§ 10.10 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Agriculture (Mr. G. R. H. Nugent)
I beg to move,That the Draft Fertilisers (England, Wales and Scotland) Scheme, 1952, a copy of which was laid before this House on 10th June, be approved.I understand that we may also discuss with this Motion the following Motion:That the Draft Fertilisers (Northern Ireland) Scheme, 1952, a copy of which was laid before this House on 10th June, be approved.162 The two Schemes differ in one or two important respects from the existing fertiliser subsidy Scheme introduced under the Act passed this year. The existing Scheme expires at midnight tonight, and I hope we shall still be surviving at that time. The existing Scheme covers England, Wales, Scotland and Northern Ireland together and provides for a subsidy for phosphates only at the rate of approximately 30 per cent.
One of the features of the new Schemes is that there will now be separate arrangements for England, Wales and Scotland and for Northern Ireland. Section 1 of the Act gives power to make separate Schemes where that is considered desirable. In the Northern Ireland Scheme the subsidy is to be paid through the manufacturers while in the case of the Scheme for England, Wales and Scotland it is to be paid direct to the farmers as under the existing Scheme.
The two methods are within the terms of the substantive Act. Both methods 163 have their attractions. Paying the subsidy through the manufacturers has the advantage of being simpler in that the amount is paid direct to the manufacturers and the fertiliser is then sold to the farmer at the lower subsidised price, and the farmer does not have to take any action to claim the subsidy.
On the other hand, paying the subsidy to the farmer has the advantages that the farmer appreciates the cost of the fertilisers that he is buying and the value of the subsidy which the Government are giving. It is a substantial psychological advantage that the farmer should understand exactly what the financial position is. The disadvantage of the latter arrangement is that the farmer must make an application for subsidy for each individual purchase, and that means a certain amount of additional paper and administrative work.
In Northern Ireland there is a certain difference. I see that the hon. and learned Gentleman the Member for Hornchurch (Mr. Bing) is smiling. Apart from differences to which he has drawn the attention of this House from time to time, there is the difference in Northern Ireland that very few merchants there deal in fertilisers. In fact, there are only 10 as against something like 300 in England, Scotland, and Wales.
Therefore, there is an exceptional convenience there in applying the subsidy through merchants instead of direct to the farmers. On consultation the wish has been expressed that the Northern Ireland Scheme should be arranged on those lines, and that is why we are proposing that that Scheme should be a manufacturers' scheme and the England, Wales and Scotland Schemes should continue to rest on an application by the farmer.
§ Lieut.-Colonel Marcus Lipton (Brixton)
Did similar consultation take place in England, Scotland and Wales as in Northern Ireland before this decision was reached?
§ Mr. Nugent
It certainly has taken place with the Scottish Office, and they have opted to continue the existing Scheme, considering that on balance the advantages lay in application being made by the individual farmer.
164 The second new feature we now propose is that the fertiliser subsidy should, in addition to applying to phosphatic fertiliser, apply to nitrogenous fertiliser at an approximate rate of 15 per cent. There was a good deal of discussion on this particular point and attention was drawn to it by the right hon. Gentleman the Member for Belper (Mr. G. Brown). We naturally took note of his observations and we considered what was the actual proposition, at that time.
We were not satisfied that the supply position would be such for the 12 months which finishes tonight that the subsidy would be justified for nitrogenous manures. We now have the details showing what is the picture over the past 12 months, and in the light of that we feel that we are now justified in proposing that there should be this subsidy at the rate of approximately 15 per cent. for nitrogenous manures.
The House will probably be interested to hear the figures which have persuaded us that this is the right proposition to make now. For the fertiliser year from 1st July to 30th June the figures show that the delivery of nitrogen was 175,000 tons compared with 215,000 tons in the previous year, a drop of 40,000 tons in deliveries. The supply rate for nitrogen was something like 220,000 tons in 1950–51 and 205,000 tons for the year expiring tonight. In the light of that we feel that there is a sufficient margin of supply which warrants the subsidy to ensure the whole of it being taken out.
The House will recollect that while the Act was going through the House we explained that there is always a keen demand in the Colonies, where there is a real and continuing need for nitrogen, for surplus nitrogen which we are not using here. Therefore there is no danger of any nitrogen that we can produce not being fully taken up.
There is one point about nitrogen which may be of interest, in passing. Although the total consumption of nitrogen dropped during the year, the consumption of nitro-chalk increased from 267,000 tons in 1950–51 to 300,000 tons in 1951–52. It has the attraction of being a very conveniently applied form of fertiliser, and there is a great demand for it among farmers.
§ Mr. R. T. Paget (Northampton)
Was that not always likely to happen in a wet season? Do farmers not want very much less nitrogen when they have a job to deal with their crops, anyway?
§ Mr. Nugent
The 12 months starting 1st July last was not wholly wet. A part of it was wet. There is a sufficient margin to justify our giving a subsidy of 15 per cent. to make sure that the gap which now exists between delivery and supply is taken up.
On phosphates, another point of interest to the right hon. Member for Belper, I give the figures for the two relevant years. In 1950–51, the total consumption of phosphoric acid was 418,000 tons. The consumption for the year 1951–52 was 295,000 tons, a very big drop indeed. That figure fully justifies the measure which my right hon. Friend took in the first place of applying this subsidy to 30 per cent. of the phosphatic manures. It was the first step to stimulate demand among farmers and to overcome the depressing effect on demand which the very steep rise in prices last July had had.
It is proposed to give the two Schemes a life of two years. My right hon. Friend would normally review the general working of the Schemes at the Price Review next year in the light of agricultural conditions generally and the supply-demand position of fertilisers, and he would be quite free either to allow the Schemes to continue or to propose a new scheme to the House varying the rates in whatever way seemed best to him to promote further production.
Finally, the House will have noticed some small amendments in the Schedule, particularly in the basic slag rates, which are confusing. The simple explanation is that in the interim, between the time when the first Scheme was drafted and tonight, the levy which was paid by the basic slag merchants in this country, to equalise the price of basic slag between home-produced and imported basic slag has since been removed. That has resulted in some adjustment in the price level of basic slag, and the result is the variation in the Schedule, as now seen. At the same time, an attempt has been made to get these Schedules of contributions as nearly related as possible to the market value of the different grades of basic slag. That accounts for the difference in the Schedule.
166 Those are the main points which distinguish these two Schemes from that which expires tonight, and with that explanation I ask the House to give them their approval.
§ Mr. Nugent
If the hon. and learned Gentleman means agriculture, including horticulture, the answer is, none that I know of.
§ 10.26 p.m.
§ Mr. George Brown (Belper)
The hon. Gentleman has moved that we approve these Schemes in the competent and charming way that we have come to expect from him, not altogether stressing, but hinting from time to time that he is happier about this Scheme because he has met many of the criticisms that we made when he brought the previous one. As long as he and his right hon. Friend follow their present pattern of making in the new Schemes all the amendments we asked for previously, he will go on increasing in happiness in his job and having the ear of the House.
But we are very modest on this side of the House. We only put up on each occasion just so many comments and criticisms that we think it reasonable for him to accept between now and next time, and it means that we shall go on putting them up with no finality in the operation. The difficulty is that I am afraid the life of this Government will not be long enough for him to share in that finality.
My first point is one that I have made previously. I am still not convinced that the hon. Gentleman is right in being so sure that he ought to go on with another Scheme to pay part of the price to the farmer in this form. He rather took it for granted tonight and did not discuss the principle of a fertiliser subsidy.
