HC Deb 20 January 1970 vol 794 cc231-3
9. Mr. Biffen

asked the Chancellor of the Exchequer what is the level of gross trading profits of companies expressed as a percentage of capital employed for the period so far available for 1969–70; and how this corresponds with the corresponding period for the preceding year.

Mr. Diamond

In terms of the net capital stock of physical assets at current replacement cost plus the book value of stocks and work in progress held by the company sector at the end of the preceding calendar year, the figures are 12½ per cent. for the first half of 1969–70 and 12¾ per cent. for the corresponding period of the preceding financial year.

Mr. Biffen

Is the right hon. Gentleman aware that those two figures show that industry for some time now has been operating on dangerously low levels of profitability which cannot but affect future levels of investment? Will he communicate to his right hon. Friend in the Department of Employment and Productivity that she should use certain discretion and economic judgment in dealing with price increases?

Mr. Diamond

I would not necessarily accept the first part of what the hon. Member has said, but I will be only too glad to convey to any of my hon. Friends any message from any hon. Member.

Mr. John Hall

Does the right hon. Gentleman agree that some major industries are operating a return on capital which is less than the amount they have to pay for new money and this is rather disastrous? Will he reconsider his answer to my hon. Friend?

Mr. Diamond

I have already indicated the average level of the return on capital employed in the definition I have given. This, of course, is a very crude method of attempting to give the answer, but it is the best information one has.

Mr. Patrick Jenkin

Is not the failure of the Government's intentions to get higher investment particularly in manufacturing industry attributable to the difficulties the Chief Secretary has mentioned this afternoon rather than the millions of pounds they have been pumping into the industrial investment scheme?

Mr. Diamond

There is no such failure.

Mr. Barnett

Do not the figures perhaps give some indication of the level of management ability in this country?

Mr. Diamond

I take account of what my hon. Friend has said.