SOFT DRINKS INDUSTRY (CONCENTRATION) (Hansard, 16 February 1943)

§ Major Procter (Accrington)
On 10th February I asked the Parliamentary Secretary to the Ministry of Food whether he is aware that the scheme for the concentration of the soft drinks industry will transfer all the assets of some 1,400 manufacturers to a new company with dictatorial powers; that the directors, exclusively, represent the largest manufacturers; that the Articles of Association do not provide for the usual election or replacement of directors by the members in general meeting; whether the directors are enabled to amend the scheme in any respects without the sanction of members of the company; and what steps he proposes to take to ensure that the Articles of Association conform to established company practice and to the Companies Act, 1929? The Parliamentary Secretary replied: I cannot agree that the effect of the scheme to which my hon. and gallant Friend refers will be to transfer assets as he suggests."—[OFFICIAL REPORT, 10th February, 1943; col. 1323, Vol. 386.] In the Articles of Association we find, for the first time as far as I have been able to discover, a company limited by guarantee being sponsored, indeed forced upon the trade, by the Ministry to carry out proposals which, as far as my experience has enabled me to discover, are unparalleled. I stated in a Supplementary Question that they were Syndicalist and that they had the features of National Socialism. These proposals embodied in the Articles of Association of this Limited Company make such provisions that everyone who signs the dotted line and becomes a member of it is at the mercy of a committee, who are not democratically elected but have been chosen by my hon. Friend and put before the part of the trade which was called to look at them and approve them. They had no powers of rejection. They were simply given the right to acquiesce in the appointment of the governing directors of this new company. There was no power given to nominate other persons. Into the hands of this committee chosen by the Ministry of Food the living of many thousands of people and assets amounting to many thousands of pounds have been placed. Let me read some of the powers which this association has and ask the Minister to tell me in what way the assets do not come under the power 1696 of transfer to this committee and the directors of this company. On page 4 he will see— 'Scheme for the regulation of the soft drinks industry' means any scheme whereby, upon the terms of the scheme, provision is made for all or any of the following matters as respects all the manufacturers or (as the case may be) as respects such of them as are intended to be affected by the scheme. Let us look at what is to happen to the assets of these business men. On page 5 we find the words, to make arrangements under which manufacturers are to place at the disposal "—

§ The Parliamentary Secretary to the Ministry of Food (Mr. Mabane)
Can the hon. and gallant Gentleman tell me what he is reading from?

§ Major Procter
I am reading from the Memorandum and Articles of Association of the Soft Drinks Manufacturing Association, page 5.

§ Mr. Mabane
The hon. and gallant Gentleman read "to make arrangements," but I cannot find those words.

§ Major Procter
They are on the seventh line from the bottom.

§ Mr. Mabane
Those words do not appear. What is says is: For the pooling and co-ordination of transport, distribution and immediate and ultimate containers, that is to say, arrangements under which manufacturers… and so on.

§ Major Procter
That is what I am reading. That is to say, arrangements under which the manufacturers are to place at the disposal of or make over to the company or to manufacturers specified by the company the staff employed, and the vehicles, stocks of spare parts, and of fuel, equipment, premises and things used by them for or in connection with the transport and distribution of soft drinks. If the Minister will turn to page 6 under (j), he will find: for limiting or regulating the sale or disposal of the assets of manufacturers. Am I not right, therefore, in saying, and is not the Parliamentary Secretary wrong in denying that by virtue of the provisions which are here made the assets of the company are handed over to this non-elected body known as the committee of the War-time Association? Let me point out some other features of this remarkable 1697 document. By Article 9, a member is at the mercy of the committee which can demand his resignation without assigning a reason, and when a member is forced to resign, he is still liable for the debts of the entire association. Under 12 (a) this same non-elected body has full power to alter the terms of the scheme without giving the members an opportunity of voting. Under 12 (e) the committee have full power to borrow unlimited money on any terms they think fit. They can mortgage, dispose of or sell the whole of a member's assets without seeking the approval of the member.
In Article 23 power is given to the Committee to vote in respect of any contract in which it is interested, which is a thing unheard of in ordinary business circles. It also gives the right to this Government-appointed committee to draw remuneration and expenses without these being voted in general meeting. Under Article 40, after members have left the company, voluntarily or compulsorily, their property can still be sold for the benefit of the company. When a member leaves the company he forfeits the right to draw any profit that may be standing to his credit.

§ Mr. Mabane
This is difficult to follow, What was the last Article to which the hon. and gallant Member referred? I think he referred to 40.

