§ 3.48 p.m.
§ Order of the Day for the House to be put into Committee read.
§ Moved, That the House do now resolve itself into Committee.—(The Earl of Dundee.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The LORD AILWYN in the Chair.]
§ Clause 1 [Schemes in connection with elimination of excess capacity]:
§ On Question, Whether Clause 1 shall stand part of the Bill?
LORD HAWKEI think this would be the most appropriate time in the Bill's progress to make the few remarks I intend to make. For thirty-six years come Michaelmas I have been directly or indirectly connected with this industry, and I have seen it decline the whole time, with the exception of a brief boom after the last war. That decline has to a large extent been caused by the fact that the trade was always full of weak sellers. These weak sellers could be unmercifully exploited by the markets of the world. The various sections tried to organise themselves by group-selling arrangements, but they were always subject to one or two weaker brethren who would break the prices and thus pull the pool down in the general decline of the industry.
744 It may be said that after this Bill has been passed and there has been the elimination of some surplus capacity, there will be no more weak sellers. Anybody who takes that view is one who clearly knows nothing about the cotton trade, because inasmuch as demand for cotton goods comes to Lancashire in fits and starts—and always has done and always will do—it is absolutely essential that there should be a greater degree of capacity available than would be actually justified by the ultimate consumer off-take at the time. I hope that the reorganisations which are foreshadowed in Clause 1 of this Bill will take this question of the elimination of weak sellers into account. I know that any arrangements for price maintenance are very unpopular these days, but I assure your Lordships that unless we can find some way of getting rid of the weak sellers out of this industry the rest of the Bill will be really a waste of public money.
VISCOUNT ALEXANDER OF HILLS-BOROUGHI am not quite sure about the various technical terms which have been used. I suppose the noble Lord, Lord Hawke, means by "weak seller" the price cutter?
LORD HAWKEWhat I mean by "weak sellers" is that in my experience of the trade, between the wars in particular, there was always some person who was willing to take a loss in the hope that the tide would turn the day after to-morrow.
VISCOUNT ALEXANDER OF HILLS BOROUGHThat is price cutting. Now I am on more familiar ground. In the retail trade in general one meets it fairly constantly. In fact they have a particular name for some lines which are subject to that practice. I expect the noble Lord knows about it; they are called "loss leaders".
LORD HAWKEBefore we get into some sort of argument, I think we are talking about two totally different things. I am talking about manufacturers and I believe the noble Viscount is talking about retailers.
VISCOUNT ALEXANDER OF HILLS- BOROUGHYes, but the same sort of practice seems to exist. I have a wide and superficial knowledge of a 745 great many industries of production as well as retailing; and especially in a trade in which there are so many varieties of goods it is not at all an unusual thing to have a few lines sold at below what is the generally accepted market price as a means of getting in on the ground floor. That is a loss leader. It is exactly the same as with a firm that sells sugar below the market rate so that they may get trade in other commodities as well. There is always a case for reasonable price maintenance, and I should welcome the remarks of the noble Lord as a general principle if it could always be arranged that the fair price should be the maximum price, so that the public as well as the trade should know exactly where they were.
There are two things I want to say upon this clause. The first is by way of apology, because I had hoped that the noble Lord, Lord Shepherd, would move an Amendment to the clause; apparently the Amendment was not handed in and it may well be that he does not intend to move it. I should feel rather more happy if, by any chance, the Report stage could be taken fairly informally on another day rather than to-day, so that I could take that point up. I know I have no right to demand it, but it would be convenient to me if that could be done. I can put to the noble Earl now the kind of point my noble friend had in mind. It was with regard to subsection (2)(a) of the clause. He wanted to get some words inserted which would make it quite clear that in preparing the scheme note had been taken of the needs and requirements of the other sections of the industry. Looking at the Bill again, I suppose it might be argued that subsection (2)(c) possibly meets the situation to some extent. However, I should like to get this matter cleared up before the Bill leaves the House, and I cannot press it further than that to-day.
