Clause 2.—(RE-EQUIPMENT GRANTS.) (Hansard, 17 June 1959)

The Temporary Chairman
I think it would be for the convenience of the Committee to take next the Amendment in the name of the hon. Member for Oldham, West (Mr. Hale), in page 4, line 19, at the end to insert: Where the Board of Trade is satisfied that appropriate textile machinery of British manufacture is available for such re-equipment the required conditions shall include a provision that only the installation of such machines of British manufacture shall qualify for re-equipment subsidy. We could discuss at the same time the following three Amendments: In page 4, line 45, at the end to insert: and must be in each case the most efficient machinery and equipment reasonably procurable. In line 45, at the end to insert: and (d) the Board of Trade must be satisfied as to the prices being charged by the textile machinery manufacturers for the machines on which the equipment grant is being spent. In line 45, at the end to insert: Provided that no payment by way of re-equipment grant in respect of any machinery or equipment shall be made to any applicant unless that applicant satisfies the Board of Trade that there are exceptional circumstances which render it expedient that such payment shall be made in respect of expenditure or loss arising in connection with such re-equipment.

§ Mr. Hale
I beg to move, in page 4, line 19, at the end to insert: Where the Board of Trade is satisfied that appropriate textile machinery of British manufacture is available for such re-equipment the required conditions shall include a provision that only the installation of such machines of British manufacture shall qualify for re-equipment subsidy. Here, again, I shall not need to speak for more than a minute, because the Amendment really requires no explanation. With it we are to discuss an Amendment in the names of my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) and others of my hon. Friends. Although the two Amendments appear to be diametrically opposed. I do not take them to be so at all, and, indeed, with a little alteration in the wording there would be nothing between us.
My hon. Friend says that there are many departments in which British machinery cannot supply the need. Nobody would dispute that for a moment, 586 but I think that those departments are rather more limited in their extent than is supposed. However, we will not argue on technicalities. There are many departments in which British machines are pre-eminent, and although we should provide a reasonable form of words which will allow people who cannot get in Britain first-class and appropriate machines to get them elsewhere, I suggest that we ought to commit ourselves to the proposition that, where Government money is being given, we should at least try to ensure that priority is given to British-made machines. That is all that we seek.
Following on that, I would only say that the firm of Platt Brothers and Company Ltd. has been in Oldham since about 1846. I have my ideological criticisms of the firm, because I have always said that it was a monopoly, but it has for 100 years provided some of the best-paid employment in Oldham, and has for 100 years provided machines that are to be found all over the world. It is really quite fantastic. Wherever one goes, one will find machines made by Platts. The firm provides big employment, and important employment.
About an hour ago we were discussing, perhaps at some length, the fact that if we start closing mills employment will go, but it is true to say that in Oldham the employment provided by Platt Brothers is the most important of all—or is, at least, one of the two most important employments. This firm provides a relatively high wage and employment for extremely skilled engineers. As I say, its work goes all over the world, and it makes a great contribution to our foreign exchange. It is fair to say that its directors responded very much to labour appeals and concentrated on the export trade at a time when the export of textile machines was vital.
The firm has done that, and it has not had much support from home industry. Even when we introduced subsidies it did not get much support. Its export orders remain at more than 80 per cent.—I think they constitute more than 90 per cent.—of its trade. Now that we are issuing public money to provide compensation for loss of industry in Lancashire, it seems to me that whatever 587 the form of words may be, we ought to provide that some priority be given to British machines. Provision really ought to be made that machines are not to be imported from distant countries unless—and, after all, this is what my Amendment says—the Board of Trade is satisfied that the needs of these spinners and weavers cannot be met by machines made in Britain.

§ Mr. Rhodes
As we are able to discuss with this Amendment that in page 4, line 45, which deals with re-equipment grants, perhaps I might address a few remarks to that before I answer my hon. Friend the Member for Oldham, West (Mr. Hale). There seems to be some doubt among some of my hon. Friends whether I can do that, Mr. Arbuthnot, but I understood that although that Amendment could not be moved it could be discussed.

The Temporary Chairman
The position is that the Amendment standing in the name of the hon. Member can be discussed, and if, when we come to it, he wishes to have a Division, we can have one.

