HC Deb 21 December 1961 vol 651 cc1629-47

3.12 p.m.

Sir John Barlow (Middleton and Prestwich)

I am most grateful to you, Mr. Speaker, for giving us an opportunity to debate the question of the Lancashire cotton textile industry this afternoon. I very much welcome the presence of the President of the Board of Trade, who I gather is likely to answer the debate, because he has acquired a greater knowledge of this industry than any other President of the Board of Trade since the war. Not only is his constituency not very far from a cotton area, but he has been in the textile trade for a time at least, and I gather that during his visit to Lancashire a fortnight ago he acquired a great deal of knowledge.

In addition, I am delighted to see present the Parliamentary Secretary to the Board of Trade, because I know that he is taking a great deal of interest in the Lancashire textile industry and that he has a great deal to do with the day-to-day handling of this work. We are very fortunate to have with us the President of the Board of Trade and the Parliamentary Secretary.

To get the industry into perspective, I think that it is necessary first to give a few figures. Obviously some of them are estimates, but I do not think that they are very far out, although of course we are dealing with very large figures.

About forty years ago this industry was the largest of its kind in the world. It produced about 8,000 million square yards of cloth a year, of which about 80 per cent. were exported. That represents probably the largest exporting industry that any country has ever had, and I believe that it was one of the most well organised export industries that anyone has ever built up.

For that reason, when other exporting industries today are finding difficulties, I urge them to look back and see what was done in those days in Lancashire. Not only was 80 per cent. of the production at that time exported, but it amounted to approximately 24 per cent. of the total exports of this country. In view of the difficulty with exports today, what would not the Government give to have a similar thriving textile industry?

By 1938 the yardage produced had halved; it was about 4,000 million yards, and half of that was exported. According to the latest information our production rate is now only about 1,300 million yards a year. We are importing at the rate of about 850 million yards a year, and our exports amount to 300 million yards a year. That means that at the present rate we are consuming—or we have a stock at home—about 550 million yards of overseas cloth. In addition, we are importing 50 million lbs. of yarn. We probably have in stock about 140 million or even 200 million yards of cloth.

During the last forty years the industry has suffered greatly as a result of this diminution in output. It has had its ups and down, and four years ago the Government recognised the difficulties of the industry, which were partially due to the loss of overseas markets but also due to the increasing imports from overseas countries. Most of the imports came from eastern mills, which had installed modern machinery and were staffed by cheap eastern labour. Many of the mills—as the President of the Board of Trade knows, having been over some Chinese ones—work for as many as 350 or even 360 days a year. The machinery is running practically twenty-four hours a day, and the work is on a three shift basis. The machinery is stopped only to enable it to be cleaned.

About four years ago our chief competition from Commonwealth countries came from India, Pakistan and Hong Kong. India had a natural advantage, in that it had home-grown cotton—which was at times subsidised by the Indian Government—and very cheap labour. The competition from Japan, which started about thirty-five years ago, has been fairly constant in recent years, as it is subject to quota. By an inter-industry agreement the imports from India, Pakistan and Hong Kong were limited in 1958 to 377 million yards a year for a three-year period. That has now been extended to December, 1962, but the yardage has been increased to 420 million yards, which comes in free—and that excludes yarn but includes made-up goods.

After the India-Hong Kong agreement the Government rightly introduced the Cotton Industry Reorganisation Bill, the object of which was to encourage mills with old or inefficient machinery to close down, and to increase machinery utilisation and efficiency. Far too many of our mills were running on a single shift, which, with modern expensive machinery, meant a great wastage of capital. In addition, accelerated re-equipment and modernisation generally were of the utmost importance.

Having fought two world wars we had suffered through not constantly bringing the equipment of our mills up to date. As a result of the reorganisation scheme, or redundancy scheme as it is sometimes known, nearly half of the spindles in Lancashire and about 40 per cent. of the looms have been destroyed. The re-equipment for which the Government were going to pay 25 per cent., started off very well indeed. But then, within a short time, imports came from unexpected places which had never shipped to this country before.

