§ 3.34 p.m.
§ The Minister of Agriculture, Fisheries and Food (Mr. Christopher Soames)
We are asking the Committee to vote an extra sum towards the support of our agriculture Vote for this year. For the United Kingdom as a whole this comes to a total of just over £78 million. Hon. Members will have seen the report of the Select Committee on Estimates which examined this Supplementary Estimate and I know that they will be grateful, as I am, to the Committee for the detailed Report and investigation which it made, and for the lucid analysis of the reasons which underlie these Votes.
I should like to deal with the main point made in the Report of the Committee, which met under the able chairmanship of my hon. Friend the Member for Aylesbury (Sir S. Summers), relating to the nature of our support system, whereby it is the duty of the Government, under an Act of Parliament, to make up the difference in terms of cash—whatever that may be—between the guaranteed prices for the various guaranteed commodities and the market prices 920 which have been obtained by farmers, on average, during the year over the whole level of production of those commodities—whatever that may be.
Inherent in this system there are, of course, many and considerable difficulties in connection with estimating. First, there is the question of timing. All the Votes have to be in and settled by the end of January. This imposes an obligation upon the Minister to do his best to decide what is to be the level of market prices in a free market for a period of up to fifteen months ahead. In other words, the Estimate of which this is a supplementary was settled in January, 1961, for a period extending from April, 1961, until April, 1962. We have to try to estimate the average market price for the different commodities over that period.
Secondly, as the Estimate has to be in by the end of January, it has to be made before a determination is decided by the Government following the Annual Price Review in February, which ends usually in early March. So we do not know, at the time when we put in the Estimate, what difference there will be in the price determination for different commodities made in the Annual Price Review, and the effect which that will have on the levels of production, or even, perhaps, on the pattern of marketing.
Last, but by no means least, do not let us forget the very considerable effects which—despite all the technical progress made in post-war years in relation to agriculture—the weather that we may enjoy, or "disenjoy", can have on the level of agricultural output.
I think that it would be best if I discussed one by one the commodities which have contributed largely to this Supplementary Estimate. Meat is the biggest. Let me take beef first, where we have been proved wrong to the tune of £35.3 million. Of this sum, £13.3 million is accounted for by the extra 10s. a cwt. which was added in the Price Review to the guaranteed price for beef, together with the number of cattle which have in fact come forward. The larger part of this figure of £35 million, that is, £22 million, has been the direct result of lower market prices for beef.
The Committee might well ask why the Government decided last year to put 921 on the extra 10s. per cwt. on beef. Beef production is a long-term enterprise, and the numbers of calves retained on farms to be matured into beef had declined considerably. In view of that fact, and taking with it the level of milk production, which is an alternative to beef production on many farms, and if we note how the figures of milk production had been increasing, we were led to the conclusion that we should give some impetus to the production of beef, because of the declining numbers of calves being retained on the farms. That was the reason for the extra 10s. per cwt.
What was the measure of the falseness of the Estimate? We had assumed an average market price for beef during the year of 142s. per cwt., which was decided in January last year. There is a nicety to be taken into account here, because this was decided in January, before even the previous financial year was over, because it ends in April. So in January, 1961, we were estimating a market price for 1960–61 of 144s., and our estimate of what the market price would be from April, 1961, to April, 1962, was 142s. per cwt.
What happened? There was a very considerable drop in the market in the summer months, and the price went down to as low as 98s. 6d. per cwt. In the Supplementary Estimate which we are now debating, we revised our estimate of what the average market price for beef throughout the year would be from 142s. to 122s. 3d. per cwt.
What caused this very considerable fall in price? There were a number of factors. First, and I think that there is something in this, though not very much, farmers had it firmly fixed in their minds before the last Price Review that there was to be an increase in the price of beef at the Review. I dare say that there was a tendency to hold beef off the market until the extra price to be paid came in at the end of March. In fact, the extra marketings in April and May were not all that much higher than they had been in the previous year. They were up by about 11 per cent. It was in June and July that we got the really heavy marketings of home cattle—up to 50 per cent. more than had been marketed in the same period of the previous year.
922 What brought this about? It was, principally, the spring flush of grass coming a full month earlier than is customary in normal weather conditions, with the result that the animals were finished much earlier and came much more in a bunch, as against being spread over the year, than is normal. There was this very considerable flow of extra numbers of animals on to the market in June and July but we still expected then that the beef market would recover in the later summer.
