HC Deb 22 July 1954 vol 530 cc1743-52

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

12.17 a.m.

Mrs. Barbara Castle (Blackburn, East)

It is appropriate that I should have been successful in securing this Adjournment debate immediately after a discussion on the cotton industry because the case I want to make tonight concerns a firm in my constituency which helped to provide employment at a time when the prospects in the cotton industry were very uncertain; and it is a firm which deserves well of Blackburn because at the time cotton was severely depressed before the war it helped to provide jobs for Blackburn people. It also deserves well of the Government because, continuing the tradition of public service, it is now making a most useful contribution to the export drive.

I have been informed that the Minister of State, Board of Trade, has to deal with this matter as representing the Ministry of Materials, and I am sorry to keep the right hon. Gentleman so late defending a Department which is so soon to be defunct. I must also express my regret at giving him such a difficult task to do tonight, because to defend the record of the Ministry of Materials in this case is a very unpleasant job for any Minister to have to do.

When the Prime Minister announced the other day that the Ministry of Materials was to be wound up he paid a glowing tribute to his noble Friend who is the head of the Ministry, for the way he had conducted the Department I certainly cannot echo that tribute, because when the Ministry of Materials was responsible for controlling pulp and paper, and was severely restricting its import, the noble Lord did nothing whatsoever to help this firm, the Universal Leather Goods Company, of Blackburn, which needed the materials for the export drive which it was carrying on. Perhaps the noble Lord did not help the firm because it was only a little one and the noble Lord has not got time to defend the interests of small firms in this country.

The Universal Leather Goods Company makes plastic handbags, as the right hon. Gentleman knows, and an essential ingredient in the manufacture of these handbags is paper board of a particular quality and substance which will bend to the shape of a bag and will be a sufficiently high quality product to be saleable on the American market. During the shortages which we experienced during the war this firm never failed to get supplies. Sometimes they asked me to approach the Board of Trade on their behalf when we had a Labour Administration. Never once did I fail to help them to meet their requirements, but since the present Government have been in office and there has been the policy of decontrol, it has been a very different story.

As recently as last December the firm wrote to me to explain that of 163 tons of paper board which they urgently required to manufacture this product for export they had been able to obtain only 93 tons from Thames Board Mills. Therefore, with the utmost confidence that once again I should be able to help them I wrote on their behalf to the Minister of Materials. I was greatly surprised to receive from the noble Lord a not only unhelpful but a positively offensive reply to my overtures on behalf of the firm.

On 20th December the noble Lord told me that the Government no longer controlled the distribution of board and he went on to lecture the firm: From such enquiries as we have been able to make, it appears that the Universal Leather Goods Company were offered a long-term contract by their suppliers at a time when the latter were anxious for business, but the Universal Leather Goods Company were unwilling to close until it was too late. In this they were, of course, exercising their own business judgment as they were perfectly entitled to do, and they must stand by the consequences. That is the reply of a noble Lord whose duty it was to see that industry had the materials that it required, and a reply in a different tone and temper from anything that we had ever received from a Labour Government at a time when shortages were acute and unavoidable.

The Universal Leather Goods Company were, naturally, indignant at his reply, and they challenged the statement that at any time they had been offered a long-term contract by Thames Board Mills. I was so shocked by the reply that I asked to see the Minister of State, Board of Trade, because the firm pointed out that they were doing a job in the national interest in maintaining the export drive in a most difficult dollar market in the somewhat luxury product which handbags are. Anybody who knows anything at all about the trade and about exports knows that it is extremely difficult to get into the American market with a product like a plastic handbag. One must be efficient in production, keen in price and intelligent in organisation to hope to compete with Americans in a field like that.

When I saw the Minister he and the Board of Trade representatives who were present admitted that the Universal Leather Goods Company had done a first-class export job and had a very good record in this dollar field, but they said, "We do not control distribution of paper board any more. The Government have wound it up as part of the policy of decontrol and therefore we cannot do anything to help the firm to get supplies from Thames Board Mills, who tell us that they are full up with orders. Let them import Dutch straw." That was regardless of the fact that the price was higher, and that it was not of the quality which the firm required.

