HC Deb 22 January 1973 vol 849 cc16-7
8. Mr. Ford

asked the Secretary of State for Trade and Industry if he will issue a directive in respect of the prices freeze enabling the wool textile industry to continue to base its own prices on the world prices of its raw materials, and taking into account the necessity of speed to maintain normal trading conditions where in some cases 87 per cent. of the cost is due to raw materials already purchased before 6th November.

The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe)

In order of maintain an effective standstill on prices I believe that it is essential to require industry to absorb a significant proportion of any increases in the world price of its raw materials. We are discussing this with the wool textile industry.

Mr. Ford

When the Minister considers his view before taking part in discussions with the industry, will he recall that the industry has recently greatly increased its export earnings, that much of this is based upon quick price reaction to almost daily changes in raw materials and that, therefore, he should give more consideration to this aspect?

Sir G. Howe

I shall certainly bear that in mind alongside the over-riding necessity to ensure that the standstill is effectively observed.

Mr. Wilkinson

Does not my right hon. and learned Friend agree that this is a quite exceptional case and that rises in the cost of raw materials of about 100 per cent. in the past 12 months are quite abnormal, even in an industry such as wool textiles which is highly sensitive to price fluctuations, and that as the industry, before the recent boom, experienced very low profit margins, it cannot reasonably be expected to cut back profits now?

Sir G. Howe

I appreciate my hon. Friend's point about the scale of increases in world prices as a whole and I am taking that into account alongside the requirement for industry to absorb such increases in profit margins and to cooperate as far as possible in preserving the standstill.