I shall deal with that. Profits honestly earned after 1970 once again started to rise, as production increased and confidence was gradually restored. Thus in 1971, adjusted profits were 12 per cent. up, and in 1972 they were up again by 12 per cent. In 1973, the year when the increased prices of oil and of other raw materials hit industry, profits rose only by just over 1 per cent. The pattern is clear—under the Labour years the consistent and disastrous falls in profit, and with them, the investment intentions, and under the Conservatives the substantial increase in profits and the return of investment to industry.
I will tell hon. Gentlemen how industry responded. There is a lag time, a long lead time, requiring the purchase of equipment, buildings, plant and so on. In the CBI survey of more than 1,000 firms there is shown unmistakeably that in the last six months of 1971 investment intentions rose by just under 20 per cent. In 1972 they went up a further 20 per cent. In the first 10 months of 1973, before the fuel crisis, they went up by a further 18 per cent. I think there is absolutely clear evidence here that when industy is profitable it invests and when it is starved of profits it does not invest. Hon. Members talk about the private and public sectors, but it makes no difference. If industry is allowed to make profits, it will invest. If it is not allowed to make profits it will not invest. It cannot.
Since investment lies at the heart of this Bill, I think we must see what the present Government have been doing to encourage industry to invest. The Chancellor of the Exchequer banged up corporation tax and advance corporation tax. He very much raised national insurance contributions and extended price control so that industry was unable to pass on the full effects. Local authorities, with Government encouragement, banged up industry's rates bill as much as 30 per cent. in 1974, with more to come this year.
Meanwhile, inflation not only in the price of fuel and raw materials but increasingly in the explosion of real wage costs to industry, is driving company after company to the wall—so much so that the number of bankruptcies has risen from 882 in the third quarter of last year to 1,355 bankruptcies in the third quarter of the 1974–75 year. Hon. Members will realise that the bankruptcies of individual private firms means the joblessness of thousands of men who work in them.
All these were body blows to industrial investment. It is, therefore, no surprise at all that the Bank of England, in its Quarterly Bulletin of last December, estimates that in the first quarter of 1974 industrial and commercial firms made no real profits at all. Rather, they suffered a financial deficit of £740 million. That is a measure of the stewardship of the present Government of British industry. One cannot expect investment out of a negative cash flow.