HC Deb 17 November 1998 vol 319 cc843-52

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

9.23 pm
Mr. Phil Woolas (Oldham, East and Saddleworth)

It is delightful to be able to introduce a debate on the prospects of the clothing and textile industries. The debate refers to the carpet and footwear industries as well, because a newly re-established all-party group is attempting to reach across the spectrum of the sector, and those industries constitute an important part of our work. Indeed, my work as chairman of the new group has been rewarding, although it has coincided with a huge fall in the number of jobs in the industry; I hope that it is a coincidence and not cause and effect. The group is working hard on behalf of the sector. I should like to place on record my thanks to all the members of the group who have taken part.

One of our main achievements has been to establish an industry advisory group, which brings together industrialists, academics, employers and trade unions from throughout the sector. It is to that body that we turn for advice, on which some of my remarks will be based.

Another implication of the establishment of that group is that I am forced, although it is a pleasant duty, to wear British-made clothing on every public occasion. My suit and tie were made in the United Kingdom. Indeed, everything that I wear that you cannot see, Mr. Deputy Speaker, was also made in the UK. After close conversations this evening, I am delighted to be able to report that the Minister is also wearing a British-made suit.

The advisory group to the all-party parliamentary group estimates that, this year, some 25,000 jobs have been lost in the industry. In the trade-unionised sector alone, job losses have been running at about 500 a month. I give just one example of how important the industry is in one region. In the east midlands, the Nottinghamshire and Derbyshire Clothing and Textiles Association reports that 3,000 jobs will be lost this year; that represents some 6 per cent. of the sector in the region.

I do not want to be a merchant of doom—far from it; we must not, whatever we do, talk down the industry. Nor is it responsible to talk down the manufacturing sector as a whole. However—it is a big however—there is no doubt that the industry is in what the Governor of the Bank of England has described as an exposed sector of the economy.

The industry is important to many communities, to seven regions and, of course, to the national economy. According to House of Commons statistics, based on the industrial classification statistics that are available, the industry directly employs some 359,000 people. That makes it larger than the farming industry, car industry and chemical industry, to name just three. In answer to a question, my right hon. Friend the Prime Minister said: The textiles industry is one of the largest manufacturing sectors in the United Kingdom, with sales of more than £17 billion." —[Official Report, 13 May 1998; Vol. 312, c. 369.] The total value of exports last year was £8 billion.

This debate is not, however, about macro-economic policy. Sustained, stable growth within the context of low inflation is what our industry needs. Having said that, there is no doubt that the value of sterling recently has caused problems. Nor, however, must we over-egg the pudding. Sometimes, the value of sterling has been used by industrialists as an excuse to bring forward a process that was happening anyway. However, I cite the case of Saddleworth woollen mill in my constituency, which closes tragically this Friday after 150 years in the woollen business—woollen spinning on the site can be traced back 1,000 years—with the loss of a further 110 jobs. There is no doubt that it was the value of the pound, particularly in the second half of last year, that was the straw that broke the camel's back.

Overall, the value of exports in the first half of this year has fallen by 20 per cent. That coincided with a number of events throughout the world: the collapse of the far east, or certainly the significant fall of the far east market, and the near collapse of the Russian market. Interestingly, the mild summer has added to the problems. I know that even the Prime Minister could not solve that one, although I have heard people in my party demanding a solution. Whatever the problems, whether they be short term or outside the influence of Ministers, all of us in the industry know that globalisation has been going on throughout this century.

I do not wish to base my appeal for support of the clothing and textile industry on nostalgia or heritage—although the United Kingdom continues to produce the best cloth and clothing in the world. I could mention Nottingham lace, Savile row suits or even—given my Lancastrian background-Yorkshire wool, but I could not do justice to them. Kidderminster carpets are the best in the world. In my own region, king cotton is, and has been for many years, the market leader. The clothing and textile industries in Northern Ireland and Scotland produce some of the world's finest products. If I have omitted to mention the constituencies of any colleagues, it is not to be rude, but only because the list is very long. As I said, I do not want our appeal to be based on nostalgia; it must be based on the importance of the industry to our economy, and on the industry's many future opportunities.

Globalisation brings new problems. Production in a clothing factory can be switched offshore with one telephone call from a buyer—as many factories across the country have regularly discovered. Despite the appalling exploitation of labour, including child labour, in the developing world, developing areas are developing a very sophisticated clothing and textile sector of their own. Exploitation is still occurring in our country, too, although I hope that that will be dealt with by the minimum wage and other measures. For all those reasons, the industry has to have a strategy, and to work in partnership with the Government on it.

The group and our advisers have identified various elements of a strategy. The first element is that we must work to the action plan that has been drawn up by trade unions and employers as part of the social partnership process, and will be discussed next week with my hon. Friend the Minister for Energy and Industry. The document will be the manifesto of the lobby of the House that will take place next Wednesday.

We must address the productivity problem. According to the plan, our productivity is 30 per cent. below that of our European competitors—although I should think that many workers in the industry would find that figure hard to believe. I do not accept, as some have said, that the minimum wage and other employment rights, such as the 48-hour week, will make matters worse. We have to increase standards and quality if the industry is to have a future.

There is absolutely no future in chasing down employment costs. We could never compete with Morocco, for example, where the average hourly rate for clothing worker is 5p an hour. Some hon. Members—I have heard them say it—think that we should compete on such a basis.

Mr. Andrew Miller (Ellesmere Port and Neston)

My hon. Friend mentioned Morocco. The work force of Bairdwear, in my constituency, were told just a few weeks ago of the closure of their plant. Their work is being transferred to Morocco, where slave labour rates operate. Does he agree that a job could be done collectively, perhaps within the European Union, to address such issues?

Mr. Woolas

I very much agree. I have been told of cases in which employees in the industry have been videoed doing their jobs, so that the videos can be sent overseas to teach other people how to do those jobs. I very much agree with my hon. Friend's comments.

We need high investment, high-tech solutions and marketing and design inputs. Many of our industrialists are already taking action on those matters, and good luck to them. The footwear industry is a good example of an industry that has turned the corner. It has a social partnership plan, which is working. That industry has gone upmarket and is successfully marketing its goods. We need to address the question of how the Department of Trade and Industry can help our exporters, as there is no doubt that export is our future.

Judy Mallaber (Amber Valley)

Does my hon. Friend share my concern at the statement made to our advisory group last week by the British Apparel and Textile Confederation that the DTI has agreed to support only 19 exhibitions and seminars overseas, compared with 31 last year? Does he agree that our textile and clothing industry can compete overseas only on the basis of the excellence in design and innovation shown by the best firms in my constituency and his, and that that requires the Government to put every possible effort into promoting that excellence overseas?

Mr. Woolas

Yes. We should be encouraging more rather than fewer overseas trade missions and exhibitions. I shall be interested to hear what my hon. Friend the Minister has to say about that.

We are telling our manufacturers to move upmarket, to increase design input and to go for niche markets, but those markets can only be global. Therefore, the value of sterling becomes even more important to our international sales force, notwithstanding the cheapening of imports. We must support the work of our sales force.

I do not wish to sound over-critical. I congratulate my right hon. Friends on their superb success in getting rid of the cotton dumping duties in the European Union. Many of my constituents are grateful for that. However, I think it was General Jiap who said that we must fight on all fronts at all times. In a very exposed market, we need to be reassured that our Ministers are following that philosophy in relation to clothing and textiles, if not in other activities.

We need quickly to establish national training organisations. Training is too fragmented and we are not providing the industry with what it needs. We need to ensure that the assisted area status maps, which are being redrawn, prioritise the clothing and textile industry. The ending of objective 2 regional funding could hit the clothing and textile sector in particular as it is regionally based. I plead with Ministers to prioritise the clothing and textile industry when they draw up submissions on the new European regional funding model.

Retex has been a great success, but we are about to lose it. We must not forget that negotiations on the multi-fibre agreement will soon be on us again. Goodness knows what will happen when MFA protection is removed.

In addition, we need to address the major structural problems that underpin the process. It has nothing to do with the value of sterling—the value against the major currencies that affect the sector is lower than it was two years ago—but relates to the relationship between retailers and manufacturers. Some of the problems are outside the Minister's control, but none of them is outside his influence.

