HC Deb 22 January 1976 vol 903 cc1661-82

9.30 p.m.

Mr. Michael McGuire (Ince)

I am pleased to have extra time, but I do not propose to use it all myself because I can see some of my hon. Friends and hon. Gentlemen opposite who wish to say a word on this subject.

Tomorrow the Thorn colour tube factory in Skelmersdale in my constituency will cease production. Over 1,300 workers will lose their jobs. The factory will wind down its operations until it finally closes in about April. Some 200 workers will carry on after next week, and these numbers will decrease steadily until the factory closes completely in April.

When the news broke, the mood in the new town was one of deep despair and utter disbelief. It has cast an air of gloom over the town. Skelmersdale is not any ordinary town. It is a New Town, and the people were positively encouraged to come to it as the deliberate result of Government policy. They have come in the main from Merseyside, where, fortunately, people are used to hard knocks.

This is the hardest knock these people have ever had to take. They came to Skelmersdale to try to build a better, fuller, richer life for their families and themselves. As I said in the House on 12th January when I tried to get a Standing Order No. 9 debate on the matter, they have had their modest hopes and ambitions cruelly dashed. They feel betrayed, and they certainly see a very grim future ahead of them in the next few months.

The present male unemployment rate is just over 15 per cent. and the female unemployment rate is just over 11 per cent. These figures are based on the best available evidence, Some confusion arises from the fact that, for the purposes of employment statistics, Skelmersdale is linked in a common travel-to-work area with Ormskirk, and the combined figure of 9.9 hides the true figure for Skelmersdale. In Ormskirk abut 5 per cent. of the men are unemployed, and just over 2 per cent. of the women.

The real nature of unemployment can be disguised by the use of a device of this sort. I do not suggest that it is used simply as a means of camouflage. It is just an accident that there is this common travel-to-work area. Nevertheless, the true figure is disguised.

To have this kind of unemployment in any town is intolerable, but for a New Town it is a scandal. It will spell ruin for many small traders, and a whole community will be blighted. It will take a long time to recover from this blow. I believe that the Government have a grave responsibility for what is happening.

Why has this factory closed? Why has the biggest employer in the Skelmersdale New Town had to close? At its height it once employed over 1,600 people. It had to shed some labour, and the number came down to just over 1,300.

I am not saying this in an unkind way, but my hon. Friend the Minister of State has said that the television tube making industry is highly capitalised and not labour-intensive. With respect, I think he is mistaken. It is probably the most highly capitalised factory in my constituency but it has also employed the largest number of people. The next biggest is a few hundred short of that figure and is also highly capitalised. Another factory I know of, not in Skelmersdale, has a capitalisation equal to that of Thorn but an employment potential of only a couple of hundred. So it has the twin blessing of being highly capitalised and highly labour-intensive.

This is about the fourth debate that we have had on this subject. When the news was given some weeks ago that the factory would close, the Government stepped in immediately and funded the wages bill while investigating the restructuring problem to see whether a British tube manufacturing industry was viable, even if it meant amalgamating Thorn and Mullard. But RCA, although only the junior partner with Thorn, did not want to know. It wanted to get out of what it saw as a continuing loss-maker. Without RCA's patent rights, there was no hope for Thorn unless it had the technology of its competitor, Mullard. Mullard had separate talks with the Minister and gave a figure—it was a private meeting but I should like to know what the figure was—for supplying not only the present depressed market but also an optimum future market, plus exports.

Once RCA got out and Mullard refused to join in, I must reluctantly accept that, except by keeping men "digging holes and filling them in", there was probably nothing that the Government could do. But it would have been a gesture of good will, even if it looked bad economically. The same could be said, after all, of the Chrysler rescue.

This factory opened in 1971 and quickly began to make profits, but Government action had already jeopardised its long-term future. Less than five years later, it was finished. A sad chapter in the short history of Skelmersdale New Town has ended in tragedy.

The factory certainly made profits, at best £2½ million a year. It existed for only a short time. In a new technology, there is a curve of early losses being followed by profits. Despite some difficulties—the factory has had some labour management problems—Thorn was making profits but it was overtaken by events which put it into the red.

