HL Deb 23 June 1960 vol 224 cc618-27

5.9 p.m.

Debate resumed on the Motion moved yesterday by Earl Waldegrave: That the Fertilisers (United Kingdom) Scheme, 1960, be approved.

LORD STONHAM

My Lords, when I rose yesterday just before the debate was adjourned, it was not to emphasise that fertilisers are not quite such a sweet-smelling subject as the noble Earl, Lord Waldegrave, was just referring to, but because thought that, however briefly I spoke, and however urgent and important the later business was, it was not right that a matter of some £28½ million of the taxpayers' money should go through virtually "on the nod". This afternoon I have the opportunity to develop one or two arguments, but I shall be very brief.

I should first of all like to make it very clear that we on these Benches are enthusiastic supporters of the principle of fertiliser subsidies, or indeed of any production grants which help the farmers to increase soil fertility or efficiency. And we welcome very warmly the statement made by the noble Earl, Lord Waldegrave, yesterday that last year the consumption of fertilisers increased by 13 per cent., although I think he will agree that the preceding year was not a very good one from that point of view, so that the increase may not be as great as might otherwise appear. But although we welcome this news very warmly we are extremely puzzled that the noble Earl should go into transports of joy at such an increase; because the inevitable result—or at least we hope the inevitable result—of increased use of fertilisers will be increased production of food, and it is extraordinary that he should take pleasure in that prospect, as we do, because it is Government policy, as plainly revealed in the Price Review, to discourage any increase of production in almost any branch of agriculture. This is not an argument against the fertiliser subsidy, which I have made very clear we fully support, but is one more example of the utter stupidity and complete unworkability of the Government's support price policy.

The noble Earl, Lord Waldegrave, joyously announced yesterday the increased use of fertilisers, and pointed out that apparently the increase is still continuing, because this spring there was a considerable increase over the same period last year. In a few months' time he will be at that Box bemoaning the consequent increased output of food, the consequent lower prices and the consequent higher cost to the taxpayer of making good the difference between the market and the support prices. The final consequence of all that will be another bad Price Review to discourage the farmer from producing more food, whereas the subject we are discussing to-day is a very proper and welcome subsidy to help him to produce more food. The Government are giving with one hand to increase food production and will very soon be deploring and taking steps to discourage that very same increase of production. When we, a few months ago, debated the last Price Review, I said that the Government's support price policy carried the seeds of its own destruction, and if this is not made clear to the noble Earl by the paradox I have just mentioned it never will be.

On the main point of the present Scheme—that is, the £1½ million reduction in the subsidy—we can only express our regret, because it means that the farmers will get little or no benefit from the reduction in fertiliser prices which we have been demanding for years and which have now come about. On this matter of prices the Government have been grossly negligent and utterly indifferent to the taxpayer's interest. The noble Earl said yesterday that manufacturers were anxious to reduce the price to the farmer. I must say that they manage to conceal their anxiety very well indeed. One has only to quote the Monopolies Commission's Report on Fison's—this particular paragraph, for example: We think the Company mistaken in believing that it is entitled to use its strength, due largely to the degree of monopoly it enjoys in a protected subsidised market, in order to earn profits at the high rate of recent years for the express purpose of financing its further overall expansion. We regard the fixing of prices at a level which produces such profits as a thing done by Fison's as a result of this monopoly position which operates and may be expected to operate against the public interest. Indeed, the poor taxpayer has provided Fison's with such profits from fertilisers that at one time recently they tried to buy themselves into the contraceptive business.

But, my Lords, with regard to the Monopolies Commission's Report, commercial business ethics being what they are, one can hardly blame this firm. It is the Government who are to blame. Here was a commodity protected by as much as a 20 per cent. tariff and with the Treasury paying as much as 45 per cent. of the market price of the product; yet the Government did not bother to find out what it cost or what was the margin of profit. When it comes to examining what prices the farmer ought to get they take all the trouble in the world to find out what things cost. And not only that; they assume every year a 2 per cent. increase in efficiency, worth something like £25 million. If it were any other form of Government contract, of course, there would be costings if anything was done on a similar basis; and yet in this particular case, with the large sums of money involved and a protected position, they did not bother to find out what the product cost or what was the margin of profit. I think it is an utter scandal for which I cannot at present think of a parallel. One can only hope that the Comptroller and Auditor General will not unearth any more such skeletons in the Minister's cupboard.

We welcome the reduced price of fertilisers, partly perhaps due to the Monopolies Commission, and still more to increased competition, and we look, and hope, for still further reductions in prices. We strongly support the increased use of subsidised fertilisers, but above all we hope that the Government will revise their agricultural policy, so that both farmers and consumers will get some benefit from the increase in food production arising from the use of subsidised fertilisers.