I should like to mention a few to show the large increase in such imports. Spain last year shipped 64 million yards. In 1959 the figure was under 10 million, and two years ago, in 1958, it was only 1 million. From Japan we received 52 million yards last year. From Portugal we received 18 million yards, compared with less than 250,000 yards the previous year. Yugoslavia sent 12 million yards compared with a figure of 6 million in 1959, and last year Formosa, a new country to enter this trade, sent us 12 million yards in six months.

I wish to emphasise that, owing to the loss of exports, the amount of cloth brought into the country has a severe effect on the national economy. Generally speaking, we import nearly half of our foodstuffs and most of our raw materials. I feel that we are importing far too many finished or semifinished materials. This is a case in point. Instead of exporting over 6,000 million yards of cloth forty years ago, we now have a net import of about 550 million yards, which I think is deplorable.

This has come about for various reasons. One thing which did not help the efficiency of Lancashire textiles, including the trade in which I am particularly interested, was the action of the Chancellor last spring in increasing the duty on heavy fuel oil. It will be recalled that this duty was increased by 2d. a gallon. In the printed cloth section of the industry an enormous amount of fuel is used owing to the constant heating and re-heating necessary to provide the required processes. Many years ago the only fuel used was coal. But the industry gradually moved over to the use of oil, and when there was a serious shortage of coal, the company with which I am connected turned over entirely to oil. The extra cost involved by the increase of 2d. a gallon on the duty amounted to £194,000. I believe that we are among the largest users of fuel oil in the north-west area. The increase in print costs is 3.5 per cent., which is considerable with a large export trade. Probably half our print is normally exported.

At the time of the introduction of the Government redundancy scheme it was estimated that the whole cost to the Government might amount to as much as £30 million, but at present it would appear that the cost may be £18 million. Of course, there is time for more people to opt to reorganise and re-equip and so the figure may approach £30 million, although that does not appear likely at the moment.

One of the objects of this redundancy scheme was to achieve greater efficiency. I am told that in the first quarter of 1961 the machinery utilisation activity was about 93 per cent., which compares with the highest annual percentage of 80 per cent. since the war. Therefore, it appears that, with modernised equipment, the industry is becoming more efficient. Part of this efficiency may be due to the three-shift running, but it is difficult in this country to achieve three shifts. Obviously, women do not work during the night. It has been the custom of the trade sometimes to use married women for a portion of the day, but in a country in which there is fairly full employment it is extraordinarily difficult to organise three shifts a day when so many people do not like working through the night.

When a firm has built up and is working satisfactorily, if there is a serious lack of orders some of that labour has to be released. It is then impossible to get back to the previous situation. It is a very serious drawback to the industry if, having as a result of a redundancy scheme once got things working smoothly with greater efficiency, it has to fall back and close mills. I am told that a hundred mills will close for a week over Christmas time, which is not normally a long holiday. I believe that twenty-nine units of the larger combines have closed down definitely and in addition forty-three smaller firms have closed entirely. They did not feel that they could or should re-equip and try to make a go of it.

Mr. Leslie Hale (Oldham, West)

Oldham Junior Chamber of Commerce, which certainly is not a partisan organisation, told me that, in the Oldham area and some adjoining areas which the hon. Member for Middleton and Prestwich (Sir J. Barlow) will know, the effective short-time employment—quite apart from Christmas, for it was long before then—was already of the order of 10 per cent.

Sir J. Barlow

I have not got that figure, but I well believe it. As the hon. Member said that was some little time ago, I should think that it is greater than that now.

I have tried to give an outline of the present state of the industry. The industry is prepared to compete on equal terms with Western nations which have Western salaries and Western standards of living, provided that they do not enjoy subsidies or unequal tariffs. Lancashire is definitely prepared for that competition and feels able to meet it, but there are such countries as Spain which have recently come into this business and exported enormous amounts to this country. They have fairly cheap labour, a much lower standard of living and definitely subsidised cotton.

That problem arose quickly about a year ago. I believe that the Cotton Board approached the Board of Trade with a view to bringing the anti-dumping machinery into operation. I believe, but I cannot be sure, that the Board of Trade urged that the industry should negotiate itself. Naturally one industry negotiating for itself with that very weak background would not carry anything like the weight of the Government negotiating with an anti-dumping Act behind it. For that reason, the result was a reduction of the 30 per cont. agreed upon. I do not think anyone can call that a satisfactory solution.

