§ Order of the Day for the Second Reading read.
§ THE PARLIAMENTARY SECRETARY OF THE MINISTRY OF AGRICULTURE AND FISHERIES (LORD BLEDISLOE)
My Lords, in submitting for your consideration the Second Reading of this Bill I desire to crave your Lordships' indulgence, partly because, although I am no longer new to Parliamentary life, I have never before had the conduct of any Bill through either House of Parliament, and partly because the passage of this Bill through your Lordships' House—a Bill which I know is of exceptional interest to many of your Lordships—is bound to be unduly rapid in order to enable it to receive the Royal Assent 629 before the end of the current financial year, and thus to secure for the benefit of producers and manufacturers of beet sugar the subsidy which it provides as from the first of October last.
I regard it as a special privilege to be allowed to submit this Bill for the sympathetic consideration of your Lordships. Convinced as I have always been of the truth of the saying of the late Lord Beaconsfield, that the nation which neglects its agriculture is bound to decay, I have for many years past ventured to criticise, possibly with temerity but always with sincerity of conviction, the apathy, the ignorance, the superficiality and, worse than all, the vacillation with which successive Governments of various political complexions have handled the agricultural problem in this country. But I recognise that in this Bill we have the first really constructive effort, for at least a generation, to place British agriculture upon a sounder footing, to ensure an ever-increasing home production of a most essential food necessity—probably second only in importance to that of bread—of which until recently none at all was raised on our own soil, and at the same time to provide lucrative employment both for agricultural workers and artisans in rural districts, especially during the winter months when unemployment, according to recent experience, has been so serious.
But this Bill has, from my point of view, a further merit which I desire to emphasise. I have long been convinced that there will be no real security for our rural industry unless and until there is some definite measure of agreement amongst all political Parties as to the fundamental principles and aims of a national agricultural policy which will ensure, on the part of successive Governments, continuity of administration according to a definite and well understood plan. His Majesty's Government lay no claim to the parentage of this measure. It rests entirely with the Labour Party, and we rejoice that it does so, because we hope it is a foretaste of that work of sympathetic collaboration between all political Parties, and also, I hope, between all sections of the agricultural community, by which alone a national agricultural policy can be successfully evolved and a sense of stability on the 630 part of our rural population secured for the future. May I also say that the Labour Party have not been slow to recognise the national peril of a decadent and unproductive agriculture, and I for my part desire to thank them for their attitude towards our most fundamental industry, although unconvinced by some of the remedies they propose for its betterment.
A distinguished member of this House whom I am sorry to say I do not see present to-day, the noble Earl, Lord Denbigh, is the great pioneer of sugar beet industry in this country. I believe he began experiments on a part of his estate at least a quarter of a century ago. The late Lord Ailwyn was also keenly interested in the industry, and amongst other enthusiasts in this House are the Earl of Selborne, Viscount Ullswater and Lord Ernie. May I be allowed to make special reference to two persons whose persistent efforts have been largely responsible for the introduction of the present Bill? I refer to Colonel Courthope, the Member of Parliament for the Rye Division of Sussex, and Mr. Alfred Wood, the, most persistent and indefatigable secretary of the British Sugar Beet Society, a post which he has occupied for many years.
Your Lordships may be interested in the figures of consumption of sugar per head of the population in different parts of the world. The United States of America and the United Kingdom have a far larger per capita consumption of sugar than any other nation of the world, and, as I learned when I was Chairman of the Royal Commission on Sugar Supplies during the war, the consumption of sugar seems to vary to some extent according to climate and according to the prosperity, for the time being, of particular countries. Thus the United Kingdom consumption has fallen per capita from 77 lbs. before the war, to 74 lbs. last year. The United States consumption has risen from 80 lbs. in 1910 or 1911, to 103 lbs. last year. This, no doubt, is partly due to Prohibition, which, as your Lordships are aware, has the effect of negativing, or perhaps more accurately, reducing, the consumption of liquor, and that, for certain physiological reasons, tends to increase the proportion of sugar consumed. Germany, France and Italy are all much behind the United Kingdom and the United States in the 631 consumption of sugar. Germany's present consumption is 45 lbs. per head of population; curiously enough, a marked increase on her consumption before the war. Germany's per capita consumption is well within half that of the United States before the war, and exactly half of the present consumption in the United Kingdom. The consumption in France is now 47 lbs. as compared with 34 lbs. per head of population before the war, and that of Italy, which was only 10 lbs. before the war, has since increased to 18 lbs. The United States consumption is, in fact, eight times as large as that of Italy per head of the population.
But we are, at any rate, the second largest consumers of sugar in the world, and up to recently we have done nothing whatever to supply our own requirements. The present annual consumption of sugar in this country is over 1,500,000 tons. In 1913 677,000 tons of unrefined beet sugar and 920,000 tons of refined sugar cane and beet, were imported into this country. The beet sugar was imported from the Continent and the cane sugar from other parts of the world, but the bulk of the beet sugar came from Germany and Austria. The British overseas supplies are quite adequate, together with our own production, to supply all our national needs. Germany, as your Lordships are aware, has a very highly developed sugar beet industry which was assisted by the State for many years before the war, and it brought the naturally poor sandy soil of North Prussia into a highly cultivated condition, which was largely instrumental in enabling Germany during the war to withstand so long the Allies' blockade.
