§ 2.36 p.m.
§ LORD BYERSMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ [The Question was as follows:
§
To ask Her Majesty's Government whether they will explain the meaning of the phrase
The Government are pledged to use their fiscal powers or other means to deal with any excessive growth in aggregate profits
in paragraph 43 of Command 3150; and what are the measures which they propose to use in such an event.]
§ LORD SHEPHERDMy Lords, if the total profits of all companies appeared to conflict with the needs of a prices and incomes policy the Government could take action in various ways. As to the second part of the Question, I cannot comment on what measures might be appropriate in a hypothetical situation.
§ LORD BYERSMy Lords, while thanking the noble Lord for replying to the Question, may I ask him whether I can take it that this confirms that the Government have no intention at all of trying to control in detail the profits of individual companies? May I further ask him whether it would not be in the interests of the nation at the present time to survey the field to find out whether certain measures could be taken to increase competition and to increase efficiency? Is it not right that we should encourage people to make profits, provided they are made in circumstances of full and fair competition?
§ LORD SHEPHERDMy Lords, the Question which the noble Lord has put on the Order Paper and which arises 612 from the Statement which I made last week refers to "aggregate profits"; that is, total profits of industry and commerce generally. I would confirm that the Government have no powers, and do not intend to seek powers, to deal with individual profits as such. In fact, there are no powers within the Prices and Incomes Act on that matter. However, perhaps I might explain—because I believe there was some difficulty about what I said in reply to a supplementary—that when I spoke last week I had particularly in mind the Government's call for the reduction of prices through efficiency and other ways.
Where increases in profits accrue without apparent regard to the criteria for price reductions or increases, the circumstances might be such as to warrant further examination. Thus, for example, paragraph 16 of the White Paper on The Prices and Incomes Policy (Cmnd. 2639), which was published in April, 1965, states that cases
Where the growth of profits or dividends is based on excessive market powercould be referred to the Board as indicating scope for price reductions. Such a reference to the Board would be on prices and not profits per se, and, again, dividends could be referred as part of a price reference.
§ LORD BYERSMy Lords, I thank the noble Lord for that address. Would he be prepared to say, having used the word "excessive" on several occasions, what is meant when the Government say "excessive"? Also, if by some mischance some companies make greater profits, is it the Government's intention to encourage others to make a loss to keep the balance straight?
§ LORD SHEPHERDNo, my Lords. What we hope to see is increased efficiency from which profits would arise. But we should also hope and expect that part of that increased efficiency would be passed on to the consumer by lower prices.
§ LORD CONESFORDMy Lords, had not the Government done enough to discourage industrial investment even before they wrote this paragraph? Why do they wish to discourage investment, or does this result of their policy still fill them with surprise?
§ LORD SHEPHERDMy Lords, there are times when the noble Lord is completely "off beam". He is off beam now. The Government have never set out to discourage investment. The noble Lord will be aware of the Industrial Development Act which this House passed a few months ago. This was one of the aids to increased investment.
LORD HAWKEMy Lords, do not Her Majesty's Government want to discourage imports, and how is that to be accomplished if prices are kept down? Surely, it is in their interest that prices should rise and that consumers should therefore import less.
§ LORD SHEPHERDMy Lords, I think the noble Lord should carefully consider this problem. Certainly we wish to contain imports, but if we are to have a rising standard of living, which I believe we all want, it can be obtained only by increased productivity and increased efficiency.
§ THE EARL OF DUNDEEMy Lords, the noble Lord is aware, is he not, that the Act to which he referred is very much less favourable than the old investment allowances which it displaced?
§ LORD SHEPHERDMy Lords, I certainly do not accept that appreciation of the noble Earl.
§ LORD BYERSThen would the noble Lord at least accept that "profit "is not a four-letter word?
§ LORD SHEPHERDMy Lords, I am not certain which four-letter word the noble Lord is referring to. But I believe that profit is a good thing when it is used in the right way.
§ LORD CONESFORDMy Lords, does the Minister think that if increased investment is not allowed to be followed by increased profit, that will not discourage investment?
§ LORD SHEPHERDMy Lords, I have repeatedly said that we believe in investment and increased investment, and we are not opposed to profit. What we want to see is profit used properly in the national interest. We also wish to see that the third party—the nation and the consumer—benefits from that increased investment.
§ LORD CONESFORDMy Lords, am I to understand from that that if there 614 is increased investment, the Government desire to see increased profit?
§ LORD SHEPHERDCertainly, my Lords.
§ LORD AIREDALEMy Lords, would the Government recognise and bear in mind the whole time that sometimes profit is made at great risk of making no profit at all, sometimes of making a heavy loss?
§ LORD SHEPHERDCertainly, my Lords. This is risk capital. But the noble Lord will also appreciate, if he reads some of the Monopolies Commission's Reports and also those of the Restrictive Trade Practices Court, that considerable profits have been earned by certain companies with little or no risk whatsoever.