HC Deb 20 June 1960 vol 625 cc159-77

10.4 p.m.

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

I beg to move, That the Fertilisers (United Kingdom) Scheme, 1960, a draft of which was laid before this House on 12th May, be approved. The draft fertiliser Scheme for 1960 extends the fertiliser subsidy arrangements for a further year from 1st July next and, like the present Scheme, covers the whole of the United Kingdom. It provides for the payment of contributions to farmers for nitrogenous and phosphatic fertilisers delivered to them during the year ending 30th June, 1961.

The House may be interested to know what progress has been made in the use of fertilisers under the influence of these subsidy schemes and, if I may, I should like to give a quite short account of our experience under the existing Scheme, which covers the year ending 30th June, before I deal with the Scheme now before the House.

Some months must elapse before we shall know the final outturn. It is not easy to make a firm estimate at this time of year, but all the indications are that a far greater tonnage of fertilisers will have been added to our agricultural land than in any previous year. Indeed, it looks as though the increase will not be less than 13 per cent. on the year before. Farmers may well spend something like £91 million on fertilisers, compared with £62½ million five years ago, and, of this £91 million, about £30 million will have been contributed by the Government.

The fine summer and autumn last year no doubt helped in achieving this result, but it is encouraging to find that deliveries of fertilisers this spring are also higher than in the same period in any previous year since the subsidy was introduced. I think that this points to the fact that the farmers, under the stimulus of this subsidy, and with the benefit of technical advice from the National Agricultural Advisory Service and from the manufacturers, are becoming increasingly aware of the value of applying fertilisers to their land.

It has sometimes been said that statistics show that we use less fertiliser per acre of agricultural land than do several other European countries. This is true, but conclusions drawn from a bare statement of figures such as this can be misleading. For instance, in the statements issued by the O.E.E.C. agricultural land includes permanent grass, the area of which it much higher in this country than it is in many other European countries.

Fertilisers are naturally applied more heavily to cropping land than to permanent grass, and if this factor is taken into account we show up well in these comparisons. County surveys undertaken by Rothamsted, and by the N.A.A.S. with voluntary assistance by the manufacturers, show that most of our potatoes, sugar beet and cereals receive enough fertiliser, but there is room for further improvement on other root and fodder crops, and on grassland.

Turning to the draft Scheme for 1960–61, it is on the same general lines as the existing Scheme and previous Schemes but, as the House is aware, it was decided at this year's Farm Price Review to reduce the total fertiliser subsidy by about al million, calculated on the present estimated level of consumption. The main reason for this is that prices of many fertilisers have fallen in the last two years, and the subsidy therefore now represents a higher proportion of farmers' costs than it did when the present rates were approved two years ago. Lowering the subsidy by about £1½ million represents a reduction of about 5 per cent. at the current level of payments.

I should, perhaps, explain that it is not possible, even if it were desirable, to make a flat percentage cut in all the subsidy rates without producing some rather untidy results. We have therefore made some adjustments, in agreement with the N.F.U. which, while producing the overall reduction required, will to some extent simplify the schedules to the scheme. Broadly speaking, however, the reductions amount to 6d. per unit on nitrogen and 4d. per unit of soluble phosphoric acid. The subsidy on sulphate of ammonia, for instance, will come down from £9 19s. 6d. a ton to £9 9s. a ton, while that on triple super-phosphate will fall from £17 12s. 6d. to £16 16s. 10d. a ton. The new rates will reduce the subsidy on nitrogen by about £870,000, which is a little more than 5 per cent., and on phosphates by £630,000, which is a little under 5 per cent.

There is one relatively minor change in the provisions of the Scheme. We have taken the opportunity to define the word "delivered" in paragraph 2 (1) in order to remove any doubt as to its meaning in the context of the Scheme. These subsidies are paid on delivery of the fertiliser to the farmer, and while the form of application makes this clear we have felt that it would be desirable to express it in the Scheme.

