BRITISH SUGAR [SUBSIDY].

HC Deb 27 June 1935 vol 303 cc1289-98

Considered in Committee under Standing Order No. 69.

[Sir DENNIS HERBERT in the Chair.]

Motion made, and Question proposed, That it is expedient— (a) to authorise the payment by the Minister of Agriculture and Fisheries, out of moneys provided by Parliament, in respect of sugar manufactured in Great Britain during the period of twelve months beginning on the first day of September, nineteen hundred and thirty-five, from beet grown in Great Britain, of a subsidy at the following rates and subject to the following conditions, that is to say— (i) in respect of sugar manufactured while the market price of imported sugar, as determined by the Minister, is four shillings and six pence per hundredweight, the rate to be—

	Per cwt.
for sugar of a polarisation exceeding 98 degrees	5s. 0d.
exceeding 76 degrees and not exceeding 77 degrees	2s. 5.7d.
exceeding 77 degrees and not exceeding 98 degrees	Intermediate rate varying between 4s. 7.2d. and 2s. 6.7d.

(ii) in respect of sugar manufactured while such market price is more or less than four shillings and six pence per hundredweight, the rate to be the above rate decreased or increased, as the case may be, by one-sixtieth for every penny or part of a penny by which such market price exceeds or falls short of four shillings and six pence; (iii) the subsidy to be payable subject to the conditions subject to which subsidy would have been payable under the British Sugar (Subsidy) Act, 1925, in respect of that sugar if it had been manufactured during the month of August, nineteen hundred and thirty-five; (b) to make such incidental provisions as are necessary or expedient in relation to the matters aforesaid."—(King's Recommendation signified.)—[Mr. Elliot.]

3.49 p.m.

The MINISTER of AGRICULTURE (Mr. Elliot)

The circumstances of the beet-sugar industry are, I think, not unknown to this Committee. The Committee will recall that the original British Sugar (Subsidy) Act, that of 1925, which originated with a Labour Chancellor of the Exchequer, was carried out by a Conservative Government, and provided for subsidy payments on a diminishing scale for a period of 10 years. That period expired at the end of September, 1934. In April, 1934, the Government appointed a committee, under the chairmanship of Mr. Wilfrid Greene, to conduct an inquiry into the conditions of the sugar industry of the United Kingdom, and to make recommendations for its future conduct. I know that there has been controversy on the question of the date of the appointment of that Committee. That subject was freely debated during the passage of the Act of 1934, and I do not propose to go over those arguments again. But in order to give time for the full examination of the position, which every one agreed was desirable before future policy was determined, Parliament passed, on 25th July, 1934, the British Sugar (Subsidy) Act, 1934, which extended, with certain modifications, the provisions of the 1925 Act until August, 1935. It had been hoped that the Committee appointed in April, 1934, would report, say, by the end of the year 1934 in time to enable the Government and Parliament to come to the necessary conclusions governing agricultural policy for 1935 and subsequent seasons. Because, of course, the Committee are aware that decision on this crop does not govern the sugar beet crop alone; it governs a great many other crops in farming, and, indeed, the whole practice of agriculture in this country.

The hope that the Committee would report in time for those conclusions to be come to proved illusive. As is abundantly evident from the examination of the report of the Committee, they had been given an extremely difficult and complicated problem to consider, and I do not think that it is in the least surprising that they found that it took longer than the Government, or, indeed, the Committee anticipated when they were appointed in April, 1934. The Government were informed in January of this year that the Committee would not be in a position to present their report for several weeks. It was obvious that their recommendations upon a subject of such importance would require the fullest consideration by the Government and by Parliament, and, indeed, by the country before future long-term policy could be determined. Equally it was impossible to contemplate that the industry should be allowed to die by default, even before the case had been put before the jury, and accordingly assistance on a modest scale for a reduced and strictly limited output was promised for the 1935–1936 season, and the Resolution before the Committee gives effect to that promise.

