HL Deb 25 March 1963 vol 248 cc12-33

3.13 p.m.

Order of the Day for the House to be again in Committee read.

Moved, That the House do now resolve itself into Committee.—(Lord St. Oswald.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD AIREDALE in the Chair.]

Clause 25:

Purchases of sugar from Republic of Ireland

25. The Sugar Board shall purchase such sugar, at such prices, as the Minister may from time to time direct for the purpose of fulfilling any agreement made by him after the passing of this Act for the purchase of sugar to be used as an ingredient of goods to be exported from the Republic of Ireland.

LORD MERRIVALE moved, after "Act", to insert "and before 31st July, 1963". The noble Lord said: In moving Amendment No. 17, which stands in the name of the noble Lord, Lord Milverton, and myself, I propose speaking to this Amendment and the following one as they are to a large extent interrelated. I should like to say that I am sorry that the procedure of the House does not permit consideration of the second Amendment first; in effect we are asking there for a whole loaf, while in this Amendment we are asking for only part of a loaf. It would seem more logical to move the first Amendment after the whole loaf had not been granted.

As mentioned on Second Reading, Clause 25 involves a completely new principle; that is, the Sugar Board will be empowered to trade in refined sugar emanating from a country which technically is not in the Commonwealth. I fear this would mean that the assurances given to the British sugar industry in 1956 would to a large extent be nullified. Also, at that period of time certain undertakings were given by the sugar industry relating to those assurances. As the then Mr. Heathcoat Amory the Minister of Agriculture, Fisheries and Food, said during the Report stage of the Sugar Bill on March 27, 1956 [OFFICIAL REPORT, Commons, Vol. 550, col. 2012]: We do not want to give the Board power to buy other than Commonwealth sugar as principals. I presume that that refers to parties to the Commonwealth Sugar Agreement, which has now been extended to December 31, 1969. I have with me a copy of this Agreement, and even in a later text, the 1962 text, there is certainly no mention of Southern Ireland as a party to the Agreement. In fact, Article 33 of the International Sugar Agreement of 1958 (Cmnd. 1146) definitely lists Ireland as an importing country, while all parties to the Commonwealth Sugar Agreement, apart from ourselves, are exporting countries.

Also in 1956 another statement was made by the then Mr. Heathcoat Amory, which I feel should still be Government policy, and it reads (col. 2010): Right hon. and hon. Gentlemen opposite would like the Board to have wide powers and discretion in fixing a policy. We, on the other hand, regard this Board as an executive board with narrow and clearly specified functions.

Later, for good measure, the Minister went on to say (col. 2057): Our object, as we have said frankly, is to reduce to the minimum the extent of Government interference with private enterprises

I feel that perhaps I should remind your Lordships of some of the undertakings that the Government gave then to sugar refiners; that is, in return for the assurances and the Government Amendment to Clause 3 of the Sugar Bill. I list three: first, an undertaking to prefer Empire sugar to non-Empire sugar as a source of supply; secondly, an undertaking to make an agreement with the British Sugar Corporation guaranteeing the Corporation outlets for the homegrown beet sugar crop; and thirdly, a guarantee not to exceed a maximum refining margin.

Even in the 1962 text of the Commonwealth Sugar Agreement there is certainly no question of any changes in the duties of the Board, which was constituted, as your Lordships know, on October 15, 1956, with a duty (that is the word used in the text) to purchase Commonwealth sugar in fulfilment of the Government's obligations under the Commonwealth Sugar Agreement. So however much one would wish—and I, for one, certainly would wish—to have satisfactory trading agreements with Southern Ireland, there seem to me no strong reasons for extending the powers of the Board, which might constitute in effect a thin end of the wedge or might even create an unsatisfactory precedent.

I should like now to refer to the Agreement which would be implemented, by this clause, as the purpose of this Amendment, Amendment No. 17, is purely to limit the powers of the Minister to the implementation of the draft Agreement which was deposited in the Printed Paper Office on March 4. We feel that no strong grounds exist at the moment, anyway, for allowing the Minister to modify or extend the present draft Agreement beyond the date of June 30, 1967. By that time, if in effect the draft Agreement was satisfactorily drafted, it would be reasonable to suppose that it had achieved the end which it set out to achieve.

