§ Motion made, and Question proposed, That this House do now adjourn—[Mr. Wakeham.]11.52 am
§ Mr. Tom Benyon (Abingdon)
I come to the House to make comments and representations to my hon. Friend the Minister about the effect of import controls and quotas in my constituency of Abingdon. I preface my remarks about the company which forms the main burden of my speech—Abingdon Carpets Ltd.—by reminding the House that recently about 1,000, some say 2,000, jobs have been lost in my constituency due to the collapse of the MG car line in Abingdon.
However, it would be facile and irresponsible of me to pretend that the collapse of the MG car was directly connected with the Government's refusal to protect British Leyland from the effects of unfair car imports, mainly from Eastern European car manufacturers and the Spanish. I do not want to dwell on the precise figures. Suffice it to say that British Leyland is convinced—and I believe that there is weight in its argument—that its recovery from the decline from which it has suffered in recent years and its attempts to rise out of the ashes like a phoenix have been impeded by the import of foreign cars.
I believe that other work could have been made available for my constituents in MG Abingdon had the Government been quicker to assist my constituents and British Leyland by imposing such controls on imported cars. I believe that the Government's refusal to impose some form of restriction on the imports of these cars has been of disadvantage to my constituents.
However, some 500 yards down the road, Abingdon Carpets Ltd. finds that its business is radically affected by the Government's imposition of import quotas on its raw product. It is that company about which I wish to speak this morning. The Minister will know that Abingdon Carpets Ltd. manufactures carpets in my constituency and that it uses imported raw materials. Abingdon Carpets is a most progressive company. It is privately owned, imaginatively run, profitable, and an employer of labour both in 924 Abingdon and in the constituency of the hon. Member for Bedwellty (Mr. Kinnock). In my view, such a company is the backbone of manufacturing industry. Its export performance is first-class. Another interesting feature is that, instead of remaining wedded to the status quo, this company has developed new markets in the United Kingdom and abroad which it is attempting to satisfy.
Apparently, the current market trend in the United Kingdom is towards American styles in carpet manufacture—in mid-lustre, bulked and continuous filament nylon constructed in cut loop and Saxony styles, with both multi-coloured and shadow print on the surface. This trend has been developing for two or three years and it has recently escalated. The market demand for it has been exploited by the American and Canadian carpet manufacturers, who are importing large quantities of prepared carpet to the United Kingdom.
It is this market which Abingdon Carpets has attempted to fulfil from within the United Kingdom. Within the limits of its facilities, it has been successful. However, it has been restricted by the Conservative Government, who have imposed import controls on its raw product. That is the last obstacle which that company ever believed would be strewn in its path by this Government. The company believed that the Secretary of State for Trade was opposed to import controls on the grounds that they raised prices, restricted consumer choice, invited retaliation against our exporters and insulated from the stimulus of foreign competition those very industries which are most in need of adaptation. Abingdon Carpets Ltd. believes that that was what the Secretary of State believed, because that was what he said in a speech made on 7 March 1980. Of course, what he foretold in that speech has come to pass, because import controls on the raw product of the company have restricted consumer choice, invited retaliation against our exporters and insulated from the stimulus of foreign competition various industries in the North-East.
The position with regard to Abingdon Carpets is that, largely due to the failure of the British carpet manufacturers to show flexibility—unlike Abingdon Carpets Ltd.—they have not seized the opportunity provided by present-day 925 technology. The Americans have been selling their carpets in the United Kingdom. They are broadly cheaper than United Kingdom carpets and are much in demand. The imposition of quotas on imported continuous filament nylon yarn from the United States and Canada has had the detrimental effect of denying progressive United Kingdom carpet manufacturers such as Abingdon Carpets the opportunity to compete with American imports while allowing our European partners continued access to American yarn, leaving them to fill the gap left by British manufacturers.
It has been impossible for Abingdon Carpets to obtain the same standard high filament yarn from a United Kingdom source, because it is just not made. What, then, is that company to do? Its position is intolerable. I know that the Government intended to treat the question of quotas with sensitivity and care. I know that the Department of Trade is under pressure, from management, unions and hon. Members to protect our indigenous textile industry in the North and North-East, where unemployment is at grotesque levels. I understand that import penetration into those textile markets is high.