From the point of view of the farmer there are many advantages in growing sugar beet. The sugar beet industry is, in fact, an agricultural asset of the first importance. Experiments have long ago shown that excellent sugar beet can be grown successfully upon our own soil. The sugar content is, on the average, equal to that of roots grown on the Continent—that is to say, nearly 17 per cent. I wish that we could say the same with regard to the yield per acre. On the Continent, and particularly in Holland, a yield is expected of at least twelve tons to the acre. So far, we have not in this country passed an average of nine tons 632 to the acre, but we have a long way to travel in the matter of experience, which Continental countries have, of course, been gaining for many years. Apart from the value of the sugar itself, sugar beet is a very valuable cleaning crop. It increases the value of all other crops with which it is grown in rotation. In Germany, it is estimated to increase the yield of rotation wheat by no less than 15 per cent. By introducing such a cleaning crop into our own agricultural rotation, the minimum figure at which cereals can be grown in that rotation would be substantially lowered. The double advantage of an increased yield and a lower cost of production per acre will undoubtedly encourage and develop arable cultivation.
But there are further advantages from the farmer's point of view in growing beet. Beet slices, which are a by-product of the beet sugar factories, are very valuable as a cattle food and are known to enhance the milking qualities of dairy cattle. Again, the tops which are removed before the roots pass to the factory, and which are deemed to be alone worth about 30s. per acre, are an excellent food for sheep and pigs. All those who are acquainted with agriculture in Scandinavia will realise to what extent the Danes and the Southern Swedes feed their pigs, which are so competitive with ours in our own bacon markets, upon the tops of the sugar beet. It has been erroneously stated that the cultivation of sugar beet would supplant wheat. That is obviously not the fact, for it only takes the place of the ordinary root crop in the four-course or other rotation. On the other hand, it makes the production of wheat more profitable and economical. In fact, it tends, as has been found in other countries, to intensify wheat production rather than to diminish it
The sugar beet industry is, of course, primarily, but not exclusively, a rural industry. Labour on the farm should be increased as the result of inaugurating this new British crop, by about ten men for every hundred acres of beet grown. If only one-quarter of the sugar imported into this country at present were produced here, about 400,000 acres of beet could be grown upon British soil and, in addition, about 600 men would be employed regularly in each sugar beet factory during the winter months—that is, from October to February—when the 633 demand for agricultural labour is at its lowest ebb. This should provide a useful outlet for any unemployed agricultural labour that there may be in the winter months. In addition, there are, of course. Subsidiary industries which are necessarily set in motion by the establishment of a new factory industry, notably those connected with the building, equipment and operation of the factories. Consequently, the firm establishment of the sugar beet industry in this country ought to lead to increased employment in many different directions. I need not remind your Lordships of the evidence in our possession as to the beet sugar industry which is contained in the Report of the Agricultural Policy Sub-Committee over which the noble Earl, Lord Selborne, presided. They emphasised in the strongest possible way the national importance of the sugar beet crop and the tendency which it is bound to bring about to develop intensive arable cultivation and the maintenance of a larger population in our rural areas.
I think I ought to remind your Lordships that the cultivation of sugar beet has been attempted for some time past in this country, though with scant success. As long ago as 1835 experiments were made in sugar beet growing in the United Kingdom, and in 1853 a small factory was actually established in Ireland. It operated for only two years. The first factory to be erected in England was erected in 1870 at Lavenham in Suffolk. This also was unsuccessful. In 1898 began the recent movement for the serious development of sugar beet as a new agricultural industry in the United Kingdom. The Central Chamber of Agriculture and the National Sugar Beet Association made great efforts in that year, and since, to enlighten public opinion as to the desirability of growing this crop. These two bodies, together with the Board of Agriculture and the Beet Sugar Pioneers' Association. carried out numerous and very instructive experiments in its cultivation in various parts of the country.
No tangible results were achieved for many years, because the farmer would not grow beet until he saw a factory actually in being, and the capitalist would not build a factory until he was quite sure that there would be a regular supply of 634 beet in order to furnish it. The first factory erected in recent years was that at Cantley in Norfolk. This failed for a time, simply because a regular supply of sugar beet was not forthcoming. The factory was started by the Anglo-Netherland Sugar Corporation, and had the advantage of the best Dutch experience in order to give it a start. But neither our farmers nor their workers fully understood the handling of the crop, and for that reason the factory had to cease work for a period of five years. I am glad to say that for the last five years it has again been in operation and now promises to be a commercial success.
In 1913 a society was formed under the auspices of the Development Commissioners to administer a grant of £11,000 from the Development Fund for educational and organisation purposes in connection with the development of this crop. In 1915 the British Sugar Beet Society came into existence with the object of forming a company which would acquire an estate capable of providing the minimum quantity of beet required to keep the factory working. That factory is now in existence, though it has had a somewhat chequered career. It is established at Kelham in Nottinghamshire, and was completed in 1921. Unfortunately, it was erected at a time when building and equipment were at their highest cost and, as your Lordships are no doubt aware, although a large amount of Government money was forthcoming in order partially to finance it, the capital has had to be drastically written down, and for a time it was thought possible that the factory might have to be closed. It is, however, now in operation and promises to be a commercial success.
Three years ago, in 1922, the Government carefully considered the whole question of encouraging the raising of sugar at home, and in view of the urgent representations of agriculturists they remitted the Excise Duty, amounting to 19s. 5d. per cwt., on home-produced sugar. This gave a much needed assistance to the industry, and may I say, in passing, that without some financial assistance, at any rate for a period of years, it would not be possible for a new industry of this kind to establish itself on a permanent basis. Even in Holland, a Free Trade country like our own, the industry 635 received State assistance for many years before it became self-supporting. There is, I believe, no country where the sugar beet industry has been successful in establishing itself without State help in its initial stages. This seems to be some justification for the Government policy. I know that the noble Earl opposite, Lord Beauchamp, has put down a Motion for the rejection of this Bill. No doubt he is going to base himself mainly, if not wholly, upon adherence to the strict principles of Free Trade. Well, I have only just lately referred to my John Stuart Mill, and I am interested to learn, from an excerpt which I have in my hand, that he at any rate in relation to a nascent—baby—industry of this country, was quite prepared to extend such assistance as is now proposed towards its support in its early stages.
