SUGAR AND MOLASSES (Hansard, 13 March 1958)

§ Mr. Frederick Willey (Sunderland, North)
I beg to move, That an humble Address be presented to Her Majesty, praying that the Sugar and Molasses (Distribution Payments and Repayments) (Revocation) Order, 1958 (S.I., 1958, No. 223), dated 13th February, 1958, a copy of which was laid before this House on 19th February, be annulled. It would probably be convenient if we could discuss at the same time the following three Prayers: That an humble Address be presented to Her Majesty, praying that the Sugar and Molasses (Distribution Payments and Repayments) (Revocation) Regulations, 1958 (S.I., 1958, No. 224), dated 13th February, 1958, a copy of which was laid before this House on 19th February, be annulled. That an humble Address be presented to Her Majesty, praying that the Sugar and Molasses (Suspension of Surcharge and Surcharge Repayments) (Revocation) Order, 1958 (S.I., 1958, No. 225), dated 13th February, 1958, a copy of which was laid before this House on 19th February, be annulled. That an humble Address be presented to Her Majesty, praying that the Sugar and Molasses (Rates of Surcharge and Surcharge Repayments) Order, 1958 (S.I., 1958, No. 226), dated 13th February, 1958, a copy of which was laid before this House on 19th February, be annulled. If necessary, perhaps we could vote upon them separately.

§ Mr. Deputy-Speaker (Sir Charles MacAndrew)
Certainly, let them be discussed together, and then we can have separate votes, if so desired, when the time comes.

§ Mr. Willey
Although these are separate Orders, they cover a single operation. The Sugar Board, which was created by the Sugar Act, 1956, was charged with the responsibility of selling at world prices the 11 million tons of Commonwealth sugar that we agreed to purchase at agreed prices.
First, I would like to make clear that we on this side of the House give every support to the Commonwealth Sugar Agreement. As we made clear during the discussions on the Sugar Bill, we think that one of the disadvantages of the present procedure is that it may lead to situations which make it more difficult to support the Agreement. We think that more simple machinery could have been 737 provided to support the Commonwealth Sugar Agreement, but the purpose of the present arrangements is to ensure that the Board recovers any loss upon the sale of sugar purchased under the Commonwealth Sugar Agreement or distributes any profit by means of equalisation payment.
These Orders end the distribution payments that were being made. Because it was believed that the price of Commonwealth sugar would be below the world price, the Sugar Board provided for a distribution payment of a lb., and that has been enjoyed by the trade since July. The Board is now proposing a very drastic alteration of policy, and imposing a surchage of 1¼d. a lb. In other words, we are adding 1¾d. to the first-hand selling price of sugar. That is obviously a very serious matter for the Government, and the Joint Parliamentary Secretary will not be surprised to hear that we have chosen to raise this matter tonight.
After all, sugar is an important item in the household budget, not only because it is a repeated and direct expenditure, but because the sugar price affects many other prices—for instance, confectionery prices. The Joint Parliamentary Secretary will perhaps welcome the opportunity of a debate to seek to explain why there is this change of policy.
After the price increases which we criticised and which were imposed in December, 1956, and January, 1957, we have enjoyed reductions in the retail price of sugar. I believe—and I think that this will be conceded by the Joint Parliamentary Secretary—that the debate that we held about twelve months ago was a factor in ensuring that we achieved those price reductions. I hope that the present debate will, at any rate, be a moderating factor in effecting any retail price increases.

§ The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber)
I would like to think that our debates have this effect. Does the hon. Gentleman mean that our debate last year had an effect on world prices and brought them down?

§ Mr. Willey
No. It had an effect on domestic prices. The Joint Parliamentary Secretary was in the unfortunate position of having to justify an untenable case. The Sugar Board made a mistake. 738 It began by imposing a surcharge in circumstances which ought to have led to a distribution payment. I will not turn to that point, but I am sure that the debate in the House in which we called attention to this matter had an effect upon the trade. This trade is very anxious not to upset public opinion.
Whether the present situation is avoidable or not, I am sure that the whole House regards it as unfortunate. Some misfortunes cannot be avoided, but at any rate the Parliamentary Secretary should not continue to be flippant but should regard it as a matter of importance that at this time of the year, when we are trying to hold prices steady, we have a threat, and in many instances already an imposition, of increased retail prices. This is a price increase which has a boomerang effect because it influences other prices.
How far is the present price increase unavoidable? I remind the Parliamentary Secretary that in Standing Committee on the Sugar Bill we maintained—and I think we have been justified by subsequent events—that the Government were following a high price policy. We said that if this happened everyone along the line would play safe. I think it is quite clear what has happened about sugar.
I ask the House to consider whether the Sugar Board is right, in the light of its history. The Parliamentary Secretary's intervention reminded us of the initial mistake which the Sugar Board made when it began with a surcharge of one-eighth of a penny per lb.—a nominal surcharge, but nevertheless a surcharge. When we discussed these matters on a Prayer about twelve months ago the whole House recognised that instead of a surcharge there ought to have been a distribution payment, because at that time the Commonwealth price was below the world price.
The Parliamentary Secretary did not deny it on that occasion. I do not know whether he will deny it today. He then said that the Sugar Board must have about six months to think about these things. But it was a fact that the Sugar Board began with a surcharge when the circumstances demanded a distribution payment.
What did the Board do next? It waited until July, and in July it provided 739 for a distribution payment. What happened? Almost immediately after the Order providing for a distribution payment, the sugar market broke. World prices toppled, and they are still falling.
In those circumstances, we want some explanation of the Sugar Board's conduct. Everybody has recognised that for months the Sugar Board has been working at a loss. In those circumstances, as on the two previous occasions, the Sugar Board has patently been wrong. The Parliamentary Secretary ought surely to recognise that the burden is upon him to show that for a change the Board is right.
The action of the Board in now imposing this surcharge must be based on the Board's forecast of the future trend of world prices. I agree that the Cuban price is still falling and that the Commonwealth price has slightly increased, but I remind the House that the arguments which were put forward last time about the world price still obtain. It is true that there was reference to Suez. I do not want to make any reference to that.

§ Mr. R. J. Mellish (Bermondsey)
Why not?

