§ 9.57 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Scott-Hopkins)
I beg to move,That the Price Stability of Imported Products (Specified Commodities) Order 1964, a draft of which was laid before this House on 15th April, be approved.I apologise to the House if my voice is a little muffled, but unfortunately I have rather a heavy head cold.
I suggest that it would be convenient to the House if we had a single discussion on this Order and on the following Order:That the Price Stability of Imported Products (Minimum Import Price Levels) Order 1964, a draft of which was laid before this House on 15th April, be approved.Both these Orders are made under the powers granted to the three Agricultural Ministers in Section 1 of the Agriculture and Horticulture Act, 1964, which the House passed earlier this year. Section 1 of the Act enables the Ministers to make Orders introducing minimum import price and levy arrangements. The purpose of these arrangements is stated in the opening words of the Section, which says they must be—In the interest of maintaining in the United Kingdom a stable market for agricultural or horticultural produce of any description produced in the United Kingdom".Section 1 of the Act was very thoroughly discussed while the Bill was going through this House, and we made it clear that our purpose in seeking these powers was to enable us to apply minimum import price arrangements to certain cereals and cereal products as part of our new policy for cereals which was announced by my right hon. Friend the Minister of Agriculture in the House on 22nd May last year.
There are three stages in applying the powers in Section 1 of the Act to particular commodities. In the first place, the Ministers must first list—or, to use the word of the Act, "specify"—the commodities to which they wish to be able to apply the minimum import price and levy arrangements. Any orders 342 specifying commodities must be submitted for affirmative resolution by each House of Parliament.
Secondly, the Ministers can then prescribe minimum import price levels for the different specified commodities or sub-divisions of them. These are the two Orders we are now discussing.
Thirdly, they prescribe the detailed arrangements for the charging of levies for the purpose of maintaining or enforcing the prescribed minimum import price levels. This is the third stage, to which we have not yet come.
The first Order—that which lists or specifies commodities—has the effect of defining the field of commodities within which the Ministers are able to apply and operate the minimum import price and levy arrangements. As the House will see, the initial list in the draft Order covers all the main cereals; the only exceptions are those which are of no practical significance, and rice which does not compete with cereals produced in the United Kingdom.
We are also specifying in this Order the cereal flours; the various worked cereals, such as cereal meals, groats, etc.; and the offals or residues from the working of cereals These secondary products have had to be included because otherwise they would have been able to compete with main cereals and so undermine the market for them. On the other hand, we did not want to extend the list of commodities too widely, and so we have included only those secondary products which it was essential to cover for the basic purpose of the minimum import price system—that is, the provision of greater stability on the United Kingdom grain market.
The effect of this Order is, as I have said, to define the field of commodities within which the Ministers are empowered to operate minimum import price and levy arrangements. If, in the light of experience, we find it necessary to add to the list of "specified commodities" in the draft Order, we would have to come back to Parliament with an amending Order for a further affirmative resolution.
The second Order prescribes the precise levels of the minimum import prices for the various "specified commodities" and for the subdivisions of them as defined in the Schedule. As the House 343 will recognise, the minimum import price levels are the crux of any minimum import price arrangements since they determine the extent to which the market for domestic cereals will be protected from the disruptive effects of low-priced imports.
Throughout the discussions on the new arrangements for cereals, we have made it clear that the minimum import prices are not to be applied with the object of creating a restrictive regime which would have the effect of raising the general level of prices in the United Kingdom. The aim is simply to cut out the unrealistically low-priced imports which have from time to time come to the United Kingdom as the only large and completely open import market for cereals. So long as we continue to maintain a completely open door to imports whatever their price, our market must always be liable to disruption from supplies which are seeking a market at any price, with the consequent effects on the returns to our cereal growers and on the cost to the Exchequer of the deficiency payments on cereals.
It is clear that we cannot continue to benefit from the luxury of bargain basement prices, while at the same time maintaining our system of support based on deficiency payments.
We have, therefore, pitched the level of the minimum import prices towards the lower end of the range within which import prices have fluctuated, but at levels which cut out the troughs of unrealistically low prices.
The relationship between the minimum import prices for the main cereals has been determined in the light of a number of factors—as, for example, differences in quality or in feeding value; market differentials; the degree to which the products concerned are competitive with home grown grain and so on.
Each of the main cereals—with the exception of wheat—is subject to a single minimum import price. Wheat and wheat flour, however, have been subdivided for the purpose of the minimum import price arrangements. Different minimum import prices are being applied to the different subdivisions, which take account of the wider quality differentials which exist between the different varieties of these commodities.
344 These two Orders cover, as I have said, the first two of the three stages which I mentioned a moment ago.
The third stage will be dealt with by a further Order, which will prescribe the types of levies and the arrangements for charging them when it is necessary to do so in order to maintain the minimum import price levels. However, as we made very clear during the debates on the Bill, it is our policy to proceed where possible by agreement with our overseas suppliers. Not only is this desirable on general grounds, but it is necessary because of our treaty obligations to a number of these countries.
