§ 3.21 p.m.
§ LORD DENHAM rose to move, That the Draft Sugar Beet (Research and Education) (Increase of Contributions) Order 1972 laid before the House on December 9 be approved. The noble Lord said: My Lords, the purpose of this Order is to increase the maximum contribution which growers of beet and the British Sugar Corporation may be required by Order to pay to finance the programme of research and education which the industry wants to see carried out. The Order is simple enough in its effect, but the financing arrangements are not quite as simple as they might appear and a word or two of explanation might be helpful to noble Lords. Section 18(1) of the Sugar Act 1956 lays a duty on the Minister of Agriculture and the Secretary of State for Scotland to make an Order each year approving a programme of expenditure on research and education for home-grown sugar beet. Ministers are required to consult the industry, and this they do through the Sugar Beet (Research and Education) Committee, which anyone concerned with sugar beet knows to be a most effective body for this purpose. The Committee, which represents both sides of industry, draws up the annual programmes of research and education for the approval of Ministers and advises on the necessary rate of contribution. So your Lordships can see that this is very much a case of the industry itself saying what it wants done and finding the money to pay for it.
§ The income from the annual levies is paid into a fund which is under the authority of the Minister of Agriculture, Fisheries and Food. Annual accounts are submitted to Parliament. The actual rate of contribution is determined annually and will be the subject of a separate Order. We are concerned here only with the maximum rate which may be levied. The 1956 Act specified that this maximum should be 3d. per ton each from the growers and the Corporation for each ton of home-grown sugar beet delivered to the Corporation. Noble Lords will, I know, forgive me for referring to old pence at this point, in the interests of clarity. I will refer 24 subsequently to the effects of decimalisation. Under Section 18(4) of the Act, the maximum rate can be varied by Order. The maximum rate laid down in the original Act sufficed for a number of years. But in 1967 it had to be increased to 4d. per ton to meet the steadily rising costs of the programmes. The Order was renewed in 1970 for a further two years ending on March 31 next. Without another Order the rate would automatically revert to that specified in the original Act, and of course this was already inadequate five years ago. So in order to secure the industry's position, we have to make another maximum contribution Order. During the past two years the rate of income has really been insufficient to match the cost of the programme, 70 per cent. of which is attributable to salaries of research and other workers. For example, income in 1970–71 was £210,000 compared with costs amounting to £241,000. This year, income is likely to match the cost of research and education, but the programme had to be curtailed because of the unsatisfactory position of the fund.
§ Apart from matching the cost of the annual programme, there is the need to carry forward a balance in the fund from year to year. In fixing the maximum rate of contribution one has to bear in mind not only the needs over the operational period of the Order, but also what is likely to be needed in the year following. This is because the levy is assessed on the tonnage of sugar beet sold to the British Sugar Corporation and, as we know, the harvest does not start until the autumn. In the meantime, of course, the research programme goes on and has to be paid for; hence the need for fairly substantial financial reserves. The proposal in the Order now before your Lordships is that the present maximum rate of 4d. per ton from the grower and 4d. per ton from the Corporation—which became 1.66p under the terms of the Decimal Currency Act 1969—should become 3p for 1972–73. The Sugar Beet (Research and Education) Committee has looked closely at current expenditure to see that this is fully justified. As I have already said, the fund is already insufficient to meet present needs. Furthermore, we are entering a period when an expansion of the programme of research and education can equip us to take 25 advantage of the opportunities which entry into the European Economic Community could ultimately offer. My right honourable friends are satisfied that in asking your Lordships to approve a maximum contribution of 3p for next year, they are only making a sensible provision for the demands likely to be made on the industry in the changing circumstances ahead. The price of sugar is unaffected by these proposals. I think at this stage I should make it clear that, if the maximum of 3p were levied, with an average crop this would bring in £390,000, as against £240.000 in 1971–72 at the present figure.
§ I do not propose delaying your Lordships longer with a catalogue of what the activities of the Committee have achieved over the years. The new technology is there for all of us to see. Much remains to be done, especially in the mechanisation of spring operations and in plant breeding. Suffice it to say that the Committee has the full support of the industry, which has for many years recognised the value of self-help in this field. The industry makes up its mind what it wants done and finances it. Growers, processors and scientists are all working together to achieve a common objective, to see that the sort of sugar beet the processors want is produced in the most economical way. Unfortunately, the sugar beet industry is no more insulated from the effects of rising costs than we are, and more money is needed to carry on the good work. I commend this draft Order to your Lordships. May I stress again that a separate Order will be made shortly specifying the actual rate of contribution for 1972–73, which cannot exceed the level laid down in the Order which is now before your Lordships. My Lords, I beg to move.
