HC Deb 05 April 1973 vol 854 cc775-86

11.41 p.m.

Mr. Ian MacArthur (Perth and East Perthshire)

I am grateful to my hon. Friend the Minister of State for Agriculture, Fisheries and Food for coming to reply to this debate as we have already

I hope that, having heard the arguments, my hon. Friends will realise that I am by no means unmindful of their strong views, which I respect, but that from my personal experience and all the evidence before me I am convinced that the Government are right in laying these regulations.

Question put:—

The House divided: Ayes 54, Noes 15.

Division No.98.] AYES [11.30 p.m.
Allason, James (Hemel Hempstead) Goodhew, Victor Page, Rt. Hn. Graham (Crosby)
Atkins, Humphrey Grant, Anthony (Harrow, C.) Prior, Rt. Hn. J. M. L.
Blaker, Peter Green, Alan Pym, Rt. Hn. Francis
Bray, Ronald Gurden, Harold Rees, Peter (Dover)
Bruce-Gardyne, J. Harrison, Brian (Maldon) Roberts, Michael (Cardiff, N.)
Bryan, Sir Paul Haselhurst, Alan Russell, Sir Ronald
Carlisle, Mark Havers, Michael Scott, Nicholas
Clarke, Kenneth (Rushcliffe) Hawkins, Paul Shelton, William (Clapham)
Clegg, Walter Jopling, Michael Speed, Keith
Cohen, Stanley Knox, David Sproat, lain
Concannon, J. D. Lane, David Stodart, Anthony (Edinburgh, W.)
Cormack, Patrick Lestor, Miss Joan Tebbit, Norman
Costain, A. P. MacArthur, Ian Thomas, John Stradling (Monmouth]
du Cann, Rt. Hn. Edward Meyer, Sir Anthony White, Roger (Gravesend)
Faulds, Andrew Mitchell, David (Basingstoke) Wiggin, Jerry
Fenner, Mrs. Peggy Moate, Roger
Fisher, Nigel (Surbiton) Money, Ernle TELLERS FOR THE AYES:
Fortescue, Tim Morrison, Charles Mr. Oscar Murton and
Fowler, Norman Onslow, Cranley Mr. Hugh Rossi.
Fox, Marcus
NOES
Bell, Ronald Hamling, William Short, Rt. Hn.Edward(N'c'tle-u-Tyne)
Body, Richard Kinsey, J. R. Stanbrook, Ivor
Bowd'en, Andrew Lestor, Miss Joan
Coombs, Derek Maude, Angus TELLERS FOR THE NOES:
Crouch, David Pendry, Tom Mr Anthony Fell and
Davis, Terry (Bromsgrove) Powell, Rt. Hn. J. Enoch Mr. Nicholas Winterton.
Faulds, Andrew

discussed the matter. However, the outcome of our discussion was disappointing and, I submit, wrong. I trust that my hon. Friend will be kind enough to reconsider that outcome in the light of the debate.

The problem concerns a firm of potato merchants—J.E. England & Sons (Wellington) Ltd., a substantial public company, whose head office is in Wellington and whose main Scottish office is in Aber-nethy, in my constituency. It was Mr. Howard England, one of my constituents, who first brought the problem to my attention. My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne), who I am delighted to see in his place, was also approached by the manager of a subsidiary company in Forfar in his constituency.

I shall turn to the facts of the case before expressing my opinion about the Government's reaction to the facts which I presented to them. On 15th March the firm was approached by Italian importers who wished to buy ware potatoes. Messrs. England made a preliminary offer which was accepted in principle on 16th March. Various negotiations followed with which I need not trouble the House, and 620 tons of potatoes were finally accepted on 21st March.

The Italian customer opened a credit account with Barclays Bank on 22nd March, and confirmation by way of a letter of credit from Barclays Bank International Limited, Fenchurch Street, London is dated 23rd March. In the meantime Messrs. England had obtained the option to charter a vessel, the "Gulf Crescent", which was to come from Le Havre to Montrose for loading between 2nd April and 4th April. The charter was confirmed on 23rd March, and the contract confirming charter is dated 23rd March. As the dates and times are significant, I add that the Telex confirming the charter which I have seen is timed 15.35 that day—23rd March.

I ask the House to note carefully that by Friday 23rd March, Messrs. J. E. England had thus completed a contractual obligation to supply 620 tons of potatoes to Italy, and had completed a contractual obligation to charter a vessel. The date of 23rd March is critical to my argument because the Government that same day decided to impose a ban on potato exports.

