HL Deb 05 August 1943 vol 128 cc1118-28

Lord BEAVERBROOK asked His Majesty's Government for a statement of the actual cost of distributing milk in the six months following the Ministry of Food's Rationalization Scheme for Milk in October, 1942, compared with the cost for the corresponding period in 1941–42. The noble Lord said: My Lords, the issue raised in the question I have put on the Paper concerns the distribution of milk. The noble Lord the Minister of Food has carried out a great scheme of rationalization in the milk industry—that is to say, he has consolidated the system of milk distribution, closed up small businesses, put businessess out of existence and brought businesses into existence, all for the purpose of saving man-power and economizing in petrol and in wheeled vehicles. When I asked the Minister who gets the money out of this system of consolidated distribution, the Minister answered that the Treasury makes the money, and then he and I did some rejoicing over the profits accruing to the Treasury on account of the scheme of rationalization.

Now I come to your Lordships' House with a question as to the exact sum of money which the Treasury may have saved as a result of this transaction known as rationalization. The Minister is here to answer me, as it is his duty to do, but I am under the impression that the answer is going to be wrapped in impenetrable mystery. Therefore I think it best if I answer my own question. There has been no saving, none at all. The Treasury has received no money. I will anticipate the answer of my noble friend. On the contrary, rationalization is costing more money than distribution cost before the system was altered. That is not all. Rationalization has not done anything much for us in saving man-power. While rationalization has resulted in cutting down the number of employees in the important industry of milk distribution, at the same time rationalization has resulted in building up the bureaucracy. The intake into the Ministry of Food in the form of man-power which is at once turned into bureaucracy has been immense. Since the noble Lord who has done such a good job of work assumed office in the Ministry of Food he has added 25,000 bureaucrats to our already extensive list.


Not on account of milk.


No. I am congratulating you on the entire intake. I will come to milk in a moment. Of those 25,000 a large proportion is represented by those engaged in dealing with this rationalization scheme, for rationalization agencies have been set up all over the country. Wherever there is a Food Ministry office there is a little group of temporary civil servants, bureaucrats who are dealing with rationalization. Not much, if anything, has been done in saving man-power. If the Minister of Labour made a good haul on the bureaucracy he would get a much bigger supply of manpower than can be got from rationalization. What is the position from the standpoint of the consumer? He cannot get a regular supply of milk any more. Sometimes he does not get his morning milk until late afternoon. There is a certain saving of petrol there, but the waste is far greater than the saving brought about by rationalization.

Really it is on account of the waste and extravagance that I have come to your Lordships' House, but there is another reason. I have raised this question because rationalization is an abuse of the rights and privileges of the little man and constitutes another great advantage to the big combines. These combines are crushing the little man. Unless you stand by the little man you are going to see the whole milk industry pass into the hands of four or five firms. That is the consequence of the Ministry's policy. I have great admiration for the Minister. I have watched him work, I have worked with him and I have worked against him occasionally. I must say he has been our most splendid acquisition. At the same time I cannot see why this abuse of the little man should continue. Here is the simple position. The United Dairies, the Wholesale Co-operative Society, the Express Dairies and a number of others can all buy milk cheaper than the little man by a penny farthing to a penny three farthings. These big combines have an advantage over our little shop-keepers ranging from a penny farthing to a penny three farthings. That is the abuse which I want the Minister to put right.

I come again and again into your Lordships' House hoping that I may get some support, that I shall find some friends of the little man, that your Lordships will not be content to watch the United Dairies, the Wholesale Co-operative Society and the Express Dairies crush the lives out of these little men who have been the backbone of Britain and whose sons in the Eighth Army and in the Royal Air Force are serving their country magnificently. May I call the attention of the Minister to some of the abuses perpetrated under rationalization? I will tell him, for instance, of one little dairy in the North Country. I had a communication from a friend telling me that an inquiry was made about that little dairy because his Lordship's agents had put it out of business. The little dairyman had been compelled to hand over all his trade to a big firm. His name is C. Palmer and he was in business at Fernbank Dairy, Darley, Harrogate. He had been twenty years in business and is an old man now. He sold a thousand gallons of milk, and suddenly his business was closed up without any promise of compensation, without any prospect of compensation as far as he can see. He is told to transfer his milk round to a concern described as a combine dairy. All his milk producers raise a protest. They say that they cannot deal with the new dairy because the transfer of these thousand gallons overloads the new dairy, and, as a result, they get back dirty churns, churns which have not been cleaned. Some of their milk, they say, is returned sour, through the inability of this combine dairy to deal with it. They say that sometimes the milk is not delivered to the customer until it is three or four days old.

