Dividend Restraint

HC Deb 05 February 1976 vol 904 cc1391-2

2. Mr. Norman Lamont

asked the Chancellor of the Exchequer what plans he has to abolish dividend restraint.

Mr. Joel Barnett

The future of the dividend control will be considered in the development of counter-inflation policy as a whole.

Mr. Lamont

Is not the right hon. Gentleman aware that dividend restraint helps the rich private investor who wants capital accumulation and not income from his investment? Is it not the case that the Diamond Commission pointed out that the only beneficiaries from abolishing dividend restraint would be small investors, pension funds and charities? Why do the Government continue to penalise them?

Mr. Barnett

I do not entirely accept the hon. Gentleman's case. As I am sure he will recognise, successive Governments have believed some form of dividend restraint to be necessary in the context of any counter-inflation policy. If we ask those earning incomes to have some restraint, it is not unreasonable to include dividend recipients, too.

Dr. Bray

Does my right hon. Friend agree that, if we have dividend restraint for the reasons he stated, the natural accompaniment is an effective wealth tax?

Mr. Barnett

As my hon. Friend knows, we shall be introducing an effective wealth tax.

Mr. MacGregor

Is the Chief Secretary aware that one of his colleagues in a previous reply on this subject said that the Government would take decisions in the light of the Diamond Commission's Report? As that Report is riddled with arguments and facts in favour of the abolition of dividend restraint unconnected with any pay policy, does not the right hon. Gentleman feel that now is the time to act?

Mr. Barnett

We shall be looking at the subject of dividend control in the context of our review of the next stage of the counter-inflation policy.

Mr. Skinner

Does my right hon. Friend agree that, although in theory corporation tax has not been abolished, in practice we collect hardly anything from it? Will he explain why that is and take measures to see that the appropriate amount is collected?

Mr. Barnett

The Question is about dividend restraint, but I can tell my hon. Friend that his assertion is not entirely correct. We are still collecting substantial sums from corporation tax.