HC Deb 22 November 1962 vol 667 cc1547-62

10.10 p.m.

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

I beg to move, That the Cutlery and Stainless Steel Flatware Industry (Scientific Research Levy) Order, 1962, a draft of which was laid before this House on 30th October, be approved. This Order, if it is approved by Parliament, will be made under the authority of Section 9 of the Industrial Organisation and Development Act, 1947. As the House will recall, this Act provides that charges may be imposed by Order on persons engaged in an industry if it thought to be expedient for funds to be made available for various purposes of which the most important is scientific research. Two years ago the cutlery industry asked that a levy should be imposed on firms in the industry to provide funds which, with a grant from the Department of Scientific and Industrial Research, would finance the cost of collective scientific research on behalf of the industry by the Cutlery Research Council. As a result of this approach, the 1960 Order came into operation on 1st January, 1961. The grant from the D.S.I.R. was made conditional on the scale of research being expanded at the end of two years and this involves an increase in the industrial contribution towards the cost as well as an increase in the amount of the Government grant.

The primary purpose of this Order, which replaces that made two years ago, is to increase the contribution from the industry from £9,000 a year to just on £14,000. On an industrial income of £9,000 the D.S.I.R. grant has been £6,000. But when £14,000 a year is contributed by the industry the Government grant will rise to £9,000. Therefore, as a result of the Order the amount available for research will be increased from £15,000 to £23,000 a year. These resources will be used on research and development projects, a technical inquiry—sometimes referred to as the "trouble shooting" service—and the dissemination of scientific and technical information. Because labour costs account for between 50 per cent. and 60 per cent. of the cost of the manufacture of cutlery and flatware the main research effort will be devoted to increasing the degree of mechanisation and to reducing the number of manufacturing operations. All British cutlery must sell abroad on quality and, therefore, improvements in quality must be and are intended to be an important and significant part of the research programme.

That programme includes research on knife and scissor grinding, on multiple polishing, on abrasive operations and on the metallurgy of the edges of knives and scissors. The "trouble-shooting" service will absorb about 30 per cent. of the resources of the Research Association and the dissemination of information some 10 per cent. of those resources. These activities of the Research Association are particularly important in this industry which has so many very small firms specialising in one or a very few of the operations for the manufacture of cutlery and flatware.

The basis on which the levy has been imposed for the last two years remains unchanged, but the rate has been increased by half to provide the additional income required and a general exemption of the first £3,000 of annual turnover has been introduced in place of the existing exemption of businesses with a turnover of less than £1,000 a year. The exemption of the first £3,000 of turnover will reduce the number of firms liable to pay the levy under the Order from 280 to about 190. This illustrates to the House the number of very small firms there are in this industry. This is a reduction of about one-third. Furthermore, it will relieve small firms with a turnover of less than £10,000 of any increase in their contribution. Therefore, only firms in the industry with a turnover of £10,000 or more will have to pay an increased contribution.

The Cutlery Research Council, which has been responsible for this scientific research on behalf of the industry, has been reconstituted at the suggestion of the D.S.I.R. to bring its constutition into line with the common pattern of grant-aided research associations. It has now become an incorporated body under the title of the Cutlery and Allied Trades Research Association. This change is reflected in the Order.

The opportunity provided by the need for a new Order to secure additional funds for scientific research has been taken to stop a loophole in the provisions of the 1960 Order in relation to businesses in the industry which change hands between the base period—that is to say, on the turnover of which the levy is charged—and the levy period.

The Order 'has been drafted in complete accord with the wishes of the trade organisation representative of manufacturers in the industry, and with the support of the trade union to which the workpeople belong. The House will be pleased to know that the industry has an excellent export record amounting to roughly one-third of its annual production. The annual production of this industry as defined for the purposes of the Order is about £10 million a year and it is exporting about £3½ million. I believe that with the increased scientific research made possible by this increase in levy the industry will be able to meet increased competition at home and at the same time maintain and expand the substantial level of export it has achieved hitherto.

10.17 p.m.

