HC Deb 27 October 1983 vol 47 cc524-32 10.27 pm

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

Mr. Simon Hughes (Southwark and Bermondsey)

On a point of order, Mr. Speaker.

Mr. Speaker

I have called the Adjournment debate, so this point of order will come out of Adjournment debate time.

Mr. Hughes

Although I accept your ruling, Mr. Speaker, that the length of speeches affects the number of participants in a debate, right hon. and hon. Members on the Liberal Bench represent more than 4 million people—[Interruption.]—who feel especially strongly about matters such as the Health Service and who would wish to have the opportunity, on a matter of such national and immediate importance, to have their voices heard. Perhaps you would further consider the matter.

Mr. Speaker

The hon. Gentleman knows that when he is called to speak, he is called as a Member of Parliament representing a constituency. The Chair does its utmost to balance the various interests in the House, and it is extremely difficult when so many hon. Members wish to speak.

Mr. David Penhaligon (Truro)


Mr. Alex Carlile (Montgomery)

On a point of order, Mr. Speaker.

Mr. Speaker

Order. I must tell hon. Members on the Liberal Bench that the Adjournment has been called and that points of order are coming out of the time of the hon. Member for Kettering (Mr. Freeman).

Mr. Carlile

On a point of order, Mr. Speaker. Were you aware that during the debate, a mere eight Labour Members took 156 minutes speaking time; a mere 10 Conservative Members took up 152 minutes speaking time; that one Nationalist and one Social Democrat were called; and that no Liberals were called and were given no time?

Mr. Speaker

I am well aware of the arithmetic.

Mr. Roger Gale (Thanet, North)

On a point of order, Mr. Speaker. Is it not necessary for hon. Members to be in the Chamber before they can be called?

Mr. Penhaligon


Mr. Malcolm Bruce (Gordon)


Mr. Speaker

Order. It is extremely unfair to destroy an hon. Member's Adjournment debate, but I must take the point of order.

Mr. Bruce

On a point of order, Mr. Speaker. With respect to the Chair, we feel that our intended contributions to the previous debate were destroyed. We represent nearly 4 million voters and we are the party that backed the Beveridge report that introduced the NHS. My hon. Friend the Member for Leeds, West (Mr. Meadowcroft) wished to speak on our behalf but was not called, and we feel that an injustice has been done.

Mr. Speaker

The leader of the Liberal party is present. I am sure that the House would consider it extremely unfair if in every debate, and given that we have 650 hon. Members, the Chair had to call a member from the Social Democratic party and one from the Liberal party.

Mr. David Steel (Tweeddale, Ettrick and Lauderdale)

On a point of order, Mr. Speaker. As you have referred to me, may I say that I take a very serious view of what has happened? There has long been an understanding between previous Speakers and previous leaders of the Liberal party on our proper rights in the Commons. I suggest that we allow tempers to cool and perhaps we can discuss the matter privately.

10.31 pm
Mr. Roger Freeman (Kettering)

I appreciate the chance to raise the state of the men's shoe manufacturing industry, which is of particular importance to my constituency of Kettering. I regret that we have lost some time in this Adjournment debate because of the actions of some right hon. and hon. Members opposite.

The men's shoe manufacturing industry in Northamptonshire accounts for about two thirds of the national output of men's shoes. The problems of the women's shoe manufacturing industry are broadly similar, and much of what I shall say—very briefly at this hour—will relate to that industry as well.

I and my colleagues on the Conservative Back Benches welcome the appointment of my hon. Friend the Member for Rossendale and Darwen (Mr. Trippier) as the Minister responsible for the footwear industry. He has long experience of that industry, and the very least that we can expect is a sympathetic hearing.

The House need not be reminded in too much detail of the background of the contraction of the industry in the last 10 years. There were two debates in the last Parliament and the ground was well covered then. The industry has contracted by about a third in the last 10 years, and in the county of Northamptonshire that has meant a loss of about 6,000 jobs or 40 per cent. of the work force. Essentially, we have had a static domestic market and rising import penetration. That has meant real havoc for the footwear manufacturing towns.

All that has happened in spite of excellent labour relations and modest pay increases. We have a very open market, but cheaper wage costs abroad coupled with a comparatively highly valued pound in recent years have resulted in serious difficulties for our industry.

In one small town in my constituency, Rothwell, there were six factories 15 years ago and now there are two. The present state of the industry is undeniably better than in the spring. Orders are up in volume by about 11 per cent. over the period April to August. I am glad to say that the same is true of exports, which are up about 8 per cent. in volume over the same period. Imports seem to have stabilised. Some firms are experiencing great difficulty in attracting either new skilled labour or some of the old workers who were with them, who have often left the industry for good. We now have the paradoxical problem of high overtime rates and a difficulty in attracting skilled workers, although the recent London shoe fair was optimistic for the short-term.

