House of Commons Hansard Debates for 23 Jun 1993

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Question accordingly negatived.

Clause 3

Determination of applications

Mr. Campbell-Savours : I beg to move amendment No. 4, in page 3, line 15, after principles', insert and details'.

Madam Deputy Speaker (Dame Janet Fookes) : With this it will be convenient to discuss the following amendments : No. 6, in clause 4, page 4, line 20, after above', insert

following consultation with parties likely to be affected directly or indirectly by the proposed modifications'.

No. 7, in page 4, line 26, at end insert

, and it shall also give then a statement as to what consultation has taken place with producers, consumers, retailers and purchasers as to the proposed modifications.'.

No. 8, in page 4, line 36, at end insert--

ded the authority with a statement as to the nature of any consultations which have taken place with those producers, retailersconsumers and purchasers of milk as it thinks appropriate on the proposed modifications.'.) Mr. Campbell-Savours : This set of fouamendments is about the issue of consultation. It follows a long series of debates in Committee where we repeatedly raised the question of consultation. We raised the profile of the issue because throughout our own consultation with the industry and our discussions with people in the industry, in particular the processors, we repeatedly heard comment on the lack of consultation. In Committee the Minister told us that a particular organisation had been consulted but the two representatives of that organisation, sitting at the back of the Committee Room, shook their heads. So great has been the misunderstanding of Ministers about their responsibilities to outside organisations.

The Government have dragged their feet on consultation since the beginning with the result that at one stage or another in the process the dairy trade, food manufacen so tardy. Why have we had to drag Ministers, struggling, protesting and bickering, through the hoop of consultation? Even today the Bill says far too little about consultation.

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Furthermore, it makes totally inadequate provision for approved applications to be endorsed by the House of Commons. I accept that paragraphs (a) and (b) of clause 3(2) refer to the principle of consultation, saying that the authority must be satisfied "that the board has taken reasonable steps to bring the principles of the schemes to persons who are registered producers"

and referring to the fact that the authority must consult purchasers, producers, retailers and consumers about the principles of the scheme. However, the provision is far too limited. The prospect of an unregulated monopoly fiercely requires the placing on the Government of an obligation to consult. And the consultation must be on principles, and not just about the details of the scheme. Details of the scheme could arguably include the machinery for fixing prices ; the arrangements for dealing with shortages in the market place ; the standards of quality of milk sold by Milk Marque ; the provision, or otherwise, of an independent arbitration or disputes

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procedure, as referred to in another amendment ; the availability to producers outside the scheme of any assets that might be retained by Milk Marque, such as National Milk Records, Genus and Central Testing, which, as I said to Ministers at the Committee stage, would amount to a questionable placing of those assets ; the arrangements in an over-supplied market where supplies might be rationed, as referred to in the intention to purchase document that the milk marketing board sent out to prospective buyers in March ; the approach to be adopted by the milk marketing board and the residuary body to outstanding claims ; the question of the incurring of expenditure by the Milk Marketing Board on the promotion of Milk Marque, which I understand to be causing quite some comment in the farming press of the United Kingdom ; the attitude to be taken by Milk Marque to the supply of milk in conditions of vertical integration with processor plants in the future, in the way that I was suggesting in the debate on earlier amendments ; the provision that is being made for the pensioners of the board's existing operation, which is to be dealt with in an amendment to be moved by my hon. Friend the Member for Sherwood (Mr. Tipping) ; and the treatment of direct sellers, some of whom remain uneasy about certain aspects of the Bill, despite the fairly substantial concessions that the Government have been prepared to make.

