HC Deb 25 February 1935 vol 298 cc841-50

Motion made, and Question proposed, That a sum, not exceeding £2,146,300, be granted to His Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1935, for a Grant to the Cattle Fund.


Could the right hon. Gentleman give us some explanation of this Vote?

7.0 p.m.


I shall be happy to do so. I did, of course, give a fairly comprehensive survey of the expenditures and the methods of administration in the Debate on the 18th February, and in that Debate I went over, I think fairly ex haustively, the points which I desire to place before the Committee. If it be desired, I shall be very willing to answer any particular points which may be raised, but I should not, I think, embark on any full explanation either of the policy of the Government in giving this subsidy as an alternative to a drastic reduction of imports, or of the methods of administration. There is the point which has been made with regard to prices and that may be put forward as an indication of the failure of the policy. I think it would be quite unjust to say that. It indicates, as I have tried to point out to the House more than once, the fact that there has not been a reduction in the weight of beef supplies coming on to the market. Instead of a reduction, there has been an increase of those sup plies, and the price situation has reflected it. The subsidy was given with the intention, not of making some great change, but of holding the situation while the long-term policy was being developed. It would be quite out of order for me to go into the question of the long-term policy now; but I may say that the longterm policy, in fairly full detail, has been not only worked out but laid before all those interested, and we are awaiting their further comments and negotiations. We are anxious to enter upon these negotiations as soon as ever it is possible for us to do so.

There is only one other point which I think I have to meet. It is that in spite of the subsidy the beef producer is worse off; he has not got the money which this House has voted. I pointed out that in the earlier months of the subsidy at any rate the producer got either the whole or a very large proportion of the subsidy, and that, as time has gone on and heavier supplies have fallen on the market, the price has undoubtedly gone down. This is not a new phenomenon. It is part of a decline in wholesale beef prices which has gone on over a period of years and which in fact made it necessary for the Government to start upon some course or other which would in the long run improve the position of the British beef producer. Left to the free play of economic forces British beef production would by now have come to an end and that great section of our industry would disappear. So far it is impossible for us to see any alternative source of employment into which those who have been engaged in this most British of all industries would pass; and so far as we could see they would have become unemployed.

That fall in price is certainly not due to the subsidy. It was taking place before. In January, 1932, the price of second quality fat cattle—the quality taken for the Ministry's index figure—was 40s. 4d. per cwt. In January, 1933, the price was 37s. 1d. per cwt. In January, 1934, the price was 35s. 9d. per cwt. In January, 1935, the price was 32s. 7d. per cwt.—although, of course, last January producers had the advantage of the subsidy of 5s. which they had not in the earlier periods. It is said that the consumer has got his meat no more cheaply and that the producer has got very much less. Well, the difference between wholesale and retail prices has never been more clearly exemplified than in such figures as these. That difference in prices, which means the difference between bankruptcy and solvency to the producer, is scarcely reflected at all in the retail prices in this country. I have often given the House the example of the fact that the amount of wool in a suit of clothes makes practically no difference to the final price of the suit and that even if the wool were given away free there would be little difference in the cost. We all know that the amount of raw material cost which enters into the price of finished production is absolutely negligible compared with the wages cost.


Tell that to Bradford.


I am astonished that my hon. Friend, who represents a London division existing to a large extent upon the great amount of skilled work put into finished production, should talk as if the coot of raw material had any substantial effect upon the price of finished production. If you take a ton of steel—


The right hon. Gentleman was not talking about steel but about wool, and I say it is nonsense for him to say that the cost of the wool has no effect on the price of the suit. I say it has, and anybody in Bradford would tell him that I am right.


It is difficult to argue under these conditions. I said nothing of the kind, and, if the hon. Baronet will look at my speech as recorded in the OFFICIAL REPORT to-morrow, he will see that I said nothing of the kind. I said that the cost of the raw material had a very small effect, and every practical man will confirm my view. Does the hon. Baronet deny it? If so, I will work out and send to him a statement of the actual cost of the raw material in a suit. How much raw wool at 5s. per lb. does he think goes to the making of one of his suits of clothes? Does he think that a shilling per lb. on wool would make a very great difference in the cost of a finished suit of clothes?


Really I do not want to argue the matter.