The difficulty in which we found ourselves last year was occasioned by the Government's decision to reduce the Customs Duty from 25s. 8d. to 11s. 8d. per cwt. This raised the whole question of the future of the industry in this country. The late Government, with the cordial support of the Conservative Party, decided to grant a subsidy on home-produced sugar for a period of years, and it is simply to implement this undertaking that the Bill now before the House has been prepared.
This brings me to the actual proposals of the Bill. Subsection (I) of Clause I provides that a subsidy shall be payable for a period of ten years from October 1, 1924, on a diminishing scale, set out in the First Schedule to the Bill, on sugar and molasses manufactured in Great Britain from home-grown beet. For refined sugar of a polarisation exceeding 98 degrees the subsidy will be at the rate of 19s. 6d. per cwt. for the four years from 1924–25 to 1927–28 inclusive, at the rate of 13s. per cwt. for the three following years, and at the rate of 6s. 6d. per cwt. for the three final years. For sugar of lower degrees of polarisation and for molasses, a subsidy on a descending scale will be payable at rates calculated on the basis of the scale which is already applied for the purpose of Customs Duty. These rates are set out in the First Schedule to the Bill, and probably it is not necessary for me to refer to them in detail.
To ensure that the main object of the Bill is achieved—namely, the assistance 636 of the agricultural industry—it is provided in subsection 2 (a) of Clause 1, in conjunction with the Second Schedule, that the subsidy shall not be payable unless the price paid for the beet is not less than 44s. per ton in respect of beets grown in the years 1924 to 1927. The House will note that the price of 44s. per ton is only a minimum price, and only operates for the first of three periods, and your Lordships will probably be interested to know that in consequence of successful negotiations conducted by the National Farmers' Union with the various beet sugar factories already operating or about to operate, prices considerably in excess of this sum have been guaranteed—namely, on a three years' contract 49s for the first year of the factory, and 54s. for the two succeeding years. At those rates I think we are all agreed there is prospect, with favourable climatic and soil conditions, of making a commercial success of the production of sugar beet. The House will observe that the minimum rate in the Bill applies to beet of 15½ per cent. sugar content, and that the minimum price varies with the sugar content in every case. It is therefore of great importance to the farmer to increase the sugar content as much as possible. As I have already said, in all favourable localities sugar beet of higher contents than this can quite easily be grown, and in fact is being grown in my district up to 18 per cent.
One difficulty, of course, is that all the seed so far has had to be obtained from abroad, but efforts are being made under the auspices of the Royal Agricultural Society, with the assistance of the Ministry of Agriculture, to persuade seed producers in this country to produce as good seed as is being provided from abroad, which will be specially suitable for British conditions.
It may be asked what guarantee the farmers have of fair prices after 1927, in view of the fact that the Second Schedule to the Bill only provides for minimum prices for the first four years of the subsidy. The reply is, that the factories cannot exist unless the farmers are willing to grow beet. Farmers are, therefore, in a position to exact favourable terms from the factories.
Subsection 2 (b) of Clause I provides that the subsidy will only be paid if not less than 75 per cent. of the plant and 637 machinery installed in the sugar factory was wholly manufactured in Great Britain. This provision is intended to ensure that the industry shall be, as far as possible, on a British basis. It was not possible to provide that the whole of the machinery should be manufactured in this country, as sugar beet factory machinery is highly specialised, and in some cases—for example, that of pulp-driers—it has been found quite impossible to obtain them from British manufacturers. Unfortunately, there are certain plans and designs connected with some of this machinery which we are not in a position to copy, except at a prohibitive price, because they are covered by Continental patents. We hope that in time, as the sugar beet industry becomes established, far more than 75 per cent. of the machinery will be British-made. The Ministry of Agriculture has, you will notice, in certain cases the power to direct that the provision relative to the 75 per cent. shall not, in fact, apply, and has already granted a dispensation in two cases. These are cases where binding contracts Lave already been entered into by existing factories, or by the owners of contemplated factories, who obtain machinery from Holland, and, of course, it would not have been possible for them to proceed with the erection or equipment of their factories if this dispensation had not been given.
§ Clause 2 provides that companies to which the subsidy is paid must send annually to the Ministry of Agriculture a proper statement of their accounts, and I am sure your Lordships will agree that, where public money is being devoted to such a purpose, it is only right that some sort of financial return should be available, either for Parliament or for the responsible Minister to see. It is interesting to notice that this clause is specially supported by the sugar beet companies, no doubt because at the end of the ten years they have it in mind, if it turns out from their accounts that this is not a profitable industry, that the subsidy may be renewed for a further period.
§ Clause 3, which establishes quite a new principle, so far as I am aware, in this country, provides that workmen employed in connection with the manufacture of sugar and molasses in respect of which a subsidy is payable shall be paid wages on 638 the basis of the Fair Wage Clause which is applicable to contracts of Government Departments. This principle is very familiar now to Parliament, and, so far as I know, has always operated smoothly and beneficially. The Fair Wage Clause, however, will not apply in cases where the wages are paid at a rate which has been agreed upon by a joint industrial council in any particular factory, representing, of course, both the employers and the employed in that business. The House will doubtless agree that these provisions are reasonable, in view of the fact that a subsidy is being granted out of State funds to this industry. If any dispute on the subject of wages arises it is to be referred under Clause 3 by the Minister of Agriculture to the Industrial Court for settlement.
