§ 9.32 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber)
I beg to move,That the Eggs (Guaranteed Prices) (Amendment) Order, 1960 (S.I., 1960, No. 427), dated 15th March 1960, a copy of which was laid before this House on 18th March, be approved.This order, made under Section 1 of the Agriculture Act, 1957, gives effect to changes in the arrangements for providing guaranteed prices and an assured market for eggs through the British Egg Marketing Board. It amends the principal Order—the Eggs (Guaranteed Prices) Order, 1957—and comes into operation on 3rd April, the beginning of the new egg guarantee year.
The arrangements for implementing the guarantee for eggs through the British Egg Marketing Board have been operating for nearly three years. It is not surprising that experience has revealed certain defects which have prevented the guarantee system from working as smoothly and effectively as we should have wished. After full discussion of these difficulties with the farmers' unions and the Board, we have arrived at an agreed solution which was announced in the White Paper on the Annual Review and is given statutory force under this Order.
To explain the significance of the new Order, I may perhaps remind the House very briefly of the arrangements as they have applied during the past three years. 1261 They provide, of course, for the guarantee to be implemented through the British Egg Marketing Board, which receives subsidy payments from the Government and is responsible for fixing prices to producers. The 1957 Order lays down the procedure to be followed each year in determining what payments are due from the Exchequer to the Board in the light of the Annual Review.
Ministers are required to determine, for hen and duck eggs respectively (a) a guaranteed price per dozen for eggs of prescribed quality; (b) an estimate of the average wholesale selling price per dozen for the guarantee year; and (c) a rate of subsidy—which is the difference between the guaranteed price to the Board and the estimated average selling price.
The Board is then paid the flat rate of subsidy on each dozen eggs qualifying for the guarantee. I should perhaps explain that since 1958 the estimated price used has been fixed on a conventional basis. It is the weighted average of the prices realised by the Board for the two preceding years, a double weighting being given to the second year—that is, the most recent year.
In addition, the existing arrangements provide an incentive for the Board to get the best out of the market. This is effected through adjustments in the flat rate of subsidy. When the Board realises less than the estimated price in any year, it bears in full the first 2d. of the loss. Beyond 2d., the Board bears 10 per cent. of the loss and the Government 90 per cent. When the Board realises more than the estimated price, it keeps the whole of the first 2d. of the profit and half of any remaining profit. The other half accrues to the Exchequer.
§ Mr. Godber
It is a complicated matter, but I am glad to know that my hon. Friend the Member for Kidderminster (Mr. Nabarro) has followed it so far. If he will listen, he will perhaps follow the next bit.
Experience has shown that these profit and loss sharing arrangements were open to two main criticisms. First, producers' returns were subject to unduly wide and erratic fluctuations from year to year. Secondly, the effect of determinations 1262 made by Ministers following the Annual Review have tended to be blurred by the effect of fluctuations arising from these profit and loss sharing arrangements. For instance, although the guaranteed price to the Board was cut by l¾d. per dozen, following the 1958 Annual Review, this was almost exactly offset by a profit of 1.7d. secured by the Board. Again, the guaranteed price was reduced by only 1d. per dozen at the 1959 Review, whereas producers have, in fact, received about 5d. per dozen less this year than in the previous year. About 4d. of this difference is due to the effect of the profit and loss sharing arrangements.
The amending Order is designed to remedy these weaknesses. I should like to draw particular attention to the following features. First, the so-called 2d. bands are abolished and all profits and all losses are shared between the Board and the Government. Secondly, the respective shares of the Government and the Board have been adjusted so that the value of the guarantee remains unaffected by the change so far as can be estimated.
§ Major H. Legge-Bourke (Isle of Ely)
My hon. Friend said that the value of the guarantee will remain the same. Appendix V of the White Paper shows an increase of £2.8 million.
§ Mr. Godber
I should like to look at the figure quoted by my hon. and gallant Friend, but I do not think that it arises in relation to this aspect. I will certainly be glad to look into it.
I was saying that, as far as we can estimate, the value remains unaffected. Thirdly, provision is made for the introduction of a reserve fund, with the object of smoothing out fluctuations in annual returns still further.
It will be seen that under the new Article 7 profits are shared initially on the basis of 75 per cent. for the Board and 25 per cent. for the Government. Provision is made, however, for the Board to pay 30 per cent. of total profits into a reserve fund. Subject to these reserve arrangements, losses up to 6d. are shared as to 40 per cent. by the Board and 60 per cent. by the Government. The Government will continue to bear 90 per cent. of losses in excess of 6d. It is intended to use the reserve 1263 funds towards meeting losses that may be incurred, and the detailed arrangements will be embodied in an agreement between the Government and the Board. A copy of this agreement will be placed in the Library of the House in due course.
§ Mr. Godber
We believe that the changes which are being introduced in the coming year will bring about a greater measure of stability in returns to producers from year to year. I apologise for the complicated nature of this arrangement. I thought that it was necessary to draw it to the attention of the House so that hon. Members will see exactly how it works out.
§ 9.39 p.m.
