HL Deb 07 May 1936 vol 100 cc838-68

Order of the Day for the Second Reading read.


My Lords, I beg to move that this Bill be now read a second time. It raises two most important questions. The first is: Should the beet sugar industry continue to receive any assistance at all? In other words, should it be allowed to go on? The second question is: On what basis should the industry be organised if it is allowed to continue? Your Lordships are aware that the Majority Report of the Committee of Inquiry presided over by Sir Wilfrid Greene recommended that it should not be allowed to continue, but the Report went on to make recommendations as to the basis of its future organisation if the Government did not adopt that proposal. It was, of course, the duty of the Government to take into consideration many points which could not possibly come before the Committee. The reasons why the industry should continue: the ruin that its termination would bring to vast areas of agricultural Britain, the employment that would be lost, both directly and indirectly, the impossibility of producing and distributing alternative commodities which might be grown on no less than 400,000 acres of land employing over 40,000 men—all these and countless other considerations have been discussed by your Lordships a great many times and voted upon, and it would therefore be wearisome, if not disrespectful to your Lordships' House, were I to repeat them all.

I would, however, venture to make just two points. The first is that, now that there is hardly an industry in the country that is not receiving some sort of assistance from the State, whether it be in the form of tariff or subsidy, there is no ground whatsoever for making the charge that agriculture in general and the beet sugar industry in particular is receiving special consideration. If we take, for instance, a particular industry that is specially favoured by His Majesty's Opposition, the treatment of coal for its by-products, action on behalf of that industry is constantly being proposed by the official Left Party. That industry is at least as uneconomic as, if not even more so than, the beet sugar industry at the present moment. My second point is that those who found it in their hearts to support the giving of assistance to this industry in the past will find even stronger grounds for supporting the present scheme in this Bill.

Your Lordships will remember that it was the noble Viscount, Lord Snowden, who first announced on behalf of the then Labour Government the intention of His Majesty's Government to give support to this industry. Support was then to be given at the rate of no less than 21s. per cwt., to come down later to 14s. and then to approximately 7s. That Government did not actually introduce the legislation, because it did not remain in power, but the next Labour Government in 1929 was responsible not merely for carrying on that subsidy but actually for increasing it, and when—I think it was in 1930 or 1931—I appeared before your Lordships and asked your Lordships to increase The subsidy from 7s. 3d. per cwt. to 8s. 6d., I then had the honour of speaking on behalf of that very Party which at the moment is opposing this legislation—speaking on behalf of a Cabinet which contained as one of its most prominent members Mr. Alexander, and was loyally supported by Mr. Tom Williams, both of which gentlemen were recently engaged in leading the opposition to this Bill in another place. By 1935 the subsidy had again come down, from 8s. 6d. to 7s. 3d. The subsidy which we are proposing is at the rate of 5s. 3d. per cwt., but it is on a certain formula, and when that formula comes to be worked out this year it is likely to be rather at the rate of 4s. 9d. It is hoped, with the economies proposed in the Bill and for which provision is made, to bring that figure down yet lower.

This proposal that State assistance should be continued, but at a reduced rate, is a very important one. Equally important, however, if not more important, is the degree and the nature of the public control upon which we, as the National Government, are insisting as a condition of the enjoyment of this modified subsidy in a Bill which has been opposed, not by the reactionary Diehards supporting this Government, who are doubtless to be found in hordes sitting behind me, but by the official Labour Opposition. I cannot help thinking sometimes, as one who once had the honour of sitting with them, that if only the Opposition could spend just a little less time talking about Socialism and a little more in thinking and studying what is actually being done by this Government in terms of economic and industrial re-construction, there might be a great deal more chance of their being taken seriously in this country.

This Bill is a most important Bill. It is important not merely to the agricultural industry; but its great and fundamental importance; is that it is part of that new structure in industry which the National Government are gradually building up. I stress this point partly because it is of general interest, but also because it would not be right to ask your Lordships to pass this measure simply as an item of agricultural relief, when at the same time you were in fact being asked to approve great and important new principles which are equally applicable to other industries. As I see it, this policy which we are pursuing is the peculiar British reply to conditions which in some countries are leading their Governments to fasten the iron hand of the State on all energy and enterprise, and which in other countries who are not facing the problem at all are leading to chaos and political strife. We are endeavouring by this type of legislation to bring some order into the complexities which are facing us in the modern industrial world. We are doing so by taking industries one by one and trying to deal with them according to the peculiar circumstances of each. Our interference as a Government is undertaken not in the spirit of imposing bureaucratic control on the enterprise of those who are responsible for the running of those industries, but, as an effort to put at their disposal all those resources of knowledge which of necessity must be in the hands of the Government alone.

In addition to the advice which is necessary if they are to work out these schemes of self-government in a way which will help themselves and be valuable to the country as a whole, we have to give them powers, powers which frequently enable them to set up monopolies in the most important foodstuffs in this courtly. With those powers and those monopolies must go the right of the State to impose public safeguards and control. That brings me to the particular and peculiar circumstances of the beet sugar industry. That industry has really, I think it is safe to say, passed its dynamic stage of development. We have got to the stage of consolidation. In this Bill, on the factory side, your Lordships will find that we are proposing a form of organisation which is neither nationalisation, nor public utility, nor private enterprise; it really partakes of all three. On the growers' side—that is not in the Bill, because it can come into operation under legislation already in existence—we hope to see established a Marketing Board, and then, super-imposed on these two bodies, you will see that there is to be a Sugar Commission, whose task will be to co-ordinate the efforts of these two separate bodies. As I have ventured to say already, the principles of this Bill may well be applicable to other industries. They have already been applied to a very considerable extent in the electricity legislation, in the Railway Act of 1921, in various Acts for the regulation and reorganisation of the mining industry, and in our own Agricultural Marketing Acts of 1931 and 1933. Your Lordships will see, therefore, that it is really part of a normal development which has been taking place for the last ten years.

