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Orders Of The Day

Volume 496: debated on Wednesday 20 February 1952

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Agriculture (Fertilisers) Bill

Order for Second Reading read.

3.50 p.m.

I beg to move, "That the Bill be now read a Second time."

This short Bill carries out an undertaking which I gave to the House on 29th November last that I would ask Parliament to make the necessary provision for the fertiliser subsidy, the introduction of which I then announced. The House will recall that at that time some farm price adjustments were made arising out of the Special Review held under Section 2 of the Agriculture Act, 1947. This review was occasioned by an award of the Agricultural Wages Board for England and Wales; but, in addition to the increase in the wages of agricultural workers, the Government also agreed to consider an unexpectedly large increase in the price of fertilisers.

It had been estimated that the withdrawal of the second half of the war-time fertiliser subsidy on 1st July, 1951, would increase the farmers' bill for fertilisers by about £10 million—that is to say, if the fertiliser consumption remained at the same level during this year as during 1950 to 1951. This increase was taken into account in the Annual Review in the early months of 1951.

Following that Annual Review, steep and quite unexpected rises in freight rates and the costs of imported materials, combined with other higher costs, turned the estimated increase of £10 million into one of a little over £19 million. The increase was particularly heavy on phosphatic fertilisers, and on behalf of the Government I promised that the excess of just over £9 million would be dealt with separately by means which would more effectively encourage the proper use of fertilisers on crops and grass, and this was to be done through payments of contributions to farmers towards the cost of acquiring phosphatic fertilisers in the United Kingdom.

Further increases in the costs of fertilisers have recently been announced, and they were included in an Order made by the Minister of Materials which came into force on 1st February this year. These increases have been taken into account by the Agricultural Departments in considering the details of this particular subsidy. It is now estimated that the rise of just over £9 million, to which I referred in my statement in November, 1951, is now a shade over £10 million, and it is this figure which the Government had in mind in fixing the rates at which the new subsidy would be paid during the first year of operation, that is, the year starting on 1st July, 1951. I should like to remind the House, in connection with that calculation in regard to fertilisers, that the fertiliser year runs from 1st July of one year to 30th June in the following year.

It has been thought expedient in dealing with this problem, in drafting this Bill, to look beyond the implementation of the promise that was given in November last and to prepare a Measure which contains powers to enable—and I stress that word "enable"—should occasion arise, contributions to be made to farmers which would not be limited as regards the type of fertilisers. The Bill is so drafted that a fertiliser subsidy amounting to one-half of the cost of any or all fertilisers bought by farmers could be brought within the scope of a Statutory Instrument made in accordance with its terms, and with the approval of the Treasury.

At this point I must make it perfectly clear to the House that for the first fertiliser year that the subsidy will operate—the year extending from 1st July, 1951 to 30th June, 1952—it will be limited to phosphatic fertilisers, and the amount of the subsidy will be calculated on the basis of the £10 million increase in cost based on the 1950–51 usage which I have already mentioned to the House. The House will observe from the Bill that the powers taken in this Bill have a life of five years and expire on 30th June, 1956—

The Minister mentions the limitation to phosphates. However, the Bill itself does not make the limitation to phosphates. I think the Minister is giving the impression that it will. Am I right in saying that?

The hon. Member is perfectly right there. The first scheme which will be introduced as a result of the passage of this Bill will be limited to phosphates.

As I was saying, the House will observe that the powers taken in this Bill have a life of five years and expire on 30th June, 1956, unless they are extended for a period or periods by Statutory Instrument subject to affirmative Resolutions by both Houses of Parliament.

Here again, I wish to make it perfectly clear to the House that, while the Bill contemplates that these fertiliser subsidies may be continued up to 30th June, 1956, or even longer through the procedure of affirmative Resolution, nevertheless the Government have given no undertaking that the fertiliser subsidies will in fact continue for so long a period. The power thus taken is permissive, and what use is made of it will depend on the needs of agriculture and the prevailing financial circumstances during the next few years. I hope that I have made that position clear to the House.

The House will realise that, when I made the announcement last November, which was a result of the Special Review, to which both sides of the House were, I think, agreed in principle, I was dealing with the situation as we found it at that time, but when the Government found it was necessary to legislate, the only right and sensible course to take was to see that we took powers, with the approval of the House, to continue this kind of help to the agricultural industry, if the House, in its wisdom in due course of time, thought it was the right and proper thing to do. That is why we take these powers in this Bill.

During the last three years—I ask the House to mark this particular fact—the costs of fertilisers to farmers have almost doubled, and as a result, not surprisingly, many farmers today are ordering much smaller quantities. If this tendency is not checked—and I am quite certain that many of my hon. Friends in all parts of the House will agree with me in this—a reduction of crop yields will inevitably follow. I have enough faith in the farming community to trust them to realise that it is a false economy to cut down on fertilisers, and I believe that they will respond to the suggestion and the provisions of this Bill, which will materially assist them to buy the fertilisers that are so necessary if productivity is to be maintained and, indeed, increased.

The right hon. and gallant Gentleman has told us that the first scheme he introduces will be limited to phosphatic fertilisers, and yet he now says that he hopes that the Bill will encourage farmers to use more. Will he tell us what is the current supply of phosphatics against the present use of them?

I should not like to go into any great detail at this stage, other than to assure the right hon. Gentleman that the supply is adequate for the need that may arise for these particular manures. I can give him that very definite assurance.

Many hon. Members will remember the criticisms that were made in the House against the removal of the old fertiliser subsidy, which had maintained the price of fertilisers at a low and steady level for a number of years by means of subventions paid by the Board of Trade. The Government's proposal will provide a useful means of dealing with the fertiliser situation as circumstances change, and will allow assistance to be given from time to time when it may be most needed and where it will do most good in the way of increasing food production.

I turn now from the general principles to the immediate future. In regard to the immediate future, should the House, as I hope it will, give its approval to this Measure, a scheme will be laid before Parliament, without delay, as a Statutory Instrument setting out details of the contributions towards the cost incurred by farmers on buying phosphatic fertilisers, and indicating the amount of contributions which will be paid. It is our intention that payments should begin immediately thereafter. Meanwhile, farmers—I wish to emphasise this—should continue to preserve their receipted accounts for fertilisers, or, indeed, their accounts even though they are not receipted.

As from 1st July, 1951.

The Agricultural Departments will make the fertiliser subsidy scheme as straightforward and clear as possible, so that it can be readily understood by farmers and agricultural merchants alike. The scheme proposed for Great Britain will, for the first year at any rate, follow very closely the procedure of the lime subsidy scheme, which has been easily worked and readily understood by those for whose benefit it was devised.

Included in the scheme which we shall make will be a schedule giving in detail the rates of subsidy that will be paid in respect of each kind of phosphatic fertiliser, and, subject to the Statutory Instrument being accepted by Parliament, farmers can expect to receive a contribution amounting to nearly one-third of the cost of any purchases made since 1st July last of superphosphates and other phosphatic fertilisers.

Contributions will also be paid in respect of phosphates contained in compound fertilisers, except where that phospate element is wholly derived from organic material. I have with me a copy of the schedule, which is, of course, provisional until the Bill is passed and a Statutory Instrument is made, but I thought that the House might wish to have some examples of the actual subsidies which it is proposed to pay if hon. Members in their wisdom decide that the Bill shall go forward in its present form.

To give examples of what the actual effects will be: A ton of superphosphates costing £14 19s. would attract a subsidy of £4 17s., while a grade of basic slag at £6 8s. 6d. a ton would attract a subsidy of £2 2s. A ton of ground mineral phosphates costing £12 11s. would be subsidised to the extent of £4, and in the case of a compound fertiliser containing 12 per cent. P2 O5, in soluble form, the contribution would amount to £3 18s. per ton, whilst a national compound fertiliser containing 12 per cent. of P2 O5 partly soluble and partly insoluble, costing, at the present controlled price, £19 10s. 6d. a ton, would attract a subsidy of £3 9s.

I hope that the House will forgive me for giving these figures this afternoon, but I know that the agricultural community will be interested to have examples, and it will give an opportunity for the House to consider the effects of the Measure before we debate at a later stage the actual scheme; and it may, perhaps, facilitate the passage of the original scheme through the House, because I am very anxious that not only the Bill, but the first scheme, should be on the Statute Book at the earliest possible moment.

I repeat that for the first fertiliser year beginning on 1st July last, the subsidy will be on phosphates only, while the contributions will be at the rate indicated in the schedule of the Statutory Instrument setting out the scheme, from which I have already quoted. I recognise, of course, that other fertilisers, especially nitrogen, are at least of equal importance, but the exceptional price rise that occurred in July last year, for which insufficient allowance was made at the previous Annual Review, affected phosphatic fertilisers very much more than either nitrogen or potash. The limitation of the subsidy to phosphates is designed to bring prices of the several fertilisers into something like their previous relationship.

The Bill is so short and simple that it is hardly necessary to deal with it Clause by Clause at this stage other than to say that Clause 1 provides power to make contributions to farmers towards their fertiliser purchases, Clause 2 prescribes the maximum rates of contribution, Clause 3 sets a limit to the period in respect of which the subsidy can be paid, and Clause 4 lays down supplementary provisions which may be included in any particular scheme.

The Bill extends to the United Kingdom, but under Clause 6, which I should like the House to note, my right hon. Friend the Secretary of State for Scotland may, if he so desires, produce a different scheme for Scotland, and a separate and different scheme may also be made for Northern Ireland. It is hoped that, in regard to England and Wales and Scotland, it will be possible, in order to avoid complications and difficulties to agricultural merchants and others who deal in fertilisers, to make joint schemes for these countries.

When my right hon. and gallant Friend talks of separate schemes for England and Scotland, is it contemplated that there will be separate schemes for England and Scotland during the fertiliser year 1951–52, because that would make a lot of difference to the producers?

Perhaps I did not make the position quite clear. I will repeat that it is hoped that, in regard to England and Wales and Scotland, it will be possible, in order to avoid complications, to make joint schemes for these countries.

Yes. To sum up the Bill, it is designed, first, to implement the undertaking which I gave to the House on behalf of the Government on 29th November, 1951, to ask for the necessary legislative authority for the subsidy on phosphates to which I then referred, and secondly, to place on the Statute Book a Measure sufficiently flexible to enable, subject to the approval of Parliament, schemes to be introduced which may be essential in the interest of maintaining the national food supply.

I believe that financial assistance towards the cost of the fertilisers they buy is a sound way of encouraging the adequate use of fertilisers by farmers, thereby ensuring high crop yields from the limited area of land in this country. May I emphasise that the ultimate beneficiary is the consumer, whose supplies of food would be diminished and costs increased if the use of fertilisers by farmers were restricted through excessively high prices.

I hope that this small but important Bill will commend itself to the House, that not only will it receive an unopposed Second Reading but that the House will be prepared to give early consideration to its further progress, so that it may receive the Royal Assent at an early date. The first scheme can then be considered in detail.

4.14 p.m.

The first thing that I ought to do is to congratulate the right hon. and gallant Gentleman upon introducing his first Measure since becoming Minister of Agriculture. I am equally sure that the highly-complex nature of the Bill, and particularly the components of various fertilisers, has been made transparently clear to us by the right hon. and gallant Gentleman this afternoon, but if not, it will be when we have had an opportunity of reading his speech tomorrow morning.

I should like to ease the Minister's mind at once by telling him that it is not our intention to divide the House against the Bill. It is possible that there may be different points of view on the wisdom or otherwise of this method of encouraging the industry, but it is true to say that a fertiliser subsidy in some form was in existence from 1937 to 1951; and I think that it was largely due to the price-fixing procedure of the 1947 Act, and possibly a desire to remove misunderstanding about the nature of some subsidies, that it was decided to abolish the fertiliser subsidy in two stages during 1950 and 1951, and add whatever the cost of the subsidy had been to the commodity prices under the first Schedule of the 1947 Act.

It therefore makes no difference whatever to the Treasury or to consumer prices whether we make this fertiliser payment or whether we increase prices to the extent of the same sum of money. I know that there were many doubts expressed when a decision was reached to remove the subsidy. It was first argued that if maximum production was really our aim, it was folly to remove the fertiliser subsidy. It was also urged that we knew that the subsidy was paid only on fertilisers used, whereas an addition to the prices of commodities of the same figure would give no guarantee that the fertilisers would be used, and certainly no guarantee that we would get the maximum output of the food which we require.

On the other hand, it was argued, not unnaturally, that farmers ought to be fully appreciative of the value of the use of fertilisers, and that, in fact, wise farmers would use fertilisers in any case. There is, surely, logic on both sides when we are thinking in terms not of two or three dozen large farmers but of anywhere between 360,000 and 370,000 farms of all types and sizes. The best farmer does and will use fertilisers because he knows and appreciates their full value, and because he always, or nearly always, has capital behind him.

There is, however, one thing upon which every hon. Member will be agreed; it is that we require the maximum production of food from our own soil. That certainly involves the use of the right quantity and the right quality of fertilisers at the right time. It has been said very often—and I do not want to go into this question of food production on a wide scale—that large, cheap, imported supplies of food are no longer available and will not be available for a very long time ahead. One only needs to think of the Argentine, where 50 years ago two-thirds of the population were engaged in agriculture, whereas today only one-third are so engaged. Industrial development means that there is more spending power in the hands of the multitude, and therefore they consume more of their own produce than they did before That means less for export.

We see a similar situation in Australia. As the population grows and industrialisation grows, agriculture becomes less and less primary, and they are unable to export the quantities of food which they did previously. We know that in India, Pakistan and some other countries the position is either more and better food or Communism Therefore, we must, as far as we possibly can, make the best use of our limited acres to get all the food we can from them.

As I understand this small but fairly important Bill, it does two things. As the right hon. and gallant Gentleman truly said, it corrects an unforeseeable miscalculation of the price of fertilisers on 1st July, 1951. The calculation, of course, was made in the February Price Review, and therefore the blame cannot be laid on anybody in particular. Unfortunately, because of the miscalculation, there has been a noticeable decrease in the utilisation of fertilisers since that time. Secondly, instead of recouping farmers by means of increased prices, we are to recoup them by means of the fertiliser payment. This costs the Treasury no more and the consumers no more, and it leaves things financially just as they were.

Under the 1947 Act there was a prima facie case for a Special Review last October because of the sudden substantial increase in the cost of production, involving wages, fertilisers, transport charges, petroleum and many other things, but it was left to the Government either to agree or disagree upon the facts once an examination had taken place. As the right hon. and gallant Gentleman has said, he made an announcement of the Government's decision in November last. In effect, the decision was that the Government felt that the industry was entitled to something like £26 million, £16 million of that to be in respect of prices and £10 million in respect of fertiliser payments.

I do not believe there is a party in the House which is really in love with subsidies as such, although over the past 11 years all kinds of subsidies have been used for certain purposes and have not been wholly unsuccessful. The Labour Government were criticised very severely in 1947 over the calf subsidy, but if it had not been for the calf subsidy we should have had much less red meat in this country in 1951. While many forms of subsidy have been used, many have also been allowed to lapse. Still, it may be that a subsidy here and there will prove very useful.

In any case, the position in 1952 is very different from what it was pre-war. If a subsidy was provided pre-war, it was done just to keep the farmer's head above water or it was given to the farmer without there being any central long-term policy at which the nation was aiming. Now the machinery of long-term policy is firmly established in the 1947 Act, and the gross income and the net income of farmers are decided in the Annual February Review, which embraces any subsidy that there may be. Therefore, any aids to increased production which impose no further burdens on the consumers will not be opposed by the Opposition for the sake of opposition. We shall, however, watch every instalment very carefully with our minds on both the size of our weekly ration and consumer prices.

I believe that a case can be made, on grounds of agricultural production, for this small Bill. We certainly want maximum production from our own soil, and because of that, and because we think the Bill may help to stop the reduction in the use of fertilisers and may help to increase our food supplies and may help the right hon. and gallant Gentleman to reach the target which we ourselves set in 1947 of 50 per cent. above the 1938 production, we shall not oppose the Bill.

4.24 p.m.

I am glad that the former Minister of Agriculture has started so well and been so conciliatory, and has approved the introduction by my right hon. and gallant Friend of this very excellent Bill. I welcome the Bill particularly. It is bound to increase the crops of this country in a business-like way. We are extremely hard up at present and it is very difficult to know how best to spend our money but when one is hard up is the very time that it pays to put out money in order to bring in more money. That is precisely what the Minister hopes to do by means of the Bill.

More especially, I hope that the extra fertilisers which the farmers will use as a result of the subsidy will enable them to grow more cereals to feed our pigs and other livestock. There is only one way of getting rid of the objectionable rationing scheme, based on pre-war quotas, which we now have. We all want to get rid of it, but if we are to do so we must find a better scheme, and nobody has yet done so. However, this is a step in the right direction because it will at least produce a great many more cereals at home. If it is as successful as we hope it will be, I shall urge the Minister of Agriculture very strongly to see whether he can get rid of the present quota scheme.

I should like to know whether the Bill applies to horticulturists. I imagine that it does. I do not know where the line is drawn.

Evidently the Bill does apply to horticulturists. I should like also to know the size of the horticultural concerns to which the scheme will be applied. It is obvious that we cannot give a subsidy on half a sack of fertiliser. It would be useful if the Minister would tell us the size of the smallest concerns to which he intends the subsidy to apply. Also, I should like to know why Clause 1 enables a subsidy to be given to distributors. I am sure there is a very good reason for it, but the Minister did not tell us what it was. I hope we shall hear about this later.

My right hon. and gallant Friend said that the scheme would apply retrospectively to 1st July last and said that the fertiliser year began on 1st July. I am not quite sure what he means by the "fertiliser year." It seems to me that the Bill should encourage the use of fertilisers by people who would not otherwise use them. Surely people who have been applying fertilisers since 1st July last do not need a payment now. They may complain that they have been badly treated and ask why they should not receive for the fertiliser which they used earlier the subsidy which is now being paid to people who applied fertiliser later; but there is always an anomaly in this sort of thing, and the whole point of the Bill is to encourage the use of fertilisers in future by people who would not otherwise use them. It seems to be throwing money away unnecessarily to make the payment retrospective as far back as 1st July.

I should like to make this point quite clear right away. It was decided that the payment should be retrospective to 1st July as a result of the Special Review in regard to the prices for the year 1951–52. This subsidy was decided upon by the Government after an examination of the facts as a result of the Special Review which took place in October last.

I thank my right hon. and gallant Friend. The only other criticism I wish to make concerns the scheme. The Minister says that this year he will apply it only to phosphatic fertilisers. He gave as his reason the fact that the price of phosphatic fertilisers had risen. This may well encourage farmers to use phosphatic fertilisers when nitrogen or potash would be better, and I cannot agree that he is being very wise in not leaving the choice of fertiliser to the discretion of the farmer. We should give the farmers a 33 per cent. subsidy on fertilisers in general and let them decide which is best for their land.

I see this danger in the present arrangement. Phosphatic fertilisers are chiefly used for grassland because grassland is chiefly lacking in phosphate. The new grass in this country in May, June and July, when it is full of protein, is created in such abundance that there is a good deal of wastage because in those three months we have not got the stock to consume the grass. It seems that if we are going to encourage more grass to grow by using phosphatic fertiliser, we may be on the wrong lines. I urge the Minister to consider, at any rate in future, schemes which would leave this to the farmer's own discretion. If the Minister will do that, I shall not have spoken in vain. Otherwise, I welcome the Bill, and I hope that it will be given a speedy Second Reading.

4.30 p.m.

I welcome this Bill. I had very serious doubts about the late Government's policy in bringing the fertiliser subsidy to an end, and that doubt was considerably strengthened during the short period I was at the Ministry of Agriculture.

I would agree that the logical method is that of no subsidy on a part of the means of production. Such a subsidy seems to me to be as illogical, as it would be to give a manufacturer subsidy for the oil which he uses for the running of his machines. Logically, it is difficult to justify this sort of subsidy on one of the factors in the means of production, but men—farmers are not excluded from this category—are neither wholly rational nor logical beings, and I regard this subsidy as doing something to encourage the increase in productivity that we so much want.

Fertilisers happen to be one of the things that farmers are inclined, when prices of fertilisers are high, to put off using in order to save money in the hope that times will improve. What farmer would ever agree that times could not possibly improve? As a matter of fact, they are always living in the state of hoping that next year will be a better year than this year, and so on, even though they happen, at the moment, to be living in fairly good times.

I do not want to cover all the reasons why this fertiliser subsidy should be paid. It is a fact that the West Midland province of the National Agricultural Advisory Service, in examining a number of farms with a low output, found that many were not using a sufficient quantity of fertilisers, and that points to one of the reasons for the low output. Those farmers were not receiving the returns which their acreage and, indeed, their initial capital outlay would justify. One of these lower output farmers had not applied any fertiliser since 1939. That man is doing a disservice to the nation. He ought to have been dealt with under Part II of the Agriculture Act and have been deprived of the farm he was holding. That is the sort of thing that is going on in some cases and we ought to do everything in our power to encourage farmers to expend more on fertilisers, even if we have to resort to a subsidy to do it.

It is also said that the National Agriculture Advisory Service is spending half of its time persuading farmers to use more fertiliser in order to increase productivity. The Service might well be using that half of its time advising farmers about so many other things upon which they need advice, assisting them in education on the many subjects about which they need education. I was surprised when, in the debate on 31st January of this year, I heard my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) use these words:
"…we have consumed the least potash per acre than in any part of the Continent of Europe."—[OFFICIAL REPORT, 31st January, 1952; Vol. 495, c. 399.]
I was inclined to doubt that statement, but this morning I spent some time looking up the figures and I was surprised to find that that statement is largely correct, taking the more important parts of Western Europe. In 1949–50 we just managed to catch up with France in the amount of phosphatic fertiliser that we used. Germany is using three times as much per acre as we are, Holland six times as much, Denmark just over three times as much per acre, but Italy is one of the countries which happens to be below Britain. Perhaps that is one of the reasons why it is such a poverty-stricken country.

I particularly welcome this Bill from the point of view of the market gardener. Market gardeners—I happen to represent a few—are part of the farming community which did not get as much benefit from the 1947 Act as did other types of farmers, and for that reason I give a special welcome to the Bill.

The cost of fertilisers is an important factor and a subsidy is, I think, the right idea. But there is not much use in subsidising with the one hand if it is taken away from the farmer with the other. The use of fertilisers to a great extent depends upon the credit facilities which are granted to the farmer both by the banks and by agricultural merchants. The Government's action in connection with this very important aspect of farming may go far to outweigh the benefit conferred by the price review and the subsidy. Bank advances to agriculture and fishing increased by £25 million between February, 1951, and August of that year, and the amount granted to farmers by the banks reached the record figure of £202 million by August, 1951.

The Government raised the Bank rate by a half of 1 per cent. soon after they came into office. That increase will cost the farming industry at least £1 million per annum. That, of course, is an important factor. If we give £10 million with one hand and take away £1 million by action such as this with the other obviously the farmers will not receive the full benefit of the subsidy.

My hon. Friend has been telling the House something about the farmers' current accounts. Can he give us any information about their deposit accounts?

That is hardly a fair one. Perhaps I ought not to go into the state of the banking accounts of such merchants. I must confine my remarks to the farming industry. It would be stupid of farmers to pay interest on loans if they had standing to their credits in the banks amounts which they could use for purchasing fertilisers, capital expenditure, and so on. I do not regard the farmers as living in dire poverty or, on the other hand, as being engaged in an over-fed and much "feather-bedded" industry. I do not want to see times return such as those in which farmers were living, and of which I had some experience, during part of the period between the two wars.

