§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kenneth Carlisle.]
12.25 am§ Mrs. Alice Mahon (Halifax)I applied for this debate to highlight the increasing danger of a major upheaval in the textile and clothing industry. It is my belief that unless the Government act now to halt the present uncertainty and allow the industry to plan and invest in the future, thousands of jobs, right across the industry, could go. My message tonight to the Minister and to the Government is clear and unequivocal: they must act now and seriously to address the problems facing the industry. In the short time that I have available to me tonight, I shall attempt to highlight those problems.
First, I emphasise that the textile and clothing industry is vital to our economy. It is not, as some would have it, a sunset industry. In the United Kingdom, it employs more than half a million people—10 per cent. of the total work force. Its contribution to the national economy is greater than that of the car industry, and three times greater than office machinery and data processing. There is strong regional dependence on the industry, which is concentrated in areas where unemployment and poverty rank high: 30 per cent. in Northern Ireland, 22 per cent. in the east midlands, and 17 per cent, in my own area of west Yorkshire.
The textile industry went into rapid decline in the late 1970s and early 1980s, and there is deep concern that it could witness a rerun of the situation in 1980–82, when more than 300,000 jobs were lost. Those parts of the industry that survived became much more capital-intensive and automated, and some survived more intact than others. Woollen and worsted, for example, has increased output by 80 per cent. per head, and exports account for 60 per cent., of output. That part of the industry is least affected by imports, but it still finds itself vulnerable and threatened for other reasons. I hope that the Minister accepts that the industry has fought back. Workers in the industry, never noted for their militancy, have become even more flexible—in fact, wages remain very low—and, because of the Government's mishandling of the economy, they are once again threatened by redundancy.
High interest rates are particularly damaging to the industry as they push up the value of sterling and add immediately to costs. Fluctuating exchange rates and the high prices of our exports when the pound is strong create a disinclination to invest and prevent any serious forward planning. Present sterling levels make imports cheaper and our exports more expensive. I am sure that the Minister will not argue against that.
Inflation is also causing concern. High energy and water prices have an effect on costs, and the high cost of water after privatisation has been drawn to my attention by woollen manufacturers, who use large quantities of water in their processes. Other factors, including EEC changes, are adding to the problems. The existing multi-fibre arrangement will end in 1991, and any new MFA is likely to have a quota set for the EEC as a whole. The free market that will exist in the EEC after 1992 means that the entire quota for a particular product could be targeted at just one country. Already within the EEC there is concern that some Governments are finding ways of 795 subsidising textiles, despite rules against doing so. Not so in the United Kingdom, unfortunately, where present policies seem to be positively harming the industry.
Such concern is not felt just on these Benches. I draw the Minister's attention to the parliamentary question asked by the hon. Member for Colne Valley (Mr. Riddick) on 26 October. The hon. Gentleman asked for
the latest position regarding the French Government's allegedly illegal subsidy to Filature du Hainault to manufacture polypropylene filaments.The Minister for Trade replied:The EC Commission announced on 27 July that it had approved the French Government's proposed aid to Filature du Hainault and that that aid did not conflict with the objectives of the Community's synthetic fibres discipline.The Minister went on to sympathise with the hon. Member for Colne Valley, saying:I have told my hon. Friend that I share his anxiety and doubts about this."—[Official Report, 26 October 1988; Vol.139, c. 293–94.]There have been other instances, of which I am sure the Department is aware, in France and Italy, and I have other suspicions of subsidies. Within the EC exports in relation to imports fell dramatically between 1978 and 1985. In United Kingdom trade with West Germany, for instance, United Kingdom exports as a percentage of imports fell from 65 per cent. to 29 per cent. In trade with France there was a fall from 73 per cent. to 46 per cent., and the fall in the Netherlands was from 96 per cent. to 40 per cent. In the EC as a whole, the fall was from 65 per cent. to 37 per cent.I believe that the implementation of the single market will make matters worse, particularly for constituencies such as mine where there is still a heavy reliance on manufacturing. Market forces will inevitably relocate activity to more favoured parts well away from centres such as Halifax and west Yorkshire. All of us are worried by recent events in Halifax, where one of the major reasons cited for the closure of the KP Foods factory was the need to obtain even more profits in the run-up to 1992. A thousand jobs were sacrificed on the altar of the single European market.
