§ Mr. N. Macpherson
I beg to move, in page 2, line 43, at the end, to insert:including in particular proper allocations to general reserve, proper provision for depreciation or renewal of assets, interest on any sums paid to that Corporation by the Secretary of State until repaid to the Exchequer, and interest on and proper provision for the redemption of capital, represented be the value of assets assessed in accordance with subsection (6) of this section.
§ The Chairman
It might be for the convenience of the Committee also to discuss the two other Amendments in the name of the hon. Member for Dumfries (Mr. N. Macpherson), in page 3, line 17, at the end, to insert:(6) All assets in possession of the Overseas Food Corporation at the commencement of this Act shall he revalued by an independent Commission of three persons who shall he appointed by the Secretary of State and remunerated by that Corporation, being persons not holding any office of profit under the Crown and not having had any previous connection with that Corporation; and all such assets, except in so far as they may be subsequently disposed of for valuable consideration, shall be shown in the books of the Corporation at the values determined by the said Commission, subject to proper annual depreciation.and in line 18, to leave out "fourteen."
§ Mr. Macpherson
I am quite agreeable to that, Major Milner, on the understanding that it might be possible for the Government to accept one Amendment without accepting the others. The point of the first Amendment is clear on the face of it. Subsection (1) lays down:It shall he the duty of the Overseas Food Corporation so to exercise and perform their functions as to secure, as soon as practicable, that their revenues are not less than sufficient to meet all sums properly chargeable to revenue account, taking one year with another.From there my Amendment goes on. Its purpose is to ensure that the proper charges are made against revenue. It will not escape the right hon. Gentleman's attention that the first Amendment has been based on what might be termed rather unrespectable parenthood, namely, the Transport Act. In the same way, we suggest that, in particular, proper allocations should be made to general reserve. That is covered by Section 14, the reference to which the third Amendment proposes to delete. I submit that it is right and proper that there should be a reserve fund, for reasons which I shall show later, and proper provision for depreciation or renewal of assets is, of course, essential. The Amendment provides:… in particular proper allocations to general reserve, proper provision for depreciation or 2239 renewal of assets, interest on any sums paid to that Corporation by the Secretary of State until repaid to the Exchequer …The Secretary of State is acting as banker and is providing, and will be providing, from 1st April the working capital for the Corporation. The Amendment goes on:… and interest on and proper provision for the redemption of capital …That is added because it is in the Transport Act. It seems to me that if it is right that the Transport Commission should have to meet this charge, so ought the Overseas Food Corporation to meet it as a charge against revenue, for reasons which I shall show in a minute.
The question then is how that capital is to be calculated. It is suggested that the capital should be calculated as the value of the assets assessed in accordance with the following Amendment. The reason it is necessary that the assets should be shown in some form or another in spite of the fact that the whole of the advances are being written off is that unless they are shown in some form or another and charged against revenue account, we are not really getting a proper experiment. As the whole purpose of the scheme is to make quite certain that we are going to have a proper large-scale experimental farming operation, it would be quite wrong if the right hon. Gentleman were to take over all the assets at no value whatsoever and make no charge whatsoever in respect of those assets.
On the previous Clause we debated the question of the valuation of assets, and my hon. Friends dealt in particular with the value of plant, machinery and vehicles. I do not altogether share their difficulties in this respect, since the amount is shown in the balance sheets and has been already very substantially depreciated, and no doubt this next year will show a very substantial depreciation. Buildings and installations were shown in the last balance sheet at something like £4 million. But perhaps the most important part of the assets is the amount that is shown for development and land clearing. It is shown as an asset at £16 million.
Of course, the whole of the advances are being written off, but nevertheless that represents not only a real asset but the main basis of the experiments which are being carried out, and it would be quite absurd if that value were to be treated 2240 as wholly written off and not be shown in any way against revenue. I submit that it would be improper for the Corporation itself to put a value upon this asset. It would not be normal, either, to ask the accountants to put a value on the asset; it is not properly their job. Therefore, there is no alternative but to get some outside body to value it. It would be a reasonable and proper thing for an outside body, not only to place a value upon the land that has been cleared, but also to look at the valuations standing on the books on 1st April of this year, at the time when the right hon. Gentleman takes over those assets.
There are, of course, additional arguments for that. One is that it is in the interests of the right hon. Gentleman himself, because otherwise each time we debate the accounts of the Overseas Food Corporation., inevitably everybody will have in mind the thought "Yes, but this is a return on £36 million"—or whatever the ultimate figure may be. We can expunge quite easily by a Clause, as is done in the Bill, the whole of the advances, but we cannot expunge from people's minds the fact that all this money has been spent; they will have that reservation perpetually in mind. It would be an advantage to the right hon. Gentleman himself to have a revaluation so that the capital of the Corporation as from 1st April would be shown at a certain given figure.
Of course, it might be asked "What is the purpose in re-valuing all the assets if quite a number of them are to be disposed of?" Equally it may be said that if they are being disposed of, it is of advantage to know what their true value amounts to. Consider, for example, the hospital at Kongwa, to which reference has already been made. It would be a snare and a delusion simply to hand it over to the Tanganyika Government merely on the ground that it is of no further use to the Overseas Food Corporation. It would be quite wrong that the Tanganyika Government should take it over for nothing if it were going to be of real value to them. If, on the other hand, it would not be of value to that Government, then it would not be an asset, but a liability, and they should not take it over anyway. Although we are anxious to assist the Colonies in every way we can, we want to know the price of the assistance we are giving. For this 2241 reason also, it is necessary that all the assets should be properly valued.
