HC Deb 23 May 1932 vol 266 cc107-15

I beg to move, in page 3, line 16, at the end, to insert the words: Provided that this Section shall not apply to sugar manufactured from homegrown beet unless the Commissioners of Customs and Excise are satisfied that the grower of such beet has been paid a price representing a rate not less than thirty-eight shillings per ton, calculated in accordance with rules to be made by the Minister of Agriculture and Fisheries. This Amendment is a repetition of the Amendment which was moved when the Financial Resolutions were going through the House. In 1931, when the Sugar Subsidy Act of 1925 was declining and farmers were finding it extremely difficult to make a reasonable bargain with the factory owners and there was grave danger that the area under cultivation for sugar-beet would decline very rapidly, the Minister of Agriculture of that time deemed it wise to continue the payment of 1s. 3d. per cwt. extra for at least 12 months to ensure that there should be no diminution in the area of sugar-beet. But when he introduced that Motion Dr. Addison made it a condition that the whole of the funds provided by the State should be handed over to the farmers, and a minimum price was guaranteed.

I do not wish to enter into the wisdom or otherwise of subsidies being guaranteed either for the production of sugar beet or anything else, but when we are concerned with providing financial guarantees we ought not to do so with- out laying down a condition as to how the money is going to be expended and who are to be the recipients. In Dr. Addison's case he was very definite. He locked, barred and bolted almost every door where the subsidy might have fallen through. The scheme was brought into operation at a rather late date due to some of the factory owners, the Anglo-Dutch group, refusing to enter into arrangements with the Minister on the lines on which the other 12 factory owners were able to do. The hon. and gallant Member for Rye (Sir G. Courthope) on the Committee stage of the Budget Resolutions explained that the Anglo-Dutch group, for some reason best known to the shareholders of the company, were unable to enter into such an agreement. Therefore, 12 factories entered into an agreement with Dr. Addison, while five factories remained outside. The result of this failure to agree was that there was a diminution in the area under sugar beet.

This year, the Government have decided to continue in another form the same sort of payment for the production of sugar-beet, but with the vital difference that while they are providing the sum guaranteed through Excise payments that the last Government made, no condition is embodied ensuring that the grower of the sugar-beet shall receive the amount allocated by the Government. The First Commissioner of Works explained in our last Debate that 13 factories out of the 17 factories in existence, now running, had entered into an agreement with the growers to pay them a minimum of 40s., while the Anglo-Dutch group had adopted another method whereby they guaranteed the grower of sugar-beet 35s., plus four-fifths of any profit that might remain. This arrangement had been made prior to the Government making their declaration through the Chancellor of the Exchequer when he introduced his Budget.

As a result of the belated agreement of 1931 a large number of farmers refused to grow sugar-beet. Certain factories, therefore, found themselves short of sugar-beet and they lost money in the process. This year we find, in Lincolnshire in particular, now that the Kelham factory has been closed down, that several farmers who have hitherto produced sugar-beet are no longer producing it, and to that extent they are losing on their farms. I had the misfortune to travel through a good deal of Lincolnshire during the Whitsuntide holidays and, to my dismay, I witnessed what, to one interested in agriculture, was neither more nor less than a tragedy. If the Government could see the real value of financial guarantees and the value of acting early enough and giving definite guarantees to the grower of sugar-beet, the area of cultivation would not be reduced but would be multiplied, and instead of the Kelham factory being closed I believe it would be working full time, and the farmers would benefit as a result.

The arrangement referred to by the First Commissioner of Works may appear sound on the surface, but the fact that the Anglo-Dutch group have only guaranteed 35s. leaves an element of speculation for the farmer. It is a sort of a gamble, and the right hon. Gentleman knows full well that no farmer at this time can afford to gamble more than he does gamble in the ordinary process of his business. We think that if this Amendment were accepted the Anglo-Dutch group, who own 4 of the 17 factories now running, would in no way be imposed upon. It only makes three shillings a cwt. difference. Unless they can make their arrangements with the farmers early enough not only to ensure adequate supplies but to ensure to the grower a reasonable price, they ought to be compelled to go out of production and to leave the job in the hands of someone who would be much more sympathetic to the farmers and to the country than the factory owners have been in the past.

