HL Deb 19 July 1922 vol 51 cc582-95

LORD STRACHIE had given notice to call attention to the decision on appeal of the House of Lords that the late Food Controller illegally imposed a charge of 2d. a gallon as a condition of a licence to sell outside the counties of Devon, Dorset, Cornwall and Somerset, milk produced in those counties; and to move. That in the opinion of this House the Government should at once take steps to reimburse all persons who have been compelled to pay this illegal tax.

The noble Lord said: My Lords, the Notice I have placed on the Paper is to call attention to a decision made by this House sitting as a Court of Final Appeal. In the first place, I think I ought to show how this Question is supported outside this House. I have in my hand the resolution sent to me by the branch of the National Farmers' Union of the County of Somerset as follows: That this executive committee, representing over 5,000 members in the county of Somerset, urges the Minister of Agriculture immediately to take steps for the repayment of the 2d. per gallon illegally deducted by the Food Controller from the farmers of this County during the months of May, June, July, August and September, 1919, together with interest at the rate of 5 per cent, per annum. I may also say that since I received that resolution there has been a conference of the National Farmers' Union for the four counties of Devon, Somerset, Cornwall and Dorset at Exeter, where a resolution on similar lines was passed to that which had previously been passed by the County of Somerset. That meeting at Exeter represented some 16,000 members. That, I think, will show the House that there is a very strong feeling in these four counties that this illegal extraction from the pockets of the farmers by the Ministry of Food ought to be returned to the farmers, in view of the decision of your Lordships' House sitting as a Court of Appeal, to which I have referred.

How did this question of legality arise? It arose in this way. In April, 1919, the Government, having, of course, a perfect right to do so, decided to fix maximum prices of milk for the country; but unfortunately they did not do what one would have thought was the obvious thing— namely, fix a flat rate for the whole country. Instead of that they took it into their heads to act on the Report of a travelling Commission. This Commission went through the country in order to furnish the Government with an idea of what ought to be the maximum price of milk. That Commission recommended that the price of milk in the counties of Somerset, Dorset, Cornwall and Devon should be lower than the price for milk in other counties—that is to say, that the farmers of those countries should receive 2d. less per gallon for their milk than was paid to farmers in any other part of the country.

No doubt, the consumers in those four counties had an advantage through being able to buy their milk 2d. a gallon cheaper than they would have had to pay in other outside counties, but milk exported from the four counties to which I have referred had to be exported by the wholesale buyer, and he could only export it by getting a licence from the Government and undertaking to pay the Food Controller 2d. per gallon upon every gallon of milk so exported. The Select Committee which was appointed by your Lordships' House in 1919, went into this question very carefully indeed, and unanimously reported against there being any differential rate throughout the length and breadth of the country. Their view was—no doubt, very rightly so—that there ought to be no differential rate, as it was impossible to take one area and separate it from another. They said it was most unfair that Somerset farmers who sold milk in Bristol should receive 2d. per gallon less than Gloucestershire farmers selling milk in the same place.

So convinced were the Government that a differential rate was unfair and unjustifiable, they accepted the Report of the Select Committee of your Lordships' House, and from the time of that acceptance all prices for milk were made the same throughout the country, so that the four counties I have referred to were damnified by the decision of the Food Controller. Not only was it the milk that was exported upon which the farmers lost this 2d. per gallon, but even the milk which was turned into cheese in these four counties had to be paid for at the rate of 2d. per gallon to the Food Controller. The case with milk used for making butter was the same.

Another rather interesting point was as to what was to be done with these twopences collected from the farmers under these licences. It was stated to the Select Committee by Mr. Wilfred Buckley, in answer to Questions 267, 270 and 271 of the Select Committee's Report, that the 2d. was to be used only to reduce the price of cheese and butter, and for no other purpose. But I suppose the Government found it impossible to do that. In the Report of the Ministry of Food, Command Paper 205, 1919, it was stated that the difference in price was to be received by the Ministry of Food and devoted to administrative expenses. I understand that neither of these two contradictory opinions was acted upon, but in the judgment given in the Court of Appeal one of the learned Lords Justice said he understood that the money had gone into the national Exchequer. Therefore it had gone, apparently, for use in ordinary Government purposes.