In general upon this clause, which is so much the operative clause in giving authorisation for the scheme, may I say that I am disappointed that the scheme is in general going forward (and at this stage I do not see how the Opposition could have moved an Amendment, in view of the passage of the Bill through another place) without some inducement for reorganisation of the industry, instead of providing merely for the 746 scrapping of old plant, the taking of new plant and the like and the elimination of other firms. If you are going to keep in the markets of the world as well as in the home market, you should try to eliminate all the unnecessary charges which exist between each one of the horizontal lines of organisation in the industry: raw cotton, spinning, weaving, finishing, dyeing, printing, packaging—all separate, horizontally organised lines in the industry. At every stage the overhead costs and the profit upon those overhead costs have to be taken into final account—that is, about six times cumulatively—in fixing the final selling price at the end. I feel certain in my own mind that that is bound to be an enormous handicap in the rehabilitation of the selling power in the markets of the world. The Bill seems to me to do nothing effective at all in that direction. The noble Earl will recognise that this is the last opportunity we shall have of pressing that point.
§ LORD SHACKLETONI am sorry the noble Lord, Lord Barnby, is not here to move his Amendment, because I had hoped to discuss this question of obsolete buildings. I should like to refer to Lord Hawke's remarks. I believe he was referring—I am sorry to have to say this—to a different subject than loss leaders. It seemed to me that his remarks were really an expression of no confidence in the future of the industry, because weak selling is, of course, a product of a situation in an industry where there is too much competition. But unfortunately weak sellers do not go out of business, and it is perfectly true, as the noble Lord knows much better than I do—although I have had something to do with the cotton industry—that this is something which has bedevilled the cotton industry for many years. It has been faced all the time with a declining market.
As I understand it, the Government's hope is that they will, one way or another, reduce the capacity of the industry to such an extent that there will not be the surplus of capacity that there is in the present situation.I am gloomy about the prospects of their succeeding in this matter, because it is competition not only within this country but from abroad that will inevitably force the owner of a business, in a desperate 747 attempt to keep his business going, to sell at a price below that which would normally be regarded as suitable to prevail at the time. This seems to me to be an inevitable product of the competitive system. I do not know whether the Government have any cure for it, but it is one of the disadvantages of the laissez-faire economy which we have not yet learned how to control. I should have liked to hear from the noble Lord, Lord Hawke, how he would propose to eliminate these weak sellers. I assume that if the Government succeed in what they are hoping to do, the industry will be stronger and more effective. In the last resort it seemed that Lord Hawke's proposals amounted to a request for a return to price agreements of a kind which have been made impossible by the action of the Government.
§ THE EARL OF DUNDEEI am most grateful to your Lordships who have spoken for your observations on this clause. With regard to the Amendments of my noble friend Lord Barnby which Lord Shackleton mentioned just now, I understand that he put them down in order to obtain elucidation on certain points, and as I have had a lengthy conversation with my noble friend I think he may not intend to move them. It is certainly the hope and the intention of the Government that the cotton industry shall reorganise itself not only by getting rid of redundant capacity but by making itself more efficient in every way. As I tried to point out to your Lordships on Second Reading, we think that there are better hopes of doing that if we help the cotton industry to reorganise itself rather than if the Government were to prescribe to the industry the exact lines upon which it shall be reorganised. I am sorry that the noble Lord, Lord Shackleton, feels gloomy about it. Certainly it is a formidable undertaking which confronts the cotton industry, but we have good hopes that, with the aid that we are able to give under this Bill, the industry will succeed in adapting itself to modern conditions, re-equipping itself, meeting competition and expanding its markets, particularly among the higher quality sections in which, in our view, there is most likely to be an expanding demand among the more advanced countries of the world.
748 I am grateful to the noble Viscount, Lord Alexander of Hillsborough, for mentioning the fact that Lord Shepherd wanted information on some point, and I shall be delighted to help him in any way I can. I have looked up his intervention on Second Reading. It appears to have been concerned only with the question of whether there would be a White Paper. I was able to answer that at the time. But I shall be delighted at any time to receive any questions or representations from the noble Lord and to give him a full answer at once. I am sorry, but I do not think it would be right for me to agree to delaying the Report stage of this Bill, in view of the extreme urgency of the timetable which confronts us at the present time. But I am at your Lordships' service in every way to answer any queries which your Lordships may want to put.
