§ 10.12 p.m.
§ Sir Leslie Plummer (Deptford)
I beg to move,That an humble Address be presented to Her Majesty, praying that the Newsprint (Prices) (Amendment No. 6) Order, 1952 (S.I., 1952, No. 933), dated 8th May 1952, a copy of which was laid before this House on 10th May, be annulled.When we continued the system of newsprint rationing, both by price and quantity, which had been inaugurated in the early days of the war, there were many attacks on the Government to the effect that what we were doing was instituting a control over the free Press of this country and, indeed, were menacing the freedom of that Press.
Newsprint was in short supply. It was necessary that a scheme which had been begun in the interests of ensuring fair shares for all, both for the small newspapers as well as for the large newspapers, should be maintained. It would be ungenerous if we did not pay tribute to the work of some leading newspaper proprietors who, in the darkest days of the war, voluntarily surrendered very valuable contracts that they had so that the smaller, independent newspapers were not forced out of existence by the then current scarcity. Out of that voluntary effort, which was a most generous gesture, the Newsprint Supply Company was formed, which has been responsible since then for the distribution of supplies.
But now we are faced with a bad situation, which has been perpetuated by the 1978 Order against which my hon. Friends and I are praying. Newsprint prices are dependent on several factors, one of the most important of which, perhaps,' is the cost of the pulp that is brought into this country. There is also the cost of the finished material which is manufactured outside the country, and which is distributed on a basis which I will describe presently.
The situation today is that the Minister of Materials decreed that as from 1st April there was to be a ceiling on the prices of the pulp that is the raw material of newsprint. The ceiling that he fixed for both classes of pulp—the different kinds of pulp that are used in the manufacture of newsprint—results roughly in the cost of pulp being £47 a ton. From 1st July, the price of pulp will be reduced to just under £40 a ton.
Those are reductions in price which are welcome, but it is worth while to relate those prices to the price of newsprint as established under the Order. Over the past two years, the price of newsprint has rocketed to an extent not shared by any other commodity in this country—from £32 to £45, to £65 and to £66 a ton in the course of two years; and today's price is £64 a ton.
It is a complicated matter to explain to the House exactly the way in which those prices are arrived at, but it may be accepted that the price of English newsprint—newsprint made within these shores—is £64 1s. 3d. per ton, the price of Canadian newsprint £56 per ton, and of Scandinavian newsprint £70 per ton. By virtue of the fact that there is a different proportion of the total amount produced by the English to the Scandinavian and the Canadian mills, the general averaged price is £64 a ton. On 1st July, however, the price of Scandinavian newsprint is to be reduced by £20 1979 a ton, from £70 to roughly £50 a ton. It is reasonable to believe, therefore, that at about 1st July the averaged price will be something just below £60 a ton.
What causes this reduction? The reason is that the Scandinavian market is weakening for the first time since 1940. There is a flattening out of the rising demand that has been prevalent in the United States. Canadian production is increasing, the Argentine and the Australian markets are being closed to the Scandinavians, and, generally, there are world-wide import cuts.
This is where this Order is working extremely hardly on the newspapers of this country. Despite the fact that there are very considerable reductions, as I have indicated, of nearly £20 a ton in the price of Scandinavian newsprint the price has come down to only £60 a ton. The reason is that there is no indication in this Order, or from the Ministry of Materials, that the price of English newsprint, now standing at £64 per ton is to be reduced because the price of pulp—the necessary materials is to be reduced by £7 a ton.
The newspaper industry is left in a state of great anxiety as to the future. Well might it have anxiety, for the situation is now this. On the present basis of the cost of paper in this country at £64 per ton the price of pulp is only £47. What else is used in the manufacture of newsprint—coal, labour, transport, some water, some china clay and some profit? For that an allowance of £17 per ton, the difference between £47 for pulp and £64 for paper delivered to the press room, is allowed the mills to meet those charges.
But in 1939 the British newsprint mills were delivering paper into the press rooms of the newspapers for just under £10 a ton and for that they paid the cost of pulp, transport, labour, coal, water, china clay and made a profit. Today, that is not enough. This generous Government gives them £17 a ton for fripperies, if the profits I propose to reveal later can be so described.
