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Prices And Profits

Volume 465: debated on Tuesday 24 May 1949

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57.

asked the Chancellor of the Exchequer whether, in view of the failure of the Federation of British Industries and associated organisations to produce any effective plan for price and profit decreases, as requested by him in February of last year he will now announce what steps are to be taken to enforce early reductions of swollen prices and profits

As I told the hon. Member on 22nd February, the request for a voluntary reduction of prices and so of profits was addressed to the country generally. I said that although it was not possible to place any numerical evaluation upon the response to my request I had had evidence of many price reductions resulting from it and of higher costs absorbed into prices without increase. On 24th February I circulated the text of an exchange of letters between the Federation of British Industries, the Association of British Chambers of Commerce, the National Union of Manufacturers and myself, indicating that industry was prepared to co-operate for one more year in avoiding any general increase in the level of dividends. I do not at present propose to add anything to what I said in the Debate on the Second Reading of the Finance Bill on 18th May, but I shall, of course, continue to watch the position with keen interest.

As my right hon. and learned Friend the Chancellor of the Exchequer now agrees with me that profits are "frightfully high"—to use his own expression—that they drag up prices with them, and that the Federation of British Industries has done nothing effective whatsoever, does not he think that his strong and vigorous words should now be matched with equally strong and vigorous action?

I am afraid that as I do not agree with the hon. Member's analysis of what I think, I do not agree with what he thinks I should do.

Has the attention of the right hon. and learned Gentleman been drawn to the statement made yesterday by the Postmaster-General, that a prudent business man when he sees his profits declining should immediately—as has been done with the Post Office—increase the cost to the consumer; and does he agree that that example set by a Government Department is one which a prudent business man outside ought to follow?

It depends very much on the circumstances. If he finds that he is charging very much less than currently is charged for other goods it may be advisable for him to increase his prices.