My constituent's brother, a co-director, was first alerted to the possibility of a ban at 17.05 on 23rd March, when he was told on the telephone by a customer in Ireland of a rumour that a ban was to be introduced. By then the contractual obligation for the sale had been completed by the firm. The next day, Saturday 24th March, my constituent read of the ban in a newspaper. That ban was to take effect from midnight on Thursday 29th March. The House will recall that the vessel chartered by the firm had been engaged to load at Montrose between 2nd April and 4th April.

On Monday morning, 26th March, the firm got in touch with the Ministry of Agriculture to ask what was the position. The firm was referred to the Department of Trade and Industry. My constituent tells me that the first reaction of the Department was to the effect that a prior commitment would probably be covered but that it would have to find out. Later that day the firm was told by the D.T.I. that the ban was absolute and there could be no exceptions to it. The firm, therefore, accepting this advice, was forced by this Government decision to cancel its contract with its Italian customer and to cancel the charter of the vessel.

At my request a director of the company called to see me here later that day and gave me photo-copies of all the documents of the case and some originals. I went to see my hon. Friend the Minister of State and explained the position to him. I expressed my opinion that the Government—a Conservative Government—would surely wish to enable the firm to honour its obligations. I know that my hon. Friend accepts totally that the documents are in order and that the obligations had been entered into as I have described.

Yet, having informed the firm categorically on Monday, 26th March, that there could be no exceptions to the ban, the DTI telephoned my constituent on Wednesday afternoon, 28th March, to say that a licence would be granted after all in certain circumstances, one of which was in the event of loading starting before midnight the next day, Thursday, 29th March. But the firm had already engaged a vessel in good faith, before the ban was known, to load a few days later. It was impossible to conjure up another vessel at this absurdly short notice.

If that were the whole story it would be disgraceful enough, but it is not. No exception was made for this contract by my constituent, although natural justice surely demands that it should have been, but I understand that among the exceptions that were made were one or two where the vessel was delayed and loading started after the deadline date. I fail to see any distinction between delay by storm or some other cause and delay to my constituent's chartered vessel because it was already committed to complete is previous charter in France.

I do not question that the ban was necessary in the national interest, but I do question—and invite the House to question penetratingly—the Government's action in requiring my constituent and possibly others to dishonour contracts properly entered into and legally concluded. My hon. Friend may well say that there are precedents for this action. Some time ago the Government introduced a ban on the export of meat, and I have been told that some existing contracts were cancelled thereby. Bans on potato exports were introduced by the Labour Government in 1950 and at the end of 1969, but I understand that they were applied in such a way that they would not have required my constituent to dishonour his obligations in similar circumstances. I have seen the instructions on the ban at the end of 1969, and that is so.

Whatever the precedents, they provide no justification for the Government's action on this occasion. It is no defence for a sinner to maintain that he should be excused his sin simply because he has committed it before.

In passing, I should say that today I have learned of another similar act by the Government affecting this company, the details of which I shall be sending to my hon. Friend.

I suggest that there are now only two remedies, although the error perpetrated by this Government cannot now be reversed because the contract has been cancelled by decree of this Government and the contract of the vessel has been cancelled also. The first remedy is for an undertaking to be given by the Government—and especially this Conservative Government—that there will be no recurrence of this ugly affair. Secondly, I ask my hon. Friend the Minister of State to make it clear to the House tonight that compensation will be provided to Messrs. England for the financial loss which it certainly will have suffered and which has been forced upon it by this unfortunate Government decree.

11.51p.m.

Mr. J. Bruce-Gardyne (South Angus)

My hon. Friend the Member for Perth and East Perthshire (Mr. MacArthur) has exposed the details of this extremely sorry story with the greatest possible clarity and precision, but as the vast bulk of the potatoes involved in the consignment came from my constituency I want to add a few words. I regard this as about the worst instance of abuse by the State— with all its powers over the individual citizens—that I have experienced in my eight years in this House.

Not only is it an example of the Government's intervening to enforce the breaking of existing legally binding contracts, which in itself is the last thing I like to see from a Tory Government; the Government have compounded their misdemeanour by an obvious and understandable display of guilty conscience which has led them, belatedly, to reverse the original decision in part and thus to allow most of those who had concluded contracts before the ban was imposed to honour them while, at the same time, making an exception of this one firm whose circumstances my hon. Friend has so graphically exposed.

