The subject of tonight's Adjournment Debate has the rather odd and harmless title of "X Y Z Timber." Under the cloak of this harmless title the Government carry out what I consider to be unfair and unethical trading. It deals with hardwoods which, of course, are quite distinct from softwoods in their application to the trade. There are hundreds of species and almost every country in the world supplies this country with hardwoods. Skilled and selective buying is required and specialised industries and consumer industries have to take great care to get the correct grade, quality and hardness of timber. That leads to the first conclusion that of all materials unsuitable for bulk purchase this is the least suitable because of the vast number of varieties.
The history of the sale of hardwoods in this country after the war and prior to 1st April, 1949, is as follows: First,
the distribution of timber was left to the pre-war importers and they had a quota on the stocks held and the pre-war turnover. There was a very rigid arrangement and only companies in business prior to the war had any chance of survival or of doing business after the war. The consumer had to have a licence to consume certain quantities of hardwoods and these licences were given to importers who had obtained fresh stocks. There was a price control on hardwoods and there was bulk purchase. On 22nd March the right hon. Friend of the Parliamentary Secretary, the President of the Board of Trade, came to this House with a flourish of trumpets, to which only the President of the Board of Trade could treat us, to announce that a large number of controls were going and that this was to the benefit of the country and, of course, to the benefit of industry. He announced on 22nd March, 1949, that these hardwoods would be what he called de-controlled. They would, he said,
continue to pass through Government stocks as at present and the timber control will exercise discretion in selling their stock by paying special attention, in the case of the better grades. to the use for which the buyer seeks to acquire them."—[OFFICIAL REPORT, 22nd March, 1949; Vol. 463, c. 213.]
That is the very praiseworthy object which the President of the Board of Trade had in mind. In answer to a supplementary question from a Member on his side of the House he said that so far as quality was concerned his hon. Friend knew the position in respect of the furniture utility scheme. He went on to say that he was satisfied that supplies were adequate to provide for decontrol.
So the President of the Board of Trade promised three things on 22nd March, when he announced his new scheme. The first was that he would pay special attention to grading, the second was that the quality of hardwoods would be maintained, and thirdly he gave an undertaking that supplies would be sufficient. That is the history up to 1st April, 1949, giving a brief account of the scheme and of what the President of the Board of Trade said on 22nd March, when he announced his new scheme.
Let us look at what happened from 1st April onwards. So far as the consumer is concerned licensing is abolished with the exception of one or two minor grades of hardwood. Bulk purchase con- tinues and all the timber goes into what is known as the national stock. That is under the control of the Board of Trade and some inventive person at the Board of Trade, not the Parliamentary Secretary, I hope, decided to call the scheme the X Y Z timber scheme. The reason was that this national stock was to be divided into three categories, X, Y and Z. The Z category was absolute rubbish in quality. It was the accumulation of the follies of the Timber Control over a number of years. It was what the trade call "junk," and it was sold at twice the market price. X was a moderate timber and the purchaser could get 50 per cent. of it. Y was a very good timber. The Board of Trade insisted that importers should take some from the three categories. One could have 50 per cent. of X, 35 per cent. of Y and 15 per cent. of Z. The reason they had this scheme was because they wanted to dispose of the junk which they had accumulated in their stocks over a period of years. This scheme enables the Board of Trade to dispose to industry in this country of all the bad timber which they themselves buy.
In addition, the consumer of hardwoods has to pay cash. The point which really made me determine to bring this matter to the attention of this House is that not only do the Board of Trade say that the consumer must take a certain percentage of this had timber which no one wants, but they also tell him that he must pay cash for it. That is made a condition of the sale. Having made sure that the consumers take supplies of that timber and put that timber into their stock they have then told several of them, "You cannot now have this good timber which you want to sell." In the result the Board of Trade unload their very bad timber on the industry and do not make good their word by giving the industry the good timber.
Let us for a moment look at the ethics of this scheme. The Board of Trade fix all prices and make millions of pounds on the sale of softwoods to the people of this country. The high cost of housing today is practically the ruination of the housing programme, and yet the Board of Trade make many millions of pounds every year by insisting that industry takes softwood at a very high price. In this case they are not only insisting that industry shall take hardwoods at a high price, but are insisting upon them taking bad hardwood and are not giving them good material.
