§ The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. John Redwood)
It is a sign of the importance that the House attaches to the textile industry and to the multi-fibre arrangement that we have had seven debates in 21 months on this industry. It has produced a pile of paper, and I have here the Hansard record of those seven debates in xerox form. Many good points have been made in those debates by Members of Parliament either representing their constituency interests or taking the wider view of the importance of a good textile industry to this country and the European Community.
Two of the debates have been on the multi-fibre arrangment. One, on 9 December 1988, was a full five-hour debate—as this one will be today—and, more recently on 9 November 1989, my hon. Friend the Member for Wyre Forest (Mr. Coombs) made some valuable points on an Adjournment motion. I set out at some length the Government's position on the negotiations in the European Community on the M FA. Unfortunately, no Opposition Members were present. I am delighted today to see a good attendance on both sides of the House for this important debate.
In the debate on 9 December 1988, the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) laid particular stress on the need to have a competitive exchange rate. He returned to that point repeatedly and made it the focus of his conclusion. I hope that he will therefore welcome today the fact that we are meeting against the background of a level of sterling that is 10 per cent. lower or thereabouts than we were talking about in that debate.
I hope that the hon. Gentleman will agree with me and with the Government's position, that the most vital need now is control of costs, especially wage costs, that the priority given to counter-inflation policy is most important and that the current exchange rate gives the industry every conceivable opportunity to compete successfully and well in the markets of the world, which is what I hope both sides of the House wish it to do.
§ Mr. Redwood
I did not say a word of criticism of the industry—indeed, I am going to praise it. I said that I hoped that both sides of the House would agree that the most important thing for British industry—the textile and other industries—is good control of all costs, especially wage costs because they happen to be an important part of costs. I am not saying that I want low wages; I am saying that I want high wages and high productivity, and that wage increases must be earned by increases in productivity.
§ Mrs. Alice Mahon (Halifax)
People in Halifax, for example, who face the second highest poll tax outside London, will have all these extra costs to meet. Is the hon. 1201 Gentleman saying that, if inflation continues to rise, it is up to these reasonably low-paid workers to make a sacrifice?
§ Mr. Redwood
I am saying that I am seeking political agreement about the priority of bringing down inflation, which is the best guarantee we all have that our living standards might rise rather than fall. I hope that the hon. Lady agrees that wage increases should be earned by improvements in productivity. One of the welcome features of the industry's performance to which I wanted to refer was the fact that, in the past 10 years, the industry has increased its productivity by an estimated 45 per cent. on industry figures. That welcome improvement increases the industry's chances of competing successfully in the world economy. The world economy does not stand still —productivity is rising among our competitors as well. We want higher wages paid for by higher productivity.
§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
; Leaving aside the important issue of wage rates, the Minister said, before that little series of exchanges, that he thought that the exchange rate level was a matter of some satisfaction. Irrespective of any given level at any given time, one of the most difficult features that the industry faces is the fluctuation in short-term exchange rates. Do the Government have plans—for example, in contemplating the exchange rate mechanism—to stabilise exchange rate levels?
§ Mr. Redwood
I said that I hoped that the present exchange rate gave some comfort and pleasure to the hon. Member for Newcastle upon Tyne, North, who urged a lower exchange rate during the previous debate. Of course the Government wish to see general economic stability. They are giving priority to their counter-inflation policy, which depends upon firm monetary control and all the disciplines which are well known. My right hon. Friends the Prime Minister and the Chancellor have clearly set out the conditions for prospective entry into the exchange rate mechanism. I have nothing to add to or subtract from their statements.
The industry employs some 480,000 people—about 2 per cent. of total employment—so it is important.
§ Mr. Redwood
If the hon. and learned Gentleman cares to contain himself a little, I shall come to the issue of job changes. The industry is also an important exporter, exporting some 3.6 billion of goods in 1988, and there have been further improvements in 1989, according to the figures that we have seen to date. I welcome that, and I welcome the recent statement of the director of the National Wool Textile Export Corporation, who said:We can start 1990 with something to celebrate"—I hope that we will hear about that in this debate—and will maintain our efforts to ensure export earnings continue to rise".I welcome that statement. I am sure that there are many in the industry who see the broadening export opportunities in a variety of markets and who will pursue them in their interests and those of the economy at large.
The industry is doing many important things. I welcome its approaches to improving and expanding training, the way in which it is welcoming and embracing new technology and its development of new products. 1202 These are all essential to successful manufacturing industry, as any of us who have worked in it know only too well. I welcome the progress being made. These things will be the cornerstone of continuing and improved industrial success in textiles, concentration on good management, design, innovation, new techniques and new technologies.
We have been living with the multi-fibre arrangements since 1974. I know that some hon. Members will think that only the MFA provides any protection against job losses; yet since 1974, employment in the industry has halved. There is no evidence, therefore, from the current figures that the MFA of itself has successfully protected employment. The industry went through a major reduction in employment in the 1970s because of difficulties largely created by Labour's economic policies.
§ Mr. Keith Vaz (Leicester, East)
The figures that have been supplied by the Department of Employment show that, over the past 10 years under this Government, one job has been lost every hour in the textile industry. Is the Minister saying that, if the multi-fibre arrangement were abolished, the decline in jobs would be arrested? Or will he accept the views of industry that the reasons why we have had one job loss every hour under this Government are the high level of interest rates and the Government's failure to support the industry exactly as other Governments in other countries have supported their textile industries?
§ Mr. Redwood
This Government have given a great deal of support to the industry in the past five years. It has been support such as the Opposition most value, which is regional support and aid. The Government have given over £300 million. However, the factors that I have already described this morning are far more important for the preservation and growth of employment opportunities. The important factors are competitiveness, product design, innovation and exporting.
§ Mr. David Tredinnick (Bosworth)
Does my hon. Friend accept that the multi-fibre arrangement has made it easier for companies to go through a transition to recapitalise? Although they have suffered losses, those losses would have been far greater had the arrangement not been in place. That is the case for continuing with this measure, which is giving the industry a real chance to break into the future.
§ Mr. Redwood
I should be interested to see evidence to prove that case. There has been a major reduction in jobs since 1974, and the House should remember that under the patterns of trade in textiles, two thirds of all imports of textiles come not from MFA countries, but from developed countries and especially from other member states of the European Community. This Government have represented the industry strongly against unfair trading practices, against dumping and against other practices that the industry has brought to our notice. I can reassure my hon. Friend that the Government will continue to do so within the EC and general agreement on tariffs and trade rules, as he would expect me to say, and as he would expect the Government to do.
The MFA has resulted in bilateral restraint agreements with 23 low-cost countries, where quotas have been imposed. I remind the House that it is the European Community which is the participant in the multi-fibre arrangement, and it is the European Community and the Commission which handle the GATT negotiations, so the 1203 whole of our debate today must be about the actions of negotiators who are working on behalf of all 12 member countries in the MFA and GATT.
§ Mr. Redwood
My hon. Friend asks me to get stuck in. Stuck in to what? The point of this debate is for the House to have a chance to express its views and I am sure that my hon. Friend will not be backward in coming forward to express his views and those of his constituents to the Commission, which will be handling for this country these important negotiations in GATT. I welcome the opportunity that this debate affords for all my hon. Friends and Opposition Members to make their points strongly and forcefully on behalf of the industry, and I hope that some hon. Members will also remember the consumer, so that this debate can be seen in the Commission before it handles the negotiations.
§ Mr. George Foulkes (Carrick, Cumnock and Doon Valley)
We are here to make the points very forcefully. There is much concern in the industry about the Minister's rather languid approach which we have seen here today, and anxiety that sufficiently forceful representations will not be made within the European Community and then within the GATT negotiations. Will the Minister tell us specifically what action he has taken in response to the South Koreans giving £2.5 billion—$4 billion—to their textile industry? If we are to compete on an even playing field, such matters must be taken up vigorously, not in the languid way in which the Minister is presenting the case today.
§ Mr. Redwood
There is nothing languid about my dislike of restrictive practices in foreign countries if they are messing up our domestic industries. I can assure the hon. Gentleman that I shall fight like a tiger for British industry if I think that it is being damaged by malpractices elsewhere. We are investigating that point at present in relation to the Korean subsidy, because it would be damaging if state aids of the wrong kind were being given in Korea to compete against industries in the European Community, which has a self-denying ordinance.
As the hon. Gentleman will know, we are not allowed under EC rules to undertake any state subsidy or programme of subsidy for individual industrial sectors. That is right, and it is also right that we need to ensure that similar rules apply throughout the world trading system. An important part of the GATT round is to make just such points. This country will urge EC negotiators to ensure that market opening is done on a multilateral basis and that it takes into account not just quotas or tariffs, but state aid and other methods of market higgling which are being practised in some countries.
§ Mr. Frank Haynes (Ashfield)
The Minister knows as well as I do that a number of countries have applied to join the European Community and that some of those countries are dumping here like hell. Why do the Government not get round the ports and do something about it? The Minister has responsibility for British industry, and that is why we are clobbering him today. He must do something about it.
§ Mr. Redwood
I did not quite hear those remarks because they were not at the hon. Gentleman's characteristic volume, but I noticed that he was referring to Turkey. He is right to believe that the Commission negotiations are considering whether the Turks are making sufficient progress in opening their own market in return for the offerings being made by the European Commission. I can assure the House that Ministers are vitally concerned that there should be fair, reciprocal measures of market opening in those countries to which privileges are being extended by the European Community. We are interested in broadening trade across the world, and there must be give and take in the negotiations.
The history of the GATT negotiations in the Uruguay round and the run-up to that will be familiar to many hon. Members who were in the House for the previous debate. I want to remind hon. Members of what was said at the ministerial meeting at Punta del Este, which has become the famous text in all this, and which was read out to the House from the Dispatch Box by my predecessor, the then Minister of Trade in 1988. He said that it had been agreed to formulate "modalities" and would permit eventual integration of the textile sectorinto GATT on the basis of strengthened GATT rules and disciplines."—[Official Report, 9 December 1988; Vol. 143, c. 588.]My hon. Friend the Member for Plymouth, Sutton (Mr. Clark) had a little difficulty in getting his tongue round that phrase and I think that the House had a little difficulty in interpreting it on first listening or on first reading. The idea is that the GATT round is concerned with trying to bring the textile industry, along with other industries, within the GATT rules and procedures. That is a balanced process. It means not only market opening measures, but strengthened disciplines against those who do not play by the rules.
The Government believe that we need a stronger GATT. The successive GATT rounds have kept open much of the world's trading system and have enabled the world to avoid plunging into protection such as destroyed jobs, incomes, hope and prosperity in the 1920s and 1930s. It is important that GATT rounds succeed and continue to open the world trading system rather than shutting it down or damaging it.
In the GATT round, the European Commission is seeking first a reduction in barriers to European Community exports. That is an important task and I am sure that the textile industry above all would agree with me in saying that there are still many barriers to exports around the world that our textile producers would like to see reduced. This Government are encouraging the European Community to do just that in the negotiations.
Secondly, the European Community seeks effective defences against the damaging imports to which several hon. Members have already referred and which, I suspect, will be mentioned at great length in the subsequent debate. The Government welcome any evidence that can be brought to their attention of malpractices in the world trading system, which can then be routed on to the appropriate authorities.
Thirdly, the general aim of the European Community, along with the other GATT participants, is to expand GATT negotiations to cover new areas. This GATT round is especially ambitious, because it is trying to bring into 1205 play both agriculture and services, and there are many potential gains for British trade if we can achieve the right balance of results in these difficult GATT negotiations.
The lesser developed countries, which obviously need to agree to the whole GATT package—just as the European Community needs to agree to it—are majoring on the importance to them of the multi-fibre arrangement. We, in our turn, are saying that other safeguards and provisions need to be written into the resulting negotiations to make a success of the GATT round as a whole.
The European Community has set out a number of objectives on textiles. It is seeking a more efficient safeguard mechanism, better disciplines on unfair trade, the sensible protection of intellectual property, equitable access to raw materials and much more market opening by all countries, including the lesser developed countries. If those countries wish us to remove our protection, it is only fair that we should expect them to reciprocate and allow access to their markets.
We must also address the question of transition and the wider issues arising from the round as a whole, which the European Commission will have to judge nearer to the termination of the negotiations to establish whether the package makes sense to the European Community's trade patterns as a whole.
The specific points on which I would welcome comment, and which are relevant to the negotiations are, first, the way in which any phasing out of the multi-fibre arrangement would be conducted. Would it be on the basis of the existing restrictions? The European position is yes; the American position is no.
Secondly, what arrangements would be necessary for any possible phase-out of the multi-fibre arrangement? We must take account of the relative sensitivity of individual sectors and the impact on employment, as well as the effect on customers and on the general economic good.
Thirdly, how long should any transitional period be? That is a subject on which we still have a chance to influence the European Community's position. Fourthly, what kind of link should there be to stronger GATT disciplines as a whole, and how should those disciplines be developed? Fifthly, how far should the European Community go in demanding market opening by others?
The Government commissioned the Silberston report to give an independent view of the impact of changes in the textile sector. I am sure that hon. Members will have read that report and it would therefore be wrong to go into detail concerning its conclusions, but I can tell the House that we are now looking at consultation replies. Some of the conclusions of the report are important. It suggests, for example, that prices of textile products would fall by about 5 per cent. and that, although the fall in yarn prices might be a little lower, that would benefit some textile producers, as yarn buyers. The total gain to consumers is estimated in 1988 prices as about £980 million, and the figure would be more than £1 billion now. That would have a particularly beneficial impact on low-income consumers who spend proportionately more of their income on textile products.
§ Dr. Keith Hampson (Leeds, North-West)
Does not my hon. Friend agree that the central thrust of that report is that the MFA, with all its faults, is better than no MFA with no international agreement on safeguards? I have to tell my hon. Friend that in many of our constituencies it would not be politically acceptable if it were thought that the Government were ready to sacrifice a major regional 1206 industry and the sort of people employed in it for the hypothetical calculation and theoretical conjecture of the Silberston speculation on price wars.
§ Mr. Redwood
I hoped that I had already assured my hon. Friend that the European Community negotiating objectives include safeguards and protections against unfair trading practices of exactly the kind to which he refers. That must be an important part of the negotiations. Silberston concludes that there would be a net gain to the economy from a phased withdrawal of the MFA.
§ Mrs. Elizabeth Peacock (Batley and Spen)
We have all read the report carefully. The House and the country must be aware that, although there would be a net gain to consumers, it is no help to a household to have a reduction in its outgoings if the head of the household has lost his job.
§ Mr. Redwood
I agree that, in the long term, job losses in the textile industry have been a terrible thing, and I would not wish matters to get worse, but I have already explained that job opportunities depend on competitiveness in the widest sense. It is important to job prospects in the textile industry that we should get decent access to a wide variety of overseas markets for the high-quality products that we now produce. That can be achieved through market opening measures in GATT. There is therefore an offsetting gain if the right kind of negotiation in GATT results in the right kind of deal. Other gains would also accrue, given the increased purchasing power in the economy from the £1 billion reduction that Silberston says would be available.
§ Mr. Max Madden (Bradford, West)
Professor Silberston suggests that there should be a trade-off for these consumer benefits and gives a figure of 33,000 textile jobs. Does the Minister accept that that is a realistic, estimate, because many of us believe that Professor Silberston's estimates of the consumer benefits are much exaggerated while his estimates of job losses are extremely optimistic?
§ Mr. Redwood
Professor Silberston gives a range of figures from 16,000 to 33,000 and makes no calculation of offsetting job gains from the considerations that I have mentioned. We are talking about forecasts in a very uncertain world, and in practice the outcome would be influenced by a wide variety of other factors connected with the industry's competitiveness, growth rates in the world and so on, which would make the resolution of that question extremely difficult.
A variety of consumer groups have written in or made public statements to the effect that they favour the abolition of the MFA. The Consumers Association seeks "a decent burial" for it. The Consumers in the European Community Group thinks that we are paying too high a price for protection, and the Retail Consortium is in favour of liberalised procurement to give more choice to customers. Manufacturers naturally have opposite concerns, and I am conscious of the need to press on, because I know that my hon. Friends will want to put the manufacturers' case to me in representing their constituencies.
I must refer to the European Community textiles and clothing agreement with Russia, which has been tagged to the debate. It is not part of the MFA but is a response by the European Community to the dramatic changes that 1207 are taking place in Russia and eastern Europe. It is part of the policy of the British Government and the European Economic Community to encourage moves to democracy and liberalisation in eastern Europe and Russia by making some changes in the restrictive trade arrangements that currently apply.
The European Community has negotiated a measure allowing market opening on both sides, although still limited by restraints. That provides a number of export opportunities, which I hope the British textile industry will not only welcome but will wish to exploit. Similar considerations may soon apply in the case of Poland and Hungary, and I am open to hearing views on that question during the debate.
The House may remember that, at the end of the last long debate on the MFA in 1988, the then Minister for Trade, who is now the Minister of State for Defence Procurement, said clearly that he would not be the Minister to announce the ending of the MFA without the necessary protection and safeguards. That is certainly true, because my hon. Friend is no longer Minister for Trade, the post is now held by my right hon. and noble Friend Lord Trefgarne. The Government's position remains the same. Transitional arrangements must be clear and negotiated satisfactorily, and to discuss that question is the purpose of our debate.
§ 10.8 am
§ Mr. Doug Henderson (Newcastle upon Tyne, North)
I echo the Minister's words. The number of hon. Members present this morning gives us a good idea of the importance of the multi-fibre arrangement to hon. Members on both sides of the House who represent constituencies throughout the country. The Opposition welcome the debate because it gives us the opportunity to put the strong views of our constituents on many aspects of the issue. It gives us the opportunity to monitor and, it is to be hoped, to influence the Government's involvement in the EEC and GATT talks on the multi-fibre arrangement and related items.
The debate also gives hon. Members the opportunity to examine the Government's record in defending and promoting the interests of a great industry that has been central to the industrial development of many regions in this country for more than two centuries. I become angry when I hear from some sections of the business community, and often from those sections that seek to provide finance rather than make things, that textiles and clothing is an obsolete and dying industry. Those of us here today who represent textile areas will be aware that the textile industry is neither obsolete nor dying and that, given the right climate and the right support, it could be very competitive.
§ Mr. David Young (Bolton, South-East)
Does my hon. Friend agree that the success of the textile industry depends also on the Government wanting to represent the industry's interests in the councils in Europe and on their playing their part in reducing interest rates to help the industry to modernise and become more efficient when it encounters foreign competitors who often receive more support from their Governments?
§ Mr. Henderson
I am grateful to my hon. Friend for raising those points and I wholeheartedly agree with the general direction of his comments.
The workers and managers in the textile and clothing industry are aware that in many areas they have adopted the most modern and efficient equipment available. Those methods were adopted with the understanding of the work force and through consultations and negotiations. That is a great credit to the work force. It has happened at a time when many thousands of jobs have been displaced.
The industry is the fifth largest industrial sector in the country. It has an annual output, together with footwear, of more than £5.6 billion per annum. Annual investment in 1988 was £479 million. The industry still employs, as the Minister said, more than 480,000 people, often in regions with high unemployment—areas such as Scotland, the north-west, parts of Yorkshire and, increasingly, the east midlands where there are many problems.
Job losses in the industry have now reached an unacceptable level. In textiles and clothing, 22,000 jobs were lost in the 12 months to September 1989. When I visited the Scottish Borders yesterday, I was told that even at the high value end of the market, there are many difficulties, jobs have been lost and there is much short-time working.
There has been a steady stream of job losses in Yorkshire and Lancashire in companies such as Courtaulds, Coats Viyella, Smith and Nephew and Hunsworth Dyeing. In the east midlands, the knitwear industry is heavily dependent on the outcome of the negotiations on the multi-fibre arrangement. That area has perhaps suffered more from job losses in the past 12 months than any other area in the United Kingdom. More than 5,000 jobs were lost between June 1988 and June 1989. Since then, the hosiery workers union in that area has noted further job losses in famous and important companies such as T. W. Kemptons.
§ Mr. Vaz
My hon. Friend will know from his recent successful visit to Leicester, where he met leaders of the hosiery and knitwear workers, of the grave concern in Leicestershire about the decline in employment in the industry. Does he agree that one of the most effective ways in which the Government can help the industry is to give Leicester assisted area status? Does he join me in rejecting the arguments put forward by the Minister for Industry in a Leicestershire debate a few weeks ago, when he said that he was not prepared to alter the maps of assisted area status and that he did not believe that the level of unemployment in Leicestershire justified that status?
§ Mr. Henderson
The Opposition Front-Bench team is reviewing what happens to an area that has a heavy concentration of a particular industry, but is not currently within an assisted area. That issue will be reviewed as part of an overall review of regional policy.
§ Mr. Janner
Is my hon. Friend aware that this week the Government announced that they will introduce a research programme centred in Leicester for £7.3 million, stretching over three to five years? Does he agree that while that is welcome, it is extremely late, and by the time the research produces results there will scarcely be an industry left to take advantage of them? How can that fit in with the plans that my hon. Friend is discussing with his Front-Bench colleagues?
