HL Deb 27 March 1969 vol 300 cc1456-63

7.38 p.m.

LORD BESWICK rose to move, That the Draft Bacon Curing Industry Stabilisation Scheme 1969, laid before the House on February 27 last, be approved. The noble Lord said: My Lords, I beg to move that this Order be now approved. Bacon stabilisation arrangements began in December, 1966. The present system of payments was introduced in April, 1967. The scheme embodied in the Order, which I hope the House will approve, is authorised by Part V of the Agriculture (Miscellaneous Provisions) Act 1968.

The only significant change of procedure in this Scheme, as against the others, will be the establishment of a register of bacon curers which will be kept by the Minister. Unless a curer's name is inserted in the register he will not be eligible for the stabilisation arrangements. Although the prospect of any levy payments may seem remote under the currency of the present Scheme, nevertheless we think it important to make clear that the arrangements as a whole rest firmly on the idea of payments being balanced in the long term by levies, and that the same considerations should apply to the payment of grants as to the application of levies. All this is provided for in paragraphs 8 and 9 of the Scheme.

It is the policy of Her Majesty's Government to encourage the expansion of British bacon production. This can be effected only by making efficient use of resources, by increased productivity and by improved marketing. The Bacon Market Sharing Understanding, the particulars of which I recently gave in the House, open the way for the curing industry to win a larger share of the United Kingdom market. The measures taken at the Annual Review should ensure a steadily increasing supply of the necessary pigs, and it is now important for the whole curing industry so to organise their resources that they can take full advantage of their opportunities.

When the Worth Committee recommended the continuance of the stabilisation arrangements they expressed the hope that these arrangements would be so adjusted as to encourage re-organisation and to discourage the inefficient use of resources". To help in achieving this, and in securing the expansion objective's, the Industrial Reorganisation Corporation has agreed to make an independent examination of the structure of the industry and to consider with individual companies whether any improvement might be effected.

In the meantime, this draft Scheme relates to bacon produced up to September 30 only. Obviously, a longer-term decision is required and the Government are prepared to consider immediately any recommendations, interim or final, made to them by the Industrial Reorganisation Corporation. I believe that the industry will give the I.R.C. that measure of co-operation which is necessary for the investigation to be speedily completed. Should it be necessary the Government propose to lay before Parliament a Scheme extending the present arrangements for a further short period, pending the Corporation's final recommendations.

My Lords, I do not believe there will be any disposition to deny that stabilisation arrangements are necessary, and that they have played a vital part in putting the British bacon industry in the more encouraging position from which further advance should be possible. I have no hesitation, therefore, in commending this Scheme to your Lordships' approval. I beg to move.

Moved, That the Draft Bacon Curing Industry Stabilisation Scheme 1969, laid before the House on 27th February last, be approved.—(Lord Beswick.)

7.42 p.m.

LORD NUGENT OF GUILDFORD

My Lords, may I thank the noble Lord, Lord Beswick, for describing the Scheme and its purposes to your Lordships, and may I say that I welcome the Scheme and would advise my noble friends to welcome it, too. This is no more than an interim measure to continue the existing Scheme. It is a complicated little Scheme, and I am grateful to the noble Lord for sparing us a complete explanation of how it all works. The fact is that it keeps the bacon-curing industry alive at present, and therefore is of great importance.

The curing industry is the essential link between the pig farmer and the housewife. The shaky condition of this industry has been a matter of great anxiety. It is due to a number of factors, some within the industry and some without. Here I should like to express my thanks to the Worth Committee for the Report which they made, which has been such a helpful review of this most complicated affair. The industry reached a crisis in 1966 when this Scheme was brought in to keep it going, and it has been most useful in this period.

