HC Deb 18 October 1973 vol 861 cc396-9
11. Dr. Dickson Mabon

asked the Minister of Agriculture, Fisheries and Food if he will make a statement on the future reorganisation of the sugar refining industry in the United Kingdom.

Mr. Godber

Discussions with the companies concerned are still continuing.

Dr. Mabon

Will the right hon. Gentleman confirm the report in the Financial Times today that an agreement in principle— to establish a UK refining monopoly for both cane and beet sugar was signed willingly by all the parties concerned"— namely, Tate and Lyle, the British Sugar Corporation and Manbre and Garton— last August 8th, under the chairmanship of the Department of Trade and industry"? Will the Minister tell us whether that is so? Further, is he aware that Mr. John Lyle, in a letter to Members of Parliament, has said that the campaign which his company has launched since Sunday disputes that claim? He bases his concern on the fact that he has not received any concrete assurance that the Government will insist on the continuation of a fair subvention payment for the year from 30the June 1974? In view of the many men who are here today and who are worried about their jobs, will the Minister say something more about the matter?

Mr. Godber

It is unfortunate that the debate on this subject has had to be adjourned. I wish that we could have had it today. It would then have been possible to expound all the details of this complicated story. I can confirm that the three companies concerned signed a general undertaking to proceed with negotiations on 8th August this year. That is the position.

In the light of communications such as the one which the hon. Gentleman has mentioned, and comment in this morning's Press, I took the precaution of ascertaining from Tate and Lyle whether the firm was still willing to go ahead with such negotiations. Its managing director has confirmed that his company will entertain an offer made pursuant to the memorandum of 8th August and that it does not regard the negotiations as having broken down. He made clear that he would prefer a two-company solution.

Sir Robin Turton

Will my right hon. Friend bear in mind the danger of creating a large monopoly, which would be contrary to the policy of the Monopolies Commission and also the policy against cartelisation in the EEC?

Mr. Godber

My right hon. Friend will realise that the position in the sugar industry is such that there is already, to a degree, a monopolistic situation. The cane refining is done by two companies only, and the beet refining by one, so there is a very near monopoly position. The question is how to organise the industry to secure the future employment of those very men who are outside at present and to ensure that future sugar refining is done in the best possible way. I understand that the three companies are genuinely seeking a way forward. The Government are trying to help and I hope that we shall continue to be able to do so.

Mr. Ogden

It is good to hear the right hon. Gentleman say that Mr. Cube was never so free and unfettered as he pretended. Have the Common Market negotiations been helped or hindered by the failure of the industry to reach agreement? If it cannot reach agreement quickly, when will the Government bring forward proposals? The Opposition have their own proposals for the situation.

Mr. Godber

Again, there is some misunderstanding. There are no direct nego- tiations going on about this matter. As I reported in July the question of the refining margin is covered up to the end of next June and will be considered then. The question of the future régime in the Community, dating from December 1975, has only recently been tabled. We have been discussing this matter in regard both to Commonwealth sugar and to beet sugar production in Europe. In respect of Commonwealth sugar, the Commission reiterated the figure that we have always pressed for—1.4 million tons—and I am sure we shall get that.

Mr. Marten

Has my right hon. Friend any reason to believe that the refining margin will not be renewed after next June?

Mr. Godber

No. Obviously, it is essential for the continued availability of Commonwealth sugar that it shall be renewed. The point is, at what level? It is a matter to be discussed. I shall put to my colleagues in the Council of Ministers the relevant factors at the time. But it must be dependent on what developments there are in the reorganisation of the industry, whether they take place or not, and on this will depend the sort of level which may be required. No one at this moment can forecast the precise position on that point.

Mr. Shore

We shall look with interest at any proposals which emerge for the reorganisation of the industry, particularly bearing in mind the position of the many thousands of workers who may be affected, including people in the development areas and the Thames and Clyde areas.

Does not the right hon. Gentleman agree that the heart of the matter is that he agreed in the first place—in January this year—to too low a sugar refining margin, and that it is only because of that that he has had to ask Parliament for a sugar subsidy, which he has had to bulldoze through the Commission and the Council of Ministers to get them to accept, and only then until next summer?

Secondly, does not the right hon. Gentleman agree that the whole problem of so-called excess capacity in the British refining industry is due wholly to his own acceptance of the phasing out, or reduction, or limitation, of cheaper imported cane sugar into Britain in favour of the protected beet sugar industries of Western Europe?

Mr. Godber

That question illustrates the need for a full debate, and I think that we must have one. It is true that the margin fixed in January proved inadequate. At that time I argued for a higher margin, but many factors were put forward—one of them the much lower margin which it was claimed that Continental refiners had. I warned then that if the margin proved inadequate I would reserve our right to provide a subvention so that I could safeguard the position. The refining margin is one question, but reorganisation is a totally different one.

On the question of supplies, my right hon. and learned Friend who negotiated the treaty of acceptance made clear in this House at the time that the undertaking he had secured was for a continuation of 1.4 million tons, and that I am certain we shall get. It was understood that the Australian quota would be phased out at some stage, and that has not been questioned until now. The remaining requirement of the cane refiners has been for the use of some raw beet sugar for final refining. That, as I would have made clear in the debate, will no longer be available in the previous quantity because for economic reasons it is much more efficient to refine it completely in the original factories. These are some of the complicated issues with which it is impossible to deal adequately at Question Time.