§ Moved, That the Draft Sugar Beet (Research and Education) (Increase of Contributions) Order 1972 laid before the House on December 9 be approved. —(Lord Denham.)
§ LORD BROWN
My Lords, I am sure that this is an extremely sound Order involving, as it does, a compulsory levy on an industry, thereby spreading the load for certain operations equally over the industry, instead of letting the willing horses carry the load and the laggards escape. The reason why I am on my 26 feet is to ask a very simple question. Am I to understand from what the noble Lord has said that this gives rise to a general principle on the part of the Government that, as a matter of principle, where a majority of an industry is in favour of the continuation of compulsory levies of this kind, they approve such continuation?
§ 3.30 p.m.
§ LORD HOY
My Lords, there are only two questions that I wish to ask on this Order. Despite what my noble friend has said, this means a very considerable increase and I am very grateful to the noble Lord for giving the figure in totality rather than saying that it is about l½p. I have always supported research and education in this field, so I shall not go back over what I have said previously. But the noble Lord said that in 1970 the levy represented something like £210,000 from the industry and £241,000 from the Corporation. I should like him to clear up the effect of this change on the contributions from the industry itself and from the Corporation. In the old days, when I introduced Orders in this respect and had to suggest that the Government wanted some provision which would allow them some leeway in the event of certain circumstances arising, I can assure your Lordships that I always met with the greatest protest from the Opposition of the day. They always said: "If in fact you need 25 per cent. say so, but what you are not entitled to do is to come to this House and ask for an increase of 140 per cent.", which is what the Government are doing to-day. The Government are saying: "We do not find the present assessment sufficient for our purpose, and we propose to increase it by 140 per cent." The Minister said," I give an assurance that we do not propose to increase it by 140 per cent. at the present time; we propose merely to have this in hand, and we will in fact make an increase as and when we feel fit".
I could not understand the other figures the Minister gave, because he said that 3 new pence meant something like £390,000 from the industry and £240,000 from Government sources. I cannot understand why there is this difference under the present arrangement. It may be that I took the figures down wrongly. The Minister mentioned two figures, and 27 if both parties are supposed to pay the same amount I cannot understand why there should be this difference.
§ LORD DENHAM
My Lords, I wonder whether I may put the noble Lord right (if he will forgive my saying so) on that point? I said that the 3 new pence, if raised in full—and we shall debate how much will in fact be asked when this Order comes before us—would raise, with an average crop, £390,000. The figure of £240,000 was the figure for this year, with which the possible figure for next year must be compared.
§ LORD HOY
My Lords, all I am pointing out to the Minister is that if the old figure was £240.000 and the new figure is going to be £390,000, then that of course does not reflect the figure he is asking for in this Order unless it is because he is saying to your Lordships' House, "Although we propose to put this up by 140 per cent., we propose to add only a certain, smaller percentage to get the figure of £390,000". Is that what the Minister is saying? I do not ask him to answer now, but I am sure that he will want to do so when he replies to the debate.
There are two other things included in this Order which I am sure will interest all Scottish Members of your Lordships' House. In paragraph 1(2) it says:This order extends to the whole of Great Britain ".Then, in paragraph 2(1) it says:… extending to the whole of Great Britain, for carrying out research and education in matters affecting the growing of home-grown beet …".So this is in fact very specific, but your Lordships will know that the Government propose to close down the Cupar sugar beet factory, which is the only factory for sugar beet in Scotland. It must seem very peculiar to several noble Lords, where-ever they may sit in this House, that at the very moment when the Government are saying, "We propose to do this with research which will apply"—as the Government specify— "to the whole of Great Britain", they are also taking action to close down the whole of the Cupar sugar beet factory, which is the only one we have in Scotland.
28 I know that this presents a little difficulty for the Government of the day because the position of this factory economically is very difficult, and in our day we had to face up to the same problem. But every single Conservative Member of Parliament, be he in another place or in this House, said, "If you vote in a Conservative Government the Cupar beet factory will of course continue to function." Now, of course, it has been proved that that statement was a complete nonsense: the factory is going to be closed down. What we object to—or, at least, what we want to find out; we do not object at the moment because we have to find out the facts—is this. The factory having been closed down, why should we in Scotland then be paying for research which will have no effect in Scotland? Indeed, my Lords, I would say to the noble Lord that it takes a great deal of courage to come and ask the Scots to pay for something from which Scotland will not get any benefit. So I would say to the noble Lord that if he wants to get this Order through this place to-day he must justify the action that the Government have taken.
