HC Deb 02 April 1936 vol 310 cc2248-58

8.52 p.m.

Mr. KELLY

I beg to move, in page 14, line 2, after "interest" to insert "not exceeding four per cent. subject to tax."

By this Amendment I am asking that instead of the Corporation being allowed to earn unlimited interest it shall be limited to four per cent. That will be an adequate return, and they will be well remunerated for. anything they undertake under this particular Measure. To-day, people consider they are doing well if they get a return of three per cent. from a safe investment, and as this scheme is to have the backing of the Government it may be regarded as a gilt-edged investment.

8.54 p.m.

Mr. QUIBELL

I beg to second the Amendment.

This is a Bill which is intended, in the main, to benefit agriculture, according to the White Paper, and if that be so I do not understand why the Minister should not accept this Amendment. If the Corporation can maintain an interest of four per cent. it will be a gilt-edged security, and not at all a bad investment. The Minister is full of good will towards agriculture and I want him to show that good will in a practical fashion by accepting this Amendment. It will be one way of helping agriculture, because up to the present the financier has gained the most out of this great ramp. The White Paper says that the primary purpose for a subsidy is to help agriculture. The parties who you are protecting are chiefly the investigating public, the people who own the shares in the beet sugar factories. The Minister shakes his head, but the wiseacres who have had their money up to now in some of these factories have milked the cow pretty well. This is supposed to be a co-partnership, but it has been a cow partnership. The public funds have been at the feeding end but the financiers have had the milking end of it. They have been crosswise instead of lengthwise.

I suggest that the Minister accept the Amendment limiting the amount of interest that these people will have in the future, and giving to the growers of sugar beet a better price. My right hon. Friend who has sat on these benches for hours to-day has been endeavouring to protect the interests of the consumers, while the Minister has been very zealous in protecting the interests of the financiers, but I would remind him that there are more hon. Members on his side than on ours who represent agriculture and who desire to improve the Bill in the interests of agriculture. If financiers had not benefited while agriculture was famishing, as has been the case in the past, and there had been a better and more just diffusion of the sacrifices that the nation has made in order to establish this industry, the Minister would have found far more support on this side for putting the industry into a better position, as I believe this Bill will do. I hope that the Minister will magnanimously say that he accepts the Amendment.

8.57 p.m.

Mr. BARNES

The issue here is apparently between a maximum of 4 per cent. and a maximum of 7 per cent. I do not think this Amendment is unreasonable if we bear in mind one or two points. The earning capacity of the Corporation is determined by these facts: first, the State gives a subsidy to home-grown sugar, then we give a differential duty to the refiners, then we proceed, in this Corporation, to give them a monopoly in sugar production, and subsequently, the operations of this scheme enable both port refiners and the inland beet sugar refiners to divide the market between them. Prior to the scheme coming into operation, the companies to be transferred were permitted to distribute their reserves to their shareholders; under this scheme the Treasury will stand guarantee for £1,000,000 debentures, of which £750,000 are distributed to the transferred companies. In those conditions it is very reasonable that the earning capacity of the shares should be limited to 4 per cent.

8.59 p.m.

Mr. ELLIOT

We should all agree with hon. Members opposite if it were not for the criticism which they have levelled at the same time that the scheme did not provide sufficiently for efficiency. My only purpose, apart from saying that I am unable to accept the Amendment, is to call attention to the stress which hon. and right hon. Members opposite have laid so repeatedly upon the necessity for efficiency in the industry. We have devised a scheme whereby efficiency may be secured by means of the division between the Corporation and the Treasury, that is to say the State, of any additional sums earned. That division is on terms which is very favourable to the State. If, by reason of the operation of the incentive scheme, the company earns more than 4 per cent. dividend, suppose it goes as high as 5 per cent. or 5½ per cent., the Corporation would get £300,000 of that and the Treasury would get 21,600,000 over ten years, which on the whole is not a bad rake-off for the community. It amounts to 68 per cent.

