MILK (AMENDMENT) BILL.

HC Deb 12 July 1937 vol 326 cc885-926

Order for Second Reading read.

4.3 p.m.

The Minister of Pensions (Mr. Ramsbotham)

I beg to move, "That the Bill be now read a Second time."

The Bill, as was explained in the Debate on the Financial Resolution last week, seeks to extend the Milk Act, 1934, as amended by the Act of 1936, for a further period of 12 months to end on 1st October, 1938. The House knows that the Bill does not import any notable change in the legislation affecting the milk position, and with the exception of two modifications to which I shall refer briefly it is purely and simply a prolongation of the principal Act of 1934 as amended by the Act of 1936. My right hon. Friend the Minister of Agriculture said last week that he would not be able during the debates on the Bill to state any outline of the more permanent provisions which it is hoped will before long take the place of the Bill. Consequently, I shall not be able to deal with the criticisms based upon the milk position, made last week by the right hon. Member for West Stirling (Mr. Johnston), who, I am sorry to see, is not in his place. The right hon. Member for West Stirling was good enough last week to compliment me upon skating lightly over the facts, and I am bound to admit that by the warmth of his denunciation at that time he did his best to thaw the ice on which I was skating. I must ask him and his friends still to exercise a little patience and watch me cut a few more figures, on the outside edge as it were of the main area.

Before I trouble the House with a few brief observations on the details of the Bill, there are two points which I hope that I may bring to the recollection of the right hon. Member for West Stirling and his supporters. Sometimes it happens that one becomes a little less censorious and critical of one's opponents if one remembers one's own difficulties. For instance, in his speech last week the right hon. Gentleman alleged that the Government was doing its utmost to divert liquid milk supplies into manufacturing processes. If that is the case it is a little difficult to understand why the Government ever embarked upon the milk in schools scheme, the whole purpose and object of which is precisely the contrary. But I want to take this opportunity of reminding the right hon. Member for West Stirling and his friends that our milk in schools scheme compares extremely favourably with the efforts that he made when in office in 1930. The House will recollect that in the Debate on the Financial Resolution of the Milk (Extension of Temporary Provisions) Act, 1936, the first extension of the Act, the right hon. Gentleman declared—my sympathy went out to him—that when he and his party were in office in 1930 he had almost to sweat blood in order to get £5,000 to start a milk in schools scheme. I cannot help drawing the attention of the House to the contrast which we now provide, for since then we have contributed rather over £1,000,000 for that purpose, and in this Bill we are asking for powers to contribute £500,000 more.

I see that the right hon. Member for West Stirling is now in his place. I was saying that he had my sympathy because of the terrible difficulty he had in getting £5,000 in 1930; but on the larger question, the question of the sale and consumption of liquid milk, I would remind him of certain facts in order to make him a little more sympathetic to the difficulties that we have to face. In the speech during the Debate on the Address in October, 1930, when the right hon. Gentleman occupied the position of Under-Secretary for Scotland, he told the House that he had addressed a meeting of farmers in Glasgow, and he told them and the House that if the milk pool were broken and the liquid surplus allowed to flow, the market would become unremunerative; and he actually recommended that arrangements should be made to prevent the surplus milk from flooding the market. He was asked what he proposed to do. This is what he proposed to do, in his own words: Assist the co-operative organisations of producers to keep their surpluses off the liquid milk market, and to set up co-operative creameries and factories where those surpluses will he turned into dried and condensed milk."—[OFFICIAL REPORT, 30th October, 1930; col. 316; Vol. 244.] He asked the House what was wrong with that? I see nothing wrong with it. That was preparatory to the marketing scheme, and the right hon. Gentleman was quite correct in his policy. Though there was nothing wrong when he did it, there appears to be everything wrong with it now that we do it.

Mr. T. Johnston

Is it not also the case that we did our utmost by initiating schemes for developing consumption of liquid milk in the schools? We were the first to do it, and we sought to extend it.

Mr. Ramsbotham

I will give the right hon. Gentleman all the credit for starting a scheme with £5,000. I am not seeking to detract from that effort. His policy then appears to have been very similar to the policy which is being adopted now, but we have a much larger quantity of milk to deal with than the right hon. Gentleman had then. I do not want him to think that I am censuring the policy of 1930. The right hon. Gentleman was then in very much the same difficulty that perplexed us, namely, the disparity between the price of liquid and manufacturing milk. His solution was to endeavour to stem the flow of liquid milk and to direct it to manufacture. His difficulties were greater than ours because he got his Government to give him only one-hundredth part of the help that we are now giving. The right hon. Gentleman also told the House in that same speech that his policy would be helpful to the chocolate manufacturers. I find it a little difficult to reconcile that statement in 1930 with the right hon. Gentleman's statement last week when he was condemning the Government for diverting the supplies that ought to be consumed by mothers and babies to the manufacture of chocolate. When the right hon. Gentleman remembers his own statements I hope he will be more sympathetic to this side.

I do not think I can add very much more to the extremely clear exposition of the contents of this Bill given by my right hon. Friend the Minister of Agriculture on the Financial Resolution last week. Clauses 1 and 2 extend the period of the Exchequer payments and the period of repayment in respect of manufactured milk, for a further 12 months. Clause 3 extends for a similar period the Exchequer contribution to the expenses of the Milk Board, for schemes designed to increase the demand for milk mainly by means of the milk-in-schools schemes. It is interesting to note that the number of children in the public elementary schools of England and Wales getting milk under this scheme in March last was four per cent. higher than the corresponding figure of 1936, in spite of the decline in the school population policy. It is a small increase and not half as much as I should like to see, although the school population is less. Clause 4 deals with Northern Ireland and provides for a further extension for 12 months of payments and repayments. Clauses 5 and 6 contain two modifications of the principal Act which were commented upon in the Debate on the Financial Resolution and were very carefully explained by my right hon. Friend.

I do not think the House would wish me to weary them with an intricate description of the causes which led to these modifications, because they were discussed last week. The House knows that the object of Clause 5 is to remove as from the 1st October, 1937, the grievance felt by the Milk Marketing Board. The hon. Member for Carmarthen (Mr. Hopkin) in an extremely well-informed speech, set out various facts and figures which constituted his grievance. I make no complaint as to his figures, and I agree that the 1934 formula was not giving the standard price that it was hoped would be obtained. Consequently, we are taking steps in this Bill to alter that formula so that in future the cheese-milk price will be separate from the butter-milk price, and in calculating them the Ministers will take into account the terms of the Board's contracts for the sale of milk for manufacture, although Ministers are not limited to consideration of those terms. It is probable that in practice the manufacturing price in the Board's current contracts will be taken, but I think the House will agree with me that it is desirable that the Minister should have discretion to fix a higher price if he thinks fit. In short, the new cheese-milk price and the buttermilk price for any month after September next will represent the value per gallon of the greater part of the milk sold in that month and manufactured into cheese or butter, as the case may be. As my right hon. Friend said last week, the result will be that whereas the gross payments to the Milk Board for the next 12 months would be £68,000 on the basis of present prices, under this Bill they will get £550,000 and will be liable to repay, at a rough estimate, £10,000, making a net payment of £540,000. Clause 6 interprets the expression "net cost per gallon of milk to the purchaser," which occurs in Section 1 of the principal Act. The Government were advised that, as a matter of legal interpretation, that phrase might have a meaning quite contrary to what was intended so as to comprise within the term "net cost" such items as the costs of collecting the milk from farms and the special May levy for publicity. It was never intended that the phrase should have that interpretation. As far as I know, no claim has been made on the basis of it, but in order to obviate doubt and to make the intention clear, we propose to provide in this Bill that the net cost in relation to manufacturing milk shall be the price specified in the contract with such additions as the Minister may determine as representing other sums payable in respect of the milk. If the contract does not specify a price, the net cost is to be the sum that the Minister may determine as representing the price per gallon of manufacturing milk, with such additions as he may decide. The last part of the Clause comes into play when the contract specifies different manufacturing prices for different descriptions of the same milk product, as for instance where milk is sold for manufacture into cheese, and different prices are given according to whether the cheese is Stilton cheese, soft cheese, cream cheese, and so on.

Clause 7 deals with cases where producer-retailers have been taking part in schemes for the supply of cheap milk to nursing and expectant mothers and children under school age in certain areas. The Milk Marketing Board makes rebates to those retailers, but some doubt has arisen as to whether the board have legal power to make those rebates under this scheme. In order to set those doubts at rest, the Clause will establish the validity of such payments. Clause 8 deals with certain consequential minor Amendments to the principal Act, and I do not propose to weary the House by going into details regarding them at this stage. Last week the House assented to the Financial Resolution upon which this Bill is founded, realising that it was a temporary Measure and that to reject it would cause grave damage to the milk industry and to a large section of the consumers. Exactly the same considerations apply to this Bill. The right hon. Gentleman the Member for West Stirling disliked part of the Financial Resolution, and no doubt he will dislike the corresponding part of this Bill; but he said that in order to avoid being misunderstood in the country, he and his hon. Friends did not propose to divide against the Financial Resolution. I can assure him that if he refrains from dividing against this Bill, the country will not misunderstand him.