The Home Secretary has been one of the biggest opponents of the beet-sugar subsidy ever since 1925. He has never lost an opportunity of attacking the scheme from top to bottom. I should like to see the Home Secretary to-night replying to this Debate, seeing that we are giving £220,000 or £230,000 away, without any condition at all. Apart altogether from the statement made by the First Commissioner of Works on the last occasion and the statement made by the hon. and gallant Member for Rye, we are convinced that the principle is wrong in guaranteeing national funds without conditions, and that the method has been hopelessly wrong and has done infinite harm to this phase of agricultural life. The hon. and gallant Member for Eye, who knows a good deal about this business, said, referring to the closing of the Kelham factory, that it was due to the failure to receive sufficient raw material to run the factory. As one of the directors we are obliged to accept the statement of the hon. and gallant Member. If we are to accept that as the real explanation, and we take it that it is, the fact that the raw material was not available was due to the fact that the farmers had not a guaranteed price at a date early enough to ensure its being an economic proposition. The hon. and gallant Member further said that: The failure last year on the part of the farmers to grow may have been because the contracts were very late, but it was not due to any hesitancy on the part of the factory owners. Up to a very late date none of the factories had seen their way to offer contracts at all."—[OFFICIAL REPORT, 26th April, 1932; col. 329, Vol. 265]. Clearly, the hon. and gallant Member contradicted himself. He admitted that the factory owners were unwilling to enter into contracts with the growers and we must assume, therefore, that the grower, with no sort of guaranteed price, refused to grow sugar beet. Consequently, there was a shortage of raw material. The Kelham factory has been closed down and the large number of people are disengaged as a result of the failure of the owners of the factory to enter into reasonable engagements with the growers. We therefore suggest that this Amendment ought to be accepted by the Government and that it ought to go forth to the factory owners and the farmers that when national funds are made available for the purpose of helping a junior industry the grower of the commodity, whatever it may be, is going to be guaranteed an economic price for the article he is expected to produce. While it may have been, as many hon. Members have stated in the past, that this sugar business has been one of the biggest ramps in the country, now that we are making the payments the least we can do is to insist upon conditions being laid down that will reflect credit upon the Government and will prove that the Government subsidy has been a sound proposition. For these reasons, because we think the principle was wrong, that the method employed created belated contracts, has reduced the area of output and has brought about the closing of one factory, I move the Amendment, and I hope that the Government will accept it.


In reply to the hon. Member, who certainly knows a great deal about this matter, I have very little to add to what I said on the Committee stage of the Resolution upon which this Clause is founded. The Government do not think it reasonable to enforce by Act of Parliament the tearing up of an arrangement entered into by the four factories of the Anglo-Dutch group this year with the farmers, and I do not believe that the farmers who are supplying the four working factories at Ipswich, King's Lynn, Ely and Cantley feel that this Amendment would be either helpful to them or is at all justified. Last year when Dr. Addison put forward his minimum condition upon which the subsidy was to be guaranteed the price of raw sugar was 6s. 6d. per cwt. To-day, or the latest figure that I have been able to get, the 20th May, the price of raw sugar was 4s. 7½d. Therefore, to fix this year the same minimum as was fixed last year, in the light of these figures, would be unreasonable.

I go further and say that in these matters it is unwise at this juncture to lay down that the particular form of contract which the majority of the factories have entered into is necessarily ideal and that the form of contract adopted by the Anglo-Dutch group is necessarily bad. We want another season's experience as to how the form of contract works out. The position is this, that the majority of the factories have entered into a flat rate contract of a minimum of 40s. and that the four factories of the Anglo-Dutch group have offered 35s., plus four-fifths of the profits. While it is desirable that there should be some minimum the question is whether in the variation of world prices it is not reasonable that the farmers and the factories should enter into profit-sharing arrangements, as it were. I am not at all sure but that the whole evolution of the relations between agricultural producers and distributors, if you consider the factories as distributors in this case, should not be more on a profit-sharing basis rather than on a flat rate basis. The whole tendency in the long run will be for the distributors, in order to safeguard their position, to put the flat rate as low as possible, and you will have the inevitable dog-fight between the distributor and the producer, the producer wanting a high rate and the distributor a low figure, instead of there being a communal interest on the basis of a profit-sharing arrangement.

While I am not disposed to say that the Government would for ever say that the Anglo-Dutch method of entering into contracts with beet growers is ideal I most certainly say that in this year, in view of world prices and the conditions which obtain, they do not feel justified in introducing legislation which would upset existing contracts entered into between the Anglo-Dutch group and the growers. The hon. and gallant Member for Rye (Sir G. Courthope) who is a director of the Anglo-Dutch Company has always taken the keenest interest in promoting, an this House and outside, the agricultural industry and the interests of the agricultural producer, and only went into sugar-beet with the idea of assisting the growers and developing the sugar-beet industry in this country. He made it quite clear that the conditions which have been agreed upon this year between the Anglo-Dutch Company in respect of their four factories and the farmers who supply them have not created any sense of grievance, and so far from the area feeding these four factories having declined they feel sure that, given suitable weather conditions for the harvest, the factories will be working to full capacity. For these reasons, the Government are not prepared to accept the Amendment which would interfere with arrangements which have been come to amicably.


