HC Deb 11 December 1962 vol 669 cc370-80

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Finlay.]

11.32 p.m.

Mr. John C. Bidgood (Bury and Radcliffe)

I am very glad to have this opportunity to raise the subject of employment prospects for workers in the viscose rayon industry in Tottington. The House will recall that, earlier this year, there was a great deal of furore both here and in the country about the designs which I.C.I. had on the Courtauld enterprise. As the smaller of the two giants, Courtauld adopted an air of injured innocence.

I am raising this matter tonight because the tears shed by the Courtauld directors earlier this year are now being shed by 760 employees of a company which Courtauld has since taken over and who have been told that the two mills concerned are to be closed at the end of this month.

The arguments advanced by the Courtauld board when the noose was around its neck somehow do not seem to count when it is wielding the stick itself. To explain the matter to the House, I shall go through the chronological details, which started only a week or two after the debate which we had in the House and the statement by the President of the Board of Trade about the proposed I.C.I.-Courtauld merger which came to naught in the end.

On 16th February, I visited Kirklees Ltd., in my constituency, to congratulate it on its export record. I found the directors in very good heart. They told me that they could not wait for the Common Market because they felt that they could compete on equal terms with any of their competitors in Europe. They also told me on that occasion that they were Courtaulds' only competitors in viscous rayon yarn.

Three months later, on 7th June, I received a letter from Courtaulds advising me that discussions were in progress between them and Kirklees whereby Courtaulds would acquire the whole of thy, issued capital of Kirklees. I wrote to the chairman of Kirklees expressing the hope that if the amalgamation came to fruition it would not adversely affect the Kirklees employees. He replied to the effect that he hoped that the outcome would be as favourable as possible for the employees who had rendered such loyal service to the company for a period of years.

On 29th June, the formal offer was posted from Courtaulds to the shareholders of Kirklees and in the offer the Kirklees chairman recommended acceptance as being a rational step as shareholders could continue to retain an interest in their business as part of a large group. On 10th August, it was announced that the offer had been accepted by 90 per cent. of the shareholders and that the remainder of the shares would be acquired compulsorily.

On 18th September, in a display of what I can only consider indecent haste, Courtaulds announced its decision to close down Kirklees at Tottington and Bolton, and 620 employees were affected at Tottington and 140 at Bolton. Shortly afterwards, I saw Courtaulds executives in London and remonstrated with them about this decision, but, unhappily, I made no progress. It is obvious that Courtaulds took over Kirklees with the express intention of closing it down.

Why did not Courtaulds say so in its offer to the shareholders? It is possible that some of the shareholders would not have agreed to sell. Some of them are local people who might have let their local loyalties intervene and would not have accepted the offer, not wishing to see local employees thrown on to the scrap heap. It may be said that the 620 Kirklees employees in my constituency can get other jobs, but, although that is possible for some of them, the great majority are married women whose standard of living has been geared over the years to two wage packets coming into the house. Many of these women will find it impossible to find alternative employment. As hon. Members know, this has happened so often in Lancashire that it is a classic example of the "other nation" about which we have been reading so much in the Press during recent weeks.

When I asked a Question in the House on this issue the other day, I was told that viscous rayon yarn had to compete with man-made fibres. But I remind my hon. Friend, as the Kirklees chairman said in his letter recommending acceptance of the offer, that Courtaulds is the largest manufacturer in this country, if not in the world, of man-made fibres, so the question does not arise.

My hon. Friend, I am sure in a desire to be helpful, said that Courtaulds itself had closed some of its plants. This is true. But what was not disclosed was the fact that many of these plants had been taken over for that very purpose, as happened in the case of Kirklees, and this, I am unhappy to say, is the last link in the chain of that operation. Courtaulds now has a complete monopoly in viscose rayon yarn, and I am sure that that cannot give satisfaction to those employees of Kirklees who have given a lifetime of service For a moment I want to deal with the financial aspect. How much did it cost Courtaulds so effect this operation? The capital of Courtaulds is almost £100 million. In exchange for scraps of paper—share certificates—it has increased its capital by 0.6 of 1 per cent. to enable it to close down its only competitor in this field. Nobody on the shareholders' list of Courtaulds will notice this infinitesimal addition to the list of shareholdings. The only people who will notice it are the 760 employees of Kirklees who are put out of work.