We were eventually told that contracts could be fulfilled if loading had not been completed by the deadline laid down last week—if loading had been started but not completed before the deadline came —provided the loading was continuous, or if the loading should have been completed but could not take place because of factors outwith the merchant's control. I regret to say that I have incontrovertible evidence that in numerous cases these conditions have been waived. I shall not give those cases because I am delighted that those concerned were able to honour their contracts.

What is the scale of this transaction? The total amount contracted for but not ready when the ban was imposed was 7,500 tons for the entire United Kingdom —one-half of one day's United Kingdom consumption. It is for this derisory quantity that the Government have broken every canon of decent ministerial behaviour. The kindest thing to say is that they acted in panic over fears of the effect of an increase in domestic potato prices on the prices and incomes policy. Since that policy is the responsibility of the Department of Trade and Industry, it is a little hard on the Minister of State that he should be expected to pick up the pieces of this affair tonight.

The firm concerned is a major potato merchant in the east of Scotland and, indeed, in other parts of the United Kingdom. Serious and perhaps lasting damage has been done to its good name with customers in our farming community and overseas by the way it has been debarred from fulfilling contracts that its competitors have been allowed to fulfil. I entirely agree that it is richly entitled at the very least to complete compensation for its loss of profits and its overall losses and, by God, it had better get it!

11.55 p.m.

The Minister of State for Agriculture, Fisheries and Food (Mr. Anthony Stodart)

My task tonight is to try to persuade my hon. Friend the Member for Perth and East Perthshire (Mr. MacArthur) and my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne)—whose interest in this matter I regard as totally and absolutely praiseworthy—to view this ban and the way that it was imposed against the background of the world supply position and recent developments in this country.

I hope that my hon. Friends will forgive me if, before coming to the case which they have deployed with great sincerity and skill, I say something about the background.

There has been a general shortage abroad of potatoes from the 1972 crop. This has produced an unusually strong demand for exports throughout the season. The crop here, though smaller than in the two preceding years—which saw an unusually large surplus—was not a short crop. Indeed, estimates of potato stocks at the end of November indicated that the 1972 main crop had produced a significant surplus of nearly 400,000 tons of marketable potatoes, even after allowing for considerably larger numbers of exports. This would have been much more than enough to meet the demand for the good quality, reasonably-priced potatoes which we aim to provide.

Unfortunately, however, because of the very circumstances in which the crop was lifted last October—in probably the best weather that farmers have ever enjoyed for the job—the quality of the crop has suffered as a result of the dry harvesting conditions. Although this was taken into account at the time that the earlier estimates were made, the very mild winter has resulted in an unexpectedly high wastage.

I have mentioned the figure, provided to us by the Potato Marketing Board, of a surplus of 400,000 tons at the end of November. But by February it was quite clear that although there still seemed to be no risk of shortage, the surplus would be a lot down from 400,000 tons. Therefore, in February, I asked the Chairman of the Potato Marketing Board to see me in order to discuss whether any action was needed to conserve our supplies as a safety-first measure.

I hope that my hon. Friends will believe me when I say that we were obviously most reluctant to interfere with the export trade in potatoes, especially as we seemed to have plenty to meet expected demand with something to spare. But we decided, as an insurance, to ask the Potato Marketing Board to relax the riddle sizes, thus providing the market— again, I am quoting the board's estimate —with about 50,000 tons more potatoes. Relaxing the riddle sizes simply meant reverting to the wider sizes of riddle used for crops in previous years, so as to allow the sale of potatoes of a diameter between 1½ in and 1⅝ in and which are large enough to go over a 3¼ in mesh. Except for their size, these are otherwise of perfectly good quality.

I asked the board at the meeting in February to keep in the closest touch with me on stock figures and on the export trade. Following upon the census of stocks which it took in March, it became clear that the demand for exports was continuing so strongly that there was a possibility of some shortage by the end of the season if they were allowed to go on. We therefore decided that we must stop them.

I hope I do not have to assure my hon. Friends that we wanted to avoid difficulties for exporters and farmers, but we had to put the national requirements for potatoes first. We considered a longer period of notice, but that could easily have produced a rush to export, because the price is very high compared with what is available in this country.