Mr. G. R. Mitchison (Kettering)

The 1960 Order passed through the House without any discussion. I think it is time that we had a look at the industry and what it has been doing. I begin by commenting on the constitutional position. These research associations, so far as they are not financed out of the trades in question, are financed by grants from the D.S.I.R. For the operations of the D.S.I.R. the noble Lord the Minister for Science and his Parliamentary Secretary, whom I am glad to see here tonight, are responsible to Parliament. The Orders, however, are brought forward by the Board of Trade. The money which is collected by the levy on the industry is paid to the Board of Trade. We have a diarchy of a kind which exemplifies the worst possible feature of the modern British Constitution.

This is a question of research in trade, and those high powers who regulate these things should consider whether it is logical that not one but two Ministries should have an interfering hand in these matters. I should like to see the whole business of research and development handed over—I do not say to the D.S.I.R., although there is ground for saying that on its statutory responsibilities, but at any rate to the Minister for Science. That does not for one moment mean that I do not take anything but the most acute personal pleasure at seeing the Parliamentary Secretary to the Board of Trade here tonight. It is one advantage of diarchy that we see two competent gentlemen instead of only one.

With that friendly introduction, let us begin to see what the Order does. As I understand it, it does three things. One is a matter of perhaps comparatively small importance—a change in the form of the body which deals with research in the industry.

Hitherto it has been a Council unincorporated, and all my researches have failed to tell me how it ever came into being. It seems to have just grown up, like Topsy. However, it grew up. We are now to proceed to the comparative respectability of a company for the purpose. I should like to know who is to be represented on that company and how the directors or shareholders—there will not be any shareholders presumably; I suppose that it will be a company by guarantee—the people who effectively run it are to be appointed, and whether there is any provision which will enable us to look at that appointment from time to time to see if it is working properly.

The second thing that it does is to relieve the needy knife-grinder. The needy knife-grinder was, I think, invented by George Canning, who inquired where he was going and said that the road was rough and his wheel was out of order—"bleak blows the blast." At the moment we are rather passing the last Governmental depression. It was blowing quite bleak a little time ago and it may, perhaps, for this particular trade, be blowing a bit bleak, as I shall show in a minute, if we have to go into the Common Market. Finally, we end up by discovering that the needy knife-grinder's hat had a hole in it, and so had his breeches. I do not know what escaped through the hole, but apparently his technical intelligence is no longer to be financed out of his own purse which has slipped down through his breeches, and whoever is going to teach him what to do, it is not going to be done that way.

I know that this trade is full of needy knife-grinders, but the number is tending to decrease, and I am not quite clear why it was necessary or advisable to take them out of the provisions of the levy. However, I have no doubt that there is some sufficient reason which we can be given for that.

What I cannot follow is the hon. Gentleman's arithmetic. The present levy amounts to £9,200, and I take that figure from the D.S.I.R. Report for 1961. The hon. Gentleman cannot differ from me much because he said that it was a little over £9,000. We add 50 per cent., that is to say, instead of 10s. on a certain turnover we have 15s. and we then deduct from it whatever is saved by letting the needy knife-grinder off. The result we get, apparently, is £14,000. That is not my arithmetic.

I wish that the hon. Gentleman would tell us in a little more detail what is the effect of this Order. Is the levy on the ordinary members of the trade, if I may so put it, increased by 50 per cent.?—I understood that it was—and is that increase subject to a reduction, as I understand there is a twofold reduction, because he mentioned not only the needy knife-grinder but also another case in connection with a rather small turnover? Having added 50 per cent. to £9,200 which, if my arithmetic is right, would make it £13,000, and having taken from that figure an unknown sum but presumably of some importance, we then reach a figure of £14,000 which, as the late Mr. Euclid used to say, is absurd. I hope that the hon. Gentleman will give us the correct figures. After all, this really is a very small sum. This is a trade which produces, we were told, about £10 million worth of stuff a year and it exports about one-third of that. It is, therefore, a very important trade. It should clearly have every attention, and the attention should be both prompt and sufficient. I can hardly feel that the attention is satisfactorily provided by a levy of £13,000 or £14,000 from the trade, and a D.S.I.R. grant that will now go up to £9,000 a year—£23,000 a year spent on research by an industry whose out-turn is about £10 million and which has a very important export function to fulfil.