I said that there were labour problems. I shall expand on that because when one mentions Skelmersdale people have at the back of their minds that there is something else behind it and that it is not only these circumstances that have brought about the closure of this factory. They do not utter their thought that it was the attitude of the men that caused the factory to close.

It is true that the factory had labour problems. The American production manager said, with the benefit of hindsight, that they could not have expected anything else. He said that it was a green field site which had quickly got into its stride, was meeting the boom in colour televisions, had quickly collected over 1,600 men but had no trained lower management. Men were promoted as foremen because they had blue eyes, and perhaps for other reasons. He said that they were almost chosen on the spot and that no one said "This man is a capable workman, he will make an ideal foreman or charge hand." He also said that there was no planned procedure for disputes or any conciliation programme and that they had all the necessary ingredients for strife, and they got strife.

However, the factory put all those things behind it. That has been shown in the last few months. The factory introduced its so-called "survival plan". It reduced the number of hours it took to make a tube from four to less than one and a half, and even that time was being reduced. The factory was making more tubes of better quality. Disputes had been virtually eliminated. What could have been a great success story has been stopped dead.

I find it incomprehensible—this is what I consider to be the Government's involvemen—that the Government have helped to bring about this sad state of affairs. The American manager told me that colour tubes were not easy to manufacture. I cannot dispute or affirm that. He went on to say that it was about the third most difficult consumer durable to make.

At almost the same time as the Government set up this factory they encouraged the establishment of two more competing companies, one in Durham and, incredibly enough, Sony—the Japanese firm —in South Wales. Presumably, Sony would import Japanese tubes to make television sets here. Therefore, the factory at Skelmersdale did not have a chance. The planners, God bless the mark, as my mother used to say, could not have done any planning at all. The Government's left hand did not know what their right hand was doing. Why did not someone make a market calculation? Everyone must have had an idea of the saturation point from the figures for black and white television sets. I am told by people in the industry that that point was expected to be reached when we had about 16 million colour television sets, slightly fewer than the 18 million monochrome sets that we have. At present, we have about 12 million of the 16 million, so there are only 4 million to go.

We are talking about an industry which has been established literally in the past few years. That is my first criticism of the Government. My second criticism is that the Government did not work out the effect of a 25 per cent. rate of VAT on the industry. I realise that inflation can sweep us all away and I reaffirm my support of the Government's strategy to contain inflation. Statistics show that the Government's policy is proving a success and I hope that we get the rate of inflation down to the figure which the Chancellor of the Exchequer has forecast and for which so often he has been derided. I wish him, the country and the party well.

One of the tactics within the Government's strategy to contain the rate of inflation was the imposition of this fierce rate of VAT at 25 per cent—over a 300 per cent. increase—and other corresponding restrictions on the sale of TV sets and their rentals. I do not believe that the Government worked out the effect of this rate of VAT on the industry. Certainly they could have damped down demand but not crippled it. In fact, the bottom has fallen right out of the market. If that had not happened, it is the considered opinion of those in the industry that they would have been able to weather the storm for a little longer.

The main charge that I level against the Government—apart from the planning matter—is that they have persisted with their almost insane refusal to deal with imports. I know that this is a very difficult subject. We are a trading nation, and we have to approach this matter with great caution. However, everyone in the industry believes that we are trying to compete with a country—Japan—which is sending here both television tubes and television sets on an unfair basis.

The companies concerned, Mullard and Thorn, jointly submitted what I consider to be most impressive evidence. One cannot describe it as proof, because one cannot prove these things in the sense of satisfying the High Court. However, extrapolating from what was the price of a tube a few years ago and looking at the fierce inflation and the tremendous cost of raw materials, to which the Japanese are as vulnerable as anyone else, and probably more so, with raw materials costs and inflation in Japan, and a dampened down market—which must have increased the unit cost of each tube—the Japanese could not for three or four years have guaranteed—as they have done and, I think, will still do until the end of the year—that they could maintain prices for these three years.

