RAW MATERIALS

HC Deb 21 November 1951 vol 494 cc402-23

3.58 p.m.

The Secretary for Overseas Trade (Mr. Henry Hopkinson)

It is with considerable diffidence that I rise to address the Committee for the first time from this Box as spokesman for a Department which is not my own—although very closely connected with it—and with whose work I am not yet as familiar as I shortly hope to be. I propose, if it is agreeable to the Committee, to cover the position broadly in my opening speech, and then later, if necessary, to deal to the best of my ability with any questions which hon. Members may wish to put on matters of detail.

This Supplementary Estimate is required to enable the Ministry of Materials during the current financial year to carry out the trading functions laid upon it by the Ministry of Materials Act, 1951. I do not expect that it will give rise to controversy, or, at any rate to party controversy. The Committee will appreciate that the Estimate follows directly on from the operations of the previous Government, and, indeed, was largely worked out when the right hon. Gentleman the Member for Ipswich (Mr. Stokes) was in charge of the Ministry.

The Estimate amounts to approximately £48 million. I should like to make it clear at once that these figures are cash figures only. They have no relation to any profit or loss on trading which the Ministry may make during the year. They are quite distinct from the trading accounts, which are kept on a commercial basis and which will be presented to the House in due course. The amount for which I ask asking today is not a financial charge upon the taxpayer. It is working capital, which will go back to the Exchequer in due course.

The Committee will recall that when the Ministry of Materials was set up in July last, it took over the trading functions of the Board of Trade and the Ministry of Supply for a certain number of essential and scarce materials. The provision originally made by the Committee for this purpose was a token sum of £10 only. That was because the receipts from sales of raw materials in which the Ministry trades were expected to exceed the cost of purchases by some £3 million, which would then have been paid back to the Exchequer.

That was the position estimated by the Ministry of Supply and the Board of Trade at the end of last year, and the Ministry of Materials adopted the figures when it was set up, since it was too early in the financial year for it to be practicable to recalculate the estimates. It now appears, mainly owing to changes in the world supply position, that expenditure will exceed receipts during the year by the sum now asked for.

As the House will see from the details of commodities set out on page 8 of the Paper, the net expenditure is almost entirely in respect of non-ferrous metals and jute. In the case of non-ferrous metals— that is, copper, lead and zinc—the world supply position became exceedingly difficult in the latter half of last year. Industry in this country was only kept supplied with its essential needs by drawing on the stocks which had been accumulated, and by a system of allocation to consumers. Receipts from sales then exceeded new purchases, and some £32 million was in fact returned to the Exchequer by 31st March last.

Since then, pressure on world supplies of these materials has to some extent relaxed. An international allocation system has been introduced for copper and zinc under the International Materials Conference, and we hope that this will in time lead to a further easing of our situa- tion. As my right hon. Friend the Foreign Secretary informed the House last night, the value of the International Materials Conference is fully appreciated by His Majesty's Government, and it will continue to receive their full support.

As a result of all these developments, the Ministry hopes to be able to build up its stocks of non-ferrous metals during the course of this year to at least a minimum safe operating level. A large part of the provision which I ask the Committee to make this afternoon will, therefore, be represented by additional stocks of these materials.

In the case of jute, which covers also jute goods, we depend for our supplies mainly on Pakistan and India. The trade deadlock between those countries, which lasted from September, 1949, to February last, led to our purchases of jute goods falling short of our needs by a very considerable extent. This was due to the fact that Dundee only supplies part of the United Kingdom requirement of jute goods—hessian, and so forth—and the remainder is imported from India. Indian jute products mainly depend on supplies of raw jute from Pakistan. As production of jute goods in India fell, drastic cuts had to be imposed in this country, and here again stocks were reduced to a very low level.

Since the signing of the trade agreement between India and Pakistan in February last, supplies have begun to come forward, although at much higher prices, and the Ministry has been able to buy enough to meet current requirements. Here, again, it is hoped to build up stocks, both of jute and jute goods, to a more satisfactory level by 31st March next, and that is the purpose for which this additional sum is required.

Of course, the reverse process has taken place in the case of tungsten ore or wolfram, for which the Committee will see that a reduced [...]gure is submitted. This was due to the fact that supplies of tungsten ore have now become increasingly difficult to obtain. We only started to buy on public account in July, and it is quite clear that there is no possibility of expending the whole sum previously allocated for this purpose this year. We hope, however, to be able to buy enough to meet essential requirements and to build up some stock.