Your Lordships may wonder why I have wearied you with rather long general remarks not specifically applicable to this Bill which is before you, but it did seem to me that by giving a background of Government policy we might make it easier to deal with the actual provisions of the Bill at somewhat shorter length. If you will now turn to the Bill itself, you will see that the general policy which I have ventured to outline is embodied in its provisions. Its principal features are the continuance of State assistance to the industry, the setting up of a supervisory Sugar Commission, the amalgamation of the existing eighteen beet sugar factories into a single Corporation, and a scheme for providing a financial incentive—and this I will mention again when I come to it in the Bill—to the Corporation to attain the maximum economy and efficiency. If your Lordships will turn to Clauses 1 and 2 of the Bill, you will see that in those clauses are set up a Sugar Commission, and its powers and duties are there outlined. It is to be composed of a Chairman and not more than four other Commissioners, and its main duties will be to supervise the efforts of the Corporation and the Growers' Marketing Board, or such organisation as the growers may set up, and to act generally as, in a sense, arbitrators, in the event of any disagreement between those two bodies.

In Clause 3 you will see that provision is made for the amalgamation of the eighteen existing factories into one Corporation. You will also see that compulsory powers are provided for bringing about that amalgamation, but it is the most earnest hope of the Government that those powers will not have to be used. Indeed, I can inform your Lordships that there is every chance they will not be used. Already you may have seen from the White Paper, issued on March 26, that definite arrangements are under discussion, and we have every hope that those arrangements will be able to go through. The capital of the proposed Corporation will be £5,000,000. Actually, the amount of the capital that has been invested in that industry is approximately £9,000,000. If it had been depreciated at the rate of 5 per cent. per annum it would have come down to about £6,000,000.


Is that paid-up, or nominal, capital?


It is the total money spent by the industry on fixed assets. On another basis of calculation we arrive at a figure of value of just over £4,750,000, but taking a round figure the figure finally negotiated was £5,000,000. As an additional public safeguard to any contained in the Bill, your Lordships will be glad to hear that the Treasury has been able to negotiate an arrangement with the companies whereby the Chairman of the Corporation is to be nominated by the Government, and the Government have been very fortunate in being able to obtain the services of Sir Francis Humphrys for that task. He has been engaged for a very long time now on the advisory tribunal, helping to work out a basis of agreement between the factories, and I need not remind your Lordships of his distinguished services to the State in the past in connection with the Government of India, as High Commissioner for Iraq, and as His Majesty's Ambassador in Baghdad.

Turning now to Clause 4, your Lordships will see that provision is there made for a Treasury guarantee for £1,000,000 loan which it may be necessary for the Corporation to raise for working capital and other purposes. It is hoped that it will not have to be quite as much as £1,000,000. Nevertheless, that is the total that has been settled, and the reason why the Treasury is prepared to guarantee that sum is that, on the basis of assistance laid down in the Bill, the Treasury is going to save as a result of any economy made by the industry, so that if the industry is enabled by means of a Treasury guarantee to borrow money at a cheaper rate, that is all to the benefit of the taxpayer of the country. When we turn to Clause 5 your Lordships will see that it is there laid down that the factory Corporation is to negotiate the terms of a contract with the growers. I have already told your Lordships that there is hope of a Growers' Marketing Board. I think some of you will be interested to know how likely it is that the growers will form themselves into a board, and I can tell you what the position is.

Some time ago the representatives of the growers submitted to the Minister a scheme for a Marketing Board. That scheme has been referred back to them to be redrafted in the light of the provisions of this Bill. When it is re-submitted, it will be for the Minister to approve it or otherwise. If he approves it will have to be submitted to both Houses of Parliament for an affirmative Resolution, and if your Lordships and the other House pass that Resolution, then it will go back to the growers in the country for a poll. There is therefore, I think, every indication that the growers intend to put through a scheme, and I can only say here, that with which I am sure your Lordships will agree: that it is of the most vital importance to the smooth working of the machinery to be set up under this Bill that the growers should proceed with that scheme. In this clause there are certain other matters dealt with too. There is the question of price which is to be negotiated between the two bodies, the factories and the growers. Of course there is not time, or rather their organisations are not in existence, so it is impossible that the price should be negotiated this year. If your Lordships will turn to the Second Schedule you will see that the prices for 1936 are laid down.

Then reference is made to the "standard quantity"—a quantity equal to 560,000 tons of white sugar, which is referred to in Clause 32. There is a good deal of feeling on this question of laying down a standard quantity which may be sold to the factories. It raises the whole question—a question on which there are very strong feelings—of the limitation of production. Actually, of course, it is the limitation of sales, but I think you will all admit that the one does really amount to the other. If I might speak quite personally, I feel very strongly with those who criticise any scheme for the limitation of production of a crop that can in any way be grown on an economic basis. But in this case let us realise what is being done. This beet sugar crop can only be grown in so far as the taxpayers pay out of their pockets a certain sum per ton produced. Therefore it is not really a question of the ordinary principle of the limitation of production here, but a question of limiting the liability of the taxpayer, and we have the right as a Parliament to say that we are prepared to help and to finance and subsidise a certain industry to a certain extent, but beyond that point we will not go. The machinery of this Bill then directs itself to trying as far as possible to make that limitation of liability. Accordingly an agreement will have to be come to between the various parties concerned as to the basis on which this task will be carried out. It will have to be on an acreage basis. It could not be on any other, because, as the scheme is to be administered under the Agricultural Marketing Act, there is in fact no provision. The tonnage is put at 560,000 tons, which is approximately 40,000 less than was grown in 1934–35.




Yes, it was about 600,000, I believe, last year. Lord Phillimore, who has been good enough to send me certain points in which he is particularly interested, has raised two points as to the basis on which these contracts, which amount to quotas of production are to be allotted, and he has made two suggestions which are certainly very attractive. The first is that provision should be made to ensure that existing growers should be enabled to maintain their existing acreage. That obviously seems to be a just and right principle to lay down. But unfortunately my advisers do not see how that can be incorporated in the Bill, and for this reason. On what basis would we assess their existing acreage? Should it be on the basis, for instance, of last year? If it were to be, you would at once come up against the snag that the factories this year have laid down a rule, which is being enforced, that growers should not grow beet on land which was growing beet last year. That has meant that a great number of growers have in fact had their production disorganised, and therefore if we take last year undoubtedly it would work out with considerable injustice to a great number of growers. Then if we were to take the year before you would find that figures had already been scaled down in that year, but they were scaled down by the factories, and there was in fact a good deal of dissatisfaction at the basis on which they were scaled down. Therefore I would suggest to the noble Lord that, excellent as his principle is, the scheme is more likely to be administered according to the principles laid down if we leave the matter to negotiation between the two parties concerned, supervised by the Sugar Commission, rather than if we tried to tie their hands in this Bill.

