BRITISH WOOL (GUARANTEED PRICES) ORDER, 1955

HL Deb 24 March 1955 vol 192 cc151-7

3.22 p.m.

EARL ST. ALDWYN rose to move, That the British Wool (Guaranteed Prices) Order, 1955, reported from the Special Orders Committee on Wednesday, the 16th instant, be approved. The noble Earl said: My Lords, this draft order also is laid before your Lordships under Section 4 of the Agriculture Act, 1947, and it is designed to take the place of the British Wool (Guaranteed Prices) Order, 1951, so as to provide for changes in the arrangements governing the guarantee for wool. The changes are intended to make the operation of the guarantee more flexible. If they are approved, this order will be followed by the usual annual order fixing the guaranteed price for the year 1955–56 on the new lines, and by a new financial agreement with the Board which will accord with the new order and will extend the period of operation of the price stabilising fund.

Your Lordships may remember that wool was the first product for which the guarantee under Part I of the Agriculture Act was effected through the mechanism of a marketing scheme. Before the British Wool Marketing Scheme came into operation there had been no opportunity for gaining experience in working schemes of this kind, so I do not think it is surprising that the arrangements made then were not perfect. They were designed to run for five-year periods and we have waited until the fifth year before proposing changes in the light of experience. Broadly speaking, two changes are being made by this order. The first affects the Board's obligation to pay certain sums to producers. The second concerns the marketing allowance which was determined each year under the 1951 order. The arrangements for implementing the guarantee for wool are complicated but with your Lordships permission I will try to explain them briefly.

Under the 1951 order the Ministers fixed an average price for wool at the point of sale from the sheep farmer to the Board. The Board was then required to draw up a schedule of prices for each description and grade of wool so that the weighted average of these prices should by the end of the year as nearly as possible be not less than the guaranteed average. If the Board misjudged (and it is a very difficult calculation) it had to meet the cost of any over-payment out of its own funds and any under-payment had to be made good unless the Ministers agreed to relieve the Board of this obligation. In fact, the Board has been extremely successful in making these calculations and has never so far been more than 2d. per pound out. In three years there have been very small under-payments. If the Board had been obliged to make these good by supplementary payments the cost of the extra work, stationery, postage and other things would have swallowed up far too much of the total sum involved. The Ministers therefore permitted the Board to keep these sums in reserve. We have now come to the conclusion that this provision requiring the Board to distribute a precise sum to producers, the overwhelming majority of whom are its own voting constituents, is cumbersome and unnecessary. Therefore this provision is left out of the draft order now before your Lordships. Under the terms of this order the guarantee will be to the Board and its distribution will not be restricted by order.

As regards the second change, the Government have each year fixed a marketing allowance in advance at so much per pound of wool, and the idea of this at the outset was to allow the Board to keep anything it could save out of this allowance, while it would have to bear out of its own funds any amounts by which it over-stepped the allowance. Now that we have had some experience with this we have come to the conclusion that there is no real distinction between the guaranteed price and the marketing allowance. Moreover, it has involved the Government each year in stating what amounts to an opinion on how much it was worth while for the Board to spend on marketing its wool. This we think is inappropriate, and we have therefore left this provision out of the new order.

The result of these two changes is that the guarantee under this new order will be to the Board and will apply at the point of sale to the wholesale buyer. That is to say, the Government will be guaranteeing the price which will be received by the Board after it has paid its marketing costs. The rest of the order—which is the most important part—is unchanged in substance, though it has been reworded to take account of the consolidation of the marketing allowance with the guaranteed price. There will therefore continue to be an arrangement between the Ministers and the Board to set off profits and losses, taking one year with another, with the Exchequer standing behind the Board as guarantor if the losses should exceed the profits.

We are indebted to the producers representatives for their helpful co-operation in drawing up these proposals, and the Board is to be complimented on the success of its operations. With the help of these guarantee arrangements a high and stable price for British wool has been maintained without any call on the Exchequer; and, though prediction is very dangerous where markets are concerned, the present prospect seems to be that this happy state of affairs will continue. I beg to move.

Moved, That the British Wool (Guaranteed Prices) Order, 1955, reported from the Special Orders Committee on Wednesday, the 16th instant, be approved.—(Earl St. Aldwyn.)

3.28 p.m.

THE EARL OF LISTOWEL

My Lords, I am obliged to the noble Earl for explaining the important and extremely intricate differences between the proposed Wool Marketing Scheme and the existing scheme. I think that this is a case where everyone has learned from experience. The defects of the old scheme have become manifest and the Government are now trying to remedy those defects by means of this new order. I think that when this new scheme comes into operation it will prove to be simpler to operate than the old scheme. It is extremely satisfactory that the farmers, the Board and the Government have all agreed about its advantages. I should like to associate myself with what the noble Earl said in this regard: that it is a tribute to the efficiency and the good will of the Wool Marketing Board that they appear to have earned the complete confidence of the farmers. I hope that this happy state of affairs will continue in time to come.

3.29 p.m.