The effect of the third of these Amendments, which proposes to leave out the word "fourteen", would be to include Section 14 of the 1948 Act and to keep it in effect. This simply means that it would be necessary for the Corporation themselves to build up reserves. We really must have from the right hon. Gentleman at this stage a clear idea of how he intends the Corporation to work. Does he intend it only to work like a branch of the Civil Service, simply receiving a Vote from Parliament and accounting for it to Parliament; or is it to be a proper economic, commercial experiment? We must know which it is to be. While it may be perfectly proper for the one farm in Kongwa, which is purely an experimental farm, to be treated as a branch of the Civil Service and possibly be put under the East Africa High Commission, the other 23 existing farms should be treated as commercial propositions. But unless the assets are re-valued and their value known, it would be quite impossible to do this.
These are the reasons why we have put down these Amendments. It merely remains for me to say that, in so far as we are suggesting that the assets should be re-valued, then I submit that it would be proper that they should be re-valued by entirely independent persons. We must know what assets there are, what is their value, and what proportion is to be retained. Only on that basis can we have a really proper, effective experiment.
§ 10.45 p.m.
§ Mr. Baldwin (Leominster)
I want to reinforce the arguments of my hon. Friends. Even at this late stage, I would say that if the Government had accepted a previous Amendment to wind up a bankrupt affair as it ought to have been wound up, by a liquidator who would have appointed independent valuers, this Amendment would not have been necessary. The same valuers who valued the assets at the end of the old Corporation, would have handed over the assets to the new Corporation at whatever they thought those assets were worth. It is obvious that the new Corporation cannot furnish proper accounts unless it has a clear picture of what it takes over from the old Corporation and the value at 2242 which it takes over those assets. How can it appreciate that value if it does not know the value of the various items at the start of the year?
I hope that the Colonial Office will present a proper picture at the end of 12 months' trading to show us in no uncertain way what it has done. I still suggest to the right hon. Gentleman that he should ask his accountants for their views on how this job should be cleared up. It is no good asking the old Corporation to furnish accounts. I have never heard of a bankrupt being asked to furnish a statement of his assets before going into the bankruptcy court. He has to get an independent person to do this. That valuation should be made so that it may be realised what is going to be handed over to the new Corporation.
I was disturbed to hear that sales were proceeding. How does the old Corporation know what the new Corporation wants? Is it selling something which should be handed over to the new Corporation? Who is going to decide that? I think that something ought to be done at once so that we may know exactly what is to happen to this bankrupt concern. I hope that the right hon. Gentleman will look upon this matter from a business point of view and will call in a liquidator.
§ Mr. Frederic Harris
I am not going to apologise for the lateness of the hour, because I think that an important issue has been raised by my hon. Friends. It is extraordinary how the Government are getting away with this. It is absolutely "jiggery-pokery" so far as the accounting side is concerned. We have heard the Minister of State tonight talking about the disposal of stores and putting across to this Committee at some given date £1,600,000 losses have been incurred in getting back £2,250,000. Those were his words. If he looks at the OFFICIAL REPORT tomorrow, he will find that he said that the cost of disposal was £1,600,000. I am sure that neither he nor the Committee knew what he was talking about. Was this a loss on the administrative side, or was it a loss on the goods of which they were disposing? Some of the losses we have seen can be understood, but that statement was utter rubbish.
As my hon. Friend has suggested, by having no new valuation of the assets as they will appear when we start again on All Fool's Day, I feel that we are 2243 playing about with the taxpayers' money. Let us know exactly where we stand. It is only right that we should know what assets are left, and whether there are any hidden assets. There are those who believe that there is not very much to be seen. Let us have an independent valuer, as has been suggested by my hon. Friend; let us see what the assets are in the light of this new proposal which the Government are putting forward. If the Government have this new idea in front of them, then surely independent valuers should be allowed to check these valuations and enable us to start afresh.
If this is not done, then when accounting has to be undertaken in a year or two we shall not have a true picture at all. There will not be any depreciation shown, for there will be no commencing assets upon which to base figures. In any normal company, the capital represented by this £36,500,000 would have to be written down to the valuation then placed upon it by whoever was appointed to liquidate the assets or whoever was going to buy them afresh in order to start again. Why should not this procedure be adopted here?
My hon. Friend has put forward a most sound proposal for a clean start on 1st April, and I hope that the Minister will concede this point to the Committee, because it will help tremendously in the long run. It ought to be appreciated that the Minister of Food has "passed the buck" to the Colonial Secretary, and I do not know which other Minister this matter can be passed to now; Ministers cannot go on handing it on. So let us get a new start correctly with the proper assets properly stated as in any normal system of accountancy. That case has been put forward in excellent detail in the proposal we have heard—we have almost had professional accountancy advice—and on reconsideration I am sure that the Colonial Secretary will be bound to agree with our suggestions.
