HL Deb 18 December 1980 vol 415 cc1201-3

11.20 a.m.

Lord Rhodes

My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.

The Question was as follows:—

To ask Her Majesty's Government whether they will introduce a scheme of temporary financial aid for the textile industry, based on interest-free or interest-abated loans for companies which have a viable future but are unable to finance their continued operation during the present period of recession and high interest rates.

Viscount Trenchard

My Lords, the Government have no plans to introduce a temporary interest relief scheme for companies in the textile industry. In the first place, high interest rates are causing difficulties for many companies and it would be invidious to single out the textile sector for special treatment. Secondly, even if this were feasible, the selection of those companies which were thought to have a viable future could be done only on an arbitrary basis. Thirdly, the extra cost involved in such a scheme would only make more difficult the task of bringing public expenditure under control. We are determined to get interest rates down as soon as possible and the further cut in minimum lending rate announced on 24th November is a step in the right direction.

Lord Rhodes

My Lords, is the Minister aware that there are many firms which were well run and profitable when interest rates were lower which are likely to close down? Is he aware that many firms are gallantly prepared to carry on over the next few months if they could be helped by the Government in some way? Is the noble Viscount aware that this is not an original thought of mine, for it is already happening in Belgium and Holland to help their industries in similar circumstances?

Viscount Trenchard

My Lords, the schemes proposed in Belgium and Holland—and that is their status—are under scrutiny by the Commission in Brussels. In the case of Holland, under Section 93 of the Treaty that country have been informed that they should not introduce it pending further investigation. As for interest rates pressing on this industry, as I have already said they press on others. We will not be diverted from the need first to get inflation under control by the root causes. If we failed to do that by bringing down interest rates prematurely we should certainly do more harm to this hard-pressed industry as well as to many others.

Lord Wells-Pestell

My Lords, as this industry is suffering extremely badly as a result of the recession, may I ask the Minister—I ask this quite sincerely—whether it would be unreasonable to find out whether the banks, which have made an enormous profit out of high interest rates, I think running into many hundreds of millions of pounds, would be prepared to offer interest-free loans to this industry?

Viscount Trenchard

My Lords, I am afraid that that scheme would not be practical, nor would it be just. Although the pressures on this industry are severe, it is by no means alone. The noble Lord will be aware that bank lending has been at an absolutely record rate, and the Government are determined that the total money supply shall not expand more than approximately the target range of something like 11 per cent. extra in a year when the country's industry has not produced any extra goods.

Baroness Hornsby-Smith

My Lords, is my noble friend aware that the penetration of foreign textiles into this country is higher than in any other industrialised nation in the world? Is it not reasonable that the industry should ask what level of its own market it will be entitled to? How many more of its people are to be put out of employment? Is the Minister further aware that I believe, slightly in conflict with the noble Lord, Lord Rhodes, that if the industry were given some confidence that it will not be further eroded, it would be able to find its own finance and be only too happy to restore the employment levels to what they should be?

Viscount Trenchard

My Lords, as I said to the noble Lord, Lord Rhodes, the Government cannot decide on a fixed size of any industry; it is beyond the capacity of a Government to do that. What we can do is everything possible to strengthen our international arrangements, which we inherited when we came to office, and we have said we will negotiate or try to negotiate a thoroughly strong MFA. We have also taken steps, which I have already referred to, to cause comprehensive discussions between the Community and the United States, from which import penetration is coming at the fastest possible level. Within the practical steps we can take in our international trading agreements, the industry has to compete and decide its own size within those parameters.

Lord Beswick

My Lords, leaving aside for the moment the argument that high interest rates are in fact inflationary and not counter-inflationary, may I ask the noble Viscount whether it is not a fact that, apart from the two schemes to which he referred, in Belgium and Holland, there are schemes already in operation for assisting with preferential interest rates exporters in foreign competitive countries, and has such a scheme been considered here?

Viscount Trenchard

My Lords, the whole question of interest rates within the Community is under continual discussion, and particular discussion at the moment in relation to exports, and I do not believe that our exporting industries compared with others are in fact handicapped. As for the noble Lord's first assertion, that has been well stated in various opinion-forming journals; the general proposition, however, must remain that if money and credit expands to a great extent, inflation will follow.

Viscount Massereene and Ferrard

My Lords, is my noble friend aware—he must be—that for very many years various countries have provided lower interest rates for vital industries? I have frequently mentioned that one can have, for instance, a high interest rate for wine, women and song but for wealth-producing industries one should have a low interest rate.

Viscount Trenchard

My Lords, I do not think I have anything further to add, except to draw the attention of noble Lords to the fact that we have given this industry, both through regional policy and through the special selective policy under Section 8 of the Industry Act, very considerable assistance. My department has been examining the help given in all competitive countries and is continuing to do so as a matter of urgency, and overall I believe we shall be able to give our industry a fair trading opportunity.

Lord Denham

My Lords, I know the noble Lord, Lord Reilly, wishes to ask a supplementary question, and I do not want to interrupt him, but noble Lords may feel that, after he has asked that question and my noble friend has replied, we might then move on to the next Question.

Lord Reilly

My Lords, would the Minister agree that one of the reasons for the troubles of the British textile industry might be the fact that for too long too many of our manufacturers have been adding too little value in terms of design and innovation? If he were to agree with that, would he perhaps be prepared to study the device adopted by the Canadian Ministry of Industry and Commerce to encourage Canadian manufacturers to invest a bit more in design and development?

Viscount Trenchard

My Lords, the noble Lord's point must be a matter of opinion. The industry itself recently held a conference in Manchester and put its own design capability under the spotlight. The conference was entitled, Product Policy for the 1980s. The industry is very conscious of the need to improve wherever improvement can be made, but it is the view of my department—and I share it—that, while standards of efficiency will always vary within each industry, this industry has been efficient overall. Its productivity and its co-operation are good, and in a number of firms designs are good, too.

Lord Brockway

My Lords—

Several noble Lords

Order, order!

Lord Denham

My Lords, if the noble Lord, Lord Brockway, will forgive me for intervening, I would say that we have spent 23 minutes on three Starred Questions. We have a further Starred Question and a Private Notice Question to follow. I can only try to interpret the feeling of the House, and I think that perhaps we ought to move on to the next Question.