LORD LUCAS OF CHILWORTH

My Lords, before we pass this order I wonder whether the noble Earl would give his attention or draw the attention of Her Majesty's Government to something which I understand is causing our woollen manufacturers in Yorkshire grave concern? I think the order which we are now discussing affects the problem. I am referring to the use of tar, pitch and other insoluble mediums with which fleeces are marked which substances cannot be removed from the wool without the use of a detergent or chemical which is highly dangerous to the operatives in the textile industry of Yorkshire. I understand that this is a very serious matter. It arises in regard to not only our own fleeces but also the fleeces that come from Australia. As the noble Earl will know better than I, there is now available a modern marking solvent which will not cause the fleece to deteriorate so much. I am told that manufacturers in industries exporting to America are losing many thousands of pounds through their inability to remove this pitch and tar marking from fleeces, and therefore from yarn, and that it will not take the very highly coloured dyes demanded by consumers in modern conditions. Can the noble Earl tell your Lordships whether Her Majesty's Government are prepared either to put a premium price on clean wool or to bring in legislation to prohibit other than clean wool from coming into the country and being marketed? Such an assurance might help our textile manufacturers, and I feel sure that anything which can help those manufacturers to face the present stiff competition in overseas markets will receive the ready support of Her Majesty's Government.

3.32 p.m.

LORD NUNBURNHOLME

My Lords, I rise in great humility to oppose this order. I come from Romney Marsh in Kent. The Rye National Farmers' Union have passed a resolution against the order. The Romney Marsh Union have not yet met to discuss the order because it has been pushed through at such short notice. This seems to be an order produced not by a Conservative Government but by a totalitarian Government. No wonder noble Lords on my left have approved it! I should like to bring two points to your Lordships' notice. First, the Wool Board have come to terms with Her Majesty's Government without carrying out their obligations to their members—the producers of the wool—as laid down in the first Annual Report in 1951 and confirmed in the first annual general meeting in that year. It was then said that the ultimate disposal of any quinquennial surplus not required for the operation of the scheme would be decided by the producers in the annual general meeting, in the light of conditions obtaining in four years' time, when the amount of the surplus was known.

I believe there is a surplus of some £2 million to £3 million. So far as I can see, this order "snaffles" that surplus, made by the 1950 wool clip, although the producers were promised that they would have a voice in deciding what should happen to it in five years' time. Her Majesty's Government have "snaffled" that sum and have given to the farmers a guaranteed price for wool; but before doing so they have absorbed all the profit made by the Wool Board. Is that quite fair? My second point is that this new order is a guarantee to the Board and not to the producer. The Board can do what they like with money realised from the sale of wool but the producers have no leg to stand on. I should also like to bring out the point made in Article 5, paragraph (2) that if no such arrangement has been made, the Board shall deal with it in such manner … as the Ministers may determine. That is a totalitarian act. I should like to hear what can be said upon this by the noble Earl who is to reply.

EARL JOWITT

My Lords, the noble Lord who has just spoken seems to think that we are all totalitarian except himself, but there is this great distinction between this side of the House and that—we have not "snaffled" the money. The complaint is made that Her Majesty's Government have done so. Noble Lords will expect a clear answer on where the money has gone.

3.36 p.m.

EARL ST. ALDWYN

My Lords, the noble Lord, Lord Lucas of Chilworth, asked about tar marking on wool. I can assure him that the Board is extremely concerned over this matter. In the years 1953 and 1954 it has imposed a penalty of 4d. per lb. on tar infected wool, and is proposing in 1955 to increase that penalty to 6d.

LORD LUCAS OF CHILWORTH

Hear, hear!

EARL ST. ALDWYN

There are good means of marking which do not affect the wool, and it is hoped that, by this penalty, producers will be encouraged to use those means and to desist from the use of tar. I am afraid I am not in a position to give any answer, at the moment, regarding Australian wool, but I will look into that matter and let the noble Lord know.

LORD LUCAS OF CHILWORTH

Before the noble Earl explains away these "totalitarian" tendencies, may I thank him very much for what he has said? The action proposed by Her Majesty's Government will go a long way. Will the noble Earl also give an assurance that, if the steps at present proposed to be taken do not cure this trouble, there will be no hesitation about making even more pronounced the differential between the prices for clean wool and dirty wool, to overcome this very serious problem?

EARL ST. ALDWYN

That is a matter for the Board, who, I am sure, will bear it in mind. The noble Lord, Lord Nunburnholme, gave a quotation stating that the ultimate disposal of any quinquennial surplus not required for the operation of the scheme would be decided by the producers' annual general meeting. It is only fair to point out that the phrase was immediately preceded by a warning that it was impossible for the provisional board (which was responsible for that Report) to make any commitment on behalf of the Board which would be in operation in 1954–55. I would point out to the noble Lord that this is hardly totalitarianism. It was the Board, and not Her Majesty's Government, who were to decide at the end of the term what should be done with the money—whether to use it then or to carry it forward.

LORD NUNBURNHOLME

I think the noble Earl will agree that the question was to be decided at the annual general meeting of the members of the Board—that is, of the producers—and that that annual general meeting has not taken place. You came to arrangements with the Board without that meeting taking place.

EARL ST. ALDWYN

My Lords, I can assure the noble Lord that the Board have full power over that money. It rests solely in the hands of the Board. The noble Lord quoted a figure of between £2 million and £3 million as the surplus. I must reassure him. The actual surplus is somewhere between £1,500,00 and £2 million.

LORD NUNBURNHOLME

My Lords, does that include the underpayment for the last three years? There is three years' underpayment, and I believe that it comes to between £800,000 and £900,000.

EARL ST. ALDWYN

As I understand it, the total surplus which there is likely to be is between £1,500,000 and £2 million. Those are the figures.

THE EARL OF LISTOWEL

My Lords, may I ask whether it would be correct to say that a large part of this surplus would be treated as a stabilising fund, which would be paid out to the farmer if the price of wool were to fall?

EARL ST. ALDWYN

My Lord, I am delighted that the noble Earl has in fact given my reply for me. In view of his most helpful words, I do not think I need say any more.

On Question, Motion agreed to.