We sent a trade mission to Japan. I discussed this with the Secretary of State, along with trade unionists. We were told by the companies which submitted this evidence jointly, Thorn and Mullard, that the Government spurned an offer of technical assistance for that mission, the better to equip it to find out whether tubes were being dumped. "Dumped" has a technical meaning. It is in two parts. The first part is fairly easy to prove. That is that the native or indigenous product is being harmed. The second part is more difficult. It is that the people bringing the goods here are selling them at a lower price than the home-produced market price. Due to the structure of the Japanese industry, this is impossible to prove, because the Japanese do not have tube manufacturers as we do. In Japan they are called "in-house producers". Therefore, one has to extrapolate.

When the Government spurned the assistance offered by the tube manufacturers, they were not acting in the best interests of the country or the tube manufacturers, and, above all, they were not demonstrating that they were willing to use every legitimate means to try to ascertain the truth.

We were told that the mission that went to Japan was quite well equipped. I do not want to impugn the integrity of its members or to impute any ulterior motives to them. We were told that they had a fluent Japanese speaker with them from the Embassy. I thought that that was very astute of them, because if they had not had this chap with them they would have really been up the creek. However, I think that they should have had technical assistance, which was available.

I have a few more minutes for the debate than I expected, and some of my hon. Friends will wish to take part. I end with some brief comments. I believe that the Government's failure to take action on controlling imports has damaged the industry. That is coupled with all the other things I have mentioned. Mullard has said that it will try to take on the Japanese. It is losing immense sums on the tubes now. I believe that in a short while Mullard will be coming to my hon. Friend and demanding import controls, and that my hon. Friend will be unable to resist that demand.

I believe also—and this is not solely a criticism of the Government—that to be given only 18 days' notice, from 5th January, that the factory would be closed on the 23rd, irrevocably, was quite wrong. The tragedy and irony is that if this notice had been issued 13 weeks later, in April, under Labour legislation, the Employment Protection Act, 90 days' notice would have had to be given.

I do not know the terms the workers secured in the redundancy negotiations, which I believe they concluded yesterday. I hope that they used the argument that they are morally entitled to much longer than 18 days, and argue on the basis of what 90 days would mean to them in cash.

We want the Government to realise that Skelmersdale is a disaster area. We want a vote of confidence from them. I hope that my hon. Friend the Minister can offer a great deal of comfort to my people. I would prefer not to have a panic reaction which gives us the dolls-eye type of factory, which would be subject to all the pressures I have described and perhaps in a short time bring us back to the same, sad situation.

I want a positive response. I want the Government to say "We intend to bring to Skelmersdale New Town industries which have a secure, long-term future. We shall demonstrate our confidence by seeing that they are of that type." It will take a little while to do that, and the people know it.

There are one or two things the Government can do in the meantime. They can announce that they will give us a new hospital. That would be a vote of confidence in the New Town. To plan a New Town without a new hospital would be to make a mockery of New Town planning. The site has been available for a long time. We have been told that it was a best-buy. The hospital would give work to our building industry colleagues at present unemployed and fill a desperate medical need. Above all, building the hospital would demonstrate the Government's good intentions.

We should also be told that the Government will aid us by their programme to disperse Government jogs. As I have told my hon. Friend the Minister of State, Civil Service Department, the North-West has been shabbily treated in this respect, as we see when we consider the jobs earmarked for South Wales and Scotland. We need a bigger share of the cake in Skelmersdale and the North-West generally.

I hope that the Government have learned something from what has happened, and that if they will the end—Skelmersdale New Town, which is a creation of the Government—they will will the means. I hope that this sad chapter will quickly be over, and that the brighter, richer, fuller future for which the people came to Skelmersdale will soon be theirs.

Mr. Deputy Speaker (Mr. George Thomas)

Four right hon. and hon. Members wish to speak. If they confine themselves to five-minute speeches, they will all be able to take part.

9.53 p.m.

Mr. Peter Viggers (Gosport)

I thank the hon. Member for Ince (Mr. McGuire) for the opportunity to take part briefly in the debate. My constituency contains the largest television set factory in Europe—Thorn's Ultra factory, employing more than 3,000 people. It is a cheerful, prosperous, successful factory, which draws its colour television tubes from the Thorn factory at Skelmersdale.

