HC Deb 04 May 1938 vol 335 cc975-98

Considered in Committee, under Standing Order 69.

[Captain BOURNE in the Chair.]

Motion made, and Question proposed,

That, for the purposes of any Act of the present Session to provide for the better organisation of the bacon industry and the pig producing industry, it is expedient to authorise—

A. The payment out of moneys provided by Parliament of any administrative expenses incurred for the purposes of the said Act by the Minister of Agriculture and Fisheries and the Secretary of State for Scotland;

B. In respect of certain pigs related to years comprised within a period of three years commencing with an appointed day—

  1. (1) the payment out of moneys provided by Parliament to bacon curers of sums related to rises in the cost of a standard ration for pigs over eight shillings and six pence per hundredweight;
  2. (2) the payment into the Exchequer of sums recovered from bacon curers, being sums related to falls in the cost of the said standard ration below the said sum;
  3. (3) the payment out of moneys provided by Parliament to bacon curers of sums related to falls in the price of bacon below, in the case of sums payable in respect of the first year, ninety-four shillings and nine pence per hundredweight, in the case of sums payable in respect of the second year, ninety-three shillings and nine pence per hundredweight, and in the case of sums payable in respect of the third year, ninety-one shillings and nine pence per hundredweight;
  4. (4) the payment into the Exchequer of sums recovered from bacon curers, being sums related to rises in the price of bacon over the said amounts respectively;

so however that the sums to be paid in respect of any pig shall in all cases be calculated by reference to, amongst other things, the weight of bacon produced or presumed to be produced from that pig on specified classes of premises, with an addition in certain cases for weight lost by the removal of bones and skin, and that sums are not paid, in the case of the first year, for more than two million one hundred thousand pigs, in the case of the second year, for more than two million four hundred thousand pigs, and in the case of the third year, for more than two million five hundred thousand pigs."—(King's recommendation signified.)—[Mr. W. S. Morrison.]

7.59 P.m.

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

I am moving this Resolution on behalf of my right hon. and gallant Friend the Financial Secretary to the Treasury. The Committee will be aware that it authorises the financial backing for our proposals for the reorganisation of the bacon industry in this country that were embodied in the Bill recently read a Second time. The full proposals have so recently been under the consideration of hon. Members that it will not be necessary to expatiate upon them at this stage, but hon. Members will remember that the two main objects of the proposals are the setting up again of the contract system for the supply of bacon pigs in this country, and a scheme for the reorganisation of the bacon factories of the country so as to provide the industry with the asset of low cost and efficient curing establishments. To enable this process of reorganisation to be carried on, it is proposed that assistance should be given to the industry for a period of three years, with the object of insulating it against wide fluctuations in prices of feeding stuffs as far as the farmer is concerned, and in the price of bacon as far as the curer is concerned.

The Resolution is, I think, almost self-explanatory. The assistance is based on the assumption that an efficient pig producer can work at a profit if he gets 12s. 6d. per score for his bacon pigs, and has not to pay more than 8s. 6d. per cwt. for the standard ration of feeding stuffs, and the Resolution, in its first two numbered paragraphs, provides for that part of the assistance. The proposal is founded upon the report of the Lane-Fox Reorganisation Commission, in paragraph 23 of which hon. Members will find the matter more fully discussed. Provision is made in these two paragraphs for payment from the Exchequer to bacon curers of the necessary subsidy, and the curers are bound to pay 12s. 6d. a score to the pig producer, plus the food cost subsidy which is appropriate having regard to the ruling level of prices for the relative commodities.

The contract between the pig producer and the curer may, and certainly will, provide for variations in price according to the grading of pigs, in order to secure that the proper animals are produced, and also according to the month of the year in which they are coming forward, in order to secure level delivery, which is so essential for the efficiency of the bacon curing industry. The other side of the picture is the assistance that is here given to the curing side of the industry. It is thought that, if the price of bacon sold in this country does not fall below 94s. 9d. per cwt., the curer can afford to pay the 12s. 6d. per score, and the second pair of the numbered paragraphs deal with the conditions on which the subsidy will be paid from the Exchequer to the bacon curer should the price of bacon fall below the figure of 94s. 9d.

The only other feature to which I ought to draw attention in connection with these proposals is that throughout the three-year period the assistance is diminished, or tapered. The reason for that is that it is supposed that, during the three-year period of reorganisation, economies will become available on both sides of the industry, as a result, not only of rationalisation, but of research and education in the matter of the production of pigs, and that, therefore, slightly less assistance may be necessary as the time from the inception of the proposals goes on. It will be understood that these proposals are not only for payments out of the Exchequer to the persons affected, but for repayment to the Exchequer should conditions become more favourable for either curer or producer. What the scheme really does is to provide, for this period of three years, a measure of stability and security which is eminently desirable if these proposals for the reorganisation and betterment of the industry are to succeed.