§ Mr. Willey
I do not want to recall the effect of Suez upon world prices. The main argument then was the increased consumption of sugar in Asia, the Middle East and Africa. Can the Parliamentary Secretary say that this trend has been arrested? This was the main reason then given for an increase in the world price of sugar. I think that the Parliamentary Secretary has to agree that there is some burden upon him and the Government to tell us whether they accept the Sugar Board's forecast.
I would put this plainly to the Parliamentary Secretary. We foresaw all these difficulties when we discussed the Sugar Bill. We said that we wanted on the Sugar Board people of commercial experience. We said that if such forecasts were to be made we should have people well qualified by experience to undertake the job. We were told by the Chancellor that all we wanted was an accountancy body. Accountants have some qualities, but I do not think this is purely an accountancy question and the Government should have accepted our advice.
740 In the light of the experience over the past year or so the Parliamentary Secretary has an obligation to tell the House upon what factors the present estimate is based. Incidentally, I hope he will tell the House why on the two previous occasions the Sugar Board was wrong. I hope he will tell us, too, something about the finances of the Sugar Board and how its reserves have been over the time it has been operated. I know there is no inducement to the Board to make profits because it is a non-profit making body. Yet I was surprised to learn that it is subject to Income Tax and Profits Tax. That is an anomaly we should put right. The general duty of the Board is to balance one year with another, and I invite the hon. Gentleman to tell us how things have worked out over the past twelve months.
The major concern we share here is about the effect this will have on the retail price. I have already noticed that in some parts of the country there have been increases already in the retail price. I know, on the other hand, that there are some admirable concerns which so far have held the retail price. We want to know when the Parliamentary Secretary thinks, if a price increase is justified, it would be justifiable to imposed that increase.
This is an industry which carries considerable stocks. We know the temptation there is to make profit on stocks. I hope the Parliamentary Secretary will reveal to us, because the facts are all known to him, what the stock position has been so that there will not be any undue profiteering in such a situation. If there is to be a price increase, as there has been in some parts of the country, how much is it to be? We are discussing tonight an equalisation payment. I was horrified to get the impression from the Minister of Agriculture, Fisheries and Food at Question Time today that he expects a price increase of 1¾d. I hope that impression was wrong, because we are discussing here an equalisation payment and it would be a ludicrous position if we had a retail price increase of 1¾d. when the world price of sugar has fallen.

§ Mr. Mellish
But is not it a fact that today the Minister said there was an increase of this character?

§ Mr. Willey
It is clear that the Parliamentary Secretary will not rise to this. I expect he is thinking how he can explain his right hon. Friend's statement. I can assure the hon. Gentleman that was the impression created by the Minister in the House. If he wishes to correct that impression I will give way, and I invite him to do so.

§ Mr. Mellish
Answer.

§ Mr. Willey
I gather from his silence that the lion. Gentleman agrees that this impression was created in the House.

§ Mr. James Johnson (Rugby)
Is it not a fact that the Minister mentioned a specific sum of money? It is within the recollection of myself and my hon. Friends that the right hon. Gentleman said 1¾d.

§ Mr. Willey
The Parliamentary Secretary is unusually coy. It would be a ludicrous position for us to find ourselves in if, because there is a drastic fall in world prices, we should have to pay more for sugar. This is a difficult calculation. I have been trying for a year or so to find out the different prices of world sugar and the sugar produced by the British Sugar Corporation, from the Commonwealth. I can only assure the House, and this is a great tribute to the Corporation, that British Sugar Corporation sugar is not the most expensive sugar we buy. If we bought British Sugar Corporation sugar and sugar at the world rate, we should contain the retail price within the present figure.
The Parliamentary Secretary has a special responsibility—his hon. Friends may not know; they may not have followed our proceedings on the Sugar Bill—because this present Government sought power and now have the power to control the margins of the refineries. That will probably surprise hon. Gentlemen opposite who stump the country talking about controls. The present Government sought these powers and obtained them. They have the power to ensure that the refiners' margins are reasonable. They have 'the power to intervene and to control them.
That put a duty four-square on the shoulders of the Government. If we are battling against inflation, if we want to avoid a price increase, as I am sure we all do, the Parliamentary Secretary must, first of all, discharge his responsibility to the House and tell us why this action 742 has led, in some instances, to a retail price increase. If he believes that there must be a retail price increase, he must tell us what he thinks is a proper and reasonable price increase, and he must not evade his responsibility.
If we are to stand together and battle against inflation, the Parliamentary Secretary, if necessary, has to intervene. He has to use the powers which his Government sought and obtained in 1956. He has to ensure that the sugar refiners and the people in the sugar trade make their contribution to holding the price. I therefore hope that the Parliamentary Secretary, before we finish this debate, will discharge these two burdens.

§ Sir James Duncan (South Angus)
What about the farmers?

§ Mr. Willey
I am not inviting the Parliamentary Secretary to say anything about the farmers. He will do that later, and it will be very bad news for the farmers; but I think that is outside the Motion we are discussing.
I ask the Parliamentary Secretary, first, why he is allowing an increase in the retail price of sugar, and, secondly, whether he is to take steps, which Parliament allows him to do under the powers given in 1956, to see, if increases are allowed, that they are kept to a minimum. Will he use the powers we gave him in the Sugar Act, 1956?

