Lords Sitting of 10 March 1936

Preamble
The House met at a quarter past four of the clock, The LORD CHANCELLOR on the Woolsack.
CONSOLIDATED FUND (No. 1) BILL.
Brought from the Commons, endorsed with the Certificate from the Speaker that the Bill is a Money Bill within the meaning of the Parliament Act, 1911; read 1a, and to be printed.
PERTH CORPORATION ORDER CONFIRMATION BILL. [H.L.]
Returned from the Commons, agreed to, with Amendments.

MILK (EXTENSION OF TEMPORARY PROVISIONS) BILL.
Order of the Day for the Second Reading read.
THE PARLIAMENTARY SECRETARY OF THE BOARD OF EDUCATION (EARL DE LA WARR.): My Lords, I do not think I need detain your Lordships very long on this Bill because it is merely a repetition of a piece of legislation to which your Lordships have already given your assent. This is an extension, for eighteen months, of the Milk Act, 1934. It might perhaps be helpful to your Lordships if I reminded you of two or three of the main points comprised in that Act. The first part is designed to guarantee the market for manufacturing milk. When it was decided that the milk market and the dairy products market should not be given the same protection which other industries in this country were enjoying, and when it was found that the bottom was falling out of the market, particularly for cheese and butter, and that that depression in the dairy products market was having its inevitable effect on the price for milk received by the farmers in this country, it was decided that some action should be taken. The action was designed so as to get the maximum benefit for the producer whilst enabling the consumer to continue to enjoy cheap im
942
ports of dairy products. Accordingly it was decided to adopt this method of underpinning the market so that, no matter how low the price for manufacturing milk might fall, the Milk Marketing Board might be guaranteed a maximum of 5d. in the summer and 6d. in the winter. That scheme is to continue for eighteen months, and the amount of money which is being allowed, though we hope it may prove to be too much, is £2,500,000.
The next portion of the Act dealt with the question of cleaning up herds. I do not think I need trouble your Lordships on that point, because that was put on a four-year basis and therefore does not arise. The last section of the Act dealt with the question of the extension of the market for liquid milk. For that purpose £500,000 a year was allotted. As it is a two-year scheme that means £1,000,000 in all. That money is being used mainly for cheapening the supplies of milk to school children. At the time of the passage of the Bill approximately 800,000 children were buying milk every day in school at a charge of per one-third of a pint, about another 100,000 being given milk free. The price of that milk having been reduced to a half-penny, instead of 800,000 buying milk every day the figure is now approximately 2,500,000; and whereas 100,000 were receiving milk free, at the present moment no fewer than 250,000 are receiving milk free. That has resulted in something over 20,000,000 gallons a year being absorbed which might otherwise have gone to increase the surplus. I think this particular aspect of the problem is one that is interesting the public, and your Lordships may have noticed that it was really the only part of the subject that received any attention at all in the debate in another place. But I do not intend to deal with it to-day, because your Lordships may have noticed that the Lord Bishop of Winchester has put down a Motion for the 18th of this month, relating to the whole subject, and probably it would be more useful and more appropriate if it was dealt with on that occasion.
I would only add that this is an eighteen-month Bill and that by that time we shall hope to have worked out a long-term policy. We also hope to have concluded negotiations with the Dominions and foreign countries, and quite shortly

943
to have at our disposal the Report of the Reorganisation Committee which has been appointed to review the whole working of the Milk Marketing Scheme with special relation to the production, distribution and consumption of milk. In a comparatively short time we shall be in a position to lay before your Lordships a long-term policy for dealing with the whole of this question.
Moved, That the Bill be now read 2a.—(Earl De La Warr.)