§ Mr. Lennox-Boyd
I do not want anybody to get alarmed; I am not going to make a speech, but there is one thing I should like to hear from the right hon. Gentleman. There has been some confusion in the minds of hon. Members since the Parliamentary Secretary to the Ministry of Food made a reference to the sale of stores. He quoted a figure of 2244 £1,500,000, and we should like to know if that is the loss or the cost of the sale of the stores. One hon. Member says one thing, and another hon. Member another.
§ Mr. J. Griffiths
That has no reference to the Amendment which we are now discussing. [HON. MEMBERS: "Yes."] No, it has no reference to it at all; there may be an opportunity to discuss that on the Motion that the Clause stand part of the Bill, and perhaps the information can be given then. But if I may have the attention of hon. Members who have spoken on this Amendment, I would point out that it is quite clear that we are discussing what will be the position after 1st April when the responsibility is transferred. How do we propose to finance this in the future? That is set out in the White Paper, and if hon. Members read the last sentence in paragraph 19, on page 6, they will find:Their operations will, therefore, be financed from the time of transference of Ministerial responsibility from moneys to be voted by Parliament, subject to effective control by the Secretary of State for the Colonies, in consultation with the Treasury.Therefore, the whole of the operations from the date of the transfer will be financed by Votes by Parliament, and the procedure by which Votes are presented and discussed would apply fully here. It would be inconsistent to make all these arrangements about what is to be set aside—certain sums for depreciation, for the redemption of capital, and so on. In future, from 1st April, the Corporation will be financed by Votes, and the purpose for which every penny is required will be set out. There will have to be, of course, provision for this Board of a sum in a general way. As from 1st April, we shall be financing it in that way by a Vote from Parliament.
§ Mr. N. Macpherson
The same procedure applies to the Royal Ordnance Factories, which are also financed by a Vote. They show, in their balance sheets, the value of capital assets. I suggest that some machinery should be devised so that charges may be made against revenue in respect of capital assets of the Corporation, whether the advances in respect of them have been written off or not. That is the point to which I ask the Colonial Secretary to devote his answer.
§ Mr. Griffiths
In the past the Overseas Food Corporation was given advances, if I may use the phrase, of money from the Consolidated Fund. In future, its requirements will be met by annual Vote. Because they are met by annual Vote, I am advised—and it is my experience, too—the sums to be given by annual Vote would be to meet the expenses of the Corporation in carrying out the scheme.
§ Mr. Frederic Harris
I am sure that the Minister is not deliberately trying to miss the point. The point is that we want to get commencing assets. It is not a question of how much additional advance is approved by this House from time to time, which, no doubt, will be fully accounted for as to the way it is expended. It is a question of how these accounts are done. We say that there should be correct assets to commence with on 1st April and correct charges against revenue for depreciation and other charges, such as my hon Friend has pointed out. I think that the Colonial Secretary will appreciate that he has missed the point entirely, although I am sure it is not his wish to do so.
§ Mr. Griffiths
Most of these speeches are relevant to a debate that we had earlier and on which I made a statement.
§ Captain Duncan
I have put my name to these Amendments, and I particularly support the second one, the main object of which is to obtain the proper valuation of the assets. Here we have written off £36 million and are starting a new Corporation with another £6 million. I agree that any future money to be voted by Parliament or by the public will be fully accounted for. In this case we should have a trading account like that of the Royal Ordnance Factories. There would be on the assets side of this trading account the value of the assets in detail.
What we want to find out is the re-valuation of the existing assets so that we can get a proper figure in the first year of the new Board. That is the point of our Amendments. It is a point which the Colonial Secretary has not answered. Our idea is that the only right way of obtaining the valuation of the assets is to have a new body of people to do the valuation. I do not like the idea of the Corporation valuing its own assets. We want an independent valuer, and that is the point the Minister has not answered.
§ 11.0 p.m.
§ Mr. Maudling (Barnet)
I do not understand the Colonial Secretary's logic. The Clause refers to sums properly chargeable to revenue account. The first Amendment which we are discussing defines certain sums properly chargeable to revenue account. If, then, those sums are properly within that definition, why does the Minister object to including them in the Clause? If they are not properly within that definition, we ought to know. Does the Corporation intend to make appropriate allocations to general reserves, renewal of assets, and so on? If the Corporation intends to make this provision, then why not write it into the Bill? If not, then surely this Committee should be told so.
§ Sir Ian Fraser (Morecambe and Lonsdale)
The right hon. Gentleman has said that in future the activities of this enterprise will be financed by Votes from Parliament. That is clear enough. When financing the activities of the Army or Navy, Parliament is approached every year and asked for so much money. It is granted, or whatever proportion Parliament is prepared to give. But this is a trading concern. Is it to be assumed that it is going to make a loss every year for ever and ever, and will come to Parliament always for a grant because it is going to make a loss; or will it one day make a profit?
Suppose it takes on its initial assets for nothing, and during the next year or two it is compelled to buy some new machinery or plant; will it treat that as a capital item, as a fixed asset, in its balance sheet? Will it write it off over a period of years? Directly it establishes the practice of maintaining a commercial balance sheet—and it seems to me that it must do—it will be following exactly the practice suggested by my hon. Friends, namely, that of having a balance sheet showing its fixed assets and writing them off out of revenue. If ever it is to make a profit, what will it do with the profit? Will it be used to set up reserves, to write off against depreciation, or merely be paid back to the Treasury against the draft for which it asks? The right hon. Gentleman must realise that this is not like the Armed Forces of the Crown, or the Ministry of Health. It is a trading concern, and therefore it must have assets. As it must start off with them, it is not 2247 unreasonable that the assets should be valued.
