HC Deb 14 December 1961 vol 651 cc602-8
3. Mr. Ridley

asked the Minister of Agriculture, Fisheries and Food what he expects the total cost of agricultural support to be during the current year.

Mr. Peart

On a point of order, Mr. Speaker. Before the Minister answers this Question, may I say that I understand that the right hon. Gentleman is to make a major statement on price support, and that the major Supplementary Estimate will be nearly £80 million? Is it possible, through you, to plead with the Minister to defer his Answer until the end of Questions, when he could make it in the form of a statement?

Mr. Speaker

I do not know anything about this. I cannot help the hon. Gentleman, but no doubt what he has said will have been heard.

Mr. Peart

Will the Minister respond to my request?

Mr. Soames

As I was first for Questions today, which coincided with the date on which we were publishing this Supplementary Estimate, and as this Question was bound to be reached, I thought that this was the proper moment to inform the House.

Mr. Morris

On a point of order, Mr. Speaker. This is a very serious matter. Many of us will want to ask supplementary questions. Surely, it is better that a major statement like this should be made at the end of Question Time so that all those interested may have an opportunity to ask questions?

Mr. Speaker

That is not a point of order for me. I do not control these matters unless an application is made to me.

Mr. Woodburn

On a point of order, Mr. Speaker. Is it not within your province to try to protect other hon. Members who have questions on the Order Paper? Assuming for the moment that Question No. 3 occupied the whole of Question Time, would not that be a great disservice to the House?

Mr. Speaker

At present it is points of order that are taking up the time. I do not know the length of the statement. I have no reason to suppose that it would necessarily be lengthy.

Mr. Hoy

Further to that point of order, Mr. Speaker. The statement will include reference to a Supplementary Estimate of £13 million for which not the Minister of Agriculture but the Secretary of State for Scotland is responsible.

Mr. Speaker

I do not follow why that is thought to be a point of order for me.

Mr. Peart

On a point of order, Mr. Speaker. This is a very important House of Commons matter, and the danger is that, if the Minister replies in this way, the people in the country will imagine or believe that he is trying to evade major criticism on the Floor of the House.

Mr. Speaker

That cannot conceivably be a point of order. The inferences are hypothetical.

Mr. Soames

I must make it clear that there is no question of trying to evade anything. When a Question stands on the Order Paper, one answers it. I will now make my reply to Question No. 3.

The total cost of agricultural support for the United Kingdom for the present financial year is now estimated to be £344.7 million. This is £78.0 million in excess of the original Estimate, and Supplementary Estimates covering that amount have been published today.

The principal cause of the excess is the increase in the cost of implementing the price guarantees for livestock amounting to £35.3 million for cattle, £13.6 million for sheep and £17.9 million for pigs. As the House will be aware, owing to a combination of factors, wholesale prices for each of these commodities have fallen greatly below expectation over the course of the year. The situation in this respect is clearly exceptional. The amount of the additional cost to the exchequer is a matter for serious concern, which we shall be bound to take fully into account in the course of next year's Price Review.

Mr. Ridley

These are indeed very serious figures. Is my right hon. Friend aware that if Members opposite had wished to know them they could have put Questions down themselves? In view of the great danger that this will occur in future years, and in the interests both of protecting the farmers' standard of living and the taxpayers, is my right hon. Friend working out new arrangements and a totally new system which might have the effect of perhaps bringing in a tariff form of protection in some sectors but of avoiding this situation happening again in future?

Mr. Soames

There were very exceptional circumstances this year, beginning in the spring, when a much increased number of cattle came forward from the spring flush of grass. This number was much greater than that which the market was accustomed to handling, and it had the effect of dropping wholesale prices very considerably.

Later, in the summer, when beef prices should have recovered, the crop of lambs from our ewe flock was infinitely higher than the average we would normally expect, owing to the exceptionally good spring and summer. The amount of lamb coming on to the market was, therefore, much in excess of what is customary, which had the effect of dragging the market down still further. When it was beginning to recover from that situation, imports of bacon from Denmark increased more than had been expected, and the pig market was also affected. It has frequently happened in the past that individual fatstock items have increased to this sort of amount, but never before has it happened for all three in the same year.

As for the future, given that, on the one hand we do not alter our trade arrangements with exporting countries, and, on the other hand, that we hold to our pledges to agriculture within the 1957 Act, there is only limited room for manoeuvre within the ensuing year. But within these limits we will do everything possible, including any action which it may be right to take at the Price Review, and we will also improve marketing arrangements where this can be done.

Mr. Speaker

Perhaps the right hon. Gentleman will be good enough to assist me. By reason of what happened, I am not sure whether or not he said that he was answering other Questions with Question No. 3.