I would really give the same answer to the noble Lord's second point—again it is a most attractive point and a very important one—namely, that small holders producing an acre or less than an acre of beet should be excepted from the scheme of limitation and to that extent allowed to grow as they wish. The only trouble there is that we all know, if we look into the figures of small holders' crops, that we might get tremendous variations of the acreage if we adopted the noble Lord's proposal. Remember this, that if you give everyone the right to grow an acre or less it would mean, let us say, that a grower with quite unsuitable land would put in for a contract, which could not be refused, but which in fact would displace some other grower who probably had very much more suitable land. Again, I would suggest to the noble Lord that his point, which is undoubtedly one that should be put before the Commission as worthy of their consideration, would be more likely to be carried out on a satisfactory basis if it were left to their judgment than if we tried to tie their hands in this piece of legislation. We really must make up our minds which scheme we are going for—whether we are going to try to run this sort of scheme entirely from Whitehall, or whether we are going to appoint certain people to carry out the scheme and rely on their good sense. I suggest to the noble Lord that the machinery of the scheme that we are trying to adopt should be allowed to be carried through; but I would say this, that the Sugar Commission, which is responsible, has to give an annual Report to the Minister, and the Minister has to lay that Report before the Houses of Parliament. That means that the Minister has full Parliamentary responsibility for the administration of the scheme, and questions can be put to him on any occasion on its working.

Now we come to the portion of the Bill dealing with finance, Clauses 10 to 16. There are two other clauses, Clauses 8 and 9, which I ought to mention, but I will do that at a later stage. Clause 14 is really the main operative clause. The rate of assistance, as I have already said, is to be 5s. 3d., but as there has been a rise in the price of sugar already, that figure will, in fact, be 4s. 9d. I should like to draw the special attention of your Lordships to subsection (4) of Clause 14, because I have already told your Lordships that provision is made throughout this scheme for ensuring that any economies which are made will inure to to the Exchequer. That will mean that so far as we are able to improve the efficiency of the sugar industry, to that extent the industry will need less public assistance. That is a very excellent principle, but it has this disadvantage, that if the Exchequer is going to "snaffle" all economies there is not much incentive to the Corporation to achieve those economies. Accordingly, in Clause 14 (4) provision is made for ensuring that some of these economies do inure to the Corporation.

Perhaps I might at this point outline to your Lordships some of the economies that are already being made. I have already said that the subsidy was 7s. 3d., coming down to 4s. 9d. per cwt. That has meant an economy of not less than £1,500,000 to the Exchequer. Then the tonnage is being reduced from approximately 600,000 in 1934–35 to 560,000. That will mean an economy of £500,000. Then there are economies that may be made by the amalgamation of the factories into one Corporation. These economies will amount eventually to approximately £300,000—shall we say a quarter of a million? Then there is one last economy that is purely hypothetical, but for which it is not unreasonable to hope. That is the possibility of some rise in the price of sugar. It may seem a little optimistic perhaps, but your Lordships know that there is, in fact, no body of producers in any country in the world at the present moment producing sugar at a profit. It is therefore reasonable to hope that there may be some rise in the price of sugar; and in so far as the price of sugar does rise so will the rate of Exchequer assistance come down.

If I may jump from Clause 14 to Clause 18, a very important new principle is laid down in Clause 18. Your Lordships may remember that in Lord Bingley's Report on the fat stock industry the recommendation was made that the Marketing Board should be asked to co-operate in the efforts of the State in the matter of paying for research and education. In this Bill the first step is taken towards implementing that recommendation and, accordingly, provision is made for contributions from the factories Corporation and from the Sugar Beet Marketing Board towards a scheme for research and education. That scheme will be subject to supervision in order to see that there is no overlapping. It would obviously be undesirable for the State to be carrying out research and the Marketing Board and the factories Corporation to be carrying out a similar scheme.

Now I come to Clauses 7, 8, 9, and 19. These clauses deal with the refiners. Your Lordships will see that the Commission shall keep a register of refiners, and provision is made for an agreement to be come to between the refiners and the factories Corporation as to sharing out the white sugar market. If your Lordships turn to Clause 19, you will see that the Commission may license refiners, which is a very different thing from merely registering them. It means that in order to ensure full efficiency in the refining industry all refiners will have to be licensed. They will have to be able to prove their efficiency, and new entries to the industry will have to be approved by an appropriate body set up. But that can only be done if it is established that it is in the public interest. The scheme must be drafted by the Sugar Commission, it must be advertised, objections must be heard, and there must be an affirmative Resolution of both Houses of Parliament. Lastly, in Clause 23, provision is made for fair wages both on behalf of the Corporation and the refiners. Your Lordships will agree that when large sums of public money are to be paid out to assist this industry, it is only fair that we should ensure that those employed in the industry should have a fair share of what is being given.

This concludes my brief summary of the Bill. There may, of course, be many points which I have not mentioned and which will be brought up possibly at a later stage, but I think I have dealt on the whole with most of what I may call the Second Heading points. We shall have the Committee stage later, but it is important at the moment to keep in mind the main purpose of the Bill, which is to continue assistance to this industry and to reorganise it with a view to putting it on a sound footing. The Bill will keep in use some £5,000,000 of capital, and it will keep in use also very nearly 400,000 acres of land. It will keep in employment at least 40,000 men, and it will maintain a crop which has become of vital importance to great areas of agricultural England, a crop for which no one, however critical of this scheme, has been able to suggest any real substitute. The Government are determined that this industry shall continue. They are determined, that those engaged in the industry shall be sure of a fair reward. They are equally determined that they shall only grant that assistance after every attempt has been made to ensure efficiency and the public interest, both on behalf of the consumer and of the taxpayer.


Before the noble Earl sits down, may I ask him for a rather fuller reply to my third question which was: How far is the farmer's contract price related to the subsidy in any given year?


I am sorry I left that out entirely. The contract price for beet will be settled in future years before the rate of assistance for that year is prescribed, and it is hoped that in future the contracts will be issued in the autumn, so that the growers will know in good time how much acreage is expected by the factories and so that they can make the necessary arrangements for the preparation of the ground. In view, however, of what I call the incentive claim—that is the part of the Bill to which I referred for encouraging the Corporation and the factories to make economies—the prescribed rate of assistance for any year will not be able to be settled until the accounts of the Corporation for the preceding year are made up, say in April or May, and when the prescribed rate is being calculated one of the ingredients in that calculation will, of course, be the price of beet. But the original assessment of the price of beet will have to be made between the representatives of the growers and the Corporation or, in the event of any disagreement between those two bodies, by the Sugar Commission. Therefore, when that determination is made, and when that negotiation has been carried through, then the rate of assistance will be determined by the Treasury.