The division by which the community takes 68 per cent. of any possible improvement of the position of the Corporation and leave the Corporation the remainder, may not seem to hold out any undue incentive to the Corporation, yet it is desirable to hold out such incentive in order to increase their efficiency. As hon. Members opposite have said, it is necessary on general grounds that that efficiency be increased, in the interests of the continuance of the industry in the future, so that it may work down the cost of its processes. It is for the benefit of all concerned to adopt this proposal for the benefit of the agriculturists themselves. We have met the general position of hon. Members opposite by limiting the rate of interest to 4 per cent. I hope that I have explained that if we do not accept a fixed and rigid limit of 4 per cent., it is because if more than 4 per cent. be earned the Treasury stand to gain enormously on those increased earnings. That means more money for the Treasury and more efficiency for the industry. I hope hon. Members will, therefore, not press their Amendment.

Mr. QUIBELL

The right hon. Gentleman has divided it nicely between the Treasury and the rentiers, but where is there anything for the growers?

Mr. ELLIOT

Surely the growers stand to gain by anything that makes for the increased efficiency of the industry. Moreover, very little attention has been paid to the growers by hon. Members opposite, who have voted for the rejection of the Bill and the complete extinction of the growers as such. [HON. MEMBERS: "No!"] It comes a little hard from those who voted against the Financial Resolution, against the Second Reading and, so far as I know, are going to vote against the Third Reading, to say that we show insufficient tenderness for the growers.

Mr. EDE

Saying it twice does not make it true.

Mr. ELLIOT

For hon. Members opposite to say that they show any interest whatsoever in the growers is to state something which is patently absurd. They desire that the extinction of the industry should be complete. [HON. MEMBERS: "No!"] I beg hon. Members' pardon, but they backed up the Greene Committee's report that the industry should be shut down and the men thrown on the dole, and that there should be no compensation.

Mr. PRICE

The right hon. Gentleman should read the Brighton Conference resolution.

Mr. ELLIOT

I have done so. Hon. Members appear to be going back on what they have just been saying. May I ask for a fair answer to a fair question? Are they now in favour of the beet sugar industry going on? [HON. MEMBERS: "Yes !"] Good. Then we are all of one mind.

Mr. JAGGER

Not on these lines.

Mr. ELLIOT

If there is apparently some confusion in the House there is no danger of the confusion which existed last night, and we know exactly where we are. We are going to vote solidly for the continuance of the beet sugar industry and for the Bill. I ask hon. Members whether the incentive scheme is not necessary for the efficiency of the industry, and if that be so, whether they find it necessary to press an Amendment which would cut out the incentive to efficiency by which alone the industry in the long run could really be justified?

9.4 p.m.

Mr. T. WILLIAMS

The right hon. Gentleman never lacks ingenuity, argument, excuses or words to justify any point which he has in mind, but when he tells us that what are called the incentive proposals are likely to result in savings to the State, I should like to put one or two questions to him. For instance, under the terms of the Order which the right hon. Gentleman has approved, he has undertaken to allow to be employed, at the same salaries of which they are now in receipt, all the directors who were in existence previously. On page 13 of the White Paper there is this paragraph: Directors' fees on the scale applicable to the year for which the rate is being fixed shall be included …

Mr. ELLIOT

Only such directors as are required.

Mr. WILLIAMS

Such directors of the 15 companies as will be required are to be re-employed at the same salaries which they presently receive. What will these directors be paid for? Merely to waste their time, or in the expectation that they will procure the maximum efficiency for this Corporation? If the right hon. Gentleman were to regard a 40 per cent. increase in the wages of every worker in the country as desirable for the promotion of the maximum of efficiency, we should agree with him, but if only directors are to be bribed by a 40 per cent. increase in the income of their companies for the purpose of procuring efficiency, it does not say much for the right hon. Gentleman's confidence in the directors who are to run this Corporation. It is true that, if £1,900.000 were saved by the increased efficiency, the State would benefit in a larger proportion than the companies, but what we are concerned about is that, out of the moneys provided by the Treasury, you first of all make the industry profitable, then you guarantee 4 per cent. interest on £5,000,000, and then you say that that rate of interest may be increased to 7 per cent. If I am wrong, perhaps the right hon. Gentleman will correct me.

