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Sugar Refining Agreements

– in the House of Commons at 12:00 am on 9th May 1957.

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11.0 p.m.

Photo of Mr Joseph Godber Mr Joseph Godber , Grantham

I beg to move,

That the Draft Sugar Refining Agreements (Approval) Order, 1957, a copy of which was laid before this House on 17th April, be approved.

I will move this Order in a very few words in view of the lateness of the hour. I do not wish to be discourteous to the House, but I think that it would be best if I left it to hon. Members to ask such questions as they may wish, and then, by leave of the House, perhaps to reply to those questions, I think that that would be the simplest way.

11.1 p.m.

Photo of Mr Arthur Champion Mr Arthur Champion , Derbyshire South East

This is the first Order of approval to be made under the Sugar Act, 1956. Despite that fact, I shall not make a long speech, nor ask many questions about the Order, although I have one or two questions which ought to be asked in view of the circumstances of the presentation of the Order and the fact that it is the first under the Act of 1956.

As I understand it, the Order gives approval to agreements entered into between the British Sugar Corporation, on the one hand, and three firms whose business is the refining and sale of sugar, on the other. These agreements really mean that the whole of the market for sugar is divided up in such a way as to create organised marketing on a near, if not quite, monopoly basis, this with the margins of profit controlled by decision of the Chancellor of the Exchequer and watched by the Treasury; so that the Chancellor of the Exchequer and the Treasury are the consumers' only safeguards against the squeezing of the consumer by what is virtually a powerful monopoly in this commodity.

Can the Joint Parliamentary Secretary tell me what steps the Chancellor has taken to ensure that the maximum price is reasonable and that the producers' margin is not excessive? Under the agreements the Chancellor has to do precisely that, and I wonder what steps he has taken and how he has done it. It must be the Chancellor's business to safeguard the public in this respect and, in turn, the Joint Parliamentary Secretary must satisfy the House tonight. They, between them, are the guardians of the consumer in this matter.

Incidentally, I had an opportunity recently of seeing Messrs. Tate and Lyle's great Plaistow works. Whatever else may be said about that great firm, it certainly does not appear to have settled down behind a monopoly price to use old-fashioned methods. It recently installed what must be among the most up-to-date if not the most up-to-date plant in the world. It is fair to say that, having just made a slight comment on the monopoly position which is created by the continuation of old agreements and their renewal in the Order.

The second question I want to put to the Joint Parliamentary Secretary is this. As the Act of 1956 and the agreements made under it are designed to ensure a home market for the sugar beet producer, am I right in understanding that the total output of sugar beet has a guaranteed sale before the refining firms purchase any sugar from Commonwealth or other countries?

Those are the questions I want to put to the Joint Parliamentary Secretary, and I hope that he will give us a reply and then we shall, without unnecessary delay, give him his Order.

11.4 p.m.

Photo of Mr Joseph Godber Mr Joseph Godber , Grantham

By leave of the House, I should like to say that I am grateful to the hon. Member, as the House will be, for his generous reference to Messrs. Tate and Lyle, who have certainly shown a commendable public spirit in their approach to keeping up to date in developments in their factories and in their attitude to this matter.

The hon. Gentleman has asked me what steps the Government take to see that the maximum price is not excessive. Of course, under the Sugar Act, the price at which sugar is sold in the shops is related far more closely to the world price than it was before. Under that Act there is provision for a surcharge and for a distribution payment if it is considered right to introduce that in place of a surcharge. The latter is to give the home consumers the benefit of the arrangements with the Commonwealth producers and, at the same time, to maintain some connection with world prices.

I agree that that has had the effect, perhaps, of putting up our sugar prices, but in what will not be a long time, I think, the working of the Act will have a compensatory effect. Indications are that, with world sugar prices remaining as they are higher than the Commonwealth prices, the distribution payment will come into effect. Any money which the Corporation accumulates will be returned to the industry, and, I trust, to the consumer in due course.

So far as the margins provided in this Order are concerned, the House might care to know of the agreement which was reached last December between my right hon. Friend the Prime Minister, when he was Chancellor of the Exchequer, and Tate and Lyle Limited, in a letter which has been published under the date of 14th December, 1956. My right hon. Friend enclosed an agreed Minute between himself and the firm, and it includes the following paragraph, which, I think, answers the point made by the hon. Gentleman: … in addition to submitting statements from their auditors reconciling their actual selling prices with the formula, Tate and Lyle, Ltd., agree to extend the period during which the results given by the new formula and the current agreement can be compared and for this purpose will continue to provide figures in 'he same way as when that agreement was in operation. Comparison with the results of the application of the current agreement does not confer on those results any intrinsic merit or imply that they were necessarily the only ones which were justifiable and satisfactory to the Government.In addition, it is agreed that there should be an examination of Tate and Lyle's costs after the Undertaking has run for a period of three years. This will enable consideration to be given to whether, and to what extent changes in circumstances might call for adjustments in the formula and will enable the Government to satisfy themselves that the Undertaking is, in fact, operating in such a way as to provide adequate protection for the consumer That is the point which the hon. Gentleman, I think, has in mind. He will see that his point is covered in that way.

I will turn now to beet sugar. The whole purpose of the Refining Agreements is to safeguard the British beet industry and to make sure that the whole of its output is taken up. In this connection, I would refer him to Article 5 of the first Agreement which is set out in this Order, where he will see that Tate and Lyle are bound to purchase any home grown raw sugar offered to them by the Corporation as the Corporation shall reasonably require. That is a very definite and binding undertaking. It does not mean that all of it would be utilised before any Commonwealth sugar was brought in, but the undertaking is given that any excess will be taken up by Tate and Lyle. That is an adequate safeguard to the home producer, and we are anxious to see that it is exercised. I think that that provides the necessary safeguards for the home producer, and that what I have said will satisfy the hon. Gentleman and the House that we are looking after the interests of the home producer.

Question put and agreed to.

Resolved,

That the Draft Sugar Refining Agreements (Approval) Order, 1957, a copy of which was laid before this House on 17th April, be approved.