What is the result? Every week a newspaper or periodical in this country dies. Fifty have died in the last 12 months; not trivial, unimportant newspapers, not speculative things, mushrooming out of a scarcity situation. Not 1980 at all, they are reputable newspapers which have represented the point of view of decent folk all over this country—the "Grantham Guardian," the "Perthshire Constitutional and Journal," the "Buxton Herald," the "Axminster and Lyme Regis Clarion," the "Gosforth Gazette," the "Ulster Post," "Public Opinion," a most eminently satisfactory and admirable weekly paper, the "Guardian," that distinguished Church of England weekly newspaper, the "Rothesay Express," the "Dunfermline and West Fife Journal," and, not to be omitted, the "Fishing Bulletin." Those papers have died because they could not sustain the strain that these high newsprint prices were imposing upon them.
It will be observed that I have not said a word in defence of what in Fleet Street were referred to in my salad days as "the big boys." I have stressed the effect of this Order on the small people because the big boys can look after themselves. It was suggested to me this evening that I was moving this Prayer in the interests of defending Lord Beaverbrook because, as is well known, I had an association with him. I should like to assure the House that it is not necessary for any Member of this House, any group or society, or party, to defend Lord Beaverbrook. On the contrary, what is required is a Society for the Protection of Lord Beaverbrook's Victims from his lordship.
Lord Beaverbrook is quite able to take care of himself and now that he has invented the Beaverbrook Conception of History and harnessed the radio waves to his support, what is required is a defence mechanism to protect us against his lordship. He is quite capable of withstanding the onslaughts that are ruining the prospects for free and independent journalism in the villages and small towns of this country.
Who are the real beneficiaries under this Order? The British newsprint manufacturers who import the pulp and make the finished product and deliver to the newspapers of this country. Last year, the eight leading paper manufacturers of this country made a total profit of £32,371,441. That is far greater than the combined profits of all the newspapers of this country—far greater. What did the mills do? They put £12¼ million to reserves, raising them to £49 million; they distributed £1,401,000 in dividends.
§ Mr. Speaker
The hon. Member is going a little wide of this Order, which merely makes a change in the maximum price of newsprint.
§ Sir L. Plummer
I will concentrate on the people who are confined almost exclusively to the manufacture of newsprint, that is the firms of Bowater's and Reed's, and as illustrations of the way in which these Orders are assisting them, I will show how their profits have risen quite disproportionately. In 1947 Bowater's, the largest manufacturers of newsprint in this country, and the main beneficiaries under this Order, made £2¾ million profit, in 1948 £3,800,000, in 1949 £4¼ million, in 1950 £6 million and last year £11,130,000.
Reed's, the second biggest newsprint manufacturers in this country, began 1947 with a miserable profit of £842,933: they increased that to £975,000 in 1948, then to £1,150,000 in 1949. They experienced a drop in 1950 to £1,144,000 but managed to recoup themselves in 1951 with a profit of £4,326,000.
How did these mills make those enormous profits last year? This is where these Orders help. They did it in this way: when prices were rising as a result of the increase in raw material prices generally because of the world situation, the mills who benefit under this Order went to the Government and said, "The price of pulp, which is the integral factor in the manufacture of our newsprint"—and which is covered in this Order—"is going up. Therefore, when you fix the price of newsprint you must fix it on the basis that the pulp is priced at replacement cost, that is to say, not at the cost at which the pulp was bought by us but at the cost which we should have to meet if we replaced it." The Government agreed, and in the normal fixing of the price the replacement price was the operative figure.
But when the price of pulp goes down, owing to the steps which the Government have taken—I admit that quite freely—the mills say, "But this drop in the cost of pulp is reducing the value of our stocks. Therefore, you must compensate us for that reduction in the value of our stocks." So, whatever happens, the mills must win. Does Lord Swinton, as Minister of Materials, never look at the balance sheets of these mills? Does 1982 he never look at their annual reports? Does he make no inquiries?