I agree, and I do not want to argue the matter, for it is self evident. We all know that if you make a ton of steel into watch springs the cost of the original ton of steel plays a. very small part in the final cost of production of the watch springs. Unless we approach these marketing question with an open mind, we shall never get a solution of the difficult matters before us. I say that a very large turn in wholesale prices may not be represented at all, or at least very little, in the retail prices. This is one of the big difficulties of the present situation. The fall in wholesale prices which has meant almost bankruptcy to many meat producers has not worked through to the consumer. I will prove it to the hon. Baronet by this. In the case of mutton and lamb very large rises in the wholesale price have taken place, but not in any degree which makes the consumer complain. As compared with November, 1932, which was the bottom of the slump period, the rise in the wholesale price of mutton and lamb has been very great. Would the hon. Baronet be surprised if I told him that it was over 50 per cent. and over 60 per cent.; that it was in fact 70 per cent? Would he be equally surprised if I told him that the rise in the retail price of British mutton has in no case reached anything like 10 per cent.? This means that a rise in price of 70 per cent. to the producer has not been reflected to the extent of more than 10 per cent. in the rise of the retail price. That surely shows that it is possible for us to maintain a considerable improvement in the wholesale price of meat while it is possible that the consumer will suffer no great corresponding disadvantage, or a very small corresponding disadvantage. As long as we are, as we are just now, on a sliding market where the prices are constantly turning against the seller and bankruptcy approaching the producer without any corresponding advantage to the consumer, it is a fundamental problem that we are up against, and one for which we will still have to bend every nerve to find a solution for.


Try Socialism.


The right hon. Gentleman says "Try Socialism." No doubt we shall hear about rigid control and bureaucracy and interference in a few minutes' time.

The DEPUTY-CHAIRMAN (Captain Bourne)

Order, order.


I fear that I was being led away. Our supplementary estimate is for the purpose of gaining time while we grapple with the very large and very novel problems which we are attempting to solve. If we attempt to solve these problems in the wrong way, it will lead to disaster not only to the producers but also to the consumers and the retailers. That money should be spent on holding the situation while these negotiations and discussions take place is not a matter for which any Member on this side of the House apologises for one moment. I may be blamed for not having secured a larger return to the producer during this time. That is certainly a matter which has been of deep regret to me, and it is the only matter for which I feel any regret in bringing forward this supplementary estimate. The price is -still unremunerative and the problem is still unsolved. [Interruption.] It is very interesting to see the confusion of thought on this matter at a moment when we are discussing measures dealing with unemployment, and to note that those who do not grasp any of the measures which are being taken are those who are making a protest against the action of this House. Unemployment in our day will not be solved by plunging agriculture into the state of unemployment which exists in industry. Agriculture is the hope of improved employment for many thousands of people in this country, and it is the industry which we must preserve. If we are to preserve it, we must be prepared to take drastic measures such as I have suggested to the Committee to-day. I make no apology in submitting this estimate, and I only regret that up till now the industry has not had the full advantage of it. Until that day comes any Minister who comes to this box must be prepared to stand here and say that we have not yet succeeded. I hope that the Minister who stands here will also say "But we shall not give up trying!"

7.13 p.m.


I beg to move, to reduce the Vote by £100.

With the right hon. Gentleman's last appeal we shall all agree. Although we may differ profoundly as to the methods we would employ to achieve that end, we all agree as to the vital necessity of maintaining and improving agriculture in this country. With regard to the Vote, I will resist the temptation with which the Minister was enticed to discuss subjects so far removed from beef as watch springs and clothes. I prefer to confine myself rather narrowly to the subject of beef. I would ask the Minister this question. Where has the money gone? Who has got it? What arrangements were made for securing that those for whom it was intended have got it? That is the first issue that I suggest is proper to this Debate.

The other day we had a long discussion upon the policies that lie behind this Vote and I expressed the view, which I still retain very emphatically, that it marks the failure of the method of quantitative restriction. The point upon which I want the right hon. Gentleman to inform us, which he has failed to do hitherto, is what are the steps that are taken to secure that the producer really does get the benefit that the subsidy is designed to provide? A loyal Member of the right hon. Gentleman's own party told me the other day that, when this system of dealing with subsidisation of meat prices was introduced, the price of cattle at Hereford Market the week before had been 37s., but that within a fortnight of the introduction of the subsidy all he could realise was 32s. 6d The consumer in the shops paid the same price afterwards as he did before, and the producer of the animal got no more Where did the money go? That is a question that is worth exploring, and the right hon. Gentleman has not assisted that exploration at all. I suggest that one species or another of middleman has got that money, and he will get this, too, without doubt. It is for the right hon Gentleman to create machinery to see that he does not. It is a hopeless method of trying to help the farmer. He has been done out of it during the six months, and he will be done out of it during the next few months. The right hon. Gentleman claimed that, at all events, he got some of it. Perhaps we may admit that he got a little bit, but the House intended that he should get it all. It was intended by the House that the producer should get this 5s. in addition to what the market was providing him, because the market price was not enough. The House said, "We will add to the market price 5s." As a matter of fact, they have not provided that 5s.—he gets the same as he did before—therefore there is something wrong with the machinery, and I suggest that there will remain something wrong with the machinery until we establish the necessary agency to cut out those who are taking away from the producer the money that Parliament is voting for him. It is a futile proceeding.

