HC Deb 06 June 1962 vol 661 cc467-78

The following Questions stood upon the Order Paper:

75. Mr. RHODES

To ask the President of the Board of Trade, whether, in view of the state of the cotton industry and the representations recently made to him, he will give an answer to the proposals submitted to him by the deputation led by the honourable Member for Ashton-under-Lyne; and if he will make a statement.

76. Sir J. BARLOW

TO ask the President of the Board of Trade, whether, in view of the state of the cotton textile industry and the representations which have recently been made to him, he will give an answer to the proposals submitted to him by the deputation led by the hon. Member for Middleton; and if he will make a statement.

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

With permission, Mr. Speaker, I will now answer Questions Nos. 75 and 76 and make a statement of Government policy concerning imports of cotton textiles and other matters affecting the cotton industry.

As the House may be aware, the Government have received, through the Government of Hong Kong, an offer from the Hong Kong industry to continue up to the end of 1965 the present ceilings on their exports of cotton piece goods and made-ups for retention in this country, and, in addition, to limit yarn exports to the 1961 rate. The limitation of yarn exports is a new feature which would come into operation shortly.

The Government are aware that the British industries concerned regard these levels as excessive, and very strong representations have been made by the Cotton Board to secure a reduction.

On the one hand, the Government recognise the serious difficulties which a large volume of imports cause to these industries; on the other hand, the Government are bound to take account of the importance of textile exports to the economies of the Commonwealth countries concerned. They believe that the proposed ceiling is reasonable in all the circumstances and they have decided that the offer should be accepted.

This offer is subject to the acceptance of similar arrangements on the part of India and Pakistan, which I am expecting shortly.

Certain matters remain to be settled and the arrangements would be on the basis of the present system whereby cotton textiles from Commonwealth countries enter Britain duty free. If, as a result of the negotiations in Brussels, there were to be any change in this system, the Governments and industries concerned would naturally reserve their right to reconsider the matter.

The long-term Geneva Arrangement is due to come into operation in October next. The Government intend to accept it for the United Kingdom subject to a reservation exempting us from obligations under the Arrangement to admit increased imports.

These measures will ensure stability over a large part of the market. Supplies from all the major low-cost Asian producers are now regulated either by voluntary means or otherwise. Imports from Japan, Formosa, China and the Eastern bloc countries are under licensing control. This will continue. Imports from Spain are limited by agreement with the Spanish industry. All imports of cotton cloth from foreign countries pay import duty. I am circulating in the OFFICIAL REPORT Tables of figures relating to different areas since 1959.

Cotton textiles is a trade where exports from new sources may grow very rapidly. The Government intend to keep the situation under review and are therefore introducing a system of open individual licensing. This involves the withdrawal of the present Open General Licence under which cotton piece goods, certain made-ups and yarn may be freely imported from most sources, but it does not entail new restrictions. A full announcement of the details of the licensing arrangements is being issued today.

It would be unfair to those countries who are voluntarily restricting their supplies to this market if other countries took advantage of such restraint to increase their own sales, Countries with no traditional trade in cotton textiles should not count on being able to build up a new market in Britain.

There is one further matter to which I should refer. The Cotton Industry Act, 1959, allowed three years for the submission of applications for re-equipment grant. This period ends on 8th July. Firms intending to submit applications to the Cotton Board should do so without delay. They will still have another year to place their orders with machinery makers and up to July 1964 to complete installation of the plant.

This statement will enable firms in the industry to judge where they stand and to decide upon their future action. Much special help is being given to the industry, but the industry itself has a great deal to do.

Mr. Rhodes

Is the right hon. Gentleman aware that he was blushing when he made the statement? Is he aware that we are not in the least surprised? Is he aware that his announcement will cause bitter disappointment in Lancashire? Is he aware that, if he had accepted the figures I suggested to him of a 1959 ceiling, it would have been more fair, more equitable, more realistic and would have given the Lancashire producers some confidence to go ahead with their re-equipment? If it was necessary in 1959, an election year, to spend millions of £s of public money on the reorganisation of the industry, when the chief imports were running at 418 million square yards, including yarn equivalent, what about the position now when imports are running at 495 million square yards, including yarn equivalent? Does he not agree—[Interruption.] I do not often ask a question in the House, but when I do I mean it. Does the right hon. Gentleman agree with the conclusion of the Estimates Committee that, unless the matter is tackled now, the public money which has been spent on the industry will be wasted?

Mr. Erroll

When Lancashire comes to study my statement as a whole and sees that it represents a restriction to the present ceilings in regard to Commonwealth Asian imports and the other features which I have announced, I think it will realise that we are doing a great deal for the industry and it should be able to make real progress in re-organisation as well as in re-equipment.

As regards the 1959 levels as compared with the 1962 levels, there is no for going back to the 1959 levels, as that would make a difference of only about 3 per cent. in the total quantity of cloth consumed in this country. I have naturally taken note of the comments at the end of the Report of the Estimates Committee, and I very much appreciate what the Chairman and the members of the Committee had to say about the administration of the Act by the Board of Trade.

