HC Deb 17 July 1957 vol 573 cc1150-4
The President of the Board of Trade (Sir David Eccles)

With your permission, Mr. Speaker, I will make a statement about the jute industry.

As the House is aware, the jute industry is protected by a unique system of State trading. The Jute Control is the sole importer of the great bulk of jute goods supplied from overseas. It sells these goods at prices comparable with those at which an efficient cross section of the domestic industry can put equivalent goods on the market.

These arrangements, particularly as they affect hessians imported for making sacks, are increasingly operating against the interests of users of jute goods and of jute as an industrial material.

There are two reasons for this: first, the price of jute sacks has to be kept so high that agricultural and industrial users are penalised; secondly, because the price is so high, there is a growing substitution of other materials in the making of sacks.

This state of affairs is causing concern to those in this country who make and use jute sacks and also in India and Pakistan; it would not be realistic to allow it to continue. I have discussed the problem with both sides of the industry, and decided to alter the basis of the Control's selling prices for the principal types of hessians imported for making sacks.

The mark-up for these hessians is now about 40 per cent. This will be reduced to a fiat 30 per cent. from tomorrow morning.

As a result, sacks made out of imported jute cloth will be cheaper. That will affect the production of the home industry unless it can reduce its costs. But if no reduction in the price of sacks is made, the market for them will inevitably be lost to substitutes.

The Government believe that the best prospect for Dundee and the surrounding area is increased diversification of industry. I am confident that firms in the jute industry will do their utmost to adapt their resources to changing conditions. The Government, for their part, will step up their efforts to get new industries to go to the Dundee area. Over the past ten years, the new factories which have been started in the area have provided nearly 6,000 new jobs; factory building now in progress will further increase the jobs available.

The Board of Trade will meet any reasonable request to provide additional factory space for leasing to firms already established and to others coming into the area for the first time, and, in appropriate cases, Treasury loans to such firms will be available under the Distribution of Industry Acts.

Mr. Jay

Can the President of the Board of Trade say why he has taken this action, which is likely to increase unemployment in Dundee, at a time when unemployment there is already high and tending to rise? As a major effort will clearly now be necessary, under the Distribution of Industry Acts, to get new employment into the area, does he think that it was wise to close the Board of Trade office in Dundee in the last month?

Sir D. Eccles

The fact is that the sack industry is being threatened by the increasing use of paper bags and it is, therefore, necessary to take some action. I am sure that we shall get a better response to a drive for diversifying industry in Dundee, because it is clearly seen what the problem is. I have already spoken to the Lord Provost of Dundee and he has offered willingly to co-operate with the Board of Trade in pressing this forward. I think that that is probably the best form of co-operative effort which we can have.

Mr. Strachey

Is the right hon. Gentleman aware that his announcement will be received with the utmost concern in Dundee and in the surrounding centres of the jute industry?

Mr. Nabarro

Not in Kidderminster.

Mr. Strachey

Kidderminster is not a centre of the jute industry.

Is the right hon. Gentleman aware that his allusions to bringing new industries to Dundee show clearly that he is aware that his announcement must curtail the jute industry in Dundee? Can he answer my right hon. Friend's question and say why he should have just closed the Board of Trade office in Dundee, which brought new industries to the city? Is he further aware that his announcement will be felt with much concern in Dundee not only because of its immediate effect, but because everyone will interpret it as the beginning of the end of the steady prosperity which Dundee has enjoyed for the past fifteen years? Finally, is the right hon. Gentleman aware that he is sacrificing Dundee not to Tory principles, as I have heard them expounded, but to his own intensely doctrinaire laissez-faire Liberalism?

Sir D. Eccles

The right hon. Gentleman is wrong when he refers to "steady prosperity", because it is precisely because the prosperity is not now steady that we have to make a major effort to bring new industries to Dundee; and that is what we intend to do.

Mr. Nabarro

Having regard to the constant complaints which have been made by certain sections of the carpet industry about the operations of Jute Control, particularly the effect upon jute yarn and hessian, over the whole of the post-war period, is my right hon. Friend aware that certain sections of the carpet manufacturing industries in all parts of the country will welcome his statement?

Mr. G. M. Thomson

Is the President of the Board of Trade aware that his announcement will be regarded as a breach of the undertakings given repeatedly by successive Governments to the jute industry, that the Jute Control would be reserved intact? Would it not have been better at least to have postponed consideration of this admittedly difficult aspect of the jute industry's problem until the Government were able to say what their general policy for jute would be in relation to the European Free Trade Area? Can the right hon. Gentleman say what estimate of unemployment to follow from his decision was made before he made his decision?

Sir D. Eccles

No estimate can be made and, indeed, it may well be found that the Dundee industry is able to produce sacks at this price. The fact remains that unemployment would increase unless we took some new steps. The protection of 40 per cent. or more which is afforded to the jute industry results in users turning over to substitute materials. That cannot be allowed to go on.

Mr. Kershaw

Is my right hon. Friend aware that in Dursley, in my constituency, a carpet factory, employing 70 people, was forced to close a short time ago due, among other things, to the very high cost of jute?

Mr. T. Fraser

The Minister said that before taking his decision he consulted both sides of the industry. From what he said one could be excused for supposing that there had been some consent from the industry. Did either side of the industry consent to the decision?

Sir D. Eccles

I am sorry if I gave that impression Of course, the industry did not consent, because, naturally, it would like to have very high and even higher protection than it now has. However, I informed both sides of the industry what I was doing and I have been talking to them for a very long time to try to find a way out of this difficulty.

Several Hon. Members

rose—

Mr. Speaker

This matter can be debated tomorrow. I hope that hon. Members will wait until then.