I would ask the Parliamentary Secretary whether that is not like his wife trying to buy half a pound of tomatoes and being told that if she buys two pounds of bad cabbage she can have them, and also that she will have to buy two pounds of potatoes also. That is what is happening in the case of timber. Someone then turns round and says, "Now that you have bought the bad cabbage and the potatoes you cannot have your tomatoes." I am not a married man, and it is not for me to say what a wife would say to her husband in such circumstances. As a politician I have a good idea what a housewife would say, although I am not sure that I could reproduce the picturesque phrases of a housewife who was asked to buy groceries on those lines.
I wonder whether the Parliamentary Secretary might not pass on those principles to the Ministry of Food? Incidentally, I am grateful to him for attending at short notice. I know he has rushed his dinner to get here, and I am grateful for that also. He would have rushed here even quicker I imagine, if, when he ordered his dinner the Minister of Food or the Parliamentary Secretary to that Ministry had insisted that not only should he have his dinner, but that he should buy half a pound of snoek or whalemeat as well.
This question of the ethics of the matter is worrying the trade a great deal. I should like to quote from a letter sent to the Timber Control on 13th October. It is from a man who was unable to obtain the good hardwood but had had the bad hardwood thrust upon him. He wrote:
The position, therefore, is that having bought some mouldy biscuits at more than double the price of good ones, on the understanding that by so doing we should obtain some jam, we are now calmly told that there is no jam. This appears to my simple mind as not only blackmail, but a swindle.
The answer of the Timber Control is also dated 13th October. I must say that for a Government Department the letter was answered fairly promptly. It stated:
If you will let me know which woods in X and Y you are unable to obtain in order to deal with your credits of Z, I will have the position examined at once. It would also assist me if you could name any specific parcels and the areas in which they exist, so that the situation can be dealt with in detail.
Here we have the Board of Trade Timber Control, with all the control which they have in the world over timber —they buy it all and fix the prices—saying to a man who wants to buy some, "I do not know what we have got. If you will let me know where it is I will see if I can let you have some good timber." It is monstrous when the Timber Control does not know where good timber is or whether there is any good timber.
I should like to know what the Parliamentary Secretary proposes to do about a case like that. It is no use the Parliamentary Secretary saying that because the Timber Control is a Government Department and is publicly owned, it automatically acts or conducts its affairs efficiently. That is not necessarily so. If a mistake is made in the Department when hardwood is being bought what happens is rather like the doctor's mistakes—they bury them. The doctor buries his mistakes or at least he used to do so; now he has no time to make any mistakes when diagnosing his patients. The Timber Control will buy bad timber and insist on the importer taking it. By so doing they perpetuate that particular section of the Board of Trade because any mistakes they make will never see the light of day. The Prime Minister might have suggested in his statement today a cut in the Timber Control.
If it is fair to do this with timber, will it not be fair to do the same with stool? If the Government nationalise steel, as they propose to do, and then turn out some bad steel would it be possible and moral for the Government to adopt a precisely similar scheme and to say to the motor car manufacturers, "You can have so much good steel but you must take so much bad steel," and after they have taken the bad steel then to tell them that they cannot have the good steel? I ask that as a specific question.
On the ground of efficiency, distribution is normally to help the consumer. The builder's merchant who sometimes supplies timber and all the different needs of builders is there for one specific purpose, to satisfy the consumer and see that he gets his materials in a steady flow in order that he can build. Under the scheme with which I am dealing tonight distribution is arranged purely to enable the Government to get rid of their stocks. All consumer's choice disappears and manufacturers are forced to stock unsaleable timber.
Quite frankly that is wrong, in my opinion, and I hope that the Parliamentary Secretary will give some indication as to when this scheme is to come to an end and how it is to come to an end. If he cannot do that I would like him to try to justify it on moral grounds and on grounds of ethics. If it is right, and he succeeds in justifying it on ethical grounds, can private traders carry on that business and use the same mode of conduct? I think it is important to know that there should be one rule for all in the country and not one rule for a Government Department and another rule for private traders.
At present the effect of this scheme is to make more expensive the cost of products into which hardwood enters. Modern methods of mass production are slowed down, because manufacturers get certain quantities of hardwoods which are unsuitable and have to put them in stock and do not get sufficient suitable wood. As a result, a large number of manufactured hardwood commodities are being imported into this country from abroad. Parquet flooring is coming from the Netherlands, and we have the absurd position of machinery and men in our own country without work, because they have not the hardwood.