Agreements have already been concluded between the United Kingdom Government, on the one hand, and the Governments of Australia, Canada, the U.S.A. and Argentina—which between them supply some 80–85 per cent. of our cereals imports—on the other. The texts of these agreements was contained in a White Paper laid before the House on 15th April. Under their terms, the exporting countries concerned have undertaken to co-operate in the operation and observance of the minimum import prices laid down in this Order. If, however, it should happen that the prices at which any "specified commodity" is available for import into the United Kingdom from an individual co-operating country fall below the related minimum import price level, we shall retain the right to impose levies on these imports in order to maintain the minimum import price. We expect to conclude similar agreements with a number of our other overseas suppliers.
The provisions in the Order prescribing the levy arrangements—which, as I have said, will be laid before the House at a later date—will be drafted in terms which reflect the agreements concluded with our overseas suppliers. In particular, provision will be made for a general levy to be charged, when necessary, on imports from non-co-operating sources. If, on the other hand, an individual cooperating country falls down on its undertaking to observe our minimum import price levels, then its exports to us would be subject to a special country levy, and not to the general levy arrangements.
The country levy would be determined by reference to the difference 345 between the minimum import price level for the commodity concerned and the price at which supplies of that commodity were available for import into the United Kingdom from that individual exporting country. The general levy, on the other hand, would be determined by reference to the difference between the minimum import price and the prices at which supplies were available for import into the United Kingdom on the world market generally. All these detailed provisions, together with the provisions for distinguishing between imports from co-operating countries and other imports, will, as I have said, be covered in the subsequent Order which will be laid before the House in due course.
I should also explain to the House that special arrangements are to apply to Canadian and Australian wheat flour, the details of which were published yesterday. The legislative cover for these arrangements will also form part of this further Order which I have referred to. It was not found possible to fit these flours into the general minimum import price arrangements in such a way as to take account of the special circumstances of the trade, and to maintain the preferences which both Canada and Australia enjoy on wheat flour. These special arrangements are designed to take account of these special circumstances and at the same time to safeguard our minimum import price system and to prevent the United Kingdom flour market from being undermined.
The arrangements include a related levy on Canadian and Australian wheat where there is a country levy on the corresponding wheat, together with a number of assurances and other arrangements which, in our view, will effectively protect our market. The whole of the wheat flour arrangements will be kept under review by a Supervisory Flour Committee comprising representatives of our Government and the Governments of Canada, Australia and the United States. The job of this Committee will be to iron out any problems which may arise in the operation of the arrangements. It will hold its first meeting in London during the first week of June.
The House will have noted that the minimum import price levels Order will 346 come into effect on a date or dates to be specified by the Order. It would clearly have been impossible to bring into effect the minimum import price levels before the Order prescribing the levy arrangements for enforcing these levels had been made. We thought it right, however, both in order to allow Parliament to approve them in advance and to enable the trade to know where they stand, to bring the minimum import price, levels before Parliament at the same time as the Order specifying the commodities concerned. There will be special arrangements to cover grain which is contracted for between the publication of the minimum import prices and the appointed day but which is not actually imported until after the appointed day.
To sum up, the two Orders which are before the House, together with the further Order to which I have referred, implement that part of the Government's new arrangements for cereals which relates to the control of import prices. The new arrangements relating to domestic production have been outlined in this year's Annual Review White Paper. These modifications in our existing system for cereals are designed to ensure greater stability in our cereals market and, by so doing, to contain the cost to the Exchequer of the deficiency payments and, most important of all, safeguard our present system of support. I therefore commend these Orders to the House for approval.
§ 10.11 p.m.
§ Mr. Frederick Peart (Workington)
As the House is aware, we did not oppose the Bill which is now an Act, but we were critical of some of the details of Part I, which creates the scheme which we are now discussing. We have taken the view throughout that the Orders which would flow from legislation and from the many suggestions we put to the House both in general debate and in Committee would have to be carefully examined. The Government tonight are presenting these two Orders but, as the Joint Parliamentary Secretary has said, there will be a third Order.
I should be out of order if I went into this matter in great detail. The hon. Gentleman has enabled me to do this partly, and the time will certainly 347 come when we shall examine carefully the type of administrative machinery which will be created by the third Order. In one sense, therefore, we are in some difficulty, but I presume that I can reply to the points made by the hon. Gentleman. It is true, as he said, that the reasons for the Orders were outlined long before the legislation was ever presented. Indeed, we once debated the Government's general policy on import control and standard quantities. As the hon. Gentleman has rightly said, the two cannot be separated. If we are discussing these Orders and their effect, not only on import policy but on home production, we must judge them in the context of main Government policy.