The £202 million to which I referred does not take into account the tremendous sums advanced by agricultural merchants, who, undoubtedly, will be affected by the increase in the Bank rate. They will begin to contract the amount of credit that they will give, and I fear the result of that contraction upon agricultural production. The use of fertilisers will be especially affected by credit facilities being restricted at the request of the Government. One other factor in this connection which is of importance is that the Agricultural Mortgage Corporation has raised its rate from 4¼ per cent. to 4¾ per cent. The sum on loan here is about £5½ million, and the increased rate of interest will take a considerable amount of money out of the industry.

Can my hon. Friend indicate whether those factors, including the Bank rate, are taken into consideration in the price fixing that takes place, and thus appear in the total cost?

They are not taken into consideration, unless I am very much mistaken.

I hope that the Minister who replies to the debate will deal with some of the points I have raised. They are matters which will affect the agricultural production rate of this country. I hope that the Minister of Agriculture will make representations to his colleagues within the Government, after considering these things, which are factors of some importance in relation to aims which he and all of us are trying to achieve.

4.43 p.m.

I give my support to the Bill, which has become necessary on account of Her Majesty's Opposition failing to take the advice which was given to them against withdrawing the fertiliser subsidy. What has happened as the result of that withdrawal is what we anticipated and what the Minister of Agriculture told the right hon. Member for Don Valley (Mr. T. Williams) would happen. I believe my right hon. Friend suggested that the withdrawal of the subsidy should be postponed until 1952.

No one in the House regrets more than I do the necessity of introducing another subsidy for agriculture. I look forward to the day, which may be distant, when our industry can stand upon its own feet, but I cannot see that that will be possible until we get outside the system of fixing prices within a global figure. For far too long it has been considered by certain politicians a crime for the producer of food to get a fair profit for the work and energy that he has put into production.

A right hon. Gentleman on the benches opposite has drawn attention to the possibility of shortage of food as a result of what is happening overseas. It therefore becomes more and more necessary that we should produce all the food that is possible in this country. As a result of the withdrawal of subsidy there was an immediate fall in the sales of fertilisers.

The hon. Member has several times used the phrase "withdrawal of the subsidy for fertilisers." Will he make it clear that when the element of price was taken out by way of subsidy the increase in cost was taken into account in fixing prices?

The subsidy was removed in July of last year and there was a greater advance in the price of fertiliser than was expected at that time. It would have been wiser to leave subsidy removal until this year. Last autumn there was an immediate cessation of sales of fertiliser, and that was reflected elsewhere. Looking through the Supplementary Estimates, I noticed a surplus of £1 million in the lime subsidy. That means that last year £2 million worth of lime was not applied to our land. When farmers seek advice from research workers about how to get better crops from their land, more often than not the first suggestion is that lime should be applied to it. We shall feel the effect of that loss of £2 million worth of lime during the next year.

During the last 30 years there has been a very great increase in the amount of fertiliser used in this country. Through the use of that fertiliser we have been able to increase the yield per acre of our major crops. It was a great disappointment to our research workers, who have done so much to encourage use of fertiliser and to ascertain a better way of making it and applying it to our land, when suddenly, last autumn, fertiliser became almost unused on a great number of farms in this country.

Among the smaller farmers this withdrawal of subsidy has been more serious because it is they who farm the greatest amount of land. They have been finding it exceedingly difficult for several months to buy what is required to keep up production on their farms. The interjection by the hon. Member for Wednesbury (Mr. S. N. Evans) indicated what I have suspected for a long time, his lack of knowledge of the agricultural industry. He suggested that although the farmers are running overdrafts they have something on deposit account in the Banks. Our farmers are just not built that way.

It is not only the application of fertilisers that will bring about the increase in crops that is required. It is no use just scattering fertiliser on the land and hoping that all will be well. What is wanted also is proper drainage of the land to which the fertiliser is to be applied. There is a great deal of waterlogged land in this country. In many instances there is need of the assistance that can be given by the research workers if the drainage is to be carried out.

Mention has been made of the increase in the amount of coarse grains that we hope to get next autumn as the result of the subsidy. I also hope that as a result of this subsidy we shall get an increase in the amount of fodder beet to be sown this spring. That crop will be exceedingly important in the future, and I look to it more than I do to cereals, as far as the West Country is concerned, to help us have more carbohydrates available for feeding our pigs. In conclusion, may I say that I have appreciated the way in which Her Majesty's Opposition have indicated their support of the Second Reading of this Bill. I know it will be appreciated by the entire agricultural community and, in particular, will be appreciated by the small farmers of this country.

4.51 p.m.

As the hon. Member for Dorset, North (Mr. Crouch) has made some reference to my knowledge or lack of knowledge of the agricultural industry, perhaps I had better deal with him first. For the last 32 years I have worked in a hard and tough field where the price of apathy, inertia and inefficiency is bankruptcy, with all the social stigma attached to it—no subsidies, stand on your own feet or go to the wall.

The second thing that gives me a vested interest in this subject is the fact that I represent 70,000 hard-working Black Country people who are very much affected by the price of the contents of the housewife's shopping bag. Thirdly, let me tell the hon. Member that my quarries are six miles from the nearest railway, that I have been surrounded by farms and farmers for the last 30 years, that some of my best friends and closest political associates are farmers and that I am not in ignorance of agricultural economics.

Let me say at once that if there is to be another shot in the arm, another financial blood transfusion, further public assistance, then perhaps this is the best way of giving it. I challenge, however, the contention that this industry is in need of financial assistance. Further, I challenge whether the nation is getting value for money. I do not mind what the farmers have. They can have the shirt off my back if it helps the recovery of our economic independence and financial self-respect. But I am suggesting to the House that the present policy is having exactly the opposite effect. In 1938 the profits of this industry were £55 million; last year they were £302 million and the year before they were £304 million—an increase of 500 per cent.

I want to find out what we have had for this substantial increase in profits—

We are told that the increase is 40 per cent., but we have never had yet a contrast in goods between prewar production and the production in these post-war years. The first thing I want to ask the Minister is this: Will he give an undertaking to prepare a statement of the production of the industry in goods in 1938, 1937 and 1936 and also for the last three years? Then, and not until then, shall we be able to assess whether the nation is getting value for money.

This industry is what somebody once described as an enigma wrapped in mystery. I have been trying to get the number of A, B and C farmers and their respective acreages. As I recall it, this was to be done during the war. The industry was to be analysed in terms of efficiency of A, B and C farmers. In these past few years we have paid out hundreds of millions of pounds in direct subsidies and subsides on home-produced food through the Ministries of Food and Agriculture, yet, when a Member of Parliament asks for the information without which he cannot determine whether or not this industry is improving its efficiency and productivity, he is told that it is not available and, furthermore, that it is highly improbable that it ever will be available.

This is a scandalous thing. We were given a promise that information would be made available with regard to A, B and C farmers and the acreages farmed by each. If we do not know how many C farmers there are and the acreage they are farming, how shall we be able to get rid of the agricultural drones, misfits and workshies? How shall we be able to make this industry efficient unless we have the relevant information which is the necessary pre-requisite?

I suggest that in voting this industry further assistance we shall not promote increased production and that the effect will probably be the very opposite. What has happened already? With all the assistance given to the industry we are getting the following situation. At the top there is the good farmer who, farming the land scientifically and because of the assistance given by this and other Bills, is brought into the higher Surtax brackets too early.

I speak here as a business man running a business with a six-figure turnover and I know of no more serious deterrent to effort and production than being brought into the higher Surtax groups too early. Furthermore, those farming good land scientifically and energetically find themselves regarded as profiteers. This is inevitable when the policy is to give such assistance as enables the drones, the misfits at the bottom, to survive.

I believe that the sooner this industry experiences a few healthy bankruptcies, the better it will be for the country and for the industry itself.

Would my hon. Friend also give his view of the result of that situation upon those who work in the industry?

In present circumstances the efficient producers in any industry, not only this industry, can absorb any temporary unemployment almost overnight. It is very important that my own party should not start mixing what I call sociology with economics. I would regard providing crutches for "Tired Tims" in order that they can maintain employment in their own field as a disastrous policy.

The hon. Gentleman has referred to the fact that there are certain farmers with good farms who make very large profits. He then referred to those at the other end of the scale. I admit that there is some land on which, under any conditions, whether through good or bad farming, a profit can always be made; but would the hon. Gentleman tell the House the proportion of that exceedingly good land which is always safe in comparison with the amount of poor marginal land which forms the majority of our land?

If the hon. Gentleman had been listening to my argument he would know that it is precisely this absence of information about which I am complaining. I started my speech by deploring the fact that there was no means of knowing how many A, B, and C farmers there were, or the acreage farmed in the various categories. I am quite satisfied that this industry is not in need of further assistance. Last year and the year before the profits of the industry were £120 million more than the total wages paid to 640,000 full-time agricultural workers working a 47-hour week.

If one is to answer my hon. Friend's case, as I have discovered in the past, it is important to take the points as he makes them, so perhaps I might be allowed to interrupt. He says that the profits were £120 million more than the wages paid to the full-time agricultural workers. Over half the farms employ no agricultural workers; the labour is entirely that of the farmer and his wife. In my hon. Friend's own £6 million turnover business, the managerial salaries are charged before assessing the profits. Would he therefore tell us what proportion of the £120 million he is prepared to allow for the labour of the farmer and his wife, who are not paid? Their profits on agriculture include the whole of their managerial services.

If my right hon. Friend will insist on interrupting and then making a speech himself he cannot expect me to answer him at length. If I were to do so I should be told to sit down; and I should certainly be very unpopular with other of my hon. Friends who wish to speak.

The profits were £120 million more than the total wages paid to 640,000 full-time agricultural workers working a 47-hour week. Is my right hon. Friend suggesting that there is a good deal more labour in this industry other than the 640,000? The farmer is in precisely the same position as I am on the question of profits. [HON. MEMBERS: "No."] Oh, yes. Friends of the agricultural industry should not be in such a hurry to silence an opposition point of view. The industry has enough friends in the House to stand one or two hon. Members having a different point of view.

The bovine complacency of the dinner-jacket farmers of 45, Bedford Square is such that I am terrified. I therefore hope that my hon. Friends will not mind my putting a different point of view. The farmer is in the same position as the proprietor of a one-man business, someone running a factory, a grocer's shop or a wholesale business. He has not made it a limited liability company.

Now I want to give further evidence to substantiate my contention that the farmers do not need this assistance, and that it will, in fact, do them no good. My right hon. Friend the former Minister of Agriculture, speaking on 20th May, 1950, as reported in the "Manchester Guardian" said:
Farming capital before the war was £350 million. Today, it is nearly £1,000 million. Out of their much-criticised net profits the farmers have put back £650 million into the industry."
I am not complaining about that, but do say that there must be a lot of fat/upon which they could survive, for a time at any rate, while we get through the very serious financial crisis with which the nation is faced.

They are to be given another £10 million for fertilisers. Well, if anybody wants the real truth about the financial health, or lack of it, of the agricultural industry at the moment he need only look at the scramble for land which is taking place. There has never been such a scramble. Heavyweight boxers, international footballers, radio commentators and television stars are all taking up farms. Indeed, before long there will only be Muffin and myself out in the cold.

And the workers. Recently, a dozen miles from where I live, there was sold a 31-acre farm; the only accommodation was a three-bedroom bungalow—it was not a palatial mansion—and the cost was £7,400.

As I work it out, that means there is about £11 interest on every acre before the man puts the plough to the land.

Is the three-bedroom bungalow included in that figure?

Certainly; the bungalow was the living accommodation. We now have the spectacle of industrialists, financiers, professional footballers and radio and television stars climbing on the agricultural bandwagon. I should have thought that that in itself was evidence of the extraordinary prosperity of this industry at the moment.

Not a bit of it. It is evidence of the prosperity of the footballers, the radio stars and everybody else. It is not evidence of the prosperity of members of the farming industry, because they are not buying the farms.

I would like to go on at some length, but I dare not. [HON. MEMBERS: "Go on."] I was interested in the remarks of a professional international footballer, Kirchen, an outside-right, who was interviewed by the "Daily Express" and said:

"There were five good years…then I sold my 150 acres for three times what I had paid."
The "Daily Express" agricultural correspondent, Kenneth Pipe, commented:
"Remember, this country lad started life as a carpenter's apprentice—not on a farm."
It is quite obvious that this industry is taking the nation, taxpayers, and the housewives for a Piccadilly hayride. I think it about time that this House of Commons got down to the problem. I am tempted to believe that we are now to have a rather more regular and careful examination of the very large sums that are passed into this industry than we have had in the past.

I wish to ask one more question about whether this assistance is really needed. I remember that in December, 1950, the President of the N.F.U. said that in five years we would be getting 375 million gallons more milk from the same number of cows. That is an extraordinary things because when I suggested that the kind of treatment this Bill continues was concealing a good deal of agricultural inefficiency and inertia, the "balloon" went up. I have come to the conclusion that I made a terrible mistake and that I should have blamed "Bluebell and "Buttercup."

No. What I was suggesting was that there is this vast amount of inefficiency to be overcome and that this method of bribing people to get their own living—because that is what it is—will not lead to that healthy, stable agricultural industry which we all want. I think we have to get down to this. I do not think there is anybody so successful as the British farmer at growing one blade of grass where two ought to grow. We have the best farmers in the world, hut we have not enough of them. We have too many drones, too many misfits and too many workshies.

For so long as this sort of policy is carried on these people will be frozen to the land at a time when literally thousands of young, strong, able, knowledgeable men and women are hungry for land. Recently, when Birmingham Corporation advertised for a tenant farmer, they received more than 400 applications and the estates department told me that 87 of them were fully qualified to farm any kind of farm, of any acreage. Yet we are pursuing policies—of which this is another step—of freezing to the land people who are too slow to walk last.

There are many of them. No one has yet explained to me how it is that we have to pay the British farmer more money for a gallon of milk than the Dane charges for a pound of butter—

Just one moment—when, in fact, it takes two and a half gallons of milk to make one pound of butter. Yet the Dane sells one pound of butter for less than we pay the British farmer for a gallon of milk, with no advantage of soil, climate or wages.

I am opposed to this "featherbedding" I think it has gone on long enough. A lot of people in this industry are not pulling their weight. We are at a very critical period of the nation's history. We shall all have to make a tremendous effort if we are to get by. One of the first things we need is a Saint Bartholomew's Eve of the Shibboleths throughout all our industries and it would be a very good thing to make a start with the agricultural industry.

5.15 p.m.

It is rather bewildering to have to follow the hon. Member for Wednesbury (Mr. S. N. Evans) because he gets intoxicated with figures which obviously he does not understand. I am not going to attempt to lift the veil for him. He says he lives in an agricultural district, passes farms every day of his life, and has many close friends among the farmers. All I say to him is, "Keep your eyes open and use your common sense and very soon you will talk more sense in this House and in public."

The hon. Member asked, in connection with the subsidy which we are to vote this evening, whether there is any evidence that this kind of Measure has increased productivity in this country. There again, I say to the hon. Member, "Keep your eyes open and you will see the condition of fields which have benefited by lime subsidy, the basic slag subsidy and so on." He will see much better crops growing in this country today than he would have seen 10 or 15 years ago. They beat the world and there is no doubt, either in terms of tons of food or gallons of milk, that the production of British agriculture has risen in the last decade. The hon. Member asked why he cannot have figures showing how production has changed. He has only to look at the Digest of Statistics in the Library of the House to satisfy himself. I will take him along there after the debate and show him the figures.

We have been told that the agricultural industry does not need this Measure and that it is time farmers either stood on their own feet, or went bankrupt. The hon. Member has told us that the farmer is in just as good a position as a quarry owner to make a six-figure income. That just is not true.

That the efficient farmer is in just as good a position as the quarry owner to make a six-figure profit a year —[HON. MEMBERS: "Turnover."]—the hon. Member confused us with his figures. A man in the position of the hon. Member does not work to a price ceiling as the farmer has to. We have heard a lot about guaranteed prices, but, make no mistake, the guaranteed prices allowed to the British farmer have created a ceiling, and if he were as free as the quarry-owner to exploit his customers, he would not need that guaranteed price.

There is really no question of further assistance to the agricultural industry being given by this Measure. I wish hon. Members opposite would get that into their heads. What is happening is that the price of fertilisers has risen very sharply, more than was expected by anyone a year ago. The Government—I think the previous Government would have taken the same view—consider that, as we must not only maintain but increase food production, which is vitally important, the cost of fertilisers to farmers should not get so out of proportion to their other costs that they cut down the use of fertilisers, and that it is in the national interest that the use of fertilisers should not only be maintained but, if possible, increased.

I am certain, and I think it is well known to the hon. Member for Wednesbury, that this subsidy of £10 million to relieve the farmer of part of the increased cost of phosphatic fertilisers will be taken fully into account at the Annual Price Review and we shall get correspondingly less than we should otherwise receive for potatoes, wheat, barley and other crops.

It is not any further assistance to farmers, but a matter of assuring those farmers who are not well-to-do—some, I grant our critics, are not very energetic or skilful farmers but they are just the people whose land will benefit most from the use of these fertilisers—that they will be enabled by reason of this assistance to continue to increase the use of fertilisers.

This Measure will raise our productivity. As the hon. Member for Wednesbury goes about with his eyes open, he will see grass fields which need phosphates particularly in order to stimulate more growth so that they can carry more livestock to get some of this extra 375 million gallons of milk about which he spoke. One builds up farm fertility, increases livestock output on the land and in turn one gets better wheat crops and barley crops. The whole standard of one's production is raised. That is what we must do. It is what the late Government were seeking to do, and I am sure that the present Government will continue to do that. It is the right course for our country at present.

I fully concede to our critics that we have some who should make way for younger men, and I am hopeful that the new Government will be courageous in tackling that problem. We must first see that we have the level of prices that is needed and then we must make quite certain that everyone farming land in this country is taking not only his opportunities as a business man but is producing to the full.

The subsidy which we are discussing will not add to the profitability of individual farms but it will add to the production of food to this country. That is something which I am sure all Members of the House want. We farmers—and I would speak for the farm workers in this —can disregard with a good heart ignorant criticisms that show too much sectional bias and too little good sense in the public interest.

We do ourselves no good today by one section of the community continually carping at another. We have to pull together, and I assure the House that this small Measure will help the agricultural community to do what the country wants. It will not line the purses of farmers who are already doing quite well enough in the ordinary course of business.

This Bill has my full support, and I am pretty certain that it will have the full support not only of the agricultural scientists to whom one of my hon. Friends referred, but of everyone who knows what is really needed in British agriculture today to get what the country wants, which is still higher production from our own soil.

5.25 p.m.

I am glad to have an opportunity, for which I have been waiting for some time, to be called upon to speak in an agricultural debate just after my hon. Friend the Member for Wednesbury (Mr. S. N. Evans). We are discussing a Bill to which I am not prepared to give the wholehearted support that was given by my hon. Friend and political neighbour the Member for Derbyshire, South-East (Mr. Champion). I have some reservations about it which I shall mention in a moment. I am not sure that we were completely wrong to remove this particular payment from the subsidy and put it in the end price of the product, but I will say a word about that later.

What I think my hon. Friend the Member for Wednesbury has never been clear about is that what we are discussing is not the sort of thing he talks about so freely in terms of slogans—"Another shot in the arm," "another blood transfusion," and "more public assistance." By the way, he seems to be running out of slogans; he is now repeating the previous ones. It is not that at all. If he would be a little less interested in the news value of slogans and a little more interested in the needs of this industry, he would learn that what is under discussion is the best way to pay a proper price for the article.

May I make just this one comment of a most inoffensive character? When dealing with bovine complacency of this magnitude, one has to paint pictures in a very broad canvas.

I am not responsible for my hon. Friend's bovine complacency. I am sorry that he suffers from it and that it causes him to use a certain extravagance of language.

What is under discussion is which way is the price to be paid for the article; do we pay it wholly in the end price or do we pay part of it in the end price and part by way of a special payment for a special part of the job? The question is, how do we provide the best incentive?

My hon. Friend is perhaps surprised that some of us on this side of the House do not share his amusement at this kind of attack on the industry. I am not a farmer but I have a number of personal friends among farmers of all political views. I have very few political supporters among the farmers of my constituency, and it may seem to my hon. Friend that I ought to join in the hilarity which he himself derives.

I do not do so because as an agricultural workers' organiser I spent a good deal of time in this industry when we had the "healthy bankruptcies," when we had the outlook which my hon. Friend is now urging. I know what happens if we do not introduce sociology. Why did the party to which we both belong come into existence if not to introduce sociology so that the industries of the country would be good enough to afford a proper return to our workers in them?

This continual attack on the agricultural industry as though it consisted of inefficient and incompetent farmers, as though the industry were, as he puts it, "living on the back of the nation," is doing us no good because it is bound to throw us back to the outlook of mind of the urban dweller in this country which produced the results we saw in the farming industry and on the workers in it in the 'thirties.

My hon. Friend tells us that £55 million was the profit of the industry in 1938. I shall have a word to say about profit my hon. Friend clearly does not understand it now. In the industry in 1938 the wages of the members of my organisation were 34s. per week—indeed, we only got 34s. just before the war broke out in 1939. Therefore, I am not amused, and those of us who are concerned with the industry are not amused, because the result of this attitude to any industry, particularly one which shares the particular difficulties, insecurities and uncertainties of agricultural food production is disastrous for our friends who work in it.

I share another interest with my hon. Friend. I have a constituency which is one-third agricultural in industrial makeup but which includes, like his, very nearly 70,000 consumers. The major interest of my consumers today—and, with great respect, of his—is how they are to be sure of getting the supply of food they want.

The hon. Gentleman and his friends must really get this matter clear. We are not again likely to get the cheap food that was the catchword in this country before the war. We are not likely to get it from abroad. As time goes on, we shall not get it from abroad anyhow, because the people of Australia, New Zealand and other places will eat more of what they produce. The only certain way of getting it is to produce it here. What we must consider—and this is the spirit in which we must approach this Bill—is whether what we are doing agriculturally will enable us to get the food we want from the fields of this country, because this is the only certain place. That is the interest of my constituents. It is the interest of the hon. Gentleman's.

As the right hon. Gentleman is so critical of me and the comments I have seen fit to make on the efficiency of this industry, I wonder whether he would care to comment on the leading article in the "Farmers' Weekly" of 18th January, which says:

"At such a time one might expect N.F.U. thought and action to be positive and progressive, matching both the needs of the hour and the parlous condition of the agricultural industry. But there is little hope of this. County resolutions are like a dismal gramophone record with the needle stuck in a groove made at 45, Bedford Square."
That is not the Member for Wednesbury speaking: that is the leading article of the "Farmers' Weekly," the leading farm journal.

But that leading article is criticising the National Farmers' Union of 45, Bedford Square. I am not disposed to defend them. Let them do that. The hon. Gentleman must address that query to them. That has nothing to do with my argument. It may well be that Bedford Square is slothful and backward and all that the leading article says. I do not know. I do not pay them. I do not belong to their union. If that journal had made similar comments about the Transport and General Workers' Union, I should have had a lot to say about it, but I have nothing to say about the National Farmers' Union.

I am dealing with the economics of the industry. The hon. Gentleman should get it out of his head that I am dealing with the N.F.U. He set out to attack the industry and to attack those who, by implication, have been concerned with a certain policy. I am not attacking him. I am defending the ground that he chose to attack.

