CLAUSE 5.—(Amendment of s. 13 of 21 22 Geo. 5. c. 42.) (Hansard, 12 December 1933)

§ Mr. HOLDSWORTH
This is a most important Clause and we only had a very short explanation of it from the Minister last Thursday. In fact, his explanation only covered about four lines in the OFFICIAL REPORT. The right hon. Gentleman said that it limited the liability of the Treasury under the 1931 Act. Is he quite sure of that? It appears to me to extend the liability rather than limit it. Section 13 of the principal Act provides for the making of short-term loans for the purpose of providing for the expenses incurred in connection with the initial stages of a scheme, and as far as I can see this Clause alters that altogether. The expenses mentioned in the principal Act are those necessary for the initial stages of a scheme. This Clause appears to extend the liability for the initial working expenses of a scheme, that is before a scheme comes in, to a period of 12 330 months after a scheme starts. The words in the Bill are that at the end of 12 months these expenses: shall be deemed to be expenses incurred in connection with the initial working of the scheme. I want the Minister to explain what is meant by the words: Any expenses incurred by virtue of this Act. Is it the purpose of this Clause to enable the Minister to treat as expenses losses which have been incurred under any particular scheme? That is the danger we see in the Clause; that it would give power, where losses have been made within 12 months after the commencement of a scheme, for such losses to be treated as initial expenses of a scheme. I may be wrong, but I should like an explanation. Section 11 of the principal Act provides for setting up a fund of £650,000 for loans to boards administering marketing schemes and there is a danger that irrecoverable losses might be written off and then the pool filled up again to the amount of £650,000. Does this particular Clause so extend the liability of the Treasury that it will be possible to treat losses as initial expenses, and then fill up the fund again in order to cover any further losses that there might be? We have not had enough explanation of the Clause. I feel that there is something more behind the Clause than the Minister has told us.

§ Mr. ELLIOT
I think my hon. Friend does well to press for some further explanation here. Certainly this is the financial Clause, and it is desirable that we should be clear on the matter. If he refers to Section 13 of the Act of 1931 he will see in the first Sub-section. The Minister may, on the recommendation of the appropriate Agricultural Marketing Facilities Committee, make to the board administering any scheme approved under this Act a loan of such amount as he thinks necessary for the purpose of providing for expenses incurred in connection with the initial working of the scheme. First let us be clear that it is a loan that the Minister is entitled to make. He is not entitled to make any grant, and any loan must satisfy the Facilities Committee and the Treasury that it is a good loan and likely to be repaid. He will also see, however, that dispute might arise about those words "expenses incurred in connection with the initial work- 331 ing of the scheme." I think it is true to say that when we bring in the words "expenses incurred within the period of one year" we have clarified and limited the liability which may fall upon public funds, as compared with the much wider words "expenses incurred in connection with," which, I am sure my hon. Friend will agree, are words subject to dispute and possibly running far wider than a mere period of a calendar 12 months, because it would be quite within the power of an unscrupulous Minister to argue that expenses incurred in connection with the initial working of the scheme had been arising after a period of 12 months. It was desirable that some clarification should be given, and consequently we have put in the period of 12 months. I think I have justified our contention that we have not only clarified but limited to a certain extent the liability which may fall upon public funds by virtue of the Section in the 1931 Act.
I come to the second point of the hon. Member. He asked, is it the intention of the Clause that, let us say, losses incurred in the early stages of applying such a scheme might be payable as expenses incurred in connection with the initial working of the scheme? Yes, but that would have no effect at all unless there was someone who was willing to stand the losses, because it is clear the Minister has no power to stand the losses; he has only power to make the loan. The second danger which he anticipated is, I think, to some extent an illusory one. It is true that losses incurred in connection with the initial working of this scheme might be held to be "expenses incurred," but it is also true that the Minister would not be empowered to meet those expenses, but merely to make a loan. It is obviously reasonable that he should make a loan on good security for the purpose of floating one of those schemes, and that he should be entitled to do so if he can satisfy the two important bodies, the Agricultural Marketing Facilities Committee and the Treasury.

§ Mr. HOLDSWORTH
In the Financial Resolution, Section 11 of the 1931 Act is mentioned. There is a provision whereby losses can be treated as irrecoverable and the pool—that is the £650,000—can be made up again to its full total. Is there anything in this Act to enable that to be done?

