HC Deb 01 February 1945 vol 407 cc1724-9

Motion made, and Question proposed, That the Biscuits (Charges) Order, 1944, dated 19th December, 1944, made by the Treasury under Section 2 of the Emergency Powers (Defence) Act, 1939, a copy of which Order was presented on 16th January, be approved."—[Mr. Mabane.]

4.13 p.m.

Mr. Barnes (East Ham, South)

I desire to raise a point of some substance on this Order, and it may be for the convenience of the House, if I state my case now so as to enable the Parliamentary Secretary to the Ministry of Food to give consideration to a point which I think demands an answer. Provided the point can be satisfactorily explained, I do not dissent from the intention of the Order. The purpose, as I understand it, is to withdraw the subsidy on flour used in biscuit production. As the Parliamentary Secretary knows, I have always been a very strong supporter of the Government's war policy of subsidising our basic food supplies. I have considered it one of the wisest decisions of the Government, being convinced that, if we had not followed that policy, which is costing us now £220,000,000 a year, our difficulties would have been considerably increased if prices of food had "rocketed." On the other hand, we all recognise that there will come a time when the policy of subsidising foodstuffs will have to be adjusted. I take it that the Government will always remember that normal supplies and prices must not be disturbed when that takes place.

The Ministry have a case that biscuit manufacturers are now, on the whole, able to make their margins and that there is no need for the continuance of this subsidy. Relatively, this is a small thing in relation to the whole problem, but there is no justification for continuing a charge on the taxpayers if it is not justified. It is all the more remarkable to have, in an Order of this description, such language as appears in paragraph (4), on page 2 of the Order. I recognise that this type of Order does not command the full attention of the House of Commons, so I propose to read the words in order to place them on record. Paragraph (4) says: If any licensed biscuit manufacturer satisfies the Minister— I take it that means the Minister of Food— that payment in full of the charges imposed under this Order has inflicted, or would inflict, undue hardship upon him, the Minister acting under a general or special direction of the Treasury may repay or remit the whole or any part of such charges as he thinks fit. This appears to me to introduce a very contentious principle into the relationship of the Minister of Food, the Treasury and the manufacturers. The Ministry must have satisfied themselves—and trade experience bears this out—that the subsidy is no longer necessary to biscuit manufacturers, and that withdrawal of the subsidy would not cause inflation in price or undue hardship among manufacturers. Yet here we have a provision that enables a Department of State to mete out special treatment to individual manufacturers. It occurs to me that this will represent negotiation between the Department and an individual manufacturer. All the information and figures will be private. There will be a private transaction between the two.

I should like to put a direct question to the Minister in charge of the Order. I hope he will withdraw that paragraph, or give an undertaking that it will be withdrawn. Let us assume that his decision is not in that direction. I want then to ask the Minister whether any Member of this House will be entitled to elicit all the necessary information, if it came within our knowledge that any preference of this description was given to any specific manufacturer. Would he be compelled, in answer to a question, to state all that information on the Floor of the House of Commons? It would obviously become known in the industry if any special manufacturer was getting treatment of this description. The facts of that individual business would not be known to the competitors. Great dissatisfaction would be created if there was any feeling that this advantage to the industry as a whole was being withdrawn generally but was still granted to a particular manufacturer. At this stage I do not want to labour the point. I think I have made the issue perfectly clear to the House, and I submit it is incumbent upon the Minister to make exceedingly clear, before this Order is approved, exactly what this provision means. It is a dangerous precedent, and we ought to know exactly to what we are being committed.

4.22 p.m.

The Parliamentary Secretary to the Ministry of Food (Mr. Mabane)

I am grateful to my hon. Friend for explaining so clearly the main purpose of the Order. He is, of course, quite right in saying that the purpose of this Order is to draw back from biscuit manufacturers the subsidy which the State provides an flour. It has been the settled policy of the Government to maintain a stable price for bread, and the only point, as he will recognise, at which we inject the subsidy, is at the point of flour. Flour is used for other purposes as well as the making of bread, in particular for the manufacture of biscuits, so the subsidy on flour goes, in the ordinary way, to biscuit manufacturers. Again, as he points out, biscuit manufacturers really do not need, on the whole—and I notice he used the phrase "on the whole"—this additional assistance. Therefore this Order has been brought forward, so that the subsidy may be withdrawn from the biscuit manufacturers.

My hon. Friend, however, while accepting the general principle of the Order, takes exception to paragraph 4 of the Order, which he read out. He said that if I were able to offer a satisfactory explanation he would be happy. He also asked whether hon. Members would be able to elicit information about any arrangements made under this paragraph. It would not be for me to say that, but my general information is that Members of this House can ask Ministers whatever they like, and, in general, they get an answer, provided that security is not thereby endangered. The hon. Member said that, on the whole, manufacturers can manage without the subsidy, but the Ministry of Food in operating its maximum price arrangement, does not, and never has expected any manufacturer to operate on an unprofitable basis. It is anticipated that paragraph 4 will be interpreted something like this. In cases where the manufacturer desires to argue that hardship has arisen because his profit has fallen below, say, the pre-war average for the industry, he will proceed in this way—and incidentally we anticipate that such cases will be very few. He will be required to submit his costs, so that it may be determined whether he is selling any lines on an unprofitable basis, and it may then be found that the solution to his difficulty lies, not in acting under this paragraph at all, but in suggesting to him—and after all, we are in the closest touch with these manufacturers—that he should discontinue the production of some unprofitable lines and produce more of profitable lines. If this does not rectify the position then it might be possible to allow him an appropriate increase in the price of certain of his products.

