Agriculture.

Part of Orders of the Day — Consolidated Fund (Appropriation) Bill. – in the House of Commons at on 31 July 1935.

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Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

That was dealt with before in the last Debate, and I do not wish to weary the House and myself by repeating again and again what must be perfectly obvious, that if—as was said quite rightly, and appears in every official report and every ministerial answer from that bench—the assistance given to the beet sugar industry is of two kinds—one is a direct subsidy and the other is a remission of half taxation, and the two together amount to £6,000,000 a year, and that if the sugar beet industry were no longer helped, the Treasury would be the richer by £6,000,000 a year as a consequence. That is certain and obvious, and the fact that some excise is paid, about half the amount that would be paid in duty, does not alter that fact, and is, indeed, taken into consideration. Therefore, the industry has been costing, and still costs, about £1 for every day for every man who is employed in its service.

There is one point upon which I would like to congratulate the Government in this connection—it is a rare occasion that I am able to do so—and that is, that they have not yielded to the temptation of dealing with this matter in a simple though somewhat surreptitious manner by saying that they will no longer trouble Parliament again and again to vote direct subsidies, but will simply sweep away the remaining excise, and the beet sugar industry will receive over £2,000,000 in that way, and consequently nearly as much money as they received before, and the matter will be concealed from the public. That was urged upon us by the right hon. Gentleman the Member for Sparkbrook (Mr. Amery) and several representatives of the agricultural industry, who said, "Why not simply repeal the whole of the taxes and then we shall hear nothing about the matter?" That would be an equal burden on the Exchequer, and I am glad that the Government did not yield to the temptation. I thought that they might be weak enough to do so, but they have rather said, "We will frankly come to the House for the money we require and use the money as an opportunity for securing a certain measure of re-organisation in the industry." The Government recognise the strength of public feeling against this ruinous expenditure of public money, because they say in their statement that there is to be a limit on the amount of sugar to be produced and the amount of acreage cultivated. The White Paper says: It is not desired to encourage production in excess of this amount. Why not? If this is such a great boon to agriculture, if this crop is such a valuable one to the farmer, and if employment is encouraged to such a large degree, why not encourage it in every direction? But the White Paper says, "No, there is to be a limit set, and nothing is to be done beyond what is now being done." Why? It is a confession and an admission that the cost of this industry is enormously heavy on the public at large, and the Government dare not venture to go on allowing it to expand more and more at this immense expense of £1 per day for every man employed without some definite limit. That is a most important admission to which I respectfully desire to call the attention of the House. Every argument advanced by the defenders of this subsidy is an argument against that particular paragraph in the White Paper which has been presented to us.

With regard to the reorganisation of the industry, there has been no time for a technical examination of the matter, but there is another point in the White Paper to which attention should be drawn. In paragraph 6 it is pointed out that the experience of the industry shows that the profits are very different in different localities. In spite of these lavish subsidies, while a great number of the factories, especially in the Eastern Counties, the Anglo-Dutch companies have been making enormous profits and paying dividends of 10, 15 and 20 per cent. free of tax year after year, with enormous capital bonuses distributed to shareholders, at our expense, other factories, especially in Scotland, have not proved profitable at all. The White Paper gives the reason. It says: Experience has shown that the costs of the several factories vary widely, owing, among other reasons, to their situation having been chosen with the special object of enabling the benefits of State assistance to be spread over as wide an agricultural area as possible. If therefore the factories were to be left independent, the rate of assistance must either be such as would keep all the factories in existence, in which case it would be unfair to the Exchequer and unjustifiably generous to the lower-cost units, or, if it is to be fair to the Exchequer, it must be on such a scale as would make it impossible for the higher-cost factories—not merely one or two exceptional units, but a large proportion of the whole—to carry on, thus defeating the purpose for which the industry is primarily maintained. In other words, these factories have been put not in districts which are economic and most suited for their successful operation, but they have been dotted over the country in all kinds of places unsuitable for the industry, in order to give a further artificial stimulus to beet-growing in those areas. A more uneconomic proposal could not possibly be made. The result has been that certain factories have been making enormous profits while others have been working at a loss, and if they are all to be kept in existence independently you must either give unduly large subsidies to the uneconomic factories or else give unduly large profits to the economic ones. That is the dilemma with which the Government have been faced. The one, they say, is unfair to the Treasury, and the other would lead to the disappearance of the factories in the unsuitable districts.

What are the Government going to do? They are going to combine the factories. They are not going to say: "These factories which are in the wrong districts and are run at a loss are to stop, and we are going to assist only those factories in the suitable districts." On the contrary, they say that all the factories ought to be amalgamated, their funds pooled and the losses of the one set off against the profits of the other, and the taxpayer is to maintain the whole. That is the proposal. The Government say that that must be done because the factories that have been put in the wrong districts must be maintained there on account of the agricultural needs of those districts. Again, a confession of an utterly uneconomic policy. It has been proved by 10 years' experience that certain factories ought never to have been built from the point of view of the industry, but, instead of dropping them, they are to be continued and the rest of the industry is to be made to carry them. That is not the only reason why these particular factories have been unprofitable. The question of management and skill has entered into the matter very largely.

The refining industry is to be brought into the scheme in a manner which it has not yet been possible to examine. The White Paper was published only recently and no expert investigation has yet been possible. Therefore, I must reserve my remarks on that subject until a later date. I would, however, draw the attention of the right hon. Gentleman to one point in the White Paper, and perhaps he will answer it. It was stated in the report of the Greene Committee with regard to the arrangements made for the refining industry that they had been given an undue advantage. Again, that industry is enormously profitable. The £1 shares of Tate and Lyle, which has almost a monopoly in refining in Great Britain, have gone up to £5. We know that immense capital bonuses have been distributed, besides large dividends. I think that the dividend this year was 22½ per cent. The Greene Committee, in referring to this matter, say: We have come to the conclusion that the arrangements made in 1928 were unduly favourable to the refining industry. That is to say, the arrangements made under Government auspices have been responsible for the refiners being able to make these colossal profits. I should like to ask the right hon. Gentleman whether the arrangements now made are, in effect, different from those made in 1928? I cannot find from the White Paper any suggestion that they are to be altered. I may, perhaps, have overlooked some point. I put it merely by way of a query. Has that paragraph in the Report of the Greene Committee who, after close investigation, condemned the arrangements as being unduly profitable to the refining companies, been taken into consideration and will that arrangement be revised?