As the noble Lord has rightly said, in the context of a programme to increase home food production bacon is a most important commodity. At present, we produce not much more than one-third of the total bacon consumed in this country. Only about one-third comes from our own farms, so there is a great scope for increased production, depending on two things: first, that our farmers produce the right sort of pig to make good bacon; and secondly, and equally important, that the bacon-curing industry is of both the right quality and the right capacity. As the noble Lord has said, this is no more than an ad hoc interim Scheme; and will come to an end in six months' time. I should like to make a comment on the shortness of this period, because it means that in these six months the Government hope to work out a permanent Scheme for this industry which will really set it on the right road.

The noble Lord, Lord Beswick, has told us that the Government have called in the Industrial Reorganisation Corporation to help. They have already the Report of the Worth Committee; but the Industrial Reorganisation Corporation has a big and difficult task ahead of it, first of all to win the complete confidence and co-operation of the industry, which is a most complex affair. It consists at the present time of something over 200 factories. It is true that the Worth Committee said that there were not more than ten or twelve groups that make a significant contribution to production. Nevertheless, the structure is most complex, and the future reconstruction of the industry will clearly depend on a number of mergers taking place in order to achieve a really efficient structure for the future.

I should have thought that the Government are being optimistic in supposing that even the I.R.C., with all its dynamic qualities, would be able first to work out schemes of reconstruction, and then to make recommendations to the Government in that short time. I was relieved to hear the noble Lord, Lord Beswick, say that if necessary an extension of this Scheme could be made, and that he would if necessary come before this House again with an extending Order. The only point I want to make to the Government is: for heaven's sake! take enough time to do it. It is impossible to get agreement in a short time, and "shot-gun marriages" for mergers are no basis for a happy future. We must try to get this industry reconstructed on a really sound basis, and I am sure that this will not be easy. The I.R.C. and the industry have my best wishes, but I press upon the Government not to say that it must be done in six months. It is most unlikely that that would be possible. So I ask the noble Lord, Lord Beswick, not to hesitate, if it is necessary, to come here and ask for a further Statutory Order extending the Scheme for a further six months.

There are three questions that I should like to put to the noble Lord. Would he say (I do not think he told us) whether the bacon curers are satisfied with the Scheme as it now exists in the present Order. Secondly, what is the annual cost of the present Scheme? I think we should know this before we agree to the Order. The noble Lord told us that the industry is co-operating with the I.R.C. I was happy to hear that. I hope it will. I think perhaps I need not do more than say that I hope that out of this co-operation will come a sound reconstruction which will put this industry on a thoroughly efficient modern basis. It consists of some good modern parts and some less good, old-fashioned parts, of adapted buildings and so on. Out of it we want to see coming something really good and permanent. With those comments, I am pleased to support the Order. I would just ask the noble Lord to answer the one or two questions I have put to him.

7.48 p.m.

LORD AIREDALE

My Lords, there are two points of detail that I should like to raise on this Order. The lesser one in importance is, I think, on Article 10, which lays down that the Minister shall determine the rates of payments or levies week by week. I assume that this is for the benefit of the industry and not of the Minister, so that the industry may keep a running account and may know, week by week, how it stands as between the receipt of payments and being liable for levies. I should have thought that it would have been better if Article 10 had laid upon the Minister the duty not only to determine the matters week by week, but to publish and to communicate to the industry weekly these decisions. I hope that when this Scheme is shortly superseded, as I understand it is to be, by another one, opportunity will be taken on that occasion to impose upon the Minister the duty not only to make weekly determinations, but to communicate these determinations weekly to the industry.

The other point (I think a much more serious one) arises on Article 9. This empowers the Minister to impose levies whenever he considers that the return from the sale of the bacon is more than sufficient to cover the cost of production of the bacon, without taking into account any profit for the producer or any question of the producer's being enabled to make a living without being liable for levy should the Minister so determine. I do not suppose that such power would ever be exercised by any Minister, because I do not suppose that any Minister wants to bring the bacon curing industry to an end; and this would be what would happen if these powers were exercised and levies were ordered without the producer being enabled to make a living. But I do not think that Ministers ought to come before Parliament and ask for powers which they would never contemplate using; nor do I think Parliament ought to grant Ministers powers which they clearly would never, in their senses, put into operation.