§ Mr. Henderson
When I visited Leicester some months ago, that point was made to me by workers and managers in the industry, and that matter is under review by the Opposition Front Bench. We welcome the announcement made by the Government earlier in the week, but it comes very late and is too little.
The trade deficit in textiles, to which reference has been made, is a key issue. That deficit has become increasingly alarming. It amounted to nearly £4 billion in the 11 months to November 1989 and it constitutes one fifth of our deficit in manufactured goods. Our ability to control our deficit in textiles is a major part of the overall problem of controlling the deficit in manufactured products. The deficit should not only be a concern of those who work in the textile industry or who live in areas that are heavily dependent on textiles. We should all be concerned about the deficit and it should certainly be the concern of the Minister and the Secretary of State for Trade and Industry.
Our overall economic situation has greatly damaged the industry. The Apparel, Knitting and Textile Alliance which represents a broad range of interests in the industry, has stated:High interest rates are leading to a cutback in capital investment. The industries have, at the same time, been adversely affected by currency instability, not least the after-effects of the excessively high level of sterling up to mid-1989.When I visited Bradford earlier this year, the Yorkshire Wool and Textile Association complained about the same dangers. Courtaulds has also made representations about the damage that is being done to the industry in Lancashire and we have already heard about the representations that have been made by east midlands industrialists.
The overvalued pound from 1987 to the autumn of 1989, as I stressed in last year's debate on this subject, made the task of exporters particularly difficult. Many argued then, and many argue even more strongly now, that the problem is not just related to an overvaluation of the pound, and I note the Minister's earlier comments on that. If we consider the problem over 10 years, it is not simply one of overvaluation. The problem involves the rapidly fluctuating exchange rate, which makes forward pricing of exports very difficult and makes the cost of purchasing materials from abroad difficult to assess. Continuing high interest rates cause industrialists to postpone investment decisions because of the cost of borrowing and the impact on high street demand.
The Minister said that the main issue affecting the industry was costs. One of the most important cost factors for any industrialist in the textile and clothing industry is interest rates. Today, German textile manufacturers can borrow for 8 per cent. The Americans can borrow for 8 per cent., the French for 10 per cent., and the Italians for 12 per cent., but a textile manufacturer in the United Kingdom will not be able to borrow for less than 15 per cent. and that makes a huge difference to his cost profile.
§ Mr. Redwood
Does the hon. Gentleman agree that it is much better for the industry to have the economic background that we now enjoy, rather than the one that we experienced in the mid-1970s, when the Labour party tried a policy of runaway inflation and almost bankrupted the whole of British industry?
§ Mr. Henderson
I am surprised that the Minister raised that point. We have not only high interest rates but the highest inflation rate in Europe. That is the background that our manufacturers must face.
The multi-fibre arrangement was set up in 1974 to regulate trade expansion in textiles and clothing products between supplier countries in the developing world a nd consumer countries in the industrialised world. It was set up to combat anarchic trading patterns and a growth in protectionism. It was set up also to allow access to industrialised markets from the poorest developing countries such as Lesotho and Macau. We must never forget the importance of that. Those countries have argued that, without a multi-fibre arrangement, they would be excluded from markets by competition from other more industrialised developing countries such as Hong Kong and South Korea.
An interesting article in the Financial Times of 4 October 1989 states that within the past three years more than 20 companies, mostly textile operations, have moved to Lesotho, primarily to exploit the country's preferential access to international markets'"We came here to trade internationally," said Mr. Steven Kluck, director of Morija Textiles, which is producing 3,000 articles of clothing a day, mostly for export to France, Italy and Britain. He said, "We looked at Mauritius and Swaziland, but we decided that Lesotho was more focused on a wide range of markets."'I am not making a particular point about Lesotho. But many other countries, regardless of the political situation there, need access if they are to have any economic development. Clearly, they cannot do that unless they have assistance through the multi-fibre arrangement.
The arrangement was set up also to enable industrial countries to restructure in the face of stiff competition from newly industrialised countries. That is an extremely important issue for the United Kingdom. Other Common Market countries have made much more of the opportunity to restructure than we have. Between 1973, the year before the multi-fibre arangement was introduced, and 1987, Italy increased its trade balance in textiles from £255 million per year to £1,576 million per year, which is a six times increase in historic cash terms. The clothing figures show an increase in the Italian balance from £453 million to £4,383 million. Germany increased its trade balance in textiles, calculated on the same basis, from £119 million to £977 million. That is a nine times increase. Belgium-Luxembourg increased its trade balance in textiles from £274 million to £1,230 million, although a substantial proportion was in carpets, which is outside the multi-fibre arrangement.
The main point is that Britain fared the worst of all EEC countries. Our trade balance in 1973 was £75 million in surplus in textiles, but, by 1987, even with the protection that was granted by the multi-fibre arrangement, we had a deficit of £1,614 million. That does not prove that the multi-fibre arrangement does not work. It proves that other things are necessary to enforce it. In clothing, the deficit in 1973 was £154 million. By 1987, the deficit had reached £1,351 million.
Some sectors of the industry have responded to the changing world situation, but others have failed to respond, despite the multi-fibre arrangement. In many instances, the economic situation has not allowed them to make the necessary response, but all of them haw welcomed the presence of the multi-fibre arrangement. 1211 Many companies believe that, even with the arrangement, there were too many loopholes and that quotas were too slack.
In 1984, Professor Silberston argued that the multi-fibre arrangement was damaging to Britain's overall trading interest. He said also that welfare in the country could be increased if the multi-fibre arrangement were abandoned. The textile and clothing industry was relieved when the professor's advice was set aside by the then Secretary of State. Since then, Professor Silberston has further reported on the multi-fibre arrangement.
Some people say that all professors are mad. Others say that only some professors are mad, and others say that only professors who are employed by the Government are mad. Professor Silberston has shown that, whatever the mental state of his profession, on occasions, even professors employed by the Department of Trade and Industry are prepared to take another look at the situation, consider more evidence, and make a conversion in their views. There are conflicting views within the industry on the extent to which Professor Silberston has converted his views. The Apparel, Knitting and Textile Alliance has acknowledged the professor's conversion and described his latest report asa balanced attempt to assess the impact of international trading policies in the UK economy.Others have been more critical. The Scottish Knitwear Council described his work asa most unsatisfactory piece of work.The professor was right to acknowledge that there is an important link between any changes in or abolition of the multi-fibre arrangement and the GATT talks that are currently taking place. However, I do not think that his evidence, or that of others which has been put forward to coincide with his evidence, has made out any case to end the multi-fibre arrangement. The professor was right that a strengthened GATT framework was crucial in the event of any multi-fibre arrangement, but no case was made out to abandon the existing situation.
If we had no regulation of trade in textiles and clothing, the inevitable consequence would be beggar-thy-neighbour policies of protectionism, trade disputes, trade disruption and, of course, disastrous consequences for the weakest supplying countries. The previous Minister, the hon. Member for Plymouth, Sutton (Mr. Clark) said:If it is of any consolation or comfort to the House, I can state that if the multi-fibre arrangement is to be discarded and if such an action is not accompanied by a satisfactory liberalisation and by a genuine strengthening of GATT rules and by proper discipline, I will not be the Minister who comes to the Dispatch Box and announces it."—[Official Report, 9 December 1988; vol. 143, c. 620.]Clearly the hon. Gentleman is not here today. I hope that his absence is a sign that he has gone on to other things —perhaps even better things. It is not a reflection that there is no comfort for the industry.
The present Minister has historically shown his hostility to intervention in trade matters. He will correct me if I am wrong. I expected him to have difficulty in defending the Government's position and in arguing for a strong renewal of the multi-fibre arrangement. However, it seems that he has no great difficulty. Again, he will correct me if I am wrong, but I did not detect in his speech any great desire to continue to have a stronger multi-fibre arrangement. Hon. Members will want to explore exactly what the 1212 Government's position is in this business. An important starting point must be the dismal performance of our industry in competing for business overseas and in countering the flood of imports.
How can the relative failure of our industry be redressed? Is the Minister prepared to acknowledge that he carries a greater responsibility than his counterparts in Europe because of the particular and serious difficulties of our industry? Does the Minister recognise that it is our industry that has failed to restructure; that it is our industry that needs additional support and protection and is demanding that the Government bat firmly for the United Kingdom on the multi-fibre arrangement talks? It is our industry that will suffer if the quotas are too large. That's why it is demanding that in future years they should be based on increases in actual usage, not on increases in total quotas. Over the coming period the difference may be academic because, as hon. Members know, many of the quotas this year have been fully utilised?
Does the Minister also recognise that it is our industry that is worried about the abolition of internal quotas in the EC? The fact that our high street market place is dominated by five large retailers makes us far more vulnerable to be flooded with imports that were previously spread throughout the European Community. What is the Government's view on that? Will the Minister argue for the retention of internal quotas or will he seek a transitional agreement?
The industry has acknowledged the desire of many Governments eventually to integrate textile and clothing trade regulations into GATT. I understand that observation. If the Government support the same view, will the Minister confirm that he recognises the importance of the link between negotiations on GATT, which are satisfactory to the industry, and any major change in the multi-fibre arrangement? In the past the industry has argued that modifications to the multi-fibre arrangement are necessary, but does the Minister recognise that the MFA could eventually be replaced by GATT only if the many outstanding matters which have previously been discussed as part of the review of the MFA and which are currently being discussed in GATT are resolved to the satisfaction of the House and Europe?
Will the Minister give a firm commitment today that he will argue strongly in the medium term for a renewal of the multi-fibre arrangement unless there is a complete change in the current regulations on safeguard clauses under article 19 of GATT? Does the Minister recognise that action against dumping needs to be taken, and will he comment on how he proposes to outlaw that practice? Will he put any proposals to the EC for negotiations on the multi-fibre arrangement or GATT?
The industry has expressed other concerns that must be raised at GATT. Will the Minister take up the matter of access to the developed markets of Australia and the United States and the question of possible access into South Korea, which has already been referred to this morning? What is the Minister's sticking point on that issue? What action does he propose to deal with non-tariff barriers that he knows affect trade in several countries, including Brazil? What action does he propose to outlaw the counterfeiting of designs and trademarks? He has said that he wants to outlaw that practice, but what action will he propose at GAIT on that matter?
Other issues also have a serious impact on the industry. There is, for example, the question of assistance to eastern 1213 Europe and to Poland and Hungary. The Minister is aware that the Polish Government have asked for a 44 per cent. increase in their quota and that the Hungarian Government have asked for a 16 per cent. increase in theirs. I am sure that all hon. Members want to support a programme of aid to develop the economies of those and other countries in that geographical area—
§ Mr. Henderson
Yes, I am coming to that. However, the industry has put a valid point to me in the representations that it has made since those issues were first raised in October and November 1989. Why should the industry bear the economic cost of our political views? Is the Minister prepared to make compensatory arrangements to ensure that the industry does not carry the whole burden and that it does not lose out, so that the people who work in the industry in, for example, the east midlands, do not lose their employment? Is the Minister prepared to make firm proposals to balance his other statements on assistance for Hungary and Poland?
Many other issues could be raised in the debate, but I am concious that many other hon. Members wish to speak. I hope that hon. Members will raise the issue of the social clause. I am sure that that will be raised by Opposition Members. I hope that hon. Members will also mention the footwear industry, which is a closely linked industry that has had its own difficulties, many of which have followed from the Government's failure to reach an arrangement with other EC countries on this matter. Many questions have been and will be raised with the Minister in the debate, but a major question is undoubtedly whether the Government intend to support the renegotiation of the multi-fibre arrangement. Perhaps more important, and in many respects the key question, is whether the Government recognise that tightening the quotas and toughening the multi-fibre arrangement will not only help the industry in this country now, but will allow any preliminary talks on eventually bringing the textile and clothing trade into the GATT regulations to be conducted not from a position of weakness, but from a position of strength.
People in the industry, workers and managers alike, will be watching the debate closely to judge whether the Government are prepared to fight for the industry. They will look for a firm commitment from the Government to negotiate a new and tougher multi-fibre arrangement. They will be looking for a commitment to enter into negotiations on measures to stop low-cost products being dumped on our market. They will be looking for a commitment to support a social clause, which is essential if a level playing field is to be achieved. They will be looking for a commitment to draw up proposals to help the footwear industry, but perhaps above all, they will be looking for a comitment to show that the Department of Trade and Industry actually cares about industry and will make representations to the Chancellor, urging him to take measures to stabilise our currency and to reduce the crippling interest rates.
The debate will show that the textile and clothing industry has many difficulties, but it will also show that potentially it has a great future. It will also show that it needs strong Government action to protect its interests 1214 here, in the European Community and at GATT. I shall not be satisfied with glib answers from the Minister, and neither will the House.
§ Mr. Deputy Speaker (Sir Paul Dean)
I remind the House that Mr. Speaker announced at the beginning of the debate that there will be a 10-minute limit on speeches from 11—30 am. Under the Standing Orders it is not possible to impose the limit until that time, but in view of the many hon. Members who wish to speak, I hope that hon. Members will feel that it would be appropriate if they were to impose a 10-minute limit on themselves from now on.
§ Sir John Farr (Harborough)
I am most grateful to you, Mr. Deputy Speaker, for calling me so early in the debate. As I have not spoken in the House for a year, I reckon that it might be my turn. I shall certainly not abuse my privilege this morning because I can say what I want and have to say within 10 minutes.
I am scared stiff about what the Government may do about the multi-fibre arrangement. Some of us—in both parties—have lived with the textile industries for many years and some of us are dependent on the textile and footwear industries for thousands of votes in our constituencies. It does not matter whether those people vote for us because we are talking about their livelihoods. We know that without successive MFAs—as we call them —over the past 10 or 20 years, no textile, knitwear or hosiery industries would exist in Britain today. They would have been priced out of existence years ago by dirt cheap competition from the far east and from low-cost countries. They exist now only because successive Governments took some action. However, the Conservative Government's attitude worries me more than the Labour Government's attitude used to worry me, because the Conservative Government's attitude appears to be that we can sacrifice the multi-fibre arrangement without some sort of firm undertaking from GATT.
I listened carefully to what my hon. Friend the Minister said. He was probably not in the House on 12 December last year when my hon. Friend the Member for Grantham (Mr. Hogg) spoke in an important debate on the Leicestershire knitwear industry and said:It would be wrong for me to try to persuade the House that the MFA will be extended permanently, for that is not the case.I repeat that my hon. Friend the Member for Grantham said this. He continued:The plain truth is that this aspect of trade must be brought within GATT, but, to the extent that it is necessary, GATT rules must be strengthened to provide more safeguards in the respects that I have identified, and also to allow a proper period of transition."—[Official Report, 12 December 1989; Vol. 163, c. 984.]That is all very well, but I do not think that it falls on the shoulders of my hon. Friend the Member for Grantham to make such fundamental statements. It has never been said before by a Conservative Member. As so many thousands of jobs all over the country, not just in the east midlands, depend on the MFA,I hope not to be a member of a Conservative Government who bring about its dismantling.
It is clear from the speeches that have been made so far this morning that the British textile, hosiery and knitwear industry has modernised extensively. It is as modern as any industry in the country and there is no way in which 1215 low-cost imports can be met by further modernisation. It is no use my hon. Friends the Members for Grantham and for Wokingham (Mr. Redwood) saying that they do not see any prospect of the MFA being renewed, but that the GATT rules may be strengthened. I do not think that the House is prepared to leave it to them to make such a decision. Nor is the House prepared to leave it to anyone else. There must be a firm undertaking that, if the MFA is to be ditched, we will not wriggle out of it. It must be done by the firm decision of the House, and any replacement of MFA rules by a restructuring of GATT must be at least as strong as what we have now. We owe that to our constituents.
I had to come here today because I have been worried by what has happened to a similar industry upon which I am lucky enough to depend for a few votes, I think. The same thing is happening with footwear. I have tabled a succession of questions for written answer during the past few days about cheap footwear imports from Korea, Taiwan and Poland and a thing called the VRA—the variable restraint agreement—from which Poland now benefits. We are full of admiration for what is happening behind the iron curtain and the earthshaking events there, but some of us were deeply disappointed when the Minister for Trade in another place, to whom I have spoken on the telephone and who has been most courteous, said that he did not think that many British jobs in the footwear industry would be put at stake by our adopting a much more relaxed attitude towards imports from Korea, Taiwan and Poland. I cannot say it to him here because he is not an hon. Member of this House, but perhaps the message will get through—there are Members of Parliament with tens of thousands of constituents who depend on the textile, knitwear, hosiery and footwear industries.
We demand protection for our constituents. We admire what is happening in Poland, but it is no use the Minister for Trade saying, as he told me on the telephone, that he is not giving instructions to our delegation in Brussels to adopt a vigorous attitude in defence of our footwear industry. If he allows our industry to be eroded, the effect on our constituents will be substantial. It would create a weak and disgraceful pattern of failure by the Government with which I would not wish to be associated.
I have come to the House today because I am scared stiff about the Government's intentions. I have read the report of the debate on 12 December initiated by my hon. Friend the Member for Rutland and Melton (Mr. Latham) on job losses in Leicestershire. It was a most important debate. Since 1987, 11,000 jobs—I think that the Minister is aware of these figures, but he keeps writing them down —in knitwear and hosiery have been lost. Since 1978, more than 42,000 such jobs have gone. There must be a limit.
§ Mr. Janner
Perhaps I may be permitted to say how happy I am that the hon. Gentleman is back in the House in robust health and voice, expressing a view which I am sure he understands is accepted on both sides of the House by his colleagues from the county of Leicestershire. Does he see any hope of improvement if the Government do not renew the MFA? If he intends to lead further delegations —he has done so successfully in the past—he will be joined by Opposition Members.
§ Sir John Farr
Once again, I express my gratitude to the hon. and learned Member for Leicestershire, West (Mr. Janner), with whom I have been lucky enough to get on very well when dealing with issues that affect Leicestershire, whether they be health, education, industry or anything else. I am glad to say that we have had no difficulty co-operating in the best interests of our constituents. I am most grateful for his support.
I said that I would be brief. We have to keep the MFA. I would like my hon. Friend the Minister to refer to what my hon. Friend the Member for Grantham said in the House on 12 December—that scope for Government funding exists. The hon. and learned Member for Leicester, West mentioned that statement earlier. Funds are available, and I would like more details. My hon. Friend the Member for Grantham said that he was disappointed with local firms' response to the opportunity to gain access to that money. If the money is there, we need it. We need help. It is no use my hon. Friend making such statements without at least, one would have thought, putting out a press release the next day saying "These are the schemes. Why do you not enter for them?" The hon. and learned Member for Leicester, West and I, and our colleagues from the county and city of Leicester, realise that our companies will seize such opportunities if they exist.
I have come up to the House because I am scared stiff. No Government whom I support will ever abandon the MFA.
§ Mr. Deputy Speaker
I am most grateful to the hon. Member for imposing a nine-minute limit on himself.
§ Mr. James Lamond (Oldham, Central and Royton)
It is a great pleasure for me to see the hon. Member for Harborough (Sir J. Farr) in his place. It is a credit to him that he came here today to speak in this important debate on behalf of his constituents. It is a special pleasure to follow him, because I happen to agree with much of what he said. I take the same line as he does: the bottom line in all of this is the need to retain secure jobs for our constituents. I shall not say whether they are well-paid —they are reasonably well-paid jobs—but they must be secure.
The Silberston report is necessarily rather academic. We expect that as it was prepared by Professor Silberston, assisted by Michele Ledic, who is also an academic. I do not believe that it is possible to put to one side the calculation, which Professor Silberston made, that a possible 5 per cent. reduction in the cost of textiles must be set against a loss of 33,000 jobs.
A cost reduction of 5 per cent. spread throughout the country would not make much impact on family budgets. For a start, each year, the inflation rate is more than 5 per cent. so that 5 per cent. would be swallowed up quickly. Even if we accept the 33,000 calculation made by Professor Silberston—it is not the calculation made by the trade union movement—the job losses would fall heavily on certain areas, including my constituency.
The Minister, if I may be a little critical, is rather academic in respect of this issue, and I hope that he will remember that we are dealing with human beings. People's jobs will disappear just to achieve, as the Minister sees it, a 5 per cent. gain in someone's budget far away. We should not proceed in that manner.
1217 I shall keep within the 10-minute limit, so I shall concentrate on a couple of points. I must emphasise that the report was compiled before the recent momentous events in eastern Europe. Page 6 of the report refers to outward processing and to the link between West Germany and the German Democratic Republic with regard to processing. Processing clothing is sent to the GDR and then comes back to West Germany without quota restraint. Circumstances have changed dramatically, however, since the report's publication. Although we are keen to help the development of the east European countries I underscore what my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) has already said, we do not want such help to be given at the expense of one particular region of our country or one particular industry.
When the Minister is considering the Silberston report proposals he should bear in mind the recent changes in eastern Europe and their impact on clothing coming into the European Community from those countries.
