§ 10.1 p.m.
§ Sir Herbert Williams (Croydon, East)
I beg to move,That an humble Address be presented to His Majesty, praying that the Order, dated 31st March, 1951, entitled the Sulphuric Acid (Prices) Order, 1951 (S.I., 1951, No. 551), a copy of which was laid before this House on 2nd April, be annulled.I am sorry that, despite the Recess, I am still suffering from a certain deficiency of voice, but I hope that hon. Members will be able to hear me. This Order varies the prices of sulphuric acid. I hoped that it would not have fallen to me to move this Prayer because my hon. Friends who were to have brought it forward are far better informed than I am, but it was not convenient for them to be here tonight. This is the last night on which this Prayer can be moved. The problem has been under consideration by a number of us for some time past. We thought that this very grave problem ought to be discussed; indeed, I suggest that it is so grave from certain points of view that the policy with regard to sulphuric acid and sulphur is more important at this moment than any other issue that can come before the House.
When I say that, I am not simply expressing my own view. Hon. Members have no doubt read what I call the new form of "Old Moore's Almanac," which is the Economic Survey of 1951. In paragraph 47, these words appear:The scarcity of sulphur is without doubt the most threatening of all.That appeared in the section of the Economic Survey which dealt with the supply of raw materials, and I think that the Economic Survey in that respect was right.
Most of us are familiar with the fact that today ladies love what they call 162 nylons. I do not suppose that the ordinary Member's wife, sister, aunt or whoever it may, be, when she puts on her nylons is what I call sulphuric acid conscious. Without sulphuric acid there would be no nylons. [Interruption.] An hon. Member tells me that he likes ladies without stockings, but that is a different matter. We have to examine what is one of the major problems facing the country at this time, and I am delighted to see the right hon. Gentleman—I think that he is now called the Lord Privy Seal—present. He changes his office very frequently. He was, I think, Lord Slap and Tickle and he is now Lord Privy Seal. He has come back from the United States and made an optimistic speech about the supply of sulphur.
I do not know whether he or the Parliamentary Secretary of the Board of Trade is to reply tonight. It may be that if the debate becomes sufficiently animated we shall get the Lord Privy Seal to join in, because I read what he says in the papers. I always read with interest what he says and listen with respect to him, because although officially he is a right hon. Gentleman, I always regard him as a close personal friend, and I hope that he may tell us what he has done about getting sulphur from the U.S.A.
This Order raises the price of sulphuric acid and is one of the most interesting issues that has yet come before the House under the system of control of prices which we have had since 1939. If the State makes war, as a result of warlike operations, supplies are limited and the law of supply and demand cannot function, because higher prices will not attract increased supplies. Therefore, in wartime, we have to do that. When we get to times when no submarines are about and higher prices may attract increased supplies, there is a good deal to be said for allowing higher prices to function. However, this particular case is almost unique.
I have spent a lot of time studying this problem in recent weeks. I am not a chemist and I have not a great deal of knowledge of chemistry, but I did learn a little about it and I can remember that water is H2O and that sulphuric acid is H2SO4. As I said earlier, this debate would have been conducted by two hon. Members who are really well informed in chemistry, but they could not be here and 163 this is the last night when we can debate this Order.
The world is full of sulphur. [An HON. MEMBER: "So is the next for the hon. Member."] I remember seeing a cartoon in one of our illustrated newspapers which showed a gentleman with horns knocking at the door of the President of the Board of Trade and saying, "Would you like a line in brimstone?" That was before the occupant of the Presidency of the Board of Trade was changed.
There is plenty of sulphur in the world, but there is not very much sulphur in its elemental form. Sulphur, as most people know, is a yellow looking powder, and while a certain amount is found in volcanic regions the bulk of the supplies of sulphur in elemental form is to be found in some of the Southern American States. I think they call them domes, which is due to all sorts of volcanic troubles. Sulphur has a very low melting point, namely, 113 degrees Centigrade, which is about 250 degrees Fahrenheit. The method of extracting it is to send down high temperature steam, though I do not know to what depth. I believe it is 1,000 or 2,000 feet. Then through long pipes it is pumped out and dried, and so there is elemental sulphur in this raw state as it is procured in the United States, [Laughter.] I do not know what hon. Members are laughing at. This is really very important and I have taken a good deal of trouble to find out the facts. Surely the facts are worth listening to, and if anyone challenges them I will endeavour to reply. [An HON. MEMBER: "What has this to do with the Order?"] It has everything to do with the question.