I should like to quote very briefly from the speech which the Chairman of the Cotton Board made about a fortnight ago. Lord Rochdale was speaking to the Manchester Statistical Society. I think that those in the industry all acknowledge the great work which Lord Rochdale has done to help the cotton industry. He is a man from outside—he was a wool man, of course—and his knowledge of that industry has helped him enormously in coping with the problems of the cotton industry. He said: I must say no other Western country exposes its industry in this way. Non-Commonwealth suppliers, such as Spain and Portugal, and also the Iron Curtain countries, including China, sell at political prices which are based on currency needs and bear no relation to cost. I think that he means by "political prices" that when the Iron Curtain countries need a certain currency they sell enough goods in that country to get the currency required quite apart from cost, subsidies or anything else. Incidentally, it is most difficult to prove costs, because we cannot easily get the information required.

I have criticised the Government for not using the anti-dumping Act sufficiently. I well remember that, when the Bill was going through the House, the President of the Board of Trade, who is now the Minister of Education, said that he wanted an Act which he could use immediately, and by which he could stop the imports of goods almost overnight, before the damage was done. I have looked up the Second Reading speech, and there are three small extracts which I should like to read. He said: … the consumer has a real and permanent interest in maintaining steady sources of supply. The consumer is not served if our market is disrupted by ruthless and unpredictable sales below cost". He went to say: … the Board could take the initiative itself under this Bill … However the process was started, the Board would urgently consider whether a prima facie case had been made out … in the exceptional case, where it was perfectly clear that serious damage was being done,"— we lay an order at once."—[OFFICIAL REPORT, 22nd January, 1957; Vol. 563, c. 58 and 61.] It is suggested in Lancashire that the Board of Trade say that this Act is not sufficient to meet the requirements to stop this kind of importation into Lancashire.

If that Act is not sufficient, I respectfully suggest that the Government should pass some suitable legislation. Not only in this industry but in many other industries as well we shall find, in the near future, that it is of the greatest importance to have some method by which the Government could act quickly. I believe that it did so in the case of butter. To Lancashire the use of this Act has been very disappointing. In addition to the competition which we are experiencing already, there may easily be cloth sent from other countries, such as Malta, Singapore and Nigeria, in the future, and I urge that the Government should make provision to deal with such cases before they arise and not wait until this becomes a really important matter. Yugoslavia has sent us a lot of cloth but it is virtually impossible to prove costs to the satisfaction of the Board of Trade.

Another type of dumping is sometimes experienced from the United States where there is enormous production and sometimes over-production. The Americans have a habit, when suffering from surplus stocks, of suddenly dumping them in this country for a month or two and then, when the stocks have dried up, nothing more is done. I am told that the Board of Trade takes the attitude that dumping over such a short time will not do much harm to the trade, but I disagree entirely with that. Severe dumping for a short time upsets the market and brings prices down, and it takes a considerable time to re-establish confidence among the buyers—the wholesalers, the middle men, the shopkeepers and the purchasers. We see that not only in cloth but in practically all commodities, such as wheat, rubber, tea, and tin. If there is sudden short-term heavy dumping it can destroy the market for a long time. I urge the Board of Trade to look at the way in which Canada checks for cost of production and dumping. Canada has very effective methods which might be helpful if adopted by the Board of Trade.

As other hon. Members wish to speak, I will be brief. Having provided a cotton redundancy scheme which is working admirably, the Government have left the industry in the lurch when unforeseen imports arrive in unexpected quantities, which in many cases are subsidised or dumped. The industry has spent vast sums of capital, and is willing to spend more, on modernising and re-equipping, providing that it has confidence. It is not asking the Government for more money but for the normal support which is given by every other Western Government. Do the Government wish to provide for a very small industry? As far as I know, they have never given an indication. Do they wish us to be self-sufficient in cloth? Do they wish us to cut down to a half or a quarter of the present consumption in this country? As far as I am aware, they have never given an indication. If they would only do that, the industry would know where it stood and would get on with the job. That would be very much better than leaving us as we have been left for so long.

