HC Deb 03 April 1950 vol 473 cc855-63
29. Mr. Frank McLeavy

asked the Minister of Food if he has any statement to make about the progress of the Commonwealth sugar negotiation.

Mr. S. N. Evans

I will, with permission, make a statement at the end of Questions.

Mr. Speaker

I think the hon. Gentleman said he would, with permission, make a statement at the end of Questions. I have had no request for permission for the statement to be made. No Question can be answered at the end of Questions unless it is with my permission.

Mr. Evans

I apologise most profusely. Sir. My information was that that permission had been applied for and conceded.

Hon. Members

To whom?

Mr. Speaker

I think the hon. Gentleman should get on to his Department and tell them to be a little more accurate.

Mr. Evans

Again I apologise, Mr. Speaker. I will most certainly do that.

Captain Crookshank

May we take it. Mr. Speaker, that you will give the permission now?

Mr. Speaker

Probably it is a long statement, and we had better take it afterwards. I have made my protest, and I hope that the hon. Gentleman and his Department will take notice of it.

At the end of Questions

Mr. Evans

On 16th January, 1950, my Department issued a full statement dealing with the offer which the Government had made to Commonwealth sugar producers and I will arrange for a copy of this statement to be circulated in the OFFICIAL REPORT. Briefly, it said that we should continue to find a market for all Commonwealth sugar available for export up to and including 1952. We had asked Commonwealth producers for the time being not to plan to increase their exports during the five years beginning in 1953 beyond the figure of 2,350,000 tons of which the share of the Colonies was 1,550,000 tons. We had offered to buy 1,100,000 tons of Colonial sugar a year during the five years in question at reasonably remunerative prices to be negotiated annually.

Provisional agreement has been reached on these proposals with all Commonwealth sugar-exporting countries except the West Indies. Our offer to the West Indies was to buy 640,000 tons each year at the negotiated prices, out of total exports planned provisionally at not more than 900,000 tons. A conference of repre sentatives of West Indian legislatures and of producers and workers in the sugar industry met in Grenada in February, 1950, and requested His Majesty's Government to receive a delegation of members of legislatures and representatives of labour to press for an increase of the figure of 640,000 tons to 725,000 tons.

His Majesty's Government have considered this request most carefully. They appreciate the importance of the sugar industry in the economy of the British West Indies, but the offer already made, after prolonged discussions, took account of this and of the many other considerations which bear on this subject and is final. If after consideration of this statement it is still desired that a delegation should come to the United Kingdom His Majesty's Government will be willing to receive it, but they regret that they can hold out no prospect whatever of amending their offer.

His Majesty's Government have given further consideration to the position of British Honduras as a potential exporter of sugar. Great importance attaches to the development of British Honduras not only in the interests of the people of that colony, but in the hope that it will provide some outlet for surplus populations in the island Colonies of the British West Indies.

The Evans Commission laid great emphasis on the value for this purpose of establishing a sugar industry in British Honduras. His Majesty's Government therefore agree that the aggregate amount of Commonwealth sugar exports planned for the five years beginning in 1953 shall be increased to 2,375,000 tons, and that British Honduras shall be entitled to export 25,000 tons of sugar annually, of which His Majesty's Government will undertake to buy 18,000 tons a year at reasonably remunerative prices to be negotiated annually.

Mr. McLeavy

While thanking my hon. Friend for this very important statement, may I ask how the figures of 640,000 tons and 900,000 tons to which he referred compare with the pre-war and present exports from the West Indies to the United Kingdom, and what are the total exports from the West Indies?

Mr. Evans

The total exports before the war were 549,000 tons, of which 247,000 tons came to the United Kingdom. The total exports for 1949 were 690,000 tons of which 363,000 tons came to the United Kingdom.

Mr. Oliver Stanley

Whatever the final decision of the Government may be on this subject, would it not have been wiser and more courteous, in view of the very representative character of the delegation who wished to come here, to have allowed them to come and discuss it, rather than to have said, "You can only come on the condition that the Government's mind is already made up"; and is not the natural feeling which they would have about that likely to be increased by the statement which the hon. Gentleman has just made about British Honduras, which appears to show that there is some pool of non-Commonwealth sugar from which additional allocations can still be made?

Mr. Evans

If the suggestion of the right hon. Gentleman is that the West Indies are now faced with a fait accompli, that would be quite wrong. There have been prolonged negotiations on this matter. Of course, other Commonwealth sugar producers are concerned to the extent of very large tonnages. For example, Australia, 600,000 tons; South Africa, 200,000 tons; Mauritius, 475,000 tons; Fiji, 150,000 tons. If this tonnage is not agreed and if concessions are made to the West Indies, these other Commonwealth exporters will demand consideration on the same scale, and therefore—

Mr. De la Bère

Why not take all the sugar?