I was very glad to hear that the trade's export position is improving, because this research work is largely needed to enable our cutlery trade to compete with that of other countries. There is very good reason for helping this competition, because when the Working Party reported on the trade in 1947 the position was far from satisfactory. At that time, Germany accounted for 50 per cent. of the world's total cutlery exports, and the United Kingdom had only 22 per cent. I understand that this country imported more from Germany than we exported to Germany. What is the position now? If there has not been the very material improvement one would hope for, one makes two comments. First: what has the industry been doing with the money it has spent on research? Secondly—and I repeat this: is the amount now to be provided for research sufficient?

When I turn to what the industry has been doing, I look at the same Report and I find a number of recommendations—with which I certainly will not dream of troubling the House in detail at this hour—in which the Working Party is very expansive about the research that is required. The mechanisation of the industry to which the hon. Gentleman has referred as something in the future was equally in the future in 1947. What has happened about mechanising the industry during the fifteen years from 1947 or, to shorten the time, what has happened to that mechanisation during the eleven years in which Tory Governments have been in power? What have Tory Governments done to see that these researches actually effected the kind of results hoped for in the Working Party Report?

I turn from that Report to the 1961 annual report of this Cutlery Research Council, and I find a number of things proposed. They are all excellent things. I am no expert in making cutlery—and there are some very strange phrases in the trade, as anyone will find if they look at some of the processes mentioned in the Order—but it looks to my untutored eye as though a lot of the things in pages 6 and 7 of the last annual report that are now called research projects are things that were recommended fifteen years ago by the Working Party. If so, what has been done since then?

This is a nice little, tight industry. They all get along very well with one another. Some of their premises are hopelessly insanitary, or were in 1947. The little master was an admirable figure, but, according to the Working Party Report, provided abominable conditions. It seems to be one of the industries that require a little watching from a Government concerned with the rather lamentable show that British industry has been making in recent years in comparison with the rest of the world. This really is an opportunity of pushing the industry forward a bit. Perhaps a slightly larger research grant might more than repay the additional money spent. A great deal of this depends on what we have not been told—though I hope that we shall be told—about the competitive position of the industry compared with the rest of the world.

One does not get much light on that. It is true that they had a look around Germany and America, and I have with me their Report about it. It is interesting, and I think I summarise it fairly when I say that there is no doubt that there is a good deal of real, old skill in this industry in this country. There is also no doubt that, while some of the things they produce contain admirable workmanship—often in rather small quantities—it is very doubtful whether their progress has been quite sufficient.

When one looks at the degree of mechanisation in the American industry, as shown in the Report about which I am speaking, one is, on the one hand, even more sympathetic with the Parliamentary Secretary's wish that there should he more mechanisation and, on the other, even more curious why there has been so little mechanisation in the past, particularly since the Working Party's Report was published not long after the end of the war.

Thus, while one is not disposed to oppose the Order—indeed, one's feeling is that the amount proposed by way of levy is probably insufficient; certainly that the accompanying amount of D.S.I R. support does look insufficient—one is entitled to ask the Parliamentary Secretary which these people have been doing by way of research during the past 15 years, what is the present position compared with other countries on the export side, and is it really sufficient to secure the competitive position of this industry in what may well be a more draughty world if we go into the Common Market? Will the industry, when "bleak blows the blast," have holes in their hats and their breeches, in the words of Canning's needy knife grinder, and be able to stand up to the foreign competition of industries which, in America at any rate, are more highly mechanised?

I come now to a small, personal confession which has some point. I am a little luxurious about nail scissors and I have long found that the best ones, alas, do not come from Sheffield. It may be that I have not gone to the right places or have not tried for long enough. But if that is so—and it certainly seems to be the case in some London shops—what is Sheffield doing about it? I do not know how much research is needed into nail scissors, and probably more is needed into other things, but I am not happy about the smell of this trade.

I am not a Sheffield hon. Member and I suppose I can say things which a Sheffield hon. Member might jump upon, but we are interested in the export drive and the competitive position of the industry. It has not got a very good record in some things—premises and working conditions—and we are anxious that it should be modernised, particularly in those respects we must consider tonight the modernisation of its methods and what it is going, to do.

