Ministry of Food

Orders of the Day — Supply – in the House of Commons at 12:00 am on 23rd February 1948.

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Motion made, and Question proposed, That a Supplementary sum, not exceeding £142,328,498, be granted to His Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March 1948, for the salaries and expenses of the Ministry of Food; the cost of trading services including certain subsidies; and sundry other services.

Photo of Mr Evelyn Strachey Mr Evelyn Strachey , Dundee

I think it is for the convenience of the Committee that I should move this Motion formally, and reply to various points, which will no doubt be raised, after a few speeches have been made.

7.6 p.m.

Photo of Mr James Reid Mr James Reid , Glasgow Hillhead

We are in Committee, and there is nothing to prevent the right hon. Gentleman speaking twice. Moreover, I should like to say now—and I shall develop it further—that we are in a very great difficulty here The Government have held back the Argentine Agreement, which is the main subject for our discussions tonight, and I had thought that, in view of the fact that they have not published that agreement—although the Chancellor of the Exchequer said the other day, when a question was asked about it, that we had better wait and see it in writing—the right hon. Gentleman would go some way to make amends for the Government's failure to produce this agreement by explaining its provisions in some detail this evening before the discussion takes place. Of course, the matter is in the Minister's hands, and, if he does not speak now, we shall go on and it may take a little longer. It is for him to say, but I offer to give way to him now in order that he may make his statement on the Argentine Agreement and other matters concerned with it at this stage. If he prefers not to do so, I am perfectly prepared to carry on. Which does he prefer?

7.7 p.m.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

We are most anxious to do our best to assist the Committee in every way we can. We have not held back the Argentine Agreement, because we have not got it.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

It is coming as soon as we can get a copy from the Argentine

Photo of Mr James Reid Mr James Reid , Glasgow Hillhead

There is such a thing as the telegraph.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

I know there is such a thing as the telegraph, but it is not very safe to publish documents on the basis of a telegraphic communication.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

We are having it sent by air mail as soon as we can, and we hope it will arrive today or tomorrow. As the right hon. and learned Gentleman knows, the final agreement was only reached the day before yesterday; it is on its way here, and the moment it comes it will be published.

Photo of Mr Oliver Crosthwaite-Eyre Mr Oliver Crosthwaite-Eyre , New Forest and Christchurch

Is the right hon. and learned Gentleman saying that the Government do not know the terms of the agreement?

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

I do not know the final wording of the agreement, but I know its terms. We have not held back publication, because whatever is published in the White Paper must be the accurate agreement, and we cannot have that until we get a copy of the actual agreement from the Argentine. If it would assist the Committee, I am prepared to say a few words about the contents of the agreement in order that the Committee, may know them.

Negotiations with the Argentine were entered into for the very obvious purpose of securing the foodstuffs and the feeding stuffs that are essential for this country for the coming 12 months without any expenditure of dollars. That was, of course, the major feature at which we were aiming, and that meant that there had to be some device, by one means or another, by which the Argentine would hold sterling, because the balance of our trade with the Argentine is such that we have to pay them more than they pay us. In other words, we have not been able to balance our exports to the Argentine against our imports from them. That has not been entirely due to our fault, but also to the fact that there has been a number of prohibitions and licensing provisions in the Argentine market which have stopped us sending in a number of our most saleable exports, such as motor cars and whisky, to take two examples. One of our other objectives with the Argentine was to secure an opening up of the market so that we can, in future years, get nearer a balance between our exports to and our imports from the Argentine. With those three objectives in view—to obtain our essential supplies, not to pay in dollars, and to expand, from our point of view, our exports into the Argentine—we set out.

What we have been able to secure, as a result of the agreement, is, first, all the foodstuffs and feedingstuffs we wish to secure from the Argentine during the ensuing 12 months. The bill for those goods amounts, roughly, to £110 million. The prices at which they were bought—as the House knows, we never disclose the prices of individual commodities—were rather higher than those which we paid before. That is quite natural, as there has, of course, been, on the whole, a very sharply rising market since our last contract was entered into with the Argentine. On the other hand, many of the prices were well below those which obtained at the same time for similar goods in other markets.

Secondly, we secured something which we were anxious to secure—the early payment of the moneys due under the arrangement made for the purchase of the British-owned Argentine railways. We were very anxious to conclude that deal as quickly as possible, because, while the railways remained suspended between heaven and earth, in the sense that they were neither Argentine nor British, it was extremely difficult to maintain them and to supply them with the spare parts and other things that were requisite. It was obviously desirable that that position should be brought to an end as quickly as possible.

The agreement is that, by 1st March, the £50 million will be paid by the Argentine for the railways. In order to do that, it was necessary for the Argentine to have more sterling; they had not enough sterling in this country to pay for the railways, and also to continue their banking operations, a part of their banking being based upon sterling—the A Account, as it was called—which, since 1941, has had a gold guarantee clause attached to it. Therefore, it was necessary for some provision to be made, to put further quantities of sterling at the disposal of the Argentine Government. It was arranged that we would pay in advance for the whole of the foodstuffs and feedingstuffs which we had agreed to purchase for the 12 months ending March, 1949, to the extent of £110 million, with a provision that the receipts from the deliveries of these goods should be set off against this sum of £110 million as they were delivered, and that if, at the end of the period, there was any sum still outstanding, that sum would be repaid to us by the Argentine Government.

Next, the Argentine Government agreed to give most-favoured-nation treatment to the import of British goods, and also to grant import permits to the value of £10 million in 1948 to United Kingdom goods which had hitherto been subject to restriction. That, of course, does not mean that we limit our exports to, £10 million; it applies to certain special categories which, hitherto, had been subject to restriction on entry into the Argentine market. The President of the Argentine Republic has also given an assurance that this figure will be substantially increased if, during the course of the year, the general situation in the Argentine so permits.

The Argentine Government have further agreed that their departments responsible for purchases—other things being equal—will give preference to United Kingdom firms in making those purchases. That, again, should be a considerable help in expanding our volume of exports to the Argentine. We have also agreed to facilitate the supply to the Argentine during 1948 of certain commodities which are important to their economy, including 1 million tons of coal and 2 million tons of petroleum products. There are some other commodities as well, which are set out in the schedule to the agreement, but those are the two principal commodities with which we are concerned. The other commodities cover a certain amount of steel, fabricated and semi-fabricated, some steel spans for bridges, some tinplate which is largely required for the packing of meat, zinc sheets, tin, lead, asbestos, agricultural machinery and implements, cutlery, those very familiar articles in supply to the Argentine, caustic soda and soda ash, and one or two other chemical materials in the quantities which we calculated we could supply to the Argentine if we were able to get the foodstuffs that we required.

The net result is that we have promised the Argentine to use our best endeavours to facilitate the supply of this list of goods which they urgently require, and we have got from them the guarantee of delivery of the foodstuffs, raw materials, and feedingstuffs which we urgently require. They have opened their market, to a certain extent, to some of their less necessary requirements, and have promised to open it still further during the course of the year, if conditions permit. We have agreed to pay in advance for one year's supply of goods—hence this Supplementary Estimate, very largely—and they have agreed to pay the debt for the railways as at 1st March.

The financial provisions with regard to that are a little complicated. Hitherto, the Argentine Government have maintained two sterling accounts at the Bank of England, known as the "A Account" and the "B Account." The A Account has been covered by a gold guarantee, and it has not been freely available for current transactions. It has been earning one-half of one per cent. interest, which interest is available for current transactions. The B Account consists of the net sterling earnings since 17th September, 1946, including any agreed releases from the A Account into the B Account. It was agreed that an amount of £5 million a year should be so released, together with the interest on the A Account balances, the half per cent. to which I have already referred. The sums in the B Account were not guaranteed, but were freely available for current transactions.

They were earning interest at the current rates of the Bank of England. At the date of the present agreement the A account held rather over £100 million, and the B account a sum of about one-third of that. Under the present agreement, as I have said, the Ministry of Food will pay in advance to the Argentine Government £100 million in respect of food and feedingstuffs purchased in 1948 and 1949, together with a single cash payment of £10 million in respect of increased Argentine production costs. The reason for that is that it was desired to make some increase in the total paid to the Argentine. It did not matter to us which of the various commodities which we purchased it was assigned, and we therefore made it a lump sum payment which the Argentine Government according to their local domestic desires, could assign to one or other of the commodities which we purchased. That sum will be paid as soon as these Estimates are through. That will be credited to the Argentine Government's B Account at the Bank of England, which will then be increased to somewhere rather short of £150 million.

The Argentine will forthwith pay over to the railway companies the purchase price of £150 million by clearing their B Account entirely, and supplementing that with whatever is necessary from the A Account, depending upon exactly how the accounts stand on the day on which the transaction passes. The B Account, though emptied by this operation, will nevertheless be maintained as an account to receive subsequent sterling earnings on current account, so that both the A and B Accounts will continue to exist under these new conditions. The A Account will, however, now for the first time be available for payments of any nature within the sterling area—that is to say, the block is removed from the A Account—and it will continue to earn the one-half per cent. interest and to enjoy the existing gold guarantee as long as it exists. The B Account, which starts with nothing in it at all, will be available later to receive balances for payments of whatever nature within the sterling area, as it always has been, and it will continue to earn the current rates of the Bank of England. But it will now for the first time enjoy a revaluation guarantee, on terms which will be agreed between the Argentine Central Bank and the Bank of England, and somewhat similar to that which rules as regards the A Account at the present time. That guarantee will be applicable to any balances in the B Account accumulating up to 31st March, 1949, as well as to any sterling that accrues thereafter as a result of forward contracts made before 31st March, 1949. Those moneys will maintain that guarantee until they are spent.

I think, and I hope, that that explains to the Committee as clearly as I can the way in which this financial transaction will be carried through. The Committee will see that the net result is that the B Account, which was the unblocked account, will be completely emptied by paying off the railways. The A Account will be drawn on to a small extent and will be unblocked; otherwise, of course, there would be no unblocked balances in the hands of the Argentine Government, and they would have no money with which to purchase goods in this country. Those balances will be unblocked, and for the period of the deliveries under this contract the moneys paid into the B Account will have a guarantee against devaluation, so that they will be secured at their present value or at their value when they are paid to the Argentine Government, as we shall be secured of the goods which we receive in exchange.

Photo of Mr Oliver Crosthwaite-Eyre Mr Oliver Crosthwaite-Eyre , New Forest and Christchurch

The right hon. and learned Gentleman said that the A Account would be available for payments within the sterling area. Does that mean that they come within category 2 or category 4 of the Exchange Control Act?

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

I cannot answer that question off the reel. I will find out for the hon. and gallant Member. I am not sufficiently familiar with the various categories to be able to say, and I would not like to give a, quick answer, because I might make a mistake. I will ascertain and will let the hon. and gallant Member know in the course of the Debate. I do not think there are any further provisions to which I need draw attention, or, indeed, any further material provisions at all with respect to the agreement, but if it should happen that there are any other questions about the agreement which hon. Members wish to raise, I will do my best to answer them

7.27 p.m.