The last words of the Resolution refer to the numbers of pigs in respect of which this assistance is to become available. In the first place, the assistance is available only in respect of pigs sold on long contract. That is the basis upon which the contract system is established. The numbers given in the last part of the Resolution are 2,100,000, 2,400,000 and 2,500,000 in the three respective years. This provides for a certain expansion of the industry. It was estimated, although no exact information is available, that in 1937 the number of British pigs converted into bacon was round about 1,900,000, so that, even in the first year of the operation of these proposals, it is anticipated that there will be some expansion. This expansion will not only be a good thing for the agricultural industry and for the nation in general, but will make it possible, by securing a greater supply of proper animals for the curing side of the industry, to obtain that steady throughput which is such an essential economic factor in its prosperity.

8.8 p.m.

Mr. Alexander

If it had not been for a little trouble at the Ministry at the time when the Bill was before the House, I have not much doubt that the Money Resolution would have been on the Paper at that time, and probably, in view of the long Debate that we had on the Second Reading of the Bill, it would have been passed with very little discussion. The principle of the Bill has been approved by the House of Commons, and the Bill is now before a Standing Committee, which is discussing the details of the legislative provisions proposed. While I shall have a few things to say to-night about the purely financial provisions and their relation to the industry, I would say at once that we do not wish at this stage to indulge in what would be a sham fight, because we have already said on the Second Reading a great deal of what we have to say, and we shall have a good deal more to say both from above and from below the Gangway, in the Standing Committee, on the Amendments that we desire to see adopted.

In dealing with the financial provision which the House is now asked to make, I thing it is important to make one or two general observations. We are asked to provide a sum which cannot be exactly measured, but which, the Minister's Department thinks, may average about £ 1,000,000 a year for three years; but there is, of course, a great deal of doubt in the minds of many hon. Members as to whether there is really going to be a strict limitation of the period. We have seen so much of the expansion of the subsidy system under the National Government in its two terms of office since 1931, that some of us have very little hope that, as long as that Government stays in, there is going to be any real limit to the extent to which it spends public money upon particular industries.

When I consider the general situation in relation to this subsidy, I find it rather disturbing. We now have a large number of separate subsidies operating outside agriculture, with which I will not deal, because it would not be in order to do so, but in relation to agriculture today we are subsidising wheat, in respect of which the Treasury acts only as a collector, because the consumer pays in the price of bread and flour; we have the Cattle Subsidy, which we were assured was in large part going to be paid for by the beneficent producers in the Argentine, who would be able to exercise such economies that they would reduce the price so that the British consumer would not pay; and in the case of the Cattle Subsidy the Treasury also provide an actual sum of £ 5,000,000 towards the cost of the subsidy.

When one looks at other subsidies, like that on milk, the continuance of the sugar subsidy, and the sugar rebate, and when one remembers the dead-weight burden of agricultural rate relief and the fact that we are now being asked to provide £ 1,000,000 a year for the next three years for the purposes of agriculture, we find that we shall now be actually voting to agriculture direct subsidies at least equal in amount to the yield of 6d. in the£ on the Income Tax, or about £30,000,000 a year. What worries a great many people when we are asked to consider financial provisions of this kind is what is going to happen to British agriculture if at some time or other we find ourselves in such a situation that the subsidies have to be removed. That would lead to an exceedingly unhealthy and difficult position.

I said a word or two on the Second Reading of the Bill about the general view of producers in relation to these matters. It was very significant to me that one of the leading speakers on behalf of the board, at the recent annual meeting of the Pigs Marketing Board, said that, although of course the Government assistance was limited to three years, they were quite convinced that they would not be let down at the end of that period. I think, therefore, that the point I am raising in regard to this financial provision has some substance, and that really a very dangerous situation is created by this constant outpouring of public money. I am not attempting to deny that agricultural production in this country for some years has had a very difficult position to face, but I am not at all satisfied that the method of constant subsidies is the way in which to provide a really lasting and effective policy for the reconstruction of agriculture on a paying basis.

I should certainly like to know from the Minister whether he can say that the Government now issues a fiat that the three-years period outlined in the Money Resolution and in the Bill is final, and that if at the end of that time contract pigs are not forthcoming at the proper rate and of the proper grade to maintain the proper expansion of the bacon curing industry in substitution for foreign imports, the expenditure of public money which we are now asked to vote will definitely come to an end. I think we ought to have from the Minister, in the interests of the general body of taxpayers, some statement on that actual situation.

There is another point, to which reference was made by my hon. Friend the Member for Don Valley (Mr. T. Williams), when he was dealing with the financial Clauses of the Bill on the Second Reading. I come back to it because I noticed that the Minister, in his remarks to-night, said that of course it was hoped that a rationalisation of the industry and a reduction of costs might make possible some reduction, or tapering, as he called it, of the subsidy, and he went on to speak of what he called the recoupment of the Treasury for the expenditure. I am all in favour of that in principle, and am not quarrelling with him for saying it, but I am concerned as to how that is to be done. One of our principal complaints about the general provisions of the Bill is that it does not deal with this industry in regard to organisation in such a way that you can organise it for plenty, and make an end to this situation, in which you have a constantly restricted supply of an important item of food, of the working classes especially, at prices which they are unable in many departments of working-class life to meet.

