§ Motion made, and Question proposed,
§ That a Supplementary sum, not exceeding £35,334,900, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March 1954, for the salaries and expenses of the Ministry of Food; the cost of trading services, including certain subsidies; a grant in aid; and sundry other services, including certain expenses in connection with civil defence.
§ 3.32 p.m.
§ The Minister of Food (Major Lloyd George)
The Ministry's original Estimate for 1953–54 was for £109.6 million. The Supplementary Estimate presented in November last provided for an additional £126.8 million, while the Supplementary Estimate now presented to the Committee is for £35.3 million. Thus, the total cash requirement for the Ministry for 1953–54 is now estimated at about £271.8 million. The additional sum of £35.3 million is required mainly in respect of two commodities—£24.3 million is required for eggs and £13.9 million for sugar. Smaller amounts are required for other commodities, but those are more than offset by savings in other directions, the net effect being a saving of £2.9 million, thus bringing the total cash figure down to the £35.3 million asked for in this Supplementary Estimate.
I do not think that anyone in any part of the Committee will disagree when I say that it has never been an easy matter to estimate correctly the expenditure of my Department, with an annual turnover of between £1,600 million and £1,700 million. It was not easy even during the period of strict control and rationing and it becomes even more difficult as we move from that period. When food is less plentiful and it is rationed, it is much easier 1818 to estimate how much of each commodity is to be consumed than it is when a greater variety of food is available, as now.
Also, the rate of production and of shipping by our overseas suppliers play an important part in the formation of our estimates and these change for various reasons from time to time with consequential effects upon our cash requirements. Thirdly, and by no means lastly, our present obligations and the Agriculture Act of 1947 have to be honoured, I want the Committee to appreciate, regardless of exceptionally heavy production or fluctuations in demand at market prices. On this occasion it is a combination of these circumstances which has made it necessary to present this Supplementary Estimate.
A striking example of one of those difficulties can be seen in the biggest single item in this Estimate, the £24 million required for eggs and egg products. When the November Estimates were drawn up, the volume of home-produced eggs was running at about the level that could be expected at that time of the year. So, also, were retail prices. The rate of subsidy during October and November was small and past experience did not lead us to expect that there would be any substantial increase during the financial year. The flush season in eggs occurs in the early spring and the price schedule under the old fixed price system was always arranged with that in view. The present support price arrangements follow the same pattern.
November and December are normally the months of lowest egg production in the year. But in 1953 we had eggs in great abundance in November and December—I do not think that the figure has ever been approached since the war—and it was a period when the support prices were fixed high in anticipation of normal supplies. Several factors contributed to this unusual position in November and December. As we all know, the weather at that period was exceptionally mild. That, of course, had something to do with it. In addition, the derationing of feedingstuffs has given a fillip to the egg producer who has taken full advantage of his freedom to buy for his own requirements. Another very important contributing factor has been the great improvement in methods of production, particularly in respect of wintereggs.
1819 The result of a combination of those three circumstances can be seen in the figures of eggs going through the packing stations into the shops. In December last, twice as many eggs went through the packing stations as in the same month in 1950. The increase was considerably over the 1951 and 1952 figures. I wish the Committee to remember that this great increase—indeed, we can call it the sort of flush which normally comes in the spring—came at a time when the support price was, asusual, at its highest. But pressure on supplies in the market pushed down retail prices to a level which had not been reached at that time of year since before the war.
Eggs are highly perishable commodities and the price has to be adjusted if supplies areto get to the public and not to be wasted. That has happened before, as my predecessors know full well. But in these unusual and unexpected circumstances the Exchequer was involved in an increasingly heavy liability in order to keep eggs moving and to honour our obligations to the producers.
I would remind the Committee of what would have been the position had the former fixed price system continued, together with the control of retail prices. It is quite clear that the pressure of supplies coming forward this winter has been such that the fixed retail prices in force a year ago could not have been maintained if the eggs were to get to the public. The fixed price to the producer in December, 1952, under the old fixed price system, was 6s. 1d. per dozen, compared with a support price last December of 5s. a dozen. With a support price of 5s. we have had to ask for this Supplementary Estimate of £24 million. But under the previous controlled price system the liability this winter would have been far greater, and might well have cost us about £35 million.
Before turning from eggs to sugar—and I propose to deal only with those two main items in this Supplementary Estimate—I wish to say a word or two about egg imports. Denmark is our largest overseas supplier, and has been ever since the war ended. Without these Danish eggs our position would have been very much worse during recent years, particularly in the winter. We did, in fact, pay a premium to obtain more eggs from 1820 Denmark in the winter months. We also obtained small quantities from Holland, Australia and South Africa. But 23 per cent. of our total supplies of shell eggs in the present year are from imports, practically the same percentage as in 1952–53. We have incurred some losses on imported eggs during the last two or three months, because they are sold at slightly under the price which English fresh eggs will fetch, and in these abnormal months this has been below the price which we paid for them.
I move now from eggs to sugar, the other big item in the Supplementary Estimate, amounting, roughly, to £14 million. Approximately half of this figure is required to pay for sugar from Commonwealth sources under the Commonwealth Sugar Agreement. Unfortunately for ourEstimates, though fortunately from other points of view, there has been a considerable improvement on the earlier reports of shipments and production from some of these Commonwealth suppliers. In this country, also, there has been a particularly heavy crop of sugar beet. Actually, it is an all-time record, being about 770,000 tons this year compared with an average of between 600,000 and 650,000 tons.
Here, again, the exceptionally favourable season at the time of the harvest, and more efficient plant—another important matter—have been contributory factors in creating this record. While it is true that my Department has not purchased the sugar, the size of the crop in this country affects the cash position to the extent that the trade reduce their purchases from Ministry of Food stocks, which means that we shall have a higher stock on our hands on 31st March than we allowed for last November.
Rather surprisingly, the consumption of sugar after derationing was materially less than anticipated. This added further to the size of our stocks, although there are indications that the demand is picking up. Of course, this additional £14 million would be realised later as we sell our stocks. The total food subsidies for the year are now estimated at £325 million, compared with £294 million last November. As I explained to the Committee, the Supplementary Estimate is an estimate of cash requirements which does not necessarily correspond with the total of food 1821 subsidies. The fact that in this Supplementary Estimate the increase in cash requirements is greater than the increase in subsidies is due to the substantial addition we are making to our stocks of sugar, about which I have already told the Committee.
Eggs, I repeat, account for most of the rise in the subsidies, but there are also increases in respect of one or two other commodities as well. I have purposely dealt only with the two main items, as I thought the Committee would want to know most about them. If there are other smaller points to which I have not referred, and about which information is required, my hon. Friend the Parliamentary Secretary will deal with them later. I hope I have made clear to the Committee why I have to present this second Supplementary Estimate and that the Committee may remember what my right hon. Friend the Financial Secretary to the Treasury said about the Supplementary Estimates last year. He reminded the Committee that the expenditure, which is the same today, is in support of British agriculture and an investment in stock. I trust, therefore, that the Committee will approve this Supplementary Estimate.
§ Mr. Frederick Willey (Sunderland, North)
Before the right hon. and gallant Gentleman concludes his speech, will he say a word about the increase asked for under Subhead A—salary increases?
§ Major Lloyd George
My hon. Friend will deal with that in greater detail, but I think it relates to an award as a result of arbitration.
§ 3.49 p.m.
§ Mr. Frederick Willey (Sunderland, North)
The Minister has continued in his usual rôle of the great illusionist. He seems to live in a world of fantasy, quite divorced from the facts as they are, in which he is joined by the Parliamentary Secretary who, when I hear him, I occasionally think of as the sugar plum fairy. But the delusion has become chronic now and it is quite impossible to expect, either from the right hon. and gallant Gentleman or from his hon. Friend, an appreciation of what really is the food position.
I asked the right hon. and gallant Gentleman about the item relating to salary increases because I wondered if 1822 he had thought of asking the Parliamentary Secretary to the Ministry of Labour to address his staff. I assume that his staff has suffered, as we all have, from the increased cost of living caused by the right hon. and gallant Gentleman's policy.
To turn to the Estimates, in short the position is this. At the beginning of the year the right hon. and gallant Gentleman asked for £110 million. In December last we discussed afurther £127 million. He more than doubled his request to the Chancellor. Instead of asking for £110 million, he asked for £237 million. That was only two months ago. The right hon. and gallant Gentleman has revealed no new factor inthe situation. Yet he has asked the Committee for another £35,500,000. In other words, instead of asking for £110 million, he is now asking the Chancellor for an enormous increase. It must bear heavily upon the Chancellor.
When we last debated this matter only two months ago, the main argument of the right hon. and gallant Gentleman was that this was only a mistake of 4 per cent. on turnover. According to his calculation, it is now a mistake of 5 per cent. on turnover. The right hon. and gallant Gentleman is the head of a great trading concern. If anyone else conducted his affairs like this, he would be in Carey Street within a few months. One cannot make a mistake of 5 per cent. on turnover unless there has been some incompetence and stupidity.
As the second leg of his excuse, the right hon. and gallant Gentleman also said, "We have to estimate 16 months ahead."That does not apply to this Supplementary Estimate. I want to draw the attention of the Committee to this. I raised the question of stocks in our last debate because from the knowledge that I had I was sure the Minister would come back with a further Supplementary Estimate. But the Minister brushed it off as being very unlikely, which was as definite a statement as we could expect from him.
This is an inexcusable miscalculation. As the Estimate shows, the miscalculation is under both heads which affect it. Since December last the Minister has found that the payments which his Department is Obliged to make will be £26,800,000 more than he then estimated. But he has also 1823 been wrong about receipts. He now estimates the receipts to be nearly £8,500,000 less than his estimate of only two months ago. In other words, he has spent more and sold less, because the receipts of the Ministry come from the sales of food. Yet we are told that this is Britain with a plentitude of food.
§ Mr. Willey
I will come to that in a moment.
To deal with individual commodities—this should lead the hon. Member to intervene later in the debate—the Minister is now asking for more than £1 million for potatoes. What has happened in the last two months? The Minister told the House earlier that the potato crop was a record for all time. That is not so. The potato crop this year is more than it was last year, but it is less than in 1951 and 1950, considerably less than in 1949 and very substantially less than in 1948. The yield is, of course, a very exceptional one. However, I am quoting the Minister, and he said that the potato crop was a record for all time; but that is not so. We see now that there is to be a subsidy on potatoes of £7,800,000. This fact was concealed last time. I got the breakdown of the figures from the right hon. and gallant Gentleman, but this fact did not appear. It now appears, and we ought to have a little more frankness from the Minister.
I now turn to the other commodities which have affected the result that we are debating this afternoon. Some of the changes under Subhead H are accounted for by increased selling prices. I have no complaint about this from an accounting point of view, because the Minister made it clear that we could not make any deductions about retail prices from the earlier Estimates. However, milk products are going up in price, and that reflects itself in this Estimate. They are going up in price although the consumption of butter is far less than it was pre-war and the consumption of butter and cheese is far less than itwas under the Labour Government—appreciably less. I am going by the import figures.
§ Major Lloyd George
I have given the hon. Gentleman figures showing that we 1824 are eating 40 per cent. more cheese than we did pre-war.
§ Mr. Willey
But under the Labour Government we were eating more than 40 per cent. more cheese than we did before the war. Does the right hon. and gallant Gentleman wish to correct that?
§ Mr. Willey
I shall come to meat in a moment.
These figures also reflect the failure of the Minister to realise stocks. This is confirmed if we look at the trading estimate, for that makes it clear that the Minister has not realised the stocks that he expected to realise, and the taxpayers ought to know that the slower the stocks are realised the greater is the burden on the taxpayers. Therefore, before we go to cereals, it is very disturbing to see, for instance, the slow way in which animal feedingstuffs other than cereals have moved from the Ministry. That illustrates what I am saying. Not only have they moved very slowly, but if we look at the trading and subsidy figures together, it is clear that the rate of loss is much higher than the Minister originally anticipated, and, indeed, estimated even last December.
I should like to know what sort of co-operation there is between the Ministry and the grain trade. After all, as a result of considerable pressure the right hon. and gallant Gentleman set the grain trade free. However, the agricultural correspondent of "The Times," who appears from his writings to be very knowledgeable on these subjects, although I do not always agree with his conclusions, wrote in that newspaper yesterday:But there is disturbing talk about the intentions of the millers and feedingstuff manufacturers after next harvest. Some are boasting that they will be able to play the market down to slump prices by holding off buying home-grown grain in the weeks after harvest when farmers will urgently want to sell.Is this the position? Is this partly the explanation of the present difficulties of the Minister regarding cereals? If it is, he had better show some virile, forceful action. Let me make it clear that I have no objection to the enterprising producer, but I have everyobjection to the enterprising distributor who holds the producer and the consumer to ransom.
1825 To return to the commodity figures, some of the discrepancies arise because a mistake has been made on both accounts, the purchases by the Ministry having been greater and the realisation of stocks less than the Minister forecast in December. I cannot possibly begin to understand how a mistake of £14 million about sugar could have been made in two months. This is not a mistake over 16 months. It is a miscalculation made between December, when we last debated sugar, and the laying of the new Supplementary Estimate.
I want to say just a few more words about stocks. The only explanation of what has happened about grain is the mammoth miscalculation of the Ministry and its inept, unbusinesslike conduct of the very wide measure of decontrol. I always assumed that the Crazy Gang spent their evenings in the Victoria Palace but it is now clear that they spend their days in Dean Bradley House, because no measure of decontrol could have been carried out less expertly and more unwisely than that of the Ministry in relation to grain.
During our last debate, the Minister said, with a flush of innocence, that at the time the Estimate was made "there was no justification for assuming that there would be any significant fall" in grain prices. But everyone else assumed it; it was generally assumed. In fact, most people were surprised that it had not begun earlier. Moreover, the miscalculation of the Minister in stocking upafter he had taken the decision will cost the taxpayer millions of pounds.