Photo of Mr James Reid Mr James Reid , Glasgow Hillhead

I am sure the Committee are obliged to the Chancellor of the Exchequer for the clear way in which he explains the terms of this agreement. I shall have some comments to make on that matter as I go along.

I am a little surprised that the Minister of Food has not seen fit to follow the usual practice and come to explain his Estimate to the Committee. After all, even leaving aside the Argentine Agreement, there is a matter of £50 million-odd involved by way of Supplementary Estimate which had materialised before the Argentine Agreement was signed, and the manner in which the trading services Estimate is presented is so cryptic that it is almost impossible for anyone to understand it adequately. We may try to put bits of a jig-saw puzzle together, and we may happen to be right, but, in view of the extremely sketchy method in which these Estimates are presented, I should have thought that the Minister would have thought it necessary to supplement his Estimate by an intelligible explanation. However, we hope that we may get that explanation later on. As we are in Committee, if any hon. Members who speak before the Minister find that they have something to add after the Minister has spoken, no doubt they will be able to catch your eye in order to do so, Major Milner.

The field to be covered by this Estimate is extremely wide, and I think it would be for the convenience of the Committee if we first dealt with the trading services, including the Argentine Agreement—because that is intimately connected with the trading services—and then at a later stage my hon. Friends who wish to devote their remarks more particularly to the groundnuts scheme will endeavour to catch your eye, Major Milner, after the other Debate has come to an end. I think it would be for the convenience of the Committee that the Debate should be divided in that way, because there is no real relation between the two from the point of view of the development of the Debate. Personally, I am not disposed to say anything at this or any other stage with regard to the groundnuts scheme.

I pass to the Argentine Agreement. It is obviously of an unprecedented character. I was not aware that the Chancellor of the Exchequer kept a spokesman, but apparently he does; I read from the Press of the 17th of this month: A Treasury spokesman last night described the British-Argentine Trade and Finance Agreement as in some respects unusual. Under-statement is a good old British characteristic, but I have never seen a more masterly example than that. I shall have something to say in a few moments about the sums which are being paid under this agreement for what we are to get

It is plain that there are other matters of vital importance involved in the agreement and in effect the Argentine have got a good deal more out of this than merely the £110 million in exchange for the goods which they are to deliver to us during the coming 13 months. They have got payment in advance. I understand that is involved in the general scheme, and I make no particular point of it, but the Chancellor was very careful not to tell us why the whole of the A account is being unblocked.

Photo of Mr James Reid Mr James Reid , Glasgow Hillhead

I must have failed to follow it.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

Might I repeat what I said? As the whole of the B account would be emptied by payments on the railways, there would have been no balance in the B account, and unless they had some balance they could not purchase any goods in this country. As we want them to purchase goods, we had to give them some sterling with which to do so.

Photo of Mr James Reid Mr James Reid , Glasgow Hillhead

That does not explain why we take £43 million out of the B account and why we have unblocked £117 million. I can well understand an agreement in which some equivalent sum, such as £40 million or even £50 million, of the A account was unblocked; that would be logical. Even that would be giving a very great advantage to the Argentine Government and would be storing up for the Chancellor considerable difficulties when other people used it as a precedent. To unblock £117 million because they are exhausting a B account of £43 million is, I should have thought, the most improvident thing this Chancellor is likely to do in his tenure of office. One would almost think the last Chancellor were still in office.

I really cannot understand—unless this is a damnosa hereditas which the right hon. and learned Gentleman has taken over from his predecessor—and he shakes his head—on what possible basis this can be justified. Observe what happens. The right hon. and learned Gentleman tells us that it is available only in the sterling area. That is quite true, but a lot of things can be bought in the sterling area, a lot of things that could be resold in America, and, therefore, in so far as that process could be operated by the Argentine, in effect the right hon. and learned Gentleman is giving them access to dollars for exchange at our expense. I cannot understand why there should have been this agreement. I trust that at some stage in this discussion we shall be told why it was necessary to unblock the whole of the £117 million when the amount of the B account being exhausted was only something over £40 million.

In addition to that, I do not quite understand why it is necessary to give a new guarantee against devaluation to new money coming into the B account. They have never had it before. It is quite true that, in so far as A money is transferred to B account, there may be a case for the guarantee following it. I do not know, I am not sufficiently a financial expert, but we ought to have some justification for completely new money attracting this guarantee. Are other people to get it as well, or is it only for the Argentine? If everybody is to be allowed to have a gold guarantee attached to any sterling balances in this country, I should have thought the Chancellor's position was even less enviable than we know it to be.

The next point I would like to ask is this—because for once I thought what the Chancellor said was ambiguous. It may have been my fault. I understood him to say that the sum we pay in advance was for the whole of the goods we have agreed to buy over the next 12 months to the extent of £110 million. I do not know whether he meant that the £110 million is intended to cover all the goods we are likely to buy over the next 12 months—his words may have meant something else—

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

I am afraid it was my ambiguity. What I meant was that the goods which we are going to buy, and have agreed to buy, and they have agreed to sell us, will cost £110 million.

Photo of Mr James Reid Mr James Reid , Glasgow Hillhead

This becomes of great importance when I come to the subject of meat. I have great difficulty in disentangling the information which we have on that subject. Because of the difficulty which results from that, I thought it best to have it clear. I take it that this agreement supersedes the agreement of 1946. Under that agreement, prices were not to be readjusted until September, 1948, and I take it that the present readjustment means the abandonment of that part of the 1946 agreement. I am not quite sure whether the rest of the 1946 Agreement remains, with the other important point, namely that we buy the whole exportable surplus or a large proportion of it up to October, 1950. Perhaps the Minister will tell us whether that part of the 1946 Agreement is still in operation.

I come to the terms of this agreement and, first, to the 10 per cent. which the Chancellor told us it was desired to add to the price. I wonder who desired it? If the prices are fair prices I can see no reason for adding anything to them. If they are not fair prices, I should have thought it desirable that fair prices should be stated in the agreement. The £10 million is called a contribution towards increased Argentine costs of production in respect of the food agreed to be purchased. I suppose that means that the food, or some of it, would be sold at a loss if the prices which stand in the agreement were all the Argentine got and, therefore, something has to be added to these prices in respect of increased costs of production. Why that was not done in a rather clearer way it is very difficult to understand. It seems to be a window dressing which, I hope, is not to be a precedent for other agreements.

There are four heads under which the goods which we buy are grouped in this Supplementary Estimate. Apparently, £15 million worth of goods is to be shipped or, at least, delivered before the end of March. It does not specifically appear in the revised Estimate. The revised Estimate covers only £85 million worth which is not to be delivered until after the end of this financial year. Taking that £85 million worth, I find that we are to get £37 million worth of cereal feedingstuffs which, I understand, are to be maize, with possibly an alternative of a certain amount of barley and a very small addition of broken wheat: £23 million worth of meat; £8.6 million worth of feedingstuffs other than maize; and £16.4 million worth of oils and fats. It is not possible to determine from the papers in front of us how the other £15 million is allocated between these four heads, and I hope that the Minister will tell us the allocation of that £15 million among the four heads. If it is proper to disclose the allocation among the goods which are to be got next year it must be equally proper to disclose it in respect of goods which are being delivered this year.

Now I pass to the quantity of goods which we are to receive. Again, we have not been told anything in this country. The usual thing that happens nowadays is, that we get our information about the Minister's contracts from the other contracting party, who is perfectly willing to publish it, and does; and then it is cabled over here. I really cannot quite understand why the Minister should be so tender about over-working his publicity department as not to give us the information direct. However, for some reason he will not do it. I want to ask him whether the statements of the quantities which have been published in the Argentine are correct. The Press carried a full statement under date line Buenos Aires, 13th February. Incidentally that seems some time before the agreement was finally concluded, according to the right hon. and learned Gentleman. Perhaps, someone will tell us whether the forecast is an accurate one or not. We were told then that the amount was 1,272,000 metric tons of maize and 85,000 metric tons of broken wheat, with an option to substitute some barley for maize. I am not sure that I have accurately converted the metric tons to our kind of tons, but I take it that it represents about 1,200,000 tons of cereal feedingstuffs. We know that we are to pay at least £37 million for it, because that is in the Supplementary Estimate. It may be that we are paying more. That represents a price of over £30 a ton.

The Chancellor told us that he would not disclose the prices which we were paying. I do not know why, because we can reconstruct them, to a large extent, from the papers which we have. Everyone else knows the prices, except Members of this Committee. Unless the Minister tells us we are going to get a much larger quantity than 1,200,000 tons of maize—and it does not seem likely that the Argentine would under-estimate the quantity they are going to give us—we can be absolutely certain, on the information that is before us, that the right hon. Gentleman has agreed to pay over £30 a ton for maize. If it is not so, it is extremely necessary that that should be contradicted at the earliest possible moment. Indeed, a most reputable and well informed organ of the Press has put the price as high as £35 per ton—an astonishing figure. We know that according to an answer given on the 2nd February, we bought during the last half of last year 341,000 tons at an average price per ton f.o.b. of £17. What has happened to cause that difference?

The Chancellor told us about prices elsewhere. In an answer given on 19th December the Minister told us that the average cost of maize imported during the financial year, 1947–48, on a landed cost basis, including Ministry overheads, was £23 16s. This price, I take it, was a f.o.b. price Under the agreement, certainly, the price does not include Ministry overheads. Yet, apparently, it is over £30. I do hope that the Minister can demonstrate that the reconstruction which well informed persons have made, and which I have attempted to check and have found no flaw in, is quite wrong. The plain way to reassure us would be to disclose the actual terms of the agreement.

There is another matter with regard to maize which I wish to raise. Last year we bought, in round figures—I think we agreed to buy, in round figures—300,000 tons of barley and 700,000 tons of maize.

In the right hon. Gentleman's speech on the Estimates on 1st July last year he hold us that we had a considerable amount of feedingstuffs — well over 750,000 tons—which had been bought in the Argentine and was ready for shipment. I do not know what the exact figures are, but it would seem something like half of that has still to be shipped or, at least, to arrive in this country. I see from the January figures which have just been published that maize is coming in from the Argentine at a considerable rate, and I do not know just how much of that 750,000 tons is still lying in the Argentine; but I assume—and I hope that the right hon. Gentleman will confirm this—that the new purchase of 1,200,000 tons is additional to any balance on the old year's purchase which is still in the Argentine. Otherwise, we should be buying it a second time over, and buying it at a much higher price.

I see the Chancellor agrees we are going to get—and this is the important point—over the next 12 or 13 months from the Argentine considerably more than 1,200,000 tons of whatever it may be, which is in the agreement. But if the price is anything like what I have tried to explain, what is the effect going to be on the price of maize and maize products to the consumers in this country? I suppose that this is the new harvest maize which is not yet reaped. Perhaps, the right hon. Gentleman will confirm that. Or is it maize from stock, from last year's harvest? I am talking of the maize under the new Andes Agreement. Perhaps, he will tell us which it is. In any event, that affects really only the date at which it would be delivered. But when it comes to this country for delivery, if it carries anything like the price which I have suggested one of two things must happen: either the amount of the subsidy must go up—and go up steeply—or the price to the consumer must be raised. Now, which is it to be? We ought to know; and I am sure the Government must have a view about it.