I believe that it is utterly wrong to leave the industry in a permanent vacuum, for that saps and destroys the confidence of the workers, the management and the investors. I earnestly hope that the Minister will indicate this afternoon what size of industry he thinks is proper for this country and what measures he proposes to achieve it.

3.38 p.m.

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

May I say a few words about the antidumping legislation? It was brought in at a time when there was very little anti-dumping legislation in any country in Europe and in the hope that other European countries would follow suit—although for what purpose I do not know, because the provisions in the Act were impossible to use to protect an industry such as the cotton industry. First, before the Board of Trade can take any action, an aggrieved person, firm or industry in this country has to show that the price of the articles complained about are appreciably cheaper here than in the country of origin. Secondly, the question of the country of origin provisions was never satisfactorily settled.

In view of the type of legislation which exists in one or two Common Market countries now the Government would do well, before they go further with their arrangements to enter the Common Market, to bring into the open the legislation which exists in Europe on this point. The problem will grow worse during the course of the next few months. In view of what we read about Japan's interest in exporting cloth and goods here, and in view of the Government's atitude towards Japan, and that they are considering granting most-favoured-nation treatment, it is about time that we had a re-casting of the Act.

Politics have entered too much into the examination of the industry's economics. The hon. Member for Middleton and Prestwich (Sir J. Barlow) dragged politics in again today. He finished his speech today in the same way as he finished his speeches before the 1958 slump. As soon as the Tory Government promised the earth in terms of money for scrapping machinery and for re-equipment, the hon. Gentleman was perfectly satisfied; he thought they were a wonderful Government until now. It is true that, unless political decisions are made about the industry, it will continue to contract until there is no industry at all. The argument should be concentrated on what decisions should best be made so that the industry, or what remains of it, can make up its mind what to do.

During the last two years the industry has received a great deal of assistance. It scrapped machinery and received money for doing so. The money went into pockets which did not need it. Much of it went into the coffers of firms which could have done the job for themselves. It is a bitter pill to see the industry again making approaches to the House of Commons after the generous treatment that the Tory Government accorded them in the period leading up to the 1959 General Election.

If any Government gave a real political boost to an industry and an area, it was the Tory Government in 1958 and 1959. It started with the Prime Minister going to the Cotton Board Conference in 1958, and announcing that a scheme would be introduced in the early part of 1959. Legislation was rushed through the House. It had to be on the Statute Book before the Recess so that the then President of the Board of Trade could go to Lancashire and boast about what the Government had done and say, in effect, "Please return even more Tory candidates". We know that that did not happen.

If the industry really got to work and worked three shifts, it still would not on the present basis, be able to compete. If I were the President of the Board of Trade, I should not do a thing for the industry unless it was able to show it could compete with the cotton industry of at least one Common Market country—for example, the Dutch cotton industry, which is well-equipped. I understand that 26s cotton which is imported into this country from Holland comes over a tariff of 17½ per cent. and can be sold in this country at 81½d. a pound less than it can be bought in Lancashire. If this is so, it is about time the industry pulled up its socks and found out for itself what it can do before seeking political remedies unless the Industry runs three shifts and puts in the most up-to-date machinery. Investors had better look for something else to put their money in. We are not now pleading for redundant labour either. The intelligent cotton worker can easily find a job elsewhere and has done so.

I agree that it is easier for countries to export to the United Kingdom than to anywhere else in the world. Our imports of cotton textiles have been on a grossly unfair scale. But at the same time, we must insist that the cotton people must make themselves efficient by the best European standards, then Government can begin to talk. Increasing the standard of living of the Spaniards by admitting their cotton textiles to this country gives me no satisfaction when I know perfectly well that they receive a subsidy of 8½ cents on every lb. of cotton they buy from America. On the other hand, I think that this time the industry must put its own house in order before the Government do anything more to help it.

3.48 p.m.

The President of the Board of Trade (Mr. F. J. Erroll)

I am grateful, as I am sure the whole House is, to my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow), for introducing this important debate, and I am particularly grateful to him for his kind remarks about myself and his references to my hon. Friend the Parliamentary Secretary.

