§ Motion made, and question proposed, "That this House do now adjourn."—[Brigadier Mackeson.]
§ 10.21 a.m.
§ Mr. Gerald Nabarro (Kidderminster)
It will be a not altogether unwelcome relief, to pass from the military matters that we have been discussing for 19 out of the last 20 hours, to an economic subject which, notwithstanding the variation in them from our earlier deliberations, is, nevertheless, of great importance to the nation at this moment. The subject of this Adjournment debate is the softwood supplies of the nation and prospects for the year 1952; also the arrangements that His Majesty's Government may feel disposed to make in regard to the control over the imports and distribution of softwoods during the forthcoming year.
It was announced by the Chancellor of the Exchequer on 7th November, in column 199 of the OFFICIAL REPORT, thatthe Government are giving prompt consideration to the reversion of all softwood purchasing to the private trade, with arrangements for a global limitation of purchases. We intend that the consumption of softwood shall be maintained at its present level.An important purpose of this debate is to seek a clarification from the Government of the machinery they propose to 1476 put in motion during the next year for securing this reversion from a system of State bulk purchase for softwoods, which has been in operation for the past 12 years, to a system of private purchase.
Moreover, a good deal was added to the Chancellor's statement by a further statement made by the Chancellor of the Duchy of Lancaster, speaking in another place on 14th November, when he said about softwood supplies:I have been carefully into this matter and my colleagues are in full agreement with me. I am completely satisfied that the whole of the buying should now be restored to private traders, and, accordingly, I have instructed the Timber Controller to discuss this with a Timber Trades Federation. There will be no difficulty in keeping within any dollar limits that may be found necessary.I pause there, because the emphasis is on the dollar limit and no reference is made to a sterling or soft currency limit. Continuing, the Chancellor of the Duchy said:There will be no danger that the timber we require for our various programmes will not be forthcoming in this sense: that I am quite certain that, wherever timber is available, we shall get it at least equally well through the trade. The control of consumption will continue as at present. It is impossible to forecast with certainty the trend of world prices, but I am satisfied that a return to private enterprise will not adversely affect prices. On the contrary, I think that the advantage may well be the other way. The present division of the world into two compartments prevents both sets of buyers from taking full advantage of the world market."—[OFFICIAL REPORT, House of Lords, 14th November, 1951; Vol. 174, c 168–9.]I should like to expand a little upon the last sentence in the noble Lord's statement that "the world is divided into two compartments" from the point of view of buying softwood. That is due to the fact that, in the last Parliament, the then President of the Board of Trade, the right hon. Member for Huyton (Mr. H. Wilson), decided to hand back to private trade purchasers the acquisition of softwood from Scandinavia and various Western European countries, while leaving with the Timber Control of the Board of Trade, under State bulk purchase, the acquisition of softwood from the North American group of countries, that is, Canada and the United States, and from Russia, Yugoslavia, Roumania, and the Eastern European group of countries.
Thus, there was a duality in the method of acquiring timber, which, as 1477 the noble Lord suggested, by innuendo, led to our suffering "the worst of both worlds." I have no hesitation in saying, that of all the raw materials necessary for British industries and for various other essential purposes in our daily lives, the one material which is, at present, in generous supply in the United Kingdom, is softwood timber.
That arises from the fact that, in 1951, our imports will reach a figure of approximately 1,600,000 standards. In fact, the Secretary for Overseas Trade, replying to my Parliamentary Question last Thursday, admitted that imports of softwood over a period of 10 months to 31st October, 1951, had already reached a figure of 1,443,000 standards. This pro-rata, in a full year would give a figure in excess of 1,600,000 standards. That figure compares very favourably with the last full pre-war year of 1938, when we imported 1,793,300 standards of softwood.
The figure for 1951 will approach that last pre-war year and there are various important deductions, which I wish to make from these comparative statistics. First there is the mistaken idea among hon. Members on the Opposition benches, that the achievement of a larger rate of house-building in this country and the target of 300,000 houses in a full year, is likely to be limited by a shortage of timber. That is wholly false.