I do not wish to detain the Committee by dealing with more than one other topic under the Argentine Agreement, and that is meat. Here, I really am puzzled The Press report to which I referred a few moments ago tells us that we are to get 400,000 long tons of frozen meat, and 20,000 long tons of boneless canned beef and mutton—420,000 tons altogether. Yet the only figure which appears in the new Supplementary Estimate as arising out of this agreement is £23 million. It may be that there is already, or will soon be, a large quantity of meat afloat which is in the other £15 million, which is not distinguished in these accounts. Anyway, the amount of money for meat is surprisingly small if it applies to the whole of the 420,000 tons. If that is the true state of affairs, I do not think that the price of meat could have gone up at all from the last figure.

On the other hand, there are persistent rumours that under this new agreement the price of meat is considerably larger than it was under earlier agreements. I hope that the right hon. Gentleman will be able to reassure us on this matter, and to tell us that the figure which appears in the Estimates, plus the appropriate proportion of the unallocated £15 million, is the whole sum which we are to pay for 420,000 tons of meat, and therefore that the price is reasonable. That, of course, does not take account of this extra £10 million. I can hardly believe that anybody could attribute any part of that £10 million to the maize if the price without that supplement is already so astonishingly high as I suggested. Presumably, the bulk of the £10 million goes to increase the meat price. At least we ought to know what the basic price is, and then we can leave the £10 million to look after itself.

It has been suggested—I do not for a moment say that the Government have contributed to this—that this agreement makes safe our meat ration for the corning year. I hope the right hon. Gentleman will give us his view about that. I have not attempted to get strictly comparable figures out of the imports for last year, but the total for meat of every kind, as shown in the accounts, is 1,400,000 tons—I agree not wholly comparable—and under this agreement we are getting 420,000 tons. Plainly, that does not assure our meat ration next year, unless we are still to import from other sources as much as we did last year. I hope that the right hon. Gentleman will put the meat situation in its proper perspective as it has been improved by the Argentine Agreement.

It appears that the £150 million for the railways—out of which, in effect, this £110 million for this year's food is taken—will have gone before the next financial year, and we shall have to find our food for next year out of some quite different source. I do not know whether the Government have dared to look so far ahead; but if it be the fact that this year we are eating the Argentine railways, what are we going to eat next year? I wonder whether the right hon. Gentleman is still prepared to be complacent about his methods of socialised buying? I wonder whether he is still prepared to say, as he was last July: I am perfectly sure that this country need have no doubt whatever of its ability to obtain an ample food supply in the coming years."—[OFFICIAL REPORT, 1st July, 1947; Vol. 439, C. 1184.] He went to great trouble to get that last "s" put in, and it is the coming years which now seem so difficult. I hope that he will be able to tell us about that.

I apologise for keeping the Committee so long, but these matters are rather complicated, and I feel that they must be explained. The Supplementary Estimate shows an increase of £146 million on the original Estimate. I want the right hon. Gentleman to tell us how that is related to the ceiling on food subsidies, because before we vote this money we are entitled to know whether the Government are still adhering to their policy of a ceiling on food subsidies, or whether this supplementary Estimate represents an increase—a heightening of that ceiling. It is not possible to determine that from an inspection of the accounts, because a rise in the adverse balance may be due, either to a trading loss which is met by a subsidy, or to a larger amount in stock at the end of the year than the Ministry had at the beginning.

Probably there has been a good deal of hoarding during this year. We know there has been, for example, in the case of sugar; and it may well be that there has been in the cases of other commodities. At the beginning of the year the policy was to run down the stocks, and therefore the estimated cash deficiency was admitted, by the financial memorandum attached to the Estimates, to be very much less than the actual anticipated trading loss and, therefore, subsidy. But how does this figure of £459 million, which is the new deficiency, square with the actual trading loss and subsidy for the year? I think there must have been a good deal of hoarding, because the original estimates of the receipts which the Government were to get by selling food during this 12 months was £1,127 million. In fact, as the revised estimate shows, they received only £979 million. They received £148 million—13 per cent.—less than they anticipated. Now that was not because the prices went down. Far from it. It was because they released less food.

This account, therefore, means that during the year the Government released 13 per cent. less food than at the beginning of the year they had determined we ought to have. It may be that our position in the world today is such that hoarding on that scale is necessary. But let us hear whether that is the explanation, or whether there has been a rise in the ceiling of that subsidies. Not all the subsidies are shown in this Vote. We were told that at least two—acreage payments of £18 million, and fertilisers of £8 million—are not shown. Therefore, at least £26 million has to come off the £392 million in order to get the ceiling of the subsidies of the Ministry of Food deficiencies.

We have had extremely contradictory accounts of what the position is. We were told about the £392 million when we had the Budget in April. Then a detailed statement of the subsidies was given in reply to a Question on 7th August. There, the maximum seemed to be adhered to, but when we come to 1st December—and I ask the Minister to give a full explanation of this—the position is very different. Although, in the Supplementary Budget before that, we had been assured that the ceiling would not be exceeded, when we come to the answer on 1st December, we had the figure of £342 million set out, and were then told that certain items, including animal feedingstuffs, welfare foods, milk in schools, national milk schemes, fertilisers and other payments made by the Agricultural Departments, were not included in that figure. My hon. Friend the Member for Thirsk and Malton (Mr. Turton) sought to repair that deficiency, and was told a fortnight later that the items here excluded amounted to £65 million. There is still left the £4 million in the case of New Zealand and £8 million in the case of fertilisers, which we were told about in the Supplementary Budget. Adding them all up, it comes to £420 million, and the estimated subsidies on 1st December were therefore £420 million, if figures mean anything at all.

It is true to say that the Minister goes out of his way to frame his details in a different way every time we ask him a Question. Therefore, it is extremely difficult to compare one answer with another. I cannot see how his answer on 1st December and 15th December can be squared with any less rate of subsidies than £420 million per annum on this account. Is that the position today, or is the ceiling of £392 million being adhered to? The Committee ought to have an answer to that before we pass these accounts. I agree that the £459 million is certainly well above the true amount of the subsidies. That means that the amount by which the £459 million exceeds the true subsidies will have to be carried forward to next year, and then we shall find, in order to keep to the true subsidy of £392 million, the deficiency will be the amount shown plus the carry forward. We shall have to discuss that when we come to next year's Estimates.

I do not want to enter into the detailed items shown as increases in the original Supplementary Estimate, but I think we ought to have some explanation about the £56 million increase in meat, apart from this new Argentine Agreement. The Committee will see that the estimated deficiency on meat rose from under £2 million this time last year to £58 million in the revised Estimate, and before the Argentine Agreement came into operation. Plainly, the agreement had nothing to do with that, because as early as August the estimated deficiency on meat had risen to £53 million. Therefore, something had happened between early spring and August to cause that rise. I know that there was a rise in prices which home producers received, but I do not know how much that accounts for; but we ought to know how this very large increase has been caused. It is all the more odd, seeing that the right hon. Gentleman told us that the cuts in meat which were made, as from last autumn, amounted to a total of £61 million a year, and that these cuts were in operation. We ought to hear how the cuts of £61 million are squared with a rise in the subsidy from a triflng sum to £57 million, and before the Argentine Agreement.

The only other matter upon which I should like to say something is tea, because here again the Government's pronouncements have been somewhat contradictory. The original Estimate was for £3½ million, but it had risen to £18½ million by the time the first Supplementary Estimate had been put in. It had been rising throughout the year. It rose to £9 million in December, and to £18 million when this Estimate was prepared at the end of January. Is that due to hoarding of tea, or is it due to a rise in prices? I suspect it is due to hoarding, but we ought to know about that. We were told by the Parliamentary Secretary on 5th August that if more supplies came along, we should get an increase in the ration. Then we were told by the Government on 28th August that the tea ration would not be increased beyond the present reduced level of 2 oz. a week. I understood that the purpose of these cuts was to save dollars, but no tea comes from dollar countries, and therefore it is a little difficult to understand why we should be held down to this ration, having hoarding of tea, with the resulting increase in the Supplementary Estimate, if that is the position.

We were told that it did not matter how much we spent on rum because it came from soft currency areas, and it did not prejudice the purchase of other foods, but when it comes to tea, which is also paid for in sterling, the matter seems quite different—we must withhold tea while we let out the rum. No doubt the right hon. Gentleman will explain why that is, because it is not plain to the ordinary man in the street, seeing that we pay for both in sterling. I will not deal with any of the very numerous topics which leap to the eye on this Estimate, and in order that my speech may not he too prolonged, I will conclude merely by saying that I hope the right hon. Gentleman will take this opportunity to be a little more forthcoming about the affairs of his Department than he has sometimes been in the past.

8.9 p.m.

Photo of Mr Ronald Chamberlain Mr Ronald Chamberlain , Lambeth Norwood

I do not wish to follow the right hon. and learned Gentleman the Member for Hill-head (Mr. J. S. C. Reid) in his detailed analysis of the Supplementary Estimate. I wish to deal with the important limited field of the Argentine Agreement. When I read the first report about the agreement, I was concerned in regard to its terms, and I felt that it was an occasion on which we should hardly be justified in putting up the flags. I was concerned in regard to the whole matter of prices, par- ticularly in respect of the supplementary £10 million, which seems to have some measure of obscurity about it. I, personally, find it rather difficult to understand why we must pay £100 million in advance. There may be a good technical reason for it, which I do not comprehend, but nowadays it seems that we pay before we receive the goods. That has recently happened in the case of the agreement with Russia, and in this case, particularly when large sums are due to us in respect of railways, the reason for advance payment seems very obscure.

The particular point I want to raise with the Minister, however, is whether we have before us the full scope of the Argentine Agreement, including its various ramifications. A point on which I would like the Minister to throw some light relates to the Smithfield and Argentine Meat Company, which, as most Members know, is one of the most powerful, if not the most powerful, of the meat importing companies. It has many subsidiaries, both in this country and elsewhere, and it seems very strange to me that just at the moment when we have concluded an agreement with the Argentine this company should have been taken over by Argentine interests. It may be pure coincidence, and I am open to correction and guidance in the matter, but I think we are justified in asking the question and expressing some concern about it. This company has been taken over by interests which are under Argentine Government control. That means that we are not only paying to the Argentine for the meat we receive, but also paying very largely to the Argentine for the distribution of that meat in our own country. We ought to know a little more about that.

I would add to that that there is an annual distribution to the Meat Importers' National Defence Association which dates from a wartime agreement. That organisation, in the last recorded year, 1946–47, received for distribution among its members the sum of £936,000, and presumably the amount is not less for the current year. A considerable proportion of that payment to those importers will also go, via this company, back to the Argentine.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

In what way have Argentine interests taken over control of the Smithfield and Argentine Meat Company? Did they buy a controlling interest in the common stock?

Photo of Mr Edward Fleming Mr Edward Fleming , Manchester, Withington

On a point of Order. How does this matter arise on this Estimate?