There are several areas in which future arguments should be avoided at all costs. To avoid those arguments, if we are not to have the disputes procedure for which we have argued today, we must have a proper process of consultation. Why should the industry have to worry about this potential lack of consultation in the future? I do not know whether the Minister has read the comments that Lord Howe made in another place. The noble Lord said that the principles of the scheme are its main elements--those elements that are enough to give a sufficient picture of the scheme as a whole so that consultees can reasonably be expected to form the view without needing the full details before them. The noble Lord said that excluded would be, for example, details such as the schedule of properties or the commercially sensitive and confidential elements of the scheme. I remind the Government that this is enabling legislation and that Parliament is having its last say. In the wider sense of the approval of schemes, these matters will not come before us again. If only for that reason, there is a real need for the most sophisticated type of consultation procedure to be put in place. We need the fullest possible transparency, not only with regard to the scheme originally submitted but with regard to variations and modifications. If the Government are minded to turn down these amendments, they would do well to recall the bitter experience of the milk marketing board in respect of its consultation on the milk requirements of the processors. The consultation did not work. It was wrong. It did not operate correctly--a fact that the Minister should bear in mind when responding. On that occasion the voice of the industry was unanimous in crying, "Stop the bullying." That was the industry's response to the way in which the milk marketing board conducted its affairs. The then Secretary of State had to intervene and almost instruct the board to withdraw the document that it had sent out, which had clearly upset so many of the processors. Of course, the milk marketing board responded.

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Many of these matters could be dealt with if the proper consultation procedures were put in place. We have the support of the Dairy Trade Federation and the Food and Drink Federation for the amendments. Those organisations feel strongly about these matters, and the Government should respond sympathetically.

Mr. Jack : The hon. Member for Workington (Mr. Campbell-Savours) is right to raise the very important subject of consultation. In the short time that I have been in the Ministry of Agriculture, Fisheries and Food it must be one of the most-consulted Government Departments. Hardly a day goes by without someone writing to us about something. It is not as if we live in a secret world in which things happen and decisions are taken without probing. The very fact that we are debating these matters today is a further example of the type of probing that can take place in respect of an exercise like this. If, at the end of the day, people are concerned about what the board proposes, the House can always be used as a forum for such discussion. The potential role of Parliament should not be ignored. The amendments seek to define in clear terms various ways in which the consultation process might be carried out. I am concerned about that. I can see no circumstances in which, once the board produces its suggestions, people whether suppliers or processors--will not come forward and give us their views in no uncertain terms. With regard to the obligations of the authority and Ministers in respect of these matters, clause 3(2)(b) makes it abundantly clear that the authority to which the application is made shall not grant it except in stated circumstances. The provision goes on to talk about consultation, and makes it very clear indeed that the process must be carried out thoroughly. It also makes clear that, in determining our role in this matter, we have to take into account the interests of consumers and producers of milk. Our obligations could not be clearer.

Mr. Campbell-Savours : Why does the provision preclude detail?

Mr. Jack : I imagine that the hon. Gentleman, because of his political persuasion, has never made an application--perhaps I do him a disservice, so I shall speak very quietly--for shares in a company. [Interruption.] We have discovered a new truth about the hon. Gentleman. I do not want to cast aspersions. Opposition Members have cast enough of them in the past 24 hours. I say to the hon. Gentleman as an honourable man, that if his eye had lighted on the prospectuses for the sale of shares in many companies that have sought to raise extra capital in the market, or have made a new issue, he would have seen the amount of detail that is necessary to satisfy even the most sophisticated of investors. Every single detail would not be provided, despite what the amendment proposed. If the amendment were accepted every lease, terms of property and every other single fact would have to be accumulated in some vast volume. A pantechnicon with that volume would arrive at the home of every consultee and a forklift truck would be needed to carry it in.

I do not believe that that is what the hon. Member for Workington had in mind. I believe that he wants sufficient detail and information to be given so that people can make informed choices. We shall look carefully at the propositions that are presented to us for the means to provide such information.

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I do not want the hon. Gentleman to think, however, that our decision-making process will be clothed in total secrecy. Once we have looked at the boards' proposals, we will produce our description of them. We will include such detail as we consider necessary to enable consultees to comment on the matters that will affect them. We will exclude, quite properly, commercially sensitive information and details that are irrelevant to the judgment of the proposals on, for example, lists of property.