§ Major Procter
It was Article 40. I have got a case which it would really take me an hour to make and I have to present it in fifteen minutes. I repeat, that for the first time in our history the Ministry of Food have done what the Board of Trade and no other Ministry have done. We have got an example of the corporate State. I believe that under syndicalism the workers pass over the means of production and distribution to their fellow workers in the industry, and I feel that the only respect in which I am wrong in applying that definition here is in regarding these gentlemen as workers, but if we do regard the committee as workers that is precisely what has been done.
Not only is this a piece of Fascist legislation but the way in which things have been done is a disgrace to this House. Let me give the sequence of events. On 3rd August the Parliamentary Secretary, in reply to an hon. Member of this House, said this scheme had the overwhelming approval of the majority of "the respon- 1698 sible elements" in the trade. He said that when as a matter of fact the scheme had not been submitted to anybody in the trade until nth August. He did not state that it had the overwhelming approval of the members of the associations or of the people engaged in the industry. The words he used were "the responsible elements." I maintain that the responsible elements are the big people in the trade. They are crushing out the small people. They have the power of life and death over them, power to cripple their business and goodwill and thrust them out of business. That is precisely what Hitler and Mussolini have done.
Let us see the sympathetic way in which the Ministry have dealt with this matter. A concentration of the trade was called together by the Ministry and given six weeks in which to prepare a scheme. They were promised information. They waited two weeks for that information but none was forthcoming. Then it was complained that they were too dilatory, and the Ministry prepared a scheme of their own. They gave the trade only six weeks, but it took the Ministry nine months to get out a scheme. A scheme was prepared by the trade and it was passed into the hands of the present chairman of the War Time Association, and that was the last that was heard of it. The Ministry prepared a scheme and put it, with the names of 12 members, before 150 men. Those men were told that if they did not comply with the scheme it would probably mean a much worse scheme. They knew exactly what had happened to the ice-cream industry. They were given the choice of being hanged or shot. Three hundred of them appealed to the Ministry to receive a deputation to state the other side of the case, but the Ministry refused to hear them. The Ministry said in effect, "We want to hear representatives of the big men, the War Time Association."
When the details of the scheme were submitted various people asked for time for consideration, but they were told "No, we must proceed with the scheme." A full scheme appeared on 9th December and was circulated to the trade, but never at any time has it been submitted to the members of the trade to ascertain whether they approve of it or not. The whole of the decisions have been made at the point of a pistol. Therefore, it is wrong and most unsatisfactory to say 1699 that this scheme has the approval of members of the trade as a whole. On 17th December the scheme was sent out for the first time, and there was protest after protest against it. I protest in the name of the small man, that he should not be crushed out of business. In the old days, combines which wanted to crush out the little men bought them out, but to-day the large people make a cartel and crush out the little man, with the aid of the Government. I hope that the representations of the protection society will be considered and that these committees should be democratically elected, and that the other points which the Minister either has or will have put before him, will be met. This thing should be democratically controlled. I hope that future concentration schemes will not be proceeded with on the same lines as those on which this iniquitous piece of business has been carried out.

§ Mr. Linstead (Putney)
I support what has just been said by the hon. and gallant Member. This is one of those concentration schemes that we have to accept as inevitable in war-time, but I suggest that there are three principles which ought to govern their operation. One is that the scheme should do nothing which is not essential for war purposes. The second principle is that there should be no handing-over of concentrated firms to the tender mercies of their competitors. The third principle, just as important, is that there should be no suspicion that such a scheme involves the handing-over of firms to their competitors. One must recognise in connection with this scheme that sober-minded members of the trade are firmly of the opinion that they are being delivered into the hands of their competitors. The opinion may be right or wrong, but the suspicion is there, and it is for the Minister to remove not only the suspicion but the actuality, if it exists.
The association looking after the interests of these people ask for four things before 28th February, when the Minister is finally to settle the constitution of the committee for the purposes of the War Time Association. They ask that the committee shall be democratically elected by a free vote of all the firms in the trade. They ask that the committee shall be required to publish the full 1700 accounts of the War Time Association for the information of all firms in it. They ask that closed firms shall be represented on the committee of the Association by representatives of closed firms, and that there shall not be the farce of closed firms being represented by a firm which remains in business. They finally ask that the chairman of the War Time Association shall be an independent person, appointed by the Minister from outside the industry. These are four simple, straightforward requests that will remove the suspicion of jiggery-pokery which exists at the moment, and I do hope that the Parliamentary Secretary will be able to satisfy us on those four points.

§ The Parliamentary Secretary to the Ministry of Food (Mr. Mabane)
The hon. and gallant Member for Accrington (Major Procter) has stated his case very powerfully, and the hon. Member for Putney (Mr. Linstead) has followed by very properly saying that any suspicions that this scheme hands over small firms to large firms should be removed. I can give him that assurance at once. It is certainly not the intention of the Department that the small man should be handed over to his larger competitor as a result of this scheme. The hon. and gallant Member for Accrington dealt in some detail with the Memorandum and Articles of Association of the War Time Association. He also referred to the scheme. I think the hon. and gallant Member knows perfectly well that the Memorandum and Articles of Association often contain a lot of provisions that are there for contingencies. We can take Table A and find that all sorts of companies have all sorts of power to do things which probably it will never be necessary for them to do. If you take any particular item out of this Memorandum and Articles of Association and do not relate it to the other safeguards provided under other parts of the scheme, I think that quite a false picture is given.
The hon. and gallant Member asked me a Question in the House on 10th February about the transfer of assets. His Question, I think he will agree, suggested that there was a definite transfer of assets. Of course, the phrase he read out did not imply anything of the kind. It was not a definite transfer of that character at all.