Mr. Evans

—we feel that on the whole this is a very fair agreement, and that it is as far as we can go.

Mr. Stanley

Since the hon. Member has found it possible to make an extra allocation of sugar in the case of British Honduras without, presumably, having any ill effects on the other Colonies, why is it not possible to have an adequate allocation for the British West Indies?

Mr. Evans

This, of course, does raise very large issues, as the right hon. Gentleman will understand. Britain cannot be a high price consumer and a low cost producer. Therefore, this question has to be viewed in relation to our need to be able to export at competitive prices. There has been a good deal of research and development in the field of sugar production over the last few years, and we are, it is true, keeping a reserve pool, so to speak, to the end that our friends may be induced to make use of all that wealth of research and knowledge that the march or science has made available. In other words, if we are to take the surplus it must bear some relation to world prices.

Mr. Driberg

Will my hon. Friend bear in mind that the resettlement of British Honduras envisaged by the Evans Commission is of only a relatively small number of people from the islands over a period of 10 years? Will he also bear in mind that although it may not be desirable ultimately that a country like Jamaica should be based on a one-crop economy, none the less it is a fact that Jamaica is much more exclusively dependent on sugar exports than a great Dominion such as Australia?

Mr. Evans

I beg to assure my hon. Friend that we accept that, and that it has been taken fully into consideration in arriving at this figure.

Sir Peter Macdonald

Why should we still be tied to Cuba as a source of supply of sugar, when our own Colonies are restricted in their production and devaluation of the £ sterling has imposed very great hardship on some of our West Indian countries owing to the fact that they have to deal with dollar areas? Will the hon. Gentleman allow these facts to be taken into consideration, and ask this delegation to come to this country and consider the whole problem concerning the West Indies?

Mr. Evans

We should be very happy indeed to take very much more sugar than we are at present getting from Commonwealth suppliers. I do not want to appear discourteous to our West Indian friends. If they feel, in the light of all that has been said, that they still want to come, then, if they come, we shall be happy to receive them, but I hope they will not come at any rate, until the end of April.

Mr. Eden

May I ask either the Leader of the House or the Prime Minister—as I do not think any of us feel very happy about the proposition that representatives of the West Indies may come here but find that all has been settled before they arrive—whether, in view of the immense importance of this question to their economy and the admitted increased difficulties they have had to face since devaluation, the Government will not reconsider this question, invite them to come and reserve a final decision until after discussions have taken place with the West Indian representatives?

The Lord President of the Council (Mr. Herbert Morrison)

This matter was very carefully considered. We had to make a balance between the various Commonwealth countries with the greatest care. Obviously, we did not wish to deny the right of our friends in Jamaica to come and talk with us if they wished, but it would really be wrong to suspend the negotiations for the purposes of that delegation; otherwise we shall prejudice the balance with other Commonwealth countries, and the rights of these countries to argue their case. That was the difficulty we were in. On the other hand, when we finally had to consider whether, if they sent representatives, we should talk to them or not, we felt we had to say to them that we could not hold out hope that they would get additional orders.

Mr. Stanley

Is it not a fact that there is a very considerable pool not allocated to Commonwealth countries that could be allocated without interfering with anyone's share. Can the right hon. Gentleman assure the House that there is no secret undertaking given to Cuba as to the amount of sugar we are to purchase from her, which prevents an extra allocation within the Commonwealth?

Mr. Morrison

I do not know anything about a secret undertaking to Cuba. There is a margin, it is true, but it is quite a limited margin. I venture to say that it is desirable, in the interests of the consumer, that there shall be some free play in the markets in order that we can check up on bulk purchase agreements. I would remind Members opposite that at the election they denounced the whole of this bulk purchasing business, but that they are now complaining there is not enough of it.

Mr. Michael Foot

Does not my hon. Friend think it is somewhat unfair to compare the position of the West Indies today under the proposed agreement with the pre-war position, since under the prewar position the West Indies were suffer ing from an acute depression, and that therefore the comparison from their point of view is not a fair one, although it may be fair from the point of view of Dominions such as Australia? In the second case, if we are to judge the wisdom of this decision to reject proposals made at the West Indian conference, will my hon. Friend tell us what expansion in sugar production in the West Indies is envisaged under this proposal, so that we may judge whether, under the guaranteed arrangement to be provided by these proposals, there shall be a full opportunity for the expansion of the sugar industry in the islands?

Mr. Evans

As I recall it, the expansion as compared with pre-war, taking from 1935 to 1938 and averaging it, is very substantial. It is certainly in the neighbourhood of 350,000 tons to 400,000 tons. We have taken very carefully into account all that my hon. Friend has said before arriving at this figure. We have done a good deal for the West Indies. Before the war, the only protection they had was £5 a ton preference, whereas today they are being guaranteed a market for 71 per cent. of their production.