Photo of Mr Ronald Chamberlain Mr Ronald Chamberlain , Lambeth Norwood

Further to that point of Order. It is a matter of great importance, Mr. Diamond, which might mean an additional hidden payment to the Argentine.

Photo of Mr Jack Diamond Mr Jack Diamond , Manchester, Blackley

The hon. Member is not out of Order.

Photo of Mr Ronald Chamberlain Mr Ronald Chamberlain , Lambeth Norwood

I said that interests in Buenos Aires, under the control of the Argentine Government, have acquired a controlling interest in this very large meat company. If the hon. Member for Louth (Mr. Osborne) likes to deny that, or enlarge upon it, he can do so. I think the matter is important, and menacing to us. In addition to this contribution to the Meat Importers' National Defence Association, a larger sum is paid to wholesalers in this country by way of compensation for the Government taking over their functions at the beginning of the war. That amounted, in 1946–47, to a gross figure of £3½ million. Here, again, the Smithfield and Argentine Meat Company, through its many subsidiaries, will secure payments from these firms.

It seems that there are four distinct methods of payment: First, for the meat; second, through this company for distribution of the meat in this country; third, through payments to importers; fourth, through payments to wholesalers. I would like to know whether the Minister feels that it is good policy that there should be this hold on our meat distribution as well as on our supplies? I would like to know whether it is simply due to coincidence that the major part of the capital of the Smithfield and Argentine Meat Company has been taken over by Argentine interests, and whether, in the agreement which has just been set forth by the Chancellor, we have had a really true and complete picture?

8.19 p.m.

Photo of Sir Frank Sanderson Sir Frank Sanderson , Ealing East

I wish to confine my remarks principally to the importation of linseed oil and linseed cakes from the Argentine, but before I do so I want to ask the Minister two questions. The first refers to the purchase of the railway companies. I find it very difficult to understand why payment for those railways was not met by the sterling balances which the Argentine accumulated in this country.

Photo of Mr Jack Diamond Mr Jack Diamond , Manchester, Blackley

I would be grateful if the hon. Member would indicate under which heading this matter comes in this Estimate?

Photo of Sir Frank Sanderson Sir Frank Sanderson , Ealing East

If I am out of Order I apologise, but reference to the railways was made by my right hon. and learned Friend the Member for Hillhead (Mr. J. S. C. Reid) and I thought I would be in Order in following up the point. However, I think I shall be in Order in making my second point. A cash payment of £10 million is to be made as a contribution towards increased Argentine costs of production in respect of the food agreed to be purchased by the United Kingdom. As that money is to be paid for the meat we had in the preceding year, it is obvious that there was some kind of a break clause in the agreement. Can the Minister inform the House whether there is any break clause in respect to the purchases which have recently been entered into? Assuming, as I think is highly probable, that the prices of commodities will fall during the present year, and mainly during the time when deliveries will be made, is there any clause which provides for those purchases being reduced nearer to those ruling in the world's markets at the time of delivery? If we are to pay £10 million for food which has already been shipped to this country to assist increased Argentine production costs, then, surely, in the event of prices falling in the world markets during the year, that price should be reduced accordingly.

The point I wish to raise is in respect of our purchases of linseed oil and linseed cake. I think that I am in order in referring to those two matters, because we have effected these purchases under the new agreement, and this money is required, I understand, to effect a settlement of the contract just entered into. In my opinion, the general policy of bulk purchasing is disastrous to this country. I do not blame the Government. I am not making a point that the Government have any recourse other than to make bulk purchases, at this time, but I would be relieved if the Minister could tell us that in principle he is opposed to bulk purchasing, and that he will revert to the usual channels in purchasing in the open market.

On 6th December, 1946, the Ministry purchased 100,000 tons of linseed oil at £162 a ton f.o.b. Under this new agreement dated, I think, 12th February, we have purchased some 20,000 tons. It is true that the price has not been revealed. I understand that in the view of the Minister it would not be advisable for the price to be made public at the present time. I think, however, that the contract price of linseed oil is known. I suggest that the price paid for that linseed oil was £135 per ton. f.o.b. or, at any rate, that it was within 5 per cent. of that amount. If that is not so, will the Minister refute that statement? I want to demonstrate to the House what a costly price we are paying for bulk purchases.

In the years 1921 to 1929, the average price of linseed oil was £36 5s. a ton; in the years 1931 to 1934, the average price was £19 10s. a ton. In the years 1935–39, the average price was £25 5s. a ton. When we came to the war years, prices naturally increased owing to the increased cost of freightage and the increased cost of general services. Is it not an astonishing fact that during the war years 1940–43 the average price was £44 10s. a ton, in the year 1944, £61 a ton and in 1945, £62 a ton, whereas, it is only after the war, when one expects to see prices come down, that we really get the big jump? When we started bulk buying for the year 1946, the average price was no less than £82 per ton. It was at this point that something happened for which we have never had any explanation, so far as I am aware, from the Minister. From January to August, 1946, the price of linseed oil was £65 a ton, but on 29th August the price increased from £65 to no less than £135 per ton. Six months later, in February, 1947, the price was again increased to £200 a ton—700 per cent. higher than the average prewar price. I claim that these prices would not have been paid in an open market.

I wish also to raise the question of the purchase of linseed cakes from the Argentine. We have adopted, or, perhaps, we have been forced to adopt, a policy of purchasing linseed oil and linseed cakes from the Argentine, instead of adopting, what has always been our common practice—the purchase of raw linseed which was imported into the United Kingdom and crushed into oil and made into cake for consumption here. The policy of purchasing the manufactured commodity instead of the raw material is having a serious effect upon a great industry of this country. As is well known this country is one of the largest seed crushing centres in the world. It is only due to the war that we have altered the process of purchasing the raw material and buying the manufactured commodity because of the difficulty, no doubt, in purchasing the requirements of linseed from British India, Canada, Russia and other parts of the world. I sincerely trust that, as soon as possible, the Minister will revert to the policy of purchasing the seed rather than the oil and cakes, which are the products of the seed. He will be well aware, no doubt, that linseed cakes do not stand a voyage well. They deteriorate and are subject to mould. It is more economical to import linseed from every viewpoint.

During last year, if one takes the total volume of linseed oil and cakes which the right hon. Gentleman has purchased from the Argentine, it will be found that in total the aggregate is about equal to the total amount of linseed which we used to purchase from that country before the war. It is expedient and wise that the Argentine and other countries should appreciate that the time will come when we will no longer pay 700 per cent. more for our requirements of linseed oil, and that we shall purchase the seed which will be crushed in this country. In those circumstances the Argentine may well find that they are erecting mills to crush their own seed and that they will have no market for that linseed oil. It must be borne in mind that the major portion, and, indeed, practically the whole of the linseed oil produced in the Argentine is being shipped to this country.

My final word is to ask the right hon. Gentleman if he will give an assurance that there will be a return at the earliest opportunity to the normal channels for the purchase of these commodities so soon as it is possible to discontinue bulk purchasing, and that our requirements of not only linseed oil but of all varieties of oil seed will be purchased in the cheapest market. Will he also see to it, as far as it is practicable, that we purchase the raw material, namely, oil seed, and not the products from it? If he can give that promise to the country we shall feel that the time will come and one hopes reasonably soon when we shall be able to purchase these commodities at reasonable, normal, fair, average prices, and that we shall not have to continue to pay the fantastic prices we have been compelled to pay on this occasion.

8.34 p.m.

Photo of Captain Charles Smith Captain Charles Smith , Colchester

The hon. Member for East Ealing (Sir F. Sanderson) will forgive me if I do not follow him over the ground that he has covered, tempting though it is to do so. I cannot forbear from remarking, however, that it seems to me very strange that anyone dealing as he was, primarily with trade with the Argentine should make an appeal for a return of what he called free markets. I hope that the Minister will not imagine for one moment that a plea of that sort will command support from this side of the House. It is impossible to forget when talking of the Argentine that, for example, returning to a tree market in importing meat means in practice returning to a situation where meat would still be subject to a system of bulk purchase—bulk purchase not by the Government but by a small number of highly organised firms working very closely together. Those firms before the war dominated the Anglo-Argentine meat trade to a very considerable degree. They handled between them 85 per cent. of the Argentine meat which came to this country, and it is an indisputable fact that, by their co-operation in the South American Meat Importers' Shipping Conference, they virtually allocated between themselves the quotas of meat which they would import in any particular year.

As I said, I do not wish to follow the hon. Member on the ground he has covered because I wish to address myself for a few minutes to the figures which are included under subhead H of the Vote, particularly to the comparison between the original and revised figures. As the right hon. and learned Member for Hillhead (Mr. J. S. C. Reid) indicated, there are various factors which have produced the difference between the two figures. One of these factors, which I do not think he mentioned, is the willingness of the Ministry of Food to allow price increases to fall on the consumer in certain cases. On this side of the Committee many hon. Members in previous Debates on this subject have indicated that we are in whole-hearted agreement with the policy of using food subsidies to keep down the cost of basic foodstuffs, and frankly our criticism at the moment would be not that the Minister has gone too far in that direction, but that he has allowed himself in the past two months to be shifted to some extent from his position.

There has been over the last few months a small but definite and perceptible rise in the price of many essential foodstuffs. In one or two instances adjustments of that kind have been countered by reductions in the price of other foodstuffs which although they figured in the cost-of-living index, were very difficult to obtain at all. Although from the statistical point of view the adjustment of subsidy which had taken place did not increase the official cost-of-living figure, nevertheless, so far as the housewife was concerned, she found that she was obliged to pay more for the food she actually needed We on this side of the Committee would urge the Minister not to be in any respect deterred from following the policy which he has himself on previous occasions announced of using food subsidies to keep staple goods at a living figure. I will go further. Many of us on this side would not wish to see him adhere to a iling figure for foodstuffs if that, in fact, meant that the cost of living had to go up

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

Does the hon. Gentleman mean that he would like the food subsidies to take care of world prices no matter how high they went?

Photo of Captain Charles Smith Captain Charles Smith , Colchester

What I said, and what I adhere to, is that we on this side of the Committee would not wish the Minister to adhere to any ceiling for foodstuffs if that were to mean an increase in the price of the basic items of food. I trust that is clear to the hon. Member.

I want to approach the problem of food subsidies and the figures given under subhead H from a slightly different point of view. The policy embodied in these figures has been based upon leaving the existing wholesale, retail and processing arrangements broadly unchanged, and that fact has had a very material influence upon the size of the figures which we are considering. In fact, what the Minister is doing is underwriting the whole of the distributive and processing arrangements in the food trades of this country. If these arrangements generally can be shown to be unduly expensive, then the figure of food subsidies is higher than it otherwise needs to be. If the arrangements are unnecessarily expensive, then the subsidising of the cost of living is itself costing more than need be.

It is fairly generally known that the processing of each of the basic foods in this country is in the hands of a relatively small number of firms. In each case these firms work in fairly close contact and liaison with one another. That is the case with grain milling, with margarine manufacture and with sugar refining, to take only three conspicuous examples. The Minister recently gave us the figures of the cost of grain milling. The Ministry of Food have an agreement with the grain millers which is indirectly responsible for the figures which appear in this subhead H, against the item, "Cereals including cereal feedingstuffs."