Coming to the second sub-head, a sum of approximately 750,000 is included in respect of Loans to Producers. This is to enable provision to be made to implement a contract now being negotiated with the Aluminium Company of Canada for additional supplies of magnesium for defence production. A loan will be made to the Company to enable it to expand its capacity, which will be repayable by the supply of magnesium over the period of the contract.

The total amount under these sub-heads is just under £48 million. I hope that in these remarks I have succeeded in explaining what are the reasons for which I am asking the Committee to approve this Vote.

4.6 p.m.

Mr. G. R. Strauss (Lambeth, Vauxhall)

I congratulate the Minister on the clear, concise and able way in which he has explained this Supplementary Estimate. I know from experience that it is not always too easy to do that. There is a tremendous amount of background to these Votes, and it is very difficult to sort out the things which are really important and to present them in a lucid way to the House. The hon. Gentleman has succeeded very well indeed.

I have little, if any, comment to make on the speech which he gave us or upon the Supplementary Estimate which is before the Committee today. It is interesting to note that, on the whole, stocks have risen. Imports of a number of materials have been greater and, of course, that has had some effect on the balance of payments problem. This aspect of that problem should be borne in mind. Otherwise, the hon. Gentleman's explanation has been full; he has been fair.

These figures are, of course, the result very largely of the activities of my right hon. Friend the Minister of Materials during the months when he exercised that function and, prior to that, the activities of my own Department before the Ministry of Materials was set up. In view of the full account which the hon. Gentleman has given and the apparent approval which he gives to the actions taken by my right hon. Friend and myself, I have no further comment to make, but it may be that some of my hon. Friends might like to ask the Minister some questions.

4.8 p.m.

Mr. Peter Roberts (Sheffield, Heeley)

There is one point which exercises my mind and the minds of other hon. Members. That is the reference in the Supplementary Estimate to paper and to timber. We notice that the credit for paper has gone down by £2 million and that timber remains more or less constant. I do not know whether the Minister is prepared to elaborate this in detail this afternoon, but it would be interesting for us to know whether he is to give us any indication of the policy of his Department regarding future trading in these commodities. I feel that the principle of locking up Government money in this way, which money might well be left to private trading, is not a principle which should commend itself to the Government and to hon. and right hon. Members on this side of the Committee.

The Chairman

I would remind the hon. Member that we are considering a Supplementary Estimate and that we cannot discuss the policy already agreed to by the. House.

Mr. Sydney Silverman (Nelson and Colne)

On that point, Sir Charles, it is true that it is a Supplementary Estimate, but it is a Supplementary Estimate in somewhat unusual circumstances, because the original Estimate was £10 and the Supplementary Estimate now required is the difference between £10 and £48 million. It is obviously in order to discuss the difference, and only the difference, and not the original Estimate, but when the difference is as wide as all this one would have thought that the width of the debate was a little more generous than on occasions when the amount of the supplementation is much smaller proportionately to the original grant.

The Chairman

I quite agree with the way in which the hon. Member has stated the case, but, nevertheless, the policy has been agreed and we can only discuss the reasons why the amount is so much increased.

Mr. Roberts

The point I am trying to make is this, Sir Charles. My hon. Friend, in opening the debate, mentioned that the sum was not a charge upon the taxpayer as such; as I understood it, it was money which would be paid back to the Treasury. That was the remark my hon. Friend made, and it was to that remark that my argument was, I hope, being attracted. My point is that this money may not, in fact, be repaid for a very long time if the policy of trading of his Department continues.

I want to press my hon. Friend to this extent. The money will be repaid to the Treasury when these funds are wound up —that, I suppose, is the ultimate object of the remark which he made. It depends, therefore, on how long the trading continues as to the length of time that this money is to remain at the disposal of his Department. It was to that narrow point, Sir Charles, that I was wanting to address my remarks and I shall not go wider than that.

I should like my hon. Friend, when he replies, to assure me that the question of coming to the House to ask for this money to be put to the use of the Department will not be a recurring event, or will recur only so much as it is necessary, in his opinion, that these buyings of stocks should remain under the authority of the Department.

4.12 p.m.

Mr. George Chetwynd (Stockton-on-Tees)

There are only two points that I should like to make. First, it seems that we are, rightly, committed to the International Materials Conference, and it would seem that if we are to get the best value from participating in it, the Government will be right in carrying on State trading in these materials. I should like an assurance from the hon. Gentleman that that is the policy that the Government are intending to pursue.