However, the Universal Leather Goods Company were desperate and were having to turn down orders from America. Therefore, they agreed to accept Board of Trade advice and they tried everywhere in Holland to get firms to supply them with Dutch board. They failed and I therefore wrote to the Minister in February and said that the firm had tried all kinds of sources of supply of Dutch board. I said that the matter was urgent and that we were losing dollar exports because of the Government's refusal to control the distribution of this very scarce raw material. On 10th February, I received from the Minister of State, Board of Trade, another of those high-handed Government replies. It stated: I have had this case most carefully investigated, in consultation with the Minister of Materials. I am afraid, however, there is really nothing further that I can do, as Universal Leather Goods Company Ltd, are unable to obtain supplies from abroad and Thames Board Mills, Ltd. are already working to full capacity. That is an absolutely intolerable reply from a Government who lecture British industry about the need for exports. I could scarcely believe my eyes when I read it.

This firm was left in desperation to its own devices and it was unable to press ahead with the expansion of its export orders. Finally, through various efforts of its own, it managed to avert disaster by obtaining 20 tons of Dutch board. It had to buy the strawboard at a price 20 per cent. higher than the price of the Thames Board Mills product. When it got it it found that it was not of a quality satisfactory for the purpose for which the paper board is needed. The firm have written again to me and I have been seeking an opportunity to raise the matter in the House because of the total disregard of the Government for their responsibilities.

The only allocation which the firm received for the first six months of this year from Thames Board Mills was 33 tons of paper board, compared with its minimum requirement of 60 tons. Similarly, it has been told that its allocation for the second six months of this year will be about 50 per cent. of its requirements.

I make it clear that my complaint is not against the firm. I have discussed the matter fully with Thames Board Mills. I have discussed its position. I believe that the Thames Board Mills is trying to do a difficult job of allocating supplies as fairly as it can on information which it has got. Its production has been limited, partly by the disastrous flood which it suffered last year, partly—at one period—by a shortage of wood pulp and partly by a shortage of plant. It is doing its utmost to expand production and to get a new plant into operation.

In the meantime, it is following a system of allocation which is as fair as it can make it by giving all its customers a certain percentage of their past orders. The representatives of the firm explained to me, and I accepted their point of view. They said, "We cannot judge the priority between the different orders. All firms come to us and say that their orders have priority. The Ministry of Supply comes to us with defence orders and food firms come with orders for packing cases for food supplies, and so on, which they claim to be equally urgently needed. It is not for us to judge between one and another."

I agree that it is not their duty to have to discriminate but it is the duty of the Government if they really are serious about the export drive. When I went round the firm's premises the other day I saw the paperboard being made up into cases for food, cosmetics and packages of soap powder and other consumer goods now on the market. This country cannot live by taking in its own washing. If we divert materials which are in short supply from the export drive to the satisfaction of the consumer market then what shall we do for consumer goods in the near future?

It is ludicrous to have a firm in a town like Blackburn—which has enough difficulties with the cotton trade—struggling to do a first-class job in a market which is difficult enough already when the paper board that it needs goes for the packaging of cosmetics. The Government have lost all sense of direction and of public responsibility when they stand by and, in the face of these repeated appeals for help, give arrogant answers of the kind I have quoted.

Everybody knows how difficult it is to break into the American market. One of the firm's difficulties is not only to get the paper board to make the handbags but to get more paper board to pack them in. American buyers will not take the handbags unless each is separately packed in a box with special arrangements to prevent the article from being damaged; but the firm cannot get the packaging materials with which to do the job.

I wish to say two things to the Government. If they are inviting this firm to buy foreign raw materials because they cannot get supplies from home, the least they can do is to give a rebate on the Import Duty which the firm has to pay on the strawboard they import. The import duty on Dutch strawboard is between 15 per cent. and 20 per cent. ad valorem. The least the Government can do is to work out a drawback scheme whereby this firm will get a rebate on the product for which the raw material is required.

