TEXTILE INDUSTRY (STRUCTURE)

HC Deb 30 June 1969 vol 786 cc41-6

The President of the Board of Trade (Mr. Anthony Crosland)

With permission, I shall make a statement about the structure of the textile industry.

On 6th February, I told the House that Courtauld had agreed, at my request, to withdraw its bid for English Calico, and that the Government had decided that the future structure of the Lancashire industry should be examined thoroughly and objectively in the light of the Textile Council's Report on Productivity and Efficiency. The council's report was published on 31st March.

On 12th February, I informed the House that I was asking my hon. Friend the Minister of State to discuss the problem of structure at length with the major firms in the industry, the textile trade unions, the man-made fibre producers and a number of the industry's major customers. He has now done so, and has been greatly helped by the advice of a small group including Sir Joseph Lockwood, the Chairman of the Industrial Reorganisation Corporation, Sir James Steel, the Chairman of the Textile Council, and Mr. P. N. Davies, an industrial adviser to the Government.

In considering the question of concentration and rationalisation in the industry, I have attached great importance to the Textile Council's view on one of the basic essentials, namely, that if the industry is to become fully competitive the existing groups must integrate their activities by developing closer technical and commercial links between the various stages of production and marketing. The main groups in the industry have grown rapidly by merger and acquisition in recent years, and, as the Textile Council pointed out in its report, most of them are still in the process of sorting out their constituent parts.

The Minister of State's group took the view that the prospect of further mergers and takeovers among these groups might in present circumstances increase the problems of management and could, through the perpetuation of uncertainty, seriously impede the internal reorganisation and integration which has yet to be achieved. I accept the group's view and I have, therefore, concluded that, on balance, the best interests of the industry would not be served by a merger between any two of the larger firms in the Lancashire industry at the present time or by a takeover of any of these firms by overseas interests, The need now is for a period of consolidation.

A standstill for a period on major acquisitions in the textile field will not prevent the larger firms from improving their structural balance either by acquiring smaller firms, or by transferring capacity between themselves, unless the result would be to create or intensify a monopoly at any stage of manufacture or distribution. But any proposal for a merger between two or more large firms which might be expected substantially to reduce competition in the textile field will always be a matter of national importance.

While, therefore, the present standstill should not be seen as a bar to further major rationalisation at some later date, there can be no question of this taking place without the Government being satisfied that the benefits to the public interest outweigh the disadvantages of reduced competition.

Apart from the special difficulties arising from monopoly, the Government do not consider that, in present circumstances, they need to take a view on the linking of fibre production with textile manufacture. It follows that the Government would see no objection if an existing fibre producer with textile interests wished to diversify into new fibres.

In arriving at these conclusions, I have also taken into account the Monopolies Commission's Report on the Supply of Cellulosic Fibres.

There remains the question of rationalisation in the rest of the industry, and the position of the medium size and small firms. The Textile Council proposed that new integrated groups and consortia should be formed from among these firms, and I attach great importance to this. I am employing two consultants to advise me on what can be done, and I am glad to say that they are meeting with an excellent response from firms in the industry.

Sir Joseph Lockwood has assured me that the I.R.C. is very ready to help with any schemes which may emerge, and I shall certainly call on this help at the appropriate moment.

Sir K. Joseph

Have the Government, on the occasion of Courtauld dropping a bid which, if contested, it might never have won, rejected, without having the guts to say so, all the six recommendations of the Monopolies Commission on Courtauld and the cellulosic fibre industry, including its recommendation that the E.F.T.A. cartel should end and import duties should be reduced?

If they have rejected those recommendations, what are the reasons for their rejection, or, if the President of the Board of Trade can give us no reasons, is he not open to the suggestion that he has simply been horse-trading with the recommendations of the Monopolies Commission?

Mr. Crosland

I cannot in the slightest understand the reference to horse-trading. The position is perfectly plain. My announcement covers the recommendation of the Monopolies Commission on the structure of the industry. The remaining recommendations of the report on cellulosic fibres relating to tariffs and the rest will be covered when I make a final statement on the Textile Council's study relating to the tariff situation and other matters. There has been no horse-trading of any kind whatever.

Mr. Thornton

Is it my right hon. Friend's intention fully to use the resources of the I.R.C. in the necessary restructuring of the industry and in securing a better structural balance within the larger firms in the industry?