During the discussions earlier this year in the House when the country was very concerned about the suggested I.C.I.-Courtaulds merger, the President of the Board of Trade said 'that the Government had no power to refer that issue to the Monopolies Commission. He also said that if the merger—if it too place—gave rise to conditions where there were grounds for reference, he would certainly do so. I suggest that here is his opportunity, for whereas in the proposed I.C.I.-Courtaulds merger we were talking about a purely hypothetical case, here we are talking about something that has actually happened.

In the I.C.I.-Courtaulds discussions, the President of the Board of Trade said that the advantages or disadvantages could only be judged by results. That merger did not take place, but the results of the Courtaulds-Kirklees merger are there for all to see.

I believe that my hon. Friend will reply that the Government have no power to intervene in this matter. He will possibly say that he can visualise no injury to the national interest. Well, I maintain that putting 760 people out of work in the north of England, which, as we all know, is particularly prone to unemployment at present, is a national injury and I believe that this is an occasion, a classic occasion, when he should suggest to his right hon. Friend that the whole thing should be gone into quite explicitly.

Earlier this year we had the spectacle of two large corporations criticising one another in public on the I.C.I.-Courtauld issue. Sir John Hanbury was well able to stand up for the Courtaulds shareholders, against Mr. Chambers. Who have the Kirklees employees to stand up for them against Sir John Hanbury? I hope that it will be the President of the Board of Trade, who has now seen the threat to the public interest and is now faced not with a hypothetical situation, but with one fraught with very real danger to people in my constituency.

During a similar discussion earlier this year my right hon. Friend said that we must wait and see. We have waited and we have seen, and I ask my hon. Friend whether he will see that this matter is either referred to the Monopolies Commission or to the committee of inquiry which, we are told, is sitting. If the House has no powers to act in circumstances of this sort, I think that it is high time we took them.

11.46 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. David Price)

I am sure that the House will agree that at any time it is a blow to a town of the size of Bury when a factory employing over 600 people closes down. But, equally, the House would agree that the seriousness of that blow obviously depends upon the prospects for employment within the town itself or within reasonable travel-to-work distance of it. Before I discuss some of the social consequences of the closure of Kirklees, I should like to acquaint the House with the background history of the decision raised by my hon. Friend the Member for Bury and Radcliffe (Mr. Bidgood).

As I understand, Courtaulds has known for some time past of the increasing difficulties of Kirklees in maintaining its position as a small and independent producer of rayon with the limited resources at its disposal. These difficulties have arisen very largely from the small scale on which Kirklees has been operating and have been accentuated by the fact that the total demand for viscose rayon, and, in particular, crepe rayon, has been falling off.

As a result of these difficulties, Kirk-lees has been able, during the last eleven years, to pay a dividend on only four occasions. In 1959, it emerged from a very difficult period, during which it had not paid a dividend for seven years. But, regrettably, its relief was only temporary and in the year ended 30th June, 1962, it made a total net loss before tax of £102,000.

Mr. Bidgood

May I tell my hon. Friend that between 1941 and 1962 Kirk-lees has shown a loss on only two occasions?

Mr. Price

With respect, in 1960, before tax, it made a net profit of £132,000. By 1961, that had fallen to less than half, £57,000. This year it made a loss of over £100,000. This shows a fairly serious deterioration in the financial position of the company.

Earlier this year it had become evident that Kirklees could not continue on its own much longer and Courtaulds concluded that it would be in the interests of all concerned if the inevitable rundown could be achieved in an orderly fashion, rather than by the liquidation of Kirklees. It was, therefore, agreed by the directors of Kirklees that Courtaulds should make an offer to the shareholders for its shares and, subsequently integrate the Kirklees business with that of Courtaulds. This offer, the acceptance of which was "strongly recommended" by the Kirklees directors, has now been by over 90 per cent. of the shareholders, and the remaining shareholdings have been compulsorily purchased.