§ Mr. A. E. Oram (East Ham, South)
I beg to second the Motion.
In doing so, having special regard to the speech of my hon. Friend the Member for Sunderland, North (Mr. Willey), I do not propose to argue the merits or demerits of the surcharge, nor to deal to any great extent with the question of sugar prices. I ask the House to look at these Orders from the point of view of public accountability. It seems most important to me, when we are considering the operations of a commerical board such as the Sugar Board—even if it has quite limited powers so far as trading goes, but, nevertheless, whose operations have an effect upon the consumer price—that the consumer should have available as full a statement of the facts of the position as is possible.
743 My hon. Friend has explained that this question of sugar is a most complex business indeed. It was made very much more complex, in our judgment, by the setting up of the Sugar Board itself. We complained at the time that, from the point of view of complexity alone, it was not a helpful process from the consumer's point of view.
In Committee on the Sugar Bill, my hon. Friends and I tried to insert provisions for consumer safeguards, but we were unsuccessful, so that the present position is that it is only this House which can act in these matters as the consumers' watchdog. It is therefore important that we should have the fullest information upon which to pass the judgments which we are asked to make.
With these Orders, the very reverse appears to be happening. The Annual Report of the Sugar Board has not yet been published, although the Board has been in operation for nearly fifteen months and it is therefore time that we had a report of the operations of the Board for at least the first twelve months of its existence. I can imagine that there may be some reason for the delay—audits and so on—but even if the Parliamentary Secretary can give us some good reason, there is another matter which is most important. Why has it been necessary to make these Orders and why has it been necessary to introduce them before the Report of the Board has appeared?
In one of the Orders, we are asked to approve the rates of surcharge on sugar and molasses. Section 7 (6, b) of the Sugar Act, 1956, says that the rates of surcharge must have regard to the financial position and prospects of the Board at the time when an Order is made. This evening we are asked to approve rates of surcharge having regard to the financial position and prospects of the Board, although we know absolutely nothing about them. How can we know if the Report has not been published?
If there is some good reason why it has not been published, why was it not possible to delay the introduction of the Orders until after the Report had appeared? We are asked to pass judgment although we cannot exercise our proper duties unless we have the fullest information. I ask the Parliamentary Secretary to say something about this important matter of the Board's Report and to let 744 us know when we can expect to have it and when we can expect to have that information upon which alone we can properly judge the matters which we are called upon to consider tonight.
I ask him, above all, to bear in mind in future that the timetable of these things ought to have regard to our responsibilities in the House, and that we ought to have the fullest possible information at the right time before we are asked to decide upon Orders such as this.

§ Mr. James Johnson (Rugby)
We have just heard the authentic voice of the Cooperative Union speaking. My hon. Friend has just argued for the consumers. The Minister has a heavy load to bear tonight. He must justify these Orders, because he has issued them in a somewhat topsy-turvy world. We have been given no figures, but we have a strong suspicion that in Cuba and many other sugar-producing areas sugar prices are falling. Yet at home my wife, and the wives of other hon. Members will be going into the shops in the near future and paying more for sugar.
The Minister has a job on his plate tonight. The situation seems to be completely crazy. I spent forty long and weary hours together with my hon. Friend the Member for Sunderland, North (Mr. Willey) in Committee upstairs on the Sugar Bill. The conditions which are now coming to pass are fulfilling the worst forebodings that we expressed in Committee. We thought that this situation would arise because of the weird and wonderful mechanism involved in this accounting board which has been set up to stabilise the situation.
I should like the Minister to let us know what is happening in the world's market, especially in regard to Cuban sugar—never mind that of Mauritius, Barbados or Fiji. Why, in answer to my hon. Friend the Member for Goole (Mr. G. Jeger), did the Minister say that in his' view the price of sugar would go up by 1¾d. per lb.—which will possibly mean 2d. if and when it comes to pass? It will give us some of the dearest sugar in Western Europe. It will be dearer than the sugar of the Netherlands, or Belgium, and other Western European countries who subsidise their own sugar beet industries.
745 Although I am conversant with the Measure, I am not too sure about such mystical terms as "surcharge" and "drawback". The Bill, which was passed against our wishes in 1956, was an ideological monstrosity. It was forced upon us by the ideological prejudices of the Government. It was given birth to very hastily, although, during its passage through the House, we forced the Minister to put in some judicious and sensible Amendments. If we had not, the position would have been worse than it is.
I hasten to add that no one on this side of the House is antagonistic towards a Commonwealth Sugar Agreement. We have a duty to fulfil to these overseas people, and although we shudder at the impost which is to be placed upon our wives when they go shopping we nevertheless agree that we should subsidise or underpin the sugar producers in these islands of the Empire—or, as we prefer to call it, the Commonwealth—and our overseas dependencies. Luckily the Colonies do not suffer, but if the Government had had their way and had not been held back in their purposes by the fact that they had to subsidise the sugar beet industry, we should have seen Commonwealth sugar producers ruined, as producers of copper, cocoa and palm oil have been, instead of being buttressed by bulk purchases in the years after the war, in the Attlee Governments of 1945–50, and 1951. It is vital, whether or not there be a Sugar Board, that the producers overseas should be helped. But we think that should be done in a much better way and we deplore these annual vacillations, ups-and-downs and ins-and-outs of prices.
We think it wrong that this sort of thing should go on. Very soon we on these benches will be the Government, and then we shall be able to do something about it instead of just talking in sorrowful terms as we are tonight. We are not even speaking in anger, because there is not much we can do about it now and there is not much point in being angry. But soon we shall occupy the benches opposite, and then we may be able to do something to remedy this state of affairs. The Government, while they are maintaining stability for the producer, are not playing the game by the consumers in this country. This is a crazy situation where the world price of 746 sugar is falling while we are expected to pay more. I hope the Minister will tell us the price of sugar in the world markets. I think we were paying about £42 a ton last year and it has fallen to £31, but I am not sure of the figures. I hope the Minister will tell us what is the position.
We have discussed the Sugar Board, which is an accounting agency. One could wish that it had more members with experience of the industry. If we had to have a Board we ought to have had a much more efficient one than the present Board. That is my opinion, after spending so long in the Standing Committee discussions on this subject less than two years ago. One does not wish to be a prophet of woe and say, "I told you so", but it is a sad thing that the consumer in this country is expected to pay more when we feel that he should not have to bear that burden. The amount of money needed to hold the price of sugar should come out of the annual tax. We should be subsidising this and have bulk purchase, and not expect the individual purchaser to pay 2d. a lb. more for sugar.
The present dilemma of the Government is that they wish to play the game by the overseas sugar producers, but their conduct towards the purchaser at home is most unsatisfactory. We hope that the Minister can tell us tonight why this sort of topsy-turvy and inexplicable situation prevails.

§ Mr. R. J. Mellish (Bermondsey)
I wish to support what has been said by my hon. Friend the Member for Rugby (Mr. J. Johnson). We do indeed live in a crazy world where the world price of sugar is falling but the price to the consumer in this country is going up. We are not sure by how much it will be increased and I think the Parliamentary Secretary was remiss in not answering my hon. Friend the Member for Sunderland, North (Mr. Willey) who asked whether the price was going up. That information would have helped us in our discussion. Perhaps the hon. Gentleman would care to say something now.

§ Mr. Godber
I wish to put this matter in the right perspective, and I think it will be more helpful if I say everything in one speech.

