§ 9.35 p.m.
§ The President of the Board of Trade (Sir David Eccles)
I beg to move,That the Cotton Doubling Reorganisation Scheme (Confirmation) Order, 1959, a draft of which was laid before this House on 13th July, be approved.This, and the two other Cotton Reorganisation Schemes Orders relating to spinning and weaving, for which we are asking approval this evening, were laid, two on 13th July and one on 16th July. I should like to thank the House for its indulgence in debating them after so short an interval. I think it will be for the convenience of hon. Members if I describe these Schemes as economically as I can, and if the House asks for further information I will do my best to give it at the end of this debate.
Hon. Members on both sides of the House recognised the need for speed and drive when they accepted an Amendment in Committee to give retrospective validity to the work of the Cotton Board before the Bill became law. The Cotton Board has pressed on with that work with remarkable success, and we now have before us, prepared in only twelve weeks since this plan was first discussed in this House, three Schemes drawn up independently to meet the requirements of the spinning, doubling and weaving sections. These three sections of the industry form the first stage in the manufacture of the finished cotton product, and we shall not be losing anything if we put them into effect in advance of the 1196 finishers' schemes which we expect to consider in the autumn.
The preparation of the three Schemes which are now before us in so short a time reflects very great credit on the Committee of the Cotton Board which had charge of this work, and also on Mr. Burney, the accountant at the Cotton Board, and his staff. It is literally true to say that they have worked night and day against the Parliamentary clock in order to get these reorganisation Schemes ready so that they would not be held up by the interval of the Summer Recess. Owing, no doubt, to the pressure under which they were making their calculations, I have to apologise to the House for a mistake in Article 9 of the Spinning Scheme, which was only discovered after the Order had been printed. To avoid the delay of reprinting it at this time, I hope hon. Members will think that it was sufficient to issue a corrigendum slip. The mistake involved a wrong calculation affecting a small number of carding engines and in no way raised any matter of principle.
As the House is aware, the Board of Trade may only confirm a reorganisation scheme if certain conditions have been fulfilled. In the first place, I must be satisfied that an agreement to compensate labour displaced has been made. The employers and the trade unions told me that they had agreed the terms of such compensation, and in brief these are at rates which depend on the recipient's age and on his or her previous earnings, and the money will be payable as to half in a lump sum and half in weekly payments. The terms will apply to everyone in respect of earnings up to £2,000 a year. The money to pay this compensation will be collected by levy on the section and administered by a central agency. I think that that is important, because it means that the compensation payments will not be the responsibility of any one firm but will be the responsibility of the section as a whole.
§ Mr. Leslie Hale (Oldham, West)
I am extremely reluctant to interrupt the Minister so early in his speech, but as he is dealing with this point, may I deal with the Textile Officials Association, with which the right hon. Gentleman had had correspondence? I know that the right hon. Gentleman realises that 1197 this is a separate and special point of difficulty and that superannuation questions are involved, but would it not be possible for the right hon. Gentleman, busy though I know he is at the moment, to find a few minutes to discuss this problem with the union, because it is not represented and has not been consulted to any great extent?
§ Sir D. Eccles
I take the hon. Gentleman's point. If the representative of the Association cares to come to see me—
§ Sir D. Eccles
—I will listen to what he has to say. As a matter of principle, I felt that it was not reasonable that terms which had been accepted by the operatives should be very different and improved for the salaried people. I thought that the basis ought to be the same, but I am very willing to see the representative of the Association.
§ Sir D. Eccles
The trade unions told me last week that, while they naturally would have liked to get more for their members, they had accepted the compensation terms after considerable improvements had been made during the negotiations. I am therefore able to say that the conditions relating to the compensation of displaced workpeople have been fulfilled.
The Act also requires me to be satisfied that the schemes make adequate provision for the elimination of excess capacity in point of time and in point of quantity. The time schedule in each of the three Orders is the same. The starting date is 30th July, if the House approves the Orders, and applications for compensation for scrapping must be made within the participation period of two months. After 30th September it will be too late to apply. The scrapping itself must be completed by 31st March, 1960. Any machines which are accepted for scrapping and are not scrapped by that date may become the property of the Cotton Board. The Cotton Board will also have power to grant an extension of the scrapping period in particular cases, but it proposes to do so only in the most exceptional circumstances where very good reasons can be advanced by the firm in 1198 question. We cannot allow anything in the nature of an option to scrap or not to scrap according to how the trade looks next spring.
The House will have observed that the Schemes prescribe minimum figures which the applications must reach before compensation becomes payable, namely, six million mule equivalent spindles in the spinning section, 400,000 spindles in the doubling section, and 45,000 looms in the weaving section. If this minimum response is not forthcoming in any particular case, then that Scheme will not become effective.
In round terms, the achievement of these figures will eliminate the capacity in the three sections which was idle on 23rd April, taking into account the fact that a proportion of installed capacity must normally be kept in reserve for production or for maintenance reasons. This will have a very beneficial effect on the industry. However, the figures are only minima. The Cotton Board has good hopes that they will be considerably exceeded in practice.
The minimum figures look low, but, as I think I can show, there is no straight comparison between them and the Estimates in the White Paper. For example, the White Paper gave 12 million spindles and 70,000 looms as estimates of excess capacity. Those were very rough calculations prepared before detailed study. The figures for looms and for the doubling sections, for instance, proved very wide of the mark, when they were taken to pieces and looked at. None the less, the practical problem, the one which will interest the House this evening, is now effectively to reach figures of elimination which will do the job we have in mind.
The Cotton Board decided, and I agreed, that we should adopt as a signal for starting a scheme the minimum figure of scrapping which would be of real benefit to the section. It would very much strengthen the cotton industry if we were to have only that amount of capacity out once and for all. Of course, we aim at considerably higher figures for scrapping. The Cotton Board advises me that the best way to get additional machines out would be to offer a bonus of 5 per cent. for early application so that the minimum would soon be reached and an announcement could soon be 1199 made to the effect that the Scheme was to come into operation.
It may be asked why it is so important that a quick announcement should be made that the Schemes are to come into operation and compensation for scrapping will be paid. The reason is a very practical one, and I think I may say a very human one. We know that there are many firms which do not wish to declare their readiness to go out of business unless they can be assured that the Scheme for their section is definitely going through. That is the reason that the Cotton Board has designed the participation period and the minimum figures to suit the facts of this complicated industry and to suit the anxieties of the people in Lancashire who now have to make some difficult decisions. Having given that explanation, I very much hope that no one will argue this evening that, as the figures of 6 million for spindles and 45,000 for looms are lower than any of us would wish to see as the level of elimination, these re-organisation Schemes are bad. As a matter of fact, our chief task is to attract the man who is still unsure whether to scrap or not. We must, as soon as we possibly can, give him a firm basis on which to make up his mind one way or the other.
I turn now to the compensation arrangements set out in Part II of the Orders. They are necessarily rather complicated, but I think that the drafters of the Orders have done a good job in making them as understandable as such things can be. Each Scheme follows the same broad pattern of providing three basic rates, premium, standard and discount. The premium rate is for firms which choose to go out of business altogether. The Cotton Board considered it right to offer such firms a more attractive incentive, bearing in mind the problems, such as the disposing of stocks and spares, which are involved when a firm closes down altogether.