I am well aware that many of those who normally agree with me in this approach to the question of subsidy payments, as against end-price payments, nevertheless feel that there are some cases that are strong, some that are weak and some in between and that the question of a subsidy on fertilisers comes in the in-between group; that when one pays a 167 subsidy for fertiliser one is nearer to getting something for which one pays in a specific way than in the case of a number of other examples of subsidies. Indeed, there may be something in that. I feel that it is the nearest thing to a borderline case.
Nevertheless I am bound to say to the hon. Gentleman that I think the case still has to be made, and I do not believe he has made it tonight or that it is as easily made as even its keenest defenders think. Having had a long period of intensive advice being given to the farming community, having had a long period of special payments of this kind, we are still saying, at the end of all that, that we have to tell the farmer how his business ought to be run and what he ought to do.
Hon. and right hon. Gentlemen opposite have a long history of complaining bitterly about the men in Whitehall telling the people outside who have spent their lives in the business how their businesses ought to be conducted. So I think it ought to be known in the countryside that that is the philosophy of the hon. Gentleman and his right hon. Friend.
I am not convinced that we could not get fertilisers used properly where they ought to be used, and in the quantity in which they ought to be used, by using the end-price payment method, the guaranteed price payments method, together with the advisory and persuasive powers of the Ministry. I think it would be a much longer-term method and a much more secure business to do it that way.
I am not at all sure that paying the subsidy on these fertilisers is in fact assisting the farmer at all. I believe that in the end it tends to encourage him still more to do anything that might seem to be specially attractive financially, while the real benefit is going to the manufacturer. The manufacturers of these fertilisers, both of the nitrogenous and phosphates and of the compounds, are vast, well organised near-monopoly people, making enormous profits, with very heavy capital structures, who would ordinarily, in the circumstance which applied in the past year, have had to face the problem of how to dispose of their products.
The hon. Gentleman quoted the uptake of phosphates in 1950–51 as being 418,000 168 tons and said it dropped to 295,000 tons in 1951–52 He claimed that that showed that the farmer needed a special subsidy. If it did prove that, it strikes a considerable blow at the argument which hon. Members on both sides of the House have employed in favour of guaranteed prices, if in fact it has now been proved that we have to take something from them and pay it in the form of a special subsidy to get the farmer to do the job.
But it may equally have proved that the manufacturers of these fertilisers are in fact not being competitive and are not trying to sell their products in a competitive way but are relying on the Ministry to come to their aid and subsidise the farmer in order that they can go on comfortably without having to face the fact that they need to reduce their prices to get the farmer to take their products.
I have talked with a number of farmers since we last discussed this matter, and I believe that there is very considerable room for urging that the margins on which the fertiliser manufacturers are working should be rapidly overhauled and vigorously attended to. I know that the Minister told me on the last occasion when we discussed the matter that the fertiliser prices were controlled by Orders of the Ministry of Materials and added the assurance that they would continue to look at the matter very closely. I ask the question, has there been any examination of the returns of these companies, their profits and their margins, between the carrying of the first Order in April and the decision to have a second Order now? I believe that the answer is that there has not been, and the fact that there has not been is a very considerable weakness.
I dislike the inference that the farmer is to be labelled as receiving a subsidy because he will not do something which is ordinary good husbandry practice without it, when in fact we are assisting the manufacturers of fertilisers a great deal more than the farmer. I thought the hon. Gentleman gave the whole game away on this.
I took down the sentence he used—"Where the farmer has to pay the full cost of the fertiliser he does see the real cost and this is a great psychological benefit." That is exactly what we have been saying—we should not pay in subsidies but in the end price, and if it is 169 in fact such a great psychological benefit that he should know what it is costing, why are we hiding it from him as we are by paying a subsidy through whatever medium one chooses to pay?
The other way in which we are helping the manufacturers is that we assist them to get rid of stuff that they are finding it difficult to sell. The hon. Gentleman discussed the change in the price of basic slag in this Scheme as compared with the last one. That suggests very much that the manufacturers of this by-product have on their hands a good deal of not particularly good stuff, which is sticking very badly, and which they hope to get rid of as a result of the Ministry deliberately subsidising their somewhat inferior stuff. When we pay an increased price, compared with last time, for inferior basic slag primarily, as I believe, because people who hold it find it difficult to get rid of, there is a double argument against this proposal.
Leaving that general argument of principle on one side, the main change in the Scheme is that it has been decided to include nitrogenous as well as phosphatic fertilisers. This is something which we urged upon the Government only three months ago. The hon. Gentleman now produces figures to show that the off-take of nitrogenous fertiliser was so much less than the supply that the Government can now afford to subsidise it. I suggest that that is another criticism of this Scheme and of the way it is to be applied and the reasons behind it.
The Ministry have not approached this problem from the point of view that the subsidy must be paid because in no other way can the right thing be done. They have approached it from the point of view of asking, "Can we afford the subsidy? Will the supply position stand it if we pay it?" It is fantastic to approach the problem in that way. The hon. Gentleman and his right hon. Friend would not accept the fact in April but he now says, as I said then, that the supply of nitrogen was in excess of the off-take. I take no credit for saying that. I was merely following the advice of the hon. Gentleman's officers, of which apparently he was taking little notice.
The off-take last year was 175,000 tons. Against that the hon. Gentleman says we have a supply of 205,000 tons. That 170 is to say, there is a 30,000 tons gap. The hon. Gentleman said there was a great demand in our Colonies. As I well knew in the last two Administrations, we had many long and difficult discussions as to how far, in the interests of world food production and the raising of standards of living in the economically backward countries, we ought to meet their demands as a first or early charge upon our supplies.
Now the Minister is going to put a 15 per cent. subsidy on nitrogenous fertilisers bought in this country. By how much does he expect the 175,000 tons used in this country to be increased as a result of that subsidy? If this country takes up the whole of the 30,000 tons gap, how is the demand from the Colonies to be met? Does it mean that the Colonies will get less because he has decided to give this subsidy as a result, I suspect, of I.C.I., seeing Fisons and others getting on the bandwagon, putting more pressure upon him than we have been able to put in this House?
How will the Minister meet that Colonial demand? I am not going to cavil when arguments which I have put forward are met from the Government side, but the aspect to which I have referred increases my general lack of enthusiasm for this Scheme. I should have thought that in the case of the phosphatic, and certainly in the case of the nitrogenous fertilisers, we could have had the slack taken up, if we wanted to increase their use, by education and advice. I agree that nitrogen cannot be taken out of the second Scheme if phosphate is put in, but the fact that the supply of nitrogen is already nearly taken up leads of the conclusion that we ought to reconsider the whole question of this subsidy.
There is one other criticism I have to make. When the Minister was justifying this Scheme to us some time ago he said:I recognise, of course, that other fertilisers, especially nitrogen, are at least of equal importance, but the exceptional price rise that occurred in July last year, for which insufficient allowance was made at the previous Annual Review, affected phosphatic fertilisers very much more than either nitrogen or potash. The limitation of the subsidy to phosphates is designed to bring prices of the several fertilisers into something like their previous relationship."—[OFFICIAL REPORT, 20th February, 1952; Vol. 496, c. 246.]171 The Joint Parliamentary Secretary said nothing about that tonight. If in fact giving a subsidy to phosphatics was necessary in order to bring the prices of that and other forms of fertiliser back to their previous relationship, surely by now giving it to other forms of fertiliser you must again be disturbing the price relationship. What does the Joint Parliamentary Secretary say to that? Does he say that prices have changed in the meantime or does he throw off completely his right hon. Friend's argument on that occasion?