When the Minister speaks about the recoupment of the Treasury, I should like to know from whom the recoupment is to come. I should like, when I come to speak on the detailed proposals in this Bill, to say something about the supply in relation to the total population to-day, as compared with that in 1933. It is so simple for the Minister to say at any given time, "The time has now come for recoupment of the Treasury. We can do that by so arranging a further restriction of imports from two main supplying countries, like, say, Denmark and Holland, that the price will rise so far above the 94s. 9d. that not only will no subsidy be required but there will be a presumed profit which will accrue to the Treasury." We ought to have some assurance about that, because the view of this party, as far as I can gather by discussing the matter with my colleagues, is that we want to see the problem of bacon production in this country tackled; we want to see the organisation of pig production of a kind that will be helpful in a well-balanced system of farming; but we also want to see that our people get enough of this important food at a price which they can pay.

So far, we have been limited to a total supply of bacon, including those parts known as pickling pork, to, at first, 10,600,000 cwts., and afterwards 10,800,000 cwts., although we were able to consume in the years of depression, when bacon was cheap, about 1932, much nearer 13,000,000 cwts.—and I have no knowledge of any substantial waste. People will eat bacon when they can afford to buy it. It may be said, with some truth, that the price of bacon then was so low as to be unremunerative, to bacon curers as well as pig producers. That we have to recognise, but for the Government to pursue a policy of either limiting the bacon supply of this country to 10,800,000 cwts., or actually reducing that amount, will go far to defeat their main objective, because they will kill the bacon-eating habit among a large section of the people.

You cannot have a satisfactory industry from the point of view of either the primary or secondary producers unless you are going to have a regular, stable, consuming market. I beg the Minister, therefore, to be quite certain as to what his policy is to be in that connection. I am tempted to ask, in view of the announcement made in the House only a few days ago that Denmark has been induced to take a larger supply of British exports to that country, whether there was any talk at the time that the agreement was made with regard to contra trade from Denmark to this country. I know that that is not the whole problem—Denmark is not the only country—but we ought to know what was said about that, and what the policy is going to be now that we are actually asked to vote the money.

The only other point I think I need raise—because we put the position very clearly on Second Reading, and we shall say a great deal more upstairs—is that in the Minister's statement in the House of Commons on 10th March he stated that in the second year the basic pig price will be reduced by 1d. a score and the notional bacon price by 1s. a cwt. He went on to say that there will be further reductions in the third year. The Financial Resolution, which is necessarily drawn in general terms, gives us no indication as to how this decrease in the second and third years will operate. I would like to have some assurance on that. While I recognise that the pig producer, in common with other sections of the agricultural industry, has had difficult problems to face, all the trouble has not been on the side of the pig producer.

As to whether this can come about with ease will depend to some extent on how you treat the bacon curer. In considering what economies can be brought about by rationalisation, many factors have to be taken into account. Following your control of imports policy, you cut off from a factory—I mention this particular factory because it is one in which I am much interested—nearly 50 per cent. We endeavour to work according to methods which we have already demonstrated can be successfully adopted, and we find ourselves actually prevented by Government control from achieving the economic working of the factory. It is in the light of that that I am asking what is the intention of this decrease. I doubt whether a man who processes about 100 or 120 pigs a week for bacon, unless he is paying abnormally low wages in a rural area, could process them at less than 12s. or 13s. per pig, but if he is a large producer of bacon, handling not fewer than 1,200 to 1,500 pigs a week, the actual processing cost per pig will be 4s. That is an extraordinary difference.

If this scheme is to function, to the benefit of both sides of the industry, it is absolutely essential that the curer should get a fair opportunity. We provide capital, put the factory up, get the most modern machinery and the latest technical devices, and then we are not allowed to produce, Further, we have to sell at a price on which we lose. If one were to look at the average record of the large curers in this country during the last eight or nine months, one would find that, without exception, they have lost money. It is in the light of that side of the industry that I am asking what is really meant by this scheme of decrease and how it is to be worked. I hope that I have put the various small problems that I had in mind clearly before the Minister and the Committee. There may be other people who take a different point of view. I shall not ask my hon. and right hon. Friends to divide against the Resolution to-night, but we should like these points to be clarified, because it will assist us in our further discussions, which we are undoubtedly going to have on the more important details of the Bill in Standing Committee.

8.26 p.m.

Mr. Acland

The Bill and the attendant Money Resolution are based upon the operation of the Development Board. I do not want to go into the discussion which we had upstairs, but the Committee has by a majority declined our suggestion to establish a board with a majority of independent members working in the interests of the public, and has established, unless we can reverse the decision on the Report stage, a board with a majority interested in the industry. Those who were of the majority in that decision seem to take the view—and I think that the hon. Gentleman the Member for Stone (Sir J. Lamb) expressed it—that nothing could be more in the public interest than to have the industry run by the industry in the interests of the industry. It is enormously in the public interest to have this industry run efficiently and well, and in that the interests of the public and of the industry coincide.