§ I am proposing, on the Committed stage of the Bill, to invite the House to insert an Amendment providing that the wages settled by the Industrial Court shall be recoverable by the workman, if necessary, by a legal process. As your Lordships are aware, under the existing system under which these Courts operate, although the Courts may arrive at a particular figure the workmen have no power to claim that figure as a matter of right. We propose to go further, and we are, as I say, embarking upon a new principle in this respect as regards this particular industry, by empowering the workmen to claim their adjudicated wages by legal process.
§ Clause 4 provides for the re-imposition of the Excise Duty, from which sugar manufactured from home-grown beet is at present exempt. The Excise Duty amounts, at the moment, to 9s. 8⅔d. The net cost of the subsidy to the Exchequer, after allowing for the Excise Duty, will therefore be 9s. 9⅓d. per cwt., representing, it is estimated, about £530,000 per annum in respect of the three factories which are now operating. It is only fair to tell the House that the sugar refineries have raised some objections to the methods by which the subsidy is calculated, first of all on the ground that the adoption of the Customs scale for the subsidy gives a definite bias to the manufacture by the new factories of white sugar, as distinguished from raw sugar; and also because the Government proposals will mean establishing in this 639 country a new industry at the expense of an old one.
§ I hope it may not be necessary for us to re-discuss in this House this passing controversy between the refiners and the promoters of these new factories. If it is, it is quite possible, I think, to persuade your Lordships of the fairness of the treatment of the refiners. If there be any doubt about it, it is interesting to note that the chief sugar refiners in this country are themselves embarking upon one of these new factories, which indicates a possibly delayed, but none the less sincere, sympathy with the movement which we are inaugurating. In order not to weary your Lordships I am deliberately avoiding entering into this controversy, but I am quite prepared to do so, if desired. I may remind your Lordships that the output of the seven factories which are now in esse or are being erected will, it is estimated, provide no more than 3 per cent. of the whole of the sugar which is being consumed, and being increasingly consumed, in this country. So, after all, a large amount of the sugar is bound to be provided in the future from the same sources as in the past.
§ There is one point to which I ought to refer, and that is that the present process of manufacture of sugar is a continuous process, from the pulping or crushing of the beet right away through to the production of highly-refined white sugar. We believe that to be the right process now to encourage in this country, and that there is no particular advantage to be gained by producing the raw sugar in one factory and refining it in another. That, at any rate, is not the view of our chief competitors on the Continent, for wherever they put up a sugar plant nowadays they invariably provide for the continuous process.
§ As your Lordships know, in the eighteenth century the agriculture of this country was revolutionised, to the immense advantage of the nation, by the system of rotation cropping, of which the pioneers were successively the second Viscount Townshend and Coke of Norfolk, first Earl of Leicester. Is it too much to anticipate that we are on the eve of another beneficial and pacific agricultural revolution, of which the noble Earl, Lord Denbigh, will rank throughout the ages as the far-sighted pioneer? At any rate, it is in that hope 640 and belief that I confidently submit this Bill to your Lordships' consideration. I trust that it will pass without opposition.
§ Moved, That the Bill be now read 2a.—(Lord Bledisloe.)
§ THE EARL OF BEAUCHAMP had given Notice to move, as an Amendment, That the Bill be read 2a this day six months. The noble Earl said: My Lords, I cannot help feeling that your Lordships' House has some small ground of complaint against His Majesty's Government for not having allowed this Bill to reach this House at an earlier stage. It was only on Thursday last that it was read a first time, and we understand that a Royal Commission is necessary in the course of the present week in order that it shall receive the Royal Assent. It is a Bill of considerable importance, and I think it would have been much better if your Lordships' House had been allowed a somewhat longer period in which to consider it.
§ May I congratulate the noble Lord who moved the Second Reading of the Bill upon the satisfaction he must feel in piloting it through your Lordships' House. For many years he has been interested in this matter, and therefore it may be a special pleasure to him that it has fallen to his lot to take charge of the Bill in this House. I am sorry, however, to disappoint him in the ground of my objection to this measure. It is on no abstract or theoretical ground that I ask your Lordships to give it a Second Reading six months from to-day. It is on the purely businesslike ground that this is a grant of public money to private companies on what, in my opinion, are unbusinesslike terms. There is no suggestion in the Bill for repayment such as that suggested by the Development Commissioners. After all, it is no new idea that public money should be granted for the assistance of the sugar beet industry. When the question was considered by the Development Commissioners they recommended that the sugar beet companies should pay interest at the rate of 5 per 641 cent. upon the money which was lent to them, and I think it would have been very much better had a provision of that kind appeared in the present Bill.
§ It is perfectly true that the beginning of all these sugar mille is a very expensive business. Kelham cost at the beginning, I think, a million of money to which the Government contributed a considerable amount. Fifteen shillings in the £ was written off the value of their shares. When Cantley was started in 1912 it met with continuous bad fortune until two years ago, when it began to turn the corner. Last year it made a profit of £146,000, while this year there is some hope that, according to an estimate which has been made, the profit will be £200,000. In those circumstances, it would have been possible to ask these people who are going to benefit by a grant of public money to do something to pay it back, if only by way of interest.
§ In view of the fact that the profits at Cantley were so large last year and are expected to be still larger this year, this is a matter which might safely have been left to private enterprise. Investors of capital would have been attracted by the possibilities of making such large profits, even had it been some years before they recouped themselves. But so far as these factories are concerned, I am bound to call your Lordships' attention to the fact that in the past it was very largely a case of foreign capital having been invested. Mr. Johann Petrus van Rossum was largely concerned in the Cantley factory, and it is the same with the other factories which belong to the same company. I am all in favour of foreign capital coming into this country to help in the employment of British workmen; but I am not in favour of inviting foreign capital to come into this country and then giving it large subsidies. At Cantley there is a Dutchman in charge of the factory and Dutch machinery is used. At Ipswich it is said that Hungarians are employed.