§ Mr. Rhodes
I notice that my name comes at the bottom of the list of names to that Amendment—

The Temporary Chairman
I thought the hon. Member was on the Amendment to page 4, line 45.

§ Mr. Rhodes
If it is agreed, and you said so, Mr. Arbuthnot, why cannot I discuss the provisions in the Amendment in the name of my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman), and to which I have my name, and which is also an Amendment to page 4, line 45? Why cannot I do so?

The Temporary Chairman
The hon. Member is in order in discussing that. I have not ruled him out of order.

§ Mr. Rhodes
All right. I will get on with it.
The Amendment to which I am now speaking is a form of words included in the legislation affecting the distribution of industry, and is a safeguard to providing that public money shall be well spent. If hon. Members will consider the form of words and fit it into the context of the Bill they will see that the 588 reason why it is a safeguard is that no public money shall be available for compensation if people are able to re-equip out of their own resources. There is not a single person who can argue the case for giving public money to private industry if private industry does not need it.
If, as the President of the Board of Trade says, we need a carrot, an inducement, to get those people to do something which they do not want to do, let us for goodness sake try to do it in another way, because we do not in the ordinary way give public money without full accountancy or a means test. This is public assistance of a sort that we have never seen before, and going to many who do not need it. Suppose Government assistance were being given to people from the P.A.C. There would soon be Questions asked in the House about why public money was being wasted. In the P.A.C. there is accountancy, and when assistance is given there is a check to see whether it is needed or not. This assistance of £30 million of public money is not insignificant.
I shall not keep the Committee long. [An HON. MEMBER: "Hear, hear."] My hon. Friend the Member for Nelson and Colne can wait for me a moment or two. I have listened to him a long time.

§ Mr. S. Silverman
What?

§ Mr. Rhodes
It is all right. I shall not keep the Committee long.

§ Mr. L. M. Lever (Manchester, Ardwick)
Do not apologise.

§ Mr. Rhodes
I have here a book, full of the names of textile trade firms, assembled by a firm of stockbrokers in the City. It is called "Textiles: Cotton and Man-Made Fibres and Ancillary Companies." It is dated May, 1959. It was brought out on 28th April, the day after the White Paper was deposited in the Vote Office. We may say that there was very little coincidence about that. Was it a matter of accident? There are very few firms mentioned in the book which cannot afford to do this job for themselves. If the Bill is an inducement, a bribe to them to do what the Government want them to do, let us say so. Do not let us pretend that there is not plenty of money in the industry yet.
589 10.45 p.m.
Some comments are made on the prospects, and illustrations are given of the diversification that is taking place and has taken place during the last year or two. This compensation business will be a very nice thing. Somebody will do very well. If one is able to bleed off one's own capital and put it into diversification and, at the other end, have compensation for the machines that one throws out, it is very good business for the company and the shareholders.
Diversification has been taking place all along the line. Calico Printers have acquired H. & J. Wilson, owning a chain of retail shops selling women's outerwear. Where is the line to be drawn on a company's activities? Can it surrender its old junk and put the money elsewhere? Are we to be a party tonight to handing out money to private industry to do that kind of thing? It is bad enough that the money is being handed out at all, never mind for this purpose.
This publication states: Lancs. Cotton now have subsidiaries in the brick and tile trade and woollen goods. British Cotton and Wool Dyers have founded two subsidiaries for the catering trade. Bleachers, with interests already in laundering and dry-cleaning, plastics and paint, have acquired a controlling interest, in a dry-cleaning firm. Bradford Dyers have subsidiaries engaged in civil engineering, road-making, and bulk-liquid transport. and so on, down a long line.
I do not blame them, but the book goes on to make the comment: … Lancashire's pre-eminence in the higher quality article are 'bull-points' when considering the depressed cotton industry. Much depends on the reorganisation scheme, but we consider that the present level of yields, backed in many instances by a high asset value, with the possibility of a 'take-over' bid or merger in the background, make selected Cotton Textiles a reasonable purchase. I have made my protest on the basis of giving money for "nowt" for closing factories or putting in machinery which these firms can quite well afford to pay for themselves. I think that we have arrived at a point where we all of us should have our heads examined.

