COTTON INDUSTRY BILL

HC Deb 04 June 1959 vol 606 cc376-494

Order for Second Reading read.

3.46 p.m.

The President of the Board of Trade (Sir David Eccles)

I beg to move, That the Bill be now read a Second time.

The House will, I am sure, join me in expressing our sense of loss that the former Member for Clitheroe, Mr. Richard Fort, is no longer with us. We shall miss his knowledge and sympathy an many subjects, but, especially in a debate on Lancashire's chief problem, his contribution would have been very valuable.

In tackling the reorganisation of the cotton industry it is common knowledge that we are up against something which is complicated, difficult and full of uncertainties. I understand very well the point of view of some who have lived for many years with this problem and who feel that there is no contrived solution which promises success, but the Government and the leaders of the cotton industry do not share this pessimism.

Over many months we have examined together this situation and we are convinced that a chance now exists, which may not recur, to reverse the long decline in Lancashire's fortunes. Incidentally, I hope that I may be allowed to use "Lancashire" to mean the whole of the United Kingdom cotton industry. In all our talks the representatives of the industry have emphasised very strongly that our most awkward and essential task is to eliminate enough capacity to leave a compact, confident and credit-worthy industry in good shape to take advantage of the increasing incomes of its customers at home and overseas. They said bluntly, and I think that they were right, that it is useless to talk about re-equipment until a drastic surgical operation on the surplus capacity has been performed. The need to do this is stated in the White Paper that was published with the Bill.

The opening paragraph of the White Paper shows that Lancashire's present difficulties are largely due to having been first in the field in cotton manufacture. When the rest of the world began to copy our Industrial Revolution it was inevitable that it should turn to textiles, perhaps the oldest industry in the world after agriculture. As a result of the growing competition from overseas Lancashire lost a large part of her huge export markets. On top of that, recently textiles produced in the Commonwealth have invaded the domestic market itself.

These latter imports we admit free of duty as part of the Commonwealth policy that has served us so well, but we fully understand that this policy has brought great trouble on the cotton industry in this country and we think that it is right for the Government to see whether they can offer effective help to prevent too violent a dislocation as a result of this overriding Commonwealth policy of duty-free imports.

The blows have fallen on Lancashire so rapidly and in such continuous succession that it has never seemed possible, as I understand, to pause to take stock and to face all those readjustments which are called for by such drastic changes in the market conditions. Now, at last, an opportunity occurs. The conclusion of an agreed limitation on imports from Hong Kong, and the prospect of a similar limitation on imports from India and Pakistan, create a favourable situation for reorganising the cotton industry on a definite plan—and one should add that the judgment of the Restrictive Practices Court in regard to yarn prices reinforces the need for fresh thinking.

As I said, some people have no faith in any deliberate plan for reorganisation. They would prefer to allow economic forces to determine where capital and labour can most usefully be employed. They would allow the bank manager and the profit and loss account to cut down the Lancashire industry to its economic size. That is the classic Liberal doctrine which we used to hear from Manchester, from a very famous school of economists. My right hon. Friends and I are not old-fashioned Liberals. We believe that special cases require special treatment and that the present circumstances of the Lancashire industry are exceptional.

We cannot shut our eyes to the fact that the way in which those engaged in this industry think about its future—their confidence or their lack of confidence—will very largely determine what its future is to be. If we left things to take their course the pervading sense of decay would undermine the whole industry. The strong firms would go down with the weak. Firms which have a proud record and which, given a little help at this crucial time, are well capable of further expansion and prosperity, would have neither the cash nor the courage to modernise and re-equip.

What would happen to the labour force then? It would continue to drift away. The older workers would hang on, young men and women would not enter the industry, and there would be no compensation far the workers displaced as a result of the closure of mills. To us, that seems a paramount consideration. I cannot get out of my mind the disastrous effect upon labour and management if we do not create that confidence in the future of cotton which will attract young people to enter the industry. It may be an exaggeration, but it is not far from the truth, to say that all the most modern machinery in the world will be of no use if, in the industry concerned, we cannot recruit boys and girls of the right type.

Mr. Arthur Holt (Bolton, West)

The President of the Board of Trade is in danger of misleading the Lancashire cotton trade on this matter. The whole basis of the Government's plan, and of what he said so far today—which is a repetition of what he said before—is that an agreement has now been reached with Hong Kong, and that another with India is likely. He would agree that this agreement is very tentative and loose, and of very limited duration. Why, therefore, does he think that there is now a new basis for the cotton trade to look forward to the future with confidence, and on which it is worth while for people to spend money on machinery which they have not been willing to do before?

Sir D. Eccles

I am glad that the hon. Member has raised that question, because it goes to the essence of the matter.

It is only in the last year, when we have had these long discussions about Commonwealth imports and, as I said, when the judgment of the Restrictive Practices Court took effect, that there has come into the minds of the leaders of the Lancashire cotton industry—who have been good enough to meet me continually in the Board of Trade—a new sense of urgency that it is really worth trying to make a deliberate plan for reorganisation. It is because their thoughts have changed that I think it is now possible, though I agree that it would have been impossible to do it earlier.

Anyway, for the reasons that I gave just now, the Government reject the laissez faire solution and have decided to treat the situation as exceptional, which, indeed, it is, and to encourage the industry to make deliberate plans for eliminating surplus capacity over a very short period—that is one of the chief objectives—and for modernising and re-equipping the remainder; and in the process to see that the labour displaced—and we do not think that the numbers will be large—is well looked after.

That is the policy which offers the best hope for those engaged in the industry, and I would imagine that the majority of hon. Members on both sides of the House would wish the matter to be carefully considered. I imagine that they would wish the practical difficulties to be examined with the industry; the cost estimated; the Government's willingness to help or to stand aside made quite plain, and the effect of reorganisation upon employment taken fully into account. That is what we have been trying to do during the past winter and spring, and the Bill that we are discussing today is the result of those deliberations.

The House will know how long drawn out the negotiations have been with the Asian Commonwealth. It was during those negotiations that we came to the conclusion that what Lancashire had chiefly to gain from them was time—time to take stock, to work out a plan and to go forward. We saw eye to eye with the industry on the necessity to make the best use of this time. As described in the White Paper, we prompted the Cotton Board to get to work without delay. That Lord Rochdale and his colleagues very readily agreed to do, and their preliminary conclusions have been most helpful and encouraging. But from the beginning they warned us that the confidence would not exist in Lancashire to carry through a big plan of reorganisation without Government help. Last September, at the Harrogate Conference, my right hon. Friend the Prime Minister said that that help would be available.

There are many reasons for the difficulties facing the cotton industry. Among them we must reckon the peculiar structure of the industry itself. Hon. Members who sit for Lancashire constituencies know much more about that complex, horizontal pattern than I do, but I think that they would agree that cotton manufacturing in this country has never been a single industry; it has grown up as a cluster of industries. I suppose that that is due to its age, and to conditions long past. Today, it might be compared to a collection of distinct buildings performing different functions, with different styles of architecture, some ancient and some right up to date. The Cotton Board itself, which is quite a recent arrival on the scene, is the only place where all these different interests can be represented and reconciled.

In the White Paper we have used the term "sections" to describe the separate groups within the cotton industry. We found that there were eight sections who wished to prepare their own plans for reorganisation. Those were the spinners, the doublers, the condenser spinners and weavers, and four subsections of the finishing trade—the printers, the bleachers, the piece dyers and the yarn dyers.

Obviously, the interests of these sections do not always coincide. Some of them lose business when grey cloth is imported; others make money out of cheap imports. Therefore, no one familiar with Lancashire will underestimate the difficulty of bringing together in one rational plan so many schemes of reorganisation which, on their own initiative, must be separately worked out.

It might be thought, with so many different interests and firms of such different sizes in each section that nothing could succeed except compulsion. It might be said that there really is no alternative to knocking together hundreds of North Country heads. That is the ultimate conclusion which the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) comes to in his "Plan for Cotton." He there envisaged a wide measure of public control, and he stated his method in paragraph 136 as follows: At first by peaceful persuasion, if necessary by compulsion, to institute mergers and groupings within the industry and to induce such groupings to push ahead with re-equipment schemes. It is a very interesting plan, and I studied it with care, and I asked leaders in the cotton industry what they thought about the use of compulsion if persuasion failed. They said that it was something which Lancashire would not take from London whatever were the politics of the Government, and they said that cotton was the last industry in the world where any kind of nationalisation would succeed.

Mr. Sydney Silverman (Nelson and Colne)

As the right hon. Gentleman has read out, my right hon. Friend accepts in his plan that persuasion is better than compulsion. So far, we are on common ground. Would the right hon. Gentleman explain what the Government's policy would be if persuasion failed?

Sir D. Eccles

Yes, I shall come to that when I come to the details of how we are proposing to eliminate surplus capacity.

Mr. F. Blackburn (Stalybridge and Hyde)

There is nothing in the Bill about the grouping of mills at all.

Sir D. Eccles

Groupings will, I expect, in some cases come about on their own, but the finishers desire to bring about certain groupings. A little later I shall mention that we are, in fact, going to amend Clause 1 (1) to meet the finishers' wishes in respect of groupings.

We accept the view of the industry that compulsion would not succeed. That means that we can proceed only by means of a voluntary reorganisation, and that the various sections in the industry must have a direct responsibility for these reorganisation plans, and that modernisation and re-equipment must be left to the judgment of those who remain in business. At the same time, the various sections, if they are to do their planning effectively, clearly need from the Government a carrot as an inducement, and something of a rod in pickle as a warning. Hence our insistence that no public funds will be available until the elimination of surplus capacity is in sight and that there will be no compensation for the machinery scrapped unless the industry itself has made arrangements for compensating the displaced workers. The powers required to provide those carrots and sticks are found in the Bill.

Before I come to the Clauses, there remains one important question of a general nature, and that is whether the prospect of holding our own in the world markets for textiles justifies the exceptional course of putting any public money at all into the cotton industry. The Board of Trade has gone as carefully as our information will allow into this problem, and we are satisfied that there can be expanding markets for British textiles. I should like briefly to give the House my reasons.

The first is a somewhat disagreeable one. The industry is now starting to climb from a very low point. I shall not trouble the House with the details, but in spite of the money spent in Lancashire since the war on re-equipment—and it is up towards £200 million—our industry is not as well equipped today as that of some of our Western rivals. Nor is our modern machinery as fully utilised as the same kind of machinery is in other countries. One result is that we have lost ground to the United States and Western Germany in world markets. But given the effort necessary to carry out the provisions of this Bill, given that change of thinking to which I referred before, there is no reason why this ground should not be made up.

There is a great deal to be done on the marketing side of cotton textiles. Perhaps because of its horizontal structure the cotton industry has not, until recently, at any rate, been in nearly close enough touch with the changes in fashion and design which are so important in textiles. I will give just one example. Makers-up of cotton fabrics have complained to me on several occasions that too often they were asked by Lancashire to buy what had already been woven and printed, whereas the trade would have liked to have had a much bigger say from the beginning in the type and design of the fabrics which it was their business to make up and to sell.

There are very definite signs, which, I am sure, hon. Members who come from the cotton districts will know, that our marketing methods are improving. They are becoming more direct, more direct from manufacturer to customer, and they are becoming more aggressive. The Cotton Board itself has sent specialised teams abroad to study overseas markets—I can think of Scandinavia and Western Germany as two—and these teams have provided very good information which is being followed up. The fact remains that more market research would undoubtedly pay.

We are not only out to expand our sales under present conditions in our old markets. It is quite probable that round the corner there are new opportunities. In Western Europe, if we get a Free Trade Area, big or small—and if we get a small one it is in order to go forward to get a big one—our textiles will have wider markets in which they should do well. One of the most encouraging things is the way our younger managers in the industry say that they would like competition with Western Europe. They think that they would come out of it very well.

Another interesting development is that the first opportunity is about to arrive to sell some cotton textiles in the Soviet Union. To start with, no doubt, the quota will be quite small. But who knows, if once even just a handful of Soviet women get a taste for British fabrics, how far that enormous market will expand?

Mr. S. Silverman

That was so in 1952.

Sir D. Eccles

I think that the Soviet Government have just come to the point where the demand for consumer goods is something that they must meet.

Mr. Silverman

It has been known for seven years.

Sir D. Eccles

There has never been any chance——

Mr. Silverman

I am sorry to interrupt the right hon. Gentleman again, but he does remember that there was an economic conference in Moscow in April, 1952, and that a number of people went from this country, businessmen as well as politicians, politicians from both sides of the House, who did work out arrangements unofficially there, and that they did include a section for consumer goods, and that our efforts were sabotaged and stopped and frowned upon and sneered at by the Government of the day, the Government of which the right hon. Gentleman was a member, as they have been ever since. This is an opportunity which has been deliberately ignored for seven years.

Sir D. Eccles

The hon. Member is wrong. The Soviet authorities assured me that this was the first time in their history when they had been willing to grant any quota for the import of textiles from this country——

Mr. Silverman

It is definitely not so.

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

I must say, in fairness to the right hon. Gentleman, that woollens have been going in for some time, as a quid pro quo for matches.

Sir D. Eccles

Woollens—of course. The Soviet bought £750,000 worth in 1957. But we are talking of cotton—or cotton textiles—and this is the first time, to the best of my knowledge, and as I was told in Moscow, that the Soviet authorities have been willing to grant us a quota.

Lancashire competes, I think, well enough in the high-quality end of the trade, but perhaps the most interesting possibility ahead, in terms of money and in terms of yardage, is the weaving of long runs of standard cloths on the most modern machines, with the quality controlled by the latest instruments, and the end-product something that will compete in value for money with cloths woven in any country in the West.

That sounds a very big claim, but I think that those familiar with the Lancashire cotton textile industry know that the leading firms believe that it is possible; and the changes in the methods of production will be helped by the concentration of demand in the hands of bigger buyers—that is to say, multiple and departmental stores. This will very much favour the new technical processes in the industry.

Therefore, for those reasons, we believe that the reorganisation schemes can stand on their own economic merits. This is not a retirement pension that we are offering to an aged friend, but an advance payment to an enterprise of whose sustained capacity for expansion we have no doubt.

I come now to the Bill. Clauses 1 and 2 provide for Government grants towards the cost of eliminating surplus capacity, and of re-equipment and modernisation. Clause 3 deals with the administration of the schemes under the Cotton Board. Here, I should say that we intend to move an Amendment to Clause 1 (1) to enable reorganisation schemes to provide for conpensation to be based on criteria which meet the requirements of the finishers—in other words, a certain amount of gaouping. Details of these provisions can be fully discussed in Committee, and my lion. Friend the Parliamentary Secretary, who is to wind up the debate, will answer points raised by hon. Members and will refer especially to the scope of the re-equipment grants, to textile machinery orders, to taxation, and to certain aspects of the distribution of industry.

I am sure that the House will want me to discuss the heart of the matter, which is whether the methods that we wish to see adopted for eliminating surplus capacity will succeed or fail. We have been criticised—and I certainly do not complain about that—for not making plainer how this elimination is to be achieved in time and to a sufficient extent.

I recognise the difficulty here. It arises, of course, from the fact that we have ruled out compulsion and have put squarely on the industry itself the task of bringing to the Board of Trade, through the Cotton Board, detailed schemes of reorganisation. Having made that decision, it would obviously have been unfair to expect the sections to do the work until they knew the scale of the financial help to be offered by the Government.

That is why we announced the rate of our contribution—two-thirds compensation for scrapping and one-quarter for re-equipment—in advance of firm estimates of the total to be done under each head. However, it is not as untidy as it may appear. The Board of Trade remains the arbiter. The reorganisation schemes have to be brought to the Board of Trade, and approved, and, after we have done that—as provided for in the Bill—they have to be laid before Parliament, and approved by Parliament.

The industry knows that we shall have to be satisfied that all the interests concerned have been consulted. For example, we shall have to consult the man-made fibre people about certain questions that affect them. And, of course, the trade unions must be brought in here, because their willingness to co-operate in the working of the modern machines is fundamental to the success of the reorganisation plans.

I think that I can say without contradiction that both sides of the industry are agreed that substantial elimination must take place. They see that it is the fear that in any upturn of business this marginal plant will be brought back temporarily into production that creates a sense of weakness throughout the industry, and makes it difficult, if not impossible, to raise the money for the modernisation of those firms which, under the Bill, can be made competitive with any Western country——

Mr. Leslie Hale (Oldham, West)

I wonder whether the right hon. Gentleman will deal with a specific and quite genuine point that troubles many people. As he knows—and, unfortunately, this is not the first time that it has happened—a number of thoroughly modernised mills, with new and up-to-date machinery, have temporarily closed.

I can quote a specific example. A completely modernised mill concerned with the spinning of coarse counts, which supplied, mostly, the Coal Board, has closed, partly owing to the credit squeeze and partly to the elimination of development orders and reduction of stocks. What happens to that firm under the scheme? It has all new machinery. It has closed, for the time being, but hopes to reopen.

As I say, this is a specific case to which I can refer the President of the Board of Trade. What happens to that firm? Does it have to destroy new machinery to qualify for compensation, or does it not qualify for compensation at all, or how is it affected by the Bill?

Sir D. Eccles

I do not know the particulars, but it is a case, of course, that will be considered by the section when the members of that section are working out their reorganisation schemes. But, in general, if any modern mills are not used to a very high degree of their capacity, it is quite possible that some of the very old firms that have completely written off their machinery will be able to undercut them. That is bad for the whole industry. The hon. Member's interruption is useful, because it shows that modernisation is not likely to succeed while there is overhanging the industry a very large number of very weak units——

Mr. Hale

And the credit squeeze.

Sir D. Eccles

I should like to return to the elimination of surplus capacity.

Suggestions have been put forward that the Board of Trade itself should take a hand in deciding which mills should be closed. On that, I would say that whoever makes the decision—and it will be the work of a great many people—must stick to the principle of achieving an efficient industry when the job is done. These schemes of reorganisation cannot be treated as an exercise in the distribution of industry. Their object is to safeguard and improve production and employment. If we did not put efficiency first, we should endanger the jobs of the many thousands who will continue to work in the cotton industry.

The Board of Trade is certainly not capable of choosing which firms should close. It manufactures only one thing that is saleable—White Papers. We have no expertise for doing this job. It must be left to those in the industry to discuss with the Cotton Board—on which, of course, both sides of the industry are represented.

On the other hand, all of us appreciate that it will be very difficult for the sections involved. The very fact that business in cotton is now picking up—and picking up well—will not make it any the easier to settle the compensation terms for those who are going out, and I would ask those engaged in these particular discussions to remember two things: first, the time limit for qualifying for the grant will be short and I will not extend it; and, secondly, the amount of the total contribution from the Exchequer cannot be unlimited.

As the White Paper explained, the best estimate that can be made of the cost to the Exchequer of all the proposals is, given a favourable response from the industry, about £30 million over five years. I wish it were possible to give a more precise estimate but it is not, for the obvious reason that only individual firms can decide how much re-equipment and modernisation they will wish to carry out. Therefore, the cost of the Government's grant will depend upon decisions which they have not yet taken. Again, only individual firms can decide whether to accept the compensation that will be offered for the elimination of excess capacity.

One of the main tasks of the Cotton Board is to work out the precise terms which should be offered, and this is a difficult and delicate exercise of judgment. It can only be made after a detailed examination of the position in each section. We have had preliminary talks about it. Those talks can only be preliminary until Parliament gives us the Bill, but they are going very well. How are the details of the compensation scheme to be worked out? That is a matter of administration which is to be found in Clause 3. Having decided that the Cotton Board should be the agent through which the reorganisation schemes are to be operated, it was necessary to devise administrative machinery within the Board capable of the task.

Accordingly, Clause 3 provides that the functions of the Cotton Board under the Bill should be discharged by a special committee consisting of the Chairman and the two independent members of the Board, with the addition of two more independent members to be appointed by the Board of Trade. It would be my intention to select for one of the two new independent members someone of wide business experience outside cotton, and a trade unionist also drawn from outside the cotton industry. That will give us a five-man committee under Lord Rochdale's chairmanship.

In passing, I should say that the present members of the Cotton Board who have an interest in the industry did not wish to be invited to serve on the special committee. Lord Rochdale has been considering the appointment of a chief executive who will act as general manager to the five-man committee. He has authorised me to say that if Parliament approves the Bill he and his fellow members will offer this job to Mr. A. G. B. Burney.

Mr. Burney is a senior partner in Messrs. Binder, Hamlyn & Co., chartered accountants, and he is at present advising the Board of Trade on the proposals forming the basis of the Bill. He has already opened an office in Manchester. I cannot think of a better choice and I am grateful to him for being willing to take on this job. That means that we shall have a strong committee and a first-class chief executive.

It will be their task to bring to the Board of Trade as quickly as possible these reorganisation schemes. We are confident that this method, about which we have given a great deal of thought, will ensure the best chance of success, because the Cotton Board is trusted by the industry. The composition and functions of the special committee have been welcomed by the industry's own leaders. They know perfectly that if these plans do not succeed, then, as I have said before, there will be no Government grant and the weak firms will cripple the modernisation of the strong firms.

The special committee will have the assistance of an advisory panel drawn from both sides of the cotton industry, for the purpose of providing it with the technical and expert knowledge required to examine and operate the schemes. That seems a very practical idea. Those who are recommending the use of public funds for the express purpose of putting new life into an industry need to have available the most modern and scientific thinking on production problems and on labour problems, as well as on the structure of the industry itself.

The first steps in this reorganisation have been taken firmly and successfully. In particular, the condition laid down by the Government that the industry must compensate workers displaced by these schemes is already on the way to fulfilment by the spinning, doubling and weaving sections. The industry and the Government have always agreed that money could not be made available for compensating for machinery that was scrapped unless compensation were also paid to the workers displaced.

There are two technical points on compensation to which I should like to draw the attention of the House. The first is that we see no reason why these payments should attract Income Tax. Secondly, I understand that among the matters which the two parties are considering is whether their agreement can be framed in such a way as not to prejudice entitlement to unemployment benefit of those concerned. Discussion on this matter is going on between the parties, and my right hon. Friend the Minister of Pensions and National Insurance is ready to give any help.

I think it is accepted by those who represent the workers in this industry that employment as a whole will benefit by the proposals. I hope it will. It must be so. The result of putting in so much new money must, at worst, arrest the rundown of the industry and, if our hopes are realised, as I believe they will be, greatly improve the prospects for the future. Both sides know that the object of the new investment is to increase the total output, and if the reorganisation is well done that will happen. It follows from that that the total number employed in the industry is likely to show little, if any, fall. I am encouraged by the number of experts on both sides of the industry who have told me that in their view the total unemployment as a result of these schemes will be very small.

Mr. Hale

Before the right hon Gentleman leaves the question of compensation of workers, I would like him to clear up two points. The first is that he has accepted that compensation for loss of employment shall be back-dated? Will that be the date that governs the loss of employment that is covered by the compensation for loss of employment? Has it occurred to the right hon. Gentleman that all those who have already lost their employment as the result of the crisis will be in very much greater difficulty for getting work within the industry, because the obtaining of work might qualify for compensation for loss of employment in the future? There is a very real difficulty about this for those who have already lost their position unless provision is made for bringing them in.

Sir D. Eccles

I think the hon. Gentleman knows that so far only the principle of compensation has been agreed between the employers of those important sections and the trade unions Now they are setting up a working party which will have a great many points of detail to settle, among them the date from which the scheme should operate. We have left it to the committee to see whether it can settle all those points. It has made good progress and we all hope that it will arrive at a fair and agreed settlement.

Let me return to the question of unemployment caused by the reorganisation scheme. It is obvious that a number of isolated mills will go right out of production. Many of them are not working to capacity today. That is why it is necessary to identify the surplus production. We shall have a considerable amount of capacity that is almost either idle or not far off idle. Where that happens, local unemployment will occur. To those who suffer, it will be no consolation to learn that in the areas where the new production is concentrated employment is likely to rise. That is an added reason why we attach much importance to fair schemes of compensation.

