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Capital Returns

Volume 927: debated on Monday 7 March 1977

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asked the Secretary of State for Industry how the current average rate of return on capital in British industry compares with the rate of return 15 years ago.

Measured at replacement cost, about one-third of what it was in 1961.

Does the Minister agree that the serious trend shown by that answer goes a long way to explaining the comparatively low level of new investment in British industry today which this year's slightly better prospects do little to alleviate since they started from a very low base last year? What steps is the Department currently taking to impress on other Ministers, including the Secretary of State for Prices and Consumer Protection in his consideration of the next stage of prices policy, the overwhelming need to improve this rate of return?

The best-kept secret from the Opposition seems to be that the world has gone through an unprecedented recession in the post-war period. Therefore, it is not surprising that our profit levels are exceptionally low, just as they probably are in other countries.

I can understand that the Opposition wish to wrap the Price Code firmly around their origination of the policy. I must point out that we have on successive occasions eased the application of the Price Code. The present discussions on it give rise to the further possibility of removing some of the rigidities while retaining some form of price control acceptable to everyone in the country. I do not disagree with the hon. Gentleman's basic argument about the profitability of industry obviously being linked to investment. Nevertheless, I do not think that he can attribute that problem entirely to this Government. The hon. Gentleman should bear in mind that we have just gone through a major recession.

Order. I appeal to hon. Members to try to get back to the old custom of a supplementary question being one question. The answer will then follow.

In the discussions on the Price Code, will my right hon. Friend, instead of being too flexible, be a bit tougher on individual items, especially items in household budgets?

My hon. Friend will appreciate that the Department of Prices and Consumer Protection is carrying out the consultations. I am sure that, from his reading of the proposals put forward by the Government, he will see that an analysis in depth, where profits appear to be unduly high, will be possible under the new régime.

Is the Minister aware that merely to hold unemployment at its present level it is necessary for the private sector to create 13,000 new jobs a month? Is he further aware that the private sector is capable of doing that provided that there is a shift to profits and provided that the Government do not follow the job-destroying proposals of Mr. Jones?

And provided that inflation is overcome and the world returns to a state of growth. I assume that, since the hon. Gentleman wants similar objectives to ourselves, he supports the policy that we are putting forward to achieve that situation.