HC Deb 02 April 1973 vol 854 cc163-89

10.15 p.m.

Mr. David Clark (Colne Valley)

I beg to move, That an humble Address be presented to Her Majesty, praying that the Sugar (Distribution Repayments) (Amendment) (No. 4) Order 1973 (S.I., 1973, No. 306), dated 26th February 1973, a copy of which was laid before this House on 27th February, be annulled.

Mr. Speaker

Is it the wish of the House that the other two orders be discussed at the same time? Very well. We shall consider the two other Prayers in the name of the hon. Gentleman and his right hon. and hon. Friends: That an humble Address be presented to Her Majesty, praying that the Sugar (Distribution Payments) (No. 4) Order 1973 (S.I., 1973, No. 307), dated 26th February 1973, a copy of which was laid before this House on 27th February, be annulled. That an humble Address be presented to Her Majesty, praying that the Composite Sugar Products (Distribution Payments-Average Rates) (No. 4) Order 1973 (S.I., 1973, No. 307), dated 26th February 1973, a copy of which was laid before this House on 27th February, be annulled.

Mr. Clark

We are becoming used at this time of the evening to debates which have a common pattern. We regard these debates with distaste because they are about statutory instruments which crudely increase the price of food. We have had a bacon order and one sugar order already, and we now have before us three further sugar orders, with promise of more such orders to come.

The Government are earning a reputation for not being willing or able to introduce any form of subsidy to help the low-paid worker—no subsidy on food, in particular—while at the same time they are becoming experts at removing various subsidies. The order before us is of that kind.

These orders are of particular significance because, although they might appear to be of a purely technical domestic character, they have far wider repercussions. Indeed, the repercussions are world-wide, as I shall show. It is a mistake to look at these matters only in their domestic context.

These orders demonstrate vividly the shortcomings of the common agricultural policy. There are many hon. Members on both sides of the House who do not share my views on British entry into the EEC, but I believe that almost all to whom I have spoken, whether for or against Britain's entry into the Common Market, admit that the common agricultural policy is not sensible, is far from perfect, and demands radical alteration. I am sure that hon. Members opposite will not disagree with that. The orders now before us show how necessary it is to introduce a sensible agricultural policy within Europe.

It has long been recognised, and must still be recognised, that certain parts of the world, for climatic and other reasons, are ideal places for the growing of particular crops. One could give many examples, but I need do no more than refer to sugar in this context. Traditionally, Governments of both parties have accepted that case. We have felt it right to encourage underdeveloped countries in the tropical and sub-tropical areas to produce cane sugar. By our Commonwealth Sugar Agreement, we have encouraged them to grow more sugar, and one can fairly say that the economies of many underdeveloped countries are dependent solely upon sugar.

The system developed in the EEC is incompatible with that traditionally accepted philosophy. The EEC countries produce their sugar from sugar beet, and they currently have an annual surplus of about 1 million tons. There is a clash here between the traditional and common-sense system which we have hitherto adopted and the protectionist system in Europe. This is no secret. It was admitted throughout the negotiations. The Government recognise it very well. I think that it was one of the major issues in the negotiations which caused hon. Members on both sides the greatest anguish.

Many hon. Members are extremely unhappy about the end result achieved with reference to sugar. The Minister was unable to secure a written assurance or guarantee on this issue. We appeared to have an aura à coeur. We hope and we believe that this was given in good faith and we hope that the Common Market will treat it as such. We have noted the Minister's statement on Friday and we hope that the interests of the underdeveloped countries will be looked after. We further hope that the 1.4 million tons of sugar which will have access to the EEC will not come in at the expense of other primary products from the underdeveloped countries.

The orders deal with a section of our sugar supply system which contravenes the EEC regulations. Our system has been devised from the 1920's, consolidated under the Sugar Act 1956 into a highly complicated system of sugar support. The system has managed to protect the country from what is probably the most volatile of all primary commodities. Britain has had a regular supply of sugar at a reasonable price. It protected the Commonwealth sugar-producing countries and at the same time it protected British sugar beet producers. We recognise that there is a good case for growing sugar beet in certain parts of the country and we recognise its value as a rotation crop and for the way it provides employment in areas where unemployment would otherwise be high. Nevertheless, there has been a balance in the past and we want that balance to be continued.

Our complicated system of sugar support covers many facets, including refining margins, which the Minister last Wednesday on his return from the Council of Ministers announced had been increased by £4 a ton, and distribution payments. It is the distribution payments aspect with which we are specifically concerned tonight. The history of this goes back 13 months. On 8th March 1972 in a Written Answer at col. 359 the Minister announced what was in effect a subsidy to the consumer. He announced that the price of raw sugar bought under the Commonwealth Sugar Agreement from the underdeveloped countries had been increased and he made the point quite rightly that this was for the benefit of the developing countries. We did not dispute that point. He went on to argue that the refined sugar prices should be, as he termed it, "contained". In order to do this special payments were to be made to the Sugar Board. We supported the idea then and we wish that the Government would continue it now. The estimated cost was £25 million which worked out as a subsidy of about £15 per ton. That was the background at that time and so since then we have had experience of this direct subsidy.

However, the subsidy is illegal under the EEC rules and the Government are having to fade it out. Earlier we dealt with statutory instrument 1973/132/4 which withdrew the fluctuating distribution payment with effect from 1st February 1973. It replaced it with a fixed payment of £15 a ton. The orders we are now discussing lower the rate of payment by £5 to £10 a ton for refined sugar as from 1st March. I understand that if the orders are not annulled the subsidy until the end of April will be £10 a ton and new orders will be laid before the House reducing £10 a ton to £5 a ton. At the end of June it will be phased out completely. The payment, which has been a direct subsidy paid by the Sugar Boards to the refiners, the British Sugar Corporation or the sugar importers, as appropriate, is being phased out. That is the second stage of the operation. The cost has to be passed on 100 per cent. to the consumer.

What will be the effect? In a Written Answer the Minister told me a few weeks ago that the estimated effect would be to increase the cost of a 2-lb. bag of sugar by about l½p. That may not appear very much, but when we look at it in another way we see that it is quite considerable. The matter was put more forcefully earlier today by the President of the Food Manufacturers Federation, Mr. A. Beresford, who said that the cost of sugar would rise by 18 per cent. this year. That is roughly in line with what the Minister has suggested. The sum of l½p does not appear very much, but we see that an increase of 18 per cent. is quite considerable on a staple basic food product.