The House will know that, as my right hon. Friend the President of the Board of Trade has stated, he is consulting the industry on 'the various matters to which the Report of the Monopolies Commission on the Supply of Chemical Fertilisers gives rise. My Ministry is taking part in discussions with the industry which are being held by the Board of Trade at the official level. These discussions are well advanced but are not yet complete except as regards the Commission's recommendations on potash, about which my right hon. Friend the Minister of State. Board of Trade replied to a Question in this House on 23rd May. No further statement can be made at present.

The House may be aware, however, that both I.C.I. and Fisons have announced reductions in their prices for the coming season, and while these are, no doubt, made on the basis of normal commercial considerations, I think they indicate that the manufacturers, whose activities have been under review by the Monopolies Commission and who, arising out of the Commission's Report, are still engaged in discussions with officials on prices and profits, are conscious of the need to take every opportunity of keeping down the cost of fertilisers to the farmer.

As a result of these reductions, many fertilisers will be cheaper in the coming season, despite the lowering of the subsidy. Consumption of fertilisers has increased each year since the subsidy was introduced in 1952 and, as I have already mentioned, it is now at a record level. I see no reason why it should not continue to advance.

10.12 p.m.

Mr. Frederick Willey (Sunderland, North)

The Joint Parliamentary Secretary has anticipated a good deal of what I propose to say. He has every reason to know what I am going to say because I have said it before on many occasions. I am going to ask some questions in the hope that at some time I shall get a satisfactory reply.

To dispose of a few matters of which he has spoken, I would call his attention to the fact that if he is talking about fertiliser consumption, the year before last was a bad year, and it is not a very good comparison to make in isolation with that bad year.

On the question of the O.E.E.C. figures, we have previously discussed the relevance of the greater percentage of land devoted to grass in this country compared with some of the other countries, but this is not altogether a consolation. In fact, there are countries which have got more land devoted to grass than we have and which nevertheless use more fertilisers.

On the question of the price fall and the subsidy fall, we take some credit for this. We have criticised the fertiliser prices for some years and we have fortunately gathered the support of the Monopolies Commission. I have said before that the Monopolies Commission has had a salutary effect on fertiliser prices. What we want to know is why the Government did not take action before and how much this has cost us. This is not a case of manufacturing costs having fallen in the last year or so. The monopoly firms have been able to reduce their costs because they felt obliged to do so in the light of the public attention which has been focussed upon them in this House and by the Monopolies Commission.

Before I say anything that might be construed as being critical of the fertiliser manufacturers, I think it is only fair to pay tribute to the research which I.C.I. and Fisons, for example, carry on and to the advisory services which are a considerable advantage to the farmer and the information which they have provided in very attractive form to Members of Parliament, amongst others. I can speak with a well-informed mind because I have received from the Fertiliser Manufacturers' Association very well-prepared informative documents telling me the state of their industry. This is something on which we should congratulate them. They have certainly taken pains objectively to bring the facts to our attention.

Having said that, I will at once be critical of the Government on these aspects because neither with regard to research nor with regard to advisory services have they done anything comparable to or commensurate with the extent of this subsidy. After all, we are discussing here a subsidy running at £28½ million. As I have said several times before, it is not good enough merely to say that it serves a laudable purpose. The National Coal Board could take very full advantage of £28½ million, but here we have for all practical purposes two monopolies—I.C.I. and Fisons—relying upon the Exchequer paying practically half the cost of the commodity. It is all very well saying that this is important to the national economy, but this argument could be translated into many other fields. This is not only a matter which affects the Exchequer; it affects the farmers.

Look at the ludicrous position we are in at the moment. I have complained time and time before of the blunting of the price incentive, but I am not the person who is calling for a sharper price incentive. It is the Government who are calling for a selective expansion in agriculture, but they have blunted the very instrument by the extent of production grants out of the overall Price Review award. Here we have the truly ludicrous position of the Government providing for all practical purposes half the cost, or at any rate 45 per cent. of the cost, of fertilisers, but, at the same time, by the Price Review having a general disincentive in practically every form of agricultural production.