My second point is that a large increase is being asked for. Is it possible for the hon. Gentleman to break it down into two parts, and to give figures to show how much extra materials we are getting in this increase and how much the increase is due to the terms of trade worsening against us?

Mr. Walter Fletcher (Bury and Radcliffe)

I should like to ask a question about the jute figures. The explanation given by the Minister, which was of events for which the right hon. Member for Vauxhall (Mr. G. R. Strauss), on the benches opposite, has taken full responsibility, did not seem to me to be quite sufficient or to fit in with the known facts.

It is perfectly true that there has been a difference of opinion between Pakistan, which produces the jute, and India, which processes it, but before the period which is under discussion 800,000 bales of jute were allocated by Pakistan to India and were started to be processed. Surely during that period, when the price of jute was a good deal lower than it is now, it would have been possible for jute to have been purchased which could afterwards have been processed either in India—in Calcutta and in the various jute mills there—or else in Scotland.

Does not this enormous increase—the largest, I think, of the whole Paper; it goes up to £31 million—conceal a great error of omission on the part of the late Government in failing to buy the jute, because they did not, apparently, realise that whether it waited or not for a little while to be processed did not matter very much, and that it was certainly a very good thing to have it ready to be processed?

The late Government must have known also that there was a great bottleneck in shipping in Chittagong, which is the port of origin, and which is about the slowest loading port in the world. Therefore, this Supplementary Estimate may conceal one of the very greatest errors of judgment, for which the Minister has no responsibility. Will the hon. Gentleman, at some time to suit his convenience, be able to let the Committee know whether the surmise I have put forward has any substance, whether the buying was not delayed far too late, and whether, in consequence, we are not for the end products. such as gunnies, hessian and so on, going to pay much too much?

4.15 p.m.

Mr. Maurice Edelman (Coventry, North)

May I congratulate the Secretary for Overseas Trade on his presentation of the Supplementary Estimates? I had the privilege of following him when he made his maiden speech and I am glad to have the opportunity today, for the second time, of congratulating him on a maiden performance.

The hon. Gentleman referred to the International Materials Conference, which everyone agrees is one of the most forward-looking international organisations at the present time. One of the difficulties from which it suffers is that certain commodities have not been associated with it, in particular rubber, tin and wool and, as rubber has been mentioned in these Estimates, I wish to make refer- ence to that commodity. I think one of the greatest causes of Anglo-American misunderstanding is the fact that some of the primary producers in the Commonwealth have not played their full part in association with the International Materials Conference.

We have all seen how in the last year or so, particularly in regard to a commodity like sulphur, how much of the disagreement which existed between us and America it was possible to iron out because there was a commodity committee for sulphur associated with the International Materials Conference. The result is that today sulphur is no longer a problem. But, in regard to tin and rubber, we have a different situation. The producers of tin and rubber—producers of both are in our own Commonwealth—although they have been organised in study groups and other organisations, have not been willing to play their full part in the International Materials Conference and that has been one of the great difficulties in the I.M.C.

I ask the hon. Gentleman whether it will be the policy of the Government to encourage by all means which lie in their power the primary producers of tin, rubber and wool to take part in these commodity committees and so strengthen the work of the International Materials Conference, which, as is well known, was initiated by the former Prime Minister last December.

4.18 p.m.

Mr. Cyril Osborne (Louth)

I wish to support the plea that the item for nonferrous metals should be broken down into its component parts. I put this question—and I am not posing as an expert in the matter—because I understand that of the four metals involved only tin is what I would call a sterling commodity.

Since the beginning of this financial year, tin has fallen considerably in price, whereas copper, lead and zinc, which are dollar commodities, have risen sharply. Those four items are all bulked together in one figure of £18,751,000. I would remind the Committee that the sterling commodity, tin, cost at the beginning of the year, in April, £1,340 a ton and today it is down to £940 per ton. At what price have we been buying this commodity? Was it at £1,340 a ton, or nearer to today's price? It is important from the taxpayers' point of view to know if our money has been spent wisely and if we have gone into the market at the right time. It is also of great importance to the people in the Commonwealth who are producing the commodity.

