Sugar from Commonwealth Countries

HL Deb 29 January 1981 vol 416 cc884-903

6.59 p.m.

Lord Walston rose to ask Her Majesty's Government what steps they propose to take to ensure continued access of raw sugar from Commonwealth countries under the Lomé Convention, in view of the closure of the Tate and Lyle refinery in Liverpool.

The noble Lord said: My Lords, I beg to ask the Question standing in my name on the Order Paper. In doing so I would like to make it very clear that I am not raising this matter in any way as a spokesman for Tate and Lyle, nor indeed am I raising it on behalf of the British Sugar Corporation, the two great giants which control the sugar destinies not only of this country but of others. But perhaps I should declare an interest in that, as I think some of your Lordships already know, I am a producer of sugar beet in this country. I should also make it clear that although I farm also in the West Indies, I am not a producer of sugar cane in that area and nor, indeed, does the island where I operate produce any sugar at all. So I hope that I can claim to approach the matter with a certain degree of objectivity.

The reasons why I thought it right to bring this matter to your Lordships' attention and to elicit, I hope, from the Government a satisfactory reply are as follows. My first reason is the serious increase in unemployment that inevitably will arise from the proposed closure of the Tate and Lyle plant in Liverpool—an area which your Lordships well know has already a frighteningly high level of unemployment. Secondly, I am a very strong and fervent believer in the Commonwealth and this matter has a very direct effect upon Commonwealth countries. Thirdly, I am an equally fervent believer in the importance of helping the less developed parts of the world and minimising, in so far as we are able, the gap in wealth that there is between the North and the South. And, fourthly, I believe very strongly, as I am sure all your Lordships do, that Governments, no less than individuals, should adhere both to the strictly legal interpretations of any undertakings that they have given and that this country has given, and also that they should adhere to the wider beliefs that lie behind those legal undertakings. Those are my reasons for raising this matter.

Having mentioned undertakings, I should like to remind your Lordships of the undertaking which was given by Mr. Geoffrey Rippon at the time of the negotiations for our entry into the EEC, he then being the Minister in charge of those negotiations. He said that there would be a secure and continuing market in the enlarged Community on fair terms for the quantities of sugar covered by the Common wealth Sugar Agreement in respect of all its existing developing countries". He further went on to say that: If quotas for beet sugar production were increased in such a way that imports from Commonwealth countries were threatened, it would be a breach of the undertakings by the Community. The Community's regulations clearly laid down that production in excess of quotas must be disposed of on the world market, and therefore could not be a challenge to Commonwealth cane sugar". Those were the undertakings given by Mr. Rippon and accepted by this House, by the other place, and by the country as one of the cardinal points in our negotiations for entry into the Common Market. Those are my reasons for raising this matter and reminding your Lordships of some of the past history.

There is no getting away from it—sugar is an enormously complex problem. It would be impossible even if I had the knowledge—which I do not claim to have—to go into all the ramifications of the world sugar market and the Community sugar regulations (let alone our own fairly complex system for sugar in this country) in the space of a reasonable speech to your Lordships. It would require not a long lecture, but a long book to deal with that matter. So, of necessity, I shall give only a very cursory view of the position.

Certain figures can make the situation reasonably clear. At present, the consumption of sugar within the United Kingdom is approximately 2.3 million tonnes per annum. Of that 1.15 million tonnes come from our own production of sugar beet. I ask your Lordships to remember that figure of 1.15 million tonnes and compare it with the 900,000 tonnes of sugar which was produced from sugar beet at the time of our entry into the Common Market. In other words, since that time there has been an increase of approximately 20 per cent., which is a significant figure. While that has been happening, our consumption of sugar for a variety of reasons, which I shall not go into now, has declined. In addition to the 1.15 million tonnes from our own sugar beet production we import between 150,000 and 200,000 tonnes annually from the Community—primarily, in fact, from Denmark and not, as many people think, from France. There therefore remains a market for cane sugar of 1 million tonnes in round figures. That should be compared with the 1.3 million tonnes under the Lomé Protocol or the 1.2 million tonnes or so which should come under the Commonwealth Sugar Agreement, and the Lomé Protocol as its successor.

As I understand it, up until now the capacity in this country—which as it happens is entirely in the hands of Tate and Lyle—for refining that sugar has been ample to cope with this amount of 1.1 million tonnes or 1.2 million tonnes. But, with the closure of the Liverpool refinery, that capacity is reduced to something slightly over I million tones—perhaps 1.1 million tonnes. In other words, there is a shortfall of refining capacity at this stage of at least 100,000 tonnes, assuming that the ACP countries, the successors to the Commonwealth Sugar Agreement countries, take up the full amount of their quota.

They do not always do that, because of the variations in climate in their countries. For example, Mauritius recently suffered severe damage from the weather, as a result of which the amount that they have been sending here has seriously declined, but only for one year. The actual amounts which have been coming in over the last two years—and there is some variation depending on how you assess the figures and which particular period of 12 months you take—have been hovering around 1.2 million tonnes or something of that sort; but they have been sticking pretty close to their 1.2 million tonnes. So we are now faced with the fact that as things are at present there is a shortfall of refining capacity in this country of at least 100,000 tonnes. Those are all facts with which I think the noble Earl the Minister will agree.

There are some other facts, which I think your Lordships should know to put this matter in the context of the effect of any difficulties in disposing of sugar on various of the countries concerned. I shall not go through the long list of those involved. There are quite a few Commonwealth countries that are very serious and major exporters of sugar to this country. I shall mention only three: the small country of St. Kitts, where 69 per cent. of its export earnings comes from sugar; Fiji, where 76 per cent. comes from sugar; and Mauritius, where 85 per cent. of its earnings come from sugar. So from those figures it is quite clear that any interference with the market for sugar inevitably must have a very serious effect upon the economies of those countries. Even more so, I think noble Lords will agree when I tell them that in Fiji and Mauritius one-quarter of the whole workforce is, in fact, engaged in the sugar industry, while in St. Kitts the figure is 43 per cent. Therefore, to these three countries sugar is of vital importance; it is also of very great importance to many other countries, including Swaziland, Jamaica and Trinidad, although it is not of such great importance as it is to those three countries.

