HC Deb 14 May 1968 vol 764 cc1023-4
24. Mr. Hordern

asked the Chanceller of the Exchequer on what grounds the Treasury based its decision to refuse permission to the board of Rest Assured to give an issue of scrip to its shareholders.

Mr. Diamond

Companies have been asked to defer normal scrip issues for the time being as they are widely misunderstood by the public.

Mr. Hordern

Do not the Government realise that capitalisation of reserves brings no material benefit whatever to the shareholder? Is not this an example of the bovine attitude of the Government which does more damage to sterling than anything else could?

Mr. Diamond

No, Sir. I understand full well what happens when a normal scrip issue is distributed and I understand that there are many cases, and it may be most cases, when there is no real transfer of value, but that is not so in every case. I am saying that there is widespread misunderstanding, that the need for scrip dividends is often not pressing and that it would therefore be in the general interest of the whole policy of restraint, which is valuable to the economy, that there should be postponement in appropriate cases.

Mr. Iain Macleod

Is the Chief Secretary putting it forward as a serious proposition that companies, businesses and firms should refrain from an ordinary business practice because some extremely ill-informed people may not understand it?

Mr. Diamond

I am putting it forward as a sensible contribution to the restraint of dividends and the incomes policy.

Mr. Bruce-Gardyne

Can the Chief Secretary explain why scrip issues are forbidden, but share splits are allowed?

Mr. Diamond

It depends on the exact nature of the scrip issue.

Mr. Hordern

On a point of order. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall raise the matter on the Adjournment.