If it can be shown that the agreement which exists with the grain millers is an unduly and unreasonably generous one, it follows that the price of bread is being maintained at its present level at an unnecessarily high cost to the taxpayer. The figures which the Minister gave us showed that, in the last year for which he had reliable or adequate statistics, it cost 8s. 9d. to mill a sack of flour. The figures further showed that the profit element, additional to that 8s. 9d., was approximately 2s. 5d. a sack. I would suggest that that indicates a very high rate of profit which, I understand, is the standard under this rather complicated agreement which has been concluded with the grain millers.

The figures further showed that there was some variation between the costs at different mills. That is what we should expect, although it appears from the figures that the range is not very wide, except in exceptional cases. I suggest that the Minister should investigate very closely this arrangement which he has concluded with the grain millers, and ask himself whether it is not possible to effect these arrangements at a rather smaller cost to the taxpayer, and with a rather smaller profit allowance to those concerned. These are, after all, not figures which apply to a period of 12 months only. There is every reason to suppose that in this House we shall be examining figures of food subsidies for several years.

During the war it was permissible, and in fact inevitable, that there should be no very close and critical examination of some of these processing industries. But the time has now most definitely arrived for a critical examination to be undertaken of these arrangements, which are being underwritten by the taxpayer.

When the sack of flour, having paid its 2s. 5d. to the grain miller, is handled by the baker, he is entitled, if he turns it into bread, to a subsidy of 6s. 3d. That subsidy is calculated in such a way as to ensure that any baker, no matter how inefficient, shall receive a profit of 5s. on the sack of flour which he turns into bread. If there is variation between the costs of grain milling firms, there is a far wider variation in the costs of bakeries. The figures submitted by the Bakers' Association to the Minister as a basis of subsidy discussions illustrate that fact. There is a very wide variation in the costs of different bakery firms. The figure of the subsidy, as I understand it, is arrived at in such a way as to ensure that the most inefficient firm can keep in business and earn quite a reasonable rate of profit. What ensures a reasonable rate of profit for an inefficient firm ensures a very generous rate of profit for an efficient firm. Here, again, I would emphasise that this arrangement is being underwritten by the taxpayer.

The Minister might well give new consideration to the steps which should be taken to raise the level of efficiency at the lower end of the scale. There is considerable scope for further mechanisation in a great part of the bakery trade. That would not only be beneficial to the bakery industry, but would increase output and bring a very substantial benefit to the taxpayer. Wherever we look behind the figures which appear in this Sub-head we find agreements which guarantee very substantial returns to particular groups of distributors and processors.

My hon. Friend the Member for Norwood (Mr. Chamberlain) has made reference to the agreement existing with the Meat Importers National Defence Association and with the Wholesale Meat Supply Association. It is a little difficult to discover precisely what functions are carried out by these associations. It is still more difficult to discover whether anyone has ever examined them criti- cally to see whether those functions are being performed in the most efficient and rational manner. I would emphasise, once more, that this is a case when a distributive machine, or process, is being underwritten by the taxpayer. I hope that the Minister will be able to give us an assurance that he does recognise what a large part of the distributive and processing arrangements in this country do have in influencing the figure for food subsidies and that he will be prepared to look very closely and critically into the arrangements which exist at present.

8.48 p.m.

Photo of Major Henry Spence Major Henry Spence , Aberdeenshire and Kincardineshire Central

My general view in discussing these Estimates is that we have not nearly enough information before us. Having listened to the whole of the Debate, my feeling is one of grave misgiving. With an important discussion, such as that on the Argentine Agreement, we should have had some details such as have appeared in the foreign Press in our hands in time to consider the case before it was put to us tonight by the Chancellor of the Exchequer. My main reason for misgiving is that the Government got the Chancellor to come down to explain the agreement. He is usually called in when there is a bad wicket. Tonight he did not fail the Government. He put over a very plausible case, but in my submission it was not a case which would stand full examination in the light of all the circumstances. It is greatly to my regret that we on this side of the Committee should not have had more facts, both in regard to the agreement and to the accounts themselves, so that we could have made a more constructive contribution to the Debate.

These Estimates really fall into two parts. There is that part which deals with our normal trading through the Ministry of Food, irrespective of the Argentine Agreement; and then there is the section which brings into the picture the extra amounts which are being spent in advance for next year. In examining the normal trading accounts irrespective of our Argentine commitments I feel a sense of something approaching dismay when I see this large rise of over £50 million, especially when we were told in August by the Prime Minister, and later by the Ministry of Food, that cuts were to be made in our imports of food from hard currency countries to an extent which, in a year's trading, would have amounted to £210 milllion.

I know that many hon. Members wish to speak tonight and I will not detain the Committee unduly, but I must draw attention to the item of meat, where the rise of our normal trading, apart from the Argentine, is of the order of £56 million. We know that no very large increase has taken place in the prices which we pay to New Zealand and Australia. We know that there has been a moderate rise in the price of home-produced meat. Therefore, it seems that we must have been paying a most extravagant price to some other market if we have had a rise of £56 million when at the same time we have a reduced ration and a cut in meat for manufacturing purposes. These factors cause me to ask the Minister whether he can tell us what price we have been paying for meat from other than home and Dominion sources.

I pass to the question of how we buy our meat. It is most desirable that under the new Argentine Agreement we should know what we are buying. I consider that an improvement could be made in many of our existing agreements. In connection with the Argentine Agreement, can the Minister tell us what steps he has taken to secure a fuller share of meat offals? I admit that they are not included as part of the ration and therefore, ministerially, they may not be quite so interesting to him; but, from the point of view of the public who look for a little variety—and, I assure him from a medical point of view—meat offals will play a most welcome part in our diet. In the past I do not think we have secured our full share.

In addition, there is the manner in which our meat is shipped. Will it come in boned, and then shall we have to buy the by-products of the animals separately; or have arrangements been made under the new agreement that we shall receive, within reason, all that goes on the hoof when we are buying our meat from the Argentine? There is another point upon which I would like an explanation. Do we buy our meat "in store" from the country from which we are buying, or do we buy on a c.i.f. basis? It appears to me that if we can buy on a c.i.f. basis and put the problems of the turn round of ships and the handling of cargoes upon the vendor, it would help to speed up deliveries so that our meat would arrive in this country in better condition than when we buy it "in store" as I understand that we do today.

Next in the Estimates I pass to the question of sugar. There, again, the position is not very easy to comprehend. We have had a cut in our sugar ration, but yet a large extra sum is now required to finance our sugar. It amounts altogether to the sum of £10 million. Since July, there has been a fall in world prices, and, unless a very large amount is going into stock, and I hope that is the case, It is difficult to see why, with a reduced sugar ration and falling world prices, we require this additional £ million. I hope the Minister will explain that point. It is possible, of course, as in the case of meat, that we are building up storage, but, when one looks at that part of the Estimate which deals with transport and warehousing, it is important to note that there is a fall of £ million, and, therefore, it does not seem to me that additional warehouse space is needed at the moment.

I want now to talk about cereals and cereal feedingstuffs, and with them I will also take animal feedingstuffs. Naturally, any increases that mean an increase in tonnage will be welcomed, because for too long it seems to have been the policy of the Government to buy the finished products, instead of buying the raw materials and allowing us to produce our own food. I hope the Minister, when he replies, will tell us what these increases in the amounts allocated for cereal feedingstuffs and animal feedingstuffs will mean in terms of additional tonnage, because it will give great heart and encouragement to those working on the land if they know that they can with confidence expect increases in the rations of these things next year.

Would the Minister also say whether, in the item relating to linseed oil, there is an allowance for animal feedingstuffs? There is an item for £26 million, and I would ask the Minister to say whether, contained in that £26 million for fats and oils, there is an allocation of linseed for animal feedingstuffs, or whether that has been separately indicated. I hope that, above all, the Minister will give us an answer about meat tonight. I think the rise which we now see before us, and the repercussions which it will have on the whole question of subsidies and the balance of payments, is so important that we should have an answer on the subject of our meat supplies, and an answer to the question why, apart from the Argentine Agreement, we have had to buy £56 million worth extra. In fact, one might say that never has so little meat been bought for so many people with so much money.

8.58 p.m.

Photo of Mr Niall Macpherson Mr Niall Macpherson , Dumfriesshire

I should like to refer to the speech of the hon. Member for Colchester (Mr. C. Smith). It seemed to me that, in his criticisms of the costs of distribution, he was making the biggest condemnation of the system of fixation of prices in the long run. The hon. Gentleman was arguing that the returns for millers and bakers should be reduced, but that is just one of the very great difficulties inherent in the system. It is a system which necessarily subsidies inefficiency, and, to my mind, the hon. Member gave one of the biggest condemnations of the system which he could possibly have given, in that part of his argument.

Referring to the first part of his argument, in which he was talking about the raising of prices, I should like to know from the right hon. Gentleman exactly where we are going. What are the Minister's instructions from the Chancellor of the Exchequer. Is the Chancellor still pegging the amount of the food subsidy at £392 million, or has he raised the figure to £420 million, as implied by my right hon. Friend the Member for Hill-head (Mr. J. S. C. Reid)? And what has become of this £10 million in the Argentine Agreement which does not seem to be allocated to any specific products? I hope the right hon. Gentleman will tell us whether it is shown in these Estimates. Is it all shown on the meat side? If so, does not that mean that, although the Chancellor of the Exchequer has said he wishes to peg the subsidies at a certain level, he has, in this agreement, undertaken to pay a further subsidy of £10 million which is not being shown in any part of the account unless it is shown in the meat account?

We would like to know whether this £10 million has to be added to the subsidy on meat, and whether the right hon. and learned Gentleman is now going back on what he previously said, that he would only allow the subsidies to be raised to a certain level, and that, after that level had been reached, he would allow prices to rise. The Committee is entitled to know that because it is bound to have an effect—

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

If the hon. Gentleman will look at the bottom of the page, he will see the item, "Unallocated payment to Argentine Government."

Photo of Mr Niall Macpherson Mr Niall Macpherson , Dumfriesshire

I am obliged to the right hon. and learned Gentleman for clearing up that point.

My next point is that I hope the Minister of Food will say exactly what effect the new agreement will have on the actual price to be paid for meat. Are we to understand that the consumer in this country is likely to have to pay an increased price for meat? What is going to be the result of the price which the consumer has to pay for maize, because, obviously, however much we welcome the increased supplies of maize, any substantial increase in the cost of maize is likely, ultimately, to be reflected in the prices which have to be paid for the end products—meat, bacon and eggs. We would like to know that from the right hon. Gentleman.

There is another matter to which I wish very briefly to refer. Will the right hon. Gentleman tell us whether there is anything in the Argentine Agreement regarding the carrying of these foods? Is it prescribed in the agreement that a certain proportion of the foods must be carried in Argentine ships? That is a most important matter in view of the fact, as this House is aware, that, in the past, the Argentine has often insisted, in any bilateral agreement it has made, on 50 per cent. of the goods that it exports being transported in its own bottoms. I hope that the right hon. Gentleman will clear up that point.

