HC Deb 24 July 1978 vol 954 cc1325-38

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

Mr. Speaker

I shall allow hon. Members to leave the Chamber before calling the hon. Member for Sheffield, Hillsborough (Mr. Flannery) and then I shall time the Adjournment debate from the moment I call him.

12.8 a.m.

Mr. Martin Flannery (Sheffield, Hillsborough)

I wish to speak about the Sheffield cutlery industry, an ancient industry which for many reasons finds itself in grave difficulty.

Some time ago I saw a television programme that dealt with the American textile industry. The plight of that industry embodies to some extent the dilemma of the cutlery industry in Sheffield. We in Sheffield love the cutlery industry. Some of my people, including my mother, worked in it. One part of the television programme showed a huge textile factory standing idle. It had been built to make shirts, but it was closed because Japan flooded the market with shirts which had one button and one button hole missing. The American workers had only to put on the button and the button hole in order to stich on a label which said "Made in USA". That sort of thing is happening all over the world, and certainly in Sheffield in the cutlery industry.

An excellent article in The Guardian today about Sheffield cutlery says: In the beginning, there were knives, forks and spoons. The world looked at them, saw the mark 'Made in Sheffield' and pronounced them good. Then came knives, forks and spoons from Japan, Hong Kong, Taiwan and Korea. The world looked at them and said they were not so good but were cheap. Some of the world continued to demand the quality indicated by Made in Sheffield'. A long time ago, London was the beginning of cutlery, in the same way as it was the beginning of most things. There was a 200-year struggle with Sheffield in the Middle Ages from which Sheffield emerged triumphant, tiny place though it was. Chaucer, for instance, in "The Reeve's Tale", mentioned that the miller carried a Sheffield knife: A Sheffield thwytel bare he in his hose. That trade in the sixteenth century gradually developed trade marks. In 1624, the Company of Cutlers in Hallamshire was formed by an Act of Parliament. Hallam-shire is the ancient name for the Sheffield area. There was a steady growth in prosperity because of the water and the water wheels in the area. There was little real competition.

Then we make a real jump to the last war. I remember being in India for a long time during the war. When I was in Calcutta at one stage, I idly did what every Sheffielder does—I picked up the cutlery and examined it. It was a link with home: it was all "Made in Sheffield". Tonight, in the Dining Room, I examined the cutlery of the House of Commons. In contrast with some of the crockery recently, the cutlery is still "Made in Sheffield".

But can anyone be sure that "Made in Sheffield" still means what it says? In many cases it does not. How has this happened, As The Guardian said, after the war, Japan entered the market, in the late 1950s Taiwan and Hong Kong, and now South Korea undercuts them all; 94 per cent. of the industry has gone, due to unfair competition.

There are about 25,000 cutlery workers in South Korea making stainless steel table cutlery. Their production is the equivalent of that of 60,000 British workers—and not because the British workers dodge but because the South Korean workers work 56 hours a week, six days a week, with very few holidays. Their young labour force works at a relentless and rapid rate. Many of them are juveniles. There are no trade unions. There is no organised labour. There are no guards on the machines. This enables a far faster work rate.

Factory conditions are primitive. There is poor ventilation and inadequate dust extraction. Little attention is paid to effluent disposal and the departments are cramped and crowded. Hygiene, welfare and safety are casualties of the system. Raw materials are cheap. At $950 a tonne stainless steel is about half European prices. Some low-cost finished Korean cutlery actually lands in our country at the same price as European stainless steel sheet.

The industry has no development costs. Initially the State finances the plant and equipment for foreign exchange purposes. Importers, sadly, including those in our own country, originate products or get successful products copied. So product development costs do not arise in South Korea. Low prices ensure that the overseas customer goes to them because they have virtually no home market.

The services are supplied by cheap labour. The average male wage is about £70 a month, the female wage is about £60, and the reductions for juveniles are drastic.