§ Mr. Mellish
The right hon. Gentleman sounds like "Father Christmas"—as though there were a great crowd waiting for him. But all we want to know is whether our understanding of what was said by the Minister of Agriculture, Fisheries and Food today is right or wrong. Will the price go up or down? The hon. Gentleman need only say "Yes" or "No" but apparently he prefers to wait until the great oration which he is to deliver at any minute now. We want to know whether the price will go up in the shops.

§ Mr. J. Johnson
Is not the Minister being a little harsh to his colleagues on the benches behind him? If he came clean on this matter it would save the time of the House in debate, we should get to bed earlier, and his hon. Friends would feel much happier that he had shortened the debate in this way.

§ Mr. Mellish
It would be very difficult to make Government supporters really happy in these days. They have had to go one by one to interview their Chief Whip for being absent last night and we shall have the Kelvingrove result declared about midnight. That is enough to make them feel miserable.

§ Mr. Denis Howell (Birmingham, All Saints)
Would not my hon. Friends agree that the most depressing feature for the Government supporters is that they still have the present Foreign Secretary?

§ Mr. James Stuart (Moray and Nairn)
On a point of order. Are we not discussing sugar?

§ Mr. Deputy-Speaker
Yes. Hon. Members should discuss sugar and not all these other things.

§ Mr. Mellish
If the right hon. Gentleman wants sugar, we shall soon get back to it. We were told that the increase in price would be very small, and the effect on the cost of living something about which we need not bother very much because it would not have much effect. We have often heard a similar argument from the Government when increases went on. We heard it in connection with the National Health Service Contributions Bill last week, when we were told that the increase was "only 6d.," that nobody would bother about 748 it, and anybody could pay 6d. It is, nevertheless, part of the inflationary spiral. We have yet to find a very good reason why we should put up the price of commodities like chocolates and sweets.
The ex-Secretary of State for Scotland said a moment ago that he wanted sugar. He is going to get it. On the Second Reading of the Sugar Bill, which created the corporation which is dealing with this matter—

§ Mr. Deputy-Speaker
The hon. Member may be out of order in a moment. He cannot discuss the Act.

§ Mr. Mellish
I was about to refer to a speech made by my hon. Friend the Member for Sunderland, North (Mr. Willey) on 10th November, 1955, when the Sugar Bill was having its Second Reading. My hon. Friend said: The price is determined by the Commonwealth Agreement. As he has explained, it is prohibited from handling the sugar unless the right hon. Gentleman so directs. My hon. Friend went on to say: As the right hon. Gentleman explained, it makes no difference to the internal market. As the White Paper says: 'The internal market for sugar in the United Kingdom forms a unified price system.'… and so it will remain if this Bill becomes an Act. That is why the right hon. Gentleman has had to seek price control powers under Clause 27. But, to avoid the subsidy, we have to have very complex and complicated administrative arrangements to make sure that we take back from the traders and refiners the difference of price between the price at which they sold the sugar, the world price determined under the Clause to which I have referred, and the Commonwealth price."—[OFFICIAL REPORT, 10th November, 1955; Vol. 545, c. 2035.] All this complicated structure brought in by the Measure which my party opposed and voted against on Second Reading has resulted in just the sort of situation envisaged by my hon. Friend. I am glad that the ex-Secretary of State for Scotland is still present because—

§ Mr. Godber
On a point of order, Mr. Deputy-Speaker. Last year, when we discussed a similar order, I had one or two good quotations I wanted to make from speeches of hon. Members opposite but I was ruled out of order, although the Order was similar to the one we are now discussing.

§ Mr. Deputy-Speaker
The rule is quite simple. We are dealing only with the Orders before us and to go back on to the history of the Act is going too far.

§ Mr. Mellish
I will, of course, bow to your Ruling, Mr. Deputy-Speaker, but we are praying against certain machinery which was brought into existence by this Government and against which we protested at the time. Some of the predictions made by my hon. Friends at that time are now being realised. I will quote a final statement made by my right hon. Friend the Member for Rochester and Chatham (Mr. Bottomley): We believe the Bill strengthens the position of the merchant without any advantage to the consumer. Indeed, the consumer will be worse off. This is a further step by the Government towards restoring liberty of action to the merchants."—[OFFICIAL REPORT, 10th November, 1955; Vol. 545, c. 2086.] My right hon. Friend went on to condemn that Bill. All those predictions of my hon. Friends have now come to pass. We do not know for certain how much this will cost, but I should have thought that at least one hon. Member opposite would have questioned his party. I suppose the chastening hon. Members opposite have had from the Chief Whip has put a damper on them, but now so many hon. Members opposite are no longer members of that party and they have full licence to criticise the Front Government Bench. If the original proposals of the Labour Party for the nationalisation of sugar had been achieved we would not be in this position. Tate and Lyle's and all they stand for have to be sustained. That is an indication of how right we were and how wrong were the Government.

§ The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber)
We have heard interesting comments from hon. Members opposite and I shall endeavour to deal with the points they have raised as briefly as I can. I thought the hon. Member for Rugby (Mr. J. Johnson) was a little ungracious to his hon. Friend the Member for Sunderland, North (Mr. Willey) when he spoke of the way in which he spent "many weary hours" with him in Committee. I have been spending many happy hours in Committee with the hon. Member recently. I 750 think that is a much kinder way of putting it.

§ Mr. J. Johnson
The hon. Gentleman must realise that because of the physical juxtaposition of seats in the Standing Committee upstairs I was facing the Government benches all the time.

§ Mr. Godber
I thought it was his hon. Friend whom the hon. Member was unhappy about. I shall not carry that further because I have no wish to embarrass hon. Members in any way.
I shall seek to deal with the interesting points put forward and shall certainly deal with the point raised in relation to the Answer given by my right hon. Friend this afternoon, but as I said in my intervention I should like to do that in the proper place in my speech. It is an important matter and should be put in its proper perspective.
The Order we are discussing is one of five rather complicated Orders which have to be considered together, but separate Orders are necessary as the exercise of what are in law quite separately delegated powers in a single instrument. I am advised would be open to legal objections. That is why we have this bunch of Orders before us.
The effect of the Orders taken collectively is that they bring to an end the distribution payment of ½d. per lb. which has been in force since 15th July last year and they introduce a surcharge equivalent to 1¼d. per lb. That is the point that my right hon. Friend was seeking to make this afternoon in reply to a Question, when he said that the maximum effect would be 1¾d. He did not say that there would be a further rise of 1¾d. He said that the maximum effect would be 1¾d. That is the way in which the situation must be seen in relation to the effect of the Orders.
It is also true that, during the preceding months, sugar had been at an artificially low price because the distribution payment was in force. While, therefore, the price may have been raised since the Orders came into effect, it was, in fact, below the price that it must have been otherwise before that period. Therefore, although the housewives are having to pay a little more now, they were gaining at that time.
I have been looking at prices and I notice that last year, when we discussed 751 this matter, the hon. Member for Sunderland, North was critical about the price that the housewife was then paying and he compared it with the price when the Labour Government were in office. During recent months, in fact, the price has been little higher than it was in 1951—the price for which the hon. Member last year took credit—in spite of the considerable increase in the cost of all trading transactions since 1951. One can, therefore, say that the position is much better now than it was this time twelve months ago.

