ROSSENDALE (FOOTWEAR INDUSTRY) (Hansard, 5 July 1971)

§ Mr. Ronald Bray (Rossendale)
In initiating this debate, it may be helpful to the House and the Minister if I briefly describe the background of the events leading up to my request for the debate. Although in the initial part of what I have to say I may give the impression that this is a maiden speech, I assure the House that the comments which have been passed in Rossendale in recent weeks about the cause of the debate have been most unmaidenly. It might also be helpful if I commented on the history of 1092 the industries in Rossendale, particularly the boot and shoe industry.
At the time of the Industrial Revolution, or just before, when the countryside was attractive, the area was known as the Dale of the Roses. There gradually developed the cotton textile industry which continued to succeed and grow from strength to strength over the years until the latter part of the 19th century. The prosperity of the textile industry then began to decline and what I would term "second tier" industry developed in the form of the manufacture of boots, shoes and slippers. This industry employed good local labour and re-utilised many of the old cotton mills, some of which are still regularly in use, with small modifications, to this day. It was an industry literally started on a shoestring and it continued willy nilly along its path, although the shoe string has become more and more worn as time has gone by.
With only limited capital resources at their disposal, due to recessions, the shoe manufacturers could cater for only the lower price range materials, but they did that with a certain degree of success. At one time some 16 per cent. of the country's total output was produced within the group of valleys known as Rossendale. However, there was little profit in the industry and very little was ploughed back as capital.
At the end of 1970, only 18 firms were operating and it is fair to say that some were in a poor way of business. One alone employed more than 50 per cent. of the operatives within the industry. In 1960 there were some 25 firms employing 6,400 operatives which produced 18 million pairs of shoes and slippers. Last year, 1970, the number of firms had fallen by seven, so only 18 were still in business, employing 4,400 operatives, 2,000 fewer, and they produced only 16 million pairs of footwear. That is a decline in production of one-ninth, or 2 million, over ten years.
By various means, I have taken the liberty of obtaining the figures of profitability in the industry. The figures taken from a sample of 10 per cent. are appalling. They show that in the ten years from 1960–61 the average company was earning 7 per cent. on its sales and that is subject only to income tax, the balance sheet figures being 21 per cent. 1093 Coming forward to 1969–70, the figure has dropped dramatically to the extent that this group of companies which I have examined was showing only a little over 2 per cent. on turnover and some 7 per cent. on capital employed. From this we can correctly assume that some were definitely trading at a loss and honestly had no funds whatever available for new plant or for re-equipment. Those are the employment and financial aspects.
Turning to the commercial aspect, fierce competition is experienced and has been more severe in the last 10 years from foreign and now from new Commonwealth countries, whose rates of pay and conditions of employment are far below our own. In many firms in Rossendale, short-time working has become the order of the week rather than the day. For a number of shoe firms, the outlook is grim and more, from what they tell me, could be driven into bankruptcy if swift Government action is not taken to protect the livelihood of many of my constituents for whom no other employment is immediately available. The outlook for them and for their families is equally grim.
These firms have not had the opportunity to utilise the £20 million showered by the previous Government, in their wisdom or whatever one may choose to call it, on Upper Clyde Shipbuilders. Not only in Rossendale, but throughout the shoe industry, the Government have refused to give urgent help by insisting on an origin marking Order for footwear. It is not asking too much to ask for an Order of that kind to be formulated.
I now come to an issue which has given all in the industry, and me, greater concern and worry than anything Rossendale has encountered in recent years, and that is the proposed implementation of the six-day suspension rule. In the last fortnight I have received about 1,000 letters of protest on this. That is a typical example. I have received them from all parts of Rossendale and from other constituencies. I am pleased to see my hon. Friend the Member for Nelson and Colne (Mr. Waddington) and the hon. Member for Accrington (Mr. Arthur Davidson) present, as well as other hon. Members who are similarly placed. All the letters I have received 1094 which have been individually addressed have had a reply setting out the Government view, as well as my own, in the most plain and lucid terms.