Mr. ELLIOT

I can only speak again by the leave of the House, but the hon. Member himself knocked the bottom out of his argument by quoting the proviso on page 14, which states that, if the dividend of the Corporation falls below 4 per cent., the Corporation will propose to the Sugar Commission that, if the Commission think fit, they should recommend the Government to make provision towards replacing the amount necessary to enable a dividend of 4 per cent. to be paid. Nobody can say that that is a guarantee, or, if it is a guarantee, it is a very shaky kind of guarantee.

Mr. WILLIAMS

Will the right hon. Gentleman be good enough to tell the House exactly what paragraph 3 on pages 11 and 12 means?

Mr. ELLIOT

There is no difficulty about that. If the industry is being reasonably and efficiently run, 4 per cent. is a reasonable standard rate for the purposes of calculation, but if it falls below 4 per cent., as it may easily do, a whole series of hypothetical conditions have to be fulfilled before it can be made up even to 4 per cent., not to mention going above 4 per cent.

Mr. WILLIAMS

Will the right hon. Gentleman tell us where it is provided that there shall be reasonable efficiency before they get 4 per cent.?

Mr. ELLIOT

In the Clauses of the Bill.

Mr. WILLIAMS

I am referring to the Order which the right hon. Gentleman has approved, and which the Treasury also has approved. Perhaps we had better return to these words and see exactly what they mean, because I do not think it is fair that Members of the House should be kept in ignorance.

Mr. ELLIOT

Of course it is not, but, since the hon. Gentleman challenges me, I would point out that all these are arrangements referred to in Clause 3, which has been passed by the House. Sub-section (3) of Clause 3 reads as follows: No arrangements or scheme shall be approved or confirmed under this Section unless the arrangements or scheme make such provision as appears to the Minister and the Treasury to be expedient for securing that the affairs of the Corporation will be conducted with due regard to the public interest and to the efficient manufacture in Great Britain of sugar from homegrown beet and to the efficient marketing of such sugar. All these arrangements are to be read subject to that over-riding Clause in the Statute.

Mr. WILLIAMS

Then what is the reason for the incentive proposals, with the extra 1½ per cent.? If it is demanded in the Bill and in the White Paper that the Corporation shall be run with due regard to reasonable efficiency, and in the best interests of the industry, of national finance, and so on, what is the reason for this extra 1½ per cent.?

Mr. ELLIOT

To use a familiar agricultural metaphor, if I ride a donkey to the market, I can very reasonably say that the donkey is proceeding in a reasonable way if I am using the reins and the whip as far as I can, but if I want to be more speedy, and take a carrot and tie it in front of the donkey, the donkey will run a great deal faster than it otherwise would.

Sir S. CRIPPS

On a point of Order. Is it right, in these proceedings on Report, that the Minister should speak four times on one Amendment?

Mr. DEPUTY - SPEAKER (Captain Bourne)

I am afraid we are getting rather slack. I think it is better that hon. Members should make their speeches and leave the Minister to make his reply. It is not as though we were in Committee, when the Minister can speak more than once.

Mr. WILLIAMS

I do not want to make it difficult for the Minister when he has no further right of reply, but I still remain unconvinced that the guarantee will not be insisted upon by the Corporation, and they can always quote paragraph 3 of the White Paper, which is headed "Return on Capital," should there be any doubt about their 4 per cent. It is true that I quoted paragraph 6 on page 14, which says: The following further provisions relate to the Corporation's earnings, but they would only apply in exceptional circumstances beyond the control of the Corporation which made it difficult to pay 4 per cent. As far as we can expect, on a reasonable interpretation of paragraph 3 and paragraph 6, there will be a definite guarantee of 4 per cent. on the £5,000,000. The right hon. Gentleman, before he guarantees this 4 per cent. on £5,000,000, insists on a reasonable measure of efficiency on the part of the Corporation, and he undertakes to pay the directors' salaries on the same basis as hitherto. Clearly, if the Corporation is affecting such economies as one might expect, it ought to start making money immediately, but the right hon. Gentleman produces a 1½ per cent. carrot to dangle before the donkey, as he puts it, the net result being that they will look forward for the next ten years, not only to 4 per cent., but to a further 1½ per cent., making a total of 5½ per cent. In the latter part of the reference to income and dividends on page 14 of the White Paper, these very significant words appear: Save in exceptional circumstances, and subject to the prior approval of the Sugar commission and the Government, the rate of dividend shall not exceed 7 per cent. per annum. The short point, therefore, is this. The sugar companies in the past have done themselves extremely well at the expense of the Treasury and they are not entitled to too much generosity now. By this Bill the right hon. Gentleman is going to keep the factories in operation, he is going to give them almost a permanent life, he is turning what otherwise would be a mere shadow into a real live marketable asset and he is going to confer upon them, possibly perpetually, 5½ per cent. interest. Since this is a Government subsidised industry it is too much.

