§ 10.47 p.m.
§ Mr. Frederick Willey (Sunderland, North)
I beg to move,That an humble Address be presented to Her Majesty, praying that the British Sugar Corporation Limited (Incentive Agreement) Order, 1958 (S.I., 1958, No. 936), dated 5th June, 1958, a copy of which was laid before this House on 12th June, be annulled.We now pass from the subject of salted pork to that of sugar. May I, in expressing appreciation to those who took part in the last debate, correct an unjustified apprehension? This Prayer is not hostile. I think we have reached the position when Members on both sides of the House take pride in the work of the British Sugar Corporation. I am sure the House would like me to pay tribute to the past chairman, Sir Alan Saunders, who did magnificent work for the Corporation in the years after the war, and also to Sir Edmund Bacon, the present chairman, who has also done tremendous work for the sugar beet industry in this country. We need no longer apologise or explain away British sugar production. It can hold its own, and has done for some years, with Commonwealth production.
What we are considering this evening is the new incentive agreement which is incorporated in this Order. This is why it is of considerable general importance. This is an attempt to promote efficiency where the ordinary incentives to efficiency and economy do not operate. I believe, incidentally, that Sir Edmund Bacon was one of those responsible for the early formulation of the incentive formula. This industry obviously provides very real difficulties because of the variable crop and the variable throughput. But in spite of its difficulties, the attempt to find this formula has, I believe, proved very successful and has, in fact, promoted demonstrably operating efficiency within the Corporation.
It is a difficult agreement to follow, but the principles of the present agreement are simple enough. It is to compare the actual trading account with a standard trading account and, on this basis, to calculate incentive earnings by making 177 comparisons between the actual and agreed standards for labour, material, useage and extraction. I wish, as I said, to demonstrate my support of the agreement. It is something to which all those interested in nationalised industries should pay attention. This proves that it is possible in the case of public corporations and nationalised industries to provide a formula for direct incentives. I want, however, to raise two or three particular points about the present agreement.
I believe—I emphasised this in our discussions in Committee on the Sugar Act—that the burden of the agreement ought to have been borne by the Exchequer and not the consumer, but I cannot pursue that now, because it would be a matter of policy. Apart from that, it is quite clear that the incentive agreement must be considered in relation to the dividends which are paid by the Corporation, for, anomalous though it may seem, it is none the less a fact that within this public corporation there is a private shareholding.
The Parliamentary Secretary knows very well that this is another matter which we argued at some length in the Standing Committee. In short, for fourteen years the dividend stood at 4½ per cent. It then rose to 5 per cent., and then to 5½ per cent. It is now running at 6 per cent. I am not raising any issue about what is the proper rate of dividend which should be paid, but there obviously is a relationship between the dividend earning and the incentive agreement. I should like the Minister to tell the House how far this has been taken into account in devising the basis of the present agreement. After all, the present dividend is running well above the guaranteed dividend provided for.
The main purpose of our Prayer is to inquire about a particular provision of the agreement for which we on this side claim a good deal of credit. In Committee on the Sugar Bill, we pressed continually and eventually effectively for the inclusion within the agreement of a profit-sharing arrangement. I am glad to see the Liberal benches represented here tonight in the person of the hon. Member for Huddersfield, West (Mr. Wade). We felt that provision ought to be made by legislation in a case such as this for the employee within the industry to share in 178 earnings made under this incentive agreement. Finally, on Report, the Government agreed with us. If we turn to paragraph 6 of the agreement, we find that it is provided, in accordance with the Act, thatPayments received by the Corporation under this Agreement shall be applied for renewals of and additions and improvements to the Corporation's fixed assets and for the provision of benefits to persons employed by the Corporation.They may also be applied,with the approval of the Ministers for such other purposes as are consistent with the provisions of the Sugar Act, 1956".I believe that this is a very important precedent. It is a precedent which might well be followed in other public corporations. We have here not only devised a formula to provide an incentive, but we have, by legislation, provided that those who work within the industry shall benefit by reason of the incentive agreement.
I want to be fair to the Corporation. I would not suggest for a moment that if this provision had not been made by legislation the employees of the British Sugar Corporation would not, in fact, have enjoyed some of the benefits of the present agreement. This is a public corporation of which we can all be proud. It has re-equipped the sugar beet industry remarkably since the end of the war. It has introduced automation and electronics. It has provided for fuel saving in a way which could be an example to any industry. The conditions of employment in the industry are first-rate. That is why I say that even if we had not made provision by legislation we could have been well satisfied that the Corporation would have made such provision itself. There are bonus schemes, extra payments for extra merit, training schemes and pension schemes. As a result, there is a remarkably low rate of absenteeism and labour turn-over. The Corporation has been a remarkable success judged not only in terms of efficiency and economy but also in terms of labour relations.
For that reason, I should not like to suggest that if we had not made this provision by legislation the Corporation would not have made provision for those employed in the industry and who are benefiting by the agreement. It was important, nevertheless, to extract from the Government the principle that in circumstances such as these there should be profit-sharing. We have heard the bald 179 statement that provision will be made for the benefit of persons employed by the Corporation. The main purpose of the Prayer is to have the Joint Parliamentary Secretary tell us in more detail what provisions are being made. If he could do that he would serve the purposes of the Corporation in making widely known how this provision is operating and how some of the benefits of the incentive agreement are being translated into increased benefits for those who are helping to promote the increased economy and efficiency of the Corporation.