Why has this situation come about? Why have Tate and Lyle been forced, for purely commercial reasons which I do not for a moment question, to close down their Liverpool factory? As I have already mentioned, it is partly because there has been quite a substantial decline over the years in the United Kingdom's consumption of sugar. Of course, there has also been the introduction of isoglucose which has been an additional factor which must be taken into account. However, there has also been this very significant increase in the United Kingdom's production of sugar, an increase of approximately 20 per cent.

Coupled with that—and it is of significance in this matter—there is the huge EEC surplus overlying the whole picture. We cannot divorce our own sugar beet production and our sugar beet industry from that of the Community as a whole. I fully agree that if the Community decides, in its unwisdom, that the quotas for sugar beet throughout the Community should be increased, there is no reason why the United Kingdom should be denied a share in that increased production. But the question that we must ask ourselves is: Why should there be any increase whatever in the amount of sugar which is produced within the Community? Let us remember those words of Mr. Rippon which I have already quoted: If quotas for beet production were increased in such a way that imports from Commonwealth countries were threatened, it would be a breach of undertakings by the Community".

Therefore, I suggest to your Lordships that it is essential—as your Select Committee underlined in their report last year—that the total sugar production in the Community as a whole should, if possible, be reduced and certainly should not be increased in any way; and there should certainly be no increase in the amount of quotas for the United Kingdom itself. I know that there are some people who say that this matter will soon disappear, that things will work out right because, after all, Greece is now a member of the Community and will undoubtedly take any of this surplus, because it is only a matter of 50,000 tonnes or 100,000 tonnes, so there is no need to get worried about it.

But although at times Greece has been a net importer of sugar, in fact for the last four years Greece has been, in a very modest way, a net exporter of sugar. In evidence before your Select Committee, which is contained in the report submitted to your Lordships, the representative of the Ministry of Agriculture made it quite clear that the effect of Greece would be no more than neutral in this respect. So I think that one can, possibly in advance, dispose of any argument that may be brought forward that all will be all right because of Greece.

I do not think I need say very much more. I hope the general point has been made that this is a serious problem and one of growing seriousness—one which will not go away simply because no action is taken. I hope that we shall hear the Minister say tonight that the Government still stand by Mr. Rippon's pledges—both those that I have read out—and that they accept that it is the responsibility of both the EEC in Brussels and Her Majesty's Government in this country to ensure the implementation of the pledge given at that time. It is not the responsibility of Tate and Lyle; it is not the responsibility of the British Sugar Corporation; it is not the responsibility of private enterprise. The responsibility must rest upon the EEC and upon Her Majesty's Government.

I should also like to make this final point. It is no good saying that this is only a matter of 50,000, 60,000 or maybe 100,000 tonnes, which can easily be absorbed by French refineries or elsewhere. I agree that on this occasion such surplus as has existed has been absorbed by other refineries, particularly in France. But there is no guarantee that that will continue. It may well be that the French will have a larger crop coming from their own departments overseas. It may well be that they have other ideas about it. So the problem cannot simply be fobbed off in that way.

What is more, one must realise that cane sugar refined in this country can only be sold satisfactorily and economically if it is sold within this country. Whereas some five or six years ago the share of British sugar beet was in the neighbourhood of 30 per cent. of the total market, it has now risen to nearly 50 per cent., which means that sale of cane sugar has dropped by the corresponding amount. That is a factor which must be taken into account in any proposals for improving this situation.

The fears in the Commonwealth countries and the Lomé Convention countries are very great indeed. They know that this is not just an isolated instance. It is not the thin end of the wedge for them, because the thin end has already been inserted. We must remember the closures that have already taken place since 1976; in the past four and a half years three refineries have been closed, and Liverpool has been reduced in its throughput. So this is a continuing process in the eyes of the Commonwealth countries and of those countries that depend so very heavily upon sugar. Their fears will not go away unless and until we hear, as I hope we shall, from the Minister tonight that those fears are true fears, are fears that he accepts and are fears that he and his Government will deal within in whatever way they see best. l hope he will say that they accept the responsibility for ensuring that at least 1.2 million tonnes of Commonwealth sugar beet can still come into this country and can still be bought under the undertakings given by Mr. Rippon, and that there need be no fear on the part of the Commonwealth countries as to their future ability to dispose of their sugar in that way.

7.20 p.m.

Baroness Elliot of Harwood

My Lords, I take part in this debate for the simple reason that I have been attending all the committee meetings that we have had on sugar, which were chaired so ably by the noble Lord, Lord Walston. I also take part to back him up in every way in the speech that lie has just made. He has in fact said exactly that which our committee is anxious for the Government to realise. It is an appropriate moment for him to put down this Question, because it was a year ago, at the time we were first discussing this question of the production of sugar and refineries, and so on, when we were warned when the noble Earl, Lord Jellicoe, was giving evidence to us from Tate and Lyle that, if the import of cane sugar went down any further, Tate and Lyle would be in the unfortunate position of having to close the factory.

That was slightly more than a year ago. Since then, as we all know, the problem has got a good deal worse. Further refining factories have been closed, culminating in what is a serious closure; the one that has just taken place in Liverpool. That is not saying that we blame Tate and Lyle in any way. They can only operate when it is a satisfactory and commercial enterprise. Therefore, it is not for that reason that I mention it, but simply because it is most important that we should all realise that our committee, and the noble Lord, Lord Walston, particularly, are trying to warn the Government that unless something is done now we may be faced with more problems in another year's time.

I should like to support everything that the noble Lord, Lord Walston, has said, about the ACP sugar. We are dealing with countries to whom we have an obligation as members of the Commonwealth, whose export of cane sugar is absolutely vital to them; far more vital than it is to the European countries. Therefore, it is essential that they should be assured, as the noble Lord has said, that we in this country, and our Government, are going to be certain to continue with the same imports of cane sugar for refining as we have up to the present time. If the ACP countries got that assurance tonight for a further period, that would be something which would give them great confidence.