But the situation on the beef market was then aggravated—and I will come to this in more detail later—by large quantities of lamb coming on to the market, and, even later, by large imports of pig meat from the Continent. It was not until unusually late in the year that the market price for beef began to recover. It is considerably better now, up to 152s.-odd per cwt., compared with the 98s. 6d. to which it fell earlier in the summer, but the improvement came too late, alas, to be able to save this very considerable Supplementary Estimate.
Now for the lamb figures. We had estimated that the market price of lamb in this year would be 2s. 5d. per lb. In fact, we now reckon it may work out at 2s. per lb. What brought this about? Here, there is no doubt that nature intervened, and, from the point of view of lambs, we have had a year to end all years. There was a record crop, a higher percentage of lambs than ever before. I see that one hon. Member opposite is smiling, but when we are working out the Estimates, and we have the responsibility of trying to get them right, although I know that we sometimes go wrong, what can we take? We have a certain size of ewe flock, and we estimate how many lambs we are likely to get from that ewe flock. But we got a higher percentage of lambs out of the ewe flock, living and marketed, than has ever happened before, following the good weather in February and March. The result has been that 700,000 more lambs grew to maturity on our farms than could have been estimated that there would be, on the basis of normal conditions. These came on to the market at a time when beef prices were low.
Now for pigs. Here, the Supplementary Estimate is for £17.9 million, of 923 which £1.9 million is directly due to the increased awards at the last Price Review. Again, the vast bulk of this Supplementary Estimate is due to the fall in market prices. The numbers of pigs reaching maturity on our farms have worked out at about what we expected them to be—slightly more, but not very much more. We included £1 million in the Supplementary Estimates for the increased numbers of pigs. We wanted to see a gradual and gentle increase in the size of the pig herd in the country, because it had dropped considerably in recent years, and the Price Review decision was designed with this in view.
What happened about the bacon market was that in the earlier months of the year Denmark found alternative markets in Europe for quite a large proportion of her bacon. This was followed by a strike on the farms in Denmark, and very little bacon was exported while it was on. It lasted some weeks, and the bacon was kept in store. The amount of bacon coming on the market from abroad, particularly from Denmark, during the autumn months was much more than we could possibly have thought likely to be forthcoming when we had made the Estimate in January, and it came on to a meat market which was already weakened, both through the beef and lamb stories.
If we consider the meat situation as a whole, beef, lamb and pigs, what pattern do we see? There has been an increase in the home production of all meat, and I am including chicken meat in this, of 12 per cent. over last year. There have been fewer imports than last year, and the net result is that the total amount of meat available on the market during the year was 4½ per cent. higher than it was in the previous year. The really worrying feature here is that such a comparatively small increase in the amount of meat coming on the market could bring about such a considerable fall in the market prices.
I will return later to fatstock, but while I am dealing with the figures of the Estimates I will say a word about other commodities. The Supplementary Estimate for cereals is £7.8 million. There was a fall in the market price of both wheat and oats, though this was counteracted to some extent by a higher 924 market price for barley than we had expected. At the last Review we cut the guaranteed price of barley and during the summer months we took measures in regard to the importation of barley and the level of price at which it would be imported. Therefore, the barley price was somewhat better on the market than we had expected. The wheat yields were somewhat up on what we had allowed for and the prices were somewhat lower, but the net difference over the whole range of cereals is an excess of £7.8 million.
For milk, the figure is £3.4 million. This arises in the main from the increase we gave to the industry at the last Review coupled with the increase in distributive costs the greater proportion of which was caused by an increase in wages within the industry during the year. The 8d. per pint for milk to the consumer throughout the whole year was not sufficient to pay for these extra costs. Once we have settled the retail price of milk for a year ahead we do not like interfering with it, and, accordingly, the £3.4 million has been carried by the Exchequer. We shall, of course, take this increase into consideration when we determine the retail price of milk for the subsequent year.
For potatoes, the bill is £3.86 million. This was entirely for the 1960 crop, not the 1961 crop. When we made our Estimates in January, 1961, we had had a very bad winter with a lot of rain, and a large proportion of the potato crop was still in the ground. It looked as though a great deal would be ruined. We made an estimate of the quantities which we thought likely to be lifted and capable of sale on the market. In fact, the weather turned much better and larger quantities of potatoes were lifted. There was a surplus of potatoes that year.
We thought that the Potato Marketing Board would have to buy 400,000 tons of potatoes to keep the market at about the right level, but, in fact, it had to buy a net 550,000 tons. This was a good investment from the point of view of the Exchequer. It was money well spent, for the total subsidy bill would undoubtedly have been very considerable had all those potatoes gone on to the market. The drop in the market price would have been very much greater. 925 But even with this considerable support buying programme, the fact remains that the market price was about 6s. lower in the event than we had estimated it would be.
