HC Deb 25 February 1953 vol 511 cc2266-76

Motion made, and Question proposed. "That this House do now adjourn."— [Mr. T. G. D. Galbraith.]

12.29 a.m.

Mr. William Blyton (Houghton-le-Spring)

I raise the question of this Czechoslovak agreement at this late hour because of the great consternation which the sugar and biscuit trade feels about the agreement on fondant and sugar fat and the imports of biscuits, chocolate, and sugar confectionery. I appreciate that trade has to be done between East and West and that we must take some goods that we could do without, but surely in this matter the trade have had a raw deal in two respects, the high prices we have paid, and the way in which licences were allocated. This has resulted in blatant exploitation of our manufacturers.

The facts are that the Board of Trade reduced the quotas of sugar mixtures for the O.E.E.C. countries in the first part of 1953. As an example, fondant imports from O.E.E.C. countries were reduced from £750,000 to £200,000 and sugar fat from £1 million to £200,000. The Australian offer of sugar fat was rejected and the import of syrups was reduced by 50 per cent. It is not my intention tonight to question this matter, though it is of considerable importance to the confectionery trade; but it is really astounding that at the same time as this was done, the Board of Trade concluded an agreement with Czechoslovakia for sugar confectionery, £600,000; biscuits, £100,000: fondant, £150,000; and sugar fat, £360,000. Biscuit manufacturers are now dismissing men and women from their factories because of the difficulty in obtaining their raw material.

The Czech Agreement was treated confidentially and the Board of Trade have followed new methods on this agreement. Since the Import Restrictions of November, 1951, were introduced the Board of Trade have issued licences to importers on their previous imports during the period 1st November, 1950, to 31st October, 1951. Importers had to forward their applications to the Import Licensing Board, accompanied by statements of previous imports, certified by a chartered accountant. The trade agreements and procedures have always been announced in "Notices to Importers" and issued through the Board of Trade.

With regard to Czechoslovakia, the Board of Trade followed new methods. The Agreement was made in August, 1952, and was not disclosed. Neither the figures nor the procedure were published as hitherto and importers were only able to get information from the London Chamber of Commerce. I think that the House is entitled to an explanation here. What is known here is that when it did leak out and applications were made, the allocations of fondant had been made. Is it a fact or not that H. W. Peabody, Ltd. of London acted as brokers and the Commercial Counsellor of the Czech Embassy in London as the distributor? Is it true that he intended to allocate 1,500 tons of fondant to one firm which, in 1951, imported only 50 tons of fondant? Is it also true that because of the protest of the trade Mr. Pyser, who is in charge of the import licensing branch cancelled—

The Secretary for Overseas Trade (Mr. H. R. Mackeson)

I really cannot tolerate an attack on one of my civil servants by name. The hon. Member should attack me personally.

Mr. Blyton

This is only a statement of fact.

Mr. Mackeson

The hon. Member is reading his speech. He should not attack a civil servant, but me personally and I will take responsibility. The hon. Member is reading from a brief.

Mr. Blyton

It was a promise to consider an alternative method of distribution. Is the Minister aware that one large firm of importers were able to get information in advance of any announcement to the trade? They were told that the imports were coming and to get busy. Information was given by a Mr. Kohn, a Czech, at that time with H. Gessler, who had a small office in Old Bond Street, and who is now reported to be in liquidation. Mr. Kohn is now with the Regent Food Trading Company, of 87, Regent Street, London. In the light of this, why was the agreement kept secret and why was the procedure altered? Why has the Board of Trade allowed the Czechs to allocate the goods to certain people some of whom are very doubtful?

The President of the Board of Trade pointed out in the House that we had to accept certain goods from Czechoslovakia, but that is no reason why we should be expected to pay inflated prices. We pay £110 per ton for fondant as against the price of £60 per ton for fondant of equal quality from the O.E.E.C. countries and £142 per ton for sweetened fat against £90. Is the Minister aware that £192 per ton is being charged for this fondant? In my opinion, this latest figure is robbery with a vengeance.