When we were discussing this matter and interviewing different people with regard to the sugar situation I asked a question because I have always been worried about it. Noble Lords will remember that in 1974 there was suddenly a great shortage of sugar. Sugar went up in price. It was difficult to get. The consumers got thoroughly worried about it. People started to buy sugar and to store it, and so on. I inquired from the Department of Agriculture, who were giving evidence to us, whether such a thing could possibly happen again. The reply I got was: the difference between shortage and over-supply [in sugar] is very small indeed, and that was even so in 1974. Much depends on the behaviour of the big suppliers and the big consumers. If the Soviet Union becomes a big buyer in the market and the Cuban production has gone down, that changes things immediately from a state of over-supply to shortage. The other factor, of course, is that sugar production responds quite rapidly to a period of high prices, and this causes the supply to swing quite sharply. That makes it very difficult indeed for the whole policy of sugar, and one wonders whether there is any possibility that at any period more sugar will be required in Europe, or in the world, which would of course be of enormous value to the ACP countries, and also of course to those who produce sugar beet. Whether that is possible or not is pure speculation, but it is something which was mentioned when we were asking the question of how much sugar can be consumed.

I have often thought on the EEC committees that we are always learning, or always hearing, about surpluses—mountains of butter, mountains of beef, or whatever it is—and not enough attention is given in the EEC among all the many producers on how you can sell; how you can dispose of the food that is produced. The consumer does not play a big enough part in EEC discussions. I may be wrong, but that is the impression I have when I go to Brussels. I hope that in this particular commodity we will study the consumer and the possibility of increasing consumption, even although at this moment it may not seem very possible. Certainly it would be of great advantage to the producers, whether they are producers of cane or whether they are producers of beet sugar.

In our discussions on our committee at one point we were talking about the question of the surplus. Again we felt in our discussions that the increase of beet sugar which has been allocated to European countries, more particularly Germany and France, and not allocated to the United Kingdom was something of which we did not approve. We said so in our findings. We do not think that there should be more beet sugar produced when at the moment there is a surplus. If that is granted to certain European countries and not to others, again it seems to us that it really is not fair.

One of our recommendations too in this last of our reports, the one that came out only the other day, was that we should encourage the British Sugar Corporation to join the International Sugar Agreement because all the production of sugar would then be under one umbrella, as it were, and that we feel would be a very good thing indeed. There is an important and big problem here. When we see the effect that something like the reduction is going to have on employment, for instance—certainly in Liverpool it will mean a big reduction in employment—and in other ways, it is extremely serious.

I am sure that the Government will respond to our report, and I hope that we shall get some assurance on the points that the noble Lord, Lord Walston, has raised and on which I entirely support him. I hope very much that we will get those assurances because we are extremely anxious that this crisis shall not continue, or if it does continue that we should be well aware of what will happen if it gets any worse. I hope that the Government will realise that we are most anxious to be helpful, but that we think it is important that they should realise that this is not something that is going to disappear in a night, and we have got to think of it as policy that is going to last for a long time.

7.28 p.m.

Lord Davies of Leek

My Lords, the House will be grateful to the noble Lord, Lord Walston, for introducing this debate. Despite the fact that it is a late hour and that the House is rather thin, nevertheless this matter is of vital importance. It is a classical example of how a hitherto prosperous country can export its own unemployment. The chairman himself has expressed as one of the saddest things in his life that this firm have had to close this factory down because of excessive losses.

The reality of existence is this: whether you like it or not, if you enter into the political field, whatever party you belong to, you cannot by a magic stroke and words create magical systems of society. We are dealing with Tate and Lyle, an historic firm, in which the investments of many people exist, and unless those investments show some return—this is a fact of life in the world in which we live, and we on this side are trying to find some answers to this historic problem—the organisation cannot carry on and will close down, and even trade union funds sometimes have to be put into organisations.

We must remember that the site of the sugar refinery in Love Lane itself creates difficulties in that it is not right at the dockside; lorries must be used to carry the raw material to the point of manufacture. Let us also not forget that the present situation has not arrived on the scene magically, simply to create headlines in the newspapers. In this connection, I was delighted when the noble Baroness, Lady Elliot of Harwood, quoted from the committee on EEC sugar policy, of which she is an assiduous member. Tate and Lyle were interviewed and they put forward a memorandum to Session 1980–81, and it appears in the 8th Report of the committee of which the noble Lord, Lord Walston, is the able chairman. In that memorandum the company said: In general, Tate and Lyle strongly opposes the latest proposals by the European Commission for the Community's 19801985 sugar régime". The first fact to impress on us is that that régime in Brussels is, as they point out, from 1980 to 1985; there are issues of sovereignty and everybody knows where I stand on the Common Market, and I do not want to create any dissention in this debate. There are issues which we should be considering because we are faced with the problem that if the policy has already been set down in the Community and the régime for 1980 to 1985 has been established, what legitimate weapons or approaches have we within European law to change the situation so that a firm like Tate and Lyle would be in a position to process the cane sugar?

Let us remember that they did not come into this simply on a gentlemen's agreement basis for the Lomé Convention. In this connection, the House must remember that many many people changed their minds regarding the Common Market when we were given guarantees that parts of the hitherto British Commonwealth like Australia, New Zealand and other areas noble Lords have mentioned, would be protected in the various commodities produced by them. Indeed, Article I of Protocol No. 3 of 28th February 1975 says: The Community undertakes for an indefinite period to purchase and import, at guaranteed prices, specific quantities of cane sugar"— mark those words— raw or white, which originate in the ACP States"— that means the African, Caribbean and Pacific states— and which these states undertake to deliver to it". I will give the list but not the figures because I do not want to bore the House. That refer to all parts of the hitherto British Commonwealth: Barbados; Fiji (which I know quite well, with between 163,000 and 164,000 tonnes; most of the employment there is concerned with this product and great railways have been built to deal with it); Guyana, Jamaica, Kenya, Madagascar, Malawi, Mauritius, the Congo, Swaziland, Tanzania, Trinidad and Uganda—all producing and in many cases dependent on selling cane sugar. I will not bore noble Lords by saying to what extent they are dependent on this crop. In some cases it is 25 per cent., in others 70 per cent. and in others 80 per cent. That is the reliance they have on it for their prosperity and standard of living.