The First Commissioner of Works, who was so depressed about the state of affairs in this country during the last week end and who has now become convinced that tariffs are no cure for present conditions—


I never said that. The hon. and learned Member is not quoting me accurately. He is taking a single sentence entirely from its context, and I really think he is a little unfair.


Then the right hon. Gentleman still thinks that tariffs are a cure. I am sorry I was wrong, but he will learn shortly that they are not a cure. I thought he had already assimilated that piece of knowledge. He says that the Government cannot accept the Amendment, because it would not be reasonable to enforce by an Act of Parliament the tearing up of agreements with the Anglo-Dutch group. That is no sort of excuse for the Government not having thought of this before. It may be inconvenient at this stage to particular persons for a provision of this sort to be inserted in the Finance Bill, but our objection is that if you are going to grant a payment of this sort it should only be upon conditions. The principle which the Government follow is that when they are ladling out money to industry they can do at without any sort of conditions whatever, but when they are making a grant to ex-Service men they must make the most rigorous and harsh conditions before deciding whether they are to have a bare livelihood. That is not just or right.

Everybody knows that these factories have not done so badly out of the sugar beet industry in the past. The right hon. Gentleman says that the factories might be considered as the distributors of the farmers' goods. They have been the collectors of the profits. The factories have made the whole of the profits that have been available out of the growing of sugar beet, and the farmer has suffered thereby. Whatever view one may have as to the sugar beet subsidy, whether it is good or bad, surely if you are to have a subsidy its only purpose should be to assist the farmer and not the factory owner. The right hon. Gentleman now says that because some factory owners have entered into a particular arrangement with farmers, which may or may not be a good arrangement, His Majesty's Government feel themselves bound to give this gratuity to the factory owner without any conditions whatsoever. It is not only a matter as to what happens this year; it is a matter of principle as to how the subsidy is going to be given in the future. The right hon. Gentleman in his speech made it quite clear that he agrees that it is desirable there should be a minimum price. He must therefore also agree that it is desirable that this House should lay down the minimum price, and that on occasions like the present it should exercise that power. If we let it slip by on this occasion what will happen next year? It will be quoted as a precedent. It will be said that it was not done last year. Factory owners will be entitled to think that it would not be done; that we cannot now at this time of the year, when they have fixed their contracts, put in a minimum price. We shall be prohibited for ever from doing what the right hon. Gentleman says is desirable; that is fix a minimum price.


I want to be quite clear about this. I said that while it might be desirable that there should be some minimum price, it was a question whether it was not desirable, over and above that minimum price, that there should be a profit-sharing arrangement, and that this was a matter which should be inquired into.


I quite agree with the right hon. Gentleman. I was just going to make a suggestion which I feel certain now he will accept. That is that the minimum price put into this proviso should be a token price, simply to make it certain and to demonstrate to the country and the industry that Parliament is going to keep control in this matter. Let the right hon. Gentleman put in 35s. It is lower than we think necessary, but if contracts have been fixed let that price be put in as a demonstration that Parliament intends to keep control of the matter. If the right hon. Gentleman can accept that proposition as a compromise on this occasion we shall be prepared not to divide on the Amendment.


That is an entirely new suggestion. The Amendment says 38s., and that could not possibly be accepted. Obviously I have not time to consult either of ray right hon. Friends, the Financial Secretary or the Chancellor of the Exchequer, but I will certainly bring to their notice the suggestion that the minimum price that has been agreed by the factories should be inserted in the Bill. I can give no pledge for the Government, but if the hon. and learned Gentleman would withdraw this Amendment and move it again on the Report stage I will undertake to communicate to my right hon. Friend the point that he has raised, and see if it can be met in that way.


We are obliged for the suggestion, and although we do not accept it as a definite pledge regarding what the Government will do, the earnest of the right hon. Gentleman's intentions is quite clear, and I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clauses 4 (Rates of drawback on certain sugar and molasses) and 5 (Repeal of sub-section (2) of s. 5 of 16 and 17 Geo. 5. c. 22) ordered to stand part of the Bill.