HC Deb 10 February 1959 vol 599 cc1129-42

10.1 p.m.

Mr. Frederick Willey (Sunderland, North)

I beg to move, That an humble Address be presented to Her Majesty, praying that the Sugar and Molasses (Rates of Surcharge and Surcharge Repayments) Order, 1959 (S.I., 1959, No. 72), dated 17th January, 1959, a copy of which was laid before this House on 21st January, be annulled. It will probably meet the convenience of the House, Sir, if we take this and the following Prayer together, namely, That an humble Address be presented to Her Majesty, praying that the Composite Sugar Products (Surcharge—Average Rates) Order, 1959 (S.I., 1959, No. 73), dated 15th January, 1959, a copy of which was laid before this House on 21st January, be annulled. Then, if necessary, we can divide on them separately.

The purpose of this Order is to increase to the extent of about a halfpenny a pound the surcharge on refined sugar. The reason for the Order should now be well appreciated by the House as it is similar to previous Orders we have discussed, namely, that the Sugar Board is under an obligation to sell at world prices the 1½ million tons of Commonwealth sugar which they purchased at the price agreed under the Commonwealth Sugar Agreement. The Board is obliged to recover the loss by way of surcharge. I would remind the House that there is already a surcharge of 1¼d. and that this is adding to the existing surcharge a further ½d.

When we last discussed a similar Order we were in some difficulty because we had not received the Annual Report of the Board. We now have it, and I will take this occasion to compliment the Board on producing a clear and concise Report. I want to make it clear again that we are not criticising the Commonwealth Agreement, and I am sure that the Joint Parliamentary Secretary will not wish to do so. Our criticism of the arrangements which make necessary Orders such as these is that they lead to some misapprehensions about the Agreement. It is unfortunate that such Orders should tend to prejudice the Agreement. That is why I have thought it fit to make it clear that there is no wish to criticise the Commonwealth Sugar Agreement in raising issues affecting the present Order.

We believe that the burden is on the Government to demonstrate to the House that this Order is unavoidable because we know that the result of it invariably tends to be an increase in the retail price of sugar which, I am sure, the hon. Gentleman will concede at once is an important item in the family budget. This Order affects not only sugar but, indirectly, confectionery prices. The increase in the cost of food is now pressing hard on the cost of living. Indeed, the cost of food has gone up a point in the past month, and I presume it is going up at present. So we have to take every step we can to prevent increasing food prices forcing an increase in the cost of living.

It is a fact, and it has been proved by the Orders we have had, that the procedure of which this Order is a part has followed a high price policy. We warned the Government about this in the discussions we had on the Bill.

It is unfortunate, owing to this method of relying on surcharge, that the trade automatically follows the easiest course of increasing the retail price. What is the present stock position? It is strange that the increase in surcharge is invariably immediately followed by an increase in the retail price of sugar in the shops. We cannot avoid the conclusion that the temptation to make profits out of stocks is not resisted.

To show the effect of the order on retail prices, I call in aid the Grocer. I know that if I refer to the Grocer the Parliamentary Secretary will quote some other publication. Nowadays, he generally refers to some mysterious market research which he undertakes, but he was good enough when we debated a similar Order about twelve months ago to mention the Grocer. The Grocer shows quite clearly that the effect of the Order has been a halfpenny increase in the retail price. Granulated loose, granulated packed in 1 lb. packets or in 2 lb. packets, whichever is the choice, the effect of the Order has been reflected in a price increase.

I remind hon. Members opposite that that compares very unfavourably with the 6d. a lb. which was the retail price of sugar in the time of the Labour Government. The remarkable thing is that the world price of sugar was then 5.28 cents and the housewife was able to buy it at 6d. a lb., while it is now 3.40 cents but the housewife has to pay between 9d. and 10d. a lb. That is very difficult to explain. It is difficult to explain why we should pay an increase in the retail price when the world price has sharply fallen over twelve months and is now about half what it was a year ago.

We are dealing with the equalisation of prices, the world price, the home-produced price, and the Commonwealth price. We are considering the impact of the increase in the Commonwealth price on the general price level. Trade figures show that imports over the past twelve months have fallen by 6 per cent. and that the cost of imported sugar has fallen by 36 per cent. However, in spite of that, the poor housewife has to pay halfpenny a lb. more. That is something which is extraordinarily difficult to explain.

