Motion made, and Question proposed,
That a Supplementary sum, not exceeding £9,589,010, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1956, for the Ministry of Agriculture and Fisheries, the Ministry of Food and the Ministry of Agriculture, Fisheries and Food for grants and subsidies to farmers and others for the encouragement of food production and the improvement of agriculture; and for certain direct subsidy payments and certain trading and other services, including payments and services in implementation of agricultural price guarantees.
§ 3.36 p.m.
The Minister of Agriculture, Fisheries and Food (Mr. D. Heathcoat Amory)
The Supplementary Estimates which we have just passed, this one which we are now about to discuss and the five others 1752 which appear in H.C. 27 have fundamentally a purely technical purpose. These Supplementary Estimates contain some big figures, and at first sight they seem rather confusing, but their purpose is explained in the Memorandum in page 4 of the Civil Estimates. It may be for the convenience of the Committee, however, if I try to put the point in rather less technical language.
These Estimates really reflect in financial terms the merger effected between the Ministry of Agriculture and Fisheries and the Ministry of Food, and they also reflect certain transfers of functions which either have taken place or are in process of being made from the Ministry of Food to the Scottish Departments of Health and Agriculture and the Ministry of Health. While technically they are Supplementary Estimates, they provide to all intents and purposes a series of revised Estimates for the new Ministry of Agriculture, Fisheries and Food.
Our intention was to present Parliament with the revised Estimates reflecting the amalgamation and the transfers which I have mentioned, and this certainly would have led to a simpler form of presentation than these Supplementary Estimates that are now before the Committee. But one consequence of the dissolution of Parliament was that this course was no longer open to us. The original Estimates of all the Departments concerned were approved by Parliament rather earlier this year than normally, and the appropriation Act was, in fact, passed on 6th May.
I think it would not have been proper, in view of these changes, for us to have left the original Estimates unchanged for the rest of the financial year, and we thought it was right, therefore, to bring forward the Supplementary Estimates both for the information of Parliament and to bring ourselves up to date. I have already said that their purpose is mainly technical. It is to appropriate in aid of the Vote of the Ministry of Agriculture, Fisheries and Food the greater part of the provision made on the Vote of the Ministry of Food for the current year and to appropriate the balance in aid of services transferred or to be transferred to the Votes of the Scottish Departments and the Ministry of Health.
That means, in simple language, that we are seeking to make available to the successor Departments the money which, 1753 Parliament voted to the Ministry of Food. In passing, I ought to observe that in legal terms this has already been effected by the Orders transferring functions, so that these Supplementary Estimates are merely the financial complement of those Orders.
It is a curious fact, as explained in the Memorandum, that this operation does not in every case produce merely token Supplementary Estimates. Under the Vote which we are discussing, £8,589,000, the sum now required under Class VIII, Vote 2, Agricultural and Food Grants and Subsidies, arises through the reallocation of the greater part of Subhead H, trading services (net) of the Vote of the old Ministry of Food, between Vote 2 and Vote 3 of the new Ministry as outlined in House of Commons Paper No. 27.
In accordance with the reallocation, a number of debit items which were formerly more than covered by receipts for the sale of stock have now been transferred naked, as it were, to Subhead 0 of Vote 2, and this has created the necessity for a substantive provision under that subhead. Hon. Members will find from this document that the receipts have been transferred in their entirety and are under Subhead M of Vote 3, where they operate to increase by the same sum, £8,589,000, the receipts payable to the Exchequer under that Vote. There is no increase in the burden on the Exchequer, the debit entry of one Vote being counterbalanced by the credit entry of the other. Practically the whole of the substantive provision of the Ministry of Health and the Department of Health for Scotland arises in the same way, being balanced by increases of equal amounts as extra receipts payable to the Exchequer.
The breakdown of Subhead H of the original Ministry of Food Vote in effect gives rise to the substantive provision mentioned and increases by £11,500,000 to £42,400,000 under that subhead the sum available for payment to the Exchequer. This reallocation of Subhead H of the Ministry of Food Vote between Subhead O and Subhead M is based on the broad principle that the trading deficits incurred in the implementation of the agricultural price guarantees should be treated for the future as subsidies chargeable under Subhead O of Vote 2, while the liquidation 1754 of the other food trading operations should be accounted for under Subhead M of Vote 3.
To complete the picture, I should like to add that the remaining £1 million of the substantive provisions is the total sum now required under Vote 2 as a new provision. That is needed to cover advances to potato growers in Northern Ireland as part of the scheme to guarantee prices in Northern Ireland under the Agriculture Act. The details of that new provision are given under Subhead P of Vote 2, in page 16 of House of Commons Paper No. 27.
I should be out of order if I referred further to Vote 3 of Class VIII although, through the indulgence of the Chair, it has been possible, and indeed necessary, for me to make some reference to it in dealing with the Estimate which we are discussing. When he moves that Estimate in due course, my hon. Friend the Parliamentary Secretary will deal with points which arise under it.
I would repeat that, apart from the provision in respect of advances to Northern Ireland potato growers, no new charge to the Treasury is involved in the Supplementary Estimates. With that exception and the exception of the transfer of responsibility for animal health in Scotland to the Scottish Department of Agriculture, all these changes arise out of the dissolution of the Ministry of Food and the distribution of its functions to the other Departments. Broadly speaking, these Estimates do not take account of any other changes which have occurred since the original Estimates were framed. Effect will be given to any other changes in the Estimates for other causes in Supplementary Estimates later. May I also draw attention to the new analysis of the agricultural and food subsidies and trading deficits prepared on a United Kingdom basis and given in pages 30 and 31 of H.C. 27?
So much for the form and the reasons for the Estimates. May I now say a word on the contents of this Vote? This Vote deals with a great part of the subsidies and production grants payable to agriculture. Hon. Members will see that the Vote as drawn provides, among other things, for the cost of deficiency payment schemes on cereals, fatstock and the price support arrangements for eggs. There is 1755 no need for me to remind the Committee that it is through these schemes, in the main, that the Government, after full consultation with the interests concerned, have given effect since decontrol to the price guarantees under Part I of the Agriculture Act.
In retrospect, it is clear that this change-over has been a colossal undertaking and has been carried out with far less disruption than was expected at the time. The new system has worked and is working and has confounded the dismal forecasts of certain Jeremiahs at the time it was introduced. Not only has it stood up to the stresses of changing supply and demand, but it has even stood up to the dislocation caused by the recent rail and dock strikes. Those dislocations were absorbed smoothly.
I do not want to convey the idea that I am in the least complacent about these matters. We must constantly be on the alert for any defects and seek, as appropriate, in consultation with those concerned, for remedies and improvements. Moreover, the return to free markets has been accompanied by progress in the organisation of marketing which is both substantial and encouraging. In the case of milk, we have already most successfully entrusted a lot of the detailed work connected with the guarantee as well as the responsibility of marketing to the Milk Marketing Board.
We have recently set up the Potato Marketing Board again. I am confident that these developments are bound in the long run to benefit the producer, the consumer and the taxpayer alike. Hon. Members are also aware that a marketing scheme for eggs is under preparation by the National Farmers' Unions. Arrangements have been agreed with us in broad terms for implementing the Agriculture Act guarantee for eggs through the Marketing Board.
I do not think I need say more at this stage, but whatever questions hon. Members may have to ask on these Supplementary Estimates my hon. Friends the Joint Parliamentary Secretaries or I will do our best to answer later in the debate. I therefore commend these Supplementary Estimates—this one in particular—to the Committee as serving the purpose of bringing before right hon. and hon.
1756 Members a revised statement of the position now reached as a result of the redistribution of the functions of the former Ministry of Food.
§ 3.51 p.m.
§ Mr. A. J. Champion (Derbyshire, South-East)
We are very grateful to the Minister for his explanation, particularly of the technicalities of the Supplementary Estimate now before us. I admit that I listened very carefully to that part of his speech, but I am still without a clue as to what it was all about. I must carefully study in HANSARD what the right hon. Gentleman said in order to find what these Supplementary Estimates do, apart from the change from the Ministry of Food to the Ministry of Agriculture.
May I sum it all up in non-Technical language? What we are doing is to put the two Estimates together and to split off the bits that go to the Scottish Departments and to the Ministry of Health.
§ Mr. Champion
I am obliged to the right hon. Gentleman. If he had said that at first I would have understood.
I was glad that the Minister went on to explain what was involved in the Estimate before us, particularly the aspect of the whole support subsidy. The very fact that he discussed that enables us to discuss these matters, which are of vital importance. Here a tremendous amount of money is being paid by the taxpayer in support of agriculture and it is right that we should carefully examine it. We should examine it in such a way that no pound is voted without being very carefully looked at previously and considered by Parliament as part of the duty of Parliament to watch the Executive, especially its duty of granting Supply to the Government of the day.
I want to ask the Joint Parliamentary Secretary a very simple question. Probably he will supply a very simple answer. Subhead M.1—Cereals—in page 13, shows a revised Estimate of £45,999,000 as the subsidy which is required. I looked at page 30 to see how that figure is divided as between wheat and rye, barley, oats and mixed corn, and saw that wheat and rye take £26 million, barley £10.4 million, oats and mixed corn £12.5 million, making a total of 1757 £48.9 million. I wondered where the £3 million, the difference between those figures, is explained in this Estimate. I dare say that there is a quite simple answer, but I have not stumbled on it when looking through the Estimates. I dare say that the Joint Parliamentary Secretary can tell me about it when he replies to the debate.
Not long ago we had a fairly full discussion of the Order relating to the subsidy on cereals. Despite what I thought at the time was a full and fairly adequate reply by the Joint Parliamentary Secretary, many of us are still far from satisfied with this way of using taxpayers' money to support agriculture. This is an Estimate for an amount of more than £45 million or £48 million, whichever it happens to be, and it is a tremendous amount over which, as far as I can see, the Treasury has no real control. It is an unlimited liability and there still remains the fear, which was well put by my right hon. Friend the Member for Belper (Mr. G. Brown), that much of the taxpayers' money, paid out with the intention of supporting agriculture, is finding its way into hands other than those of the grower of cereals.
I have re-read the answer which the Joint Parliamentary Secretary gave, but it seems that he was not able, or did not attempt, to answer the very telling points which were made about the jump in the profits of some of the great milling interests of the country. My right hon. Friend the Member for Belper pointed out that the gross profits of Ranks had risen from £4,850,000 in 1953 to £6,409,000 in 1954. Messrs Spillers showed a similar increase between the years 1953–4–5. One cannot help asking if it is just a coincidence that this rise in profits of those interests should take place at precisely the time when the Government have decided to return this section of the agricultural industry to the so-called free market.
I do not regard it as the job of the Government to explain the profits of private companies, and so on, but I do regard it as their job to watch what is happening in order to see whether any of the taxpayers' money in a case like this is leaking into their hands when it is intended for an entirely different purpose. Despite the excellence and fullness of the reply of the Joint Parliamentary Secretary 1758 on that occasion, I hope that he will return to this matter and give us a further answer upon it.
Another question I want to put to the hon. Gentleman arises out of his reply on 22nd June when, explaining the workings of the free market, he told us:The fact is that right hon. and hon. Gentlemen opposite either will not or cannot understand the working of a free market. These men are in business to make their living. If they fix a price which is unreasonably low farmers will not sell to them. The farmers themselves are in the market. How is it possible for the merchants, 2,000 of them, to get together and fix the price against the farmers? If any particular merchant offers a farmer an unfairly low price, the farmer simply goes to another merchant. It is as simple as that.Then followed this interchange between my hon. Friend the Member for Norfolk, South-West (Mr. Dye) and the hon. Gentleman:
§ MR. NUGENT
It certainly is.
—[OFFICIAL REPORT, 22nd June, 1955; Vol. 542, c. 1457.]
I am bound to say that I agree with the "Is it" asked by my hon. Friend when the Joint Parliamentary Secretary said:It is as simple as that.I find it rather hard to accept as a guarantee that, because there are 2,000 merchants, there cannot be any ganging up by those merchants against the farmer. I find it impossible to accept that. The 2,000 merchants are spread all over the country. I imagine that my hon. Friend the Member for Norfolk, South-West has within reasonable distance of his farm one or two corn exchanges to which he has reasonable access to sell his product.
In the corn exchanges which might be within a reasonable distance of his farm I suggest that there are not too many merchants attending in order to do a little ganging up against the farmers if they so desire. I do not know the figure, so I ask, how many butchers and dealers were attending the markets between the two wars? Was it five times as many, or ten times as many as those 2,000 merchants? I do not know, but certainly the number would be very much greater than the 2,000 merchants mentioned by the hon. Gentleman. Many more butchers and dealers were attending the markets in those old days. No one will suggest to me that that figure prevented those butchers and dealers ganging up against 1759 the farmers. Of course they did it. It is known to everyone who has any knowledge of agriculture and agricultural marketing.
Because of my doubts on these points, I discussed the matter with a farming relative of mine over the weekend. He said that in the old days there was this ganging up by a number of butchers and that it was very much greater than the number of merchants who get on to their stands in the great corn exchanges throughout the country. Therefore, I ask the Parliamentary Secretary to go into this point a little deeper before we can feel satisfied that the money which we are today voting in this Supplementary Estimate will, in fact, go to the people for whom it is intended by Parliament.
There is something to be said for an exceptionally careful review of these subsidies. The sum is a vast one. It goes up from the estimate of under £250 million last year to an estimate now of £252.9 million, and it is, of course, an unlimited guarantee. No limitation is placed upon the guarantee, because we are supporting the so-called free market. The figure might be millions above or millions below that, but it is not very likely to be much below it in the circumstances which we now face.
It was said—rightly, I think—in another place that if all the subsidies being paid to agriculture were equally divided between all the farmers, each one would get about £1,000 a year in the form of subsidy. That is a tremendous amount of money. It is right that we should pay it if it is the only way we can secure a prosperous agriculture, but let us be careful to examine every farthing of this to ensure that we can justify it to the people; otherwise, the whole structure will come tumbling about our ears.
Of the £81,800,000 that is estimated for the fatstock section of these subsidies, no less than £76.5 million is support for pigs. Cattle take £1.8 million and sheep £3.5 million. I am wondering whether we can justify such a support for the pig industry in present circumstances. Our pig population has gone up from 4,394,000 in 1939 to 6,913,000 in December last year. Bacon imports are down from a monthly average in 1938 of 31,400 tons to 25,100 tons in 1955. On 1760 the surface, that appears to be excellent for our balance of trade, but we are bound to ask how much of that apparent gain is lost on the feeding stuffs that have to be imported to feed our pigs.