It is a very good omen that the scheme for the spinners, doublers and weavers has got off to so good a start. I should, perhaps, say here that Clause 1 (5) will require amendment to provide that compensation shall also be payable to operatives who lose their jobs as a result of re-equipment. Some operatives will retire for good, and they deserve compensation. Others will be glad of the money to give them time to look around for a new job, and for them the new job matters most. The Government will do all they can to find them that alternative employment, and the industry has offered to do all it can, also.

Our hopes of being able to do this for the great majority and in a reasonable time rise as the unemployment figures for the country as a whole fall. Trade is now improving. As a consequence, we expect it to he easier to persuade firms to expand their businesses in areas where labour is available. My hon. Friend when he winds up the debate, will go in more detail into this question of distribution of industry in the cotton belt.

I would remind the House that this is an enabling Bill. It permits the Government—it does not do more than that— to make substantial grants and we are asking for that power because we believe that the Lancashire situation is quite exceptional. As is made very plain in the Bill, the conditions attached to those grants are formidable. I do not think that I have minimised the difficulty of meeting those conditions. A particular firm may think that it is just within its interest to hang on and to hope for better times when it is in the interests of the industry as a whole that it should close. As I said at the beginning of my speech, without a swift and drastic surgical operation, re-equipment will not take place in the way in which we all know it ought to take place.

The cotton men to whom I have talked believe that the wider interest will prevail. They believe that this Bill offers a chance which will be accepted. They are confident that the sections will produce workable reorganisation schemes. I could perhaps illustrate that confidence by repeating what one mill owner said to me last week. "If the Bill becomes law and its provisions are implemented," he said, "there is no reason why Lancashire should not go right ahead. Once again, in all the good markets of the world buyers will prefer our cottons to those of any other country because they will get better value for money."

That is our objective—to put Lancashire in a position to give better value for money than any other textile industry. We think that this can be done technically, that is to say, the problem of the industry, looked at as a production problem, can be solved on the purely economic level. But that would not be enough. We believe that it can also be done in terms of the human and social issues involved. I say that because I have seen for myself that the will exists on both sides of the industry to grasp this opportunity. It is for that reason, therefore, that, without hesitation, I commend the Bill to the House.

Mrs. Barbara Castle (Blackburn)

The right hon. Gentleman has made no reference at all to the effects of this reorganisation plan on the textile machinery industry. He will agree that this upsurge in demand for new machinery will give an opportunity to the British textile machinery industry to get rid of some of its redundancy. Can he give an assurance that in his policy of liberalising trade with America there is no intention of abolishing the tariff and importing American machinery?

Sir D. Eccles

I mentioned in my speech that my hon. Friend the Parliamentary Secretary hopes to deal precisely with the effect on the textile machinery industry and orders coming in. In reply to the last point made by the hon. Lady, I can assure her that there is no intention of abolishing the tariff on textile machinery.

Hon. Members

Why not?

4.34 p.m.

Mr. Anthony Greenwood (Rossendale)

The mellifluous speech of the President of the Board of Trade means one thing above all others. It is that today we are saying goodbye to the cotton industry as it was in the heyday of our commercial greatness. Those of us who have known the cotton towns for many years and remember the clatter of the clogs when we were children will appreciate the tragedy which is being enacted, and has been enacted, during the past few years.

It is difficult not to feel emotion at the thought that communities with a pattern and culture of their own are being transformed or disrupted, and we are to see still more gaunt and derelict mills, more skilled men and women at the employment exchanges, more empty shops in our main streets, more houses for sale, and more young people leaving Lancashire for the Midlands and the South.

I should like, at this stage, to associate myself with what the President of the Board of Trade said about Mr. Richard Fort. He was an hon. Member who was loved and respected on both sides of the House and I know that many of us will miss his friendship much more than we can say and will miss, also, the contributions that he made on occasions of this kind.

The magnitude of the disaster which the Bill represents is a measure of the Government's failure. The President of the Board of Trade referred to the opening paragraphs of the White Paper, but the White Paper is not very informative about w hat has happened since 1951. I want to remind the House of some of the relevant statistics. Since the Government first took office, our exports of cotton yarn have gone down from 65 million 1b. a year to 27 million 1b. Our exports of cotton cloth have declined from 858 million linear yards to 371 million. The number of operatives has fallen from 286,000 to 192,000. The number of looms running has dropped from 312,000 to 192,000, and now, as the White Paper admits, we are importing more cotton goods into this country than we are exporting.

It would be foolish to attribute the whole blame for this situation to Her Majesty's Government. To some extent it is due to world causes beyond anyone's control, although we appear to have suffered, as the President of the Board of Trade admitted, more in this country than our competitors in the United States and the textile countries of Western Europe. To some extent, too, the position is the fault of the industry itself, the failure of the various sections, to which the President of the Board of Trade referred, to work together, their refusal to re-equip on the same scale as their competitors, the failure of many firms, as the right hon. Gentleman stressed, to produce the sort of goods that other countries wanted to buy. Our indictment against the Government is that they failed to help the industry soon enough, and indeed in some ways damaged the industry. They helped to create the situation that this Bill is now designed to cure.

I do not want to refight the old battles that we have had in this House over the last seven or eight years, but I believe that we are entitled to remind the House of something of the history. I believe that the Government resisted for far too long the demands which were made from both sides of the House for the abolition or reduction of Purchase Tax upon cotton textiles. Even at the time of the textile recession of 1952, the Government insisted on retaining this additional burden upon the industry, already strained almost to the point of collapse.

In 1956, in the discussions on the Finance Bill, my right hon. and hon. Friends tried to exclude the cotton industry from the effect of the suspension of the investment allowances. Hon. Members opposite denied the industry even that small measure of protection and security. The credit squeeze damaged the industry further. It discouraged traders from holding stocks; it damaged mills which had big supplies left on their hands; it made re-equipment more difficult than would otherwise have been the case.

Finally, there was the way in which the Government watched the invasion of our home market by cotton goods made from subsidised Indian yarn or made under appalling conditions in Hong Kong. In the words of the Economist, although no other major industry stands unprotected against low wage competition from Asian countries. the Government left Lord Rochdale and his colleagues to battle alone for an agreement limiting exports to Britain.

The right hon. Gentleman referred to what he called the long-drawn-out nego- tiations. We on this side of the House believe that, if the Government had adopted the scheme for the selective buying of cotton goods set out by my right hon. Friend the Member for Huyton (Mr. H. Wilson) in the "Plan for Cotton" and commended to the electors for the Labour Party at the last General Election, it would have strenthened Lord Rochdale's hands and made it much easier to get a voluntary agreement with Hong Kong and so to buy a little time in which to put our house in order.

We say, therefore, that the Government added to the industry's difficulties at a time when world forces were already working against it. Contraction may have been necessary—I believe that it was—but contraction should have been planned contraction accompanied by the simultaneous provision of new industries in the textile areas. Instead, we had no plan, only an unplanned running down of the industry accompanied by all the waste and hardship that that could cause—in accordance with what the President of the Board of Trade called "the classical Liberal doctrine."

It is only at this late stage that we are getting any positive intervention by the Board of Trade in the problem of the cotton industry. The new industry that ought to have accompanied the running down of the textile industry has not been provided. I hope that the House will realise the smallness of the help that has been forthcoming. Because of the Government's failure to publish statistics, the information is not easily available. Indeed, I was able to get it only through the courtesy of the Parliamentary Secretary himself and I am much obliged for the information which he was so kind as to send me yesterday. I find that the position is this.

In the South Lancashire Development Area the total expenditure incurred by the Government is £1,834,333 and 1,842 workers are now employed in the Board of Trade's factories built in the area. I find that in the North-East Lancashire Development Area which is, of course, of greater importance to the cotton industry, that the total expenditure incurred to date is rather higher. It is £2,180,659 and 1,651 people are at present employed as a result of that expenditure. It is said that a further 500 are expected to be employed in the fairly near future. So far as D.A.T.A.C. aid is concerned, I am informed by the Treasury that no aid has yet to be made available to the cotton towns under the Distribution of Industry (Industrial Finance) Act which the House passed last year.

So, in the case of North-East Lancashire, even supposing that all the 1,651 workers were previously engaged in cotton, which is an assumption that no one can prove, I cannot regard it as a significant contribution to a situation in which over the same period the numbers employed in the cotton industry fell by 65,000 and the number of mills decreased by 400. Last year alone, 118 mills closed and over 30,000 workers left the industry. In my own constituency, which is excluded from the Development Area, the insured population dropped from 36,200 in 1950 to 32,500 in 1957, a drop of over 10 per cent. in eight years.

Now we have this belated Measure of Government help. As the Textile Recorder puts it: After several years of procrastination, the Government is at last prepared to take some positive action on the problems of the cotton industry. What is that positive action? To us as Socialists it is a little surprising that we should be paying for the destruction of productive capacity in a world of want. I hope that it is equally surprising to hon. Members opposite, who believe in the capitalist system, that private enterprise should be so badly in need of State aid.

Only a few months ago we were told in the House that a private steel company, Messrs. Colvilles, has been lent £50 million by the Government. More recently, there have been rumours, which were neither confirmed nor denied yesterday in the House by the Minister of Transport, that the Government are considering a grant of £30 million or £40 million to the Cunard Company. When my right hon. Friend the Member for Belper (Mr. G. Brown) asked the Chancellor of the Exchequer at the beginning of May the total amount of grants, subsidies and other financial assistance provided by the Government during the current financial year to privately owned industry, including agriculture, he was told that it was £263.1 million, of which no less than £20 million was for industries other than agriculture.

Now it is proposed to pay what the right hon. Gentleman said would be about £30 million to private enterprise in the cotton industry. We are a little bit surprised that such large sums should be paid out without securing in return—equity shares would be perhaps too much to ask—any effective part in the running of the industry. The Government are giving a lot and ought to expect a lot in return.

We accept this Measure, but we accept it with very great reluctance indeed. We accept it only because without a Measure of this kind unplanned contraction will continue and unplanned contraction will continue without compensation for displaced workers and without grants for re-equipment. Our reluctance is not tempered by any confidence that the Bill will succeed in its objectives. The likely results should certainly not be exaggerated. The President of the Board of Trade spoke of reversing the decline in the fortunes of the industry. If the right hon. Gentleman had said arresting the decline he would have had a plausible point to make, but I do not think that there is much prospect of reversing the decline in the way the right hon. Gentleman put it.

The right hon. Gentleman talked later about the industry's sustained capacity for expansion. If the House will consider carefully the rather inadequate statistics which have been provided, it will find that the President of the Board of Trade appears to envisage, on the spinning side at least, re-equipment at a rate which is rather slower than that which prevailed in the five years between 1953 and 1957. The Government themselves, therefore, have no staggeringly high hopes of the scheme.

I want to tell the House why even those modest hopes may be disappointed. The right hon. Gentleman asked: will the scheme work? I believe that there is no guarantee that the industry will give the President of the Board of Trade the co-operation on the scale for which he has asked. The scheme will be financed, partly at least, by a levy on those firms which opt to remain in business. That may mean that the firms which remain in business will be paying out fairly large sums—a heavy addition to their present overheads—in order to re-equip their less enterprising rivals and to finance the retirement of their less successful competitors, and perhaps, in some cases, for the benefit of financial sharks. There may, therefore, be some perhaps understandable reluctance to give that whole-hearted co-operation for which the right hon. Gentleman has asked.

Moreover, previous experience does not suggest that the cotton employers are outstandingly co-operative or forward-looking in these matters. It was of them that the United States productivity team reported in 1952 in these terms: Considering the importance to the future of Britain of a healthy and efficient textile industry, our Team was sorry to see that the less forward-Looking elements of management in Lancashire were armed with such ironclad arguments against re-equipment. In good times, they seemed to be saying, they did not need to change, and if poor times came, they were already preparing themselves with the argument that they could not afford it. It seemed clear to us that the net result of this attitude was bound to be disastrous. Some employers, of course, have done a wonderful job of re-equipment, but the overall position is far from satisfactory. Between 1948 and 1957, on the spinning side of the industry, the weekly average output per head increased from only 161 1b. to 163 1b., and that was in spite of the re-equipment subsidy which the spinning side of the industry had had from Sir Stafford Cripps and the Labour Government. On the weaving side of the industry the position is not much better. Over the same period the weekly average cloth output per head went up from 401 yards to 417 yards.

I should like to tell the House the views of Mr. Allan Ormerod, who, perhaps, knows as much as anybody else about the problem of productivity in Lancashire. He wrote, in the Textile Recorder: Between 1950 and 1957 the output per head in spinning mills in Western Germany, Belgium and France, increased by 56 per cent., 39 per cent., and 59 per cent. respectively, compared with 3 per cent. in the United Kingdom. During the same period the output in weaving mills in Western Germany and France increased by 30 per cent. and 66 per cent. respectively, compared with 4 per cent. in the United Kingdom. I am not sure whether we can hope for a great deal from employers who have failed on such a scale in the past, but I hope that the right hon. Gentleman's confidence is better founded than we have reason to believe.

Another example of the employers' failure to keep pace with the times is shown in the long dispute about redundancy payments which dragged on for over a year and which produced as recently as 27th November last year this gem of mid-nineteenth century capitalist philosophy: … it would not be suitable or practicable, said the employers, to enter into a joint agreement putting upon employers an obligation and responsibility to supplement State unemployment benefits through payment of compensation to redundant operatives. It is at least encouraging to find that some small progress has been made since November, 1958.

There are two further examples which I want to mention of the industry's ultra-conservatism of outlook—the kind of thing which I believe makes the Bill less likely to succeed. The first is in respect of joint consultation. Joint consultation is almost unknown in the cotton textile industry, although it could be invaluable in periods of redeployment and economic stress. Another example is the doctrinaire and short-sighted way in which certain influences in the industry killed British Overseas Cottons, although it had done magnificent work in the export field. I hope that I have made it clear that we entertain certain doubts whether the industry will avail itself of such opportunities as are left.

Mr. William Shepherd (Cheadle)

The hon. Member talked about the ultra-conservatism of the employers and what they should do. His strictures are perhaps justified in some cases. Will he proceed to tell the House what the workers should do to help the industry?

Mr. Greenwood

At the moment we are discussing the implications of the Government's scheme. I hope that the hon. Member will himself have an opportunity of speaking later in the debate. The point which he made will certainly be met by my hon. Friend the Member for Farnworth (Mr. Thornton), to whom I shall refer in a moment. I do not want to break off now from the line of argument which I am pursuing.

The President of the Board of Trade referred to both the carrot and the rod in pickle. He made it clear that there was not to be any what he called "interference" by the Board of Trade. I believe that the Government are placing too much confidence in the industry's readiness to re-equip and to see that re-equipment takes place in the right places and at the right time. We think that that is one of the most important aspects of this problem. We do not yet know what say the Cotton Board's special committee will have in matters of this kind, but we find it difficult to justify the expenditure of such large sums of public money unless the public has a real say.

In our view the decision to close a mill should not be taken haphazardly and should not be decided solely on the basis of a firm's financial structure. A decision of that kind should be taken in the light of the social circumstances and the employment opportunities in the area which will be affected. We all know mills upon the existence of which a whole village depends, mills the closing of which, although desirable on grounds of pure economics, would have disastrous social consequences. Moreover, there are parts of Lancashire outside the Development Area which may lose the cotton mills upon which they are at present dependent. We say, therefore, that the decision to close should be related to the employment opportunities and not to the financial structure of individual firms.

I should like to touch very briefly upon the question of the redundancy agreement. I will touch upon it only briefly, because it will be dealt with by my hon. Friend the Member for Farnworth. When my hon. Friend was introduced into the House after a by-election, I was one of his sponsors. It therefore gives me special pleasure to be associated with him on the first of what I hope will be a long series of appearances at this Dispatch Box or the Dispatch Box at the other side of the House. He is the first textile worker to speak from the Dispatch Box since the late Mr. George Tomlinson.

My hon. Friend has been closely associated with the negotiations about redundancy, and therefore I do not want to deal with that side of the problem in any detail, but I should like to make one or two points. First, I do not believe that anything can really compensate a worker who, after thirty or forty years, is deprived of the opportunity of using the skill which he has acquired Neither can anything compensate him for being taken away from the comradeship of the mill. Secondly, I believe that if redundancy payments are to be made there is much to be said for them being made in the form of a lump sum. I hope that the Parliamentary Secretary will tell us what consideration has been given to that possibility.

Thirdly, I believe that in many respects the redundancy scheme is vague and, in others, unsatisfactory. The right hon. Gentleman said that the scheme was well on the way to fulfilment, but many decisions still have to be taken. I hope that the President of the Board of Trade will impress on the employers the need for flexibility and liberality in the further negotiations which have to take place. The attitude of the trade unions towards the whole scheme will be determined by the response shown by the employers in meeting the outstanding difficulties which have still to be solved.

Finally, we do not believe that redundancy payments alone are enough. The right hon. Gentleman said that the number to be displaced will not be large. We hope to receive a fairly firm estimate from the Parliamentary Secretary about the number who will be displaced as a result of the Bill. But redundancy payments do not help a worker to obtain the sort of employment which will give him the same status among his comrades as he had before or enable him to discharge his family obligations. The answer to the displaced worker's problem is to give him work.

I believe that that means two things. It means, first, that there must be training schemes for those workers who want to acquire new skills and techniques. I trust that the Parliamentary Secretary will be able to tell us what the Minister of Labour is doing in this respect. It means, secondly, that we need new industry in the cotton textile area. We should like to see the greater part of Lancashire and industrial Cheshire included in the Development Area. We are afraid that, unless that is done, capital will leave Lancashire and we see no reason why part at least of the money which the taxpayers are spending to close mills should not have to be invested in new industries in the area.

In this scheme, unless care is taken, and the Government are prepared to accept much greater responsibility than is at present apparent, we are not only scrapping machines; we may be scrapping men and women and communities as well. We must not only re-equip cotton. We must re-equip the cotton areas with the new industries for which they have been calling for so long.

The broad outline and the general philosophy of our policy have been set out in "Plan for Cotton" prepared by my right hon. Friend the Member for Huyton and in "Report on Unemployment", prepared by my right hon. Friend the Member for Battersea, North (Mr. Jay). Those are Labour's plans for the cotton areas. Until those plans can be carried into effect, we accept with reluctance, and with grave doubts as to its effectiveness, the belated and unimaginative Bill which the President of the Board of Trade has commended to the House today.

5.5 p.m.

Sir John Barlow (Middleton and Prestwich)

I am very glad to follow the hon. Member for Rossendale (Mr. Anthony Greenwood), who has just made what I consider to be a not very helpful speech. To me, it was rather disappointing. In the middle of his speech, the hon. Gentleman asked—this was his one important point—whether the scheme will work. That is what we are all asking. The hon. Gentleman will not help the scheme to work if he throws doubts on it. If he works against it, it is not very helpful to Lancashire as a whole.

The hon. Gentleman suggested that employers were not being co-operative. Employers have shown considerable co-operation. Employees likewise have shown great co-operation. Unless there is co-operation between employers and employees. I am sure that the scheme cannot work. I hope that the hon. Member who is to wind up the debate for the Opposition will be a little more encouraging. The Bill is of tremendous importance to Lancashire. It may or may not work, but it is a great gesture and I believe that it will work. Undoubtedly it must have the co-operation of all sides. I assume that it will have the co-operation of all people.

Mr. Hale

I am grateful to the hon. Member for giving way. The word "co-operation" has some importance. I understood that the hon. Member had been saying that unless the employees co-operated by accepting the amount of compensation offered to them the employers might lose the scheme and the employees might lose their jobs. The word "co-operation" raises a difficult question of terminology. The hon. Member's observations, if correctly reported, appear to be much nearer to blackmail than to co-operation.

Mr. H. Hynd (Accrington)

Capitulation.

Sir J. Barlow

I do not accept that. I did not say anything about blackmail. I said that the scheme required the co-operation of both sides, otherwise it could not work.

Mr. Hale

What did the hon. Member mean by that?

Sir J. Barlow

I meant that it required the co-operation of both sides. I think there are good indications that it is receiving that co-operation. Either side could scuttle it, but I am very hopeful that both sides will have sufficient vision to see that it is a good scheme for the industry as a whole. I am very hopeful that something good may come out of it. It is perhaps unnecessary for me to tell the House that I have interests in this industry.

Mr. S. Silverman

The hon. Member will come out of it all right, whatever happens.

Sir J. Barlow

I should have come out very much better off if I had never been in it. I had considerable experience of merchanting millions of yards to the Far East before the war. I had the honour of being the first deputy chairman of the Cotton Board. I am now a director of the largest vertical combine in the trade. If I had never been in the trade at all I should probably have been much better off than I am now.

This industry has had violent fluctuations throughout the ages. It was the first great mechanised industry of this country. In looking up some old speeches, it is very interesting to see one speech by the President of the Board of Trade on 4th February, 1936. When Mr. Runciman was introducing the Cotton Spinning Industry Bill, he used these words, which are equally applicable today: We are engaged this afternoon on one of the most intractable of our industrial prob- lems. No one who has been watching industrial developments in the world for the last generation can have been blind to the fact that the position in Lancashire is not now, relatively, what it was thirty years ago."—[OFFICIAL REPORT, 4th February, 1936; Vol. 308, c. 73.] If hon. Members care to pursue that speech, they will find a great many facts and figures relatively similar to those existing today.

Mr. S. Silverman

I think the hon. Member and I had the pleasure—at least, it was a pleasure for me—of serving on the Standing Committee which dealt with that Bill. It was the first Standing Committee on which I served as a Member of the House. I remember the Minister's speech which the hon. Baronet has just quoted. Looking back now to 1938, would the hon. Member say that that Bill had achieved any purpose whatever?

Sir J. Barlow

That was in 1936 and not 1938. In the circumstances of that time, it was probably the best thing that could have been done.

Mr. Silverman

That is not what I asked.

Sir J. Barlow

I find that hindsight is better than foresight.

We welcome this Bill as an effort to put the Lancashire cotton industry on its feet again and to restore it to an efficient, compact and, as was said by the President of the Board of Trade, credit-worthy position. It was a question whether to let the old Liberal doctrine take its course and let the weakest go to the wall, or whether to organise reorganisation and avoid the chaos which would have been inevitable. For a long time, I have advocated that the right thing to do to prevent great misery among the workers and to prevent a great loss of money by mill owners was to organise the diminution of the industry. That was the only possible solution, and I am delighted that the Government have now introduced this Bill.

I realise that there are many problems o which will result from this scheme to organise the industry, but I think that in the present difficult position this is the best Bill which could have been devised. One of the difficulties will be to decide which are the right mills to retain. The hon. Member for Rossendale said that some good mills had already been closed, which is a fact. This is a voluntary scheme, and it will be difficult to keep the right mills in all sections in production. I do not know how that can be done. I believe that a voluntary scheme is right, but it is important to see that we have an efficient and economic industry.

Hon. Members on this side of the House and, I think, the whole of Lancashire are indebted to the Prime Minister for the personal interest he has taken in Lancashire. I cannot think of any other Prime Minister of recent times who realised the importance of this traditional industry or who did so much to help it. Not only did my right hon. Friend come to the Cotton Board Conference at Harrogate last year and make an important speech——

Mr. Rhodes

He went to the Derby yesterday.

Sir J. Barlow

My right hon. Friend can take an interest in Lancashire and in the Derby. Many Lancashire people take an interest in the Derby.

Since the Harrogate conference, the Prime Minister has taken an active interest in these problems. I feel sure that had he not taken that personal interest, the difficult negotiations with India, Pakistan and Hong Kong would have fallen through, and for that reason we owe him a considerable debt of gratitude.

It has been suggested that this is the wrong method of reorganising or resuscitating the industry, because we are putting money into it in certain unusual circumstances. It must be realised and admitted that the cotton industry is unique in this country. For many years, it has been the basis of our national wealth. It was the first great mechanised industry in the world, and it was the wealth from the cotton industry primarily upon which our export trade was built from 50 to 100 years ago. Many people are apt to forget that, especially hon. Members who represent constituencies not in Lancashire or the neighbouring counties. For that reason, Lancashire and her traditional industry has a great call on the rest of the country which they should not be allowed to forget. It is all very well to talk about the new industries which are growing up, but without the basis provided by the wealth from the cotton behind them they would be nowhere today.

