TEXTILE INDUSTRY

HC Deb 01 July 1963 vol 680 cc101-59

7.1 p.m.

Mr. Charles Fletcher-Cooke (Darwen)

I beg to move,

That this House recognises the disadvantages under which the United Kingdom textile industry at present labours, as compared with conditions enjoyed by textile industries in other countries of the world, and urges Her Majesty's Government to take all steps within its power to remove those disadvantages as soon as possible.

The very moderate Motion which I am moving refers to the United Kingdom textile industry and although I believe that all those who live by the loom, the frame and the spindle, should stick together, whatever the raw materials they use, I shall confine myself to the Lancashire end of this trade.

The cotton industry of Lancashire is not asking for public money; it is merely asking that the public money already invested in the industry shall not be wasted. We have had many debates, certainly in the twelve years that I have been in this House, on this subject. I should like, at the outset, to try to counter the atmosphere that sometimes hangs over it, namely, that these debates of protest, which they almost always are, are merely the galvanic dying kicks of an industry which is on its last legs. It is rather as though the manufacturers of incandescent gas mantles, or of hansom cabs, or of something for which the demand has passed, are making their protests before they are carried to the grave. But textiles are not like that, although other industry sometimes find it useful to pretend they are. There is an enormous growth and ebullience in world trade in textiles. There is an enormous and growing demand for them, yet the world cradle of the industry here somehow gets less and less of this ever-increasing trade.

There is tremendous esteem still for our skill in this country. People come from all over the world to such places as the Shirley Institute to learn how we do it, yet in spite of our skill and our application we continue to find our trade both at home and abroad dwindling year by year.

My first point is to try to nail the theory that somehow there is some innate superiority in the metal-using industries, or something like that, and that they therefore must be protected at our expense. The reason that they are doing so well is that they are protected at our expense. They have confidence because their protection is so much better. Of course, if we protect one industry and not another the industry that is not protected has to bear the burden of the industries that are. They have to pay more for their vehicles because the vehicles are protected. I could elaborate that sort of position. Therefore, I should like to start off with the thesis, which, I hope, will not be denied, that there is a great future, and there can be an increasingly great future, for the United Kingdom textile industry if it is given a fair chance.

Sometimes we are asked,"Why do you grumble? The adaptability of the people of Lancashire is so great that they can turn their skills to other trades. Therefore, what is the worry?" Why it should be thrown in their faces in this way I am never quite sure. Anyhow, it involves an immense waste of skill when a population which has special skill is turned over rapidly to something for which it has no special qualifications.

What are the disadvantages of which I speak in my Motion? They are simply stated, but they have been long endured and they are getting worse. The only figure which I need quote about it—the figure speaks for itself—is that at present about 35 per cent. of our home market is taken up by imports, and the figure is growing, whereas our exports are increasingly blocked by other countries, notably recently by Commonwealth countries. No other country in the world takes anything like the percentage of imports from abroad that we take. Western Germany takes about 7 per cent., the United States of America about 5 per cent., Belgium and Holland, 2½ per cent., France 1 per cent., and no amount of example by us, no amount of adjuration, makes any difference to this sort of figure.

One thing which I should like to know is: how are the growth provisions in the long-term G.A.T.T. agreement actually working out—the provisions by which the countries that I have quoted have agreed to take an increasing number of imports—and what sort of force is being put behind the acceptance of that obligation by those other countries? So far as protection is provided by the long-term G.A.T.T. agreement, those countries are very ready to evoke it, and have done so. The United States of America has constantly evoked the disruption clauses and has constantly taken refuge in the categorisation of quota clauses which the long-term G.A.T.T. agreement allows, but we do not. We are still the soft underbelly of the world in this matter. We are getting softer, and I think that it is time we hardened up.

I believe that the time is ripe for new measures now. We have always previously been told—I will refer to the new measures in due course—to wait for some event or other, and it has been reasonable to make that request. We were told to await the outcome of the Common Market negotiations. That was a perfectly reasonable request because I believe that if we had succeeded in those negotiations we should, in the end, have achieved most of what we now have to achieve, but it will take three times as much pain to do it as it would have had the Common Market negotiations succeeded. Then we were told to wait for the recent G.A.T.T. meeting, and the recent meeting of our Commonwealth Trade Ministers, and we were also told to wait to see the pattern of the reorganisation scheme. That, unfortunately, is now clear and rather gloomy. I shall have some words to say about that presently.

I should start by saying that as a result of this experience in recent years the United Kingdom cotton industry in all its parts is united as I have never known it in twelve years. For the first time I think that it can be said that every section of the industry is in agreement with what must be done. The different sections are not only agreed but I think that there is agreement between management and men. It is an industry totally united and free of strikes, yet it gets scant attention in our opinion.

The reorganisation scheme upon which such hopes were placed is coming to a crisis next week, the last date for the ordering of the new equipment. I think that originally about £115 million worth of applications were put in. To the best of my information—although it is difficult to find out what the true figure is—it will be well under 50 per cent. of that when the last date for ordering comes along. It is not surprising that there has been this great shortfall because already a growing amount of the machinery that was originally ordered, either under the scheme or immediately before it, is on the market, secondhand. It is said that there are more second-hand automatic looms on the market at present than there are looms in Lancashire. This cannot have been the intention of the scheme.

Here I put in a small plea for the finishing and dyeing end of the trade. It has had less time in which to make up its mind than, I think, any of the other sections of the industry, and it wants an extension of time not merely for paying for its new machinery, but for deciding whether to order it or not. That seems to me a reasonable although difficult request. The fact is that it has had less time than the spinners or weavers.

What can be done? Perhaps I may divide the suggestions into two. First, there are the immediate proposals. These are detailed and may sound small, but, in the aggregate, I believe that they would give some confidence to the industry. I do not think that they come under any severe strictures either on the grounds that we should be breaking our word—which, of course, we must not do—or that they would provoke retaliation. They are things which other countries have done, and which are accepted and which have, as far as I know, not provoked any retaliation upon those countries.

The first, and perhaps the most important, concerns anti-dumping. I am not in favour of export devices, although I know that some of my hon. Friends are. But I am very much in favour of a much quicker, more efficient and more ruthless smelling out and exposing of export devices by other people. I believe that this should become the direct, active responsibility of the Board of Trade.

Somehow or other, the Board of Trade for some reason seems to constitute itself as an advocate of the foreigner—or so people in the industry often think. I certainly believe that it should be the responsibility of the Department to smell out such things as differential price agreements, and other devices which are well known, on behalf of the industry for which it is the trustee. It should not constitute itself, no doubt with the best intentions, as the critic of the industry when the industry tries, with the limited resources at its disposal, to find out these things which are, of course, very often concealed.

At present, there are great delays in the machinery. This is not a complaint which is confined to the cotton industry, but to many others as well. But it hits the cotton industry in particular because of its delicate state. At present, for example, I believe that it is necessary to show the deleterious effect of a single shipment, and that, of course, is an almost impossible thing to prove because the effect of continually dumped shipments is cumulative. It cannot be said that any particular shipment is the one which has disrupted the industry.

A great deal of time is taken up in trying to discover what I think could be discovered fairly quickly. For instance, there is the well-known story that in India domestic prices are about 30 per cent. above the prices at which that country sells to this country. Another example is the story—I do not know whether it is true—that Canada, now buys her quota of Hong Kong cotton, sells it on the domestic market at her own domestic price, and then sells her own cloth to this country at what one might call the Hong Kong price. I am telescoping a rather complicated series of transactions, but that is the effect.

Mr. Leslie Hale (Oldham, West)

The hon. and learned Gentleman is telescoping the time factor as well. All these facts were before the Government ten years ago. I have submitted samples of cloth which have been sent to Africa, exported at prices which were below the prices we were paying for our cotton for spinning. The hon. and learned Member says that this has taken a long time to find out, but it was known then. We have pressed the Government for ten years to do something. All that happened was that the hon. and learned Gentleman joined the Government and rather shut himself up for that period.

Sir Arthur Vere Harvey (Macclesfield)

Examples have been given to successive Governments for about seventeen years. Will my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) press the President of the Board of Trade to pay more sympathetic consideration to individual complaints from the industry and use them collectively?

Mr. Fletcher-Cooke

Perhaps I may make a modest reply to these criticisms.

These examples could not have been given ten years ago, but no doubt there were others. I do not think that the Indian or Canadian examples I have mentioned were known earlier, because I understand that this situation has not been going on for more than two years in Canada. There may be other examples and no doubt the hon. Member for Oldham, West (Mr. Hale), who knows a great deal about this, will give them if he is called to speak.

I have no doubt that Canada would be the first to take severe action if we started dumping there—and I would not blame her. She has a strong system of current domestic value certificates, by which each consignment into Canada has to bear a statement of current domestic value, and she insists, quite rightly, on the right to inspect markets and conditions in the exporting country to see whether it is a fair certificate or not. She simply will not allow a consignment in unless the certificate is in order.

We have nothing like that at all, and it is known that we have not. I think that it would be much better if nobody had anything like it. But I do not think that exhortations, even in the powerful manner which the Minister of State used to Canadians the other day, really will make very much difference.

The second factor is the slackness—perhaps I should call it weakness—of our anti-dumping legislation, which allows the manipulation of raw material prices. I think that this is fairly well known and I will not expand my speech by going into detail on it, but it is clear that in many cases raw material prices are manipulated to form dumping operations. Thus, anti-dumping really is the first thing that we must see to.

If we are to go in for a system of tariffs and quotas—as, indeed, we have done—we must not let that system get the worst of all worlds by not enforcing it—and not enforcing it in a reasonable way. Secondly—and this is technical, although a great many Members will have been given a great deal of ammunition on it recently—there is the categorisation of quotas.

If there is a case for protecting our industry by quotas at all, then there must be a case for making the quotas effective. If the point of quotas is that the industry shall not be destroyed by sudden and unexpected waves of imports, then the same must be said for any particular section of that industry.

It is, I think, well known that at present there is a practice in many of the countries which send textile goods to us of concentrating first on one part of the industry here, hoping to knock it out, and then on another part, and so on, until every section has been destroyed. Indeed, there is said to be in Hong Kong an organisation with the principal object of steering within the quota allowed more sophisticated made-up articles for consignment to this country.

They go first from shirts to, perhaps, overalls, and then from overalls to raincoat poplins, or whatever it may be. One after another a target is selected, which it is hoped to knock out. There must be an end to this. All the other importing countries insist on categorisation, and, except for the difficulties of administration—which, I agree, would be great—I cannot understand why we should not adopt the same practice.

The third thing that we should do immediately is to stop the carry-over of quotas. I know that this practice, of allowing people who do not fill their quota one year to carry it over into some months of the next, was agreed by the industry at one time. But when the industry negotiated these agreements it was negotiating with no ammunition, and often against a deadline of time. It had to do its best, and it did extremely well, without anything behind it in the way of a sanction. Therefore, it is not now fair to throw that fact in its face and to say,"After all, you agreed to this." The industry was negotiating from extreme weakness.

The effect of carry-over is that, by clever means of allocating quotas, in the first few months of any year all the new orders are set against the unfilled quota of the previous year. The result is that any increase in the trade goes not to the home industry, but abroad. In Pakistan, for instance, in the first quarter of this year, imports of cotton piece goods into this country, including made-up goods, were far in excess of the ceiling. Indeed, I am not sure that they were not in excess of the carry-over of last year. Obviously, they could not have got where they were but for the carry-over.

Again, Formosa has already exceeded its ceiling in the first quarter of this year by means of carry-over from last year's quota. This is a very great hole which must be stopped up.

