HC Deb 17 June 1999 vol 333 cc657-64

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

7 pm

Mr. Phil Sawford (Kettering)

I begin by thanking my hon. Friend the Minister for Energy and Industry for the interest that he has shown in the footwear industry. I welcome the fact that he supports the footwear industry action plan launched in Rossendale last year. I am also grateful for his Department's support of the benchmarking programme between the United Kingdom and Italian footwear industries, and for its efforts in promoting the benefits of British safety footwear.

I am sure that most hon. Members know that footwear is the traditional industry of Northamptonshire. Thousands of people in the county are still employed making shoes. The skills and expertise are part of a proud tradition, and we continue to produce some of the finest shoes in the world. I am told that Northamptonshire produced most of the boots for Cromwell's army, so the tradition goes back some time.

Mr. Phil Hope (Corby)

He never paid for them.

Mr. Sawford

There is a rumour to that effect, which we shall pursue with my right hon. Friend the Chancellor.

Anyone born in the county, as I was, will more than likely have some connection with the footwear trade. Two of my grandparents worked in the footwear industry all their working lives. My parents met in a shoe factory: she heard him clicking, he admired her uppers, and here I am.

I must be one of the few hon. Members who walk into Parliament each day wearing shoes made in their home town by people they know personally. Being Northamptonshire born and bred, I am very proud of that. Also, although it is not a fetish, I notice what other hon. Members wear on their feet. Without being too critical of my colleagues, few of them wear anything as good as a pair of Cheaney's finest when they enter the Chamber. My hon. Friend the Minister visited the factory recently, and I invite him to buy a pair of top-quality shoes made in Desborough. I shall be glad to collect them and deliver them to him.

I want to highlight the successes and opportunities in the industry, and to draw attention to a number of problems and concerns. It is important to set the context. There is no doubt that the industry has declined. In 1979, more than 80,000 people were employed in the British shoe industry. The total is now nearer 20,000. However, the industry is still important. It produces 89 million pairs of shoes a year, with a value of more than £500 million, and almost half the output is exported. Many other industries would be doing well if they could match that.

The industry provides employment for more than 20,000 people, and is a world leader in men's formal footwear and in youth street fashion footwear.

Mr. Hope

I thank my hon. Friend for giving way and can tell him that I, too, am wearing a pair of Cheaney's shoes, which I bought from the factory shop in Desborough, so he no longer need bother to look at my feet.

However, I hope that that is not being disloyal to the Dr. Martens factory—

Mr. Paul Stinchcombe (Wellingborough)

I am wearing a pair of those shoes.

Mr. Hope

My hon. Friend the Member for Wellingborough (Mr. Stinchcombe) is wearing shoes from that factory, which is in my constituency and also in his. It employs 2,300 people locally and about 3,000 nationwide. It sells 10 million of the 89 million shoes made in the United Kingdom and it has a £280 million turnover. In a recent global survey, Dr. Martens was rated one of the world's 100 best-known brands. I spoke to the managing director today—

Mr. Deputy Speaker (Mr. Michael Lord)

Order. Interventions should be much briefer. If the hon. Gentleman intends to make a speech, he should do so after the hon. Member for Kettering (Mr. Sawford) has finished his.

Mr. Hope

Will my hon. Friend address concerns about the high rate of the pound, which is affecting exports of Dr. Martens, and import penetration?

Mr. Sawford

My hon. Friend has mentioned Dr. Martens, but there are many well-known names, including Barkers and Loakes. Many small family businesses produce good shoes, but Dr. Martens is perhaps one of the biggest success stories in the shoe industry in Britain. In addition to having a high reputation for our footwear, we have a good reputation for research. The Shoe and Allied Trade Research Association, which the Minister has visited, is at the forefront of testing, innovation, research and development. It deals with the shoe trade in Britain and thousands of companies around the world.

