To ask the Chancellor of the Exchequer what are the latest projections for the growth of manufacturing investment in the United Kingdom.
Manufacturing investment is projected to increase by 11 per cent. in real terms in 1988, according to the Department of Trade and Industry's latest investment intentions survey.
Those figures are just the tonic for those concerned about the growth of manufacturing industry. Does my right hon. Friend agree that the significant increase in industrial productivity since 1981 means that investors should hold their nerve and that their confidence should remain high? Confidence is threatened only by the Jeremiahs on the Opposition Benches.
I entirely agree with my hon. Friend. Since 1979 manufacturing productivity growth has continued at a substantial level, and for the past year at a rate of 6½ per cent.
Has the right hon. Gentleman seen today's quarterly survey from the Manchester chamber of commerce and industry, which represents by far the largest part of industry in the Greater Manchester area? Will he note that expected manufacturing investments are less than they were previously? They all seem to want reductions in interest rates to reverse that trend. As the report was published only after the increase in interest rates, what does the Minister intend to do to restore the expectation of manufacturing investment?
I cannot agree with the right hon. Gentleman that the survey is as pessimistic as he painted it. It paints an optimistic picture, and rightly so. Manufacturing investment is growing strongly. The right hon. Gentleman will recall that the CBI's January quarterly trend survey showed that investment intentions still remain strong. Manufacturing investment is doing exceedingly well at present, and I share the right hon. Gentleman's wish that it should continue to do so.
Does my right hon. Friend agree that the Ford pay dispute is unfortunate because it inhibits investment and is a clear sign of overheating in the economy?
With great respect to my hon. Friend, it would be unwise to read overheating into every indicator. Improvements on the supply side since 1979 mean that firms can operate at a much higher rate of capacity utilisation than before, and my hon. Friend's concern may be a little overdone. In any event, if overheating were to appear, there is no doubt that the Government would not hesitate to take action against inflationary pressures.
When will the Chief Secretary realise that he cannot fool all the people all the time on manufacturing investment? The reality is that, in real terms 1980 prices, manufacturing investment now is 10 per cent. below what it was in 1979. Even if the CBI forecast of an 8 per cent. increase this year were achieved, the 1979 level would still not be reached, and this is at a time when the world economy is slowing down. When will the right hon. Gentleman pursue policies which, in the long term, will ensure that savings go into manufacturing investment so that we can rebuild the competitive economy?
The end product of investment is productivity and profitability, and the quality of investment, as well as its quantum, are extremely important, and those have improved. The evidence of higher profitability and better productivity suggests that investment has been running at a high level and that it has been quality investment.