§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Concannon.]
§ 3.18 a.m.
§ Mr. George H. Perry (Nottingham, South)
I apologise for delaying the House still further at this very late hour. I only hope that I shall be able to stay awake and make my point.
My hon. Friend the Minister of State knows that I became interested in this subject as long ago as October, 1967, when I first contacted his immediate predecessor on behalf of a friend of mine of very long standing. On that occasion I was shuttled back and forth between the Board of Trade and the Ministry of Agriculture, Fisheries and Food for some time and succeeded in getting nowhere very quickly. I tried again in October, 1968, and again made no progress.
In June of this year I put the case in the hands of my right hon. Friend the Member for Belper (Mr. George Brown), in whose constituency my friend now lives. My right hon. Friend told me that until he went into hospital on 3rd July he had been having a battle with the Board of Trade on this question. The day before he entered hospital my right hon. Friend said to me, "I am afraid I got nowhere. They are not prepared to move a hand". My right hon. Friend sent me copies of correspondence he had received from the Board of Trade, including the minutes of a meeting between himself and the Minister of State as long ago as June of this year.
My right hon. Friend has given me carte blanche to carry on during his absence in hospital. I am still very concerned that the answers given to us over the past 18 months or two years are contradictory, ambiguous or somewhat vague. Is my hon. Friend the Minister of State aware of the full significance of his information to me that the Department has issued as many as 300 apple import licences as at 1st July this year? I have made investigations, and my information is that it is quite possible that over 50 per cent. of those 300 licence holders belong to three small groups. My observations in the East Midlands lead me to the conclusion that in Nottingham, 844 for instance, 28 per cent. of the market space is occupied by Dutch and American interests. The same applies in Derby, with 35 per cent. Leicester, 48 per cent. Wolverhampton, 65 per cent., with the space in the markets there occupied by two firms which are actually foreign interests trading under the name of old family concerns.
This sort of thing is happening all the time. Down the years, the name of Johnson Brothers has been known as that of an established business, but now, although the name still obtains, the firm is controlled from outside. Almost every week a firm is taken over in these localities by one of the large combines, the faceless men who never see an apple. They do not know what an apple looks like, yet they are allowed to make vast fortunes through being given licences.
The public are being fleeced every week, being almost bled white and exploited by these people who just want to make vast sums of money. Does the Board of Trade know what is going on in this sector of the distributive trade in this country? It seems to me that Lord Thomson's words could apply here. These are not just apple import licences; they are more like licences to print money.
My constituent and friend, now the constituent of my right hon. Friend the Member for Belper, could not be granted a licence. We were told that the reason was that he does not already hold a licence or he does not import goods at the present time. It is possible to import Australian apples, but one cannot import goods from the Continent without a licence. This is the off-season, but my friend tells me that he can buy a 40-lb box of apples at Southampton docks for 28s. Transport to his own town in Derby is 2s. That is 30s. for the 40-lb box. Yet when he goes to buy them from one of these firms with an import licence, as he has to do to carry on his trade, he has to pay as much as 60s. or 70s. for it—a box of French golden delicious or some such. He then has to add his profit, as he is entitled to do, to earn a margin to pay his staff and meet his rates and taxes. The price to the public can sometimes be 1s. 3d. for a single apple, or 3s. 9d. a pound. One apple has cost as much as 1s. 10d.
845 This is the way the housewife is being fleeced, because certain firms have a stranglehold on the market. I very much hope that my hon. Friend the Minister of State can answer my questions and give some assurance through me to my long-standing friend.
§ 3.23 a.m.
§ Mr. John Wells (Maidstone)
I follow the hon. Member for Nottingham, South (Mr. George H. Perry) in a more general sense. He has rightly raised the case of his former constituent, but I wish to develop the generality of the matter which he has raised.
In recent weeks there has been a reallocation of apple licences. My complaint would be more at the attitude of the Board of Trade in this reallocation. There was a massive reallocation in 1967, which was then, reputedly, to last for many years. It was said to be a major change. Why, then, do we need another major change only two years later, and, if we are to have such a major change, why has there not been a much closer examination of the bona fide trading credentials of those who have applied? This is where the House must be grateful to the hon. Member for Nottingham, South, for raising this subject.