§ LORD LATHAMMay I ask the noble Earl whether we are to regard his speech, helpful as it may have been, as being the elucidation which led to Lord Barnby's withdrawal of his three Amendments?
§ THE EARL OF DUNDEEI mentioned the Amendments of Lord Barnby only because they were referred to by the noble Lord, Lord Shackleton. They are on altogether different points.
§ LORD LATHAMI gather from the noble Earl that they were withdrawn because of the elucidation he gave to Lord Barnby. Can we have the benefit of that elucidation? After all, these Amendments are the property of the House now, once they are on the Marshalled List.
§ THE EARL OF DUNDEEIt is not for me to say whether my noble friend should move his Amendment or not. Surely it is a question for him.
§ VISCOUNT ALEXANDER OF HILLSBOROUGHOn that matter we wish to proceed on a subsequent stage of the Bill. We are not really satisfied in regard to some of the points that remain and on what has appeared in the Marshalled List. Surely we should be entitled to move at a later stage of the Bill any of the matters which were put down by Lord Barnby and are now not being moved. We have no opportunity of doing so straight away. This is a 749 Parliamentary Paper. We have no explanation as to why the Amendments are withdrawn. We have no real explanation of the reasons for not proceeding with these questions. It is quite clear that we ought to have a Report stage, or at any rate we must have the right to move on Third Reading.
§ THE EARL OF DUNDEEI think it is not for me to explain the reasons why any noble Lord does not move an Amendment. Surely, that is for him and not for me. I thought it was perhaps courteous to mention that my noble friend might not intend to move his Amendments since Lord Shackleton alluded to the fact that my noble friend was not here. But it is not my responsibility, and I cannot accept any responsibility for it. I think I am right in saying that any of your Lordships will have the right to raise any matters that your Lordships may desire on Third Reading.
§ Clause 1 agreed to.
§ Clause 2 [Re-equipment grants]:
§ 4.6 p.m.
§ On Question, Whether Clause 2 shall stand part of the Bill?
§ LORD SHACKLETONI should like to speak to Clause 2. I should have liked to ask the Government for an explanation of the policy with regard to re-equipment grants in the matter of buildings that may be obsolete. As your Lordships will appreciate, this is the substance of the Amendment that has not been moved, and it would seem that it would be appropriate to speak to it on Clause 2, which is concerned with re-equipment grants and the conditions under which they are permitted. We are confronted with the particular problem of an industry which has a large number of economically obsolete buildings, which have, as I am sure the noble Lord, Lord Hawke, will bear out, been a serious factor in limiting re-equipment. The spacing of machines and even the requirements of the newer factory legislation have made it difficult for the owners of certain mills to do the sort of job that they would want to do.
I should like to know from the Government what their policy is in this matter. I certainly would not have gone so far as the noble Lord, Lord Barnby, was prepared to go in suggesting that no 750 grants should be given for new or reconstructed cotton spinning machinery unless it was housed in suitable, single-storey buildings. I regard that as an impossibility. There are a certain number of mills in Lancashire, and some most efficient ones, which are certainly not single-storey buildings, and noble Lords who know Lancashire do not visualise the mill as a type of modern factory. It may well be that modern mills should be of this kind. But I should be interested to know what the Government's view on this matter of buildings is—not merely the conditions under which machinery grants will be allowed, but the suitability of the buildings into which the machines are to go. This seems to me to be an important and material consideration to this particular clause. I hope that I am not taking an unfair advantage of the noble Earl, but since he has given this satisfactory explanation to Lord Barnby, it may well be that he could satisfy other noble Lords.
§ THE EARL OF DUNDEEThere are two reasons which either have been, or may be, urged for getting rid of derelict or out-or-date buildings. One is the economic reason, as it will lead to more efficient production; and the other is the aesthetic reason: that if a building is derelict and abandoned—that is, not used at all—it may become most unsightly, and it may be desirable in the public interest that it should be removed. On the first point, the economic point, we do not wish to control the methods by which the industry re-equips itself under Clause 2 of the Bill. The main thing is to prepare the groundwork by Clause 1, by getting rid of the excess machinery. Without that no progress can be made. Then we come to Clause 2, under which a grant of 25 per cent. for new machinery is payable. That leaves 75 per cent. to be paid by the industry, and we do not consider it likely that if the industry is to pay 75 per cent. towards re-equipping itself it will do so in an uneconomic and wasteful manner.