I beg of the Parliamentary Secretary to remove this scheme at once. I would ask him to do something in the future which the President of the Board of Trade has not done in the past, and that is to consult the trade. The President did not consult the retailers when he made them lower their prices. He did not consult members of the trade when he arbitrarily imposed this scheme upon them, parts of which are quite unworkable. I believe that the only body he ever consults is the T.U.C., whom he consults before he does anything at all. I hope that the Parliamentary Secretary will see that the trade is consulted and that this scheme is removed. Expediency is no answer to a question of morals.
As the House is aware, the Secretary of State for Scotland has on more than one occasion informed us that one of the factors limiting housing in Scotland is timber. In Scotland there is a good deal of dissatisfaction with the Timber Control.
I was informed recently of the difficulties with which manufacturers are faced. The greatest users of timber are those who, in the nature of things, accumulate the greatest amount of unwanted and unsuitable timber. As my hon. Friend the Member for Wallasey (Mr. Marples) has pointed out, every sale is a conditional sale. The manufacturer has to take a parcel, so much of which is good and so much of which, in certain classes of business, there is no opportunity of using whatsoever.
There is the double difficulty that the yards which accumulate class 3 timber—which is hardly suitable for anything but fuel—stand statistically with the Timber Control in such a position that they cannot get further supplies of class 1 and class 2 timber. If a man is a large consumer of high grade timber, and has been continuously a large consumer, he stands to put himself out of business, because his accumulation of an increasingly large stock of junk prevents him applying for the superior timber which is the only kind he can use in his class of trade.
A second question has been put to me by my friends in the timber trade. It was first raised in connection with the importation of charred wood from Hamburg which caused some concern to people on the east coast of Scotland. I do not know what happened to that. Timber merchants have asked what are they to do with the inferior material which they have been compelled to take and for which there is no outlet? They could, of course, take it to the balance sheet and put no value on it, which would be discouraging to the Chancellor, although it would be the proper thing to do. They would like some guidance from the Timber Control as to what they should do with it. It might be disposed of as fuel. Is there any restriction on it?
I agree that the ethical side has been well put by my hon. Friend. Conditional sales in certain merchandise were declared to be illegal. I recollect, in the silk hosiery trade, the conditional sale of a certain class of hosiery in order to buy another class was declared to be illegal, and certain punishments were inflicted upon merchants who made conditions of sale. Perhaps the Parliamentary Secretary has that in mind. Perhaps he would make it clear that there is no condition of sale in the Timber Control. Is it the case that suitable timber, in the judgment of a manufacturer, can be supplied to him and is there no conditional sale involved in it?
This short discussion which we have had is an indictment of the Timber Control. I was more credulous than my hon. Friend. When the President of the Board of Trade said, with such a flourish of trumpets, that he was removing a number of controls so lengthy and far-reaching in their character that he would not detain the House of Commons with them because they ran into many scores, I got the impression that that was a great sweeping away of these impediments. But if what my hon. Friend has said is correct—and I do not doubt it—that impression was quite false. The controls were not removed, but remained in their most offensive characteristic. They have had the effect in practice of encouraging, first, the buying of worthless timber and secondly, the use of worthless timber. These are indictments which I hope the Parliamentary Secretary will dispose of effectively in his reply.
The hon. Member for Wallasey (Mr. Marples) has raised a matter which I agree is of importance to the entire hardwood trade, whose long and loyal co-operation with my Department has enabled the national needs of hardwood, from furniture to shipbuilding, to be met in adequate measure during the last 10 critical years. I would emphasise that it is the help we have had from the trade which has made possible continuous supplies and their fair distribution in these difficult times.
I am sorry in some ways that the hon. Gentleman raised this matter at this moment of time. I hope he will agree with me that, as discussions are in fact at present proceeding with the trade, it would be wrong of me to prejudice those discussions; anxious as I am to have the fullest advice possible from the trade. I will not be drawn into a discussion about consultation in general. On this matter consultation is proceeding at this moment and I want to get the full benefit from it.