It is true that standard quantities for cereals were laid down in the recent Annual Price Review. I will not go into the details. We have the figures which have some bearing on the policy that is being put forward this evening. Although we are discussing import control and the minimum levy and minimum import price system, we must always discuss them in relation to the standard quantity principle which has been laid down by the Government for a very long time.
The Parliamentary Secretary has mentioned the various negotiations. We have not had time to discuss them in detail though the hon. Gentleman has given us details tonight of the conclusions reached with Canada, Australia and the Argentine. We do not disagree with this. Obviously, if we are to have an import policy, it is better that we should have sensible voluntary agreements with our traditional suppliers. On the other hand, although agreement can be reached, difficulties may arise. We have had a recent experience with meat. Although we have voluntary agreements with our traditional suppliers, in order to re-emphasise the need for phasing meat imports with home production, there have been difficulties. For various reasons, mainly climatic, perhaps, the Argentine is not supplying the quantities which we expected. I hope that, although we have voluntary arrangements for cereals confirmed by treaty with Canada, the Argentine and Australia, there will be no breakdowns and no serious shortages which could affect the market here and our own producers. Can we have assurances?
348 The Orders confirm Section 1 of the Act. The White Paper deals with international arrangements, and there have been references to specific arrangements which have had to be concluded by the Government with Canada and Australia regarding wheat flour. Again, I should be out of order if I discussed these in detail. There is to be a supervisory committee. I trust it will work. We cannot press the point too much now. Perhaps, when we have the Order in detail, we shall be able to pursue the argument. Inevitably, out of the arrangements which are being made there will have to come some permanent machinery. I am not sure that the Government know where they are going as regards the creation of suitable permanent machinery to produce the stability which we require.
How is this system to be administered? The Minister has spoken of the two types of levy. In Committee on the Bill, we chided the Government on their uncertainty. On Second Reading, when we discussed the principle, the Minister was not aware of the point. He was in the dark and, when hon. Members pressed him, it was clear that he did not know. Only after hon. Members had pressed the Parliamentary Secretary over and over again in Standing Committee were we able to get some information. The hon. Gentleman did very well. He was an improvement on his Minister, and he was able to explain in detail how the levy would work for non-co-operating countries as against those countries which had agreed to conclude treaty obligations with us.
But even now there is uncertainty about the levy. I have here the Ministry's Press announcement which deals with the special arrangements for imports of Canadian and Australian flours which have been referred to by the Minister. In this Press statement there is reference to a related levy, but on the back page, in the appendix, the reference throughout regarding the special arrangement for Australian flour is to a derived levy to be applied to imports of Australian wheat flour. The derived rate of levy per ton of flour will be 1.4 times the levy per ton of wheat. Here, therefore, we have other terminology introduced, so it will not be easy even for those who have to administer the scheme to have any certainty.
349 The Minister has tried to give us some information. These Orders are needed if we accept the Act, but how is the scheme to be administered? Will it be done through the Civil Service or shall we have some permanent machinery outside the Civil Service? Over and over again, many people connected with the trade—merchants, those who are also in the import trade as well as those who deal in home production and the marketing of cereal products—have come to the conclusion that there must be some organised marketing and that this should take place outside the Ministry. The Government will have to come to the House with something much more detailed concerning the administration of these orders and the levies and minimum prices laid down.
I wish to quote what the Minister said on the Second Reading of the Bill on 22nd May, 1963. He stated:The detailed arrangements for the different commodities which we would aim to agree with our overseas suppliers might well need to induce a body to keep under review the level of supplies and also the phasing of those supplies in our markets in the light of changes in the pattern here and overseas and other factors, such as the opening up of new markets."—[OFFICIAL REPORT, 22nd May, 1963; Vol. 678, c. 449.]In principle, the Minister had to accept, because of the pressure of events, the need for some sort of machinery to phase our imports.
These Orders are very specific. They confirm the Government's policy, and give details of how it is to be worked out for various cereal products. When will the Government do something about this? Is it just a pious hope? Is this to be left to an enlarged department of the Ministry of Agriculture? Is the Civil Service, which is excellent in its way—I pay tribute to the men who deal with this matter—to be enlarged? Is this hard-working group of men who have helped to frame the policy to have additional staff? How will it operate? This will be a major job in the Ministry.
Those in the business, the practical businessmen, take a contrary view to the Government, as the Minister knows. I have here a memorandum which has been given to most hon. Members—[Interruption.]—I do not know whether the hon. Member wishes to make a speech. I will give way if he wishes to interrupt. I am sure that he and other 350 Tory Members have read the memorandum from the National Association of Corn and Agricultural Merchants Ltd. on the marketing of cereals. It has a bearing on these Orders. The Association makes three main points. The first isa possible increase, depending on the level of minimum import prices imposed, in feed and food prices.That is the effect of Government policy.Livestock and livestock products provide over 70 pet cent. of farmers' income and increases in feed prices could react on production.The Minister said this evening that the Government have set the prices in the lower band; they are dealing with prices which are of a low order. Therefore, they do not contemplate—I assume that this is how the Minister is thinking—an increase in cereal prices to the farmer. They are merely creating a bottom in the market. This is the Minister's argument. However, the trade is very worried about this. The first main point in the memorandum to which I have just referred is that there could be a possible increase which could have a serious effect on farmers' incomes.