There are people who have applied for licences and, for all I know, have been granted them, and who have done little bona fide trading in apples. They have been trading in other imported horticultural commodities and in order, as it were, to round off their portfolio and make themselves more attractive to trade, they have wanted apple licences. I hope that if there is to be a further reallocation at some future date there will be far greater consultation with the trade. The Minister of State has a good reputation in the House for his fairness and accessibility and his ease of personality, but I remind him that he was less than gracious to the deputation which waited upon him. Hon. Members who know his amiable reputation were surprised by the brusque handling of the existing licence holders, who felt very aggrieved about it.
This matter is bound to be looked at again. The 1967 review was meant to last a long time but was rethought in a couple of years. I ask him, when the matter is reviewed again, to pay 846 closer attention over a longer period to the representations of the bona fide trade and to see that licences are given to the bona fide traders. We all know that licences should not be given for all time, that there should be a flow. We appreciate that times change, but I hope that the Minister of State or his successor—who, I hope, will be drawn from this side of the House—will listen to the trade rather more closely.
§ 3.27 a.m.
§ The Minister of State, Board of Trade (Mr. Edmund Dell)
I at once respond to what the hon. Member for Maidstone (Mr. John Wells) has said about my treatment of representations from the existing licence holders. His remarks were completely unjustified. I am grateful to him for his compliments to me but to suggest that I was brusque with the licence holders is totally unfounded.
What happened was that officials of the Board of Trade held discussions over a long period with the representatives of the fruit trade. One section of the trade subsequently, because it was not satisfied with the way the officials had accepted its arguments, asked to see me. I saw representatives of that section and we had a discussion which I thought was fruitful, following which that section put up to the Board of Trade certain proposals for reallocation. The Licence Holders' Association, which had also had discussions with my officials over a very long period, then also asked to see me. It was indicated to it that it had already presented its arguments and that if a review was to take place by 1st July a decision was likely to follow rapidly after its representatives had seen me. Nevertheless, I added that if they wished to see me personally, they could, and we arranged on that basis for them to come to see me.
Some of them came to see me and I listened to their arguments and I think that I made it clear to them that, although I had taken note of the arguments, which had already been presented to my officials, I could not guarantee that these would lead to any holding up of the reallocation. In fact, we decided to go ahead with the reallocation a few days later. I see no reason for complaint. They could have asked to see me earlier and I would have been prepared to meet them earlier.
§ Mr. John Wells
The 1967 allocation was held up as the great allocation to last for many years. Why the haste within two years? The hon. Gentleman says these people could have seen him sooner. Two years is a very short time.
§ Mr. Dell
I am simply answering the remarks made by the hon. Member about the way in which I received the delegation which, if I may say so in my own defence, were completely unjustified.
I will now come to the basic question of why the Board of Trade decided to carry out this reallocation. Although he welcomes the initiative of my hon. Friend the Member for Nottingham, South (Mr. George H. Perry), the hon. Member for Maidstone is on a different side of the issue. The hon. Member for Maidstone does not want a further reallocation. My hon. Friend wants a far more radical reallocation than has occurred. Although they both welcome the fact that the point has been raised, they are arguing from a different point of view.
I welcome my hon. Friend's initiative in raising the matter because it represents to the House and to the public something which certain of those from the trades who made representations to me refused to believe, and that is that there was pressure from hon. Members and from people outside for a reallocation.
The purpose of import licensing is, of course, to keep the amount of imports from the restricted sources within a certain ceiling. Unfortunately, however, the technique used of issuing licences to individual importers inevitably means that we also decide the amount of trade which individual importers can do; we decide, that is, the distribution of the trade between different traders. Our objective here, and I am sure that the House will agree that this is the right objective, is to interfere as little as possible with the way trade would have been distributed between individuals in the absence of restrictions. What we have to do, therefore, is to try to find some criterion by which to judge what the distribution of trade would have been in those circumstances.