§ 10.58 p.m.
§ Mr. J. E. B. Hill (Norfolk, South)
I rise merely to welcome the appearance of this incentive agreement. I do not think I have ever heard the hon. Member for Sunderland, North (Mr. Willey) offer such sweetness in one of his Prayers. This is a blessing rather than a Prayer. Perhaps that fact is not unconnected with the subject matter. The hon. Member mentioned that the agreement was largely the work or inspiration of Sir Edmund Bacon. As he is a constituent of mine, I should not like his name mentioned without my saying that unfortunately he has been seriously ill recently. I am sure the House will wish him a speedy recovery so that he may go back to deal with the affairs of the Corporation. There is no doubt that the incentive agreement will keep the Corporation in pursuit of the efficiency and economy which it has practised so successfully. I greatly wish that it should continue to do so.
§ 11.0 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber)
I am grateful to the hon. Member for Sunderland, North (Mr. Willey) for the friendly way in which he moved the Prayer. I assume from this that in due time we shall be able to persuade him to withdraw it. It is helpful that we should have a discussion of this Order which, as he has said, produces the incentive agreement under the terms of Section 19 of the Sugar Act, 1956. He has put forward one or two points with which I want briefly to deal. I especially join with him and with my hon. Friend the Member for 180 Norfolk, South (Mr. J. E. B. Hill) in paying tribute to the chairman, Sir Edmund Bacon. I am sure that we all wish him soon to be fully restored to health. He has done a great job of work which we can all respect.
As the hon. Member for Sunderland, North said, this Order is difficult to follow. I was very much afraid at one moment that the hon. Member intended to ask me some questions on some of the more intricate parts of the Schedule. I am grateful for his forbearance, because this is an extraordinarily complicated document. However, as the hon. Member said, the principle behind it is perfectly simple, in that it is based on a target and, if the target is beaten, to that extent the incentive operates—and operates effectively.
The hon. Member asked me for one or two comparisons between the incentive earnings and the dividends—a fair question. He reminded us that the dividend rate had risen from 4½ per cent. and had now reached 6 per cent. The gross dividend in 1938 was £225,000 and the net dividend was £163,125. In 1958, it is £300,000 gross and £172,500 net, not a very big increase in the net figure.
The employee's incentive earnings comparisons are rather interesting. The hon. Member rightly said that this scheme is recent, but there have been a bonus scheme and other forms of incentive. In 1954, the figure was £33,976, and for the current year it has reached a figure of well over £100,000, so that it has more than doubled. In fact, the comparison with more recent years is more striking still because it is only in this year that it has reached that sort of figure. Last year it was about £46,000. It has doubled in recent times, therefore, while dividends have increased only marginally. To that extent the comparison should certainly please the hon. Member. I will not give this year's actual figure, which has gone up sharply, much to the satisfaction of the workers, because it includes the incentive earnings of the management grades as well. However, even deducting that element, it has more than doubled.
I am glad the hon. Member referred to the fact that there is a low labour turnover and that labour relations are good. That is abundantly true in this industry, 181 and the Corporation is to be congratulated on consistently having maintained that over the years. This is not an easy industry in which to plan labour requirements, and yet the labour relations are very good. I hope and believe that the incentive agreement, which gives very favourable conditions, will help to consolidate the happy feeling between the different sections of the industry.
Those are the main points with which the hon. Member asked me to deal. I hope that he will feel that the indications I have given are encouraging. I hope that with the new incentive agreement labour relations will be strengthened. This is a demonstration of the worthwhileness in an industry of this sort, where it is difficult to provide the normal incentives of trade or business, of providing something of this kind in the place of such incentives. Although the consumer may bear the burden, that is a matter rather outside the scope of the present debate. By and large, the consumer gets a square deal with the British sugar grown from British beet.
§ 11.5 p.m.
§ Mr. Willey
We are obliged to the Parliamentary Secretary for his reply, not only for the information he has given, but for his indication that the Government take a continuing interest in this, as they should, under the terms of the Sugar Act itself. He has given the figures of the benefits which the employees take, and we all agree that those are satisfactory. He has not quite satisfied me about the dividend rates. I was not trying to make any particular point about this, but only indicating that there is obviously a relationship between the two, and I invited the Parliamentary Secretary to indicate the Government's views on it. But I gather from his reply that their views are that the 6 per cent. is not an improper return on the holdings in this Corporation.
I am obliged to the Parliamentary Secretary, therefore, for that further information by inference; but the major interest we had was in the provision that there should be a sharing of the benefits of the incentive agreement, and it is clear from the reply that both the Government and the Corporation are alive to the importance of this and that the Corporation is trying to do what it can overtly to show that those employed in the 182 industry are taking part in the benefits which obtain from increased efficiency and economy. For these reasons, I beg to ask leave to withdraw the Motion.
§ Motion, by leave, withdrawn.