The weaker pound, particularly in relation to the dollar, has helped, as did the strength of United Kingdom domestic sales during the summer. This relief is rather similar to the position of a man who has stopped beating his head against a wall. The pain has stopped, but he feels a little dazed, and it is now that both the industry and the Government should make sure that the beating never occurs again. The industry has taken many dramatic steps to improve its position, but there are two areas where the Government can and should help. The first is trade relations, and the second is investment.

Three quarters of the world shoe manufacturing capacity is tightly protected. Only in the United States and western Europe are markets relatively open. We impose an 8 per cent. tariff on leather goods coming in. If the United States Government decide to accede to the pressures of their shoe manufacturers—who are putting on pressure under article 201 of their Trade Act—and restrict imports into the United States, the position will be more difficult for us, because imports into the United States will be switched from the United States to us. I hope that my hon. Friend will say that the British Government will do all that they can to persuade the United States Government not to accede to that pressure.

The industry accepts the views of the Government, which I assume are very similar to those expressed in the last Parliament. On 26 November 1982, the Minister's predecessor argued that the maintenance of an open international trading system was in Britain's best interest overall. I accept that, as do many of my hon. Friends. The Minister can help in three specific ways. In doing so, he will help an industry that has had a rough deal, in terms of both tariffs and quotas facing it abroad. First, I hope that my hon. Friend will give us an assurance that he will encourage the European Commission to bring pressure to bear on the developed countries that have comparatively high tariffs and quotas against us. We have an 8 per cent. tariff against imports, but Canada has a 22 per cent. tariff against us, in Australia it is 46.5 per cent., in Japan 27 per cent., in South Africa 30 per cent. and in New Zealand 45 per cent. These tariffs do not commend themselves to the industry as representing fair and reciprocal trade.

Secondly, I hope that the Minister will give us an assurance that he will resume the pressure that his predecessor brought to bear on Brazil to enter into a voluntary restraint agreement on its exports to us. Hong Kong and Brazil are two countries with no quota or restraint agreement. Many other countries are so covered. Thirdly, the Minister could give us an assurance that a tough negotiating stand will be taken in the next few weeks against the Comecon countries, on the imports from those countries. I should like to see the ceilings that applied recently reduced to the actual level of shipments in the past 12 months. I should not like either an increase in the ceilings, or for them to be left where they are.

In a debate on 23 February 1982, the Minister, then a Back Bencher, drew attention to the plight of the slipper industry in his constituency, due to dumping from China. He said that we in Britain are gentlemen and play cricket by the rules, whereas everyone else plays rugby. Now that his roles are now reversed, I have pleasure in reminding my hon. Friend of his words.

I turn to the question of Government aid for capital investment, factory reorganisation and product design. Many of the companies in the industry, particularly in my constituency, are family firms that employ between 100 and 200 people. Some have gone out of business, but those that remain have survived on very low profit margins, despite the better trading conditions of the past few months. They have therefore not had the resources to invest, and have not had sufficient profits to use the generous tax allowances available for new capital investment.

The Government have done much in recent years to help the footwear industry, by encouraging the development of micro-electronic equipment and computer-aided design. I pay tribute to that, but there is a great difference between encouraging development and encouraging investment. The Shoe and Allied Trades Research Association, the industry's research body, is aided by the Government, and located—I am pleased to say—in my constituency. It has a great reputation and has done much in the past few months to pinpoint areas in which the industry could improve productivity. By improving productivity we shall be able to beat foreign competition, which can rely on cheaper wage costs than US.

How are we to achieve that aim? The Footwear Economic Development Committee, ably assisted by the British Footwear Manufacturers Federation last month delivered a recommended package to the Minister, amounting to £8.8 million of grant aid for the industry. The proposals are very similar to the small engineering firms' investment scheme which operates very successfully in the west midlands. The proposals involve one third grants over two years for new capital equipment, both for the closing room and for the back office—for financial and inventory control. Grants would also be available under the proposals for modernising buildings and investing in new buildings.

In the East Midlands 70 per cent. of our factories were built before the first world war. Therefore, we need to modernise our buildings. The proposals also involve very modest grants for companies that take on graduate designers. That is very important. We are all acutely aware of the need to control public expenditure, but the Exchequer would see a very quick return by concentrating part of its total budget on the footwear industry. It would see a return through lower social security payments, higher corporation tax payments as profits recovered and there would also be the indirect benefits of import substitution and capital expenditure programmes for the equipment suppliers.

The proposals have been warmly welcomed by the industry and by many of the constituents to whom I have spoken in recent weeks. Their confidence has been restored by the recent improvement in trading. I hope that we can persuade the Government to commit some funds to helping the next phase of modernisation, and that they will agree to repeat the experiment of 1978 and to help the industry to help itself. Indeed, I hope that my hon. Friend the Minister will have something encouraging to tell the industry tonight.

