§ 11. Mr. Gaitskell
asked the Chancellor of the Exchequer whether his attention has been drawn to the recent violent fluctuations in the prices of the shares of certain companies as a result of take-over bids; and, in view of the encouragement thus given to the increase of dividends, the dissipation of reserves and the abandonment of conservative financial policies, what action he proposes to take in this matter.
§ Mr. R. A. Butler
Yes, Sir. I have given this matter close attention. The so-called "take-over bid" covers a very wide range of transactions, of which it would appear that some are in the normal course of business whilst others may be open to criticism on several grounds.
The Bank of England have, with my concurrence, emphasised to banks and other financial institutions the need for special care in dealing with requests for facilities for such transactions, in cases where there appears to be a speculative element. The banks and other financial institutions have given renewed assurances of their full and continued co-operation in carrying out the request that I made in December, 1951, that credit facilities should not be given for the speculative buying or holding of securities, real property or stocks of commodities.
Generally, I can assure the right hon. the hon. Gentlemen that the President of the Board of Trade and I are keeping a close watch on these events, including the aspect mentioned by the hon. Member for West Ham, North (Mr. Lewis), and we shall consider if there is any further action which the Government should take.
§ Mr. Gaitskell
Whilst welcoming that statement as far as it goes, and recognising the complexity of this problem, may I ask the Chancellor whether he does not feel that when, as a result of this take-over bid procedure, the value of shares is doubled, as happened in a recent case, there is bound to be an immense pressure for increased dividends; whether he would not further agree that the danger of this kind of thing happening is driving other boards of directors to increase dividends in advance so as to maintain their position; and does he not further agree that all this process is extremely dangerous in the light of the industrial situation in the country?
§ Mr. Butler
I have indicated in my answer that I deplore those cases where there is a speculative element. That is precisely why I supported the initiative of the Bank of England in taking the action which I have described, as they did with my concurrence. Furthermore, I said in my original answer that we are watching the situation, and if there is any 180 further action which either I or the President of the Board of Trade can take, we shall take it, because I do not underestimate the dangers of speculation of this character.
§ Mr. Lewis
Whilst thanking the Chancellor for that reply, can I ask him whether he is aware that if he would be so good as to consult my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) for the purpose of drawing up a legislative programme to deal with this matter, all hon. Members on this side of the House would assist him in getting it on the Statute Book as quickly as we could? And in view of that, will the Chancellor consider taking legislative action if his appeal here does not bear fruit?
§ Mr. Butler
If hon. Members had listened to the latter part of my reply, they would know that I shall take any action which I consider necessary.
§ Mr. Roy Jenkins
Is the continued co-operation from the banks and the insurance companies considered enough to correct this dangerous situation? Is it now proposed to proceed with the inquiry into the affairs of the Savoy Hotel Company, which was asked for by Mr. Samuel and which apparently he does not now desire?
§ Mr. Butler
I expected that the latter question would be raised. That is a matter for the President of the Board of Trade, and I shall certainly bring the question to his attention. As to the former question, I am satisfied that the banks have as much hold as they can have on this situation.
§ Mr. Jenkins
I beg to give notice that in view of the importance of this Question, I shall raise it on the Adjournment.