§ Mr. Rhodes
If my hon. Friend the Member for Nelson and Colne gets up again I shall have three points, like a 590 parson, instead of two. But I promise that I shall not wring hon. Members' souls. I shall only tell them something about machinery, in connection with the Amendment in my name. It is no use putting this through the Committee tonight and having a Report stage next week if we are going to make the cotton industry a replica, on a similar scale, of what it is now. How can one obviate that? By making it more efficient.
Running through all the speeches, Amendments and everything to do with this Bill from its inception has been the suggestion that all has not been well from the point of view of efficiency. We have been told that 20 million spindles have been installed. We have been told by the head of the cotton spinning section of the industry that there are only 3,500,000 spindles that are any good anyway, and that the remainder are out-of-date junk. What has the industry been doing while it has been making the fabulous profits of the last ten to fifteen years? What has it been doing, instead of husbanding its resources and demanding the best machinery from any place in the world? One may say, "Yes, but it has not had confidence. It has known that difficulty was around the corner, that the cheap labour from the Far East would eventually supersede what it had been doing before." But I feel that unless this cotton industry in its smaller size is far more efficient than anything ever seen before, we shall fail again, and it will come down through the next two or three years to the same pitch that it has reached at this moment, and it will not know what has hit it.
What is the use of putting in provisos about machines that should be made in Oldham, or Timbuctoo, or anywhere else, if they are not the best machines? I am not saying that they are not the best, but if my Amendment is agreed to and the Amendment of my hon. Friend the Member for Oldham, West is rejected, it means that he has confidence in my Amendment and will have confidence in the fact that the best machines are produced in Oldham in any case.
During the last few days there has been news of many technical developments in machines, and that will go on. But no real technical development will 591 take place in a machinery industry if the industry which normally buys its machines is on short-time or not working to full capacity. There is a difference between that kind of purchase and the American type of investment. I do not know whether hon. Members have noted during the last few days information coming from America on the type of activity and capital investment which is now taking place in America. It is not so much investment for the increase of production as such, but investment for the increase of productivity.
If we tie ourselves to the machinery that is available here and do not give manufacturers or spinners the opportunity to buy the best machines that are procurable in any part of the world, it really means that we are condemning the industry which survives this operation to virtual extinction in a few years' time.
Why cannot the Government remove the duty on machines which are eminently suitable for achieving higher productivity in our factories? If the machines are available to the Chinese and Indians from other countries, they should be available here too. Otherwise we start on a false premise. I ask the Committee seriously to consider this matter. The Government should accept that the industry ought to be able to install machinery which is the best procurable in the world.
When I mentioned this on Second Reading, the Parliamentary Secretary, in his closing words, dismissed it by saying that the people who put the machinery in know best. It may be that they have available for their section of the industry only the machines which are made in this country, but they may need machines which would give higher productivity in other sections. I ask that those machines should be made available free of duty if they are the best that can be procured in the world.

§ Mr. H. Hynd
I agree with much that my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) said in the first part of his speech, but I resist the temptation to follow him there because I want briefly to support the Amendment moved by my hon. Friend the Member for Oldham, West (Mr. Hale).
592 I support the Amendment because I have a very strong constituency interest. A very important factory in my division makes textile machinery. When the scheme was first propounded I had the idea that if there was any bright spot about it at all it was that some of the people displaced from the cotton mills might find employment in producing the textile machinery which would be made available under the re-equipment provisions. But I was horrified to hear the President of the Board of Trade tell me in reply to a Question that the subsidy on new machinery would also apply to imported machinery. If my hon. Friend the Member for Ashton-under-Lyne is right that British machines are inferior—

§ Mr. Rhodes
I never said so.

§ Mr. Hynd
My hon. Friend said that we must have the best machines, and he implied that they were foreign machines and that was why the duty should be removed.

§ Mr. Rhodes
I said they may be.