10.42 pm
Mr. Peter Fry (Wellingborough)

My remarks must, of course be brief. However, I congratulate my neighbour and hon. Friend the Member for Kettering (Mr. Freeman) on raising this topic on the Adjournment. I join him in congratulating my hon. Friend the Minister on his appointment. No doubt he will remember that there were times during the previous Parliament when he and I thought that we were the two lone voices speaking for the footwear industry. I am delighted that my hon. Friend the Member for Kettering has joined us.

I should like to stress the importance of selling and marketing. It is not much good producing shoes if one cannot sell them. Abroad one often hears that British manufacturers have lost their traditional markets. One reason for that is that the footwear industry is made up of fairly small firms, which, in a highly competitive world, find it very difficult to sell to all the world's markets. Indeed successive studies of the industry—going back to the study made in the late 1970s by the Economist Advisory Group—have specifically said that the industry was grossly deficient in marketing, especially the marketing of exports. The advisory group went on to say that the main stumbling blocks are: lack of initiative, dynamism and lack of marketing professionalism". When the Select Committee on Industry and Trade reported in 1980–81 on the subject of footwear and other industries, it said: Too often British firms appear to lack tenacity in tackling markets. The time has come when, if the industry is to be effective, it must realise that it is struggling and going through a time when both the market and the number of firms have been reduced to such a size that there is almost an equilibrium. However, the problems faced by the industry in the past are likely to recur. It is time that the industry recognised the weakness of having so many small and medium-sized firms. Should not the industry set up marketing agencies to which groups of firms could belong?

Such a project has been put forward in the Minister's county of Lancashire. I hope that it will happen in my county of Northamptonshire also. I hope that the Minister and the Department have taken that idea on board and will give it a fair wind. If some limited assistance is necessary to set up a modern marketing agency, I hope that the Government will not be slow in giving it.

10.45 pm
The Under-Secretary of State for Trade and Industry (Mr. David Trippier)

I am delighted to have this opportunity to reply on behalf of the Government in this debate. I have listened with great interest to the comments that my hon. Friend the Member for Kettering (Mr. Freeman) made on the proposals from the footwear economic development committee for new schemes of Government assistance specifically designed for the footwear industry. I am grateful to him for using the occasion to air his views on the proposals. I am also grateful to my hon. Friend the Member for Wellingborough (Mr. Fry) for his helpful contribution to the debate. I am pleased to see my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling), the Minister of Agriculture, Fisheries and Food, in the House. His interest in the footwear industry is well known—especially as he has the Kay Shoes company in his constituency.

We all share a close interest in the footwear industry's prospects and profitable development, and at the personal level I have considerable sympathy with many of the views that have been expressed. As the House knows, a high proportion of my constituents are employed in footwear manufacture, so it is with more than usual ministerial interest that I am studying the FEDC's proposals, which reached me under a month ago. The House will not, of course, expect me to prejudge the outcome of the very careful consideration that my ministerial colleagues and I are giving to that detailed package of proposed new measures, but I would be less than frank if I did not say immediately that the proposals—and indeed the similar ones that we have received from the knitting industry, the clothing industry and the textile industry—present the Government with some very difficult decisions at a time when public expenditure constraints have rarely been tighter. The House will recognise that it would be neither equitable nor indeed sensible for the Government to consider the claims of a single industry in isolation without taking full account of others, which are in a similar position and indeed face many similar problems. All those potential claims on taxpayers' money do, however, add up to a very large sum.

Naturally, the footwear industry, like many other sectors of manufacturing, is dependent upon the prospects for the economy as a whole. In broad terms the picture is one of strong and firm recovery from the depths of the very severe world recession—and footwear, I am glad to inform the House, is not missing out.

It is opportune to engage in this debate at a time when the prospects for footwear manufacturers in this country are looking better than they have for some years. United Kingdom retail sales of footwear overall continue to be strong and imports have slowed their upward trend. Our own manufacturers' production is on an upturn and their order books are very healthy. it is also particularly encouraging to see that the rapid decline in employment that afflicted the industry in 1981 and last year has halted and that the number of jobs has recovered somewhat since its low point in January this year. Those good signs are reinforced by the very much reduced level of short-time working, down some 40 per cent. on last year, and by the even more heartening increase in overtime working, up by more than 65 per cent. in the past 12 months. Those encouraging developments should not lead us into complacency, but are nevertheless a reason for congratulation.

The picture in the men's footwear sector, to which my hon. Friend is directing attention, is also encouraging—albeit slightly less so than for the generality of the footwear industry. Following the steep fall of 14 per cent. between 1980 and 1982, production has now virtually stabilised. During the first half of this year, it was only fractionally down on the same period last year but imports have risen during the same period by a disturbing 9 per cent. compared with 1 per cent. only for the footwear market as a whole.

On the export side it is encouraging to see that at a time of buoyant home demand the industry as a whole has paid due attention to the vitally important area of exports. Total footwear exports in the first seven months of this year were 5 per cent. up on the same period the previous year—a significant achievement. Men's footwear exports, how-ever, have shown a somewhat worrying 7 per cent. drop. It is clearly invidious to attempt to draw conclusions from short-term figures such as these. Nevertheless, the comparisons appear to raise questions for which the industry, in the first place, should attempt to find the answers.

It is of course directly relevant that Italy, which has grown to a position of great strength in the footwear market in Europe, and indeed further afield, is particularly strong in the men's footwear sector, supplying as it does a substantial 28 per cent. of the market for men's shoes in our country. It is frequently said, and, I believe, with justification, that an important cause of the problems of our footwear manufacturing industry is low-cost imports. Because of this—as one of the few exceptions to our general trade policy—we have always done all we can to provide protection for the industry against low-cost competition, not total and absolute protection, but a substantial degree of help. This is not the occasion to go into detail but about 50 per cent. of low-cost footwear imports are covered by measures initiated either by Government or by the British Footwear Manufacturers Federation, with our support.

Italian competition is, however, something completely different. I should not regard Italy as a low-cost country in this context, in general. Anyone who can show that it is trading unfairly should give me chapter and verse and I shall gladly take it up. By and large Italian competition has to be met head-on by United Kingdom footwear manufacturers. They must meet it by becoming more competitive and offering the customer in the street a well-made, stylish, highly attractive product which he or she wants to buy, and at an attractive price.

The improved fortunes of the industry, figures on which I deployed a minute or so ago, show that it has made a good start along this path. I believe that there is much more that can and must be done by the industry itself, and my hon. Friend the Member for Wellingborough suggested this. Indeed, the FEDC has spelled out precisely that message in the preamble to its aid proposals to Government. This must be right. Whatever our decision on whether to channel more taxpayers' money to the footwear manufacturing industry, the great bulk of the investment and all of the effort must emanate from within the industry itself. This in turn will be based on individual companies' commercial decisions in the light of each one's perception of developments in the market. My hon. Friend the Member for Kettering referred to the barriers faced by United Kingdom footwear exporters. We are, of course, worried about the restrictions that other countries continue to maintain while their exports enjoy relatively easy access to the United Kingdom market. I am gratified to hear that he agrees that the solution lies, not in following a policy of protectionism, but rather in pressing for the removal of these barriers. There is already some evidence that this policy has produced results. One has only to lock at the various welcome measures introduced by the Japanese—after EC pressure—to remove trade barriers on a wide range of products, to see that such a policy is paying dividends. Although the Japanese measures did not go far enough, they are, nevertheless, welcome and I can asssure my hon. Friend that the pressure will most certainly be maintained upon them to open up their market. Moreover, the Brazilians have been left in no doubt of the depth of Her Majesty's Government's—and the industry's—feelings about the unacceptable tariff disparities.

That is not to say, however, that we are at all complacent about the issue and we know that much more needs to be done. I particularly regret the fact that trade in footwear is one of the most difficult areas in which to make progress. My hon. Friend may be sure that we view the whole problem seriously and that we take every opportunity to make determined efforts, both bilaterally and though the Community, to get a better deal for the United Kingdom industry. However, changes of this nature cannot be achieved overnight, but we shall continue with our efforts, since we believe that United Kingdom interests are better served by increasing international trade rather than risking diminishing it by starting a slide into protectionism.

I am pleased to give my hon. Friend the assurance that he seeks, that my Department will help the industry in the preparation of anti-dumping cases. If evidence of dumping and of resultant material injury to the industry can be shown, appropriate remedial action will be taken.

The FEDC projects, to which reference was made during the debate, are of course largely financed out of public funds. An important part of the funding of SATRA is also provided in this way, through my Department. Incidentally, I should not allow this opportunity to pass without congratulating the footwear industry on maintaining and supporting this excellent organisation which is, of course, based in or near my hon. Friend's constituency.

I would be very pleased to see footwear companies making full use of the public funds that are directly available to individual manufacturing companies.

As the House is fully aware, the footwear manufacturing industry contains many small firms. Considerable Government help and advice is available to such firms. An enormous amount of work has been done in this regard, much in the Kettering area.

In conclusion, let me repeat how pleased I was when this motion was tabled. It is right that hon. Members should have at regular intervals an opportunity to debate the fortunes and prospects of this important section of our manufacturing industry. My hon. Friend is to be congratulated on instigating this debate, and as regards the main thrust of his arguments I can assure him and the House as a whole that the proposals recently submitted to Government by the footwear EDC will be given the most careful consideration.

Question put and agreed to.

Adjourned accordingly at three minutes to Eleven o' clock.