HL Deb 11 July 1938 vol 110 cc702-15

Order of the Day for the Second Reading read.

THE PAYMASTER-GENERAL (THE EARL OF MUNSTER)

My Lords, I beg to move that this Bill be read a second time. It will be within the memory of noble Lords that the Chancellor of the Exchequer announced in the course of his Budget statement that the Government had made certain purchases of essential commodities—namely, wheat, sugar, and whale oil, and that in order to avoid any undue fluctuations of the market these purchases had been carried out with the utmost secrecy. The action which has been taken by the Government has, I think, been received with general satisfaction by all Parties in the Slate, but although the procedure adopted has been unusual, the course we have taken is undoubtedly justified when all the relevant circumstances are considered. This Bill is, therefore, necessary to legalise and approve the action already taken by the Government, and to enable further expenditure to be incurred in increasing stocks of food, forage, fertilisers, and petroleum products. The creation of this reserve is an essential part of national defence, and an assurance that in the event of a sudden emergency stocks of essential commodities shall be maintained at a level sufficient for the needs of the civil population during the early months of any such emergency.

It will be quite apparent to noble Lords that if war broke out and that hideous form of insanity again engulfed this country and the world, there would conceivably be a serious dislocation of the machinery of distribution of food supplies consequent upon the destruction of property by aircraft and upon the diversion and delay of merchant shipping. It would be imprudent of any Government not to take adequate precautions in peace time against any delay that might occur from the causes which I have mentioned. The creation of these reserve stocks is not advocated as a means of maintaining a beleaguered nation, but rather as a safety measure against occasional and temporary shortage. Our freedom and our security depend upon the command of the seas, and every Government plans and prepares its defence measures with a view to final victory and a successful conclusion of hostilities.

Before I enter into an explanation of the Bill before the House, it would be useful if I gave a brief outline of the arrangements made by the Government for the custody of the stocks already purchased and the proposals for the replacement of such stocks to avoid loss by deterioration. The first commodity essential and vital for preservation of human life is wheat, and it is generally known that wheat is not a commodity which will keep for any length of time. Accordingly, when the Government made this purchase through Messrs. Rank and the Co-operative Wholesale Society of England, its custody was entrusted to these two firms and to the Co-operative Wholesale Society of Scotland and Messrs. Spillers, Limited, who will at the appropriate time take over this wheat in order to avoid deterioration. They have at the same time given an undertaking that they will maintain their own commercial stocks at the normal level and no remuneration or commission will be paid for their services apart from out-of-pocket expenses. By this course it will be possible to avoid the necessity for the Government to sell wheat on the open market which might seriously interfere and disturb the normal business in this commodity. All wheat so purchased will be stored in the ports almost entirely on the West Coast. Reliance is being placed on the principle of dispersal and the wheat reserve will be spread over as many centres as practicable.

Next I turn to sugar which has already been purchased and will be placed in the custody of the British Sugar Corporation, who will be responsible for the technical supervision of this reserve and will undertake in consultation with the Food Department of the Board of Trade the turning over of this stock when necessary for the purposes of avoiding deterioration. I understand that the reserve will consist of "preferential raws" the greater portion of which is home-grown. It will be stored at various centres in this country and arrangements have already been completed for the erection of new warehouses to accommodate this commodity. The British Sugar Corporation is giving its services without cost and only actual expenditure will be repaid. Lastly, I come to an explanation of the purchase of whale oil which is by far the most suitable source of edible oils for storage purposes on account of its superior keeping qualities, for it can be kept for long periods without any fear whatever of deterioration. Accordingly the problem of turning over stocks of this commodity is much simplified. We intend that this reserve shall be used during an emergency for the manufacture of margarine and cooking fats. Although arrangements are not so far advanced as in the case of sugar and wheat, the purchase has been completed and steps are now being taken for its custody and supervision. Those are the three commodities which have already been purchased and the Government do not at present contemplate any further purchase of these products.