However, the imposition of these quotas has more effect in being seen to do something, rather than in terms of saving jobs. For each job saved in the North and North-East—if any are saved in the long term—a job is being lost in Abingdon at Abingdon Carpets or in its Bedwellty factory. Thus, the imposition of quotas—not on finished products, as in the case of cars, but on raw materials—while seeming on the surface humane, compassionate and caring, does damage. Like so many other Socialist legislative devices, it has almost the opposite effect of what was intended. That opposite effect is the price of our being beguiled—I hope temporarily—by protectionists.
Currently, we are denying Abingdon Carpets the opportunity to fulfil the job it set out to complete. It has invested hundreds of thousands of pounds in machinery, plant and buildings, but it is unable to make carpets because the Government have stopped the flow of supplies of raw materials.
The original request of Abingdon Carpets was for 2,176 tonnes of filament yarn, plus a further 300 tonnes to develop a new style. The quota given was 328 926 tonnes, plus 300 tonnes that it had already imported prior to the imposition of the quota. It also imported 255 tonnes through Europe under free circulation; and thus had a shortfall of 1,293 tonnes. Its total imports in 1980 amounted to 1,085 tonnes. It managed to develop and use 463 tonnes through a European source of fibre production which left it with a shortfall this year of 628 tonnes. I am sorry to give so many figures, but I can make my point clear only by doing so. That would produce just over 1 million sq. yds. of carpet at a trade price of £3 per yard. Thus, Abingdon Carpets has lost £3 million of sales and has experienced a drop of 25 per cent. in last year's turnover. That is the price it is paying for being entrepreneurial, risk-taking, inventive and path-finding. Ironically, its less adventurous competitors have been given protection.
This is a serious time for the carpet industry, which is in a recession. Abingdon Carpets has managed to survive and prosper through its skills and adaptability. In such circumstances, those skills have been tested to their outer parameters. The company has found some alternative sources for its yarn from the EEC, which shows how patently daft these quotas are anyway, and also a waste of time and effort. The alternative yarn has to be specially treated in the United Kingdom on importation, and, I understand, there is insufficient heat-setting capacity for the continuous yarn system within the United Kingdom; so the company's plans are limited even in that attempt. It is essential to its future business that it be allowed to import raw material from the United States and Canada.
Demand for Abingdon Carpets' products continues to rise, but the confidence of the company is being undermined and no further investment will be made while this interference with fibre imports continues. That is clearly stated in a letter from the managing director and chairman of Abingdon Carpets, Mr. Richard Viney, who wrote to the Secretary of State for Industry on 14 March 1980. The letter succinctly states his case:I must write to you, if only as it were to say goodbye. I cannot run Abingdon Carpets on sympathy extended from your Department alone. Neither can we remain in business if we are to be asked to sail close to the wind pretending that our carefully thought-out policies are not in shreds.927 It is essential that the Minister differentiates between the imports of the finished article and basic raw materials. Limitations on imports of basic raw materials and interference with our manufacturing companies in recent years have been at a high level. Any further interference will make their position even worse than it is now. Small manufacturing companies have had their confidence eroded by previous Labour Governments' over-protective legislation on employment. Further measures would damage our manfacturing base beyond repair.
Abingdon Carpets had planned a considerable expansion in its factories, and in its South Wales factory in particular which, I need hardly remind the House, is already an area of high unemployment. These restrictions have caused these plans to be postponed. Unless these quotas are lifted, the expansion is likely to be cancelled indefinitely.
In brief, restrictions have brought exports to a halt. Abingdon Carpets is suffering from all the difficulties of a strong pound but is unable to benefit from the advantages of its strength in the purchase of raw materials.
Clearly, the Americans have a right to export to this country, but Abingdon's production costs in an efficient mill are considerably less than the imported completed rolls of carpet. It seems folly, therefore, not to allow relatively small quantities of yarn into the country to stem the flow of completed carpets, thus saving both foreign currency and an enormous number of jobs. There are, after all, no jobs for the carpet industry when completed rolls are imported, whereas fibre requires labour for uptwisting, dyeing and tufting in a particularly labour-intensive finishing plant before a carpet is ready for the market place.
This unnatural exclusion of our industry from the world raw material market has set off a chain reaction and caused Abingdon alone to postpone an order for nearly £2 million worth of Lancashire-built tufting machinery. Thus, the country loses on several fronts. First, it loses large amounts of foreign currency; secondly, it loses the jobs that go with the manufacturing process; and, thirdly, it is well known that the Americans will retaliate by increasing duties on European textile imports if Britain does not lift its 928 quotas on United States fibres by 1 January.
