Book Manufacturing Industry (Hansard, 12 June 1981)

§ Mr. Robert Litherland (Manchester, Central)

I am grateful for this opportunity to draw attention to the problems and the growing crisis within the book manufacturing industry. Hon. Members have been informed of the deterioration that has affected the industrial manufacturing base of the country, including steel, textiles, board and paper and chemicals. These are a few of the issues that have been debated. Common to all has been the effect of the strong pound, high interest rates and high energy costs, which have contributed to a decline in major manufacturing industries, creating difficulties for them in competing with overseas producers.

Now the British book manufacturing industry faces the same problems. The present economic recession, together with Government monetarist and non-interventionist policies, is crippling another major industry and taking its toll in the form of redundancies, cutbacks and closures. The book manufacturing industry has always enjoyed stable employment, good worker relations and a high degree of co-operation and recognition between unions and employers about the causes of the problems that face the industry. This joint recognition is shown by the approach taken by both sides of the industry and the issuing of a document which, by its title "A joint approach to immediate problems", conveys this unity of purpose. Both sides urge the Government to act quickly in the interests of what is a traditionally thriving and prosperous sector of British industry.

The printing industries sector working party comprising representatives of SOGAT, the NGA, Cambridge University Press, the Publishers Association, the Pitman Press, SLADE, the British Industries Federation, NATSOPA and Pindar Print, came to speak to hon. Members of all parties to instil into them the seriousness of the situation. They have displayed the joint approach by setting up a sector working party to examine in detail the industry's problems, concentrating on two main areas—the factors under the industry's control and the factors outside its control.

Both sides are working to make the industry more competitive. One may argue whether this should be a role of the trade unions. However, in the situation facing the industry, both sides recognise the problems. Areas under review include marketing and other services for customers, exporting, prices, efficiency of management and labour, materials and machinery. Improvements in these areas have been tackled as a matter of urgency. Every effort is being made to rectify the situation.

It is on the factors within their control that the two sides are taking action. It is the factors outside the control of the industry that are the real cause of concern and that seriously affect the international competitiveness of British book manufacturers. These external factors are the Government's responsibility. The industry has reacted and is playing its part. It now looks to the Government for support.

The book manufacturing industry is responsible for employing 20,000 workers. It has a turnover of £200 million with a reputation for delivering high quality goods at a price that offers value for money. It is an industry with 706 a reputation for good industrial relations that are second to none. It is an industry that is buoyant and efficient and an industry with all the ingredients of success. Yet it is falling into decline, another victim of recession and Government policies. The industry is a victim of circumstances beyond its control and not brought about by its own doing.

The reduction in the size of the industry within the past 12 months has shown a trend towards rapid deterioration because of an increase in production overseas aimed at the United Kingdom domestic market, a change that has been dramatic and sudden. The effect has been disastrous, resulting, inevitably, in many people losing their jobs. Irretrievable damage has been caused to the industry. Overseas competitors have been given an open cheque and an unobstructed path to our market, which, unlike that of its competitors, is entirely unprotected.

The orders lost are unlikely to be recovered, as the market for books is international. Coupled with that is the effect of the decline in the domestic market, because fewer school books are being bought, owing to the Government's public expenditure cuts. One million fewer school books were purchased by Britain's schools in the first quarter of 1980.

The book production industry is particularly concerned about the disproportionate share of the reduction in the education budget that has fallen on the purchase of textbooks. Anybody with the remotest idea about printing will express the view that to cut back the stock of books is a shortsighted and uneconomic policy. Because the greatest cost in printing is at the outset of production, the more books printed, the lower the unit cost. The shorter the printing run, the more costly a book becomes. Therefore, we do not require an economist or a mathematician to tell us that smaller runs of books are uneconomic. The added reduction in spending on public and other libraries results in lower standards and higher costs per child.

Mr. John Davis, director of the Educational Publishers Council, has said that no industry is more dependent on public expenditure than the book publishing industry, that books are central to education and to library services, and that annual expenditure in schools, higher education and libraries is around £150 million, about one-third of the industry's turnover. He points out that although the Government said in their expenditure White Paper that expenditure on books should not be curtailed, that is exactly what has happened.

Schools are reported to have inadequate book stocks—50 per cent. in secondary schools and 30 per cent. in primary schools in 1981—and levels of provision are below half what they should have been in 1979. The proportion spent on books is under 1 per cent. of total expenditure on education. Other surveys show that in the West Midlands, the North-West, Wales, Scotland and the South of England there have been cuts of over 50 per cent. in some authorities since 1975, and that nearly 4 million fewer school books were bought in 1980 than in 1979. The prospect is alarming for the nation's schoolchildren.