5.18 p.m.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, may I say that I have read the proceedings of yesterday, I have read the proceedings in another place on this Scheme very late on Monday night, and I have been extremely interested in it. The Government, I thought, in their reply in another place did not pay sufficient attention to the statement made on behalf of my Party that some sort of inquiry was necessary. I should have hoped that, now that there has been time to consider the case that was made there for an inquiry, they might have indicated to-day that they would be willing to have one.

Not that I in any way support some of the arguments used during the debate down there; for example, I resented very much the attitude of, I think, the Member for one of the North Devon constituencies. It was a very unfair attack. It puts all the blame upon the subsidy Scheme as though it were a special gift from the gods for farmers and farmers alone; it pays no attention at all to the services which are rendered in general to the country as a result of the Government's scheme, by the employment given, not only upon the farms because of their increased efficiency but also in the actual increase in production of fertilisers, and the general prosperity in that connection that otherwise probably would not exist. It is perfectly true that when we take all these things together, the great firms who are engaging in the production of fertilisers have been able to create financial stability and, even perhaps at times, financial prosperity in order to extend every branch of their business.

On the other hand, there is no doubt at all that if the Government had been doing their full duty, as my friend Mr. Willey in another place said, they would probably have put in much more time on research and development in regard to the production of fertilisers—which were the best ones for every one of the different districts, and the like. On the other hand, we have to acknowledge that Imperial Chemical Industries and Fisons, and maybe one or two others, have spent time and money on research, for which they get good reward but from which the country also derives beneficial results.

What I also specially want to say to the Parliamentary Secretary is this. I am sure he will acknowledge that, however right he considers to be the decisions of the Government in the last annual revision of guaranteed prices, there has been widespread dissatisfaction among the farming community. Exactly how that is going to be dealt with does not, of course, appear, for the leader of the National Farmers' Union has been having conversations, first with the Prime Minister, and afterwards, I take it, with the Minister of Agriculture, and I dare say the noble Earl the Parliamentary Secretary has been involved in some of these discussions. But for the moment we know absolutely nothing as to what is transpiring from these things. Therefore perhaps the noble Earl will forgive me for saying that when we get the kind of presentation we had yesterday of this Order and all that it means—being given the facts, as it were in a lump—we find that it means a reduction of £1½;million in the total rates of subsidy on fertilisers. Maybe there have been Government representations during or after the proceedings of the Monopolies Commission affecting the goodwill of the firms concerned. We do not know the inside story, but there have been quite substantial, although in my view not substantial enough, reductions in price.

I do not think the Government ought to feel that they can have it both ways. If the procedure of the Government is to deal once a year with guaranteed prices, and in the course of that procedure to reduce the overall amount of the guarantee by many millions of pounds, then, with the farmers' costs rising and with the farmers looking to get a little further advantage in their struggles against rising costs, the Government should, in addition or in the interim period, examine the guaranteed price situation. I feel sure that the Government ought to think once or twice again about that matter.

I am so concerned to support at all times and at all costs the policy of endeavouring to improve fertility in all classes of growth, including grassland, that the noble Earl knows perfectly well that I should not dream of opposing this Order. But I think that before he comes to consider any further renewal of this scheme—and I am certain that there will be a renewal of some kind—he should take into consideration the other facts. If, on the one hand, you are going to have an Annual Review of guaranteed prices, and out of the overall national budget of farmers you want to take many millions of pounds, surely if, in the interim, they have been subjected to rising costs, they ought in the Annual Review to get the advantage from that situation. It seems to me that at present they are not going to get such an advantage.

The other point that arises is whether the Government have really started to make up their minds upon whether the agricultural industry in this country is to be encouraged to expand. I read with particular interest the speech of the Parliamentary Secretary in another place. He hurriedly claimed that it had been proved before in debate that this was not the Government's wish. Yet I think it is fairly clear, looking at the report of the Review of the guaranteed prices in the early part of the year, that certain commodities, at any rate are picked out as being commodities the production of which ought not to be expanded beyond its present level, even if it is to be maintained at such a level. When we consider the particular variations of the agricultural products favoured in the different parts of the country, that must come down very hard indeed upon some of these districts. How on earth is the agricultural industry to be able to progress at the same rate as other industries in the country if farmers are to be told that in regard to these things they must not expand, and at the same time there is a small breach here, a little crack there, an opening for further foreign agricultural products to be imported into this country to attack their own position here?

I mention that today simply for this reason—I am sure the Parliamentary Secretary will understand—that I thought he put very fairly the need for using fertilisers and the need for extending their use, for example to grassland. We have had a great deal of encouragement in the last three of four years in regard to the production of beef, but the Government do not seem to be so anxious to encourage the production of milk. Of course, to a certain extent, you can use grassland, if the use of fertilisers is expanded in their application to grassland, for the production of beef. But my point of view is that a far better reason for getting increased fertility in grassland is to enable the dairy farmer to be able to reduce his costs by a continually improving use of the products of grass, whether by silage or by the new economic methods of using silage afterwards, or by improving the quantity and standard of his hay. Then—much more important—there is the question of improving the management of grassland for the daily feeding of the dairy herds, and for constantly improving the protein in the grassland by encouraging the growth of clover. I hope that the Parliamentary Secretary will be able to say a few words that will be of help to me in my thought and consideration of these matters.