§ Mr. Hynd
Well, they may be. My experience is that in mills in other countries we see British machinery and we are told that it is the best that it is possible to obtain anywhere in the world. But we do not see that machinery in British mills. I have never been able to understand this. Having seen British machinery abroad, which I am told is the best of its kind in the world, I find it fantastic that when we are providing public money to subsidise new machinery we should subsidise foreign machinery although we can make the machines in this country. That does not seem sensible or good public policy, and it is not something which I should expect a Conservative Government to support. It is strange that the Government should be suggesting such a thing. Here is an opportunity to help the textile machinery industry of this country, which has been going through a pretty rough time in the last few years; in fact, the factory in my division is able to carry on largely because it is making machinery for foreign countries. It has recently participated in a large order from Poland, and I believe another order is expected from Russia. That is splendid, but I would far rather it were making the machinery for British mills.

§ Mr. Hale
Certainly the machinery of Oldham and Accrington is the best in the world, but the whole range of machinery has now become concerned with the erection of factories mostly outside the United Kingdom. The conclusion of orders from behind the Iron Curtain has been delayed only by the fact that orders had been offered for patterns which might be copied. The machinery being made in Oldham and Accrington is recognised all over the world as the best in the world.

§ Mr. Rhodes
That is grossly misleading, because this machinery is being exported to countries which employ cheap labour. Although we are satisfied to see the machines exported, it does not follow that they are the best machines for a modern economy.

§ Mr. Hynd
All I am asking is that when there is an opportunity for these mills to get public money to enable them to re-equip there should at any rate be special consideration for British-made machinery. I do not think anything could be more reasonable than that. As I understood him, my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) said that many British textile firms had ample funds at their disposal. If that is the case, they would get this foreign machinery even if it cost more—if they thought that it was better than British-made machinery. I say that, other things being equal, we should give priority to machinery which will provide employment in this country.

§ Mr. S. Silverman
I want to confine myself to two arguments in support of the Amendment in page 4, line 45, at the end to insert: Provided that no payment by way of re-equipment grant in respect of any machinery or equipment shall be made to any applicant unless that applicant satisfies the Board of Trade that there are exceptional circumstances which render it expedient that such payment shall he made in respect of expenditure or loss arising in connection with such re-equipment. My hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) was very effective and eloquent on this point in the Second Reading debate. He has made this matter his special interest in many ways, and I concede to him a prior right to be heard on this matter in Committee. I was glad to be able to assist him in drafting the Amendment and 594 I agree with him in the principle he was defending. I assure him that when I was talking to my hon. Friend my words had no reference to him or his Amendment. I was explaining the intricacies of the Notice Paper, which is not always understood even by hon. Members of the Chairmen's Panel, and I prematurely thought he had come to the end of his speech. I am sorry that I was mistaken, but my hon. Friend the Member for Accrington (Mr. H. Hynd) was also mistaken.
I do not want to enter into the controversy about the two other Amendments being considered, except to say that if it is conceded by all my hon. Friends that there is as good textile machinery to he bought in Accrington and Oldham and elsewhere in this country as we can hope to find abroad it does not seem to be much to ask that we should give it a measure of priority when we are dealing with social and economic problems affecting the whole area and re-equipping, at any rate in part, with public funds.
It seems to be a simple proposition, about which there is not much room for any division of opinion—certainly on this side of the Committee.
I wish to make a short point which was not made by my hon. Friend, but with which he agrees. As he said, the words are copied verbatim from the Distribution of Industry Act. They are words from the Section which gives the Treasury power to make grants, which it never has, or loans, which it has sometimes made, to new industries prepared to go into the Special Areas covered by the Act. If people, using their own money and initiative, and with a sense of public service—because they are not bound to move their industries—go out of their way to take industries from where they now are and plant them in other places where there is greater need for them, the Treasury has no power to give them one penny of assistance, even by way of loan, until they have satisfied the appropriate committee that they have made every attempt to get the capital elsewhere at ordinary market rates and have been unable to do so.
I am not concerned at the moment to argue whether that principle is right or wrong. If I were, I should say that it is wrong, and that the Government ought to be much more ready to give assistance 595 to people who do not let the social necessities of the case influence their private judgment in conducting their own private enterprise in their own way. But, rightly or wrongly, the Government have decided that when it is a question of taking a new industry into a depressed area, there shall be no assistance without a means test.
Contrast that with what they are doing in this Bill for the re-equipment of the cotton industry. If the Government reject this Amendment, they are saying that when it is a question of re-equipping an industry, in respect of which it is Government policy that it shall contract, and create new unemployment, assistance shall be given out of public funds without any means test of any kind, without any proof of any exceptional requirement, whereas if another firm says, "We want to build a new industry to replace the cotton industry which you have removed, and we want some assistance," the Government say, "First prove that you need it."
This dichotomy cannot be justified. If we are spending public money in order to take industry—the cotton industry, or any other industry—into an area where it is needed, we may apply some kind of means test, if we think that right, or grant aid without a means test, if that is thought right. What is monstrously unjust is to grant it without a means test for the one purpose and refuse to grant it for the other purpose except with a means test. The Government must choose, because if they do not people will say with the utmost conviction and plausibility that the Government are ready to spend any amount of public money in order to assist industry but are not prepared to give one penny, except on proof of direct need, to those creating industry for these areas. That is one point.
The other point is that it is unjust to other people in the industry. People say that a lot of the Lancashire industry is out-of-date. No doubt a lot of it is, but it would be most unjust to say that in the years since the war nobody has spent any money on re-equipping the industry. There has been a great deal of capital investment in the cotton industry in the past twelve years. I am not saying there has been enough—of course there has 596 not—but a great deal has been done by people who ploughed back some proportion of the very high profits which they made in the industry in the years following the war to re-equip their factories. They will get nothing under this Bill because their factories have been re-equipped and paid for by their own money.