I should like to deal with another of his comments. There was this business about apathy, inertia and inefficiency in this industry. My hon. Friend says that he comes from a tough field in which one has to be efficient in order to live and to get on. That just is not true of all other industries except agriculture. It just is not true.

And it is not true of sand and ballast merchants either, as I can testify. Of all industries theirs is one of which it is not true. It is not true, and in this respect—

This is not a question of getting personal. If someone chooses to allege that the fanning industry is in a certain condition, then I am entitled to reply by reference to other industries. I happen to know the sand and ballast industry, and what the hon. Member said is not true of them.

It is not our view that in order to get an efficient industry of any kind, we must have prices and conditions that will force out all but the toughest, all but the most aggressive and the most ruthless. In every industry that I know, prices are fixed in a way in which the small man, whom we need as much as the big man—and that is particularly true in farming—is able to provide his service to the community in the job that he is doing.

My hon. Friend used one revealing phrase which shows how little he really knows about this industry which he chooses to attack so much. He spoke of the good farmer farming on good land. But the good farmer is by no means always farming on good land. It is a condition of this country that our land is simply not divided like that. Nor is the farmer able to produce, nor can we allow him to produce, only those crops which he is most capable of producing and for which the land is most suitable.

It is a condition of modern farming that we have to lay on all sorts of farmers on all sorts of land the obligation to produce crops in the quantity and in the order of priority that consumers need regardless of the fact that their land may be better suited to the production of something else. There are a whole lot of farmers, many of them on anything but good land, with enormous differences in rainfall, and two-thirds of them farm under 50 acres. Not the few but the bulk, over 80 per cent. of them, farm under 100 acres and two-thirds farm under 50 acres. Two-thirds of them are tenant farmers. They are not the chaps who are selling land. This scramble for land does not prove what my hon. Friend thought that it proved.

It proves that there are a whole lot of people in other industries who, on the few limited occasions when the possession of land comes into the market, prefer to use their money in this way rather than in some other way.

No, with great respect, it is not. My hon. Friend does not follow his own argument. To the two-thirds who are tenant farmers that scramble for land means nothing at all. To the few of these dinner-jacket farmers whom he talked about that is a very small problem, and I am not sure how much of a problem it is.

I have always taken the view that if a fellow comes into farming from an outside industry, he may well come in with the intention of losing some of the profits from the other industry; but if he has been good in another industry, before very long he is usually good in the new one. What is more, it is particularly true of Warwickshire and Stratford-upon-Avon, which always seems to attract these chaps, that if they go out of farming they leave behind them a holding which is very much better equipped than it was before they came in. They have done something of permanent value.

Our industry is one largely composed of tenant farmers on small holdings to whom this alleged scramble for land is of no interest whatever. Since we have protected them—and that is what has made the land valuable—since we have prevented the holding from being sold over their heads, since we have prevented them from being kicked out, they cannot be affected by the scramble for land. Therefore, the few holdings which come on the market have an increased scarcity value. That is really the essence of the matter.

But it is not that part of the Act with which this Bill is concerned. I could continue with a whole lot of these points. Let us look at the profitability figure of £55 million rising to £304 million last year. Actually it will be less than that when the latest figures come out. We are always considering figures which are behind the event because of the time it takes to get out the up-to-date figures. We are considering this year the figure for a previous year.

My hon. Friend said at first that the small farmer was in the same position as be was himself. Then, after some interruption, he amended that to say that the small farmer is in the same position as the owner of a small one-man business anywhere else. He is not.

He is not because the alleged profits of this industry make no allowance at all for the labour—not the management, but the ordinary labour of the farmer and his wife. Not only do they make no allowance for the management services or for interest upon capital, but all those matters ought really to be taken out of account before we get the figure which is labelled as profit.

In addition, what happens to the man who this year has bought a calf, which he will keep to sell three years hence for fat meat? That calf cost him more money. I do not know the current price —[An HON. MEMBER: "About £8."] All right, about £8. Between now and the end of the year, that calf will have done nothing but cost him still more money; yet, at the end of the year, it will have come into his profitability figure as being worth £10 or £12, and a profit is assumed. There is no machine in business or industry that eats and grows like that during the year. Machines depreciate during the year.

Really, I must be allowed to say a word about that. The right hon. Gentleman has great gifts and is a very charming fellow, but quite obviously what he knows about accountancy might have passed in the time of the First World War, but is not good enough now. The fact of the matter is that the farmer is in precisely the same position as the proprietor of any small business. He receives the same allowances for managerial functions and for whatever work he does, just the same as I said earlier I would receive myself. There is no difference at all, and there is no hardship by comparison.

The hon. Gentleman has said all that once before. This is the first time that I have answered him. I have listened to him four or five times, and I beg of him to follow my argument and not to be in such a hurry to repeat his own.

Nowhere in his business has he got anything like that calf, which does nothing but cost more money, but which is alleged to add to his profit figure at the end of the year. This situation is peculiar to agriculture. It may well be that the Minister of Agriculture ought to do what I know his predecessor would have done, and which I myself urged several times at 55, Whitehall, should be done.

I think we ought to look at the form in which we use these accounts. I think they are lending themselves to a good deal of quite honest misunderstanding which should be cleared away. These alleged profitability figures are really quite misleading. They are wrong because they leave out the labour content, the management content and the element of interest upon capital, and they are misleading because the more cattle the farmer keeps, even though they are giving him nothing, the higher seem to be his earnings, whereas the fact of the matter is that he has increased liabilities and has made no profit at all.

Even so, the figure has gone up, we are told, five or six times. Wages of farm workers have gone up by three times. I will not weary the House with figures, although I have come prepared with them. Of course, the commitments of the industry have also gone up. We had to face the fact, when we became the Government in 1945, that we were asking for a substantial urgent and sudden expansion of this industry, when, behind us, we had a whole period of years during which the industry had earned nothing which could make provision for that expansion. It is out of these earnings since the war that we have had to finance this immediate and current expansion, and, if the industry had not had that money, the expansion could never have been financed.

Let us remember, too, as my hon. Friend said, that growing food is very much a long-term business, and particularly the element of food production. We want our chaps to produce more beef, but there is nothing slower in terms of return, and nothing more long-term, than raising cattle for beef, and the farmer has got to put in a whole lot of money before he can get the output and his reward in terms of production.

My hon. Friend said how much better it would be if we could see the figures. If I had known that he was going to raise that question I should have brought them for him. He has no idea of the number of figures which I have collected in order to answer the questions I expected him to ask, but I did not bring this particular one. I have no doubt that the figures can be obtained, and, if my hon. Friend is more interested in developing an argument and following it through than he is in sloganising, he will find that the figures are there to be had. I invite him to get them. Sloganising is all very well, but what value has it to the 70,000 people of Wednesbury who want food? While they cannot eat the hon. Gentleman's slogans, they could eat the output of the agricultural industry.

The returns for last June which I got last week are now fairly up-to-date, and show progress in terms of cattle and livestock and the output of crops. My right hon. Friend the previous Minister of Agriculture has several times answered Questions in this House giving comparative figures in terms of beef, mutton, lamb and milk production compared with previous years, and the figures are all in HANSARD and can be compared. No doubt, one can get them from the present Minister, if the hon. Gentleman wants them. I could go on for a long time answering these statements by my hon. Friend. He talked of agricultural "drones and work-shies" just as the present Prime Minister once talked about "weary Willies and tired Tims." We objected to that expression at the time, just as we object to these expressions from my hon. Friend.

My hon. Friend says that the figures do not tell him what the farmers are doing, but the figures of the supervised farmers and of those concerning dispossession orders are available. Again, I wanted these figures last week; I rang up and asked for them, and I had them. The figures are available of the number of farmers placed under supervision, the number of orders made, the time of revocation and the number dispossessed, and my hon. Friend may be surprised to find how many there are in each category.

But the figures for which I asked are not available. My right hon. Friend is a very eloquent defender of inefficiency and inertia within this industry, but the fact of the matter is that the figures for which I have asked and which I am hoping to get—figures of comparison between the pre-war period and now—are not available, despite what the right hon. Gentleman says.

The hon. Member is proceeding now from inaccuracy by misunderstanding to inaccuracy by repeated assertion. The figures are available, and, if my hon. Friend will not do it, I will myself put down a Question to the Minister and obtain the figures for him. They are available on meat, milk and egg production, on crop output, cattle and so on. It is no use the hon. Gentleman continuing to assert that these figures cannot be obtained; they can. Indeed, with a little energy in 55, Whitehall, they might even be produced tonight.

Now I come to the hon. Gentleman's reference to myself as a "defender of inertia" in his attack on an industry which I have come to love very much and with which a great part of my life has been concerned. It is no good abusing a comrade by calling him a "defender of inertia." I believe that the hon. Gentleman is sincere in his attack on the industry, but I also believe that he is misinformed and that he also misunderstands the situation. If he will discuss these things with the rest of us, we may get somewhere and be able to remove the misunderstandings.

I really ought to leave the hon. Gentleman now, but with very great reluctance, because there was so much that I have been wanting to say about these matters. However, I think I have said enough to show that the hon. Gentleman is as misinformed as he was on a previous occasion when he spoke of a man who had grown potatoes at £10 an acre. The hon. Gentleman makes use of these inaccurate figures, but they are never withdrawn.

If the hon. Gentleman is to make statements of this kind, he really should look up HANSARD in advance. I did not say that; the words which the hon. Gentleman has quoted were not used by me.

I know very well what is in HANSARD. The hon. Gentleman said he had received a letter from a farmer saying that he got £1,000 for planting 100 acres of potatoes, and that he sold them for £5,000. If that does not mean that it cost him £10 an acre to plant, then it is difficult to see why the figures were put in that form, because the hon. Gentleman did not say it cost him so much to plant. He used the £1,000 which everybody took to mean the cost, despite the actual form of words he used. If it was not, then the whole example was meaningless because the cost was not given. In that case the deduction drawn would not exist. Therefore, if the hon. Gentleman is being wrongly quoted it is due to the way he put it. I knew the kind of retort he would make, and therefore I came prepared for it.

Whilst leaving the rest of the hon. Gentleman's argument until the next time he gets involved in this House, I would mention that I heard one of my hon. Friends, who I know is associated with the Co-operative movement, expressing agreement with the hon. Gentleman when he was speaking. I ask any who are associated with the Co-operative movement to have a word with those societies who have been or are running farms, to have a word with Mr. Walworth, with Mr. Gemmill, of the London Society, or with the Lincoln Society. They should ask them what has been their experience in the years when there is supposed to have been so much inertia. They will find the story does not back up what is being said.

One last word to the hon. Gentleman. We have had quotations from the N.F.U. journals, but I now invite his attention to the "Economist" for 16th February, which states:
"It is an exaggeration"—
and the "Economist" is not noted as being a particular friend of the farming industry—
"It is an exaggeration to say that the ordinary farmer is feather bedded; his prices have been high enough since the war to enable him (except in one or two bad seasons) to make an adequate living out of a moderate turnover."
In the good seasons farmers make no more than an adequate living out of a moderate turnover, and therefore the whole of the hon. Gentleman's case falls to the ground.

I will now turn to the comments I want to make to the Minister on the Bill. I asked him just now a question about the supply of fertilisers. He has told us that the first scheme to be issued under this Bill will be limited to phosphatic fertilisers because that is where the largest part of the increase has fallen. But the argument in favour of the Bill is not so much that. It is that, paid in this way, it will encourage farmers to make better use of fertilisers than they are doing at the moment. It is no use encouraging them to use more than there is available of a particular kind of fertiliser.

The Minister nodded his head, and then said he had not got the figures, but could assure the House that there was enough available for whatever it was. I hope that the Under-Secretary of State for Scotland will give us the figures when he winds up the debate. If they are not available today—I know how the mechanics work in the Ministry, after having been there for five years—let us have them at some other time. I doubt it very much. The only statement I could get hold of today was that of the N.F.U. at the end of last year. It said:
"There is no immediate threat to supplies of nitrogenous fertilisers. The superphosphate position is serious,"
and they went on about potash, and said there was only enough for current supplies.

Such inquiries as I have been able to make lead me to believe that the position of phosphatic fertilisers is still serious and that we cannot jump up the demand for them without running into difficulties. This is important, because if we reduce the price and there is cornering of this fertiliser by the bigger men who are able to produce the money quickly, the result of this subsidy could easily be that the small man got less and not more. Therefore, I hope the hon. Gentleman will put our minds at rest either tonight or in Committee regarding this point, because I personally shall not be very content until it is cleared up.

There is one small point in the Bill on which I want to return to the Minister some of the brickbats I had from him over the course of the last few years. Clause 4 (5) provides that:
"A statutory instrument making, varying or revoking a scheme under this Act shall be subject to annulment in pursuance of a resolution of either House of Parliament";
in other words, shall be subject to negative procedure. I warn the right hon. and gallant Gentleman that on the Committee stage I shall come armed with quotations from his speeches made in earlier years unless he takes out the negative procedure and puts in the affirmative procedure. In the past he has been one of the greatest fighters for the affirmative procedure. What is good for the goose is good for the gander, and he will have to do some eating of his own words, because I think that provision ought to come out of the Clause.

I said at the beginning that I have some reservations about the Bill in general. Indeed I have, and this, in part, is because, after a period in the Ministry of Agriculture, I came to the conclusion that there is a tremendous amount of misunderstanding and distortion about the agricultural industry which is encouraged every time we pay half the price in this way. It is not only the urban-minded man who thinks in this way. The hon. Member for Dorset, North (Mr. Crouch) repeated it today. He said—I remember his exact words—that the industry must stand on its own feet. The fact that we are proposing to give this subsidy does not mean that the industry is not standing on its own feet. This is part of the price which would otherwise have had to be paid to maintain the Price Review settlement.

It is that attitude—which comes from within the industry as well as from without—which makes me very doubtful about this sort of thing. It looks expedient, but I am not sure how much good it does in the long run. We have had not only a fertiliser subsidy running since 1937, but 11 or 12 years of the fullest agricultural advisory service which exists anywhere in the world. We have been telling the farmers, not as ex cathedra pronouncements, but from their own experience, that by fertilising the soil to the proper extent they will increase their output and at the same time their income.

It is a sad commentary that we have to risk distortion of this kind and arouse a great deal of misunderstanding simply because all the educational work done so far has gone over the heads of a minority of the farmers. I am not going to oppose the Bill, but I think there is something to be said for the point of view that it would be well to do less of this, however politic it may seem, and drive home the advisory information harder and make the farmer understand that he must do something in his own interest as well as in ours.

There are two other points I wish to make. No one has said a word about the position of the manufacturers of these fertilisers. They have a fairly powerful lobby, and I sometimes wonder how much this is a case of "feather-bedding" the manufacturers of fertilisers rather than the users of them. I have some figures relating to the main manufacturers in this field. These figures do not lead me to believe that those people could not have borne some part of this price increase themselves. Their profits and earnings are substantial and there are a large number of free capital bonus issues involved. They have been doing very well. Before he brings more than the first scheme into operation, I ask the Minister to have a look at the financial position of the manufacturers.

It is not good enough only to say that prices have gone up and therefore we have to subsidise the farmers. It is much better, if there is room for bringing down prices at the source, to do that, and my suspicion is that there is a fair amount of room for that to be done. I hope the Minister will bring some pressure to bear in that direction. That is another reason why I have a reservation about this kind of Measure now.

An old and besetting sin of the Ministry of Agriculture, which the Minister will find will take the most vigorous and energetic work on his part to eradicate, is their habit of putting out fairly bald announcements about a change of policy which then bring in a great flood of inquiries from farmers to the county committees. Then there is a long delay before it is learned how the change of policy is to be brought about.

November was the date of the announcement of this scheme and I know from friends I have in the county committees that they have been driven nearly barmy in trying to answer the tremendous number of applications they have received in respect of it, and a whole lot of confusion has been caused. I suggest it would not have been at all difficult, even though we could not have had the Bill for other reasons any sooner than this, to put the county committees in a position to answer the kind of inquiries which on past experience Government Departments must know arise. The same delay will occur with the ploughing-up subsidies if we are not careful.

I apologise for the length of time I have taken and for perhaps abusing to some extent the hospitality of the House, but I felt that what I have said had to be said and I hope that those who take the other view will reconsider the position. While I am not giving the Bill a warm welcome, because I have certain doubts about it, I support its Second Reading.

6.3 p.m.

After the eloquent defence of farmers by the right hon. Member for Belper (Mr. G. Brown) I do not think there is much need for me to enter into controversy with the hon. Member for Wednesbury (Mr. S. N. Evans). I listen to his speeches on agriculture with interest, if with surprise and disagreement, and I must confess I sometimes hear in them echoes of what might be thought old-fashioned Liberalism coupled, also, with the financial views which I think were held by Mr. Bernard Shaw about the undesirability of Surtax or, indeed, of any tax which affected him.

I should like to support what has been said in the debate about the smaller farmers and those who farm the poorer land. Lately, in the Orkneys, we have looked into the circumstances of these farmers, following the damage they suffered from the gale. I think it would surprise even the strongest advocates of farming in this House to find how untrue it is to say that those farmers are in a particularly prosperous condition today. Far from it. Many of them have extremely little capital and not a few of them are seriously indebted not only to the banks but also to agricultural merchants.

The idea that they are people living on large profits that they can put away on deposit or in some other way is totally untrue in my experience of my constituents. It may be said by the hon. Member for Wednesbury that since they are not making large profits they are idle drones, who ought to make larger profits. The fact is that they are working poor land in a difficult climate. If the crofters in the north of Scotland were put in the easier conditions of the south they would more than hold their own. Indeed, even in the sand and gravel trade they would more than hold their own. It is by no means the case that they are idle drones. It is the case of their having poor land and working it very hard.

If we are to have greater agricultural production that land must be worked and we must make it possible for those men to obtain some livelihood. As has been said in this debate, the assessment of profits on these farms can be totally misleading because on most of them the work is done by the farmer's family and the cost of that labour is not calculated in assessing profits.

I regret that when the Minister introduced the Bill he made it clear that at least in the first year it would apply only to phosphatic fertilisers. He gave the reason, a perfectly true one, that their price has risen very considerably. But the price of other fertilisers has also risen. He himself mentioned one factor making for those increases in price, namely, the continuing rise in freight charges. That applies to all fertilisers. I ask the Minister whether it would not at least be possible for him to review his decision to apply the subsidy only to phosphatic fertilisers; if the price of other fertilisers and the cost of freight continue to rise.

The Bill is designed to encourage the use of fertilisers and if it is to succeed advantage of it must clearly be taken by small farmers and the crofters who make up such a large proportion of our farmers today, as well as by the bigger farmers. I suppose most people would agree that it is particularly on the smaller and poorer farms that fertilisers are needed. Certainly, in some parts of the Highlands of Scotland we have suffered very greatly from the lack of proper manuring of land not only in the last year or two but for generations.

Bearing that in mind, I should like to put two or three things to the Joint Under-Secretary of State for Scotland. The first is that under the previous scheme for a subsidy for fertilisers a minimum amount of fertiliser was fixed, and a minimum can be fixed under this Bill. Crofters have brought to me many cases where they have been prevented from obtaining a subsidy because the amount of fertiliser which they wanted was too small. A croft is a very small holding and a crofter a very poor man, and in many cases he has no use for that amount of fertilisers as he would have to obtain a subsidy and cannot pay for them.

I should have thought that it was just these men, who, in many cases, have not benefited to the same extent as the bigger farmers from the general agricultural policy, who ought to be helped by this Bill. Even guaranteed markets have not been of the same use to crofters as to the big farmers. There is a very great need for more fertilisers to be applied to the land in the crofting counties and when schemes are drawn up under this Bill I ask the Under-Secretary either to strike out the minimum and leave it to the discretion of those administering the scheme or else make special provision for the small crofters.

Am I right in supposing that under this Bill a subsidy can be claimed for fertiliser no matter to what sort of land it is applied? Under the previous scheme one could only claim a subsidy if one laid the manure on certain types of land. Is that the case under this Bill or not? There is every room for the improvement of hill pastures in Scotland and of common grazings or "scattold" as they are termed in Shetland.

Are any experiments being carried out in the spreading of fertilisers from the air? I believe there have been experiments in the past. I believe an experiment was carried out or projected at a farm called Burg in Mull, sponsored by Sir David Russell for the National Trust of Scotland and, of course, there have been other experiments. I know it is extremely expensive to do this, but I see that the New Zealand Government, or the New Zealand farmers, are facing the expense of fertilising marginal or hill land from the air and, as far as I know, there is no cheaper or better way of doing it. I do feel that when we have to make more and more use of the poorer and higher land we should at least carry out some experiments to see if we can improve these hill grazings by this method of fertilising from the air.

6.11 p.m.

I should like to welcome this Bill as an opportunity to tackle the problem of increased food production, which is one that is exercising the minds of everybody so much at the present time. It is an extremely complicated process and, while it is very easy, by agricultural policy, to shift the emphasis from one line of production to the other, it is not always easy to devise means of increasing production all round.

I believe that if we can find a means of increasing the rate of fertiliser application we shall not only increase the production of crops but increase the production of livestock as well. That is why I think this Bill is so vitally important at this time. It seems to me that the point which we are discussing is not whether the price should be paid for the agricultural production, but the way in which it should be paid. I think the arguments for paying it by way of subsidy are very convincing as regards fertilisers.

I should like to instance to the House one or two examples. I think that everyone who follows agricultural production knows the risk of a decline in the production of potatoes. In addition to growing potatoes on the best land a certain acreage has to be grown on the poorer land, for instance, on the lighter fens in my own constituency. Those people who undertake the very expensive job of potato growing at the present time, where the cost can rise to £80, £90, or even £100 an acre—and not £10 which has been quoted earlier in this debate—are taking a very great risk and, in so far as we are able to help them with the purchase of their fertilisers, we are contributing to a certain extent to the decrease of that risk.

I think that a great number of small and poor farmers on these lands will look twice before they undertake such an expensive crop as potatoes when they find their fertiliser bill, at the prices which have been running, can easily run them into almost £20 an acre for fertilisers alone. Therefore, it is not only from the point of view of increased production that this subsidy is justified, but also to prevent a decreased production of those expensive commodities which we cannot do without at the present moment.

I think everyone agrees that, as regards the use of fertilisers on grassland, we are only at the beginning of what can be achieved. By intensive management and heavy application of fertilisers it will be possible to get a still further increased production from our grassland and so, from the point of view of both arable and grassland farmers, I think this subsidy is a very desirable thing.

Mention has already been made of horticulture. Horticulture is not just an isolated section of the farming community, because all farmers—or many farmers—are engaged more or less in horticulture and, in so far as we can assist them with fertiliser applications to those crops which are also expensive crops, I think we shall do good not only to the horticultural industry but to agriculture as a whole.

There is one point which was mentioned by the right hon. Member for Belper (Mr. G. Brown) which, I think, is of importance in connection with this subsidy and which ought to be made; that is, the charges made by the manufacturers. I do believe it is a fact that when the fertiliser prices were increased after the removal of the subsidy the increased prices charged were not only contributed to by the cost of raw materials, but by the fact that manufacturers did take the opportunity of claiming very substantially increased margins for their process of manufacturing compounds, and there is a widespread feeling within the industry that the margins claimed at that time were in excess of what they need have been. I think that is a point which should be very closely watched.

From all points of view, especially from the point of view of increased production and of preventing a decrease in very expensive cropping at this time. I welcome the Bill.

6.17 p.m.

I am glad that this debate has got back to the provisions of the Bill. I am sorry that the hon. Member for Wednesbury (Mr. S. N. Evans) succeeded in diverting the attention of the House for quite a considerable time. I very much regret that he should have thought fit to say so much which would have been much better said on a general agricultural debate.