§ Mr. ELLIOT
I was just coming to my hon. Friend's third point. "But," he said, "I also have to refer to the Clause which says that it is possible that losses may be made in any of these loans and in which, if losses are incurred, provision is made for a procedure whereby such losses can be made up." Clearly that is a general power extending to any loan, and therefore of course extending to this loan also. Clearly in any loan there is an element of risk, and one has to do one's utmost to guard against that element of risk. Neither the Agricultural Marketing Facilities Committee, however, nor the Treasury, nor the Ministry is infallible, and money may be lost in these loans. As I said on the Second Reading of the Bill, and on the Committee stage of the Financial Resolution, we may lose money in home loans as we have so often lost money in foreign loans, but we shall do our utmost to guard against it. We have a special Financial Committee whose consent has to be obtained, and we have the responsibility of the Minister for advising the Treasury to make such a loan, and the Treasury has that over-riding guardianship of the public purse which is inherent in the Treasury. If all those three bodies are satisfied, and with the permission of all those three bodies a loan is made, and if subject to this most meticulous investigation money is lost, provision is properly made for writing off such a loss. That is the reason why we have to bring this Clause before the House in the form of a Financial Resolution: because without a Financial Resolution this Clause might not have been able to become law.
Surely the hon. Member would not say that this would be thoroughly bad faith, either by the Minister or by the Agricultural Marketing Facilities Committee or by the Treasury. It is not going to be used as a subsidy for the purpose of emptying the pool for the benefit of any particular scheme and then filling it up again—syphoning off the pool into a particular scheme and proceeding with this process of granting a subsidy in a rather roundabout way;. filling up the pool by day and then stealthily by night coming and emptying out the contents of the pool into the pockets of one or other of the boards. It is a bona. fide transaction in the strictest sense of the term, and it is certainly not the intention of the 333 Minister to give a concealed subsidy to any scheme by any such process as I have described. But there is a possibility of loss, and of money having to be written off; there is a possibility of the moneys provided by Parliament for the floating of these schemes being refurnished by the Treasury or this House for the purpose of floating bona fide, schemes. I do not desire to conceal any of these possibilities from the House, but only to say that they are all bona fide transactions. All the proposals before the House have been sanctioned by the most competent financial authorities that this House can produce. If loss occurs, why not face up to it and write it off, as would have to be done in any other public transaction?

§ Mr. HOLDSWORTH
I do not think anybody would challenge the good faith of the Minister but what we are discussing is whether this a wise provision or not. As far as I can see the Minister acknowledges that losses made in the initial stages can be treated as expenses and under the Financial Resolution, these losses can be written off. [HON. MEMBERS: "No."] That is how I understand it.

§ Mr. T. WILLIAMS
I think the Committee is suffering from confusion as to what is possible under Sections 11 and 13 of the original Act. Section 11 enables the Minister to set up an agricultural marketing fund to make loans to marketing boards but it has no relation either to Section 13 of that Act or to Clause 5 of this Bill. Clause 5 makes reference only to Section 13 of the original Act and it turns actual losses into expenses as the hon. Member for South Bradford (Mr. Holdsworth) said. The word "expenses" in Clause 5 is really a misnomer. Any losses incurred 12 months after the operation of the scheme become expenses under the terms of the Bill, and to that extent I agree with the hon. Member that the word makes it a misnomer, and it may well be that the principle is not sound. But as for moneys advanced for initial expenses such as the taking of a poll or losses incurred in the initial stages, they can be met under Clause 5 as extending Section 13 of the Act and no loans advanced under Clause 5 could be written off as a bad debt.
334 Under Sub-section (5) of Section 11 of the original Act bad debts can be wiped off but that is the agricultural marketing fund and not the fund which is made available for the purpose of enabling a board to bring a scheme into operation. My objection if I have any to Clause 5 is that it has a close relationship to Clause 1 and the extension of power to any board to pay any sort of loss incurred under any scheme. Because of what has happened during the present year the right hon. Gentleman will have to be much more careful in future when inspiring any of these boards to jump into activity and causing them to send, as he himself described, hundreds of thousands of pigs sqealing at him from all directions. That is the situation which has brought about the necessity for this Bill. News went out to pig producers that certain marketing schemes would come into operation, that certain restrictions would be placed on imports and that they would be able to secure higher prices for pigs at a later stage. They therefore withheld pigs from the market.
The restriction of imports was applied. There was a temporary shortage; prices tended to increase and demand tended to decrease. But the bacon curers who had entered into contracts with the producers, found themselves unable to sell at a price which would enable them to pay the producers the prices for which they had contracted. That brought about the serious collapse in the bacon situation which has produced the Bill. Unless and until the right hon. Gentleman pays, more attention to retail prices than has been done so far, or is being done at this moment, or is likely to be clone under the terms of reference laid down to the Consumers' Committee and the Consumers' Council, he will always be subject to booms and slumps, not in five yearly cycles but in cycles of every few months. We think the scheme may be necessary, but in future much more attention must be paid to retail prices, and the Consumers' Council must become an almost permanently sitting, watching, and examining body if these agricultural marketing schemes are to be a success.