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Dividend Restraint

Volume 531: debated on Thursday 28 October 1954

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asked the Chancellor of the Exchequer, in view of the importance of good industrial relations, what action he proposes to take to ensure a reasonable policy of dividend restraint.

If there is a proper understanding of the full course of industrial dividends and of the part that dividend policy plays in our economy. I do not think there is anything in the present situation which need prejudice good industrial relations.

May I ask the Minister not to under-estimate the dissatisfaction that is felt on this matter, and, before it is too late, will he try to understand that many people are unsettled about it and expect that some real action will be taken in this very important matter?

I certainly do not under-estimate the importance of this matter, and that is why I am most anxious that a complete and proper understanding of the facts in the case should be widespread.


asked the Chancellor of the Exchequer if it is still his policy that there should be restraint in the distribution of dividends; and how he proposes to make his policy effective.

The answer to the first part of the Question is in the affirmative. My right hon. Friend considers that it is best to rely in this matter on the voluntary action of individual managements.

As the voluntary action has broken down, in the sense that profits distributed in the form of dividends over the last 12 months are higher than those distributed in the previous 12 months, what action does the Chancellor of the Exchequer propose to take?

My right hon. Friend has always made it clear that restraint on dividends, just as in the case of restraint on other personal income, is not the same as a complete freeze.


asked the Chancellor of the Exchequer what steps he proposes to take to restrain the present rise in dividends and ensure that a higher percentage of industrial profits is used for re-equipment.


asked the Chancellor of the Exchequer what action he is taking to implement his recent suggestion that companies should plough back a greater proportion of their profits.

It must clearly be left to the managements of individual undertakings to decide how profits should be allocated; and my right hon. Friend trusts that in doing so they will have regard to the great importance, in the national interest, of increasing the volume of industrial investment.

As the only practical effect of the appeal which the Chancellor made a few weeks ago has been that he has been publicly and flatly contradicted both by the "Financial Times" and by the chairman of the Stock Exchange, is he just going to sit idly by and do nothing at all?

There are signs that the rate of industrial investment is increasing. This criticism comes hard from a Member of a former Government whose last Budget was designed to reduce the rate of investment.

Can we have an assurance that there will be a consistency of attitude on the part of the Chancellor? The Chancellor having suddenly changed his attitude from that contained in all the replies which we had last Session, can we be assured that he will not change back again as a result of the bad time he had at the bankers' banquet?

I think that my right hon. Friend's attitude has been consistent in this, as in other matters.

Is my hon. Friend not aware that payment of good dividends is one of the best ways of attracting capital for investment?

It is a most important fact that if we are to have investment in new enterprises, the investors must be assured of a reasonable return.