I will not deal again with the details of the grey and black markets, but I should like to know how the Minister got on with his scheme for colouring grain red. I should like to know whether he made any progress with this fantastic scheme to cope with the black and grey markets by colouring the grain.
We have debated this matter before, and the fact is that we have been taking into this country 11 or 12 times the amount of Canadian barley that we did previously. We have now got the Board of Trade returns for the year, and we find that in the third quarter of this year we allowed into this country between two and three times the amount of animal feedingstuffs that we took in 1950, and finished 1826 the year with having taken nearly twice as much as we did in 1950 and enormously more than we took in 1952.
Our farmers, advised and encouraged by the Government, have increased the production of coarse grains doublefold above our production before the war. What is the right hon. and gallant Gentleman going to do about this? Is his solution of this dilemma to put an ever-increasing burden on the taxpayer? He has abandoned the sensible, orderly pattern of buying which we had before, which was essential if we were to have orderly agricultural production in this country, and he has resorted to this peculiar formula of profits for the middleman without control and allowing the burden to fall upon the taxpayer.
Let us turn to sugar, which is the subject of an enormous miscalculation by the Ministry. I join with the right hon. and gallant Gentleman in congratulating the British Sugar Corporation on their magnificent work, and I am very glad also that he has tempered his views on public authorities.The Corporation have done very well, being inspired by public enterprise. I congratulate the Australians on the magnificent way in which they have increased their sugar production, but I call the attention of the Committee to this very important fact, which we debated in December. I then said that I had discovered a price variation in the Cuban Agreement, which explained why all the Cuban sugar was brought here so quickly. When we were told that these supplies would be spread over two years, it was really quite unreal, and gives us an illustration of how far the Minister is from the facts of life.
The Committee will remember that, during our last debate, my hon. Friend the Member for Blackburn, East (Mrs. Castle), whom I am glad to see back with us, asked the Minister what was the cost in dollars of the Cuban sugar, and the right hon. and gallant Gentleman said that it was 62 or 63 million dollars. Then, he corrected himself and said he thought it was 62 million dollars. Later, he got a note at the Box and said, "It is approximately 65 to 70 million dollars." That is about the margin of error that runs through all the remarks of the right hon. and gallant Gentleman.
§ Major Lloyd George
I said it was 62 or 63 million dollars, speaking from memory, and later I said I had had it checked and found that it was 65 million dollars. I suggest that that is not a bad feat of memory.
§ Mr. Willey
It is quite clear that, when sugar was to be one of the main subjects to be debated, the Minister ought to have made himself much more conversant with what was happening about sugar.
Let us see what has happened about sugar as far as the Chancellor of the Exchequer is concerned. In the original Estimate, the Minister was able to assure the Chancellor that he would give him a credit; that is, make a profit of £900,000 for the Chancellor. On 2nd December, the Minister said that there would not be a credit, but that, instead, there would be an expenditure of £36,600,000. Now, only two months afterwards, the Minister was even more vague than he was about the price at which we bought the Cuban sugar. Now, we find that it will not be £36,600,000, but over £50 million. He gives no explanation of this grave miscalculation. Surely the right hon. and gallant Gentleman knows what goes on, knows what was purchased, and what will be purchased in a few months' time? [HON. MEMBERS"No."] I can quite understand the concern of some of my hon. Friends at this situation. This is also the concern of the taxpayer.
What is happening about stocks? The Minister has said nothing about the way in which stocks are being handled. There are no adequate facilities for the storage of grain in these quantities in this country, and I have said before—and it was not denied—that it has been dumped on airfields and anywhere where it can be shovelled. The same applies to sugar. It is being dumped all over the place. When my hon. Friend the Member for Bristol, Central (Mr. Awbery) complained that it was dumped on waste ground, the Minister said that it was not on waste ground, but had been dumped on private ground. Well, it is still being dumped in the open, and sugar ought not to be dumped in the open. Unless we are very fortunate in the weather and other circumstances, unless the pests show great restraint, this will involve us in considerable stock losses.
1828 Just as in the case of grain we have private enterprise buying free and refusing to co-operate with the Minister, we now have the same position in regard to sugar, and I was very interested to see that the Minister admitted that the trade is not "playing ball" with him. Indeed, Lord Lyle, in a recent speech, made it quite obvious that he does not intend to do so, because the first action which Tate and Lyle took was to close their refinery at Greenock so as not to use this sugar and to embarrass the Minister. The Minister, in the defence of the taxpayer, ought to do something about this unrestrained private enterprise which is trying to hold the Chancellor up to ransom.
Now, to turn from the trading figures to the subsidy figures, although I think it is only by about £300,000, once again the agricultural subsidies are up. I notice that it was estimated the other day that, on the average, every farmer in this country received £500 by way of subsidies. I should like to know from the Parliamentary Secretary whether or not that is so. I tried to persuade the Minister yesterday to say what was the proportion of producer subsidies, but the right hon. and gallant Gentleman said that no precise proportion could be determined.
This is something that we must know about, because it is quite clear that the food subsidies are rapidly disappearing, and in this Estimate a high proportion of what are called food subsidies are not subsidies at all, but merely commercial losses. However, in general, in so far as the Minister of Food fails in his purpose of abolishing the food subsidies, I exult; I only commiserate with myself that I have so little to exult about.
I want to ask him a few questions about the food subsidies. I notice that the Minister is asking for £3½ million more for the meat subsidy. [Interruption.] I am dealing with the subsidy, and hon. Gentlemen will see the breakdown of the figures in the reply which the Minister gave to me yesterday. The meat subsidy is now running at more than £43 million. What is to happen? We saw what happened about eggs. What is to happen on the decontrol of meat? The Minister said, last time, "I am asking for more money for meat, but meat is more plentiful than it has ever been before." Why 1829 does not the right hon. and gallant Gentleman look at the figures? We have the figures now for 1953. This is a matter which I have put to the Minister time after time. I said that I would be surprised if he beat the 1950 figure. He has not done so.
The consumption figure for 1953 given in weekly averages was, according to the Government statement, 34,900 tons. What was it for 1950? Not 34,900 tons, but 35,600 tons. Whatever ground there may be for coming forward with a Supplementary Estimate, that is not the ground. As I have indicated, we have consumed less meat throughout the year than the Minister assumed, although, of course, it was more than in the previous year. We aredealing with the assumptions on which the Minister based his Estimate.
I am glad that the milk subsidy is up. It means that the Minister has been wrong in his Estimate, and that rather more milk has been taken than he assumed. Again—this is very cold comfort—we are now consuming less milk than in 1950 and 1951 and very nearly less than in 1949, and that, as the agricultural correspondent of "The Times"has said, with a record milk production. We are rapidly getting back to the position which we had pre-war, of having a Milk Marketing Board whose main function was to dispose of milk through manufacturing channels. I ask the Parliamentary Secretary to let us know the price policy for the calendar year. I would like him to announce that there will be no price increase this year.
Now to deal with eggs. The Minister has referred to consumption. We have now the figures for the year, and this is a very appropriate time to hold this debate. According to the figures published by the Government, the consumption of eggs this year has been more than in 1952, but it has been less than in 1951 and considerably, substantially less than in 1950, and less than in 1949. What does the Minister mean when he talks about plenty and abundance? Does he relate himself only to the consumption figures in 1952? Is that what he regards as a standard year? He was talking about his difficulties in December.
I would call his attention to a remarkably interesting figure. The consumption of eggs in December, 1953, was less than it was in December, 1952. I had better 1830 give the Parliamentary Secretary the figure, because his attention has obviously been called to it.
The Parliamentary Secretary to the Ministry of Food (Dr. Charles Hill): The hon. Gentleman is giving the figures for December last year and the year before.
§ Mr. Willey
I am obliged to the hon. Gentleman for that intervention. I assume now that he does not challenge my figures, because they are figures published by the Government.
§ Major Lloyd George
The hon. Member must not assume that we do not challenge them. I most definitely do challenge them.
§ Mr. Willey
Perhaps the right hon. and gallant Gentleman will interrupt me when he challenges the figures. It is essential to get agreement about the facts.
§ Major Lloyd George
The latest estimate of total production for human consumption, which, I take it, is the best thing we can get, is: for 1950–51, 23,051 thousand boxes of 360 each; for the following year, 22,067 thousand; for 1952–53, 22,561 thousand; andfor 1953–54, 23,647 thousand.
§ Mr. Willey
Will the right hon. and gallant Gentleman tell the House whether he has been destroying eggs? Here are the consumption figures published by the Government, given in million dozens: In 1949, 15.81; in1950, 17.77; in 1951, 15.42; in 1952, 15.07; and in 1953, 15.39. Has the Minister been destroying eggs to keep up the price? If there be an explanation and a reconciliation of those two sets of figures, perhaps the Parliamentary Secretary can give it.
§ Mr. Nabarro rose—
§ Mr. Willey
I want to deal with the Minister's account of what has happened. He has concealed some of the factors which have contributed to the situation. We do not know what was the ultimate figure, but the Minister told us that in the summer he took off the market about 60 million home-produced eggs to hold the price. As I explained before, we asked the Danes to oil dip and hold a considerable number of eggs, which were bound to come on to the market sooner or later. As a matter of fact, they embarrassed the Minister when they came back on to the market.
1831 I am glad that the Minister did not rely upon the weather alone, because the weather is relatively unimportant in what has happened about eggs. What has happened is a change in the manner of production, because 35 per cent. now, not 8 per cent., are produced by intensive forms of production. For the benefit of the hon. Member for Kidderminster (Mr. Nabarro) I would point out that the grocers, in theirofficial journal, the "Grocer," complained ofthe lamentable fall in the quality of eggs.Perhaps the Parliamentary Secretary will deal with that point when he speaks about eggs.
§ Mr. Nabarro
The hon. Gentleman has quoted endless figures in support of his arguments. Will he deal with one simple fact? Why, if the supply of eggs was so much more abundant under the Administration of the hon. Gentleman, could he not deration eggs? Why is it that under the present arrangements eggs are in abundance and can readily be bought over the counter whereas in the hon. Gentleman's care they could only be bought under the counter or in the black market?
§ Mr. Willey
We could not deration eggs because the demand was well above the supply, provided that the price was kept within reasonable levels. The demand was for a higher level of supply than we were able to obtain, and although we obtained a high level of supply we could not deration.
What did the Minister do? He had a level of supply higher than pre-war. He disbanded the Eggs Division of the Ministry, and left the matter to the civil servants. They started in September by paying the wholesalers a cash allowance of 2s. 8d., but there was no control over it, so exorbitant profits were made by the wholesalers.
The figures have been given by the Commonwealth Economic Committee. By December, that cash allowance had risen to 20s. 11d. per long 100. In other words, the Minister, who had abolished the subsidy when it was 1d., now pays a cash allowance to wholesalers of 2d. per egg. This is how the right hon. and gallant Gentleman abolished the subsidy. This is what we find when we look at the 1832 report of the Commonwealth Economic Committee—and, of course, the grocers complained bitterly:Our margins are being cut.That is normally to be expected when demand slackens—that is not unusual in business—but the wholesalers, who received the cash allowance, increased their margins.
Let us deal now with the egg subsidy. I was the first person to mention in the House the restoration of the egg subsidy. Might I remind the Committee what I said on 10th November last? I said: "The Minister of Food has not revealed to the House that eggs are being subsidised today. Will he deny it? What a position to be in? The taxpayer is now subsidising eggs, but receives no benefit from cheaper supplies during the rest of the year. Now we have got all the fantastic results of trying to meddle with a free market."—[OFFICIAL REPORT, 10th November, 19S3; Vol. 520, c. 824.]
The Minister did not get up and say, "I repent; I am restoring the egg subsidy." He remained mum. We got the Supplementary Estimate, but nothing was revealed about the egg subsidy—it was hidden under "Miscellaneous."In the debate in December he said that the level of retail prices had been lower than he forecast. He told us that there was a subsidy of £3 million. Two months later he comes here and says, "Oh, it is not £3 million; it is £27 million." What has happened?
The Minister claims to have abolished a subsidy which, in the previous year's Estimates, was £22,200,000. We have endured dear eggs during most of the last calendar year. [HON. MEMBERS"No."] Eggs ran consistently above the controlled price until September of lastyear. The right hon. and gallant Gentleman now says, "I have abolished the £22,200,000 subsidy by imposing on the taxpayer a subsidy of £27 million."
I cannot understand it. I can understand the Minister saying, "I have heard the hon. Gentleman the Member for Sunderland, North, explain the advantages of the food subsidy; I agree with him and have restored the subsidy."If he did that I would thank him very much and say, "I hope you will properly administer it and not throw it away, beause it is taxpayers' money."I would also ask him to recant all that he said about subsidies, because when he removed the subsidy he 1833 said that he did so because a subsidy which benefited both rich and poor alike is not right. We know from the official figures published in the inter-war years that, on a free market, rich people buy three times as many eggs as do poor people.
What is the Minister going to do? First, will he meet my challenge that there should be a public inquiry into the payment of these cash allowances to the wholesalers? If he does not meet that challenge we shall know that he has far too much to conceal. Secondly, will he—
§ Mr. Willey
—restrict supplies or continue, as a matter of policy, afood subsidy on eggs? If so, we must again have an Eggs Division of the Ministry with proper, experienced personnel to deal with this administration of public funds. We cannot tolerate for another day the muddle and chaos which now surrounds the administration of the Ministry.
Let me now conclude by summing up the grotesque achievements of the Minister of Food. In this financial year he has slashed the food subsidies. He abolished the subsidy on flour and sugar, and is now abolishing that on margarine, cooking fats, butter and cheese. He set out to abolish the subsidy on eggs, but failed. We have had these price increases consequent upon the slashing of the food prices: butter, 4d.; margarine, 2d.; cooking fats and lard, 2d.; sugar, 1d. Eggs, for the most part of the year, were up l¾d. and 2d. This month we are going to have more increases—cheese, a further 2d., and butter a further 4d.
