Dividends (Hansard, 13 February 1962)

§ 18. Mr. Callaghan
asked the Chancellor of the Exchequer what appropriate corrective action he proposes to take in accordance with paragraph 14, dealing with profits and dividends, of the White Paper on Incomes Policy, in view of the excessive increase in dividends from 1958 to 1961, compared with increases in hourly wage rates.

§ Mr. Selwyn Lloyd
In view of the fall in profits, from which dividends are paid, in 1961, I do not think there is any need for corrective action at the present time.

§ Mr. Callaghan
Has not the Chancellor looked up the figures, which show that dividends increased four times as quickly as wages during those years? Does not he regard that as excessive, whatever the rate of profits paid out? Does not he realise that until he takes some action along these lines his incomes policy will be regarded as a mockery by the ordinary people?

§ Mr. Lloyd
People who say that should also point out the fact that I mentioned earlier, concerning the ploughing back of profits and the raising of new capital. It also depends on the period from which one takes the figures. Comparing 1938 with 1961 one finds an enormously greater increase in earnings than in dividends. Between 1946 and 1961 the figures are about the same. But the statistics that we have do not take into account the factor that I have mentioned, which is of great importance, and I hope that the hon. Member will help me in explaining it to the people.

§ Mr. Callaghan
Is the Chancellor aware that I shall certainly assist to make the economic facts of this country known during the next few months? Whether he will agree with my analysis I am not so sure. It is that he has laid down, as a condition for increases in pay, that people must undertake more arduous or onerous work. What is it he is asking the shareholders to undertake in order to justify this excessive increase in dividends?

§ Mr. Lloyd
It is quite clear from the fall in profits that the figures for dividends will correspond, because profits are the fount of dividends. As the statistics that I gave earlier show, the fall in profits has been very substantial.