment in particular ways that will enable healthy growth to follow.
Would not my right hon. Friend agree that his report is an indictment of the private manufacturing sector of the economy, and will he not seek to utilise the resources of the State, including the Industrial Reorganisation Corporation, to offset the weaknesses of private manufacturers?
I do not think that it would be possible for the State to undertake all the private investment that I expect manufacturers to do. I do not think that it is an indictment of them if they look cautiously ahead at market prospects and decide what their future will be, but it should be the aim of all of us, on all sides of the House, to ensure that when we have a healthy period of growth the markets will be there.
The Index of Intrial Production is not the most reliable of the indices we have to provide. I remember that once during my predecessor's term of office it was revised by four points in two months, in an upward direction on that occasion, but clearly we need an increase in industrial production, and it is towards that that the Government's policy is directed.