It is for that reason that we regret having to agree to an Order like this without having the safeguards for the consumer which we implored the Government to accept when we discussed the Sugar Act. However, there is one measure which places a direct obligation on the Government because—and hon. Members opposite who talk about abandoning controls may be surprised to hear this—the Government recently imposed drastic controls on the Sugar Board. The Government have powers to control the margins of the refiners. The Parliamentary Secretary knows as well as I do that the Government have reached an understanding with Messrs. Tate and Lyle. Has he made inquiries to satisfy himself that the margins are properly controlled, since the House ought not to accept the Order without being so satisfied?

I appreciate very much the difficulties arising under this Order. I have given the general position in regard to sugar which is at present being imported into this country. I realise that the Parliamentary Secretary cannot tell us tonight, as he did on a previous occasion, that the consumption of sugar is rising. He said then that we had a very good Government and that we were consuming more sugar, but we are now eating substantially less. I do not know whether or not that has contributed to the fall in the Gallup Poll, but certainly it is something which one would have expected would have led to some fall in the price of sugar. What we regret is that the housewife and the domestic consumer in this country seems to be precluded by the formula set up by the Government from having any advantage of price falls which have taken place in the world.

If we look forward, one of the arguments for the Order is that we can anticipate further falls in the world price of sugar, but here the world price falls and the housewife must pay more. It is for the Parliamentary Secretary to explain that. I have a reservation to put to the Parliamentary Secretary about this. I think this is probably as mistaken as the supply of arms to Batista. This decision was obviously taken when the British Government were expecting President Batista to remain in power for a very long time, no doubt because of the British arms he was receiving. That has not happened, and we have now got a new President—Castro. I should have thought that this might very well have changed the outlook for sugar. I should have thought that we have got to recognise that it might well be the policy of the Cubans now to take more vigorous action to try to hold the world price, but this is the unfortunate circumstance which happens under the present arrangements.

I am not going to criticise the Sugar Board on the present occasion. I have criticised it on previous occasions with every justification, but I concede, now that we have had the Act in operation for some time, that the Sugar Board is precluded from exercising a commercial judgment. It would be unfair to criticise the Board for showing a lack of commercial judgment.

The fact is that we get this forward view, this estimate of the likelihood of a further fall in the world price just at the moment when we probably ought to revise our estimate about this. In saying that, I criticise the Government. We have to realise that the Parliamentary Secretary disturbed the House the last time we discussed sugar, when he talked about the level of prices having been held at an artificially low level. He will remember that I interjected to say that it was very disturbing to feel that political considerations had been used to affect the price of sugar. If that be so, I think we can ask for some political guidance at the moment. If we cannot get a commercial discretion from the Board, because of the way it is set up, I should like the Government to exercise some guidance and to say why the estimates and forward view which was taken about sugar prices was so different from what they were at the time of this Order. The Government have the responsibility, if necessary, to intervene and hold the price of sugar. It is very disturbing that we have a Government responsible in part for failing to hold food prices, which are pressing on the cost of living, and now we have got sugar.

I should have thought that if the Parliamentary Secretary could say twelve months ago that the Government took action to hold sugar prices at an artificially low level the surcharge here is larger than it otherwise may have been. He is under an obligation now, when we are finding things rather difficult in holding the cost of living, because of the pressure of some food prices, to say that it would be advantageous to hold sugar prices. I realise that a good deal of the criticism which I have made of this Order is unavoidable because of the Sugar Act which was brought in by the Government despite our protests. It is regrettable and no real consolation to be able to say that we told the Government that this would be the effect of the arrangements which they introduced then.

I asked the Parliamentary Secretary to justify the necessity for the Order. We recognise that the Board is little more than an accounting body. If the calculating machines produce a particular figure, the Board has to act accordingly. But I think the Parliamentary Secretary should satisfy us that the Board has no alternative. The hon. Gentleman has to discharge the responsibility of showing that he is in earnest about holding the cost of living.

10.15 p.m.

Mr. James Johnson (Rugby)

I beg to second the Motion.