4.21 p.m.

Mr. T. Williams

While my right hon. Friend the Member for West Stirling (Mr. Johnston) is quite capable of defending himself against the Minister of Pensions, it would not be out of place if I were to say now that in 1930, when my right hon. Friend occupied a Ministerial appointment, the problems confronting the nation were not the same as they were in 1934. In 1933–34, the increase in the output of liquid milk, as compared with the output in 1930, was no less than 8½ per cent., and as far as one can gather, neither the farmers nor the Government had done anything to provide a market for that increased output. Therefore, the two periods were in no way identical. The least that can be said of the policy of my right hon. Friend the Member for West Stirling is that he visualised the possibility of an increased output of milk and paved the way by the Scottish experiment, which, as is always the case, is slowly but surely followed by Members of the Conservative party, if only they are in office long enough. What the Government did in 1934 and subsequently was merely to follow the very fine lead which was given by the Labour Government in 1930, and which was very largely due to my right hon. Friend. From that point of view, when the Minister of Pensions refers to skating, I think I may say that compared with him the Home Secretary is a mere novice.

If legislation could either kill or cure an industry, agriculture ought either to be extremely healthy or to have been dead years ago. This is the third Milk Bill we have had. The Minister tells us that the final instalment may come later, but he is unable to make any reference to it at this moment. The original Milk Bill in 1934 made provision for milk for school children. It is true that the £500,000 set apart to help school milk compared very favourably with the £5,000 for the initial experiment, but the Milk Bill of 1934 gave £5,500,000 approximately to dairy farmers in one way or another for dealing with their surplus milk. In 1936 the Bill was extended, and it is now to be extended again. Nobody expects the National Government to make up its mind rapidly, although I hope the new Minister of Agriculture will act much more rapidly than some of his predecessors; it is a question of jam tomorrow but never jam to-day, and we shall have to wait and see what happens.

Last week we said that we welcomed the extension of the scheme for supplying milk to elementary school children and that we would hesitate to vote against it—certainly, we would not vote against it on principle—because we knew that we should be misrepresented in the country if we voted against parts of the Measure towards which we were much less kindly disposed than we were towards providing the subsidy for manufacturing milk. The position at the moment is simply ludicrous. Many people find it impossible to purchase requisite supplies of liquid milk at 2s. a gallon, yet since 1934–35 we have been providing a subsidy for manufacturing milk which is sold in hundreds of millions of gallons at 5d. a gallon.

On the first occasion that a Milk Bill was introduced in the House, the hon. Gentleman the Member for the Isle of Ely (Mr. de Rothschild) stated that he and his hon. Friends feared that the outcome of the subsidising of manufacturing milk would be to establish a chain of creameries and a chain of factories which would have to be subsidised for ever. If the Minister does not take time by the forelock, it almost looks as if that will be the case, and that we shall be left in a similar situation with the factories dealing with surplus milk as we were ultimately left in with regard to sugar beet. I remember that in the same Debate the hon. and gallant Gentleman the Member for Altrincham (Sir E. Grigg) said that he agreed with 100 per cent. of what I said on that occasion, but that the Government were dealing with an immediate problem requiring an immediate remedy, and that, as a temporary expedient, he would be ready to support the Government on that occasion. Nevertheless, the hon. and gallant Gentleman argued learnedly that the only ultimate solution of the milk problem would be when we subsidised milk into the stomachs of the women and children and not into the factories. At that time, we moved a reasoned Amendment. It was either my good fortune or misfortune to speak on the Amendment, and the words of it apply just as much in 1937 as they did in 1934. It read: Whilst this House is of opinion that the wider distribution of a pure and efficient milk supply is an urgent necessity, it cannot assent to the Second Reading of a Bill which is designed to encourage the production of milk products in preference to an increase in the consumption of fresh milk amongst the children in public elementary schools and at a price within the reach of the poorer households. That was our point of view in 1934, and it is still our point of view in 1937. Having regard to our experience, we regret that the Government have not extended the cheaper or free supply of milk instead of allowing this chain of factories to be built up over a period of time. As an emergency Measure, the 1934 Act was probably justified, but three years have passed since that time, and we are still extending the 1934 Measure, and four years will have elapsed before the Government have made up their mind on a permanent policy. What has been our experience? The Minister of Agriculture in 1934 told us that he wanted above all to put a bottom in the price; he did so, but he knocked the bottom out of many people's milk jugs. The supply of milk has increased, the surplus has increased, and the prices have increased. In 1937, the price of liquid milk is more than it was in 1934. The Government cannot claim any credit for that situation. Not only is the liquid milk price higher than it was in 1934, but the farmers are receiving less in 1937 than in 1934. The whole thing is topsy-turvy, with the result that the greater the output, the higher the price. I know that the right hon. Gentleman can tell us, as he no doubt will tell us, that the utilisation of factories and workshops for the establishment of milk depots is very good work, and we shall readily agree with that. The total increase in liquid sales for 1936–37 was 12,500,000 gallons. That seems a nice increase until it is compared with a surplus of 400,000,000 gallons, and then it looks very small. The agricultural correspondent of the "Times" made this statement in June: The increase in liquid milk sales is probably due more to rising industrial prosperity than to such propaganda efforts. Advertising milk would be waste of money if the public had not the money to buy increased quantities. The Milk Board campaign has certainly had a very favourable wind. The right hon. Gentleman may tell us that Government policy has contributed to industrial prosperity and has tended to put more wages into the pockets of the workers, but that only goes to prove our argument that the problem of the farmer is not one of production. His productive capacity is almost unlimited, and his problem is to have enough consumers who can afford to buy his products at a price that will pay him. On the basis of existing normal wages, obviously a large proportion of the people find it impossible to pay from 2s. to 2s. 3d. per gallon for milk. Hence the surplus, and hence we find organised society through the Government coming to the rescue of a disorganised society in agriculture.

These emergency proposals are not taking us forward at all. We are actually progressing backwards. The diversion of 400,000,000 gallons to factories for cream, condensed milk, dried milk, butter, or whatever it may be, represents a heavy burden not only on the producer but on those who buy liquid milk in reasonable quantities in this country. If millions of people cannot afford to pay 2s. a gallon for liquid milk and if nutrition experts and medical officers agree that milk is the most important of all foodstuffs for nursing and expectant mothers and children from one year to the school-going age then, clearly, instead of selling this whole surplus at 5d. per gallon to factories it ought not to be beyond the wit of the National Government, this Government of all the virtues, to find a scheme for providing free supplies of milk to some of these mothers and children and cheaper supplies to others. Those who received it would benefit by the consumption of the milk, and the farmer would benefit by the increased price.

What have we been doing in the past three years? From 1933 to 1936 we have been entering into voluntary agreements to reduce the imports of dairy products so that we might produce those articles ourselves out of this surplus of milk. In 1936 our imports of cream compared with 1933 had been reduced by 34,000 cwts.; our imports of condensed unsweetened milk by 148,000 cwts.; of condensed sweet milk by 55,000 cwts., and of separated or skimmed milk by over 500,000 cwts. And still there are 38,000 cwts. left, while our exports of condensed milk, sweetened and unsweetened, have increased by 164,000 cwts., meaning in effect that we are selling milk to the foreigner at 5d. a gallon and charging working-class women and children in this country 2s. a gallon. It is a state of things which simply will not bear looking at, and if the Minister cannot tell us to-day what his long-term policy is likely to be, I hope he will give some indication that the time is not far distant when we shall cease to subsidise manufacturing milk or at least when the amount which we do subsidise will be a minimum and that the Government intend to do everything in their power to provide a cheaper milk supply for those millions of families who now find it impossible to buy their requirements.

I notice that the quantity of milk turned into butter in this country has increased six times since 1930. It may be desirable to produce large quantities of butter in this country, but if we are going to do so, then the liquid milk consumers will have something to say about the price of their liquid milk. A Noble Lord said recently in another place that the liquid milk consumer at present was subsidising the manufacturer to the extent of 3d. per gallon, or approximately £6,000,000 per annum. That retards the increase in liquid milk sales. It represents a burden on the consumer which ought to be taken off as quickly as possible. Only when we reduce the price or alternatively when organised society uses the Treasury as a health service to provide milk for many families who are now unable to get it, shall we be able to deal with the problem now confronting us. The policy which we have been pursuing has been to keep liquid sales down to the minimum. I am convinced that our object and our aim ought to be to secure the maximum and not the minimum consumption of liquid milk.

