§ 8.39 p.m.
§ The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart)
I beg to move,That this House takes note of Commission Documents Nos. R/1900/73 and R/1957/74.The importance of this subject needs no emphasis. I am glad that we have left sufficient time for a debate to which I am sure many hon. Members will wish to contribute. The documents mentioned in the motion are of course memoranda or communications from the Commission, which reflect the Commission's views of some considerable time ago. They do not become regulations until they are approved by the Council of Ministers and the process of discussion by the Council is sure to indicate to the Commission a need for amendments. The House should not have the idea that these drafts are the last word. Indeed these particular documents have already been overtaken by a new draft Instrument R/2717/74 on which an explanatory memorandum has been sent to the Scrutiny Committee. Even on this latest draft I shall myself have important changes to propose. I shall indicate them in my speech and so may other Ministers on another occasion.
These drafts, I repeat, are not decisions but more like a Green Paper as a basis for discussion. And let me remind the House that the Council acts only by unanimity where vital national interests of member countries are concerned. I am glad that the debate tonight will enable me to go to Brussels next week with the views of honourable Members in my mind.
Most of the content of these documents is concerned with the nuts and bolts of Community arrangements for sugar under the Common Agricultural Policy—methods of intervention, management, and so on. Much of this is now somewhat academic because of the revised draft that I have mentioned.
My hon. Friend the Parliamentary Secretary will be willing to deal with any questions that are raised on these technical matters when he winds up the debate. I think the House will wish me to concentrate on the way in which these documents and the revised draft bear on current anxieties in the country, which I 142 fully understand, about the supply position next year and on the position of the United Kingdom cane refining industry.
Let me take first the supply situation. Let me start with some background to the supply situation. We have increasing world demand and at the same time much higher costs—of labour, oil, in the cane-producing countries. So we have a world shortage reflected in the unprecedented prices which continue to rise. The United Kingdom as a large deficit area is partcularly vulnerable.
The attraction of high prices in other markets has already led to some diversion of supply from the Commonwealth Sugar Agreement countries despite successive increases in price which we have agreed. I do not want to get this out of perspective. Most of the developing countries are fulfilling their contracts in full, and all those who still have sugar to ship in 1974 assured me only a fortnight ago that they would send the full agreed quantities. But some of the Caribbean Commonwealth countries, for reasons which I can fully understand, decided to ship part of their United Kingdom quota to other markets instead. Then the weather has made for a very bad year for beet production and a disappointing crop.
The House will recognise that these factors are almost wholly independent of our membership of the Community. If we were outside the Community we should no doubt be negotiating the next triennium of the Commonwealth Sugar Agreement. The attraction of the high world price to the developing Commonwealth countries with their own severe payments problems would have made that negotiation very difficult for all parties.
§ Mr. Neil Marten (Banbury)
Surely by now that triennium review would have taken place and they would have known exactly where they stood, whereas nothing has happened so far. Is that not right?
§ Mr. Peart
I hope that the hon. Member will appreciate that events were decided before I had responsibility. He took part in the debates. I am only stating the facts of life, and we now have to consider what is happening in the Community. Severe payments problems which I have stated would have made 143 the negotiation very difficult for all parties, as I have said.
Long-term commodity arrangements are always notoriously difficult to make at a time of high world prices which may not persist. This is the true source of the present difficulty. so I turn now to Protocol 22.
The position now is that the Community is committed to replace the Commonwealth Sugar Agreement with Community arrangements under Protocol 22. Satisfactory arrangements will be the key factor for our supply situation in 1975 and after. The Commission's proposal is that the Community should allow preferential—that is, levy free—imports of 1.4 million tons from the exporting countries. This is satisfactory and fulfils the pledge we have always required. I am confident that the Council of Ministers will accept this. Then the next step will be to negotiate with the supplying countries and the key points will be the price and duration of the agreement. I have already said that the Government will support a price of not less than £140 a ton f.o.b., which is the amount we are now paying under the Commonwealth Sugar Agreement. The price is, of course, linked to the duration of the arrangements, because the incentive to the suppliers to accept a reasonable price now is the assurances they obtain of long-term access to the Community market. We intend to press for duration provisions that give the developing countries a firm basis for long-term confidence in their future place in the Community market.
The Commission proposal does not at present, however, provide in a satisfactory way the quota arrangements needed to bring the Protocol 22 sugar to our own refineries, though it gives a financial advantage to specialist refineries, such as our own, by placing a levy on the refining of cane sugar in beet factories. I assure the House that it will be my objective in the Council to secure satisfactory arrangements for reserving cane sugar for our cane refiners. We want sugar to come here.
In this connection perhaps I could say how glad I am that sugar is again being delivered from our largest refinery.
§ Mr. Emlyn Hooson (Montgomery)
When the right hon. Gentleman refers to long-term guarantees, which is virtually what he is talking about, what does he mean by long term in this context? Could he define the number of years he has in mind?
§ Mr. Peart
I hope that we can get indefinite terms, but it may well be that if that is an impossibility, we shall have to negotiate. I want something long term. We had it with the Commonwealth Sugar Agreement. I cannot be specific. I must allow latitude to myself and my officials who have to undertake the negotiations. We want a long-term arrangement and we have said so. We want the sugar to come here and, as I have said to refinery workers, I shall do my best for the refinery workers. They need have no doubt about that.
Even if the supplying countries send all the 1.4 million tons for which the Community provides access and it all comes here, we still face a short fall up to September 1975 of something like 600,000 tons, partly because of our poor beet crop and partly because we borrowed forward this year to make up the short fall from the Commonwealth this year. So we have a need for additional supplies. This is where we are taking advantage of an important provision of the Community sugar réegime, namely, that subsidies can be granted on imports from the world market when there is a shortage of supply in the Community.
There was a Council decision on this last month, which I shall quote because there has been some misunderstanding:to adopt the measures necessary to ensure an adequate supply of sugar throughout the Community for the 1974–75 marketing year, at common prices, the costs being financed by the Community under the 1975 FEOGA budgetary provisions. The first stage is for the Council to adopt the appropriate regulation proposed by the Commission for an amount of 200,000 metric tons. The Council will decide on further stages in the light of experience and depending on the effectiveness of this measure.Those words make clear that the scheme is not, as some people have said, restricted to 200,000 metric tons. The Council decision clearly provides for the full shortfall to be met.
The arrangements for the first 200,000 tons are complex. They were fully set 145 out in the answer to a Question last week—HANSARD, 8th November, c. 232—and I shall not go over the ground again except to say that my Department is in close touch with the refiners about them. Indeed, the refiners have already taken steps to secure supplies from the world market in the interests of ensuring supplies to consumers. These are exceptional transactions which the Government have agreed to assist with bridging finance by means of temporary advances from public funds. Authority for the expenditure involved will rest upon the Estimates which will be presented in due course, and upon the confirming Appropriation Act. In the meantime, I shall have recourse to the Contingencies Fund.
I come now to the Australian deal, because I know I shall be asked, "What about the Australian position?" Although this does not strictly arise from the documents before the House I hope, Mr. Deputy Speaker, that I shall have your indulgence to deal with it because I know that many of my hon. Friends and hon. Members on both sides are interested in this matter.
A lot of the publicity that has been given to this has presented the subject as if I had a simple choice of buying from Australia so much sugar at such-and-such a price which I unaccountably rejected. But this is not the choice that I faced. To deal with our immediate shortfall, the Australian suppliers in any case at most had only a relatively small amount, about 200,000 tons, available and my latest information is that because of a poor harvest this amount would not have been forthcoming.
§ Mr. Peart
Let me continue. My hon. Friend has had his say and has written articles. I am giving my views as one who had talks with the Australians, as one who was a friend of Australia and as one who took the initiative to bring the Australian observers here when we had discussions at the Lancaster conference. I therefore hope that my hon. Friend and others will listen carefully to what I am saying.
As I was saying, the Australian suppliers had a relatively small amount, about 200,000 tons, available and my latest information is that because of a 146 poor harvest this amount would not have been forthcoming.
But the Australian authorities were not willing to let us have these immediate supplies without a long-term agreement and they made it clear that they wanted such an agreement to be made either directly with the Community or at least to have Community endorsement. They also made it clear that they would want the price in such a long-term agreement to be systematically above the current Community price level. These were conditions which it was not in my power alone to fulfil. But, as my right hon. Friend the Prime Minister told the House on Thursday, it will still be our aim to get all the sugar we can from Australia, whether through the Community or direct, if mutually satisfactory arrangements can be made.
§ Mr. Douglas Jay (Battersea, North)
My right hon. Friend has given information about the present state of what the Australians are able to offer, but is he denying what has constantly been reported from any number of sources, namely, that last summer the Australians were willing to offer 200,000 tons this year, but 300,000 tons in the subsequent four years and that had we accepted the offer at that time there would have been no condition—I do not disagree that there is now—that the EEC had to endorse the whole project?
§ Mr. Peart
There may have been a slight possibility of that some time ago. As I said, I explored this and took the initiative at Lancaster House meetings. I had Australian observers there, and we had discussions and talks. As hon. Members know, I interrupted my election campaign to have talks with the Australian Minister.
All I am saying is that my right hon. Friend must appreciate that what I am saying is fact. The simple fact is that there were difficulties of supply, and there are problems of price. I think I have given a full account of why, in the end, we had to proceed as we did.
I have dealt mainly, as I think the House would wish, with the supply position—
§ Mr. John Mendelson (Penistone)
Is it correct, as my right hon. Friend for Battersea, North (Mr. Jay), who is a former 147 President of the Board of Trade, has just asked, that if my right hon. Friend and the Cabinet had concluded the agreement there and then in the summer the terms would have been as satisfactory as my right hon. Friend has indicated?
§ Mr. Peart
I cannot give that categorical answer. I was negotiating with the Australians on this. I still want to have Australian sugar. I have said this over and over again. I have given an explanation of the position, and I hope that my right hon. Friend will accept that I do not want to mislead the House. He knows me. I have been in the House a long time and he respects my integrity, as I respect his, so I would ask him to understand what I have done.
I have dealt mainly, as I think the House would wish, with the supply position from overseas, and the documents before the House and the revised draft to which I have referred are also concerned with the internal Community réegime for beet sugar.
I shall deal quickly with the EEC internal réegime, as this is important. The Commission's proposals maintain the quota system for the present réegime for controlling the production of beet sugar within the Community.
At the Council of Ministers on 21st and 22nd October, I secured agreement to a basic quota of 1,040,000 tons, by comparison with our present basic quota of 900,000 tons for the current year. On top of this basic quota we, with other member States, have a maximum quota which includes the basic quota plus 45 per cent.
I hope that the House will accept that, in securing this arrangement in advance of our debate tonight, I acted in the best interests of the country. Our experience this year has certainly demonstrated the importance of having a firm home base for our supplies. I hope that our farmers will now recognise that they have an effective incentive to expand, given that they will soon receive the full EEC price.
I emphasise also that I see no inconsistency between this aim and that of having room for the quantities of Commonwealth cane to which we are committed, namely, 1.4 million tons. I 148 believe that in the foreseeable future there is plenty of room for both.
§ Mr. Deputy Speaker (Mr. George Thomas)
Before I call the right hon. Member for Cambridgeshire (Mr. Pym), I should inform the House that Mr. Speaker has selected the amendment in the name of the hon. Member for Newham, South (Mr. Spearing) and his hon. Friends.
§ 8.58 p.m.
§ Mr. Francis Pym (Cambridgeshire)
I entirely agree with the Minister of Agriculture, Fisheries and Food about the importance of this subject. We might tonight express our gratitude to the Scrutiny Committee for the attention it has given to this subject. Not only has it recommended that the two documents before us should be considered by the whole House, as we are doing this evening, but I believe that it has made similar recommendations on three other occasions.
These two papers raise the whole question of our sugar supplies and how the Community intends to deal with it. At Business Question Time last Thursday my right hon. Friend the Leader of the Opposition indicated to the Leader of the House that the House would want a considerable time to debate these documents on sugar. Although I am glad that the debate has started soon after half-past eight and will go on until half-past eleven, in view of the interest and the number of right hon. and hon. Gentlemen in the House tonight I believe it is right to say that three hours may not be enough to deal with this subject and that we may have to return to it, and I suspect we will have to return to it on other occasions.