Before I sit down I think I should give your Lordships an explanation of the principal clauses of the Bill. Clause 1 gives power to the Board of Trade to obtain information as to the amount of existing stocks and storage accommodation. Although we have received considerable assistance from the majority of traders by voluntary methods the object of this clause is to require a few persons who have not yet responded to fall into line. Subsection (1) of Clause 2 gives power to the Board of Trade to enter into arrangements for additional reserves to be held of any essential commodity by the trader concerned, the trader remain- ing the owner of the additional stocks and being recouped of his expenses if necessary. Arrangements may also be made for assisting traders to provide increased storage accommodation and the necessary statutory authority is also provided for payments being made to traders by way of grants or loans for these purposes. The second subsection of this clause gives power to the Board of Trade to acquire and store stocks of any essential commodity and to erect the necessary accommodation for the preservation of stocks acquired. The third subsection is, I think, of the utmost importance. If it became apparent that the reserves were no longer necessary the question of the disposal and liquidation of these stocks is a matter requiring careful consideration and accordingly these reserves will not be disposed of except after subsequent legislation. By this method we shall remove anxiety among traders that the reserves might be suddenly thrown into the market with a heavy fall in price, and I believe we may confidently anticipate that the ordinary methods of the sale and purchase of stocks on the open market will remain undisturbed.

Clause 3 establishes an essential Commodities Reserve Fund into which moneys voted by Parliament will be placed, and all expenses will be paid from the fund subject to the approval of the Treasury. I do not think I need weary the House with any explanation of the last three clauses, which are, I think, practically self explanatory, but your Lordships will note that the Schedule to the Bill sets out the commodities which may be declared to be essential commodities. That is the history of this important Bill. I now beg to move that it be read a second time.

Moved, That the Bill be now read 2a.—(The Earl of Munster.)

LORD STRABOLGI

My Lords, I am sure your Lordships would wish me to thank the noble Earl the Paymaster-General for the very full and clear explanation which he has given in the fewest possible words of this complicated and important measure. It raises very large issues which I will deal with as briefly as possible. But in the first place I would like to ask a question of which I have given short previous notice to the Paymaster-General. Your Lordships will observe that the Bill empowers the Govern- ment to store against emergency certain limited articles of food, forage for animals, and fertilisers for land and the raw material for the production of the same, and, in addition, petroleum and petroleum products. That is in the Schedule and we are limiting the reserves of these commodities, which broadly speaking, are food and petroleum.

I would like to ask why the Bill has not been extended to include other necessities and raw materials, and in particular certain metals. Your Lordships will be aware that this is a Bill to meet the possible emergency of war and should that emergency arise the supply of certain raw materials, particularly metals, will be absolutely necessary. To give three examples, I include in metals copper, tin and nickel. It would be very dangerous indeed if we were caught short of certain of these commodities which do not come within the terms of the Schedule. In that connection may I draw your Lordships' attention to the importance of mercury for the manufacture of explosives? The main supply of mercury is in Spain and is no doubt an object of prize for either the Germans or Italians in the Spanish Peninsula, and the time may come when we may find supplies of mercury cornered by Germans or Italians. I make no apology for mentioning this matter. Furthermore—and I want this next remark of mine to be treated with discretion—it may not be a bad thing in the present state of the world to take off any surplus of these essential metals for munition production from the market, not a bad thing at all; in fact for a long time in my personal capacity I have advocated that the Powers friendly to ourselves should go out of their way to corner the world supplies of certain essential metals. We should have heard far less of war dangers in Europe if that had been done when it was first advocated by my friends and myself.

With regard to the general question of essential commodities being stored, it is very remarkable how either a war or some apprehension of war brings in a measure of Socialism. This is, of course, a Socialistic measure and I welcome it on that account. It has long been part of the policy advocated by my noble friends and myself and by my honourable friends in another place that Import Boards should be established. We want to keep prices stable by making bulk purchases of just these kinds of commodities—wheat, sugar and whale oil—in order to prevent fluctuations in price which are so disadvantageous to producers and also to consumers, and with the object of course, in the end, of keeping down prices to consumers. When there is an emergency or an apprehension of emergency then we get a limited instalment of this policy brought in by a so-called National Government, and I congratulate the Tories on one more phase of Socialism forced on them by recent events and recent threats from certain quarters on the Continent. The only thing we wish is that it had been carried a little further, because we have always advocated this, not as a war policy or as a preparation for war, but as a peace policy. Long before the clouds gathered over the European horizon we were advocating this very principle which the Government are now putting into force.

