§ Mr. Skeetasked the Chancellor of the Exchequer what has been the level of profitability in the banking sector in each of the last 10 financial years; and to what extent it has been influenced by cyclical economic factors and inflation.
§ Mr. LawsonInformation on the level of profitability in the banking sector by financial year is not available. The table below shows the pre-tax profits of the big four clearing banks for the last 10 calendar years on a historical cost basis.
£ million 1970 214 1971 278 1972 380 1973 580 1974 449 1975 424 1976 700 1977 854 — 895 1978 1094 1979 1564 There is a break in the series in 1977 as a result of changes in accounting practice—notably the treatment of deferred taxation. The clearing banks' profits will have undoubtedly been influenced by both cyclical economic factors—there is a tendency for bank profits to be high when times are bad for others—and inflation; it is impossible, however, to quantify the precise extent of these influences.