Mr. J. A. Leavey (Heywood and Royton)

My hon. and learned Friend said that the last two interventions in his speech were welcome. Perhaps this will also prove to be. Is he aware that new quotas are being continually offered? Recently, Malaya was given a quota of 5 million sq. yds., although I believe that she has only one cotton mill, with about 200 or 300 looms, which would seem out of keeping with that quota.

Mr. Fletcher-Cooke

I am sure that my hon. Friend is right, as he always is about matters connected with the cotton industry. I shall return to the point of new quotas for new countries.

The fourth thing that must be done immediately concerns the question of Commonwealth content. Only 25 per cent. of value needs to be added to goods for them to be able to come into this country as Commonwealth goods, or as goods from Eire. We are told that goods of Asiatic origin are flooding into Eire, having 25 per cent. added to the value, in the form of finishing, and then coming here. This makes nonsense of the quotas which have been so laboriously negotiated.

The quotas themselves are often in the form of inter-industry agreements. They are not nearly tight enough in their administration. I do not blame the industry altogether, because, as I said, it had to negotiate from extreme weakness, but the situation seems to be extraordinarily vague. There is now a dispute with India about whether the Indians should be allowed to concentrate on the finer end of the trade—made-up goods, and so on. It is said that in the agreement negotiated the two sides"agreed to consult in respect of an undue distortion of the well-defined pattern of trade."

That is a very loose phrase. I do not altogether blame the Indians for saying that it obligates them to exactly nothing. An agreement to consult, or an agreement to agree, imposes no obvious obligation whatever, as any lawyer knows. I have no doubt that when businessmen make these agreements they think that they are binding people in certain directions. If these inter-industry agreements, which I deprecate, are to continue in future they need to be much more closely drafted, and drafted with a great deal more foresight as to the future.

It is true to point out that the looseness of these agreements can work both ways. I therefore adjure the authorities to take full advantage of any ambiguities in our favour. There is usually no arbitration clause in these agreements, and we therefore have the whip hand, in the sense that we can simply refuse to allow the goods in in case of dispute, pending a decision. I would not regard that as conflicting with one obligation that we must observe, namely, not to break our word.

So much for the short-term proposals, which would be of immense value. As for the long-term proposals, my right hon. Friend has said that a ring fence now exists around Lancashire. At least, I believe that he said that. A ring implies a continuous circle, but as far as I can see the protection is no more than a few widely dispersed and rather low hurdles, with a great many gaps between them. The reason is that each country is treated piecemeal, as my hon. Friend pointed out in referring to Malaya. Every time one source is stopped up there is an immediate flood from sources which have no ring fence near them. They establish within twelve months a large market, and then seem to have the right to a quota although they have no traditional trade with this country in cotton goods. From where they get the right I do not know.

Yugoslavia, with no traditional textile trade with this country, has been given a quota of 5 million sq. yds. Where will it be next? Will it be Israel, or West Africa? Where shall we find the flood coming from next? We must have a global policy in this matter. We must not operate a country-by-country policy. I am not saying that every country should be treated the same, because we have obligations, both in Europe and to the Commonwealth, which rightly prevent us treating each country the same. But every country must be dealt with. There is room for a Commonwealth agreement, provided that it is fully reciprocal, and there is certainly room for E.F.T.A. arrangements.

To all those people in the cotton industry who come to see me I say that they must put up with imports from Portugal and other European countries, provided that they are fair and that there is no dumping, or any other dodges. That is one reason why I am so anxious that we should police the dumping provisions more effectively. There is nothing in the E.F.T.A. arrangements or anywhere else that prevents us from relying on the long-term G.A.T.T. agreement, by which severe disruption can be treated as exceptional.

The fundamental difficulty of any new policy arises from the tradition of Commonwealth free entry. I do not believe that the Commonwealth depends on free entry; I believe that it depends on reciprocal arrangements which are fair to both sides. For example, since 1959 Canada has been a net exporter of textiles to the United Kingdom. There is no duty on them here. But we have to pay 12½ per cent. to 25 per cent. duty on our textiles going to Canada, and with the stringent anti-dumping provisions I have mentioned. Where is the reciprocity about that? That seems to me something as between, I will not say underdeveloped countries—it is more like overdeveloped countries—which is quite wrong. There are historical reasons for it, but I think that the matter must be renegotiated.

We are always told, whenever we point out that with members of the Commonwealth free entry has been reached, that historical reasons exist for it. I notice opposite the hon. Member for Rotherham (Mr. O'Malley), who is interested in the musical instrument industry. I was very interested in the reply which he received recently to a Question to, I think, the Minister of State, Board of Trade, when he was told that there was a tax on musical instruments coming from Commonwealth countries. Why is it that musicial instruments, the English musical instrument industry—undoubtedly it is an admirable industry—should have this protection, while to suggest that the textile industry should have it—I think that raiment is more important than sound—would be a most deplorable breach of some fundamental ideology and we cannot contemplate it.

It applies nearer home than that. We are told that for historical reasons there can be protection for man-made fibres, but none for natural fibres. Who is to be master, man or history?"Historical reasons" is a strange philosophy, for everything that happens is historical. The only question is whether one wishes to change it or keep it. One cannot say that because it is historical it is necessarily there for all time. There is no underlying philosophy in Commonwealth policy at the moment and I think that there must be one.

The Australian tariff against us is now enormous, and our preference there dwindles every day because it is expressed in pence and not ad valorem. I think that I am right in saying that. Certainly, some preferences are expressed in terms of pounds, shillings and pence and not ad valorem. My hon. Friend may say that I am wrong about it and if so I take his word for it. Since the Common Market negotiations it is not possible to return to the old sacred view of Commonwealth free entry. We should have to do something about it then. Although it would be far harder to do so, we must do something now. I do not wish to equate the Commonwealth countries with foreign countries. But the balance of disadvantage against this country from Commonwealth free imports is too much to be borne.

I wish to ask—I am sure that we shall be told—what is the policy of the Labour Party in this connection. Some years ago there was a suggestion by the now Leader of the Opposition of an import board—"The Wilson plan". We should like to know whether that is still the policy of the Labour Party. It seems to me that it suffers from two great disadvantages. It is a cleft stick. If it is to give protection, why cannot the protection be given straight? If it is not to give protection, what is the point of a new bureaucratic machine? When that riddle is answered perhaps we can consider what is the policy of the party opposite.

I am delighted to see that my right hon. Friend the President of the Board of Trade is in the Chamber. It is very good of him to attend, as I know that he has had to cancel a most important engagement to be here. After his visit to Lancashire on 14th June my right hon. Friend will be in no doubt about the feeling in the industry and particularly among the members of the Cotton Board. Sometimes hard things have been said about the Cotton Board. But there is no doubt that under a succession of Presidents and Directors-General, Lord Rochdale, Mr. Roston, and perhaps I might add Sir Cuthbert Clegg, the Board is fighting for the cotton industry as well as and quite as fully and strongly as any body could. The Board is by no means composed of Government"stooges" as one sometimes hears them unfairly called.

The cyclical upturn of trade which I think we all hope for has not materialised, although it is due. Why is that? I think that the reason is partly outside our control because it is due partly to the weather. It is also due to the fact that such advantages as there are still on our present system undoubtedly go not to our own people, but abroad. Meanwhile, this great industry is being of no advantage to the Government. I would have thought that since so much public money is invested in the industry, and since it has reserves of taxable capacity in which the Treasury should be very interested, the Government would do more to protect what in both sense is one of their investments because this year the Treasury will have to pay out on losses in the industry rather than collect taxes as it might have hoped to do.

These are new circumstances. The time has now come when it is impossible to say that we should wait for this or that—wait for the Common Market, or the G.A.T.T., or the Commonwealth Trade Ministers. In these new circumstances it is time to do not merely the things which I have suggested should be done immediately, but to take a look at the industry in its global setting and to dictate what will be its future and what it can expect, because only that can make it flourish as it should.

7.37 p.m.

Mr. F. Blackburn (Stalybridge and Hyde)

I wish to congratulate the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) first upon his luck in the Ballot and secondly upon his choice of subject. I am in general agreement with what he said. He will not have very much longer to wait to learn the details of the Labour Party programme. I think that most hon. Members who represent constituencies concerned with the textile industry would be in general agreement with what the hon. and learned Gentleman has said. I wish I could feel as convinced that, were there a vote, they would all be found in the same Lobby.

It is about 12 months since we had the last debate on the cotton industry and I think it very important that we should again be considering the industry. What has happened in those 12 months? As everyone knows, there have been further closures. Unfortunately some have occurred in my constituency. When these mills are closed we get no help from the Board of Trade for the provisions of new industries for our areas. The President of the Board of Trade excuses himself on the ground that the level of unemployment is not as high there as in some other parts of the country; but the right hon. Gentleman knows as well as anyone that the present figures for unemployment do not reflect the true position because so many women in the textile industry were not insured in their own right. They have been lost to the industry, and we know that there has been a great depopulation of some of our areas. Surely it is not in the interests of the country that our areas should be depopulated and our people go to other parts of the country which are already over-crowded.

During the last debate the position was described as a crisis of confidence. Is there any greater confidence in the industry today? I am afraid that the answer to that question is definitely"No". There is no other cotton industry in the world which has to face such difficulties as ours, nor is there any other large British industry which has to face competition on the same scale as that faced by the cotton industry. Other Governments are prepared to help their textile industries much more effectively than our Government are.

Our Government have been pumping money into the industry, on the one hand, and undermining the industry, on the other, by allowing still larger and larger imports. At present, as the hon. Member for Darwen said, the level of imports is about 35 per cent. of home consumption. When we compare that with the figures for other countries we see what a great burden our industry carries. In 1959 it was 23 per cent. of home consumption. That was the figure for imports which we pressed upon the President of the Board of Trade in last year's debate and which he rejected.

On the question of pumping money into the industry, I want to make one quotation from an article by Andrew Alexander which appeared in the Yorkshire Post on 24th May. He said this about the Government's reorganisation scheme: In brief, the whole aid scheme would have been fine for an industry which was assured of a good future, but very short of capital reserves. But, in fact, the position in Lancashire was exactly the reverse of this—though the industry could scarcely be blamed for thinking at the time that the Government meant to look after its investment of public money in the cotton trade. We all agree that it is vastly important that a country such as ours should help the underdeveloped countries. That is a concept with which we all agree. We are all anxious to play our part. I should now like to pose a question which I put in last year's debate: who decided that the best way to help underdeveloped countries was by killing our own industry? The more development takes place here the more we are in a position to help underdeveloped countries.

I am very eager to develop Commonwealth trade, but surely that trade must follow a sensible pattern. To ruin our own industry does not seem to me to fall within that description. Would it not have been more sensible for the main outlet for cheap Asian textiles to be to the poorer countries with a lower standard of living? That is not happening. They are sent to England. The attitude is—"We can get there without any difficulty. There is a free market there." The Board of Trade should be looking after us a little better than it is.

As a corollary of our receiving such large quantities of duty-free imports, have we not the right to expect fair trading practices from those who enter our market? The hon. and learned Member for Darwen mentioned certain of these matters. India places a duty on exports of raw cotton, gives an incentive for exports of cotton goods, and places a duty on imports. Pakistan has a duty on raw cotton exports. The hon. Gentleman mentioned the question of Ireland providing a back-door entry for still more cheap textiles. Providing that 25 per cent. of value is added to them, as they are made up in the Republic they can enter Britain on Commonwealth preference terms.

The hon. Gentleman also mentioned Canada. Can the Government confirm or deny the position with regard to Canada? I understand that Canada produces certain cloth at 1s. 10d. a yard, and, as such, it would not normally be competitive with the British product. Hong Kong is producing the same cloth at 1s. 5¾d. a yard. A Canadian company therefore imports Hong Kong cloth which it sells to its own customers at 1s. 10d. a yard but sends its own cloth to Britain to sell at just over 1s. 5¾d. a yard. That is the information we have. It is very important that the President of the Board of Trade should either confirm or deny it.