I remind the Committee that just after the beginning of the year the price of tin touched its highest price of £1,620. On the other hand, the prices of the three metals that are controlled by the dollar markets have risen since the beginning of the financial year, since we began to spend this money. The prices look like going still higher and the balance of trade is moving against us largely because of these factors. At the beginning of this year copper was £210 a ton, whereas today it is £227 a ton, lead was £160 a ton and is now £175 a ton, zinc was £160 a ton and is now £190 a ton.

Has this money been spent at the lower prices, or are we spending the taxpayers' money at top prices? When did we go into the market and what caused the Ministry to decide to go into the market? Was it that they thought world prices were changing in our favour, or that our needs were so great that we must-re-stock? The Minister said with regard to non-ferrous metals that pressure since March, 1951, on world markets had now been somewhat relaxed and he hoped because of that that we would be able to build up our stocks. From the figures I have given it would not seem that pressure is being relaxed and, as the Chancellor of the Exchequer would agree, it would be an extraordinary thing if markets relaxed when prices are going up. I think the Minister should give the Committee some explanation of that.

Another question I wish to ask is in regard to the jute position. There again I would remind the Committee that. whereas only in October, 1950, the price of jute was £110 a ton, in April, at the beginning of the financial year, it was up to the peak price of £255 and today it has gone back to £165. The Committee are being asked to agree to a Supplementary Estimate of £31 million. Has the purchase of jute been at anything near the peak of £255 a ton, or more round the price of £165 a ton? I think the Committee are entitled to that information and, in no spirit of hostility, I ask that when the time comes the Minister should give it to us.

4.22 p.m.

Mr. Sydney Silverman (Nelson and Colne)

No one would suspect the hon. Member for Louth (Mr. Osborne) of asking questions of his Minister in any spirit of hostility. I hope, therefore, if I ask a number of similar questions, no more hostility will be attributed to them than to those asked by the hon. Member. Probably it is no secret to the Committee that the hon. Member and I do not always take the same view about things, but on this occasion I am bound to say that, although not precisely the same, the lines on which we have been thinking have been similar.

Normally, in considering a Supplementary Estimate, one is able to find by a few direct questions—and perhaps to find out from the opening statement without asking questions at all—what it is that has led to the necessity for a Supplementary Estimate. It is no criticism of the Minister that we could not derive that information altogether from his speech. I agree with all those who have complimented the hon. Gentleman on the lucidity and fullness of the explanation he made, and I hope I might, without impertinence, join in those compliments.

But what we cannot find in these circumstances is whether we are buying more materials than we contemplated when we passed the original nominal Estimate, or are getting less materials, We do not know whether the movement of prices has been such as to lead to our spending a great deal of money on fewer goods than we originally thought we would get for it, or whether it is the other way about. We are dealing with quite a substantial sum of money. We are dealing in this Supplementary Estimate with nearly £50 million in circumstances when there is, by common consent of the whole Committee, a necessity for reducing our expenditure and particularly for reducing our international expenditure—our expenditure on dollar account. It is vital for the Committee to know how this matter is progressing; how it fits into the general world picture of raw materials supply and world prices.

I have never belonged to the group of some hon. and right hon. Friends who sometimes argue as though they believed —although I am sure they do not believe—that it is this country's rearmament alone that is putting our dollar account into ever-increasing deficit out of surplus. If other conditions remained the same and all the other countries went on re-arming at the rate at which they are now re-arming while we did not spend any additional money, I suppose the rise of world prices would be unaffected and we would suffer from it in our dollar account whatever the purpose for which the raw materials we bought were to be used.

Nevertheless, it is certain there has been an enormous increase in world prices of these raw materials since first we contemplated these purchases, since first this original nominal Estimate was agreed to in the Committee and in the House—

Mr. Osborne

With the exception of tin.

Mr. Silverman

With the exception of tin, which was due to quite other causes a little while before. It is no secret, nor matter of controversy either, that that wide, rapid and serious rise has been due to one result of the world rearmament programme, namely, the intensification of competition for an amount of raw materials which does not increase and could not increase over the period for which the extensive competition provides.

What we are anxious to know is how far this Supplementary Estimate contributes to the general intensification of competition—what the rise of prices has been and whether our own taking part in it has made the rise of prices higher, or more rapid than otherwise it would have been. If it should turn out—as it may well do—that all the countries of the Western world and some others enter the market at the same time for a limited amount of raw materials and compete with each other with only inadequate checks and the amount of raw materials does not increase, all we would do in the end would be to get fewer goods for more money.

