HC Deb 23 November 1951 vol 494 cc837-46

Motion made, and Question proposed, "That this House do now adjourn."—[Brigadier Mackeson.]

4.0 p.m.

Air Commodore A. V. Harvey (Macclesfield)

The remarks I have to make are not controversial but concern the trade recession in the Macclesfield constituency and in the adjacent areas. In making these remarks I am conscious of the fact that similar conditions prevail in Lancashire, the West Riding of Yorkshire and elsewhere. The alarming thing is that in my constituency, which is concerned with weaving and the manufacture of silk and rayon, orders, both from abroad and at home, have steadily been declining since the summer.

In the last few weeks conditions have steadily deteriorated. It became very apparent from the early days of the General Election, and I am sorry to say that some of my political opponents suggested that the falling off of trade and the numbers working short hours was a stunt.

Mr. Harold Davies (Leek) indicated dissent.

Air Commodore Harvey

I am not accusing the hon. Gentleman; I said that some of my local political opponents made that suggestion. I do not attach much seriousness to it; many things are said at elections, but unfortunately that was not true. I wish it had been.

The situation has deteriorated in the last two or three weeks. It was worsened by the remarks of the right hon. Member for Bishop Auckland (Mr. Dalton). He did not instigate the decline or its commencement, but undoubtedly a considerable number of orders from abroad were withheld because it was felt that prices would come down and it would be better to wait.

On 15th October I questioned the Minister of Labour about unemployment figures. In the past we have had something like 40 or 50 unemployed, but on 15th October there were 447 unemployed. I read in my local newspaper this morning, the "Macclesfield Times," published yesterday, that the unemployment position in Macclesfield had appreciably deteriorated during the past month, due mainly to short-time working in the silk industry. It was stated that many workers in the silk trade were working two or three days a week and signing on at the employment exchange for the remainder of the period. In Congleton, which was almost a distressed area before the war, the employment exchange has been working overtime.

It is my responsibility to take care, to the best of my ability, of the affairs of my constituents, but it is also the responsibility of the Government of the day to do everything they can to help. Some things—in fact, in my view, most things—have been mismanaged during the last six years, and I sympathise with my right hon. and hon. Friends in having to cope now with these difficulties with which the country is faced. But as I see it, the textile trade may be in for a very difficult time. I should like to think it was only a phase, but the industrialists who have spent their whole lives in this business do not seem to think it is.

We shall have pockets of unemployment in certain parts of the country. whereas the engineering and light engineering industries want more people. It is a most serious problem when we have a shortage of houses, unemployed in certain areas, and over-employment elsewhere. That is one of the problems which have got to be tackled.

I am unable to find out from the Minister the number of people working short-time in my constituency, but I am assured by the local mill owners and industrialists that the figure is considerable and that it is increasing. Many of the firms have had a good six months. In the first six months I think they have made very good profits, but since then their profits have steadily declined.

They have kept on a number of men and women workpeople hoping that orders would come in so that they could give them plenty of work. But they cannot go on doing that definitely. I have been told that they will try to keep these people on until the end of the year. Unless something happens before that, a number of them will have to be paid off.

In Congleton and in Macclesfield there are a number of firms known as makers-up, who make gowns and garments, and they are suffering considerably at the moment. They are looking for orders and just cannot get them, yet I read a report in a newspaper, sent to me from the Division, which quoted a report from Milan as saying Britain had ordered £240.000 worth of R.A.F. shirts, as the Ministry of Supply office here confirmed tonight. I do not think that is true. I cannot imagine the Ministry of Supply ordering nearly £250,000 worth of shirts for the R.A.F. when our own mills are waiting for orders. I hope my hon. and learned Friend will check that point with the Minister of Supply, because if the report is correct something should be done immediately to place the orders in the mills at home.

To add to my troubles and to those of my constituents, last Saturday we had a disastrous fire in Congleton involving a firm known as Conlowe Ltd., who employed just over 400 people. The building was razed to the ground, with a considerable amount of stock. The firm have been able to place something like 40 per cent. of their employees in factories belonging to subsidiary companies, but, even so, that will involve the hardship of travelling, while the other 200 employees are still out of work. I ask my hon. and learned Friend to bear this in mind, so that when the firm make representations about rebuilding or getting the business under way—and incidentally it involves a great deal of export business—their application will be considered sympathetically and speedily by the Department concerned.