There are two methods of getting sulphuric acid. One is based on what I call elemental sulphur, which is not a combination of other chemicals, and the other methods is different. [HON. MEMBERS: "This is a lecture."] Hon. Members opposite will find out in a few moments why I am giving this lecture, if they like to call it so. There is no reason why we should not have all the facts about an important subject before we come to a decision as to what is the right policy. By making sulphur in the way I have outlined in the United States, they get it rather cheap. Indeed, that is the cheapest source both of elemental sulphur and sul- 164 phuric acid. There are other sources of supply about which I will say a word in a moment. Why do we want sulphur? I have already mentioned nylon stockings—
§ Mr. Speaker
Sources of supply do not seem to me to come into the Order. From what I see it deals with maximum prices. The question of getting sulphur or sulphuric acid seems to be covered by a preceding Order, not by this one.
§ Sir H. Williams
I realised there might be some difficulties on this problem. This is a problem in regard to the price of sulphuric acid, which depends upon the cost of production. If sulphuric acid is produced from elemental sulphur, the price can be relatively low, but if it is produced from anhydrites, pyrites and other things I have mentioned the prices are much higher. Sources of elemental sulphur are insufficient at the moment to enable this country to obtain all the sulphur it needs and all the sulphuric acid it needs.
Therefore, unless we examine the sources of supply we cannot determine the right policy to pursue and that is why I have been referring to this issue. Without sulphur we could not have tyres on motor cars and without sulphuric acid we could not run the battery of a motor car. Without sulphuric acid we cannot have tinplate because unless sheet steel is dipped in sulphuric acid it cannot be coated with tin. I could give a list of things which would come to an end if we did not have sulphuric acid. There is not enough sulphuric acid or sulphur available and the two issues cannot be separated.
This Order deals with the price of sulphuric acid and what is important is that it should be sufficiently high to attract the necessary supply. I am quite impartial in this matter, because I do not produce sulphur or sulphuric acid. As a private person I buy tyres and batteries and in one respect, in connection with a business which dresses leather, I am a small purchaser of sulphuric acid. I have no interest in a high price being paid for sulphur. The cheaper it is, the better it would be from a selfish point of view. We can produce all the sulphuric acid we need in this country from our own resources. Anhydrites means without water; anhydrous means that all the water 165 has been expelled as in the case of anhydrite which is sulphate of calcium, and gypsum is the same thing as anhydrites, except that the water of crystallisation has been expelled.
Another source is pyrites, which is sulphur associated with a variety of metals of which probably the most important are iron, copper, zinc and, less importantly, cobalt and nickel. Probably there are other metals which have an affinity with sulphur. In this country we have masses of anhydrites. I believe that the I.C.I. plant at Billingham is over great beds of anhydrites.
I am concerned whether this price restriction will destroy the sources of supply. The gas industry is, of course, responsible for the production of large quantities of sulphuric acid because coal has a lot of sulphur in it, whether in the free state or not I have not been able to discover. When I say the gas industry I do not mean the domestic gas industry alone, but also the part of the industry dealing with coke oven plants, which together produce very nearly a quarter of a million tons per annum. But all that is not free for sale in the market. About two-thirds of it is used in the treatment of ammonia to produce ammonium sulphate, which our agricultural friends esteem very highly—it is a most important agricultural fertiliser; but there are still about 80,000 or 90,000 tons of sulphuric acid to sell.
Earlier today we were listening to a statement by the Foreign Secretary about the troubles in Persia. Petroleum contains a very considerable proportion of sulphur. In the distillation of petroleum, in separating it all out and getting all the constituents, a good deal of sulphur can be made available. Is not my point that the Economic Survey says thatThe scarcity of sulphur is without doubt the most threatening of all"?A little while ago we had a President of the Board of Trade who is now doing something else—he is a timber merchant or something. The last speech which he made before he resigned was on this question of sulphur. His remarks were of the gravest possible character, of the reaction on this country of a shortage of sulphur and sulphuric acid. If the shortage is due to the fact that the Government, by this Order—that is the issue I 166 am discussing—made sulphuric acid too cheap to attract production from these other sources—from gypsum, anhydrites, pyrites, and the rest of them—then we shall be face to face with what? With vast unemployment. [An HON. MEMBER: "Oh."] Oh, yes—the textile industry, the motorcar industry, the tinplate industry. There will be a shortage of tinplate to can foods. There will be a shortage of fertilisers for agriculture.