The Select Committee showed its anxiety and consciousness of the difficulties which any Minister of Agriculture has in trying to hold a balance of interest as between agriculture, the consumer and the Exchequer in this matter of support buying of potatoes. It is a nicely balanced point. Support buying, of course, takes place only in years when the acreage planted for potatoes, which would, in a normal year, produce roughly the amount of potatoes consumed by the public as a whole, gives an exceedingly high yield and one has to deal with very much larger quantities. Support buying takes a proportion of those quantities off the market to hold it at a reasonable level. One has to look at it over the years, and I think that, on the whole, this has been to our national advantage.
The doubtful element in it, of course, is the consumer, and whether it has been to her advantage.
§ Mr. Soames
No. There is no doubt that it is an advantage to the taxpayer. Where the consumer is concerned, the Consumers' Committee which was set up under the Agricultural Marketing Act, and which examined this very problem of support buying of potatoes last year, gave it as its opinion that this was right and that the consumer did not suffer in the long run.
I return now to the fatstock story and the whole picture of the Supplementary Estimates. There is no doubt that what has happened this year is that several circumstances, all of which can lead to bad estimating, have combined together to bring about a very considerable Supplementary Estimate. This is not unusual. Many of these factors arise not infrequently though they do not, of course, always combine in the way that they have this year. I do not say that the target is never hit. Looking back over the last six years since 1955, there was in 1957 a Supplementary Estimate to cover an excess of 25 per cent. on the Vote as a whole.
926 In 1955 and 1958, there was what proved to be quite considerable overestimating. In other years the Estimates, taking them together, turned out about right, but not without considerable over- and under-estimating in certain commodities. In one year, for instance, there was £36 million over-estimated in respect of one commodity, but this was counter-balanced by Estimates being proved wrong the other way, the total Vote in the end coming out about right.
This system with all its inherent faults has been supported over the years by both sides of the Committee. It is, of course, designed to ensure a fair return to the farmer for his produce and, at the same time, to ensure that the consumer has the advantages of food cheaper than would be the case under a different system of control of imports, either fiscal or quantitative.
To what extent has it been successful this year? I take, first, the farmers' point of view. The increased figure for support of fatstock—fatstock, of course, is by far the biggest element in it—is £78 million this year over last year. I am not talking about the difference between the original Estimate and the Supplementary Estimate, which just happens to be the same figure, but I am speaking now about the amount of subsidy paid out on all fatstock this year as compared with last year. Every penny of that £78 million has been paid to the farmers, but a large part of it has not led to any increase in the gross takings of the farming community.
The reason is that, because the market price fell, the sums had to be larger to take account of the difference between the market price and the guaranteed price. But within that figure of £78 million, £31 million has been paid by virtue of increases in the guaranteed prices for beef and for pigs which were made at the last Review and for the extra numbers of cattle, sheep and pigs which have come off our farms this year.
I now turn to the matter as it concerns the consumer. It has been a popular cry that the consumer has gained nothing from the fall in prices. Let us look at what has happened. I will take, if I may, the last published figures of the cost-of-living index for December. The index shows that the increase in the cost of living as a whole 927 was 4½ per cent. over December, 1960, and that the increase in the non-food items during that period was 5½ per cent. The figures show that the increase in the food items was 2 per cent, and that the item of food which contributed most to this small rise was meat, for the meat figure was 6 per cent. less in December, 1961, than it was in December, 1960.
Perhaps we can consider this from another angle. When we put in this Supplementary Estimate we had knowledge of what the movement in the retail prices of meat would be like on the figures produced by the Ministry of Labour up to December. We had, then, to estimate the price up to the following April. In doing that, we had to arrive at a figure covering April, 1961, to April, 1962. I do not think that the estimate we made will be all that far out. I believe that the cost-of-living index figure for meat over the whole period—from April, 1961, to April, 1962—will be 4 per cent. down compared with the previous year.
What does that represent? The value of meat at the retail point throughout the country—and this is for all meat produced including that which is imported—is about £1,300 million a year. A 4 per cent. reduction on that total is about £50 million. A reduction of £50 million spread over every family represents about £1 a head a year, or about 6d. per week per head and this might not be thought to reflect very much on individual families. It is, therefore, understandable why individuals may not have felt that there has been this fall in the price of meat. Nevertheless, looking at it from the other side of the coin, £50 million as a reduction in the context of our discussion today—a Supplementary Estimate for fatstock of £67 million—is quite a considerable figure.