I would add that the more I meet with the conditions of farmers locally, the more I am convinced that a good many things are available to some farmers who do not take full advantage of the Ministry's Agricultural Advisory Service, and that possibly in some areas wider and better use could be made of the Advisory Service on to the taking of samples, analysis of soils and the special needs of particular classes of soil on a given farm for some particular type of fertiliser. I am quite sure that those who have already used agricultural fertiliser adequately have found it effective. But if farmers are going on expanding their production in this way, what kind of hope does the noble Earl the Parliamentary Secretary give them with regard to markets for their produce—markets which will enable them to meet not only the costs which have already risen so much but also what are undoubtedly the oncoming demands for a better standard for agricultural labour?

5.31 p.m.

EARL WALDEGRAVE

My Lords, I do not think your Lordships will wish me to make a long speech in reply to this debate. First I will refer, if I may, to one or two points made by the noble Lord, Lord Wise, who followed the Motion rather more closely than did the other noble Lords who have spoken. I would say to the noble Lord, Lord Wise, that there is no difference between the figures of £96½ million and £91 million, because the figure of £91 million which I gave in my opening remarks is of course expenditure for fertilisers only. The figure of £96½ million, which the noble Lord took from the Annual Review White Paper, includes expenditure on lime. That is a small point which I thought your Lordships would wish me to correct straight away.

The noble Lord, Lord Wise, referred to a reduction of over 15s. a ton in subsidy on one particular kind of fertiliser and said that what the farmer gains by the action of the fertiliser firms is now offset by the action of Her Majesty's Government. The noble Lord chose a rather bad example because on that particular fertiliser—triple superphosphate—the reduction which the manufacturers (Fison's) have made is actually £2 7s. 6d. per ton so on that example farmers will be paying £1 11s. 10d. per ton less next season despite the reduction in the subsidy. I believe that in some cases, however, the farmers will be paying slightly more owing to the reduction of the subsidy.

I should like to put to the noble Lord a point which is relevant to what was said by the noble Viscount who leads the Opposition and by the noble Lord, Lord Stonham—that there should always be borne in mind the two reasons why we have reduced the subsidy. First, under the 1952 Act we have a statutory limitation and cannot pay a subsidy greater than 50 per cent. of the delivered cost of the fertiliser; and in some cases we were getting close to that. Secondly, the subsidy is paid as a specific amount, as published in the Order, and not as a percentage. If, therefore, the prices of the products are falling and the subsidy is left untouched, we are actually paying a greater subsidy on a percentage basis; and that was neither desired nor intended. The amount of £1½ million is not, therefore, any form of vicious reduction. I hope that the noble Viscount who leads the Opposition will forgive me if I do not follow him fully. He ranged rather widely over the field—

VISCOUNT ALEXANDER OF HILLSBOROUGH

Why not?

EARL WALDEGRAVE

My Lords, the noble Viscount asks "Why not?" In this Chamber we are lucky in that we have no Speaker. We are actually discussing a Fertiliser Order. I would rather not range over the wide field of agriculture in replying to the question raised by the noble Lord, Lord Stonham, of whether the agricultural policy of this Government is generally a good or a bad one; for I feel that that would be going rather too far afield. I would say that I do not for a single moment accept his implication that we did not bother to find out these figures. The difficulties were fully set out in the records of the Public Accounts Committee. I would only add that, as noble Lords will know, the Report of the Monopolies Commission is now being studied by my right honourable friend the President of the Board of Trade and discussed with the fertiliser industry; and it would be quite improper for me at this stage to comment upon it except in so far as the contents of the Report relating to this subject have been made known. If noble Lords wish to raise such far-reaching matters I think time should be set aside for a special debate to enable them to do so.

LORD STONHAM

My Lords, will the noble Earl allow me to interrupt him on that point? He seems to think I was inaccurate in saying that his Department did not know anything about the costs and had been unable to find any record of what had been said by the Comptroller and Auditor-General. He said this: The Ministry informed me that in the absence of price control they had insufficient information about production and distribution costs to judge whether fertiliser prices were fair and reasonable. That is a categorical statement—that they had no information about costs.

EARL WALDEGRAVE

My Lords, when the noble Earl reads Hansard tomorrow he will see that the words to which I took exception were: "did not bother". I am fully aware of what was said before the Public Accounts Committee—that the costs were not known—but there is a great difference between saying that the figures were not known and saying that someone did not bother to find out. With that I leave the subject, and I hope that your Lordships will now approve the Order.

On Question, Motion agreed to.