Oral Answers to Questions — Trade and Industry – in the House of Commons at 12:00 am on 15th November 1971.
asked the Secretary of State for Trade and Industry what plans he has to change the system of investment incentives; and if he will make a statement.
Taxation allowances are a matter for my right hon. Friend the Chancellor of the Exchequer. I keep other forms of investment incentives regularly under review.
Is the Secretary of State aware that the only effective test of the Government's investment incentives is whether they are contributing to a fall in unemployment in the development areas? As this is manifestly not happening has not the time come for a radical change? Will the Minister please introduce some urgent action to tackle unemployment in the regions—preferably something like a crash programme of investment grants?
As I have told the House before, I am currently considering other measures which might be taken to encourage investment and the absorption of unemployment in the development areas. But I dissent from the hon. Member's view that the sole value of investment is in that field. Investment has many other values, which I hope the hon. Gentleman recognises.
Would my right hon. Friend not agree that there is accumulated evidence that geographically differentiated investment incentives simply provoke a feeling of frustration and resentment in those areas which feet that they are differentiated against? Is it not a fact that the best form of incentive to industrial investment is the expedition of profitable sales and the ability to retain those profits after taxation?
I entirely agree with my hon. Friend. There is no doubt that the greatest single stimulus to investment is precisely that which he described, and I have nothing whatever to add to what he said.
Has the right hon. Gentleman seen the article in today's Financial Times giving precise details to show that the measures so far announced by the Government since their election in June, 1970, have reduced investment differentials in the development areas? Will he confirm that the long-standing pledge given by the Conservatives before the General Election to have a thoroughgoing study of regional policy has at long last been started by the Central Capability Unit? If so, may we be told when that study will be completed and whether the results will be published in the form of a White Paper?
The hon. Gentleman is not quite right in the first part of that supplmentary question, though he is right in the sense of the effect on manufacturing industry. In the second part he is wrong, however, because the net differential in terms of industry as a whole is not less than it was, certainly not in the development areas, because the present arrangements provide for the coverage of service industries.
My answer to his question about regional policy is that I have made it clear for some time that the study of this subject is not a short-lived affair. It is a progressive and continuous operation which is being continuously undertaken. The hon. Gentleman will be aware of the danger of changing too frequently the various measures and provisions concerned with regional policy.