Another reason why it has been difficult to tackle the problems arising from this industry is because it is concentrated in Lancashire. If cotton mills had been dotted about all over the country, there would be far greater and wider knowledge of its difficulties and the necessity for restoring prosperity. But, because it is concentrated in a comparatively small area, people in other parts of the country sometimes fail to realise the worth or significance of the industry at the present time or, for that matter, in the past.

Of course, we realise that the cotton industry must change with the times. Although it has been of tremendous value in the past, like everything else it is subject to change and evolution. As each foreign country tries to industrialise itself, the first thing it builds up is its cotton industry, with the result that there are now far more spindles and looms in the world than are required. We have to use our brains and develop new industries, and that we are doing. By exporting electrical equipment and nuclear material, we are progressing and providing new things which other countries have not developed. But that is no reason for leaving the cotton industry completely in the lurch, It must be looked after, and in my opinion this Bill represents a real effort to do that.

I wish to mention some of the problems. It is our duty to face those problems and try to find a solution. It is of the greatest importance that manufacturers should opt in or out of the scheme as quickly as possible. It is no use their delaying. We shall always find that there are some clever people who like to delay their decision until the last moment in order to try to get the best of both worlds. But, to my mind, that course presents no advantages. I should like to see a very short period allowed—say, a month or six weeks after the situation is clear and people know exactly where they are—in which a decision may be made. To have a longer period would be a complete waste of time and prove a disservice to the industry.

There is also the question of how these redundancy payments will be treated from the point of view of Income Tax. I do not believe that this has yet been made sufficiently clear. When the President of the Board of Trade made his statement six weeks ago today, I asked whether these redundancy payments would be liable to taxation, and I nave not yet received a complete answer. This is a very important item to a hard-pressed industry. We do not know, or I have not yet heard, whether investment allowances and matters of that kind will be allowed on the 25 per cent. contribution for new machinery. These points are difficult and should be clarified at the earliest opportunity. Until that has been done, people will not know whether to opt in or out of the scheme.

I find that a great many people are critical of the industry because they say that it contains so much obsolete machinery. It must be remembered that a vast amount of money has been spent in modernising machinery since the war, at least £100 million and probably much more. In some cases, people have spent a vast amount of money on new machinery only to find that they were still unable to compete even after spending their valuable capital. That sort of thing should end, which is a reason why I support this Bill wholeheartedly.

Speaking of machinery, I can think of no time at which there has been more technical progress in machinery than in the recent past. For that reason, this is the moment to spend money on machinery, when we have made advances and have got pretty well up to date. I know that owing to war conditions we got behind. Some special machinery may be produced better in Switzerland or, possibly, in America, but great advances have been made here in the last few years. That being the case, this is the time to instal it and to use it to the fullest extent.

I believe that both British and foreign machinery will be allowed to be bought. Naturally, one hopes that as much British machinery as possible will be used. One cannot suppose that manufacturers who are paying 75 per cent. of the cost of new machinery will waste their money by buying more expensive foreign machinery if it is not very much better. Therefore, I hope that while they have the option of buying both British and foreign machinery, they will buy as much British machinery as possible. It would, of course, be helpful if the President of the Board of Trade saw fit to remove some of the import duties on foreign machinery.

There is another point about which I am not at all clear. Perhaps the Parliamentary Secretary can tell us tonight whether whole mills or parts of mills will be required to close. Will a manufacturer be allowed to close down half his spindles or half his looms, or will he be required to opt in or out for the whole mill? In some cases, and especially as regards the smaller manufacturers, that is very important.

It is curious that the announcement of the scheme should coincide with good weather and an enormous demand in the country for print frocks which led to a resuscitation of trade that had not been experienced for a long time. We have suffered from two wet summers. It will astonish the House to know that the demand for print frocks in the fine weather just before and during the Whitsuntide holiday coincided with the running down of stocks at all stages, from the shopkeeper to the wholesaler and the manufacturer.

For various reasons, people have thought it good business to carry the minimum of stocks. Of course, it is very expensive to carry stocks and fashions may change, especially if we have one or two wet summers. That, however, has unexpectedly occurred and, in the long run, it may be a disservice to the trade as a whole. It is a curious thing but some manufacturers may be short-sighted enough to opt to stay on in trade when it would be better to close down just because they have experienced a temporary upsurge in demand. I hope that manufacturers will realise that.

There are also questions of redundancy of labour which are of very great importance. There is a great difference between, for example, a mule spinner being put out of work at the age of 55, and obviously not being able to get another job, and a person who can walk out of one mill into another.

Mr. W. R. Williams (Manchester, Openshaw)

Or out of one industry into another.

Sir J. Barlow

As the hon. Gentleman says, or out of one industry into another.

It is of the greatest importance to work out these redundancy schemes in some detail in fairness to the people concerned, because unless it is done with the greatest accuracy there may be some very serious misunderstandings. A few people will suffer and, naturally, one wishes those people to be adequately provided for, but one does not wish other people unduly to get two profits.

In considering this scheme as a whole, I personally think it is important to consider the whole wage structure in the cotton industry. It has been built up over a long period of time and many serious anomalies exist. This is the proper time to solve those difficulties, because new expensive machinery must be worked to its utmost capacity. If this opportunity for change and improvement and for rolling out some of the anomalies in the wage structure is not taken, it will not occur again and it will be very unfortunate for the industry.

There is one other matter which I should like to mention regarding manufacturers who may opt in or stay out of the scheme. It may well be that the interests of managements and shareholders may not coincide. I can imagine cases where managements consist of people of, perhaps, 55 or 60 years of age. They may be getting fairly good salaries and may have good pension rights and that sort of thing. There may be enough money in the company to last out their time, and their inclination may be to advise the shareholders to remain in the industry, whereas, in certain cases, it might be to the shareholders' advantage to opt out. Where there is the slightest doubt of this kind, I would urge shareholders to get outside advice in order to see whether their interests really coincide with those of the management or not.

I think that the Bill represents the best scheme that can be provided to meet a very difficult situation. As I said at the beginning of my speech, it will require the co-operation of all connected with it as, otherwise, it will undoubtedly fail. I hope that the people concerned will co-operate and will make it a success, because if they do not I can see in the future some further lean and difficult days in Lancashire.

5.28 p.m.

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

If I could find enough hon. Members to join with me as tellers I would vote against the Bill tonight, especially after listening to the speech of the hon. Member for Middleton and Prestwich (Sir J. Barlow).

In the first place, the industry has enough money to do the job itself. Also, the most important thing behind this plan is that some part of the industry should close down. The hon. Member for Middleton and Prestwich said that he had no idea which part or how. That will be the problem which will tax the ingenuity of everybody during the next year or two. So I would vote against the Bill on its undefinability. I do not believe that the Bill as it stands is sufficiently well defined or workable.

Hon. Members on both sides of the House have mentioned that other countries have done better than we have done. My hon. Friend the Member for Rossendale (Mr. Anthony Greenwood) mentioned how well the Germans are doing. I would remind him that the Germans were fortunate in being blown up. They had the opportunity to start again.

Mr. S. Silverman

It is always better to lose a war than to win one.

Mr. Rhodes

That may be so. At any rate, the German factories were blown up and the Germans were able to forge ahead with new machines. The President of the Board of Trade advocates the introduction of new machinery, the re-equipment of the industry and all the rest of it, but we have to remember that a gigantic operation on the same sort of scale and in the same industry has taken place before. The industry was blown up in Germany and a shift took place in America, too, when the whole of the cotton industry was moved from New England below the Mason-Dixon line. It is not surprising that an old industry which had its principles embodied in machines of long ago, with practically little technical development in the last forty or fifty years, should go through the difficulties and pangs of rebirth, if I may put it in that way.

Mr. Silverman

Would my hon. Friend complete the history, to which we are listening with great interest, about the destruction of the German industry and the great advantage that that has been to the Germans? Would it not be correct to say that it was rebuilt largely by American capital?

Mr. Rhodes

Yes, I agree with my hon. Friend, and that applies also to large sections of the Italian industry.

Sir D. Eccles

As we are dealing with history, the House might like to know that the hon. Gentleman has got the history wrong. I happened to be in Germany when Dr. Erhard said that the industry in that country was in exactly the same state as ours and that he thought of copying our Bill.

Mr. Rhodes

I disagree, and I will have a word to say about what Dr. Erhard saw in Japan two or three days after the hon. Member for Preston, South (Mr. Green) and I were there last year.

Reference has been made to the purchase of new machines and the discovery that these machines were unsuitable and now out of use and the factories closed down. All I can say is that if the managements have no more wit than to buy machines which could not be operated for at least a few years, they deserve what is coming to them. In many cases, they bought the wrong machines; they were the wrong type of machines, and the management was absolutely wrong in buying them. Anybody will agree with that premise. It is too often assumed that the management or the board is always right. It does not follow.

Mention has been made of present business activity. I understand that in Royton it is impossible to get ring spinners today for love or money. At the moment, labour is short, and I doubt whether the industry as it is organised at the moment, with this sudden upsurge of activity, can get the labour it needs in the next few months. From order hooks of six days, many mills have now got order books of four months.

I would say, too, that the industry can well afford to do this job on its own. But, if the Government insist on assisting, they could have selected one of two methods—either the obsolescence method or the method of encouraging new equipment. The same end could have been achieved with less difficulty and better definition. I am afraid that this plan will prove to be unworkable on that account.

If hon. Members have an opportunity to look at this pamphlet which I have in my hand, issued by a member of the Stock Exchange, whose name I do not know, but whose initials are at the bottom, they will see set out the names of the best firms—the best bets, one might say—in the textile industry at the moment. The reserves in the companies as they are constituted at the moment could enable the companies to afford to do this job themselves. I suppose, however, that the Bill will go through, but it may have the same fate as the cotton Measure which was introduced for a very similar purpose just before the war.

There is no question of redundancy in the industry today. Let hon. Members consult the Oxford Dictionary for the meaning of redundancy. There is obsolescence. There is no surplus of the right sort of machines to do the job in a highly competitive world, and there is no surplus of people who are prepared to work the modern machines. Neither is there any surplus of the right kind of buildings to accommodate the workers on the right sort of machines.

The only machines which are considered up to date in the spinning section of the industry are ring spindles which have been installed since the war, 3½ million in number, against 20 million spindles installed. There is no question of redundancy. It is obsolescence—stuff which is out of date and which should be disposed of.

I should like to ask the right hon. Gentleman whether he agrees with Mr. William Winterbottom who, in a very fine speech at the Cotton Board Conference last October, stated what he considered to be a suitable size for the industry. Judging from the amount of money that has been allocated to the industry for the purpose of overcoming obsolescence and re-equipping it, I should think that the President of the Board of Trade would agree that another 3½ million spindles would do the job, and that 65,000 to 70,000 looms should be scrapped so that the amount of woven cloth that we have would fit the amount of yarn that is being produced.

While the right hon. Gentleman is thinking that one over, I will put something else to him. The premise in terms of size has been arrived at from very shaky foundations indeed. It was based on a so-called agreement with Hong Kong, which has no basis in law, which can be upset by Hong Kong at a whim, and has not taken into consideration the amount of cotton yarn which can come into this country for wearing. The people in Hong Kong are pretty smart. I do not think they need any advice from me about how to carry on their business. If they are wise, they will fill up their cloth quota by buying Commonwealth yarns from Pakistan and India and Commonwealth cotton from Tanganyika, Uganda and Nigeria, etc., and then they will export their yarns to this country as yarns to be woven in this country.

I would not be too desperately pessimistic if I were a manufacturer of some cloth in this country, because I would buy my yarns from Hong Kong and get on with it.

Mr. Charles Fletcher-Cooke (Darwen) indicated assent.

Mr. Rhodes

I notice that the hon. and learned Member is nodding in agreement.

In these circumstances, one must set ones' target low enough and make it efficient enough to begin with. I am referring to new spindles and new looms. The basis of stability indicated in paragraph 5 of the White Paper is not well enough founded.

I spoke earlier about technical developments which have taken place. Very little has taken place for the last forty years. The same old principles applied until the shortage of labour after the war made people think. It gave a stimulus to make the machine do more. This is essential in an economy which is mildly inflationary and in which high wages are the rule. Again, I am not sure whether the Government appreciate that before any money is paid out from the public purse for machines we should have the best, wherever they come from, whether it be the United States, Switzerland or anywhere else, and they should be free of duty. If I had the job to do on the Front Bench opposite, I would certainly insist that the criterion of the productivity of the machine was the all-important factor.

This is a once-for-all operation. If it is not done this time it will never be done, so let us do it right if at all. It has been said that we are developing better machines now. I would not disagree. I think that is so, and things are getting under way very nicely. So it might be an advantage to wait, before we decide.

At Whitsuntide, I attended a conference at the Textile Institute. There were some very able speakers there. There was one Paper given by Mr. Catling and Mr. De Barr of the Shirley Institute illustrating precisely the point I am trying to make about the technical under-development which has been the rule. I will read the relevant paragraph of it: As an illustration of the present position of the textile industry, the following figures from the Census of Production for 1951 are of interest. Taking account of the value of plant and machinery, the 'added value per operative per annum' figure for all manufacturing industries in the United Kingdom is £140. The corresponding figure for the textile industry is only £30. This means that, considered nationally, the average worker is employed more profitably than is the textile worker. When it is also realised that the value of plant and machinery in the textile industry is about £2,900 per operative, compared with a national average of only £1,800 per operative, it becomes evident that the considerable changes required to raise our operative utilisation efficiency to that of other industries are imperative if we are to survive. It is on that matter that I want to make another point or two and then conclude on machines.

We must have the best machines. Who has done anything in the industry to find out who has the best machines? The hon. Member for Preston, South and I did a little in Japan when we were there. We were taken to one of the most modern mills in the world, the one that Dr. Erhard was taken to two or three days afterwards. It is on show to the world. The factory is nearly noiseless, with spindles running at 12,000 revolutions a minute. Whereas one operative looks after 100 machines in that mill in Japan with their low wages, we have one operative in this country looking after less than 30.

Mr. H. Hynd

A hundred looms?

Mr. Rhodes

No, carding machines. If the hon. Member for Preston, South is called, he will corroborate that, I am sure.

When we moved on to Hong Kong, we asked the most up-to-date manager there, a first-class man, where he was looking for machines for the present, and he said, "Japan". We could understand that after having seen that plant. I asked him, "And where for the future?", and his reply was that he was looking to Western Germany because Western Germany had its factories and its cotton industry to all intents and purposes destroyed, which had given the people of Germany a stimulus to do in a comparatively few years what we have been trying to do over many years.

At Shirley, a small amount of work has been done on the productivity of machines. I want the President of the Board of Trade to back this work. I want him to ask the people at Shirley to assess the productivity of the machines in Germany, in Japan, in this country and in America. Then he should give an opportunity to the people who are re-equipping to acquire the best machines, and if they do not, he should not give them any grant. Let us set off on the right foot; otherwise we are just wasting our time. The Board of Trade will also have a yardstick by which to measure it.

Then there is the question of the labour side. It is not the slightest bit of use finding the best machines from all over the world to put in a factory unless we have the best conditions in which they will be worked. We must face the fact that if we put the best machines in they must work at least double shift, and treble shift if possible. It would be absolutely wrong to talk of anything else when we consider the scale of help which is being given to the industry. Do not let it be £30 million for nothing. We shall be letting down our constituents and the taxpayers in our constituency, who are also textile workers, if we do not ensure that the machines are worked and that unless they are worked not a penny will be paid over.

The situation is easy to understand. In 1956–57, active spindles in the United States of America worked an average of 6,117 hours; in Germany, 4,000 hours; France, 3,707 hours; Japan, 4,867; India, 5,932, and Hong Kong, 8,158. Right at the bottom of the list comes the United Kingdom with 2,124 hours. Does anybody think that the expenditure of public money on the finest machines in the world if they are then to be worked only on a single-shift basis will do the job? It will not. It must be worked all out. If it is worked all out, we can probably revise the figure of £30 million for which the Government are estimating; we could manage easily all that we need with 6½ million spindles.

I earnestly beg hon. Members to think this over before the Committee stage. Today, for one reason or another, we are committed not to vote. We on this side are making no attempt to vote against the Bill on any of its shortcomings. Be that as it may, if we put it on the Statute Book, let us have a real go in Committee to make it a workable Act so that we shall not waste public funds.

Further, it is no use buying the best machines to be worked in the best way unless they are put in the best containers. Mr. Winterbottom at the Harrogate conference expressed himself in no uncertain fashion about the factories. He said that less than half the mill structures that we have today will he needed. At least half of those are in the spinning section and are either unsuitable for modern ring frames or are already in need of replacement. That is precisely what I said ten years ago when I spoke in this House about the unsuitable mills still in use. Pillars which were right for old machines are not right for new. Textile machinery makers had to make new machines to fit the old buildings. Surely we are not giving public money to people to buy machinery to fit into old buildings. Let us try in Committee to improve the Bill.

5.55 p.m.

Mr. Alan Green (Preston, South)

Before I follow formally the hon. Member for Ashton-under-Lyne (Mr. Rhodes), I hope I may be permitted to add my voice to those who have already today regretted the passing of Mr. Richard Fort. I do this specifically, not only on grounds of long-standing personal friendship, but because Mr. Fort was in a direct and personal sense my own Member of Parliament. I live in the Clitheroe constituency and I am glad of the chance to put on record my deep regret and deep sense of loss at his passing.

The hon. Member for Ashton-under-Lyne has saved me the trouble of making a lengthy speech. He has already said many of the things I wanted to say and certainly he has quoted all the necessary figures that we need in this debate. I agree wholeheartedly with him that it is not merely a matter of better machines in better buildings and having them better arranged in those buildings. It is also, and even more importantly, a matter of the machines being most intensively worked and most skilfully managed.

In addition, if the cotton industry is to stage a real recovery, it is essential that there should be a much closer connection between those who make the goods and those who sell them. At the other end of the scale, there must be a much closer connection than, perhaps, has been possible in the past between those who operate the machines and those who design and build them. There are signs of this happening.

I have no doubt whatever that because of the tremendous length of time over which the industry has declined, ever since 1918, its organisation, its relationships between the various parts of the industry and its relationships with those who supply the machinery and with its customers, have all got, so to speak, out of kelter and very much require to be put right, and quickly.

The justification for the Bill rests upon the contention that the cotton textile industry is unique in British industry. In some respects it is. It is the first major industry to suffer the direct impact of cheap quota-free and tariff-free Commonwealth products. It is not the only industry to do so, but it is the first major one. In that respect it is, perhaps, unique.

It is also unique in another respect. It is an industry that was unfortunate to have, immediately after the war, a short-lived and, in true economic terms, false burst of prosperity. At the beginning of the war it was concentrated for necessary national reasons. After the war it expanded again. I regretted then, as I regret now, that it was reconcentrated in the very towns that were already overdependent upon it. That was due to a national mistake and a series of local mistakes which were quite understandable. Looking back, however, it is easy to see that the immediate post-war years offered a unique opportunity to the towns around where I live, and where I hope to go on living, to diversify their interests and to wake up in the methods that they were pursuing in their own textile trades.

Those opportunities were lost. No doubt there were plenty of good reasons for that. I am not attacking any one party or set of people because it happened, but it did happen and a first-class opportunity was lost. However, because by deliberate intent people were encouraged by the Government immediately after the war to go back into those old mills and work the old methods—I remember many campaigns up and down Lancashire to staff the mills—I believe that they can claim to be in a unique position. Being an industry which has long been in decline, it was encouraged—I think falsely—in a sudden burst of activity after the war, and it was the first industry to suffer on a major scale from the impact of cheap imports from the Commonwealth.

There are certain grounds for saying that the cotton industry is unique. I hope, like the hon. Member for Ashton-under-Lyne, that it will show a unique capacity for rejuvenation, because that is what it needs, and it needs it now. I believe that there is inside the industry enough skill, energy and "know-how" to make a smaller and more compact industry work vigorously. The trouble at the moment is that that skill, energy and "know-how" are too thinly spread over too big and too empty a shell. It is because I believe that there is a sufficiency of energy and skill in the industry that I think an enabling Bill of this kind can be justified.

I want to add my own word of warning, not only in this House but also in Lancashire, that if effective efforts are not quickly made to concentrate skill in those sectors which are prepared to work new machines intensively, then I fear that the Bill will fail, the project will fail and the textile industry in Lancashire will perhaps lose is last chance of real and swift recovery. I think that there is enough skill in the industry to do the job that needs to be done. But it must be intensively applied, reconstituted, reconcentrated and reorganised. I hope that all of us will have the opportunity of encouraging those progressive elements in the industry which I know from my contact with and knowledge of them are increasing in influence within the industry. I want to warn others not to be misled by the present boomlet in their trade.

Over the last few years, since the immediate deficiencies of the post-war world were made good, the industry has operated in a two- or three-year trade cycle—one good season followed by two bad ones. That has been the general rule within the industry. I hope that the industry will not be misled by the fact that this is a good season. Unless something is done quickly to revitalise it and to make it more competitive, then I am afraid that two more bad seasons will inevitably follow the present good one. I give that friendly word of warning to the trade.

What, if any, is the alternative to the present method of procedure? The laissez faire, kill-by-competition method is one. For various reasons, whatever the House may say about the Bill, I think that the House will agree that that is not the best way to get a quick solution to the cotton trade's present difficulties. The only other runner in the field at the moment is the so-called "Wilson Plan." I am a little surprised that the right hon. Member for Huyton (Mr. H. Wilson) was not able to lead for his own side in this debate, although I am sure that there are good reasons for that. I am sorry to hear that that remains the official plan for the opposition. I rather thought that the footsteps of Mr. Cleverclogs were receding down the corridors of time. I am sorry to hear that they are not.

If the Opposition's plan were adopted, it would place on a Government Department the duty of deciding what units should continue to operate. Furthermore, if I understood the plan correctly, it would put upon a Government Department the duty of deciding what types of cloth should be made. That is not the way to sell cloth in the modern world. Government Departments, except those in Communist countries, are not in a position today to dictate to customers, either at home or abroad, what they should buy. I beg the Opposition to burn their so-called plan and to think of a better one. I am sure that they can if they will only try. Bureaucratic central direction which decides which mills should close, which should merge and what the surviving mills should make is wrong. It is not a workable proposition in the modern competitive world.

One of the real reasons for the success of Hong Kong's textile industry is the absolute unfettered freedom given to the mill operators to make the cloth that they want to make and in the process to drive the operatives too hard. I have been to Hong Kong recently. I do not deny that that is happening.

Mr. John McCann (Rochdale)

Surely the hon. Gentleman does not suggest that to make workers labour for 13 hours a day, seven days a week, with women working for a shilling an hour, is a sensible solution to the problems of the cotton industry in this country?

Mr. Green

I did not say that it was. Perhaps the hon. Gentleman is so intent upon what he may have in his own mind that he did not quite hear what I said. I said that they had absolute freedom in Hong Kong to drive their operatives too hard. Steps are now being taken to put that right.

As the hon. Member for Farnworth (Mr. Thornton), who has also been to Hong Kong often, and the hon. Member for Ashton-under-Lyne saw with me, the real volume of cloth coming into our own home market from Hong Kong is made in Hong Kong mills which operate a three eight-hour shift system for six or seven days a week under better than average Asian conditions of work. It is not the very bad mills—there are plenty of them—that are responsible for the volume of cloth which is entering Britain and which is hurting the Lancashire producer. It is the bigger, better organised and better run mills which are doing the damage in this country.