In preparing these Orders, did the Ministry consult the corn merchants and the trade? Has it consulted all those concerned?
§ Mr. Peart
We have had these assurances before. The trade takes a different view from the Government. It may be that the trade has been consulted. But it may have been ignored. Often it is ignored, because the Government, in their decline, have adopted a measure of arrogance. This has happened time and again.
The second point made by the corn merchants isthat to traders it seems illogical to ask exporting nations to send grain here at agreed price; which may be above the price at which they are prepared to sell, when world grain prices are low".My hon. Friend the Member for Enfield, East (Mr. Mackie) made this point over and over again in Standing Committee. Is this so? I should like to know the views of hon. Members opposite who claim to be business men. Do they accept the views of business men in the trade who have worries about this matter? I hope that they and the Minister will give us their views.
351 Thirdly, the National Association of Corn and Agricultural Merchants Ltd. statesthat the new framework of support through restrictions on import prices will not, by itself, guarantee a minimum market price for home grown cereals. If the home market is under severe pressure at any time in the season from domestic supplies, prices of home grown grain could fall below their value in relation to imported supplies".The Association goes on to say that itfeels that early action should be taken to help in the more orderly marketing of the home grain crop, and puts forward the following proposalsincluding a non-trading cereals commission which would do the job which is to be done by the Government under the Orders.
That is a serious criticism of the Government, who have been extremely vague about their policy. If we are to approve these Orders, we must know how they are to be implemented. That, as the Minister said of one of the Orders, is the crux of Government policy. These two Orders cannot be separated from a third Order, which will come in due course and which will be debated, to provide what the Minister called the necessary arrangements and the type of machinery which is required.
Is it not time that the Government made up their mind? When will they do so? [Interruption.] The hon. Member for Tiverton (Mr. Maxwell-Hyslop) keeps muttering to himself. I hope that he will get up and make a sensible contribution to the debate. It is right that hon. Members, on both sides, who represent agricultural constituencies should give us their views about this import policy and how it can be fitted into home production.
The farming community, through its leaders, has conceded the argument about standard quantities. I never regarded the argument as a new one, because Part I of the 1947 Act laid down the principle of standard quantities, even though hon. Members opposite voted against it. Now they have had to accept it. Part I of the 1947 Act deals withsuch part of the nation's food and other agricultural produce as in the national interest it is desirable to produce in the United Kingdom".352 Now we are changing the Act and adding such part of the nation's food as we import from abroad. I do not disagree with this principle, because we on this side have often said that there must be planning. I want good planning, however. I do not want the chaos, uncertainty, delays and evasions that we have had in agricultural policy for some time.
§ Mr. Peart
No. I have described the Minister and his Joint Parliamentary Secretary as crypto-Socialists in many ways. The backwoodsmen behind them may take a contrary view. They are waiting to criticise the planning arrangements.
We will watch carefully the machinery which is proposed. The trade, which is concerned with imported cereals, has concluded that there must be orderly marketing and machinery outside the Government to do the job. We have come to this conclusion in principle. I am not arguing our policy tonight. We shall argue it on the hustings. We are dealing with the policy of the Government, who are still out of touch with those in the industry. Before we finally approve these Orders we should like to know more about the administrative machinery.
There are one or two hon. Members opposite who are sensible and sided with us in Committee on the Bill when we sought to put the case; we were even supported in a Division. I am sorry that the Liberal Party abstained on one major question. However, there are some people in agriculture who are worried about this, and therefore I plead with the Government to be more forthcoming, more specific. We shall await with interest their detailed proposals when a third Order is presented.
§ 10.30 p.m.
§ Mr. John Mackie (Enfield, East)
The Joint Parliamentary Secretary made it quite plain that the main object of these Orders is to provide stability, and I do not think anybody would disagree that we want stability in our grain markets. What we on this side do not agree, and what some hon. Members opposite, even though they are not very vocal about 353 it, are not happy about, is that this is the right way to get stability.
As my hon. Friend the Member for Workington (Mr. Peart) said, what we cannot ignore is that the people in the corn trade have said that this is undoubtedly going to cost us dearer food. One thing which should be made quite plain is that it will take something off the taxpayer and put it on the consumer. It will save the Minister from having to come to that Box and ask for higher subsidies. That is all that it is going to do: it will give stability to the market, give us dearer food, and save the Minister coming to ask for subsidies.