Is it not the case that there is a very heavy adverse balance as between these two figures of the saving on the import of bacon products and the foreign currency that has to be expended to import feeding stuffs for pigs? I have no doubt whatever that the adverse balance is very heavy. Incidentally, I should like the Parliamentary Secretary to tell us what is being paid to farmers as an average per score as against the amount that we are actually paying for imports from, say, Denmark.
While there was a severe shortage of meat there was every justification for a large stimulus to pig production, but the position in relation to meat supply has now considerably altered. Painful though it may be, I believe that we ought to, and must, face up to the new situation. That is the kind of remark which may perhaps bring some of my hon. Friends down upon my head when I sit down but it is something that we must consider. After all, the balance of trade is a matter of importance to the life of the country.
I would have thought that the time has perhaps come when we ought to use some of the £76.5 million which is now paid for support of the pig industry for assistance for those meat productions which we can obtain by our own feeding stuffs —our grass, and so on; perhaps even to increase the sheep subsidy rather than continue to pay this subsidy for the support of a section of the industry which is so largely dependent on imported feeding stuffs.
These are points which ought to be answered before we pass this Supplementary Estimate. I am sure that my hon. Friends will support some of these points, although some may disagree with me in various respects. Nevertheless, I hope that the Parliamentary Secretary will answer these questions before we pass the Supplementary Estimate today.
§ 3.59 p.m.
§ Mr. Sidney Dye (Norfolk, South-West)
The Minister, in introducing the Supplementary Estimate, said that the form 1761 which it takes was due in part to the dissolution of the last Parliament. I suppose the fact that I am here is also due to the dissolution of the House. In looking at the figures, I wish to speak from my experience when I was not in the House and to look at them not merely from the point of view of a farmer, but also as one who is concerned with the fairness of the distribution of the money that is involved and the soundness of its effect on agriculture.
It is stated in page 31 of the Civil Estimates that the total of subsidies and trading deficits now amounts to £337 million. The total cost of agricultural support is £252,900,000. That is a very considerable amount. My first question is to ask whether it is being fairly distributed. Is it being distributed on a basis which people can understand and which they can look at and can say that it is not only right, but that it is going to the right people?
My first example concerns cattle. I asked the right hon. Gentleman a Question the other day but his Answer and the explanations I have heard since cause me grave concern. The right hon. Gentleman's Answer does not show that the money is going to the right people. Let me take the example of the fat cattle that went to market in, say, February and March of this year. They attracted no subsidy payments at all. None was received by those who sent their cattle in those months, if my memory serves me aright. When we come to April, when the selling prices of fat cattle had gone up to figures much higher than in February or March, the farmers received, in addition to the price, 5s. per live cwt.
In May, when the price was still much higher, they received, in addition to the guaranteed price, 3s. 6d. per cwt. The prices ranging in the markets of Norfolk at that time were over £9 per live cwt., but, in the White Paper that was issued, the figure which is there taken as an example was £7 10s. per live cwt. The example there given does not indicate how the money would be paid, either in individual or in collective guarantees, if the amount received on the market was less than the standard price.
Nowhere in that White Paper does it show how any producer would receive a subsidy when the market price was far in excess of the standard price, and yet in 1762 the month of May—I think it was for the four weeks ending 22nd May—66,065 cattle received a subsidy, and in those cases the average market price was far above the guaranteed price.
If it was right for those farmers to receive that guaranteed price, what had happened previously? Had some of them, who had sent their cattle to market in earlier months, received a market price plus the guaranteed price, and was the total well below the standard price? If so, in twelve months, there were some farmers who were parting with their cattle, not at the guaranteed price, but at something below it, while at another period of the year—in April-May of this year—others were getting far in excess of the guarantee. Does it help those who received well below the standard price to know that others were getting something well above it? Do the Government think that they have a meeting afterwards and go round and share it out?
The Parliamentary Secretary said he did not think that certain merchants and other people had meetings and decided on the price at the market, and so on, but what is the explanation? Can it be justified that when I, as a farmer, send a bullock to market I receive far more than the guaranteed price in the market and then a subsidy? Am I occupying an office of profit under the Crown?
§ Mr. Amory indicated dissent.
§ Mr. Dye
I am not, and the right hon. Gentleman has relieved me in that respect. Whatever I occupy, what is my position, and what is the position of thousands of other farmers who, in these months, received these extra payments from the Ministry? I hesitate to say that it was because there was an Election coming on and the right hon. Gentleman wanted to assure the farmers that this matter about which he speaks so much—this system of subsidising prices—was for the benefit of agriculture.
We must be assured that, at any time of the year, so long as the Government operate a guaranteed price system and have a system of standard prices, whether it is in November or in April, each farmer sending his cattle to market will be fairly treated; and that the Government will not accumulate an amount of money from failure to pay sufficient on some cattle, and then find that another 1763 farmer who happened to be lucky enough to send his cattle to market at another time is receiving far in excess of what others received.
There must be something wrong with a system like that. What was the first consequence of the Government announcement that they would pay in advance? The announcement was made in March that, in April for a four-week period, the Government would pay over and above the market price. They would pay 5s. per cwt. in addition. What were the consequences? The first was the attraction on to the market of more cattle than otherwise would have gone to the market—not only those which were reasonably fat, but those that are usually described as being in store condition. Many of these 60,000 cattle, in a previous year, instead of coming on the market to be slaughtered, would have been bought by farmers, grazed and fattened and would have come along later. The consequence was that in April and May there was a big rush of cattle on to the market, and of cattle below the normal standard.
It seems to me, looking back over the past twelve months, that because of the higher range of prices plus the subsidy, we have been consuming eighteen months' supply of cattle in twelve months, which has meant that there has been plenty of meat in the butchers' shops at that period, and must lead to a shortage later. The figures shown in the March returns are somewhat disturbing, since we are eating our cattle at a lower weight—eating them younger—and we are also eating into calves in the form of veal. There has been a very heavy killing of heifer calves, and therefore we are killing off those animals which would otherwise be the breeding stock for later supplies.
There are two very serious questions here. One relates to the distribution of the subsidy month by month throughout the year. Can it be fair if at one period a farmer receives the additional subsidy if it means that in another period of the year other farmers will not get it? Fat cattle are not a regular weekly supply from each individual farm, as is the supply of milk, and we cannot therefore say that those who received the extra in April and May are the ones who were deprived of a portion of the subsidy in an earlier period or who will be deprived 1764 of it in a later period. The right hon. Gentleman should endeavour to answer at some time the question how this is worked out, and should say whether he can possibly justify it on grounds of fairness.
The second important point is the encouraging, by means of the higher prices plus the subsidy, of greater quantities of cattle coming on to the market and the question whether we are not laying up trouble for ourselves for the future in this respect by encouraging housewives to believe that there is a plentiful supply of home-killed meat, only to find out a little later on that they are disappointed and that prices may be considerably higher.
This applies with equal importance to pigs, and I take it that in this Supplementary Estimate we are dealing with pork pigs as well as with other types of fatstock. Here, again, an extraordinary thing has happened. When many pigs were being brought to market at the end of last year and in the early part of this year prices were as low as 6d. per 1b. live weight. It did not make much difference to the price at which the pork was sold in the shops, and it made no difference to the price of bacon. Therefore, it was of no advantage to the housewife. But what was happening when these low prices were ruling? Many pig breeders lost confidence in that section of the industry and quite small pigs were brought on to the market and were slaughtered. Thousands of sows and gilts came on to the market and were slaughtered.
The result has been that there was a heavy fall in the number of gilts recorded in the March returns. In the winter months when pork is generally the favourite meat there is a glut of pigs and a low market price, and yet there is a high selling price for pork. Now, at a time of the year when people normally do not eat so much pork, the selling price of pigs is double what it was a few months ago. It has reached 30s. a score. Not so long ago it was about 15s.
The Government's policy and system, therefore, have not evened out prices on the market. We have had greater variation in price than ever before. Experienced hon. Members opposite who have been in our markets and taken part in them over many years will have to scratch their heads and search their memories most diligently to find a time other than 1765 now when the price of pigs doubled in a few months. That has taken place this year.
I was talking at lunch time today to an hon. Friend who does a little pig farming. He told me that he sent to market one of his sows which was no longer any good for breeding and that this old sow, who had produced many pigs in the past, had brought him in £42 a week ago. The price of pigs has indeed gone up when an hon. Member is enriched to the extent of £42 in July for an old fat sow. That indicates the variation in price and the instability of the market.
That which applies to cattle applies equally to pigs—that when there were many coming on the market the subsidy was small and the price was low, but now that the price of pigs has gone up the subsidy is still available. Such a situation requires some explanation. The same applies to sheep and lambs. In fact, the very system of subsidising the breeding of lambs encourages their being brought on to the market earlier and their being killed at an earlier date in their lives and at a lighter weight. The very enthusiasm of the butchers to get their knives into these young animals reduces the amount of meat that is produced at home, and it is not only a question of quality but also one of quantity. The more young lambs and calves that are killed the fewer sheep and cattle there will be for the production of meat later in the year.
This new system of marketing, or, rather, this return to this old system of marketing together with the new system of subsidising, is doing very grave injury to agriculture itself. A farmer should be primarily engaged on the farm, but not for two consecutive weeks has the price of fat cattle in the market been level. Prices have been up and down. The farmer who can pick up all the "ups," or higher prices, will do very well indeed, but he can only do that if he spends more time in the market and less time on the farm. This encouragement of marketing by the system of free marketing has undermined the confidence of the farmers in their industry and in the subsidy system. Consequently, it is against the farmers' best interests and against the increased production of food at home.
I do not think that we can separate the fall in agricultural production from the 1766 Government's policy. It is a consequence of it. There has been a steady increase in production through the years until this last year, and it was not the rain that washed away the 2 per cent. of farm output which was lost. The rain had its advantages. It brought about an increased amount of grass, more cattle, greater weight, and more milk. The rain had its advantages as well as its disadvantages, but I do not think that the Government can get away with the statement that it was the weather that reduced agricultural production by 2 per cent, last year. I am satisfied that the reduction followed the Government's own policy. These are very important matters, not only because of the amount of subsidy involved but also because of the proportion of our total production which fat-stock represents.
Again, in the case of cereals, we are confronted with another big problem to which I referred in a debate the other day and about which I did not receive a satisfactory answer. I think it is true to say that I received no answer at all on a point which I made about barley. The amount of subsidy that will be paid for cereals is roughly £46 million, some of which will be apportioned in respect of barley. How is that amount assessed and how is it applied to the individual farmer? We have a standard price and distribution on an acreage basis, but how does the Ministry of Agriculture arrive at the average market price for barley?
The barley market is a peculiar market. It does not consist only of farmers selling their barley to a merchant or maltster. During the period following the harvest last year the price of barley was very low. It was 75s. per quarter for a long period. It then rose to 85s. per quarter, but after Christmas it rose beyond 120s. I know that the Minister has explained that when the price gets beyond 120s. it is not taken into account in estimating the average market price, but my point is that the greater proportion of the barley that was sold after Christmas was barley sold by one merchant to another and had nothing to do with the first sale of barley by the grower to a merchant.
If we are taking into consideration barley which was bought at a low price in September and cleaned, dried and stored by merchants and then brought out of store and sold at a higher price in 1767 the new year and we are bringing that into the calculation of the average price of barley, that has nothing to do with the farmer as grower. Therefore, if it is brought in it means that those who are growing barley are not getting a fair crack of the whip. They are not getting the difference between their average first sale price of barley and the standard price which has been established by the Ministry. So here is a case which requires examination and proper explanation, too, not merely to the Committee but to the farming community in general.
It seems that we are entitled not merely to make searching examinations into the vast sums here involved, but we also want to know that the money is being properly and fairly distributed to those who as producers should be entitled to it. I hope that before these Supplementary Estimates are passed we shall get a satisfactory explanation from the Parliamentary Secretary or from others who will endeavour to enlighten us on the Government's policy about these matters.
§ 4.30 p.m.
§ Mr. Victor Collins (Shoreditch and Finsbury)
My hon. Friend the Member for Norfolk, South-West (Mr. Dye) has told us how an hon. Friend of his sold a sow for £42. She was an ancient grandmother. I had the opposite experience about two months ago when, at my farm, a sow which was healthy and comely, and not a grandmother, was sold. All that was received for it was £11 15s. There was nothing wrong with the sow, but the market prices happened to be low at the time. Normally, we do not sell pigs on the market. They go to the factory, but that was a complete illustration of what my hon. Friend the Member for Derbyshire, South-East (Mr. Champion) said about the ganging-up by dealers to purchase animals in this way.
My hon. Friend the Member for Norfolk, South-West has clearly illustrated, in his remarks about cereals, that there is no longer a guaranteed price. It has been destroyed, because the total price received depends on when the farmers sell their produce. If, because of financial stress or other circumstances, they happen to sell below the average, then, of course, the total of the price they receive plus the support figure is 1768 less than the guarantee, so the guarantee no longer exists.
So far, my hon. Friends have dealt with these Supplementary Estimates almost entirely from the aspect of the farmer. I want to say a few words about them from the aspect of the taxpayer. The Minister pointed out that these Estimates were only technically Supplementary Estimates; that each revised Estimate was, in fact, the entire sum required in support prices for these various commodities. Almost £46 million are needed for cereals, £251 million for eggs, and nearly £82 million for fatstock, which the taxpayer has to provide in subsidies without getting any benefit by reduced prices. The taxpayer has to find over £153 million, for which he gets not a penny benefit in return.
I well recall how hon. Members opposite, in 1951, pledged themselves to maintain food subsidies and how, within a few months, they had removed all the consumer food subsidies with the exception of milk, welfare schemes and bread. I should therefore like to ask the Parliamentary Secretary whether this is a peculiar attempt and a belated method of implementing the pledge to maintain food subsidies. In this case, the farmer gets no benefit, as my hon. Friend has proved; the consumer gets no benefit; and presumably this colossal sum leaks out in various ways merely for the benefit of people whose functions we were able to dispense with during the war.
I hope I am not being in any way unfair, but I ask the Parliamentary Secretary to confirm or deny whether my assumption is correct, that this £153 million is in direct subsidy or in support of prices of those three commodities to the producers, and that no direct benefit accrues to the consumer by way of reduced prices, as accrued to the housewives when we had consumer subsidies which were directly related to the retail price.