Trouble-shooting is an excellent thing. We have quite a lot of it in the Boot and Shoe Research Association. For example: Question: "How is it that Little Harry's shoes collapsed after a week's wear?" Answer: "Because Little Harry chucked them in the fire when mummy was not looking." That is called "trouble-shooting", I have no doubt that the same sort of thing could be applied to table knives, for we can all readily think of appropriate questions and answers. But 30 per cent. of the total expenditure leads to the comment that while that may he all right for trouble-shooting, it does not leave enough for the rest of the expenditure we have in mind. It makes me feel that a hit more is needed. If the industry cannot afford it—and it may be that it cannot; there is some evidence for that in the papers. I see—then I think that the D.S.I.R. ought to do a little more about it.

Lastly, I hope that the needy knife-grinders, the small men who are going to be exempted from the levy, even if they do not pay the levy will still be in a position to profit from any improvements which may be adduced to them, probably much smaller improvements than would affect the larger firms, and that full steps will be taken to see that not only are the researches made but also, so far as the Government can see, that they are applied and, at any rate, that the trade is informed of exactly what can be done.

This is a rather sketchy Report, the last Report of the Research Council. I do not want to criticise it too much because no doubt it is so very much concentrated in the town of Sheffield that there are other means of disseminating information which may be just as good. Therefore, having asked the hon. Gentleman a number of questions and made some criticisms of his Order, none of what I have said being, as I see it, a ground for opposing the Order because it is mainly on its insufficiency, I sit down.

10.36 p.m.

Mr. Frederick Mulley (Sheffield, Park)

Although I think that my hon. and learned Friend the Member for Kettering (Mr. Mitchison) has been rather hard on this industry, I shall personally, as an hon. Member representing a Sheffield constituency, make it my business to convey his point about the quality of nail scissors to the manufacturers concerned.

As the Parliamentary Secretary and my hon. and learned Friend have said, this is characteristically an industry of small firms. In that connection I think that there will be much interest in the figures which the Parliamentary Secretary has given about the decline in the number of small firms that will be involved as a result of this Order. I wonder if at the same time the hon. Gentleman could say whether there will also be a tendency for the total number of firms in the industry to decline also, or whether it will be only a decline as a result of the drafting of the levy. I certainly hope that such fruits of the research association as will be profitable to the small firms will be available to them even though on turnover grounds they are not participants in the scheme.

I wonder also whether there has been any change in the computation of turnover as the basis of the levy or whether the present Order follows the previous one in that regard. I have had no representations made to me personally about the Order, but can the Parliamentary Secretary say whether, in fact, the pressure or the initiative for the change has come mainly from the D.S.I.R. or whether representations have been made about the new form and about the particulars of the Order from the trade, and whether there has been any substantial body of criticism from big or small firms?

My hon. and learned Friend, as indeed did the Parliamentary Secretary, made some reference to the export performance of this industry. Having regard to its size, I think that it has made quite a contribution, although I am bound to say, whether inside the Common Market or outside it, we must remember that in E.F.T.A. there are countries with substantial cutlery interests as well. I think that the industry is going to have a difficult time.

I wonder whether in these days, when matters of design, salesmanship and market research are very much scientific matters, the Order will be wide enough if there is a demand within the trade for research on questions of design, packaging and matters of that sort as well as research into methods of production—what one would imagine is scientific research in the rather narrower sense.

I had a great disappointment recently when I went into one of the largest departmental stores in Paris when it was making for Christmas a particularly large display of imported goods. Even after interviewing the buyer concerned, I found it impossible to find a knife made in Sheffield. The only thing the store could produce from Sheffield was a silver-plated coffee set, although there were knives, flatware and cutlery from almost every country. There were kitchen knives on display but not, I am sorry to say, from Sheffield.

Particularly because of the intense competition and the small size of many of them, I feel that firms may have to look again at their traditional export performance. I have advocated many times that there should be an attempt to secure co-operative selling organisation among firms which are not in other respects direct competitors, for example people who make scissors and penknives and flatware manufacturers. They might get together to make a bigger selling organisation than an individual firm could produce.