Mr. Harold Davies

I hope the hon. and gallant Member will permit me to add my voice to his, because some of my constituents work in the hon. and gallant Gentleman's constituency and have been affected by the fire at that mill. I heartily endorse the hon. and gallant Gentleman's statement.

Air Commodore Harvey

I am glad to have that support. I do not often get it from that quarter, but I am glad to have it on this occasion, and I hope my hon. and learned Friend will bear in mind what we have said.

In my view, there are three reasons for this semi-slump. The first is the high cost of living. Where there is a small family, with two or three children, by the time the household bills have been paid there is very little left to buy garments for wear, especially at today's high prices. Secondly, orders are not coming in from abroad or at home. The warehouses at home are stacked full, and in some cases the same position exists abroad. Thirdly, and most important, is the incidence of Purchase Tax. I shall refer to that again in a moment.

When the Korean war broke out, I believe firms at home and abroad, thinking there might well be a world conflagration in a short time, stocked up. If that is so, there is a reasonable hope that the stocks may be unloaded and that we shall get full employment going again. But that is not necessarily so in this case. These are quality goods. Best Macclesfield ties sell in America, but travellers are coming back with very small orders.

It seems to me that as a nation we must try to sell quality goods. It is no use making rubbish and cheap articles, as many other European countries do. We have to make high quality goods, and an export trade in those lines can be sustained only by a healthy home market. Designs have to be tried out on the British public to discover their reactions and to see what will sell. Some of these foreign markets are only seasonal markets, for four months a year or for two months twice a year. They have to be supported by a healthy home market.

The expense of exporting these productions is considerable, bearing in mind the cost of preparation and the sending of travellers to America and other countries. It must be made possible to make some recovery from the home market. Purchase Tax is killing that at present. The bulk of the fabric produced for export and home use is a high quality rayon. It looks like silk but it is a rayon fabric and it is only a few pence dearer than the best utility material.

Many people at home are tired of utility clothing. Girls in mills and elsewhere want something a little bit better. They are entitled to it. After all, they are entitled to make the best of their dress. Export customers also have a high opinion of this fine rayon, but the prices are out of reach of many of them. They are out of reach of many abroad as well as at home.

For instance, the cost of fabric processed at home is approximately 5s. 6d. a yard. It bears tax ultimately at 6s. a yard. It is eventually sold in the shops at something like 18s. 6d. a yard. If it were classified as utility fabric it would be much cheaper. It does not seem to me to make any sense.

Unless something happens by the end of this year, I am quite convinced that in certain areas concealed unemployment will be exposed. We have had concealed unemployment a long time. It has very rarely been admitted in this House, but we have had it for months, and it will be exposed unless something is done. The situation cannot possibly be left until the Budget in April because even in normal times—and we are living in very abnormal times—buyers hold off for two months before the Budget. They have held off from last June. If we wait until next April before something is done many firms will be bankrupt and many thousands of people will be out of work.

The Chancellor of the Exchequer has had little time to consider this problem. He has got far weightier problems on his mind at the present time, and I sympathise with him. He has a tremendous task, as we have heard in the last few weeks. However, I do ask him and his colleagues at the Treasury and in the Board of Trade to review this matter of Purchase Tax at a very early date. I recognise that Purchase Tax has to remain, but we may come to a situation in which the law of diminishing returns may apply, and then the Government will get less money.

If we work out a better scheme of taxation the Government will get more revenue, industry will be healthier, and exports better. In my view this is a pernicious tax. It was never intended for peace-time. It is one of the things that, has got to go on, certainly at the present time, but it is killing initiative in the textile trade.

Raw silk is sometimes considered a luxury, but I can assure my right hon. and hon. Friends that that is not the case. Silk has many uses in strengthening other fabrics, and has to be used today for a large number of things because there is no alternative to it—no substitutes for it. We are faced with competition from Japan, Italy, Switzerland and France. Japanese competition has not begun yet, but we have to put our house in order against that competition when it arrives, and sell our fabrics at the lowest possible price.