Is what, in effect, happens that the representative of the British mills goes to the Ministry of Materials, as he used to go to the Board of Trade, and say, "Here are the production costs of the mills in this country. But I do not want you to know what the individual costs are, I do not want them to be clear, so I scramble them. I put the big fellows in with the little fellows, the competent mills with the inefficient mills, the high producing mills with the low producing mills," on the basis of the man who put horse into his rabbit pies and said that he did so on the basis of 50–50—one horse one rabbit? What happens is the rabbit of low prices goes 50–50 with the horse of high prices.
At one time the newspapers used to go along to the Ministry—the big newspapers and little newspapers alike—and put their case against these increases, but I regret to say that that system has stopped. Clearly the Director-General of the British Paper and Board Mills, Sir Herbert Hutchinson, has been too much for the Government. To him must go much of the credit for this very handsome and comfortable position in which the newsprint mills find themselves.
His advocacy, his powers and his general knowledge of the people and the Departments with which he deals have served the mills in very good stead, and have served the consumers in this country and the Government in very bad stead. But that is his job, and he is doing it extremely well, and the mills should be grateful to him.
What should be done? How are we to preserve the future of these small and struggling newspapers against these inflated prices? The first thing the Government should do is, on the basis of pulp costing £40 a ton, to reduce the price of newsprint to £50 a ton; £10 would be ample compensation for the mills.
No doubt, despite all the optimistic statements which were made by the Chancellor of the Exchequer last week, the Government are faced with the prospect that they may have to restrict the import both of pulp and the finished product. I urge the Government not to accept the argument of the mills that if less newsprint comes from Canada or Scandinavia the British price must rise 1983 again, and to prevent even greater profits being made out of shortages. The Government do not want to lose the last vestige of friendship which they have with the newspapers, they will surely not fall for that line from the newsprint mills.
I recommend that the Government withdraw Order 933 and make a vigorous attack on the whole basis of the submission of these prices. Every six months the mills submit prices and each time the profit goes up. Here is an opportunity to form a real commission of inquiry into the principle on which these prices are based.
There is needed an Order that is designed to produce prices which are in keeping with the needs of the market, with the ability of newspapers large and small throughout the country to pay them, and which at the same time returns to newsprint mills a reasonable and decent profit, and not the sort of profit which swells their accounts in this fashion. That is the way to promote confidence in the future among the small newspapers, magazines and periodicals which are the real fundamental basis of our free Press.
§ 10.32 p.m.
§ Mr. Percy Holman (Bethnal Green)
I beg to second the Motion.
First let me assure the House that I have no interest in newsprint. This Order against which we are praying tonight reduces the price of newsprint by £2 17s. 6d. per ton. It was inevitable that an order should be made once the Government had placed a ceiling on pulp towards the end of last February. This came into operation in April.
In effect, it cut the price of most sulphite pulps by about £10 a ton, and many spot parcels, as they are called in the trade, by more than that. We are told that some spot parcels of sulphite were being purchased by British mills for as much as £115 a ton, although the majority of the sales on long contract were in the region of £90, and some sulphite, the cheapest made being sufficiently good for newsprint, was often somewhat lower than that.
As far as mechanical pulp was concerned, which represents 80 per cent. of the contents of newsprint, this was mostly 1984 £41 or £42 a ton and the ceiling was placed at £39. The actual saving on raw material made by the mills exceeded the figure of £2 17s. 6d. a ton.
In proof of that I would draw the attention of the House by way of illustration to the other Order issued at the same time as this one, and to which a Prayer was put down but was afterwards withdrawn. It is very apposite in this connection, for it deals with the Paper (Prices) (No. 2) (Amendment No. 6) Order, 1952, which is operative from the same date; and it deals with mechanical printings, which are those in which mechanical pulp tends to predominate; and the lowest price for it, under this Order is £60 12s. 6d. a ton. That is paper containing more than 70 per cent. of mechanical pulp, and it is slightly thicker than newsprint.
In the Order made on the very same day, newsprint is listed at £63 10s. 0d., as against a somewhat superior paper. There is a reduction in the one Order of £7 2s. 6d. a ton, and in the other of £2 2s. 6d. a ton. The better paper used by many periodicals comes down below the price of newsprint, which is made by a cheaper process on faster running machines on the whole.