§ Mr. Willey
The hon. Gentleman appears to be on a point of some importance—the question of how far the Government and the Sugar Board dictate policy. I conceded that there had been price reductions during the last twelve months. Now, however, the price is running up again and shortly it will be above what it was twelve months ago. These, surely, are matters of policy when we are trying to avoid increased costs of living. Is the Parliamentary Secretary saying that he is sorry but he cannot do anything about this and that the Sugar Board, when it pleases, against the market, can hold prices; and that now, at this critical moment, when the Prime Minister declares that he is desperately trying to hold prices stable, the Sugar Board upsets the apple cart by saying that it is putting up the price now because it made a mistake over the past twelve months? This upsets the present delicate equilibrium.

§ Mr. Godber
I propose to deal with the reasons why this has happened in this way, but I wanted first to bring the matter down to reality in relation to present prices. The hon. Member for Sunderland, North has just said that the price is going up and is likely to reach the levels of a year ago. There is no likelihood of that whatever. The prices of a year ago were considerably higher.

§ Mr. Willey
May I call the hon. Gentleman's attention to the prices given in the Grocer this week of 8½d. to 9d.?

§ Mr. Godber
The prices that the hon. Member is now quoting, of course, include the increases which already have taken effect with the surcharge reimposition. Certainly, no additional increase in price is anticipated, although as the 752 stocks work out some of the prices quoted are, presumably, those of new stock. Plenty of sugar is, however, being bought, I would say, below the price quoted by the hon. Member as stocks are being worked out. I imagine that the price quoted by the hon. Member is the peak price—

§ Mr. J. Johnson
Will the hon. Gentleman give way?

§ Mr. Godber
I have given way on several occasions.

§ Mr. Johnson
This is important. Forgetting all the technical terms in the Orders, will the hon. Gentleman explain in simple language, so that the housewife can understand, why at this moment, when the price of sugar in world markets is falling, we are faced, in the hon. Gentleman's own words, with a possible 1¾d. per lb. increase in the price?

§ Mr. Godber
It is not an increase of 1¾d. per lb. over the prices that the hon. Member for Sunderland, North has just quoted. I am saying that it is a possible 1¾d. increase over the price operating before the surcharge was imposed.

§ Mr. Godber
I should be glad if the hon. Member would be patient for a moment, because I want to put the matter in proper perspective.
The policy about which I have been talking, and of which these Orders are an instance, is embodied in the Sugar Act. Briefly, the objects were to bring to an end State trading in sugar and to give the sugar and sugar-using trades the greatest possible freedom compatible with the discharge of the Government's obligations under the Commonwealth Sugar Agreement and the agricultural guarantees. That, of course, is where we part company with the hon. Member for Rugby.
That policy has now been in force for about fifteen months and has, as I hope to show, proved both practical and beneficial over the whole field. The arrangements set up under the Act are certainly practical because the Sugar Board has from the outset successfully carried out, in a manner which has earned the cooperation and respect of the sugar trade, the considerable task of buying about 1½ million tons of Commonwealth sugar each year at the negotiated price and selling it at the world market price. This 753 is the means by which the price guarantees to Commonwealth producers are implemented, and the profit or loss on these and corresponding transactions on home-produced sugar is the major factor in determining whether there shall be a surcharge or a distribution payment, and at what rate, since the Board must balance its accounts taking one year with another.
I was asked a number of questions about the Board's accounts. I should point out that, in fact, owing to the exceptional conditions of the first year of operation of the Board, my right hon. Friend made an Order on 24th July last year in accordance with Section 35 (3) of the Sugar Act which extended the term of the Board's first financial year to 30th June, 1958. The Board's first Report and Audited Accounts will accordingly be presented as soon as possible after that date, but I am not yet in the position to give the precise date. That deals with the point about the publication of accounts.
Although the first of the Board's operations coincided with quite exceptional movements in the world market price, from well below the guaranteed price to well above it and back again, this has not prevented the smooth movement of supplies, and the necessary moves from surcharge to distribution payment and back again have been made in good order. Arrangements made under the Act have thus proved capable, although exceptionally difficult trading conditions were encountered at the outset, of achieving their main purpose of allowing the sugar market to function freely whilst fulfilling the price guarantees to home and Commonwealth sugar producers.
The Government's policy has also proved right from the point of view of the consumer, the trade, and the Government and the economy generally. The freeing of the sugar market has undoubtedly benefited the consumer. Consumption increased slightly in 1957 to about 2,620,000 tons, and supplies under free trading have amply covered steadily rising consumption and changes in stock levels, despite the temporary and exceptional shortage of world supplies in the first half of 1957.
Of course, it was those shortages in world supplies which really caused the undoubted difficulties last year, not only 754 in this country but throughout the world, in relation to sugar, and caused us to go from surcharge to distribution payment, which was something that had not been envisaged by anyone as being the least likely at the time the Sugar Act was passed. It was an acute shortage and it was due not so much, I think, as the hon. Member for Sunderland, North said this evening, to increased consumption, but due, as I said on the last Prayer we had on the subject, to world climatic conditions. I said we had had difficulty with the sugar crop in Europe and Cuba, and the crop generally had been affected by drought. Those were the real reasons for the shortage.
Turning from supplies to prices, the consumer is still, despite inflation, despite an increase in the guaranteed price of both home-produced and Commonwealth sugar, and after making full allowance for the effect of the amount of the recent surcharge, paying no more, indeed rather less, for sugar than before the present Act came into operation on 1st January, 1957.
The last retail price quoted by the Grocer on 8th March, 1958, was from 1s. 3½d. to 1s. 5½d. per 2 lb. packet granulated, as against a firm quotation of 1s. 5½d. at the end of 1956. So that the price is marginally lower at present. It is true that the retail price rose above 1s. 5½d. in 1957. That was for the special reasons which I have explained. World prices have now fallen back to about their earlier level.
I was asked particularly about the level of world prices. The free world price at the present time, I am told, is about £30 15s. a ton c.i.f. London, or, to quote it in the manner in which it is normally quoted, 3.40 cents per lb. f.a.s. Cuba. The Commonwealth price about which I was asked is somewhat higher than that. The present price is £43 16s. 8d. a ton which is an increase over last year of about 33s. 4d. As I say, world prices have fallen back to the levels at which they stood steadily for three or four years up till last year.
The present arrangements ensure that, because the domestic price reflects the world price, plus or minus the surcharge or distribution payment, which broadly represents the difference between the market price and the guaranteed prices, 755 the consumer pays on average over a period the true cost of the sugar consumed, Undoubtedly there is a delayed effect in the operation of the Sugar Act, and that is a point that is worrying hon. Members opposite, in that it takes time to change from one to another, from surcharge to distribution payment and back again; but in fact, the housewife gets the benefit, either before or after. At present she will have to pay more because she was getting it at an artificially cheaper price previously. That is one of the difficulties in the present situation particularly when a change has to be made from the distribution payment to surcharge.
I mentioned a few moments ago that when we first passed this Act it was not thought that the distribution payment would be material at all.