I would be less than honest if I did not say how complicated this subject is in detail. I am bound to say that I have come fairly fresh to it. The more I go into it, the worse it gets and the more conflicting some of the views expressed seem to be.
For most people in their everyday lives there is no complication about sugar—it is not there. The simple immediate experience and reality is a shortage or normal availability of sugar. It has nothing to do with the recent strike which, happily, has now been settled. The shortage has been going on for some time. 149 It is largely because of the long duration of the limited supply on the shelves and the failure of the Government to acquire extra supplies on anything like a sufficient scale to bring to an end the shortage that the feeling has persisted—and, indeed, has grown—that the shortage is genuine. I know that the Government have tried by means of soothing words to stem what might be a difficult situation, but they have proved inadequate.
No doubt it is true that in some months supplies to the shops have, as the Government claim, been as high as, and sometimes even higher than, those of last year. However only a massive increase could have ended the shortage experienced by the consumer. In all the circumstances, what else could or should any prudent housewife do but buy a bag of sugar whenever she got the chance?
I feel very sorry for the shopkeepers, who have borne the immediate brunt of consumers' irritation. They have tried a whole range of methods of their own devising for quasi-rationing, to try to be fair, but all are subject to criticism of one kind or another. I am sure that shopkeepers have tried their best in a difficult situation. They are fed up with the shortage, but in my view they have borne it stoically, and, no doubt, would go on doing so if there was a real and reasonable prospect of the shortage coming to an end. Is there such a reasonable prospect? I find it very hard to come to that conclusion on the basis of the evidence available so far or on the basis of what we have heard so far tonight.
That new arrangements have to be made for 1975 and that a new situation had to be prepared for from 1975 onwards has been known for a long time. We are now only a few weeks away from the New Year and apparently—I should like to read very carefully what the Minister said tonight—no firm contracts have been settled yet by the European Community, although I accept the undertaking it has given. So we do not know where our sugar requirements are to come from.
It is true that we have the firm assurance from the Commission, contained in the documents before us tonight, that all the necessary measures will be taken to ensure an adequate supply. But, clearly it would bring comfort and re 150 assurance to this House, as well as to the industry and the housewife, if we knew exactly how this commitment was to be met.
Last year the House debated this subject and had before it the first of two documents referred to in the motion. The second document, dated 12th July, 1974, updated the first and it acknowledged thatthe imbalance between world production and consumption has become more serious".At the top of page 2 it says:It is hardly likely that this situation will improve quickly.In the next paragraph it says:the growth in the sale for human consumption in the Community, in 1973–74, has been much higher than the usual consumption, whilst at the same time deliveries from certain member countries of the Commonwealth Sugar Agreement were about 300,000 tons below the quantities contracted for".We are, therefore, in a situation of immediate world shortage which has, of course, had its effect on prices. The sugar supply situation was beginning to get tight a year ago. The Russians were in the market then as they are now. The price had to be adjusted and this was done at the Commonwealth sugar producers' conference convened by my right hon. Friend the Member for Grantham (Mr. Godber) last February. He negotiated an increase in price from £61 a ton to £83 a ton, to be paid retrospectively to 1972. That cost the United Kingdom £35 million and was accepted at the time as a fair and reasonable settlement.
The producers in the Caribbean area who had been affected as a result of the sharp rise in the cost of oil and other imports, and who had stopped sending supplies to this country, decided after that conference and the price adjustment that normal shipments of sugar should be resumed. That was the position at the end of February. On 15th March the present Minister confirmed the agreement to which I have referred.
§ Mr. Buchan
I must admit that it is galling to hear the right hon. Member speaking like this, considering the history of the time and the failure to produce any bankable assurances. Now he comes and preaches to us. Is it not the case that the West Indians approached the Tory Government in the middle of February 151 to try to get a new deal but that there was no answer to their cri de coeur?
§ Mr. Pym
A new deal was arranged in February, as I have described, and the price went up from £61 to £83 a ton. As a result of that, shipments which had stopped began to produce supplies again in this country.
What, then, is the position of our suppliers, and what are the prospects? First there is the home-grown beet crop, regrettably, as the Minister said, and perhaps uniquely low, due to weather and disease. The estimate is no more than a yield of 600,000 or 650,000 tons, well down on last year and not much more than half a record year. That is nobody's fault.
I am glad that the Minister has taken steps to increase both the acreage and the profitability of the crop next year. I do not believe that he has yet gone far enough in encouraging the maximum possible acreage that is available to us to be taken up. I can be corrected by the Parliamentary Secretary if I am wrong, but I am told that the increase in take-up of acreage next year is not going ahead as quickly as it should if we are to take advantage of the increases in the quota and acreage and in the profitability which the Minister has encouraged.
It would pay to make the United Kingdom crop highly profitable next year so as to obtain the largest possible home output. The Minister spoke of an incentive to expand. That incentive, if it is thought to be adequate, has not reached enough sugar beet growers to yield the increase in output next year to which the country is undoubtedly capable. I mention that in a spirit of some criticism but more in the spirit of a desire to see the Minister use his resources to get a greater take-up of home-grown acreage.
So far as supply is concerned, in 1974–75 home-grown sugar will account for no more than about 25 per cent. of our requirements, instead of 35 per cent. or even more. By far the most important source of supply is the countries which were parties to the Commonwealth Sugar Agreement. As the House well knows, and the right hon. Gentleman readily recognises, the previous Conservative Government were highly concerned to 152 ensure a continuing supply from those countries. [HON. MEMBERS: "Oh."] Oh, yes, we were highly concerned to do that, and we had the full support of the Labour Party. We went to great lengths to secure this position in the protocol to which the right hon. Gentleman referred—No. 22 of the Act of Accession—and a definite proposal in relation to the 1.4 million tons is referred to in the first document before us.
I know from the Press this morning—and the right hon. Gentleman confirmed it this evening—that he is confident that the Community will honour that undertaking. I have here a piece from the Daily Telegraph and from other papers indicating that he is confident that the Community will fulfil that undertaking which my right hon. Friend negotiated and the House endorsed.
I want to press the right hon. Gentleman on the expected total quantity, because doubts have been expressed in many quarters whether the full 1.4 million tons of raw cane can now actually be obtained. Some estimates indicate that no more than 1 million or 1.1 million tons will be forthcoming. I confess that I have no means of my own of testing the accuracy of these estimates, but as there is a shortfall in CSA deliveries this year, and as next year the world shortage is likely to persist and probably increase, and the world price is so high, what is the basis for supposing that the full 1.4 million tons of raw cane will be imported into the Community and delivered to the United Kingdom in circumstances in which, I understand, no firm contracts have been signed? This was not absolutely clear from the Minister's speech and I hope that the Parliamentary Secretary will say something about it.
§ Mr. Mendelson
It is a travesty of the truth, in the absence of the right hon. and learned Member for Hexham (Mr. Rippon), for the right hon. Gentleman to have the face to tell us about a firm agreement. He must know that when the right hon. and learned Member for Hex-ham, who then spoke in our name, announced at five o'clock in the morning that agreement had been reached, the French Foreign Minister at five minutes past five said that no agreement had been reached. The right hon. and learned Gentleman said that that was what the 153 United Kingdom wanted. We on our side are not committed. That is the truth, and the right hon. Gentleman should admit it.
§ Mr. Pym
The hon. Member for Penistone (Mr. Mendelson) should not get so excited. The 1.4 million tons was negotiated and accepted—[HON. MEMBERS: "No."] Yes, it was accepted by the members of the Commonwealth Sugar Agreement and is referred to in the document that is before the House. The hon. Gentleman should obtain a copy and look at paragraph 5. That is a Community document. We negotiated that arrangement, it was accepted and the Minister said that it would be fulfilled.
There is then the Australian situation. Australia has usually provided this country with about 300,000 tons of sugar, and the assurance we obtained on the 1.4 million tons did not relate to the supplies from Australia. This came out clearly in the debate last October when my right hon. Friend the Member for Grantham said:We recognised from the outset that it would be impossible to negotiate long-term arrangements for Australia after the Commonwealth Sugar Agreement expired. The Labour Government came to exactly the same conclusion when they applied for membership of the Community. The only difference between us is that—to judge by the speech given by the then Foreign Secretary, now Lord George-Brown, in 1967—it appeared at that time that they "—that is, the Labour Government—envisaged an abrupt termination of Australia's exports while we believe they should be phased out."—[OFFICIAL REPORT, 24th October, 1973; Vol. 862, c. 1290–91.]However, the position tonight seems slightly confusing. The right hon. Gentleman said that only 200,000 tons might be available, but then I thought he said that it was not available and that if it were available it would be at a high price. That seems to be in contrast with what he said was the Prime Minister's aim of trying to get sugar from Australia to the maximum degree he could.
§ Mr. Pym
I agree with the right hon. Gentleman on that point, but it seems 154 to me that the trade with Australia may come to the abrupt end—I hope that that will not happen—which was referred to by my right hon. Friend last year when referring to the previous Labour Government's negotiations in 1967. At the very worst, it must be better to come to some new arrangement with Australia for next year, and longer, than to arrive at the present time, in mid-November, with nothing settled.
I appreciate the Community's responsibilities and the problem of price, but what is needed is sugar. What steps did the Minister of Agriculture take with the Council of Ministers during the summer to get an agreement negotiated? What weight did he throw into the task of making rapid progress on contracts for future supply? Clearly the House recognises the grave situation confronting our cane refineries. They face—or they fear they face—a serious depletion of supplies after February next.
It is extremely difficult to establish the precise sources and quantity of supplies after February. Raw cane for 1975 should be loaded on to ships fairly soon, but there is no sign of where that cane is to come from. If I am wrong about this and the contracts have been settled and raw cane is coming, no doubt the Minister will say so in his reply.
§ Mr. Marten
My right hon. Friend said earlier that he thought the Commonwealth producers might not reach the 1.4 million tons and that there might be a small shortfall. Is it the Conservative Party's case that we would recommend going to Australia to obtain 350,000 tons a year for five years to cover that shortfall? Is that the case we are making?
§ Mr. Pym
We are in the position that we were in a year ago that the contract with Australia could not probably be a permanent feature for all time of our sugar supply, but if it were to be reduced in any way it ought to be phased out and not come to an abrupt end. The risk we face at present is that it may come to an abrupt end. [HON. MEMBERS: "Answer"] That is the position. The 1.4 million tons, as I have made clear, did not include any deal with Australia. That was outwith Australia. It seemed to us that a phasing out of our supplies from Australia would be a likely outcome, but the longer that takes the 155 better. That is in the OFFICIAL REPORT for hon. Members to see, and I quoted it.
There is now a world shortage and a shortage in the United Kingdom. I criticise what has happened in the summer months from the point of view both of the Government and of the Community in not getting everything they could from Australia and every other country to fulfil our supplies.
§ Mr. Pym
It is for the Commission and the European Community to negotiate—[HON. MEMBERS: "Ah."] Yes, it is. That is the position. What I have been saying is, what has the right hon. Gentleman been doing to use his weight and his muscle to get the Commission to do that during the summer months? I was referring, on my hon. Friend's question, to the way in which we saw it developing a year ago—that is to say, a phased-out agreement.
§ Mr. Peart
The right hon. Gentleman knows that the right hon. and learned Member for Hexham (Mr. Rippon) did not negotiate in the Community for Australia. He also knows that, since a new Government have been in power, we have continually raised this; it will be raised again, probably tonight, by the Foreign Secretary. We have acted. Hon. Members opposite would have dillydallied.
§ Mr. Pym
No, I have been perfectly frank. I quoted from the debate last year from the then Minister of Agriculture precisely what the position was. I said that the 1.4 million tons did not include anything from the Australian suppliers which we then visualised being phased out. I cannot help thinking that, if the Government had been more active, more agitative, with the Commission during the summer, the present uncertainty which is hanging over the industry and which brings anxiety to so many people could have been avoided.