The effect of the Bill dealing with unemployment benefit will be that a large proportion of workpeople in the footwear industry, in which there is currently no guaranteed weekly wage, will have to exist for two or three days a week without any support other than the money they draw for the balance of the week by virtue of their labours. The trade is essentially seasonal and, in some circumstances, six, eight, and 10 weeks have been worked "on the trot". I submit that the intentions of the Government are not equitable for the employees of an industry which works on this basis. Strong representations have been made to me not only by the unions but by the Lancashire Footwear Manufacturers Association, which has requested a joint meeting between the unions, itself and myself in the very near future. This will take place, and I hope to have some good news to offer them.
Earlier I commented on the very difficult financial circumstances of certain companies. I am reliably informed that, while many of them would like to see a guaranteed working week agreement established, the extra cost involved as a direct result of continuous spells of short time working could be bankruptcy for some smaller firms and severe financial hardship for others. The local footwear trade union is also very conscious of this grim fact which could lead to many of its members, who are my constituents, being unemployed with little immediate choice of alternative work in the vicinity or in the immediate future. In time this could lead to further depopulation in the valleys, and I cite the borough of Bacup which at its optimum had a population of 24,000. Currently the figure is about 16,000. I suggest to the Government that every action should be taken to prevent a further decline in its population.
These are the difficulties of a major industry in Rossendale. The boot and shoe industry does not seek charity. It never has done so and I sincerely hope that it never will. All I ask is that it be given every reasonable consideration, and I am sure that the whole House supports me in this request. It wishes to have the opportunity to restructure itself and make 1095 itself ready to meet every challenge, to face our possible membership of the European Economic Community with confidence and to make a success of it. The president of the Footwear Manufacturers Association stated that only last week in his annual address. But a degree of restructuring must be effected in the interim.
The people who work in Rossendale are grand folk. They work hard. We have no labour difficulties. Sometimes there is a shortage of labour. But these are valley communities, and from generation to generation they have been dependent on the industries in the valley. We must ensure that, subject to their providing the effort and the right product at the right price, they are there for keeps and that they continue to prosper.
As I see it, three major Government Departments are intimately involved in the future of Rossendale's footwear industry, as they are in footwear industries in the rest of the country. I look to them personally for their joint and several co-operation in meeting the points raised in this short debate. The Department of Trade and Industry has it in its power to provide a degree of aid by discouraging the import of cheap-labour footwear from overseas, thus varying the policy of the previous Administration. In the first five months of this year. Britain imported 38 million pairs of shoes, of which 50 per cent. came from Hong Kong, which is a cheap-labour area.
Last year, total British production was just over 190 million pairs of shoes. In addition, 65 million pairs were imported—roughly one third of the total production. Of this total 53½ per cent. came from Hong Kong and 20 per cent. from Taiwan. The cost of these imports to the United Kingdom was £35 million, and I suggest that it is fundamentally wrong that when we have the capacity in this country such a high proportion should be imported, much of it from countries to whom we owe no allegiance and from whom we ask none.
I referred earlier to the introduction of an origin-marking Order. This would also help the customer who wishes to buy British and does not want to be foisted off with foreign footwear.
The next Department involved is the Department of Employment. It could 1096 well assist with guidance to employers and unions in respect of the advantages of guaranteed working week agreements. It would have little else to do, because in Rossendale we have, and will continue to have, excellent working relations between labour and management.
I come to the Department which has triggered off the debate by proposing to implement a Section of the 1966 National Insurance Act. I do not ask much of the Department of Health and Social Security, just that it should defer the implementation of the six-day suspension rule in those sections of industry—and here I broaden my remarks to include industry as a whole—where there is no guaranteed working week agreement. I suggest that it would not be asking too much that this be deferred for four or five years until such time as a satisfactory agreement can be established. This would give the respective industries a chance to restructure and consequently absorb the extra costs involved by the introduction of a guaranteed working week. I would welcome the introduction of a working week for all sections of industry, but I feel, and here I agree with the Government, that it is not for them to impose a guaranteed working week. This is for employers and unions to get together and work in their mutual interests to establish a system of working week which best suits the economics of the industry. I ask when the Minister replies that he speaks for all the three Departments involved and tells us how the Rossendale boot and shoe industry can prosper and look forward to the future with confidence.