To return from that broad generalisation to the subsidy itself, the first disturbing thing is that we all know that this is not properly administered. I have mentioned the National Coal Board. Think what would happen if the National Coal Board had had a subsidy—it has not a subsidy, of course—and if it received a subsidy of £28½ million and had it administered in the way that this has been administered.

I have raised before the question of the Fertilisers and Feedingstuffs Act, 1926. It was agreed before the war that this Act should be reviewed and amended, but still nothing has been done. I am told that it has been considered. What we do know, meanwhile, is that there appears to be excessive over-charging for the mixing and bagging of fertilisers. There are many other factors which we should like to see attended to. We know that from the administrative point of view—and everyone will concede this—the way of paying this subsidy is not satisfactory. I was in an agricultural co-operative over the Whitsun holidays, and found that they had four people engaged upon the forms necessary to obtain the repayment—to claim the contribution from the Exchequer. Again, what would happen if one of the public corporations behaved in this way?

To turn to the more fundamental question which the Joint Parliamentary Secretary has anticipated—the purpose of the subsidy—the hon. Gentleman has done no more than anticipate some references which I will make to the figures provided by O.E.E.C. He can do no more than that, because I know that he is not in a position to say more. We know very little about the effect of this. We know that up to 1951 it was running down to £8 million and it is now £28½ million. I defy the Joint Parliamentary Secretary to inform the House of the effects of this subsidy. We have had committees saying that we do not know enough about this.

There are the very disturbing comparisons which I have drawn on previous occasions in the House. If we compare ourselves with other countries in Western Europe, taking the figures "processed", shall I say, by the Fertiliser Manufacturers' Association itself, we find that we are eighth in the table except in the case of phosphates, where we are ninth. We are the only country in the world which is paying a subsidy of this extent to encourage the use of fertilisers. Why are we eighth and ninth in the table? In Western Germany there is a subsidy for fertilisers, but a much more modest one than ours. We have had an entirely different usage of fertilisers compared with Western Germany. As I have said in previous debates, the Germans use about twice the nitrogen and twice the potash that we use in this country.

The Joint Parliamentary Secretary called attention, as the Minister has on previous occasions, to the percentage of grassland in this country compared with the percentage in some of the West European countries. There are two countries out of the eight which have a greater percentage of grassland than we have. What the Parliamentary Secretary has not faced is that airy-fairy excuses really will not do. What troubles us is the small use of fertiliser which is made in grassland. Does he accept that that is one of the problems facing his Department? Why has not this incentive had the effect he desires? If it has not, what does he intend to do?

I mentioned the advisory services of I.C.I. and Fisons. Why have we not something to match them? The Exchequer has a very real interest here. While everyone will agree that it is a desirable objective to encourage the use of fertilisers, we really must draw the line somewhere. When a subsidy practically reaches £30 million—after all, the Government cannot proceed with Blue Streak, and that was costing £20 million a year—there is a burden upon the Government to show what are the results obtained from the expenditure of the money. They ought to provide factual information to show that the expenditure has been justified.

I can only repeat that, on such comparisons as we can make, it is clear that the case has not been fully established. If the case has not been made out, there is a real burden upon the Government to inquire further. What we are really subsidising here, to about half the cost of the commodity, is good husbandry. That is all. Most farmers, of course, would in any case make the use of fertilisers that they are at present making.

We know—I wish the Parliamentary Secretary had said something about this—that, in spite of this subsidy, there was an increased subsidy of 75 per cent. in the case of a supplementary scheme under the Small Farmer Scheme. Has it been successful? Why, if the present is effective, was it necessary?

To turn to another aspect of the matter, it cannot be concealed—indeed, ii is well recognised—that we are dealing here with tariff-protected subsidised monopoly producers. The farmer is told that he cannot have it both ways, and it is explained to him that he has a subsidy because he has not tariff protection. Here, however, we are dealing with producers who have substantial tariff protection and subsidised production on top. We have spoken in the House about the £4 a ton subsidy on sulphate of ammonia which has a 20 per cent. tariff protection. In the case of super-phosphates, it is a 17½ per cent. protection.

