HC Deb 18 July 1940 vol 363 cc560-70

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Grimston.]

10.52 p.m.

Mr. De la Bère (Evesham)

I desire to raise the question of the rates of interest charged by the banks to the agricultural industry. The banks have from time to time been approached to make some reduction or some concession in the charges which they have made over a period of years to the agricultural industry, but they have never acquiesced in any of the suggestions which have been put forward. They have made various excuses which cannot be justified. I do not wish to pursue the old arguments of the last five years. I want to approach the question from the point of view of the war. It has been rightly said that every possible acre of food should be produced, but this cannot be done if the banks put what amounts to a hindrance on the industry by making such high charges for the credits that are utilised by it. We know from a statement of the Chancellor of the Excheuqer that about £53,000,000 is outstanding as money lent by the banks to the agricultural industry. A simple sum shows that, with interest at 5 per cent., £2,500,000 is being paid by the industry to the banks. This is a tribute from men who cannot afford it, and because they cannot afford it they cannot produce the maximum amount that they should do.

It is really indefensible, but nothing is done. The reason is simple. It was never intended by the banks and the Treasury that anything should be done. It is always the same thing. If you go to the Minister of Agriculture, he says, "I must consult the Treasury" If you go to the Treasury, as I did this morning and had a friendly chat, they say, "We must consult the Minister of Agriculture, and we do not think we can do much with him." The Minister of Agriculture has put his foot into it, "good and proper." He wrote me a letter in which he said he did not think there was any considerable amount of call for a reduction in the rate of interest. I was not content with that and got into touch with the National Farmers' Union. I asked them whether they had at any time raised this matter, and they said they had done so repeatedly. I asked them whether they still contended that there was really a need for a reduction in the rates of interest charged to the farmers, and they said they did. They could show good evidence that a reduction is necessary, and show good evidence that there is a lack of capital in the country. Therefore, with great respect to the Minister of Agriculture I do not see on what basis he made the statement in his letter that he did not feel there was any evidence to show that a reduction of interest or any concession was required. It was quite unrelated to the known facts, and when a responsible Minister does allow such a statement to be put in a letter to a Member of this House I think that Member is wrong if he does not raise the matter at the first opportunity. I have raised it, and he will find that what is going on will not be forgotten.

The all-important point is that we are at war and that we want all we can get in order to prevent us from running short of food and to save us from the possibility of any degree of starvation, and for anybody such as the bankers to resist this Clause, as they are resisting it, is perfectly fantastic. They say that if the Government did insist upon a reduction they would have to call on the Government to take over the whole or part of the existing loans which are outstanding. Surely that can be shown to be entirely false, because each year the banks put in their balance-sheets that their profits are so much after taking into account all bad or doubtful debts. Therefore each year they must have written off any bad or doubtful debts of the agricultural industry. In spite of assurances to the contrary, the banks have done extremely well over a period of five years. They have taken £2,500,000 a year by way of interest from agricultural borrowers, and if that sum is multiplied by five the total is fell over £12,000,000.

What is the cost to the banks of the credits which they have given to the agricultural industry? The cost is just nothing at all, or only the cost of administration. I have said in a previous speech that that administration is both efficient and good. I am not an enemy of the banks, but I am a friend of this country, where I was born and where I have received much kindness; and I feel that the banks should not be so blind to the interests of this country and indeed to their own interests as to resist the concession at a time like this. Public opinion to-day is stronger than it has ever been that this concession should be made, and it is vitally necessary, in the interests of the country, that it should be forthcoming now. It is urgent that Ministers, and indeed all Members of the House, instead of holding this question up to ridicule and laughter, as has happened on some occasions—though not recently—should take it seriously and see whether we all, as true lovers of our country, cannot get this vital step taken at the earliest opportunity.

10.57 p.m.

Mr. Turton (Thirsk and Malton)

The hon. Member for Evesham (Mr. De la Bère) has at times, by his very gifts, made this question of credits for agriculture something that has been turned into laughter in this House and I must congratulate him to-night on the very great restraint which he has placed on his wit, and even on the power of his voice, so that we can discuss this very important problem in what, I think, is the right atmosphere. In times of peace the credit facilities for agriculture, whether Government credit or bank credit, were not adequate. In the present emergency conditions they are entirely inadequate, and unless something is done about them they will jeopardise the policy which my right hon. Friend the Minister of Agriculture is endeavouring to carry out. He is asking for increased production from agriculture, he is asking for farmers to buy up large quantities of fertilisers and feeding-stuffs, so that supplies may be spread throughout the country. For that purpose agriculture requires credit. When the fanner goes to the bank he is charged between 4 and 7 per cent., dependent upon his credit-worthiness in the opinion of the bank. The banks have perfectly good reasons for adopting that attitude, in their own small-business outlook.