I turn now to the European Community, from which we have contracted 156 to buy direct 150,000 tons of white sugar in 1974 and 1975, and to the way in which the Community intends to deal with the imports of sugar. I understand that the Commission, instead of making outright purchases of sugar, will invite traders to tender for subsidies from the FEOGA funds. Obviously, those who put in for the lowest level of subsidy will be awarded the contracts and the authority to import. Under these arrangements, the traders who import sugar will be authorised to export to the world market, free of export tax, an equivalent quantity from the 1975–76 beet crop.
This scheme may lessen the amount of subsidy which would ultimately have to be granted by the Commission, but it seems to me to assume that adequate tonnage of sugar will be available from next season's crop, which obviously has not yet been planted. Clearly, therefore, there are risks for any traders taking part and in any case a fairly massive financial operation is involved. One of the companies in the sugar industry in this country has said that the immediate cash requirement for purchase of the first 200,000 tons could, at £500 per ton, be about £100 million. Longer-term finance would be needed until eventually our export profit was realised a year ahead.
The Minister referred tonight to the availability of finance to assist in this operation and I shall be grateful if the Parliamentary Secretary will give us more details and particulars of that. The scale of money involved is clearly considerable. I should like to know how much money the Government will make available and upon what terms.
The present uncertainty and escalation of price of sugar adds to the risk and the cost of this arrangement. Since these arrangements were announced, the end price has gone up to more than £600 now and I see that there are forecasts that it could go even higher yet.
There can be no denying that this enormous price increase in sugar has a direct bearing on the 1.4 million tons that we wish to continue to refine. Can the Community obtain that quantity at a price we can reasonably afford? Always before we paid less for CSA supplies than it cost us to produce sugar at home. The CSA countries got a higher price than they otherwise would and long-term stability with it. Now the Government 157 and the Community will have to decide how far to pay over the odds in order to meet the demands of the developing countries for higher price.
In view of the price and the fact that we and other countries in the Community can produce sugar for less cost, it is hardly surprising that the second document enlarges the quota for beet production. In the case of the United Kingdom it is highly unlikely, and perhaps even impossible, that the full A and B quota, which is slightly more than 1½ million tons, can be taken up either by producers or refiners. The British Sugar 'Corporation's capacity for slicing is little more than 1.2 million tons, and even if there were to be a huge increase in acreage, the sugar from it could not be available to the consumer until 1975–76.
Europe now recognises that for the foreseeable future in order to meet the European deficit situation it will have to be a net importer of sugar. That entails the import of cane sugar and therefore a cane refining industry. If that industry is to be viable in the future, the Community must recognise that some form of long-term arrangement is necessary, as the Minister said tonight.
For some time it has been accepted on all sides that some form of reorganisation of the sugar industry in the United Kingdom is necessary. Can the Government say where this matter now stands? Everyone agrees on the need for a fundamental reorganisation, as is indicated by the signatories to the Memorandum of Intent signed last August, the priority being to ensure long-term stability of the cane refining industry in the United Kingdom.
While on the subject of cane, I want also to remind the House of the importance of refining margins. Continental beet refiners, refining cane in their closed season, have a distinct competitive advantage over the specialist port refiners in the United Kingdom. This was recognised by the Community when my right hon. Friend the Member for Grantham was involved in negotiations.
Unless special terms are negotiated for United Kingdom refiners, some of the 1.4 million tons might be diverted elsewhere, and as we know many jobs are at stake—[Interruption] We negotiated a higher 158 margin for United Kingdom refiners and that is something the Government must keep in mind—[Interruption.] It is no use hon. Members saying that I am wriggling, because I am not. Separate and higher margins for refining were negotiated by the Conservative Government.
To summarise the supply situation for next year, as far as we know we can expect 600,000 to 650,000 tons. From the Commonwealth we simply have an assurance of 1.4 million tons, hopefully, but some say it will be 1 million tons and some estimates put it at even less. The Minister was not forthcoming about actual hard contracts that have been signed with former members of the CSA. There is then the completely unknown situation in Australia. Basically there seems to be nothing arranged at the moment and at the very best, if everything went well, the Community might be able to get 200,000 tons, but it does not sound very certain from what the Minister said. We then have 150,000 tons direct from the Community.
Our requirement in the United Kingdom is 2.8 million tons. The gap is alarming. The Minister's figure was 600,000 tons. That could well be made a higher figure and some people make it a higher figure. I am doubtful whether the House will be satisfied that we have taken all possible steps to reduce the gap. Further, our strategic stock has been eaten into and may have vanished altogether. The Minister did not say anything about that and I think we need to know. We may have 1,000 years' supply of salt under our feet, but I doubt whether we have one month's supply of sugar in reserve.
§ Mr. Robin Corbett (Hemel Hempstead)
In view of the right hon. Gentleman's concern about the supply of sugar, will he tell the House whether he favours the introduction of sugar rationing?
§ Mr. Pym
I am coming to that now. Given the world supply situation—I hope that the Minister will not be upset by this—I find the Government's handling of the matter throughout the summer and since at best imprudent and based on wishful thinking and at worst the prelude to rationing. It is difficult to know where to take one's starting point in this story, but the House may well recall—
§ Mr. Eric Ogden (Liverpool, West Derby)
Let us start after the right hon. Member for Cambridgeshire (Mr. Pym) left.
§ Mr. Pym
The hon. Member for Liverpool, West Derby (Mr. Ogden) can make his point wherever he likes, but his right hon. Friend who is now Secretary of State for Trade said:Against that, it is the judgment of virtually all those who are experienced in the sugar trade that long before this decade is out, and probably well within the next two years, supply will outstrip demand, with devastating effects on price levels. I remind the House in that context that the price of sugar was as low as £15 a ton as recently as 1967."—[OFFICIAL REPORT, 24th October 1973; Vol. 861, c. 1280.]I do not think that was a prescient comment from the right hon. Gentleman who is now a member of the Cabinet.
In March the Minister confirmed the new Commonwealth Sugar Agreement price which was negotiated in February by the then Conservative Government. As a result, supplies from the Caribbean countries started to flow in again, although it was obvious that the future position would require the most careful watching in the light of the uncertain world situation. I do not think that the Minister was alert enough to react to the developing and deteriorating situation with the required resolution and urgency.
In April the retail trade warned the Minister of shortages and of the problems of supply for its customers. It warned of the possibility of rationing. I understand that there was no response that month or the next month and that the response did not come until June. In May it was estimated that the importation of cane sugar this year would be approximately 20 per cent. short of expectations. We were told that authorisation had been given for 100,000 tons to be taken from the strategic stock on the basis that it would be replenished later this year or next year. Clearly, there is now no hope of that 100,000 tons being replenished.
At the same time representations were coming from some Commonwealth countries that a further price increase would be necessary. Guyana made clear its dissatisfaction early in May. We are not aware of what action the Minister took on that matter until September when he visited Guyana and negotiated a deal. 160 We do not know what happened between May and September, but by July industrial buyers were facing the prospect, if not the actuality, of cuts of 30 per cent. or 40 per cent. Retail customers were facing increasing problems as cane refining had to be cut back because of shortfalls in the arrival of cane.
In the same month the world price moved up to £280, which was then a record. The United States was beginning to be affected. That, of course, added more pressure to the market. Five countries were unable to meet their supply quotas to the United States and some Commonwealth countries stepped into that market.
The second document that we are discussing recognises the new and changed situation. The Minister gave a Written Answer which said:I am taking steps to make additional sugar available to overcome these temporary difficulties …He referred to total supplies to the country as a whole over the year. He said:total supplies to the country as a whole over the year will be maintained at the normal level …"—[OFFICIAL REPORT, 26th July 1974; Vol. 877, c. 573.]That, of course, would become inadequate in the light of shortages that had developed, and the Minister did not seem to be aware of what was going to develop.
On 3rd August we read reports that the Minister had already given assurances that the immediate supply position would improved by the middle of the month. Apparently extra supplies had been secured by the Government from Commonwealth producers and these were about to arrive in the shops. On 6th August the Daily Telegraph told us:The sugar shortage will ease week by week and should be 'significantly better' by next month, the Minister of Agriculture said yesterday.[Interruption.] Labour Members do not like it. But we must face the fact that this is a very complicated matter and that the housewives are short of sugar. I am sure that the Leader of the House will provide extra time if we need to have a longer debate on the matter.
On 13th August there were reports that the Government had decided the previous 161 day to release sugar from strategic reserves and that the Ministry of Agriculture had written to retailers saying that they mightplace orders now for delivery next week of the additional sugar being released by the Government.Next day we read:The Government yesterday tried to dampen down further alarm about the supply and price of sugar…Hon. Gentlemen may not like to hear about that, but that is what happened.
A Press report stated:Reports that only 30,000 tons of sugar had been released in hundredweight bags from government stockpiles have prompted concern because the trade expected about 100,000 tons to be forthcoming.All of this arose because of a lack of comprehension of the situation and a lack of determination to deal with it. Prices kept going up and up, and no deal was completed by the right hon. Gentleman. I agree that he tried to make a deal, but he did not succeed, nor did he go at the matter hard enough.
I would like to know whether we have got the sugar that the Government have talked about. What is to happen after February? Are we to have rationing? Are the Government satisfied that their supplies are adequate? Have they put arrangements in hand sufficiently well to ensure that there will not be rationing?
I was asked earlier whether I thought there ought to be rationing. If the supplies, for which the Government are responsible, are not adequate, there will have to be rationing. It is up to the Government to make sure that there will not be rationing. We have not yet had sufficient information about what the future position will be. I hope that the Government can satisfy the House on this matter tonight, but this is a subject to which we shall have to return.
I apologise if I have taken too long in putting forward my views. I would not have been so long had I not been interrupted. What I have been saying shows both the complexity of the situation and the embarrassment being felt by right hon. and hon. Members on the Government side. We are not yet satisfied that the arrangements made by the Government are adequate to ensure supplies in 1975 and beyond.
§ 9.34 p.m.
§ Mr. Nigel Spearing (Newham, South)
I beg to move, to leave out, in line 1, from 'Commission' to the end of the Question and to add instead thereof,Document No. R/1900/73, but declines to approve Commission Document R/1957/74 as it makes no provision either for continuing imports, at fair and stable prices, of at least 1.4 million tons of cane sugar from Commonwealth countries, or for the continued existence of and employment in the port sugar refining industry in the United Kingdom, or for securing long term supplies of domestically refined cane sugar at a fair price to consumer and producer".The calling of the back benchers' amendment tonight is important. On 23rd July my hon. Friend the Member for Llanelli (Mr. Davies) drew Mr. Speaker's attention to the importance of "Take Note" motions and we on this side of the House are grateful that Mr. Speaker has seen the need for some development on this point.
My interest in this matter started in relation to Third World issues. I still have that concern, however, but I shall not speak about it this evening because my hon. Friend the Member for Sheffield, Healey (Mr. Hooley) hopes to speak on this point.
Since my initial interest in this matter have become the Member for Newham, South. The Silvertown refinery is in my area. The refinery is now back at work distributing sugar, although for a week it did not do so. I made clear to my hon. Friend that I am in no way taking on board the views of Tate and Lyle. The refinery must exist regardless of the question of its ownership, and that question is still to be resolved. If Tate and Lyle had shouted earlier than last week, we might have done it, because had Tate and Lyle shouted on 12th May 1971, when the right hon. and learned Member for Hexham (Mr. Rippon) concluded his aura à coeur arrangement, we might not be in the situation we are in now. Also, if the right hon. Member for Cambridgeshire (Mr. Pym) had not been so effective in his whipping on 27th June 1972, and if we had won the amendment to write the 1.4 million tons into the European Communities Act, we would not be in this position today.
Therefore, his attacks on my right hon. Friend are completely unfounded, because it was the hand which the then Conservative Government left with my right hon. 163 Friend that has bound him hand and foot in the negotiations which he has been forced to have in the last few months.
§ Mr. Spearing
I certainly agree that, in the sense that it is in the first document, but, as the right hon. Gentleman knows, the first document has been superseded, and that 1.4 million tons was not in the Treaty of Accession. Nowhere was it written down as a firm, binding and bankable assurance. Every time we have tried to bank those cheques they have bounced, and the right hon. Gentleman is partly responsible for that.
§ Mr. Spearing
The right hon. Gentleman must not presume that. We are hoping that that will be so. My right hon. Friend the Minister and his hon. Friend who is to wind up the debate have their own reasons for doing that. It is our intention on this side to press them to give those reasons, because we believe that this is necessary to protect, not only the interests of people in the industry, but also the interests of the British housewife.