In these circumstances, one would have thought that any prudent person would have ensured that there were costings. There used to be. The Government have to bear the responsibility of there not being any costings. What was the result of this? We protested about it in the House. In addition, the Comptroller and Auditor General protested about it. He said: The Ministry informed me that in the absence of price control they had insufficient information about production and distribution costs to judge whether fertiliser prices were fair and reasonable. What a sorry position. We know from the Monopolies Commission's Report that the prices were too high. This is recognised by the present reductions. But how much of the taxpayers' money has been paid unnecessarily because the Government were too incompetent to provide for a costings inquiry? This was a subsidy, not of £500,000 or £1 million, but of £28½ million, and the Comptroller and Auditor General was told by the Department that it could not say whether production and distribution costs were fair and reasonable.

If we read the Monopolies Commission's Report carefully, we see that the distribution costs are too high. We also know that the prices are too high. We have, at any rate, some consolation in the present reduction in prices and the slight reduction in subsidy, but it is a bit thick that the Parliamentary Secretary should come to the House and say that consultations are now in progress. The trade expected that these consultations would be concluded. This is not being fair even to the producers. It is the same sort of lackadaisical attitude towards the expenditure of large sums of money.

To be fair, I say at once that I.C.I. appears from the Commission's Report to have been enterprising. This concern appears to have been cost-conscious. However, the position remains unsatisfactory in three ways. First, with all respect to the Monopolies Commission, this is a very different conception of "enterprising" from that which the Americans would have adopted. One can read the story of the disposal of Prudhoe and the additional capacity which the Government have created and handed back to the monopoly producer. This would not have happened in the United States. They would have ensured that there were two competing producers. The United States would not have expanded a monopoly and made it a more dominant monopoly. That is the first disquieting factor.

The second was expressed by the Monopolies Commission itself. It said that I.C.I. had not attained the rate of profit which it set out to attain. I.C.I. may be more successful in future. The Commission expressed some disquiet that I.C.I. may be more successful in attaining its target of profit.

The third disquieting thing concerning nitrogen is this. We were concerned about the restrictive agreement between I.C.I. and the F.M.A. This was precluded from receiving the attention of the Monopolies Commission. It is registered as a restrictive agreement and it is to go before the Restrictive Practices Court. I should have liked the Parliamentary Secretary to tell us something about it. When will the case be heard? This is a matter which affects the other monopoly producer, Fisons.

One of the interesting things is that the Fisons organisation was driven to go into nitrogen production. The Shell organisation is also in production. I think there is a burden on the Joint Parliamentary Secretary to tell us when this will be considered. Otherwise it simply will not do, because there is this substantial element of public expenditure, to allow this matter to be unattended.

From nitrogen to Fisons. Fisons come out with a clean sheet as being an enterprising concern. One would expect that, of course. But here we have a Report of the Monopolies Commission coming down against Fisons on the question of prices. I had better quote the Report: We think the company mistaken in believing that it is entitled to use its strength, due largely to the degree of monopoly it enjoys in a protected and subsidised market, in order to earn profits at the high rate of recent years for the express purpose of financing its further overall expansion. We regard the fixing of prices at a level which produces such profits as a 'thing done' by Fisons as a result of its monopoly position which operates and may be expected to operate against the public interest. The scandalous thing about this is that it was supported by the Government. Everybody knew it was happening, yet the Government took no action whatsoever. The Government are accountable to this House for the loss of public moneys which has been involved. Of course, when the Commission referred to the expansion of Fisons it pointed out, too, that expansion was very largely in other fields apart from the expansion of nitrogen production because of the effects of a restrictive agreement. In fact, the Government themselves were, by their price formula and price support, supporting Fisons own programme of expansion of production in other non-fertiliser and overseas fields. I should have thought that the Government should recognise some responsibility for this. It is quite patent, and it comes out in the Report, and it is agreed by Fisons, that the Government were subsidising Fisons' products so that Fisons could expand production in non-fertiliser fields overseas. If Fisons knew it was happening why did not the Government know it was happening?

