COTTON MANUFACTURING INDUSTRY (TEMPORARY PROVISIONS) BILL. (Hansard, 7 June 1934)

§ THE PAYMASTER-GENERAL (LORD ROCHESTER)
My Lords, the purpose of this Bill is "to make temporary pro 914 vision for enabling statutory effect to be given to rates of wages agreed between representative organisations in the cotton manufacturing industry." It is even less contentious than the Bill which we have been discussing during the last two days. The proposals which are in the Bill represent an experiment and are designed to provide the cotton industry with an opportunity for which the organisations of both employers and workers in the industry have asked. If it is said that an experiment of this kind should not be tried upon a great industry such as the cotton manufacturing trade, I would remind the House that in the history of industrial relations no part of this country and no industry has given earlier or more constant support to collective principles than Lancashire and the cotton trade.
Permit me to state briefly the circumstances in which this request has been made for assistance by the organisations in one of the most highly-organised industries in the country and one which has always been put forward as a notable example of voluntary collective arrangements. In this industry 15 per cent. of the production in times of prosperity is for export, largely to the East. The lowered purchasing power of those countries, mainly agricultural, has transferred trade to the lowest priced goods from whatever source. Again, some of those consuming countries have become large producers and thus the export of cotton goods from this country has fallen to a calamitous extent. There have also been great changes due to the growth of the use of artificial silk and other textiles. This has affected the financial situation of the industry and accentuated the difficulty of securing new capital for its organisation and development to meet modern competitive needs.
For our present purpose the effect in this country which has chiefly to be taken into account, as the result of these circumstances, is the scramble for business between the mills irrespective of the ultimate result. There has been reckless price-cutting which has wasted the capital resources of the industry and has not added to the total volume of trade. In short, in face of the most serious and well-organised competition abroad which the industry has ever had to face 'and at a period when the most effective use of 915 its combined resources in technique and finance was necessary, it has been disintegrated by internal dissension. Amongst the reasons for this are that the transition from the misleading trade boom after the War to the difficult conditions which have followed has necessarily involved changes in costs, including wages. When I tell your Lordships that the total number of persons employed in the cotton industry has been reduced from 485,000 in 1924 to 374,000 in 1933, I think your Lordships will appreciate that such a change could not take place without affecting wage standards; but in the chaotic conditions prevailing, the normal resistance of the workers' organisations to changes in wages has been accentuated by their lack of confidence that reductions would be used for the general good of the industry. In fact, they have felt that these reductions have been frittered away in uneconomic competition between mills and have not been passed on in such a way as to increase trade and employment.
The result has been that the adjustment of working conditions to the circumstances of the industry has become more and more difficult because of the prospect that any wages agreed will immediately be undercut by individual employers. In recent years there has been a complete stoppage of the industry every other year, with immense loss to both sides and a permanent loss of trade to the industry and to the nation. That loss has fallen with greatest severity upon those better elements in the industry who wish to make and to keep reasonable agreements and who are now being driven to think only of themselves. In the negotiations for the settlement of the great dispute in 1932, the proceedings were greatly hampered by the feeling that, whatever the terms agreed, there was no assurance that they would be generally observed, and the reluctance of the unions to agree to reduction of wages was thereby greatly increased. A special section of the agreement was devoted to the subject of the honouring of agreements and, in view of the importance of this and of its close connection with the joint application which has led to the introduction of this Bill, I crave your Lordships' indulgence that I may be allowed to read that special section of the agreement.
916 It states: (1) it is essential, if agreements are to be honoured, that they shall embody conditions which are suited to the circumstances of the industry and therefore will not cause either employers or operatives to have any adequate reason for departing from them. Continued failure to reach agreements on adjustments required by either side may produce a tendency to depart from agreements, and, in proposing additions to the Joint Rules, the parties have the intention of removing this obstacle to the effective operation of collective agreements. (2) Industry requires for its proper regulation, and for the preservation of equitable arrangements as between employers and employers and as between employers and operatives, the effective operation of collective agreements throughout the whole industry. (3) It is necessary to consider means by which the conditions agreed upon by the responsible organisations can be made generally operative, and that this subject shall be further explored in conjunction with the Ministry of Labour on the termination of this dispute. (4) Nothing but harm can result from the unfair competition within the industry which arises from the operation of working conditions different from those settled by agreements, provided always that those agreements are maintained in relationship to the general circumstances in which the industry has to he carried on. These statements embody, I think your Lordships will agree, the whole case for collective agreements in this country, and this Bill is founded upon a belief in the principles set out in this agreement. It will be seen that there is emphasis upon the necessity of the agreements being in accord with the requirements of the industry, and the provisions of this Bill are such as to ensure that no agreements will be made which are against the welfare and progress of the industry and of those engaged in it.