§ Mr. Rhodes
That is the point.

§ Mr. Silverman
Those who held back and transferred their profits from the industry all those years into some other industries and invested them elsewhere, those who were greedy, lazy and did not care a hang what happened to the industry so long as they could make profits out of it—those are the people who will be compensated under this scheme. If they are not compensated for going out, they will remain in and be re-equipped. This is an absolutely Gilbertian situation and there is no justification for it.
If we are to discriminate we should discriminate in favour of the man who has the initiative and public spirit to take a new industry to an area which needs it. Do not discriminate against him and in favour of people who have had the opportunity all these years to help themselves but would not. I do not press it as hard as that. I am content if the Government will have no discrimination at all and give the assistance even-handedly, first, to reequip such cotton industry as we retain, and, secondly, to help the provision of new industries to replace the cotton industry that we destroy. Whether we make the grant or loan or give assistance for the one purpose or the other, do not discriminate between them; give it on the same terms to both.

§ Mr. Alan Green (Preston, South)
I want to say a word about the source of new machinery, principally because I am a manufacturer of what I believe is rather advanced textile machinery. Under the provisions of the Bill I could not benefit because the machinery I make is of a specialised kind, clean outside the provisions of the Bill, but my belief is that if any words go into the Bill about the source of supply of new machines which may be required under the Bill the provision should be as wide 597 as we can make it and not as narrow as we can make it.
British textile machinery is good on price and good on quality and its export performances prove that fact without anyone attempting to write into the Bill a compelling command that British textile manufacturers have to use only British textile machinery. That would be a great mistake. I personally hope that as generous a view as possible will be taken of imports of very specialised foreign machinery from the duty-free point of view. If we get such machines in and they can be profitably used, we can be certain that the ingenious and wide-awake British textile machinery manufacturers will quickly learn how to make and sell them.

§ Mr. Hale
I agree with the hon. Member entirely, and I made it clear that where we cannot make the machinery we should encourage it to come in from abroad, but his Government imposed a heavy duty on these imports. Firms in Oldham, compelled to use specialised machinery from Switzerland, are paying a heavy import duty on it under Regulations which the hon. Member supported.

§ Mr. Green
The hon. Gentleman is very ingenious, but he cannot have it both ways. The purport of this Amendment is co encourage British textile machinery makers to make a special effort. What I am pleading for is the most generous and open-minded view on the part of the Board of Trade whenever it considers applications for duty-free imports of machinery arising as a result of the operation of this Bill. We must do our best to see that if this industry is to be competent and properly concentrated it shall have the greatest possible freedom in the sources of supply of its new machinery.
That is the only plea that I make, and if any words have to be inserted into the Bill in order to ensure that, they will have my support. But perhaps there is no need for anything additional to be put in. Do not let us do anything which in any way restricts freedom of choice. In any case, I am confident that most of this machinery will be British.