If we cannot make better agreements with India, Pakistan and Hong Kong because of the Ottawa Agreements, what will be the position with all the new emerging self-governing countries of the Commonwealth? Surely they will have exactly the same rights to come into our market. That would be the final nail in the coffin. It is no good the President of the Board of Trade saying that he has put a ring round Lancashire or round the cotton industry. Whatever ring he has put there is invisible. Mention has already been made of two new entrants into the British market—Malaya and Yugoslavia.

The Government were willing to throw over the Commonwealth in order to crawl into the Common Market, but they are not willing—this seems strange to me—to take effective action to save our own industry.

Mr. Hale

May I add that the Government have told us for 10 years that the Congo Basin Treaties are of such constitutional importance that we cannot possibly vary import terms in Africa? Since then they have been offering to give away the coastal strip in Kenya to redistribute boundaries, and to reallocate the territory of the Sultan of Zanzibar, and the new Government of Kenya are now talking about a Common Market of East Africa, including the Congo. Yet we have been told that constitutional treaties prevent imports from Japan, Hong Kong, and so on, into the whole of East Africa being subjected to any regulation.

Mr. Blackburn

My hon. Friend has just confirmed the point I was making. As I said earlier, no other cotton industry has to face such difficulties as ours. I wonder why there are no wholesale closures in the Common Market countries. The answer is that the total level of Asian imports and cheap textiles is only 2 per cent. of home consumption. It is true that under the General Agreement on Tariffs and Trade E.E.C. undertakes to increase its share of cheap imports from Asia, but this will raise the figure only to about 4 per cent. of home consumption.

As the hon. Gentleman said, the United States imports about 5 per cent. of its home consumption, yet she has already taken over 70 effective actions under the G.A.T.T. long-term arrangement against 17 different countries, whilst this country appears to be reluctant to take any action at all.

I should like to say something about re-equipment machinery, but since I have written to the President of the Board of Trade about a specific case I think that it would be wiser to await his reply. I do not want to detain the House long, because I know that many Members wish to speak. I want to mention briefly a few things which I think the Government ought to do. Knowing this Government, I know that it is no use suggesting to them they ought to have any control over merchanting. Yet we must remember that the people who are importing these cheap textiles into this country are our own people.

Leaving that aside, I suggest to the President of the Board of Trade, first, that a Commonwealth conference specifically on the problem of textiles should immediately be called. Secondly, new agreements should be negotiated at Government level. It should not be left to the industry to try to come to some arrangement with industries in other countries. Thirdly, they should fix six-monthly quotas with no carry-over of unexpired balances of quotas or ceilings. Fourthly, they should negotiate agreements on the basis of classification of imports, or what the industry calls categorisation.

Fifthly, effect should be given to the President's words that countries with no traditional trade in cotton and textiles should not count on being able to build up a new market in Britain. The right hon. Gentleman will agree that effect has certainly not been given to his words on this subject. Sixthly, they should adopt more effective methods of dealing with dumping by using the American and Canadian systems, which require the exporter to indicate on his invoice not only the ceiling price but also the current domestic value of the goods, and make any necessary adjustments, as they do. Seventhly, let the Government be as active in defence of our industry as other Governments are in defence of theirs—and that includes readiness to take effective action under the G.A.T.T. long-term arrangements.

As I said earlier, the last debate we had on this subject revealed a general lack of confidence. Unless we can see the Government effectively doing something, that lack of confidence will remain. Unless the Government take action the cotton industry is bound to continue to suffer.

7.51 p.m.

Mr. John C. Bidgood (Bury and Radcliffe)

Not very much new can be said in a debate of this kind. Hon. Members who are interested in Lancashire's problems have from time to time reiterated the various points that have been made this evening. I do not think it possible for my right hon. Friend to query the terms of the Motion, for no fair-minded person can quarrel with the way in which it is worded.

There is no doubt that the Lancashire cotton industry has taken a terrific hiding during the last ten years. We know that the taxpayer has poured vast sums of money into the industry—yet we are still going through that same difficult period that we have been going through for a decade, namely, a crisis of confidence that seems to have got worse instead of better. Although the industry has been streamlined, company results now coming out are showing very little improvement. From what one can see, there is little hope that conditions will be better next year.

One of the basic reasons for the difficulties confronting the industry is the question of cheap Asian imports. The first thing the Government must do is to settle without delay the future level of quotas from India, Pakistan and Hong Kong and not leave it, as has been suggested, to the industry to negotiate its own agreements. A clear decision devolves on the Government to take the initiative in this matter and I am sure that the industry would agree that any revision of the quotas must be in a downward direction.

We have heard this afternoon—and I support this—that the next quotas must be categorised. This is one of the principal complaints that the industry is now making. We have also heard that there must be no carry-over of quotas in any future arrangements. I feel it only fair to say that if, as has happened over the last two years, importers of cheap Asian goods have found it necessary to carry over their quotas, trade must have been very bad indeed in this country, if only because the Asian producers were not able to sell their full quotas here.

One-third of the consumption of cotton textiles in this country is imported. I am sure from what I have heard that the industry is united in the view that the Government must do something to come to its rescue. I do not believe that it should be left to the industry to provide my right hon. Friend with examples of dumping. There must be within his Department facilities to enable him to come to a conclusion on the evidence available as to whether or not goods are being dumped here at give-away prices.

We are told that the domestic price of cotton textiles in India is 30 per cent. above the price at which they are sold in the United Kingdom. While hon. Members and those engaged in the industry may or may not have conclusive evidence to bring before my right hon. Friend, I am fairly certain that in his Department there must be conclusive proof as to whether or not dumping of this sort is taking place.

The cotton industry has altered its character very much in the last few years. Whereas it used to be a labour-intensive industry it is now a capital-intensive one. There are some efficient firms in which the capital expenditure per employee is as much as £8,000, which is higher than that in the motor trade. On the other hand, looking at the other side of the coin, productivity and prices in the cotton industry are not as good as they should be. We need not seek far for the reasons. They are, first, because the industry is horizontal instead of vertical and, secondly, because of the difficulty—shall we say antipathy?—of going over to the three-shift system which operates in the Asian countries and also among our European competitors.

The position is not helped by the attitude of the trade unions, which are asking for large premiums on shift-working and on working new machinery. Whereas it is possible to try to draw up a balance sheet as to which side of industry may or may not be wrong, the fact remains that the industry itself, both employers and employees, is united in thinking that the Government must do something, and very quickly. The industry is certain, as must be every reasonable hon. Member, that Commonwealth countries should not be allowed to push up tariffs against British textiles with impunity.

There is much the Government and industry can do in this connection but, as I said, the first thing that the Government must do is to restore the confidence of the Lancashire textile industry in itself. One of the criticisms against the Government is that their attitude to Lancashire textiles is not crystal clear. What is crystal clear is the attitude of Lancashire towards the Government. All the Motion seeks to do is to give the industry an opportunity to operate under the same advantages as the cotton industries of other countries, and the United States and Canada have been quoted as examples. I could quote countless other examples.

It is a great credit to this House of Commons that on this absorbing subject so many hon. Members, regardless of party affiliations, have sensitive and sensible views about what should be done. We have a clear conscience over the Lancashire textile industry—and by"clear conscience" I do not mean the conscience of the Government but the conscience of individual hon. Members, who feel that something must be done, and without delay, to try to retrieve the injustices under which this industry is labouring. I have the greatest pleasure in supporting the Motion.

8.0 p.m.

Mr. Ernest Thornton (Farnworth)

We are all grateful to the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) for tabling this Motion, and for the cogent way in which he has highlighted the unfair treatment meted out to the cotton textile industry. He will, I know, forgive me if I say that none of his arguments, or mine, will be new to the President of the Board of Trade. The right hon. Gentleman has consistently and repeatedly rejected suggestions put to him by the trade, and by this side of the House in particular, for fairer treatment of this important industry.

The Government's policy towards this once very great industry has clearly failed, and I doubt whether one person on either the employers' or the workers' side has a good word to say for it. During the last 10 years, the Opposition have on many occasions challenged the Government on the failure of their textile industry policy. The Government's main effort was made just prior to the 1959 General Election, when they rushed through the Cotton Industry Act, 1959. We then pointed out that unless the volume of imports was realistically and reasonably tackled, confidence would not be restored and adequate re-equipment would not take place.

The warning contained in the Report of the Estimates Committee last year has been proved correct. It said: …failing a speedy and satisfactory solution to the related problems of imports, marketing and the fuller use of plant and machinery, much of the expenditure incurred"— under the Cotton Industry Act, 1959— will have been to no purpose. On 28th June, 1962, the Opposition tabled a Motion taking note of the Select Committee's Report and calling on the Government …to take positive steps without delay to promote the stability and prosperity of this important industry. What was the Governments reply? It was to table an Amendment inviting the House to welcome: …the assurances on import policy contained in the Government statement of 6th June as providing the basis upon which the cotton textile industry can work for future efficiency, stability and well being within a prosperous national economy."—[Official Report, 28th June, 1962; Vol. 661, c. 1367–1377.]

Mr. Dan Jones (Burnley)

Since when, the industry has gone from bad to worse.

Mr. Thornton

The Government have certainly not provided the"prosperous national economy". In fact, in the meantime, the economy has nearly gone bust, and a few months ago we had the highest level of unemployment for many years. It is equally clear that the Government's statement on import policy has failed, and failed badly, to provide the basis referred to.

I agree at once that the industry is not free from fault. To take one of the three related points mentioned by the Estimates Committee—marketing—the industry has moved all too slowly towards integrating the production processes with the marketing arrangements. It is true that there has been some perceptible movement in recent weeks but, in the main, it has been the merging of firms that already have their own marketing sections. The spinning processes, dominated by the Lancashire Cotton Corporation, the Fine Spinners and Doublers Association and Combined English Mills, remains predominantly horizontal in structure. A break through here should be organised.

I do not suggest that vertical integration is the answer to all the problems—it is not. The probability is that, from the point of view of production costs, the difference is only marginal, but it is a necessary contribution if this problem of orderly marketing and the ironing out of booms and slumps is to be solved. In recent years, of course, it has been all slumps and no booms.

With regard to the other two related problems referred to by the Estimates Committee—imports and the fuller use of plant and machinery—the fault clearly lies outside the industry's control. In the last year or two, the relationship of imports to domestic production has meant that many efficient producing firms operating a two-and three-shift system have had to knock off one shift because of shortage of orders—and a few have gone out of business altogether. I particularly call the attention of the hon. Member for Bury and Radcliffe (Mr. Bidgood) to this point.

We really have cause to worry, cause to say that something is seriously wrong with the industry's opportunities. When our most efficient firms, operating on a three-shift system—and our efficient firms are as good as any in the world—cannot keep their plant running because the markets are not there for the long runs necessary for this highly-productive machinery, there is something seriously wrong with the conditions under which the industry has to operate.

As the Estimates Committee pointed out, there was a crisis of confidence in the industry, and since the issue of the Estimates Committee's Report the Government have done nothing at all to restore that confidence. That lack of confidence is high-lighted by the almost certain failure of the re-equipment phase of the Cotton Industry, Act, 1959. If that Act does not succeed in getting substantial re-equipment it has failed completely, and a lot of public money has gone down the drain.

Much has been said about the damaging effect of the large volume of cheap-price imports. The United Kingdom was once the world's largest exporter of cotton textile goods—it is now easily the world's largest importer of those goods. The United States of America, with three and a half times our population and probably seven or eight times our purchasing power, imports, quantitatively, only about two-thirds of the cotton textiles that the United Kingdom imports.