§ I think, too, that the forecast of the noble Lord himself as to the employment which would be given by this scheme was somewhat optimistic. I understood him to say that there would be 400 men—or was it 600?—employed at each factory. If you multiply whichever figure is the 642 correct one by six or ten factories the resultant employment will bear a very small relation to the amount of unemployment in the country. There is also this point, that in agricultural areas and in those districts where factories are likely to be built there is not so much unemployment as there is in the towns. Generally speaking, it is within the knowledge of your Lordships that the agricultural labourer is employed all the year round. The point in this case is that agricultural labourers who are already employed will be given this amount of casual labour—because it is only casual labour—during the time they are working on these roots, and that does not really afford any very great hope that there will le a large reduction in unemployment generally. As against that, we have to remember the number of men who are now working in the refineries and who may lose work in consequence of the erection of these other factories.
§ There is a long history connected with this matter with which I shall not burden your Lordships, but it is interesting to remember that this is a considerable reversal of the policy initiated by Mr. Joseph Chamberlain at the time of the Brussels Sugar Convention. People went over from this country to represent the Government of the day and to induce other countries to discontinue their bounties, to persuade them that their bounties were uneconomic and that it was much better for them not to put bounties on the sugar grown in their countries. At that time the anxiety was for the refiners who were to be found chiefly in Glasgow. This is a very considerable reversal of that policy, and I am not sure that it is an improvement upon it. We have always heard from noble Lords opposite of their anxiety to tax the foreigner. I have always thought that in the matter of sugar bounties we went a considerable distance towards taxing the foreigner in order to get cheap goods here from him. Foreigners raised money by their ordinary taxation, and then gave it in the form of bounties to growers of sugar. The people in those foreign countries had to find the money to pay those taxes and, having grown the sugar and having refined it—some of it was not refined but sent over here in its raw state—it was sent here a great deal more 643 cheaply and we could get our sugar cheap because the foreigner received a bounty on the sugar he grew. That seems to me to be the only way in which we may really hope to tax the foreigner effectively.
§ The noble Lord explained to your Lordships the figures which related to the subsidy. It is a rather complicated matter, and I hope your Lordships will permit me to repeat those figures. The subsidy is to be 19s. 6d. per cwt. From that we must take away the Excise Duty which is now payable on the sugar and amounts to 9s. 9¾d. To that we have to add a Customs Duty of 11s. 8d. and the advantage which they get by the preference of 1s. 11d. That makes a total of 21s. 5d. a cwt. As far as I can see, sugar of a somewhat similar character to that which is likely to be turned out by these factories is now being sold in the London market at 32s. 4d. a cwt. In those circumstances I thing the scale is very generous indeed, because, in addition, we have to remember that these factories are able also to sell the feeding stuffs to which the noble Lord referred and which are said to be very valuable for the stock of this country. The companies, therefore, will not only get the subsidy but the advantage of the feeding stuffs and they certainly ought to be able to pay some interest on the money advanced to them by the State at no great distance of time from now. I understand that the amount is to be £500,000 this year, and next year they expect to deal with a great deal more. Even when we have subtracted the amount of Excise Duty the burden on the Exchequer is likely to amount to something like £2,000,000 or £3,000,000. The more successful they are in growing sugar the worse it is for the taxpayer.
§ The reason I invite your Lordships to reject this Bill is based on grounds of economy. During the last few days there has been a discussion in this House upon the increse in the Air Force. We know that the Navy Estimates are larger, and I think the last Bill mentioned in your Lordships' House to-night entailed a loss of something like £200,000. These things go on, and it becomes more and more impossible for the Chancellor of the Exchequer to give that relief to industry by a reduction of taxation which is the desire of every member of your Lordships' House. We all want to see a 644 reduction of taxation, and it can only be done by the most rigid economy and by refusing to grant these large sums of public money in this way. But if we do make these grants of public money, the least we can do is to ask for a return on the capital that we invest. I would further point out the difficulty that this Bill raises to a further reduction of the Sugar Duty—an aim which certainly was the object of a good many members of your Lordships' House. We should like to see the Sugar Duty reduced, not only because of the constant use of sugar as an article of domestic consumption, but also because of its use as a raw material. It is a necessary ingredient in a number of articles which used to be made on a large scale in this country, and the more we can have of it in this country, and the cheaper it is, the better it must be for our trade, because there will be more people employed in making these secondary things. But the institution of this subsidy makes it more difficult than it was before to consider the question of further reducing the Sugar Duty.
§ Agriculture is not the first interest considered in this matter; indeed, it was only comparatively lately that the agricultural interest, represented by the National Farmers' Union, took a very deep interest in this subject. It was only in 1922 that they first began to press this matter upon His Majesty's Government. But if it had been a question of agriculture chiefly, I think His Majesty's Government might have found means to subsidise the raw material only, and not to penalise these manufacturers, the refiners, who are now working in Glasgow. It is quite evident that assistance to raw sugar is one thing, and the subsidy which is being given on manufactured sugar is another thing, because the latter assists the manufacturers of sugar as well as the producers of the raw material. This is just one section of agriculture which is being assisted.