If the right hon. and gallant Gentleman had only accepted the advice of his predecessor there would have been an economic stability. As "The Times Annual Financial and Commercial Review" said:If subsidies have been maintained at their old level there is little doubt that it would have been comparatively easy to restore a more stable wage and price level.
§ Mr. Willey
I will deal with the cost to the ratepayer.
1834 We have now more price increases envisaged for the summer. Just as we are concluding the present round of wage negotiations the right hon. and gallant Gentleman is going to start it over again.
§ Mr. Willey
Indeed, as my hon. Friend tells me, the right hon. and gallant Gentleman is going to start it over again before the present negotiations are finished.
We have had a series of measures of decontrol so disastrously conducted that not only has the housewife been having to pay increased prices, but the taxpayer has been made to pay more than he was paying when the year began. The burden has been put on the taxpayer by sheer incompetence, and on the housewife by deliberate Tory policy, at a time when world food prices have been falling for two years.
Let me remind the Committee of some of these essential prices, taking wheat, like for like, first of all. The price in October, 1951, was 2 dollars 40 cents; in October, 1953—the latest available figure—1 dollar 92 cents. Why have we not got cheaper bread? Why has the bread subsidy gone up? What is the explanation? We have been talking about Canadian barley; in October, 1951, the price was 1 dollar 36 cents, and in October 1953, 95 cents. Sugar—Cuban market price—October, 1951, 5 dollars 28 cents; October, 1953, 3 dollars 15 cents. Lard—October, 1951, 19 dollars 50 cents; October, 1953, 19 dollars 17 cents. The free market price for Danish butter in October, 1951, was 772 kroner; in October, 1953, 714 kroner—yet this month butter is to be further increased in price.
To illustrate this argument I will quote tea. This is what happens from decontrol. According to the city editor of one of our newspapers, there was a tea price rise last year—in December, as we were debating these matters—just two months ago—that gave theshares a boost. It was stated "Common tea, for instance, which was selling at 1s. 6d. a lb. a year ago is now around 3s. 6d."What about world prices? The Calcutta price in October, 1951, was 2s. 9½d. a lb.; in October, 1953, it was rather less. I should like the Parliamentary Secretary to explain in the 1835 same simple language he used to use—because the hon. Gentleman is expert in explaining things simply—how this has happened.
§ Sir Herbert Butcher (Holland with Boston)
On a point of order. Is the hon. Member in order in discussing tea, which does not appear to be one of the subjects of debate?
§ The Temporary Chairman (Major W. J. Anstruther-Gray)
I took it that tea might be included in the item "Miscellaneous." It is without my personal knowledge, but I thought it could be and allowed it to be mentioned.
§ Mr. Willey
I do not wish to take advantage of the position, because it is within my knowledge that tea is not included in the item "Miscellaneous."
I want to deal shortly with the consequences of the crass stupidity and incompetence shown by the Ministry in these measures of decontrol. In his Budget speech, less than a year ago, the Chancellor said:This reduction"—that is, the expenditure of the Ministry of Food— "flows from our policy, which has already been announced, of decontrolling eggs and cereals."—[OFFICIAL REPORT, 14th April, 1953; Vol. 514, c. 43.]
He went on to say that it was, perhaps, fortuitous, but that it would happen this time, at any rate, and we would make this once-for-all profit, which would reduce the call upon the taxpayer.
That has not happened. What is the position? We were told that the demand on the taxpayers would be £220 million, in the form of what were improperly called foodsubsidies. We began the year with a subsidy of £250 million or, to use the words of the Parliamentary Secretary, "in the region of £250 million."We have now a subsidy of well over £300 million, and one which is running at a rate considerably above that.
As a consequence, not of the food subsidy policy—because the food subsidies have been slashed—but of the un-business-like manner in which the Ministry has been operating, we get two remarkable results. First, this country, which is battling on the export market, is having labour costs turned to its dis- 1836 advantage because of food costs being put up as a matter of Tory policy. Prices are going up while they are going down elsewhere. Secondly, there is the further consequence, as a result of the Minister's incompetence, that the taxpayer has gained nothing. He is worse off than when the year began. This is probably the reason the Chancellor had to announce that there would be no Purchase Tax concessions this year.
Mr. Oscar Hobson said that this policy had cracked the Budget. My opinion is that it is bringing it down in ruins. The Minister and his Parliamentary Secretary were once Liberals—a party with a great radical philosophy. They have fallen among the Philistines. Like Samson, eyeless in Gaza, the right hon. and gallant Gentleman is struggling to bring down the two pillars—the pillar of price support, on which our industrial peace has rested since the end of the war, and the pillar of price security, upon which the prosperity of our agriculture has depended during the last few years. If the right hon. and gallant Gentleman succeeds in bringing down those two pillars he will not only bring down himself and the Government in ruins but seriously endanger the economic future of this country.
§ 4.34 p.m.
§ Mr. W. F. Deedes (Ashford)
Except for the last few mischievous remarks of the hon. Member for Sunderland, North (Mr. F. Willey), I confess to an unwilling admiration for his dialectical skill in the presentation of his case. From what he said one might suppose that he was comparing abundance for the consumer without any cost to the taxpayer, in October, 1951, with the reverse position today. But, as he well knows, that is not an accurate presentation of the facts. Today, we are considering errors of judgment, and it is very easy, when considering errors of judgment, particularly by Ministries, to be exceedingly wise after the event.
I want to consider the errors of judgment in respect of only one commodity—eggs—about which the hon. Member had a good deal to say in the concluding part of his speech. It is quite true, as the Supplementary Estimate makes clear, that there has been an error of judgment by the Ministry, but there has been an error of judgment on the part of all 1837 those who had anything to say on this subject at the time when eggs were decontrolled. The truth is that nobody—least of all hon. Members opposite—expected that when eggs were decontrolled they would be selling, in this month, at the retail price of 3s. 6d. a dozen. Nobody on the benches opposite predicted that. In fact, they predicted the very opposite.
I have here a cutting from the "Daily Herald" of 27th November, 1952. It bears the headline, "The Shilling Egg?" In fairness, I must say that a question mark accompanies the headline. It goes on to say:Prices will soar in free market, says ex-Food Minister.That is a reference not to the hon. Member for Sunderland, North, but to the right hon. Member for Bradford, Central (Mr. Webb). According to the "Daily Herald," the right hon. Member asked the Minister:Is he just willing to throw this open to the free market where eggs will be 8d., l0d. or even a shilling in the worst period of the year and the ordinary household will not be able to get them?The cutting also reports that the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton),as asking for an assurance that the price of an egg would not go up to l0d. in the next 12 months.I hope that the hon. and gallant Member for Brixton is now satisfied about that.
§ Lieut.-Colonel Marcus Lipton(Brixton)
I am making no more forecasts in future if the only way in which my forecasts can be proved wrong is by the Food Minister spending £28 million on hidden food subsidies.
§ Mr. Deedes
I thought the hon. and gallant Member might make that point. He suggests that if we add the cost of what the Ministry has spent in subsidy to the price of the egg to the consumer we shall arrive at the l0d. egg. That is quite wrong. The fact is that hon. Members opposite also made an error of judgment. The hon. Member for Sundew-land, North, with great experience of this Department, made an error of judgment. Hon. Members on his side predicted the l0d. egg. That was an error of about 200 per cent.
If one takes the gross figures of the Ministry, the Minister is about £28 1838 million out in respect of eggs. Over his whole trading account that is an error of about 1 per cent. In the whole field that we are discussing todayhe is about £270 million out, which is an error of 10 per cent. While not in any way seeking to mitigate the extent of the error, let us be fair in comparing the various errors of judgment. The Minister was wrong to the extent of 1 per cent. in respect of eggs and 10 per cent. in respect of the whole account, and hon. Members opposite were wrong to the extent of between 200 per cent. and 300 per cent. Even if the subsidy of 11d. per dozen is added to the price of the egg, we still have an error of 200 per cent. in the estimates given on the other side of the Committee.
The truth is that the egg has defied all predictions, on both sides. How very much more fuss there would have been, in particular from the hon. Member for Sunderland, North, if the prediction had gone the other way. Suppose the Minister had not taken the precautions, the bill for which we are now discussing.
§ Mr. Willey
Surely the position is this, that eggs reached prices at which they could not be sold. We cannot say what price they would have gone to on a free market because the food subsidy was restored. What would have happened under private enterprise would have been what normally has happened in like circumstances before: the eggs would have been destroyed. The Minister could nottolerate destruction of the eggs, and had to ensure that supply met the demand by reintroducing the subsidy.
§ Mr. Deedes
I think I may safely leave my right hon. and gallant Friend to answer that particular point for himself. What I am saying is that had the prediction gone the other way, if we had under-insured rather than over-insured for a free market, the hon. Gentleman would have had an even more powerful speech to make today, and he would have made it, as he well knows.
It is a pity, but there is an attitude, that needs correcting, among a great many people, not only people with the political point of view of hon. and right hon. Gentlemen on the other side of the Committee, that there has, generally speaking, been a muddle over eggs. I freely admit that that is what a great many people 1839 say. I consider it an extremely unjust point of view to take. What has happened?
The producer has received a floor price from the packing station against consumer resistance which would otherwise have led to a considerable fall in what he received. He would have benefited even more—and here I come down on the side of the hon. Gentleman—if the price of the feedingstuffs and grain had fallen as I think it should have done. I do not in any way seek to defend some merchants who, I think, have not played fair. I hope that when my hon. Friend the Parliamentary Secretary replies to the debate he will say something about this, because I think it is a considerable factor in the present situation.
The consumer, for his part, has received a cheap egg, and in an abundance which, however we may exchange figures—and I noted the figures the hon. Gentleman produced—he has not known for many years. I challenge the hon. Gentleman to suggest that it is not easier to buy eggs in the shops at lower prices now than for a great many years. The taxpayer, on Whose behalf the hon. Gentleman may fairly put a case, has paid a lower subsidy per dozen this year than in the last. He paid about 11d. a dozen as against 11¾d. I am not saying that ¾d. is a very large margin, but the taxpayer has not been wronged to the extent some of the stories circulating about the so-called egg muddle would suggest he has been. So we have the producer, the consumer and the taxpayer, all three of them, no worse off, and one or two a great deal better off, than this time last year.
§ Mr. Deedes
It is no good going about saying that the egg situation is in a muddle without saying specifically in which category one would make an adjustment. I challenge the hon. Gentleman to say in which of those three categories he would make an adjustment. Is the consumer to pay more for an egg? No, I hardly think so. Are the hens to lay fewer eggs? No, I do not think we need discuss that. Is the farmer to get less? I hope we may hear more about that as the debate goes on. Is the taxpayer to pay less? If the taxpayer is to 1840 pay less it must be at the expense of either the fanner or the consumer. Which?
§ Mr. Willey
—because during the summer the producers were able to get still more than the guaranteed price. If we are to have a food subsidy it must be properly administered. We cannot have this haphazard, happy-go-lucky cash allowance that we have now, running up at this rate. The point I made about the rate of subsidy was that the housewife has had no protection at all. Until Septembershe had to pay well above the previous controlled price. To bring prices within reason, so that the eggs could be sold, the Minister had to inject the 2d. subsidy. The obvious thing to have done would have been to continue the subsidy. That would have been more satisfactory to the housewife. She would have had eggs at a stable price throughout the year. It would have been better for the taxpayer because the subsidy would have been less than it has turned out to be. It would have been far better for the producer, because the producer has been disturbed and knows that the Minister will not go on paying 2d. an egg.
§ Mr. Deedes
The hon. Gentleman will forgive me when I say he is trying to have his egg and eat it. He is trying to have it both ways. He knows thatthe February Price Review gives a guarantee 12 months in advance to the producer. It is no use saying at this stage he would make it flexible, or alterable in any way. It is given 12 months in advance. Then there is the price the housewife has to pay. Inthis particular case the housewife paid less, but the producer got what he was guaranteed as the floor price of his eggs. What I am challenging the hon. Gentleman to say is whether he would change. Would he lower the floor price to the producer or increase the retail price to the housewife?
§ Mr. Willey
I am sorry to interrupt again, but the hon. Gentleman asks me questions and I must reply or they go by default. The Minister had to inject 1841 a 2d. subsidy because demand cannot be affected just by a variation in price, as any grocer will tell the hon. Gentleman. There had to be a dramatic change in price to boost demand. That situation would not have arisen if the subsidy had not been abolished and then reintroduced. We would have had a stable demand throughout the year, and that would have been more satisfactory to the housewife, the taxpayer and the producer.
§ Mr. Deedes
I am sorry, but I do not accept the hon. Gentleman's argument. However, I am anxious to give others a chance to speak in the debate, and I shall leave that matter where it is.
There is one point I want to make, in conclusion, that I think has been rather overlooked. There are much wider implications in this Estimate than the Minister's miscalculation. This is not only an administrative error. It is part of a major economic situation. In a way I am sorry that the hon. Gentleman the Member for Sunderland, North did not make more of that and less of the political point we can all make out of an error of £25 million.
I cannot pursue this matter on this Estimate, but this small field serves to focus attention on the consequences of a free market combined with a guaranteed price, for that really is the essence of the error of calculation. I think that I am within the bounds of order in saying that it is no good making too light of this. It is no good making out that this is a situation which is a Ministerial miscalculation, and that is all there is to it. It is the most considerable economic problem in the domestic field today.
I ask the Parliamentary Secretary to give some indication that that is appreciated and that, before another year is out, it will lead to some action. In return for that assurance, I will consider the Supplementary Estimate that we are asked to consider today—tothe tune of £24 million in respect of eggs, and, indeed, the whole of the Estimate—as cheap at the price.
§ 4.50 p.m.