As a result of this integration, severe dislocation has been avoided. Although it has been necessary to close down the viscose yarn plant at Bury and the yarn processing plaint at Bolton, it has been found possible to continue the garment making section of Kirklees' activities at Farnworth, and to make a number of arrangements about the displaced staff and operatives. I shall say more about those arrangements in a moment.

During the last decade there has been substantial over-capacity of viscose rayon plant in this country and overseas. Courtaulds itself has been forced to scrap plant on a considerable scale and to concentrate production in larger and more economical units. In 1961, Kirklees' production of viscose yarn was approximately 4 million lb., or less than 7 per cent. of total United Kingdom production of viscose textile yarn and a little over 1 per cent. of total United Kingdom viscose yarn and staple fibre production. This was much smaller than the total capacity of any of Courtaulds remaining mills and this, together with the fact that financial stringency had prevented Kirklees from keeping its plant fully up to date, made it very probable that this plant would be the one which would have to close down in any further rationalisation of the industry.

The position has been made more difficult by the fact that viscose rayon filament is now only one of many types of man-made fibres manufactured in this country. Viscose rayon, particularly in some of its recently improved varieties, is still a most useful fibre, but over the last few years it has faced severe competition from the newer filament yarns. These include Tricel, the acetate rayon manufactured by Courtaulds, Nylon and Terylene, as well as the acrylic fibres like Acrilan and Courtelle, another Courtauld product.

As a result of this competition, the total United Kingdom production of viscose textile yarn, 59 million lb., in 1961, was lower than in 1938. Because of the elimination of high-cost excess capacity, the prospects for viscose textile yarn have been greatly improved and the industry is in a stronger position to face competition at home and also in an enlarged European market.

I turn to the question of Courtaulds efforts to ease redundancy problems. I am sure that my hon. Friend will recognise that if Kirklees had simply "gone broke" it would have been harder to make reasonable arrangements to assist redundant workers. Courtaulds is doing everything it can to lessen the impact of the closure on those who work in the mills. The earliest possible notice has been given 4o those likely to be affected. In September all Kirklees employees were informed that the plant would be closed at Christmas, although some employees would be required for some time into 1963 to remove existing equipment and prepare the factory for a new user if one could be found. Courtaulds has long had well established redundancy arrangements for terminal payments to staff no longer required and who could not be transferred to other work within the company, and these arrangements are being applied to Kirklees employees.

Mr. Bidgood

My hon. Friend said "If Kirklees had simply 'gone broke'". Is he suggesting that Courtaulds took them over for philanthropic motives?

Mr. Price

I am suggesting that there is an element of just that in it. I am not saying that that was by any means the sole motive, but it has certainly been possible to make better arrangements to deal with redundancy than could have been made if a firm had been facing bankruptcy.

I was about to point out that all the arrangements have been fully discussed with the trade unions concerned and have been accepted by them. There have also been discussions with the local authority. In addition to making arrangements for redundant employees, Courtaulds has also been making strenuous efforts, in conjunction with the Board of Trade regional office and others, to find a new occupant to take over these premises.

I turn to the present unemployment situation. The Kirklees mill at Bury employed about 620 people. The mill at Bolton, which is also to be closed, employed 140 people. According to the information available to the Ministry of Labour, the labour force at the Bury factory had fallen to 374–271 males and 103 females—by 7th December. Only 60 workers were originally given actual notice, but the majority of these have found other jobs before they were due to leave, as, of course, have most of the 180 workers who have already left on their own account.

A special count was carried out at Bury Employment Exchange yesterday, and it showed that only three former employee's of Kirklees are registered as unemployed; these comprise three men, two of whom are 56 years of age. Of the workers currently employed, 170 have been given notice to terminate on 14th December, of whom about 50 are understood already to have found other work. About 100 other workers have also been given notice to terminate their employment by the end of the year. The remainder, numbering about 100, are pretty certain to be retained at least until next March.