I am sorry that time makes it impossible for me to delay my reply so as to enable hon. Members representing cotton constituencies to say something, but I am sure that their constituents will be glad to know that the hon. Members for Oldham, West (Mr. Hale), Sowerby (Mr. Houghton) and Farnworth (Mr. Thornton) are all in their places, and would have spoken had they had the opportunity. I am glad, too, that my hon. Friend referred to Lord Rochdale and, thereby, to the Cotton Board. Lord Rochdale has done an outstanding job as Chairman of the Board, and the Board itself deserves a tribute for the excellent way in which it has carried out its many difficult tasks.

I went to Manchester for the day on 8th December, and had a very useful series of talks with different branches of the industry. As I told them, I went there to learn and, at the same time, to outline the Government's policy. Lancashire lived up to its traditional reputation for plain speaking, and I was told bluntly, and very clearly, what people there thought. The result was that I came away with a greater knowledge of the industry than the little I had previously possessed.

There is no doubt, as I was told there and as I have heard again today, that the main problem is one of imports, and I shall deal with that first. The import figures are substantial, but not quite as bad as my hon. Friend stated. I understood him to say that imports were running at a rate of 850 million square yards in 1961. The annual rate for 1961 is, in fact, 757 million square yards and, of that, 216 million square yards are grey cloth imported for further processing and re-exporting, so that total retained imports amount to 541 million square yards.

It is a mistake, when people refer to total imports, to do so without making the necessary qualification that a substantial part is for re-export. The manufacturers of grey cloth in Lancashire have no objection to this import for re-export. I am not seeking to minimise the seriousness of the import problem, but hon. Members must remember that in the case of non-Commonwealth countries the tariff for cotton textiles, as for other industries, should be the Government's main weapon for protecting the industry. The tariff for grey cloth is 17½ per cent., and this applies to all cloth other than that coming from Commonwealth countries.

In the case of the three main Commonwealth exporters—India, Pakistan and Hong Kong—inter-industry agreements have been arrived at whereby a system of voluntary restraint on shipments to Britain has been agreed to. In the case of certain other countries, where competition would be at low cost, and a tariff different from the present level might not be sufficiently effective, there is a variety of arrangements taking the form of quota restrictions We have a quota applying to shipments from Japan, China, Formosa and—moving around the globe, so to speak—since Spain was referred to earlier, there is a voluntary inter-industry agreement which has cut back Spanish shipments to Britain by 30 per cent.

Mr. Rhodes

I am interested in what the right hon. Gentleman is saying, but since he has recited the countries to which quotas apply, would he say whether the arrangements he has made in recent weeks with Japan are in preparation for the quota system with Japan being dropped?

Mr. Erroll

There is obviously nothing I can say about the negotiations for new trade arrangements with Japan while those negotiations are still taking place.

Mr. Rhodes

Cannot the right hon. Gentleman say anything at all about them?

Mr. Erroll

I cannot say more until the negotiations are finished.

The position, therefore, is that there is a pattern—albeit a somewhat irregular one—of restraint on imports from the producing countries of the world with the exception, of course, of Western Europe. The tariff of 17½ per cent. should be sufficient protection against European manufactured textiles flowing from countries in which the standards of living are comparable with those of our own.

I was particularly interested in the remarks of the hon. Gentleman the Member for Ashton-under-Lyne (Mr. Rhodes) concerning the Dutch textile industry. Substantially smaller than our own, it is efficient, well-organised and capable of sending us goods over the 17½ per cent. tariff. Holland does not impose restrictions on the import of Hong Kong textiles into the Netherlands.

Mr. Douglas Houghton (Sowerby)

What about the position if we enter the Common Market?

Mr. Erroll

That is in the future. I am dealing with the present. It is significant that, despite tariff protection, imports came in from Western Europe to the extent of 60 million square yards last year, whereas we were able to sell to Western European countries only about 4 million square yards. The Lancashire cotton textile industry should ponder on these rather disturbing figures.