I can assure the hon. Gentleman that I am not complaining. I am merely saying that since discussions are proceeding, and we have had so much help in the past, it is important we should have the best advice we can get, and that is what we are trying to obtain.
As the hon. Member has explained, at the beginning of the war the Government took over the importation of hardwood. Since then Timber Control has maintained Government stocks of hardwood which have, I think, by and large enabled the hardwood consumption, although until quite recently below free demand, to exceed that of pre-war for the whole of the last six years. This increased consumption is due largely to the substitution of hardwood for scarce softwood to the greatest possible extent. The Government have no desire—I say what has been said so often before—to extort profits from the consumer. The last published Trading Accounts and Balance Sheet show that for the last two years for which accounts have been published, the net trading result of the operations of Timber Control has been a loss of about 1 per cent. on turnover, reflecting I think the general success with which a policy of trading on a "no profit, no loss" basis has been carried out.
It has always been the policy of Timber Control to dispose of its hardwood stocks, known as the national stock, in a balanced and orderly fashion ensuring, as any prudent trader would do, that sales over any period would represent a fair cross-section of existing stock. From the outbreak of war until quite recently the licensing of hardwood consumption which was necessary to direct inadequate supplies to essential needs also gave us the means of carrying out this policy. The releases of hardwood from national stock were made only against customers' consumption licences produced to the Control by the timber merchants. Care was taken to see that the grades and the species of wood specified on the licences both corresponded to the uses for which the licences were required and, over a period, represented a fairly balanced proportion of total releases and total stocks.
Early this year when it was decided that the improved hardwood supply position would allow us to abolish licensing for nearly all types of hardwood from the 1st April, the picture obviously radically changed. That, which was a very considerable move, altered the whole picture. From 1st April, if we had not made any further arrangement, any merchant would have been entitled to go to national stock and to draw as much of any quality or species as he wished to buy for the purpose either of sales or stock building.
National stock amounted at that date to something like 24 million cubic feet—about one year's consumption of imported hardwood worth about £20 million. An appreciable part of it consisted of hardwood which, as it had been bought during the post-war period of scarcity when quantity here at home was more important than quality in meeting essential needs, would inevitably prove less attractive to the customer than those supplies which we had been able to buy more recently under more favourable conditions. There was a time when we literally had to take what we could get. Later on the position improved, and we were able to exercise very much greater choice. I think that it was clearly advisable—
in connection with the hon. Gentleman's last point, is it the case that the Timber Control are now transferring to this bad section timber which they have recently purchased?
I would not accept that. I would say that the less good timber—the timber of which complaint has been made—is almost wholly the result of the kind of buying that we had to do in the years when we had to get what we could.
Before I gave way, I was saying that it was clearly advisable in the interests both of the general body of hardwood consumers and of the taxpayer, to continue the policy of sharing out fairly what was available. Equally clearly, the disposal of a large and a varied stock in accordance with this policy but without the detailed control afforded by consumption licences was a difficult problem and, I grant readily, a problem to which no, perfectly satisfactory solution was likely to be found. What we did was to tell our Timber Control officers that in order to continue a balanced and orderly disposal in these new circumstances national stock should be divided into the three categories which have already been mentioned by the hon. Gentleman.
Every purchaser from national stock had to take a minimum of 15 per cent. of the Z woods—those are the less popular—and could not take more than 35 per cent. of the X woods—those are the popular varieties.
Yes. I will deal with the point made by the hon. Member for South Edinburgh (Sir W. Darling) in a moment.
The balance—the Y woods—consisted of intermediate types. On the advice given to me—and I have looked at this matter carefully because the hon. Gentleman was good enough to give me adequate notice—I do not accept that there is a lot of "junk" as he put it, in the national stock. The Z category hardwood, which was acquired for the most part in these difficult and immediately post-war circumstances when it was often the only hardwood available to meet essential needs, amounted on 1st July to about one-fifth of all national stock.
All things are relative, and my own feeling is that the fact that Z woods are now thought so unattractive is at least partly due to the Timber Control's energy and skill in recently buying more and better varieties. The hon. Member for Wallasey referred to an individual complaint. I thought as I listened to him that in this matter the Control had behaved in exactly the right way. A complaint had been lodged. The Control, I gather, answered the complaint quickly and said, "Please give us further details and we will go into the matter quite fully." That is the attitude which I should have expected the hon. Gentleman to say was the kind of thing which pleased him.