This is lazy, lackadaisical, wasteful administration of public funds. Though one would have hardly thought so from hearing the Parliamentary Secretary, we are discussing tonight the expenditure of the enormous sum—I make no apology for calling it "enormous"—of £28½ million. We do not know what direct effect that subsidy has had on the increased use of fertilisers. All we can say is that if we make comparisons with other countries a good case does not seem to have been made out. I accept the present dilemma that a price increase would be a disincentive, but it is the Government themselves who have put themselves into this position, to the prejudice of the taxpayer and in present circumstances to the prejudice of the farmer himself. We are discussing this subsidy in a year in which we had a Price Review which was a general disincentive all round the clock in agriculture.

I urge the Government—I give a challenge to the Government—forthwith to hold a public inquiry into the expenditure of these very large sums of public money on this subsidy. Let us know the facts. Let us see whether the facts reveal that this has been a wasteful expenditure of public money which we could have better used in forwarding agricultural production. Let us know whether there cannot be a better formula for using such money to make sure that this aid goes where it is most needed.

Are we satisfied that this subsidy has ensured that where increased fertiliser use was required it has led to that greater use? Is there any explanation why it has not improved grass husbandry? We know that the Government have no information about this. I challenge the Government to hold a public inquiry. Let us be satisfied that this money was properly spent. As far as the future goes, where this money, which comes out of the Annual Price Review, is not spent on this purpose it is spent on other purposes to aid the farmer. Let the farmer be equally satisfied that this is the most effective use to which this £28½ million can be put.

10.37 p.m.

Mr. Jeremy Thorpe (Devon, North)

In so far as this is a measure that encourages the use of fertilisers in the industry it is obviously to be welcomed, but it might be good to pause for a moment and ask ourselves why it is necessary to spend so much money for this purpose. The reason is the high cost of fertiliser in this country and the cause of that is that since 1930 the industry has been sheltered by very high tariff walls which have kept out foreign competition. The effect has been to give us high prices, huge profits and vast monopolies, and Her Majesty's Government are today finding that the fruits of protection are expensive.

We hear from the Monopolies Commission that Fisons were getting a profit which represented a yield of 20 per cent. on their invested capital. Not only that, but it is an industry generally in this country which is lagging behind in modern techniques, and this is the industry to which we are about to grant a very large sum of money. In the United States, West Germany and Italy, there have been introduced high analysis compounds using as their base mono-ammonium phosphate which, to the best of my knowledge, is not even manufactured in this country by the fertiliser industry, and that which is imported into this country is subject to a 33⅓ per cent. tariff. In the United States sulphate of ammonia is out of date as a spray fertiliser. Instead, 33 per cent. ammonia nitrate is used. It can be used as a spray or solid fertiliser. It is far more economic because it can be used as a more concentrated source of nitrogen.

Here our main nitrogen producing plant is 25 years old. We are outpriced by every progressive agricultural community and particularly by the United States, Germany and Italy in nitrogenous phosphates. Here with the backwardness of the industry, coupled with penal imports, sulphate of ammonia is still served straight to farmers or for mixing in compounds; and this is the up-to-date industry to which we are granting large sums of money.

Fisons have announced—and it appeared in the Financial Times on 15th June—that they are going to reduce prices generously to farmers by over £1 million, and this is the third year in succession in which they have been able to do it. How fortunate to be in an industry in which prices are so high that one can make three annual reductions. Prices of triple superphosphates are to be reduced by £2 7s. 6d. per ton to £36 10s. a ton. Yet the cost of triple superphosphate from Holland, after adding 17½ per cent. tariff duty at port, is still £32 17s. 6d. per ton, or £3 to £4 cheaper than the existing British product. Making allowance for the fact that there is 2 per cent. less phosphate in the Dutch product, even with the 17½ per cent. tariff, Fisons are selling at inflated prices, so I am not very impressed by its reduction in prices.

In the last two years, world prices of sulphate of ammonia have gone down by £5 a ton. In the same period, I.C.I. has uplifted its prices by 3s. a ton, referred to by the Monopolies Commission as a "reasonable profit" on its capital. To see whether it is reasonable or not one should look at world prices to see whether they are competitive. One does not yet know what I.C.I. prices will be, but in the United States sulphate of ammonia in bulk was £12 10s. a ton ex-works while I.C.I. was charging £18 a ton in bulk ex-works. The subsidy is now to be £9 9s. and was then £10 and the farmer gets barely half the benefit of that subsidy.

I say to the Parliamentary Secretary that this is not the time for consultations with the industry. It is a time to subject the industry to good, healthy competition. The first thing we have to do is to start lifting the tariff duties which all too long have protected this industry and rendered it monopolistic and inefficient.

We are told that there is great fear of dumping. If dumping be analysed to mean exporting a commodity at lower prices than it is sold in one's own domestic market, then that is precisely what this country does if she exports sulphate of ammonia; so do not let us get too excited about dumping. What is needed is a healthy dose of competition in this industry and a lifting of the tariff.

I noticed with some interest that the first measure taken by Fisons after being told that their prices were too high was to get the noble Lord, Lord Netherthorpe and others to take their place on the board. If the figure of £151,000 be the correct figure for directors' fees for 1959, he no doubt will be enjoying some of the benefits of that in this coming year.

It will be very interesting to see whether he on that board will be a Trojan horse seeing to it that prices are lowered by subjecting this industry to competition, so that it produces and sells at world prices, or, if possible, below, or whether in his newly ennobled status he will be turned into a robber baron. If he does, he will have done what Fisons intended him to do.

Mr. Ray Mawby (Totnes)

Shame! Disgrace!

Mr. Thorpe

It is a shame and disgrace and the farmers have been held to ransom all too long with the tariffs which have protected this industry. It is a disgrace, because this is public money which has been pumped into this monopoly.

Mr. Mawby

I was saying that it was a shame that the hon. Member should make such imputations against a man who has given such sterling service to the National Farmers' Union and to suggest that he would engage in such practices.

Mr. Thorpe

I would be grateful if the hon. Member could give me any example of an intervention by the noble Lord to lower the tariff on the tools of the trade which the farmer has to buy and which artificially inflate the prices which the farmer has to pay for them.

Mr. Speaker

It is probably convenient for me to remind the House that in a debate of a Scheme of this kind, discussion of alternative methods of attaining the same objective is out of order.

Mr. Thorpe

I merely say that I do not intend to oppose the Scheme because the farming community is entitled to be protected against what is an even greater danger, but I warn the Parliamentary Secretary that the Liberal Party will continue to press for this tariff to be reduced. We are voting a large sum of money. The trouble has arisen and the expense has been caused because the fertiliser industry is not an industry which is feather-bedded, but an industry which is in perpetual deep litter.

10.44 p.m.

Mr. Percy Browne (Torrington)

I do not intend to follow the hon. Member for Sunderland, North (Mr. Willey) nor the hon. Member for Devon, North (Mr. Thorpe) into discussion of monopolies and the Monopolies Commission. The hon. Member for Sunderland, North is wrong if he thinks that farmers would continue to buy as much fertiliser as they do today if there were no subsidy. Furthermore, he will find, even if we are lagging behind in improvements to our grassland, that we have improved it a great deal during the past few years.

I would tell the hon. Member for Devon, North, who bemoans the fact that we as farmers are still forced to buy straight fertilisers, that several of us like to buy straight fertilisers for particular reasons. I have just bought some sulphate of ammonia.

I should like to ask my hon. Friend whether he is satisfied that the Scheme is working out as it was intended. Is the present fertiliser subsidy giving a sort of "dropsy" to the large arable farmer rather than helping the grassland farmer for whom, I imagine, it was originally particularly introduced?

It is a fairly strong combination for an arable farmer who gets a ploughing-up subsidy, a fertiliser subsidy and at the end of it a deficiency payment or an acreage payment. There is a case, I think, for putting a tonnage limit upon the amount of fertiliser which is eligible for subsidy in any one year for any one farmer. Similarly, possibly, there is a case for an acreage limit for the ploughing-up subsidy. Any saving in this direction could be used for a subsidy on potash.

My hon. Friend has said that he hopes that a better use will be made of grassland in this country. He is only echoing what my right hon. Friend the Minister of Agriculture has said on frequent occasions, particularly at the time of the latest Price Review. My union, if I may so call it—the National Farmers' Union—has frequently in the past asked that we should have a subsidy on potash, and it has always been told that there is a foreign selling cartel to which the benefit would accrue rather than to the farmers. This is a point which has been made before today by hon. Members opposite. However, I think that since the day when those arguments were used certain changes have taken place.

My hon. Friend mentioned the reply given to a Question to the President of the Board of Trade on 23rd May, when these words were used: Though Potash Limited remains by far the largest supplier of potash in this country, competition from other sources has been increasing. Sales in the United Kingdom of potash from other sources in the calendar year 1959 were 44 per cent. higher than in the fertiliser year 1957–58 and represented 26 per cent, of total sales as compared with 20 per cent. in 1957–58."—[OFFICIAL REPORT, 23rd May, 1960; Vol. 624, c. 12.] In paragraph 702 of its Report, the Monopolies Commission said: We have commented on the beneficial effects of competition from East Germany in recent years. Back in 1958 the Committee on Grassland Utilisation said: that there is a good case in principle for a fresh subsidy…to encourage the use of potash and it expressed the hope: that a limited degree of risk of monopolistic practices would not necessarily dissuade the Government from encouraging the use of potash by subsidy. As my right hon. Friend and my hon. Friend know—they are both practical farmers—potash is a very necessary nutrient if one is to maintain the fertility of the soil. I do not intend to go into a biological lecture about the birds and the bees or anything like that, but if one is to maintain a balanced sward one must have, first of all, lime, on which there is a subsidy; secondly, phosphate, on which there is a subsidy; and thirdly, potash, on which there is no subsidy. If one has this one has a decent percentage of clover in one's grass, and clover produces nitrogen, and one can then use nitrogen as much as one likes.

In view of the fact that the argument about the cartel is no longer as accurate as it was, and in view of the expense of potash as a straight fertiliser without subsidy—it is by far the most expensive of the lot—I would ask my hon. Friend whether, in consultation with the N.F.U. this summer, and looking to the next Price Review, he will ask his right hon. Friend to introduce a subsidy on potash for next year.

10.50 p.m.

Mr. Godber

If I may speak again, with the leave of the House, I should like to reply to one or two of the points that have been raised.

The hon. Member for Sunderland, North (Mr. Willey) said that I had anticipated some of the points he wished to raise. I am not sure whether he was pleased or sorry about this. But, as he said, some of his remarks were not wholly original on this occasion. I believe he was quoting from the speeches of the hon. Member for Sunderland, North on previous occasions. These were a help to me in preparing my own remarks before the debate. I therefore do not intend to go over much of the ground I have already covered, but I must take him up on the point he made tonight and has made on a number of previous occasions. I suppose he thinks that repetition makes his remarks true.

He said that in the last Price Review we had given a general disincentive to production. I have replied to that charge at this Box before, as has my right hon. Friend. We have done nothing of the sort. I would refer him again to Paragraph 14 of the White Paper, which sets out precisely the commodity objectives, and in regard to almost every one the criticisms he makes do not apply. Therefore, some of the arguments he hung on that story fall to the ground.

It is logical for us to go on providing a general proportion of the cost of these fertilisers to encourage their greater consumption. He complains that consumption is not high enough, but we have done a great deal, through this subsidy, to encourage increased consumption. When one looks at the figures, as I have been doing since the hon. Member spoke, one finds that the increased total consumption of fertilisers since 1952 has been quite startling. It is an increase of about 50 per cent. in total application. Taking it in terms of plant nutrient content, it has risen from 828,000 tons to 1,200,000 tons, which is a very substantial increase. It means that the increased sums we have been paying out have been worth while.