§ In this House we are constantly hearing complaints of the present depressed condition of agriculture. I think we have some right to comment upon that fact. Even the Tariff Commission which was set up by Mr. Chamberlain declared against the taxation of wheat, on the ground that it was selecting one product of the agricultural community and giving special treatment 645 to it, which amounted to favouritism, and was not going to help other sections of agriculture. This is oven more the case. There are far fewer people engaged in growing sugar beet than in growing wheat, and it is to this small section of agriculture that this assistance is going to be given. We may expect other interests to come forward and ask for similar treatment in the future. I know that my friends amongst the hop growers will not be backward in pressing upon a sympathetic Minister and Parliamentary Secretary of the Ministry of Agriculture their claims to be assisted by subsidies or by some other means of the same kind.
§ The noble Lord challenged me upon the point as to whether in my opinion this was Protection or not, and he quoted a sentence from John Stuart Mill. Far be it from me to enter into any competition on a matter of that kind with so great an authority. I would say what I have ventured to say in many places before, that if you want to assist any industry subsidies are certainly a very great deal better than tariffs. With subsidies you see exactly the amount of money that is being spent by the country in assisting industry; the money goes direct to that industry, and does not percolate through into the pockets of other people. In those circumstances subsidy is a great deal better than tariff. If, on the one hand, you are to have a low subsidy and no Excise Duty, and on the other a high subsidy and payment of Excise Duty, which is the scheme" under this Bill, comparing the two the first alternative is certainly very near indeed to a system of Protection. I incline to think that is perhaps the reason why this Bill was introduced by the late Government.
I was reading that Protectionist newspaper the Scotsman on August 21 last, and I found that they said this:
Whether protection should be afforded by subsidies or by a tariff is a point mainly of tactics. A Socialist Party will probably prefer the method of subsidies since it can be plausibly argued that a subsidy will not increase prices. But a subsidy is a concealed tax on the whole community; and taxation is unquestionably an important element in cost of production. It is illusory therefore to suppose that the effect of a subsidy will be different from that of a tariff, so far as concerns prices.
§ That, I suppose, explains why this Bill was originally proposed by the Government to which the noble Lords sitting on 646 the Bench below me belonged last year. Indeed, I remember that their proposals were brought forward at a somewhat interesting moment in the electoral history of that Government. There was certainly one by-election pending at that time, and the Chancellor of the Exchequer made haste to announce his conversion to the system of a subsidy to sugar. I am glad to think, whether it was connected with that by-election or not, that the result did not meet with the success which His Majesty's then Government expected, for the bribe offered to the electorate was refused.
§ I think that this marks another step in that unfortunate direction in which, as it seems to me, the Labour Party is tending. It is not on those grounds that I am asking your Lordships to give this Bill a Second Reading this day six months hence. It is because His Majesty's Government, as it seems to me, have not sufficient control over the business in return for the money which they put into it. I should have preferred, if there was to be a grant of public money, that it should be granted either under the Trade Facilities Acts, or under the Development Commission, and I hope your Lordships will agree to my Amendment.
Leave out ("now") and at the end of the Motion insert ("this day six months").—(Earl Beauchamp.)
§ LORD ARNOLD
My Lords, I desire to give to this Bill general support qualified by certain criticisms. It follows that I oppose the Amendment moved by the noble Earl who spoke last. Quite frankly I do not understand his Amendment; at least, I cannot quite understand how it is consistently put down upon the Paper when only as recently as last Thursday the noble Earl informed your Lordships that this is a Bill to which there seemed to be offered no opposition. His next act is to put down a Motion on the Paper for its rejection. That seems to me a somewhat mystifying procedure. However, I leave that aspect of the matter for the moment, and I will deal with the economic points of the noble Earl as I proceed. The main provisions of this Bill have been very fully explained by the noble Lord who moved the Second Reading in an interesting speech, and I shall be mainly occupied, in the brief observations which I have to make, in stating—because 647 there seems still to be some misconception about the matter—the position of the Labour Party in regard to this subject. I am happy to think that I can do it within the space of a few minutes.
First, in regard to the history of this subsidy. The noble Lord who moved the Second Reading outlined the facts broadly, but I think it is necessary to stress one or two details, because I do not think they are sufficiently appreciated When the Labour Party came into office the sugar beet industry enjoyed protection, because the Import Duty on sugar at that time was 25s. 8d. per cwt., and there was no Excise Duty. In fact, the Excise Duty had been removed in 1922 with the express purpose of encouraging this industry. As a result, certain things had been done; capital expenditure had been incurred. Consequently it would have been impossible for the Labour Party, even if they had desired, and they did not so desire, to throw this industry over. To have done that would have meant considerable unemployment and loss. The noble Earl, in stressing the cost of this Bill, looked at the matter entirely on the debit side. He entirely left out of account the fact that in return for the subsidy you have a considerable saving in unemployment pay, a substantial advantage to agriculture, and undoubtedly valuable educational experience of which much may be expected in the future.
The next step in the history of this subsidy is the reduction made by the Labour Government in the Sugar Duty last year, a very big reduction, because the Sugar Duty was cut down from 25s. 8d. per cwt. to 11s. 8d.—a larger reduction in that Duty than was ever made by any Government in one year. It is clear that the protective assistance given to the industry was largely reduced, and the Labour Government was determined to reimpose an Excise Duty, and it did reimpose that Duty. In that respect—I should be very glad to have the noble Earl's attention on this point—it bettered the example of the last Liberal Government of which he was a member, because that Government refused to put on an Excise Duty although pressed to do so. That is the position. I say that the Labour Government was more virtuous in this matter, so far as Free Trade is concerned, 648 than the last Liberal Government of which the noble Earl was a member. I was not surprised therefore, though I confess I had no idea what reasons he was going to advance, when he did not dwell at great length upon the protective aspect of this matter.