We feel that the policy of the Government ought to be threefold. It ought to aim at a reduction of price, it ought to provide free or cheap supplies for expectant and nursing mothers and for children between one and five and it ought to provide for steps to rationalise the distribution of milk. The Noble Lord to whom I have already referred made a speech on this subject elsewhere which he has since had circulated to hon. Members. He declared that the large volume of milk diverted to manufacture had so increased the price of liquid milk that the subsidy was equivalent to 3d. per gallon. We think that by thoroughly rationalising the distribution we might easily save another 4d. per gallon. Then the producers themselves ought to be able to forfeit 1d. per gallon because with the price reduced to 2d. a pint from 3d. a pint the consumption would increase enormously and the producer would ultimately get more than he is receiving to-day. In any case, there is no reason why the inefficient producer should be kept in business any longer. For those reasons I hope the right hon. Gentleman will not ignore the facts and figures submitted to him by the Noble Lord already mentioned.

Then the Children's Minimum Committee, a society representing nearly 2,000,000 women in this country, have submitted to the right hon. Gentleman and to the Minister of Health proposals whereby the price of milk might be reduced to nursing and expectant mothers and to young children in the same category as elementary school children. They propose a means whereby the price might be reduced from 3d. per pint to 1½d. per pint. Their statement is that there are 3,500,000 women and young children in that category. If they were to take a half pint of milk each per day, if the price charged by the producer were to be 9½d. per gallon and the price charged by the distributor 8d. per gallon making 1s. 5½d. per gallon in all, and if the Government undertook the burden of 5½d. per gallon leaving the milk to be supplied to that category at 1½d. per pint, the cost to the Exchequer would be £1,666,000 per annum less what they would save on their subsidy for manufacturing milk and less any increase they would obtain in duties on imported dairy produce. If we can make available for 3,000,000 deserving persons what has been agreed to be the only reliable foodstuff for mothers and young children at that period and if we can do so at half the present price, even though the cost to the Exchequer might be just over £1,500,000, would it not constitute the most important, the most positive and the best subsidy that the National Government have provided in the last six years?

In any case we should be pouring the milk into the stomachs of the people instead of into the factories. As a health measure it would be extremely beneficial and would probably save millions of pounds later on. It would take off the market approximately 80,000,000 gallons of liquid milk and to that extent the farmer would be receiving 9½d. a gallon instead of 5d. or 6d., and we should know that the best possible use was being made of the milk. The Minister may say that it would be an exceedingly difficult scheme to administer. Everything, we are told, is difficult to administer but if a subsidy is wanted for people who grow wheat or oats or barley or beef then, no sooner said than done—the machinery is at once provided. I am convinced that until we find the means of taking more liquid milk off the market, and while we are left with the surplus of 340,000,000 to 400,000,000 gallons per annum the dairy farmer is not going to be a happy man. He cannot feel that his position is stable. I hope the right hon. Gentleman, therefore, will begin to consider seriously subsidising the consumption of liquid milk and cheapening the supply of liquid milk to those who need it but who cannot afford to buy the requisite quantities of it. I am very hesitant to quote against the Minister of Pensions what he said in his election campaign in 1935. He is so decent in most things that I hate to reduce him to farcical proportions, but I must recall that when seeking the votes of the people then he said: I hope soon to he able to announce a policy under which the cheap milk scheme for school children will be extended to expectant mothers and children under five. It is our policy to divert surplus food into the stomachs of those who live in our back streets and who are sorely in need of it. We agree with that sentiment. That was said on 5th November, 1935. It will soon be November. 1937, but no statement has yet been made from that bench. When is the Minister of Pensions going to announce that policy which he promised the electors in 1935? It is a sound policy. We would welcome it and give him every support on it. I am sure this House for once in a way would form itself into a Council of State if the hon. Gentleman only came forward to give effect to that promise. Last year the Minister of Health in this House said he could give the undertaking that the Government would be willing to support any practical proposals for the extension of the cheap milk scheme for schoolchildren and the Minister of Agriculture has stated that one effective way to increase consumption is to lower the retail price; that the arrangements for the supply of cheaper milk in schools is an example of the manner in which machinery can be used to increase consumption and that children below school-going age and expectant and nursing mothers have at least as great a need for cheaper milk as others. I do not need to quote any further authorities. The Ministry are in possession of much more information than I have on this subject, and I want to suggest that, after the original Bill in 1934, the extension in 1936, and another extension in 1937, it is high time, not only in the interests of the population of this country, but of the producer of milk as well, that we ceased fiddling and started getting on with the job.

4.45 p.m.

Sir Francis Acland

I am rather tempted to follow the hon. Member for Don Valley (Mr. T. Williams) into the intricacies of the arithmetical speculations that he has just been putting before us, which open up a very wide field. On the other hand, this is not really the occasion for doing that, and we shall have other occasions, one hopes, this calendar year, though not this part of the Session, for going into these very difficult matters connected with national milk policy more fully when the Government's proposals are really before us. I am sure that it was with no lack of realisation of their difficulty that the hon. Gentleman who preceded me made the suggestions, which at first sight seemed so easy and so plausible, which would really deal with the whole thing. I wish it was as simple as it sometimes seems. I think we should be wiser this afternoon in getting reasonably soon if we can to the Committee stage of the Agriculture Bill. Hon. Members may remember that on the Financial Resolution in connection with that Bill I asked the Minister whether he could make clear to us what was the real policy of the Government in regard to the reorganisation of the veterinary services, and he said that that matter would come up and be discussed more properly on one of the Amendments to the Financial Resolution, which afterwards was not moved, so that that matter has not come before the House, and I think the House is interested in it. Therefore, I will confine myself to two quite small points.

First of all, the Minister and I had some slight disagreement with regard to the actual movements of factory milk as compared with liquid milk. I stated that on the latest figures that I could get the factory milk seemed to have been increasing faster than the liquid milk, and that is so to a fractional extent when I compare the last two reports of the Milk Marketing Board. The figures, comparing 1936–37 with 1935–36, show an increase of liquid milk of 12,000,000 gallons and an increase of factory milk of about 8,000,000 gallons, which is a very slightly greater proportional increase of the factory milk than of the liquid milk. There is practically nothing in it, but there it is. The Minister did not deny that. He said that last year it was so, but that this year it has not been so. If he could show that, subsequent to that Milk Marketing Board year, things have been turning in a better direction, I am sure we should all be very pleased to know of it and to know to what extent it is due to Government policy with regard to the milk in schools scheme or anything else, and to what extent it is due to other causes which may or may not soon pass away.

The important thing is that, whichever year you take, there is more than half as much milk going to the factories as goes in human consumption. The figure for 1935–36 was 335,000,000 gallons factory to 657,000,000 liquid, and the figure for 1936–37 was 342,000,000 factory to 669,000,000 liquid; and that is a thing which is pressing the milk industry rather hard. They have by their levy to make up the price of more than a third of their milk which goes to factories, and it is that that is staring us in the face and that needs to be grappled with, as no doubt the Government are going to grapple with it in due time. We realise that they have only had an eight months' period of gestation of this matter since the report of the Milk Reorganisation Commission was published, and that that may be too short a time for them, but no doubt we shall get the real scheme later on.

The only other point that I want to make is this, that when I said a few words on the Financial Resolution I quoted something which my hon. Friend the Member for the Barnstaple Division (Mr. Acland) had said about the organisation of a better scheme for grading butter. He had drawn attention to what had been borne in upon him in talking to people who came from Australia, namely, that if we were to get a real market for our butter, we had got to standardise and grade it better than we normally do now, and that that needed a real corps of trained butter graders and tasters; and in reply to that suggestion the Minister's predecessor had said that he could give the hon. Member all the assurance in his power that from the point of view of efficiency and quality what he had said would not be lost sight of, in preparing a long-term policy, during the interim period. I do not expect the Minister to make any statement as to what is in contemplation with regard to that to-day, but I would like an assurance, if he can give us it, that that question of getting a better price for our butter, not by subsidising it, but by taking steps to improve its popularity and its quality, is not being lost sight of in the other matters which no doubt are engaging his attention.

In the circumstances, I think it is not unreasonable that we should be asked in general to renew these subsidies. Whether our constant renewal of the factory subsidy is not encouraging the manufacturer to go on from month to month and from year to year and allowing these very large amounts of factory milk to be obstructing a real, sound, national policy, is another matter, on which we may have something to say on the Committee stage of the Bill, but at this stage I hope the Second Reading will be carried.

4.52 p.m.

Major Sir Reginald Dorman-Smith

In listening to these Debates I have an uncomfortable feeling that the Opposition are inclined to throw a certain amount, if not quite a lot, of blame on the milk producers for the fact that more liquid milk is not available at cheaper prices. I hardly think the Opposition will say that any blame can be laid on the producers for the fact that some sections of the community have not enough money to buy their full amount of liquid milk. I think the producers have shown quite a commendable spirit in co-operating in the various schemes which have been put forward for dealing with nutrition, like the milk in schools scheme, and indeed they have initiated certain other schemes in the Special Areas, which, I think, may point the way to what can be done in the future. I would say straight away that milk producers as a whole agree that it would be indeed desirable to have some bigger scheme with regard to nutrition. We have pointed that out right from the very beginning of the milk scheme and, indeed, before that.