I come now to the question of the exact amount which is involved. I have been given to understand that something like £250,000 has been illegally taken out of the pockets of the producers in the counties I have mentioned. A part of that sum, I understand, is now in the hands of the Government, while a part of it also, undoubtedly, is in the hands of such companies as the Wiltshire United Dairies Company, which brought the action against the Government that they have been so successful in sustaining. It must be admitted that the United Dairies Company have done a very great service, and no doubt have been put to very considerable expense. It cannot be expected, therefore, that the whole of the amount received from the farmers in those four counties by the Wilts United Dairies Company can be returned to them by that company. The company have been put to great expense in fighting this matter, first in the High Court, then in the Court of Appeal, and finally in the House of Lords. No doubt, the Government will have to pay some costs in this matter, but we all know that the costs in such an action, even when you are success- ful, are not sufficient to meet the whole of your expenses.

I understand that the Wilts United Dairies Company consider that they will be liable for Excess Profits Duty and Income Tax upon this 2d. which they have retained in their hands. No doubt the Inland Revenue will say: "You have made a very handsome profit by getting this 2d. extra which you ought to have paid to the Government." Again, there may be cases where those who bought under this licence and had the profit of 2d. per gallon on the milk they sold, are not now in the position to repay the money, owing to bad times. It. is now three years ago, and there may be companies who got the 2d. which have been wound up, or there may be private individuals who may have retired from business. There may not, therefore, be an opportunity of getting back this money.

The question is, who ought to find the money to repay the farmers from whom it has been illegally extracted? It has now been declared not only by a Select Committee of your Lordships' House, but also by this House sitting judicially, to have been a tax which the Food Controller was not justified in imposing upon His Majesty's subjects. To use the words of the Bill of Rights, this was "levying money for use of the Crown without the grant of Parliament." Therefore, it was in contradiction of all the rights and privileges of the people of this country. It seems to me, therefore, that it is now the duty of the, Government to take steps to remedy this illegal Act, and to do justice by carrying out the views expressed by the Select Committee, who said that it was unjustifiable to make this differential rate, which has led to the whole of the difficulties and trouble. I hope that the Government will be ready to assent to my Motion; that all those who had to pay this illegal tax will be indemnified; that the Government will take care that the decision of the House of Lords shall be made good; and that no person who suffered by this imposition is injured in any way. I beg to move.

Moved, That in the opinion of this House the Government should at once take steps to reimburse all persons who have been compelled to pay the charge of 2d. a gallon imposed as a condition of a licence to sell outside the counties of Devon, Dorset, Cornwall and Somerset, milk produced in those counties.—(Lord Strachie.)


My Lords, I had the honour to sit as Speaker when the case to which the noble Lord refers came before your Lordships' House for decision, and perhaps you will permit me to give some further explanation than that which has already been offered of the circumstances in which the dispute arose. This is, I think, all the more important because, judging from several sentences of the noble Lord, he has completely and profoundly misunderstood the operation of the Order he seeks to challenge. The circumstances were these. Owing to the scarcity of milk the Food Controller was given powers to regulate its distribution throughout the whole of England. It was an extremely difficult task for him to discharge. It will be obvious to every one of your Lordships that when milk was scarce and transport difficult you could not expect that the same Prices would rule for milk in the industrial area around Leeds, and other Yorkshire towns, as would obtain in the richer and more generous pastures of the west of England.

The Food Controller therefore established a Commission for the purpose of deciding the right course for him to take, and I utterly fail to understand why the noble Lord should quarrel with the Food Controller because, having taken the best means at his disposal for the purpose of ascertaining the facts, he acted on the facts when they had been ascertained. A judgment obtained by looking backward might possibly show that another and better course could have been followed, but I see no reason whatever to doubt that the Food Controller, when he accepted the advice of his Committee, was doing what would have appeared not merely to him but to most people a very reasonable thing and one which was abundantly justified by the awkward and difficult circumstances in which the country then stood. No one in this House will accuse me of affection for officials, but I see no reason why an official who is trying to do his best in circumstances of great anxiety should be attacked merely because he happens to hold an official position.

What the Food Controller determined was this: that there should be three areas established in England, one, which was called the normal area where the price which was fixed should rule as the normal price of milk, another, the more favoured area in the west of England, where the price should be 2d. per gallon below the normal price, and the third area, the industrial area, where the price was to be 2d. above the normal price. It must be plain to your Lordships that when such an Order had been made, unless some other corresponding steps were taken, the activities of commercial people who sometimes find an opportunity for profit in other people's distress would most undoubtedly have taken milk from Devonshire and sold it in the industrial area and put in their pockets the difference in price which ought rightly to belong to the farmer.