This is a major issue. I am delighted that at this late hour so many hon. Members on both sides have stayed. [Laughter.] It is not a joke. It is a most serious issue, and I am suggesting to hon. Members—
§ Sir H. Williams
It has everything to do with the Order. I am suggesting to hon. Members that if we have a commodity which has two costs of production—one rather low, when it is produced from elemental sulphur, and one rather high, when it is produced from sulphur in combination with a variety of metals or with calcium—and when the Government fix the price at a level that we cannot get it, the nation is going to be short.
Therefore, the purpose of my speech tonight—I do not want a vote about this; I only want to get the issue properly considered and discussed—is to urge upon the Board of Trade, represented by the Parliamentary Secretary, and upon the Lord Privy Seal, who has just been on a mission to the United States, in which sulphur played an important part, that we should not do something which will deprive the nation of something that is vitally important for our whole economic prosperity and, equally, for our defence programme.
I hope I have succeeded in keeping in order. I am sorry that an attack of bronchitis has made my voice a little less attractive than, I hope, it is normally. I have endeavoured to present to the House a very important issue—partly scientific, partly economic—because unless there is enough sulphur available to the nation, whether as sulphuric acid, as sulphate of ammonia, or as elemental sulphur, there will be a measure of unemployment which will be horrifying to the nation and a shortage of essential supplies which will irritate everybody, of 167 both sexes. It really is an issue of major importance, and I hope that when the Parliamentary Secretary replies he will say something of substantial importance, partly about the mission of the Lord Privy Seal, partly about the steps that have been taken—
§ Sir H. Williams
—partly about the steps that have been taken to encourage people to instal plants to deal with pyrites and anhydrites. It takes quite a long time for those plants to get into operation. A friend of mine in the business rang me up recently and said, "We can deliver plants in six months, but they have to be erected and it will be two years before a plant ordered today can be in production so that we may have adequate supplies of sulphuric acid."
This issue really is one of vital importance to the security of this nation, its prosperity, its employment and the happiness of great masses of the people. I wish that my other two hon. Friends, who know more about this subject than I do, had been here but, because they are not, I have taken their place and tabled this Prayer tonight.
§ 10.22 p.m.
§ The Parliamentary Secretary to the Board of Trade (Mr. Rhodes)
I was glad to know that this Prayer had been bequeathed to the hon. Member for Croydon, East (Sir H. Williams). I should have been disappointed if this had not been raised, because an idea seems to be coming from one or two quarters, including the hon. Gentleman, that somehow, somewhere, there has been a slip up in the speed with which conversions or new capacity have come into operation. I shall not enter into a technical lecture on the way in which additional supplies of sulphuric acid are produced, but will reply to the very proper point raised by the hon. Member for Croydon, East, with regard to the impact of price on the speed of conversion or the introduction of new capacity. When I have answered that, I shall have answered the tenor of his remarks.
168 Although the hon. Member prefaced his remarks by much detail regarding the different methods of sulphuric acid production, the gist of what he had to say lay in the compact little sentence regarding the impact of price on production. May I go through some of the points relevant to the price of increased capacity and conversion? Fifty-five per cent. of our total capacity of sulphuric acid is designed to operate on sulphur, which represents 1,100,000 tons of 100 per cent. strength sulphuric acid. That is per year. Of this, slightly more than half is production for domestic consumption. I have no need to enumerate the big producers of other commodities, because everybody knows that sulphuric acid is used throughout the length and breadth of British industry, but I want to draw attention to the fact that the remainder of the production of sulphuric acid from sulphur is for sale.
I think that the hon. Member for Croydon, East, will agree with me that the people who produce sulphuric acid for consumption domestically will have little or no incentive whatever either to convert or to increase their capacity by pyrites or anhydrites on price considerations alone, because they are concerned particularly with the end products, and with a sellers' market they are not concerned wholly about the price of their sulphuric acid. If it can be produced more easily, as it can be, from sulphur, they are likely to stick to it, because of the higher capital cost of changing over or putting in new plants. I hope I have made that clear. I am sure that the hon. Gentleman will agree that that is reasonable.