Mr. Osborne

Surely the hon. Member will agree that it is not the countries of Western Europe competing one with another which is the dominant factor, but whether America is in the market or not which determines whether prices go up or not.

Mr. Silverman

I am obliged to the hon. Member. I thought I said the Western world; if I said Western Europe I meant the Western world.

This is a classic case, on the international level, of the absence of controls and of rationing and allocations. The purchaser with the longest purse gets the most and, by reason of that, he sends up the price against everyone else. If the result of the examination were to be that these Estimates, compared with the amount that other countries are spending over the same period in the same field, showed that the net effect has not been to increase the amount of raw materials and not been to increase the proportions in which they are required by the various countries but only to increase the prices at which they are required, so that in the end we get no more goods for a lot more money, that would be a pointer to a number of things.

One would be the general policy on which we are engaged. If that were so it would prove a very powerful reinforcement to the argument of those who say that this re-armament programme, whatever its justification or lack of justification in principle or politics may be, cannot be achieved. The very size of this Supplementary Estimate, unless it can be explained otherwise than my questions may indicate, would seem to show that the race is being run faster, but over the same ground, and that the position of the contestants has not greatly altered.

The other consideration of general policy which may be indicated, if the answer to these questions went in a certain direction, would be whether the time had come for having something very much more effective than the international body to which my hon. Friend the Member for Coventry, North (Mr. Edelman) referred. I agree with him that so far as it is there, and exercises some kind of control, it is an advantage, but I would not have referred to it in terms of quite such generous praise as he did. It would seem to me, if all we have been saying about this is anything like correct, that the necessity which is really intimated is for a very much more universal and stringent control of supplies and allocations of those materials; not only among the nations who happen to agree together at a particular period on common defence, but also among all the nations of the world.

All those materials, and I shall not name them, are equally valuable in a great many other connections than rearmament. These are materials which, if we were not using them for armaments, would be used for much more constructive purposes. The general rise in world prices to which we contribute in this way, without deriving much material advantage from it, might lead even the most backward of us to realise the necessity, not merely for maintaining automatic control of these things, but for establishing a real international control under a system of fair shares among all the nations of the world.

4.32 p.m.

Mr. John Grimston (St. Albans)

I shall not follow the hon. Member for Nelson and Colne (Mr. S. Silverman) very far, because the item to which I wish to refer, non-ferrous metals, has not gone up in price to the extent he would have the Committee believe, and to the amount on which he based his argument.

The right hon. Member for Vauxhall (Mr. G. R. Strauss) will not be surprised that I am speaking again on non-ferrous metals in which, I should tell the Committee, I have a private interest. The Minister claimed, as is quite true, that the bulk of the £18 million for which he is asking in the revised Estimate represents the further financing of stocks. But a very significant amount of money is also represented by the margin in that metal for refining and subsequent processing which can be performed both in this country, in the United States and elsewhere.

Part of the policy of the former Minister of Supply and the former Minister of Materials was to average the prices charged in this country for non-ferrous metals. That policy had two very serious results which I hope the present Government, and particularly the Chancellor of the Exchequer, will investigate, for the following reasons. By averaging the prices in this country the home manufacturer is today being charged about £7½ million above the price which a corresponding range of American manufacturers is being charged for the same metals, thus inflating our costs in this country. We are consequently put at a disadvantage in the export trade

There is an even more serious objection, as I see it. There are certain pro- cesses which can be performed in this country and can equally be performed in the United States. I refer particularly to the refining of copper. Under arrangements made by the former Minister, long-term, or fairly long-term, arrangements have been entered into for the refining of this metal to be done in America. The effect of that is to force our refineries to work shorter hours than they would otherwise work, and to have work done in America for which we have to pay in dollars, and which could perfectly well be done in this country.

I believe that the cost to this country for every year on this one point alone is between one-third and one-half a million pounds, almost entirely payable in dollars. I do not expect the Minister to know the details in the same way as the right hon. Member for Vauxhall ought to know them, but I am convinced that by this arrangement we are having to pay between one-third and one-half a million pounds worth of dollars every year unnecessarily. By altering our arrangements, by introducing an added measure of flexibility into our over-rigid system, we could save those dollars quite easily. This is the kind of saving which I am certain free enterprise trading would make, were it allowed to do so, and I ask my hon. Friend to look into that particular matter.