Twelve months ago we had a similar discussion—I will not say pantomime. My hon. Friend the Member for Sunderland, North (Mr. Willey) made the same kind of thoughtful protest and advanced cogent arguments to which the Minister made an unsatisfactory reply. I do not propose to argue the merits or demerits of this Order, but I wish to comment on sugar prices. [Interruption.] The question is an exceedingly complex one and it is difficult to discuss it if I hear mutterings and "Exeter bellowings" from the benches opposite.

This matter was discussed in the Standing Committee which dealt with the Sugar Bill, as it then was. Hon. Members on this side of the House were opposed to the Sugar Board and considered the Act a bad piece of legislation. But the Minister must implement the provisions of that Act and tonight he is responsible for explaining how, when in Cuba and from other parts of the world we are buying sugar at less than the price twelve months ago, we should be paying more in the shops in this country. He has to explain why my wife and the wives of other hon. Members must pay more when they buy sugar.

In the Standing Committee an attempt was made by hon. Members on this side of the House to insert provisions into the legislation to safeguard the consumer, but we did not succeed. When we debated this matter last year we had not the benefit of the Report from the Sugar Board and we had no facts and figures to guide us. Even then, we were not satisfied with the explanation of the Minister. On this occasion, and now that we are less in the dark, we hope that the Minister will be able to tell us something satisfactory. We need the fullest information which we did not succeed in obtaining a year ago, when we said that it was a topsy-turvy situation with a topsy-turvy Government buying cheap sugar which costs more now in the shops.

Our Colonial Territories are selling sugar to us much more cheaply and are being impoverished. We are buying cheap and the gap between the less developed territories of the world and the better-off people, particularly in Western Europe and North America, is widening. I cannot see how any Government worth their salt can fail to attempt in some way to pay more for sugar and by some means other than the present proposals to hold the price of sugar in our shops.

The new President of Cuba, President Castro, has been referred to, but we cannot blame him for this—we cannot even blame Errol Flynn. I should like the Minister to tell us what we are paying in the world markets when we buy sugar in tens of millions of tons. In Mauritius, we may pay £2 10s. or £4 a ton for 1½ million tons of sugar. But we buy in other places, including Fiji and Barbados. I am almost sure that prices are falling and I should like the Minister to state what methods are employed by this stilted and artificial mechanism of the Sugar Board if the world price falls by 1d. or even ¼d., or if it goes up by a 1d. or ¼d. Is it a fact that we have the dearest sugar in Europe? I hope that the Minister will tell us.

If the Government wish to maintain their stature and standing in the public esteem they will have to "come much cleaner." They must explain to the women in the shops how and why they are paying more to fill their shopping baskets. I emphasise that in no way do the Opposition attack the Commonwealth Sugar Agreement. We stand foursquare by it. We are attacking not the way in which the Government are buying their sugar, but this curious Commonwealth mechanism called the Commonwealth Sugar Board. We want to know how it is that the Government are buying sugar more cheaply year by year while my wife and other women are paying more for sugar in the shops. It is the most comical and foolish set-up imaginable.

It is a good thing to stabilise buying conditions over the years, but we are not even doing that in some cases. We are buying more cheaply but we are charging more for sugar here. It is a very queer set-up. We spent 40 hours in Committee, two years ago, discussing the whole business, but we still need to have the whole matter explained to us. The cost of living is going up. The Minister will have to explain to us, the watchdogs of the public, exactly why this has happened. I hope that he will do that.

10.22 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber)

I have listened with interest to the comments of the hon. Member for Sunderland, North (Mr. Willey) and the hon. Member for Rugby (Mr. J. Johnson). I will try to deal with the points they have raised.

I was very glad that at the outset of his remarks the hon. Member for Sunderland, North made it abundantly clear that he was not saying anything against the Commonwealth Sugar Agreement. His hon. Friend supported him in that. I will take up first the points raised by the hon. Member for Rugby. He seemed to have some misapprehensions about the operation of the arrangement. I am not saying that in any critical way, because the matter is extremely involved.

The hon. Member said that we were buying cheaply from the least developed places for the benefit of those who were better off. I think that he was a little wrong there. I know the concern the hon. Gentleman has for the underdeveloped countries and I understand his views on that subject, but I can assure him that we are doing exactly the opposite. We are guaranteeing and maintaining the standard of the sugar producers in the Commonwealth. That is the purpose of the Commonwealth Sugar Agreement. We are not buying more cheaply from them.

