HC Deb 01 June 1954 vol 528 cc1074-5
44. Mr. Roy Jenkins

asked the Chancellor of the Exchequer whether he is satisfied that the course of company dividends in the first four months of this year meets the requirements of his financial policy.

The Economic Secretary to the Treasury (Mr. R. Maudling)

Taking account of the increase in the amount of capital employed, on the figures available, the shareholders' gross return on invested capital during the first four months of 1954 was about 6.9 per cent., compared with about 6.2 per cent. in the same period last year. One could take the absolute amount of gross dividends reported—for which the increase is about 21 per cent.—but that would give a misleading picture. However, continued restraint in the distribution of dividends is necessary.

Mr. Jenkins

Is the hon. Member not aware that even leaving aside this very large increase—21 per cent. as he says, and 26 per cent. as the "Financial Times" indicated recently—and even accepting the rather unsatisfactory basis of the percentage of capital employed, the increase in the first four months of this year appears to have been of the order of 15 per cent. above that of the first four months of last year? Will he indicate what degree of increase in dividend distribution would be regarded by the Government as showing a lack of restraint?

Mr. Maudling

I do not think it is for the Government to lay down for the guidance of individual boards of directors how much they should distribute by way of dividends. The gross return on the sum of invested capital in the first four months of this year has risen from 6.2 per cent. to only 6.9 per cent.

Mr. Nabarro

Is it not a fact that the present dividend position reflects adequately the exceptionally high level of business and industrial activity in the country today and the extraordinary level of prosperity everywhere?

Mr. Jay

Does not this mean that the Government's dividend restraint policy has completely collapsed? With all these increased profits and this increased prosperity, is there any reason for delaying any longer the promised increase to old-age pensioners?

Mr. Maudling

I do not think there is any evidence here of a breakdown in the Government's policy of voluntary dividend restraint.