§ 15. Mr. Viggersasked the Secretary of State for Industry what is his estimate of the return on capital employed by British industrial companies.
Mr. Alan WilliamsAbout 4 per cent. for United Kingdom industrial and commercial companies in 1975, measured at replacement costs and after deducting stock appreciation.
§ Mr. ViggersIs the hon. Gentleman aware that profits and the return on capital employed have not been sufficient to allow proper reinvestment and that with the implementation of inflation accounting the rate of return on capital employed will look much worse? Is not the Government's prime duty to provide a profitable framework within which companies can operate profitably to allow for reinvestment?
Mr. WilliamsI do not dissent from the basic premise put forward by the hon. Gentleman. This underlines the decision by the Chancellor of the Exchequer on capital allowances and stock appreciation, the relaxation of the Price Code, and the introduction into the Price Code of something largely refused by the Opposition, namely, an investment element. In addition, we got rid of the productivity requirement under the Price Code. We have tried to accept criticisms made by industry when they have seemed reasonable. We want profitable industry and, as I said on the last occasion when I answered Questions on this subject, we want profitable public and private industry.
Mr. WilliamsI cannot anticipate the figure, but we expect that the rate will increase both because of the gradual upturn in trade and because, by taking advantage of the opportunities that the pound has given in export markets, industry is finding that the export section of its work is much more profitable and is therefore able to top up the profit ratio by turning to the export market.