VISCOUNT ASTOR: My Lords, I shall venture to make only a few observations, and shall deal merely with points of major policy. I do that because, as the noble Earl has just said, during the next few months the Government and others interested in agriculture will be thinking out a long-term policy for dairying, which, I have always maintained, should be the corner stone of British agriculture. I shall be as brief as possible because I know many of your Lordships, like myself, want to go to another place to hear the debate that is proceeding there. I want now to deal with two points. One is the determined effort which the Government and others are making to increase the consumption of liquid milk; the other is the machinery now being employed to fix the price of milk. I think that unless there is some modification of the present procedure neither the consumers nor the dairy interest itself will get the best result.
As the noble Earl has very rightly pointed out, we are shortly to have a debate on the whole problem of nutrition, so I will not say anything about that to-day. In regard to the special scheme which has been initiated for giving cheaper milk to children, I hope it may be extended. We see in the newspapers that it may be extended to preschool children and, possibly, to pregnant women. I also wish to refer briefly to a new movement for improving nutrition, which has been developed in this country, and to carry out which a special Commission has been set up by the League of Nations. I would like to take this early opportunity of paying a tribute to the part which the noble Earl has played in both these aspects of the problem. I am perfectly certain that all who are interested in the welfare of the rising generation are beginning to appreciate the fact that if children from the earliest
944
age have an adequate supply of milk, they will be healthier and better citizens, and will not suffer from many of the deficiency diseases or other diseases.
We should recognise the fact that that was started when the noble Earl was at the Ministry of Agriculture. I am very glad that when he moved from that Department he went to another Department also associated with school children. It is my great privilege to be Chairman of the League of Nations Commission, and I know what is being done under the auspices of the League. What may, I hope, be done for the development of a nutrition policy in most countries will be very largely due to the pioneering work of the noble Earl. I know what it is to be a pioneer. I know the difficulties which have to be overcome. The fact that this is a live policy, both at Geneva and in this and other countries, is very largely due to the initiative and the courage of the noble Earl. I think we ought to be very grateful to him and to recognise that fact.
For the reason I have indicated I am riot going to say anything about the milk for school children, except tins. The experience we have had shows that first of all there was a large increase, then there was a seasonal drop. Now we find there is actually a drop compared with a year ago—that is to say, not a seasonal drop. There are also gaps. I merely mention that to show that it is unlikely that there will be a spectacular large increase in the consumption of milk through the schools. But I hope that there will be a steady increase. I hope that what the Government are doing to assist in the way of propaganda and in other ways will gradually lead to an increase. The point I want to make is that we cannot look to this as a way in which to absorb the whole or even a very large proportion of what is called the milk surplus. And that brings me to the next point, which is the one I want to speak about mostly to-day. That is the method which is adopted now in price fixing.
Unless you can lower the price to the consumer very substantially you are not going to get that full consumption of milk which I am sure all of us agree is desirable. There are three ways in which you can reduce the price to the consumer. You can reduce the cost of dis

945
tribution, you can reduce the cost of production, and you can subsidise. I believe something should be done along all these lines. I am not going to say anything about distribution, because people accept the fact that something can be done to reduce the spread. I have been associated on more than one occasion with what may be called a very radical policy, but I would only venture to say to-day that I hope the noble Earl will not wait too long in developing that policy, because the longer he waits the more the community is going to lose the benefit of rationalisation as applied to distribution. Most people agree straight away that something should be done to reduce the cost of distribution. Those who are interested in agriculture are not so ready to admit that it is also possible to reduce quite substantially the cost of production. It is because of that that I am taking this opportunity to refer to it, and I am very glad to have the support of the noble Lord, Lord Eltisley, who is so interested in agriculture.
