HC Deb 31 January 1978 vol 943 cc416-28

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

11.13 p.m.

Mr. Mike Noble (Rossendale)

I am grateful for the opportunity to debate the question of the temporary employment subsidy with my hon. Friend the Under-Secretary of State for Employment, but once again it is a cause for regret on the part of my hon. Friends and myself that we come here to debate a crisis in the textile, clothing and footwear industries. I hasten to add that this time it is a crisis caused not by cheap imports but by a proposal from the European Economic Community that the temporary employment subsidy scheme, which has done so much to aid these and other industries, should be at least changed, if not terminated.

I wish to confine my remarks to three points. First, I want to say a few words about the nature and coverage of the temporary employment subsidy. Then I want to look at the position posed by the EEC. Finally, I want to make one or two recommendations or suggestions as to the way in which we might approach this problem.

We all know what the temporary employment subsidy was introduced as a means of preserving jobs—many of them, incidentally. in modern plants, particularly in the textile industry—in industries which were facing an excessive but short-term fall in demand, and often facing cutthroat competition from low-cost imports. Frequently we would term that unfair competition.

The first advantages of the subsidy is that it has been relatively cheap to operate. My hon. Friend the Under-Secretary said on 22nd November that overall it was a cheap scheme to operate in that the saving in unemployment benefit was considerable. A further advantage is that it has been easy to administer. There is no question but that this scheme is easily understood by employers and trade unions. As it is a scheme needing the co-operation of both, it has had great advantages in that respect. Many companies and trade union officials in my constituency have said that the administration of the scheme has not involved a great bureaucratic machine.

The total saving of jobs from this scheme must be approaching 400,000. In the circumstances of a world recession, and particularly in the difficult circumstances of the textile, clothing and footwear industries, the scheme has been invaluable. It has been very beneficial on a regional basis in the North-West.

It appears from figures released by the Department of Employment on 30th September last that 160,000 jobs in the textile, clothing and footwear industries were being supported out of a total of 325,000 jobs. Eighty-six thousand of those jobs are in the North-West.

The withdrawal of the subsidy would create massive dislocation of an economic, industrial and social nature. It should be borne in mind that many of the communities in which the textile, clothing and footwear industries are concentrated can offer very little alternative employment. The problems of structural decline that we in the North-West face mean that the textile, clothing and footwear industries particularly have borne the brunt of the recession. This subsidy has enabled them to see their way through.

For that reason, my hon. Friends and I question the EEC's attitude. That attitude has been adequately summed up by Commissioner Vouel, who complained about the scheme. He said that this is seriously distorting competition. He went on to say, as regards ending the scheme: I accept that this may lead to some more unemployment but this is a problem which should be dealt with by social measures. Many of my hon. Friends and I campaigned in the referendum against such an attitude. I do not recall the promarketeers arguing that that would not occur. However, I recall a big banner appearing in my constituency which said "If you vote 'Yes' there will be jobs for the boys'." It appears that those jobs are now being snatched away by the Commission itself.

Commissioner Vouel went on to say: How can you afford to continue paying out subsidies to keep people in jobs where they are no longer needed'? I am not aware that the world is overdressed or over-shod. Countless millions are in need of clothing and footwear. Yet the world economy cannot come to grips with the problem. If the TES is not continued, there is a grave danger that the capacity to produce these goods in Britain will again be further reduced.

Commissioner Vouel then said that paying subsidies to keep people in jobs where they are not needed is surely…taking a gamble that there will be economic recovery. We were told at the time of the referendum campaign that if we remained in the Common Market it would assist us to achieve that recovery and would ensure that economies would prosper and expand. Remarks of the kind that Commissioner Vouel has made are not helpful to us.

In reply to a supplementary question by me on 19th January the Prime Minister put the matter in perspective. He pointed out that as the Treaty of Rome was drawn up at a time when the world was expecting the market economy to dominate and growth to continue, it only goes to show, in my view, one of the weaknesses of having written constitutions of this sort, becaue the conditions are now entirely different. Of course they are different. We as Socialists and Social Democrats on the Government Benches are in business to deal with this problem of competition when it drives workers to the wall unnecessarily. As a Socialist, I have always been in business to distort competition in circumstances where it leads to unemployment. The temporary employment subsidy has been a valuable weapon in preventing this kind of competition driving us to the wall.

Without the TES unemployment would be on a massive scale. It would be concentrated regionally and it would be worse in those sectors of the economy which structurally faced the fiercest competition from overseas. The opposition of Members on the Government Benches to the demands of the European Community that the TES should either be altered or phased out is absolute and total. From discussions that I have had today with representatives of trade unions and employers in the industries that I have mentioned I can tell the House that we have their full support.

