WOOL TEXTILE INDUSTRY (SCIENTIFIC RESEARCH LEVY) (AMENDMENT No. 2) ORDER 1966 (Hansard, 21 February 1966)

§ THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD RHODES)
My Lords, I hope that your Lordships will agree that the two Orders on the Paper should be dealt with together. 6 If my speech dealing with them appears too long, I am sorry, but I have cut it down to the bare minimum. The purpose of these two Orders is to amend Orders at present in force under Section 9 of the Industrial Organisation and Development Act 1947. The levies were first introduced at the request of both the employers and the trade unions in the industry, the first Orders being made in 1950 and having been varied from time to time since. One levy is for the promotion of exports of the products of the industry, and the other is for scientific research into the technical problems of the industry. The levies are paid by both the suppliers of wool and the processors of wool. The payments are based upon the quantity of wool supplied or consumed and on the number of persons employed in processing it, during each period of six months ending on March 31 and September 30 of each year. The levies are collected by the Board of Trade and paid to the National Wool Textile Export Corporation to reimburse expenses incurred by that body in the promotion of the export trade of the industry and to the Wool Textile Research Council, the body responsible for co-ordinating research in the industry.
The purpose of the Orders is to increase the total current annual yield of the two levies by about one-third, from £369,000 to approximately £500,000 a year, by increasing the rates of charge, while at the same time adjusting the incidence of the rates so as to reduce the proportion paid in respect of the supply and consumption of wool, while increasing the proportion based on processing operations. The main reasons for the increased charges are the continued inflation of costs since the levies were last increased and the continued decline in the industry's labour force. The new rates are intended to operate for the period beginning April 1, 1966, returns for which will fall to be made after October 1, 1966.
For export promotion, the amended rates now proposed should initially produce about £214,000 in 1966–67, this sum amounting to about one-twenty-seventh of one per cent. of the turn-over of the industry. The industry is meeting ever-increasing competition and the income from the levy is no longer adequate to maintain its promotional effort in Europe, 7 which has been stepped up in recent years, while at the same time allowing expenditure in the U.S.A. to continue at a sufficiently high level to take advantage of the recent change in the U.S. labelling regulations relating to the marking of imported wool cloth. As already announced, to assist the Corporation in this particular endeavour, Her Majesty's Government have agreed to contribute £50,000 towards expenditure incurred between April 1, 1965, and March 31, 1966, on publicity in the U.S.A., provided that the Corporation spend an equivalent sum on this project within the same period. In my view, and I believe in that of the Export Corporation, too, the proposed increase in this levy is not sufficient for the proper performance of the export promotion work that is necessary, but I understand that with the voluntary levy for domestic promotion and the new statutory training board levy, this is as much as firms in the industry are prepared to contribute.
For scientific research, the amended rates now proposed should produce about £286,000 in 1966–67; this sum will amount to one-twentieth of one per cent. of the turnover of the industry. The increase now proposed is not designed to cater for an expanded programme of scientific research but is required to meet the rising costs of maintaining research at its existing level. The bulk of the proceeds of the levy are allocated to research schemes carried out by the Wool Industries Research Assocition, and this constitutes the major part of the Association's income. In addition, the Association receives a grant from the Ministry of Technology which currently amounts to £82,500 a year. It is, however, Government policy to ensure that an increasing percentage of the cost of research is borne by industry. This is a factor the industry has taken into account in seeking increased rates of levy now.
As required by Section 9(8) of the 1947 Act, the Board of Trade have consulted the various organisations concerned. The Orders were requested by the Wool Textile Delegation, which itself represents about 85 per cent. of the employers in the industry, and its application is supported by the National Association of Unions in the Textile Trade and the National Union of General and Municipal 8 Workers, the principal organisation of employees in the industry. That the industry in general values the work paid for from the two levies, and desires that work to be continued and extended, is borne out by the fact that the increased rates have been requested by the principal organisations in the industry and are warmly supported by the trade unions. And this gives me confidence in recommending these Orders for your Lordships' acceptance. I beg to move that this Order be approved.