Even if that is done, even if an attempt is made to meet the financial difficulties of the firm, it will still not meet their basic problem of quality. The Thames Board Mills paper board is not only the cheapest product, but it is the best quality produce because it will bend. It is flexible and suitable for use in making the handbags for which it is designed. The right hon. Gentleman knows perfectly well that so far as quality is concerned the imported product is no substitute for this firm's product.

Raw material distribution by the Board of Trade was abandoned a long time ago. When my right hon. Friend, who was then the President of the Board of Trade, wound up the allocation scheme he made it perfectly clear that it did not mean that the Board of Trade washed its hands of all responsibility for seeing that priority needs were met. In fact, he made it clear that the Board of Trade would keep a watch on the situation, and intervene where necessary to see that firms got urgent supplies to keep employment going and help our exports. The record of the Ministry of Materials in this case is so bad that it is time the Ministry was wound up, because it has been worse than useless. I hope that under the transfer scheme which we are to have from 16th August, and now that the responsibility is to be solely centred in the Board of Trade, we shall have more effective action on behalf of British industry.

I hope that the right hon. Gentleman will tell me that from now on his Department will see that firms of this kind, who are doing a difficult job in the national interest, will get the backing of his Department as they did under the Labour Government. I hope that he will see that instead of paper board going to unessential consumer goods on the home market it will be used for the export drive and that the Universal Leather Goods Company will be able to get the supplies it so urgently needs.

Mr. F. P. Bishop (Harrow, Central)

The hon. Member for Blackburn, East (Mrs. Castle) has indicated, as I understand, the difficulty of the Thames Board Mills in meeting the requirements of this firm. Will she tell the House if that difficulty was due to any shortage of raw material that they needed for producing their product, or whether it is that they are, in fact, 100 per cent. occupied in production and the difficulty is in meeting the demand?

Mrs. Castle

At one time, Thames Board Mills were afraid that they would be held up by a shortage of wood pulp. That, I understand has not been the main problem, which is one of awaiting new plant coming into production. In the meantime, they are meeting all orders, irrespective of their nature, on a percentage basis. I am asking that the Board of Trade should give them guidance.

12.35 a.m.

The Minister of State, Board of Trade (Mr. Heathcoat Amory)

I am sorry that the hon. Lady the Member for Blackburn, East (Mrs. Castle) believes that the Government have failed to assist an exporter in difficulties with raw material supplies. I wish to try to convince her of the contrary, to convince her that we have taken considerable pains to help in every reasonable way open to us. Anyway, I shall try not to give her an arrogant answer. I am extremely sorry if she felt that I did so before, because I very much dislike arrogant answers.

The Universal Leather Goods Company is doing a useful export trade in women's handbags, for which they have required strawboard, or chipboard, as the United Kingdom equivalent is called. I want to make this clear: it was in 1949 that the Government of the day—not this Government—decided that it would no longer continue detailed control of the end uses of paper and board, that is to say, the internal allocation of those commodities. As a result, since then every producer and importer has been free to dispose of his wares in whatever manner and to whatever customers he chooses.

In 1950 the post-Korea developments led to a shortage of paper and board, and at that time, I understand, discussions took place between the Government and trade associations as to what should be done, and if there should be a reversion to the allocation. Neither party then thought that it would be a good idea to restore that kind of control which had been lifted a year before, and instead they started a voluntary priority scheme, which, according to the information I have, has since been in the main loyally observed by the traders, and which traders are at present trying to work to the best of their ability.

I want to say this about the Universal Leather Goods Company's own position. In 1951, when the firm were short of supplies, the Ministry intervened, and claimed the co-operation of the firm the hon. Lady has mentioned, the Thames Board Mills, with the result that at that time the firm were able to supply the Universal Leather Goods Company with 135 tons of chipboard for export orders. The Thames Board Mills would have been willing to maintain deliveries, I am assured, on that scale, and later definitely offered to do so, but in 1952 a decline in demand set in and the Universal Leather Goods Company for a time reduced their purchases from the Thames Board Mills, no doubt for commercial reasons.