The next matter I would like to refer to is this. The operation of this scheme is limited. I understand from what was said by the Minister for the Co-ordination of Defence in another place that the cost of this in the first instance is of the order of £7,500,000. I see the noble Lord, Lord Ritchie, in his place. He knows something about imports into the Port of London and other ports. I think I am right in saying that £7,500,000 covers about a fortnight's supply of wheat and sugar and whale oil. That is not very much. We hear from time to time that supplies of food in the country suffice for only about six weeks. I have always said that that was an exaggeration, but when we are told that we must build up the Navy and so on one of the reasons given is that we have only six weeks' food supply in the country. This will only increase it to eight weeks. It is not very much. I should have thought that if we are going to do this job at all we should do it thoroughly. This money is not wasted, because it will be turned over. I presume that the price paid was a fair one, that it was a cheap price. Indeed, it is an investment. I would much rather see the country's resources going into the necessities of life than into gold which is sterilized in the vaults of the Bank of England. I suggest, therefore, that although the policy is a good one it has been conceived on too narrow a basis.

There is another suggestion I would like to make to the noble Earl the Paymaster-General, to His Majesty's Government and to noble Lords opposite. It is all very well storing wheat which deteriorates, and sugar which deteriorates, and whale oil which keeps for a long time, but I suggest that in the end the best storehouse is in the productive, well-fertilised soil of the country. Since noble Lords opposite have been in office 1,000,000 acres of land have gone out of cultivation. Flocks and herds are the natural store place of food supplies. If we have a flourishing agriculture we need not have such fear of trade routes being temporarily interrupted or ports destroyed. This matter is very important indeed. I am not going to develop it to-day, because my noble friend Lord Addison is going to bring it up in debate to-morrow, but there is a great deal in what I have ventured to say to your Lordships. The Conservative Party particularly have been most remiss, if I may be allowed to criticise the dominant Party in the present Government, in allowing this deterioration in the agriculture of the country.

I would like to be allowed to say that I agree with the Paymaster-General in what he said with regard to command of the sea and the defence of trade routes. Of course we must keep command of the sea. That is self-evident. But now we have a new weapon in the long-range bomber. All the time bombing aeroplanes are increasing in range and power. As we have seen by the recent almost miraculous flight of a Royal Air Force formation, even further distances are capable of being covered by these dreadful weapons of destruction. We have a precedent created in Spain again by the bombing of the harbours there, to the loss and detriment of British seamen and British ships, with the connivance of the present Government and with almost the approval of the present Prime Minister. It is a precedent that may serve us very ill in the future. When my noble friend Lord Snell protested in debate against what is going on in Spain, it was not simply because he has natural sympathy with the Republican Government of Spain but because he and my other noble friends have taken a much longer view of the interests of this country. It will be of little use placing our stores on the west coast as the noble Earl, the Paymaster-General described. Indeed, with a balloon barrage on the East coast it may be easier for high flying bombers to reach the west coast ports. I should have thought the obvious point of attack would be where the attackers were not expected. The problem may well be to defend the long western seaboard.

This is a very real danger. We may have an interruption of food supplies for a considerable time. If that is the case, I should have thought this Bill should have been drawn much more widely. However, it is permissible. There is no limit, as I read the Bill, to the amount of money that can be expended on the storage of essential commodities. I presume that this is only an instalment. I can understand perfectly well that the Government had to act secretly and quickly in their first purchases, and I dare say they will have to act quickly and secretly in further purchases. Giving them credit for that, I do not want to probe too deeply into the matter. With regard to the principles of the Bill, as the noble Earl the Paymaster-General said, it has been welcomed by all three Parties, and, speaking for my noble friends, we offer no opposition to the Second Reading.

LORD RITCHIE OF DUNDEE

My Lords, I should like to make one or two observations about this Bill. The noble Earl who introduced it told us that the Government are to lake powers to augment stocks of essential commodities in two ways—by granting loans to traders to enable them to augment their stocks and improve their storage facilities, and by the Government themselves acquiring and holding stocks. Of the former of these methods I have no criticism to make at the moment, provided that traders are not restricted in any way as to the port or place in which the increased stocks shall be stored, and that they are free to import their goods through the port they consider to be most suitable for the needs of their business. But I am convinced that if the Government pursue the latter method—that is, the method of themselves acquiring and holding stocks—they will not only fail to achieve their object of augmenting the total quantities held in the country generally, but they will bring about precisely the opposite result. I say that you cannot expect merchants to carry on their normal business and to import and hold their normal stocks in the country when they have the nightmare of Government-held stocks which may be realised any day owing to the fact that they are perishable, weighing on the market. I earnestly hope that the Government do not intend to pursue this policy, because I believe it will be disastrous to trading interests generally and will result in the diminution rather than the augmentation of stocks throughout the country.

