HC Deb 29 February 1984 vol 55 cc249-52
13. Mr. Alfred Morris

asked the Secretary of State for Trade and Industry what measures he proposes to assist the textile industry further to improve its international competitiveness.

The Minister of State, Department of Trade and Industry (Mr. Norman Lamont)

The Government's policy will continue to be directed towards establishing the right economic framework for sustainable growth, and to giving firms confidence to invest and increase their competitiveness. I have been pleased to see recent reports of improved company results. The higher figures for both output and employment suggest that the textile industry is pulling out of recession.

Mr. Morris

Is the Minister aware that profitability is still lower than it was four years ago, and of the now urgent need for investment in the new generation of textile manufacturing equipment if the industry is to improve its international competitiveness? Will the Government. respond to the British Textile Confederation's document entitled "Plan for Action", which was published a year ago and which sets out proposals for achieving the right level of investment?

Mr. Lamont

The right hon. Gentleman will know that we wanted to consider these proposals alongside those that we have received from the economic development committees of the clothing, knitting, footwear and leather industries, which were received later than the textile industry's submission. It is logical to consider them together and we hope to make a response shortly. I understand the right hon. Gentleman's anxiety. As regards profitability, although profits are historically low, there has been a sharp increase. Courtaulds, Vantona-Viyella, Dawson International, Illingworth Morris, have all reported sharply improved profits.

Mr. Dorrell

Is not the new emphasis on international competitiveness as a key objective for the textile industry a welcome development, and will my hon. Friend take every opportunity to encourage the industries which he named, which have applied for assistance under the Industry Act schemes, to continue to put the emphasis on increasing international competitiveness rather than looking to the Government to protect them against international competitiveness?

Mr. Lamont

My hon. Friend is right. The underlying fact is that there have been dramatic improvements in the British textile industry, particularly in companies such as Courtaulds, which have dramatically turned round

Mr. Sheerman

Is the hon. Gentleman aware that the industry has been extremely competitive and has done a great deal of good work in spite of the Government's policies, which it has had to endure over the past four years? Is it not time that the Government responded with the action that has been demanded by all parts of the industry? Is he aware that what the Government have done in other sectors, such as education and training, has not been done for the textile industry and represents a dereliction of duty that could damage the future of the textile industry?

Mr. Lamont

I totally reject the hon. Gentleman's last point. He heard what I said to his right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris). We shall be replying to the submission in "Plan for Action" as quickly as possible.

Mr. Nicholas Winterton

While my hon. Friend has been able to quote a number of companies which have returned a very satisfactory level of profit this year, is he aware that the overall return on capital involved in the industry is extremely low and does not encourage the investment that will be necessary for the industry to purchase the new generation of high technology machinery which is essential if we are to compete in the real world, in which textiles are seeking to compete at present? Will he therefore come forward with some proposals to assist investment in this vital industry?

Mr. Lamont

My hon. Friend is quite right in saying that although the profits of the textile industry have increased sharply the margins are lower than in British industry generally. However, he ought to recognise that it is the function of management in this industry to widen the margins and to improve design of clothes and textiles. It is design — not just price — that is a key to the competitiveness of the textile and clothing industries.

Mr. Ryman

Is there no limit to the complacency of the Government on this matter? The Minister may like to consider two specific points that would help the industry enormously. The first is protection against oil-subsidised imports from America, particularly from South Carolina, which have directly resulted in three companies in the north-east of England going bankrupt—one, P. Shapiro Ltd., only last week. Will he also consider the British Technology Group's policy of investment in manufacturing industries, with a view to giving further help to the textile industry?

Mr. Lamont

The British Technology Group has very little to do with the textile industry. We have set out our views on the group's functions in the White Paper. The question of American energy prices is one that we have taken up on many occasions with the United States Administration. The one thing that people cannot say about the textile industry is that it lacks protection. It has very extensive protection indeed. Of course, through the MFA, we wish to make that protection effective in places where agreements have been negotiated. Those agreements should be honoured.

Mr. Thurnham

Does my hon. Friend agree that if other countries did not subsidise their electricity prices that would help British manufacturers?

Mr. Lamont

If my hon. Friend is able to provide evidence about the subsidisation of electricity prices in other countries, we will examine it very carefully. He will be aware that the cost of generating electricity in many countries is cheaper because of cheaper coal and a higher proportion of nuclear power.

Mr. McGuire

Is the Minister aware that this is a model industry, in Conservative terms, in that it has had high capital investment and very low wages? One of the common accusations that we hear is that the wages of the work force have been too high and that this has driven firms out of business. This was not and is not the case with the textile industry. Will he seriously examine its problems and consider how a Government who are concerned to preserve an industry can go about helping it in a real fashion?

Mr. Lamont

I agree with the hon. Gentleman that it is certainly a model industry in terms of industrial relations and that high wages have not been a cause of its problems. As I have said to the House already, we are looking at "Plan for Action" and we shall respond to it.

Mr. Ashdown

In the light of the comments made in the British Textile Confederation's paper, will the Government consider instituting a small textile firms investment scheme, similar to that which operates in the engineering sector?

Mr. Lamont

As the hon. Gentleman said, that is one of the proposals that have been put forward, and we are looking at it.

Mr. Williams

Is it not ludicrous for the Minister to say in one breath that the Government want to create the right framework for the industry and in the next to say that they have delayed, dallied and dithered for 12 months in response to a plea for urgent action from the industry? Contrary to the Minister's optimism, the fact is that the industry has levels of profitability that are so low that it cannot afford the new generation of machinery that is essential to its survival. The Minister is guilty of appalling complacency and irresponsibility.

Mr. Lamont

The right hon. Gentleman is totally wrong. In bringing about the right climate, we have achieved significantly improved results within the textile industry. I quoted Vantona, Dawson, Illingworth Morris and Courtaulds—all leading companies. The right hon. Gentleman merely needs to look at the runaway performance of the textile sector on the stock exchange to see that it is facing a very much brighter climate and is doing very much better as a direct result of the Government's policies on inflation and interest rates.