According to one report,Last week, President Carter issued a proclamation that the United States would retaliate by raising duties on certain woollen ap-the United Kingdom fails to end its quotas parel categories and man-made fibre yarns it on United States polyester yarn and nylon carpet yarns. The proclamation was a procedural follow-up to a warning issued by the United States in July.Thus, the thoughts in the mind of my hon. Friend the Secretary of State for Trade in his speech in March this year about all the disadvantages of import controls and quotas have come to pass.
I ask the Minister to rethink carefully his policy regarding import controls on yarn and the deleterious effect that it is having on Abingdon Carpets in particular. Will he give us some comfort that these import quota controls will be lifted in early January 1981 if we cannot do it before?
§ 12.8 pm
§ The Under-Secretary of State for Trade (Mr. Norman Tebbit)
As I think my hon. Friend the Member for Abingdon (Mr. Benyon) knows, my hon. Friend the Minister for Trade would have wanted to reply to this debate today and, indeed. would have done so. Unfortunately, he is airborne somewhere between Israel and Britain on his way back from one of his many missions abroad to promote British trade.
I should also like to pay tribute to my hon. Friend the Member for Abingdon for the way he has done all that he could reasonably, or even unreasonably, be expected to do to promote the interests of his constituents, particularly those who work at Abingdon Carpets. In the process, he has become something of an amateur expert on all these intricate matters of the various types of yarn and the manners in which they are used in this industry. Certainly no one could have done more than he.
However, like all of us—my hon. Friend has emphasised this today—he is engaged in the slightly difficult job of squaring circles. I suspect that as a Minister one has to go on one order from that and into the business of cubing spheres, which is even more difficult. This was underlined in my hon. Friend's speech.
929 It is not often that we have the privilege of hearing a speech made by both Dr. Jekyll and Mr. Hyde at the same time. My hon. Friend invited me both to resist seduction by the protectionists and to arrange an orgy at which we could be seduced by them at the same time. I confess that he caught me a little off guard by introducing matters of the motor industry and the unhappy story of MG cars. When my hon. Friend speaks of East European imports, I remind him that the scale of imports of motor cars from Eastern Europe is very small indeed. I do not have the figure at once in my mind, but, if I recollect rightly, it is certainly in the very low single figures of percentages. I cannot believe that it was imports of Skodas or Lada Fiats that caused the closure of the MG car company at Abingdon. I am simply not willing to believe that.
When my hon. Friend talks about the need to introduce controls on foreign car imports, I have to ask him this: would the prevention of the imports of Fiestas from Spain have produced any more cars here? When he answers that question, I think that he must answer it in the light of wondering whether, if the Halewood Ford Escort line were running flat out today to satisfy demand, it would not do more for the British motor car industry than any measures of import controls conceivably could do. I think that my hon. Friend would have to satisfy my right hon. Friend the Secretary of State that that Escort line at Halewood was producing cars at similar cost, at similar return on the investment and at similar levels of productivity per man employed to the similar line in Germany. I think that he would have to persuade my right hon. Friend of that before my right hon. Friend could conceivably be persuaded of the necessity of introducing import controls.
I think that my hon. Friend would have to satisfy the Secretary of State, too, that there were ample supplies of Mini Metros rolling off the lines to satisfy all the customers, and that they were not being forced to buy foreign motor cars by a lack of supply caused by industrial disputes in our own industry.
Those perhaps slightly harsh words are not the sort of thing that I would say about Abingdon Carpets.
§ Mr. Tom Benyon
I accept my hon. Friend's comment to some degree. Nevertheless, I believe that he is misinterpreting what I said. I did not say that the imports of Eastern European, Spanish or Japanese cars were responsible for the collapse of MG. I specifically said that that was not so. However, what I said was that at a time when British Leyland is attempting to rise like a phoenix out of the ashes of the problems of the past—which I believe it is trying to do—every assistance ought to be given to it. I also believe that there is a considerable difference between import controls and what I would regard as grossly unfair competition in terms of tariff barriers, which clearly I could not go into in my speech. I believe that every little bit helps and that some protection should be given to British Leyland as regards assistance to it in respect of fair competition as opposed to unfair competition. For example, the Spanish tariffs—34 per cent. against us, 4 per cent. for them—are utterly absurd in my view and in the view of many others as well.