The difference is not due to efficiency, but mainly due to restriction of entry. As has been pointed out by the hon. and learned Member for Darwen and other hon. Members, the United Kingdom proportion of imports to domestic requirements has varied in recent years from 25 per cent. to 40 per cent., whereas in the United States the figure is 5 per cent. or 6 per cent. No other industrial country—with, perhaps, the exception of Sweden, with its 7½ million population—approaches anything like the United Kingdom proportion.

Our present system of uncontrolled imports under ceilings for individual countries, Commonwealth and others, is clearly unsatisfactory. I agree with the hon. and learned Member for Darwen. There is price disruption, inability to book long runs, which are so essential with highly productive, new and expensive plant, and there is absence of adequate categorisation. All these three problems are interlinked. We on this side of the House, and doubtless hon. Members opposite, met representatives of the industry this afternoon. The picture that emerged was certainly one of chaos in the industry, in marketing, in the back-door entries, and the rest. There is a clear need for adequate machinery for planning, categorising and timing these large imports.

We have to accept substantial imports, for a variety of reasons, not least the needs of developing countries such as India and Pakistan. I freely admit this, but why cannot we control imports more effectively so that they do the minimum of damage instead of very nearly the maximum damage as is now the case? The United States does it and Switzerland does it by different means. Other countries do it as well. If all other countries take steps to prevent disruption, when they have only a low percentage of imports, how much more important is it that we should take these steps with our relatively much higher percentage of imports?

Within the framework of an outward-looking trade policy which a great trading nation like ours should pursue, there is much that the Government can and should do. All the countries represented at the recent G.A.T.T. long-term cotton textile arrangements, importing and exporting nations alike, recognised and wrote into the document recognition that the United Kingdom was saturated with cotton textile imports.

The present ceilings on imports are too high but they have been accepted up to 1965, notwithstanding protests from this side of the House in June of last year against the last increase that was made. An assurance should be given to the industry that limitation will continue after 1965. The limitation should be global, as suggested by the hon. and learned Member for Darwen. If new exporters gain markets here and some of the existing exporters increase their share, others must lose out, at least until such time as other advanced countries come near to matching our United Kingdom performance. Special regard, however, should be given to India and Pakistan. They have tremendous problems, including a serious balance of payments problem. But this does not apply to Hong Kong.

Hong Kong is not a poor Colony. It has no balance of payments problem. I agree that it has other problems. The hardship among the population of Hong Kong could be ameliorated by having a reasonable taxation system. Why should the extremely wealthy people in Hong Kong—European, British and Chinese—get away with such a low level of direct taxation?

A great deal has been said already about the issues of categories, trade distortion, and quota periods. I would only add on the last named subject that Hong Kong did not have a carry-over last year. It had a carry-over in the preceding year of 10 million sq. yards. I understand that this year India has a carry-over of 37 million sq. yards. Pakistan has a carry-over of 6 million sq, yards and Formosa one of 1 million sq. yards. I understand that India's 37 million sq. yards carry-over has already been delivered in this country. It would appear, therefore, that in 1963 we shall have from India 232 million sq. yards compared with 195 million sq. yards. Is it surprising that in those circumstances the industry in Lancashire remains depressed and that the upturn has not come about? Is it surprising that prices remain disruptively low and that confidence is at a record low ebb?

Another point to which reference has already been made and which ought to be emphasised is the need to redefine Commonwealth goods. Enough has been said on this subject. I do not want to go into further details, but there is a point to which I should like to draw the attention of the President of the Board of Trade. The right hon. Gentleman should have a further look at the provision for an automatic increase in allowable imports when the average order book in the Lancashire industry reaches 15 weeks. An order book of 15 weeks is not unreasonably long. In saying this I do not deny the fairness of making some provision of this kind, because excessively long order books are not good in the long run.

The Government have clearly failed the industry. The suspicion has long existed in Lancashire that the industry was expendable. That suspicion is now a near certainty. Why does every other advanced industrialised country consider its cotton textile industry an important part of the economy? Why have this Government done so much to create conditions for the industry which make it increasingly impossible for it to survive? We warned the Government when the"scrapping" phase of the Cotton Industry Act, 1959, seemed so successful that unless they created confidence on this import issue the re-equipment phase would fail and much public money would have been wasted. This is happening, if it has not already happened.

The hon. and learned Member for Darwen asked what the Labour Party would do. I think that from the way he put the question he already accepts that it will be a Labour Government that will have to resolve these problems. When the Labour Party comes into power, which cannot be long delayed now, a real attempt will be made to establish conditions of fairness and to restore confidence to the Lancashire industry.

A Labour Government will reopen negotiations at G.A.T.T. and seek to secure an early and substantial liberalisation in the 1962 Agreement. The broad principle of that Agreement, of a 5 per cent. per annum increase in imports seems generous in itself. It is in fact a high rate of increase but, of course, it starts from a ridiculously low rate. It will be 10 years before a real contribution is made to the problem of the needs of the developing countries for cotton textiles, assuming that the scheme is implemented and works successfully. These developing countries cannot afford to wait 10 years. It would be far better for all concerned to have an immediate substantial uplift in imports by the developed countries followed by a 2 per cent. per year rate of increase instead of the 5 per cent. on the very low base.

A Labour Government will establish machinery to bring order out of the present chaos, to regulate the imports of cotton goods into the United Kingdom. The present high level to which we are committed to the end of 1965 will be handled in such a way as to minimise price disruption and iron out the ups and downs of supply and demand which have been a bugbear to the industry for years. Further integration will be encouraged by financial grants for modernisation in those firms which undertake approved integration schemes.

A Labour Government will demonstrate that with order and planning it is possible to maintain a viable cotton textile industry without damaging the economies of the developing Commonwealth countries. Orderly adjustments have been achieved with agriculture and coal. It can be done with cotton if there is the will to do it.

The statement of policy, which will be made in full by my right hon. Friend the Deputy-Leader of the Opposition in Manchester on 19th July, will, I feel sure, go a long way to restore the confidence which the present Government have so lamentably failed to create.

8.22 p.m.

Sir John Barlow (Middleton and Prestwich)

Many Members wish to speak on this important subject tonight, and, for that reason, I shall try to curtail my remarks. So many Members obviously wish to say very much the same thing, and therefore one should shorten one's speech.

I am very glad to follow the hon. Member for Farnworth (Mr. Thornton). We in the industry have a great respect for his knowledge of the cotton industry and, while I do not always agree with him, I always take what he says about the cotton industry with very great seriousness.

Mr. D. Jones

I wish the President of the Board of Trade did.

Sir J. Barlow

So do I. The cotton industry, the oldest great industry in this country, has been the best organised and the most economic in its day and has provided relatively more exports than any other industry in this country at any other time. People nowadays so often fail to remember the size of the industry about 50 years ago, when it was producing something like 8,000 million yards of cloth a year of which it was exporting nearly four-fifths. The present production of the cotton industry is, I imagine, in the region of 1,200 million yards of cloth a year, which is approximately one-seventh of what it was 50 years ago.

At that time, when the cotton trade was at its zenith, as I said previously, I think it was probably the best-organised exporting industry that we or the world have ever seen. I was very familiar with it in the early 1920s when it was still very large. I remember that the merchants used to get their telegrams from all over the world in their offices as soon as they opened in the morning, and as soon as those telegrams were decoded the representatives from the mills in the different Lancashire towns would be coming in and seeing what we wished to buy. We then had some discussion with them as regards price and delivery and, of course, the type of cloth.

After lunch we went on 'change; they came back with their prices and we tried to see whether we could do business with them. If we managed to secure the cloth, the acceptance was wired back that afternoon. If not, an alternative offer was sent back. All that business was done on a very slight profit indeed—some of it commission and some of it profit. But I think that has been the quickest and most efficient type of overseas business that the world has ever seen on a large scale.

The diminution of the industry has, of course, been steady, with spurts and occasional uprisings, in the last 40 or 50 years. Every new emergent country wishes to establish a cotton industry. It seems to offer them prestige, and very often they cannot run their mills efficiently without our technical help and without quotas and tariffs as well.

The reduction in the number of spindles in the last 10 years has been very substantial, largely helped by the redundancy scheme. In 1951 there were about 22 million spindles and last year I believe they were reduced to about one-third of that number. In the same way, in 1951, there were approximately 360,000 looms and those have now been reduced to about 130,000. When the redundancy scheme was imposed in 1959 it was done on the basis of a certain amount of cloth which was expected to come into this country at that time. It will be remembered that the Commonwealth cloth at that time was something like 360 million yards and foreign cloth 170 million yards. In 1961 320 million yards came from the Commonwealth and 420 million yards from foreign countries. In 1962 the figure was somewhat less because of bad trade in this country.

The scheme was based on the expected import figure of 1959, and the Government have done all too little to maintain the import figure at that level. They have let it gently rise and they have been all too slow in plugging the holes in the bucket. It is no use pouring redundancy scheme money or water into a bucket if there are holes in it, when the number and size of the holes are increasing and one does nothing to plug those holes. That is what has happened in this country. It is comparable to building a dam and finishing 80 per cent. of it while failing to do anything about the remaining 20 per cent. It brings down the whole scheme in failure and ruins the industry at the same time.

Quite a lot has been said about categories this evening. They are very important indeed. The Board of Trade has done all too little about these. Time and time again it has encouraged the industry to do what it can for itself, but that is not good enough in the present circumstances. The industry cannot handle that part of the negotiations nearly as well as the Board of Trade. The industry has insufficient facilities to do it. That is part of the job of the Board of Trade.

In the case of Hong Kong we see determined efforts to stop different parts of the industry. One year, Hong Kong manufacturers may send a large amount of children's clothing perhaps, putting several clothing factories in this country out of business. Then they will switch to something else, raising their price on the children's clothing and making a very big profit out of it. One by one, just as Hitler ruined and destroyed the small nations of the world, the Hong Kong industry destroys one type of manufacturer after another in this country. The Board of Trade has the facilities for stopping it, yet it is doing little or nothing about it.

I take a rather similar case, the export of handkerchiefs from India. In 1961, none were sent to this country. In 1962, 60,000 dozen were sent. In January this year, in one month alone, there were 26,000 dozen sent. The indications are that the Indians are concentrating on handkerchiefs just as Hong Kong concentrated on other things. One by one, the manufacturers in this country, quite apart from the spinners, the weavers and finishers, can be ruined in course of time.

As has been said, the United States has very full control over categories. We do not necessarily wish that amount of detailed control, but we wish for something reasonable to keep our manufacturers in normal business.

I have heard of two small rather silly cases which are, perhaps, an indication of hundreds of others. I am informed that on what are known as gents' denim trews up to 29-inch waist there is no tax imposed in this country. When the inside leg measurement is over 29 in., then a tax is imposed. But the Board of Trade insist on the turn-up being sewn up properly in this country, whereas on similar imported garments, I understand, the turn-up may be left loose so that it may be turned down, lengthening the trews by the 2 or 3 in. of the turn-up. Someone is getting away with something there. I am told that the Board of Trade has been informed about it, but it seems all too slow to do anything.

Likewise, I am informed that on all made-up clothing such as men's shirts there has to be a marking,"Made in the Commonwealth" or something of that kind, in a fairly easily seen place. I am told that, recently, garments have come in with the mark almost hidden in the collar band so that it is very difficult to see it. Again, I understand that the Board of Trade has information about it but seems very slow to anything.