Moved, That the Bill be now read 2a.—(Earl De La Warr.)


My Lords, I beg to offer a few observations on this Bill on behalf of the Opposition. These observations should really have been made by my noble friend Lord Noel-Buxton, who regrets that he is unable to be here. They will be brief because, among other reasons, I do not want to stand too long in the way of the debate to be initiated by my noble friend Lord Ponsonby, to deal with a situation which, in part, results from the same economic nationalism which is attempted in this Bill. Let me begin by stating quite plainly that I am an interested party. I am a shareholder in one of the companies affected by the Bill and already the value of my shares has risen on the London Stock Exchange. Nevertheless, though I am opposed to the Bill, if your Lordships divide upon it I do not propose to vote.

This Bill and what has led up to it are an example of the awful things that happen when an orthodox Free Trade economist strays from the narrow path of Cobdenite virtue while not following Socialist principles in the process. In 1924, as the noble Earl pointed out, Viscount Snowden allowed himself to be persuaded into subsidising, or promising to subsidise, beet sugar manufacture under private enterprise. Since then, up to May of last year, the unfortunate overburdened taxpayer of this country and the nine-tenths of the farmers who do not grow beet have had to find £40,300,000 as subsidy. Of this sum only £15,400,000, I am informed, has gone into production costs and manufacturing costs, and there has been a trading margin, I am informed further, of £11,200,000, with the result that certain favoured companies have made very heavy profits indeed. I am told that three of what I may call the Dutch concerns paid 20 per cent. dividend in the four years from 1928 to 1931 as a result of the taxpayers' assistance. Now this Bill is introduced with its permanent monopoly and its permanent subsidy all under private enterprise. I really wonder that the noble Viscount, Lord Snowden, has not turned in his political grave and come here to see the result of his lapse.

I understand that the total annual consumption of sugar in this country is round about 2,000,000 tons. This Bill cuts production, as the noble Lord, Lord Phillimore, I gather, has already pointed out in his communications with the Under-Secretary, from 600,000 tons to 560,000 tons, so we shall be nothing like self-supporting in sugar as a result of this Bill, nor are we likely to be. The subsidy will be equal, I understand—the calculations are a somewhat complicated matter—to about 100 per cent. on the present price of sugar.

Now, about the employment given. In another place the Under-Secretary, Mr. Ramsbottom, on February 10, stated that 30,000 men were employed directly in this industry at a cost of £5,000,000, including the subsidy and the Excise abatement. This works out at over £3 per man per week; a subvention of £3 to keep one man in employment! But that is not the only assistance given to employment. Capital is to be assisted to be employed, and very remuneratively, too. I understand that the cash paid-up capital of the companies taken over was £4,550,954. There is some dispute about the definition of "capital." There apparently was some difference and the noble Earl who has introduced this Bill gave a capital valuation. I think he gave the figure of £4,500,000, or thereabouts, as the real assets. The Corporation will have a capital, guaranteed of course as to its profits by the subsidy, of £5,000,000 and a capital bonus immediately therefore of about 10 per cent. Why? Furthermore, the Treasury is creating, as we have heard, what is in fact a gilt-edged security on, I understand, a 4 per cent. basis, while trustee stocks, as your Lordships know, carry an interest of only 2½ or 3 per cent. to-day. In addition to that the companies participate in the extra dividend that it may be possible to pay up to one-third, so they have one-third in the equity as well. Is it difficult to understand why my Party is opposed to any such scheme?

As to what our policy would be, we would either taper off the subsidy gradually, until it disappeared, and leave the industry to get along as best it could; or we would make a public Corporation of the whole industry, a real public Corporation. If you are to tackle this matter properly, you should not only take over the factories at a fair valuation of cost but also the refineries. That is what we ought to do if we are really going in for sugar production in this country. If we are to grow beet for sugar, I do not see why we should not aim at producing the whole of our requirements; then, instead of having only 10 per cent. of the farmer growers in this country out of the total farmer growers benefiting, something like 30 per cent. would benefit. That would be a policy I could understand. It would be just as sensible to try and grow our own cotton in this country under glass as this ridiculous proposal of the Government. Needless to say my noble friends are opposed to it.


My Lords, before dealing precisely with the Bill which is before the House, I desire with your Lordships' kind permission to say a few-words on this the first appropriate opportunity which has offered upon a subject which is of the deepest interest to a large section of the members of your Lordships' House. We have just had a Bill of first-class agricultural importance introduced to your Lordships by the Parliamentary Secretary of the Board of Education. Why? Because for the first time in memory there is neither a Minister for Agriculture nor a Parliamentary Secretary to the Ministry of Agriculture with a seat in your Lordships' House. The House is well aware that in its personnel it happily includes elements which are fully representative and will be able to speak upon all the great questions of the day, but it still remains a fact that rural economy and agriculture has more representatives in this House than all the other subjects of interest put together. The circumstances are remarkable. I would not have believed it possible had it not happened, that there should be for the first time no spokesman for that Ministry in this House.

There is contained in this House persons well able to speak upon the practice as well as the science of agriculture, upon the administration of that great industry and upon its political aspect. The circumstances now prevent us from being able to engage upon the floor of this House in debates of the quality which the personnel of the House requires that they should be. Without any intention of any discourtesy to the Minister who has introduced the Bill I desire to make a protest. In the case of this Bill we know that the noble Earl's long service at the Ministry of Agriculture and his intimate acquaintance with this subject will ensure that the House will suffer no disadvantage—I gladly acknowledge that—but that in no way affects the principle which I am endeavouring to emphasise. The time must come, and come shortly, when the noble Earl, whose duties at the Ministry of Education will take him further and further out of touch with the Ministry of Agriculture, will be inadequate to represent before this House the topics which must arise and which we desire to discuss.

I say no more on the subject except to assert, as is the truth, that I speak not only for myself but for a large section of the House who have felt, and do feel, deeply on this question. It so happens that my noble friend the Leader of the House is engaged on an interesting domestic matter to-day. I wished he had been here, but he knew that I was going to say a few words on the subject. We must leave this matter to him and I feel sure that there is no one who, whether by personality or record of achievement, is better fitted to uphold both the rights and the dignity of this House. With that, my Lords, I leave it. At the request of the Minister who introduced the Bill I would add this further word, that he himself has left the House because of a domestic circumstance of great gravity to him. Most readily do I excuse him for not being here to listen to the further progress of this debate, and I feel certain that those noble Lords who follow me will do the same.

Now, quite briefly, I will address myself to the subject of the Bill. I would like, if I may, to say how gratefully the agricultural industry as a whole and the sugar beet growing areas in particular have received this Bill. But it must not be understood for a moment that the Bill is going to pass entirely without criticism. In general principle it meets a request which has been pressed upon the Government—and not only this Government—for a term of years, that they should create an industry which can be stabilised and which agriculturists will know not to be subject to sudden abolition by the removal of the assistance under which alone it can be carried on. By those who do not live in the sugar beet growing areas there can, I think, never quite be realised the immense benefits which the sugar beet industry has brought to the people of the soil. To know that, with whatever limitations, this industry has not only been established but is to be continued, is of itself of immense benefit to all classes connected with agriculture not only in those districts but throughout England, because if those districts were unable any longer to engage upon this industry they would by force of circumstances be competing more strongly with other parts of England in the business by which those parts live.

But, having said that, and knowing that in saying it I am expressing the general sentiment of agriculture, I would add that I am personally disappointed with the Bill. The noble Earl, Lord De La Warr, referred in anticipation to what would unquestionably be put forward as the major objection to the Bill—the limitation of production which the Bill contains. The noble Earl advanced as a reason for it the perfectly sound one that Parliament had the right—I would have added also the duty—of limiting the amount of assistance which it could give to any industry, and I regret to acknowledge that there must consequentially follow a limitation in production. That must consequentially follow upon the limitation of subsidy in the circumstances under which this Bill is constructed. But the question arises as to whether this Bill is constructed aright. As the Bill is constructed I have little fault to find with any part of it, except on matters of detail which will arise on the Committee stage, but it is evident from the first to the last page of this Bill that it is in a sense a surrender to the Treasury.

It is an acknowledgment that the case for the continued growing of sugar beet has been so strong that the Government of the day have felt bound to give way to the arguments advanced for that continuation. Having felt so constrained, they have set to work to discover how cheaply it can be done, and throughout the whole structure of the Bill there appears to my mind a restrictive policy, an endeavour to make the thing as little as it can be. The noble Earl, in introducing the Bill to your Lordships' House, made far more of the small demand that is made upon the taxpayer in general than of the advantages that it gave to agriculture. I am afraid that is not an angle of approach which would appeal to me. If it had been given to mo to have anything to do with the measure I should have rather looked at it from another standpoint. I should have asked myself, how much sugar ought we to grow in this country to be safe? Sugar is an essential article of diet for human life. The human frame cannot exist without sugar. We know that during the Great War the quantities of sugar which we were able to import were less than those which the population reasonably required. Do we know that in the next Great War we shall be able to import any sugar? It seems to me that the minimum requirement of this country in sugar should have been the foundation upon which this Bill was built. If we do come to a conclusion—it is a matter for experts—as to the quantity of sugar we require, then by all means let us go further and see how cheaply we can achieve that particular production. But the Bill has not been framed on those lines at all. It has not been framed with any greater intention than that of preventing sugar production from getting any bigger than it was and is now.

The advantages of growing sugar beet in this country are manifold, and one of the greatest of them is that no crop like sugar beet so well maintains the fertility of the soil. If you were to come, as one day you may, to the necessity of being able to grow intensively upon that soil in times of emergency, how thankful would you be if you could be certain that all the soil of Britain was in a high state of fertility. That is just the state in which the soil of Britain is not, and there is no crop like sugar beet for maintaining it in such a state. Additionally, there has always been the great social advantage of the crop, that it retains upon the soil a labouring population without whom you cannot do and who would not remain if you were not from time to time able to devise forms of cultivation of this character which, by the wages which they pay and the constant employment which they give, encourage people on the soil to stay upon it. Sad indeed would be the case of this country if its rural population were to be depleted ever more and more and you had no resource upon which to fall back in time of need.

The question of subsidising and encouraging the sugar beet industry goes beyond mere terms of money, and I am sorry that this Bill has not shown a greater vision than it has. Limitation of production can never be sound. There might be, it is true, such production of a particular commodity as went beyond any conceivable requirement; but so long as you have a margin between what you produce and what you consume, surely it cannot be right that the production of that item should be restricted in your own country. Though I admit that, from the standpoint of the sugar beet-growing areas, restriction of production is, in the present instance of limited subsidy, to the advantage of those areas; yet, regarding the matter less from the standpoint of the persons interested in the sugar beet grown and more from that wider view which all of us ought to take, I hold and proclaim that limitation of production is a cardinal sin to which I cannot be a party.

Within the four corners of this Bill are contained quite a number of inconsistencies. You limit production and yet you provide what will be a great fund for research. There are clauses in the Bill which positively discourage the grower from producing better crops than he now does. If he does produce them, he is going to be disabled from selling them. To what advantage will this research work be applied? Research can only be intended to teach the grower to grow better what he now grows, and to grow it to greater profit. Limitation of production on a tonnage basis makes an ambition of that kind futile. I regret that it should have been thought worth while to embody it. Though on the face of the Bill it may seem wise, it is of no effect. The noble Lord, Lord Strabolgi, dealt mostly with the financial clauses of the measure, which he criticised for what he conceived to be the over-generous gift to the manufacturing side of the beet sugar industry. We are all aware that certain groups on the manufacturing side of the industry have of recent years made profits which have made the growers' mouths water. But as growers we have never complained, for the reason that not until the factories are established on an absolutely certain financial basis may the growers be sure of a continued market for their product. Therefore, although financial criticisms of a perfectly just kind may be levelled against the proposals of this Bill, they will not come from the growers, because we recognise that our interests over a certain wide field are identical.

I think I have said quite enough on the subject of this Bill for a Second Reading purpose, to show that there is no intention on the part of agriculturists in any way to interfere with or retard the passage of the Bill. I have also shown, I hope, that there is much disappointment with the niggardliness of its structure, that it might have been a far greater measure than it is, and that, had it been a greater measure, it would have received a greater welcome. I thank you, my Lords, for your attention.


My Lords, there is no member of your Lordships' House who speaks upon agricultural topics to whom it is a greater pleasure—at any rate to me—to listen than the noble Lord who has just sat down, for he always speaks with full knowledge of his subject, with exceptional clarity, and with an eloquence which does not always distinguish some of us rustics from the countryside! I feel compelled to participate in this debate without, frankly, having mastered the details of this somewhat complicated Bill, first of all because I acted for a period of the Great War as Chairman of the Royal Commission on the sugar supply; and secondly because it was my experience to introduce on behalf of the Government in this House the British Sugar (Subsidy) Bill some eleven years ago.

In the first capacity I realised that sugar is one of the most essential forms, possibly the most essential form of food in times of great emergency such as the Great War, and that its adequate supply from within our own borders affords, or should afford, a great measure of security to the country. There was one period during the summer of 1917 when two sugar ships were sunk by submarines in the course of three weeks, and we were faced with having a bare fortnight's supply of sugar in this country. I think your Lordships will agree with me when I say that, of all the food necessaries essential for the comfort of homes where children are to be found, sugar stands pre-eminently first. I therefore travelled a very long way with my noble friend when he suggested that, from the point of view of national security, it would be desirable to frame this Bill on the basis of what are the essential requirements of the country in time of emergency. As it is, I think I am right in saying that some thing like one-quarter of our sugar requirements—


Between one-quarter and one-third.


—something between one-quarter and one-third of our sugar requirements are raised upon our own soil. The noble Lord—and no one has done more than he has done to foster the development of this important industry in any part of England—has quite rightly emphasised the fact that, of all crops raised in any part of the world upon agricultural land, there is none that is more calculated to increase its fertility than that of sugar beet. And I go so far as to say that although I, very reluctantly, have to confess that the standard of fertility of British land has declined very considerably since the War, at any rate in those areas where sugar beet is mostly grown, as in East Anglia, the standard of achievement on the part of the arable farmers in the improvement of the fertility of the land has been raised, in my judgment, by at least 20 per cent.

The noble Earl, Lord De La Warr, has left the House, but I hope someone on the Front Bench is prepared to reply to our criticisms. Perhaps Lord Monsell will do so. The noble Earl incidentally made the remark in regard to subsidisation and protection generally, that the Government were taking industries one by one. I wish that instead of taking various branches of the agricultural industry one by one, they would develop a settled long-range plan, so that every essential branch of the agricultural industry may receive its due consideration; because what is the case to-day? Whether it is dairying or wheat production, or beet sugar production, the tendency is of course for farmers who are not engaged in a subsidised branch of the agricultural industry, in order to ensure a living for themselves, whether or not they themselves have the competence, and whether or not soil and climate are suitable for this particular enterprise, to go into a subsidised branch of the agricultural industry to the detriment of their land. It is happening particularly in the dairying industry, to-day, and without sharing the somewhat extreme views of Lord Strabolgi, I for my part most earnestly wish that, without any measure of nationalisation, the whole of our agricultural problems could be grasped by the Government as one great problem which should not be dealt with piecemeal.

What is exercising my mind in particular is this. I happen to live in an area in the West of England where excellent sugar beet can be grown but where we have no factory. I want to ask how is it going to be possible, if this Bill becomes law, for a new factory to be set up in such an area with any chance of its being able to stand upon its own legs, and serve the sugar beet requirements of that part of the country? And there is another thing which I am tempted to ask. First of all, I should like to say how utterly distasteful it is to me that the greatest industry of this country should require to be treated as mendicants, and require subsidisation from the Government at all. But I ask, more particularly with regard to this branch of the agricultural industry, where does the necessity come in? On the one hand Excise Duty is charged on the sugar raised in this country, and on the other hand a bounty or subsidy is provided, by way of balance, to those producing sugar, who have directly or indirectly to pay the Excise Duty. Why cannot one cancel the other and the industry stand upon its own legs as I have reason to believe any efficient producer of sugar beet can enable it to do to-day?

However, I may be told that that is a matter for the House of Commons and not for your Lordships' House, and that it would be a breach of the Privilege of another place to introduce any Amendment to that effect. At any rate, if it is really necessary from a financial point of view to subsidise a branch of British industry, because there is some duty or extra burden like Excise upon that branch of industry, I do most sincerely ask why is it necessary to maintain that burden and thereby turn the producers in that industry into mendicants or the recipients of Government subsidisation?

I do not want to take up your Lordships' time further, except in order to refer to the remarks of the last speaker. I deprecate very strongly the fact that there is no longer any representative of the Ministry of Agriculture in this House. I think we can without egoism claim to give authoritative views with regard to agriculture at least as well as the members of another place. I would remind the noble Lord of this: My memory goes back to the year 1912, when I myself was a member of the House of Commons, and when I may confess I was instrumental in organising a deputation to the late Lord Oxford, then Mr. Asquith and Prime Minister, in order to protest to him against the non-representation in the House of Commons of the then Board of Agriculture by anyone other than an unofficial member sitting on the Front Bench. The House of Commons were then complaining, and to-day your Lordships are in a similar position, but at that time we were given clearly to understand that if a Parliamentary Secretary were inaugurated in connection with that Department, each of the two Houses would have its representative, in order officially to state the opinions of the Government with regard to the country's greatest industry. I, for my part, in general terms support the Bill, but I do most sincerely deprecate what the noble Lord has described as the limitation, possibly for all time, of the development of this most essential industry, as I believe there is none more essential to the security of the country and the improvement of our agricultural methods.


My Lords, I do not want to take up the time of your Lordships at any length this evening, for I have had previous opportunities of giving expression to my views on the subject of beet sugar, but I cannot allow this Bill to pass its Second Reading in this House without entering my protest against what I think is the most complete and most scandalous instance in history of a Protectionist ramp. This Bill, in my judgment, violates every sound economic principle. I do not want to take your Lordships through the whole story. It is very well known. It began when, in an unfortunate moment, Mr. Snowden, a member of the Labour Government and Chancellor of the Exchequer, thought he could help an infant industry by a subsidy for a few years, to enable beet sugar growing to get on its feet in this country. Even the great economist John Stuart Mill said that you might help an infant industry to get a start and Mr. Snowden in a weak moment opened the door for the Protectionists who have followed him.

It was laid down that the subsidy was to last for ten years only, on a diminishing scale. It lasted its ten years. Forty millions of public money was spent. The larger part of it went to the investors in the beet sugar factories, a smaller portion of it to the farmers. There was no scarcity of sugar. There was no pretence that you were going to get a crop which would enable you to have sugar when otherwise the country would get nothing. On the contrary, there was in the world a surplus of sugar. Sugar growing was not very profitable in the West Indies before beet sugar was subsidised in this country. The sugar growers in other parts of the world were not making very large profits. Well, the deed was done, the subsidy has been paid, and at the end of ten years we had an inquiry into the working of the system. The Greene Report went fully into all the circumstances and explained—what was really well known before the inquiry—that sugar beet was not a profitable crop in any country in the world, and that it could never be grown in this country without a Government subsidy. They therefore recommended that the subsidising should be brought to an end, and beet left to resume its former position in British agriculture.

It is not uninteresting to notice, by the way, the growth of this legend. Sugar beet, which was a rare crop in old days, has now become the stable foundation of British agriculture, and we are told by the supporters of this Bill that without this crop British agriculture must infallibly die away. Well, what has been the result? The Government have not accepted the recommendations of the Greene Report. On the contrary, they have set them on one side, and are now going permanently to subsidise the crop. As a result of their operations shipping has suffered enormously, and we are coming down to subsidised shipping for the loss of freights due to the setting up of a subsidised beet sugar industry. The West Indian sugar grower surely had competition enough in the world before, but a new rival was brought in, subsidised by Government money in this country. And now a permanent subsidy is to be given to it.

Thus, there are three things all of which are repugnant to any one with a sound financial economic sense. The first of them is that public money is to be used to set up a monopoly. That is one of the criticisms which have always been addressed by Free Traders to Protectionists—that you take the public money in order to bolster up particular interests. This is an extreme case of that policy. The sugar factories are to be all united together in a monopoly, so that no fresh rivals can arise without the utmost difficulty. I listened with great interest to the noble Viscount, Lord Bledisloe, whom we knew well in the House of Commons as an agricultural authority, pointing out that in his part of the country he sees no means by which a beet sugar factory can be successfully started. I believe the Bill sets up a quite firm monopoly in the interests of the shareholders in the present eighteen sugar beet factories. The refiners, of course, have had to be squared. Without a reconciliation of the interests of the refiners and the factory owners the scheme could not go through, and after long negotiations behind the scenes the sugar refiners and the factory owners have come to an agreement by which they will be able to share out the Government swag. I am using the plainest language I can find. I am afraid it will be something of a shock to refined cars, but the thing is a grotesque ramp.

Finally, this monopoly having been set up, it is to be used to limit production—another of the evil effects of a Protectionist policy. You set up a monopoly, you square the interests, pressure is put in all directions, then you limit production, and presently you are hoping, as the noble Earl told us to-day, for a rise in the price of sugar. Well, sugar is not dear, but the cheaper sugar is. The moment the Government pay a subsidy to grow sugar, naturally they want the price to go up, and the general community in this country are sacrificed in the interests of those whom the Government see fit to subsidise. Looking at the whole history of the thing, it would have paid the farmers a great deal better if you had handed over to them £2,000,000 a year not to grow sugar than to do what has been done over the last twelve years in regard to the sugar beet business.

And may I say this to Lord Hastings, to whom I always listen with the greatest interest on this question, both because of his knowledge, his eloquence, his power of putting his point, and I think I may add his realisation of the other man's point. I am sorry he is not quite contented with the Bill. It is a little hard after all these years that he should not get complete satisfaction. But he really is indulging in too great a hope when he says the matter is finally settled now and put on a permanent basis. This subsidy cannot be put on a permanent basis. When financial pressure becomes heavier in this country—and it is growing year by year—a future Government will undoubtedly have to ask itself: "Where can we economise? Where can we cut off wasteful expenditure?" And there is no waste in the whole record of Government waste at this moment comparable with the money which has been paid out to the beet sugar industry.

Lay not the flattering unction to your souls that this is going to last for ever. You had agriculture put in an even stronger position than this in 1920, when the guaranteed price of wheat was put into an Act of Parliament. That Act was repealed within a year of its passing when financial pressure came on the country. And so it will be with sugar beet. The subsidy should never have been paid. When pressure comes it will be taken off. I hope those who are interested in agriculture will realise that, and not believe that this exotic crop can be the stable foundation of agriculture in this country. I do not know if your Lordships are going to divide against the Bill. I should like to vote against it, but it does not matter. You have your majority, you do what you will, but I leave it on record that, of all the Protectionist deals I have seen in the course of an unhappy experience now lasting many years, this is far and away the worst, and for that sooner or later agriculture is going to have to pay.


My Lords, the noble Lord who has just addressed us said he was going to use the plainest language, and he referred I think to this measure as a Free Trade ramp.


Protectionist ramp!


I beg jour Lordships' pardon. I am going to follow his lead by suggesting that the views he has advocated are a marvellous example of what I may call Free Trade futility. The reason I say that is that the noble Lord ignored altogether the points made by my noble friend below me as to the advantage sugar beet cultivation has been to agriculture. It is no small thing to put 400,000 acres under a very productive and most beneficial crop, to provide work for something like 30,000 people in agriculture alone, to say nothing of the subsidiary advantages to transport, to coal-mining, and to the jute industry of Dundee.


I did not go into that side of the question because I dealt rather fully with it last year, and I wanted to save the time of the House. I am not oblivious of the considerations which the noble Lord is now urging.


I did not hear the noble Lord on the last occasion, and I was not aware he had dealt with the matter, but surely it is material to bring out the advantages of the case and not dwell merely on the other side. It gives a very one-sided impression if you do not indicate both sides. There is another question, and that is the question of national defence. Surely in the matter of national defence food is a very important item. I believe that during the War, in 1917, we spent in buying something like 1,300,000 tons of sugar not less than £32,000,000, and we were then going very short. In 1919, the year after the War, we spent in buying rather more sugar no less a sum than £52,000,000, and the Sugar Commission, as my noble friend will be able to say, on one occasion—I think in 1920—had to pay for Mauritius sugar £90 per ton, and they bought 200,000 tons at that rate, paying £18,000,000 for what is considerably less than the amount we are now growing in this country. That is about one-third of the amount of the sugar crop in 1934–35. The cost of that crop to the country as a whole was £18,000,000, and of that amount £7,000,000 was paid to British, industries.