Yes, but up to an hour ago we were having a much more general debate. I know that people like me do not count very much. The hon. Gentleman is more important than I am. But it happens that I am one of the "useless drones" who is trying to produce a little food, and I think that the least thing the hon. Gentleman might have done was to have come along yesterday and discussed the provisions of this Bill with some of us who are interested in the industry, before sailing into the House and delivering an ignorant tirade against the agricultural industry in the way he has done.

Having said that, I proceed to the Bill. I wish to say that I think the Government have done the right thing in assisting the industry in this particular way. Although I agree with practically everything my right hon. Friend the Member for Belper (Mr. G. Brown) said in his most interesting speech, I did not agree with one point he made at the end. He seemed to think that this was not the best method of helping the industry. I am sorry that he is not in his place at the moment, but if I understood him aright he thought it better to give the assistance by direct help to prices. I do not think that is so.

Rather than giving direct subsidies to the end-product of agriculture I think it is much better to do it in an indirect way, by lowering the cost of production. My reason for saying that is that I am certain that this method assists the better type of farmer—the progressive farmer —rather than the one who is not so progressive—and, of course, there are some who are like that, and it is upon those whom we have to put pressure in order to bring them up to scratch.

The non-progressive farmer would much prefer to receive the help in his prices and not bother about his method of cultivation, but those of us who know something about the industry know that the planning and systematic use of fertilisers takes a lot of trouble but it does bring about, in the long run, much greater returns than direct subsidies of the type I have just mentioned, because for a given expenditure of money by the State—or by the consumer in this case—a twofold or threefold return is given for the outlay. It is, in fact, an investment.

I am sorry that the subsidy was taken off 18 months ago on this very thing. Again, I do not agree with my right hon. Friend, who seems to think it desirable, because the effect has been a bad one. I do not know the exact figure, but I think that the decrease in the use of artificial fertilisers in this country since the subsidy was taken off has been in the neighbourhood of 30 per cent.

Moreover, this is not confined to phosphates. It also covers potash and nitrogenous manures. I find in my costings accounts that a good dressing of artificial manure might involve an expenditure of up to 25 per cent. of the cost of producing a crop. If that is raised from 25 per cent. to 35 per cent., which was the result of the removal of the subsidy, farmers will think twice before they put on quite so much artificials. That is what happened. It is a wise policy to restore the subsidy and to encourage farmers to add more fertiliser.

The work of the National Agricultural Advisory Service in this respect has been very good. The tendency in my county has been largely in the direction of getting farmers to analyse their soil. That has been done on an extensive scale. I have done it myself, and some fields which I did not realise were deficient in certain ingredients were found to be deficient in them.

It has been said that potash has not been used as much in this country as on the Continent. The answer is probably this. I do not think our soils—at least, our heavy clays—are as deficient in potash as are the lighter sandy soils of the Continent. That is probably the reason why it has not been used so much. The soil analyses which the Agricultural Advisory Service is helping farmers to undertake on their farms is finding out just where deficiencies exist. An astonishing thing is that not only are some fields deficient while adjoining fields are not deficient, but, also, some parts of the same field show deficiencies while other parts do not.

In this way, scientific research and the encouragement of the application of its results to the industry, will bring about increased food production. In this respect, the experiments made by the Imperial Chemical Industry about two years ago—the so-called "early bite" experiments—showed that an application of 2 cwt. of nitro-chalk on one acre of land increased the grass growth by 6.5 cwt. and the crude protein content went up by 17.5 per cent. The total cost was £1 10s. per acre and the product would keep a dairy cow for three months, giving between three and four gallons of milk a day.

If we wanted to achieve the same result with feedingstuffs the cost would be £3 10s.—and they would be imported feedingstuffs at that, which would involve a burden on this country. I contend, therefore, that by the scientific use of these fertilisers great value can be found for the nation through savings in dollar imports or in expensive imports from outside the Sterling Area. We can produce them here as a result of these scientific methods, about which so much more is known today than was known in the past.

The Minister has told us that the scheme which he proposes to put into operation will concern only phosphatic manures. It is very important to have balanced dressings, not only of phosphates but, in some cases, of potash and, particularly, of nitrogenous manures. Quick returns will come with nitrogenous manures. If we want quick returns to help us in our difficulties, I hope we shall take action to include in a subsequent scheme, which, I hope, will not be long delayed, nitrogenous manures or balanced artificial manures which, I am sure, will give good results. I am very glad that the Government have taken this way of carrying out assistance for agriculture, because I am sure it is much better than giving the direct subsidy in food prices.

6.26 p.m.

I should have had no intention of speaking in the debate but for the fact that the hon. Member for Wednesbury (Mr. S. N. Evans) "had a go." Before I deal with what he said, however, I want to express my views on the Bill. As many of my hon. Friends know, I have spoken against subsidies—whether subsidies for the farmer or for the consumer—on almost every possible occasion in the House, but of all the subsidies which have been paid to the farming industry I think this is the best, because it is one which will help the marginal land farmer who cannot afford to buy artificial manure. If we are to get the increased production which is necessary in this country, it must come from marginal land. I give this Bill my blessing, therefore, and I hope my right hon. and gallant Friend will give me credit for that, because I do not always have a good word for subsidies.

I want to say a few words about the speech of the hon. Member for Wednesbury. Perhaps it is not necessary; he has already had a good milling from his own side. I thought the speech of the right hon. Member for Belper (Mr. G. Brown) was an excellent one. He and I have not agreed on many occasions, but on this occasion I agree wholeheartedly with what he said, and also with what was said by the hon. Member for Gloucestershire, West (Mr. Philips Price).

One thing which terrifies me in the House, and possibly in the country, is the absolute division between town and country. That division is fostered by speeches such as that which we heard today from the hon. Member for Wednesbury, who often makes that sort of statement which, although it may give many of us a certain amount of light amusement during the afternoon, will probably make headlines in the newspapers tomorrow and will be believed by many people who do not know the facts any more than does the hon. Member for Wednesbury. I wish he would accept the advice which I have given him on many occasions, which is to take a farm himself and let me see the accounts. I have invited him to my farm, and I do so again. I will show him my accounts for the last 45 years and he will find no feather-beds there.

What are the facts of the case? There is not one single commodity for which the farmer is getting what is called a guaranteed price today which he could not take into the open market and sell at a higher price—not one single commodity; and I challenge the hon. Gentleman to tell me of a single commodity for which I am getting a guaranteed price and on which I could not make more money in the open market.

As the hon. Gentleman has challenged me, may I tell him that my barber's complaint is that he is having to pay 12s. a dozen for black market eggs. He thinks the price should be frozen, so I think the hon. Gentleman is right.

I am not talking about black market eggs. The hon. Gentleman talks about guaranteed prices and about feather-beds and says that farmers can sit on a deck chair to do their farming; and he says they spend most of their lives in dinner jackets. The farmer has just as much right to a dinner jacket as a gentleman connected with sand and ballast. I want the public to know the facts. Today, farmers are compelled to sell 75 per cent. of their wheat to the Ministry of Food at £10 a ton less than they have to pay for the food with which they feed their pigs. The farmer is being paid £10 a ton less for wheat than we are paying to the other countries of the world. Barley is being bought in the world at as much as £20 more than the British farmer is getting. Is that much of a feather-bed? Is that much of a guaranteed price?

The hon. Member should remember this. What we are getting is not a guaranteed price: we are getting a controlled price. We have fed the public for the last 12 years at something less than the food has been costing from abroad. What has in fact been happening is that a subsidy is paid to the consumer, and that subsidy is charged up against the farmer. I think it is a great mistake. I am against guaranteed prices, and on this I am against my right hon. and hon. Friends. This policy of a guaranteed price leads to all sorts of misunderstandings. I say that if the farming industry were given the same protection as any other industry gets in this country, guaranteed prices, so called, would go by the board. We farmers can fight our own battles under the same protection as other industries have.

If we in the farming industry are not entitled to that protection, we must have something else, and we want that guaranteed price. We cannot pay our workers good wages unless we get that price. It is about time the consumers of this country realised they have got to pay more for their food. They will never get cheap food again. If there were cheap food available in the world, we would not have the money to buy it. Therefore, the day of cheap food has gone. The sooner we begin to realise that the better it will be for the country.

I hope that in the February Price Review that is taking place, instead of talking of giving subsidies and all that sort of thing, they will give us the price for the articles we are producing and let the best man win it. I think that guaranteed prices and these controls, and all these sorts of things, ought to go by the board, and if they were to go by the board we should get rid of that misunderstanding that people have that the farmers are cosseted—as the hon. Member for Wednesbury has suggested. I should have liked him to come down into the country—

—in January when I invited him to my farm. I could have shown him my men and women pulling sugar beet, up to the neck in mud. I do not think that is much of a feather-bed.

Before the hon. Member makes any more speeches in this House, I hope he will acquaint himself with the true facts about the farming industry. There are hundreds and thousands of farmers who are farming today and not making farm labourers' wages. There was a case that occurred very recently in my district. There were two brothers who were farming, and when the farm wages went up to £5 8s. they could not earn this wage on their farm. One of them took a job as a stockman and left his brother to carry on with casual labour. That is the sort of thing that will go on happening if we do not meet the increased cost of production, particularly on the marginal land from which increased production must come.

6.33 p.m.

I think it will be agreed on all sides of the House that we have had a lively debate. I do not think that any of us, before the debate began, could have thought that fertilisers would have provoked so much interest and discussion; but I am afraid that the debate has gone into realms that do not quite belong to the Bill, which is a simple Bill—a modest Bill concerned with a very limited field. Although I want to make one or two points on the general case I want, if I can, to confine myself to the Bill in the short time I propose to speak.

The debate has ranged over those wider issues for very obvious reasons. I think all of use feel some concern about the future of agriculture, and it is a pity that we should allow any exaggerated terms to divert us from the actual technical problem we have got to face. The technical problem is quite a simple one. How can we get more food out of our soil? It is not a matter of going back to the old days of cheap food at the expense of the livelihood of the farmworkers or of the farmers.

It is a matter, however, of getting food at the most economic cost—of getting food as cheaply as we can. That is the practical problem in front of us, and it is my view—and I think it is the view of all of us on this side of the House—that this Bill does make a contribution to that end. It does, in fact, provide some means whereby we can improve our crop yields.

It is quite clear to all of us—and there is no need for us to make the case over and over again, but it has to be said—that our food supplies present a problem of increasing gravity, and it is quite clear that we have got to get more food from our own soil. How are we to do that? We certainly cannot do it by just throwing money away recklessly. After all, the money involved in this operation, as in all the operations in which we have been concerned in the support-price policy in recent years, is public money, and it is our duty in this House to see that it is directed to the most productive needs. That is the simple technical problem in front of us tonight and I am sure that this Bill will, in fact, make productive use of that element of public money which is involved—the sum of £10 million.

Nevertheless, the general issues do require some examination. I do not think any of us can sit back and think that all is well. I recall reading a most interesting letter from Lord Bledisloe in "The Times" recently, where he complained about 15 per cent., as he put it—it may be a guess: I do not know on what basis he was calculating, but he is a responsible man who knows this industry—and he said that about 15 per cent. of the farmers in this country are inefficient and are not doing their job and ought to be cleared off their farms. I do not know what is the order of the inefficiency, but in so far as there is inefficiency in the industry it ought to be the common concern of both sides of this House to try to root it out, because we want to make the industry efficient.

My feeling is that we have reached the point where it would be a useful thing to examine afresh the whole basis on which we are conducting this system of guaranteed prices. I was interested to see that the Lincolnshire—I think it was—branch of the National Farmers' Union, in a resolution that, I think, they sent to their annual assembly, complained that the present method of paying out the money was not an incentive to the efficient farmer. They wanted—I cannot actually say what they wanted, but I think they probably wanted—to go back to the old acreage system of payment.

There have been a lot of complaints about that. A lot of people think that that is a bad system. What is clear is that a lot of people in the farming industry, in the House, and in the various Ministries connected with the supply of food, are concerned about the mechanics of the administration of the system of supporting farm prices. Let us think about this clearly, without any prejudice, and consider what is the best way of applying this method to the public advantage.

With that in mind all I want to do is to ask one or two questions which, I hope, the Minister will be able to answer, although if he cannot I shall not complain. I wonder if he would tell us what steps are being taken to reduce the pro- duction costs of fertilisers? After all, here is a plan to extend the use of fertilisers, which gives great guarantees to the people engaged in the production of fertilisers. They are getting the subsidy, and I think we are entitled to ask what they are doing to reduce the economic cost of their production.

I think that is something we may explore. I do not want to press the point, but it is a question that seems to me to be reasonable. After all, we should not always expect the taxpayers to pay. If we do, that is the road to ruin. We must, in the end, find out what is the economic result of the use of the taxpayers' money.

Another question I would put is: What is the effect of this on the global food subsidies? I do not want to argue this on any party basis. It is a much wider issue, in the end, as to whether or not the present ceiling of £410 million is too high or too low. It is a much wider issue than this Bill raises, but it is important for us to be quite clear what is the effect of this particular operation on the amount of money available for food subsidies.

Is it not a fact—I am merely putting it as a question, and seeking information —that the Ministry of Food, which is the Department concerned with the payment of food subsidies, will have less credit for subsidising rationed foods to the extent of £10 million? I should like to know, merely for the purpose of clearing up this position, what will be the effect of this operation on the subsidy ceiling.

The issue of what is the best way to inject this subsidy into the industry has been raised in earlier speeches. This is a matter upon which we can, quite honestly, take contrary views, without having any prejudice about it. Is it better to use the subsidy directly in price subventions on the crops completely? Is it better to reduce the subsidy by putting up the price to the farmer or putting up the price to the consumer, by in any way directly using the subsidy to affect the actual price of the commodity, either to the farmer or to the consumer? Or is it better to use the element of subsidy in operations of this kind, in subventing and supporting actual elements in production, such as we are now doing with fertilisers?

We might do it with tractors and in all sorts of ways. That is a matter for argument and discussion. All I hope is that we do not begin to develop a policy that has not been thought out. Whether we go one way or the other, it should be subject to examination. It raises such important principles that we should not slip into one method or another by accident, just by feeling our way. I wonder whether the Minister could tell us whether there is to be some examination of the way in which, generally, the Government will approach the use of this subsidy for the better production of food?

I think the answer to my next question is in the Bill itself, but it is not very clear. It may be made clear in the scheme the Minister is to produce later. To whom will this be paid? Clause 1, I think, makes it fairly clear that it will be paid to suppliers, distributors or to groups of farmers. That is not very clear, and it may be that the scheme itself will clear up that point. However, it would be useful to the House to have rather more information about that, because it involves an important aspect of administration.

My right hon. and gallant Friend explained that it would be done on the same lines as the lime scheme.

I am going by the Bill and not what the Minister said. I think that there is an obscurity here which might be cleared up; there is no great issue in it, and I think it can be cleared up as we go along.

Those are the only points I wish to make. I do not want to enter into any great controversy about this Measure, because it is obviously a useful Measure. If we are to use public money in this way, this is one of the most useful ways of using it. It will give a direct incentive to those farmers who will grow more food. We need to grow more food, and on that basis I commend the Measure to the House.

6.44 p.m.

I should be lacking in courtesy, and perhaps also a little in my duty, if I did not say that on the whole this has been a very helpful debate, during the course of which we have had one or two interesting incidents. I found the debate extremely interesting, because I confess that we were not very sure what the attitude of hon. Members would be when we recalled the reception accorded to my right hon. and gallant Friend's announcement on 29th November, when he indicated that a subsidy of the kind embodied in this Bill will be provided.

Tonight, as on that occasion, the hon. Member for Wednesbury (Mr. S. N. Evans) has had a day out. He enjoyed himself very much trying out a series of new phrases which seemed to come trippingly to his tongue, and we now have the picture of "feather-bed" farmers with dinner jackets thrown in.

Although some of the debate has been irrelevant, it does give me the opportunity to say at least two things which I very much want to say. The critics conveniently forget—and in justice to the farming industry it is necessary to make this clear—that since the last February Price Review, in 1951, the costs of production have risen phenomenally; so much so that before the General Election the Labour Government recognised that a Special Price Review was necessary to meet the situation.

When the results of the Special Review were announced last November, some critics seemed to jump to the conclusion that farmers were getting away with something; that they were, as we say in the North, getting away scot-free, with a sort of extra dole of £26 million provided through the medium of a subsidy on fertilisers and higher commodity prices. The fact is that their annual expenditure on inescapable charges over which they have no control had risen, even at that time, by no less than £40 million. That is since the last February Review. Since then the figure has again gone up considerably. Farmers are accordingly at present meeting the difference out of their own resources. It must be emphasised that the arable crop farmer will have to wait until the crops of 1952 are harvested, stored and threshed before he gets recoupment through the price machine in respect of the rise in costs resulting from increased wages as apart from fertilisers. It is just as well that these facts should be emphasised.

When my right hon. Friend replied on 29th November to a supplementary question asked by the hon. Member for Wednesbury, he said:
"The Government are very well aware of the extremely difficult financial position, but they are equally aware of the danger of a fall in production from the farms of Great Britain."—[OFFICIAL REPORT, 29th November. 1951; Vol. 494, c. 1730.]
Unfortunately, statistics show that there is a distinct danger of a decline in the overall production of food in this country Our tillage acreage is falling, and we have had to come forward with a scheme quite recently offering a subsidy of £5 per acre in order to get more tillage for the coarse grain feedingstuffs pool. The number of cattle is also less than a year ago. Yet circumstances are such that the need for British agriculture to produce all the food it can economically produce was never greater than it is today.

We want more coarse grains for the feedingstuffs pool so that we can increase the pig population. We want better grass management and better grass conservation; and we want better utilisation of the result of intensive grass management Finally, in the background behind it all, there is the not unimportant question of the maintenance of soil fertility itself.

All these things call for the greater use of fertilisers, but the increase in prices arising from the removal of the remaining half of the fertiliser subsidy on 1st July last, has resulted in a drop in demand, which until then had been well maintained. This, in turn, has created a serious storage problem for the trade. It is hoped that this Bill, with the reintroduction of a subsidy on phosphatic fertilisers, will dissuade farmers from attempting to economise by reducing their fertiliser intake, and we hope it will encourage them to maintain, and even increase, their applications in the interests of maximum production from their farms.

In the course of this debate, various hon. Members have asked for information and I will do my best to deal with certain of the questions. The right hon. Member for Bradford, Central (Mr. Webb) asked what steps we were taking to reduce the production costs of fertilisers. We are doing everything that can be done in that connection. He will know that fertiliser prices are controlled. The controlled prices are decided upon only after a very careful and detailed costing inquiry carried out by the Ministry of Supply. The recent rise in July last was allowed only after such an inquiry. I can say that we are watching that position very closely.

The hon Gentleman's right hon. Friend mentioned that one of the reasons for thescheme for phosphatic fertilisers coming to an end was the increased cost relative to nitrogen fertilisers. I should have thought that both types would have felt this impact of the rise in costs, because the manufacturing processes are practically the same and freightage costs are practically the same.

In the case of phosphates, of which phosphatic manure is composed in the main, they are to a very large extent imported into this country. The other question put to my right hon. and gallant Friend is one which I do not think I can be expected to deal with, namely, the guaranteed prices structure. Naturally, that is often thought about, but I cannot say anything about it, except that any approach to that question needs to be very cautious indeed.

The right hon. Member also mentioned the question of the efficiency of food production. On the question of efficiency, we are aware of the need to make sure that we have the most efficient system of farming possible. The machinery exists already under the Agriculture Acts both for Scotland and for England and Wales, and it is up to us to see that it is properly administered. The hon. Member for Tonbridge (Mr. G. Williams) also asked several questions. I think that his first question has been fairly generally put by several hon. Members, and if I deal with it in one reply, I hope that they will not feel that I have forgotten to mention them individually.

I was asked: What is the smallest amount on which the subsidy will be available?—that is to say: What will be the minimum quantity for which a contribution will be made under this Bill? We intend to make that minimum 10 cwt., and we think that is quite a reasonable thing to do. It should be remembered that under the Bill the small people are looked after by a special provision—that is to say, they can, through the various associations which buy fertilisers in bulk, take advantage of the provisions in the Bill; so the small man will be looked after.

The hon. Member for Orkney and Shetland (Mr. Grimond) asked about retrospective payments to the people who had already bought fertilisers since last July in small amounts, and what would we do about them. All I can say is that, so far as the Department of Agriculture in Scotland is concerned we will look very sympathetically at any application, but I would throw out a warning that this dealing with many applications in respect of small amounts would involve considerable costs in administration.

Then there was a general question put by many hon. Members, including the hon. Member for Tonbridge: Why does this Bill provide only for phosphatic manures? The hon. Member made the rather astonishing statement that phosphates were not by any means the most important manure. I do not know how one can differentiate, because they all work together, but phosphates are required for all plant growth, whereas other fertilisers are not necessarily required for all plant growth.

Surely this Bill applies to other fertilisers which may come from non-organic materials; it is not a specifically phosphatic Bill? The scheme in the Bill applies to phosphatics, but surely that does not prevent the Minister from introducing a scheme affecting other non-organic fertilisers.

The Bill is intended to cover schemes for any kind of fertiliser subsidy, but what we are introducing in the first scheme is a subsidy payable only on phosphatic fertilisers. I am dealing with a specific scheme under this Bill, and the question is: Why are we paying a subsidy for phosphatic fertilisers only and not for nitrogenous and other manures?

In so far as phosphatics form the basis of all manures for farm crops—for every hundredweight of nitrogen put on the land, there are probably two of phosphatics and one of potash—they are of very great importance; and also we felt when we decided upon the scheme that this was the way in which we could best assist farmers to meet the increased costs of fertilisers, since the increases have been, broadly speaking, greatest for phosphatic manures. Another point is this: Had we extended the scheme to cover nitrogen, we might not have been able to meet the demand that might arise through a subsidy.

The right hon. Member for Belper (Mr. G. Brown) asked a question about the supply position. We believe that our resources will be sufficient to meet any foreseeable increase in the demand for phosphatics of any kind arising out of the subsidy. We could not say that in regard to nitrogenous fertilisers.

The hon. Gentleman used the words "we believe." I am not casting any reflection upon the Ministry of Agriculture, but may we have the figures on which the belief is based? There are, I think, some who are not quite so strong in that belief.

I do not think that it would be possible for anyone to produce the figures. I certainly have not got them here, and I do not think that they can be got. It is true that because of the abolition of the subsidy, or the removal or relaxation of it last July, production tended to fall, but the point I am trying to make is that phosphates, we believe, are available to meet any increased demand that may arise out of this Bill, whereas an increased demand for nitrogenous manures would put us in very great difficulty indeed. The hon. Member for Tonbridge also asked why 1st July was chosen. That is really because, as my right hon. and gallant Friend explained, it is the beginning of the period that has always been taken as the fertiliser subsidy period.

The hon. Member for Derbyshire, South-East (Mr. Champion) welcomed the Bill on behalf of the horticultural industry in a very interesting speech, and I think that he will appreciate that this Bill deals with the horticultural industry as well as the agricultural industry, in that the horticultural industry is to be assisted in regard to phosphatic manures in exactly the same way as the farming industry. I think that I have dealt with his point about the 10 cwts. in reply to the hon. Member for Tonbridge.

