HC Deb 03 July 1991 vol 194 cc307-8
9. Mr. Nicholas Winterton

To ask the Secretary of State for Trade and Industry whether he will make a statement about the impact of inflation on the competitiveness of British industry.

Mr. Sainsbury

Inflation erodes competitiveness and destroys output and jobs.

Mr. Winterton

I am grateful to my hon. Friend for that succinct reply. Will he also pay tribute, however, to ICI plc for having invested in research and development at a much higher level than the rate of inflation? Should not the company be warmly congratulated on that?

Hostile approaches to the company might well affect its magnificent performance for many years. It employs some 54,000 people and makes a major contribution to our economy. Surely it should be seen as a national asset and its operations should be recognised as being in the national interest.

Mr. Sainsbury

I know that my hon. Friend will agree that inflation is one of the most damaging influences on our research and development spending. The increased spending that I mentioned earlier is clearly a response not only to a lower tax regime, but to a lower inflation regime. A return to the taxation and inflation levels that characterised the last Labour Government would have a disastrous effect on British industry's research and development.

Mr. Harry Ewing

If the Minister is so convinced that inflation damages the competitiveness of British industry, why on earth did the Government allow it to increase in the first place?

Mr. Sainsbury

I wonder whether the hon. Gentleman doubts whether inflation is damaging. If so, I am very surprised. If, however, he agrees with me that it is damaging, why does he support the policies of nationalisation, high spending, high taxation and high borrowing that are espoused by his party? They would make the present position much worse.

Mr. Michael Brown

May I hark back to the question asked by my hon. Friend the Member for Macclesfield (Mr. Winterton)? Will my hon. Friend also note that, although inflation over the past three or four years has been higher than we would have wished, SCM Chemicals in my constituency has been extremely competitive? Moreover, it is owned by the Hanson group of companies.

Mr. Sainsbury

I know that my hon. Friend strongly supports all industry in his constituency. My Department certainly welcomes good news from industry—which we do not hear very often from the doom and gloom experts in the Labour party.