In a situation in which imports of a particular commodity are restricted for the first time, the obvious way of doing 848 this is to take the distribution of the trade as it existed immediately before the imposition of restrictions. This is, for example, largely what was done in 1951 when, after a short period during which there were no restrictions on imports of apples and pears from non-dollar sources, such restrictions were reimposed in November of that year.
As time goes on, however, the continued use of an historical period of that sort clearly becomes less and less defensible. It freezes trade in a pattern which becomes increasingly artificial, and it is unfair. It is unfair to new firms who would otherwise have entered the trade; it is unfair to firms already in the trade who, because they are more enterprising and efficient, would otherwise have increased their share in the trade. It is unfair; and it also leads to abuses. Because of the restriction, licences are valuable and are worth money. That is the point made by my hon. Friend the Member for Nottingham, South. To continue an inflexible system of allocation that has no regard to the way the importing trade is developing generally is to invite abuse of the system. A situation inevitably arises in which we get not just trading in licensed apples but also trading in the licences themselves.
The problem of remedying this situation lies in the difficulty in finding some criterion, other than trade in quota apples before the restrictions were imposed, by which to assess the trade which individual companies would be doing if there were no restrictions. In the case of apples, we can get some guidance at least from trade in other fresh fruit.
There are very few traders who would in ordinary circumstances be importing only apples, and only apples from the sources to which the restrictions apply —I should perhaps remind the House that apples from the sterling area are admitted without quantitative restriction. They will normally be importing other fresh fruit also, for example, apples from the sterling area, pears, peaches, citrus and so on. The size of the trade they do in this unrestricted sector is certainly no perfect guide to the trade which they would be doing in apples had there been no restriction. It is, however, some indication, and I think the only one we can at present turn to.
849 That is why, when a measure of reallocation was introduced in 1967, a part of the allocation was based on imports of apples from non-quota sources, and imports from the major quota countries of other fresh non-tropical fruit. The main part of the allocation—80 per cent. in fact—was, however, still based on imports of quota fruit, and since these imports were necessarily limited by the licences each trader had, this meant that 80 per cent. of the allocation was still based on the trade which had taken place very many years before.
That is why earlier this year we felt the time had come to examine the possibility of making a further change in the allocation. We were influenced in this matter by an increasing volume of representations—to the Board of Trade and to the Ministry of Agriculture—that the new allocation was still unsatisfactory. It allowed insufficient scope for new traders to enter the trade, and for the more enterprising existing traders to expand theirs, and, it was alleged, trading in licences, even if carried out in forms which made it very difficult to detect, was still continuing on a sizeable scale.
The conclusion we came to was that it was wrong to continue an allocation still so very heavily based on trade done partly in 1951 and partly in 1936–39, and that some further change was needed. What we have done is in large part to repeat the procedure used in 1967 but to carry it further in two respects. First, a smaller part of the reallocation—70 per cent. as compared with 80 per cent. in 1967—has been based on trade in quota fruit and a larger proportion—30 per cent. compared with 20 per cent.—has been based on imports of other fruit. Secondly, whereas in 1967 we based this second part of the allocation on imports of non-tropical fruit from our main apple quota suppliers only, this time we have cast the net wider and used imports of such fruit from all sources. I will not go into all the details of the system used. These are complicated and it would take more time than is at my disposal to deal with them adequately. There is no question of people who are not bona fide importers qualifying under the system. I will, therefore confine myself to a few general points.
First, I would like to explain that we have consulted with the various trade 850 associations who represent the interest of importers in this field. It is fair to say that, while the views of traders were divided, the majority certainly were against any further reallocation. It would not, however, have been right to have settled this matter solely on the basis of the majority view inside the trade. We had to take account also of the minority view. We had also to take account of interests outside the importing trade who are affected by the way the importing trade works—I have in mind, for example, the retail trade and indeed the consumer. I should, however make it clear that the consultations we had with the importing trade were not just a sham and that we had careful regard to the points they made. It was in the light of some of these points, for example, that we based part of the allocation on imports of non-tropical fruit from all sources instead of just from the main apple exporting countries. It was in the light of the reactions of the trade that we finally decided to base only 30 per cent. of the allocation on imports of non-quota fruit instead of the 40 per cent. we had originally in mind.
