HC Deb 08 June 1978 vol 951 cc237-8W
Mr. Rooker

asked the Secretary of State for Industry what has been the rate of profit, before and after company taxation, as a percentage of capital invested in the United Kingdom manufacturing industry for each year since 1950.

Mr. Cryer

The only available figures on both a before and after tax basis relate to large listed companies whose main activities are in the United King- dom manufacturing sector. The ratios shown are of net income after all interest charges (a) before tax and (b) after tax to shareholders' interest—book values.

NET INCOME(a) AS PERCENTAGE OF SHAREHOLDERS' INTEREST(b) AT BOOK VALUES
Large listed companies in manufacturing industry
Before tax Per cent. After tax Per cent.
1950 … … … 25.9 12.3
1951 … … … 27.9 12.1
1952 … … … 21.4 9.0
1953 … … … 21.7 9.7
1954 … … … 22.6 11.2
1955 … … … 22.2 11.6
1956 … … … 20.1 10.0
1957 … … … 18.7 9.4
1958 … … … 17.0 9.0
1959 … … … 18.0 10.3
1960 … … … 18.3 10.0
1961 … … … 15.5 8.4
1962 … … … 13.8 7.5
1963 … … … 14.8 8.0
1964 … … … 16.6 9.2
1965 … … … 15.6 10.1
1966 … … … 13.7 6.4
1967 … … … 14.1 7.4
1968 … … … 16.7 8.7
1969 … … … 16.0 8.1
1970 … … … 14.5 7.8
1971 … … … 15.7 9.1
1972 … … … 18.9 12.1
1973 … … … 21.5 13.8
1974 … … … 10.0 13.7
1975 … … … 17.0 11.6
1976 … … … 21.7 15.7

Notes:

(a) (i) Before tax. Gross trading profits less depreciation plus other income less hire of plant and machinery and less all interest payments;

(ii) After tax. As for before tax less company tax charge other than deferred tax less income tax payable on dividends plus investment grants (where separately distinguished in company accounts).

(b) Ordinary and preference shares plus capital revenue and deferred tax reserves plus minority interests plus dividends outstanding at the end of the year less goodwill and intangible assets.

Being based on the book values in companies' accounts, the ratios given do not allow for the effect of inflation on income and capital and thus are not a true reflection of the level or trend of real rates of return; that is, adjusted for inflation. Before tax rates of return for manufacturing industry using different definitions and including real rates of return are published annually in Trade and Industry; the latest article in the series appeared in the issue for 16th September 1977. The basic data from which the ratios are derived are contained in Business Monitor M3—Company Finance.