I turn now to the question of trade marks and the Trade Descriptions Act. Most people do not know that cutlery, as with other items, can enter this country without the country of origin being marked on it if it is unbranded—that is, if it has no trade mark. When it is sold anonymously, the consumer will never know where it comes from and whether it is oriental in origin. If it is branded with a name or trade mark, the country of origin must be shown on the products and packaging.

There is a loophole. If a manufacturing process occurs on imported products, resulting in what is called a substantial or material change, the product may he stamped as "British" or "Sheffield", and that is quite lawful. But what is a material or substantial change? It needs a court case to determine that. I hope that there will be one to define the phrase, because it is not clearly defined at present.

There is a disturbing and growing tendency for some manufacturers to take advantage of this loophole. They bring in stainless steel knives, forks and spoons without identification on them. They then stamp with their name and the words "silver plated Sheffield". It should be "in Sheffield" but they omit the word "in" sometimes. Instead of saying "in Sheffield", they say merely "Sheffield" and convey the impression that the article was made there. That is a product passing for British.

There is a severe split in the cutlery trade in Sheffield. I confess that I am very surprised that the unions did not go into this matter on a considerable scale a long time ago. The split has arisen between the importers of cheap, almost finished goods and those who are resisting this trend. The importers want a quick profit and, whether they like it or not, are selling tomorrow for today. It is, one would think, a short-sighted, myopic policy. They are cutting the industry's jugular vein, and they must know it, and the industry is bleeding to death. Some factories in Sheffield are becoming mere warehouses for cheap, shoddy products from sweat shops in South Korea which convey the impression that they were made in this country and in our city.

One of the Sheffield newspapers which telephoned me yesterday told me that since 1971 5,000 jobs have gone. One recent visitor to South Korea has told us that special steels, which are now the lifeblood of Sheffield and the one really profitable side of the BSC, are in grave danger because of the machinery now in South Korea which is building up a special steels industry. However, that will be taken up in another debate. Since the late 1950s, about 10,000 jobs have gone. Only about 4,000 now remain, and 400 of those work people are out of work.

We are asked to accept voluntary agreements. They mean that countries rely on one another—as they do in the motor trade, for instance, where vast numbers of Japanese cars come into this country but we sell hardly any to Japan. As a result of a deputation that we had some time ago to my hon. Friend the Under-Secretary, there is now to be surveillance of cutlery.

The Common Market forbids import controls. France and Italy have thriving cutlery industries because they operated import controls before the Treaty of Rome was signed, and therefore they are not affected in the same way as we are. I wonder how many of the employers in the cutlery industry who are now squealing asked for us to stay in the Common Market and wanted us to join the Common Market. By that they struck a blow at their own industry from which it is reeling to its knees, and even further. The so-called voluntary agreements are difficult to police, are seldom honoured and are totally inadequate.

What, then, can we do? The Government must intervene on imports. Whatever laws they violate in so doing, let them remember that it is our industry, not the Common Market's industry. It is an old and honourable craft. We do not want it killed because of our adherence to EEC quotas. Quotas must be introduced on cheap table cutlery—for example, the £5 per dozen pieces which are coming into this country and under-cutting the workers in our city. The quotas must be on all table cutlery made from all metals. They should be introduced progressively so that the industry is not suddenly faced with an increased demand which it will be unable to meet.

Therefore, these controls would need to be introduced progressively. This would steadily reduce the rate of imports from Far Eastern countries and produce expansion in the trade, which we calculate would be from 5,000 to 8,000 jobs in a few years, depending on, say, 25 per cent. at the beginning. The rate of expansion will depend on that, but it is my duty to warn all concerned that there will be resistance from within the trade from those whose quick profits now depend on cheap imports.

It is possible still to save the Sheffield cutlery industry if we act now and act quickly. This is a proud industry with a proud history, and it must not be allowed to die. We can and we must take the necessary steps to save it.

12.21 a.m.