It is no good blaming Tate and Lyle for the present unemployment problem because the warning was there months ago, and something needed to be done about it then. They say in their letter, and I will quote only parts of it to save time: This position may well imperil the Community's, and particularly the United Kingdom's, ability to absorb the tonnages of the ACP (African, Caribbean and Pacific) imports to which it is committed for an indefinite period". Mark the words "for an indefinite period"; we used the word "indefinite" in the treaty. They continue: By the same token, if the proposals are put through, it will be difficult to avoid some further reduction in the UK's cane refining capacity, which"— and here is the 64,000 dollar problem: if closed, would occasion further job losses in areas already suffering from very high unemployment. Finally, there must be doubts as to whether the level of guarantees to Community producers will enable the Community to engage in meaningful negotiations to join the International Sugar Agreement". I would bore the House if I read more of that, and I will now develop my argument as a result of that quotation. The noble Lord, Lord Walston, made a constructive point when he said that we must search for a constructive answer to these problems, and the present Minister of Agriculture, Mr. Walker, has tried his best to get a new attitude towards them. Tate and Lyle have, as I have pointed out, made some constructive points, asking why they have the problem and why they have to suffer. They argue that the sugar régime of the EEC, was constructed to facilitate beet sugar production, which was the only source of sugar in five of the original six countries in the Community". They argue: Although France had about 300,000 tonnes of cane sugar refining, this was used for cube manufacture and was of little significance compared with France's very large beet sugar produc tion. When Britain joined the EEC there was no framework for obtaining a good margin on cane sugar refining, and this position still persists". I remind noble Lords that I am quoting from Tate and Lyle's own documentation: The result is that beet enjoys a margin which is up to £30 per tonne more profitable than cane…". There right away is the worm in the apple of cane sugar production, that it is in a disadvantageous position compared with European farmers' sugar beet. We in Britain have had with sugar beet a bonanza in farming, as has been the case throughout the Common Market. If we believe in helping the third world, we should put more heart in trying to find answers to difficult problems of this kind, problems which will not be answered by Tate and Lyle, for example, saying, "We will run it, despite the fact that we are losing £10 million", or, We are in a disadvantageous position to the tune of £30 a tonne".

Are there any answers and are there any opportunities for Tate and Lyle to increase sugar refining? It must be admitted that they know their job; whether I like their politics does not matter because we are looking at the realities of the situation. The firm state what possibilities are considered: (a) Increase UK sugar consumption". That is the difficulty. I was glad that the noble Baroness mentioned 1974. My dear wife was alive then, and whenever I was driving through a village she said: "Try to buy a pound of sugar on the way home". I nearly had to swap my motor car in one village for a pound of sugar. Then, (b) Win market share from British Sugar Corporation by aggressive marketing". Well, by golly! we know what that means. (c) Persuade British Sugar Corporation to export 300,000 tonnes of beet sugar, thereby leaving room in the UK market for the Tate and Lyle surplus capacity to be used. (d) Reduce white sugar imports from continental Europe". All those possibilities would have a rough effect on our neighbours in the Common Market.

I believe that we are forced to secure a top-level discussion on this problem—and it does not apply only to sugar; it applies to other commodities and other activities, too. I am interested in one part of the commodity world, which happens to be platinum, but that does not feed people. What I know is that there is an absolute need for those who support the Common Market, and even those of us who have been kicked screaming into it, to get down to the brass tacks of feeding the Western world, and, through feeding it properly, to keep our promise to those other parts of the world which have much lower standards of living.

I see that I have been speaking for 12 minutes, and I should like to trespass upon your Lordships' time for another minute or so. I do not want to reiterate the arguments that have been made before. I am trying to distil in the alembic of the politics that we use in this House some answers to this problem; and I believe that the answers need looking into.

The Economist puts one of the points quite neatly. I had better be sure of my facts, and so I shall quote the Economist: Four British sugar merchants are claiming that the price advantage which the EEC gives to beet sugar is enabling"— this is not the Labour movement, nor Davies speaking— the British Sugar Corporation to squeeze out its competitors. They fear that the BSC will soon have a monopoly". I cannot go into the birth of the BSC; there is not the time. But this is a knowledgeable House, and your Lordships will know about the birth of the British Sugar Corporation. The article continues: …under Articles 85 and 86 of the Treaty of Rome there was an 'abuse of dominant position'. Until Britain's entry into the EEC its market was dominated by cane sugar imported from the Commonwealth. Three firms, Tate and Lyle and Manbre and Garton for cane, and the BSC for beet…". Now the BSC has taken over completely and it has got rid of the merchant system. People working in the commodity market will know that merchants sitting down using the Telex and other things can do a lot to keep prices down. But in the sugar trade the BSC is being accused of eliminating the old merchant dealers who used to know their job and deal. That monopoly is a dangerous one, and four of the great merchant groups have asked for the Monopolies Commission to look into it.

I have spoken for 14 minutes, which is long enough at the end of a tiring week. All I wish to add is that I am quite sure that Tate and Lyle—whoever the firm may be, and whoever all their directors may be—do not look on this as something that they do willy-nilly. Much thought has been given to the matter. It has been pointed out to the Government, it has been pointed out to committees for a long time that this problem needs investigation. I beg of the Minister who is to reply to take this little debate seriously, because it is important to Britain, it is important to the Common Market, and in the name of heaven!, it is important to those little countries where 30 per cent., 50 per cent., 70 per cent., and 25 per cent. of their living depends on cane sugar. I thank your Lordships for listening for so long.

Lord Mottistone

My Lords, I should like very briefly to give my support to the Question that the noble Lord, Lord Walston, has put down. As befits a most excellent chairman until recently of Subcommittee D (which prepared the report to which so much reference has been made) he has covered the ground very fully and I have little to add, except to say that I hope that the Minister gives proper reply to the various points that the noble Lord, Lord Walston, made. I should also like very much to support the remarks of my noble friend Lady Elliot of Harwood, as well as some of the remarks of the noble Lord, Lord Davies of Leek. I shall not elaborate on where there is any difference.

I think that the key factors which really require an answer are these. First, is this the end of a rather disastrous situation, or is it just going to continue little by little as the European Commission develops its policies which apparently allow our European colleagues on the mainland of Europe to produce more and more beet sugar as time goes on? The point is made very clear in the 8th Report, to which reference has been made, that this is a danger which we see and which really must be halted, indeed must be reversed, if things are not going to get worse. That is the first point.