The hon. Member for Dorset, North (Mr. Crouch) referred to drainage, and I agree with the points that he made. The hon. Member for Wednesbury is, I see still waiting here—

The right hon. Member for Belper dealt with him so well that I do not think that it is necessary for me to take up the arguments which he made. There is one point which he attempted to make, rightly or wrongly, when he quoted the figure of £300 million as the net aggregate income. Comparing that with the figure of the national income of over £11,000 million, it represents about 2.8 per cent. on the recent calculation of the national income, and, considering that agriculture: is a basic industry, I do not think that anyone can say that 2 per cent. or a little over is an unreasonable proportion for that industry to take of the national income.

The hon. Member asked why we could not produce a statement of the production of the agricultural industry in the various commodities. That statement is in existence. I have a copy here. In the Annual Review of the Fixing of Farm Prices, 1951, we have the particulars for every commodity which is produced in this country.

The hon. Member will there find all the facts for which he is asking. If he should not get them all there, it would not be very difficult to go to the Library to obtain from the Statistical Digest all the details which could not be given in the Review because of lack of space.

I have asked for the quantities in terms of goods. I know that the amounts are available in terms of depreciated currency, but I am not satisfied with that. I want the quantities in terms of goods for 1936–38 and for the last three years.

If in referring to "goods" the hon. Gentleman means products of the agricultural industry whether in tons or in acres, all that is available to everybody. At home I have statistics going gack to about 1924. I do not think there is anything at all in the point he has raised.

The hon. Member for Orkney and Shetland (Mr. Grimond) was the only hon. Member to speak for a Scottish constituency. We all sympathise with him about the terrific gales in Orkney, and we hope that things are a little better there now and that the damage is being repaired. When the news came through, the Scottish Office did everything it could to press button A or button B to try to help Orkney. The hon. Member asked whether we would review prices if other fertilisers and freights increased in cost.

We shall certainly keep this under review. As I have said, the Bill gives power to produce any kind of fertiliser scheme. The hon. Member also asked about the minimum quantity to be considered, and I have said that it is 10 cwt. If the hon. Member has any cases to submit to the Department of Agriculture for Scotland, he will get sympathetic consideration. He also asked what kind of land would rank for the subsidy, and the answer is that any land will.

The hon. Member also referred to air experiments. I believe he was referring to lime spreading experiments carried out by aircraft. I understand that this is in the hands of the Agricultural Research Council. A committee is looking after the matter at the moment and experiments have been carried out. I do not know what progress has been made, but I can make inquiries. I believe that the great trouble, as one would expect, is to find a method of distribution which is economical.

We have had a year of very steeply rising costs. Labour, feedingstuffs and fertiliser costs have all gone up, and the sharpest advance has probably been in the case of fertilisers, which has adversely affected sales and, in turn, storage space. It ought to be said that the trade has gone to all sorts of lengths to increase storage space in order to meet the spring demand. The production of fertilisers has necessarily had to be curtailed. In these circumstances, the only wise course for us is to do everything we possibly can to reverse this very serious tendency.

We are trying to do that by means of this Bill. We believe that the provisions in the Bill to provide a subsidy for phosphatic fertilisers with retrospective effect to 1st July should bring about the desired result of stimulating sales of what every- one agrees is an indispensable raw material for agriculture. Without it we cannot possibly hope to secure the high level of production we need today.

Question put, and agreed to.

Bill accordingly read a Second time.

Committed to a Committee of the whole House.—[Mr. Heath.]

Committee Tomorrow.

Agriculture (Fertilisers) Money

Considered in Committee of the whole House under Standing Order No. 84 (Money Committees).—[ Queen's Recommendation signified.]

[Colonel Sir CHARLES MACANDREW in the Chair]


That, for the purposes of any Act of the present Session to authorise the payment out of moneys provided by Parliament of contributions for relief of occupiers of agricultural land in respect of expenditure on fertilisers, it is expedient to authorise the payment out of moneys provided by Parliament—
  • (a) of contributions for relieving occupiers of agricultural land of a part of the expenditure which they would otherwise have incurred in respect of fertilisers acquired before or after the passing of the said Act, being contributions made in accordance with a scheme securing so far as practicable that the making of contributions in accordance with the scheme in respect of fertilisers of any kind will not relieve occupiers who acquire fertilisers of that kind of more than one-half of the expenditure which they would have incurred in respect thereof if there had been no provision for the making of those contributions; and
  • (b) of any expenses of administration incurred by a Minister for the purposes of the said Act of the present Session, or of any scheme made under that Act.—[Sir T. Dugdale.]
  • Resolution to be reported Tomorrow.

    Agriculture (Pasture Acreage)

    7.7 p.m.

    The Joint Parliamentary Secretary to the Ministry of Agriculture
    (Mr. G. R. H. Nugent)

    I beg to move,

    That the Agriculture (Special Directions) (Maximum Area of Pasture) Extension of Period Order, 1951 (S.I., 1951, No. 2262), dated 17th December, 1951, a copy of which was laid before this House on 20th December, be approved.
    Section 95 of the 1947 Agriculture Act gave the Minister power to make an Order
    "…which must be approved by affirmative Resolution of both Houses within 28 days of Parliament's re-assembling."
    The Order was first made in 1948 and it was renewed in December, 1950, to be effective in 1951. The duration of the Order now before the House is for the current year, 1952.

    The effect of the Order is to give the Minister power to limit the maximum pasture acreage on a holding or, by implication, the minimum tillage acreage. In practice, the Order is operated by the county agricultural executive committees to whom the Minister delegates these powers. As to the past operation of the Order, up to 31st October last year there were about 400 directions which had been served by county committees. Most of them were fully or substantially complied with, and in only 14 cases were prosecutions necessary.

    The case for continuing the Order in 1952 was stated by my right hon. and gallant Friend when he announced the introduction of the new £5 per acre grant for ploughing for the 1952 harvest, and there is a continuing need for the greatest possible production of all tillage crops, particularly coarse grain and potato crops, and in the present critical state of the nation's economy this need is greater even than it was before.

    Since 1947 there has been a serious decline of more than 500,000 acres of tillage, mostly in 1951, which is serious enough in itself. A further decline now cannot be contemplated. I believe that most farmers are maintaining the maximum possible tillage acreage in response both to their own interests and the nation's needs. But there are some who could do more, and it is to provide the county committees with means to deal with those people that I am asking the House to approve this Order.

    7.10 p.m.

    I must apologise for having so rapidly been translated from below the Gangway to above it, but in the absence of my right hon. Friend the Member for Don Valley (Mr. T. Williams), for reasons that we all understand, there are one or two things which I should like to say. I do not believe that the Government side of the House expect to get away with this Order like this.

    This is the Order which the present Government fought so bitterly when it was introduced in 1948. This is the Order which the present Minister of Agriculture voted against. This is the Order against which the present Leader of the House made such a violent speech. The hon. Member for Harrogate (Mr. York) made a wonderful speech against this Order, and the hon. Member for Thirsk and Mallon (Mr. Turton), who is now the Parliamentary Secretary to the Ministry of National Insurance, put forward many reasons why we should not have this Order.

    We on this side of the House are prepared to consider the circumstances and the facts and to vote consistently. We shall vote the same way as we voted when the Order was brought in, but what about the Government side of the House? I cannot attack the Joint Parliamentary Secretary to the Ministry of Agriculture, because he was not then in Parliament, but other Members on the Government side of the House are to vote in a way opposite to that which they voted before when they would not accept the Order we proposed.

    The Minister of Agriculture and the hon. Member for Thirsk and Malton must have some reason for changing their minds. It cannot be the economic situation because I read that the Leader of the House, when speaking of this subject in 1948, said:
    "Although we are aware, that, in general, the international background and the national economic background are extremely serious today, that is not enough for this argument."
    He said, in fact, that we could not use that argument, but that we must use something better. So, today, it cannot be because of the serious economic position, and something else must have happened in the interval to make him change his mind.

    The hon. Member for Harrogate asked why is it we had to use this kind of sanction, and said:
    "Why cannot the same sanction of public opinion be used now as was used before? The Minister is using a legislative sanction and not the sanction of public opinion.…This Order is a very serious error. It certainly has, and will further, upset the industry."
    We ought to be told why a very serious error that would upset the industry is being carried on now.

    Let us have a look at what was said by the hon. Member for Thirsk and Malton:
    "I do not object to any Order against a man who is not farming in the interests of his land or country, but the men who are going to be attacked by this Order are farming in the interests of their land and are producing a good crop, which is grass."
    He went further and he described the Order—the same Order as this with the same wording—in this language:
    "If that is right…it means that this Order besides being oppressive, is also nonsense."
    We are entitled to know why we are being presented tonight with an Order which, in the opinion of a Member of the Government, is nonsense. This Government have had sufficient time now to know the answer to that.

    I could go on with further extracts. The hon. Member for Leominster (Mr. Baldwin) also made a speech against it, but I think it is hardly right to read out portions of that speech when the hon. Member is not here. The right hon. Gentleman the Leader of the House is not here. I understand that he could not be present. I mentioned to him that I was going to raise this matter, so that I gave him notice of my intention. He began his speech in 1948 by saying:
    "I will say that most sensible people in the country object to being ordered about by directions."
    He then went on to give the argument which I have already read to the House about the economic situation:
    "Although we are aware that, in general, the international background and the national economic background are extremely serious today, that is not enough for this argument…That is the Labour Party and the Labour Government all over again—the big instrument for the little necessity."
    It is not the Labour Party or the Labour Government now. It is the Conservative Party and the Conservative Government who are introducing this Order.

    The right hon. Gentleman said:
    "What is being done by this order is typical of that mentality…the Government are making a terrible psychological blunder for which the whole farming community, who have done everything they can to increase production, as was asked for by the Government last year, will suffer."
    The Government ought not to perpetuate terrible psychological blunders. They have had time to put these things right. The right hon. Gentleman also said:
    "It is an absolutely stupid thing"—
    this Government are carrying on doing a stupid thing—
    "when an immense voluntary effort is needed and is being accorded, to introduce this great hammer of compulsory direction."
    As I say, I absolve the Parliamentary Secretary from any blame, but the farmers of Guildford ought to be told that their representative is introducing what the present Leader of the House once described as a
    "great hammer of compulsory direction."
    and that he also said that this was
    "an absolutely stupid thing to do."
    The farmers of Thirsk and Malton and of Richmond, in Yorkshire, ought to be told what the Government are up to tonight; indeed, the farmers of the country should be informed. We on this side of the House are entitled to an explanation, in view of the fact that the Leader of the House said:
    "Surely we are not in the very parlous condition that we have got to have peace-time powers of direction which are admittedly against the rules of good husbandry throughout the country."
    The Parliamentary Secretary is bringing in an Order which a member of the Cabinet, which he supports, has admitted as being against all the rules of good husbandry. As the right hon. Gentleman went on he worked himself up into a real passion:
    "It is a monstrous thing to bring this great weapon of direction into force for what is admittedly to be a comparatively small majority."—[OFFICIAL REPORT. 19th July, 1948; Vol. 454, c. 123–152.]
    So we have an absolutely stupid thing, which is quite monstrous. He said that the only reason the Order was introduced was because the gentlemen in Whitehall knew best. He ended in much the same way as he had begun.

    So we have the Leader of the House of Commons, the hon. Member for Newbury (Mr. Hurd), who used to wind up debates in those days, the hon. Member for Harrogate and the hon. Member for Thirsk and Malton supporting this Order tonight. None of them is completely inarticulate or a "yes man" for this Administration, but they are being asked here tonight to support what was once described by them and by leading members of their party as a stupid, monstrous, cruel, and dictatorial thing. I do not think the Government can get away with it.

    It is true that the present Minister of Agriculture, on that occasion, kept out of that discussion. I remember trying to get him to make a speech that night. I did not succeed, but he went into the Lobby and voted against the Order. Several other hon. Members opposite voted against the Order then with the hon. and gallant Member for Rutland and Stamford (Major Conant) and the hon. Member for Honiton (Mr. Drewe) acting as serjeant majors and whipping them up and getting them into the Lobby.

    I shall advise my hon. Friends tonight to be consistent and vote the same way as they voted in 1948. We regard the economic situation as serious, but here tonight we see a Government going to do the very thing which they described as wrong in 1948, and I think we are entitled to an explanation.

    7.19 p.m.

    It was a very good thing that in 1948 my hon. Friends and I made such a fight against this Order. The result was that the Ministry of Agriculture were forewarned that if there was an abuse of their powers, arising out of this Order, there would be serious consequences. To many of my hon. Friends direction of this kind is reprehensible.

    Many of the things in this Order are objectionable to us, but hon. Members opposite must realise that we have received a legacy from them which we cannot digest in five minutes. We have to continue a considerable number of wholly objectionable Measures that we hope in due course to obliterate. I confess that the Government thoroughly deserve the barracking that they have had. I do not think that we ought to extend this Order for a future year. I shall not support a similar Order for another year.

    7.21 p.m.

    Many hon. Members remember the action that has been taken by the hon. Member for Harrogate (Mr. York) on many occasions, and not just on this Order. I remember the discussion that took place on many proposals in the main Agriculture Bill of 1947. In the Committee stage on that Bill, the hon. Gentleman used to argue his point very forcibly that we were interfering with the freedom of the individual and were taking powers that we ought not to have. That was his attitude when he opposed this Order. He ought to say now that his party was wrong and admit it, instead of trying to make an excuse for the action which it is taking.

    I am not referring to any particular Clause, but if the hon. Gentleman will read his own speeches on the Clauses of the Agriculture Bill—

    Any of them. Take the Clause on direction. The hon. Gentleman may take pride in the fact—

    I must point out to the House that discussion on a statutory Order must be strictly limited to the contents of the Order.

    I apologise, Mr. Speaker, but I was drawn into an argument by the hon. Gentleman. I merely ask that the Opposition should come clean on this point. [Laughter.] I mean the opposition—which is still there on the Government side of the House—to this Order. The hon. Gentleman has said that he has not changed his opinion. He should be prepared to say that his colleagues are wrong, and particularly the present Minister of Agriculture, who was against this Order. We support the Order because we believe that it is necessary in the interests of food production. I am very glad that my hon. Friends on this side of the House are taking a much more responsible attitude to British agriculture than the Tory Opposition did when we were in the Government.

    7.23 p.m.

    I must congratulate the right hon. Member for Belper (Mr. G. Brown). He has really had a field day today. Considering that his hon. Friend the Member for Wednesbury (Mr. S. N. Evans) has also tried to restore the confidence of the country in the agricultural intentions of his party he has had a good day.

    Reading past copies of HANSARD is a fascinating occupation. I daresay there are speeches that could be taken out of it, not necessarily referring to the right hon. Gentleman, but to other hon. Members, that would fill them with embarrassment. If we have many more speeches of the kind we have had in the last few weeks, the Opposition, if they find themselves back on this side of the House again, may be very much embarrassed at them.

    Well, we shall see.

    It is a point worth making that the greater part of the decline in the tillage acreage in this country took place in 1951 and to a certain extent in 1950. The right hon. Gentleman did not know that, when this Order was renewed at the end of 1949. At that time the Order went through on the nod. He did not at that time charge hon. Members of the Government, who were then in the Opposition, with any inconsistency. It was very significant that the Order went through so easily. The greater part of the decline has taken place in the past year. We have something like 500,000 fewer acres of tillage in 1952.

    The cogency of this Order is very much what it was before. We have always been prepared to look at the facts of a case and to apply what we think the best practical measure to deal with the situation. In the circumstances, my right hon. Friend was more than justified in taking the view that, in the circumstances and the present position of the country, it was necessary to extend this Order for another year. I trust that the House will give this Order its approval.

    Question put, and agreed to.

    That the Agriculture (Special Directions) (Maximum Area of Pasture) Extension of Period Order, 1951 (S.I., 1951, No. 2262), dated 17th December, 1951, a copy of which was laid before this House on 20th December, be approved.

    Agriculture, Scotland (Pasture Acreage)

    Motion made, and Question proposed,

    That the Agriculture (Maximum Area of Pasture) (Extension) (Scotland) Order, 1951 (S.I., 1951, No. 2199), dated 12th December, 1951, a copy of which was laid before this House on 14th December, be approved.—[Mr. Snadden.]

    7.27 p.m.

    The Joint Under-Secretary of State for Scotland should say a word about this Order before the House is asked to approve it. He did not commit the error which the Leader of the House did in 1948, because we did not then have the Scottish Order. We had one in December, 1949. He did not make such a speech as did the right hon. Gentleman when the English Order was brought forward in July, 1948. The Under-Secretary was not very enthusiastic about the scheme. He said that it was necessary only because of the maladministration of the Government. Is the Order now necessary because of the maladministration of the late Government or the maladministration of the present Government?

    This process of education of the Conservative Party is interesting. In 1948, the House was, we were told, doing a stupid thing, a monstrous thing, a dictatorial thing, which ought not to have been done at all. The Conservative Party voted against the scheme. By 1949, as the Parliamentary Secretary to the Ministry of Agriculture has just told us, the Conservative Opposition did not make any speeches at all about the renewal of the English scheme. When we had the Scottish scheme in 1949, the right hon. and gallant Member for Kelvingrove (Lieut.-Colonel Elliot), speaking from the Opposition Front Bench on behalf of the Conservative Party, said:
    "These powers must be watched with caution and must be withdrawn at the earliest possible moment."—[OFFICIAL REPORT, 5th December, 1949; Vol. 470, c. 1670.]
    As a matter of fact, they die a natural death if they have not been used. The Government are now saying, "Please support us" in renewing this scheme and continuing its operation. Surely, in the circumstances the Under-Secretary should tell us what has happened since 1949 to convince him that this sort of thing is now good. I am not surprised that he did not volunteer a speech, because he must be suffering a little from embarrassment.

    We are all glad, notwithstanding all that, that the Government appreciate that it is desirable that farmers should not be permitted to allow too much of the land of Scotland to go back to grass. In my view a lot of the land that has been allowed to go back to grass, or is under grass at the present time, is producing a most valuable crop. Those acres that are given over to grass, which is cut two or three times in the summer and is used for grass drying or silage-making to feed to cattle in the winter, are producing a most valuable crop. It may well be that such acreage ought not to be listed in the acreage of pasture at all, but in the acreage of tillage-producing crop.

    However, it is undeniable that farmers in many parts of the country have allowed too much of their land to revert to semi-permanent or permanent pasture. It is, unfortunately, true that farmers with good arable land, suitable for producing crops, but whose main industry is that of feeding or raising beef, are satisfied with producing only that quantity of grain necessary for their own requirements, and are not interested in producing that little extra to help the fellow next door who has not the land to put to the production of those cereals necessary for animal feeding. It is right and proper that the Government should give to the executive committees power to say to the farmer, "You are not ploughing enough land," and that, of course, is precisely the power which this scheme proposes to give to the executive committees.

    Since the Under-Secretary of State for Scotland must, by now, have appreciated that he really owes it to the House of Commons to make a speech in justification of this scheme, I wonder if he could also tell us something about the need for this scheme in Scotland? Could he tell us at what rate tillage has been going down in Scotland in 1951 or during 1950? Could he tell us what use has been made of the scheme from the time it was first introduced in December, 1949, until the most recent convenient date for his purpose?

    Could he tell us how many directions have been issued under the scheme? Can he tell us, as he probably can, that there have been no prosecutions at all? In any case, he can tell us how many directions have been issued throughout the whole of Scotland, and I think he can tell us the extent to which the acreage under pasture has increased during the past year and to what extent we have fallen short of reaching our tillage target.

    If he does that, he will go a long way towards showing us that there is a need for this scheme. In any case, in view of his lukewarm attitude to the scheme when it first came before this House, and in view of the conversion of the Conservative Party to the use of these Statutory Instruments for bringing about more production and higher efficiency in agriculture, I think he will wish to make a speech to the House in justification of this scheme.

    7.34 p.m.

    Before the Under-Secretary of State for Scotland replies, may I put to him, shortly, one or two points which are entirely agricultural and not dialectical? As I understand it, the need for this scheme is largely due to the fact that we cannot now import and pay for the feedingstuffs which we used to get from other countries. That in itself must take a considerable amount out of the fertility of our soil.

    I should also like to ask him whether he, with his great knowledge, and his Department are satisfied that the continual ploughing up of land in this country in the long term will not have deleterious effects not only on the soil but on the stock raised on the soil? Also, how far is he satisfied with the progress made in the introduction of new grasses and the treatment of grass for fodder? The hon. Member for Hamilton (Mr. T. Fraser) mentioned that in some cases grass silage, dried grass, and so on, is an important product. I wonder how far the Department is satisfied with regard to that, as far as Scotland is concerned.

    Further, is there not a danger in the method by which this Order is applied through the agricultural committees? Is there not a tendency for each committee in its own county to insist on the maximum acreage being ploughed, regardless of the special suitability of that county to particular form of agriculture? In Ayrshire, for instance, is there not a tendency to order each farmer to plough up a certain amount of his land? In that process there may be encouragement of mixed farming which, while it may have many advantages, may not be the most efficient way of farming in a specific county, bearing in mind the shortage of labour and the high results in food which can be achieved only by specialisation. If the hon. Gentleman could outline those points I should be grateful.

    7.36 p.m.

    In answer to the hon. Member for Hamilton (Mr. T. Fraser) may I say that as there had been a debate on the previous Order for England and Wales, whose purpose is identical with that of the Scottish one, with exactly the same background, I thought it would not be necessary for me to go into the question of why we wish to have a similar Order. However, I expected that the hon. Member would probably raise a few points on it. If the hon. Member will refer to the OFFICIAL REPORT Of our debate on the previous Order—and he mentioned what I said on that occasion—he will find that I did not oppose the Order or even criticise it. I asked for the reason why it was found to be necessary, which is rather different.

    Nobody likes the service of directions, least of all myself, but in that connection the same can be said of Scotland as can be said of England and Wales. We do our best in Scotland, through our agricultural executive committees to persuade the very small minority of farmers who have not done so to play their part in the food production programme. It is only when persuasion has failed that an agricultural executive committee reverts to compulsion. I think I am right in saying that this is the only Order under the Agriculture Act of 1948 which is now in operation, apart from the general powers that exist in that Act.

    We have to take into account the very serious figures that are available now. I will give the hon. Gentleman one or two of them to show how even I, who dislike directions, feel that it is now in the national interest to see that the maximum area of our land is ploughed up. Since 1947 we have lost 128,000 acres of tillage, and considering the smallness of our arable acreage in Scotland that is a very big figure. We have lost over 84,000 acres of cereals and over 33,000 acres of potatoes.

    The Government, therefore, recognising the need for more tillage, more coarse grains, have recently offered a new subsidy of £5 per acre for ploughing up grassland which was sown out in 1948 or earlier, to try to bring in the coarse grains that we feel are necessary if we are to maintain, let alone increase, the head of livestock which we have at present in the country.

    I am sorry to interrupt the hon. Gentleman, but could he tell us the rate at which this tillage acreage has been running down in more recent years? He gave us the figure since 1947. It was precisely because the tillage acreage was running down after 1947 that we brought in an Order, first of all, in 1949. I do not want to press the matter, but if the hon. Gentleman has separate figures for last year we should like to hear them.

    I gave the overall figure from the 1947 expansion programme, quite apart from any party point, to show that we have not reached our target and, rather, that we are moving downward. As regards the actual fall of tillage—the hon. Member, who was in the Scottish Office, will know what I mean by "tillage"—the latest figure is that we have lost 38,000 acres since 1950. I could give the figures for all the commodities if the hon. Member wishes—wheat, oats, barley and all the rest—but it would take some time to read them out. The figure I have given is the one that really matters.