The Under-Secretary of State for Industry (Mr. Bob Cryer)

May I first say how pleased I am that my hon. Friend the Member for Sheffield, Hillsborough (Mr. Flannery) has drawn attention to the difficulties facing the cutlery industry at present? I very much appreciate the way he dealt with the subject. May I also point out that my right hon. Friend the Member for Sheffield, Park (Mr. Mulley), whose constituency is very much concerned with this industry, and my hon. Friend the Member for Sheffield, Brightside (Miss Maynard) have displayed their interest, without participating in the debate and repeating the very clear statements made by my hon. Friend the Member for Hillsborough, by being here throughout the debate tonight. There has been a drop of 9 per cent. in employment in Sheffield alone in the three years from 1973 to 1976, and this is a matter of serious concern to us all.

Before embarking on my reply, perhaps I should briefly say that the term "cutlery" which we are using refers to implements such as knives, forks and spoons and the like, known in the trade as "flatware". This is the section which we are now discussing. We are not at present concerned with razors and razor blades or with knives for machines. Although they are regarded for some purposes as cutlery, they are entirely separate sectors and are not beset by the problems which my hon. Friend has described.

My hon. Friend has been assiduous in drawing attention to the difficulties of the industry, and the industry itself has made representations to successive Governments on a number of occasions about the adverse effects of increasing competition from imports. Together with my hon. Friend the Under-Secretary of State for Trade, the Member for Oldham, East (Mr. Meacher), I met a deputation from Sheffield on 9th January this year to discuss the matters which have been raised tonight. In addition to my hon. Friends the Members for Hillsborough and Sheffield, Heeley (Mr. Hooley), and our much lamented late hon. Friend as Member for Penistone, Mr. Mendelson, the deputation included representatives of the cutlery manufacturers, the trade unions, Sheffield city council and South Yorkshire county council.

We are to meet them again next Thursday, and this is an indication of the great willingness on the Government's part to discuss this serious matter. I think it important that the Government should keep in touch with the important areas which are expressing concern, and this is why we are happy to see a deputation so soon after the first one in January this year.

Our meeting with the Sheffield delegation earlier this year not only underlined the concern but left us in no doubt as to its members' views on the need for early action. The industry agreed in 1976 to undertake a study in depth of its problems to see what answers could be found, including the possibility of import restrictions. I shall deal with this study more fully later.

As a consequence of the discussions in January of this year to which I have referred, and because of the continuing pressure of imports, my hon. Friend the Under-Secretary of State for Trade arranged for the possibility of temporary import restrictions to be discussed with officials of the EEC Commission. The Commission indicated that it was not prepared to support at that stage an application for the imposition of import controls by the United Kingdom. Among its reasons for that were the fact that a number of British cutlery manufacturers were themselves significant importers. It cannot, surely, strengthen the case for import controls if the very people who are complaining are themselves the main culprits.

Second, the Commission said that because imports of stainless steel table cutlery had become so high, it seemed unlikely that home producers could provide fully for the cheap end of the market. My hon. Friend has made suggestions to cope with that, and those suggestions will be taken into account.

However, the Commission did agree to the introduction of surveillance licensing for all imports of cutlery into the United Kingdom from outside the Community. This came into effect on 10th April, but at present it is too soon to draw any positive conclusions from the information so far collected. But we hope that it will be of value in further consideration of the industry's problems. I am sure that my hon. Friend will agree that it is too soon to draw any substantial conclusions, but certainly the information gathered so far indicates that the surveillance is of very great importance.

I must emphasise, as my hon. Friend did, that we are now members of the EEC and it would be very difficult to act unilaterally. There has been a shift of emphasis, of course, and the Government must take this into account. The Commission is involved. I well recall that my hon. Friend and I warned of the consequences of this position before the 1975 referendum. However, the fact is that the referendum decided in favour of our continued membership of the Common Market. The modification of the Government's position regarding unilateral action, because of membership of the EEC, is today a reality that we must face.