The standard rate will, in general, be for firms which close down complete individual mills, without going out of business, or which scrap machinery which was in operation at the time the Government's proposals were announced in April.
A lower or discount rate will be payable for units which had closed down before 23rd April, or for machinery 1200 which was already idle, but it will be payable only where that capacity could be brought back into production without undue difficulty and expense. We cannot have some one who has had machinery out of action for twenty years coming along and claiming compensation.
There are certain differences of detail between the three schemes. These reflect the different circumstances of the individual sections concerned. I will mention three. First, the premium rate is 25 per cent. for all three schemes, but the discount rate is 25 per cent. below the standard rate for spinning and doubling but only 20 per cent. below the standard rate for the weavers. The reason for that is that in the Weaving Scheme, unlike the others, there is a difference made throughout between active and stopped looms, the latter rate being 25 per cent. below the former, so we get a discount in that way as well as through the discount rate.
The second difference is that whereas in the case of the Weaving and Doubling Schemes compensation is based on one main description of machine and is payable "per loom" and "per spindle", in the case of the Spinning Scheme, compensation is related to two descriptions of machines, namely, spindles or carding engines. This is because in the spinning section it was found better and fairer to split the compensation between the spindle and the preparatory machinery. The slightly more favourable terms which are offered when combers are also scrapped are designed to even out the treatment of mills spinning higher quality products and using, therefore, more preparatory machinery. Splitting the compensation in this way does not increase it: it is simply a fairer basis for assessing it.
The third difference is that, unlike the other two Schemes, no provision is made in the Doubling Scheme for treating stopped spindles differently from active ones. The reason for this is that a doubling mill requires a considerable number of different types of spindle for different types of work and what is idle one week may be active the next and vice versa. In these circumstances, it was thought inappropriate to differentiate between active and idle plant.
Before I leave the question of compensation payments, I should like to 1201 draw the attention of the House to the "refund" provisions in Article 13. These require a firm to repay three-quarters of the compensation received in cases where the capacity which has been eliminated is later replaced with the aid of the re-equipment grant. We decided that for this reason. The purpose of the re-equipment grant is to stimulate the modernisation and replacement of the remaining capacity after the short phase of elimination has been completed. We are only allowing six months for this scrapping to be done. After that will come the great bulk of the re-equipment.
I have asked the Cotton Board to try to assess the cost of these Schemes.
§ Mr. H. Rhodes (Ashton-under-Lyne)
Before the right hon. Gentleman leaves this point of compensation, would he be kind enough to explain the difference in the price that will be paid for scrapping to a firm which has a ring mill and a firm which has a mule spindle mill, because this is on the basis of mule equivalent and I think that it would be as well at this juncture if the right hon. Gentleman would explain how the difference will look?
§ Sir D. Eccles
There is an established relationship between mule spindles and ring spindles, but if the ring spindles are in a mill which is closing down altogether and are good machines, the hon. Member will observe that the Cotton Board can permit the firm concerned to sell its ring spindles, but in respect of those, of course, it does not get any compensation.
§ Mr. Rhodes
I am talking about what the right hon. Gentleman was talking about, the compensation paid for scrapping. What I want to know is whether compensation will be paid to a firm scrapping ring spindles.
§ Sir D. Eccles
There is a relationship established by the Cotton Board between the two, and if the hon. Gentleman wants to have Mr. Burney's views on that, I will let him have them.
I was saying that I had asked the Cotton Board to try to assess the cost of the Schemes. Their best guess is that the total cost of achieving the minimum figures of scrapping may be about £7½ million, of which the Government contribution would be about £5 million. 1202 That would roughly be the cost on the basis that we achieve the minimum figures and no more, but of course we hope, and expect, to go a good deal further than that. In so far as more machines are scrapped, the cost will go up, but that will be worth while.
The reorganisation Schemes constitute the first phase of bringing about a more efficient industry and I contemplate that the arrangements for the re-equipment grants will be introduced once the response to the three Schemes is such that the minimum figures for applications are reached and compensation for scrapped machinery becomes payable. The Board of Trade and the Cotton Board are already giving close attention to the conditions to be applied to the re-equipment grants so that when the time comes we can act without delay.
I can now tell the hon. Gentleman the Member for Ashton-under-Lyne (Mr. Rhodes) that the relationship between a mule spindle and a ring spindle is roughly as 1½ to one, which I happened to have forgotten.
I conclude by saying that I have never seen a better piece of work done in an industrial negotiation than has been done by the Cotton Board's Committee. One must remember that the men who did this are not in the cotton industry but are people who came from outside. I pay a most sincere tribute to the way they have succeeded in getting such a vast number of firms to come together in these Schemes. I think that that must be considered a good omen for the constructive part of our plan which begins after the elimination is over. One cannot but be impressed by the goodwill and sense of responsibility towards the industry as a whole shown by both the employers and the trade unions ever since the Government first said that they were willing to help with financial aid.
Lancashire has always been known as a county where the people were resilient and where they showed good sense and good humour. In the last six months, I have had a most exceptional chance to see those qualities in action. It is the character of the people who work in this industry rather than the cash which the Government are to provide which makes me confident that we are on the threshold of a new chapter in one of our most famous industries.
§ Mr. Deputy-Speaker (Sir Gordon Touche)
I think that it has been agreed that with this Motion we should discuss the other two Motions—That the Cotton Spinning Reorganisation Scheme (Confirmation) Order, 1959, a draft of which was laid before this House on 16th July, be approved.That the Cotton Weaving Reorganisation Scheme (Confirmation) Order, 1959, a draft of which was laid before this House on 13th July, be approved.
§ 9.59 p.m.
§ Mr. Anthony Greenwood (Rossendale)
These three Orders involve the expenditure of considerable sums of public money and I hope, therefore, that you will bear with me, Sir, if I briefly restate our main criticisms to the Act so that the House can get our attitude to these Orders into proper perspective. I will do it very briefly.
Our main objections to the Act were fourfold. In the first place, we were disturbed that public money was being spent without there being any effective share in the control of the industry, and we are a little alarmed at the growing tendency for private industries to join the long queue for national assistance. We take the view that as we pay the piper we might at least decide the key in which the tune will be played.
Our second objection was that we had some doubts about the response which was likely from the industry to the proposals that the Government made. Thirdly, we were disturbed that the industry might be reorganised without proper regard to the social consequences that might result. Finally, there was the strongly-held view expressed from these benches that part at least of the money should be reinvested in the textile areas to provide alternative employment.
However, in spite of the criticisms that I have expressed, and the fact that we had many Divisions during the Committee and Report stages, we did not vote against either the Second or Third Reading of the Bill. We now come to consider Orders applying decisions of the House that were taken at that time. No doubt we shall all be influenced in our attitude to the Orders by the knowledge that they appear to have been accepted as fair throughout the industry.