Will the hon. Gentleman also confirm or deny that under this system there is no longer an absolute guaranteed price to the farmer in the way that we provided one under the 1947 Act as interpreted by my right hon. Friend the Member for Don Valley (Mr. T. Williams)? Those are two vital questions which demand an answer.
1769 I would ask the Committee to examine in particular the three items of cereals, eggs and fatstock, and I think it is appropriate to compare this year's cost with the cost to the taxpayer when we were under the old system. To get that comparison, I looked up the Estimates for 1953–54. In those Estimates, of course, there are included the results of Government trading. One assumes so because in cereals, including cereals and foodstuffs, there is shown a profit of £1½ million. For the Parliamentary Secretary's benefit, I am referring to page 92 of the Civil Estimates. Class VIII, Vote 9, 1953–54. That is against a loss to the taxpayer now of nearly £46 million.
Similarly, on eggs, there was a profit of £1½ million against a loss to the taxpayer now of £25,600,000. In 1953–54 the estimate showed a loss on bacon and ham of £4½ million and on meat and livestock of £16,300,000, roughly £21 million compared now with nearly £82 million. The summary of those three items is this. In 1953–54, the taxpayer had to foot a bill of £17,800,000 net to provide the farmers with the guaranteed prices which they knew they were going to get for cereals, eggs and fatstock before they produced the goods. Today, those three commodities cost the taxpayer not £17,800,000 but £153,990,000, which is approximately an extra £136 million cost to the taxpayer for which, as a consumer, he gets no benefit, and the farmer still has not the same guarantee as he had under the previous method.
I believe that those figures and deductions are incontrovertible. In his opening remarks, the Minister said that it had been a colossal job. As far as the taxpayer is concerned, it is a colossal flop. Yesterday, an hon. Gentleman said that the Minister of Fuel and Power was driving the country to disaster. The right hon. Gentleman has an equally amiable and equally able competitor in the Minister of Agriculture in driving the country to disaster. As was indicated by my hon. Friend the Member for Derbyshire, South-East, there is another case of the Gadarene swine. I wonder how many people, even hon. Members of the House, realise, when we ask Question, as I did of the Minister a week or two back, about increased prices of bacon, that there have been times this year when the taxpayer has been paying 1770 practically half the price which the farmer gets for his pigs.
We have here a change in a system which was working well. I do not think that there were two farmers out of a hundred anywhere who wanted to change the system of payments instituted by my right hon. Friend. Of course there were grumbles at times. That was natural, because grumbling is endemic to farmers but, over all, the system was not only popular but was working well. Broadly speaking, too, it was appreciated in the towns by the housewives. They understood that they were benefiting, directly or indirectly, from increased production. They understood the necessity for assisting the farmer by means of guaranteed prices. The taxpayer understood that it was necessary to pay taxes to achieve that objective. And, finally, they understood that consumer food subsidies were related directly to the prices they paid and that because of that sum, in all £400 million, they were buying at lower prices in the shops.
In the debate in the House last December the Minister and his Parliamentary Secretary were both pressed to say what would be the total amount of these subsidies, and the Minister expressed doubt that they would even be £200 million. I ventured to suggest that they would be much nearer £300 million than £200 million. My right hon. Friend the Member for Belper (Mr. G. Brown) was good enough then to say, in winding up the debate for the Opposition, that he felt that my estimate might be nearer the truth. I think it has proved to be so, because the total is now in excess of £250 million. I ask the Minister, and I ask hon. and right hon. Gentlemen opposite, how long is this folly going on? They have taken something that was sound and good. They have all but destroyed it. And for what? To a large extent, they destroyed the confidence of the farming community and it was saved only at the eleventh hour through pledges given by the Chancellor of the Exchequer. They have not yet aroused the full wrath of the British public because the people as a whole do not know what is going on; but that is the wrath to come.
The Minister has produced his figures. I have studied them and I went to considerable trouble to make sure that I was making a fair comparison. I believe that 1771 the figures I have given for three comparable items correctly show that the administration of the right hon. Gentleman has cost the taxpayer £136 million more than the administration of his predecessor in 1953 to 1954. I do not think that it is due to any personal failure on the part of the right hon. Gentleman. I think the change is due to a doctrinaire insistence on trying somehow to superimpose on the agricultural system that we brought in a passion for free enterprise at any cost.
I ask, too, that the Minister will tell us just where this money is going. He must be as interested in this as we are, because it is a colossal amount of the taxpayers' money. Who is getting the benefit, the relative profit? Ranks, Spillers and others who have been quoted, account for some, but not all. Is it going in leakages of the kind indicated by my hon. Friend the Member for Norfolk, South-West, where farmers, at some times of the year, are getting extravagant prices plus a subsidy? If that is happening, it is a public scandal.
I almost hope that the Parliamentary Secretary can tell me that my figures or my deductions are wrong, but if not, I hope that the Committee will get this time not an evasion but a definite reply, and that, subsequently, there will be a real change of policy in this matter, which is of such vital interest to the whole country.
§ 4.48 p.m.
§ Mr. Archer Baldwin (Leominster)
I have not attempted to catch the eye of the Chair until now, because I have been patiently waiting for the hon. Gentleman the Member for Wednesbury (Mr. S. N. Evans) to have his usual opportunity. Apparently the hon. Gentleman is taking note of all that is being said and he may be winding up the debate for the Opposition.
I have listened to three speeches from hon. Gentlemen opposite, one from a practical farmer, one from a businessman-cum-farmer and one from a hon. Member who, apparently, claims no farming knowledge since he gave information which he had received from one of his hon. Friends. I am surprised to think that anybody with a practical knowledge of farming could show such a complete lack of knowledge of the working of the deficiency payments scheme.
1772 Let me first deal with cereals and the statements about money going into the hands of the millers. That is complete nonsense, because the price of grain and cereals in this country is, as it has always been, entirely dictated by the cost of the imported cereals. To say that Ranks, or anybody else, have any influence on the internal trade in cereals in this country is pure nonsense.
§ Mr. Collins
But if the millers refuse to buy, if they will not absorb more than two-fifths of the grain, is not that exercising an influence on the price?
§ Mr. Baldwin
I do not understand the hon. Gentleman. The millers are doing this job for their livelihood, and if they can buy more cheaply from abroad obviously they will not give the English farmer more than the foreign price. To say, however, that they are deliberately giving more to the growers from abroad and refusing to give the same to the English farmer, is not true. The idea that 2,000 millers can gang up and depress the market to the farmer is moonshine. How many farmers' co-operatives are there in this country today? Several hundreds. I belong to one of them and do a great deal of business with it, but it does not give me any more for my grain than any of the other merchants, and I sell to the highest bidder. Is it suggested by hon. Gentlemen that the farmers' cooperatives in Britain are ganging up with the other millers?
Let us consider what has happened to barley. We, as farmers, are not bound to sell barley to a miller. It is all locally consumed. We make our own feeding stuffs. I grow a lot of barley, but I sell none of it; in fact, I buy it as cheaply as I can in order to produce my bacon. In the autumn, when barley was at a low price, I tried to buy some, and it was not very easy to get.
§ Mr. Baldwin
We buy barley off the combine, no matter what we are told about the moisture content. We are buying grain with a good deal of moisture in it and we want to buy it at several pounds a ton less off the combine than the price at which we buy it today. That must be taken into account. I will be quite candid. I do not know why we 1773 should be receiving any deficiency payment on barley except that we are suffering from the amount sold by farmers off the combines last autumn.
I would say this to the farmers: put it into store, dry it and put it into silos. After all, we have had to do it before. I have stored it in order to get 6d. per cwt. more than it was worth at harvest time and farmers must do the same now. If they like to throw away their barley at harvest time at a low price, they are had salesmen and deserve all they get.
The ordinary farmer is not grumbling about the present situation. It is the Piccadilly farmers, as we call them in my district, who are grumbling—some of these business men who thought farming was dead easy and who came into the job thinking they would make piles of money. They are becoming disillusioned, for they have found that they want a lot more business capability to make money out of farming than to make it out of any other industry. They are grumbling more than anybody else and they make the headlines and make the public think that everything is wrong.
Except for a very short period, oats have never been sold at less than the guaranteed price and they have made as much as £5 per ton more than the guaranteed price. As a farmer, I want nothing better than that. I have my floor price, and if I can make more than the floor price I can take it.
§ Mr. Baldwin
If they like to pay me a subsidy, hurrah, but they will not lose my confidence because they want to pay me a subsidy on top of the guaranteed price.
§ Mr. Baldwin
Does not the hon. and gallant Gentleman?
Let me say a word about wheat. I asked my right hon. Friend whether he would not alter the system so as to pay the deficiency payment for wheat per acre rather than per ton. I suggested that for three reasons. First, we should then have no gibes from hon. Members opposite, such as we had in the debate on the 1774 deficiency payments last week, that farmers were "fiddling" and getting wheat certified twice. If they were paid on an acreage basis, that accusation could not be made, and that is one important reason for which I ask my right hon. Friend to give this matter further consideration.
Secondly, many farmers want to consume a great deal of their wheat. I consume and I sell a large quantity of wheat and it seems nonsense to me that, to get a deficiency payment, I have to sell my wheat and send it 15 or 20 miles away to a miller and then buy other wheat back from him at 30s. to £2 a ton more in order to cover the cost of transport and his profit. That is the second reason for which we should have a free sale of wheat as we have a free sale of barley from farmer to farmer. Then we could get rid of these dreadful millers, about whom the hon. Member for Norfolk, South-West (Mr. Dye) spoke.
Thirdly, a deficiency payment per acre would average the return for wheat on the marginal land with the return of the wealthy farmers in South-West Norfolk where they get two tons to the acre. Let us assume that a deficiency payment of £10 per ton is to be paid. If it were paid on an acreage basis it would mean that the man on the marginal land would get £10 per acre just as would the man who produces two tons to the acre.
§ Mr. Baldwin
I should not have thought, after the passing of the 1947 Act and all that goes with it, that there was such a thing as a marginal farmer left.
§ Mr. Baldwin
One reason which my right hon. Friend gave for not adopting an acreage basis was that we could not make differential payments for different periods of the year. That is up to the farmer. He can hold his grain and get an extra price for holding it. This year the man who held wheat may have been paid a little less than he would have received had he sold before Christmas.
1775 Let us have a look at the huge sum which is to be paid as deficiency payments. Why is it to be paid? Largely because wheat has been dumped on our shores. We have been subjected to dumping of French wheat in this country at from £10 to £12 per ton less than the price which the French farmer was paid for it. We cannot stand up against that sort of thing. Unless we have a system of tariffs to protect us, we must have protection in some other way.
Nevertheless, this is not entirely a loss to the Exchequer. If the French like to send wheat over here at £10 to £12 per ton less than it is worth, then we can have cheap grain and can reduce the claim on the Exchequer for the subsidy on pigs. It is, therefore, not all a loss.
I want to turn to the fatstock deficiency payments, and here I should be glad if my hon. Friend could give us a little more information about how the subsidy payment on beef and sheep is arranged. I do not understand it. I think it is based on an average which probably has to go back a considerable time to when beef was being sold at a low price, but I should be glad of an explanation. Beef is now selling at £1 per cwt. less than the price at which it was selling six weeks ago, but no deficiency payment is being made.
§ Mr. Baldwin
I do not understand why there was a deficiency payment, based on an average bringing in previous low prices, at a time when beef was making £9 to £9 10s. It would be helpful if my hon. Friend could clear up that point.
I hope that we have persuaded the consumer to pay the cost price for his food, certainly for his beef and mutton, and I hope the present prices will continue so that there will be no deficiency payments claim on the Exchequer. We have a fair trade in sheep, although there is still a subsidy of about 4d. a 1b. I am not sure whether that is due to the fact that at one time sheep were not reaching the guaranteed figure and we have a backlog to make up.
The hon. Member for Shoreditch and Finsbury (Mr. Collins) said it was wrong that so many cattle should go to the market at one time and he added that we would later have a shortage. We had all those cattle on the market at 1776 that time, not because of the deficiency payments, but because the price of cattle had gone sky-high. Prices of £9 to £9 10s. a hundredweight were attracting sales of cattle. I agree that many cattle were sold which could well have been kept until later, but we have more and more beef coming into the markets today and the price of beef has come down by as much as £1 a hundredweight in the last month, so that the fact that there were too many cattle at £9 to £9 10s. has not greatly affected the market. I dare say there are plenty of sheep coming into the market. I hope so, because I have a lot of sheep to sell myself.
I want now to refer to pigs, with which I am deeply concerned. I should like the hon. Member for Norfolk, South-West to put me in touch with the market where his friend sold a big fat sow for £42. I will give him a jolly good commission and find him quite a number of fat sows. I should like to go into a huddle with him and with his hon. Friend the Member for Shoreditch and Finsbury after this debate to see if we can find whether these people sold their pigs to the Fatstock Corporation or on the open market.
The trouble with pigs is that when the Government decided some time ago to go into a free market they had obviously to ensure that there were the supplies to meet what might be a shortage. No one could foretell what demand or supply would be. The Government, therefore, quite rightly decided to insure against a very serious rise in price. They went wrong in making too big a contract with Denmark. I do not know whose was the responsibility, but obviously no account had been taken of the 4th June returns which showed that we had nearly one million more pigs in the country than 12 months previously, so that we were suffering from having one million extra pigs on the market in addition to the clearing up of the contract with Denmark. That position is now being levelled and there is now a gradual rise in prices. I understand negotiations are to take place with Denmark, and I am prepared to wager that we will have to make a better contract with Denmark because they cannot provide these pigs at so much less than we can. They say so themselves. I am not getting rid of any of my gilts or sows, because I think that the future for pig breeders is good.
1777 There has been much gibing at the butchers. I do not know whether there is a butcher Member, but I should like to hear from him. My information is that butchers are finding it difficult to make profits. When pigs were cheap their price was not reflected to the consumer, because what the butchers lost on the swings they were trying to gain on the roundabouts. As business men, I cannot blame them for doing that. But if the butchers had been doing these terrible things, why did not the Co-operative butchers come in and put things right? Why talk about the margin between the producer and the consumer when the Co-operative shops were there to put things right? They did not do so.