§ Mr. Tom Boardman (Leicester, South-West)
I know of my hon. Friend's interest in the footwear industry, as he knows of mine. In making his remarks about the guaranteed working week, will he say whether he is taking the specific case of the Rossendale Valley? He has made general references to the shoe industry and the problems of certain sections of the industry. Are his criticisms on this narrower point related, as I believe they are, entirely to Rossendale Valley, which perhaps could have a special problem?

§ Mr. Bray
I thank my hon. Friend for that intervention. I am happy to say that the whole of the British shoe 1097 industry, with the exception of the Rossendale Valley, already enjoys a working week agreement which stands at 75 per cent. There are preliminary negotiations going on between the unions and the employers aimed at securing a working week agreement. As I have said, the employers are extremely dubious about the wisdom of implementing it, for financial reasons, and the unions, for their part, are equally dubious about the advisability of pressing their point for fear of redundancy. In the long term, I feel that there is everything to be gained by its implementation, but in the short term I appreciate the caution with which the trade union in the area approaches the subject.

§ Mr. Arthur Davidson (Accrington)
I compliment the hon. Member for Rossendale (Mr. Bray) on pointing out to the House the difficulties that will hit employees in this important industry in North-East Lancashire if the Government continue with their policy of applying the six-day suspension rule to flat-rate unemployment benefit. It certainly would not be right for me to go into the merits of the Government's proposals, but the hon. Member is right to point out that this industry, because there is no guaranteed week and because it is subject to periodic short-time working, will be particularly hard hit by the Government's proposals.
Like the hon. Member for Rossendale, I have many constituents who work in the industry, and I also have received the letter to which he has referred. The union points out that due to the Government's intentions to implement these proposals, it has been given only seven months in which to negotiate a guaranteed week with the Lancashire Footwear Manufacturers' Association. The union says—I rely on the letter being factual— that that is a quite inadequate, ludicrous length of time. I would go further than the hon. Member—

§ Mr. David Waddington (Nelson and Colne)
Is not the difficulty that when the Labour Government, in the 1966 Act, took power to suspend the payment of unemployment benefit for short-term unemployment, they envisaged that time should be given to employees and employers 1098 to reach arrangements such as guaranteed weeks? Although that power was taken in 1966, however, precisely nothing has been done until now by management or by the unions.
Take the textile industry. I under stand from my inquiries the other day that it was only a month ago—

§ Mr. Deputy Speaker (Miss Harvie Anderson)
Order. I hope that the hon. Member will remember the subject of the debate and the shortness of its duration.

§ Mr. Waddington
Yes, Mr. Deputy Speaker. Does not the hon. Member recognise that a great deal of time has been given to both sides of industry to put their own houses in order but that precisely nothing seems to have been done?

§ Mr. Davidson
I recognise that I have precisely a quarter of a minute to reply to that extremely long intervention. I will allow the Minister to reply to the debate.

§ The Under-Secretary of State for Health and Social Security (Mr. Paul Dean)
This has been an interesting debate, and I must be very brief in view of the short time available. I am grateful to my hon. Friend the Member for Rossendale (Mr. Bray) for putting the problems of the industry in his constituency so clearly. He speaks with knowledge and authority and he has put the case effectively and persistently over recent months to the three Departments he has mentioned.
The point which has been put by my hon. Friend has been amplified by the hon. Member for Accrington (Mr. Arthur Davidson) and by my hon. Friend the Member for Nelson and Colne (Mr. Waddington), who has cogently pointed out that there has been a great deal of time in which industry has had warning of what was afoot. That must be my answer to my hon. Friend when he asks me whether the introduction of the six-day suspension rule can be postponed still further.
The fact is, as my hon. Friend the Member for Nelson and Colne has just pointed out, that this matter was in the air as long ago as 1966, when it appeared 1099 in the Labour Government's National Insurance Act of that year. The rule applied to the earnings-related supplement straight away and it was to apply to flat-rate unemployment benefit from March, 1969. That was intended to give industry time to readjust and to make the appropriate arrangements. We now propose that it should apply from 1st January, 1972, which will mean that industry has had over five years in which to prepare itself. When Parliament agreed to the bringing into operation of the Order a few weeks ago, it was not opposed by either side of the House.
I am glad that my hon. Friend spoke in favour of a guaranteed working week arrangement. He said that he would welcome this at the earliest possible opportunity. I reiterate that this is exactly what my right hon. Friend the Secretary of State for Social Services has said. I think my hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman) when he spoke about the industry in other parts of the country was referring to the fact that the footwear industry generally has an agreement of this kind. We welcome guaranteed agreements, but we do not intend to introduce legislation to make them compulsory. We think it better that they should be freely negotiated so that they can be tailor-made to meet the requirements of individual industries.
Why is this six-day suspension rule being introduced? The first reason is that we are spending substantially more where the need is greatest. I need mention only the over-80s, the chronic sick, widows and the substantial increase in benefits in September, the biggest ever in money terms, a substantial increase in real value—all this costing £600 million, some of which will go to my hon. Friend's constituency. In addition, there 1100 is substantial extra expenditure on health and welfare.
If we are to achieve these things we must try to save where we can, where expenditure is no longer high enough on the priority list to be justified. The present system in modern times is a subsidy on short-time working which costs the National Insurance Scheme about £3 million a year. In other words, the National Insurance contributions of employees generally, including those on low pay but regular work, are subsidising earnings in a few industries, often highly paid ones like the motor industry. In our judgment this is neither fair nor equitable.
The present rules also lead to misunderstandings and uneven results, for example, between day and night workers, and in some cases the pattern of work is manipulated to obtain the maximum possible benefit. We feel, in our responsibility to those who contribute to the National Insurance Fund, that this is no longer a sufficiently high priority to warrant continuation of this expenditure and that the solution lies in agreements voluntarily reached between the employers and unions concerned.
My hon. Friend also mentioned several points which concern other Departments. As he will know, the parts of his constituency which he particularly mentioned are included in the North-East Lancashire intermediate area and therefore get the attendant benefits which come from that. An advance factory has been recently started, and there are a number of road programmes and improved housing programmes, all of which will help the economic prospects of his constituency and the area concerned.