The second question is, if the process of increased beet sugar production in Europe is not halted, how can the Commission continue to maintain its obligation to the Lomé countries? That is the second big question, because that surely must be continued. Quite apart from the moral obligations that we have to those countries, there is also the undertaking given by the European Community, which cannot be reneged on, and it is not reasonable on anybody's part, even if they are Dutch, German or French farmers, to expect the countries of the Lomé Convention to develop alternative means of earning their living in the world market. The figures were given by the noble Lord, Lord Walston.

However, the principal point is that perhaps over a very long period of time these countries should develop a more diverse basis on which to earn their international living, but they cannot be expected to do it shortly, and it is extraordinarily unreasonable of the farming communities of the Nine—now the Ten—to go on developing schemes and arrangements which are working directly and positively against the wellbeing of these overseas countries, to whom we have these obligations.

Poor old Tate and Lyle—if I may say that in the presence of my noble friend Lord Jellicoe—is really the unfortunate jam in the sandwich in this particular business. They are getting squashed out of the edges of the sandwich, and their workforce is suffering. I think it is extremely hard on them. But in the long run what the Community must do is to ensure that its position in the wider world community is one that can be respected by all the other poeple in it, and that is a situation which will not continue if we go on producing too much of our own food in a selfish kind of fashion, as has been made clear in the many reports of the Select Committee relating to these matters. I very much hope that my noble friend will be able to provide positive answers to the three key questions which I have sought to underline.

7.50 p.m.

The Principal Deputy Chairman of Committees (Baroness White)

My Lords, my non-conformist conscience will not allow me to remain seated without saying a word or two in this brief debate. I do so because to my mind, as has already been stressed by both my noble friend Lord Walston and other speakers in this debate, this is really a moral question as much as anything else. We are committed. I recollect very distinctly, when we were discussing in the early 1970s whether or not we should remain in the Community, that this question of our obligation to certain territories was one of the sticking points for some of us who had had long associations with certain parts of the world.

That was because we knew that, as the noble Lord, Lord Mottistone, has rightly emphasised, while possibly over a generation or two it might be possible for them to change the basis of their economy, in any short-term period that just is not possible for them; whereas it is possible for farmers in the temperate zone of Europe at least to grow some alternative crops. They are not absolutely bound to beet sugar in the way in which the cane farmers in the Caribbean, Mauritius or Fiji really have nothing else that they can produce which can be sold on the world markets. The most specific pledges were given, as my noble friend Lord Walston indicated, at the time. We were told, "Have no apprehensions, everything will be done; you need have no concern about this, it need not weigh on your conscience, because arrangements are going to be made", and so on.

I appreciate that the fact that in this particular respect the European Community has a collective selfishness, which is how it appears to me, makes it difficult for the Ministers in the United Kingdom to deprive our own beet producers of opportunities which are available to beet producers in other Community countries. But one would hope that Her Majesty's Government would take very seriously the anxiety and concern of so many people that we should be able to hold our heads high and say that we have done everything that we possibly can to make sure that the moral obligations on us towards countries which are far poorer than we are, and which have no viable alternatives, should be fully honoured; and that we should use every opportunity to endeavour to influence our Community partners, who may not have quite such close connections with those parts of the world, to recognise that if you are talking about North or South, or one world, this is one of the most striking examples of how one can try to carry out the obligations of our common humanity in the most practical ways possible, and if we evade this so strikingly significant moral obligation then I feel that we shall be failing in our international duty. I hope we shall be reassured by the Minister tonight.

Earl Jellicoe

My Lords, I wonder whether the noble Lord, Lord Goronwy-Roberts, would allow me to intervene for a brief moment. I did not put my name down on the list following Lord Walston this evening because I felt it really almost improper for me, as my interest in this matter is so patent, to itervene, however briefly. But I feel moved to spend just two minutes expressing my own feelings on this subject. First of all, I should like to make quite clear to your Lordships' House the deep sense of responsibility which, as chairman of the company concerned, I must feel towards the company, its management, its shareholders and, above all, its employees.

The noble Lord, Lord Davies of Leek, was kind enough to quote a warning which Tate and Lyle gave in the autumn to the sub-committee over which the noble Lord, Lord Walston, has so efficiently and effectively presided. Perhaps your Lordships will allow me to quote a warning which I personally gave to that same sub-committee over a year ago. It is very brief, and it is as follows. I was talking about the Commission's then proposals, which would have meant a United Kingdom beet sugar quota of 936,000 tonnes, and I said: If the Commission's proposals for the United Kingdom are not accepted, I find it very hard to see how it will be possible for us in Tate and Lyle to avoid the closure of yet another refinery, and that in an area of intolerably high unemployment. In the short time since I have been chairman of Tate and Lyle I have presided over the closure of three refineries and the severe curtailment of a fourth "— that was Liverpool— and I find it very hard to reconcile myself to yet a further closure". My Lords, I have found it very hard indeed to reconcile myself to yet a further closure.

The second thing I should like to say very briefly to your Lordships is how much I agree with what the noble Baroness has said about our moral responsibilities and our political responsibilities to those developing countries which produce sugar. One can argue whether the guarantee which is embodied in the Sugar Protocol of the LoméConvention is a Community obligation or an obligation on Her Majesty's Government. My Lords, the answer is obvious. It is a dual obligation; not least of' Her Majesty's Government in view of the fact that those guarantees were an essential condition of our entry into the European Economic Community.

I should like to say only this in conclusion. If at this late hour it were possible for that original proposal, for that original United Kingdom quota, proposed by the European Commission, to be accepted, there would be no need for us to close the Liverpool refinery. If, alternatively, at this late hour it were possible for some arrangement to be worked out by which surplus beet sugar over that limit were exported, there would be no need for the closure of that refinery, with all that that means to the people of Liverpool, and to our employees. But if for any reason those suggestions, at this 13th hour, are unacceptable, I would implore Her Majesty's Government—and I do this (in the hallowed phrase) with all the force at my command, but I mean it—to do all within their power to ensure that there is no further erosion of the position. I say that bearing in mind the interests of our employees in Tate and Lyle and also bearing equally in mind the interests of the ACP sugar-producing countries.