As I said earlier, these economic indicators, coupled with potentially damaging legislation from the United States in the form of the Textile and Trade Apparel Bill —recently vetoed by the President, but hanging over our heads like the sword of Damocles—could, if implemented, increase US protectionism for the next 10 years, forcing many Third-world countries into the European markets. Imports are already damaging those markets, particularly our own. During the first six months of 1988 textile imports increased by 12 per cent. to £3.4 billion, increasing the balance of trade deficit and leading directly to redundancies and mill closures. If there were more time, I would cite some of those closures.
Almost a third of our balance of trade deficit is in textiles and clothing, and sooner or later the Government will be forced to act on what is a major crisis in trade imbalance. All sides of the industry agree on the problems, and there is a fair measure of agreement on the solutions. Only the Government, with their adherence to the free-market philosophy, seem to be at odds with that agreement. Peter Booth, the national secretary of the Transport and General Workers textile group, recently said:
What we have at the moment is a double constraint on British Industry, first of all by the false level of sterling making it impossible to compete fairly and secondly by the punitive interest rates designed to push the pound even higher. In effect 796 the Government are garotting British Manufacturing by their myopic economic policies based solely on interest rales. Unless there is a change of course the many improvements in productivity and efficiency in our industry will be swamped by the ever increasing tide of lower priced imports. Tax cuts in June are no use at all to the 1,000 textile workers facing the dole in September.Just eight days later Barry Spencer, president of the British Textile Confederation, said:
First the recent strengthening of sterling against continental currencies is now making our highly successful export performance more difficult to sustain in Europe. Second, I turn to the associated question of interest rates. The recent series of increases in the base rate adds to uncertainty and is a disincentive to investment, in what is now a highly capital intensive industry. Finally, I want to call attention to the impact of rising textile and clothing imports on the national trading deficit. There is rightly considerable concern about the likely size of the national deficit this year.Exchange rate movement has encouraged companies to buy yarn abroad instead of manufacturing it here. Tootal gets much of its yarn from China and two thirds of its employees are overseas, while 55 per cent. of its textile materials are bought outside the United Kingdom. It ships in cloth from India, sends it to Germany for finishing, to Mauritius for stitching and then sells it in the United Kingdom. The trend is very worrying. Marks and Spencer, which traditionally has supported British manufacturing. has recently opened a purchasing office in Hong Kong, joining the shift to far eastern "sourcing".Imports of acrylic yarn from Turkey have increased from 600 tonnes to 4,500 tonnes in three years. The 1988 quota is 5,000 tonnes. There is massive exploitation of textile workers in Turkey. The labour laws in that country are repressive and very low wages are paid. State assistance is massive. Huge subsidies are provided for the industry.
I want the Minister to tell the 5,000 people in my constituency who are still employed in the industry what he intends to do about these unfair practices, because they have been on the receiving end of his Government's lack of concern. In Halifax, wages are well below the national average and there is still a great deal of part-time work. A recent economic survey carried out by the local authority showed that 45 per cent. of the work force is still employed in manufacturing, so what is on offer for them?
West Yorkshire is ranked the 46th most disadvantaged region after countries such as Northern Ireland and Sicily, but there are no new policy initiatives for the area. In France, however, two textile closure areas, which are ranked 103rd in the same table, have already had a financial input, so what is the Minister prepared to do to redress the imbalance?
There are many other regional disparities in the EEC. Emphasis is shifting to less well-developed areas and away from declining industrial areas. In the past, Halifax has received help under the non-quota textile area funding. That ends in 1989. My local authority tells me that Calderdale is not included among those parts of west Yorkshire that the Department of Trade and Industry submitted to the European Commission in connection with eligibility under its second objective—reform of the structural funds. I take this opportunity to ask the DTI, through the Minister, to reconsider that decision.
I understand that the Department has recalculated the published unemployment rates to include the self-employed and that the average rate of employment recorded in Calderdale during the last three years on that basis is 12.35 per cent., compared with the Community average of 12.5 per cent. We failed to qualify by 0.15 per 797 cent. If, however, the Department were to take the published unemployment data and did not allow for the self-employed, Calderdale would qualify. In the past, self-employment data have proved to be notoriously unreliable. I ask the Minister to take that point on board.