This measure may be repugnant to those who are upholders of sound financial and economic sense, but it represents a pretty good thing for the country both in peace and in war, and I suggest that from the practical point of view we would make a great mistake to follow the noble Lord in opposition to this Bill. There were two other points which the noble Lord made. He referred to the competition which this measure is introducing with the sugar growers in our Dominions and Colonies. We take every ounce of sugar that the Dominions and the Colonies produce; and, as regards shipping, if the noble Lord will consult the statistics he will find that so far from carrying less sugar, our shipping industry is carrying more sugar than ever before. This Bill is not perfect, but I consider it represents a great advance. Moreover, representing as it does a measure that was drawn up by the Socialist Party and first of all studied by Lord Noel-Buxton when he was Minister of Agriculture in the other House, and eventually introduced by the noble Viscount who leads this House, it may be regarded as a very good piece of national legislation, and I am sure it is in the national interests.


My Lords, I shall be brief, but I desire to associate myself in the first place with the protest made by my noble friend Lord Hastings as to the absence of any representative of the Ministry of Agriculture from the Front Bench in this House. It is quite clear that we want, not one representative, but a team of representatives of agriculture on the Front Bench if we are going to have many more Bills of this complicated kind. Your Lordships will observe that the noble Earl who introduced the Bill was careful to point out that Parliamentary control over this scheme was maintained through the Ministry of Agriculture. If Parliamentary control is to be maintained through the Ministry of Agriculture, it is surely very necessary that the Ministry of Agriculture should be represented in this House. If your Lordships' House is going to take its fair share in watching over this new scheme, it is absolutely necessary that persons who have the time to devote themselves to these questions should be represented on the Front Bench. No one knows better than I do the charm, courtesy, and competence of the noble Earl who now represents education in this House and speaks for agriculture. He has beaten me too many times in the Lobbies for me not to be able to recognise that he is one of the most competent "putters-up" of a case, if I may say so, of any of your Lordships in this House. But that is not enough. The man dealing with this complicated legislation must be able to give his whole time to it.

May I dwell for a moment on a personal matter? I interrupted the noble Earl to ask him a question, and I realise that my behaviour was eccentric and perhaps out of order. I should like to tell the House that I knew from private knowledge and consultation with the noble Earl that he had to leave the House owing to a necessary engagement, and I had come to a formal agreement with him that he should deal with certain points before he left which otherwise it would have been impossible properly to consider. I am not going to take up much time on this Bill. It is a difficult and complicated Bill, and its chief features were very well and very clearly explained by the noble Earl. The Bill is part of the new structure of industry which His Majesty's Government are gradually building up. It does behove us to watch very carefully how that structure is being built up and how each stone is being fitted in. When we were talking about the Cotton Spinning Industry Bill the other day, I pointed out that we were gradually committing ourselves to a piece-meal system of industrial organisation which involved us in some very startling and very anxious commitments. I pointed out then, and I point out again, that restriction is one of the principal features in this structure. In this ease it is limitation of production of wealth which could well be got out of the land if the farmers of England were only allowed the opportunity.

Your Lordships will have noticed that the noble Earl, in reply to my question, held out no hope that small holders would be allowed to cultivate even small patches of sugar beet and sell to the factories on contract. That is a very serious hindrance to the work of setting up small holdings which the Government, with another hand, has entrusted to another body of which I am a member. Sugar beet is essentially a small holder's crop. It is one requiring a great deal of manual labour and gives a reasonable return for that labour. The noble Earl who introduced the Bill did not, I think, appreciate that my suggestions were directed quite as much to the setting up of new small holdings as to existing small holdings, and if we are to take what he said as final it will be impossible on any new small holdings for the holder to grow sugar beet as a crop. You cut off one of the most valuable and suitable crops for a small holder that he can possibly have; yet you are anxious to take unemployed men from the distressed areas and establish them on the land. That is one of the consequences that follow from limitation of production.

Some of your Lordships may have noticed that I put down a long complicated Question about potatoes in regard to Mr. Rowley's case just before the holidays. The gist of that was that that particular landlord had had last year to pay a fine of £5 per acre, amounting to £250, in order to enable his tenant to grow fifty acres of potatoes, and that without that inducement he could not keep the tenant. In other words, he was fined for production. What followed? Potatoes were a short crop, and the Tariff Advisory Committee were asked to agree to reduce or knock off the tariff on main crop potatoes in order that more potatoes should flow into the country, whilst Mr. Rowley, whose case I was quoting, was prevented from growing them except under fine. The results of limitation of production are numerous, and hard to trace in some cases, but most important, and I do join with the noble Lord, Lord Hastings, in making our protest against that restriction. We could not ask, and we do not ask, for a penny more from public money. What I suggest is that that public money might have been allowed to be freely competed for by the farmers of this country.

Your Lordships will notice that very little has been said so far about the vastly important consequences of this Bill which deal with the quota agreement, and the refiners, and the licensing to refine. You will find there the other characteristic feature of this structure which is being gradually built up, and that is the imposition by Parliament of a monopoly on the trade. I will not go into that very big question to-night, but I do hope, when our minds are not so charged as they must be to-day with more important matters, Parliament will give very careful consideration to these important principles.


My Lords, the noble Lords, Lord Hastings, Lord Bledisloe and now Lord Phillimore, have all made a complaint that a very important agricultural measure is introduced by a representative of the Board of Education. As First Lord of the Admiralty I find myself even further removed from the soil than the representative of education. For that reason, with your Lordships' permission, I shall not attempt to arouse the ire of noble Lords who have spoken on this subject by attempting to reply in detail to any of the criticisms that have been made, except to say that the undoubted feeling of your Lordships' House as to having a representative of the agricultural industry on the Front Bench here is, I think, a very strong one, and I shall represent it to the Leader of the House at the first opportunity. It may be that one of the reasons against having a representative of the Ministry of Agriculture will be that your Lordships' House has already such a galaxy of agricultural talent, as has been exemplified by the speeches that have been made to-day. Several points have been raised this afternoon that I think your Lordships will agree are Committee points. The noble Earl who moved this measure has been called to a sick bed, and, as your Lordships know, there will be a Committee stage on the Bill. The noble Earl will then reply in detail to all the criticisms that have been made this afternoon. In view of that I will now ask your Lordships to be good enough to give a Second Beading to this Bill.

On Question, Bill read 2a, and committed to a Committee of the Whole House.