That complaint was transmitted to the Ministry, and the Ministry inquired into it. A Committee was appointed by the Minister. The Chairman of the Committee was Mr. H. A. Pepperall, who is, so far as I know, one of Lord Woolton's officials, and the members of the Committee included a Mr. Capstick, a professor of Reading University, and Mr. R. J. Hall. Now why is that abuse allowed to continue? Why is that injustice still perpetrated in that little village near Harrogate? The Minister told us that dairies, if they wished, could sell out, that producer-retailers, if they wished, could sell out, that they could sell their rounds when they are confronted by abuses. That is the very thing we complain of; producer-retailers, the little men, being compelled to sell their rounds by this sort of thing. They do not want to go out of business; they want to stay in it. You do not want to sell your great enterprise; I do not want to sell the shares I hold. We want to stop with the undertakings we have been brought up with. We have made them, and we are proud of them. Why should we be turned out? Why should these small dairymen be turned out?


I entirely agree.


YOU entirely agree! Well, a week ago you were telling me how these little men could sell out to big combines.


Oh, no.


You were saying that you were giving the big combines money with which they could buy up these small men. The small man with 500 gallons a day sells out to the United Dairies; he sells out and he gets a good price, a price of which—if I may use the expression in no sense in a derogatory manner—you boasted. He sells out at a good price, but United Dairies, by purchasing that milk round, receives from you £600 a year more than the little man got. Always United Dairies passes to a different level of remuneration which represents £600 a year more than the little man got from the Government. There is an addition of £600 a year. Of course United Dairies can afford to buy. It means that in buying they buy £600 a year, £600 a year for life, £600 a year for ever, and the milk round that was once the property of a little man is now swallowed up by a great trust, a great combine.

I appeal to some of the members of your Lordships' House. Why does not Lord Snell speak up? Why do not others who understand the trials, the worries and the tribulations of the little man in industry raise their voices about this abuse? How long is it to go on? Are we always to see the gentleman in the frock coat"doing in"the little shopkeeper? Are we always to see the process of the little shopkeeper being gobbled up till there is nothing left in the land but three or four great milk combines? I hope it will not be necessary to come back to this House again on this matter. Three times I have come here and raised it, and I hope that this may be the last occasion. I hope that forthwith we may get a fair deal for the little shopkeeper, the same deal that is now given to the big combines.


My Lords, in the first place, I think I ought to tell your Lordships that the noble Lord, Lord Beaverbrook, was good enough to put this question on to-day's Paper instead of yesterday's because at a late hour last night I had to go to a Cabinet Meeting and 1 asked him if he would therefore postpone asking this question. I had no idea from the question that he put down that he was going to deal with the issue quite in the way that he has done. I make no complaint about that at all; but it places me in just a little embarrassment, because the facts of the position as indicated in the question are facts with which I want to deal, and which I have prepared the reply for very carefully. Therefore, I am going to take up your Lordships' time by giving that answer because I cannot reply now on other matters which the noble Lord has put to me.

We introduced the new system of remuneration for the distribution of milk —the system to which the noble Lord has referred to-day—on the 1st October last. It is a system which will enable my Department in due course to give the actual cost of distribution, something which it has never known before. At the moment there are a number of claims still outstanding for the six months from October I, 1942, and I therefore cannot give that figure. It will be impossible to give comparable figures for the six months from October 1, 1941, as at that time milk was being sold at varying prices throughout the country, prices varying during different months of the year, and the information is not available as to the quantities which were sold in the separate areas to which the varying prices and, consequently, the varying margins applied before the introduction of this price structure, on one point of which—and only one—the noble Lord and I are in disagreement.

However, were it possible to give the costs of distribution during the six winter months of 1941–42, it would be misleading to compare these costs with those incurred during the six winter months of 1942–43. Under the system prevailing before October 1 last, distributors' margins varied between winter and summer, and were actually lower in winter than in summer. This was adopted to provide the producers with a higher return during the winter months. On the introduction of the new system on October 1, 1942, distributors' margins over the whole field were averaged so as to avoid these fluctuations in earnings between winter and summer respectively. This was done without affecting the system whereby the return to producers is maintained at a higher figure in the winter months. The result of this change, which is generally beneficial, is that it is statistically impossible to make comparisons between these two periods. Distributors' margins are now reviewed at six-monthly intervals in the light of a continuous costing investigation.

The noble Lord has, with great persistence and obviously with great belief, taken the view that I have done some-thing in this matter which is not right.I shall have the new costings in a few months' time. If I then find that thesystem which I have introduced is not equitable, I shall have no hesitation in coming to you and telling you that I have altered it. I hope that that will give the noble Lord some satisfaction. I shall then be dealing with actual figures and I shall know, as we have never known before, what the costs for fixing the margins are. I offer that to the noble Lord in the hope that at any rate he will be convinced that my mind is not closed on this issue. I am not taking my stand on anything but the actual figures, and, when 1 have those figures, I hope that 1 shall be able to satisfy him—but I shall certainly have to satisfy myself first— that I have been just to all classes of the trade. Then the noble Lord asked me whether I have really in fact saved any money for the Treasury. The last review which we made of these figures was on March I, because the intervals are six-monthly. The reductions then made represent a saving of £2,250,000 per annum. The noble Lord may not think that that is a very large amount of money, but at any rate we have made some contribution to the Exchequer by reducing the margins which the distributors had.