This raises the question of cost, and here is a very tangled and confused story. When he was discussing this point on Second Reading of the Agriculture (Fertilisers) Bill the Minister referred to the rise in prices, and said itis now a shade over £10 million, and it is this figure which the Government had in mind in fixing the rates at which the new subsidy would be paid during the first year of operation,"—[OFFICIAL REPORT, 20th February, 1952; Vol. 496, c. 244–6]And certainly in all the discussions we had this Scheme was to give a subsidy of £10 million to the industry.
When the White Paper came out the following appeared:On the quantities of fertilisers bought by farmers in 1951–52, the cost of the subsidy at this rate, in respect of review commodities, is £5.4 million. The allocation in the award of £7.5 million for fertiliser subsidy means that in the next Scheme to be presented to Parliament the effective total rate of subsidy can be increased, and that a subsidy need not necessarily be confined to phosphates only.Originally it was to cost £10 million. Then it was found it would cost only £5 million. Then they provided £7.5 million, and that is how they have included the nitrogen. It is difficult to make these three figures tally.
I want to ask two questions, to which we ought to have answers because the House and the country ought to know what this Scheme is involving. And the farmers ought to know how much of the price award has been devoted to this, and whether they will get it all back. What was the sum allocated in the price award for this purpose? Was it the £10 million which the Minister said on 20th February he had allowed for it? Or was it £5 million or £7.5 million? And by how much will the inclusion of the nitrogenous 172 fertilisers increase the cost over what it was when we only had phosphatics in?
The Joint Parliamentary Secretary has made no comment on that tonight. I ask him to let us know before the debate comes to an end. If it does not add to the cost we are bound to conclude that what was deducted has in fact all been paid out by way of subsidy and the farmers do lose quite considerable allowances they otherwise would have got. He is now paying the individual farmers instead of paying as under the old arrangements, and as he now proposes to pay it in Northern Ireland from this year on, that is through the merchants or the distributors. But he admitted that one of the objections to this sort of subsidy is that there is created a very large administrative machine with large numbers of forms, all for the purpose of paying out a lot of very small items.
Hon. Members opposite when they were in opposition were great pleaders every night for less forms. There were tremendous demonstrations on the benches opposite about the needless number of forms that the Socialist Government were supposed to be handing out. We are now going to have several hundreds of thousands of forms when, on the Parliamentary Secretary's own showing, we need only 300. He said that in Northern Ireland we are going to pay it through the merchant and the distributor because there are only 10 merchants there, and it is easier to pay through 10 than it would be to pay it through 300 in England, Scotland and Wales. That is true. But how much easier would it be to pay through 300 in England, Scotland and Wales than through 370,000, which is what he is doing?
He has chosen, despite his own argument, deliberately to pay at 370,000 points of payment when, on his own showing, he could easily pay at 300 points, and the 300 points would comprise much more substantial men who would be far less harassed by the seasons and more able to cope with the paper work involved. In addition, because they would pay for quantities and bulks the paper work would be little more at each one of the 300 points than it would be at each one of the 370,000. I ask the hon. Gentleman to apply the-arguments in his own brief to the case which he has chosen to defend. I believe that in this case he has not done so.
§ Major H. Legge-Bourke (Isle of Ely)
If the right hon. Gentleman is arguing that the number of forms and transactions should be cut down to a minimum, would he say why in that case when he was a member of the Government, his Department continued to allow the lime subsidy to be paid optionally either to the farmer himself or to his merchant?
§ Mr. Brown
Because in that case there were very good arguments for it. I am dealing tonight with this case where we always took the other view. One of the great merits of the Labour Government was that we were not like the hon. and gallant Gentleman, doctrinaire. We approached each subject on its merits, and we decided one way on one thing because it merited being treated in that way, and we decided one way on another thing because it merited treatment in that way. On this matter we decided not to pay at all the points of the compass but to pay to the manufacturers who made it much easier. This particular subsidy lends itself easily to payment this way. The hon. Gentleman has been misled and has not seen the road along which he was being misled.
This brings me to another point, and a point of substance. We pressed the Minister before about the minimum quantity on which they were going to pay. The Under-Secretary for Scotland originally mentioned 10 cwt. We made our point very courteously and modestly and it was seen to be a good point, and so 10 cwt. has been reduced to 4 cwt. Anyone who can buy fertiliser in 4 cwt. lots gets a subsidy. But take the little men—and I am appealing to the party who believe in the little man; they have said so, and they must have meant it at some time. I appeal, in particular, to the hon. Member for Norfolk, South-West (Mr. Bullard) who must know what is done by the extremely good domestic food organisation in Norfolk.
Any little man who is an allotment holder and who is contributing to the food production of the country will not get the benefit of this subsidy at all unless he buys his fertilisers in 4 cwt. lots. If one is paying at so many points one must have a de minimus Regulation; otherwise the thing defeats one. It gets too complicated and much too big. If the hon. Gentleman paid as he does in Northern 174 Ireland—and as we did—he could easily make a much smaller plan.
My hon. and learned Friend the Member for Hornchurch (Mr. Bing) will be interested to note that under the Northern Ireland Scheme the subsidy is paid on 56 lb. lots; so, so long as fertiliser is made up in a 56 lb. bag, it attracts a subsidy; but anybody buying a 56 lb. bag in England, Scotland or Wales would not get the subsidy. He would have to buy eight 56 lb. bags, all at one time, before he could get the subsidy. What is the reason for that? What point can there be in it? Why is it proper that a user of a 56 lb. bag in Northern Ireland should receive a subsidy, paid by us, and the user of a 56 lb. bag or the 112 lb. bag in England, Scotland and Wales should not get a subsidy? It is absurd. It will take a lot of defending, and I warn the hon. Gentleman that he cannot just ride off on it. He must not ignore it. It is absurd; it is inequitable, and there is no justice in it.
If all the arguments which he has used about the value of this for food production are right it is a deliberate blow at food production here, because a whole lot of people who could be encouraged to use more will not now do so, and we shall lose the benefit of the food which they would otherwise have produced. I ask the hon. Gentleman to consider this question closely. I think it is one of the major defects in the Scheme, and one of a number because of which he ought not to try to force the Scheme through tonight.
It is quite true that the old Scheme runs out in an hour from now; but no very great tragedy will occur if it does. The Government will still be in position on the Front Bench when that happens. Ten months had elapsed when they brought in the old Scheme, and if we can have 10 months for one Scheme we can easily have a few weeks for this one. I think someone has slipped up here and has not seen what would be the effect of paying the subsidy here in a different way from in Northern Ireland. I ask the hon. Gentleman to reconsider the matter—and I warn him that he will be pressed very heavily from these benches—and to do so before we agree to such an obvious injustice being done.
The hon. Gentleman referred to the differences in this Scheme, as compared 175 with the previous Scheme, in relation to the question of the subsidies for basic slag. I wonder if the House appreciates what is being done? The hon. Gentleman was good enough to discuss this matter with me earlier, and as he mentioned it I am sure he has no objection to my doing so. The provisions of this Scheme increase the amount of subsidy we pay on the very inferior basic slag.
On basic slag, with a P2 O5 content of 6 per cent., the subsidy goes up; but on good basic slag with a high P2 O5 content the subsidy goes down—and it goes down very heavily indeed. If we take basic slag with a 15 per cent. P2 O5 content we find that under the old Scheme the subsidy was £2 12s. and under the new one it has gone down to £2 4s. 6d. But the very inferior stuff has gone up from £1 9s. to £1 11s. The 17 per cent. has gone down from £3 10s. to £2 9s.
