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National Economic Development Council

Volume 887: debated on Tuesday 4 March 1975

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Q2.

asked the Prime Minister when he next expects to take the chair at a meeting of the NEDC.

My right hon. Friend the Chancellor of the Exchequer is chairman of the council. I have said previously that I hope to take the chair about once a quarter, but I have no specific date in mind at present.

Is my right hon. Friend aware that the worsening outlook for capital investment confirmed by yesterday's CBI Industrial Trends Survey can only prolong the recent fall in industrial production and thus add to unemployment? Will he therefore take an early opportunity, such as chairing the NEDC can provide, to put some backbone into business men, pointing out to them that theirs is the responsibility for the present lack of investment because theirs is the crucial rôle, impressing on them that no one, including themselves, can benefit from this state of affairs, and asking them whether they will start trying to believe once more in themselves?

As I have told the House, the NEDC—both sides of industry and the Government—at its last two meetings, and it will happen again tomorrow, has been working on the problem of investment and increased industrial capacity to meet the requirements of world markets in the oil States, in the Soviet Union and elsewhere.

My hon. Friend, and I hope right hon. and hon. Members opposite, will have been encouraged to see the figures published this morning showing that, despite earlier forecasts, industrial investment in manufacturing rose in the fourth quarter of last year. It was 5·4 per cent. up on the fourth quarter of 1973, when the Opposition were responsible for these matters, and 19·9 per cent. up on the fourth quarter of 1972. [Interruption.] In reply to the illiterate muttered supplementary question about prices, may I say that the hon. Member knows that these figures are at constant prices.

If the Prime Minister takes the chair at the NEDC, will he be repeating his speech outlining the Government's achievements, and does he consider the present rate of inflation to be an achievement or a failure?

All my speeches from the moment we came to office have dealt with the problem of inflation. Nothing happening today is different from what we were told a year ago—[HON. MEMBERS: "Oh."]—since we were told a year ago today about the likelihood for inflation and for unemployment, except that all of us—I should like the Opposition's support—are struggling to stop the increase in unemployment then forecast which is occurring in most other industrial countries. We have also made more impact on the balance of payments problem.

When the Prime Minister meets trade union leaders at NEDC or elsewhere, will he listen carefully to what they have to say about import controls? Will he note that these are a means of improving the balance of payments and preventing unemployment from increasing, particularly in such industries as textiles and footwear?

There is a special textile and footwear problem. Hon. Members on both sides of the House are concerned about it, and I have suggested that they should meet my right hon. Friend. I have been in touch with the industry and certain action has been taken, but I know of the anxiety.

I take the view that import controls as a general policy would be bad for Britain from the point of view of dealing with the balance of payments, because they would help to get world trade spiralling further downwards. I point out to my hon. Friend and to those who support him that if we impose physical controls to restrict imports it will not be an alternative to deflation. We reject both policies. We should have to have deflation in order to prevent a big increase in consumption which would frustrate our exports.

Does not the Prime Minister agree that investment intentions are declining to the worst level ever and that, until we see a new confidence in industry, forward investment will not increase? Does he agree that the terms of the letter which I wrote to him on Friday setting out the instructions that would have to be given to bring the Industry Bill into the terms of the White Paper—as he has promised to do—are the basis of the instructions which he will be giving to parliamentary draftsmen for preparing Government amendments to the Industry Bill?

I do not accept any of the points made by the hon. Gentleman. As to the effect of business confidence on investment, the figures have been showing a decline for a very long period. The figure for the fourth quarter is actually up, and I hoped that the hon. Gentleman would say how delighted he was, but that is not in his nature. The intentions for the fourth quarter were worse, but they have improved in reality and I hoped that the hon. Gentleman would be pleased.

The hon. Gentleman will be receiving a reply to the letter he so kindly sent to me, and he will know that I am currently discussing these matters with the CBI and the TUC. I thought I might perhaps send him a detailed reply because it is plain from his letter that he has totally falsified the position in relation to the Bill. The hon. Gentleman in his speeches and letters should stop thinking in slogans and apply himself to the problems. He will get the reply to his letter, and I hope that he will be a much humbler man when he has read it.

Does my right hon. Friend agree that, worrying as inflation is, the villain of the piece has been the failure of those with the ability to invest to do so or their preference to invest overseas? Does he agree that, in spite of what he said, this is a continuing worry? Does he think that the policies are sufficient to arrest the tendency and drastically to improve investment?

Yes, Sir. I answered that question a week ago, and I dealt with it at some length when discussing these matters with the Scottish TUC last week and on television in Scotland. I said then, and I must repeat, that, as we have said for 12 months and more, the immediate problem of inflation can arise from self-generated income demands—wages, salaries and other incomes outside the employment field. The long-term problem we face is the totally inadequate investment—under successive Governments; I concede that—for about 20 years. That is the basic problem. Had business invested when it should and could have done and had every chance of doing, we should not be as vulnerable as we are to short-term factors.

When the Prime Minister takes the chair will be explain to the council why his Government are steamrollering through the House an iniquitous tax which is ill-understood and which has far-reaching economic consequences, without adequate debate because of the timetable motion?

I do not agree with the hon. Member's premise. There have already been about 170 hours of debate. I understand that the House is being asked today to approve other arrangements which will provide adequate time for considering all the nonsense of hon. Gentlemen opposite for another four days.