§ Mrs. Castle
I understood earlier this evening that I should not be out of order 598 if, at this stage, I discussed the Amendment standing in my name later on the notice Paper, in page 4, line 45, at the end to insert: and (d) the Board of Trade must be satisfied as to the prices being charged by the textile machinery manufacturers for the machines on which the equipment grant is being spent". My point is that under the operation of the law of supply and demand, which hon. Members opposite believe should govern our economic life, there may be a tendency for prices of machinery to rise when as a result of this Bill there is put into circulation financial power encouraging demand for textile machinery. This, indeed, has been visualised by a very prominent firm in my constituency, British Northrop, Ltd., which is the largest maker in this country of automatic looms. On Second Reading of the Bill, I informed the House about what this firm had done with regard to prices; action which is commendable because the firm is aware of this danger of inflation of prices.
I understand from the firm that it has been in touch with the officers of the Cotton Spinners' and Manufacturers' Association and has told them that it has no intention of inflating prices for plant which will be required under the reorganisation scheme. This firm has told the Cotton Spinners' and Manufacturers' Association that it will maintain current prices for automatic looms at the level established in January of last year. Indeed, it has gone further and stated that if there is any wage award, or rise in the cost of raw materials, or any other factor in the cost of production which makes it necessary for loom prices to be raised, it will negotiate with the Association and establish a formula for price adjustment. That will be agreed between its own accountants and those of the Association. This, I submit, is a most commendable step by this large firm, and I believe it is one which should be copied by other makers of textile machinery.
I seek, by reference to my Amendment, to find out what steps the trade intends to take, when this large amount of public money is being pumped into the market to increase demand for textile machinery, to see that no exploitation shall result. On the contrary.
599 I hope we shall see that prices remain uninfluenced by this new factor of public money being spent.

§ Mr. Blackburn
No one would be very popular if he made a long speech at this hour, and I will try to be brief. These first three Amendments seem to be bedfellows and I do not know how they managed to be together. Turning to the fourth, in the name of my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman), if we applied to the farming industry the same principles as the Amendment seeks to apply to the textile industry, the reduction in the farming subsidies would be considerable.
I want to make a strong plea that we do not put any restrictive words into the Bill with respect to textile machinery. I agree entirely with the hon. Member for Preston, South (Mr. Green) that the textile industry should be allowed to buy its machinery as it wishes, and the best machinery it can buy. I sympathise very much with those hon. Members who have textile machinery works in their constituencies. We all freely admit that some of the British machinery is among the best in the world, but there is other machinery which is not made in this country.

§ Mr. Hale
If that argument is true, why propose the Bill at all? Why give subsidies to the British cotton textile-producing industry? The British textile machinery industry has made a greater contribution to our dollar balance than has the textile-producing industry over these years. If it is said that the textile-producing industry should be helped because it is in Ashton-under-Lyne, it seems reasonable that the textile machinery industry should not be injured by authorising public money to be spent among its competitors.

§ Mr. Blackburn
We are not arguing about that. As I have said, some of the British textile machinery is among the best of the world, but there is some textile machinery which is not made in this country, and if a firm wants to reorganise and bring itself up to date it will have to import that machinery from abroad. As far as I know, the shuttleless loom is not made in this country, and there is no cone winder for the shuttleless loom. This problem has been 600 with the Board of Trade for eighteen months. Probably by the time the Board of Trade has settled it the machinery will be made in this country, judging by the speed with which the Board of Trade is working on the problem. There is none at present.
If we are to expect the textile industry to re-equip and to become a modern industry, we must give it the greatest possible freedom. My hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) said that the highest priority ought to be given to British machinery. It is already given that priority. Duty has to be paid on machinery which is imported unless the firm can prove that there is no similar machinery available in this country. To that extent British machinery has priority. There is a good deal to be said for the suggestion that the duty ought to be removed at this time, when we are suggesting that the industry should be re-equipped.

§ Mr. J. Rodgers
The Committee has debated four Amendments dealing with the re-equipment of the cotton textile industry and at first blush the first two of them seem to be contradictory, although I know that a case could be made out that they come under the same umbrella.
The first Amendment would make it obligatory on the cotton industry to buy United Kingdom machinery. It is obvious that in any event the vast bulk of the new machinery will come from the United Kingdom, but the Government are not prepared to make it a condition of the re-equipment grant that a firm can re-equip with foreign machinery only if it has Board of Trade permission.