We have a glut to-day, we have a surplus, because producers' prices are too high. Before the Milk Board was set up the price of liquid milk was kept up when other commodities were cheap. As the result of the negotiations of the National Farmers' Union the price of liquid milk, relatively speaking, was kept high. Now by surplus I mean that liquid milk which is substantially in excess of the actual or immediately probable demand for liquid milk. I realise, of course, that there must be seasonal variations, winter and summer, and I would make allowances for the natural demand for cheese and butter. In other words I only count as surplus that milk which is needed to build up a butter, cheese and dried-milk industry. I hope that the noble Earl, when working upon a long-term policy, will bear in mind the differences between the liquid milk market and the market for processed milk. The question of the magnitude of the butter, cheese and dried-milk industry must not be considered merely as an agricultural question. It raises all sorts of major national and Imperial questions. Do we want the Dominions to buy English-made manufactures? Do we want the Dominions to take a large number of migrants? If we do we must of necessity limit the extent to which we develop and expand agriculture in this
946
country. Do we want as part of our national policy to keep alive our mercantile marine, that nucleus on which the Navy depends? If so, we must not kill our overseas trade by developing too much the policy of economic nationalism. It is very important that we should go into that aspect when thinking out a long-term policy.
The noble Earl referred just now to the new conception of a nutrition policy. I think agriculturists in every country must recognise the fact that they cannot of themselves supply the whole of the additional food required if we want those with smaller incomes to have enough food. That is to say, a certain amount of the food to be eaten must be cheap. I have noticed a tendency in some letters appearing in the public Press here, and I have noticed in other countries, that farmers are saying: "This is a splendid idea that people should eat more, and we will try to supply the whole of the requirements of the consumers in our country." We have to bear in mind that if they do that the cost may be too high.
There are two ways in which the producer's prices can be fixed. They can be fixed on the basis of what is called cost of production. That is rather a seductive basis but one sometimes leading, I think, to trouble. The other way in which it can be done is by relating the price to the actual demand for liquid milk. I think that is a much sounder basis on which to fix the farmer's price. I am a great believer in businesslike methods in agriculture. I am always a little nervous about the proposals of the noble Lords who sit on the Labour Benches. They seem to think that you can work out costs of production in agriculture and fix a statutory price absolutely on that basis. I believe that there are too many fallacies associated with costing in agriculture, particularly where you go in for mixed farming, as you do in Britain, to make it possible to use that as a hard and fast rule.
If you take the published figures of the cost of milk- production in recent years, you will find that it has varied from 6d. to 1s. 6d. per gallon. I do not want to be bound by those figures; merely want to use them as an illustration. Generally speaking, the farmer's price is fixed on the average price of production. But the real average price

947
depends on proportions. If half the milk is produced at 6d. and half at 1s. 6d. you get an average of 1s., but if one-fifth is produced at 6d. and four-fifths at 1s. 6d. you get an average of 1s. 3d.; or if four-fifths is produced at 6d. and one-fifth at 1s. 6d. you get an average of 8d. The average, therefore, may vary between 8d. and 1s. 3d. per gallon. I think the efforts of the Milk Board or whatever organisation may be in that Board's place, should be to encourage as many farmers as possible to produce milk at 8d., or at a lower price, and should not pay so ninth attention to the average price. I am afraid it is never going to be possible for any of the Marketing Boards, constituted as they are now, to fix the most satisfactory price in the long-term interest of the industry and the country. It is impossible for members of the Milk Board, who come up for re-election, to lower the price of milk to such a figure as will knock out the less efficient farmers. Yet that is what ought to be done. The result of the present system is that the consumer and the taxpayer are paying large sums of money in order to expand a surplus which has to be sold eventually as butter, etc., at less than the cost of production. I suggest that that is not a wise policy.
The second basis on which you can work is to fix the price according to the actual demand of the liquid milk market. That is to say, if your supplies are greatly in excess of demand you should lower the price to the producer. That has not been the policy hitherto, and as the result we have had an ever-growing surplus sold as manufacturing milk, which has had to be subsidised, and which tends to make both the consumer and the taxpayer pay far too much. A third way to reduce the price is by subsidies. That is a matter entirely for the taxpayer to decide. If the taxpayer thinks it desirable to build up a dried-milk industry and is prepared to pay the cost, that can be done.