§ Major Procter
May I point put that under this scheme the business and assets which belong to the owner before he comes into the scheme belong to one legal person, and that person, through this scheme, not through the Articles of Association, now becomes a part of the company, and according to this scheme this committee has the right of expelling him if he does not agree with what they do, and if they say, "We want to sell your assets," and he says, "No, you do not," they have the power under the scheme, and under the Articles, of expelling him and taking away his assets? Now answer that.

§ Mr. Mabane
I would be very delighted to answer that, but it is a very different question from that which the hon. and gallant Member asked on 10th February, which was Whether the Parliamentary Secretary to the Ministry of Food is aware that the scheme—will transfer— That is a very different matter indeed. That was not the question which the hon. and gallant Member has just suggested that he asked me. He suggested I had given him an incorrect reply to the question he asked. He now suggests that I gave him an incorrect reply to a question he did not ask. I would ask the House to consider these schemes for the concentration of industries, necessary, as we all know, for the saving of transport and the saving of man-power. They do involve, at any rate at first sight, very considerable difficulties for particular firms and particular individuals. Indeed, when this project was first before the trade there was not unnaturally a very considerable opposition, a very considerable suspicion. It was, as the hon. Gentleman has said, some time after the inauguration of the War Time Association that the scheme was prepared and announced. It is a very considerable document, that has been compiled with the greatest care in order that the proper interests of all concerned shall be properly safeguarded.
The effect of the publication of this scheme was quite remarkable. The opposition substantially disappeared, and it has been my experience—for I have had many letters to deal with, both from Members of this House and from organisations outside—to observe the degree to which this scheme has been recognised as 1702 fair, in that it protects the interests of those who previously thought themselves likely to be adversely affected. There is an overriding consideration. That is, that the Executive Committee of the War Time Association is composed of 12 members from the trade and two members representing the Ministry of Food, and those two members' have an overriding vote. They are responsible to the Minister, and the Minister is responsible to this House.

§ Sir Herbert Williams (Croydon, South)
Who appointed the 12?

§ Mr. Mabane
In the summer of last year a meeting was called, which was attended by 150 representatives of the soft drinks industry. It had been previously recognised by the national associations that they could not agree on a scheme, and that, therefore, it was better that the Ministry should prepare a scheme and form a War Time Association. At this meeting a committee was elected. The Department suggested 12 names of representatives of the trade. The meeting could have accepted or rejected those names, and could have put forward other names.

§ Mr. Linstead
I am given to understand that the 12 members of the committee who were selected by the Minister were in fact thrust on the meeting. The meeting had no opportunity of putting forward their own names.

§ Mr. Mabane
I do not understand what this process of thrusting is. The 150 members there present were free and equal citizens, and they could have got up and said what they liked.

§ Sir Harold Webbe (Westminster, Abbey)
Were the members invited to suggest names before the meeting was held?

§ Mr. Mabane
No; the names were there, and the meeting could have accepted or rejected them. There was nothing secret about it. If it was not a convenient proceeding, the 150 members there could have objected.

§ Mr. McEntee (Walthamstow, West)
What about the many thousands who were not there? Why were they not invited?

§ Mr. Mabane
I can give one reason why a free and open invitation was not given. In such a case the meeting would clearly have been overweighted by London. It was far more important that the whole country should be represented than that a larger meeting should have been held which would be largely or wholly representative of London interests.

§ Sir H. Williams
The meeting was handpicked, just as the committee was.

§ Mr. Mabane
If the hon. Member is suggesting any intentional mala fides, I would like him to say so. Does he?

§ Sir H. Williams
The impression I have gathered, from my own constituents and from other people, is that they have been browbeaten from first to last by the Ministry.

§ Mr. Mabane
That is different; I asked whether there was any definite evil intention suggested. I am quite satisfied that the intention was of the best. I will again say, as I was saying when the hon. Member interrupted, that since the publication of the scheme the opposition has substantially disappeared. Those engaged in the industry have examined the scheme with care, and have realised that it gives them 1704 a very fair deal. You have got to have concentration. Surely no one in the House now denies that?

§ Sir H. Williams
Why are you concentrating an industry which is larger than it was before the war?

§ Mr. Mabane
Because of the great saving effected in transport and in factory space.

§ Major Procter
Is it not a fact that if anybody refused to join the Association he was in danger of having a licence to make these things absolutely refused, so that he could not carry on?

§ Mr. Mabane
That is not so. The House knows that I have only a minute to go, and I cannot answer points if I am continually having questions thrust at me. It is not correct that the scheme was devised so that people who otherwise ought to be engaged in this industry are unable to do so. There is no possibility of such a thing.