I should like to begin by commenting on two of the right hon. Gentleman's 1204 observations. He told us that the scheme for the finishing end of the industry would come before the House during the autumn. Can he say how many schemes there will be? Originally it was suggested in the Press that there were to be eight sectional schemes, spinning, weaving, doubling, condenser spinning, bleaching, printing, piece dyeing and yarn dyeing. I hope that the right hon. Gentleman will tell us whether the number remains at eight or whether it has been reduced, as I suspect is probably the case.
Secondly, I should like to comment on the right hon. Gentleman's remarks about the compensation scheme for the operatives. We are glad to know that substantial improvements have been made to the basic tentative agreement originally drawn up, and we hope that some of the discussions that we had in the House helped during those negotiations.
If I may turn to the Orders in general, I join the President of the Board of Trade in paying tribute to the speed with which the Committee of the Cotton Board has worked. Even if we have some doubts about the Schemes, the Committee has obviously been extremely efficient and very quick in the work that it has done. I think the President was right to congratulate the members on their remarkable success.
The figures of compensation are very much what was anticipated at the time, but it is not without interest to notice that the break-up value of some of these firms appears to be much greater than the Stock Exchange value of their shares. That is a point on which I think some of my right hon. and hon. Friends will comment later.
We must not close our eyes to the fact that, as the right hon. Gentleman admitted, the basic minima in the three Schemes are roughly equal to the number of machines already stopped. If we are paying public money to compensate employers who have already had to stop their machines, it seems to me that we are not getting a very good bargain. In other words, I think that the three scales of compensation, and the 5 per cent. bonus if the decision is taken before the end of August, are ingenious and should be welcomed. It may be that they will 1205 have the effect of ensuring that the basic minima are exceeded by a considerable margin.
Nevertheless, we have certain misgivings about the response there will be, and whether the right hon. Gentleman's bait will work. So long as it is not known whether compensation will be paid, it is quite clear, as the right hon. Gentleman admitted, that firms will hesitate to put their cards on the table. It is obviously extremely unattractive, particularly in the middle of a minor boom in the industry, to propose shutting down the whole or part of a firm if the compensation which justifies the proposal is not guaranteed. A number of firms will be in great difficulty in that account.
Once a firm has declared its intention of closing down in whole or in part its order book will tend to fall away, and it will be difficult for it to retrace its steps if it decides to change its mind. I very much hope that the industry will not be too influenced by the present boom which is going on. We have heard too often in the past that it was impossible to do things that should have been done because times were bad, and when times have been good we have been told that it was not necessary to do them. The industry will have to get away from that attitude in mind and face the new situation which has been created.
What will happen if only the basic minima are reached? I have found it a little disturbing to hear from the President of the Board of Trade how wide of the mark some of the original estimates have been, and it is a little surprising to find that in the case of spinning the basic minimum is only half the estimate of surplus capacity which was drawn up by the Federation of Master Cotton Spinners Associations. It seems that if half the excess capacity remains in use the Scheme will clearly not be as effective as would otherwise be the case.
It does not follow that the reorganisation Scheme would be bad, but it would be difficult to justify the expenditure of public money if it were not being used more effectively than that. I have no doubt that the right hon. Gentleman noted the views of the Manchester Guardian on 14th July, when it said:If the schemes are to be worth while, and if the Government is to be justified in paying 1206 grants from public funds, for modernisation and re-equipment, a much more radical pruning will have to be achieved.There is another doubt. If a basic minimum is reached in one section but not in another, what happens? Let us suppose that it is reached in the case of weaving but not in spinning. It would seem that in that case the excess capacity in the spinning section would be relatively greater than it was before. Although, as the Financial Times has said, that is perhaps unlikely, it is nevertheless possible. I should like the President of the Board of Trade to tell the House what would be the views of the Government and the Cotton Board in a situation of that kind.
Finally, this is not an occasion which can give any of us cause for rejoicing. We must hope that these Schemes will reinvigorate the. industry. We hope that they will lead to a streamlining of organisation and to improvements in de sign and in merchanting, but whether they do depends largely on the industry itself. We all hope that our misgivings and doubts are without foundation, and that the mistakes of the past have been put irrevocably behind us. We, for our part, shall continue to watch the progress of the industry with anxiety and the welfare of its workers with solicitude.
I know that all Lancashire Members will appreciate the tribute paid by the right hon. Gentleman to the character of the workers in the textile industry. They have made an incomparable contribution to our commercial greatness in the past, and we must see to it that in the years ahead they are given further opportunities, through the provision of new industries as well as through the preservation of the cotton industry, to prove their skill and enterprise, and their devotion to the welfare of the country.
§ 10.10 p.m.
§ Sir John Barlow (Middleton and Prestwich)
All hon. Members on this side of the House who represent Lancashire constituencies welcome these Statutory Instruments and the speed with which they have been made. Many of us have pressed for a long time for some such measure as this to be taken for the cotton industry. Many of us foresaw two possibilities. One was an organised reduction such as the Scheme we have before us, and the other was the old-fashioned laissez faire system of letting 1207 the weakest, or some of them, go to the wall. Many of us welcome this as an ordered reduction carried out in a sensible way to meet the requirements of modern world conditions.
Undoubtedly, there are a number of difficulties which will arise. It is important that an adequate number of machines of every kind should be eliminated. It has already been pointed out that the temporary upsurge in the industry may well be a flash in the pan, but it may prove very misleading to some people in the industry. It is well known to people in all sections of the industry that the demand over the last two years has been exceptionally low and the supply in the pipeline from the spinner to the shop also has been exceptionally low. There were a variety of reasons for this. Some people wanted to keep their stocks to a minimum. There was also the credit squeeze, and for a number of reasons those who kept their stocks low the whole way through the pipeline have benefited for a considerable period. Then suddenly we had wonderful weather before Whitsuntide and the demand for frocks was unprecedented in the last two or three years.
Owing to the minimum quantities in the pipeline there has been an unexpected upsurge recently, but I and many others think that it is only of a temporary nature. It may prove very misleading to some managements and shareholders who think it likely to continue. Hon. Members on both sides of the House have mentioned that this may prove a difficulty which should not be overlooked.
Another possibility which may prove a difficulty is the difference between the outlook of management and shareholders. I can visualise a number of companies where the management may include directors and executives who are approaching 60 years of age and who have good jobs with pensions in the offing. There may be funds in the bank and they could well carry on during the rest of their working lives. It might pay them well to do so. On the other hand, it may be very much to the advantage of shareholders to opt in and take advantage of this offer from the Gov- 1208 ernment. I urge shareholders to examine this matter very carefully and to see that their interests coincide with the interests of the management. If there is any doubt, it would be quite easy for them to consult outside accountants, or other outside authorities, to discover where their benefit lies.
Here we are dealing with three sections of the industry. I am not sure how many more sections it is visualised shall come in. In certain quarters, it has been suggested that there is not too much finishing machinery and it might be unnecessary to have the Schemes which originally were thought necessary. I am not familiar with all the finishing sections, but I have a slight experience of the printing section. There are about 250 expensive machines with all their ancillary equipment, and probably there is work for little more than half of that number. It would be most unfortunate if anyone in authority gained the idea that there was not a surplus of these machines. For that reason, it is most important that the Cotton Board and its representatives should push on with the other sections and not sit back, having done a very good job up to date.
The Board has accomplished a wonderful job of work in a very short time. There may be minor criticisms, but, by and large, we are all agreed that it did a very fine job. I therefore hope that it will not sit back and think that it has done all that is necessary. There is still considerable work before it in the finishing sections, and for that reason I hope that it will press on and complete what began as a very good job indeed.
I congratulate the Government on introducing this new Scheme. Some of us have pressed for this, or something like this, for years—
§ Sir J. Barlow
The hon. Member says "Not very hard", but perhaps he does not know how some of us have been pressing for it for a very long time. At last, we are achieving something substantial, and I congratulate my right hon. Friend the President of the Board of Trade and the Government on doing it with such speed.
§ 10.16 p.m.
§ Mr. H. Rhodes (Ashton-under-Lyne)
Following up what was said by the President of the Board of Trade, and his reply to the question I asked him about ring spindles, it would appear from the machinery activity figures that, at the end of June, there were 2½ million ring spindles not working. That being the case, if what the President of the Board of Trade hopes for comes about, it will mean that 2½ million ring spindles are to be scrapped, as well as the 4½ million mule spindles standing at the end of June. What I ask the President is this. Is it to be Board of Trade policy to scrap ring spindles simply because they are not running, in preference to mules, which are?
Compliments have been paid to the Cotton Board and those associated with it about speed, but they remind me, at any rate, of something that Dr. Johnson once said, if I can think of it. It was that if a man is to be hanged on the morrow, it concentrates his thoughts wonderfully. If anybody can correct me on that, I shall be glad. [Hon. MEMBERS: "His mind."] That is the case. An urgent job needed to be done, and we in this House have had different opinions as to how it should be done. It all depends on how the circumstances suit us. Very often it all depends on whether we are talking to suit our own ends, does it not?
Here we have the hon. Member for Middleton and Prestwich (Sir J. Barlow) talking about an orderly reduction. He is a man who believes in private enterprise, who has always believed that the articles which one makes will be dictated by their profitability or by the rate at which one can borrow the money to make them, and here he is—and I quote him—talking about making an orderly reduction. I hope he will never be a protagonist of the sort of private enterprise that I support, because, if so, I shall have to take him to task about it. I believe that private enterprise should enterprise, and that, if we are supposed to be working an economy on that basis, it should do its job or get out.
If an industry comes to the House for money to put its affairs in order it must listen to what is said, even by people who perhaps do not understand adequately all the pros and cons of the 1210 matter but nevertheless have to think in terms of how much they will vote to put the industry on its feet.
When I was chairman of a local authority, we used to spend more time deliberating whether to put up a new lamp than we did when spending hundreds of thousands of pounds on, say, a sewerage scheme. Now we are proposing to vote £30 million, and we should think of it in terms of the larger issues involved. I will deal with one or two of them and also with a few of the details which I would like the trade to consider while making up its mind on the Scheme.
I shall not condemn it in a wholesale manner, as I have done up to now when we have been discussing this matter, except to say that I am against giving public money to private enterprise which has not been able to put its own house in order over the years and which can afford to do most of the assisting for itself. Why has it not done so before? It has made plenty of profits since the war. I do not need to go through the rigmarole, as I have done in Committee, of quoting firms which have done very fairly and which still have vast reserves. I do not want to waste the time of the House. Private enterprise still has plenty of money in the kitty, but it has not had the confidence to put in the new machinery required to put the industry in order.
Why is that? Is it because it has no confidence in the industry or that the machines it proposes to buy have not passed muster for productivity? I spend a great part of my time when away from this House in thinking in terms of what a machine acquired from any part of the world will do on a given area of floor space, and in working out the economics of it—
§ Mr. Speaker
The hon. Member seems to be giving us his view on matters which are covered by the Act, which lays down the principles on which these Orders are made. The House would be obliged to the hon. Gentleman if he would confine his attention to the schemes before us.
§ Mr. Rhodes
I must contend, Mr. Speaker, that the Schemes enable the cotton industry to draw money.
§ Mr. Rhodes
Well, Sir, I disagree. I do not think so. I think that so long as there is an opportunity to put a case about the spending of money for whatever purpose on a private industry, we should be able to do so. These Orders are more important than even the Act we passed a short time ago. These are the meat of that Act. Without the Act, of course, they would not be possible, but now they are before the House these are the important things.
§ Mr. Speaker
I agree with the hon. Member that these are the important things. From the point of view of order, they are the matters to which hon. Members must confine their remarks.
§ Mr. J. T. Price (Westhoughton)
On a point of order. When we were discussing the principles of the Act it was frequently said from the Government Front Bench that we should have an opportunity later to discuss the details when the Orders came before the House for ratification. Because we did not have the opportunity then, we are trying to get it now.
§ Mr. Rhodes
That may be true, but I respectfully point out that certain assumptions are made in these Orders, certain assumptions which have their basis in the amount of capacity which needs to be scrapped to achieve a certain result. It is implicit in every Order that it has as its basis an assumption that a given capacity is scrapped to put the industry on its feet.
§ Mr. Speaker
I think that is true; but, on the other hand, I think that assumption was agreed to by the House when it passed the Act.
§ Mr. Rhodes
Yes, but it does not alter the fact. Mr. Speaker, that the same principle applies. This subject begins with the assumption that a certain number of spindles will make this industry into an efficient industry. I should like to think that the reduction in spindles under these Orders assumed a different proportion. Instead of thinking in terms of a 12 million spindle reduction on the basis of mule equivalent, I should like to 1212 think that we based the Orders on what really would put the industry into an efficient state.
I contend that if the industry had scrapped down to the basis of the new ring spindles it has put in since the war, it would not have gone too far. It has put in about 3 million spindles since the war. I contend that the programme for scrapping should go down to the most efficient machines which have been put in since the war, and that we should build up from that. On that sort of premise T think we should have arrived at a better result. It is assumed that the scrapping of 12 million spindles mule equivalent will put this industry into an efficient state. Will it? Personally I do not think so. Going back to the speech which Mr. Winterbottom made at the Cotton Board Conference at Harrogate, I think that 6½ million spindles, running shift, with a capacity of about 700 million lb. per year, would be nearer the mark.
What are we doing with these Orders? We are assuming that we have 24 million spindles, mule equivalent. At the end of June, 8 million of those spindles were idle. The 6 million spindles which we are giving as criterion for the Scheme to go forward is below the number of spindles which were idle at the end of June. If this is only a beginning and if it is only an inducement for the spinners in Lancashire to start scrapping, that is one thing, but to assert that the removal of the 6 million spindles will remove the surplus capacity in the industry is another and, in my opinion, is not correct. I should have been better pleased if the number of spindles to be scrapped had been higher. It has been fixed at 6 million. I hope that the position is fully realised.
I agree with the hon. Member for Middleton and Prestwich that a difficulty may occur with public companies which have directors who do not meet their shareholders as often as they should. The shareholders may not know what is going on and the directors may hold on to jobs to last their time out. I ask the President of the Board of Trade from now on to see that enough publicity is given through the newspapers or through any other means that he can use to point out to people interested in the cotton industry, including the shareholders, what are the issues, how they should be looking at them, and how they should 1213 be weighing up whether it is in the interests of the company to remain in existence.
I have been making inquiries over the weekend and I find much bewilderment about what the Orders mean. Personally I do not find them bewildering—I think they are straightforward—but I know of many managements and many others connected with the trade who are uncertain about what they mean and what the implications are from them. The President has a firm of chartered accountants who have been given this job, and one of the principals has been seconded to the Board of Trade to work things out. At this juncture, if the President is wise, he will see that spinners, weavers and doublers in Lancashire have easy access to the offices of the Cotton Board—not merely to the Board itself or the officials, but to an enlarged organisation for the next few weeks.
Staff who understood the Scheme could be brought in so that a firm—bewildered, not quite understanding the Scheme and wondering what to do—could very quickly have its figures worked out. The calculation could be made on the basis of figures supplied by the firm—and surely people know what they have in their own factories. Their compensation could be worked out in that way along with the firm's own accountant. If the right hon. Gentleman were to do that, or if he were even to send round to the factories, on request, people qualified to explain all the details and the implications, it would be a good thing.
I would say to anyone in the spinning trade who was making up his mind whether to stop in or go out: "Just weigh up what your problems will be over the next few years if you stop in." I suppose that the trade's total yarn requirement is about 700 million lbs. I would say to the spinners—after making that point—that they cannot compete with old, written-down machinery against countries that are using new machinery on the basis of shift working; and if they put in new machinery they must run it two shifts, as a minimum, and preferably three; and that to put in new machinery at present and make a profit on it in the face of competition, the workers, if their shift is 38 hours a week, will be asked to take the same hourly rate as they are taking now for a 45-hour week.
1214 I do not want to be misunderstood. I do not say that they should, but I do say that on the present productivity basis, unless the workers are prepared to work shifts on the same hourly basis that they are now paid for a 45-hour week, the machines put in will not pay, and they will not do it. I want my words to reach people who are uncertain whether to go out or to stop in, because unless they can fulfil that sort of criterion they might just as well get out—
§ Mr. McCann
My hon. Friend says that he wants his words to be clearly understood. Do I understand him to say that for working a 38-hour week the worker should get paid only at the same hourly rate as previously he got for 45 hours? In other words, that is asking the worker to work shifts and to take a reduction in his wages.
§ Mr. Rhodes
That is precisely why I was slow over this. I never said "should." I said that to make the machines economic the worker would need to—according to the employers.
§ Mr. Arthur Holt (Bolton, West)
Is that, in fact, really what the hon. Gentleman said? I understood him to say that the man would have to keep to the same wage as he got for 45 hours. He did not say anything about "per hour."
§ Mr. Rhodes
I wish the hon. Gentleman would listen. I said "hourly rate." If one works 38 hours a week one draws the same rate of pay as if one has been working 45 hours a week. As the hon. Gentleman probably knows, at the moment one draws the 45-hour wage for a 48-hour week. Correct? Any more questions on that? It is so elementary.
A firm which is thinking in terms of going in, stopping in or going out must be able to get on two shifts 100 lbs. of yarn per spindle per year. The present rate of production on our spindles in Lancashire is between 45 and 60 lbs. Can a firm step it up to 100 lbs. a year? That is what an employer has got to ask himself—whether he is going to be able to compete against the Japanese 124 lbs. per spindle per year on a six-day week.
1215 I think that the Orders should have a fair crack of the whip. I have made my protest pretty thoroughly in the past. This is the only opportunity for the Lancashire cotton industry to do something for itself. There is no alternative at the moment, and it is up to the people of Lancashire to support this effort and to try to make it work. It can be made to work if they do it thoroughly enough, if they are enthusiastic enough about what they really want and if they are not bemused by the temporary demand of the type about which we know in this last week or two.
That does not mean that they need not look forward to a reasonable amount of trade. The industry is not as dead as all that. But I think that, if over the next five years the industry has not taken full advantage of what has been offered to it by the end of September, perhaps an approach should be made on the basis of scrapping what is recognised throughout the world as the kind of productivity per spindle. I do not think that it is going to be achieved very quickly.
There may be a lot of difficulty in influencing people who should be tendering their resignations to do so, but if my words are of any influence at all in Lancashire I would say to them, "Get on with this job; do not delay. Times are pressing. The criterion is a minimum of 100 lbs. of cotton yarn per spindle." If the industry does not measure up to that, then it is going to have a difficult row to hoe. I ask Lancashire to get on with this and to see that it is made a success.
§ Sir J. Barlow
The hon. Gentleman referred to Mr. Winterbottom's important speech at Harrogate in which he suggested that the number of spindles should be reduced far more than is proposed as the minimum quantity here. Does the hon. Gentleman realise that at the present time Mr. Winterbottom is fully behind this Scheme and is satisfied that it has a reasonable chance of success?
§ 10.45 p.m.
§ Mr. Graham Page (Crosby)
I wish I had the practical knowledge to enable me to comment on the most interesting and sincere speech to which the House 1216 has just listened. I do not want to address my remarks to the merits of the Schemes contained in these Orders. I want to address myself to the form of the Orders. I think hon. Members will agree with me that when Orders such as these come before the House we ought to look at them to see whether they are encroachments on the liberty of the subject in excess of what is necessary in order to enforce a scheme of this sort.
I find in Article 3 of each of these Orders a repetition of what has come to be a standard form of Article inserted in marketing schemes and schemes of this sort. This is not the first occasion on which I have objected to this Article. If hon. Members will refer to Article 3 of each of the Orders they will see that it states:The Cotton Board may for the purposes of the said reorganisation scheme require by notice in writing any person carrying on business in the spinning section of the industry "—I am reading the Spinning Order—to furnish returns or other information relating to activities comprised in that section of the industry.…—not in his own business but in that section of the industry. So by notice in writing the Cotton Board can call upon any person concerned in any of the industries dealt with in these Schemes to give information not about his own business only but about anybody else's business within the industry.
I am sure it is not the intention of my right hon. Friend to call upon businessmen to snoop upon other businessmen and give information about businesses in which they are not concerned. Yet again and again this form of Article appears in these Schemes, and I ask my right hon. Friend when he brings in other Orders, as I understand he will do, relating to other parts of this industry, to look again at this Article. It is unnecessarily wide and dangerous.
It may be said that the Department does not intend to use it for the purpose of insisting upon one businessman giving information about the whole industry and not merely about his own business, but it is so drafted. If it is intended merely to ask for information about the business of the person on whom the notice is served, the Article should say so and should not go so wide as it does. I hope that when it appears in other 1217 Orders relating to these Schemes concerning this industry my right hon. Friend will have amended it so as to restrict it to the purpose for which he intends to use it.
§ 10.49 p.m.
§ Mr. Ernest Thornton (Farnworth)
I hope the hon. Member for Crosby (Mr. Page) will forgive me if I do not follow him in his line of argument. I should like to refer to one point raised by my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes). As I understood him, the point that he emphasised was that in re-equipment the important factor was the productivity of the machines. I do not think for a moment my hon. Friend was suggesting that operatives should be called upon to work 38 hours on a shift system for less than a 45-hour-week wage. Even if that were a serious suggestion, there is not the faintest hope of the operatives and the unions agreeing.
In any case, even if it were morally justifiable, one must remember that the cotton textile industry is not a high-wage industry. For men, average earnings are roughly £11 10s. a week, whereas in the rest of British manufacturing industry average earnings for men are about £13 a week.
§ Mr. Rhodes
What I was doing was to point out the difficulties which lie ahead in the spending of money. I was not saying that they should—not at all—or that they would. But to make a competitive go of putting new machines in now, that is what the employers would want to happen, that wages should be reduced.
§ Mr. Thornton
I quite understand the point that my hon. Friend makes. I have taken it up only because I have heard employers express that other point of view, that operatives ought to work on a double shift system for thirty-eight forty-fifths of their present single shift earnings. That simply cannot happen.
The President of the Board of Trade paid a proper compliment to the work which has been done in the preparation of the Orders. For my part, I should like, through the right hon. Gentleman and his Parliamentary Secretary, to compliment the very competent technical personnel who have produced these very complicated Schemes. Within the limits 1218 and aims of the enabling Act, these Orders provide for Schemes which appear workable. They are, broadly speaking, fair as between section and section, as between stopped mills and running mills, and reasonably fair, also—this was a critical point—as between single unit mills and combines or groupings of mills. I add my thanks and compliments to those which the President of the Board of Trade paid for a difficult job accomplished with very great technical competence.
I say those words of appreciation to give some balance, I hope, to the doubts and criticisms which I have to offer. The Act and the Orders, in my opinion, will not achieve the Government's objective as declared in paragraph 48 of the White Paper, to makea compact, up-to-date and efficient cotton industryFirst, if the minima only are taken, then too little additional confidence will be created to stimulate adequately the re-equipment which is vital. The minima figures prescribed in the Orders will still leave 25 per cent. excess capacity in spinning, about 11 per cent. excess capacity in weaving, and 40 per cent. excess capacity in doubling. In his opening speech, the right hon. Gentleman said that closer examination had revealed that the employers 'organisations' estimates of excess capacity were very wide of the mark. Candidly, I am surprised to hear that. From my experience, and according to my limited knowledge, I had thought that the figures given in the White Paper were a very close estimate of the actual degree of excess capacity in these three sections of the industry. If only the minima figure are attained, even in five years we shall still have an industry which is not compact, which is not up to date and which is not efficient as a whole.
On the other hand, if the maxima figures are attained, even in five years we available in the Treasury's £30 million for adequate re-equipment to take place. My arithmetic is not very good, but my estimate of the cost to the Treasury of scrapping 6 million mule equivalent spindles, 400,000 doubling spindles and 45,000 looms is about £8 million. I base my figures on 16s. 4d. per mule equivalent spindle, including carding engine, 12s. 6d. per doubling spindle and £60 in respect of each loom.
§ Mr. Thornton
I do not think that that arises. I was talking about the cost to the Treasury. The figures which I have quoted are the amounts which will be paid out of Treasury funds.
§ Mr. Thornton
Then my figure of £8 million is subject to correction and the cost to the Treasury would then be about £5 million. The cost to the Treasury with scrapping to the maxima will be about £10 million. I wonder whether the right hon. Gentleman agrees with that estimate.
§ Mr. Thornton
Considerably less than £10 million on the basis of the maxima prescribed in the Orders? I suggest, then, that the figure at which we shall eventually arrive will be a cost to the Treasury of somewhere between the two, about £6 million or £8 million.
If that be so, if full advantage is taken of re-equipment, that will enable the amount of re-equipment to be done which was envisaged in the White Paper. That brings me to my point, that in the main firms will wait two or two and a half years before they engage in re-equipment to any considerable extent. They will wait to see what happens when the Hong Kong undertaking runs out in early 1962. That uncertainty is more responsible than excess capacity for lack of confidence in the future.
I now come to the statutory levies. Without doubt, these will be a burden unless they are spread over a substantial number of years. The Orders prescribe the maximum period of the levy as ten years. Since my arithmetic is not too good, I am a little hesitant about submitting other figures, but the levy for redundant machinery and for operatives will be an addition to production costs. Since 1958 was an abnormally bad year, I will take 1957 production figures, and on that basis the average added cost per yard will be .7d. with the minimum amount of scrapping and 1.36d. per yard if the maximum figures are reached.
Therefore, I suggest that it would be wise, in the long-term interests of the 1220 industry, to spread these levies over at least five years, and probably seven or eight years. I see a danger of an even greater unbalance appearing in the industry than exists at present. For example, if the maximum figure is reached in weaving and only the minimum in spinning, or if, on the other hand, the weaving section fails to reach the minimum figures and the spinning section exceeds them, the whole purpose of the Orders will be frustrated, and to a very great extent the money will go down the drain. Even at this late hour I would ask the right hon. Gentleman to consider whether it would not be better to abandon the whole business if either of the two main sections—the spinning and weaving sections—failed to meet the minimum figures for scrapping. If one of the main sections were left out of the Schemes, or did not fit into them, the resulting confusion would be worse than the chaos we have had in recent years.
I now come to one small advantage for the combines or groupings. I said earlier that the Schemes appeared to be fair as between section and section, and as between running mills and stopped mills and unit firms and groupings, but as I understand Article 13 (1) of the Cotton Spinning Reorganisation Scheme, combines or groupings could stop a running mill or mills and receive compensation payments at the standard rate. If they have also an empty mill or a mill with vacant space they could re-equip without the claw-back of 75 per cent. Is this really the position? If, on the other hand, a single unit mill scraps and re-equips, there is this clawback of 75 per cent. of the compensatory payments made for scrapping machinery according to the prescribed formula.
If confidence is to be restored and success achieved there must be, first, some firm guarantee in regard to the over-riding problem of the last few years, namely, the problem of duty-free Asian Commonwealth imports. I do not propose to discuss that question tonight, because I should be ruled out of order.
Secondly, there is a need for greater vertical integration of the industry, with merchanting far more firmly associated with the producing section. This 1221 problem of effective marketing is urgent and of prime importance.
As will have been noted, I have my doubts and misgivings, but in the interests of the people with whom I have worked all my life I hope that the Schemes will be more successful than I expect.
§ 11.4 p.m.
§ Mr. Arthur Holt (Bolton, West)
Not only have I some doubts about these Schemes, but I most strongly protest at the position in which the House has been put. Even now we have not the completed schemes before us. From the beginning we have had to discuss, almost in vacuo, a new and complicated idea for dealing with an industry which is in difficulties, and all those hon. Members who have had any detailed contact with the industry have felt some sympathy for any kind of scheme which would help it out of its difficulties.
We are voting about £30 million to the industry, but we have not a clue about how it is to be used. The hon. Member for Ashton-under-Lyne (Mr. Rhodes) talked about giving money to private industry for not doing something, but he did not make the story as bad as it is. We are giving money to private industry for having done something which ought to have been done, for stopping about 6 million spindles. I should say that there was not the slightest chance of those spindles ever starting up again. They had been stopped because of bad trading conditions, the work people had gone and would not come back. But the Treasury proposes to pay about £3.6 million for spindles which would never have worked again in any case. That is the frightful thing which we are doing. Do not let us pretend that there are not some extremely objectionable features about this matter.
I said that we did not know the entire scheme because we do not know the amount of the levy which eventually will have to be paid by those firms which stay in the industry. If only 6 million spindles are scrapped the levy on the remainder may not be burdensome. But if we reach the target which the President of the Board of Trade seems to have in mind, although he has never given a figure, the levy on the remaining firms will be so much bigger.
§ Mr. Alan Green (Preston, South)
In a way, what the hon. Gentleman is saying is perfectly true. But I am sure that he will bear in mind that if 6 million spindles are to be scrapped, which in his judgment is too few, and if the levy is to be paid, in his view and, I think, in the view of the trade, it must be paid out of the stopped spindles for which no compensation has been paid. This is something about which those in the trade must make up their minds. If too few spindles are scrapped, it follows that a number will remain idle and from those idle spindles the levy must be paid when the others are scrapped.
§ Mr. Holt
Some firms may pay the levy for two or three years and then get into difficulties. They may not have to close down but they will be down to see the President of the Board of Trade as fast as the Mancunian can bring them. They will say, "This Scheme was all very well a few years ago, but trade is terrible now and it is nonsense to go on paying this levy for something which was done for the trade three or four years ago. A sensible President of the Board of Trade will certainly scrap this levy now and write it off as a bad debt—just as the railways want their millions written off as a bad debt. Who will gainsay them?
There are too many things not tied up about these Schemes and too many things that even the President of the Board of Trade does not yet know about. Yet we are being asked to pass these Orders which implement the right 1223 to give this trade some £30 million. I do not wonder that the hon. Member for Farnworth (Mr. Thornton) had some difficulty in deciding what this might cost the Treasury. There are no figures.
As I understand the hon. Member's figures, he gave the total cost of paying for the scrapping of the minimum requirements. But I understand that one-third of the cost would be paid by the trade, so that the Treasury would only pay two-thirds of his figure. If we only get this minimum requirement the cost to the Treasury will be something of the order of £5 million to £6 million. But, of course, in these Orders we are supposed to be catering for giving away £30 million. So where is the rest going? The Orders which we have not yet had are comparatively small in cost. The rest, some £20 million, is supposed to go on re-equipment.
I must again draw attention to the fact that under the Cripps arrangement the Government paid out in the end £28 million at a time when the trade was booming and when a lot of people thought it had a bright future. In view of all that has gone on, do the Government really think that the cotton industry, reduced in size in the next few years, is going to undertake re-equipment on the scale which will use Government money to the extent of £30 million? This is another side of the Scheme which shows a lack of realism.
What happens if mills take a rather more favourable view of the compensation offered in Part 2 of these Orders than some of us have thought previously? My previous view, based on what information I had about the ideas that were current, was that fewer mills would take advantage of the Scheme than I now believe to be the case, in view of the premium on the rate and in view of the fact that no firms who are going out are going to be asked for any compensation. I had taken it that a firm at present producing, which decided to scrap would, at least, have to pay something towards the compensation of its own workpeople. I gather that is not now the case. The levies for scrapping and for compensation of workpeople will be paid only by those mills which stay in business, so that the 1224 terms offered to those who scrap are a good deal more favourable, particularly for firms which go out completely.
I know of a number of firms which are going to have to do some hard thinking. I can give the example of a unit of two mills whose premises are some of the most modern in the industry, which means they were built in the early '20s; they are large mills with probably 125,000 spindles in each, and they have been running quite well, even keeping their heads above water in the last year. They could get, if they went out under this Scheme, £250,000, including the actual scrap value of their machinery. If they stay, gradually reorganise and get on to shifts, they might be faced with an expenditure of something like £400,000. They could take their £250,000 from the Government and the trade plus the assets they have in the business now and invest in almost anything. On balance, they could probably do better than if they spent a great deal of money and stayed in. These people have to do some very hard thinking and it may be that not all of them will come to the same conclusions, but some will close down.
If after he has got 6 million spindles in the spinning industry the President of the Board of Trade finds quite a number of mills like that are closing—and quite a number in one locality such as East Lancashire, Bolton or the Leigh area are closing—is he going to have any regard to this, because it is going to produce for him in his other capacities as President of the Board of Trade some rather difficult problems. I do not see why he should have those problems before him. I very much doubt whether the closing of a mill such as I have described is in anybody's interest, except possibly the shareholders'. This is another example of the blind way in which this thing is going.
It is up to the President of the Board of Trade to give the House some idea of how his mind is working if the response to this Scheme is rather greater than many of us expected, particularly if it is concentrated in certain localities.
§ 11.17 p.m.
§ Mr. Douglas Jay (Battersea, North)
I want to ask the President of the Board of Trade a few brief questions because, as several hon. Members have said, we 1225 are providing for the expenditure of a great deal of public money and the exact pattern in which it is to be done is still not clear to some of us. If the answers to my questions are contained in the Orders, I can only believe that we have not found them because we have not had a great deal of time in which to study them. As the right hon. Gentleman will agree, they are complicated.
First, I have mainly in mind the Order dealing with the spinning section of the industry, but it is a basic part of all these Orders that spindles, looms or whatever it may be have to be scrapped in order that compensation should be paid. That runs throughout all these Schemes. I am not asking if it is probable or economically advisable, but is it legally possible under a Scheme for a firm to scrap a certain number of spindles during the period provided by the Scheme, to take its compensation and then to install new spindles? I know that it is provided under Section 13 that, if this is done by the re-equipment grant under the Scheme, the Treasury claws back 75 per cent., but it might be done not under a re-equipment grant. Is it possible and legitimate for a firm to do that?
Secondly, it is provided under the standard rate part of the Schemes that as a condition a participant has to close down the mill in question. The phrase is:A participant who closes down his millIs it possible for someone, having closed down the mill for the relevant period, to receive the compensation and, at a later period, after the deal is over, to reopen the mill and to use it for spinning or weaving cotton, or whatever was happening before? I am not saying that this is likely to happen, but we should know whether it is legally possible after public money has been spent.
Thirdly, if a firm is to qualify for the appropriate rate of compensation, there is the further condition that it has to cease to carry on business. The President of the Board of Trade, when he quoted that, slightly implied that the firm had to cease to carry on business altogether. Under the Scheme, I think it has to cease to carry on the business of cotton spinning or weaving. If it were a firm like the Lancashire Cotton Corporation, which does all sorts of other things. it would not have to cease doing 1226 them. But let us suppose that it has to cease carrying on the manufacture of cotton in that particular section. Can it do that, receive its compensation, and then, supposing it were a firm doing other things than manufacturing cotton, resume the manufacture of cotton again afterwards? I am not asking whether these things are likely to happen, but whether it is possible to do that under the legal framework.