The one year and eleven months since accession to the Community have produced no movement towards these bankable assurances. Even if my right hon. Friend is successful in the next few weeks, as we all hope that he will be, even then it will have shown that the "having at heart" or the desire of the community to help in this matter is perhaps a little tardy and delayed.
I have referred to the fact that my right hon. Friend had a difficult hand to play and, if he had not already bargained out of the Australian deal, my hon. Friend might have been more successful in that respect. But I am not going to follow up on that matter for the moment. He was not successful, and in the Summer Adjournment debate I raised the matter and asked for a statement. We did not 164 get it from the Government, and that is one of the reasons why I took certain steps when we came back, because 3,000 people in my constituency are liable to be out of work if the Silvertown refinery does not operate on imported cane sugar. Whether we get that or not lies with the EEC, and it is that on which the last Government sold out on 27th June 1972 and formerly in the Treaty of Accession.
I think everyone agrees that the Lardinois proposals, which my hon. Friends may refer to, are only a short-term measure which will last for one year. The deals which my right hon. Friend has made with Guyana and other Commonwealth countries run only until the end of this year. The hopes that have been raised in the Press are perhaps not as high as some people would like. On Friday my right hon. Friend managed to assure the workers at the Silvertown refinery that he will do his best, and that the Government have it at heart, to obtain this 1.4 million tons. I do not think that the sincerity of my right hon. Friend has been called in doubt. It is only that the tools that he has available are virtually non-existent. That is why we want to press him, because he must press—and so must his hon. Friend the Minister of State for Foreign and Commonwealth Affairs, who I believe is going to Brussels tomorrow—that the view of the House of Commons—and the British people is that this undertaking must be honoured.
The effect of the amendment is to decline to approve Document R 1957/74 because itmakes no provision either for continuing imports, at fair and stable prices, of at least 1.4 million tons of cane sugar from Commonwealth countries, or for the continued existence of and employment in the port sugar refining industry in the United Kingdom, or for securing long term supplies of domestically refined cane sugar at a fair price to consumer and producer.This wording is unexceptionable in its specific terms, and I hope that the Government will accept it in the spirit in which it is moved. If they want strength from which to bargain in the next few weeks, they can go to Brussels saying that the House of Commons does not believe that this regulation is good enough and therefore has not even "noted" it. It would strengthen the Government's hand and help them to 165 achieve something which I think the whole House wants them to achieve. It will be for the Government to say why they think that the regulation achieves their objectives, which are also the objectives of the whole House.
I wish to concentrate on Document R /1957/74 because Document R/1900/ 73 is now out-dated. It was a preview, a kind of forward look from nearly eighteen months ago, and it has been overtaken by events.
The memorandum which accompanies Document R/1957/74 from the Ministry of Agriculture, Fisheries and Food, makes it quite clear that the document does not deal with the external sugar trade. I does not attempt to deal with the Protocol 22 countries or with the import of cane sugar. Therefore, by first definition in that document it cannot deal with the figure of 1.4 million tons. So I believe that the amendment is proved on that factor alone.
But the document deals in great detail with the internal production of EEC sugar, and it is that to which I now turn. We all know that sugar beet-growing in Europe is increasing. I will not detain the House by going into the complicated matter of the A, B. and C quotas. They were spelled out in a Written Answer to me in HANSARD on 6th November and they are most complex. But, of course, the quotas have been increasing, and I draw the attention of the House to the Answer.
The amount of sugar grown in the EEC in the last few years has varied between 7 million and 10 million tons a year. I believe that the highest figure was achieved in 1973–74, when 9.5 million tons were grown. In the current year, 1974–75, the total will be slightly less.
The Written Answer I had, which I assume follows on the document before us, shows that the quotas have been rapidly increasing. The basic maximum quota for 1973–74, that is, the A and B quotas combined, was 10 million tons. But in the year after next, namely, the first post-Lardinois year, 1975–76, the quota rises to 13¼ million tons. That is an increase of over 30 per cent. It might be said that the B quota does not have to be grown. However, a lot of the B quota has been grown. As the right hon. Member for Cambridgeshire knows, there is a 166 C quota, which is that it is not a quota at all but that the sky's the limit if it can be refined and sold. In other words, officially the quotas have been expanded and the off-quota amount for a deficit is there for anybody, if they can grow and refine it.
Therefore, Document R/ 1957/74, if my Written Answer is correct, shows that the European beet quota is going up 31 per cent. over a two-year period. That is the import of that Written Answer, and I take it that that is the import of the document, because I assume that the information was taken from the document. Page 4 of the document shows the figures I have quoted. It says further that the probable total production within the maximum quotas is 9.7 million tons and that the estimated consumption is 10 million tons. The deficit is shown as 0.3 million tons.
There is no room for a figure of 1.4 million tons there. Far from providing the opportunity for the 1.4 million tons that we all want to see, the document and my Written Answer suggest the opposite, namely, that it is being squeezed out.
What are the increases in these quotas? The Netherlands increase is 58 per cent. The Belgian increase is 55 per cent. The French increase from beet is 40 per cent. The French are by far the biggest growers of European sugar beet. Their quota from 1973–74 was 2,611,000. It is to go up in 1975–76 to 3,669,000, an increase of 1 million tons in French sugar beet quota alone. Of course, they get their 400,000 tons of French-grown cane in under their internal agreements, from part of metropolitan France. They have done all right for their Caribbean territories. The right hon. and learned Member for Hexham and his Friends did not do the same for ours.
Not only does this document which we are asked to approve not provide room. It suggests that cane is going to be shoved out. Indeed. United Kingdom beet—the right hon. Member for Cambridgeshire mentioned this—is to go up 67 per cent. We know that the maximum quota is well above what the sugar beet factories can actually process. No doubt there will be pressure for them to be expanded. I believe that the British Sugar Corporation has a £25 million expansion scheme for its sugar beet factories. No doubt, the farmers will be pressing to take up 167 all that 1.5 million in two or three years' time.
I think that my case is made, unless the Minister can prove me wrong. I emphasise that that is the import of what we have before us in respect of Document 1957/74 and the Written Answers to me in cols. 162–3 of HANSARD of 6th November
There is a third document which is not before the House, Document 2717/74. It was issued as late as 21st October 1974. I have made inquiries about this matter, and I understand from the Clerk of the Scrutiny Committee that this document has not even gone to it. So it is no use the hon. Gentleman say that we cannot discuss it tonight because the Scrutiny Committee has not sent it to us. That may be true, but is it good enough?
§ Mr. John Davies (Knutsford)
The hon. Gentleman is no doubt aware that the Scrutiny Committee does not exist at the moment.
§ Mr. Spearing
I am grateful to the right hon. Gentleman. I was aware of that, and I apologise for the mistake. I am grateful to the right hon. Gentleman for drawing the attention of the House to the fact that, despite this queue and this important document, which I shall mention in a moment, we have no Scrutiny Committee. It is a salutary thought, and if hon. Members are wavering on this matter tonight perhaps they will bear it in mind.
This document, which the Scrutiny Committee has not seen, goes into further detail about the quotas for the coming year. Indeed—surprise, surprise—it mentions 1.4 million tons, but it is not in front of the House tonight. I ask my hon. Friend—perhaps he could give us a reply now, or certainly when he winds up the debate—whether Draft Regulation 2717 is to be discussed at the Foreign Secretary's meeting tomorrow or at the meeting of agricultural Ministers on 18th and 19th November? I can hardly suppose that it is not, because it goes even further into the thinking of the Commission. It is a draft regulation for the Council of Ministers, and one would imagine that it would almost certainly be discussed. If that is the case, why was it not put down for a "take note" debate and why are we not formally discussing it tonight?
168 I think that the Government have an obligation to explain why this document is not in front of us. The document goes into some detail about how the quantities from the developing countries can be brought in. It refers to an IPT scheme, which I believe is called imported preferential quantities. Article 31 states:In a period of 12 months the sum of the preferential quantities may not exceed 1,400,000 metric tons of white sugar.I repeat that it says "may not exceed"; it does not say that that shall be the minimum; it does not say 1.5 million or 1.6 million, but "not exceed".
Secondly, Article 32 refers to the guaranteed price.
Price is, of course, going to be very important. Article 32 says:The guaranteed prices shall be fixed taking into account the intervention price for white sugar applicable in the Community. …Thus, in a document that is not in front of the House and that surely must be discussed in Brussels in the next few weeks there is some provision, albeit in outline, for 1.4 million metric tons.
If that is so and there is to be an import of 1.4 million tons and if there are to be these increased sugar beet acreages, or quotas at least, that we have read about, how will it all balance? There is only one answer. It is that in future there will be a considerable export of sugar from the Common Market to world markets, as there was some years ago. We may get in some 1.4 million tons—though that has yet to be decided, as it is only a draft regulation—but it will be at the expense of putting a lot of sugar out of the back door on to the world market, perhaps ruining the market for Third World producers who are non-associables as well. That is a possible solution, although perhaps not a very moral one.
It behoves the Government to tell us tonight whether that is to be. Let not my hon. Friends be deceived—that issue is not before us tonight. We are dealing with Document R / 1957/ 74 and, as I have said, there is nothing in it about the 1.4 million tons and nothing that will repudiate my amendment.
Finally, I had a letter today from the Minister of State at the Foreign and Commonwealth Office commenting 169 on some points I made to him on this matter. He said:There may need to be some contraction in refining capacity but I know that Fred Peart is anxious to keep this to the absolute minimum and that he is looking at ways of dealing with this problem.So, even the Minister of State at the Foreign and Commonwealth Office agrees that there may be some need for contraction in the beet refining industry.
To sum up, I hope that my hon. Friend will tell us something more about that. If I may return to where I started, these matters not only affect overseas suppliers and consumers and housewives in this country but they affect the whole beet refining industry.
For these reasons my hon. Friends and I have put down the amendment. I appeal to the Government to accept it, because, unless they can show to the contrary, the contents of Document R/1957/74 give us no hope as it stands.
§ 9.56 p.m.
§ Mr. John Davies (Knutsford)
The debate this evening illustrates very clearly one of the great problems in dealing with these instruments coming from the Community, with which the former Scrutiny Committee has been faced. As the Minister has told us, the two instruments which we are debating this evening are both superseded. According to what the Minister said this evening, the instrument to which the hon. Member for Newham, South (Mr. Spearing) referred-2717/ 74—is itself already subject to amendment and change. It is, therefore, exceedingly hard to accept in any reasonable terms an amendment posed in respect of a document which the Minister now categorically tells us is no longer valid.
It also illustrates the difficulties in dealing with the instruments with which we are faced. It may be curious to many Members here that agriculture Ministers, of all Ministers, should be particularly given to what are called fast-moving documents. But they are. These fast-moving documents are ones which the Scrutiny Committee, even when it exists, is at sore pains to find means of seeing in time to take them in, to debate them, to discuss them adequately, and then to make a recommendation to the House which is timely enough for the House to have a debate before the Ministers are obliged to deal with these matters in the Council.
170 This is a very real problem particularly affecting the agricultural area in the Community. It is notable that the Community, which is not always noted for its speed in movement, should in this area be fast moving. It may be surprising that agriculture Ministers, who have not, at least latterly, been particularly rapid in movements to secure the better interests of British farmers, can move with such astonishing rapidity when it comes to dealing with agricultural regulations.
The truth is that the Scrutiny Committee is suffering from this curious contrast of dilatoriness as between London and Brussels in so far as here a number of good and willing Members are waiting for the chance to get to grips with a vast mass of paper but are not given the opportunity of doing so to help the House. I take this opportunity—perhaps I abuse the opportunity, but I feel justified in doing so—of bringing to the attention of the House the fact that we are building up day by day a continuing backlog of work which inevitably will cause the House difficulty in future. There will be problems with vitally important issues which should be debated on the Floor of the House. No time will be available because we are being held up.
To turn to the instruments, outdated as they are, any Minister of Agriculture has an extremely difficult task in dealing with sugar, and I fully acknowledge that He has somehow to reconcile a surprising number of different and at times contradictory interests. He has, first and foremost, somehow to meet the supplies—
§ It being Ten o'clock, the debate stood adjourned.