The second point I should like to deal with is the one which the hon. Member for Nottingham, South has raised, namely why we have based the allocation only on returns of imports and have not thrown it open to other traders such as wholesalers or retailers, one of whom he is particularly interested in, who handle apples but do not themselves act as importers. There were two reasons. First, as I started by saying, our objective was to get as close as possible to the distribution of the importing trade which would have existed had there been no restrictions. If traders do not import fruit other than apples, it is a reasonable presumption that they would not, in the absence of restrictions, be importing apples either. Secondly, to have given licences to such traders would have made the whole licensing system unworkable. The number of traders who handle apples in one way or another, as wholesalers or retailers, is so large that to have given all of them an import licence would have fragmented the importing trade to an impossible extent and have resulted in many licences being of a value which was not commercially usable.
It may be suggested that we might get over this last difficulty by issuing 851 licences only to companies which undertook to import a specified minimum quantity. I frankly do not see how this procedure would help us. Unless we set the minimum very high indeed, a large number of traders would be willing to give an undertaking to import that minimum and the quota would be oversubscribed. We might avoid this by setting the limit very high indeed. It was suggested that the limit should be as high as £250,000. But this would mean that only a few traders would get licences indeed, only 50 if the figure of £250,000 were used. I cannot see any grounds in equity or efficiency for such a restriction in the number of licence holders. On the contrary, it seems to me indefensible to force out of this trade the smaller importer who has for years been importing apples and, on the evidence of his trade in other fruit, is clearly in the importing trade as his normal business and not solely in order to take advantage of the scarcity of quota apples.
This leads me to another point that my hon. Friend has made, about prices. At certain times of the year there is often a considerable gap between the price that importers pay for their apples overseas and the price that they realise for them in this country. But we cannot hope to restrict supplies—which is what the quota of course does—without affecting the price. It is not as though importers were monopolists holding the public to ransom. There are over 270 licence holders, and no one trader holds more than 4 per cent. of the total licences.
I do not follow the argument that, if we used an alternative system which might restrict the number of licence holders to a figure well below the 270, we could be sure that that smaller number would not exploit the price situation in the same way as my hon. Friend suggests that the price opportunities are being exploited at the moment.
My hon. Friend went on to suggest that, in a high proportion of cases, licences were concentrated in a very few hands. I have no evidence of that, and my hon. Friend has not submitted any 852 evidence of it to me before now. If he wishes to do so, I will study what he has to tell me.
Then there is the point about which the hon. Member for Maidstone was clearly concerned, that it might be said that the reallocation is unfair to traders who have lost their licences altogether or who have received a smaller licence in the past. Here we have got to face the fact that if we are going to allow newcomers to the trade, and if we are going to allow a larger trade to those firms which on the evidence of trade other than in quota fruit are the more enterprising, some traders are bound to lose. This takes us back to the crux of the issue with which I started. We have tried to get closer to the distribution of the trade which would have existed in the absence of restrictions. This means that some traders will gain and that some will lose.
We have had in this matter to strike a balance between conflicting considerations —on the one hand, the obvious imperfections of the earlier system and the need in equity to allow newcomers and give bigger allocations to the more enterprising firms; and, on the other hand, the imperfect nature of the criteria we have used and the possibility which I must accept, that in some cases they will have resulted in a measure of unfairness. I can only say that we examined this whole matter with the greatest care and that I believe that the balance we struck was about right.
§ Mr. John Wells
Before the hon. Gentleman sits down, has he any indication of the number of new licence holders who are not British taxpayers; in other words, foreign nationals or companies which are foreign-based?
§ Mr. Dell
I cannot answer that question without notice. Clearly it was never an intention within the licence system to limit the granting of licences to British nationals. That is not the way in which the licensing system has ever operated.
§ Question put and agreed to.
§ Adjourned accordingly at sixteen minutes to Four o'clock.