I must refer to the watch-spring argument. It seemed to arise out of the price of wool in a coat, which was a little obscure. The point is that there is no relation whatever between a case like that, where the value of the raw material in a highly complicated manufactured article is very small, and what happens to a joint agreement. The plain fact is that the history of this subsidy shows for the last six months, and will continue to show, that this grant of money by Parliament for beef is largely filched away from the producer by the middle-man, and that will be the case until we take our courage in our hands and adopt my hon. and learned Friend's sotto voce suggestion and try a Socialistic remedy. We will control prices so as to protect the consumer and we will have an agency—


I would remind the right hon. Gentleman that we are in Committee of Supply.


I was following the attractive lead given by the right hon. Gentleman, but I am only commenting on the inadequate arrangements at present in being for seeing that the producer gets what Parliament intends him to have, and I suggest that it is our business as sensible people to create the necessary machinery. As the machinery has not been created, we are not giving the benefit to the producer that we want him to have.

7.23 p.m.


I am not going to delve into this subject very deeply, because it was discussed when the original proposal came before the Committee last week. Let me first express my regret that I used the word "nonsense" when the right hon. Gentleman was elaborating his argument. There is no Member of the Government for whom I have more respect and affection, and I do not want it to be felt that I was prompted by any desire to be discourteous. But it was a remarkable and a most dangerous doctrine that the right hon. Gentleman put forward. He is a most ingenious Minister, and he is always prepared to bring forward new ideas. When he suggests that the price of the raw material has very little effect on the price paid for the commodity by the consumer, he is putting forward a theory which has the most dangerous reactions. He suggested that the wholesaler can raise and drop his prices without any scientific consideration, because the price of the commodity when it reaches the public will remain constant. He brought forward the doctrine, which I thought would be very interesting to the grower of wool here and in the Dominions, that whatever they got for their wool did not make very much difference to the price of the finished article. It may not have very much effect on a 10 or 11 guinea suit bought in Bond Street, or Jermyn Street, but of course the two or three guinea working class suit is intimately affected by the price paid for the cloth, the cloth is affected by the price paid for the yarn, and the yarn is inevitably affected by the price paid for the wool. When a Minister of the Crown suggests that the price paid by the public is not affected by the original price paid to the grower, he is reduced to a very poor pass to fortify his case in asking for this large sum of money.

The absurdity of it all is that he weakens his whole case. The farmers have a strong case for help—undoubtedly they are going through hard times—but this is the wrong way to give it. There is a stronger case, from the point of view of raising prices, for a tariff. If you put a tariff on a commodity, it tends to raise prices. If your purpose is to raise prices, you are more likely to achieve it by a tariff than by this clumsy way of doing it, because the inevitable result of this subsidy is to draw supplies into the market and, far from raising prices, to tend to bring them down. That is exactly what has happened. We asked the right hon. Gentleman last week to explain what became of the money. Who has got it? We should like to know. He has his inspectors and his organisation at the board. He has his statistical department. He has his machinery for collect ing information. We are entitled to ask who has got the money that has already been voted before we pass this supplementary estimate.

I think that the right hon. Gentleman the Member for Swindon (Dr. Addison) is more or less right. The subsidy has acted as a stimulus to the producer to bring his cattle to the market and the farmer has found, as we rather anticipated, that the weapon has not achieved the purpose that we all desired, of helping the farmer. If it is really true that the low price has not been reflected in the retail shops, there is something fundamentally wrong with the whole marketing system. In bulk commodities a reduction in wholesale prices ultimately reaches the consumer. We see it in butter and milk and we have seen it immediately reflected in the price of bread. It may be that a small percentage does not reach the purchaser but, if there is an increased price for wheat, it goes into the flour and into the bread, and ultimately reaches the retailer and the public. I want to know before we part with this Vote how this money is to be supplied. We were told last week that there was to be a levy.

It being Half-past Seven of the Clock, and there being Private Business set down by direction of The CHAIRMAN OF WAYS AND MEANS under Standing Order No. 6, further Proceeding was postponed, without Question put.