The events since this agreement was made have emphasised the need for getting such order in the industry, particularly as regards such changes as the introduction of the more-looms-perweaver system. I am sure your Lordships will agree that every legitimate and practicable method for putting the industry in a better position to compete with lower prices abroad should be adopted, and it has been recognised by the operatives that such new methods should be adopted under proper conditions. Those employers who have competed unfairly with others by not observing proper conditions for the working of the more-looms 917 per-weaver system have done a disservice to the adoption of further new methods. Whatever gain they individually have secured has been paid for by other employers and the operatives. The limit of the resisting power of groups of operatives, in the midst of a large body of unemployed, cannot be regarded as the proper basis for settling conditions of work, especially when the immediate object is to take an order from another employer who operates fair conditions, an order which in any case would be given to the industry. This, of course, is entirely to be distinguished from that proper exercise of individual enterprise which is necessary for the health of the industry. Trade Boards Acts were made necessary for just those conditions which are rapidly, growing in the cotton manufacturing industry.
It was hoped, my Lords, that in the course of the exploration of the position which was provided for by the 1932 agreement, those in the industry would be able voluntarily to find means of securing order in the industry. In order to get down to brass tacks, if your Lordships will excuse the expression, my right honourable friend the Minister of Labour caused a special investigation to be made into the wages position, principally in those mills where the more-looms-perweaver system was in operation. In this he had the co-operation of both employers' and workers' organisations, and it is believed that the report which was made confidentially to both sides gave a basis of facts as opposed to theory, which was of considerable assistance in indicating the real position. Unfortunately, in the fairly long period which has since elapsed the organisations have had to confess their failure to deal with the situation by their own unaided efforts, and have thus had to seek the temporary assistance of the Government as embodied in this Bill. The Government, after full consideration, have felt it necessary to give such assistance, and that is the raison d'être of this Bill.
Let me now summarize in a few words the proposals in the Bill. In the first place the scope of the Bill is confined to the weaving or manufacturing side of the industry. It does not cover the spinning or finishing branches in which conditions are different. Further, the Bill is only to operate in a particular geographical area defined in the Schedule to the Bill. This 918 is the area covered by the organisations whose agreements as to wage conditions this Bill is designed to uphold. I think I should add that cotton manufacture is so defined in Clause 7 as to exclude any possibility of including woollen or other textile industries. In the second place, the Bill leaves the existing voluntary machinery in the industry for reaching wage agreements entirely untouched. There is nothing whatever in the nature of a compulsory balancing element, such as is provided by the appointed members of a trade board, put in to tip the balance arid prevent deadlock. There is, that is to say, no element at all of compulsory arbitration. Having made their agreement, and only when they have made it, the organisations are then empowered by Clause 1 to apply jointly to the Minister for an Order to give legal effect to the agreed rates. They are required to give public notice of such application and to specify a time for objections. The Minister must thereupon, unless it is clear that the joint applicants do not respectively represent majorities, appoint a board of three persons not connected with the industry to report upon the application.
The board will be assisted by six representatives from each side, sitting as assessors. In this way they will be assured of all the technical assistance they may require. The first duty of the board will be to satisfy themselves that the joint applicants represent respectively employers controlling a majority of the looms in the industry and a majority of the persons employed in the industry of the class or classes affected by the agreed rates of wages. If they are satisfied on this point, they must then report to the Minister, after considering objections and taking evidence, upon the desirability of making an Order to give statutory effect to the provisions of the agreement relating to wages. Any recommendation to the effect that an Order should be made must be unanimous, and a further point to which I would call your Lordships' attention is that neither the board nor the Minister will have power to modify the terms of an agreement. Nothing has been included in these proposals which would in any way impair the freedom of voluntary agreement. If the board report in favour of an Order it will be for the Minister to decide in the light of all the facts whether an Order should or should not be made.