We can be heartened by a further point made by my right hon. Friend the Prime Minister on 19th January, when he said: At the moment. 186,000 jobs are being supported by the temporary employment subsidy…this must be pointed out to anybody who would ask the British Government—nobody has yet done so and I assume that nobody will, because if he does he will get a pretty serious rebuff—to put 186,000 people on the dole."—[Official Report, 19th January 1978: Vol. 942, c. 658.] I hope that that promise will be carried out. We can compare that promise with the attitude of hon. Members on the Conservative Benches. In this connection I think of the argument put forward by the right hon. Member for Leeds, North-East (Sir K. Joseph), when he called for the total withdrawal of the TES.

Mr. Max Madden (Sowerby)

Where is he?

Mr. Noble

My hon. Friend asks "Where is he?" One may ask "Where are the Tories?" What is their concern for the people of the North-West? They are not concerned at all, as is shown by their absence. We recall that the right hon. Gentleman wanted to withdraw the subsidy entirely. I also recall the speech by the right hon. Member for Lowestoft (Mr. Prior) yesterday—a speech full of waffling ambiguities, when he would not come out clearly and tell us what was the Conservative attitude.

Why is the European Community proposal unacceptable? We cannot accept it because it would bring immediate and overwhelming crisis to the industries that I have mentioned. Neither can we accept the alternatives suggested. Some of us read the inspired leak in the Economist last week, which talked about the introduction of a scheme, similar to that in Germany, of short-time working—a scheme that would be difficult to administer and, in my view, would cause division among the work force, some of whom would get payment for short time working and others for working all the week.

The alternative is to continue discussions with the Community on this issue. We need a political initiative. I cannot think it would be better than coming from my right hon. Friend the Prime Minister. We know that there will be a July Summit meeting, and I hope that we can then persuade our colleagues in the European Community that this scheme is worthy of consideration in terms of the whole Community. I hope that my hon. Friend and my right hon. Friend the Prime Minister will talk to the Europeans and tell them that because of the economic and social dislocation that would be caused if the scheme were dropped we must ask for it to be continued, and that we shall seek to persuade our colleagues in the Community to consider applying the scheme themselves. Only in that way shall we safeguard the jobs of workers not only in this country but in the rest of the Community.

I cannot accept that the battle is anywhere near over, although some newspapers seem to think that it is. In my view, we shall have far greater pressure brought to bear on us by the unions, employers and people of the areas that are most dependent on this scheme.

I hope that my hon. Friend will be forthcoming on the points that I have raised.

11.20 p.m.

Mr. Max Madden (Sowerby):

I am grateful to my hon. Friend the Member for Rossendale (Mr. Noble) for securing this debate. The presence of my hon. Friends the Members for Nelson and Colne (Mr. Hoyle), Chorley (Mr. Rodgers), and Burnley (Mr. Jones) indicates the strength of feeling in constituencies where there are substantial textile, clothing and footwear interests about the future of the temporary employment subsidy.

We all realise that this subsidy has been placed in jeopardy because of the direct intervention of the European Commission. In a Written Answer, the Under-Secretary said: I confirm that the Government have received a letter from the EEC Commission under Section 93(1) of the Treaty of Rome drawing attention to the need to give advance notification of any proposal to continue the TES scheme beyond 31st March 1978. The Commission has expressed doubts about the compatibility of the scheme in its present form with European policy on competition and has suggested various changes they would like to see in any future scheme. The Commission's letter is being taken into account in the Government's current review of the future of TES."—[Official Report, 19th January, 1978; Vol. 942, c. 280.] We have heard from my hon. Friend the Member for Rossendale that TES has secured in excess of 370,000 jobs in the United Kingdom. We have also heard that it is a most effective weapon against unemployment, that it is extremely cost-effective and, most important of all, that it has given numerous companies a breathing space. This has enabled them to reorganise, secure new markets, create new designs, and return to viability.

We must remind the Opposition, who are opposed to subsidies and who say that firms in difficulties should be allowed to close, that in the textile areas firms that close never reopen. New investment gen- erated in allowing firms to close is not brought into the areas of textile decline. People out of work face the future of long-term unemployment, or of moving home to the more prosperous South and South-East against their will. That is a prospect that none of us is prepared to support.

Nor are we prepared to support, as an alternative to legislation, the prospect of giving payments for short-time working. Such a scheme would be undesirable and unacceptable. I ask the Under-Secretary how many jobs would be lost if TES were abandoned and we moved to the alternative scheme of funding and supporting short-term working. We may not get a reply, but I suspect that a considerable number of jobs would be lost, and that unemployment would increase.

