§ 22. Mr. Martenasked the Chancellor of the Exchequer by what percentage the gross trading profits of companies have risen between 1964 and 1970 and, in the same period, income from employment.
§ Mr. HigginsBetween 1964 and the first three quarters of 1970 the level of the gross trading profits of companies (adjusted for nationalisation) increased by 11 per cent. and that of income from employment by 52 per cent.
§ Mr. MartenDoes this not confirm that the narrowing of profit margins has had very adverse effects upon investment and, therefore, on our growth rate?
§ Mr. HigginsI certainly agree with my hon. Friend that the figures underline how far the rate of growth of wages and salaries has outstripped the growth of company profits in recent years. During the past year there has been a narrowing of profit margins because prices have recently been substantially less than earnings, which constitute a major part of companies costs. I also agree with him that this is a very worrying trend with important implications for future growth and for the sustainable growth of real income.
§ Mr. BarnettWill the hon. Gentleman confirm, therefore, that it is the Government's policy to encourage and maximise the growth of profits and, therefore, to do nothing whatever about price increases? What effect does he think this will have on wage negotiations?
§ Mr. HigginsThe hon. Gentleman has got it exactly upside down. It is quite clear from our policy that we believe the important thing is to have a de-escalation of wage settlements, which will in turn have an effect on prices, tending to reduce them.