If you are going to pay your directors a salary consistent with the onerous duties that they perform, if they perform them, we ought to expect that those directors will produce a maximum of efficiency regardless of what dividend the owners of the Corporation obtain. It is not so much the shareholders in the Corporation who matter, it is the efficiency or otherwise of the directors who are going to run the show. You do not say either in the Bill or in the White Paper that, if

the directors put in the maximum time and produce a maximum of efficiency, you will double their salaries. You do not say to any of the technicians, "If you will really put your heart into this Corporation, effect economies wherever they can be effected and run the show as cheaply as possible consistent with reasonable wages and salaries for the workpeople and technicians we will increase your wage or salary at the end of a week, a month or a year." All you say is that the shareholders, who play no part at all in the running of the Corporation shall be able to get another 40 per cent. increase on their 4 per cent. dividend. I think the right hon. Gentleman is a bit too generous, to put it no higher than that. It is unnecessary to make this addition. If he had said to those who are going to do the job, "If you do your level best, if at the end of a year or two we find you have produced such economies as will reduce the demand for Treasury funds, we will increase your wage or salary," perhaps he would have found unanimous support on these benches. I think the Amendment is perfectly legitimate. The money is going to the wrong people, to those who have taken advantage of their opportunities in the past, and I do not think we ought to give more Treasury money to those who have not been worthy of it in the past.

Question put, "That those words be there inserted in the Bill."

The House divided: Ayes, 114; Noes, 198.