The hon. Member for Shoreditch and Finsbury said that not two farmers in a hundred wanted to change last year. He was probably right. Today I would say there are not two farmers in a hundred who want to change back. They were nervous about a free market, but now they have experienced it they are fairly happy. It is the amateur farmers who are not happy. They were not prepared to take risks. They wanted it cut and dried on a plate. They wanted the Welfare State in agriculture, and I do not want to see that. If the farmers are dissatisfied, they did not say so. There was a bit of swing in the General Election in South-West Norfolk, but I do not know whether it was the farmers, the farm workers, or someone else. My experience—and I was in trouble, because I had condemned subsidies on more than one occasion and attacked compulsory marketing boards and did not therefore get much sympathy—was that I had a fairly substantial majority in my agricultural constituency. I do not think that the idea that farmers are disgruntled is altogether true.
§ Mr. George Brown (Belper) rose—
§ Mr. Baldwin
It fell by 1,300, but it still remains at about two to one, if I am entitled to say so in a debate on agriculture, and I am happy about that.
Although the farmers did not reflect their dissatisfaction with the present Government 1778 at the General Election, the fact that farmers are still nervous about their long-term future must be faced. [HON. MEMBERS: "Oh."] I know that I had only to throw out the bait and hon. Gentlemen opposite would jump. I will send them the same challenge as I made in my constituency 12 months ago after being hauled over the coals, I offered £5 for the best essay on a longterm policy for agriculture. My conditions are that this policy must be acceptable to the people, to the farmers, and, more important still, if it is to be a longterm policy, it must be one which future Governments will accept.
Various Chancellors of the Exchequer for the last 15 years have been troubled with the balance of payments. This and previous Governments have said that exports are the answer. Exporting is becoming more difficult. We are meeting increasing competition and I believe that exports will never solve the balance of payments problem which we are now facing. There is one source from which it can be solved, and that is by more production from the land of this country. We can increase our production by 25 or 50 per cent. The figure of 50 per cent. already achieved seems high and may give a false impression of the capability of the industry, but much of it can be achieved through increasing the production of pigs and poultry, things which can be done overnight, or in the twinkling of an eye.
If we use 16 million acres of rough grazing and two to three million acres of common land which is now producing nothing at all and if we have that land properly farmed, reaching another 50 per cent. increase will not be difficult. A 50 per cent. increase would be a flea-bite of what we can do. An increase of 50 per cent. in agricultural production would make the Chancellor of the Exchequer much happier.
My final suggestion is one with which the hon. Member for Wednesbury will agree. It is that there should be set up a Royal Commission to consider the use of our land. It should not be a Commission composed of farmers or anybody interested in the industry. It should be composed of competent business men capable of deciding from evidence submitted to them the right policy for agriculture.
§ Mr. Baldwin
The Commission's report should be debated and a long-term policy could be deduced. It could be done under no other conditions. It is extraordinary that we are to send a Commission to tell the people of Kenya what to do with their land when we do not know what to do with our own. I hope the day will come when we shall take steps to put agriculture where it rightly belongs; to regard it as the most important industry in this country, instead of the lowest form of life.
I will now say something to please the hon. Member for Norfolk, South-West. I want to see the agricultural worker rewarded for his work. But the consumer will have to foot the bill. The consumers of this country are being fed at less than the cost of production by means of subsidies and so forth, and it is time that they devoted more money to paying for their food and less to things that do not matter.
A rise in the cost of food would not necessarily mean a rise in the cost of living. The huge subsidies being paid come from the funds of the Chancellor of the Exchequer, from the taxpayer, and are collected from the consumer. I suggest that, instead of collecting money from the consumer by way of taxes and reducing that amount by administrative expense and then paying back the balance in the form of subsidies, it would be better to leave the money in the pockets of the consumers and not to tax them to death as is being done at present. That would reduce the cost of living.
§ 5.12 p.m.
§ Mr. S. N. Evans (Wednesbury)
I did not propose to intervene in this debate. I have been listening to the discussion with enjoyment, if not with much profit, but I must support the hon. Member for Leominster (Mr. Baldwin) in his request for an impartial inquiry into this somewhat backward industry.
The hon. Member said that we can produce much more food than we are producing today. I wish to know whether we want to produce much more food than we produce today. That is a very important question. Only one-twelfth of the people of this country are supported directly by the land. The other eleven-twelfths are supported by the metal fabricating industries, the textile 1780 industries and various other of our national activities. I am inclined to agree with the hon. Member for Leominster that there is far too much "double-talk"—I think I can say "political double-talk"—about this expansion. The hon. Member called for a 60 per cent. expansion, but 60 per cent. of what and at what price?
§ Mr. Evans
Yes, I know, but 60 per cent. of what commodities and at what price?
These Estimates deal with milk. Do we want more milk which we cannot sell in liquid form and cannot afford to turn into butter at 8s. a lb.? Is that what we want? Not in these circumstances. So I agree with the hon. Member that the time has arrived when the frontiers of the British agricultural industry should be set out clearly and without ambiguity.
I am not opposed to guaranteeing British farmers against losses brought about by savage fluctuations in world prices. I have never been against that.
§ Mr. Evans
I say that the time has arrived when the Government should set up an inquiry to decide just that. To what extent are the pre-war patterns of international trade to be restored? How much agriculture production do we want? What form can it take? Should it be cereals? The hon. Member complained bitterly about the imports of subsidised French wheat. He conveniently forgot to tell the Committee that between July and November last year we exported over 100,000 tons of barley and oats to the Continent at prices up to £6 10s. a ton less than the guaranteed price paid to the British farmer, and that loss was borne by the taxpayer. So we were subsidising the export of British agricultural products to the Continent.
This illustrates the Alice-in-Wonderland nature of present British farming policy, because within six months of exporting this 100,000 tons—actually it was in excess of 100,000 tons—of oats and barley to Europe at prices up to £6 10s. a ton less than the guaranteed price paid to the British farmer, we increased the price to the British farmer for oats and barley by 35s. and 30s. a ton. Six months earlier we had so much oats and barley 1781 that we did not know what to do with it. In order to get rid of it we exported it to the Continent and lost up to £6 10s. a ton on it, and the taxpayer footed the bill. Then, within six months, at the last farm Price Review we gave the farmer another 35s. a ton for barley and 30s. for oats. If that is not an Alice-in-Wonderland farming policy, I do not know what it is.
§ Mr. Baldwin
Did the hon. Member also conduct researches to find out how much barley we imported from Iraq and other places for a great deal less than the price at which we sold to the Continent? We imported barley at £14 to £15 a ton.
§ Mr. Evans
That is the only point I wish to make.
I agree with the hon. Member for Leominster. Let us have this impartial inquiry. I think that it would be a very good thing for the farmers because, by Jove, they must be very worried when they think that without these subsidies they would have no income at all. How worried they must feel when they go to bed at night, and when they think that if they received the same prices for farm products as do the Danish and Dutch farmers, they would again have no income at all. What a volcano they are sitting on! So I say, with the hon. Member for Leominster, let us have this inquiry. I want a healthy, stable British agricultural industry as much as anyone in this Committee, and I am not averse to voting sums of money to insure British farmers against losses due to wild fluctuations in world prices. I have always thought that, in its pursuit of a healthy agricultural industry, the House is entitled to take from the taxpayer moneys designed to guarantee the farmers against loss in circumstances such as I have outlined. But it is no part of our duty to guarantee a profit to the farmers. It is their job to earn it. I say that the present farm policy is one in which it is heads 1782 the farmer wins and tails the taxpayer loses. That is not acceptable to me.
Let us please remember the interests of the industrial worker and his wife. Holland and Denmark are taking £200 million worth of goods a year from this country, which helps to provide considerable employment in my constituency.
§ Mr. Evans
There will, I know, be a time when the National Farmers' Union will demand that there shall be a cut-back in these imports of food in the interests of a fair standard of life for the farmer. This is the same attitude as we deplore in the American manufacturers of hydro-electric equipment and bicycles, who complain about British competition. In the conduct of our economic affairs we had better be careful to observe standards which do not make us look rather stupid when we criticise other countries, such as the United States.
The hon. Member for Leominster is quite right; we want an impartial inquiry into the industry. The industry is entitled to expect the Government to regard it as in the national interest to lay down the frontiers of British agriculture. It is not unreasonable to say to farmers, "This is the type of production we would like you to give us. We are prepared to give you support prices upon the basis of cost." If the cost of producing potatoes in normal circumstances, on fair quality land, is £8 per ton, I am not averse to guaranteeing a return of £8 per ton, but it is up to the farmer to earn his profit. At the present time it is a case of, "Heads I win; tails you lose." That is no longer acceptable to the taxpayer. Never in history has money been poured out like this.
§ Mr. Dye
My hon. Friend does not seem to have observed the fact that whereas there was a decrease of 2 per cent. in British agricultural production last year, there was a decrease of 12 per cent. in the farmers' incomes—a total of £40 million—which is of some importance to the industry. Should not my hon. Friend inquire where that has gone?
§ The Temporary Chairman (Mr. Godfrey Nicholson)
This is not a suitable occasion for discussing what underlies our 1783 agricultural policy. Speeches and interjections should bear some direct relationship to the Supplementary Estimate before the Committee.
§ The Temporary Chairman
I do not think that the Supplementary Estimate is concerned with farmers' incomes. I must ask the hon. Member to relate his speech as closely as he reasonably can to the Supplementary Estimate.
§ Mr. Evans
I should have thought that the subsidies which we are now asked to vote are the very things from which the farmer derives his income, and in that case that the question of farmers' incomes was strictly relevant to this discussion. If it were not for these vast subsidies, farmers would have no incomes.
§ The Temporary Chairman
It is very difficult to lay down the lines which should confine a debate of this sort. The Chair can only rely upon the good sense of hon. Members. But this is not the occasion for a general debate upon agricultural policy.
§ Mr. Evans
If I may, I would just like to reply to my hon. Friend the Member for Norfolk, South-West (Mr. Dye). I could not agree that the average figure over the last four years should be sanctified for all time. I say that it must be strictly related to the efficiency and cost of production. I shall not hinder the Committee any longer, except to reinforce the plea made by the hon. Member for Leominster that we should have an inquiry into the industry; that the frontiers of the industry should now be laid down, and that the industry should afterwards be encouraged to produce effectively and efficiently.
§ 5.25 p.m.
§ Mr. Robert Crouch (Dorset, North)
I do not intend to delay the Committee for very long, because I know that it has a lot of business to get through. As is usual in an agricultural debate, this one has been of a very friendly nature. We tend to stray outside the scope of these debates in our enthusiasm for the industry.
§ Mr. Crouch
I want to refer to the question of pigs, which was raised at the beginning of the debate. The hon. Member for Derbyshire, South-East (Mr. Champion) wanted to know whether the Government were going in for pigs unlimited. I know that there has been a very considerable increase in the number of pigs since this party came into power. The number was deliberately kept down by the previous Administration, but I have always maintained that it is far better to produce our bacon at home than to rely upon other people to do so. There may be some criticism in regard to the subsidy of £76.5 million for the coming year, but I am quite sure that the housewife is very much happier when she can get the cut and the kind of bacon she wants instead of the small amount to which she was confined before the present Administration came into office. We should continue the expansion of the pig population and, with it, the development of our bacon factories, so that we can reduce the amount of bacon coming in from overseas.
The hon. Member for Shoreditch and Finsbury (Mr. Collins) expressed his concern about the sum which we are now voting, and wanted to know where the money went. It goes to the farmers, under the scheme of guaranteed prices, of course; I am surprised that the hon. Member did not realise that. The prices of these various commodities are guaranteed to the farmers.
§ Mr. Collins
I was under no misapprehension as to where these sums go. Of course, they are paid in support prices to the farmers. My point was that the support prices or guarantees in respect of three commodities—cereals, eggs and fatstock—are now costing over £153 million, whereas, under the former system of straight guaranteed prices, they cost only £17,800,000. Where does the extra money go?
§ Mr. Crouch
The difference can be accounted for by the very large increase in production. If we increase our production that is bound to happen, and our production has gone up consistently; it has risen by 10 per cent. in the last three years.
The hon. Member for Norfolk, South-West (Mr. Dye) said, quite rightly, that barley was sold at a very low price last harvest. It was wet, and farmers were 1785 only too glad to get rid of it before it went bad on their hands. The barley which was sold early this year had been properly dried, either in a rick or silo, and brought to the market in a fit and proper condition. The barleys that were kept until this year were of the better quality. The poor quality barleys had much better be got rid of as quickly as possible.
§ Mr. Crouch
Yes, but the moisture content was very much higher.
While still referring to cereals, I want to disagree with my hon. Friend the Member for Leominster (Mr. Baldwin). He has been talking, not for the first time, about a flat price per acre. I think that would be a retrograde step. It would encourage people to grow wheat on land which was not suitable for it. I believe that the policy which the Government have propounded for agriculture of paying for the weight of produce produced, whether wheat, pig meat or fat cattle, does encourage people to produce the food which is suitable for their land. It would be a mistake to go back to a policy by which we were encouraging, in this year 1955, people to grow crops which were unsuitable for their land when there is ample opportunity on a weight basis of payment to produce crops which are suitable for particular soils.
§ Mr. Baldwin
If my hon. Friend's argument with regard to wheat is sound, why does not it apply to barley?
§ Mr. Crouch
I should like to see it applied to barley as well. It is only in cereals that we do not get the weight basis. I agree with him about cattle. For so long as I can remember, we have always heard the cry during the spring, "These cattle will make more now, and we are going to sell them as beef." If that process is continued, we shall be terribly short of beef later on.
On the production side, I should like to mention something which has not yet been touched on, and that is the £12.8 1786 million general fertiliser subsidy. I believe that if more farmers used more fertilisers we should be able to increase the production from our soil, and that as a result of that increased production we should be able to compete quite fairly with the price of any agricultural product sent to these shores. The farmers today who are using to the full extent the amount of fertiliser their crops will take—and various crops take varying quantities—are well able to meet any competition that may come to them.
I maintain, as I always have done, that with the climatic conditions which we have here we should concentrate more on the production of grass. I should like to see considerably more fertilisers used on grass. By so doing, we can produce livestock and crops which would compete in price with any from overseas, and I have no doubt as to the quality of the livestock products which we could produce.
There is one other matter in the Estimate to which I should like to refer. That is the subsidy given to bread. I see that it is £40.5 million. That is a very large sum of money. What disturbs me is the position of the small country baker. He is not making a fair profit at the present time. I should like to see further assistance given to him. I know that we have plant bakeries growing up and spreading throughout the country. They work 24 hours a day and turn out all the bread that they can during those hours. They also work seven days a week. I am concerned as to what will happen if we have all plant bakeries and we have snow, frost or floods. The plant bakery may be 40 miles away and its bread may not get through. The country baker living in the village always gets through. He may not turn up at four o'clock in the afternoon, but he will turn up at some time and see that we get our bread.