It is also true that the modernisation and equipment of many firms are not as good and up-to-date as we should like them to be. At the same time, there are firms which have gone to great lengths to bring themselves up to standards both of cleanliness and technical efficiency. This industry suffered for many years from an extremely vicious imposition of Purchase Tax. After representations, silverware and mother of pearl were taken out of special categories. The matter is not so serious today, but knives, forks and spoons are the only essential articles in daily use which have been subject to Purchase Tax throughout the period of Purchase Tax itself. Yet when I was a prisoner-of-war I was given by the Germans a knife, fork and spoon. I did not find much use for anything but the spoon, but even in those primitive conditions these were regarded everywhere as essential articles.

This is not the only or perhaps the main problem for the trade, but it has been one of its problems in development, in investment and possibly in seeking export markets. The trade, having regard to all the circumstances, has done a good job, though I feel that by co-operation and a more vigorous approach it might be able to do even better in the future. The industry is not only to be judged by the actual figures of its exports. Many of the firms in my constituency make a contribution to the quality of British goods. The fact that the finest cutlery and flatware in the world is made in Sheffield is, because these products are seen in shop windows, a general advertisement for the quality of British workmanship.

The industry has problems in craftsmanship. The number of skilled craftsmen is declining. The industry has made efforts to carry on the standard but it has not been very much helped by the Board of Trade which recently removed some of the incentives and concessions which were designed to assist in this direction. Not only in the D.S.I.R., but probably in the Board of Trade as well, people ought to look at this industry and see whether they cannot do a little more to help it in connection with Purchase Tax and in promoting exports than, I tend to think, they have done in the past.

10.45 p.m.

Mr. John H. Osborn (Sheffield, Hallam)

One or two comments have been made from the other side of the House, not so much by the hon. Member for Sheffield, Park (Mr. Mulley), which need correcting. It is not fair to give the impression that the cutlery industry is asleep because a Working Party came to that conclusion 14 years ago. The impression I receive from the outside—I am not in the industry—is that the leaders of the industry have brought it together chiefly by creating the research council mentioned in the Order, which will have a new name after the debate.

The point about the industry is that it is getting together. The bigger and more progressive firms are, by and large, helping some of the weaker ones which have not the resources to help themselves. That is apparent from the Measure before us.

As the hon. and learned Member for Kettering (Mr. Mitchison) said, a fair amount of work is being done by the research section in Hoyle Street in connection with mechanisation and with what has been seen in America. It should be remembered that the Sheffield cutlery industry has technical people who have travelled and know what their competitors throughout the world are doing. Many firms are bringing in machinery, from abroad if necessary, and adopting the best methods for producing their goods.

Reference was made to knife grinding. I have seen machines for the multiple grinding of knives. Much of the manual work is being taken out of the process. That has happened within the last few years, and that development is going ahead. I do not say that the industry should be satisfied. It is not satisfied, and that is one of the reasons for this Order; but progress has been made. There is also magazine loading of machines for making components. It would be wrong—

Mr. Mitchison

The reference to knife grinding was not mine but George Canning's. He is dead.

Mr. Osborn

That is fair enough. The hon. and learned Gentleman referred to that. Canning may be dead, but so is the Report of the Working Party, which is 14 years old now. That has been noted, and suitable action has been taken over the intervening years and will continue to be taken after this Order.

With regard to exports, it would be wrong to minimise the changes in designs which have been considered and adopted by the cutlery industry. In any factory or showroom new designs are now available; admittedly, many of these have been the result of the endeavour of individual firms but others have resulted from joint efforts.

I have visited several firms recently. The Factories Act is being applied, and many of the less satisfactory conditions are being eliminated. There is progress throughout the industry in working conditions. So it would be wrong to say that the intervening years have been wasted. The cutlery industry is well prepared to enter the competition which it knows it will find when we enter the Common Market.

10.49 p.m.

Mr. D. Price

I will try briefly to answer one or two of the points raised.

First, with regard to the diarchy, which the hon. and learned Member for Kettering (Mr. Mitchison) does not like, the plain fact is that this Order and previous ones have come under a 1947 Statute. If the Statute is ever recast, it may be that it would be more convenient to put this under the Minister for Science. That accounts for it, and because of the diarchy hon. Members see my hon. Friend the Parliamentary Secretary to the Minister for Science here tonight.