Out of 1,600,000 standards of timber which we shall import in 1951, if we did build 300,000 houses and if each house consumed 1⅓ standards of timber, it follows that only 400,000 standards of timber would be consumed for house-building purposes, a figure that is no more than 25 per cent. of our total imports, or one quarter. It follows, also, from the figures I have quoted, that we have, in the last 12 months, been able to put very considerable supplies of softwood on one side for strategic stockpiling purposes and to rebuild our internal stocks in the United Kingdom.
If we import this year, 1,600,000 standards, and as consumption will not be more than 1,100,000 standards, the surplus of 500,000 standards being added to our opening stock at the beginning of 1951, which was about 300,000 standards, we would have an end-year stock in 1951 of 800,000 standards. This figure is only 100,000 standards fewer than the figure with which we entered the Second World War in September, 1939.
1478 I think that those figures amply justify my statement that the softwood position in the United Kingdom at this moment is quite satisfactory. But, obviously, next year, in view of the statements that have been made both in this House and in another place, there is an intention on the part of His Majesty's Government to limit the further imports of softwood for, I believe, financial reasons. That consideration in itself will rather hamper, I consider, the handing back of the softwood business to private traders.
I seek from the Secretary for Overseas Trade an amplification and a clarification of the former Ministerial statements made on this subject, and I shall pose eight or nine simple questions to him as to how this hand-back to private traders is to be achieved over the course of the next 12 months. First, I would like to ask the Secretary for Overseas Trade whether he would be prepared to state that the figures of softwood stocks in this country at present, that is 800,000 standards, need not further be increased, either for strategic stockpiling purposes or for commercial internal stocks, during the forthcoming 12 months? Will he be satisfied that 800,000 standards of timber kept in this country is adequate for all strategic and commercial purposes?
Second, is it the intention of His Majesty's Government to impose quantitive limitation upon our imports of softwood during the year 1951, and, if that is indeed the case, how do the Government propose to operate that quantitive limitation? Will it be divided into two sections—the American group of countries, generally regarded as hard currency, and the Western and Eastern European groups, generally regarded as soft currency, or one global limitation for all overseas imported supplies of softwood?
Third, is it the intention of His Majesty's Government to impose a financial limitation upon the total sum of money that may be spent either in dollars, or in soft currencies in respect of softwood imports during the year 1952? Fourth, which is equally important, is it the intention of His Majesty's Government to maintain consumer licensing of softwood in Britain during the course of the forthcoming 12 months?
1479 I think it is logical to say, that if it is the intention of the Government to hand back to private traders the acquisition and the importing of softwoods from overseas, those traders will be placed in an invidious and exceedingly difficult position in acquiring their supplies, if they have no knowledge of the quantities, sizes and grades of softwoods, for all internal purposes in the United Kingdom, that the Government are prepared to allow the Timber Control to licence to users and consumers. There must certainly be proper balance between those two important considerations.
The fifth point, on which, I think, the Government might give us an indication of their intentions, is whether it is proposed to impose any sort of price control in respect of softwood licenced for consumption in the United Kingdom during 1952. I know that there is no price control at present, but if a free market is to be restored, it may, in certain circumstances, be desirable to have a form of maximum price for certain specifications; but, in any case, that is a matter on which the trade, the general public, would welcome some guidance. In view of the stringency of timber, they would like a clear line of policy to be expressed.
The sixth point of considerable interest, which I shall not press on the Secretary for Overseas Trade, is his general intention in regard to the future of the Timber Control Department. That has been in operation for 12 years. It clearly cannot be wound up in a great hurry. It is desirable, in the public interest, to know whether it is the long-term policy of the Government, gradually to cut down the scope of Timber Control, as the acquisition and distribution of softwood is finally handed back to the private trader.
It is during this transitional period of the next 12 months, and this is the seventh question, that there will be a serious operational difficulty in regard to contracts made by the State—that is the Timber Control—for buying Canadian and U.S. timber.
I can state, on reliable authority that no fewer than 500,000 standards of timber—softwoods—have been contracted for, already, by the Timber Control from Canada and the U.S., for shipment during 1952 When that timber arrives in the 1480 United Kingdom, it will not be, I presume, for stockpiling purposes, as a considerable figure has already been achieved on stockpiles, a figure which, I think, will meet all our requirements in the immediate future. I would like to ask the Secretary for Overseas Trade whether His Majesty's Government, at present, have any views upon how this 500,000 standards of rough Canadian timber may best be disposed of, in the United Kingdom, during the course of the next year or two.