China is mentioned on page 119 of the report. Although I do not agree with the report's conclusions, it is valuable because it has drawn together a great deal of information about the textile and clothing industries. It mentions that China's potential for exporting textiles and clothing gives rise to the greatest fear in this country. Since 1970, the growth in China's textile industry and its exports has been tremendous.
We are not talking about an under-developed country that is trying desperately to match our performance. The report informs us that, in 1987, China was the third largest exporter of textiles in the world. What is even more interesting is that China has six universities, more than 40 technical schools and 80 research institutes devoted to textile education and research. If that country is given unrestricted entry to our markets within the EC, the effect on our textile industry will be devastating.
§ Mrs. Peacock
Does the hon. Gentleman agree that, apart from the textile research and education undertaken in China, what is worrying is that Hong Kong companies and some of our own are now investing in plant in Guangdong province? Such investment means that those companies can operate outside the quotas and it means that much of the expansion of the Chinese textile industry is being funded from outside that country.
§ Mr. Lamond
The hon. Lady's point strengthens my argument.
My constituency still has considerable textile interests, although they have been greatly diminished in the 20 years that I have represented it. About 6,000 people are now engaged in the textile and clothing industries in Oldham, but, in the past year, 1,000 jobs have been lost and a number of mills have been closed, including Courtaulds' mills.
Courtaulds is a good company and it has invested a great deal in improving its mills, particularly in the Oldham area. The result of increased investment, however, has led not to an increase in employment, but a decrease. The company has become more efficient, but the net result has been a loss of jobs. I do not like that. I want increased efficiency to result in increased employment. Perhaps the Minister will say something about that when he replies.
Courtaulds has spent £5 million modernising the Maple mill in Oldham. It was ironic that, on the day Professor 1218 Silberston visited Oldham to see the Maple mill, it was closed because of short-time working. Courtaulds has been forced to close the Briar mill, the Fox mill, the Lilac mill and the Maple No. 1 mill. In the clothing industry, the Barron Clothing Manufacturing company and Eli Lees have closed. That has all happened in the past year. The situation is serious, and if the MFA is abandoned it will become even more so.
This week I received a number of letters about this debate. I received one from Courtaulds Spinning of Oldham. By and large, that company accepts the Silberston proposals, provided, in common with Professor Silberston, that the GATT protection is strengthened. That company asked me to emphasise to the Minister that one cannot abandon the MFA without taking fully into account the Silberston proposals to replace it.
I also received a letter from an important local company, Shiloh plc from the chairman and managing director of that company, Mr. Edmund Gartside. His letter is much more forthright. Mr. Gartside is internationally important in the textile industry, and has played an important part in the EC negotiations. He unequivocally states:We do not accept the Silberston Report that the MFA should be phased out. Even if there is a strengthening of the GATT rules under the Uruguay round talks it is absolutely essential that any new rules are seen to be effective before we can contemplate a relaxation of the MFA.It does not give us much confidence when the existing GATT rules are not used, so how can we have any confidence that strengthened rules will be effective?Mr. Gartside also mentioned dumping, which is negotiated on our behalf by the EC, as is the MFA, which, sometimes is rather disturbing to consider.
On dumping, Mr. Gartside says:We have something like between 10 and 15 anti-dumping cases in the pipeline originated by Eurocoton in Brussels. Some have been on the books for nearly two years, e.g. Turkish cotton yarns.I have written to the Minister on a number of occasions about that. The letter continues:There is no sign at all of them reaching any effective conclusions. Meantime jobs are being lost in your constituency and serious hardship is being caused while the papers lie in the Civil Servants pending trays in Brussels and London.We look to the Minister to do something about those long-standing matters that are costing jobs every day of the week in Oldham.
§ Sir Giles Shaw (Pudsey)
I am delighted to join colleagues on both sides of the House in welcoming the return of my good friend, my hon. Friend the Member for Harborough (Sir J. Farr). How good it is to see him lead the debate once again with such vigour.
In common with the hon. Member for Oldham, Central and Royton (Mr. Lamond), I shall be brief. In a sense, I must apologise not to the House, but to my constituents. This is the first time in about 10 years that I have participated in a debate on textiles. The issues, however, remain much the same.
I make no apology for speaking as a firm and committed supporter of the continuity of the multi-fibre arrangement. I may view it from a different angle from other hon. Members, but I do not envisage the use of the arrangement as purely protectionist. It is part of the 1219 development of a trade policy that, with fairness and firmness, will allow world textile manufacturers and marketing to take place in an orderly and reasonable way.
Although I have heard Professor Silberston and read chunks of his report, I do not believe that the issue can be determined by such examinations. My hon. Friend the Parliamentary Under-Secretary of State for Corporate Affairs should accept that in any industry as complex as the textile industry—which has been ill-organised for many generations, but now it is impeccably organised—there will always be huge difficulties with international trading arrangements, whether with primary raw materials, marketing, manufacturing or the labour force.
The reason for the large gathering of hon. Members today is to demonstrate, almost at a stroke, that we are talking about 9 per cent. of British manufacturing industry. Every significant region on the north and the midlands is represented by its Member of Parliament. It is a large exporting industry, with significant potential.
What has happened during the past 25 years in the industry is history, but there has been a massive reinjection of new technology, which has contributed to the reductions in labour forces—however unwelcome they may have been. I take the point made by the hon. Member for Oldham, Central and Royton about the future stability of employment in the industry depending upon the future stability of the industry. Employment is not, of itself, the objective; the objective is an industrial base that can sustain employment. To date, that degree of security has been represented by the multi-fibre arrangement. I wish to make three points about that.
First, if we believe, as I do, that the arrangement is a continuing ideal, there is no reason why the basis of how it is implemented should not change. I well recall that, when it was introduced it was viewed as a transitional arrangement from two standpoints—first, that of European Community development and, secondly, world trading arrangements with countries outside the Community. It was to be a market liberator, an industrial opportunity and a trading bedrock that would allow that opportunity to develop fairly over time.
There is no reason why the multi-fibre arrangement should not be renegotiated within the GATT framework, which would ultimately take over. However, we must learn from what has already happened with the application of the multi-fibre arrangement and what needs to be done in GATT to make that application more effective for all parties.
My hon. Friend the Under-Secretary referred to modalities. In Pudsey we do not know about modalities, but we do know about dumping. I agree with the hon. Member for Oldham, Central and Royton that, taking it as a simple issue, the existing arrangements on dumping are absurd. No organisation in the City of London would have a regulatory body operating in such an arcane and absurd way. Why cannot the onus of proof be on the importing country? Why must the receiving country have to prove that 14 companies have collapsed? That is absurd.
If there is to be a way of passing through the House a refined multi-fibre arrangement within the context of GATT, the dumping issue must be grabbed. My hon. Friend the Under-Secretary has the zeal to grab it. He must demonstrate that the Government will make it an 1220 immediate and effective requirement on the exporting countries to show, at bill of lading stage, the costs of their goods and that those are true, fair and acceptable.
My hon. Friend specifically mentioned time scale. There must be a time scale while the multi-fibre arrangement and GATT work through. I do not think that any hon. Member would disagree that the linkage between the two is essential. The time scale must be generous—perhaps five, six or eight years. That matters not, provided that it is not overnight and provided that it is not dealt with, in European Community terms, as an arrangement that we have had for long enough, and therefore we just end it.
I am worried that Community rules and regulations may not provide for a sufficiently long period of linkage into GATT before GATT takes over. I recognise that other textile countries within the Community are not as substantially based as the United Kingdom, so they may think that it is another British issue that they would rather not tackle. I urge my hon. Friend to recognise that the present state of the industry—even in this country, where it has great support, 9 per cent. of manufacturing, and a vast export potential—requires a generous renegotiation of the multi-fibre arrangement within GATT and that the linkage be positive, not negative.
The Community arrangement with GATT must be firmly led by the United Kingdom, and must not trot off after the Portuguese. Above all, dumping—I do not know the Turkish word for dumping, but I do not like the sound of it—should be dealt with in an effective, speedy and practical way, as opposed to the impractical modality at present in place.
§ 11.6 am
§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
I am pleased to follow the hon. Member for Pudsey (Sir G. Shaw). I agree that there is a danger that the discussion of this important subject could be confused and befuddled by a great deal of technical, economic jargon that no sensible knitwear or other manufacturer understands or wants to know anything about. However, they certainly do know the difference between modality and dumping. That should be understood by the Government.
The background economic conditions affecting the industry are serious. There has been a serious financial haemorrhage suffered by the industry in recent years. It is no exaggeration to say that it is now bleeding towards a slow and lingering death. That must be a matter of concern for the Government. It would be unfair to attribute all of these difficulties to imort penetration alone. Obviously, other factors are involved such as the increase in raw material costs, fashion changes in the knitwear industry and the warm weather during the past few summers, all of which have had an impact on the domestic market. Those are in addition to the more obvious perennial economic problems of relatively high interest rates and a wildly fluctuating exchange rate. In the high fashion sector of the knitwear industry there has emerged a noticeable increase in consumer resistance to the price increases required for the industry to maintain any degree of profitability. We should therefore reccognise that other factors are involved.
We are rightly principally concerned in this debate with import penetration. It is worth remembering that against the background to this debate, which is a shift in, or at 1221 least the beginnings of a reconsideration of, Government policy in two important areas. The first is the relative importance of manufacturing as opposed to service industries.
During the past few years, there has been an almost pathological obsession in favour of service industries, to the detriment of manufacturing industries, emanating from the Treasury as well as the Department of Trade and Industry. I hope that that balance will shift more positively in favour of manufacturing industry. The Minister today has a valuable, if not unique, opportunity to demonstrate, in the way that he handles this issue, the Government's position on the balance between manufacturing and service industries. That will be crucial to the industry in the coming months, if not years.
In terms of the Government's macro-economic and trade policy, whatever he does about the knitwear industry will have an impact on the country's trade deficit and balance of payments. I wholeheartedly agree with everything said earlier in the debate about the difficulties which the industry faces because of the constraints on their exporting efforts.
The knitting industry is the sector that concerns me most because of its importance to my constituency. According to the provisional figures, which go to the end of 1989—I have to rely on them because the final figures are not complete—the United Kingdom imports of knitted products in 1989 amounted to £1,470 million. There were exports in the opposite direction of £700 million, which leaves a trade deficit of £770 million. That has a substantially adverse effect on the United Kingdom's economy.
Imports of knitted products to the United Kingdom have increased since 1986, when the import figure was £923 million. In 1989—again using provisional figures—it was £1,470 million. That is an increase of £547 million during that period. It is a 59 per cent. increase in three years—a substantial figure in anyone's language. That was against the background of the MFA. If anyone were to suggest that the level of imports could have been properly controlled if the MFA had not been in place during that time, it would require a great deal more detailed explanation, at least to satisfy me.
This debate is important, because it gives us the chance to share constituency experiences. Each constituency Member is concerned about particular aspects of the industry. It is also an important and valuable opportunity, particularly because the textiles committee in GATT is required to meet in July 1990 to discuss whether another renewal is to be contemplated. Therefore, during the next six months or so, public and private discussions will take place. It is necessary for the Government to make their position clear to the House. I fully understand that Ministers are not entirely masters of their own house in this matter. Therefore, it is important that the EC mandate that is eventually negotiated should be discussed as openly as possible.
I have found in the past that this debate is valuable too, in order to explain the exact realities of the multi-fibre arrangement to the outside world. Many people labour under misconceptions about the arrangement and its effect. It produces difficulties as well as advantages, and these must all be weighed in the balance.
It surprises my right hon. and hon. Friends when I remind them that there have been significant and dramatic increases in quotas in the three renewals since the original 1222 MFA was introduced in 1974. It staggers some of my hon. Friends when I tell them that the United Kingdom's M1FA quota on sweaters is 52 million pieces per year. The misconception exists that there is a great, oppressive element of trade restriction and barrier in the multi-fibre arrangement. Far from that being the case, under the current arrangement generous increases have been countenanced and others observed during the past 15 years.
Each of the three renewals of the arrangement has made considerable improvements. For example, during the last renewal one quarter of the products covered by quota were removed. The MFA has improved the regulation of trade and provided confidence and stability in international trade, which is warmly welcomed, particularly by less developed countries. The newly industrialised countries can look after themselves.
I share the fear mentioned by the hon. Member for Oldham, Central and Royton (Mr. Lamond) about the future impact that China may have on this country's trade position. That must be watched carefully.
The multi-fibre arrangement has allowed helpful bilateral arrangements to be negotiated across the world, throughout the network of international trade, in a positive and beneficial way. It has given this country's industry the confidence to invest substantial sums of money, to go high tech and to be as capital intensive as possible—the industry is essentially labour intensive. All those benefits have accrued because of the MFA's existence in the past.
If there had been no multi-fibre arrangement to provide orderly regulation in the international market, the Americans would not have kept their markets as open as they have in the face of the penetration that they have suffered. Costs and benefits are therefore involved on both sides of the equation. The Silberston report refers to them. We have also heard that there is a case for allowing greater access to the lesser developed countries. It is no part of my political philosophy that there should be a siege economy in this country. It would be stone daft for us to consider going for trade barriers for the sake of them. This country has survived and prospered because of its quite rightly open international trade policy.
We are talking not always about the Bangladeshis and Sri Lankans, but about, for example, Australians. I remind hon. Members that countries such as Australia, which is not a signatory to the arrangement, impose 60 per cent. tariff barriers on our knitwear going into Australia. We buy the wool from Australia and knit the jerseys with Australian wool, then the Australians charge a 60 per cent. tariff when we try to export them to Australia. That is unacceptable. It is not fair trade, but exploitation. That cannot be allowed to continue if the industry is to have any chance of surviving and prospering.
I am sceptical about the modalities and other economic factors that have crept into the Silberston report. I do not follow all the detailed economic arguments, but there are good grounds for rebutting some of the economic conclusions reached by Silberston, about the effect of the MFA on import prices, manufacturers' prices, output and unemployment. His job loss figure is not right.
The knitted products sector alone in the year to June 1989 suffered as much as almost 7,500 job losses. My figures are slightly different from those used by the hon. Member for Newcastle upon Tyne, North (Mr. Henderson), mine come from Textile News. Those are 1223 serious job losses. Professor Silberston is wildly optimistic if he thinks that the removal of the MFA would result in the loss of only 32,000 jobs.
The Silberston report has not paid enough attention to the impact on sectoral employment. I am pleased that Hawick in my constituency gets an honourable mention on page 99—that is an improvement on the first Silberston report some years ago, which did not even mention Scotland. However, there is evidence that there is a move towards twin tracking in the industry's lower sector, in places such as Leicestershire and Lancashire. I do not blame them because they have suffered more job losses than we have in the Borders of Scotland, if not in other parts of Scotland.
The trend is for some of those companies to trade up market. I do not blame them for that, but they will end up competing with the fashion sector of the industry that already exists in the Scottish Borders. That will produce no solution for the United Kingdom's domestic industry in the long term.
The Silberston report did not pay enough attention to the problems that will occur in the single European market. Unless something is done about it, there is potential for market targeting by importing countries that could cause havoc in the United Kingdom's domestic market and will end up with us taking even more than we are now. Ater 1992, the MFA can and should be subsumed into GATT. I make no apology for returning to the point made by the hon. Member for Leeds, North-West (Dr. Hampson) when he quoted page 123 of the Silberston report. Those three sentences are most important and I make no apology for quoting them again. Under the headingEurope 1992, GATT and the Uruguay Roundit stated:What would be regrettable would be for the MFA to be abolished without agreement on measures to strengthen GATT rules and disciplines. The MFA, for all its faults, is better than no MFA with no international agreement on safeguards. That would lead to piecemeal unilateral, or forced bilateral, action by many importing countries, without multilateral supervision: the remedy would be worse than the cure.The Government must take that advice seriously. The MFA can and should be brought back into GATT, but the linkage is crucial. We must get movement on reductions in tariff and non-tariff barriers, more effective action against dumping, better safeguard clauses than the existing article 19 and action against piracy of design and trade names. That linkage is crucial. Without it the future of the industry throughout the country and particularly in areas such as the Borders and my constituency will be seriously prejudiced.
§ Mr. Nicholas Winterton (Macclesfield)
The multi-fibre arrangement has played a vital part in avoiding conflict in international trade, in allowing poorer developing countries to gain growing access to the market of the developed world and in preventing disruption in the United Kingdom and European textile and clothing industries with the resultant saving of vital jobs which otherwise would have been lost. I am not sure whether my hon. Friend the Under-Secretary of State for Corporate Affairs has a true understanding of the industry or the 1224 immense benefits that the MFA has brought since its inception in 1974.
I preface my brief remarks in today's important debate with a summary of the effectiveness and the benefits of the M FA so that there can be no doubt that, like so many right hon. and hon. Members on both sides of the House who take an active interest in the clothing and textile industries, I am unequivocal in my view that the MFA should be renewed in its current form when the present term expires in July 1991, and that its longer-term future should be dependent on clear and quantifiable progress being made in tackling the trading abuses and barriers which face the international textile and clothing trade and which hold back the development of the United Kingdom industries.
There are those in the House and outside who criticise the MFA as a restriction on free trade, as protectionism and as unjustifiable in a world which is seeking to move ever closer to free and unrestricted trade. Those who express such a view are displaying a great naivety and a complete ignorance of the way in which the MFA has taken the world textile and clothing industries nearer to that goal that we all want to achieve—free and fair trade between nations. Had it not been for the MFA, the developing producers in Third world countries would soon be squeezed out of the world market by the big boys in Europe, in the far east, and the United States of America, who of course were able to wield considerably greater commercial clout.
We have heard robust speeches from hon. Members on both sides of the House, particularly from my hon. Friends the Members for Harborough (Sir J. Farr) and for Leeds, North-West, who was a distinguished Minister—
§ Mr. Winterton
I apologise, I thought that the name might have been changed, although I always recall it as Pudsey. My hon. Friend the Minister will ignore the views that have been expressed at his peril, and so will the Government.
§ Sir Giles Shaw
I apologise for interrupting my hon. Friend the Member for Macclesfield (Mr. Winterton). Although I have not participated in a textiles debate for some time, I can assure my hon. Friend that during that time the name of my constituency has not been altered.
§ Mr. Winterton
My hon. Friend has made his point very well.
Renewal of the MFA is vital to the future of free trade in the textile and clothing industries. The leverage and influence that it provides can be used to ensure that clear and quantifiable progress is made in dismantling and eliminating the trading abuses that still exist and that allow the dumping of goods—which has been emphasised during the debate—to continue almost unchecked, although technically it is condemned under the GATT rules, which, in too many cases, have proved to be a toothless watchdog. It is time that we tightened up on those abuses. The renewal of the MFA could be used to encourage the establishment of rules to allow action which is swift and effective in coping with attempts to undermine markets through the dumping of seasonal and fashion goods in particular.
I and other hon. Members who seek to assist the industry are deeply concerned that current European proposals do not go nearly far enough in allowing 1225 increased scope for the use, for example, of constructed prices in anti-dumping cases, and penalising the use of dumped components—all important points in the debate. We have a long way to go in eliminating the grossly unfair subsidies which are made available by some Governments to reduce the cost of exports from their own textile and clothing industries. That practice is unacceptable, but it continues to be widespread. I am sure that others who speak in today's debate will provide specific details.
I wish to move on, as two further gross trade distortions must be put on record. The first is the theft of designs and brand names, which is sadly becoming increasingly prevalent as the pace of fashion change heats up. Effective international rules must be established to outlaw that practice and to protect intellectual property rights.
The second trade distortion is the straightforward closure of markets to the United Kingdom clothing and textile industry. We cannot possibly open up our markets totally to overseas competition while our own products face huge tariff and non-tariff barriers overseas. It is essential that the Uruguay round should lead to an opening of those markets to allow a true free flow in international trade.
I have highlighted to successive Ministers the gross distortions which exist, which mean that Brazil has implemented virtually a total ban on import , and that Turkey, through the imposition of an imaginative if totally unjust housing fund contribution, has priced our products out of its domestic market. Yet we are expected to open our markets to them. That is grossly unfair, and, whatever the EC might say, we must do something about it to ensure that it does not continue.
The rules of the GATT agreement must be made more workable. We need to consider the possibility of selective action against particular countries whose exports cause or threaten disruption and to suspend in specified circumstances the requirement to compensate the countries which are affected.
It is interesting to note that Professor Silberston, who so often has been portrayed as the bete noir of the textile and clothing industries, now shares the concerns that have been expressed about the trade. He now supports in principle the need to link the future of the multi-fibre arrangement with verifiable progress in strengthening GATT rules and disciplines. Needless to say, I believe that Professor Silberston has once again seriously underestimated the impact of phasing out the MFA on jobs in Britain. Even his own figure of 33,000 resulting job losses is one which we must not begin to countenance.
I understand that the Retail Consortium, which has just hot-footed it back from a meeting with our former colleague and now European Commissioner, Sir Leon Brittan, and which is a long-standing opponent of the MFA, has also accepted that the immediate abolition of the MFA would cause such disruption to the United Kingdom industries that it would be counter-productive, even from its own limited viewpoint.