One thing I am absolutely certain about is that the levy, which caused such a furore when the matter was discussed in Committee, will be non-existent, judged by the amount collected. I see the Financial Secretary to the Treasury here. I hope he has not come to hear how much will be got out of the levy. He may as well go away home now, because I am certain there will be no levy collected, if we are told that the price to be paid is £20 a ton for barley, or whatever it is, to send to the Treasury. So the hon. Gentleman may as well go away home.
The Joint Parliamentary Secretary talked about special arrangements for forward contracts. There is a considable number of forward contracts made in the futures market. I just wonder what these special arrangements are. If there is a considerable difference, who will pay it? The House would be interested to know that.
I think all this shows us that the countries which are selling us this grain are delighted at the speed with which the agreements have been made on this. I am not experienced enough a Member of the House to know whether the Minister has the right or not to seek to make agreements under an Act before it has received the Royal Assent. The Royal Assent to this one was only ten or twelve days ago. If these agreements were made in that time they were made mighty quickly, and I suspect that the Minister was doing something about them before the Bill became law, and I suspect that the agreeing countries have been delighted to make them because 354 they suspect that grain will fall below the price mentioned in the Orders—which is what we on this side have repeatedly predicted.
I do not want to delay the House but just to emphasise what my hon. Friend said about the people in the corn trade. They emphasise that if the price goes up to the consumer, particular feed grain—and 70 per cent. or more of agricultural produce here is from livestock and livestock products—it will put their costs up considerably.
What we have emphasised time and again is the illogicality of asking people to charge a price below the fixed price we are prepared to pay. They will be delighted to charge the maximum fixed price, as our merchants have also emphasised.
Lastly, and most important, it has been pointed out time and again that it is not prices which depress the market but supplies. If we get the pressure of too much supply of grain we get a depressed market for prices. This scheme will not, therefore, have the effect that it is supposed to have.
We are all agreed on the necessity for stability, but we are worried about the way the Government are trying to achieve it. In Committee hon. Members opposite, who are not saying much tonight, were as worried as we were about fixing prices. They abstained from voting and the Government were defeated. All hon. Members on that Committee understood the importance of the question. But on the Floor of the House the Government put the Whips on and overturned the Committee's decision, which had been based on our understanding of the issue.
That is not the way in which things should be handled and I was worried about it. It is pointless to pursue this matter further now but, as my hon. Friend the Member for Workington said, we must watch this very closely.
§ 10.37 p.m.
§ Mr. Harold Davies (Leek)
Hon. Members on both sides of the House know that we had first-class discussions on this in Committee on the Bill and that we all tried to understand clearly what the Minister was trying to do. To be fair to the Minister, I would point out that we are entering an unknown 355 area where there will have to be an empirical or pragmatic approach. The Government will have to create a new type of machinery.
My hon. Friend the Member for Enfield, East (Mr. Mackie) made constructive and knowledgeable criticisms of this scheme at the time of our discussions upstairs, and I remember him asking a question which we discussed and which I hope the Joint Parliamentary Secretary will answer tonight, especially since we have this important list of minimum import price levels per ton, with barley at £20 a ton.
The question was what would happen if we paid a levy and then started to export barley product ourselves. Would our merchants be able to claim the levy back on that? I recall the position in the coal mining industry in 1947. We were then very short of coal ourselves but had to maintain certain overseas markets.
§ Mr. Mackie
We had this situation in 1961 when we were importing barley in the West and exporting in the East.
§ Mr. Davies
That has happened with a great many commodities and, therefore, the question is not as strange as it may seem at first sight.
What kind of machinery is being drawn up? With the third Order, we should go into this with more information from the Ministry. It would be unfair to delay the House now, because there is little I can add to the argument except to say that the question I have posed deserves an answer and to point out that it originally came from my hon. Friend the Member for Enfield, East and not from me.
§ 10.40 p.m.
§ Mr. Emlyn Hooson (Montgomery)
The Parliamentary Secretary has made it clear this evening, as the Minister did on Second Reading and in Committee, that the purpose of this elaborate scheme is to contain the cost to the Exchequer of the present support system for grains. The hon. Member for Workington (Mr. Peart) was not quite right in describing this as a levy system with a minimum import price system in addition. It is essentially a minimum price import system which has been used with the 356 levy as an additional safeguard. I made it clear earlier that we would have preferred to see a levy system, because it is clear that the beneficiaries from our minimum import price system are other countries, whereas if a levy system had been used the beneficiaries would have been in this country.
Is not the Parliamentary Secretary being far too sanguine as to the possible effect on savings to the Exchequer? For example, he pointed out that the prices fixed are near the lower level of prices, very close to current world prices for these commodities. An elaborate system of administration will have to be set up, and I cannot see that it will afford a great deal of protection to the home market when we have a glut. Minimum import prices by themselves are not sufficient to protect the home market; something more is needed. Perhaps the Government have this in mind. A system for the orderly marketing of grains during glut and harvest time is absolutely necessary and the merchants' organisations are surely right to suggest that this mechanism by itself will not protect the home market.