Calderdale is the only district in west Yorkshire that is not being put forward in connection with the second objective. Economic activity there is certain to be sucked into surrounding areas, where firms can obtain European regional development fund grants and where local authorities can provide improved infrastructure with that kind of assistance.
Finally, I must press the Minister for assurances on a number of points. First, will he urge the Government to renogotiate the multi-fibre arrangement and other trading arrangements to allow for fair competition? Will he ask the Government to include a social clause that would make employers in foreign countries, who are exporting to the United Kingdom and other EEC countries, treat their work force humanely?
Secondly, will he press for Professor Aubrey Silberston, of the Imperial College of Science and Technology, to be replaced as the expert who is due to report on the multi-fibre arrangement and other trading arrangements? The professor is a well-known free marketeer, whose 1984 report recommended phasing out the multi-fibre arrangement. It was widely attacked by all sides of the industry.
Thirdly, will the Minister take up with the Chancellor of the Exchequer the question of high interest rates and point out that manufacturing and trade are vital to our future prosperity? Trade is all that some of us have by which to earn our living, once the oil runs out and everything has been sold off.
Fourthly, will he tell the Government that they are destroying the textile industry's ability to plan for the future by their worship of the free market and their mishandling of the economy? I say in all earnestness to the Minister that the free-market philosophy is endangering the livelihoods of my constituents and contemptuously damaging their efforts to restore the local economy. They have been through one trauma and dragged themselves up, with very little help. Halifax, my town, had its assisted area status taken away in the early 1980s.
The industry has dragged itself up. Parts of it have recovered. We now want the Government to use sensible interventionist policies to ensure fair competition and to make sure that the healthy growth of the textile industry in my constituency continues, rather than allow a return to the position in which the industry found itself in the early 1980s.
I beg the Government not to persist with their policies. Anyone can see that they are forcing up costs, increasing our export prices and subjecting us to cheap imports.
§ Mr. Bob Cryer (Bradford, South)rose—
§ Mr. Max Madden (Bradford, West)rose—
§ Mr. Pat Wall (Bradford, North)rose—
§ Mr. Deputy Speaker (Mr. Harold Walker)Do the three hon. Members representing Bradford constituencies have the consent of the hon. Member for Halifax (Mrs. Mahon) and the Minister to intervene in the debate?
§ Mrs. MahonYes.
§ The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Eric Forth)Yes.
Mr. Bob Cryer $ (Bradford, South)I am grateful to my hon. Friend the Member for Halifax (Mrs. Mahon) for giving us the opportunity to discuss this serious subject.
I emphasise the fact that the import of cheap Turkish acrylic fibre yarn has caused at least 600 job losses in the Bradford area, many of them affecting my constituents. Mills have been running on short time and redundancies have resulted. Can the Minister say whether his Department is in a position to require the EEC to take action under the safeguard clause of the treaty with Turkey, especially as the likely increase in Turkish yarn imports is causing grave anxiety to the industry?
No doubt the Minister will want to refer to the record of the last Labour Government, as most Ministers do, so let me tell him that employment in the West Riding woollen industry was much higher in 1978, when we were in office. I hope that the Minister will aspire to that level of employment and to the improved quality and output that were achieved under the Labour Government.
I have no time for anything more, other than to endorse the point made by my hon. Friend the Member for Halifax that high interest rates are also very damaging. The damage is not clear yet, but it is working its way through and jobs will be lost in the near future.
§ Mr. Pat Wall (Bradford, North)I am grateful to my hon. Friend the Member for Halifax (Mrs. Mahon) for introducing the debate. The textile industry represents the sixth largest sector of the British economy, employing 450,000 workers. It is larger than the car industry and had £2 billion more value added in 1985 than the aerospace industry. The British Textile Confederation newsletter of July 1988 said:
Continued control of inflation is obviously vital; and the textile industry is not looking for an under-valued currency to make life easy. Far from it. But, particularly with the move towards a Single European Market by 1992, the industry needs to plan ahead with reasonable confidence that its own efforts—in productivity improvement, new equipment, product development, marketing and so on—will not be undermined by changes in competitiveness due to increases in sterling.Given that interest rates have doubled in 10 stages and that we have one of the highest rates of inflation in Europe, for textile workers and the textile industry, which has already faced a rise in import penetration from 31.5 to 44.6 per cent. in the period 1980 to 1986, the prospect of 1992 is a nightmare.We face a further problem. There is the possibility of the American Government introducing a quota Bill restricting America's imports to a 1 per cent. increase per year. As my hon. Friend the Member for Halifax said, that will not only directly affect British exports to America, but will mean that far eastern and other suppliers will look for markets in Britain.