Unemployment in Bury and the immediately surrounding area is well below the national average. The fact that in the Bury Employment Exchange area only 1 per cent. were registered as wholly unemployed in November and the fact that most of the workers who have so far left the Kirklees factory have secured other employment suggest that there are reasonable opportunities for finding other work in the immediate area. Individual placing problems must, however, be expected, especially where workers are elderly.

Because of the low level of unemployment in Bury, the Board of Trade is not encouraging industrial expansion in this area, but if any serious and lasting unemployment developed the Board would do what it could to encourage development, subject, of course, to the overriding needs of the development districts.

My hon. Friend raised the question of monopolies and the merger aspect. I think that he recognised that the acquisition by Courtaulds of Kirklees could not have been investigated by the Monopolies Commission before the merger took place. I think that he knows that under existing legislation my right hon. Friend the President of the Board of Trade has no power to ask the Monopolies Commission to investigate mergers before they take place.

My hon. Friend also knows that there is currently going on a review of the whole of the monopolies and restrictive practices legislation which my right hon. Friend the President of the Board of Trade announced in the House on 14th February. During the course of this review the question of powers to investigate mergers is being considered. Interested persons have been invited to give evidence and representative organisations have already given their views. No decisions have yet been made.

As I explained earlier this afternoon, in a Written Answer to a Question from the right hon. Member for Battersea, North (Mr. Jay), no report is likely before the end of the year, and then my right hon. Friend will need some time in which to study it.

But the Board of Trade have power to ask the Monopolies Commission, under Section 2 of the Monopolies and Restrictive Practices Act, 1948, to investigate the affairs of any industry where "monopoly conditions" as defined in the Act appear to them to exist—that is, usually, where a single firm controls at least one-third of the supplies in this country of a particular product.

Mr. Bidgood

Is not that precisely the case here? Courtaulds now controls 100 per cent. of the viscous rayon yarn manufacture in this country.

Mr. Price

I was about to say that in this technical sense Courtaulds was in a monopoly position as a producer a long time ago and the Board of Trade could have referred the supply of viscous rayon to the Monopolies Commission.

The acquisition of Kirklees has introduced no basically new element from the standpoint of the 1948 Act, because the previous position clearly met the definition in the 1948 Act. However, we do not make a practice of asking the Commission to investigate industries in respect of which we have no evidence of abuse. So far, though my hon. Friend has made a new suggestion tonight, there has been no suggestion that Courtaulds has abused its position.

Unlike the American legislation, our legislation does not say that where monopoly exists it is per se contrary to the public interest. It is up to the Monopolies Commission to decide whether a monopolist is abusing his monopoly power. I think that my hon. Friend will agree that it has been right, therefore, not to refer firms to the Monopolies Commission simply because they have a technical monopoly, but only where there is evidence, as a result of complaints made to the Board of Trade through the normal channels, that there is a possibility of abuse taking place.

My hon. Friend ought to look at Section 14 of the 1948 Act, which defines the public interest. Section 14 (c) says that one of the considerations which the Monopolies Commission must bear in mind when determining the public interest is the fullest use and best distribution of men, materials and industrial capacity in the United Kingdom". I will not develop the point further. I merely draw that to my hon. Friend's attention.

The technical arrangements for, but not the economic justification of, takeover bids were considered by the Jenkins Committee, which concluded that takeovers are an essential feature of economic growth and development. The Committee pointed out, however, that, like other convenient arrangements, this procedure has on occasion been abused, but in practice it is generally a convenient method of amalgamation.

I recognise that my hon. Friend raised at the end of his remarks a number of rather wider issues which I believe can be considered only in the context of a whole review of the field of monopoly and restrictive practice legislation. I hope that what I have told the House tonight will at least have reassured my hon. Friend on the specific human problem of the redundancy likely to arise from the closure of the Kirklees factory in his constituency.

As to the other matters, I can assure him that these are under—

The Question having been proposed after Ten o'clock on Tuesday evening, and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at two minutes past Twelve o'clock.