I need hardly say that we also considered allowing the fulfilment of all existing contracts. But this could have been ineffective, because there remains only a little more than two months of the main crop season, and a large volume of exports might well have been contracted already.

No licences or any kind of registration of exports have been needed, and we thus have no means of knowing how many tons had been contracted for. Moreover, it is very difficult to establish exactly when a contract is made. Contracts are frequently made by telephone and confirmed later.

My hon. Friend referred to the occasion in 1950 when a similar ban was imposed. It is true that the Government of the day allowed what were described as existing contracts to be fulfilled. I assure him, from my knowledge resulting from the examinations I have made, that terrible difficulties ensued as a result of that decision.

Mr. MacArthur

Is not my hon. Friend completely satisfied that in the case I have described the contracts were clearly entered into and were legally binding before the ban was introduced?

Mr. Stodart

I am about to deal with the case my hon. Friend mentioned.

It would be quite impossible to ensure that only contracts in existence at the time of the ban were fulfilled.

So the balance of considerations was this: on the one hand a short period of notice would leave merchants and growers holding potatoes contracted and graded ready for export, and facing additional expense; against that an adequate period of notice from the exporter's point of view might have left us short of potatoes.

We saw no real alternative but to impose a ban effective from seven days after the announcement—a longer period of notice than when meat exports were banned in 1970—to conserve at that time, just as at this, the national stocks of a basic foodstuff.

This has, of course, resulted in grave difficulties for some exporters and their supplying merchants and farmers. Nor do I for a moment overlook the fact that contracts have had to be broken. I hope that my hon. Friends will believe that no one who serves in the House can ever under-estimate the value of keeping one's word. But there is a matter of national interest involved, as my hon. Friend accepted. We believe that by our prompt action we have avoided the risk of shortage and unduly high prices later in the season.

I now turn to the case to which my hon. Friend referred, and the other cases involved. In all, there have been eight cases in which licences have been granted for the export of ware potatoes after the coming into force of the ban. I have examined all of these very carefully. Two were special cases—one involving a supply to Gibraltar, which is a British colony that grows no potatoes of its own. I am sure that hon. Members will agree that we have a special responsibility to ensure that that requirement should be met. The six remaining cases, to one of which my hon. Friend has referred, related to shipments where loading had begun before midnight on 29th March, or was scheduled to begin before then but the transport concerned had been unavoidably delayed. I would not wish to question anything that my hon. Friend has said about the case he mentioned.

For example, heavy weather conditions in the North Sea delayed a ship which should have begun loading at Montrose on 27th March. Again, I hope that I shall win agreement when I say that in a case like this, in which the delay was quite beyond the control of anyone concerned, it was right to allow the shipment. It is a difficult judgment to make, but it had to be made. These were the only types of case in which exceptions were made.

I think that the line, which was a hard one to draw, was drawn fairly, and has been applied quite objectively, but if any hon. Member has evidence that anyone has secured a licence by misrepresenting the facts I shall, of course, be very ready to look into it. Under the Export of Goods (Control) Order 1970 it is an offence punishable by a fine of up to £100, or imprisonment of up to six months, or both, to make any statement or furnish any document or information which the applicant knows to be false in any material particular in order to obtain an export licence. But I have no information suggesting that there is any question of this in any of the cases I have mentioned.

My hon. Friend has suggested that compensation should be paid to those who, in his view, have been treated unfairly. I can well understand his feeling that those who have made contracts and chartered shipping in the best of faith —and who have now lost money because they are not allowed to go through with the export—have a case which should be considered. But I must point out to him that there have been similar export bans in the past—for example, when meat exports were prohibited to conserve national stocks of a basic foodstuff, as I said, in 1970. Then, as now, we had most regretfully to reject claims for compensation.

The reasoning behind this may appear harsh, but I am afraid that it is unanswerable. If the Government were once to agree that compensation should be paid whenever they took action in what they believed to be the national interest and that action had the effect of compelling individuals or companies to break contracts or to pay penalties, the cost to public funds could be very great and the implications very serious. Because that is so, and is known to be so, I am afraid that possible losses stemming from Government decisions simply have to be regarded as one of the commercial risks which traders must accept.

Mr. MacArthur

Oh, no. Really.

Mr. Stodart

I regret that I can hold out no hope of the Government's being able to make any such payments.

Question put and agreed to.

Adjourned accordingly at nine minutes past Twelve o'clock.