I think the House will agree that the ideal way of dealing with the problem is to get employment back so that the consumer can in fact have enough of his own money in his pocket to buy the necessary amount of milk and, as the Prime Minister said the other day, to create his own happiness out of his own pocket, but until we have been able to liquidate the position which has been left to us by very nearly 100 years of Free Trade, where, in fact, we have got these people who cannot afford to buy the milk, I agree that the State has some responsibility, but it has never been suggested that the milk producers themselves should bear the whole burden of these great social services which are suggested by the Opposition, and until the State does take over this responsibility and does provide the means, I suggest that the producer has only one job, and that is to continue to provide an adequate supply of milk to meet each and every demand at the lowest possible price. I think that he is doing that job very well at this moment and, in fact, that the consumer has no real "grouse" against the producer at all.

I wish to deal for a moment with the producer's side of the matter. I would like to have said something about distribution, but I think that is a matter for the future, and I hope that we shall hear that the whole problem of distribution will be inquired into as soon as possible, but, as far as the producer is concerned, I suggest that he is doing his job as cheaply as possible. The Opposition are always asking about costs of production, and, as far as milk is concerned, we can give them some help and guidance in this matter. It will be within the recollection of the hon. Member for Don Valley (Mr. T. Williams) that the Committee of Investigation accepted the price of 9½d. as being the average cost of production for milk throughout the country. The average pool price last year was 11.48d. per gallon. From that you have to deduct 1.75d. per gallon for collection and transport, and that leaves a potential profit of 0.23d. per gallon, or less than a farthing per gallon. I do not think anybody would suggest that that is a really outrageous profit. It is round about 16s. 8d. per annum on an 800-gallon cow, and I do not think that is going to fill anybody with greed or to make anybody's mouth water. I would also say that this figure of 9½d. per gallon as the cost of production was taken before the cost of feeding-stuffs rose to the point at which it now stands, or 40 per cent. since that determination. Therefore, I think it can be said with truth that the average milk producer in this country is now producing his milk at a loss.

I do not think there can be any doubt at all that at this moment there is something rotten about the state of milk production. I had a chance during the last week of being up at the Royal show, where I was able to meet, not only milk producers, but also those merchants who sell the feeding-stuffs, implements, and so on, and it was indeed a very sad story. I met one very big seller of cattle food, who had not got a stand there this year, for this reason, that he said he could not face it. Only last week he had sent out to milk producers something over 100 writs to try and get back his money from those producers. I saw some of their letters, which he showed me, and the tale was a very unsatisfactory tale, and an indication that the milk producers are not profiteering over this scheme. It is right to say that in a lot of districts the value of a producer-retailer's milk round had gone down by something over £7 per gallon as compared with what is was two or three years ago. I do not know whether the right hon. Gentleman the Member for Hillsborough (Mr. Alexander) can say whether that is so or not—he might know something about it—but it certainly has depreciated very much indeed. Therefore I do not think any charges can be levelled against the producer.

Why has this state of things come about? I think the hon. Member for Don Valley has in fact pointed to the reason. In the whole story of milk production the villain of the piece has been the value of milk used for manufacture, and this is a very old story, because long before the Milk Marketing Board came into operation this villain pursued those who were trying to bring about voluntary negotiations on the permanent Joint Milk Committee, and the villain still pursues them. In the pre-Milk Marketing Board days the depressed values of manufacturing milk did bring about such an undercutting of prices as led to very unsatisfactory conditions in the milk industry. To escape having to sell in this market the producers were undercutting their fellow producers and the retailers were following suit. In fact, the whole structure of the milk industry was completely undermined. The consumers may have gained some temporary advantages under that scheme of things, but "alas, regardless of their doom." There is no question that at one period the country was faced with a definite shortage of milk. Indeed, if things had gone on as they were going then, and if prices had become so depressed there would, without doubt, have been a milk famine.

The next question which arises is why, if that is so and if milk production is so unprofitable, there is all this surplus and why producers are concentrating on milk and not on other things which they can grow or produce? The answer is simple. In any business which produces a variety of commodities, those in charge of the business can either say to themselves, "What am I going to concentrate on in order to get the most profit?" or, "What am I going to produce which will show the least loss." In farming in the last few years milk production has been the "last ditch" of the farmer. Farmers have been forced out of cattle production, breeding and rearing, and other branches of farming, while arable has gone down, and they have been forced into milk production in order to try and minimise their losses, but not in order to try and make very much profits.

For years the milk producers have recognised the desirability of bringing down the prices of liquid milk, and they have realised that if they could obtain an economic price for the milk going into manufacture they could bring down the liquid milk prices. At the present moment, however, the mere bringing down of prices would be a risky thing for the Milk Board to do, because they have not very much money to play with as far as profits are concerned. If the Milk Board were to reduce the wholesale prices of liquid milk by 2d. per gallon the consumption would have to go up by 25 per cent. to enable the Milk Board to pay out the amount which they are at present paying to the producers. To get milk production up by 25 per cent. in this country is a difficult thing, because it is well known that we are not so partial to milk as some other countries are. Therefore, when people talk about a reduction of price immediately bringing about increased consumption, I rather think that it is over-simplifying the problem. Indeed, the Milk Board would be taking a rash step if they were to reduce prices unduly.

We have to realise, too, that it will be impossible for us to reduce the price of liquid milk while this country is subject to the dumping of milk products from the Dominions and foreign countries. You can buy Dominion butter over here very much cheaper than it is sold in the Dominions. In Sweden and Holland butter is infinitely more expensive than the butter which they place on this market. The Government recognise that fact, and a little time back they gave a firm undertaking to milk producers that if they organised themselves the Government would set about controlling imports. That was a definite undertaking and it persuaded milk producers to take action under the Agricultural Marketing Act. If the Government had committed the justifiable homicide of the villain surplus by controlling imports, the condition of the industry would be very different from what it is to-day, and I think that probably liquid milk prices could have been reduced. The volume of imports has increased. The hon. Member for Don Valley (Mr. T. Williams) gave instances of certain commodities the imports of which have been reduced, but if he will take the milk equivalent of commodities coming to this country, he will find that in 1932 we imported 2,500,000,000 gallons; in 1935, 2,823,000,000 gallons; and in 1936, 2,871,000,000. Our production has stood constant at about 1,000,000,000 gallons.

Mr. T. Williams

Is the hon. and gallant Gentleman aware that there is a duty of 15s. per cwt. on imported foreign butter and of 10 per cent. on imported cheese; and that of the imports of cheese 89 per cent. came from the Dominions, and of butter 56 per cent.?

Sir R. Dorman-Smith

That is my complaint. There are ways and means of getting round the tariff and the Dominions have found them as quickly as anybody, whether by maintaining the internal price, or depreciating their currency, or some other means. Unfortunately this milk has arrived in this country and it has had a disastrous effect from the producer's point of view on the prices of milk products. In 1929 the price of New Zealand butter was 172s. 3d. per cwt., and in 1936 it was 72s. 7d. The retail price dropped from 1s. 10¼d. to 11¼d. That, of course, has made great difficulties for the producer, although the consumer, again, has benefited. The right hon. Gentleman the Member for West Stirling (Mr. T. Johnston) brought out the fact that the consumer benefits by the lower prices of butter and so on. The fact is that the consumption in this country of milk in fresh milk, butter and cheese, is about 90 to 100 gallons per head per annum. That has been bought during the last few years at the equivalent of about one penny per pint for all the milk used for human consumption. I doubt whether there is another country which can say that the whole of its milk consumption goes in as cheaply as that.

The complaint is always coming from the Opposition about the board selling so-called cheap milk to the manufacturers. I wish that they would occasionally look at the question from the point of view of the Milk Board. If they will grant me that even they do not expect the producers to start these great schemes of social service and to bear the whole burden, they will realise that the Milk Board has to sell all the milk at prices which will enable the manufacturers in this country to compete with imports from foreign countries and the Dominions. The board has also to try and prevent the manufacturers from having recourse to what is known as the "iron cow." That is important, because if the price becomes too high it is not impossible that the manufacturers of chocolate and that kind of commodity will reconstitute imported butter, with the result that the home milk producers will not be able to sell their milk into that market at all. It was because of these difficulties of the milk industry that the Government first introduced this first Milk Act to take the place of the control of imports which they had promised.

I do not think the Minister will be surprised that producers think this is a very poor substitute for the protection which they had expected. In spite of the provisions of this Measure and of the assistance which it has given, the milk producers have had to suffer an average deduction from wholesale liquid prices of more than 3¾d. per gallon during the last year to carry the manufacturing milk. That has been a burden which the Minister will agree has been almost intolerable. I do not think that the Minister will claim that this Bill meets to any degree the present need of the industry, but I think he can tell the House that it represents a magnificent bargain as far as the Treasury are concerned. As I see the situation—and the hon. Member for Carmarthen (Mr. Hopkin) put this quite clearly—it relieves the Government of a moral obligation of about £1,200,000, and it debars the Milk Board from going forward with a claim for something like £200,000 on the determination on the net price. The milk producers have every right to feel a bit sore about this unless some more definite and satisfactory explanation can be given by the Minister.