That the Motion relating to Sugar may be proceeded with at this day's sitting, though opposed, until half-past Eleven o'clock.—[Mr. Coleman.]
§ Question again proposed.
§ Mr. Davies
One of the Minister's primary problems is to ensure the supply of the market. The evidence that this is a difficult task is before our eyes, as my right hon. Friend the Member for Cambridge (Mr. Pym) so eloquently pointed out. It is difficult to order the sequence of priorities, but the Minister's 171 second problem is to be concerned with the interests of the developing countries which are members of the Commonwealth Sugar Agreement. Second only to the assurance of supply of the market, he has a major responsibility in that respect.
My own experience in dealing with these matters, at second hand perhaps, was that that great responsibility was always deeply acknowledged both by my right hon. and learned Friend the Member for Hexham (Mr. Rippon) and subsequently by my right hon. Friend the Member for Grantham (Mr. Godber). It is totally unjust to accuse them of having in any way failed to seek to deliver exactly what they undertook. I had the pleasure of attending not the first but the second of the Lancaster House conferences, when the Caribbean and other countries which were members of the CSA were fully assured that every effort was being deployed by the Government of which I was a member to ensure that that outlet was secured. I cannot accept that there is any fairness in the charges which have been made across the Floor of the House this evening.
The third responsibility of the Minister is to ensure the continuance of the employment involved in our major cane sugar refining industry. He has a big task in that respect which it is sometimes hard to reconcile with his other responsibilities. It is clear that in these days, with the shadow of great doubts about employment hanging over parts of the country—my mind goes particularly to Merseyside—there must be a responsibility incumbent upon the Minister to ensure that he does all he can to preserve employment.
The Minister has a fourth responsibility, which is to try to look after the best interests of the British farmers. The potential of our beet planting and reaping industry has been too little referred to in the debate. It is a vital matter. Our farming industry in many respects is limping in serious circumstances. Here is an area in which there is a potential for increase. The Minister surely must give attention to securing its progress.
§ Mr. Peart
I agree with the right hon. Gentleman that sugar beet has a place, with cane sugar. There should be no conflict, and the interests of sugar 172 workers in both sections of the industry should be reconciled. As the right hon. Gentleman knows, and as I said in my speech, I secured at the Council of Ministers an agreement to a basic quota of 1,040,000 tons by comparison with our basic quota of 900,000 tons for the current year. Then we have another quota. Apart from that, I recognise that there have been crop failures and other matters that have affected the industry. I am anxious that we shall succeed there.
§ Mr. Davies
I am glad the Minister said that. My right hon. Friend the Member for Cambridgeshire sounded the same word of caution about the extent of the inducement to beet farmers to fulfil the kind of quota provisions which the Minister now claims he has made. This is an area of no mean importance.
In a world where all the ominous signs are of inadequate food supplies to meet the needs of a growing world population, we are wise to look to the Common Market to give us the assurances which are implicit in the common agricultural policy. That policy provides for a preferential supply within the markets of the Community. In conditions of serious food shortages ahead, we are wise to take advantage of that policy.
It is open to the Minister to try to pick and choose among the advantages he may see, but he must be careful. He cannot pick and choose to a point at which his whole adherence to the principles of the CAP is cast in doubt, because if he does he will forfeit many of the rights to which he is entitled within the framework of that policy, rights which are greatly valued.
I commend the Minister of Agriculture on what he achieved in October in the Council of Ministers. The improvement in beet quotas is a commendable achievement, and for our own sakes it is something for which we shall thank him in future. I do not hesitate to say that. The right hon. Gentleman's intervention a moment ago was not necessary to draw forth my approval, because, as I have said, I approve of his action. But there is still much work to be done.
The regulation of the Community market is an abiding problem which has always caused great difficulty and long negotiations within the Common Market. It is quite a success that the present situation has been achieved.
173 I do not share the anxieties expressed by the hon. Member for Newham, South or his view about the quotas in relation to total requirements in the Common Market. I do not believe that this has in any sense within a Community context the intention of foreclosing outlets for Commonwealth sugar or for cane sugar imports, or for procuring by the back door an exit for equivalent quantities. That is not my experience in dealing with the Community in these matters.
§ Mr. Spearing
Does the right hon. Gentleman agree that in the late 1960s about 1 million tons surplus beet sugar was put on the world market by the EEC? With a 30 per cent. increase in beet acreage quotas, is not that situation possible even in view of the 1.4 million tons figure?
§ Mr. Davies
I understand the hon. Gentleman's point, but that situation obtained in totally different conditions from those which exist today. They have no relevance to the present question. How could one say of February this year, when my right hon. Friend was seeking to renegotiate part of the Commonwealth Sugar Agreement and to obtain a price improvement for Commonwealth suppliers of up to £83, that that period had anything in common with the present state of the market? At that time we were agonised with a market that surprised us by rising to a figure of £200 a ton. We are now seeing reports of sugar at £500 a ton or more. To imagine that the circumstances in February are comparable to those which obtain today is nonsense, but to imagine that they compare with the late 1960s is even more nonsensical.
§ Mr. Hooson
Did not a similar problem face this country in terms of beef? Perhaps the right hon. Gentleman will cast his mind back three years. Had he then said that there could not be a surplus of beef in this country or in the Common Market, the House would have accepted it. He is making the same argument about sugar, and we should be sceptical about it to say the least.
§ Mr. Davies
I am not so sure. If quotas were the same as production, there would be justice in that argument, but quotas are not the same as production. Quotas are facilities within which goods 174 can be produced. That is a very different issue. The provision of these additional quotas is no more than a facility allowing the Community to move its production forward in a period of acute shortage. The "C" quota is specifically oriented to that end and is only available for access to Community markets in the events of their running short of sugar for their own supply. There again, these quotas do not represent the threat which it has been suggested tonight they might.
The Minister has told us that the 200,000 tons which M. Lardinois has put forward as the first step which the Commission might take to try to secure our very worrying supply situation during the current sugar yield is one which he expects to be able then to complete, with further deals to be undertaken subsequently. There is one considerable anxiety about this and I hope that the Parliamentary Secretary will refer to it. I mean the curious expression that this arrangement will be undertaken "within the limits of the budget". I hope that this does not imply that there is a ceiling within the framework of the budget which, at a given moment, might be quoted as something which would preclude the Community from carrying out its undertaking to us.
The most important issue remains to be concluded—the question of the 1.4 million tons and what will follow the Commonwealth Sugar Ageement. This is to us all the most critical question of the lot. It is, however, an issue which is in one way quite segregated, within Community terms at least, from the handling of the normal sugar system in the Market. The framework of discussion within Protocol 22 was always, and was recognised during the course of the negotiation as being, a separate issue which would cover sugar. My clear recollection of many discussions that I had during the negotiations last year on this subject is that there was always strong pressure not to conclude a sugar arrangement to the exclusion of other equally substantial issues in relation to the Protocol 22 countries.
Therefore, one of the big factors for delaying—I agree with Labour Members, delay there has been—was simply because there was a desire not to seek to conclude one section of the Protocol 22 negotiations to the exclusion of the rest. 175 Moreover, there was an understandable concern in the Community that one should not seek again to conclude arrangements in relation to the 1.4 million tons either in anticipation of any decision which was taken about the eventual adhesion of the Community to the International Sugar Agreement on the one side or to the finalisation of the internal sugar réegime within the Community on the other.
So there were perfectly sustainable reasons, which were nothing to do with any deep-laid plan to upset the principles which my right hon. and learned Friend for Hexham agreed. There were some perfectly sustainable arguments about why there was a desire not to deal with one issue at one time. The truth is that for all of us this issue looms by far the largest and, as has been said, it embraces a series of different and interrelated questions. [Interruption.]
There is the big question—[Interruption.] If the hon. Member really has a question to put about the point I have just made, I shall be delighted to answer him. Otherwise I find it difficult to hear what he is constantly murmuring.
§ Mr. William Molloy (Ealing, North)
What the right hon. and learned Member for Hexham (Mr. Rippon) did was go to Brussels and let down the British Commonwealth of nations on issues which should have been discussed and decided in this British House of Commons. That is the difference between the right hon. Gentleman and me.
§ Mr. Davies
That is an interesting statement which had no question attached to it whatsoever. The hon. Gentleman has posed no question but simply made an interesting statement, as he generally does, and generally from a sitting position.
The issues around which the negotiation of this critical question will dwell are the following. Obviously the quantity is very important, but equally the price is absolutely critical. The question of security is important and perhaps has not had enough discussion. We have seen the current agreement fall short in terms of its supply by about 335,000 tons for reasons we can understand. None the less, when it comes to ensuring the supply to the market, it is a considerable shortfall.
176 If we are dealing with the Community in a market of approximately 10 million tons of sugar, the precarious element which may be introduced in so big a quantity as 1.4 million tons is an important factor. I am sure, Mr. Deputy Speaker, that if you were sitting in Brussels and organising these matters, no doubt efficiently, you could not take the risk of not having 1.4 million tons at the critical moment when you needed it.
The security aspect is therefore fundamental. The wise Community providers for that market will have to make some kind of provision to ensure that they will not find themselves suddenly let down for these supplies, or we shall all be let down.
§ Mr. Frank Hooley (Sheffield, Heeley)
Is the right hon. Gentleman suggesting that, given a definite assured long-term agreement as they had under the Commonwealth Sugar Agreement, the Commonwealth producers would fail totally to supply 1.4 million tons?
§ Mr. Davies
In the past year, for reasons which we understand, they failed to do so. In any wise provision there must be effectual security, otherwise the market will not be provided with sugar.
There is the question of destination. In the discussions I had during the time in which I had to deal with these matters there was never serious question but that these supplies when they were agreed would be for our port refining industry. I would regard it as something of a delusion to imagine that the Community, knowing our problems of employment which obtain not only on Merseyside but in Greenock and Silvertown, is working out some Machiavellian scheme in order to deprive our port refining industry of sugar. The Minister must persist, in the light of tonight's debate, in seeking to ensure that we get the full 1.4 million tons and that the price is reasonable—I do not mean a price which harks back to the old Commonwealth Sugar Agreement price. It must be a price negotiated with the peak of the market in mind, otherwise the housewife in Britain will have to pay a frightening amount for her sugar.
The Minister must press for a high degree of security in the contract which is signed, and he will have no difficulty in securing that the destination will be 177 our port refineries. The right hon. Gentleman started slowly, he has done one or two things which seem to me to be 178 right and I now only advocate strongly that he should see the whole thing through to the end.
§ 10.19 p.m.
§ Mr. Eric Ogden (Liverpool, West Derby)
The right hon. Member for Knutsford (Mr. Davies) has learned much since he first came to the House as a North-West Member. He has the enviable ability of appearing to be the most reasonable of men—perhaps he is—and of saying reasonable things such as he said in the last sentences with which most hon. Members would agree. Of course, the whole House wants that 1.4 million tons and a proper price for the consumers and producers. In the North-West we are concerned not only with the question of the cane refiners but with every industry that uses the products from the refineries, and with security of employment. Yet the right hon. Gentleman cannot expect us to forget that he had the responsibility not only of expressing hopes that the EEC would fulfil our requirements, but of getting acceptance of our hopes in writing, of trying harder to get acceptance in writing.
The right hon. Member for Cambridgeshire (Mr. Pym) asked when all this began. My right hon. Friends' responsibility began when they first took office. They were given a very bad hand and I appreciate very much the way they have played that very bad hand so well. Certainly on Merseyside we have a great deal of confidence in my right hon. Friend's desire to get the best possible bargain.
I am in a difficulty because the Government motion asks the House to take note of Commission documents, not to approve them. If I take note of them it does not mean I like them, simply that I am noting that they are there. My hon. Friends' amendment says that they will not even take note of them and will positively decline to approve them. I should have thought that in any negotiation my right hon Friends on the Front Bench should have the support of the House, and they would be stronger in negotiations if the House accepts the amendment rather than the Government's own motion. The Minister might give some guidance on this when he winds up the debate tonight.