In a call to my office yesterday afternoon, the consortium accepted that renewal of the MFA in 1991 is necessary and said that its subsequent phasing out must be gradual. The Consortium's time scale of five years, like that of Professor Silberston, displays a continuing ignorance of the way in which in reality our domestic clothing and textile industries function in international markets.
1226 After careful thought, I take the view that we must look forward to a period of at least 10 years beyond the time at which GATT rules are strengthened before we can assess whether the changes have worked and it is prudent to begin to bring an end to the MFA. Any earlier move would be imprudent, precipitate and downright irresponsible. As my hon. Friend the Minister well knows, that view is now shared by several developing countries who fear for a future in which their infant industries would be left to flounder if exposed too soon to unrestricted trade.
It is interesting to note that the Retail Consortium, the textile industry, a number of developing countries and even Professor Silberston, all take the view that premature abandonment of the MFA would cause serious damage to our economy and world trading patterns. That would he in nobody's trading interest, and that makes support for the renewal of the MFA in 1991 the sensible and inescapable conclusion of our debate.
I should like to ask the Minister two specific questions. Will he give us an assurance in clear terms that he accepts that the future of the MFA must be linked to clear and quantifiable improvements in the working of the GATT rules? Secondly, I express my concern and ask the Minister about current rumours that would affect the position of the United States of America. It is mooted that the American Administration are currently proposing that the MFA should be replaced by a series of global quotas.
Can the Minister shed any light on that rumour, because such a change would be disastrous for United Kingdom exports? It would leave us and the rest of the European Community vulnerable to all the goods diverted from the United States and would throw world trade in textiles and clothing into chaos. Will the Minister give a firm assurance that he will stand against any such ludicrous proposal?
This debate is unique because every speaker will be strongly in favour of the MFA. That is not only a message to the Government, but a clear message to the European Community, and I trust and pray that it will not be ignored.
§ Mr. Max Madden (Bradford, West)
In opening the debate the Minister spoke about the debates that we have had in recent months on the textile and clothing industries. All those debates unfolded in a familiar way. There are many familiar faces in the Chamber; I am pleased to sec: that the hon. Member for Harborough (Sir J. Farr) is again with us and that other hon. Members representing clothing and textile constituencies are clamouring for more help and understanding by the Government. The Minister dishes out buckets of praise and sympathy but has displayed little understanding and little hope of action for the industries.
Reference has been made to the Minister's predecessor, who is now the Minister of State for Defence Procurement. In past debates that Minister showed a forthright understanding of the textile and clothing industries. He reported robustly to us on many occasions the international efforts that he was making to defend British textiles and clothings. By contrast, I am sorry to say that the Minister who opened this debate gave a good impression of someone who will be happy to preside over the continuing decline of industries which, sadly, have 1227 been in decline for many years. I hope that when the Minister speaks to us again, his views will have changed dramatically.
The 485,000 men and women who work in textiles and clothing want clear assurances, not only from the Minister but from the Government as a whole. Because of the importance of the industry, such assurances should come from the Prime Minister, who should say that the Government do not regard those industries as expendable. That is the suspicion in the minds of many people who depend for their livelihood on the prosperity and future of those industries. We must know clearly whether our textile and clothing industries are expendable in favour of Britain's financial services. Many people in the industry think that there is the risk of such a deal.
The textile and clothing industries face great difficulty. Successive Ministers have sought to argue that matters are in the hands of others and there is nothing that the industries themselves can do. I challenge that view. There are a number of steps that the Government can take to help the industries and stop or lessen some of the damage that is being done. Over the last year, 400 jobs a week have been lost in the textile and clothing industries, which describe the prospects for the coming year as extremely worrying.
Mills are closing, workers are being made redundant and still more are being put on short-time working. Recent changes in the social security benefits system are heaping penalties on workers who are forced into short-time working. I appeal to the Minister to take note of that and to ensure that those recent benefit changes are again changed so that short-time textile workers are not penalised.
The Government can take other action. I was contacted this week by a carpet manufacturer in my constituency who is owed £48,000 in VAT as a result of his company's sharply improved export performance. The company has been waiting since 19 December for that money to be repaid by the VAT office. I have written to the Secretary of State for Trade and Industry and to the Chancellor of the Exchequer about this matter, and I hope that the Minister will intervene to ensure that that money is repaid to that firm as soon as possible so that it can continue in business.
I support the view expressed by hon. Members that the MFA must be continued, and whether that is as part of GATT or independently does not matter. What is important is that the framework of protection and assistance given by the MFA continues for the foreseeable future. Some obvious strengthening measures must be taken to safeguard the industries, especially against dumping, subsidies, theft of design and brand names, and the closure of markets.
The Minister should give a much stronger assurance than the one he gave earlier about the insertion of a social clause into either GATT or a renewed MFA. In view of welcome changing events in recent months, not least in Europe, the insertion of a clear and forceful social clause is vital.
The purpose of such a clause is not to restrict the export opportunities of developing countries, but to act as a positive lever for improvements in working conditions. It is a stated objective of the GATT and of the Uruguay 1228 round to improve social conditions in the developing countries by introducing a social clause to achieve basic International Labour Organisation standards for employment rights, child labour and freedom of association.
The clothing and textile industry is vitally important for a number of regions, particularly Yorkshire, the north west, midlands, Scotland and Northern Ireland, where it plays an important part in the local economy. When Ministers speak of consumers, they should understand that textile workers themselves are consumers—and if they are forced into short-time working and unemployment, the local economies that we represent will be badly damaged. The areas concerned have suffered massive unemployment through the Thatcher years, and I appeal to the Minister and to the Government to begin to understand the enormous problems that those communities have striven to overcome.
For those communities, the future is extremely worrying. The men and women whose livelihoods depend on the industry's future want to be reassured that the Government will give a firm lead. They may not have done so in the past, but the need to do so now is greater than ever. The Government must ensure that, in the GATT negotiations, there are firm undertakings on the matters about which I and hon. Members who have spoken, or that the MFA will continue independently. The arrangement is not a protectionist measure, and never has been, but it allows for limited textile imports.
The latest figures show textile imports in this country amounting to £3,500 million—representing almost one fifth of our trade deficit. Britain is often regarded as a soft touch. If Marks and Spencer increases the number of imported goods it buys by 1 per cent., that will add more than £20 million to Britain's trade deficit. That illustrates the dimension of the problem and the importance of the industry, which is the fifth largest manufacturing industry in this country. It is not expendable.
The Government must respond to the pleas made today by hon. Members in all parts of the House, and to those made in previous debates, with determination and conviction, and in the understanding that their endeavours will help to sustain fragile local and regional economies. Right hon. and hon. Members who represent the textile and clothing industry, which has served this country well, look to the Government to serve it in the same manner.
§ Sir Hector Monro (Dumfries)
I agree with many of the comments of the hon. Member for Bradford, West (Mr. Madden). I welcome back to the House my hon. Friend the Member for Harborough (Sir J. Farr), who is in good voice and heart, and who started the debate off well.
The strength of feeling expressed today and the cross-party united view demonstrates the importance that right hon. and hon. Members attach to the clothing and textile industries that they represent in different areas of the country. I represent the cloth and knitwear sector and, like the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), a constituency in which the mills account for a high proportion of employment and in which any short-time working or redundancies would have serious repercussions.
I am worried about the lukewarm approach of my hon. Friend the Minister towards the multi-fibre arrangement. Without it, unemployment in the industry would be much 1229 higher, even though it has reached serious levels. The Government must adopt a higher profile and lead from the front in Europe, to secure an even better MFA than the present one at the next GATT round in Uruguay. Everything must be done to prevent escalating imports and unfair competition.
The cloth and knitwear sectors are facing severe difficulties—knitwear most of all. They need, above all, confidence. I hope that the debate will stimulate that, and that the Minister will do everything that he can to restore confidence. Right hon. and hon. Members have been presented with a number of valuable documents relevant to the debate from the Scottish Knitwear Association, the Apparel, Knitting and Textile Alliance and the Confederation of British Wool Textiles, as well as from individual companies. It all points to the concern that is felt about the industry's economic future and the future of the MFA. I have received individual confirmations of that anxiety from speaking to managing directors and managers of mills in my constituency.
I approve of the Government's overall economic objective. They have brought down inflation, and in my constituency unemployment has halved over the past three years. I accept that an important ingredient in the success of those policies is containing interest rates. They were high when we came to office and were then brought down, but have risen again. The textile industry wants nothing more than to see interest rates again being reduced, coupled with a stable exchange rate. That is the common denominator of the industry's complaints, and I hope that my hon. Friend the Minister will convey that view to the Secretary of State for Trade and Industry and to the Chancellor of the Exchequer.
As was mentioned by the hon. Member for Roxburgh and Berwickshire, the Government are unable to do anything about the warm weather of the past 18 months, which certainly affected knitwear sales, or about fashion trends. However, the industry is not sitting back and doing nothing, for I doubt whether any other industry does so much in export and design. I am sure that things will turn in the industry's favour in the coming year. It is working on the development of non-traditional fine yarns and cloths to meet changing fashions. Nevertheless, it still has to meet the very high costs of imported cashmere, which have escalated dramatically over the past five years. I am glad that in the agricultural sense we are diversifying in Scotland into cashmere, but it will take a considerable time for that innovation to have a significant effect on the domestic industry.
The textile industry has a fine labour force, which has held back on wage claims in the past year or two, when the situation has been difficult. Mills are retaining their employees, perhaps against their better judgment, but mindful that in the long term there will be a shortage of skilled labour. They are desperately hanging on in the expectation that things will improve—but they cannot do so for ever.
What action can the Government take? We have all read the Silberston report and have made up our minds about it. I strongly disagree that we should fade out the MFA and its links with the GATT. The opposite is true. We must play our part in Europe and retain the MFA and insist that it is effective. That point has come out strongly in the debate. We must strengthen it and ensure that 1230 implementation is fair and that we are all on the same level playing field. In that way, all sectors and countries will have a better balance of opportunity.
As many hon. Members have said, we must halt the escalation of imports. They come into this country under various shades of regulation, but basically it is all a matter of dumping in one way or another—let us not mince words about it. We must quickly stop dumping. It takes years before there is effective action and the Government must do what they can to speed up effective measures to prevent dumping and enforce GATT. We must eliminate the export subsidies achieved by other countries. Goods from China are selling at less than the cost of the raw materials, and that cannot be allowed to continue because it is unfair and destroys our industry. We must act quickly when there is a breach of the rules. As my hon. Friend the Member for Macclesfield (Mr. Winterton) said, we must watch like hawks the moves towards further protectionism in America.
By coupling our economic policies with stimulation of demand, which is necessary for the industry to pick up, we can bring back confidence to the industry. This is a great opportunity for the Government to start us off in the right direction. Firm words from my hon. Friend the Under-Secretary of State about the determination to lead from the front in Europe on MFA would be the best possible start.
§ Mr. George Foulkes (Carrick, Cumnock and Doon Valley)
I am pleased to follow the hon. Member for Dumfries (Sir H. Monro) and to join a growing chorus in the House in favour of renewal of the multi-fibre arrangement. I speak as one who represents a constituency where the knitwear, textile and clothing industry is the main employer, following the drastic, unnecessary and short-sighted closure of deep mining in Ayrshire. My hon. Friends the Members for Kilmarnock and Loudoun (Mr. McKelvey) and for Cunninghame, South (Mr. Lambie) have asked me to speak on their behalf. Five thousand people in Ayrshire work in the knitwear industry. The Ayrshire knitwear industry deals almost solely with cut and sew rather than fully fashioned knitwear, and is therefore much more vulnerable to the flood or cheap imports.
The Under-Secretary of State asked what factors he should consider in the negotiations. I hope that he will take account of my point. He seemed to speak only of high-value exports from the United Kingdom, but a large part of the industry produces cheaper garments. Thousands more people in Ayrshire are employed in textile and clothing production. On behalf of Afton Dyers in New Cumnock, I have already written to the Minister expressing concern about the flood of imports of cheap socks from Turkey. Manufacturers of jeans, ladies' nightwear—I shall make no further comment, because Scottish Members should keep away from that subject—and other clothing in my constituency are under intense pressure, because of reduced margins, short-time working and lay-offs.
I remind the House that the Cumnock and Sanquhar travel-to-work area has the highest level of unemployment of any such area in mainland Britain. We are particularly anxious about the threat to jobs, as a former Minister, the hon. Member for Pendle (Mr. Lee), knows only too well. 1231 Last week I had a meeting, at their request, with representatives of the Scottish Knitwear Association, including Cumnock Knitwear and Kyle Knitwear, and of the employees. They asked me to bring this urgent plea to the House and the Government about their worries. This is a crucial time for the industry, which is facing difficult trading conditions because of warm weather and fashion changes, as the hon. Member for Dumfries said. We can do nothing about that, but we must take account of factors on which we can have some influence. Abandoning the multi-fibre arrangement would have a devastating effect on an area of already high and chronic unemployment.
As Scottish Members know, there has been understandable and widespread concern in Scotland about the threat to the Ravenscraig steelworks. There has been an all-party outcry and a campaign to preserve steel operations. I would argue that the threat of abandonment of the MFA in Scotland is an even greater danger to employment in Scotland than the closure of Ravenscraig.
That point is not fully appreciated because of the spread of employers throughout Britain and the lower profile of this sector. The hardship, the economic effect and the other problems would be just as severe. The industry has told me that it reckons that the 30,000 jobs about which Silberston talks would be lost in Scotland alone, not just in the United Kingdom.
As you know, Mr. Deputy Speaker, I rarely speak from the Back Benches because I am a Front Bench spokesman on foreign affairs. [HON. MEMBERS: "Hear, hear."] Thank you. I am a spokesman on aid and development, which is appreciated by Conservative Members. In that role, I am constantly made aware of the needs of developing countries, so I know of their concern about protectionism and of their wish to have access to the rich markets of the West.
That has to be balanced against our constituency interests, but as other hon. Members have said, the MFA allows controlled growth in access to the market without excessive disruption of employment. Other hon. Members, such as the hon. Member for Macclesfield (Mr. Winterton) have said that the employees in the textile industry are themselves consumers and their purchasing power is important. With controlled growth, we can ensure that priority in growth is given to the poorer countries rather than to the newly industrialised countries whose economies, in some cases, are stronger than our own, especially with the present Government's economic policies.
As other hon. Members, such as my hon. Friend the Member for Oldham, Central and Royton (Mr. Lamond) have said, we must ensure that the market throughout the world is not swamped by the colossus of China. That would have a devastating effect in other countries, as well as ours.
I want to reinforce above all what others have said about the need to ensure that, before the full rigours of the free market come into effect, there is a level playing field. That means that the present inadequate controls against dumping must be tightened. It also means that there must be no subsidies such as the subsidy in South Korea which I mentioned in an intervention, or the subsidy in Turkey, which the German Government are giving to encourage the return of the guest workers. We must ensure that all 1232 those subsidies are eliminated, that all markets are opened up and, as the Minister said—I hope that he will say it in other councils as well as here—that intellectual property is safeguarded.
Above all, that policy needs to be pursued vigorously by the British Government. The producers have told me that they detect a lack of determination in the Government's approach. I have a great respect for the Minister's intellect and capability, but there seemed a lack of energy and determination in his speech. The industry feels that this sector is being sacrificed to others. The Prime Minister, for example, considers that civil engineering contracts in Turkey can be traded off against United Kingdom textile jobs. That is not acceptable. The Government must fight hard.
We make representations by remote control through the European Community, but that increases the need for the Minister to be even more active in fighting on behalf of the industry to retain the MFA or a similar arrangement that is far more effective than GATT. If that is not done, there will be not only unacceptable job losses but, as was said earlier, as a result of increased imports and the decline in exports, there will be an increase in our already abysmal trade deficit.
The Minister must act with more vigour than he has displayed today to protect this vital industry. Above all, he must represent what will be seen at the end of the debate as the unanimous view of the British House of Commons.
§ Mr. John Lee (Pendle)
I welcome this opportunity to participate in the debate on the multi-fibre arrangement and to hear a virtual unanimity of view.
In view of the importance of textiles to my constituency, it is perhaps appropriate that my first Back-Bench speech after six years of ministerial office should be on this subject. No other parliamentary constituency has as many employees in textiles as we have in Pendle. The 1987 figures—the latest figures—showed that about 3,800 employees were in textiles, which represented 24 per cent. of total manufacturing employment and 13 per cent. of overall employment. Hence, the health and prosperity of the industry are of particular concern to me.
In preparing my speech, I referred again to my maiden speech in June 1979, in which I pointed out that the textile companies then would not invest the substantial sums necessary to re-equip and increasingly automate their plants unless they saw a permanent future for their products. I went on:That is why the commitment to continue with the multi-fibre arrangement well into the 1980s is vital."—[Official Report 14 June 1979; Vol. 968, cc 690–1.]As the House knows only too well, the early 1980s were a sad and difficult time for our textile industry. There was mill closure after mill closure and painful redundancies as the industry carried through brutal, if necessary, restructuring, in the teeth of the recession. I am delighted to see my hon. Friend the Member for Hyndburn (Mr. Hargreaves) here. He knows full well the impact that the recession and the closures had on our region of Lancashire.
Management appreciated that there was no future in mass-produced, low-value products and concentrated on higher-value products, often in niche markets, taking full advantage of the most modern manufacturing techniques, 1233 with increasing emphasis on quality, design and colour. The industry also faced up to the increasing globalisation of companies and markets. Perhaps no industry is so truly international as the textile industry, with major companies taking full advantage of the lowest raw material and making-up Costs on the world scene. Many of our major companies act as both importers and manufacturers.
Heavy and continuous capital investment has produced dramatic increases in productivity. For example, at the Carrington Viyella fabrics Holmefield mill operation at Barrowford which I visited last week and which is part of the Coats Viyella group, productivity per employee will have risen by 50 per cent. in the four years from 1987 to 1990.
Perhaps no industry is quite so sensitive to factors outside its direct control as the textiles industry. It is sensitive to imports, exchange rates, interest rates and climate—let alone fashion. In Pendle today, firms such as Smith and Nephew, Albert Hartley, Thomas Mason, J. B. Battye, Verber Bairdtex, Dawes and Company, Lontex, Clover Brook, Mitchell Interflex, William Reed, Johnson and Johnson, Peter Reed and others battle away in intensely competitive markets.
I think that it is agreed that, despite its imperfections, the present MFA has given a measure of protection, and during the mid and late 1980s, in broad-brush terms, the industry experienced better trading. Now there is increasing anxiety, however, with a question mark over the future of the MFA post-1991.
I welcome the fact that 25 of western Europe's most powerful textile groups came together in December to finalise plans for a new organisation to represent the industry on trade issues, including forthcoming negotiations on the future of the MFA—companies such as Marzolto and Benetton of Italy, DMC and Chargeur of France, and Courtaulds and Coats Viyella of the United Kingdom.
Nobody in the industry believes that the world's textile trade is fair as between companies and countries, when hidden subsidies abound, when a country such as Turkey imposes substantial duties on EC textiles and clothing imports, compared with a nil duty for Turkish exports to the EEC and when anti-dumping cases take so long to prosecute. I have considerable regard for my hon. Friend the Minister, but his officials at the Department have a lousy record when it comes to prosecuting dumping cases. I can only think that the Barlow Clowes team has been promoted to the task.
I can do no better than to quote Dr. John Finnegan, the chief executive of Carrington Viyella fabrics and a vice-president of the Council for British Cotton Textiles, who summarised his views to me:Whilst we understand the UK Government's and European Commission's desire to move to a free trade arena, their pace towards this goal takes no account of the realities of overseas trading practices where local subsidies are given to producers, and significant barriers to our own exports exist… We cannot see the point in freeing EC import restrictions without such moves being reciprocated in our export markets. We are not asking for any privileges or support, just simply that we are allowed to play on a flat and level pitch with an unbiased referee.What happens to our textile industry in future is vital for the United Kingdom economy in terms of employment and balance of payments. Textiles and clothing constitute no less than 23 per cent. of our overall adverse trade balance.
1234 I have some recommendations for my hon. Friend the Minister as we look to the future. First, if negotiated on an EC basis, each country must retain its own quotas so that no member state can be the target for total EC quota. Secondly, if the MFA is to be scrapped, that must happen over a long period—say five to 10 years—during which time the GATT rules must be strengthened. There must be a reciprocal opening up of domestic markets in low-cost exporting countries. Thirdly, the tightening of procedures and reciprocal duty rates must be in place and working before the MFA is phased out. Finally—this is perhaps particularly apposite at the moment—we must maintain our quotas against newly liberalised eastern bloc countries or they will be another cause of job losses.
I repeat that I have a considerable regard for the intellectual ability of my hon. Friend the Minister. He said earlier that, at times, he would fight like a tiger. When he replies, I hope that he will sound rather more like a tiger; the future of the MFA may be of limited concern to his constituents, but it is of considerable concern to my constituents.