The eighth question upon which we would like the views of the Government is the relations of private traders in this country, that is the timber importers, with the Soviet Union. We have, in the last two or three years acquired approximately 17 per cent. of our softwood imports from the U.S.S.R. That has been done under the broad terms of the Anglo-Soviet Trading Agreement, which, I believe, was negotiated by the right hon. Member for Huyton, and although I am not absolutely certain of the terms, I think I am correct in saying that no quantitative figure was written into the agreement. It rested largely upon the question of what the Soviet Union could furnish annually to us and upon other considerations. If private traders are restored complete freedom in the acquisition of softwoods, will it be possible for those traders to pass freely to and fro between Britain and Russia in the normal course of their day-to-day intercourse and business?
My ninth and final question is, perhaps, one of much technical interest at the present time. The Minister of Supply, in reply to a Parliamentary Question by me only the day before yesterday, announced that the shortage of finished steel in 1952 would be in the order of 1½ million tons. Our softwoods position is relatively good. I believe that the shortage of steel can in measure—I am not prepared to say by what percentage—be abated by the substitution of timber for steel in certain constructional work.
I am delighted to note the commendable alacrity with which His Majesty's Government have made their decision to return the softwood importing trade to private hands, but clearly there will be great operational difficulties in doing so, 1481 during the next six or eight months. I hope that the Government will keep prominently in mind that the optimum is the complete and unrestricted restoration to private enterprise, of the acquisition of all timber supplies.
§ 10.38 a.m.
§ The Secretary for Overseas Trade (Mr. Henry Hopkinson)
I am grateful to the hon. Member for Kidderminster (Mr. Nabarro) for the very clear way, especially after a twenty hours Sitting, in which he has set out his points on this rather complicated matter of dealing with softwood in 1952. I am also obliged to him for having given me notice in advance of some of the questions he intended to raise.
I think that it may be simplest if I deal with them under three headings—consumption, imports and stocks. Before I do so, I should like to clear up one statistical point. I do not wish to go into the details of the figures quoted by my hon. Friend, but I must point out that the import figure for 1938 was a very low one for the pre-war period. He quoted 1,793,000 standards. The average total annual import in 1934–38 was 2.4 million standards, and it is apparent that, even if our 1951 imports amount to 1.6 million standards, we are still a long way behind the pre-war figure.
As the Chancellor of the Duchy of Lancaster said the other day, His Majesty's Government have decided to restore the whole of the buying of softwood to private traders. My hon. Friend has explained the implications of that decision. Having said that I must make it clear that the dominating factor in deciding the level of imports, consumption and stocks must be our balance of payments. It is for this reason that the Government have decided to maintain softwood consumption in 1952 at its present level.
To do this it will be necessary to maintain the machinery of licensing in order to restrict the consumption of timber and, I must add, to take all possible steps to see that any evasion is prevented. If timber, for instance, finds its way into unlicensed uses it means the expenditure of more money abroad, or else that some essential users have to go short.
In regard to my hon. Friend's points on the subject of the substitution of 1482 timber for steel, I shall be glad to look into that matter, but I do not think that very much can be done in that direction, having regard to our present supplies of softwood. The level of imports of softwood in 1952 will be limited to the amount necessary to maintain our present consumption and to support it with adequate commercial stocks. It will, therefore, be necessary for some considerable time to come to impose a global limit on the volume of our imports. Within that limit it is our intention to allow importers the maximum amount of freedom which circumstances permit in choosing the sources from which they buy; that is to say, from the areas which hitherto have been free and those in which hitherto the Government have been buying.
The precise way in which this limit will be administered is still under discussion with the Timber Trades Federation, and there is a meeting between my noble Friend and the Federation tomorrow. Meanwhile, in order to avoid prejudicing the final decision, we have suspended existing open import licences for softwood. This step was taken in consultation with representatives of the trade and it will have no serious effect upon our softwood supplies.