It being Eleven of the Clock, the Motion for the Adjournment of the House lapsed., without Question put.

Question again proposed, "That this House do now adjourn."—[Mr. Grimston.]

Mr. Turton

From the larger standpoint of the nation, there is a necessity that these rates of interest should be something in the region of 2 per cent. I think something could be done by the Chancellor of the Exchequer, working in conjunction with the Minister of Agriculture, and probably calling in aid the war agricultural committees that are working under the direction of the Government in each district of the country. They can assess the credit-worthiness of each farmer and producer. They should be able to help the Government in any system of guarantee or loan such as was suggested in the Debate last Tuesday.

War agricultural committees could act in an advisory capacity in these matters. The Government would not be losing, in securing that loans were obtained by producers at 2 per cent., when the loans must, by their nature, be short-term loans. I ask the Chancellor of the Exchequer and the Minister of Agriculture, whom we are very glad to see here tonight, to consider the question of putting forward some policy immediately to deal with this problem of credit. The industry is, at the present time, something in the region of £50,000,000 in debt to the banks and the merchants. To carry out the necessary agricultural policy, that indebtedness will have to be largely increased, unless there is Government help at once. I believe there will be no danger of starvation if we carry out a policy of vigorous food production. The whole country is looking to the Minister of Agriculture to see whether his policy is to be truly vigorous. Without money and credit it is impossible to get vigour. I hope that the Government will reconsider this matter.

11.3 p.m.

Mr. Price (Forest of Dean)

I support what has been said by the two hon. Members. There is abundant need at present for dealing with this problem of cheap credits for agriculture. The rates of interest charged at the present time on loans by the private banks are of such a kind as to make conditions exceedingly difficult for any but the most financially strong among producers and farmers of the country. These, unfortunately, are not the majority of those who try to earn their living by the soil. The high rates of interest are an exceedingly serious matter for those people, in their general plan of operations. This country has been very much behind other countries in times past, in the way in which it has dealt with this question. On the Continent for a long time past there have been facilities for Government, or semi-public resources, providing rates for the industry cheaper than those that can be normally obtained from the private banks.

I suggest to the Minister that under existing legislation, he can do a lot to meet the position. In Section 24 of the Agriculture (Miscellaneous Provisions) Act, passed a few months ago, there is a provision whereby the Minister can, with the consent of the Treasury, with a view to increasing production of food in the United Kingdom, for providing goods or services to persons requiring them for agricultural purposes, incur expenses. I remember that when that Clause was discussed there was a good deal of uncertainty as to the conditions under which credits were to be given. I remember that the Minister promised that in another place Amendments would be put in whereby the conditions under which the credits would be given would be drawn up in regulations which would be submitted to this House, so that we could see them from time to time, and that the war agricultural executive committees would be given powers under the conditions laid down in the regulations to advance money to those who were in need of it for the purpose of carrying out the instructions of those committees.

This is the position. There are scattered about the country hundreds of small farmers and producers who are ordered by the war agricultural committees to plough up land, to do this and do that in carrying out the increased production campaign, but who have not got the capital to do it and who are not likely to be able to get accommodation at the banks. I have not seen the regulations put upon the Table of this House. If they have been, I have not seen them. I do not know, and I do not think anybody knows, the conditions under which money is to be advanced, or, if so, how much is being advanced. I wish that when the Minister replies he would let us know to what extent this Clause has been carried out in practice, what moneys, if any, have been advanced through the war agricultural committees to producers who are in difficulties and who want to carry out the orders for increased production, how much is to be carried out and what are the conditions under which they have been carried out. I know it is only limited and restricted and it is not a general advance for any form of agricultural production. It is only that activity connected with the orders of the war agricultural committees, but in view of the emergency in which we find ourselves I think that in itself is very important. I hope that the Minister will be able to give us some assurance, if not that much has been done, at least that it is intended that he will work this Clause 24 of the recent Act, and at least go some way towards meeting the desires of all of us who are anxious to see something done in this matter. I am very glad that the hon. Member for Evesham (Mr. De la Bère) has raised this question, because there is nothing at the present time which would contribute more to a satisfactory execution of the orders of the county war committees than an assurance that the producers would have the necessary accommodation at a cheap rate and at a rate cheaper than they would get if they went to the banks at the present time.