As normally, before or after January 1, 1962, it is the importer, not the exporter, who pays the surcharge, and as the surcharge is added to the wholesale price of sugar, it is the United Kingdom consumer who ultimately has to foot the bill which it is proposed now to pay by means of that draft Agreement. But in effect it seems a little strange that on May 5 my noble friend Lord St. Oswald should have said that in this case the surcharge was paid by the exporter and not the consumer, and that since January 1, 1962, amounts had been accruing which now stand in the region of £150,000. Thus there is no question I feel of refund or payment since the price changes to which I have referred: these changes were introduced solely to safeguard the Commonwealth Sugar Agreement, and as from that date British refiners and the Irish company paid the same price for raw sugar. It seems to me, therefore, that in this case the Government are proposing to give Southern Ireland a Commonwealth producer status although Ireland is not a party to the Commonwealth Agreement.

Apart from this curious form of accounting, with, so we are told, the surcharge accruing in the coffers of the Sugar Board, it seems to be a curious form of legislation. I would stress, as was said on Second Reading, that I and my noblefriend Lord Milverton are fighting for a principle more than for a question of amounts or quantities. That is why I strongly believe that the powers of the Minister should be limited to implementing this draft Agreement only if the Government can prove that this money is effectively owed to the Irish.

In view of the aims of this Amendment, Amendment No. 17, I would ask my noble friend, even if he will not go so far as to agree with the principle of our Amendment, at least to give a categorical assurance that any renewal or extension of the Agreement beyond the date of June 30, 1967, will not be allowed without the approval of Parliament. I ask that, because in another place on March 20 this year Mr. Scott Hopkins, the Parliamentary Secretary, in answer to a Question, said merely that the House would be "informed". I am uncertain whether that means that the House would be empowered to disapprove such an extension, or whether they would be faced with a fait accompli. As the clause stands at present, it seems to me that this Agreement could be extended or modified ad infinitum, without Parliament having any say in the matter at all or being given an opportunity for formal approval or disapproval. I beg to move the first Amendment standing in the name of my noble friend and myself.

Amendment moved— Page 18, line 37, after ("Act") insert ("and before 31st July 1963 ").—(Lord Merrivale.)

3.25 p.m.


In adding my support to this Amendment I will be as brief as possible, and will try to combine brevity with clarity. But some length is, I am afraid, unavoidable if we want to understand what we are being asked to approve in Clause 25. In the course of the Second Reading of the Bill I dealt at some length with Clause 25, and in answer to my criticisms on that occasion the noble Lord in charge of the Bill gave a reply which, to put it mildly, seemed to me quite inadequate. There are three points for your Lordships to consider: first, what are the Government trying to do; secondly, is their objective good or bad; and thirdly, is this the right way to set about it?

The noble Lord, Lord St. Oswald, on March 5 stated three objectives an increased market for Commonwealth raw sugar, a small restriction on exports of refined sugar from Eire to Northern Ireland—a trade, may I add, which was built up against British refiners in the past five or six years by the advantageous manipulation of Commonwealth preference; and at least a partial compensation to the Irish monopolists, called the Irish Sugar Company. This compensation was apparently to be paid for the loss of their pre-1961 advantage, which, as we heard in the debate on Second Reading, was commonly called the "hole in the tariff"—a hole which was stopped by the new 1961 pricing arrangements introduced to save the Commonwealth Sugar Agreement from destruction by dumped sugar from the Iron Curtain countries.

What are the facts? In 1956, in order to ensure, in the absence of State trading, that Empire producers got the prices guaranteed by the Commonwealth Sugar Agreement, but at the same time that consumers had the option of buying sugar from other sources at freely competitive prices, a Sugar Board was set up under the Sugar Act. This Board was charged with the duty of buying negotiated price sugar at fixed prices, negotiated annually, under the terms of the Commonwealth Sugar Agreement, and of reselling it at prices which are competitive with world prices. The Board also had to receive surpluses or to make good losses to the British Sugar Corporation. The Sugar Board came into being at a time when world prices were rising steeply, and in its early days it was receiving surpluses from the British Sugar Corporation and was selling negotiated price sugar at a profit. But over the years it will make a loss, because the negotiated price is generally higher than the world market price. In order to make good its loss, it has the power to charge a levy on all sugar consumed in the United Kingdom.

Before the 1961 change in pricing arrangements, the reason for which I have just mentioned, British refiners were bound by an undertaking to the British Government to pay a higher price for raw sugar than that which was being paid by the Irish company. After the change in these pricing arrangements British refiners paid the same as the Irish company. The change in pricing arrangements, therefore, so far from hitting the Irish company unfairly, in fact put right the disadvantage previously suffered by British refiners. The proposed Agreement, then, does not redress the losses suffered by the Irish company: it recreates the unfair advantage which that company enjoyed before the price changes, and which, incidentally, was exploited to establish Eire's present trade in Northern Ireland, a trade previously supplied from Greenock and Liverpool. For the £150,000 which the Government estimated the Agreement might cost the British consumer, Commonwealth producers, if they were given such a sum, could find a market for much more of their sugar than the 5,000 tons minimum guaranteed under the Agreement.