I ask the Opposition to look again at another aspect of its policy. If I understand hon. and right hon. Members opposite correctly, on the one hand they stand for a policy of pushing up the standard of living in under-developed countries and of helping those who are down to rise higher. They make a considerable moral point of that process. It is central to the whole of their project and their moral thinking about what they want to do. We cannot push up the standard of living of people in Hong Kong and at the same time refuse to take their products. Those two ideas are contradictory. Ideas of that kind, if offered to the electors, must surely be made to dovetail one way or another. I beg hon. and right hon. Gentlemen opposite to think of that point again.

It is most misleading for any Government or potential Government to suggest to the voters of Lancashire that there is some magic way of helping the people of Hong Kong while still refusing to buy their cotton. It is most misleading, yet the impression is going around that, by some miracle, cotton goods made in Hong Kong and exported here will never replace a yard of cotton made in Lancashire for home consumption. Such a suggestion is rot worthy of the people who make it.

Mr. J. T. Price (Westhoughton)

We are all following with interest an attempt made by hon. Members opposite to make a moral point. There is a considerable degree of agreement on the point which the hon. Member is putting. But since it is also known by the hon. Member and his hon. Friends that much of the cheap cloth coming from Hong Kong is the product of refugee capital from Shanghai and refugee labour in its millions from the mainland, driven out of China by the Communists, and is the product of intense exploitation, may I point out that if we are prepared to raise the standard of living, this standard must be raised by a process of applying moral principle to the employment of labour where these goods are made?

Mr. Green

I do not dissent from that. A start has been made on improving working conditions in Hong Kong mills, and I hope that it will continue as speedily as possible. We must not forget the pressure of population in such a small area as Hong Kong. The effort to raise the standard of living must be made in a practical and sensible way.

I am not as pessimistic as the hon. Member for Rossendale (Mr. Anthony Greenwood). I do not think that there is insufficient skill and energy in the industry to do the job if the industry really understands what job it has to do. What we must not do in the House is to mislead people into thinking that some curious form of protection can keep them alive in a modern competitive world. If we can get that fully over from both sides of the House today there is a very good prospect of the skill and energy and drive of the people remaining in the trade seeing to it that we become competitive once again. Meantime, we have this enabling Bill. Only if the sectional schemes put forward will fit the facts, as we have tried to present them today, can the Bill work or the Government put any money into the scheme.

6.15 p.m.

Mr. F. Blackburn (Stalybridge and Hyde)

May I, first, ask the Parliamentary Secretary to the Board of Trade to call the attention of his hon. Friend the Minister of State to what my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) had to say about textile machinery and ask him to make it compulsory daily reading? I agree with very much of the first half of the speech made by the hon. Member for Preston, South (Mr. Green). I hope that he will forgive me if I do not deal with the second part, because if I am to make a speech dealing with Labour Party policy in addition to the Bill and the White Paper on the Reorganisation of the Cotton Industry I shall speak for a longer period than any hon. Member would want me to do.

The hon. Member for Preston, South did not express a great deal of enthusiasm for the Bill. The best that he could say about it was that perhaps it could be justified. As I listened to the hon. Member for Middleton and Prestwich (Sir J. Barlow), who expressed enthusiasm for the Bill, I thought that I had never heard a sadder enthusiast. Apart from a period in his speech when I thought that he was taking over the job of Colman Prentis and Varley, I had the impression that the hon. Member was very worried about the details of the Bill though, at the same time, he was expressing. great enthusiasm for it.

I disagree with my hon. Friend the Member for Ashton-under-Lyne on one point. It would he quite wrong to reject the Bill. On the other hand, I cannot feel any great enthusiasm for it. It seemed to me that the President of the Board of Trade was able to read into the Bill far more than I have been able to read into it. The Bill seems to me rather nebulous. I do not consider that this is an attempt to save an industry. It is an attempt to make the death throes less painful.

There is no attempt at planning and at matching the closing of factories with the provision of alternative employment. There is no attempt whatever to keep closures in step with the opening of new factories, to provide employment for redundant workers. In fact, the President of the Board of Trade was quite specific. I took down his words about the Bill. He said, "We cannot use it as an exercise in the distribution of industry."

Actually, the problems are very much linked together. The problems of the textile industry and the provisions of the Bill ought to be linked very closely. It is true that the proposed scheme depends upon compensation for loss of employment but, apart from that, the Bill shows no appreciation whatever of the human problems and the human tragedies involved. Whether the contraction in the industry is haphazard or phased, what we need in the area is new industries. I can speak with some feeling, because I believe that the last new factory built in my constituency was about sixty years ago.

Since the war, the north-west region has not had its share of new factory building. I blame both the Labour Governments and the two Conservative Governments. They have both allowed too much development in the London area and in the Midlands. Between 1945 and 1952 the South and the Midland regions had 45 per cent. of all new industrial building. By the end of March, 1958, the proportion had increased to 55 per cent.

The present position in the textile area ought not to be underestimated. In the early months of this year in the northwest region the ratio of unemployed to vacancies was over six to one. The further closures contemplated by the Bill will make the position even worse. Paragraph 24 of the White Paper states: Judging from past experience … the numbers who will have a continuing difficulty in finding new work will be much less than might be feared. Is that true? I wonder whether the fact that unemployment has not been greater than it is has not been due to depopulation of the area rather than to any provision of new industries through the activities of the Board of Trade. The Bill is a belated attempt to do something for the industry. The first creakings were apparent in 1952. If this scheme has any merits I would say that it is three or four years too late.

One of the first Bills brought in by the Conservative Government of 1951–55 was one to abolish the Raw Cotton Commission. The reason given by the Government for closing that Commission was that it was wrong that public money should be used as a cover for private industry. Since those days the Conservative Party has moved considerably, has it not? Because it now seems to be an accepted part of Conservative philosophy that public money should be used to help private industry, without, of course, participation in any increased profits.

It is typical of the Government's attitude that they are prepared to find money for scrapping, that they are prepared to find money for re-equipment; yet when it comes to compensation for employees, the whole of the money has to be found by the industry itself. The President of the Board of Trade said it was only right that if there was to be compensation for scrapping machinery there should also be compensation for redundant workers. Yes, but what is the difference? For the scrapping of the machinery the Government are prepared to give help but for the redundant workers the whole of the compensation has to be found by the industry.

The House must agree that a heavy burden is being placed upon the unions by the Bill, because if agreement between the unions and the employers is not reached, the scheme fails. While I am on the subject of compensation, perhaps the Parliamentary Secretary, when he replies to the debate, will explain a matter which is troubling me. That is the difference between subsection (2, b) and subsection (5, a) of Clause 1. Subsection (2, b) states that the Board of Trade has to be satisfied … that arrangements have been made within the section for the payment of compensation in respect of loss of employment due to the elimination of the excess capacity … Subsection (5, a) refers to the reorganisation scheme, which I take it is the same one as that mentioned in subsection (2), and states that provision may also be made by the scheme … relating to any section of the industry … for raising by means of charges to be imposed as aforesaid the amounts required for compensating persons employed in the section … Why, in subsection (2, b), is it definite that arrangements have to be made and in subsection (5, a) provision "may also" be made?

The only sound basis for compensation is a lump sum payment. I can see that there will be endless difficulties if the present proposed scheme, based on weekly payments, is proceeded with. I hope that whatever influence the Board of Trade has will be used to try to make some different arrangement for compensation for workers than the scheme which has been put forward so far, I suppose tentatively.

I also want to call attention to the following four lines in paragraph 9 of the White Paper: During the negotiations with Hong Kong the industry and the Government found themselves at one in thinking that if a voluntary arrangement for three years were concluded no time should be lost in making use of the period of stability for a drastic reorganisation of the industry. But the imports from Hong Kong were stabilised at the peak period of 1958. Are we anticipating that after the three-year period there will be a still further increase, and do we then begin this process of contraction all over again?

Now I want to look at the financial provisions of the Bill and of the White Paper. According to the estimates given in the latter for re-equipment, spinning is estimated at £40 million, doubling at £8 million and weaving at between £30 million and £45 million, or, taking an average figure of £36 million, giving a total of £84 million, of which the Government grant will be one-quarter, which is £21 million, leaving about £9 million for scrapping of excess capacity, according to my arithmetic. Again, according to the estimates given in the White Paper, the excess capacity for spinning is 50 per cent., for doubling it is 60 per cent., for weaving it is nearly 30 per cent., and for finishing between 25 per cent. and 40 per cent.

I wonder whether the arithmetic is right, or whether it is possible that the £9 million, plus the £4½ million which will have to be found by the industry itself, will be sufficient for getting rid of all that surplus capacity. I agree that it is for machinery only and I am sorry to find that this is so, because we are now to be left with empty shells and we have already in the textile area sufficient empty shells without having to add to them. I am sorry, too, that the Bill makes no provision for help in building. As my hon. Friend the Member for Ashton-under-Lyne said, many of the fac- tories in use at present in the textile areas are totally unsuited for modern machinery. It would be a great help to the industry, therefore, if a programme could be envisaged for erecting new factories and also for getting rid of same of the empty shells we have and leaving space for the erection of new factories.

The industry will itself have to find £63 million if full re-equipment is carried out. It will also have to find a £4½ million levy for the scrapping. an unknown sum for compensation of its employees and an unknown sum for the expenses of the Cotton Board. How is it expected that the levy will be raised? Is it expected that it will be taken from accumulated capital, from current profits, or by raising prices? If it is by the last method, we shall be in a much worse state in competition with others than we are now.

It was not clear from the speech of the President of the Board of Trade which mills are to close. I want to know what are to be the criterion. Is it to be the criterion of obsolescent machinery? If it is, a number of factories that have re-equipped have been in difficulties. Or is it to be that of a bad employment record over the past few years? Or is it to be that of non-profitability during the past year or two? Or is it to be related to the type of production? Are we to put emphasis on quality production?

As my hon. Friend the Member for Rossendale (Mr. Anthony Greenwood) asked, are we to take into account the social problems which may be created? My hon. Friend drew attention to the fact that in some small places, in some villages, the only source of employment may be a cotton factory. If that closes, the whole source of employment goes. What are to be the criteria on which will be taken the decision about closures?

What does this reorganisation scheme mean? As I have said, the President of the Board of Trade seemed able to read far more into the Bill than anyone else could read into it. The Bill means scrapping and re-equipment, but the interests of the industry, as the right hon. Gentleman said, may require a more vertical structure. The right hon. Gentleman said that he would introduce an Amendment to deal with that, but what he said appeared to relate only to the finishing trade. Neither the White Paper nor the Bill gives us a very clear indication of what the ultimate picture will be.

Let no one think that the Bill will solve the problems of the cotton industry. Let no one think that it will end the very human and social problems which have existed over the past few years, and let no one think that £30 million will settle the debt which this country owes to a great industry.

6.31 p.m.

Mr. Charles Fletcher-Cooke (Darwen)

Last time I addressed you, Sir, was to protest against the closing of a railway station in my constituency, and it is perhaps ironical that today I should be supporting a Bill which will undoubtedly result in the closing of some of the weaving sheds in my constituency.

However, I think that the stands on both scores are perfectly justifiable, because they point very neatly the dangers of allowing decisions on which mills are to be closed to be left in the hands of State political authorities, which are inevitably susceptible to public pressure and which would be bound to take into consideration worthy but wrong considerations when one is considering, as one must here, the stripping down of an industry for action.

Efficiency, and only efficiency, must be the criterion now. Although in my constituency there are several of the villages which were mentioned by the hon. Member for Stalybridge and Hyde (Mr. Blackburn), and which are dependent on one or two mills, nevertheless I am sure that we must harden our hearts in this matter and say that if public money, the taxpayers' money, is to be put into this operation, the only considerations must be the efficiency of the resulting industry.

It is a very dangerous thing that we are doing today, but, as my hon. Friend the Member for Preston, South (Mr. Green) said, in a speech which I very much enjoyed and supported, one which can be supported.

Mr. McCann

He said "perhaps".

Mr. Fletcher-Cooke

I do not add "perhaps". I go a little further than that.

I am bound to say that I do not pay much attention to the argument that what we are doing today is exceptional because the industry which we are treating is exceptional. We have had one or two definitions of why the industry is said to be exceptional. My hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow) thought it exceptional because it was the oldest. Another hon. Member thought it exceptional because it was the first to sustain the full blast of Commonwealth competition. In another case, a Government source, it has been said to be unique because it has a peculiarly horizontal structure and is very stratified.

By those definitions of uniqueness, I suppose it is meant that the industry is exceptionally vulnerable or exceptionally defective, and if the unique quality lies in its stratification, all I can say is that the Bill does nothing to cure that stratification. Indeed, it does the reverse because, as my right hon. Friend made clear, since speed is of the essence, a great deal of the weight, authority, power and autonomy is being put into the sections of the industry which are to become, as it were, autonomous branches of the Cotton Board for this purpose.

Therefore, in as far as the stratification of the industry is said to be a unique weakness, all I can say is that the terms of the Bill do nothing to cure it. I am not myself satisfied that the horizontal structure is altogether the weakness which it is sometimes said to be; but if that is the ground on which the industry is said to be uniquely weak, the Bill does nothing to cure it.

If one is taking the very serious step of putting public money into a private industry, the criterion one has to take is to see whether, as a once-and-for-all operation, one can somehow hasten a process which is nevertheless taking place, whether it be a process of growth or a process of contraction, and give it a push. Although change is undoubtedly our ally, our ally sometimes wants a little help. That seems to be the correct philosophy behind this, and it does not necessarily apply in that case only to the cotton industry. On this side of the House we would be deceiving ourselves if we thought that it was only the cotton industry which would require this sort of help and that no other industry ever would.

It is the condition of an industry with its particular history, its immediate history and its immediate prospects, which determine this fact. There are many complicated aspects, with which I do not now want to deal, which one has to consider if one wants to give the industry a shove in order that its reorganisation, which will happen anyhow, will take place quicker, cleaner, and with less suffering. That is a legitimate purpose for using public funds as an inducement, for that is a way to undertake this change much more speedily.

It is for that reason that I support the Bill. That opens up very large prospects ahead, but I am not frightened of that, because I think that it is perfectly consistent with the philosophy of free enterprise that the State should help the enterprisers along their way.

As for the criticisms of the Bill which we have heard and which we shall hear, not only from hon. Members opposite but from our own supporters and from manufacturers and spinners, one was mentioned by the hon. Member for Rossendale (Mr. Anthony Greenwood), whose support for the Bill was much more gloomy and cold than even the outright opposition of the hon. Member for Ashton-under-Lyne (Mr. Rhodes). Indeed, I preferred the latter's opposition to the Cassandra-like support of the hon. Member for Rossendale, who made one of the most depressing speeches which I have ever heard, quite unworthy of his usual sparkling self.

The hon. Member said one thing which I thought was wrong and inaccurate, that t here would be great dissatisfaction among the people who remained in the industry at having to be levied and taxed in order to re-equip their rivals. But there is no suggestion in the Bill that anyone is to be levied for the re-equipment of his rival. All that they are to be levied for is the extinction of their rivals, and that, of course, is a much more welcome purpose for which to be levied. If we are to be as gloomy as was the hon. Member, we must not do whatever the opposite of over-painting the lily is.

Mr. Blackburn

It is gilding the lily.

Mr. Fletcher-Cooke

I know that the hon. Member was a schoolmaster, but he will find that "painting the lily" is the right quotation. Whatever that opposite is, we must be careful not to do it. As my right hon. Friend observed, this is an exercise in the stimulation of confidence in an industry which has lost its confidence. It therefore behoves all of us not to be quite as Cassandra-like as the hon. Member for Rossendale, because if that happens the industry will not take heart from the atmosphere of confidence and those who support him, equally with those who support me, will go down the drain.

I do not think that the levy even for the purpose of extinguishing rivals will be popular. There has been very little protest so far, but I have had letters from manufacturers in my constituency, and I had one today, with this very hot paragraph: It seems immoral that this Bill should be pushed hastily through Parliament before the trade have had time to digest it. This would leave people with dictatorial powers to levy the trade for the privilege of stopping in business which is strongly resented. Those of my supporters who write in those terms—and very often they are fine manufacturers, in a very small way—will have to put up with being levied for the benefit of the industry, of the county, and of the country as a whole.

On principle and in logic it is very difficult to justify, as it is put in rather emotional terms by my correspondent, "Why should we be levied for the privilege of staying in business?" They must pay for the extinction of their rivals because there is a limit to what the taxpayer should be required to pay. It is only right that those who are to have rival capacity wiped out should pay something, and a good deal, for what indeed is an advantage.

Mr. Holt

What answer would the hon. Gentleman give to the manufacturer who wrote to him saying, "I am not interested in having my competitor wiped out, whether I pay or the taxpayer pays. I am quite ready to compete with him"? The hon. Gentleman says the levy must still be made because it is a jolly good thing.

Mr. Fletcher-Cooke

There is no other way of doing it. If one accepts the principle, as I do, that this industry has to be contracted, and contracted quickly, and that the "virtue" in it, as was graphically described by my hon. Friend the Member for Preston, South, has been too thinly spread over too large and too empty an egg—which was roughly how he put it, and was an extremely graphic description of the present state—and the "virtue" is to be more thickly spread over a more competent entity, there is no other way of doing it than this. If the hon. Gentleman can think of a better way I should be very happy to listen to it. but I gathered that his attitude is, "You do not want to do this at all. You should let natural causes take their course".

That was the attitude of the hon. Member for Ashton-under-Lyne. I understand that, but if one does not accept that, as I do not because we have only a limited time in which to perform a difficult operation, the way that the President of the Board of Trade has suggested in the Bill seems the only tolerable way unless one goes in the opposite direction and follows the policy that the official Opposition advocate. I shall explain all that to my constituent, and if he does not like it no doubt he will write to the hon. Member and give him his support in future, but that is something which I shall have to support with as much equanimity as I can muster.

I know that many of my colleagues wish to speak because many of us in Lancashire are concerned about this development. I could go on with small criticisms, but I think that they are matters for the Committee stage. But there is one criticism which I have found which appeared in a letter in The Times, and which is quite widespread. I hope that it will be answered by my hon. Friend the Parliamentary Secretary. There is an impression about that the automatic loom is not the right equipment for a great deal of the Lancashire weaving industry. People who have been in the trade, and feel that they know more about it than perhaps we do, say that this cry for re-equipment of the automatic loom as opposed to the old Lancashire loom may well be a false cry in the sense that the automatic loom, which relies so much on long runs and takes so long to tool up, and if it breaks down is difficult to mend, is not the versatile instrument that the old Lancashire loom was.

The old loom can change the type of its weave very rapidly. It can weave different sorts of cloth from day to day and almost from hour to hour, and since this country, at any rate hitherto, has had to produce so many different sorts of cloth because it has so many different sorts of markets, it needs a much more versatile machine, albeit slightly less efficient, than the very long runs one gets when one has a mass of uniform markets as in the United States of America. A letter to that effect appeared in The Times about three weeks ago and it was not answered.

There is a fallacy in that argument, I believe. There is nothing about the automatic loom that is not versatile as far as its machinery goes. Hitherto, it has not been economically versatile, as is the Lancashire loom, in the sense that one needs long runs and that one cannot change as quickly as one can with the Lancashire loom. The automatic loom can, in fact, weave as many and as varied types of cloth as the Lancashire loom. I should have thought the whole purpose of this exercise was to concentrate in relatively few automatic looms all or most of the business that at present goes out to thousands of Lancashire looms. If that is done they will be weaving as many different types of cloth as are at present woven by Lancashire looms, but they will have much longer runs because there will be fewer of them taking in the business.

If that is not the answer, I hope that the Parliamentary Secretary will tell me what the answer is, because this point has been mentioned more than once not only by manufacturers themselves, but by operatives and employees in the weaving sheds, who say that this modern craze—and many of these people, as the hon. Gentleman the Member for Rossendale knows, are very Conservative people, I am glad to say—for the automatic loom is a false craze. If the automatic loom goes wrong they say that it takes a lot of time to put right and requires a tremendous amount of altering when one wants to alter the range.

I should like that particular criticism to be nailed today, because I foresee that with the passage of the Bill there will be all sorts of points in opposition that will develop in the carrying out of this rather difficult and revolutionary scheme. I can see that the opportunities for treading on some people's toes will be very great for those who, by some means or other, are allotted to be left out and those who are allowed to survive. There is bound to be jealousy. I am glad that my right hon. Friend has managed to remove that responsibility from his Department and place it in other hands, otherwise I foresee endless trouble in the forms of political pressure; just the sort of trouble, as I said when I began my speech, that I and others give the Minister of Transport every time he wants to close down a railway station or a branch line.

Mr. Anthony Greenwood

The hon. Member was good enough to call my attention to what he believed was a misstatement in my earlier remarks. I was not aware that I had given the impression which he gained from my remarks, but if I telescoped two ideas and gave him a wrong impression, I should like to take this opportunity of correcting my statement.

6.50 p.m.

Mr. Arthur Holt (Bolton, West)

It is always very delightful to watch the hon. Member for Darwen (Mr. Fletcher-Cooke) skate over thin ice. He does so with more delicacy and elegance than any other hon. Member opposite.

Mr. J. T. Price

He has changed his skates.

Mr. Holt

Nevertheless, at the end he got himself involved in the very complicated question of which machinery is best for Lancashire. This is a matter which is still argued extensively in the county, and it cannot be answered in general terms. In some situations there is a case for an automatic loom, or a new ring frame, but in other circumstances, as yet, there is not. When the House discusses the cotton trade it must avoid talking in general terms about it, because it is such a varied trade.

The other point in connection with which I thought the hon. Member was skating on very thin ice concerned his support of the Bill. He referred to remarks made about the Bill by his hon. Friend the Member for Preston, South (Mr. Green), but I believe that the hon. Member for Preston, South said that this was a Bill that he could only just support. There has been no enthusiastic support from anyone. Indeed, it might be said that the President of the Board of Trade gave it least support of all. I suspect that it is a thoroughly bad Bill, foisted upon him by the Prime Minister.

I would certainly like to know what is good about it. The only thing that Members representing Lancashire constituencies could all accept would be that the cotton trade has had a very rough time. We may have different ideas as to how it could have had a better time, but I have always said that it has had the dirty end of the stick, and if somebody is willing to offer it £30 million I shall certainly look twice before I reject that offer. Nevertheless, I find the economics of the Bill chaotic. Indeed, in view of the slight boomlet—or, perhaps, I should say improvement—in trade which is now taking place in the textile industry, I wonder whether the Bill is not already a dead letter.

I shall be very surprised if the scheme for redundancy for spindles ever comes to fruition if the President of the Board of Trade continues to stand by the argument put forward in the White Paper that the redundancy capacity is equivalent to about 12 million spindles. In answer to a Question on 23rd April, when the President of the Board of Trade made his original statement about the cotton redundancy scheme, he said that, roughly speaking, at the end of last year nine out of 25 spindles were stopped. But if 12 million spindles are considered to be the surplus capacity, and if he is not going to approve the spindle scheme unless 12 million are made redundant, we shall have to stop spindles that were running at the beginning of this year. The number stopped was only nine out of 25, whereas 12 million spindles represents half the capacity of the industry.

It means that the Minister cannot pass the redundancy scheme for the cotton spinning part of the trade unless many of the firms which are probably now running at a profit close down. I wonder how many boards of directors will decide within the next few months to close down spinning mills which are now doing good business, with order books perhaps two or three months long, and when the mills are running at a profit. It may be that some mills are not running at a profit, but it is very unlikely that anything like the surplus capacity described will be made redundant.

If the Bill had been introduced six months ago it might have produced the result which the Minister is after, according to the White Paper, but I very much doubt whether it will produce that result now. If it does not, either the original objectives must be changed or the Bill must be regarded as a dead letter.

The hon. Member for Preston, South said that there seemed to be three possible lines of action. First, there was killing by competition, which I gather he assumes is what has been going on in the last few years, and which he thinks is no longer desirable. Secondly, there is the Bill and, thirdly, the plan which bears the name of the right hon. Member for Huyton (Mr. H. Wilson).

Mr. Green

I said that those were the only runners in the field. I did not say that they were the only possible methods.