I have two sets of figures which have been collected quite recently for the Ministry of Food which show that one baker made a profit of 2s. 6d. per sack after drawing his subsidy on the flour, and the other one made a loss of 2s. 10d. I know that they get an additional subsidy for the first 25 sacks of flour, of 4s. a sack. I should like to see that increased to 8s. I do not want to see our small country bakers go out of existence. If they did, it would indeed be a tragedy.
1787 I believe that, in spite of what some people have said, there is a future for agriculture. I do not feel concerned about it. I believe that there is a future for British agriculture, and that the people of this country want to see this industry expanded, because they realise that it can make a greater contribution towards the economics of this country today than any other industry. We do not want to spend money outside our shores if we can produce food here all the time. I know that we can produce better food, and I believe that if we make full use of all the available resources of science, research and machinery we can produce food which will compare in price with that produced in any other part of the world.
§ 5.35 p.m.
§ Lieut.-Colonel Marcus Lipton (Brixton)
I was very interested in what the hon. Member for Dorset, North (Mr. Crouch) said about the small country baker. I recall that on a recent occasion when I raised this matter in the House and said that the small baker had a raw deal from the present Government—
§ The Temporary Chairman
I hope that the hon. and gallant Member will not pursue that matter further. I do not think that a speech on the small country baker should be permitted on this Estimate.
§ Lieut.-Colonel Lipton
I want to make the strongest possible protest against a limitation being imposed on me which has not been imposed on anyone else in the debate. As you had not ruled the hon. Member for Dorset, North out of order, Mr. Nicholson, I thought that I might be permitted to refer to the point which he raised.
§ The Temporary Chairman
I have no wish to be hard on the hon. and gallant Gentleman. I know that I allowed the hon. Member for Dorset, North a little latitude, and I was going to pull him up if he had gone on with his argument much longer. I want to keep this debate within the limits of the Supplementary Estimate.
§ Lieut.-Colonel Lipton
I quite agree, and all that I am asking for is equality of treatment. I am suggesting that I might have some latitude to be allowed the opportunity of putting this one point.
§ Mr. G. Brown
Further to the point, Mr. Nicholson, which my hon. and gallant Friend was making, I wonder whether in fact you feel that you must hold him strictly to that Ruling. I understood that the hon. Member for Dorset, North was making his point because there is included in this Supplementary Estimate, on page 15, a very large figure under the heading N.I.—Bread. There is also a note about the bread subsidy which explains that it includes payments to bakers to enable National bread to be sold at not more than controlled maximum prices. I understood that the argument of the hon. Member for Dorset, North arose out of that. It involves the question of the margins allowed. I should have thought that your original Ruling to allow the hon. Member to make this point is clearly covered by that and that my hon. Friend might be allowed to pursue the point.
§ The Temporary Chairman
The confines of the debate are quite clear. Bakers are referred to on page 15, and it is in order to speak about them. It is speeches about the virtues of small bakers as compared with those of large bakers which are out of order.
§ Mr. Brown
So that my hon. and gallant Friend the Member for Brixton may know quite clearly where he is, may I ask whether we are to take it that we are in order in discussing the costs that fall under small bakers and which are taken into account by the Department in arriving at the figures, but that we must not go outside that limit?
§ The Temporary Chairman
It is quite a narrow point, and the right hon. Gentleman has stated it correctly.
§ Lieut.-Colonel Lipton
Perhaps I may be allowed to dispose of the point. I would have finished with it by now if I had been allowed to make it. All I wanted to point out was that we are being asked to approve a payment of £40½ million to bakersto enable National bread to be sold at not more than controlled maximum prices.The only comment I make is that, despite that very considerable expenditure, there are many bakers, not only in Dorset but elsewhere, who consider that they are getting a raw deal from the Government, for a variety of reasons into which it is not possible for me to go. In that respect, 1789 I suggest that this payment is not fully achieving the purposes for which it was intended.
That applies to many other payments that we are being asked to approve this afternoon. The hon. Member for Leominster (Mr. Baldwin) had much to say about cereals. He referred to the fact that wheat is being imported from France at £10 to £12 per ton less than is paid to the French farmers. The argument he advanced in favour of this was that pig producers would benefit and we might be able as a result to produce pig meat more cheaply. On the other hand, speaking from the point of view of the producers of wheat, he thought the thing was iniquitous. The hon. Gentleman blew hot and cold. We did not quite know whether he was satisfied with the present Government or not.
§ Air Commodore Harvey (Macclesfield)
Is it not right that the hon. and gallant Gentleman should declare his interest in this matter?
§ Lieut.-Colonel Lipton
Everybody knows that I have an interest in this matter. I have put Questions in the House in the past relating to pig production. The hon. and gallant Member has not attended previous agricultural debates or he would know more about my interest.
The hon. Member for Leominster urged that dumping should be prohibited in the interests of cereal producers in this country. What do he and the Tory Party really want? It would be of very great interest to the farming community to have that question answered, because the farmers still do not know what Government policy is. The hon. Member made fun of the "Piccadilly" farmers, but Government policy has produced the Piccadilly farmers. If it were not for the present Government, we should not have Piccadilly farmers. [HON. MEMBERS: "Oh"] I will explain why. It is very simple. On the present level of taxation, for which the present Government have been responsible over the past four years, it is possible to lose money in farming and to set off the loss against profit earned in the City. There is the answer in a nutshell. If we want farming to be seriously conducted, we need a Government quite different from the present one.
1790 The hon. Member for Leominster also said that the farming community were not discontented with the Government; the results of the General Election showed it. He himself was satisfied with the present Government. [An HON. MEMBER: "No."] He was, in certain parts of his speech. I want to quote what the National Farmers' Union say, as stated in the "British Farmer" for July, 1955. Nothing can be more up-to-date than this. The "British Farmer" says:The great industry of farming has earned a better fate than to be left at the mercy of a vacillating and unplanned policy.That is on the front page, in the editorial columns. It is the official policy of the National Farmers' Union. This is not the attitude of a Piccadilly farmer or of some irresponsible body, or even the attitude of the Herefordshire branch of the National Farmers' Union, which passes various resolutions from time to time. It is a considered statement in the editorial columns of the "British Farmer." Let me add one or two sentences about the weather. The National Farmers' Union, in a spirit of magnanimity, says:We accept the weather, but our industry is too vital to the well-being of this country to be allowed to be left swinging helplessly on the end of a crazy economic pendulum.Who is responsible for this crazy economic pendulum? Hon. Gentlemen opposite; the present Government; the Chancellor of the Exchequer; the Tory Party. We are not responsible for it. If the Government wish to convince the farming community that they have serious intentions, they must completely change their attitude.
I shall not say anything to destroy or to strangle at birth the coalition which has been created between the hon. Member for Leominster and my hon. Friend the Member for Wednesbury (Mr. S. N. Evans). It may well be that some further inquiry has to be made into the subject, but let it not be by Royal Commission, for goodness sake. That will take four or five years to report, and in the meantime British agriculture will have gone down the drain. We cannot wait all that time. The Government can say very much more quickly than can a Royal Commission what they expect from British agriculture.
My hon. Friend the Member for Wednesbury was quite right when he asked, 1791 "What are the targets? What do you want?" For a long time I have been trying to find out from the Minister of Agriculture what he wanted in pig production. All he said a few months ago was "We have too many pigs. They are costing us too much money."
Right. Even if we accept that, we are entitled to ask, "If we are producing too many pigs, to what extent do you want us to cut down?" Pig producers would then know what to do. Instead of that, we have the crazy fluctuations of the past few months referred to by my hon. Friend the Member for Norfolk, South-West (Mr. Dye), who pointed out the market price had doubled in the last few weeks. I know it is possible for farmers to cash in on the present arrangement, but that is no way of building up a stable agriculture.
I am not a cereals producer and I do not know much about cereals, but at considerable expense to myself I have learned something about pigs. The hon. Member for Leominster wanted to know where it was possible to get £42 for an old fat sow. I am not going to tell him, because of the system of free enterprise in which he believes. Why should I tell him and destroy the market which I have discovered for myself? Let him find his own market. Let him stop on the end of a telephone all day long, 'phoning to the markets to find out where the price may be suitable and then sending his live-stock into that area.
Under the present agricultural system which the Government are now encouraging, what the farmer has to do is not so much to go to the pigsties to see whether or not the stock is being properly fed, but to have a lot of telephones and sufficient staff to be able to keep using them. The farmer who wants to make money has to turn his farmhouse into something resembling a stockbroker's office. It may be profitable, but it is not farming.
Another point which has not yet been answered by any hon. Member opposite is that we have been slaughtering and disposing of the supply of meat for next year and the year after. The hon. Member for Dorset, North has said that, to his knowledge, that has been going on every year and that in the subsequent 1792 year the position has righted itself. Let him not think that next year or the year after we shall be able to make up our meat supplies by imports from overseas. According to a statement which has just been issued by Mr. Harold Stassen, Director of the Foreign Operations Administration of the United States of America, the Soviet Union is now buying food supplies in the free world to an extent far greater than ever before.
In 1953 it bought seven times more meat from the free countries than it did in previous years, and the largest suppliers were New Zealand, Uruguay, Argentina, Denmark and France, in that order. If any hon. Members think that it will be quite so easy in the next year or two to make up our meat deficiencies by imports from overseas, they may have a rude awakening ahead.
In 1954 the Soviet Union was the world's third largest meat buyer. That is a significant fact which we dare not overlook or ignore. The same thing applies to butter. The Soviet Union was the world's second largest buyer. In those circumstances hon. Members opposite must not think that there will be large supplies available to us in other parts of the world to make up the losses or deficiencies we ourselves may have to face as a result of the Government's crazy agricultural policy.
The Government said they were going to save money, but they are spending more than ever before and getting a less satisfactory return. We are entitled to a very much fuller explanation from the Government than we have had. As my hon. Friend the Member for Wednesbury asked, "What do the Government expect of the agricultural community?" They spend millions on cereals but the tillage area is decreasing—nearly half a million less acres in 1954 than in 1953.
All the millions which are being spent on cereals have not yet succeeded in arresting that decline. Even if we do not get a satisfactory explanation—and I doubt whether we shall have it from the Parliamentary Secretary this afternoon—I hope that the Committee will take a very early opportunity to deal with what threatens to be a disaster for British agriculture unless it is tackled at the earliest possible moment.
§ 5.55 p.m.
§ Mr. Frederick Willey (Sunderland, North)
I shall endeavour to profit by the advice which the Committee received from the Chair a little while ago. Arising from the Estimates there are a few further points which I want to put to the Joint Parliamentary Secretary. This Vote deals also with welfare foods, and we should record our opinion that the economy shown in that respect is very unwelcome. It is a very difficult matter to deal with, and I can only say that I doubt whether it is an economy at all. I know that the Parliamentary Secretary cannot give me the information I seek, but I want to know what increase there has been in the prescription of proprietary foods in the national welfare service. I feel that, at the end of the day, the taxpayer will be no better off. The continuing run-down in the amount spent on welfare foods is disturbing.
We should also express our concern at the reduction in the subsidy on milk. If we are to continue subsidies running at well over £300 million, it is disturbing to find that the subsidy on milk should fall. Ever since this Government have been in office the subsidy on milk has fallen. That is very undesirable and anomalous. Even though we have an attractive girl endeavouring to persuade us to drink more milk we are, in fact, drinking less every month. We would rather that the Government pursued a positive policy in promoting the consumption of fresh milk.
I want to refer to this very quaint appendix to subhead "O," which deals with the trading services. That shows that on purchases costing the Ministry £15,200,000 the Ministry managed, in reselling those foods, to lose £9,900,000. That really is an achievement for the Ministry of Food. I should like to ask the Parliamentary Secretary to explain, therefore, how, on purchases costing the Ministry just over £15 million, it can manage to lose practically £10 million on resale.
To the items which have been dealt with I have little more to add except this. Though I doubt whether this is an appropriate occasion to discuss the deficiency payments at large, I should like the Parliamentary Secretary first to tell us how real are these figures in the Estimates. How real is the figure of nearly £82 million for fatstock? I ask because of what happened last year. We began last year 1794 with an Estimate of £42 million. In the revised Estimate that became £35 million. In the Supplementary Estimate it was £51 million, and it has ended up—in figures which the Parliamentary Secretary gave me the other day—as a subsidy of about £82 million.
Does the Ministry really know what is likely to happen during the next twelve months in relation to these deficiency payments? The Minister said something about the colossal job he had undertaken in setting the farmer partially free. How far is he in a position to calculate what the results are likely to be? Can he explain the policy of this subsidy of £77 million for pigs alone? For cereals we have a figure—if we look at the other Estimates too—of £49 million this year. That compares with the figure of about £40 million last year. What is the policy behind that? Is it the Government's policy now to price-support cereals at round about this figure, or is what the figure turns out to be purely haphazard? That is what has happened in each case.
I want to say something about eggs, and I cannot avoid saying a few words about the history of this subject. Eggs were to be decontrolled and the subsidy eliminated. The subsidy was running at the time at £23 million. But the subsidy has not been eliminated. That is why I am asking the Minister and the Parliamentary Secretary what their policy is. They said that the policy was to eliminate the subsidy; yet we now have in these Estimates a subsidy of £29 million. Have they reversed their policy? Is it the present policy of the Government that eggs should carry a subsidy of about £30 million? If that is the policy, let them say so; and if that is not the policy, let them explain how this subsidy arose.
What applies to eggs applies also to the other commodities: the Government floundered into a partially free economy, and they justified the results by what the result happened to be. It is like someone falling into a ditch and saying that it is a good thing to be permanently in a ditch.
To return to the subject of eggs, we know that of this £29 million, less than £15 million goes by way of direct subsidy to the producer. Is this fortuitous, or haphazard, or is it designed? I should like to know what proportion of the other deficiency payments goes to the producer.
1795 How much is taken in other ways? In the case of eggs we are fortunately sustained by the advice which has been given by the Comptroller and Auditor General, and now by the Public Accounts Committee.
I am anxious to know how many reports we shall get before the Government do something, and then, when the Government do something, I want them to explain their policy relating to financial support at the taxpayers' expense. This is important in the case of this and all deficiency payments. What certainty has the taxpayer that this money is being properly and solely devoted to the purpose to which it ought to be devoted? In the case of eggs we know, because the Ministry gave evidence, that this was a temporary and unexpected setback.