I remind the Minister that we have just emerged from a freeze, and are still in a period of severe restraint. The Government are controlling wages rigorously and are supposed to be controlling prices.

We all applauded the Minister of Agriculture, Fisheries and Food when he told us last Wednesday that in the Council of Ministers he was fighting to contain prices. He believed it necessary at this time of inflation to freeze prices. But the support we gave last Wednesday makes us feel rather cynical now when we consider orders by which in effect the Government are deliberately increasing the price of food. The Minister tells us that he is fighting in Europe to avoid that. The situation does not make much sense.

We are praying against the orders because we believe that they are not sensible. We are worried about the effects of dismantling our delicate, tried and tested sugar apparatus. We are especially worried about the effect on our traditional suppliers, the underdeveloped countries. We all know how volatile the market is and how important it is to keep the confidence of the sugar producers, because of what it means to the underdeveloped countries.

We are worried about the repercussions on the world market, especially as the EEC is not a signatory of the International Sugar Agreement. If the orders divert on to the world market many tons of sugar in addition to the Australian sugar that will be diverted, there could be chaos.

On the domestic front, the public cannot have too much confidence in the Government's fight against the pernicious phenomenon of inflation when the Government constantly come before the House after 10 o'clock at night, without publicity, to increase the price of basic foodstuffs.

For these reasons, because of the inconsistency and illogicality of the Government's case, I urge my right hon. and hon. Friends to support me in the Lobby tonight in trying to annul the orders.

10.29 p.m.

Dr. J. Dickson Mabon (Greenock)

I await with interest the Minister's reply on the impact of the orders on the cost-of-living index if we are not successful in praying against them. No doubt she has all the figures to hand. They may seem marginal, and she will no doubt argue that that is so.

However, the Government cannot take much comfort from the cumulative effect of the changes since our entry into the EEC, particularly when, at the same time, they are trying to operate a prices and incomes policy. I am surprised that, in those areas where they have some control left—sugar, for example—they are not being more cautious. Indeed, their pattern of behaviour since entry is remarkably inconsistent. Sometimes they are adventurous, sometimes timid. These orders are timid. The Government have cautiously and without much resistance admitted to the Commissioner that they should take all necessary steps to withdraw what remains of these food subsidies—which essentially is what they are —in order to conform to the Treaty of Rome in all its purity.

This attitude contrasts with the answer given to the hon. Member for Derbyshire, West (Mr. Scott-Hopkins) on 23rd March. While the Minister is "saving" money for the Treasury by these orders—how much is he saving?— He is spending a great deal introducing a subsidy which, according to the French Government, is entirely against the letter and spirit of the Treaty. According to the Financial Times, we are threatened with being taken to the European Court of Justice for introducing a new subsidy which, although it does not replace this subsidy, is nevertheless very much part of the economics of sugar. I applaud the right hon. Gentleman for doing it. I hope that he will persist. No doubt we shall learn the size of the subsidy on a Supplementary Estimate which, I understand, will extend from about the present time to 30th June. I should like to know why it extends for so short a period.

Thus, one subsidy is being taken away and another put in its place. I cannot understand why. The £17 a ton being given to the sugar refiners is to make up the difference between the price at which they can sell and the sugar refining margins recently agreed in Brussels. All this shows that our initial negotiations with the EEC were not as successful as they first appeared. The Minister, having lost the first round, is apparently trying to win the second, and I shall support him. He is right to make vigorous efforts in defying the French and others in order to reach a fair and sensible result.

If cane sugar refiners and port refiners cannot sell at the present commercial price, they will not be able to refine cane sugar, irrespective of quotas or orders or promises or anything else. Without the economics of refinement being understood and accepted, the figures in cane sugar tons are nonsense. We are, in effect, beginning the debate on the Commonwealth Sugar Agreement and other cane sugar implications which follow from re-negotiation, together with the International Sugar Agreement. The orders are not just concerned with a marginal half penny or penny on sugar. Although they are not immediately involved, they touch also on the whole future of the cane sugar refining industry of the United Kingdom.

While I speak for nearly 2,000 workers in Greenock there are many more thousands of workers in London and Liverpool who will be substantially affected if anything adverse happens to the United Kingdom sugar refining industry. I do not speak of beet sugar. It seems from the Financial Times of 23rd March that everyone is growing more beet. The French are growing more. Despite our pledge to the Commonwealth, we are to grow more. Those European countries not in the Nine will grow more and even in Eastern Europe the acreage of sugar beet in 1973–74 will increase substantially. This bodes ill for the developing countries. We must have a definite policy from the Minister and from the Council of Ministers.

With respect, I do not see how these orders are part of a consistent policy. They seem to be part of a retreat and advance pattern which the Government are following. As I understand it, there is to be a submission by the sugar refining industries of the Nine, to the Commission in the first instance, which will ultimately be referred to the Council of Ministers. They are putting up a blueprint for a new sugar system. This accommodates the interests of beet sugar, the Commonwealth cane and the port refiners. This kind of comprehensive approach is the right way to deal with the problem. I hope that the Parliamentary Secretary will not simply limit her reply to the narrow margins of the orders. I should like her to tell us when we will see the Supplementary Estimates. I should like her to tell us why there is this restriction of 30th June.

Otherwise, the way things are evolving we will need to have a proper debate on the Floor of the House at a sensible time, not late at night. This issue concerns consumers and workers and the interests of many millions of people who work in the developing countries supplying this country with sugar.

10.38 p.m.

Mr. Alfred Morris (Manchester, Wythenshawe)

My hon. Friend the Member for Colne Valley (Mr. David Clark) made a strong, indeed compelling, case in opening this debate. He quite properly referred to the wider implications of our deliberations and particularly to the uncertainties still facing cane sugar producers in the developing countries of the Commonwealth. The economies of many developing countries depend almost entirely on the prospects for their sugar industries.