    The hon. Member for Orkney and Shetland (Mr. Grimond), asked one or two questions which I hurriedly wrote down, and I may not have noted them all correctly. One of his questions concerned the putting of such powers as these into the hands of agricultural executive committees. I agree that some risk is run by allowing the A.E.C.s to use powers of direction, but throughout Scotland the evidence in my possession, at any rate, shows that, generally speaking, these powers are very sparingly used. They are used after every factor is taken into account. If the farm in question is a dairy farm, the nature of the farm, the acreage that is under grass, and so on, are taken into account. It is only when a committee feel that the farmer is not pulling his weight in the national production drive that they serve directions.

    As regards grass, a lot has been done in this direction, especially in Ayrshire. Recently, I visited the various research institutes there and was very much impressed by what I saw. There are tremendous possibilities in increased intensive manuring of grass, strip grazing with electric fencing, and better conservation, and it may be that in the course of time there may be no such thing as imported feedingstuffs. I am very hopeful that we will make real progress.

    On the question of the danger to stock from ploughing up, I do not think that scientific advice would show that there is any danger at all in this respect.

    Can the Under-Secretary say how many directions have been issued under the Order?

    I am sorry I meant to give that figure, but I forgot. To date, 91 directions have been served under the Order since its inception, or a little over one farmer in 100. That is not a very high proportion, and it says a good deal for our efficiency in Scotland. Those 91 directions involved a total of 1,680 acres brought back into cultivation out of grass, and is a very small figure when the full total is taken into account.

    7.43 p.m.

    Is the Joint Under-Secretary aware that in one or two of the beef producing areas, there is a reluctance on the part of farmers to make any contribution whatever to the producing of winter feed? They tend to depend on somebody else outside their own area—I do not want to mention any area in particular—and some of the agricultural executive committees have had great difficulty even in pursuading some of the farmers to do their duty in this matter.

    In one place, where the farmers were rather different even from the economic point of view of the returns from the farm, they were prepared to go through the motions of ploughing up and playing with the job but not really producing the crops. It may not be a matter for congratulation that so few directions have been issued, and I hope that not only will there be discrimination in dealing with the type of grass that should not be ploughed up but should be used as an equivalent to crops, but that careful supervision will be given by the agricultural executive committees, with backing to them from the Scottish Office, to see that farmers in areas that can produce crops actually produce them.

    I could mention places where some of the good farmers of the area were very disturbed that the crops of which the land was capable were not being produced. It may be, therefore, that some parts of the country remain too sparsely used in the sense that farmers treat their colleagues with too great delicacy in getting the job done. If the feeding is to be produced for the winter, the farmers who are to use it for beef must play their part as well as the others in trying to plough up the necessary ground.

    Question put, and agreed to.

    That the Agriculture (Maximum Area of Pasture) (Extension) (Scotland) Order, 1951 (S.I., 1951. No. 2199), dated 12th December, 1951, a copy of which was laid before this House on 14th December, be approved.

    Export Guarantees Bill

    Order for Second Reading read.

    7.45 p.m.

    I beg to move, "That the Bill be now read a Second time."

    The House will be aware of the series of Acts which have been passed over a period of years for the purpose of developing a system of encouragement of our export trade. Credit insurance by the Government was first introduced after the First World War in a very modest form under the authority of the Overseas Trade Credits and Insurance Act, 1920. The scheme took the form of cash advances, and credits were limited to£26 million a year.

    This system was discontinued in 1929 in favour of a system of guarantees, which is the basis of the present scheme. The powers given to the Board of Trade under the original Act were exercised by the Department of Overseas Trade until April, 1930, when the Export Credits Guarantee Department became a separate unit under the Secretary of the Department for Overseas Trade. Before and after the Second World War, there were further extensions by Acts of Parliament both in regard to the scope of the Department's activities and its financial powers.

    In 1949, the Export Guarantees Act was passed with the general approval of all sections of the House. This Act, which was introduced by the right hon. Member for Huyton (Mr. H. Wilson), was, broadly, a consolidation Act, modifying and simplifying existing legislation; but it also took powers to increase the amount of the liability of the Board of Trade in respect of guarantees given by the Export Credits Guarantee Department. There was also a further short Export Guarantee Act in 1951, which conferred certain minor additional powers on the Department covering overseas subsidiaries of British companies. That is the legislation up to date.

    The object of this Bill is to secure a further extension of the aggregate limits of liability of the Board of Trade, acting through the Export Credits Guarantee Department. This is for the purpose of meeting the still further expanding demand for guarantees. Before dealing in detail with the need for this, it would, perhaps, be for the convenience of the House if I were to outline the way in which the Export Credits Guarantee Department operates.

    The guarantees given by the Board of Trade can be divided into two main groups: First, the commercial guarantees, which are in practice a form of insurance given on a broad, commercial basis. I must, however, make it quite clear that it is not a question of the Department giving credits or providing money in any form. They simply give guarantees of payment. These guarantees are given with the consent of the Treasury and after consultation with an Advisory Council, which consists of eminent bankers and business men and representatives of organised labour. Guarantees are only given in cases where the Council considers that a guarantee can be offered as a reasonable commercial risk.

    The guarantees are divided into short-term credit contracts, which mainly cover consumer goods and raw materials, and medium-term contracts, which are directed towards capital goods and where the terms are different in each case and, generally speaking, longer than in the case of consumer goods. In the majority of cases in this second category, the buyer is a public authority. In both cases, the risks covered include such matters as the insolvency of the buyer, difficulties over the transfer of sterling, the risk of war or civil disturbance and a number of other contigencies. Under the 1949 Act, the limit of liability of the Board of Trade for the commercial guarantees was fixed at £500 million.

    The second group consists of special guarantees given, again, with the consent of the Treasury under Section 2 of the 1949 Act, for specific transactions which are considered to be desirable in the national interest. They are not necessarily acceptable as reasonable commercial risks, and consultation with the Advisory Council is not required. These guarantees cover a wide number of projects, such as certain aspects of the dollar drive and such things as the export of herring to Poland and many other projects.

    In the case of North America, there are all sorts of new schemes which have been devised, including policies covering losses involved by market research, advertising or other forms of promotional activity. Special guarantees also include trade with the Iron Curtain countries amounting to £13,240,000 on 31st December last. They also included recently £10 million for the sale of buses to Cuba, to provide transport for the city of Havana, as the right hon. Gentleman the Member for Rochester and Chatham (Mr. Bottomley) knows very well. The liability of the Board in the case of the special guarantees is at present limited to £100 million.

    It is the object of the present Bill to increase the limits for the commercial guarantees and the special guarantees to £750 and £150 million respectively. It has always been the practice of the Export Credits Guarantee Department in administering its policy to seek increased limits as and when they are needed, rather than to obtain from Parliament sanction for powers which would be sufficient for all contingencies and circumstances for a long time ahead.

    When the limits were last raised in 1949, I doubt whether anyone expected that the Government would be obliged to ask for a further large increase quite as soon as this. At the same time, I hope to be able to make it clear to the House this evening that, if the Export Credits Guarantees Department is to have the flexibility to operate which it requires, these increased limits of liability are necessary.

    I shall first take the commercial guarantees. The volume of business under this heading has been constantly expanding since before the war. The average annual value of policies for the three years before the war was £43 million. By the year 1945–46, the value of policies issued had reached £71,800,000. This figure again rose each year until, for the year 1950–51, the total volume of business was valued at£511,200,000. The value of policies issued for the nine months up to the 31st December. 1951, amounted to£470,600,000.

    I should explain that, broadly speaking, guarantees given by the Department cover a percentage only of the loss which an exporter may incur. The percentage in the case of individual guarantees is a high one, up to 85 per cent. in cases of the buyer's insolvency and 90 per cent. for other risks. On this basis, the total value of the Department's commercial liabilities was fixed in 1939 at£75 million. In 1945, it was raised to£200 million, and in 1948 to£300 million.

    In 1949, when the right hon. Gentleman the Member for Huyton asked the House to agree to raise the figure from £300 million to£500 million, the maximum liability outstanding at the end of the previous year was £224,500,000. The right hon. Gentleman said that, in seeking this increase, he was asking the House to agree to make provision for further increases in business.

    These increases have now occurred, with the result that, by October last year, the maximum liability of the Department in respect of these commercial guarantees had reached the figure of£415 million. The House will realise that, at this point, officials of the Department were inevitably becoming nervous about the possibility that they might be faced with the necessity of turning down business as a result of the present statutory limit of liability.

    At the end of December, 1951, the latest date for which figures are available, the liability in respect of guarantees given and offered under Section 1 of the 1949 Act had fallen to £387 million. This fall, however, must be regarded as fortuitous and to some extent seasonal, and it must be assumed that the figure will rise again sharply. It is possible that the extra £250 mill ion now in question may not be required in the immediate future, but it would be dangerous to assume this in view of current high prices and an increasing number of applications at this particularly difficult time.

    I did not catch the exact figure of the fall under the Section 1 guarantees. Will the hon. Gentleman now repeat the figures?

    No. When the hon. Gentleman said there was a fall, which he said might be temporary or fortuitous, what was the date to which he referred?

    The fall was from a figure of £415 million in October last to £387 million at the end of December.

    I now turn to the position regarding the special guarantees, which is a matter of real urgency. These guarantees, as I have explained, refer to transactions which are undertaken as a matter of public policy. The House will realise that, in regard to certain of these guarantees, the risks are far heavier in relation to the premium receipts than in the case of the commercial guarantees, and claims, when they arise, may be substantial.

    Special guarantees given under Section 2 of the 1949 Act are also generally of long duration, and most of them have not been running long enough for a sound judgment to be formed of claims experienced. In the year 1949–50, the volume of business was £1,600,000. By the following year, it had risen to £45,200,000, and for the nine months to 31st December, 1951, it amounted to £55,800,000.

    As regards the liability of the Department for the special guarantees, the figure at the end of December, 1951, stood at £63 million. In October, it had been as high as £70 million, and I understand that, at that time, there was a question of a guarantee of £15 million which, in fact, did not materialise, but which would have brought the figure up very close to the maximum limit. Having regard to the nature of this type of business, notably the size of the transactions and the short notice at which demand for facilities may arise, this figure was regarded by the Department as dangerously high in relation to the total statutory liability of£100 million.

    There is another point, which is that credits under this Section do not revolve as quickly as those under Section I, and each has a cumulative effect. Once the balance available is near exhaustion, as might happen at any time now, credit proposals of real urgency and of national importance might have to be abandoned, or, alternatively, the Government might have to come to Parliament for emergency legislation.

    It is in the light of these facts which I have described that the Government consider that it is prudent to ask the House to agree to raise the maximum liability in the case of commercial guarantees from£500 million to£750 million, and in the case of the special guarantees from£100 million to£150 million.

    The reasons for the increase in business which has rendered this action necessary are not far to seek. It is partly due to the rise in prices and partly to the success of our export drive, or perhaps I should more properly describe it as a combination of both. The total value of United Kingdom exports rose from £2,171 million in 1950 to £2,580 million in 1951, an increase of 19 per cent. Moreover, the United Kingdom export prices also rose quite sharply during the past year.

    Average export prices during the year were nearly 20 per cent. above the 1950 average. We must expect this trend to continue during 1952, and it is quite possible that the 1952 average export prices will be nearly 30 per cent. above the 1950 average. The volume of United Kingdom exports in 1951 was some 3 per cent. greater than in 1950, and, given the Government's determination to increase the resources devoted to production for export, there is no reason to suppose that there will be a reduction in export volume. On the contrary, we must devoutly hope that there will be a further increase in volume.

    In the engineering field, all the Government's policies are now directed to increasing the proportion of total output devoted to the export trade, and therefore we must expect that capital goods and machinery will form an even larger proportion of total export earnings than in 1951. This will inevitably have a substantial influence on the Export Credits Guarantee Department's medium-term operation.

    This fact, coupled with the expected increase in export prices, makes it clear that the conditions governing the flow of our export trade will almost certainly be such as to require a very substantial increase in the use of the facilities offered by the Export Credits Guarantee Department.

    Her Majesty's Government are satisfied that in the circumstances the proposed increases to a limit of£750 million for commercial guarantees and £150 million for special guarantees, which I have explained and which includes the dollar export drive, are not too high. I must, however, say that the increases which we expect to occur in the business of the Department cannot be solely attributed to higher prices of exports or to the initiative and performance of our exporters. Part of the credit—for it is a matter of very great credit—must go to the officials of the Department itself.

    Generally speaking, the history of the Export Credits Guarantee Department is a success story. Since the Department became independent in 1930, its staff has increased from 79 to 580. The amount of business transacted, however, has increased at least 50 times. I feel certain that hon. Members opposite who speak in this debate this evening will be tempted to describe the success of the Department in building up this large and prosperous business as a perfect example of what a publicly-owned enterprise, and indeed an actual Government Department, can do in the commercial field. We on our side of the House would argue no less vigorously that the Departments success lies largely in the fact that in its 22 years of independent existence it has deliberately based its operations on the methods of operation of private enterprise in its most modern and efficient form.

    This policy has been encouraged by successive Secretaries for Overseas Trade of all parties. They have all given this Department their warm support. From its earliest days its headquarters have been in the City of London where the officers are in daily contact with bankers, brokers and merchants. In addition, there are six district offices and six branch offices from which the operations of the staff completely cover the British Isles. These people in the branches particularly are responsible for selling insurance like any other insurance agent, and providing a constant service to policy holders.

    To further the export drive and to consolidate its resources, the Department must increase its spread of risk, its gross income and its service to exporters. It must satisfy its existing clientele, and at the same time it must make sure that no export effort fails because its legitimate services are not exploited by potential new policy holders.

    I feel that the whole House would wish me to take this opportunity of paying a tribute today to the success of members of the Department from the highest to the lowest in achieving these aims. The Department's commercial success may be measured by the fact that not only has it succeeded in affording this remarkable assistance to the British export trade; it has also been a source of revenue to the Treasury.

    Since April, 1930, until the present time it has made a contribution to the Exchequer of no less than £7,387,568. This in the case of the normal insurance company would be regarded as part of its reserves against future contingencies, but under the system operated here it goes into what is known as a "notional reserve" in the Treasury, and the Department has never had access to it again, and probably never will. This figure covers payments on claims as well as the administrative expenses of the Department.

    The House may be interested to know that since 1930 the gross payments on claims have amounted to £9,400,000. Of that, £5,800,000 has actually been recovered, leaving £3,600,000 outstanding. A part of this has been written off as irrecoverable, but it is quite possible that at least a part of that sum of £3,600,000 will be recovered and will go to swell the notional reserve in the Treasury.

    There is one final aspect of the Department's work to which I wish to refer. A good export is an export paid for. It is almost a platitude to say that our whole future depends upon the development of our export trade. But it is not enough merely to register an increase in physical exports listed in the Trade and Navigation Returns. What you have to do is to get your money.

    In this connection, the Export Credits Guarantee Department make two important contributions. In the first place, their assessment of the credit risk involved does in many cases make the difference between a good and a bad export. In the second place, it is the duty of the Department to follow up particular transactions for which they have given guarantees so as to assist exporters in obtaining the ultimate cash recovery, even though in some cases the immediate payment has been frustrated. The Department has special facilities for dealing with this type of work which it carries on in close consultation with our commercial diplomatic officers abroad and our trade commissioners in the Commonwealth which undoubtedly results in recoveries being made which would otherwise be lost.

    After this explanation of the operations of the Export Credits Guarantee Department and of the possibility, and, I would say, the necessity, of its extending its activities, I hope the House will feel able to give a Second Reading to this Bill today. If there are any questions on which hon. Members require further information, my right hon. Friend who will be speaking later in the debate will be glad to answer them.

    I hope, however, that I have succeeded in convincing the House that the Department is doing valuable work which is increasing in importance, and which is, indeed, becoming of overwhelming importance at this particular time. Its success over a very long period is something of which all parties and, indeed, the whole nation can feel proud, and I hope that the confidence which the Department has earned may be rewarded by the extension of its financial powers and scope which I am asking the House to accept tonight.

    8.10 p.m.

    Upon the subject matter of the Bill I think there will be unanimity, but upon the comments made by the Secretary for Overseas Trade I am sure there will be some differing opinions from this side. My hon. Friend the Member for Hamilton (Mr. T. Fraser) earlier today talked about educating the Conservative Party. This is part of that process.

    The Secretary for Overseas Trade said that the State entered this insurance business after the First World War. It is in the midst of war that the Conservative Party generally thinks of putting the national interest first. In the First World War, bearing in mind that we had to reestablish our overseas trade, a Measure was introduced and the Export Credits Guarantee Department was established. It carried on smoothly for a time, but it was not long before the Conservative Party were out to destroy that newly-created organisation and it was necessary for the Labour Government to be elected before it was possible for the Department to be put on a sound and reliable basis. In 1930 a Committee was established and as a result the Export Credits Guarantee Department carried on the work it was originally set up to do.

    One of the ways in which the Department does its work is by the aid of an Advisory Council, a body of men who have done a very good job. In the days of a Conservative Government the Advisory Council was made up of nine financiers and one manufacturer. Things are different today. There are not so many financiers on the Council, but there is an exporter and a trade unionist. I think it will be agreed that that has given the Council a broader view and some of the success of which we have heard tonight has resulted from that change in the membership of the Advisory Council which has given better service than was given by the earlier body. I should like to say to the Advisory Council that they have done a good job and we appreciate it.

    As the Secretary for Overseas Trade said, the Export Guarantees Act was consolidated and we raised the amount of money available in order that credit should be given. Since then, as the hon. Gentleman rightly said, there have been many other additions, such as special arrangements for boosting the dollar export drive, which was so necessary, the holding of stocks and the provision whereby overseas subsidiary companies are able to obtain credit insurance, too. All this has been very useful and worth while.

    The Secretary for Overseas Trade said that the value of exports has gone up by so much and that the volume had also risen but that he was not able to give the figures of volume. If it is possible for the President of the Board of Trade, when he comes to reply, not only to give the value but also some idea of the volume we shall be in a better position to judge whether the amounts asked for tonight are those that can be reasonably sought at this time.

    I should like to join with the Secretary for Overseas Trade in congratulating the staff of the Export Credits Guarantee Department. They have done a very good job. I should like to know from the President of the Board of Trade whether the Government economy drive will affect the Export Credits Guarantee Department in any way. I struggled a long time ago to obtain and increase the staff and eventually secured it. I hope the Department will keep that increased staff, because it is by having a high standard of service from those employed that the work can be carried on. Any interference with the staff might result in Government economies on the export drive and that would be most undesirable.

    I should like to know how the export drive generally is being covered by credit facilities. I do not know how successful the dollar drive has been and what proportion of credit it takes. I should like to know what has happened in Asia and Europe and how the Commonwealth countries are affected. We should like to know how the credit facilities are operated in different parts of the world. That knowledge would be useful for some of us in doing all we can to help along the work of the Department.

    I understood that when the Secretary for Overseas Trade said that the money had gone in the past to the Treasury the President of the Board of Trade said, "Never again." Is this a new policy? If so we should like to know something about it; perhaps the President can give us more information.

    The Export Credits Guarantee Department helps our traders to do overseas work, to export and to enable this country to secure a viable economy. The resources and craftsmanship of our industry merit that, but the oil is provided by the Department in the form of credit facilities. It is most essential that the export trade should be maintained at the highest level. This Department helps to do that. It is the best compliment that can be paid, and again a very strong reason why the Conservatives should take more notice than they do of the Labour Government that here are a body of civil servants doing a thoroughly commercial and technical work with great success. We on this side of the House will do all we can to foster that work and help its development.

    8.16 p.m.

    I should like to make three points, very briefly. As it is the custom of the House when we discuss these Export Guarantees Bills—the third with which I have been concerned—to declare one's interest, I must tell the House that last year I said I was one of the Department's customers. Today I am far and away its biggest customer, and I have had the pleasure of negotiating with it on matters involving millions of pounds.

    First, in reply to the right hon. Member for Rochester and Chatham (Mr. Bottomley) the development of this Department had nothing to do at any time with any political party. To endeavour to take credit to his friends for its development was a great deal less than generous and somewhat unusual for him. The most notable of the people responsible were the present Comptroller-General and his predecessor, Sir Frank Nixon. It will be a great pity if it went out of this House that any group of politicians was endeavouring to steal the credit.

    I gave praise to the work of the Civil Service, but what I said was that the policy as a result of which they carried out that work was decided ultimately by the Labour Government.

    It was, of course, decided by the Government in power, but only after the greatest pressure had been brought to bear upon them by the two gentlemen I have named.

    I am sure the hon. Member would wish to be fair to the successive Comptrollers-General. I am sure he would wish to list the Comptrollers-General who preceded the present Comptroller-General. I am sure he did not intentionally wish to miss them out.

    I am much obliged to the right hon. Gentleman for that intervention. I want to be fair to them all.

    This Bill gives an opportunity of a general review. I probably deal with the Department a good deal more than the Minister does or his predecessor did and I am always glad to pay my tribute to the staff. I know them all personally and we know what we think of each other. They are going through a very difficult time and would ask the Minister to take a careful note of that fact. In the course of the last year or two they have become so overloaded for domestic reasons that there are dreadful delays in getting decision from the Department. It has been said rightly that the Department is a successful Department because it operates on a commercial basis.

    The Secretary for Overseas Trade has given a very clear illustration of how the Department works and of the job it does to help the export drive, but when an exporter has an offer it is most important that he should be able to give a decision. Somebody sends an order from Bombay or an agent arrives from New York and wants to place an order. It is absolutely no good whatever if we have to wait five, six or even seven weeks to hear whether or not we can do it.

    I have here detailed figures if my hon. Friend would like to see them. I do not intend to burden the House with them. They concern technical matters. But the average time for getting decisions is over four weeks and for getting approval for particular credit limits—a technical matter of great importance—it is running from two to three and even four weeks. This does very real harm. I believe that one of the reasons is because of the shortage of staff, and in case anybody on the other side of the House should hasten to make capital out of a Conservative argument for more civil servants, may I say that that is precisely what I am doing, because this is a commercial Department and not an ordinary Government Department.

    It is quite unlike all other Government Departments. This particular Department operates as a commercial concern. [Interruption.] Hon. Members opposite have very little experience of commerce and perhaps they do not understand. This Department does operate as a commercial concern, and whatever extra staff it has it will not cost the taxpayer anything. On the contrary, it will earn more money for the Government and give a greater service to the taxpayer. I hope that the Minister will very seriously consider this question of the shortage of staff and also the question of delays.

    There is one further point which I had not intended to raise, but which I think comes up in view of some of the very interesting figures which my hon. Friend gave the House. He noted the volume of business which has been turned over in the last 10, 15 and 20 years. He also noted the amount of claims paid and the amount of recoveries from the claims. In other words, one gets a comparison of the net loss of this Department, compared with the turnover from which I, knowing something of that turnover, can make a fairly quick calculation of the premium earned. I would say that it indicates that the rates are far too high.

    This is a point which I have frequently argued with the Civil Service. They say that in relation to the liabilities on their books the rates are not too high; that, if anything, they are too low. But insurance is a commercial proposition and the loss ratio in any insurance should bear some reasonable relationship to the volume of business done; and when the loss ratio is about 5 per cent. far too much money is being made.

    These figures—which I had not heard before and about which I did not know—indicate to me, as an insurance man, that there is a real argument for reviewing these rates, not only as the Civil Service must do in relation to the liabilities on their books but, over a 30-year spread, in relation to the profit margin during that time, because it is fair to say that the more we can get the rates down the more business will be done and the more service this Department can give, as it has done in the past, to exporters in this country.