§ Mr. Frederick Willey (Sunderland, North)
As hon. Members will have gathered from the title of the Order, we are discussing eggs. We are discussing a short, simple Order, and any hon. Members who have had difficulty in following the Joint Parliamentary Secretary are advised to look at the Order.
The reason for the Order is set out quite simply in the White Paper. Paragraph 24 says:Experience in the past three years of the working of the profit and loss sharing arrangements between the Government and the British Egg Marketing Board has shown that they may result in unduly large and erratic fluctuations in producers' prices from year to year. This has disadvantages for both producers and the Government.That is a mild understatement. What I am particularly sore about is that three years ago I anticipated all this. When we discussed the egg marketing scheme this was just the sort of thing I anticipated, and I want to know why the Government have not done something earlier.
As the hon. Member for Kidderminster (Mr. Nabarro) knows well, we are discussing a commodity that has a very substantial Treasury subsidy—now running at £36½ million. The Parliamentary Secretary knows that this matter usually has the attention of the Comptroller and Auditor General, but it is something that affects not only the taxpayer but the producer.
In passing, I would ask the Parliamentary Secretary how he lightly refers to 1264 last year's fall of 5d. in the price and then tells producers that they have the assurance of the 1957 Act. This is another matter that I anticipated. When we discussed the 1957 Act, I said that it gave no real assurance at all to the producer if the Government played ducks and drakes with the formula by which the guarantee is implemented. That is what we have here.
We are now facing this further difficulty—and I plead with the Minister and with the Parliamentary Secretary to avoid equivocation. It has been the object of the Minister over the last few years, and now for the current year, to reduce egg production, and the disincentive has been a price disincentive. When we debated the Supplementary Estimate the other day, the Minister advanced the extraordinary argument that, in effect, because of the formula we are now discussing, there would be an increase this year and, as a result, at least a reduction in production. That is nonsense. In fact, it is not true—
§ Mr. Willey
The Minister said that as a result of the formula we are now discussing there would, in fact, be an increase in price—
§ Mr. Willey
That is not, in fact, true.
The other day I asked the Parliamentary Secretary a Question, and I got this Answer:The reduction in the guaranteed price for eggs represents a reduction of £4½ million in the total value of the guarantees as calculated for the purposes of the 1960 Annual Review." —[OFFICIAL REPORT, 28th March, 1960; Vol. 620, c. 93.]We can only make that assumption for present purposes. We do not know how the year will work out; we only know the estimate made about it. I therefore hope that we shall not get any equivocation about it.
I mention these matters because I think that it would be unfortunate if we got a wrong impression about the effect of this Order. It does not affect— and the Government must have the courage to say so—the Government's intention in reducing egg production. They have declared that intention in black and white in the White Paper. 1265 The Order is concerned with something rather different. Its purpose is to weaken the impact of the present price disincentive, and no more than that; and also to avoid these undue fluctuations in future.
The present position could not be worse. We have four successive price returns and, in addition, we have these very wide, erratic fluctuations. I do not accept that this Order will mitigate those fluctuations, or lessen the impact of the Government's purposes. We accept it as an alleviation, but we must at least be cautious in welcoming it, as it in no way restores the confidence of the industry. It is welcome in itself but, at the same time, we should be very forthright in our criticism of the Government and say that it is only against the background of their intention that we accept the Order as some alleviation.
Once again, I say that it really will not do for the hon. Gentleman to come to the House, after three years, and tell us that the Government have now looked at this subject in the light of experience and are trying something they think will work rather better. Many people had a good deal of hesitation about accepting this in the first place. It should have been reviewed earlier.
When we have a very large Treasury subvention to give more confidence and more security to producers, it ill becomes the Government to confess, to use their own words, "unduly large and erratic fluctuations". The whole purpose of the aid for the taxpayers is to avoid that. This is a confession of failure, but, on top of that, we have the Government, for the fourth year running, saying to the industry, "We are determined—the men in Whitehall are determined—to reduce the production of this industry." I would say that it would be far better if we could get some cooperation to try to help this industry to solve its problems, but we have had only this negative approach.
We can say no more, therefore, than that we welcome the Order as far as it goes, we hope that it will work rather better than the previous formula, but we are not satisfied, as some of us said the last time when we were discussing the egg marketing scheme, that the Government have got their support of egg prices right. I hope that this will not only be an alleviation, but a beginning of a more 1266 realistic view of the egg industry by the Government, and that they will endeavour to give this industry the security to which it ought to be entitled.
§ 9.46 p.m.
§ Sir Richard Nugent (Guildford)
I should like to add a word or two to the debate on the amending Order before the House, and I congratulate my hon. Friend the Joint Parliamentary Secretary on bringing this Amendment along. It struck me that the hon. Member for Sunderland, North (Mr. Willey) was wishing to have it, not only both ways, but all three ways.
The object of this Order, and of the Government's policy, as I understand it, is not to reduce production, but to stabilise production, which is a very different thing.