7.58 p.m.

Lord Goronwy-Roberts

My Lords, it certainly would be no part of my intention, in my brief intervention, to criticise in any way the performance and the policy of Tate and Lyle. We all know that the noble Earl, who holds a position of high distinction and great respect in this House, is more concerned and more saddened than anybody by the possibility of the closure of the Liverpool refinery.

I think this debate has served to pinpoint our very deep and varying concerns about what may have to happen, and the first is this. Some of the oldest of our Commonwealth partners face the still further erosion of the major part of their economy. In some cases, as we have heard, a very high percentage of their life and of their economy turns upon the production of cane sugar, which is refined mainly in Britain. There is some refining done in Europe, but by far the greater part is refined in Britain. It is a major industry in Britain. So the first point is that we owe to these cane sugar producing countries the obligation to assure them of a market in this country for refining which will maintain their economy at least at the level to which the original agreement acceded.

The figures have been given. A matter of 268 million tonnes would about settle it. I think the noble Earl has indicated to the Government how this can be done with little difficulty and with far-reaching advantage to the countries concerned, and to Liverpool, and not least also to the refining industry which is a major industry of long-standing in this country. That is the first point.

The second point of concern is that we are all pledged to assisting the third world countries, the developing countries. But it seems to me somewhat the economics of madness to pour money very often into non-rewarding projects in some of these countries or pour in money at the rate of something like £700 million a year into these countries but with little effect or practical result and at the same time, as the noble Baroness showed, to cut the very roots of the indigenous prosperity of those countries. So the whole question of third world policy, of meaningful help from the North to the South, is under query because of this development in Liverpool.

The third point is that there is rivalry between beet and cane but they are both interdependent in the sense that if somehow a monopoly emerges it can only be at the expense of the housewife and it can only be at the expense of running the risk of seasonal shortages arising very often from climatic differences of the origins of supply. What affects supply in Lincolnshire is not the same factor that applies to the seasonal output of cane sugar, say, in Barbados. We have seen how both are necessary in proper proportion to maintain consistency of supply both to the domestic and industrial consumer without the ups and downs of scarcity and surplus and of rise and fall of prices.

While these countries may well find an outlet for their sugar in other parts of the world—and indeed through the Commonwealth—there is the constant uncertainty with which they are beset, the lurking doubt as to whether they will follow the New Zealand road. That was another cast iron undertaking we gave to an old and valued comrade in the Commonwealth which we have minimally observed. In the ACP countries, as I know from experience, there is always this lurking doubt whether this constant erosion of the guarantees will proceed so far that finally there is nothing left in Britain for them; that in fact anything is organised and directed towards Europe and nothing towards the old Commonwealth. There is no need for this. Insufficient attention has been given to the comity of production and distribution of both cane and beet sugar within Britain—the question of exports—so that all producers, whether indigenous to this country, in Europe or the ACP countries, can proceed with forward planning and have confidence in investment. Indeed, a confidence that they can undertake insurance out there because the Commonwealth countries are all very much more at the mercy of season and climatic hazard than we are here.

I want to put one or two questions to the noble Lord who will be replying. The first relates to Liverpool. Here is an area of very high unemployment indeed. Mr. Ogden, the Member for West Derby, has very kindly supplied me with certain figures because he and I worked together when he was my Parliamentary Private Secretary in the Department of Trade. So I imagine that Mr. Ogden knows his way round these kinds of statistics.

The total registered unemployed in Merseyside is 109,483. That represents 15.8 per cent. of the working population at the moment. This will increase to 20 per cent. if we add from the refining process, 1,600; from the transport services associated with Tate and Lyle in Liverpool, 200; from the docks, 700; and from other associated activities, 130. That would add, approximately, another 2,000 people and raise the percentage of unemployed to 20 per cent. One in five of the people of Merseyside may be unemployed not entirely because of this development but partly because of this development.

There is further unemployment at risk in the immediate environment of the refinery—the biscuit, confectionery, sweet and other comestible group of industries which draw heavily on Tate and Lyle in Liverpool. There is major activity related to machining and paper, transport, the manufacture of soft drinks, and so forth. That would add another 4,500 making a grand total as a result of this closure of an additional 6,500 and raising the percentage to over 20 per cent.

I make the Liverpool point because I think that there is growing in every part of the House and every part of the country a belief that there must be some modification of the rigid monetarism which so far the Government have conducted in the economic affairs of this country. Unless areas like Merseyside—already on the way to an unemployment percentage of 20 per cent.—are to be irredeemably ruined, and a population created which has no hope either there or in other parts of the country of useful work, there must be intervention.

I agree entirely that it is partly a Community matter and partly a matter for Her Majesty's Government. I cannot address myself to the Community; I hardly think that they would listen to me or to my noble friend Lord Davies of Leek. But I can address myself to the Government of the day and especially to the noble Earl who is to answer. He too is a man of deep compassion on these social matters and I have never considered him to be doctrinaire.

May I ask him first whether he will draw the Government's attention to the need to do in a minor way for Merseyside in this specific instance—which means the saving not of a firm but of the industry of refining—what they have quite rightly decided to do in a major way for the motor industry?

The second point is this: Will he take the sense of the House to the Government, that we expect them to honour their commitment to the cane sugar-producing islands? This is really an expectation that moral obligation, as my noble friend Lady White has pointed out, will be sustained by this country. If the Government do so, as we have every right to expect, they must preserve enough sugar refineries in this country to carry it out. This is not a question of doles; it is a question of making it possible for an industry, specifically in Liverpool, where it has been a flourishing industry employing thousands for 112 years, to continue.

So far I fear that what the Government have done is to agree to the EEC pursuing arrangements which have undermined the viability of our refineries. We could go into that, but we will not. In turn, the refineries have either closed down or reduced their labour force; and Liverpool is the latest example. I therefore make a plea for a major adjustment of policy designed to save an entire industry specifically in what is probably its home in this country—Liverpool. Thirdly, unless the process is arrested, unless we deal with the quota as the noble Earl, Lord Jellicoe, so reasonably suggested, are we not in danger of creating a situation of monopoly in this country, and may we not be in contravention of Article 86 of the Treaty of Rome?