919 Clause 3 provides that an Order, when made, shall have the effect of making the agreed rates, wherever they apply, a term of the contract between employers and workers. Any employer, organised or unorganised, who pays less than the legal rate is to be subject to a penalty on summary conviction not exceeding £10 for each offence. Employers are further required to exhibit a notice of the statutory rates, and to keep records to show that they have paid not less than the legal wage. There is no provision for Government inspection. The whole object is to give the industry power to help itself. Its purpose is to ensure that rates of wages, once they are agreed, are really observed, provided a disinterested tribunal has first been satisfied that they should be made legally binding. It will be for the associations themselves to decide what rates should be made the subject of an Order, and whether the Order should include "piece" as well as "time" rates, and whether it should be coterminous with the whole field covered by an agreement, or should be limited to one or two simple basic rates. It might, of course, happen in spite of all the safeguards provided in the Bill, that the rates scheduled in an Order, or some of them, prove unsatisfactory. Clause 4 accordingly provides that either of the parties may at any time apply for revocation, either in whole or in part; and the Minister is thereupon required to revoke the Order, or the part in question, after three months notice. It is further provided that after a period of twelve months the Minister himself, after proper notice, may refer the question of revocation to a board for inquiry and report.
I must frankly admit to your Lordships that in giving statutory effect to voluntarily agreed rates of wages, as is here proposed, a new departure is being taken. It is an experiment called for by a particular situation; and it is provided in Clause 8 that the Bill shall remain operative only for three years. If the Bill is to be continued after that it will be necessary to ask Parliament for further authority. Before I sit down I should like, if I may, to refer to three points of criticism of the Bill that have come to my notice. In the first place it is suggested that unless a very high and definite percentage of membership of 920 organisations is required on each side there is a danger of substantial minorities being unfairly coerced. In point of fact there is in every industry a large proportion of employers and operatives who, while faithfully observing agreed conditions, do not, by reason of apathy or for other Causes, become members of organisations. The requirement of at least a majority on each side is sufficient to give the organisations the right to have their agreements considered for the purposes of an Order. The board of three impartial persons will then consider the objections, and it is obvious that the larger the number of reasonable objections the greater will be the onus upon the board in reaching a decision. In fact it is certain that in all cases there will be an attempt, before agreements are reached, to bring the whole industry into counsel, and I may say that the first result of even the presentation of this Bill has been that non-affiliated employers have been invited to confer with the affiliated employers' organisations. I cannot help feeling that much of the present trouble would have been avoided if a similar instrument to stimulate such co-operation had been available earlier.
A second criticism which has been brought to my notice and which I intend to meet quite frankly on the floor of this House is that this Bill will destroy the voluntary system. What I have already said is a reply to that, but I would go further and say that the voluntary system in this industry would appear to be approaching the point of collapse, and that without such support as this Bill gives, collapse may possibly occur. As I have said, this Bill is a temporary measure for three years and is intended for the purpose of giving the voluntary system time and opportunity for re-establishment. It is not expected that the powers of the Bill will be used for more than a minimum and necessary amount of statutory enforcement, but that the greater part of the operations of the industry will remain under voluntary arrangements, loyally observed.
The third objection, and the last I will refer to this afternoon, is that elasticity of conditions and innovations of method will be jeopardised. I submit that there is no ground for such fears. It is not the case that enterprise and initiative are found only among unorganised employers, 921 and it may be accepted that, in making their agreements, the organisations will provide for changes in the industry to be met. As a final safeguard the Minister himself has power to initiate action to revoke an Order if it is shown to him that such action is desirable. I would emphasise that it is not likely that the Bill will be used to bring rigidity into all the complex conditions in the industry. To suggest that is to suggest that common rules in highly organised industries are unworkable, for all this Bill does is to enable the industry to regulate its conditions as if both sides were fully organised. To come to the example which has been most quoted by critics, it is not piece-rates, which may be Changed from time to time, which will be the subject of regulation, but the basic conditions upon which those rates are fixed. In fact it is fully anticipated that this Bill will give an impetus to a simplification of wage-fixing in the industry which has long been recognised as necessary but which, by reason of the circumstances, both sides have been reluctant to tackle.