Britain is a world leader in footwear design and teaching. Cordwainer college has an excellent reputation, and the variety of ethnic styles and outrageous designs on show at its Barbican exhibition last year was impressive. Young people are coming through, and our training programmes have much to contribute.

The footwear industry is an important part of my local economy and in the constituencies of my hon. Friends the Members for Northampton, North (Ms Keeble), for Wellingborough (Mr. Stinchcombe) and for Corby. I am delighted to see all of them behind me. The industry is also important to the national economy. Exports have doubled during the 1990s, and the Department of Trade and Industry has assisted with much-appreciated trade fairs and export promotions.

Ms Sally Keeble (Northampton, North)

My hon. Friend will know that the famous Church's of Northampton produces excellent shoes. Will he comment on the difficult export position in which both Church's and Griggs find themselves because of trade barriers that certain countries have raised?

Mr. Sawford

That is one of the issues that I had intended to raise. The UK footwear industry is open and competitive. Through good times and bad, we have successfully met the challenge of overseas competition. However, 85 per cent. of footwear sold in Britain is imported. That is not true of other countries, and many foreign markets are effectively closed to the UK industry. We welcome efforts by the Government to press for a sharp reduction in tariffs, and I ask the Minister to press that case hard during the millennium round of trade negotiations. I hope that he will stick rigidly to the goal of removing all tariffs by 2010.

Talking to manufacturers and employees, I have found that they fear that the UK or the European Union may make concessions on our tariffs while other countries maintain restrictions on our exports. I ask the Minister to keep a watchful eye on negotiations to ensure that market access is fair to all parties. The industry asks only for a fair system and a level playing field, and we should support those aims. I congratulate the National Organisation for Footwear, Leather and Shoe Repairs on its accreditation with the Department for Education and Employment. It is recognised as a national training organisation, and I ask the Minister to join me in welcoming the industry's increased investment in the skills of its employees.

I know that I am asking a lot, but will the Minister also look favourably on any request for support from his Department for any project to upgrade the recruitment and career resources of the industry? There is a perception that the industry is old-fashioned—a sort of sweatshop industry. That is not how it is. It is an industry with a future, a lot of high-tech and opportunities. It is important that we promote the industry in that way to attract the right people to develop their skills and a career within the footwear trade.

I am sure that the Minister knows that China is the world's largest footwear producer. It incorporates many state trading companies within its industry. Proof of dumping and customs fraud by Chinese traders has been found through the European Commission. Will the Minister do his best to ensure that any future trade agreements with China are rigorously fair in both directions?

Mr. Paul Gates, the general president of KFAT—the knitwear, footwear and allied trades union—drew attention to that particular issue this week in Llandudno at the union's national conference. He said: China imports into the UK some 40 million pairs of footwear. Much of this is produced in modern factories with the Latest Machinery. Indeed, I learned of one factory which is investing $43 million on the latest equipment. No UK company can make this sort of commitment. That is why we are calling for China's entry into the WTO (World Trade Organisation) to be with 'Developed Nation Status'. It is important for the industry that China's entry is considered and approved, but with that developed nation status. We are not dealing with a third-world economy. When it comes to producing shoes, China has the technology, the modern equipment and the factories. There is no reason to be more generous to China than we need be.

Mr. Gates also called for the whole issue of tariff and non-tariff barriers, which restrict the ability of UK manufacturers to export overseas, to be addressed at the next round of WTO talks at Seattle. I hope that the Minister and his Department will take that point on board.

The industry needs more IT support. Footwear is no more low-tech than any other industry these days. Many companies want to develop their IT, computerisation and, particularly, electronic commerce. Our smaller companies and traditional family businesses in and around Northamptonshire and elsewhere in Britain do not always have the resources and skills to take that forward.

Mr. Stinchcombe

My hon. Friend mentioned small family businesses. Will he join me in expressing concern to the Minister that some of those firms feel that they are over-regulated?