§ Mr. J. Johnson
Is the hon. Gentleman saying that the price will be going up by 1¼d or perhaps 1½d, or even 1¾d. a lb.? Is he saying that, within a few months, we shall be over the hump and we may be paying 1s. 6d. or 1s. 7d.? Is that the argument?

§ Mr. Godber
I am not going to commit myself to future prices because they depend entirely on world prices. All I am saying is that where the Sugar Board has to operate in this way it has to take account of the world price. It is buying Commonwealth and home-produced sugar. It is averaging those prices out because it has got to pay the subsidy to the Commonwealth and home producers and it has to put that charge on top of the world price in order to arrive at the price which the housewife pays. It is a complicated system, but that is how it works out. It is related directly to the world price.

§ Mr. Mellish
I never realised when I put a spoonful of sugar into a cup of tea how much complication was involved in arriving at the price.

§ Mr. Godber
I hope the hon. Member gets added sweetness from it, now that he knows the explanation. I admit that these arrangements are complicated, but I am trying to explain them to the House.
These arrangements have achieved the other objectives in the White Paper on Future Arrangements for the Marketing 756 of Sugar and embodied in the Sugar Act. Because the consumer pays on average the true cost of the sugar consumed, no burden of subsidy falls on the Exchequer. Neither can the Exchequer make a profit out of the consumer via State trading. The sugar and sugar-using industries have been given the maximum freedom compatible with the Government's guarantee obligations, and useful hedging facilities of the London terminal market have been re-established. We should not minimise that fact, because it has a useful effect and its attracts a certain amount of trade to this country.
From the dockside in the exporting countries and the sugar beet fields at home, to the retail grocery or confectionery shop, our sugar supplies are now handled by sugar experts—and that, I think, takes up the point made by the hon. Member for Sunderland, North, though, as he says, the Board is the accountant—

§ Mr. Willey
Does the hon. Gentleman intend to say something about the financial position of the Board? I ask, because I should like to know that, if it is the accountant, its steps are purely accountancy steps. As I have said, there is some suspicion that there may have been political motives in holding the price too long, and so on. Will he assure us that the Board was in a position, financially, to continue the distribution payment for the length of time it did?

§ Mr. Godber
It was done on financial grounds. I can assure the hon. Gentleman that it certainly was not on political grounds. It is purely an accountancy matter.
In addition, there is the consideration that the Board has to pay tax on any profits, and so would, naturally, not wish to show a profit. If it did, then, clearly, the housewife would suffer from the tax paid on the profit. It is rather an odd situation, I agree, but that is the ruling. For that reason the Board has particularly not wished to show a profit. I cannot give figures for the Board's accounts, but when they are published the hon. Gentleman will, obviously, have the opportunity of seeing them. The Board dealt with that matter solely on that basis.
The sugar is in the hands of experts, who understand their subject and who are exercising commercial judgment, and 757 that, in my view and that of my hon. Friends, is certainly better than having a Government Department trading in sugar. A Government Department, or its political heads, might have an eye on politics in taking their decisions. There can be no doubt which is the more efficient of these two methods of getting our sugar, particularly where, as in this case, there are effective safeguards against excessive profits. The Sugar Board takes, and passes to the consumer, any margin between the world price and the guaranteed prices, which cover between 85 and 90 per cent. of our supplies.
The margin allowed to refiners to cover the cost of conversion from raw to refined sugar is controlled, as the hon. Member for Sunderland, North well knows, by an undertaking given by Tate & Lyle to the Chancellor of the Exchequer in 1956, and the results of the operation of the undertaking are verified by a professional firm of accountants and auditors. Periodic reviews of the operation will be made, to ensure that that undertaking has not ceased to be satisfactory to the Government, or has proved onerous to the refiners. There is no indication, so far, that the undertaking has failed to protect the consumer, or has been unduly generous to refiners. The margin for the distribution from refinery to the retail sale is limited by competition, and there are no signs that the housewife, or the commercial user, is being overcharged.
For these reasons, I must ask the House to resist these Prayers, because, obviously, if the Orders were not passed it would make chaos of the whole operation of this somewhat elaborate arrangement. I have tried to explain its elaborateness to hon. Members. It is one of the most complicated things with which, I think, any of us have had to deal, but it is functioning—and it is functioning well. It has, as I have said, a somewhat delayed effect, but it does ensure that the housewife gets the sugar at the price it costs to produce, having in mind that we are not paying a subsidy through the taxpayer; and that the housewife herself is paying the full cost of the sugar.
She is paying, and she has to pay for it in one way if not in another—either she or her husband. The hon. Member for Rugby said that it was, of course, 758 very right and proper that we should support the Commonwealth in this field. If we are to do that, the sugar has to be paid for in some way, and we think that this averaging of prices is the best and most effective way of doing that—

§ Mr. J. Johnson
Does not the Parliamentary Secretary think that Income Tax is the fairest, by any yardstick, of all forms of taxation? Is it not fairer to have Income Tax providing the bulk of the moneys to support the nation, so to speak, rather than to take the money from the housewife, who may have to look after a large family on a low income? Is not public taxation of that kind better?