On March 5 the noble Lord, Lord St. Oswald, said that he thought the offer—that is to say, this assistance to the Irish Republic (meaning the monopolist Irish Sugar Company, which, incidentally, does exercise its monopoly to shut out products of British refiners from Ireland), was reasonable. How can he argue in this way? It is an indisputable fact that the Irish Sugar Company enjoyed an unfair advantage against British companies before 1962. May I repeat that they arose because British companies had an undertaking to the British Government to pay a higher price for raw sugar than that which was being paid by the Irish Sugar Company. If, therefore, there was a grievance at all, it was a British grievance. Now, after this alteration of arrangements, both the British companies and the Irish company pay the same—the lower price. Is it being seriously contended that the proposed Agreement gives an estimated £150,000 a year to compensate the Irish Sugar Company for having to pay the same as British refiners?

If the same treatment for Commonwealth sugar as is being suggested in the Irish Agreement were afforded to British refiners, it could result in a much larger increase in outlet than anything contemplated by selling Commonwealth sugar to the Irish Sugar Company; and it would not be necessary to pay a subsidy to the British refiners in order to get their agreement to buy the sugar. Surely it borders upon the absurd that what has been refused in connection with British exports can be granted in connection with Irish exports; and, indeed, be treated as a justification for a subsidy.

In passing, I should like to deal with the argument that the unforeseen steep rise in the world price of sugar to £55 or so threatens to eliminate the compensation which was enshrined—I almost said "concealed"—in the strange book transaction in this Agreement: that the Sugar Board shall purchase annually from the Irish company 10,000 tons of refined beet sugar, produced and refined in the Republic of Ireland, at a price of £50 per ton ex-factory, and forthwith re-sell it at a price exceeding by £10 per ton the average of the London daily price for raw sugar during the year.

The noble Lord, Lord Walston, on March 5 commented that he saw no reason for making any fuss, because all this meant was that the British Government, infected by the prevailing craze for bingo and other games of chance, was merely having a gamble with the Irish Company on the future world price of raw sugar, and that it looked as if the Irish had (if I may use the phrase) been "sold a pup" in the process. Perhaps I may be allowed to dismiss this reflection on the British Government's use of public funds; also to point out that the average price over, say, the next five years initially contemplated by the Agreement is unlikely to result in anything but an annual payment by the Sugar Board to the Irish Company of some undefined amount which might rise to £150,000, or even more.

It is easy to get the emphasis wrong. For instance, the Evening Standard of March 21, in a note by its reporter, said that it was hard to see how I could be right in speaking of a subsidy to the Irish company, since at the present London daily price (then £55) it would be the Irish who would be paying the subsidy, not receiving it. Present price conditions are admittedly a freak, and the London daily price averaged over a year, which is the period taken in the Agreement, is unlikely long to maintain the present altitude. In any case, it was the British Government who publically estimated the cost of this arrangement to the Sugar Board as £150,000 a year; and even now they do not anticipate its complete elimination, although they have said that perhaps it will not come to as much as that.

It is also pertinent to remember that if we approve Clause 25 as it now stands the Sugar Board, acting under instructions from the British Government, will be able to vary, amend or extend the Agreement, without further authorisation from Parliament. Apparently we should merely be informed. This is clearly, I suggest, very unsatisfactory, because it could result in a greater tonnage and larger sums of money being involved.

I have dealt with what the Government are trying to do and I think I have shown that it is not justifiable. At Question Time on March 4 the noble Earl, Lord Alexander of Hillsborough, who leads the Opposition, expressed grave misgivings about the fact that the main bodies in the trade had not been consulted before the Agreement was drawn up, and also about the failure of the Government to publish the terms of the Agreement, or even to make them available to Parliament until recently. The Press notice published on November 1, if one examines it closely with the terms of the Agreement now available to Members, did not give a full picture of the terms.

Finally, in the debate on March 5 the noble Lord, Lord Champion, pointed out that Clause 25 seemed to be in strange company in this Agriculture (Miscellaneous Provisions) Bill. With respect, I consider it to be entirely out of place in this Bill. The Sugar Board was intended to implement the Commonwealth Sugar Agreement, which was solely concerned with Commonwealth raw sugar. The effect of passing Clause 25 would be, as the noble Lord, Lord Merrivale has just told us, to extend the Board's powers into an entirely new sphere, as a State body trading in the refined sugar of a country over which the British Minister of Agriculture, Fisheries and Food has no authority and which is not technically in the Commonwealth. Not only is this a departure from the purpose for which the Sugar Board was set up, and contrary to assurances that were given to the British sugar refiners in 1955 before the passing of the Sugar Act, but it also introduces a principle which could be extended to trading in other commodities and which might have very far-reaching consequences.

If the British Government are so confident that circumstances to-day merit the cancellation of these former assurances, and an enlargement of the power and scope of the Sugar Board, surely separate legislation should be submitted to Parliament so that a change in policy of this magnitude may be given the separate attention that such a change demands. The effect of Amendment No. 17 would be to limit the powers of the Government to implementing the Anglo-Irish Agreement, which has already been signed and only awaits ratification. It would effectively prevent the use of the clause to cover any future agreement for which separate legislation would be required. In my view, the objections, in principle and practice, to the present Agreement remain unimpaired, and in principle my objection extends, really, even to this Amendment No. 17, which as the noble Lord, Lord Merrivale, has said, is only half the loaf. But at least a compromise of the sort indicated in Amendment No. 17, instead of the complete cancellation of Clause 25, would save the British Government the embarrassment of being deprived of the power to implement the draft Anglo-Irish Agreement, which has already been signed and which awaits ratification. I feel sure that the noble Lord, Lord St. Oswald, has considered and will be able to tell us, why the Government are so anxious to go on with this particular clause and the powers under it; and why they wish to pay this compensation, the reason for which is not apparent even after the closest study.

3.43 p.m.


I hope that at this stage I may add a few words which could be of value. I should like to begin by saying that I have no personal interest to declare in this matter. I do not grow beet, and I certainly have no connection with the Irish Sugar Company. But I do come from Ireland, and I want to say, frankly, that the interest of Ireland is at my heart in this matter. But when I came to go into this matter in a little detail I began to find myself increasingly doubtful as to where the true interest of Ireland did lie. In particular, I went so far as to investigate what was the London daily price for sugar, although before I personally could not have told your Lordships what it was for toffee, or any other purpose. But, in any case, it is not a very difficult research job, and I discovered that the price to-day is no less than £59 15s. a ton. So far as I can see, this means that Ireland is undertaking to sell sugar to this country at £50 a ton and to buy it back at £69 15s., which is a loss of approximately 50 per cent.; and that does not seem to me very good business.

I know it will be said—in fact I do now say—that it is not to-day's price that matters, but the average price of sugar over the calendar year ending on June 30, 1963. But I have been into that, too, and I have here the figures for each month from July 1 last year. They are extremely interesting, because in July of last year the London daily price for sugar was only £26, and it stayed at about that figure until the end of October, when it began to rise. By February it was £51; last Tuesday it was £55, and it is now rising by about £1 a day. It reached the record figure of £59 15s. this morning, and I must admit that I wish I had bought a few thousand tons of it. We can estimate that the average figure for the month of March is going to be approximately £55, and the futures for the next four to six months are all in the neighbourhood of £58. In fact, the future for March of next year is over £50. From this we can ascertain that the average price for the first twelve months of this agreement will be approximately £41 10s. It therefore seems certain that, for the twelve months' period we have under review, Ireland will be selling sugar to you at £50 a ton and will be buying it back at £51 10s.

The noble Lord, Lord Milverton, has assured us that in his opinion the price of sugar is now going to fall. It has, of course, to fall to £40, to two-thirds of its present price, before Ireland derives any benefit from this Agreement. I should have thought that, if any businessman were absolutely convinced that the price was going to fall by that very substantial margin, there must be some clever way in which he can "do a bear"—I believe that is what it is called, but I may have got it the wrong way round—and make a very substantial profit out of it. I will leave that to the noble Lord, Lord Milverton. I hope that I have made clear what, at any rate, is my dilemma in this matter: that I do not quite see exactly how Ireland is by any means certain to benefit by this. However, I do feel that it will involve an extension of trading between the two countries, and the Irish Sugar company itself seems to be content with the arrangement, and therefore I certainly have every intention of opposing the Amendment.

3.48 p.m.


I am grateful to my two noble friends because, in moving this Amendment, they have been ready for the two Amendments to be debated together. I should have found it very difficult indeed to make a speech on each. With your Lordships' permission, I will first explain the precise effect of the two Amendments which the noble Lords have tabled. With a complicated measure of this kind it is important to see exactly what steps the noble Lords, Lord Merrivale and Lord Milverton, are urging, before I go on to say why I must resist them.

