HC Deb 03 May 1955 vol 540 cc1520-6
The Prime Minister (Sir Anthony Eden)

I propose, with permission, to make a statement on certain of the problems confronting the textile industries in Lancashire and Northern Ireland. In view of the conclusion of the discussions with the Indian Government I am now in a position to make the comprehensive statement which was promised by my right hon. Friend the Chancellor of the Exchequer on 22nd April.

About two years ago, India raised her tariff against our cotton textiles to rates ranging from 60 per cent. to 80 per cent. while in addition retaining a very severe quota restriction. After representations on both quota and tariff made by Her Majesty's Government, the quota restriction was removed in October last. The tariff, however, remained, forming an almost complete barrier to trade.

Following upon the visit to India of my right hon. Friend the Minister of State for the Board of Trade, at the end of last year, arrangements were made for a Mission from the Lancashire textile industry to visit India. This Misison, which was ably led by Mr. Angus Campbell, one of the leading merchants in Manchester, has recently returned and, as a result of its work, backed by the representations made by Her Majesty's Government, I am glad to say that the Indian Government have today announced a substantial reduction in tariff rates covering the whole range of cotton textiles.

The general effect of this will be to reduce the rates on British goods by more than half to a level of 25 per cent. compared with 60 per cent. to 80 per cent. previously. In addition, there is a specific duty of about 5 per cent. on average which Indian producers will also pay. The present substantial and important preference in favour of British exports is also preserved. These arrangements will result in welcome opportunities for increased trade.

At the same time, we have had under consideration the separate question of the level of imports of duty-free cloth from the Commonwealth. We would be reluctant to take action against imports from India, particularly action which would discriminate against India compared with other parts of the Commonwealth. Special considerations of colonial policy arise in the case of Hong Kong. Her Majesty's Government are not prepared, at this time and in existing circumstances, to depart from their long-established arrangements for duty-free entry from the Commonwealth.

We have had very much in mind the fact that many of the problems of the cotton textile industry arise from the fall in exports. The Government have given serious consideration to the further representations made regarding the effect of Purchase Tax on the export of quality textiles. We should propose, in any case, to keep under review the structure of the tax in relation to textiles and other quality goods of importance from the point of view of exports.

In the meantime, without prejudice to such review, the Government have decided that some further measure of relief is required in order to enable the cotton industry to take full advantage of all export opportunities, including the new situation created by the Indian tariff decision. The Order recently made reduced the Purchase Tax on non-woollen cloth and domestic textiles from 50 per cent. to 25 per cent. A further Order is now being made removing the tax altogether from these goods with effect from tomorrow. The combined cost of these two Orders is about £6 million in a full year. The effect will be to encourage the production of quality textiles for sale at home and abroad and to bring substantial benefits both to Lancashire and to Northern Ireland.

Mr. H. Morrison

We are interested to hear what the Prime Minister has had to say. I will leave the more technical questions to my right hon. Friend the Member for Huyton (Mr. H. Wilson) and others, but we welcome the action of the Indian Government in modifying their policy in this matter. We are glad that that should have happened.

The Government's decision to abolish Purchase Tax on this class of goods, really is a most fascinating story. We were promised a comprehensive statement before Easter; we have only now got it, about two days, I think it is, before the dissolution. Last week, on the Motion of my hon. Friend the Member for Preston, South (Mr. Shackleton) we urged the complete abolition of the Purchase Tax—well, of course, there are limits to what can be moved, but that was the argument—and that was resisted by the Government. Since then the Government have had to submit to the policy of the Labour Party—[HON. MEMBERS: "Oh."]—and, therefore, it will be known by the County Palatine that we are the authors of this further change of Government policy.

I am beginning to wonder whether it would not be a good thing to have the Election in about a week. Even so, the great problem of Lancashire will remain. Great difficulties will remain, in view of the import position, and the House would be unwise to think that this solves the problem. But of all the miserable pieces of political humbug I have ever heard, this is the biggest.

The Prime Minister

I am glad that, at any rate, the right hon. Gentleman welcomes the action of the Government of India—that is something about which we can all agree. It is also true, and the right hon. Gentleman will recollect, that we have repeatedly stated that while the discussions were going on we did not wish to state the whole of our intentions in respect of this problem. We have waited until this morning, when the declaration—[Interruption.] I think I am entitled to a hearing from the hon. Member for Cardiff, South-East (Mr. Callaghan). We have waited until this morning, when the Government of India published their intentions, in order that we might complete the policy which we now submit to the House.

Mr. H. Wilson

The Prime Minister will, of course, not expect Lancashire to be taken in by this kind of move. Will the right hon. Gentleman not recognise that the Cotton Board has been pressing the Government now for about 10 months on the question of imports of Indian cloth into Lancashire; that it is now clear that the cotton industry were led up the garden path at No. 10 by the right hon. Gentleman's predecessor and that we have still got no answer to the fundamental problem facing Lancashire, namely, Indian imports?

Secondly, will the right hon. Gentleman tell the House what it has been—other than the Gallup Poll, which is against the Government—which has caused the Government suddenly to change their mind—after the Chancellor was so obdurate about abolishing the Purchase Tax on cotton goods last Thursday night—and tell us that the Purchase Tax is being abolished?

The Prime Minister

It is the considered view of the Government—[HON. MEMBERS: "And the Chancellor?"]—that the concessions today and hitherto—as the hon. Member for Cardiff, South-East keeps interrupting, may I be allowed to explain it?

Mr. Callaghan

What I was asking the Prime Minister was, as we are getting two concessions—on dependants' pensions and Purchase Tax—in two days, what more can we expect if the Gallup Poll continues to move against the Government?

The Prime Minister

I was replying to the right hon. Member for Huyton on the question of the negotiations with India. I said that it is the considered view of the Government that the concessions which the Government of India have made—the very important concessions—in respect of our export trade are such that we do not propose—I made that quite clear—in present times and in present circumstances, to put on a quota. I do not know whether the Opposition policy would be to put on a quota and destroy exports, or not.

Mr. Assheton

May I be allowed to congratulate my right hon. Friend on the two very important concessions which have been made and to tell him that the export trade of Lancashire will benefit greatly not only by the complete abolition of Purchase Tax on these two classes of goods, but also by the very substantial reductions of duty in India?

Mr. Blackburn

May I ask the Prime Minister why there has been no mention in his statement about another serious matter affecting the cotton industry—the import of foreign yarns, which is seriously affecting one side of the industry? Would he explain how it is that we were told that it was impossible to wipe out the Purchase Tax entirely and leave the 25 per cent. Purchase Tax on clothing and yet today it has been possible to do it?

The Prime Minister

Foreign yarn is subject to tariff. I was dealing with the negotiations which have been going on for a long time with the Government of India, and I should have thought that the House and the country as a whole would very warmly welcome the fact that after these long discussions we have been able to reach arrangements with the Government of India which are most helpful to the trade of Lancashire.

Mr. Blackburn

On a point of order. There is a second point about this question to which no reference was made and—

Mr. Speaker

That is not a point of Order.

Captain Orr

Is the Prime Minister aware that, in spite of the chagrin and disappointment expressed by the party opposite, his statement will be regarded as the best news which the Ulster linen industry has had for a very long time?

Mr. Jay

As the Government are now completely on the run, will the Prime Minister tell us why he has so abruptly over-ruled the Chancellor of the Exchequer in this matter? Is the Prime Minister aware that only last Thursday night the Chancellor told us that it was not merely financially impossible but was also dishonourable to make a concession of this kind?

The Prime Minister

If we are on the run, I do not know why the right hon. Gentleman is complaining, because the acting Leader of the Opposition has just been saying that we are moving the way he wants us to move. [HON. MEMBERS: "Answer the question."] As for the position of the Government, incredible as it may be to right hon. Gentlemen opposite, we do agree with each other.

Sir I. Horobin

While appreciating, as Lancashire will appreciate, the value of the successful negotiations with India in leading to the abolition of a tax which hon. Members opposite doubled, and also to increasing our exports, may I ask whether we can take it from my right hon. Friend that the very closest contact will continue to be maintained with the Empire in view of the very important fact that the third difficulty facing Lancashire, imports into this country, still remains for negotiation?

Mr. W. R. Williams

Is the Prime Minister aware that he and his Government have been dilly-dallying for so long with this subject, which is important to Lancashire, that we now have information from the Oldham and Failsworth areas that one mill has already closed, that another is likely to close next week and that about 600 operators in the constituency of the hon. Member for Oldham, East (Sir I. Horobin) and in my constituency will be on the dole as from next week? Is he not ashamed of the dilly-dallying of his Government in this matter?

The Prime Minister

These negotiations with India were inevitably prolonged and I think we were wise in allowing them to develop. I think that the outcome is the best we could have hoped for.

Mr. H. Wilson

When the House debated the question of Indian imports on 9th March we were put off by the fact that the President of the Board of Trade had invited the Cotton Board to make suggestions. Is the Prime Minister now telling the House that because of this valuable but small concession from the Indian Government—[HON. MEMBERS: "Oh."]—very small as affecting Lancashire's production problem—and because of this small concession from the Chancellor of the Exchequer, the advice of the Cotton Board, which was used by the President of the Board of Trade to stall in that debate, is now being totally rejected by the Government?

The Prime Minister

No, Sir. What I said in my statement was quite clear. I will repeat the words. I said that we have had this concession which I have reported to the House and which the House has just welcomed. It is by no means insignificant and I hope the right hon. Gentle- man will not take the line which he has just taken about it. I then went on to say: Her Majesty's Government are not prepared at this time and in existing circumstances to depart from their long-established arrangements for duty-free entry from the Commonwealth.

Mr. Wilson

On a point of order. The Prime Minister, in answer to my question has referred to duty-free entry, which relates to tariffs. The advice of the Cotton Board related not to tariffs but to quotas, which is an entirely different question.

The Prime Minister

The right hon. Gentleman will surely know that the quota must have been a holding quota.

Mr. Fletcher-Cooke

Is my right hon. Friend aware that the troubles in the industry recently have been largely those in the fine end of the industry, and that both of the measures which he has announced will give an immense fillip to the fine end?

The Prime Minister

That is exactly the purpose we had in mind.

Several Hon. Members rose—

Mr. Speaker

Order. There is no Question before the House.