The other question is about the effect of all this on the value of the shares of some of these companies which draw compensation from the Treasury. We have always had some doubts whether it was right to hand out all this public money as a free gift, in effect, to shareholders, without further conditions. I noticed some calculations made by the city editor of the Evening Standard last Friday, about the effect of these arrangements on the shares of some companies, and which, if correct, are somewhat disquieting in their indication of what is being done. I should like to ask whether these can be correct. The calculations take several companies, assume that they close down a number of mills, and try to calculate the resultant effect on the value of the shares if the companies were to go out of business, though they might not necessarily do so.
The first company was Horrockses and Crewsdon, in which, according to this calculation, if it were to take the compensation and go out of business, the shares would have a break-up value of 75s. a share, whereas the present market value is only 38s. 7½d. If that were correct it would appear to offer the opportunity of large capital profits to the present shareholders, or to anyone else who bought the shares when the Scheme was originally introduced. A similar calculation is made for Joshua Hoyle, whose shares would break up at 6s. 3d. a share, whereas they are now worth 3s. l½d.
§ Mr. Jay
I was about to say that it would not be unprecedented for the break-up value of companies to be superior to the market value of their shares. Nevertheless, as we have seen 1227 recently, this situation is likely to invite purchasers and thereby to produce large capital profits for existing shareholders.
But is it the case that these Schemes are so framed that if the companies took the maximum compensation and went out of business further considerable capital profits would be earned by the shareholders? If so, I think it throws a further and rather odd light on the precise figures we now have before us. I am asking whether the President thinks that those calculations are correct, or anything like correct.
§ 11.25 p.m.
§ Sir D. Eccles
With the leave of the House I should like to reply, very briefly, to the debate.
The hon. Member for Rossendale (Mr. Anthony Greenwood) asked about the finishing schemes. I cannot give him the exact information, but at present it looks as though there will be a Scheme for printing, bleaching, piece dyeing and yarn dyeing, but it is still rather uncertain precisely what form of schemes the finishers want to submit. Conversations about this will be carried on over the next few months. He also asked what happened if the basic minimum was reached only in the case of one section. The scheme for that section would have to come into effect, because that is the nature of the Order, but I believe that that is a very unlikely result, and everything will be done to see that it does not happen. As the Orders are drafted, they are independent one of the other.
The hon. Member for Ashton-under-Lyne (Mr. Rhodes) made two good suggestions, both of which we are putting into practice. I am glad that he talked about publicity being desirable in order that the Scheme may be thoroughly understood by all firms. A description of the Scheme in as plain language as it can be written has been sent to every registered firm by the Cotton Board, but I think that we have to go on with the job of explaining what these Schemes can do, and I also agree with him that easy access to the Cotton Board and its advisers who are working on these Schemes is desirable. He said—and we were very grateful to him for saying it—that this is the only opportunity before the cotton industry for the time being 1228 and is likely to be the only opportunity for some time, and therefore we all hope that it will be seized.
The hon. Member for Farnworth (Mr. Thornton) paid a compliment to the Cotton Board Committee for which we were grateful. I agree that it is necessary to get more than the minimum target, but, as I tried to explain in my earlier speech, this is the method by which we think that we are most likely to get more than the minimum figure. He is right that the levy on the industry would best be spread over a number of years.
I cannot off-hand answer the question of what happens if a combine has an empty mill. It may be that such exist. If so and they desire to re-equip, we shall have to consider their application for a re-equipment grant when it is received. The re-equipment grants will be subject to the scrutiny of the Cotton Board and the Board of Trade before they are made. We shall have to think about that case.
The right hon. Member for Battersea, North (Mr. Jay) asked a number of questions, and I think the answer is the same in each case. If a firm which qualifies for either the standard rate or the premium rate scraps and receives compensation, and afterwards starts up again, it is at liberty to start up again but without the re-equipment grant.
In such a case we would have nothing to say, but if the firm applies for a re-equipment grant it will have to repay 75 per cent. of the compensation money. That would be, of course, in the case of the firm that was still in being. The machinery of the firm that has gone right out of business—and obtained the premium rate for the machinery—will have been scrapped, and if the firm is to come back into the cotton business it has to start right from the beginning, and whether or not, starting completely afresh, it would be eligible for a re-equipment grant is, again, something that we will have to take into consideration when framing the conditions for that grant—
§ Mr. F. Blackburn (Stalybridge and Hyde)
But is there anything to prevent any organisation that is not at present a cotton manufacturer from opening up as a manufacturer of cotton 1229 goods? Would not it vitiate the whole Scheme if anyone else could come in?
§ Sir D. Eccles
The question, of course, is completely out of order because it has nothing to do with these re-organisation Schemes, but I did say that we are now studying the conditions on which the re-equipment grants—which are not in this Order—will be given. I am afraid I cannot give the hon. Gentleman the answer about the exact conditions tonight, because the Cotton Board and ourselves are still working things out. But I do not think that we can describe something as re-equipment if someone has never been in the business before.
§ Mr. Blackburn
I did not mean applying for re-equipment grant, but is there anything to prevent any other firm from starting in the cotton industry?
§ Sir D. Eccles
I hope not. I think that it would be a very good thing if, from time to time, as we have already seen happen since the war, people were to come into the textile industry—never having been in it before—and make an extremely good job—
§ Mr. Jay
Then the right hon. Gentleman agrees that it is perfectly possible for a firm which has either scrapped its machinery, or closed down the mill, or ceased business—or all three—and having taken the compensation—provided it does not seek the re-equipment grant—then to reverse any of the three processes? I do not say that it will, but it will be perfectly possible for it to do so?
§ Sir D. Eccles
Yes, but it will have lost all its machinery, because it cannot get the compensation unless all the machines are effectively scrapped. That having been done, it closes the transaction. If the firm has never gone out of business, and then starts replacing the machinery and applies for a grant, it will have to repay 75 per cent. of the compensation.
1230 I hope that I have answered all the questions that I have been asked. I am very grateful for the general agreement in the House that this Scheme is worth trying and, in particular, for the way in which hon. Members have encouraged the industry not to pay too much attention to the extra trade that is going on this summer, but to think very seriously whether it is not right for them to take advantage of this offer. I believe that we shall be successful but, as I said on Second Reading, this is a voluntary Scheme and, therefore, nobody can give an assurance in advance as to whether the individualistic people who live in Lancashire will or will not take advantage of it; but I hope that they will.
§ Question put and agreed to.
That the Cotton Doubling Reorganisation Scheme (Confirmation) Order, 1959, a draft of which was laid before this House on 13th July, be approved.
§ Cotton Spinning Reorganisation Scheme (Confirmation) Order, 1959 [draft laid before the House, 16th July], approved.—[Sir D. Eccles.]
§ Cotton Weaving Reorganisation Scheme (Confirmation) Order, 1959 [draft laid before the House, 13th July], approved.—[Sir D. Eccles.]