§ Mr. Godber
If we were to enter into a dissertation on the relative merits or demerits of Income Tax, we should be here for a very long time. I do not accept that it is unreasonable that the payments should be made in this way. I have pointed out that, after all, the present price is very little different from what it was before the Sugar Act came into force. It seems to have been done efficiently, effectively and economically. Indeed, I was not aware that hon. Gentlemen opposite were now in favour of general consumer food subsidies, after the announcement by the right hon. Gentleman the Leader of the Opposition on television a little while ago. I am rather surprised that the hon. Member for Rugby should take that point.
I have tried to explain the particular position in relation to these Orders and I hope that, with the information I have given, the hon. Member for Sunderland, North may feel inclined to withdraw his Prayer.

§ Mr. Denis Howell (Birmingham, All Saints)
One thing is crystal-clear from the speech we have heard and from the mass of complexities of this matter, and that is the housewives of the country are to pay more for their sugar.

§ Mr. Godber
If the hon. Gentleman will forgive my interruption, I feel that I must reject that at once.

§ Mr. Mellish
Why did not the hon. Gentleman reject it earlier?

§ Mr. Godber
I tried to explain it at an earlier stage, and I said that, in fact, the maximum effect which may happen is the 1¾d., but that is not an increase on 759 today's price; that was an increase on the price which was quoted before the surcharge came into being. It has already come into effect, and it is quite wrong now to mislead the housewife by saying that the price will increase.

§ Mr. Willey
May I mention by way of an aside that there are concerns which have not yet increased their price of sugar? They have held the price. Those concerns are going to increase their price by 1¾d.

§ Mr. Godber
Yes; but the hon. Gentleman himself quoted a current price of 8d. per pound, and I was concerned that a report did not go out from the House that there was an intention to have an additional increase over that.

§ Mr. Howell
I return to the point I made, which is a very substantial one, that many housewives will now have to pay more for their sugar, and those who are not now to be asked to pay an increased price are, in fact, already paying more than the world price of sugar justifies today. In other words, the housewives are at the wrong end of the stick, whatever happens.
The Minister told us—taking a good deal of time about it—that the housewife ought to be jolly pleased that she has to pay only 1¾d. extra because, for a long time, she has had the benefit of ½d distribution payment. This is "Alice in Wonderland" economics and political dialectic. One can imagine what would have happened in the halcyon days of the Housewives' League, if a Labour Government had propounded such theories. Those of us who were connected with politics in those days remember the ¼d. on bacon which was enough to induce thousands of fur-coated housewives to come to the Lobbies of the House and complain about the failure of the Government to hold the cost of living stable.
This touches on the fundamental plea we have had from the Government and from the Prime Minister, about holding the cost of living steady. We are entitled to ask the Minister and the Government how the effect of what they are putting to the House tonight comes into line with the Prime Minister's famous plateau, for instance. What about his further injunction to industrialists that, where world commodity prices are fall- 760 ing, the fall should be allowed to pass through to the consumer? Here is a first-class example of an occasion when the Government themselves are in a position to regulate the price of sugar to the housewife, at a time when commodity prices are falling, yet they are completely unable to do so.

§ Mr. Godber
Let us get this straight. The price the housewife is paying today and will be paying tomorrow is lower than that which she was paying this time last year. That is very relevant.

§ Mr. Howell
That is a very relevant factor in the argument I am making, which is that in the island economy of this nation, based as it is on importing large amounts of raw materials and foodstuffs, when the world prices of those raw materials and foodstuffs are substantially falling, the value of the fall is not being passed on to the consumers in this country. I think that that is a perfectly valid point to make.
What the hon. Gentleman has just said may be true, that the price is fractionally lower—"fractionally" was the word which, I think, he used in his original reply—today than last year; but he cannot escape from the main fact, that if it were related to the actual price in the world, in the way the Prime Minister has persistently asked manufacturers and traders in this country to relate their prices to world prices, the housewife would be getting the advantages of a stabilised economy and paying far less than she has been so far.
I certainly think we are entitled to express our disgust at the position at this time, when the trade union movement is being asked to refrain from seeking wage increases, when we have the Cohen Committee set up and propounding the theory that even where production is increased wages ought not to follow suit, and even that there might be a need for an even greater degree of unemployment than we have at the moment, and when there is this organised and co-ordinated attack on the organised workers of this country. Sugar is one of our basic food commodities, which affects so many things, confectionery and other foodstuffs. It is a very serious matter indeed and one about which we ought to protest most vigorously.
Of course, there is another side to the question, and it was set out by my hon. 761 Friend the Member for Rugby (Mr. J. Johnson), and we subscribe to it. That is the need to bulk buy sugar to preserve the economy of the Commonwealth. It may be thought by some hon. Members opposite that we on this side are in a dilemma because we are arguing, on the one hand, that the housewife should get the benefit of a drop in the world price of sugar, and, on the other, that the Commonwealth should be sustained against these fluctuations in prices. I am glad to see the hon. Member for Stafford and Stone (Mr. H. Fraser) thinks this is a contradiction. It is a contradiction in the terms of capitalist economies; it is a contradiction in the terms of the economics of the Conservative Party. It is thought we cannot have it both ways.

§ Mr. Hugh Fraser (Stafford and Stone)
Will the hon. Gentleman inform me which market dominates the world price?

§ Mr. Howell
The Cuban market, of course.
Our argument is for the bulk purchase of sugar. The hon. Member leads me on—

§ Mr. Speaker
I think the hon. Member is now traversing the provisions of the Act, which are not in issue on these Prayers—the provisions of an Act of Parliament to which the House has agreed.

§ Mr. Howell
I was only following the line the Minister himself followed, Mr. Speaker, and if he was out of order I suppose I am out of order. Without wishing to go out of order, I would say that the lack of a bulk purchase policy in the West Indies is having serious social consequences and the hon. Member ought to realise the seriousness of the position. It is because the West Indian producers have no confidence in the Sugar Board and the Orders that we are debating that thousands and thousands of West Indians are coming into this country and creating other social anomalies.
To follow up that argument would he out of order.

§ Mr. H. Fraser
A stupid argument.