There is a great deal of trouble in finding out what cloth coming into this country is subsidised. The Cotton Board and other organisations have done much work on this subject but it is not nearly so easy for them as it is for the Board of Trade to find out about subsidies. I understand that Portuguese cotton yarn and cloth is considerably subsidised, but it has only been after a very long time that the industry has been able to obtain the information. I am told that the subsidy on carded yarn amounts to about 5.3d. per lb., on combed yarn 6.4d. per lb., and about 5¾d. per lb. on the weight of yam in cotton fabric. This sounds rather complicated, but I have no doubt that the experts at the Board of Trade know all about it.

Hon. Members have spoken this evening about cheap foreign cloth going to Eire, being manufactured, and then coming to this country with the necessary 25 per cent. uplift by which it obtains Commonwealth status. This is just not good enough. It is nothing but a wangle, and the Board of Trade should do something about it. We believe that 50 per cent. is reasonable uplift for this type of business.

Reference has been made—it is so important that I shall refer to it again briefly—to our heavy imports compared with those of other countries. We import about 35 per cent. of our consumption; in other words, for every two yards we make and use here we import one. In the United States, the percentage is about 5½. In France it is 1 per cent., in West Germany it is 7 per cent., and so on. We are the only country with a great textile industry which tolerates anything of the sort. When our delegates go to conferences in Geneva, in France or in other places, delegates from other countries ridicule our people and ask what on earth our Government are doing not to preserve the wonderful industry which is traditionally so great here.

We have great skills, traditional skills. We have the towns. We have modern equipment. But we must have help from the Board of Trade to stop up the holes in the bucket and not allow cheap and often subsidised cloth to come here, especially from foreign countries.

The Board of Trade seems to sleep so much of the time. A country may be sending nothing to us one year, a little bit the next year, and thereafter increasing. Naturally, we grumble, but the Board of Trade says,"It is only a little bit. It does not matter", and it waits for about five years until it does matter, and then it settles for more than the greatest import from that particular country has ever been. This does not happen once. It is happening time and time again from all over the world. I tell the President of the Board of Trade that it is not good enough.

The President of the Board of Trade, his Ministers and his officials are charming people individually. They are very helpful. They work very hard. But collectively they are a very different"cup of tea". We want them to do things collectively, not just talk nicely as individuals. The other day, the President of the Board of Trade came to Manchester and he said sweet nothings. This is not good enough. We in Lancashire have had our troubles in the past. We have got our troubles now. I urge the President of the Board of Trade to take them seriously. Otherwise, we shall.

8.38 p.m.

Mr. Dan Jones (Burnley)

It is always a pleasure to follow the hon. Member for Middleton and Prestwich (Sir J. Barlow) because his criticism, at any rate, is always followed by action.

Although I have a lot of support and enthusiasm for the Motion, I am not entirely certain that I can congratulate the hon. and learned Member for Darwen (Mr. Fletcher-Cooke). I say that because I have here a copy of the last debate on this very important subject, and it is noticeable that on that occasion he did not support us in the Lobby. For that reason, I was rather disappointed that he should have attacked this side of the House which, as far as my memory serves me, has been consistently loyal to and anxious to help this industry, as it very richly deserves. I go out of my way to say that that criticism does not apply to the hon. Member for Middleton and Prestwich, and I accord to him my homage for what it is worth.

Coming to the industry itself, I think that these observations spring readily to mind, although very little can be said by anyone which has not been said already. I am very prepared to admit that there are people like my hon. Friend the Member for Farnworth (Mr. Thornton) who have been reared in the industry and who know its history chapter and verse. I must admit that I bring to this debate the feeling of injustice to an industry rather than an immaculate knowledge of it. Nevertheless—and I say this with some pride—I represent a constituency which, through the years, has made a quite remarkable contribution to this industry, and it could do so again. It has undoubtedly made a remarkable contribution to the economic well-being of our nation.

It is important to recall 1959 and not only the fact that millions of pounds of public money were poured into that industry, but that people in the industry did something which was quite remarkable. Indeed, with my knowledge of the industries of this country, I question very much whether any other industry would have acted similarly. At the behest of the Government, the industry went in for a period of rationalisation. It got rid of unwanted factory space, unwanted and out-of-date machinery, and unwanted men and women. I could not see the engineering industry in this country cooperating on such a basis. What this industry did was quite remarkable—and who can dispute it? This co-operation was given because of the specific promise of the Government that if what was suggested was done the whole industry could look forward to a period of greater prosperity than ever. The Government sent one of their Ministers, who is now in another place, to Lancashire to speak in precisely those terms.

I look at the subsequent developments with a sense of very real dismay. It is not a question of the Government not knowing what they are doing, so repeatedly have they been warned. I have never ascribed to the Government a lack of ability or the inability to see the economic problems just as clearly as we can. I must say almost with bitterness that it is nearly impossible not to come to the conclusion that the Government have written off this industry.

The people in my constituency looked forward to a new industrial era. Within a few months this new industrial child was suffocated by the Government and by the extent of importations. I shall not dwell on that matter except to say that I was particularly attracted by the reference of my hon. Friend the Member for Farnworth to Hong Kong, which will be the main burden of my very brief contribution. He said that Hong Kong might not be in the same position as Commonwealth countries in terms of tradition. I wonder whether my hon. Friend the Member for Farnworth knew how near to the mark he was. He certainly was correct when speaking about the financial well-being of that country.

I have with me a Barclays Bank statement which, under the heading"Present situation", states: Business buoyant" and No difficulty with payments for exports to Hong Kong. In the middle of a fine analysis, the statement uses these words: Textile manufacture, which accounts for about 50 per cent. by value of all exports, is the largest industry. Exports of garments increased last year by 18 million (33 per cent.), which more than offset a fall in exports of other textiles of £5 million. I wonder whether those figures, carefully prepared by the bank, have, in turn, any effect upon our own country.

These figures will interest the House. In February, 1962, imports from Hong Kong of textile yarns, fabrics, made-up articles and related products were £899,567 and in February, 1963, one year later, the figure was £1,459,990. If my arithmetic is correct, that means that there was an increase in imports to this country from Hong Kong of precisely £560,423, which, judged by any standard, is a substantial increase upon a figure that already was very high.

The point I am making is that these exports do not represent trade with a typically Commonwealth country. I offer these figures as ample substantiation for that viewpoint. I refer the House to Hansard of 22nd May, 1962, when the former Secretary of State for the Colonies, now Chancellor of the Exchequer, was replying to Question No. 38. I quote: Restrictions are necessary because there is a limit to the number of immigrants from mainland China that Hong Kong can now absorb, while there is virtually no limit to the number of Chinese who may seek entry. More than 1 million Chinese have entered Hong Kong in the past twelve years, and with a total population of 3.2 million, Hong Kong is very overcrowded. Nevertheless, about 60,000 still enter the Colony, legally or illegally, every year."—[Official Report, 22nd May, 1962; Vol. 660, c. 226.] It is almost impossible to escape the conclusion that those figures, relating to the amount of imports into this country from Hong Kong, and to the number of people who find employment there from China, give us the right to say that the Lancashire cotton textile industry is actively subsiding the refugee problem from Soviet China. It is difficult, if not impossible, not to arrive at that conclusion. I suggest that these facts are similarly well known to Her Majesty's Government. If they are not, they ought to be.

There is a consequence. I, at least, am not prepared to accept the suggestion that this is traditional trade between Commonwealth countries. I reject that upon the evidence which I have put forward. Those three sources of information—Barclays Bank, the Statistical Division of the House of Commons and the Chancellor of the Exchequer himself—are sources of information which are incontestable and add up to a conclusion from which one cannot possibly escape. I repeat it. The Lancashire cotton textile industry is subsiding the refugee problem of Soviet China and Hong Kong.

There is a good deal more I should have liked to have said, but I know that other hon. Members are very anxious to speak, so, instead of making half a dozen more points I should like to make, I will make two and sit down.

First, I hope the situation with regard to Portugal will be very carefully watched. I am given very reliably to understand that the industry itself believes that unless that happens Portugal could become the Hong Kong of Europe, because the exports of that country are very readily developing, and the costs of production in that country are comparable with those in Hong Kong, and consequentially offer a most unfair competition to the Lancashire textile industry. I would, therefore, repeat that I would hope that that situation will be very closely watched.

Secondly, and more importantly, I am very pleased indeed with the Motion which has been brought forward by the hon. and learned Gentleman the Member for Darwen—and full marks to him for so bringing it forward—and I hope that before the debate ends an equal amount of pleasure will be given us by the President of the Board of Trade in his response to the debate.

8.51 p.m.

Captain L. P. S. Orr (Down, South)

I hesitate to distract the House from the Lancashire cotton industry for a moment, but I do so with the justification that the Motion as drawn refers to the disadvantages under which the United Kingdom textile industry at present labours". So far as the textile industry in Northern Ireland is concerned, we fully share the anxieties of the Lancashire cotton industry about the high level of imports. We are entirely at one with Lancashire in this.

This is the first time I have sat through a cotton industry debate, and I have been impressed by the arguments, brought forward both by my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke), in moving the Motion, and by the hon. Gentleman the Member for Stalybridge and Hyde (Mr. Blackburn), about the need for a better co-ordination of Commonwealth trading in textiles. I was impressed by the suggestion—I think it came from the hon. Gentleman the Member for Stalybridge and Hyde—that there should be a Commonwealth conference confined to textiles alone. I think there is clearly a need for the redefinition of Commonwealth products. The fact that so much in the way of imports comes by what my hon. and learned Friend called the Eire wangle through the back door is some- thing which clearly the Commonwealth countries as a whole ought to consider.

Let me turn to the textile industry in Northern Ireland for just a minute or two. It is not, I think, realised in this House, because we hear so much about our shipbuilding industry and our aircraft industry, that the second largest employer of labour in Northern Ireland is the textile industry. Textiles as a whole account for 12½ per cent. of the working population, that is, 10,000 people more or less directly or indirectly employed. A very substantial portion of that textile industry is the handkerchief trade, and it is particularly to the disadvantages which that trade suffers that I want to refer. My hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow) also referred to them.

Not only is it a substantial employer of labour; it is a very substantial exporter on behalf of this country. The value of exports of the handkerchiefs trade in 1959 was £507,000, in 1960 £553,000, in 1961 £507,000 and in 1962 £519,000. The whole of the export of made-up linen handkerchiefs from the United Kingdom comes from Northern Ireland, but what is not often realised is that nearly 85 per cent. of the export of cotton handkerchiefs comes from Northern Ireland. The majority of cotton handkerchiefs, even those which come from Lancashire, are hemstitched and made up in Northern Ireland and exported from Northern Ireland.

Until recently, we have been the third largest exporter of handkerchiefs in the world but because of the introduction of specialised machinery in other countries which can now be operated by means of relatively unskilled labour and because of the development of the other textile industries that we have been hearing about, we have now lost that position, and the handkerchief trade is in some difficulty. We have got to rely principally upon our quality in order to compete both in the home market and—it is important here to bear in mind what one of my hon. Friends said about the export of handkerchiefs from India—in the export trade.

It is extraordinary that in these circumstances there should be 10 per cent. Purchase Tax upon handkerchiefs. This comes about because, with the withdrawal of the special surcharge on 10th April, 1962, the rate of Purchase Tax on Group 2 articles—accessories and minor articles of apparel—went up from 5½ per cent. to 10 per cent. This is, in fact, a direct tax on grey cloth, and its effect is to put a 1d. or 3d. on a finished handkerchief, depending on its quality. This has an extraordinarily damaging effect upon our handkerchief trade.

Mr. Douglas Jay (Battersea, North)

Surely what the hon. and gallant Gentleman is saying about handkerchiefs is also true of almost all other textiles?