Mr. A. J. Irvine (Liverpool, Edge Hill)

I wish to express the anxiety which I now feel, but which I did not feel at an earlier stage in the discussion, and which derives very largely from what has been said by the hon. Member for Louth (Mr. Osborne) and the hon. Member for Nelson and Colne (Mr. S. Silverman). I hope that the Secretary for Overseas Trade will be able to indicate quite clearly to the Committee how far these revised Estimates are due to the additional bulk of purchases and how far to movements in price. I conceive that to be an important matter, and I would be grateful if he would clarify it.

4.37 p.m.

Mr. Robert Crouch (Dorset, North)

I feel that one of the principal duties of a back bench Member is to see that moneys are properly spent. This Estimate of nearly £50 million has involved a great deal of work, industry and thought on behalf of many people in this country to provide the Department with the money for which they are now seeking power to spend. I hope, therefore, that that money which has already been spent has been well spent, and that the amount which is still to be spent will be used by the people in charge of it with every care to see that they get full value for the money; because it is public money they are spending.

Having obtained these materials I hope that every care will be taken to see that they are properly used, and not wasted. We are living in an age of scarcity of raw materials and, therefore, I hope that these materials will be properly used Looking at these Estimates I see that while jute is the material on which the largest amount of money has been spent, fertilisers, I am glad to see, take the third place. Fertilisers are the raw material of our agricultural industry. If we are to get increased production from our grassland, if we are determined to produce more meat and milk, it will be necessary for us to use a greater quantity of fertilisers than at present. It is from our grassland that we shall obtain an increase in meat rather than from the importation of larger quantities of coarse grains. Those will have to be used for the smaller livestock.

I suggest to the Minister that he should see that the people who receive these materials should use at least 2½ per cent, of them for research. I know that research work is going on very rapidly today, but I consider even more care and attention should be given to this very important question of whether we can in the future make better use of whatever material it may be than we do at present.

Mr. Thomas Cook (Dundee, East)

I hope that the Minister will endeavour to get as much jute as possible. It is a vital commodity, not only for our re-armament programme, but also for the export trade. I am pleased to see that jute figures largely in the Estimates. I was rather surprised at the point made by the hon. Member for Bury and Radcliffe (Mr. W. Fletcher), who questioned, by inference, whether we had bought at the wrong price or at the wrong time. As one who from time to time did try to get jute supplies for this country by various means. I would inform the Committee that it is one of the most difficult commodities to obtain, and I hope the Minister will endeavour t o get as much as he possibly can.

4.41 p.m.

Mr. G. R. Strauss

Before the Minister replies, I would ask him to deal with two points of criticism made by the hon. Member for St. Albans (Mr. J. Grimston). He suggested that the consumer in this country has to pay more than is necessary because of the policy of the late Government in averaging the price of nonferrous metals, the consumer being charged the average cost price plus a certain amount for distribution and expenses. The hon. Member alleged that, as a result of that policy we are at a disadvantage compared with the American consumer.

I do not know whether the Minister has yet had time to go into it, but if he has I would ask him to comment on whether it is not the fact that, because of our shortage of materials, we have had to buy a number of parcels from abroad above the normal standard price of these various non-ferrous metals; and that the alternatives were for the Government either to subsidise the price and allow the consumer to have the metal at the world standard price, the U.S.A. price, or to average the price of the purchases and let the consumer have those purchases at that average price. I would also ask the Minister if he does not consider that that was the sensible and proper thing to do; and that the only alternative, a subsidy, was really quite out of the question?

Mr. J. Grimston

Would the right hon. Gentleman say whether the argument he is now advancing applies to copper as well as zinc? I know that it applies to zinc, but in regard to copper these special purchases were not made. The extra charge in this country hitherto is represented by freight increases over the Atlantic of these lots sent to America for refining.

Mr. Strauss

I was coming to the refining point in a moment. I was dealing merely with the suggestion that we should not have averaged the price of purchases and so put the consumer at a disadvantage. I do not think that is true and the alternative would have been to make a substantial subsidy, which would have been unjustified.

With regard to refining the copper in the United States, the hon. Member sug- gested we had done wrong and it was unnecessary. I should like the Minister to say whether it is not a fact that the metal was refined in the United States, because it was not possible to get it refined anywhere else. We did not want to send metal out there to be refined, because it cost dollars and was altogether inconvenient. We went into the matter very carefully on a number of occasions with the various interests concerned and there was no other way of dealing with the matter.

If there were some other way out at the moment it would be very desirable and we should be very pleased to hear it. Perhaps the hon. Member will say if there is some new method of getting the copper we want in this country without sending it to the United States to be refined and if it is not a fact that up to now there has been no alternative and that we have had to incur dollar expenditure much against our will because there was no other way out?

Mr. J. Grimston

Will the right hon. Gentleman confirm that on 4th July his Ministry, as it was at that time, wrote a letter, which I have here, saying that they were very concerned at the rate of refining in this country and asking for it to be reduced?

Mr. Strauss

The hon. Member will not expect me to check a letter sent by my Ministry on 4th July without some reference to my Ministry, which I am not able to do now, and without looking into the whole circumstances of the letter.

Mr. Grimston

I was merely asking the right hon. Gentleman whether he thought the letter bore out the argument he has just put forward.

Mr. Strauss

The policy about which I have just been speaking was the policy which my Department had been pursuing, and I cannot possibly defend or explain a certain letter which was sent. I agree that a sentence taken out of it would appear to lead in some other direction, but it cannot really be so because the policy which I have stated was the policy pursued by my Department throughout.

4.47 p.m.

Mr. Hopkinson

A number of questions have been put to me, and many of them are of a very technical character, but I shall do my best to reply to them. First of all, I wish to thank the right hon. Gentleman the Member for Vauxhall (Mr. G. R. Strauss) and other hon. Members who have very kindly congratulated me upon my remarks. As to the point raised by the right hon. Gentleman about the effect on our balance of payments problem, I will certainly bear that very fully in mind.

My hon. Friend the Member for Heeley (Mr. P. Roberts) referred to paper and timber and asked why they were included in the Supplementary Estimate. The position with regard to paper is that we have a revolving credit under which we pay the Finnish producers an advance of £3 million at a time in respect of pulp production, and it was estimated that the amount which we had paid to them would be sufficient to last until the end of next March, but, on later consideration, it is thought better to allow for an outstanding amount of £1,500,000 to be available to the Finnish producers for this purpose. In the case of timber, the sum is a small one, but, of course, even if softwood timber is handed back to private trade, we shall be involved with contracts for some months to come and these are bound to figure in the Supplementary Estimates.

Mr. P. Roberts

I thank my hon. Friend for his answer. Does he think, therefore, that as these payments are repaid a greater credit will appear and that we shall get a good deal more money in up to the end of the year, or will the figure be the final figure for the period? If there is to be payment to his Department for the stocks, I should have thought that the money would have been greater.

Mr. Hopkinson

The answer is that as the stocks are eventually sold the amount will be reduced. We cannot apply this to a certain period. We cannot say exactly when the stocks of timber will be sold. They will not necessarily be sold in the period to which the Supplementary Estimates relate.

Mr. Hugh Gaitskell (Leeds, South)

Will the hon. Gentleman clarify the last point? It is difficult to follow. As I understand, the credit we expect to get from the revolving fund is now put at £1 million instead of £3 million. I could not quite follow the reason for the reduc- tion in the credit and, therefore, the increase in the Supplementary Estimate. We should be much obliged—we realise the hon. Gentleman's difficulties this afternoon—if he could give a little fuller explanation.

Mr. Hopkinson

The Finns have always required advances on contracts for the purchase of pulp, the importers and the banks being unwilling to give large credits in the present circumstances of political insecurity, and, to ensure supplies, his Majesty's Government have in the past—the right hon. Gentleman knows this better than anyone else—advanced £3 million at a time to cover firm forward contracts, the credit being repaid by pulp deliveries. The Finnish Reserve Bank agrees to repay any part of the advance not redeemed by pulp deliveries.

It was originally estimated that no advance would be outstanding at 31st March next, the amount outstanding at 31st March, 1951, being repaid this year, but it is now thought safer to allow for £1,500,000 outstanding. There is no question of default. The amount outstanding will depend on the state of deliveries of pulp at the end of March. I hope that answers the question, but, if not, perhaps I may look into it and give the right hon. Gentleman a further answer.

Mr. Gaitskell

I think I have understood it. Does it imply that the deliveries of pulp are likely to be smaller than we should otherwise suppose?

Mr. Hopkinson indicated assent.

Mr. Gaitskell

That is not the result, I take, it, of any decisions on restriction of imports, but something that arises out of the physical scarcities in Finland?

Mr. Hopkinson

I think so. I believe that that figure was worked out under the previous Government.

