HC Deb 09 March 1955 vol 538 cc447-576

3.33 p.m.

Mr. Harold Wilson (Huyton)

I beg to move, That this House notes with concern the serious situation which is developing in the cotton industry, and regrets the failure of Her Majesty's Government to take effective action to remedy the position. Before I come to the terms of the Motion, I am sure we should all like to welcome back the President of the Board of Trade, in a state, if not of health, at any rate of convalescence, and express the hope that the strain of the debate will not be too much for him. On so important a debate, we certainly welcome his return. It has the additional advantage that it spares the House the ordeal of a winding-up speech by the Parliamentary Secretary. [HON. MEMBERS: "Shame."] If hon. Members opposite think it is a shame, they should have put pressure on the Government to ensure that the Parliamentary Secretary wound up the Monopolies Commission debate instead of the right hon. Gentleman having to speak twice, thus endangering his health.

I understand that there is some controversy about the second part of the Motion, which says that we regret: … the failure of Her Majesty's Government to take effective action to remedy the position. I am rather surprised about the controversy on this subject in view of the fiery speeches which have been made by hon. Gentlemen opposite with constituencies in Lancashire. If they are today going to make speeches half as fiery as they have done, I should have thought that there would be no alternative for them but to vote for the Motion.

Whatever disagreement there may be about that part of the Motion, I am sure the House will agree on the first part, which says: That this House notes with concern the serious situation which is developing in the cotton industry. … All hon. Members in all parts of the House with cotton constituencies will have been very anxious for a long period about the position which is developing.

Perhaps at this stage it is right that I should make a disclaimer of interest in this matter. I noticed one or two newspapers and financial journals suggesting that the line that I took on the subject of calico printing a fortnight ago was dictated by the fact that I represent a marginal Lancashire seat and that this would be a popular line in getting me votes. That shows the ignorance about geography of the "Economist, "which is almost equal to its ignorance about economics. All hon. Members know that Liverpool is not famous for the presence there of the cotton industry. I have no textile mills, much less calico printing establishments, in my division. I have no cotton textile workers there so far as I know, and any reference to cotton there is received with almost as much boredom as a reference to the editor of the "Economist. "Nevertheless, I think that the right hon. Gentleman will agree that anyone who has had the honour to hold the office which he at present holds must inevitably be concerned about the present position and the future of the cotton industry.

We on this side of the House have been very restrained in not pressing for a debate on this subject a great deal earlier. It was 8th July last year when the Cotton Board sent an appeal for help to the Board of Trade. All hon. Members in all parties were informed of the appeal. After eight months nothing has come from the President, except a number of suggestions to the effect that Lancashire was squealing before she was hurt. We have had no direct action whatsoever from the Government. We have, indeed, shown restraint in not pressing for a debate.

I have no doubt at all that the right hon. Gentleman will say that we should not be having a debate now because the matter is being considered by the Cotton Board and that he has just asked the Board to do that. I hope he will not suggest that the Board is a kind of inverted B.B.C. and that the House is not allowed to discuss any matter which is liable to be discussed by the Cotton Board in the next 14 days. The fact is that he referred the matter to the Cotton Board for advice only after a number of hon. Members from this side of the House, and some from the other side, started pressing him very hard on the question of Indian imports.

We shall be told that the Prime Minister, whose indisposition we all regret, is to see representatives of the cotton industry and that it is, therefore, perhaps untimely for us to debate the matter. However, the Prime Minister, who sat on the invitation that he had from the cotton industry for well over a fortnight, only replied to the cotton industry agreeing to the meeting after the Motion was put down.

I have a very high regard for the Cotton Board, and a far higher regard for development councils in general than the right hon. Gentleman has, and I think we should all want to pay tribute to the very statesmanlike work that Sir Raymond Streat has done as Chairman of the Board for many years. I tend to feel that why the President has specifically summoned the Board to this meeting rather than the producers' organisations is that he would naturally assume that there would be divided counsels on the Board. The Board includes representatives of the merchants and converters, and one can assume that their strength will to some extent balance the views of the trade unions and the producers' organisationson that body. It may very well be that no agreed proposals will come out of the Cotton Board and that all the President of the Board of Trade will have gained from it will have been time.

I said that we have shown restraint in not asking for this debate before. I think we have also shown restraint in the fact that no one, on this side of the House at any rate, has been suggesting that we should tackle this problem on the basis of simple protectionism. There was, of course, that snarl in the "Manchester Guardian" on Monday morning suggesting that for the sake of some votes in Lancashire we were throwing over all our fiscal ideas about tariffs and quotas. I hope to deal with that comment in a few moments.

Incidentally, it is rather significant that for once the "Manchester Guardian" has made no proposals itself about how this problem should be dealt with. Usually we get a lot of advice, whether Government, Opposition, or industry, from the "Manchester Guardian" about how to deal with our problems. It is remarkable that that newspaper has not put forward any suggestions this time.

We have not adopted, as would have been easy for an Opposition to adopt, the cry of many interests in Lancashire for protectionism. That contrasts very markedly with the attitude of a number of Tory newspapers and candidates in 1951 when we were the Government and there was the problem arising from Hong Kong goods coming to this country. In some Lancashire constituencies the Election was fought on that question, and candidates and newspapers missed no opportunity to advocate that the problem could be dealt with only by a quota. The right hon. Gentleman has shown reluctance to deal with the problem by quota in the case of the Indian imports.

I hope the debate will be dealt with in a constructive manner. Certainly we shall not impugn the right hon. Gentleman's motives for his treatment of Lancashire. I am not going to repeat the charge frequently levelled at him by many employers, as well as trade union representatives, that the Government have written off Lancashire. I admit that all the evidence points to the suggestion, but I do not believe it. [Laughter.] No, I accept the assurances of the Chancellor of the Exchequer on this, despite the evidence. The Chancellor is very touchy about this charge. Recently he was in Manchester and repeated it, and, after denying it, said that he had been brought up on the doctrine, "Never believe more than half you are told." Therefore, I accept his assurance that the Government have only half written off Lancashire. However that may be, the Government have certainly dealt some very serious blows to Lancashire's prosperity over the past year. About a year ago we had a series of debates in this House about three blows which fell in a matter of weeks. The first was the decision of the Chancellor of the Exchequer not to remove Purchase Tax. The harm that has been done to the industry by Purchase Tax has been argued many times from this side of the House when debating the D scheme. In the "Manchester Guardian" this morning a very powerfully argued article appeared on that question.

The second blow the Government dealt the industry was the Japanese Trade Agreement, and the events of the past year have gone a long way to confirm the warnings we gave from this side of the House at the time of the signing of that Agreement. The third blow was the decision of the Government to abolish the Raw Cotton Commission and to restore the Liverpool Futures Market. While not all the disasters we then forecast have yet happened, for the very obvious reason that the Liverpool cotton market has been operating against a favourable economic background, we warned the Government then that if another dollar crisis came it would have a very serious effect on Lancashire and the Liverpool cotton market. Now we must ask the President what will be the position of the Liverpool cotton market if the Chancellor's Bank Rate gamble and confidence trick fail to come off and they have to restrict the dollars available to the market.

Figures given in this House have shown that imports from Commonwealth countries were 34.9 per cent. of the total in 1953 and 26.7 per cent. in 1954, which is what we said would happen. Imports from the dollar area have risen from 28.3 per cent. to 34.6 per cent., and long-term contracts with Colonial Territories have been wound up. That is a very serious state of affairs, particularly if a dollar crisis is on the way. We always said that a free enterprise raw cotton market was a fair weather ship; it would probably function pretty well so long as storms did not blow up, but I am not sure that it is functioning well now. We have had some very serious comments made in Lancashire about the futures market, for instance, by the Chairman of the District Bank a few weeks ago.

I also notice that "The Times Review of Industry" says that there is some anxiety about the smallness of business passing through the Liverpool Futures Market. It says: Transactions have become fewer than they were in the first two or three months after the market reopened, and now there are not enough of the small sales or purchases from occasionally producing disproportionately large effects on prices. Many traders are clearly fighting shy of the Liverpool market and transacting their futures business at New York. It goes on to say that no spot stock of any dimensions has been built up. Indeed, our cotton stocks today are lower than they were during the Battle of the Atlantic. They are lower than at any time since the American Civil War. I ask the Government what position that puts us in if we have to face any kind of emergency, including, for instance, a dock strike? The Liverpool market is not being used by the big spinning interests and is becoming only a shadow of what the President intended it should be. "The Times" also says: Some change is needed if the market is not to sink into inanition. I have referred to the very serious contribution of the Government a year ago to Lancashire's depression. Certainly since last year the position has very seriously worsened. At Christmas very many mills had extended holidays as a means of allocating and spreading work and disguising short time. A very large proportion of mills are not actually closing or going on short time but are keeping their operatives because they fear they will not be able to get them back if they let them go; and they are all on a guaranteed week. I ask the President of the Board of Trade how many mills are at present on a guaranteed week? I have heard it stated that between 10 and 15 are on a guaranteed week. I should like him to tell us whether that figure is correct, or whether it is higher or lower. I expect he has seen the figures in the Ministry of Labour Gazette.

I know that the Government will say that the last short-time figures only show the industry as a whole, but these figures were collected in August and November—

The President of the Board of Trade (Mr. Peter Thorneycroft) indicated dissent.

Mr. Wilson

Yes, if the right hon. Gentleman looks in the Ministry of Labour Gazette he will find that fact. I have been looking at the figures for those temporarily stopped, men and women still on the books of the mills but not working on the day of the count. We know that those figures are not exhaustive and are only a small proportion of the numbers on short-time working. The Ministry of Labour Gazette used to say, before the war, that figures of short-time working did not, for example, include underemployment often brought about by weavers working two or three looms instead of four, five, or six; and they do not come into the "temporarily stopped" figures either. Very often mills working a four-day week close on Friday but not on Monday, and since the figures are collected on Monday, again it is an under-estimate. But if one takes the numbers of those temporarily stopped as an index of what is happening, one finds that in the spinning industry in January, 1954, there were 69 and in January, 1955, there were 661. That is nearly 10 times as many.

These figures are not exhaustive, but they are an indication of a forthcoming slump. In the weaving industry the figures were 93 in January, 1954, and 169 in January this year. In February, 1954, the number in the spinning industry was 102, and in February this year 1,249, more than 10 times as many, and in the weaving industry in February, 1954, there were 148 and in February this year 399. If the President looks at the figures, he will see that the latest figures available show that the numbers temporarily out of work in the spinning sections is 1,249, which is higher than in January, 1952; and the numbers temporarily stopped in weaving are 399, which is one higher than in January, 1952. We all know what happened with such disastrous rapidity in 1952.

There is certainly very widespread anxiety in Lancashire about the position. There was a meeting recently in Manchester. The Minister of State went there, and I gather that he was treated to some rather picturesque language, which I should be out of order in repeating in this House, particularly from the employers. This meeting passed this resolution: This meeting affirms its grave concern at the immediate and potentially increasing threat to employment, stability and confidence in the cotton industry from the imports of cloth. It expresses profound dissatisfaction"— much stronger words than we have used in our Motion— at the Government's unwillingness to take action to safeguard the vital interests of workpeople and employers in the Lancashire cotton industry, and urges that strong representation be made direct to the Prime Minister. I understand that the diplomacy of Sir Raymond Streat has been used to ensure that the strong representations made to the Prime Minister are in rather different language to the representations made to the right hon. Gentleman, but they will, nevertheless, be strong and come from both sides of the industry—the weaving employers, the spinning employers and the trade unions.

Why has there been this worsening in the position in the last year? First, there is the decline in exports. I think that the President of the Board of Trade on one occasion said that he was more concerned about the export position than the home market position. He has every reason to be concerned. The exports of piece goods last year were the lowest since 1947, a year when we had barely recovered from the war. If we look at the figures for the whole period since they were first collected, we find that, apart from what I will call the war years of 1942 to 1947, exports last year were lower than at any time since 1840, lower than at any time since the American Civil War.

The Prime Minister may or may not have been elected to preside over the dissolution of the British Empire, but the right hon. Gentleman certainly may regard himself as having been elected to preside over the dissolution of our export cotton trade. When we look at figures of this kind, we begin to see why the "Conservative Freedom Works" posters are looking a little fly-blown in Lancashire. If one were able to trace the figures back, one would probably find that they are the lowest since the Tory Administration of Lord Liverpool, an Administration which was only distinguished from that of the present Front Bench by the fact that in the person of Huskisson it had at least a good President of the Board of Trade.

Mr. William Shepherd (Cheadle)

Will the right hon. Gentleman give the figures for 1952, 53 and 54, so that the House may have an idea of what is the actual decline.

Mr. Wilson

I have not the figures before me but they are available in Tattersall's which, as the hon. Member knows, is compulsory reading for a President of the Board of Trade and for M.Ps. interested in the cotton industry. He probably never sees it.

The reasons for this decline in exports are, first, the Janpanese Trade Agreement. I do not think that the President will really deny that. If he looks at Tattersall's he will find the statement month by month, and if he reads the trade comments in the "Manchester Guardian" he will see day-by-day statements which show that our export trade in West Africa and elsewhere is being seriously interfered with as a result of the Japanese Trade Agreement.

The second reason why there has been this serious decline in exports is the fact that there has been great uncertainty in the world about the future level of raw cotton prices. We know that prices are artificially maintained today as a result of the American price support system, and there is great anxiety that there may be an export subsidy or a collapse in prices.

But the reason for this country losing ground compared with other countries is, of course, the Purchase Tax on Lancashire quality textiles. We have put questions to the Chancellor of the Exchequer about two-fold poplins. There is not only the question of our losing our export markets, but the manufacture of these things has almost stopped. There are a few mills in Lancashire making these things today because they cannot sell them on the home market. In today's "Manchester Guardian" there is a detailed and expert survey of this particular problem.

The real anxiety in Lancashire is arising from what is happening in the home market and not in the export market. We all remember the debate on textiles about three years ago, which was the occasion of the last intervention in our debates of George Tomlinson. Many of us who heard him speak from this Box on that occasion felt that that would probably be his last speech, and I think that he himself felt that it would be his last speech. It is some consolation that the Farnworth tradition in this House has been so splendidly carried on by my hon. Friend who succeeded him and who, if he is successful in catching your eye, Mr. Speaker, will be winding up the debate for this side of the House.

I remember George Tomlinson telling us in that speech that when he first started as a part-timer the mills of Lancashire used to provide all the needs of the home market before the breakfast break on Monday morning and spent the rest of the week manufacturing for the export trade. All those conditions have gone a long time ago. For the last few years more than three-quarters of the production has been for the home trade.

We have now the very serious and, to many people unexpected, intervention in the home trade of the Indian imports. We are all familiar with that problem. What I think is sometimes forgotten, especially in some of the answers which we get from the Front Bench opposite, is that although imports of Indian cloth are confined to a fairly narrow range of qualities, the effect on Lancashire is much wider than that because great uncertainty is being created in the production of many other types of cloth, and market values are being utterly destroyed by the fact that these Indian imports are coming in.

The difficulty about this, of course, is presented not merely by the absolute size of the imports, but by the fear that they may go on increasing. The House knows the figures—16 million yards imported in 1953 and 133 million in 1954, a very large increase, although the President of the Board of Trade did on one occasion describe it as a slight increase.

Mr. P. Thorneycroft indicated dissent.

Mr. Wilson

The right hon. Gentleman has only to look at HANSARD.

Mr. Thorneycroft

I think that the right hon. Gentleman has got his two lots of statistics rather muddled. It is a slight increase on the average over the previous six years

Mr. Wilson

I thought that the right hon. Gentleman was going to say that. He knows perfectly well that that is a completely phoney use of statistics. [HON. MEMBERS: "Oh."] Oh, yes, and I will now proceed to prove it. The high import figures which he quoted in 1949–50 were coming in at a time when Lancashire could not meet anything like the orders. The high orders which came in in 1951–52 were connected with the rearmament programme and were only placed abroad when the Government had satisfied themselves that Lancashire could not meet them. Therefore, to take the average over six years is a completely inappropriate way of looking at this problem.

Mr. Thorneycroft

What I was pointing out was that the right hon. Gentleman took the increase in the Indian imports over one year, and he said that I described that as a "slight increase." I never did so. What I described as a slight increase was taking the figure of all foreign grey cloth imports against the average over six years. That is, if I may say so, a false use of statistics.

Mr. Wilson

That is what I am saying. Comparing it with the average over six years certainly was a false use of statistics. If the right hon. Gentleman will look at HANSARD of 3rd February he will find what he did say on that occasion. But let us take it that the right hon. Gentleman was meaning something else than the House thought he meant because the question related to Indian imports. I think that he will agree that an increase from 16 million yards to 133 million is a very serious increase, and most of the anxiety in Lancashire is connected with the fear that it may go to 266 million or even higher next year. There are, of course, many people in Lancashire who say it would not be so bad if it were stabilised at the present level, harmful though that would be.

What has the right hon. Gentleman been doing since the appeal made to him by the Cotton Board eight months ago? He has made speeches and the Minister of State has been to Manchester. It is apparently the policy of the Government that they wait to see things getting a lot worse before they take action. The right hon. Gentleman wants to be absolutely satisfied that all the horses have bolted from the stable before he considers setting up a committee with the Cotton Board to take what the Government Amendment calls such safeguarding action on imports as may prove to be essential and appropriate to make sure that the stable door is finally closed. But things happen quickly in Lancashire and when the rot starts it may develop at a speedy rate.

One reason why we fear that it may get worse is that many Manchester merchants think that they are on a good thing in buying this cloth and are apparently advertising in India for supplies. I am sure that hon. Members on both sides will want to say to the merchants that this is very foolish, even so far as their own interests are concerned. Surely, there are more important things for them than quick profits on Indian imports. If as a result of their action a section of the industry goes into a serious slump, it may not recover. There has been enough difficulty in getting operatives back to the mills after the slump of 1952. There is a shortage of operatives. Vacancies are notified to the employment exchanges at the very time when we have short-time working and anxiety about the future. [An HON. MEMBER: "Remarkable."] That is not very remarkable.

Mr. Arthur Holt (Bolton, West)

Would the right hon. Gentleman like to explain it?

Mr. Wilson

Certainly. I am surprised that the hon. Member, representing a Lancashire constituency, does not know what is going on. There are many mills which are under strength as far as their permanent establishment is concerned, yet they are living from hand to mouth for orders and having to go on short-time, but they are still seeking in the employment exchanges for more workers because they hope for a better time in the future.

Mr. Holt

Why has there been a net increase in the number of employees in the weaving industry in January?

Mr. Wilson

There was a decline in the first part of February, as the figures showed last week. I think that my hon. Friend the Member for Farnworth (Mr. Thornton) will be able to deal better with that point. [Laughter.] My hon. Friend has more experience of the weavers' amalgamation than hon. Members opposite. My own impression is that there has been a good deal more short-time in spinning than in weaving; as it is in spinning that orders first begin to contract. Figures indicate that there are more on short-time and more people temporarily stopped in spinning, but many weaving employers are holding on to their workers in the interest of having them if better times come.

I am sure that the whole House would agree, and certainly Lancashire does, that Indian imports cannot be described as fair competition. The "Manchester Guardian," in a leading article on 6th December, made that clear when it said that it was unfair competition. It is unfair for two reasons. The first is the lack of reciprocity in the matter of British exports to India and Indian exports to Britain. Whereas Indian manufactured goods come into this country duty free, because of the pre-war Agreement, we are paying tariffs of some 60 to 80 per cent. on some of our staple lines of exports. Before the war, no one thought that this country would be importing large quantities of manufactured goods from India or that our exports would fall to 3 million yards a year to India whilst their imports into this country were coming in duty free. While we all support the Government's attempts to get Indian tariffs down, and no one expects that the trade to India will come to balance trade from India at the present time—

Mr. Leslie Hale (Oldham, West)

If I may interrupt my right hon. Friend, he referred to what the President of the Board of Trade said in the House on 3rd February. It was precisely as my right hon. Friend correctly indicated. The President said; I have given careful consideration to the need for introducing further restrictions on imports of cotton grey cloth but in the circumstances to which I have referred I do not consider that at this stage the slight increase which has taken place in imports justifies such action."—[OFFICIAL REPORT, 3rd February. 1955; Vol. 536, c. 1254.]

Mr. Wilson

At any rate, the President has been made aware this afternoon that the comparison of figures with six years ago was irrelevant.

Mr. Thorneycroft

As the right hon. Gentleman is searching for accuracy, the comparison was not with figures six years ago but with an average over six years, which is quite different.

Mr. Wilson

I think that the right hon. Gentleman will still be prepared to recognise that the real comparison for this House and for Lancashire is the increase in 1954 compared with 1953.

I am sure that the House will agree that the real element in this unfair competition results from the fact that Indian exports are produced from raw cotton which is a good deal cheaper than the cotton available to the Lancashire mills. World prices are kept up artificially by American action. The consequences are that we have to pay world prices whereas Indian mills get controlled prices which are much lower, and any cotton imported into India for processing and re-export is free of the import duty, which is a very serious discrimination. The difference between the two is 10d. to 1s. per lb., which represents 3d. a yard on the grey cloth. Indeed, the weaving industry of Lancashire has to pay more for its yarn than the price of Indian cloth. Even if weavers of Lancashire worked for no wages at all they still could not compete.

Lancashire does not seek old-fashioned protection in this respect. It is not afraid of Indian competition on fair terms. Although wages are lower in India, Indian productivity is lower as well. It is unfair competition that Lancashire seeks to prevent. A suggestion was made that there should be an approach to the Indian Government. The "Manchester Guardian" said that in December, and I do not apologise for quoting the "Manchester Guardian" leaders of December so often. It shows that some of us do read them. If the editor of the "Manchester Guardian" would read his own leaders more often he would not be so guilty of unwisdom and error as those for instance in Monday's paper. The "Manchester Guardian" said in December that perhaps the right thing would be to approach the Indian Government and that we should ask the Indian Government if they would agree to place a voluntary limitation on exports, since India would not feel it very greatly but it would make a difference to Lancashire.

The Minister of State has been to India and has had discussions with the Indian Government. According to all the accounts that I have received from Delhi about his visit, it appears that as far as most of his representations were concerned his visit was highly successful. He went down very well and did a good job in indicating to the Indian Government and to trade and industry there what this country was prepared to do in the shipment of capital goods for the development of that country.

The trip seems to have been well worth while but, nevertheless, I do not think that the right hon. Gentleman would think that his representations on cotton had been particularly successful, because he and Lancashire received a very dusty answer 10 days ago when Sir Chintaman Deshmukh presented his Budget to the Indian Parliament. He cut the export duty and took certain internal measures designed to increase the flow of textile goods abroad. It is suggested this morning that he is having second thoughts on the latter point, but we cannot count on that. Therefore, any approach to the Indian Government seems to have ended in a blind alley, and the right hon. Gentleman the Prime Minister did not even discuss the problem with Mr. Nehru when he visited this country.

What is the answer to the problem? The President has rightly said that it raises issues far wider than that of cotton, and if we go blundering in with tariffs and things of that kind it may have a serious effect on our exports. There is a very serious objection to the use of quotas and tariffs in this connection. It would mean denouncing the Anglo-Indian Trade Agreement, it would be a breach of Ottawa and the General Agreement on Tariffs and Trade which is to have its name altered to O.T.C.

We sympathise with the reluctance of the Government to do that. That is why my hon. Friends and I jointly with the Council of the Textile Factory Workers' Union have produced another scheme which we think would be simple and effective. It was to set up a Government buying agency for cotton yarns and cotton piece goods, this agency to be given the exclusive rights of these things with the idea that it would then restrict goods that come into this country on the basis of unfair competition. It would obviously import continental cloths which come in under the O.E.E.C. liberalisation policy and unlimited Indian cloth for processing and re-export, but as far as unfairly-made cotton cloths are concerned, there would be a strict limitation on what was coming into the country.

I have mentioned yarns because we know there is a problem affecting a number of constituencies and of certain sections of the industry, particularly Portuguese and Egyptian yarn. This is coming in under conditions which amount to dumping. I have never said it was dumping, but I think it would be right for any such body as we propose to have the right to restrict such imports.

In HANSARD this morning we see the answer to a Question put by my hon. Friend the Member for Stalybridge and Hyde (Mr. Blackburn) which gives the figures of these yarn imports, and although they are on a much smaller scale than the cloth imports, there has been a very serious increase between 1953 and 1954. Any hon. Member who looks up those figures will share my hon. Friend's concern about them. Therefore, it is necessary to deal with them as well.

I think the President will confirm that the proposal which we make is not contrary to our international obligations. Indeed, he would find it difficult to say it was, because he is doing precisely the same thing in relation to the import of jute in order to provide protection for the Dundee jute industry. I am not criticising what he is doing, but he is maintaining the public buying of jute goods, although no one suggests that jute goods are produced under conditions which are as unfair as apply to Indian cotton goods. I do not think he will deny that this will not offend against the principle of the General Agreement on Tariffs and Trade, which says that State trading must be carried on on the basis of commercial principles. None of us believes that commercial principles mean that a buyer must always buy in the cheapest market regardless of other considerations. It would not be good commercial principles for Britain to buy cheap imported goods if it means losing one of the principal sources of supply, which is the Lancashire cotton industry itself.

The right hon. Gentleman will tell us that this matter is before the Cotton Board. I do not know whether the Cotton Board will produce an agreed recommendation to put before the Government, but I would guess that if it does its proposal will be a system of quotas. If the President decides to accept a proposal from the Board to impose quotas, we would support it with the utmost reluctance. We think it would be a very serious step for the Government to take, and we would only support it if we were satisfied there were no other scheme available. We believe our own proposal is one which meets the problem, and I hope the Government are going to approach it with an open mind, because they certainly have not put forward any other proposal. I hope they are not going to turn this one down on purely doctrinaire laissez faire grounds. If they do, there will be no doubt in Lancashire where the responsibility for the crisis lies. I hope they will approach this with an open mind and will tell us that they will agree to this as it avoids the difficulties of quotas ant tariffs.

Before I sit down, I want to remind the right hon. Gentleman—I am sure he does not need reminding—that this problem which to many is a short-run problem and has risen very quickly, is having a serious effect on the long-term development of the cotton industry. For yean since the war all of us hoped that some thing would be done about re-equipment, and some firms have a progressive record in this matter. But all our hopes for re-equipment, modernisation, mechanization, re-deployment and all these other things which are essential to increased productivity in the industry will receive a great setback if something is not done immediately about the problem of Indian imports.

There can never be a progressive attitude in Lancashire when men on both sides of the industry are dominated by the fear of an approaching slump, want to ask the right hon. Gentleman whether he agrees that this is a very serious situation, although so far we have not seen anything like the depths of depression of 1952, but a serious depression might be upon us in a matter of months, or even weeks. I want the right hon. Gentleman to tell us whether he is going to take action. There is nothing in the Amendment which suggests that the Government have any ideas about taking action. I want the right hon. Gentleman to tell us what is the Government's attitude to this problem, and to say that he will give consideration to the scheme which we announced in Manchester recently.

I want finally to say to the right hon. Gentleman—I am sure this will be supported from both sides of the House—that this is not just an economic problem; it is a social problem as well. Speaking as a Yorkshire man, I say we cannot look on the problems of the Lancashire textile industry as though it was just one other industry. If this industry is destroyed, it will not merely be the destruction of a segment of our economic system; it will be the destruction of a community, a community which in the past has served this country, not only industrially but in many other ways, and can do so again in the future.

It is wrong to look at Lancashire simply as a nursery of fast bowlers and wet weather. It has produced some very great statesmen in industry and, indeed, in this House. It is utterly wrong, like some of the sneering financial journals of the City, to suggest that Lancashire goes all protectionist every time a problem arises and wants Government aid. Lancashire's record in this matter over many years is remarkable. In the American Civil War when many people were calling for the removal of the blockade on the trade with the Southern States, and when no one would have gained more from the removal of that blockade than Lancashire, it was Lancashire who held firm because of its belief in the Tightness of the cause of the Northern States.

Mr. Ellis Smith (Stoke-on-Trent, South)

It was the Lancashire working classes.

Hon. Members


Mr. Wilson

I think there is a lot of evidence to support what my hon. Friend said. That attitude was being adopted even at the time when journalists and M.P.'s in London were calling for support for the South. In the 30's when there was mass unemployment through the Indian boycott of cotton goods, Lancashire workers stood in the streets and cheered Gandhi. Their approach to this problem goes deeper than economic self-interest. I appeal to the right hon. Gentleman to do something about this problem. Do not write Lancashire off.

4.18 p.m.

The President of the Board of Trade (Mr. Peter Thorneycroft)

I beg to move to leave out from "House" to the end of the Question, and to add instead thereof: noting the diverse character of the problems confronting the cotton textile industry, supports the representations made to the Government of India on the level of import duty on United Kingdom cotton textile exports to India, and approves the declared intention of Her Majesty's Government to take such safeguarding action on imports as may prove to be essential and appropriate having regard to the position of the United Kingdom as a worldwide trading nation; and welcomes the steps which Her Majesty's Government have taken to obtain from the Cotton Board their detailed views of the problems and their specific proposals for action. This debate takes place on an Opposition Motion which criticises the Government for inaction. All of us on all sides of the House share the same concern about certain trends which have been developing in Lancashire. But we for our part reject the criticisms which the right hon. Gentleman has made, and in particular we reject, for reasons which I shall elaborate a little later, the specific proposal which he made. We do, however, welcome the debate. We in the board of Trade always welcome debates. There is no aspect of our policy which we ever fear being raised at any time in the House of Commons. Any week the right hon. Gentleman chooses, he can put down any Motion he likes, and we shall be happy to debate it with him.

Mr. H. Wilson

Did that apply to the Development of Industry Bill, which remained on the Order Paper of the House for a long time?

Mr. Thorneycroft

Yes, it applies to all Bills and to all aspects of debate.

This one, as the right hon. Gentleman rightly says, raises wide issues not only of cotton policy but also of commercial policy, and particularly Commonwealth commercial policy. As our Amendment indicates, this is not the time to make final judgments on this matter. Some weeks ago we invited the Cotton Board, representing the whole industry, to meet the Government. That meeting will take place shortly. At that meeting wide issues of policy will be discussed, and it will be attended by my right hon. Friends the Prime Minister and the Chancellor of the Exchequer, as well as by myself.

The purpose of such a meeting is to obtain the up-to-date industrial view about these problems. The Cotton Board will give us an opportunity of discussing these matters with merchants as well as with manufacturers, with exporters as well as with importers. I am not so concerned, as is the right hon. Gentleman, that there might be some difference of opinion. Why should there not be? It would be a remarkable thing if, in a matter as complex and difficult as this one, there were not room for at any rate two shades of opinion about some of the points that will be raised. We hope to have, with the industry as a whole, a detailed analysis of the particular problems arising, and a detailed account of the kind of action which might appear, to the industry at any rate, to be desirable.

I hope to be able to convince the House of two things: first, that the nature of these problems is much wider and more complex than from some reports so far might be supposed; secondly, that it would be wise that both the Cotton Board and the Government should reflect upon and discuss some of these matters further before deciding whether, and if so, what specific action should be taken. What this debate enables me to do is to state in reasonably unvarnished terms the nature of the problem as I see it, and to examine some of the various solutions, including the proposal to establish a State purchasing commission for textiles, which has been put forward from various quarters.

I start by saying two things. First, the fact that I seek to put some of these problems into perspective does not mean that I am indifferent to them. I am not. The problems with which we are concerned are real, are serious and are urgent, and are of considerable variety. Industry is perfectly right to draw attention to them. Secondly, the fact that I shall indicate the difficulties of certain types of action—difficulties which I think are acknowledged on both sides of the House—does not mean that I rule action out. I do not.

These are, indeed, the very matters which we are proposing to discuss with the Cotton Board. However, it is necessary to indicate some of the perils into which British interests, including textile interests, might. easily run if certain courses were unwisely or precipitately followed.

I want first to give the background to this problem, which is well known to Lancashire Members, and it is a somber one. As the right hon. Gentleman reminded us, Lancashire remembers the world textile revolution which took place between the two world wars, which reduced the number of workers employed by about 200,000, which cut the yardage output by a half and exports by two-thirds. Today Lancashire watches these new perils with the past very much in her memory.

Lancashire wants to know—and I want to face this fairly and squarely—whether she must face another textile revolution. She wants to know whether there will be another drastic reduction in her activity. She asks whether the losses she has sustained already in her export markets are to be matched by further losses, not only in exports but in her home trade. That is what Lancashire is asking at the present time.

Now as to the causes for concern. The year which has just ended, 1954, was a good year for textiles. Production was sustained at a high level. Profits were sustained at a high level. Employment was high. Wages and earnings increased. Only in the latter months did a small amount of short-time working develop. Those are the facts. It is much better that we should get the facts absolutely straight.

The perils and the anxieties lie not in what happened last year but in what might happen if certain trends, which have shown a marked development in recent months, continue. Let me summarise those trends. Briefly, the present problem consists in high production and rising imports, on the one hand, and declining exports coupled with a slight pause in home demand upon the other. That is the gist of the problem, and I propose to deal with these factors one by one.

I shall start with the question of the declining exports. For clarity, I refer to exports of cotton cloth in any figures that I quote. Last year, a reduction of 70 million yards took place in Lancashire exports. In 1954, the annual rate was nearly 270 million square yards less than in 1949, and that trend continues. The latest figures available—I ask the House to note this because it is important and serious—indicate that the volume of export orders is running at one-third lower than a year ago.

The loss of exports is due to a number of factors. In the Colonies it is largely due to Indian and Japanese competition. In the Commonwealth it is due to domestic productive capacity and tariff barriers, which have shown a slow but steady increase.

I mention these matters because it is important to recognise that the loss of exports, though far less publicised, is every bit as important as any increase in imports. Indeed, in some respects, this is more of an export than an import problem. I will deal with imports a little later on. I merely want to say now that no measure taken to limit imports is likely to help, though some measures might well hamper, the export situation.

I will not deal with the whole field of exports, but there are two aspects of it with which I think the House would like me to deal for a moment—exports to India and exports to the Commonwealth, including the colonial markets. I will start by dealing with exports to India.

I would say about these exports that the problems are not confined to Indian trade or Governmental policy. The basic fact is that India is now a textile exporter, whereas she was a textile importer. That is the basic alteration in the textile position which has taken place in the last 25 years. It is, of course, not something new.

I will now say a word about the Indian tariff. The Indian tariff rate of 60–80 per cent., which is still a preferential rate, compared with the most favoured nation rate of 80–100 per cent., is too high, and we have consistently represented that to the Indian Government, and we have repeated our representations since the Budget statement to which the right hon. Gentleman referred. I would only add this comment at this stage. It is, of course, easy to link the argument that the 60–80 per cent. is too high compared with the free entry which we accord to India here, but it is not necessary to argue against a 60 to 80 per cent. rate on that basis. It is too high even if we did not accord India free entry here. The point about 60–80 per cent. is that in those ranges we are getting to a frustrating or prohibitive rate of tariff, and it is upon that basis that we have put this case to the Indian Government.

Secondly, as regards Commonwealth trade, we have been suffering from Indian and Japanese competition. Whatever may be said about protection against Indian goods in the home market, I think it is absolutely plain to everybody that we cannot contrive tariffs against Indian goods in third markets. That is not a proposition which is open to us.

What, then, about the Japanese situation? The Commonwealth countries have been buying increasing quantities of Japanese textiles. That is true of Australia, for example, who is a big market of our own. It is, of course, in Australia's interests to maintain trade with Japan. Australia sells wool in large quantities to Japan, and it is in her interests to maintain trade between the sterling area and Japan at a high level. It is not within the power of the United Kingdom Government to inhibit trade between sovereign countries in that field.

It is sometimes suggested that, while that is true of Australia, we should somehow inhibit the Colonies from importing from Japan. In the second half of the 20th century, it is not open to us to inhibit colonial trade in that way. It is the case that the Colonies' trade is now largely a great world trade, and not confined to the very valuable trade that they do with the rest of the sterling area.

The Japanese Sterling Payments Agreement is neither an original document nor an original idea. The balance of payments criteria incorporated in the document were incorporated by the previous Government. The balance of payments argument was used by hon. Members opposite when they were in office, and it cannot be honourably abandoned by them when they are in opposition.

So much for exports. Now what of the import situation?

Mr. H. Wilson

Apart from what the right hon. Gentleman has said about Japan, with which we do not agree, I am sure the House is indebted to him for this very useful, objective account of what is going on and for some new information which he has given to the House. However, before he leaves the subject of exports, he will agree, I take it, with what I said about insecurity in relation to raw cotton prices. Will he say something to the House about the effect of Purchase Tax on our export trade?

Mr. Thorneycroft

Plainly, I do not propose to embark upon a discussion of Purchase Tax in this debate, for reasons which the whole House will fully appreciate.

Mr. Hale

Will the right hon. Gentleman permit me to suggest that one thing that can be done to assist Lancashire is to stimulate purchasing power in the Colonies, and that if it were not for the retrograde wage policy in many Colonial Territories, Lancashire could be supplying much-needed cotton goods to the whole of our Colonial Territories?

Mr. Thorneycroft

Naturally, I appreciate the tribute which the hon. Gentleman pays to the efforts at Colonial development which have taken place under successive Governments.

With regard to the import situation, we import from Japan, Europe, India and Hong Kong, and I think it is worth while to state certain general facts about these imports at once. First, these imports can, for the purpose of clarity, be taken as being wholly grey cloth. So far as we can judge, more than half of them are processed and re-exported. They are cheap grey cloth brought in for processing by the finishers and then sold abroad. If we stop the import of this grey cloth which is re-exported, we are likely to lose more exports, which certainly cannot help us against the background that I have just been describing.

Secondly, I turn to the total amounts involved. In view of what the right hon. Gentleman said earlier, I will try to state these figures as impartially as possible. The total imports of grey cloth, mainly from India, increased largely in 1954 over the imports in 1953. They increased only marginally over the average of the previous six years, but—I think this is the most important point—in the concluding months of 1954, and particularly in January this year—I do not want to put too much stress on one month—the import rate from India and Hong Kong increased substantially.

It is not easy to assess the impact of these imports on the home market. Leaving aside re-exports, the total amount of foreign and Commonwealth grey cloth retained here was probably between 80 million and 100 million square yards in 1954. That compares with a United Kingdom production of 2,000 million square yards. Lancashire's share of the home market is over 90 per cent., although, of course—I want to be fair—the impact on certain sections must inevitably be much heavier than upon others.

The real upsurge of imports, however, comes from two places—in both cases free of duty and free of quota—India and Hong Kong. In the case of India, though not of Hong Kong, the suggestion of subsidy has been made. That case cannot, in fact be substantiated. India is not wrong in selling her own raw material to domestic industry below the world price. Incidentally, in this case it is a world price sustained by American policies.

If we claimed the right to retaliate on those grounds, our engineering exports would be vulnerable throughout the world on the basis of differential steel and coal prices. We do it; many other people do it, too. This problem must not be based on some technical ground of subsidy. The fact is that both Indian and Hong Kong cheap cloth are coming in free of duty. Those are the facts of the case, and it is much better that we should face them.

Mr. Holt

Is the right hon. Gentleman arguing the case that because we did something wrong over coal and steel, it is all right?

Mr. Thorneycroft

I say it is not wrong. If one goes round the world one sees a number of countries which, by one means or another, are probably providing their domestic industries with locally-produced raw materials cheaper than at world prices. I think that a great deal of the pattern of world trade is built on that. If one is to start alleging that this is a special form of subsidy, one will have a very wide reaction over a large field. At any rate, it is an argument which I do not choose to use in the case of India.

These goods are cheap and are coming in duty free. What Lancashire can and does say is that her exports are hindered by quotas and high tariffs, which are thrown up by countries developing new textile industries, while her home trade is suffering from duty-free imports arranged at a time when Commonwealth countries had no appreciable production capacity. That is the situation of which Lancashire is complaining and is the problem which faces her from both India and Hong Kong.

I want to emphasise something that the right hon. Gentleman said. This is not a claim by Lancashire for unqualified protection. We are all familiar with that type of claim, which is made from time to time. It is to our great credit that I have seldom heard this argument advanced from either side of the House.

It is argued by those who claim 100 per cent. protection for Lancashire in the home market and the right to dictate colonial purchasing, irrespective of the balance of payments position. No party will ever support that case in office and no party would be wise even to pay lip service to it in opposition. This is a different case. It can be and no doubt will be put forward on a more substantial foundation, and it arises from the impact of cheap duty-free imports at a time when exports are in decline.

Now, as to the remedies which are being canvassed: I make no final judgment on them, but I will briefly enumerate them. The first is to reduce imports of Japanese cloth into the United Kingdom market. But Japanese cloth is already severely limited under the Japanese Payments Agreement. In fact that Agreement provides—though imposed on balance of payments grounds—a very substantial protective safeguard for Lancashire in the home market. There is virtually not a yard of Japanese grey cloth retained here in the United Kingdom home market. Any action taken here against the quota of Japanese cloth allowed in for re-export would tend to exacerbate rather than solve the problem. So much for the Japanese solution.

The second is the argument for action against Europe. Very small quantities of European grey cloth—subject to the 17½ per cent. most favoured nation rate—are retained at home, something less than 5 million square yards. Action here could affect the liberalisation of the textile trade in Europe. It might well threaten—and seriously threaten—openings for our other industries including, for example, the woollen textile industry, or motor cars in Europe. That is the kind of consequence which could arise if we restricted imports from Europe and elsewhere on a non-discriminatory basis under Article XIX of the G.A.T.T. Action of that kind would certainly have to be justified in Europe and outside it.

The introduction of world-wide quota restrictions by this country would certainly not pass unnoticed by industries other than textiles. Other countries suffer from the impact of our competition in manufactured goods. Many of them probably retain less than 90 per cent. of their home market, and the unemployment figures in those industries abroad may well be higher than we could show in Lancashire today. Such action—I am not making a final judgment—would be likely to damage our export trade. Lastly, there is the possibility of import duty, or quota restriction, on India and Hong Kong cloth. I will not elaborate all the problems here. They are pretty familiar to both sides of the House. The free entry of Indian cloth is assured to India under the Trade Agreement of 1939. There is nothing in the G.A.T.T. which prevents us putting an import duty on it, nothing at all, up to the most-favoured-nation rate; the free entry is assured to India under the Indian Trade Agreement.

We do, however, carry on an export trade of over £100 million a year with India. We want to proceed with discretion and caution and good sense in dealing with trade figures of this character. Free entry of colonial goods is deeply embedded in our commercial policy and tradition, and, indeed, is reflected in our statute law.

Last but not least, there is the right hon. Gentleman's own solution—a textile buying commission, associated presumably with price control. I will simply say this about it. It does not evade any of the problems listed above, but adds a few more of its own. One does not evade one's responsibilities, nor avoid retaliation against one's goods, by setting up some other body to do the job of restricting imports for one. State trading for the purposes of protection—and there could be no other reason—is dealt with under the General Agreement on Tariffs and Trade negotiated by the right hon. Gentleman himself. It is specifically provided for and dealt with in various articles, particularly Articles IV, XVII and XI.

One cannot use it for the purpose of adding to the bound rates, or effectively adding to the bound rates of duty, which one has negotiated; nor can one use it effectively to bring about the same result as a quota which the Agreement would not allow one to impose in other circumstances; nor for the purpose of operation on the basis of countervailing duties in a way other than that provided under the general Agreement. Therefore, all I would say to the right hon. Gentleman is that if we are to impose new restrictions on imports, let us do it openly. Let us say what we are doing to what imports, and why.

Mr. H. Wilson

The right hon. Gentleman has not yet understood that we are proposing special action in the case of India, because we believe the competition to be unfair, as do some of the right hon. Gentleman's supporters. We are not suggesting general protection. But if all that the right hon. Gentleman has just said about his interpretation of G.A.T.T. and all the rest of it is true, will he tell the House how he justifies action taken by this Government to protect the jute industry by using State trading to assist the jute industry? Will he, secondly, say why this Government have used State trading for the protection of the bacon-producing industry in this country?

Mr. Thorneycroft

I thought that I had already dealt with Indian trade and with the question of whether it is unfair. It does not matter whether one thinks it is unfair or not. If one thinks it is unfair, one could use a quota against it. Even if one does not think it is unfair, one could still use aquota. One does not avoid one iota of one's difficulty by getting some one else to do it for one. The commercial policy of a great nation cannot be conducted by means of subterfuge. If one decides, as a matter of high policy, that a particular form of protection is necessary, then the Government of the day must take the responsibility for introducing it. The right hon. Gentleman comes out with a plan to set up a State body which, "we imagine" he says—he does not seem to have given it very specific terms of reference—"we imagine would probably allow fairly free import" from one lot of countries, and, "would probably feel free to import substantial quantities … for finishing. "We cannot conduct trade in that way, and if we once started to do so, the retaliation which would follow would be far greater than if we had the courage to take, where necessary, any specific measures of our own.

The right hon. Gentleman mentioned jute. In fact, there could be differentiation in the same way. The jute duty is not bound and so that particular difficulty does not arise. But in any event, the right hon. Gentleman knows the jute story every bit as well as I do. The idea that we should take these arrangements for jute, which are a hang-over of the wartime control, and are maintained there for convenience—and which, incidentally, afford a certain protection for Dundee—and use them as an argument for a principle of general policy, as a method to be introduced as a matter of general conduct in commercial arrangements, is an argument which I am astonished to hear from a previous President of the Board of Trade.

Mr. H. Wilson

The right hon. Gentleman described it as a hangover from wartime control. Since he has removed many other controls—some of which he ought not to have removed—will he tell us why he has not removed this particular hangover? Is it for one reason only, in order to maintain this "deceptive subterfuge"—to use his own phrase? If he will do that for jute why cannot he do it in the special case of Indian cotton, where there is unfair competition? We are not elevating this into a principle of commercial policy.

Mr. Thorneycroft

The right hon. hon. Gentleman did not even suggest Indian cotton. I have his suggestions here. In the case of European cloth they may feel that they could let in "fairly free imports." Who this great body is I do not know. But the idea that we could find a body of gentlemen and establish them, and then that the Government of the day could sit back and say, "We have got rid of that particular problem at any rate, let them carry on with it," is a proposition which, coming from anyone with any industrial or Governmental experience, seems to me to be quite astonishing.

I have indicated the problems confronting us, not for the purpose of ruling out action—except the latter action—but for the purpose of demonstrating that we are likely to pay a high price for any action that we take. The choice here, not for the first time in public affairs, is not between right and wrong, but between a number of extremely difficult and dangerous courses. In such circumstances, I am sure that we are right to hold detailed discussions with the industry concerned.

It would be right to do that even for a straightforward tariff application, indeed it would be essential; but this is something which in some ways is more complex and far-reaching in its consequences than any ordinary tariff application. It is with these thoughts in mind that we and the Cotton Board propose to hold certain conversations. The question which we shall discuss, against the background which I have described, is whether any, and, if so, what form of protection should be provided.

Mr. Sydney Silverman (Nelson and Colne)

The right hon. Gentleman has dealt very fully with all the proposals which have so far been made, and he has not had a single favourable word to say about any one of them. Now he says that he is to have discussions, or conversations, with the Cotton Board. Does he propose to say anything to the Cotton Board or is he merely proposing to invite it to make other suggestions different from those which he has already rejected? If the Government really have any proposals of their own to make, either to the Cotton Board or to anyone else, would the right hon. Gentleman kindly tell us what they are?

Mr. Thorneycroft

I am having conversations with the Cotton Board, and not with the hon. Gentleman.

I prefer in this case, and I think that it would be normal, to have detailed proposals from the industry. That is appreciated by the men in the industry, who have great experience and wisdom in these matters. I wish now to enumerate the kind of questions which we shall discuss together. First, we have to get the industrial view about whether this is a short-term or a long-term problem. If what is sought is a temporary expedient, is a quota the right answer, and, if so, at what level and against whom?

What is the view of the industry as a whole about this question of re-exports, that is, cloth which is brought into this country and finished and re-exported? Should that cloth in any event be free? Should a quota apply only to retained imports? If it is a long-term solution, do the industry propose some form of tariff, and if so at what level? Above all, what are the views and proposals of the industry about the present export situation?

These are not questions which can be answered in the clamour of public controversy. They are detailed, complex and technical. They affect many sections of the textile industry, and the answer to them will have effects which are wider still. I would, therefore, say just this in conclusion. There is no series of problems in the Board of Trade—which has many problems—which has a higher priority than this group of problems associated with the textile industry.

My right hon. Friend the Prime Minister is himself meeting the Cotton Board for discussions—

Mr. S. Silverman

What does he know about it?

Mr. Cyril Osborne (Louth)

Far more than the hon. Member for Nelson and Colne (Mr. S. Silverman).

Mr. Thorneycroft

A good deal more than the hon. Gentleman.

My right hon. Friend the Minister of State, Board of Trade, has only recently returned from India. This is a matter of day-to-day consideration in the Board of Trade. The problem confronting us is one of very great difficulty in the field of commercial policy. I repeat again that the problem is far wider than is sometimes supposed. It is an export as well as an import problem, and the decision to stop, or to partially stop, some imports would still leave us with a major problem in the export field which might even have been exacerbated. In such circumstances I judge that the Government are wise to discuss the problem, not in general, but in detail, with the industry, and to examine specific proposals before reaching a final decision on what action, if any, should be taken.

4.58 p.m.

Mr. H. Rhodes (Ashton-under-Lyne)

When the President of the Board of Trade was saying how good they in the Board of Trade were in replying to debate, and how they would take on anybody at any time, he rather reminded me of Bruce Woodcock on the day before he fought Baksi. If I remember rightly, the "result was that Bruce Woodcock was knocked out in about the third or fourth round. Whether the President is fighting his third or fourth round, I do not know, and neither does he, but on his performance today I do not think that it will be very long delayed. All he has told the House today are facts which most of us know. He has brought a few small new features into the discussion, but that is all.

With reference to his remarks about the repercussions of quotas upon European goods, surely he cannot be unaware of what is happening in the wool trade today. I draw his attention to that trade, because he mentioned it specifically. I should like to send him on his way with a little bag, trying to sell something in competition with the stuff which is being sent in by the Italians, to see how he would get on. Circumstances today are such that even if we had the labour and all our overheads—fixed and variable-given to us, we should not be able to produce at the same price as certain cloths for winter wear which are coming in from abroad.

I am sure that the President did not intend to slur over the question of jute as he did. If he had given a better explanation the House would probably have received it quite properly from him, but he just side-tracked the question. He knows perfectly well that the jute industry has the kind of organisation which has been proposed from this side of the House. It stems directly from the days when the jute industry of Dundee was very depressed. I think that the President will agree about that, and I hope that the Minister of State will have something to say about it later.

All those who live in Lancashire are affected in some way or other by this situation. Hon. Members are affected according to the number of their constituents who are engaged in the cotton industry. In my constituency the proportion is about one-third. It is an area which was very badly hit during the 1920's and 1930's, but I shall not elaborate. Everybody knows the circumstances and the history of that period. We know what is in the minds of the folk who have been engaged in the cotton industry for so long and who, in later years, have persuaded their children to go into the industry and are now faced with the possibility of a recession.

One mill in my constituency has closed down; three mills are now on short time, and I understand that several more are considering whether they ought to go on short time. The cotton industry has a fairly long pipeline, because its structure is horizontal. With a vertical structure it is possible to have a shorter pipeline and so be able to respond quickly to markets for fashionable goods, but that does not apply to the cotton industry. In my industry a five weeks' order book is very good, and we must be on our toes to get the stuff out just when it is wanted, but that is not so in the cotton industry. If a spinning mill has no more than six weeks' orders it goes on short time, because the necessary pipeline is so much longer.

The President said that export orders are running at a rate which is one-third lower than it was a year ago. Practically everything he said in building up his reply reinforces my argument about a positive step which should be taken. The one thing the President would not talk about was Purchase Tax. I ask him now what is his view about Purchase Tax. Would its removal help Lancashire? [HON. MEMBERS: "Answer."] I am asking the President for an answer. Would the remission of Purchase Tax help Lancashire trade? I ask him to answer now.

Mr. P. Thorneycroft

I shall tell the hon. Gentleman something which ought to be within his knowledge. I can think of no single thing which would do more damage to Lancashire than if I started to make incautious statements about Purchase Tax now.

Mr. Rhodes

No; that is no answer. The damage has been done already. No statement which he can make at the Dispatch Box this afternoon can do more damage than he has done already.

Mr. Thorneycroft indicated dissent.

Mr. Rhodes

Yes—more damage than he has done already, simply because of the uncertainty which exists. It is that uncertainty, and the delay in the placing of orders, with which I want to deal briefly. There is a complex on the part of the customer not to buy taxed goods. The obvious reason is the cost of living. There is a complex on the part of the retailer not to sell taxed goods. He does not want them upon his shelves, because they are not easy to sell. If he has them in stock and there is a reduction in the price of cotton he loses not only the amount of the reduction but the proportion of Purchase Tax he has paid. In consequence, the manufacturer is forced to make lines which do not bear Purchase Tax.

This is a very serious matter, and it is about time that the detrimental effects of Purchase Tax in Lancashire were remedied. I hope that the Minister of State will refer to the tax indirectly, even if he cannot say whether he agrees with its remission altogether. We all know the evidence which has accumulated over the years about manufacturers who make less and less of certain lines of cloth, such as poplins and really first-class furnishings. We have evidence that one firm now makes only one-tenth of the amount of furnishings it made two years ago. If the President can exert any influence whatever upon the Chancellor of the Exchequer on behalf of Lancashire I appeal to him to do so on Purchase Tax, because a remission would be in Lancashire's interests.

During the discussions upon the Finance Act, we heard several reasons why the Chancellor should remit Purchase Tax upon goods made in Lancashire. One was that unless we have a reasonably good home trade in a certain line of cloth we cannot develop it in the export market.

I have experienced this with fashion goods running in the home market, some at very high prices. If we were not running them in the home market we should be very diffident about trying to sell them in the export market for, if we made them for export only and anything went wrong in the export market, it is certain that we should not be able to get rid of them in the home market. I ask the President of the Board of Trade to consider this aspect of the matter. There is the question of the craftsmen engaged in the industry, too.

Mr. Osborne

Before the hon. Member leaves the question of Purchase Tax, will he say to what extent a reduction or the abolition of Purchase Tax would help him in his business to compete with the Italians on the very lines that he says he cannot touch at the moment?

Mr. Rhodes

It would be nothing at all, because it would not be enough to enable me to compete against the remissions of taxation that the Italians get on their cloth before it comes here.

Mr. Osborne

Therefore, to meet the hon. Gentleman's second plea, that Purchase Tax should be reduced or abolished, would not help him one iota in his problem with Italian imports.

Mr. Rhodes

Not with mine. I was illustrating my own case only as an example of how the market works. It would not make any difference to me, but I am certain that it would to Lancashire as a whole, because we have had much evidence from people who are in the industry and who know very well the problems that it faces. There must be a home market. If there is no sale in the home market for a lot of goods, the risk is too great to consider making special lines for the export trade.

There is nothing against abolition of Purchase Tax. The help that abolition would give to Lancashire would be considerable, and its psychological value would be even more so. It would not contribute to inflation, as it would not influence a man to buy two shirts instead of one or a woman to buy two sets of curtains instead of one. It might enable the man to buy one shirt or the woman one curtain of better quality.

Thereby the manufacturer would be helped to do exactly what the President of the Board of Trade and the Minister of State for the Board of Trade want Lancashire to do, spur on the export trade. The admonition or advice given to Lancashire by the Minister of State was that it was an export as well as an import problem. The Chancellor of the Exchequer has also said that it is in high quality goods that we must pursue our endeavours. We are under a tremendous handicap, but if we can get Purchase Tax off this year it will be a step forward in helping Lancashire's trade.

5.14 p.m.

Lieut.-Colonel Wentworth Schofield (Rochdale)

In view of the worsening positioning of the cotton trade and of the fact that many people in my constituency depend for their livelihood on the cotton industry, I thank you very much indeed, Mr. Deputy-Speaker, for giving me the opportunity to participate in this debate.

As the President of the Board of Trade has pointed out, the cause of the deterioration in the position is two-fold: a decline in exports, and an increase in the import of Commonwealth and foreign-made cloth. Both these things have synchronised. For the past four or five years the demands of the home market have provided an off take of approximately 75 per cent. of the total production of the Lancashire industry. The other 25 per cent. has gone to export. Last year the industry was still busy, but in the fourth quarter of the year ominous signs started to show themselves. The total exports for 1954 were 637 million square yards, of which 550 million square yards were home-produced. The balance of 87 million square yards was made up of imported textiles finished in this country and re-exported.

By the end quarter of 1954, our export figures had fallen to a rate of approximately 440 million square yards per year. Unfortunately, during the period when our exports were falling there was a very steep rise in the imports of foreign and Commonwealth cloth. As the year proceeded, the volume of the imports increased until, at the end of the year, they were coming in at the rate of 350 million square yards a year. More than half of the imported cloth finds it way into our own home market at exceedingly low prices, and most of it enters this country duty free.

Lancashire is worrying today because there appears to be no limit to the amount of these imports that can come in. With such a threat of cheap imports overhanging the market, it is not surprising that there has been a general loss of confidence and that, in fear of a further fall in prices, dealers buy from to hand to mouth or not at all. I do not want to dwell on the unemployment that we experienced in Lancashire before the war because of the unfair and unfettered competition from Japan, except to say that memories of those days are not easily eradicated from the minds of those who have to earn their livings in the Lancashire cotton industry.

Before the war, Japan was the menace that Lancashire feared most, but today an even greater bogy is raising its head in the shape of India. I say "greater" because India, enjoying the privileges of Commonwealth membership, is in the very happy position of being able to send her goods into this country duty free and at prices so low as to defy competition from our own cotton industry in our own home market. This in itself is bad enough, but because of the action of the Indian Government, Indian cotton spinners are enabled to buy their raw cotton at about 10d. a lb. lower than the price which spinners in the rest of the world have to pay. Whether this is right or wrong, the fact remains that it makes the selling price of the finished article at least 10d. a lb. less than it would otherwise be, if the Indian spinners had to pay the same price as other spinners. The total labour costs for spinning and weaving one lb. weight of cotton drill cloth, which is the bulk of the Indian cloth coming into this country, is about 11d. a lb. It will therefore be seen that the start given to the Indian spinners in their costs of production is so great that no degree of improved efficiency can possibly span the gap. Indeed, British producers would have to spin and weave for nothing at all before they could compete with goods of that character.

Mr. Edward Shackleton (Preston, South)

Do I gather from the hon. and gallant Gentleman's remarks that he does not agree with his right hon. Friend's view that this aspect of the matter is a mere technical consideration?

Lieut.-Colonel Schofield

I do not see that that point is very relevant to my remarks. I am stating the case as I see it, as the representative of a constituency which depends for its livelihood upon the cotton industry.

It must not be thought that Lancashire's inability to compete for these cheap imported cotton cloths is due to any inefficiency on the part of the industry. That is certainly not the case. As a matter of fact, if it were not for the assistance which is given to the Indian spinners in buying their raw cotton, Lancashire could effectively hold her own in spite of the other advantage which the Indians have in the shape of lower wages.

Since the war vast sums of money have been expended in the cotton industry on re-equipping and modernising mill plants in Lancashire. Although the level of efficiency is by no means the same throughout the industry, even so, a great many of the mills in Lancashire today have reached a very high pitch of efficiency. But however efficient a mill may be, it could not hope to counter-balance the advantage which the Indians receive in the purchase of their raw materials.

Let me give an example of a mill which I know very well indeed, and which has been wholly engaged in the production of cotton drill cloth for the boiler-suit trade. The mill to which I refer is equipped throughout with automatic looms working double-shifts, looms which have been installed since the end of the war and are therefore completely modern. Not only does the manufacturer weave the cloth but he shrinks and dyes it himself and eventually makes it into the boiler suits which he then sells to the retailers.

There is no such thing as a middle man's profit. But in spite of that most economical set-up, he is still beaten by no less than 5½d. a yard which, in a boiler suit taking six yards, amounts to 2s. 9d. a boiler suit. The tragedy is that in order to keep his connections in this boiler-suit trade which he has built up, that manufacturer has been compelled to stop production of that cloth from those automatic looms and buy the cheap Indian cloth which he processes and makes into the cotton drill boiler suits, in order to compete with others who buy these cheap goods.

The thing which has upset members of the Lancashire cotton industry today, probably more than anything else, is the obvious unfairness of an arrangement which allows the duty-free entry into this country of cotton goods which in many cases are regarded as State-aided textiles from India in particular—a country which imposes insurmountable duties against the importation of any of our cotton goods.

There is another aspect of the problem which hon. Members should not ignore, and that is the strategic value of this cotton industry in this Island of ours, and its importance in the event of war. During the last war the industry was concentrated to save manpower. The result of that concentration was that the industry was unable completely to satisfy the demands of this country for its Forces and its civilian uses, and large quantities of cotton textiles had to be imported into this country during the war and run the hazards of war at sea.

I am informed on very good authority that even on the present output of the industry, the industry would have difficulty on its present size in completely satisfying the requirements of this country in war conditions. Therefore, I submit that we cannot possibly afford to allow this industry to dwindle so that it could not meet those needs. In the recession of 1952 the industry lost about 58,000 of its labour force. If there is another recession it will lose more, and if the labour force declines too far there will be a wholesale scrapping of looms and spindles. Just as it is necessary to keep other industries intact in case of war, so it is necessary that we should rely on our own cotton textile industry to meet the needs of this country if by some mischance it is involved in war.

The question which Lancashire is asking today is: What kind of safeguarding action do the Government envisage when they decide to take it? Whatever that may be, I hope the Government will not wait too long, or they may find that the very position which they want to avoid will be upon them.

The most encouraging feature, I consider, is that we now know that the Prime Minister has asked to meet a delegation representative of the industry as a whole and to receive from them their proposals regarding the steps which the industry thinks should be taken. For my part, I shall wait to see what those proposals are before forming an opinion, but in any case I personally am grateful, and I am sure that Lancashire as a whole is grateful, for the action which the Prime Minister is taking.

5.28 p.m.

Mr. W. A. Burke (Burnley)

I hope to be brief because I know that many other speakers want to take part in this debate. I wish to try to show the President of the Board of Trade that while we agree with him that a rise in exports would be desirable, that is not possible because of the world difficulties of today, and therefore it is more and more imperative that steps should be taken to preserve the home trade, since it is the basis of Lancashire's future. If I refer to difficulties in the export market, it does not mean that I want tariffs or anything of that description; it is just to show the President of the Board of Trade that those difficulties are at present insurmountable.

I am sorry that we did not get one word of advice or any suggestion from the President of the Board of Trade as to what he intends to do, except that he intends to ask the Cotton Board what it thinks about the situation. He ought to know what the Cotton Board thinks about it. It sent him word in July last year in a telegram, a copy of which I have with me. The Cotton Board said that it was greatly impressed by the alarming increase in the imports of cotton cloth from India; it asked for the application of import licensing to cotton goods from India and requested that thereafter a long-term policy should be discussed with the Indian Government.

I do not know who is coming from the Cotton Board, but the President of the Board of Trade will know Sir John Grey and Sir Frank Platt who, on the weaving and spinning side, probably know as much about cotton as any two men in Lancashire. If Sir John Grey comes, as I hope he does, I can tell the President of the Board of Trade in advance what he will say. I had put down a Question to the Minister a short time ago, and in his answer he gave a lot of figures. He had to admit that the imports from India showed an eightfold increase.

This is what Sir John Grey said about it: Mr. Burke only got evasion—and that is all you seem to be able to get from the members of this Government. They can point out that there have been big profits … but all that is based on the past working of the industry. That is what the Government are doing. Sir John went on: It would appear to be that they will take no action until there are so many people unemployed that they cannot afford any longer to ignore it. But that is no solution for the people in the cotton industry—we all know the folly of locking stable doors after horses have gone. That is all we shall get, except, licences.

It seems to us that, in view of the very rapid increase in this menace from India, the Government ought by now to have made up their mind what they are going to do about it. The employers have told them about it, and what they ought to do. The trade unions have told them. The mill managers in April last year sent a telegram to them and told them that the position was desperate. It is going from bad to worse. The T.U.C. has been warned about it, and will probably ask for a deputation to be received. I do not know whether the Prime Minister will meet that deputation, but whoever meets it can make no difference to this—that all the facts of this situation are very well known, and that it is the desire of Lancashire at the present time that something should be done. When I asked the Minister of State, Board of Trade a question about the mills that had stopped in Burnley he wrote to me and questioned the suggestion that there was anything significant in the stopping of those mills. I am not going to quote the letter because I know—

The Minister of State, Board of Trade (Mr. A. R. W. Low)

I think that the hon. Gentleman is misrepresenting me, though by mistake, I am sure. I wrote to ask to which mills he was referring in a supplementary question that he had asked me. That is all I asked.

Mr. Burke

Then the right hon. Gentleman wrote another letter telling me that the mills I had mentioned had not really stopped. He said one of them had only had extended holidays at different times, and that the other had stopped for some reason I was asked not to mention.

Both mills stopped because of bad trade. One of the mills stopped, and had extended holidays in September and at Christmas. The point is that even if there were extended holidays, extended holidays are a sign of short order lists. It is no answer to say that only a number of people are on short time. There are thousands of people on short time, although the fact does not show so clearly in Lancashire as in other industries in other parts of the country. The reason for that is that people are working two looms instead of four.

The amount of unemployment is very great. In September last year, at my own labour exchange alone there were 669 unemployed people and, in addition to them, there were 204 on short time. In the area represented by the hon. and gallant Gentleman the Member for Rochdale (Lieut.-Colonel Schofield), close to my own home, Nelson's Mill, as he will know, went on short time this week, as did also the Balderstone Mill and the Facit Mill. The Whitefield Mill at Nelson has closed, and the Bolton mills are going on short time.

The deterioration of the situation is growing rapidly. Lancashire has told the Government over and over again that the situation is growing worse rapidly. It is now really serious. The Minister of State told us the figures for Indian imports to this country, and he said they had leaped from 16 million yards in 1953 to 133 million in 1954. That increase in imports has not stopped. The average was about 12½ million yards per month last year. What is it now? In the first month of 1955 the amount was 15¼ million yards. The position is getting steadily worse this year.

The Government allowed 15¼ million yards to be imported from India and 33 million yards to be imported from all quarters in January. Do the Government know that that means the production of 45,000 looms for that month, or that such quantities would put all the mills of Burnley out of action for six weeks? That is the kind of problem which, Lancashire people say, the Government are not facing up to.

If half of our imports from India stayed at home and the other half went abroad as exports after being processed, that would be a good move, we should thoroughly agree. It is the half that stops at home that is important. Let the Government notice this. While the amount of imports from India increased by eight times during the years 1953 and 1954, although they represented half the total volume of imports, they represented only a quarter of the value in sterling, which means that a lot of stuff is coming in here at very cheap prices. That is the sort of difficulty which Lancashire is up against.

Lancashire needs a better break than it is having at the present time. In this House we hear a great deal of talk from time to time about Scotland's woes and Scottish Home Rule, and Welsh Home Rule as well. There are more people in Lancashire than there are in Wales—twice as many; and there are as many in Lancashire as there are in Scotland; and within 25 miles of Manchester Town Hall there is the biggest concentration of industrial population in the world, numbering five million people. It is about time their voice was heard, and it is about time the Government told them exactly what they are going to do.

Lancashire has made a great contribution in the past. It was Lancashire's industry that first built up our country's world trade. We were the first great exporters. It is not true that Lancashire cotton trade has not adapted itself. Years ago our great markets were in India and other Far Eastern countries, but in recent years those countries have built up their own domestic industries. Lancashire did not remain idle as those markets disappeared, but switched over to trading with other countries, and today half of our Lancashire cotton exports go to the Dominions and to Europe. There has been a complete change. That shows that Lancashire is ready to do the kind of thing that the right hon. Gentleman has said it should do—adapt itself.

However, things are getting worse now. In India our competitors start with a price 10d. per lb. lower. There is competition from Hong Kong. Last year, 64 million yards came from Hong Kong. The population of Hong Kong has jumped from 800,000 before the war to over 2 million, mostly Chinese refugees working at rice bowl wages in the textile mills there. That is the sort of thing against which Lancashire cannot compete for exports. That is the kind of thing Lancashire cannot be expected to overcome in world markets.

We say that if we cannot do any better in the markets of the world, in view of all these circumstances, of which we know the complexities, we expect the Government to do all they possibly can to protect the home trade. We expect them to do that at once—if not before.

5.40 p.m.

Sir Ian Horobin (Oldham, East)

Before I come to the points which I want principally to put to the House, I should like to comment on two matters which have come from the benches opposite.

First, if the hon. Member for Ashton-under-Lyne (Mr. Rhodes), who mentioned Purchase Tax, would bear with me for a second, not for the first time I find myself in almost complete agreement with him. While we all appreciate that it is impossible for anyone usefully to make statements about taxes at this season of the year, I hope the Government, while rightly impressing upon Lancashire that our hope is in quality goods, will appreciate that no industry in the country, for technical reasons into which I need not go, is worse hit by Purchase Tax in quality goods than the cotton industry.

I do not want to make too much of a party political speech, but it does not come too well from some hon. Members opposite for them always to be harping on Purchase Tax. When they came into power Purchase Tax was bringing in less than £100 million a year. By the time we got rid of them they had boosted it up to nearly £350 million a year. We have at least halved the Purchase Tax on cotton, although the sooner we get rid of it, unanimously, the better for Lancashire.

I want to make a reference to the little interchange between the right hon. Member for Huyton (Mr. H. Wilson) and the President of the Board of Trade on the proposals for a purchasing monopoly and its relation to G.A.T.T. Of course, the objections to the proposals are not confined to its relation to G.A.T.T., but so many people talk about G.A.T.T. and so few read it that I feel that I should take the point up. More people ought to do what I do, for my sins—keep it under my pillow when I go to bed. I am, of course, a bachelor.

As hon. Members made such a point of G.A.T.T., I think it would be worth while for me to read Article XVII (a): Each contracting party undertakes that if it establishes or maintains a state enterprise, wherever located, or grants to any enterprise, formally or in effect, exclusive or special privileges, such enterprise shall, in its purchases or sales involving either imports or exports, act in a manner consistent with the general principles of non-discriminatory treatment prescribed in this Agreement for governmental measures affecting imports or exports by private traders. If that does not explicitly make it impossible to do what the right hon. Member for Huyton proposed to do, then I do not know what would.

I come to the only point which the right hon. Gentleman was able to make and which was chanted at intervals—jute. I am not an expert in jute, but surely the short answer is that the General Agreement on Tariffs and Trade was drawn up at Geneva in October, 1947. The jute scheme preceded that, and all who have studied the problem will be well aware that things are tolerated under G.A.T.T. if they were in existence when the contracting parties acceded to the agreement but are afterwards explicitly and intentionally refused. I think that completely disposes both of the argument that G.A.T.T. does not make it impossible to do what the Opposition have suggested and of the argument that the jute exception invalidates the case which the President put forward.

Having disposed shortly of that, I want to come to a more general point. It is not necessary to spend much time on the background, for the Minister impressed on the House what must be borne in mind—that 1954 was a very good year. Broadly speaking, all sections of the industry were running about 90 per cent. of the 1951 boom year.

The hon. Member for Burnley (Mr. Burke), who is not in his place, emphasised the difficulty in which I believe some Lancanshire Members are placed—the difficulty that very exaggerated statements have been made. He quoted from somebody—a prominent manufacturer—who said last April that the position was desperate. But the position was not desperate in April. If we are not careful—and I am not accusing hon. Members opposite, because this comes more from the employers than from the employees—we shall be faced with the fact that some members of the industry have cried Wolf so often that now, when the position is beginning slightly to deteriorate, we may have lost sympathy and shall get nothing done.

I hope the Minister will bear with me in this because, although it has not been a popular line in the county, I have pointed out this danger more than once and have pointed out the further danger into which these members were running in making worse their principal problem, which is that of recruitment. To go out of our way to talk as though the industry were permanently in a state of desperation is not the best way of getting recruits into it.

There has, however, been a slight deterioration recently. It is not yet anything very serious, as was candidly stated by the right hon. Member for Huyton. I should say that activity is running about 3 per cent. less than it was last year. Stocks may be going up. It is difficult to get figures, but there may be three weeks' spinners stocks held instead of two weeks'. Some mills have closed. About 15 closed last year, most of them nothing whatever to do with imports of Indian cotton cloth. It is curious, and shows the complexity of the problem, that more have closed in the fine end of the trade than in the coarse end of the trade, which shows that over-simplifications in this matter are dangerous.

I shall have a word to say later about short time, which has increased but we must again keep some sense of proportion. The latest figures are only about 2 per cent.—something like 5,000 in an industry which employs about 300,000.

Mr. H. Hynd (Accrington)

That is registered short time.

Sir I. Horobin

We can all say that; it is like the quarrel on the cost of living figures. Efforts now being made to bring the figures up to date are far more extensive than any ever made by the Board of Trade in previous Administrations, and, although I stand to be corrected when the debate is wound up, the best figures which anybody can obtain suggest that the percentage is 2 per cent. That in itself is something to which industries up and down the country are quite accustomed. We should prefer it to be the purely nominal figure which existed for a large part of last year, but it is not in itself a very great problem.

It is well to put on record, in view of the importance of recruitment, that it is very encouraging to see that the proportion of school-leavers entering the cotton industry is holding up very well. It is not quite as high as last year, but it is very much higher than the year before. The number of places filled is also going up. It is true that there are no longer six vacancies to one application, but there are still many more vacancies than applicants—and they are not bogus vacancies, for the figures have gone up every week in the last few weeks. The vacancies are being filled.

It is important that we should not panic in this matter and go from one extreme to the other. If that is so, why are we, moderate people in the county, getting worried? The reason is perfectly clear. We are worried not about anything which has happened hitherto but, as the right hon. Member for Huyton rightly said, about the rate of increase in these imports of grey cloth and the recent but very serious falling off in export orders. If that continues it will produce a very serious situation.

Even there, I think we must get one or two figures right for the record. It has been said that imports of Indian grey cloth increased by six to eight times last year. That is true. But total imports have increased by less than three times. A large part of the Indian imports are replacing those from other people. Nevertheless, an increase by three times is serious enough.

The President has given the figure showing that export orders have fallen off recently in an already difficult market by about one-third, but that again shows the complexity, bcause the latest figures, the January figures, for exports are extremely good and the best for nearly a year. The January exports, both in yarn and in cloth, were higher than the average for 1954, although we must be careful about any deductions which we draw.

Mr. Anthony Greenwood (Rossendale)

The hon. Member would agree that large exports in January were partly accounted for by the dock strike at the end of last year?

Sir I. Horobin

I was coming to that, but of course it works both ways; the deterioration in the last month or two of last year was partly due to the dock strike and the boost up afterwards. The reaction, I am merely putting the point, which runs through all my observations, not that there is no ground for anxiety, but that no case has been made out for panic action.

We have already had reference to the essential need for a large part of these grey cloth imports for re-export. I must draw attention to that again, because it shows how very ill-conceived has been a great deal of the propaganda of the industry in the past. The whole of the Japanese imports are re-exported. If we did not have those and a very substantial proportion of the Indian imports, our export markets in Africa would have gone even worse than at present. The Japanese Sterling Payments Agreement, although it was not made for that reason, is the best piece of protection Lancashire has at present. Accusations of the "Black Pact," "The Sacrifice of Lancashire," look very silly at the moment. What the position of Japanese imports into our home market would be but for the Japanese Sterling Payments Agreement I shudder to think. But the right hon. Member for Huyton has been attacking us and has said that that Agreement was one of three things in one week which had produced such a serious situation.

Mr. H. Wilson

The President of the Board of Trade made some play with the fact that in certain respects his Agreement last year followed the one we had. So far as the home market was concerned, our payments Agreement also provided the protection to which the hon. Member is referring. All our pacts were in respect of the colonial market, not the home market.

Sir I. Horobin

What has that to do with the discussion? It has already been shown—I thought it elementary and that it was admitted by the right hon. Member for Huyton and his friends when they were in office—that the Colonial Governments are now sovereign in this matter. Anglo-Japanese Sterling Payments Agreement or not, nothing can be done against the will of the Colonial Governments to stop imports there. Therefore, all the Agreement does is to affect Japanese exports to England. As the right hon. Member singled out the Japanese Agreement as one of the three deadly blows in one week, it is fair to remind him of the fact that the only influence it has is to prevent Japan doing what India is doing in our home market.

Mr. S. Silverman

That is not its only effect.

Sir I. Horobin

I will not pursue that matter. If the hon. Member for Nelson and Colne (Mr. S. Silverman) catches Mr. Speaker's eye, no doubt he will be able to pursue it. I think I have carried some of the House with me in that while there is reason for anxiety there is no reason for panic and that some previous proposals on the part of the industry have been ill-conceived. Before coming to the specific suggestion I want to make, may I say that Lancashire must bear in mind that all this discussion must be looked at as the background to something much wider than the Lancashire economic problem. In Lancashire it is partly a social problem as well as an economic problem, but that is equally true of the country as a whole.

We have to look at the matter from two points of view. Firstly, there is its relation to the problem of the Foreign Secretary and, secondly, there is its relation to the problem of the Chancellor of the Exchequer. With regard to the first problem, I do not think that public opinion in this country has yet altogether woken up to the desperate salvage operation we are endeavouring to carry out in the whole of East Asia. From Japan, Siam, Hong Kong, the Philippines, Indonesia right round to India we are faced with a situation in which our position is almost impossible. Great Britain has enormous influence in that part of the world largely because—rightly or wrongly—they feel we are less selfishly concerned than our American friends—

Mr. M. Follick (Loughborough)

Because we are more honest.

Sir I. Horobin

That may be, but the fact remains that in that part of the world we run the danger of losing the support of the whole of the remaining free part of Asia. Anything which would put this country into a head-on collision with Japan at one end of the crescent and India at the other end would make the position of the Foreign Secretary absolutely impossible. In all we recommend to Her Majesty's Government in dealing with this grave problem of Lancashire, we must bear in mind that overriding interest which may decide whether or not World War III breaks out.

So much for the interest of the Foreign Secretary in this problem of how we treat Japan and India, but there is the Chancellor's problem which falls into two halves. It has already been pointed out that we have to pay regard to the 1939 Trade Agreement with India and to the Ottawa Agreements Act, 1932. I am convinced the more I think of this problem that anything in the nature of discriminatory action against India might have the most serious effect on our trade with India. It must be borne in mind that that affects Lancashire just as much as the rest of the country. We export very substantially. We export about five times as much machinery and electrical equipment to India as our imports of grey cloth and a lot of that is made in Preston. We export approximately the same value of vehicles to India as we export grey cloth, and a lot of that is made in Leyland. We must see that we do not go into head-on collision with the Indian Government.

The problem goes further than that. Once, with the ill-will of the Indian Government, we reopen the 1939 Treaty and the whole of the Ottawa settlement, there will be others to be considered. The biggest single export market for Great Britain at the moment is Australia. The biggest export for cotton textiles is Australia, and Australia would welcome an opportunity of reopening the Ottawa Agreements because she says she is not getting as much out of them as she used to get and that we are getting more. We have to think very carefully before reopening those Agreements or we may hear something which Lancashire will not like at all.

It does not even stop there. I do not expect hon. Members opposite to go so far as I go on the matter of convertibility, but those of us on this side of the House who feel that convertibility is important will appreciate the importance of what I am now about to say. There is no country in the world which would have so much to gain by increasing the amount of freer trade—free to move as it will—as this country. At present—I give only one figure, because I do not want to detain the House for too long—40 per cent. of the cotton exports of this country going to foreign countries go across tariffs which are bound under G.A.T.T.

So cotton has a specific interest, which of course is much wider in many other parts, in preserving and strengthening freer trade for which the general policy of G.A.T.T. stands. It would be a disaster if instead of 90 per cent. of liberalised European trade we went back to the 56 per cent. of four years ago. We must be careful in anything we do to meet this very genuine danger which faces Lancashire not to lose more than we gain.

Apart from the question of Purchase Tax, we have heard of all the difficulties and warnings. What does it all amount to? I think that the President of the Board of Trade was very wise not to give his suggestions for dealing with the problem until he is in a position to give them the force of law. Let us suppose that he suggested approval for a quota. Can we imagine anything more likely to produce a flood of imports until it was actually in force? That seems a valid reason for him to wait until he can give a decision. There is no reason why back benchers who are not irresponsible in the bad sense of the word but have enough irresponsibility to make their suggestions should not make them. The more one thinks of this matter, the more one is convinced that we must avoid anything in the nature of discrimination.

I am glad to see the right hon. Member for Brighouse and Spenborough (Mr. J. Edwards), who was with me in Japan not long ago, in his place. I think he will agree with me that, taking Japan first, disappointed as Japan would be if we had to invoke Article XXXV and continue, as we are now, under the Payments Agreement—and Japan would be very disappointed—it would have nothing like the bad effects that anything discriminatory against Japan specifically would have. The Japanese are peculiarly and naturally sensitive, and the same applies to the Indians.

If we have to do something in the nature of limitation, we stand a much better chance if we make it general and do not attempt, in the case of either Japan or India, to reopen agreements on a discriminatory basis against them in particular. My own feeling is that what Lancashire mainly needs—and in this, I think, I am not far different from the right hon. Member for Huyton—is some assurance that the present sudden increase will not go on without any limit at all. It is a question of psychology and confidence. The quantity of cotton now coming into this country, although it is a nuisance and is hurting some firms, is probably not much more than they ought to be prepared to face. What they cannot face is the prospect that it can multiply, perhaps, six times this year and again next year.

The sort of policy which seems to me to hold out much the most hope is, not to set up complicated machinery such as is suggested by hon. Members opposite, to move by a subterfuge and to get all the disadvantages as well as any advantages, but, either by invoking Article XIX or leaving out the foreign countries and simply by a quota against Commonwealth goods, to limit temporarily the total of imports into this country from all sources which are to be retained here at something like the figure of last year.

The sky should be the limit, as far as I can see, for imports which are to be re-exported—and I was glad to get some support in that from the hon. Member for Burnley; but for retained imports, which have increased by something like three times in a year, it does not seem unreasonable that we should say, either by Article XIX generally or by purely a Commonwealth quota, that they should be held at something like last year's figure. And while we hold them at that level, we must have discussions with the Colonies and with India and Australia on this whole matter.

One part of his speech in which I could not altogether follow my right hon. Friend the President of the Board of Trade was in his treatment of the Indian export duty. I cannot—

Mr. H. Wilson

Three-quarters of the hon. Member's speech has been against doing anything on Indian imports. Now he suggests general Commonwealth quotas, but would that not be denouncing the Anglo-Indian Agreement?

Sir I. Horobin

No. There is nothing in the 1939 Agreement which deals with quotas. The 1939 Trade Agreement gives free entry as regards tariffs but—I speak subject to legal correction—I believe, not about quotas. It certainly does not refer to them. It deals with tariffs. And my suggestion is for a global oversea quota, not a quota against one country.

This is the proposition which I am putting to the House. If we come to the conclusion that we must reassure Lancashire that there shall be no further increase in imports which are retained here on the scale of the increase which took place last year, the way which would do the least damage, both to our relations with India and Japan and to the general freer trade policy of the Government, is either to invoke Article XIX, as we are entitled to do, or, if the Government in their wisdom think it better to leave the foreign imports—which it is agreed are small—alone, impose a purely Commonwealth quota; and to call together the Indians and Australians and the Colonies and to discuss thoroughly this, what seems to me—I am bound to agree with the hon. Member for Burnley—an unfair advantage which the Indian mills have with the rest of the Commonwealth over Lancashire.

By doing that, we might not satisfy everybody. On the other hand, nobody would have the feeling of being completely hopelessly dealt with. Japan, after all, is in a sterling surplus and does not have a real grouse if she continues as she is now for another year. India would have free import into this country for re-exports and, therefore, would have substantial trade with this country. The finishing side of the industry would not feel that it was put in a position in which it would have to lose its exports because it could not buy cheaply enough; and the spinners and weavers would at least feel that they had over 90 per cent. of their home trade secured to them and would have something like a bottom in the market. The right hon. Member for Huyton said that no solution would satisfy everybody, this is a choice of evils and my suggestion seems to me to be the least evil and one which is worth well considering.

6.6 p.m.

Mr. H. Hynd (Accrington)

Lancashire has been waiting for this debate and for a gleam of hope from the President of the Board of Trade, but I very much fear that Lancashire will feel disappointed tomorrow morning when it reads the right hon. Gentleman's speech. In my opinion, his whole approach to the problem was unsatisfactory. When he has a weak case, he gets more aggressive, and perhaps his aggressive attitude prejudiced me against him in the way that he approached the matter today. Yet, when we examine what the right hon. Gentleman said, it is obvious that he realises the gravity of the situation.

The President of the Board of Trade told us that the problems are real, serious and urgent—which, incidentally, was not quite in accordance with the speech which we have just heard from the hon. Member for Oldham, East (Sir I. Horobin). The President did, however, indicate that he was well aware of the real facts of the situation. He told us that the volume of export orders was one-third lower than a year ago. He gave the startling information in regard to the importation of grey cloth, mainly from India, that the import rate in January was still increasing; he said that it had "increased substantially." It is obvious, therefore, that the President of the Board of Trade cannot plead ignorance of the facts which have been put forward by other hon. Members since he spoke; but it is equally obvious that he does not have a clue as to a possible solution of the problem.

I agree with my right hon. Friend the Member for Huyton (Mr. H. Wilson) when he said that there should be complete unanimity as regards the first part of the Motion— That this House notes with concern the serious situation which is developing in the cotton industry … —because the situation is so well known to all hon. Members. Indeed, there has been a procession of Ministers up to Lancashire in the last few weeks. We have had the three Ministers from the Board of Trade and the Chancellor of the Exchequer, and now, we are told—and I am glad to hear it—the Prime Minister himself is to take an interest in the matter. I am glad that the Prime Minister is taking it out of the hands of the Board of Trade and that it will therefore be dealt with at the highest possible level.

Mr. P. Thorneycroft

My right hon. Friend is a member of the Board.

Mr. Hynd

We know that there are several people in the background who are technically members of the Board. If we examine far enough, I may be a member of the Board. [HON. MEMBERS: "No."] At any rate, those people play just as little practical part in the working of the Board of Trade as I do.

The fact is, and it is not too much of a flight in oratory to say it, that the cotton textile industry in Lancashire is bleeding to death. The number of spindles is steadily being reduced and everybody is getting apprehensive, as even the hon. Member for Oldham, East admitted in the latter portion of his speech. Therefore, I regard as the first victory achieved by this side of the House in having put down the Motion today the fact that at last the Prime Minister himself is to meet the Cotton Board and discuss the situation.

We have had this double blow, first to the export market, and secondly to the import market. It is no good the President of the Board of Trade treating very lightly the effect of the Japanese Trade Agreement on the export market and making the debating point, as, no doubt, he is entitled to do, that the Japanese Trade Agreement was originally negotiated by a Labour Government. The Agreement was re-endorsed last year. At that time there was a debate in this House when some pessimistic forecasts were made and certain warnings were given. We then received assurances from the other side of the House that we were far too pessimistic about the possible effects of that Agreement. Now we are told that not only has it had a devastating effect on our export trade, but that there is very little we can do about it and that the Colonies and other people have a perfect right to choose where they will buy their goods.

We suggested at that time that the opportunity should have been taken when the Japanese Trade Agreement came up for reconsideration to look at some of those possible consequences and try to forestall them. That is exactly what we are trying to do again today. It is perfectly true, as some hon. Members have said, that the situation in Lancashire has not reached anything like the position in 1952, and still less that of pre-war, but all the signs are there for the world to read. The writing is on the wall, and I submit that the industry and others who are interested in Lancashire are perfectly entitled to ask the Government now to take measures before things get too bad. That is the whole object of this debate. "The Times" on the 14th of last month told us that last year the imports of Indian grey cloth reached a total of 128 million square yards, an eight-fold increase as already mentioned today, and it pointed out that this was the equivalent in Lancashire of three to four weeks' production. The article went on to say that: Lancashire has always assumed a stable home market absorbing about three-quarters of its total production. That position is now threatened. That is a serious situation with which we are faced, and "The Times" told us, in the same article, that: Lancashire feels mutinous. … There is now a lack of confidence in the Government, because of the rapidly rising imports of Indian grey cloth into the home market. … Already some nine cotton employers have resigned office in their local Conservative associations. I am not suggesting that that is a disaster either to Lancashire or the country, but it may be taken into consideration by the Government. The Government cannot now shelter behind treaties, because, as the hon. and gallant Member for Rochdale (Lieut.-Colonel Schofield) pointed out, they have since the war encouraged the industry to invest a considerable amount of money in modern machinery and, therefore, there is a moral responsibility on the Government to pursue a policy which will enable the industry to indulge in fair trading.

In my own division, I have been making inquiries among the trade unions concerned, and they all indicate that there is a general slow-down. May I give one instance of a spinning mill which has a capacity of 100,000lb. per week, and which has been deliberately slowing down to the rate of 80,000 lb. per week in order to retain its workers? Not only is this mill slowing down its production but it is having to change over from coloured yarns to white because dealers are becoming nervous about laying in stocks of coloured materials. That is all resulting in a reduction in the earnings of the workers. It is also significant that the reduction is not being put fully into effect in accordance with the price lists. The employers dare not put the full reduction of wages into effect because they would lose their workers to other industries, so, in order to retain these workers, they are paying them more than they are actually entitled to pay on the agreed list.

That kind of thing, multiplied throughout the various constituencies, is obviously having a very detrimental effect. I should like to give some evidence of that, not from this side of the House at all, but from the presidential address of the President of the Blackburn and District Incorporated Chamber of Commerce. I am sorry that the right hon. Member for Blackburn, West (Mr. Assheton) has just left the Chamber. I do not suppose that the President of the Chamber, Mr. T. Guy Aspden, is a supporter of my hon. Friend the Member for Blackburn, East (Mrs. Castle)—[HON. MEMBERS; "Why not?"]. I should be very surprised if he is. This is what he says in his presidential address. Lancashire's textile people are angry, and anxious at the delay in an announcement of the future policy of the Government. We seek no unreasonable protection … He says that the complaint is with regard to the import of so-called "British" cloth. This cloth is imported under Open General License, and there is no restriction whatsoever on the quantity which can come in … but imports of cloth are increasing every month … Lancashire asks the Government, what is your long-term policy? We had a policy suggested by my right hon. Friend this afternoon. The President of the Board of Trade poured scorn on it, but I noticed that he did not produce an alternative policy of his own, and I suggest that until he can produce a better policy he should not be quite so contemptuous of what I consider to be the practical suggestions made by my right hon. Friend.

Mr. Aspden, in his address, went on to say: Can the nation afford to allow this large industry to run down? … The industry will never tolerate a repetition of such conditions … This is really an indictment of the Government by people who would normally be their most faithful supporters, and when that kind of thing is being said from Conservative quarters in the county, I suggest that the Government ought to sit up and take notice.

In fact, since this Motion was tabled I have had a telegram, as no doubt other hon. Members have had, from the Blackburn Chamber of Commerce inviting me to consider voting against the Government if effective action is not announced. [Laughter] As effective action has not been announced, I am sorely tempted to accept this invitation.

We do not want to concentrate this debate entirely upon the subject of Indian cloth. The aspect of Purchase Tax is an important one. As it has already been dealt with, I will say no more about it. The aspect of the import of yarns from various countries, as revealed in a written answer yesterday, has been mentioned, and it ought to be taken seriously into consideration. I will content myself by saying that I hope that the Government will not take refuge in the fact that figures at the employment exchanges and elsewhere do not reveal a situation as bad as it was years ago. Let them rather look at all the evidence which has been laid before them from both sides of the industry to see if they cannot prevent us going back to 1952, and, still worse, going back to those bad old days before the war.

6.19 p.m.

Sir Harold Sutcliffe (Heywood and Royton)

The telegram which the hon. Member for Accrington (Mr. H. Hynd) has quoted blends very well, I think, with the atmosphere generally in this House during the debate. It makes all the more nonsensical the idea that we are debating a Motion of censure. I cannot recall that any speaker so far, including the right hon. Member for Huyton (Mr. H. Wilson), has said anything which is in anyway a censure on the Government's action or inaction. The point is, of course, that the debate is taking place far too soon; the Opposition have stepped in too early. No wonder the right hon. Gentleman was distressed at Monday's leading article in the "Manchester Guardian," a newspaper which he was at pains to quote once or twice. It said: This, like the other censure debate that went wrong a fortnight ago, illustrates how the party has lost its moorings. It is trying so hard to think of things that will catch votes. That is obviously the reason for this Motion of censure, but that reason has been very largely demolished during the first two hours of the debate by what has been said by my right hon. Friend the President of the Board of Trade and others.

The fact that a conference will be held very shortly with the Cotton Board, the trade union representatives and others connected with the industry, at which the Prime Minister himself will take the chair, surely shows that the Government intend to do all they possibly can in this matter. They have been active in their consideration of the subject for many months past, as everybody knows.

The difficulties are in some ways almost insuperable. We live in a very different world from that in which we lived before 1939. Our hands are tied in many respects by trade agreements and agreements of one kind or another. Any Government in this country have a very different task now compared with the tasks which faced Governments then, when dealing with the difficulties of an industry like the cotton industry. My right hon. Friend dealt most effectively with the ideas of the Opposition that there should be Government control, imports, such as is now being operated in the jute industry. There is no need therefore for me to go further into that matter. My right hon. Friend demolished the argument completely. The jute industry is on a totally different footing.

I want to make one or two points about the general situation. It has been said in some quarters that over the industry as a whole trade is not at all bad, and therefore the difficulties may be exaggerated. But that is certainly not the case with regard to many of the smaller towns. I am thinking of towns like Roy-ton, which has 20 spinning mills, and Shaw, in my constituency, which has a similar number and very little employment outside the cotton industry.

It is in places like that that the pinch will be, and, indeed, already is being, felt. There is not in those towns the diversity of industries or the large engineering works which now employ so many in the county. We have to consider places like that where all the people have been nurtured in the cotton industry for generations, and undoubtedly order books are very low at present.

One or two factors especially hurt the trade. One is the 3d. per yard Indian subsidy on the raw material. When that is applied to a yard which costs Is. 3d., it makes it quite impossible for the industry in this country to compete. The shops are afraid to buy our goods in case the cheaper Indian goods come in later. Exports are described as scrappy and an important contract is quite an event. The quantities that are being ordered are modest in the extreme. The majority of the mills are stocking up because they cannot sell their production. That is a very serious matter indeed.

The doubling section of the industry is not affected by Indian competition but this section is greatly affected by another factor in present conditions. One mill has been mentioned already. Another mill in the same valley of Whitworth is closing down very shortly because it cannot sell the yarn which it produces at the rate of 15,000 lbs. per week. Imports from Portugal, Belgium and Holland are the reason for this state of affairs. Portugal is the chief offender. This is a real tragedy and it is unconnected with the other events of which we have heard today. The condition of the home industry is due to what really amounts to dumping. I think, as indeed the Government have possibly been considering, that a quota should be applied on the grounds that this is dumping and as such should be stopped.

I see that 764 people left the cotton industry last year although it was in many ways a prosperous year. I believe that these people came largely from the doubling section of the industry. We are, therefore, losing some of our best workers and our best production in the finer counts. They are goods which we particularly want because it is in those counts that we hope to capture export markets again. I hope, therefore, that my right hon. Friend will pay special attention to this section of the trade.

As the President of the Board of Trade mentioned, quotas will be among the subjects which will come before the proposed conference. I believe that we shall have to consider seriously the application of quotas against India. Has any real pressure been applied already against India to make, or cajole, her to alter the present scheme of things?

Mr. Charles Fletcher-Cooke (Darwen)

I am sure that my hon. Friend will remember last July, I think, when he and I and one or two other of our colleagues on this side of the House at about 2 a.m. were pressing the then Minister of State, Board of Trade, now the Minister of Agriculture and Fisheries, who replied that a great deal of pressure had been put on India even then. I do not think, therefore, that my hon. Friend needs to inquire whether pressure has been put on India in this connection.

Sir H. Sutcliffe

I am very much obliged for the assistance of my hon. Friend, and I am glad to have a reassurance on that point. If I may say so, one could not use too much pressure in connection with this matter, and I think it is a point that should be mentioned.

I want to reinforce what has been said by one or two hon. Members on both sides of the House, and to draw the attention of the Chancellor of the Exchequer to this question of Purchase Tax. I agree that steps cannot be taken immediately for reasons which we all know, but it is penalising good quality cloth and good quality goods. The public is resisting it, the shopkeepers are resisting it—there is a tremendous amount of clerical work concerned with it—and altogether, it is depressing the class of goods that are being sold.

It is true to say that it is not likely to increase inflation because people will not buy two shirts or two frocks where they now buy one. They will buy a rather better quality shirt or frock. We are more or less compelling a large number of people to buy inferior goods in order to save Purchase Tax, because people will not pay and shopkeepers will not stock goods which bear Purchase Tax. We are depreciating a whole range of cotton goods by a continuation of the tax. I know that the financial results are good and it has probably been essential, but I urge my right hon. Friend the Chancellor to give this subject very special consideration. I know that the total abolition of the tax on textiles would cost some £80 million, but if my right hon. Friend could go part of the way it would help considerably. It would stimulate demand in the home market, and, therefore, it would increase our ability to compete in markets abroad, because it would enable mills to make the "long runs," as they are called, which mean continuous production, in better goods. That is the only way of making goods at the lowest price.

I was very glad to have the assurance of my right hon. Friend the President of the Board of Trade that the Government are doing much more than watching the situation. The time has gone past for watching situations. The time has arrived for some action to be taken if and where such action is possible. We all want the same thing, but we do not want to do anything rash, because we may do more harm than good. We all stand for the good of the industry and for every person employed in it. I welcome what has been said today and I hope that the most active steps will be taken at the earliest opportunity.

6.33 p.m.

Mr. F. Blackburn (Stalybridge and Hyde)

One has some difficulty in realising from the last three speeches we have heard from the other side of the House that they came from Members of the same party representing the same county. I thought at one stage that the hon. Gentleman the Member for Heywood and Roy ton (Sir H. Sutcliffe) was deciding that there was no emergency at all and that the anxiety was merely on the part of hon. Members on this side of the House. I think that he will find that our anxieties are shared by many of his hon. Friends and even by Conservative organisations in Lancashire, to one of which I shall make reference in a moment.

There are two points on which I shall be following the hon. Gentleman. The first is the question of Purchase Tax and the other the question of the doubling trade. I shall come to both of them later, because I want to make my own speech in my own way.

My complaint against the Government is that they seem to think that they have solved a problem if they express their sympathy, say that they are keeping a close watch on events and then try to minimise the seriousness of the situation. I am sure that we are all glad that the President of the Board of Trade is sufficiently well to come here to be shot at, but I suggest that if he wants to feel sympathy for the cotton industry he should change constituencies with one of his hon. Friends and should mix with our people and learn at first hand of their anxieties about the present trend of events.

I am always sceptical when I hear the Government say that they are keeping a close watch on events. It usually means that unless there is some catastrophic change they intend to take no action. A mere gradual deterioration seems to mean nothing to them. I would remind the President that it is no comfort to those who are unemployed or on short time to be told that others are in full work.

In replies given in this House by the right hon. Gentleman and the Minister of State, Board of Trade, and in the correspondence which I have had with the Minister of State, there has been a continual attempt to minimise the seriousness of the situation. That is precisely the charge made by the "Manchester Guardian"—we can call the "Manchester Guardian" to our side this time—in its Trade Notes on 4th February. I should like to read what it said on the day following the answers given in the House by the President of the Board of Trade. It said: In his replies in the House of Commons yesterday to questions about the imports of Indian grey cotton cloth, Mr. Peter Thorneycroft, the President of the Board of Trade, was careful to give figures and comparisons which minimised the growth and size of those imports and the seriousness of the danger which they represent to the cotton industry in Lancashire. His treatment of the subject has made a very bad impression among traders, who had hoped for some indication of remedial action but who were given instead only quibbles about statistics. I am glad to see that the right hon. Gentleman has returned to the Chamber, because I intend to make some reference to the interchange which took place between him and my right hon. Friend about what the President actually said in the House on the subject of the increase in imports. Perhaps it would be better not to use my own words, but to refer to this article on the subject in the "Manchester Guardian": To speak, as Mr. Thorneycroft did, of a 'slight increase,' when the imports from India rose in fact from less than 16 million yards in 1953 to an annual rate of 130 million yards in 1954 is to suggest that he is trying to evade the issue. To state, as he also did, that total imports of grey cloth in 1954, which were 236 million yards, were only 'slightly above the average for the previous six years' is to conceal that the average for the previous two years was only 110 million yards and to ignore that in the four years before that the imports were needed to supplement the supplies for export by an industry which could not otherwise have met all the home and overseas demands which were put on it. The President of the Board of Trade is well aware that it is misleading to compare the position today with that of a year or two prior to 1951; and to say that the increase in imports of foreign grey cloth was less than I per cent. of the total cloth production of Lancashire—he will persist in forgetting Cheshire—is incorrect. The increase in imports of foreign grey cloth in 1954 compared with 1953 was 160 million yards, which represents 8 per cent. of a total production here of 1,993 million yards. The 1 per cent. refers to the average for the previous six years.

Then the President seems to think that there is little unemployment or short time. I will quote from a letter sent by the managing director of a firm in my constituency, and in doing so I would point out that I received this letter four months after the first letter sent by this gentleman. He wrote: We are still running only four days per week and unfortunately we have also had to stop a third of our machinery; our total production being thus somewhat under 50 per cent., and from the information I can get from other Doublers, this situation is pretty general throughout the trade. Some firms being infinitely worse off than us, some being slightly better off. …I notice from the Press that, according to Mr. Thorneycroft, there is very little unemployment or short-time working in the Cotton Trade. This is rather staggering when, if you will take Stalybridge alone"— As all hon. Members know, Stalybridge is rather a small town but its importance far exceeds its size— I know of one Spinning Mill which has been on three days a week and is now closed for a week or a fortnight and another Spinning Mill is on three days a week as well as ourselves being on four days a week with some machinery stopped. Another Doubling Mill in Stalybridge has some operatives working only a three or four day week. In pressing the Government to take some action to relieve the present position, I am not overlooking the fact that there is action which the industry would take. But whatever is done by the industry itself, it could never compete with the cheap cloths and yarns which are being brought into this country. The merchants, of course, are only taking advantage of a policy of laissez faire. If the Government set the people free to put profits first and foremost, they must anticipate the results, and the results in this case are somewhat disastrous for the cotton industry.

The President of the Board of Trade has told us, and the Amendment hints at the fact, that whilst the cotton industry may be suffering in our trade agreements there are compensations to other sections of our economy. We do not dispute that, but if the cotton industry is expected to carry the burden for the rest of the country, we have the right to expect special consideration and help from the Government.

Reference has already been made to Purchase Tax and it is not necessary for me to stress the importance of that aspect. If the President of the Board of Trade has been too busy preparing for this debate to read the article in today's "Manchester Guardian," I suggest that he makes a special study of it. The abolition of the Purchase Tax would stimulate sales and would increase the production of quality goods, with beneficial effects on our export trade, as has already been pointed out.

The difficulties of the cotton trade are not peculiar to our own country. I realise that other countries have their difficulties also. I have recently been in Japan and therefore I can fully appreciate the difficulties with which she is faced. Some 35 per cent. of her economy is dependent upon textiles. She has lost her former markets in China, Manchuria and Korea and she has a pressing problem to provide for her huge population, which is increasing at the rate of 13 million persons per year. Therefore Japan is anxious for our help, but while we have every sympathy for her, we cannot be expected to solve her problems at the expense of unemployment for our own people. I shall say little about the problem of Indian cloth because that aspect is being dealt with fully by other speakers. However, in emphasising the major problem of cloth, there is a danger of overlooking the serious situation facing our spinning and doubling trade through the importation of cheap foreign yarn, as the hon. Member for Heywood and Royton said. I have had some correspondence with the Minister of State, Board of Trade, on this subject and I do not think he will be surprised when I tell him that I have found his replies completely unsatisfactory.

In answer to a Parliamentary Question yesterday the right hon Gentleman gave me the figures of imports of cotton yarns for 1953 and 1954. These were, from Egypt in 1953, 33,000 lb., in 1954, 1,539,000 lb.; from Portugal, none in 1953, 1,753,000 lb. in 1954; from Italy, 1,404,000 lb. in 1953, 2,080,000 lb. in 1954; from Belgium, 377,000 lb. in 1953, 1,679,000 lb. in 1954; from the Netherlands, in 1953, 319,000 lb. and in 1954, 1,205,000 lb.; from the Irish Republic in 1953, 84,000 lb. and in 1954, 328,000 lb., making a total for 1953 of 2,217,000 lb. and in1954, 8,584,000 lb.—practically a fourfold increase.

Although these figures may represent a small proportion of our production, a fourfold increase in one year must have an unsettling effect and create fears for future trends. I am not suggesting that all the difficulties of the doubling trade are caused by these increased imports, but obviously they are having a serious effect, particularly since the yarn is being sold at prices with which we could not compete unless our operatives worked without wages.

I am informed that the price at which the imported yarn is sold is between 20d. and 25d. a lb. below the price at which it can be produced in this country, and 12d. per lb. below the price at which a similar yarn could be sold if made from a shorter stapled single yarn spun from American cotton.

In his last letter to me the Minister of State, Board of Trade, wrote: Certain schemes operated by the Egyptian Government, the sterling entitlement account in particular, might be enabling yarn exporters to quote particularly low prices. We have made strong representations to the Egyptian Govern- ment with a view to getting them to end at any rate the sterling entitlement account, and the Trade Mission which has just left Egypt had the opportunity of pressing the matter directly. When the Minister replies to the debate I shall be glad if he will say whether there has been any result from those representations.

In his attempts to minimise the difficulties of the doubling trade, the Minister of State informed me that the output of doubled yarn for the week ended 22nd January was above the average for 1954. That may well be, but it could mean much or little. We should need to know the counts of yarn being produced because, if they are very coarse counts, the weight is naturally higher.

I should like to go into more detail about the imported yarns but I shall curtail my remarks because many other hon. Members wish to speak and in any case I have made my point.

Interest in this House in the position of the industry is not confined to Labour Members; supporters of the Government are also seriously concerned about it. I have in my hand a report of the annual meeting of the Middleton Conservative Association which was addressed by the hon. Baronet the Member for Middleton and Prestwich (Sir J. Barlow). I am glad the hon. Baronet is in his place, because I had informed him that I would refer to the report of that meeting and I shall read a resolution which it passed unanimously. In his speech the hon. Baronet said: We have officers of the Conservative Party in the division who have resigned from the party because they were so dissatisfied with the action of the Government in this matter. That is going to extremes. But I have a right to criticise the Government for the insufficient attention they have paid to textiles. I hope that all hon. Members opposite will agree with what the hon. Baronet said.

I should like now to call attention to the resolution which was passed at the meeting: The Middleton Conservative Association at its annual meeting, after discussing the textile industry, has come to the conclusion that the present recession in trade is not in the nature of the normal ebb and flow of trade but is the beginning of a definite change in the textile trade unless the Government take immediate steps to counteract this trend. This meeting further records its disappointment in view of the visit of the Chancellor of the Exchequer, the President of the Board of Trade and the Minister of State, that apparently nothing tangible is being done to support the textile trade against cheap overseas competition.

Mr. S. Silverman

Have they been expelled yet?

Mr. Blackburn

The resolution went on: This meeting further records that such inaction is likely to lead to unemployment. It is quite obvious that the hon. Baronet cannot vote for the Government's Amendment, which asks us to approve intentions. It would appear that if he came into the Lobby with us, he would have the support of the Middleton Conservative Association.

I have a final quotation which, I am afraid, will worry Lord Woolton. One of the speakers at the meeting said: … that canvassers had found that old subscribers would not subscribe again until the Government did something about the cotton trade. I call special attention to his next sentence: What value did the Government place on Lancashire folks? The question is, indeed: "What value do the Government place on Lancashire and Cheshire folk?"

So far, the Government have done nothing to help the industry. I wish that I had time to deal with the Amendment in detail, but it is time I finished speaking. My right hon. Friend has put forward a scheme; obviously, the President is against it. We shall be satisfied if the President of the Board of Trade will himself bring forward a better scheme, for he will then have the support of this side of the House, but immediate action is called for.

6.53 p.m.

Mr. F. J. Erroll (Altrincham and Sale)

I am sure that we all very much enjoyed the speech of the hon. Member for Stalybridge and Hyde (Mr. Blackburn), particularly inasmuch as he spoke for Cheshire as well as for Lancashire. I will not try to go with him into his examination of the affairs of the Middleton Conservative Association, because I am sure that my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow) will be able to explain matters if he is successful in catching Mr. Speaker's eye.

Mr. Blackburn

I am sure that the hon. Member for Middleton and Prestwich would agree entirely with everything that was said at the meeting. I do not think there is any quarrel about it. I agree entirely with the hon. Baronet.

Mr. Erroll

I think we can leave my hon. Friend to develop that theme for himself.

I wish to refer to the remarks of the hon. Member for Stalybridge and Hyde about short-time working. I am sure we are all very distressed to hear the extent of the short-time working which he has described, particularly in his own constituency, but could he explain whether the operatives who are working short-time are paid only for the short-time or whether those who are working four days a week are being paid for a five-day week, because it makes it much better if it is the latter?

Mr. Blackburn

It does not make any difference at all to the fact that there is short-time working in the industry. I do not see the hon. Members' point.

Mr. Erroll

I think that the parties concerned would see the point of whether for doing four days' work they are being paid for four days or five days.

Mr. Blackburn

Surely what we are discussing is the possible recession in the textile industry. We are not discussing whether men are working four days a week and being paid for five days.

Mr. Erroll

I will let the point pass, but I am sure it makes a considerable difference to the workers concerned whether they are being paid for a full week or for part-time work.

Mr. G. Lindgren (Wellingborough)

No, it does not.

Mr. Erroll

Before I turn to my main remarks, I should like to refer to the opening speech made by the hon. Member for Huyton (Mr. H. Wilson). We are accustomed to hearing many witty remarks from him, but I thought that this afternoon he was not so witty but rather more waspish than usual. I should not like to allow his remarks about the Parliamentary Secretary to pass. My hon. Friends and I have a very high regard for the Parliamentary Secretary. For myself, I always enjoy listening to my hon. and learned Friend's speeches from the Dispatch Box, particularly as they are cogent, lucid and extremely forceful. I cannot agree at all with what the former President of the Board of Trade had to say about my hon. and learned Friend.

I am sure we all appreciate the concern that has been expressed this afternoon about the problems which beset the cotton textile industry. At the same time, it is as well for us to remember that other industries have their problems too and occasionally suffer from periods of short-time working, shrinkage of export markets, or, indeed, from the flow of cheap imports into the country. The Lancashire textile industry is by no means alone in this matter, but it is almost unique in constantly complaining to the Government for the Government to do something about it. What my hon. Friend the Member for Oldham, East (Sir I. Horobin) said is particularly appropriate, that it is a great mistake to complain too much about one's troubles because one only drives away would-be entrants into the industry and brings about an atmosphere of depression and despair out of all proportion to the actual difficulties.

While difficulties may exist, it is not fair to assume that they all spring, or very largely spring, from the imports of Indian textiles. That will be, and, indeed, is, a factor, but it is not necessarily the only factor. If we are to be mesmerised into concentrating on this factor we may ignore other factors which also have an influence. I do not claim to be able to say what all the factors may be, but I suggest that we should be wrong to concentrate solely on the problem of the importation of Indian textiles.

I well remember how 18 months ago we were all being told how the agreement with the Japanese, whereby they could make strictly limited imports into the British Colonial Territories, would do a great deal of harm to the Lancashire textile industry. In fact, Japanese imports into Colonial Territories are now running at a lower rate than they were 18 months ago, and so the agreement can hardly be said to have done much harm, although it is one of the bogies which is trotted out against, and in face of, all the facts to illustrate the problems of Lancashire. Certain facts about the industry need to be stated, particularly the very considerable benefits that the industry has received since the war, far greater benefits than most other industries. There was shortly after the war the very extensive spinning re-equipment subsidy which enabled a good deal of re-equipment in the spinning industry to be carried out with the aid of Government money. One of the factors which was going to help in the re-equipment was the introduction of double-shift working. I think it is a great pity that the workers in the industry have not responded in the same way as the employers and the Government in playing their part in making the industry more efficient with the full use of post-war equipment.

Mr. Fletcher-Cooke

Does not my hon. Friend appreciate that in the cotton industry, unlike almost all other industries, the majority of the workers are women and that the question of shift working with women raises social problems different from the problems in other industries?

Mr. Erroll

I can only say that it is surprising that such points were not made clear at the time when hon. Members on both sides of the House were in favour of double-shift work. There was also a substantial reduction in Purchase Tax rates and the introduction of the D scheme, but we are still told that Purchase Tax is—

Mr. Richard Fort (Clitheroe)

The D scheme was forced on the industry in order to raise money for the Revenue and was in no way to benefit the industry.

Mr. Erroll

I can hardly deal fully with the D scheme without taking too long, but it was the gap in quality between Utility goods and Purchase Tax goods that led to Lancashire's pressing for the D scheme, or its equivalent. I can only say that if Lancashire did not like the D scheme I have heard no complaints about it, or any demand that the D scheme should be removed and the old scheme reintroduced. That would be infinitely worse.

While Purchase Tax is a factor, it is by no means a major factor, as one can see by going into a shop. One will find that very rarely is the customer interested in whether an article bears tax or not, and very rarely does the retailer know whether it is taxed or not. The extent to which retailers are shy of taxed goods arises largely because of Lancashire's shouting about Purchase Tax and making everybody wary of it. If Lancashire would use its energies to say that the tax was a relatively small item in the retailer's establishment and could therefore be ignored, it would find that it was far less of an obstacle than it is made out to be.

On the specific Indian matter, I quite agree with all that has been said about the importance of trying to persuade the Indian Government to lower the tariff on English textiles whichwe are exporting to that country. I hope that further pressure can be brought to bear on the Indian Government to help in that direction. At the same time, we must remember that India takes a large volume of goods from us. If we are going to try to keep her textiles out of England, how is she going to be able to pay for what she takes from us? There must be some degree of reciprocity between the two countries.

I am quite sure that Lancashire does not want to secure benefits for herself at the expense of the rest of England. Any drastic protection for Lancashire textiles would undoubtedly result in the taking of severe measures against some of our extremely important exports. We export to other countries whose labour costs are higher than ours and we appear to them as the Indian textile producer appears to us. They would just love to have the opportunity of clamping restrictive tariffs or quotas on our exports, if we set them an example by doing the same in respect of Indian textiles coming into this country. We ought to move very carefully before we see our own exports being restricted in that way. I should like to give the House a couple of brief examples, of which the bicycle trade is one.

We are exporting about £12 million worth of bicycles to the United States of America at present and there have been two applications to the United States Tariff Board for increases in their domestic tariff to keep out British imported bicycles. These applications have been resisted so far, but if we set an example in respect of textiles, we may well find our bicycles are being kept out of America.

Similar arrangements apply to India, to which country we export some £100 million worth of engineering goods and chemicals a year. If we proceed to discriminate against Indian goods coming to this country, we cannot complain if we find discrimination applied to the very much larger volume of British goods going to India. Much the same argument can be used for Australia which has relatively high labour costs compared with this country and in which country there is constant clamour for protective tariffs for their own domestic industries. If we set the example, Australia and other sterling area countries will follow suit.

In all this we have not heard very much about the British consumer. Surely the British consumer has the right to textiles at the lowest possible cost. Any measure of protection for the Lancashire textile industry is protection secured at the expense of the British housewife and the British consumer of textiles. While in the long run it may be necessary to secure such protection, let us be in no doubt at whose cost it will be achieved.

7.5 p.m.

Mrs. Barbara Castle (Blackburn, East)

There has been a remarkable dichotomy in the speeches of hon. Members opposite during the course of the debate. They have obviously been torn between the desire to play down the problem of Lancashire to save the Government's face and the realisation that if they play it down too much, they will be in trouble with their own supporters.

We had the hon. Member for Heywood and Royton (Sir H. Sutcliffe) telling us that it was ridiculous to call this a Motion of censure. As I listened to him, I began to wonder why he imagined we were having the debate. Did he think that it was invented as a piece of malice and spite by this side of the House? He obviously did not listen to my hon. Friend the Member for Accrington (Mr. H. Hynd) who pointed out that there was strong censure of the Government which had not originated on these benches, but in the firms in Lancashire, among employers and trade unions. This debate has reflected the censure which has been mounting in Lancashire—outside the House.

I should like to remind the hon. Member of the telegram which my hon. Friend the Member for Accrington read. It was from the President of the Blackburn Chamber of Commerce. I got a similar telegram, too. I am under the same instruction, which I will read: Blackburn and District Chamber of Commerce, considers you should vote against Government if effective action is not announced Wednesday. That is clear enough. Reference has already been made to some devastating criticisms of the Government that have been coming not from party opponents of the Government, but from the men in the industry itself, the employers and from people like Mr. Aspden, of the Blackburn Chamber of Commerce, who normally represents a point of view very different from ours. Let me read one paragraph of his speech which is a complete vindication of our action in putting down the Motion. After having elaborated the problems of Lancashire, and the representations that have been made on Purchase Tax and unfair competition and the rest of it, Mr. Aspden says: The only answer to date has been a coordinated chorus of platitudes from Ministers at various levels of importance—intermingled with vague references to the restrictive effects of G.A.T.T., the Ottawa Agreement, and the India Act, 1939—which invokes the thought that there is no policy at all, other than one of drift, and a Micawber-like hope that something will turn up to keep the troublesome Lancashire spinners and manufacturers quiet. So we have it on his evidence that it is the Lancashire spinners and the Lancashire manufacturers who are in effect moving the Motion of censure on the Government, and I am very happy to be their instrument on this occasion.

We were told by the hon. Member for Oldham, East (Sir I. Horobin) that he did not want any panic action. He need not worry, he is not likely to get any action at all from this Government. He told us that all these difficulties—and the hon. Member for Altrincham and sale (Mr. Erroll) echoed this—arose because Lancashire keeps crying, "Wolf, wolf," and creating worse difficulties by her panic propaganda. The hon. Member for Altrincham and Sale seems to proceed on the assumption that if we do not talk about the problem, it will not be there.

Of course it is there. I want quite soberly to give the House the picture that I was given in my constituency last weekend in preparation for this debate, a picture I got after consultation with the local employment exchange, local trade unions and local firms. The situation is one with which the Government must deal and with which it must deal rapidly by effective action. I do not suppose that Blackburn is necessarily one of the most seriously affected areas in Lancashire at the moment.

None the less, in Blackburn, on 4th February, the Longshaw Mill closed down completely. It is not reopening. It was weaving better-class goods like furnishing fabrics and dress cloths. On 11th March, another mill, which had been operating a double day-shift on automatic looms, making twills, drills, plains and tickings for home and export, stopped weaving. The reason given to the operatives was that the firm had no orders on then-books. The firm blames that situation on Indian cloth imports. In another part of the area, a doubling mill has gone on to a four-day week. A spinning mill in the employment exchange area has put 33 women on to a four-day week, until further notice.

Another mill in Blackburn, which is one of the largest Jacquard weaving units in the country, has been on a four-day week since 28th January. On 18th February, it started laying half its weavers one week off in five, under the local agreement. It is now about to stop almost half its machinery.

This will mean two things: first there will be the immediate consequence, unemployment; and, secondly, there will be the future difficulties of starting up again when the President of the Board of Trade has been galvanised into action by Members in all parts of the House.

I have talked to firms in my constituency about the situation. They say that the last mill to which I have referred is not untypical of a large number of firms, which are now beginning to come to the end of the order books which have kept them going, and which had cushioned them from the effects of the increasingly shrinking trade. The directors of the firm to which I have referred associated the crisis which is facing their mill with the importation of foreign cloth, particularly from India. They blame not only present cloth imports but the general degeneration of market confidence which uncertainty as to quantity of imports and the price level at which they will come in has created. While I was in my constituency the executive of the Amalgamated Association of Beamers, Twisters and Drawers met me and talked about the situation. Men from the whole area gave me their views. Hon. Members representing Lancashire constituencies have already given us a very grim and challenging picture for the area. Admittedly, there is no large-scale and obvious unemployment at this stage, but it is a picture of firms who have put up the one week's notice which they have to put up under the local agreement, and who are keeping it up indefinitely so that they can lay off workers when necessary. Firms are stopping for a week here and there, or are on a four-day week. There are firms who frankly admit that they are running on existing orders and that when those orders are exhausted they have no more in prospect.

I was told that one of the most modern mills in Lancashire, re-equipped recently at a cost of between a quarter to half a million pounds, is stopping next week. The reason given to the operatives is "owing to the difficulty in filling order books."

In these circumstances, I was astonished to read in "The Times" this morning a leading article which might have come direct from the Board of Trade. It said that there have been no real signs of fresh underemployment in the industry, since the big increase in Indian imports took place. I can only suggest that the gentleman who wrote that is not in touch with the facts as we are on this side of the House who know intimately the conditions in our constituencies. I have given evidence from my own constituency which shows that the leader writer is wrong.

The official employment figures are not a fair and full reflection of what is happening. Part-time workers who are laid off do not report to the employment exchange. Many women in my constituency working on evening shifts prefer, if the mill lays them off, to stay idle for a time. They want to stay with the mill because they are familiar with it. It may be just around the corner and they do not want to register at the employment exchange perhaps to be sent to temporary work elsewhere and miss the chance of going back to the mill. Non-insured married women do not register anyway. Whereas before there were vacancies, now the vacancies list has dried up in a new and alarming fashion. One trade union representative told me, "The uncertainty is eating into the soul of Lancashire again." That is the essence of the situation.

All we have had from the President of the Board of Trade this afternoon was the statement that this was not the time to make final judgments. The right hon. Gentleman seemed none the less to be making some pretty sweeping judgments, but all were negative. He told us what I expected to hear from him, that this was more of an export than an import problem. That has been the answer to all the representations we have made on unfair competition from Indian imports. We have always had the answer that Lancashire's problem is due to the shrinking of the export trade, and I am not surprised that the right hon. Gentleman stated that in the House once again. It enables him to plead that he cannot take action but must "reflect further" in order not to injure the export trade of other industries in Lancashire.

That is not the argument that we have met in our constituencies. Employers and trade unionists alike say that Lancashire can adapt itself to the inevitable gradual shrinkage in the export trade but ought not to be expected to take in its stride the sudden undermining of the home market by a flood of imports which are weakening prices all along the line, not merely in the cheaper goods but in the finer goods as well. They are causing market and price uncertainty and the drying up of orders, which create the general shadow of doubt that is once again hanging over Lancashire.

The Government must make up their minds. If the real difficulty is exports, what can justify the failure to tackle the problem of the Purchase Tax? The Government must have some plan in their minds for the future of Lancashire. That is what we complain about. Lancashire has been given many conflicting stories since the war ended of what her rôle should be. I understand that the Chancellor of the Exchequer has been lecturing Lancashire, saying that the main problem was a shortage of export orders and that Lancashire must put its house in order and be ready to meet competition by specialising in high quality goods, by efficiency, and all the rest of it. Lancashire asks the Government, "What about the D scheme which is crippling high-class production all along the line?" as the "Manchester Guardian" shows so devastatingly this morning. We get nothing. There can be reductions of Purchase Tax on furs, jewellery and other things, but not to help one of our major industries.

The Government have given the impression that they have written Lancashire off, that they have no coherent plan for Lancashire and no place for Lancashire in their economic plan. No one on this side of the House wants to injure our relations with India, and no one wants to injure the economy of that country. We want nothing but friendliness and co-operation with India. Certainly there is no ill will towards her in Lancashire. But I believe that the Indian Government and the Indian people themselves, if they were approached in the right way, with firmness by a Government who knew their own minds on this problem, would be prepared to co-operate with us in curbing the disturbing import trend based on unfair competition.

I believe that Lancashire's case has never been put, because the Government have a divided mind, which was illustrated by the speech of the hon. Member for Altrincham and Sale. The President of the Board of Trade and other hon. Members opposite have said that we must not do anything to deal with this situation because there are other export industries which might be affected. That division in the Government's mind weakens their whole approach to this problem. It is because we have had no announcement of action, and no indication of a basis upon which we can expect any action at all, that I shall vote against the Government.

7.22 p.m.

Mr. William Shepherd (Cheadle)

There is one characteristic of hon. Members opposite which has been very noticeable today, and that is a complete lack of enthusiasm for the plans put forward by the right hon. Member for Huyton (Mr. H. Wilson). Whatever hon. Members opposite want, they do not want their own official proposal, and, although I may condemn them for some things, I must say that they have my support in that instance. There is, after all, something to be said for the view of my right hon. Friend the President of the Board of Trade that it is as well to get the facts right and put into the picture everybody who knows something about the subject, rather than dash into some sort of solution.

The hon. Lady the Member for Blackburn, East (Mrs. Castle) went through the usual performance of all hon. Members opposite who have spoken in saying how bad things were and accusing us of playing down the situation. I hope that no one on this side of the House, or indeed in the country, will attempt to play down the situation. But one thing which is worse than playing it down is to exaggerate it. For instance, I heard the hon. Member for Accrington (Mr.H. Hynd) say that the industry was bleeding to death. That is absolute nonsense, and it cannot be justified by any examination of the facts. Those who try to paint the picture of this industry in over-sombre tones are doing the industry a real disservice.

I know that this industry is a difficult and sensitive one. It is sensitive because it has a very long pipeline, and when an industry has a very long pipeline it is essential to take evasive action rather early on. Nevertheless, nothing that I have heard today has justified some of the pessimism which has been expressed.

We have heard talk of the effect of working half-time. Yet the figures show that the production a few weeks ago was only a few per cent. below that in November, 1954. My hon. Friend the Member for Oldham, East (Sir I. Horobin) said he understood that the stocks held in hand by spinners was two or three weeks. According to my information, that is a gross exaggeration. The stocks held in hand by spinners is much less than two or three weeks; indeed it is not as much as one week. Therefore, we must look at the situation of this industry realistically. It is possible to talk Lancashire into a state of depression. Hon. Members opposite tried to talk America into a state of depression some time ago, but they did not succeed.

Mr. Ellis Smith

That is a slight exaggeration.

Mr. Shepherd

It may be an exaggeration, but they made a jolly good effort. They did not succeed. We all know that depressions are 25 per cent. economic and 75 per cent. psychological. Therefore, we have a real responsibility to treat this issue with a little more restraint than hon. Members opposite have been doing this afternoon. There is no basic danger in this industry. There may be some unpleasant tendencies, but there is no danger. After all, the total labour force in this industry has come down from 750,000 to 250,000. Let us assure the workers in Lancashire that there is no real prospect of getting a recurrence of the situation which we had between the wars, because the real reduction has already been made.

Mr. Shackleton

Presumably the last 250,000 do not count.

Mr. Shepherd

That is the sort of observation I might have expected from the hon. Gentleman. The labour force has undergone a very severe contraction and, as my hon. and gallant Friend the Member for Rochdale (Lieut.-Colonel Schofield)said, it is doubtful whether the industry at the present level can fulfil all the needs of this country in an emergency. Therefore, the labour force has been reduced to an almost irreducible level.

We ought to make it clear that whatever Lancashire is suffering from at present, it has suffered in the past 10 years from too much profit made too easily. While we would naturally prefer to see better conditions than there are today, it is nevertheless true that economic changes that have to be made in Lancashire before she can meet world competition will not be made in feather-bed conditions. I see the hon. Member for Nelson and Colne (Mr. S. Silverman) laughing—

Mr. S. Silverman

I was laughing at the notion that anybody knowing the conditions of Lancashire today would describe them as feather-bed conditions.

Mr. Shepherd

I did not say that conditions in Lancashire today were featherbed conditions. All I said was that the conditions necessary to bring about the economic changes which are essential for the long-term success of the industry are not those of a feather-bed. There are more vacancies in Lancashire industry than there are out of work.

Another item which people tend to overlook is that the present demand for textiles in the home market is very low. The average use of textiles per head of the population in 1937 was 48 square yards. If we take what was available for the home consumer in 1953, we find that the figure had gone down to 39 square yards, and that includes rayon mixtures. Today the consumption of cotton textiles per head of the population is below the normal, and it is to be hoped that the consumption per head of the population will be increased in the next two or three years.

That can be achieved by a number of methods. One method is by dealing with the Purchase Tax. There is now a very strong case for the Chancellor of the Exchequer to consider the reduction or abolition of Purchase Tax upon cotton textiles. There is no doubt that that would have a very stimulating effect upon the whole of the industry. We have heard a good deal today about the need to deal with Indian competition. Let me say right away that serious and unfair as that competition is—and no one says that this competition is fair, because it certainly is not—the slackness in the trade cannot be attributed in a substantial measure to imports.

For one thing—and I am surprised it has not been mentioned today yet—I think that the weather has had as much as anything else to do with the bad state of things in Lancashire. Let hon. Members recall last summer. In the summer we expect normally to sell millions of cotton dresses. Last season we sold few. Now, at this time of year, when normally we have rather good weather, and when we look forward to buying new clothes, and women look forward to buying new frocks, we are greeted by snowstorms and blizzards. The tendency to buy cotton dresses is thus, to say the least of it, somewhat inhibited. I believe that the weather conditions have probably as much to do with the depressed state of the trade today as anything else.

Briefly, because of the short time I have, I want to mention one or two things I think ought to be done in this situation. I have already said that we ought to try to restore fair conditions of trading so far as India is concerned. It is not my idea of fair conditions to put on quotas. I am wholly against the concept of quotas. What we want is an import tariff which will give our own people a reasonable chance to compete fairly with Indian products. That would be much more satisfactory than a system of quotas, to which there is a great number of very solid objections.

Secondly, we ought to reduce or even eliminate Purchase Tax upon textiles to encourage the production of better quality goods, because, remember, it is in the case of the better quality goods that we are suffering most. Third, I hope that my right hon. Friend will negotiate with foreign countries bilateral agreements. He should try all he can to push textiles. I know the tendency is in these cases to push textiles out. It is my right hon. Friend's duty to try to push them in.

Though there are certain things the Government can do there are things which Lancashire can do. I want to state what one or two of them are, because we ought not to cultivate the idea that the solution of the problem lies entirely in the hands of the Government. One of the first things to do is to improve quality in Lancashire. We have done a great deal to improve our quality since the recession in 1952, but there is more to be done than has yet been done, and it is a very bad thing to feel we lose orders because of the quality of the goods. That is something we ought to devote our attention to. I am speaking of faulty production rather than of low standard of production. This is a consideration apart from the incidence of Purchase Tax.

Secondly, we could improve our selling in certain markets, in the Central and South American markets, for example, and also in some European markets now opening to us. There is a course we ought to pursue. We ought to avoid as much as we can the dangers of monopoly in this industry, and I congratulate my right hon. Friend on accepting the report concerning the calico printers. I am sure that the solution of the real problem of selling overseas will not be assisted by monopolistic practices. It will be assisted by more energetic enterprise in this country.

There is a good deal to be said for giving protection to the home market in textiles, particularly against unfair competition, but I think that those of us who come from the constituencies mainly concerned with textiles have to recognise the great change that has come about in the pattern of British trade. In 1850 textiles comprised 63 per cent. of our total exports. By 1951 textiles had come down to 19 per cent. of our total exports. Today the selling of our metal goods is the most important factor in our lives.

I would illustrate that. If we were able—and we certainly cannot do this—to eliminate all our metal exports and replace them with textile exports we should starve. That shows how important metal exports are to this country. They have a very high conversion value against the very low conversion value of textile exports. So I hope that whatever the Government do they will not lose sight of the main fact that no longer are the textile industries responsible for 63 per cent. of our exports, and that even if they were to be we could not then maintain this country's present standard of living, because we depend, absolutely and utterly, upon the high conversion value of metal and machine exports to live.

That does not mean that Lancashire is not entitled to a fair deal, and I hope the Government will go ahead with getting some reasonable tariff against Indian goods. I hope that Lancashire will realise that, apart from the Government, it, too, has some part to play. It can improve its own position. By cooperation between the Government and the industry the present unfortunate tendency can be eliminated.

7.36 p.m.

Mr. Anthony Greenwood (Rossendale)

I think we are all indebted to the hon. Member for Cheadle (Mr. Shepherd) for his final cautionary remarks about the general pattern of trade, and I would agree with him in deprecating the hysteria of Middleton and Prestwich Conservatives in the resolution they passed, although its general line, of course, commands the support of hon. Members on this side of the House. I do not agree, however, with hon. Members opposite who complain about what they call the Lancashire tendency to cry, "Wolf, wolf." I think that if there were any tendency in that direction it will now have learnt a lesson from the last time the cry was raised, the Chancellor of the Exchequer was sent in response to it. That would be a salutary lesson, I think, for any industry.

One of the more lamentable parts of the speech of the President of the Board of Trade was his dramatic conclusion, when, after a pause, he told us what the Government were going to do next, which was that the Prime Minister was going to attend a meeting at which the President and the Cotton Board were to be present. I do not think that is a very substantial contribution to the solution of the difficulties of the industry. It is the less impressive, I think, when hon. Members remember that a letter was sent to the Prime Minister by the industry on 18th February asking for such a meeting. The meeting is to take place only next week, nearly a month after the request was originally transmitted to the Prime Minister. That delay has taken place in spite of the fact that when the letter went from the industry to the Prime Minister he was told that delay might produce "irreparable damage." Yet we have had to wait nearly a month for the conference to take place.

I should like to emphasise what other hon. Members have said about the extent of the crisis in which the industry now finds itself. I shall not go over the details other hon. Members have given the House, because I do not want to take too long, but want to give time to other hon. Members to take part in the debate. There is certainly anxiety in my own constituency about the shortness of the order books. Residents in the Rossendale Valley are not prone to hysteria or excitement on these subjects, but there is genuine alarm and apprehension about what the future may hold, and there is certainly alarm about the short-time working and closing down of mills in other parts of Lancashire about which we read from time to time in the "Manchester Guardian." The "Manchester Guardian" on 9th February told us that in what it called the last few months a dozen or more spinning, doubling and weaving mills had closed down permanently.

We cannot escape the fact that, although some workers have gone back to the industry since the recession of 1952, the number employed in the industry is still 30,000 lower than it was before the recession. There has been talk about workers being on short time, and I could not understand the point which was worrying the hon. Member for Altrincham and Sale (Mr. Erroll) about whether the workers were being paid for short time. Obviously that makes a great difference to the workers concerned, but it makes no difference at all to the relevance of the evidence on the serious state of the industry. The truth of the situation is that many employers, and especially employers who have spent considerable sums on new equipment, are not anxious to disperse their labour force and therefore are continuing to pay their workers even though there is not adequate employment in the mill.

Mr. Shepherd

The hon. Member has mentioned the closing of mills, but many of these mills do not close because of shortage of orders, but—some of them at any rate—because of financial manipulations, among other things. It is therefore wrong to give the impression that these mills are necessarily closing merely because of the shortage of orders.

Mr. Greenwood

It is difficult to distinguish between the two. My hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) rightly suggests that one cause often arises out of the other. But if the trade columns of the "Manchester Guardian" tell us that mills are closing down because of shortage of orders, we can accept that as reliable evidence.

Perhaps I may return to the question of the workers in the industry. The difficulty is that once employers find that a pool of unemployed labour is available in the industry, they will be less inclined to keep on their books workers who at present are working short time, and what is at the moment a slight recession may at any time turn into a serious avalanche from the point of view of the workers in the industry.

I am bound to say that I do not think the raising of the Bank Rate has helped the industry towards a solution of its problems. There will be a tendency for people to hold off buying and also a tendency for people to be reluctant to hold stocks.

We have heard a number of criticisms of the proposal put forward by my right hon. Friend the Member for Huyton (Mr. H. Wilson), but it seems to me that right hon. and hon. Gentlemen opposite are being a little too negative in this matter. It may be that there are difficulties in what my right hon. Friend proposed—proposed with the full support of the trade unions in the industry—but, on the other hand, we have had criticism by hon. Members opposite in some cases of quotas and in other cases of tariffs.

I believe that quotas and tariffs are much too blunt an instrument to use in a situation of this kind. The Government should seriously consider whether they could not devise a plan on the lines which my right hon. Friend suggested, which is flexible and which would not be discriminatory against any one country but could be used from time to time to deal with any serious situation as it arose.

After all, it is not so much the present level of Indian imports which worries the industry as the fear that this level may continue to rise and that the situation may become more and more serious. In my opinion the Federation of Master Cotton Spinners' Association summed up the situation well on 28th February when it said that a slight recession in world textile trade would be enough to bring subsidised goods from all over the world pouring into Lancashire. That is what is alarming Lancashire and causing uncertainty and instability in the industry—not so much what is happening at the moment but what may happen at any moment unless there is some control over imports of this kind.

Especially in view of the far-from-positive speeches made this afternoon, I believe that right hon. and hon. Gentlemen opposite bear a heavy responsibility. Frankly, I was shocked to hear the President of the Board of Trade say that he would not be led into discussing the effects of Purchase Tax on this situation. Hon. Members have referred to the article in the "Manchester Guardian" but, in order to put it on record, I want to quote one extract from that article on the effect of Purchase Tax on our export trade. It reads: Examples of troubles in the export markets are as easy to find as examples of difficulties at home. A manufacturer of high-quality bedspreads finding no sale for them at home has had to drop them from his ranges completely, even though there was a keen export demand. A firm making screen-printed poplins has had to reduce its range drastically. At a show in America it was criticised by buyers because it offered only a dozen designs. A maker-up of cotton frocks had to restrict his designs to bring them below the "D" line, and as a consequence their export possibilities were greatly reduced. Comparisons with the conditions under which competitors in other countries work further irritates the British exporter. I hope that whoever replies to the debate will be more frank and forthcoming in dealing with the question of the D scheme than was the President. In conclusion, like the hon. Member for Cheadle, I share the feeling which was expressed very forcefully by Mr. Pardoe, President of the Manchester Chamber of Commerce, the other day—that Lancashire, and the textile industry itself, has a good deal to do to help itself, as well as being fully deserving of any help which the Government can give. We have to do a lot of things and to recognise many of the facts about which the hon. Member for Cheadle spoke.

We should regard the under-developed areas of the world as being as much a challenge to us as a threat, because in those areas is a tremendous market for the goods which we can produce in this country. The Food and Agriculture Organisation the other day gave these figures of the amount of cotton available per head for home consumption in 1952–53: in the United States, 12…3 kilograms; in the United Kingdom, 5…3 kilograms; and for the 1,300 million Asiatic consumers only 1…7 kilograms.

Once we can raise the standard of living in the Asiatic countries so that they can buy textile goods on the scale at which we are using them in this country—a modest scale compared with that of the United States—then the export problems of all the textile producing nations in the world will have been solved. It is for those markets that we must fight. Lancashire will fight world competition abroad and Conservative inaction and muddle at home, and I am confident that in both those fights it will be victorious.

7.47 p.m.

Mr. Charles Fletcher-Cooke (Darwen)

Apart from the remarks which the hon. Member for Rossendale (Mr. Anthony Greenwood) sought to put on the record at the end, his speech was a most agreeable one. It was most gallant of him to come to the rescue of his right hon. Friend the Member for Huyton (Mr. H. Wilson) by giving somewhat qualified support to this proposal for State buying—the first support which his right hon. Friend has had so far during the debate.

But he did not answer the point which my right hon. Friend the President of the Board of Trade put, that in fact this was an illegal scheme. It is no good the right hon. Member for Huyton saying, "What about jute?" because it looks very much to me as if the jute scheme is illegal too. I am glad that this nasty thing has been dragged out in the cold light of day to be examined by everybody, because I hope that my right hon. and hon. Friends at the Board of Trade will now seriously consider whether this wartime relic ought not to be ended if it is in conflict with our obligations under various international treaties.

That brings me to the whole policy of liberalising international trade, because I have come to the conclusion that this worthy object—and worthy it is—is liable to do more harm than good if it is done piecemeal. It is rather like disarmament; if we deal merely with some arms and not with all arms, we simply drive into the sectors with which we have not dealt all these discriminations and inequalities which originally existed. We do not do away with them.

From a remark made by my right hon. Friend today, it seems to me that we are in danger of doing that in the cotton trade. My right hon. Friend rather dismissed the complaint, which I believe to be a serious complaint, that the Indians and other producers are getting their cotton at an unfairly cheap price because they have a double scale of prices. He said that that is often done elsewhere, that we even do it ourselves; therefore nothing could be done about it. I would ask him to think again about that.

It seems to me that that is just as much a discrimination, just as much an illiberal action, as a quota, tariff, or any other form of what I think the Americans in their anti-trust laws call "not honestly commercial conduct." If we are going in—as I think we have done, rightly—for a policy of liberalising trade, it is no good taking just one or two instruments of restriction such as quotas or tariffs—we have to take them all. If we deal with the quota, or the tariff, other countries will simply go into another hole if they are driven out of one and use the double price system for the purpose of discriminating in the way that Lancashire undoubtedly is being discriminated against now.

I do not think it good enough to say that this is a subsidy in the strict sense, in the legal sense, or in the apparent definition of the word "subsidy." Undoubtedly it is a practice which operates most unfairly against a country which buys its raw materials and does not grow them. That is going to become increasingly important in the United Kingdom. Unless we are careful, we shall find that all our attempts at liberalising trade and making things fairer and more equal will merely result in our raw materials being held up to ransom by devices which other countries are getting to understand now and by selling to their own people, or to favoured people, at much lower rates than those at which they are prepared to sell to us. I do not think it is right. I know it is a novel thing which has to be tackled, but tackled it must be.

This has been a debate about one county of the United Kingdom. As the hon. Member for Burnley (Mr. Burke) said earlier, we have often heard debates about "lesser" areas such as Scotland or Wales. In those debates one often finds that at some point in them it is proposed that Scotland, Wales, or wherever it may be which has been neglected, should have some measure of home rule. I believe some such suggestion was made last Friday. But they drop that pretty quickly, like a hot brick, when they find that in fact those other areas take more economically out of the common pool than they put in and, therefore, no doubt would suffer considerably economically if any severance occurred.

I submit that Lancashire is in absolutely the opposite state of affairs. Lancashire puts in more than it takes out. For that reason it is not as any suppliant that Lancashire comes to the Government at the moment. It is asking only for its rights.

I am bound to say I could not disagree more with the suggestions of my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) who somehow implied that the cotton industry had had tremendous favours since the war and in some way had thrown away those favours and did not deserve any more. To my amazement, he instanced Purchase Tax. There is no doubt that the textile industry, in common with the boot and shoe industry and one or two other relatively small industries, suffers a form of taxation which is peculiarly crippling. It is not just a straight ad valorem cut but a tax which, in its higher reaches, goes into the realms of geometric progression with the result—which has been canvassed in this debate—that ever since the D scheme was introduced quality has been crippled. I am quite sure that the request of the hon. Member for Rossendale that we should hear something about Purchase Tax cannot be answered tonight. He knows the reason as well as I do. But I beg the Government—not only beg—

Mr. Anthony Greenwood


Mr. Fletcher-Cooke

I was not going to use the word "insist," but, if the hon. Member suggests something in between, I shall be happy to adopt it. The time has come when we cannot wait very much longer and the evidence is overwhelming. The advantage would be twofold. This is something which the Government can do quickly. Many of the things which have been proposed, such as changes in quotas and tariffs, owing to binding obligations, cannot be altered quickly. That would involve giving notice and denouncing various obligations, which would take a great deal of time.

The great merit of the Purchase Tax, if Purchase Tax ever has any merit, is that it could be altered speedily. Secondly, it is what is sometimes called a flexible instrument. Its great exponents who first propounded it claimed as its merit the fact that it would depress an industry which was doing too well, or raise another industry which was doing badly. We can play on it as on a stringed instrument. Therefore I suggest—if that be the verb between begging and insisting—that before the Spring is out this tax on quality must go.

I am delighted that the Prime Minister is shortly to receive the Cotton Board. I should very much like to be a fly on the wall at that meeting. I can visualise, I can almost hear, the little preliminary exchanges about life in the cotton trade, life in Oldham 60 years ago, or in Northwest Manchester. The Prime Minister knows this industry very well.

As we have all promised to be short in our speeches tonight, because this is a matter which affects all our constituencies, I will end on this note. The Prime Minister knows that although the industry has contracted in the way my hon. Friend the Member for Cheadle (Mr. Shepherd) described with a wealth of statistics, although the markets have changed, the people have not changed. Although the structure and machinery has been revolutionised, the same unique skill and the same valuable capital in human endeavour remain and always will remain so long as they are given half a chance. They are not asking for more than that. They can beat the world, given a fair field, but they cannot beat a 60 per cent. to 80 per cent. tariff.

Last July I raised the subject of the Indian import and export position. I think I was the first to do so in this House. I must say this because I think it is relevant in view of the attack which has been delivered by the Opposition today. It was 2 a.m. after a gruelling debate and one or two of my hon. Friends supported me. We talked of the dangers that were threatening then but there was not a single hon. Member of the Opposition—not even an Opposition Whip—who stayed to listen to that debate. I am not blaming the Opposition particularly. All I say is that they have no monopoly in this matter. Then I remember that on 13th July last year the then Minister of State, who is now Minister of Agriculture, said that he had pressed the Indian Government even then, those many months ago, and he was most disappointed with the response.

The hon. Lady the Member for Blackburn, East (Mrs. Casde) said that, given firmness, the Indians would agree. I wish that she were still in the Chamber to tell us what she meant by "given firmness." Nobody, I am sure, could have been firmer than those of my right hon. Friends who have put the matter, not only to the Finance and Trade Ministers of India, but to the Prime Minister of India, with, I regret to say, no apparent result. I do not see how anything other than action, as opposed to mere words, will now have any effect on India, because India's course in this matter is evidently not to be influenced by words, however firm. I am convinced that action will have to be taken.

I am equally convinced that the action proposed by the right hon. Member for Huyton would be the worst of all the actions so far proposed. I think that it would hide under a somewhat unconstitutional body the sort of definite obstacles to the import of foreign produce which ought to be shown openly. When we face restrictions in trade, what our exporters cannot tolerate is a hidden obstacle, something which they cannot get at and something which they know nothing about. What our exporters find so galling and difficult to deal with are the secret subsidies that, it is thought, some foreign Governments give. What we cannot stand is sending goods to an overseas country and not knowing what the quota will be like until the goods arrive and have to be shipped back.

All these objections apply a fortiori to the right hon. Gentleman's scheme, because the very merit that he claims for it—its flexibilitiy, which will let in a little bit from one country and a little bit more from another, while letting in none from another country—cannot be published in advance, so that the countries concerned, whether India, Hong Kong or anyone else, cannot know until the last moment what they are up against. That is something that ought not to be put up against a foreign country. If restrictions have to be imposed, they should be put up openly, freely and well in advance by means of a quota or tariff. To my mind, any other method is a most reactionary and restrictive method of conducting our foreign trade.

8.3 p.m.

Mr. Sydney Silverman (Nelson and Colne)

It would be very tempting to follow the hon. Member for Darwen (Mr. Fletcher-Cooke) in what was for most of it an extremely thoughtful and moderate speech, but we have all imposed upon ourselves a restriction and I do not want to take up any more than my share of the time. I hope, therefore, that the hon. Member will not take it amiss if I do not follow him in any of the points that he made, although; as I say, it requires quite an effort of will not to do so.

My right hon. Friend the Member for Huyton (Mr. H. Wilson), said that this was more than an economic problem: it was a social problem. Perhaps I can most usefully occupy the few minutes which I wish to take up in this debate with some analysis of what the social problem is. I quite appreciate that hon. and right hon. Members opposite think that the Opposition is making too much out of Lancashire's grievances and troubles today for political purposes. I do not think that they would blame us very much even if that were true. That is the pattern and business of politics, and hon. Members opposite did not restrain themselves very much when they were on this side of the House and we on the other side.

I suppose it is true also that my hon. and right hon. Friends on this side think that, for the same reason in reverse, hon. Members opposite in debate tend to underplay the situation. But the fact that we are having this debate at all is because Lancashire itself is anxious, unhappy and insecure. There would be no political capital for anybody in this situation if that were not so.

It is all very well for the hon. Member for Cheadle (Mr. Shepherd) to say that manpower employed in the industry used to be 750,000 and is only 250,000 now and, therefore, it will never be less; that was the hon. Member's argument. But how is this House to pursuade Lancashire that its manpower figure will not become less? It has been going down during the lifetime of every Member of the House. I do not believe that anyone thinks, either in Lancashire, in the House or anywhere else, that Lancashire's manpower figure will expand much in the years to come.

The President of the Board of Trade, who spoke first for the Government, made a most depressing speech. I do not know whether he wanted to make a depressing speech or whether he could not help it. I am bound to say that it will be read in Lancashire tomorrow with the deepest disappointment and that the anxieties and uneasiness of Lancashire will be vastly increased by it.

Why is that so? It is because the right hon. Gentleman had not a single word of hope or encouragement to offer—not one. He examined one by one every proposal that has been made to alleviate the situation, to ward off impending dangers and to take positive, constructive steps to see that the present trend—I agree that it is only a trend so far—does not accelerate or go too far. The right hon. Gentleman had not one favourable word to say about any one of those proposals.

When the President of the Board of Trade came to the proposals that my right hon. Friend had put up, he was, If possible, even more negative about them. He said that he was going to have a meeting and the Prime Minister was to attend, and that they were to have conversations. I asked the right hon. Gentleman what contribution he and the Prime Minister would make to the conversations, and I got a flippant and not particularly courteous reply. There was no hint of what suggestions the Government would make to the Cotton Board when they met. It is admirable that the Prime Minister should have been made so aware of what the situation has become that he shall go and meet the Cotton Board himself. It does at least show, however belatedly, that some attention is being paid to it in the Government.

But that will not take us very far. The Prime Minister is, possibly, the greatest Parliamentary orator of our times, but he has the great weakness of all orators in that when he has made a great speech he thinks he has won a battle. It will not be any good making oratorical gestures to the Cotton Board. What are the Government going to suggest to the Board to take the place of their rejection of all the suggestions which the Board has made? Surely, we ought to have some indication in this debate from the Government, if they have anything in their minds at all, so that we too can bring our minds to bear upon their suggestions.

Mr. Kenneth Thompson (Liverpool, Walton)

I am sure that the hon. Gentleman is not trying to be unfair. He will realise, of course, that the Cotton Board has not yet made any suggestion, and that this meeting is for the purpose of getting the suggestions of the Board.

Mr. Silverman

If I was inaccurate in my statement, I am much obliged to the hon. Gentleman for correcting me. A number of suggestions have in fact been made, and we have heard what the Government's reaction has been. If there are other proposals, either by the Government or the Cotton Board, or by anyone else, they should be added to the pool, and we should have an opportunity of considering them. But the Cotton Board is not responsible to me and the Government are. I suggest that if the Government have any suggestions of their own to make, they ought to bring them forward in this debate so that we can see whether they are any better than those of my right hon. Friend the Member for Huyton, if they do not like my right hon. Friend's suggestions.

Supposing the truth is that no one has any useful suggestions to make at all. I hope that is not the situation, but we must face the facts. No constructive, hopeful or intelligent suggestions have been made as yet. What then are the Government to say to the people of Lancashire? I represent a constituency which has virtually nothing in it except cotton. Sixty or 70 per cent. of its industry is concerned with cotton. It earns its living by cotton. There is no part of this country which has more bitter memories of the middle 'thirties and the years between the wars than Nelson and Colne.

My hon. Friend the Member for Farnworth (Mr. Thornton), who is to wind up for this side of the House, knows that better than I know it. I believe that he was born in Nelson and lived there during those years to which I am referring. What was the cry then? It was "Diversify our industries. If you cannot guarantee that we are going to be able to employ all or the greater part of our population for the next generation in this industry on which the town was built, then for heaven's sake give them something else to do." That was not done then when it might have been done.

We had the depressed areas Act, and we tried year after year to get it applied to this part of Lancashire without success. Then the war came. During the war nothing could be done. When the war came to an end, between 1945 and 1950 we did not need Government help. We could have got all the light industry we wanted. Light industries were clamouring for labour and for factories, and we could have diversified our industries during those years without seeking help from the Government, or special allowances, or special concessions of any kind. I am not blaming the Labour Government for not having assisted us. It was a patriotic act on the part of north-east Lancashire not to bring light industries into that area at that time; that is to say in the days when our export industry was virtually bankrupt, and during those years we depended upon the cotton industry first and foremost for restoring the solvency of this country in the international financial market.

We did not take this golden opportunity of diversifying our industry. Then came the end of that period and the collapse, or virtual collapse.

I am not arguing whose fault it was. That does not matter for the purpose of our present discussion. What does matter is that three years ago, at long last, this Government applied the Act dealing with special areas to north-east Lancashire. It made it a special area. We rejoiced at it. There was a little jealousy about it. Some of my hon. Friends thought that their areas ought to have been included.I do not think that any of them thought that my area ought to have been excluded, but they thought that other places could have been included, and there was a certain amount of rivalry about it.

Nelson and Colne has benefited not at all in the three years since an Order under that Act was made. When the President of the Board of Trade is asked about it, he says, "It is all right; we are now building one new factory on the extreme edge of this special area"—that part which, I hope I may be forgiven for saying it, needed it least. But even that factory is not yet in operation. Now we have the debate today. What are we to say to people in Nelson and Colne. What are we to say to the young people? Are we to say: "Come into this industry, invest your lives and your futures and your faith in it. Join the unemployed or half-employed or under-employed labour pool. After all, you will get five days' wages for four days' work; what more do you want?"

Only a Cheshire Member could have said that about Lancashire.

Mr. H. Wilson

A Cheshire Tory.

Mr. Silverman

The hon. Member for Altrincham and Sale (Mr. Erroll) did not need to go far. He had only to speak to a few Lancashire men and women and he would have known that Lancashire men and women do not like being paid money for nothing. They want the opportunity to work. They want to give a full contribution, and they want proper wages for it. They do not want something for nothing. That prospect does not attract them.

I say to the Government that if they have nothing better to offer to the cotton trade than they have offered it up to now, if there are no guarantees and if there is no security, they have no right whatever to expect the people of this area to bear the whole of the consequent burden. Let those industries in other parts of the country which say, "Do not apply this remedy or that proposal to Lancashire's difficulties, because it will have a bad effect on our trade" take some of our mills and give us some of their industry. We have no right to expect any part of the country to have all its eggs in one basket if the situation is that we have neither eggs nor basket.

That is all I want to say. It may be said that I have had nothing useful or constructive to add to the analysis which has been given of Lancashire's present difficulties. I do not pretend to be an industrialist. I have represented my constituency for nearly 20 years, and I have done my best to understand its industrial problems and its industry. How well I have succeeded may be a matter of differing opinion. I have done my best to understand. I do not pretend to be expert about it, but I dare say that my discussion of the present situation has not been profoundly less intelligent than other contributions which I have heard during the debate. What I wanted to do was to beg the Government, and the House if the Government will not do it, to face up to their responsibilities and to the consequences of saying to an area which has lived all these generations on cotton, "We cannot guarantee that you will earn your livelihood ever again."

8.20 p.m.

Mr. Arthur Holt (Bolton, West)

The hon. Member for Nelson and Colne (Mr. S. Silverman) wanted to know what advice he should give to young people in his area on what occupation they should follow. I sometimes feel that one should not try to answer questions which are put to one. If one is a planner par excellence one presents oneself wide open to be asked that kind of question, which I do not think is a proper one to be addressed to a Member of Parliament. A Member working in a free economic system should give his attention to the overall system and let people make up their own minds whether their future lies in the cotton industry or whether they should go into engineering.

Mr. S. Silverman

I hesitate to believe that the hon. Member is quite so irresponsible a Member of Parliament as he is now pretending to be. Here we have a diminishing population, houses are empty, rateable values are going down and buildings are derelict. Is the hon. Member really saying that a Member of Parliament and the House of Commons have no responsibility in this matter at all?

Mr. Holt

I thought that I had made it perfectly plain where I think the responsibility lies. The responsibility of a Member of Parliament lies in the overall activity and the prosperity of industry, and not in going into details and deciding whether the cotton industry has a future or not. We have had this trouble in Lancashire. We have had the Cotton Working Party and people outside the cotton industry who could not agree that the cotton industry would grow or could grow to its pre-war size, but in a matter of a few years the industry had taken on another 100,000 workers in spite of the Jeremiahs.

I suggest that his historical memories of the industry after the war are also false. When Sir Stafford Cripps was President of the Board of Trade, his instruction to the textile industry as a whole was to fulfil the utility programme. Immediately after the war, exports were secondary, as during the war they had not existed at all. It was only in about 1947 that that instruction was altered and the textile industry was told to go all out for exports.

The reason why the textile industry grew up again in Nelson and Colne after the war was not the patriotic reason of it being a duty to go into the industry. I wish we could get away from the idea of it being patriotic to go into an industry when in fact it is a matter for each person to decide for himself.

Mr. S. Silverman

Under the initiative of the Board of Trade, committees were formed of employers, unions and local authorities and they held meetings to persuade people to go into the industry, but it is no good saying now, 10 years later, that they should not have, done so. It was done, and the responsibilities then assumed cannot be shuffled off in this light way.

Mr. Holt

There were recruiting campaigns in Bolton in the cotton and in the engineering industry. Everybody wanted to get more people back into their firms, but to suggest that people went back into cotton as a patriotic duty against their best interests is absolute nonsense.

Mr. Silverman

I did not say that.

Mr. Holt

I want to agree with one or two points which were made by the hon. Member for Darwen (Mr. Fletcher-Cooke) with regard to the piecemeal liberalisation of trade. This is a matter which the Government should consider. We are in danger of getting into a jam about it, and I have drawn the attention of the House to it on one or two previous occasions.

The hon. Lady the Member for Blackburn, East (Mrs.Castle) made a remark which, if I understood her correctly, caused me considerable surprise. I understood her to mean that Lancashire was not worried about the loss of the export trade and that the industry considered that it could adjust itself to that loss but it was worried about the influx of imports. We have heard a great deal about yardage. I should like to draw the attention of the House to some figures of values.

The exports of cotton yarn and woven piece goods for 1954 were down by £5 million, that is from £117 million worth to £112 million. That is a comparatively small percentage, but it is a reduction. Imports were doubled from just under £11 million to just over £21 million. Therefore, to say that we do not mind losing the export trade, a loss of business of £112 million, and to say that we are very concerned about an increase of imports of £10 million is to get the thing rather upside down. Even if it is true that Lancashire does not mind losing the export trade, and that it could close mills without much disruption to the extent that that implies, I cannot imagine that the present or any other Government would not be concerned about a loss of over £100 million in export trade.

Bearing those figures in mind, we must remember as the President of the Board of Trade mentioned—and I think he was the only person to do so—that Lancashire production has gone up during the past year. In spinning it is about 1,000,000 lb. a week up on the average over the previous year. This has happened during a year in which our exports have gone down and our imports have gone up, and it is not surprising that there is now a little trouble.

An examination of the Trade and Navigation Accounts, which show the origin of some of the imports, enables one to build up a picture which is most definitely complicated and certainly does not indicate that even the larger part of the trouble is coming at the moment from India and Hong Kong. There has been a big increase of imports from India and Hong Kong, but the Indian imports last year were less than £7 million worth, which should not be a staggering figure to the cotton trade.

There has been some talk about imports from Portugal, but that is a comparatively minor case which is not mentioned separately in the Trade and Navigation Accounts. The increases of imports are quite substantial from the Netherlands, Belgium—which in this section is second only to India—France, Grece, Japan, and a group of accounts referred to as "other countries." Be it noted that imports from all those latter countries have to face a 17½per cent. tariff, so when we are talking about slowing down the amount of imports from India we must recognise that some of the increase comes from countries on whose goods there is already a 17½ per cent. tariff.

If we examine our exports we find that those to the Gold Coast and Nigeria are down while, strangely enough, those to the Belgian Congo are up. There may be a perfectly simple explanation for this of which I am not aware. The exports to Burma, Ceylon, Singapore and Hong Kong are down. We should bear in mind when we worry about imports from Hong Kong, of £1½ million, that our cotton exports to Hong Kong are £1 million a year. On the other hand, exports to Finland, Switzerland, Southern Rhodesia, Australia and New Zealand are up, Australia considerably, by £4½ million, while those to Canada, U.S.A. and Denmark are down. An interesting aspect about the Middle East is that exports to Jordan are down and, for some reason, those to Syria are up. Again, no doubt there is a perfectly simple explanation for that.

It seems to me that we must approach this matter very carefully, and certainly there must be a close examination by the Government and the representatives of the industry, such as the Cotton Board. What I have tried to show indicates that there are, in fact, two quite separate problems. There is the apparent loss in the over-all competitive ability of the industry in the last 12 months, and then there is the issue of the imports from India in particular. That problem is one that is in the future more than in the past, and we are worried whether it is going to get a great deal bigger. I suggest that imports valued at; £7 million from India mean that the problem is not great, but if they continue to increase—and this is why Lancashire is so worried—at the rate at which they have been increasing in recent months, then people see the figures becoming astronomical and hitting the industry for six.

Mr. Tom Brown (Ince)

They are doing it.

Mr. Holt

They are not yet doing it. They may do so, and I do not want to evade the issue, but the first thing the Government are entitled to say, when looking at this problem to see what plan can be developed to help the industry on the special matter of damaging imports from a country which is providing a subsidy for these imports—I just do not accept the attitude of the President of the Board of Trade on that matter—is, "First you have got to do all you can." I do not think that that has been said sufficiently to Lancashire.

I am quite at one with the people who criticise some of the leaders, both official and otherwise, for crying "Wolf" a long time before it is necessary, and this undoubtedly has had an unsatisfactory impact on other people who are less sympathetic to the troubles Lancashire is now facing than would otherwise be the case.

What can industry do now? Whatever are the views of people about nationalisation or capitalism or a free economy, the Lancashire cotton industry is operating under a system which is more or less that of a free economy and it must put its house in order accordingly. I was glad to hear a fortnight ago that the President of the Board of Trade had accepted the Report of the Monopolies Commission on the Process of Calico Printing, and I hope that action will soon be taken in that direction. However, there is a price ring in the cotton spinning trade which must also go.

When the hon. Member for Farnworth (Mr. Thornton) speaks, I hope that he will be able to say that whatever troubles Lancashire is in, the cotton unions are completely behind the trade in doing everything they can to make it efficient once the spinners have dropped then-ring. As long as any employer adopts any restrictive practice whatever, the unions are entitled to keep their old ways, but when the employers set an example, I hope that the unions will give the greatest co-operation possible.

I am not making a great point of this because I believe the cotton unions have been well ahead of many of the other unions in their attitude to new methods, but one or two of the friends of the hon. Member for Farnworth have not been quite as progressive—I am thinking particularly of one union official in the East Lancashire area who retired some while ago. It would be helpful to most of us if the hon. Member could assure the industry that the unions are behind the industry in its efforts to put its own house in order.

As regards what the Government can do, that is a different problem. I have not been struck by any of the suggestions made so far and I do not think that those hon. Members who have tried to make suggestions have been very happy. Before the hon. Member for Oldham, East (Sir I. Horobin) made his suggestion about quantity restrictions, he seemed to put all the arguments which would show what a bad effect almost any restriction would have.

I do not accept the view of the hon. Member for Altrincham and Sale (Mr. Enroll) who instanced the sales of British bicycles in America and said that, if we put on tariffs or quotas, the rest of the world would follow suit by treating our exports in the same manner. It is one thing to accept dumping from a private firm abroad, since it could not do that indefinitely, but it is quite a different matter to accept large quantities of goods which could only reach us in such quantities as the result of action amounting to a subsidy, however much the President of the Board of Trade tries to talk himself out of it. I am sorry that the right hon. Gentleman said that we could not challenge this, because we do it in the case of coal and steel, and it is a practice which should be stopped.

A while ago Germany complained that she was meeting competition in steel on an unfair basis because the steel industry was getting its coal too cheaply. As the hon. Member for Darwen said, we must get our minds clear on what are good practices if we are to liberalise our trade. If we do not, we shall get in a mess, and the industry which will suffer will be the Lancashire cotton industry. I have in my hand Statutory Instrument 1955 No. 33, the Import Duties (Exemptions) (No. 1) Order. It is the first one for 1955. It deals with the exemption of Import Duty for certain products of the steel industry, most of which go to the car industry. This is supposed to be because there is a shortage of materials in the country at the moment and the car industry must not be jeopardised in its endeavours to win export markets. It is said that in order to be able to introduce its cars cheaply into those markets, the car industry must not have to import any of its raw materials subject to a duty. Therefore, the duty is removed until 18th March. What happens then? It is assumed that by then the steel industry will be able to produce more; the imports will then not be required, and so the protective duty will be restored.

Is there any sense or logic in that when the cotton industry has no protection whatever against its chief competitor? If the cotton industry is to be expected to stand up to world competition it must be able to buy in a world market. It is not doing so; it is buying in a protected market when it is buying in the United Kingdom market at the moment. If it wants to import machinery from abroad it has to pay a tariff. A lot of its other costs are influenced by the fact that other industries are getting protection which it is not getting. The Government must at least see that there is no discrimination against the cotton industry in our attempts to get a greater liberalisation of trade. I hope that the Government will have more to tell us in that respect after they have met the Cotton Board.

If the industry is given a fair deal there is little chance of its having to contract in any quantity, but if it has to, surely now is a better time than when there is a depression. There is no difficulty now. If a cotton mill wishes to close down, nobody need lose anything, least of all the shareholders. The net liquid assets in most mills meet the value of the share holdings, and the workers at most places can get jobs elsewhere. I do not believe a great problem exists here, but I hope that this will not happen and that the Government will take some action to ensure that it does not.

8.43 p.m.

Mr. Richard Fort (Clitheroe)

Being the last back bench speaker in the debate, I have had the advantage of hearing practically all the themes which have run through the debate, and also the very many contradictions, particularly from hon. Members opposite supporting the Motion.

Some, like the hon. Member for Nelson and Colne (Mr. S. Silverman), seemed to want simultaneously to diversify the industries of East Lancashire, with which I agree, and at the same time to arrange that all now working in the textile industry should retain their jobs in it, an equally commendable, although contradictory, policy.

It was much the same with the hon. Lady the Member for Blackburn, East (Mrs. Castle). She gave examples of mills working short time or even closing down, examples which all hon. Members from the textile areas of Lancashire could parallel from their own constituencies but, unfortunately, the three or four factories to which she referred seemed to be affected scarcely at all by imports but a great deal more by Purchase Tax, which makes the selling of the high grade goods to which she referred more difficult at home and, consequently, also abroad.

Then we had another line, on the suggestion that the present anxieties of Lancashire should be got into perspective, In that connection the speech of the hon. Member for Bolton, West (Mr. Holt) was very characteristic, as indeed was the speech of my right hon. Friend the President of the Board of Trade. In using these statistics, speakers have missed what is really affecting all of us who are concerned with the textile industry in Lancashire, and that is a loss of confidence.

No doubt statistics show that at present there has not so far been too much to worry us, but there is a real loss of confidence about the future. The consequence of that—and it is one of the criticisms which I shall make of the Government—is that the Government have somehow failed to understand that figures about unemployment, or about this or that, do not carry the weight it seems to think they do. The Government have a case, but somehow it has failed to put it across to those who are concerned with the industry. Statistics can be used to put things into a right perspective, but when they are repeated as often as these have been they make people suspicious. I have certainly been misled about the figure that only 13 per cent. of Lancashire industry is textile industry. I look at the towns which Lancashire Members all know and see that between 40 and—in the case of the constituency of my hon. Friend the Member for Heywood and Royton (Sir H. Sutcliffe)—80 per cent. of the population are employed in textiles.

It may well be that only 13 per cent. of all Lancashire's industries are textile industries, but we all know that there are towns with enormously large proportions, and it is there that we have operatives and employers alike wondering from where the money will come to pay for next week's wages and the machinery ordered a few months ago.

One should use not only statistics but the more intangible criteria to judge what is happening in the county and the industry. The Government are not solely to blame for their failure, very far from it. I do not believe the industry has told its side of the story as well as it should have done, and as well as I hope it will do when its representatives come to London next week.

It was very ill-judged that some hon. Members opposite should almost scoff at the Cotton Board because its representatives include more than spinners and weavers. One of the great problems of our industry is that it is enormously diversified. The sooner we get people in London to understand the complications of that diversification so that they are not listening first to this side and then to that side but trying to synthesise what is best for the whole industry, so much the better for it. The Government, whatever their failings may have been in putting their case, were right in insisting that it should be the Cotton Board and not only spinners and weavers whom they met, although my constituents are very much more concerned with the weaving side of the industry than with the industry as a whole.

Several hon. Members, including my hon. Friend the Member for Oldham, East (Sir I. Horobin), rightly made a point about the poor publicity put out by the industry. It will convince all who are concerned in the industry, but not those who are outside Lancashire.

Many hon. Members seem to have no great understanding about the difficulties of Lancashire. One of the reasons is that throughout the agitation we have very seldom heard any leaders of the textile industry, whether on the employers' or on the trade union side, putting the industry in its setting of national industry as a whole. A great many people would have listened more sympathetically if they had had the feeling that sometimes those at the top of the textile industry looked beyond its horizon, desperately important as it is to our constituents, and tried to understand how our industry fitted into the economic life of the nation. It is that which lies at the heart of the inability of the industry to arouse the sympathy which I think it ought to get.

Mr. Lindgren

The hon. Member's hon. Friends do not seem very interested, to judge by the attendance.

Mr. Hale

Did the hon. Member see the very excellent publication issued over the years by the Textile Association? He will find many of these problems dealt with there.

Mr. Fort

In recent months I have read no public discussion of that sort. Hon. Members opposite have been critical of the Government's case and have discussed it with less realism than they ought to have. I will not change King Log for King Stork. The proposals of the right hon. Member for Huyton (Mr. H. Wilson) have come in for criticism which, even though he will not agree with it, is well merited. He may think that it requires some answering. I have not time to refer in detail to the criticisms made by my hon. Friend the Member for Darwen (Mr. Fletcher-Cooke), nor to those which pointed out that there are many simpler ways of avoiding dumping than by the setting up of a nationalised Cotton Cloth Import Commission such as the right hon. Gentleman has suggested.

I would like to ask the right hon. Gentleman whether he has in mind how he would control the pricing policy of this scheme? The agency might buy cloth abroad at prices lower than the English prices. Would he try to sell it at the English prices? If so, does he think the organisation would sell much imported cloth? If it sold it at lower prices, than those in the home market, it would be open to the criticism of competing with home industry? If he proposes an importing organisation without discussing its pricing policies it merely shows that the proposal was not considered sufficient for such an occasion as this.

Mr. H. Wilson

We have thought about that. I answered a number of Press questions on that point, and I will not answer them again today.

Mr. Fort

I thank the right hon. Gentleman for that reply. I cannot remember seeing the matter fully reported, or being discussed in his own speech to us today.

I come back to two lines on which I think the Government can take action. The Opposition always hopes that we will forget about these things, but when the industry was in really bad difficulties in the recession of 1952, it was the present Government who spent £20 million or £25 million on Lancashire on Government orders for cloth. It was the party opposite who, just before, had spent nearly £40 million abroad on cloths for rearmament.

Two things I strongly recommend to the Government. One is Purchase Tax reduction. There is a case for it, and it has been made overwhelmingly. The other thing is a non-discriminatory quota. I am sure that if this were imposed it would do much to remove the difficulties and restore that sense of confidence that all of us want, in the industry which not only clothes all of us as cheaply as in any part of the world, contributing to our high standard of living and providing us with foreign exchange.

8.55 p.m.

Mr. Ernest Thornton (Farnworth)

This has been an interesting and, in some respects, a remarkable debate, because we have had from the President of the Board of Trade a speech the greater part of which was apparently designed to prepare Lancashire to understand that nothing can be done for its industry at all, that the difficulties were so great that Lancashire must be prepared for a negative answer. Doubtless, the sending for representatives of the Cotton Board by the Prime Minister is a delaying tactic in the hope that, Micawber-like, something will turn up to get the Government out of their dilemma.

I am afraid that Lancashire will have very cold comfort from the speech of the President of the Board of Trade or from the terms of the Amendment. The proposal to delete the words … notes with concern the serious situation which is developing in the cotton industry indicates that, in the opinion of the Government, there is not yet a serious situation developing in that industry. Yet all the experts in the industry, on both the employers' and the trade union sides, are at one that a really serious situation is developing.

Mr. H. Hynd

So are the Tory back benchers.

Mr. Thornton

Many of the Tory back benchers have indicated today that they think the situation is serious. But I have noted that the speeches of the Conservative back benchers in the main, with perhaps the exception of the hon. and gallant Member for Rochdale (Lieut.-Colonel Scholefield), have been much stronger in their constituencies than they have been in this House.

I feel satisfied that little can be expected from this Government. But I have noticed flutterings in the dovecotes of the Cotton Board, the Board of Trade and, I think, even in the Prime Minister's office, since Monday week and particularly since our Motion went on the Order Paper. There has been a feverish activity to attempt to get some scheme formulated and presented before this debate took place.

The scheme outlined by my right hon. Friend the Member for Huyton (Mr. H. Wilson) has been designed to compel action with a view to getting something done. The scheme is a workable scheme. It is, in fact, the only workable and practicable scheme that has been put forward. The President of the Board of Trade has not dealt with our questions relating to the jute industry situation. The principle that is applied in the jute industry is the very principle that we suggest should apply to the current problems of the textile industry. We contend that if it is good enough for the jute industry, it will be good enough for the cotton industry as well, in similar, if not worse, circumstances.

Remember this, that the chief jute imports into this country come through Jute Control, which the Government have kept on. I understand that they have no immediate intention of ending Jute Control. The competition of jute textiles arises only because of cheap labour costs. The competition of cotton products arises, as we have been told repeatedly in the debate, from unfair practices. Therefore, there is a responsibility upon the Government, and if the proposal put forward by my right hon. Friend is not accepted, the Government have the responsibility of finding an alternative proposition.

It is doubtful whether they can escape from that situation. The Government attempt apparently to put upon the Cotton Board the responsibility for finding a solution of what is essentially a fiscal problem. I am convinced myself, and the cotton textile industry, on the employers' side and on the trade union side, is convinced, that the Government regard the cotton textile industry as expendable in the Government's economic policy. Their conduct and inaction have made that evident. The President of the Board of Trade has protested that that is not true, but in Lancashire the President and the Government have been judged not by what they have said but by what they have not said and by what they have not done in a situation developing so seriously.

Various remarks have been made on both sides of the House about the degree of unemployment, and concealed unemployment, in the industry at the present time. I think the experts in our industry who have examined this situation would agree that the present position is being maintained very delicately, and mainly on the basis of experience in 1952. The employers are afraid of losing their workpeople, and for the moment are hanging on in a delicately poised position, but if a number of mills are eventually closed, and in consequence the demand for labour is saturated, then there can be precipitated, as there was in 1952, large-scale unemployment in Lancashire. Lancashire wants to know and is entitled to ask what is to be the level of unemployment. Is it 50,000 or is it 100,000? Lancashire is entitled to ask what degree of unemployment the Government will tolerate, and Lancashire is entitled to know what the attitude of the Government is.

The overriding cause for this threat that overhangs Lancashire at the present time is the Indian imports. We have very seriously to consider whether they should be allowed to threaten serious injury to our domestic producers. During 1954 there were several disturbing influences in our trade and industry. The President of the Board of Trade referred to them and other speakers in the debate also have commented on them. I recount them briefly. There has been a fall in exports—unfortunate, but, I am afraid inevitable. We are all agreed upon the fact that there has been that fall. Without doubt, the D scheme has had its effect upon the quality end of our export trade.

There has also been an increase in the imports of folded yarn and there has been over-production of synthetic yarns and fabrics. To the critics of our industry, on both sides of the House, who feel that the Lancashire industry has been backward and has not made sufficient effort to adapt itself to and to develop the man-made fibres, it is perhaps as well that I should point out that approximately 25 per cent. of the spindles and looms of Lancashire are now engaged on man-made fibres and synthetic yarn. What happened during 1954, in my opinion, was that the trend to this development was too great. They took too big a risk in that advance and it has resulted in over-production and over-concentration on synthetic yarns and fabrics.

Next, we had the recent trend of low-priced imports of grey cloth, particularly from India and, in the last quarter of 1954, the rather alarming rise in imports of grey cloth from Hong Kong. The President referred to the figures for 1954, but to assess what is likely to happen in 1955 we should look particularly at the figures over the last quarter of 1954 and at the January and February figures of this year. They give the disturbing picture. The trend of1954 is being carried into 1955 and therein lies the main danger.

Because of these low-priced imports, there has been a lack of confidence amongst buyers, and I think we must admit that confidence has also been influenced to some extent by the uncertain course which is predicted for American cotton prices.

But the Government and the President of the Board of Trade must carry a large measure of responsibility for the factors which have influenced and disturbed our industry during 1954. In the first place, there was the Japanese Trade Agreement, to which several of my hon. Friends and the President referred. The Japanese Trade Agreement has opened the floodgates into our colonial markets and it may well be that in 1955 most of our colonial trade will disappear, mainly to the Japanese.

In the debate on the Japanese Trade Agreement, we did not take the line—indeed, we have never taken the line—that Colonial peoples, with their low living standards and low incomes, should be compelled to continue indefinitely purchasing the higher-priced Lancashire fabrics when cheaper Japanese or Indian goods were available.

Our claim was that the relaxation would be too rapid. We appealed for gradual opening of the floodgates so that Lancashire could have a better opportunity of adjusting herself to the new trade pattern. Unfortunately, the full impact of this Japanese Trade Agreements will hit us this year when we are also hit by the rising volume of Indian imports and imports from Hong Kong, and if the Government are not worried about the situation, I can assure them that Lancashire is very seriously worried today and has cause to be.

No industry can adapt itself, without suffering and without mass unemployment and great losses, to rapid and violent change. No industry is more fitted than the cotton industry to adapt itself to gradual change. I contend that by their precipitate action the Government have expended the interest of the cotton industry for the interests of the rest of Britain's export industry. On the broad national picture that might be commendable, but it is no satisfaction to Lancashire—none whatever. Lancashire carries a wholly disproportionate burden in the interests of the economic policy of the Government and Lancashire has awakened to that fact.

The President has rightly had his attention called to the mounting flow of cheap folded yarns to Portugal and other countries. My hon. Friend the Member for Stalybridge and Hyde (Mr. Blackburn) dealt with that problem at considerable length. I am afraid the right hon. Gentleman has tended to dismiss this as unimportant. In consequence, we have had pockets of unemployment in an important sector of the industry—the sector which produces the folded yarn mainly for fine quality goods. The stubborn refusal of the Government to end Purchase Tax under the D scheme on textiles has given a grave blow to Lancashire's export hopes. In this sphere Lancashire can hold its own for a number of years, given fair and reasonable conditions and opportunities.

I repeat that the over-riding problem is the rising trend of duty-free grey cloth from India at incredibly low prices. In 1954, 133 million yards came to this country from India. To get a proper picture, one must look at the figures for the fourth quarter of 1954 and relate those figures to imports in January this year. In January. 1955, 16 million yards were imported from India. That is an annual rate of nearly 200 million yards. The serious concern to Lancashire at the moment is that if the trend of 1954 is carried through 1955 it is quite possible that 300 million yards will be imported from India.

The price advantage is so striking that Manchester merchants are pouring orders into India at present. I shall not give many figures, but I will quote the example of a standard cloth. On a standard grey cloth the Lancashire price at present is 13d. per yard and the Indian price is 9.95d. The price advantage of the Indian cloth is 3.05d. or, according to my doubtful arithmetic, 23 per cent. lower than the Lancashire price. It might well be suggested that perhaps Lancashire textile industry production costs are too high. They may be to some extent, but the gap is so large that it could not possibly be bridged, however efficiently our industry were organised.

I shall give the figures in reference to that cloth. The Lancashire spinning and weaving costs in producing that cloth at 13d. a yard are 6d. The Indian spinning and weaving costs, plus insurance and freight to this country, are 5¾d. Therefore, the advantage in the cost of production for the Indians is ¼d. per yard. The 2¾d. of the 3d. advantage is due entirely to India's access to more favourable raw cotton prices. In other words, it is not untrue to say that, due to Lancashire's greater productivity, the labour costs in producing a lb. of yarn or a yard of cloth in Lancashire are very little higher than in India.

The people of Lancashire are very disturbed and angry, because to them the present position, rightly or wrongly, seems very unfair. I think that by and large both sides of the House have agreed that it is unfair, and I should like to recount, as I see them, the three points of fundamental unfairness.

The United Kingdom cotton industry is the only cotton industry in the world which has to face competition from duty free imports. That seems to be a rather unfair situation in which Lancashire has to fight in the world as it is today. Secondly, although India has free access to the enormous United Kingdom market, she imposes quite prohibitive duties on our exports of cotton fabrics to India, whose duties on our goods range from 60 per cent. to 80 per cent.

That is a completely prohibitive duty. Although we have a substantial preference, the duty imposed upon our goods makes it almost impossible for them to enter India, In fact, the exports of Lancashire textile fabrics to India in 1954 totalled 3 million yards, or about 2 per cent. of the yardage of what India sent to us in the reverse direction. Again, Lancashire asks whether this is fair. We must agree that it is very unfair. It is one-way trading.

Thirdly, as a result of India's dual pricing system for Indian cotton, Indian mills receive their Indian cotton at approximately Is. per lb. cheaper than Lancashire receives comparable grades of United States or other growths or even of Indian cotton. This advantage, as other hon. Members also have indicated, is equal to 2¾d.-3d. per yard of cloth, or approximately 25 per cent. of the value of the cotton fabric. Again, we ask, is this fair? I think everyone must agree that it is a most unfair condition in which an industry is expected to survive.

I have a lifelong and intimate connection with our once very great cotton industry. I have felt its decline from its peak to its present severely contracted size. I have gone through those periods of violent contraction and have had intimate experience of the strife, struggle and suffering, and the mass unemployment and the insecurity and misery that that violent contraction caused. To divide those violent contractions. in to two, the 1920's saw the great contraction due to the loss of the enormous Indian market and the 1930's saw the full impact of unfair cut-throat competition from Japan.

Because of my personal background of unhappy experience and memories, it may be that I see the problem out of perspective, but I do not think so. I have tried to be fair and objective. The facts that I have produced cannot be refuted. I do not think that the comments and opinions I have expressed have been unbalanced and unreasonable. Therefore, I think that it is legitimate to contend that an impartial observer must agree that the present situation and conditions under which the Lancashire textile industry is functioning are most unfair. It is carrying impossible handicaps which no British industry ought to be asked to bear. I am afraid that the Government, by its continued inaction, has brought the cotton industry of Lancashire to the verge of a third violent contraction in the form of the loss of a substantial part of the home market.

The House will make a great mistake if it fails to appreciate and take account of the great human problems which are involved by these violent changes in the pattern of trade. Someone once said that the country is richest which has the greatest number of happy and contented human beings. People cannot be happy and contented if insecurity and the spectre of unemployment hangs over them; in other words, if they are in danger of losing their jobs, as they feel they are in Lancashire today.

There is, of course, always the tendency to think that the other fellow's job is not as important as our own; but to him it is important. To put this human aspect of the problem into correct perspective in the atmosphere of this House, I would say that cotton operatives are as uncertain and as alarmed by these cheap foreign imports as Members of Parliament are uncertain and alarmed by the operations of the Boundary Commission.

I suggest that one should bear in mind that situation in the attempt to appreciate what is in the minds of the people in our textile industry at the present time. This feeling of anxiety and uncertainty which hung over a number of hon. Members on both sides of the House during 1954 and has extended into 1955, has to the same extent hung over cotton operatives.

My right hon. Friend the Member for Huyton made reference to Lancashire 40 years ago producing home requirements in the two hours before breakfast each day. That time has gone. Instead of being an industry in which 80 per cent. of its products were exported and 20 per cent. satisfied the home market, the position has been completely reversed, and now 80 per cent. of its production is needed to satisfy the home market and only 20 per cent. is exported. The question that is being asked in Lancashire particularly is this. Is the home trade to be allowed to go the same way as the export trade? Here we can exercise some control. The great losses in the export markets were due to external factors which we could not possibly control, but in the home market the situation is within our own hands and our own control. Here we can at least influence and determine the rate of decline, if further decline there is to be.

Should the home trade be protected? This is a legitimate question to be asked. We on this side of the House do not stand for either wholesale protection or for unregulated cut-throat competition. We believe that there should be some flexibility in industry, that some industries should be encouraged to expand and others should be encouraged to contract. Over-rapid expansion can be as fraught with danger and distress as over-rapid contraction. We know this in Lancashire. We have had experience of both during the last half century.

If something effective is not done at once, the home trade can go the same way as the export trade. I appeal particularly to the Government to devise some scheme whereby the impact of these changes can be gradually absorbed in our industry. Responsible leaders in the cotton industry do not take the view that we should be 100 per cent. protected, but they take the view that we should be given reasonable and fair conditions in which to operate. They contend that if the changes in the pattern of trade which must inevitably occur in achanging world are influenced so as to be gradual. our industry better than any other can adapt itself to those changes.

We have a large labour force, the oldest labour force in any industry. We have also a sex segregation which is rather peculiar. The position of our labour force is roughly, though fairly accurately, as follows—one-third males, one-third single females, and one-third married females. By the nature of this labour force, Lancashire can well fit into an ordered contraction if further contraction there must be.

In my opinion, for what it is worth, if right and reasonable policies are pursued, our industry at present is not far from right in size. There may be need for further contraction in the overall national interest, but I think that it need only be slight—I should say about 10 per cent. over the next 10 years. One per cent. per year. I believe that it is possible for some ordered development to be introduced. We on this side of the House feel that Her Majesty's present Administration have failed in their responsibilities. We feel that they have been distinctly lacking in their sense of appreciation of the urgency of this problem. Finally, we believe that to them Lancashire as a textile industry is an expendable instrument of their economic policy.

9.30 p.m.

The Minister of State, Board of Trade (Mr. A. R. W. Low)

I am sure that we should all like to congratulate the hon. Member for Farnworth (Mr. Thornton) on his speech. We are all glad that he was chosen to wind up the debate for the Opposition, for we know of his experience, we respect his views and the sincere expressions of feeling which he has conveyed to us this evening.

I believe that we can all agree that this has been a valuable debate. We have had speeches from hon. Members who have great experience of this industry. I can mention my hon. and gallant Friend the Member for Rochdale (Lieut.-Colonel Schofield) as well as the hon. Member for Farnworth. I personally am sorry—and I know my hon. Friends will join with me—in saying this—that my right hon. Friend the Member for Blackburn, West (Mr. Assheton) has got such a bad cold that he has lost his voice, and I must apologise to the House, too, that I am likewise suffering from a cold. My voice is not quite lost, but nearly so, and I hope that the House will be patient with me.

Many of my hon. Friends who have spoken have reminded us that the problems of Lancashire today, to which all give serious attention and which, as my right hon. Friend the Prime Minister has said, are a matter of anxious concern to us, raise national issues of the widest importance as well as issues for Lancashire itself. The hon. Member for Burnley (Mr. Burke) said that it was time that Lancashire's voice was heard. I can assure him that Lancashire's voice has been heard by my right hon. Friend and me for many months, and I would also assure him that we have listened very, very carefully to what Lancashire has had to say, just as we have listened carefully to what hon. Members from both sides of the House representing Lancashire and cotton constituencies have said today.

I have paid special attention to what was said by my hon. Friend the Member for Heywood and Royton (Sir H. Sutcliffe) and by the hon. Member for Stalybridge and Hyde (Mr. Blackburn) about the smaller towns and the yarn position, to which I do not think I shall have time tonight to reply.

Mr. Blackburn


Mr. Low

As the hon. Gentleman himself said, I have written him several letters and he was good enough to read one of them to the House.

Mr. Blackburn

I am waiting for another.

Mr. Low

Several hon. Members mentioned the subject of Purchase Tax. All I can do about that is to assure the House that everything that has been said on that subject today will be faithfully reported to my right hon. Friend the Chancellor of the Exchequer; and I think I can add that I am sure that he knows all the arguments very well.

Part of the day's debate has been spent in discussing the facts, in diagnosing the ills and trying to assess them aright. I can assure the House that in giving figures and statistics, about which my hon. Friend the Member for Clitheroe (Mr. Fort) spoke, we did not try to minimise the seriousness of the issue. Equally we tried to avoid any exaggeration. How wise was my hon. Friend the Member for Cheadle (Mr. Shepherd) in pointing to the dangers of exaggeration in a situation like this.

There is a tendency in some quarters to blame Indian imports for all Lancashire's present difficulties. The facts as reported to me, and as mentioned by hon. Gentlemen from both sides of the House, indicate that this is not generally correct. Of the short-time reported last week, which certainly was an increase on the previous week, three-quarters of it was in the finer end of the trade, which could hardly be affected by the Indian imports. My hon. Friend the Member for Clitheroe took up this point. Of the seven mills closed this year, five were concerned with the finer end of the trade and of the other two closures, one was a quite normal group reorganisation and the other was due to financial difficulties which had taken place over a period of more than a year. Nevertheless, I think that we are all conscious of the fears for the future which have been expressed in relation to these imports generally and those from India in particular; fears which are expressed by many responsible men, both inside and outside the House. We are also well alive to the point which has been made by several speakers in the debate about the loss of confidence. I thought that my hon. Friend the Member for Clitheroe put that point extremely well.

If we agree that this is a matter both of exports and of imports, we must agree, too, that the complete removal of all imported cloth from the home market of, say, between 80 million and 100 million yards last year would not have solved the problems of Lancashire in the immediate past and would not solve them in the future. Those 80 million to 100 million yards are really not a substantial part of the home market. The fear—and I understand it—is that the imports will rise substantially.

One of the questions we have to ask ourselves is this: is it possible to contemplate a ban on all imports of cloth to the home market? If it is not—and that, I gather, is not the policy of the hon. Member for Farnworth and other hon. Gentlemen—at what level should we aim if we decide to take action to limit imports? That is one of the points we shall be discussing with the Cotton Board. Some hon. Members have suggested that it is unusual that these points should be discussed by a Government with an industrial body, It really is not the slightest bit unusual that industry should come to put its case to the Government when the industry is seeking protection.

We have heard it argued that action ought to have been taken in the past or ought to be taken at once. Some hon. Members have argued that it is wrong to waste the time of the House in explaining the difficulties of the various forms of protective action which might be taken; but in this matter it is impossible to consider whether to take protective action without considering carefully at the same time what specific action might best be taken. We have to consider the "whether" and the "what"—

Mr. Lindgren

The weather?

Mr. Low

I would remind the hon. Gentleman that this is a serious matter which we have been debating. I do not think he can have been here all the time. It is not a matter on which he should talk about the weather outside. Even after this debate it is worth while emphasising the difficulties of various forms of specific action but, if I emphasise them, I hope that the House will understand that I am not saying that it is impossible to surmount these difficulties.

This point has been covered already but various counter-points have been put in the debate, and it is normal that the Government spokesman should deal with those points in reply. One important issue which has not been dealt with to any extent by hon. and right hon. Gentlemen opposite is this: can we helpfully take action to restrict Indian imports and leave the door wide open to Hong Kong imports? In the four months October to January of this year it is estimated that 26 million yards of Indian cloth and 12 million yards of Hong Kong cloth may have gone on to the home market. If we were to restrict Indian cloth imports alone, it might be said that Hong Kong imports might quickly increase and go a good way to fill the gap.

Mr. Follick rose

Mr. Low

The hon. Gentleman has not been here throughout the debate. I would gladly give way to anybody who had been. Of the various methods that have been discussed, I wish to refer first to the tariff.

My hon. Friend the Member for Cheadle is an advocate of dealing with the matter by tariff. There are considerable difficulties about this, which the right hon. Gentleman knows well. It is contrary to both Article I and Article II of our 1939 agreement with India under which we enjoy valuable preferences on 20 per cent. of our exports to India. It is contrary to the Ottawa Agreements Act, 1932, in respect of India. It is contrary to long-established and traditional principles of our Commonwealth and Empire trading policy.

If we decided to go for a tariff and to re-negotiate the Indian Trade Agreement, should we apply the tariff to all Commonwealth countries, or do we want to discriminate in trade against India or Hong Kong? Is this the time when we should want to take discriminatory action against India or Hong Kong? These are serious issues which were mentioned by my hon. Friend the Member for Oldham, East, among other hon. Members. Among other things, we should have to make up our minds whether even the most-favoured nation rate of 17½ per cent. was sufficiently high to achieve the purpose of those who are asking us to apply a tariff.

It is a good thing to remind the House that trade with India is going well. Last year our exports were £115 million in value, and India's exports to us were of about the same order. My hon. Friend the Member for Altrincham and Sale (Mr. Erroll) took this point and said that India has to earn the sterling with which to pay for our exports.

When we come to the point, which has been made from time to time during the debate, about goods which are cheap for one reason or another—such as wages or special cotton prices—we must surely keep in mind the fact that our United States friends, our exports to whom we are trying manfully to increase, might well take that point against us if we pressed it too far.

Mr. Ellis Smith

Especially with the engineers.

Mr. Low

I note that I have the support of the hon. Member for Stoke-on-Trent, South. The next method discussed was a quota. My hon. Friend the Member for Oldham, East (Sir I. Horobin) and my hon. Friend the Member for Clitheroe advocated that we should use a quota as a cure for Lancashire's problem. Article XIX of G.A.T.T. has been mentioned; it provides for emergency action. The use of a quota would be a short-term and not a long-term solution. Are we certain at the moment whether the problem which faces Lancashire is a short-term or long-term one? That is one of the questions that we have to consider very carefully and, of course, to discuss with the Cotton Board.

One of my hon. Friends and one or two other hon. Members suggested not a nondiscriminatory world quota, as it were, but a quota against Commonwealth and colonial manufactures. That certainly is another point that we have to consider. According to the hon. Members who have spoken about it, it could be justified on the ground that other imports are held by the 17½per cent. tariff. However, this departure from free entry raises very big issues of Commonwealth policy, just as a tariff would do. How could we confine our actions merely to cloth? Many other United Kingdom manufacturing industries have recently been affected by imports from Commonwealth and colonial manufactures coming in free of duty, and in nearly every case those industries have already lost a far higher percentage of the home market than the 5 per cent. to 6 per cent. which the cotton textile industry lost last year. Some of these industries have been mentioned on the Floor of the House—carpets, gloves, cutlery. Others have been mentioned in letters to myself, my hon. Friend and my right hon. Friend. Great issues of Commonwealth policy are raised by that point.

The third proposal that has been made was the right hon. Gentleman's State trading importing commission, another monopoly for Lancashire. The right hon. Gentleman is in favour of monopolies for Lancashire, apparently. I am not sure how many of his hon. Friends are in favour of these monopolies for Lancashire. We have yet to find out. He suggested that this commission would buy freely from everywhere for re-export, but would discriminate in its purchases for the home market against India alone, because of the unfair competition in the price of Indian cotton.

We can all express our opinion that the price of Indian cotton is unfair, but, as my right hon. Friend said, whatever our opinion may be, it is not contrary to any international obligation, nor contrary to something we have done ourselves for some time over steel and coal. The right hon. Gentleman seems to think that the behaviour of the Commission in this way would be consistent with our international obligations. How that can really be so in view of Article XVII of the G.A.T.T., which my hon. Friend the Member for Oldham, East read out, I do not know.

However, suppose it is, then is he suggesting that other countries can legitimately do the same thing against our engineering goods, just because the domestic price of our steel is cheaper than the world price? The second point about the right hon. Gentleman's proposal is that it is only meant to deal with India—special discrimination against India. That would hardly meet the case of his hon. Friend the Member for Burnley who wants the whole of the home market, or nearly all, reserved for Lancashire. What would the right hon. Gentleman's Commission do about Hong Kong imports, most of them kept for the home market?

Mr. H. Wilson

The right hon. Gentleman is misrepresenting what I said. So far as Hong Kong is concerned, if these imports were an unfair competition, the same restrictions would apply. I also made it clear this afternoon that they would also have power to deal with yarns coming in under virtually dumping conditions. Will he please tell us why this argument does not apply to jute?

Mr. Low

If the right hon. Gentleman will give me time, I certainly will. As he has been good enough to draw me on, I will come to it at once. There are some quite important differences between the jute industry on the one hand and the cotton industry on the other. I hope that he will bear that in mind. I hope that he will also bear in mind that the Government do not wish to continue State trading in jute one moment after they have found another method of honouring their undertaking to the jute industry. The jute control was a State control skeleton which we found in the cupboard in 1951 and we are not now going to find a companion for it.

Now for the differences. The jute industry is a relatively small industry employing 19,000 people and concentrated for the most part in or around Dundee in Scotland. The cotton industry is large and employs 300,000 people or more over a large area.

A second difference is that the cotton industry produces considerably more than the needs of the home market and is a leading exporting industry; some of us seem to forget the important part the cotton industry still plays in the nation's exports. The jute industry produces considerably less than the needs of the home market and its exports are very limited.

A third and very important difference is that most of the Control's imports of jute goods are confined to a few standard types of yarn and cloth. There are many diverse types of cotton goods for many different purposes and, by their nature, they can best be bought by individual merchants who know the needs of their customers, having carefully studied them, and who know the skill and efficiency of their suppliers.

The advocates of this State trading proposal put it forward as a wangle to get round what they admit to be a most formidable difficulty of protection by any other means, namely tariff or quota. These formidable difficulties relate to international and commonwealth obligations. The right hon. Gentleman knows all about them and knows that he cannot wangle round them by his State trading proposal.

When the right hon. Gentleman himself took action in 1947 on the G.A.T.T., he appeared to some of us to be protecting himself from the temptation to which he knew he was otherwise liable to succumb. He agreed to sensible Articles in the G.A.T.T. about State trading and we thought they were specially designed to protect him and those like him from the temptations of the "Idol of State Trading" which he worships. Alas, he seems to have forgotten those sensible Articles, and to have wasted a great deal of his time and the time of his supporters.

Now let me say something about the representations we have made to the Government of India about the level of import duty. There is a long history of these representations, going back to the time before I went to the Board of Trade.

We have always taken the view that a free licensing policy of cotton textiles on the part of the Government of India would be frustrated by the very high level of their tariff. The Government of India did not accept our view when they introduced free licensing in September last year, but assured us they would reconsider the level of their tariff in the light of evidence of imports after September.

They repeated that assurance to me when I was in Delhi early in January. I discussed the whole of Lancashire's case with Mr. T. T. Krishnamachari and I made it quite clear to him that we all felt strongly about the disparity between the duty-free treatment we gave to Indian cloth and the preventive level of duty imposed by India on our cotton textiles.

Since the Indian Budget we have made further representations. There can be no doubt that the Government of India understand our point of view, but they have a point of view too. They are not convinced that it is the level of duty that prevents British textile exports to India. They point to recent applications for licences which are higher; but actual imports into India and the evidence we have of orders from India support our view, which is that trade has not increased as it should have done since the free issue of licences began in September.

They also say that they are not convinced that Lancashire exporters have an up-to-date knowledge of the Indian market. It is my view, as I told Mr. Krishnamachari, that Lancashire merchants are better informed than any merchants and manufacturers outside India about the Indian market. Nevertheless, the Indian Government told me in January that they would be most easily persuaded that British textile exporters really had taken all possible steps to increase their trade if an exporters' mission was to go out to India.

This suggestion had first been made by Mr. Neville Wadia, the Chairman of the Bombay Mill Owners Association, in a letter to Sir Raymond Streat before Christmas. It was also suggested that such a mission should visit Delhi and express its point of view to the Government of India. I told the Cotton Board of this, and of the importance which the Government of India attached to the Mission, at a meeting which I had with it on 26th January and I repeated it on 15th February in Manchester. I have always made it clear that Her Majesty's Government did not hold the view that Lancashire had not exerted itself to the utmost to increase its exports to India.

In replying to our recent representations the Government of India have returned to this proposal for a Mission. They thought it was worth while repeating the suggestion made by Mr. Neville Wadia that a team of United Kingdom textile experts should come out to India and study the market conditions, so as to find out what type of United Kingdom goods will appeal to the Indian market. The investigations of such a team may be expected to enable the Government of India to examine the matter on the basis of more precise information than is now available in regard to India's demand for better varieties of textiles, and the United Kingdom's ability to supply them at reasonably competitive prices. The Government of India will examine any suggestions made after such an investigation with sympathy and consideration.

The Cotton Board have been considering this suggestion, and while it is a matter for the industry to decide, the United Kingdom Government for their part hope very much that the invitation will be accepted.

We regard the level of the Indian tariff as quite a separate matter from the question of whether and what action should be taken to control imports into the United Kingdom. There is, of course, no question of asking the Indian Government to reduce this tariff as part of a bargain in which we would promise not to restrict imports into the United Kingdom of Indian cloth. We hope that the Government of India will reduce that tariff because we believe that its present level prevents trade and we believe that the Government of India do not wish to prevent trade with us.

Whatever else this debate will have done, I hope that it will have shown the people of Lancashire's staple industry that this House is aware of the problems they face, and that it is not only aware but, regardless of party, cares very deeply about its problems. We have had in mind not only the facts about production, employment, imports and exports as they show themselves today, but also the careful estimates made about the future and the fears which have been expressed.

I hope, too, that there will be a better understanding of the great issues involved in any of the various methods of safeguarding action which we have discussed. These great issues concern our nation's position as a world-wide trading nation. Mistaken use of protective weapons would damage all exporting industries including woollen textiles, vehicles, machinery, heavy plant and so on, and the cotton textile industry would not escape. That is the difficulty we face.

If we were to restrict imports, perhaps by a relatively small amount, giving Lancashire a relatively small gain, we might lose freedom and even preferences in other markets over the whole range of our trade, not excluding textiles. That is a substantial risk which I do not say we should not run in any circumstances, but I am saying that it is a risk the very nature of which forces any responsible Government to examine most carefully its disadvantages as well as its advantages.

This is a changing situation, and the balance of disadvantage and advantage may change from month to month. Let us never forget that whatever is done or not done, the main cause of the reduction in orders to the weavers and spinners is the loss of export orders, and anything

that might be done to protect the home market by itself will not go even halfway to making up the gap between present orders and orders which Lancashire wants.

We have been charged by the Opposition with failure to take action, as if to act without care and fullest consideration and without regard to our international and Commonwealth obligations would have best served Lancashire and Britain. We are convinced that if we had in these past few months placed any new restrictions on cotton cloth imports we should have seriously damaged the nation's interest, without contributing very much to Lancashire's.

It is absolutely certain that if at any time we had taken or were to take the State-trading action proposed by the Opposition, the damage to the national interest would be even greater. Instead, we have kept closely in touch with the industry, who will shortly be letting us have their specific proposals; and we have made our own studies and preparations for action if that were to become essential and appropriate.

In the next week or two this process will continue. That this is the right way to proceed we have no doubt, and we ask the House to approve it by voting for our Amendment.

Question put, That the words proposed to be left out stand part of the Question:—

The House divided: Ayes 256, Noes 288.

Division No. 43. AYES [10.0 p.m
Acland, Sir Richard Butler, Herbert (Hackney, S.) Edwards, Rt. Hon. Ness (Caerphilly)
Adams, Richard Callaghan, L. J. Edwards, W.J. (Stepney)
Albu, A. H. Castle, Mrs. B. A. Evans, Albert (Islington, S.W.)
Allen, Arthur (Bosworth) Champion, A. J. Evans Edward (Lowestoft)
Allen, Scholefield (Crewe) Chapman, W. D. Evans, Stanley (Wednesbury)
Anderson, Frank (Whitehaven) Chetwynd, G. R. Fernyhough, E.
Attlee, Rt. Hon. C. R. Clunie, J. Fienburgh, W.
Awbery, S. S. Coldrick, W. Fletcher, Eric (Islington, E.)
Bacon, Miss Alice Collick, P. H. Follick, M.
Baird, J. Collins, V. J. Foot, M. M.
Barnes, Rt. Hon. A. J. Corbet, Mrs. Freda Forman, J. C.
Bartley, P. Cove, W. G. Fraser, Thomas (Hamilton)
Bellenger, Rt. Hon. F. J. Craddock, George (Bradford, S.) Freeman, John (Watford)
Bence, C. R. Crosland, C. A. R. Freeman, Peter (Newport)
Bonn, Hon. Wedgwood Crossman, R. H. S. Gaitskell, Rt. Hon. H. T. N.
Beswick, F. Cullen, Mrs. A. Gibson, C. W.
Bing, G. H. C. Daines, P. Glanville, James
Blackburn, F. Dalton, Rt. Hon. H. Gooch, E. G.
Blenkinsop, A. Darling, George (Hillsborough) Gordon Walker, Rt. Hon. P. C.
Boardman, H. Davies, Harold (Leek) Greenwood, Anthony
Bottomley, Rt. Hon. A. G. Davies, Stephen (Merthyr) Grenfell, Rt. Hon. D. R.
Bowles, F. G. de Freitas, Geoffrey Griffiths, David (Rother Valley)
Braddock, Mrs. Elizabeth Deer, G. Griffiths, Rt. Hon. James (Lianelly)
Brock way, A. F. Delargy, H. J. Griffiths, William (Exchange)
Brook, Dryden (Halifax) Dodds, N.N. Hale, Leslie
Broughton, Dr. A. D. D. Donnelly, D. L. Hall, John T. (Gateshead, W.)
Brown, Rt. Hon. George (Belper) Dugdale, Rt. Hn. John (W. Brmwch) Hamilton, W. W.
Brown, Thomas (Ince) Ede, Rt. Hon. J. C. Hannan, W.
Burke, W. A. Edelman, M. Hardy, E. A.
Burton, Miss F. E. Edwards, Rt. Hon. John (Brighouse) Hargreaves, A.
Harrison, J. (Nottingham, E.) Mellish, R. J. Smith, Norman (Nottingham, S.)
Hayman, F. H. Messer, Sir F. Snow, J. W.
Healey, Denis (Leeds, S.E.) Mikardo, Ian Sorensen, R. W.
Henderson, Rt. Hon. A. (Rowley Regis) Mitchison, G. R. Soskice, Rt. Hon. Sir Frank
Herbison, Miss M. Moody A. S. Sparks, J. A.
Hewitson, Capt. M. Morgan, Dr. H. B. W. Steele, T.
Hobson, C. R. Morris, Percy (Swansea, W.) Stewart, Michael (Fulham. E.)
Holman, P. Morrison,Rt.Hn.Herbert(Lewis'm,S.) Stokes, Rt. Hon. R. R.
Holmes, Horace Moyle, A. Strachey, Rt. Hon. J.
Houghton, Douglas Mulley, F. W. Strauss, Rt. Hon. George (Vauxhall)
Hoy, J. H. Murray, J. D. Stross, Dr. Barnett
Hubbard, T. F. Nally, W. Summerskill, Rt. Hon. E.
Hudson, James (Ealing, N.) Noel-Baker, Rt. Hon. P. J. Swingler, S. T.
Hughes, Cledwyn (Anglesey) O'Brien, T. Sylvester, G. O.
Hughes, Emrys (S. Ayrshire) Oldfield, W. H. Taylor, Bernard (Mansfield)
Hughes, Hector (Aberdeen, N.) Oliver, G. H. Taylor, John (West Lothian)
Hynd, H. (Accrington) Orbach, M. Thomas, George (Cardiff)
Hynd, J. B. (Attercliffe) Oswald, T. Thomas, Iorwerth (Rhondda, W.)
Irvine, A. J. (Edge Hill) Owen, W. J. Thomas, Ivor Owen (Wrekin)
Irving, W. J. (Wood Green) Paget, R. T. Thomson, George (Dundee, E.)
Isaacs, Rt. Hon. G. A. Paling, Will T. (Dewsbury) Thornton, E.
Janner, B. Palmer, A. M. F. Turner-Samuels, M.
Jay, Rt. Hon. D. P. T. Panned, Charles Ungoed-Thomas, Sir Lynn
Jeger, George (Goole) Pargiter, G. A. Usborne, H. C.
Jeger, Mrs. Lena Parker, J. Wallace, H. W.
Jenkins, Roy (Stechford) Parkin, B. T. Warbey, W. N.
Johnson, James (Rugby) Paton, J. Webb, Rt. Hon. M. (Bradford, C.)
Johnston, Douglas (Paisley) Peart, T. F. Weitzman, D.
Jones, Rt. Hon. A. Creech Plummer, Sir Leslie Wells, Percy (Faversham)
Jones, David (Hartlepool) Porter, G. Wells, William (Walsall)
Jones, Frederick Elwyn (W. Ham, S.) Price, Philips (Gloucestershire, W.) West, D. G.
Keenan, W. Probert, A. R. Wheeldon, W. E.
Kenyon, C. Proctor, W. T. White, Mrs. Eirene (E. Flint)
Key, Rt. Hon. C. W. Pryde, D. J. White, Henry (Derbyshire, N.E.)
Kinley, J. Pursey, Cmdr. H. Whiteley, Rt. Hon. W.
Lawson, G. M. Rankin, John Wigg, George
Lever, Harold (Cheetham) Reeves, J. Wilcock, Group Capt. C. A. B.
Lever, Leslie (Ardwick) Reid, Thomas (Swindon) Wilkins, W. A.
Lewis, Arthur Reid, William (Camlachle) Willey, F. T.
Lindgren, G. S. Rhodes, H. Williams, David (Neath)
Lipton, Lt.-Col. M. Robens, Rt. Hon. A. Williams, Rev. Llywelyn (Ab'tillery)
Logan, D. G. Roberts, Albert (Normanton) Williams, Rt. Hon. T. (Don Valley)
MacColl, J. E. Robinson, Kenneth (St. Pancras, N.) Williams, W. R. (Droylsden)
McGhee, H. G. Rogers, George (Kensington, N.)
McGovern, J. Ross, William Williams, W. T. (Hammersmith, S.)
McInnes, J. Royle, C. Willis, E. G.
McKay, John (Wallsend) Shackleton, E. A. A. Wilson, Rt. Hon. Harold (Huyton)
MacMillan, M. K. (Western Isles) Shawoross, Rt. Hon. Sir Hartley Winterbottom, Ian (Nottingham, C.)
McNeil, Rt. Hon. H. Shinwell, Rt. Hon. E. Winterbottom, Richard (Brightside)
MacPherson, Malcolm (Stirling) Short, E. W. Woodburn, Rt. Hon. A.
Mainwaring, W. H. Shurmer, P. L. E. Wyatt, W. L.
Mallalieu, E. L. (Brigg) Silverman, Julius (Erdington) Yates, V. F.
Mallalieu, J. P. W. (Huddorefd, E.) Silverman, Sydney (Nelson) Younger, Rt. Hon. K.
Manuel, A. C. Simmons, C. J. (Brierley Hill)
Marquand, Rt. Hon. H. A. Skeffington, A. M. TELLERS FOR THE AYES:
Mason, Roy Slater, Mrs. H. (Stoke-on-Trent) Mr. Bowden and Mr. Pearson.
Mayhew, C. P. Smith, Ellis (Stoke, S.)
Aitken, W. T. Boothby, Sir Robert Crookshank, Capt. Rt. Hn. H. F. C.
Allan, R. A. (Paddington, S.) Bossom, Sir A. C. Crouch, R. F.
Alport, C. J. M. Boyd-Carpenter, Rt. Hon. J. A. Crowder, Sir John (Finohley)
Amery, Julian (Preston, N.) Boyle, Sir Edward Crowder, Petre (Ruislip—Northwood)
Amory, Rt. Hn. Heathcoat (Tiverton) Braine, B. R. Darling, Sir William (Edinburgh, S.)
Anstruther-Gray, Major W. J. Braithwalte, Sir Albert (Harrow, W.) Davidson, Viscountess
Arbuthnot, John Braithwaite, Sir Gurney De la Bère, Sir Rupert
Armstrong, C. W. Bromley-Davenport, Lt.-Col. W. H. Deedes, W. F.
Ashton, H. (Chelmsford) Brooke, Henry (Hampstead) Digby, S. Wingfield
Assheton, Rt. Hn. R. (Blackburn,W.) Brooman-White, R. C. Dodds-Parker, A. D.
Astor, Hon. J. J. Browne, Jack (Govan) Donaldson, Cmdr. C. E. McA.
Baldock, Lt.Cmdr. J. M. Bullard, D. G. Donner, Sir P. W.
Baldwin, A. E. Butcher, Sir Herbert Doughty, C. J. A.
Banks, Col. C. Butler, Rt. Hn. R. A. (Saffron Walden) Drayson, G. B.
Barber, Anthony Campbell, Sir David Dugdale, Rt. Hn. Sir T. (Richmond)
Barlow, Sir John Carr, Robert Duncan, Capt. J. A. L.
Baxter, Sir Beverley Cary, Sir Robert Duthie, W. S.
Beach, Maj. Hicks Channon, H. Eccles, Rt. Hon. Sir D. M.
Beamish, Maj. Tufton Churchill, Rt. Hon. Sir Winston Eden, Rt. Hn. Sir A. (Wrwk & Lgtn)
Bell, Philip (Bolton, E.) Clarke, Col. Sir Ralph (E. Grinstead) Elliot, Rt. Hon. W. E.
Bell, Ronald (Bucks, S.) Clarke, Brig. Terence (Portsmouth, W.) Errington, Sir Eric
Bennett, Dr. Reginald (Gosport) Cole, Norman Erroll, F. J.
Bevins, J. R. (Toxteth) Conant, Maj. Sir Roger Fell, A.
Biroh, Rt. Hon. Nigel Cooper, Sqn. Ldr. Albert Finlay, Graeme
Bishop, F. P. Cooper-Key, E. M. Fisher, Nigel
Black, C. W. Craddock, Beresford (Spelthorne) Fleetwood-Hesketh, R. F.
Fletcher, Sir Walter (Bury) Lindsay, Martin Robertson, Sir David
Fletcher-Cooke, C. Linstead, Sir H. N. Robinson, Sir Roland (Blackpool, S.)
Lloyd, Rt. Hon. G. (King's Norton) Robson-Brown, W.
Ford, Mrs. Patricia Lloyd, Maj. Sir Guy (Renfrew, E.) Rodgers, John (Sevenoaks)
Fort, R. Lloyd, Rt. Hon. Selwyn (Wirral) Roper, Sir Harold
Foster, John Lloyd-George, Maj. Rt. Hon. G. Ropner, Col. Sir Leonard
Fraser, Hon. Hugh (Stone) Lockwood, Lt.-Col. J. C. Russell, R. S.
Fraser, Sir Ian (M'cmbe & Lonsdale) Longden, Gilbert Ryder, Capt. R. E. D.
Galbraith, Rt. Hon. T. D. (Pollok) Low, Rt. Hon. A. R. W. Sandys, Rt. Hon. D.
Galbraith, T. G. D. (Hillhead) Lucas, Sir Jocelyn (Portsmouth, S.) Savory, Prof. Sir Douglas
Gammans, L. D. Lucas, P. B. (Brentford) Schofield, Lt.-Col. W.
Garner-Evans, E. H. Lucas-Tooth, Sir Hugh Scott, Sir Donald
Glover, D. McAdden, S. J. Scott-Miller, Cmdr. R.
Godber, J. B. MeCallum, Major D. Sharples, Maj. R. C.
Gomme-Duncan, Col. A. McCorquodale, Rt. Hon. M. S. Shepherd, William
Gough, C.F. H. Macdonald, Sir Peter Simon, J. E. S. (Middlesbr'gh, W.)
Gower, H. R. Mackie, J. H. (Galloway) Smithers, Peter (Winchester)
Graham, Sir Fergus Maclay, Rt. Hon. John Smyth, Brig. J. C. (Norwood)
Gresham Cooke, R. Maclean, Fitzroy (Lancaster) Snadden, W. McN.
Grimond, J. McLean, Neil (Inverness) Soames, Capt. C.
Grimston, Hon. John (St. Albans) Macleod, Rt. Hn. Iain (Enfield, W.) Spearman, A. C. M.
Grimston, Sir Robert (Westbury) MacLeod, John (Ross & Cromarty) Spence, H. R. (Aberdeenshire, W.)
Hall, John (Wycombe) Macmillan, Rt. Hn. Harold (Bromley) Spens, Rt. Hn. Sir P. (K'ns'gt'n S.)
Hare, Hon. J. H. Maopherson, Niall (Dumfries) Stanley, Capt. Hon. Richard
Harris, Frederic (Croydon, N.) Maltland, Cdr. J. F. W. (Hornoastle) Stevens, Geoffrey
Harris, Reader (Heston) Maitland, Patrick (Lanark) Steward, Harold (Stockport, S.)
Harrison, Col. J. H. (Eye) Manningham-Buller, Rt. Hn. Sir R. Steward, W. A. (Woolwich, W.)
Harvey, Air Cdre. A. V. (Macclesfd) Marlowe, A. A. H. Stewart, Henderson (Fife, E.)
Harvey, Ian (Harrow, E.) Marples, A. E. Stoddart-Scott, Col. M.
Hay, John Marshall, Douglas (Bodmin) Storey, S.
Head, Rt. Hon. A. H. Maude, Angus Strauss, Henry (Norwich, S.)
Heald, Rt. Hon. Sir Licnel Maudling, R. Stuart, Rt. Hon. James (Moray)
Heath, Edward Maydon, Lt.-Comdr. S. L. C. Studholme, H. G.
Henderson, John (Cathcart) Medlicott, Sir Frank Sumner, W. D. M. (Orpington)
Higgs, J. M. C. Milligan, Rt. Hon. W. R. Sutcliffe, Sir Harold
Hill, Dr. Charles (Luton) Molson, A. H. E. Taylor, Sir Charles (Eastbourne)
Hill, Mrs. E. (Wythenshawe) Moore, Sir Thomas Taylor, William (Bradford, N.)
Hill, John (S. Norfolk) Mott-Radyclyffe, C. E. Teeling, W.
Hirst, Geoffrey Nabarro, G. D. N. Thomas, Leslie (Canterbury)
Hollis, M. C. Neave, Airey Thomas, P. J. M. (Conway)
Holt, A. F. Nicholls, Harmar Thompson, Kenneth (Walton)
Hope, Lord John Nicholson, Godfrey (Farnham) Thompson, Lt-Cdr. R. (Croydon, W.)
Hopkinson, Rt. Hon. Henry Nicolson, Nigel (Bournemouth, E.) Thorneycroft, Rt. Hn. P. (M'nm'th)
Hornsby-Smith, Miss M. P. Nield, Basil (Chester) Thornton-Kemsley, Col. C. N.
Horobin, Sir Ian Noble, Comdr. A. H. P. Touche, Sir Gordon
Horsbrugh, Rt. Hon. Florence Nugent, G. R. H. Turner, H. F. L.
Howard, Hon. Greville (St. Ives) Nutting, Rt. Hon. Anthony Turton, R. H.
Hudson, Sir Austin (Lewisham, N.) Oakshott, H. D. Tweedsmuir, Lady
Hudson, W. R. A. (Hull, N.) Odey, G. W. Vane, W. M. F.
Hughes Hallet, Vice-Admiral J. O'Neill Hon. Phelim (Co. Antrim, N.) Vosper, D. F.
Hulbert, Wing Cmdr. N. J. Ormsby-Gore, Hon. W. D. Wade, D. W.
Hurd, A. R. Orr-Ewing, Charles Ian (Hendon, N.) Wakefield, Edward (Derbyshire, W.)
Hutchison, Sir Ian Clark (E'b'gh, W) Orr-Ewing, Sir Ian (Weston-super-Mare) Wakefield, Sir Wavell (St. M'le'bne)
Hutchison, James (Scotstoun) Osborne, C. Walker-Smith, D. C.
Hyde, Lt.-Col. H. M. Page, R. G. Wall, Major Patrick
Hylton-Foster, Sir H. B. H. Peake, Rt. Hon. O. Ward, Hon. George (Worcester)
Iremonger, T. L. Peto, Brig. C. H. M. Ward, Miss I. (Tynemouth)
Jenkins, Robert (Dulwich) Peyton, J. W. W. Waterhouse, Capt. Rt. Hon. C.
Johnson, Eric (Blackley) Pickthorn, K. W. M. Watkinson, H. A.
Johnson, Howard (Kemptown) Pilkington, Capt. R. A. Webbe, Sir H. (L'nd'n & Westm'r)
Joynson-Hicks, Hon. L. W. Pitman, I. J. Wellwood, W.
Kaberry, D. Pitt, Miss E. M.
Kerby, Capt. H. B. Powell, J. Enoch Williams, Rt. Hn. Charles (Torquay)
Kerr, H. W. Price, Henry (Lewisham, W.) Williams, Gerald (Tonbridge)
Lambert, Hon. G. Prior-Palmer, Brig. O. L. Williams, Paul (Sunderland, S.)
Lambton, Viscount Profumo, J. D. Williams, R. Dudley (Exeter)
Lancaster, Col. C. G. Raikes, Sir Victor Wills, G.
Langford-Holt, J. A. Ramsden, J. E. Wilson, Geoffrey (Truro)
Leather, E. H. C. Redmayne, M.
Legge-Bourke, Maj. E. A. H. Rees-Davies, W. R. TELLERS FOR THE NOES:
Legh, Hon. Peter (Petersfield) Remnant, Hon. P. Mr. Buchan-Hepburn and
Lennox-Boyd, Rt. Hon. A. T. Ridsdale, J. E. Sir Cedric Drewe.

Main Question, as amended, put and agreed to.

Proposed words there added.

Resolved, That this House, noting the diverse character of the problems confronting the cotton textile industry, supports the representations made to the Government of India on the level of import duty on United Kingdom cotton textile exports to India, and approves the declared intention of Her Majesty's Government to take such safeguarding action on imports as may prove to be essential and appropriate having regard to the position of the United Kingdom as a world-wide trading nation; and welcomes the steps which Her Majesty's Government have taken to obtain from the Cotton Board their detailed views of the problems and their specific proposals for action.