§ 12.5 pm
§ Mr. Bob Cryer (Bradford, South)
I will endeavour to speak for less than 10 minutes.
I was born in Bradford and I am proud to represent part of Bradford that is the centre of the wool and textile industry. I was brought up in Saltaire, a textile village, where what was once the biggest integrated textile mill in Europe now stands gaunt and idle.
Some 14,000 people in Bradford depend on textiles directly—perhaps double that number in other respects—for employment. The industry is vitally important. 1 am committed to a confident, modern, well-paid textile industry which does not have short-time working. A statutory instrument was introduced at the end of 1989 which limited unemployment benefit to a maximum of £43 a week. That was disgraceful, because it has badly hit textile workers and others who are forced to work short time, although they may not want to do so.
I urgently call for a renewal of the multi-fibre arrangement. It is better to have arrangements for solving trade problems by agreement than to indulge in trade wars that are potentially highly damaging to our industry. The MFA has helped developing nations, not hindered them, by providing increased and improving quotas. We face the problem of imports from developed nations and that problem must be considered.
The Minister said that there was no calculable proof of the efficiency and effectiveness of the MFA. He should ask his civil servants in the industry section of the Department of Trade and Industry to calculate the number of jobs lost in relation to the quantity of exports. An increase in exports to the United Kingdom might bear a direct comparison to the number of jobs lost.
It is very important that a social clause should be incorporated into the MFA. Child labour is used in some developing nations such as in South Korea. There are no adequate health and safety standards in those countries and I resent the National Consumer Council urging in more cheap imports on the back of child labour and shoddy and dangerous working conditions.
I thought that the Minister concentrated excessively on the alleged lower prices of imports as outlined by Professor Silberston. The cost of job losses is very great. It includes 1235 a waste of skills, the level of unemployment benefit, retraining costs and health costs for workers and other family members who are adversely affected.
As I said in an earlier intervention, textile workers have collaborated with changes in shifts, with new machinery and new working patterns. No one could describe their wages as excessive. On every criterion, the textile industry reflects help and collaboration on both sides of the industry. However, workers have often been kicked in the teeth by mill closure after mill closure, and the Minister should bear that in mind. The Minister's speech was not clear. It may be because of his style that he sounds lacklustre, but he did not provide an assurance that he will clearly and positively support the industry in the future.
The EEC must negotiate the new agreement with important, effective measures of application. People have criticised the Department of Trade and Industry. We handed powers to the Common Market when we should not have done so. People who support the Common Market must direct their criticism at that institution to ensure that they negotiate the multi-fibre arrangement satisfactorily and produce an effective means of application.
My hon. Friend the Member for Oldham, Central and Royton (Mr. Lamond) referred to anti-dumping cases taking years, and jobs being lost in the process. Bradford is concerned with woollen textiles. The Prato region of Italy has been subsidised for many years. That problem has not been dealt with effectively by the Commission, because it is difficult to obtain proof. With increasing water prices and privatisation, many people in the woollen textile industry are looking apprehensively at 1992 and regarding it as a nightmare and not a benefit.
I emphasise that the burden of sharing arrangements for imports into the Common Market must be continued. The United Kingdom has the most efficient retailing system in the EC. Therefore, why should our manufacturing industry be damaged because importers find a soft retailing arrangement in the United Kingdom? They can go to five major retailers in the United Kingdom and get distribution to every major town and city throughout the length and breadth of the United Kingdom. That cannot be done in any other Common Market country: It is absolutely vital that the burden-sharing arrangements are retained after 1992 and coupled with the existing multi-fibre arrangement.
People in Yorkshire, Lancashire, Scotland and other regions have pride in their skill and traditions in producing fine textiles of high quality. Of course we must develop our design potential, but we have pride in skills and ability. We have a tradition of knowledge. I am determined, and I hope that the House is determined, that those skills should be retained and have application in job opportunities in the textile industry.
§ Mr. Donald Thompson (Calder Valley)
My hon. Friend the Member for Pudsey (Sir G. Shaw) said that we discussed the same topic 10 years ago. That is quite true. It is because the Conservative Government have renewed the multi-fibre arrangement on two occasions before this. Therefore, we have had similar debates. My credentials for speaking in the debate are as strong as those of the hon. 1236 Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) or anyone else. My constituency is in the centre of the Yorkshire textile industry. In 1914, when she was 12, my mother started work as a weaver. She worked in the textile industry until she was married. She thought that I was a bit Left-wing.
My area makes textile products of all sorts. In 1988, I held a celebration of textiles on the Terrace of the House of Commons. We had printed clothes, woollen clothes and woven fabrics. There were 50 different ensembles from my constituency, and manufacturers brought buyers from all over the world. Our firms are old family businesses, new one-man and one-woman businesses, national companies and multinational companies. All export and all work hard to encourage people to buy British. In the 1980s I visited a firm that was closing. As my hon. Friend the Member for Pendle (Mr. Lee) said, 26 ladies worked in that firm. All of them were wearing imported jeans. We should buy British more often.
It cannot be that all my companies will remain as they are at present. Various factors, from the developments in Eastern Europe, which the hon. Member for Oldham, Central and Royton (Mr. Lamond) mentioned, to the hot summers, which the last remaining Liberal, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) mentioned, change trade all the time.
I expect to see an expansion in some areas, but unfortunately I also expect to see significant restructuring and—I know that my hon Friend the Member for Pudsey asked us not to put too fine a point on this—a significant number of redundancies in my constituency shortly because of the changes in fashion and the hot summers. Jobs will disappear for both training and technical reasons. I am fortunate in the level of employment in my constituency. Between 95 and 96 per cent. of all those who want to work are working.
However, many of those jobs rely on the same factors that affect the textile trade, and high on the list of factors for keeping those jobs is access to other markets. We should begin to deal with that at home—here in the EC. The fastest growing sector of employment in the country and in Calderdale is financial services. That industry cries out for the same level playing field as textiles. That is what we need if we are to keep jobs in that industry.
The EC cannot continue to sanction a totally unbalanced agreement with Turkey. I know that other hon. Members have had and will have more to say on this detailed point. Like other hon. Members, I have received a significant amount of correspondence from the textile firms in my constituency, much of it about Turkey. I simply want to point out the position to the Commission. Here I agree with the hon. Member for Bradford, South (Mr. Cryer), but from an entirely different standpoint, that the Commission cannot go on pussyfooting and prevaricating, because that is costing me jobs and those jobs will not be replaced until the EC allows free trade within its own boundaries, not just for the textile industry but for financial services and other industries. Those other industries should not be instead of the textile industry, but should run alongside it. We must ensure that the same level playing field prevails for all our industries.
An effective MFA and/or a strong framework in the Uruguay round of GATT is necessary. As other hon. Members have said, and as my hon. Friend the Member for Pudsey so eloquently put it, we need that protection through GATT and the MFA because otherwise it would 1237 be like playing a game of American football as the only chap without protection or padding. It would be difficult for us to score.
Europe must put its own house in order as part of that process because unless we do so we cannot argue with strength. All businesses rely on capital equipment and on the price of raw materials, power and labour. We cannot negotiate demand elsewhere in the world unless we in Europe have a level playing field in those things. Firth Carpets in my constituency, the manufacturer of the very carpet upon which the Minister now has his feet, was subjected to unfair competition by a German firm within a few months of laying that carpet. The German firm received £1 million and the EC did nothing about it. We cannot have such unfair competition in Europe.
Raw materials will be discussed at the GATT round, and I shall not go on about that issue. Power is an emotive subject and United Kingdom suppliers should ensure that they are at least Euro-competitive. However, it is up to the Commission to see that there are no hidden subsidies on power, as there seem to be in France at present.
We have debated social clauses before. I was glad that the hon. Member for Bradford, South again brought up the subject of the "perpetual Prato" in northern Italy and the way in which it ignores social standards. I am worried when I hear Opposition Members say that we should have a social charter when there are still such people in Europe. I saw nothing in the article that I read in the Financial Times in November last year about the heavy South Korean aid for textiles, nothing about the £15 billion or the £23 billion to help replace outdated production lines. I saw no evidence of the Korean Government doing anything for a social charter. We may find pronouncements such as that by South Korea nearer to home when state trading companies shape themselves into some other animal—perhaps tigers.
My textile workers and companies are frustrated by the Commission's lack of action on their behalf. I ask the Opposition not to complain when our Ministers attack the Commission in Europe. They should not call us little Englanders, as that is what they have asked my hon. Friend to do all day today. The EEC will have to he vigilant.
The textile industry looks after itself and is looking after itself in a remarkable number of ways. With other hon. Members, I recently went to a seminar on trading in the clothing industry in London, where I was delighted to learn that the much vaunted German trading systems are not flexible, cannot adapt to retraining people who come into the industry and are not as effective as ours. All they are is more expensive.
The future also depends on our industry exhibiting throughout the world, which it already does very well. I have had complaints about the British Overseas Trade Board. I am sure that my hon. Friend the Minister has received similar complaints from hon. Members on both sides of the House and that he will deal with them. The hon. Member for Roxburgh and Berwickshire knows all about quotas in a fishy sense and how they lead to more and more complications. We must be careful when asking for quotas, even in the MFA or the GATT round, that our industry is not restricted as to what it can produce, as was the steel industry until very recently. It would be in the interests of many countries to restrict production to the 1 January 1990 level. An arbitrary date was chosen for milk quotas.
1238 The textile industry is essential to Britain. We have to have high technology industries, and the textile industry is one of them. We have to have industries that are ready for change, and the textile industry is one of them. My time is up.
§ Mr. Frank Haynes (Ashfield)
An arrangement has been made to enable every hon. Member who wants to, to speak—the Front Benches have been squeezed a bit.
I, too, welcome the hon. Member for Harborough (Sir J. Farr). The House may know that for several years we have been joint chairmen of the all-party knitwear industry federation, the aim of which has been to support the industry in whatever way we can. It is obvious from the attendance today what is happening and what hon. Members feel about the effects of the proposals on their constituencies. Hon. Members know that things are going wrong. I must tell the Minister this—he has to change his ways. He did not do any good at the Dispatch Box this morning. We have heard Minister after Minister speak on behalf of the textile industry from the Dispatch Box. Now we have another one who is going in the wrong direction. I hope that he has got the message about what hon. Members feel. The House will decide which direction to take.
§ Mr. Haynes
Oh it will. The Government will have to listen. They will have to go in the direction that we want them to take.
The Minister is representing the Government, and he portrayed Government policy this morning. They can start to change their minds. We want our industries to have a fair deal. The Government are destroying the mining industry. It used to be the main industry in my constituency, but it has almost gone. The next biggest industry is textiles, hosiery and knitwear. Slowly but surely, the Government are allowing it to be destroyed as well because they are not helping as they should.
Ministers stand at the Dispatch Box and talk about all the help that they are to give to eastern European countries,but I hope that that help will not enable those countries to dump all their textiles on our shores. We have had enough of that. Since 1978 imports from those countries have increased year by year. The Minister brushed those massive imports to one side today, but he must listen to hon. Members. We want a fair opportunity to be given to the workers, trade unions and management of the textile industry rather than a move towards the destruction of that industry.
The Minister talked about being competitive—that is all we get at the Dispatch Box. Sometimes industry needs help, but the help that has been given for many years is being taken away slowly but surely. The Minister must realise that the countries that dump their textiles on our shores get massive subsidies from their Governments. How can we compete against that? It is the same with coal mining. The new port on Humberside will allow the massive importation of coal at the expense of our industry. The same thing is happening with textiles, and it is not good enough.
I know that the Minister came to my constituency to have a look round. He should come back to see the textile industry and the mess that has been allowed to develop 1239 because the Government are not pulling out all the stops. One of his hon. Friends has already told him that he must get stuck in. He must do that or else he will get his backside kicked—he will get it kicked from Ashfield, I can assure him of that. That is what will happen unless he starts travelling in the right direction.
A lot of people are pulling out all the stops and, back in the constituencies, they are working like billy-o. But they are standing still because they are not getting the proper support from the Government.
I hope that the Minister has got the, message and I hope that he will do something about it because we are crying out for help. For God's sake give it to us.
§ Mr. Michael Knowles (Nottingham, East)
I do not go all the way with the hon. Member for Ashfield (Mr. Haynes), but the Minister must realise why people are so het up.
In the east midlands, one in four jobs are connected with textiles, representing 9 per cent. of all manufacturing jobs. My family comes from Lancashire and it has been through all this before. There is a strong feeling that the textile industry is given no support, that somehow it is seen as an old-fashioned, sunset industry. That is not only unfair, but incorrect.
We have seen recent company closures in the east midlands. Kemptons went into liquidation and 1,200 people lost their jobs. Texted Jersey of Corby recently closed with a loss of 120 jobs. Those closures are the tip of the iceberg, as there is a great deal of out-work in the industry. Those people are the first to go, then the part-timers. It is only when a company closes that it might make the headlines. Many textile companies are small, however, and they disappear gradually. The unemployment figures show only the cumulative effect of such company closures.
There is a feeling that there is a lack of sympathy for the industry in the Department of Trade and Industry. A recent issue has been the import of socks from Indonesia. Such imports have risen from 4.5 million to 9.5 million a year. In that time, those imports have more than doubled. The average price of those socks is 28p, which does not even cover the cost of the raw material. The replies from the Department about that matter could hardly be described as sympathetic.
If we are to respond to such subsidised imports, the Department must move much more quickly. If one sits around waiting to produce an intellectual study of the implications of those imports, the affected companies will be already bankrupt.
The Department must respond quickly. It should remember that we are talking about a major industry that employs 500,000 people. Employees in that industry represent 9 per cent. of the manufacturing work force, which is a lot. There are annual sales of £14 billion, which could be increased.
The MFA has brought substantial benefits since its introduction, not least because it has averted an international trade conflict. That would have followed as night follows day if the MFA had not been introduced. If the MFA is wound up too quickly, that type of conflict will be the result. Without it, the weaknesses in GATT will 1240 produce a proliferation of unilateral measures. We need only to think of the Bills produced in the United States Congress last year to realise what the result would be. That would affect our exports as well.
The other day I received a letter from someone in an associated trade. He was referring to the situation in Hong Kong and how it should be dealt with and to the suggestion that 50,000 heads of families should be allowed into this country. He concluded his letter by saying:Ministers tell us that if we do not give assurances to these hand-picked people, the economy of Hong Kong may suffer. Dare I say—so what?That is the response of someone on the receiving end of some of the trade that Hong Kong has conducted.
The MFA has kept disruption to a lower level. Without it, not only unemployment but—I speak as a Nottingham Member—the problems of the inner city would be exacerbated and the social consequences felt. For the poorer developing countries, the MFA has provided guaranteed and growing access to the world markets. The danger for them is that otherwise they would be crushed and ground between the millstones of the newly industrialised countries.
Under the Uruguay round, the MFA is supposed to be integrated into GATT. The GAIT rules and disciplines will be strengthened and the MFA-imposed restrictions can be phased out. That may happen, but even if it does, there would be a year between the conclusion of the Uruguay round and the MFA being renewed. One year is not long enough to determine whether those measures would have the desired effect. The MFA must be renewed. If the GATT rules have done their job, we can start talking about phasing out the MFA, but not until then.
It is essential for the Community and for the United States to develop and implement their textile trade policies in a harmonised way; otherwise, we will be played off against each other. We are the two great markets and we would each start taking protectionist measures without controlling dumping subsidies or non-tariff barriers. Once those problems have been solved, the British textile industry can gain substantial markets. The industry is confident that it can.
In 1989, the industry had almost £4 billion of exports. I must make it clear to the House that our textile industry is our most successful single-industry exporter to Japan. Let no one do the industry down. When it has a level playing field and when there is free and fair trade, our industry can more than hold its own. Our plea to the Minister is to ensure that the playing field is level.
§ Mrs. Margaret Ewing (Moray)
I know that you, Mr. Deputy Speaker, will be conscious of the sense of unanimity and harmony that has been shown by Scottish Members today. However, that will not continue into other debates. The hon. Members for Roxburgh and Berwickshire (Mr. Kirkwood), for Dumfries (Sir H. Monro), and for Carrick, Cumnock and Doon Valley (Mr. Foulkes) and I are here because we want to speak strongly on behalf of our constituents and all those in Scotland who are employed in the textile industry.
The latest figures from the Library show that more than 55,000 people are employed in the textile industry in Scotland. That represents 14 per cent. of the manufacturing base in Scotland. Hon. Members have already touched on the industry's overall significance, but when we realise 1241 that 14 per cent. of the manufacturing base in Scotland is represented by textiles, people will appreciate why there is unanimity among the four of us today.
Moray is the most northerly constituency of the Grampian region. I do not know whether the Minister has ever had the opportunity to watch the exciting presentation prepared by the Grampian Initiative. If he has, he will know that strong reference is made to the importance to our area of the textile industry. In that presentation one of our proud boasts was that from the Grampian region we have sold warm woolly overcoats to the people of Russia. I do not know whether President Gorbachev is going round in one of the Crombies we produce in the north-east of Scotland. If it were possible to persuade Ministers and the Cabinet to adopt the same decentralist philosophy that the President of Russia shows, I would gladly supply them with coats from our area.
Like others who have spoken, I pay tribute to those who work in the textile industry—both at management and shop floor level. It is important to remember that people have tried hard to respond to the new challenges in the industry. They have not been slow to respond to the changing demands. I have seen great determination and vision shown by those in the industry.
In my area, small companies have managed to make major breakthroughs into the more general fashion market through contracts with organisations such as Tie Rack and Next—household names. Sixty per cent. of all goods produced in my constituency are exported. The work is being diversified because, like those mentioned by the hon. Member for Dumfries, many of the companies in my area are looking carefully at the prospects for cashmere. One of them is already competing effectively with fashion knitwear companies in Italy and France because of the high quality of its product.
One difficulty we have experienced is the high cost of cashmere during the past few years. In correspondence with the Ministry of Agriculture, Fisheries and Food and the Scottish Office, we were disappointed when we asked whether there was any possibility of fallow ground, which is part of the set-aside scheme in agriculture, being used for grazing cashmere goats. A strong attempt is being made to establish our own cashmere flocks to to reduce the cost. It will take a long time to reach the required levels, and we should he given more assistance.
Investment in new machinery has been made by many of the companies to make them more competitive. One comment I received from the mills this week was that the textile industry was not looking for feather-bedding and was not afraid of competition as long as it was fair. All the work done in the companies in my area shows that they do not expect feather-bedding, and have not received it. They want fair treatment to ensure that they can maintain the manufacturing base that exists in our area.
I am conscious of the other hon. Members who wish to speak, so I shall be brief. I was surprised at the debate's opening, because the Minister seemed to say—he can correct me if I am wrong—that he agreed with many of the findings of the Silberston report. I re-emphasise the point made by the Scottish Knitwear Council: that, if the multi-fibre arrangement is abolished, the upper projected figure of unemployment in the report—33,000—will apply in Scotland alone. When the Minister winds up, I should 1242 like clear guidance about which aspects of the Silberston report the Government agree with and with which they disagree.
Like other hon. Members, I believe that the renewal of the MFA is essential for the continuation of our industry. The Uruguay round of negotiations must lead to a reduction in the unreasonably restrictive tariff and non-tariff barriers operated by competitors. We need better rules to allow prompt and effective action to be taken against dumping, particularly as we move towards 1992, and we need action against the clear subsidies which are being given in other countries.
Finally, I am often told that it is becoming increasingly difficult to attach "Made in Scotland" labels to our goods. Apparently that is because of regulations pertaining to the country of origin of the raw materials and various EC regulations. Right hon. and hon. Members who have spoken in the debate have shown great pride in the work of their country or region. We all want the right for goods to be clearly labelled because it gives dignity to the work undertaken by the people in the mills and it is generally a sign of quality. We want quality to be recognised, because it wil be one of the most accepted ways in which we can compete in a hard commercial world. Will the Minister touch on the labelling of our goods, as it is an important issue?
May I add my request that the Minister goes in fighting very determinedly for the textile industry? The hon. Member for Calder Valley (Mr. Thompson) said that the Minister was being urged to be a Little Englander. The Prime Minister boasts about negotiating tough and hard on our behalf. Generally speaking, I did not agree with the Prime Minister's attitude in the European Community or with the issues on which she fought, but if the Minister reflects the same toughness of attitude in fighting for the textile industry, the House will be greatly indebted to him.
§ Mr. Gary Waller (Keighley)
I maintain today, as I have always done, that the British textile industry does not seek protection for its own sake, but wants to end the distortions of the free trade system. Some people in the House—although not today—and outside have failed to grasp that when, without examining the facts, they condemned our industry for opposing the opening of our markets to what they called fair competition.
A report from the National Economic Development Office shows that many countries have protected their home markets using every trick in the book, including high tariffs, quotas, restrictive licensing and distribution systems as well as import deposits and bans. By no means are the worst offenders the poorest countries. At the last renewal of MFA the British Government rightly pressed for special provision to be included for the most underdeveloped countries to expand their markets. However, tariffs of 100 per cent. or more destroy the jobs of British workers and to say, as the leader of the Liberal Democrats stated in 1986—I am sorry that the representative of his party, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) is no longer present—that MFA 4 must not be renewed is effectively to give away all our bargaining counters. Not for a moment must we consider trading off or bargaining away our textile industry in return for other benefits.
1243 We must also recognise that a protectionist spiral would harm Britain perhaps more than any other country. We in Europe cannot sit back and allow our market to be swamped by diverted goods if the United States imposes unreasonable protectionist measures. Earlier legislation in Congress may have been halted, but United States protectionism is certainly not dead and buried and we must be vigilant.
At the beginning of the previous decade there was great scope for rooting out inefficiency as a means of improving productivity in our industry. After such enormous improvements have been achieved it is much harder to detect ways of reducing costs and increasing production. Because the nature of many sectors of the industry requires them to be relatively labour-intensive, demographic changes involving a fall in the number of school leavers pose particular challenges. It is no longer a matter of seeking cheap labour only. Training has become all-important and we need more people with the skills and commitment to make their career in a progressive industry. We should never forget that, despite the structural improvements which have taken place in the past decade, profitability in our industry is still relatively low, and even a modest decline in demand would have devastating effects. Already many sectors of our home market have been captured, and eight out of every 10 pairs of jeans or shirts sold in Britain are made abroad. The dramatic effect of textiles on our trading position generally can hardly be underestimated, with a deficit in textiles accounting for nearly one fifth of the total national balance of trade gap.
The fragility of the present trading position is well put by the managing director of Aire Valley Mills in my constituency, Mr. John Knox. He writes:Imports over the last few years have grown at a greater rate than our domestic market … It would seem that already we must brace ourselves for a fresh avalanche of imports from Eastern Europe as they sell us one of their few tradable commodities (fabric and clothing) for hard currency. We would doubt if their prices would represent the actual cost of manufacture.Despite the recent changes in eastern Europe, it is likely to be a considerable time before one will be able to say that the countries there have ceased to be state trading economies. For political and social reasons, we are right to encourage their economic resurgence, so there is likely to be a long period during which imports from eastern Europe will increase while prices continue to be centrally supported. As Mr. Knox says:in the case of a sizeable percentage of our imports the main beneficiary is the middle man and not the general public. We manufacture wool crepe which we sell to the makers up at about £6.50 to £6.70. A very similar fabric is bought by a merchant from Poland at £4.65 and sold to the same makers up at £6.25.It is not surprising that Mr. Knox concludes:The controls that exist in the form of the MFA are to a great extent illusory, but their final removal would precipitate further disruption to our market and more manufacturing closures.In several of our previous debates about textiles and the MFA in its various forms, hon. Members have stressed the importance of reciprocity and the need for any dismantling of safeguards to be linked to clear progress towards free and fair competitive conditions and access to markets. Some newly industrialised nations now have many people 1244 prosperous enough to seek out the best in textiles and clothing of the type which our exporters produce so well, but those countries remain adept at using tariff and non-tariff barriers to deny us access to their markets.
It should not be thought that we can rely on further moves towards liberalisation without insisting on the renewal of the MFA. I agree with hon. Members who have said that its phasing out must take place over a lengthy period. I emphasise again the critical importance of the Punta del Este declaration, and that GATT rules must be strengthened before the MFA can go.
It is clear that the measures that GATT should incorporate in its rules must be sufficiently flexible to deal with unfair disruption of European Community markets in response to changing fashions and preferences. It is often difficult to make out a case that dumping is taking place, but its effects can be quite deadly in terms of the survival of companies and employment in this country. Although Professor Silberston says that Britain is not alone within the European Community in its susceptibility to targeting, it remains a fact that the relatively small number of distributors and retailers who account for over half the clothing sales in the United Kingdom make us peculiarly vulnerable to targeting—very often from countries whose own markets remain relatively restricted.
The creation of a single European market implies a single quota, but I do not think that we are alone in our concern about the damage that could be caused if that change was not introduced gradually and linked to progress in eliminating restrictions by producing countries.
Contrasting to some extent with his earlier report, Professor Silberston has gone a long way in recognising the realities of international trade in a competitive environment which is, unfortunately, far from fair. It is now perhaps also more widely recognised that over-hasty changes would have disastrous effects on employment in certain parts of the country, including the north of England. One must also not underestimate the problems caused by high interest charges and fluctuating exchange rates for an industry that is bound to import much of its raw materials and that depends so heavily on exports.
To an unparalleled extent, factors such as interest rates, which so often matter more than anything else, are outside the control of those who have to make the decisions about investment for the future. One must applaud the long-term vision and confidence of Courtaulds Textiles, which is currently investing over £4 million in a new factory for the production of mainly furnishing fabrics at Silsden in my constituency.
It is important to lift our eyes from the economic issues and consider the political and social consequences, not just in terms of jobs in Britain, but internationally.
The former Minister for Trade, my hon. Friend the Member for Plymouth, Sutton (Mr. Clark), was never slow to speak up for British interests, and in introducing our debate on the MFA in December 1988, he stated:As 1992 approaches, there is talk and, indeed, apprehension about the prospects of a Fortress Europe developing, and that would not be in the interests of the United Kingdom."—[Official Report, 9 December 1988: Vol. 143, c. 563.]A great deal has happened in eastern Europe since then. Economic factors will continue to play a key role in determining the future both of western and of eastern Europe, and trade, both between Europe and the rest of 1245 the world and within Europe, will continue to involve a number of state trading systems in the East—with tremendous consequences for the rest of this decade and into the next century. Unless that trade develops against a background of discipline and order, there could be disastrous results for both East and West.
§ Mr. Tredinnick
On a point of order, Mr. Deputy Speaker. I seek your guidance because of the crucial nature of the debate. Is it in order to proceed now that the Liberal Democrat Benches are empty?
§ Mrs. Alice Mahon (Halifax)
It is important, even at the risk of being repetitive, to remind the Government of the views of right hon. and hon. Members in all parts of the House on the possible consequences to the textile industry of any move to end the multi-fibre arrangement. The Minister gave a rather ominous warning about the industry's wages costs. Given the Government's record of not looking after the industry as well as they should have done, I hope that we are not entering a phase of the Government blaming workers, who have co-operated in every possible way through the most difficult times, for the industry's problems.
Like the hon. Member for Calder Valley (Mr. Thompson), I have a strong constituency interest. In fact, my mother was a textile worker, as were many other members of my family. I can go one better than the hon. Member for Calder Valley, because I worked in the industry myself, in two or three different disciplines.
I object to Conservative Members blaming the industry's current position all on the EEC, when in truth the Government themselves are responsible for a great deal of the mismanagement that has affected the industry's fortunes. No effective manager would have allowed a clothing and textiles trade deficit of £3.5 billion to develop, accounting for almost 20 per cent. of Britain's negative trade balance.
As to wages, if the Minister imagines that low pay leads to a successful economy, why is it that Bangladesh is not ahead of West Germany in the league of successful economies? My constituency and Calder Valley have suffered the loss of 8,000 jobs in the industry since 1975 but 5,000 jobs remain, and that is a substantial work force. The industry's workers, in co-operating in massive restructuring and in achieving an enormous increase in per capita production, helped to achieve the stabilisation that the industry enjoyed until very recently. Unfortunately, textiles are again becoming very vulnerable, and part of the blame for that must be laid at the Government's door. High interest rates and energy costs and other factors have created that vulnerability.
The effect of water privatisation has already been mentioned by my hon. Friend the Member for Bradford, South (Mr. Cryer), and it is of particular concern to those engaged in wool manufacture. It is suggested that water supplies will be cheaper, but I hope that any Conservative Member who makes that argument will be around when the industry starts receiving huge hills for water services.
For years, the Opposition have been telling the Government about misdescribing, which is another big problem for the industry, and about dumping. The Minister has promised to fight like a tiger. In the past, we have seen rather more kittenish behaviour, and we would welcome a change. Against that background, the MFA has 1246 been important to the industry, allowing it to recover. There is no question but that the MFA has controlled the rate of imports and allowed planning to take place.
The Silberston report said:It seems on balance to be desirable that every effort should be made to bring the MFA to an end, phasing it out over a period of time.We would have expected that view from a pro-marketeer such as Professor Silberston. Even he has had second thoughts. He now feels that the MFA should not be abolished without agreement on measures to strengthen GATT rules and disciplines. He now says:This would lead to piecemeal unilateral, or forced bilateral, action by many importing countries without multilateral supervision: the remedy would be worse than the cure.I am worried because the Minister has not shown even this modest conversion. He told us that there was no evidence that the MFA had protected jobs. I wait with apprehension to see what the Government have in store. The Silberston report, referring to consumers and bringing down prices in shops, says that the ending of the MFA would allowviable sectors of their textile and clothing industries time to adjust to greater competition.I know what my constituents would choose if given the choice between decreassing prices and their jobs—they would definitely go for jobs in the industry. I ask the Minister to take that on board.
I welcome the assurances given by my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) that the Labour Front Bench was considering helping areas without assisted areas status. I have long complained that we in the Calder valley have been left like the hole in the middle of the doughnut, with areas all round us given assisted area status, but we have had nothing. That is detrimental to long-term planning and to the aim of attracting business into the area.
We have heard about the 33,000 jobs, or 7 per cent. of the total in the United Kingdom, that might go if the MFA were abolished. That is nonsense. Informed people agree that the figure would be nearer 100,000 jobs. If only 7 per cent. of jobs went in my constituency, that would mean half the jobs gone at a stroke. If the figure were 100,000 nationally, it would wipe out the industry in Halifax and the Calder Valley for ever.
It is important to pursue the aim of a social development clause if we purport to be democrats. That measure concerns child labour. I should like the Under-Secretary of State to ask Ministers in other Departments to look at the awful regulation affecting textile workers laid off and working part-time which was introduced before Christmas. I ask the hon. Gentleman to give us some assurances to end the uncertainty and to tell us that the MFA will remain in place and protect the industry.
§ Mr. Deputy Speaker (Mr. Harold Walker)
Order. Several hon. Members seek to catch my eye. Doubtless, Front-Bench speakers will want time to wind up. I therefore hope that, although the 10-minute limit has expired, hon. Members will continue to make brief speeches.
§ Mr. David Tredinnick (Bosworth)
I want to place on record the fact that six Leicestershire Members are in the Chamber this morning. That is over 20 per cent. of the total number of hon. Members in the Chamber this morning. There have been three Opposition Members; and three Conservative Members: that shows the enormous concern in the county about the multi-fibre arrangement. I welcome the return of our senior Member, my hon. Friend the Member for Harborough (Sir J. Farr) and I also welcome the fact that my hon. Friend the Member for Loughborough (Mr. Dorrell) was in the Chamber, although, as a Government Whip, he was unable to speak.
I too believe that the MFA is crucial, as does every hon. Member who has spoken in this debate. It has enabled the industry to modernise. In the past five years, more than £2 billion has been spent on new equipment. As a result, since 1980, output per head has risen by 50 per cent. These industries make a huge contribution to the national economy. In 1988, sales exceeded £14 billion and their value added exceeded £5.4 billion. That is more than half as much again as the aerospace industry, and more than twice the computer and office machinery industry.
Like my hon. Friend the Member for Dumfries (Sir H. Monro) I am worried by what I perceive as the attitude of my hon. Friend the Minister to the MFA. I should like him to adopt a little more feline zeal. I forget whether he said that he would put a tiger in his tank or fight like a tiger. I hope that by the end of the debate, my hon. Friend is persuaded to fight like a tiger for the MFA.
The industry has had record exports of £3.6 billion. It provides 480,000 jobs, which is 9 per cent. of total manuafacturing employment. My hon. Friend represents Wokingham so he must believe me when I say that this issue is crucial in the midlands and in the north. We are not concerned merely with tinkering with technicalities; we are talking about livelihoods. I appeal to him to take seriously the issue of the continuation of the MFA.
At this very time, firms in my constituency are making desperate requests for MFA quotas to be introduced on imports of socks and sweaters from Indonesia. Firms such as Atkins of Hinckley, Hall and Son, Pex and Smallshaws, which are well known to me, are under threat. Most of the 70 firms in the Hinckley areas will be affected to some extent. The Knitting Industries Federation has been fighting hard on behalf of the firms, which are faced with a huge surge in sweater imports of 2.2 million pieces in the first nine months of 1989 compared with 1.4 million pieces in the same period in 1988, against a basket extractor level of 462,000 pieces. Indonesian sock imports spiralled to 9.5 million pairs in the first nine months of 1989, which is an incredible figure. We must see the MFA as the only way in which we prevent this wild escalation in imports. The 28p cost of those socks is lower than the cost of the raw materials in this country.
The Minister for Trade in another place—my right hon. and noble Friend Lord Trefgarne—has replied to the representations of the Knitting Industries Federation. He said:I am not persuaded that we have the clear evidence that these Indonesian imports, as opposed toother factors, are a major cause or threat of injury to UK producers in this sector.I am delighted to tell the House that I received a letter yesterday from the KIF saying that my right hon. and noble Friend has now agreed to consider the matter again. 1248 That is the flexible approach that we need. I appeal to my hon. Friend to follow the example that has been set by our right hon. and noble Friend Lord Trefgarne.
The examples of the surge in the import of socks and sweaters from Indonesia show up the weakness of the basket extractor system, which exists to introduce new quotas when imports rise and become disruptive. The Government require proof of injury or proof of the threat of injury before any action can be taken. The production of the necessary facts and figures inevitably takes time.
In the meantime, while the data are provided for the Government, the industry continues to suffer severe damage. As my hon. Friend the Member for Pudsey (Sir G. Shaw) said earlier, the process is too slow. To me, it is like trying to catch a rabbit which has gone down into the warren. What hope is there? The imports come in and it is impossible to track them down. We have discussed this with representatives of the KIF. We face an uphill task. The onus should be on the exporting countries. As my hon. Friend the Member for Pudsey said, we want to see the bills of lading. Why should we do it all at this end?
Then there is the whole question of enforcement. The industry as a whole seeks reassurance from the Government that in future they will readily implement the existing agreements. That problem is highlighted by the massive influx of Turkish socks. In just three years, United Kingdom imports of knitted products have risen by 59 per cent., fuelled by artificial manipulation by many south-east Asian countries, particularly in connection with currencies and other matters.
Hon. Members have touched on the question of the United States. The USA is currently considering the possibility of introducing a global quota on all imports. If that happens, we shall have another major dumping problem. That too strengthens the case for existing arrangements. In the important Adjournment debate on the Leicestershire knitwear industry on 12 December, my hon. Friend the Minister for Industry, responding to my hon. Friend the Member for Rutland and Melton (Mr. Latham) said that, in looking for ways in which the industry could be helped, there wasscope for collaborative ventures in which the Government are prepared to play a part."—[Official Report, 12 December 1989: Vol. 163, c. 984.]I should like to know from my hon. Friend the Minister what those collaborative ventures are; we should be grateful for clarification.
The Minister also referred to the 10-point plan put forward by the Knitting Industries Federation. Half of those points entail self-help. Many firms in my constituency have approached their problems aggressively with self-help in mind. Few industries, if any, have a better record in this respect. Take Fludes in my constituency. In 1975, it employed 1,200 people. Today, it employs half that figure, but its productivity is a third higher. Local firms—Fludes, Bennetts, Atkins and many others—have all invested in new plant and new equipment. They have certainly helped themselves—make no mistake about it. One can get any modern high-fashion design made up in Hinckley now. One does not need to go to Italy. The turn-around in Hinckley is 24 hours for a sample. That shows how competitive we have become.
There have been failures too, and that is why we need the MFA and we need the transitional period extended. My hon. Friend the Minister asked how long we should extend the period. The answer is 10 years. Failures in my 1249 constituency include Castle Knitwear, Sunnydale Knitwear, Hinckley Knitting, and K. D. Apparel, which announced its closure almost a year to the day after I attended its new factory opening ceremony.
I am convinced that any phasing out of the M FA must depend on demonstrable progress in strengthening GATT rules and principles and signs that the rules are truly effective in eliminating trade abuses. That is why I argue for a 10-year period. It is unrealistic to expect that strengthened GATT rules and disciplines will have had a sufficient effect in removing trade distortions for the benefits to be felt fully before 10 years have elapsed. It will take 10 years for the new arrangements to evolve. One cannot wave a magic wand and simply say, "It will change." It will not work like that.
We are all delighted at the changes that are taking place in eastern Europe, but the hosiery knitwear industry must surely view the prospects with some foreboding. The obvious way in which to help eastern European countries is to ease the quotas. The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) referred to requests for quota increases of 44 per cent. for Poland and 16 per cent. for Hungary. We cannot take such changes straight away. I am all for giving aid to help the countries develop internally, but we must not give away concessions that will wreck our industry.
Finally, I should like my hon. Friend the Minister to initiate a "Buy British" campaign. We have great products. It has been done before. I receive lots of letters asking why the Department does not promote a "Buy British" campaign. I am sure the Minister would have the support of all of us, and I leave him with those thoughts.
§ 1.9 pm
§ Mr. Keith Vaz (Leicester, East)
I join other hon. Members in welcoming the hon. Member for Harborough (Sir J. Farr) back to the House, although he has had to leave the Chamber because he is unwell. My hon. Friend the Member for Leicester, South (Mr. Marshall) is here and my hon. and learned Friend the Member for Leicester, East (Mr. Janner) was present earlier, but had to leave because he had an urgent constituency engagement and was unable to stay.
The unity of Leicester Members was demonstrated recently in the early hours of 12 December 1989, in our speeches during an Adjournment debate initiated by the hon. Member for Rutland and Melton (Mr. Latham).
The history of the textile and hosiery industry is embedded in the social fabric of the county of Leicestershire. As early as 1520, one third of the aldermen in the city of Leicester gave their occupations as connected with the textile and hosiery industry. Despite the job losses over the past 10 years, Leicester remains one of the principal seats of the industry.
It was wrong of the Minister today to begin his speech trying to stir up problems between the two sides of the industry by referring to wage costs. One of the rare things about the industry is the degree of unanimity in Parliament and outside between the employers and the trade unions. Representatives of the National Union of Hosiery and Knitwear Workers and the Leicestershire knitting district committee came to the House of Commons in December to lobby and speak to both Labour and Conservative Members. It was a great pity that the Secretary of State for Trade and Industry could not be present, although he was 1250 invited. The representatives spoke with one voice and said that the problems in the industry over the past 10 years were in part due to the Government's policies. The high level of imports, the Government's inability to take a tougher line in negotiations with the Common Market, the high interest rates—a direct Government policy—and the fact that the level of the pound was so high have caused devastation in our local industry.
My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) witnessed the problems at first hand when he visited Leicester. He visited firms, met both sides of the industry and heard what they had to say about the Government's policy. The Minister is not prepared to accept the level of job losses as a sign of the damage to our industry.
Over the past 10 years, the industry has lost 150,000 jobs. This week the Leicester initiative was launched, which shows that if we divide the number of jobs lost as a result of the Government's policies over the past 10 years, by the number of weeks, days and hours in that time, one textile job is lost every hour. By the time the debate is concluded, five more textile workers will have lost their job. The Minister has said nothing at the Dispatch Box to end that decline.
The ordinary people in the industry, the workers who understand the problems and the employers who live daily with the high interest rates, want the Government to take firm and effective action. Recently I visited a small textile firm in Humberstone. The owner asked me honestly, openly and in plain language, "How, Mr. Vaz, do I compete with 14p knickers that come from the far east? How do I compete with that? What profit margins do I have to pay on that?" In a week when my hon. Friend the Member for Edinburgh, Leith (Mr. Brown) has made an issue of such matters and the press went to town, the press did not question the origin of that particular garment.
The hon. Member for Bosworth (Mr. Tredinnick) referred to America. I visited America a year ago. When I watched the legislators in the Senate, I was astonished to see them discuss the textile industry. Senator after senator in that place, which represents the gods of the free market, urged the President of the United States to set import quotas. That area, which believes in free trade, has suffered a penetration rate in the textile industry of between 80 and 90 per cent. The senators were putting forward initiatives which they call Acts, but which we call Bills. Twenty Acts were before the Senate, calling for the limitation of imports into the United States. If the Minister wants to know what the textile industry will be like in the year 2000, he has only to look at the American experience. That is why everyone is concerned and passionate about the issue. We do not want to share the American experience.
Hon. Members mentioned the economic importance of the industry. I agree with my hon. Friend the Member for Halifax (Mrs. Mahon). I do not accept for one moment that we can anticipate that 33,000 jobs will be lost if the Silberston inquiry report is accepted by the Government. The figure will be nearer 100,000. That will devastate the city which I and my hon. Friend the Member for Leicester, South represent. It will affect not only firms, which will have to close, but whole families.
I have asked the Minister to give an assurance about assisted area status. He says that other Ministers have said that it is not right that the Government should provide subsidies to industry. What about Rover? When it was convenient for them, the Government were prepared to 1251 give sweeteners to buy not a lame duck but a lame dog company. They were prepared to give incentives to convince the people who wished to buy. Why not provide the same assistance to our industry? The industry does not want the Government to assist it with its profits, but it would like fair competition. At present, it faces unfair competition.
All other Governments in Europe are prepared to give assistance to their industries. The French, who have refused to accept EEC directives on origin marking, are prepared to support their industries. Why are the Government and the Minister not prepared to do that? When hon. Members raised the issue of assisted area status with the Minister for Industry on 12 December 1989, he gave two explanations why it could not be effective for Leicester, Halifax and other centres. He said that, for the duration of this Parliament, he was not prepared to alter the maps for assisted area status. The Government are prepared to alter the constitution and social fabric of the country, so why are they not prepared to alter the maps for assisted area status? The Minister said also that the unemployment figures in Leicester do not justify the establishment of assisted area status for Leicester. Unemployment figures in the textile industry in Leicester certainly justify assisted area status. Since the beginning of 1990, there have been more than 290 redundancies in the county of Leicestershire.
Nine civil servants are sitting in the Box. We have an identikit Minister, who was probably crocheted by the Prime Minister on one of her days off, and we have no policy. The Minister will remember an article in The Sunday Times in April 1988, which predicted that he would be one of the great leaders of the 1990s and that, one day, he would become the leader of his party. When he becomes the Leader of the Opposition, there will be no textile industry left unless he acts quickly.
Day by day, we see the human tragedies. Hansard shows lists of statistics, which are referred to by many right hon. and hon. Members. We are punch-drunk on statistics. The thousands and the millions roll off the tongue extremely well, but they represent real people who have lost their job and who have invested in their industries, and real companies such as Kemptons and Corah, which have a tremendous amount of involvement in Leicestershire. They cannot survive without the Government taking action.
All hon. Members have pressed the Minister for an assurance that the multi-fibre arrangement is not only to be renewed but supported and toughened because of experience over the past 10 years. On a practical level, let us have an assurance from the Minister that he will ask the Chancellor of the Exchequer to lower the damaging interest rates that are forcing many of our companies and industries to close. The evidence and the damage exist. We ask the Government to act now.
§ Mrs. Elizabeth Peacock (Batley and Spen)
I welcome the opportunity to speak in the debate. As we are coming to the end of the debate, I realise that many of the points that I shall make have undoubtedly been made already, 1252 but I make no apology to the House for reiterating them just in case, in the earlier hubbub, the Minister did not hear what we were saying.
It has been a good debate. This is the House of Commons at its best. However, I wonder how much of it will be televised and reported because we are not shrieking at each other, but agreeing. This is good House of Commons work.
It is essential to be positive about the multi-fibre arrangement and about the possible development of a totally free market in 1991 unless we can get a continuation of international trade agreements that will control the worldwide production and movement of textiles. We need that desperately. We have already heard that the industry employs about 480,000 people and has invested highly in automation and technology. Its production has increased by about 50 per cent. since 1980.
I am looking for the continuation of MFA-style agreements, if not for the present one, and for something that is orderly and equitable to provide for the development of trade for a substantial number of years into the future. Together with their European partners, I expect the Government to get on with negotiating the continuation of this style of agreement. Nothing less will be acceptable to those of us who represent textile industries and to the people who work in them.
There is no point in mincing words. The British textile industry has to be protected from unjustified and unethical competition. The Government have a duty to protect British jobs in British industry. I suggest that that is what they were elected to do and many of us look to them to do just that in the future. We must make it clear that the industry is not looking for protectionism as such. It is looking for safeguards. If other countries call it "protectionism", let them, but we know what it means and we should continue with it.
These issues affect many of us in Britain. The north of England, Scotland and the midlands have been well represented by their Members of Parliament today. We are all concerned about the industries in our areas and about many of the people employed in them. In many cases, it is not only the head of the household who is employed in the textile industry, but the whole family and any change in the fortunes of the industry will affect a great number of people. The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) mentioned Hunsworth Dyeing. I do not know whether he has been to visit Hunsworth Dyeing—I was not aware that he had visited it—but it is a Coats Viyella company that is closing. The tragedy is that is not just the loss of 100 jobs, which is bad enough in itself, but that husbands and wives and even sons are employed in that industry. They will all lose their livelihoods and jobs. Many of us have been involved in great family tragedies. Unfortunately, we have not been able to persuade Coats Viyella to continue there and, regrettably, we must accept its commercial decision.
I am all in favour of overseas aid. We all are, but sometimes charity must begin at home. We must look to protect our British way of life and our textile industry. We should not be too ashamed if we are occasionally branded as "Little Englanders". Why not? That is what we are and if it helps to protect our industry, why not—
§ Mrs. Peacock
I leave other hon. Members to include Scotland.
As a country, a Government and a House of Commons, we should always play by the rules. We are supposed to be English gentlemen, so we play cricket by the rules, but why should we continue to play by the rules when other countries do not even understand how to play cricket and are certainly not playing by the rules? But we are not talking just about cricket; we are talking about preserving jobs in the British textile industry. I take issue with Professor Silberston's report because of his great underestimate of the number of jobs that might be lost. Many of us are greatly concerned that even 33,000 jobs might be lost, but we do not believe that that will be the total number of job losses.
We have a great affinity for our textile industry. I was born and brought up in Yorkshire and have spent most of my life there, and I have seen all manner of textile companies prosper, go down and come back up again.
§ Mrs. Peacock
Indeed, I did, and no doubt learnt a lot while I was there.
Professor Silberston speculated that if the MFA were ended, textile product import prices would fall by about 8 per cent., which would lead to an average 5 per cent. fall in United Kingdom producer and retail clothing prices. A small reduction in household budgets of 2, 3, or 4 per cent. is no consolation if the head of the household, his wife and some of their children lose their jobs. They might make a small gain in their weekly budgets, but they would have no jobs. I do not believe that they would willingly make the latter sacrifice.
Given the right conditions, the wool industry for one is prepared to sell. It has done that. It has been prepared to create real export growth with first-class value added goods which cannot be equalled anywhere in the world. My hon. Friend the Minister mentioned the chairman of the Wool Textile Export Corporation, Mr. John Ward, who is a constituent. The corporation has achieved record earnings from wool textile exports for three consecutive years, 1989 being the latest, and it looks forward to the future with confidence. It hopes that 1990 will be even The Batley part of my constituency has clothed our soldiers since the 1800s. It was the home of the army greatcoat and army blankets. The industry was built up partly on such products. Unfortunately, boom times in Batley were during war, and bust times were when we settled down to peace. The textile industry there has had ups and downs. It is regrettable that soldiers do not wear army greatcoats any more. I am not sure what they use for blankets, but it is certainly not Yorkshire wool. Those times have gone, and we must look to the present and the future. Wool and mixture yarn has accounted for much of the increased value in trade recently, and for increased volume. That is a clear demonstration that the industry is capable of taking positive action if it is encouraged by the right sort of Government and European support. All sectors of the United Kingdom textile and clothing industries have greatly increased their efficiency and competitiveness, especially during the past 10 years. They are less vulnerable to foreign competition than they once were as they have learnt to handle fashion changes and 1254 provide quick deliveries. That is what we need. Nevertheless, we need an international framework which enables the industry to prosper and reinvest.
This is too important an issue to leave to civil servants in Whitehall or bureaucrats in Brussels. We have to be involved and to have strong Government pressure and a strong Government input into the decision. In my part of the world, we have halved unemployment since 1984, but we are losing jobs in textiles. We are worried about that. If more jobs go, they will be regional. They will be Yorkshire jobs, Scottish jobs and jobs in Northern Ireland. We are not prepared to lose them to help achieve greater affluence for what I suggest are already affluent people in Britain.
Having recently discussed textile matters in Hong Kong and China, I am aware of the tremendous international pressure to end the MFA in 1991. We have to reject any change. Businesses never stay still. We all recognise that, and it is particularly true for international concerns. At the 1990 Uruguay GATT round, we must negotiate the continuation of firm and sensible MFA-style controls. I suggest that we need some sanctions, if necessary in the form of emergency tariffs. Other countries can get away with that. Anybody who sends goods to Turkey contributes to that country's housing programme. I wonder whether we could do the same here. I am sure that we will be told that that is not possible.
I note, Mr. Deputy Speaker, that you are looking carefully at your watch. Therefore, I must curtail my remarks.
Business is about confidence to invest and about. long-term planning and investment to minimise risks. It is not about allowing agreements such as the MFA to wither away. We must plan for its replacement a long time before that happens. In modern-day life we tend to do everything quickly. We should take 10 years or more to decide on any replacement. The six to seven-year timetable for change proposed by Professor Silberston is not long enough. It is up to us to ensure that we have a much longer hand-over period.
When my hon. Friend winds up I hope that he will give us some assurance that the Government will ensure the continuation of an MFA-type agreement. If that agreement must be called something else it must come out of the GATT round of talks. That would be acceptable. We need such an agreement as it ensures help for the British textile industry.
We should concede nothing during the GATT round that would commit Britain to any steps that are not part of a long-term management plan to ensure the stability of our textile activities. Those activities are important to our manufacturing base and important to many hon. Members and their constituents.
§ Mr. Jim Marshall (Leicester, South)
The Minister must be impressed by the unanimous view expressed in the Chamber about the need for continuing with some form of MFA, whether a renegotiated MFA or a strengthened GATT arrangement developed over a suitable time.
The Minister must also be impressed by the fact that we are not seeking extra protection for the textile industry, but we are seeking to ensure that our textile industry, at home and abroad, can compete on equal and fair terms with its competitors. Despite some of the Minister's 1255 churlish remarks at the beginning of his speech—he redeemed himself a little by the end—the industry has made great strides to face increased overseas competition.
Reference has been made to the increase in output per employee, which, in the past 10 years, has been 50 per cent. In the past five years, £2 billion has been invested in the industry. It is also important to note that wage claims within the industry have always been moderate. Male employees earn about 85 per cent. of the national average male wage, whereas female employees earn between 90 and 95 per cent. of the average female wage. The workers are not grasping and avaricious; they have always moderated their wage claims in their interests and in the interests of their industry.
Industrial relations are good. My hon. Friend the Member for Leicester, East (Mr. Vaz) has already mentioned the amicable relationship between the trade unions and the employers. It is amicable because people realise that employers and employees have a vested interest in ensuring the industry's success. The industry has made a real attempt to survive.
I have been involved in the textile industry in some way or other ever since I graduated from university in 1963; first professionally, and then, after my election here in 1974, politically. Without fear of contradiction, I can say that confidence in the industry now, particularly among the employers who make the decisions, is at the lowest ebb that I have ever seen.
We had meetings during the past few months with employers, who said that unless action were taken—they were talking about the need for changes in Government policy on interest rates and the high value of the pound —there was a real possibility that large sections of the textile industry would not survive the next two to three years. The Minister said that the value of the pound has declined. However, we still need action on interest rates. They are so high that they act as an inhibition on employers to invest in the new technology that the industry still requires.
There must also be continued action on the MFA. If it is thought that the Government are prepared to do away with the MFA, that could seriously—if not lethally—undermine the remaining confidence within the textile industry. The Minister must say clearly and unambiguously that the Government are prepared to renegotiate the MFA and, if necessary, to set up a new MFA and wait for the strengthening of the GATT in the next 10 years.
The Minister and the House are probably sick of Leicester Members speaking during such debates as this, but I wish to say a few words about Leicestershire, as the industry is vital to the city and the county. Two years ago, 42,000 people were employed in the textile industry in that area. Since then, 20 per cent.—one in five—of those jobs have disappeared. If present trends continue, that figure is likely to be further increased throughout 1990. That would be disastrous.
As the Minister and the House know, a large proportion of those employed in the industry are women and members of the ethnic minorities. Every time a job disappears in the textile industry, it impinges upon equal opportunities for those people. It is essential that there is some stability in the industry to protect their jobs.
1256 It is in all our interests that there should be an expansion in world trade, as that will increase prosperity both here and overseas. When we seek to bring that increase about, it must be done in such a way that competition is fair on both sides. The Government have made clear the guidelines that they want for that to be brought about.
There has been a surge in imports and in tariff and non-tariff barriers. The hon. Member for Bosworth (Mr. Tredinnick) talked about the surges in imports of sweaters and socks from Indonesia. The initial reply from the Minister for Trade, Lord Trefgarne was appalling. He said that, although imports had increased by one third in 1989 over the corresponding period for 1988, he remained unconvinced that that was a surge in imports, and he was not prepared to take any action. I was pleased to learn from the Under-Secretary's speech that he may now be prepared to take action. We must ensure that, if the Government know the rules, they are prepared to operate them quickly and expeditiously so that British industry can be saved from unfair competition.
On tariff barriers, the example of Turkey has been quoted many times. Turkey is operating discriminatory trade barriers against British goods. For knitted outerwear, it is 125 per cent. That is a well-known fact. Therefore, why the hell is something not done about it, so that British manufacturers can compete on an equal footing?
I shall repeat the point that I have already made twice. The British textile industry can and will be able to compete if the Government are prepared to ensure that there is fair competition at home and abroad. In the short to medium term, we must maintain the MFA so that we can have such fair competition.
§ Mr. Andy Stewart (Sherwood)
The subject of today's debate is of great significance to the knitting and textile industries, which play a major role in the national economy. Therefore, it is essential to renew the multi-fibre arrangement in its current form when its present term expires in July 1991. It is also essential that its longer-term future should be dependent on demonstratable progress in tackling the trading abuses that adversely affect international trade and hold back the development of the United Kingdom's industry.
The knitting and textile industries are vital to the national economy, with annual sales of more than £14 billion, exports last year approaching £4 billion and a work force of 485,000 people who account for 9 per cent. of all manufacturing employment—64 per cent. of whom live in the east midlands. The region's prosperity is crucially linked to the fortunes of the knitting and allied industries, in which one job in five is to be found in manufacturing, compared to one in nine nationally. The industries are also major employers of women, who represent 80 per cent. of the work force.
What I have said so far gives the impression of a successful industry. Unfortunately, that is only half the story. The profitless prosperity of 1987 and 1988—high activity with insufficient profit margins—has been overtaken by high interest rates, which have stunned high street sales. Today's debate takes place against the background of increasingly difficult trading conditions. The latest production index from the Department of Trade 1257 and Industry shows output down 13 per cent. in October 1989 compared to a year earlier. Job losses in the 12 months to December 1989 were 23,000, and the outlook for 1990 is extremely worrying.
The United Kingdom's knitting and allied industries are efficient and well equipped, with a strong reputation for quality and design. Their work force is skilled and adaptable. That commendable tribute is supported every time I visit a factory in my constituency. My latest visit was to the Viyella menswear factory in Hucknall. It preceded an important visit by the Princess Royal. We saw the latest in computer design and a new production line system of gents' shirtmaking—revolutionary but necessary for the company to stay in business and to meet its customers' growing need for a quick response to rapidly changing consumer preferences.
Despite the continuing rise in exports, the trade deficit in textiles and clothing is likely to have reached £3.5 billion in 1989—almost 20 per cent. of the national balance of trade deficit. In those extremely difficult circumstances, it is vital to avoid adverse changes in the international trading framework. Any phasing out of the MFA must be dependent on progress in strengthening GATT rules and disciplines, and signs that those new rules are truly effective in eliminating the trading abuses that adversely affect our constituents.
It is too early to specify the period required to bring about such progress, but it is unrealistic to expect that strengthening GATT rules will remove trade distortions and allow the benefit to be felt until at least 10 years after the integration process begins. Even the exporting countries whose exports are limited under the MFA recognise that the process cannot take place overnight. Virtually all have recognised the need for a phasing-out period of at least five years, and some will be seeking considerably longer.
Therefore, it is essential that the MFA should be renewed in its present form in 1991 when the current term expires. Without the MFA, despite its serious imperfections, there is no doubt that the present critical situation would be even worse.
In my constituency there is an added dimension. The House and the country know that Sherwood is Britain's premier coal-producing constituency. It was also the home of Rev. William Lee, the inventor of the knitting machine, whose quincentenary we celebrated last year.
Miners' wives invariably work in the textile industry. The two industries run hand in glove. The textile factories take advantage of the available female labour and the wives' salaries complement the household income. However, since 1983 6,500 miners in Sherwood—;50 per cent. of the total work force—have left the industry. Miners over the age of 50, having worked underground for almost 40 years, were encouraged by their wives to accept early retirement and enjoy their remaining years, but before doing so, all the options were considered, including the wives' earnings. Due to the textile recession and the unfettered dumping of garments, wives' jobs are disappearing, bringing hardship to many households. If there is no alternative female employment available, as a last resort retired miners will have to seek work again. That would be grotesquely unfair.
However, my hon. Friend the Minister has said that he will fight like a tiger. Perhaps he should not have said that, knowing that these days the only people who win fights are 1258 the lager louts. I know that he is listening to the arguments and that he will act in the best interests of my constituents who work in the knitting and allied industries.
§ Mr. David Young (Bolton, South-East)
Debates on the textile industry have one factor in common: right hon. and hon. Members from both sides of the House who represent constituencies with textile interests rally round an industry which is vital to Britain. The textile industry is the fourth largest light manufacturing industry in Britain. It employes 485,000 people. Its output per head has been increased by 50 per cent. in the last 10 years. Its annual sales amount to £14 billion and exports in 1988 reached £4 billion. It represents 9 per cent. of manufacturing employment in the United Kingdom. However, the textile industry is concentrated in particular regions. Therefore unemployment in the industry means unemployment in those regions which were hardest hit by the recent recessions. Often there is little alternative for employment. Therefore it is the duty of the Government and Back-Benchers to support the textile industries in those regions.
I was taken aback by the Minister's rather laid-back approach—it was almost horizontal. Of course, he has no direct responsibility and of course the decision will be taken by the EC, but it is the duty of the Government to speak for the textile industry in the councils of the EC and those negotiations are no place for sleeping tigers.
Management and unions have the feeling that the Government look upon the textile industry as something from the past. Financial services are the up-and-coming thing and there is an impression created by the Government that we may have to do without the textile industry. I hope that that impression is wrong and that in his winding-up speech the Minister will say that the Government are fully behind the renewal of the multi-fibre agreement. I hope that he will tell us that the Government will do everything that they can to see that the agreement is renewed.
I recently found a quotation which sums up the matter fairly well. It is from a speech by Mr. Tony Benson, president of the British Textile Employers Association, and was delivered in 1985 before the last renewal of the multi-fibre agreement. Describing the agreement he said:The developing countries have been provided with an assured, quantified market in the developed countries, and with reasonable annual growth rates. The more vulnerable developing countries receive equal treatment and are protected from the crushing power of their more advanced neighbours. We must have confidence to invest in new and modern equipment in order to improve our international competitiveness, and the prospect of a balanced trading environment, in which the MFA is an essential part, is a pre-requisite for this advance.That quote from a speech made some years ago sums up the present position.
The Government must seek the renewal of the MFA because it is all that we have at the moment to safeguard the textile industry. We must not throw away such an agreement by actions or by default. The textile industry has an efficient, skilled and adaptable work force. Management has done what it can to modernise, but that is not enough to counter the grinding effects of high interest rates. I am sorry that in his opening speech the Minister seemed to place responsibility for success entirely on the management and work force. In the battle to retain 1259 our share of the textile market, Government have a part to play. It is worrying that a great deal of the severest competition comes from countries whose Governments have taken up the cudgels and are prepared to support their textile industry in every way.
I hope that the Minister will do everything in his power to help our industry. More than anything else it needs confidence. It must be assumed that Back Benchers and Government are speaking on its behalf and that the Government will argue in Europe for the renewal of the MFA.
This nation is a member of the EC and must fight its corner within that organisation. We have a tremendous textile industry, but its is facing increasing difficulties, which in many cases such as high interest rates have not been caused by its own actions. It is for us and the Minister to back the industry and to help Britain to retain an important part of its manufacturing base. That can be done only by supporting a renewal of the multi-fibre arrangement.
§ Mr. Ken Hargreaves (Hyndburn)
Perhaps it is appropriate that the last Back Bencher to speak in the debate is from Oswaldtwistle, where James Hargreaves invented the spinning jenny. Not so many years ago, a debate on textiles would have prompted a large postbag for the Member of Parliament representing my constituency. That that has not been so on this occasion reflects the massive loss of textile jobs in Hyndburn in recent years, with those involved in the industry now numbering hundreds rather than thousands. I may be speaking on behalf of fewer constituents, but they are no less important for that.
The debate does not concern propping up the domestic textile industry but is about maintaining a fair and stable environment that will give it confidence to invest in the future. It asks not for protectionism but for the enforcement of fair trading practices. Given that, there is no doubt that massive investment on the scale of recent years will continue.
The present rules are unsatisfactory, in that in many instances they allow a case to be proved only after damage has been done. Blackburn and District Textile Manufacturers Association supports the view that any erosion of the rules would be catastrophic and that strengthening of GATT is of paramount importance prior to the ending of the MFA.