There is one rather important question, that of price, upon which the interests of the industry and of the public as a whole conflict. There are two problems in the industry. There is, first, the price at which the semi-finished product is passed on from the primary producer to the secondary producer, and that price has to be a fair price, and for the settlement of that price the present board is most admirably suited. But more important from the public point of view is the final price, and it is in the private interests of the industry that the price should be high and in the interests of the public that the price should be low. I appreciate that it is possible for an individual, when he finds himself appointed to a board, to address himself to his task entirely divorcing himself from any consideration of his own private financial interests. It is a little harder for him to do that when he has been appointed to such a board for the very purpose of representing the whole class of interests. Therefore, we must be forgiven if we fear lest these boards may look primarily to the interests of those who are in the industry rather than to the interests of the public as a whole.

In the Money Resolution the price for bacon is fixed for three years, and the State is to pay to the industry any margin by which the realised price falls below the fixed price. Under Clause 27 of the Bill the State also has power to raise or lower the price of bacon by its regulation of the volume of imports. Therefore, the State, having power to raise prices, is made financially interested, together with the board, in maintaining prices. That is rather an ominous provision to put in an Act of Parliament. As at present estimated, the cost of this provision is to be round about £ 1,000,000. Is it going to be temporary or permanent? It is for three years, as provided in the Bill, but we have had in this industry Measures introduced with every possible promise and undertaking that they would be of a purely temporary nature and yet they have become permanent.

Therefore, I think that I can safely say to the Minister, though this is subject to any decision to which the electorate may come at the next General Election, that the provisions of the Bill will, in fact, become permanent. We are settling the price of this product for three years, but if this scheme goes on, no doubt the House of Commons will again settle the price in the fourth, fifth and sixth year. It will be settled, as will the volume of importation, almost solely on the advice of this board. Hon. Members opposite regard all this sort of thing apparently as perfectly normal. The Minister described this process as if it were absolutely usual and unexceptional. I saw the hon. and learned Gentleman the Member for Ashford (Mr. Spens) most vigorously shaking his head at me in Committee when I stated that there should be nothing suspicious or dubious about the way in which the board carry on. It really is one of the privileges of belonging to my party that one is able to watch the way in which both the other parties swallow with complete complacency suggestions made by themselves, which they would mock to scorn if they were proposed by members of the party opposite to them.

Mr. Alexander

I hope that the hon. Gentleman is not going to attack my party in that way. I remember the present Viscount Samuel and the present Leader of the Liberal party swallowing Protection holus-bolus when they joined the National Government.

Mr. Acland

They expressed their opinions on that matter pretty strongly.

Mr. Alexander

After they had accepted it.

Mr. Acland

I suggest to the right hon. Member for Hillsborough (Mr. Alexander) that there might be protests from above the Gangway if a Bill were to he introduced, not to nationalise the coal industry, but to conduct the coal industry efficiently and well in the interests of that industry by means of a board containing a majority of those engaged in the industry, namely, the miners. That Bill might fix the price of coal for three years and then stop, but no hon. Member would assume that in the fourth year the price would be free. It would be taken for granted that in the fourth, fifth and sixth years the miners' representatives on the board would suggest, and the Labour Government would accept, further price-fixing. One can imagine the leading article in the "Times" newspaper if it were a provision of that Bill that the State should make up to the board any sum by which the price of coal fell short of the price fixed by the Labour Government at the suggestion of the trade union representatives forming the majority of the board in control of the industry. do not expect that the hon. and learned Gentleman the Member for Ashford and his friends will agree with many of the detailed criticisms which we intend to bring against the Bill, but I hope that he will understand why so many of these things, which seem to him to be perfectly normal and right, are bound to seem to us a little open to suspicion.

It is almost a mistake to talk about big bacon factories in this country. Our average is 250 pigs per week, while the Danish average is 800 per cent. higher. Our average bacon factory is not to be compared with the Danish bacon factory. The Minister told us that we have factories capable of handling over L000 pigs a week. Are there any capable of handling 2,000 pigs a week, which is the Danish average? Have we any factory which comes up to the Danish average? We speak of bacon factories in Denmark, but in this country we speak of middle-sized and small bacon factories. I am afraid that under this Bill the middle-sized factory will squeeze out the small factory and frustrate the big factory.

I visualise the time, three or four years hence, when the factory rationalisation scheme has gone through and when the small factories are being bought up and the middle-sized factories are running to a capacity varying between 250 and 500 pigs per week, and then I think of some courageous, far-sighted, patriotic and astute group of business men coming to this country and saying: "Let us establish a couple of factories on the Danish scale capable of dealing with 4,000 pigs a week." Those two factories would put up our capacity by 10 per cent. I imagine that there would then be a howl from the Development Board. They would say: "This is going to upset the whole of our arrangements. We shall no longer be able to maintain our high percentage of output and we shall be prevented by these big bacon factories—which is what the public want—from making profits in our middle-sized bacon factories. Therefore, we will under the Act prevent those factories from being established in this country." That is what I fear.

