Investment Relief

Oral Answers to Questions — Prices and Consumer Protection – in the House of Commons at 12:00 am on 11th October 1976.

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Photo of Mr Michael Neubert Mr Michael Neubert , Romford 12:00 am, 11th October 1976

asked the Secretary of State for Prices and Consumer Protection what is his estimate of the effect on prices of the additional investment relief announced in the consultative document and the additional relief announced by the Chancellor.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

It is not possible to make accurate estimates of the effect of individual Price Code changes on the overall price levels. We estimate that the total effect will be an increase of about 1 per cent.

Photo of Mr Michael Neubert Mr Michael Neubert , Romford

What will be the effect on consumer prices of the £1 million a day extra cost to industry which the CBI believes to be the result of raising the minimum lending rate to a record 15 per cent.?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

It depends on many imponderable factors, such as how long the minimum lending rate continues at that level and the effect of the depreciation of sterling, or—as I hope and believe—the rate of appreciation of sterling. Because of these difficulties, it would be unwise to make arithmetical estimations.

Photo of Mr Giles Shaw Mr Giles Shaw , Pudsey

Does the right hon. Gentleman agree that when that concession was introduced in the Price Code the intention was to stimulate investment? Does he agree that, in view of today's interest climate, that intention will not be realised? Will he therefore revise the provision in the Price Code on interest relief?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I cannot agree, and I shall try to express my disagreement at greater length tonight. For the moment, I remind the hon. Gentleman of something said on television by the Director-General of the CBI, I think on Thursday evening, that industrial investment decisions will depend far more on companies' views of stability, and the success which I believe last Thursday's measures will certainly have, than on a couple of points on the minimum lending rate. I am sure that that is a correct analysis.