Mr. A. J. Irvine

Before the hon. Member sits down—the whole Committee appreciates the manner in which he has dealt with these matters—will he say, something in the most general terms in respect of the question raised by hon. Members on both sides of the Committee, as to how far the revised Estimates are due to changes in the levels of prices and how far they are due to changes in bulk purchase?

Mr. Hopkinson

I shall attempt to deal with a number of other points if the Committee will bear with me for a time.

My hon. Friend the Member for Heeley also asked for an assurance that the purchases by the Ministry of Materials would be handed over to private trade. The hon. Member for Stockton-on-Tees (Mr. Chetwynd), asked for an assurance in an exactly contrary sense. My impression from the Chairman's ruling is that it would be out of order for me to go into that matter in any detail as it involves a question of principle.

My hon. Friend the Member for Bury and Radcliffe (Mr. W. Fletcher), asked why jute was to be bought in the next few months when it could have been bought during the period when deadlock existed between the Indian Government and the Government of Pakistan. The answer is that we delayed buying in the hope that the matter would be resolved. We kept fairly steadily to our normal buying of jute during that period. As a matter of fact, I understand that, probably by not going in to buy then, the late Government made a good deal, because it is hoped that the price of jute will now be falling and that when we come to sell the jute we shall be able to average the prices out and sell it at a lower price than would have been the case if we had bought earlier.

Hon. Members have asked whether the increase in the Estimates was due to the increase in prices or to the fact that we were to receive additional stocks. I have not got the figure for jute, but I have it for non-ferrous metals, and in that case the additional cash of £18,751,000 is due to additional stocks costing approximately £17.5 million and to a rise in the value of the basic stock of approximately £1,250,000. I hope that that answers the query.

Mr. Gaitskell

Can the hon. Gentleman give a similar breakdown for other materials? I think this is the most important matter raised in the debate, and the hon. Gentleman's answer suggests that this applies to other materials also and that the major reason for the Supplementary Estimate is the increase of the quantity of imports. That is a very satisfactory answer, and if he can say a word about other materials we shall be grateful.

Mr. Osborne

Can my hon. Friend answer the specific point I put to him about how much of the extra supply has come from the sterling area tin and how much from the dollar-priced non-ferrous metals?

Mr. Hopkinson

The question of tin does not enter into the Supplementary Estimate, for tin is bought on private account. However, I can give some breakdown figures for the other nonferrous metals; approximately £4 million for copper, £9,500,000 for lead, and £4,500,000 for zinc. As I have said, we have not been buying tin.

The hon. Member for Coventry, North (Mr. Edelman), referred to questions arising out of the International Materials Conference. As I have said, we fully intend to support the work of the conference in every way we can, for we fully recognise its value, and we also recognise the interest which the hon. Member has always shown in the matter. I assure him that he can count on our continued interest. However, tin does not come into these Estimates, and in the case of rubber the amount is only a very small one, being a hangover from the days when rubber was being bought on public account.

Mr. Edelman

Without wishing to press the hon. Member unduly on this point at the present moment, may I ask him to bear in mind in future that tin, rubber and wool, in so far as participation in the I.M.C. is concerned, are the three most important commodities for the future successful working of the conference? Will he bear that in mind when he discusses with the Colonial Secretary the question of bringing all these elements into the working of that organisation?

Mr. Hopkinson

I fully recognise that what the hon. Member says is right, but he will admit that they are the most difficult commodities and that they give rise to problems of very great difficulty involving not only this country and the Commonwealth but also the United States and other interests. However, I will certainly bear that in mind in the future.

The hon. Member for Nelson and Colne (Mr. S. Silverman), also made some kind remarks. I believe that I have covered many of his points while he has been out of the Chamber. The remainder are of a rather general nature, and I ought to say that I shall take note of them and bear them very much in mind, for it would be difficult for me to answer them and remain in order. I do assure him that I take note of them.

My hon. Friend the Member for St. Albans (Mr. J. Grimston) raised some very technical questions about copper refining and the averaging out of prices. I have not had very long to familiarise myself with the work of the Department and I should hesitate to dive into the argument on these very difficult points which is going on between the right hon. Gentleman the Member for Vauxhall and my hon. Friend. However, I will study the matter, and I hope that on a future occasion I shall be able to take more part in the discussion.

Question put, and agreed to.

Resolved,

That a Supplementary sum, not exceeding £47,966,470, be granted to His Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1952, for expenditure of the Ministry of Materials on trading services and assistance to industry.