The Food Controller, therefore, made a further rule; that there should be no sale of milk outside this area except under licence and that no person but the farmer should be at liberty to produce milk within the area except under licence. There was not, from beginning to end of the whole of the Food Controller's Orders, anything that affected the price of the farmer at all, and when the noble Lord talks about the farmer being damnified I am utterly at a loss to know what he means. When this energetic society passes their resolution, and hands it to him, calling for repayment to them of the money improperly taken from them, my answer is that upon the facts, as the matter came before your Lordships' House, not one single farthing has been taken from them; and what the Food Controller did was designed for their security and protection and not for their injury and loss.

The Food Controller, accordingly, proposed to grant these licences. Again, it was plain that if you wanted to prevent what I will describe as profiteering in milk the only way to do it was by putting on some charge for the right to hold a licence, and accordingly he did. He provided that if a licence was granted to any man to sell milk produced in the favoured area outside the favoured area he should pay 2d. per gallon for the privilege of doing so, and if he sought to produce milk within the favoured area, in competition, of course, with the farmers, he again should pay 2d. per gallon for the privilege of so producing it. Those were the two licences granted—a licence to sell outside Devonshire, and a licence to produce within— and the people who bought them bought them as a commercial bargain, not driven or compelled by the harsh treatment of the Food Controller, but because they saw the means of making a commercial profit if they had the right to trade on condition of paying 2d. per gallon.

Having done that, and the amount they owed under this bargain amounting to £12,000, they sought an opportunity of repudiating the contract they had made and prevent payment by saying that the Food Controller had no power to impose this payment because it was in the nature of a tax. And that was the question that came before your Lordships' House for decision. Your Lordships decided, and there is no means of challenging the accuracy of your view, that it was outside the power of the Food Controller; in point of fact, that he was levying from subjects a payment, in consideration, of course, of a privilege, which the Statute that created his office and gave him powers did not authorise him to exact. I trust that the Law Courts will always be extremely vigilant of the rights of subjects in such a case. Accordingly, this money was money that the Food Controller could not lawfully compel these people to pay, but I say without the least hesitation that it was money which in honour they were bound to pay. Why should a man who has entered into a commercial contract, and obtained a great privilege over and above his fellow subjects on the terms of paying 2d. per gallon for the right, come here and through the noble Lord pose as an injured person because he is asked to pay money which he has signed an obligation to discharge. I am utterly unable to understand the complaint of the noble Lord.


The Report of the Committee of this House declared that the farmer was injured unfairly by it.


I take no notice of that Report because I have nothing whatever to do with it, nor has this House, because it is dealing with the special matter which came before your Lordships' House for decision. It is with that case that I am dealing, and the facts are as I have stated them to your Lordships. It will be for your Lordships to consider, in this instance, how far the farmer was injured. I can understand that, if the Food Controller had never allocated areas as he did, certain farmers might have obtained a greater profit. That I can readily conceive, but that is not the point which your Lordships are asked to consider here to-day. You are solemnly asked to resolve that these people are to have recouped to them out of the public purse moneys which they haw paid under a common commercial contract, and I am utterly at a loss to know upon what ground, in honour or justice, such a claim is put forward.

If this were a matter in which the farmers had been injured, or in which the producer had been injured and had been compelled to produce under harsh and exacting terms, which reflection showed ought not to have been imposed, it would have been perfectly possible, in that case, to have given them redress, and I should have hesitated long before I objected to it. But it is not the producer, it is the middleman who comes before your Lordships to-day, and asks that the public funds should be once more depleted for the, purpose of paying him back the money that he has paid, and in respect of which I do not doubt that he has made a very considerable profit. I hold very strong views indeed about men who use the necessities of their fellow subjects as a means of exacting gain, and I hold also a very strong view indeed about men who, having solemnly promised that they will do a thing, try to sneak out of their bargain by an appeal to an accidental legal difficulty. That is the position of the people on whose behalf the noble Lord comes here to-day to plead. When I was a young man, I remember very well a man who wrote poetry with such astonishing facility that it was currently said that he could write verse quicker than he thought. I have come to the, conclusion that that power of phrenetic inspiration is not confined to poets.


My Lords, I had not intended to participate in this discussion, but, after the somewhat vehement, though, I admit, eloquent, tirade in which my noble and learned friend has just indulged, and, coming as I do from the south-west of England, I should like to tell him, perfectly frankly, that, whether or not the middleman's interest has made an undue profit at the cost of the producer, or of the consumer, or of both, I can testify to the fact, living as I do in the County of Gloucestershire, that Gloucestershire farmers did, in fact, obtain a benefit in the Bristol market at the expense of Somerset farmers, and of a certain number from Wiltshire, who sold in the same market.