Mr. Holt

I accept that. The hon. Member said that they were the only runners in the field. Let us suppose that the Bill achieves the success intended. Is there anything in it which will alter the hon. Member's description of what has been going on—this killing by competition? The Bill provides no protection. Even when the trade is greatly reduced in size, and even if much money is spent on new machinery, it will still be acting under competitive conditions, with Commonwealth imports completely free of tariff. The hon. Member seemed to be suffering from schizophrenia in this context, because at the end of his speech he warned the trade that it must not believe that some curious form of protection would save it in a competitive world. I agree with him. That is the problem in the cotton trade, and it will continue to exist when the Bill is passed.

I rose to intervene during the speech of the President of the Board of Trade because of what I believe to be his mistaken attitude. I do not see that the agreement with Hong Kong has radically changed anything. I agree that it has slightly eased the situation temporarily. It might be continued, but the likelihood is that if it is it will not be of such value to the cotton trade in the future. Further, as the hon. Member for Ashton-under-Lyne (Mr. Rhodes) pointed out, there are many ways round it. I do not see that it provides a new basis upon which to say, "All right, we can now start again. We can see that the size of the trade should be so much, and we must reorganise and get down to that size as quickly as possible." That was the line of argument put forward by the hon. Member for Darwen. That is what he said. He was in favour of doing this kind of thing because we could not continue to have too much capacity. It seems to me that there is no basis for that kind of action. If there were I think that I should be quite ready to support it, but there is not.

So I come back to the line I have taken continuously on cotton, that the only way we can treat cotton is to treat it fairly. That treatment is what I maintain it has never had. It is, as somebody said, one of the first trades to come up against real competition from free Commonwealth imports. Most of the other trades have not met that yet. It is a problem with which we have got to deal.

Why should we let the cotton trade suffer in this way on its own? To me, the logic of this falls into one category or the other of two. If a person is a protectionist he could quite legitimately say that the cotton trade is entitled to the same protection as some other industries and that he does not mind whether the competition comes from the Commonwealth or any other part of the world. If he is not of that mind—and I am not—the logic seems to me to indicate that other industries must have their protection lowered so as not to put up the costs of the cotton industry which has to compete with these other goods which come in without any tariff whatever.

In those circumstances, for the President of the Board of Trade categorically to say that he will not reduce the tariff on, say, machinery from America seems to me to make absolute nonsense of the whole thing. Surely, if the cotton industry is now to be re-equipped with the best possible machinery to make it really efficient to stand up to the competition which the hon. Member for Preston, South admits is going to go on in the future it is utterly illogical to dissuade it from buying the best machinery—in fact, to put an obstacle in its way.

Sir D. Eccles

Surely the hon. Member knows that if no comparable machine is made in this country we waive the duty? On the other point he has raised, he is not right in saying that there are only two choices between the logical protectionist and the logical free trader. There is the Imperial Preference system which is of really great use to this country, and the hon. Member must not throw it away as though it did not matter at all.

Mr. Holt

I do not want to get drawn into an argument with the right hon. Gentleman on Imperial Preference. I have had considerable discussion with him on that subject before, and he has different views from mine.

Let me, however, take up the point about the duty on machinery. One can get machinery imported duty-free only if one can show that one can get the producer of equivalent machinery in this country to agree that his machinery is not the same as that which one wants to import. That is the point. I have had this time without number. Someone wishes to import a machine from America. What does he do? He tells the Board of Trade, and it inquires from the very kind of people who produce this kind of machinery, and asks, "Can you produce it?" Of course, if there is something like it which they make they say, "Yes." They are really the people who do the deciding whether the tariff is taken off or not.

The interesting thing is that despite that thousands and thousands of pounds worth of machinery are imported into this country, and the people who are going to use these machines, who are, after all, most likely to be the people who know whether they are most suitable, just pay the tariff, and machinery is being imported into this country in spite of the fact that a 22½ per cent. in some cases—27½ per cent. and up to 33⅓ per cent.—tariff is being paid on that machinery. This seems to me absolute nonsense.

Sir James Duncan (South Angus)

I have nothing to do with the cotton trade, but my constituency is interested in the manufacture of textile machinery, and I do not think it would be in the least in agreement with the hon. Gentleman in that statement that protection of the textile machinery industry is nonsense.

Mr. Holt

I am arguing this from the point of view that the cotton industry itself is receiving no protection at all against its chief competitor. Perhaps the hon. Gentleman will tell me simply this one fact. If it is still the Government's policy that this situation shall continue, will he tell me what is equitable in the textile machinery in his constituency still having a tariff against all its competitors of 33⅓ per cent. while the cotton textile industry has not that same protection? How is that equitable as between one industry and another?

Sir J. Duncan

The whole object of the tariff is to enable the textile machinery industry to have a home base and, by selling textile machinery in the home market, to be encouraged to expand production and to sell textile machinery overseas in competition with the Americans and the Germans and the others. Up to now it has been doing so extremely well and extremely successfully. Only in the last six months or so has it been going through a very difficult time, and it will not welcome the hon. Gentleman's statement about protection being nonsense.

Mr. Holt

I can assure the hon. Gentleman that if he cares to come to Bolton and use the same argument the cotton textile manufacturer will say, "Fine. The same argument will do for me, too, so that I can have protection against cheap imports coming from the Commonwealth and so that I can have a fine home market base in this country from which I can make myself efficient to produce cheap goods to export abroad."

Mr. S. Silverman

What would be wrong with that?

Mr. Holt

The hon. Member for Nelson and Colne (Mr. S. Silverman) has just come into the Chamber and intervened in a rather complicated argument, but my point is that there is no equity in the protection of the cotton textile trade and the textile machinery trade and other trades at the moment.

Mr. Green

The hon. Gentleman is trying to make a black and white argument where black and white do not exist. The principal competitor traditionally and indeed today with the Lancashire cotton trade in this country is not Hong Kong: it is Japan. Imposed upon Japanese products coming into this country are both a quota and a tariff. The matter is not as black and white as the hon. Gentleman is trying to make it out to be.

Mr. Holt

I agree that Japan is one of them, and at the moment she is, as it were, prevented from importing much into the home market, but she is putting a great deal into our export market. In Lancashire the complaint is not about Japanese goods but about the big increase of imports from the Commonwealth which, we all know, have been increased. I am sure the hon. Member for Preston, South does not deny that.

I really do doubt, much as I should like not to, what use this Bill is going to be, when we consider, for instance, the amount of money which is going to be handed over to the cotton industry. Even under the Stafford Cripps arrangement in the late 'forties the amount of money handed over was only £2.7 million. The figure which, I think, the President of the Board of Trade gave to me in a recent Answer was £2.7 million. There was, of course, a limiting factor on this subsidy because it could be given only to mills which had at least 250,000 spindles, but it was open to a large part of the trade, and at a time when the people in the trade had a rather rosier idea of the future than, perhaps, they were entitled to have. The net result was the Government paid out £2.7 million.

Do they really think, after the experience of the last eight years since the cotton depression started in the latter part of 1951, that the industry, even with the 25 per cent. grant from the Government, is just going to pour its money into new machinery? That is out. The hon. Member for Ashton-under-Lyne talked about putting new machinery into old containers—I think that was the word he used—and said this was really frightening, and that what we must have was some new buildings. Can he tell me of a single cotton spinner—this does not apply so much to the weavers—in Lancashire who has the remotest intention of building a new mill within the foreseeable future? That would be news to me. I may be wrong. The hon. Member for Heywood and Royton (Mr. Leavey) may know about this. Perhaps the firm with which he has some connection is contemplating such a course of action. But it would cost a fabulous sum of money and the prospects of the trade do not warrant that kind of expenditure.

I still feel that if the Government wish to help the people employed in the textile industry, and it is those people with whom the Government should be concerned, and if the Government are prepared to spend £30 million of the taxpayers' money to this end, there are probably better ways of spending it. I hope that even now it is not too late to devote this amount of money to other things. It might be used to put new industries into the area, to encourage new industries whose future is obviously good.

Would it not be far better to use the £30 million in that way than to spend it on an industry the future of which, to say the least, is gloomy? Why should that money be devoted to an industry in which even the efficient members who have money—as many of these mill owners have—are extremely reluctant to spend other than small amounts at odd times when they can see a substantial and immediate reward for that expenditure? For the Government to spend all this money rather blindly appears to me an extremely doubtful policy. I question whether it will prove to be in the interest either of the people in the cotton industry or the taxpayers.

One of the difficulties about examining and criticising this Bill fairly arises because we cannot see the whole picture until the schemes are produced. Those of us who have doubts about it must reserve our final judgment until we can see the schemes, and then we shall have a clearer picture and can decide whether it will serve a useful purpose.

7.13 p.m.

Mr. Philip Bell (Bolton, East)

By an agreeable coincidence I find myself following my political colleague, the hon. Member for Bolton, West (Mr. Holt). I will not chase his "King Charles's head" of tariff reform, nor will I go into some of the technical details. But I will say that the hon. Gentleman is more confident of his own judgment than I am if he really believes that by looking at the scheme when it is produced he will be able to come to an unalterable conclusion about whether it will work. The scheme itself will not prove itself. It may appear to be good or bad. But in matters where human decisions have to be made and responsibilities taken the proof, to use an old-fashioned simile, of the pudding will be in the eating.

I have learned a lot during this debate. I was glad when it was lifted from its rather gloomy, schoolboy, "I will shoot you down" atmosphere by powerful contributions from the hon. Member for Ashton-under-Lyne (Mr. Rhodes)—we always expect such a contribution from the hon. Member—and my hon. Friend the Member for Preston, South (Mr. Green). One hon. Gentleman opposite finished his speech with a peroration in which he invited us not to think a lot of things and I found myself in sympathy with him.

Let us not delude ourselves. It is not easy for a Conservative to conceive that public money should be put into private industry merely to risk it. We Conservatives believe that the State should assist industry from time to time. It should not take over an industry. It is difficult for a Conservative to say that public money should be used to arrest the flow of competition, or to prop up the cotton industry, which some people have described as a dying industry.

What has been properly observed of some of my hon. Friends may be applied to me. We did not jump with joy about this matter. We are sad to see a private industry, with a great past, and from which great wealth has been derived, come on hard times through circumstances some of which were not beyond its control. As Conservatives, we take no pleasure in pointing out that sometimes people who indulge in private enterprise become bankrupt and that sometimes they go to prison, but it happens. Of course, other things happen, also. Sometimes when the State takes over, difficulties arise, and because an industry has come on bad times we should not jeer and say, "This is the end of private enterprise."

This is a Bill which we did not like to introduce. We should have liked the cotton industry to have looked ahead and perhaps not done some of the things which it has done. But this is an enabling Bill. A great deal has been said about this Measure. It has been suggested that it will not prove helpful, that it will he a failure. The failure, if failure there be, will be on the part of an industry which had an opportunity but did not take it. What else does the industry want? No one has yet suggested—everyone knows that it is not true—that this industry could be saved, and we could have full employment and everything would be all right, so long as imports were prevented from coming into the country. I know that that is a popular cry, but it has been overworked.

The hon. Member for Ashton-under-Lyne never mentioned the question of imports or stopping them by more quotas or restrictions. That might help for a few months, until someone else became quicker and cleverer and got over the tariff. It might help until a tariff war sprang up. We might get quick profits in that way, but it would not help in the end. It is not the answer. There is not one simple answer. A number of things have been referred to. The proper working of machinery has been mentioned and the question of time study, as well as the need for more intelligent management; the possibility of going in for more export lines instead of relying on the present well-known "bread and buter" lines, and the value of more selling points. That might possibly depend on a different form of organisation.

A lot of these things have been discussed, but no one seems willing to make a start or to take a risk until he can discern the possibility of a little assistance from the Government. Here, in a sense, the Government are flying a kite. Has the cotton industry really got confidence in itself, or is it letting its assets dribble away? Are the people in the industry prepared to make an effort? This Bill is a kite. We shall see whether these people really believe that their industry can again become powerful and strong. Or do they know from their own experience that it cannot be powerful and strong unless some severe form of reorganisation is carried out?

I am not one who takes the view that this industry is sunk in any case, or that we are only attending its funeral or enabling it to die a less painful death. In the issue of the Manchester Guardian of 1st June there was a report of the company meeting of Hayeshaw, Ltd. which some hon. Members may have read. The chairman of the company, Mr. R. H. Taylor, made a statement about the effectiveness of using machinery properly and what could be done in that way. If I may, I will weary the House by reading a passage which gives an example of the advantages to be gained by the proper use of machinery.

Mr. Taylor said of his company: We have successfully operated double shifts in all our spinning mills, though not always at maximum capacity. The important factors in double shift working are the percentage of labour cost to total cost, the premium for the shorter hours of each shift, and of course the profit level. In one of our mills where the percentage of labour cost to total cost is only 35 per cent., the effect is as follows"— and he goes on to give several examples, of which I will indicate two: On 45 hours costs, nil profit becomes 21 per cent. profit and 10 per cent. loss becomes 9.1 per cent. profit. One of my friends was managing director there. Anybody who comes from Lancashire will probably be not unfamiliar with him, and will remember he had rather a disagreement with the master spinners. He points out, for instance, that a Lancashire vertical group producing standardised cloth on double shift with work study methods can beat the better types. Thus, the price of 80-square print cloth would be 17½d., which is 1d. less than Hong Kong. That is not as low as the U.S.A., because Carolina and South Carolina, where they can sell at 16½d. pay three times the wages but work three shifts on special-purpose machinery. I have no doubt that what that company is doing many more companies will do, if they can bend their minds to making the effort.

The Bill is not revolutionary in the sense that these schemes have not been thought of before. In that document which is rather ingenuously described as "Plan for Cotton", but is, in fact, a few suggestions that arrangements should be made to consider whether the suggestions are good suggestions or not, there are recommendations. It is very interesting to notice that in those recommendations this question of reorganisation by payment of compensation for scrapped machinery is put down in so many words. It is mentioned in recommendations 8 and 9. I see that the Commission, which is referred to there, and which would have all the necessary powers to enforce a more rapid rate of re-equipment and to secure further amalgamation in the industry, might well also have within its power the destruction, or the inducement of the destruction, of what is called "surplus" machinery.

This matter of the destruction of surplus machinery is not absolutely part of the plan for cotton, because there are suggestions in the plan that there should be State help for buildings as well as for machinery, and, indeed, for other matters. It is true that there is a big difference later. There is the usual story that the State might take a controlling interest in the business and that it might be necessary to have statutory acquisition of shares in the principal textile-machinery firms. This will be achieved in some way not through specific firms, but by control of the industry, because the State will have put money in. It will do so, but not because the industry has been falling down on its job. As a doctrinaire Conservative, I do not like the idea of putting money into an industry unless it is to make the industry more fruitful.

If this money is put in, will it make this industry more fruitful? We shall want to get the money back, and the Government will get it back by taxation on the subsidiary industries. If we get it back in any intangible way, there will still be craftsmen in Lancashire, employed in a good industry which is so much associated with Lancashire. The skill is there and the capital is there.

The Bill provides opportunities for using them. We are always keen on saying that this is the last chance. I shall have no sympathy with Lancashire if it does not take advantage of the opportunities provided by the Bill. I am not going to be a party to the more simple but I believe specious method of just stopping anybody from sending goods into England by saying, "Let the Hong Kong people and the other people in the Colonies look after themselves. We must look after ourselves". The day is long past when we can do that. I welcome the Bill as an opportunity of testing Lancashire's confidence in itself.

I would ask my right hon. Friend the President of the Board of Trade just one or two questions which have been raised with me in Bolton. I am told that the machinery has to be smashed up, but there is a great shortage of smashers-up in the country. Anybody who has an interest in forming a new firm might well consider starting a firm of smashers-up. The Board of Trade has to be satisfied that the machinery is smashed up. I understand there will be a great queue once the scheme gets going. The second point concerns taxation. I do not think there is any doubt that payments made by the levy will be deductible, under Section 292 of the Income Tax Act, 1952, after the scheme is approved by the Government, against the profits of a firm. That will apply to anything paid into this levy, whether for compensation to workpeople or for surplus machinery. That seems clear, but I would like to have it confirmed.

What about payments received in respect of destroyed machinery? I am not asking for a concession nor do I think that a concession ought to be made, but people want to know from a high level what the tax position is. Will there be a balancing charge under Section 463 of the Income Tax Act if the money they receive happens to amount to more than that at which the machinery is written down? Will that be brought into a balancing charge? There is doubt about it, and I think it depends upon Section 463. I would he rather diffident about expressing an opinion, but that does not make me diffident in asking my right hon. Friend to express his opinion.

Sir D. Eccles

Perhaps my hon. and learned Friend would like me to answer those questions, as my hon. Friend the Parliamentary Secretary is not here. The first question was about smashers-up. We are prepared to get an undertaking that, in fact, the machinery will not be sold, but will be broken up as soon as possible. On the second question, I understand that levy payments will be deductible from assessments of profits. On the third question, the law is rather difficult. Conversations are going on. There may be some difference between the case of a whole mill and the case where compensation is paid simply for the machinery.

7.28 p.m.

Mr. H. Boardman (Leigh)

The Bill is a sad commentary on the state of the Lancashire cotton trade. It is a great tragedy that this industry, one of our oldest and greatest, should now be in such urgent need of the kind of help that we are discussing today.

In view of the enormous manufacturing capacity of the world in textiles, contraction is inevitable. The only trouble is that this industry has been contracting for the last forty years. It is probably a very good thing that by means either of the Bill or of some other method, any further contraction in the industry should be controlled.

The Bill is largely concerned with the payment of compensation for redundant machines and, I regret to say, to a very much less extent with the payment of compensation to redundant men. I wish to raise with the President of the Board of Trade a small point about redundant machines. There is different wording in the White Paper and in the Bill. The White Paper talks about compensation for redundancy where there is an "undertaking physically to scrap" redundant plant, whereas the Bill talks of the elimination of excess capacity.

One of the ironies of the Lancashire cotton situation is that some of the firms—some were quite small firms—which demonstrated the greatest confidence in the future of cotton after the war by re-equipping are now among the very hardest hit. It may well be that some of those firms will be candidates for the closure of mills. Their mills may contain a substantial amount of old and obsolete plant, but certainly in many cases they will have some modern plant. I do not think there are two opinions about smashing old plant, but I should like the Parliamentary Secretary, when be replies, to say what is to happen to modern plant in mills which are to be closed.

It would be unthinkable that any modern efficient machinery should be broken up. It would be even more unthinkable for any modern efficient machinery to find its way through some bargain basement to Lancashire's foreign competitors and to give them an advantage in that respect.

The Bill makes quite clear that there is going to be no compensation for buildings. I am inclined to agree with that, despite all that was said by my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes). We are in a special position in Lancashire, and I think this Bill will make the position even more acute. Already in the Lancashire cotton towns there are a number of empty mills. Through the Lancashire Industrial Development Association, we have tried to get British and American employers seeking sites for their industries to look at these mills. Nobody wants them; they are an eyesore and are becoming derelict. If as we expect, as a result of this Bill there is a further large number of closures, the position in Lancashire will become worse. I should like to see embodied in the Bill a Clause whereby any disused cotton mill which is not to be put to alternative industrial use within a very brief and specified time shall be demolished. The site should then be cleared and an advance factory built there so that the skill and industry of the Lancashire worker can be fully employed.

It is expected that compensation will cost public funds about £30 million spread over five years. There are some aspects of this matter to which I should like the Parliamentary Secretary to reply. A substantial amount is to be raised by way of a compulsory levy on those who remain in the industry. I should like to know from the President, or the Parliamentary Secretary, who is to pay this compulsory levy. How will it rank for Income Tax purposes? Are there to be Income Tax reliefs given to the extent that the cost to the public purse will be greatly in excess of £30 million? Will this compulsory levy be collected from the consumer by way of higher prices, or will the shareholder pay his part by reduced dividends?

This is a very important point. After all, this is a Government-sponsored takeover bid. It is simply a process of enabling the big firms to gobble up the little firms with all the advantage of greater output and greater sales. Perhaps the President of the Board of Trade will tell us—in any case we are entitled to know—what sorts of relief are to be given.

Sir D. Eccles

It might be convenient to the hon. Member if I answer that now. Each reorganisation scheme put forward by the section concerned will have to give the details of the levy arrangements for the section. The Cotton Board, as the hon. Member no doubt knows, has a register of all the firms in the industry, and it will be that register which will contain the list of firms which must come into the levy payments. The payments will not be chargeable against profits for tax, and, of course, they will have to come out of the general finances of each company. Therefore, in so far as they are paid, it will be the shareholders who will be so much the worse off. The purpose of the levy will be to strengthen the assets of the cotton business as a whole.

Mr. Boardman

That is very assuring, and I am glad that the President has been good enough to answer that now.

I should like to say a word or two about compensation for displaced opera- tives. Although I understand that that is a matter at present for negotiation between the trade unions and employers, I want to deal with a particular aspect of that question. I rather regret, I almost resent, the fact that the employees are to be paid compensation on a weekly basis. If I could allow myself one shaft of humour in this tragic story, it would have been comic to have seen the lords of the motor industry, Who received such heavy compensation, paid weekly. If we do not do it for the master, why should we do it for the men? I think the trade and trade unions must look at that matter again.

That is incidental, but the point I want to raise is a serious one with regard to the basis of payment. As the House knows, compensation will not be on the basis of length of service in the industry but strictly on the age of the displaced operative, and the maximum amount will be reached when the man is 65 or over. Provided he does not get a job in the meantime, he will receive a maximum payment of 30 weeks' wages. I am not complaining about that, although, heaven knows, it is little enough.

I want the President of the Board of Trade, the employers and the trade unions to note that, despite what the White Paper says—and I think it speaks from unjustified optimism—about finding alternative work for older displaced people, there are going to be many human tragedies in the Lancashire cotton towns concerning men of 55 and over who will find it well-nigh impossible to get work again. If they do get work again, it will obviously be unskilled work at very much lower wages than they have been receiving.

I would rather have seen the 30 weeks' compensation paid for the maximum age of 55, but unfortunately, under the arrangement as it stands, a man of 55 is entitled to 17 weeks' wages as against the 30 weeks for a man of 65. Unless he is very fortunate, I am afraid that a man of 55 will have a very distressing time trying to find any employer willing to employ him under any circumstances. I have had so many letters from constituents on this matter that I think there are many men in my constituency who know the bitter truth of what I am talking about.

In paragraph 11, on page 5 of the White Paper, we are told that the Government believe that the industry can be so reorganised as to take full advantage of changes in demand and fashion at home and abroad. I agree entirely, but I venture a comment on the subject of design, which has already divided the trade. It is really astonishing to see how such a large part of the textile industry of Britain thinks it is producing the finest designs in the world, when that is just not true. There are some very good firms in British textiles. Let us not under-rate that. Some have first-class designers, and if we are to take the fullest advantage of this reorganisation and re-equipment, I agree with the White Paper that we have to keep in step with what the rest of the world is doing in this matter.

Those in the trade must realise that colour and design can create demand. We are having to face immense competition from many of the continental firms in the matter of the gaiety and variety of their cloths. There is immense competition in furnishing and fashion fabrics, and I think that the first appeal to women is eye appeal and that quality is very secondary to that.

I appeal to the trade itself to give its good designers their head. Let them go ahead and let the trade give them the fullest scope for originality and enterprise. I am sure that if we can do that we shall meet the continental competition in design and colour, and I am bold enough to say that we shall beat it.

The White Paper refers to a compact, up to date and efficient cotton industry. If the Bill can establish a compact, up-to-date and efficient industry, giving greater security for the people employed in it, it will prove a very good thing for Lancashire and Britain in the long run. I say that with the proviso that the Board of Trade keeps its promise about bringing alternative industries to Lancashire.

7.41 p.m.

Mr. J. A. Leavey (Heywood and Royton)

I am never quite sure what is the correct procedure in the matter of declaring one's interest and therefore I shall err. I hope, on the safe side by saying that I have an interest in the cotton industry inasmuch as I am a director of a cotton company. I do not know whether it is necessary to say that or whether that will prejudice what I may say subsequently, but I felt it prudent to do so.

In view of the exchanges, some of them lighthearted, which have gone across the House today as to the nature and strength of the support and the kind of welcome some of my hon. Friends are willing to give to the Bill, I will just say that I welcome it. I suppose that as we are not to have a Division at the end of the debate, or at least I hope that we will not, it is important simply to state that fact.

I believe that the cotton industry as a whole also supports these proposals. The Bill, as has been said, is perhaps the least significant part of our discussion. I was glad to hear the hon. Member for Leigh (Mr. Boardman) express his support. I also listened with great interest to the speech of the hon. Member for Ashton-under-Lyne (Mr. Rhodes) earlier this afternoon and to the speeches of other hon. Members who have expressed a point of view which, quite briefly, I shall also try to express to the House.

I believe that the people who have been concerned in these discussions and negotiations, particularly the Cotton Board, deserve a word of credit. It was in October that the industry was encouraged to believe that the Government would welcome some proposals and might look favourably upon them. Since then, the industry, guided by Lord Rochdale and members of the Board, have got together, made some general proposals, got over their major arguments, arrived at serious conclusions in the main sections and presented them to the Government. The Government have digested those proposals and have come back with certain suggestions, which we have in the White Paper and which we are able this afternoon, seven months later, to discuss as agreed proposals, involving large sums of money.

It seems to me, since the industry has shown its vigour and is able to get down to proposals of this sort, that the time is long overdue for someone to say that the industry is not, as some of its critics have been only too ready to say in the past, old-fashioned and backward-looking. It has been said in this debate often enough before and elsewhere that for nearly half a century the industry has lived with dwindling order books, at least in regard to the volume of the product.

In spite of the vast sums of money which have been invested and the skill and energy shown in the industry, it is none the less true that it has not been able to adapt itself sufficiently. Many reasons can be put forward for that. This afternoon, it has been suggested by my right hon. Friend and others that the conditions are unique. I suspect that any individual in the industry who is in difficulties will plead his case on the basis that the circumstances are unique.

I do not think the facts are in dispute that for literally fifty years, and perhaps longer, this industry and all concerned in it, with the exception of a few occasions when they have enjoyed improved conditions, have lived with the prospect that the industry will get smaller in terms of volume, and that probably the total productive capacity of the industry will have to shrink. Therefore, it seems to me that in criticising this Measure one is in fairness compelled to consider the alternatives, which have been stated already. One is a cruel change brought about by economic forces. I think that everyone is opposed to that. I was not quite sure of the line pursued by the Member for Bolton, West (Mr. Holt). There is protection by tariffs or quotas, or by both, as a second alternative, and I do not believe that hon. and right hon. Gentlemen opposite have very seriously put that forward as an alternative treatment. My right hon. Friend has consistently explained to the House and to the country the Government's attitude towards that. We thus arrive at such a scheme as this, and there can be many variations. It would have been surprising if we had swallowed whole this scheme exactly as it has been presented.

We have been considering the proposals in the White Paper and in this enabling Bill, which, as I have said, is the least important part of our consideration, and the prospects of success. I believe that it is a sensible concept that, first, the surplus, or the obsolete plant as I think it has been more properly described, should be eliminated before the second stage is embarked upon of employing the resources within the industry together with public money for re-equipment. I certainly believe it is right that when spending public money in this way the terms should be fairly tough.

I hope that when these individual schemes are considered, my right hon. Friend and the Board of Trade will take just that attitude. A warning has been given that if the reductions are not sufficient the money will not be forthcoming for obsolescent or redundancy payments, but I should not have thought that the Board of Trade would say, "Unless the scrapping of plant is on the exact scale envisaged in the White Paper there will be no redundancy payments." I do not expect that. It has been suggested that the reduction in the spinning industry will have to be about 12 million mule equivalent spindles. I hope that that is not a rigid figure and that it does not mean that if the figure is less it will not attract the redundancy payments.

A prerequisite which I very much welcome is that those who are to receive public money as an inducement to scrap their old machinery should be required to settle proper compensation terms with those who may lose their jobs as a consequence. I wonder whether the hon. Member for Stalybridge and Hyde (Mr. Blackburn) and his hon. Friends are right when they say that this scheme places the unions at a disadvantage, because it seems to me that if the Government have erred by offering too much to the industry, then those who seek to represent the employees' point of view are put in a very strong position. They will know that the industry wishes this scheme to be implemented, since it would mean the attraction of £30 million of public money, and, by these conditions, there would be vested in them the power to strike a hard bargain, because if that bargain were not agreed the scheme would be frustrated. I should have thought that that placed a powerful bargaining weapon in the hands of those who represent the men and women who might face unemployment.

Mr. J. T. Price

I have listened to most of the debate and I am trying to weigh the merits of the arguments. The point of view of the trade unions, as I understand it, is that if there is to be redundancy—which some authorities have put as high as 40,000 out of a labour force of 190,000, which is 21 per cent.—there ought to be compensation agreed between the two sides of the industry. The dispute at the moment, as I understand it, is about the nature of the compensation—whether it should be paid by way of a lump sum or by weekly payments. Under the present agreement payments are to be determined on the age of the worker affected, and only on the age, and the highest pay will go to the older people who will have the greatest difficulty in obtaining new jobs. This might seem an inducement to less scrupulous employers to sack the young people, who will receive only nominal compensation. in that event, where should we find the young labour for the next generation of cotton operatives who will be required to keep the industry going?

Mr. Leavey

I understand the hon. Member's argument. The fact is that the only adequate compensation is another job, and preferably a better job with wider prospects. Whether they disagree on the terms or not, the fact remains that the prospects in many of the existing jobs have been dwindling all the time in an industry which has been compelled to face the fact that it will shrink. I am merely pointing out that writing into the scheme this sine qua non, if I may be allowed to use a dead language, is placing a powerful bargaining weapon in the hands of the unions.

One tends to run out of the variety of words such as "vital", "essential" or "important", but I believe it essential that the new machinery which is to be installed as the second phase of the scheme shall exploit all that is most modern and efficient in both methods and design. I welcome the fact that the industry is to be allowed to buy its machinery where it chooses without prejudicing its chance of attracting a support payment, whether the machinery be bought from America, Switzerland or elsewhere. I do not wish to be diverted into a discussion on machinery protection and free imports, but when we had the original announcement by my right hon. Friend, I asked whether any safeguards would be written into the scheme to ensure that the contribution from industry and from the State would be spent prudently. I was given what, with respect, I thought was the very reasonable answer that about three-quarters of the money is to be spent by the individual firms themselves. That was a reasonable assurance that the money would be prudently spent.

In discussing obsolescent plant and redundancy, the question is whether the inducements will be sufficient to persuade those whom I believe the Cotton Board and the Board of Trade wish to go out of the industry in fact to scrap their plant. It has been suggested that some of those who are interested in the assets of these businesses will be well advised to accept this scheme and to register their plant for scrapping but that others may give them bad advice in those cases where they have a greater interest in salaries and in continuing employment than in the asset value of the business. That may be an unworthy suggestion. Nobody knows, and we shall not know until these schemes have been presented for approval.

Turning to the question of the smaller and, we hope, more efficient industry which I believe there is a good chance that we shall see emerge from this scheme—I do not put it any higher than that—there is one matter in particular on which I wish to express a point of view. I will be brief because I know that several other hon. Members wish to speak in the debate.

It seems to me that the need is to take seriously paragraph 41 on page 10 of the White Paper, which says as clearly and concisely as possible what is perhaps the most important single factor in the future prospects. It reads: The reorganisation of the industry will fail unless management and labour are willing to co-operate in the introduction of new methods and in the extended shift-working without which the installation of expensive new machinery will be uneconomic. This implies that full advantage will be taken of existing agreements"— I think that refers to the agreements for shift-working, work loads and rates— and that no difficulty will arise over the introduction of extended shift-working in re-equipped mills in order that they may be operated as economically as possible. It seems to me that the new skills which we shall need are skills in management more than skills among the operatives. I hope that in the three or four years which lie ahead, allowing for all the possibilities, doubts, hopes and fears in Lancashire and of hon. Members, we shall see a new approach to methods and techniques.

Reference has been made to design. I endorse what the hon. Member for Leigh said. Some of our designs are very gloomy and dreary. Everywhere one hears people saying, "You cannot sell this new design." In going round exhibitions and trade fairs, I am continually struck by the occasional designs of cloth, furnishing fabrics and dress cloths which have shown imagination, but in which the company or merchant has very little confidence. When going to exhibitions where one sees continental cloths one is often struck by the fact that the attractive cloth is one which has been designed in Italy, France, Belgium or elsewhere.

We must improve our methods of quality control. The chemistry of the textile industry has to be advanced.

Particularly we must have a new concept about this very difficult question of shift working, the domestic effects of it and the complete waste of money involved in introducing machinery unless those changes go with it. This will be known to some hon. Members, but I venture to restate it. Agreements existing today for three-shift work in weaving and spinning—there are mills operating three shifts in spinning and weaving—are based primarily on three 37½ hour shifts, which is a 20 per cent. premium on wages on one 45 hour shift. That is fair. People must be rewarded for the inconvenience of shift working. In terms of what is economic, it means that about two and a half times the productivity must be achieved in those circumstances. If we are to see very large sums of money being invested in new plant and new techniques, I am sure that this paragraph in the White Paper puts the emphasis where it ought to be.

There have been criticisms that many Lancashire managements have been lacking in a readiness to base their developments on the sort of investments which we have seen in the United States. Reference has been made to the usage per year of the existing plant of this country as compared with America. Very impressive figures were given this evening. About 6,000 hours was the average usage of spinning plant in America compared with about 2,000 hours in this country.

Mr. Ernest Thornton (Farnworth)

Is the hon. Member for Heywood and Royton (Mr. Leavey) aware of any mill in Lancashire which has been refused facilities for shift work by trade unions when any new machinery has been installed?

Mr. Leavey

I am not aware of any mill which has been refused the support of unions in those circumstances. I very greatly welcome being able to say so.

In circumstances of this sort, success can be achieved only if there is the type of co-operation which exists in other mills known to the hon. Member for Farnworth (Mr. Thornton) and myself. Occasions have been used in the past by managers and owners to welcome that co-operation. It is unfortunate that even today criticism is coming from some districts of the three-shift operation, and there is a feeling in some cases that the introduction of this more modern method has not really produced the results which it was hoped for.

I have said that I wish to support the Bill, and I have not sought to qualify that support. I believe that it will be possible to make the cotton industry a better industry to work in and invest in, and an industry which has at least much better prospects in the future than it has had for the last thirty or forty years. If the Bill and these Measures bring that about, they will have done very well.

The Bill, the Measures and the reorganisation scheme will not solve all the industry's problems. I believe that it is true of individuals and industries that they depend upon their usefulness to the community and that their prosperity must be linked to their usefulness. If the Bill helps the cotton industry and all who work in it to be more useful and effective and to have a better chance to be competitive in the world as it is rather than in the world as we would like to see it, it will be a great step forward.

Thirty million pounds of Government money and a rather larger sum from the industry itself is a great deal of money by any standards. I believe that the industry would spend it well and wisely. I have no doubt that there will be points of criticism. I hope that the message will go out from the House that, in spite of all the criticisms, the House as a whole supports the scheme, because I think that would make a great deal of difference to its acceptance and operation and to the negotiations and bargaining which will follow.

8.8 p.m.

Mr. John McCann (Rochdale)

It is a pleasure for me to follow the hon. Member for Heywood and Royton (Mr. Leavey), who represents a number of small districts around my own constituency of Rochdale—districts which we hope to take over following the next local government reorganisation.

I was rather interested in his support for the Bill, because I remember his criticisms during the last textile debate of the Government's failure to do something and his courage in saying what he said from that side of the House. I remember, also, that he and I joined together in saying that we would never be a party to the House or the country writing off the Lancashire textile industry and that we felt that the industry should be given some assistance and confidence to allow it to reorganise and re-equip. I hope that in the early stages of his speech his use of dead language was no indication of his thoughts for the future of the industry.

I was interested to hear the hon. Gentleman's views on shift working. I think that I can speak with the authority of the trade union movement in the industry when I say that, provided that the workers are receiving their fair share from reorganisation, they, as they have always been prepared to do, are prepared to make this new scheme work.

The scheme talks glibly about reorganisation. Yet one of the fundamental things which has kept reorganisation back in Lancashire is the cost of re-equipment. I am informed from a reliable source that the cost of re-equipping has risen from £1 a spindle in 1913 to almost £20 a spindle today. When one recognises the amount of reorganisation envisaged in the White Paper, one can see the tremendous capital cost which the industry will have to bear.

In my opinion, the Bill is an indication of the failure of the Government to recognise the position of the textile industry in 1954. Members on this side, in particular, have argued that the industry was suffering from an unhealthy rate of contraction. One recognises that, because of circumstances beyond its control—and whether or not the White Paper and this Bill had been published—the industry would have contracted, but one feels that had this Measure been brought forward in 1954 we would still have had a foothold in some of our traditional markets. Had the industry been reorganised and contracted it would have been in a far healthier state today.

The Bill is very important not only to the textile industry, but to any other industry which, because of the development of backward countries or changes in habits and circumstances, may, in the near future, find itself in the position of the cotton textile industry. By the Bill, and through the operations of the trade unions and the employers, we are laying down the pattern for all such industries in the future. It therefore behoves us to look very carefully at this Measure.

From the other side of the House there has been argument ad nauseam about the "Wilson Plan." Little bits have been taken out of it to prove that it was not a plan at all, but in page 16 the "Wilson Plan" says—and this was written in 1957: Any proposals for the future of the cotton industry, therefore, must be directed first and foremost to the long overdue re-equipment and modernisation of the industry and to raising the level of the average and sub-average mill to that of the best. The author refers to that in greater detail in a later chapter, but he prefaces his remarks by extracts from what was said by the team of American experts, that While there were a few mills in Lancashire carrying out re-equipment programmes which will put their productive capacity on a par with mills anywhere, it was reported that many of the firms had no re-equipment programme worth mentioning. In the cotton industry debate on 30th June last year, the President of the Board of Trade said: If we are not taking today the action that the Lancashire Members would like us to take, we cannot plead ignorance. We really do know what is happening."—[OFFICIAL REPORT, 30th June, 1958; Vol. 590. c. 899.] I am certain that the Minister did know but, of course, he was so completely tied to Imperial Preference at that time—as, I believe, he is now—that the industry was allowed almost to rot away.

There is a very strong feeling in the industry that that was done deliberately. When one thinks of the number of people who have left the industry without compensation, one can appreciate the terrific amount it would have cost to put this redundancy and compensation scheme into operation four years ago. One of my trade union colleagues tells me that over the last three or four years his membership has diminished from 24,000 to 12,000, and that this scheme will take out another 9,000 from membership. These are not just trade union members, but men who have been deprived of a living in an industry into which, practically, they were born.

I am very glad to see that it is recognised that a man who is deprived of his means of earning a livelihood as a result of changing circumstances is entitled to compensation, but I am not altogether happy that the full cost of the redundancy should be borne by the industry. The hon. Member for Heywood and Royton said that this put a bargaining weapon in the hands of the trade unions, but I think that the reverse is the case; it places a bargaining weapon in the hands of the employers. The White Paper quite clearly lays down as a condition of the Exchequer grant that compensation is to be paid to displaced operatives under arrangements for the individual section settled between the employers and the trade unions.

The Bill says that arrangements far the payment of compensation have to be made within the section. Knowing that they had to bear the whole cost of this compensation, it became imperative to the employers that they should get the best possible value, dig in their heels and try to salvage something from this scheme. Here I pay tribute to the patience of the trade union negotiators who, in very difficult circumstances, have come forward with a scheme which, while it does not particularly satisfy some of the members in the industry—and, I am certain, does not satisfy the trade unions themselves—is the best bargain they could get.

As I understand it, compensation means that a man will be paid for losing his job. When, as the result of a take-over bid, or of other circumstances, a director loses his job, he is immediately paid a lump sum, and I believe that that principle should be observed in this case. I understand that the trade unions asked for a lump sum payment, but we now find that it will not be a lump sum at all but purely and simply a dole.

This has put the trade unions in a very difficult position. Both the White Paper and the Bill make the payment of compensation for the removal of redundant capacity conditional on agreement on compensation of redundant workers. In other words, if the trade union representatives and the employers cannot reach an agreement on the compensating of redundant workers, there is no payment for the removal of excess capacity.

That means that if the trade unions failed to agree on this the onus for the scrapping of the scheme could be placed on them. The employers could say, "We were in favour but, unfortunately, you would not agree." I believe that this has actuated the trade union representatives into accepting something rather less than they feel is just.

The scheme, so admirably outlined by my hon. Friend the Member for Leigh (Mr. Boardman), is, of course, based on age. From 21 to 23 years of age a man receives one week's pay, and the amount progresses until the man from 41 to 42 receives eight weeks' pay, and from that age to 65 and over he receives 30 weeks' pay. The result is that an older man can get more money, because of his age, than can a younger man who may have twice as many years in the industry, and I do not need to tell the House the difficulty that this will create.

The point is that a man will be paid only if he is not working. If he feels that he does not want to sponge—even on something to which he is legitimately entitled—and gets another job, he gets no money. That raises two interesting points. First, there will certainly be a tendency among operatives to delay acceptance of the first job that is offered. Obviously, if a man has eight weeks on full pay in which to study his position, he will look for the best possible job.

Let us not forget, either, that if he takes an inferior job at £2 a week less, then if he is about 65 years of age he will be compensated for that reduction for the next 30 weeks. If he is aged 30 to 32, he will be compensated for eight weeks. After that, he drops £2 a week. He has the chance of a short time on the old wages or the rest of his life in a contracting economy on short wages. Therefore, the fact that the compensation is not paid as a lump sum might deter people from at once looking for other employment.

The fact that a man cannot draw unemployment pay means that the industry will be subsidising the Government. If a man of about 65 is otherwise entitled to £4 a week unemployment pay but draws for 30 weeks the wages to which he was entitled, obviously he will not draw the unemployment pay towards which he has been contributing so long. That will amount to a hidden subsidy to the Government of £120. On the other hand, we can see that the compensation is being reduced by the amount of unemployment pay that he could otherwise have drawn, because if this is compensation for loss of office then he should not only draw his compensation but anything else to which he is legitimately entitled. I still think that compensation should be paid in a lump sum, because I am one of those people who feel that what is good enough for the directors is good enough for the workers. Of course, I do not mean the Institute of Directors. Nothing is too good for them!

While we are on the question of compensation, I should like to ask about the mills which have already closed. The White Paper states that any mill which closes after 23rd April is entitled to money for disposing of its excess capacity. We believe that, even although a mill may have closed before this period, it will still be entitled to claim compensation when it eventually scraps its spindles. The people who were employed but have now left the industry have no claim to compensation under the Bill. One of the difficulties, namely, the question of sacking young people because their liability to compensation will be less, obviously must operate in a different way. The older people who have left the industry because a mill has closed will no longer get employment in the industry because of the liability to a high rate of compensation should a further contraction take place. I should like to know what is being done about these old people.

There is as yet no indication about the figure per spindle for scrapping. The President of the Board of Trade said that he is not prepared to alter the Income Tax laws for the cotton industry. Prominent members of the industry have approached the Inland Revenue and have been told that the 66⅔ per cent. which is being paid by the Government will attract the standard rate of Income Tax of 7s. 9d. in the £. That means, therefore, that the Government grant will immediately be reduced. The one-third subscribed by industry will be allowed as a trade charge, but will attract tax when paid to the manufacturers or to whoever receives it for the redundant machinery.

The hon. Member for Middleton and Prestwich (Sir J. Barlow) asked whether the 25 per cent. for new machinery would attract the initial allowance. Apparently inquiries have been made and it appears that the 25 per cent. will not attract tax. At the present rate of company taxation. over a very few years the whole of that 25 per cent. will be repaid to the Government. This means that there is a very real danger that a modern mill will do exactly what has been suggested on this side of the House: it will close down, not for scrapping, and will not attract a Government grant. Therefore, there will be no need to pay compensation to its redundant employees and it will have the right to sell its modern machinery in the open market. If that happens, there is a first-class chance that the machinery will go to our competitors.

The Bill is only the first step towards saving the industry. If this is all that is to be done, we are wasting our time and we should bury the Bill decently today. In three years' time, or possibly before, because the conditions of the Hong Kong Agreement say that the Agreement can be abrogated at any time that Hong Kong feels that conditions in this country are detrimental to its trade, the Hong Kong Agreement may run out. Hong Kong has said that immediately the Agreement runs out an all-out call for freedom of activity will be made. The Agreement does not cover yarn, which is coming into this country in increasing quantities.

It is fairly obvious that one of the difficulties of the Lancashire textile industry is the amount of retained imports which are finding their way into the home market. Unless we are prepared to give a guarantee to the industry, it will think twice about spending huge sums of money. The figure of £80 million for re-equipment has been mentioned. If we pay 25 per cent. of that, or £20 million, that leaves only £10 million for scrapping and the industry will immediately have to find £60 million, or £20 million for every effective year that the Hong Kong Agreement lasts. I feel that the Government must either establish quotas on duty-free goods from the Commonwealth—I make no apology for saying that—or at least put a ceiling upon retained imports. I believe that a reorganised and revitalised industry could do this.

I should like briefly to mention a most glaring omission from the Bill, namely, the failure to link closures of mills with the provision of new industries. The President of the Board of Trade said that closures must not be regarded as an exercise in the Distribution of Industry Act. The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) said that he was very pleased that the closure of mills was not a political decision and that, although hardship may be caused, we must harden our hearts. I am not prepared to harden my heart.

This is a position which we find in Lancashire and the background against which the Bill must be considered. I should like to quote some up-to-date figures of unemployment in Lancashire from the Annual Report of the Lancashire and Merseyside Industrial Development Association. In January last year total unemployment in the North-West, mainly in the Lancashire area, was 58,000. In February this year it had risen to 104,000. More important still, whereas there were 10 vacancies for every 20 persons unemployed in January, 1958, there were only 10 vacancies for every 63 persons unemployed in February this year. My own town, Rochdale, has 3,322 unemployed and there are only 10 vacancies for every 168 people unemployed.

Against this background, we are facing the closure of more mills. The natural thing that is happening is migration. At present, migration is on a scale similar to that which we had in the 'thirties. The latest figures of insured population from 1951 to 1957, show that the South-East gained 142,000, but that the North-West, industrial Lancashire, lost 22,000. This is the human and social problem which is facing local authorities in Lancashire. We need new industries. I should like to ask the Parliamentary Secretary whether he would consider the payment of compensation to be used to recreate new industries in the areas from which money was taken.

It is all very well paying for redundant excess capacity, but it is no good to Lancashire if the money is invested in breweries in the south of England. The compensation should be used to recreate industries. As my hon. Friend the Member for Leigh said, the old mills could be knocked down, advance factories built and the Board of Trade use its powers to make people come into the factories. The people of Lancashire do not want compensation. They want work and wages, not dole.

I ask the House to remember the job that the people of Lancashire have done in the industrial development of the country, I remind hon. Members of the natural skills which are inherent in these people. They still have a great part to play and I hope that the Bill can be so altered in Committee to allow them to play that part.

8.29 p.m.

Mr. J. Enoch Powell (Wolverhampton, South-West)

This is one of those debates in which one almost feels that an hon. Member who intervenes owes the House an apology if he cannot disclose an interest, if only a constituency interest. I feel, however, that hon. Members who represent Lancashire constituencies would be among the first to agree that a Measure of this sort cannot be treated as a purely local or sectional Measure. Other industries and other areas have their own difficulties and problems and are often under severe pressure and necessity of change. Faced with a Bill in which they will be contributing to help Lancashire, it is right that the clearest indication should be given, understood and accepted of the special necessity of this Measure.

One of the aims of the Bill is the elimination of excess capacity. As the hon. Member for Ashton-under-Lyne (Mr. Rhodes) said, that is a somewhat unfortunate expression, since the White Paper makes it clear that the eventual aim is a higher capacity for the industry than its present capacity. In fact, as the hon. Member for Aston-under-Lyne said, the intention is the elimination of a great part of the existing obsolete capacity in the industry.

In its early paragraphs, the White Paper gives striking figures of the shrinkage of the industry over the last generation or so and then sets out the aims for the further elimination of capacity to take place in the next three to five years. It is of interest to compare the rate of elimination envisaged by the plan with what has been happening in Lancashire in the last three to five years. The White Paper envisages, for example, that up to 12 million mule equivalent spindles are redundant and should be disposed of: in the last five years, between 7 and 8 million mule equivalent spindles have gone from the industry. The White Paper envisages at least 70,000 looms as redundant and to be dispensed with: in the last five years, over 100,000 looms have gone from the industry.

This shrinkage is to be matched by a massive investment in the industry for re-equipment and modernisation. Several hon. Members who have taken part in the debate have pointed out that the figures in the White Paper imply a total of something like £80-£90 million over the industry as a whole. In the years since the war, in spinning and weaving alone, the new capital put in has been about £100 million and my right hon. Friend the President of the Board of Trade, in moving the Second Reading this afternoon, mentioned that in the whole of the industry the total investment has possibly been nearer £200 million. A good part of this investment, moreover, has been taking place in recent years. No less than £33 million was invested in the spinning section alone in the five years from 1953 to 1957, a figure which was given earlier by the hon. Member for Rossendale (Mr. Anthony Greenwood).

We have, therefore, to accept that the plan embodied in the White Paper and in the Bill represents a continuation of a process which has been going on and is going on still or at least was going on until the publication of these proposals. It envisages the continuation of that process at a rate which is not greatly in excess of the actual rate which has been achieved under what I might describe as natural forces.

This shrinkage in recent years under natural forces has happily, as the White Paper says, "not led to widespread unemployment". When the hon. Member for Rossendale was quoting the very large numbers of men by which the size of the industry had been reduced in recent years, this only illustrated more strikingly the success of re-absorption of that labour either into other industries in the area or into other industries throughout the country.

Mr. S. Silverman

Does the hon. Member not think from his own study of these facts and figures that the White Paper is unreasonably euphemistic on this point? He has just said that the workers displaced or lost to the cotton industry have found other employment either where they were or somewhere else. But it is not either where they were or somewhere else. In so far as they have found other employment at all, it is somewhere else. One of the tragic social and human sides of this problem, with which the Government are now so inadequately dealing, has been the depopulation of all this part of Lancashire and the wastage and contemplated continued wastage of all the social capital built up by the efforts of nearly 150 years.

Mr. Powell

I am glad that the hon. Member has now succeeded in making his third speech in this debate but I am not prepared to go into the long debate about social capital, about the relative advantage of retaining and utilising social capital, much of which is more or less obsolete, in comparison with getting a pattern of employment and industry which corresponds to the demands and needs of the present day and the emerging future.

Mr. Silverman rose——

Mr. Powell

And I am not going to give way to the hon. Member again.

In the continuation of this process of shrinkage, and even in the appreciable acceleration of it which the White Paper envisages and which the Bill is designed to bring about, the Government do not anticipate—and I hope and believe that they are right—that even at the higher rate the problems of resettlement and re-employment will be at all unmanageable.

Therefore, the question that emerges in comparing what is intended to happen under the Bill with what has happened, is happening, and presumably would go on happening through natural forces, is whether the result will be a more efficient industry. The key question must be whether what we shall have after three or five years is a better industry than the industry we should have got otherwise without the assistance of the Bill and over the same period.

Efficiency means productivity, as productivity reflects itself in a selling price; and efficiency in this sense must be the key to the industry's whole position today. A peculiarity of the situation in the cotton industry is that older machinery—obsolete machinery—remains in existence and partly or wholly in use because the gap between the productivity of the old and the new machinery has not been sufficient to offset the fact that the old machinery's capital cost is written off, and so the modern machinery could not push the obsolete machinery out of use and existence fast enough. That is a position which I believe is now changing in any case.

The O.E.E.C. published a Report two years ago on the "Future of the European Cotton Industry" in which there appeared this paragraph: In contrast with past decades, modern improvements in textile machinery, especially in spinning, are such that older types of equipment are becoming economically unusable. This factor would help to solve the problem of the over-equipment of the European cotton industry by eliminating the unhealthy effects of the output from some of the antiquated equipment. Therefore, we may hope to see the gap between the productivity of the new equipment and the productivity of the obsolete equipment widening, perhaps dramatically, certainly helpfully. But this in itself cannot be the whole solution; for it is not the lower costs of the obsolete equipment of which the capital cost has been written off; it is not the lower prices at which the output of old machinery can be sold, which lie at the root of the problems of the cotton industry: it is the still lower costs of the oversea competitor which are the reason why the industry continues to shrink and the very plant whose production can be sold at the lowest prices continues to be eliminated.

It follows that the total costs of production must be brought down if the situation which the Government envisages is to be realised. That situation is mentioned in paragraph 17 of the White Paper: an industry left, after reorganisation, capable of producing substantially more, if markets can be won. These are perhaps the most significant five words in the White Paper—"if markets can be won." If those markets are to be won, it follows that neither the new equipment in itself nor the abolition of the obsolete equipment in itself is sufficient. If that were all, the problem would have solved itself already. The solution must also require a more intensive use of the new machinery—more intensive and on a much wider scale than has been seen hitherto.

I make no apology for quoting again a sentence from the White Paper which was quoted by my hon. Friend the Member for Heywood and Royton (Mr. Leavey) because it seems to me to be essential. This sentence is in paragraph 41: The reorganisation of the industry will fail unless management and labour are willing to co-operate in the introduction of new methods and in the extended shift-working without which the installation of expensive new machinery will be uneconomic. Now the justification of this scheme, not merely to Lancashire but to the country at large, to all who are to be concerned with it, must turn upon that. It must turn upon whether we are going into this scheme with an assurance that the more intensive utilisation of the new plant will be attained; and. I may add, the assurance that if that is attained the industry as reconstituted will be fully competitive in the markets which it seeks. I do not feel that we have yet been given—I hope we shall be before we part with this Bill—full grounds for believing that this condition will be realised. I was rather surprised by the exchanges between my hon. Friend the Member for Heywood and Royton and the hon. Member for Farnworth (Mr. Thornton), from which it emerged that there is apparently no obstacle in the industry even at present to the intensive utilisation of modern machinery. But I return to the point, and I repeat, that only on the basis that this plan is the only way to achieve a modernised industry, making full intensive utilisation of its capacity, can this Bill be justified or should we seek to justify it.

8.43 p.m.

Mrs. Barbara Castle (Blackburn)

The hon. Member for Wolverhampton, South-West (Mr. Powell) has made out the most devastating case against the Bill that has been made so far this afternoon, because he has effectively summed up the contradiction which underlies the whole Government argument about it. On the one hand, there is their statement that Lancashire can survive, given sufficient help and, therefore, that they have produced a scheme which is intended, by pruning the industry and by its reorganisation, to increase output, to shrink machinery but not to shrink production, whilst, on the other hand, they state that Lancashire must accept that its markets have now gone.

Of course, we are in the paradoxical situation that Lancashire is in the doldrums at the moment because of the competition from outside. We are told by the free traders who have been addressing us from the other side of the House this afternoon that it is impossible and intolerable for us to regulate that competition. They say that we must accept it.

We are all well aware that the agreement with Hong Kong is merely a temporary breathing space, but the Government, in using this period, as they say, to contract the industry, nonetheless admit that the very process of so-called contraction will at the end of the three years leave us with exactly the same output as at the beginning. We therefore have, in my view, a ludicrous situation. We are offering Lancashire a scheme of reorganisation which will not only cost the taxpayer £30 million over five years but will also cost the industry itself a good deal of money. We are asking the industry to make that investment in order to meet a situation which in three years' time will be just as crucial as it is now, because in three years' time the voluntary agreement about cheap imports will have ended. We are therefore asking the textile industry of this country to make an investment in itself at a higher rate than in the postwar boom and to do that when its prospects are not of boom but of a resumption of intolerable, cheap competition in three years' time.

I was very much alarmed by the final logic of the hon. Member for Wolverhampton, South-West, because, if I followed him correctly, he said that the only way in which the more efficient industry could survive at the end of this reorganisation period was by more effective use of its labour.

M. Powell

Its equipment.

Mrs. Castle

Certainly, but by the more intensive use of its labour.

Mr. Powell

No. A more intensive use of the equipment which spreads the capital cost over a greater amount of production.

Mrs. Castle

The two must go together.

Mr. Rhodes

Not necessarily. One could introduce easier labour conditions.

Mrs. Castle

The intention is to introduce a three-shift system. Many lectures have been given this afternoon on the need for labour, in working the machinery, to operate more intensively and to get the maximum out of it. It is recognised that a three-shift system puts more duress on labour than a single-shift system. I am married to a journalist who is a night worker, and I know what stress persistent night work is on a worker, apart from the obvious ancillary hardships on the domestic side. It is because of that problem that there is a natural resistance by the operatives to a three-shift system.

As my hon. Friend the Member for Farnworth (Mr. Thornton) pointed out earlier, there has been a remarkably progressive attitude by the trade union movement to the need to recognise that the traditional attitudes towards a single-shift system must be reconsidered with the introduction of more modern machinery and the reorganisation of the industry. I believe that the trade unions have been well ahead of management in their modernness of mind in facing the textile industry's problems since the war, but, even so, the logic of the speech of the hon. Member for Wolverhampton, South-West was that unless we get as much out of our labour as is being obtained in the areas from which we suffer intensive cheap competition, then we shall be no better off at the end than we were at the beginning.

I agree with the hon. Member for Wolverhampton, South-West that we face the very dubious prospect that this scheme will solve the problems of the cotton industry. I agree with my hon. Friend the Member for Rochdale (Mr. McCann). I do not believe that it can be taken on its own because there is no way of building the basis of confidence on which the industry will be prepared to invest its share of the cost of reorganisation as long as there is the knowledge hanging over the industry that, in the words of The Times leading article some few weeks ago, the purpose of this scheme is to enable the industry to stand on its own feet when the voluntary agreements for the limitation of imports come to an end.

The Times visualises that the agreement with Hong Kong is purely temporary and that a situation will develop when an uncontrolled flood of free imports will come in, whether we like it or not. That is not the basis on which any industry can build a future with confidence. I see no reason to believe that the industry which failed to reorganise and re-equip satisfactorily in the post-war boom period is likely to do it now. We on this side of the House strongly supported the movement for the reorganisation and re-equipment of the textile industry. The Labour Government gave the lead in 1945, and I remember when I was Parliamentary Private Secretary to Sir Stafford Cripps at the Board of Trade that it was a terrific job to persuade the textile industry to re-equip and take advantage of the subsidy that was offered to it.

The response was unfortunately such that the industry was far less well equipped to meet later intensive competition than it otherwise would have been. Certainly any demands to stimulate re-equipment and reorganisation of the industry will receive the maximum support from this side of the House. If the textile machinery industry of this country had had to depend solely on the enthusiasm of British cotton manufacturers to re-equip we should have had redundancy in the industry far earlier than we did.

I know that the Board of Trade went to British Northrop Ltd., the automatic loom makers in my constituency, and more or less instructed them to reserve some of their capacity for the home manufacturer. This was because the firm found a bigger response from our overseas competitors for their machinery than they were getting from British manufacturers. The firm's response was, "If you expect us to deny our export markets in order to concentrate on British home cotton manufacturers, then you are expecting us to starve."

I would be the first to welcome any real response by the cotton industry to the opportunity which is being given to it. The tragedy is that if the cotton industry declines it drags down with it the textile machinery makers in the country as well. It means a double dose of redundancy in areas where employment depends on this kind of industrial activity. Since the war, British Northrop Ltd. has faced a tremendous slackening off in the demand for automatic looms. It has been increasingly unable to sell these looms abroad because of the development of competition in textile machinery there, and its inability to sell them to the British manufacturer who has increasingly got into the doldrums with the growth of the cheap competition in cotton goods from abroad.

Nothing will be more welcome to these firms than if the cotton industry takes advantage of this scheme. After the war British Northrop Ltd. deliberately expanded its capacity to make automatic looms in order to meet the post-war boom in the cotton industry. Its capacity for making automatic looms amounts to between 8,000 and 9,000 a year. Unfortunately, in recent years its production has been running at only 2,000 or 3,000 a year.

If this re-equipment takes place under the provisions of the White Paper and the Bill at the level visualised by the Government, and if the British cotton industry at last makes itself fully or nearly fully automatic, with the prospect of a demand for about 40,000 more automatic looms spread over five years, the capacity is available, ready and waiting to be used, in British Northrop Ltd. The firm could meet the demand from its own resources. I am not saying that it will have a monopoly, but it has the capacity to meet the demand.

The firm realises that firms taking advantage of the scheme should be able to buy their machinery anywhere in the world. It is obviously also desirable that if no equivalent British machinery is available the machinery required to reorganise the industry ought to come in from abroad. But it would be an ironic development if, at the moment when the reorganisation plan for the cotton industry was giving new hope of revival to the automatic loom industry, and when the reorganisation of the cotton industry was being made possible not by the ordinary activities of private enterprise but as a direct result of Government financial help and interference in the industry, the Government should plead for an extension of laissez faire economics and expect the British textile machinery industry to accept an extension of competition from overseas in order to enable cotton manufacturers to get the best of both worlds.

As a result of the activities of the President of the Board of Trade in relaxing importt quotas on goods from America and liberalising trade with that country there is a little anxiety that his pro-American enthusiasm will run away with him and that it will be the American machinery manufacturer who will get the benefit of this Government interference in the British cotton industry. That is why I asked the President of the Board of Trade for an assurance about the maintenance of tariffs on American machines. I was clad to have an assurance from him on that point.

There is one further point which may be of value to the President. Clearly, this putting of Government money into the industry in order to re-equip it will, if it succeeds, lead to a big new demand for textile machinery. It could, therefore, lead to the exploitation of the situation by the textile machinery makers, for example, by pushing up the prices. Sometimes when public money is involved people do not count the cost as carefully as they might.

I was glad to hear from British Northrop Ltd. that it has given an undertaking to the Cotton Spinners' and Manufacturers' Association that it has no intention of inflating the prices of new plant required under the reorganisation scheme; that it will maintain current prices for automatic looms at the present level which was established in January, 1958. The firm points out that if, because of wage awards or changes in the prices of raw materials, there has to be some adjustment in prices, it is prepared to undertake that a formula for price adjustment shall be agreed between the firm's accountants and those of the Association. I think that a fact well worth the notice of the House, and I believe it a condition which ought to be applied by the Board of Trade to every manufacturer of textile machinery.

Mr. Deputy-Speaker (Sir Gordon Touche)

Mr. Thornton.

Mr. S. Silverman

On a point of order, Mr. Deputy-Speaker. I do not know whether you can assist me, but I think that I ought to put this point to you. I represent a constituency in which two out of every three of my constituents who work at all work in the cotton industry. Their livelihood is being taken away by this scheme to an extent which is not paralleled in any other part of the country——

Mr. Deputy-Speaker

Order. That matter cannot be discussed on a point of order.

Mr. Silverman

Perhaps I can finish my point, Mr. Deputy-Speaker.

The point I am putting to you is that the arrangements for the debate have been so handled that my constituents are deprived of any voice in the matter at all. While it may well be——

Mr. Deputy-Speaker

Order. We cannot discuss that matter on a point of order.

Mr. Silverman

I am not discussing it.

Mr. Deputy-Speaker

It cannot be mentioned as a point of order. It is not a point of order.

Mr. Silverman

I do not know whether it is or not, as I have not yet finished, Mr. Deputy-Speaker. All I am saying is that I should not consider it consistent with my duty to my constituents if I did not put the point to you and register my emphatic protest.

Mr. Deputy-Speaker

That is not a point of order. Mr. Thornton.

9.2 p.m.

Mr. Ernest Thornton (Farnworth)

It will be difficult for me to speak on this subject without emotion, because if this scheme be fully implemented it will cut deep into the social life of the people among whom I have lived and worked for many years. But I will attempt to make an objective assessment of the scheme and of the points which have been raised, and voice my criticism of the Bill.

The Bill has had a rather remarkable reception. The views expressed have ranged from tepid enthusiasm to cautious pessimism. As I see it, the Bill is a belated and not a very good attempt at planning. We are to have a first phase which lays down that an agreement for compensation for operatives must be reached. Then we pass to a second phase, providing for compensation in respect of machinery which is scrapped. If sufficient machinery is scrapped to satisfy the Board of Trade, we move to the third phase, providing for 25 per cent. Treasury grants towards the cost of modernisation and re-equipment.

There is no guarantee that phase three will be reached, yet the success of the scheme, from the point of view of the long-term interests of the industry, depends entirely upon that phase being reached and fulfilled. I think that there is a danger of a repetition of the situation immediately before the war, when the Cotton Spindles Act resulted in wholesale scrapping with little or insufficient re-equipment. It is good to know that the Government are being slowly converted to the need for industrial and economic planning in a modern world.

If social chaos is to be avoided, further attempts at planning must be introduced. There must be a phasing of the mill closures if there is to be a chance of a smooth reabsorption of labour. There must be also a balance of mill closings. The President of the Board of Trade very rightly called attention to the peculiar structure of our industry, to its predominantly horizontal structure, which makes it very important that there should be a balance of mill closures among the spinning, doubling, weaving and finishing sections.

Thirdly, there must be a dispersal of mill closures. It may well be that half the mills in one community will be closed and only one-quarter in another. Suppose the Government's objective to be that one-third of the mills be closed. The closing of one-third of the mills in one community where 60 per cent. of the operatives are dependent upon the industry will cause far greater social problems than the closing of one-third of the mills where only 30 per cent. of the operatives are engaged. In the first case, 20 per cent. of the insured population would be affected and in the second case only 10 per cent.

Fourthly, there must be far more specific and energetic efforts to get new industries into the cotton area. That point has been made, at least from this side of the House, and I do not intend to pursue it much further.

The Bill is a marked indication that unrestricted private enterprise is no longer a going concern. Even a Tory Government have to intervene more and more in the working of the so-called private enterprise and free competitive system. About £30 million is to be found for this declining and contracting industry, but my hon. Friend the Member for Rossendale (Mr. Anthony Greenwood) called attention to the fact that an even bigger amount had been found for the expanding industry of steel. If the steel industry does not expand rapidly we can say goodbye to the United Kingdom as an industrial Power of any significance.

This queue for public assistance is to be joined, I understand, by the Cunard Company, by the de Havilland Aircraft Company, and by shipyards which hope to build the first atomic-powered merchant ships; and, indeed, there are others. It is worthy of note that neither in cotton nor in steel is it proposed that the Treasury should share in the profits made, in the capital gains or the capital appreciation. Whether Government supporters like it or not, the fact is that, in the second half of the twentieth century and throughout the Western world, Governments are having to interfere more and more in the control of industrial and economic affairs. Public money is having to be made available not only to help declining industries, but to buttress expanding industries.

In case West Germany should be given as a shining example, let me quote from the Manchester Guardian of 10th February, a report which said: The West German Federal Assets Ministry has decided to grant long-term credits to West German textile firms to facilitate their modernisation. A Ministry spokesman said that the credits would be worth between … about £6,350,000 and £9 million sterling. One of the reasons given for this modernisation was that Germany is also feeling the effect of cheap imports of Asian textiles. The growing scale of public funds made available for economic and industrial expansion in the underdeveloped parts of Asia and Africa is a further indication that the private profit motive is no longer meeting the challenge of the twentieth century.

The size of the operation that the Bill and the White Paper envisage is a measure of the Government's long neglect of the problem of the Lancashire textile industry. My right hon. Friend the Member for Huyton (Mr. H. Wilson) referred to it as a confession of failure. I think that he was right. The scheme envisages a cut-back in operable machinery of about one-third. If that be so, about one-third of the operatives will lose, or have to change, their jobs. If one-third of the milk are closed, one third of the operatives are likely to have to move or change their jobs.

Mr. Shepherd

Is the hon. Member not overlooking the fact that this means that men will have to work a double shift instead of one shift?

Mr. Thornton

I said that they would either move or change their jobs. They will be involved in a change of job. I do not think that there can be any doubt about that. I am not suggesting for a moment that it will mean all these people will be out of a job, but I assert that the effect will be partially to reduce partial unemployment and to increase the number wholly unemployed.

Mr. Shepherd

Does the hon. Member not realise that if men now working one shift work a double shift, it is quite conceivable that while one-third fewer mills are used even more men will be employed than at present?

Mr. Thornton

The volume of production which the Government envisage is likely to be the same and the same amount of manpower will be needed. The process of redeployment with the production of new machinery and more shifts will be a slow process—the Government expect that it will take about five years.

Another factor is that this problem of unemployment and under-employment has been reduced to a considerable extent by the depopulation of and movement away from industrial Lancashire. Although I am not for a moment suggesting that movements of population should not take place, the figures I shall give indicate that the movement has now assumed alarming proportions and will be responsible for the creation of near-derelict areas in certain parts of Lancashire.

Since 1911, the population of England has increased by 26½ per cent. In the seven years since 1951, the population of England as a whole increased by 3.3 per cent. Taking seven of our principal cotton textile towns, Oldham, Rochdale, Blackburn, Bolton, Burnley, Nelson and Colne, since 1911 the population of those towns declined by 16½ per cent. We should match that against an increase of population in England as a whole of 26½ per cent. to get an indication of the degree of social stagnation in that area. Since 1951, the population of those seven towns has declined by 4 per cent., which, again, we should set against the increase of population in the country as a whole of 3.3 per cent.

The point I make is that between 1911 and 1921 those seven towns lost 16,000 in population. In the next ten years, between 1921 and 1931, the population fall was 12,000. There was no census in 1941. but in the seven years 1951–58 those seven towns lost 24,000 population. That is almost as many as in the twenty years between 1911 and 1931. This depopulation has accelerated rather steeply during the last seven years and there are all the dangers of social decay entering into this part of Lancashire.

I do not want to go into the problem of local government and over-age population. The mayors of many Lancashire boroughs have made numerous representations to the Government. Just as in the last seven years the cotton towns had their most rapid rate of loss of population, so, during the same period, there has been the most rapid rate of decline in the size of the industry. During those seven years, the employed personnel has declined by over 100,000, or about one-third. This is, indeed, an alarming rate of decline and is perhaps without parallel in British industrial history.

As has been stated from both sides of the House, the long story of decline is due to loss of exports. In recent years there has been added to that the increase in imports, and the reason for this accelerated rate of decline has been because these two factors during the last seven years have overlapped. We have had a continual decline in exports and also an increase in imports.

It is not without significance that 1959, the year of the General Election, has been chosen to proffer monetary aid to this hard-pressed industry. It has been apparent since 1952 that the industry was in need of some special help. On several occasions since 1952 the Opposition have tabled Motions on the problems of the Lancashire textile industry and pressed for specific action. It is true that the Government, during the last several years, have taken specific steps. We have had the Bill to wind up the Raw Cotton Commission. Did that help? It certainly did not.

Then we had the reopening of the Liverpool Cotton Market. Were it not so tragic it would be a joke. It is apparent that even spinners who supported the winding up of the Raw Cotton Commission now agree that they made a bad blunder. They are completely uncovered and take appalling risks during the period of falling prices. We then had from the Government the Japanese Trade Agreement. That may have helped the trade of the United Kingdom as a whole and the trade of the sterling area as a whole, but it certainly has not helped Lancashire by any means.

I do not for a moment suggest that Africans and other Commonwealth people should have been compelled to pay higher prices for Lancashire goods while cheaper Asian goods were available, but there could have been a more effective phasing so far as the textile industry was concerned by this Japanese Trade Agreement and it had a very damaging and sharp effect on the export trade. Then we had the Government's delay in dealing with Purchase Tax, to which my hon. Friend the Member for Rossendale referred, and also the ending of the Yarn Spinners' Agreement.