The hon. Member criticises us because there is insufficient use of fertilisers on grassland. We are conscious of the need for more use of fertilisers for grassland, and I welcome his support in any campaign to bring that to the notice of farmers. We believe there is still greater scope for increasing the full usage of our grassland by a more intelligent and fuller use of fertilisers, and through our National Agricultural Advisory Service we do a great deal of work in seeking to promote that additional use.

He took us to task on the Report of the Monopolies Commission and asked why we had not taken action before in regard to the prices of the firms concerned. I would remind him that we referred this matter to the Monopolies Commission, and it was right that we should await its Report. Having received it, we are in consultation with the industry, and there has been more than one reduction in price since the Commission reported. I think my hon. Friend the Member for Newbury (Sir A. Hurd) brought out in an earlier debate the fact that certain reductions had taken place following the examination and before the publication of the Report, and additional reductions have now been made, which considerably reduce the percentage of profit.

Mr. Willey

My case against the Government is made on two grounds. First, the prices are being revised because the Monopolies Commission has objected to the basis of the price of, for instance, Fisons. I am saying that the Government could have known that, and should have taken action some time ago and that the present delay is symptomatic of that sort of approach to an industry which is taking a substantial subsidy from the Exchequer. I am asking the Government to show that they are more conscious of their responsibility for intervening to see that the price is fair to the farmer and to the purchaser.

Mr. Godber

I take the point, but I think it right to remember that we set up the Commission to do this sort of work. Having referred the matter to the Commission, it was right to await its Report and to act on it. This is what we have been doing. The reductions in price which have been referred to may have been assisted—I say no more than that—by the publication of the Report. In any case, the interest we have taken in the subject is clear. We accept the need to keep a close watch in the case of an industry of this nature, so I do not think there is a great deal between us. It is important that we should encourage the maximum effective use of fertilisers in this country, which is what we are seeking to do.

I realise the line which is sought to be taken by the party to which the hon. Member for Devon, North (Mr. Thorpe) belongs. In making a realistic assessment of the Liberal Party's policy on farming, one should remember that its policy on free trade does not apply only to fertilisers but also to a great many of the commodities produced by farmers, and farmers would do well to have that in mind. I regret what I can only describe as a somewhat scurrilous attack which was made on Lord Netherthorpe. It is no part of my duty to defend him. He is capable of defending himself, but I do not think it a good thing that a man who has done so much for the farming industry should be subjected to a rather petty comment. When the hon. Member considers what he has said, I think that he may regret some of his remarks.

My hon. Friend the Member for Torrington (Mr. P. Browne) made an interesting point regarding the subsidy assisting the large arable farmer rather than the small farmer and the hon. Member for Sunderland, North asked about the effect of the Small Farmer Scheme. The Scheme has not been going for very long. The payment in relation to fertilisers under the Scheme since July, 1959, is an addition of £200,000, which is a considerable amount in a new Scheme which is only just getting under way. Undoubtedly the use of fertiliser by the small farmer is of great importance. There is a great need to instil into the small farmer the need for greater consumption.

My hon. Friend made an impassioned plea about the use of potash, which I can fully understand. I cannot add much to the statement of my right hon. Friend to which my hon. Friend referred. The position has been difficult, but we are still continuing to watch it to see whether an opportunity arises to take action.

It is interesting to note that the high level of subsidies on other fertilisers has had an effect on potash consumption. In recent years an increasing quantity of fertilisers has been used. This has had the effect, indirectly, of increasing the consumption of potash. The estimates show a rise in potash consumption from 227,000 tons in 1952–53 to an estimate of 400,000 tons in 1960–61. Potash goes into compounds. Farmers, of course, have had subsidy on other fertilisers included in compounds and have themselves been willing to pay for the potash, so that potash consumption has been helped indirectly in this way.

I realise that it is necessary for hon. Members opposite to make a case, but I am sure that the House as a whole will welcome the Scheme, which I commend.

Question put and agreed to.

Resolved, That the Fertilisers (United Kingdom) Scheme, 1960, a draft of which was laid before this House on 12th May, be approved.