But there is another aspect of this question which concerns me as Chairman of the Port of London Authority. What effect is this policy likely to have upon the Port of London? I know that the policy of the Government is to store goods almost anywhere except in London because of its supposed vulnerability to enemy aircraft. In time of war, of course, every sacrifice must be made. But if, before the emergency arises, the policy of the Government is to accumulate stock of all such commodities as may be considered essential in time of war and store them elsewhere than in London, the effect on the Port of London will be disastrous. I suppose there are probably something like £80,000,000 of money invested in the docks, wharves and warehouses in the Port of London and that there are something like 30,000 men engaged in handling the goods that come in and out of the Port of London. It is hardly necessary for me to point out what would be the result upon the Port of London Authority and the other owners of property in the Port, and upon the men employed in the Port, if trade were seriously diverted. I suggest that it is unnecessary, until the emergency arises, to interfere with the trade of the Port of London, and undesirable, provided arrangements are made to ensure the evacuation of essential commodities from the warehouses in time of emergency.

I am informed by those intimately connected with the wharfage and warehousing operations in the Port of London that stocks of important commodities could be speedily removed should the occasion arise, and that a scheme of evacuation could be brought into operation when necessary, before or during war, and that thus the grave dangers of dislocating established trades and incurring heavy losses would be avoided. I should like to assure the noble Earl that the Port Authority are anxious to assist the Government in the proposals contemplated in this Bill. We are, however, aware of the complexities of the various trades concerned and of the sensitiveness of markets. We fear that operations by the Government under the suggested powers may dislocate markets and possibly involve the Government in heavy losses without achieving the object which the Government have in view of increasing the total stocks of essential commodities in the country.

I would venture to offer this suggestion to the noble Earl: that in any future transaction in other essential commodities than those with which the Government have already dealt, where the trade is in the hands of importers, merchants, brokers or dealers, the best course would be to use only the powers in the Bill which enable the Board of Trade to make grants or loans to the traders concerned for the purpose of inducing the augmentation of the stocks of any such commodities held by them; and that the traders with whom arrangements are made for the augmentation of stocks should be free to import their goods by the ports they consider to be most suitable for the needs of the business. I would suggest this, too, for the Government's consideration: that all retailers and provincial distributors should be induced to increase their stock of suitable foodstuffs and possibly to enlarge the storage accommodation in their shops. By this means large quantities of such foods as canned goods, tea, coffee and cocoa could be distributed to every town and village in the country and be a valuable reserve in time of emergency.

THE EARL OF CRAWFORD

My Lords, I should like to say a word or two about the speech to which we have just listened. I agree with Lord Ritchie that the storage by the retailer is a very profitable method of placing reserve goods in various parts of the country. At the present moment the storage of wheat is storage as wheat, and everybody knows that the wheat is all in the ports, and of course the ports are probably the more vulnerable for air raiding in consequence. The best way to hold reserves of foodstuffs is not in the form of wheat, but in the form of flour. That is the second stage of rendering it consumable; and, of course, as Lord Ritchie has said, it can be much more widely distributed than by means of the mills. Measured in numbers, I suppose there are four big milling companies in the country, and there must be nearly forty thousand retailers of flour. That gets it nearer to the consumer.

But after that I really do not think that I agree with anything which Lord Ritchie has said. He asked the Government to limit their Bill to using loans. Loans are a purely subordinate part of the Bill. They are not the operative part of the Bill. Loans are put in for the convenience of the trader, to enable him to perform the major operation. Lord Ritchie looked upon it as if it were the principal object. Then he suggested that traders should be entitled to choose their place of storage and, still more striking, that the trader should be allowed freedom as to the destination of his goods. That is to me quite inconceivable, and is entirely to forget all the lessons of the Great War. Of course the trader can have no freedom whatever to settle the destination of his goods, and after the war has been on a fortnight he will not have any freedom in the choice of his goods. Let us recognise that fact at once. The goods will have to be brought to this country by means of convoy, and that the trader in London should be entitled to say that his goods shall not go to Liverpool or elsewhere is impossible.