That was asking the customer to indicate where Timber Control's stocks were. The gravamen of my charge is that Timber Control have not the slightest idea, where the timber stocks are.
Surely, the hon. Gentleman is misled. If a complaint is made about this vast stock, then it is reasonable to say to the complainant, "Please particularise, and we will go into the matter Tully." However, I imagine that that case is proceeding. I do not know the details of it. I do not know the actual case.
Before I turn to the other matters mentioned by the hon. Member for Wallasey, I should like to deal with the point made by the hon. Member for South Edinburgh about conditional sales. Of course, we had to look into this matter very fully. If the hon. Gentleman were interested I would give him all the details, but I will content myself by saying that the way in which this hardwood is being disposed of is not contrary either to the letter or, if I may give my own view, to the spirit of the law. I have taken the highest advice from the proper quarter on that point. I am absolutely satisfied that what Timber Control is doing at present in the way of this orderly distribution of wood is legal and, I believe, in the best interests of the trade. Within the framework of this policy which we have been pursuing, everything reasonably possible was done to smooth the path of the disposal of the rational stock. Flexibility—
Perhaps the hon. Gentleman will allow me to go on. The flexibility was introduced into the arrangement by allowing purchasers to overdraw their entitlement of X wood up to a certain limit. In addition, in consultation with the Timber Trades Federation, it was decided to allow three months' rent-free storage to buyers of hardwood from the national stock and this avoided much unnecessary movement of the wood which would have been involved and also relieved the hardwood trade of considerable expense.
The course which was then adopted had two very considerable advantages. In the first place, a wide variety of Government stocks were shared out fairly among all merchants and consumers, instead of the most desirable items going to a few. I should mention that, in our discussions with the trade on all these points, we found that they felt strongly—and I would emphasise that—that whatever changes we may later decide to introduce into our present arrangements, some safeguard to ensure fair distribution of the more desirable woods in the national stocks is essential. I challenge either of the hon. Gentlemen who have spoken to deny that statement or to put against it any responsible opinion from the trade.
In the second place, Timber Control, and through them the taxpayer, is not likely, as the result of maintaining continuity of essential supplies in a difficult post-war period, to be able to meet the heavy trading loss which would occur if the best of the national stock were rapidly sold off and the rest left. When, as we hope, we revert to private trading, we want continuity in it, and we would do no service to those who will take this trade over in due course if we were to dump this stock now. Again, I do not believe that any responsible opinion in the trade would deny that view. It is, then, of the utmost importance from everybody's point of view that we should clear this stock in this orderly fashion, and particularly from the point of view of those who I hope will in due course have this trade in their own hands.
While I recognise that no solution of the problem of the disposal of the national stock is likely to be completely satisfactory to every individual member of the hardwood trade, I will say again that we are at present discussing with representatives of the Timber Trades Federation whether some modifications can be made in present arrangements. These somewhat technical discussions are still going on, and I am confident that a satisfactory arrangement will be reached. I rule nothing out; I am content on this matter that there should be the fullest consultation with the trade from every point of view and that we shall find an understanding, as we have done over so many of these difficult years, and in the interests of all the people concerned, about what changes should be made in the present system of allocation.
I do not suppose that the trade would agree with the precise way in which we have done this, but I am quite certain that the trade as a whole would agree that some way must be found for the orderly distribution of the national stock. Certainly, at any rate on the advice given to me, I would say that no responsible merchant in this field would really behave in the way in which the hon. Gentleman has suggested. This is a matter which I admit is difficult, but is one on which we are doing our best and on which we shall continue to take the advice of the trade and make whatever changes are called for.
It is perfectly true that he subsequently modified his remarks so that they could not bear the full interpretation of what my hon. Friend called the "flourish of trumpets" with which he introduced his remarks, but he certainly did introduce them in a way which would have led the ordinary man in the trade to suppose that it was a great deal more than the Parliamentary Secretary has said. For instance, the President of the Board of Trade said:
… as soon as this Order comes into effect, hardwood will be quite free for consumption by all purchasers, and not only the furniture industry."—[OFFICIAL REPORT, 22nd March, 1949; Vol. 463, c. 215.]