Mr. Gammans

Has the hon. Member taken the trouble to find out how strong have been the expressions of public opinion in the West Indies of the negotiations up to now? Does he realise what a very bad effect it will have on Imperial relations if the elected delegation of this Colony comes over to this country and the Government refuse to do anything except entertain them?

Mr. Evans

Yes, Sir.

Mr. Harrison

Will my hon. Friend say, in view of our urgent need for more sugar, how it comes about that he has put a ceiling of 640,000 tons on the West Indian production, whereas in 1948 we were importing no less than 790,000 tons? What is the reason for this considerable reduction in the amount permitted under this agreement from the West Indies?

Mr. Evans

I must point out that we shall not be getting from the Commonwealth, including the West Indies, the tonnage of sugar we should be very happy to take, not even at the end of 1952.

Mr. De la Bère

Why not take the lot?

Major Legge-Bourke

In view of the fact that we export quite a considerable amount of sugar from this country in the year, will the hon. Gentleman say whether the result of this new proposal will be that we shall be exporting or re-exporting more sugar than we were before, or shall we give more sugar to the consumers who really want it?

Mr. Evans

We shall certainly hope to export as much. It is very important that we should maintain our export market, but it has to be pointed out that included in this tonnage allowance is 300,000 tons for Canada. We guarantee it, but Canada does not guarantee us that she will take it. There is an element of risk even in the figures which are complained of.

Captain Crookshank

At the end of it all are the people of this country going to have their sugar ration increased? Is it going to remain the same or is it going to be decreased?

Mr. Evans

That is a different question.

Mr. Peter Smithers

Is the hon. Gentleman aware of the very serious political consequences which might follow from the announcement he has made, and that in the eyes of many people in the West Indies, rightly or wrongly, the good faith of the Government is involved in view of the statement made by the Minister at the end of the negotiations last summer? What action does he propose to take to make sure that our good faith is re-established in the eyes of the population of the West Indies?

Mr. Evans

All fair-minded persons who have any knowledge of this subject are bound to recognise that the Government's proposals are eminently fair.

Mr. Dodds-Parker

Will the hon. Gentleman tell the House what the Government are doing to persuade the sugar importing Dominions—he mentioned one, Canada—to give an undertaking to give priority to Empire sugar to stop overproduction in the period ahead?

Mr. Evans

As well as ourselves, Canada gives a very substantial preference.

Mr. Marlowe

Is not the truth of the whole matter that the Government are deliberately limiting the sugar ration, because an increase in it would involve an extra food subsidy and the Chancellor of the Exchequer will not allow it.

Mr. Evans

No, that is not true.

Following is the statement:

The Ministry of Food issued the following statement today following the close of consultations with Commonwealth countries on the future sugar policy of His Majesty's Government in the United Kingdom. The United Kingdom Government was represented at these discussions by officials of the Ministry of Food, Commonwealth Relations Office, the Colonial Office, the Board of Trade and the Treasury: During the war by 'arrangement with the Canadian, New Zealand and Ceylon Governments and with the Governments of Malaya and other sugar-importing Colonies, the Ministry of Food made itself responsible for procuring the whole of the imported sugar supplies of these countries in addition to providing for the United Kingdom's own needs. On the 22nd September, 1948, in order to encourage sugar production in Commonwealth countries and help to remedy the sugar shortage in the United Kingdom and in the countries for whose supplies the Ministry of Food was still responsible, the Parliamentary Secretary to the Ministry of Food announced in the House of Commons that the United Kingdom Government guaranteed to find an outlet either in the United Kingdom or in the Commonwealth for the whole exportable surplus of Commonwealth sugar producers until the end of 1952. Shortly afterwards representatives of the West Indian sugar producers pressed for an extension of this guarantee beyond the end of 1952 and in the summer of last year the United Kingdom Government undertook to enter into discussions with Commonwealth producers in the autumn with a view to making long-term arrangements which would assure them a market beyond 1952 for agreed tonnages of sugar at reasonably remunerative prices to be negotiated with the producers. The United Kingdom Government stated that it was its declared policy to maintain and improve the economy of the Colonial territories and that where, as in the British West Indies, sugar production is the main and indispensable basis of a healthy economy, this would be given special consideration in fixing the quantities of sugar to be covered by these arrangements. Discussions with this end in view have been in progress in London since the 21st November. The United Kingdom's arrangement with the Canadian Government terminated at the end of 1949 and the Canadian sugar refiners are now free to buy their raw sugar where they can get it most cheaply. Similarly New Zealand, Ceylon and the sugar importing Colonies may when supplies of sugar become plentiful, wish to purchase their sugar for themselves in their own way and no longer expect the United Kingdom to procure it for them. The only market, therefore, for which the United Kingdom is able to give a guarantee to Commonwealth producers from 1953 onwards is the United Kingdom market. Accordingly the United Kingdom has offered to Commonwealth producers a five-year contract from 1953, making, with the unexpired portion of the present guarantee, eight years in all. Until 1952 the United Kingdom will continue under the existing guarantee, to find a market for the whole exportable surplus of Commonwealth producers. From 1953 onwards to 1957 the United Kingdom has offered to guarantee a market in the United Kingdom at reasonably remunerative prices fixed annually for a total of 1,550,000 tons, 1,100,000 tons from the Colonies, 300,000 tons from Australia and 150,000 tons from South Africa. In the light of information as to increased costs submitted by the producers, a price per ton 12 per cent. above the 1949 price has been offered for the 1950 crop, and any reasonable further increases of cost, together with all other relevant factors, will be taken into account in fixing the prices to be paid in future years. The precise basis for fixing these prices is still the subject of negotiation between expert representatives of the producers and the Ministry of Food. The existing undertaking encourages expansion of Commonwealth sugar production for export without setting a limit, but since the preferential market for Commonwealth sugar is limited, the United Kingdom Government has suggested to Commonwealth producers that, as part of the proposed agreement, they should undertake for the time being not to plan to expand their exportable surpluses beyond a figure of 2,350,000 tons. The Colonies' share of this total is 1,550,000 tons, which compares with their pre-war present, and prospective export figures as follows:
Pre-war average (1935–38) 960,000
1949 1,200,000
1952 1,400,000
Hence, under the arrangements proposed by the United Kingdom, the Colonies could lay their plans up till 1957 on the footing that they had an annual export of 1,550,000 tons, or 350,000 tons more than their exports today and 150,000 tons more than their expected exports for 1952. Of this total, 1,100,000 tons would consist of guaranteed sales in the United Kingdom. For the balance above the amount covered by the guarantee, they should find a market either in the United Kingdom or in Canada, since in both these markets the preferential rate of duty gives a considerable advantage to Commonwealth sugar over foreign sugar. If these arrangements were agreed to and carried out, and assuming that the United Kingdom by 1953 will be able to purchase all the sugar it needs, annual imports from the Colonies into the United Kingdom market would from 1953 onwards be about 100 per cent. more than they were on the average of the years 1935 and 1938. Imports from foreign countries would fall to less than 10 per cent. of the United Kingdom's total requirements of sugar, or no more than one-third of the pre-war quantity. The United Kingdom is under an obligation to the United Nations to enter into negotiations when the time is ripe for the framing of a new International Sugar Agreement. Pending such negotiations the United Kingdom Government feels bound to reserve some part of the United Kingdom market uncommitted. His Majesty's Government realises that its offer does not completely fulfil the desires of some of the producers concerned. There are numerous conflicting interests which it has been impossible to reconcile to the satisfaction of all parties, but the facts stated above show that there is no foundation for the view advanced in some quarters that the offer involves the restriction of Colonial sugar production in order that the United Kingdom may buy a greater proportion of foreign sugar. The figures given in this statement show that exactly the reverse is the case. All that the United Kingdom is doing in the way of limitation is first to place certain limits on the amount of sugar which they are prepared to guarantee to take at a fixed price negotiated each year, and secondly to ask Commonwealth producers for the time being to place certain limits on their expansion programme after 1952. It would be unreasonable to expect the United Kingdom to undertake for eight years ahead to purchase unlimited quantities of any commodity on the basis of a guaranteed price. The quantities covered can be revised upwards if circumstances permit, but there is no question of revising them downwards during the period of the eight-year agreement. The offer made represents a greater degree of security than the Colonial producers have had at any previous time. Before the war the total exports of the Colonies amounted to 960,000 tons, the whole of which was without guarantee and had to compete in world markets apart from the protection afforded by Commonwealth preference. The Colonies' export today is 1,200,000 tons. By 1952, on present expansion plans, it will be 1,400,000 tons. If they accept the present offer, the Colonies will be entitled in 1953 and for four years after that to export 1,550,000 tons. Of this total, 1,100,000 tons, representing no less than 71 per cent., will be shipped to the United Kingdom with a price guarantee giving them ample protection against any risk of a collapse in world prices. The balance they will be free to sell to their best advantage in the market and in so doing they will enjoy the full benefit of the Commonwealth preferential rates of duty. In these circumstances, His Majesty's Government feels that by this offer it has fully implemented the pledges given in the communique of 10th August. Australia and South Africa have accepted the offer subject to some reservations which remain to be settled. Replies are awaited from the Colonies.