The hon. Gentleman asked about the price. Last year, I said that we were paying from £43 16s. 8d. per ton under the Commonwealth Sugar Agreement, Since then, in the code on which this is worked, we have agreed, as from 1st January this year, to increase that by another £1 5s. 4d., which represents an increased cost over the period. So, in fact, we are paying through the Sugar Agreement a higher price than we were paying last year. Most of the benefits of the increase will go to producers in the Commonwealth countries, but there are arrangements in relation to our home producers, too.

I am sure that the hon. Gentleman will be happy to have that reassurance that the intention of the Commonwealth Sugar Agreement has been fully carried out and that this country's interest are being fully safeguarded. That is the purpose and the basis of all we are doing today. It is true that the world price has fallen, but we are protecting the producers from the effects of that fall. That is the exact reason why this increase in surcharge is being brought about. Since we debated this matter a year ago the world price has fallen by a considerable amount. The result has been that over the last twelve months the retail price has gradually dropped.

Although he studies the Grocer, the hon. Member for Sunderland, North failed to make that point. I have the prices given in the Grocer during the whole of 1958 and up-to-date in 1959 before me and I notice how judiciously the hon. Member picked his prices. I do not blame him for that. It is a perfectly fair debating practice, but he will see that there was a gradual drop, representing about ld. on a 2-lb. packet, from the last surcharge to the present change.

Mr. Willey

Will the hon. Gentleman make a very simple comparison of the price he quoted in the House when we last debated sugar and the price quoted in the Grocer now? He will see that it is ½d more.

Mr. Godber

I am just coming to that; the hon. Member is too anxious. The price I quoted then was Is. 3½d. to 1s. 5½d. per 2-1b. packet. The price for similar grades of sugar on 9th February was 1s. 3d. to 1s. 6d., so the gap has widened between the minimum and maximum in that twelve months. If one takes the bottom range it is ½d. per 2 lb. cheaper and if one takes the top range it is ½d. per 2 lb. dearer and the average is exactly the same.

Mr. Willey

Will the hon. Gentleman agree that 1s. 6d. is the price to which it has gone up? Will he look at the three figures I gave for granulated loose, which showed a clear increase of ½d. to 1d.? He will see that the relevant price in any case is 1s. 6d. because 1s. 3½d. is charged in shops which are still charging the old price. If he looks at the three figures the hon. Gentleman will see that it has gone up by Id. on the amount of the surcharge.

Mr. Godber

We must get this right. I am quoting exactly comparable figures, as the hon. Member asked me, to those I quoted last year. Therefore, I am sticking to the simple bracket over the period.

The prices in the Grocer of 9th February were 1s. 3d. to 1s. 6d. I do not accept the contention of the hon. Member that 1s. 6d. is the general price. It is the price for the top range. There is a substantial range of prices in different grocers' shops because, as the hon. Member knows, grocers use sugar as an incentive to people to come in and buy, and 1s. 3d. is the relevant price. The Grocer quoted these varied prices throughout last year of 1s. 3½d. to 1s. 5½d. and now 1s. 3d. to 1s. 6d., so I say that the average is exactly the same as last year.

It is interesting to note that the drop over the last twelve months represented the comparative drop in world prices. That is exactly what the Commonwealth Sugar Agreement was intended to do. It is no use the hon. Member paying lip-service to the Agreement and then protesting at the price produced. That is what it was intended to do and it is perfectly right that that should happen if, as the Sugar Act imposes on us as a duty, we are to see that these costs are passed on to the consumer. It is perfectly fair and right and a very good example of the operation of the Sugar Act in practice that it has had exactly that effect.

This additional surcharge of ½d. has restored the position to what it was a year ago, thereby safeguarding the position of the producers, with whom the hon. Member for Rugby is rightly concerned, in a condition of falling world prices. This is doing exactly what the hon. Member wants us to do and it is a vindication if one were needed of the operation of the Sugar Act and of the wisdom of the Government. I am sure that is something which hon. Members ought to be conceding to us gladly with both hands instead of making this rather niggardly approach at the present time.

