HC Deb 20 March 1972 vol 833 cc1064-5
20. Mr. Bruce-Gardyne

asked the Secretary of State for Trade and Industry whether he is satisfied with the application of the Confederation of British Industry's prices ceiling to the nationalised industries; and if he will make a statement.

Mr. John Davies

The nationalised industries for which I am responsible have fully respected the C.B.I. pricing initiative and have contributed thereby to the success of that initiative.

Mr. Bruce-Gardyne

But will my right hon. Friend think very hard before allowing the arrangement to be renewed in the case of the nationalised industries? Quite apart from the fact that it must imply the abandonment of all commercial criteria in the nationalised industries, have we not now seen that it is bound to lead directly to taxpayers' subsidies for the settlement of individual wage claims in the public sector, which my right hon. Friend the Secretary of State for Employment identified as a very undesirable initiative, giving a fresh twist to the inflationary spiral?

Mr. Davies

I am very conscious of all the points my hon. Friend has raised, but I would point out how important it is to the nation as a whole that the containment of inflation should continue from the point of view of the nation's external competitiveness and also its internal standard of living.

Mr. Palmer

Would not the right hon. Gentleman agree that this forced interference with the pricing policy of nationalised industries is wrecking their financial structures, particularly that of the electricity supply industry?

Mr. Davies

Of course the problem of price containment has very grave difficulties for the industries, as I fully recognise, but I am sure the hon. Gentleman would not wish to dissociate himself from what I said in response to the Question—that the containment of inflation is a primary purpose not just of the Government but of the whole country.

Mr. Emery

While my right hon. Friend must be correct on the desire to contain inflation, does he not accept that if the policy of price limitation, whether in the nationalised industries or in the private sector, is not followed up by an equal containment of wage increases, all that will happen is a build-up of future price increases, which will then be even more damaging to the economy?

Mr. Davies

Yes, Sir. I think there is a great deal in what my hon. Friend says. I hope that the whole purpose of the restraint of inflation will be seen as necessary by all sectors of the community.

Mr. Eddie Griffiths

Is the right hon. Gentleman aware that the price increase proposed by the British Steel Corporation—about 4½ per cent.—is unrealistic in view of the price escalation which it is asked to absorb? Can he tell us what concessions and indications he gave to the corporation regarding its borrowing powers and its capital investment programme for the future?

Mr. Davies

The Iron and Steel Act contains provisions for certain concessions to be made to the industry. These remain yet to be finalised. The hon. Gentleman, who knows the industry so well, is aware that the question of pricing and of production is not merely a function of the costs involved but also very much a function of the competitive atmosphere in which the industry must live.

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