§ Mrs. Barbara Castle (Blackburn, East)
The hon. Member for Ashford (Mr. Deedes) has made a most thoughtful contribution to this debate. I begin by taking up his perfectly fair challenge to those of us who, when the decontrol 1842 policy for eggs was announced, forecast egg prices rising in times of scarcity to 8d. or 9d.—a figure which I myself quoted. Though in the summer we got near that figure when we had a 7d. and, in some cases, an 8d. egg, it is true that the winter prices, when we thought that scarcity would force them up, have belied our forecast.
The whole point of our argument, however, is that the l0d. or the 1s. egg is implicit in the Government's scheme of egg decontrol. One of the reasons we have this vast Supplementary Estimate is that we have not had the l0d. egg, which the Minister not only estimated that we would have, but which he hoped we would have, because otherwise the Treasury commitment under his scheme became impossible. The hon. Member for Ashford put his finger right on the spot when he said that here we are in a fundamental economic dilemma created by the Government's policy of attempting to link the free market with a guaranteed price.
That policy must give us this kind of impossible situation unless at certain times of the year the market price is to be high enough to reduce the Treasury commitment. I want to add this note to the brilliant speech of my hon. Friend the Member for Sunderland, North (Mr. F. Willey). He tore the poor old Minister's clothing into such shreds that there is very little debunking left for any of the rest of us to do. But there is one point I want to make on this question of eggs. What is to be the consequence on the Government's future policy of this Supplementary Estimate and the economic chaos which it reveals?
It is clear that in the last few months in the Ministry we have had the finances of an inebriate lurching fromlamp-post to lamp-post There must be an awful lot of trouble brewing behind the scenes in the Government about how this can be avoided in future. Somebody has been in hot water. Somebody has been told that it must not happen again. The question is what is to take its place. That is what I want to examine now.
I want to make one point clear at the outset, because we have been challenged on it. We on this side of the Committee are not grumbling about the low retail price of eggs. We are not grumbling that the housewife can now buy a 3½d. 1843 egg. We do not complain about the subsidy. We complain that it is unpremeditated. Because it is unpremeditated and because right hon. and hon. Gentlemen have stumbled into it by accident, it is not a secure and integral part of the food consumption policy of the Government.
It is ironical for us in the Opposition to look at this food subsidy situation into which the Government have got themselves. Here we are with food subsidies running for the current year at some £325 million, when certainly it was not the intention of the Government that they should. We welcome food subsidies at this level, but this is virtue by inadvertence. It is doing good by incompetence.
Our minds go back to those days when, as a Labour Government, we were fixing a subsidy ceiling of about £400 million. How we were attacked for misuse of public money. How indiscriminate the food subsidies were said to be because they were benefiting the millionaire as much as the miner. That was one point. Yet the millionaire has been enjoying the 3½d. subsidised egg along with everybody else in the last few months. The second complaint made against our subsidy policy was that it tended to keep down the supply of food because it put suchan Exchequer burden on the Government that they were afraid to see an expansion of supplies. There was talk about how we were not sending the merchant venturers to scour the world for imports; we were accused of being afraid to increase food supplies because that would increase the subsidy burden.
Today eggs are still subsidised to an enormous extent, but the important factor from the point of view of the housewife and the future consumption policy of the country is that the Conservative method is very different from ours. What the Government are doing is to subsidise production and prices that have been completely decontrolled. That is just like pouring water into a bath when one has pulled out the plug and then wondering why it takes such a lot of water to fill the bath.
There are two drawbacks to this Conservative method, one of which has already been touched on by my hon.
1844 Friend the Member for Sunderland, North. It is a matter which is of great importance in a Committee of this kind which is examining with a full sense of responsibility the expenditure of public money. It is, of course, the drawback that this form of subsidy is a form of practically unchecked public expenditure. It is ludicrous that these payments should be made to the packing stations at a time of price decontrol when there can be no effective check on the amounts that ought to be paid.
But in my opinion the greatest draw back to this Conservative method of subsidy by accident is that it carries within itself the seeds of its own destruction. If any Conservative Member thinks that he will be able to go to his constituency next weekend and say, "We stand for the cheap egg for the housewife; these Labour people have been complaining that we have been reducing the price of egg…"—
§ Mrs. Castle
Let me place on record the reply to that type of propaganda, in which I am sure the hon. Member for Kidderminster (Mr. Nabarro) needs no instruction from me. We see in this Committee today the shadow of the termination of this era of cheap food, especially cheap eggs, for the simple reason that the whole financial calculations of the Government have been based on the assumption that food would not become so cheap.
We know perfectly well that the Conservative Party always believed that food was too cheap under the Labour Administration. That is why they attacked the food subsidies. To cut food subsidies and to allow the market price of food to rise is a very good way of redistributing income, of taking money from the poor and giving it back to the rich. That is one of the most regressive things that one can do in social legislation.
The Chancellor very clearly revealed the Government's policy on food as recently as 9th November when he was replying in the agricultural debate on that date to the attack made from this side of the House. He said:The problem I want to put before the House is whether the policy in fact imposes too great a strain upon the Exchequer and the taxpayer1845 The right hon. Gentleman had his doubts even then. He went on to say: "If that alternative"—
the alternative suggested by this side of the House—be brought in…namely, continuation of trading by the Ministry of Food with guaranteed fixed forward prices, it must be obvious to all hon. Members that the Exchequer commitments would be totally unlimited because the prices are fixed and the amount sold, is unlimited.For this reason the Government had adopted the policy of restoring, to some extent, the free market. He explained:By introducing marketing into this and introducing the deficiency payment with a buttress to the individual, the Exchequer liability is moderated by the introduction of the market price."—[OFFICIAL REPORT, 9th November, 1953; Vol. 520, c. 728.]That means, of course, that it has all the time been the Government's intention that their financial liabilities under the deficiency payments scheme should be restrained by an increase in the market or retail price of food. The Government are deeply distressed to find that, so far as eggs are concerned, the hens have been flushing all the year round instead of restraining themselves in the proper way and allowing the retail price of eggs to go up at the appropriate moment.
I prophesy—and I think that future events will prove it to be a correct prophecy—that at this very moment discussions are going on within the Government behind the scenes as to how this un-Tory-like abundance of cheap food can be stopped. I quite agree that it is impossible for any Chancellor of the Exchequer to be faced with finding money for an unlimited and unregulated commitment to any section of the community. It cannot be done even in the case of consumer subsidies, and, quite clearly, it is intolerable that it should be done in the case of subsidies to the producer when he has been set free from price control and is at liberty to exploit the market whenever scarcity enables him to do so.
Therefore, we must have some form of regulation and control if we are not to have an unrestricted commitment which no Chancellor of the Exchequer can foresee at the beginning of the year and for which the sky is the limit. Of course, the free market would regulate prices if it were really free, but there cannot be a 1846 free market when we have guaranteed prices and producer security in one form or another.
If we had a system of completely unrestricted imports, of complete price decontrol and no guaranteed prices, then, of course, the situation would regulate itself, because if prices fell too low the producer would stop producing and prices would go up again. That is the chaotic state of affairs which existed before the war and on which both parties have turned their backs. When the Parliamentary Secretary used to talk to us about "freeing the egg," he was, of course, talking through the back of his neck. We have not freed the egg, and, if we had, the producers would be the first to howl.
Therefore, the first thing to decide is what form this regulation should take. We do not want the pre-war chaos and all the waste of the unrestricted operation of the price mechanism. The Labour Government had a form of regulation which worked very well. It was regulation through a guaranteed economic price for a planned quantity of production with a graduated subsidy so that the consumer could afford to take up the production which had been planned into existence.
The producers liked the scheme, and it was one which related production to consumption and gave us the basis on which we could expand production. It is the only real basis on which we can get expanding production. The alternative method is the one which the Government are now contemplating as a result of these chaotic financial consequences of their half-and-half policy.
The hon. Member for Ashford was quite right. He was merely letting the cat out of the bag a little early, and he will probably get into trouble with the Whip. The Government are not going on with this policy of giving endless deficiency payments for unplanned production ina decontrolled market. That is not a policy which will work.
What is the regulation which the Government are now planning? It is regulation to force up the market price in order to restrict demand and to reduce the Exchequer liability. The leading article in "The Times"today suggests how this can be done. A few kites are now being flown in certain Conservative quarters to see what the reaction will be.
1847 We could reduce imports and keep out Danish eggs, and thus have a higher price at home. That would reduce Treasury liability. The Government are now going down on their hands and knees and asking egg producers to have a marketing board so that they can control production and reduce supplies. But the producers are doing rather well out of this mixed economy which the Government have created, and they are resisting it.
The Government, however, say that this cannot go on and that something has got to be done. Eggs are too cheap, and they are costing the taxpayers too much. That is too much like Socialism. Iprophesy that as a result of the sad lessons which this Government have learned about economics in the last 12 months, we are about to see a wonderful revolution. The decontrol policy will come full circle very shortly, and will end up with the restriction of output, plus higher prices. We shall get the situation that is inevitable when we have a Conservative Government. We shall have no more eggs eaten than under the Labour Government, but they will be eaten by different people because prices are too high for the poorer consumer. Some people will be eating more and others will eat less.
What, then, is the way out? I am going to give a piece of free economic advice to the Government. They can get out of their dilemma by adopting the policy which we advocated of planned production, with guaranteed prices to the producer, accompanied by controlled prices for the consumer, plus the subsidies required to enable that production to be taken up.
But if the Government are going to continue a policy of decontrol, if they are going to take off price controls so that the producer can reap whatever profit he can get in times of scarcity, getting 8d. for an egg at a certain time of the year, and yet always call on the taxpayer to finance his security when the price has fallen. I suggest there is only one way of giving the producer the security to which he is entitled, and that is to let him finance his own security through a minimum price insurance scheme, such as that to which the egg producers contribute in Holland, Denmark and other countries. In those countries egg producers do not 1848 expect the Exchequer to protect them against the stormy weather of low prices. As long as we have a semi-free market there is no reason why, when the packing stations buy the eggs from the farmer, they should not levy upon those eggs an insurance premium of so much per dozen, and in this way finance a guaranteed minimum price when the price in the market falls too low.
This would be a self-regulating scheme. The producers would control it. They could decide what premium they were willing to pay, according to the level of the guaranteed minimum they wanted to secure in times of abundance. There could, if necessary, be an Exchequer contribution of fixed amount. In that way the producer would have security without expecting to be wet-nursed by the housewife through high prices in periods of scarcity or by the taxpayer in periods of abundance through guaranteed deficiency payments.
It is intolerable to expect the producers to continue to get the best of both worlds at the cost of the rest of us. If this policy we are discussing today continues, if this item is to appear in these Estimates year after year instead of being placed on the shoulders of the producers, we shall get not a policy of expanding output but a planned restriction of production.
§ 5.14 p.m.
§ Mr. Frederic Harris (Croydon, North)
I hope the hon. Lady the Member for Blackburn, East (Mrs. Castle) will forgive me if I do not follow all her arguments, but I must confess that, summing up what she has said, speaking on behalf of the Socialist Party, she appears to believe that the only way to control this situation and keep food subsidies in hand is by the eventual restoration of rationing. That is something which I do not believe the people would tolerate again unless war circumstances were to arise and make such a thing necessary.
§ Mrs. Castle
I do not want to make a second speech, but that certainly is not implicit in what I said.
§ Mr. Harris
There is no time to continue this argument,but if food subsidies are to be controlled at all in present conditions, I should imagine that the only way to do so under the Socialist policy would be by a return to rationing.
1849 I listened carefully to my right hon. and gallant Friend the Minister of Food when he explained these items. I think that any reasonable person would agree that he explained the items very soundly. The hon. Member for Sunderland, North (Mr. F. Willey) had a marvellous time—so much so that I heard the hon. and gallant Member for Brixton (Lieut. -Colonel Lipton) and the hon. Member for Dart ford (Mr. Dodds) say, "This is really good stuff."No doubt they thought that the hon. Member for Sunderland, North had thought up lots of new arguments, and twists and turns, which they could use possibly on public platforms lo their benefit in some other part of the country. If I may say so to the hon. Member for Sunderland, North, there is nobody more competent to do this than himself because he has had some excellent experience in the past. I remember how some years ago he was busily defending items of this kind when speaking on behalf of the then Government.
§ Mr. F. Willey
While I was at the Ministry of Food we had only one Supplementary Estimate, which was a formal one for £10. In fact, we made a considerable saving.
§ Mr. Harris
The hon. Member knows that he had to explain his Estimates from time to time, and one realises when one has been in the House for a few years that people talk differently when they are on one side from the way they talk when they are on the other side. It is surprising how hon. Members opposite are able to defend these Estimates on one occasion and then turn their case round and attack the Estimates when it suits them.
I listened very carefully to whatmy right hon. and gallant Friend said, and I felt that he made an excellent case for putting the Ministry of Food out of business as fast as possible and for letting the trade get on with the job that we Conservatives feel it ought to have, so that we can get back to trading in normal conditions. If there were anything serious to attack in these Estimates there would not be a mere 3 per cent. of the Labour Party on the benches opposite this afternoon.
§ Mr. Harris
We do not need to defend our policy. We are satisfied with the explanation that has been given by the Minister. Hon. Members opposite know that if there were any real complaint in this country there would be many more on the Socialist benches to support their argument on an occasion like this. I suggest that this is a question not of administrative competence to which the hon. Member for Sunderland, North referred, but, in the main, of giving support to the producers in this country.
A large proportion of these Estimates relate to payment for stocks of sugar. It is rather misleading to some degree when we have to finance additional stocks on a temporary basis, for people are inclined to think that we are spending more. Of course, all we are doing is temporarily to finance the additional stocks, and the position will be eased later on. The hon. Member for Sunderland, North said that these excess sugar stocks may go wrong. I submit that there is not the slightest need to suppose that any of these Ministry of Food sugar stocks which have had to be held temporarily will go wrong.