The hon. Member for Sunderland, North also asked me a question in relation to Tate & Lyle margins of profit. He chided us gently for the fact that there was this arrangement with Tate & Lyle. I think that it was a very right and proper arrangement, of which everybody is fully aware. The undertaking which was given by that firm to the Chancellor of the Exchequer in December, 1956, limits the margin to 9s. per cwt., based on the costs in August, 1953, and brought up to date by the movement of the Board of Trade indices. This is scrutinised by professional accountants, and, in fact, the limit of the refining margin limits that profit.

Any extra profit can only be made by buying under the average price or by processing above average efficiency. The accountants have certified that the permitted margin has not been exceeded, and Tate and Lyle's profits have not risen as a result of that operation. I assure the hon. Gentleman that these margins are being properly controlled.

The hon. Member mentioned that we were eating less sugar. We may be eating a little less, but that is because of the wonderful variety of food which is available to the consumer in this country under a Conservative Government. The housewife has such an abundance from which to choose that she has been adequately sweetened by the policies of the Government.

Hon. Members have also referred to the changes that have occurred in the Cuban scene. Of course, they are matters which could have an effect on the sugar market. I readily concede that. It is because of the uncertainty here that no change has been brought in before.

Mr. J. Johnson

Could the hon. Gentleman tell us the amount of Cuban sugar imported, in hundredweights or in millions of tons, as opposed to Commonwealth sugar, and also say what we are paying for Cuban sugar as opposed to Commonwealth sugar?

Mr. Godber

We import just over 1½, million tons of price-guaranteed Commonwealth sugar a year. There is an additional usage which is not necessarily obtained from Cuba, amounting to half a million tons. Then there is home production which is at the moment running at a record level. It will be over 700,000 tons this year, which, I should think, will be a record. There is free world sugar, some of which is represented by Cuban sugar. Only a small proportion, certainly not more than 10 per cent., of our requirement is met by Cuba. Of course, it is Cuban sugar which dominates the world market and sets the world price.

As to the price of Cuban sugar, it is at present at a low trough. Yesterday's price was 3.12 cents per lb. on New York, which is below the lowest price under the International Sugar Agreement.

Mr. Johnson

Could the Parliamentary Secretary give that in pounds sterling per ton?

Mr. Godber

Off the cuff I might give an unreliable figure, and I should not wish to do that. It would represent a price substantially lower than we are paying under the International Sugar Agreement. At a guess, it might be below £30 a ton, but that is pure conjecture.

The importance of Cuban sugar, as I say, is the fact that it sets the world level of prices. Hon. Members will see the value of the Commonwealth Sugar Agreement to our producers in the light of these very low levels of prices which exist at the moment.

I hope that I have said enough to show the value of what is being done, and the wisdom of the present move by the Board in imposing this further ½d. surcharge in the interests of the proper working of the scheme. Although one cannot cast one's mind too far ahead, I hope that we shall be able to continue this present level—providing there is no wild change in sugar prices—for a considerable period. We have to try to make alterations as seldom as possible, because they have a disturbing effect. It is for that reason that the Sugar Act says that there shall be six-month intervals.

I trust that what I have said will make hon. Members realise that the Board has given proper consideration to this matter, and that my right hon. Friend has brought forward this Order on the Board's advice as being a proper implementation of its duties. I might add that I have just been able to work out my sums a little more closely. I gave a figure of something under £30 to ton. I have since been checking it in my head, and work it out as £28 2s. 6d. a ton—so I was not very far off the mark.

I am grateful to hon. Members for what they have said in relation to this subject. It has enabled me to explain this very complicated Order. I can quite understand any hon. Member not fully understanding it, but, in view of what I have said, I hope that the hon. Member for Sunderland, North, may feel willing to withdraw his Motion.

10.36 p.m.

Mr. Willey

Like the Sugar Board, the Parliamentary Secretary seems to be a rather good calculating machine, and I congratulate him for getting his result before sitting down. He has not satisfied me, and I am sure that he would be very surprised if he thought that he had. The housewife still cannot explain—

Mr. Speaker

I do not think that the hon. Member can make a second speech.

Mr. Willey

No, Mr. Speaker. I was about to explain that in spite of the fact that he has failed to satisfy the housewife, we have to recognise that the Board has imposed on it under the Act an obligation. Recognising that, we do not think that it would be right to press this matter to a Division, and I therefore beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn