RAW COTTON COMMISSION (CANCELLATION OF LIABILITIES) ORDER 1967 (Hansard, 19 December 1967)

§ THE PARLIAMENTARY SECRETARY, MINISTRY OF PUBLIC BUILDING AND WORKS (LORD WINTERBOTTOM)
My Lords, I beg to move that the Raw Cotton Commission (Cancellation of Liabilities) Order 1967 be approved. As your Lordships are no doubt aware, the Cotton (Centralised Buying) Act 1947 established a Commission for the centralised buying, selling and distribution of raw cotton. The Act transferred to the Commission all property rights and liabilities in raw cotton and other contracts relating to trading in and dealing with raw cotton vested in the Board of Trade immediately before the establishment of the Commission. The Act also made provision for periodical advances to be made by the Board to the Commission for the purpose of meeting outgoings chargeable to the Commission's revenue and capital accounts.
In 1954 the Cotton Act amended the functions of the Commission principally by withdrawing its monopoly status, and provided for its dissolution if at any time the Board of Trade and the Minister of Materials were satisfied that it would be in the public interest to do so. The functions of the Minister of Materials under the 1954 Act have since been transferred to the Board of Trade. In exercise of this power the Raw Cotton Commission (Dissolution) Order 1954 was made after approval by Parliament, and on September 1, 1954, the Commission went into liquidation. The winding up has been handled by a liquidator appointed by the Board of Trade and the Minister of Materials empowered to exercise the remaining functions of the Commission during the winding-up period.
1367 The liquidator took over a net deficit of £7,035,502. The losses incurred by the Raw Cotton Commission were discussed by the House during the debate on the Cotton Bill in 1954. During the winding-up period a further deficit of £1,233,094 was incurred. The major part of this additional deficit is attributable to the development premiums amounting to £808,029 paid on Nigerian cotton imported during 1955 and 1956 as part of the negotiated cancellation of the agreement with the Nigerian Produce Marketing Company Limited. The liquidation has been delayed by certain outstanding claims, but these have recently been settled. All assets have been realised and no further income can be expected to reduce the outstanding liabilities to the Board of Trade.
It is therefore now possible to proceed with the formalities required to complete the liquidation of the Commission, including the presentation of the liquidator's final account, which under Article 13(2) of the Dissolution Order must be laid before Parliament by the President of the Board of Trade. Before this can be done the outstanding liabilities to the Board must be cancelled. Section 4(6) of the 1954 Act provides for the cancellation, with the consent of the Treasury, by Order of liabilities in respect of both initial and periodical advances. Section 5(1) of the Act provides that power conferred by the Act to make Orders shall be exercisable by Statutory Instrument and shall be invoked only if a draft of the Order has been laid before Parliament and approved by Resolution of each House. The draft has been so laid. I beg to move.

§ LORD ERROLL OF HALE
My Lords, I should like to thank the noble Lord, on behalf of noble Lords in this House, for his clear explanation of this draft Order. But I do not think we should allow the draft to pass your Lordships' House without just looking back for a moment at what is in fact a sorry little epitaph to a largely forgotten episode of the last time the Labour Government were in office. 1368 The Liverpool and Manchester Cotton Exchanges had to be closed down during the war because of war-time conditions, and after the war was over they were anxious to get going in business again and to provide the service to the cotton industry which they had provided with such exemplary efficiency for nearly a hundred years. The 1945 Government, however, had other ideas. They believed that there should be a monopoly-buyer of raw cotton, and that it would accord not only with their principles but also with their belief in the ultimate efficiency of the cotton industry, if cotton buying were nationalised. Hence the Cotton (Centralised Buying) Act, which passed through your Lordships' House some twenty years ago. That Act established a single, monopoly buyer, and it was claimed for this buyer that it would enable prices to be stabilised to the spinners; that they would be protected from fluctuations in world markets; and that the speculator, with his profits, would be eliminated.
This state of affairs continued, with ever-growing losses on the part of the Commission when it had been set up once the Act was passed, until a Conservative Government came into office in 1951. We inherited the Raw Cotton Commission; and the Act of 1954, to which the noble Lord has referred, removed the monopoly buying powers of the Commission and forced the Commission—by then a very cumbrous, bureaucratic institution—to compete with the recreated, though much smaller, Liverpool and Manchester Cotton Exchanges. It became quite clear that in the more free world commodity conditions which prevailed in the early 1950s there could no longer be a place for a monopoly or nationalised buyer of raw cotton, and it fell to the Conservative Government to dispose of the Raw Cotton Commission, which it did by means of the winding up Order and other details so clearly enunciated by the noble Lord. Now we come to the end of the sorry story: a net cost to the taxpayer of over £8 million in a Socialist experiment started twenty years ago. My Lords, will they never learn?

§ LORD RHODES
My Lords, if there was anybody present who did not know any more than that, it would sound very good, but I can tell the House that what 1369 the noble Lord has been saying is absolute and utter nonsense. If Lord Chandos were here—he was a: very distinguished Member of the other place, and held the high rank of President of the Board of Trade—he would confirm what I have to say about what the noble Lord has said, because it is on record that Lord Chandos said that it was a total impossibility ever again to resurrect a terminal exchange for cotton. That was because of the contraction which had taken place, and the fact that for a terminal exchange the contracts for cotton bought against futures, totalling a minimum of a million bales, had to be delivered against futures as and when required. Lord Chandos would verify that if he were here, because I am merely quoting what he said. That was at a time when the Conservatives were responsible.
The Raw Cotton Commission came in at a time when it was absolutely necessary for that type of control to be maintained. It saved the Lancashire trade then because of its ability to buy cotton all round the world. If it had not been for the Raw Cotton Commission it would not have been possible, for instance, to sustain the utility schemes which were so important during the war, when the ordinary folk of this country, with the price controls that existed at the time, were able to buy goods at a reasonable price. In many ways I wish we had some of those price controls now. People knew what they were buying and that the prices which were being charged were reasonable and fair. That is what the Raw Cotton Commission did. If the noble Lord wants any more information, I can give him chapter and verse for an hour.
What I should like to ask is this. The Conservative Administration in a transaction with the Nigerians took on an indebtedness against the resources of the Raw Cotton Commission which landed us with a deficit of somewhere in the region of £600,000 or £700,000. How much debt was incurred under Sections 14 and 15 of the Cotton Centralised Buying Act 1947, under which the Raw Cotton Commission traded, after the 1954 Cancellation Order? How much debt has been incurred under Sections 14 and 15 since the Order which provided for the dissolution; and does the winding up 1370 in total take place on January 1, 1968, like the cancellation of this £8 million debt?

§ LORD WINTERBOTTOM
My Lords, I am certain the House is grateful to both noble Lords for their sermons on the virtues of private enterprise and on the success of the Cotton Commission during the period when the raw material markets of the world were destroyed and distorted by a major war. I think that even the noble Lord, Lord Erroll of Hale, with his fervent belief in the virtues of private enterprise, would agree that in the difficult period immediately after the war private enterprise would not have served this country as well as the system which we introduced. But, of course, historians will comment upon this when we are passed away. All we have to do is to close a chapter. The noble Lord described it as "a sorry episode". Whether or not the stabilisation of a basic raw material at the cost of something under 1 per cent. of the total gross dealings of the Cotton Commission is a matter for complaint, I should not like to argue to-day. I personally believe that the nation as a whole benefited by this action, and did so also particularly during the difficult period of the Korean War, when the cotton markets of the world were once again stabilised.
But times change and things get better. The world markets settled down, and at a time considered appropriate by the Government of noble Lords opposite the Cotton Commission was wound up. The main business of winding up was completed by 1957; and, as my noble friend has pointed out, substantial losses were incurred during the period of liquidation—not because of the operation of the Cotton Commission but during its period of liquidation; for ten years, in fact. However, the business of liquidation has dragged on because of very minor court cases which had to be finally settled. After this long period, settlement has been achieved, and the Raw Cotton Commission (Cancellation of Liabilities) Order has to be agreed by this House so that we can finally close this chapter. I hope that, with my explanation, noble Lords will agree to this course of action.