§ 22. Mr. Jayasked the Chancellor of the Exchequer whether, in view of inflationary tendencies now emerging in the British economy, he will take action to ensure greater restraint in the payment of higher dividends.
§ Mr. MaudlingI can agree with the right hon. Member that restraint in the payment of dividends is still necessary. The most suitable way of ensuring this is by relying on the voluntary action of individual managements.
§ Mr. JayIs the Minister really satisfied with a situation in which wages have increased no faster than prices but dividends have increased four or five times as fast as prices? Does he not realise that these dividend increases will inevitably produce wage claims, which will in turn lead to higher prices? What is he going to do about it?
§ Mr. MaudlingAs I pointed out in reply to a recent Question by the right hon. Gentleman, wage rates in the last three years have been increasing much faster than the retail prices.
§ Mr. AlbuHas the Minister seen the figures which were given in a paper to the Royal Statistical Society, which show that the level of investment in this country was the highest ever in950? Are not the dividends paid due to investment which took place at that time, which was very largely made possible by the restraint exercised on wage claims by the trade unions?
§ Mr. MaudlingI have certainly seen the figures which were given to the Royal Statistical Society. I also saw a letter in the "Economist" by the hon. Member, which indicated that he based some rather false conclusions on those figures.
§ Mr. JayDoes the hon. Gentleman deny that, on the figures which he has given to the House, dividends increased in 1954 four times as fast as wages?
§ Mr. MaudlingThe last time I gave figures to the House I gave figures to show how the whole picture should be regarded over the years.
§ Mr. GaitskellIs not the Economic Secretary taking this matter far too lightly? Is he really contending that an increase of 20 per cent. in dividends over the last year is exercising restraint in the payment of dividends? If he does not think that, what further steps is he taking to induce industry and companies generally to exercise restraint in the payment of dividends?
§ Mr. MaudlingI think that right hon. Gentlemen opposite—I will not say deliberately—are exaggerating the influence of dividend movements on the inflationary tendencies in the economy referred to in the Question. If they calculate the total amount of additional consumption expenditure likely to be involved in the dividend increases of 1954 after the deduction of tax and of the amount saved, they will find that it is very small indeed in relation to the total amount of consumption expenditure.
§ Mr. GaitskellWill the hon. Gentleman answer my question? I asked whether he considers an increase in dividends of 20 per cent. in 1954 compared with 1953—the figure given by him—is an indication that adequate restraint is being exercised in the payment of dividends.
§ Mr. MaudlingFor the reasons which I explained in answer to the right hon. Gentleman last week, I do not think that the figures indicate a general breakaway from the policy of restraint.