Mr. Sawford

Yes, I think that they do express that view. That has not happened just in the past two years. I know that many of those businesses feel that successive Governments have perhaps regulated them a little too much.

Mr. Gates has called on the Government to work alongside regional development agencies and to recognise the need for positive help and support on IT. I hope that the Minister will note that and provide support if his Department can be of assistance in that direction.

I do not intend to speak for too long, but I hope that in this short debate I have been able to highlight the successes of our footwear industry as well as its challenges and concerns. Yesterday I was interviewed by a television company which said that it wanted to talk about the crisis in the industry. I said that that was not my agenda or how I saw it. That is not what we are talking about here. There are problems in terms of trade agreements and negotiations, and the industry has become depleted since its heyday; but, for all that, we are highlighting successes—we are proud of our industry.

I am most grateful to the Footwear Manufacturers Association and KFAT for helping to prepare me for this debate. I thank my hon. Friend the Minister for his interest in this important industry. Finally, I thank those people in my constituency and in the rest of Britain who use their skills to make the shoes that many of us wear every day when we come to Parliament.

7.15 pm
The Minister for Energy and Industry (Mr. John Battle)

It is traditional to compliment hon. Members on winning an Adjournment debate, and I congratulate my hon. Friend the Member for Kettering (Mr. Sawford) on that. However, I want to do more than that. The way in which he used a constituency example—a personal story—not only to champion the excellence of the production skills of a company in his constituency, but to spell out the structural questions relating to a whole sector, was quite remarkable. I enjoyed the personal tone and the lively and interesting way in which he presented the case. It was a model of what Adjournment debates should be.

I notice that my hon. Friends the Members for Corby (Mr. Hope), for Northampton, North (Ms Keeble), for Wellingborough (Mr. Stinchcombe) and for Derby, North (Mr. Laxton) are in the Chamber. They were anxious to speak, but, at this time of the evening, were unable to fit in more than one sentence. It is unfortunate that we cannot hold a longer debate in which to raise these matters; they are precisely what we should be talking about in the Chamber.

My hon. Friend the Member for Kettering and I began the day together in the Chamber, because he switched the place on—as it were—with his question at Trade and Industry questions. Now, he is putting the lights out tonight—what a day. He assiduously represents his constituency in raising these matters.

When I was elected to this place in 1987, my hon. Friend the Member for Linlithgow (Mr. Dalyell) asked me how I got here. It was somewhat unexpected because I won against the trend. I explained to him that I had traipsed around my constituency, knocking on doors and talking to people. He made the remark, "What makes a good politician is shoe leather". A winning politician is about shoe leather. I think that we could take my hon. Friend's remark especially personally in the case of the footwear industry.

I enjoyed my visit to Cheaney. My hon. Friend the Member for Kettering patiently persisted in urging me to go there, to see one of the United Kingdom's leading manufacturers. From that visit, I learned about the blend of traditional craft skills with the latest high-tech technologies that has transformed what is regarded as a traditional sector, and has shown how that sector can be regenerated and built up for the 21st century. It was a good experience. My hon. Friend invites me to buy a pair of shoes, and I shall be more than happy to do so. If he is willing to act as their transport, he can be my guest. I am happy to purchase a pair of stout shoes, as I shall continue to do a great deal of walking; I shall be glad to do so in a pair of Cheaney's best.

In February 1998, I gave a speech at the footwear liaison action group's first national conference to launch its action plan for the industry and to try to get ahead of the game—not to treat events as a crisis, but to anticipate what we would be up against. The fact that the hon. Friends whom I mentioned are in the Chamber shows that the regional clusters that we talk about in my Department exist. There is a cluster of excellence in the industry that should be supported, and should be given the best assistance that we can provide to meet the challenges of global competitiveness that face industry.