The issue of imported acrylic yarn has been brought home to me graphically. I live opposite a mill which, for the past two years, has found good employment for workers. Plenty of overtime has been worked because of the low average wage. For the past fortnight, however, owing to the import of vast amounts of subsidised acrylic yarn from Turkey, the employees have been working part 799 time. That will continue for the foreseeable future. That mirrors the position of textile workers in the West Riding as a whole.
§ Mr. Max Madden (Bradford, West)I congratulate my hon. Friend the Member for Halifax (Mrs. Mahon) on securing this debate and declare my interest as a Member sponsored by the Transport and General Workers Union, the textile group of'which represents many thousands of men and women who work in the textile, clothing and knitwear industries. Thousands of jobs in those industries are now under threat, for within the next few weeks—certainly in the next few months—thousands of redundancies will be announced in them.
I appeal to the Minister to take urgent action to safeguard textile employment, as it is often in areas that already suffer from high rates of unemployment. I urge him to convene a crisis conference of the textile, clothing and knitwear industries, the textile committee of the Trades Union Congress, employers' organisations that represent the industry, Members of Parliament who represent textile constituencies and local authorities where the textile industries are important so that the Government can be given clear information about the range of action that they should take to assist those industries and the dangers that they face.
I urge the Minister to put to one side his reputation as a free marketeer and recognise that urgent Government action is necessary if these jobs are to be saved. That is the crisis that confronts the Government. Continued complacency is not an option that they can afford. If they are complacent, many more thousands of men and women in the textile, clothing and knitwear industries will be cast on to the dole queue.
§ The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Eric Forth)I congratulate the hon. Member for Halifax (Mrs. Mahon) on obtaining this debate. I recognise the importance of this matter to her and to the other hon. Members who have spoken. I shall cover as many of the points that have been raised as possible, but I may not be able to deal with all of them in the nine minutes that remain, so perhaps I might respond later in writing to those that I cannot cover now.
I acknowledge the vital importance of the textile and clothing industries to the British economy. They are spread throughout the country, and are not confined to the constituencies of those hon. Members who have spoken. In the hon. Lady's constituency, however, there are some 20 firms, ranging from small establishments with fewer than 20 employees to a subsidiary of one of our largest firms which has more than 300.
I acknowledge, too, the scale of the industry, even after the retrenchment that has taken place over some decades. We are talking of some 15,000 firms which employ up to 500,000 people. That is equivalent to about 2 per cent. of employment in the United Kingdom, and almost 9 per cent. of manufacturing employment. Output in 1987 was about £12 billion, making it the UK's fourth largest manufacturing industry.
Exports of textile and clothing products in 1987 totalled more than £3 billion, forming one of the largest exporting sectors in the United Kingdom. Many firms have major 800 international links throughout the world. Some of those links are long established, and others are more recent. By any standards, we are talking about very large industries. I salute them on their achievements, and I should like to identify some positive points that have not been brought out fully tonight about the industry's resilience.
We must pay tribute to the skilled and adaptable work force and the improved management standards that have recently been experienced throughout the industry. The increasing use of more and more sophisticated technology must be acknowledged. It has produced significant productivity gains. We must also remember the critical importance of good design.
My portfolio includes design, and I should like to take this opportunity to emphasise its importance. Remarkable progress has been made, establishing London as an acknowledged centre of fashion.
All those factors are of the greatest importance and have produced industries which can match fair competition and respond rapidly to the changing demands of the market place. However, we recognise the great difficulties that those sectors face.
My Department has a close relationship with the industries through its contacts with individual companies and with trade associations. Ministers and officials meet regularly, and only this morning my hon. Friend the Minister for Trade met representatives of the British Clothing Industry Association and the Knitting Industries Federation to discuss current trade issues. That may go some way to answering the point raised by the hon. Member for Bradford, West (Mr. Madden), who called for a special meeting. I emphasise that such meetings and discussions are a continuing process. Although I cannot concede his point, I hope that he will acknowledge that that goes some way to recognising the difficulties that the industry continues to face.