Surely, when one comes to examine the position from a commercial and not merely from a legal point of view, it is inevitable that, whatever the middleman may be deprived of, so long as the laws of supply and demand operate—and I am bound to say that they have operated very unequally under Government control —whatever may be the detriment in relation to a certain commodity to the middleman must ultimately operate, to the detriment of the person who provides him with the commodity. That is exactly what has happened in this case. The noble Lord speaks of the dairy farmers of these counties in the extreme south-west as if they had on this particular occasion obtained, or possibly sought to obtain, some advantage from the consuming public to the detriment——


No, no. The noble Lord has completely misunderstood me. I have never said anything of the kind. I have never said a word about the producer, nor does this Motion deal with him. It deals simply with the man who takes the milk within one district to sell it in another, and the farmer would never have got a farthing more.


I beg the noble and learned Lord's pardon if I have misrepresented his argument. All I wish to point out is that, in the south and west of England, there are undoubtedly circum stances of soil and climate operating to give the milk producer in those areas a definite advantage over milk producers in certain other parts, but that these favoured areas are not co-terminous with the counties. On the face of it, therefore, any attempt to make a discrimination based on county boundaries must be an unfair discrimination. I should further like to point out that these advantages have been recognised for many years and many generations, and are taken into account in the fixing of rents, in the assessment of rates in those districts, and when property is transferred from one individual to another. In effect, therefore, the producer in these counties is already handicapped relatively to the producers of the same commodity in other counties, and the fact is that those favourable conditions are taken into account when the contract of tenancy is determined.

There can be no doubt, in fact, that, whatever may be the force of the legal argument of the noble and learned Lord, the Somersetshire farmers were, in fact, suffering a detriment which the Gloucestershire farmers were not suffering in selling their milk in the same market, that of Bristol, and, if that is so, and if it has been found by the highest Tribunal in the land that the Government have obtained what they were not entitled to obtain at the cost of the dairy industry—I do not care whether it was from the producer or from the middleman—it is "up to" the Government to make good that loss to the producer who, in the last resort, has suffered the detriment.


My Lords, the decision of your Lordships' House, sitting in its judicial capacity, a decision delivered by my noble and learned friend Lord Buckmaster, and one with which I naturally agree, made it clear that there was no question as to whether the charge in this matter was a reasonable one, or whether the step taken by the Food Controller was a wise and sensible one, having regard to the difficulty with which the whole question of the milk supply of the country was surrounded, and I do not understand the noble Lord who moved, or the noble Lord who has just addressed the House, to dispute that, on the merits of the case, and in relation to the existing circumstances of that time, the action of the Food Controller was justified. The only question to which the House of Lords in its judicial capacity addressed itself was as to whether or not the powers granted to the Food Controller were sufficient to cover this particular case. The answer given by their Lordships was in the negative; they reached the conclusion that the charge was an illegal one.

That so-called tax, and the circumstances in which it was imposed, may, perhaps, be usefully considered for a moment or two, because, obviously, we are not here concerned with the legal side of it—except in so far as the decision of your Lordships' House, sitting judicially, enables us definitely to repel the legality of this charge— but we are here to deal with the matter on merits, and to decide whether or not a burden must be imposed on the country which it is estimated would amount to a large sum. In deciding whether or not we are to take the course recommended by this Motion, we must, of course, pay very considerable attention, not only to the financial situation of the country, but to the case which is made, in order to determine whether or not it is a meritorious case. If it is a case in which the merit is indisputable, we shall solemnly have to face once more an additional burden; but we must satisfy ourselves beyond all doubt, before we reach that conclusion, that the case is really a meritorious one.

In the spring of 1919, it became obvious that the fixing of a flat maximum price for milk over the whole country had resulted in producers in the areas of cheaper production making excessive profits at the expense of the consumers. I do not understand that the contention of either noble Lord so far has been that the Food Controller was wrong in deciding that the necessities of the case required there should be a flat rate. Accordingly, a flat rate was introduced, and when it was introduced, and for the reason I have given, it immediately became obvious that an unreasonable advantage would be given to those who produced at a cheap rate. I beg leave entirely to doubt whether, on a detailed examination of the rents paid and the rates paid in those areas in which the production was cheaper, it will be found that they were higher than those paid, say, in the County of Gloucester. The making of these excessive profits in the circumstances caused great agitation at the time amongst consumers, as your Lordships may recall, and the result was that the Food Controller considered the practicability of fixing differential prices according to the cost of production. He then appointed a travel ling Commission, and it has never been disputed that those who were the members of that Commission were highly qualified to give him the advice which he desired. On the advice of this Commission the producer's maximum price in the southwestern area for the summer of 1919 was fixed at 2d. per gallon less than in the rest of England and Wales.