It came about that an entirely new-position had to be faced by the late Labour Government, and it was then decided to proceed by means of a subsidy along the lines of the present measure. I maintain that such a proceeding is not inconsistent with Free Trade and that it cannot rightly be represented as inconsistent with Free Trade. I am not going into a disquisition of the difference between a tariff and a subsidy, although it is a very tempting theme and a great deal can be said about it. But this measure is supported by strong Free Traders, and even such a rigid Cobdenite as Mr. Francis Acland, last year in the House of Commons encouraged the idea of a temporary subsidy for the purpose of assisting the sugar beet industry. As the noble Lord who moved the Second Reading has pointed out, there is not a single country in Europe where this industry is now in being where it has not been necessary for a limited period in the early stages to give some form of State assistance. Unless you do so the industry can never be founded. There are certain circumstances in which a temporary subsidy is a vital necessity, and I can quote no less an authority than the noble Earl, Lord Oxford, himself as approving the subsidising of an industry under certain conditions and circumstances.
§ LORD ARNOLD
I am glad to find there is no difference between us, and I hope that in future we shall hear nothing more about the Labour Party having departed from the strict path of Free Trade. I maintain that in the circumstances, having regard to the position of the Labour Government when they came into office and their determination to re-impose an Excise Duty, which they did, they had no other course than to proceed by way of a subsidy. There is only one further point on which I desire to say but a few words because the ground has been 649 more than covered by the noble Lord who moved the Second Reading of the Bill. I should like to thank him, and the Government, for having accepted an Amendment in regard to the Fair Wage Clause, moved by the Labour Party in another place. In connection with that clause there is a further Amendment which was held over for reconsideration by the Minister of Agriculture, and I hope that when we reach the Committee stage we may come to an agreement on that matter.
Before I sit down I wish to say something about a provision in the Bill on which the noble Lord dwelt at considerable length. It is in regard to the provision that at least 75 per cent. of the plant and machinery installed in the factory for the manufacture of sugar and molasses shall be wholly manufactured in Great Britain. It is, of course, quite true that a very plausible case can be made out in that connection, but I believe it is open to very grave objections. I am not going into the fiscal argument and considerations more suited to a general discussion of that character. I will content myself with putting the practical point, that this clause will mean, I am afraid, that the industry will not have so good a chance as it ought to have, and as it could have, if this prevision were not inserted in the Bill. I do not think that the 25 per cent. which is left for purchase abroad is by any means sufficient to ensure that the industry will have the best chance. To say that is not to reflect in the least on the British manufacturer or the industry. These sugar beet industries abroad have been established for many years and the plant and machinery for them is made there with all the advantages which come from long practical experience and experiment. We are not yet in that position in this country. We may come to it some day, and I hope and believe we shall, but I do not think the time has come when a provision like that should be inserted in this Bill, because it will handicap seriously, possibly fatally, this experiment.
It is quite true that there is a qualification to which the noble Lord referred—namely, that in certain circumstances the Minister can practically contract out of this provision. I was a little disappointed to hear that this qualification 650 had been put in chiefly for the purpose of dealing with one or two past happenings. I hoped it meant that the authors of it were themselves very unhappy about it and felt that it was necessary to insert it in order to meet the position which would arise in the future. The words of this qualification are:—.! shall not apply in the case of any factory in respect of which the Minister thinks fit for any special reason to direct that they shall not apply.!That is one of the widest discretions I have ever seen in an Act of Parliament, and it is rather an astonishing proceeding to put in a provision and then put in also a discretion which makes the provision nugatory. I do not think the statement of the noble Lord was at all satisfactory on that point. I regret that this provision remains in the Bill. If the qualification is put in I think it would be better to delete the provision altogether.
Let me say this in conclusion, that although we are obliged to offer criticisms on certain points, nevertheless the main structure of this Bill is, as the noble Lord has stated—I should like to express my appreciation of what he said about the action of the Labour Government in this matter—the same as that for which the late Administration was responsible. We wish every success to the industry which this Bill is designed to assist.
My Lords, I should like, if I may, to detain your Lordships for a very few moments on this interesting subject, though certainly not with the intention of supporting my noble friend, the noble Earl opposite, in his Motion to read the Bill a second time this day six months, nor yet of finding a solution for the evident differences that exist between the two Parties opposite, both here and elsewhere. I am only too thankful when I find a Ministry of Agriculture that is really desirous of helping agriculture to some extent. But I venture to offer one word of warning to your Lordships from a practical point of view, and I am tempted to do so because I remember very well that, during the war, when my noble friend Lord Selborne was equally enthusiatic as is the noble Lord on the Front Bench below me now concerning a scheme for the establishment of farm colonies, I pointed out from a practical 651 point of view that it was going to be a failure; and, as your Lordships know, it was an almost total failure.
As regards this experiment, I am not speaking from my own experience, but I have had the opportunity of consulting a very eminent agriculturist who has been pursuing this subject for twenty years or more, and who, to assist in the matter, has himself grown sugar beet. He does not show the enthusiastic confidence displayed by my noble friend below me. I cannot help thinking that my noble friend has absorbed some of the enthusiasm of my noble friend Lord Denbigh, whom, in the same breath, I will congratulate upon his success, after many years of struggle and disappointment, in securing the assistance of the Government. There are several snags which this boat must either drive down or get round. In the first place, though I believe that on the Continent sugar beet is not grown more than once in five years, let us estimate that it can be grown once in four years. Then I am told that a well equipped factory will require the supply from something like 4,000 acres a year. That means that the factory must be able to depend upon at least 16,000 acres. Now 16,000 acres of sugar beet arable is a pretty big area. A great deal of that area will not be at a very convenient distance from the factory, and this will increase the cost of transport If you sum up in your own mind, thinking of any area of country that you well know, how many other kinds of cultivation are already going on and well established and are not likely to be interfered with, you can see over what a very large area indeed the 16,000 acres will have to be spread. That is one of the difficulties, and the noble Lord below me has not attempted to touch upon it.