Letters have been disclosed formulating the basis of the agreement in the White Paper between ourselves, the United States, the Argentine, Canada and Australia, but there are no letters, for example, between ourselves and the E.E.C. countries. Has there been an attempt to get the E.E.C. countries to agree to this? I have particularly in mind that at the moment they are re-exporting maize meal here with a drawback on the levy paid in the E.E.C. countries; that is, they are recovering the levies which they have paid on their own importation and are re-exporting here at slightly below world prices. Has there been an attempt to reach agreement with the E.E.C. countries? Have we failed to reach agreement with them, and is it envisaged that we shall use the levy with respect to re-exportations from those countries?
Lastly, I cannot understand why in the Schedule we have to have a minimum import price, for example, for cereal flour in the C category—containing more than 12 per cent. by weight of protein at the prescribed standard moisture content357 with the minimum price fixed at £40 per ton. The Parliamentary Secretary said that a new agreement was to be announced with Canada and Australia, and presumably the majority of this wheat is Manitoba No. 4 wheat which comes from Canada, with some possibly from the United States.
This flour does not compete with flour on the home market. We cannot produce wheat of this standard in this country and I would not have thought that this provision was necessary. It appears to put a floor in the market for the flour millers. There is already very little competition among the flour millers in this country and, if we are to have this minimum import price fixed for the importation of flour for bread at this high quality, there will be virtually an end to any competition among the flour millers in respect of this commodity. I should like some elucidation about why it is thought necessary to have this minimum import price for this commodity.
§ 10.44 p.m.
§ Mr. Timothy Kitson (Richmond, Yorks)
What does the Parliamentary Secretary consider will be the price ex-farm for barley this season? I disagree with the hon. Member for Workington (Mr. Peart) who appeared to plead the case for the corn merchants in that these levies would keep up prices.
Too often we have been faced with the difficulty of the bottom being knocked out of the market. I was surprised to find that the hon. Member for Enfield, East (Mr. Mackie) was not happy about removing this burden from the taxpayer and getting the agricultural industry into a more healthy condition.
It is a little strange to follow the hon. and learned Member for Montgomery (Mr. Hooson). The last time that the Liberal Party was here on an occasion like this was when we were discussing levies on the import of lettuces. I remember that occasion very well. They were here in force and divided the House. It seems as though they are changing their minds a little, and that is very encouraging.
I hope that my hon. Friend will be able to say what he imagines the price of barley will be ex-farm in this country.
§ Mr. Mackie
I did not say whether it was a good thing or a bad thing to 358 transfer the burden from the taxpayer to the consumer. I said that it would not save any money.
§ Mr. Kitson
I am even more surprised to hear that, because the hon. Gentleman is an agriculturalist and he has often talked about stability in agricultural prices. I am sure he knows that one of the things that was worrying the agricultural community was seeing the subsidy bill running at about £360 million. That is the point that I was making, and I am glad that the hon. Gentleman has followed it up.
I should like to know what my hon. Friend thinks about this, because it seems to me that with imported barley dried down to 14 per cent., when most of our barley is sold at 16 per cent., the price will be rather lower than some of us hoped for, and I disagree with the hon. Member for Workington when he says that the price would have been a little higher rather than a little lower.
§ Mr. Scott-Hopkins
With the permission of the House, I should like to reply to the points which have been raised.
These are two of the most important Orders that have come before us for a long time. They make radical changes in our system for dealing with cereals.
I deal, first, with the point made by the hon. Member for Enfield, East (Mr. Mackie), which he repeated several times. He said that the minimum price Order would make the cost of cereals for animal consumption dearer to the purchaser, and presumably he was relating his remarks to cereals for human consumption, too. I do not think that is true. The hon. Gentleman will note that present price levels are much higher than those specified in the Order. Indeed, over the past years they have been generally higher than those in the Order.
The purpose of this Order is to cut out the unrealistically low prices which occur from time to time and cause damage to the market. Its purpose is not so much to contain the cost to the Exchequer as to give stability to the market and to enable our cereal growers to get the benefit of orderly marketing. The prices in the Order are 359 on the low side, and they will not raise the cost to the consumer. The present levels of prices are well and truly above those in the Order.
§ Mr. Mackie
I cannot follow the argument that if the price of something is raised the cost of it is not raised, too.
§ Mr. Scott-Hopkins
Perhaps the hon. Gentleman will allow me to develop the point I was making. In recent years the general level of prices has been well above the minimum prices specified in this Order. I expect this Order, which lays down minimum import prices for the specified commodities, and the subdivisions of those commodities, to remain in force during the coming crop year. At the end of that time we shall nave to review it in the light of the experience and knowledge that we have gained to see whether the prices ought to be changed—either raised or lowered, depending on general price levels in the meantime. Thus the minimum prices specified in this Order will not have the effect of increasing the general level of the cost to the consumer of cereals, cereal meals, or cereal flours.