That goes a little further than merely saying that he was sweeping away certain detailed, technical and meticulous interferences in the procedure of individual licences. If the Parliamentary Secretary will read that sentence with a slight alteration, he would be given the impression that whisky would be quite free for consumption by all purchasers and he would not assume automatically that it would be parcelled out, involving the purchase by some of a considerable quantity of Algerian wine and by others of more or less drinkable gin. We now
understand that the President, did not mean what he said.
Next comes the question whether it is now being satisfactorily done. The Parliamentary Secretary advocated with great vigour the theory of conditional purchasing, which he said did not contravene either the letter or spirit of the law. I trust that his remarks will not embarrass his hon. Friend the Parliamentary Secretary to the Ministry of Food when she is carrying out prosecutions of traders who have carried out similar practices. The last thing which the Parliamentary Secretary said was that the earlier part of the stock was not so good, but the later stocks were very good indeed. Maybe, that is so, but the Parliamentary Secretary will know his own circular which was sent out on 21st July, 1949, which was long after the alteration made by the President of the Board of Trade, and in which it was stated that the following woods had been transferred from Y category to Z category, which is the one which, on the admission on the Parliamentary Secretary, can only be disposed of by conditional sales:
The right hon. and gallant Gentleman is implying what I did my best to deny, and his hon. Friend made the same point. I deny that it is right to describe the Z stock as "junk." It is, I admit, inferior in quality to the other grades. The whole purpose of the grading system was to bring out that point, but the suggestion of the right hon. and gallant Gentleman is unfair in view of the explanation I have given.
I was making no suggestion; I was merely asking whether the trader was able to dispose of the timber in any way he liked. It was not I who said it was "junk," or who gave the definition. Let me give the hon. Member's definition:
Stock of poor quality or deteriorated stock or species unsuitable for most commercial purposes.
These are very strong words, and, as I say, I do not think that anybody here has made the suggestion that the wood is unusable in any way. But what we certainly have said, and what the hon. Member has just admitted, is that it is wood which the trader would not be purchasing in the ordinary way, and which, as my two hon. Friends have stated, he may find himself landed with for a considerable amount.
When the Parliamentary Secretary says that I do not understand, I do not think he is very clear on the matter himself. What is being discussed are conditional sales, sales under pressure, and to say that a merchant is accepting this because he is intending to re-sell it is, surely, if I may with all respect use the word, rather a quibble. The fact is that a purchaser is having forced upon him an amount of stuff which in the trade he would find great difficulty in using, and my hon. Friends were saying that this practice should be brought to an end as soon as possible.
The Parliamentary Secretary said it was his desire—and we welcome his statement—to get back to private enterprise in this matter as soon as he could, and to get rid of this control and hand it over to the trade in an orderly fashion. But he says that he is now discussing whether some modifications can be made to the present arrangement. That is what my hon. Friends were pressing for. The matter should receive more expeditious treatment, as my hon. Friends said. I am sure that in all these matters a certain amount of Parliamentary pressure does no harm in accelerating the sometimes somewhat lengthy process of negotiation to which, naturally, the Board of Trade demur if it means that they are to be found in default as having bought some stuff of which they find it difficult to dispose.
As I say, the analogy of the Algerian wine occurs to everyone's mind. I am glad to hear the Parliamentary Secretary say that the Government are welcoming the "no profit, no loss" basis. I am not sure that that holds good for all transactions with the Timber Control; I am not sure that it holds good for the softwood transactions. What made me attend the House this evening, and the point in which I am interested in relation to these transactions, is the inordinate profits which are made on softwood. That bears directly upon the cost of houses, and I do not think that the Parliamentary Secretary will deny that the figure of £7,500,000 which appeared in some of the papers which he submitted to the House is the resultant, I will not say profit but out-turn of the transactions to the benefit of the Board of Trade and Timber Control and to the detriment of those who subsequently wished to live in houses at a reasonable rent.
However, we have the Parliamentary Secretary's assurance that the matter is proceeding, that he is doing his best to get out of State trading and to get into private trading as fast as he can, and that negotiations are now actually proceeding for the modification of the present arrangements. These are all signs of grace and we welcome them; we all hope that they will be rapidly proceeded with, because up to now these transactions have not all been entirely satisfactory to the trade neither have they been satisfactory to the country.