Then, when the beet is grown, it has to be treated in rotation—that is to say, the factory cannot deal with, say, 80,000 tons all at once, but that quantity has to be divided in rotation. Since the roots have to be pulled at the same time, a certain proportion of them will have to wait for treatment. I do not know how that is going to affect the sugar content. It may have no material effect or, on the other hand, it may; but at any rate, the farmer who depends upon the sugar content has to wait until his particular crop has been treated, and he may have 652 to wait a very considerable time. Again, there are a number of competing industries in the particular area in which these experiments have been carried out, and will continue to be carried out to some extent. You are on some of the very best potato land in England, worth £5 an acre, I am told. Some of these farmers are not going to give up growing potatoes merely to experiment with beet, and you may depend upon it that the area that will have to be included for each of these factories will be extremely large. I do not think that this has been taken into calculation.
As regards labour, I have always understood, and I am supported by my informant, that one of the reasons of success abroad has been the extremely cheap female labour that has been employed. This is imported labour. My noble friend below me held out hopes that ten men more, I think, per 100 acres were likely to be employed on the farm. Does he mean all the year round? This crop has to be rushed in, and when it is ready it has to be rushed out again. You will want a great deal of casual labour that is not upon the farm. You will have to get it from the towns. I sincerely hope that ten more men per acre are going to be employed, but this is going to put up the cost of cultivation very considerably. This is not cheap labour, and I doubt very much if the labour which you are going to get from the towns, whether male or female, is going to be anything like so economical as the labour which has been employed abroad and has been one of the factors in making the cultivation of sugar beet so successful there.
These are only two or three of the difficulties that have to be dealt with. For a good number of years past I have had to consider questions into which chemistry enters. You can prove anything by laboratory experiment, and so far there has been very little more than laboratory experiment in this matter. There is no question that we can grow beet, there is no question that some of it will contain the necessary sugar content and there is no question that it can be treated. I think that the difficulty you are going to meet will arise from the agricultural point of view, both as regards area and as regards labour. But I would no more think of opposing the Second Reading of this 653 Bill than of opposing any other offer of assistance for agriculture that might be made by the Government, and I sincerely hope that this experiment may prove a great success.
§ LORD BLEDISLOE
My Lords, I thought just now that my noble friend Lord Harris was proposing to some extent to damn our Bill with faint praise, and it was a relief to me when he ended his interesting speech by stating that he proposed to support the Second Reading. I would venture to say to him that most of his neighbours amongst the farmers in East Anglia are definitely enthusiastic about the inauguration of this industry.
§ LORD BLEDISLOE
East Kent? I beg the noble Lord's pardon. At any rate, in those areas where there is a sugar beet factory or the prospect of one, I understand that the enthusiasm amongst farmers is considerable, and there appears to be no prospect, upon any information that we have, that so important a crop as the potato crop is likely to be in any way displaced to make way for sugar beet. The noble Lord will not expect me to enter into the different conditions which govern the production of different crops, but I think I should be able to convince him that the conditions differ to such an extent that one crop is not likely to displace the other.
I should like to thank the House for the reception, on the whole favourable, which has been given to this Bill. I am afraid that if I tried for many hours to convince my noble friend Lord Beauchamp as to the desirability of this Bill, at any rate from a Free Trader's point of view, I should fail most signally, but I should like to say to him that, so far as a loan is concerned as against an out and out subsidy, it would have been quite impossible to have persuaded the gentlemen who are now putting their money into these new factories to come forward if we had simply provided a loan, even at a low rate of interest, instead of that which may be regarded as the gift of a subsidy. I think I am right in saying that in all those countries where the sugar beet industry has been developed so 654 successfully there has been a similar attitude taken up by the Government of the country, in providing financial assistance; and I am bound to say that, as I read John Stuart Mill and other eminent economists, there is no suggestion in their remarks upon this subject that a loan should be substituted for definite financial assistance on the part of the Government. The only other point mentioned by the noble Lord, to which I should like to refer, is that the sugar beet industry provides employment outdoors at one period of the year and in the factories during the other part of the year. In fact, it is seasonable employment of very high value, tending to change casual and ill-paid employment into regular and well-paid employment.
So far as Lord Arnold's criticisms are concerned, I do not think there is very much between us, but I would like to suggest to him that a large amount of this machinery which might be obtained from abroad, for the equipment of these factories, is undoubtedly produced by low-priced labour, and there is a strong feeling among those who desire to develop their factories in this direction, and among the workmen employed in those factories, that they should not be subjected to the unfair competition of goods produced abroad by lower wages than are paid in this country. After these remarks I trust your Lordships will allow this Bill to pass its Second Reading. So far as Lord Arnold is concerned, I will do my best to meet his more persuasive arguments in Committee.
THE EARL OF BEAUCHAMP
Perhaps your Lordships will allow me, in asking leave to withdraw my Motion for the rejection of this Bill, to thank the noble Lord for the answer which he has given me. I will not pretend that I am completely satisfied with the answer he has given, but probably if I spoke as long as he contemplated speaking to me, he would be as little convinced as I am. We had perhaps better be content to leave the matter there, and I ask leave to withdraw my Motion.
§ Amendment for the rejection of the Bill, by leave, withdrawn.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.