COTTON INDUSTRY (REORGANISATION SCHEME) (Hansard, 21 July 1961)

§ The Parliamentary Secretary to the Board of Trade (Mr. Niall Macpherson)
I beg to move, That the Cotton Doubling Reorganisation Scheme No. 2 (Confirmation) Order, 1961, a draft of which was laid before this House on 12th July, be approved. I hope that it will be to the convenience of the House if we consider with this Motion the four remaining Motions in the name of my right hon. Friend.

§ Mr. Ernest Thornton (Farnworth)
I agree.

§ Mr. Macpherson
The purpose of this and the other four Orders which the House will be asked to approve is very narrow. It is to make small and precisely similar amendments to each of the five reorganisation schemes which have been introduced under the Cotton Industry Act, 1959. These amendments take the form of supplementary schemes varying the principal schemes. Like the principal schemes, they require to be confirmed by the Board of Trade after being 1691 approved by both Houses by affirmative Resolutions.
The confirming Orders were laid before Parliament in draft on 12th July and the supplementary schemes are attached as Schedules to the Orders. The principal schemes for the spinning, doubling and weaving sections came into force on 30th July, 1959, and for the finishing section on 1st August, 1960. The Board of Trade is authorised by the Cotton Industry Act to make grants not exceeding 25 per cent. of the cost of eligible expenditure incurred on approved re-equipment and modernisation and to lay down conditions for grants. The Cotton Board administers the re-equipment schemes on behalf of the Board of Trade as its agent.
These Orders provide that the Cotton Board's expenses in administering the schemes shall be met by the various sections of the industry themselves out of levies imposed under the principal schemes, on persons registered as carrying out business in those sections. The original intention was that the principal schemes should provide for this to be done, in accordance with the Act, but provision was not made at that time. I must apologise to the House for that omission and, at the same time, ask it to repair it by agreeing to these Orders.
As required by the Act, these schemes have been prepared by the Cotton Board in consultation with the bodies appearing to it to represent the interests both of those carrying on business and of those employed in the sections concerned. There has been general agreement with the purpose of the supplementary schemes, and, subject to the approval of Parliament, it is intended that they shall come into effect on 7th August.
With that explanation, I would ask the House, as I have said, to repair the omission in the principal schemes and to allow us to have these Orders.

§ Mr. Ernest Thornton (Farnworth)
I agree that the Orders are very narrow, but they provide for the raising of levies from the industry to meet the administrative expenses of the reorganisation part of the scheme. Therefore, it appears to me that the amount of money raised for this specific purpose must be 1692 related in some degree to the amount which will be paid for re-equipment; that is, to the number of applications which have to be dealt with.
I am sorry that the Parliamentary Secretary was not able to make any reference to the progress of the scheme. We are aware that in their scrapping provisions the original schemes have exceeded expectations. In fact, according to the reply given by the President of the Board of Trade on 12th June last, the estimated cost to the Treasury of the scrapping schemes will be £12 to £13 million. Therefore, the scrapping schemes have doubled the expectation of the original estimate.
But what about the re-equipment schemes, the administrative expenses of which we are concerned with this afternoon? I think we must admit that these are going very badly indeed. Two of the three years have now passed in which applications can be made, and according to an Answer given by the President of the Board of Trade yesterday, the amount of Treasury grant which the applications attract is only £6.7 million. Therefore, if, in the third year, we get the same proportion of applications as in the first two years, only £10 million of Treasury money will be attracted in re-equipment grants.
If we add to that an estimate of £2 million for the finishing section, the total will be £12 million. It would appear that the re-equipment part of the schemes will be only about half the estimate made by the President of the Board of Trade when he presented the Bill and the original schemes to Parliament. I appreciate that the estimates for a Measure of this kind and for the schemes would be extraordinarily difficult indeed, but we cannot escape the fact that the uncertainty in the industry today is probably responsible for the comparative failure of the re-equipment schemes under the original Measure.
The purpose of that Act was, in the words of the President of the Board of Trade at that time, to create a smaller, more compact and more efficient industry. As I indicated earlier, the scrapping provisions have exceeded expectations. They have probably doubled them. Therefore, we have succeeded in making a smaller and more compact industry. But what has still to be done is to make a more efficient 1693 industry. I am very considerably disturbed—I am sure the House is—at the slow progress which is being made in respect of the re-equipment aspect of the Cotton Industry Act, 1959. Unless there is a substantial change and a recreation of confidence in the next few months, it would appear that the re-equipment phase of the Act will be a substantial flop, and if that happens the whole scheme will prove to have been a costly failure.
I see no reason why we should oppose these Orders. I think that we are agreed on both sides that the House should approve them.

§ Mr. N. Macpherson
I thank the hon. Member for Farnworth (Mr. Thornton) for the way in which he has received the Orders. I think that it is, perhaps, a little premature to say that the re-equipment schemes are likely to be a flop. At present, the Cotton Board has received applications representing a total expenditure by the industry of about £27 million. The hon. Member's figures were exactly right.
I would agree that there is some uncertainty in the industry, but the fact is that there is still a year remaining for the submission of applications for re-equipment and modernisation and, after that, a further two years for the installation of machinery. We certainly hope that within the next year we shall have many more applications and that, within that time, it may be possible to see the future a little more clearly than it is perhaps possible to do at this juncture.

§ Mr. Thornton
I am sure that the hon. Gentleman will not overlook the fact that I qualified my statement by saying that unless there is a substantial change in the position in the next few months it will be a flop.

§ Mr. Macpherson
Yes, I recognise that. The hon. Gentleman, very generously, was not condemning the scheme or prophesying disaster. On the contrary, I know that he hopes, with us, that the scheme will be a success and that the degree of re-equipment and modernisation will make for a much more compact and much more efficient industry.
I hope that in the time that is left the industry will take advantage of the facilities that are offered and make applications for re-equipment and modernisation grants. If that is done, when we come to the closing date in a year's time we may see that the original target has been very nearly reached, if not exceeded.