When the Milk Act was first brought in, the House determined that the milk producers should have 5d. in summer and 6d. in winter for milk going into butter and cheese. In order to determine a basis for payment the formula which was then used by the Milk Board was adopted. This House undertook to pay the difference between that formula price, which was a straight average price of Canadian and New Zealand cheese, and the 5d. and 6d. Then prices relapsed and world prices fell, and the committee of investigation was called upon to determine whether that was a fair price for the manufacturer to pay. They decided that in view of the existing circumstances the price was too high, and they suggested that instead of a straight average there should he a weighted average.

The then Minister of Agriculture ordered the Milk Marketing Board to alter their formula so that the price which should be paid for the milk was less than the original formula. The Board had no choice in the matter. They were told to depart from the formula, and it has meant that the Board has received something like £1,200,000 less than they would have received had they stuck to the original formula. This meant that although the House had given instructions that the producers were to get 5d. and 6d., they never got it. It would be rather as through Parliament had decided that out-relief should be given at a certain rate and that the local authorities would pay it, and that then the Minister of Labour, in answer to certain representations from local authorities, had said "No, I will alter the figure and make it lower." If that had happened I imagine there would have been a certain amount of protest from most of the benches here. We feel that it is a most distinct hardship that the instructions and the will of this House have not been carried out in this matter.

The other little claim which the Board had against the Government was one for £200,000 over the net price for milk. I understand that the Law Officers do agree that there is a case, and that the Milk Board probably could establish a right to that money, but this Bill debars the Milk Board from pursuing that claim, because the Clause is made retrospective. It looks to producers as though the uncomfortable little matter of the net price is going to be wiped out, by this being made retrospective, but that the injustice, which has been admitted, about the 5d. and 6d. is not going to be made retrospective, because that does not suit the Government. I am afraid this action will cause a certain amount of trouble throughout the country, because milk producers will consider that they have been rather let down, and I feel that they are right in their complaint, and that the Minister should do what he can, even at this late hour, to try to meet that complaint.

Like other hon. Members I am hoping that very soon we shall have the statement of the Minister's future policy, and I hope that first of all we shall hear that he has been able to devise means of getting milk to those who really need it and cannot afford it. He will have the whole House behind him if he can produce such a scheme for necessitous cases. I hope, also that he will cause the problem of distribution to be examined, because I have a feeling that certain savings could be made. Further, I hope that he will be able to tell us that the milk producers will at long last be able to have that full measure of protection which was promised right from the beginning, before the Milk Board was formed.

5.19 p.m.

Mr. Lewis

The Minister of Pensions when he opened the Debate asked for the sympathy of the Opposition because of the difficulty in which the Government found themselves as the result of the increased production of milk. I am not sure that he was entitled to ask for that sympathy. After all, no factor has been so important in bringing about an increase in the production of milk as the failure of the Government to present an effective policy for beef. It is because beef producers have in many cases been driven into the dairying industry that we have this increased production of milk, which aggravates the milk situation today. I realise that these various agricultural problems are of extreme complexity, and I think we all recognise that successive Ministers of Agriculture have endeavoured to grapple with them, but it is to be regretted that we should once more be faced with a temporary Measure. Seeing what has been accomplished in the case of other industries, our disappointment is all the keener. In the last five or six years we have seen an effective form of protection evolved for all our principal manufacturing industries. I know that there have been difficulties and complaints as between one industry and another, but on the whole an effective working system has been introduced. Agriculture, alone of the great industries, has been left out.

It has been said that it is impossible for reasons of high policy, to bring agriculture within that system of Protection. The reasons are well known, and are reasons with which I entirely agree, but it is a lamentable thing that, granted that agriculture cannot be brought within that system of Protection, no effective substitute has yet been found. I submit that the only effective substitute which has been suggested is that of the guaranteed price, supported by a levy on imported produce. That was tried in the case of wheat, where it was extremely successful. I submit that the agricultural problem will not be solved until that principle is extended to all the chief agricultural products. It is the only practical solution which has been offered, having regard to the fact that Protection is applied to all manufacturing industries. Take the case of milk, which we are discussing. I do not believe that any Minister will be able to submit a satisfactory scheme for the solution of our milk problems unless some levy is placed upon milk products coming from the Dominions. It is the failure of the Government to resist the pressure, the very great pressure, which has come from the Dominions and from some foreign countries against the imposition of levies, which is the cause of the continual failure to produce an effective programme for agriculture.

I urge the Government to reconsider the milk problem, in relation to the other agricultural problems, from that angle, to realise that until they do insist upon our right to place a levy upon all forms of agricultural produce coming into this country, from whatever source, we shall not effectually solve our agricultural problems. Some hon. Members may say that if we do that we may add to our difficulties by producing a substantial increase in the price of foodstuffs generally in this country. I think that what happened in the case of wheat and in the case of Argentine beef, and the very strength of the opposition of the Dominions and foreign countries in those two cases, go to show that a very large proportion of such levies would not fall on the consumer in this country. Granted that there would be some increase in the cost of foodstuffs in this country, I suggest that that is a price which the towns might very fairly pay as their contribution towards restoring prosperity to agriculture. For generations the countryside has been sacrificed to the towns in England.

Mr. Gallacher

Question.

Mr. Lewis

For generations the workers in the country have been sacrificed to the workers in the towns, and it is time that some effort was made to restore that balance. I do not believe that Measures such as the one before us can ever effectively deal with the problem. We may be told of how difficult the situation will be if we do not pass this Bill. I agree that, if it is a case of this Bill or nothing, hon. Members will obviously vote for the Bill, and I doubt whether even the Opposition will vote against it. I hope that we shall not continue in a situation where it is a case of Bills of this kind or nothing, but that we shall have the courage to realise that our agricultural policy as a whole has not succeeded for the reason that we have not faced the real essential difficulties. Until we do insist, as between ourselves and the Dominions and as between ourselves and foreign suppliers, on our right to support guaranteed prices in this country by levies on imported produce those problems will never be effectively solved.

5.27 p.m.

Mr. Johnston

In the first place I would refer briefly to some remarks which fell from the Minister of Pensions at the opening of the Debate. He seems to have had a rather interesting time browsing among some old speeches of mine, I hope to his edification, and I trust that as he continues his studies in that direction his opinions will develop still further in the direction of Socialism than they are now. But I am afraid I must take some slight exception to his giving some half-boiled, semi-understood quotations from what I said on 30th October, 1930. He said that when I was in this House assisting to push through the Marketing Act I said, among other things, that the Milk Marketing Board, with compulsory powers against a minority, would supply better milk at a cheap price to chocolate manufacturers. I have before me exactly what I did say on that occasion and it was no such thing. What I did say was that until we could get a Milk Marketing Board with compulsory powers against a minority, the chocolate manufacturers of this country, with one exception, would continue to buy foreign milk for the manufacture of their chocolate. The reason they gave was that in Great Britain there were some 20 or 30 different grades of quality of milk. The chocolate manufacturers told me, when I personally asked them, as chairman of the Empire Marketing Board, to use British milk in preference to foreign milk, that they could not use British milk because they could not get a guaranteed standard, there being some 20 or 30 different grades of quality.

I used that one argument in favour of organised production and organised marketing as against fierce anarchy and competition, with different standards and different grades. I used the argument that if we had one standard, which could be got through a Marketing Board, the chocolate manufacturers would have no further excuse for not buying British milk.

Mr. Ramsbotham

I should not like the right hon. Gentleman to misrepresent what happened. What I think he said in his speech in October, quite rightly, was that his policy was to help the chocolate manufacturers. In a recent speech he will see that his policy was designed to help the chocolate manufacturers to a better standard of milk than we are getting.

Mr. Johnston

Surely what I said does not help the chocolate manufacturers. I was speaking about helping the farmers. I was saying that I would compel the chocolate manufacturers to buy British milk after we had secured organised production in this country. I am not saying anything about helping the chocolate manufacturers and I am not suggesting that we should give chocolate manufacturers their milk at cheaper prices than that charged to the industrial consumers.

Mr. Ramsbotham

And better milk?

Mr. Johnston

If we could abolish 20 or 30 different standards of milk, we could compel chocolate manufacturers in this country to use British milk. I am rather surprised that the hon. Gentleman—

Mr. Ramsbotham

I really must interrupt the right hon. Gentleman once more. We are accused of helping the chocolate manufacturer, but the right hon. Gentleman himself was taking steps to obtain better milk for the chocolate manufacturers.