Captain Orr

Yes, I fully accept that, but I am talking in particular about handkerchiefs. During the proceedings on the Finance Bill, some of my hon. Friends and I tabled an Amendment to deal with the problem, but, unfortunately, the Ways and Means Resolution meant that we were not in order when we tried to move a new Clause.

Mr. Sydney Silverman (Nelson and Colne)

But the hon. and gallant Gentleman will recall that there was an occasion when it was in order and when an Amendment was moved, from the Government side of the House—by, I think, the hon. Member for Manchester, Withington (Sir R. Cary)—to reduce or abolish the Purchase Tax on textile goods. It was most persuasively argued on both sides, and particularly on the Government side. As I pointed out on that occasion, hon. Gentlemen opposite could have had their way if they had only gone into the Division Lobby in support of their Amendment, but none of them would do so.

Captain Orr

The hon. Gentleman is talking about Purchase Tax on the whole range of textile goods. I was talking about a new Clause which I tabled to the Finance Bill to deal with linen handkerchiefs under 21 ins.—

Mr. Silverman

Surely the greater includes the lesser.

Captain Orr

Of course. If the greater is absolutely impossible, however, sometimes it is not a bad idea to go for the lesser. We had decided that the lesser was possible, and we thought it was reasonable to ask the Government to exempt handkerchiefs under 21 ins. We did that because the Chan- cellor could not tell us,"But this includes headscarves and all kinds of things." What we tried to do was to move handkerchiefs into the category of toilet accessories. One of the unfortunate things facing the handkerchief trade is that paper handkerchiefs are free of Purchase Tax. It was this that concentrated our attention on this aspect. In the United States the paper handkerchief has now outstripped the textile handkerchief. Far more paper handkerchiefs are sold there now than textile handkerchiefs, and the textile handkerchief makers in Northern Ireland are very much afraid that this will be the pattern in this country in future.

Consequently we say that, in order to be fair as between paper handkerchiefs and textile handerchiefs, the time has come when at least this limited change in the Purchase Tax ought to be made to help us. I hope that my right hon. Friend the President of the Board of Trade will say that he will recommend to the Chancellor that in his next round of Purchase Tax changes he will remove Purchase Tax from handerchiefs, bearing in mind the background of very considerable unemployment in Northern Ireland and the importance of this industry to us. We should take it very ill indeed if, in the next round of Purchase Tax changes, the Chancellor did not make this very simple concession to us. With that, I shall now allow the House to return to the subject of Lancashire.

9.2 p.m.

Mr. Anthony Greenwood (Rossendale)

I am sure that the hon. Member for Down, South (Captain Orr) will understand that I, a Yorkshireman representing a Lancashire constituency, am loath to follow him in the very interesting points that he has made about the effect of the Government's policy on Northern Ireland. I do so because I want to be brief. I think that it is most important that as many hon. Members as possible should be enabled to take part in the debate so that we can impress upon the Government what is almost the sense of desperation that pervades Lancashire at the present time.

I confess that my own self-imposed aim of brevity is made easier by the fact that, like other hon. Members who have spoken, I find it difficult to say anything new on an occasion of this kind. Over the last seventeen years, year after year, there has been debate after debate on the cotton industry. The unions have pleaded, the employers have begged, the local authorities have argued, and the Cotton Board has wheedled in the most statesmanlike possible way. Yet throughout that period, particularly during the last twelve years, we have been met with indifference or invincible ignorance on the part of the President of the Board of Trade.

The President of the Board of Trade visited Lancashire very recently, and I should like to tell the House what the Textile Mercury, the principal periodical in the industry, had to say about that visit: speaking of the Minister, it said: Eighteen months ago—just ten days before Christmas, 1961—he came to Manchester and failed to put anything at all, except comforting and meaningless words into Lancashire's stocking. Last week, at the start of the series of Wakes holidays, he came again, and if Lancashire was hoping for a few coppers for its holiday fund the county was again disappointed. As before, Mr. Erroll came, said the same old things, and went away. He might just as well have spent the weekend helping the Prime Minister cope with the domestic difficulties of the Government. The Textile Mercury also said that the last time the President of the Board of Trade went to Manchester he said that he had gone there to listen and learn and that he had proved quite adequately that he had done neither. The net result of all the efforts that have been made by the industry and by hon. Members on both sides of the House over a very long period, manpower in the industry has continued to fall, imports into the country have continued to rise, and the confidence of the industry has been eroded.

I would like to say what this means in terms of a constituency. Excluding the town of Ramsbottom, the number of workers in this industry in my constituency fell between 1951 and 1961 from 7,923 to 6,300, a drop of one-fifth. The last annual report of the Lancashire and Mersey Industrial Development Association gave the unemployment figures for 11th March—and I strongly support my hon. Friend the Member for Stalybridge and Hyde (Mr. Blackburn) in what he said about the unrepresentative and inaccurate character of the unemployment statistics in areas like our own. The Association's figures showed that in Bacup alone there was an unemployment rate of 7.5 per cent. There were only two towns in the region, Up Holland, with 8.1 per cent. and Hoylake, with 7.6 per cent., which had a higher level.

The position in Bacup is accentuated by the fact that the slipper industry there is affected by similar conditions. The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) and my hon. Friend the Member for Blackburn (Mrs. Castle), who also have the slipper industry in their constituencies, will, I am sure, agree.

The other day I got what I thought was one of the saddest letters I have had from my constituency. It came from a young and brilliant textile manager. I imagine that he is about 36 years of age. He wrote: In my 20 years in the trade I do not remember such an atmosphere of widespread alarm and despondency. As an Associate of the textile Institute I would point out that an analysis of the admission lists shows that only about 5 per cent. of new members are connected directly with spinning and manufacturing. The supply of technical staff for future managerial posts is just about nonexistent. That letter epitomises the tragedy of the industry. This is National Productivity Year, yet the new managerial and technical class in the industry is having its heart broken and being discouraged from continuing in the industry.

The hon. and learned Member for Darwen asked what Labour's plan was. It is not for me to say what it is in detail tonight, but I want to state, from my point of view, five things which are absolutely necessary. First, we need firm ceilings for total imports. I know that we are limited up to 1965, but I believe, as other hon. Gentlemen have suggested, that we should start now deciding what future figures are to be. It may well be that the 1959 ceilings were themselves too high, but I think that to start on the basis of the 1959 ceilings is to start on the wrong foot. It is for the Government to decide what size they want the cotton industry to be and then create the conditions to help it achieve and maintain that size.

Secondly, I agree with what other hon. Members have said about the need for categorisation. It is a horrible word, but that is, I think, an essential requirement for the textile industry at present. The United States has over 60 categories, and I believe that a stipulation that exports to the United Kingdom should be limited according to well-defined categories should be introduced into quota restrictions against some countries and into bilateral agreements with others.

The third requirement. I believe, is, as the hon. and learned Gentleman has pointed out, to stop the carry-over of quotas. Here I would say that I wish that his Motion had not been in such general terms, but had included specific proposals for helping the industry out of its difficulty. That would have produced an interesting situation, in which hon. Members opposite whose seats in Lancashire are in great danger would have had an opportunity to save them by voting with us on the practical proposals which have emerged from both sides of the House today.

The fourth necessity, I am certain, is for the kind of cotton import commission which my right hon. Friend the Leader of the Opposition suggested in the Wilson plan five years ago—a commission which will regulate the flow of cotton imports and determine import prices. That is the only form of machinery which will stop the merchants who are at present sabotaging the Lancashire textile industry from continuing to destroy it for their own miserable private profits.

Lastly, I suggest that we must tighten up the anti-dumping machinery. I am sure that hon. Members who have stressed this point are absolutely right. It is ridiculous that it should be possible for Indian textile goods to come to this country at a price which is 20 per cent., 30 per cent. or more below the domestic prices that operate in India. It is ridiculous that yarn should come from Ireland and sell here at a price substantially less than that which it commands at home.

It is absurd that the industry should have to prove that dumping exists, that it is disrupting the industry and that it will be to the national interest to stop the dumping, before it is possible to get the President of the Board of Trade to act. The responsibility for acting must be accepted fairly and squarely by the right hon. Gentleman. I want him to tell us tonight what he objects to in the Canadian system; it seems to work well in Canada. It protects the Canadian cotton industry. I hope that it will be possible for him to hold out a small crumb of hope that at last he is seized of the desperateness of the situation and is prepared to do something to help the people of Lancashire.

9.12 p.m.

Mr. Geoffrey Hirst (Shipley)

Time marches on. I have had to decimate the speech that I had prepared. I hope that my example will be followed; otherwise I shall feel that my sacrifice has been in vain.

This is an important subject, and I am grateful to my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) not only for his interesting speech but for leaving the Motion wide enough to allow other industries connected with textiles to be mentioned. I follow industry very widely, and I support the tenor of the speeches that have been made so far. I am only too conscious of the problems and difficulties facing the cotton industry. I am also aware of the fact that some people in the wool textile industry, considering the attitude adopted by the Government in respect of cotton, feel that some of the same dangers may arise in connection with their own industry.

On the other hand, for a number of reasons the wool textile industry does not have quite the same difficulties of competition in the home market that the cotton industry has to face. There are climatic reasons, and the expense and difficulty of working with wool products as opposed to cotton. Nevertheless, the wool textile industry is not very pleased with Her Majesty's Government. It is not as pleased as it used to be. The wool textile industry has a great export market worth £150 million a year. It is doing a fine job, but recently it has not always had the same attitude in respect of consolidation that it used to have.

This situation arises broadly from the Japanese attitude. The wool textile industry still stands by the fears expressed at considerable length on this subject in the debate in December, 1962. The protection provided to this industry in its own country is considerable. For instance, in the case of Italian cloth at 32s. a yard there is a particular form of duty, which is 20 per cent. ad valorem, plus 175 yen per square metre. This means that the protection is double what it is in our country in respect of the same cloth. With cheaper material, at 14s. a yard, the protection is three times what it is here.

The Japanese market is almost exclusively controlled by large trading concerns, and a very nice arrangement it is. Most of the traders buy the raw material and then distribute it to mills of their own choice. Then, by a form of discipline, they put up the prices. All this leads to the greatest example of dual prices in the world. It still exists, and it will remain. It is nothing less than dumping. I support the views which have been expressed tonight that Her Majesty's Government are far too soft-bellied in this business. There is no reason why our basic industries and our sound export industries should be sacrificed, whatever the incentive may be to develop new ones.

Although I have had to scrap most of my speech, I wish to conclude by quoting an extract from the speech which was made by my right hon. Friend the Chancellor of the Exchequer to the Association of British Chambers of Commerce. I should not have taken a lot of notice of it but for the context in which it was made. My right hon. Friend said: It is fundamental far the British economy not to dwell too much on the lost trades of the past, but to concentrate more and more on the new trades of the future. That is all right so far as it goes—if it were not Government policy time after time to say that everything must be thrown on the side of the new industry and that it does not matter how much an old one is damaged. That is not good enough for the textile industry and it ought not to be good enough for Her Majesty's Government to retain as a policy.

9.16 p.m.

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

Hon. Members must, of necessity, condense much of what they would like to say. If we on this side of the House were able to say all that we believed about the Government, it would take a long time.

I must excuse myself for being a little hoarse this evening. Yesterday, I was singing heartily at our annual"church sing" in a church in the Pennines which overlooks Lancashire on the one side and Yorkshire on the other. I must confess to a few secular thoughts as we raised our voices in the hymn: Let every creature rise and sing. I thought of the multitude of people from both sides of the Pennines who have raised their voices about the parlous state of the textile industries and near-anarchy which persists.

The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) asked a rhetorical question: what was the policy of the Labour Party? He should know by now that if it took as long to obtain an answer from the Labour Party as it has taken hon. Members on this side to get an answer from the Tory Party, or to find a policy at all, it would be a minimum period of twelve years. But he will find that it will not be long.