LORD RITCHIE OF DUNDEE

I did not say during a war.

THE EARL OF CRAWFORD

We have to prepare these things before war breaks out, but the noble Lord wants us to go blindly on and then when war breaks out to extemporise some operations. I think the Government have done the right thing. I think it is hateful to have to trade in this way, but it is one of the inconveniences of war. I would make one other observation. Lord Ritchie said there is the nightmare of Government held stocks. We experienced that during the War. In those days it was the Government entirely, operating and buying and selling foodstuffs and commodities. With a little care this nightmare can be exorcised. So far as wheat is concerned, private industry and enter- prise in importing and distributing wheat in this country was rehabilitated during the Great War, and it was done in such a way that I do not think anybody lost a penny. By taking the importing and distributing trade into the confidence of the Government these things can be rehabilitated without loss, as was shown during the last War. I approve of this Bill very much indeed, and I hope that the Government will not delay until war begins the essential organisation for looking after the food supplies of the country.

THE EARL OF MUNSTER

My Lords, the Bill of which I moved the Second Reading is one which appears to have had support from all the political Parties in the State, but there were one or two very critical remarks made by Lord Ritchie to which I will reply in the course of a few moments. Lord Strabolgi addressed one or two questions to me. He asked why the Schedule was so limited in scope. He criticised the Schedule, and said that it should include pig iron, and, I understand, copper, mercury and other substances. I think, if my noble friend will, he should look at this subject in this light, that this is a matter of policy as to what additional quantities of various commodities should be stored in this country in the event of any emergency. My right honourable friend has made very careful inquiries into many of the substances and products which the noble Lord mentioned, and he is satisfied that at the present moment it is not necessary to take the power, by extending the scope of the Schedule, to include those commodities and products which the noble Lord mentioned.

As regards agriculture, I hardly think that this is the appropriate moment to elaborate the agricultural policy which the Government have in mind, but I have no doubt whatever that that question will be amply debated and discussed upon the Motion which the noble Lord, Lord Addison, has put down for to-morrow. The noble Lord opposite also raised the question of how long these food supplies would last in this country. Of course it would not, obviously, be in the national interest to disclose the period during which these essential commodities will last, but I can assure the noble Lord that it is certainly not a fortnight, which I think was the figure he mentioned in the course of his remarks; and I think—I endeavoured to make a point of it during my Second Reading speech—that if we hold the command of the seas we shall in all probability not have an interruption of imports for any very prolonged time.

I turn from that to one or two points made by Lord Ritchie. He first of all discussed the question of the nightmare of Government-held stocks. In the course of the remarks which I made on the Second Reading I did draw your Lordships' attention to the clause in the Bill which sets out that these commodities must not be disposed of, except by subsequent legislation. I cannot help thinking, in my own mind, that that really does answer the whole question which Lord Ritchie raised.

LORD RITCHIE OF DUNDEE

Even if perishable?

THE EARL OF MUNSTER

Even if perishable. These stocks are going to be turned over, and the companies will take the stock over to avoid deterioration. If in the future we find that we can rid ourselves of these commodities which the Government have purchased, then additional legislation must be introduced, and come before this House, to sanction the disposal of those commodities. Therefore I really cannot see the fear which the noble Lord expressed, that this might seriously damage the various trading concerns, for it was the very intention of the Government, in insisting upon future legislation, to avoid any sudden collapse in market prices due to any flooding of the markets. Of course I cannot give the noble Lord any undertaking whatever that in any future transactions the trader shall have the opportunity of saying where these commodities are to be stored. It raises the whole question of the vulnerability of various districts in London, and in the British Isles as a whole, and of course that is one matter which my right honourable friend has to take into consideration in arranging for the storage of any of these commodities. I am not sure that there are any other points with which I need deal at the present time, but I hope that I have satisfied the noble Lord in regard to the criticisms which he has made and which I cannot believe to be anything but unfounded.

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