The hon. Gentleman, with his commercial experience, will appreciate the type of questions that people who are interested in the proposals will want to raise. If I were a supplier of milk, I would want to know the terms upon which my business would be conducted. I should like to know what I was expected to do. I should also like to know what Milk Marque was expected to do and when I would be paid. I should like to know how my milk would be paid for, when it would be collected and under what terms of the contract. Those are the things that matter to farmers. I do not believe that they would be wildly concerned as to whether the office typewriter is leased, bought or whatever.

Mr. Campbell-Savours : What about the boards' other assets?

Mr. Jack : I shall come to them in a moment, but they will want to know about the terms under which their members may acquire their milk.

I appreciate that the document that was sent out by the Milk Marque did not get a warm and friendly press. I can understand why. The hon. Member for Workington is assiduous in his preparation, however, and if he delves into that document he will find that it contains some warm and friendly phrases. It talks about wanting to develop partnerships and offer service. That is the language that producers understand. The document also provides a variety of specimen types of contract. Those are the details for which those who are seeking supplies of milk will look. I feel certain the propositions from the boards will reflect on those issues.

The central issue is found in clause 3, which puts a clear responsibility on Ministers to ensure that the right detail is considered. We want to be able to paint our pictures. I am sure that the hon. Member for Workington will want to put his own questions and we may want to ask some in our consultation document. That important safeguard will ensure that people can give us their views. 7.15 pm

Someone may say that he would have liked to have seen more detail on a certain point. Such a sensible question is what proper consultation is all about. As the hon. Gentleman will be aware, all the various interested bodies will certainly not be backward in coming forward with their propositions concerning the proposed major change.

I have considered the Opposition amendments and I cannot recommend my right hon. and hon. Friends to support them.

Mr. Campbell-Savours : How sad.

Mr. Jack : It is a great sadness because some of them are drafted in such a way that they would not work.

Mr. Campbell-Savours : Perhaps that was the reason for them.

Mr. Jack : The hon. Gentleman has admitted that he has drafted amendments that do not work, but he invites

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the House to support them. They are the product of the "Don't work" party. For that reason, I need not detain the House with a detailed examination of them.

Amendment negatived.

Mr. Jack : I beg to move amendment No. 10, in page 3, line 44, leave out milk production' and insert the occurrence'.

Madam Deputy Speaker : With this it will be convenient to discuss also Government amendments Nos. 11 and 12.

Mr. Jack : The amendments, unlike those tabled by the Opposition, work and make a small technical correction to clause 3(5), which deals with the possible basis for the distribution of board assets to producers. The present reference to milk production is fine in so far as it could refer to a person who is registered as a producer on a specified day or within a specified period.

If a board wanted to base its distribution of assets on a producer's litreage of milk or the value of it, it would refer to milk produced and marketed. Some milk is produced and not marketed, however ; for example, if it is fed to calves on farms. The new wording makes the necessary distinction.

Amendment agreed to.

Amendments made : No. 11, in page 3, line 45, after year)', insert of any relevant matter'.

No. 12, in page 3, line 48, at end insert--

(6) For the purposes of subsection (5) above, the following are relevant matters--

(a) the production of milk, and

(b) the sale of milk by the person responsible for producing it. (7) For the purposes of subsection (6)(b) above, milk shall be treated as sold if it is sold in the form of milk or in the form of a product which is wholly or partly derived from milk or which includes milk as an ingredient.'.-- [Mr. Jack.]

Schedule 1

Qualifying scheme of reorganisation

Mr. Jack : I beg to move amendment No. 13, in page 33, line 19, at end insert--

(3) Where information specified under sub-paragraph (1) above identifies a person as a purchaser of milk from the board, the scheme must provide for the information to be disclosed only with his written consent.'.