The hon. Member for Middleton and Prestwich (Sir J. Barlow) said that the Government were required to block up holes in the bucket. We do not want the Government to block up any holes in any bucket. We want them to"kick the bucket"—and to get out. The policies which they have pursued, laissez-faire as they have been, with a tiny mixture of planning, have led us into such a mess that now no one, either in Lancashire or Yorkshire, has any confidence in the Government.

The Government have relied on competition and consumer's choice and the elimination of the inefficient by the ready and old-established method of the bankruptcy court, never worrying about the side effects of that kind of approach. But, in recent months, they have accepted in part the principle, which has been enunciated from this side of the House for many years, that a planned economy is necessary. That must be the case, or they would never have dreamed of setting up the N.E.D.C.

When there is a violent change because of the contraction of an old industry or old industries, it is essential that there should be better and newer thinking than the President of the Board of Trade and his colleagues have shown up to now. I could quote at length what industry thinks about the performance of the Government, but I will content myself with making one quotation which will cap anything which has been said by Tory Membrs about their own Government. This is from an important person in the wool trade: Last week at the annual meeting of the A.B.C.C. the President made one of those London Schools of Economic speeches saying that Britain must get behind the glamour industries and forget old-fashioned ones. Mr. Reginald Maudling was there, nodding approval and grinning like a Cheshire cat. Our own exports, which regularly yield £150–£160 million in wool, waste, tops, yarns and piece goods, will not be maintained if H.M.G. continue in this way. I agree.

The President of the Board of Trade has much to answer for. He was at the Board of Trade during the implementation of the policy of reorganisation and re-equipment of the industry under the 1959 Act. He has seen the response. He must be aware of the responsibility that he has to Lancashire and the whole country for the money spent under that Act. He has an account to render to the House as to why it has not been successful. On the one hand, there is assistance by the Board of Trade. On the other, the Board of Trade takes the benefit away.

Since the programme for re-equipment and reorganisation was devised, things have happened in Lancashire which, as usual, make the working folk bear the brunt of any change. I will give one example. During the last two years a large Lancashire firm with a reputation throughout the world for branded goods was broken up. A large financial organisation got hold of one-third of the shares, and on the 25 per cent. rule no major reorganisation could take place in the firm.

Therefore, the grip on the firm became stronger, with the result that a huge profit was made by that financial house. It did not do anything for the industry, but it threw hundreds of people on the scrap heap and broke up good mills in consequence. This is the sort of thing which has gone on concurrently with the Government proposals which have been supposed to help the cotton industry. The Government have undermined it themselves, and have allowed others to undermine it, too.

Now is the testing time. The country is watching to find out what is the Government's policy on redundant labour. The redundancy caused by the contraction of an industry like this will be nothing to the redundancy which will be caused by automation in the future. I believe that the Government have neither the policy nor the will to do anything about it.

Of the wider question involved, the problem of automation and the economic and social changes which are bound up with it will loom long in the future. If this problem is superimposed on the existing unsolved problems which only common sense and planning can solve, our difficulties will increase to the point when no Government will be able to do anything about them. The answer to our economic problems lies in planning a holding operation for changing times to take account of older industries to allow for an orderly advance in world trade.

The immediate answer to this problem is to change the Government. Tory gimmicks are exhausted. I urge the party opposite to go to the country and discover what Yorkshire and Lancashire think about them.

9.26 p.m.

Mr. Maurice Macmillan (Halifax)

I will confine my speech to expressing general agreement with the views expressed by my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke). I find it difficult to add anything constructive to his admirable speech.

I should like to develop what he said about selective protection, particularly with reference to the wool textile industry. I urge the Government to act now to prevent similar situations developing in this industry in the near future. Many practical steps have been suggested today which apply equally to the wool textile industry. Two of these have been, first, the speed of the machinery and the slowness with which the Board of Trade is taking up evidence of dumping and similar matters; and, secondly, the need to review the whole question of Commonwealth free entry, not only for textiles but in the context of their own actions in regard to British exports. I urge my right hon. Friend to look at the whole matter of developing industries in the light of the decision—with which almost every hon. Member who has spoken agrees—that a liberal trade policy is essential.

I think that most hon. Members would agree that, of necessity, the development of the backward countries—and I wish that we could have as general agreement on this as on other matters—should not be carried only on the backs of those industries which those countries find most easy to use, the textile trade in particular. Now that the problem is a little harder than it would have been if the Common Market negotiations had been successful, this in itself puts not a smaller but a bigger duty on the Board of Trade.

I hope that hon. Members who represent Lancashire will recognise that neither they nor anyone else should wish that the problems of the cotton textile industry should be solved at the expense of the wool textile industry.

9.29 p.m.

Mr. Arthur Holt (Bolton, West)

Because of the lack of time I will telescope my remarks into a few sentences.

The Government are to be congratulated on their desire to carry out a liberal import policy. They are not to be condemned for doing so. There comes a time, however, when one may decide to cry"Enough". The Government are to be condemned for allowing the burden of their liberal trade policy to fall unfairly and almost entirely on the cotton industry.

Up to a year ago it was possible to find people in the industry who still had confidence in its future. Since the failure of the Common Market negotiations there has been a noticeable change. I should find it quite impossible to take anyone into a mill in Bolton now where I would find any confidence at all in the future. As a result, some of the most extraordinary and hair-raising cures that I have ever heard have been suggested for the industry's troubles."An I.C.I. for the cotton industry"—I cannot imagine what that would do for the ultimate consumer, and it would certainly be a very bad thing for the industry itself.

We must therefore do what the Government have never been prepared to do, which is, within some limit, to decide that a certain portion of the home market shall be retained for the Lancashire industry. There can be many reasons for doing that. There can be many reasons for saying that the industry should be left to wither away, but there are stronger arguments for saying that it is in the interests of the country, and of the consumers, to keep in being a small textile industry, as it is now.

I hope that we shall soon get into the European Common Market, but it is not in our interests that when we go into it we should not have a small but efficient cotton industry to play its part in that market which, for a long time, is bound to be a highly protected market for textiles. If that is to be done, we must fairly face up to the issue of how the Government can create a feeling of confidence within the industry.

I do not like the Labour Party's plan for an import board—that is far too bureaucratic, and quite unnecessary—but I believe that the Government should set up a committee to consider the basis on which this feeling can be created. [Laughter.] That committee should start with the objective of seeing that between 60 per cent. and 75 per cent. of the home trade is retained for the Lancashire industry. It should examine imports; those that Lancashire obviously cannot compete with should be allowed to continue, but those that are marginal represent the kind of business that should be retained for the industry.

I regret that I have had to telescope my remarks—obviously to the slight confusion of hon. Members—but I urge the Government to take that kind of action now because, without a return of confidence within the industry, the present deplorable state of affairs will continue.

9 33 p.m.

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

We are all very grateful to the hon. Member for Bolton, West (Mr. Holt) for providing us with our only laugh in a rather sombre evening. We realise that, as he had to telescope his remarks, what he said may not be a full and considered exposition of Liberal policy, but it was interesting to see the obviously clear intention that one should have free trade everywhere except in one's own constituency.

I very much appreciate the action of my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) in selecting this subject for debate coming, as it does, almost exactly a year after we last debated cotton policy. I had hoped that there would be an opportunity for such a debate before the House rose for the Summer Recess, so I particularly appreciate his action. The debate gives me an opportunity of saying how much the Government have been doing in the 12 months since our last debate, and in the 13 months since I made a statement to the House outlining the Government's policy in regard to imports of cotton textiles. I shall, therefore, go back to the situation as it was a year ago, and explain what has been done since then.

In my statement and subsequent speech in the Supply day debate I sought to give Lancashire certain assurances about out policy, with a view to enabling the industry to know where it stood in relation to imports up to the end of 1965. These assurances have beenfully carried out. If some hon. Members on both sides of the House have been somewhat critical about me during this debate I put it down to the fact that perhaps I have failed to explain sufficiently loudly and clearly during the year how much has been done. I hope to rectify that omission this evening.

My hon. and learned Friend the Member for Darwen referred to my phrase about the ring fence a year ago. It is certainly quite a good ring fence. It was a phrase designed to illustrate what we were doing and I think that it has held up well. The hon. Member for Farnworth (Mr. Thornton), in a speech which we heard with great attention, with its combination of moderation and of feeling about an important subject on which he is a great expert, referred to uncontrolled imports. I assure the hon. Member that they are not uncontrolled. I will go into that in detail in a few moments.

The hon. Member for Rossendale (Mr. Greenwood) spoke eloquently in the debate a year ago. I know that his constituency has been more hard hit than those of other hon. Members who have a constituency interest in the textile industry. He referred today to the need for firm ceilings for total imports. I mention these three points from the speeches because they serve to illustrate exactly what has been done during the last 12 months.

In my statement and in the debate last year I explained that India and Hong Kong had agreed to continue the voluntary limitation up to the end of 1965 at the ceiling levels for piece goods and made-up goods which had been established in 1961. There was no question of increasing these ceilings. Indeed, an entirely new limitation was introduced in the form of a restriction on exports of cotton yarn for the three years at the 1961 level.

These arrangements are now fully operative although complete agreement was not reached with Pakistan. Pakistan, unfortunately, was not able to agree to restrain her exports of cotton yarn on the same basis as the other countries and therefore I decided to impose an import control—and this was the first time that this had been done in respect of a Commonwealth country—in December, 1962. I have recently been in touch with the Pakistan Minister for Commerce over the question of Pakistan's exports of cotton piece goods and made-ups, since his Government had also been unable to accept the three-year agreement. I am glad to tell hon. Members that the Pakistan Minister for Commerce has now assured me that the export licensing of Pakistan piece goods and made-ups to this country this year will be kept within the quota. I am glad to have had his co-operation because it has avoided the necessity for quota restrictions which certainly I would have imposed had the need arisen.

I also made it clear that imports from other low-cost sources which were subject to control—Japan, China, Formosa, and East European countries—would remain limited at the low quota levels which had been established. This has been done. Indeed, the restrictions have been intensified. The quota on imports from Formosa has been reduced from 12.5 million sq. yds. to 2.5 million sq. yds. per year. My hon. and learned Friend the Member for Darwen suggested that the quota had been exceeded. I should explain the exact position to show how these innocent mis-statements can arise.

What happened was that from last year, when the quota was 12.5 million sq. yards, there was a carry-over of 800,000 sq. yards. Total imports this year have been 3.5 million sq. yards, compared with a quota of 2.5 million sq. yards. The 800,000 sq. yards of excess is the legitimate carry-over. The balance of 200,000 sq. yards arises from a very technical point of recording delays, that is to say goods imported last year which were only recorded in the January figures. Therefore, we have effectively cut back Formosa to the figure which we stated we would establish. As regards Japan, under the commercial treaty which was signed last November and which has been ratified in May of this year, a nil quota for yarn has been fixed and imports of cotton fabrics and garments remain subject to restriction.

Spain is a country which is frequently mentioned. The agreement between the industries limiting imports from Spain has been extended until the end of 1965. Last year I made it plain that imports from Western Europe and the United States of America would continue, subject to any change arising out of the Common Market negotiations, to receive tariff protection but that there was no justification for quota restrictions when dealing with our major trading partners whose standards of living are approximately the same as our own.

The industry has always told me that it was ready and willing to compete with countries of this kind, and therefore I do not think it is right for the hon. Member for Farnworth and my hon. and learned Friend the Member for Darwen to press so strongly for what they call global control. I think I am right in my recollection of what my hon. and learned Friend said—

Mr. Fletcher-Cooke

I think not. I went out of my way to say that I always told my friends in the cotton industry that they have got to take Portugal, that it is no good saying they must have protection from Portugal or a quota other than the normal E.F.T.A. standard, provided that there is no dodging or dumping. I have said that they have got to take Portugal as a Western European nation in the E.F.T.A. system.

Mr. Erroll

I am sorry if I did not correctly understand that part of my hon. and learned Friend's speech. Certainly reference was made to global control. The industry did not ask for global control which would include within the control the countries of Western Europe and the United States of America. Many hon. Members have referred to countries with no traditional trade in cotton textiles. I said last year that they could not count on being able to build up a new market in Britain. I went on to reinforce that by saying that we would be able to keep the situation under much closer review than hitherto by introducing a new system of open individual licensing so that we would see exactly what was going on, and that we would also invoke the long-term Geneva arrangement wherever necessary and appropriate.

In addition to these steps, I have personally initiated negotiations with Malaya, Yugoslavia and the Irish Republic and have reached agreement with these countries for the limitation of their exports of the cotton goods which were causing or threatening disruption.

The case of Malaya is interesting, because one hon. Member said that Malaya was given a quota. This is quite the wrong way to look at it. Previously there was no restriction at all on Malaya's right to send cotton goods to this country; so that, in fact, we were imposing quite a severe restriction on Malaya's right to send goods to this country. It was very satisfactory that we were able to reach a voluntary agreement with her because thereby we did not imperil our export trade to Malaya.

Mr. Greenwood

What about a quota for Lancashire?

Mr. Erroll

I do not want to depart from the order of my speech but I must deal with that interjection. When the arrangements with Commonwealth countries come in for so much criticism we must remember that there are many preferential tariffs for the export of British textiles to Commonwealth countries; these were very much enjoyed by Lancashire, and regarded as very important, before the war but after the Ottawa agreements were negotiated. They are in the main, though not entirely, still in force if only Lancashire will do a bit more exporting. I very much wish that she would. [An Hon. Member:"Of what?"] Of textiles. There is a 15 per cent. preferential tariff on certain cotton goods going from this country to Canada as compared with corresponding goods from Western Europe. It is a very valuable benefit which ought to be used. I wish there had been a little more said about Lancashire's ability to export cotton textiles to the markets which are still available and which are being used by other highly-developed countries.

The Yugoslavians have, in fact, behaved very well in this matter. I shall explain to the House a little of my problems in this connection. I went to Yugoslavia in September last year primarily to see whether we could win for Britain an extremely important steel contract worth about £25 million. This was a great prize to be secured for British industry, if it could be pulled off, but it did not deter me from taking up strongly with the Yugoslavian authorities the need for them to restrain their exports of textiles to this country, although they themselves were wondering how they could earn enough sterling to pay for the steel works and other equipment which they were buying from Britain.

I put this matter to them as strongly as I could even at the risk of losing the steelworks order. Fortunately, all came out well, because not only did we get the steelworks order, but we got from them an understanding that they would restrict their exports of grey cloth to us to 5.5 million square yards per annum for the three years 1963–65. Previously, of course, the level had been considerably higher. In 1962, it was about 7.2 million square yards and it was higher still in 1961. Thus, we have actually achieved a cut-back by voluntary agreement with Yugoslavia, at the risk, though fortunately not materialised, of losing a very important export order.

I hope that the House will appreciate that we sell a lot of the products of the British textile industry to Eire as well as importing there from. It is a trade in both directions. It varies between one element of the industry and another, but it is a very important part of our trade.

Discussions have been held with other Governments on a warning basis where the level of imports is too small to justify or to require restrictive action. I know that particular difficulty arises as a result of imports from Portugal. I was very grateful for the intervention of my hon. and learned Friend the Member for Darwen on this particular matter. I appreciate that there is a problem here although I cannot quite agree with the somewhat exaggerated language of my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow). I have heard it said in Lancashire that Portugal could become the Hong Kong of Western Europe, but I do not think that this is likely to happen.

This is a difficult situation because of our undertakings under the Convention setting up the European Free Trade Association. Nevertheless, I took the matter up with the Minister of Commerce, Dr. Oliveira, in Lisbon this year, and, although there was the very great prize of the three-year acceleration towards zero tariffs on industrial goods to achieve in Lisbon in May, this did not deter me from pressing the matter with him. even at the risk which, fortunately, did not materialise, that the Portuguese would dig their heels in and not agree to the acceleration. I mention these things not—I hope that the House will appreciate this—in any boasting manner but to show that I have really placed the interests of the textile industry in the forefront of any negotiations with which I have been concerned, and I do not think that I have altogether failed.

As, I hope, the House will appreciate from the examples I have given, we must realise that the protection of Lancashire's industry cannot be the only consideration determining the policy of the Government. We are asked by hon. Members on both sides to increase trade within the Commonwealth, and we want to do so. On a serious occasion like this, I do not wish to make cracks, but the hon. Member for Rossendale is always for the free importation of Commonwealth workers into this country though he does not seem to believe that their products should come here.

Mr. Greenwood

That is not quite worthy of the right hon. Gentleman. One of the things characterising Lancashire's attitude throughout these extremely difficult years has been that we are fully prepared to play our part in accepting the products of the under-developed countries. We only wish that America and various countries of Western Europe were equally ready.

Mr. Enroll

I am coming now to the subject of imports by other countries. They have not done as well as us. I quite accept that. America has been restrictive, but I hope that the House will remember that America's unemployment problem is far worse than ours. With over 5 million unemployed, the United States is naturally very sensitive to any contraction of a labour-intensive industry such as the cotton textile industry. I am not here to defend America's policy—it can do that for itself—but the fact that the Administration have invoked the Geneva arrangement to such a wide extent is a matter for serious study and I have some doubt whether their action is in keeping not only with the spirit but also with the letter of the long-term arrangement.

I have been asked what I propose to do. We cannot compel other countries to relax their restrictions, but we can keep up the pressure on them. However, I am sure that it is not right to go about impressing them with the need to import more and to set an example of subjecting the under-developed countries of the Commonwealth to further restrictions in the British market. I am not suggesting that we need accept any more, but to cut back from our existing levels would have the effect throughout the world of encouraging other countries at present restrictively minded to become even more restrictive.

Mr. Jay

If the right hon. Gentleman thinks that the United States is in breach of an international agreement, presumably there is some way of making a protest, otherwise why do we keep to these agreements at all?

Mr. Erroll

It is not an agreement but a voluntary arrangement entered into by those who signed it at Geneva. I am keeping a very close watch on the position to see whether anything further should be done. But it might be more appropriate for those countries whose exports are being frustrated to take the initiative rather than we ourselves who are not directly affected.

May I move on because I want to try to deal with the many important points which have been raised this evening. I wish particularly to refer to categorisation, to use the jargon which has grown up. My hon. Friend the Member for Middleton and Prestwich said that when I saw the Lancashire industry on 14th June in Manchester I said nothing. I should like to say in my own defence that a year ago I said that I hoped to maintain a series of regular meetings with the industry at which we could talk things over. The Cotton Board and myself had a very useful meeting some months ago at which we were able to talk things over in private. However, when I got to Manchester, I found that that was not what they wanted at all. It was quite a different affair. I was presented with a list of detailed points which I did my best to answer. I was then told that I had said nothing because I had not conceded any important point of principle and because on certain points it was quite clear that I could not give an immediate answer.

I am sorry that the industry has seen fit to resort to what I call an arm's length approach to me once again and I hope that the next meeting can be conducted on a more informal and more mutually fruitful basis.

Sir J. Barlow

Must we suppose, then, that every time my right hon. Friend comes to Manchester he will say very little and that no appreciable advance will be made towards doing something for the industry?

Mr. Erroll

The question is whether one ought to go to Manchester, because it is drummed up into a full-dress occasion, with the Textile Action Group on the wings and the Press and everything there, which is not the best way to have fruitful discussions. I feel it only right that I should make that point in my own defence.

Mr. Charles Mapp (Oldham, East)

rose—

Mr. Erroll

Hon. Members can choose between making speeches during my half hour or listening to what I have to say, but they cannot have both in the last four minutes.

On categorisation, the fundamental point is that the Commonwealth countries naturally attach importance to their ability to make the full use of their quota on goods for which there is a market. An unduly rigid system would reduce their earnings by limiting their opportunities to sell their textiles when market conditions change. But there is another side of the picture, and that is that if one had excessive categorisation it would lead to great administrative difficulties.

The industry in this country claims however, that categorisation would help the exporting country. Therefore, if that is so, clearly the best way is for the British industry to negotiate and to talk matters over with the exporting countries—[Interruption.]—which is what I have suggested. But I have also said that I will be very happy to help in this important matter and will be glad to do so when the industry knows exactly what it feels is negotiable as a result of talks in this matter.

I remind the House that the present arrangements are part of an agreement to which there are two parties, the other side as well as ourselves, and, therefore, changes can be brought about only by the agreement of both parties. It is important that we should remember the other parties to these various agreements.

Mr. D. Jones

I wonder whether the Minister—

Mr. Erroll

I am sorry, I cannot give way; I have several things to say. That is why we have encouraged the Cotton Board to enter into discussions with India and Hong Kong. The Board has sent the Indian industry a detailed account of the categories of grey cloth which it has in mind and has suggested limits on the export of finished cloth and made-up goods.

The carry over of quotas, to which my hon. Friend the Member for Bury and Radcliffe (Mr. Bidgood) and the hon. Member for Stalybridge and Hyde (Mr. Blackburn) referred, can be seriously exaggerated. There is, indeed, an advantage in having a carry-over facility, because in the event of an absolute cut-off we would only compel shipments to try to come in within the quota year. The original concept of the carry-over was to ensure that shipments came in regularly instead of being bunched up towards the end of the year. The carry-over does not really affect the trade from Hong Kong, because it fills its quota fairly well every year. It has hardly affected trade from Pakistan. It is a serious matter this year only in the case of India, and the Indian industry has agreed informally with the British industry to limit the carry-over this year to three months in- stead of six months. The way things are shaping, it looks as though there will not be any carry-forward from India into 1964.

Therefore, it is questionable whether the carry-over is a serious issue. Here again, however, I will be very glad to do what I can to help the industry. I would hope for fruitful and useful talks with the industry about this, in Manchester or in London—but I hope that they would be informal—at any time that the industry wishes.

There is not time for me to deal with the important question of imports through the Irish Republic, to which several hon. Members have referred. The matter was discussed in Manchester, but here again I should be prepared to have discussions with the industry if it wished. I discussed anti-dumping extensively with the industry in Manchester. I have offered to give all the help I can from my officials within the framework of the present legislation.

On re-equipment, we have a good story to tell. No less than £5¼ million has already been paid out for re-equipment grants. Approximately a further £2 million is in the pipeline and this takes no account of expenditure which does not attract grants. The grant is 25 per cent. of the total expenditure. This means that £21 million of re-equipment has already taken place and there is approximately another £2 million in grants. That makes up the total of about £28 million of re-equipment already, with another year to run, but we do not know the exact amount until claims for repayment are submitted. It is, therefore, a great mistake to say that re-equipment is not going well.

From what I have said, I hope that my hon. and learned Friend the Member for Darwen, who moved the Motion, will realise that I am determined to help the industry in every way possible and to remove the disadvantages as soon as possible within the framework of the present policy of limiting Commonwealth and other imports, as I have outlined, at their present level.

Question put and agreed to.

Resolved, That this House recognises the disadvantages under which the United Kingdom textile industry at present labours, as compared with conditions enjoyed by textile industries in other countries of the world, and urges Her Majesty's Government to take all steps within its power to remove those disadvantages as soon as possible.