How can the Government experts and the Parliamentary Secretary justify such a position? How can they justify these two Orders, signed on the same date, with this slightly superior paper coming on the market at a lower figure than the newsprint price? It is just an absurdity. What is behind this; what does it mean? First, it means that newsprint has a more rigid market.
The newspapers have to produce six or eight pages every day. They have been allowed 10 per cent. extra newsprint, but they are not taking it up; even the big dailies are finding some difficulty about it, because they cannot afford it. Mechanical printings are in general use, and in stock, and very often ordering can be held off for months, and it will be found that very soon after 1st July—and indeed, already—these prices for mechanical printings are ceiling prices, and most contracts are being placed well below them.
But not so with British newsprint Contracts, I believe, in all cases, are being placed at £64 1s. 3d. The ceiling has recently been reduced again by 20 1985 per cent. for sulphide, and for mechanical pulp by 5 per cent. and these ceilings today are not realistic. In the "Financial Times" we have been told that mechanical pulp was offered by Scandinavia at £35, and the British mills were not in agreement.
Now is the time when the British mills ought to have agreed with the Government as to their price from 1st July on the basis of replacement costs. Many figures tend to show that at the beginning of the year the average cost of the pulp, per ton of newsprint, had fallen by more than is generally believed. I have taken the most conservative, the lowest figure of contracts, and that shows from 1st July a fall of over £11 a ton, part of which ought to have been reflected in this Order, something composite and similar to that found in the mechanical printings Order.
I want the Government to look into this matter very quickly, firstly, because the profits of the British mills in this respect are absolutely excessive; and secondly, because, in spite of what was said by hon. Members opposite for years past about the shortage of newsprint preventing the education of the democracy of this country, today the stocks are double what they were at the beginning of the year.
There are high-priced stocks in the hands of the small publications as well as the large; they cannot use them because they would lose money on every edition they published if they added pages at the present high costs and the lack of additional advertising matter. Their excuse is that the public likes its news in tabloid form; in other words, they could not give another two pages of news without a proportion of advertising in them.
The main consideration before us tonight is: Why did the Government agree to such a small diminution in the price of newsprint in this Order? Can we have a pledge from the Government that they will seriously go into the costing side of the problem—in Scandinavia from 1st July there is to be a considerable fall in the price of newsprint—and see that the British mills act in advance and do not keep the country waiting in a condition of uncertainty for four, six or eight weeks 1986 as the still lower-priced pulp begins to flow into this country at a figure around £35 a ton.
This Government consider themselves to have more business ability and more company directors, and so on, than we have on this side of the House. Let them show their business acumen in the interests of our consumers. Why should we not have bigger newspapers? We do not want those of pre-war size; nobody is asking for that. But let us have a bit more news, and a little less of the tabloid form of news.
My hon. Friend has suggested that the price of British newsprint could come down from £64 to £50 a ton. I cannot commit myself to that exact figure, but unless the Government can bring it down sharply after 1st July by a very considerable proportion of that amount they will show themselves conclusively to be thoroughly incompetent, and not worthy of even being known as businessmen. I hope the Parliamentary Secretary will take that to heart and ensure that his technical advisers see that British mills bring down their prices without any conditions.
There have been some unpleasant reports recently that the British mills are trying to get the Press to agree to support a tariff on imported newsprint as a condition of adequate reductions in price. That report has come to me from several quarters. I cannot produce written evidence because that sort of thing does not get into writing.
§ The Secretary for Overseas Trade (Mr. H. R. Mackeson)
That is a very serious statement. If the hon. Gentleman has any evidence of that I very much hope that he will send it to me.
§ Mr. Holman
As I say, it is the sort of thing that is passed from mouth to, mouth. It is not put in writing. Nevertheless, it is possible that that is happening and it can be obviated if the Government take strong action, and say, "We are going to send costing accountants into these mills to see what is a fair rate of profit on the basis of replacement costs." If that had been done in connection with this Order the price would have been lowered, if it were shown that from 1st July there is to be another very substantial reduction in price.
§ 10.45 p.m.
