§ 55. Sir Granville Gibsonasked the Chancellor of the Exchequer whether he is aware that, under threat of compulsion, the Ministry of Supply are endeavouring to obtain the agreement of certain essential industries, including the leather industry, to a figure for the maximum percentage of profit permissible on their computation of the capital employed or at a lower rate of profit on turnover which in many cases is so low as to render it impossible to attain to the standard profit of such firms; and is such action being taken on instructions from the Treasury or in order to put such a policy of profit restriction below pre-war level into operation?
§ Sir K. WoodI am aware that the Ministry of Supply has been in negotiation with certain sections of the leather industry in order to arrange for control over the prices of leather (the bulk of which is 1390 needed for Government contracts and utility footwear) with reference to what is regarded as a reasonable average return on the capital employed in those sections of the industry. The principle of controlling prices in such fields by reference to return on employed capital is one which has been frequently explained to Parliament. The standard profit of a company for the purposes of Excess Profits Tax is not regarded as any criterion of what should be the return to be allowed on employed capital in such cases, as I explained at some length in the Debate in the House on 7th October, 1942.
§ Sir G. GibsonIs my right hon. Friend aware that the Treasury is responsible for the policy which has been carried out by the Ministry of Supply and that prices have been fixed on such a basis that it is physically impossible for an efficient firm to earn anywhere near the standard rate of profit? Was not E.P.T. designed to take excess profits?
§ Sir K. WoodI have already explained the position as regards E.P.T. and also the policy of the Government, but if my hon. Friend would like me to look at any particular case he has in mind, I shall be glad to do so.