I welcome the fact that that view is widely shared by the Government, by the European Community and by Professor Silberston. It is important that before the arrangement is ended, stronger and more efficient safeguards, especially those relating to dumping, subsidies and fraud, are put in place. I welcome also the statement by my hon. Friend the Parliamentary Under-Secretary of State for Corporate Affairs thatThe main issues for discussion in GATT are clear. It is accepted that the integration of textiles and clothing into GATT could only be gradual and progressive."—[Official Report, 9 November 1989; Vol. 159, c. 1304.]In a letter to me on 8 January, Mr. David Duckworth, secretary of Blackburn and District Textile Manufacturers Association, commented: 1260To achieve an orderly transition from the MFA to GATT rules will need a period of five to ten years in order that the effectiveness of the GATT rules may be tested.I believe that he is absolutely right.
The textile industry and the fine people whom it employs deserve our support. The industry has shown remarkable resilience over the past few years and has acted to improve its competitive position. Even in the uncertain conditions that now prevail, investment is increasing, with some £8 million of investment in north-east Lancashire over the past five years.
Increasing importance is being placed on design. Hilden Manufacturing Company in my constituency, under the enthusiastic leadership of its managing director, Mr. Peter Hargreaves, has succeeded in expanding through a combination of positive attitudes by all and a determination to break into the often difficult export market. I know that Mr. Hargreaves will ensure that its export earnings continue to rise.
The survival of such firms depends on improving further their competitiveness in both domestic and overseas markets. The investment required in new technology will be made only if companies are confident of the future. Without the present system of restraint on low-cost imports, the prospect of reasonable stability would be removed—and with it, much of the confidence on which investment depends. Job losses would inevitably follow.
Professor Silberston himself acknowledges that almost 33,000 jobs will be lost if the MFA is ended. Many in the industry believe that he underestimates the danger and fails to take full account even of his own statement that imports entering this country at very low pricesif sustained for some time, could make it impossible for competing domestic production to survive at all.Professor Silberston has also paid too little attention to the additional job losses resulting from the knock-on effects in other related manufacturing and service industries. Despite the increased investment in east Lancashire, which I mentioned, in the past 12 months there has been a return to short-time working in many companies, together with a number of redundancies and mill closures—at a time when unemployment has fallen dramatically in north-east Lancashire. The loss of jobs in textiles is sad in an industry that is made up of skilled, hard-working people with an industrial relations record second to none, people who have readily accepted attempts to improve competitiveness—shift working, job flexibility and low wage increases.
Those are real people, as the hon. Member for Leicester, East (Mr. Vaz) said. To those of us who have lived in textile areas all our lives, these are our family, friends and neighbours. I believe that the Government care about the textile industry. Although the British Government in isolation cannot have their own way in the important decisions and discussions ahead, I hope that we can look to my hon. Friend the Under-Secretary of State to argue Britain's case forcefully.
§ 2 pm
§ Mr. Henderson
With the leave of the House, Mr. Deputy Speaker, I wish to make a few concluding observations on an interesting debate. Much information about the industry has emerged and the passion felt about the industry and the communities that depend on it has been displayed. The number of hon. Members who have 1261 spoken shows the strength of feeling on this subject on both sides of the House. I welcome the fact three former Ministers were prepared to give us their experiences of industrial affairs in making the case for strong support for the industry--the hon. Members for Pudsey (Sir G. Shaw), for Pendle (Mr. Lee) and for Calder Valley (Mr. Thompson). The Minister should be in no doubt about the opinion of the House.
My hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) commented on the Minister's lack of energy in presenting his case. I hope that there is nothing physically or mentally wrong with the Minister. I hope that he has some appetite for his brief. He is remembered, especially by Conservative Members, as a somewhat energetic tiger when he was involved in the No. 10 think tank. I hope that he is not burnt out. Industry needs something better than a paper tiger in the Department of Trade and Industry tank. Unless the Minister explains the Government's position more clearly, the House will be in great doubt about their intentions.
The hon. Member for Harborough (Sir J. Farr) said that he was scared stiff of the consequences for his constituency. My hon. Friends the Members for Ashfield (Mr. Haynes), for Bradford, South (Mr. Cryer), for Bradford, West (Mr. Madden), for Halifax (Mrs. Mahon), for Oldham, Central and Royton (Mr. Lamond), for Leicester, East (Mr. Vaz) and for Bolton, South-East (Mr. Young) said that they, too, had been scared stiff by the possible consequences if we do not get this matter right. The industry will be scared stiff if, at the end of the debate, it is not clear where the Government stand.
The Under-Secretary of State must not hide behind any brief that the civil servants have prepared for him in the hope that he will play for more time before it is necessary to make the Government's position clear. I am not saying that this was your intention, Minister, but I do not believe that the Government's intention was clear from the opening remarks. You must give the House a clear answer—
§ Mr. Henderson
I apologise. The Minister must give a clear answer to the House so that we know where he and the Government stand on the matters that we have raised.
I have four final questions for the Minister. First, will he make it clear that he will support a multi-fibre arrangement renewal by the European Community in the talks that are about to begin? Secondly, will he guarantee that any outcome of the talks at the GATT negotiations on safeguards, anti-dumping and market access will be reported to the House before a final decision is reached by the EC negotiators? Thirdly, if the results of those talks are unacceptable to the House, will he give us a commitment that it is not the timetable, but the substance of the issue that then matters? Will he guarantee that the British Government will seek to toughen the MFA, if that is the situation that we face? Fourthly, does the Minister accept the argument that whatever one's long-term strategy, there is a strong and essential case to be made now for a tightening-up and renewal of an MFA 5?
§ 2.5 pm
§ Mr. Redwood
With the leave of the House, I shall reply to the debate. We have had a good debate in which many hon. Members have put forward strongly held views from 1262 their constituencies, and have stressed to the House the importance of the textile industry and the way in which it has changed in recent years. I appreciate all those comments and I understand the importance of the textile industry to many communities. In the mid-1970s, I was a textile analyst and I travelled the country extensively visiting the textile industry, so I learnt a great deal about it. Although I travel less frequently these days in my new job, I see textile companies, and I am impressed by how great the changes have been and how much progress there has been in introducing new machinery, new ideas and new products. Nothing that I said at the beginning of the debate was intended to cast aspersions on the industry, and I went out of my way to stress its importance and its achievements in increasing productivity and exports arid playing an important role in our economy and in many individual communities.
I understand that some hon. Members have had to leave before the conclusion of the debate and I am grateful to them for letting me know in advance. Friday is the day on which hon. Members like to be in their constituencies and I am grateful for the courtesy of those hon. Members. Much comment has been made about my remark that I would fight like a tiger against unfair trade practices. I reassert that now. I have no love of unfair trade practices, whether they are state subsidies and state aid, dumping or other types of market distortion which are widely condemned by GATT provisions covering individual products, and in the framework set out in the treaty of Rome and subsequent documentation aimed at creating a fair and level playing field in many areas of the market place within the European Community.
I repeat that assertion, but the House should remember that most of the remarks today were addressed to my right hon. and noble Friend the Minister for Trade. I am not in the same position as my predecessor at the Dispatch Box at the end of 1988, who was Minister for Trade and who was himself handling these detailed matters. My right hon. and noble Friend is doing a good job standing up for British interests in matters such as Turkish and Indonesian imports and he will read the comments made in the debate. I know that he is doing the best possible job for Britain in trying to put across our point of view through the EC and directly when he meets his opposite numbers. He has, for example, recently been to Turkey and has made strong representations about the points on which the House is concerned. The House will have noticed that I have been here throughout the debate listening attentively and I have made copious notes. I shall report the strength of feeling in the House to my right hon. and noble Friend and to my right hon. Friend the Secretary of State. Three times in recent weeks the Government have set out their attitude to the negotiations in the EC and to those in GATT. My hon. Friend the Minister for Industry put it clearly in a recent Adjournment debate. I have tried to be more expansive today as we have had the advantage of a five-hour debate. I have tried to explain some of the intricacies of the negotiating position that has been assumed by the European Commission in the early negotiations with GATT and the type of questions that the British Government are pursuing as a result of the consultation replies to Silberston, this debate and other representations that have been made.
When the record is read, it will be quite clear that a number of issues of importance to the textile industry are being covered in those negotiations but that the 1263 negotiations must be looked at in the round. The EC negotiators will, in the end, have to do the best possible deal for European interests at large and for industry and commerce generally. Those negotiations are a matter not for the British Government but for the Commission.
It was good to see my hon. Friend the Member for Harborough (Sir J. Farr) here today, and I hope that his health continues to strengthen. It is a sign of his great concern about the issue that he came today to give us the benefit of his views. He said that the final decision on the MFA had to be a firm decision of the House. That is not the legal or constitutional position. Some hon. Members may regret the fact that these decisions are made following EC negotiations; others will welcome it because they wanted such powers to be exercised at European level. Under our treaty obligations and under the other legal arrangements with our Community partners that have developed, the simple fact is that the European Community is a party to the MFA and the European Community handles the GATT negotiations.
§ Mr. Haynes
The Minister is not being very helpful. We get this sort of talk all the time. It is time it stopped and the British Government did some fighting over there in Brussels. Proposals come to us when they have already been decided in Europe. That is all wrong. We should be deciding our own destiny in this place and it is high time that the Minster said so over there.
§ Mr. Redwood
Usually the Government are criticised for fighting too hard for British interests, so it is strange to hear the Opposition level the opposite criticism. I assure the hon. Member for Ashfield (Mr. Haynes) that I fight extremely hard for British interests in the Council of Ministers. I look at them in the light of wider European interests, but there is no way in which I will let Britain down when I am handling negotiations because I believe that it is my job, as a member of the British Government, to make the point for Britain.
§ Mr. Henderson
On the question of how the negotiations have been considered in Europe, may I ask the Minister how the British Government have argued? Have they argued that there should be a further round of MFA, an MFA 5? If the Government have argued for an MFA 5, have they argued that it should be the same as MFA 4, less strong than MFA 4 or tougher than MFA 4?
§ Mr. Redwood
As I explained, the British Government have said that they seek the best possible series of market-opening measures in GATT. We have been making the necessary representations to Brussels and my right hon. and noble Friend the Minister for Trade and my right hon. Friend the Secretary of State will keep in touch with Brussels as the negotiations develop. They have not proceeded that far yet.
§ Mr. Kirkwood
Surely the GATT textile committee will have to meet initially in five or six months' time—in June 1990. The Uruguay round of GATT will not be completed until the end of the year and the Government will have to strike a position in four or five months. I realise that the Minister cannot give away his bargaining hand but the House is entitled to know what attitude the Government will strike in June or July this year.
§ Mr. Redwood
I have explained the Government's position on the GATT negotiations and on the negotiations through our European Commission friends. By June, other issues may be on the table but I do not intend to prejudge those because they will, of course, depend on progress being made in the general negotiations on GATT.
§ Mr. Foulkes
Can the Minister clarify something? I am sorry to interrupt, but this is the most crucial point. Am I right in saying that the answer that the Minister gave to my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) is that, rather than the strengthening or continuing the MFA, the Government propose to opt for the GATT alternative? That effectively means that they are abandoning the MFA. Is that what the Minister meant?
§ Mr. Redwood
I have described the way in which the European Commission is approaching the GATT round negotiations. The Government are happy for the Commission to negotiate in good faith in that round to get the best possible deal. The implications of that for the MFA were set out by my hon. Friend the Minister for Industry in the Adjournment debate on 12 December. I have tried to enlarge on that today in the interests of keeping the House informed.
My hon. Friend the Member for Bosworth (Mr. Tredinnick) asked what scope was available for funding and other hon. Members wanted me to clear up what my hon. Friend the Minister for Industry meant when he commented on that in the recent Adjournment debate in response to hon. Members from Leicester.
My hon. Friend the Minister for Industry meant that there are various types of money available for which textile companies may be eligible and in particular research and development money. Research and technology initiative money is available via bodies such as the British Textile Technology Group and the Clothing Technology Centre. Those technology-based bodies can advise people about that funding and the sort of project that would qualify. The Department of Trade and Industry can also offer advice. If companies have projects which they believe might qualify, the Department would be more than happy to make information available and offer guidance on how the system works. My hon. Friend the Minister for Industry recently issued a press release stressing the nature of those schemes from which the textile industry could benefit.
Many hon. Members, including the hon. Member for Oldham, Central and Royton (Mr. Lamond), referred to eastern Europe. Of course, changes in eastern Europe will have a major impact on many elements in the European Economic Community as the economies in those countries develop and they widen their horizons and liberalise their trading patterns. Many eastern European countries are now aware of the dangers of extreme protectionism and they see the way in which their poverty has been underlined or enforced by the absence of open trading with western Europe. They naturally now seek greater trading links with western Europe to try to remedy the obvious defects in their economies created by many years of closed markets.
The European Community and the British Government believe that it is right for us to respond to those changes, particularly where the countries concerned are making good progress in returning to democracy. In many cases 1265 countries have specified when they will be holding open elections and they are moving to multi-party systems. We also believe that Commission negotiators should be interested in the question of reciprocity so that market opening should not be one way, as that might be damaging to British and Community interests. There should be give-and-take in those market-opening devices and our businesses should gain access to their economies. We believe that our companies and economies have much to offer the eastern European countries as trading partners, as inward investors and as advisers in many sectors.
That is the basis for the tentative steps taken so far and I described one such step at the beginning of the debate in connection with the USSR. I am sure that Hungary and Poland will be close to the top of the Commission's agenda.
There are other considerations about China, which has become a worry. It is an important textile producer and exporter. The British Government have always argued that we should reflect the fact of increasing Chinese dominance in the textiles trade and the fact that it is heavily dependent on state trading when constructing trading arrangements with that country. That has been the consistent British Government line to the Commission. Once again, those are matters that can be settled primarily by the Commission, in which Britain has an important voice, but not the sole voice, in determining how those matters are achieved.
My hon. Friend the Member for Pudsey (Sir G. Shaw) made a powerful speech in which he gave advice about the time scale of transition, which he said should take five years or a little more. He was particularly worried about dumping. Many hon. Members, words on dumping will be taken on board by the Department. I have already said that the Government do not like dumping and, through the normal procedures in the European Commission, will vigorously pursue any case that hon. Members or companies can bring to our attention. If hon. Members have more evidence or information about dumping, or they know of companies that have evidence or information about dumping, of course 1 pledge, as the Goverenment always have done, that those cases will be vigorously pursued.
§ Mrs. Peacock
In my experience, whatever evidence is brought to the Department, by the time the case is proved, jobs are lost. That has happened in my constituency with imports of acrylic yarn mainly from Turkey. By the time the system works, jobs have gone and quotas gone up. We need to change the system to get faster action.
§ Mr. Redwood
I quite understand the point. It is now firmly on the record that many hon. Members are worried about the time that it takes to deal with anti-dumping cases. I pledge that I and my noble Friend will do anything in our power to make sure that the delays are not in the Department of Trade and Industry. But the procedures themselves are designed at European level. Of course, they must relate to a range of industries, not just the textile industry. For that reason, they are complex and difficult to change. My noble Friend and I will take that point on board.
The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) began his speech by saying that the industry is in a state of financial haemorrhage. He implied that there had been a financial collapse. There have been problems in 1266 the industry in recent months, and they have been well documented in the debate. However, I do not think that the results of the major companies in the industry can in any way be said to represent a financial haemorrhage. I recently looked at the reports and accounts of three of our major textile companies. Courtaulds, for example, had more than £250 million of operating funds flow. Coats Viyella had £172 million of funds generated in the past year in which it has reported. Tootal had £51 million of funds generated. Those three major companies are central to our textile industry—Courtaulds is a major textile producer of some significance—with profitable businesses generating good profits for their shareholders because they have made such good strides in investment and productivity.
§ Mr. Foulkes
In each case can the Minister work out how much of the profit was from manufacturing overseas rather than in the United Kingdom?
§ Mr. Redwood
I could work that out if I spent a little while with the reports and accounts, but there are profits from the United Kingdom operations, and the picture in the accounts is of companies that are a great deal stronger than the textile industry was in the mid-1970s. That reflects the fact that they have made major investments, taken care of their staff, opted for training schemes, and completely changed their product ranges. They have spent a lot of time wondering which is the niche market for which they can opt or how they can enhance their markets, how they can brand their products, and how they can use the techniques of modern manufacturing to reduce their costs and boost their productivity and output. I want the House to admit that the great British textile companies have done a good job in adapting to changing conditions. That is manifest in their recent results.
§ Mr. Kirkwood
Of course there have been successes in my constituency. I refer to Pringles, the Dawson Group and so on. They are coping and are doing very well in the circumstances, but there are many small companies in my constituency. Small companies with 20 or 30 employees are struggling hard and swimming against the tide. When the Minister is doing his research on the results of the big companies, will he extend it to smaller businesses, too?
§ Mr. Redwood
I am sure that some small companies will be under cash flow pressure. I began my researches with the major companies because they happen to be major employers and, therefore, of major concern to many hon. Members. Of course I am concerned also about small businesses. I understand what the hon. Gentleman says.
I was staggered to hear the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) say that there had been a dismal performance by the industry. Many hon. Members have explained that the industry is working extremely hard and well at improving and changing its market position. I was glad to hear that Professor Silberston has moved from being "mad" to almost a good thing because the hon. Gentleman now seems to have found some things in Professor Silberston's report with which he can agree. However, I remind the House of the hon. Member's clear statement on 9 December 1988, with which I entirely agree. He said:I must make it clear that the Opposition recognise that for a trading nation such as the United Kingdom it is important that we encourage the maximising of free trade."—[Official Report, 9 December 1988; Vol. 143, c. 567.]1267 He went on to say that trade should be fair. I entirely agree with his sentiments. Indeed, that is the central objective of the EC negotiating position in GATT and it is an objective that the British Government entirely endorse.
I got a little lost when the hon. Member for Newcastle upon Tyne, North said in December 1988 that he wanted both a lower currency and no currency fluctuations. However, I was pleased to hear that he welcomes the level now. Perhaps we can agree that the current level gives people good export opportunities. The battle against inflation is a central task for the Government.
The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) expressed concern about the Turkish sock problem. I have already explained that that issue is being handled by my noble Friend who will continue to take whatever action is possible to deal with that difficulty.
My hon. Friend the Member for Pendle (Mr. Lee) made a good, penetrating speech in which he considered the way in which the negotiations could be progressed. Many of the points that he made very much covered the issues that the EC Commission is bringing to the negotiations. My hon. Friend talked about the need for transitional arrangements and the need to strengthen the GATT rules. Most importantly, he referred to the need for reciprocal market-opening. That is what this is all about. The whole point of GATT is that all countries should take action to remove barriers and blocks to trade because that is the way to achieve a more prosperous international community and that is how good companies can have a chance to export to other countries and therefore create employment and opportunity. That is exactly what the Government will be arguing for.
The hon. Member for Bradford, South (Mr. Cryer) was concerned about recent changes in unemployment benefit which affect those who might be working short-time. I remind the hon. Gentleman and the hon. Member for Halifax (Mrs. Mahon), who also made this point, that other benefits are in place for which such people may be eligible. People on low incomes may qualify for income support or for family credit, which was designed deliberately to help people on low incomes with family responsibilities and to encourage people into work. That is the Government's aim.
The hon. Member for Bradford, South thought that there was no assurance that I would support the textile industry. I thought that a bit harsh, since I had already covered the way in which the Government have offered a great deal of help to the industry in past years and still intend to do so. The Government have represented the industry's case in the past over issues such as dumping and unfair trading practices. I note that along with several 1268 other hon. Members, the hon. Member for Bradford, South is concerned about the possibility of our losing national quotas and about the transition to a single EC-wide quota. The Government will take that point into account when making decisions on such matters.
My hon. Friend the Member for Calder Valley (Mr. Thompson) was worried about hidden French subsidies that might make competition unfair between ourselves and some French companies. Again, if there are any hidden subsidies that can be exposed—as long as they are not so hidden that we cannot find them—they are a suitable case for treatment under the Commission's attack on state aids. It is the policy of Her Majesty's Government to ensure that the Commission is given every help in pursuing unfair state aids wherever they may be in the European Community, with a view to levelling the playing field for competitors between one country and another.
The Government are willing to help through the British Overseas Trade Board and through the organisation of trade fairs. If individual companies have problems or questions about that, the DTI would be more than happy to supply the necessary information about the type of assistance that is available for companies that are starting up in a new country and wish to have some guidance and support in that task.
The hon. Member for Ashfield wanted to start kicking me all round the House and all around the pitch—[HON. MEMBERS: "Hear, hear."] He made a lively speech. I was glad that my hon. Friend the Member for Nottingham, East (Mr. Knowles) did not think that he would join the hon. Gentleman, so I shall not be quite as sore as I would have been if I had been kicked from both sides at the same time. That might have caused me some anatomical difficulty. I repeat that the Government are not going in the wrong direction. We are going in the direction of more open trade across the board. That must be good news for jobs and customers.
It is a pity to talk in this high-quality debate about the industry—
It being half-past Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.