That certainly did not help Lancashire. I am not one who was a 100 per cent. supporter of this yarn price maintenance scheme—not by any means. I think that the spinners overplayed their hand, but an emendation of the Agreement and some measure of control by the Board of Trade, rather than ending it, was needed. Then we had the Government's procrastination for three or four years in not even making an attempt to deal with the very real problem of duty-free and quota-free cotton textiles from low-wage Asian Commonwealth countries.

The voluntary agreement emerged. Perhaps that would have been a satisfactory solution if it had been brought about two or three years ago when a far better bargain could have been struck, but the present undertaking with Hong Kong, in the opinion of most leaders of both the employers' and the trade unions' sides, is a little better than nothing. I do not take so harsh a view, because of the sudden emergence of China in the cotton export field, but I assert that had the Government exerted their influence as strongly in 1956, just after the 1955 election, as they did in 1958, just before the expected 1959 spring election, a far better agree merit could have been reached.

That is the record of the Government's failure, procrastination and neglect. Since the Conservative Government came to power in 1951 the labour force has declined by one-third, the steepest rate of decline in the industry's history. It would not be correct to say that all this is the responsibility of the Government, but it is an understatement rather than an overstatement to say that a large part of this responsibility rests upon the Government benches.

Let me quote Mr. Roger M. Lee, chairman of the Lancashire Cotton Corporation, the largest of the Lancashire textile organisations. It is reported in the Textile Weekly of 20th February that he said that he was apprehensive of the Government's announcement of proposed help for the cotton industry. Past efforts by the Government on the industry's behalf had not been very helpful to the industry and the recent announcement could well continue "this melancholy record."

After all this delay and neglect, why did the Government produce this big financial inducement at this time? Perhaps the answer was given on 13th February by the Textile Weekly editorial, which read: Sir David Eccles announced at long last that some form of Government assistance to the cotton industry was contemplated. … needless to say, the announcement has been received in Lancashire with a significant calm. The reasons for this are fairly clear. To begin with, there is the imminence of a General Election, and however strenuously Mr. Macmillan"— Mr. Macmillan, by the way, is the Prime Minister— may exert his personality to deny the connection most people in textiles will find his conversion too late to inspire much in the way of conviction. The Textile Weekly is not a party pontifical journal, but the official organ of the National Federation of Textile Works Managers' Associations.

May I return quickly to the three phases of the Bill, although I have time to deal only with the first, which is the question of compensation for operatives. Do the Government intend to wash their hands of this important aspect of the problem? It is an aspect which in the opinion of the Manchester Guardian is more important than that of scrapping machinery and re-equipment. On 14th May the Manchester Guardian said: It is to be a condition of the Government grant that compensation is paid to men and women who lose their jobs when mills close, on terms to be agreed between employers and trade unions. In many ways those terms—still to be fixed—are more important than questions of compensation for scrapping machinery or grants for re-equipment. It continues: …but it remains strange that the expenditure of large sums of public money should he left dependent on private arrangements. The Government should insist that the proposed terms of compensation must be approved by Parliament as well as by the unions. There is also the principle involved whether compensation to operatives should be based on lump sum payments or on weekly supplements. The Economist, of 23rd May, said: Should compensation cease or be reduced when a worker gets another job? The treatment of labour should be on the same footing as capital. Shareholders in mills that are compensated for closing down will be able to put their capital to work elsewhere, and an executive is compensated for loss of office irrespective of subsequent employment. I suggest that the same principle should be observed now in Lancashire. Just as capital will be compensated without conditions, labour also should be compensated without conditions. I warn the Government of the disincentives to accepting employment which will result from weekly payments of compensation. The disincentives themselves should really be a sufficient objection to the scheme.

I understand that employers are being rather sticky in their negotiations on this point. They are being sticky about accepting the principle that workers should be compensated on the same basis as their own shareholders and directors. I hope that the Government will use their influence. Much public money is involved. I know that it is involved only indirectly so far as compensation for operatives is concerned, but an important principle is involved. The Government should not avoid their responsibility and hand it over to outside bodies. Parliament should have an opportunity of at least considering and approving the principles involved in these compensation settlements.

The Lancashire textile industry has many faults. It has had many shortcomings and failures, but I think that there have been many misconceptions about it. There is a misconception that it is a totally out of date and inefficient industry. I agree that much of our plant is obsolete and out of date and that redundancy and scrapping are needed over a fairly substantial sector, but our best mills, operating with new equipment and on shift systems, are as good as any in the world.

In the immediate post-war period, as has been stated in the House, Lancashire made an invaluable contribution to Britain's export drive. Members on both sides will remember the slogan, "Britain's bread hangs by Lancashire's thread." That was virtually true in those difficult post-war years. From 1946 to 1949 exports of cotton yarns and fabrics from the United Kingdom ranged from 6.9 to 8.9 per cent. of Britain's total visible exports.

In 1958, exports of motor cars, which have been boosted so much—I do not denigrate their contribution—totalled only 5.6 per cent. of total visible exports. Therefore, the motor industry has not yet matched Lancashire's contribution in the export drive in those vital years. During that period in the national interest the industry was over-expanded, and it is true to say today that the nation has failed Lancashire rather than that Lancashire has failed the nation.

This Bill is not an effective answer to Lancashire's problems. It leaves unanswered the problem of uncontrolled imports of cheap Asian textiles. It has been said over and over again from the other side of the House that we have to accept that competition, but the fact remains that no other country does so. America does not—she limits Japanese textile imports to about 1½ per cent. of United States production. This problem is a very serious one in Lancashire, as these imports now amount to about 20 per cent. of Lancashire's production.

The Bill leaves unanswered the problem of the heavy losses due to falling cotton prices—the spinners having no cover. It does not ensure that re-equipment will take place in the right place and on a large enough scale, nor does it ensure that it will be the inefficient and not the relatively efficient mills that will go out of commission. It does nothing to ensure more verticalisation; more effective merchanting.

It does nothing to safeguard the small village and township communities, of which there are many, dependent on one, two or three textile mills, and the encouragement that this Measure gives to closure will result in serious social problems and social hardship. Finally, it does nothing to promote a matching scheme for bringing new industry into those areas to take the place of the old.

Anybody who, in December last, read an article in the Manchester Guardian entitled, "A Cotton Town In Slow Decay", must have been moved by the problem there developing, and I want to close my speech with the closing words of that article. It was written by the newspaper's industrial staff, and ends: To people of the mill towns, talk of the building of new towns when there are old ones with all amenities and services readily available and no housing shortage, seems wasteful folly. In towns where there has been no major labour trouble for more than thirty years, and where the people belong to a distinctive community rich in traditions of skilful and honest work, suggestions that industry will not move to them because ii fears disputes are plain nonsensical. 'They are the salt of the earth, these people,' said one local employer. 'Don't be deceived. We can't do without them.'

9.33 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. John Rodgers)

All who have listened to this debate will have been struck by the constructive and realistic nature of the speeches delivered from both sides of the House. They have been based on specialised and intimate knowledge of the industry, as well as of the problems of Lancashire as an area.

In particular, on behalf of my right hon. and hon. Friends, I should like to offer congratulations to the hon. Member for Farnworth (Mr. Thornton) on his first appearance at the Dispatch Box. We always listen to him with great respect and interest—though not always with agreement—because of his knowledge of the industry and also, if I may say so, because of his great humanity and his integrity. I hope that we shall often hear from him again from that Dispatch Box——

Mr. James Griffiths (Llanelly)

And from the other one.

Mr. Rodgers

Later on—perhaps.

We were also interested in the speech of the hon. Member for Rossendale (Mr. Anthony Greenwood), but for once he came out of character and, far from being his usual charming and optimistic self was, as my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) said, a positive Cassandra. He admitted that the industry had to undergo a measure of contraction and, because of that, accepted this Bill with reluctance and qualified approval. He was, in fact, excessively pessimistic and gloomy.

He was not, however, so gloomy as his hon. Friend the Member for Stalybridge and Hyde (Mr. Blackburn), who said that this was not an attempt to revive an industry but was merely making its death throes less unpleasant. If that is really the belief of some Lancashire hon. Members opposite in the future of one of the county's great industries, I hope that they will get in touch with the leaders of the trade unions and management, and revise their views of the future prospects of the cotton textile industry.

Whatever disagreements there may have been about the Bill and its timing, there is, I think, general agreement about the seriousness and complexity of the problems facing Lancashire and the cotton industry.

As has been said by several hon. Members, I believe that there were three courses open to the Government. First, we could have relied on laissez faire. We could have allowed market forces to determine the speed and nature of the contraction. We believe, however, that this would have been an undue hardship on the workers affected, and, in any event, if any reorganisation scheme were to be effective, speed was the essence of the matter. We therefore rejected the laissez faire approach.

The second course open to the Government was to adopt virtually a Government takeover, as outlined in the Wilson plan, which envisages Government control and compulsion. This is unacceptable to hon. Members on this side and to the industry and as my hon. Friend the Member for Preston, South (Mr. Green) said in a forthright and sensible speech, it was therefore rejected. I think that even the Labour Party, if they look at the plan again, may have some doubt about adopting it as their official plan for the reorganisation of the cotton industry.

The third course open to the Government, and which we have adopted, was to introduce an enabling Bill in order to allow the industry to make itself compact, efficient and creditworthy. As my hon. and learned Friend the Member for Bolton, East (Mr. Philip Bell) said in his brilliant speech, this is a kite which has been flown by the Government in a sense to test the confidence that the cotton industry has in itself. We have adopted this course because we believe that Lancashire will respond to the challenge.

Many hon. Members have asked why the cotton industry qualifies for special governmental help. Was it because it is one of our oldest industries; was it because it was the first major industry to suffer from cheap Commonwealth imports; was it because it was peculiarly organised and horizontally stratified; or was it because it was concentrated largely in one area? It is the combination of many special factors which make the cotton industry's problems unique.

It may well be, as the hon. Member for Rossendale said, that the industry has been ultra conservative. It may well be, as my hon. Friend the Member for Heywood and Royton (Mr. Leavey) said, that management must pull up its socks. I do not think that he used those exact words, but he thought that management could improve its efficiency. It may well be, as the hon. Member for Ashton-under-Lyne (Mr. Rhodes) said, that in the past the industry has bought the wrong sort of machinery. All those things may be true, but I think that Lancashire has been the victim of circumstances largely outside its own control, in particular, the worldwide tendency for newly industrialised countries to embark first on cotton textile industries in their move towards industrialisation.

It is desperately easy to criticse Lancashire—as a Yorkshireman I have often done it—but I am not sure that criticism comes well from certain other industries which have not suffered the same impact from world forces as Lancashire. Those who criticise the cotton textile industry should ask themselves in all fairness whether in similar conditions they would have done any better. Most people recognise that this industry has been subjected to special pressures, not only in the last few years—they have been intensified as the hon. Member for Farnworth said—but it has been a gradual process over fifty years, as any study of the industry will show.

It is a fact that we are now taking a special and, we hope, imaginative step in order to attempt to create an industry which can compete in existing world conditions. It may well be, as my hon. Friend the Member for Preston, South, said, that if Lancashire misses this opportunity it may forfeit for ever its last chance of recovery. This was also the note struck by my hon. and learned Friend the Member for Bolton, East. I am sure that this is something which the industry will ponder about and will, if it has any sense, take speedy action to implement.

My right hon. Friend the President of the Board of Trade said that I would deal with re-equipment grants, textile machinery, taxation and problems relating to distribution of industry. I will deal with those matters now. If there is enough time, I should like to take up one or two points raised by hon. Members on bath sides. However, some of them will be better dealt with in Committee.

I should like first to deal with the all too human problem of the operatives and employment and unemployment.

While the streamlining of the cotton industry will, we hope, lead to greater output and stability, and, we believe, also to mare security and better terms for the workers, there is no doubt, as the hon. Member for Farnworth said, that a number of people will suffer either from complete loss of employment, at least for a certain period, or, in some cases, from being forced to take less well-paid jobs.

The hon. Member for Rossendale asked whether I could give an exact estimate of the number of people who were likely to be displaced under the reorganisation scheme. It is impossible to estimate the number of people who will suffer loss of employment under the scheme. Much will depend on the period over which the scrapping of machinery takes place. Much will depend on the state of the trade generally throughout the country as well as in the cotton industry. Another unknown factor which makes assessment impossible is the localities in which the mills to be closed down are situated. We shall not know this until the detailed schemes are submitted to that Board of Trade. Therefore, I cannot hazard a guess.

Our object, as we have pointed out, is to increase and not reduce the total production of the industry and to enable it to reduce short-time working and offer increased and more secure employment in the mills that remain. In some areas, the number of jobs will actually rise as a result of the greater concentration of production. The alternative to organised arrangements for contraction with provision for the compensating of workpeople would be a more protracted but, in the long term, even more painful rundown in which more mills would go out without any assurance that those who lose their jobs under these conditions would get any compensation.

Furthermore, much of the excess capacity estimated to exist in the industry is already out of use. It is, in fact, as several hon. Members pointed out, obsolete or obsolescent. The total number of mule equivalents idle in the spinning section is today 7.75 million, compared with the White Paper estimate of excess capacity of 12 million, and there are comparable figures for the rest of industry. Therefore, I do not quite agree with the hon. Member for Farnworth when he said that a shutting down of one-third of capacity necessarily means a reduction of one-third in the employment force, because this is not so. A good deal of the capacity which would be eliminated is already idle.

Mr. Thornton

My point was that if one-third of the mills were closed, one-third of the operatives would have to move their jobs.

Mr. Rodgers

That is not so. I do not accept that argument. Perhaps I may continue it privately afterwards with the hon. Member. We do not believe that the number of people who will be thrown out of work will be very high, but we recognise that there will be cases of hardship, particularly in the mule spinning section and among workers nearing retiring age, who might find it difficult to obtain other jobs.

It has been argued by the hon. Member for Farnworth and by the hon. Member for Stalybridge and Hyde that it was wrong that the Government should be paying public money to employers for scrapping machinery, but not to employees who were thrown out of work as a result of the scrapping. This criticism is based on a complete misconception of the Government's proposals.

We believe that the method we have adopted is sound in principle and will prove effective in practice. As the hon. Member knows, we have insisted from the outset that a condition of the Exchequer grant for schemes for getting rid of excess capacity and for re-equipment is that compensation must be paid to the displaced operatives under arrangements for the particular sections settled between the employers and the trade unions. I do not see how we could have better safeguarded the workers' interests than by trusting to the established method of industrial negotiation and laying down as an indispensable condition that the arrangements must be in full agreement with the unions.

Mr. Douglas Jay (Battersea, North)

Can the hon. Gentleman say why that indispensable condition, which was specified in the White Paper, has been omitted from the Bill?

Mr. Rodgers

It is not relevant to the Bill because my right hon. Friend has laid this down as a condition of acceptance of any scheme submitted by the various sections of the Cotton Board. Therefore, it is not really relevant.

Mr. Jay

Is there any reason why it should not be clearly included in the Bill?

Mr. Rodgers

I will look into that point, if I may.

We must also safeguard the interests of those employees who are not members of trade unions, and this has not been mentioned today. I am glad to inform the House that, while the details are still to be worked out, the industry has assured the Government that such employees, who are managers, foremen, overlookers or clerical workers, will not suffer by reason of the fact that they have no representative body to speak for them. There was some discussion by various hon. Members as to whether redundancy payment should be by lump sum, weekly payments or combinations of both. These are all matters for negotiation between employers and trade unions, and I think that we can leave them there. At the moment we do not anticipate trouble. Obviously—and it is a very important and relevant point which hon. Members on both sides of the House have made—there is need for new industry to come to Lancashire to replace the mills that will be closed down.

Mr. Holt

Would the hon. Gentleman tell the House what the Government's policy will be if not sufficient a number of mills decide to close down to reach this target of so-called excess capacity, for instance, in spinning of 12 million spindles? Does the whole thing fall by the wayside? It is clearly stated in the White Paper that the essence of this scheme is that the elimination of excess capacity must be assured before modernisation starts.

Mr. Rodgers

It is true that it is one of the conditions, but we have to wait and consider what is to be done in an eventuality like that. We cannot anticipate, in winding up the debate, what would actually obtain in those conditions.

I was talking about the need to diversify industry in Lancashire. First of all, we must not overlook the great diversification in the economy which has already taken place in the area in recent years. While the Government are determined to do all they can to help the cotton belt, it would be quite wrong to give absolute priority to this area over all the rest of Great Britain. I could give plenty of reasons and prove that there are other areas actually suffering more than this area. Alongside this scheme we shall use our negative powers to refuse I.D.C.s in congested areas, combined with the incentives which we have to offer under the 1945 and 1958 Distribution of Industry Acts, and we shall do our best to steer new enterprises to Lancashire and particularly to the cotton belt.

Up to now our efforts have not been too lacking in encouragement. Many new enterprises have started in recent years in Lancashire. One gets a wrong picture if one takes the attitude of the hon. Member for Rossendale, who merely quoted the numbers of those employed in factories built by the Government rather than the whole employment picture since the war. Several well-known firms have established themselves in the North-East Lancashire Development Area, for example, and now employ many hundreds of workers.

To name only two, there are the Michelin factory at Burnley and the Mullard factory, which has already had an extension and is now contemplating a large new and separate venture at Padiham which is eventually expected to employ about 1,000 people. In the Wigan district, at the other end of the cotton belt, there is a Reed factory making cardboard containers and the new Heinz factory which opened only a fortnight ago at Kitt Green. These are outstanding examples of successful steering which are already providing employment in industry.

There are others in the pipeline. Let me name a few: Burco Dean are expanding at Burnley and we are seeing whether we can help with a rented factory. Hebe-Jacqmar has taken an empty mill also at Burnley. And Corah has moved over the Pennines to Rochdale. These three alone will provide employment for approximately 1,800. The D.A.T.A.C. list includes the North-East Lancashire Development Area, Accrington, Blackburn, the Oldham district and the Rochdale district. Firms setting up or expanding in any of these areas can apply for financial assistance, and in North-East Lancashire they can also get factories built for them in some cases.

The hon. Member for Rossendale was scornful of what D.A.T.A.C. had done for the cotton belt and said that up to now nobody had had money from the Treasury to set up or expand there. These towns were only added at the beginning of the year, and there are now 21 applications being examined from that area. If unemployment, unfortunately, should get worse in any of these areas, we shall undoubtedly look at the matter again as to what further action will be required.

We do not believe that the whole area should be scheduled as a Development Area, but there is one place in the cotton belt which I propose to add to the D.A.T.A.C. list as from today. That is Todmorden. Though it is in Yorkshire, it is adjacent to the North-East Lancashire Development Area, and many who live in it travel to Lancashire for work. It is in a high degree dependent on cotton and is not well placed for finding alternative work. I regard this as a proper tidying-up of the boundaries of the area and one which will be welcomed by the district.

Mr. Douglas Houghton (Sowerby)

May I thank the hon. Gentleman very much indeed?

Mr. Rodgers

The limiting factor for attracting industry to an area where there are factory buildings available is how many firms there are with plans for expansion and the capacity to expand. The Government have taken steps to reflate the economy and bring about greater confidence. We hope, therefore, that there will be a greater number of projects which we can steer and that Lancashire will share in what we hope will be a greater number of industries on the move. We shall certainly watch the position, but we reject the idea put forward by the hon. Member for Rossendale that the whole of Lancashire, and part of Cheshire, should be a Development Area. That would not allow us to concentrate on providing help in the worst hit districts, in our view.

Mr. Anthony Greenwood

I did not say the whole. I said the greater part.

Mr. Rodgers

I am sorry, I stand corrected.

Now a word about the re-equipment grants, to which reference was made. As the Bill makes clear, these grants refer to machinery and equipment. They do not extend to buildings. We recognise that some firms will want new premises. Others will be able to adapt existing buildings. The view of the Government is that already the measure of financial assistance offered is generous, and if we are successful, as we hope, the industry should once again become creditworthy and have the confidence itself to raise the necessary capital for buildings. Therefore, we do not accept the sugges- tions put forward by the hon. Members for Leigh (Mr. Boardman) and Rochdale (Mr. McCann).

Now a word about taxation. As regards the taxation of compensation payments for scrapping machinery, the position is that a number of discussions have already taken place between representatives of the industry and the Board of Inland Revenue. Those discussions are still proceeding, but I understand that it is not anticipated that any major difficulty will arise in this regard.

With regard to textile machinery, the Government have been in touch with the textile machinery industry, and the manufacturers are confident that they can meet all reasonably phased demands by the industry without jeopardising their export markets. We do not insist that all machinery should necessarily be British, but obviously the greater part of it will be made in these islands. What is essential, as the hon. Gentleman the Member for Ashton-under-Lyne so truly said, is that it should be the best machinery for the purpose. The only place at which I part company with the hon. Gentleman in this regard is that I do not believe it is for the Government to say which is the best machinery. That is for the industry to say. So we reject his idea of withholding payments unless specific machines are bought.

All the speeches have shown a deep appreciation of the serious difficulties which have progressively faced the cotton industry. They affect not only the happiness and livelihood of the people employed in that industry, but they have great economic and social consequences for the communities in Lancashire which are still, alas, all too dependent on cotton as their main source of wealth and employment.

The circumstances of the cotton industry are, we believe, so exceptional that the Government feel fully justified in asking Parliament to agree to assist it financially. Without such help, we believe there is no prospect in the foreseeable future that the cotton industry can be made compact, up-to-date, fully efficient and able to compete in the strenuous conditions of today's markets. We believe equally that this objective can only be achieved by working with and through the industry and not by dictation from Whitehall. We equally believe that both management and operatives will rise to the great opportunity which the Government are offering.

Success can be assured only if management makes full use of scientific and technological research and development. It must examine its marketing structure and policies and adopt modern marketing research. It must also adopt much more modern and aggressive advertising and selling methods both at home and abroad, and particularly abroad, and I was delighted by the emphasis placed by the hon. Member for Leigh on the importance to the industry of good design. This cannot be over-emphasised. We have to study what consumers want, particularly overseas, in type of cloth, design and colour, and we must then give it to them at the right price, with all the efficient service which goes with it. This will be a challenge to management which I believe it will successfully meet, but it cannot be overstressed that management has a part to play which extends further than it has done to date. We know that certain parts of the industry are as efficient as they could be but there is still great room for the average to be as good as the best in this industry.

From the workers' side, we shall need continued redeployment in order that expensive machinery will be economically and fully used and not left idle for a good part of its life. This was a point made by my hon. Friends the Members for Middleton and Prestwich (Sir J. Barlow), Ashton-under-Lyne—if I may call him my hon. Friend—and Preston, South. No one will install these very expensive machines if they are to be used for only one-third of their natural life. Industrialists even with Government assistance, would not be willing to find the necessary money to re-equip the industry with the most modern and up-to-date machines unless assured that those machines will be worked to the maximum. That will involve the consideration of an extension of double-day shifts and three-shift working, under arrangements which must be settled with the unions and with adequate safeguards for the workers.

Mr. J. T. Price

The hon. Member has made a point which has been supported on both sides of the House. Nobody disagrees in principle with the full employment of the best machinery that can be brought into the industry. I fully share that view. May I put to him a point which has not been raised in the debate? Three-quarters of the labour force in the industry consists of women, and I will not be a party to any agreement for a three-shift system for women operatives in the textile industry. Because that is the system in the Far East does not mean that we can do it here.

Mr. Rodgers

Nobody suggests that we should imitate labour conditions in the Far East. The Advisory Committee which has been set up by the Cotton Board will have an important part to play. It will include not only representatives of both sides of industry but also experts on research, development and productivity.

To solve the problems of the cotton industry will call for many qualities of courage, enterprise and determination, but these are qualities on which the past greatness of Lancashire has always been based. I believe that this is a chance which Lancashire cannot afford to throw away, and I have no doubt that the qualities which I have mentioned will be forthcoming and now. It is in this belief that I ask the House to give the Bill a Second Reading.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Brooman-White.]

Committee upon Monday next.