There are two questions that the noble Lord has to answer: first, why do we require to increase this levy by 140 per cent.; and, secondly, why should Scotland have to pay for this research from which we shall see no benefit because the Government of the day are closing down the only sugar beet factory in Scotland? If the noble Lord said: "Despite the fact that the factory is closing down we propose to carry out a considerable amount of research in Scotland," and if the noble Lord can tell us how much of this money is going to be paid to Scotland we shall he prepared to accept that argument. Research, as we appreciate, is not confined to any section of the country; nor even, perhaps, to any section of the world. All we are saying is that the noble Lord must justify the proposals that he has made to the House this afternoon, and unless he can answer these two questions satisfactorily then I am afraid he will not be able to have the Order quite as easily as he expects.
§ LORD DENHAM
My Lords, I think I can satisfy noble Lords opposite on the points they have raised. The noble Lord, Lord Brown, asked whether, where there is a majority in an industry in favour of 29 a programme such as this being carried on, Her Majesty's Government will always concur with them. I do not think the noble Lord will be surprised when I say that every case must be taken on its merits. Of course, what both sides of the particular industry say on the point is and will be taken very seriously into consideration by Her Majesty's Government, but the noble Lord cannot expect me to lay down a general rule on this.
The noble Lord, Lord Hoy, asked me a number of questions. I think he was worried, in the first place, about the figure of £390,000—and this is only an estimate; there is a great deal on which it depends—and that the Sugar Corporation and the producers would pay different amounts. This is not so. If the levy were to produce £390,000, this would be split down the middle and one-half, £195,000, would be paid by the producers and a similar amount by the British Sugar Corporation. There is no Government contribution at all as to this.
The noble Lord also asked why there was to be an increase of 140 per cent. in the levy. The increase, not in the levy but, let us say, in the maximum levy (because I think those are the figures which the noble Lord was talking about) is from 1.66 pence to 3 pence, which is in fact about 80 per cent.—not quite as bad a figure as the noble Lord suggested. Then he asked, if in fact it is an increase from 1.66 to 3 pence, how that produced an increase from £240,000 to £390,000. My Lords, there is not only the rate of the levy to be taken into consideration, of course, but also the acreage grown and the yield per acre—and those two things are variable. The amount of £390,000 that I quoted is purely for guidance, purely an estimate, and cannot be taken as a firm figure.
The noble Lord, Lord Hoy, mentioned the sugar beet factory at Cupar. I think it will probably be for the benefit of your Lordships if I reminded the House of a little of the history of this. In July, 1969, the then Government announced that the British Sugar Corporation would close their factory at Cupar after processing the 1971 crop. At the General Election in 1970, the Conservative Party promised to investigate the reasons for this closure if they were returned to power. After an exhaustive examination, 30 which included meetings with all the parties involved, the Secretary of State announced on December 14, 1970, that there were insufficient grounds on which to ask the British Sugar Corporation to reconsider their decision.
Local opposition to the closure continued and in June, 1971, an independently-commissioned feasibility study was submitted to Ministers, one of its conclusions being that an independently-operated factory at Cupar would be viable. This would require amending legislation and a willingness on the part of the British Sugar Corporation to dispose of their assets at Cupar at a price consistent with the feasibility study conclusions. The British Sugar Corporation is a publicly-quoted company in which the Government hold approximately one-third of the shares. It is not possible to direct them to dispose of their assets. The Corporation agreed to participate in discussions with a consortium which was established under the chairmanship of Sir George Dunnett to follow up the feasibility study. The Government announced that while they were ready to do what they could to facilitate negotiations between the parties concerned, they could not intervene in what was essentially a matter for commercial negotiations between two private companies. The consortium then asked as a condition of their proceeding that they should obtain more favourable conditions in relation to sugar output than the other refiners. Ministers have publicly declared that they were not prepared to contemplate distorting competition in this way. The consortium, in view of the present and foreseeable circumstances of the sugar market, decided to abandon their project.
The noble Lord, Lord Hoy, also asked why the Order should refer to Scotland. The reason for this is that there is a small amount of residual expenditure needed to cover the winding up of the Scottish experiments. It is for this reason that my right honourable friend the Secretary of State for Scotland also has an interest in this order.