In conclusion, it seems to me that, in the matter of bilateral agreements, we are getting to the stage where it is going to be difficult for us to have Estimates before this House. Instead of having a sum shown in sterling, we shall shortly reach the point where it will have to be shown in coal, petrol, and so many Argentine railways to be written off for that year. That will be the ultimate and inevitable end of bulk trading. Although the Government are paying lip service to the principle of multilateral trade, they are, at the same time, entering into bilateral agreements, which are being narrowed down to an exchange of so much of such and such goods for so much of such and such other goods. In the end, we shall find that Estimates of this kind will become completely unintelligible and useless.

9.4 p.m.

Photo of Mr Oliver Crosthwaite-Eyre Mr Oliver Crosthwaite-Eyre , New Forest and Christchurch

So far, in this Debate, we have had something like 10 speeches, none of which, with the exception of that by the Chancellor of the Exchequer, which was frankly explanatory without taking any side, has been favourable to this Supplementary Estimate. The speech which came nearest to being favourable towards it was that of the hon. Member for Colchester (Mr. C. Smith), who said that he wished to see food subsidies promoted irrespective of whatever ceiling might be set by the Government. I think it was fortunate for him that at the time he spoke the Chancellor of the Exchequer was not in the Chamber.

The fact is that tonight we are discussing the most disastrous of all those agreements which have been made with the Argentine Republic. It is only some 11 months since we discussed the last one, and I have been looking up the reports of those Debates. In the first place, the present Financial Secretary to the Treasury made it clear that in 1944 we had entered upon a four years' agreement as to which the prices could be reconsidered in 1946. It is only 11 months ago when Parliament was asked to pay £7 million to the Argentine in order to perpetuate the 1944 agreement. We were told from the benches opposite that His Majesty's Government had concluded a hard bargain, and in exchange for the £7 million, among other things, the agreement of 1944 was to be extended for a full year.

Therefore, if those terms have been carried out, and if what His Majesty's Government said on that occasion was correct, there should be no need for us tonight to be debating further increases for the Argentine. If one looks at the Press, I admit that Senor Miranda has made it clear that he considered that, by our refusal to maintain the convertibility of sterling, whatever agreements he had made were now rendered null and void. But if that be so, all one can say to His Majesty's Government is that this is yet another proof of the disastrous financial policy which they have pursued in the past, and of what happens when they try to make terms and conditions with regard to currency which they know they cannot fulfil and which merely result in our having to debate this gloomy and, if I may say so, final proof of the disaster of His Majesty's Government's economic policy.

Photo of Mr Percy Daines Mr Percy Daines , East Ham North

Could the hon. and gallant Gentleman indicate what other country we could approach to get the meat and other foodstuffs which we are getting under the agreement with the Argentine?

Photo of Mr Oliver Crosthwaite-Eyre Mr Oliver Crosthwaite-Eyre , New Forest and Christchurch

That is an entirely different point but, with permission, I will deal with it later. I was only dealing with the actual fact which I have mentioned, and which I do not think the hon. Member would wish to contradict.

Coming to this present agreement, I think my right hon. and learned Friend the Member for Hillhead (Mr. J. S. C. Reid) mentioned something which the Treasury spokesman had said: I would like to refer to one further phrase of his. He said: Then the suggestion was made from the Argentine side—and it was very interesting to us—could we link up the situation by advancing to the Argentine Government the value of the goods we should purchase from them, on the understanding that they used that advance, pus some current sterling, plus drawings on their blocked account, to pay out the railways. That is the structure of this curious agreement. I do not think Parliament has ever been asked to consider a more curious agreement. In the first place, we are told tonight that we are to get certain foods and feedingstuffs. Let us not forget what we are paying in exchange. Let us not forget, as the Chancellor of the Exchequer told us earlier, that what we are asked to guarantee to the Argentine are coal, steel, tinplate and those other manufactures of ours which, because of their nature, we can sell in any single market in the world. The Chancellor of the Exchequer laughs. Would the right hon. and learned Gentleman deny that those categories of goods which we have promised the Argentine are the only ones for which he knows there is a ready market throughout the world?

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

I should say that we can sell them in many markets, but that in few can we get so good a return as we get from the Argentine.

Photo of Mr Oliver Crosthwaite-Eyre Mr Oliver Crosthwaite-Eyre , New Forest and Christchurch

I hope the Chancellor is right and that he will maintain that view by the time I have concluded one or two more considerations from this agreement. [HON. MEMBERS: "He will resign."] He will follow a very illustrious master if he does so. The Chancellor of the Exchequer has told us that the great object of the agreement is that we get food and feedingstuffs without dollars. He went on to say that the whole of the A Account which at present is blocked, is going to be made free. He, no doubt, knows far better than I do, with my imperfect knowledge, that it is a fact that anybody who comes into the category of having balances freed in this nature can secure hard currency by buying from the sterling area, goods which we ourselves desire to sell direct for hard currency. I want to give only one example—rubber. It is possible, and indeed it has happened, for Malayan rubber to be sold for French francs while French rubber is sold for hard currency, like dollars, being replaced in the franc area by our own. The Chancellor is fully aware of that. He went on to say that we got quick payment for the Argentine railways and he seemed to make that a point in favour of the agreement. He did not mention to the Committee that, after all, we still own these railways and, surely, if we are selling them we are—

Photo of Mr Robert Young Mr Robert Young , Newton

I think the hon. and gallant Gentleman is swinging rather wide of the Supplementary Estimate.

Photo of Mr Oliver Crosthwaite-Eyre Mr Oliver Crosthwaite-Eyre , New Forest and Christchurch

The Chancellor of the Exchequer made it clear in his statement that the purchase of this food and the sums we are now paying are all part of one indivisible contract and, surely, if he is allowed to refer to the full terms of that contract we are allowed to do so.

Photo of Mr Robert Young Mr Robert Young , Newton

I think it is necessary to remember that I was not then in the Chair. If a right hon. Gentleman or hon. Member says something he ought not to have said, it cannot alter the fact that there is nothing whatever in this Estimate before me in relation to the railways agreement.

Photo of Mr Oliver Crosthwaite-Eyre Mr Oliver Crosthwaite-Eyre , New Forest and Christchurch

Sir Robert, we are asked in these Estimates to grant £110 million which will guarantee delivery of certain foods, but we are told that the grant of this money is an essential feature to the pact, and that if we do not grant it, so that the Argentine railways may be bought, we shall not get the food; surely we are allowed to discuss all the features together.

Photo of Mr Robert Young Mr Robert Young , Newton

There is nothing about the railways in the Estimates which we are discussing.

Photo of Mr Oliver Crosthwaite-Eyre Mr Oliver Crosthwaite-Eyre , New Forest and Christchurch

Further to that point of Order, Sir Robert. We are told that, unless these railways are sold, we shall not get the food and, therefore, I would suggest, with great deference, that it is in Order to refer to the railways we are selling for this food.

Photo of Mr Robert Young Mr Robert Young , Newton

I adhere to my decision that we cannot discuss the railways agreement.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

May I draw your attention, Sir Robert, to page 2 of the memorandum about the agreement which states: This revised Supplementary Estimate is presented in consequence of the agreement just concluded with the Government of the Argentine Republic, under which His Majesty's Government agrees to pay out the purchase price of the railways. As the Chancellor of the Exchequer opened this Debate by giving full details of that agreement and explaining this memorandum, with fuller and more detail, are we debarred in the Opposition in answering the points he made?

Photo of Mr Robert Young Mr Robert Young , Newton

Point out where it says anything about railways.

Photo of Mr James Reid Mr James Reid , Glasgow Hillhead

Up to date this Debate has been conducted, certainly, by the Chancellor of the Exchequer and myself, on the footing that the Minister of Food is asking us to pay £110 million in order that a certain agreement may go through. That is the whole basis of the Supplementary Estimate. If we are to determine whether it is a good thing that the agreement should go through, we must look at all the terms of the agreement, and the Chancellor of the Exchequer very properly pointed out on that point that we were to be told all the terms of the agreement. One of the terms of the agreement is that certain money is released in order that £150 million sterling may be immediately available to the Argentine Government. It does not matter what, but it happens to be to pay for railways. The point is we must discuss the terms on which £150 million is to become immediately available to the Argentine Government. That, I apprehend, is the point my hon. and gallant Friend the Member for The New Forest (Colonel Crosthwaite-Eyre) is trying to make.

Photo of Mr Robert Young Mr Robert Young , Newton

I dare say that, from that point of view, the right hon. and learned Gentleman is correct, and also the hon. and gallant Gentleman. But the Chair is tied to the items stated in the Supplementary Estimate, and is bound to keep hon. Members to what is directly stated in the Supplementary Estimate; and I must tell them that the question of the railways agreement does not enter into this Supplementary Estimate.

Photo of Mr James Reid Mr James Reid , Glasgow Hillhead

Further to that point of Order. I do not think you, Sir Robert, were in the Chair at the time when this Debate began, and it would be most unfortunate if the character of the Debate were altered at this juncture. I can assure you—and I am sure that the Chancellor of the Exchequer would agree—that in the earlier stages of this Debate it was common ground that the Government had to convince the Committee that the agreement was a good agreement, in order to get this £110 million. That being so, the Chancellor of the Exchequer did his best to convince the Committee, and narrated with great clarity the whole of the terms of the agreement, and, in particular, the financial terms which were devised with the object of producing the £150 million free in the hands of the Argentine Government in London immediately. We criticised the means by which that £150 million is put at the Argentine Government's disposal. Surely that is necessary to meet the case the Government sought to put to us. I can assure you, Sir Robert, that that was the basis on which both of us conducted the early stages of the Debate.

Photo of Mr Robert Young Mr Robert Young , Newton

I shall listen further to the hon. and gallant Gentleman, but I do not promise not to call him to Order if I think it is necessary to do so.

Photo of Sir Frank Sanderson Sir Frank Sanderson , Ealing East

Further to that point of Order. If it is the case that we are now allowed to discuss the railways, may I continue my speech?

Photo of Mr Robert Young Mr Robert Young , Newton

I have not ruled that way at all.

Photo of Mr Oliver Crosthwaite-Eyre Mr Oliver Crosthwaite-Eyre , New Forest and Christchurch

One of the points of the Chancellor was that we obtain speedy payment for the Argentine railways; and I was saying that surely, in all respects, His Majesty's Government should demand payment in accordance with their own wishes. But what has happened? First we pay £110 million to the Argentine. Of this money, £10 million is to pay what are called increased costs of Argentine production, and £100 million are to be paid into the B Account. From that B Account payment is to be made back to this country for the railways. I want to ask the Chancellor of the Exchequer why he has agreed to that, rather than to payment from the A Account. Even if what they want is a bad deal, at least let them make it out of something that bears an onerous guarantee to His Majesty's Government, rather than agree to pay out of an account which bears no such guarantee. This agreement means once again that His Majesty's Government have chosen the worst of all worlds.