May I repeat a question which I asked in the Second Reading Debate, to which I did not get an answer? Under the Bill the price which the curer will pay to the producer will be reduced from 12s. 6d. to 12s. 3d. That is a reduction of 3d. a score, which represents is. 9d. for a seven-score pig, which I understand produces 1 cwt. of bacon. Therefore, the curers would get 1 cwt. worth of pig for 1s. 9d. less. They are going to sell 1 cwt. of bacon at 3s. less. Does that mean that the total savings which are anticipated from rationalisation is worth no more than 1s. 3d. per cwt.? If it is worth more, why does it not show, and if it is not worth more, what are we bothering about? These figures of 12s. 6d., 12s. 5d. and 12s. 3d. and the corresponding figures of 94s. 9d., 93s. 9d. and 91s. 9d. per cwt. must be based upon some calculation. Can the Minister publish the calculation, or can he supply to interested Members a copy of the calculations? It seems to me that that calculation ought not to be a confidential document. It would assist us in the consideration of these prices.

Could the Minister help us in dealing with the financial provisions of the Bill by giving us another set of figures? With respect to certain typical factories of the top size, our biggest factories dealing with 1,500 or 2,000 pigs a week, a factory dealing with 500, and a factory dealing with 75 pigs a week, can he give us figures showing approximately the cost of the pigs, raw materials, the costs of labour and other running expenses and overhead expenses, expressed perhaps not in figures but as a rough statement of total? It makes a difference if raw materials represent 40 per cent., labour 50 per cent. and overheard charges 10 per cent., compared with overhead charges 30 per cent. and other charges correspondingly lower. Those figures must be in the Minister's possession. He could not talk as he has done about rationalisation unless they were in his possession. I hope he will be able to assure us that he can give us answers to these questions of detail so that we may consider this Bill, of which we are suspicious for the reasons I have tried to give.

8.38 p.m.

Sir Ernest Shepperson

I find myself in 100 per cent. agreement with the right hon. Member for Hillsborough (Mr. Alexander) in regretting the fact that a subsidy of £1,000,000 is to be paid by the Exchequer to this industry. I should possibly have preferred that the £ 1,000,000 went towards rearmament rather than to the pig industry. I regret it not because the industry does not require the £ 1,000,000—it does—but I would rather have seen the £,1,000,000 put into the industry not by the Exchequer but by a levy on imported bacon coming into this country. The right hon. Member for Hillsborough said that it might be possible for the Minister by restriction or control of imports to raise the price of bacon beyond the figure of 94s. per cwt. That might be possible, but I would suggest to the right hon. Gentleman and to the Government that if the £ 1,000,000 required had been paid by a levy on imported bacon it would have the result that the price of bacon would not have risen to anything like the figure to which it will rise on restriction of imports, and the producer of bacon under the levy subsidy principle would have obtained what he wants and what he must have in order that the industry may continue, while the consumers would have got their bacon far cheaper than they will get it under and restricting methods. I prefer that the Danish importer should pay the subsidy rather than the British taxpayer should pay the subsidy to the industry.

Mr. Alexander

After our experience of food taxation in the last seven years does the hon. Member suggest that the foreigner pays the tax? The Minister told us when he was introducing the meat tax 12 months ago that the Argentine producer would pay it. The fact is that although the tax was three farthings per lb., we have been paying from 1½d. to 2d. per lb. more since the tax was put on. The foreigner never pays the tax, but the consumer does.

Sir E. Shepperson

In putting forward the principle of a levy on imported goods coming into this country the reply that has come to me from different parts of the House has been that the effect of the tariff or levy placed upon the articles will not be what is desired, that is, to raise the wholesale price, because the foreigner will pay the levy. Does the right hon. Gentleman not know what happened when we put a duty of £ 1 a ton on Dutch potatoes coming into this country? The Dutch Government subsidised the export of those potatoes to England. When we took the duty of £ 1 off, the potatoes did not alter in price because the Dutch Government ceased subsidising the export of the potatoes. That is definite proof that the duty on those potatoes was paid by the exporters who were subsidised by their Government. That is my only criticism of this proposal. I should have preferred that this subsidy to the industry should have been obtained by a levy on the exporters rather than out of the pocket of the British taxpayer. I should like to ask the Minister or you, Mr. Deputy-Chairman, a question. The Financial Resolution provides: For the payment out of moneys provided by Parliament to bacon curers of sums related to rises in the cost of a standard ration for pigs over eight shillings and sixpence per hundredweight. I am hoping in the Committee stage of the Bill to move Amendments which will increase the figure which the producer shall receive. I should prefer that the figure should be 12s. per score, when the standard rate of foodstuffs is 7s. 6d., the figure which applied when the Bacon Marketing Board first introduced their Measure three years ago. The question I want to ask you, Mr. Temporary-Chairman, is whether this Financial Resolution will bar me from moving those Amendments in the Committee stage? I hope to do so, although I cannot say that I have very much hope that they will be accepted.

The Temporary Chairman (Sir Hugh O'Neill)

I could not give a Ruling now as to what Amendments will or will not be in order on the Committee stage of the Bill, but any Amendment to increase the money paid by the Government would not be in order under this Resolution.