But at a time when a shortage of sulphur is apparent, then, to protect their own capital investments in other parts of their processes, they are likely to take action to safeguard themselves. The hon. Member will probably agree with that.
§ Sir H. Williams
There is a time element. I am told that it takes two years to get these altered plants erected.
§ Mr. Rhodes
I will come to that. The basic principle of it is the shortage; that is what matters. To substantiate that, I would say that to convert a plant from sulphur to pyrites is a very expensive business. It can cost anything up to £250,000 for a normal capacity of 25,000 169 tons of acid per year, and that is far more than the cost of a sulphur burning plant. The hon. Gentleman must realise too that sulphur burning is the modern conception of converting a material into sulphuric acid. The old method was pyrites; the new is sulphur burning, which is more economical and the cost of the plants is less.
An increase in the selling price of acid benefits all manufacturers. The producer of acid from sulphur for sale realises a higher rate of profit, and therefore he might well prefer to continue to operate his plant at a reduced capacity on a higher realisation—as and when sulphur supplies were cut—than to incur heavy expenditure upon new plant. That is also a reasonable deduction to draw.
In March, 1949, representatives of the trade were notified by the American sulphur producers that a limit must be imposed on their requirements and no more sulphur could be provided than was necessary for the plants then operating or in course of erection.
§ Mr. Rhodes
Yes. From that date the Board of Trade refused all applications for sulphur burning plants, which was the right and proper thing to do, and We endeavoured, and have constantly endeavoured, to develop the industry on pyrites and other alternative materials. The large producers of sulphuric acid made extended representations against this decision and pressed for additional sulphur burning capacity. It is interesting to note that if this had been allowed by the Board of Trade, another 120,000 tons of sulphur per year would have been required.
It was clear by the end of that year that very little material progress was being made. The Board of Trade asked the Council of the National Sulphuric Acid Association to meet their officials with a view to reviewing all the circumstances and seeking a solution of the problem. A meeting was held shortly afterwards and the full position put to them. It was made clear that there was no hope of getting more than 380,000 tons of sulphur per year to keeping existing sulphuric acid plants in production, 170 and, furthermore, that unless we showed willing and were able to point to plans to reduce our dependence on imported sulphur to operate at the earliest possible date, there was every prospect of supplies being reduced arbitrarily by the American suppliers, either on their own account or at the behest of the American Government. So a request was made for a cooperative approach and the submission of a comprehensive plan to cover every aspect of this problem. I hope that the hon. Member is listening to what I am saying, because it is for his benefit.
§ Mr. Rhodes
That plan should include maximum prices, differential prices of varying kinds of raw materials, differences in capital costs, on which the fullest cooperation of the Board of Trade was promised.
The industry's response to this invitation was not received until the autumn of that year, despite several reminders by the Board of Trade. It was then suggested that one of the conditions likely to encourage the turn-over from sulphur to pyrites was the removal of all price controls. Now, if the removal of price controls had taken place, the trade estimated that the increase in prices would have been in the region of 33⅓ per cent. It is a perfectly reasonable thing to expect that if a suggestion was made that price control should be removed, accompanying it should have been a guarantee or undertaking that conversion would in fact be carried out and a programme should have been put up to support it. But there were only vague hopes expressed as to what might ensue in the event of the Government agreeing to the complete abolition of price control.
It was clear that the industry itself had no confidence that even the complete removal of price control, let alone any lesser increase, would provide the necessary inducement to conversion. If they had had that confidence, surely they would have supported it with information about the capacity which the industry would have been prepared to accept. I should like the hon. Gentleman to observe that in any event the new capacity that went ahead after May, 1950, when the Americans first proposed cuts in sulphur deliveries—that is conversion plants and new capacity plans—has gone to the limit 171 to which we can at present reasonably see prospects of the supply of pyrites.
There has been an immense amount of work put in on this plan which, when it is explained in detail by my right hon. Friend the Lord Privy Seal—but not tonight—will make a very fine record. Therefore, the conditions on which alterations in new capacity and conversions have been put in hand since May last year were just the same so far as prices and profits were concerned, and it is illogical to argue that the price factor has had anything to do with it. It is a spur of necessity which has caused the speed of conversion.