I would remind you, Sir Robert, of what the Financial Secretary to the Treasury said 11 months ago, when defending a similar agreement, though it was in less harsh terms than the one we are now discussing. He said: We have not been silly or soft"—[OFFICIAL REPORT, 14th March, 1947; Vol. 434, C. 1763.] On this occasion the Government could not say this. All I can say is that they have again given away everything and got in exchange a few months' feedingstuffs and food for this country. They may say that that is something valuable to have done. But how long do they think they can go on selling railways and tramways in order to keep this country in food?

What do they think will happen in 12 months' time when they go back to the Argentine and try to make a new agreement? If they look back on the terms of the agreement they made 12 months ago and compare it with the terms today, what do they think will be their reception when they go back next time? True, they have a few tramways and a few dock installations still to sell. But compare that with what they have had to spend this time. Unquestionably, when they go back next time they will find that anything they can get will not be something contrary to our amour propre, something that is unworthy of a great nation, but something which not even this House of Commons would tolerate.

Let us think what we have done. We have sold our major assets in the Argentine—assets which took 60 years of the resources of this country to build up. We have sold them for nine months of meat and feeding stuffs. [HON. MEMBERS: "Six months."] I am being generous to the Government, and I will stick to nine months. We are paying prices far and above anything else that exists in the world. I know that Senor Miranda is not satisfied with those prices, but I ask the Chancellor to consider them: Linseed per quintal, which before the war was 17 pesos, is now 112 pesos; wheat, which before the war was seven pesos, is now 60 pesos; maize, which before the war was eight pesos, is now 40 pesos. If one looks at our adverse trade balance, in 1946 it was £36 million; in 1947 it was £95 million. The Chancellor tells us he is satisfied that the Argentine Agreement will help us to bridge that gap. But what will £10 million—even if the whole sum is achieved—do to bridge that gap of £60 million? How far does the Chancellor really think the statement of Senor Miranda, that he will make other concessions in the future, if it means anything at all—and he knows as well as I do, indeed far better, what those concessions mean—is likely to materialise in any unilateral benefit to this country?

Photo of Mr Oliver Crosthwaite-Eyre Mr Oliver Crosthwaite-Eyre , New Forest and Christchurch

The Chancellor says it is helpful. It is time that this House of Commons took one decision, namely, whether we are going on bartering away our last remaining assets for whatever we can get, irrespective of the price we have to pay, and irrespective of the future which it will bequeath to us, or whether at last we are to reassert our honour and our purpose and speak the truth when we are faced with an agreement like this, which is dishonour to us and traitorous to those who come after us. That is our decision tonight. It is easy enough for the Chancellor to say, "I have got food; I have got this, that and the other; I have got them at this price." What he has to answer is how he will feel in 12 months' time, or even two or three years' time, when the assets that still remain have been sold, and when we have to go back, to negotiate even more pauperised than we are now. How then will the Government be able to face not only our creditors abroad, but those who have sent us here to try to look after them?

9.24 p.m.

Photo of Mr Victor Collins Mr Victor Collins , Taunton

My only reason for intervening in this Debate for a few minutes is because of a remark made by the hon. and gallant Member for the New Forest (Colonel Crosthwaite-Eyre) that, in effect, in his view the Argentine Agreement was the most disastrous of all agreements that had been made by my right hon. Friend. He referred, among other things, to feedingstuffs. It occurred to me that he could not possibly have spoken during recent months to farmers. We on this side of the Committee have had to listen on many occasions to utterances made with owlish solemnity by hon. Members opposite, to the effect that it would be much better, and much more economical, if we imported into this country, not eggs and bacon, but feedingstuffs. Of course it would be more economical, but he and all other Members must know that feedingstuffs are extremely scarce in the world. They must know, or should know, that one of the most vital needs of the British farmer today is some easement in the feeding-stuffs position, even if it depends on the stringent conditions of these negotiations—their very protracted nature indicates the extent to which our people tried in the matter.

Anyone who considers these things will know that 600,000 tons of feedingstuffs, in addition to the quantities we had previously contracted for from the Argentine but did not receive, will make possible an almost revolutionary change in the present position of feedingstuffs allocation to farmers. We on this side, as opposed to hon. Members opposite, recently greeted with enthusiasm the announcement of the deal in coarse grains with Russia. We who greeted it enthusiastically knew that it was the first step towards an increase in feedingstuffs to farmers, which in due course would be translated into more eggs and bacon for our people produced on British soil. Which is the policy hon. Members opposite have always advocated, although they have never told us from where the feedingstuffs were to be obtained. That 750,000 tons merely off- set the 600,000 tons we did not receive from the Argentine. It obviously did not make any difference at all in increasing the ration of feedingstuffs, or in bringing in people other than the 1939 producers.

There are hundreds and thousands of people who can produce more eggs and bacon, if it were possible to enlarge the scope of allocations of feedingstuffs. Any Member with any knowledge of farming will know how vitally important this is to farmers. It is a gross misuse of language for the hon. Member to suggest that this agreement is most dangerous. It is an agreement which must be every bit as welcome to anyone who desires the welfare of the people of this country as was the Russian grain agreement.

As for these cheap remarks, such as we are going to feed our people on the proceeds of the Argentine railways or tramways for the next six or nine months, they do not impress me at all. What we are suffering from is merely the disaster of the war. We cannot go on blowing the world to bits for 10 years without having to pay for it. The hon. Member said that these railways were the accumulation of 50 or 60 years of endeavour and savings. Do we not know of all sorts of things in this city and even in this House, which have been the accumulation of many years of endeavour and savings which were blown to bits in a few seconds? Therefore, there is not much point in that argument. I am sure that the farmers of this country, and those who are looking forward to eating the bacon and eggs which will be produced from these feedingstuffs, will say that this was not a disastrous Agreement, but a successful Agreement and a major step towards the rebuilding of British agriculture

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

On a point of Order. I am one of the only two back benchers who have sat through the whole of this Debate, Sir Robert—

Photo of Mr Robert Young Mr Robert Young , Newton

That is not a point of Order.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

When the Minister of Food has finished shall we have the opportunity of making a contribution to the Debate?

Photo of Mr Robert Young Mr Robert Young , Newton

I cannot say; I do not know when the Minister of Food will sit down. This Debate ends by a certain time.

Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

Further to that point of Order—

Hon. Members:


Photo of Mr Cyril Osborne Mr Cyril Osborne , Louth Borough

I shall not sit down; I intend to ask this question, and—

Photo of Mr Robert Young Mr Robert Young , Newton

That is not a point of Order, and if it is, that is not the way to put it. Mr. Strachey.

9.32 p.m.

Photo of Mr Evelyn Strachey Mr Evelyn Strachey , Dundee

We have listened to a very interesting Debate, and I confess that I wish it could have been listened to very widely in the country and that careful attention will be paid to it. The proposition which has been reiterated from the Opposition benches tonight is that we should not have made these very substantial purchases of food and feedingstuffs from the Argentine. It is a very interesting proposition that someone should be prepared to go to the country and say to the people, "We ought to have forgone at all costs this meat, oils and fats, and linseed," which, although it is not a food, is an industrial raw material of great importance. Such a proposition is one which I am quite sure my right hon. and learned Friend the Chancellor and all of us on these benches would like to meet on any public platform. [An HON. MEMBER: "At North Croydon."] Yes, and posthumously at Paisley, as we might say. The people of this country should know that the Opposition have now committed themselves to this proposition.

I would like to pass from that to the more serious detailed points which have been raised on the substance of this agreement which, I agree, is large and complex, and which, I believe, as my hon. and learned Friend said at the beginning of the Debate, is very much in the interests of this country. I will reiterate the positive reasons why that is so towards the end of my remarks, but, first, I will deal with the points which have been raised in the Debate. The right hon. and learned Gentleman the Member for Hillhead (Mr. J. S. C. Reid) asked: Why should we unblock the hitherto blocked account of the Argentine Government, the A Account, as part of this Agreement? The short and broad answer is that, taking the agreement as a whole, unless that was done, the Argentine Government might well find themselves, indeed, probably would, without current sterling available for their very substan- tial purchases of goods from this country and we should be the last people to put the Argentine Government in that position. When the Argentine Government pay for the railways as part of the agreement, as they definitely inform us they will do, and also keep, as they propose to keep, a very important balance of sterling for the purpose of currency reserve in their own country, we should be the last people to object to such use for sterling, because it is surely an admirable thing that sterling is so used by a major country of the world today. If the Argentine Government do that, as they intend to do, unless this account were unblocked, the Argentine Government might not find themselves in a position to pay for the long list of exports which we certainly desire very much indeed to sell to the Argentine. Therefore, the unblocking of that account is a very necessary part of the whole transaction, and one with which we have no quarrel.

I was asked what was the justification for the guarantee against devaluation which the unblocked moneys would then carry. The justification for that, surely, is in the very important aspect of the agreement, under which we make our purchases in the Argentine in sterling instead of in dollars. Surely, that is something for which some quid pro quo it not unjustifiable. I was also asked whether this agreement superseded and washed out the earlier, so-called, Miranda agreement come to in September, 1946. The answer to that is that if some clauses of that earlier agreement are revised under the new agreement, that does not wash it out or supersede it. It is merely a revision and reviewing of the earlier agreement.

I was then asked a series of questions on prices. I was asked whether the £10 million payment to the Argentine Government, under the new agreement, meant, in fact, that the prices paid under it were unjustifiable, and had gone up to above the world market prices. We are able to say that that is not the case, if judged by the prices which were obtainable by sellers in the market for these commodities over the past period. The question was then posed as to the amount in this agreement which referred to new purchases, and the monetary amount that may be attributable to commodities purchased under earlier transactions. The quantity of maize of 1,200,000 tons to which reference was made refers to the new quantity of maize. I am not willing to give a split to the financial sums attributable to the new quantities and the old, because were I to do so, the price could be calculated at once.

Photo of Mr Evelyn Strachey Mr Evelyn Strachey , Dundee

For the reasons which we have steadily given, and shall continue to give, not just in this transaction, but in all these transactions. It would be against the public interest to give the price of the contract. That is not something that we have thought up for ourselves; it is the earnestly repeated advice of those very eminent businessmen who conduct these negotiations for us and who buy these commodities.

Photo of Sir Gifford Fox Sir Gifford Fox , Henley

Will the right hon. Gentleman admit that he has had a bad deal?

Photo of Mr Evelyn Strachey Mr Evelyn Strachey , Dundee

They are perfectly convinced that their hands would be hampered in these transactions were that information to be given. These are the very men of whom hon. Members opposite are so loud—and very justly so—in their praise. These are the businessmen to whom we are told we ought to listen carefully in these matters when they give advice on commercial questions.

Photo of Mr James Reid Mr James Reid , Glasgow Hillhead

I take it that the right hon. Gentleman is not prepared to deny that the price of maize under the agreement exceeds £30 a ton.

Photo of Mr Evelyn Strachey Mr Evelyn Strachey , Dundee

The right hon. and learned Gentleman should not make such assumptions

Photo of Mr Evelyn Strachey Mr Evelyn Strachey , Dundee

It was the next point I was coming to in my remarks. The right hon. and learned Gentleman should not make an assumption, and if he would just have patience for a moment I will come to that point. I can tell him quite simply and easily that I am prepared entirely to deny that the price of maize exceeded £30 a ton. It was very appreciably less than that figure.