It has been said that some Governments have all the brains and all the ability, though it cannot be said of this one: may I ask them, therefore, in the name of all reason why they are increasing the subsidy to encourage the use of inferior fertiliser and decreasing the subsidy to discourage the use of good fertiliser? Because of the higher subsidy farmers will be encouraged to use this inferior stuff of which there is a good deal about—indeed there are many large heaps waiting to be used—and they will not get the results they expect. They will go around saying that the "know all" chaps from the colleges said they should use it but they had got nothing out of it. The subsidy will be paid to finance these people, but had they insisted on basic slag with a 12 per cent. or 15 per cent. content they would have got an altogether different result.
When the Government prepared this new Schedule I doubt very much whether they really saw that that would be the outcome. The hon. Gentleman referred to the complication of taking away the levy factor. I can well understand that would reduce the price and the subsidy would come down, but what I cannot understand is why it should come down for the inferior type then for the better kind. I believe the answer is that the manufacturers have persuaded the Minister that they have a lot of this stuff hanging about of which they want to dispose. 176 They find that there is not much of a demand for it, so if the Minister could only subsidise it they would get rid of it altogether. But why should they not reduce the price? Why should we do it for them?
There are objections to this Scheme: they are objections of detail, but substantial detail. There are injustices in it. Whether hon. and right hon. Gentlemen accept my point of view is beside the point—and I am aware that many will not—but on the detailed criticism I think it must be agreed that this is a slipshod Scheme produced without any real consideration, which will have different results from those which are claimed for it. It is going to run for two years, though I know the hon. Gentleman said that the Minister will reconsider it in the light of the price review negotiations. We know that means it will become a bargaining counter, and bargaining counters sometimes have the habit of becoming touchstones and very difficult to disturb.
I suggest that the hon. Gentleman should take the Scheme back tonight, because there is no abiding and furious need for it to be passed immediately. Suppose prices come down during those two years? We are told that the subsidy is to be about 30 per cent. on phosphatics and 15 per cent. on nitrogenous fertilisers. But it is stated not as a percentage but as an absolute payment. If prices fall in the two years the Scheme is to run—and I gather from the organs of the Press that support the party opposite that that is likely to happen—then we are committed over that period to a specific amount of subsidy which will mean that as prices fall the percentage we are paying in subsidy will rise. So that if there is a considerable fall, instead of paying 30 per cent. we shall be paying 40 per cent. and perhaps even 50 per cent.
There is no reason, I believe, for making this Scheme in a great hurry, nor for allowing it to run for two years without allowing us an opportunity to review it. Though it could run for that period there is no reason why the hon. Gentleman should not make it run for one, as he did with the other Scheme we discussed recently. He should reconsider it because I should have thought there was a good reason why this specific amount ought not be established for two years.
177 I believe it to be a badly drafted and slipshod Scheme. I accept that this is a borderline case, and that many people think it is a good thing to pay a subsidy on fertilisers, and I would not press my objections on principle too strongly. But I press them on these detailed injustices, inaccuracies and bad arrangements in the Scheme and I hope the Parliamentary Secretary will agree to take it back for reconsideration, for which there is plenty of time.
§ 11.1 p.m.
§ Mr. G. R. Mitchison (Kettering)
I feel very shy in an agricultural debate and my main disqualification for speaking is that I do a little farming, but only in the sand, where we use seaweed instead of fertiliser. There was a well-known lady, unfortunately not a Member of this House, called Rosa Dartle, and there is a Rosa Dartle question that I want to ask about basic slag. I have always understood that basic slag was the refuse which was left over when one finished making steel, and that one thing that one did not, and does not, want in steel is phosphoric acid.
I have a lot of trouble in getting rid of all the tins and things in the countryside, and I have not yet succeeded in getting anybody to pay me large sums for the tins and to pay me an even larger sum the worse and more useless the tins are. It seems to me that the steel makers are doing remarkably well out of this business. I am not an expert at what I think are called agronomics, but does it not work like this? The steel maker has a lot of bulky useless refuse which he has got out of his ore or raw material in order to make steel. He has to persuade someone to buy it from him. The only person he can persuade is the agriculturist, because we have the authority of the Parliamentary Secretary that basic slag cannot be used for anything else, and I am sure the Ministry of Agriculture know all about that.
Then the farmer says, "But you are asking too much for it. I cannot afford to pay that price." Sure enough, as we had explained to us, the quantity taken by farmers falls in consequence. One would have thought that, wedded as are right hon. Gentlemen and hon. Gentlemen opposite to the laws of supply and demand and the principles of free enterprise, somewhere about then the iron and 178 steel merchant would have said, "I do not want this stuff. It gets in my way. If you cannot afford to pay as much as that for it, what can you afford to pay? At what price can I induce you to take more?" But it does not seem to work that way.
A benevolent Government, from whichever side of the House it may be, steps in and says, "In these circumstances what we do is to subsidise the basic slag." That is to say, we join with the farmer in paying the iron and steel merchant a higher price for his bulky and useless refuse—useless from his point of view—than he would otherwise get. The fact presumably is that, since it costs more, then, whether by way of taxes or food prices somebody will pay more. For whose benefit? The iron and steel merchant's. I am not an expert on agronomics, but I should like to know why, in these circumstances, the price is not reduced, instead of being subsidised.
One more thing. I follow this basic slag across the sea to Northern Ireland. It must have crossed the sea, because it seems to have got a lot more expensive on the way and to attract an even larger subsidy. This refuse is very curious stuff. Valueless and an encumbrance at the steel works, it attracts a subsidy that grows larger and larger the further away you take it; and it attracts the subsidy notwithstanding the fact that all other phosphates do not seem to go up in price. Why has it to be sent to Northern Ireland if it is all wanted here? Why is there a different rate there and here?
I am sorry to be ignorant about these things. But the House is full of farmers, and I am sure they will be able to tell me that it depends on the seasons, the method of farming, or the cycle of crops, and that for that reason the Government must pay an extra amount for the benefit of the iron and steel manufacturer, so that the farmer shall be induced to use more basic slag.
§ 11.8 p.m.
§ Mr. Robson Brown (Esher)
I never thought that I should take part in an agriculture debate, but I must intervene to correct the fantastic argument of the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) about the steel trade and its huge profits from basic slag.
179 The facts are simple. Basic slag is a by-product of the manufacture of steel, and with the development of the Bessemer process this by-product has conferred upon British agriculture a great boon and blessing. The value of basic slag to agriculture is well known to everyone connected with British farming. It is also well known that in many cases the steel manufacturers are pressed—and in the war were compelled—to crush and grind basic slag which it would have suited their purpose much better to have discarded upon the tips.
The hon. and learned Gentleman seems to be under the impression that slag, as a by-product of steel, is rubbish to be tipped into a truck and sold at a fancy price, plus the subsidy. The truth is that basic slag has to go through a considerable process before it is used on the land. It has to be worked to very fine chemical limits.
I am not going to answer the arguments of the right hon. Gentleman the Member for Belper (Mr. G. Brown) with regard to the varying subsidies and qualities, but he knows, as he once occupied a place on the Treasury Bench, why these things are done. In this respect, the steel trade is performing a national function, and the margins that it enjoys, if they exist at all, are small. In many instances, the slag is ground and delivered to the agricultural industry in the national interest.
§ 11.10 p.m.
§ Mr. M. Philips Price (Gloucestershire, West)
I agree with the principle behind the Scheme, because it seems to me to do something towards encouraging good farming. The increased costs which have been such a feature of farmers' accounts have been such that some farmers, as the figures quoted by the Parliamentary Secretary show, have economised in their consumption of fertilisers. One of the best ways of increasing output per acre is the use of artificial manures in balance with the humus of farmyard manure. Unfortunately, this has decreased. One reason this subsidy is good is that it will encourage those using these fertilisers to continue to use a large quantity, and those who stopped using them during the last 12 months to start using them again.