    8.25 p.m.

    The hon. Member for Somerset, North (Mr. Leather), with his customary vigour, has this time turned the usual Conservative argument right over on to its head. The thing we usually hear from the Conservative Party is that the Civil Service are all right doing a job such as that of the Prison Commissioners and the usual things which they allow Government Departments to exist for, but that when one gets the Civil Service running a commercial department they cannot do it efficiently—that is a job only done by private enterprise. But the hon. Member now says that it is only when one gets the Civil Service running a commercial department that they can do an efficient job—

    I do not intend to spend much time on the speech of the hon. Gentleman, because I hope to hear a little more about the Bill—what the Bill is for and whether it is necessary. I must say that it gives me very great pleasure to support my right hon. Friend the Member for Rochester and Chatham (Mr. Bottomley) in expressing a welcome to this Bill. I was at the Board of Trade for four years in both the capacities represented on the Front Bench opposite, and I saw a good deal of the Export Credits Guarantee Department.

    As the hon. Gentleman said, it has been the desire of both parties in this House to further the work of that Department, and we have had successive Acts, of which the Overseas Trade Act, 1929, was quite a remarkable Act in its way. Then there was the Export Guarantees Act, 1937, the Export Guarantees Act, 1939, the Overseas Trade Guarantees Act, 1939, and the Export Guarantees Acts, 1945, 1948, 1949 and, of course, the latest Act of 1951, which confirmed and extended certain of the powers of the Department.

    I think that the success of the Department has been shown by the tremendous growth in the volume of business transacted by it. The hon. Gentleman gave some figures but I do not think he gave them all. Before the war this Department was handling business to the tune of about £61 million. In 1941–42—the war years—that had risen to £108 million; in 1947–48 it was £186 million; in 1948–49 it was £280 million; in 1949–50, £362 million, and last year, 1950–51, it was £466 million. This is a tremendous development in the work of this Department.

    There is no doubt—and the hon. Gentleman is quite right in saying this—that it has played a very large part in the development of our post-war export trade. The Secretary for Overseas Trade gave the figures of exports in 1951 and showed how much they had increased compared with 1950. There was an increase of £500 million. I could not help thinking, when he gave those figures, of the broadcast of the Prime Minister on 11th February, 1950, at the time of the Election, when he said that our native enterprise, contrivance and genius was paralysed by a Socialist Government. Yet we saw under a Socialist Government the tremendous increase in export figures referred to by the hon. Gentleman.

    I will not enter into a discussion of a doctrinaire nature with the hon. Member for Somerset, North, but it was because of and not despite the work of the Export Credits Guarantee Department that this great success was achieved. One reason the volume of business done by this Department has risen so much in post-war years is that post-war trade has been so much more risky all over the world and there has been far more risk to insure against. The Export Credits Guarantee Department have not merely provided their traditional service for dealing with those risks, but they have expanded their service as the risks became greater and more widespread.

    Though the hon. Gentleman said little about this—and I hope the President of the Board of Trade is going to say more about it—I think the interesting development is the support given by the Department to third-country trade, that is, export merchants based on this country trading between second and third countries abroad, and—something which was dealt with in the last Bill before the House— the development of trade through subsidiary companies operating in this country.

    I am sure the whole House will join the Minister and my right hon. Friend the Member for Rochester and Chatham in paying credit to the staff of the Export Credits Guarantee Department and especially to the Comptroller General, Mr. Somerville Smith. I think it is right to say that all the staff of this Department —and this is equally true of their regional offices, which are a very important development—are a complete denial of the usual Tory Press cartoons of the Civil Service. They are enterprising, business-like, commercial-minded, and not at all like the cartoons one sees in the "Daily Mail" and other newspapers favoured by hon. Gentlemen opposite. I have never met civil servants like those. One only sees them on the benches opposite. As my right hon. Friend has said, it is the success of public co-operation, carrying out a job of public enterprise in a field in which private enterprise has not dared to tread.

    The Department has not only done that, but it has consistently covered its costs, taken more and more risks over a period of time and yet has provided something in the nature of a profit for the taxpayer. It has given good service. I think the hon. Member for Somerset, North, is almost alone in his complaint of excessive premiums. I have heard quite the reverse from many business men all over the country, and certainly in the matter of dollar exports, about which I wish the Secretary for Overseas Trade had told us a little more, they have been extremely enterprising and have taken far more risks than many firms in private enterprise who are supposed to be venturing into the dollar markets.

    I am sure the right hon. Gentleman appreciates that I speak with some knowledge in that I deal with several hundred exporters, and I speak not just for myself but for many others. I can assure him that my remarks about the premiums are quite justified.

    I am well aware of the hon. Gentleman's activities and the particular form of insurance work which he carries on. It is perhaps significant that he, one of the largest private enterprise operators in this field, has to underwrite himself with the Export Credits Guarantee Department, even at this high premium about which he complains.

    In the export drive of 1949, 1950 and 1951, obviously the thing on which this country had to concentrate above all was dollar exports, and one of the biggest tests which we could apply to the Department is—how did it co-operate in the field of dollar exports? The Department itself thought up one or two extremely enterprising ideas for giving aids to exporters. The Board of Trade suggested one or two ideas to that Department. I myself produced one or two ideas which I thought were extremely risky and venturesome to see what the Export Credits Guarantee Department thought of them, and the Department took them up, worked them out and put them into effect.

    There have been facilities to finance, or to guarantee against the risks involved in, building up stocks in dollar markets; market research—referred to by the hon. Gentleman; even the financing of risks in connection with sales and advertising campaigns, which is a very risky development, as I think the hon. Member for Somerset, North, would agree; and in special cases assistance with tenders and insurances in respect of tenders for public works contracts abroad.

    I will admit to the House quite frankly that I expected there would be losses on this kind of activity by the Export Credits Guarantee Department. I thought that at best they would be able to make up those losses from profits made on other sides of their business. I was quite prepared, if necessary, to come to the House for a vote of money to cover those losses, because this export trade was so important. What happened in fact was this—and I may not be quite up-to-date with this, and I hope the President of the Board of Trade will bring the House upto-date—that the Department has rendered most valuable service in the dollar market and has not involved itself in losses in its business with the dollar market. If that is so, I think it is a tremendous tribute to the work of the Department.

    What we did not get from the Secretary for Overseas Trade was some statement of what the policy is to be for the future, especially with regard to the dollar export trade. Is it still the policy that the Export Credits Guarantee Department should provide this special form of assistance for dollar exporters? Are they still being as successful as they were? Will the President tell us how many dollar exporters there are now registered with the Export Credits Guarantee Department and enjoying these special facilities, and how they are getting on?

    There was a rather disturbing letter in "The Times" this morning from a prominent business man who referred to his experience in the United States market. He said:
    "The United States exports heavily to the rest of the world but has surrounded herself by high tariff walls."
    We all know that that is so.
    "She requires to import only a few commodities like rubber and tin, and a few luxuries. A company, of which I am chairman, has established its own selling organisation in the United States for the sale of British textiles. But we are closing this down as we find that the expense of building up one's own sales organisation is not justified by the results, for the slightest trade recession cuts off foreign imports into the United States."
    That was a very determined letter to be in "The Times." I do not know whether the firm in question were aided by the Export Credits Guarantee Department, and it would be wrong of me to ask the President to tell us, because it is not right for the House to be told details of the transactions of individual companies with the Department; but I think the right hon. Gentleman should tell us whether that kind of letter is symptomatic of what is going on in the dollar market today. Is it general? Are firms which established themselves in 1949 and 1950—in some cases not without a good deal of pressure—now closing down their sales organisation and deciding that the dollar export market is too risky a market in which to stay?

    Perhaps the right hon. Gentleman will tell us how many organisations which have been specially aided by the Department have had to close down their activities, perhaps in the past few months. I am sure he will tell us that the Board of Trade are giving both help and advice to dollar exporters and especially to new dollar exporters, and, in particular, encouraging people to get away from the New York beachhead and to get to New Orleans and the Middle West and the Far West, and so on. I have no doubt that he will be able to tell us that the Export Credits Guarantee Department is in a position to help with developments in those parts of the United States as well as in New York and in the principal selling areas in Canada.

    I hope the President will not fail to tell us what progress is being made with the third country trade and trade with subsidiaries to which I referred earlier, because these are forms of trade which are very important to this country. I think the last two Bills before the House enabled the Department to give some very valuable help to that kind of trade.

    There is one point which I am sure the hon. Member for Somerset, North, has come across many times in the course of his work. It is often said that the Department is unable or unwilling—that is often the suggestion—to make longer-term credits available for trade covering some little period ahead. It is pointed out by our exporters, and quite fairly pointed out, that other countries provide longer-term credit than is possible, for instance, with E.C.G.D.

    I am not suggesting that E.C.G.D. would ever be in a position to compete with the American Export-Import Bank and offer a 15 to 20 years' credit for trade with South America. It is important, however, that there should be elasticity in individual cases. There have been such cases. I remember a year or two ago when it was important to get a development of trade in equipment with South America, which would involve a considerable amount of replacement and spares. That is a kind of trade which it is desirable to press and in which it is necessary to have some of these special credit arrangements.

    Medium-term credits are obviously of importance, especially in trade with the Middle East. It is perhaps right that I should mention to the House that I brought such a problem to the attention of the Department some time ago. In the development of trade with Israel, I think we shall need a good deal more extension of the period of credit available to British exporters through the Export Credits Guarantee Department. There are other European countries, no better off financially than the United Kingdom, which are making credits for one year and two years for shipments to Israel and to certain other Middle Eastern countries—particularly shipments required for the development of those Middle Eastern countries, for constructional work and so on.

    Obviously, everyone who knows anything about Israel appreciates that the biggest problem they have at the present time is their housing problem. It is common knowledge in this respect that there are firms in this country which have developed techniques of prefabrication which could give tremendous help in developing housing in Israel with no loss at all to the housing programme in Britain. I am thinking of some of the firms dealing in concrete which could provide the "know-how" to Israel and could also provide some of the equipment without any loss to our own housing programme. It is most desirable that this should be done.

    In saying this about the Department, I am making no reflection whatever on the Department. Anyone who has had anything to do with them knows perfectly well that they are allowed no elasticity in this matter whatsoever. They are completely regulated by the Treasury. I hope the President will be prepared to fight the Treasury on this time and time again, for it is important. I hope he will be prepared to put up a fight for British trade and industry sometimes against the Treasury, whose interests are a little restricted and whose ideas, too, about this sort of thing are a little restricted.

    I hope that more facilities will be given to the Export Credits Guarantee Department to provide rather longer-term credits in appropriate cases. I know that the country is not in a position to go in for any large overseas investment or any credits over a long period of time, but I mentioned the case of Israel just now, and Israel has obviously got a very great future in its industrial development and trade development, and it is right from every point of view—the political and diplomatic points of view, and from every other point of view, and not least from the point of view of the trade of this country—that this country should be closely integrated with Israel's great development, and we should not throw away this great opportunity because of the credit policy dominated by the Treasury's conception of what Wordsworth called "The love of nicely calculated less or more."

    This Bill increases the limit to £750 million. We shall all welcome this fact. We shall all welcome it if the President comes back to the House—if he does: I do not think he ever will, though I am not referring to his expectation of political life, but to certain other considerations, so that I do not think that he will so come back—to ask for an extension of this figure of £750 million; but if anyone does come back to ask for it, we shall welcome that extension.

    The reason we shall not see anyone come to ask for that in the near future is the doubt whether they will need this £750 million. In the first place, are exports going to go on increasing at the same rate as they have been increasing over the last two or three years? I know that the January figures were good. No doubt they sent the President home to bed happy the night he announced them, but it will not be long before he finds that there are seasonal variations and that usually January is a very good month. But we are, of course, facing greater difficulties in the export trade. Hon. Gentlemen opposite and on this side who are closely in touch with British industry know what difficulties we are facing now in the export trade.

    The post-war development of exports, and the figures quoted by my hon. Friend, have been dependent as to about 50 per cent. on engineering exports. Can the President tell us whether he thinks that engineering exports will or will not continue? That has a direct bearing on the need for this Bill. I saw in the "Manchester Guardian's Commercial Review" one of the best reviews I have seen of the new industrial situation, and it said:
    "It would be useful to be able to say whether business opinion as a whole, believes that British engineering exports can be maintained in 1952. We cannot draw any honest conclusion. In our own inquiries the majority of answers was undoubtedly against the maintenance of such exports. A number of firms expect defence contracts to divert some part of their output from exports. In some cases this has already happened. Others fear that raw material or labour shortages will reduce output, or at least prevent any growth."
    It stated lower down that a minority considered that engineering exports will increase, but it went on to say:
    "It is useless to hope that re-armament will not interfere with exports."
    One firm was quoted as having said:
    "The Ministry of Supply frowns on our exports."
    I hope that the right hon. Gentleman will wipe that frown off the face of the Minister of Supply and get all Departments to encourage engineering exports even if it may mean some interference with the re-armament programme, about which he made eloquent speeches in the country not very long ago.

    It will be interesting to know whether the right hon. Gentleman expects engineering exports in 1952 to increase markedly above the 1951 level, because by this time he must have given up much hope of a big increase in textiles, clothing, and other consumer goods. There is a world slump in those commodities, and if engineering exports are to be limited he has really got to make a second speech to make a case for this Bill and to make a case for the extension up to £750 million.

    My right hon. Friend asked for a little more information about the facilities being provided for trade to individual markets or groups of markets. I think that is important, and I think it is a deficiency on our part not to have asked more. We ought to have more information, and have it broken up by groups of countries, about the work done by the Department. It would be interesting to know how much is going to South America, the Middle East, the Commonwealth, and so on.

    One of the things that disturbs many of my hon. Friends as regards this Bill is the use that is to be made of the Department in financing trade to Eastern Europe. When I moved the Second Reading of the previous Measure on 2nd February, 1949, I said:
    "I know that those who have experience or knowledge of trade with Eastern Europe at present realise how valuable the Export Credits Guarantee Department has been, and how much more valuable it might be under this new Bill, in helping trade with that part of the world."—[OFFICIAL REPORT, 2nd February, 1949; Vol. 460, c. 1688.]
    I mentioned capital goods to Eastern Europe at that time. It would be interesting to know what assumptions the right hon. Gentleman is making about the exports to Eastern Europe in 1952. It is a problem of capital goods and of the strategic controls which were put on, and for which I take my share of responsibility, though I still say that it is wrong and would be wrong to aid the shipping of munitions equipment. I say that, in the present state of world affairs.

    But I hope the right hon. Gentleman will look at this from the trading point of view of this country and not the international political point of view. I suggest to him that the time has now come for a thorough, expert, practical review of the controlled list of shipments to Eastern Europe. I think he ought to look, for instance, to shipments of rubber, because this is at the present time restricted by certain controls. It is really very hysterical to say that, because this might be used strategically, we ought not to let them have it, since in return for it we are getting timber which is going into our strategic reserves.

    The Government made a Supplementary Estimate which had the purpose of putting Russian timber into our strategic reserves. The Russians are sending us strategic material, and really some of the controls that we have on shipments at the present time are very pedantic indeed, and at this time, when our dollar problems are so greatly affected by the demand for rubber and by the price of rubber, obviously to open up a new market for rubber at this time would not only be useful in itself but would help to put up the price of rubber and to increase the dollar earnings of the sterling area.

    We have had—and the Board of Trade have always been very closely identified with this—during the past two or three years about 350,000 standards of timber from Russia coming into this country—the equivalent of about 250,000 houses. In 1948–50, in three years, we have had £38 million worth of feedingstuffs from them —about one-third of all the feedingstuffs coming to this country—and hon. Members who earlier today were debating agriculture know how important that is. That was in 1948–50, and there has since been about another £20 million worth. That is a total of about £60 million worth of grain from Eastern Europe. If the right hon. Gentleman would divert his attention—when the Chancellor will let him—from some of the irrelevant Measures which are to be introduced, and which it would be out of order to discuss tonight, and pay more attention to the prospect of trade with these countries and other parts of the world, he would be doing far more for the industrial and economic recovery of Britain.

    I hope that he will tell us something of the guarantees required for commodity trading, particularly between third countries. There is the question of Hong Kong —obviously an important centre for the activities of the Export Credits Guarantee Department. I hope that the right hon. Gentleman will tell us tonight that his influence is such that all these paralysing restrictions on Hong Kong trade are to be removed. He has had plenty of time to get down to that by now, and I hope he will make that announcement tonight.

    Recently "The Economist" carried a very disturbing article on the Hong Kong trading situation, which I am sure he has read, showing a decline in the quantity of their trade of 30 per cent. over the past year, and a decline in their trade with China of 80 per cent. over the past year. I commend to the right hon. Gentleman some of the things "The Economist" says about that, and about the very serious effect it is having upon the trade and prosperity of Hong Kong, the earnings of the sterling area—which are of great importance to this country at the present time—and also the growth of unemployment in Hong Kong because of these paralysing restrictions. "The Economist" says particularly:
    "There is acute mistrust in Hong Kong of Japan and growing fear that Japanese trade competition, encouraged by the United States, may deal a heavy blow to the Colony's interests.
    It is felt to be unfair that the Americans should strongly condemn British or other Allied interests suspected of trading with Communist areas; but if the Japanese do the same thing it is always considered a necessity, and even sometimes a virtue. Recently, for instance, $1 million worth of Japanese grey sheeting was sold to Communist China, and the deal was financed through Hong Kong."
    I do not know whether that deal was financed by the Export Credits Guarantee Department, but if it is financing trade of this kind with China it ought to be financing Hong Kong trade and not Japanese trade.

    The other thing which I hope the President of the Board of Trade will tell us is something about which I asked him in the last debate, when I was very disappointed not to get an answer—although I am sure he intends to make that good tonight. What is he doing about shipments of rubber to China, because that is of direct importance to this Bill? If he says "No" to all these things, or that he does not know, then he is not making his case for this £750 million. If, on the other hand, he says there is to be some resumption of rubber shipments to China, then he is making a very good case for these facilities being voted to the Export Credits Guarantee Department.

    In the famous debate when the Prime Minister used those alarming words about following America at all cost, I was disturbed and concerned that my right hon. and learned Friend the Member for St. Helens (Sir H. Shawcross) should have announced a policy of cutting off supplies of rubber to China until the end of 1951. We are now past the end of 1951 and into 1952, and as far as I know there has been no statement from the Government about whether rubber shipments are to be resumed. If we are not told that rubber shipments are to be resumed, even on a restricted scale, they are in effect announcing a change in policy, because the policy was a stoppage until the end of 1951. If shipments are not to be resumed in 1952 there is a change in policy, and the right hon. Gentleman ought to come to the House and tell us about it.

    I have asked a number of questions, and I wish to leave sufficient time for the right hon. Gentleman to reply to them, as I am fully confident he will. I am not opposed to the Bill. I very much welcome it. However, I am not yet convinced that the right hon. Gentleman's policy is such that he will need the Bill. I am sure we should all like to be certain that he will alter his policy so that the money voted for the Department will be needed. All parties in the House have welcomed what the Department have done, and have complete confidence in those who run the Department. But I, for one, have not confidence that the Department and Britain's export trade will be allowed a clear run to do everything they are capable of in the export market.

    On the specific question of trading facilities of particular kinds with particular countries, and the granting of credits for a period of time, I hope that the Treasury will allow more elasticity, both to the Board of Trade and the Export Credits Guarantee Department. The right hon. Gentleman used the phrase "operating with freedom and flexibility." He should make those words mean something, but to do so he will have a fight with the Treasury first, and I wish him luck. The Export Credits Guarantee Department know more about trade than the Treasury will ever know; they have a vast experience.

    It has been interesting in these postwar years that the commercial diplomatic service, of which the right hon. Gentleman has had experience, has been expanded, and has drawn on staff provided from the Export Credits Guarantee Department. There has been recently an ambassador, much admired by everyone in this House, who served his apprenticeship in the Export Credits Guarantee Department, and we all deplore his passing a few months ago.

    That fact has shown that the Foreign Office, at any rate, have recognised the great commercial knowledge and experience of the Export Credits Guarantee Department, and if only the Treasury will for once recognise that the Department—even if they will not recognise it in the case of the Board of Trade—know more about trade and industry than they do, then the export trade of the country will be given a freer hand. If that happens, then the £750 million which the House is being asked to approve will be an instrument in the hands of the Export Credits Guarantee Department of inestimable value to the trade and future of this country.

    8.56 p.m.

    I am sure that the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) has gone out of his way politically to make much heavier weather of many things than is really necessary. I do not believe for one moment that he thinks that the need for the increased figure for which my hon. Friend has asked depends upon whether we free to some extent our trade with the East and with Eastern Europe. I agree that all these problems are of great consequence to this country and to the whole world, and that they admit of far more than one point of view; but I am certain that he is running a political hare in this discussion.

    My sole reason for rising tonight is to plead with the Board of Trade to do something for my part of the Manchester area. We are, as I think the House knows, a very substantial trading area and we have particular problems, especially those connected with the textile industry. We have tried for some time to get a representative on the Advisory Council but we have not so far succeeded. I hope that my right hon. Friend the President of the Board of Trade will take an early opportunity of getting a Manchester representative on the Council. The Council has become very important, and the Manchester area and the textile trade would be extremely gratified if this could be done.

    I approve wholeheartedly of the Bill. I doubt, as did the right hon. Member for Huyton, whether this total amount will ever be needed, but I do so, perhaps, for rather different reasons, and I hope that the Department will continue to give the service to trade which it has done in the past.

    8.58 p.m.

    I, too, should like to intervene briefly to give support to this Bill, which is designed to extend the activities of a nationalised enterprise which, in the first place, does a considerable service to private industry which it is either unwilling or unable to do for itself, and, in the second place, makes a handsome profit in the course of doing it.

    I do not understand how right hon. and hon. Gentlemen opposite who have today paid tribute, and well-justified tribute, to the helpful and profitable activities of the Department can reconcile what they have said now with all the things which they have said in public in the past, especially during the Election in October last, about nationalisation always resulting in losses. I heard a great deal about that, and about anything which is run by a Government Department being bound to be inefficient.

    I listened with great interest, during that hectic period, to many people now sitting upon the benches opposite discoursing upon industry, both public and private, and I confess that for so long and as carefully as I listened I did not hear anyone pay any tribute at all to the work and performance of the Export Credits Guarantee Department. They seem to have discovered it for the first time.

    I am sure that the President of the Board of Trade knew of the existence of the Department before he brought this Bill along. I am sure he knew about it between 5th and 26th October last, but, though I read with great care reports of many of the orations he made, and even went to his constituency to get some first-hand account of what he was saying, I found no record whatever, in his speeches to the good people of Monmouthshire, of any tribute to the work of the Export Credits Guarantee Department. The right hon. Gentleman's interest seemed to be road transport and something of which I never really got the hang—analgesia.

    It is good to see the education of right hon. and hon. Gentlemen opposite proceeding at this fast pace. It will be a sheer delight, the next time some of them rant about the inefficiency of people in the public service, to quote some of the delightful and flowery language which they have used tonight. They will find that equally difficult to reconcile with whatever it is they keep in the place where other people keep a conscience.

    We always listen with great interest to the contributions by the hon. Member for Somerset, North (Mr. Leather), which are sometimes well-informed and always lively. His principal complaint against the department was that its premiums are fixed too high. One is entitled to ask two questions of anyone who takes that view. First, if the premiums are too high, how does it come about that the business which the Department has done has shown this enormous increase in almost geometric progression from year to year?