§ Mr. Frederick Peart (Workington)
The Minister is now giving average figures concerning retail prices and their effect on consumers. Why, when he put this Supplementary Estimate to the House, did he say that any estimate of what the consumer received could only be speculative? How does the Minister arrive at this figure, since his Department has no accurate figures on this subject? Is not the figure he has given representative of a very small sample and, therefore, only speculative?
§ Mr. Soames
It is speculative for two reasons, one of which I have given, namely, that we have had to cast our minds forward to market prices at the end of next April because this Supplementary Estimate is from April, 1961, to April, 1962. That is one inevitable element of speculation. The second is that this is not based on individual purchases in individual shops, but by taking an average—which has been accepted by both sides of the Committee—of the movement of prices as reflected in the cost-of-living index. As I have said, this figure of £50 million in the context of what we are now discussing is a very considerable figure.
But what of the distributive trades? What sort of a year has it been for them? Let it be said, first, that they have had a good year, for things have gone forward. The quantity has been right, the market price has been low and the demand has been strong. Thus, this has been a good year for them, certainly compared with the previous year, when the situation from their point of view was not so satisfactory. It is very difficult to estimate what the extra figure is for all the distributive trades. There are 40,000 butchers' shops apart from 200,000 other units which handle meat at some point during the distributive chain—importers, slaughterers, grocers, supermarkets, and the rest.
When I presented this Supply Estimate, in December, I made what I think, in retrospect, was a bad calculation, because I took a bad base point. I took as the base the figure of £78 million which was the increased amount of subsidy we expected to be paid out. I took the figures of £31 million for the farmer and £35 million as the benefit that the consumer had received from home-produced meat on the prices that had had to be paid. I added those together and subtracted the total from £78 million. I arrived at the figure which I said I would call about £10 million.
As I say, that was all done on a false base and the more I have looked at this the more impossible I think it is to reach a conclusion as to how much, throughout all this complicated chain of the many units at different levels, one can estimate the many links in the chain and the level of increases in profits. Certain figures have been made available 929 to us. One well-known retail chain of shops has published its figures. These show that the profit made on meat by that chain in the period which we are discussing was under 1½d. per lb. This firm is in both the retail and wholesale links of the chain. The only comment I would make on this figure is that even were it very considerably reduced it still would not have made any great impact on what the consumer would have paid for meat.
Undoubtedly, some firms—the multiples particularly—have reflected the movement of wholesale prices in their retail prices very much more closely than have other firms. Indeed, the knowledge that we have of the movement in prices in some businesses over the course of the year, together with what we take to be the average movement of meat prices from the retail prices index shows that there must have been some firms which moved them considerably less than did other firms.
It is also revealed—and we know this without any doubt—that the movement in prices at the retail point of different cuts of meat has varied enormously. Some figures I have in my mind from a well-known organisation show price cuts varying from a 4 per cent. reduction on steak to, I think. a 20 per cent. or more reduction on the poorer cuts of Iamb. What I think has been shown beyond peradventure, and what has been highlighted this year from the point of view of the consumer, is that there have been opportunities to get very considerable reductions in the cost of meat compared with the previous year, but to obtain full advantage, purchasers have to be very "choosey" both as to the cuts of meat they wish to buy and the shops they wish to patronise.
Of course, there are some who always go to the same butcher's shop and who are always inclined to ask for the same cut of meat, but there is no doubt that discrimination both as to the type of meat that was bought and the shop in which it was purchased have given the consumer this year the opportunity to get very much above that average of the reduction in cost of meat at retail point.
§ Mr. William Baxter (West Stirlingshire)
The calculation made by the right hon. Gentleman is, I believe, on a false foundation. The Supplementary 930 Estimate seeks to give a bonus or an award to quality produced cattle, but that has a bearing on the other side of the matter, cast cows. That is one of the biggest selling features of beef in any market at present. The price of cast cows fell from approximately £50 or £40 per cow to £30 or £20. The right hon. Gentleman is basing his calculation on the butchers' meat sold in a shop.
§ Mr. Soames
This debate is about all the animals which go through the certification centres and are certified as achieving a certain standard so as to be able to qualify for the subsidy. I quite agree that the more low quality meat there is on the market the more it tends to drag down the whole tone of the market. That undoubtedly is so, but deficiency payments are paid only for animals which reach a certain quality when inspected in the certification centres.
The retail end of the business is only a comparatively small part of the total meat industry. What is most disturbing, and what has brought about this Supplementary Estimate for fatstock more than for anything else, is the change both in the pattern of marketing and the source of marketing and the fact that, following this considerable increase in home supplies, but not a very large increase in total supplies, the market has fallen to such an extent.