The Ministry suffered this temporary setback over two years ago. The Ministry is still in the ditch; it is still floundering. It says that it is desirable to be in a ditch, that it is a good condition of affairs in which to find oneself. At the same time it says that some time very soon it is going to allow the producers, who present us with this scheme, to pull us out.
I want the Government to tell us what they are going to do about this very heavy element of financial support. We on these benches have made our position quite plain. It has been referred to on several occasions. We are not quarrelling with the support given to British agriculture. What we are quarrelling about is the uncertainty and the haphazard nature of the support which is now being given, the uncertainty whether it has been devoted to its proper purpose, and also, as my hon. Friend the Member for Shoreditch and Finsbury (Mr. Collins) said, the uncertainty about what is happening to money provided by the taxpayer.
Again we have the benefit of the Government's advice about this matter. In 1953–54, they reduced the subsidies to £210 million a year. They told us so. They said, "That is the mark of our achievement." They indicated that if they pursued that policy they would reduce the subsidies to a rate of about £100 million a year. All the steps to achieve this have been taken. What has not happened is the reduction of the 1796 subsidies to £100 million. The two subsidies on bread and milk—the welfare foods—run at about £100 million. How is it that today subsidies are running at about £330 million and increasing?
As my hon. Friends have said, that brings no benefit to the consumer, because this operation is now being carried out in a structure, not of low retail prices, but of high retail prices. So the consumer is no better off, and the taxpayer will be no better off. If we increase the subsidies at this rate, before the Government can go to the country again they will be back where they began. The farmer is no better off. Indeed, as the hon. Member for Leominster (Mr. Baldwin) said, the farmers are disturbed about this.
§ Mr. Baldwin indicated dissent.
§ Mr. Willey
The hon. Gentleman explained the position to his constituents, and we know that it had a deplorable effect on his constituents, from his point of view.
§ Mr. Baldwin rose——
§ Mr. Willey
No, I will not give way now. I will state the position of the farmers, as I see it, and then I will willingly give way.
The farmers are not anxious to be pensioners at the taxpayers' expense. The farmers are anxious to get an adequate return for the work they perform. They are anxious that that fact should be recognised. They do not mind at all the taxpayer being equally anxious that the money should be devoted to that purpose, and to that purpose only. The farmer is as anxious as anyone when, for instance, pork is sold at high prices in the shops and the taxpayer is called upon to pay the farming community nearly £80 million by way of subsidy.
§ Mr. Baldwin
What I said was that the farmers are satisfied at the present moment, as was reflected in the Election, but what they are not happy about is the long-term future. They are getting bored of the farming industry being a shuttlecock between the two political parties.
§ Mr. Willey
I am obliged to the hon. Gentleman. He has not only got my hon. Friend the Member for Wednesbury (Mr. S. N. Evans) in agreement with him, but he has me in agreement also. That is 1797 what I am asking the Government. I am asking them the purpose behind their action.
§ Mr. Willey
We are discussing a considerable sum of money—£338 million, which is well over £100 million more than the Chancellor of the Exchequer said would be the subsidy two years ago. What we want to know is this. In a country in which we have high retail food prices and in which the farmers, far from being better off, are worse off than they were, where has all the money gone? Repeatedly in this debate we have asked the Government to tell us, and I cannot put it any more simply than that. I hope that the Parliamentary Secretary will give us a simple answer.
§ 6.8 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. G. R. H. Nugent)
We have had an interesting debate on these Estimates, and I will do my best to reply to the many diverse points which have been raised in all quarters of the Committee. My right hon. Friend and I regard these Estimates as being of first importance, although the significance of the Supplementary Estimate is purely technical.
Dealing first with one or two points mentioned by the hon. Member for Sunderland, North (Mr. F. Willey) concerning eggs, he made the surprising statement that a large part of the egg subsidy does not go to the producer. In fact, it all goes to the producer, except the trading loss. The actual amount in the Supplementary Estimate—M.2, £25.6 million—is the amount which is used to cover the difference between the price at which the packer has to buy the eggs from the producer—that is the guaranteed price—and the price at which he can sell, taking into account the margins and allowances.
May I make a brief reply to the comment of the Public Accounts Committee on eggs? It is true that since last August we have been operating what we believe is an improved system of marketing eggs which to some extent removes the defects to which the Public Accounts Committee referred. In a system under which the producer is individually guaranteed a 1798 price per dozen eggs, according to their grade, and the packer must pay that price to him, the packer must be sheltered to some extend from the commercial risk, but the system which we are working today, by which packers declare every day their quantities to the central authority and then buy back what they themselves wish to sell as wholesalers, makes a considerable improvement over the old arrangement.
They have to take a full commercial risk on whatever they buy and sell as wholesalers. We are continually examining margins. An examination is now going on. I can assure the Committee that the margins and allowances for eggs are very reasonable.
I will reply generally to a number of points made by the hon. Member for Sunderland, North, but there is one specific point with which I will deal now. He asked about the level of liquid milk consumption and expressed the anxiety that because the subsidy was falling, consumption was falling too. I am glad to be able to reassure him that the present liquid milk consumption is less than 1 per cent, lower than a year ago, and there seems to be a reasonable prospect that the Milk Marketing Board's strenuous and efficient efforts will maintain consumption. As the Committee knows, the Board is doing everything it can to expand consumption.
I will deal, next, with one or two points made about cereals at the beginning of the debate by the hon. Member for Derbyshire, South-East (Mr. Champion). He persisted in the view that the cereal deficiency payments are going, not to farmers, but to the benefit of the merchants.
§ Mr. Nugent
To some extent.
That is a very great improvement on what his right hon. Friend the Member for Belper (Mr. G. Brown) said on the last occasion. I still feel that the right hon. Gentleman owes it to the Committee to use this occasion to substantiate the charges which he then made against the millers. He told us that the millers—and he named them, particularly Messrs. Rank and Messrs. Spillers, who have been mentioned again today—were deliberately manipulating the prices of home-grown grain in order to keep them down, with 1799 the result that the subsidies were going to their benefit. At the time I invited right hon. and hon. Gentlemen to give me evidence of that. I said I would gladly go into the matter. I need hardly say that I have received no evidence whatever.
I regard it as irresponsible for the right hon. Gentleman to make statements of that kind when he has no evidence to sup- port them. Had he wished, he could have consulted his friends in the Co-operative Wholesale Society. They are milling on a scale equal to that of Ranks and Spillers. He did not tell the House that. They could have told him soon enough whether the market was competitive or not and whether they were receiving the subsidies. Perhaps they are not on very good speaking terms after what he said about millers the other night.
The right hon. Gentleman comes to the House, and in his customary polemical style, lays about him and injures the reputation of people who cannot reply. I feel that he has some responsibility not only to himself but to his own party to substantiate those charges or to with-draw them. He has given a classical example of the occasion…full of sound and fury, Signifying nothing.I turn to the more serious remarks of the hon. Member for Derbyshire, South-East. I assure him that individual merchants cannot gang up together and proceed against farmers in the way that he fears. In the farming papers every week—"Farmer and Stock-Breeder" and "Farmers Weekly," for example—the farmers see what are the current market prices throughout the country, and they will not sell to their merchants under those prices unless there is a very good reason, such as lower quality or higher moisture content. If their own merchant offers lower prices they will search around and find another.
It does not make sense for right hon. and hon. Gentlemen opposite to persist in the suspicion that 2,000 merchants—in fact there are between 2,000 and 3,000—can gang up together to hold down the price against the home grower. The home market is as live a market as any market can be. It is directly related to international cereal markets, and the price paid for grain which our farmers market 1800 is the current market price which that grain is worth on the day on which it is sold and at the quality at which it is sold. There is no evidence whatever that the position is any different from that.
I hope right hon. and hon. Gentlemen opposite will look objectively at this situation. If we are to have a system which is free from allocation and rationing—and I am quite sure they wish it as much as we do—there is no alternative to the free market, and the system of deficiency payments which we are using is operating to ensure a fair return for the individual farmer, while at the same time leaving the market completely free to move. After all, if the merchants had this adverse influence which hon. Members opposite suspect, would the market in barley or oats have risen by £5 to £10 a ton from start to finish? Of course not. It rose because the demand was strong enough against supply to cause it to rise. Such is bound to be the case in any free market.
The hon. Member for Norfolk, South-West (Mr. Dye) asked how the barley deficiency payment is calculated. It is calculated by reference to the average market return for all barley over the twelve months, after that figure has been computed on a weighted basis. All barley sold at more than 1s. less than the average price is then, so to speak, cut out of the calculation, because that barley relates broadly to the malting barley market. In order to give the necessary support for the feeding stuffs barley market, with which we are concerned here, the deficiency payment is calculated from there.
I can assure the hon. Member that the merchants' sales which take place later in the form which he suggests, merchants having bought barley in September and sold it in the New Year, would not come into the computation. The sales must be farmers' sales to be registered for this purpose. I hope that that reassures the hon. Member that the calculation is done in a proper fashion.
§ Mr. Nugent
Sales made from farmer to farmer cannot come into the calculation. They must be sales made to a merchant. The bulk of sales are made to merchants although there are some from farmer to farmer. The point I wish to make—I hope it reassures the hon. Member—is that merchants' sales do not come into the calculation.
The hon. Member for Derbyshire, South-East asked some questions about pig prices which I think he would like me to answer. He asked what was the present price level for home-produced pigs compared with the price of Danish pigs. I think I can give the figures completely. The average price guaranteed for home-produced pigs is at present 51s. 3d. per score to the United Kingdom producer. There is a subsidy of approximately 20s. per score, and the Danish price is very approximately 37s. 6d. That will give the hon. Member the broad basis of comparison.
In reply to my hon. Friend the Member for Leominster (Mr. Baldwin), who made the point that the Government have imported too much bacon from Denmark and that had caused the difficulty, I would say that in the process of derationing we had to ensure that there was enough meat. It was difficult to estimate exactly where demand would go. If in any respect we over-insured I am certain that that was a mistake on the right side. In any event supplies are now evening out and I think any initial difficulties have been overcome.
Turning to the general debate on fat-stock marketing, upon which so much has been said, I will give the Committee a few figures of how the scheme has been working in the last twelve months. The new arrangements have now had a complete twelve months' working. My right hon. Friend made the point that it was a very big operation to turn over the meat trade of this country to private hands after it had for nearly fifteen years been entirely in the hands of the State, trading at fixed prices, with allocations and rations. That operation was successfully carried out last summer and has been working successfully in the past twelve months, I believe to the advantage of producers and consumers and with reasonable economy to the Exchequer.
The total value of the industry is very large—between £400 million and £500 1802 million a year. It will give the Committee some idea of the size of the operation when I say that the total number of animals involved in the guarantee arrangements in the last twelve months was approximately 20 million. Our system of price guarantees with a dual guarantee—the normal deficiency payment guarantee and the individual guarantee —means that every one of this 20 million animals had an individual guarantee. I think the Government can claim to have operated that system successfully in the first year and to have ensured that there has been a free flow of meat over the counter to give choice to consumers at the same time as they have given regular payment to farmers. That is an achievement of great credit to all concerned.
The farmer has had alternative marketing systems either in the livestock auctions, which have been chiefly commented upon today, or in the deadweight sales and by several other methods Generally, the F.M.C. is spoken of, but there are a number of wholesalers, including thirty-four who function in the same fashion as the F.M.C. The farmer has alternatives to the Fatstock Marketing Corporation and to the live-weight auctions if he wants them.
I shall deal only briefly with the work of the livestock auctions because they have not come in for much criticism. They have worked surprisingly well considering the immense difficulties of working out a satisfactory marketing system for all these animals. The number of cases of deliberate breach of Regulations or fraud, fortunately, has been very few.
§ Mr. Nugent
There have been ten prosecutions in all and six convictions. There are three cases before the courts now and three are pending.
There have been many rumours as to how the markets are working, but we find that our system of market supervisors and livestock inspectors has kept a fairly good supervision working in these markets. There is no doubt that in using livestock markets farmers are taking a very real commercial interest in the marketing of their animals.
We have to use rather complicated arrangements like the market addition for pigs as normally the price for pigs runs 1803 below the individual price guarantee, but they have been effective in giving the farmer an interest in the market price of his animals. Although as a rule farmers do not withdraw their cattle or pigs on the day of the market, if they are dissatisfied they switch next time to another market. In that way the markets are kept in a healthy condition and ensure that real prices are paid. Average weekly payments cover 400,000 animals, and we have managed to keep them running with only ten days delay for liveweight payments and sixteen days delay for deadweight payments. I think I need say no more about the general work of the markets as there has been little criticism of them.
Now I wish to say a few words about the cost of the subsidy. The general cost of the subsidy, as hon. Members have said, is high. We certainly acknowledge that. For pigs the figure is £76 million, for sheep £3½ million, and for cattle £1.78 million. In reply to the technical point raised by the hon. Member for Norfolk, South-West about how this collective payment works, I think I can give him an explanation which will satisfy even his inquiring mind. I agree with him that it seems extraordinary that there should be no collective payment in the period from the end of January to the beginning of February, and that it should suddenly reappear.
I have looked into the matter and I am grateful to the hon. Member for warning me that he intended to raise it. I am able to explain how it happens. First, there was an award of 1s. 10½d. per cwt. in respect of the Special Review, and that came on in the period 28th February—27th March, to operate for a period of three months. That provided a sufficient sum to recoup the amount due on cattle as a result of the Special Review. After the conclusion of the normal Annual Review there was an award of 5s. 6d. per cwt. additional to the guaranteed standard price for cattle, and that began to operate in the period 28th March—24th April.
It was then that the deficiency payment went up to 5s. per cwt. From 25th April to 22nd May the deficiency payment was 3s. 6d. It was thus reduced and the following month it disappeared. The reason it tapered off is that we calculate the deficiency payment on what is 1804 called a "rolling 12-month" figure. That is to say, the 12-month period rolls forward four weeks every four weeks and we always have a fresh twelve months every month.
When we started the system of these deficiency payments in the free market last summer we had to estimate a notional year. As the months have gone by we have gradually worked out of that period and, with the higher cattle prices coming into the computation month by month, the figure calculated as the average market realisation has risen, and so gradually eliminated the deficiency payments altogether. Because we had the two increases in the standard price in February and March, for a short time we had a deficiency payment again. Because the market price was still rising we ran out of it in May, and we continue to be out of it now. I apologise to the Committee for the complications of the calculation, but I hope that the hon. Member now understands it clearly.