The sector has real strengths: quality, design, innovative products, world-leading flagship brands—Church's, Clarks, Dr. Martens or Cheaney's—and an amazingly strong export performance. There is a positive attitude towards improving the sector's performance, from the trade associations, the business support associations and, of course, the Cordwainer college, which my hon. Friend congratulated. The college is internationally renowned for the design talent of Patrick Cox and others. The list is impressive. It provides a firm foundation that will ensure a successful future for the industry.

Some ideas have already emerged from the action plan. There are developments in relationships with customers—life style clothing retailers, department stores, mail order companies and so on—to build and develop supply chain management. There are benefits from the clustering that aids collaboration between manufacturers, components suppliers and educational establishments; that has already happened in Northamptonshire, providing a model of how to do it. Export markets have been developed, using innovative sales techniques and methodologies.

I hope that high-tech in the industry will also include e-commerce, because that is where the trade of the future will be. That needs to be plugged in to the overall development. Marketing—especially effective branding—should be used to add value. Changes should be explored to improve adaptability and flexibility to new market demands. Technologies should be adopted that make production more efficient and, indeed, environmentally friendly. I have seen evidence of that in my visits. The industry is pursuing those opportunities enthusiastically, and many manufacturers have taken up the challenge and are well-positioned to break through into the 21st century.

In the time available to me, I shall focus on technology and innovation. We cannot meet the challenge of global competitiveness on low wages: only one company can be the cheapest; everyone else must compete on quality, innovation, new ideas, new processes, new products and new ways of doing things. That involves technology, looking at production methods and management systems, and innovating to meet the needs of the market. Here in the UK, companies in the footwear sector produce some of the highest-quality footwear in the world and have done so for generations. I expect them to do so well into the 21st century.

The British Footwear Association runs an ADAPT project—Quickfoot—to help smaller UK manufacturers adapt to the threats and challenges posed by international competitiveness by offering a series of events and diagnostic support. With the participation of Nottingham Trent university, Cordwainer college, Business Links, the Department of Trade and Industry and Eurocad Projects Ltd., that project has delivered a range of consultative and training events to the smaller companies that make up the majority of the UK footwear industry.

UK footwear manufacturers increasingly use CAD-CAM digital last-making and other high-technology and environmentally friendly applications to ensure that the sector has a positive international future. In 1997, the shoe and allied trades research association, with some support from the DTI's innovation budget, ran a project to develop water-based adhesives for the footwear industry to replace some of the solvent-based adhesives. Such innovation is world class and world leading, and it sends a signal to other sectors to transform traditional manufacturing industries into ones of which we can be proud in the 21st century.

There are several education and training schemes and projects run with DTI support either by the Leicester and County Footwear Manufacturers Association or by the national footwear training organisation, which was recently granted national training organisation status by the Department for Education and Employment. Those schemes are designed to ensure that there is adequate and appropriate training in the sector; to attract youngsters and school leavers and to persuade managers to enter the footwear sector because they have a prosperous and successful future there; and to encourage closer links between companies, schools and colleges, so as to ensure that the right skills are taught and the right imagination, willingness and commitment to the sector instilled in the next generation.

With DTI support, the BFA has launched, here and in 12 overseas markets, the industry's largest-ever marketing exercise. The BFA produced a life style brochure that demonstrates the capacities and capabilities of footwear manufacturers in the made-to-order sector. The brochure was sent to more than 2,000 freshly researched contacts, all of which are potential specifiers of own-label footwear.

The 22 participating companies have started to assemble new marketing methods to ensure a market for their products.

The footwear liaison action group is a partnership between the Department of Trade and Industry, the Department for Education and Employment, the KFAT, Business Link Northamptonshire, the British Footwear Association, the Leicester and County Footwear Manufacturers Association and the Northamptonshire Footwear Manufacturers Association. All have come together to combine, co-ordinate and co-operate, even in the context of competition, to determine when to compete and when to co-operate for the good of the whole sector. They are working together to support the footwear industry.

FLAG's steering committee has consulted many parties on the range of challenges facing the industry and has drawn up an action plan under three main headings. "Education and training" identifies skills shortages and challenges misperceptions of the industry to increase graduate recruitment. "Competitiveness" addresses supply-chain management issues and runs the Footprint project, which is designed to enhance the use of information technology and other high-tech technologies. "Marketing and exports" encourages branding, sets out a benchmarking project looking at Italian footwear companies, and seeks means of enhancing the safety footwear sector. The group has also advanced a number of projects for support from the DTI's innovation budget. Some are already up and running and others are nearing approval and start-up. I hope that they will prove helpful.

The group is responsible for organising national footwear conferences, such as the one held in Rossendale last February. I think there is to be a second conference on 11 November in Northamptonshire. We hope to build around those conferences and add some momentum and dynamism to the whole sector. Companies are certainly making more use of business support organisations in their local areas.

I must move on to the issue of trade. Given the problems and challenges facing the sector, it is absolutely remarkable that footwear manufacturers achieved an export figure of £517 million in 1998. What is the sector up against? It has received assistance from the DTI's support for the exhibitions and seminars abroad scheme and for overseas trade fairs. This relatively small sector is doing very well in winning resources to participate internationally, which speaks volumes for the industry's tenacious and forward-thinking approach.

There are several important issues to consider. The Government acknowledge that the sector has suffered as a result of both high tariffs on footwear exported from the United Kingdom and low tariffs on imported footwear, particularly products from developing countries. However, the United Kingdom will not be acting unilaterally and we want to see other World Trade Organisation members offering reductions in their tariff rates in order to achieve a level playing field. We will work to that end.

Several of my hon. Friends mentioned China. Any complaints of alleged dumping are lodged with the European Commission, which investigates on behalf of all member states, including the United Kingdom. Each case is then considered carefully by the Government. When there are allegations of fraud, we encourage the Commission to investigate. We are fully apprised of the various non-tariff barriers restricting access to the Chinese market, and we are pressing the European Commission—which negotiates on behalf of the United Kingdom and other member states—to address those matters robustly in the continuing negotiations concerning China's accession to the World Trade Organisation. That issue is part of the negotiations and we will continue to press the Commission about it. It is a vital matter for the sector.

I am aware also of the sector's priorities and goals set out in the British Footwear Association's recently published trade policy paper, and we will take full account of them during the World Trade Organisation market access negotiations. That is consistent with the aim of opening up markets fairly and creating a level playing field that will enable this quality sector to flourish. A paper has been submitted arguing that many overseas markets have high tariffs and other market access restrictions, and that there should now be reciprocity. We cannot wait: we must press hard to ensure that happens.

There have been requests for projects to upgrade recruitment and careers resources in the industry. Officials in the textile, clothing and footwear unit will consider on merit any applications for project support, including those involving the innovation project. We anticipate that the national footwear training organisation will make a strong application and, if it fits the usual project criteria, I hope it will be viewed favourably. I can say no more than that in the Chamber. Let us see what can be done.

The point of this debate is to get ahead of the game and anticipate future difficulties. The industry today is facing real difficulties involving China and tariff barriers. However, the WTO and the European Commission are forums for negotiation and we will keep challenging and working on behalf of the sector. The sector has realised that the traditional crafts and skills, honed over generations—which are a pleasure and a delight to see in action—can be blended with new technologies, including information technologies, mechanical equipment technologies and CAD-CAM design. That will lift the sector but not denature traditional crafts. Traditional hands-on crafts can be blended with the best scientific and technological advances to develop and deliver a product that is serviceable and a pleasure to wear.

I cannot think of a more vital industry. Try walking around London or elsewhere in modern Britain without shoes. That is practically impossible. We want to ensure that the British footwear sector is strong. There is a cluster of excellence in the region represented by my hon. Friends, and I am sorry that we cannot debate this matter further tonight. Let us treat this Adjournment debate as the beginning of our conversation.

Question put and agreed to.

Adjourned accordingly at half-past Seven o'clock.