Some of the factors are, I hope, transient, but others, I hope even more strongly, are those which will be with us for some time to come, notably a high level of production of meat from our own farms. If this is to be so, it is most disturbing that the market seemed so incapable this year of adapting itself to these changed conditions. [HON. MEMBERS: "Hear, hear."] I am talking about the whole pattern of meat marketing from the market itself down to the butcher's slab.
There have been a number of inquiries in the 1900s into meat marketing. There was the Linlithgow inquiry after the First World War, and the Reorganisation Commission for Fatstock in 1934, the recommendations of which had not been put into operation when the last war intervened. Then there was the Lucas Committee, which examined this matter with other matters during the 931 post-war period. The proposals of that Committee for fatstock marketing, also, were not implemented.
The situation we are facing today, however, is entirely different from what it was when any of those Committees examined the problem. I cannot break these figures down for beef, but, taking cattle as a whole, there are 55 per cent. more in this country than there were just before the war. There is 40 per cent. more lamb killed off our farms than just before the war and 85 per cent. more pigs. The situation is fundamentally different. I am convinced that what we need is a thorough re-appraisal of our whole system of meat marketing.
§ Mr. Soames
Yes, a committee. I can assure the hon. Member that I am not the slightest bit ashamed of setting up a committee. With the agreement of my right hon. Friend the Secretary of State for Scotland and my right hon. Friend the Home Secretary, we propose to set up a committee of inquiry whose terms of reference will be:to investigate the organisation of the marketing and distribution of fat stock and carcase meat in the United Kingdom, and the existing facilities and present methods employed; to consider whether changes are desirable: and to make recommendations.From the producer point of view there is a strong feeling among many farmers that a producers' marketing board for meat would have alleviated our problems to some extent this year.
§ Mr. Anthony Fell (Yarmouth)
My right hon. Friend has told us that a committee is to be set up to look into the whole question of marketing meat. Could we have a promise from the Government that nothing will be done to disturb the present support of agriculture before that committee has reported?
§ Mr. Soames
I think that my hon. Friend misunderstood the purpose of the committee. Its purpose is not to look into the system of agricultural support, but into the whole structure and system of meat marketing within the industry. I am coming later in my speech to the question of the change in the system.
A substantial body of producers would like to see a producer marketing board for meat. The leaders of the National 932 Farmers' Union have said that they certainly do not dismiss this thought from their mind—indeed, they intend to examine it. Nevertheless, there are weighty arguments on both sides about the setting up of a producer marketing board and I have had discussions on this with the President of the N.F.U. We are in agreement that before taking this point further, it is necessary for us to look into both the pros and the cons in some detail.
The feature which, obviously, needs looking into most of all is what degree of control a meat marketing board must have to have an effective impression upon the market and the corollary of that, namely, whether the level of control which is necessary to have an effective impact upon the market would be such as to be acceptable within the national interest as a whole. This will fall within the terms of reference of the committee.
§ Mr. George Darling (Sheffield, Hillsborough)
Will slaughterhouses and slaughterhouse policy, and, perhaps, recommendations for factory abattoirs be included in the terms of reference?
§ Mr. Soames
I would not go so far as to talk about recommendations, but the whole system of meat marketing, which includes both markets and slaughterhouses, will be included.
The other point concerning the Estimates is the question of the importation of meat. We are, of course, limited within our international obligations in ways which hon. Members know well. It does not do any good either to the exporting Government or to this country if the levels of importation of any commodity are such as to lower the price to an unacceptable level.
I have drawn the attention of every major meat exporting country to the situation on our market and have asked them in the ensuing year, because the level of supplies of meat in the coming year will, I expect, be at least as high in total as it was during the past year—although, I hope, the pattern will be spread more evenly—to take the fullest possible account of the situation in our market when they plan their exports to us.
§ Mr. F. J. Bellenger (Bassetlaw)
Will the Minister be more explicit? What 933 does he mean by that? He says that he has consulted exporters overseas. Does he mean that he wants them to limit their exports to this country?
§ Mr. Soames
No. Exporting countries are well aware of this. Many of them depend on these exports for their livelihood. If the volume of any commodity on our markets is such as to break the market, as it did in beef last summer, nothing will be gained by the exporting country any more than by us. That is what I said.
§ Mr. A. E. Oram (East Ham, South)
Will the terms of reference of the proposed committee include the question of imports? The Minister may recall that the Lucas Committee complained that it was not able to produce a more valuable Report because its terms of reference did not include the question of imports. Can the Minister assure us that the same mistake will not occur this time?