§ Mr. Dye
I am far from satisfied. What the hon. Member has not explained is why a deficiency payment is made—he used the word "deficiency"—when the average market price is much higher than the standard price and why those who send their cattle to market or for slaughter just in those two months, which happened to be April and May, get that in addition, whereas later, when the price has fallen, as it has done now, they simply get a note from the Ministry saying that no deficiency payment can be made.
§ Mr. Nugent
The deficiency payment system is bound to operate to the industry. It raises the average market price to the guaranteed price level. The people who marketed during that period were certainly fortunate, especially with the incidence of the Special Price Review award, which had to be made over three months; and that was agreed with the representatives of the farmers as the best method of doing it.
There are, however, great advantages in having a rolling twelve months, because that keeps the deficiency payment system up to date and enables payments 1805 to be promptly made every month. If we had to wait until the year was over, the payments would be made so long afterwards that there would be great inconvenience to all farmers.
§ Mr. Nugent
I hope that that explains the method.
Something has been said about the position of the consumer, especially by the hon. Member for Shoreditch and Finsbury (Mr. Collins), who quoted figures. I congratulate him on his research. I have had the figures checked and the reply is that the Estimate for 1953–54 included these subsidies for home production: bacon, £25 million; eggs, £18 million; meat, £50 million; wheat, £11 million; and coarse grains, £20 million. That makes a total of £123 million, compared with the hon. Member's figure of £150 million. But bearing in mind the increased volume of production, particularly in meat and to some extent in eggs also, those figures are not far out in comparison. I feel that something has gone wrong with the hon. Member's final computation. The figures which I have given are correct.
§ Mr. Collins
As I said, the figures I was quoting were from the 1953–54 Estimate, where they were given clearly. For the three items which I picked out, the final net loss was given as only £17,800,000; that was what the Estimate asked for. The comparable figure now, as I have pointed out, is over £153 million. As I see it, that is extra money from the taxpayer without any benefit to the consumer in reduced prices.
§ Mr. Nugent
I do not think we are comparing like with like. The Supplementary Estimate before the Committee today is arranged on a different basis from that of 1953–54 but the figures which I have given to the hon. Member are a strict comparison with the figure of some £150 million which he quoted today. The confusion arises through the different construction of the two Estimates.
§ Mr. Collins
There were other subsidies which were not included in the Estimates to which I referred?
§ Mr. Nugent
I think that that is the answer, and that trading losses were included in subsidies. If we have not 1806 completely cleared up the point, I shall be pleased to write to the hon. Member to settle it with him.
There is one point to be made about consumer interest. It is fair to remind the Committee that the consumer has benefited greatly by this fatstock operation. It is impossible to have free choice to the consumer over the counter in the butcher's shop unless there is a free market in which the retail butcher can buy. This is not the time to develop these arguments at length—we have debated them at length before; but I assure the Committee that the retail butcher must have choice if the consumer is to have choice. What we have managed to do is to restore that choice to the consumer.
I allow that there has been some rise in meat prices but the rise has been greater in respect of the choicer cuts. I have had some figures obtained. The price of home-killed sirloin today is 4s. to 4s. 6d. per lb—that is, in the week ended 14th June—compared with 3s. 2d. under control. But in the case of the inexpensive cuts, such as imported breast of lamb, the price today is 9d. to 1s. 3d. compared with 1s. under control. Home-killed belly of pork is 1s. 10d. to 2s. 6d. today compared with 2s. 2d. under control.
§ Mr. Willey
The hon. Gentleman is surely aware that on imported meat the Ministry of Food made an appreciable profit.
§ Mr. Nugent
That is not really relevant to my argument that there is in the shops today a big range of choice. Although the more expensive meats are dearer than under control, they are there now for people to choose and to buy instead of disappearing altogether. The less expensive meats are quite comparable in price with the prices during control.
§ Mr. Ede (South Shields)
This is the old story about the Ritz being free to all who can afford to go in.
§ Mr. Nugent
I am afraid that the right hon. Gentleman is farther off the target than usual.
The service available to the housewife today is incomparably better. She can now go into the shop and choose what she wants. The meat is better hung and better trimmed, the fat is trimmed off 1807 and the service is better. The whole aspect of the butchering business has completely changed.
§ Mr. Nugent
The consumption figures are also worth mentioning. The increase in carcase meat consumption since 1951 is approximately half a pound per head of the community per week. That is a valuable half pound, because it has made choice possible for people at last. The picture is one of an increasing total supply of meat, both home produced and to a rather lesser extent imported; that remains at about the same level. The total result has been free choice and an adequate supply.
I note the point made by the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton) that the prospects of increasing imports are not good. His interesting comment about Russia being in the market is something of which we are certainly aware and I am sure that the Committee was interested in it. We must rely on increasing production from our own farms. That, indeed, is the whole object of Government policy.
The hon. Member for Derbyshire, South-East asked whether it would not have been wise to reduce the amount of money on the pig subsidy and to give greater incentives for cattle and sheep. In a small measure, we followed that very policy at the last Price Review. We made a cut in the guaranteed price for pigs and we increased the guarantees both for cattle and sheep, because that is exactly what we want to do. We want to increase as fast as we can the number of grass-eating animals which will make meat, but at the same time we certainly want to maintain about the present pig production. Not only do we want the bacon supply but we also want a very large supply of fresh pork to supplement what we do not have in the way of carcase meat. We want to maintain production at about its present level.
To the hon. Member for Wednesbury (Mr. S. N. Evans) and to the hon. and gallant Member for Brixton, with his special interest in pigs, I may say that in the Annual Price Review we really give very close guidance as to how we think production should go in respect of 1808 the various guaranteed commodities. The broad picture there is that, in such commodities as carcase meat like beef, we want production to go ahead as far as ever it can—there is no limit. With regard to sheep there must be more regard to price, because New Zealand lamb can come into this country at very competitive prices and in very good quality.
We obviously cannot have a further expansion in pig production when the present subsidy cost is £76 million; and the whole objective of the pig producer must be to try to reduce his costs while at the same time increasing quality. Indeed, he is doing that. One of the reasons why the pig market in the livestock markets has been stronger in the last few months is because pig producers for the pork market have been selling smaller pigs. Whereas there is a good demand by housewives for small pork joints and a good demand by the butchers for small pork pigs the demand for the large, over-fat pigs for pork is very poor indeed; and that was one of our primary difficulties last autumn.
§ Mr. Nugent
We should all like to know where this big fat sow was sold for £42. It is a miraculous price, but I think it is the exception. I should add that a sow does not come into the Government's guaranteed price.
May I conclude, as I fear the debate is running rather late? I think I have dealt with the important points that have been put to me, but there was a point mentioned about exports of barley. Certainly, we have exported about 68,000 tons altogether, but at a price which started at £22 per ton and finished up at over £40 per ton, so that it was not entirely a bad transaction, taken overall, from the point of view of the Exchequer. The whole point is that in a free market, as we now have in all cereals, importers are free to import and exporters are free to export.
§ Mr. S. N. Evans
Could the hon. Gentleman tell the Committee about the sale of that 100,000 tons of oats and barley between July and November last year? Was it at a profit or a loss? Have we sold it at up to £6 10s. per ton less than we paid the farmers, or not?
§ Mr. Nugent
I should need to have a fairly elaborate calculation made to work out just what the profit or loss is for the whole transaction. The sales started in the autumn and finished in the spring, and it would be necessary to do a fairly complicated sum before I could give an answer to the hon. Gentleman. I will have that done, however, and will give him the answer.
The hon. Gentleman really touched on the germ of this matter, which is that this country imports very large quantities of grain every year in order to live. Our pre-war imports of wheat were over five million tons, and today we import about four and a half million tons, and three million tons of coarse grains as well. It stands to reason, as indeed my hon. Friend the Member for Leominster acknowledged, that it is a very great advantage to us if we can buy this wheat cheaper rather than more expensively, and if we can buy the feeding stuffs cheaper we can produce the eggs and the pigs cheaper.
So long as we have a system of guaranteed payments which ensures that the farmers get a fair return, the farmers and everyone else are getting the best of both worlds, and that broadly is the policy which my right hon. Friend has been following. I think that the remarks quoted from the "British Farmer" by the hon. and gallant Member for Brixton were somewhat out of step with public opinion. After all, we have just tested public opinion in May, and there is no doubt that the country as a whole is very satisfied with what this Government are doing. [Interruption.] Hon. Members opposite may encourage themselves by shouting remarks of that kind, but the results are there for all to see.
I think I have said enough to show that these subsidies, large though they are, and heavy burden though they are on the taxpayer, have been good value to the community as a whole. They have continued to assure farmers individually and collectively of a fair return, and have given to the consumer—to the housewife at long last—freedom of choice over the counter. As my right hon. Friend said, it has been a large and complex operation. It certainly has, but it has been carried out successfully, and I believe that the country as a whole recognises that, expensive though it is, it is good 1810 value, and I therefore ask the Committee to approve the Supplementary Estimates.
§ 6.47 p.m.
§ Mr. George Brown (Belper)
Nobody would accuse the Joint Parliamentary Secretary of being unduly concerned to get his own Estimates through the Committee. It was not my intention to speak at all. I have sat here listening to the whole debate, and I have thoroughly enjoyed it, but the hon. Gentleman saw fit to begin his contribution with a somewhat violent attack on myself in a personal way, of which he gave me no notice.
I do not object to that, but when he telephoned me to ask me if I would kindly tell him what points the Opposition would take up in the debate, and I responded, it would have been more in keeping if the hon. Gentleman had told me that one of the points which the Government would take up would be a personal attack on me. The hon. Gentleman was apparently under the erroneous impression that I would not be able to rise after he had spoken, but I am bound to help him to delay his own Estimates a little bit longer.
I have noticed that the deputy Chief Whip on the other side has been dodging about between the hon. and gallant Members for the Isle of Ely (Major Legge-Bourke) and Macclesfield (Air Commodore Harvey) to persuade them not to make speeches, because the Government wanted to get these Estimates approved. It does not look as if the Parliamentary Secretary is keeping up with the strategy laid down on the Front Bench opposite.
Since I am never loth to answer back for myself, may I now deal with what I said the other day? I withdraw not one single word. I say that, on the question of the cereals guarantee, this Government are laying the British farming industry open to the very kind of attack which my hon. Friend the Member for Wednesbury (Mr. S. N. Evans) made this afternoon, when in fact the featherbedding is being done for the millers and for the merchants. There is nothing whatever to apologise for.
All that the Parliamentary Secretary said was that I had produced no evidence for it. May I ask him to look again at what I said in that debate? If he will 1811 look at column 1439 of HANSARD for the 22nd June, he will see that we were talking about a deficiency payment, which also appears in this Supplementary Estimate in Class 8, Vote 2, on page 13, of almost £46 million. On that occasion, I said, and I repeat it now, that we had spent this money in order allegedly to induce the British farmer, or to enable the British farmer, to grow the cereals we badly need, and, having done that, at the very same time we had allowed the importers of grain—and these are, very largely, the gentlemen of whom I was speaking—to import unrestrictedly the very same grains from overseas.
I gave the figures, and if the Parliamentary Secretary had wanted to dispute them, he could have done it with rather more point than by making this attack on me. I said:In the first four months of this year we spent £64½ million"—of what was in large part scarce currency, much of it in dollars, and the very thing which is causing trouble for the Chancellor of the Exchequer—on importations from overseas of cereals and cereal preparations.In the same period last year we spent £40 million. Therefore, the importers went out of their way, encouraged by the Government, to push up the expenditure of our scarce currency on cereals by £24,500,000, or as near as could be by 50 per cent.
Does the Committee regard it as coincidental that that 50 per cent. extra having been spent and just over 50 per cent. extra having come in on this so-called free market in which the millers are allowed to decide for themselves the price they are then prepared to pay for the British farmer's grain, the price to the British farmer fell? The price of the British farmer's grain having thus been artificially depressed, the Government were then called upon to pay out increased sums of some £8 or £9 per ton by way of deficiency payment, which made up the £46 million.
I said all this on 22nd June last. It is not new, but neither the Joint Parliamentary Secretary nor any other Minister has refuted it yet. Therefore, I repeat that this money was not needed to hold up a good, justified British price for wheat and that the Government deliberately 1812 enabled the millers, and the millers deliberately took advantage of the enablement, to go overseas to buy additional quantities partly to depress the price here and partly because they prefer to handle imported stuff—it comes in barges to the silos and is more easily handled with less labour, and so on.
Therefore, that is my evidence for saying that this feather-bedding of the millers, and not the British farmers, is a jolly stupid thing to do. Either we want home-produced grain because we do not want imported grain, or we prefer to rely upon imported grain because we do not want home grain. Either one or the other makes intelligent policy. One of them was the policy about which the Joint Parliamentary Secretary wrote in the Conservative Party agricultural document called, "An Agricultural Charter" some years ago when the party thought about giving the home producer first place in the home market.
Either of those would have been an intelligent policy, but I invite the Committee to consider how it can possibly be intelligent to spend nearly £50 million to induce British farmers to grow more grain and spend £64½ million to import it from somewhere else. Can that be intelligent? It makes no sense at all. We are trying to ride two horses, because we are trying to obtain a bit of a controlled market for the home producer and at the same time a wholly free market for the miller and importer.
On 22nd June, I went on to show what this was doing for the millers, and I chose Messrs. Rank and Messrs. Spiller. The Joint Parliamentary Secretary was quite entitled to say, "That is all right. That may be true of Rank and Spiller but let us have a look at the Co-operative." I would not have objected to his doing this, but he has not done so. I said on 22nd June:I found that in 1953 Ranks made £4,850,000 gross profit. In 1954 their gross profit had risen to £6,409,000, an increase of £1½ million in two years.That is the very same period as that during which we have been gradually stepping up our deficiency payment and allowing the millers to import and depress our own prices.
§ Mr. Nugent
I can help the right hon. Member with a piece of information.
1813 The 1954 financial year for Ranks ended on 28th July—before the deficiency payments system had really started.
§ Mr. Brown
Yes, I have happened to choose those two years, but the profits of Ranks for the subsequent years went up even more. They are mounting steadily and obviously they will do so. Clearly, if one allows a business man to buy wherever it suits him best and in consequence of that to depress the price which he pays to the home producer, his profits will go up. That is why he does it. That is why our people receive lower prices, not only when the grain contains moisture immediately after harvest but after the grain has been stored and dried, and that is why we had a higher deficiency payment in January and February of this year.