There was some exaggeration in the suggestion that the only research done by the industry has been done through this research association. Whereas at one end we have the very small firms, there are also some very substantially larger ones many of which do a certain amount of research. Many are members of B.I.S.R.A.

Of course, in B.I.S.R.A. there is fundamental research on such things as casting. All these casting firms do co-operative research. It is in the rather narrow field of some of the matters I listed that one finds what in a large organisa- tion one would regard as applied research. It is difficult to draw the distinction between basic research and applied research, but that must be borne in mind. This is not the totality of the research effort.

It is also inevitable that, where there are many small firms in an industry, if one is to give assistance to them, quite a high percentage of the research association's income will have to be spent on What we call, loosely, "troubleshooting." I do not like the phrase but it is growing up in common parlance. It goes a little deeper than the sort of sales complaint hon. Members have experienced in boots and shoes.

In the chemical industry in which I used to work we would call it technical service which is in support of sales. If one gets a serious complaint from a customer and looks back at the process of, say, knife grinding, I do not think one can dismiss it as one would in the case of children playing with knives to fight each other then mother complaining that they are too blunt to carve the meat.

In dealing with the mathematics of the income of the research association, the hon. and learned Member for Kettering did not allow for the smallness of firms which are staying out. Ninety will be below the minimum turnover figure required to have to pay a levy. The proportion of 'turnover remains the same under this Order as under previous Orders.

The hon. and learned Gentleman also asked about imports in relation to exports. He will be delighted to know that imports last year were broadly half of our exports, which is encouraging. It would, I think, be expanding the rules of order too far if I followed the hon. Member for Sheffield, Park (Mr. Mulley) into some of his suggestions for exporting. We naturally would like to see any co-operative efforts firms may see fit to adopt on exports. That is true of his industry among others.

The hon. and learned Member for Kettering asked whether the number of smaller firms was declining. There has been a slight decline which has been due to amalgamations rather than to a general reduction in activity.

Mr. Mitchison

That is not quite the question I asked. I really asked two. Both derived from the Working Party's Report. First, at that time Germany had 50 per cent. of the world export trade and we had 22 per cent. Has that proportion improved? Secondly, has our total export figure gone up? If so, by about how much?

Mr. Price

I have not the figures with me, but I will be happy to write to the hon. and learned Gentleman.

I was explaining that the number of small firms had been declining mainly due to amalgamations. The Order refers to 90 firms. These have a turnover of between £2,500 and £3,000 a year, and on that basis it might be reasonable and proper to have more amalgamations. But hon. Members from Sheffield know that it is possible, because of horizontal operations in the industry, for people in very small factories which are not much more than rooms really to be able to make a small contribution. To those of us who come from heavy industry, it seems rather peculiar in this modern age, but if they can earn a good living and produce good results—and we see that on their export records—who are we to say that it might be tidier if they did it all in big firms?

Mr. Mitchison

Will the hon. Gentleman answer the particular question I put to him several times? How far is this industry still engaged in carrying out the recommendations that were made in the Working Party's Report in 1947?

Mr. Price

Mechanisation is an almost continual process, and it must be inevitable that, so long as there are these very small firms, there must be a limit to how far they can mechanise. With a turnover of £3,000 a year they are not likely to be in a position to mechanise to any great extent. As my hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn) pointed out, the large firms at the top have a very impressive record of keeping up to date in the type of machinery he referred to.

We have this structure in the industry between bigger firms which have the resources and the very small firms, which strikes one as pre-Industrial Revolution, almost like a cottage industry. One cannot expect them to mechanise, but they appear to be able to make a living. As long as they are able to make a living, who are we to say that they are carrying on their activities inefficiently?

Mr. Mitchison

In spite of the Working Party's Report in 1947, I can trace no research association or anything of the kind until the 1960 Order which we are replacing today. Am I right, or was there an earlier one?

Question put and agreed to.

Resolved, That the Cutlery and Stainless Steel Flatware Industry (Scientific Research Levy) Order, 1962, a draft of which was laid before this House on 30th October, be approved.