There has been considerable discussion on the subject of eggs, about which I would only say this. The people in my constituency, and I am sure the rest of the country, are only too pleased, because they get more eggs at present and they buy them more cheaply, which is what really matters.
I should like to devote a little time to the question of the stocks in the Ministry of Food. I should like the Minister and the Parliamentary Secretary, with the civil servants in the Ministry, to prune these stocks of theirs and sell them more quickly. I believe there is room for some serious complaint about some of the stocks that they are holding. I refer, for instance, to stocks of canned meat. Nothing is disclosed about them in the Estimates, but I believe I am right in saying that the Ministry have had firm offers from excellent people in the trade who would purchase and distribute the excessive stocks of canned meat whichmay be held at present.
One of the troubles is that we are not getting rid of the Ministry stocks quickly enough, and I suggest that the problem should be tackled without delay. We have seen rumours in the national Press 1851 about our friend Mr. Dawson and what he wants to do. I strongly suggest to the Parliamentary Secretary that members of the trade are well able quickly to handle the distribution of excessive stocks now held in the Ministry of Food—and I single out canned meat, in particular. If they cannot be sold in this country because some of the stocks are excessive, why cannot we export them? There are plenty of countries to which the excessive stocks could be exported.
I submit to the House that there may have been a misunderstanding between the Ministry of Food and the War Office about some of these canned meats. It may be that these stocks should be examined quickly and that no further time should 'be lost in disposing of them, particularly as some of them, unfortunately, are slow-moving and some, I believe, are quite excessive.
Contrary to some views which have been put forward by hon. Members opposite this afternoon, I suggest that the reason some of the basic foodstuffs are not selling so heavily these days as they were in the past is that the people in this country have more from which to choose at present. There can be no doubt about that. Hon. Members can go to any of their local traders and find that out for themselves.
Consider the co-operative societies, for example. Hon. Members can see for themselves how much their trade is up today. People are buying more food from the co-operative societies than they have bought for a very long time. That is the case with a large percentage of the co-operative societies in this country. It is no good saying that the sales of certain commodities are down when the total consumption of food is well up. It is a fact that the people have more to choose from today, and I am sure they prefer those conditions to times of restriction and rationing.
As confirmation of the fact that the policy which we have been pursuing is right, I suggest that the attack this afternoon, such as it is, has been mythical. Very few people are interested to take part in the debate. The people of this country are well satisfied with the present food policy, as has been clearly shown in the three by-elections which have taken place in the last week or two. It is all 1852 very well for hon. Members opposite to try to pooh-pooh that, but let them go into any crowd of people in this country and ask whether they prefer the days of rationing or present days when they have more food from which they can choose. Hon. Members opposite know as well as I do what the answer will be, and it is mere rubbish to pretend otherwise.
In conclusion,I believe that the Ministry has done an excellent job and that those in the service have done their utmost. I believe that the present stocks held by the Ministry of Food should be examined, gone through quickly and disposed of through the legitimate channels either in this country or in exports overseas. The sooner the Ministry of Food restores the whole business to private trade, the better for the people of this country.
§ 5.25 p.m.
§ Mr. J. Grimond (Orkney and Shetland)
I can at least agree with the hon. Member for Croydon, North (Mr. F. Harris) in this respect: I am sure that if we asked the people of this country whether they like rationing or not, they would say that they do not like it. On the other hand, I do not know that I can agree with him when he says that this Estimate does not disclose certain rather serious problems, and I would draw his attention to what was said by his hon. Friend the Member for Ashford (Mr. Deedes), who hinted that behind the Estimate there is a considerable dilemma.
I want to address the few remarks which I shall make to the subject of that embarrassing bird, the hen. We have already heard a lot about the hen today, and I think when we look at the extra £24 million which will have to be provided for eggs and egg products, the question which we must ask ourselves is, are we getting value for this money? I agree that no Ministry can estimate exactly in these matters, but I think we must ask not only whether they have made a good shot at what is required, but also whetherwe shall get value for the money. Various metaphors have been used about the Minister and the Parliamentary Secretary this afternoon, most of them uncomplimentary. I should say they are certainly skating on very thin ice; and, to change the metaphor, they may fall into very hot water if they do not succeed in abolishing them- 1853 selves before that unhappy event takes place.
The fact is that this is now an agricultural subsidy and not a food subsidy at all. It should therefore be examined from an agricultural point of view. I agree with those who have said there is no magic way of supporting agriculture. Somebody has to pay for it. If we want to support agriculture above the minimum which would be paid for food if we were prepared to go where we could getit at the cheapest prices, then somebody has to pay the extra. It may be the consumer, it may be the taxpayer, but there is no magic way out of the dilemma. I only say that in coming to a conclusion about who is to pay and how he is to pay, we ought to have one or two salient points in mind.
The first is that, in my view at any rate, there are three major parties concerned—consumers, taxpayers and producers. Certainly in my view the consumers are entitled to reasonably cheap food and a reasonable variety of it. No one would seriously suggest going back to the days of rationing, price control and high prices; no one could put that forward in the country today. The consumers' interest is certainly very large.
The taxpayers also have an interest. It hasbeen pointed out that in fact the taxpayers are being asked to pay under the Estimates probably what they would have had to pay under the guaranteed price system. I would say that if it is necessary to subsidise any part of agriculture, then usually I prefer the subsidy to be straight, open and above board, paid by the taxpayer. For one thing, it is not regressive and, for another thing, it can be set on one side and examined. Obviously that has certain advantages.
I turn, next, to the producers, and this is where I am critical of this Estimate and the method used. Producers in agriculture are by no means all of one class. That is a most important point about agriculture. As we all know, land varies. For instance, it varies in its distance from the market.The costs of one producer are inevitably different from the costs of another. The trouble is that all too often producers with many advantages—a lot of capital and good land near to the market—receive the same benefits as poorer and less fortunate people on much worse farms, with less 1854 capital. One object of our policy should be to support the producers who are up against high costs and difficulties but not to give bonuses to the successful farmers on the big farms with a low rent and a lot of capital; and I am not at all sure that the method of payment, for example in the case of eggs, achieves that.
Then, surely any sum which is devoted to the support of agriculture should primarily be directed towards making agriculture more efficient, and, again, I am by no means certain that this will be a result of the present system. The hon. Member for Ashford mentioned the high cost of feedingstuffs. It is true that the costs of egg production are still extremely high, and there is a great deal tobe done by way of co-operation, by way of marketing and the provision of capital which could bring down the costs. I think we have a good deal to learn in that direction from Denmark, and I believe the Ministry of Agriculture and the Department in Scotland could make use of this money, or some of it at any rate, in encouraging experiments in this direction and possibly providing capital for improved methods of production, the provision of batteries, deep-litter, and so on.
The third point is that on the whole we cannot keep prices entirely steady, but so far as the producer is concerned reasonably steady prices are more advantageous to him than wide fluctuations.
I think these are points which we should bear in mind and ask in this debate that the Minister of Food, by next year at any rate, if the Ministry are going to produce Estimates of this order, should see if he cannot find some way of devising a scheme which will enable these sums to be used to make agriculture more efficient as well as giving adequate prices to producers.
I should like to say one or two other things about the present situation as regards eggs. I cannot agree with the hon. Member for Blackburn, East (Mrs. Castle) that very large profits are being made by poultry farmers. On the contrary, the people in my constituency are finding it a difficult situation. A woman tells me that she is getting £5 17s. 6d. a case and paying 38s. 6d. a cwt. for layers'mash. My constituency is a difficult one, because it has heavy transport dues, diffi- 1855 culty of climate, and most of the producers are small people. We certainly cannot allow it to go on record that egg producers in this country are making fortunes. That is not true. A great many of them are up against very small profits or losses.
Mr. Nabarro Has the hon. Gentleman worked out what the price of £5 17s. 6d. per case represents per egg? If he will do so quickly, he will find that the amount is a very little under 4d. an egg, which is a very small return, particularly in his part of the country, for producing eggs.
§ Mr. Grimond
I am afraid that I only got down to the price per dozen in the time that the hon. Member fox Kidderminster (Mr. Nabarro) got down to the price per egg. He is used to calculating these things and making a little profit, but I am not.
It is certainly true that at the moment there is no question of big profits. If egg production is to stay on a high level in remote areas such as mine, the Government scheme for producers will have to allow a very much bigger margin than is at present available to the farmer. We do not know yet what the Parliamentary Secretary's views are about long-term marketing arrangements for these remote areas and their packing stations. There is a small cash allowance paid for transport, butit nothing like covers the cost of freight. Furthermore, it does not operate, so far as I know, between the packing stations and the market. It operates only between the producer and the packing stations, and even then, not in all areas. In my constituency it is not operating satisfactorily, for instance, in the South Isles of Orkney nor in some Shetland Islands.
I suggest that there is a general problem of the marginal farm and that some attention has to be paid to these extra costs. I think that the Fanners'Union have always demanded that the guarantee should be the guarantee at the farm gate, and I would support that demand. A further point is that there is growing up a considerable difference between prices paid by various packing stations, and I think that it is desirable to have a support price and that, in general, it should operate uniformly throughout the whole country.
1856 I conclude by summarising the points that I have made. This Estimate should be taken out of the hands of the Ministry of Food; it is an agricultural subsidy. We have to make up our minds whether we want to support agriculture for social reasons, defence reasons or whatever it may be, and if we want to do that, we should face up to the implications of it, and put the burden on the taxpayer. It seems to me apparent that what is desirable is to give some extra help to the marginal producer and not to give a further general bonus over the whole of agriculture paid to the big prosperous farmer, as well as to the small fanner and crofter.
§ 5.35 p.m.
§ Lieut.-Colonel Marcus Lipton(Brixton)
This is indeed a doleful occasion, because I do not know whether we are celebrating the imminent demise of the Ministry of Food or not. It seems to me that, in the process of suicide, it is costing thecountry and the taxpayers so much money that some of us are beginning to think that it would probably be cheaper to let the Ministry of Food carry on rather than attend these expensive obsequies.
We are concerned with the Supplementary Estimate which the Government are asking us to approve. We must consider this in the light of the economic situation generally. As the Minister of Food himself said, in the debate that took place on the Gracious Speech, on 10th November, it is a mistake to believe that food questions can be dealt with in isolation from other economic problems. In that respect, he was, of course, saying what was quite true. We are faced with this dilemma, and a dilemma with more than two horns to it. It is a three-pronged dilemma, if such a simile may be applied, affecting the interests of the consumer, the interests of the taxpayer and the interests of the farming community.
Just because the Government have not thought out what they really want to do, we are faced with all these difficulties—Supplementary Estimates and what not. I asked the Minister of Food yesterday whether he would give an assurance that this was the last Supplementary Estimate to which he would ask the Committee to agree before the end of the financial year, and there was no answer. That leads me to believe that there is still 1857 a possibility of further Supplementary Estimates being asked for before the current financial year comes to an end
We are faced with another great difficulty to which reference has been made. We are witnessing the transition from consumer subsidy to agricultural subsidy. If the Ministry of Food disappears, who is going to look after the interests of the consumer if all these food subsidies are being translated, by accident or design, into a form of subsidy for British agriculture? We are not disputing the idea for some form of support prices, and that is why we have been asked to agree to this Supplementary Estimate.
I should have liked to have said something more on the subject of eggs, but that has been very fully discussed already. I have nothing to retract concerning anything which I have said on this subject in this House on previous occasions.
I will deal with what is, I think, a fundamental difficulty which faces the Committee in dealing with this Supplementary Estimate. We do not know anything about the present stocks held by the Ministry of Food. When we ask them how much wheat they hold and how the stocks compare with those of last year, we are told that it would not be in the publicinterest for such information to be disclosed. When we want to know about barley, we are told that we cannot be given information about that. As a matter of fact, the Ministry of Food's stocks of barley have been artificially ensured by the unrestricted imports of Canadian barley for dollars during 1953.
The sugar stocks held by the Ministry have been difficult to get rid of because of the 65 million or 70 million dollars spent on Cuban sugar. Had it not been for this substantial dollar expenditure on Canadian barley during 1953 and the 65 million or 75 million dollars worth of Cuban sugar which the Ministry has taken, the stock position would have been very much better than it is today. I am advised by my friends in East Anglia that there are stocks of this year's barley which have not been threshed. What is the use of asking the British farmer to produce more if he is to be faced with that situation? Naturally, he likes a guaranteed price, but he also likes to feel that his product will be sold and not left 1858 to depreciate in stores up and down the country and not held by the Ministry of Food for months, or goodness knows how long, at the expense of the taxpayer.
§ Mr. Ellis Smith
Then why are we not opposing the Supplementary Estimate?
Lieut.-Colonel Upton:That is a question not for me but for some other hon Members who find themselves in the Committee at the moment.
Because of the lack of information about stocks, it is very difficult to know or to analyse the position as accurately as we would like. There has been a trading deficit on the sale of home-grown grain, and increased stocks are unsold at the end of the financial year. Some 18 per cent. of our harvest of barley was sold, I believe, by the end of January, but I fear that heavy losses will be incurred by the Ministry of Food. We heard the hon. Member for Croydon, North (Mr. F. Harris) not long ago ask the Minister or the Government to get rid of their stocks and so get rid of an undoubted considerable liability.
It is most unfortunate that the Government are not able to say to what extent there can be an apportionment between the subsidies to producers and the subsidies to consumers, which is a vital consideration on which we ought to have information. It makes it extremely difficult to help the Government out of their difficulties if they will not take us into their confidence. If only they told us a little more, they would find themselves in a much less unhappy position.
I hope that this dilemma will soon be resolved. Several kites have been flown. There is the editorial in "The Times"today, which suggests that restriction on imports is perhaps not the right way and that the 1947 Act must be amended. Something has got to be done, because this state of affairs cannot be allowed to go on if it is costing as much as the Supplementary Estimate indicates.