The hon. Member for Enfield, East chided me for the speed at which we had concluded agreements with the cooperating countries—Australia, Argentina, America and Canada. I am surprised he should chide us on this. Usually hon. Members opposite chide up because we take too long in their view to bring in certain measures. I thought that for once in his life he would be congratulating the Government on speedy action in implementing what he knows in his heart of hearts to be the right policy in this field. This has taken a great deal of very hard work and negotiation. I am delighted to see these agreements concluded as quickly as they have been. I am sure that he does not want to persist in his sedentary interruptions, because he knows full well how fast we act in matters of importance.
The hon. Member also referred to the special arrangements for forward contracts. I do not think he wants me to go over all this ground again. This point was discussed extensively when the parent Act was passing through 360 Parliament and we went over such matters as how a maximum forward rate of levy will be quoted to the importer when he registers a contract and how the importer will benefit from this maximum rate when he comes to import the grain. Depending on the actual rate of levy at the time, he may qualify for a rebate. If the hon. Member looks up the HANSARD of the Committee stage, he will find all the information on that point there.
That also applies to the point raised by the hon. Member for Leek (Mr. Harold Davies) about the re-export of barley, wheat, or whatever it may be. I agree that any cereal or cereal product could be re-exported after a levy had been paid on it. Section 1(3) of the parent Act would permit us to provide for a repayment of the levy. If he looks back again to the time when the Act was going through the House in Committee, he will see that I explained it to him then.
The hon. and learned Member for Montgomery (Mr. Hooson) asked about the minimum price of £40 for high-protein wheat flour. I am sure he knows that the whole of the flour market is inter-related. If we left out one particular type of flour, even though it did not necessarily compete directly with other types, we might endanger the price stability of all the other related types. Indeed, all cereal prices are related to each other; that is how this particular trade works. If we left out one product, we might upset the balance of the whole; so we must cover the whole range.
§ Mr. Hooson
Does the Parliamentary Secretary not agree that this particular grain of wheat is the basis of most of the bread in this country and that he is really putting a floor on that market?
§ Mr. Scott-Hopkins
At the moment, this flour forms part of the grist which is used for bread in this country. There are other constituents. Part of the grist is Australian wheat and part is English home-grown soft wheat. There are a great many constituents in the grist. If we upset the balance of prices we might endanger the very principle on which we are aiming at getting stability. We must cover the whole field at once.
361 In the case of this particular flour, the same argument applies. £40 is below the present levels. We are only cutting out the low troughs to which the price of this particular type of flour might fall.
As far as the E.E.C. is concerned, it is not a question of negotiations having failed. We are hopeful that some of the countries which provide the other 15 or 20 per cent. of our supplies can enter into agreements with us. As I told the House earlier, about 80 or 85 per cent. of our present supplies come from the countries with which we have concluded agreements. We hope that other suppliers will be able to enter into agreements with us, and I include the E.E.C. countries in that category. I hope that we shall be able to conclude agreements with them.
But all these negotiations will take time, and if these countries are to conclude agreements with us they will have to give undertakings of the sort contained in the agreements already published in the White Paper. Although we move fast, as the hon. Member for Enfield, East admitted, we cannot do everything at once, although we try to do the impossible sometimes, and even succeed.
My hon. Friend the Member for Richmond, Yorks (Mr. Kitson) asked me to forecast what the ex-farm price of grain will be in the coming year. He knows that I cannot tell him that. I hope that the various arrangements we are making will stabilise the market, but this is something on which he will not expect me to stick my neck out. He knows what trouble I could get into if I chanced a definite answer.
I turn now to the points raised by the hon. Member for Workington. He made considerable play about the machinery of the minimum price system and asked how it would work. He has been asking this for weeks. I am sick of hearing it. He never stops asking it. I have explained it to him many times, and I find it difficult to go on saying the same thing in different ways, so as to hold his attention and that of the House. He knows that the collection of the levy at the port of entry will be carried out by the Customs and Excise authorities. They collect Customs duty on many products, including some cereals, and this will not be a particularly onerous addi- 362 tion to their duties. The schedule to the parent Act adapts the provisions of the Customs legislation for this purpose.
The hon. Member will realise that we could not have brought the third Order before the House—laying down the machinery for the working of the levy—until the Orders that we are now discussing had been laid. In those circumstances I cannot see what substance there is in his chiding me with not having told him how the machinery will work. He knew that I could not do so until these two Orders had been approved.
§ Mr. Scott-Hopkins
It is nobody's fault. As a matter of fact, the hon. Member for Enfield, East chided me for being too quick. I have gone as far as I can in explaining how the general and country levies will work. What is needed for this purpose is information about prices on the cereals markets. We shall also need Information on the prices at which contracts are being concluded. Under the Statistics of Trade Act certain returns are already required, and these statistics will be used.