Sir J. Barlow

Is my right hon. Friend aware that, although we appreciate his long-delayed statement, Lancashire will be very disappointed with it? A most important redundancy scheme was promulgated in 1959, and we regard that as being entirely let down and changed. Will my right hon. Friend do his best to arrange for a debate on this important subject as quickly as possible? Is he satisfied that he is taking sufficient powers to deal with dumped imports?

Mr. Erroll

I can only repeat that I do not think that Lancashire will be so disappointed when it has had time to study the statement in full. All important sections of the industry are planning to go ahead with re-equipment, because re-equipment grant applications received up to 1st June exceed a total of £51 million. As regards the antidumping legislation, the system operated under the Act has been explained on several occasions to the industry and I am not aware of any recent complaints about its ineffectiveness. As regards the debate, that is not a matter for me.

Mr. Thornton

Is the right hon. Gentleman aware that in terms of our coal industry these excessively high figures represent an annual import of 65 million tons? Had coal been involved instead of cotton, would the President have dared to come forward with this statement? Is not the Government action typical of what has been done over a wide field of being strong with the weak and weak with the strong?

Mr. Erroll

One of the most important things to remember is that unemployment in the cotton belt of Lancashire is well below the national average.

Mr. S. Silverman

Eight per cent.!

Mr. Erroll

There may have been one or two small local pockets with a higher rate, but I am speaking of the cotton belt as a whole. Therefore, although there have been severe changes in the size of the industry, there has not been great suffering caused by unemployment.

Sir A. V. Harvey

Is my right hon. Friend aware that the ceilings to which he has referred will keep the cotton industry in difficulties? Why cannot he invoke the disruption clause of G.A.T.T.? Why do the Americans and the E.E.C. countries take only half of the 5½ per cent. of their home production, while Britain takes 30 per cent.? If my right hon. Friend thinks that what he has said will satisfy people, he will learn differently tomorrow.

Mr. Erroll

As regards the disruption clause of G.A.T.T., I imagine that my hon. Friend is referring to the short-term G.A.T.T. arrangement which provides for action being taken if imports exceed those of the period for the year ending June, 1961. Since then imports into this country have been at very much lower levels than the base period, and therefore it has not been possible for us to invoke the disruption clause of the G.A.T.T. As regards the practices of other countries in relation to imported cotton goods, there are no restrictions against imports from India, Pakistan and Hong Kong into Benelux or Italy, while West Germany applies quota restrictions to India and Pakistan but not to Hong Kong. Therefore, the practice of other countries is not universally restrictive.

Mr. Mapp

Is the right hon. Gentleman aware that the real heart of Lancashire was in the House on Monday afternoon? They indicated specifically that these possible schedules which the Minister has would sap completely what little confidence is left in Lancashire for re-equipment. Therefore, half the Government legislation dealing with scrap machinery will be wholly disrupted by this most depressing announcement. Will the right hon. Gentleman agree to receive a deputation from the country from all levels of the industry so that they may tell him firmly and candidly what their opinion is of his statement?

Mr. Erroll

I do not think it follows that all the money which has so far been spent on redundancy will prove to have been wasted, because I think that a substantial measure of re-equipment will take place. When the industry has had an opportunity to study my statement and its implications, I shall be very glad to receive a deputation from the Cotton Board.

Mr. Leavey

My right hon. Friend must recognise that with unemployment at the levels which persist at this time, at any rate in my own constituency, this statement cannot be received with anything but bewilderment. If the recent G.A.T.T. agreement at Geneva did not permit Her Majesty's Government to impose effective quantitative restrictions, why did we subscribe to it? It seems that it was possible, hardly before the ink dried upon it, for the Americans to impose a restriction upon Hong Kong textile exports. Why cannot Her Majesty's Government apply effective limits which will at least restore some confidence to Lancashire? I ask my right hon. Friend to recognise that, whatever the national unemployment levels may be, there is today among my constituents widespread unemployment. A large number of them are on short-time and two mills are permanently closing down. I ask my right hon. Friend to take a more realistic and sympathetic view of the present situation in the cotton textile trade.

Mr. Erroll

The countries which export textiles to us have been pressing very strongly for an increase in the ceilings. It is only as a result of my taking a sympathetic view and adhering to it that I have been able to secure the maintenance of the ceilings at the present level only. I have to take into account the interests of other countries as well as our own interests. As regards the G.A.T.T. arrangement, in answer to my hon. Friend the Member for Macclesfield (Sir A. V. Harvey), I was referring to the short-term arrangements. May I remind my hon. Friend the Member for Heywood and Royton (Mr. Leavey) of the long-term arrangement which comes into operation in September of this year, in which I think that he will find the arrangements are more satisfactory.