§ Mr. Willey
If the hon. Gentleman will look at the White Paper, he will see the words set out expressly—… production of eggs should be reduced;
§ Sir R. Nugent
Iit is rather a matter of reducing it marginally until consumption catches up with production again. So far as the assurance to producers is concerned, the hon. Member should take note of the 18 per cent. increase in production that has taken place over the last three years, and in consumption, which has been a very great blessing to the producers. This arrangement has given producers stability of price and a guaranteed price throughout a big expansion. I think my hon Friend can take credit for giving not only stability to producers, but enabling them to make a very big expansion in production at the same time.
I think I would be right in saying that the present price guarantee machinery would, over the long term, say five or ten years, probably average out all right. The main fault, as my hon. Friend said, is that it makes for instability in the short term. Like the hon. Member for Sunderland, North, I had doubts about it when it was introduced, and I know that the Ministry had, too. It is always difficult to get agreement on these things and to take a view into the future. It is very easy to have hindsight now and say that the arrangement would not work. I think that, in the light of experience, my hon. Friend is right to bring in an amending Order which will remove 1267 the worst of the faults, although I think there are one or two more still remaining.
The machinery of the price guarantee is a very great stabilising factor, but it has not been working too well. My hon. Friend called the attention of the House to how the machinery works, and said that the amending Order will remove the "2d. band"—the 2d. above or below the estimated average selling price, which at present accrues to the Board, whether it is a profit or a loss. I entirely agree with him that the effect of this 100 per cent. arrangement has been to exaggerate the high returns of a strong market when this has occurred and to exaggerate the lowering when there has been a weak market, and, therefore, in both the first two years, it has led to too high a price to producers and, in the third year, to too low a price to producers.
I am sure that my hon. Friend is right in removing that feature and having a straight profit and loss sharing arrangement which comes in immediately there is a difference between the average ascertained selling price and the average estimated selling price. These are the terms which are used, even though they do not seem to mean very much when I use them.
There is another feature about which we should be absolutely clear. My hon. Friend spoke about the reserve fund which would be set up. The present arrangement under the existing scheme is that any funds accruing to the Board due to the so-called profit it has made have to be cleared and paid out by the end of the financial year, 31st March; otherwise, they will attract Income Tax like any other profits. The result has been that the Board, to avoid tax falling on the profits it has made, has paid these moneys out during the spring months which are the glut production months, whereas it would have been far wiser production policy to have that reserve taken out during the scarcity months in order to encourage a bigger production during those months in the future. In the new arrangement, will the reserve fund be taxed or arranged so that the Board can carry it forward from one financial year to another and so avoid that further undesirable feature?
1268 A third point arises with regard to the basis for computing the estimated selling price. One is always adjured not to count one's chickens before they are hatched, but, of course, the Ministry not only has to count the eggs before they are laid but estimate the price they will make at the beginning of the year in order to work the price machinery. My hon. Friend told us that the estimated selling price for the coming year was to be computed on the basis of the previous two years with double weighting for the last previous year.
In my judgment, this is still a factor leading to instability. It is too short a period over which to compute the price. For instance, last year there was a low average ascertained selling price, and therefore the effect will be that the estimated average selling price for the coming year may be set too low again because of the distorting effect of the previous year. It would be far better to compute the estimated selling price for the coming year by reference to the previous five years, or any longer period my hon. Friend prefers, rather than just two years, which is too short a period and is bound to introduce additional instability.
I quite realise that my hon. Friend cannot alter the Order now, but I ask him to look at the point, which is, I think, a cogent one. I am sure that, throughout our consideration of this very delicate machinery and the very complex operation of egg marketing, we should all the time be looking at the long-term effect of what we are doing rather than the short-term advantage which, obviously, tends to appeal to most of the producers.
The Board's operations have come in for some criticism. The Board has had rather a rough time in recent months and, before I leave this matter, I should like to say that my own view is that it has really done well in an extremely difficult operation, the first three years of which were bound to reveal all kinds of problems which no one could foresee. It is true that the egg traders must buy from the Board if they want to buy from home markets. That is all right when demand is strong. On the other hand, when demand is weak the Board must sell to the egg traders, and then become prisoners of bondage. Undoubtedly 1269 they have been behind the market from time to time.
There is another point which I should like to make about the machinery. In the weekly fixing of prices the Egg Marketing Board must carry out in order to establish its price for the week, I suspect that there has been far too much price fixing by committee, which is an absolutely impossible task when one is dealing with a market. It is difficult in a highly professional business to get the feel of the market and to know where demand exceeds supply or vice versa.
That is something which only one man can do, and the Board would, therefore, do far better if it appointed a competent man and instructed him to do the job. If he does it right, all is well. If he does it wrong, he may have to be replaced. But it is hopeless to try to settle a price of this kind in committee. It would be much better to appoint a competent man and trust him. He will eventually get the feel of the market and a much better result will be obtained than is obtained at present.
In concluding my remarks on this interesting but somewhat esoteric subject, I should like again to congratulate my hon. Friend on what he has done and ask him to bear in mind the two points I have mentioned for the future. It may be that we could improve the machinery even further.
§ 9.57 p.m.
§ Mr. Harold Davies (Leek)
The House is always interested in the contributions of the hon. Member for Guildford (Sir R. Nugent), because he puts his case so cogently and he is such an expert on his subject. It would be very risky for someone like myself to take him up on this subject, but there are few simple points which I, representing an agricultural constituency and with the interests of the small farmer at heart, would like to make.
I must agree with my hon. Friend the Member for Sunderland, North (Mr. Willey). We understand that there is to be a cut-back in egg production. I should like to ask an elementary question. There will be a marginal reduction. We heard that from the hon. Member for Guildford. If there is a marginal reduction, as is envisaged, where is the burden of that cut-back to fall? Let me give a concrete example. I have over 1270 3,000 farms in my constituency, but over 1,400 of them are of 20 acres or under. Some hon. Members would not call them farms, but a man and his wife and son or daughter work hard morning, noon and night on the hill farms in my constituency and make a living. Eggs and milk are their bread and butter. [Laughter.] That is absolutely apt. They have suffered all the time from market fluctuations. They have been asked to produce more eggs.
Is this marginal cut-back to be borne by the smaller people who are sometimes cast aside with a supercilious air and of whom it is said, "They are not efficient"? When the Government make this marginal cut, will a square deal be given to the very small producers who, when the country is in need, are called upon to produce as much as possible?
I do not want to bore the House. My point is clear. I want to see the very smallest people in this great industry protected. I want them to have some guarantees, which I fail to see under this Order; but that may be because I have not understood the Minister's point clearly.
§ 10.0 p.m.
§ Major H. Legge-Bourke (Isle of Ely)
May I, first, apologise to my hon. Friend the Joint Parliamentary Secretary for interrupting him in his speech introducing this Order? The interruption which I made was, I am afraid, inaccurate and I have since managed to detect my mistake. The comparison that I made of an increase of £28 million in the guarantee was the difference last year above that of the year before. I am sorry that I did not realise that Appendix V did not cover this year.
The matter which I should like particularly to touch upon is the one raised by my hon. Friend the Member for Guildford (Sir R. Nugent). It is the question of liability to taxation of the reserve fund. I hope that my hon. Friend will be able to give us an assurance that marketing board reserve funds will all be treated in the same way as the Potato Marketing Board's reserve funds, which, I understand, are now exempt from taxation.
It is quite absurd, when we make an independent body such as the Potato Marketing Board or the Egg Marketing 1271 Board responsible for administering the guarantee, to tax what they have been able to save in the process. It is not in the interests of the public purse, or of the taxpayer. I think that if there is a variation as between the Egg Marketing Board and the Potato Marketing Board, any arguments over the Egg Marketing Board will not damage the other case, because it is a great relief to us all to know the satisfactory outcome of that matter.
The other point arises out of the explanatory paragraph in page 22 of the White Paper which is implemented by Article 2 of this Order. In this whole question of the arrangements to be entered into between the Government and the Board are we to understand that an agreement has now been entered into with the Board? I should have thought that it ought to have been entered into before this Order was introduced. If it has not been, how soon will it be? I cannot see how this Order can be operable unless the agreement has been entered into.
Another question which I want to raise arises out of paragraph 10 (ii) of the explanatory paragraph in the White Paper, where it states thatThe Board will allocate 40 per cent. of their share of the profits (i.e. 30 per cent. of the total profit) to a reserve fund and retain the balance for disposal as they see fit;What scope does that give the Board? Can it, by doing that, increase the guarantee to individual producers, or can it use it for publicity purposes, or what? Perhaps my hon. Friend can satisfy us on that point.
§ 10.3 p.m.
§ Mr. Douglas Marshall (Bodmin)
I want to put only one point to my hon. Friend. I listened to his explanation of this Order and the objective that lies behind the machinery contained in it, with which I wholeheartedly agree. I also listened to the hon. Gentleman the Member for Sunderland, North (Mr. Willey) refer to the Order as being a simple little Order. I do not think that the actual reading of the Order is very simple.
I have discovered during the last week or so that quite a number of people are extremely puzzled as to how the Order confirms the different points that have 1272 been made by my right hon. Friend the Minister and by my hon. Friend the Joint Parliamentary Secretary at the Dispatch Box. I am wondering whether my hon. Friend can find any way of issuing a memorandum which would make the Order clearer even than his explanation tonight.
In spite of what my hon. Friend the Member for Guildford (Sir R. Nugent) said, there is still a good deal of confusion as to the meaning of the Order, although we may understand its objective.
§ 10.4 p.m.
§ Mr. Gerald Nabarro (Kidderminster)
Before my hon. Friend the Joint Parliamentary Secretary replies, I wish to say something in support of what my hon. Friend the Member for Bodmin (Mr. D. Marshall) has said. It is easy for my hon. Friend the Joint Parliamentary Secretary to tell Members like myself that I am out of touch with my farmer constituents. I will send him specimens of county newspapers in the next 48 hours, so that he can see the anxieties which have been expressed, particularly on eggs.