I do not suppose that in the next six months during which this Order is going to operate any Minister, however malevolent, will be able to do a great deal of damage to the bacon industry, and I am sure that no Minister wishes to do so. Nevertheless, I very much hope that when this Order is superseded by another one the power which is sought in the new Order to make levies will not require the Minister to consider simply the cost of production and the proceeds of sale and take no account of the entitlement of the producer to make a living. I hope that in granting power to impose the levy it will require the Minister to have regard to the fact that the producer is there to make a living out of the work that he does. I very much hope that that point will be borne in mind when the new Scheme is brought into operation.

LORD BESWICK

My Lords, I am grateful for the welcome which has been expressed for the scheme, and I particularly welcome the words of the noble Lord, Lord Nugent of Guildford. Also, I hope that I can construe what was said by the noble Lord, Lord Airedale, as a welcome for this scheme, although he had some reservations to make. Let us face the fact that it is an interim scheme, and a necessary interim scheme. I was asked by the noble Lord, Lord Nugent of Guildford, whether it was agreed by the industry. They welcome the framework of the scheme. I understand that they would like rather more money to come as a result of it, but nevertheless the amount, which is some £8½ million for this year, is a very considerable sum. I am glad to see the noble Lord indicating his support. I suppose it is very seldom that we shall get an industry—especially an industry concerned at all with agriculture—saying that they are quite satisfied with the amount of money. But that is the position in this case.

The noble Lord said that it was better to wait a little longer and to come up with the right final scheme rather than to make a quick decision with an unsatisfactory scheme. Of course this is a sensible thing to say. My understanding is that the I.R.C. say that they might make interim recommendations about the reorganisation of the industry within about two months. They are not entirely unfamiliar with the industry. A good deal of inquiry, of course, has been made and they know something about its structure, although not until quite recently, I understand, did they get the agreement of the companies concerned to go in and make detailed investigation. The fact seems to be that they will go in now with some understanding of the overall Picture, and that within a few months they will be able to complete their inquiries. I trust that they will be able to come up with proposals that will be satisfactory. Nevertheless, I take the point that rather than hurrying without reaching a satisfactory conclusion, it would be better to have another extension of this interim scheme.

The noble Lord, Lord Airedale, raised two or three points. He wanted to know why these determinations about prices were made weekly. The answer is that they are decided weekly because bacon prices change weekly, and it is of assistance to make these determinations each week. He asked whether it would be possible to publish the prices. I understand that the industry is informed of the prices, but whether any formal publication would be more helpful is a matter we shall consider. The noble Lord went on to say that the powers to apply a levy, as they were not likely to be brought into operation within the next six months, ought not to be in the Order. I do not agree with him at all on this. The whole essence of this sort of stabilisation scheme is that it should be a give and take arrangement. The principle is important, and on reflection I hope he will agree that even though within the short term that part of the principle covering the levy is not applied, nevertheless it is essential that we have firmly before us the fact that in the lean times the Government help, in the good times the industry make a contribution, and that the objective is that overall the scheme will be self-balancing. Therefore I hope the House will agree that it is as well to maintain this principle in this Order.

The noble Lord, Lord Airedale, went on to say that he thought there should be specific reference to a profit before a levy is applied. Again, I am afraid that I cannot agree with him. It is quite impossible to say that no levy shall be raised unless each firm makes a profit. One cannot say that at all. One given rate of price may enable one firm to make a profit, and another one could well make a loss. What I think is important is that there should be the possibility of profit. We want a reasonable rate of prices to prevail, and the considerations which are set out will enable the Minister to determine whether there are prices under which eventually some firms will make a profit. Some, if they are not so efficient, may well not reach the profit-making stage. Nevertheless, they have the opportunities of profitability, and I think this approach—perhaps the noble Lord will agree—is the right one. I hope that I have answered all the points which the noble Lord, Lord Nugent of Guildford, put to me, and I trust that the House will now be able to approve this Order.

On Question, Motion, agreed to.