I intend to make this intervention as brief as I can. What I said was that I thought that additional work might have been available in the Abingdon plant for my constituents—not at MG at all; I totally accepted the economic arguments for that decline, although reluctantly—if British Leyland had been given some protection. It is another factor. That is all I wanted to say.
§ Mr. Tebbit
I understand my hon. Friend's strong feelings. I am sure that if I had a motor car industry in my constituency I would also have very strong feelings about some of these matters. I know that he will understand that we are anxious that the difficulties that stand in the way of British companies exporting to Spain will be eased as Spain comes forward for accession to the European Community. But equally I have to say to him again—and I would not want to prolong this exchange between us—that before a man asks to be given a suit of armour to enable him to withstand the fire from his opponents, it is up to him to take adequate cover and to take all the measures that he reasonably can to protect himself from the fire of his opponents or competitors. I emphasise that those are not the words that I would want to use about Abingdon Carpets.
931 My hon. Friend very rightly quoted the words of my right hon. Friend the Secretary of State on the general theme of the dangers which come from protectionist measures. He was right to recollect that import quotas were imposed on polyester filament yarn and on nylon carpet yarn by the Community in February 1980 at the request of Her Majesty's Government. Our request was on the basis of a very strongly argued case by the United Kingdom industry that very large and sudden increases in these imports posed a serious threat to employment in the United Kingdom. Indeed, it was suggested by some commentators that it could mean the extinction in Britain of the manufacturing capacity for such yarns.
The Government also requested controls on synthetic fibre tufted carpets—the very sort of carpet, I understand, that is produced by the factory to which my hon. Friend refers—but our case was not accepted by the Commission. Although much publicity was given to the case at the time, the Government were not then approached by carpet manufacturers, importers or distributors with any suggestion that hardship might be caused to carpet manufacturers by the introduction of the quotas.
I know that subsequently Abingdon Carpets and its chairman, Mr. Viney, made representations to the Department of Trade. Indeed, Mr. Viney saw officials of the Department on a number of occasions and finally met my hon. Friend the Minister for Trade on 11 September. But that was all rather after the event.
It is possible to say that the method of allocating the quotas was hard in its results upon Abingdon Carpets, but it had to be, as usual, on the basis of past imports. That is as fair and equitable a basis as possible, but, of course, it bears particularly hard upon companies such as Abingdon Carpets, which was in an expansionist mood, which wished sharply to increase its imports over previous levels, and which was planning, and had already begun to make investments to do just that.
Up to the end of July, the Department had issued licences to Abingdon Carpets to allow it to import some 555 tonnes of nylon carpet yarn from other member States of the Community, much 932 of that under the arrangements for the free circulation of goods within the Community. Those licences were not, in fact, utilised.
I know that there may well have been technical difficulties and difficulties of all sorts in the way of making use of that possible escape road for the company of importing through the other member States of the Community. Since the end of July it has not been necessary to seek licences for such imports. However much we may sympathise with the company's position—and we do—the Government could not make an exception of Abingdon Carpets, in terms of the quota. at this late stage without treating several similar companies in the same way. That would make nonsense of the quotas. My hon. Friend would say that the quotas were, in themselves, nonsense. Nevertheless, they exist. For the rest of the year, Abingdon Carpets will have to meet its requirements by means of imports through the Community.
The company had a meeting with my hon. Friend the Minister for Trade and the position was fully explained. As regards the future, my right hon. Friend the Secretary of State for Trade told the House on Monday that he was reviewing whether the existing import quotas on polyester and nylon yarns should be renewed next year and whether any products should be added. I cannot add a great deal to what my right hon. Friend said.
We are considering the problems caused by the import of synthetic products from the United States of America, and we are considering whether the quotas should be renewed. It is a complex question. There are different interests, which must be balanced against each other. Many aspects must be taken into account. My hon. Friend was right to remind the House of what President Carter said recently in his presidential proclamation. That is one of the factors that the Government must take into consideration when balancing the interests of one set of workers against another. We must realise that protection for one set of workers can, as my hon. Friend so rightly said, result in great difficulties for others.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-two minutes past Twelve o'clock.