I am advised that the first Amendment would simply prevent us from making any modification we might agree with the Irish Republic during the five-year life of the Agreement. In this instance, therefore, the noble Lords are saying in as many words, "Let us have this Agreement—but let us make sure that we cannot change it in any way during the next five years, even if it was to our advantage to do so." The second Amendment would prevent my right honourable friend from directing the Sugar Board to buy the sugar from the Irish Republic. Although such directing is only part of the Agreement, it is an integral part; and the noble Lords might fairly suppose that, without this part, the whole Agreement must founder. Here the noble Lords are saying in as many words, "Let us not have the Agreement at all". In fact, my noble friend Lord Merrivale, referred to this quite rightly as "the whole loaf", from his point of view.

The last time we discussed this clause, on the Second Reading of the Bill, it seemed to me that noble Lords' objections were rooted in a misconception of the purposes and effects of the clause. The appearance of these Amendments on the Order Paper makes it clear that those misconceptions, as I read them, remain. I can only conclude either that the noble Lords did not fully understand those purposes and effects, as I described them in our Second Reading debate, or that they are still not convinced that the purposes are desirable and the effects beneficial. Having listened to their speeches to-day, I think that probably both of those impressions are partly true. May I therefore, on this occasion, adopt a somewhat negative process of persuasion by putting more emphasis on what the clause does not do?—and, in the course of that, I hope to reveal its positive virtues.

The strongest reaction among my noble friends on Second Reading came from my noble friend the Duke of Atholl, who was actually "filled with horror" by this clause. I suppose I should be relieved that he is not behind me to-day.


He is.


He is. But, together with the noble Lords, Lord Milverton and Lord Merrivale, he regarded it as a purely Irish "benefit match", with no compensating advantage whatever for this country. With characteristic patriotism, he toyed with the idea of putting down an Amendment to the Water Resources Bill, compelling the Central Electricity Generating Board to buy electricity from the South of Scotland Electricity Board at 2d. a unit and to sell it back to Scotland at a lower price, without any balancing "sweetener" for the Sassenachs. I can see the appeal of such an arrangement to the Scottish soul, but my noble friend was also persuaded that we were getting the wrong end of this sort of bargain with the Irish Republic. Because this illusion appears to be shared by all noble Lords who have spoken against the clause, and because it seems to me the furthest flung of all the illusions aired, I shall try to dispose of it first, and I fear at greatest length. I also, with the noble Lord moving this Amendment, found it very difficult to achieve brevity and clarity in combination. The noble Lord, Lord Milverton, also thought that this "subsidy", as he stigmatised it, to a foreign competitor would come ultimately from the British taxpayer. I hope to dispose of this hallucination in the same passage of argument. And, for good measure, I intend to lay the bogey that this Agreement will aggravate unemployment in the ports of Greenock and Liverpool.

The Sugar Board has in its pocket, or on its books, approximately £150,000 accrued over the past year at the expense of the Irish Republic. This came about as a result of the change at the beginning of 1962 in the surcharge which is imposed on all imported and domestic sugar, and the pricing arrangements for sugar in the United Kingdom. These changes were plainly destined to prejudice all suppliers. To compensate the Commonwealth Sugar Agreement countries they, like our home producers, are receiving supplementary payments from the Sugar Board. The Irish Republic, which had been placed under a similar trading disadvantage, was not made subject to this special arrangement. It was in fact treated in the same way as foreign countries. It is thus that the Sugar Board are profiting from the Irish to the tune of about £150,000 a year.

Even had we sought to return the full £150,000 to Ireland in one payment or over the course of one year's trading, this could not have been regarded as a "gift" or subsidy.


Before the noble Lord goes any further, could be explain one point? Are there other foreign countries concerned who also are prejudiced and to whom there is no refund being made?


As I think I have explained, all foreign countries were placed at this trading disadvantage—in fact all countries, all suppliers, were placed at this disadvantage—but compensation was made for Commonwealth suppliers. The similar compensation was not made for the Irish Republic.


The Irish Republic is not in the Commonwealth, is it?


The Irish Republic is not in the Commonwealth.


May I ask the noble Lord this: is it not the fact that in virtually all trade matters Ireland has Commonwealth preference?


Yes. I do not want particularly to turn this into that sort of argument, and I do not imagine that any Member of your Lordships' House would wish me to do so. But it is clear to all of us, I think, that Ireland is a close neighbour and is bound up with our own history very intimately, and quite clearly not many of us, at least, would think of it as a foreign country.


What do they think?