Imports are high and serious, but it is important to realise that retained imports have been falling during last year and now, in the third quarter of this year, are considerably lower than the first quarter. They were 166 million square yards retained in the first quarter, 138 million square yards retained in the second quarter, and 120 square yards retained in the third quarter. I mentioned tariffs as being the main protective instrument, but the Government are not resting content with that. In the Conference on Textiles, at Geneva, we have signified our acceptance of what is called, colloquially, the "Short-Term Agreement" whereby all the countries concerned have agreed that if low-cost imports were to increase to such an extent as to cause disruption, or even threaten to do so, to the domestic industry, they would agree to cut back shipments to the 1960 level and the receiving country would have the power to impose restrictions. At Geneva, also, there is a conference, at the moment at a technical level, discussing long-term arrangements for the orderly movement of textiles between member countries. We are, naturally, playing our full part in that.

I want to turn to the Customs Duties (Dumping and Subsidies) Act, 1957, which was criticised on both sides of the House. This Act is really, again to put it colloquially, an anti-material injury Act and not an anti-dumping Act as such. In other words, if a product is sold here at below the cost at which it would be sold in the country of origin, that on its own is not a sufficient reason for imposing an anti-dumping duty, because the public get the benefit of the cheap products. The purpose of the Act is to impose an anti-dumping duty if such dumped goods cause material injury or a threat of material injury to the domestic producer in this country.

We in the Board of Trade, of course, cannot know whether a domestic industry is suffering material injury or is threatened with it until those in the industry tell us about it. I am for ever telling industries who grumble and complain about the ineffectiveness of the Act that they do not help to make it effective by staying away and not telling us what their troubles are. I put that point strongly to the different meetings that I had in Manchester at the beginning of this month, and I hope that people will not hesitate to come and tell us at the earliest possible opportunity what the problem is and enable us to see in what ways we can help them.

It is sometimes difficult to find out the ruling price in the country of origin, but here again, particularly with regard to the Communist bloc countries, where the market prices are difficult to ascertain, we would be very glad to help them and show them the sort of way in which they should present their applications.

We are anxious to help industry, and not just the cotton industry, in securing their rights under this Act. There is a good deal of misunderstanding which can only be cleared up by talks between trade associations and by officials who are ready and willing to embark upon such talks.

Mr. Rhodes

Would the right hon. Gentleman deal with the matter of the country of origin? Does he think that the provisions in the Act relating to the country of origin are adequate?

Mr. Erroll

I am not quite clear what the hon. Gentleman is referring to. The point is that the proof must be given of the price in this country being below the price ruling in the country of origin.

Mr. Rhodes

No, that is not the point. The point is, which really is the country of origin of the material? There was an argument as to whether it should be on a percentage basis or on a processed basis.

Mr. Erroll

Yes, that is a complication. If the hon. Gentleman will forgive me, I will not try to go into that question now in view of the time.

Mr. Leslie Hale (Oldham, West)

This debate started at eleven minutes past the hour. The right hon. Gentleman keeps looking at the clock. He has not said a word about the future. The real trouble is uncertainty. My hon. Friend has put a point about the Common Market and we want to know something about it. If Holland can get over a 17½ per cent. tariff, if German and French trade is expanding, if world trade in textiles is expanding and we are contracting, what do the Government say about that?

Mr. Erroll

I think that the position about the Common Market is clear to hon. Members. It is that negotiations are only just beginning, although we have applied for membership and hon. Members know just what such membership would entail. So should the Lancashire cotton industry know. I do not see why Lancashire need be in any way inferior to the Dutch, German, or French textile industries, operating in roughly similar conditions.

I have referred to the Customs Duties (Dumping and Subsidies) Act and explained its limitations. I have also explained that we would be glad to help industry with its applications.

I turn now to re-equipment and redundancy. My hon. Friend referred to the £30 million as being the amount which the Government said they would spend on redundancy and re-equipment together. That figure was always intended to be an indication of the maximum amount which would be spent. It was not meant to imply that £30 million had to be spent.

Mr. Rhodes

That is not correct. I have read thoroughly the Report of the Public Accounts Committee which investigated this matter. The senior official from the Board of Trade who gave evidence to the Committee said that there was no maximum figure.

Mr. Erroll

It was a figure given as an indication of what was thought likely. I quite agree that I should not, perhaps, have used the word "maximum" as meaning that we should simply turn off the tap when £30 million was reached. I am sorry if I conveyed that impression. It was regarded as the likely figure. Equally, it is not intended to be a minimum figure. If the amount does not go up to £30 million, there will be no question of scraping round to find some way to spend a so-called unallocated balance.