§ Captain Crookshank
The right hon. Gentleman, on an earlier Amendment, said that he would look at the question of the assets, and perhaps in the light of this discussion he will also take this point into consideration. I listened very carefully to what he had to say, and it seems to me that he was very much concerned about how the Corporation was to be financed in future, not by advances but by Votes, which of course was not our point. My hon. Friends have been talking about the desirability of finding out, at the particular moment when the right hon. Gentleman assumes responsibility, the value of the previous assets, and I hope, therefore, he will take that point, as well as the other point, seriously into consideration.
As my hon. and gallant Friend the Member for Morecambe and Lonsdale (Sir I. Fraser) has said, we were under the impression—we may be wrong—from reading subsections (1) and (3) of this Clause that we were dealing with a Corporation which was meant to be a trading concern, and that it was possible to foresee both losses and profits over a period of years. The expectation of profits is not very likely, but it is a possibility which must not be entirely excluded from our minds when we are discussing this as objectively as we are doing now. Therefore, if there have to be trading accounts, and Parliament has to maintain its control, quite apart from the payment of money through the Vote into the concern, then there ought to be, before the Bill leaves this place, an agreed system of finding out what the assets are at the beginning. I hope that we shall not have to press this technical matter further now, and I hope that the right hon. Gentleman will look into it. I will excuse him if he cannot do it now.
I hope that someone will explain at some stage why the Government want to leave out Section 14 of the original Act, which allows the Corporation to establish a reserve fund. If the Corporation is really going to be a proper trading organisation, it presumably ought to have a reserve fund. Whether it ought to or not, the Government intend it to have one, because the White Paper recommendation, on page 17, says that a sum 2248 of £1 million is to be set aside to cover unforeseen contingencies. If that is not some kind of reserve fund, what is it? If it is a reserve fund, how can it be dealt with when the clause that allows the Corporation to have a reserve fund is being deleted from the whole structure? I hope that at some stage that point will be answered. I can understand that the right hon. Gentleman may not have his financial expert here, but there will be further stages. We shall look for a reply to that point, and also a considered answer about assets, reserving our right to take such measures as will then be available to us to try to rectify the matter.
§ Mr. J. Griffiths
In reply to an earlier Amendment, I said that it was our determination to see that there was a proper valuation of the assets before the changeover takes place. I promised that before the Report stage I would see whether the provisions were completely adequate on a point that all are agreed is desirable and essential. In discussing this Amendment, I thought we were mixing up with it something that I had covered already and on which I had given an assurance to the House. If the hon. Gentleman will withdraw the Amendment, I will look at the matter.
§ Mr. Alport
Before we leave the discussion of this Amendment, I wonder if the Secretary of State, the Minister of Food, the Minister of State, or the Parliamentary Secretary to the Minister of Food, or indeed any hon. Gentleman on the Front Bench, has been able to find out the answer to the question—
§ The Deputy-Chairman (Colonel Sir Charles MacAndrew)
That will arise on the Question that the Clause stand part of the Bill.
§ Amendment, by leave, withdrawn.
§ Mr. Lennox-Boyd
I beg to move, in page 3, line 12, after "aforesaid," to insert:to the extent to which they are represented by the fixed and current assets of the Overseas Food Corporation at the commencement of this Act and.The object of the Amendment is really quite simple. We are writing off tonight some £36,500,000 of public money 2249 that has been lost, but we are not wiping off the sums that have been advanced to the East African Railways and Harbours Board. The purpose of this Amendment is to make quite certain that if and when these latter sums are recovered, they will be paid into the Treasury and in no way go as a hidden asset to the new Corporation. If we can have that assurance, we need not detain the House.
I think I can give that assurance. I do not think there is any possibility of what the hon. Gentleman thinks may occur, actually happening.
§ Mr. Frederic Harris
With regard to the disposal of the sum of £1,600,000, perhaps the Minister might be able to put us right on the matter.
§ Amendment, by leave, withdrawn.
§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
Mr. F. Wiley
I think the hon. Member is rather confused. I did not refer to the figure of £1,600,000, but I will give an explanation of the figure, which was given during the discussion. In fact two figures of that amount were given. The first relates to compensation to personnel, which is a straightforward figure. The second deals with the liquidation of assets in the shape of stores, and that can be broken down under the following headings. Stores of this magnitude obviously cannot be disposed of immediately, so the first item is the cost of the maintenance of these stores and assets, and for this purpose it is assumed that the liquidation will take about two years.
The second head is the cost of concentrating and moving the stores, because again it is obvious that in East Africa the stores would have to be collected and brought to dispersal centres. Thirdly, there is a number of miscellaneous obligations arising, such as the dispersal of concentrations of African labour, the termination of contracts for supplies, and that sort of thing. Under these heads the total amount estimated as being the cost of the immediate closure of the Scheme is about £1,600,000.
§ Mr. Henderson Stewart
Would the hon. Gentleman answer the question I put to him a little while ago? If this amount of £1,600,000 is to be the cost of dispersal, what is the value of the goods to be dispersed? How can we judge whether this figure is reasonable or not unless we know what has to be disposed of? Is it £10 million, £20 million, £40 million worth of stores, or £1 million worth? The Committee should be told what it is we are talking about.
§ Mr. Frederic Harris
We know it was not the hon. Gentleman who gave us this figure; it was the Minister of State. What I should like to ask is what it is related to. Has it anything to do with the £2,250,000? Is it a new loss or a loss that has been going on? This disposal has been going on for months and months. When the Minister says that some of this is for the maintenance of such stores, I wonder who has been pulling his leg about it. What sort of maintenance? If he would look at the maintenance of these stores, he might be considerably shocked, and I am sure hon. Members here would be.
There is no suggestion that there is a first-rate staff, with a lot of stores that cannot be used, who keep on going round titivating things up. Much of it is in the open, much of it uncovered, and much of it is never seen. It is important that we should know what is behind this figure. The Minister's advisers must know. To suggest that this is something that none of us knows anything about, or something to do with maintenance, and to expect us to accept statements like that is going a bit too far. Can we have some proper explanation before we go home tomorrow, because we shall keep pressing for the proper answer until we get it? If the Minister is being kidded by somebody, we on this side are not.
§ 11.15 p.m.
§ Mr. Selwyn Lloyd
I want to ask the Parliamentary Secretary a simple question. Is the £1,500,000 the cost of realising the £2,250,000 referred to on page 12 of the White Paper?
§ Squadron Leader Burden (Gillingham)
The hon. Gentleman made three statements. He said it was for the maintenance of stores and assets for a period of two years. The maintenance of what stores and what assets? Is it to keep weevils out of peanuts that have never 2251 existed? He speaks also of the cost of concentrating and moving stores that have already been maintained for two years, and of the Ministry's obligations for compensation for the loss of contracts. What is the explanation? The Committee have asked that this matter should be made clear, and all the Minister has done has been to throw the Committee into confusion. It is not good enough for the Government to get away without an explanation, and I must press for one.
§ Mr. F. Willey
Perhaps I should try again, but I assumed that hon. Members opposite had some commercial experience and that before joining this debate they would have informed themselves better about the assets of the Corporation. If we assume, as we do in these figures, that the Scheme is to be closed down immediately, obviously all the stores of the Corporation are disposed of. If hon. Gentlemen have had commercial experience, they know where to look in the Annual Report to find a valuation of these assets. It is not part of my responsibility to teach them elementary commercial procedure.
I am asked why we cannot dispose of these stores immediately; and if we cannot dispose of them immediately, why have we to look after them? The hon. Gentleman was not here during the debate; if he had been, he would have heard the hon. Member for Bury and Radcliffe (Mr. W. Fletcher) saying that in East Africa stores have to be carefully looked after if they are not to deteriorate rapidly. If it is accepted that the stores have to be disposed of over a period, proper provision has to be made for their maintenance. No one has challenged this. For disposal, they will have to be concentrated, and that costs money. If the Scheme were immediately closed down, compensation would have to be paid on the termination without notice of contracts for supplies. These three heads provide the basis for the estimate of cost, which has not been challenged seriously by anyone who has studied the accounts, and which is the estimate of those best informed about this.
§ Sir I. Fraser
The hon. Gentleman does not act wisely to get cross when he is asked simple, straightforward questions about this matter. All he does is to repeat that his experts advise that £1,600,000 2252 will be spent on concentrating, maintaining, guarding and preparing for sale a certain amount of stores. Yet he does not tell us what the stores are. He says that we can look in the balance sheet. No doubt that is true enough, but if he wants to get business through he would be very wise, as a good managing director, which he probably thinks he ought to be, to tell his shareholders the answer to that question. It is no good telling them that they ought to have read the papers. If he will be conciliatory and tell what he knows—if he knows it—it will undoubtedly help us to get on with the business.
He says, "You cannot do that, because who knows whether the stores will be sold quickly, as if we were winding up altogether, or whether it will take two or five years to sell them?" How can he bring an estimate at all if he does not know how many years they are to be watched, concentrated and guarded? It is obvious that there is something which he does not know or something which he is ashamed to tell us.
§ Mr. Baldwin
May I beg the Minister to get some information ready for us for the next occasion? I can assure him that some of us have had some commercial experience. All my life I have been realising assets, and my commission has been at the most about five per cent. My firm is at present realising assets and is managing to get about five per cent. Whoever gave the Minister the figure of £1,600,000 must have based it on something. What was it based on? Was it based on the realisation of something which was worth £10 million or £5 million, or was it based on a figure of £1 million? Why not say, "We shall lose £1,600,000; we are going to give the assets away"? That seems the obvious thing to do. He has not explained why he will lose £1,500,000 for breaking contracts which he has entered into. In these days of rising prices, anybody who has an old-time contract should be getting some advantage from it and not losing money on it. The Government have not made it clear to us, and we ought to have some explanation from them.
§ Mr. Henderson Stewart
There is still another point. In his reply, the hon. Gentleman said that, if the assumption is that all the stores are to be sold now, the figure will be found in the balance sheet, and thus £1,600,000 would presumably be the cost if that is his argument 2253 for disposing of that total. But that is not the assumption to make, because we are to proceed for another seven years, and in that time we shall, presumably, use a great deal of the stores which now exist. Therefore, the stores which have to be sold cannot be anything like the stores which now exist. We are only asking what part is to be sold and what part shall be kept. Within a rough £20 million, could the Minister give us an answer?
§ Captain Crookshank
As is usual with Government matters, the Government have, I am afraid, got the Committee into a complete muddle. It is not surprising, because two different sets of questions are running together at the moment. As I understood it—may I try to see if I have it right?—when the Minister of State gave the original figures, which were more or less repeated by the Parliamentary Secretary, what we were then trying to elucidate was how it came about that the White Paper said that it would cost almost the same to wind up everything and to sell up as it would to go on with the modified plan. On that the right hon. Gentleman built up the figure of something like £6 million, which is referred to in the covering report, by saying that if we wound it up, we should have to compensate for loss of wages and salaries at a cost of £1,500,000, and that the liquidation of stores would cost £1,500,000.
Then there was some confusion because nobody could make out whether he said "cost of liquidation" or "loss on liquidation." That was where the confusion was to start with. He said that the third point was that £1,400,000 would be required to deal with the contracts which had to be abrogated; and that the total came to roughly £6 million. That was the first set of figures, as I understood it, but owing to the confusion about whether it was "cost of" or "loss on" liquidation, the Government were pressed to clarify that; but this delectable piece of information had to be kept back until we got to the Motion that the Clause stand part of the Bill.
Then the Parliamentary Secretary got up and told us what in his view those figures represented. He said, "Oh, yes. It is £1,600,000, and that is made up of the cost of maintaining the stores for two years pending sale, the cost of concen- 2254 trating and moving the stores pending the sale, and miscellaneous, which includes—" here is what has got the whole thing muddled again—"the cost of African labour and the cost of terminating contracts." Well, the previous answer put the cost of terminating contracts at £1,500,000. Now, it is lumped in by the Parliamentary Secretary with all these other items to make £1,600,000. That is the first confusion.
The second confusion was when my hon. Friend and others tried to ascertain what part of the existing assets is to be sold, not on the assumption of the whole thing being closed down—which is what the first set of figures refers to but on the assumption that it is going on for seven years, according to the White Paper plan. I do not think that that figure—and I have listened to all these confusing figures—has been given to us by anybody from the Government Front Bench. It may be that they do not know. It may be that that is one of the things which will emerge when the Colonial Secretary goes into the question of the assets, which we have discussed already at considerable length. I should like to have an answer from one of the Ministers on that point.
If there is any way of clarifying—I am not sure that repeating them over again with different emphasis would do it—the other set of figures, perhaps the right hon. Gentleman will think of some way of doing it, because the group of figures given, first by the Minister of State and then by the Parliamentary Secretary, of the £6 million which it would cost if we closed down the Scheme—which is the same cost as carrying it on—is in a way rather a piece of academic information, because nobody at present intends to close it down. Therefore, there is no great rush about giving us that information tonight so long as eventually we get the right information and not these confused figures. If I have disentangled the questions to which we want answers, and if the hon. Gentleman can help with the replies and can make them quite clear and foolproof, we shall be pleased.
Mr. F. Wiley
I will try the soft answer. I agree with much of what the right hon. and gallant Gentleman has said, because I think that he has clarified the issue. I agree that it is academic. That is why I cannot understand the persistence of the Committee in seeking to obtain this in- 2255 formation at present when it is not really relevant to the matters we are discussing—[HON. MEMBERS: "Yes, it is."] I said that the issue was put clearly by the right hon. and gallant Gentleman, and it is put clearly. What we are dealing with is not the loss upon the liquidation of the stores, but the cost of the liquidation of the stores.
§ Mr. Willey
All the stores of the Corporation. Those stores would have to be liquidated if the Scheme were closed down. The assumption upon which these figures rest, and the context in which they were given, is the complete closing down of the Scheme. If the Scheme is closed down completely, then we have to calculate as a cost consequent upon the closure of the Scheme the actual cost of, in this instance, disposing of the stores. That is a cost which we have to calculate and to isolate as the cost consequent upon the complete closure of the Scheme. The figures with which we have been dealing are those figures. These are estimates of the actual cost that would be consequent upon disposing entirely of the stores of the Corporation.
The right hon. and gallant Gentleman made one small point—I quite agree that it adds another note of confusion—that in the disposal of stores we included the costs of the disposal of African labour. After all, we reduced the original figures to three broad headings. The cost of the disposal of African labour could not be included in compensation to personnel for terminating their services. But in fact, if the assets of the Corporation were to be liquidated immediately by the closure of the Scheme, one of the costs which would have to be borne by the Corporation would be the dispersal of the concentration of African labour. This was the most appropriate of the three heads under which to include this cost.
§ 11.30 p.m.
§ Mr. Selwyn Lloyd
Before the hon. Gentleman leaves the question of stores, will he say what it is estimated that these stores will yield? Is it £2,250,000?
§ Mr. Willey
That is the matter which confused the issue. This cost with which we are dealing at the moment is a cost consequent upon the disposal of the assets of the Corporation. If we deal with the loss on the liquidation of the assets, which is the point which the hon. and learned Gentleman had in mind, that is an entirely different question. That would be an estimate of the realisation of the assets of the Corporation, which is an entirely different matter. But we are dealing now only with this cost consequent upon, and brought about by, the closure of the Scheme.
§ Mr. Lloyd
The hon. Gentleman cannot get away with that answer. This figure of £4,500,000 is a hypothetical figure of the cost of closing down completely. We are told that because it would involve that loss to close down the Scheme, we ought to agree to its going on and to spend £6,000,000. Surely the relevant figure, which we have not been given, is how much these surplus stores are going to yield. That is another hypothetical figure; it is an estimate. The figure of £4,500,000 was an estimate. Before we can judge the validity of the figure of £4,500,000 we must know how much these stores are worth.
§ Mr. Frederic Harris
I must support my hon. Friends on this. The Parliamentary Secretary has got us all into a state of difficulty now. He is really saying that from a certain given date, if the idea was to close down the Scheme—which is not the idea now, as far as the Government are concerned—then it is going to cost £1,600,000 to get rid of these stores. What could he be talking about? Surely these stores must be worth several millions of pounds. The £36 million have gone somewhere, and quite a few of those millions of pounds have gone in overbuying for a Scheme which it was thought could be coped with but which it was subsequently proved could not be handled. Therefore the whole of East Africa must be littered with stores, whether those stores are plant or anything else. It is certainly not snoek in this case. In Dar-es-Salaam, Nairobi, and Tanganyika, we must have plenty of stores—many millions of pounds worth of stores.
The hon. Gentleman's suggestion is that if these stores had to be disposed of, it would cost £1,600,000 to do that. Surely that is not possible. What is the Parlia- 2257 mentary Secretary going to get for these stores when he sells them? What stores are there to be sold? It is well known that if one has stocks of anything today, prices are going up. Surely if we had to cut off this Scheme at any time, we ought to make a profit on the stores. If we had to keep on supporting things put to us today on the basis of advice given, and if we did so on an issue like this, we would be a second-rate business undertaking.
We do not know what we are doing. We are told to accept the statement of the Minister that, if he has to close down and dispose of the stores, he is going to find a way to lose £1,600,000. I could tell him how to do it. It has been done in the past, and a lot of it went into the hands of the Indians. Anybody can give money away as quick as lightning. If we are to base our whole argument on the type of information which the Minister is apparently getting from some advisers somewhere, then all I can respectfully say is that he ought to tell somebody to change the advisers.
I appeal to the Minister once again to appreciate that it is quite clearly ridiculous to pretend that, in disposing of stores, if this Scheme were "packed up" and we had to get out, he is going to find some really extraordinary way of losing £1,600,000. Anybody knows that, if the stores were bought in the last three or four years, as presumably they were, he would make a profit, and not a loss; and that is what is worrying hon. Members on this side of the Committee.
§ Mr. Dodds-Parker
I thought my hon. Friends had made their point perfectly clear; all we are asking is what is the figure these stores will get when they are sold.
§ Sir I. Fraser
May I suggest to the right hon. Gentleman that we abandon this discussion, and all go home, and then he can find the time to get the information which he obviously has not got at present, and then at another time, when he has that information, he can come and tell us? Surely in one of the Ministries concerned, or in the archives of the Treasury, or in the London office of this Corporation, there are figures which will disclose to somebody who understands accountancy what these stores cost. Let us suppose that they cost £10 million; then they are now probably worth £15 million, because every month they are 2258 increasing in value. It is most unsatisfactory that the Committee should be put in this position, and I do not think that the Minister should get his Clause when he utterly refuses to give this information. It is an insult to right hon. and hon. Members, furthermore, that there is nobody here from the Treasury who is competent to answer questions about plain figures.
§ Mr. Webb
If I may intervene, may I say that, without accepting any of the allegations made about the inadequacy of the information given by the Parliamentary Secretary—because I think that he has given a lucid statement—I will undertake to look at this point. The information given tonight has to be considered against the background of the printed information which is, and has been, available to right hon. and hon. Members for some time now, and if that had been done, I think it would have been considered satisfactory. This is not a matter for great depths of difference between us. The Committee are entitled to as much information as we can give, and between now and the Report stage I will undertake to break down the figures. I do not know how far we can go this is a complex matter, but in so far as we can break them down. I will undertake to do it.
§ Captain Crookshank
I must say that we are all very grateful to the right hon. Gentleman for that, and we can only hope that, when available, the information will be that for which we have been asking. It is all very well for the Minister to say that he is surprised that there should be so much difficulty following upon the large amount of printed background which has been available, but he should remember that he and his friends have been living with this problem day in and day out. We all know it has been the skeleton in their cupboard for so long. Right hon. and hon. Members are deluged with all sorts of information and it is somewhat difficult for us, although interested in a variety of subjects, to keep up with every separate detail.
It is surely the duty of Ministers, when explaining Bills, to provide information upon which the ordinary Member can make up his mind. An hon. Member should be able to come in to the debate and obtain information. If he brought 2259 in with him all the books and documents available on the subject, there would be no room to move in the Chamber. It is the proud privilege of Ministers to take from all those reference books all the relevant information from which the rest of us can form our judgments. Perhaps what the Parliamentary Secretary to the Ministry of Food told us will look better in print. Perhaps we shall be better able to disentangle the figures when we read this Debate in the OFFICIAL REPORT.
The fact still remains that we have not had any estimate at all, so far as I have heard, of the two very relevant figures for which we have repeatedly asked. I mention it again so that the right hon. Gentleman can be quite sure that these are not overlooked in the information he is going to give us. First, what is the estimated value of the stores it is intended to sell now that a modified plan has been decided upon? Secondly, what would be the value of the stores to be sold if the whole scheme were closed down altogether, as is mentioned in the White Paper, paragraph 17?
If we knew what is the estimated value of all these stores which would be sold in that contingency, we should then be able to relate it to the cost of £1,600,000 which the Parliamentary Secretary says is what would be involved in maintaining the stores for two years—concentrating, moving them, and all the rest. It would give us some idea of the relevant cost of doing that. These are the two figures in which we are most interested and I hope the right hon. Gentleman will be able to give them to us. As we are on the Question that the Clause stand part—
§ The Chairman
I am very doubtful indeed whether the questions raised by the right hon. Gentleman properly refer to the Clause at all.
§ Captain Crookshank
I could not agree with you more, Major Milner, but without criticising your predecessor in the Chair, may I say that it was decided that it would be more convenient for the Parliamentary Secretary, who, incidentally, had not then the information, to give us the information on the Question "That the Clause stand part of the Bill." That was the arrangement with the Chair. The whole problem is that for the last 25 minutes or so there 2260 has been so much dubiety about what was the information and the relationship between it and anything that anybody asked, that we have got out of order in your view, Major Milner. I must submit we are only following the lead which has been given us.
It is right for me now to say, as we are discussing the Clause standing part—and this is where you took me up, Major Milner—just one comment. I do not think the debate is going to be prolonged any further. While, during the last hour or two, we have been pursuing these very important problems, without much success, in order to inform ourselves of the details, the fact still remains that this is the major Clause in the Bill, in which £36,500,000 of the taxpayers' money is being written off as the result of one of the greatest failures of Government activity ever known. I think we should pause to remind ourselves of that, because when the right hon. Gentleman the other day saidI am very sure that it is prudent, honest and right now to write off our losses."—[OFFICIAL REPORT, 20th February, 1951; Vol. 484, c. 1093.]we had some measure of the financial views of a Socialist Administration. While it may be right to write off £36,500,000 when you have gone completely bankrupt, how far the word "prudent" can be attached to the transaction I do not know. I imagine it is inevitable, but whether it is "honest" or not, again I do not know. It depends on the view one takes about that word. That is the effect of this Clause—£36,500,000 is being wiped off and at the same time this Committee is authorising, by subsection (2), the continuation of a scheme of some sort or another by some new form of financing.
It is only because we are going to have an annual review of the estimates of the new Scheme and because of the previous decision of the Committee, that we do not propose to divide the Committee tonight on the Motion that the Clause stand part of the Bill, because the Colonial Secretary has reminded us that we shall have opportunities annually of reviewing, and presumably annually deciding, whether we want to continue the Scheme in its modified form. We have an Amendment on the Order Paper in which it is suggested 2261 that there should be a maximum in any financial year, but we have not thought fit to move it, although we hope the occasion will arise, perhaps on Third Reading, for the Minister to reiterate the present intention of the Government, which I understand is that not more than £1 million a year should be voted.
§ 11.45 p.m.
§ The Chairman
I think we must have a little order in this matter. Do I understand that the Minister has given an undertaking and that the right hon. Gentleman is satisfied with it?
§ Mr. J. Griffiths
I do not think that at any stage I gave any undertaking that in any one given year there would be a sum of £1 million or less than that. I have no recollection of it.
§ Captain Crookshank
It was just an idea of mine that if a scheme was going to cost £6 million in seven years, it would be reasonable to pay £1 million as a maximum each year; but the reference to all this is subsection (2) of this Clause, where the Secretary of State for the Coloniesmay out of moneys provided by Parliament pay to the Overseas Food Corporation such sums in respect of expenses of the Corporation as he may with the consent of the Treasury determineIt was that to which I referred, and it was to that subsection that we had put down an Amendment which was, in fact, not moved. That was my only contention, because I thought it was reasonable out of the sum of £6 million to pay an annual maximum of £1 million.
§ The Chairman
The right hon. and gallant Gentleman knows that it is not in order to make reference to 2262 an Amendment which has not been incorporated in the Clause which it is proposed should stand part. That is not in order.
§ Captain Crookshank
No, but I think that a passing reference or so is. I pass immediately from it in the hope that at some stage the right hon. Gentleman can give us his intentions with regard to the matter, but I must remind the Committee that this is the most important Clause in the Bill, because of its effects on the taxpayers, the loss of public money involved, the loss of confidence of the public both in the Corporation which has been instrumental in losing the money and in the Government which have permitted it to go on. All these things arise out of the Clause, but because the Government have decided in future to mend their ways—at any rate to the extent of making this an annual discussion—we do not intend to vote against the Clause, particularly as we have the promise that we are going to have this information which the right hon. Gentleman will make available to us on the value of all the assets.
§ Clause ordered to stand part of the Bill.
§ To report Progress, and ask leave to sit again—[Mr. Whiteley.]
§ Committee report Progress; to sit again Tomorrow.