Mr. Soames

I was answering only Question No. 3, Mr. Speaker.

Mr. Peart

The right hon. Gentleman's long reply confirms that we should have had it as a statement.

Is he aware that he has admitted that his Department made a serious miscalculation? That is how this has been accepted. [HON. MEMBERS: "No."] Of course it has. Is the right hon. Gentleman aware that it also reflects a breakdown in the policy the Government have pursued and that the system of deficiency payments and the trend away from the 1947 Act have proved to be a major disaster for the agricultural industry?

Is he further aware that the Government's policy does not mean more for the producer or for the consumer, but that distribution costs are increased. Producer and consumer do not benefit. Is he aware that this policy has failed and that the Government stand condemned?

Mr. Soames

It is not true that nobody has gained from this except the distributors. [HON. MEMBERS: "Oh."] The outturn for this year for expenditure on deficiency payments for fatstock compared with last year will be about £76 million up. In round figures, about £31 million of that will have gone to the farmers for the increased number of cattle coming forward and because of the higher prices received as a result of the increased guarantee at the last Price Review. We reckon that, over the course of the year, the average drop in retail prices—it is obvious that we cannot be so precise as with the first figure—will be about 5½ per cent., or about £35 million to the consumer.

Mr. Prior

When have the Opposition ever complained about the increase of 10s. in the price of beef in the last Price Review? In the case of beef, will my right hon. Friend, in view of the increased Supplementary Estimate, say whether he can help the marketing of this product? We have a great number of inefficient slaughter-houses, which are operating in such a way that they are unable to make use of the cheaper cuts of meat which the butchers have been unable to sell this year. Should not my right hon. Friend now take more steps to encourage co-ordination in meat marketing?

Mr. Soames

I am aware of these difficulties in marketing and we are paying attention to them, but we can operate in only a limited field.

Mr. Darling

I did not follow the calculations the right hon. Gentleman gave to us and I do not believe anybody else did. Assuming that he is correct and that £34 million is going to the pockets of the farmers—which I doubt—where has the other £45 million gone? The right hon. Gentleman says that retail prices have been reduced by part of that amount, but he still ends up with £10 million. I do not believe that the customers have had that reduction. Where has this £10 million gone?

Mr. Soames

There is no argument where the farmers are concerned. There has been the increased guaranteed price, and we know that £31 million has gone to the farmers. That is definite. It is harder to estimate the consumer benefit but, on the basis of a 5½ per cent. reduction in retail prices, it comes to £35 million. That leaves £10 million for the distributive trades, which have handled a very considerably increased quantity of home-killed beef and mutton this year.

Mr. Bullard

Does my right hon. Friend agree that, despite the very heavy cost of this, the surveys conducted by his Department and by other authorities do not show that beef production has been all that profitable? Do they not show that the price allowed in the Price Review was a true reflection of the very great increase in costs that has taken place in the production of beef?

Mr. Soames

I agree with my hon. Friend. The figures available to us at the time of the last Review showed a very considerable fall-off in the number of calves being retained for beef. We thought it right to give this extra incentive towards the retaining of a larger number of calves.

Mr. Wade

Can the right hon. Gentleman be more explicit about the extent to which this very large subsidy has been reflected in retail prices? Is he referring to meat in the shops? Is the figure of 5½ per cent. reached in comparison with previous years? Can he tell us the total amount which it is alleged the consumer has gained?

Mr. Soames

The hon. Gentleman will realise that this is inevitably a somewhat speculative figure. [Hon. MEMBERS: "Oh."] It is estimated over a year which is not yet finished. It is for the fatstock year from April to April. It is our belief, however, that the average fall in retail prices on all meat is in the neighbourhood of 5½ per cent. We calculate that that represents a saving to the consumer of about £35 million as compared with last year.

Sir A. Hurd

Does not my right hon. Friend agree that it is a matter for satisfaction that Government policy has resulted in this increase of good quality home-produced beef? If we are to have more home-produced beef, is it not inevitable that we will have to pay more for it, including the extra 10s. a cwt. in this year's Price Review? Is he surprised by the additional figure for beef?

Mr. Soames

What has surprised us in this respect is that a comparatively small increase in beef coming on to the market should have brought about such a considerable drop in the wholesale price. It is that fact for which we did not allow in the Estimates.

Mr. Woodburn

In view of the experience this year, is the right hon. Gentleman prepared to go into the question of finding a more sensible way of buying beef from the farmers and selling it to the general public? Is not the present marketing a pure gamble with many farmers, especially the small farmers? They do not benefit, and the public do not get the benefit of cheaper meat.

Mr. Soames

It is not our present intention to enter into State trading with meat.