We feel that the main weight of Government assistance should be given to the necessary groundwork—that is, getting rid of redundancy. Having done that, we are providing a further additional stimulus by this 25 per cent. grant for new machinery. We think that that 751 will put the industry not only in a better position, but in a much more creditworthy position; and we do not think it would be justifiable to give still further grants for the erection of new factory buildings which we think a re-equipped industry, having been relieved of the incubus, the drag, of redundant machinery, ought to be able to do for itself with the assistance which the industry is receiving under this Bill.
The social point was also dealt with in another place but it is not really a matter which is relevant to this Bill. My right honourable friend the President of the Board of Trade pointed out that planning authorities have powers under Section 26 of the Town and Country Planning Act to require removal of unsightly buildings. My right honourable friend feels very strongly about this and he is consulting with the Minister of Housing and Local Government to see whether anything can be done to stimulate action. In fact, the last sentence of my right honourable friend on the Report stage of the Bill in another place, when he was replying to a point raised by an honourable Member, was that he would be glad to do what the honourable and learned Member had asked. I hope that that makes clear what the noble Lord, Lord Shackleton, wished me to tell him.
VISCOUNT ALEXANDER OF HILLS-BOROUGHI am much obliged to the noble Earl. The noble Earl says, however, that Her Majesty's Government do not want to control the methods and arrangements of the industry in its efforts at reorganisation, apart from what they are doing by way of grant under Clauses 1 and 2; but under Clause 2 itself, in subsection (4), a pretty strong attempt is made to have control in certain respects before payment is made. In regard to the Amendment under Clause 2 not moved by the noble Lord, Lord Barnby, might I ask what was the persuasive argument used by the noble Earl, apart from what he has said today, which caused the noble Lord not to move that Amendment? What is the view of Her Majesty's Government as to grants under this scheme for buildings other than single-storey buildings? What is the answer to that?
§ THE EARL OF DUNDEEI did not say to my noble friend anything more than I have said to your Lordships. The question of double-storey buildings is a matter of opinion and the Cotton Board inform us that there are in the industry a number of authorities who hold the view that in some circumstances a building of more than one storey is perfectly suitable; and we could not contemplate making it a condition that there should be single-storey buildings for spinners when many people who know a great deal about the industry hold a different opinion.
§ LORD LATHAMI should like to ask the noble Earl a question. Did I understand him to say that in another place the right honourable gentleman the President of the Board of Trade stated that he had enlisted the support of his right honourable friend the Minister of Housing and Local Government in regard, particularly, as I understood, to obsolete buildings? Was that the Minister of Housing and Local Government?
§ THE EARL OF DUNDEEYes.
§ LORD LATHAMIn what way is it expected that the Minister of Housing and Local Government would help in regard to obsolete buildings which may become eyesores? Is he to bring them into a planning or development scheme and pay for their demolition? Would the noble Earl be good enough to expand that a little?
§ THE EARL OF DUNDEENo, I do not think so. Surely the obvious way is by stimulating action under Section 26 of the Town and Country Planning Act. As the noble Lord knows, there are also special powers in development areas which the President of the Board of Trade can use directly for acquiring and demolishing buildings on economic rather than aesthetic grounds. But of course the North East Lancashire Development Area does not cover a very large part of the cotton area, and therefore I did not mention that aspect of the matter. Apart from that, however, it is a matter for town and country 753 planning legislation rather than for this Bill.
§ LORD LATHAMIt may be a matter for town and country planning legislation. At the present time the Minister of Housing and Local Government has no power to require the demolition of an obsolete factory. Indeed, if a local authority receives his permission to do it they now get no grant except as part of the block grant. I cannot see how the Minister of Housing and Local Government can advance the solution of the difficulties of obsolete factories in any important aspect.
§ THE EARL OF DUNDEEIt may be that the noble Lord, Lord Latham, is right, but I cannot add anything to what was said by my right honourable friend in another place.
§ Clause 2 agreed to.
§ Remaining clauses agreed to.
§ House resumed: Bill reported without amendment.