This is a question which occurred to me as soon as I heard of the intention of the Government to allow this to go ahead, because its only final result could be a monopoly situation, meaning a higher price for domestic and industrial users leading to a contraction of demand, with redundancies in secondary industries using sugar and not simply in what is left of the refining industry—and, finally, in a primary industry of supply, sugar itself, which would be effectively a monopoly. So I join with my noble friends on all sides of the House in pressing the Government, first, to come to the aid of an area which is sorely beset by unemployment and one where the social effects of unemployment are to be seen every day, and getting worse; secondly, to save an old industry, an efficient industry, producing an excellent commodity; finally, and above all, to show to the world, and certainly to the sugar-producing world, that this country means to discharge its moral obligations to it.

8.14 p.m.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers)

My Lords, I have found this debate of prime importance and, if I may say so, a sad debate, because it is a worrying situation all round the clock. That has been expressed by everyone this evening. I have found it a moving debate for the concern which has been expressed by all noble Lords on a whole variety of matters which are involved. We have had the privilege of hearing my noble friend Lord Jellicoe, who was a distinguished Leader of your Lordships' House and, if I may say so, a very agreeable one, and who is now the leader of a very distinguished company which finds itself in very difficult waters. It is his unenviable task to try to guide that company aright.

The noble Lord, Lord Walston, quite rightly, put down this Question which covers a matter of hugely important domestic Commonwealth and Community concern. When one sees closures of factories such as those which have primed this debate, that cannot be anything other than a cause of sorrow, regret and concern. And when one thinks of the unemployment which is involved in an area which the noble Lord, Lord Goronwy-Roberts, quite rightly referred to as an area of very high unemployment, one thinks of the personal hardship, sorrow and despair it can cause. This is a matter of great concern.

There is no simple answer to the sugar problem; it is a hugely complex answer and anyone who tries to find a simple solution to a simple part will merely find that that solution interacts against another part of it. I suppose that, in what I have to say, I should declare my interest in that I am a farmer and a grower of sugar beet. I hope that will not make your Lordships feel that I am necessarily biased to any degree in what I have to say.

I think I should begin by stressing that the Government, like their predecessors, continue to have the interests of the sugar exporting ACP countries firmly at heart. I shall come to this later on, but it is of absolutely prime importance and has been mentioned by a number of speakers. We are concerned to see that the Community commitment under the Sugar Protocol to the Lomé Convention is fully implemented, and we will continue to strive to ensure that any decisions which are taken in the Community and which could, either directly or indirectly, affect that commitment are compatible with its fulfilment. I think I would carry every single noble Lord in the House with me on that.

The recent announcement by Tate and Lyle of the imminent closure of their Liverpool refinery is one which I, like the noble Lord, Lord Walston, find acutely distressing. Nevertheless, the decision was a commercial one and one which the company felt it had to make: if it did not do that it would risk putting the whole of its business in jeopardy. My noble friend Lord Jellicoe said that that decision caused him the greatest concern—those were not his words but that was his meaning. I can understand that.

In the context of the Question of the noble Lord, Lord Walston, the decision needs to be looked at from two angles: first, in respect of its effects on the United Kingdom situation and, secondly, with regard to its effects on the position of the ACP exporting countries. Perhaps I might be allowed to take the United Kingdom angle first. Sugar which is refined from imported raw cane sugar has long been an essential part of our supply, and it will continue to be so. It is true that the total United Kingdom consumption, nevertheless, has fallen over the last few years from 2.7 million tonnes in 1974–75 to 2.3 million tonnes in the year 1980–81. This, together with the loss of most of its refining business for raw sugar in the world market, has meant that Tate and Lyle have needed less capacity. I speak with some hesitation on these domestic matters of Tate and Lyle, when we have the advantage of my noble friend being here. I hope he will not consider that I am misinterpreting anything or in any way telling him or his company what should be done.

There are similar constraints as a result of reduced consumption which are imposing themselves on United Kingdom sugar beet producers. The optimistic aim of about 1.3 million tonnes of sugar which was to be produced from sugar beet—this was included in the White Paper Food from our own Resources, which was published by the Government of the noble Lord, Lord Peart, when he was holding a very distinguished position—and which was the target figure to which the British Sugar Corporation's recently completed capital investment programme was related, has now had to be revised in the light of the changed position. There is no longer a United Kingdom market of 2.7 million tonnes, of which United Kingdom production of 1.3 million tones—about half—was to be from beet.

So far as sugar beet is concerned—I mention this as it is a very relevant part of the issue, and my noble friend Lord Mottistone asked whether we find ourselves in the position of being part of the EEC's efforts to boost beet sugar production—we have made it clear that we are prepared to accept a reduced United Kingdom quota under the European Community's sugar régime. Our present quota is 1.326 million tonnes, which was agreed by the Labour Government of 1974. Her Majesty's Government are prepared to accept a substantial cut in the United Kingdom's quota, if reductions can be made for all member states on an equitable basis. My right honourable friend the Minister has indicated that in a satisfactory settlement he would accept a United Kingdom quota of 1.15 million tonnes, which is about half our production potential. This should permit a reasonable balance between the interests, then, of beet sugar and cane sugar.

At present levels of consumption, and given Tate and Lyle's new capacity at that time which, with time and a certain elasticity could possibly be enhanced, our market would normally be supplied half and half as from beet sugar and cane sugar; the position in which we anticipated being when the market was at 2.6 million tonnes. There would not normally be any danger of a shortage with these three established sources of supply, if one includes the small element of European sugar which we import and which is a matter of only 150,000 tonnes.

Perhaps I may turn to what one might call the ACP angle. The noble Lord, Lord Walston, said that we must stand by our commitments to these developing countries when we joined the European Community. I think Mr. Rippon said at the time that the Community's offer to safeguard the interests of those countries, whose economies depended on sugar, represented a firm assurance of a secure and continuing market in the enlarged Community, on fair terms, for the quantities of sugar covered by the Commonwealth Sugar Agreement, in respect of all the existing developing countries. He went on to say that if quotas for beet sugar production were increased in such a way that imports from Commonwealth countries were threatened, it would be a breach of the undertakings. That was the fundamental platform on which the Lomé Convention for sugar was based and that still remains.