    Surely this is a matter in which the proof of the pudding is very much in the eating? If the premiums had been such as to injure the prospects of doing export trade—that is the only thing that can be meant by saying that they are too high—one would have expected the amount of insurance placed with the Department constantly to decrease; but, as we have heard, instead of doing that, it has increased very sharply.

    The hon. Member for Somerset, North, said that he was not alone in thinking that the premiums are too high and that many other people thought it. The hon. Member is not only an honourable but also a very persuasive Gentleman, and I daresay that the opinions of the other exporters to whom he has referred have not been formed without some influence from the hon. Gentleman. If that is what is thought by these people, one is entitled to ask them: If the premiums charged by the Department are too high, how does it come about that other insurers do not cut into this highly valuable business? where is the law of supply and demand?

    The hon. Member has put the question which the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) also put: Why do not private insurers come into the market to compete with the Department? I should have thought the hon. Member would have known that the principal reason for that is that private insurance companies do not cover the same risks as are covered by the Department.

    I will tell the hon. Member. One of the risks they do not cover is loss to traders as a result of war. I do not suppose that any hon. Member would suggest that war risk is a legitimate risk for private insurance to cover.

    I am deeply grateful to the hon. Member for making for me in advance the point I was about to make. I am glad to have his support. I am making precisely the same point, that here is a class of business which the private insurance companies were unwilling to take and are still unwilling to undertake.

    There is no law which limits the risks which private insurance companies should cover.

    If the hon. Gentleman will wait a moment I will give way as much as he wants. I am enjoying his interventions.

    Insurance companies can cover anything they want. There is very little they are statutorily debarred from covering; indeed, in the past they have shown no reluctance to extend the type of risks which they would cover when they decided so to branch out. They went into one class of insurance, then into another and then into another. They agreed on each extension at the moment when they decided the extension was profitable or had a lot of cream in it. There is nothing to prevent an insurance company insuring any man against his wife having triplets or against the Conservatives winning the next Election. That can be insured for about Is. 6d. per £100. I have never known the insurance companies to be very diffident about dipping into any gravy that was lying about.

    I can clarify the hon. Member's mind by putting to him a simple question. Most of the insurance companies in this country are proprietary companies which are doing a wide range of insurance business. Would the hon. Member like the company which had a life assurance on his wife and was looking after his money to undertake war risks?

    The company which insures my wife does not ask my permission to undertake any new sort of insurance. The hon. Gentleman's question clarifies nothing, which, in advance, is what I feared.

    It really does not matter what the policy holder thinks about the scope of the activity of the insurance companies. It is the directors, the shareholders and the managers who decide upon this scope. I see that the hon. Gentleman does not controvert the statement that I made, that in the past insurance companies set out to cover one sort of risk and never hesitated to add fresh sorts of risks without considering the feelings of the policy holders, the policy holders' husbands or any other single factor other than the simple question of how much profit there was in the business. I do not blame them for it, and I do not make any criticism of it. The insurance companies were set up to insure and to make a profit, and they never launch out into any new venture if it is not profitable.

    I am quite sure that if they thought there was any undue amount of gravy in this business of E.C.G.D. they would have been in it first. If it were a fact, as the hon. Member for Somerset, North, has said, that E.C.G.D.—let us not mince words—were profiteering there would be a queue of prospective profiteers all the way from here to the head offices of every insurance company. In fact, the absence of any competition in this difficult field indicates that the rates fixed by E.C.G.D must be about right.

    Here is this law of supply and demand, which hon. Gentlemen talk about as a classical feature of free competition. They argue that nobody would be able to exploit the community, because as soon as anyone began to demand more for his commercial services than they were worth, along would come some other person and offer the same commercial services for less money. No competitor has come along and offered the same services as E.C.G.D. for less money, so I am prepared to be sufficiently, if temporarily, an apostle of the doctrine of free competition in order to accept it as a fact from that premise that there cannot be any exploitation of the commercial community by the Department.

    I had not expected to dwell so long on that topic, Mr. Speaker, but, as you will have observed, I have been subjected to a certain amount of provocation, and of confusion which arose undoubtedly out of a well-motivated but somewhat ham-handed attempt to clarify the situation.

    Another point arises—it was raised by my right hon. Friend the Member for Huyton (Mr. H. Wilson)—about the desirability of encouraging, as far as possible with the help of E.C.G.D., exports to the Middle East, and particularly to Israel. I spent some time in the Middle East a year ago and I found almost everywhere there a passionate desire to buy British capital equipment. In some cases they wanted capital equipment which we could not have supplied, or would not have wanted to supply because it was of greater use in this country. In other cases they were willing and anxious to buy British capital equipment of types which British manufacturers are anxious to export, but they found themselves using equipment from Switzerland, Sweden, France and the United States of America.

    They were doing so unwillingly and would sooner have had the British equipment. They believed that in many cases they would have got more reliable equipment and, equally important when you are using capital assets in the shape of machinery from overseas, a more reliable spares service. Over and over again I went into a factory and found equipment being used which was less suitable for the purpose than British makes, such as machine-tools and woodworking machinery. In one great plywood factory they were using American veneer cutters much less suitable than British cutters. I asked them why they had chosen the less suitable type of equipment. They replied, "We know it is less suitable and we are not very keen about using it. We have to run it below its proper speed for the job. We use it because we get some credit in respect of the American machines and none on the British machines."

    In fields like this, a single capital sale is valuable—I am sure that the Secretary for Overseas Trade appreciates this point —because it results in continuous spares sales. The machines I have mentioned use quite a lot of spares. We may get a one-time sale worth £50,000, and thereafter a steady, and probably cash, business of £4,000 or £5,000 a year in spares for the one machine. It seems a pity to lose this trade from unwillingness to give credit, or willingness to give it only for periods very much shorter than it is given by other nations, including some whose economic stresses and strains are no less great than our own.

    One has to keep a sense of proportion in all these matters and to weigh up relative priorities and needs, but other countries do the same as well and I have the feeling—if I am wrong, I hope I shall be corrected—that in some of these matters we are taking a slightly less longterm view than some of our competitors in other countries. That is not because the manufacturers and suppliers take a less long-term view, but because it is taken by those who have it within their power to create and to grant the credit facilities without which so much of this business cannot be done at all.

    In spite of the general welcome which this Bill has received, I hope that when the President of the Board of Trade winds up the debate he will give us the information for which he has been asked. I hope, in particular, that he will be able to tell us that there is some hope, not even of increasing but of maintaining our exports overseas and the exports for which the services of E.C.G.D. are required.

    It now becomes all too patently evident that those who were saying rather less than 12 months ago that the rearmament programme was an economic possibility for this country, that our export drive was an economic possibility for this country, but that the two taken together would be like trying to get a quart out of a pint pot, were right in their forecasts. It is now all too sadly evident that those who were saying then that one effect of the re-armament programme would be to slow down enormously our rate of exports were right in their forecasts. Nobody takes any pleasure in having been right in those forecasts, but it is a fact which we have with us and which we have to face.

    Perhaps the best way to face it is for the right hon. Gentleman to do something to reverse it. If it is the fact, as has been said publicly in the "Manchester Guardian Review," from which my right hon. Friend the Member for Huyton (Mr. H. Wilson) quoted, that the Ministry of Supply are telling firms to stop manufacturing for export in order to release capacity for the armament programme, then that is something about which the President of the Board of Trade ought to roll up his slevees and go running into the Cabinet room.

    One hopes very much that in these matters he will see that the interests of the British export trade are not too readily sacrificed to those who are willing to sequestrate an undue proportion of the engineering output of this country to so called Defence purposes.

    As a last point I want to repeat one which I made in another context and in another debate which, if I may say so, is highly relevant to the matter we have under discussion now, because we are trying to discover ways of compelling E.C.G.D. to use all its £750 million of new limit that we are giving them in this Bill. If it were a fact that we were losing engineering exports because engineering exports were being taken off machine tools in order to make room for armaments goods going on to those machine tools, that would be bad enough. In fact, the situation is much worse.

    I have myself been in to many factories in the last three or four months in which the situation is that engineering export goods have been taken off machine tools to make room for defence goods going on to those machine tools. However, because of the dislocation and the failure to plan adequately, the defence goods have not been ready to go on to the machine tools. And so we get all our kicks and we lose all our halfpennies; we lose our exports in the interest of defence goods and then do not get the defence goods for which we have lost our exports.

    I know that the Minister is concerned about these matters. I know he is anxious to make a success of his job—someone on that Front Bench had better make a success of a job anyway. I know that he has this matter at heart and I plead with him to find out not how much engineering export capacity he is losing in substitution for defence goods but how much engineering export capacity he is losing every day with nothing to substitute for it because of the dislocation caused by an ill-digested defence programme. I do not doubt that he will remind me it was a programme initiated by a Government of which I was a supporter. I will take that one, and take it right on the chin. It may give him a moment of satisfaction, but the problem still remains.

    I join in welcoming the Bill, but I hope that the Government, and the Minister in particular, will face boldly and with courage the very many problems which at the moment face the Department, because they also face our export trade.

    9.21 p.m.

    The whole House was interested in the firsthand account given by my hon. Friend the Member for Reading, South (Mr. Mikardo), of seeing in the Middle East certain evidence of a decline in our export drive. I shall not detain the House long, but I must refer to something that I saw myself in the Middle West of the United States on two visits in 1949 and 1950.

    At the Chicago Trades Fair in 1950, for instance, one of the lines which was selling best was some hideous furniture made in this country. It was selling best because the man who made it went out and spent many months in the Middle West, going to the towns of about 10,000 population and finding out what they wanted, and not relying on reading the "New Yorker" and thinking that that was evidence of the taste of 150 million people in the United States. He was a man in a small way of business. He happened to be a man of enterprise, a man who went out and got the business.

    We all know that the large exporter can run his own organisations in market research and finds no difficulty. The small exporter, the man who has not the facilities and the great knowledge which is required even to know the need for market research, is the man who must be encouraged by the Government to sell his goods, especially in the dollar area.

    What was the organisation to which it was most appropriate for this small man to turn? It was the organisation of the British Export Trade Research Organisation. B.E.T.R.O. was an organisation set up partly with Government money and partly with money from industry and commerce. Gradually, it decided to do without the Government money and it concentrated entirely on the money coming from industry.

    B.E.T.R.O. died at the end of last month, because it was let down by businessmen in this country. It died because these men would not realise that the sellers' market was not going on for ever. They would not realise that it needed enterprise, drive and imagination to continue in the battle for markets.

    Does the hon. Member at last admit that while exports have been so high, it has been very largely due to the fact that there has been a sellers' market in the world and not due to the activities of hon. Members opposite when in power, as they so often claimed?

    No, I would not admit that for a moment. I am trying to compress my remarks, and I may have slipped over this rather lightly, but I am reluctant to go back and develop the point at greater length—that it was really the larger firms to which I was referring as successful, particularly the motor car firms, who have their own expert knowledge of marketing conditions and are able to provide those things that will sell in a particular country.

    I suggest that it is the Government's duty to prod the businessman who does not realise the importance of market research, and to see that he continues working in the country's interests by exporting. I want to know what the Government are going to do to help the small exporter now that B.E.T.R.O. has been allowed to die. I would remind them that, just as B.E.T.R.O. died, there was born on the other side of the world an organisation copied exactly from B.E.T.R.O.—the Japanese Export Trade Research Organisation, and that, as the Director-General of the British organisation announced at his Press conference, when he stated that B.E.T.R.O. was to be wound up, the Japanese organisation has paid him a compliment by electing him an honorary vice-president.

    9.27 p.m.

    The Bill which we are discussing is the special responsibility of the Secretary for Overseas Trade. Those associated with this matter will know that a certain statutory responsibility is placed upon his shoulders for the work of the Export Credits Guarantee Department. I certainly do not want to add to the very illuminating survey which he gave of the background of this particular department, because I think the House will agree that he developed it at proper length and gave a very clear picture, both of its history and present technique.

    We have had a short debate upon it, and it is, after all, an important subject. It covers the export trade from this country to the whole of the world.

    Perhaps the hon. Gentleman will allow me to continue my speech. It covers a wide range of our export policy, and the Bill which we are now discussing contemplates an increase in the total liability of some £300 million, which is no small sum of money. I think the fact that we have had a fairly short debate is not due to the lack of importance of the subject, but to the fact that hon. Members on all sides of the House are really in a large measure of agreement about the proposals which we are putting forward.

    Most politics are inseparable from controversy, but there do come instances where, perhaps fortunately, we do find ourselves momentarily in agreement, and I think this is one of them. The Conservatives like this sort of enterprise, which is that sort of Government activity which assists the private trader. The Socialist Party are equally proud of it. It is, after all, a public enterprise, and, perhaps what is still more remarkable about it, a successful public enterprise.

    It is remarkable in the sense that the Minister responsible has been accused of making it too profitable, and I know of no other Minister responsible for public enterprise who ever had that accusation made against him. [HON. MEMBERS: "What about the Post Office?"] It seems to me that the Post Office is just another matter with which the Conservative Party has been associated in its development, and which has also proved a profitable one.

    The right hon. Member for Rochester and Chatham (Mr. Bottomley) asked me a number of questions to which I would like to reply. He asked me whether it was possible to describe or divide the various activities of these export guarantees between the Commonwealth, the United States and the Iron Curtain countries. What I can say is that so far as the Commonwealth are concerned, excluding Canada, we cover through the activities of that body 8 per cent. of the total trade. In the case of the United States and Canada, which I put together as both being dollar countries, we cover 9 per cent., and in the case of the Iron Curtain countries we cover 10 per cent.

    But I think the most illuminating fact is that since 1945, when we covered 5 per cent. of the total United Kingdom exports, the figure has increased to 13 per cent., which gives a clear indication of the extent to which traders are increasingly using the facilities available to them through this organisation.

    Perhaps the right hon. Gentleman would give me the information for which I asked later. I did not ask about the Iron Curtain countries. I asked especially about Asia and Europe as a whole.

    There are many ways in which one can divide up these figures, but I will find the information about the Asian countries separately if the hon. Gentleman wishes.

    My hon. Friend the Member for Somerset, North (Mr. Leather), said he had one complaint to make about the activities of this body—the delay which took place in the giving of quotations. I want to say right away that the Department themselves are conscious that sometimes they cannot give a quotation as early and as quickly as they would wish to do. It is not easy to give quotations on some of this business. The rapidly changing terms of trade and the import and export regulations throughout the world which are constantly changing make the giving, of quotations on this type of insurance quite a difficult matter. In fact, the average delay in issuing quotations is between 15 and 21 days on the initial quotation.

    The Department are not satisfied with that. They intend to use every endeavour to speed it up. But their credit service, that is to say, the information service which they have about buyers throughout the world, is not only a great facility, but takes time to extend. They have current information about some 120,000 buyers, and there are about 2,000 new buyers' files opened each month. Then there are about 12,000 applications for credit limits every month. All those things mean some delay in giving a quick quotation to a trader who wishes to do business. We are conscious of it, and may I say on their behalf that, on balance, I think they have done a very good job. By every means within their power they will seek to increase the speed of these quotations.

    My hon. Friend also went on to say that the premiums were too high. He was speaking as a customer, and that is a perfectly legitimate thing for a customer to say. He also said we were making too much money. I do not want to repeat what I said before, because it created a certain amount of irritation, but I do not think there is any harm in a public undertaking making money. It is certainly better to make it than lose it. If we look at the reserves built up we find that they now amount to only 31 per cent. of the liabilities. Compared with commercial undertakings of that type, I do not think that figure could in any way be said to be excessive.

    The right hon. Gentleman the Member for Huyton (Mr. H. Wilson), addressed the House and he, too, paid a tribute to the staff, in which we all join. He asked me about the cover which was given on the external trade policies. I attach great importance to the external trade policies. I think it was a substantial and useful advance that that type of insurance was introduced. He will be interested to know that they have grown from a total of £37 million in 1950–51 to a rate of £60 million in 1951–52, which, I think, shows there was a need for that type of insurance, that it is appreciated by industry and merchants and is in fact being used.

    The right hon. Gentleman asked me about the dollar drive. The Department has insured over 500 exporters and it has 218 guarantees current. I think everyone who has studied it would agree that the type of insurance they have developed in their joint venture policies is an imaginative and adventurous type. It has been widely used. I do not wish to exaggerate in this matter, but it has made a substantial and useful contribution in giving confidence to those exporters who wish to export to that very difficult market.

    The right hon. Gentleman went on to ask me about certain types of guarantee to certain countries, and, in particular, he and the hon. Member for Reading, South (Mr. Mikardo), mentioned Israel. This Department is perfectly ready to consider and examine any insurance proposition of that character that is put before it. Their job and their desire are not to shut out insurance projects. But they cannot bind themselves in advance to accept any particular one and, as the right hon. Gentleman the Member for Huyton, knows very well, these things need very close examination before they can be entered into. But if either the right hon. Gentleman or his hon. Friend the Member for Reading. South, have any propositions, or anybody they know have any, let them come forward and I assure them they will be received with sympathy and that they will have detailed examination as in any other case.

    I do not think the right hon. Gentleman has quite got the point I was making. I know the Department would consider any proposition, however unorthodox, if it was going to help the export trade. But in certain cases which I remember when I was in his Office—and there have been some since—the Department were prevented by the Treasury Regulations from entertaining certain propositions because they involved credit over a period of time rather longer than the Treasury considered desirable. I should like the right hon. Gentleman to look into that. Perhaps he cannot give an answer tonight but I should be glad if he would try to persuade the Treasury to allow more elasticity than they do at present.

    Whatever the right hon. Gentleman's experiences have been, my experience of the Treasury is that they will do anything they reasonably can to assist us in promoting the export drive. I do not think he will find any obstacle in that way, provided the proposition put forward is a reasonable one. If there are these proposals let them be placed before the Export Credits Guarantee Department and let them be examined on their merits.

    Perhaps the hon and learned Member will allow me first to deal with the points made by his right hon. Friend the Member for Huyton.

    The right hon. Gentleman went on to ask me whether I would forecast the future of exports in this country during the coming year. Well, I will not say that I would learn everything from my predecessors, but there is one thing, at any rate, which I could learn and that is the danger of making forecasts or of setting targets. These forecasts are, in practice, liable not to be fulfilled. [HON. MEMBERS: "Hear, hear."] If I might say so, the success or failure of the export drive will depend in no small measure upon the attitude of the party opposite—how far they are prepared to assure and to persuade people that sacrifices are necessary if goods are to flow out of this country.

    I am sure the right hon. Gentleman would not like to suggest to the House that in the matter of export forecasting the Labour Government did go badly wrong. On a number of occasions I think our forecasts were exceeded, and I do not think the right hon. Gentleman can complain when, particularly recently, we have been emphasising the importance of exports.

    The question I asked was—and I did not ask him to make a clear or specific forecast—is he asking for this £300 million from the House because he expects exports to go on increasing considerably over our present figures—and, if so, by roughly how much—or is he simply saying that exports will not increase, but that a higher proportion of them will have to be insured through the Export Credits Guarantee Department because the world is getting riskier, and so on?

    The answer is, quite simply, that the figure in the Bill—the extra £250 million in the case of commercial credits or £50 million in the case of special credits—is due not to one, but to several factors. It is due to the fact that prices are going up; it is due to the fact that trade risks throughout the world have increased rather than diminished over recent years and, therefore, traders increasingly seek services and facilities of this kind; and it is due also to the fact that if the measures we have put in train are successful the volume of exports will increase.

    The right hon. Gentleman went on from that to develop a case which I must say I thought went a little wide of our discussion—about the future of our trade with the Iron Curtain countries. If I may say so with respect, I admire the skill with which he hung this argument upon the rather narrow thread of the two Clauses in this Bill. I think he was a little doubtful himself whether he would in fact get the speech over, because he had taken the precaution of having it published in the "Daily Worker" this morning, in advance. That paper said:
    "Mr. Harold Wilson, former Labour President of the Board of Trade, plans to break the political truce in Parliament today. He will call on the Government to defy the American ban on East-West trade when the Export Guarantees Bill is debated.…A miniature foreign affairs debate will now take place, in which the Government and ex-Labour Ministers policy"—
    do not imagine that the Front Bench opposite get away with it altogether; they are going to be arraigned as well—
    "will be challenged. Labour M.P.s will emphasise the need to do more business with the Soviet Union, China and the Peoples' Democracies."

    It is rather extraordinary for the right hon. Gentleman to accuse another Member of this House of circulating a speech in advance in any newspaper, particularly that one. I assure the right hon. Gentleman that I have not seen that newspaper today, and that until he read that extract I did not know it was in the newspaper.

    I had no intention of intervening in the debate tonight because, if the right hon. Gentleman will read the public Press, I was billed to speak at a public meeting in Great Windmill Street—[Laughter.]—a perfectly respectable meeting. I do not know Windmill Street as well as hon. Members opposite. I was due to be there and it was only at 5 o'clock this afternoon that one of my hon. Friends agreed to deputise and, therefore, I was able to be present at this debate tonight; so perhaps the right hon. Gentleman will withdraw his statement.

    I assure the right hon. Gentleman that I had no intention of accusing him of any impropriety in this matter. I know the energy with which the Press pursue these things, and in this case they certainly seem to have had a mind reader in the office, because they succeeded in producing something which had a remarkable similarity to the speech which the right hon. Gentleman decided, at the last moment, to give in the House. In any event, although I accept the right hon. Gentleman's argument that he did not give it to the "Daily Worker," I think he might almost have been well advised to have done so, because part of his speech went so wide of the subject matter of the Bill that I think we should scarcely continue into what—

    —would be virtually a miniature foreign affairs debate at this stage in our proceedings.

    On a point of order. Surely what the right hon. Gentleman has just said reflects very gravely on the occupant of the Chair at the time when my right hon. Friend was speaking. What the President of the Board of Trade has said—and I think I quote his words accurately—was that my right hon. Friend's speech was very wide of the Bill. In fact, Mr. Speaker, your predecessor in the Chair made no intervention at all during my right hon. Friend's speech. Surely the President ought not to say such things about the Chair.

    What is wide of the subject in the debate is a matter of degree. I was not here at the time to hear what was said, but what I am quite clear about now is that both right hon. Gentlemen concerned are tending to go very wide of the Bill before the House.

    I fully accept that warning which you have given us. Mr. Speaker, and I will therefore conclude by saying this: that I am glad that this Measure has received a general welcome from both sides of the House. The Bill and this Department certainly provide useful facilities for the traders of this country and enable them to carry on exporting goods in difficult circumstances and to do business in parts of the world, from which they might otherwise in some cases be precluded. I think it is a valuable contribution to our export drive, and I hope the House will give the Bill a Second Reading.

    Would the right hon. Gentleman say whether there is any change in our financial arrangements? In an interjection in the speech of the Secretary for Overseas Trade he said he would explain that and he said the Treasury would get no more money.

    The system of the financial arrangements remains exactly the same as it has ever been. That is to say, if the Department makes some money that goes into the Treasury in the form of notional reserves. If the Department loses money it has to come to the House. If its income does not equal its liability the Department has to come to the House and ask for a Vote on account.

    Will the right hon. Gentleman deal with the simple point which I put to him, even if he thinks it may have been a little wide of the debate? I merely followed his hon. Friend the Secretary for Overseas Trade, who mentioned insurance against losses incurred in market research.

    I should not like to start a debate on what is an entirely different organisation and, indeed, a defunct organisation, and which is separate from that we are discussing.

    What I was asking was what the Government will do to help the small exporter now that B.E.T.R.O. has been allowed to die.

    9.49 p.m.

    Mr. Geoffrey Bing