Mr. Barnes

Are these things which the right hon. Gentleman is now stating, the responsibility of the Minister?

Mr. Mabane

Yes. We are in daily contact, as I am sure my hon. Friend knows, with food traders and associations of food traders, on all matters affecting prices and profits and matters of that kind. After all, we have to determine maximum prices, and as the hon. Gentleman well knows, we do not determine those maximum prices without first consulting the industries. Surely it has been one of the best features of the administration of the Ministry of Food that it has been able to carry the food trades with it so happily for so much of the way. [Interruption.] We advise traders. Traders can come to us if they are in difficulty; ours is a very human Department. They may sometimes think they have difficulties as a result of action by the Minister of Food, and we are able to say, "No, it is your own difficulty, but why not do so and so, for example?" We hope we may be able to overcome any hardship in the ways I am now suggesting, so that a reasonable margin of profit will be left, and it is only in the most exceptional cases indeed—so exceptional that my officers inform me they can scarcely conceive any such case arising—when neither of these suggestions apply, that consideration would be given to a remission of the charge under paragraph 4.

Let me emphasise that while the paragraph is included, we do not in the least want to have to operate it. The intention of the Order is that every manufacturer shall pay the charge laid down by this Order. Paragraph 4 has been inserted merely to deal with an extreme case which cannot be met by the normal methods of price adjustment such as I have outlined. I hope that explanation will satisfy my hon. Friend opposite, who is so expert in these matters, and who knows how happily we get on with food manufacturers, and that it will satisfy him, too, that we should not, in the least, use any such powers as are here inserted to give particular favours to particular people. I have no doubt, as he says, that if any such thing were not to happen but be supposed to have happened, there are Members of this House who would ask us for the actual details, and I have no doubt that when we gave them, those Members would be satisfied we had done nothing to which objection should be taken.

Mr. W. H. Green (Deptford)

Is this principle, which seems to some of us entirely new and novel, an indication that in the future, as subsidies generally are withdrawn, these same conditions will prevail, and that if any manufacturer can prove that he is suffering as a result of the general withdrawal of subsidy, he can get a revision or rebate?

Mr. Mabane

I should not like to suggest that any general principle ought to be erected on this Order. Let me remind the hon. Gentleman that this Order arises from the quite peculiar circumstance that the subsidy is paid on the flour. The intention of the subsidy is to keep down the price of bread. It is not the fault of the Ministry of Food that flour produces biscuits as well as bread. It would be more convenient to us if they were made of something else. Therefore, we have to proceed in this way in order to withdraw the subsidy.

Mr. Barnes

I must say that I am entirely dissatisfied with the reply of the Minister, and I ask him not to proceed with this Order to-night, but to take it back and look at it again. He admitted that his own Department does not anticipate that any occasion will arise. Is it worth his while to press this when hon. Members are in a difficulty? I do not want to divide the House under the circumstances, but I feel strongly dissatisfied with the Minister's statement. My right hon. Friend says that he cannot anticipate that the Department will have occasion to use it. Surely, it is not desirable that he should have a vicious principle like this introduces, and I beg of him to hold it over and have another look at it.

Mr. Mabane

I am afraid I could not give an undertaking of that character at all. All I can do is to put this to my hon. Friend. Surely, he would not suggest that the Ministry of Food, which is responsible for dealing with these operations and which enters into contracts with manufacturers and prevents them from securing abnormal profits by fixing maximum prices, should introduce a practice which might force them to operate on an unprofitable basis. Hon. Members should remember that, in so far as manufacturers might be compelled to operate on an unprofitable basis, if this Order were to operate without any variation, manufacturers might argue that, but for the circumstances of war, and the restrictions imposed upon them, they would be able to make a profit. It has never been the wish of this House that manufacturers should be required to operate on an unprofitable basis, and it is for that reason only that we desire to prevent that undesirable circumstance arising, if we can help them along. I hope my hon. Friend will not regard it as a really serious variation from the previous practice of the Ministry.

Mr. Barnes


Mr. Deputy Speaker (Major Milner)

The hon. Member cannot make another speech. He may ask a question.

Mr. Barnes

I submit to the Minister that the subsidy has never been the instrument of the margin of profit of manufacturers. The expenses and efficiency of conducting their businesses do that. The subsidy is a universal and general figure.

Mr. Mabane

If I may be allowed to reply, Mr. Deputy Speaker, yes; but they bear a relation to the maximum prices at which we allow the manufacturers to sell, and there is no limitation on our power to fix maximum prices. Surely, the cost of a product bears a very close relationship to the maximum price.

Question put, and agreed to.

Resolved: That the Biscuits (Charges) Order, 1944, dated 19th December, 1944, made by the Treasury under Section 2 of the Emergency Powers (Defence) Act, 1939, a copy of which Order was presented on 16th January, be approved.