In this context, it is important not to overlook the steps which the industry itself has taken to secure a limitation of imports from two of the three principal sources. I understand the point that my hon. Friend has made about the limitations of voluntary agreements, but it is important to point out that voluntary restraints have been exercised by Japan for many years, and that restraints have recently been volunteered by Korean manufacturers following talks with their British counterparts. Voluntary restraint arrangements impose much less pressure on the international trading system than do formal import controls, as is recognised in other sectors.

Therefore, it is important to urge the industry to seize whatever opportunities it can to extend these voluntary arrangements. I know that there are criticisms —my hon. Friend has mentioned them—such as that full reliance cannot be placed upon them, but I certainly believe that every possibility needs to be exploited, and the industry should certainly explore that sort of possibility.

I now turn to the study of the industry that is going ahead. First, I must emphasise that the study is being done primarily by the industry itself, by staff from its research association. The suggestion that the industry should look for a solution to its problems other than by import controls is not a new one. Positive proposals for a study were put by my Department to the industry as long ago as 1974. In 1974, these proposals included the proposed terms of reference and an offer of a contribution to the cost of the study. We do not have and nor does the trade association, frankly, have sufficient information on past or future investment capacity, profitability and other factors on the industry to enable us to make informed judgments about the whole position.

The study which the industry has now agreed to undertake has the following terms of reference, but I would point out that we have lost those two years due to the inability, at the time, of the industry to make a decision about embarking upon this important study. The terms of reference are: To consider the major factors affecting the efficiency and competitiveness of the UK cutlery and flatware industry in both home and overseas markets; and in what ways its performance might be improved, including whether temporary restrictions on imports might help to achieve this. Therefore, restrictions on imports are included in the terms of reference, and they are being studied.

My Department has agreed to pay half the cost of the study, and to make an economist available to help with the commercial and economic aspects. After a slow start, because of delay in obtaining a sufficient response to the questionnaire sent to firms, I am glad to say that the study is progressing satisfactorily. The information contained in the study will enable us to present a complete case to the Commission. It is certainly our view that simply a decrease in the amount of employment in the industry would not of itself convince the Commission that import controls should be imposed.

It is necessary, therefore, to explore, every avenue, and that involves presenting the strongest possible case that the Department can do to the Commission when the study has been completed.

Mr. John H. Osborn (Sheffield, Hallam)

I probed Commissioner Davignon on this matter only two weeks ago, and he indicated that no positive approach had been made to him and that he was waiting for that approach from the industry and the British Government. After these remarks, will the Minister clarify the matter?

Mr. Cryer

Certainly. I am not responsible for Commissioner Davignon. It sometimes happens that what a Commissioner says is not entirely in accord with what has transpired. But I can assure the hon. Gentleman that an approach has been made to the Commission about import controls, and that as I said earlier —I do not know whether the hon. Gentleman was present at the time—the Commission was approached about import surveillance and has agreed to it. There is no question but that representations have been made to the Commission.

It was our understanding from the Commission that, for the reasons I outlined, import controls could not at that stage be applied. A full and proper case must be presented to the Commission. We have been urging the industry for some time to compile a study in order to ensure that we have the fullest information so that any questions that arise can be satisfactorily resolved.

The industry hopes that a report on the fact-finding phase of the study will be available by the end of August. The intention is that the report will then be considered by a working group consisting of representatives of both sides of the industry and of my Department to consider and recommend appropriate courses of action to achieve the objectives of the study. No doubt that will involve a consideration of import controls as a way of improving the position.

I cannot forecast what recommendations will be made, but the industry and my Department have a target completion date for the work, the end of 1978. I can only say that we shall give all the help we can towards a successful conclusion. I know that the Sheffield city council and the South Yorkshire county council are also anxious to help in any way they can.

The study is not the only way in which my Department is helping the industry. Officials have had discussions with some companies about financial assistance under the Industry Act, and I am glad to say that interest is being shown. We help the industry to benefit from collective research and development carried out by the Cutlery and Allied Trades Research Association in two ways. First, the Department undertakes the collection of a statutory research levy from manufacturers of stainless steel cutlery and flatware. Secondly, it contributes towards individual research and development projects on a significant scale.