Mr. Jack : The Bill covers the possibility that a reorganisation scheme might contain provision for a board to pass information to a successor organisation. I do not envisage that Ministers would approve the passing of commercially sensitive information to a trading successor body. I am, however, aware of the concern of the dairy trade that the safeguards in this respect should be as watertight as possible. The amendment responds to its concern by making it necessary for a board to obtain a purchaser's written consent in the relevant circumstances.

Amendment agreed to.

Clause 7

Information

Mr. Jack : I beg to move amendment No. 14, in page 6, line 41, leave out 21' and insert 14'.

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Madam Deputy Speaker : With this, it will be convenient to discuss Government amendment No. 15.

Mr. Jack : The Government were subjected to strong words--perhaps "attack" is too forceful a word--in Committee about their failure to listen and to take into account some of the interesting ideas that the Opposition put forward. We did listen, however, because the amendments respond to an interesting, sensible proposition from the Opposition.

Clause 7 would enable Ministers to require any person to supply them with the information that they need to decide whether to approve a milk marketing board reorganisation scheme or any application from a board for a variation or withdrawal of its scheme. It provides that if Ministers require information from the milk marketing board to which the reorganisation scheme relates and the board fails to provide that information, its application is treated as having been withdrawn.

The Bill currently gives a board 21 days to show that any failure to supply information was accidental. In Committee the Government agreed to consider a reduction in that limit to 14 days. We accepted that suggestion, hence the amendment. Amendment No. 15 introduces a parallel change for the potato marketing board.

I thank Opposition Members for their suggestion and I am delighted that I have been able to move the amendment.

Mr. Campbell-Savours : I dreamt that one up in the bath. Amendment agreed to.

Schedule 2

Provisions relating to carrying out of approved scheme of reorganisation

Mr. Jack : I beg to move amendment No. 16, in page 35, line 13, leave out for no' and insert without any'.

Madam Deputy Speaker : With this it will be convenient to discuss also Government amendments Nos. 17, 28 to 41, 18, 19, 42, and 20 to 27.

Mr. Jack : The amendments make technical, drafting adjustments to the provision specifying the treatment for tax purposes of transfers made under an approved reorganisation scheme.

Amendment agreed to.

Amendments made : No. 17, in page 35, line 13, after consideration', insert

being provided by the persons acquiring them'.

No 28, in page 35, line 18, at end insert--

3A.--(1) Where--

(a) in accordance with an approved scheme, shares in a subsidiary of the relevant board ("the transferred company") are transferred otherwise than under section 10 above to a qualifying body ("the successor"),

(b) immediately after the transfer, the successor is a member of a group of which the relevant board is a member, and

(c) the scheme provides as mentioned in paragraph 3(1)(b) above, sections 178 and 179 of the Taxation of Chargeable Gains Act 1992 shall not apply on the transferred company ceasing to be

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a member of a group of which the relevant board is a member if, immediately after doing so, it is a member of a group of which the successor is a member.

(2) Where by virtue of sub-paragraph (1) above sections 178 and 179 of the Taxation of Chargeable Gains Act 1992 do not apply, then, on the transferred company ceasing to be a member of a group of which the successor is a member, those sections shall apply--

(a) as if any assets acquired by the transferred company, at any time when it was a member of a group of which the relevant board was a member, from any member of that group had been acquired by it at that time from the successor, and

(b) as if the transferred company and the successor had at all material times been associated companies for the purposes of those sections.

(3) In this paragraph--

"group" has the meaning given by section 170 of the Taxation of Chargeable Gains Act 1992 ; and

"relevant board" means the board to which the scheme relates.'. No. 29, in page 42, line 39, at end insert--

( )where the trustees acquire the shares or securities on a disposal, the person making the disposal shall be treated as if the consideration for the disposal were of such amount as would secure that on the disposal neither a gain nor a loss accrues to him,'. No. 30, in page 43, line 34, leave out share is' and insert shares are'.

No. 31, in page 43, line 37, after him,' insert--

(aa) to trustees on terms which provide for the transfer of the shares to persons by virtue of their being, or having been, registered producers,'.