My right hon. Friend may need several extra people the cereals division of his Ministry to cope with the extra work involved in compiling and evaluating this information, but once the machinery Order has gone through, laying down how the country levy and the general levy will operate, it will simply be a question of getting the information relating to price levels, so that the size of the levy which my right hon. Friend prescribes by Order can be fixed day by day, week by week, or month by month, depending on price movements. I have told the hon. Member all this before. It is nothing new to him. I hope that the House will bear with me for having gone into it yet again.
The hon. Member also referred to my right hon. Friend's statement on 22nd May when he was speaking in a much wider context about the possibility of setting up a body to co-ordinate supplies. In that speech my right hon. Friend was referring to meat as well as cereals. For bacon there is already a consultative council, and, as we have just announced, there will be a committee with trade advisers to supervise 363 the working of the special arrangements for Canadian and Australian flour. The present two Orders are in line with what my right hon. Friend said.
The hon. Member seemed to be a little confused when talking about a breakdown of arrangements. He was talking about meat products and a breakdown of supplies, and he asked what would happen if there were a breakdown in the supply of cereals because of these Orders. He asked whether I could give an assurance that there would be no breakdown. These Orders relate only to minimum prices and not to quantities. If there were a breakdown of supplies it would be because of bad harvests or bad crops, in this country or abroad, affecting the quantities available; it would have nothing to do with these Orders.
§ Mr. Scott-Hopkins
There has been no breakdown in Government policy over meat. There is no question of blame attaching to anyone. The breakdown will come if ever the country is so unfortunate as to have an Administration by hon. Members opposite trying to operate these Orders.
§ Mr. Speaker
Order. These exchanges with one hon. Member seated and the other standing do not facilitate the passage of business.
§ Mr. Scott-Hopkins
There are only one or two other remarks to which I wish to refer. The hon. Member asked whether we had consulted the National Association of Corn and Agricultural Merchants Ltd. We have consulted them 364 although we have not perhaps carried them with us on every single point contained in these Orders. When the hon. Member quoted from the Association's paper I was not sure whether he was putting forward his own ideas or the Association's ideas and, if the latter, whether he agreed with them. I thought that he was putting the case of the corn merchants rather than his own case.
He asked what would happen if the market price fell below the minimum import price. That can easily happen, but it would not be because of imports from overseas. The reason would be what happened on the home market.
I hope that in these few points which I have been able to answer I have shown the House that these Orders are of extreme importance.
§ 11.3 p.m.
§ Mr. William Ross (Kilmarnock)
There is one point which I wish to make and that is that there is no date in these Orders.
These are draft Orders. They come before the House in this form to allow us to say what we feel about them and to enable the Government to have an opportunity for second thoughts. This also enables domestic interests to make their views known. The hon. Member's remarks in relation to what was said by my hon. Friend the Member for Workington (Mr. Peart) about the domestic concern were quite out of keeping with the nature of the Orders.
The hon. Member said that the Orders did not include a date for a fairly obvious reason, but what we are discussing is incomplete, and an important part of the discussion has been out of order because we have been referring to Orders which are not yet laid. The person who introduced the Order is the Minister, and he caught my eye on more than one occasion for he knew quite well what was in my thoughts—which was that he was chancing his arm in relation to his prepared brief in connection with matters of the rules of order. When will the Minister be in a position to put a date to these Orders? I understand that the date will be given only when the right hon. Gentleman has made up his mind about the next stage, which is the important stage.
365 What types of levy will be prescribed and how will they be calculated? What machinery will be used to put them into effect? These questions must be answered, because it is after this point, when decisions have been made, that the right hon. Gentleman will not have to bother with Parliament, for the fourth stage Orders will be the actual levies and, by the very nature of things, they may require to be amended or altered to meet prevailing circumstances.
Since hon. Members have been so concerned about this, it is obviously pointless of the Joint Parliamentary Secretary to say that there is no question of increased prices. The whole idea, the reason for the presence of Treasury representatives and the basis of these Orders is to safeguard the Revenue in certain cases and to ensure that we do not have a run on the Treasury for support prices in, say, cases of surpluses driving down the home market. In such circumstances there must be increased prices, particularly since stability often means higher prices.
§ Mr. Scott-Hopkins
By leave of the House, I can answer the hon. Member's question about the date by telling him that we expect the Orders to come into effect by 1st July, as the latest working date. This is the beginning of the cereal year. If it can be done earlier—perhaps between 1st June and 1st July—my right hon. Friend will implement them sooner.
His question about the fourth stage can be answered simply by pointing out that the fourth stage is only implementing the machinery of the third stage, which will be contained in an Order to be laid before the House shortly.
§ Question put and agreed to.
That the Price Stability of Imported Products (Specified Commodities) Order, 1964, a draft of which was laid before this House on 15th April, be approved.
§ Price Stability of Imported Products (Minimum Import Price Levels) Order 1964 [draft laid before the House, 15th April], approved—[Mr. Scott-Hopkins.]