The Resolution relates to a period of 12 months from 1st September next. That is to say, it covers the operations of the forthcoming manufacturing campaign, and that only. It is strictly an interim measure, designed to do no more than keep the industry in being while the Government and Parliament have time to consider the grave issues raised by the majority and minority Reports and to determine on the future of the industry. The assistance under this Resolution, if the Committee sanction it, and the House passes legislation on these lines, will be limited to the produce of 375,000 acres of sugar-beet. Last year's contracted acreage was 395,000, although the general returns showed a slightly higher acreage. That is simply due to differences in computation. There is no reference to this limitation of acreage in the Financial Resolution because, following on the announcement of 6th February that this condition would be attached to the Government assistance for this season, if any were given, the beet-sugar factories, in consultation with the growers' representatives, immediately took steps necessary to ensure that the condition was complied with. The total area of 375,000 acres was divided between the various factory groups in accordance with the proportion which the 1934 contract acreage of the group represented of the total of the 1934 contract acreage.

At the same time the form of contract for growing sugar-beet was amended in order to give the factories power to require the growers to furnish a return of their acreage, and further, to give the representatives power to measure up the acreage required. I have now been supplied with the actual contracted acreage of each factory and each group, and also the crop acreage returns based on the information supplied by growers. Both the total contracted acreage and the total crop acreage as returned to the factories by the growers are slightly less than the stipulated figure of 375,000 acres. The growers' organisations have throughout co-operated fully with the factories in respect of measures deemed desirable to make effective the prescribed limitation and have given me an assurance that they will continue to do so. Therefore, all practical steps have been, and are being taken to carry out this intention, and it is not necessary to include the provision in the proposed legislation. A further condition to which reference was made in the announcement of 6th February was that the beet-sugar industry would offer, and the farmers would accept, a price for sugar-beet which was 1s. per ton below that offered in fixed-price contracts in 1934. That meant that in the majority of cases the basic price for sugar-beet would be 36s. per ton of beet of 15½ per cent. sugar content, but in certain cases it would be 38s. per ton for similar beet. That condition was also fulfilled, and all the beet is now being grown on these terms.

The Financial Resolution provides for a rate of assistance calculated on the ascertained basis of average costs. No allowance is made here for factory capital services. On this basis it is proposed that in respect of sugar manufactured in any week when the average price of raw sugar is 4s. 6d. per cwt. the subsidy for white sugar shall be at the rate of 5s. per cwt. and for raw sugars at rates calculated on the basis of the scale which is already applied for the purposes of Customs duty. In any week when the average sugar price exceeds or falls short of 4s. 6d. per cwt. the rate of subsidy on white sugar will be reduced or increased correspondingly by the amount of the variation in the average sugar price, and the rates applicable to raw sugar will be reduced or increased proportionately. That is to say, of course, if sugar is fetching a high price in the market the assistance given will not be so great. It will be recalled that the assistance provided by the Act of 1925 in respect of the crop grown in 1933 was 6s. 6d. per cwt. subsidy on white sugar and the equivalent of 9d. per cwt. on white sugar as subsidy on molasses, giving a total of 7s. 3d. per cwt. The total rate has been reduced to this figure from a level of 21s. 9d. per cwt. in the early years of the Act, so that it will be seen that very considerable reductions in the assistance which was originally afforded have already been made. The rate provided by the Act of 1934 in respect of the crop grown last year was again a total of 7s. 3d. per cwt., but arrangements were made whereby if the average world price of raw sugar during the manufacturing season had exceeded 5s. 6d. per cwt. the subsidy on molasses would have beep reduced. The price, in fact, never exceeded 5s. 6d. per cwt. and so the arrangements did not take effect.

There are two points in connection with the present proposals to which I would draw the attention of the Committee. First of all, it is proposed to discontinue the contingent subsidy on molasses, and secondly, as I said before, there is no allowance made in the rates proposed in this Resolution for any margin in respect of capital services, that is to say, interest on capital or depreciation. Any allowances which have to be made in this respect, and the amount of such allowances will, of course, have to be reserved for the time being, pending the examination, which is now taking place, of the report of the Committee of Inquiry into the United Kingdom Sugar Industry, and the whole question of future policy. Clearly, whether any allowance is to be made for depreciation then will depend entirely on the decision as to whether the industry is regarded as a going concern, or whether it is being wound up and the plant is being taken at scrap value. On the basis of an average raw sugar price of 4s. 6d. a cwt., and an area of 375,000 acres of sugar beet, it is estimated that, under the arrangements proposed in the Resolution, about £2,750,000 will be payable as subsidy.

There are on the Order Paper two Amendments dealing with the Resolution both of which raise points of considerable interest. There is one by my hon. Friend the Member for Colchester (Mr. Lewis) to leave out "twelve," and insert "eight." I should think that his desire is—he will correct me if I am wrong—to ensure that a decision as to policy is given at the earliest possible time because, of course, the limitation as between twelve and eight would not make any practical difference to this scheme as set out, since all sugar will have been produced before such limitation could come into effect. Under that limitation, it would be necessary for the Government to make an announcement before next April, and, of course, the Government will certainly make an announcement before next April. It is our intention that a statement will be made, if possible, before the House rises for the Summer.

I come to the second Amendment, which is also one of very great interest. It is the Amendment set down by the right hon. Member for Swindon (Dr. Addison), and those who act with him. It is very interesting to see in that Amendment that, subject to certain conditions, the Opposition clearly contemplate some continued support to the industry. It is interesting that the matter is not being treated purely on a party basis of attack and defence between the Government and the Opposition, but that constructive ideas are being applied to it, and I gladly welcome and recognise that an attempt is being made by the Opposition, from their own point of view, to grapple with the question, and to help to bring forward a permanent solution. The general effect of the Amendment would be to make any subsidy during the present season conditional upon the industry accepting a scheme of reorganisation.

The CHAIRMAN

I think that I ought to tell the right hon. Gentleman now that I have informed the right hon. Member for Swindon (Dr. Addison) that his Amendment is out of order, but that does not necessarily mean that some of the matters dealt with in that Amendment cannot be discussed.

Mr. LANSBURY

I take it that when the right hon. Gentleman has finished his speech, we shall be able to try to put some reasons why we should hope that you would alter your decision in that matter?

Mr. ELLIOT

Of course, I do not desire to say anything in advance of any decision you, Sir Dennis, may take, but, as I say, it is interesting to know that hon. and right hon. Gentlemen opposite have put down an Amendment which clearly envisages a continuance of assistance to the industry. The difficulty, of course, of dealing with the present season is that I do not think it would be possible to carry through any far-reaching reforms while the present season is actually running. The solution of the difficulties of the beet sugar industry is very great, as we have found, and as the Greene Committee found on going very closely into these matters. Therefore, I think the Government are wise to commend to the House their view that we should now pass this Resolution, and allow the consideration of these very difficult problems to go on.

I have made no reference in these opening remarks to the size and importance of the industry, or the place it fills in agriculture. This will be stressed, I have no doubt, by many speakers in the course of the Debate, and indeed, the counter proposals and the counter arguments will be given full force from those who are opposed to the continuance of this subsidy even for 12 months. For the moment, His Majesty's Government are weighing up the evidence tendered to them in the Majority and Minority Reports, and are preparing their verdict. The matter is in more than a technical sense sub judice. We have taken steps to hold the position while the inquiry is taking place. But it is not alone in reports or resolutions that such evidence is led. It is led in the opinions and speeches of Members of this House. I have no doubt His Majesty's Government will learn much from the debates which now commence.

4.8 p.m.

Dr. ADDISON

On a point of Order. May I first address some observations to you, Sir Dennis, with great respect? This proposed subsidy relates to sugar extracted from beet that is now being grown, that is to say, beet which will be pulled out of the ground during the coming harvest time, and will be dealt with in the factories after September next. Seeing that the processes of manufacture, etc., will not commence until then, I would submit that it should be proper for us to discuss and suggest, in view of the practicability of applying other conditions, that conditions other than those prescribed in the Resolution should apply to those processes of manufacture. Perhaps you would be kind enough, in reply, to tell me, if that is not so, to what extent we can discuss the matters which, we believe, are properly inseparable from the proposal now before the House?

Mr. OSWALD LEWIS

Further to that point of Order. I did not object to the right hon. Gentleman getting up, because I understood that you had decided to rule his Amendment out of order, and, therefore, I imagined you called upon him to speak in the general Debate. May I point out, that if you decide to change your view, my Amendment is first on the Order Paper, and may I ask that you will not allow the right hon. Gentleman to move his Amendment and cut out mine?

4.10 p.m.

The CHAIRMAN

If I call the right hon. Gentleman's Amendment, it must be called in due order. With regard to the point raised by the right hon. Gentleman I am not quite sure whether he desired to raise the question as to whether his Amendment was in order or not, or whether he was merely confining his question to the matter of what could be debated on this Motion. In regard to the right hon. Gentleman's Amendment on the Order Paper, I do not think I can do better than refer to a Ruling which I gave quite recently in connection with the Resolution relating to the Depressed Areas (Development and Improvement). I think the wards I then used want only the alteration of one word in order to apply them in the present case: We now have before us a Resolution with the King's Recommendation signified, in other words a request by the Crown for the grant of a certain amount of money for certain purposes. It is not within the competence of the Committee, either to increase the amount named in that Resolution or to extend the purposes for which the money is to be granted."—[OFFICIAL REPORT, 5th December, 1934; col. 1714, Vol. 295.] I think that will apply in this case if, in place of saying "to extend the purposes," we say, "to alter substantially the purposes" for which the money is to be granted. The form of the Resolution is to authorise the payment of a subsidy at the following rates and subject to the following conditions. It then sets out the rate and then comes to the conditions:— the subsidy to be payable subject to the conditions subject to which subsidy would have been payable under the British Sugar (Subsidy) Act, 1925, in respect of that sugar if it had been manufactured during the month of August, nineteen hundred and thirty-five. Therefore, the King's Recommendation applies to the grant of a subsidy—perhaps applies, I might rightly say, to the continuance of a subsidy—subject to certain conditions set out in the Act of 1925, and those conditions are, of course, known to this Committee, or can be found out by Members from the Act. The right hon. Gentleman proposes to leave out practically all the operative words of this paragraph of the Resolution, and to make it read that the subsidy will be payable subject to: amalgamation on terms to be approved by Parliament of all sugar-beet factories in Great Britain into one national public service corporation. Stopping there one moment, I think that that itself would probably be, in my mind, a substantial alteration in the conditions on which the subsidy is to be paid. The Amendment goes on: and to such conditions as Parliament may determine for the purpose of effecting economies and the progressive reduction of the subsidy, ensuring that the growers and their employés shall enjoy the full benefits of the subsidy, and safeguarding the interests of consumers. Therefore, the right hon. Gentleman's Amendment proposes not merely to alter substantially the conditions on which the subsidy is to be paid, but to claim for and reserve to Parliament practically an unrestricted right as to the conditions which should be attached within the words set out in the Amendment. That, I think, makes it clearly an invitation to the Committee to purport to grant this money subject to quite different conditions from those upon which the King's Recommendation was given. In those circumstances, I feel that I have no choice whatever but to rule the Amendment out of order.

Now I come to the question of what can be discussed on this Resolution. It is always difficult to be able to say before-hand exactly what will or will not be in the opinion of the Chair relevant or irrelevant, and therefore in Order or not; but I will try to put the matter as clearly as I can by saying that when a proposal is before the Committee, as we have one now, for the grant of a subsidy for certain purposes, subject to certain conditions, there is no reason why Members should not argue against the passing of the Resolution on the ground that, in their opinion, if a subsidy is to be granted it should be granted for a some-what different purpose, or subject to very substantial alterations in the conditions on which it is to be granted.

Perhaps I might put the matter best for the guidance of the Committee if I say that to refer to such alterations of conditions as are suggested in the right hon. Gentleman's Amendment would not be out of Order in the discussion, but there would be a certain limit, which I think hon. and right hon. Members will see at once when I say that while it is legitimate to argue that this subsidy should not be granted on the conditions proposed but on some quite different conditions, and while it is legitimate to set out those conditions, broadly, it would not be within the limits of debate to go into them in any very great detail, as though we were asking the Committee definitely to adopt them. That is about as clear as I can put the position in regard to the limits of the debate.

4.17 p.m.

Dr. ADDISON

In continuance of the discussion on the point of Order, may I say that the Amendment was drafted with full knowledge of the Rule to which you have called our attention. The purposes of the Rule, as I understand them, were that it was not in Order to propose to increase the charge or to alter the purpose. With great respect, I would suggest that the Ruling that you now give seems to go considerably beyond that Order. The Amendment which we have put down does not propose to increase the amount or to alter the purpose, namely, that this subsidy should be paid in respect of sugar manufactured in Great Britain, etc., but it does, admittedly, very substantially alter the conditions, and I should with very great respect—

Whereupon the GENTLEMAN USHER OF THE BLACK ROD being come with a Message, The CHAIRMAN left the Chair.

Mr. SPEAKER resumed the Chair.