§ LORD SHEPHERD
My Lords, does the noble Lord contemplate that when these residual amounts have been paid off, the contribution from Scotland will cease?
§ LORD DENHAM
My Lords, I was coming to that matter. The contribution from Scotland is contributed by the Scottish growers of sugar beet. If there are to be no Scottish growers of sugar beet, If there will be no contribution. That is the point that the noble Lord, Lord Hoy, made when he asked why the Scots were to pay. In fact, they will not pay. We have consulted the National Farmers' Union of Scotland about the proposed increase and they say that they would have no views on the level of the contribution if Cupar closes and would almost certainly agree to the proposed increase (as have the English Union) if Cupar remains open and sugar beet production continues in Scotland.
I hope that I have satisfied the noble Lord, Lord Hoy, and the noble Lord, Lord Brown, on the questions they raised and I would ask your Lordships to accept this Order.
§ LORD BROWN
My Lords, in the event of some industries having had, through the operation of a compulsory levy, a long history of very successful and useful use of that levy, would the noble Lord then, under these rather more conditional situations, not agree that in principle, if the majority of the industry is in favour of a continuation of the levy, the Government should on general principles back the continuation of that general levy?
§ LORD DENHAM
My Lords, I believe that that would be taken into account; but that there might be other factors in whatever the noble Lord has in mind—if he has any particular thing in mind; and from the expression on his face I think he has—which, as well as other circumstances, would also be taken into account.
§ LORD HOY
My Lords. I did not know whether the noble Lord had made up his mind to sit down. I was safeguarding my own position. The noble Lord 32 said that the present contribution was 1.66 per cent. This I find very difficult to understand. I do not know how it could be 1.66 per cent. when is fact—
§ SEVERAL NOBLE LORDS: 1.66 pence.
§ LORD HOY
I do not know how it could be 1.66 pence when the Order says that we are increasing this sum from 1.25 pence. If this is true, I want to know where the rest of the money came from and where did the Government get the power to impose a levy of 1.66 pence when the Order specifically declares that it has to be only 1.25 pence.
My Lords, I think I should intervene at this stage. I think that this would be in accordance with our normal Rules of Order. It is only in order for the noble Lord to put a brief question to my noble friend "before he sits down".
The noble Lord indicated that he was going to put a stream of questions to my noble friend. I think the noble Lord is beginning to strain our Rules of Order.
§ LORD HOY
My Lords, may I have an answer to that question? I am sorry that the noble Earl the Leader of the House should feel as he does. He was not here when we began discussing this matter. Here we have an Order which says that we are going to increase the levy from 1.25 pence to rather more than 3 pence. The noble Lord replies to my question about this by saying that it is not all that different because at present we are imposing a levy of 1.66 pence. Indeed, the Act of Parliament lays down 1.25 pence. I am entitled to ask who gave the power to increase it by that amount. Surely, only Parliament has the right to do it.
I should like to ask one more question. If Scotland is to go on producing sugar beet and is not to have a share in this research and development, I want to know why we are being asked to pay this amount. We are not going to get any benefit from it.
§ LORD DENHAM
My Lords, I think I can put the noble Lord straight on this point. I think he is a little confused. I am sure that the fault is mine for not 33 having explained the matter properly. The parent Act, although it expressed the sum in old pence, allowed the equivalent of a maximum of 1.25 pence; but this could be increased for a period by an Order such as the one we are discussing this afternoon. This was increased to 4 old pence which is the equivalent of 1.66 new pence. It is that sum that we are increasing to 3 new pence. If this Order were not to be passed by your Lordships the amount would not revert to the 1.66 new pence current at the moment; it would revert to the 1.25 old pence of the parent Act. I think that this is what is confusing the noble Lord.
So far as the noble Lord's second question is concerned, I thought that I had already answered it. Scottish farmers will not be contributing if they do not grow sugar beet. If they do grow sugar beet, they will contribute; but if the Cupar factory is to close I cannot conceive that they will be growing sugar beet. If they were growing sugar beet they would have an interest in the research. If they do not have an interest in the research they do not pay for the research. Surely that is fair by any standards.
§ LORD DONALDSON OF KINGSBRIDGE
My Lords, may I clarify one thing? Noble Lords have spoken of "1.25 and 1.66 per cent." It is of course "per ton".
§ LORD DENHAM
My Lords, it was the noble Lord, Lord Hoy, who said "per cent." It is 1.25 and 1.66 new pence per ton.
§ On Question, Motion agreed to.