Mr. Johnston

The hon. Gentleman has not appreciated my point. Would he be good enough, if he has the quotation there, to see what I said? This was what I said: I am Chairman of the Marketing Committee of the Empire Marketing Board, and I know there is only one big chocolate firm in this country which is making its milk chocolate out of British milk. The rest are importing foreign milk with which to make their milk chocolate."—[OFFICIAL REPORT, 30th October, 1930; col. 316, Vol. 244.] I am struggling to get British milk used in the manufacture of British chocolate, and I am not at all concerned that the chocolate manufacturer in this country should get his milk at a cheaper price.

Mr. Ramsbotham

I never suggested that.

Mr. Johnston

It is the gravamen of our case, that the chocolate manufacturer of this country is getting his milk at one-third or one-quarter the price that is charged to the mothers and babies in the distressed areas, and that is what I am complaining about. I beg the hon. Gentleman to believe me, and also the hon. and gallant Gentleman the Member for Petersfield (Sir R. Dorman-Smith), who I understand is president of the National Farmers' Union, when I say that the last thing that we want to do is to go back to the chaos and disorganisation which existed before Marketing Boards were introduced. There is indeed some cause for grumbling on this point. Lord Addison, as he is now, and myself met with a considerable amount of opposition among our own friends and incurred a considerable amount of opprobrium from our friends for the steps which we were taking to induce our party, in the difficult economic circumstances at that time, to agree to the principle of the Marketing Board, and we got precious little help in pushing that Measure through the House from some hon. Gentlemen opposite.

Having got it through, and given the farmers power of compulsion upon the minority who had previously interfered with prices—the trouble with such a scheme always is that the minority undercut, undersell and break the fair market of trade union prices—having given the farmers that power, we are entitled to say: "You shall not continue the policy of selling your milk at lower prices to manufacturers than the price at which you are prepared to sell it for necessary human and health purposes to the poorest sections of our industrial population." Like every one else in this House, I hope I am prepared to develop and to change my opinions as new facts come to light, but if there is any subject upon which I think I can say I stand to-day where I stood five or 10 years ago, it is in believing that food should be produced for human use and that that and not profit, is the primary purpose of production.

When I happened to be on the Government side of the House I endeavoured, in a very small way, I grant, to put my principles into operation. It is true, as I said, that I had to sweat blood in order to obtain £5,000 to start the milk-in-schools scheme. The hon. Gentleman opposite does not know this, but I did not get the £5,000 out of the Treasury. I had to get it out of Empire Marketing Board funds and the Miners' Welfare Fund, and to scrounge round the country to get it. Having got it, and having proved beyond all doubt that a ration of milk to our schoolchildren in Lanarkshire increased their weight, their height, their health and their school attendance, and the benefits of education in every way, we are entitled to plume ourselves a little on the fact that it was our experiments which started this milk-in-schools scheme. We are not complaining about the milk-in-schools scheme of the hon. Gentleman and the Government. It is because he has got in this Bill a payment of money for his milk-in-schools scheme that my hon. and right hon. Friends have seen fit not to vote against this milk Order, and that is the only thing which prevents us from going into the Lobby to-night against the Bill. We do not want to be accused of not agreeing to an extension of the milk-in-schools scheme.

I want to carry this matter a stage further. On about twenty occasions now I have begged the hon. Gentleman and his predecessor to give me any kind of reasoned explanation why they provide cheap milk only for a child of five years of age when it goes to school. Milk is 2s. a gallon for that child at four years of age. What is the reason for that? Milk is also 2s. a gallon for the child aged three, for the baby and for the toddler. We want an explanation. My hon. Friend the Member for Don Valley (Mr. T. Williams) gave figures this afternoon, which, so far as I know, are unanswerable, and have, to my knowledge, been vetted by actuaries and chartered accountants. I believe I am right in saying that a 3,500,000 population of babies, toddlers and children under five years, as well as of nursing mothers, could get their milk at 1s. a gallon—the price at which the farmers are willing to sell milk, and do sell it, to schools—at a total cost to the Government, including the cost of contribution, of about £1,600,000 per annum. If the mothers were to go or send to the shops for the milk, thus saving the cost of distribution, they could get the milk even cheaper than 1s. a gallon.

In 1930 we did not propose a differential price against the poor, such as the Government are operating. We never suggested, in our wildest dreams, that Horlick's Malted Milk, Fry's, Cadbury's or any other chocolate manufacturer, should get milk at 6d. a gallon and that the distressed areas should pay 2s. We never, in any circumstances, suggested that we should subsidise an export of 12,000,000 gallons of milk in dry form to Czechoslovakia and other countries, while the distressed areas were paying 2s. We did say, and I repeat it this afternoon, that at that time we were faced with an actual importation of dry milk, that foreign countries were importing dried milk into this country, and that if the farmers would agree to compel the minority and to set up a co-operative organisation, we would help them to establish factories for—in my own words—"the amounts that are necessary to be produced," of dried milk in this country.

Again I beg the Minister not to fob us off with a few little university debating tricks. I do not say that he has done so, but that sort of thing has been done 20 times from that bench since the General Election. Is it not the case that the poorest, the least able-to-pay section of the population, whose health most demands it, have to pay 2s. a gallon, while wealthy chocolate manufacturers get milk for 6d. a gallon? That is a straight question. Do the Government intend to continue that system, or to extend their milk-in-schools scheme to children, toddlers and babies under five years of age, at 1s. a gallon? That is another straight question. We are entitled to have straight answers.

I want to comment on an observation which fell from the hon. and gallant Member for Petersfield and another hon. Gentleman, who talked about the imports of cheese, butter and dairy produce from the Dominions overseas. Here is what the hon. Member for East Fife (Mr. Gallacher) would call one of the inherent contradictions of Capitalism. The hon. and gallant Member for Petersfield asked a question on 12th May about British overseas investments and the amount of British money invested overseas. He was told in answer that the best available information went to show that we had—when I say "we had" I mean British nationals—invested in Canada £520,000,000; in Australia, £540,000,000; in New Zealand, £140,000,000; in South Africa, £280,000,000; and in the Argentine, £440,000,000. If the City of London and the investing classes will invest thousands of millions of pounds overseas, how are they to receive interest upon those investments or how are they to get a return on their capital? They can be paid only in the produce of the people concerned, their manufactured produce and their dairy produce.

The struggle is not, in the last resort, between this country and the Dominions, but between two conflicting interests in this country, the producers of dairy produce and the investors of capital abroad. The investor of capital in Argentina must get back—"must" is probably the wrong word; he hopes to get—a return upon his capital. Obviously he will never get a return on his capital if Argentina is not able to export her beef; if Argentina is prevented from selling her goods here, that will prevent the payment of interest on these investments abroad. I wish hon. Member opposite luck in trying to reconcile these two ideas.

Mr. Lewis

I never suggested that importations from the Dominions or from foreign sources should cease. I suggested that they should pay a levy for the benefit of the home producer. I envisaged their still coming in, because otherwise we should not get the levy.

Mr. Johnston

If you add to the price that the New Zealand producer has to pay to get into your market, he will either be able to sell less in this market or he will have to take a smaller price. In other words, his purchasing power will be limited, and he will be less able to pay the interest on these investments. These are elementary facts, and I am sure it is not necessary to elaborate them further. No one knows better than I do the tremendous difficulties that the right hon. Gentleman has in reconciling the various conflicting interests in agriculture, and we forgive him a lot and will help him. As my hon. Friend the Member for Don Valley (Mr. T. Williams) has said, we are prepared to go into a Council of State on the matter if during that process he will see that every human being in this country is fed as long as there is superabundance—that, as long as there is enough, nobody will be left to go hungry. But, so long as the problem is how to stop production, how to limit production—the right hon. Gentleman shakes his head, but he is destroying fish, or is permitting it to be destroyed. He has a Herring Industry Board which is busy cutting down the drifters; and in the case of potatoes he is fining people £5 an acre for every additional acre of potatoes that they grow. The whole purpose of the marketing boards is to limit the flow of produce on to the available market, and quite rightly so; and the same is the case in shipbuilding, in coal—everywhere; capitalism is compelled by its very nature to limit production. I do not wish to make a partisan point, but it can only be in a Socialist community, where production is for use, that you can afford to increase the output without damaging the producer. We appeal to the right hon. Gentleman. Will he go this far with us this afternoon? Will he give us a promise that His Majesty's Government will this summer produce a scheme, to be sympathetically examined by his nutrition committees, his milk reorganisation committees and so on, backed by Sir John Orr, Sir Frederick Gowland Hopkins and all the rest, under which in the autumn the nursing mothers, the babies and the sick will get milk at the same price at which it now pays the farming community to supply milk to schools?

5.51 p.m.

The Minister of Agriculture (Mr. W. S. Morrison)

I am sure the right hon. Gentleman and the House will forgive me if I do not seek to extend a Debate upon what is after all a piece of temporary legislation into those very wide questions which have been raised traversing not only the whole of agriculture but an important part of the field of economics as well. The only comment that I would make upon the eloquent peroration of the right hon. Gentleman is that he is as much aware as I am of the difficulties of increasing production and at the same time benefiting consumers in this country. I have never been one who had much faith in milleniums of any kind, but I would say to the right hon. Gentleman that he need not despair of developments along the lines he suggested.