§ Mr. F. P. Bishop (Harrow, Central)
I think the House is aware of my special interest in this subject of newsprint, and although I shall try to be fair and objective in what I say, and not join in any attack upon the mills supplying a large share of the newsprint consumed in this country, I must confess that my bias is on the side of the consumer. From that point of view I welcome the support of the mover and seconder of this Prayer.
I cannot support the Prayer, because the Order which is being prayed against makes a reduction in the very high price of newsprint. If the Prayer were successful, I suppose the result would be that even the small benefit we have received in these last few months would be taken away. But although the price of newsprint has been reduced by this Order it remains, as the hon. Member for Deptford (Sir L. Plummer) said, at just about twice what it was two years ago. Owing to the welcome increase in supplies of newsprint recently, stocks of newsprint in the hands of the newspapers have doubled within the last year. So the financial burden which rests upon the newspapers today arising from the high cost of newsprint is that much greater.
It is a burden which is shared equally among all the newspapers of the country, large and small, because one of the functions of the Newsprint Supply Company, in conjunction with the Paper Control, is to take care to see that the stocks of newsprint are fairly and equitably distributed among the newspapers. So this burden is being felt by every newspaper in the country. It has reached a point when many newspapers, and not only the smallest, are finding it impossible to accept increased supplies, or to build up their stocks further.
This is a great misfortune, because although stocks have improved and are at a better level than they were even a few months ago, they still are not high enough for real security. We ought to have larger stocks in this country. Beyond that is the need for increased consumption. This need has not disappeared because the cost of newsprint is so high. It is still there, but it is overborne by the burden of the present high prices. This Order affects only that part of the supplies of newsprint available in 1988 this country today. In addition to the newsprint supplied by the British mills—which is the newsprint affected by this Order—we import large quantities from Canada and from Scandinavia. The price of these imports is fixed by the contracts made by the Newsprint Supply Company.
The price of Canadian newsprint coming into this country under our contracts, as the hon. Member for Deptford said, will be about £56 a ton for the rest of this year. From 1st July until the end of this year the price of Scandinavian newsprint under our contracts will be about £52 a ton, while this Order maintains the price of newsprint supplied by the British mills at just about £64 a ton. Considering the improvement in supply and the reduction in the cost of pulp, upon which the British mills are dependent for the newsprint they manufacture here, I hope it may be possible for my hon. Friend to tell us that in the near future another Order may be expected making a much more substantial reduction in the price of newsprint supplied to us by the British mills.
Every newspaper in the country pays the same equalised price fixed by the Newsprint Supply Company—average the cost from all sources of supply—and, in view of the very big reduction in the cost of some of our imports, it is reasonable to expect that we shall be able to make a reduction in the price to newspapers, even if the cost of the home-produced newsprint remains the same. But for any really substantial relief to the newspapers in the coming months we must look to a big reduction in the price of the home-produced newsprint.
I know the difficulty of the Government. It is fair to say that the price that has been fixed by the Order has been fixed in exactly the same way that prices have been fixed since the period of control began, 12 years or more ago. It is fixed on a sort of cost-plus basis, which looks after the cost and the reasonable profits of the mills and, at the same time, is designed to protect the consumer against exploitation in a period of acute shortage.
I am not prepared to argue whether the price as it stands today is fair or not judged by the standards by which it is fixed. Frankly, I have no means of 1989 knowing, because although the newspapers consume about 90 per cent. of all the newsprint used in this country they have never been allowed any information about the basis upon which these costings are worked out. But I do not question the fairness of the Ministry in fixing the price upon the recognised basis. Nor do I join with the hon. Member for Dept-ford in commenting upon the recent profits of the paper mills.
These profits, as they tell us, do not all come from newsprint, though it must be obvious that the profits could not have reached the record level of 1951 if newsprint had not played a reasonable part in the result. It is a fact that in 1951, while paper makers were attaining these record profits—about three times higher than they had ever been before—more than 50 of the smaller newspapers and periodicals in the country had to go out of production because they were unable to meet the heavy cost. It is not surprising if the survivors, large and small, who are still struggling against these difficulties, look not only with some envy at the figures of papermakers but wonder whether it should not be possible to make some much more drastic reduction in the price of newsprint now. What is really wrong with this Order is that it takes no account of the present state of the market as regards newsprint supplies.
Controlled prices are very necessary in a time of acute scarcity, but, when supplies become relatively easy and when the market is falling, a controlled price of this kind can possibly give too much protection to the producer and impose too heavy a burden upon the consumer. I think it is possible that we have reached that point with newsprint, but, again, the Order, as my hon. Friend the Secretary for Overseas Trade may well and justly point out, fixes only a maximum price. There is nothing in the Order to prevent the mills themselves, if they feel that their interests would be served by doing so, from quoting and offering a lower price for the supplies they are able to deliver.
§ Sir L. Plummer
Has the hon. Member, from his long experience, ever known a case in which the mills have given a minimum price, below the maximum price, fixed by the Order?
§ Mr. Bishop
To be fair to the producers, I think it is right to say that 1990 the price fixed by this Order is a price which is determined by the Ministry to be a fair one. It is not unreasonable that they should seek to stand by it.
What I am arguing is that the fair price, based on a cost plus basis, may become quite irrelevant when the markets change, supplies improve, and when there is a real danger that surplus production may appear. In my opinion, we have reached the point when there is a real danger that an apparent surplus of production of newsprint in this country may be appearing, with the consequence of short-time working, machines closing down, and men being stood off. The surplus, if such it appears to be, is only an apparent surplus because the basic need for greater consumption and the basic need for bigger stocks still remains. It would be a tragedy, just at a time when better supplies are coming forward and when a possibility exists of some of the desperate, acute shortage we have been suffering from being made good, if a consumer found it impossible to take up a supply which is available because the price is too high.
The only remedy for that is to take the drastic step of cutting the price much lower, but whether by means of a new Order or by the voluntary action of the producers themselves, I cannot say. I do feel very strongly, however, that if grievous trouble is to be avoided, not only for the newspapers but for the producers of newsprint, too, the time has come when a really much more drastic cut, and a lowering of the price of newsprint to find its level in the markets today, should be brought about.
§ 10.59 p.m.
§ Mr. William Shepherd (Cheadle)
I should very much like to have supported my hon. Friend the Secretary for Overseas Trade on the first occasion on which he is answering a debate, but I feel that the circumstances of this case make it quite impossible. I am satisfied that the case is made out for a fresh review of the price situation not only in the interests of the general consumer but in the interests of the mills. The price, as my hon. Friend has said, has been doubled in the last two years. To introduce a slightly controversial note, had it not been for the unfortunate cancellation of those Canadian newsprint contracts I do not believe that the Scandinavian prices 1991 would have risen as they have in the last 18 months.
§ Mr. Holman
The hon. Gentleman will appreciate that in the last 18 months—roughly from December, 1950—practically every grade of paper from Scandinavia has gone up proportionately.
§ Mr. Shepherd
I am aware of that. I believe it to be the case that had it not been for the unfortunate cancellation of the newspaper contracts with the Canadians we should not have seen this increase to the regrettable total of double the price of 1950. The British mills at the moment are trying to get the best of both worlds. They have agreed that the replacement value is the only basis upon which to work, but when there is a prospect of even a small fall they want to maintain roughly the same sort of price.
I am in some sympathy when they say that a great deal of their increased profit arises from the increased value of their stockholding, but if that is fair and true they should be prepared to take some reduction which might not be wholly justified on the existing replacement values. What I should like my hon. Friend to do is to try to get a little more public confidence, and confidence as far as the newspapers are concerned, in the price arrangement he has with the mills. It is obvious that this price arrangement at the moment is under suspicion.
I do not think that the average consumer of newsprint really believes that the arrangement that now exists, the scrambling of prices, and the inquiries by the accountants, result in a fair arrangement. They are not satisfied that the price arrangement is working equitably. It is most important, if we have to have an artificial price, that all buyers feel that the price has been fairly arranged. I suggest that for once he might bring the newspaper people and other consumers into the picture, and let them see how the price is arranged. There is no doubt that at the moment there is considerable suspicion and lack of confidence, and that ought not to continue.
It has been said that while the profits of the mills have gone up three times the number of newspapers that have gone out of business has increased considerably. That in itself is a condemna- 1992 tion of the position. Then there is the effect on the advertisers. They are an important section of the community, although I do not think they evoke much sympathy from either side of the House. But I think advertising has a real part in our national life.
As the hon. Member for Deptford (Sir L. Plummer) said, many newspapers will not take more newsprint because they cannot afford to do so. They cannot get sufficient advertisements to make an allocation of fresh newsprint profitable. They cannot get enough advertisements to support the additional newsprint. Rates have gone up so high that advertisers are being driven out of the market. Some of the biggest newspapers in the country are offering a cut rate to large scale buyers of advertising space.
Clearly, this means that business will not progress, and it also means that the smaller man in trade, and the growing business, are being squeezed out. The established concerns perhaps can afford to pay inflated prices, but the others cannot do so. Therefore, there is a sound social reason why there should be a reduction in the price of newsprint, an increase in the amount of newspaper per issue and a reduction in advertising costs. This will suit the mills, because they are already operating below capacity. As advertising revenue becomes more and more difficult to obtain so there will be a less inclination on the part of newspapers to take more newsprint.
My hon. Friend will appreciate that many of us feel very strongly on this issue. The time has come for the newspapers, the advertisers and the general body of the public to have a price which is fair. At the moment the mills are not operating at full capacity and they cannot take anything like the amount of waste paper which is collected. There is a need for a new outlook and I hope that my hon. Friend will look at the matter again.
§ 11.5 p.m.
§ The Secretary for Overseas Trade (Mr. H. R. Mackeson)
I welcome the fact that the Prayer has been put down and I congratulate the hon. Member for Deptford (Sir L. Plummer) on the very skilful way in which he kept in order.
This is not an easy problem, but I can quite well understand his remarks on the 1993 profits of the two firms to which he referred. It is certainly not my intention or job to defend either the newspapers or the mills in this connection. I can quite understand the public reaction to the very large profits disclosed. I hope I shall be able to satisfy the hon. Member that perhaps the situation is not quite so rosy as the newspapers have made out, as far as Bowater's and Reed's are concerned.
The hon. Member will not resent it if I say that the death of the large number of newspapers to which he referred was not caused by this Government. In saying this I am not laying the blame on the late Administration, and I am certain that we all regret it when old-established papers with great historical and local interest have to close down.
The real trouble about this problem is that we are now still dealing with the second quarter of this year, not the third. From 1st July the price c.i.f. of the wood pulp coming into the mills—I am entirely excluding imported newsprint which is processed before it arrives—will be lower. But at present we are still getting Scandinavian pulp for instance at the higher ceiling price. I must make it perfectly clear that Her Majesty's Government could not accept the annulment of the Order by this Prayer.
These arrangements have been continuing since 1939 and, if the Prayer is carried, I am advised that under Section 6 of the Statutory Instruments Act, 1946, no further proceedings under the principal Price Control Order could be taken and we would free the whole market from control. If that is what the House wants, —which I do not think the mills, newsprint proprietors, or the trade unions really desire—of course the House must have its way. I think the right hon. Member for Huyton (Mr. Harold Wilson) would agree that since 1939 these arrangements have not worked too badly.
This Order refers to home-produced newsprint only, not to imported newsprint which is bought in bulk by the Newsprint Supply Co. which represents all the users of newsprint from the "Daily Telegraph" to the "Daily Worker," with the possible exception of one or two technical papers.
§ Mr. Mackeson
The large proportion of the users.
The procedure is, as far as fixing the control price is concerned, that the accountants of the mills submit to the Paper Control a statement of the cost of production. The cost of raw materials is estimated at replacement cost. That is a very important point, because at the moment the situation is that without any doubt these mills have made a very large profit because the value of their raw materials has gone up. The value of their raw materials has now fallen and they will take the knock on the fall.
Broadly speaking, most Scandinavian newsprint is coming into this country at present at about £70 a ton, and will, we hope and believe, come in at £50 a ton after 1st July. There is a rather different situation in Canada and there the price of newsprint has recently gone up by £4 to £56 a ton. I can give the House this categorical assurance. In the middle of July my noble Friend will review the whole of this situation. We cannot do it today by revoking this Order, because we are still buying Scandinavian woodpulp at £39 a ton.
§ Mr. Mackeson
The noble lord the Chancellor of the Duchy of Lancaster and the Minister of Materials, whom I have the responsibility of representing in this House.
§ Mr. Mackeson
It looks as though prices of the raw materials will fall and we shall be able to review the whole position and reduce the price of newsprint. That, of course, is a difficult matter to forecast. I fully appreciate the criticism of the hon. Member for Bethnal Green (Mr. Holman). He pointed out the apparent divergency in prices. This is due to a time lag. It may well be we shall not be able to reduce the price of 1995 newsprint as much as we hope. We think that on the whole, however, if the market goes as we hope we shall be able to reduce it a good deal more.
It would be rash of me if I made a promise to the House that we could afford to scrap this Order or give any guarantee of how low we can fix the price of newsprint. It does appear that the market is running our way, but it would be a rash man who gave a categorical assurance; but we hope to be able to take steps in about a month.
§ Mr. Holman
The Government has reduced the ceiling on pulp recently by 20 per cent. on sulphide and 5 per cent. on mechanicals. Why is it that newsprint is about the only paper I know of that has not already notified a reduction corresponding to the new prices and costs that are known to be coming into operation? The Swedes have reduced the price of newsprint by £20 a ton from 1st July. Why cannot the price review of this controlled paper be carried out quicker than the middle of July?
§ Mr. Mackeson
I think the hon. Member was out of the House when I tried to explain that we are still working on the second quarter prices. After 1st July it may be a different situation.
It would be wrong to attempt that now when we are actually buying these materials at the former price—because that is the price at which they are coming in c.i.f.—but I can assure the hon. Gentleman that my noble Friend the Chancellor of the Duchy of Lancaster will deal with this matter in July, and I hope very much that we shall be able to issue an Order which will fulfil the wishes which I fully appreciate are shared by all Members in the House.
§ 11.16 p.m.
§ Mr. Ede (South Shields)
I am sure that those of us who are not technically acquainted with this industry must have been impressed by the knowledge displayed by my hon. Friends the Members for Deptford (Sir L. Plummer) and Bethnal Green (Mr. Holman), and the hon. Member for Harrow, Central (Mr. Bishop) in the speeches which they have made. Indeed, I would not have thought it was possible to generate so much passion as my hon. Friend the Member for Bethnal Green, of all people, dis- 1996 played in the course of his speech on so apparently prosaic a subject.
I am glad that the Secretary for Overseas Trade has recognised the evident feeling on both sides of the House in this matter. I am quite certain that the House will look forward with keen anticipation to the further deliberations of his noble Friend and himself on this subject when they see what is to happen after 1st July. We hope that will mean that there will be a substantial reduction in the actual price being paid by the various newspapers and publications for the newsprint that they have to use.
We all regret that some of the papers that were mentioned by my hon. Friend the Member for Deptford, which used to give very considerable pleasure and enlightenment to not unimportant sections of the community, even if not numerous sections, should have disappeared from the bookstalls. We can only hope that with the lowering of the price it may be possible for some of these or similar publications again to appear.
My hon. Friends have, I think, achieved the purpose for which this debate was originated. Clearly, it would be foolish of us to press this Motion to a Division even if we had the support of hon. Gentlemen opposite who have supported us in speeches, because we should then merely deny the trade the reductions that this Order brings about. But I hope that we shall find that within the next few weeks the intervention of the Secretary for Overseas Trade in this debate will be followed up by deeds worthy of the sentiments he has uttered tonight.
In those circumstances, I advise my hon. Friends to be content with the speech to which we have listened from the hon. Gentleman, though, of course, if his next Order does not give us satisfaction we may have to find some way of raising the matter again.
§ Sir L. Plummer
I would, of course, very much like to press this matter to a Division, because the support we have had from the Opposition benches indicates that the Government would be defeated and it would give me the greatest pleasure to defeat this Government. But, in view of the words of wisdom of my right hon. Friend, I beg to ask leave to withdraw the Motion.
§ Motion, by leave, withdrawn.