I agree that we should be seeking urgent agreement with the Community not to abandon TES but to introduce it on a Community-wide basis in order to deal with unemployment in the Community's textile, clothing and footwear industries. Contrast Commissioner Vouel's attitude on unhindered competition with that of the other Commissioner who recently negotiated one of the toughest protectionist policies—the Multi-fibre Arrangement—to protect the Community's industries. We have this paradox even within the Community. Faced with this paradox the Community should not seek to victimise British workers in these industries.

I urge the Under-Secretary to convey to the Prime Minister and the rest of the Cabinet the fact that we are not prepared to acquiesce in this further attempt by the European Commission to impose its will on the British Government. We faced a similar attempt over the green pound and over drivers' hours. Are we prepared to tolerate this intervention in our affairs? I urge the Government to stand firm. We know best how to combat our unemployment problems. We do not want policies imposed by Brussels. We must argue our case in the interests of the workers whose interests we defend here. I urge the Minister and the Government to tell the Common Market in the clearest possible terms that its objections are unacceptable and that we intend to deal with our unemployment problems in the way that we believe is most effective and has proved most successful in the past few years.

11.30 p.m.

Mr. George Rodgers (Chorley)

I shall concentrate my remarks into a few sentences. I appreciate deeply and warmly the gesture of my hon. Friend the Member for Rossendale (Mr. Noble) in allowing so many hon. Members to participate in the debate.

The deep instrusion into the employment and industrial policies of this country by the mandarins of the Common Market is a bitter pill to swallow for hon. Members who were freely elected to this House and for those who saw that they were elected. It is a sombre reminder of how much power was taken away from our Parliament when we entered the Common Market.

The welfare of many thousands of people in the North-West, and certainly in Lancashire, is, for the time being, dependent on the continued existence of the TES. It is surely apparent that the economic problems of member States of the EEC will vary and logic and common sense indicate that the responses to such problems must also vary. Unfortunately, Common Market legislation is not renowned for its common sense.

I must register my regret and bitter resentment that the Government can be threatened with the prospect of being hauled before a court like a common criminal, charged seemingly with the offence of endeavouring to keep people in employment at a time of harsh economic circumstances.

I have no intention of refighting the campaign on our membership of the Common Market, but I am adamant that those who advocated our continued presence in Europe did not venture to explain that we should become captive to rules and regulations designed to obstruct the battle against unemployment.

The subsidy has not merely preserved a great number of jobs; it has enabled people to retain their dignity and has given purchasing power to families who would otherwise be experiencing harrowing times. We must protect our right to defend the legitimate interests of our people, and I am confident that our Min- isters will do so with vigour. If we accepted the dictate of the Commission on TES, it would be the start of a slippery slope that would end in total national humiliation.

I am much taken by the strategy of attack as the best form of defence and I urge the Government to launch a counter offensive to call on other EEC member countries to introduce legislation to combat unemployment in their own nations rather than indulging in unconstructive actions against measures to provide jobs in the United Kingdom.

11.34 p.m.

Mr. Doug Hoyle (Nelson and Colne)

I also wish to thank my hon. Friend the Member for Rossendale (Mr. Noble). If any hon. Member has pursued the need to preserve the textile and footwear industries, it is he. If it had not been for people such as my hon. Friend, we we would not be arguing for these industries tonight.

I wish to speak about the experience of my constituency. Without TES, it would be a graveyard, certainly for the textile industry. Let me emphasise the message that has already been given to the Minister. We must stand up to the pressure from the Common Market. If we do not, we shall suffer a mortal blow in North-East Lancashire. Unless we say that the subsidy will continue, there will be further unemployment. It is already occurring. It is occurring in my constituency and in the constituency of my hon. Friend the Member for Burnley (Mr. Jones).

That is why I simply say to my hon. Friend the Under-Secretary of State that he must fight for the present scheme. The scheme is simple and flexible, and it has preserved jobs. Why change it at the diktat of the EEC? If the EEC says that it distorts competition, let it be remembered that there are many other schemes in the Common Market that distort competition. Why should we cease to operate the TES? If we do, we shall strike a heavy blow at the textile and footwear industries.

I ask my hon. Friend to reassure us that he will continue to resist the pressure and will fight within the EEC until it adopts the policy of the TES as we know it today.

11.35 p.m.

Mr. Dan Jones (Burnley)

I have about three minutes in which to speak, and I want to try to complete my remarks in two and a half minutes.

I thank my hon. Friend the Member for Rossendale (Mr. Noble) for allowing me to take part in the debate. My constituency is affected in precisely the same way as my hon. Friend's as regards textile viability.