Mr. Crosland

Yes, Sir; it is certainly our intention to call on the resources of the I.R.C., as I said in my statement. In fact, the I.R.C. is already working closely with the two consultants I mentioned and with the Board of Trade. The consultants have already seen more than 70 firms in the industry, and sufficient progress has been made in a number of cases to enable the I.R.C. to begin discussions with the firms concerned on prospective mergers.

Mr. Fletcher-Cooke

May I, for my part, congratulate the President of the Board of Trade on at last putting down the foot of the Board of Trade on merger-mania? He has struck a blow against the merger-mania and monopoly-mania with which other Departments of the Government seem to be infected, and for that reason he deserves the congratulation of all those who believe in free competition, free trade and the ancient and sterling virtues.

Mr. Crosland

Striking a blow is more flattering than being accused of horse-trading, so to that extent I welcome the hon. and learned Gentleman's question.

Mr. J. T. Price

Is my right hon. Friend aware that his rather cautious statement will be received with sympathy in Lancashire, if not with wild enthusiasm? Is he aware that those of us on this side who represent textile areas in our famous textile county are still most perturbed at the fact that the major source of trouble for us in Lancashire is not necessarily inefficiency—we are all in favour of increased efficiency—but that Britain is still the dumping-ground for all the excess textile production of the rest of the world?

So long as 53 per cent. of our home market is occupied by imported textile products, we shall remain sceptical about the full advantages of increased rationalisation—which we support—being achieved by the industry itself. Will he bear in mind, since he makes a reference to marketing, that, in our opinion—

Mr. Speaker

Order. Long supplementary questions mean fewer supplementary questions.

Mr. Price

With great respect Mr. Speaker, I am about to finish on this point. It is a most important question which we have not debated in the House for a long time.

Is my right hon. Friend aware that the separation of textile production in Lancashire, its historic home, from marketing, which has been hived off to Aldgate, in London, for many years, is one of the greatest handicaps against which we are still struggling? Will he encourage the reunification of marketing and production?

Mr. Crosland

No statement which 1 or any other President of the Board of Trade could make about the textile industry would evoke wild enthusiasm in Lancashire. Sympathy is the most one can hope for.

I know my hon. Friend's strong views and those of the industry about the level of imports. I shall be making a statement on the import question during the course of this year. I stress this point, however: whatever views are taken about other problems of the textile industry, an attempt to get the right structure for the industry is a necessary condition for future prosperity.

Mr. Carlisle

The right hon. Gentleman referred to making a further statement about the future of the textile industry, particularly imports or tariffs. He will appreciate that this is a matter of urgency if confidence is to be revived in the industry. Will his statement be made before the Summer Recess?

Mr. Crosland

I appreciate that this is an extremely urgent matter. I have already told the industry that I hope to make a statement at the latest by the early autumn; and if I can possibly make it earlier, I shall.

Mr. Alfred Morris

With regard to the larger enterprises, can my right hon. Friend say for how long he expects the period of consolidation to last? When, on the most favourable estimate, does he expect the consultants' report on medium and smaller firms?

Mr. Crosland

As to the first part of my hon. Friend's question, I cannot give a definite date. The purpose of the standstill is to allow the larger firms to achieve the degree of internal integration which was the original object of their mergers. I would not like to hazard a guess as to how long it will taka them to do this. It might take some, considerable time.

With regard to the second part of my hon. Friend's question, I do not want to give a specific date. I hope that the consultants with the help of the I.R.C., will produce a continuous process of mergers and rationalisation among the smaller firms.

Mr. Oakes

Will my right hon. Friend give the House more details of the help the I.R.C. will give towards the integration of the industry? Will it be purely advisory, or is it to be financial? Who are the two consultants whom my right hon. Friend has appointed?

Mr. Crosland

I cannot answer my hon. Friend's first question specifically now. At present, the help of the I.R.C. is in an advisory capacity. Whether anything more than that will be needed, we shall have to see with the development of the exercise. One of the two consultants is Mrs. Caroline Miles, a well-known figure in the industry, associated with the Textile Council. The other is Mr. Ord-Johnstone, also a well-known figure in Lancashire.

Mr. Biffen

Is the right hon. Gentleman aware that the ambitions and activities of the I.R.C. and Mr. Charles Villiers are becoming increasingly controversial? What expectations have we that the I.R.C. and the Textile Council will be any better at putting together groups of textile companies than the Shipbuilding Industry Board has been successful in putting together groups of shipyards?

Mr. Crosland

I wholly reject that suggestion. Mr. Villiers and the I.R.C. have done an excellent job in achieving structural reorganisation in British industries which clearly needed it, and where it has been many years overdue.