Sir E. Shepperson

Then I am afraid my Amendments will not be in order. Although the Financial Resolution provides this money by a method which I do not prefer, I say to the Minister that the pig producers of England thank him for having brought forward the Bill. While this, is not the method I should have preferred for providing this money, we do accept the Financial Resolution and the Bill as a very definite attempt to solve the difficult problem of pig production in this country.

8.49 p.m.

Mr. Price

The provisions in the Financial Resolution will undoubtedly do a great deal to help the pig and bacon industries through a difficult time. At the same time, many of us are a little uneasy at the continued use of public money in support of one or other branch of the agricultural industry. I am not one of those who take the view that this should not be the case. On the contrary, having regard to the fact that agriculture as a whole has to meet the products of agriculture in other countries in world markets subsidised by the Government of these countries, it is difficult indeed for the Government of this country to remain altogether uninterested in the matter. But I do not think that is the main reason why this financial provision is necessary at the moment for this industry. I think the main reason is that the industry has in the course of the next couple of years to pass through a process of rationalisation. I refer to the pig-curing side of the industry, and until that is carried through there is a very strong case for the expenditure of a certain amount of public money. But it must be temporary, and it must be contingent upon the rapid rationalisation of the industry.

There is no doubt that there are in different parts of the country great waste and far too high overhead charges in consequence of small and inefficient methods which are responsible for the present state of the industry. While safeguarding the legitimate interests of the small curers, nevertheless, this process has to be carried through, and I think there is a strong prima facie case for the expenditure of a certain amount of public funds for the purpose of helping the industry through this difficult time. But it must not become permanent. The whole matter must be subject to review, and this House should withdraw its sanction for further expenditure if for one reason or another rationalisation is not carried through in the way it should be carried through. Of course, there are other reasons. The State cannot wash its hands of the industry if owing to the collapse in prices on the world market, or, as I have said, owing to subsidies given by foreign Governments prices are forced down to an uneconomic level, as was the case in 1930 and 1932. I am not one of those who say that the State must wash its hands of the industry in those conditions. But as far as the industry at the moment is concerned, the main reason for the Financial Resolution is the necessity for rationalisation.

There is one point upon which I should like the Minister to tell us something, and that is on what basis he has calculated the standard ration for pig feeding. There has been a certain amount of research carried out in the agricultural research stations in recent years to find the best and most economical pig-feeding ration. Has the Minister consulted the figures in the research stations, and are these the figures on which the subsidy is to be based? I may point out that pig rations vary considerably. There are, of course, three main articles, bran, middlings and hydrogenous food like fish meal, but it has also been found possible to include such articles as maize. A few years ago the Harper Adams College made investigations into this question and found that, up to 30 per cent., one could feed maize meal to pigs without unduly affecting the pig meat. Up to last year, the price of maize was £7 a ton, and the introduction of maize into the pig ration would very substantially reduce the figure. To-day, of course, the situation is different. The price of maize is up to nearly £9 a ton, and any advantage of introducing maize into the pig ration has gone, owing to the rise in the price of maize on the world market.

What I wish to point out is that all these things should be liable to revision. The movement of prices on the world market may make it possible for the pig feeding stuffs of to-day to be uneconomical to-morrow, but it might be possible to introduce some other ingredient which had fallen in price and thus bring about a reduction in the figure, thereby saving money to the Treasury. The price of the standard ration is likely to be at a varying figure, and therefore, the Minister ought to keep a careful watch in order to save public money. Personally, I think that the figures mentioned in the Financial Resolution for dealing with the standard ration of pigs and the price of bacon are reasonable, and I think that all efficient pig producers should be capable of carrying on reasonably in present conditions. I think that the Committee, in considering this Resoluton, must do everything it can to see that, where possible, public money is saved, and therefore I hope that the Minister will be able to give some assurance that he has gone closely into the matter of the standard feeding-stuff ration for pigs.

8.58 p.m.

Mr. W. S. Morrison

In replying to some of the questions which have been asked in the course of the Debate, I would like to begin by saying something about the paragraph in the Financial and Explanatory Memorandum which mentions the sum of £1,000,000 a year. In the course of the discussion, hon. Members have once or twice referred to this figure as though it were the average cost of the scheme. What the Financial and Explanatory Memorandum says is that it is difficult to estimate exactly what the cost will be, but that on certain assumptions it will be £ 1,000,000 a year. I will elaborate that a little bit, because hon. Members will be interested to see how the financial provisions work out. Hon. Members will see that a subsidy becomes payable to one or other branch of the industry in the case of two eventualities —when the price of feeding stuffs rises, or when the price of bacon goes down.

The sort of assumption on which we have been working, for the sake of making a careful estimate, is that, supposing that feeding stuff prices remained at about what they are to-day—10s. a cwt.—and bacon prices fell, the cost might approximate, as nearly as one can estimate, to £1,000,000 a year. But all experience shows that these two things very seldom go together; that is to say, when feeding stuff prices rise, there is always a reduction in the pig population, accompanied by a scarcity and a rise in bacon prices. That is true not only of this country, but of every country in the world. Last year when the cost of feeding stuffs began to rise, not only did our pig population suffer, but the pig population of Denmark and Holland was reduced by no less than 15 per cent. and 16 per cent. respectively. The conclusion which I ask hon. Members to draw from that fact is that the real influence on the price of bacon is, in the long run, the price of feeding stuffs, and the question whether or not conditions exist which make it profitable for pig production to go on.