We hope that the Government will make their position clear, because it goes to the very root of our economic future. Are they departing in some way from the 1947 Act, as envisaged in today's editorial in "The Times,"and as envisaged by the hon. Member for Ashford (Mr. Deedes), who spoke a little earlier? The Government must make up their minds on these serious issues before they can 1859 expect the Committee to allow them to come again and ask for these substantial sums, which are evidence that they have not yet thought out what policy they want to pursue.
§ 5.43 p.m.
§ Mr. Gerald Nabarro (Kidderminster)
I am anxious to draw attention to three items which appear in the Supplementary Estimate and to say afew words about each of them. First, I should like to deal with the increase of £1,100,000 in the subsidy on potatoes, an increase which is shown as arising from an initial amount provided of £6,200,000, which, with the increase, now goes up to £7,300,000.
We have had an unexpectedly heavy potato crop in all parts of the country. Hon. Members opposite, who criticise so wantonly the amount and the extent of the Supplementary Estimate, neglect the fact that it is a primary factor in the policy of the present Government to assure that an economic return is paid to the primary producer for those staple commodities that are contained within the February Price Review.
§ Mr. Nabarro
Of course the hon. Member's party, when in Government, brought it in and we have continued it, but his hon. Friends now accuse us of wanting to scrap the system. In the case of potatoes, as just one example, the Supplementary Estimate arises solely from the fact that the Government are scrupulously abiding by the policy of guaranteeing the price to the producer for the potato crop.
In 1939, we had a potato acreage of 525,000. As a result of food stringency in the war years and the post-war period, the potato acreage has today risen to 990,000 acres. In addition, during this period of 15 years since 1939, the average yield per acre has risen by no less than 10 per cent. The result today is that we have a very large indigenous output of potatoes, and this ata time when the human demand for potatoes is likely to decline. As part of their economic policies, right hon. and hon. Members opposite believe in a basic diet of starch and we on this side believe in a basic 1860 diet of animal protein—in other words, more red meat and not so many potatoes.
§ Mr. Coldrick(Bristol, North-East)
Is it not true that, first, the guaranteed price for potatoes is given to the fanner; then, the farmer sells them at the guaranteed price to the Ministry, and afterwards buysthem back from the Ministry at a much lower price than that at which they were sold to them? In these circumstances, would it not be infinitely better to sell the potatoes cheaper to the producer than to give the farmer the double benefit?
§ Mr. Nabarro
The answer to everything that the hon. Member says is to be found in the increase of £1,100,000 for potatoes in the Supplementary Estimate, to which I have referred
Surely this is the cardinal point. We are moving towards a situation with potatoes in which the acreage, based on an average yield each year, is substantially above what the total indigenous demand of the United Kingdom can reasonably be expected to be as an aggregate of human consumption and for the diversion of supplies for animal stock feed. The inference, surely, is clear. Before another year has passed we must regulate the acreage under potatoes and try to relate the total supply, based on an average yield, to the total demand.
§ Mr. Nabarro
Perhaps the hon. Member will allow me to continue.
We must try to relate the total supply to the total demand. [An Hon. Member: "Planned economy."] I urge upon the Minister the necessity for concluding his negotiations with the National Farmers' Union and with other interests for the resuscitation of the Potatoes Marketing Board. I do not want the Ministry of Food to be in the position, for yet another year, of having to introduce a Supplementary Estimate for potatoes. I want the executive instrument for relating total production to total demand to rest with the producers and associated interests, in the form of a potato marketing board.
§ Mr. Coldrick
And create scarcity.
Mr. Nabarro: The hon. Member, who is so well versed in co-operative methods, 1861 should recognise the clear analogy which exists between a co-operative retail organisation and a co-operative producer organisation, which is a marketing board.
I pass from potatoes to a very important item in the Supplementary Estimate, namely, sugar. The amount to be provided in the Supplementary Estimate has been increased from £36,600,000 to £50,500,000, an increase of £13,900,000, a considerable sum of money and a large part of this Supplementary Estimate. Hon. Members opposite have tried to make a case that this represents a loss to the taxpayer. Every speaker from the other side of the Committee who has referred to sugar has made that case, but that is totally false. The whole of the sugar is in stock and in serviceable and saleable condition.
§ Mr. Nabarro
Perhaps the hon. Member will allow me to continue. I will leave my hon. Friend the Parliamentary Secretary to deal with that ratty question.
For the moment, let me repeat emphatically that the whole of this sugar is in stock. Unless there were some drop in world prices of sugar, no loss can be incurred to the taxpayer, except perhaps on account of a minor or local emergency such as would arise from damage to these stocks. How has this Supplementary Estimate arisen? Simply because my right hon. Friend the Chancellor of the Exchequer in his last Budget conceded the point I put to him on 6th February, 1953. [Interruption.] The hon. and gallant Gentleman the Member for Brixton (Lieut.-Colonel Lipton) on that occasion was not in his place.
I urged on my right hon. Friend the desirability of going out into the world markets and, as a temporary and nonrecurring expedient, buying a sufficient tonnage of sugar from any source from which he could obtain it, to enable him to de ration sugar in the United Kingdom. My right hon. Friend, two months later in his Budget speech, showed that he took my advice on this point. [An Hon. Member: "What was the hon. Gentleman's reward."] No reward was attached to it. I applauded my right hon. Friend's decision for doing so, but I now want to emphasise that no part of this Supple- 1862 mentary Estimate for sugar will result in a loss to the taxpayer.
In opening the debate this1 afternoon, my right hon. andgallant Friend drew attention to the very large sugar beet crop this year. I have a special interest in this matter as one of the largest sugar beet factories in the United Kingdom is in Kidderminster. The United Kingdom sugar beet crop this year was 770,000 tons, and the normal estimate for our sugar beet crop is 625,000 tons. The Commonwealth Sugar Agreement has yielded this year—that is, the year covered by the Supplementary Estimate which we are discussing—a figure very much higher than the forecast. It has yielded approximately 2,100,000 tons. In fact, the estimate that was made no more than 12 months ago as to this year's yield was only 1,800,000. Therefore, we have obtained under the Commonwealth Sugar Agreement 300,000 more tons of sugar than we anticipated.
Does any hon. Member suggest that we should not honour our obligations to the Commonwealth and buy every single ton of sugar we are under contract to buy, and which Commonwealth countries are anxious to furnish?
§ Mr. Nabarro
The hon. and gallant Member will keep shouting at me. It will be recalled that I very clearly said that the Cuban sugar represented an exceptional and non-recurring purchase to enable my right hon. Friend to deration sugar.
§ Lieut.-Colonel Lipton
It was not necessary.
Mr. Nabarro:The hon. and gallant Gentleman says it was not necessary, but I say that it was because we could not estimate with accuracy 12 months ago what the total yield of the Commonwealth Sugar Agreement would be, or the United Kingdom crop. In fact, it has turned out to be 300,000 tons more than we expected from the Commonwealth, and the home crop of sugar beet has turned out to be 150,000 tons more than anticipated, so that we are getting a total of 450,000 tons of sugar more than we expected. That, married to the exceptional and nonrecurring 1 million tons of Cuban sugar at a price—it is quite an open secret—of 1863 between £29 and £30 a ton, gives us the total Supplementary Estimate for sugar.
In that the taxpayer has made a temporary investment, but surely he must bear in mind, first, that we are under contract to buy the whole of the Commonwealth sugar that is available; secondly, that we are under contract to buy from the home producer the whole of the beet that is produced by the Sugar Beet Corporation; and, thirdly, we have satisfied the consumer, for in spite of the abolition of the small consumer subsidy we have given the consumers in this country all the sugar that they want, and still at a very reasonable price.
I will wind up what I have to say about sugar by quoting my right hon. Friend the Financial Secretary to the Treasury. In a speech which he delivered in this House on 6th February, 1953—and this was two months before sugar was derationed—my right hon. Friend, in a passage which I am going to quote, gave the true answer to the sums of money that are being provided in this Supplementary Estimate for sugar. This is what my right hon. Friend said:My hon. Friend the Member for Kidder minster himself put to my right hon. Friend the Chancellor"—
§ Mr. Nabarro
I said I guided the Chancellor—
a question which accepted the fact that to reach the right level to permit of derationing an increase in the first year of 750,000 tons would be required and subsequently 500,000 tons a year. Those figures take into account, quite properly, the fact that when a commodity becomes decontrolled we have to build up further stocks since the demand has necessarily become uncertain and there is a certain wisdom in making larger provision in the first year."—[OFFICIAL REPORT, 6th February, 1953; Vol. 510, c. 2.281.]That is the reason for the Supplementary Estimate today.
If anyone in the Committee wants to criticise my right hon. and gallant Friend the Minister of Food, the only valid basis of criticism is that he over-insured himself against derationing, and what a wise thing to do, in view of the miserable results that flowed from the policy of right hon. and hon. Gentlemen opposite when they made their abortive attempt to deration sweets. There, sitting on one 1864 of the back benches, is the culprit, the right hon. Gentleman the Member for Dundee, West (Mr. Strachey).
One final word about eggs. In this Supplementary Estimate there is a heavy bill for the taxpayer to pay on their account. It is true, of course, as was observed earlier in this debate, that the hens have had a remarkable flush period this year, in the middle of winter. They have produced an abundance of eggs, but does any hon. Member opposite, including the hon. Member for Norfolk, North (Mr. Gooch). wish to withdraw the guarantee to producers in order to save sums of money under this Supplementary Estimate? Of course he does not. He knows he is committed as much as I am to guaranteeing prices for staple commodities at each February Price Review.
The hens have laid a large number of eggs this year, and because they have done so there is a big bill for the taxpayer to meet. But the taxpayer also happens to be the consumer, and whereas the taxpayer may have a heavy bill to meet in the form of the subsidies we are considering this afternoon, at least the taxpayer, in his rôle as consumer, can now go into the grocer's shop and buy his eggs over the counter, instead of, as in the days of the Labour Administration, from under the counter. At least my right hon. and gallant Friend, by his policy, has killed the black market in eggs and exterminated the "spiv,"both of which flourished under the policy of right hon. Gentlemen opposite.
§ Mr. Nabarro
I hope the hon. Gentle man will manage to persuade and com fort his hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton)—
§ Mr. Nabarro
So far as we are concerned, although the bill is a heavy one this year in the form of this Supplementary Estimate, the consumer has had a 1865 good deal of satisfaction and is continuing to do so. The consumer is happy with the food policy of this Government. I urge my hon. Friend the Parliamentary Secretary, for the third successive year, to try to make next year's Estimate for the Ministry of Food his last Estimate. I urge him to do what I urged him to do last year, metaphorically speaking, to cut his throat at the earliest possible moment.
§ 6.1 p.m.
§ Sir Leslie Plummer (Deptford)
I am sure that the hon. Gentleman the Member for Kidderminster (Mr. Nabarro) will not mind if I do not follow his modest and retiring speech, because time is passing and the Parliamentary Secretary must have as much time as we can afford, for we shall be engrossed by the spectacle of seeing how he can best keep out of that creeping barrage laid down by my hon. Friend the Member for Sunderland, North (Mr. Willey).
I want to raise a somewhat different question from that raised by any of my hon. Friends. I want to bring to the notice of the Committee the fact that under the increased subsidies for meat and livestock and the reduced one for bacon and ham lies a deep injustice to the pig producer. If it is the desire of the Ministry of Food and of the Treasury that our pig production should be curtailed over a long period, that is a point of view which ought to be discussed with the pig farmer in detail. The honest thing to do would be to say, "We asked for the rapid expansion of this industry when we were short of pork and bacon. Thank you for what you have done. We do not want you to go on with it and we shall try to help you to establish yourself in some other direction."This is not what the Government are saying.
The Government are taking a line with the pig producer that is quite reprehensible. I ask hon. Members to remember that the majority of home-produced pigs in this country, either for pork or bacon, are produced on little farms. Two-thirds of our farms are under 50 acres in extent, and it is largely from the small farms that our pigs are produced. How is the pig producer paid today? Last year, the Government altered the basis of payment for pigs by estimating that on 1st April, 1953, the price of feedingstuffs was 33s. 6d. per cwt. and the Government said, "We are freeing from control 1866 cereals and feedingstuffs generally, so the price of pig meat will fall 1d. a score by every 1d. cwt. that the cost of cereals and feedingstuffs falls. The result has been that the price of pigs today is 4s. 3d. a score less than it was in August of last year, and the average receipt that the farmer gets for an eight score seven pound pig, which is a desirable killing weight for bacon, is about £2 less.
This price is predicated on the basis that the price of feedingstuffs generally has fallen pro ratain the manner I have described. However, as the farmer on these small farms has to buy cereals in order to produce the proper grade of pig, he has to go to the merchant because, except for some barley here and there, he cannot grow feedingstuffs himself. He was told by the Government last year that he would be able to buy these feedingstuffs at considerably lower prices and that, while the price he received would also be lower, it would not be lowered to such an extent that it would be worse than the price he had to pay for the feedingstuffs—to make myself clear, the reduction in the price of his product was to be married to the reduction in the cost of feedingstuffs.
Every month this situation is reviewed and a new price fixed. On 8th February the price of pigs was reduced by another 1s. a score on the basis that the cost of the feedingstuffs had dropped from 33s. in August last year to 29s. 3d. today. But it is not so. As a result of giving the control and the handling of feedingstuffs back to the trade, tremendous gambling is going on. In December farmers could buy what the Ministry call wheat offals and what we in East Anglia call "middlings"for £19 10s. a ton. Yet I have here a quotation from an important firm in East Anglia quoting not £19 10s. a ton but £27 8s. 9d., that is, nearly 50 per cent. more than the price last December. The small pig farmer who, because he had neither the capital with which to stock up in feeding stuffs nor the land to grow them, is now entirely dependent on those merchants who are rigging the market in this way.