I believe that in the face of the massive competition from imports it is of vital importance that British cutlery manufacturers should exploit every opportunity offered by advances in technology. Apart from the contribution which my Department makes to collective research and development, it is always ready to consider applications by individual manufacturers for assistance under the product and process development scheme.

The pressure of imports for some types of cutlery, serious though it is, can, if we are not careful, give a somewhat distorted view of the achievements of the industry. The traffic is not all one way by any means. The British cutlery industry—as I defined it at the beginning of my speech —exports successfully to many parts of the world, mainly in the better quality and more expensive sectors of the market. In fact, in 1977 our exports of cutlery were greater in value than our imports, and the figures to date point to our again enjoying a favourable balance of trade in 1978. This represents a gradual improvement on earlier years, and it not, therefore, a flash in the pan.

However, we should be wary about assuming that because we are exporting well in the expensive end of the market this is the end of the matter. We have always bobbing over our shoulders the example of the British motor cycle industry, which opted out of the cheaper end of the market and gradually the expensive end was taken over as well. But the industry should be congratulated on its export achievements. Certainly it is a hopeful sign for the future.

My hon. Friend raised an important question about marking, which included the question of imported blanks, which are silver plated in this country and then sold with a description which suggests. or might be taken by some to mean, that they are of British origin. Whether this is a breach of the Trade Descriptions Act depends on whether the silver plating constitutes a substantial change in the product. This is solely for the courts to decide, and I cannot express an opinion. If anyone feels that an offence has been committed he should draw the matter to the attention of the appropriate local authority consumer protection department, which has responsibility for enforcing the Acts. That is the legal position, and I must make that quite clear. But I would add that practices of the kind described would be regarded as not in the best long-term interests of the British cutlery industry.

I would strongly urge anybody who feels that there is a case to make the appropriate report so that action can be taken and a legal decision arrived at. That might be of enormous benefit and importance to the industry. I shall bring this debate to the attention of my right hon. Friend the Secretary of State for Prices and Consumer Protection, so that he is kept fully abreast of the representations and feelings on the matter.

There is no general requirement for origin marking of goods in this country. Moreover, the use of the order-making powers under the Trade Descriptions Act 1968 to impose such a requirement can be used only when origin marking is in the interest of the consumer. The cutlery industry has not so far convinced my right hon. Friend the Secretary of State for Prices and Consumer Protection that there is a good case for a marking order on consumer protection grounds. The legislation does not allow for origin marking for the purpose of protecting trade.

But my hon. Friend is bringing a delegation on Thursday and I can assure him that there will be a representative from the Department of Prices and Consumer Protection so that this matter can be gone into in some detail, because it is an important matter which is of concern not only on cutlery but on many other items of manufacture.

My hon. Friend pointed out the disparity in working conditions. There was a recent film on television about working conditions in Korea which clearly showed that Korean employees have not got trade union rights, they have no health and safety at work legislation, and no employment protection Act, so if any factory inspectors were called in they could be sacked at a moment's notice. It is hardly fair competition for British workers, who have had this element of protection introduced by the Labour Government, when people in such countries as Korea and Hong Kong are grossly exploited, although that would not be true. for example, of Japan.

But it may be necessary, in considering any import restrictions or quotas, during the negotiations for, for example, a social clause to he considered, which may well be of assistance to the working class of Korea in improving their working conditions, so as to end the long hours and extreme tiredness demonstrated in the film by the girls falling asleep during their luncheon break, when a photographer crept inside, apparently against the wishes, which is hardly surprising, of the factory owners and took pictures of them asleep.

This must be a matter for any future negotiations. But if we are to have international competition it must be fair, without the sort of massive exploitation I have described. I look forward to meeting my hon. Friend and the delegation on Thursday, when we can go into these matters in detail. I thank him for his expression of concern tonight. I hope that I have answered some of his questions and assured him that this is a continual process of investigation.

Question put and agreed to.

Adjourned accordingly at twenty-three minutes to One o'clock.