The position so far is that redundancy payments amount to about £12½ million and applications for re-equipment grant—which, I think, are much more important now—amount to £35½ million, of which the Government's contribution would be about £8.9 million. Thus, about £20 million has already been spent or allocated for the purpose. There is still more than six months to go for applications for re-equipment grant to be received, so the final figure may well be higher than the one I have announced.

When one talks of redundancy and re-equipment, one naturally goes on to the question of the size and structure of the industry. My hon. Friend asked whether the Board of Trade would say what size it thought the industry ought to be. I was asked that several times in Manchester. I want to make quite clear that it is not the job of the Government to go about telling different industries what size they ought to be, whether they ought to be large or small. That is for the individual industry.

Mr. Hale

Why not?

Mr. Erroll

I know that the Labour Government did that sort of thing, but we do not believe in running the economy in that way.

We think that a much higher industrial efficiency is attained in Britain if we let each industry find its own right size, which it will do in accordance with the determination of all the people engaged in it. There will be no question of the Government determining an artificial or predetermined size for an industry and trying to make it fit that size. We do not believe in running the economy that way.

What did interest me in my visit was that, instead of having one meeting, I had to have a series of meetings with different sections of the industry. Of course, I was familiar with what is called the horizontal structure of the industry which, I know, has its roots deep in history, but the fact is that, while it would be very difficult to make changes at the present time, the horizontal structure is, on the whole, a weak one. It means that in many cases the finishers and the producers are not really in direct contact with their customers.

I met the organisation representing the merchants, and a very keen and alert body of men they are, fully alive to the advantages to be got from keen selling on narrow margins. But the trouble about having the merchants, in a sense, standing between producers and customers—or, as the defenders of the system would say, having them applying their specialised skill in marketing—is that Lancashire's prices tend to go up rather rapidly in a time of shortage of products—

Mr. Rhodes

Hear, hear.

Mr. Erroll

—because demand is always running ahead and, therefore, there tends to be over-buying at times of rising prices. Then, when demand falls away, prices tend to be unnecessarily depressed because of the excessive volume of unsold stocks hanging over the market. That is simply a fact of the situation.

We in the Board of Trade have been trying to do something about this. The first thing needed is knowledge. What is the size of the stocks at any given time? Even that is not known in the industry, and the industry has not been able to organise itself to find out. We have worked with the industry to try to reach some arrangement for providing statistics of stocks. The Grey Cloth Importers' Association has proved very co-operative in this difficult and complicated exercise.

I have talked about imports. I come now to a few words about exports. Of course, we are very sorry about the loss of export markets, but I believe that there are export opportunities which some firms are undoubtedly taking. I am sure that there are many more export opportunities. One of the important things is to consider new markets rather than bewail the loss of some old ones.

One clothmaker told me how disappointing it was not to be able to sell his highly specialised and expensive material to India and wanted to know why we did not persuade the Indians to stop imposing import controls. It is no good bemoaning the loss of that market. India will maintain her import controls as long as she has to do so. His object ought to be to consider other markets, particularly those in Western Europe and North America. Perhaps he is already doing so. I do not wish to do him an injustice. There was not time for me to question him more thoroughly and I only mention the case to illustrate what the industry can do to find new export markets.

Finally, let me say a few words about the future. I was asked in Manchester and I have been asked today what is the Government's policy. I have been criticised on the ground that the Government have lost interest in the cotton industry. In fact, the hon. Member for Ashton-under-Lyne intimated that once the General Election was over we lost interest in the industry. That is not the case, and I am glad to rebut that somewhat unfair insinuation.

Our policy remains the same. We wish to see an efficient and prosperous cotton textile industry as part of Britain's economy. We will, therefore, continue to apply, where appropriate, restraints on imports and to help in the application of inter-industry agreements. We will implement our undertakings in connection with re-equipment, which I have dealt with in some detail today, and will represent Britain's interests at Geneva during the two conferences which I have mentioned. However, the future of the industry lies in the hands of the workers, designers, salesmen, managers and directors in the industry. It is they who will finally decide the future of their great industry rather than the Government.