Photo of Sir Gifford Fox Sir Gifford Fox , Henley

Will the right hon. Gentleman make the figure known?

Photo of Mr Evelyn Strachey Mr Evelyn Strachey , Dundee

I will not give an exact figure, but it is appreciably less than the figure he has mentioned. From the point of view of an answer to the right hon. and learned Gentleman's speech, that is rather a pity because point after point in his speech, as the Committee will remember, following that assertion, was based on the hypothesis of a dreadfully bad bargain which we had obviously made, because the price which we had given for maize exceeded £30 a ton. The price did not exceed £30 a ton but was very appreciably less, so that that part of the right hon. and learned Gentleman's argument falls to the ground. I need say no more about it.

Photo of Sir Gifford Fox Sir Gifford Fox , Henley

What was the price?

Photo of Mr Evelyn Strachey Mr Evelyn Strachey , Dundee

I now turn to the next price upon which the right hon. and learned Gentleman spoke, namely, that of meat. He said again very acutely, turning to the Estimates, that it appeared that the price of meat had not been raised at all from the earlier price being paid under the Miranda agreement. I can say something of the price, and I can tell the Committee at once that that is true, if we impute none of that £10 million to the payment of the meat price, though I think we should impute some at any rate of that £ million to the meat price, but how much should be imputed to that and how much to the other commodities is a matter of opinion.

Photo of Mr Evelyn Strachey Mr Evelyn Strachey , Dundee

I have very little time and I have a large number of points to answer—[Interruption.]

Photo of Mr Douglas Clifton Brown Mr Douglas Clifton Brown , Hexham

Hon. Gentlemen must restrain themselves.

Photo of Mr Evelyn Strachey Mr Evelyn Strachey , Dundee

I have a very large number of points to answer, and if I give way to hon. Members who get up now it will simply mean that those hon. Members who raised a number of points in the course of the Debate will not receive an answer.

The right hon. and learned Gentleman also raised the question of the meat ration, and he asked if I could give a guarantee that this purchase of meat guaranteed the meat ration at the present level? As the right hon. and learned Gentleman pointed out, the meat which we receive from the Argentine previous to or under this agreement is only one part, and not by any means 50 per cent. of the meat which we receive in total. Therefore, it would be quite wrong to suggest that the securing of this particular part of our meat supplies would necessarily secure the meat ration at any particular level. All we can say is, "other things being equal." But other things are not necessarily equal. They may improve, or deteriorate, and it would be absurd to take this particular part of our supplies and say that we guarantee any particular level of distribution.

The right hon. and learned Gentleman and the hon. and gallant Member for the New Forest (Colonel Crosthwaite-Eyre) both asked what are we to do in future years when transactions of this kind arise. There is no large asset to sell in the Argentine, such as the British railways. That, surely, is simply part of our general balance of payment problem. Evidently the hon. and gallant Member has reflected very little on this question. Surely, if he had reflected on it at all, he would see that when we come to the question of paying for our food imports from the Argentine—and other imports for that matter—and have no capital asset which we desire to sell, an agreement which, for the first time, has made it possible to base our transactions with the Argentine on sterling, and pay in the Argentine on sterling, is something for which we shall be extremely thankful.

Photo of Mr Oliver Crosthwaite-Eyre Mr Oliver Crosthwaite-Eyre , New Forest and Christchurch

Would the Minister confirm that in 1944 the original agreement was made for payment in sterling, and this is the first time sterling arising from current transaction is guaranteed by this country?

Photo of Mr Evelyn Strachey Mr Evelyn Strachey , Dundee

Just the opposite to that is the case. The earlier agreement was, made in convertible sterling equivalent to, dollars—

Photo of Mr Evelyn Strachey Mr Evelyn Strachey , Dundee

Yes, this is the first time it has not been made in convertible sterling. The right hon. and gallant Gentleman based a question not so directly on the Argentine Agreement, but one which bears on it in an important degree, which was the reconciliation of these figures in the Supplementary Estimate with the Estimates for the levels of subsidies over the year. It is an important point of some accounting complexity. Put in somewhat round figures, the increase demanded in these Estimates is of some £146 million. Of that, £95 million is prepayment under the Argentine Agreement, leaving some £50 million which is a genuine increase, as it were, in the Estimates on a cash account for this year. As the right hon. Gentleman is aware, that is mainly, and could only be, accounted for by a difference in levels of stocks. I am not saying that that is the only character, but it is much the most important one.

It is true, as he suggested it must be true, that they do reveal that in certain commodities we have raised the level of our stocks fairly substantially. That is true of meat, sugar and tea. It would be a mistake, and I must so warn the Committee, to think that we have been enabled to build up vast new reserves of these commodities. I wish we had. In most cases it simply means that we have been able to raise our stock level from the unpleasantly low levels to which they had fallen at an earlier period. I think it is really little more than a measure of prudence to have raised them at the earliest moment we possibly could by the appreciable, but by no means excessive, amounts to which they have been raised.

That accounts for much the greater part of the £50 million otherwise unaccounted for, but it is not the only factor. There have been other factors both on the plus and on the minus side. There have been reductions in rations of which, paradoxically, perhaps the first effect is usually to increase the cost, because the amount sold to the public is reduced while a contract running on means that for a time the amount bought goes on at the old level and an increase in stock results. There have been transactions in which the Ministry has made a profit. One has received notoriety in this House. I refer to the transaction in nuts; but it has come in in aid of these figures. There have been price rises cutting the other way on the commodities we have had to buy.

All this is balanced out—that on the cash account, the amount needed for actual purchases this year, and the amount received on sales. This extra sum, apart from the Argentine prepayment is needed. However, that does not mean that there has been any proportionate increase, or indeed—we believe that it will be found at the end of the financial year—any increase at all in the subsidy level as it has already been announced. The Chancellor of the Exchequer has told the House repeatedly that the subsidies would be held below the figure of £400 million. I think that it will be found at the end of the year that they have come out very near to the predicted figure of £392 million.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

Would the Minister explain why on 1st December, subsidies amounted to £420 million? What is the error in these figures?

Photo of Mr Evelyn Strachey Mr Evelyn Strachey , Dundee

There is not an error in these figures, but there have been several changes since then. There have been reductions in distribution, there have been price changes and there have been two increases in prices to the consumer. We believe that those measures and events taken together will reduce the total subsidy level by the end of March, the end of the financial year, to very near to £1 million or £2 million on one side or the other of the figure of £392 million.

I pass now to the remarks made by the hon. Member for East Ealing (Sir F. Sanderson). He asked whether the £10 million payment was retrospective in regard to food which had already been purchased. No, I think that is fairly imputed to the new foodstuffs which are purchased under the new contract. He dealt with the question of bulk buying in principle. I have not time to follow him in that subject, but I seemed to hear him say that bulk buying at the moment was indispensable but also disastrous. That seems to me a little like calling a lifebelt something disastrous when it is thrown to one. It is an ungrateful attitude on the part of the swimmer. I would not agree, of course, that bulk purchase is necessarily a disastrous policy to adopt. I would look at these matters on their merits, case by case, and I would not rule out bulk purchase at any time where, on balance, it seemed advantageous to the national interest all things considered.

The hon. Gentleman spoke of the high price of linseed. I neither confirm nor deny the prices he mentioned. I would say to him that we ought to compare the price we pay not with the pre-war price but with the price which other customers have to pay. I think that it would be found in that comparison that we are not doing so badly. I would agree with him very strongly that the price of linseed is very high and that we would much prefer to import the linseed rather than the linseed oil. I agree with him that naturally a very high price of that kind, and the choice of the Argentine to sell the oil and not the linseed, naturally induces cus- tomers like ourselves to look round for other sources. We have begun to grow linseed ourselves at home. It may be that in Africa and elsewhere in time we shall be able to develop other very important sources of supply upon which we may be driven to depend to a very large extent.

I have no time to develop, and I have no desire to traverse it, the interesting speech which the hon. Member for Colchester (Mr. Charles Smith) made, but let him believe that these are matters very much in our minds today, and I am grateful to him for drawing the attention of the Committee to them.

The hon. Member for Dumfries (Mr. N. Macpherson) asked me if I could tell him what the effect on meat prices would be. Again, as in the case of the ration, this is only one of the factors in our general supplies of meat, which is averaged out, and I cannot tell him what particular effect this transaction would have on meat prices. I now come to the speech by the hon. and gallant Member for New Forest and Christchurch, and I am bound to say that, if I were to take it seriously, I should have to go over again some of the points which were raised earlier in the Debate, but which were put by the hon. and gallant Member far more intemperately and with far less regard to the realities of the situation.

Photo of Mr Niall Macpherson Mr Niall Macpherson , Dumfriesshire

Could the right hon. Gentleman answer my question about shipping?

Photo of Mr Evelyn Strachey Mr Evelyn Strachey , Dundee

It has no part in the agreement whatever.

There is one point which I should like to make about the speech of the hon. and gallant Member for New Forest and Christchurch. He commented strongly on the terrible price which he alleged—and it is a high price—the Argentine are charging for wheat, but we are not buying any wheat from the Argentine. The hon. Member suggested that it was a quibble. I am very interested to know that it is a quibble that a high price matters less if you are not buying.

Photo of Mr Evelyn Strachey Mr Evelyn Strachey , Dundee

No, the Minister will not agree.

Photo of Sir Gifford Fox Sir Gifford Fox , Henley

On a point of Order.

Photo of Mr Douglas Clifton Brown Mr Douglas Clifton Brown , Hexham

The hon. and gallant Gentleman must resume his seat when I rise.

Photo of Sir Gifford Fox Sir Gifford Fox , Henley

On a point of Order. May not hon. Members ask the Minister if by wheat he means broken wheat?

Photo of Mr Douglas Clifton Brown Mr Douglas Clifton Brown , Hexham

That is not a point of Order at all; it is a question of fact.

Photo of Mr Evelyn Strachey Mr Evelyn Strachey , Dundee

I wish to repeat what the Chancellor said at the beginning of the Debate—that the advantages, and we believe that they are very substantial, to this country—there are advantages to the Argentine as well; there must be two sides to these deals—the advantages to us are that it enables completion of the railway deal, which we think is a very real advantage to us, so that our very substantial food programme can be carried through; we open up to a very considerable degree the markets of the Argentine to types of exports which were closed to us, and, finally, and perhaps above all, we are basing, for the first time, enormously important transactions with the Argentine upon sterling.

9.59 P.m.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

The Minister, I think, has misconstrued our case on the Argentine Agreement. We believe that we have not bought enough feedingstuffs, and that what he has bought he has bought at far too high a rate. Last July, he said we were buying 700,000 tons of maize. In fact, he has failed to buy the 240,000 tons which he promised last July. Now he comes along and tells us that he is buying another 1,200,000 tons this year. When are we going to get delivery of these feedingstuffs? The Minister of Agriculture

It being Ten o'Clock, The CHAIRMAN left the Chair to make his report to the House.

Resolutions to be reported tomorrow.

Committee report Progress, to sit again Tomorrow.