My hon. Friend referred to the Commonwealth Sugar Agreement. The House should be reminded that for 21 years and more that Agreement has been the charter for Commonwealth sugar. The Agreement has linked countries across the globe, from Mauritius to India and from Barbados to Fiji, in long-term contracts at settled prices for two-thirds of the sugar consumed in this country. All of these countries are poor countries and for them the Agreement has been a catalyst for social and economic progress, for reviving once derelict industries, for earning much-needed foreign exchange, for providing better wages, for improved housing and health and, above all, for more jobs. For Britain, the Agreement has meant absolute security of supply, in bad times as well as good, at prices for the consumer which have been among the lowest in any developed country.

We have been reminded of the importance of the price of sugar. None of us wants to under-estimate the difficulties facing the Minister. Last week the Minister met representatives of the Governments of Barbados, Belize, Fiji, Guyana, India, Jamaica, Kenya, Mauritius, St. Kitts-Nevis-Anguilla, Swaziland, Tanzania, Trinidad and Tobago, and Uganda. I understand that at that meeting in London the exporting countries made it clear that they had already planned the future of their sugar industries on the strength of the assurances given at Lancaster House, that is, at the previous conference, on long-term access to the enlarged EEC, and that they would continue to do so. Of course, one of the problems for the developing Commonwealth countries is that they have been given an assurance by the British Government that has not been backed by an assurance of equal force by the European Economic Community.

My hon. Friend the Member for Greenock (Dr. Dickson Mabon) has referred to the increase in the production of beet sugar in the member States of the Common Market. We often hear from people in Western Europe that the poorer developing countries should diversify their economies, that they should not be so dependent on the production of cane sugar. It is notoriously easy for people in the temperate zones to lecture the poorer countries on diversification. The fact is that diversification is much easier in Western Europe than it is in Mauritius or in Fiji or in any of the sugar-producing countries of the Caribbean.

None of us wants European farmers to starve. The problem is to find ways of supporting them that do not have the mischievous side effects of the Common Agricultural Policy. There are various acceptable alternatives, all depending on using income support instead of price support. The French scheme, devised by M. Pierre Uri, would directly subsidise the incomes of the poor and medium farmers. Britain has some experience of applying both deficiency payments and selective production grants. In the end the Common Agricultural Policy will have to be drastically amended if it is not to destroy itself.

I referred earlier to countries that were present at last week's London conference on Commonwealth sugar. For my part, I much regret that Australia was not present as a full member of that conference. There are many who now wish to overlook the great part played by Australia in supplying the British market. The Australians have been treated badly by the British Government and there are those, on both sides of the House, who recognise the rôle that Australia still has to play in both helping the developing countries and in supplying her traditional market with cane sugar.

I hope that the Parliamentary Secretary, in reply, will not merely read a prepared brief. I hope that she will address herself to the issues raised in the debate. I hope, most of all, that she will have something to say about the wider implications of the debate as they affect Commonwealth countries.

10.45 p.m.

Mr. James Scott-Hopkins (Derbyshire, West)

I can understand the feelings of anxiety which have been expressed by the hon. Members for Greenock (Dr. Dick-son Mabon) and for Manchester, Wythen-shawe (Mr. Alfred Morris) on behalf of the Commonwealth. They feel that the developing countries—I leave Australia on one side for the moment—will be hard done by by the three orders. This is not true. The orders will not affect the production or the level of refining which is being done in the United Kingdom. This is not the immediate anxiety. I am glad to observe the hon. Member for Manchester, Wythenshawe indicating agreement. They are worried about the long-term effect of Community policy towards sugar and the United Kingdom's reaction to it.

The hon. Member for Manchester, Wythenshawe referred to the Australian position. Some of my family are in Australia. I have just as much affection for that country and those who produce cane sugar there as the hon. Gentleman. But it is extraordinary that we should be asked to provide a subsidy, which is what we have been doing, towards the Australian economy for the production of cane sugar when there is no need for it. This is a matter that I have failed to understand in recent years, but I believe that the Australians do understand it. [Interruption.] The hon. Gentleman spoke about subsidising the French or other countries in Europe.

Mr. Alfred Morris

Why is the hon. Gentleman prepared to subsidise the French?

Mr. Scott-Hopkins

I am not prepared to subsidise the French. [Interruption.] Let us not be diverted too far by these comments which come from hon. Gentlemen in sedentary positions. Doubtless they will make their points at a later stage if they have the pleasure of catching your eye, Mr. Deputy Speaker.

I turn from the position of the Australian producer to the main gravamen of what has been said by the hon. Members for Greenock and Manchester, Wythen-shawe concerning the developing countries of the Commonwealth and their position regarding production and access into not only the United Kingdom, but Europe. I find it extraordinary that hon. Gentlemen opposite completely refuse to accept the word of those in the Community about the increasing and continuing access of cane sugar. Indeed, from what hon. Gentlemen opposite have said about what was negotiated and embodied in the articles, they seem to think that the Community will break them willy-nilly and refuse to honour their word about continuing access.

The hon. Member for Manchester, Wythenshawe referred to the conference which has just taken place in which my right hon. Friend the Minister of Agriculture, Fisheries and Food took part. The representatives of the Commonwealth sugar producers, which the hon. Gentleman kindly enumerated for us, were satisfied with the arrangements which are being made at this moment.

Mr. Alfred Morris

I said that the British Government had given an assurance which had no definitive backing from the European Economic Community. That was the position at Lancaster House and that is the position today.

Mr. Scott-Hopkins

Continuing access was agreed not only into the United Kingdom, but into the Community. I do not need to read a lesson to hon. Gentlemen opposite about the conditions and the methods whereby the Community work out their three-quota system. This would be tedious for the House to endure. We have heard it in many debates concerning our accession to the Community. It is only on quota A that the Community is guaranteeing a price. Quota B is that amount of acreage or hectares, or however one wishes to compute it, which can be grown and which will pay a levy to sustain the quota A within the Community. Quota C can be grown only for export to world markets. No matter what the hon. Gentleman may think about these orders, the fact is that they do not affect the position in any way and will not be detrimental to the position that we have taken up.

As the hon. Gentleman knows, during the recent negotiations in Brussels my right hon. Friend the Minister of Agriculture was adamant about the subsidy— for want of a better word—which is paid in the United Kingdom for the refining of cane sugar. There were suggestions that the subsidy should be removed but my right hon. Friend stuck to his guns and insisted on our right to continue it, and I congratulate him on that. The existing situation will continue until 1974. There is no doubt in my mind, or in the minds of our Commonwealth producers who supply us with cane sugar, that the present level of access will be continued. Nor is there any doubt about the continuing access of cane sugar to this market after 1974.