The point I want to emphasise is that our aim should be to produce as much clean and healthy milk and as cheap milk as possible; that something should be done to reduce the cost of distribution; that something can also be done to reduce, very substantially, I think, the cost of production. If these things can be done we can give people very much cheaper milk than they
948
are getting to-day without subsidy. I think also it will be necessary for the taxpayer to subsidise the milk given to children, young people and pregnant women, and I believe the public will increasingly support that policy. If they do, we shall obtain results in good health as well as in a sound dairying industry. But before the Government or the Milk Board very largely expand the factory capacity for processing milk, whether it be the factory capacity for dried milk, cheese or butter, the Government should very seriously consider the possible consequences that this may have upon our whole Imperial and overseas trade policy.
LORD ELTISLEY: My Lords, I desire to say a few words in hearty support of this measure which has been briefly but ably submitted to the House this afternoon. In doing so, may I venture with all respect heartily to congratulate the Parliamentary Secretary of the Board of Education on the way in which he has stated the case to us, and on the high office which he now holds in another Department of the Government. I also take the opportunity of expressing a view held by a good many in this House who are interested in the industry of agriculture, and their sense of grievance that for the first time now for several decades there is no direct representative of the Ministry of Agriculture in this House. Their hope is that it may be found convenient for the Government at some time again to appoint in this House a direct representative of agriculture and so to rectify the state of affairs which exists at the present time. We all appreciate and recognise our good fortune in the fact that the noble Earl, Lord De La Warr, can still continue to submit important agricultural measures in person to this House, and to expound them to us, but that cannot be, and it is not, the same thing now that he sits as Parliamentary Secretary for another Department. He can no longer take part in those Departmental discussions which precede the introduction of a Bill; he can no longer meet those delegations and deputations which arrive almost hourly at the Ministry of Agriculture, and his knowledge, great as it will be, of various measures must of necessity no longer be at first hand. In view of the very heavy agricultural programme which lies before Parliament—to mention but a

949
very few matters: the tithe question, unemployment insurance and sugar reports; matters of great and grave importance to the agricultural industry—I hope that the Government will give serious consideration to the re-establishment of the old principle of direct connection between this House and the Ministry of Agriculture.
The purpose of this Bill, as the Minister has explained, is to carry on the provisions of the 1934 Milk Act and to rescue and preserve the general milk industry from the chaos and disaster that threaten it. This Bill is to give those who are interested in agriculture an extension of breathing-time, some further help to face the immense difficulties which now confront them, pending the placing on the Statute Book of a long-term, long-range policy. I may remind the House of the great difficulties with which this important branch of agriculture—namely, the milk industry—has been confronted. In 1934 the milk equivalent of the gross imports of milk products equalled over 3,000,000,000 gallons of milk. The imports of butter and cheese alone totalled a milk equivalent of no less than 2,898,000,000 gallons, and to those imports of butter and cheese must be added the imports of condensed milk, cream, milk powders and other milk products. The average gross imports of whole milk products in 1929–31 represented a milk equivalent of 2,246,000,000 gallons. In 1934 that figure bad risen to 2,920,000,000 gallons. The increase in 1934 over the three-year average of 1929–31 was some 30 per cent. or 674,000,000 gallons.
If I may put it in another way, in five years the increase of imports of milk products to this country equalled no less than a half of the home supply. That, obviously, has created an almost intolerable and extremely difficult position for the home agriculturists. And concurrently with this vast increase of imports of milk products, there was a tremendous drop in the prices of those products. In 1929 the price of butter was about 173s. per cwt., but in 1934 it had fallen to 73s. per cwt. In other words, the price of butter dropped in those years by no less than 58 per cent. Similarly, the drop in the price of cheese amounted to 49 per cent., namely, from 91s. 3d. to 46s. 9d. per cwt. How could the home producer engaged in the industry live in those circumstances with-
950
out assistance? How could the home industry pay an adequate and proper wage to those engaged in that branch of agriculture? How could they attain and maintain a decent standard of living? What a tremendous strain was thereby imposed upon the meagre capital of the farmer!