Messrs. Spiller in 1953 made £3,050,000. In 1954, they made almost £4 million. The Joint Parliamentary Secretary cannot try to answer this case in the same way as he answered the case of Messrs. Rank. Fortunately for me, Messrs. Spiller produced the 1955 figures in time, and by the end of that financial year they had made £½million. Their profits have steadily gone up by the same £1½ million, although it took them longer to do it.
I added on 22nd June:In dividends, Spillers made provision for £240,000 in 1953, for £321,000 in 1954, and for £428,000 in 1955, an increase of very nearly £200,000 in the three years, in dividends paid out."—[OFFICIAL, REPORT, 22nd June, 1955; Vol. 542, c. 1439, 1442.]I did not give the figures for Messrs. Rank, and as I was not given notice of this attack upon me I did not bring with me a copy of the figures. I did not intend to make the same case twice, but I can assure the Committee that the figures for increase in dividend will be found to be even higher in the case of Messrs. Rank.
I repeat that, because of the doctrinaire decision of the Government that they must get rid of the guaranteed price system for maintaining British agriculture, because of their rather stupid insistence on allowing the millers and importers to be free to manage things to their own personal profit while maintaining some kind of supported price for the British producer, we have been involved in paying out the very large sum which is covered in the Supplementary Estimate. That large sum has gone not to increase 1814 the incomes of British farmers, for they fell by £40 million last year, but to inflate the incomes of Messrs. Rank and Messrs. Spiller and many other millers and merchants whom I could mention, and to increase the personal spendable incomes of their shareholders.
My hon. Friend the Member for Sunderland, North (Mr. F. Willey) asked the Minister if he was prepared to swear that, within reason, these figures are likely to turn out to be right. I venture a guess that these are not the figures on which the year will finish and that in fact this provision will cost us more, as last year it cost us considerably more by the end of the year. The Joint Parliamentary Secretary did not answer my hon. Friend. The hon. Gentleman gave a very painstaking answer to the debate. However much we may get involved in battle, we will not complain that he did not attempt to answer the points made. He did not answer my hon. Friend's question because he cannot.
One of the other stupidities of this set-up is that no Minister knows how much is involved. Only Messrs. Rank and Messrs. Spiller can tell them, because only the importers know how much is going to be brought in from overseas and how much it will depress the home price. So not only is this in their interest but virtually the control of it has passed to them. It has passed right out of the control of the Treasury and of the Chancellor of the Exchequer, and neither on cereals nor on any other commodity have they any idea how this is going to turn out in the end.
If I may, I should like to leave that point. I repeat that I would not have brought it up but for the attack which was made on me. But I say that I think the Government have failed dismally to bring forward a defence of this scheme. When from this side of the Committee we pointed out that, leaving the price aside, the thing does not work in detail, as was pointed out today during this debate and as my right hon. Friend the Member for Don Valley (Mr. T. Williams) pointed out at Question Time the other day, we are met with the answer from the Minister, "Well, you suggest a better way of operating the deficiency scheme."
But we had a better way. The Government in their wisdom, as they are perfectly entitled to do under the party 1815 system in operation in this country, decided to get rid of the way we did it, and in its place they chose to put this. Even if our attack is met principally on the ground that, "Anyway, we are the party in power," they are entitled to meet our attack on detail with something more than "You suggest some other method."
The thing does not work in detail and, apart from the open public purse which is involved, the guarantees are paid at the wrong time, as my hon. Friend the Member for Norfolk, South-West (Mr. Dye), has shown. My right hon. Friend the Member for Don Valley the other day did the same about sheep. The collective guarantee payment under this system is not paid when the price of the home product is depressed, when we need to pay the guarantee to keep up the farmers' income and to give him an incentive to produce. Under this sloppy, uncontrollable scheme, the guarantee price is paid when the price is high and, as likely as not, nothing is paid when the price is low.
When this is pointed out to the Minister, all he says is, "Can you think of anything better?" If the Minister cannot control expenditure and cannot arrange to pay deficiency payments to producers when they need them instead of paying them when they are not needed, then we suggest it is time he looked at the whole thing again and returned to the guaranteed prices attached to the Price Review and paid in a way in which the farmer requires them for his advancement. We hear about the guaranteed payments for fat cattle being made all through the period when the prices have been so high that heifers which ought to have been kept for breeding and others which ought to have been kept for fattening have been killed and sold on the market.
May I repeat the position in regard to sheep? Take the last two six-monthly periods about which my right hon. Friend put questions to the Minister the other day. From October to March the average market realisation price was 2s. 11d. per 1b. The collective guarantee was paid all through that period at 4½d. per 1b. In the second six months' period from April onwards the price became 2s. 6d.; that is to say, it fell by 5d. If we assume that 2s. 11d, was an inadequate price and required a 4½d. a 1b. guarantee on 1816 what was paid, then clearly a price of 2s. 6d. a 1b. required a guarantee of 9¼d. a 1b. But does it work out like that? Not on your life. The 2s. 6d. attracts the same guarantee as the 2s. 11d., namely 4¼d. One of two things emerges from this. Either the 2s. 11d. price needs no collective guarantee at all, or the 2s. 6d. requires a much better one.
But it is clearly an absurd situation in which the guarantee does not get paid when the price falls but does get paid when the price rises. Such a system does not remove fluctuations, and the main evil from which agriculture suffered before the war was wild fluctuations. Ultimately there is going to be fluctuations of this order inside the two six-monthly periods, and we are going to achieve nothing with all this expenditure of public money.
On this side of the Committee there are some who agree with my hon. Friend the Member for Wednesbury, and there are hon. and right hon. Gentlemen opposite who think as he does, too. Today we had the hon. Member for Leominster (Mr. Baldwin) forming a coalition with my hon. Friend the Member for Wednesbury in his demands. I am getting a little alarmed about that, because I had a coalition with my hon. Friend on certain other questions. I hope I may have a discussion with him about which coalition is the more effective.
The hon. Member for Leominster took up my hon. Friend's view, as do certain right hon. Gentlemen on the Government Front Bench, because they will not defend expenditures of this kind that do not produce the results which they should. Ministers have done nothing to answer the criticisms put forward this afternoon. I had to tell the Joint Parliamentary-Secretary somewhere else today that to answer a case is not the same as merely to reassert the view that the present conditions should continue. What we are really getting from both Ministers today is a reassertion of their doctrinaire point of view.
The Minister himself said that the system has worked well. Those are his words, and he quoted the Milk Marketing Board and the potato scheme, neither of which owes anything at all to this system. He gave no other example, because there is no other example to give. It is patently clear from the figures that over a very 1817 wide field this system creates disorganisation in marketing. My hon. and gallant Friend the Member for Brixton (Lieut.-Col. Lipton) rather humorously remarked, though in all essence he was accurate in what he said, that what happens under this system is that the farmer has got to turn himself into an office boy and he has to choose his markets over the telephone when he ought to be concentrating on being a farmer with a proper organisation to look after him.
The Parliamentary Secretary was a little critical of the organ of the National Farmers' Union because certain quotations from that body did not suit his purpose. May I say this, although I am not one who is always in favour of Bedford Square, that had the National Farmers' Union not rushed in very gallantly and courageously with the Fat-stock Marketing Corporation after the Government failed to produce anything, the chaos would have been far worse than it is. Since Sir James Turner had to take the tremendous responsibility of that without any help or encouragement at all from the Government, I think it is stretching things a little far for the Government to claim the credit when Sir James Turner managed to rescue a little security from the chaos.
May I finish this unwonted speech of mine by referring to—[HON. MEMBERS: "Oh."] It was forced upon me, but on the whole I am now feeling rather at home. May I follow up what I have been saying by remarking on the Parliamentary Secretary's general defence of the scheme, which came very much at the end of his speech? What he said—and this I think is the Conservative Party's apologia for this incredibly costly, wasteful, uncontrollable and uncontrolled system—was that the housewife has benefited because she has had freedom of choice. There is, of course, no reason to assume that freedom of choice in a period of larger supplies needs this kind of milking by the merchants and the importers.
We are now 10 years after the war. The animals that were being bred for subsequent breeding when my right hon. Friend the Member for Don Valley was, in office are, of course, inflating the herds which the right hon. Gentleman has been able to call upon to supply meat during this period. Other countries that were not producing such quantities immediately 1818 after the war are producing. So quite a large part of his argument is "phoney," but nothing could be more "phoney" than the evidence of the hon. Gentleman. What did he say? He said, "I admit that prices have risen under this greater freedom of choice." It is true that home-killed prime sirloin has gone up to between 4s. and 4s. 6d. a lb.; indeed, I can show him shops in Streatham, Brixton and other parts of South London where recently it has gone up higher than that. "But," he said, "the housewife has freedom of choice. She can buy imported breast of lamb for between 9d. and 1s. 3d. a lb." Is this Tory freedom? Is this Tory freedom brought home for the housewife? A choice between home-killed sirloin which the housewife cannot afford and mucky imported breast of lamb that she can? This may distinguish us from most hon. Gentlemen opposite and I can claim no credit for it because it happens to be part of the fortunes of life, but some of us sitting on these benches, of whom I am certainly one, have graduated from imported breast of lamb, which was all that we could afford. Under the free market provided by previous Conservative Governments, when I was a boy in South London we never regarded it as effective freedom of choice that there were in some shops prime cuts of meat that we could never have and in other shops imported breast of lamb which was the one thing we did not want. It looks horrible and very often is, and anyway it is a most expensive buy.
I happen to know the Joint Parliamentary Secretary's wife; and I am on much better terms with the Parliamentary Secretary outside the House than would sometimes appear possible in the House. I suggest to the hon. Gentleman that he tell his wife—if he will not tell her, I will—that she should buy imported breast of lamb, cook it and serve it up to him. I would like to be present, not only because I would like to be there to see his face, but because I would like the hon. Gentleman to see just how expensive a purchase it is because of the quantity of bone to meat. I only hope he eats it in a Henry VIII fashion, because otherwise he will find it difficult to get any meat off it at all.
This is no freedom of choice, and when my right hon. Friend said to the Joint Parliamentary Secretary. "Of 1819 course, this is the same as saying that the Ritz Hotel is free for all if only people can afford to use it," the hon. Gentleman affected to regard that as an irrelevant comparison; but it was absolutely relevant. We are all free under Tory freedom to do all sorts of lovely things; the only problem is that most of the community under Tory freedom are not able to afford them, and therefore the choice is wholly illusory.
§ Dr. Barnett Stross (Stoke-on-Trent, Central)
Will my right hon. Friend allow me to interrupt? The words "breast of lamb" brought me out of my somnolence. It is a fact that not only the poor eat it but that it is served up to us sometimes in the House of Commons disguised under a French name.
§ Mr. Brown
I do not know what to say to that interruption, except that I would never eat it under any name or in any form, and as an example of Tory freedom it is no better for being dignified with a French name than when it goes under its straightforward English name. The same argument applies to belly of pork. What is the use of saying that belly of pork on the one side and home-killed sirloin of beef on the other presents the British housewife with effective freedom of choice? There is no freedom of choice in this for many people. That is what the Government do not realise.
This system does not work, it is extravagant, it is fantastically costly, it is uncertain in that nobody knows what the end of it will be in terms of money. It does not enable the farmer to plan his production. It does not ensure that the country uses its resources to grow food here instead of buying what it cannot afford to buy abroad. It ends up with a system in which the housewife pays more for the final product in order that the wealthy may then have all the sirloin of beef on the assumption that the poor stick to imported breast of mutton.
I hope the Joint Parliamentary Secretary now feels that his exercise in getting me to my feet was worth his while. I hope he feels that it has helped the progress of the debate. I, personally, have been delighted to take part in the debate. Had I known that the hon. Gentleman was so anxious for me to do so, I assure him that I would have done so before 1820 he wound up the debate. All he has to do in the future, if he wishes me to speak, is to let me know that he will make an attack on me. I assure him that I will get up early in the debate instead of leaving it until the end.
Hon. Gentlemen opposite won the recent Election and are therefore entitled to be as silly and as misguided as they please. It is just worth remembering, however, that for the most part hon. Gentlemen who sit for agricultural constituencies lost part of their majorities in the Election when, on the whole, Conservative majorities rose. On the whole, then, it is a claim which the Joint Parliamentary Secretary ought to make a little less enthusiastically, since he succeeded in the rather unusual distinction this time of losing some part of his majority, although not so much as did his hon. Friend the Member for Leominster. Since, therefore, they won the Election, and since the Tory Party works that way, they are entitled to go on doing so. All I say is that we take no responsibility for this and we believe that our system of arranging guaranteed prices is much better.
I see that the hon. and gallant Gentleman the Member for Isle of Ely has now returned and has been enjoying my last few words. I repeat what I said before he came in, that as I have been deliberately incited by the Joint Parliamentary Secretary to make a speech, I thought it was unfair that the deputy Chief Whip should have severely discouraged the hon. and gallant Gentleman from making his speech. As far as I am concerned, and since the Government are not in a hurry, I hope he will make his speech now.
§ Major H. Legge-Bourke (Isle of Ely)
The right hon. Gentleman knows me well enough by now to realise that nothing a Whip has ever said to me about not talking has made me not do so.
§ Mr. S. N. Evans
Before my right hon. Friend sits down, may I put a point to him? I have listened to his fierce indictment. Am I to vote against this Motion?
§ Mr. Brown
I am delighted to see our coalition re-established. As the Whip of my private coalition, I am delighted to inform my hon. Friend that we regard this matter as entirely the responsibility of Her Majesty's Government. Those whom the gods intend to destroy they first drive mad, so we think that tonight we had better let them go on their way.
§ Mr. Frederick Peart (Workington)
On a point of order, Sir Charles. Do I take it that after a decision has been taken on this Motion, you will take Vote III—Agricultural and Food Services—and that we shall have a separate debate on them?
§ Question put and agreed to.
That a Supplementary sum, not exceeding £9,589,010, be granted to Her Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1956, for the Ministry of Agriculture and Fisheries, the Ministry of Food and the Ministry of Agriculture, Fisheries and Food for grants and subsidies to farmers and others for the encouragement of food production and the improvement of agriculture; and for certain direct subsidy payments and certain trading and other services, including payments and services in implementation of agricultural price guarantees.