The right hon. Gentleman has participated in what might be called a storm in a cocoa cup over the battles that were waged about the chocolate manufacturers, but I would ask the House to realise that, in the figures relating to the manufacture of milk products, chocolate is listed with other goods; it has not even a category by itself; and the other goods taken all together only account for 0.84 per cent. of the uses to which manufacturing milk is destined. I think the House will see, therefore, that it is easy to exaggerate the importance of the amount of milk which is destined for chocolate manufacture. I think my hon. Friend the Minister of Pensions was justified in contrasting the denunciation which the right hon. Gentleman, in his speech on the Financial Resolution, applied to chocolate manufacturers who allowed cheap milk to come their way, with the practical speech which he made in the Debate on the Address. On that occasion the right hon. Gentleman said that it was necessary to prevent this manufacturing surplus from breaking the price and rendering the production of milk unremunerative. He was perfectly right in that, but, as I gathered from his last remarks to-day, he is not prepared to countenance a differentiation between the price of milk for chocolate manufacture and the price of liquid milk.

One would think, from the right hon. Gentleman's speech, that a differential price as between liquid and manufacturing uses was a new thing that has come into existence since the Milk Marketing Board was set up, but, of course, as he is well aware, and as the House will realise on reflection, a difference between the price commanded by manufacturing milk and the price commanded by liquid milk is of very old standing. In the year of this controversy about chocolate of which we have been reminded, the manufacturing price was in the neighbourhood of 5¾d. a gallon, a price which was calculated on the same basis as the cheese-milk price now is, that is to say, the price at which it might be sold for manufacture having regard to the proportionate quantity of the article imported into this country. In December of the year of that battle, 5¾d. a gallon was the price for manufacturing milk, and 1s. 5d. a gallon was the price for milk for liquid consumption. If the right hon. Gentleman in 1930 was, as he very wisely was, doing his utmost to keep surplus milk off the liquid market and put it into the manufacturing market, he will realise that when he was doing that he was allowing manufacturers to have it at 5¾d. a gallon.

Mr. Johnston

Will the right hon. Gentleman be good enough to read exactly what I did say? What I said quite clearly was that the chocolate manufacturers of this country, with one exception, whose name I can give, were importing their milk from abroad. The reason they gave for doing that was that there were 20 or 30 varieties of milk in this country, and they said that not until they could get a common standard would they buy British milk. My argument in favour of a marketing board was that it was desirable that there should be one standard and one quality, so that this infinitesimal quantity of milk to which the right hon. Gentleman refers should at least be purchased from British sources and not from abroad.

Mr. Morrison

I have no desire to prolong this controversy, and will point out only that there was far more in the problem of disposing of milk for manufacture in 1930 than merely the question of a standard grade of milk. The milk must be sold to the manufacturers at a competitive price, and the competitive price was determined by the importations of the competing article from abroad. That is exactly the position in which we are to-day. There has never been a subsidy on milk manufactured into chocolate. The Milk Board get 9d. a gallon for milk that is manufactured into chocolate, and 3¼d., on the average, for milk sold wholesale for liquid consumption.

Mr. Price

The right hon. Gentleman says that chocolate manufacturers are paying as much as 9d. a gallon, but I understand that, in the district which he knows, they are paying 6d. a gallon.

Mr. Morrison

I am not myself either a chocolate manufacturer or a member of the Milk Board, so I cannot speak from my own knowledge, but that information has been given to me. I have just had it checked, and am assured that it is correct, in spite of the experience of the hon. Member, that they are paying 9d. a gallon for milk to be used for manufacturing into chocolate. I think I may now dismiss the chocolate question with the appropriate quotation: Sweets to the sweet. farewell. Coming to the question of milk, and the reason why we are asking the House to give a Second Reading to this Bill, I do not bring it before the House as anything more impressive than an umbrella, under which we may proceed from one point of time to another. All that I am asking for is that we may be given a year in which to prepare the more far-reaching and permanent proposals which I am sure the House would like to see on the Statute Book. My hon. Friend the Member for Colchester (Mr. Lewis) expressed a feeling of disappointment, which I think is common to all of us, that we are still asking for temporary legislation in regard to milk, but I think that anyone who knows the circumstances will feel that the Bill is not unreasonable. The Cutforth Commission reported last Christmas, and since then we have had a great number of representations from all the bodies affected, some of which have been received only very recently. Anyone who realises the magnitude of this industry and the extent of its ramifications, not only into our agriculture but into our commerce, must, I think, agree that it is far better to take sufficient time to examine the matter thoroughly, rather than to produce legislation hastily conceived which may require to be hastily amended in the future.

One or two very interesting points have emerged from the Debate to-day. The hon. Member for Don Valley (Mr. T. Williams) and other hon. Members opposite dealt with the question of increasing the consumption of liquid milk as though it were purely and simply a matter of price—as though, if either the price were reduced or the consumer were subsidised in some way, there would inevitably be a rapid increase in the consumption of liquid milk. The hon. and gallant Member for Petersfield (Sir R. Dorman-Smith) expressed grave doubt as to the validity of that proposition, and I share it. I would refer the House to a very interesting report on milk consumption published in April last by the Agricultural Economics Research Institute, in which a very curious light is thrown on the whole problem. Investigations were carried out in the homes of the people of Oxford. Oxford is to-day no longer a town of a purely academic character. It has a vast industrial population, providing a very good cross-section of life in this country. The tenour of the report bears out the construction that I am placing upon it. It throws doubt upon the question whether it is price alone, or capacity to pay, which is the determining factor. If says: The difficulties in the way of increasing the consumption of milk are partly lack of purchasing power and distaste, but possibly the biggest obstacles are antipathy, indifference, and prejudice. The existence of wide variations in the purchases of milk between households with similar food expenditures suggests that milk consumption could be doubled without raising income levels, if the consumer can be induced to do it. There is a lot of evidence to show that in these matters questions of custom are very important. We are great consumers of milk in the form of butter and cheese, but we are not great consumers of liquid milk. I do not seek to say that questions of price and income have not a great deal to do with it, but they are not the whole story. It has also been suggested that in some way the burden of the loss on manufactured milk is borne by the consumer in unduly inflated price. I recommend there again the exhaustive study into the matter by the Committee of Investigation whose report created the necessity for an alteration in the cheese-milk price. They went with great thoroughness into the question of the costs of the production of milk, and anyone who reads the report will come to the conclusion that, if there is a loss, the person who is really paying it is the producer, because they give us in the main what he can afford to produce at, and it is not by any means very different from the prices which he gets from milk sold for liquid consumption having regard to the necessary margin to allow for seasonal variations in production and consumption. These are important things to bear in mind when the problem of manufacturing milk is taken into account.

Mr. A. V. Alexander

The right hon. Gentleman would not want the other side of the report to be lost. He must not overlook the fact that the Committee showed clearly that contract prices for the purchase of milk have risen in the lifetime of the Board by 1.36d. per gallon and, while it is true that the producer had raised the net increase only to 1.16d. per gallon, it meant that the consumer of liquid milk had had that increase of 1.36d. and something more passed on to him.

Mr. Morrison

I do not know that the report quite bears out the right hon. Gentleman's condensation of it, but all that I am seeking to establish is that, when hon. Members talk of the desirability of a reduction in the price of milk, they must remember that that is not the whole solution of the problem of increasing consumption and, secondly, that if the cost of production and other things are taken into account no evidence of this character is available to show that a margin exists in the producer's pocket.

Mr. Stephen

Is the report available to Members?

Mr. Morrison

Yes. It is the report of the Committee of Investigation for England on the operation of the Milk Marketing Scheme, published in 1936. It is a very interesting document, which I can highly commend. The right hon. Baronet the Member for North Cornwall (Sir F. Acland) drew attention again to the question of the grading of butter. It is not so easy in our country to grade butter as it is in the case of an exporting country, where it is all collected at the ports instead of being dispersed in a multitude of small units; so it is not fair to make a comparison between our own country and Denmark and New Zealand. The utmost that we can do with our present powers is to give assistance to the provision of such instruction of a technical character as can he given through the County Councils' Agricultural Education staff, and to set up grade standards to be observed by packers, which we can do under the National Mark Scheme. We do our best to make -sure that both these devices for improving the quality of home-produced butter are utilised.

The right hon. Baronet also asked me to elaborate some statement that I made during the previous Debate as to the changed proportions of manufacturing and liquid milk. In 1935–36 there were produced 370,000,000 gallons of liquid milk and 211,000,000 of manufacturing. In 1936–37 there were produced 381,000,000 gallons of liquid and 180,000,000 of manufacturing. The truth is that liquid milk sales have gone up by some 3 per cent. and manufacturing sales have gone down by 13½ per cent.