The continuous costing investigation takes into account savings resulting from the rationalization of retail distribution, but this rationalization was not undertaken to reduce costs. I did not do this in order to reform the milk trade; it was done to save man-power and transport for use elsewhere in the national effort. Retail rationalization schemes have been or are being introduced in 95 London districts, 513 provincial areas in England and Wales, and 68 areas in Scotland. So far, statements have been received of the actual savings made in 217 of these areas. The savings in labour are 16 per cent.; in vehicles, 15 per cent. in mileage covered by roundsmen, 33 per cent.; and in petrol used, 33 per cent. If savings on the same scale are achieved in the remainder of the areas in which rationalization schemes are being introduced—and I have every reason to suppose that they will be—they will represent a total of 10,000 full-time employees, between 3,000 and 4,000 part-time employees, 9,000 vehicles, nearly 45,000 gallons of petrol per week, and over 1,000,000 miles covered by roundsmen per week.

The noble Lord was not quite fair when he said that I had taken large numbers of people into the Ministry of Food to carry out this reorganization. The numbers in the Ministry of Food are a constant source of regret to me.


I am sure they are.


The noble Lord knows quite well how very difficult it is to reduce the size of a Department.




I am sure, however, that he will want me to tell him this. The Milk Division of the Ministry of Food consists of less than 1oo people. The number dealing with rationalization at headquarters is six. The work in the provinces is done by Associations set up by the trade, and we have no officials in them. On the other hand, there is a little extra work being done in the food offices. I do not know the number of people engaged there, but I do want to give this assurance. The noble Lord was justifiably afraid that we might have brought in a rationalization scheme which is involving the country in enormous extra manpower. This is not so. The savings which I have given you are really very substantial. A reduction of 10,000 full-time employees will represent a saving which. I was bound to make when I was asked by the Government to see what I could do to reduce the man-power in this trade.

Milk, as your Lordships know, is one of the foods which is being subsidized for the dual purpose of benefiting the health of the nation and keeping down the cost of living. The Treasury subsidy for the national milk scheme and for the milk in schools scheme costs £17,000,000 a year, and the reductions in margins to which I referred are to be devoted to the reduction of that Treasury subsidy. I hope that, notwithstanding the absence of the specific figures for which I was asked, I have been able to show your Lordships that the scheme: introduced on October 1 last for rationalizing milk distribution has effected considerable savings in manpower and motive power, as it was designed to do, and that the organization which now exists for controlling trade margins has ensured that the financial benefits of these savings shall accrue to the Exchequer.

I was distressed by the noble Lord's story about the man near Harrogate. My memory does not carry me to what happened, and your Lordships would not expect it to, but I can assure your Lordships that I shall at once inquire into it, because I am very anxious about this. I know that we are at a very late hour at the end of these sittings, but I do want to say this. The noble Lord made a most moving plea for the small man. Look at my history at the Ministry of Food. I have kept all the small grocers and other small people in existence as far as it was possible to do so. Every federation of grocers and other traders will tell you the same story—that they are better off now than they have been before, because so many more are in a financially stable position. I thought that that was the right thing to do during this period of the war. We have paid for it a little, but it is worth it.

On the question of milk rationalization, my instructions have been specific and definite and entirely in accordance with what the noble Lord has said about the small man. I have told them that every man who is in the trade is to have a round —his allocation of gallonage—unless he desires to go out. And, after all, people do sometimes desire to go out. I have gone out of business and did not want to do so. The noble Lord had to go out of business when he took office, and I am sure he did not want to. There are sometimes people who want to go out of business; they want to sell their businesses. And I have given to them by this system of allocated gallonage something which they can sell if they want to, and which nobody can force them to sell. I think, in spite of the language which the noble Lord used, there is so little difference between him and me that I wonder whether he really has any legitimate complaint of the way in which I am treating the smaller traders.


My Lords, the advantage which the Co-operative Societies and the United Dairies and the Express Dairy dealers enjoy over the producer-retailers and the dairymen is 1¼d. to ¾d. If the noble Lord gives me a pledge that he is looking into that situation with the hope and prospect of rectification I shall be completely happy, for I know that if he ever looks into it he will rectify the terrible wrong that has been done. I do not think he knows what is, going on. All over the country everywhere wretched little men are being driven out of business, as they are unable to carry on. They are not getting enough trade to live on. The noble Lord says that he has secured to each of them the trade that he was doing. He has limited each of them to do no more trade.


But still they keep alive on it.


But the moment you make the slightest restriction in the supply of milk to the customer you strike at that little man's business, and you leave him over and over again at a disadvantage in relation to United Dairies and unable to exist. There are countless numbers of them writing to me every day, telling me that they are making a penny a day, they are making a shilling a week, they are making a pound in a month, and suchlike profits—just because of the rigidity of this scheme of the noble Lord, which is putting them at a terrible disadvantage. I do not wish to repeat what I have said, but I will now go hence in the hope that the pledge the noble Lord has given here to-day will lead him to an examination of the position of the little man, and then—justice for all of us and a fair deal for everyone.

House adjourned.