It has been shown that combine drilling, that is, drilling the seed with the 180 artificial manure, will increase the yield of corn considerably. There are figures to prove this, but they depend very much on the conditions in which the crop is grown. I have one criticism. Like some of my hon. Friends, and the right hon. Gentleman the Member for Belper (Mr. G. Brown) I do not see why the system which the Northern Ireland Scheme establishes, of giving this subsidy to the manufacturer or merchant, should not be applied in England. The continuation of the old system, which is proposed here, will mean a lot of paper and a lot of time.
I know that the Parliamentary Secretary says that it gives the farmer an idea of what the real costs are, and of the amount by which he is being assisted; but I do not see that. I ought, perhaps, to declare an interest in this matter as I engage in farming and get some advantage out of this; and I know that when I got my returns, anything from six to nine months after I had actually paid for the fertiliser, I had to search my books to discover what the cheque was for. There was with the cheque no indication of what particular item it related to—basic slag, super-phosphate, or rock phosphate. That is wrong and inefficient.
The better system is that suggested in the other Scheme. Nevertheless, I think that this will, in the long run, encourage good farming. I prefer this way of doing it to assisting the end product, a method which is of as great advantage to the lazy farmer as to the good farmer. This encourages the man who uses fertilisers in up-to-date scientific cultivation.
§ 11.15 p.m.
§ Mr. George Jeger (Goole)
I listened with great interest to the Parliamentary Secretary's introduction of these Schemes which are designed to pay a subsidy to farmers. Coming at the end of the day as they do, when I have been sitting here for seven hours hoping to speak on food subsidies, I find it an interesting contrast to consider these Schemes.
Mr. W. M. F. Vane (Westmorland)
The same speech?
§ Mr. Jeger
Part of it will be.
I have looked for the conditions and terms under which the subsidy is to be paid to the farmers, and see none at all except that the Minister may require to 181 inspect the fertilisers and accounts, invoices, receipts and other documents. That may well add to the army of inspectors, or snoopers as they are irreverently called. But I see nothing in these Schemes to suggest that there is to be any discrimination in the payment of this subsidy.
In fact, the subsidy is to be paid to the farmers irrespective of whether they are rich or poor, whether they have a large bank balance or a small bank balance, in contradistinction to the arguments we have heard all day that it is iniquitous that a subsidy should be received by a food consumer who happens to be rich. The food subsidies had to be adjusted to make that philosophy of the Tory Party operable. That seems to display a contradiction in the way in which the party opposite, now in Government, are looking at the question of subsidies. We expect them to bring the same principle to bear in regard to these subsidies as they have been arguing all day on food subsidies.
§ Mr. Speaker
The question of whether or not a subsidy for fertilisers should be paid is a matter settled by the parent Act and the hon. Member cannot argue against that because it was the decision of the House. The Scheme merely sets out the method by which it shall be administered.
§ Mr. Jeger
I am not disputing your Ruling, Mr. Speaker. I would be the last to do that but, with all respect, I would point out that the Scheme says that the Minister may make the contribution to the purchaser in regard to the amount of the fertiliser produced by him without reference whatever to the financial circumstances of the purchaser or of the association, if he is not the actual occupier of the land. It is to the lack of any condition with regard to the means of the farmer that I am addressing myself.
I was going to suggest that there should perhaps be a means test and that the method by which the Minister may prescribe the payment of the subsidy should be dependent on the farmer being actually in need of it. We cannot have the rich farmer drawing subsidies he perhaps does not need. I am quite in favour of the medium or poor farmer drawing it to help and encourage him to make the best possible use of the land and, naturally, he needs the fertiliser for that purpose.
182 If we are to adopt the indiscriminate method of subsidies to farmers we should also allow the consumer of food to be in receipt of subsidy in the same way. Or is it to be held that it is necessary to subsidise the production but not the consumption of food? If we are not looking at the consumption end of the matter we are neglecting the work of the production end and in effect wasting some of the subsidy which is to be paid under these Schemes.
There is another danger in the Government's attitude over these Schemes; that of driving a wedge between town and country in a way which in the past we have deplored and tried our best to avoid. We have tried to bring about a greater understanding between them, an appreciation of the problems of agriculture in the towns, and vice versa, in order that the whole community should work together for the prosperity of the whole country and the better welfare and lives of our people. This, on the other hand, will drive a mental wedge between the people in the town and the people in the country, when the recipients of the food in the towns feel they are being asked to pay increased prices for food because of the withdrawal of food subsidies, whilst they see the farmers receiving increased subsidies which send up the price of food upon which they depend.
I ask the Government to consider again whether they should not withdraw these Schemes and submit them again in a better form, more in line with their own logical arguments which they have been pursuing all day long. I ask them to consider giving to the farmer a subsidy only when he obviously deserves it and needs it.
Another aspect of this matter is that the life of the Scheme is stated as two years. The Government are asking the farmer to plan ahead on the basis of the subsidy as set out in the Schedule, but there are many farmers who are a little chary of planning far ahead because they have not security of tenure on their land. I would direct the attention of hon. and right hon. Gentlemen opposite to a recent case at Winchester where a tenant farmer was given notice to quit by a wealthy landlord. That notice was confirmed by the Ministry and then, as a result of a long drawn out and expensive case before the tribunal, that confirmation 183 and the notice to quit were reversed. But the wealthy landlord has announced that he intends to serve notice to quit again.
§ Mr. Jeger
With respect, Mr. Speaker, I was attempting to relate the two-year life of the subsidy to the possibility of a tenant farmer taking advantage of it only if he has security of tenure of his land.
I was going to ask the Parliamentary Secretary, if it came within the bounds of order, whether he would try to ensure greater security to tenant farmers in view of the fact that he is giving them in this Scheme an inducement of a long-term subsidy. If they could be guaranteed that they would remain in possession of their land for two years or longer this subsidy would have the stimulating effect which the Minister is anxious for it to have.
§ 11.23 p.m.
§ Mr. J. Grimond (Orkney and Shetland)
I wish to make only two short points on this Scheme. The first follows from something which was said by the hon. Member for Goole (Mr. G. Jeger). It is that this type of subsidy, as indeed is the case with guaranteed prices, helps the rich farmer who is making fairly large profits on reasonably good land as much as it does the poorer farmer who is in some difficulty in buying sufficient fertilisers.
In my own constituency, and in the North of Scotland generally, one of the reasons why farmers need assistance is that being far away from railheads and main ports they have very heavy freight charges. At present a great many fertilisers are delivered to various terminal points in Great Britain at the same price, under an arrangement made by the manufacturers. One of these points is Kirkwall, in my own constituency. But when they are carried from those points, the extra cost of transport is added to the cost which the user has to pay, and it is considerable.
I ask the Joint Under-Secretary of State for Scotland whether, when he watches the working of the Scheme, he will see if some means cannot be devised 184 to help the crofters and the small farmers who have to pay these extra transport costs. They are people who certainly should use more fertilisers and whom this Scheme should encourage to put more manure on their land. I notice that apparently there is an extra subsidy for basic slag in Northern Ireland. I do not know whether that has anything to do with the cost of transport to Northern Ireland or not. But I expect it has. Why not help for the North of Scotland then?
I was also struck by the fact that the subsidy becomes lower as the quality of the basic slag becomes higher. It has always been the custom in the Highlands of Scotland to buy the highest quality of basic slag, because, if you are going to pay transport anyway, you may as well pay it on good quality slag. While I understand the reason for some differential I am rather puzzled why the difference is so large.