I may point out that, similarly, in the industrial area of the West Riding the producer's maximum price was fixed at 2d. per gallon more, but it is unnecessary to complicate the argument by more than a reference to this. The distributor's prices, including the retailer's price to the consumer, were fixed throughout England and Wales on the basis of the maximum price allowed to the producer. It followed, therefore, that if milk produced in the south-western area reached the consumer outside that area, somebody would be making an additional profit of 2d. per gallon. That was the basic fact in the case. It was with a view of intercepting what was quite clearly unearned profit that the Food Controller imposed, by way of a charge for a licence to export from the south-western area, the charge which is now found to be illegal. If it had been practicable to earmark all south-western milk throughout the course of its distribution, the consumer outside the area would have been enabled to purchase south-western milk at 2d. per gallon less than other milk. This was clearly impracticable. It would have destroyed the whole scheme, and the Food Controller's plan was to intercept that 2d. per gallon at the point where the milk left the area, and return it to the consumer in the form of a subsidy on cheese.

The noble Lord said that the boundaries of the two areas affected were not precisely co-terminous, but it has to be remembered that we are dealing with a case which arose during the great war and it is not suggested that the boundaries were not, broadly speaking, correspondent with the action taken. The effect of the decision given the other day is that distributors and cheese manufacturers in the southwest of England will obtain a profit considerably in excess of that earned by their less fortunate competitors in other parts of the country, and I am quite unable to see, making all allowance for the admitted merits of the farmers in that part of the country, why they should make larger profits than their competitors in other parts of the country. This is no doubt inevitable in the present case, but there is no reason why the equilibrium should be upset in other cases. The noble Lord asked in his Question what the Government propose, to do. I cannot state in detail because the matter is still under discussion by the Cabinet, although I expect, an early decision will be reached, but if it in any way interests the noble Lord I am able to tell him plainly that as far as I personally am concerned any small influence I possess will be most unsparingly used against it.


My Lords, I must really correct some misstatements made by my noble and learned friend in his clever special pleading, and I should like to draw attention to the Report of the Select Committee, which my noble and learned friend treats with such absolute contempt. The Committee said that they were of opinion that the evidence submitted to them did not sufficiently justify the maintenance of an arbitrary differential rate based on the average cost of milk production in the southwest counties as compared with the rest of England and Wales, and, as I have already told you, the Government concurred in that Report and in the opinion of the Select Committee, because instead of continuing for the winter, as had been suggested by the travelling Commissioners in their Report, with these differential prices, they immediately after the Report had been presented to your Lordships scrapped the proposal and had a flat rate, for the four counties and the rest of the country, showing that the Government quite recognised that injustice had been done by putting on a differential rate. Therefore, I am quite justified, although my noble and learned friend behind me thinks the opinion of the Select Committee is of no value—


It is not that I thought it of no value, but that it has no relation to the Motion, because the Select Committee dealt with the question as to whether you should have differential areas, which is not the subject of the Motion, nor has it anything to do with it.


Of course, I cannot go into the special pleading and hair splitting of my noble and learned friend, but I am speaking on behalf of sixteen thousand farmers in the west of England, who will not appreciate the noble and learned Lord's views. I am speaking for plain men, agriculturists like ourselves, and I say that the Committee of the House reported against differentiation as being unfair, and the Government acknowledged it and agreed to scrap that differentiation. All I am concerned to say is that this money went away from the producer, and I have been given to understand that all those who had to deduct that 2d. are ready to return the money themselves to the clients from whom they bought the milk.

On the other hand, where the Government have received the money, which it is now being declared that they had no right to receive, through the licences, it seems only fair and right that the money should be returned and not kept for general expenditure. My noble and learned friend seems to think that the farmers in these counties made enormous profits, and that it was quite justifiable to impose this tax upon them in the form of a licence, not enabling them to get the same value for their milk as.

was obtained by farmers in other counties. It is impossible for me to argue in detail against the special pleading of my noble and learned friend. All I can say, speaking to noble Lords who are agriculturists like myself, and who have the interests of the farmers at heart, is that I am sure they will