Sugar is an emotive word these days. It is as explosive as Cambrian water ever was. It is an emotive issue. Partly 180 for historical reasons, partly because of the patterns of our trade with the Commonwealth we have enjoyed ample supplies of cheap sugar. It would be more accurate to say that we were used to such supplies, but not any more. Times have changed whether it be in world markets or world economies, since last October. This applies not only to sugar but to oil and every primary commodity like copper, cocoa and wheat. Nothing is quite the same as it was a year ago and the new wealth of the world is in primary products. For reasons of security of supply of sugar, for reasons of balance of payments and our own agricultural interests we should cultivate and even expand production of home-produced beet sugar.
Cane sugar is no less important generally, and in my part of the world it is far more important. There is rivalry between cane and beet but there is also an interdependence because cane sugar refiners have been kept going at times by the raw sugar of the beet refineries. The situation can operate the other way round. Cane and beet are rivals but they need each other's co-operation.
The Commonwealth should be reminded that trade and aid is a two-way trade and it is not helpful to break agreements, for whatever reason. For reasons of trade, investment and regional employment security of supplies is a primary interest. The need to keep our cane sugar refineries in full production backed up by new investment is as important as all the other considerations which have been put forward.
Cane sugar is of particular importance to Liverpool and Merseyside and has been for well over 300 years. The sugar trade was one of the reasons for the growth of the ports of the Mersey. This goes back to that infamous trade of manufactured cotton goods out to West Africa, of slaves from West Africa to the West Indies and of the products of the West Indies, whether cotton, molasses, or raw sugar back to the Mersey. On Merseyside now we have two refineries—Tate & Lyle at Love Lane, Liverpool and the Sankey Sugar Refinery at Warrington. They provide investment, employment and high quality sugar products, and these we want to maintain. In the last 181 five years all Liverpool Members of Parliament have been involved, by invitation of the workers and employers, in discussing the future of Tate & Lyle in Liverpool. The refinery is located in the constituency of my hon. Friend the Member for Liverpool, Scotland Exchange (Mr. Parry). He has led in the consultation which has taken place at every level. I have never known such co-operation between workers, management, and local authority members and local Members of Parliament. I put on record my appreciation of the support we have had from Labour Ministers from the Department of Agriculture, the Department of Trade, and the Department of Industry. They know the needs of Merseyside and have acted to meet those needs. My regard for the management of Tate & Lyle is not quite so clear. I have a high regard for the company's products and for the expertise with which Tate & Lyle guard their interests. The prime interest of Tate & Lyle is Tate & Lyle. Most of the time the interests of the workers and management coincide but this is not always so. Tate & Lyle put forward some truth within their advertisements for Mr. Cube. The company put forward the truth so far as they see it, but they do not always put forward the whole truth. Mr. Cube's sponsors are formidable operators. They want us to think of Mr. Cube as a simple and strong crusader. But he is not the only member of his family. He has a cousin, Mademoiselle Cubette. There is certainly a Graf von Cube active in Germany. There may well be a Signor Cubellino active in Italy. The company does not always emphasise that part of their international relationships. They want to be both British and European.
Mr. Cube is not as independent as he would have us believe. In their latest, current advertisements, Mr. Cube seems to be wearing a rather tatty cardigan. He is certainly worried. He is not so independent now as he claimed to be five or six years ago. The Government obtain his sources of supply. His standards are regulated by Government as are his costs, profits and processes. Mr. Cube is rather more a bowler-hatted civil servant than an independent crusader.
Almost all Britain's sugar supplies are provided by three companies—namely, 182 the British Sugar Corporation, which is mainly in beet, supported by Government investment. The corporation is part public and part private. Manbre & Garton Ltd. is a private company which controls a smaller share of the market. It deals mainly in cane sugar. Then there is Tate and Lyle. It is a private company which controls the remainder of the market. All three undertakings are very much subject to Government authority and control. Sometimes they want help and sometimes they do not. There are continuing arguments going on about the reorganisation of British cane sugar refining. Whether we are with the Commonwealth or inside or outside the EEC there will still be a need for a total reorganisation of the whole of the British sugar-refining industry. We cannot possibly have a situation which allows three companies to control what is virtually a monopoly and which allows all the blame to attach to the Government when supplies are not secure. The Government have no real authority to impose terms. It is a situation which allows each undertaking to play for its own end of the market. I have heard workers in Silvertown saying that the "villains of the piece" are the beet sugar workers. That is nonsense.
§ Mr. Stephen Hastings (Mid-Bedfordshire)
The hon. Gentleman is making a point of criticising our refiners. Of course, that is not abnormal from his side of the House. Is he suggesting that there is something inefficient about our refiners? I claim that they are probably the most efficient in the world. The hon. Gentleman says that they must be reorganised. Why?
§ Mr. Ogden
The British Sugar Corporation, with major investments, is expanding at the same time as there is real danger of cane sugar refineries being closed. I said nothing about the efficiency of Tate & Lyle, except to praise the quality of the products, and then I said, that the refiners are not truly independent, although they say they are.
§ Mr. Ogden
I am not suggesting that it is. I am merely stating a fact. They are not as independent as they have claimed. Their sources of supply, prices and so on are controlled by the Government. The 183 Government are blamed when there are shortages. Why should they not say "We will take into public ownership and control the whole of the sugar refining interests of this country"? [Interruption.] The hon. Gentleman should ask any of my hon. Friends who, tonight at least, are on my right. No one has accused me in the past 10 years of being a Marxist or militant. Some of my hon. Friends would think better of me if I were.
The logic of the situation is that there is almost a monopoly source of a vital commodity—sugar, yet the Government are blamed for shortage of supplies. The only future for security of supply for consumer and security for the workers, whether cane or sugar beet workers, the only hope for investment, is to take the industry into public ownership as soon as possible.
§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)
The hon. Gentleman said that there were only three firms in the industry, and that these were not enough to secure competition. He is now advocating reducing the industry to one monopoly firm. That will reduce competition, lower the standard of service and efficiency, and reduce the opportunities for workers. What is the hon. Gentleman talking about?
§ Mr. Ogden
I wish that the hon. Gentleman had listened, and that he would not put words into my mouth. I was stating the fact that there are three main companies which claim to be independent but which are in fact interdependent, and that there is very little independence for any of them because the Government control three-quarters of their operations. In those circumstances, why pretend that there is independence? Why should not the Government take the full responsibility for the whole industry, for security of supply, for control of prices for housewife or industry, and for employment and security of workers. Britain needs a British National Sugar Corporation and the sooner the better
§ 10.32 p.m.
§ Mr. Neil Marten (Banbury)
I shall not go into the rather curious arguments of the hon. Member for Liverpool, West Derby (Mr. Ogden) about nationalising 184 the sugar industry. But I congratulate the hon. Member for Newham, South (Mr. Spearing) on having his amendment selected. It is important that we should be able to make such amendments in debates on the Common Market regulations. We should take it one stage further sometimes and try to make amendments to the regulations or draft directives. I do not see why we should not do that.
As there is not much time for debate left, and as I imagine, Mr. Deputy Speaker, that you will call the hon. Member for Renfrewshire, West (Mr. Buchan) next, because he resigned on this very issue, I shall be brief.
I wish to come to the defence of the Commonwealth on the question of its supply of sugar to this country. I have given my hon. Friend the Member for Chingford (Mr. Tebbit) notice of the fact that I would refer to the exchanges on sugar at Question Time last Thursday, when he used these words:I have a good deal of sympathy for the right hon. Gentleman the Secretary of State…who has seen the Commonwealth producers rat on their obligations to supply us at reasonable prices."—[OFFICIAL REPORT. 7th November 1974; vol. 880, c. 1230.]There is a need to defend the Commonwealth suppliers against that sort of accusation. I imagine that my hon. Friend spoke out of ignorance, or perhaps he had been paying too much attention to the European Movement propaganda. I have spoken to my hon. Friend, and I think that he would now agree that perhaps he went a little too far.
Australia has fulfilled its quota, and has offered us more; Australia has not ratted. Australia is a very reliable, efficient supplier, and it has supplied its full quota in spite of the terrible floods in Queensland.
§ Mr. Marten
I am glad that the right hon. Gentleman accepts that.
Mauritius, another Commonwealth country, fulfilled its quota, and is offering us more over and above the quota. The same goes for Swaziland, which wants to give us more next year, and Fiji. They have not ratted on their quota.
185 Therefore, what I think and hope the hon. Gentleman meant was that the West Indies had failed exactly to fulfil their quota. But I do not think that criticism of the West Indies for that is entirely justified.
They have suffered from inflation and the oil crisis. They had two bad seasons with their crops, and the cost of their imports rose. They are not rich countries and they were running short of foreign exchange. So they appealed to Britain for help, which was forthcoming, albeit a little late. In the interim they had to turn to the world market. They sold part of their sugar on the world market, purely to get urgently needed foreign exchange for their own domestic reasons. I do not and will not blame the West Indies for the shortfall. I certainly do not consider that the Commonwealth ratted on the Commonwealth Sugar Agreement. That needs repeating.
In the past we would have got together rather earlier over the whole question of the Agreement and sorted out a price. Had we been able and free to do that, this situation may not have arisen. It is essential in all these developing Commonwealth agreements to recall why we operate them. It is for trade and aid. It is a form of aid which is trade. We are worried about the small sugar farmer in Fiji with perhaps 10 acres, as well as about our own housewives and families. The Commonwealth Sugar Agreement was a stable reassurance to many families in those countries. It was also an assurance to our housewives.
I find the delay in reaching agreement on this 1.4 million tons curious. I see no satisfactory reason why the agreement could not have been reached earlier. I would like the Minister to deal with this in his reply. There is a deep suspicion among Members in all parts of the House that this was due to the French beet lobby trying to increase its share of the European market and trying to put out of production part of our refineries so that we would not be able to use so much cane sugar.
Turning to the Lardinois proposals, there must be a slight suspicion that they were suddenly brought forward to forestall the Australian deal for 200,000 tons and 350,000 tons for five years. I ask the Minister: what guarantees are there 186 that this 200,000 tons, or a proportion of it, will arrive in this country? Secondly, what guarantee have we got that this will be renewed? There is a guarantee that it will be reviewed, but none that it will be renewed.
If it is renewed, then for how long will it be renewed and for how much? All of these matters, so important to us, are vague. Have the Germans agreed to pay their share of the subsidy for more than 200,000 tons? I have heard doubts expressed in Europe about this. It has been said that the Germans have refused to pay any more subsidy. In that case the agreement would break down.
I refer to the Prime Minister's answer to me at Question Time last Thursday when I questioned him about the sugar and inflation. He ended by saying:we have every intention of getting all the sugar that we can from Australia, either through Community arrangements or direct."—[OFFICIAL REPORT, 7th November, 1974: Vol. 880. c. 1240.]That is the sort of talk I like to hear. It is the right approach, because it is the duty of the Government to look after British families, as well as those overseas for whom we had a responsibility in the past. I urge the Government no longer to go to Brussels and play these rather silly lower sixth form-type politics in the Community, wasting further time. Send out a senior Minister to get that sugar, get it in the bag. That is the right line for any British Government to take, before American and Japan wade in and get it. Having got that deal we could rely upon the Australians but, regrettably, it would require the approval of the EEC as the Australians might fear that the EEC would eventually stop the deal in some way.
If there is a shortage of sugar—and I say "if"—I shall blame it on our entry into the Common Market and on our failure to get more than that undertaking of aura à coeur. I shall blame the Minister of Agriculture for not being tough enough in Brussels. But in the end I shall blame the Common Market itself for failing to get on with that agreement for 1.4 million tons because people in Brussels have been procrastinating, as they always do. That will probably be the final reason why we shall not get the sugar.
187 It is curious to look back on the debates in 1971 and 1972, when we were told that we should not debate the Common Market on the question of butter. I always agreed with that, because the debate had nothing to do with butter but with whether or not we should go federal. We were concerned with the political debate. It would be curious if it were said that that debate should not be about butter but it turned out to be about sugar, because sugar will illustrate the extent to which we have surrendered our sovereignty to the Common Market.
§ Mr. Deputy Speaker (Mr. George Thomas)
I call the hon. Member for Renfrewshire, West (Mr. Buchan).
§ 10.42 p.m.