§ Mr. Nabarro
We cannot go back to pigs now. But the censorious comment from Worcestershire farmers includes pigs and eggs, for the reasons expressed by the hon. Member for Leek (Mr. Harold Davies), namely, that these are principally the staple commodities of the small man, the man farming less than 20 acres, of whom I have hundreds in my constituency, and large numbers of them are concerned primarily with pigs.
One of the things which worries my smallholder constituents and myself is the near-impossibility of understanding machinery of the kind which was read out to us this evening with the utmost fluency by my hon. Friend the Joint Parliamentary Secretary. I congratulate him upon being able to gabble fluently. I shall read it in the OFFICIAL REPORT tomorrow morning and, no doubt, my poor brain will understand its purport.
The plain fact is that I cannot understand every aspect of the present arrangements enshrined in the Order. If I cannot understand them, I would not expect the smallholders in my constituency to 1273 understand them. The present position with eggs reflected by the Order is that the subsidy is costing £36½ million. It amounts to roughly 1d. per egg. It is almost one-third of the market price of eggs. I formed the impression that at certain times of the year eggs were being sold in the shops so cheaply that more and more money is being heaped on the subsidy every year. And so we have a continuing policy on the part of the Government of cutting the guarantees systematically every year and bringing to the House Orders of the kind that we have before us this evening. I hope that my hon. Friend the Joint Parliamentary Secretary will not quarrel with me when I interpret the eggs position. He is an expert farmer. I am a poor industrialist.
§ Mr. Nabarro
We cannot talk about steel tonight. If I interpret the Order and the eggs position correctly, it is surely that last year too many eggs were produced at too high a subsidy. I hope that my hon. Friend the Joint Parliamentary Secretary agrees with me.
§ Mr. Nabarro
It may suit the hon. Member's purpose, but I cannot talk about steel tonight. I am talking about eggs.
§ Mr. Nabarro
The subsidy is a very heavy, if not intolerable, burden on the taxpayers. All that my hon. Friend the Joint Parliamentary Secretary is doing in the Order is altering the machinery for 1274 paying for the subsidy. I hope that when he replies he will tell us why he considers a heavy subsidy of this kind to be necessary at all. He would still be in order within the terms of the Statutory Instrument which is before us.
§ Mr. Nabarro
It is all very well for the hon. Member to attempt to heckle me. I am quite used to that kind of thing, but I am trying to talk about eggs, not steel.
The subsidy, at £36½ million, is becoming an intolerable burden on the taxpayers' shoulders. A few years ago, we had an exact analogy. We spent a long time in this House arguing whether we should subsidise everybody's bread. Eventually, after immense pressure from the Government back benches, the bread subsidy was cancelled. I hope that tonight's Order will lead on to a position whereby, without prejudice to price support for egg production we might dispose of the greater part of the subsidy, because I believe that the two things are not incompatible. If the consumer has to pay more, why not? The consumer is paying for his eggs today partly over the counter and partly through his taxes in the form of this subsidy.
There is this complicated machinery gabbled so fluently, I repeat, by my hon. Friend the Parliamentary Secretary this evening. He went so fast that it was impossible for any layman such as I to keep up with him. The complexities inherent in the marketing system for eggs today are such that hardly anyone inside or outside the British Egg Marketing Board understands it.
A few months ago I was commissioned, without fee, to take the chair at the Royal Society of Arts. Yes, Mr. Deputy-Speaker, this is about eggs. It is in the Order. I was commissioned to take the chair at a forum of all the interests producing eggs, marketing eggs, the British Egg Marketing Board, the consumer interests, the hatchery interests, and the rest. The controversy about the machinery for marketing eggs enshrined in the Order was the most acute that I have ever listened to. It was evident to me, sitting in as chairman, that an awful lot of people speaking there—and the controversy raged for 1275 three hours—were themselves engaged in the trade—I do not call it an industry. They were really appalled by the complexities now thrust upon them by what the Parliamentary Secretary is pleased to call machinery for implementing support for egg prices.
If my hon. Friend doubts all that, he will get a number of county newspapers from me this week. I have a report here of the Royal Society of Arts in the January, 1960, issue of Fullo'-Pep News. [An HON. MEMBER: "Advertising."] I am not advertising. It may be a trade name, but it is also a form of egg food. But the meeting is accurately reported. I will send a copy along to my hon. Friend the Parliamentary Secretary, because the point I am trying to make is that lack of understanding of this complicated machinery which is being dealt with in the Order tonight is in itself a major contributory cause of the grave anxiety felt today by a large number of egg producers and distributors. I hope that my hon. Friend the Parliamentary Secretary will not respond by telling me that I am out of touch with egg producers in my constituency, that I have no knowledge 6f this matter, that they are not suffering any anxiety, and that Her Majesty's Government in the context of egg prices are magnificent.
There is the greatest anxiety among egg producers. They are fed up with the Government over reducing the price. I know not whether the Government are correct in reducing the price, but I know that I want simplification of our machinery called delegated legislation for dealing with eggs, and I want earnest consideration given to a lightening of this intolerable burden of £36.5 million for a support for eggs, which in effect means that the consumer of eggs is paying for three-parts of the cost of the egg over the counter and one part, or approximately 25 per cent.—and at certain times of the year 30 per cent.—in one form or another of his taxes.
§ Mr. Harold Davies
I agree in the main with the hon. Member. I am concerned with the small producer of eggs, but in view of the dynamic criticism made by the hon. Member, would he support me in putting a Motion on the Order Paper that the time has now come 1276 to investigate completely the entire system of agricultural subsidies?
§ Mr. Deputy-Speaker (Major Sir William Anstruther-Gray)
That certainly cannot arise on the Motion.
§ Mr. Nabarro
In a minute. I should be out of order, Mr. Deputy-Speaker, of course, if I responded to the hon. Member for Leek (Mr. Harold Davies).
§ Mr. Willey
The hon. Member for Kidderminster (Mr. Nabarro) should give way to his hon. and gallant Friend the Member for Dorset, North (Colonel Richard Glyn).
§ Mr. Nabarro
I am not finished, but I will give way. As for the hon. Member for Leek, who has a constituency not dissimilar to mine and has large numbers of smallholders engaged in egg production, I will go as far as this. If he puts a Motion on the Order Paper asking for urgent investigation of the whole of the machinery for payment of subsidies and associated matters in connection with egg production and distribution, as referred to in the Explanatory Memorandum to this Statutory Instrument, I would join with him in requesting an investigation of that kind. Now my hon. and gallant Friend wishes to intervene?
§ Colonel Richard Glyn
I am very much obliged to my hon. Friend, and I am sure we are all interested in his experiences with "Fullo'pep" which have so greatly affected him—
§ Colonel Glyn
I want to say that whereas he is right to point out that the bread subsidy was not in the interests of all taxpayers—thanks to our medical advisers who speak to us about dietary rules, there are a number of taxpayers who wisely avoid bread—nevertheless there are very few taxpayers who do not at some stage of their career use eggs, either in cooking or in cakes. My hon. Friend is pointing out the large burden 1277 on the taxpayer, of which we are all conscious, but he seems to take the view that it is unfortunate that the egg consumer should only pay for part of the value of the egg he consumes directly in the price and my hon. Friend objects to his paying the rest in tax. I suggest that this is not an analogy with the bread subsidy, because it is clear that whereas everybody eats eggs not everybody eats bread.
§ Mr. Nabarro
I cannot go into the details of bread consumption on this Order, but I can reply, and I think be within the rules of order, Mr. Speaker, in saying that 98 per cent. of the people of this country eat bread and I should have thought that 98 per cent. of the people of this country consume eggs. Whether they are the same 98 per cent. no one can say.
§ Mr. Willey
On a point of order, Mr. Speaker. I am only regretfully looking back at the speech I might have made if I had realised that the debate might go so wide—
§ Mr. Willey
I am on a point of order. As I understand this Order, the point we are on at present is the substitution of one article of the principal Order by another. Surely it is not in order on such an Order to discuss the principal Order?
§ Mr. Speaker
I am at a slight disadvantage because at the moment I returned to the Chair I was not certain who was intervening upon whom, or how the medical advice tendered to one hon. Member, apparently in relation to the consumption of bread, had anything to do with hens' eggs or ducks' eggs. I hope hon. Members will seek strictly to keep in order. It is insufferable that we should not.
§ Mr. Nabarro
I am trying terribly hard, Mr. Speaker, but as you know, we have had from the Minister a reference to the British Egg Marketing Board and the need for increasing the consumption of eggs. They are both connected with the change in method and machinery referred to in this Order. As most of us eat two eggs on toast at some time or other in the course of a working day, it is difficult to dissociate eggs from bread.
Now I will return to the serious point in this Order. The whole of the 1278 machinery for the production and distribution of eggs, and the support prices associated with it, has now become such an appalling tangle that not only am I incapable of understanding what machinery is to be used in the next twelve months but my farmer constituents, and notably egg producers, are completely befogged by an Order of this kind. All they know is that they have responded to the call for increased egg production by raising their individual standards of efficiency, and in return for that splendid effort they have had the price reduced again this year.
I hope that my hon. Friend the Joint Parliamentary Secretary will not deny that there is anxiety among egg producers in my constituency. If he does deny it, I will give him an appropriate answer very quickly, and excite an agitation in my constituency to give vent to this grievance directed against the Minister and himself. I know my farmers well. I am closely in touch with them and they know me personally. It is nothing short of impertinence to indicate otherwise to them.
§ 10.21 p.m.
§ Mr. Godber
I seem to have incurred the wrath of my hon. Friend the Member for Kidderminster (Mr. Nabarro) quite unfairly but I am willing to be judged by the House. All I said in dealing with the previous Order was that the subject matter was not one which I thought would have angered producers. My answers seem to have angered my hon. Friend and to have coloured his remarks on this particular Order.
I will try to deal in due course with some of the points that he raised, but, first, I come to the points raised by the hon. Member for Sunderland, North (Mr. Willey). He realised, of course, the difficulty, as most of us do, of trying to discuss matters which go very much wider, but clearly, in a machinery Order, it is impossible for most of us to do that. It is difficult, therefore, for me to reply in any detail to a number of the points raised tonight.
It is true that the egg subsidy figure is high. It is also true that this Order is complicated. I sought in my opening remarks to explain just what we were trying to do. In so far as the total of the subsidy is concerned, the White Paper sets out the position very clearly—that 1279 we feel that under existing conditions, until an increase in consumption can be stimulated, it is essential to get some reduction in production, which must be related to the need for fresh eggs. The difficulty at present is that a considerable number have to be broken out and sold at a very much lower price. That is one of the difficulties we have to face, but it is somewhat outside the scope of this Order.
The Order seeks to amend, in the light of experience, the manner in which we implement this particular guarantee. It has been an extremely complicated one, but I think that hon. Members will find that the new system is not quite so complicated. As my hon. Friend the Member for Guildford (Sir R. Nugent) made so clear in his very interesting and helpful intervention, this is a matter on which one has to try to get agreement with the National Farmers' Unions. It was on the basis of that agreement that the initial arrangement was entered into, and it is by an agreement entered into in the light of experience of the operation of the original system that we have made these amendments.
I believe that these will have a considerable effect in reducing those fluctuations to which my right hon. Friend has referred and to which I have referred again today. The change will avoid these wide fluctuations. The hon. Member for Sunderland, North said that my right hon. Friend had pointed out that, in effect, we were cutting the guarantee, but that that could mean an increase in actual returns to producers. Under the profit and loss snaring bank which we have been operating producers suffer the full first 2d. of the loss. That will not be the case under the new arrangement and they will have an immediate saving there.
There is also the effect of the assessment of the estimated average price which is on the weighted average of the two previous years, giving a double weighting in the last year. If the price has been lower in the previous year it gives a better average to the producers in the ensuing year. So I think it is reasonable to say that this could happen.
But it must be remembered that the price was artificially depressed in the previous year. We then made a cut of 1d., but because of the effect of the 1280 band it was depressed considerably more. This coming year, the effect of the previous year will be corrected, or so we hope. To that extent, it can bring about a situation which the hon. Member would regard as surprising.
§ Mr. Willey
I accept what the hon. Gentleman has said, but I am concerned with the estimate that was made for the purposes of the Annual Price Review— not whether this is possible, but whether it was estimated that this would result. As I understand, it was estimated that there would be a reduction in the return to the purchaser in the forthcoming year.
§ Mr. Godber
The £4½ million figure that I gave him was the effect of the l.38d. cut—the actual cut, irrespective of the changes in actual returns, which are difficult to evaluate precisely in relation to the estimates which we put forward.
The hon. Member then dealt fairly generally with some of the problems facing the egg industry. We need to reduce production until such time as we can obtain increased consumption. But it is only right—in spite of the strong words which he used at one stage—to face the difficulty posed by the fact that we have a definite excess production, and that there is this considerable cost of £36½ million to which my hon. Friend the Member for Kidderminster referred. It would have been wrong for us to have ignored that cost. It is necessary to reduce that to a somewhat lower figure. When it is working out at 1d. an egg it is a very big proportion.
§ Mr. Godber
I am grateful to my hon. Friend for his support on that.
My hon. Friend the Member for Guildford asked me a specific point in relation to the reserve fund. He indicated that it would be of little value if it were subject to tax. This is a matter which must be discussed and decided by the Inland Revenue authorities, and I cannot anticipate what they will say, but, as my hon. and gallant Friend the Member for the Isle of Ely (Major Legge-Bourke) pointed out, another board has been able to get a satisfactory arrangement, and if the Inland Revenue authorities can be satisfied about the method upon which the reserve fund will be operated the Egg Marketing Board should be able 1281 to benefit from the provision in the 1952 Finance Act. It would cover the same point. I see no reason to be unduly worried about that.
My hon. and gallant Friend also suggested that we should consider spreading the estimated average selling price over a five-year period instead of the two-year period on which we operate at present. I should like to examine that point. We have not yet had a five-year period on which to judge, even if we wished to do so. When we first made this arrangement with the Egg Marketing Board we had to make an approximation in respect of the first year. In the past two years we have operated this system, which seems to work fairly well, but we will keep it under review and see whether any amendment is necessary.
The hon. Member for Leek (Mr. Harold Davies) spoke up for his small farmers. I know the problems of his area, but I would remind him that my right hon. Friend has been very conscious of the need to look after the interests of small farmers, and it was for that reason that, last year, we introduced the Small Farmers' Scheme, which has proved very helpful to the farmers in his area, as well as to others. But it would be impossible to differentiate between one type of farmer and another. We have to state clearly what the objectives must be. It was for that reason that the Small Farmers' Scheme took particular account of the needs of the small farmers. I am sure that it is the way to help make them more viable and efficient, whatever they are producing.
My hon. and gallant Friend the Member for the Isle of Ely was kind enough to apologise for his intervention when I was speaking earlier. I was grateful to him. I admit that I was a little puzzled by the figure, but I have since been able to track it down. As my hon. and gallant Friend said, it related to the previous year and there is no need for me to comment further, because my hon. and gallant Friend appreciated that.