My hon. Friend raised a point about private traders buying from Soviet Russia. The answer is that private traders will be free to make contracts for Russian timber from such agents in this country as the Russian may choose, and this reverts to the pre-war practice. I can see nothing to prevent its resumption today, apart from certain technical difficulties. The limitation on demand which will be created by restriction of consumption will, I believe, make it unnecessary to impose price control upon softwood in this country. We have no evidence to support the suggestion that private traders might raise their prices unjustifiably.
I am very much obliged to the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) for coming here so early in the morning to listen to this Debate. When he was at the Board of Trade the rise in prices was caused by factors which he made perfectly clear to the House at that time. Indeed, the members of the late Government on several occasions made it clear that there was no ground for thinking that importers or merchants 1483 in this country were taking more than a reasonable profit margin. The timber trade itself has set up a committee to deal with this question.
We are satisfied from our experience this year that the timber trade has dealt fairly and reasonably with its customers, and I have every reason to believe that it will go on doing so. We shall take every precaution to prevent stocks from falling to a level which hampers distribution and leaving us in a weak position in dealing with overseas sellers. We know that the timber is available in the world for us to buy, and it will be false economy to attempt to save money now by running down stocks too far.
As to strategic stocks, my hon. Friend will not, I am sure, wish me to go into our plans too closely. We have already said that the rate of stockpiling must be slowed down in 1952. If we do decide to add to our strategic reserves during the coming year, I am satisfied that the necessary arrangements can be made. We have already made arrangements for a system of buying by private traders for the strategic stockpile in the case of hard wood. I should not like to say here and now that we shall carry out precisely the same system for softwood, because we believe there are alternative ways open to us.
My hon. Friend has asked me how the sale of the Timber Control's North American contracts—they are not merely Canadian contracts—for some 400,000 standards due for delivery in 1952 will be handled in this country. The answer is that this will be done as in the past through National Softwood Brokers, Ltd., who act as a link between the Timber Control and the trade and, secondly, through private traders to the consumers.
As far as the first stage is concerned, we earnestly hope that National Softwood Brokers Ltd., an organisation set up at the request of the Government, will continue in being until the purchases are disposed of. This is of the greatest importance. We are discussing with the company problems likely to arise on staffing and other matters, and we hope they will be settled satisfactorily. The way in which this company has performed its 1484 duties, and the confidence which it has inspired in the timber trade, have been of great value to the nation.
As regards the second stage, private traders have already been responsible this year for handling the Timber Control's purchases. This year we have added a large quantity of the better specifications of timber to the strategic reserves. The residue consequently has been less attractive to traders and to consumers, but we think that that position ought to alter later with the slowing up of stockpiling.
We are all indebted to the present Controller and his predecessor for the work of the Timber Control during the war and during the difficult and unfortunately long-drawn-out period of transition since 1945. I believe that the Timber Control has fully retained the respect of the trade and others concerned.
We must remember that most of the staff were recruited from the timber trade and are anxious to return to their previous occupations, but it would not be to anyone's advantage if this final stage in the return of the trade to its proper functions of procuring the nation's timber supplies were to be confused and impeded by too hastily disbanding the Timber Control. There is a lot of work for the staff still to do and the Timber Control is bound to last well into next year.
We hope that such of its staff as are needed to do this work will remain to see it through. I would not like to say precisely when the Timber Control will actually disappear, but I can assure my hon. Friend that the Control are fully seized of the need for every practicable saving of men, money and materials in their organisation.
I hope I have succeeded in making clear why, in the present circumstances, it is necessary to proceed with caution. We believe that the methods which we propose to adopt will enable us not only to secure the largest possible supplies economically, having regard to our present payments position, but will also, by giving new scope and vigour to the timber trade, prepare the way for the eventual removal of all limitations on timber consumption at home, which is the aim and object of us all.
§ Mr. Nabarro
In the one moment remaining, may I ask my hon. and learned Friend whether, when he has completed his negotiations with the timber trade, he will arrange that a synopsis of all the arrangements for 1952, based on the agreement and the statement he has made today, be published in the "Board of Trade Journal"?
§ Mr. Hopkinson
I should have to refer that point to my noble Friend the Chancellor of the Duchy of Lancaster, who is responsible for the Department. I will see that it is brought to his notice.
§ Adjourned accordingly at Nine Minutes to Eleven o'Clock a.m., 28th November, 1951.