The DTI-funded work of the apparel and textile challenge comes close to achieving the correct solution. We cannot have a retail sector that bullies the manufacturers or a manufacturing sector that is not flexible and responsive to the retail sector, as that will push production overseas. We must address that problem.

Nor can we base our appeal for the future of the sector just on patriotism. If we want consumers to buy British, we must make British best. There is no premium on the label "Made in Britain" in this country, although British goods sold overseas carry a huge premium because of their label. It is ironic that manufacturers label goods for overseas "Made in Britain", but often fail to label goods intended for the domestic market. The Government can give enthusiasm to the process. We need to examine the labelling laws, perhaps to take into account ethical production issues such as child labour. I believe that consumers have a right to know whether production methods are unethical and the country of origin of the goods that they buy. I also believe that the best badge of quality in this sector and many others is the label that says "union made". In the United States, that is the kitemark of quality. If it is good enough for the entrepreneurial United States of America, it is good enough for my constituents.

The industry must shed its rag trade image. We cannot continue to talk the industry down; it is too important. We cannot treat the industry as a Cinderella sector, because it is not. We have the best cloth makers, the best shoe makers, the best carpet weavers and the best designers. This country has a great reputation for quality; we should build on that. I urge Ministers to do all in their power to support the social partners in their endeavours.

9.40 pm
Mr. David Lock (Wyre Forest)

I congratulate my hon. Friend the Member for Oldham, East and Saddleworth (Mr. Woolas) on securing this debate on such an important sector of British manufacturing industry. I have the privilege to represent Wyre Forest, which includes Kidderminster—the home of the British carpet industry. More carpets are made in Kidderminster than in any other part of Britain.

My hon. Friend has referred to the problems of the high pound. I endorse what he has said. They are long-term problems, not short-term ones. The markets that have been lost in Europe were lost long before the Labour Government came to power. With stability in macro-economic policy, those markets are now back within the grasp of the manufacturers that I represent, but there is still a feeling that the high pound is detrimental to our ability to sell to Europe. I hope that, as interest rates come down over the next 12 months, the value of the pound will ease slightly, to the benefit of manufacturers in my constituency.

I thank Ministers at the Department of Trade and Industry for their excellent work in preventing a ban on carpets by Russia, which was threatened during the summer and would have removed a substantial market. We were particularly worried in Kidderminster, because the prospect of a large amount of cut-price carpet from Belgium, much of it produced in circumstances that are, at best, very close to breaching EU rules, caused great concern. Despite all the good work of the DTI, other circumstances have caused the Russian market to collapse. We now fear a substantial ingress of carpet from Belgium. I ask Ministers to bear that in mind when considering the sector in the coming months.

My constituency is not in an EU-funded area. Will Ministers bear in mind the detrimental effect that substantial grants to carpet companies in parts of the United Kingdom that are fortunate enough to be in EU assisted areas would have on companies in my constituency, which are in direct competition, when considering applications for grants or support? I am thinking particularly of companies in Ulster, which have received substantial grants in recent years and are now competing directly with Kidderminster.

There are several high spots. I do not want my hon. Friend the Minister to think that the progress made in the carpet industry in Kidderminster has not been noticed or that the achievements should go unrecorded. World-class companies are being built and investment is high. Investment in marketing, technology and computers is impressive. Companies manufacturing carpets in other parts of the world are being taken over and run by British companies in Kidderminster, with the benefit of the manufacturing know-how of the west midlands. That means that, at the moment, jobs in the traditional industry in Kidderminster are reasonably secure. I hope that the industry there will expand, not contract.

I shall conclude by making two points. First, will the Minister bear in mind the fact that those of us who are concerned about the housing market do not view it purely as a construction issue? When people move house, they spend considerable amounts of money on white goods and carpet. A steady housing market—not a boom or a bust—is essential to the health of the domestic carpet industry.

Secondly, will the Minister use his influence, as those of us in the all-party group do, to encourage members of the public to buy British? By buying British, they are not only buying the best but securing and creating jobs in some important areas of the country.

9.45 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Dr. Kim Howells)

I congratulate my hon. Friend the Member for Oldham, East and Saddleworth (Mr. Woolas) on the way in which he has raised this important issue, as I do my hon. Friends the Members for Wyre Forest (Mr. Lock) and for Amber Valley (Judy Mallaber) on assisting him. I notice the huge interest among the Opposition parties—Tories, Liberal Democrats and nationalists—in this extraordinarily important debate on manufacturing. It is a disgrace that they cannot even be bothered to turn up for such a debate.

I also congratulate my hon. Friend the Member for Oldham, East and Saddleworth on reviving the clothing, textile, carpet and footwear industries all-party group, and especially on the formation of the sectoral advisory committee. Such joint approaches are the way forward. We have suffered too often from being unable to tap the enormous potential in our work force in many sectors. My hon. Friend has taken an imaginative approach to moving forward at a difficult time for the industry.

The Government recognise the substantial contribution that the United Kingdom's textile, clothing and footwear industries make to the economy. As my hon. Friend the Member for Oldham, East and Saddleworth has reminded us, they have a turnover in excess of £17 billion a year and employ about 350,000 people. That is a huge number. We have had many debates on the steel and coal industries, but I cannot remember when we last debated the textile industry—still less the carpet or footwear industries. Yet many are located in some of the most vulnerable industrial areas, very often on the edge of rural parts, where the alternatives to such employment are very few and far between. This debate is very timely, and I wish that many more hon. Members were present to take part in it.

My hon. Friend the Member for Oldham, East and Saddleworth mentioned exchange rates as a factor in closures. As he said, the exchange rate is now broadly the same as it was when the Government came to power. The important difference, as I am sure he will tell his constituents and those in the industry who are trying to do something about the situation, is that inflation is firmly under control. In addition, long-term interest rates are at their lowest for 35 years. That makes a difference; it makes the industry less vulnerable, and poses new challenges. Although growth is expected to be slow, no one is forecasting a re-run of the early 1990s, when, under the previous Government, manufacturing output fell by 7 per cent. and 1 million jobs were lost as the economy suffered its longest recession since the second world war.

I turn for a moment to the support that my hon. Friend the Minister for Energy and Industry is giving to the effort that everybody is making to try to drive up productivity.

A stable macro-economic environment is an important external factor that provides the opportunity for the industry to flourish, but it is not enough. Our industries have to be globally competitive as well, and the Government have a role to play in that respect. My hon. Friend reminded us of studies that show that parts of our textile sector are 30 per cent. less competitive than those of our main European competitors. There are all sorts of variables in that equation, but I am absolutely convinced that one in particular is the key—investment. I have no doubt that, if firms here had invested in the way that Italian and American firms have invested over the years, we would not be facing the current situation—my hon. Friend reminded us not to talk down the industry by referring to a crisis. There are some superbly efficient firms in operation, but the difficulties would have been far less had there been proper levels of investment. It is all part of the British malaise—refusing to invest and assuming that firms can stagger along by paying lower wages, without realising that technology is advancing around them.

My hon. Friends mentioned the problem of technology transfer to places such as Morocco, and it is true that technology transfer has never been easier than it is now. My hon. Friend the Member for Oldham, East and Saddleworth mentioned videos that show workers in Morocco how the job is done. Such technology transfers will not stop and no rules will be introduced to prohibit them. The economies of the world are opening up and captive markets are becoming fewer. We have to try to understand how we can compete in the new world.

The way to compete is to ensure that we add real value to the carpets we create. We have some of the best art colleges and fashion houses in the world, and fashion and design are crucial to the textile sector. I want a rocket to be put up many of our universities and institutions of higher and further education, so that they start to talk to industry and embark on joint projects with sectors such as textiles. That will encourage everyone to become involved in a crusade to exploit the marvellous design capabilities that this country has. The Government, through the Departments for Trade and Industry and for Education and Employment, have a role to play in encouraging such a partnership approach.

Mr. Lock

Does the Minister recognise that, in some parts of the country, local further education colleges are more innovative and imaginative than their traditional university counterparts? I am thinking particularly of Kidderminster college in my constituency, which runs an impressive textiles degree and works closely with industry. It is now finding that students from across the world, especially the far east, are coming to Kidderminster to study carpets and carpet design, because of the expertise that is found nowhere else in Britain.

Dr. Howells

Kidderminster has a great reputation and long may it flourish. I was an art student in the 1960s, although I must admit that I was far more interested in revolution than in art. I remember giving up painting on 28 May 1968, because it was bourgeois individualism. My mother called me mad, and she was dead right.

We are only just beginning to understand what value our universities and colleges can add. My hon. Friend is right to say that further education colleges often outstrip our best universities, which have a stultified view of the relationship between academia and industry.

Mr. Miller

Will my hon. Friend invite another partner into that esquation—the major high street chains? They are the buyers of the products and the cause of some of the closures, such as that of Bairdwear in my constituency.

After all, unless they become involved in the debate, those of their customers who currently work in industry will not be able to afford to buy their products in future.

Dr. Howells

My hon. Friend makes a good point. My hon. Friend the Member for Oldham, East and Saddleworth is looking carefully at ways of bringing major buyers of textiles, footwear and carpets into the debate so that they understand that their symbiotic relationship cannot be allowed to wither on the vine. The best buyers are interested in talking about that relationship.

Buyers should want to buy from nearby producers, and their relationship is so important. Why must products be produced in Morocco or China? It is logical for products to be produced on demand, quickly and to meet changing market demands as closely as possible to the markets. We should start celebrating that fact and find out how to achieve it—

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. I realise that most of the Minister's hon. Friends are sitting below the Gangway, but I am here and it is to the Chair that he should address his remarks.

Dr. Howells

I am sorry, Mr. Deputy Speaker. It is late and I have clearly forgotten that fact.

My hon. Friend the Member for Amber Valley referred to the tangible ways in which we can help the industry. I wish to refer to the support for the exhibitions and seminars abroad scheme. I am delighted that we have received a record 1,000-plus bids for support under the new scheme. I take that to indicate broad satisfaction with the new arrangements. We have included about 40 per cent. of the bids in the programme for 1999–2000. With 45 of the clothing sector bids included—some 62 per cent. —the industry has, in fact, done much better than the average.

Organisations bidding for support have told us that they expect to take well over 900 supported clothing firms to the 45 events. Despite the slightly smaller programme, that is well above the 770 firms expected to be supported in 1998–99. My statistics and those of my hon. Friend the Member for Amber Valley diverge, and I shall check to ensure that we arrive somewhere near the truth as quickly as I can.

The DTI is not only helping companies to identify and exploit market opportunities overseas, but at home. The Department provides support to the apparel and textiles challenge, which is dedicated to the improvement of the textiles and clothing supply chain. The challenge organises meet-the-buyer forums around the country, which provide the opportunity to bring textiles and clothing manufacturers together with potential customers. Six events have been held so far this year, with each event generating, on average, £500,000 of new business for the participants.

More generally, we understand that the UK high street is—as my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) pointed out—a very demanding market, and that retailers here have very high expectations of their suppliers. Through the apparel and textiles challenge, we want to encourage a dialogue between UK suppliers and retailers that will help each of them to understand more thoroughly the other's needs. My hon. Friend the Member for Oldham, East and Saddleworth and his delegation will discuss these matters with my hon. Friend the Minister for Energy and Industry next week, and they will explore the ways in which the industry can be helped. The days are long gone when we could bail out firms that were failing—nor would we want to. The textile, carpet and footwear industries have the experience and the wherewithal to compete with anyone in the world. It is a question of having the confidence and the will to invest in those sectors, and not to be frightened by those who would preach a gloomy message—that the whole of world production will move to China or another part of the world where poverty wages are paid. I do not believe that that is the case.

Mr. David Drew (Stroud)

It may interest hon. Members to know that the Stroud valleys were built on the textile industry. The Government could provide help by encouraging organisations such as business links and development agencies to give training the emphasis that it deserves. I am sure that that would be very helpful to industries such as textiles.

Dr. Howells

That is an important point, and a good one on which to end. If we have the confidence to invest in new machinery, new technology and new techniques in training an already excellent work force to learn new skills, we will be able to compete with anyone in the world.

Question put and agreed to.

Adjourned accordingly at Ten o'clock.