No one will, I think, gainsay the need for maintaining the milk industry in this country. The output of those engaged in the milk industry represents about 27 per cent. of the total output of agricultural produce, and the annual value of the milk and dairy products produced by our own people amounts to some £65,000,000 a year. It is computed that no less than 375,000 men are engaged, wholly or in part, directly or indirectly, in this branch of the agricultural industry. The value of the cow population alone has been computed at £160,000,000 of capital, to which must be added some £70,000,000 worth of equipment in the various homesteads of the country. All this vast capital and that great number of men have been jeopardised because of the flood of imports. Our agriculturists have always had to suffer, and to suffer very heavily, for reasons which were alluded to by the noble Viscount, Lord Astor: for reasons of general national policy, in order that we might maintain and secure overseas markets for our manufactured articles and employment for our industrialists. It is for that reason that the workers on the land and the farmers have had to submit to so many irksome trade agreements and to unregulated and unrestricted imports of agricultural and dairy produce from overseas. It is for that reason that our home agricultural industry has been left so long—far too long—defenceless and unprotected.
This Bill is but a small and meagre help to the agriculturist. I venture to maintain that agriculturists have for years and years been subsidising other branches of industry. The man who milks the cow gets a matter of 36s. to 40s. a week, and it is a long week at that, a seven-day week, while the man who pushes the milk barrow on a round gets nearly double that salary. This Bill is necessary, vitally necessary, pending the formulation of a long-term, long-range, policy based, as I hope it may be, and as has been indicated to us on various occasions it may be, on a levy-subsidy principle, or

951
on a regulation of imports. We all appreciate the great difficulties which confront the Minister of Agriculture and the Government generally in putting forward a permanent policy, and therefore we welcome this gesture of good will. We realise that until the Report of the Re-organisation Commission is considered, until the termination of the trade agreements with Denmark and other countries takes place, we cannot expect a permanent Bill, to place the industry on a permanent basis, to be brought before the House; but I would take this opportunity of expressing the earnest hope that such a measure will be brought forward with the greatest possible expedition.
I have pointed out the great weight and great importance of the issues involved in this Bill, and while thanking the House for allowing me to put this before your Lordships, I hope I may be permitted to trespass for one or two minutes further on your kind indulgence in order to make one or two suggestions and criticisms. I have no doubt that the main criticisms of this Bill, if any are made in this House, as were made in another place, will come front noble Lords who are perhaps interested largely in the co-operative interest, and who will press the interest of the retailers rather than that of the producers. I can understand that, because I have been informed that while in nine years the co-operative milk profits showed a margin of some £840,000 in retailing, yet in their short experience of farming they showed a loss of some £23,000. I regret that the Government have been unable to see their way to increase the contribution of £500,000, most of which was used under a previous Act for providing milk for schoolchildren. I regret that they have been unable to see their way to increase that provision under this measure, and to enable an extension of the school milk scheme to take place. Everyone agrees that this scheme, sponsored, I believe, by Lord Astor's Committee, has been a complete success and has received general national approval.
I would plead for the establishment of the scheme on a permanent basis, as an important development of our national life. As the Minister said, 900,000 children in England and Wales were taking 10,000,000 gallons of milk, and were paying one penny per third of a pint for it, before the scheme. Now, over 2,750,000
952
children are taking some 23,000,000 gallons and are paying one halfpenny per third of a pint. This is still growing. How is that scheme being financed? The milk is sold to the school child at half the usual retail price. For every gallon of milk produced in this country and handled by the Milk Board the producers contribute a farthing towards the cost. That is the cost to the milk producers generally in the country. The distributors came in and suffered a substantial reduction in distributing margins. The Milk Board puts up 5d. per gallon, and the Government, approximately, 4½d. per gallon. I cannot help feeling that the Government might participate rather more adequately, shoulder rather more of the burden, and take further steps to extend the scheme in the national interest.