However, he also asked me a question about the reserve fund, which is mentioned in the White Paper, and he wanted to know what the Board would do with the remainder of the profit. The answer is that the Board will be able 1282 to utilise it in any way it sees fit, for helping prices to producers, for publicity, or any other purpose which is appropriate, but the Board will have to spend it in the financial year if it is not to attract tax.
My hon. Friend the Member for Bodmin (Mr. Marshall) asked for a simple explanation. I sympathise with him, because this is a complicated subject and I apologise for having to weary the House with it. However, in the White Paper we tried to set it out more simply and I hope that my hon. Friend and his constituents will be able to follow it. If not, I shall be happy to provide further explanation.
§ Mr. Marshall
Will my hon. Friend consider some form of simple pamphlet for distribution among farmers interested in this matter? Could not there be a pamphlet to show how the machinery works?
§ Mr. Godber
I will look into that. I am most anxious that farmers should fully realise how the machinery works. However, this is a rather difficult matter, a point which my hon. Friend the Member for Kidderminster also made. Incidentally, my hon. Friend accused me of gabbling. No one would accuse my hon. Friend of gabbling, whatever else one might say. His stentorian tones ring round the Chamber with absolute clarity and I had no difficulty in hearing what he was saying on this occasion. I am sorry if I have hurt his feelings about his connection with his farmers.
§ Mr. Godber
I did not think that I could. I should be most surprised if I had, as I would have been the first person to achieve that. However, I am aware of his connection with his farmers. He consults me about their problems and I have not the least hesitation in saying that he is very well aware of their problems and difficulties.
§ Mr. Nabarro
My hon. Friend has referred to the complexities of this machinery. Complexity is the sacred cow of the bureaucracy. Will not my hon. Friend respond to my appeal for simplification of the machinery? Is there no means of spring-cleaning his Ministry and getting a simple and businesslike arrangement instead of this welter of complexities?
§ Mr. Godber
I will endeavour not to follow what my hon. Friend said about sacred cows. I have every sympathy with his desire for simplicity. However, as I have said, we have to do these things with a measure of agreement with the producers concerned and take their views into account and it is very difficult to find a simple way. I am entirely with my hon. Friend in wanting to get rid of complexity, but it is not easy to do so when one gets down to the problem.
I realise the strictures he has made about the intolerable burden, as I think he called it, of the £36½ million, but I would not share that view with him. As we have indicated in the White Paper, it is our wish and intention to see it reduced, but, having undertaken in the 1947 Act, and having reinforced in the 1957 Act, our duties to the farmers, I certainly would not wish to see us depart in any way from those undertakings made to them. If, in fact, it has meant a heavy bill in this case it is money well spent so long as we give the farmers incentive and encouragement, as we are trying to do, to bring their production more into line with the needs of the market, but I would not subscribe to the description of this as an intolerable burden. How one can say that while, at the same time, standing up for the farmers, is difficult to understand.
§ Mr. Nabarro
My hon. Friend has not responded fairly. I said "without prejudice to price support". I deliberately used the words, "without prejudice to price support". That is standing up for the farmers and is exactly in accord with Conservative Party policy.
§ Mr. Godber
I should be very pleased to follow this argument with my hon. Friend for some time, but how one can produce this result without prejudice to price support, I cannot see. But that is a matter I can discuss with him at some other time. We are bound to 1284 honour our obligations to the farmers and I am glad that he supports me in that. I felt sure that he would. That being so, it is our duty to reduce this particular element of our guaranteed price arrangements, which, as my right hon. Friend has said, is a large one, and that is one of the reasons why we have said, in the White Paper, that we wish to see a reduction in the number of eggs coming forward.
§ Mr. Willey
As the hon. Gentleman is referring to the White Paper, if he turns to page 23 he will see that it says, in paragraph 10:The ultimate shares of the Board and the Government in profits and losses have been so fixed that the guarantees for hen and duck eggs to be provided under the revised arrangements are estimated to be equivalent in value to those which would have been provided under the previous arrangements if they had been continued.Does that mean, as I have suggested, that the income from eggs is to be cut by £4½ million and that the Order we are discussing does not affect that position?
§ Mr. Godber
That is perfectly true. The Order we are discussing does not affect that. It is providing an equivalent. I may have been led some distance away by my hon. Friend into these wider issues, but it is true that the Order is purely a machinery Order providing an equivalent method of providing this measure of support.
I say to my hon. Friend the Member for Kidderminster that I am aware of the feelings of his egg producers and assure him that I can understand the views he has expressed on their behalf tonight. I hope that he will forgave me if I have hurt his feelings in this matter. It certainly was not my intention to do so, but if I have done so I have broken new ground in the House of Commons.
§ Question put and agreed to.
That the Eggs (Guaranteed Prices) (Amendment) Order, 1960 (S.I., 1960. No. 427), dated 15th March 1960, a copy of which was laid before this House on 18th March, be approved.