§ Mr. Soames
I am not at all sure that it is a mistake. We are not looking to the new committee to advise the Government what its trading arrangements should be. It will, however, take into account what trading arrangements exist when it makes its report.
§ Several Hon. Members rose——
§ Mr. Soames
I really must get on.
The Estimates Committee said, in its Report, thatIn your Committee's opinion, this Supplementary Estimate is fundamentally due to the policy embodied in the Agriculture Acts rather than to avoidable miscalculations in the original Estimates.The present system of support has served the country well and has had the support of both sides of the House of Commons over a long period. Of course, the situation in which we find ourselves today, from the viewpoint of supplies of food throughout the world, is very different from what it was when the system of support was introduced. If we are to maintain, as we on this side are determined to maintain, the possibilities for the agriculture industry to remain buoyant and virile and to make its contribution to the national life, we must be prepared to adapt the systems of support that we use to the circumstances as they present themselves. We 934 have our pledge to the agricultural industry that the 1957 Act will remain operative during the lifetime of this Parliament, and this pledge, of course, remains.
We have also to think of the fact that negotiations have begun with the Common Market to see whether it is possible to make arrangements which are suitable from the viewpoint of preserving the vital interests both of the Commonwealth and of our own nation, to enable the country to join the Common Market. Of course, no changes can, or should, be brought about until the outcome of those negotiations is decided.
Changes will inevitably be necessary to a considerable extent if we join the Common Market; of that there is no doubt. Quite considerable changes in our system of support to suit the existing circumstances may well be necessary, in any case. Meanwhile, however, we continue with our present system of support, with its advantages and also with the risks of bad estimating or bad out-turn as against the Estimates which are inherent in it. At the same time, the Government will continue to do their best within the scope of what is open to them to ensure that the out-turn is as near as we can manage to bring it to the Estimates.
§ 4.28 p.m.
§ Mr. Frederick Peart (Workington)
We have had an amazing speech from the Minister, At first, I thought that he would explain in detail the effects of Government policy on the price support position. Throughout my speech, I should like to challenge some of the Minister's main assumptions. I am astonished at his cursory announcement of the new committee on marketing. I will deal with that, because we on this side feel that over a long period of years the Government have failed to respond to our prodding on marketing policy.
I believe this to be one of the most critical debates for agriculture that we have had in the House of Commons. Hon. Members, on both sides, are disturbed about the results of the Government's policy. The Government cannot escape responsibility for their miscalculations. I see the hon. Member for Kidderminster (Mr. Nabarro) opposite me. I can imagine his reactions if a 935 Labour Minister had been making the same speech——
§ Mr. Peart
—or if the Chairman of the National Coal Board had made so many miscalculations.
The Government face a critical debate. There is, of course, as the Minister quite rightly said, the shadow of the February Price Review negotiations, and he has mentioned now the Common Market negotiations, and there is also, and above all, the general financial and economic policy of the Government—the Chancellor's policy. We cannot separate increased payments and increased farm incomes from the Government's financial policy as announced recently in the White Paper. So, today, we must inevitably consider the system in relation to that general background.
Today, the Minister has been slightly more forthcoming than he was when the increased Estimates were announced on 14th December last year. I was astonished that the Minister did not, when he announced the increase, make a statement to the House. That was an example of how the right hon. Gentleman tried to evade his responsibilities for giving the House full information. The reputation of the Secretary of State for Scotland on this has been rather that of a political clam. We are, after all, discussing not only Estimates which affect England and Wales, but also nearly £13 million for Scotland, and, so far, we have had no major statement on these Estimates from the Secretary of State.
On 14th December we cross-examined the Minister, although I am sure that he arranged for an ordinary Question to be addressed to him so that he could evade making a major statement; but we have had no statement as yet from the Secretary of State. I know that that will be remedied, and I hope that some of my Scottish colleagues will chase the Secretary of State, who has so far failed to make a major statement.
Fortunately, we had the benefit of the Report of the Estimates Committee, and I, too, would like to congratulate the Chairman of the Commitee, which is comprised of hon. Members from both 936 sides of the House. The Committee extracted from the Minister information which he could have given to the House in December. I should also like to congratulate the Minister's Permanent Secretary on the evidence which he gave and on the memorandum which he submitted. Indeed, the speech of the Minister today is only a rehash of his own Permanent Secretary's memorandum to the Estimates Committee.
The Minister described the total cost of agricultural support as now running at £344.7 million and how he is now seeking to justify the increase of £78 million. The figures now are known. We need not go into them in much detail—£35.3 million for cattle, £13.6 million for sheep, and £17.9 million for pigs. Then there are the Estimates which have been mentioned for cereals and for potatoes.