The doubt being expressed by the hon. Gentleman relates to what will happen after 1974. The first point to remember is that a promise has been given of continuing access of a comparable amount in value. The second point to remember is that if the Community finds that the production is uneconomical there will still be the remedy that our Commonwealth sugar will have access to the United Kingdom market, and through that market into the Community, of the amounts spoken of originally in the negotiation agreements.

I have no doubt that the Community will honour the intention expressed in the negotiations. I see no reason to doubt that. The Community has honoured the intention of the agreement up to now. They are honourable men, and the agreement is in writing. I cannot understand why hon. Gentlemen opposite should think that people in the Community—be they German, French, Dutch or any other nationality—will renege on what has been agreed.

I understand the reason for hon. Gentlemen wishing to raise the matter. It is a fairly good aunt sally at which to throw coconuts, but I see no reason for doubting the promises which have been given. I am confident that they will be honoured, and so are the representatives of the Commonwealth countries whose livelihood depends on the agreement being carried out. If they are content I see no reason why I, too, should not be content.

I suggest to the hon. Gentlemen opposite that rather than try to find difficulties and create imaginary problems which cause anxiety not only abroad but in this country, too, they should take the facts as they are. They should consider what has happened in the short weeks since we joined the Community. They should confine their remarks to the honouring of agreements since our joining the Community. By their comments tonight hon. Gentlemen opposite are doing a disservice not only to this country but to those members of the Commonwealth who are listening to what they are saying. Hon. Gentlemen opposite are creating anxiety, worry and doubt in the minds of our Commonwealth sugar producers when there is no need for them to worry.

Dr. Mabon

Given the hon. Gentleman's optimism, which I am sure we all hope will be realised, about what will happen after 1974, what I cannot understand is how the hon. Gentleman, who was a Minister at the Ministry, can say that all will be well until 1974. On 28th March his right hon. Friend said that the subsidy would go on until 30th June. What will happen between 30th June 1973 and the renegotiation in 1974?

Mr. Scott-Hopkins

The subsidy required at that time will be on a descending scale. With the level of sugar prices, the subsidy will not be required.

The Commonwealth Sugar Agreement has been to the great advantage of our Commonwealth partners—

Mr. Alfred Morris

And to the British consumer.

Mr. Scott-Hopkins

And to the British consumer. But at this moment it is to the disadvantage of our Commonwealth partners because the world market price is higher than the Commonwealth Sugar Agreement price for the quota that comes in and, therefore, the British consumer gets an advantage. But for many years —certainly in the 1960s when I had a degree of responsibility—it was the other way round. It was greatly to the advantage of our Commonwealth producers and not to the advantage of the British consumer. The one has to be weighed against the other.

Our Commonwealth producers will not suffer between June 1973 and the end of 1974 by the temporary withdrawal of the £17 per ton refining subsidy, bearing in mind the uncertain level of world sugar prices.

What we have been saying has little to do with the orders. The issue is a wider one. I ask the House to believe that our Commonwealth producers will not suffer from the Community's policies. The Community will keep its word. Cane sugar producers are getting the best deal possible in the circumstances of increasing beet and sugar production in the western world.

10.56 p.m.

Mr. Thomas Torney (Bradford, South)

I wish that I could share the optimism of the hon. Member for Derbyshire, West (Mr. Scott-Hopkins) about the reaction of the Commonwealth to the proposals of the EEC. I recently visited the Caribbean where I found a great deal of support for the apprehension that has been expressed by my hon. Friends. This is no wild scare. We spoke to responsible members of the Governments of the Caribbean countries who voluntarily raised with us their worry about being able to sell their sugar in view of our entry into the EEC. They were concerned about the effect upon their countries if the EEC fell down on its promises. I have seen the degradation in these countries and the extremely high unemployment in Jamaica, and I hate to think what might happen if these countries were unable to get a return for their sugar.

That is a wider aspect, and I want to come back to the orders and say what worries me about them. I was very concerned about what was said by my hon. Friend the Member for Colne Valley (Mr. David Clark). I know it to be true. He pinpointed the matter for me. It was not in the forefront of my mind. However, it should be reiterated, because I am very concerned for a particular reason, which I shall explain.

My hon. Friend said that over past weeks a number of orders, many dealing with subsidies on food, have been slipped through very late at night. I reiterate and endorse the serious danger in this practice. We all know what happens in the House. Many members of the Press go to bed well before 10 p.m. I do not mean that literally, but newspapers are ready for printing before a debate such as this debate can come forward. Therefore, perhaps the people of Britain are not so well aware of orders which will cause them to have to pay more in due course for many basic food commodities as they would be if the Press reported a split in the Labour Party. They are not so aware that these matters will cause them to pay more for their food.

I make no apology for harping upon a pet subject which is so near to my heart. During most of my life as a trade union officer I was engaged in the struggle to obtain a better standard of life for the lowest paid and those worst hit in our community. I do not apologise for returning to this matter tonight. I did so when a similar order was brought before the House on another item of basic food. I also spoke from the Dispatch Box on behalf of low-paid workers in a debate on the wage freeze machinery.

My hon. Friend the Member for Colne Valley has told us that the order will mean a 1½p increase in the price of a 2 lb. bag of sugar. Those with fairly good incomes may say that this is not very much. Possibly for most right hon. and hon. Members on the Government side of the House it means nothing. But 1½p is about 4d. in the old money. Coupled with the various increases on so much of our food recently, and coupled with the orders—also brought before the House after 10 p.m.—stopping wage increases for workers earning £15 a week, the l½p increase is very important. It is a very urgent matter, particularly for those about whom I am concerned, those among the very lowest income groups.

Sugar is one of the basic commodities. This matter concerns not just the housewife who buys a 2 lb. bag of sugar to put a little of it into tea or coffee. Sugar is used in many items of manufactured foods. This order will surely have repercussions on very many foodstuffs. It will add to the past increases of the prices of many basic foodstuffs.

My hon. Friend told us that some food manufacturers anticipate that the cost of five basic foods, one of which is sugar, will rise before the end of 1973 by between 4 per cent. and 25 per cent. It is not the Opposition or the Labour Party who are saying that. It is the food manufacturers.