We acknowledge that there are still significant concerns which I shall do my best to cover. First, I should like to deal with the problem of Turkey, which has been raised by all the hon. Members who have spoken.
I am aware of the concern about the situation which has arisen in the past year in the acrylic yarn spinning sector, which, as the hon. Member for Bradford, South (Mr. Cryer) rightly pointed out, has resulted in redundancies and short-term working.
My hon. Friend the Minister for Trade has met representatives of the Confederation of British Wool Textiles and hon. Members to discuss the problems and officials have followed the situation closely. When the Turkish voluntary textile restraint arrangements with the European Community were renewed last year, we were able to secure a new restraint limit on Turkish acrylic yarn exports to the United Kingdom, although the level was higher than the industry had sought. However, at the time of negotiations, there was insufficient evidence of serious disruption to United Kingdom industry as a result of those imports. The economic data that have to be taken into account in negotiations of this kind—such as the trends of domestic production, consumption and exports—did not at that time show the sort of systematic downward movement which was necessary if we were to be able to make a case for a tighter restraint level. Indeed, United Kingdom production levels remained high well into 1988, although we recognise that the position has changed in recent months. However, it is also relevant to note that imports of Turkish acrylic yarn have also fallen very 801 sharply in the first nine months of this year compared with the same period last year, and currently represent only about 25 per cent. of the agreed restraint level.
It was factors such as these which have created difficulties for the anti-dumping application made by the European industry, including the United Kingdom, against imports of acrylic yarn from Turkey. This application also covered imports from Mexico. We were disappointed that the Commission did not feel able to take action. I am sure that the hon. Member for Bradford, South, with his unique involvement in European matters, will be able to pursue this matter through the institution of which he is such a distinguished member.
The Department's unfair trade unit assisted the United Kingdom industry in the preparation of its part of the complaint, but on the basis of the information available it was not possible to establish injury attributable to the Turkish imports. Other contributory factors, such as fashion changes which have led to a fall in demand for knitwear, did not help either. I am afraid, therefore, that there does not appear to be an early prospect of returning to the Commission—where the dumping complaint remains on the table—with a renewed request for action. However, the Department's unfair trade unit is continuing to monitor the situation closely in conjunction with United Kingdom industry.
Before I leave anti-dumping, I should say that work proceeds on other textile cases. Two investigations and one review of earlier measures are in progress at present and a number of other complaints have been lodged with the Commission or are in various stages of preparation. Again, our unfair trade unit is carefully monitoring progress on all these cases.
I should like to turn briefly to the multi-fibre arrangement. The current phase of the MFA, phase IV, expires in 1991, as hon. Members have pointed out, and 802 details of any successor arrangement have yet to be worked out. The MFA is in any case one of the many trade issues under consideration in the GATT multilateral trade negotiations now under way, known as the Uruguay round. In these negotiations, taking place in Geneva, we and the European Community generally are committed to examining the "modalities" for the return of trade in textiles and clothing to normal but strengthened GATT disciplines. The Government believe a lasting return of textiles and clothing trade to GATT rules can be achieved only if the right conditions are established. In particular, we will be looking for a satisfactory safeguards clause to guard against sudden surges of imports, for better market access, and a reduction in trade barriers by developing countries, particularly the newly industrialised countries.
At the mid-term ministerial meeting in Montreal in December we shall be pressing for a clear reaffirmation of the commitment entered into by trade Ministers of all parties in Punte del Este in 1986 that the "modalities" for returning textiles and clothing to GATT depend upon strengthened rules, and we shall be looking for progress elsewhere in the GATT discussions.
The news that the United States Congress had failed to override the President's veto of the Textile and Apparel Trade Bill was of course most welcome. Had the Bill passed, it would have imposed limits on legitimate United Kingdom exports to the United States and it could well have resulted in the diversion of third country exports to EC markets. On the other hand, the United States has passed a major new general Trade Act and we shall be monitoring its implication closely. The United States has been left in no doubt that, if the new Act is used in a manner—
§ The Motion having been made after Ten o'clock on Monday evening, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at five minutes to One o'clock.