When I asked my firm why it was that in the course of a few weeks the price of wheat offals had gone up by 50 per cent., the reply was that supplies have become short. Of course, they have, because the market is being rigged all the way up.
1867 Today, when the farmer is supposed to be paying £29 5s. a ton for his feeding-stuffs, I estimate that on today's ruling prices he is paying £31 7s., which is £2 2s. a ton more than the Government are paying him on the basis of the equalisation of prices.
This is not good business. As I have said, if the Government want to drive a man out of pig producing, let them go to him honestly and tell him so, and not disguise the determination of the Treasury and of the Ministry of Food to force him out of business. This Government will have a very bumpy ride with the National Farmers'Union when they face the February Price Review and hon. and right hon. Gentlemen will have a very bumpy ride when they go into their constituencies and talk to farmers about the future of agriculture over the next year or so. Indeed, on this issue of treating the pig farmer as badly as I have described, they will have such a bad ride that they will find themselves unseated.
§ 6.10 p.m.
§ Mr. Douglas Jay (Battersea, North)
Despite the sketchy and inadequate speech made by the Minister at the beginning of the debate, I hope the Committee will not part with this Estimate before pondering deeply on what it means and what its implication is. For, when all these statistical mysteries have been unravelled, and all party points made, it remains true that we are concerned today with large amounts of public money. There has also been a major failure of budgetary control in this last year; and very far-reaching issues of food and agriculture policy have been brought starkly before the Committee by the Estimate.
Three facts which are beyond dispute emerge from this debate. First of all, astonishing miscalculations have been made by the Chancellor of the Exchequer and the Minister of Food. Secondly, the Chancellor's food subsidy policy, as announced in his last two Budget speeches, has gone completely astray. Thirdly, as my hon. Friend the Member for Deptford (Sir L. Plummer) has just pointed out, the agricultural situation is causing very great anxiety to everybody concerned.
Let us first sum up the conclusions of this debate affecting the actual financial miscalculations. The first, of course, 1868 is in the Trading Services of the Ministry of Food, the main item of which we have been considering this afternoon. The Budget provided originally for a total spending of £96 million. This has now risen in two jumps to £259 million, an increase under one subhead of £163 million. According to my calculation that is an error of 169 per cent.
Secondly, the total of food subsidies, which according to the Chancellor's Budget speech in 1952 were to have a "ceiling" of £250 million, and according to his Budget speech in 1953, only 10 months ago were to stand at a "round figure"—he had become a little more cautious—of £220 million are now shown as having risen already to £325 million a year or 43 per cent. higher than the Chancellor's forecast only last April. For all I know they may go higher. Thirdly, the total of the items in the Supplementary Estimates, after having deducted a small reduction, over and above the 1953—54 Budget, is now as high as £229 million.
How can one justly describe these remarkable mistakes in forecasting? I am reminded of the speech which the present Leader of the House made on 14th March, 1950, when he was describing a Supplementary Estimate for the Ministry of Health. He said that any Minister ought to be given a "very bad mark"for producing any Supplementary Estimate at all, particularly if he made use of the Civil Contingencies Fund, which the Minister of Food has done this year to the tune of £41 million.
The present Lord Privy Seal went on to call the Estimate, which at that time totalled only £148 million, compared with the present £229 million, as "staggering" and he said:This is a very big hole through which money has been pouring…We on this occasion are faced with an increase of £163 million under one subhead alone.
The Lord Privy Seal also said on that occasion:One had hoped—that an intelligent guess would have been within 40 per cent, of the right answer."—[OFFICIAL REPORT, 14th March, 1950; Vol. 472, c. 921–924.]But the Trading Service item now asked for is not 40 per cent. but 169 per cent. above the original Estimate, and the food subsidies, as I have said, are 43 per cent. above it.
1869 The first question which we must ask is this: what has been the immediate reason for this year's miscalculation and this extraordinary loss of public money? It is, basically, of course, the conflict between the Chancellor, the Minister of Food and the Minister of Agriculture, and the confusion and the muddle which that conflict has caused—with Mr. Cube also making trouble in the wings.
The Government have abandoned State purchase over most of the field, set up an uncontrolled speculative market, and tried, at the same time, somehow to allay the deepening anxiety of the farmers. They have tried to do that at a time of falling world prices—a point which they attempt to ignore when they take credit for the fact that living costs have not gone up much faster. In addition, they entirely failed to foresee the course of prices during the present year. So unnecessarily large stocks were built up, as the Government admit, and control was abandoned in indecent haste on a falling market. The Minister said today that even with "strict control"it is difficult to get the Estimate right. He thereby admits that by decontrol the Estimates are more likely to go wrong, and money would be lost. I am glad to have the Minister's agreement on that.
The degree of miscalculation can be shown by comparing what the Chancellor said in his Budget speech last year with what the Minister said in this debate and in a debate on earlier Estimates in December. I ask the hon. Member for Kidderminster (Mr. Nabarro) to listen to this in particular, in view of what he said about stocks. The Chancellor said, in April, that the saving he was going to get in cutting food subsidies to £220 million "flows from the policy of decontrolling eggs and cereals."He said that we were to have a great saving on those items. But the Minister now comes forward with an item of about £30 million extra to be sought from the taxpayer on account of eggs alone over and above the Budget Estimate, and a further item of about £56 million extra in the case of cereals.
Yet the Chancellor said in April that…a large once-for-all reduction has been secured by the receipts expected from sales of Ministry of Food trading stocks of feedings tuffs and other grains Here again the Exchequer benefits from cereal decontrol."—[OFFICIAL REPORT, 14th April, 1953; Vol. 514, c. 43.]1870 In point of fact, they lost something between £50 million and £60 million by the admission of the Minister, who told us in December that he ishaving to take delivery of substantial quantities of home-grown grain offered at the guaranteed minimum prices, and these will have to be disposed of at the ruling market prices.So very large sums of money have been lost on grain.
As to sugar, to which the hon. Member for Kidderminster referred in particular, the Chancellor took much credit in April for the great budgetary relief that he expected from the end of sugar rationing. But the Minister again told us in December:I frankly admit that we provided for larger Government stocks than proved necessary."—[OFFICIAL REPORT, 2nd December, 1953; Vol. 521, c. 1174–6.]That is why we have an additional item of something like £50 million on sugar today. What a staggering failure at forecasting this has turned out to be, and what an extraordinary story of muddle and improvidence!
§ Mr. Nabarro
The right hon. Gentleman used the phrase "loss to the taxpayer."Would he not agree with my contention that the whole of this £50,500,000 for sugar represents perfectly sound stocks and that therefore it is only an investment?
§ Mr. Jay
But revenue was being taken into account in other parts of the Estimates for stocks of commodity sold during the same period, and the Chancellor claimed credit in the Budget for a once-for-all release of stocks. Therefore, the hon. Member cannot take one item and say that it represents an investment which has been built up.
What really is the underlying cause of the confusion in which the Government now find themselves? I believe that it is mainly the fact that all three Ministers have been pulling in different directions. The Chancellor set out to save money. The Minister of Food set out with madcap doctrinaire haste to decontrol everything and abolish his Ministry in a few months, egged on by the unwisdom of hon. Members opposite. I think that "egged"is the appropriate word in which to refer to the hon. Member for 1871 Kidderminster. And the Minister of Agriculture, of course, has been tagging along timidly behind, trying rather ineffectively to honour the 1947 Act guarantees to the farmers.
What I want to emphasise is this. It is impossible to do all three things at once. We cannot save public money, decontrol the food trades, and maintain guaranteed prices and assured markets. If we try when world prices are falling, the confusion is all the greater. In the event, unluckily for the nation as I believe, the Minister of Food has come nearest to winning this undignified squabble. The farmers are being left in the lurch. The Chancellor has completely lost control of expenditure, and been made to look exceedingly foolish.
Let us at least hope that the Government will now understand, what most people understood before, that if one tries to perform the impossible, one gets landed in a state of confusion. What does the Minister of Food think he is achieving by re-establishing these speculative markets? Take two examples. In the case, for instance, of the uncontrolled meat auction markets, which he is so proudly re-establishing, all experienced farmers tell us that trade rings will beat down the prices. In that case the farmer will recoup himself at the expense of the taxpayer, while the middleman's rings will be profiting out of public money.
§ The Temporary Chairman (Mr. George Thomas)
We are confining ourselves to Class VIII and the question of meat does not arise here.
§ Mr. Jay
I think it will be found that meat is mentioned, but in any case I only referred to it as an illustration.
Secondly, I do hope that the Parliamentary Secretary will give us the answer asked for by my hon. Friend about the speculative market in grain. We have had the very disturbing statement by the agricultural correspondent of "The Times,"that the millers are boasting how they are going to talk prices down, and put both the Government and farmers in a difficulty. The agricultural correspondent of "The Times" said this yesterday:Such irresponsible talk should stop if the grain trade does not want to jeopardise the market guarantee for the 1954 crops.1872 But how do the Government propose to stop these things happening, which, otherwise, are bound to result in further loss of public money?
I ask the Committee to note, in particular, the long-term lesson of all this for food subsidy policy. We in the Labour Government maintained the subsidies not only for the sake of social justice—important as that was—but for three other reasons. The first was because they helped to maintain stability in wages and prices, and so greatly assisted the export trade when world prices were rising. Secondly, we were convinced that if the subsidies were heavily reduced, other forms of Government expenditure would rise by a very similar amount or more. Thirdly, we understood very well—as hon. Members have said today—that the greater part of the subsidies were paid on account of home-produced food, and were the price of preserving ahealthy and thriving agriculture in these islands.
In the 1952 Budget the Chancellor despised these arguments, and launched his reckless experiment of cutting food subsidies. He has now discovered, as we can see by the figures, that all three of those arguments have turned out to be valid. His attempt upset wage, price and dividend stability, and gravely injured our exports over the last two years. Secondly, it has not even saved public money in the narrower sense. In his Budget speech of 1952 the Chancellor added £80 million to social service expenditure to set off against the proposed £160 million cut in the subsidies. But, if we add that £80 million to the £325 million at which the subsidies are actually running now, we get back to £405 million, or practically to the 1951 subsidy total—without allowing for all the increase in Government expenditure in wages and salaries right through the Civil Service and other parts of the public services, due indirectly to subsidy cuts.
On balance, therefore, there can be little doubt that a net increase, and not a decrease, of public expenditure has resulted from the original decision of the Chancellor on subsidies. I hope hon. Members opposite will ponder on the figures if they seriously doubt that. We used the subsidy money deliberately for keeping down the price of certain carefully selected foods for social and human reasons, and as part of a general policy 1873 of stability affecting wages and dividends as well as food prices. The present Government pour it out, contrary to their own avowed intents, without any plan, and without any agreed policy for industrial stability.
Thirdly, Ministers have at last discovered that most of the money—I believe now something like 90 per cent.—is spent on account of home-produced food. As the hon. Member for Orkney and Shetland (Mr. Grimond) rightly said, they are really misnamed "food subsidies."They cannot be cut down beyond a point without grave injury to home food production. All the Government have done, after all this disturbance of the industrial scene, and after impugning the political veracity of Lord Woolton and the Chancellor, is to change the name from food to agricultural subsidies.
I hope that the Parliamentary Secretary will tell us what the Government propose to do next, because the House of Commons is really entitled to ask. Will the subsidies continue to run at £325 million in the next Budget, as they are shown in the paper that is before us today? Or will the Minister of Agriculture finally admit defeat and, as "The Times"hinted this morning, abandon altogether the 1947 Act guarantees? Will the Chancellor openly admit that his intended savings cannot be made? Or last, but not least, will the Minister of Food abandon his disastrous, doctrinaire and reckless efforts to decontrol, and resign here and now in the interests of the country? While expressing no personal preference between one Minister and another, I must admit to a fervent hope that for the sakeof the nation, the farmer, the taxpayer and the housewife it is the Minister of Food who will go.
I would add this, especially addressed to hon. Members opposite. I do hope that they will note the effect of this Estimate on Budget expenditure as a whole this year. I think they have still not noticed that. In the last full financial year of the Labour Government the total Budget expenditure, above and below the line, amounted to about £3,800 million. The Chancellor's estimate for the present year, this was last April, was £4,955 million. But in the present Supplementary Estimate even if we allow for possible hitherto unrevealed savings of £100 million on other Votes—which is sometimes possible 1874 —this total spending has been raised by the Vote we are considering today to well over £5,000 million.
I wonder how many hon. Members opposite, supporters of the Government, realise that their Government are now spending £1,200 million more than the Labour Government did in their last full budgetary year? That excess is about equal to the whole Budget in 1938. In the debate on 14th March, 1950, the Lord Privy Seal said:We are certain that expenditure must be reduced in order that taxes can be reduced."—[OFFICIAL REPORT, 14th March, 1950; Vol. 472, c. 926–7.]But total expenditure is now £1,200 million higher.
The Temporary Chairman:Order. The right hon. Gentleman really must confine himself to the £35 million Supplementary Estimate which is now before the Committee.
§ Mr. Jay
I am certainly glad to do so, Mr. Thomas. I was considering the effects of that on the budgetary picture for the present year.
I will conclude by saying that in July, 1951, the Prime Minister said that "no Government in history has spent money so recklessly."The mistakes before us this afternoon, however, is not 30 per cent., but 169 per cent. and the total of public expenditure has risen from £4,000 million to £5,000 million. I can therefore best conclude by quoting two other sentences from the eloquent speech of the present Leader of the House in March, 1950. He said:These Supplementary Estimates are a condemnation of the administration of the Chancellor….He stands condemned, and…we deplore his failure."—[OFFICIAL REPORT, 14th March, 1950; Vol. 472, c. 926–7.]
§ 6.31 p.m.