The only people capable of handling this problem of silk are the fine craftsmen of Macclesfield and a few other parts of the country. They must be protected. They export silk at something like three times the value of the raw silk that comes from Japan. That is a very nice turnover.

There is no time to go into other matters, but in my constituency the authorities have on their books two firms who are willing to go to Macclesfield, to a site prepared by the Corporation, to bring in other industries—engineering, which, I believe, is connected with rearmament. I would ask the Government to give their consideration to this matter. The idea is that we should have as a buffer another type of industry to which the workers could go, and which they could fall back upon in lean times.

I do not mean that we should rob the silk industry of its workers. The workers in the silk and rayon industries have made a fine contribution to our export trade, and they did a fine service in the war by weaving silk and rayon for parachutes, and so on. I hope that my right hon. Friends will consider this point.

I do not wish to overstate this problem, but I think that any hon. Member of this House who sees any unemployment going on week after week is worried by that. It becomes a nightmare. It is a worry lest it should get worse. I ask for consideration of these questions affecting the silk and rayon industries. I do not say that it should be done in a few weeks, but that that consideration should be full consideration to bring about alleviation of the problems wherever possible.

4.15 p.m.

Mr. Harold Davies (Leek)

I am sure that the House is grateful to the hon. and gallant Gentleman the Member for Macclesfield (Air Commodore Harvey) for raising this subject this afternoon. It may be that this is a local matter, for the Macclesfield district alone, but although I am a political opponent of the hon. and gallant Gentleman I am also a neighbour and I know that the matter he has raised is of importance to all of us, whatever may be our politics.

I heartily endorse the statements made by the hon. and gallant Gentleman. If it is correct that orders are being given to firms in Milan for R.A.F. shirts, surely the Board of Trade and the Government could investigate this immediately and see if these orders could be given not only to Macclesfield but to Leek. I do not want to trespass on the constructive reply which we are to get, I am sure, from the Parliamentary Secretary to the Board of Trade and which the hon. and gallant Gentleman deserves, but I should like to take up two small points.

It is right that we all should be made aware of the concealed unemployment which now seems to be overshadowing an important dollar earning industry like the silk and rayon industry in Macclesfield and in Leek. It was not so long ago that these industries were penetrating the North American markets and enabling us to maintain our standards of life.

My second point is one which concerns the Japanese Peace Treaty, a matter which I hope to deal with in the near future at greater length and on wider issues. There is no one in this House who wishes to make a punitive Peace Treaty, particularly in its economic clauses, but some of us on this side and, no doubt, some hon. Members opposite are worried about the vague generalities of the economic clauses of the Japanese Peace Treaty.

I want to see the Government now in power encouraging maximum contacts between British manufacturers of cotton, silk, rayon, pottery and shipbuilding with those in Japan, and we should also like to see contacts made on the trade unions side. I do not think that within any measurable distance there is any hope of creating, in Japan, standards of like life we have in this country, and, consequently, areas like Macclesfield and Leek may feel the shock of intensive Japanese competition in the near future, which may completely undermine the prosperity we have hitherto enjoyed.

I cannot finish better, in illustrating the practical difficulties, than by quoting from the Mitsubishi monthly economic circular figures which were published recently. They show that in 1913 the average number of workers in a ceramic factory in Japan was 6.7 while the average today is about 13. In other words, because of the small accumulation of business per factory, the trade unions in Japan cannot be properly organised. I hope that in dealing with this problem, and when we sustain the full shock of Japanese competition, these matters will be the concern of His Majesty's Government.

4.20 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. Henry Strauss)

My hon. and gallant Friend the Member for Macclesfield (Air Commodore Harvey) has made a characteristically persuasive speech on behalf of his constituents and. as we have heard from the last speaker, on behalf of the constituents of other hon. Members, too. The main industry in his constituency is, as he has pointed out, interesting and world famous. The silk industry is one of the oldest in this country, dating from the 14th and 15th centuries. It has been established in his constituency since the 18th century, and it is now widely spread throughout the country. One sixth of the industry is still centred in my hon and gallant Friend's constituency, and the products of that industry are famous throughout the world.