The other point I wanted to make is to return to this matter of filling the forms. Certainly, on going round my constituency it does seem that a considerable number of crofters are failing to get subsidies they ought to get and so lose a chance to improve their land simply either because they do not fill up forms or cannot fill them up correctly. I do not want to stress this point unduly but there are a number who are in difficulty over the forms. If you are working all day on a small croft and you are not a very highly educated man this can be a difficulty.
§ Captain J. A. L. Duncan (South Angus)
The merchant fills in the form. All the farmer has to do is sign his name.
§ Mr. Grimond
I was just going to say that. It is largely the custom for the merchant to fill in the form and for the farmer to sign his name. Even so, the obligation falls on the crofter, and he has to let the merchant know he desires this fertiliser.
Only the week-end before last I was talking to one of the largest, if not the largest, merchant in Orkney and he said it was perfectly true that a number of people were not getting all the subsidy they could because of this difficulty of forms. I do not know whether the solution is to put the whole burden on the merchant and let him draw the subsidy, or more publicity or what, but the 185 difficulty has been brought to my attention and if the hon. Gentleman can say anything about it I would be glad.
One last point. If he could give some advice on disposal of tins as requested by the hon. Member for Kettering (Mr. Mitchison) that would be very valuable indeed. Certainly I, like him, suffer from a severe glut of tins. Is there any chance of a subsidy for their disposal?
§ 11.28 p.m.
§ Mr. Thomas Fraser (Hamilton)
I hope that the Parliamentary Secretary and the Under-Secretary for Scotland now realise that a good many of us have grave doubts about these Schemes. Many of us expressed grave doubt about the wisdom of this policy when the Bill was going through. However, the House took a decision on that and we are obliged now, not to consider whether a fertiliser subsidy is a good thing or not, but whether this fertiliser subsidy is a good thing or not.
I suggest that sufficient reasons have been given by my right hon. Friend the Member for Belper (Mr. G. Brown) and other hon. Friends to induce the Government to tell us soon that they will take these Schemes away, give some thought to them and bring forward other Schemes that are more acceptable to the House generally.
The hon. Member for Orkney and Shetland (Mr. Grimond) has just been talking about transport costs in his constituency. I think that when we were discussing this Bill I called his attention to the fact that his constituency was a bit further away than Northern Ireland. But Northern Ireland gets a higher subsidy. The hon. Gentleman's constituency does not. What does the Under-Secretary for Scotland say about that one?
How can he come to this House tonight and justify a higher subsidy for basic slag used in Northern Ireland than is to be paid to the farmer and crofter who use basic slag in Orkney and Shetland? The costs to the farmer in Orkney and Shetland will exceed those to the farmer in Northern Ireland, and I should have thought that would be a very good reason for the Under-Secretary of State for Scotland at least to nudge his hon. Friend and ask whether they had not 186 better have another look at this Scheme after all.
The hon. Member for Orkney and Shetland mentioned the convenience it would be if the distributor or the manufacturer or the importer made application to receive the subsidy rather than that each small farmer and crofter should do so. The hon. and gallant Member for Angus, South (Captain Duncan) seemed to think there was a very simple answer to that, but I should have thought that the Parliamentary Secretary gave the best answer of the lot when he explained that the reason why the subsidy is to be paid to the manufacturer or importer in Northern Ireland is that it is a great convenience to pay the subsidy to a small number rather than a very large number.
What some of us have argued in the earlier stages of the consideration of this matter of fertilisers is that that is the method which should be adopted in the country as a whole. It was adopted for any part of the country in the first scheme. It is now being adopted for Northern Ireland. Why not for England, Wales and Scotland? Why not for the crofters of Shetland, the Western Isles and the Highlands? Why not for the small farmers all over the country? Why should the subsidy not be paid to the person who distributes rather than to each smallholder?
What would be a great advantage to the users of these fertilisers is this: if the merchant is able to make application for and to receive the subsidy, the subsidy can be paid on much smaller quantities. We were told, earlier, that the reason why it would be difficult to pay a subsidy on less than 10 cwt. was the administrative inconvenience of receiving and dealing with applications from people who receive less than 10 cwt. However, the Minister and the Under-Secretary of State for Scotland were able to produce a Scheme providing for paying the subsidy in respect of quantities right down to four cwt., and that went for the whole of the United Kingdom.
But when the Government brought forward this new Scheme for Northern Ireland, and were able to provide that applications will be received from and subsidies will be paid to the merchants instead of to the individual users, they were able to provide that the subsidies would be paid on packages of 56 lb. 187 or more, so that the subsidy can be paid to those people because it is being paid in this convenient way through the merchants on quantities of 56 lb.
Why cannot we have that system operating throughout the whole of the country? Why can we not get it for England, Wales and Scotland? Why cannot the smallholders and crofters in different parts of the country be treated as generously as the small farmers in Northern Ireland? There seems no reason for this differential treatment at all.
I have to tell the Parliamentary Secretary and the Under-Secretary of State that I have very grave doubt whether this subsidy was introduced to help the agricultural industry at all. We have spent some time discussing basic slag—where it comes from, why it is used for agriculture, the advantage to agriculture of the by-product of the steel industry.
We had these subsidies promised, in the first place, because of the steep rise in the price of phosphates after July of last year. Did the cost of basic slag go up steeply in July last year, or at any time from July last year to the present time? I should have thought not. If it did, for what reason was it? After the subsidy is paid are the farmers going to be paying more or less for their basic slag than they did a year ago? We should like to know. I do not know. I have no idea at all.
It appears to some of us—and it does seem to be so if one studies the Schedules to these two Schemes—that the Government are deliberately giving a higher subsidy than the present one in respect of the low-content basic slag, and for the simple reason that the producers of basic slag are finding it exceedingly difficult to get rid of their waste material. But it is another industry altogether which is being subsidised here, and not agriculture at all. The Parliamentary Secretary or the Under-Secretary of State will have to bring forward some powerful arguments if they are to convince us that these Schemes are ones which should receive the approval of the House tonight.
Will the Parliamentary Secretary—I think he is to reply—tell us what will be the cost of the new phosphatic fertiliser subsidy? Will he tell us what will be the 188 cost of the new nitrogenous fertiliser subsidy? We will then do the little sum ourselves and see what is the total cost. We want to know what allowance was made for this in the Annual Price Review. The White Paper gave a figure of £7.5 million; but the Minister, speaking in the debate on food, said that he had allowed £10 million.
We want to know what the sum is; we are entitled to know. The farmers are entitled to know what sum was set aside. Was the White Paper telling the truth when these prices were fixed after the annual negotiations? Was a sum of £7.5 million taken out of the sum to be paid in guaranteed prices and given in this form? Do these two Schemes now provide that a sum of £7.5 million per year will be paid directly or indirectly to the farmers?
§ Mr. Fraser
I am not going to enter into a foolish academic discussion on whether it is a calendar year or a fertiliser year. I suggest that it should be a year of 12 months; but perhaps that would be rather too difficult for the hon. and gallant Member.
We understood from the Minister that this Scheme was to cost £10 million a year, by which I think he meant a year of 12 months. The White Paper said it was £7.5 million, although the cost on 1st September was to be £5.4 million. We want to know what these Schemes are to cost us and it is normal for us to be told that almost in the first sentence of the speech of whoever it is who asks the House to approve a Scheme such as this.