Mr. Scott-Hopkins

The hon. Gentleman will accept that only one person has said that about the rise in food prices and it may well be denied by other food distributors. He must be accurate about that. Secondly, will the hon. Gentleman say exactly how the three orders will raise the price of a 2 lb. bag of sugar by 1½p?

Mr. Torney

It is quite clear that if we take a subsidy off anything, be it meat, sugar or cereals, it will ultimately work its way down to the consumer by way of increased price. The same thing applies to VAT.

I make the strongest possible protest against the increases in the prices of our foodstuffs. It will be useless for the Parliamentary Secretary to reply, as has the right hon. Gentleman the Minister in the past, that we have no control over the price of many of the fresh foods, and so on, that we import. That sort of reply is no use to, say, the wife of a man on a very low wage or to a pensioner on a low fixed income. Some way must be found to ensure that people, and particularly those who are the worst off, can buy enough of the basic food commodities. The Government have been most unhelpful both by their inflexible wages policy and by the recent Budget. It is no use offering low-paid workers or pensioners an ice-cream cornet when they need a piece of meat or a bag of sugar.

I hope the hon. Lady will tell us how these unfortunate people can be expected to buy these basic food commodities which they need in order to keep body and soul together whilst prices keep going up, and while the Government show no encouragement by introducing orders of this type, not only tonight, but last week and the week before.

11.8 p.m.

Mr. Michael Shersby (Uxbridge)

First, it is proper that I should declare an interest, in as much as outside the House I am the Director of the British Sugar Bureau.

We have been listening to a wide-ranging and interesting debate which has had little to do with the subject of the orders. What we are discussing is a Prayer against the reduction of a purely domestic subsidy which was introduced to deal with temporary high world prices. In February of this year the subsidy was reduced to £15 a ton. In March it was reduced to £10 a ton, and with effect from the end of April it will come down to £5 a ton. It will eventually disappear altogether at the end of June.

The reduction of £5 which we are now discussing is the equivalent of ½p on a 2 lb. bag of sugar, which at around 8½p represents astonishingly good value for money. Sugar is one of the cheapest commodities available to the British housewife by comparison with almost any other foodstuff one can mention. It plays an important part in the balanced diet because it is a carbohydrate, which is why the cheapest sugar is important to the housewife. But the total amount involved when the subsidy ends will mean an increase of l½p. This is a purely temporary subsidy.

It is interesting to compare the attitude of hon. Members opposite on this emotive subject of sugar tonight, when they are worried about an increase of l½p, with their completely different attitude to the announcement of my right hon. Friend the Chancellor in the Budget Statement relating to reductions in the prices of ice-cream, soft drinks, confectionery, and so on, amounting to £110 million, which has given the British housewife real reductions on many hundreds of lines which are essential items of diet and which more than compensate for this small increase. Tonight we have been treated to many crocodile tears which should be exposed for what they are.

This does not affect the interests of the developing countries. We are talking about a purely domestic subsidy. Therefore, I do not think that the debate should be taken as an opportunity to debate the wider questions of Commonwealth sugar.

However, having heard so much about the subject this evening I cannot resist saying that the difference between the amount which was negotiated in Brussels in January and the amount of £17 which was announced by my right hon. Friend last week is not a subsidy. It is recognition of the margin already agreed between the Government and the refiners and of the efficiency of the cane industry internationally.

As I have said in the House before, what the cane industry needs for the post-1974 sugar regime is a realistic profit margin on normal industrial criteria which takes account of the efficiency of the industry and the need of Commonwealth countries to export their sugar both to this country and to the Common Market at a price commensurate with the interests of all consumers within the Community. Let us not have any more crocodile tears about 1½p on 21bs of sugar. Let us hear more about the substantial reductions which have been made as a result of the Chancellor's Budget Statement on so many lines, which will compensate so many housewives for this small increase in the price of sugar.

11.12 p.m.

The Parliamentary-Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner)

I can well understand why hon. Members have sought to use the debate on the Prayer to refer to the Commonwealth Sugar Agreement.

It is impossible to link these orders in any way to the question of imports from developing countries. For the period up to 1974 these are safeguarded by the existence of the Commonwealth Sugar Agreement, to which my hon. Friend the Member for Derbyshire, West (Mr. Scott-Hopkins) referred, and thereafter the developing countries will be protected by the arrangements which will be renegotiated with the Community under Protocol 22 of the Treaty of Accession. At the meeting last week all the Governments confirmed that they would continue to regard the Community's undertaking as a firm assurance of a secure and continuing market in the enlarged Community on fair terms for the quantity of sugar covered by the Commonwealth Sugar Agreement in respect of all its existing developing countries.

The United Kingdom reaffirmed that it stands by its assurance contained in the communiqué, without reservations. As we are not strictly discussing the Commonwealth Sugar Agreement, I think that that deals with the point.

The hon. Member for Greenock (Dr. Dickson Mabon) raised the point of the subsidy to refiners, to which my hon. Friend the Member for Uxbridge (Mr. Shersby) has referred. The sum is £3.5 million, as announced by my right hon. Friend. The hon. Member wanted to know why it had been announced only to 30th June. The margin available to the refiners depends on the difference between the prices fixed for raw and white sugar, and 1st July is the start of the Community's next sugar season. It is only until then that prices for raw and white sugar have been fixed.

The three orders are the mechanism whereby the Government are injecting an Exchequer subsidy on sugar. The present rate of subsidy is £10 a ton, which at the retail level is equivalent to about 1p on a 21b bag of granulated sugar. This represents the first reduction of £5 with effect from 1st March. The remainder will be phased out by the end of June of this year.

I should like to begin by recalling the origin of the subsidy. Up till March 1972, when the subsidy was introduced, it had not been the practice for Exchequer money to be used in any way in our sugar system. Indeed, there used to be Revenue duties on sugar for the Exchequer's benefit until they were abolished along with those on other foods in April 1962 by the Chancellor of the Exchequer in the administration at that time.