Important though Lomé sugar is to the United Kingdom as part of our balanced supply, it has a special importance, also, to the developing countries who supply it and who, as noble Lords have said, depend heavily on it for their livelihood. As the noble Lord, Lord Walston, knows, this was recognised under the original Commonwealth Sugar Agreement with its price and access guarantees. This is now covered by the sugar protocol to the Lomé Convention which, in the same way, has price and access guarantees, but which differs from the Commonwealth Sugar Agreement in that it is the Community as a whole and not just the United Kingdom which is the importing party.

This strengthens the position of the developing countries considerably, because imports no longer depend only on the United Kingdom; other European countries can, and do, take part in the Lomé total. Indeed, Tate and Lyle's contracts recognise this and allow a degree of flexibility to suppliers. if necessary, if a commercial contract cannot be concluded in any Community country, the Community is compelled to buy even into intervention any ACP raw sugar which cannot find a home. Obvously, no one wishes to see that happen, but it provides the ultimate guarantee of access of ACP sugar to the Community market, regardless of what happens in individual countries.

Many of your Lordships have expressed anxiety. The noble Baroness, Lady White, said that it is a moral obligation. So it is. It is a moral obligation to continue to undertake to fulfil the imports to the European Community, which the Lomé Convention permitted. If I may add this, those agreements of the Lomé Convention were indefinite, without finality, unless they were agreed to be altered by all parties. So I give your Lordships the assurance that the United Kingdom will do all that it can to see that the European Community continues, as it is bound to do, to fulfil the agreements of that Lomé Convention. In doing that, we shall have fulfilled what has been described as the moral obligation towards developing countries.

The noble Lord, Lord Goronwy-Roberts, said that we must honour our commitments to the developing countries and that we must not always think only of Europe, because there are other countries to consider as well. That will, in fact, be so. My noble friend Lord Mottistone asked specifically: Will the European Community renege on its undertaking to the developing countries? No one can say what others will do. All I can tell your Lordships is that we in the Government intend to sec that that Community obligation is kept.

The developing countries, the ACP suppliers, are of course accustomed to dealing with the United Kingdom and, in particular, with Tate and Lyle. Provided all the parties concerned give priority to ensuring that the traditional patterns of trade are maintained, I can see no reason why this should not continue. Tate and Lyle have themselves made a statement which I welcome in which they say that they will do their best to continue to take all the sugar for which they are at present contracted, possibly passing to other European countries any small quantity which they themselves may not be able to refine. The company's ability to fulfil this commitment will obviously depend upon their reduced capacity continuing to be profitable in the future.

I should like to emphasise that the Government are aware that it is important to the United Kingdom and to these developing countries that supplies of Lomé sugar should not be disrupted. For over 50 years, the United Kingdom market has relied on a mixture of home produced beet and ACP cane sugar to meet its needs. This arrangement has been satisfactory to both sides. For the importing country it has provided security of supply, since it is rare for both beet and cane crops to fail in the same year. For the exporting countries it has offered a guaranteed outlet for one of their major products, and that has contributed to the viability of their economies. These are very important facts in a difficult and awkward situation.

The noble Lord, Lord Goronwy-Roberts, said: Would the Government do to the sugar industry what the Government have done to British Leyland? By that I think he meant: Would the Government give money to keep this refinery going? Even if they did, it would not solve the problem. The problem is the diminished requirement in this country for sugar. I explained at the beginning that it was a drop of 2.6 million tonnes to 2.3 million tonnes. Merely to keep going an organisation would not necessarily be a right application of money. Whoever runs that business has to make a commercial judgment as to whether the business itself is viable for the operation which it has to do.

Lord Goronwy-Roberts

My Lords, in very precise and generous terms the noble Earl has given one part of the undertaking for which we have asked; namely, so far as Her Majesty's Government can achieve this, the European Community is going to honour its obligation to the ACP countries. Lomé is going to be upheld, and we are very grateful to him for being so definite on that point.

The second part of what at least some of us are after is this. We seek some kind of undertaking that the British refining industry is also helped so that it may continue. One can envisage the flow into the European Common Market of a certain amount of ACP sugar. The process of the erosion of the British refining industry has been going on for some time, partly because of the pricing arrangements. All this would need a separate debate to go into.

May I leave the point with the noble Earl in a twofold way. We welcome what he has said about the obligations of Europe, because the obligations of Europe are those of Lomé. We hope that he will bring out some of the arguments which have been put forward tonight in favour of assisting, strengthening, bringing back to its previous position the British refining industry, otherwise that, too, will go to Europe.

Earl Ferrers

My Lords, the noble Lord, Lord Goronwy-Roberts, has asked a very pertinent question and I will do my best to give him a reasonable and full answer. I will certainly look at it. So far as one can ever gauge what is likely to happen in the future—I have explained that even after what was done in 1974 the facts altered—half the requirements of this country for sugar should come from beet processing and the other half from cane refining. That is likely to be, in the fullness of time, 1.1 million tonnes of each, with about 150,000 tonnes coming in from the Community. I cannot give the noble Lord, Lord Goronwy-Roberts, any further guarantee than that. Indeed, it is not a guarantee because one cannot guarantee the future. However, this is the Government's hope and intention. Of course we want there to be a refining industry but we cannot guarantee its size.

I have tried to answer not all the questions—I think that would take too long—but the drift of the questions and to deal with the anxiety which has been expressed, and rightly so, this evening. The Government are always willing to discuss the problems of the ACP countries with them. My right honourable friend the Minister of Agriculture undertook in June of last year at a meeting with ACP representatives to hold further consultations with sugar supplying countries should a situation arise in the United Kingdom market which was harmful to their interests. Despite the anxieties which have been expressed, I do not think that at the moment we are in that situation and that any special measures are required to ensure the continued access of Lomé sugar to the United Kingdom. But if such anxieties are held by the ACP countries, then of course my right honourable friend will be only too happy to speak with them and to help them.

I conclude by saying that I am grateful for what your Lordships have said this evening. Considerable anxiety and disquiet has been expressed. That anxiety and disquiet is shared by the Government. I hope that we shall be able to see both a successful sugar beet part of the United Kingdom and a successful sugar cane refining position. The two are interlocked. I hope that will come about.