It is ridiculous at this time that we should have a Scheme which fixes for the next two years, the sum to be paid per ton of fertiliser of different kinds. One could have understood it if the Government had said, "We will pay a certain percentage of the cost of fertilisers over a period," but to say, "We will pay fixed sums over a certain period" seems to be quite absurd. The Parliamentary Secretary said, "Of course, we are asking the House to approve this Scheme to run for two years," but the Minister always has the right, between now and the next Annual Review, to have further thoughts about this, and if he 189 wishes to bring forward a Scheme with different subsidies he is perfectly free to do so. The trouble is that he is the only person free to do it. If the Scheme is approved tonight none of us will be free to offer any comment on it before 1954. I think that is wrong.
I argued in the Committee stage of the Bill that these schemes should not run for more than 12 months because we have an Annual Price Review, and because each year there must be discussions with the leaders of the farmers as to what amount of money ought to be paid to them in prices and what proportion of the total amount should be paid in subsidies. But what will happen when the price of fertilisers changes? Will the Minister come to the House and say, "Please may we have another Scheme, with different subsidies?"
What the farmers are asking for is that the cost of production should be kept stable and steady, and, of course, if prices were kept steady everything in the garden would be lovely. It is a pity that the Minister responsible for the co-ordination of food and agriculture could not get the Ministry of Food to accept the policy the Ministry of Agriculture is adopting. They seem to be travelling in opposite directions.
It is clear that there are many who do not like these Schemes in their present form. It is not good enough to bring forward at the same time two Schemes that are so different, and which provide for the subsidies being paid out to different people altogether and also that the minimum quantity for getting the subsidy shall be 56 lb. in Northern Ireland and 4 cwt. in the Highlands of Scotland or other parts of this country. That is wrong, and the Parliamentary Secretary should get up and tell the House that he will take the two Schemes back, give them further consideration and come back with them when he has had adequate time to consider what is involved in them.
§ 11.43 p.m.
§ Sir Leslie Plummer (Deptford)
I shall not detain the House very long, but there are two points I would like to put to the Parliamentary Secretary in illustrating my fear that this Scheme will militate against the use of basic slag in the heavy clay land in that part of Essex in which I have, and must disclose, an interest. One of the disadvantages of basic slag is that it takes 190 a very long time to operate, and the uninformed farmer tends to disregard it as an effective fertiliser. A great deal of propaganda and education are necessary to make him appreciate how valuable it is.
In our part of the country we use basic slag to the extent of 3 cwt., 4 cwt. or 5 cwt. an acre on last year of a ley, but because it is slow acting its value is not immediately apparent to the farmer. It is no good using basic slag on land of this character unless it has a high P2 O5 content—14 per cent. or 15 per cent. What will now happen is that the farmer will find that the subsidy he got last year on basic slag of 14 or 15 per cent. P2 O5 will suffer a reduction of 5s. and 7s. 6d. respectively. So he will be attracted more to the use of inferior fertilisers of 6 or 7 per cent. P2 O5 instead of spending money wisely on the efficient fertilisers.
What is the purpose of giving an additional advantage to the farmer in an attempt to get him to use inferior quality fertilisers? Has somebody got large dumps of this stuff which they want to release? Is that the purpose? It is outrageous to carry on an educational campaign telling the farmer to use fertilisers soundly and properly if he is then subsidised to use the worst kind of fertiliser.
There is no subsidy for the Northern Ireland farmer to use the inferior basic slag. The subsidy for Northern Ireland starts with 14 per cent. P2 O5—not from 6 per cent. to 14 per cent. is it suggested that the 6 per cent. to 14 per cent. is all right for the English, Scottish and Welsh farmer, but is not good enough for the Northern Ireland farmer? Why is it right to induce the farmers in Britain to use an inferior fertiliser but wrong to use an inferior fertiliser in Northern Ireland?
If the Parliamentary Secretary wants to see basic slag used properly in this country, I beg him to realise that the whole insistence should be on using a properly balanced basic slag and not the rubbish which is being subsidised in this fashion.
§ 11.46 p.m.
§ Mr. Nugent
I think I have noted most of the points raised in the discussion and perhaps I may first take the basic slag plot, which has grown thicker as the debate has proceeded. The hon. Member for Deptford (Sir L. Plummer) made a 191 point which, I think, went a long way to answering his hon. and learned Friend the Member for Kettering (Mr. Mitchison)—that although basic slag is of great value agriculturally, as many of us understand, farmers have always been rather reluctant to use it as fully as they might. It is slow acting, and therefore the less progressive have not been as ready to use it as they might have been. They have needed some encouragement to use it, and they have had that encouragement for many years.
§ Mr. Mitchison
I am sorry for interrupting the hon. Gentleman so early in his speech, but he has not understood my point. I am not disputing the value of basic slag to the farmer. What I am asking is why the price has to be reduced by a subsidy instead of getting the iron and steel merchants to reduce it. I am left unimpressed by the moving picture painted by the hon. Member for Esher (Mr. Robson Brown) of the iron and steel merchants working hard on the basic slag outside the steel works.
§ Mr. Nugent
The general question of whether the subsidy should be applied to the end product—to the fertiliser—or by means of higher commodity prices to the farmer is basic. The hon. and learned Member for Kettering shakes his head, but that is very germane. It is no use the Ministry of Agriculture or anybody else telling the slag makers that they must reduce the price of their basic slag to a level at which the farmers will take it if they say they cannot produce below a certain level.
§ Mr. Nugent
In fact it has gone down, and I am about to give the House information as to what the price has been, which will help to explain some problems which have been troubling hon. Members about the Schedule.
I assure the hon. and learned Gentleman, who is obviously sincerely bewildered, that we have done what can be done to persuade them to reduce their price. We have persuaded them to go as far as they are able, and the element of subsidy we are now proposing is what is necessary to get the farmers to take up the supply available.
To come to the specific problems of the basic slag price. I was asked by 192 the hon. Member for Hamilton (Mr. T. Fraser) whether basic slag prices have gone up or down. They have done both. Under the last price schedule, on 5th June the low-grade slag prices have gone up slightly and the high-grade have gone down. Thus, low-grade slag, which has a relatively low agricultural value, has become less attractive and the high-grade slag has become more attractive.
§ Mr. T. Fraser
Is there any reason why the low-grade slag has gone up while the high-grade slag has gone down?
§ Mr. Nugent
If the hon. Gentleman will allow me to continue, I may be able to enlighten him further. In this last price schedule, dated 5th June, a firm attempt was made to try and relate this schedule—which is fixed in consultation with the Ministry of Materials—to the actual fertiliser value of the various grades of slag. We believe we have got it to a more realistic schedule than in the previous schedule, and the subsidy schedules are, of course, related to them. That is why to some extent they seem rather difficult to understand without looking at price schedules as well.
§ Mr. G. Brown
If that is so, will the hon. Gentleman say why one gets almost exactly twice as much subsidy per centum for the inferior end of the scale as compared with the useful end of the scale?
§ Mr. Nugent
If the right hon. Gentleman can restrain his impatience, I am just trying to explain that point.
To make the picture clear, here is an example. On the 6 per cent. slag, the price under the late schedule was £4 8s. 6d. and, under the new one, £4 14s., a significant increase in price; on the 14 per cent., the prices are £7 9s. 6d. and £6 10s. So there is a substantial reduction in price on the high grade slag, and the difference is even higher on the higher grades.
The right hon. Gentleman was asking me to explain the basis of these basic slag schedules in these two Schemes. Basic slag is made up to a large extent of lime. Its content of lime is about 40 per cent. to 50 per cent., in addition to the known quantity of phosphoric acid, which will vary from 6–20 per cent. There are also various valuable trace elements, particularly manganese, which 193 have a particular value when they are applied to farm land. The lime itself is also valuable. The size of application is very much smaller than is normally put on with a lime application, but it is of distinct agricultural value both in the lime and trace elements.