I was saying that, had we sought to return the full £150,000 to Ireland in one payment or over the course of one year's trading, this could not have been regarded as a "gift" or a subsidy. It would have been a form of reparation. And it would not have come from the British taxpayer. In fact, this clause does not seek to make any such full and immediate reparation. What we have arranged instead is to pay a fixed price for some beet sugar produced in the Irish Republic. This price may well involve some loss for the Sugar Board in years when the world price of sugar is low, but this is not what the Irish Sugar Company are counting upon. The important thing for them is that it covers their costs. It has now been asserted for the first time, I think, in this debate by the noble Lord, Lord Milverton, that it will do more than that. It is not, in fact, doing any more than that. I suggest that it is also important to British refiners. Since this fixed price is being passed on to Irish beet producers, there can be no subsidy of the kind which concerned noble Lords during our last debate.

In fact, in so far as the Agreement has an effect upon our industry, it is beneficial in four separate ways, all of which seem to me to have been overlooked or misconstrued by the two noble Lords. First, the Irish Republic agree to restrict their exports to Northern Ireland to 10,500 tons, whereas at present those imports stand at 13,000 tons. Noble Lords have dismissed this reduction of 2,500 tons very lightly, but it is fair to point out that the amount of 13,000 tons could, and probably would, have increased in the coming years, taking the distance and transport advantages of a land frontier into account. Secondly, this concession on the part of the Irish Government enables the shortfall of 2,500 tons, small though it be, to be taken up by our refiners at Greenock and Liverpool. This must be to their advantage, not the oposite as was suggested in our Second Reading debate, when my noble friend the Duke of Atholl argued that the employment situation would suffer at these two ports, a claim which was made again to-day.

A third misconception in the noble Lords' arguments concerns the Irish undertaking to import only Commonwealth sugar (for re-export to us) to the exclusion of foreign sugar, which they have always bought before. My noble friends Lord Merrivale and Lord Milverton both said that these advantages had been exaggerated. The noble Lord, Lord Merrivale, sought to dismiss them altogether by pointing out that the Republic was at present importing 15,000 tons of Commonwealth sugar before the agreement was implemented under this clause. He concluded that the Commonwealth was therefore gaining no advantage. But, with respect, he is entirely ignoring the fact that these 15,000 tons of which he spoke have been bought in anticipation of the agreement and in order to honour the Irish Government's side of the bargain. He has only to study the trade figures for last year or previous years to see that this is an important and valuable new outlet for the Commonwealth suppliers.

The noble Lord, Lord Milverton, may consider it an unimportant amount, but as a director of a Commonwealth sugar company it is somewhat surprising that he should wish to look even a modest "gift horse" of this nature in the mouth. In fact, the Irish Sugar Company have stated their intention to take at least 5,000 tons of Commonwealth sugar in future years, and in most years they will need much more, possibly as much as 25,000 tons.

The fourth instance in which it appears to me the noble Lord, Lord Milverton, misconstrued the facts was in his reference to the Irish Government's undertaking, to us and its own farmers, to expand its beet-growing area. In reply to my intervention on this point on Second Reading he said he regarded it as indicating how profitable the arrangement would be for Ireland. But hardly to the Irish exporters, my Lords, which is the aspect which bothers him. The plain truth is that sugar produced from Irish beet can seldom be competitive with that purchased in the world market. The advantage as between their new arrangements and their former tradition of buying on the cheapest market, anywhere in the world, clearly lies with us. Yet the noble Lord, Lord Milverton, spoke of an unfair advantage being restored by these measures. Added to these four separate points is that part of the Agreement which will enable an experiment in beet production to be started in Northern Ireland, and this may well prove of some consequence.

I should like to rebut, gently, I hope, the suggestion made by the noble Lord, Lord Merrivale, that this Agreement is a breach of the assurances given when the Sugar Board was first established. The original draft of the 1956 Sugar Bill enabled the Ministry of Agriculture to direct the Sugar Board to buy sugar from any country in the world. In response to representations of the refiners, an Amendment was introduced by the Government so that the Minister could only direct the Board to buy sugar from the parties to the Commonwealth Sugar Agreement. We did not say then that there would never be circumstances in which Parliament would think it justifiable to extend by legislation the powers of the Sugar Board. In fact we had to do this last year when dealing with the position when South Africa withdrew from the Commonwealth, and there were no complaints from the refiners; and since this is the matter of principle, as the noble Lord, Lord Milverton, described it, then there must be some reason for this matter of principle not having been raised then. I can only say to the noble Lord that we do not regard this in any way as a one-sided Agreement. The price of £50 per ton for refined sugar is comparable with the price of £35 15s., free at ship at Durban, being paid for raw sugar under the South African Sugar Agreement; and this is not as favourable as the terms of the Commonwealth Sugar Agreement.