11.9 p.m.

Sir Frank Sanderson (Ealing)

I wish to support my hon. Friend on rather different grounds from those which have been put forward. I think he has made a very good case why the farmers should be able to get their credit facilities from the banks at a lower rate of interest. But it is from another angle that I approach the matter. The Government to-day have a greater hold upon both the currency and the credit of this country than any other Government have had in our history. During the last war the Government were borrowing on bills at no less than 6 per cent., compared with ¾ per cent, to-day. They were borrowing at 6 per cent, on three-year loans, compared with a rate of 2½ per cent, on seven-year loans to-day. Since 1920 the Treasury have travelled a long way. They have found means—for which the country must be very grateful—whereby they can raise credits at a minimum rate of interest, even during a war. But, while the Government have been successful in so arranging credit that they are able to secure facilities for their own loans at low rates of interest, they have done nothing to see that the same facilities are enjoyed by, not only agriculture but industry as a whole. We have to go back only a very few years to a time when the banks were paying 2½ per cent., and even up to 4 per cent., interest on deposits. To-day, the banks are paying ½ per cent, interest on deposits in London, and 1 per cent. in the country. Yet they are charging, both to Industry and Agriculture, the same rate of interest on loans as they were charging when they were paying 2½ per cent, interest on deposits. I cannot see why, when the banks are paying only ½ per cent, interest on deposits, they should demand the same rate of interest from fanners—5 per cent.—as when they were borrowing money at 2½ per cent. Surely it is possible for the Treasury, with the assistance of the Minister of Agriculture—in whom, if I may say so, the whole country has the greatest confidence—to provide means, which present themselves to me, and, I am sure, to my hon. Friends, by which agriculture may derive some benefit from the cheap money facilities from which the banks and the Treasury benefit so much to-day.

11.13 p.m.

Mr. Loftus (Lowestoft)

I rise for one moment, as the only representative of East Anglia present in the House, because I know how desperately many farmers in East Anglia are in need of better and cheaper credit facilities. I wish to support heartily the pleas which have been made to-night, and to urge my right hon. and gallant Friend to give them consideration and to persuade the Treasury to help in every possible way the carrying out of this war plan for agriculture, and not in any way to delay or hinder it, as, I fear the Treasury in the past delayed or hindered our rearmament, and prevented us from securing the stocks which were necessary for the carrying on of this war.

11.15 p.m.

The Financial Secretary to the Treasury (Captain Crookshank)

The last speaker made some very wild accusations against the Department for which I am responsible and about which he has produced no kind of evidence, nor would he be able to do so if he tried. My right hon. Friend the Chancellor of the Exchequer is very sorry he could not be here, as this arose out of a question addressed to him, but hon. Members will realise that in the week-end before the Budget, and particularly a first Budget, it is not very easy to spare the time, and he hopes he may be excused on that account. However, the Minister of Agriculture has been here and has heard all that has been said, and I think that some of the things that have been said probably have surprised him.

Mr. De la Bère

He has learnt a lot.

Captain Crookshank

It depends where the learning comes from whether it is of value or not. Before I deal with the particular point that has been raised, I must take exception to one thing said by the hon. Gentleman the Member for Evesham (Mr. De la Bère) when he used the words that the banks were blind to the interests of the country. I do not think he meant it, but he was perhaps carried away by his own enthusiasm.

Mr. De la Bère

I said the banks were not only blind to the interests of the country, but blind to their own interests as well, which is a very different point, showing their complete blindness in both eyes.

Captain Crookshank

All that I want to say on that criticism is that the banking system of this country is the admiration of the whole world.

Mr. De la Bère

I said so myself.

Captain Crookshank

The banks are certainly not working against the best interests of this country; I should not like such a remark to be made in my hearing without my protest against such a very sweeping statement.