The attempt is made here to relate this subsidy to the complete value of the fertiliser, which is the phosphoric acid. Therefore, there is a basic value, and it is from that that the 6 per cent. starts. The right hon. Gentleman is not getting a true picture if he simply divides the 6 per cent. into the 31s. at which it starts. He will have noticed that, starting at this low per cent., 1s. 6d. is allowed as each additional per cent. is added, whereas, at the top end of the scale, it goes up to 3s. The subsidy gets heavier as the phosphoric content rises.
With the great deal of care that has been given to the price schedules and the subsidy schedules I think we have a balance which is about right now—first of all in getting the price schedules related to the fertiliser values, and the subsidy schedules properly related—to encourage the greater use of the higher phosphoric acid basic slag.
With regard to the price differential for Northern Ireland, the point there is that the basic slag has to travel from England as the finished product, and there is, therefore, that additional freight element, whereas the raw material for the super-phosphate comes in the form of rock phosphate from North Africa. The cost of the shipping freight rate from North Africa to Northern Ireland is not substantially greater than from North Africa to Liverpool or London. It is on that account that the higher amount is allowed.
The right hon. Member for Belper asked for figures of cost. He is right that on the current Scheme, which is to end in about two minutes, the cost has worked out at £5.4 million on Price Review commodities. It is true that it was estimated, when the Scheme was designed, that the off-take of fertilisers would be that much higher than the original amount which my right hon. Friend estimated would be taken up. The two Schemes before the House are designed on the basis of the price award at the last Price Review, which gave a sum of £10 million to farmers for this purpose. That £10 194 million is the total sum. That sum is made up in this way—£7,500,000 applied to the Price Review commodities, £1,900,000 to horticultural commodities making a total of £9.4 million.
The right hon. Gentleman asked what increase there will be on account of the nitrogen being included and the answer is that all these estimates have been drawn up on the basis of the 1951–52 consumption, the year now ending. If consumption runs at the same level we shall use exactly the same amounts, if it is less we shall use less, and if more we shall use more. But we anticipate that the margin we have left should cover any increase over the estimate if such should occur.
§ Mr. G. Brown
I am grateful to the hon. Gentleman for explaining that, but on the original Scheme, which I understand to be the £5.4 million actually spent in 1951–52 as against the £10 million allowed for in the special Review last year does that mean £4.6 million which the farmers were entitled to under the Review but which, in fact, they never had?
§ Mr. Nugent
The £5.4 million was in respect of Review commodities only and there would be an addition to that of—I have not the exact figures—£1 million of £1½ million probably in respect of non-Review Commodities. But to that extent the farmers have actually received that much less than the award which is entirely due to the fact that they did not take up the amount of fertilisers we hoped they would.
On the question of the minimum quantity allowed in Northern Ireland, which is, of course, intimately bound up with the question of whether it is to be the manufacturers' scheme as in Northern Ireland or the farmers' scheme as in England, Wales and Scotland, I can only reiterate that we feel that the advantage of the farmer paying the actual cost of the fertiliser and then claiming the subsidy that was due was such that it was worth the extra administrative trouble. It is a matter of opinion which is the best but we felt that this was the best for England, Wales and Scotland.
In Northern Ireland they are, naturally, free to make their own decision and they feel, particularly with the small number of merchants, that it would suit them 195 best if they had the manufacturers' scheme. It is possible to argue a very good case on either side and I congratulate hon. Members opposite on the force with which they have argued the case from their side.
§ Mr. Nugent
I am sure that the generous nature of the right hon. Gentleman will get the better of him shortly.
On the question of the half hundred-weight which has been alluded to this was drafted in this form so that it must be more than half a hundredweight which means that a half hundredweight bag would not qualify. In fact, it pushes the amount up to a cwt. Under the manufacturers' scheme quantity may be reduced to something less than 4 cwt. but it was felt that, on balance, it was better to have the farmers' scheme in England, Wales and Scotland. We are open to be persuaded by practice and will see over the next 12 months how the two schemes operate. If it seems on balance that the manufacturers' scheme is better we shall have that advantage of seeing the two schemes operating alongside and can propose the next Scheme in a different form.
The right hon. Gentleman criticised the two-year period. We shall, of course, take into account, next year, what is the right disposition in regard to fertiliser prices and shall not hesitate to propose a new Scheme at different rates, according to what seems necessary. I believe that there is an intrinsic value in a subsidy of this kind. That being so, the farming community has something which will help to give farmers confidence and cause them to use all the fertilisers available.
The right hon. Gentleman asked what would happen supposing we stimulate domestic consumption of nitrogen to the higher level. The answer is that we have been exporting something like 50,000 to 60,000 tons of nitrogen annually and if we have not used an amount intended for the home market then to that extent there is more for the Colonies. But that basic amount is reserved for the Colonies, so their needs will be substantially met even if we are able to increase our own demand at home.
196 I should like to say one or two words on the argument, which was put very forcibly from the other side of the House, that this Scheme will really benefit the manufacturers and not the farmers. Fortunately, I can give the right hon. Member for Belper the assurance for which he asked on one point. I hope that I shall not disappoint him in being able to give it. It is that we have been looking very carefully at the manufacturers' margin, particularly the compound margin. Discussions are going on at present and I cannot commit myself tonight, but I can say that I am not unhopeful that the outcome may show a trend in the direction which we desire.
§ Mr. Nugent
The subsidy on the compounds is not directed to the compounding costs, and, therefore, the subsidy will not be affected; but I hope that it will make some significant difference to what at present seem to be very high margins on compounding costs. I assure the right hon. Gentleman and the House that the Minister of Materials is looking at the matter very closely and I hope that he will have something to say on it in the near future.
On the general picture, as to whether it was advisable to make the price award of £10 million, as it was in this case, by way of higher commodity prices, or by a specific subsidy of this kind, that, once again, is a matter of opinion. The right hon. Member for Belper knows that on the Second Reading of the Bill his right hon. Friend the Member for Don Valley (Mr. T. Williams) gave the Bill quite kindly support. I am sure that the right hon. Member for Belper will be the first to acknowledge that opinions differ, even on his side. I understand his point of view, but at the end of the day it must be a matter of personal judgment in each case whether a subsidy will secure higher production at lower cost than would higher end prices.
It will not do to follow the argument of the hon. Member for Goole (Mr. G. Jeger) and say that it is not right to subsidise the rich farmer and the poor farmer and that the subsidy should be directed to the poor farmer only. I assure him that if the award is made by 197 means of higher end prices it is without question the big farmer who is getting the bigger slice of the cake, because of his bigger crops and yields and his generally lower costs than the small farmer on difficult land, with his less than average yield and his higher costs.
§ Mr. Nugent
There is no danger at all of the fertiliser subsidy going to waste. Once the fertiliser is applied to the land it will undoubtedly grow a bigger crop. I feel that, of all the specific subsidies, the House can look upon this one with the greatest confidence as one which, with the minimum expenditure of money, will give the community the greatest return, and far greater than it would if applied as a higher end price on particular commodities.
I think I have covered the various points that have been raised and I therefore ask the House to approve the two Schemes.
That the Draft Fertilisers (England, Wales and Scotland) Scheme, 1952, a copy of which was laid before this House on 10th June, be approved.
That the Draft Fertilisers (Northern Ireland) Scheme, 1952, a copy of which was laid before this House on 10th June, be approved.—[Mr. Nugent.]