We have been most careful to ensure that the Agreement is consistent with our determination to leave private traders free to get on with their job. It does not transfer to the Sugar Board any business at present in the hands of private traders. Purchase and resale of Irish refined sugar will be no more than an accounting operation by the Sugar Board. The sale of raw sugar will not add to the quantity of such sugar that the Board has to sell; and they will sell it in exactly the same way as they sell sugar to users in Britain. The noble Lord, Lord Milverton, is mistaken in stating that the Sugar Board can vary the terms of this Agreement. They cannot. Only the Government in agreement with the Irish Government can do so.

I was asked a question about the possibility of extending this Agreement after 1967. This would be possible under this clause. An assurance has already been given that Parliament would be informed of any proposal to modify or extend the Sugar Agreement with the Irish Republic—and the term "informed" is the correct one, as my noble friend thought. To sum up, we have here an Agreement which opens up a new outlet for Commonwealth sugar producers; which helps to redress an anomaly that has crept into our sugar trade with the Irish Republic; which, in answer to the noble Lord, Lord Kilbracken, I would say will—though not this year—help towards compensating the Irish Republic for previous losses and at the same time ensure that in future there will be no question of the Irish Sugar Company's having any advantage in the cost of raw sugar imported; which spells out levels of trade upon which Irish producers and our own refiners can shape their plans to mutual advantage, and which enables Ulster to engage in experimental husbandry with a new crop. I am sure that your Lordships will wish all this to go forward, and I hope that my noble friends will now be disposed to withdraw their Amendments and to accept this clause as it stands.

4.5 p.m.


The position gets "curiouser and curiouser". So far as I can make out, the sugar trade in this country, at any rate, considers that the Irish refiners secured large markets in Northern Ireland, previous to January, 1962, by the fact that the British refiners were forced by an undertaking to Her Majesty's Government to pay higher prices for raw sugar than the Irish were paying. The noble Lord said that the price arrangements were altered in order to deal with the dumping of Iron Curtain sugar; and in the course of that the Irish position was affected too. Therefore it is proposed, by this curious, roundabout method, to pay compensation to the Irish refiners for the loss of a market which they ought never to have had, because the natural geographical sources of supply for North Irish sugar would be seaborne sugar from Glasgow and Liverpool. Everyone knows that it is cheaper to send this commodity by sea than by land. Frankly I cannot understand it. I feel that Her Majesty's Government must have some other quid pro quo. I wish we could be told what advantage they have secured from this Agreement.

There has been a good deal of argument about the price of sugar. I can assure the noble Lord, Lord Kilbracken, that when I was in trade and dealt with sugar, I have seen it at £4 or £5 a ton. The sole reason that it has gone up is that Russia has cornered the Cuban sugar crop. I have no doubt that in future years this crop will appear on the world's markets by some roundabout method, and the price of £50 per ton may prove to be too high at the moment. I should have thought that the Board of Trade would be concerned with this particular matter, but I wish that my noble friend, who is speaking for the Minister of Agriculture, will "come clean" and say what advantage we have got out of the £150,000 a year, which could be the amount handed over to the Irish sugar refiners.


I am aware that there have been suggestions that there is a mysterious and hidden quid pro quo. There is no such quid pro quo. I have spoken at exorbitant length on this clause in the Bill to show why I thought the advantages were well balanced as between the Irish and ourselves.


As my noble friend mentioned my name and remarked that I had said on the Second Reading that this clause filled me with horror, may I make it clear that what filled me with horror was that this clause was in this particular Bill? It seems to me, as I said then, that this is a most inappropriate Bill in which to put this clause. It has nothing to do with sugar production in this country; it in no way alters subsidies or increases or diminishes anything; nor does it do anything to beet sugar growers in this country. I should have thought that if we could justify this clause in the Agriculture (Miscellaneous Provisions) Bill, we might well put in another clause entitling, say, the South Africans to send tinned peaches to this country. There are a few peach growers in this country. It is definitely a Board of Trade matter, I should have thought, not an agricultural matter.

My noble friend also says that Greenock and Liverpool will benefit by 2,500 tons extra sugar refining, thanks to this Agreement. The British Sugar Refiners Association do not appear to think so; and I should have thought that if this were so, they would have been all in favour of the Agreement, because their object in life, like that of all commercial bodies, is to increase their turnover. They certainly think that this Agreement will diminish their turnover.