The Thames Board Mills then asked the Universal Leather Goods Company, in fact urged them, to place continuing orders, because with business picking up again they saw a shortage of supplies coming along.

Mrs. Castle

I have gone into this very carefully. Of course, as the right hon. Gentleman is aware, all firms reduced their orders in 1952, because they were all feeling the pinch of the depression. Therefore, they were in common with the others. In 1952 the Thames Board Mills sent out a circular letter suggesting that orders should be placed over a four-month period, not only giving the quantity required but the substance required too, to which the Universal Leather Goods Company said that they could not specify what substance they would require, above all because they did not know what lines were selling in America until the experts had been consulted.

Mr. Amory

I understand that, and as I said, it may have been for good commercial reasons. But it is the fact that the Thames Board Mills urged this company to place continuing orders if they possibly could.

When this trouble was brought to the Ministry's attention, the Ministry again tried to help. They asked the Thames Board Mills to see whether any further supplies were available, but they found that the Thames Board Mills had such very big demands from all their customers that, with the best will in the world, they said then that they could not increase the quantities for the present. Then the Ministry supplied the names of two trade associations and five merchants in this country. I do not know whether the firm got in touch with them or not, but if so I presume that they failed to get additional quantities. Then the Ministry offered the firm facilities to import, but again I understand the firm found the foreign equivalents not quite suitable and higher in price.

Those were the things that the Ministry did, and I want to assure the hon. Lady that I cannot see anything else that the Ministry could do with the exception of reverting to the allocation of supplies in this country. The hon. Lady suggested, in effect, that we should direct supplies and give a priority to exports. But, to start with, it is extremely difficult to separate what is required for export from what is not. The trade is so complicated.

What we could not do is to put on a sort of allocation scheme for one firm only. What we did for one firm, if it were a statutory control, we should, of course, have to do for everyone. That would mean a return to rationing and price control, the kind of scheme discarded in 1949 and which the Government of the day considered again in 1950 and decided that it would not be a sensible thing to do.

Mrs. Castle

May I interrupt the right hon. Gentleman?

Mr. Amory

Certainly, if the hon. Lady will allow me a few minutes in which to finish.

Mrs. Castle

Surely the right hon. Gentleman will admit that the Board of Trade does, from time to time, show flexibility in the operation of its regulations, and that it does intervene specially in some cases in order to prevent unemployment or to help exports. That is what I am suggesting should be done.

Mr. Amory

It would be quite impossible for the Ministry of Materials to exercise a compulsory direction to discriminate in the case of one firm, however much we wanted to do so.

On the general situation, strawboard is in short supply not only in this country, but in others as well. It is being brought into the country on specific licences, and the licences issued in the latter half of 1954 show an increase over the past period. I understand that the licences which have been issued for the second half of this year will enable us to import all the strawboard that is available.

Regarding the production of chipboard in the United Kingdom, all the mills in this country are working at full capacity, with the exception of one mill where there is a breakdown at present. Fourteen firms are involved, and during the first five months of this year production represented an annual rate of 290,000 tons as against 214,000 tons in 1951, which shows that production is increasing. I understand that a further 50,000 tons are expected from August onwards as a result of a new machine starting up, and a further machine is to start up later. That means that the position will steadily improve.

The one thing which the hon. Lady has suggested is really something that, with the best will in the world, we simply could not do at present. We do not think that it would be in the national interest or in the interest of exports to bring back the direction of internal supplies. However much we should like to help this particular firm in the good export trade it is doing, that is something which I am afraid it would be simply impossible to consider doing.

I hope that what I have said will convince the hon. Lady that, short of the one thing for which she has asked, we really have done our best, and are anxious to go on doing our best, to help this firm. But to restore the control of internal supplies once again would not, as I have said, be a sensible thing to do, either in the national interest or in the interest of our export trade as a whole.

Question put, and agreed to.

Adjourned accordingly at a Quarter to One o'Clock.