Investment by manufacturing industry in the 12 months ending September 1979 is estimated at £3,791 million at 1975 prices, seasonally adjusted. The Department's survey of manufacturers' investment intentions published early this month shows a likely 6 to 10 per cent, fall in the volume of manufacturers' capital expenditure.
Does my right hon. Friend agree that business men will invest in new plant and machinery only if they believe that they will be able to sell the output at a profit? What steps will the Government take to increase demand in manufacturing industry so that investment will be encouraged in that way?
I agree with my hon. Friend's presumption. There is no shortage of demand in the country. Much demand is being met by imports, and world demand is still wide open to our exports—with all the difficulties that we appreciate.
Does my right hon. Friend agree that investment will not rise with MLR at 15 per cent.? Does he further agree that the only way to get MLR down is to ensure that the public sector is prevented from taking the bully's share of the cake? Does he agree also that the best thing that we can do to encourage investment is to ensure that the public sector is diminished?
I agree with my hon. Friend. However, we should remember that it is not only the quantity of investment that leads to growth in output. There is great scope for getting more output of what the customer, both at home and abroad, demand from our existing investment.
The short answer to that is that I do not know. That is an interesting question, of which I am delighted to be the focus, and I shall take an opportunity to inform myself on the matter.
Does the right hon. Gentleman recall that at the time of the Budget we were told that the money that was being given back in tax rebates was to be used, in the main—the Government hoped—for industrial investment? Will the right hon. Gentleman tell the House why that hope has not been fulfilled?
The hon. Gentleman's time scale is totally wrong. It must take time for the greater reward that flows from lower taxation on risk capital to be translated into more risk taking. The House is aware that the conditions that are consequential upon the legacy from the previous Government are deeply un-favourable for that.