§ Mr. Hale
The Amendment says nothing of the kind. It says that, other things being equal, priority should be given to United Kingdom machinery. That is all.

§ Mr. Rodgers
We feel that the firms must be free to buy the machinery that suits them best. They must be in a position to say whether British machinery is the best for their purpose, or whether it should come from overseas. It would be contrary to the purpose of the re-equipment scheme to compel them to instal United Kingdom 601 machinery against their better judgment. As my hon. Friend the Member for Preston, South (Mr. Green) said, the United Kingdom textile machinery manufacturers should be able to hold their own without the condition suggested by the hon. Member for Oldham, West (Mr. Hale), and they have not themselves suggested that they will be in difficulty in doing so. We are, therefore, unable to accept that Amendment, and I would ask the hon. Member to consider whether he is prepared to withdraw it.
Dealing with the Amendments in turn, I come now to that in the name of the hon. Member for Ashton-under-Lyne (Mr. Rhodes). We have tremendous sympathy with his objective. Hon. Members on both sides of the Committee are anxious, naturally, that Lancashire should re-equip with the most efficient equipment available. We know that to be also the view of the industry, as is stated in paragraph 31 of the White Paper.
I understood from an argument he used some time ago that the hon. Member felt that certain firms would not necessarily know which was the best machinery. However, to meet that it is contemplated that the Cotton Board shall have the assistance of an advisory committee of experts in such matters as scientific research, technical development and productivity. The hon. Gentleman also mentioned productivity. One of the reasons for having such a committee is that it should he able to play an important part in encouraging the adoption of the most efficient methods and, therefore, the most efficient equipment. But the Government would not be prepared to make what the hon. Gentleman suggests a condition for the payment of re-equipment grant.
In the first place, the Government feel that the fact that three-quarters of the cost of the new machinery must be provided by the firm is the best safeguard that it will try to get the most modern machinery. In the second place, the Government do not share the view that the Board of Trade or the Cotton Board—or even the Advisory Committee of experts—is necessarily more competent than firms are to decide which machines are best suited to their requirements.
602 I come now to the Amendment standing in the name of the hon. Member for Nelson and Colne (Mr. S. Silverman) and other hon. Members—and supported by the hon. Member for Ashtonunder-Lyne—which, in effect, says that we should not give any grant to any firms unless they can show that exceptional circumstances warrant it. I know that a plausible case can be made out that public money should not be given to any firm unless it can prove that it has need for it. People can ask, "Why should Government grants be applied indiscriminately, irrespective of the financial resources available to the applicant, and of whether he would have undertaken the re-equipment in any case with or without a grant? Surely, it should be up to the firm that has applied for the grant to show that it has a need for it."
I admit that that is an argument that can be, and has been advanced—

§ Mr. Rhodes
Let us get this quite clear. Is the hon. Gentleman bringing in a new condition?

§ Mr. Rodgers
No, I am restating the argument put by the hon. Gentleman, and if I have restated it wrongly I apologise. I think that he argued that they should show exceptional need before being successful in their application for a grant. That was certainly the point made by his hon. Friend the Member for Nelson and Colne.
Our answer is that the Amendment is based on a misconception of the Government's proposals. After all, as I have said, it will be for the firm to provide three-quarters of the money. I think that I shall carry both sides of the Committee with me when I say that the major obstacle to the re-equipment of the industry is that in recent years there has been a general lack of confidence in the future of the industry. We believe that the elimination of the excess capacity should reduce that lack of confidence—that is one of the main purposes of the Bill—but in view of the difficulties that the trade has experienced it is too much to expect it to do so completely without assistance. The grant of 25 per cent. is intended to encourage firms and their financial backers to invest large sums which will still have to be found out of private sources, and if the effect is that firms without 603 substantial resources available are enabled to re-equip more than would otherwise have been possible, that is all to the good and will help the Bill to succeed. There is no risk of uneconomic re-equipment being stimulated by the offer of the grant because 75 per cent. of the money has to be found by the firm itself, the Government only providing an incentive of 25 per cent.

§ Mr. Rhodes
How does the hon. Gentleman view this business of a firm diversifying, closing part of its cotton interests and putting its own money into another organisation? How would he react to that? Can we have an answer tonight, please?

§ Mr. Rodgers
I think the answer to that is that we are discussing the re-equipment and the purchasing of more modern machinery, and obviously unless a firm does pay 75 per cent. of its own money in order to attract the 25 per cent., it does not get the 25 per cent. Therefore, if it uses its own money to buy a catering establishment or any of the other things which the hon. Member mentioned, it does not attract the grant.

§ Mr. Rhodes
The hon. Member is misunderstanding me. We are discussing at the moment payment of money to people who can afford to do the job for themselves. It does not matter whether or not the equipment is surplus, redundant or obsolete. It is just a matter of re-equipment. What happens if a firm decides to accept public money for scrapping machines and then proceeds to invest its own money in another enterprise altogether because it has not got the guts to put its own money back into cotton? That is what I want to know.

§ Mr. Rodgers
Many hon. Members, particularly on that side of the Committee, have been pleading for more diversification. However, to answer the hon. Gentleman's point, we are still, on this Amendment, discussing re-equipment—[HON. MEMBERS: "No."] Yes, we are.

§ Mr. S. Silverman
I put a point to the hon. Member on which he has not so far touched. While I do not want to encourage him to make an unnecessarily 604 long speech, I think it a point of sufficient importance to be worth a reply. I can quite see his point that if we want to encourage people to re-equip we do not put obstacles and clogs in the way of the help we give them, although I share my hon. Friend's objection to the obvious unfairness of it as against other people.
But what the hon. Gentleman does not explain is the discrimination to which I referred in my speech. If we are to give public money without a means test of any sort for the purpose of re-equipping a cotton mill, why do we not give the same kind of assistance, with no clogs either, to those who are taking new industries into an area where the cotton industry is being contracted? We may not be able to do it in this Bill, but is there any justification for discrimination of that kind?

§ Mr. Rodgers
I really do feel that that is not parallel to what we are discussing—

§ Mr. Silverman
It is exactly.

§ Mr. Rodgers
—in this Bill tonight. If I were to attempt to answer it in any detail, I should find myself embarking on a long speech dealing with the distribution of industry. Secondly, I think I should be out of order. So I do not propose to say any more than I have in answer to the point.
I now turn to the suggestion of the hon. Lady the Member for Blackburn (Mrs. Castle) on the prices of machinery. The suggestion put forward would, of course, have the effect of imposing a price control over textile machinery bought with re-equipment grants, but as a matter of policy, of course, the Government are firmly opposed to the use of price control. Nevertheless, in saying that I should like to assure the hon. Lady that we do also recognise the importance of avoiding any undue inflation in the price of new machinery ordered under our re-equipment proposals. To safeguard against this we have been in touch with the main United Kingdom manufacturers of looms and ring frames. They have individually given assurances to their customers on this very point.
The organisations representing the firms in the textile industry which use the equipment have indicated to the Board 605 of Trade that they regard these assurances as providing effective safeguards against any undue increase in price. We feel, therefore, that there is no need for any special provision in the Bill. We ask the Committee to reject this attempt at the imposition of price control in this field, because we feel that voluntary efforts have succeeded.

§ Mr. Jay
Since, fairly obviously, the injection of this money into the textile machinery industry will tax its capacity severely, what if it turns out in practice that the assurances are not sufficient and the Bill has already been passed into law? What power will the Board of Trade have to do anything about it?

§ Mr. Rodgers
That is a hypothetical question. We do not, in any event, feel that it will overtax the resources of the textile machinery industry.

§ The Chairman
Does the Committee wish to divide on the Amendment in the name of the hon. Member for Ashton-under-Lyne (Mr. Rhodes)?

§ Mr. S. Silverman
On a point of Order, Sir Charles. I understood that these three Amendments were being called and debated together but that the Qustion was to he put separately on each of them. It is quite true that we did not divide on the first, but it was the intention to divide on the third, the Amendment in my name and the names of my hon. Friends, in page 4, line 45.

§ The Chairman
No, there was no question of a Division on that. I offered a Division on the Amendment in the name of the hon. Member for Ashton-under-Lytle, but the offer was not taken up.