Thirdly, it seems to me, on the face of it, that to pay £150,000 for the joy of having an experiment in growing beet sugar in Northern Ireland, which appears to be what this amounts to, is an expensive way of doing it. I should have thought that the Government could easily have found a cheaper way, such as putting up a sugar beet factory in Northern Ireland on their own, rather than doing this. I realise, of course, that at the moment they may get the best of both worlds, because, thanks to events in Cuba, the price of sugar has gone up to a remarkable extent. Therefore they may be able to have their beet grown in Northern Ireland without having to pay for it. But it seems to me that if the Government are going to conduct governmental business in this way the whole time, we are going to come to a very nasty loss sooner or later, when world prices do not move in our favour. Therefore, I should like a little more explanation of what the Government really are trying to do by this particular Agreement.


My noble friend has asked me three questions, or rather given me three opinions, to which he would like a reply. He said that this was the wrong Bill. I cannot agree with him on that. This is a Miscellaneous Provisions Bill which, therefore, allows considerable scope for matters which come under the Minister of Agriculture, as does the Sugar Board under its terms of reference. My noble friend said that British sugar refiners did not think that they would find any advantage from the extra 2,500 tons. I did not say that they were going to, but that they could, and I cannot see who would be better placed to take advantage of the short-fall which results from these provisions.


May I interrupt the noble Lord? What I intended to say was that if this Agreement did not take place British sugar refiners appear to think that they would be able to get considerable more advantage than this 2,500 tons.


I think I have done my best to show that they will get an advantage by the undertaking of the Irish Republican Government to limit their exports to Northern Ireland to 10,500 tons instead of the present 13,000 tons, which, as I pointed out, could easily have increased over the years. This is a question of mathematics. I do not know how British sugar refiners work out their theory, but to me the position seems plain enough. My noble friend also said that we were paying £150,000 for an experiment in growing beet sugar in Northern Ireland and that this seemed rather expensive. Presumably he was being a little frivolous, or came in towards the end of my speech, because £150,000 is not in fact being paid. It is simply not being taken away from the Irish Republic, as it otherwise would be. It is a compensation for the £150,000 per year which the surcharge is at present costing the Irish Republic and which we should not wish to see continue. It is not paying back the £150,000 which has already accrued, as I explained before. Of course, it covers many more things than the experiment in beet growing in Northern Ireland.


I do not propose to divide the House at this stage, but there are one or two comments that I should like to make. I am sorry that my noble friend Lord St. Oswald did not consider the point of view we are trying to make from these Benches with regard to limiting the powers of the Minister. He just said that if this Amendment were carried to-clay in its present form, it would not be possible to modify the draft agreement during the next five years. That is not the intention of this Amendment, but, in spite of that, the Government do not wish to consider even the principle of our Amendment. That I find very distressing. Another point, which I think was not given sufficient consideration by the noble Lord is that what the Government themselves are trying to do should not be achieved by separate legislation. I thought that strong arguments had been put forward, and it was disappointing to hear the noble Lord just say that in 1956 the Govern- ment had not said that the duties of the Sugar Board would never be extended. Perhaps they could be extended, but I think that those duties should be considered in the proper context, because this is a completely new departure in the duties of the Sugar Board.

I would add that I was a little surprised at the comment of the noble Lord, Lord Kilbracken, when he was standing up for Southern Ireland, that he would oppose the Amendment but that the Agreement was going to cost the Irish company a large amount of money, for the price of sugar tended to rise rather than to fall.


I said that it looked as if it would in the first year, but in subsequent years it was a gamble, as the noble Lord, Lord Walston, pointed out. In the first year, the Irish Sugar Company is certain to lose a bit, and I said that I oppose the Amendment because I liked the extension of trade between the two countries.

The Irish company was apparently in favour of it.


I must have misinterpreted the words of the noble Lord. I should like to say—because the noble Lord's opening words were that all those who spoke on this Amendment had an interest in sugar—that I have not any interest to declare, except as a consumer. I think we have to consider very carefully the noble Lord's reply, to see what further Amendments may be necessary at a later stage, but I urge on him and on the Government to give further consideration to what we are trying to do, even if the drafting of this Amendment is faulty. With these few remarks, I beg leave to withdraw the Amendment.


I should like to say one word before this matter is put to the Committee. I join with the noble Lord, Lord Merrivale, in not wishing at this stage to press for a Division on the points we are trying to make, but I am left completely dissatisfied with the reply of the noble Lord, Lord St. Oswald, in trying to explain why there should be any compensation paid. It still completely defeats me. As the noble Lord, Lord Hawke, said, why we should pay compensation to the Irish for the loss of an advantage they ought never to have had, leaves one completely defeated.

Amendment, by leave, withdrawn.

Clause 25, agreed to.

Remaining clauses and Schedule agreed to.

Bill reported with Amendments.