§ Mr. Norman Buchan (Renfrewshire, West)
I have not always heard cheers when I have been called to speak in a debate, and I am glad to hear them today.
I have waited a long time to take part in this debate and I shall be as brief as I can. I was interested in the speeches of my hon. Friend the Member for Newham, South (Mr. Spearing) and the right hon. Member for Knutsford (Mr. Davies). The right hon. Gentleman almost casually put two key questions out of the way. The question of the Scrutiny Committee underlines the necessity for the debate, and if my right hon. Friend the Minister of Agriculture, Fisheries and Food does not agree with the amendment I think that the House should take a decision on it. The fact that the Scrutiny Committee does not exist is not a criticism of the Government, but it shows some of the difficulties that we have come up against because of the nature of the Bill that was passed by this House.
The second matter that we have to consider is the failure of the Caribbean countries to deliver their full quota, because there are good reasons for that, too, and they are not unconnected with the legislation that we passed two years ago.
The right hon. Gentleman raised an interesting point which brings me to my main theme in discussing these draft regulations. That was the point about the Lardinois proposals having to be within the limits of the EEC budget. Even the 188 right hon. Gentleman questioned the possible consequences of this.
I was sorry that my right hon. Friend the Minister of Agriculture did not give way and allow me to put a fairly simple question to him. Any disagreement that we may have over this decision is not because I question my right hon. Friend's motivation or his desire to do his best for this country. I know my right hon. Friend far too well for that. I believe that the judgment was wrong, not that it was a bigoted judgment.
§ Mr. Buchan
That makes me more confused than ever. However, I believe that many people have been confused about this matter of sugar.
A matter which engaged our attention this summer, which is related to these regulations and was referred to by my right hon. Friend, was the possibility of the Queensland deal. My right hon. Friend said that Australia was offering only 200,000 tons. That is precisely the figure which is now coming forward in the Lardinois proposals, and which we are told is very good. We cannot shove one aside and welcome the other in quantitative terms.
One reason for the failure to clinch the Australian tonnage was that at one point in the discussions the Australians firmed up and said "We want EEC guarantees for it, before we agree." Those guarantees were not forthcoming. We know why the Australians wanted those guarantees. They were afraid that if there was a change in the world market price—and incidentally the right hon. Member for Knutsford underestimates the speed of variation in the world market price—and the world market price of sugar came down, there would be levies on the price of sugar. The correct reaction would have been for us to say to the Australians "We will guarantee it. No matter what the EEC decides, we will stick to the terms of the agreement." That was one option.
For this reason, the Australian deal was pre-empted by another deal. It was perhaps the reason for the Lardinois deal, to pre-empt the Australian deal. I remember when my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) 189 warned the House that we should not underestimate the power of the European farming lobby and the desire to keep out sugar cane. That was exemplified this summer. There may have been a connection between the two; I put it no stronger.
I should like to refer to the analysis of the Lardinois offer by the right hon. Member for Cambridgeshire (Mr. Pym), whose speech was as irresponsible as it was long-winded. The Lardinois offer bears examination. It speaks in terms of 200,000 tons. Some of us say that is not enough. What further guarantee is there? This is where the right hon. Gentleman's point has some relevance. My right hon. Friend says it is only a start, and some of us challenge that statement; some of us believe that it is not only a start but that it is also the end. But if it goes further than that to 600,000 tons—and I believe we require nearer 1 million tons—where is the money coming from? The Germans say they will not increase the budget. What happens if it goes over 200,000 tons? What happens, without going beyond 200,000 tons, when the world market price of sugar shoots up?
The right hon. Member for Knutsford dealt with that point only casually. It is a really crucial point. There has been some disagreement about the translation, and doubt has been expressed about whether the 200,000 tons is to be continued. I am told that I am translating it wrongly, but the translation says that the Community will then look to see how it can increase the continuing amount. That agreement on the budget casts grave doubts on whether the amount will be increased.
§ Mr. John Davies
I have no doubt whatever that the proposal referred to a first step of 200,000 tons. My anxiety, as is the hon. Gentleman's, is about what happens in paying for the subsequent steps when they arise.
§ Mr. Buchan
That brings us back to "Go"—" and do not collect the 200,000 tons ". It was based on finance which was not to be extended. Does anyone believe that the Germans will spend up to their full proportion of £200 million or £250 million in supplying us with sugar when the whole concentration of the regulations is to expand beet production? We do not believe that.
190 Next is the effect this has on the world market. The world market represents a tiny amount of sugar. It acts as a small reservoir of sugar for people who want a bit extra. Like angels dancing on the point of a needle, small though it is, a hellish number of speculators can dance on the sugar market. As soon as there is a requirement in the world market the price shoots up. The smallness of the market emphasises not its unimportance but its importance. The first pressure that goes on the market causes the price to shoot up. That is the gap that has to be bridged.
The Common Market recognised that and put in another string. To close that gap a little the Common Market said that one must be able to buy forward sugar. The refineries are not sure whether that will work. I understand that the Government will assist and that the major refineries will do their best to cope with the problem, but there is no guarantee that they can cope with it. There is no guarantee that this 200,000 tons of sugar will come here. The French, Germans and Italians can provide for forward buying, but we still do not know whether we can. That is another problem involved in the Lardonois agreement. This deal which pre-empted the Australian deal does not yet guarantee a single ton of sugar.
Further, as the Commonwealth Sugar Agreement runs out at the end of this year, and the only sugar on this year's allocation may come in in the first two months of next year, there is no guarantee of sugar beyond 1st January other than our own sugar beet. Some of us say that there is an alternative—not to allow ourselves to be dominated by the EEC.
The right hon. Member for Cambridgeshire (Mr. Pym) succeeded in making his monstrously long speech without once accepting an atom of responsibility. But we all remember what happened with aura à coeur and the translations we had of that. We were told that the excess of the 1.4 million tons was bankable. The cheques are still bouncing, and they have never yet been banked.
I do not primarily blame my right hon. Friend. I agree with those who said that he had been given a rotten hand. The Conservatives presented him with that 191 rotten hand and disagree with his decision. I understand the difficulties which my right hon. Friend faces. The right hon. Member for Cambridgeshire made no attempt at apology or understanding. Indeed, he suggested that all the troubles started in February this year. That is nonsense.
The reason why the right hon. Member for Knutsford was able to talk about the failure of my right hon. Friend to provide was not in connection with the passing of the European Communities Act. The Opposition are saying that we still have no guarantee that Britain and the EEC will bank the Lancaster House assurance. We still have no assurance that at the end of this year our cane sugar will be provided for Britain and the EEC countries. The Conservatives looked for other arguments. Yes, there is the price factor. Who can blame the West Indian countries for being worried about that?
There is also the fact that they have no guarantee. What they require is continuity and security and reasonable prices, and that is what we should give them. We should re-open negotiations with Australia and guarantee the Australians a price, regardless of what the Community says.
I have good reason for saying that this is an extremely important aspect. We have had one Parliamentary scrutiny of these regulations, carried out by the House of Lords Select Committee on the European Communities, Sub-Committee D, under the chairmanship of my noble Friend, Lord Champion. He asked one of the civil servants who gave evidence on 20th August:In the light of the world situation in sugar supplies, is there anything you would wish to add to your explanatory memorandum of the proposals now before the Sub-Committee?The civil servant replied:…we shall have an assured need for 1.4 million tons of sugar from the developing Commonwealth, and in addition to that, as he "—my right hon. Friend the Minister of Agriculture—said in his statement, we shall need an assured supply on a long term basis from Australia. So, if anything, the supply situation emphasises the need to secure satisfactory arrangements for Commonwealth sugar in the forthcoming negotiations.192 Later, the civil servant, in reply to a question by the noble Lord, Lord Inglewood said:Our policy, as ministers have stated, rests on three rather different assumptions in three respects. First, and I think this can be regarded as common ground, there is the access for the 1.4 million tons. Secondly, there is assured access for Australian sugar on a long term basis. These two forms of access are essential to maintaining the domestic supplies in this country in the short term.The third objective was expansion of our own home-grown sugar beet production.
By and large, my case rests here. I understand the difficulties faced by my right hon. Friend. He should support the amendment. We should immediately say to the Commonwealth countries that we want to enter into negotiations with them and that we understand their need for continuity and security. Our need is for supplies and the common ground is probably price. It is unthinkable, for example, that we can drop below the £140 a ton than British Guyana and other Caribbean countries got in recent years. This should be the starting point of our negotiations. Secondly, we cannot accept the EEC's view that the Commonwealth Sugar Agreement price must not be higher than the European threshold price. That is surely a non-starter.
How many years should agreement with the Commonwealth sugar-producing countries run? There is a seven-year cycle of production requiring a reasonable basis for security I suggest that a five-year rolling programme would be necessary—in other words, a rolling programme from year to year, with continuity assured for five years so that at no point could there be anything less than a five-year cut-off. Given that security and continuity, I believe that the West Indians and other Commonwealth countries will begin to be able to come to an agreement with us which will be fair to both sides and which will guarantee us our supplies.
I hope that my right hon. Friends will consider what I have said. I had hoped that the Government would have said that they would accept the amendment. I have been 10 years in the House—
§ Mr. Buchan
I look on that as almost a marriage proposal. I accept on the spot. I am glad to receive the indication—[AN HON. MEMBER: Consummation.] It is a consummation most devoutly to be wished. I hope that the spirit is carried out to the letter, whether by the Whip, by the Under-Secretary, the Minister of State or anyone else. The right thing for the Government to do is to accept the amendment. It can only strengthen the Minister in the discussions this week. On that very hopeful note—for once in my life—I sit down.
§ 11.1 p.m.
§ Mr. Clement Freud (Isle of Ely)
The hon. Member for Renfrewshire, West (Mr. Buchan) mentioned monopoly and throughout this interesting debate every speech seems to have been a mixture of chance and "community chest", each ending up with 1.4 million tons.
Without doubt the problem lies in the fact, first, that we as a nation eat too much sugar and, secondly, we have been able to eat too much sugar because it has been too cheap and there has been every incentive to ruin our teeth and spoil our health by eating too much sugar. What must be realised is that the days of cheap food are over. In fact, the days of cheap food, just as the days of surplus food, are over. What we have come to now are the days of self-sufficiency in food.
The right hon. Member for Cambridgeshire (Mr. Pym) said that he feels sorry for grocers. I submit it is very difficult for the right hon. Member to feel sorry for grocers in a constituency which adjoins mine which abounds with sugar beet farmers. I feel very sorry for sugar beet farmers who are now to be encouraged to expand; to do exactly what the pig farmers and the beef farmers were encouraged to do in the last few years.
I make one simple plea to the Secretary of State, namely, that if our sugar beet farmers are to be encouraged to grow more beet they be given an absolutely copper-bottomed guarantee. Farmers have always, been prepared to accept the vagaries of the weather. If the Government are to ask them to grow more sugar the farmers must have a chance to make money by so doing. They do not want the type of promise that the pig farmers and the beef farmers have had and have learned to rue.
194 I was interested to read in the Economist—[Interruption.]—I will make this my last word, not because I have no more to say and not because of the interference from the. other side, but simply to allow the Front Bench speakers to wind up—The EEC subsidy scheme for sugar for Britain has been made the whipping boy for the unalterable fact that there is no cheap Commonwealth cane sugar to be bought.
§ 11.5 p.m.
§ Mr. James Scott-Hopkins (Derbyshire, West)
The debate has been interesting, and it has shown the complexity which the sugar problem poses to the House. We have had only a three-hour debate on this subject, and it is obvious that we shall need to return to it. There are many hon. Members in all parties who have not had an opportunity to take part in the debate on this major issue.
The subject-matter of the debate falls into two major parts, the short-term and the long-term problem. The short-term problem involves filling the gap between the present and September 1975. There are various methods of attaining this end and hon. Members in all parts of the House have put forward their ideas on how this could be done.
I do not think there is any conflict between what the Minister of Agriculture has proposed and what has been said by some hon. Members, including my hon. Friend the Member for Banbury (Mr. Marten) in respect of the Australian and EEC positions. It is quite clear that in terms of what has been proposed by the Community to solve the problem of the shortfall mainly in this country, and to a more limited extent in Italy, there is a gap of 600,000 to 700,000 tons—perhaps more, but at least not much more than that. This gap will be filled by the Community and it will pay a subsidy on imported sugar from third countries at whatever price that may be to bring it to EEC price levels.