The first thing I would say to the House is that, as my hon. and gallant Friend already knows, the falling off in demand which he has brought to our attention is not confined to this country and, within this country, is not confined to Macclesfield. The falling off in the world demand for silk goods is part of a decline in the demand for textiles generally. The silk industry has specially suffered from competition from other fibres, but it is a vigorous and virile industry, as we know from the Third International Silk Congress which took place in London last September.

Among the difficulties which this industry has had to face have been the high cost of the raw material, and the great fluctuations in price. Japan is the great source of supply of the raw material, and it may be of interest to the House to know that a Bill for the stabilisation of raw silk prices is now due for consideration by the Japanese Diet.

On the point raised by my hon. and gallant Friend about the high cost of living, I cannot add to what has already been said by the Chancellor of the Exchequer on this subject, when he was dealing with inflation. On the question of Purchase Tax, my hon. and gallant Friend is aware that that is not a subject for my Department but for the Treasury. He will have observed that the Financial Secretary to the Treasury has been here throughout the debate and has noted his observations.

Air Commodore Harvey

I am much obliged.

Mr. Strauss

On the question of utility schemes, the House may be aware of the difficulties of extending them in the case of goods of which there are imports as well as a home-produced supply. This country has certain obligations under the General Agreement on Tariffs and Trade and certain other international agreements, as a result of which we are bound to give national treatment to the products of other countries in respect of internal taxation.

That is one of the matters being considered by the committee whose setting up was announced by the previous Chancellor of the Exchequer on 31st July—the committee that sits under the chairmanship of Sir William Douglas and is generally known as the "Douglas Committee." I understand that the industry has put its case to the Douglas Committee and that, as my hon. and gallant Friend is no doubt aware, Mr. Goodale, the President of the Silk and Rayon Users' Association, is a member of that committee.

My hon. and gallant Friend would probably like me, in the few moments which are left, to deal with the possibilities of alternative employment. In recent years 21 extensions to existing premises and new projects have been approved in the Macclesfield-Congleton area. There are some possibilities of work connected with re-armament within travelling distance of the principal places in his constituency.

However, the chief point that I wish to bring to the attention of the House is one which, from his speech. I believe he already well recognises. It is that what may be desirable must depend to a large extent on the question: Is the present recession temporary or permanent? I am certain that the House will appreciate that actual harm might be done to the industry whose cause my hon. and gallant Friend has so eloquently pleaded if we were to treat as permanent a shortage of work which may be destined to be only temporary. Although I certainly do not wish to be dogmatic, I believe there are reasons why part, at any rate, of the shortage of work will be only temporary.

Air Commodore Harvey

Will my hon. and learned Friend give just one reason why he thinks it will be temporary?

Mr. Strauss

I want to be brief, because I have other things to say, but one of the reasons is that part of the unemployment is not in the most luxurious part of the trade, but in a part which has, over a period of years, always recovered after slumps, a trade without which the world cannot do. I have no time to develop that, but I believe there are grounds for the statement I have made.

My hon. and gallant Friend mentioned the wishes of two engineering firms from Stockport. I cannot definitely tell him whether the two firms from Stockport which I shall mention are those he has in mind, but I am sure that he will be glad to learn that two engineering firms from Stockport have had Industrial Development Certificates issued to them this year for new factories in Macclesfield, one for 10,000 sq. ft. and the other for 14,000 sq. ft. I do not want my hon. and gallant Friend to misunderstand the effect of the issue of an Industrial Development Certificate. It does not in itself mean that building licences will necessarily be granted. In frankness to the House, I ought to say that. In present circumstances the grant of building licences must depend on over-riding national considerations. I do not think I can go beyond that, if for no other reason, because the sponsoring Department in this case will be not my Department but the Ministry of Supply.

In the short time left to me before I have to sit down I should like to express the regret of the House that the difficulties of my hon. and gallant Friend's constituency have been accentuated by the recent fire in Congleton. I am sorry that in the time at my disposal I cannot elaborate further in answer to my hon. and gallant Friend's speech.

Question put, and agreed to.

Adjourned accordingly at Twenty-nine Minutes past Four o'Clock.