No. 32, in page 43, line 46, leave out share' and insert shares'.

No. 33, in page 43, line 47, leave out it' and insert they'. No. 34, in page 43, line 49, leave out share' and insert shares'.

No. 35, in page 44, line 1, leave out share' and insert shares'. No. 36, in page 44, line 2, leave out it' and insert they'. No. 37, in page 44, line 7, leave out a share' and insert any shares'.

No. 38, in page 44, line 8, leave out share is' and insert shares are'.

No. 39, in page 44, line 18, leave out debenture' and insert (a)'.

No. 40, in page 44, line 19, after board,', insert

and

(b) is either--

(i) issued'.

No. 41, in page 44, line 21, at end insert

, or

(ii) included in an issue of debentures to trustees on terms which provide for the debentures to be transferred to persons by virtue of their being, or having been, registered producers.'.

No. 18, in page 45, line 2, leave out for no' and insert without any'.

No. 19, in page 45, line 2, after consideration', insert being provided by the person acquiring them'.

No. 42, in page 45, line 32, at end insert--

(3A) For the purposes of sub-paragraph (3)(b) above, a person to whom property is leased shall be treated as a person to whom property is transferred if the scheme could, without breaching the requirement in paragraph 7(2) of Schedule 1 to this Act, have provided for the property concerned to be transferred to him.'.

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No. 20, in page 46, line 33, leave out from company' to to'. No. 21, in page 46, line 34, after class' insert

without any consideration, or with only a nominal consideration, being provided by the members acquiring them'.

No. 22, in page 47, line 2, leave out for no' and insert without any'.

No. 23, in page 47, line 2, after or', insert with only'. No. 24, in page 47, line 2, at end insert

being provided by the members acquiring them,'.

No. 25, in page 47, line 36, leave out for no' and insert without any'.

No. 26, in page 47, line 36, after second or', insert with only'.

No. 27, in page 47, line 37, after consideration,', insert being provided by the persons acquiring them,'.-- [Mr. Jack.]

Mr. Paddy Tipping (Sherwood) : I beg to move amendment No. 85, in page 49, line 19, at end insert--

(4) If as a result of a deficit in the funding of the pension scheme, the scheme is unable to meet its obligations to any or all of its members, the substitute principal employer or its successor shall have the power and be under a duty to require eligible milk producers to make contributions for the purpose of making good the deficit. (5) The appropriate authority shall create a residuary body to the milk marketing board which shall exercise the power and be subject to the duty mentioned in subsection (4) above, if- -

(a) the substitute principal employer or its successor at any time ceases business without there being a further successor, or (b) the appropriate authority considers it otherwise desirable to create such a body.'.

The purpose of the amendment is straightforward. It seeks to protect the interests of present and future pensioners of the milk marketing scheme, who represent quite a large group--8,600 contributors and 5,500 pensioners, of whom, I understand, 1,000 are widows. I understand that the fund has assets of £300 million. Pensioners of the fund are rightly concerned about its future. Quite simply, it is their future that we are debating. They have contributed to the fund and they want to be consulted on the way forward. They feel that there has been a lack of consultation and that so far their views have been rebutted. With the high profile of pension issues in the news, they are concerned. It is clear that, in any scheme of reorganisation, real changes must be made. Change is often worrying and past and present pensioners are clearly anxious about the future.

A number of issues can be identified. What is the present position of the pension fund? Can it meet its liabilities? Is it in surplus or in deficit? Should there be a surplus--I understand that there is supposed to be one-- how will it be dealt with? There is a strong case to be made that any surplus should be applied only to the beneficiaries of the scheme, since they have contributed to the scheme and built the foundations of the company. They believe that any surpluses should be applied to them rather than to funding reorganisation. They want the milk marketing scheme and successor bodies to give commitments in line with those that currently exist--such as a commitment that index-linked pensions will be continued.

The amendment addresses the issue of a possible deficit. The successor bodies must take responsibility for any deficits. The key issue is how pensioners will be split

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