Since then the consumer has paid the true and fair costs on our various supplies. These are derived essentially from two sources—sugar purchased under the Commonwealth Sugar Agreement at a price negotiated every three years, and homegrown sugar beet purchased from farmers at a guaranteed price. Because these prices are stable for considerable periods, the price to the consumer has similarly been fairly stable. He has been almost entirely insulated from the fluctuations in the world price which can affect other foodstuffs so much. The precise mechanism by which this has been effected is very complicated and I will not go into it tonight, but it is sufficient to say that it has required periodic adjustments in the Sugar Board's rates of surcharge or distribution payment to offset the world price movement.

Early in 1972 it was clear that the price to the consumer would, if no action were taken, rise appreciably. We have just renegotiated the prices to be paid for the sugar received under the Commonwealth Sugar Agreement for 1972, 1973 and 1974. These have remained unchanged for six years and a substantial increase was due.

There had also been an increase in the price to be paid for beet from the 1972 crop, and the refiners' margin had also increased to an extent which reflected changes in their costs. All in all, it looked as if the range of ex-refinery prices announced for 1972 would have to be £92 to £102 a ton compared with £79 to £87 a ton in 1971—an increase at the midpoint of the range of nearly 17 per cent.

The Government then, as now, were extremely concerned about the increase in the cost of living, and we decided at the beginning of March last year that it would be proper to make additional payments to the Sugar Board, to enable it to keep the price of sugar within the range of £82 to £92 a ton, which is a rise of slightly less than 5 per cent. at the mid-point.

Subsequently, in recognition of the high prices which had prevailed in December, January and February, we were able to introduce an even lower range of £77 a ton to £87 a ton. In the event, the average price for the 13 months from the beginning of 1972 to 31st January 1973 was £88 per ton, or 6 per cent. above the mid-point of the 1971 range. Retail prices which had been as high as 10p to 10½p per 2 lb. packet in January and February 1972 came down to 8½p to 9p a packet.

Our original intention when the subsidy was introduced was that it was a temporary measure to last no longer than the end of 1972. By then, however, we had introduced phase 1 of our prices and incomes policy. Moreover, prices had been high in the early months of 1972, and in order to achieve our target average for the whole year the subsidy was latterly running at about £15 per ton with an average ex-refinery price of about £83 per ton.

Mr. Charles Loughlin (Gloucestershire, West)

I am trying to follow what the hon. Lady is saying. May I refer her to Statutory Instrument No. 307? This is, I assume, a distribution payment. Could she tell me why, at 17.02F, caramel, solid, is 0.50 whereas caramel, liquid, is 0.34? If the hon. Lady will turn over the page—[HON. MEMBERS: "Oh!"] Mr. Deputy Speaker, we are being asked to approve these orders and I am asking for information. The hon. Lady will give me the information if hon. Members will be a little less impetuous. Under the tariff heading 20.01 there is a reference to vegetables and fruit, and the figure against that is £0.17 per cwt. At the end of that section, however, there is the word "other". What is "other", to which the figure of £003 relates?

Those are the two questions I put to the hon. Lady: first, with reference to heading 1702F, caramel, solid and liquid, and the differential between them; and, second, with reference to heading 20.01 and the word "other", at a rate of £0.03.

Mrs. Fenner

I recognise the hon. Gentleman's keen interest in the matter. As he raises a technical point which deserves a complex reply, I shall ensure that the reply is sent to him by letter.

I was saying that prices had been high in the early months of 1972, and in order to achieve our target average for the whole of 1972 the subsidy was latterly running at £15 per ton, and the average ex-refinery price at about £83. This represented a subsidy of about l½p on a 2 1b. packet of sugar.

It would have been wrong during this period of severe restraint to have removed a subsidy of this size abruptly at the end of December. We therefore extended it till 31st January, and in consultation with the Community we were able to secure its continuance until 30th June on a reducing basis.

The orders which we have debated reduce the rate of subsidy by £5 per ton and reflect the first step in this process of phasing out. Of itself, this increase will not have a significant effect on consumers. In formal terms, the increase is equivalent to a rise in the food index of 0.18 per cent., attributable in roughly equal proportions to sugar bought in shops and sugar used by food manufacturers.

In practical terms, we buy about 1 lb. of sugar per head per week in the shops, and the increase represents no more than ¼p a pound. The effect is ½p for each of us once a fortnight, a figure which could be covered by giving up one cigarette a month or, say, one pint of bitter a year. The full effect of the removal of the subsidy will at the end of the phasing be three cigarettes a month or three pints of bitter a year, but it is relevant to remind the House that increases in pay are now possible under phase 2 of the counter-inflation policy.

It is impossible to forecast the practical effect on the price of manufactured foods, but, as my hon. Friend the Member for Uxbridge said, in the case of many foods with high sugar content, such as chocolate and sugar confectionery, icecream and soft drinks, the removal of purchase tax and zero rating for VAT will far outweigh the effect of removing the subsidy. [Interruption.] Hon. Members should not assume that people do not eat chocolate and sugar confectionery, ice-cream and soft drinks in pretty large amounts.

In any event, under the Counter-Inflation Act, before any manufacturer can increase his prices he must be able to show that the increase is justified in the light of his whole cost structure and not just in the light of an increase in the price of one of his raw materials. That would relate to manufactured items containing sugar.

As hon. Members know, I am not sold on the idea of food subsidies. They are an indiscriminate benefit showered equally on the rich and on the poor, and they have many other disadvantages which I have no time to go into now. In our view, the proper course has been gradually to withdraw the sugar subsidy in line with the progress of our prices and incomes policy, and that is the purpose of these orders.

11.25 p.m.

Mr. Norman Buchan (Renfrew, West)

Nobody could ever accuse the Government of showering their blessings over rich and poor. Their blessings have been directed very much towards the rich and away from the poor since the Government came into power. We are getting a little sick of being told by Ministers every time we are confronted with an order increasing the price of food that the price will go up by only 0.18 per cent. or 0.2 per cent. or 0.25 per cent. If all those small amounts from the last few months are added up the increase becomes considerable. The Parliamentary Secretary cannot get away with the argument about giving up three cigarettes in a year, nor can she explain it by saying that the increase is more than offset by the abolition of SET. When the Government remove SET from prices they claim that it is a large amount. When an equivalent amount is added to prices they say that it is small.