Division No. 137.] AYES. [9.20 p.m.
Acland, Rt. Hon. Sir F. Dyke Davies, R. J. (Westhoughton) Jagger, J.
Adams, D. M. (Poplar, S.) Day, H. Jenkins, A. (Pontypool)
Adamson, W. M. Dobble, W. Jones, A. C. (Shipley)
Alexander, Rt. Hon. A. V. (H'lsbr.) Dunn, E. (Rather Valley) Jones, Morgan (Caerphilly)
Ammon, C. G. Ede, J. C. Kelly, W. T.
Anderson, F. (Whitehaven) Edwards, A. (Middlesbrough E.) Kennedy, Rt. Hon. T.
Attlee, Rt. Hon. C. R. Edwards, Sir C. (Bedwellty) Kirby, B. V.
Barnes, A. J. Fletcher, Lt.-Comdr. R. T. H. Lawson, J. J.
Barr, J. Foot, D. M. Leach, W.
Batey, J. Gallacher, W. Leslie, J. R.
Bellenger, F. Gardner, B. W. Macdonald, G. (Ince)
Benson, G. George, Megan Lloyd (Anglesey) McGhee, H. G.
Bevan, A. Gibbins, J. MacLaren, A.
Broad, F. A. Graham, D. M. (Hamilton) Maclean, N.
Bromfield, W. Grenfell, D. R. MacNeill, Weir, L.
Brooke, W. Griffith, F. Kingsley (M'ddl'sbro, W.) Mander, G. le M.
Cape, T. Griffiths, G. A. (Hemsworth) Marklew, E.
Cassells, T. Griffiths, J. (Lianelly) Marshall, F.
Charleton, H. C. Groves, T. E. Maxton, J
Cluse, W. S. Hall, J. H. (Whitechapel) Montague, F.
Clynes, Rt. Hon. J. R. Hardie, G. D. Morrison, Rt. Hon. H. (Ha'kn'y, S.)
Cocks, F. S. Henderson, A. (Kingswinford) Morrison, R. C. (Tottenham, N.)
Compton, J. Henderson, J. (Ardwick) Muff, G.
Cove, W. G. Holdsworth, H. Naylor, T E.
Cripps, Hon. Sir Stafford Holland, A. Oliver, G. H.
Daggar, G. Hollins, A. Parker, H. J. H.
Davidson, J. J. (Maryhill) Hopkin, D. Pethick-Lawrence, F. W.
Potts, J. Smith, T. (Normanton) Westwood, J.
Price, M. P. Stephen, C. Wilkinson, Ellen
Pritt, D. N. Stewart, W. J. (H'ght'n-le-Sp'ng) Williams, D. (Swansea, E.)
Quibell, J. D. Strauss, G. R. (Lambeth, N.) Williams, E. J. (Ogmore)
Ritson, J. Taylor, R. J. (Morpeth) Williams, T. (Don Valley)
Rowson, G. Thurtle, E. Wilson, C. H. (Attercliffe)
Seely, Sir H. M. Tinker, J. J. Windsor, W. (Hull, C.)
Sexton, T. M. Viant, S. P. Woods, G. S. (Finsbury)
Shinwell, E. Walkden, A. G. Young, Sir R. (Newton)
Short, A. Walker, J.
Simpson, F. B. Watson, W. McL. TELLERS FOR THE AYES.—
Smith, E. (Stoke) Welsh, J. C. Mr. Mathers and Mr. Whiteley.
NOES.
Acland-Troyte, Lt.-Col. G. J. Furncss, S. N. Neven-Spence, Maj. B. H.
Agnew, Lieut.-Comdr. P. G. Gibson, C. G. O'Neill, Major Rt. Hon. Sir Hugh
Albery, I. J. Gledhlll, G. Orr-Ewing, I. L.
Allen, Lt.-Col. Sir W. J. (Armagh) Gluckstein, L. H. Penny, Sir G.
Amery, Bt. Hon. L. C. M. S. Glyn, Major Sir R. G. C. Petherick, M.
Anstruther-Gray, W. J. Goldie, N. B. Pickthorn, K. W. M.
Apsley, Lord Gower, Sir R. V. Pilkington, R.
Aske, Sir R. W. Gridley, Sir A. B. Ponsonby, Col. C. E.
Assheton, R. Grimston, R. V. Procter, Major H. A.
Astor, Hon. W. W. (Fulham, E.) Gritten, W. G. Howard Radford, E. A.
Baldwin, Ht. Hon. Stanley Guest, Maj. Hon. O.(C'mb'rw'll, N.W.) Ralkes, H. V. A. M.
Baldwin-Webb, Col. J. Gunston, Capt. D. W. Ramsay, Captain A. H. M.
Balfour, Capt. H. H. (Isle of Thanet) Guy, J. C. M. Ramsbotham, H.
Baxter, A. Bcverley Hamilton, Sir G. C. Ramsden, Sir E.
Beaumont, Hon. R. E. B. (Portsm'h) Hannah, I. C. Rankin, R.
Beit, Sir A. L. Harbord, A. Rathbone, J. R. (Bodmin)
Birchall, Sir J. D. Hartington, Marquess of Rayner, Major R. H.
Blindell, Sir J. Heilgers, Captain F. F. A. Reed, A. C. (Exeter)
Boulton, W. W. Hepburn, p. G. T. Buchan- Reid, W. Allan (Derby)
Bowater, Col. Sir T. Vansittart Herbert, Major J. A. (Monmouth) Remer, J. R.
Bower, Comdr. R. T. Hills, Major Rt. Hon. J. W. (Ripon) Rickards, G. W. (Skipton)
Briscoe, Capt. R. G. Holmes, J. S. Robinson, J. R. (Blackpool)
Brocklebank, C. E. R. Hope, Captain Hon. A. O. J. Ross Taylor, W. (Woodbridge)
Browne, A. C. (Belfast, W.) Hopkinson, A. Rowlands, G.
Bull, B. B. Horsbrugh, Florence Ruggles-Brise, Colonel Sir E. A.
Butt, Sir A. Hudson, Capt. A. U. M. (Hack., N.) Russell, A. West (Tynemouth)
Campbell, Sir E. T. Hudson, R. S. (Southport) Russell, S. H. M. (Darwen)
Cartland, J. R. H. Hunter, T. Salmon, Sir I.
Carver, Major W. H. Inskip, Rt. Hon. Sir T. W. H. Salt, E. W.
Cary, R. A. Jackson, Sir H. Sandys, E. D.
Chamberlain, Rt. Hn. N. (Edgb't'n) Jones, Sir G. W. H. (S'k N'w'gt'n) Sassoon, Rt. Hon. Sir P.
Chapman, A. (Rutherglen) Kerr, Colonel C. I. (Montrose) Scott, Lord William
Clydesdale, Marquess of Kerr, H. W. (Oldham) Selley, H. R.
Colfox, Major W. P. Kirkpatrick, W. M. Shaw, Major P. S. (Wavertree)
Colville, Lt.-Col. D. J. Lamb, Sir J. Q. Shaw, Captain W. T. (Forfar)
Cooke, J. D. (Hammersmith, S.) Latham, Sir P. Shepperson, Sir E. W.
Cooper, Rt. Hn. T. M. (E'nburgh, W.) Law, R. K. (Hull, S.W.) Smith, Bracewell (Dulwich)
Courtauld, Major J. S. Leckie, J. A. Somervell, Sir D. B. (Crewe)
Craddock, Sir R. H. Leech, Dr. J. W. Somerville, D. G. (Willesden, E.)
Crooke, J. S. Lennox-Boyd, A. T. L. Spens, W. P.
Croom-Johnson, R. P. Levy, T. Stanley, Rt. Hon. Oliver (W'm'l'd)
Cross, R. H. Lewis, O. Stewart, J. Henderson (Fife, E.)
Crossley, A. C. Liddall, W. S. Srauss, H. G. (Norwich)
Culverwell, C. T. Liewellin, Lieut.-Col. J. J. Strickland, Captain W. F.
Davidson, Rt. Hon. Sir J. C. C. Loder, Captain Hon. J. de V. Stuart, Hon. J. (Moray and Nairn)
Davies, Major G. F. (Yeovil) Loftus, P. C. Sueter, Rear-Admiral Sir M. F.
Denman, Hon. R. D. MacAndrew, Lt.-Col. Sir C. G. Sutcliffe, H.
Donner, P. W. McCorquodale, M. S Taylor, C. S. (Eastbourne)
Dorman-Smith, Major R. H. Mac Donald, Rt. Hn. J. R. (Scot. U.) Titchfield, Marquess of
Drewe, C. MacDonald, Rt. Hon. M. (Ross) Touche, G. C.
Duckworth, G. A. V. (Salop) Macdonald, Capt-P. (Isle of Wight) Tryon, Major Rt. Hon. G. C.
Duckworth, W. R. (Moss Side) McEwen, Capt. H. J. F. Tufnell, Lieut.-Com. R. L.
Dugdale, Major T. L. Maclay, Hon. J. P. Wakefleld, W. W.
Duggan, H. J. Manningham-Buller, Sir M. Walker-Smith, Sir J.
Duncan, J. A. L. Margesson, Capt. Rt. Hon. H. D. R. Wallace, Captain Euan
Dunglass, Lord Markham, S. F. Ward, Irene (Wallsend)
Eckersley, P. T. Mayhew, Lt.-Col. J. Warrender, Sir V.
Eden, Rt. Hon. A. Mellor, Sir J. S. P. (Tamworth) Waterhouse, Captain C.
Edmondson, Major Sir J. Mills, Sir F. (Leyton, E.) Wedderburn, H. J. S.
Elliot, Rt. Hon. W. E. Mills, Major J. D. (New Forest) Wickham, Lt.-Col. E. T. R.
Ellis, Sir G. Mitcheson, Sir G. G. Williams, C. (Torquay)
Errington, E. Morgan, R. H. Windsor-Clive, Lieut.-Colonel G.
Erskine Hill, A. G. Morrison, G. A. (Scottish Univ's.) Wise, A. R.
Everard, W. L. Morrison, W. S. (Cirencester) Young, A. S. L. (Partick)
Findlay, Sir E. Muirhead, Lt.-Col. A. J.
Fleming, E. L. Munro, P. TELLERS FOR THE NOES.—
Fremantle, Sir F. E. Nall, Sir J. Lieut.-Colonel Sir A. Lambert Ward
and Commander Southby.