I trust that I have succeeded in this necessarily brief summary, in making it clear to your Lordships that the provisions of the Bill have been drawn up with the single aim of strengthening and unholding the principle of voluntary agreements, freely negotiated, and loyally observed. It is, I think, altogether auspicious that, as I have said, since the drafting of this Bill the very first, step taken upon the employers' side has been to send an invitation to the employers in unfederated districts, inviting them to send representatives in order that all parts of the industry may join together in considering the steps which should be taken to put the machinery provided by these provisions to the best practical use in the interests of the whole industry. All that we can hope to do is to provide this great industry with such machinery. It is for them, relying on the sturdy principle of self-help, to put the opportunity provided to the best and most effective use. In doing so, it is necessary to ensure that all minority and individual interests will be safeguarded and that the progress which arises from individual enterprise will not be jeopardised. It will be seen that the Bill makes such prevision and the favourable reception which it has received throughout the industry encourages me to 922 submit this Bill to your Lordships for Second Reading. I beg to move.

§ LORD ASKWITH
My Lords, I am not surprised at the Minister introducing this Bill. He frankly says that it is an experiment, and it is clear from the Bill itself that it is a Bill of agreement. The proposed terms cannot be altered by the Minister. It says expressly: No such Order shall modify the terms of the agreement. Further, it is agreement which is to cover the industry as a whole and to be in the best interests of the whole of the industry. The noble Lord says that there has been criticism on the point whether minorities are being sufficiently protected. On reading and studying this Bill and from my knowledge of the cotton industry, I should have thought that they were more than amply protected. The difficulty in the cotton industry over and over again has been that there have been, either within the association itself or outside it, persons who cannot come up to what is wanted by the majority as wages in the weaving and other sections of the industry. Particularly there has been under-cutting from outside, very often by persons who have left the association, in a manner that puts those members who try to keep loyal to agreements in the most difficult position.
At the present time the cotton industry has fallen into a very bad way indeed. It has been attacked by fierce competition from the Far East, which may be only the begin-ling of still worse competition. It is an industry that requires some support horn the Government, and I am glad that the Minister is trying this experiment, guarded and hedged in as it is, in the hope that it may be of some advantage to the cotton industry. There is only one clause to which I might call attention, which it seems to me might be more clearly expressed, and that is Clause 7 (2), where it says that …other classes shall be determined in like manner by reference to the several occupations of the persons employed. That is a rather difficult phrase to understand, and I confess I do not quite understand it myself. Years ago I was engaged in a very big dispute in the cotton trade, where with great difficulty 923 a general strike was averted on the single question as to whether a man was a grinder or whether, as a grinder, he was entitled to be a picker or cleaner of flax. That nearly upset the whole industry.
This difficulty was so much recognised during the War that in one of the Munitions of War Acts it was expressly laid down that the courts of arbitration should decide what industry a man belonged to and what section of it. While much else was swept away, that particular arrangement was still maintained in the Wages (Temporary Regulation) Act of 1918, in a clause which stated that: Where a difference as to whether a workman is a workman of a class to which a prescribed rate of wages is applicable.… that matter shall be decided by arbitration. There is no method of deciding here, and there might possibly be considerable difficulty in deciding to which class of weaver a workman belonged. It might be left to the Minister of course to decide, but I should be very glad if the noble Lord would look into the matter.

§ LORD ROCHESTER
My Lords, I am much obliged to the noble Lord and I undertake on behalf of the Government to bring in an Amendment on the Committee stage substituting the word "grade" for "class". I think that would meet the noble Lord.

§ LORD ASKWITH
Very probably.

§ LORD ROCHESTER
I will look into it further, but I think that will probably meet the noble Lord.