The subject of the Debate has been the question of credits for the agricultural industry. The hon. Member for Thirsk and Malton (Mr. Turton) said that the present high rates, as he called them, of interest charged for overdrafts to the farming community was "jeopardising the policy of the Minister of Agriculture." The Minister of Agriculture is here. I think he is a pretty good judge of what is likely to jeopardise his policy and what is not. Certainly, during the tune he has been in office he has not been slow in helping in every possible way the industry with which he is concerned, and I am sure that if at any time he thought anything was jeopardising the industry or its full production in war-time, he would be willing and ready to take action. As an agricultural Member myself, I am satisfied to leave the interests of my constituency in that field in his very safe hands. None of the hon. Gentlemen who have complained have produced any evidence in support of the case they put up. I know that the hon. Member for Evesham has repeatedly asked questions of my right hon. Friend—and he admitted himself that he had been in communication with the Minister of Agriculture—but neither he nor others who have spoken have given any case or stated that there were cases where the banks had refused accommodation—

Mr. De la Bère

This has nothing whatever to do with accommodation but is a question of the rate of interest.

Captain Crookshank

That is all part of the same thing.

Mr. Turton

Is it not a fact that there are farmers who are being charged from 4 to 7 per cent.?

Captain Crookshank

That is not the point. The remark with which the hon. Gentleman started—and I took down his words—was that because of the interest which is charged, farmers cannot now produce all they ought to produce for war purposes. That is the first sentence used by the hon. Member in his speech. After all it is one thing to make a statement of that kind, and another thing for it to be corroborated, and no real evidence has in fact been put forward.

Mr. De la Bère

Ask the fanners, anyhow.

Captain Crookshank

The hon. Gentleman said that he had been in touch with the Farmers' Union and that they would like a reduction in the rates of interest. I dare say we would all like to see the rate of interest reduced so far as our own personal affairs are concerned, but it still does not follow that the hon. Gentleman has produced any evidence as, indeed, my right hon. Friend sug- gested he should. My right hon. Friend told him that if there were these difficulties the hon. Gentleman should communicate with him, tell him where they were and how grievous they were. But at the moment the hon. Gentleman has no evidence—

Mr. De la Bère

There is overwhelming evidence.

Captain Crookshank

It is all very well to keep on saying that there is overwhelming evidence, but if the hon. Gentleman produces it in concrete terms it can be considered. When he says that the Government should do something, that is tantamount to suggesting either that they should somehow or other bring their influence to bear on the banks in order to induce them to reduce the rates, or else that the Government should subsidise credit. The policy of the Government towards the agricultural industry has not been short-sighted, as anybody connected with the Treasury fully realises.

Mr. Price

Is there not an Act which enables the Treasury to advance money at a cheap rate? What has been done in that respect? What is the interest charged, and what are the conditions on which the credit has been given?

Captain Crookshank

I was saying that the alternative proposition presumably would be that the Government should subsidise credit. That has not been the Government's policy. The Government have been, and are, subsidising the agricultural industry to a large extent at the present time. The subsidies which are covered by the new schedule of agricultural prices are large and cover a wide field, and inter alia the result of that should leave a margin which would enable the farmer to pay a reasonable charge on the money he may have to borrow. All that has been taken into account. All these problems do not only originate in the Questions which the hon. Gentleman puts across the Floor of the House. They have received the earnest attention of my right hon. Friend and the Government—

Mr. De la Bère

But nothing has been done or is being done.

Captain Crookshank

The hon. Member for the Forest of Dean (Mr. Price) asked about Clause 25 of the Act recently passed. It is quite clear that county agricultural executive committees are able to assist by providing both goods and services, but I cannot now give precise particulars of what has been done. That question ought properly to be addressed to my right hon. Friend the Minister of Agriculture. The Act has been on the Statute Book only a short time and covers goods, implements, seeds and services in a way which will help farmers with drainage and tractors and so forth; but the actual details the hon. Member cannot expect me to know off hand. We will study once again what the hon. Member has said, and we will study anything that he likes to say or that other hon. Members put before us, but we should be in an easier position to deal with the problem if authentic and documented evidence could be brought that there is a difficulty on account of the high rate of interest for the farmer to produce what is necessary. We have not that evidence, and I am rather doubtful whether it can be produced, because the full effect of the new schedule of agricultural prices has not yet come about. It is true that wages have been raised, but the goods have not yet been sold, and therefore we cannot see in any particular case how much better off a farmer is going to be, but that there is scope for improvement within the field of these prices is undeniable.

In conclusion, I can only repeat that I do not believe for one moment that this problem, important as it is, is one that will jeopardise the policy of the Minister of Agriculture, and I do not believe that my right hon. Friend will allow anything to jeopardise his intention of getting the maximum production during the period of the war that is necessary to get us through in security.

Question, "That this House do now adjourn," put, and agreed to.

Adjourned accordingly at Twenty-seven Minutes after Eleven o'clock, until Tuesday next, pursuant to the Resolution of the House this day.