In the light of those figures, the persons who have the licences are making over £100,000 on 1,500 tons of fondant. We have made a present to the Czechs of over £60,000 sterling, which is the difference between the O.E.E.C. prices and what we pay to the Czechs. Is the Minister aware that the trade state that they part with £50 per ton more than the O.E.E.C. price, and that they are financing the agents out of their industry? There is so little fondant available now that manufacturers need sugar to carry on, and outrageous prices can be demanded for fondant so long as the sugar is not available.

The charge is made by reputable firms of long standing in the trade that people who got the licences were nominated by the Czechs. If that is so, does the Minister consider it in the best interests of the country that not only should the Czechs dictate high prices, but also who should handle the goods? There is a deep feeling in the trade that they were not notified of the Czech Agreement, and they say that the Board of Trade statement that it was an open agreement is a chimera. I have here a number of letters from people of high repute who have expressed their utter dissatisfaction with this whole business and are prepared to give evidence at an investigation, should one take place. I do not know if the Minister has read the letter from Richard Mannheim, Ltd., of Ibex House, Minories, which was published in the "Financial Times," but it is an indictment of his Department.

Does the Minister know that on fondant the goods are invoiced "Centrokomice," of Prague, and that the people who got the licences had no say as to the supplier, or the prices? Sweetened fat goods are marked "Koospol." Can we be told who got the licences and how they got them? Can this question of who decided to whom the licences should be granted be made public? Was the importer in this country who received the bulk of the Czech sweet fat the United Malt and Phosphate Company, because it is reported that they placed the order in Czechoslovakia in July, 1952, before any announcement was made.

The question that arises is whether the entire purchases were made by one firm in this country and eventually split among other firms out of the hundreds desirous of having the goods? And why, of those who got the licences, did one importer get 14 per cent. out of the entire importation? As I have stated, there is great resentment on the whole matter and also a great distrust of the Board of Trade. Does not all I have said justify an inquiry or a tribunal to investigate the whole of this affair? It is important that the air should be cleared—as it is said that another agreement will be made —so that the House can be assured that licences will be given to importers of standing, that is, sugar importers or actual users who can get these prices down and buy in the best markets, rather than to a few opportunist importers, some of whom I am given to understand only recently became importers.

In view of the serious concern of the people employed in the biscuit, cake and sugar industries at the recent import licences for biscuits, sweets, and so on, in agreement with the Czechs, at a time when large numbers of workers in these industries are being paid off owing to lack of raw materials, will the hon. Gentleman take steps to curtail the imports of some of the manufactured goods until the time when the Minister of Food can find raw materials to keep our own workers in this country employed?

Will the hon. Gentleman see that fondant and sugar are brought from the O.E.E.C. countries, thereby helping to bring down our prices, as a result of the saving which would follow, and enabling us to compete in world markets? The importers who agreed to pay £110 per ton for Czech fondant are not the right people to receive licences. It has resulted in £192 per ton being charged to users. It was their duty to get the Czech prices down, and the Board of Trade ought to have used their influence to that end. The fondant ought to have been bought from the O.E.E.C. countries at £50 per ton cheaper.

The granting of licences and the procedure followed by the Board of Trade have created doubt and indignation in the trade, and the only way to clear it up is by a tribunal or by some other investigation. The trade believe that the whole affair is suspicious, and the managing director of a large biscuit factory in a letter to me said: There is a feeling in the trade—and one importer summed it up by stating that the ghost of Sidney Stanley seemed to be hovering about somewhere in Westminster in order to keep the present sugar substitute racket in being." In conclusion, will the Minister give us the names of those who got the licences for fondant will he tell us how fondant becomes £192 per ton to the user; and will he tell us why we accepted the Czech nominees for the licences? If we are to compete in this competitive world, then it is important to get our materials in the O.E.E.C. countries where they are cheaper. We ought now to be concentrating on preventing, if we can, Denmark cutting down the production of sugar beet in the coming year, because of our import cuts of fondant, sweetened fat and other sugar lines.

It is monstrous for the Government to permit such a situation to arise when we are told that we are so short of sugar that we cannot lift rationing. Can we stand by and watch a sugar producing country cut its production, especially as it is a soft currency country? It is only when sugar is available that this terrible exploitation will end, and the scandal of charging £152 a ton for fondant which costs us £110 from the Czechs, when it could have been obtained for £60 from our allies in O.E.E.C. countries, stopped. This makes it all the more imperative that some inquiry should be held, and some confidence restored to the trade, and in the Board of Trade.

12.46 a.m.

Mr. Ede (South Shields)

I thank the hon. Member for Houghton-le-Spring (Mr. Blyton), whom I have the honour to represent in this House—he is a constituent of mine—for bringing this matter before the House tonight. I have seen the documents on which he has based the remarks he has uttered, and I am convinced that there is something about the way in which this matter has been handled during the last couple of years which calls for a more detailed explanation than we could expect to get in answer to a debate on the Adjournment.

I want to impress on the Secretary for Overseas Trade this fact, that the trade is very gravely concerned about what has been happening and feels that it has been exploited by firms, some of which had no previous experience in this trade at all but muscled in when it appeared possible that a racket could be engineered. I therefore hope that the hon. Gentleman will assure us that, in the light of what my hon. Friend has said, which can be fully supported by documents and witnesses, a very full inquiry will be held, and that if it is found, as we believe it will be found, that something serious has been at fault, steps will be taken immediately to put things on to a basis which can be defended before the trade.

12.48 a.m.

The Secretary for Overseas Trade (Mr. H. R. Mackeson)

I am grateful to the hon. Member for Houghton-le-Spring (Mr. Blyton) and the right hon. Member for South Shields (Mr. Ede) for having sat up so late in order to raise this subject tonight. Perhaps I might, before I start to reply to the debate, just say in explanation of my interruption of the hon. Gentleman's speech that it is not usual to quote the names of civil servants in debate. Ministers are responsible. I am sure that the right hon. Gentleman will accept my point. The hon. Member for Houghton-le-Spring was obviously reading from a brief. I think I know who wrote it, and we could all easily make the same mistake. I am sure he will accept the fact that I am responsible, and not one of my civil servants.

Mr. Blyton

My brief was made out by myself, and, together with the documents from the importers, was typed for my benefit.

Mr. Mackeson

I am sure of that, but it so happens that it corresponds with the words used by a gentleman whose name the hon. Gentleman used, and which I would not have used in the debate unless he had mentioned it—to wit, Mr. Mannheim. The information Mr. Mannheim has given to one or two of my hon. Friends on this side has not been 100 per cent. accurate, although I admit that he is fully entitled to say what he likes, when he likes, as he likes.

I want to deal, first of all, with the specific case of Czechoslovakia, and this is quite a long story. It starts in 1949, when a five-year trade agreement was made by our predecessors and under which there was provision for this country to take each year £5,750,000 worth of less essential imports, which provided Czechoslovakia with the sterling to pay her debts to Britain. It is partly used to pay compensation for nationalised British property, and also helps us to sell to this Iron Curtain country. Indeed, this particular Iron Curtain country is the only one which continues to pay these debts under a commercial agreement, and is doing so at a rate of £3 million a year.

In 1951, our predecessors agreed with the Czechs on a quota for fondant, and licences were issued to three firms. The present Government agreed last year to a quota for the year ending 30th June, 1953, of £150,000, and this was at a time when we were importing four times as much fondant from Western Europe as we are doing now; so that the figure of £150,000 from Czechoslovakian sources was not unduly high. It will be remembered that there was considerable pressure put on the President of the Board of Trade to keep the quota for exports of textiles to this country to a minimum.

Considerable thought was given to the method which should be adopted for distributing the quota in this country. The Czechs had originally proposed that the distribution should be decided by a British firm acting as agent for the Czech State Corporation which is responsible for exporting the fondant. We, as a Government, were not prepared to agree to this, since we regarded it as important that trade should be conducted through the normal channels and that licences should be distributed on a basis which, in our view, could be considered equitable.

The system we adopted, therefore, was to issue licences to those importers who applied and who had previously imported fondant from any source on the basis of their past imports, giving extra weight to previous imports from Czechoslovakia. Licences on this basis were, in fact, issued to 17 importers. This was compared with three in the year before. Two other licences, of a value of less than £8,000— and this is perhaps what is worrying the hon. Member and the trade—were issued to two firms to enable them to clear consignments already despatched by the Czechs before the Czechs knew that we were issuing licences only to previous importers of fondant. We could not comply with the Czech wish to use their own agent, a reputable British firm, to distribute the fondant.

I hope that the hon. Member is satisfied on the major point. Forty-one other firms who unsuccessfully applied for licences were rejected because they had not imported fondant before, or because the amount they could have been given would have been too small to be a commercially practical quantity. I might mention that one firm would have been entitled to 1/2,000th part of £150,000, and that would have been quite impracticable.

Perhaps I may say a word about the allegations which have been made that the Board of Trade have shown favouritism and have been secretive about issuing licences for the import of fondant from Czechoslovakia. I am not accusing the hon. Member of saying that, but it has been suggested in the Press and, in any event, it is only right that a Departmental Minister should meet the accusation and answer it. I have a list here which shows that such allegations are without foundation. The system which we adopted allowed no favouritism to individual firms. All the licences were issued to traders with a substantial previous interest in the fondant trade.

Apart from the two licences which I mentioned a moment ago, which may be the origin of the complaints, all the licences issued were based on previous imports. As the right hon. Gentleman knows, this method was adopted by his Government and has been adopted by this Government. I quite agree, as I am sure all hon. Members—and particularly Conservative hon. Members—would agree, that any system of restricting trade is bound to be unsatisfactory and extremely difficult to administer. Any restriction of trade of this nature is a matter of the greatest difficulty. Imposing restrictions, which is contrary to our normal policy, must, in my opinion, be carried out on the most equitable basis and on a basis which can be accepted by all those affected as the best in the circumstances.

The suggestion that the Board of Trade, contrary to what they have done in other cases, did not announce details of the quotas agreed with Czechoslovakia is one to which I must reply, firmly, that it is not our usual practice to publish lists of bilateral trade quotas. To have done so in this case would have been a departure from the normal procedure which has been adopted both by this Government and their predecessors. The question of global quotas is different, and it is here that the friends of the hon. Member, who have briefed him so ably, may be a little confused.

I have also been asked why we should Import fondant at all from Czechoslovakia at a price higher than that charged by other Western countries. That is a perfectly fair question, to which I have three observations to make. First of all, no importer is obliged to buy Czechoslovakian fondant if he does not wish to do so. The price is left to be settled by normal commercial bargaining.

Secondly, we are allowing the import of fondant from Czechoslovakia as part of a normal trade agreement which gave to us certain very real benefits, some of which I have already mentioned. Hon. Members may recall the great interest shown by the House, which was demonstrated in connection with these Czechoslovakian agreements when pressure was put so strongly, and quite rightly, on my right hon. Friend the President of the Board of Trade over the possibility of imports of Czechoslovakian textiles.

Finally, the real answer to the problem can come only when we are in a position to import more sugar. This will, of course, lead to a reduction in, if not the complete disappearance of, the demand for imported fondant and other expensive substitutes for sugar.

I hope that I have said enough to make it clear that the issue of licences for fondant has been based on a principle adopted by our predecessors, one which we ourselves have employed in the case of other imports—namely, that the licence an importer receives should be related to the amount of his previous imports. I am extremely grateful to the right hon. and hon. Gentlemen for raising this matter, because I am well aware that there has been a great deal of talk about it. In conclusion, the fact that both Governments have carried—

The Question having been proposed after Ten o'Clock on Wednesday evening, and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at One Minute to One o'Clock, a.m.