§ The Parliamentary Secretary to the Ministry of Food (Dr. Charles Hill)
We have gone some way in our journeying through the field of Estimates—and outside it—since the hon. Member for Sunderland, North (Mr. Willey) made his forceful speech, upon which I congratulate him. I say that as a regular adversary of his night after night. But that speech contained the usual general admixture of inaccuracies with which his speeches are customarily studded.
The hon. Gentleman began by saying that he was referring to the period be- 1875 tween when the Supplementary Estimates were discussed in December, and today. He suggested that there had been no new features; no increase in the production of eggs in December; no abnormally high production of eggs in January; no new calculations as to the yield of the home beet industries—calculations which could not have been made before the date of the Supplementary Estimates. Yes, he began with a generality, that he hoped we shall show where the extra expenditure has been incurred between the last Supplementary Estimate and this.
The hon. Gentleman began, as he so often does, in a mild, interrogatory way, by asking what happened to potatoes—that was his particular question. My hon. Friend the Member for Kidderminster (Mr. Nabarro), with that unerring touch of modesty which he brings to the examination of these problems—[HON. MEMBERS"Oh."]—well,perhaps with a mixture of diffidence and modesty, dealt with this point in general—as did the hon. Gentleman. He referred to the really surprising increased yield per acre which has resulted, despite a fall in acreage, and with the surplus this year which may be about 1 million tons, compared with rather less than half of that figure a year before.
The hon. Member for Sunderland, North referred to the grain trade with a mixture of doubt and anxiety as to what would be the attitude of the miller in this matter of the purchase of home-produced cereals. I wish to deal with that point because I consider it of great importance. In pre-war years, out of, the 1,650,000 tons of home production, the millers took rather less than half, about 730,000 tons. This year, out of a production of 2,664,000 tons, the millers are taking 1,125,000 tons, a similar proportion.
It is all too easy publicly to criticise such trades as the grain trade and the millers—I am dealing with the criticism and ignoring, for the moment, its origin. It is all too easy to throw about these loose criticisms, but, as a matter of fact, the grain trade and the millers have cooperated magnificently to secure that the home production is taken up. There is no ground for the rumour that they will not be taking the proper proportion of home grains next year.
1876 The hon. Member for Sunderland, North did his best with sugar. He objected to the Cuban sugar purchase. Of course he did—it enabled derationing to take place. He disliked this accumulation of stocks. With his mathematical acumen, he might have calculated what had happened to the average price paid for that Cuban sugar as a result of a higher proportion of it being taken before the end of last year. He would have found, because of the fact that we took more before the end of the year, that the price fell from 2.864 cents to 2.817 cents.
Bearing in mind that the world price today is in the region of 3.40 cents, I should have thought that, with his genius for economy, the hon. Gentleman would have congratulated the Government on having bought this supply of sugar which enabled us to end sugar rationing for good and all, and, at the same time, to hold substantial reserves of sugar. How hon. Members opposite seem to dislike the idea of these powerful stocks which are being held.
Then the hon. Member wandered on to the bread subsidy. He said that had gone up, with the price of cereals going down. As a matter of fact, the bread subsidy has gone down—as he would have seen had he examined the accounts—so that seems to dispose of that part of his argument.
§ Mr. Willey
I do not want to interrupt the hon. Gentleman's fun, but the question I would like him to deal with is the prospect regarding the bread subsidy.
§ Dr. Hill
I am dealing with the arguments put forward by the hon. Gentle man, and if he makes an allegation—
The Temporary Chairman:Order. The hon. Gentleman will be unable to pursue that argument. Prospects are one thing: what happened up to 31st March is another, and that is what we are now discussing.
§ Dr. Hill
Clever, but relatively unimportant. 1877 Then we have the old story of 1950. How the hon. Member for Sunderland, North loves to quote 1950 in his comparative figures of food consumption. Of course he does. The party opposite raided stocks in 1950—160,000 tons of meat were taken from stock; the cheese stocks were substantially down at the end of the year. And while we are on the subject of meat, why does not he carry the comparison on into the beginning of next year, when the carcass meat ration—because of this raiding of stocks—was down to 8d.?
To come to eggs, 1950 was a good year. There was a heavy flush. What did the Labour Party do? Quite properly, they reduced the retail price in order toget rid of the eggs, and they incurred a very substantial addition to the subsidy in so doing. What was good enough for the Labour Party in 1950 now apparently becomes evil when it is done in the presence of a bigger flush.
The hon. Gentleman seemed to besaying, or giving the impression—I do not believe he intended to say it—that the 2d. which went to wholesalers was for the purpose of the wholesalers. He may have been hurrying over his ground. Nevertheless, he spoke of 2d. per egg being handed out to the wholesalers. That is a grossly unfair statement to make. I will deal with the question of the margin, because I know that the hon. Gentleman has been watching it.
The margin on eggs is about 1d. per egg. The retailers' margin is ½d. The packing station margin in respect of collecting, testing and packing eggs and transporting them to the wholesalers is .22d. per egg. That is the figure. Indeed, the profit element in the calculation is .025d. To come to the next margins, the transport to the wholesalers represents .13d. and the wholesalers' margin is .15d. That is the story of the margin which in the aggregate from farm to consumer amounts to 1d. per egg.
What the hon. Gentleman had in mind, of course, but didnot make clear, was that we are using the packing stations to fill in the gap between the support price and the price at which the packing stations are having to sell the eggs in order to dispose of them. In other words, it is not 2d., the figure given by the hon. Gentleman, with the customary inaccur- 1878 acy which passes for him, but l¾d., and that is the subsidy element which is being paid through the medium of the packing stations. But that sum of money is in no sense held by the packing stations or the wholesalers, and it was utterly misleading for him to give the impression that there was this wholesalers' rake-off in the matter of eggs.
My hon. Friend the Member for Croydon, North (Mr. F. Harris) referred to stocks. "Sell them fast," he said. Let me tell him that we are, of course, seeking to dispose of our stocks, but we must do it wisely. We must do it through the recognised channels of trade. We must avoid a situation in which we overhang, and so destroy, the market. I can tell him that we are proceeding in the case of canned meat, which he quoted. I do not think it will be long before he will hear of the successful disposal of the stores of canned meat.
The hon. Member for Orkney and Shetland (Mr. Grimond) made his usual constructive speech. I will not pursue the line of general agricultural policy, but I wish to refer to the practical point which he raised affecting his own constituency. We have now made an arrangement with the shippers of the eggs which completely bridges the gap betwen the packing stations in the islands and the selling price at Leith. I admit that the problem still remains for those who have to take their own eggs to the packing stations, being outside the region of collection, but I hope he will regard this as at leasta token of our appreciation of the difficulties there.
The hon. and gallant Member for Brixton (Lieut.-Colonel Lipton) said that this was a doleful occasion. It has been a doleful occasion for the Opposition, for the situation we are now in is associated with a substantial fall in the price of everything and an enormous increase in the quantity available to the community and being purchased by the housewives. The hon. and gallant Gentleman said that he had nothing to retract of his previous utterances—nothing at all. On Wednesday, 26th November, 1952, on Question No. 4, the hon. and gallant Gentleman asked:Can the right hon. and gallant Gentleman give a categorical assurance that the price of an egg will not go up to l0d. with in the next 12 months, as I forecast last week when 1879 I put that figure to him?"—[OFFICIAL REPORT, 26th November, 1952; Vol. 508, c. 435–6.]Nothing to withdraw!
I really wondered what the hon. and gallant Gentleman was advocating in the latter part of his speech. I wondered whether he was advocating a limitation of imports. He was light and indefinite in his touch, but it seemed to me that he was suggesting as an easy solution to the problem that we should deny ourselves the opportunity of buying in the world and should adopt a policy of restriction of imports and the creation of artificial scarcity for the purpose of raising the home price.
The hon. Member for Deptford (Sir L. Plummer) might have reminded himself of a former incursion or gambit of his in an egg debate, when he denounced with great vigour the "wicked practice"then obtaining of selling imported eggs at a profit. He might at least have recognised that £5 million of the amount due in respect of eggs is accounted for by the reverse process, that of selling imported eggs at a loss. He might at least have found a little credit for Her Majesty's Government in that, but he preferred to raise a matter which is not unimportant but which falls to be dealt with at the Price Review rather than across the Floor of the Committee at this time.
I now come to the question of eggs generally. After all, for all the discursive character of the debate and for all the Finance Bill speeches to which we have listened, it is a fact that the Supplementary Estimate isdue to two factors, eggs and sugar. The hon. Gentleman the Member for Sunderland, North did his best, of course, to run around in all possible directions except this one. He sniffed at the While Paper, paragraph by paragraph, like a terrier on an afternoon's walk. But at last he came to eggs.
Let us look at the egg situation. It has been suggested—I shall come to some of the observations of the hon. Lady the Member for Blackburn, East (Mrs. Castle) in a moment—that this reduction in prices isnot real. In opening the debate, my right hon. and gallant Friend referred to a calculation of what it would have cost under the old system of control. I want to look at that matter for a moment. If we take the third week of February last
1880 year and this year, we were, last year, paying the producers 5s. per dozen, and this year the support price is 3s. 9d.
As my right hon. and gallant Friend asked, what would the Labour Party or any Government administering the old scheme have done when confronted with this unexpectedly rich supply of eggs? Would they have reduced the price? Of course they would have had to reduce the price to the level necessary to enable them to sell the eggs, which is the price at present obtaining in the market. I could not understand the right hon. Gentleman when he failed to see that it is the market price which is obtaining today. It is the price which is necessary to get rid of the eggs.
If the Labour Party, in such circumstances, had not reduced the price to the present level, they would not have got rid of the eggs. If, on the other hand, they had not reduced the price to the present level, they would have been denying consumers a fall in price to which they were entitled, and, at the same time, running the risk that supplies of unsold eggs would be wasted by reason of their going bad.
So it seems to me that this situation of a surplus not wholly expected, if I may understate the position, was due to a number of factors, and that it is anybody's guess which is the most important, though I would add that I myself believe that deep litter methods have played a very big part in it. Confronted with that situation, the result had to be that the retail price would fall. Imports played their part as well, and there was a suggestion in one speech today that this freeing of imports was a factor in it. I do not think the hon. Gentleman the Member for Sunderland, North himself made the point, but it is interesting to note that the proportion of imports to total supplies before the war was 33 per cent. and the proportion now is 23 per cent. In fact, if hon. Gentlemen opposite study the period since 1950, they will find that imports of eggs today are substantially less than they were in 1950.
I want to bring these arguments closer together. The difference between the price paid to the producer and the price paid by the consumer, after allowing for distributing costs, represents the trading loss, which is the subject of this Supplementary Estimate, and those who argue 1881 that this is a wasteful expenditure of money should tell us what their solution is. Would it be to lower the price to the producer? I should say not, but it is one way. Would it be to raise the price to the consumer? That is another way. Or would it be a continuance of their present policy of adducing no effective arguments but talking vaguely and suggesting that it is the distributors' margins which is responsible. It is up to hon. Gentlemen to say, in fact, what they would do.
We are committed to the policy of the Agriculture Act of 1947, and we are facing up to the cost and implications of that Act. The party opposite are flirting with such notions as are put forward by the hon. Lady the Member for Blackburn, East and by the hon. Member for Wednesbury (Mr. S. N. Evans), while their own Front Bench adopts a respectable attitude of continued support for the Agriculture Act, 1947, very content that the rebels on the fringe should use arguments which are based on a departure from that Act.
§ Mrs. Castle
Is the hon. Gentleman aware that, in "The Times"today there is a leading article which advocates the abandonment of the 1947 Act?
§ Dr. Hill
It is good to see the hon. Lady in respectable company.
It has been alleged today, and not without some justification, that there has been an error in forecasting, and the hon. Lady was generous enough to refer to her own error in forecasting. She used that argument to explain things away, and she said that expensive eggs were implicit in the control scheme. Well, the retail price today of the best eggs is 3¼d., plus the subsidy l¾d., which makes 5d. in all. I do not know whether that justifies her policy or her argument, because she went on to use another argument.
The hon. Lady seemed to suggest that this was due to what I might call a lucky or lonely virtue of inadvertence. What an argument to use with which to explain the fact that the hon. Lady herself, her right hon. Friend the Member for Bradford, Central (Mr. Webb) and other hon. Gentlemen opposite told the world about the 8d., 9d. and even l0d, egg. The hon. Lady also talked about the 1882 harshness of the Chancellor in deliberately introducing this device to protect the Exchequer.
The fact is that all the forecasts of the party opposite about expensive eggs and scarce eggs, as well as their whole argument, came unstuck, and they are now confronted with and embarrassed by an effective contribution to the steadying of the cost of living, which they still do their best to deny. They are confronted with the failure of their own forecasting, and only the hon. Lady the Member for Blackburn, East among them has had the grace to refer to her failure as a prophetess in this field.
The Supplementary Estimate is due to the difference between the price given to the producer and the price paid by the consumer. When we face that fact, the argument becomes one of reality. To those who say that the margin is too great, I would say, "Let them stand up and say whether it is the producer's price which they would lower or the consumer's price which they would raise."But for this subsidy, the loss would have fallen on the producer. I will not engage in a verbal exchange of a dictionary character with the hon. Member for Sunderland, North, because I know that his acquaintance with such volumes is greater than mine, but this difference, this trading loss, which is the subsidy, is due either to producers being paid too much or consumers being charged too little.
I invite hon. Gentlemen opposite to make up their minds which of those solutions they would follow, and, at the same time, face the fact that, unfortunate though this Supplementary Estimate, like every other Supplementary Estimate is, it derives from circumstances which have redounded to the satisfaction of the consumer and to the discomfiture of the party opposite.
§ Question put, and agreed to.
§ That a Supplementary sum, not exceeding £35,334,900, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1954, for the salaries and expenses of the Ministry of Food; the cost of trading services including certain subsidies; a grant in aid; and sundry other services, including certain expenses in connection with civil defence.