There are two main reasons why we shall vote against the orders. One is the situation in which they are being brought forward. They have been introduced in the middle of the biggest explosion in prices the country has had since the war. The Minister's latest figure for increases in all prices since the beginning of the freeze was 5.4 per cent in mid-February. That represents an annual rate of increase of 23 per cent. I remember when the Leader of the House, a former Minister of Agriculture, attacked the Labour Government in June 1971 for allowing prices to rise 25 per cent in five years. Is it any wonder that we oppose measures

which will increase the price of food at this time?

We also oppose the orders because they show an appalling weakness. There is no need for many of the orders the Government have been bringing forward. They moved on the beef guarantee, on bacon and now on sugar. We were supposed to be operating a transitional period lasting seven years. Instead, the Government have progressed to the end of 1977 within a matter of weeks just when the workers' wages have been frozen.

That is why we oppose the orders. We are also concerned with the effect on the Commonwealth countries. It is not good enough for the hon. Member for Derbyshire, West (Mr. Scott-Hopkins) or the Minister to talk about assurances. We have not yet received those assurances from the Common Market.

We were told in the latest document that there was a firm assurance of a secure and continuing market. Is this assurance any firmer than aurà à coeur or the assurances given before? One of the Commissioners in the Common Market this week took the opportunity to deplore the fact that there were no Labour Members in the European Parliament fighting against high prices. Labour Members are here fighting against high prices and against the Government's policies—and voting. Considering the implication of these prices for Greenock, a reputed Liberal stronghold, we might have expected Liberal Members to be present tonight.

Those are the reasons why we are opposing the orders. It is an insult to the people of this country to be scrapping the system of support that we have used for foodstuffs. We have still not received from the Government assurances about the—

It being half-past Eleven o'clock, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 4 (Statutory Instruments, &c. (Procedure)).

The House divided: Ayes 158, Noes 182.