The Minister talked about a combination of several factors, howwholesale prices for each of these commodities have fallen greatly below expectation over the course of the year."—[OFFICIAL REPORT, 14th December, 1961; Vol. 651, c. 604.]and from the Minister today we have had really what is virtually a hard luck story—a very hard luck story—about how everything has gone wrong, how the weather has not responded, how the Price Review determinations have had the effect of an increase in beef production, how, in pig production, the determinations of the Price Review last year have led to a larger flow on to the market, then the flow of imports from outside, from Denmark—which the Minister today did not mention, but which was mentioned in the memorandum submitted by the Ministry to the Estimates Committee—the extra Irish store cattle, and extra wheat from France, and so on: all this, he said, has led to a depression of the market.
Our main case today is that though we accept that there may be certain factors in agriculture which cannot be estimated——
§ Mr. Peart
There are bound to be, but when the Labour Government were in power, in 1947, when our flocks of sheep were affected by the bad weather, we were attacked unmercifully by hon. Members opposite. Here we have a 937 combination of factors, and a combination of factors effected by deliberate Government policy.
Indeed, over the last two years the Government have encouraged increased beef production and the remarkable fact is that farmers have produced more. Because of the circumstances, because of what is termed a free market, because the Government have not sought to create an organised market linked with a deficiency payment system, inevitably such a crisis has occurred. So what we are really debating today is the fact that the system has broken down.
However much one looks at the figures which were mentioned by the Minister, however one examines the miscalculations which are now admitted—and, my goodness, does not the Minister admit gross miscalculations?—he cannot escape his Department's responsibility in this. Here, we are seeing a breakdown of the system, and the hon. Member for Kidderminster and others who are very vigilant on Estimates know that that is really the issue behind the debate today on these Estimates.
§ Mr. Peart
The hon. Member can have an opportunity to make his contribution. I thought, judging by where he was sitting, that he was a P.P.S. today.
I want to know what the Minister will do. We heard him talk about the interim committee on marketing. He made a significant statement on 14th December in reply to a question from one of his hon. Friends, when he said thatwe 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."—[OFFICIAL REPORT, 14th December, 1961: Vol. 651, c. 605.]I want to know from the Secretary of State whether the Minister really does intend to take action in relation to the Price Review. I want to know what is the Government's policy towards marketing.
I do not intend to be fobbed off by the announcement of this new committee. As hon. Members on the other side know, this is only window-dressing; it is only a last-minute sop by the Minister. 938 He does not even know who the chairman of this committee is to be, or who are to be its members. I want to know, as I shall demonstrate later, from the Minister what really is his policy on marketing.
As I have said, the Minister must accept responsibility for gross miscalculation. We have had the benefit of the work of the Estimates Committee, and I have paid a tribute to that, but we want to know now where the money has gone. I think that he said that 5 per cent. went to the consumer during the period. Now he has changed his mind. I quote what he said:In round figures, about £31 million…will have gone to the farmers for the increased number of cattle coming forward and because of the higher prices…My hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) asked where the other £45 million had gone. The Minister, in reply, said that there had beena 5½ per cent. reduction in retail prices…"—[OFFICIAL REPORT, 14th December, 1961; Vol. 651, c. 605–6.]The right hon. Gentleman has argued all along that the consumer has benefited by £35 million, and in reply to a question by my hon. Friend said then that the other £10 million went to the distributive trades.
I assert again, as I did in an intervention in the Minister's speech today, that the Minister's figures are only speculative. Indeed, he said this when he announced these figures. I should like to know how the Minister has arrived at these figures. I hope that we shall have an answer from the Secretary of State. His own Department does not collect retail prices. The Ministry of Labour, of course, does, but even that Ministry takes only a small sample. How can we really have direct comparisons for retail meat? I have here the figures which have been given to me by certain butchers' organisations—no doubt, organisations similar to those which the Minister has mentioned. I have figures given to me by the Meat Trades Federation. I shall not argue who is right, or who has benefited, whether the farmers, the butchers or the distributive trade. Individuals have taken advantage of the system which has been created and that is where, I hope, my hon. Friends will focus their attack.
939 As yet, we are unable to get exact figures. Even when we considered retail prices, the Minister said, "The consumer could benefit if she would be a bit more choosey. How can ordinary families, old-age pensioners and people on small incomes be choosey in relation to the buying of steak and other high quality cuts? They cannot possibly buy these.