The right hon. Gentleman the Member for Hillsborough (Mr. Alexander) referred to this aspect of the matter and to the great importations into this country in 1932, and he said that people will eat bacon when they can afford it. I would ask him to accept the corollary to that, which is that people will produce bacon only when they can afford to produce it. The low prices of 1932 did not last, and they would not have lasted even if there had been no scheme. What happened was that pig production on the Continent became so unremunerative to the Danes and the Dutchmen, who could make no profit out of the low prices, that wholesale destruction of the breeding herds took place, with the result that we had an immediate scarcity and a very violent example of what has come to be known as the pig cycle.

As prices have been mentioned, let me say what the Bacon Marketing Scheme has done. It has steadied prices, and it has prevented the wild swings and fluctuations of the pig cycle. By doubling the output of British bacon, it has left us to that extent less dependent upon foreign supplies. If hon. Members will look at the published figures for bacon, they will see that since the bacon scheme came into operation, the price of bacon has risen less than the prices of other foodstuffs, and that the prices of food stuffs have risen less than the prices of other commodities purchased by the wage-earning population of this country. It would be a great gain if we could somehow secure the people of this country against such fluctuations in prices. I think I speak for the whole agricultural population when I say that what the farmers want is not high prices and not excessive profits, but that they long for some stability in the price structure which would make their occupation less hazardous.

The right hon. Gentleman the Member for Hillsborough asked certain questions to which I will endeavour to reply, although I am sure he will excuse me if I make the general observation that many of the points that he made can be dealt with in greater detail when we face each other across the floor in the Standing Committee.

Mr. Leach

I beg to call your attention, Sir Hugh, to the fact that there are not 40 Members present.

The Temporary Chairman

I think the hon. Member has forgotten that it is not possible under the Standing Orders to call a "count" between 8.15 and 9.15.

Mr. W. S. Morrison

The right hon. Gentleman raised the important matter of the duration of the scheme. This is a three years scheme, but the permanent benefit which we hope it will give to the industry will be to enable the industry during that period to equip itself, so that the factories in this country will approach a standard of efficiency and low-cost production which will facilitate the supply of cheap British bacon capable of competing with bacon from any other part of the world on equal terms and with profit to the industry. The right hon. Gentleman asked how recoupment would be carried out by the Treasury. In this matter of financial arrangements, the curers will be agents for that purpose. The curer will pay his price to the pig producer, adding if necessary the appropriate feeding stuffs subsidy, and in his turn he will receive from the Treasury what he has paid to the producer for the feeding stuffs subsidy. But if the bacon curer has to make recoupment in respect of feeding stuffs, then that will be deducted from the sum which he will pay to the producer. So the recoupment will go on; there will be a balancing of accounts and there should be no difficulty whatever in these financial arrangements.

The hon. Member for Barnstaple (Mr. Acland) invested this discussion with a miasma of suspicion and seemed to suggest that at some point a man with a cloak and dagger was lurking ready to jump out; but I ask him to believe that we on this side are as conscious as he is of the necessity of building up the industry in a way which will be fair to all concerned. He said that it might be in the interests of the bacon industry in this country to have what he would consider unduly high prices, but I think he got his answer in what was said by the right hon. Gentleman the Member for Hillsborough. If anyone were stupid enough to try to kill the bacon demand in this country, it would be one of the most short-sighted commercial propositions imaginable. The truth about this question of price and about the interests of the various boards in price, is that under this proposal, for three years, neither the Bacon Board nor the Pig Board will have any interest at all in the price of bacon. They will be able to observe its fluctuations without any interest in them whatever. They will be insulated; they will be able to put their own house in order and to supply what is such a desirable thing for the people of this country, namely, cheap British bacon.

The hon. Member also asked certain questions about the size and output of the factories in this country and particu larly whether there were any factories with a production of over 2,000 a week which, as he correctly said, is about the average of the factories in Denmark. There are at least three factories which exceed that output. One of them at Brierley Hill near Birmingham has an output of 6,000 a week and is as far as I am aware, the biggest and most up-to-date bacon factory in the world, so that there is nothing lacking in the genius of our people, if they are given a chance to produce bacon factories equal to anything to be found abroad. It is a wonderful thing that, in spite of the selective competition to which our agriculture has been exposed from all over the world, you should find remaining such confidence, skill and enterprise, and we hope that under the provisions of the Bill those qualities will provide us with the sort of factories which we want in this country.

Certain questions were also put by the hon. Member about the "taper" and he seemed to wish us to calculate, with a nicety which is really impossible, the relative values of the decrease in the price per score of pigs and the price of bacon that was guaranteed. In the first place I should make it clear to him that the three figures which we take for the purposes of our financial calculations, namely, 8s. 6d. per cwt. for foodstuffs, 12s. 6d. per score dead weight for pigs and 9d. for bacon, are important only in their relation to one another. We are not really fixing the price of bacon at 94s. 9d. or the price of pigs at 12s. 6d. per score. There will be added or deducted the appropriate amounts for the cost of feeding stuffs. It is in the way in which these figures are related to one another that the validity of the scheme lies. While it is obvious that we can expect economies in production during the progress of this scheme, I would not be rash enough to predict with any likelihood of accuracy what the money value of those economies will be in every case, but I think there is a strong case for supposing that there will be economies, a case which justifies the financial proposals now before the Committee.

Mr. Acland

Is it not the case that the total expected economy is 1s. 10d. per cwt. in two years?

Mr. Morrison

That is not really the whole of the story. I anticipate that the full economies of rationalised bacon production will take a great deal longer than that to mature. There will have to be a good deal of reorganisation and it would not be quite justifiable to suppose that in a certain period of six months or 12 months you will achieve a certain amount of economy. The thing will be a continuous process and all we can say is that as there will be some economies, it is right to make this "taper" provision.

Mr. Price

The figure of two years is in the Bill.

Mr. Morrison

Rationalisation will take place in that time, but when the economies of rationalisation will be realised is another matter. It takes a little time for the economies to accrue. There is expenditure of one kind and another to be taken into account.

Mr. Acland

The economies of rationalisation surely take place the moment rationalisation is completed and the economies of which the Minister and hon. Members opposite have been talking, are the economies which will be effected when you get your factories working at something like 100 per cent. instead of 60 per cent. of their capacity. Surely that begins to happen as soon as rationalisation has been completed and therefore, if rationalisation is to be completed in two years, we ought to expect these economies to be realised in two years. I appreciate the fact that after that there is a further period of getting in the more up-to-date machinery, which your 100 per cent. capacity makes possible, but the 100 per cent. ought to be achieved simultaneously with the rationalisation.

Mr. Morrison

I do not think there is anything between us in this matter. It is clear that rationalisation is a process which brings economies. It is not clear that you can absorb all the capital costs that may be necessary for purchasing businesses, amalgamations and so on and realise economies straight away. It will take some time and all we can say with certainty—and I would not like to prognosticate anything of which I was uncertain—is that there is a reasonable chance of sufficient economies during the period of the currency of this scheme to justify the "taper" which we propose. The hon. Member also asked for a number of figures. He asked on what grounds we justified these various price relationships. They are the result of a great deal of information of a very varied character which has been supplied to us in confidence. The Department is able to rely upon business people to give them information which they know will not be divulged against their wishes. I will look into the matter and see whether any figures are obtainable which I can give to the hon. Member, but I am sure he will not ask me to give any figures which I ought not to give. It is on the information with which we have been provided that we have arrived at these various figures and I may be able to tell the hon. Member a little more later. He will appreciate that it is impossible to group these factories altogether by size. There are costs inside the factories which vary very greatly.

The hon. Member for Leominster (Sir E. Shepperson) also gave us his views, and I am grateful to him for his speech of general commendation. It was suggested that the limitation of imports since the date when the scheme came into operation had had the effect of raising prices. I am confident that it has done nothing of the kind. It is true that it has rescued the industry from the slump crisis of 1932–33. I have endeavoured to argue earlier that if that had not been clone, if the bacon-pig producing industry had been suffered to perish, the position would have been very much different from what it is at the present time.

The hon. Member for the Forest of Dean {Mr. Price) also gave a general commendation of the Bill, but he mentioned a dilemma about assistance to agriculture which is sometimes expressed. I think everyone in this House would like to feel that he was associated with our general desire to assist this vital and important industry, but sometimes I hear it said that the particular method which we have chosen is not the right one. I believe that, as agriculture is a vital industry and one which, if they allowed it to decline, the people of this country would regret, not only in time of peace, but in time of war, we ought to apply such measures of assistance as appear to us to suit the exigencies of each particular problem as it arises. It is no good saying that we are anxious to assist agriculture if we object to import duties, to regulation by quantities, or to subsidies. It is no good saying that we like agriculture very much, but that we hate all of the only methods by which it can be brought into some degree of prosperity. Therefore, I hope the hon. Member will continue to give us his assistance upstairs in Committee, on the basis that we have made a real attempt, by these proposals, to provide the industry with the assistance necessary to enable it to be reorganised.

I can assure the hon. Member that, on the question of a standard ration in particular, we set great store by the provisions for education and research contained in the scheme, that the question of what is the proper method of feeding pigs will be kept constantly under review, and that every effort will be made to ensure that a standard ration is so determined as to give a just reward to the producer and not to encourage waste in any department. At present, for the purpose of contracts, the standard ration consists of certain proportions of barley meal, wheat offal, and fish meal; but all these matters are being kept under review. I think I can commend this scheme with sincerity to the Committee, and I hope it will now let me have the Financial Resolution.

Question put, and agreed to. Resolution to be reported To-morrow.

The remaining Orders were read, and postponed.

ADJOURNMENT.

Resolved, "That this House do now adjourn."—[Mr. Furness.]

Adjourned accordingly at Twenty Minutes after Nine o'Clock.