The system by which this will be attained is complicated and I shall not weary the House with the details, except to say that importers have to take a view on what the forward market will be to recoup some of the high prices they will have to pay for their imports now by making exports without tax from Quota "C" sugar from the 1975–76 crop. Therefore to that extent, their tenders for 195 subsidy from FEOGA funds will be reduced.
As I understand the situation, there is no limit on the amount of sugar which the Council of Ministers has agreed will be needed to fill the gap. The first tranche or section is 200,000 tons, and will be subsidised out of FEOGA funds. I understand that after the 200,000 tons has been imported, the Council of Ministers will review the position to see whether it is the best way of paying the subsidy to bring in sugar to make up the gap.
My right hon. Friend the Member for Knutsford (Mr. Davies) and the hon. Member for Renfrewshire, West (Mr. Buchan) raised an interesting point about payments out of existing budget of FEOGA funds in respect of this import. At the moment the figure needed is 200,000 tons, but it will rise beyond that. The hon. Gentleman asked whether the fund would be available in that event and, as I understand the position, the Council of Ministers, including the German Ministers, agreed in principle that the gap between now and September 1975 should be made up from FEOGA funds. I understand that there is no doubt about that, and perhaps the Parliamentary Secretary will confirm the position.
I further understand that the budget estimates which are now being put before the European Parliament this week, include an element in which there is sufficient room within the existing draft budget so that the estimated cost rise of the subsidy system can be met.
§ Mr. Spearing
On this very important point, I have in my hand the Council's statement dated 22nd October, headed "Luxembourg" and it reads:The first stage is for the Council to adopt the appropriate Regulation proposed by the Commission for an amount of 200,000 metric tons. The Council will decide on further stages in the light of experience and depending on the effectiveness of this measure.It does not suggest that, although the amount may be guaranteed, the method of finance after the 200,000 tons is in question.
§ Mr. Scott-Hopkins
I do not think that the hon. Gentleman's interpretation is right. I have debated this with Commissioner Lardinois. I have heard the Chairman of the Council of Ministers talk about it in the Parliament. As I 196 understand it, the only point at issue is whether the proposal from the Commission on the way of financing the subsidy is the best in all the circumstances. They are going to review that method after the first 200,000 tons has been imported into the Community to make up the shortfall. Perhaps the Parliamentary Secretary will be able to confirm this fact.
So the hon. Member for Newham, South (Mr. Spearing) need have no anxieties about that. I have none—[Interruption.] No, I have no anxieties. When they say, as they have, that they will fill the gap and find a method of subsidising it, I believe that this will be done and the funds will be available.
In the sugar situation, there has always been some difficulty—rivalry, if one likes—between cane and beet in both the long term and the short term. I agree that in this country we need both the imports of cane and as much beet as we can grow. In the longer term also there is no doubt that we need both sources of supply. There has been a lot of talk about the 1.4 million tons. This of course does not include the Australian 200,000 or 300,000 tons of sugar which they are prepared to supply.
All through my time in the European Parliament, ever since we joined the Community, in repeated debates, repeated assurances have been given by the Council of Ministers and its chairmen of several nationalities, from the Ministers and from the Commission, that the 1.4 million tons of cane sugar proposed under Protocol 22 was accepted. When my right hon. Friend the Member for Grantham (Mr. Godber) opened the debate on 24th October, 1973, he repeated that the previous month the Council of Ministers had accepted the 1.4 millions tons as that which it was necessary to import under Protocol 22. It ill becomes hon. Members opposite to query the good faith of these Ministers of other countries, when they say that they will do this, and to say that they do not mean it. They have said it and I have no doubt that they will. Therefore, the 1.4 million tons will be negotiated and will come into the Community.
But there are two points on which I must criticise the Minister. These negotiations about the 1.4 million tons were started by my right hon. Friend the 197 Member for Grantham way back in July 1973. They were ongoing negotiations—
§ Mr. Scott-Hopkins
The Minister knows the reason full well: because the Commonwealth countries were not able to complete the negotiations themselves at that time, and the new sugar réegime—this document here—had not been completed and agreed.
I cannot understand why the Minister did not press his colleagues in June and July of this year not only to start the negotiations but to get them going. I have tried to find out from Brussels today what was the state of negotiations with the Commonwealth countries. But I have had no success: I understand that all the officials were in Luxembourg attending some other ministerial meeting, at which the Foreign Secretary was present.
As I understand it these negotiations can be completed by the Commission within the available time, and the real question is that concerning price. I am sure that the House will feel that there is no doubt about the good faith of the Commission or of the Council of Ministers that the 1.4 million tons will be accepted. [Interruption.] My hon. Friend the Member for Banbury (Mr. Marten) says that French beet growers will not like it. They did not like it. But their Minister accepted the commitment in the Council of Ministers and did not dissent from this arrangement in 1973 and 1974. The report can confirm this.
§ Mr. Hastings
I do not want to impugn anybody's good faith, but where will the 1.4 million tons come from, and what will be the price of the subsidy, since we shall have to pay 13 per cent. of it in any case?
§ Mr. Scott-Hopkins
There is no question of subsidy on the 1.4 million tons. The subsidy is for the shortfall of the 1974–75 crop to be made up between now and September 1975. The 1.4 million tons is the ongoing commitment to enter into the Community.
My hon. Friend asked where will it come from. It will come from our traditional suppliers, but if they are unable or unprepared to provide it at a price 198 which is reasonable not only to them but to us, then the fall-back must be from the other existing suppliers in the world. I would say to my hon. Friend—I hope that this will be confirmed in the reply on behalf of the Government—that as long as the price can be agreed at a reasonable level, there is no doubt that Commonwealth countries, particularly the West Indies, will wish to supply on an ongoing basis the 1.4 million tons to this country. The proposal from the Commission to the Council provides:that the preferential import system shall apply from 1st January, 1975, and that it shall be valid for the same period as that of the new Convention, namely five years.Therefore the point made by the hon. Member for Renfrewshire, West (Mr. Buchan) is covered.
It is a question of a five-year forward-looking contract as far as the import into the Community is concerned. I hope that this point will be confirmed in the reply.
I turn now to the Australian position. As many hon. Members have said there was an availability of a certain amount of sugar from Australia in the summer of this year. The right hon. Gentleman the Minister has not given an explanation why he was not prepared to close that deal at that time. I hope that we shall be informed whether, if there is difficulty in getting the 1.4 million tons for 1975–76 onwards and there is a possibility of Trinidad putting 13,000 tons on the open market for auction in the next week or so—which is not a good sign—there will be no opposition from the Commission or the Council of Ministers to whatever gap or shortfall there is, bearing in mind that there will be a five-year basis available, being filled by Australian sugar. I have no doubt that this will be so.
I turn now to the Amendment moved by the hon. Member for Newham, South (Mr. Spearing). I do not think that the amendment is all that relevant because as has been pointed out by my hon. Friend the Member for Knutsford (Mr. Davies) the documents to which it relates are out of date, and have been superseded. The new document completely succeeds that for 1973 which we are meant to be dealing with. The 1974 document is a useful one, with which to open the debate, 199 but it is purely a memorandum and does not contain any proposals.
Therefore whether or not the amendment is irrelevant to the issues at stake, I agree that it has been necessary to have this debate which has highlighted the fact that the Minister should have moved earlier.
I do not believe that our beet growers have sufficient security in order to be able to fulfil the 1.5 million tons figure. They want an adequate price; I do not believe that they have yet got it. There is now little time for beet growers to make a choice between sowing beet this winter, or some type of cereal. I believe therefore that the Minister must hurry and get that one sorted out. He has been extremely dilatory on this whole question, certainly where the 1.4 million tons and the negotiations with the Council of Ministers were concerned. He has not done enough, yet for the beet growers of this country who need an assurance and need it quickly if they are to plan properly for 1975.
§ 11.20 p.m.
§ The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang)
All hon. Members will agree that we have had a useful debate. Certainly there will be other debates on this issue, so hon. Members will understand if I concentrate my reply on those questions which pertain to the documents and which will be central to the discussions which my right hon. Friend the Foreign Secretary will be having this week and which my right hon. Friend the Minister of Agriculture will be having next week.
I should like quickly to dispose of some of the more outrageous criticisms by the right hon. Member for Cambridgeshire (Mr. Pym). He criticised us about the basic price of sugar beet. Surely he realises that the price of beet when we came to power was £7 a ton. We raised it to £10 a ton. We are not saying that this is high enough for the 1975 crop, but it ill becomes the right hon. Gentleman to criticise us for not giving the beet producers a fair return.
§ Mr. Strang
The right hon. Gentleman also sought to take the credit for his right hon. Friend for increasing the CSA price from £61 to £80. Had the right hon. Gentleman and his right hon. Friends increased that price earlier we would not have had the diversion of shipments under the CSA which took place in the earlier part of the year. So, far from claiming credit for increasing that price, they deserve criticism for the delay they incurred in raising it so as to secure our quotas under the CSA.
I come now to the central weakness of the right hon. Gentleman's argument. It has been picked up by my hon. Friends. The right hon. Gentleman's Government did not secure Community agreement to the access of 1.4 million tons from the developing Commonwealth, and that is what the argument is about. That is what my hon. Friend's amendment is about. That is what we are going to negotiate, but we do not have agreement from the Council of Ministers or the Community about 1.4 million tons.
Let me come briefly to the question raised on the Australian deal. The Australians made it clear throughout that their preference was for a deal with the Community as such. They insisted on Community endorsement of any agreement with the United Kingdom as soon as it became clear, at the Agricultural Council meeting of 17th-19th September, that it might not be possible to secure the agreement of the Council to the exemption of Australian sugar from the levy. The central point—and my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) did not make this clear—is that the Community has accepted a commitment to meet our needs for the whole of the 1974–75 crop year. The 200,000 tons refers solely to the mechanism. I can assure the right hon. Member for Knutsford (Mr. Davies) that there is no limit to the money which will be spent on this arrangement. The financial claims for the subsidisation of the sugar imports on FEOGA will be equal to any other claim.
§ Mr. Strang
I recognise the deep concern which my hon. Friend the Member for Newham, South (Mr. Spearing) has for the future livelihoods of the sugar refinery workers in his constituency. They are lucky to have acquired my hon. Friend as their champion on these issue. I accept the concern of my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden).
The central issue is the 1.4 million tons. We must first secure Community endorsement for that figure. Second, we must secure an acceptable duration for that agreement. That means a deal which stretches very far into the future and certainly well beyond the referendum. Third, we must ensure that the sugar is refined in the British cane sugar refining industry. Fourth—this is perhaps the most important part of the whole deal—we must see that the price which the Commission and the Council of Ministers offer to the developing Commonwealth is reasonable and reflects to some extent the current world market situation.
I think that my hon. Friends will accept that with those four points I have covered the substance of the amendment. I am therefore able to inform my hon. Friends that the Government accept the amendment. There should have been no doubt about it. The Government have made their position clear throughout on these matters.
There are two central facets of the issue that we must recognise. First, the situation which the Government inherited would have been much better if the Conservative Government had secured adequate arrangements for the future supply of sugar when they negotiated entry into the Common Market. That was the time to secure the 1.4 million tons. That was the time to secure adequate agreements and arrangements for the future of the refining industry. The second central issue that we must face is that the whole sugar situation has been stood on its head in the last year in the sense that in the short term we are not doing developing countries a favour by buying their sugar at the sort of price that they get at present under the Commonwealth Sugar Agreement. In one year the price of sugar has gone up from £100 to £500 a 202 ton on the world market. That is the central issue.
§ Question, That the amendment be made, put and agreed to.
§ Main Question, as amended, put and agreed to.
That this House takes note of Commission Document No. R/1900/73, but declines to approve Commission Document R/1957/74 as it makes no provision either for continuing imports, at fair and stable prices, of at least 1.4 million tons of cane sugar from Commonwealth countries, or for the continued existence of and employment in the port sugar refining industry in the United Kingdom, or for securing long term supplies of domestically refined cane sugar at a fair price to consumer and producer.