§ Mr. Howell
The hon. Member for Stafford and Stone (Mr. H. Fraser) says that it is a stupid argument, but it is not. If he represented a city such as Birmingham, which has to take thousands and 762 thousands of these immigrants, he would not call it a stupid argument.

§ Mr. Speaker
This argument is wide of the Orders.

§ Mr. Howell
I am sorry, Mr. Speaker. I am allowing the hon. Member for Stafford and Stone to lead me on. I shall leave that matter there.
It is extremely important to make the point that the way to deal with this problem is by way of bulk purchases and guaranteed prices, and the complete nationalisation of the industry. The Minister—

§ Mr. Speaker
Order. I do not think that these slender Orders will support the weight of the hon. Member's argument.

§ Mr. Howell
I was about to draw your attention to the Minister's comment about the function of Tate and Lyle in the sugar industry, Mr. Speaker. He made that comment while you were in the Chair. This is a political matter. The difference between us is that the, Conservative Party has taken political action in this matter at the behest of Mr. Cube, of Tate and Lyle, with grave economic consequences to the domestic consumer, whereas we say that this private monopoly of Tate and Lyle should be taken over completely by the State. We can then have the best of both worlds.

§ Mr. Speaker
That issue is not before us. The hon. Member must not persist in arguing it.

§ Mr. Howell
I submit that it is a very important and material factor in the question why the British housewife is being asked to pay 1¾d. more than she need for her sugar today.

§ Mr. George Jeger (Goole)
I apologise to you and to the House, Mr. Speaker, for arriving late in this debate. I shall curtail my remarks on the question, although there are five Orders, which could lead to an elaboration of arguments on the subject. I have listened with great interest to the views of the Parliamentary Secretary and to the wistful way in which he said that this matter is in the hands of the experts. How pleased he must be that it is in the hands of the experts, because nothing but chaos—and that was a favourite word of his—could arise from the explanation that he attempted to give 763 of the reason for the increase of 1¾d. a lb. in the price of sugar.
I took part in the original debates and discussions on the Sugar Bill two years ago. I happened to come across a newspaper extract a few days ago referring to a pledge given by the hon. Member's predecessor that the sugar barons would not put up the price. That was the pledge given by the Joint Parliamentary Secretary on 27th November, 1956, in the Third Reading debate. It appears that since then there have been changes in the Ministry; changes in policy, and changes in the arguments presented to the House and the country about the effect of the Measure.
The attempted explanation by the Parliamentary Secretary did nothing to satisfy us on that score. If the hon. Member will refer to the Second Reading debate he will see that a similar pledge was then given, in quite definite terms, on 10th November. 1955. The Joint Parliamentary Secretary then said: It is rather important not to have a wrong impression on this point. Nothing in the Bill or in the surcharge will increase the cost to the consumer. He went on: We should not get the idea that this surcharge will increase the price of sugar to the consumer."—[OFFICIAL REPORT, 10th November, 1955; Vol. 545, c. 2060.] What we are debating, and what hon. Members on these benches object to, is the action of the new Parliamentary Secretary and the new Minister of Agriculture, Fisheries and Food which will result in an increase in the price of sugar by 1¾d. per lb.
It is true that the information was dragged out of the Minister at Question Time today by me. The right hon. Gentleman was reluctant to give that information and I had to appeal to you, Mr. Speaker, to allow him to give that information to the House; because for reasons best known to himself he was attempting to conceal it or hold it back so that we could not make use of it in this debate.
Despite the protestations of the Parliamentary Secretary, there is not the slightest doubt that the 1¾d. is to be borne by the ordinary consumer. We protest against that, not only because it will be an added burden to the housewife, but because it shows again that the pledges 764 of this Government can be broken. While they can change their Parliamentary Secretaries and Ministers, they do not change their habit of breaking promises. The promise given to the consumers when the Act was introduced just over two years ago has been broken. The attempt by the Parliamentary Secretary to dress up this broken promise in many obscure words will not carry much weight at the ensuing by-elections.

§ Mr. Godber
If I may, by the leave of the House, I wish to reply to the wholly unwarranted attack on my right hon. Friend by the hon. Member for Goole (Mr. G. Jeger). My right hon. Friend had no intention of misleading the House or withholding information. He thought it was out of order to give information which would be given later in the day in debate. That was the sole reason why he did not give it then, and I am deeply distressed at the imputations of the hon. Member.

§ Mr. G. Jeger
Has not the hon. Member seen the text of the Question on the Order Paper: To ask the Minister of Agriculture, Fisheries and Food, whether he will make a statement on the proposed increase in the price of sugar. The right hon. Gentleman made a statement in obscure language without referring in terms to the increase and refused to give the figures until he was pressed to do so. If that was not deliberate—

§ Mr. Speaker
Order. I hope that this debate on what is normally a sweet subject will not be soured by these acerbities.

§ Mr. Godber
I am sorry, but I must protest against what the hon. Gentleman has said. I repeat my protest because in fact the Question he has just quoted was on a proposed increase, whereas the increase had already taken place. There is no further proposed increase. The hon. Member has again said that the housewife will have to pay an additional increase of 1¾d. I dealt with that at considerable length earlier on. I hope the hon. Member does not wish deliberately to misrepresent what I said, but certainly his speech has given me that impression. The price has not risen. In fact the price today is almost identical and, if anything, cheaper than when the pledge was given. So I say that the hon. Member is entirely wrong.

§ Mr. Willey
I have tried to bring a little sweetness into the debate, but I regret that I cannot accept what the Parliamentary Secretary has just said. The hon. Gentleman concluded his first speech with an appeal to me. He came to a rather amazing assumption, that if there was a Division, it was an odds-on chance that we should win. He thought that we should succeed and he said that if we did, we should get chaos out of chaos. Perhaps we prefer the chaos that we have, rather than that which we do not know.
I would agree that we are in some difficulties here. The Sugar Board has to decide these things. I was disturbed by the hon. Gentleman's reference to Cuban prices, because it looks as if they are lifting again, and that is just what we would expect if the Sugar Board had taken this action. We have had a debate which will be helpful, and an explanation from the Parliamentary Secretary of some of the points we raised. In the circumstances we should allow the Sugar Board to proceed with the steps it intends to take. We in the House have taken the steps that we also should properly take: we have publicly called attention to the action which the Board has taken, and expressed our views.
On those grounds, I beg to ask leave to withdraw the Motion.