asked the Secretary of State for Industry what further measures he will introduce to increase the rate of investment in manufacturing industry.
The Government will maintain their policy of establishing the right economic framework for investment and enterprise.
Is the Minister aware that according to the latest CBI industrial trend survey, 42 per cent. of firms said that they would be spending less in the next 12 months on investment on new plant and machinery than in the last 12 months? What will the Minister do about that? When will the results of the so-called incentives policy come through to fruition?
We believe that the results are coming through already. The hon. Gentleman and the House know that we are facing a period of world-wide economic stagnation. One way to attack that, as my hon. Friend the Under-Secretary said in answer to a previous question, is to try to get down the public sector demands on the economy so that there are more funds available for private investment, thereby reducing interest rates, which are another difficulty.
Does my hon. Friend agree that it is not just levels of investment that are important—indeed, firms can suffer from too much investment as BSC has shown over the last 15 years—but many other matters should be taken into account, such as levels of manning and productivity?
My hon. Friend is quite right. The first priority is to use the investment properly. Secondly, we must ensure that there is a profitable return on that investment and any future investment.
With reference to investment in the public sector, will the Minister explain, in view of his assurances during the last debate on the ship building industry, why the national environmental research council's order is being placed abroad and not with British Shipbuilders?
The hon. Gentleman should put down a separate question on that point. It does not arise on the question on the order paper.
Is it not also a question of the under-use of existing manufacturing capacity? Would it not help if manufacturers had a reasonable prospect in the forthcoming Budget of a better return on investment?
It is true that the present return on investment is disastrously low in real terms. One of the features of recent years has been that the profits that business has retained—or that it has been allowed to retain—have been too low.
Given the real return on capital, the prohibitively high interest rates and the reduction in public expenditure, where does the Minister expect that new investment to come from? Bearing in mind the consequences of Government policy in areas such as South Wales, when will the Government reassess regional development policies in those areas?
My hon. Friend has already mentioned that the Government are prepared to put £48 million into South Wales in order to cope with some of the consequences of running down the steel industry. Otherwise, the money has to come from resources that are available to the economy as a whole. That is why we place such emphasis on reducing the demands of the public sector on those resources.