Division No. 95.] AYES [11.30 p.m.
Allaun, Frank (Salford, E.) Atkinson, Norman Bishop. E. S.
Archer, Peter (Rowley Regis) Barrett, Guy (Greenwich) Booth, Albert
Armstrong, Ernest Bennett, James (Glasgow, Brldgeton) Bottomley, Rt. Hn. Arthur
Ashton, Joe Bldwell, Sydney Boyden, James (Bishop Auckland)
Brown, Hugh D. (G'gow, Provan) Hunter, Adam O'Halloran, Michael
Buchan, Norman Irvine, Rt. Hn. Sir Arthur (Edge Hill) O'Malley, Brian
Campbell, I. (Dunbartonshire, W.) Janner, Greville Parker, John (Dagenham)
Castle, Rt. Hn. Barbara Jay, Rt. Hn. Douglas Parry, Robert (Liverpool, Exchange)
Clark, David (Colne Valley) Jenkins, Rt. Hn. Roy (Stechford) Pavitt, Laurie
Cocks, Michael (Bristol, S.) John, Brynmor Peart, Rt. Hn. Fred
Cohen, Stanley Johnson, James (K'ston-on-Hull, W.) Pendry, Tom
Coleman, Donald Jones, Barry (Flint, E.) Perry, Ernest G.
Concannon, J. D. Jones, Rt.Hn.Sir Elwyn(W.Ham,S.) Prentice, Rt. Hn. Reg.
Cox, Thomas (Wandsworth, C.) Jones, T. Alec (Rhondda, W.) Prescott, John
Crawshaw, Richard Judd, Frank price, William (Rugby)
Crossman, Rt. Hn. Richard Kaufman, Gerald Radice, Giles
Cunningham, Dr. J. A. (Whitehaven) Kerr, Russell Reed, D. (Sedgefield)
Dalyell, Tam Kinnock, Neil Rhodes, Geoffrey
Davies, G. Elfed (Rhondda, E.) Lamborn, Harry Roberts, Albert (Normanton)
Davies, lfor (Gower) Lamond, James Roberts, Rt.Hn.Goronwy(Caernarvon)
Davis, Clinton (Hackney, C.) Latham, Arthur Robertson, John (Paisley)
Davis, Terry (Bromsgrove) Lestor, Miss Joan Roderick, Caerwyn E.(Brc'n&R'dnor)
Deakins, Eric Lewis, Ron (Carlisle) Rodgers, William (Stockton-on-Tees)
Dell, Rt. Hn. Edmund Lipton, Marcus Roper, John
Demosey, James Lomas, Kenneth Ross, Rt. Hn. William (Kilmarnock)
Dormand, J. D. Loughlin, Charles Shore, Rt. Hn. Peter (Stepney)
Douglas-Mann, Bruce Mabon, Dr. J. Dickson Short, Rt.Hn.Edward (N'c'tle-u-Tyne)
Duffy, A. E. P. McBride, Neil Silkin, Hn. S. C. (Dulwich)
Edelman, Maurice McCartney, Hugh Sillars, James
Evans, Fred McElhone, Frank Silverman, Julius
Ewing, Harry McGuire, Michael Skinner, Dennis
Faulds, Andrew Machin, George Smith, John (Lanarkshire, N.)
Fernyh'ough, Rt. Hn. S. Mackenzie, Gregor Spearing, Nigel
Fitch, Alan (Wigan) Mackie, John Spriggs, Leslie
Fletcher, Ted (Darlington) Maclennan, Robert Stallard, A. W.
Foot, Michael Mahon, Simon (Bootle) Stewart, Rt. Hn. Michael (Fulham)
Ford, Ben Mallalieu, J. P. W. (Huddersfield, E.) Strong, Gavin
Freeson, Reginald Marks, Kenneth Tinn, James
Gilbert, Dr. John Marquand, David Torney, Tom
Golding, John Marsden, F. Tuck, Raphael
Grant, George (Morpeth) Marshall, Dr. Edmund Urwin, T. W.
Griffiths, Eddie (Brightside) Mason, Rt. Hn. Roy Varley, Eric G.
Hamilton, James (Bothwell) Meacher, Michael Wainwright, Edwin
Hamling, William Mendelson, John Watkins, David
Hannan, William (G'gow, Maryhill) Millan, Bruce Wellbeioved, James
Hardy, Peter Milne, Edward White, James (Glasgow, Pollok)
Harrison, Walter (Wakefield) Mitchell, R. C. (S'hampton, ltchen) Whitlock, William
Hattersley, Roy Molloy, William Wilson, Alexander (Hamilton)
Heffer, Eric S. Morgan, Elystan (Cardiganshire) Wilson, William (Coventry, S.)
Horam, John Morris, Alfred (Wythenshawe) Woof, Robert
Houghton, Rt. Hn. Douglas Morris, Charles R. (Openshaw) TELLERS FOR THE AYFS:
Howell, Denis (Small Heath) Moyle, Roland Mr. James A. Dunn and
Hughes, Robert (Aberdeen, N.) Mulley, Rt. Hn. Frederick Mr. Joseph Harper.
Hughes, Roy (Newport) Oakes, Gordon
Adley, Robert Cormack, Patrick Griffiths, Eldon (Bury St. Edmunds)
Alison, Michael (Barkston Ash) Crouch, David Grylls, Michael
Astor, John Crowder, F. P. Gummer, J. Selwyn
Atkins, Humphrey d'Avigdor-Goldsmid, Sir Henry Hall, Miss Joan (Keighley)
Awdry, Daniel Dean, Paul Hall, John (Wycombe)
Baker, W. H. K. (Banff) Deedes, Rt. Hn. W. F. Hall-Davis, A. G. F.
Balniel, Rt. Hn. Lord Dixon, Piers Hannam, John (Exeter)
Batsford, Brian Dodds-Parker Douglas Harrison, Col. Sir Harwood (Eye)
Bell, Ronald du Cann, Rt. Hn. Edward Havers, Michael
Benyon, W. Edwards, Nicholas (Pembroke) Hawkins, Paul
Biffen, John Elliot, Capt. Walter (Carshalton) Hayhoe, Barney
Biggs-Davison, John Elliott, R. W. (N'c'tle-upon-Tyne, N.) Hiley, Joseph
Boardman, Tom (Leicester. S.W.) Eyre, Reginald Holland, Philip
Body, Richard Fenner, Mrs. Peggy Hornby, Richard
Boscawen, Hn. Robert Fidler, Michael Hornsby-Smith, Rt.Hn.Dame Patricia
Bray, Ronald Finsberg, Geoffrey (Hampstead) Howell, Ralph (Norfolk, N.)
Brewis, John Fisher, Nigel (Surbiton) Hunt, John
Brinton, Sir Tatton Fletcher-Cooke, Charles Jenkin, Patrick (Woodford)
Brocklebank-Fowler, Christopher Fortescue, Tim Jessel, Toby
Brown, Sir Edward (Bath) Fowler, Norman Jopling, Michael
Bryan, Sir Paul Fox, Marcus King, Evelyn (Dorset, S.)
Buck, Antony Fry, Peter King, Tom (Bridgwater)
Butler, Adam (Bosworth) Gibson-Watt, David Kinsey, J. R.
Campbell, Rt.Hn. G. (Moray & Nairn) Gilmour, Sir John (Fife, E.) Kirk, Peter
Carlisle, Mark Godber, Rt. Hn. J. B. Kitson, Timothy
Chapman, Sydney Goodhart, Philip Knight, Mrs. Jill
Chataway, Rt. Hn. Christopher Goodhew, Victor Knox, David
Chichester-Clark, R. Gower, Raymond Lamont, Norman
Churchill, W. S. Grant, Anthony (Harrow, C.) Lane, David
Clarke, Kenneth (Rushcliffe) Gray, Hamish Langford-Holt, Sir John
Clegg, Walter Green, Alan Le Merchant, Spencer
Cooke, Robert Grieve, Percy Lloyd, lan (P'tsm'th, Langstone)
Loveridge, John Pounder, Rafton Stuttaford, Or. Tom
Luce, R. N. Powell, Rt. Hn. J. Enoch Sutclitte, John
MacArthur, Ian Prior, Rt. Hn. J. M. L. Tapsell, Peter
McCrindle, R. A. Proudfoot, Wilfred Taylor, Sir Charles (Eastbourne)
McLaren, Martin Pym, Rt. Hn. Francis Taylor, Edward M. (G'gow,Cathcart)
McNair-Wilson, Patrick (New Forest) Raison, Timothy Taylor, Frank (Moss Side)
Maddan, Martin Rawlinson, Rt. Hn. Sir Peter Tebbit, Norman
Mather, Carol Redmond, Robert Thomas, John Stradling (Monmouth)
Mawby, Ray Reed, Laurance (Bolton, E.) Thompson, Sir Richard (Croydon, S.)
Maxwell-Hyslop, R. J. Rhys Williams, Sir Brandon Tilney, John
Meyer, Sir Anthony Ridley, Hn. Nicholas Trew, Peter
Mills, Peter (Torrington) Roberts, Michael (Cardiff. N.) Tugendhat, Christopher
Miscampbell, Norman Rodgers, Sir John (Sevenoaks) Waddington, David
Moate, Roger Rost, Peter Walder, David (Clitheroe)
Money, Ernie Royle, Anthony Walker-Smith, Rt. Hn. Sir Derek
Monks, Mrs. Connie Russell, Sir Ronald Wall, Patrick
Monro, Hector Scott, Nicholas Ward, Dame Irene
Montgomery, Fergus Scott-Hopkins, James Weatherill, Bernard
More, Jasper Shaw, Michael (Sc'b'gh & Whitby) Wiggin, Jerry
Morgan-Giles, Rear-Adm. Shersby, Michael Wilkinson, John
Morrison, Charles Sinclair, Sir George Winterton, Nicholas
Mudd, David Skeet, T. H. H. Wolrige-Gordon, Patrick
Neave, Airey Smith, Dudley (W'wick & L'mington) Woodhouse, Hn. Christopher
Nott, John Soref, Harold Worsley, Marcus
Oppenheim, Mrs. Sally Speed, Keith Wylie, Rt. Hn. N. R.
Owen, Idris (Stockport, N.) Spence, John Younger, Hn. George
Page, Rt. Hn. Graham (Crosby) Sproat, lain TELLERS FOR THE NOES:
Page, John (Harrow, W.) Stanbrook, Ivor Mr. Hugh Rossi and
Parkinson, Cecil Steel, David Mr. Oscar Murton.
Percival, Ian Stewart, Donald (Western Isles)

Question accordingly negatived.


Motion made, and Question proposed. That this House do now adjourn.— [Mr. Humphrey Atkins.]