I am not blaming anybody, nor am I blaming the industry which was using modern methods of burning sulphur for the production of sulphuric acid, and naturally it was reluctant to turn over so long as supplies looked as if they might be available. As soon as supplies looked as if they would be reduced, it acted as a spur. The increased prices in the Order benefit everybody. The bulk of the increases is to cover the rise in the price of the raw material and the freight charges. An element is also included to compensate for increased costs.
Producers with sulphur burning plants are now on a reduced output, because of cuts in sulphur supplies, with a consequential increase in operating costs. To maintain to these producers a reasonable rate of profit on capital employed means providing a price which gives to producers on full output a higher rate of profit. Those who are remaining on full output are those using pyrites, zinc concentrates, spent oxides and anhydrites. Their production costs have not increased but have decreased, as these plants are being pushed to maximum output. I would ask the hon. Gentleman to accept the answer that this spur has been physical, due to a diminution in sulphur supplies, and that the same conditions for rates of profit apply today, as they did 12 or 18 months ago, and it is my submission that the profit that has been allowed on pyrites or sulphur for the production of sulphuric acid has had no relation to the speed at which the turnover has been made.
§ 10.40 p.m.
§ Sir H. Williams
I hope the hon. Gentleman understands what he has just told us. Frankly, I do not. He has talked a lot about people producing from sulphur and people producing from pyrites. While he was speaking I was looking through the schedule and I cannot find one word to support what he said at the end of his speech. After all, the main function of the Board of Trade is to be the intelligence service of British industry. Many years ago I held the office which he now holds, and we thought our main job in those days was to get information from all over the world and to pass it on to the traders.
What we want to know is: When did the Board of Trade discover that this problem was likely to arise? The hon. Gentleman said the traders had been unenterprising, but he did not tell us how soon the pyrites plants will get busy. He said not one word about anhydrite—and that is something we produce in this country. We have plenty of it in this country. What about production from raw materials which exist in this country? There are masses of sulphur compounds in this country, but we have not heard one word about that. All we know is that we are short of sulphur. The Lord Privy Seal made a speech when he came from the States and said that all would be lovely on the night.
Since my name appeared on the Order Paper I have received masses of documents; all sorts of people have sent me information. Hon. Members will see the masses of paper I have accumulated from all sorts of sources. I have a document here which is as recent as 21st May. It says that Western Europe has helped to relieve the world sulphur shortage. This document comes from Paris. It says Western Europe has helped by developing other sources of sulphur from manufacturing sulphuric acid for the past three years, as the Marshall Aid survey shows.
According to this information, of the European countries producing the largest volume of sulphuric acid Italy used pyrites for 88 per cent. of the total production, France 82 per cent., Germany 80 per cent., Belgium and Luxembourg 52 per cent. and the United Kingdom 17 per cent. That is a document which should be in the hon. Gentleman's possession.
§ Sir H. Williams
I quite agree, Mr. Speaker. I would not have said these things but for the provocation which came from the Parliamentary Secretary. He said that all our people had been adapting these new plants for the production of sulphur from pyrites. It is because there has not been—
§ Mr. Speaker
This Order deals with maximum prices and nothing else. I have allowed the debate to go very wide, but we must not abuse the Rules too far.
§ Sir H. Williams
As you know, Mr. Speaker, I am usually a most orderly Member. The cost of sulphuric acid, which we are discussing, depends on the way in which we produce it. If we produce it from elemental sulphur it is much cheaper than if we produce it with pyrites, anhydrite and the rest. What we are concerned about is to get plenty of it. But if the Parliamentary Secretary's price control continues, we shall continue to be short of it. That is why we are criticising the price control and, in the remarks I was making, I was drawing attention to the fact that in certain continental countries, where they pursued a different policy, they are getting masses of sulphuric acid by other methods. What the hon. Gentleman proposes is that we shall have very little of it very cheaply. What the public want is plenty of it, even if the price is a little higher.
The Lord Privy Seal went to America to get sulphur—to get cheap sulphur to produce cheap sulphuric acid. He came back after a trip which appears to have been most attractive to the people of America, and when he arrived back he said we should have masses of cheaper sulphuric acid. I was hoping to induce him—
§ Mr. Speaker
I understand that at some time, sooner or later, the Lord Privy Seal will make a statement on his visit to the United States and, therefore, we must not debate it now.
§ Question put, and negatived.