MR. Elliot's Statement.

Oral Answers to Questions — Government Proposals. – in the House of Commons on 30th July 1935.

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Photo of Mr Edward Ruggles-Brise Mr Edward Ruggles-Brise , Maldon

34.

asked the Minister of Agriculture whether he is now in a position to announce the decision of the Government as to the future of the sugar-beet industry?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

Yes, Sir. I hope to make a statement, by leave of the House, at the end of Questions.

Later:

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

The Government have given careful consideration to the reports of the Committee presided over by Mr. Wilfrid Greene, K.C. These reports have been of the greatest assistance to them in the determination of their sugar policy. The conclusions which the Government have reached, and the financial and administrative arrangements which will be necessary to give effect to them, are as follow:

It is desirable, on agricultural grounds, to continue to assist the beet sugar industry without any limitation of the period during which assisance may be given. It is necessary, however, to set a limit to the volume of directly assisted production. The limit will be the equivalent of 560,000 tons of white sugar, which is the estimated produce of the 1935 crop. It is proposed to appoint an independent Sugar Commission to be entrusted with such powers in relation to the sugar-beet industry as may be necessary for the carrying out of the Government's policy. It has been decided to adopt the recommendation of the Greene Committee that the beet sugar factory companies should be amalgamated in a single Corporation.

The Beet Sugar Factories Committee, representing all the beet sugar companies, have informed the Government that they are prepared to recommend in principle to the Boards of the respective companies that an amalgamation scheme should be prepared and submitted as soon as possible to the Sugar Commission, and, if approved by them, to the Government. The Factories Committee are of opinion that if the Amalgamated Corporation is to be formed, it should become operative before 1st April, 1936. In order to facilitate procedure, the Government propose to set up an informal tribunal to advise them upon any scheme of amalgamation which the factories may submit for approval.

The financial arrangements which the Government propose are based on the assumption that, as from 1st April, 1936, there will be a transitional period of not more than five years. During this period, assistance will be given upon a diminishing scale based upon certain standard levels for the world price of sugar, the price of beet and other factors, and liable to variation with any variation from those standards. Subsequently, the basic rate of assistance will be subject to review at triennial intervals. The basic rate of assistance for 1936, adjusted for the price of beet to which I shall next refer, will be reduced to 5s. 3d. per cwt. of white sugar. The price to be paid for sugar beet sown in 1936 is to be 35s. and 36s. per ton respectively, delivered to factories that are paying 36s. and 38s. per ton under current contracts. In the case of beet for the Cupar factory, the contract price will be 34s. per ton, payable free on rail as at present. These prices assume a factory output of not more than the equivalent of 560,000 tons of white sugar. The beet price in 1937 and subsequent years, and the terms and conditions of the contract, will be matters for negotiation between the Amalgamated Corporation and the growers and in the event of failure to agree will be referred to the Sugar Commission. The acreage to be contracted for in any year will be subject to a maximum limit to be approved by the Sugar Commission.

For the purpose of their immediate sugar policy, the Government do not propose to make any change in the details of the Customs, Excise or subsidy scales. They have, however, aimed at securing the financial effects, as regards all the interests concerned, which it is reasonable to expect would have followed from the adoption of the Greene Committee's recommendations with regard to the regulation of refined sugar production as between the beet sugar factories and the refineries. The refiners have undertaken to enter into a new agreement with the factories, under which the factories shall be allowed quota rights for the production of white sugar up to a total of 720,000 tons per annum, but during the currency of the agreement the annual white sugar production of the factories will not exceed 500,000 tons. In return, the refiners have agreed to purchase all quota rights offered to them at a stated price.

The Government have also reviewed the international sugar situation. They believe that the various producing countries can only set their sugar industries upon an economic basis by means of an international agreement for the adjustment of supplies to the requirements of the world market. State assistance being diminished as market conditions improve. The Government's domestic policy is in full accordance with this view. They propose to invite the Governments of the sugar exporting Dominions and Colonies to examine with them the possibility of a joint endeavour to reopen international negotiations if it should appear that there is a reasonable prospect of a successful issue thereto.

A White Paper setting out in greater detail the Government's financial and administrative proposals, with an estimate of cost, has been prepared and will, I hope, be available for hon. Members this afternoon.

Photo of Mr Thomas Williams Mr Thomas Williams , Don Valley

While reserving any comments on the general scheme, may I ask whether the right hon. Gentleman can give the House the estimated cost of the first five years, and whether when the amalgamation suggested in the scheme takes place it will be a private one, the factories remaining in private hands, or whether it will be a public service? If the former, will the amalgamated concerns have public utility society conditions imposed upon them?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

It is not possible to give an estimate of the cost for the first five years, because during that period there will be a revision of the terms. As to the second question whether the amalgamated corporation will be publicly or privately owned, it will be owned by the companies, but will be subject to a fairly extensive control of the nature I have sketched in my statement, and which is given in greater detail in the White Paper.

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

Can the right hon. Gentleman say whether the result of the new arrangements will be any reduction in the charge to the State of this industry in respect of subsidy and rebate of taxation next year and in the following year, and, if so, to what extent?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

The result of the arrangement will be a reduction, but I am afraid that I cannot give the right hon. Gentleman the exact amount of the reduction across the Floor of the House.

Photo of Dr Christopher Addison Dr Christopher Addison , Swindon

In view of the fact that the statement bristles with points which call for examination and discussion, and which will require legislation to give effect to them, may we be assured that the House will have full opportunity of discussing and examining it before any further steps are taken in the matter?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

Yes. In the first place, legislation will be required to carry out these proposals, and the House will have the fullest opportunity of discussing the legislation. Before that time opportunities will arise in the course of Parliamentary business in which a certain amount of discussion can take place.

Photo of Mr George Lambert Mr George Lambert , South Molton

May I ask whether action will be taken to prevent factories from making excessive profits?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

Yes. If the right hon. Gentleman examines the terms of the White Paper he will see that the question of excessive profits is fully dealt with.

Photo of Captain Sir Peter Macdonald Captain Sir Peter Macdonald , Isle of Wight

The Minister promised me that he would pursue the question of the cost of transport charges when he was framing his sugar beet policy. May I ask whether he has given consideration to that matter with the intention of easing the burden of the cost of transport on producers in counties a long way from the factories?

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

That is a matter of detail.

Photo of Mr Thomas Williams Mr Thomas Williams , Don Valley

When the Sugar Commission ultimately decides on the scheme for amalgamation and the right hon. Gentleman is dealing with profits, which will be permanent profits for the amalgamated factories, will the right hon. Gentleman bear in mind the colossal profits which these people have taken in the last 10 years?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

The question of profits has been carefully considered in the arrangements made.

Photo of Mr Arthur Greenwood Mr Arthur Greenwood , Wakefield

In view of the fact that legislation will not obviously be attempted until the autumn, may I ask whether the scheme will provide that there shall be no advantage to persons speculating in sugar shares as a result of the announcement?