The latest official survey of investment intentions shows a 3 per cent. fall in the volume of manufacturing investment in 1972 over 1971, but a rise of about 2 per cent. in investment in the distributive and service industries, excluding shipping. The survey was, however, conducted in November—December and may not fully reflect present intentions.
I would refer the hon. Member for Ashton-under-Lyne (Mr. Sheldon) to the answer which my right hon. Friend the Chief Secretary gave the hon. Member for Stoke-on-Trent, South (Mr. Ashley), on 14th December.—[Vol. 828, c. 37.]
We have done a great deal. The level of manufacturing investment for 1971 is likely to be higher than earlier estimates suggested. The revised estimates of manufacturing investment for the third quarter show a rise of about 5 per cent. over the second quarter level, and that is good news.
Does not this appalling forecast of the Department of Trade and Industry show that the level of investment in factories at the end of this year, two-and-a-half years after the Government came to power, is falling year by year; yet the Government have no new proposals to put before the House. Is not this scandalous, and will not the Chancellor go into this matter once again to see whether, even at the expense of his own face, he can devise a form of investment grant which will provide continuing investment in our factories?
It was precisely because of the investment situation which we found when we came to office, which was unsatisfactory both to the previous Government and to the present Government, that we took various actions. For example, the first-year allowance on plant and machinery was increased from 60 to 80 per cent. over a two-year period. Free depreciation was introduced for service industries in the development areas. I have made two reductions of corporation tax. Interest rates have been reduced very substantially—[HON. MEMBERS: "No."] Yes. Right hon. and hon. Gentlemen opposite do not like this, but it is what has been done by the Government. There have been increases in public sector investment and also substantial measures of reflation which were referred to yesterday by my right hon. Friend the Prime Minister.
The Chancellor will have seen the latest disturbing figures of the further downturn in investment intentions in engineering and the drop in engineering orders. How does the Chancellor explain the total failure of this vital industry to react to all the measures which he has just enumerated?
I do not accept for a moment that there has been total failure. Without any doubt, what has happened is that, as a result of the measures which we have taken over the past year, the situation is better than it would have been had we pursued the restrictive policies of right hon. Gentlemen opposite. Any business man will agree that the main reason why investment has been lagging is the squeeze on profits which was caused by the excessive level of pay settlements. Of that there can be no doubt whatsoever.