Mr. Darling

Is the right hon. Gentleman aware that we will have to have a debate on this subject at the earliest possible opportunity? Would he agree that the reorganisation that the House approved and which the taxpayers in part are paying for cannot possibly succeed with this high level of cheap imports? Is he aware that no one connected with the industry, and certainly no one in the House, would say that the imports from our Commonwealth countries ought to be cut off, but would he face the problem of how to keep the industry going when we are taking about twenty times more imports than our competitors? In these circumstances something more must be done than the right hon. Gentleman has suggested this afternoon.

Mr. Erroll

We must remember that the imports which came in in such large quantities in 1960 and the beginning of 1961 came in because the Lancashire industry could not meet the demand in this country and had very long order books. If the industry was then suffering from imports, it is now suffering from a certain amount of over-stocking which is working out. I am able to announce today, too, that agreement has been reached on the provision of the figures of stocks which will be made available to people in the industry, so that for the first time in Lancashire's history there will be a comprehensive picture of the stock position. I therefore think that Lancashire will be able to assure for itself a place in the economic life of the country comensurate with its ability to regain export markets and reorganise its structure.

Mr. S. Silverman

Will the President of the Board of Trade tell the House what his position will be if his optimistic forecast of what Lancashire will think of this statement turns out to be unreal? If Lancashire is as disappointed as many of us think that it will be, will the Government change their mind about this? In the meantime, will he bear in mind some of the facts which he seems to have overlooked? Is it not true that when the Cotton Industry Act was passed in 1959 it was to give the textile industry an opportunity of adjusting itself to the new world situation? Since that time the amount of imported manufactured goods for retention in the home market, so far from having fallen, has increased more than twenty times. The President spoke about unemployment in the cotton area of Lancashire, but does he know that in my own constituency it is already running between 8 or 9 per cent., although the national average is scarcely more than 1 per cent.? Does not the right hon. Gentleman appreciate that in these circumstances his statement will spread such alarm and despondency throughout the industry as to make it not worth anyone's while to avail themselves of the offer of re-equipment subsidies up to 8th July? Are we not reaching a situation when the question before the House will have to be whether we desire to retain a cotton textile industry in this country at all?

Mr. Erroll

I will certainly bear in mind the points which the hon. Gentleman has made and, if there is a debate on this subject, I will do my best to reply to them.

Mr. S. Silverman

On a point of order, Mr. Speaker. I desire to ask leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of drawing attention to a definite matter of urgent public importance, namely, the acceptance by Her Majesty's Government of proposals that will paralyse the cotton industry of Lancashire.

Mr. Speaker

The hon. Member for Nelson and Colne (Mr. S. Silverman) asks leave to move the Adjournment of the House for the purpose of discussing a definite matter of urgent public importance, namely, the acceptance by Her Majesty's Government of proposals that will paralyse the cotton industry of Lancashire. I regret that I do not feel able to put that matter to the House.

Mr. Silverman

In giving that Ruling, Mr. Speaker, had you paid regard to the fact that before we shall again have an opportunity of discussing this matter these agreements may be ratified and the last opportunity of preventing that may have been lost? Does that not render it a matter of immediate urgency?

Mr. Speaker

I wish to adhere to my Ruling. I feel confident that it is right.

Mrs. Castle

In supporting the representations made by my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman), may I ask you, Mr. Speaker,

Million sq. yds.
Original Current*
Hong Kong 164 185
(February, 1959-January, 1962)
India 175 195
(January, 1960-December, 1961)
Pakistan 38 42
(January, 1960-December, 1961)
377 422
* NOTE: Provision is made in the present arrangements for the issue of supplementary quotas, on certain conditions, if this is necessary to ensure that the voluntary restraint exercised by these countries does not prejudice their share of the United Kingdom market in relation to other exporting countries.

if you are aware that when a deputation from the cotton industry met hon. Members—the Textile Action Group—on Monday it was put to us that mills in Lancashire may close this weekend if there is not immediate restoration of confidence there. Therefore, if the Minister's statement further destroys confidence, there is a very urgent element in the consequences for Lancashire.

Mr. Speaker

I am afraid that I cannot, in giving a Ruling on these matters, assess the hypothetical results of something, even if strong expressions have been made about it. I cannot accept the proposition that I should put the application to the House.

Following are the figures:

Million sq. yds.
1959 1960 1961 1961 1962
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 1st Quarter
Total imports 525 713 714 221 192 163 138 143
of which for re-export 153 191 193 55 54 47 37 30
For retention of which 372 522 521 166 138 116 101 113
A. Dutyfree
From Hong Kong
India and Pakistan 305 320 259 83 72 61 43 60
From Canada 10 22 5 6 5 6 3
From other Common-wealth countries and Irish Republic 4 6 11 2 3 2 3 2
Total duty-free 309 336 292 90 81 68 52 65
B. Dutiable
From countries now restrained 17 74 90 27 22 22 19 16
From Western Europe and U.S.A 44 82 95 31 24 17 22 23
Other countries 2 30 44 18 11 9 8 9
Total dutiable 63 186 229 76 57 48 49 48

*Western Europe: West Germany, Netherlands, Belgium, France, Italy, Austria and Switzerland.