Sir F. Acland

Do we not start on the basis that the total milk production is something like 1,000,000,000 gallons? My figures are quite different from those of the Minister. His do not add up to anything like that.

Mr. Morrison

I have the explanation. I have the figures for the first eight months of the contract period 1936–37—we have not yet figures for a complete year—also we have not yet the figures for the producer-retailer. The right hon. Baronet wanted to carry the inquiry a little further and he asked how far this improvement, from his point of view, was due to matters of policy and how far to other causes of a less permanent character. In my view the improvement in this respect is partly due to a higher power of purchasing on the part of the industrial community and also, no doubt, to the effect of publicity through milk bars and other schemes of that character. But that is not the whole story. The truth is that last year there was a shortage of hay and a shortage of pasture and, consequently, if the figures that I have given for these two periods of eight months are looked at again, the right hon. Baronet will find that there is a total drop in the gallonage of milk. So the truth is that liquid milk consumption in the last period of eight months increased and left less for the manufacturing market. That is as accurate an explanation as I can give in support of the general statement that I made on the Financial Resolution.

The hon. and gallant Member for Petersfield referred to many aspects of this problem which are more suitable for treatment in a long-term Bill but, in so far as his criticisms were directed to the present Measure, perhaps I might say a word or two about them. He is of opinion that there is some kind of moral obliquity in what is now being done about milk prices. It is important for the House to realise exactly what happened in regard to that matter when Parliament legislated in 1934, in the best way it could, to secure the application of 5d. and 6d. as standard prices, and in seeking to define the gap that the Treasury was to fill up, they took the very sensible and obvious course of putting the standard price of 5d. and 6d. at the top, taking at the bottom the formula used by the Milk Board themselves in selling milk for manufacture, and they said that the difference between the price of the Milk Board contracts and the standard price was what the Treasury had to fill up. But, of course, Parliament was not legislating then by this Act alone. There were other Acts. There were the Agricultural Marketing Acts, 1931–1933, in which there is power given to a Committee of Investigation to recommend an alteration in the price in circumstances which make it very difficult for any Minister, unless with very good reason, not to abide by it. But that is what happened in this case. There was complaint made under the Act, there was this full investigation completed in April, 1936, and as a consequence an alteration took place. We are taking this earliest opportunity of putting that matter right and we are doing so by the new formula which is enshrined in the Bill.

The other point to which the hon. and gallant Member objected was the treatment meted out to producers by the Milk Board in respect of the second matter in which there was a change, namely, the new definition of net price, contrasting somewhat unfavourably the fact that, whereas the cheese-milk alteration in favour of the producer is not made retrospective, this one is. He seemed to base his argument upon the fact that we were making retrospective something which actually was damaging in its consequences to the producer. No one could ever say that the misunderstandings and difficulties of legal interpretation which have arisen because of the drafting of the 1934 Act, which has now been put right in this regard, have really caused any loss or changed the position of the producer in any degree at all. It is a very complicated matter and one with which I hesitate to weary the House, but I think it is necessary to say why action of this character is retrospective and why the other question cannot be retrospective. If this legal interpretation be right, you will find all sorts of anomalies coming into play. Indeed, it is true to say that the situation is such, that you could never pay anything at all with any sense that you were doing anything that was right, because so many complications would be introduced into the calculations of price that it would never be calculated at all. That is the reason why no claim has been formulated on this interpretation, and that is the reason why we are going back to the origin of the Bill as originally drafted in 1934 and putting it right from that date. The effect of this legal interpretation was to put into the net milk price items, such as publicity and transport charges, and so on. Let me take the example of collecting charges. If it be right, as the legal interpretation says, that you must take the collecting charge into account, what flows from that? In the first place, everyone knows that farmers pay a different rate with regard to the collection of their milk. Some farmers supplying a factory, for example, incur a collecting charge of ½d. per gallon, others a collecting charge of 1d. per gallon, and others ¾d. a gallon, and the remainder might send the milk direct to the factory themselves and have no charge at all imposed upon them. But all the milk goes to the factory, and though it incurs an infinitely varying degree of collecting charges it would be the one article upon which the whole price has to be charged. You could not in fact find out the net price paid by the consumer on this interpretation unless you were prepared to re-examine the contracts of every single individual supplying milk to the factory and find out the incidence of the collecting charge and of these other things. The task has only to be stated for one to see how ridiculous it is.

The truth of the matter is, that what we are now proposing to do is to alter this error of drafting, if it be an error, to carry on the interpretation of the price that has been adopted since the scheme started, and to make certain by this reenactment that all legal uncertainty is swept away and the matter put in order. It is true that one could say that the effect of the Clause will be to prevent the English Milk Board, on the assumption that this other interpretation is right, from claiming an extra sum of money in respect of the collecting charge to which it was never intended they should be entitled, and to which they have always regarded themselves as not being entitled in the past.

Sir Joseph Lamb

Oh, no. Has the right hon. Gentleman the authority of the Milk Board to say that they never understood that they were entitled to do this? He has stated that he regards this Bill as an umbrella, and I say most definitely that the producers consider that if it is an umbrella, it should cover and protect both the producer and the Treasury alike.

Mr. Morrison

I cannot speak for the Milk Board. The hon. Member may have some other information about it, but I know that on the basis which will be the basis in the Bill all the claims have, in fact, in the past been submitted, and money has been paid upon that basis. I assume, therefore, that the Milk Board have acted on what they know was intended by the formula. Even if the Milk Board were to decide that they were entitled to claim under the formula, no one could tell what the gain to them would be. They would have to go through the contracts of individual producers in order to disentangle the items. Certainly, there is the point to be borne in mind, that when the Bill has gone through, we shall be able to pay the Milk Board the slim of approximately £1,200, which at present we have had to hold back because of the doubt in the matter. I hope that I have made it clear to the hon. Gentleman that these two Amendments are of an entirely different character. First of all, with regard to the cheese-milk price, Parliament legislated in 1934 on the assumption that this was a scheme operated under the Agricultural Marketing Acts with all the possibilities as to the Committee of Investigation and everything else prevailing at the time.

Sir R. Dorman-Smith

It was the intention of Parliament that, having regard to all the facts that might operate, eventually the producers would get 5d. and 6d.

Mr. Morrison

I have no doubt that that was the intention, but before intentions can be operated they have, to be enshrined in an Act of Parliament, and it is by no means an unusual thing for an Act of Parliament, which intends to attain a certain result, being thwarted from that purpose by interposition of another event. If a certain intention is in the mind of those who draft or frame legislation, and some new factor comes along and prevents your intention from bearing fruit, you legislate at the earliest possible opportunity to fill up the gap, and that is what we are doing now. But when you have doubts cast upon the legal interpretation of words in a Statute which have always been assumed to bear a certain meaning, then, for the removal of doubts and the validation of what has been done, for all those reasons, it is necessary to go back to the origin of the Statute itself, and in that way put the matter right from the start.

Mr. Croom-Johnson

The right hon. Gentleman mentioned the figure of £1,200. Is that the accurate figure?

Mr. Morrison

I understand that that is the accurate figure. It arises from the publicity levy. As my hon. and learned Friend knows, there is a levy of a farthing a gallon made, of which the Milk Board pays half, leaving the purchaser to pay one-eighth of a penny, which does not amount to a very large sum, and that may account for the sum being so small. We are applying a change which is of benefit to the Milk Board.

Lieut.-Colonel Acland-Troyte

You are taking a lot away, and giving a small sum in return.

Mr. Morrison

We are not taking anything away. Whatever is introduced into the Bill, no one can say that it is not a help to the producer. To represent this Bill as though it were taking something away from the producer, is placing a construction upon it which I am sure nobody could possibly sensibly do.

Sir J. Lamb

It does not give to the producer what it was intended to give.

Mr. Morrison

That is a very different matter. What I am saying about the Bill, and why I am asking my hon. Friend to support it, is that we are now going to give him what he wants, and what it was intended he should get in 1934. As my hon. Friend the Minister of Pensions has said, it is a very easy thing, in discussing the question of milk, for the Debate to become curdled by substances of a foreign nature which produce an entire change in its physical condition. This is merely a continuing Bill, and we hope that the House will give it a Second Reading in order that other policies more permanent in character will have time to mature and find their way on to the Statute Book.

Mr. Alexander

Will the right hon. Gentleman say a word or two about the operation of Clause 7?

Mr. Morrison

The purpose of Clause 7, as the right hon. Gentleman will see if he studies it, is to enable the boards to make payments to registered producers in respect of milk sold at a reduced price and to continue the powers which now exist for certain schemes with which he is familiar. I think that the House will not wish, at a stage when we are preparing long-term legislation, that there should be any change in those powers to conduct schemes in the distressed areas, which have been very useful experiments, and other matters of that character. It is in order to enable boards to play their part and make a contribution to these schemes that the Clause has been introduced.

Bill committed to a Committee of the Whole House for To-morrow.—[Mr. Cross.]