HC Deb 28 March 1984 vol 57 cc271-3
2. Mr. Pike

asked the Secretary of State for Trade and Industry what are the Government's plans and strategy for the British footwear industry.

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

The Government recognise the difficulties which the footwear industry has experienced in recent years and the need to invest in advanced technological equipment. Accordingly, this industry is included in the new measures of assistance which my right hon. Friend announced on 19 March.

Mr. Pike

I thank the Minister for that reply. As he recognises the importance of the industry for employment in areas such as Lancashire, will he assure the House that he also recognises that, compared with our partners in Europe, we have the lowest percentage of exports of footwear? Will he ensure that we have not only free, but fair, trade, and will he take steps to ensure that tariff barriers in the far east are on a reciprocol basis and far fairer to British industry than they are at present?

Mr. Lamont

We are always talking to other countries about their import restrictions on shoes. The hon. Gentleman will know, because he is interested in the industry, that roughly half our imports from low-cost sources are subject to import restrictions of one kind or another. As to his point about exports, he will have noticed the good news that exports of shoes generally increased by 7 per cent. last year, and by 11 per cent. to the EEC.

Mr. Michael Morris

Is my hon. Friend aware that the announcement of £20 million for the grant scheme, along with help for design, on top of the announcement by my right hon. Friend the Chancellor of the Exchequer that VAT is to be imposed on shoe imports, is the best news that the industry has had for 10 years?

Mr. Lamont

I am grateful to my hon. Friend for his comments. He will know that the fortunes of the shoe industry have been improving. From February to September of last year the industry created another 1,900 jobs, and the number of people working overtime increased last year from 5,800 to 9,600, so generally things are looking up for the industry.

Mr. Ashdown

Is the Minister aware that many in the footwear industry believe that the key sector for Government assistance should be not so much the purchase of new machinery as the funding of assistance for new ideas and innovation? Why is it that on the one hand the Minister has found £20 million to help purchase new machinery, while on the other innovation grants have been cut to from 33 to 25 per cent. and the scope on project size has also been reduced?

Mr. Lamont

The new scheme will apply specifically to advanced technological machinery, which is in itself helping innovation. The hon. Gentleman will know that we are giving aid to design, and design innovation is one of the most important things.

Mr. Marlow

As my hon. Friend doubtless wears British footwear, would he like to take this opportunity to extol its virtues so that the rest of our fellow countrymen might likewise be discriminating and buy the best value that is available?

Mr. Lamont

I am not sure that I ought to show off my shoes, as I think I have a hole in one of them, but I certainly wear British shoes.

Mr. Janner

Is the Minister aware that in areas such as Leicester, which rely greatly on the footwear industry, there has been a catastrophic drop in employment for so long that the Government's measures, while welcome are far too few and far too late? I seek an assurance from him that these are the beginning, and not the end, of the measures that the Government intend to take to assist.

Mr. Lamont

I think that the hon. and learned Gentleman should live in the present as well as in the past. Output in the footwear industry has increased, employment has increased, and exports are increasing. That is not a bad situation.

Mr. Bowen Wells

Can my hon. Friend reassure us that he is not lurching into export subsidy and protection in the measures that he has taken, and will he make certain that the industry becomes far more efficient and pays attention to that aspect of its work?

Mr. Lamont

I can give my hon. Friend that assurance. The help announced by my right hon. Friend is specifically for capital investment. It is not an operating subsidy.

Mr. Williams

Is the Minister aware that this scheme has been received with far less enthusiasm by the industry than it has by some of his hon. Friends because it falls far short of what was required, and because it excludes the major companies such as K Shoes, C and J Clark, Start-rite Shoes Ltd. and BSC, which employ over half the work force in the industry? Those companies are excluded, although, like the rest of the industry, they are facing the same cash flow problems, resulting from the 30 per cent. increase in leather prices, and are facing intense import competition, which will become even worse if later this year the United States introduces quotas and so leaves the Common Market as the only open market in the world.

Mr. Lamont

We have of course made our concern very clear to the United States on the matter that the right hon. Gentleman mentions. I do not think that the right hon. Gentleman, in discounting the improvement that is taking place in the footwear industry, should ignore the considerable advantages that exist for operating business in this country. As to competition, France has inflation rates that are nearly twice as high as those in the United Kingdom, while those in Italy are 2.5 times higher, and those in Belgium 50 per cent. higher than they are here. One has to look also at the levels of interest rates. They are much higher in many EEC countries than they are here, which enables us to compete with the EEC as well.