Universities' expenditure on books fell by 40 per cent. between 1971 and 1977, and by 33 per cent. between 1977 and 1980. Sales of scientific and technical books have declined by 20 per cent. in real terms since 1972—resulting in a depressing outlook for the training of our future scientists.

707 In public libraries, book funds have been cut by 10 per cent. in 1980–81, in some cases by 30–40 per cent. in real terms. Parallel cuts have been made in the school library service. Hardback fiction is down by 28 per cent. since 1972 and hardback children's books are down by 35 per cent. since 1972. Again, the prospect is dismal for new authors and for the growing number of unemployed who use libraries.

The number of new titles published in the United Kingdom is larger than in any country in the world. The manufacture of books in the English language is world-wide, so there remains considerable concern about the future of book manufacturing in this country. At present, other major English-speaking countries such as America, Canada and Australia give sufficient protection to their book manufacturers. Over the decades America has built up a substantial book manufacturing industry and has the reassuring protection of a clause in its copyright Act which bars overseas competitors from its markets. After international pressure that clause may be withdrawn next year, but the Americans have a strong industrial base from which to attack the whole market.

In Canada and Australia the publishers are given financial incentives for their own market. We are informed that a major Canadian book manufacturer has announced plans to attack our market, using huge Government grants towards the cost of new equipment.

The British book manufacturing industry is feeling the effect of all this because it is vulnerable to such trade practices. It is feeling the effect of inflation, high exchange rates, high interest rates, a strong pound—or what was a strong pound—and dearer energy costs. The results can be seen when we look at the escalation of imported books into this country. In the first 11 months of 1980, over 60,000 tonnes of books were imported, valued at £116 million—an increase of 7.3 per cent. and 20 per cent. respectively.

In human terms, we again see the spectre of unemployment looming greater with increasing redundancies and short-time working, with a higher proportion of redundancies in book production. The figure is 8 per cent. compared with the rest of the printing industry, which is at something like 2 per cent. Any observer would agree that those figures illustrate the problem clearly.

I come back to the point that I made at the beginning—that the trade unions and employers recognise their responsibility and have worked towards improving performance. Here again I quote from a speech by Tony Dubbins, the assistant general secretary of the National Graphical Association. He said: Of course it would be naive, if not arrogant of us to lay all the blame at someone else's door. We, in the industry, have been looking long and hard at ourselves, and have seen our failings—we have set out about rectifying some of these. Here I need only mention the invaluable work of the Sector Working Party through which both unions and employers have successfully worked at improving the performance of the industry, looking at in particular, such areas as communication, exports, import substitution and cost competitiveness. In the trade unions, we have set about engendering amongst our members a more competitive attitude, and with the employers, we have pledged ourselves to the creation and maintenance of a high output/high wage industry. I emphasise again that both sides recognise that Government support is essential if they are to halt the decline that the industry is experiencing in the value of book printing. The industry has to cope with the loss of markets, the dramatic rise in imports, work leaving the 708 country, and the spectre of rising unemployment. In my own trade union, SOGAT, since January 1980, 20,579 workers have lost their jobs. Since January this year, 6,278 have been thrown on the dole.

The British book manufacturing industry has made a tremendous contribution to the quality of life and has also contributed to the economy of this country. It is a vital, necessary industry that is worth saving. That cannot be achieved without support, and it is this Government's support that is now being requested. I trust that the Government will respond accordingly to their responsibilities regarding what have been described as the external factors—inflation, exchange and interest rates, energy policies, public expenditure cuts, unfair trade practices, and barriers to international trade. To support the industry's effort, the Government are being implored to respond accordingly and to give their support now.

§ The Minister for Consumer Affairs (Mrs. Sally Oppenheim)

I congratulate the hon. Member for Manchester, Central (Mr. Litherland) on taking this opportunity to raise the problems affecting the book manufacturing industry. The Government are well aware of the importance of the industry and do not underestimate it.

A delegation from managements and unions in the industry came to see my right hon. Friend the Secretary of State and me on 9 February. Unfortunately, due to a previous engagement I had to leave before the end of the meeting. We listened carefully to the delegation's clear explanation of the industry's current problems. We were most encouraged to see managements and unions working together with a view to improving the industry's performance. This is an ideal state of affairs, which is extremely welcome.

My right hon. Friend explained the Government's overall economic policy and the primary importance we attach to the control of inflation and the reduction of public expenditure. While we fully appreciate the problems facing book manufacturers, many of which are common to British industry, the success of this policy is central to the long-term interests of the industry and will create circumstances in which many of its problems can be tackled effectively.