§ LORD DRUMALBYN
My Lords, I should like to thank the noble Lord for the information he has given and for these two draft Orders. I think that his concluding remark—that he has confidence in recommending the Orders—is perhaps at variance, to some extent, with what he said about the sufficiency of the export levy. If I understood him correctly, he said that in his opinion—which is also, I take it, the opinion of the Government—the export levy is not sufficient for the purposes in question. Perhaps he can tell us a little more about what the purposes are, how much in his opinion the levy ought to be, and what purposes that are not now being met should be met; that is to say, what is not being done that should be done, and how much it would cost.
Secondly, in regard to scientific research, the noble Lord told us that the grant from the Ministry of Technology was£82,500. I take it that this is in the current year—that is, 1965/66—and that it was Government policy not to increase these grants. Will the noble Lord confirm that the grant has been at this level for some time? If I understood him correctly, the grant is to be held at the present level, and the entire burden of the increase in costs is to be borne by the industry. Is this so? Can the noble Lord say whether it is the intention of the Government to hold the grant at present level, or whether he envisages that the grant should be progressively reduced, as might be inferred from what he said.
9 There is the question of how this levy is divided, to which I do not think the noble Lord referred. According to the Explanatory Memorandum, a higher burden is being placed on the processing parts of the industry, and a smaller burden on the raw material part—that is, the part which supplies the raw fibre. If my calculations are correct, the disparity is not very great. There seems to be an increase of about 45 per cent. in the charge per employee in processing, and an increase in the charge per 100 lb. of raw materials, either used or supplied, of just over 30 per cent. Perhaps the noble Lord will say on what principle this has been done. The Explanatory Memorandum says: The Board are satisfied that the incidence of the amended charges is in accordance with a fair principle. Can the noble Lord tell us what the principle is, so that we, too, may consider whether or not it is a fair principle? Certainly we should not dissent in any way from these Orders. It is most important that the work of the Wool Textile Research Association should be maintained, and we do not in any way dissent from the increased charges to enable that to be done. But it may well be that the work that is being done is not sufficient and that the charges should be higher still in order to provide for an expansion of that work. I wonder if the noble Lord would also deal with that aspect of the matter.
We agree, also, as to the wool textile export promotion, and I would recommend my noble friends on this side of the House to approve the second Order. This question of export promotion is something that we must in no way neglect. The noble Lord has said that he does not think the levy is sufficient. At the same time, perhaps he will tell us in what directions it is not sufficient.

§ LORD RHODES
My Lords, my view, and the view of the Department, is that it is not enough for export promotion. The wool trade is a trade which is holding its own, with £160 million exports a year, but is finding great difficulty in maintaining this. It is facing competition from all over the world, and particularly from Japan in America. I was there a few months ago, seeing the scientific way in which the Japanese are making inroads into the American market, to the exclusion 10 of the traditional supplies of worsteds and woollens to the American market. The Treasury, at our instigation, gave £50,000 to the wool trade for promotion in America to try to meet this terrific competition which is going on at the present time. It will be seen from the Orders that the amount to be raised for export promotion is about £218,000. I reckon that this is no more than they need for promotion in Europe. And, if I may put a figure to anything at all, I would suggest to the trade from this House that what they need in America within the next few years is something in the region of £500,000 a year.
As to the difference in the change of emphasis in the levy from the wool suppliers to the wool processers, it will be known and observed by many that synthetics of all sorts are making inroads into the traditional use of wool. The result is that there is not as much wool used as there was at the time when this type of Order was originally conceived. So the emphasis is rather wrong, and to correct that we have altered the proportions this year between the suppliers of wool in the raw state and those who work in its manufacture. With regard to the third question about wool research, I suppose one could venture an opinion about the amount of money for it. I will not do so in this instance. I have already said enough on my own initiative to stir things in one or two quarters about the other levy, and I will leave it at that. But may I say that, as the noble Lord will remember, from its inception it was based on a pound-for-a-pound basis with the old D.S.I.R. contribution. Gradually, through the years, in the time when the noble Lord's Party was in Office, it was gradually reduced so that the industry was taking a large share of the cost. This Order is in line with that, and I hope that with that explanation the House will give its blessing to these measures.

§ LORD DRUMALBYN
My Lords, before the noble Lord sits down, can he say specifically whether it is the intention to maintain the grant from the Department of Technology at its present level, or to reduce it progressively?

§ LORD RHODES
My Lords, I could not say that off hand.