Investment Decisions

Oral Answers to Questions — Trade and Industry – in the House of Commons at 12:00 am on 25th March 1999.

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Photo of Michael Jack Michael Jack Conservative, Fylde 12:00 am, 25th March 1999

What assessment he has made of the most important factors determining new investment decisions by (a) small and medium enterprises and (b) other sizes of company. [77036]

Photo of Michael Wills Michael Wills Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Department of Trade and Industry)

Business told us in the consultation leading up to the Competitiveness White Paper that one of the main factors holding back investment in both large and small companies was the British record of macro-economic instability. As the right hon. Gentleman will be aware, the Government have now put economic management on to a more stable footing and are introducing other measures to encourage investment and enterprise.

Photo of Michael Jack Michael Jack Conservative, Fylde

If the situation is as good as the Minister has just enunciated, can he explain why chart A6 in the Red Book shows a falling level of business investment over the next three years?

Photo of Michael Wills Michael Wills Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Department of Trade and Industry)

Let us look at the record since the Government came to power. Last year, whole economy investment grew by 8.25 per cent., the largest annual rise for a decade. Business investment in the last quarter of last year rose by 5.5 per cent. It ended the year 12.3 per cent. higher than a year earlier. Long-term interest rates, which we know are crucial to long-term investment decisions by businesses, are at their lowest for 40 years. The facts speak for themselves.

Photo of Ian Pearson Ian Pearson Labour, Dudley South

When large inward investors can get Government grants in euros, why cannot our hard-pressed small exporters get investment loans guaranteed in euros?

Photo of Michael Wills Michael Wills Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Department of Trade and Industry)

My hon. Friend makes an interesting point, which I shall be happy to consider when we look at how we can help small firms move forward, which is what we shall do.

Photo of Mr Jonathan Sayeed Mr Jonathan Sayeed Conservative, Mid Bedfordshire

I recently conducted a survey of over 500 companies in my constituency and one of their complaints was the extra cost of the 1,940 net new regulations imposed by the Government. Micro-businesses—those with fewer than nine employees—said that that was costing about 17 per cent. on top of their normal costs and medium businesses said that it was costing an additional 7 per cent. Does the Minister agree that those extra costs are likely to translate into lost jobs?

Photo of Michael Wills Michael Wills Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Department of Trade and Industry)

We recognise the burdens that regulations can place, particularly on small companies. That is why, as my right hon. Friend the Secretary of State said, we will take this seriously and take action to help. We are aware of the problem. However, picking figures out of the air at random is not necessarily helpful. We need to look also at the benefits that some of the regulations can bring to business.