At the present time the scheme is limited to schools in receipt of grants from the Board of Education. Perhaps there is some hope in this respect, because we have a Minister introducing this Bill who is now Parliamentary Secretary of the Board of Education. It is to be hoped that he will be able to produce another formula. An extension of the scheme to Poor Law Schools, conducted on the site of Poor Law establishments, is wanted. The children in these schools, although eligible in every other way, are yet debarred from obtaining milk under this scheme. I cannot help feeling that that is inequitable and that there is a distinct grievance there. These children are just as much in need of good nourishment as children in other elementary schools—perhaps more so. It would perhaps not be presumptuous of me if I ventured to suggest that our thanks are due under the scheme to the school teachers, for the part they have played in making the scheme a working success.
I think that we should also thank the Milk Board. The farmers were told a short time ago to organise themselves, and indeed they have done it very well. I think that in the short time available to them, under the Chairmanship of Mr. Baxter, they have handled some £3,500,000 a month in the Milk Board, and it is the fact that the farmers have organised the Milk Board which has enabled such schemes as the accredited milk scheme to come into operation.

953
There are now some 15,000 accredited milk producers, producing clean and pure milk on premises licensed and inspected by licensed authorities, and now producing one-third of the milk handled by the Milk Board. Great experiments are being carried out to ascertain whether raw milk or pasteurised milk is more suitable for children and young persons, and if so, which is the better. Milk bars and milk clubs, which are being established, are proving very successful, and in view of the great activity of the Milk Board in various investigations which they are carrying out, I feel that as generous treatment as possible should be accorded to them.
Our aim nationally should be to secure, if it is found practicable to do so, that every child under five should have an adequate supply of pure, fresh milk. Our aim should be to supply and make available for expectant and nursing mothers a suitable and adequate supply of good milk. Also, I think our aim should be to do what we can to encourage the manufacturing processes of milk in this country. Something has been done in this respect. 192,000,000 gallons of manufactured milk were produced during the first year that the Board was in operation, and in the second year the amount had increased to 302,000,000 gallons. That represents very substantial progress, and progress of which I think we may well be proud. Development is taking place in every branch of the milk industry, and I think that is due in no small measure to the interest which the Government are taking in this side of agriculture. Therefore I welcome this second step, this small added encouragement to the development of abundant supplies of good, clean, healthy milk to our people. It means encouragement also to the setting up perhaps of more manufactures, which will require machinery and labour and which will deal with the surplus milk, arid at the same time do something to improve the employment of the people of this country. May I express the earnest hope that this Bill will have a speedy passage to the Statute Book?
EARL DE LA WARR: My Lords, I do not think there have been any new points of criticism raised, and therefore it is not necessary for me to reply at any length. I would only thank the noble Lords who have spoken for the very real contribu-
954
tions that they have made. The noble Viscount, Lord Astor, has been a student of the milk problem for very many years. The first Committee over which he presided having to do with this subject was, I think, in 1919. If it were not that he had been so very generous in the things he said about myself, and that therefore we might be suspected of having entered into an agreement to scratch each other's back, I would like to pay him a most warm tribute for all the work which he has done for the industry. The noble Lord, Lord Eltisley, is serving on the Milk Marketing Board, and therefore knows what he is talking about. We all enjoyed the tribute which he paid to himself as a member of that Board, but we in particular appreciated the tribute which he paid to the teachers, who have done a magnificent service by the way in which they have helped to work this scheme. Without them, as indeed without the Milk Marketing Board, we could never have begun to put it through and make such a success of it. I thank the noble Lords for their intervention.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

SHOPS BILL. [H.L.]
Read 3a (according to Order), and passed, and sent to the Commons.