Since our meeting, sterling has fallen against the United States dollar. This of itself should please the industry on the basis of the complaints that the industry has made about the strength of the pound and on the basis of what the hon. Gentleman said. However, on the other side of the coin, this means dearer raw material prices. The hon. Gentleman and the industry have complained about interest rates. He will be aware that rates in this country are now among the lowest, not the very lowest, in Europe.

The delegation which came to see us accepted that there was much that the industry itself could do to improve its competitiveness. While I recognise that it is wrong to equate the industry's industrial relations and productivity with those of Fleet Street, I must point out that the industry's loss of competitiveness is at least partly due to its own poor performance.

The national pay dispute last year must have had a damaging effect on customers' confidence. The British Printing Industries Federation's book production section admitted last autumn that British book manufacturers' wage costs had increased by about 50 per cent. since May 709 1979. The technology is international, and it is difficult to understand how, for example, binding costs in the United States can be 30 to 50 per cent. of United Kingdom costs.

I know that in the pay negotiations this spring the industry agreed increases averaging 10 per cent., and I welcome this evidence of a more realistic approach by both managements and unions to what the industry can afford in the current economic climate. But there is a great deal more to be done to improve competitiveness. The printing industries sector working party, on which management, unions and Government are represented, has made a start on improving the use of resources by its war on waste campaign. However, there does not seem to have been an equal readiness to tackle the constraints on the more efficient use of machinery and manpower. This was pointed out to the chairman of the sector working party at the National Economic Development Council last December, and we shall be looking to the industry for some action on these aspects of productivity before long.

Turning now to the various trade issues which affect the industry, I should first explain that the Government's trade policy is founded on the principle that the interests of the United Kingdom and those of the world community are best served by an open trading system in which commodities may flow freely across international frontiers. We have also, in common with the other member States of the Community, undertaken as signatories of the UNESCO Florence agreement to grant freedom from customs duties and other charges to a variety of educational, cultural and scientific materials.

We do, however, attach a great deal of importance to ensuring that free trade is at the same time fair trade. The industry delegation raised with us a number of cases where other countries have tariff or other barriers against the import of British books or subsidise their domestic printing or publishing industries. Some of these cases have been or will be the subject of representations to the Governments concerned, either bilaterally or through the Community. The scope for action in other cases is being examined. Within the constraints of our international obligations, we shall continue to press for action where the industry can substantiate a case.

The hon. Gentleman referred specifically to school books. The Government recognise that the level of book stocks in some schools gives cause for concern. But it would be wrong to attribute deficiencies solely to the effects of public expenditure reductions. Schools normally have a good deal of control over the books that they buy, within their capitation allowances, and they allocate their spending priorities. There have for many years been wide variations in the provision made by different schools within the area of the same authority. In addition, there has been a tendency in recent years to spend less on books and more on other types of teaching materials and equipment. This is a fashion which may have been taken too far.

710 Nor should the scale of the present problem be exaggerated. Her Majesty's inspectors, in a survey undertaken in this school year, reported satisfactory provision of books in more than half the local education authorities in England. Of just over 1,000 returns from visits to individual schools, nearly 700 described the book supply as satisfactory.

My right hon. and learned Friend the Secretary of State for Education and Science has repeatedly stressed that he sees a sufficient stock of books as fundamental to improving standards in schools. This is why the rate support grant settlements for last year and this year have allowed nationally for increases—not reductions—of 2 per cent. compound in real terms in per capita expenditure on books and equipment. The Government's public expenditure plans for later years make similar allowances. Of course, it is up to local authorities and schools themselves to determine how they use the resources made available to them.

The hon. Gentleman also mentioned the United States manufacturing clause. We share the industry's concern about the United States manufacturing clause. We have certainly not been inactive. In March our embassy in Washington presented a note to the State Department arguing strongly that the manufacturing clause should be allowed to lapse on 1 July 1982, as provided for in the existing legislation. We have been assured that the note is being taken fully into account in the report which the United States Copyright Office is to present to Congress next month. A copy of the note will be annexed to the report.

We are keeping in close touch with developments. We will review carefully the need for further action in the light of the Copyright Office report and Congressional and other reaction to it. There has been no Congressional action yet, though we understand that the appropriate Committees are likely to hold hearings on the future of the manufacturing clause when the Copyright Office report is presented. No doubt the industry will want to keep closely in touch with my Department on this matter.

Finally, I thank the hon. Gentleman for the opportunity to explain that the Government are aware of and concerned about the problems affecting the book manufacturing industry. As our economic policies come to fruition, the prospects for book manufacturing and for British industry generally will improve. The decline of sterling against the dollar should ease the problem of foreign competition in the short term, and we are acting on the various trade issues raised by the industry.

The hon. Gentleman may rest assured that my Department and I will keep the matter under continual review.