I shall explain to my hon. Friend the Under-Secretary of State what is happening in Burnley at this very moment as regards the small firm of John Booth & Co. On behalf of the firm I have been to my right hon. Friends the Secretaries of State for Industry and Employment and the Chancellor of the Duchy of Lancaster. The owner is a small entrepreneur who sank his money into a firm that was derelict. In that way he brought into existence about 80 or 90 jobs. He lost some of those jobs and he now wants help. He has had TES and the extension of TES. What is needed to help this man is a pittance compared with what the Government have paid out for some years in other directions. In comparison with what they propose to pay out to other industries, it is a miserly sum. If some small assistance were given it would be possible to bring back into employment those that the firm lost a few months ago.

Last weekend my constituency lost a firm that employed 130 people. The problem is continuing and it is quite untenable, especially in an area such as Burnley, which since the turn of the century has been making an extremely valuable contribution to our economy.

I must say bluntly that I do not think that my right hon. Friends are playing the game. If I were asking for thousands of pounds I could understand their response, but on behalf of others I am asking for hundreds of pounds which would bring back into employment about 30 or 40 people and make a company viable once more.

I appreciate that time is short, but I ask my hon. Friend the Under-Secretary of State to give an answer one way or the other. I have been to four Ministries and I have not yet received a definite reply. That is not playing the game. Naturally, I should prefer an affirmative reply, but in any event I ask for a definite reply.

Again, I thank my hon. Friend the Member for Rossendale for giving me the opportunity to say a few words.

11.38 p.m.

The Under-Secretary of State for Employment (Mr. John Golding)

The importance of the debate is illustrated by the presence at a late hour of my hon. Friends the Members for Rossendale (Mr. Noble), Sowerby (Mr. Madden). Burnley (Mr. Jones), Chorley (Mr. Rodgers), Nelson and Colne (Mr. Hoyle), Stoke-on-Trent, Central (Mr. Cant) and Bolton, West (Mrs. Taylor) and my hon. Friend the Under-Secretary of State for Industry, the hon. Member for Keighley (Mr. Cryer).

Unfortunately, the rules of the House preclude me from giving a full reply, but I undertake to write to my hon. Friends about the matters that they have raised. I promise to convey their deep feelings to the Prime Minister.

I give the assurance once again that my right hon. Friend the Secretary of State gave yesterday—namely, that it is the Government's view that it is essential to continue the support for industry that is provided by the temporary employment subsidy. My right hon. Friend said that should we have to modify the scheme we could do so only when we are in a position to provide a scheme that covers the area within the scope of the TES and provides equivalent support for employment.

We cannot accept a situation in which 186,000 people are declared unemployed. The Commission asked that we should end the temporary employment subsidy before 31st March, but we said that this was impossible. It is my clear understanding that firms which have qualified for and claimed TES by 31st March will benefit from the subsidy for the full 12-month period.

I wish to make it clear that were it not for the request from the Commission there would be no question but that the subsidy would have continued in its present form. However, the Commission has challenged that and asked that the proportion of TES that goes to any one sector of industry should not exceed the proportion of employment in that sector to employment in manufacturing, or some similar formula to limit disproportionate support to any one sector; and that the maximum period of payment for TES should be 12 months—in other words, it suggests that the supplement scheme should be dropped. This would hit textiles, clothing and footwear hard.

The Commission has also asked that important cases should be notified individually in advance to the Commission, and that if TES is to continue beyond six months a plan for reorganisation and restructuring shoud be submitted to the Commission at the six-month stage.

We have resisted hard in this matter and have sought to put the arguments put so eloquently by my hon. Friends in this debate. We have done so because we believe that the Commission has not understood the importance of the scheme in saving jobs and in helping our textile, clothing and footwear industries to modernise themselves to become competitive.

The TES has given a breathing space to our textile, clothing and footwear industries. It is not intended to be a permament prop to ailing firms. However, it has been used as a splint to give temporary help to firms to get over a bad period.

It is inconceivable that we could concede the drastic reduction demanded by the Commission to which I have referred. Therefore, we shall be negotiating very hard indeed in Brussels to avoid the damage which any drastic change in the scheme would bring to the North-West and other areas in which textiles, clothing and footwear activities are so heavily concentrated.

I emphasise that, although the Commission has expressed views about the TES as a whole, it is concerned predominantly with textiles, clothing and footwear. It is suggesting not a complete withdrawal but a reduction in these sectors. Our view is that if that reduction takes place because of the power which the Commission could use we shall have to protect our working people in other ways from the harm that such a move could do to them. The Government are conscious of their responsibilities to the working people in these industries. This is why my right hon. Friend the Secretary of State for Employment has been so diligent not only in pursuit of negotiations with Brussels but in trying to make certain that if concessions have to be made there will be some replacement to save jobs.

I cannot answer my hon. Friends on the matter of—

The Question having been proposed after 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 seventeen minutes to Twelve o'clock.