My fear is that the British television set manufacturers will go the way of the British radio set manufacturers. Japanese manufacturers captured the United Kingdom component market and then without too much difficulty captured the set manufacturing capacity. As a result, there is now no major British-owned radio set manufacturer. It will be easy for the television industry in this country to go the same way.

It has been the policy of successive Governments to tinker with consumer demand by changing the tax rates and credit arrangements. When they ease purchase tax, imports flood in and fulfil the demand that has been created. When the Government tighten restrictions the home manufacturer is left with surplus capacity. The harshest blow of fill was the tinkering with the VAT rate, changing it from 10 per cent. to 8 per cent. and then up to 25 per cent.—a so-called luxury rate. When contemplating the word "luxury", it has to be remembered that it is possible to obtain the "luxury" of a colour television set as a social security benefit.

The result of the increase of VAT to 25 per cent. was predictable. Deliveries of sets in the 11 months to November 1975 were 30 per cent. down on the previous year. There have been 50 changes in purchase tax rates, VAT rates, hire-purchase rates and credit terms in the past 10 years. It simply cannot go on. I hope that Governments of whatever complexion will realise that it is their responsibility to provide a stable background against which the industry can work. It will be sad if nothing can be done for Skelmersdale, even at this late hour.

9.57 p.m.

Mr. Bob Cryer (Keighley)

I am grateful to my hon. Friend the Member for Ince (Mr. McGuire) for raising this subject. Some of my constituents work in the largest colour television set manufacturing factory in Europe—the Bradford factory of Thorn. They are much concerned about the closure of the Skelmersdale factory and fear that it will lead to an erosion of their job prospects. The National Economic Development Office said in October of last year that if a viable picture tube industry could not be maintained in the United Kingdom the set makers would be in the hands of their major overseas competitors. This is the fear of those of my constituents who work at Thorn, and the rest of the Thorn employees. They came here last Tuesday to lobby Members, to express that fear, and to make sure that their public representatives understand the difficulties.

Thorn has a large retail sector, and therefore might not be all that badly harmed if it ceased manufacturing and started importing complete sets. It is very much to be hoped that this will not happen, but it is something which, because of its integrated position, could occur. It has already been said that there is a strong parallel with the United Kingdom radio manufacturing industry. Output in that industry dropped rapidly. From 87 per cent., the home-based manufacturers' share of the United Kingdom market fell to 17 per cent. This was largely due to Japanese imports. The share of the United Kingdom market taken by Japanese imports of television tubes and sets increased from 9.6 per cent. in 1971 to 50.7 per cent. in 1974, which indicates the rapidity of the growth of imports.

The dumping of goods is difficult to prove, as my hon. Friend the Member for Ince has said. This is because the Minister has difficulty in going to Japan and opening the books of companies there. The only solution, because of the difficulty of proving dumping, is to impose selective import controls. We do not ask for total exclusion. For example, France allows in 12,500 sets a year. We have seen important sections of British manufacturing industry disappear entirely. When the importers have cornered the vast majority of the market the low prices have been changed to high prices. The motor cycle industry is a case in point.

The home market—this was emphasised by the employees who came down last Tuesday—is essential for a sound base. It is certainly essential if the British manufacturing industry is to be retained, ready for the much-vaunted upturn in the economy, when it comes. May I ask for an assurance from the Minister that the Government will not allow set manufacturers to wither away? I ask him to ensure that a planning agreement is entered into with Thorn and that the Government urgently consider taking a shareholding in the company to ensure an even greater degree of accountability.

I also ask the Government to consider selective import controls. If the Government are considering a greater degree of control over the economy, in the interests of planning a Socialist economy, it is totally impossible for them to ignore imports. They cannot allow a free market for imports. I ask for a planning agreement internally and a planning of imports externally. That will ensure that the televisions manufacturing industry is retained on a viable basis.

9.59 p.m.

Mr. Graham Page (Crosby)

I am grateful to the hon. Member for Ince (Mr. McGuire) not only for bringing the matter before the House but for the very clear way in which he put the case of the Thorn factory in Skelmersdale, which has failed not because of bad management, or bad business, or bad running of the firm.

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn—[Mr. Snape.]

Mr. Graham Page

The firm has suffered from the 25 per cent. rate of VAT, restrictions on hire purchase, and the dumping of Japanese goods. I use the word "dumping" deliberately. I say that the firm is not to blame for its management, because it has streamlined its labour over the past years, as a result of work study exercises. It has got the greatest productivity it can out of the men it employs, and it has not produced just one item; it has produced the new PI tube, which is difficult to manufacture but which is a great success.

Those who will be thrown out of work by the closing of the factory are not all employed in Skelmersdale. A fairly small percentage are actually employed there; many work in my constituency. Therefore, the closing of this factory is not just a concentrated depression in Skelmersdale; it causes a depression in a wide circle, in which skilled people will be thrown out of employment.

I cannot understand why the case for anti-dumping has failed. It has been wrongly accepted, I believe, that dumping could not be proved. Dumping occurs when the export price is below the fair market price in the country of origin. Under Section 6 of the 1957 Act the Minister has a wide discretion to judge what that export price is. There are certain provisions for calculating it in the Act. When one realises what has happened in terms of the import of television tubes from Japan, one cannot imagine that there really is no case for an anti-dumping Order.

The hon. Member for Keighley (Mr. Cryer) said that we must have import controls. That is far too wide an expression. In this instance I am not talking of controls over a large area of imports; I am talking about an anti-dumping Order against these particular items. Bearing in mind that they have arrived in this country with a gap of £10, which cannot be accounted for in terms of the difference in prices, the matter seems to be one of deliberate dumping on this country. Taking into account the degree to which Japanese manufacturers have penetrated this country, as compared with other countries, one must conclude that they have made a deliberate effort to undermine production in this country. I ask the hon. Gentleman to re-examine the case for an anti-dumping Order.

Under the 1968 Act a provisional Order can be made. If the case is eventually not proved, no harm is done by that provisional Order—by a suspension, as it were, of the position. I ask that the case be looked at again and that the facts be re-examined under the discretion which the Minister has to decide on the figures and calculations. I ask for a real effort to prove the dumping case and that an anti-dumping Order be issued to protect this industry in Skelmersdale.

10.5 p.m.

Mr. Leslie Spriggs (St. Helens)

I, too, congratulate my hon. Friend the Member for Ince (Mr. McGuire) for giving the House an opportunity to learn something of the sadness and gloom that has spread throughout Skelmersdale and has linked nearby St. Helens with the same problem.

One of the large companies in my constituency, namely, Pilkingtons, produced the glass section of the television tubes for Thorn of Skelmersdale. In 1974, when orders were falling off, about 650 jobs were lost at the Ravenshead factory, in St. Helens. A further 750 jobs are being lost gradually as the firm closes down at Ravenshead. There are parts and pieces of equipment in stock that will have to be cleared from the factory and the firm is keeping on a minimum staff to clear up. It is expected that the factory will finally close its doors at the end of March and that a total of approximately 1,400 jobs will have been lost by then.

Right hon. and hon. Members have appealed to Ministers in various Governments to examine what has been happening in world trade. I want it to be firmly understood that none of us is anti-Japanese. We are representatives of the people, and we want to do what we can to protect our constituents' jobs. That is why I asked the then Secretary of State for Trade and Industry to take action on dumping from Japan and Taiwan. We still have not received an answer to the question that I Dosed. I was told that the Secretary of State had not been able to obtain the necessary information to justify an anti-dumping Order.

The researchers have found that of the total number of television tubes and sets that Japan exports, 51 per cent. find their way to the United Kingdom. Most of the EEC countries take less than 1 per cent. That is an example of Government control. I recognise that the Japanese must work and fight hard for every job that they win and that they have to continue to fight to maintain those jobs, but why have they succeeded where the British firms have failed? Why have they been able to take over large orders from firms in this country and from other parts of the world, whereas our own factories, staffed with highly skilled technicians and workers, both men and women, are losing their jobs?

I wish the Japanese all the good will in the world, but I appeal to my hon. Friend to do all in his power to get the Japanese to recognise the sense of the argument that they should take a fair share of the trade and not dump their unemployment in the United Kingdom.

10.10 p.m.

Mr. Ian Percival (Southport)

I also wish to thank the hon. Member for Ince (Mr. McGuire) for initiating this debate. I congratulate him on affording us an opportunity to discuss this matter tonight.

I, too, have constituents who will lose their jobs tomorrow. It is difficult to think of anything more depressing than the situation that faces those workers we are dealing with a new work force, in a new factory, in a new technology, in a new town. The future of these people must have appeared rosy as recently as 1973, when they reached their peak production. Now, for them the situation could not look bleaker. In addition, there are the long-term effects, of which we have heard from hon. Members on both sides of the House, that may arise if this initial disaster is allowed to happen.

I know that we are all waiting to hear the Minister, and we wish to give him the maximum amount of time to reply, but I wish to emphasise one point. I cannot believe that it is not possible to take some anti-dumping action. The Japanese fixed the price for a 22-in tube at £34 early in 1973. Even then, it was a price that was hard to match in this country. The Japanese are still landing tubes in this country at that price. There is surely ample evidence to justify the making of a provisional Order such as that suggested by my right hon. Friend the Member for Crosby (Mr. Page).

I think that we all tend to be overcautious in these matters. Here is an instance in which, unless we are prepared to do something quickly rather than to wait until we have a belt-and-braces case, the damage to our constituents will be great, quite apart from damage that we may do to long-term prospects in the industry. That damage may be such as to make it impossible for any recovery at a later date.

I sincerely urge the Minister to take some action, and to take it now, even though he may be taking a risk, or may think that such action would be wrong.

10.13 p.m.

The Minister of State, Department of Industry (Mr. Gerald Kaufman)

The people of Skelmersdale are suffering this week very grave misfortune, but their one piece of good fortune is that they have in my hon. Friend the Member for Ince (Mr. McGuire) a champion who has fought for them in every conceivable way and on every possible occasion. He has left no avenue unexplored in putting their case. Although this is a sad week for Skelmersdale, its people can rejoice in having such a representative in this House because of the way in which he fights for their interests.

My hon. Friend has given the House an opportunity to debate an extremely serious issue. Hon. Members on both sides of the House have spoken appropriately of the situation in the town. I hope that in that serious situation none of us will seek to exaggerate the disadvantages. The hon. Member for Gosport (Mr. Viggers)—who spoke with appropriate severity as to the way in which the British electronics industry had yielded markets to foreign competitors, a way that cannot be to the credit of that industry—implied that we in this country do not have a radio industry. Although far too much of the market has been yielded to the Japanese, it must go out from this House that we still have an admirable radio industry. It makes high quality radios that are more than suitable to compete with foreign imports.

My hon. Friend the Member for Keighley (Mr. Cryer) rightly said that we should seek to avoid a situation in which the British colour television industry might wither away. Again, I want it to go out from this House that the British Government have no intention of allowing the British industry to wither away, or of seeing the British television tube industry defeated.

My hon. Friend the Member for St. Helens (Mr. Spriggs) asked why the Japanese had succeeded so greatly in this industry. I refer my hon. Friend to the Boston Group Report on the motor cycle industry and its description of the way in which the Japanese took over that market. We are determined that we shall retain markets of the kind to which my hon. Friend the Member for Keighley referred. If right hon. and hon. Members opposite referred to that Report, they would see how difficult it is to prove any kind of dumping case against the Japanese.

In the many discussions I have had with representatives of the colour tube and television set industries, it has been necessary for me to repeat that while the Japanese may well have been selling colour television tubes in this country at a loss, that does not necesarily mean that they are dumping them here.

I am deeply distressed that the factory of Thorn Colour Tubes Limited at Skelmersdale is to be closed, causing serious personal difficulties for those who are to lose their jobs and further problems for the locality which, as my hon. Friend the Member for Ince has described, has already a very high rate of unemployment.

I have devoted a great deal of attention—and so have my colleagues—to the problems of the manufacturers in the United Kingdom of colour television tubes. We in the Government strove hard to find a solution for the factory at Skelmersdale because of the employment consequences of its closure and also because here was a factory specially designed and built for the product.

Despite all our efforts, we could not find a solution. I wish to emphasise—because my hon. Friend's constituents have a right to know—that the Government were willing to play a major rôle in bringing about a solution if one could have been found.

There were preliminary discussions with Thorn Colour Tubes Limited on whether financial assistance could be provided towards the costs of re-tooling for new types of tubes to be made at Skelmersdale. But these were not pursued after the company told us that they were unable to carry on with the factory.

Then we offered—and our offer was accepted—up to a little more than £1 million towards the losses of the factory so that it would be kept open while we completed our investigations into the possibility of restructuring the industry. Without that money, the factory would have been closed 2½ months ago. We ended that support on 31st December 1975 only after it had been established that there could be no place for the factory in a restructuring of the industry. I wish to make clear to the people of Skelmersdale and to those who worked in the factory that had a viable rôle been found for Skelmersdale in a restructured industry, we would have been prepared to consider giving substantial help to assist the factory during an initial phase of the restructuring.

Thorn Colour Tubes Limited, which had invested heavily in the Skelmersdale factory, is jointly owned by two major groups—Thorn Electrical Industries and the Radio Corporation of America. Both have high reputations in television and other products and are very substantial organisations. But even they could not continue to bear the heavy losses which had been incurred at Skelmersdale because, after a careful review, they could see no prospect of an improvement. I know from the several discussions I had with the chairman and the managing director of Thorn that they did not rush into a decision to close the factory. They were anxious to find a solution, but they told me that they could not expect the group to continue indefinitely with the heavy burden of losses at the factory.

The technology employed at the factory was drawn from RCA. The other tube manufacturer in the United Kingdom—Mullard—uses the technology of its parent company, Philips. There is no indigenous technology in this country for colour television tubes. So it should be recognised that, deeply regrettable though the closure of the factory as Skelmersdale is, this is not a case of abandoning a key United Kingdom technology. In this country we have had two foreign technologies.

The tubes made at Skelmersdale were of the fat, 90 deg. type. This type is not now used much outside the United Kingdom and North America. It is being superseded by the slim, 110 deg. type, particularly for export markets, for complete sets as well as for tubes on their own. Thorn Colour Tubes Limited had made 110 deg. tubes, but a year ago these were dropped as part of a plan to rationalise production so that losses might be reduced.

There have been two main consequences. In recent times, when our home market has been depressed the slack could not be taken up by exports. Secondly, the set makers have purchased supplies from abroad.

The sizes of tubes made at Skelmersdale have, until very recently, been con- fined to 26-in. and 22-in. This, combined with the fact that Mullard, too, has not made smaller sizes, has meant that foreign tubes have had to be imported to meet the needs of set makers for 20-in. and smaller sizes. Probably approaching 40 per cent. of colour sets sold in the United Kingdom in 1975 were of those sizes.

My hon. Friend the Member for Keighley and the hon. Member for Gosport have spoken about the interests of their constituents who work in colour television set factories. If we had imposed import controls on colour television tubes it would not have protected the Skelmersdale factory, but it would have caused unemployment in colour television set factories which depended on imported tubes for their sets.

Mr. Percival

Is the Minister correct in saying that the factory did not make 20-in. tubes? My information is that it did, and that it went into mass production of them in 1975 with a radical new technology.

Mr. Kaufman

I regret that my information is that we did not have the capability in this country to meet these needs, and I assure the hon. and learned Gentleman that I had many discussions with Thorn and Philips in my efforts to find a solution. I do not want in any way to seem vainglorious, but I spent dozens of hours trying to find a solution which, among other things, would save the factory at Skelmersdale.

Indeed, I come now to the very point the hon. and learned Gentleman raised.

Thorn Colour Tubes Limited had made preparations in 1974 to start the manufacture of 20-in tubes but those plans were frustrated at that time by the low prices of Japanese tubes. The company, together with Mullard, had drawn our attention to this and other consequences of those low prices which applied also to 22-in tubes, and alleged that the Japanese were selling at dumped prices.

My right hon. Friend the Secretary of State for Trade had this allegation investigated in Japan by an exceptionally strong team of expert officials. They made an extensive examination, during which prices of relevant sales in Japan were compared with prices charged in the United Kingdom, but no evidence was found to justify the imposition of antidumping duties. However, my right hon. Friend drew the attention of the Japanese Government to the serious problems caused to the manufacturers in the United Kingdom by the low prices of Japanese tubes. It is to be noted that some of those prices and the prices of certain other imported tubes have recently increased.

Another problem was the dependence of Thorn Colour Tubes Limited on supplies of glass and some other components from other manufacturers. My hon. Friend the Member for St. Helens explained that glass parts had been obtained from Pilkington's factory at Ravenhead, but the requirement was inadequate and resulted in the closure of that factory, an event which caused us great concern and regret. We could see no justifiable way in which we could have helped since there was no prospect of the factory be-becoming viable in the foreseeable future. In contrast, Mullard's operation is complete and integrated, with a large glass-making plant and component factories.

In the light of all those features, it had become clear to my Department that the television colour tube industry as structured was of doubtful viability. We approached the problem in terms of a single technology in the United Kingdom, with, possibly, a Government stake. I assure my hon. Friend the Member for Keighley that one ingredient of the solution which I sought to achieve was a Government equity stake, if possible, through the NEB. I regarded that, if we could have achieved a solution, as an essential component, and I told both Phillips and Thom that that was my objective. They had no doubt about it.

It was at this point that Thorn and RCA informed us that they could not afford to keep their factory at Skelmersdale going. It was clear that the only chance of a viable future for the factory was as part of a consolidated industry and that, therefore, the Government would not have been justified in providing the substantial financial support necessary to keep the factory in operation as an independent unit. As I have told the House, Thorn and RCA agreed to keep the factory open, with financial support from the Government, while we completed our investigations into restructuring the industry. However, with RCA's and Thorn's decision to withdraw, the only way forward was on the basis of the technology and management of Mullard.

Let me make clear that we wanted to provide if at all possible a continued rôle for the facilities at Skelmersdale. We strove to that end, and I bitterly regret the outcome.

The fundamental problem was one of over-capacity. The total capacity at existing factories of about 2.3 million has been less than half loaded and has resulted in uneconomic production. In 1976, total demand which could be met from our factories will be no more than last year. In 1977, it may be more but only at a level to half load capacity which would then be available.

When, in later years—I know that my hon. Friend the Member for Ince is concerned about this—demand further increases as off-take of colour sets reaches 2 million—the level at which we consider demand will stabilise—Mullard's capacity could be expanded to meet the requirement. Production could be concentrated at high loading to give maximum economies, enabling a wider range of tubes to be made at more competitive prices. To retain the capacity at Skelmersdale would perpetuate the unsatisfactory conditions of low loading which have added to unit costs, making the industry unprofitable and uncompetitive. In any case the conversion of the plant to Mullard's technology would be expensive.

As my right hon. Friend the Chancellor of the Exchequer said on 17th December, the Government carefully considered whether restrictions on imports of colour tubes would have helped. Imports had fallen from 1.5 million in 1973 to 1.3 million in 1974 and to some 900,000 in 1975. But a large proportion of the imported tubes are of sizes and types not made in the United Kingdom and, therefore, we could not introduce controls on these without causing serious harm to our manufacturers of colour sets. We were forced to conclude that controls on tubes that are similar to those made here would not make a sufficient impact on loading to improve the position of Thorn Colour Tubes Limited. We looked even into the the possibility of the factory at Skelmersdale being used for some colour tube work other than production of new tubes. But again we drew a blank.

I assure my hon. Friend that all the Government Departments concerned—the Department of Industry, the Department of the Environment, with its responsibility for New Towns, the Department of Employment and the agencies of the Manpower Services Commission—will do everything possible to help the employees to find new jobs and to secure alternative employment for the area. As well as being a New Town, Skelmersdale is part of the Merseyside Special Development Area and this means that the full range of regional and other incentives is available to attract new projects. We and the Development Corporation will continue to promote the area vigorously, but I do not wish to give the impression that new manufacturing projects will be easy to find.

I regret very much the closure of the factory at Skelmersdale, but I hope that what I have said will show that the Government did everything possible to help before concluding that there was no viable future for the factory.

The Question having been proposed at Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half-past Ten o'clock.