§ Mr. Soames
I did not mean that. When I was talking about people being choosey, I meant that the price reduction had not been on the more expensive cuts, but, in fact, on the cheaper cuts.
§ Mr. Peart
I think that what the right hon. Gentleman was really saying was that the consumer should have bought cheaper cuts—scrag-end and meat of that kind.
If we examine retail prices we find that they vary from locality to locality, from the North of England to the South of England, and, indeed, the Scottish position might be quite different from that in the South. I cannot see how the Minister can be so dogmatic. After all, the Minister himself has argued that this is speculative. Again, the Estimates Committee examined the Minister's evidence. [Interruption.] I am glad that hon. Members opposite support my point of view. I would advise all hon. Members to read paragraph 20 of the Second Report from the Estimates Committee, which deals with the relationship betwen wholesale and retail prices. It says:It might have been expected that the payment of the extra £51 million which was made necessary by a fall in market prices of fat-stock would have been reflected in a reduction of retail prices. The witness from the Ministry of Agriculture was asked whether the low wholesale prices for beef had had this effect. He replied that they had not done so to the extent that the Department would have wished, pointing out that it was to the advantage of the Ministry that price reductions should be passed on to the public because this should stimulate demand, strengthen the market price and so lower the deficiency payments. Your Committee are concerned that this process has, in the opinion of the Department, operated so ineffectively.In other words, the Estimates Committee merely reinforces the point of view that I have put forward.
§ Sir Spencer Summers (Aylesbury)
I think that in all fairness anyone seeking to pass judgment on a situation should 940 recognise that no evidence was taken from the retail meat trade. The last words that were quoted merely reinforced the statement of the Minister. There was no opportunity, because time did not permit, for the retail trade to make its point of view.
§ Mr. Peart
The hon. Gentleman, who was responsible for the Report, cannot escape responsibility for it. Nor can the Minister escape responsibility for the evidence which he submitted to that Committee.
I should have liked to have been set up—I have always argued for this—a permanent Select Committee which could examine an industry like this and where expert witnesses from outside, the National Farmers' Unions, the Meat Trades Federation and other people concerned with the industry, could be examined. The Minister was submitting evidence, and the hon. Member, who was Chairman of that Committee, must also accept responsibility for the findings of his Committee.
§ Sir S. Summers
I am not seeking to escape any responsibility. All that I am seeking to do is to draw the attention of readers of the Report to the fact that the retail meat trade did not have an opportunity to put its point of view.
§ Mr. William Ross (Kilmarnock)
The hon. Member will appreciate that the Chairman of the Estimates Committee has power to call anyone to give evidence on the matter under discussion.
§ Sir Godfrey Nicholson (Farnham) rose——
§ Sir G. Nicholson
I think that hon. Members should realise that the Estimates Committee in this case could only examine a Supplementary Estimate, Which it examined at the end of December. It had to produce a Report in time for this debate. It could not conduct a full-scale inquiry into all the operations and probably it would not have been in order to have done so.
§ Mr. Peart
I think that is a remarkable admission from two members of the Estimates Committee. I do not want 941 to chase the two hon. Members, for whom I have the greatest respect, but I think that, on reflection, and in view of all their long experience in the House of Commons, they will find that their interventions were rather unfortunate.
§ Sir G. Nicholson rose——
§ Mr. Peart
I must continue with my speech. I have been very courteous and I have given way on two or three occasions. After all, we are discussing evidence which is on the record. I can only assume that this evidence is right. Indeed, it is confirmed by the evidence that has been submitted by the Minister. Other responsible people have commented on this. I have here a report in The Times, from its political correspondent, and I am proposing to quote from other papers which are sympathetic to the Government. The Times of 14th December, 1961, stated:In other words, the taxpayer as consumer has paid twice. Through taxation he has paid out millions to support the meat producers' prices during the months when the market collapsed; through the butchers' shops, it is held, he has not benefited from lower prices.The Times, in its editorial, on 15th December, 1961—this is not a Socialist criticism of the Government, but a criticism from a newspaper which is sympathetic to the Government—said, under the heading "The Price of Meat":Next to the gross official miscalculation, the most unwelcome aspect of the supplementary estimate for agriculture is the failure of the retail price of meat to respond fully to the drop in wholesale price. The fall in wholesale price is offset by deficiency payments (hence the size of the supplementary estimate). But it is one of the boasts of the British system of state support for agriculture, about which much has been heard in relation to the Common Market, that while it guarantees a decent living for farmers it also secures cheap food for the people.The Daily Telegraph, which is proGovernment—and I shall not read all the evidence from people sympathetic to the Government—on Friday, 15th December, 1961 said: