Orders of the Day — Textiles (Purchase Tax)

– in the House of Commons at 12:00 am on 29 April 1952.

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7.3 p.m.

Photo of Mr Anthony Greenwood Mr Anthony Greenwood , Rossendale

I beg to move, That this House calls upon Her Majesty's Government to consider removing the Purchase Tax from textiles in order to alleviate the rising unemployment in this industry. My right hon. Friend the Member for Farnworth (Mr. Tomlinson) is to second this Motion and I know that the House would wish to join me in saying how delighted we shall be to see my right hon. Friend back at this Despatch Box.

On 26th March I opened a debate on the textile industry which was moderate in its tone and which, I believe, served a useful purpose in acquainting the House with the bare facts of the situation and in focusing public attention upon them. On that occasion I suggested, among other proposals, the possibility of suspending Purchase Tax upon textiles. On 7th April my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) and my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) elaborated upon that suggestion in the debate on the Finance Bill, and the Chancellor of the Exchequer in winding up, gave a reply which we regarded as wholly inadequate.

So, apparently, did many hon. Gentlemen opposite, for in the course of that debate leading Members of the Conservative Party's Finance Trade and Industry Committee tabled a Motion calling on the Government to reconsider their policy. That Motion was left on the Order Paper in spite of the reply of the Chancellor, and it subsequently received the support of 44 Members—21 Conservatives, 22 Socialists and one Liberal.

To play our part in ending the suspense into which the industry has been plunged, the Opposition decided to give up part of our time today to a discussion of that all-party Motion. Unfortunately, the rules of the House preclude the discussion of that identical Motion, but the one which we have tabled in its place does not, I think, involve any change of substance, I had hoped that all the sponsors of the original Motion would have felt able to support us on this occasion because the Motion that we have tabled is in line with the letter which the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton) wrote to "The Times" on 12th April.

Indeed, any case there was a month ago for these proposals has, in our view, been strengthened by subsequent events. But the right hon. Member for Blackburn, West, has put down an Amendment which is far weaker. It surrenders to the Government before the campaign is really under way, is vague in its wording and, we believe, does not go sufficiently far to meet the needs of the situation.

Last Thursday, the "Northern Daily Telegraph," a paper which is well-known to many of us and which perhaps has a more intimate knowledge of the weaving belt than any other paper, prophesied that the situation this week in Lancashire would be worse than at any other time, except for Christmas and Easter. That probably means that this week there are over 100,000 workers in Lancashire alone either wholly or partially unemployed.

On the other side of the Pennines the production in most sections of the wollen industry is between 15 per cent. and 30 per cent. less than a year ago, and in February last over 1,600 workers left the woollen industry. In the spinning section of the cotton industry yarn production is down by one-third and the number of workers in spinning dropped by 10 per cent. between November and 12th April. In the last few weeks the drain away has been at the rate of more than 1,000 a month in the spinning section, many of them key workers. Indeed, the dispersal of a labour force built up with such difficulty is one of the most serious effects of the stagnation from which we are begging the Government to save the industry while its long-term future is under consideration.

I wish to impress on the House that we have never proposed what has been called a "tax-free holiday." It is a phrase which has only been used by the hon. Member for Skipton (Mr. Drayson), by the Chancellor of the Exchequer and by the Foreign Secretary when he visited Blackburn on Friday to demonstrate that there is no split in the Conservative Party. That is the sort of situation with which all of us in the House are acquainted from time to time. I cannot find anything in the speeches of my right hon. Friend which could bear that interpretation of a tax-free holiday, and certainly we would have little sympathy with such a proposition.

Our attitude is quite clear. The original justification of Purchase Tax was that it increased prices and discouraged consumption. That was a sound policy in a time of few goods and inflated purchasing power. Today, however, we have a surplus of goods and a weakening of demand which has arisen from the rise in the cost of living. If Purchase Tax discouraged buying in days of easy money it must surely do so to an even greater extent when money is short.

On 7th April my right hon. Friend the Member for Leeds, South, said: We have always said that this was a tax that should be used in the interests of economic planning. Just as we cut down consumption deliberately when it is necessary, so if we want to encourage consumption we should be prepared to take it off. I believe that the time has come when we definitely ought to encourage the home consumption of textiles. …"—[OFFICIAL REPORT, 7th April, 1952; Vol. 498, c. 2428.] When we have spoken of this being a temporary measure, we have not had in mind a matter of weeks or months. Our aim is to give this help to the industry until the sellers' market returns, and that may be two years, three years, or even longer, but we cannot accept the view that any Government or party can commit itself to renouncing for all time so valuable a source of revenue as the Purchase Tax, particularly as it is, or should be, primarily carried on the more expensive luxury products.

There is one other misconception which I should like to try to remove at this stage. The Chancellor and the Foreign Secretary have spoken as if we believed that the Purchase Tax is the main cause of our troubles, and that its removal is our only constructive suggestion for remedying them. No one who has studied the speeches which we on this side of the House have made could seriously hold that view.

On the 26th March, we did our best to stress the real causes of the recession, and to suggest other remedies which could be applied by the Government—the placing of defence contracts, a further meeting of the Commonwealth Finance Ministers, the search for new markets overseas and international action to stabilise the cost of raw materials. One of these suggestions, the speeding up of defence contracts, has produced action by the Government, but the acceptance of one suggestion does not justify the Government in turning down the others.

The placing of defence contracts will help some sections of the wool and cotton industries, but they will not help others, and those other sections are the ones like the fashion section and the furnishing fabric section, which the removal of the Purchase Tax would tend to help. We believe that all these remedies which have been suggested are necessary if the industry is to be helped out of the doldrums.

Far be it from me to suggest that the removal of the Purchase Tax in itself would initiate a new era of prosperity, but we believe that its removal could not fail to remove a handicap to sales, to give consumers a psychological stimulus, and to free the industry from what we believe to be an intolerable imposition in a world clouded by recession. The right hon. Gentleman the Member for Blackburn, West, hit the nail on the head when he asked what the bricklayers would say if half of them were out of work and there was a heavy tax on houses?

The "Manchester Guardian" of 9th April commented on the speech which the Chancellor of the Exchequer had made on 7th April. It said: Purchase Tax in its present form under the D scheme is a handicap to recovery of a kind with which Lancashire's competitors have not to contend. In that sense the Government is intensifying the depression. It really is ironical that no other textile industry in the world is treated in the way in which we treat our textile industry. I wonder if the Government have looked at it in this way. Today, our most dangerous rival, the Japanese textile industry, is clamouring for a Government subsidy of £15 million a year. At the same time, our own Government, quite apart from Income Tax and Profits Tax, is imposing a Purchase Tax burden of between £80 million and £100 million a year upon our own industry. I say that that is grossly unfair.

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

I fear that the hon. Gentleman, in his lucid speech, has fallen into an exaggeration. That figure covers the whole of the section, including boots and shoes and everything else.

Photo of Mr Anthony Greenwood Mr Anthony Greenwood , Rossendale

It covers all that section in the Schedule to the Act, but the Chancellor will also agree that the figure for textiles alone is something in the neighbourhood of £80 million. It may be a little more or a little less, but I think I am right in saying that that is the figure. However, I will cut the £100 million and compromise with the right hon. Gentleman at £80 million. I still believe that that is unfair, when we consider that other textile industries in the world are asking for Government subventions.

Those are the reasons which have prompted us to continue with this campaign for the removal of the Purchase Tax, and I am sure that similar reasons have prompted the many organisations which have made similar demands. I think that many of us here tonight will remember Members of the present Government in the last two Parliaments making constant pleas for less Government interference and for letting the men who know get on with the job. That is exactly what we are asking today.

All the trade unions in the woollen, cotton and clothing industries have joined in these demands. So have the Cotton Board, the Wool Textile Delegation and the Cotton Spinners and Manufacturers Association. So have the Furnishing Fabrics Federation, representing a large number of interested organisations. So have the National Chamber of Trade and the Manchester Chamber of Commerce, a body which is famous throughout the world for its knowledge of the textile industry and the conditions which it needs to give it a chance to prosper. Those are the men who know the job, and, today, it is the Government who are interfering. Why? Because the Chancellor of the Exchequer refuses to surrender a yield from Purchase Tax which he will not get in any event if the present recession continues.

I found surprising support for our point of view in the report of a company meeting which appeared in Friday's Press. The chairman of that meeting in his speech, spoke as follows: Whatever justification there may originally have been for this tax when supplies were limited and it was desired to discourage consumption, this now no longer exists. By applying Purchase Tax to a greatly increased range of articles, the Government has extended the use of what is now proving to be an inflationary tax, and is to this extent, on a falling market, preventing a healthy fall in retail prices, with all its implications on the cost of living.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Kidderminster

What is the name of the company?

Photo of Mr Anthony Greenwood Mr Anthony Greenwood , Rossendale

I am grateful to the hon. Member for Kidderminster (Mr. Nabarro). The company is Lewis's Investment Trust, of which Lord Woolton was until recently so distinguished a member.

After that vicious stab in the back for the Chancellor, I read with very great regret, but, I confess, without surprise, on another page of the paper, a headline which ran: Butler Says He Took Aspirin 'To End It All'.

Photo of Mr Anthony Greenwood Mr Anthony Greenwood , Rossendale

I do not want tonight to give many details of how the D Scheme hits various sections of the industry, but I do want briefly to refresh the memory of hon. Members. Of over 120 Utility furnishing fabrics, for example, previously tax-free, all but three now carry the tax, and the "Manchester Guardian" has maintained that the Budget has made most cotton and furnishing fabrics of decent quality prohibitive for the ordinary buyer.

To give one example, printed linen, which was 11s. 9d. before the Budget, is now 15s. 9d. A lady's woollen suit, specification 227D, had a ceiling price of £11 14s. 3d. under the Utility scheme; today, under the D Scheme, the same suit costs £12 17s. 0d., an increase of more than £1. Knitted gloves were all free of tax before the Budget. Today, all of them are subject to tax.

I understand—perhaps the Financial Secretary when he replies will correct me if I am wrong—that of the yield that the Chancellor expects from textiles this year, over half will come from goods which were previously tax-free. I only add on this part of my speech that even before the Budget, it was almost impossible to sell goods in the higher Utility grades. How much more difficult it will be to get them out of the pipeline now that they are subject to tax.

I notice that the Foreign Secretary, at Blackburn, argued that there is no reason for removing Purchase Tax from those textiles which carry it, because tax-free goods are not selling either. That seems to me to be fantastic reasoning. If it is difficult to sell tax-free goods, it is infinitely more difficult to sell goods which carry tax, and the effect of the present scheme is to penalise the manufacturers of those goods and the work-people they employ.

That brings me to a further objection to the scheme. The greatest safeguard for our industry for the future is the quality of the goods that we produce. I am told, however, that retailers, by fighting shy of goods which come above the D line, are encouraging manufacturers to debase quality. The President of the Board of Trade and the Secretary for Overseas Trade, whom I am glad to see in his place, at least know what effect that will have on our export trade.

With the development of textile industries in other countries, international trade in textiles, as the Douglas Committee reminded us, may become increasingly confined to high-quality and speciality articles, and debasement of quality in the home market will handicap us seriously in markets abroad.

In conclusion, I want to say this to the Government. The placing of defence contracts, for which we pressed and which we welcome, will have some effect, but its importance should not be exaggerated. It can only help certain sections of the woollen and cotton industries. It is, moreover, an unnatural boost, which cannot help in the long run. When the new contracts have all been placed, the total value of Government contracts for textiles will be in the neighbourhood of £85 million.

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

May I help my hon. Friend? I had an Oral Question down to the Chancellor today which was not reached. The reply points out that of the £4,700 million defence programme, approximately £200 million will be for expenditure on clothing and textiles.

Photo of Mr Anthony Greenwood Mr Anthony Greenwood , Rossendale

I am grateful to my hon. Friend. Apparently, between £85 and £90 million worth of that has already been placed. The point I was making is that we will not get a balanced industry on a basis of that kind, and the sooner we get down to long-term planning, the better it will be.

The removal of the Purchase Tax also would do something to help the industry, although the importance of this, too, should not be exaggerated. It would be an encouragement to the industry and an indication of the Government's awareness of the situation. It would give a breathing space while the Government work out their long-term plans for the industry and for the introduction of new industries to the textile areas.

In the meantime, however, skilled men are leaving the industry, mills are closing and looms are being sold, and unless we are careful we will get a haphazard, unorganised, chaotic running down of the textile industry, which will not help the interests of the textile areas and which will leave the industry permanently weakened and unable ever again to play the great part that it has played in the past.

As the President of the Manchester Chamber of Commerce has said in pleading for the removal of the Purchase Tax, the industry does not want straws; it wants a lifebelt. If the Government will throw that lifebelt tonight, we shall be the first to applaud their action and to lead the cheers that will echo tomorrow around the slump towns in the textile areas.

7.25 p.m.

Photo of Mr George Tomlinson Mr George Tomlinson , Farnworth

I beg to second the Motion.

It is so long since I had the privilege of addressing the House that I feel like asking for its indulgence; and yet, at the risk of offending my doctor, I felt that it behoved me as an individual, as well as a representative of the textile workers of Lancashire, to come here and say my little piece in the debate.

I want to say straightaway that we are not putting this suggestion forward as a solution, but as a means of priming the pump so that we might begin again the flow of buying. If it is asked why we are asking for preferential treatment, my answer is because we have earned it by our past contribution to the State. Fifty years ago, I entered the textile industry as a half-timer. I was literally born into the mill. The Minister of Labour will understand me when I say that in those days, we did not need employment exchanges. The employer knew when children were coming, and their names were in his book long before school-leaving age was reached.

Since those days, many are the vicissitudes through which the industry has passed. Everybody realises that over the years it has made a great contribution to the export trade. Even before the first motor car which now heads the list was on the first drawing board, the cotton industry had helped to build the greatness of the country from a trading point of view. What has been the reward of the workers over the years? In so-called good times, starvation wages. In bad times, Poor Law relief, the workhouse and, in later years, Public Assistance and the Means Test. It has always been difficult to keep the bitterness out of one's soul when dwelling upon the treatment of the workers in our industry over the last half century.

When I began work in 1902, I had the princely wage of 2s. 3d. per week as a half-timer; and 5s. at 13 years of age for 55½ hours' work. Married men, fathers among them, were fortunate if they could earn 25s. or 26s. per week. And those wages carried on for many years. It was said at the time that in the two hours before breakfast on Monday morning, we could meet the needs of the home market; and the rest of the week, the remaining 53½ hours, were for the export market.

In 1914, when I was married, we never turned a wheel for eight weeks. The reason was that war had begun and every piece of cloth on the eight looms that my wife and I were running was for the central European market. Until the markets had been adjusted, we had to play off. Last year, I remind the House, 75 per cent. of the finished cloth was for the home market, and only 25 per cent. for the foreign market. It is to the home trade, therefore, that we must look for the future of the industry.

I was interested to read in the "Sunday Express" last week that it was no accident that in the rain-soaked areas of Lancashire the cotton industry was established. No, it was no accident. The dampness in the atmosphere held the strands of cotton together. Many an experience of mine brought home that fact. I remember on more than one occasion going to work along with my father on a Saturday morning, with my mind on the cricket match in the afternoon, and the drizzling rain as it came down bringing forth from him the exclamation "It's a grand morning for weaving." I could see nothing grand in it, but I realised as the years went by that the holding together of the strands of cotton because of the damp atmosphere meant all the difference between a reasonably good wage and a very poor one. Therefore, I could understand his enthusiasm for the rain which I had earlier failed to appreciate.

Forty years ago most people in Lancashire felt that we should always keep our monopoly in cotton because of the climate. They did not realise in those days that science could and would come to the aid of industry and produce the Lancashire climate in a weaving shed in India, which is what took place. I worked in a mill where the first humidifier was installed by the Oldham firm of Clayton and Company, Limited. It seems to me that the splitting up of the drop of water by the jet was almost as great a revolution from the standpoint of Lancashire as the splitting of the atom, for it enabled that competition to begin from which we afterwards began to suffer.

I remember the time when in the village adjoining that in which I was born and in my own village, most of the mills were engaged in the weaving of what we called duty. I am open to correction, but I should be very surprised if there is a single mill in any one of those villages today which is producing a single duty, and yet between 11 or 12 of those mills were so engaged full-time. The consequence was the murder of villages.

I have seen places where practically everyone working in a mill owned his own house. Those people had paid for them painfully over the years on a mortgage through the Co-operative Society, spending almost a lifetime in paying for them. As a result of the recession that took place in the cotton industry I have seen those houses go back to the mortgagee in the next generation. The same thing is happening today. There are people in those villages who again have begun the task of seeking to buy their houses, and although we are told how desirable it is that they should own their houses, because of the circumstances they can no longer keep up the payments.

For 40 years, like the children of Israel, we were in the wilderness. In 1938, when I came to this House, I tried to make the House cotton conscious. Week after week and month after month, in order and out of order, I talked cotton. I failed, in spite of all my efforts. I could never get a Minister of Labour to understand that there was such a thing as under-employment. It was one of the worst industrial maladies of this century, and yet the rest of the country never understood it, and does not yet. Then came 1939 and the war.

In 1941, at the behest of the right hon. Member for Woodford (Mr. Churchill), I went to the Ministry of Labour. Industry had to be concentrated to give us munition workers, and it was decided to start with the cotton industry. I still have a feeling that I was chosen to help the Big Six so that there would be someone to "take the can back" if we failed. However, we concentrated the industry, and I think it will be agreed that the scheme for cotton was fair. As its author, I take some pride in that. We got the workers into munitions, and everybody agrees that they did a good job.

But, more than that, we had at the Ministry of Labour for the first time a man who understood the cotton workers and knew something of the history of cotton. He introduced the Essential Work Order for the munition and other industries, and to keep workers in any industry it had to be applied. Those Members who were in the House at that time will remember that three conditions had to be satisfied. The work had to be essential, welfare arrangements had to be satisfactory and a guaranteed wage had to be paid. Thus, for the first time, we solved the problem of underemployment and, so far as the cotton industry was concerned, we saw the promised land. For 10 years we built up confidence in the industry. We persuaded the workers to return at the end of the war. We made a great contribution to the balance of payments, leaving exports stable for a long time.

Now, in the last six months, we have returned to slump conditions. The older people in the industry are afraid, and the young ones will be getting out. It may be asked, how will the abolition of Purchase Tax help? It will cheapen the product and help people to buy again. It is a strange thing, but the workers in this industry have never been able to buy their own products. In 1944 I went for the first time, thanks to a beneficent Government, to the United States of America. After the second week I ran short of underpants. I went to Wannamakers, in Philadelphia, and asked to see some underpants. A man brought them out. I said, "Have you nothing rougher than this?" He said, "No." "Well," I said, "I had better take them," and I bought four pairs. They were made of sea island cotton. I had woven thousands of yards of it, but I had never been able to buy a pair of pants made of it. No, that was not for the workers.

My hon. Friend the Member for Rossendale (Mr. Anthony Greenwood) spoke of the better class qualities of textiles which are now subject to Purchase Tax. Those have never been in the homes of the workers. Take off the Purchase Tax and give us an opportunity of looking at the best stuff and wearing it. We can solve the problem if only we may have the opportunity of buying back that which we have produced. I have heard the argument about stocks being piled up and that, therefore, the removal of the Purchase Tax would not immediately increase the demand that we want to get the looms running again. There may be stocks in the warehouses, but I can assure hon. Members that there are not stocks in the homes of the people. No worker buys more than two shirts. In the old days he bought only one, and he could never afford to buy more than two. Such people do not change the habits of a lifetime over night. Give them an opportunity to get the best, by removing the Purchase Tax.

If I am asked what we can do, my reply is this. I know all about the long-term programme. People have been talking in terms of long-term programmes during the 50 years that I have been in the industry, but they have never materialised. Why? Because the industry all the time has been running for profit and never to meet the requirements of the people. What else can be done if we do not do this? It is the only practical thing that can be done at the moment, and three generations in my lifetime have earned this consideration.

What it will cost the Chancellor I do not know, but I say that the Chancellor of the Exchequer, being responsible for the country's finances, owes it to this industry for what it has contributed in the past. Therefore, I ask him with full confidence not only to do what he can, but to make the gesture that will bring hope to people who are now living in despair. We can close the dollar gap at the expense of Lancashire, but if we do that we shall be murdering the people of that county for the sake of an economic credit, for once more will be experienced that which we all declared should not happen again and the whole county will be sacrificed.

7.40 p.m.

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury and Radcliffe

I beg to move, to leave out from "removing," to the end of the Question, and to add instead thereof: reducing or amending the Purchase Tax on textiles and to take any measures including acceleration of orders for textile goods in order to alleviate the rising unemployment in this industry. I think the first thing I ought to do on behalf of the whole House is to pay a tribute to the right hon. Member for Farnworth (Mr. Tomlinson). He is a political neighbour of mine on one side, as is the hon. Member for Rossendale (Mr. Anthony Greenwood) who moved the Motion, on the other side. I am sandwiched between them. I can only say that though we may frequently differ—and my constituents frequently do differ from him—in that part of Lancashire he is held in great affection and regard, and everybody will be delighted to think that he is on his feet again and making a contribution in the eloquent terms to which we are all accustomed. I do not agree with a great deal of what he said, but I am coming to that a little later.

The first question we have to ask ourselves this evening is, why are we having this textile debate? I think it is a "pretext-ile" debate, that it is just a pretext for right hon. and hon. Members opposite, who a month ago had a debate at great length on textiles, to try to get a political advantage because they thought that what had been put down by my hon. Friends and myself might lead to an embarrassing situation. For the hon. Gentleman who moved the Motion, that is a great fall indeed, because when he opened the debate a month ago, a debate from which, I think, only the hon. Lady the Member for Liverpool, Exchange (Mrs. Braddock), and myself were excluded—that is a fair balance—he certainly made, as he said this evening, a calm, sober and cool survey, and with the undoubted idea at the back of his mind, as did everybody else in the House at the time, to examine this problem, but not sentimentally. Sentimentality is a bad guide; it is emotion divorced from action. That is the best definition of it. It was an attempt to get at the root of the trouble, but I do not feel that either of the two speeches we have heard tonight are really of that character.

Indeed, if we examined the paraphrase of the Motion, we on this side of the House have to ask ourselves which of the two opposing teams seated on the benches opposite is responsible for it. Is it the Hornchurch Harriers, which we have very often seen in action, or is it Attlee Disunited? There have been some transfers from one team to the other, but under what conditions we do not know.

Photo of Mr Anthony Greenwood Mr Anthony Greenwood , Rossendale

The hon. Gentleman has asked why we are having this debate. I think we are entitled to ask the hon. Gentleman why he himself put down a Motion on this very subject. Surely he was not abusing the procedure of the House by putting down a Motion which he had no wish to discuss.

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury and Radcliffe

It is a little unusual—for the hon. Gentleman made a speech which was more fitting for next week when we come to the Committee stage of the Finance Bill—that hon. Members should take three hours out of their precious time to do it. I think the accusation I have made lies very fully.

This debate is brought forward solely with the idea of creating a difficult situation between certain Lancashire Members on this side of the House and the Chancellor of the Exchequer, but it will not succeed. Let us take what was said by the two hon. Gentlemen opposite. There seemed, first of all, to be some confusion as to whether the home trade or the export trade was to be the more important. I think we ought to decide right away that these cannot be divided. If we are going to rely greatly on the one, it must almost always be at the expense of the other.

The first question I want to ask is this. In the last month, not very much has happened to change the situation since the last debate, but how little reference is made to what happened in the year before 25th October last. Every sign existed then for those who could read them of the serious deterioration of the cotton industry. Order books were no longer full; deliveries were being greatly accelerated; things which it had taken a year or 18 months to get delivered were all immediately available, and no congestion was in the warehouses. What were the hon. Gentleman and his friends doing them? All the things that they are pressing the Chancellor to do now were open to them to do at that time. They were in power and they could have negotiated a great many things then in a much more propitious atmosphere than now.

It leaves in the minds of many of us the feeling that it was probably because they saw they had failed dismally to deal with the things which were going to affect Lancashire and other parts of the country that they found the 25th October a very convenient date to hand over the burden, quite seriously of their creation, to others.

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

Would the hon. Gentleman agree that up to the end of October, in Bury and other Lancashire towns, there were still advertisements on the gates of the mills asking for more hands?

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury and Radcliffe

If the hon. Gentleman will look at previous debates, I think he will find that we were already having warnings from the then Chancellor of the Exchequer. We were already realising how very patchy was the situation. Some four or five years after I started warning this country about what would happen in Japan, hon. Gentlemen opposite were jumping on the band-wagon joining in and pointing out the danger that would arise from Germany and Japan. What did they do about looking ahead and taking the necessary steps? No single action was taken during that period to refute the dangers threatening Lancashire.

Today the situation needs careful and dispassionate examination, and I am going to try to give it a little of that. There is no doubt that the words of our Amendment are obviously much wider than those of the Motion moved by the hon. Gentleman opposite. Purchase Tax is only one of many factors which have to come into play. I agree with the hon. Member for Rossendale on one thing entirely, that my objection to the tax is because of its long-term effect on the quality of goods that Lancashire produces. But it is exactly for that reason that it is vitally important not to rush into its immediate removal altogether if there are other alternatives which can be taken in a progressive attempt, step by step, to rescue the industry.

The foundation step, the basis on which everything else must be done, is to see that the hardly won beginning of stability in our country is maintained. We on this side have had six years of Opposition, and we realise what the difference of the House is on this occasion. We realise, and must realise, that while we ask the Chancellor, for reasons which are perfectly sound, to do a certain thing, he is assailed at the same time by 40 or 50 others which appear to those who put them before him—and they will do so in the coming weeks—equally important.

It is for that reason that we have widened our Amendment so that we may receive, as we hope to and shall in due course, some alleviation through these things, side by side and progressively. We have so far received the bringing forward of purchase for re-armament. That in itself is not the greatest possible relief. It is only Government stock-buying in a form. Even if Purchase Tax were taken off today, that would be inadequate. It is only one step.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

I think we all agree that there is no permanent cure for our troubles in the mere removal of the Purchase Tax, but would the hon. Member say what useful purpose is served by the Purchase Tax today? If the answer is none, why does he not join with us in appealing to the Government to take it off?

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury and Radcliffe

I do not know whether the hon. Member thinks it is a useful purpose to try and balance our Budget.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

But we have a large surplus.

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury and Radcliffe

Not if it is taken on the true basis, above and below the line. I think it is a useful purpose to try and balance or have a small margin. Everything else is of no value at all if we do not achieve that.

Photo of Mrs Barbara Castle Mrs Barbara Castle , Blackburn East

Would the hon. Member allow me to intervene?

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury and Radcliffe

I have been interrupted several times and on a previous occasion the hon. Lady refused me that same courtesy, so I see no reason to accord it to her now. The hon. Member for Rossendale put forward one very bad theory. He talked of the removal of Purchase Tax for possibly two, four or five years. That really is a ruinous policy in any industry. That is to hang the sword of Damocles over the head of any industry, to make quite certain that the intake of new recruits and new capital and new enterprise is vitiated. Even in present circumstances it is much better to wait a little until the full plan, not produced by hon. Members opposite, is produced.

One of the great evils at the moment is undoubtedly the complete uncertainty in which the industry rests. The job of rescuing it has been made extremely complicated by certain outside factors. I hope hon. Members will agree that what will restore confidence is not when goods pile up here for the home market but when the flow of goods over the quay-side starts again. Everybody in Lancashire realises today that that job will be harder than ever and that we have to face, as undoubtedly we are facing, certain financial losses in the textile industry that we are unlikely to recover. That is the history of evolution, not a counsel of despair. Everybody realises that it is on the great export trade that we have still to depend to a great extent.

I have lived through two of these crises as an importer of textiles in other parts of the world—in Mombasa in East Africa in 1930, when the slump was greater, and in the Far East in 1930 and 1931. There arrives a moment when people's nerves are taut, when they are facing very considerable losses and they hesitate to start buying. The one object at the moment must undoubtedly be to keep the flow over the quay-side even if, to start with, it is only a trickle.

As I see it, this crisis, if it is well handled, need be nothing like so prolonged and dangerous as previous crises have been. The world sponge, with its capacity for absorbing textiles and other goods, is much greater than some people seem to realise and, despite the competition that will cut into our business very greatly, there is the possibility that if confidence in our finances and ourselves is restored the crisis will pass more quickly than would seem now to be the case.

But we have to have certain circumstances to achieve it. That brings me to what I am sure has impressed the Chancellor of the Exchequer and those who assist him at the Treasury as one of the greatest difficulties at the moment. It is the cancellation of contracts that has taken place, thanks to the unilateral action of Australia. There is a danger that South Africa and India may follow suit.

I do not want to take up the time of the House on the principle of sanctity of contract. That cannot be dealt with in a three hours' debate of this kind. It is a most important subject and deserves a special debate of its own. But at the present moment the result of the action that has been taken has been to shake everybody's confidence. It has not only been to put in doubt—because I believe that final repudiation has to be decided in a court of law—whether it is legal or not. I believe that in a large number of cases no action by the Australian Government can bring to an end a contract entered into on an f.o.b. basis where the final decision is not with the buyer but with the seller. I think it will be found that those contracts should be fulfilled.

That does not mean that we should press entirely for fulfilment and do a great disservice to Australia and other countries. It means that we should have a meeting here not one only of financiers, because this is not only a matter of finance, but on the trade side as well. We should have a meeting on the basis that those contracts are not cancelled and we should sit down to a meeting—as happens frequently in business—between people who find themselves in the greatest possible difficulty, not entirely because of blame on either side, and who are looking for a practical solution.

I should like to see a meeting convened before the arrival of Mr. Menzies, who I hope will be only a precursor of representatives of other countries concerned. The trade unions, the chambers of commerce and everybody concerned should have a list of contracts prepared so that when we do get another conference—;as I feel certain we shall—we shall be in a fit state and perfectly ready to divide those contracts up so that the burden, having been shared, can be eased for everybody.

What will spring from that meeting will be a far greater possibility of doing good for trade within the Empire and outside than would be the case by any other measure. If we do not do that and we go back to a restrictive trade in textiles then anybody can work out for himself that the present crisis in Lancashire is as nothing with what we shall have to face.

But let us, when we are considering this matter, really understand that if we try to blame each other too much and try to apportion unjustly and unfairly as between the results of the play of circumstance and the mistakes made—and I have a very unhappy feeling that that was the origin of today's Amendment by the Opposition—then we are doing the greatest possible disservice to everybody concerned.

There is no doubt about it that competition is serious. But those who study the history of wars know quite well that in their own country during war they always saw the incredible difficulties that they were going through and they always thought that the enemy—the German General Staff or whoever it might be—were marvellous people who got over their difficulties with ease. But when one read the history of the war one saw that the enemy's difficulties were just as great and he made just as many mistakes. That is true today. It is true of Japan. The fact that she is asking her Government for something like a subsidy is proof positive of that. It is not easy in Germany or any of the countries.

What we have to stick to as our absolute bedrock and the firm basis of our future is the restoration of trade and the removal of the trade barriers. When we have established the certainty that we shall be getting our raw material—our cotton—in the best possible circumstances, we shall be able to afford the direct alleviation in respect of which we now ask for some measure of relief.

I am greatly impressed by many arguments for the removal of Purchase Tax—I should not have put my name down to any Motion of this kind if that had not been so—but I realise, equally, that there are times when, if we can get part of a loaf, and if we can get some encouragement, the psychological effect will be enormous. The first thing to do is to encourage once more our exporters. This is not a crisis of manufacturers; it is a crisis of exporters. The exporters, having had a terrible blow delivered to them through the cancellation of contracts, and facing many other difficulties and uncertainties, need a very great deal of encouragement.

It is not very easy for a firm which has been specialising in the export of textiles for a good many years to find that it is not allowed to export to its best customer. It is not easy for these people to break new ground and to go into other markets, and until you have encouraged the merchanting, which is an integral part of the trade, whatever is done about manufacturing will not have the full effect that it might. I hope that when we get a reply later in the evening from the Chancellor or the Financial Secretary he will take into account the feelings in Lancashire at the present time, as I have tried to take into account his difficulties, which is something that requires a considerable feat of imagination on the part of those who do not know it.

Time and again, every hon. Member representing a Lancashire constituency on either side of the House is asked the question by anxious parents, "Shall I put my boy or girl into the textile trade?" We have been given a history of the textile trade by the right hon. Member for Farnworth, and it is clear that that trade has still a very great role to play. So the honest reply, if it is to be for the good of the country, must be: "Yes, in a great many instances, but not universally." We must recognise what we are to lose. I would ask the Financial Secretary, in replying, to take into account the fact that he should strain to give the maximum amount of relief, and that when the D scheme is taken apart it is true that there are certain unfairnesses in it which have hurt and hit people very hard.

Although he may have to say "No," I hope he will be able to give us the fullest reasons, taking into account all the facts, for not doing what we are asking. In our Amendment we have left him a very wide field. But he must show that he appreciates the need for that practical help which, though it cannot be decisive at the present moment, is so necessary from the psychological view and the point of view of people who are hard working, honest and who have rendered great service to the country. It must be something which gives them great hope for better things and better treatment to come, and I think that they will undoubtedly get it at his hands.

8.5 p.m.

Photo of Mr Richard Fort Mr Richard Fort , Clitheroe

I beg to second the Amendment.

I must begin, as did my hon. Friend the Member for Bury and Radcliffe (Mr. W. Fletcher) by asking why we are again debating the problem of the textile industry within a month of having a memorable and long debate on the same subject The problems which we then discussed are still, alas, with us.

Photo of Mr Richard Fort Mr Richard Fort , Clitheroe

As the hon. Member has said, from the human point of view they are even worse than they were then because even more of our constituents are out of work. But the other fundamental problems are the same. Stocks are still accumulating; export contracts have been terminated and—I am sure that this will give immense satisfaction to the other side of the House—the industry is still burdened with a tax which, ever since it was introduced, has been a horrid one.

There has been just one change since the last debate and that is the action Her Majesty's Government have taken. I was glad to hear the hon. Gentleman the Member for Rossendale (Mr. Anthony Greenwood) acknowledging that; though I thought he took perhaps rather undue credit when he suggested that the action has been thought up by Her Majesty's Opposition rather than Her Majesty's Government. The truth of the matter is—and it has been shown by the agitated interruptions from the other side of the House—that the reason we are debating this matter tonight is pure and unadulterated politics. The Opposition have hoped, that, at the best, they can split the party sitting on these benches.

Photo of Mr Richard Fort Mr Richard Fort , Clitheroe

I am grateful to my hon. Friend. What a hope!—and at the worst—and I have no doubt that this is what has occurred to the more realistic minds on the other side—the debate would be a little easy fuel which could be used to stoke up the flames during the electoral campaign next week.

Mr. I. O. Thomas:

What is the hon. Member's objection to pure and unadulterated politics?

Photo of Mr Richard Fort Mr Richard Fort , Clitheroe

The hon. Gentleman has got me on the hop. He is quite right. Politics are seldom pure—and never from that side of the House.

To see fairly what are the reasons for debating this matter this afternoon, let us look at the history of the development of thought on the other side of the House, that although abolishing Purchase Tax would not solve completely all the textile industry's problems, at least it would be of very great assistance. During the Budget debate, of three hon. Gentlemen on the other side of the House who know much about the textile industry—the right hon. Gentleman the former Chancellor of the Exchequer the Member for Leeds, South (Mr. Gaitskell), the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) and the hon. Gentleman the Member for Ashton-under-Lyne (Mr. Rhodes)—not one of them mentioned the need to abolish Purchase Tax.

Photo of Mr Hervey Rhodes Mr Hervey Rhodes , Ashton-under-Lyne

I did on the Budget debate, and I was the first to mention it; so the hon. Gentleman will have to exclude me from that.

Photo of Mr Richard Fort Mr Richard Fort , Clitheroe

I cannot give way.

The right hon. Gentleman the Member for Huyton, who is perhaps less orthodox than his colleagues did go so far as to suggest that the D level should be greatly raised; but that was as far as he went. Then we had the big textile debate on 26th and 27th of last month. At that time the thought had developed to the point where raising the D level was commonly mentioned. I have notes that the hon. Gentleman the Member for Rossendale and also the hon. Gentleman the Member for Brighouse and Spenborough (Mr. J. Edwards) mentioned raising the D level. Then, a little more boldly, they suggested that it might be possible in the last resort to abolish the Purchase Tax.

Finally, we have had the development of thought in the Second Reading of the Finance Bill that the best thing would be to use the Purchase Tax as a planning instrument and to abolish the Purchase Tax temporarily. Then, at some future date, perhaps it could be clapped on again.

The hon. Member for Rossendale enlarged upon that theme this afternoon. We heard talk about, not abolishing it for a few weeks, or even a few months, but perhaps for a few years, and the hope that no Government would impose the tax again. This is the first time we have heard anything as extensive an abolition as that for several years. Purchase Tax was certainly spoken about in the earlier debate as though it was a tax which might be taken off until the autumn, or until the Christmas trade came along. That was the impression left then. So much was that the impression left then that today hon. Gentlemen opposite have been at great pains to try to remove that apprehensions, not only from our minds but also from the minds of the public.

Photo of Mr Anthony Greenwood Mr Anthony Greenwood , Rossendale

We did that because there was deliberate misrepresentation by hon. Members opposite.

Photo of Mr Richard Fort Mr Richard Fort , Clitheroe

Let us analyse this a little further. I do not think that interruption has carried the argument much further.

Why are stocks now accumulating? Why should the removal of Purchase Tax for any length of time prevent those stocks re-accumulating when it is again imposed? What we want its to have the tax fixed for a time—say till the next Budget. People have hesitated to buy because they were uncertain whether prices would come down because the Purchase Tax would be reduced. When once the Chancellor has managed to recover our finances sufficiently from the mess the party opposite left them in, he could abolish the tax altogether and for keeps.

Photo of Mr Dryden Brook Mr Dryden Brook , Halifax

Would the hon. Gentleman not agree that one of the main factors preventing restocking today is the fear that Purchase Tax will be taken off in the future and retail shopkeepers left with stocks on which they have paid the tax, but for which they have no redress?

Photo of Mr Richard Fort Mr Richard Fort , Clitheroe

That is a very sensible argument, but that is exactly my objection to the whole of this argument for the temporary removal of the tax.

Photo of Wing Commander Edward Shackleton Wing Commander Edward Shackleton , Preston South

Then why was the original Motion put down?

Photo of Mr Dryden Brook Mr Dryden Brook , Halifax

The hon. Member for Clitheroe (Mr. Fort) is forgetting what my hon. Friend the Member for Rossendale (Mr. Anthony Greenwood) said. Our suggestion is not for a temporary removal of the tax, but for a removal of the tax until such time as the pendulum has swung entirely the other way and we have a sellers' market.

Photo of Mr Richard Fort Mr Richard Fort , Clitheroe

That is still a temporary removal of the tax. We want the tax to be fixed so that we know where we are, certainly until the next Budget, when it should be at the top of the list of taxes to be abolished when we are out of our present financial mess, to which hon. Members opposite have contributed. I will not say they made it, but they have contributed to it.

Photo of Mr Hervey Rhodes Mr Hervey Rhodes , Ashton-under-Lyne

Is the hon. Gentleman in favour of the abolition of Purchase Tax now?

Photo of Mr Richard Fort Mr Richard Fort , Clitheroe

I am in favour of abolishing Purchase Tax when once we can forgo the revenue from it because we are out of our present financial difficulties. Hon. Gentlemen opposite are too keen on scoring political points. The hon. Member for Preston, South (Mr. Shackleton), interjected a moment ago to ask why we put down our original Motion. That is a further proof of what I have been saying, that this debate is based on political grounds.

Photo of Mr Richard Fort Mr Richard Fort , Clitheroe

Our original Motion asked Her Majesty's Government to reconsider Purchase Tax.

Photo of Mr Richard Fort Mr Richard Fort , Clitheroe

Despite all the nice, quiet and apparently straightforward pleas of the hon. Member for Rossendale, in his Motion he uses the word "removal," and we put down our Amendment in order to have a much wider discussion on the problems of the textile industry.

Photo of Mr Anthony Greenwood Mr Anthony Greenwood , Rossendale

I am loath to interrupt again, but I am sorry to see that this splinter movement itself is now splitting. The right hon. Member for Blackburn, West (Mr. Assheton) in his letter to "The Times" suggested two further steps that can be taken to meet the short-term problem, one of which was to remove Purchase Tax. Is that the view of the hon. Gentleman? Or is he dissociating himself from his right hon. Friend?

Photo of Mr Richard Fort Mr Richard Fort , Clitheroe

I have expressed my views, and my right hon. Friend has written to "The Times." I say, let us remove Purchase Tax as soon as circumstances allow. Do not let us hear that the Purchase Tax is not holding up exports as we did when we were on those benches and that this Tax has a distorting effect on the design and quality of goods and, therefore, of exports.

Photo of Mr Anthony Greenwood Mr Anthony Greenwood , Rossendale

The hon. Gentleman now says he wants to remove Purchase Tax when circumstances permit, but his right hon. Friend wants to remove Purchase Tax to meet the short-term problem. Which of them is right?

Photo of Mr Richard Fort Mr Richard Fort , Clitheroe

I would remind the hon. Gentleman that we are discussing the Motion on the Order Paper, and not letters to "The Times."

Photo of Mrs Barbara Castle Mrs Barbara Castle , Blackburn East

The hon. Gentleman has said he believes that Purchase Tax should be removed only when our circumstances allow. Is he not aware that the Furnishing Fabrics Federation, which as he knows, have been the most badly hit of all, pointed out in their memorandum calling for the complete abolition of Purchase Tax that it should be stated in no uncertain terms that the perpetuation of the incubus of Purchase Tax on textiles will defeat its own ends and defeat the financial ends the hon. Gentleman has in view?

Photo of Mr Richard Fort Mr Richard Fort , Clitheroe

The hon. Lady has no strong case on Purchase Tax, in view of the arguments she used less than a year ago for treating the full range of Purchase Tax on all high quality goods in the Committee stage of the Finance Bill last year.

Photo of Mrs Barbara Castle Mrs Barbara Castle , Blackburn East

I cannot allow the hon. Gentleman to get away with that. He knows perfectly well what has happened since then. We have had the introduction of the D Scheme, with its profoundly different effects on the whole textile range.

Photo of Mr Richard Fort Mr Richard Fort , Clitheroe

The hon. Lady cannot get away from the fact that less than a year ago she was pressing for Purchase Tax as long as it was on what she called luxury goods.

What I want to hear from my hon. Friend the Financial Secretary, either this evening or, as is perhaps more likely, on the Finance Bill is that the Purchase Tax is now to be fixed, and that the very first tax to be removed as soon as our financial position allows will be this Purchase Tax, which has be devilled the production of quality goods in our textile industry, and also, no doubt, in other industries, ever since the end of the war.

Let us have those undertakings; and let us also hear that Her Majesty's Government are actively pursuing other measures which will help us in Lancashire. My hon. Friend the Member for Bury and Radcliffe, with his great knowledge of the export trade, enlarged on that. What we all want to hear is confirmation of what the Foreign Secretary said in Blackburn the other evening: that as a long-term help for all of us in Lancashire Her Majesty's Government will assist in bringing new industries into the county. That we also want to hear. Then we shall have felt that we can bring many—certainly everyone on this side of the House and probably all those on the other side who are not actuated by mere partisan politics—to support the Amendment which has amplified their own Motion.

Photo of Dr Mont Follick Dr Mont Follick , Loughborough

Before the hon. Gentleman sits down—

Photo of Sir Charles MacAndrew Sir Charles MacAndrew , Bute and North Ayrshire

If the hon. Member believes that he has an honest point of order, I shall hear it; otherwise, I do not wish to hear it.

Photo of Dr Mont Follick Dr Mont Follick , Loughborough

I wished to correct a false statement.

8.21 p.m.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

I was very disappointed at the reaction of the proposer and the seconder of the Amendment, because I thought that the Opposition had been very generous, by its Motion, in giving time for this discussion to enable them to express their views on the subject. When they ask such a question as, "Why is this debate needed?", they show that at any rate they are not in touch with sentiment in Lancashire, where the gravity and immediate seriousness of the situation is realised, at least by hon. Members on this side of the House.

I was under the impression that we should hear from the hon. Member for Bury and Radcliffe (Mr. W. Fletcher), with his great practical experience of the textile industry, some concrete suggestions, such as we ourselves had made for benefiting the Lancashire textile industry.

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury and Radcliffe

Will the hon. Member particularise?

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

All that the hon. Member did was to indulge in a bout of generalisations—"We should survey the whole situation"; "The Chancellor of the Exchequer must be fair to all claims that are made"; "The industry must face its task with courage."

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury and Radcliffe

I did not generalise. I took particular points regarding the export trade. The hon. Member has missed the particular points I made. I have now asked him to particularise and tell us what are his suggestions.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

The hon. Gentleman said, "The industry must show courage"; "Export goods must roll off the quays"; "The Chancellor of the Exchequer must be impartial in examining the situation." It seemed to me that the hon. Gentleman had joined the ranks of those intrepid defenders of unchallengeable assertions whose advice is so copiously available to Lancashire in her hour of need, and has been for the last half century.

I am not going to depend on the statistical erudition which has been displayed by hon. Members opposite both today and in previous debates. We have a short-term and a long-term problem in Lancashire. The short-term problem is how to get rid of the stocks which are overhanging the market because of the abnormal position created by the Korean war, and the long-term policy is how we can maintain the textile industry in Lancashire sufficiently to maintain the needs of the home market and contribute to the nations paying their way in the world by the process of marketing their raw materials and food supplies.

It is rightly understood that Lancashire's best chance of contributing to the permanently dwindling world trade in textiles lies in quality goods. It is said by hon. Members opposite that the Purchase Tax operates in precisely the opposite direction. It is defacing the quality of goods produced in Lancashire at a time when it is most vitally necessary that emphasis should be on high quality goods.

I should emphasise that by high quality goods is not meant the merely traditional complex and finished goods that Lancashire produces. It especially means in the time ahead, if we are to play a part in the export trade, new high quality goods, new finishes, new weaves and new raw materials, such as nylon and terraline. These are the kind of high-quality goods by which we can exploit the wealth, talent and inventive genius of Lancashire. There is no evidence that this is going to develop so long as this Purchase Tax is kept on to discourage the production of these new high-quality goods.

I have to draw the attention of the House to the fact that there are three major fields in which there is Government impact on Lancashire's industries and problems. One is Purchase Tax, the second is the rate of increase, and the third is the Profits Tax and E.P.L. In each of these three fields, we must observe that the Government are not acting in the interest of the textile industry, badly hit as it is, but to its detriment.

Let us look at Purchase Tax. We all wish high-quality goods to be encouraged. What would a good Government do? In our hour of crisis they would take off Purchase Tax to encourage trade in textiles. What has this Government done? It is supine and has said that it is not going to take off Purchase Tax because the goods are no longer selling too well. Hon. Members have asked the Government to throw a lifebelt to the textile industry and the Chancellor of the Exchequer replies that he is not throwing any lifebelts to weak swimmers because it is doubtful if the strong swimmers can reach the shore.

What would a good Government do so far as the Bank rate is concerned? It would do everything possible to see that there were finances for every new industry in Lancashire; the production of terraline and nylon, for which there is an immense world market. It would see that a low rate of interest was available to the textile industry. This Government are charging an iniquitous rate of interest to the Lancashire textile industry when it ought to be able to get credits easily. Consequently, these brilliant new discoveries in Lancashire will not be for the benefit of our country and the people of our country. In addition, E.P.L. positively penalises the taking out of capital and risking it in exploiting these new textile discoveries.

I see that there are a number of other hon. Members anxious to speak, so I will confine my remarks to my main point. The Lancashire textile industry at the present time is losing something approaching 1 per cent. per week of its entire labour force, and it is the best and most talented workers that are going. If continued, the process will leave the Lancashire labour force so depleted in quantity and quality that after a short period the Lancashire textile industry will be in no condition to serve even the home market sufficiently, still less to play any part in the very difficult export battles which are ahead in the textile industry. It is not enough for the Government to say that the fiscal requirements are in contradiction to Lancashire's needs and that they must get in the Purchase Tax over the next six months, if by that time the industry's labour force is so permanently mutilated that it will not be possible for the industry to recover.

I beg the House to bring every possible pressure upon the Chancellor of the Exchequer to realise that this is not merely a mild depression which is afflicting Lancashire or threatening it in the immediate future. It is the permanent ravaging of the textile trade, permanent mutilation of its labour force and the discouraging of its rich initiative and talent which have contributed so much to our economy in the past.

8.30 p.m.

Photo of Mr Ralph Assheton Mr Ralph Assheton , Blackburn West

I am always glad of an opportunity to discuss the textile trade, so I make no complaint that hon. and right hon. Gentlemen opposite have put down their Motion. However, I rather complain that they have given up only half a day. If they had been able to persuade their right hon. and hon. Friends to be a little more generous we might have had a longer opportunity which would have enabled more of my hon. Friends and hon. Gentlemen opposite to participate in the debate.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

The right hon. Gentleman's colleagues objected to his having any time.

Photo of Mr Ralph Assheton Mr Ralph Assheton , Blackburn West

The Motion which I originally put down is not being discussed. I understand that it was not within the rules of order for hon. Gentlemen opposite to move it and, therefore, the hon. Gentleman the Member for Rossendale (Mr. Anthony Greenwood) himself put a Motion on the Order Paper. It was not quite the same as the one that I had put down. I had asked the House to press the Government to reconsider their proposals. The present Motion calls upon the Government to consider removing Purchase Tax.

When I heard last night that that new Motion was on the Order Paper some of my hon. Friends and I put down the Amendment which has just been moved and seconded by my hon. Friends the Members for Bury and Radcliffe (Mr. W. Fletcher) and Clitheroe (Mr. Fort) respectively. I am hoping to persuade the House to accept the Amendment. I believe it will suit the House better than the Motion does. Whereas the Motion asks the Government to consider removing Purchase Tax, the Amendment goes a great deal further and asks the Government to consider removing, reducing or amending Purchase Tax and to take any measures, including the acceleration of orders for textile goods, to alleviate the rising unemployment in the industry.

Photo of Mr Ellis Smith Mr Ellis Smith , Stoke-on-Trent South

Was the right hon. Gentleman informed of the Motion that we were placing on the Order Paper last night? If so, can he tell us who informed him?

Photo of Mr Ralph Assheton Mr Ralph Assheton , Blackburn West

Of course I was informed. Otherwise, I could not have set down the Amendment. There was no secret about the Opposition's Motion. It was available to anybody who wanted to see it. As soon as I saw it I decided to set down the Amendment.

Photo of Mr Ralph Assheton Mr Ralph Assheton , Blackburn West

It was available on the Table.

Photo of Mr Ralph Assheton Mr Ralph Assheton , Blackburn West

I cannot recollect what the time was. There is no point in all this, because there was no secret whatsoever about it and many hon. Members were talking about it. There was no attempt at concealing it—at all events, I never heard of one—and I made no attempt to conceal my Amendment. My Amendment will help more than the Motion will do to achieve our object, which is to move the Government.

The recession came as no surprise to me nor to many other hon. Members. Speaking in the House in the debate on 25th July last year, to which the hon. Member for Rossendale made a very useful contribution—it was a foreign affairs debate and we were discussing Japanese competition—I said: Who, in 1913, would have thought that the Lancashire cotton trade stood on the edge of a precipice. Let people who are too satisfied now think of that."—[OFFICIAL REPORT, 25th July, 1951; Vol. 491, c. 566–7.] I went on to develop the increasing difficulties which were ahead of us, so there was no secret about it on this side of the House.

Photo of Mr Harold Davies Mr Harold Davies , Leek

The right hon. Gentleman should not give the impression that there were any illusions on this side of the House either.

Photo of Mr Ralph Assheton Mr Ralph Assheton , Blackburn West

I was just coming to that.

Even the most partisan supporter of the Opposition—I hope that in tonight's debate they will not be too partisan—can hardly blame the recession on the Government. The hon. Gentleman has just made it clear that he knew that the recession was approaching, and when the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) made his celebrated speech on 14th September, 1951, in which he advised housewives to lay off buying in anticipation of a fall in prices, he clearly knew that the recession was on its way. There can be no talk hereafter that the recession was something brought on by the present Conservative Government. I make that point in case of difficulty in the future. I think it wise to put it on record.

In the textile debate on 26th March I made it clear that I was critical of the proposals about Purchase Tax in the Finance Bill and I made certain suggestions. The hon. Member for Rossendale again made a perfectly reasonable speech, and that led me to hope that Members on the other side of the House who were interested in textile constituencies not only in Lancashire but all over the country would co-operate with Conservative Members in doing all they could to help the textile areas.

It was rather disappointing to me—and I do not mind saying this as the hon. Lady the Member for Blackburn, East (Mrs. Castle) is in her place—to find my colleague from Blackburn interested in trying in my constituency to make party capital out of these difficulties. She rather suggested that I was not sincere in what I was doing, but I hope I shall be able to show her that I was and that she will believe me now when I tell her and the House that I am utterly sincere in all I am trying to do for Lancashire. Other hon. Members who represent Lancashire seats and who, like me, were born and bred in Lancashire have never challenged my sincerity in doing what I could for my native county.

Photo of Mrs Barbara Castle Mrs Barbara Castle , Blackburn East

I think I should ask the right hon. Gentleman to establish quite clearly where he does stand on this matter. He will appreciate that we have, in fact, brought before the House his own Motion. If he wants to see that all-party action which he said was desirable why is he not prepared to accept our Motion? Will he tell us whether he still stands by his own statement that one of the solutions to this problem is the abolition of the Purchase Tax now?

Photo of Mr Ralph Assheton Mr Ralph Assheton , Blackburn West

I am coming to that and I hope that I shall be able to satisfy the hon. Lady on all points and that what I am trying to do I am sincere in doing. I hope the hon. Lady will not think the contrary, for I can assure her that she is not right if she does and I could call witnesses from both sides of the House to support my view.

Her Majesty's Government have promised to give further examination to this problem, and we are hoping to hear from my right hon. Friend the Chancellor of the Exchequer during the debates on the Finance Bill, or from my hon. Friend the Financial Secretary tonight, what they intend to do to deal with this situation. I am a critic of Purchase Tax for a number of reasons and I cannot expose them all now. I hope, however, to have an opportunity to do so during the Committee stage of the Finance Bill, and I hope to be able to continue to press the Government to remove the Purchase Tax. That is what I want them to do and I am going to try to persuade them to remove it from textiles. I want hon. Gentlemen and hon. Ladies, too, to help me in this. I think that I am going about the job in the best way likely to get something done for Lancashire. I am afraid, however, that hon. Members opposite might spoil my efforts.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

I think the right hon. Gentleman's object is—and I accept it from him—to get the Government to remove Purchase Tax from textiles, but it is a little difficult for us to understand why he has associated himself with the hon. Member for Bury and Radcliffe (Mr. W. Fletcher), who moved this Amendment, and the hon. Member for Clitheroe (Mr. Fort), who seconded it, both of whom say that it ought to be preserved now because we cannot afford to lose the revenue.

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury and Radcliffe

I did not say anything of the sort. I said that the difficulty in removing it in part or in whole was the loss of revenue, which the Chancellor now has to take into account.

Photo of Mr Ralph Assheton Mr Ralph Assheton , Blackburn West

This just illustrates my difficulty. I do not want hon. Gentlemen on the other side of the House to try to split us on this point and to throw discord into my efforts. They are trying to make it more difficult for me to get what I want when I am trying to get what they want.

I am now going to put a few arguments to the Financial Secretary of the Treasury, who is listening intently, I know, to show why Purchase Tax on textiles is thoroughly bad. I find it difficult to see why he should subsidise food and houses and find part of the money for that out of taxing clothes, which are also a necessity of life. Clothing is a necessity of life, and in this 20th century most people will agree with me on that point. I am sorry to see that it is taxed.

Purchase Tax is inimical to our exports. It is only possible to build up a good export trade if there is a good home market to support it. To remind the House of what my right hon. Friend the Prime Minister said on the subject I would quote these words that he used, so wise were they: Can we suppose that a fertile and healthy export trade can be maintained except with the overspill of a very much larger domestic trade? These are two good reasons why Purchase Tax should be removed. [An HON. MEMBER: "Now?"]

A third reason is that exports are vital to us to balance our payments, and in the particular case of textile goods it is quality which is of vital importance. It is becoming more and more important to us as the years go by and as other people in different parts of the world are able to manufacture the lower quality goods. Purchase Tax makes the production of quality goods for export hazardous and costly; hazardous, because frustrated export production, such as the goods which have been rejected from Australia just now, will not be readily saleable on the home market; and costly because the advantages of large-scale production both for the home market and for the export market are destroyed. An hon. Member opposite has pointed out already that none of our foreign competitors imposes such a handicap upon the industry. Many of our foreign competitors pay much lower wages than we, and are not supporting such expensive systems of social services. We are handicapped already in the textile industry, and Purchase Tax is an additional handicap that I want to get rid of.

Naturally, Purchase Tax induces firms to design various kinds of cloth with the narrow objective of avoiding the tax rather than to produce suitable ranges of cloth for the home and export markets. That is another good reason for doing away with it. The effect of all these rigidities is a very great handicap to the development of our trade, and to employment. The increasing anxieties which are felt in regard to employment in Lancashire are well known to every Lancashire Member of Parliament, and, I think, are beginning to be appreciated by hon. Members in all parts of the House. I see one of those hon. Members opposite—the right hon. Member for Farnworth (Mr. Tomlinson). We sat on the same bench together for a long time during the war. I am one of the Lancashire Members and I, too, was born and bred in Lancashire and know something about it.

My final point against the Purchase Tax is that the risks of a change in the Tax cannot be hedged as one can hedge a risk in raw materials. That is why the uncertainty which is engendered at every Budget invariably interferes with the trade during a large part of the year. That is one reason why I wish to see that tax removed. That point is well illustrated by the difficulties of the retailers. I hope the Chancellor will consider seriously their difficulties and try to provide for them in any proposals he may make, because uncertainty is the great bugbear.

These are many of the reasons which prompt my friends in the textile constituencies to support the Cotton Board in their plea for the removal of this tax. I fear that the tax is bringing in much less revenue than previously. The Chancellor will have the opportunity of telling us what he is going to do when we come to the Finance Bill. I am still hoping that he will make substantial concessions. I do not know how far the Financial Secretary will be allowed to go tonight, but I beg hon. Members on both sides of the House who are interested in the textile areas to make it as easy as possible for the Government to give concessions which will help our people in Lancashire.

Photo of Mr William Proctor Mr William Proctor , Eccles

If I understood the right hon. Gentleman correctly, he was appealing to us to give him more time to influence the Chancellor in this matter. If we concede him that point and give him the support he asks for, would he give us a guarantee that, when the final stage comes, if the Chancellor is adamant, he will support us in the Lobby against the Government to ensure that the Lancashire Tories are in a special position? They can get this concession if they are really in earnest. Is the right hon. Gentleman really in earnest?

Photo of Mr Ralph Assheton Mr Ralph Assheton , Blackburn West

The hon. Gentleman is an old negotiator and it is not easy to talk about negotiations in the middle of them. All I say to the hon. Gentleman is that I am doing what I think is best in the interests of Lancashire at this time and I hope that all hon. Members will support my Amendment.

8.48 p.m.

Photo of Wing Commander Edward Shackleton Wing Commander Edward Shackleton , Preston South

The speech we have just heard is in marked contrast to the peevishness and mock anger of the mover and seconder of this Amendment. They complained that the Opposition Motion had been put down to embarrass them. Whatever purpose it was put down for, it certainly has embarrassed them, and the embarrassment they showed throughout their speeches was marked by the obvious insincerity of the original Motion on the subject of Purchase Tax.

Photo of Mr Ralph Assheton Mr Ralph Assheton , Blackburn West

Is the hon. Member challenging me with insincerity in putting down the Motion asking the Chancellor to reconsider those proposals?

Photo of Wing Commander Edward Shackleton Wing Commander Edward Shackleton , Preston South

If the right hon. Gentleman will allow me, I will deal with him specially. It would be interesting to know why they did put their Motion down. I should like to know what happened. I can imagine, perhaps at 4 o'clock in the morning, the Prime Minister discovering it and wanting to know what had happened. Then they would point out that a number of hon. Members on the Government side, including that experienced Gentleman, the right hon. Member for Blackburn, West (Mr. Assheton), had put down the Motion. In this case there would be some extenuation. It would be said, of course, that the right hon. Member for Blackburn, West, had an embarrassingly energetic Socialist colleague who was so interested in the cotton industry.

After hearing the speech of the right hon. Gentleman, I believe he was entirely sincere, which is more than I believe were many of the hon. Members who put down the original Motion. I believe it was the sheerest hypocrisy designed to enable them to say to their constituents, "We are doing our best for the textile industry and we have this nice Motion in the House of Commons," never thinking they would be called to question on it.

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury and Radcliffe

The hon. Gentleman has taken it upon himself to make an accusation of insincerity, which is not usual in this House, and he has singled me out. Would he really say that such an accusation can be backed up by any act or speech of mine during the last few years?

Photo of Wing Commander Edward Shackleton Wing Commander Edward Shackleton , Preston South

The actions of hon. Members opposite in their speeches today have lent plenty of substance to the remarks I am making, and I would say that the hon. Member was the first to charge insincerity to this side of the House.

The hon. Member went on to make other extraordinary remarks. He wanted to know why we wanted this debate. Surely he realises that since the last debate the situation has deteriorated considerably more. The workers have had the Easter holidays. Some of them, perhaps, have been paid on the basis of one day and have been unable to draw any unemployment benefit and are still paying their contributions to National Insurance.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

If the hon. Gentleman and hon. Members opposite are so sincere, may I ask whether it is not a fact that they have admitted that they saw the crisis coming long before now? Why, then, did they not press for the Government at that time to remove Purchase Tax and so prevent this situation arising?

Photo of Wing Commander Edward Shackleton Wing Commander Edward Shackleton , Preston South

After that interruption, it is, obviously, impossible to give way again when such irrelevant remarks are made. I do not know whether the hon. Member has been sitting in during the debate.

Photo of Wing Commander Edward Shackleton Wing Commander Edward Shackleton , Preston South

The hon. Member who moved the Amendment said that this was fundamentally a crisis in exports. That is one of the most astounding remarks. Surely he realises that there is gross unemployment in the tailoring trade. How can that be a crisis in exports? It is a crisis in under-consumption in this country, and it is irrelevant—I would say, hypocrisy—to consider that any action short of an attempt to increase the consuming power of our people and of our workers will do anything to solve the problem.

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury and Radcliffe

The hon. Gentleman spoke of hypocrisy—

Photo of Wing Commander Edward Shackleton Wing Commander Edward Shackleton , Preston South

The hon. Member refused to give way, and I must do likewise.

I want to look at the question of Purchase Tax. Many areas—in particular, areas like Preston—which make high quality fabrics, are faced as much with unemployment as any other area. Unless they can be certain—we have been told this dozens and dozens of times by hon. Members who are in the Conservative Party—of a good home market, they cannot get their cost down for their exports. Although no one on this side would suggest that to take off Purchase Tax would by itself solve the problem, there is no question that it would go some way towards helping it.

The very least that the Government can do if they sincerely intend to deal with the problem of unemployment in the textile industry, is to remove the Purchase Tax. But I rather have doubts as to how far they intend to deal with that problem. The Government Economic Survey, which has been published since the last textile debate, makes the point that the difficulties of recruiting workers for defence production should be eased by the measures which the Government has taken to limit competing demands for labour and materials. This point was made by my hon. Friend the Member for Blackburn, East (Mrs. Castle), who was accused of making a party political point. Whether this is party political or not, it is part of the Government's policy. They have shown this again in a later part of the Economic Survey, where they say: If employers have insufficient work to keep their labour force fully employed, it is clearly wasteful to keep on short time workers who could be used to fill important vacancies elsewhere. The whole tenor is that there should be a move from the textile industries into the armament industry.

But how do the Government believe that that can be carried out? In my part of Lancashire—I believe it is true of the area represented by my hon. Friend the Member for Blackburn, East—there is no opportunity of absorbing this unskilled labour into engineering industries, because there is a shortage of skilled labour. Over a long period, something can be done, but it is the height of indifference to realities to believe that it is possible to see workers transferred from the textile industry overnight, or even over a period of weeks or months, into the engineering industry.

I am personally extremely alarmed at the statement in the Economic Survey, and I hope that we shall have a categorical statement from the Government that if this is their policy they will reverse it, because they will neither solve the problem of the textile industry nor get any more armaments if they believe there will be an automatic flow, driven by hunger and unemployment, into engineering.

I wish to refer again to the efforts of my hon. Friend the Member for Blackburn, East, to find out exactly what is the policy of the Government in regard to the remarkable memorandum issued by the Admiralty in regard to contracts, in the Preston, Blackburn and Chorley area where there is a ban on contracts of any kind. This is borne out again by the statement in the Economic Survey that Orders will be concentrated in the areas worst affected by unemployment and as a result there may be some lack of balance between the items bought. Preston is not so wholly a cotton town as are certain other towns. Already industry has been diversified. About 30 to 40 per cent. of our workers are in the cotton industry, but there is no reason why they should or could be taken into engineering.

I hope that we shall see that the Government will look once again at the problems of the textile industry and give what Lancashire is asking for, a clear lead, a plan, a reversal of the fiscal policy which is depressing the living standards of the workers and the people of this country. Only in that way will they solve this agonising problem, a problem which today, at this moment, is worrying countless households, especially in Lancashire. Since the war they have been certain of paying their rent, but now many do not know whether or not they will be evicted in a short time, and those who, under the new "Housing Crusade" of the Minister of Housing and Local Government, hope to own houses, see any chance of that disappearing until the Government are thrown out, back into opposition, where they do so much better than as a Government.

8.58 p.m.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

This debate, although a short one, has been a very interesting and, at times, a lively one. I think it has been made remarkable— and this has been welcomed on all sides of the House—by the return of my right hon. Friend the Member for Farnworth (Mr. Tomlinson), who spoke once again with all his old fire and warmth and enthusiasm.

One cannot take this debate, since it has been so short, entirely on its own. It has to be taken with the debate we had on textiles five or six weeks ago, which was a very much longer debate. I am bound to say, comparing the two debates, that there has been very much less sense of urgency from hon. Members opposite tonight than there was five or six weeks ago. We are bound to ask why there is this lesser sense of urgency. It is certainly true that the situation in the textile districts—all references have been to Lancashire, but I must refer to the textile districts as a whole—has immeasurably worsened in the last four or five weeks. The "Manchester Guardian" reported a few days ago that 100,000 cotton trade workers were unemployed or on short time, that 570 mills were idle and that one-third of the whole labour force of Lancashire was affected by unemployment and short time.

If we look at the production figures we see that the production of single cotton yarn in the week ending 11th April, the week in which the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton), put down his original Motion, was 11.49 million lbs. compared with 17·3 million lbs. in the week, which also included Good Friday, a year ago, a fall of 33½ per cent. compared with a year ago. That was only the week before Easter. Easter week was still worse, because very many mills took a prolonged and, from the point of view of Lancashire, an entirely unwanted holiday.

We are glad to see the Minister of Labour here tonight. I suggest to him that he should resume the publication, in the Ministry of Labour Gazette, of those full, detailed and regular figures we used to have before the war of under-employment in the cotton and other industries. I know that he publishes figures from time to time in the Gazette, but not in anything like the full scale required. Now we have returned—and this is a tragic thing—to the heavy under-employment of pre-war days the House and the country ought not to be kept in ignorance of the extent of that under-employment.

The right hon. and learned Gentlemen's Department issued figures showing that as early as January there were 86,000 workers in the textile trade on short time and losing 16 hours a week each. We know that the situation has become very much worse and is getting still worse since that time. Since we last debated textile industry, only five weeks ago, the export situation has become much worse as more import cuts are beginning to affect the position and more and more markets are closing against our products. As for the slump in home trade, since that debate we have seen figures published by the Wholesale Textile Association showing that in February of this year home sales at the wholesale stage were 33 per cent. below what they were a year ago; and hon. Gentlemen opposite ask why we are having this debate tonight.

I wish to draw attention to the complete change in the situation from what we knew over the past six years. For four years it was my privilege to be dealing with the problems of Lancashire and Yorkshire and the textile industry. I recall the great recruitment drive in which hon. Members on both sides of the House were actively engaged. We remember how we brought over foreign workers. We remember the great drive we tried to carry on for re-deployment and for new methods in this long neglected industry.

One essential thing in trying to carry out this policy was that we had to ensure, almost at all costs, that there should be no unemployment in the cotton industry, because once unemployment began, even on the smallest scale, it was the end of all our hopes of re-deployment and recruitment, and so on. We found, what we had to expect, that in the mind of everyone in Lancashire there was a dread, a fear of a return to the mass unemployment and short-time working they had known in the 1920's and the 1930's.

I remember—I think it was in the summer of 1949, when I was on holiday; it was in the middle of August—reading in the Press of the danger of one mill closing for one week, or part of a mill closing. We moved heaven and earth to avoid that; the Cotton Board, I remember, were very active. Because we knew that if a single mill closed for a week it would defeat all hopes of what we were trying to do in Lancashire and Yorkshire. Now, since our last debate, we hear that 570 mills, one-third of Lancashire's labour force, is affected by unemployment. What this will mean in terms of the permanent loss of key men in the industry; what it will mean in terms of the reversal of the trend of recruitment and the new force we had coming to the industry in the last six years, when the number of school-leavers entering the industry had again got back to the very high level; what this will mean in terms of the reversal of those trends it may take a generation to discover.

Yet, with all that unemployment, the Government economic policy, the Budget speech of the Chancellor and the Economic Survey are all based on gambling on increased production. What hope can they have of increased production when this unemployment is undermining one of our basic industries?

Photo of Mr Harold Davies Mr Harold Davies , Leek

And the Chinese market being closed.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Another development since we last debated this has been the growth of widespread agreement in Lancashire with the suggestion pressed by my right hon. and hon. Friends and supported by the right hon. Gentleman that, while the removal of the Purchase Tax from textiles and clothing will not solve the problems of the industry, it is an essential condition. It is one of the steps that must be taken if we are going to do those things that are necessary.

We have seen the Cotton Board, a powerful body representing all sections of the industry, press the President of the Board of Trade and the Minister of State for Economic Affairs, and, after the deputation had left, Sir Raymond Streat said that the delegation had put up the strongest case he had ever heard put up in the whole of his career. That is saying something, because Sir Raymond Streat has long experience. I have heard him put up strong cases, but this, he said, was the strongest he had ever heard put up. He said: We are convinced that a healthy future for industry, and any chance of early recovery from its present difficulties, hang on a favourable answer to our proposition that the Purchase Tax and the 'D' Scheme must be abandoned for cotton and rayon. When he was asked if he supported the idea of a tax free holiday, he said, "No, finish; set Lancashire free." Hon. Gentlemen opposite were elected on a promise to set Lancashire free, but now we have this announcement.

Our view is supported by the President of the Manchester Chamber of Commerce, who said that nothing short of the complete abolition of the tax will suffice in the present desperate situation. That was not overstating the case. The President of the National Chamber of Trade followed that up with a telegram to the Government, and then we had the telegram from the United Textile Factory Workers' Association of 7th April, pressing, among other necessary plans, the removal of the Purchase Tax completely from cotton and rayon textiles.

Then, we get the "Manchester Guardian" publishing a most moving and powerful leader entitled "A Bad Tax." I am bound to say that, in all the period in which I have had anything to do with the cotton trade in Lancashire, which, admittedly, was relatively short, though longer than that of most Members of the Front Bench opposite, I have never found such unanimity in Lancashire on anything and yet the Government are flying in the face of this weighty and unanimous advice.

The hon. Member for Clitheroe (Mr. Fort) referred a few moments ago to the uncertainty in the industry, but, of course, the Chancellor of the Exchequer, in his speech on the Second Reading of the Finance Bill, made what was already an uncertain situation intolerably worse. He refused the proposals and the pressure for a removal of the Purchase Tax, and then he said that he was prepared to make concessions on individual items. Is there anything more likely to create uncertainty and create more delays? This is not just my own view, but the view of anyone in Lancashire who knows anything at all about the trade, and the right hon. Gentleman should have realised that it would be the inevitable result. The "Manchester Guardian" comments: Anyone thinking of buying these goods will naturally hold up because they think they will get them more cheaply when the Chancellor of the Exchequer has made up his mind. We on this side are not so concerned with the troubles and difficulties of the right hon. Gentleman and two of the hon. Gentlemen who have spoken tonight. I have never seen three more unhappy men trying to explain the matter and controdicting one another, and I think that what they were really trying to do was to avoid explaining it. I want to address myself to the Government Front Bench.

Have the Government got a plan for the textile industry? Have they got any ideas? If so, will they tell us what ideas they have got? We had hoped to get some idea from the speech of the President of the Board of Trade in the textile debate, and the right hon. Gentleman made what was, for him, quite a serious speech, but it did not get anywhere. He referred to the difficulties caused by the vagaries of American stockpiling, and, if I had said that, there would have been trouble, but this was the President of the Board of Trade. He outlined a number of proposals which, when added up, came to very little more than monkeying about with the Raw Cotton Commission

There has been the Chancellor's plan for Government purchasing of textiles required for the re-armament programme. It was suggested on the other side tonight that my hon. Friend the Member for Rossendale was claiming the credit for our side when really it belonged to the party opposite. I think that is rather a sterile and arid discussion because, of course, the suggestion was made two years ago in "Labour Believes in Britain." We are delighted to see that the Government are learning a little from that document which they attacked so bitterly at the time.

What we were saying then, of course, was that these purchases should not be confined to re-armament, but that when an industry is facing difficult conditions there should be Government purchasing of anything required for the Government programme. I suggest to the Treasury Bench that what they are proposing here does not go far enough. Why not extend it to purchases for the National Health Service? Why do not they buy all the textile requirements for the National Health Service to help Lancashire? Why do not they place orders for textiles which might be distributed through the Assistance Board to those who need them? Why should we have old people needing textiles, on the one hand, and Lancashire workers unemployed on the others? That is obviously something they ought to have thought of already.

What I want to ask the Government tonight—and I really think the Board of Trade should be replying to this debate or should at least have intervened, and I say that without any disrespect to the Financial Secretary—is what do they think is going to happen in the textile industry; on what are they pinning their hopes of an improvement in the position of Lancashire, because we have seen no signs of hope from them so far.

They can hold out very little hope regarding the export markets. We are seeing import cuts in Australia and South Africa, cuts which may perhaps involve a reduction of 80 per cent. in our textile exports to certain of these markets. We see import cuts starting in France, and even in Uruguay. The Government should realise that this game of cutting imports, as we warned them, is an infectious disease. Other people catch it, and then it has a serious effect on our exports.

Are the Government hoping for increased shipments of textiles to the dollar areas where, already, there is a slump in consumer goods and where, already, American business interests are lobbying for increased tariffs whenever they see the success of individual European export drives? There is a suggestion in the Press of further increases in tariffs, even in Canada. There is a feeling on this side of the House that the Government should really tackle this export problem. This year we are going to see a terrible slump in exports generally and in textiles in particular. They should long before this—and in any case should do it now—have called a Commonwealth trade conference, as the hon. Gentleman suggests. I emphasise "trade," not solely finance. I agree with the hon. Gentleman. Let us get down to working out some scheme for increasing our exports, particularly in the Commonwealth. It is quite plain to me—

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I am very sorry I cannot give way to the hon. Gentleman, but he was not very helpful with his last interruption.

It is plain, and the Treasury Bench really have some responsibility—there are enough of them from the different Departments—that the Government are quite clearly basing their plans for textiles on a slump in export markets. It is the Government's view that there is likely to be a sharp reduction in the volume of British textile exports this year. I am sure the Secretary for Overseas Trade and the Parliamentary Secretary to the Board of Trade will not deny that they are basing their plans on a sharp reduction of textile exports in 1952. It is not often we have the heavenly twins of the Board of Trade present at the same time, but now that we have them here I should like them to confirm that that is the position, and that they are basing all their plans on a slump in exports.

If that is so, and I see no disposition on their part to deny it, then we have really to turn our attention to the home market. I agree with them that it is likely that there will be something of a slump in exports this year unless a miracle happens or they do something about developing Commonwealth trade. My right hon. Friend the Member for Farnworth stressed the big change in Lancashire now that it is dependent on the home market. Last week-end Mr. Ernest Thornton, one of the biggest figures in the trade union movement in Lancashire, said this was the first slump in the cotton industry which was not due to lack of export markets but brought about by a slump in purchasing power at home.

The whole House knows that there is this slump. There are two main reasons for it. The first is the violent changes in raw material prices—of cotton to some extent and even more of wool—which have been considerably affected, as the President of the Board of Trade indicated, by American stockpiling last year.

Photo of Sir John Macleod Sir John Macleod , Ross and Cromarty

Will the right hon. Gentleman say what he did when a deputation of Highland Members went to his Department to obtain a reduction in the Purchase Tax on Harris tweed when hundreds of people were leaving the Outer Islands and many are now unemployed?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Perhaps the hon. Member will keep that point until the relevant part of my speech. I shall deal with it and he will not be disappointed.

The second reason for the slump is the shortage of money on the part of the consuming public. It has been said several times in this House that when an average family has bought its food and paid its rent and coal bills there is nothing left over for textiles. In this respect the Government are doing absolutely nothing to help the textile industry. In fact, all their more important economic measures are designed to make the situation in the textile industry all the worse.

What are the three items we have had from the Government in the matter of economic policy in the last few months? First, there has been the slashing of food subsidies. That will push food prices up even higher and there will be less margin with which to buy textiles. Secondly, the National Health Service charges are designed to leave ordinary people, when they have paid those charges, with less money to spend on textiles and clothing, which will mean a greater slump in Lancashire. Third, there has been the increase in the Bank rate and the financial squeeze which is creating a slump psychology and poverty, and making it more and more difficult for people to buy the products of Lancashire and Yorkshire.

This placing of orders is on far too small a scale to help Lancashire and Yorkshire. In fact, it will not be enough to absorb the additional unemployment which will result from the Australian import cuts, the effect of which we have not yet felt.

Photo of Mr Charles Waterhouse Mr Charles Waterhouse , Leicester South East

Will the right hon. Gentleman deal with the question why his own Ministry placed orders for £35 million worth of textiles for the defence Forces outside the British Isles only nine months ago?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

That was very fully debated throughout a long night debate. At that time every attempt was made to place the orders in Lancashire, and Lancashire could not accept them because we then maintained full employment.

The first thing to do is to get goods moving into home consumption. The "Manchester Guardian" said a few weeks ago that the major trouble was the blocking of the trade pipelines. What is the Government doing to free them? The plain fact is that in this respect the Government are sacrificing the interests of the Lancashire and Yorkshire textile industry to the need of the Treasury for revenue. I am glad to see the Chancellor of the Exchequer now in his place. I want to tell him that the Treasury must really show more elasticity in their operations and for once be prepared to sacrifice their revenue calculations to the needs of industry and the welfare of 500,000 workers in Lancashire and Yorkshire. I would warn the Chancellor, if he does not know it already, that from the Treasury point of view the Government are going to lose, through loss of Income Tax, Profits Tax, unemployment benefit and Assistance Board payments, more than is involved in the whole of the revenue from Purchase Tax on these textile items.

I think it was Wordsworth who said: … high Heaven rejects the lore Of nicely-calculated less or more. I suggest that if high Heaven can afford to do so the Treasury can afford to do so, when so much is involved. There is so often a pull between the Treasury and some Departments which are concerned with trade. It was a fortunate thing that all the Labour Chancellors of the Exchequer and the Economic and Financial Secretaries who were in office in the concluding stages of the Labour Government had the benefit of Board of Trade experience and knowledge of the needs of industry.

Why do the Government not yield to the facts of the situation—to the unanimous views of Lancashire, which have been expressed with great vehemence from both sides of the House? The Chancellor was very incensed when my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) in the Second Reading of the Finance Bill, asked: … does the right hon. Gentleman think that the level of unemployment in Lancashire and other areas is only just what he wants to secure the turnover to defence?"—[OFFICIAL REPORT, 7th April, 1952; Vol. 498, c. 2428.] But it was a very fair question, as has been shown by the Economic Survey, which said: We cannot afford to have labour and scarce materials engaged in producing goods for consumption at home when these resources could be used to increase exports. Some industries may have to contract in order that others can expand. Adjustments of this kind are always difficult and painful, and they must inevitably cause a temporary increase in unemployment while workers are changing jobs. Are those words meant really to apply to the cotton industry, to wool and to rayon? If they are, one cannot understand why the Chancellor was so upset at my right hon. Friend's question.

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

May I tell the right hon. Gentleman why I was so upset? It was because the right hon. Member for Leeds, South (Mr. Gaitskell) deliberately tried to make out that the Government desired to see unemployment, which is quite apart from the truth. Our desire is to see that workers, if there is to be a change of employment, go into the industry which is most valuable to the economy of the country. We have no desire to see a major recession, which is a source of great human sorrow to us all.

Photo of Mr Hugh Gaitskell Mr Hugh Gaitskell , Leeds South

Since something which I said seems to have started this argument, I should like to point out that at no time did I suggest that the Government wished to see unemployment for its own sake. As my right hon. Friend pointed out, I asked the perfectly serious question—how much transitional unemployment did the Government think there ought to be in this industry. I would do him this justice, that he did not wittingly get so incensed. I am sure that he must have supposed that I was attributing to him motives which, in fact, I was not; but I hope that he will address his mind to that question because, in the light of what my right hon. Friend has quoted from the Economic Survey, the House and the country are properly entitled to an answer.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I trust that we shall get that answer from the Financial Secretary when he winds up the debate, because the words I have quoted are from the Economic Survey and they have reference to additional workers for defence being required and having to come mainly from consumer goods industries. Those words really spell the death warrant of the Lancashire cotton industry, unless the Government are telling us that they mean something other than they appear to do. The Government appear to be willing to sacrifice this great industry for the sake of revenue which they will not actually get.

If I may refer specifically to the Motion, by a happy coincidence, as has been pointed out, the Motion which stands in the name of my right hon. Friend the Member for Leeds, South, is almost identical with the Motion placed on the Order Paper by the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton), and some of his hon. Friends. There were 21 of them who signed it, now reduced to 20 because the hon. Member for Barnet (Mr. Maudling) has gone to assist the Prime Minister in the Ministry of Transport. The remaining 20 are a powerful combination of Privy Councillors and Parliamentary Private Secretaries; they are the cream of the Tory Party in the House of Commons; they represent a group of Members who spoke passionately and vehemently about Purchase Tax during the textile debate, and their Motion still remains on the Order Paper.

Yet, tonight, they ungratefully and ungraciously spurn our generous offer to join them in a bi-partisan effort to remove the blight of Purchase Tax from our textile and clothing industries, and have produced this milk and water Amendment. We are bound to ask what has happened. It is not that the textile industry has improved in these past five weeks. We all know that its situation has grown immeasurably worse, and that the need for removal of the tax is clearer now than it was then.

I suggest that the reason for the change in the attitude of hon. and right hon. Gentlemen opposite is not any developments in Lancashire, but developments in a Committee room upstairs just before Easter. They forgot all about their brave words in their Motion when they found themselves faced with the brutal discipline of the Tory Party. Or is it, perhaps, that the Prime Minister, with his eloquence and his powers of persuasion, at that meeting, faced with this revolt, lured hon. Gentlemen into acquiescing in the ruin of the cotton industry as part of a rather squalid party deal in which he bowed to their pressure and promised to introduce legislation to ruin the steel industry and the transport industry as well? Is that what happened? Then, last night for some reason they were embarrassed by our Motion, and one can visualise—one almost saw—the flurry and scurry of Parliamentary Private Secretaries rushing to the Chancellor and asking him if he could accept this Motion, could they go a little bit further, and so on.

The right hon. Gentleman referred tonight to his sincerity. May I say that we all accept, coming from him, his statement about his sincerity. He has a chance tonight to show that sincerity, because unless the Financial Secretary is a great deal more forthcoming than the Chancellor was we shall obviously have to contest this issue in the Division Lobbies. I appeal to the right hon. Gentleman and to other hon. Gentlemen opposite to show that Lancashire and Yorkshire Members of Parliament, particularly, are united in defence of their interests.

Photo of Mr Ralph Assheton Mr Ralph Assheton , Blackburn West

The right hon. Gentleman has sadly misled the House. The terms of the Motion which I put on the Order Paper the other day are terms which I would have been prepared to vote for tonight. Unfortunately, the right hon. Gentleman has put down a quite different Motion, and I have therefore been obliged to amend my original Motion to meet the situation.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

The right hon. Gentleman tells us he was prepared to vote for his original Motion, but he was not prepared to vote for his letter to "The Times." We can understand his divided loyalty.

I appeal to the House quite seriously to rise above party and these niggardly Treasury calculations, and to realise what is at stake. What is at stake is the future of Lancashire, of Yorkshire, and of the textile industries throughout the country. My right hon. Friend has referred to these industries and to the part they played in peace and in war. We are all aware of what these industries have done. We know that if this industry goes under now we shall lose a great national asset.

When I refer to an asset, I am not talking about the value of the mills and the machinery, I am not talking even solely of the quality of the craftsmanship of the people in these industries, I am talking more of the indefinable virtues which make up the textile community; that spirit which in the greatest disaster Lancashire ever had to face, the American Civil War, and the indescribable misery and poverty which that brought on the people of Lancashire, kept their faith in freedom alive.

If it had not been for the steadfastness of Lancashire in those years, the United States of America, as we know that country today, could not have existed. Now we find Lancashire once again facing depression, but this time there is action which the Government can take, and failing the Government the House can insist is taken before it is too late.

9.31 p.m.

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

This has been in several ways a somewhat unusual debate. One unusual feature is that the right hon. Member for Huyton (Mr. H. Wilson) and myself owe a common apology to certain gentlemen in the University of Cambridge where, at almost this identical hour, we should have been debating with each other.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Tell them what is the Motion.

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

I resist the temptation, which the right hon. Gentleman always indulges in, to lure me out of order. The second agreeable feature has been the return to this House of the right hon. Member for Farnworth (Mr. Tomlinson). I hope that he will allow me to say, on behalf of those who are his friends in everything except the strict political sense and who sit on this side of the House, how glad we are to see him back here in such apparent vigour. We hope that means that his health is really restored and that we shall see him at that Box many times in the future.

The Motion which the House is debating relates solely to taxation, and it is a somewhat unusual feature of this debate that the House should be debating taxation on the very eve of the Committee stage of the Finance Bill. I would in that context remind the right hon. Member for Huyton that it is taxation and solely taxation which is the subject matter of the Motion which his hon. and right hon. Friends have put on the Order Paper. The right hon. Gentleman very courteously suggested that the reply to this debate should have fallen on one of my hon. or right hon. Friends who are Ministers at the Board of Trade. May I put it to the right hon. Gentleman that the choice of subject lay in the hands of his own hon. and right hon. Friends and that when they decided, for whatever reason, to table a Motion relating solely to the issue of a particular tax, then the duty falls upon a Treasury Minister to reply.

The right hon. Member for Huyton made many general comments upon the textile industry. He went a considerable distance from the narrow confines of this Motion. I must remind him that if he and his hon. Friends had wanted a general debate on the textile industry, the day was theirs and they could have had it. They did not so choose. They chose, for reasons which, I think, are tolerably clear to most hon. Members and which indeed were most agreeably admitted by the hon. Member for Rossendale (Mr. Anthony Greenwood) in moving the Motion, for a debate on this particular subject.

The debate has, all the same, had the advantage of making clear, if indeed it were necessary to make it clear, the very deep concern which is felt on both sides of the House as to the condition and future of this great industry. I do not dissent from—indeed, I have strong family reasons for agreeing with—some of the concluding words of the right hon. Gentleman on the subject of the contribution which this industry and those who have worked in it have made to our national progress and development.

I believe that it is no doubt some advantage that the concern which we all feel about this industry should have been so clearly indicated tonight, because that will convey to those concerned with the direct operation of the industry some degree of reassurance. Obviously this Government—obviously, any Government—must from every point of view, human and fiscal, be very concerned when one of the major industries of the country suffers a recession of this character.

It is all the more important, surely, that the remedies which are to be prescribed should be the right remedies. There has been rather a tendency outside the House for people to argue in this way: "Something must be done. This is something. Therefore, let us do it." This House must, of course, proceed on the basis not merely of wishing and willing that effective action be taken, but of securing and ensuring that the action taken really is the right action.

It would be rather cruel to those who are struggling with the difficult situation of the industry to raise their hopes with a suggestion that a certain measure would produce good results for them, if, on analysis and on experience, that measure did not produce those results. It really is important that we should be quite sure in discussing the various measures which can be taken that those measures—or indeed the degree in which they are taken—are really the right ones and not merely the offspring of an unthoughtful desire to help.

If we are to be quite clear as to what we ought to do, we must be equally clear about the background of the situation. Two facts seem to me to bear very strongly on that point. In the first place, as my right hon. Friend said on the Second Reading of the Finance Bill, this is not a problem which is confined to this country. The recession in the textile industry is common to all the major textile industries of the world, whatever their system of taxation may be.

It may interest the House to know that in the United States of America employment in the textile industry has fallen by 77,000 since this time last year. The Japanese yarn output for March was 17½ per cent. below that for February. Employment in France has fallen by 10,000, in her much smaller textile industry. German textile sales were 18 per cent. down last month compared with the previous month, and unemployment in the Austrian textile industry has doubled. That shows that this is a common problem and that it is perhaps a little deeper than can be completely coped with merely by domestic measures and expediences.

There is also the fact—not as one might have thought when listening to some of the speeches today—that this is not a sudden bolt from the blue which has fallen upon both the Lancashire textile trade, which has been mentioned, and also the Yorkshire textile trade, which has not. I was born in that county, and I rather resented that it had received no mention so far as I could recall in the course of our debate. [HON. MEMBERS: "Yorkshire was mentioned."] I apologise if one fellow-Yorkshireman was able to state its point of view.

The tendency in the industry has been clearly apparent since last summer. I think it was the hon. Member for Newton (Mr. Lee) who sought to indicate that there had been no signs of unemployment until the change of Government. If the hon. Member will look at the statistics which are available, he will see that unemployment in the textile industry actually doubled between the middle of September and the middle of October last year. This is not an immediately new situation. It is perhaps a more difficult and a more alarming problem for that very reason. It is not one of those sudden changes which may come as suddenly as they go. It has been a clearly developed tendency at least since late last summer.

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

Would not the hon. Gentleman agree that what unemployment there was in textiles during the last few months that we were in power was in the Yorkshire wool industry, and that there were a considerable number of unfilled vacancies in the Lancashire cotton industry? Would he not also agree that the fact that the cotton industry could not take the contracts which went abroad shows that there was no threat of large-scale unemployment at that time?

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

I am not going to follow the hon. Gentleman into the reason why the Government of which he was a supporter placed these contracts abroad. My only point in referring to it was that, if we would fairly consider this problem, we must not consider it as a sudden cataclysm which has fallen upon the northern counties and upon the textile trade, because it is not confined to Lancashire and Yorkshire and has steadily developed since last summer.

The only remedy prescribed in the Opposition Motion is that we should consider removing the Purchase Tax from textiles. Many of the arguments which supported the Motion, notably that of the hon. Member for Rossendale, would be more appropriate if addressed to the Amendment which my hon. Friend the Member for Bury and Radcliffe (Mr. W. Fletcher) subsequently moved. The hon. Member for Rossendale's Motion suggested the removal of Purchase Tax as the sole remedy, but he made, as he always does, useful and constructive suggestions which go outside the Purchase Tax field. I am sure the House will not wish to be forced into taking the view put forward by the Opposition that the removal of the Purchase Tax is the only matter which ought to be considered in this connection.

I was very interested when the hon. Member for Rossendale told us what the Opposition meant by the removal of Purchase Tax. It was not a tax holiday. The hon. Member seems to have dismissed that somewhat contemptuously. Nor was it to be a permanent removal of tax, but a removal to some unspecified date, when it would be restored. I do not think I have misrepresented the hon. Member. But when the hon. Member puts that forward he really is not entitled, as his right hon. Friend the Member for Huyton did, to claim that he is putting forward the unanimous opinion of the trades and industries concerned, because those trades and industries have made it clear that their view is that such a temporary removal of Purchase Tax would not seriously assist in dealing with the problem.

The right hon. Gentleman, if he is urging a temporary removal of tax, is not entitled to call in aid the unanimous voice, as I think he put it, of Lancashire on this issue. The issue is, what do the Opposition mean on this point? They mean apparently some period at the end of which the tax will be restored. That course seems to me to have clear disadvantages.

My hon. Friend the Member for Bury and Radcliffe was absolutely right when he said that the real need in this connection is certainty, and there is a great risk that if the Tax is temporarily removed and is to be restored at some unspecified date later on we may simply repeat the process which this industry has so recently experienced, the process of over-buying followed by the clogging of the machinery of distribution and then by a similar recession. We would put the industry in a very difficult position of uncertainty as to the future. I was interested to get it from hon. Gentlemen opposite that the proposal put forward is for some indefinite, but not permanent, period of removal.

The real question is whether this is, temporary or permanent, the major remedy for this problem, as would appear from the Motion before us. I would like to look at the facts, so that the House will be in a position to judge whether the removal of Purchase Tax would necessarily provide a solution by itself. The hon. Gentleman's party has put down a Motion demanding its removal, and nothing else. The right hon. Member for Huyton has threatened that the hon. Gentleman's party will vote for this proposal and nothing else. In the circumstances, that party cannot run away from the argument that the removal, or the modification, of Purchase Tax is not necessarily the complete solution.

Photo of Mr Anthony Greenwood Mr Anthony Greenwood , Rossendale

I am sure that the hon. Member will appreciate that the word used in the Motion is "alleviate" and not "permanently cure."

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

I do, and I also appreciate that the hon. Gentleman did not think fit to put in his Motion one other proposal, temporary or permanent. If he has other proposals to put forward he could, as my hon. Friends have done, have put them forward in the body of the Motion. He must not now take it to heart if I assume that the Opposition mean what they say when they put a Motion on the Paper in these terms.

I will analyse the matter rather further, because this may be of help to the House as showing how the tax operates in this industry. There are large sections of the industry which the tax does not fall upon at all, such as exports, contracts for Government Departments, children's clothing, which is by statute exempt, and industrial cloths, which are by statute exempt. A very substantial proportion, in the order of 40 per cent. by volume, of this industry is not even within the scheme of the tax at all. Some 60 per cent. is perhaps within the scheme, but, as hon. Gentlemen will appreciate, it is the essence of the D scheme that the tax only falls upon half of the total volume.

Therefore, one comes to the position that in point of fact something of the order of 70 per cent. of the output of the textile industry does not carry Purchase Tax at all. That being so, no manipulation, adjustment or variation of the tax can be held to be responsible for the condition of that part of the industry nor, unfortunately, can any such variation of Purchase Tax alleviate its present troubles. One really would not have thought, listening to speeches from the benches opposite, that hon. Members were discussing an industry very nearly three-quarters of the output of which does not, under the present scheme, pay the tax at all.

I am not seeking to dispute that the tax may, in the remaining section, have some effect; but if one is to have the matter in proportion it is essential to appreciate that one is dealing with an industry of which 70 per cent. is outside the payment of the tax.

Photo of Mr Wilfrid Burke Mr Wilfrid Burke , Burnley

Will the hon. Gentleman—

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

I am sorry but I have not time. It is essential to remember that in this position it would be misleading to suggest that tax variations would seriously assist a large part of the industry. It is also significant, perhaps, that the shops at the moment contain a large number of the old top-class utility goods which, of course, are still tax free, and that those goods are not being disposed of with any rapidity. If hon. Gentlemen opposite are right in their theory, if they think the industry would be greatly helped by putting the successors of those goods in the shops in the same position as those goods themselves now are, it is curious that those goods are, unfortunately, not disappearing from the shops with any speed.

I am not for one moment disputing that over the 30 per cent. of the industry the tax may have some effect, though, there again, even within that 30 per cent., hon. Members will appreciate that under the D scheme the tax is quite small at the point at which it first arises, and it is only on the final, say, 10 per cent. of the total output, of the really high-class or luxury-class, that the tax has an appreciable effect on price.

But having said that, may I, in reply particularly to my hon. Friend the Member for Bury and Radcliffe, say this. We are about to enter upon the Committee stage of the Finance Bill. It is the intention of the Government to listen carefully to the arguments which are put forward from both sides of the Committee during the discussions on the relevant Clauses and Schedules of the Finance Bill. The Government have not got closed minds on this subject. We are prepared to listen to the arguments put forward and to see whether, as the result of those arguments, it becomes apparent that in the limited sphere to which I have referred something can be done to assist the industry.

However, we have not waited for that. As the House is aware, we have acted with considerable speed in the placing of orders. My right hon. Friend the Foreign Secretary mentioned at Blackburn on Friday the actual placing of a number of orders of the value of £1,800,000. Today tenders are being offered in Manchester for eight-and-a-half million yards of denim, eight-and-a-half million yards of drill and one-and-a-half million of broadcloth—orders totalling in value something in the nature of £3¾ million. Another £¾ million worth of orders will be tendered for in the next week, and in view of the urgency of the matter, the normal time for tender has been reduced.

We have not forgotten the other side of the industry, the wool side. Tenders for 600,000 blankets are being offered this week against the normal programme, plus 880,000 added as part of the proposals of my right hon. Friend. Next week tenders will be offered for not less than 1½ million yards of cloth overcoating at a value of £¾ million and, towards the end of May, for six million yards of Angola shirting to a value of £1¼ million.

Those are the orders placed by the Ministry of Supply. The Admiralty are placing further orders on their own behalf and we believe that those orders, deliberately placed in those towns and districts where the situation is worst, will be a welcome contribution both to the wellbeing of the industry and to the maintenance of employment in those areas. I believe they will be so regarded by persons of all political views in the areas concerned. That should convince the House that we mean business in this matter. The House should also realise that it is a solid contribution towards dealing with this problem, and it is a contribution whose effects can be precisely measured. In that way it contrasts perhaps with the proposal limited to Purchase Tax in the Motion.

It is a matter to some extent of speculation how far we assist the producer by the removal of Purchase Tax. Let me take an example. Suppose we remove the tax of, say, 1s. on a shirt. The Exchequer loses that 1s., but it does not necessarily follow that the producer obtains that 1s. It does not necessarily follow that the purchaser is so pleased at not having to pay the tax that he buys a second shirt. It may well be—and here we are in the realms of pure speculation—that he spends that 1s. on some other agreeable purpose, but without benefit of any sort or kind to the textile industry.

But the placing of these orders, as a direct effect, secures that employment is given in places deliberately selected, where the need is greatest, and that the employment is given—

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

My right hon. Friend gave the figures in winding up on 7th April and, no doubt, the hon. Member is familiar with them. That employment is directly given, and effectively given, in that way. It is always possible, like Oliver Twist, to suggest that there could be more, and with a great re-armament programme in process it is obvious that there will be considerable needs for textiles. That seems to us to be of some assistance—

Photo of Mr James Carmichael Mr James Carmichael , Glasgow Bridgeton

Are any orders coming to Scotland?

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

—but I stress that, in saying that, I am not seeking to indicate other than that on the point of Purchase Tax, which has been discussed tonight, we shall give during the course of the debate on the Finance Bill

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

—the fullest and most careful consideration to the points that are put, whether they affect England or Scotland.

The House will realise, I am sure, that Purchase Tax is a problem which goes beyond the textile industry, that other commodities and articles are concerned, and that their position will, equally, have to be taken into account. But the undertaking I have given, of careful consideration of proposals as they come forward during the debate, indicates that our minds are open on this question.

The only thing I need add is this.

Photo of Mr Archibald Manuel Mr Archibald Manuel , Central Ayrshire

May I ask the hon. Gentleman a question?

Photo of Mr Archibald Manuel Mr Archibald Manuel , Central Ayrshire

We would like to know what is happening to Scotland.

Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames

—that the problems of the textile industry will not be solved by one expedient alone. For that reason the Amendment, which was moved in such an effective way by my hon. Friend the Member for Bury and Radcliffe, gives a truer picture of the right way to handle this situation than does the narrow Motion moved from the Front Bench opposite.

to move, "That the Question be now put."

Question put accordingly, "That the words proposed to be left out stand part of the Question."

The House divided: Ayes, 238; Noes, 269.

Division No. 106.]AYES[10.0 p.m.
Acland, Sir RichardFinch, H. J.MacMillan, M. K. (Western Isles)
Adams, RichardFletcher, Eric (Islington, E.)MacPherson, Malcolm (Stirling)
Albu, A. H.Follick, M.Mallalieu, E. L. (Brigg)
Allen, Arthur (Bosworth)Foot, M. M.Mallalieu, J. P. W. (Huddersfield, E.)
Anderson, Frank (Whitehaven)Forman, J. C.Manuel, A. C.
Awbery, S. S.Fraser, Thomas (Hamilton)Marquand, Rt. Hon. H. A.
Ayles, W. H.Freeman, John (Watford)Mayhew, C. P.
Bacon, Miss AliceGaitskell, Rt. Hon. H. T. N.Mellish, R. J.
Baird, J.Gibson, C. W.Messer, F.
Balfour, A.Glanville, JamesMikardo, Ian
Bartley, P.Gooch, E. G.Mitchison, G. R.
Bellenger, Rt. Hon. F. J.Greenwood, Anthony (Rossendale)Monslow, W.
Bence, C. R.Greenwood, Rt. Hon. Arthur (Wakefield)Moody, A. S.
Benn, WedgwoodGreaten, Rt. Hon. D. R.Morgan, Dr. H. B. W.
Benson, G.Grey, C. F.Morley, R.
Beswick, F.Griffiths, David (nether Valley)Morris, Percy (Swansea, W.)
Bevan, Rt. Hon. A. (Ebbw Vale)Griffiths, Rt. Hon. James (Llanelly)Morrison, Rt. Hon. H. (Lewisham, S.)
Bing, G. H. C.Griffiths, William (Exchange)Mort, D. L.
Blackburn, F.Hale, Leslie (Oldham, W.)Moyle, A.
Blyton, W. R.Hall, Rt. Hon. Glenvil (Colne Valley)Mulley, F. W.
Boardman, H.Hall, John (Gateshead, W.)Murray, J. D.
Bottomley, Rt. Hon. A G.Hamilton, W. W.Neal, Harold (Bolsover)
Bowden, H. W.Hannan, W.Noel-Baker, Rt. Han P. J.
Bowles, F. G.Hardy, E. A.O'Brien, T.
Braddock, Mrs. ElizabethHargreaves, A.Oldfield, W. H.
Brockway, A. F.Harrison, J. (Nottingham, E.)Oliver, G. H.
Brook, Dryden (Halifax)Hastings, S.Orbach, M.
Broughton, Dr. A. D. D.Hayman, F. H.Oswald, T.
Brown, Thomas (Ince)Healey, Denis (Leeds, S.E.)Padley, W. E.
Burke, W. A.Henderson, Rt. Hon. A. (Rowley Regis)Paget, R. T.
Burton, Miss F. E.Herbison, Miss M.Paling, Rt. Hon. W. (Dearne Valley)
Butler, Herbert (Hackney, S.)Hewitson, Capt. M.Paling, Will T. (Dewsbury)
Callaghan, L. J.Hobson, C. R.Pannell, Charles
Carmichael, J.Holman, P.Pargiter, G. A.
Castle, Mrs. B. A.Houghton, DouglasParker, J.
Champion, A. J.Hoy, J. H.Paton, J.
Chapman, W. D.Hudson, James (Ealing, N.)Pearson, A.
Chetwynd, G. R.Hughes, Cledwyn (Anglesey)Plummer, Sir Leslie
Cocks, F. S.Hughes, Emrys (S. Ayrshire)Poole, C. C.
Coldrick, W.Hughes, Hector (Aberdeen, N.)Porter, G.
Collick, P. H.Hynd, H. (Accrington)Price, Joseph T. (Westhoughton)
Cook, T. F.Hynd, J. B. (Attercliffe)Price, Philips (Gloucestershire, W.)
Corbet, Mrs. FredaIrvine, A. J. (Edge Hill)Proctor, W. T.
Cove, W. G.Isaacs, Rt. Hon. G. A.Pryde, D. J.
Craddock, George (Bradford, S.)Janner, B.Pursey, Cmdr. H.
Crosland, C. A. R.Jay, Rt. Hon. D. P. T.Rankin, John
Crossman, R. H. S.Jeger, Dr. Santo (St. Pancras, S.)Reid, Thomas (Swindon)
Cullen, Mrs. A.Johnson, James (Rugby)Rhodes, H.
Dalton, Rt. Hon. H.Jones, David (Hartlepool)Robens, Rt. Hon. A.
Davies, A. Edward (Stoke, N.)Jones, Jack (Rotherham)Roberts, Goronwy (Caernarvonshire)
Davies, Harold (Leek)Keenan, W.Rogers, George (Kensington, N.)
Davies, Stephen (Merthyr)Kenyon, C.Ross, William
Deer, G.Key, Rt. Hon. C. W.Schofield, S. (Barnsley)
Delargy, H. J.King, Dr. H. M.Shackleton, E. A. A.
Dodds, N. N.Kinley, J.Shawcross, Rt. Hon. Sir Hartley
Donnelly, D. L.Lee, Frederick (Newton)Shurmer, P. L. E.
Driberg, T. E. N.Lee, Miss Jennie (Cannock)Silverman, Julius (Erdington)
Dugdale, Rt. Hon. John (W. Bromwich)Lever, Harold (Cheetham)Silverman, Sydney (Nelson)
Ede, Rt. Hon. J. C.Lever, Leslie (Ardwick)Simmons, C. J. (Brierley Hill)
Edwards, John (Brighouse)Lewis, ArthurSlater, J.
Edwards, Rt. Hon. Ness (Caerphilly)Lipton, Lt.-Col. M.Smith, Ellis (Stoke, S.)
Edwards, W. J. (Stepney)Logan, D. G.Sorensen, R. W.
Evans, Albert (Islington, S.W.)MacColl, J. E.Soskice, Rt. Hon. Sir Frank
Evans, Edward (Lowestoft)McGhee, H. G.Sparks, J. A.
Evans, Stanley (Wednesbury)McInnes, J.Steele, T.
Ewart, R.McKay, John (Wallsend)Stewart, Michael (Fulham, E.)
Fernyhough, E.McLeavy, F.Strauss, Rt. Hon. George (Vauxhall)
Summerskill, Rt. Hon. E.Viant, S. P.Willey, Frederick (Sunderland, N.)
Swingler, S. T.Wallace, H. W.Williams, David (Neath)
Sylvester, G. O.Watkins, T. E.Williams, Rev. Llywelyn (Abertillery)
Taylor, Bernard (Mansfield)Webb, Rt. Hon. M. (Bradford, C.)Williams, Ronald (Wigan)
Taylor, Rt. Hon. Robert (Morpeth)Wells, Percy (Faversham)Williams, W. R. (Droylsden)
Thomas, David (Aberdare)West, D. G.Williams, W. T. (Hammersmith, S.)
Thomas, George (Cardiff)Wheatley, Rt. Hon. JohnWilson, Rt. Hon. Harold (Huyton)
Thomas, Iorwerth (Rhondda, W.)White, Mrs. Eirene (E. Flint)Winterbottom, Richard (Brightside)
Thomas, Ivor Owen (Wrekin)White, Henry (Derbyshire, N.E.)Woodburn, Rt. Hon. A.
Thurtle, ErnestWhiteley, Rt. Hon. W.Wyatt, W. L.
Timmons, J.Wigg, GeorgeYates, V. F.
Tomlinson, Rt. Hon. G.Wilcock, Group Capt. C. A B.
Ungoed-Thomas, Sir LynnWilkins, W. A.TELLERS FOR THE AYES:
Mr. Royle and Mr. Holmes.
Aitken, W. T.Douglas-Hamilton, Lord MalcolmKerr, H. W. (Cambridge)
Alport, C. J. M.Drayson, G. B.Lambert, Hon. G.
Amery, Julian (Preston, N.)Drewe, C.Lambton, Viscount
Amory, Heathcoat (Tiverton)Duncan, Capt. J. A. L.Lancaster, Col. C. G.
Anstruther-Gray, Major W. J.Duthie, W. S.Langford-Holt, J. A.
Arbuthnot, JohnEccles, Rt. Hon. D. M.Law, Rt. Hon. R. K.
Ashton, H. (Chelmsford)Eden, Rt. Hon. A.Legge-Bourke, Maj. E. A. H.
Assheton, Rt. Hon. R. (Blackburn, W.)Elliot, Rt. Hon. W. E.Legh, P. R. (Petersfield)
Astor, Hon. J. J. (Plymouth, Sutton)Erroll, F. J.Lennox-Boyd, Rt. Hon. A. T.
Astor, Hon. W. W. (Bucks, Wycombe)Fell, A.Linstead, H. N.
Baker, P. A. D.Finlay, GraemeLlewellyn, D. T.
Baldock, Lt.-Cmdr. J. M.Fisher, NigelLloyd, Maj. Guy (Renfrew, E.)
Baldwin, A. E.Fleetwood-Hesketh, R. F.Lockwood, Lt.-Col. J. C.
Banks, Col. C.Fletcher, Walter (Bury)Longden, Gilbert (Herts, S. W.)
Barber, A. P. L.Fletcher-Cooke, C.Low, A. R. W.
Barlow, Sir JohnFort, R.Lucas, Sir Jocelyn (Portsmouth, S.)
Baxter, A. B.Fraser, Hon. Hugh (Stone)Lucas-Tooth, Sir Hugh
Beach, Maj. HicksFraser, Sir Ian (Morecambe & Lonsdale)McCallum, Major D.
Bell, Philip (Bolton, E.)Gage, C. H.McCorquodale, Rt. Hon. M. S.
Bell, Ronald (Bucks, S.)Galbraith, Cmdr. T. D. (Pollak)Macdonald, Sir Peter (I. of Wight)
Bennett, William (Woodside)Galbraith, T. G. D. (Hillhead)McKie, J. H. (Galloway)
Bevins, J. R. (Toxteth)Garner-Evans, E. H.Maclean, Fitzroy
Birch, NigelGeorge, Rt. Hon. Maj. G. LloydMacLeod, Iain (Enfield, W.)
Bishop, F. P.Godber, J. B.MacLeod, John (Ross and Cromarty)
Black, C. W.Gough, C. F. H.Macpherson, Maj. Niall (Dumfries)
Boothby, R. J. G.Gower, H. R.Maitland, Comdr. J. F. W. (Horncastle)
Bossom, A. C.Graham, Sir FergusMaitland, Patrick (Lanark)
Bowen, E. R.Gridley, Sir ArnoldManningham-Buller, Sir R. E.
Boyd-Carpenter, J. A.Grimond, J.Marlowe, A. A. H.
Boyle, Sir EdwardGrimston, Han. John (St. Albans)Marples, A. E.
Braine, B. R.Grimston, Sir Robert (Westbury)Marshall, Sidney (Sutton)
Braithwaite, Sir Albert (Harrow, W.)Harden, J. F. E.Maude, Angus
Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)Harris, Frederic (Croydon, N.)Maydon, Lt.-Comdr. S. L. C.
Brooke, Henry (Hampstead)Harris, Reader (Heston)Medlicott, Brig F.
Brooman-White, R. C.Harrison, Col. J. H. (Eye)Mellor, Sir John
Browne, Jack (Govan)Harvey, Air Cdre. A. V. (Macclesfield)Molson, A. H. E.
Buchan-Hepburn, Rt. Hon. P. G. T.Harvey, Ian (Harrow, E.)Monckton, Rt. Hon. Sir Walter
Bullard, D. G.Harvie-Watt, Sir GeorgeMorrison, John (Salisbury)
Bullus, Wing Commander E. E.Hay, JohnMott-Radclyffe, C. E.
Burden, F. F. A.Heald, Sir LionelNabarro, G. D. N.
Butler, Rt. Hon. R. A. (Saffron Walden)Heath, EdwardNicholls, Harmar
Carr, Robert (Mitcham)Henderson, John (Cathcart)Nicholson, Godfrey (Farnham)
Carson, Hon. E.Higgs, J. M. C.Nicolson, Nigel (Bournemouth, E.)
Cary, Sir RobertHill, Dr. Charles (Luton)Nield, Basil (Chester)
Channon, H.Hill, Mrs. E. (Wythenshawe)Noble, Cmdr. A. H. P.
Churchill, Rt. Hon. W. S.Hinchingbrooke, ViscountNugent, G. R. H.
Clarke, Col. Ralph (East Grinstead)Hirst, GeoffreyNutting, Anthony
Clarke, Brig. Terence (Portsmouth, W.)Holland-Martin, C. J.Oakshott, H. D.
Clunie, J.Hollis, M. C.Odey, G. W.
Clyde, Rt. Hon. J. L.Holmes, Sir Stanley (Harwich)O'Neill, Rt. Hon. Sir H. (Antrim N.)
Cole, NormanHolt, A. F.Ormsby-Gore, Hon. W. D.
Colegate, W. A.Hope, Lord JohnOrr, Capt. L. P. S.
Conant, Maj. R. J. E.Hopkinson, HenryOsborne, C.
Cooper, Sqn. Ldr. AlbertHornsby-Smith, Miss M. P.Partridge, E.
Cooper-Key, E. M.Horobin, I. M.Peake, Rt. Hon. O.
Craddock, Beresford (Spelthorne)Howard, Gerald (Cambridgeshire)Perkins, W. R. D.
Cranborne, ViscountHoward, Greville (St. Ives)Peto, Brig. C. H. M.
Crookshank, Capt. Rt. Hon. H. F. C.Hudson, Sir Austin (Lewisham, N.)Peyton, J. W. W.
Crosthwaite-Eyre, Col. O. E.Hudson, W. R. A. (Hull, N.)Pickthorn, K. W. M.
Crouch, R. F.Hulbert, Wing Comdr. N. J.Pitman, I. J.
Crowder, John E. (Finchley)Hurd, A. R.Powell, J. Enoch
Crowder, Petre (Ruislip—Northwood)Hutchinson, Sir Geoffrey (Ilford, N.)Price, Henry (Lewisham, W.)
Cuthbert, W. N.Hutchison, Lt.-Com. Clark (E'b'rgh W.)Prior-Palmer, Big. O. L.
Darling, Sir William (Edinburgh, S.)Hylton-Foster, H. B. H.Profumo, J. D.
Davidson, ViscountessJenkins, R. C. D. (Dulwich)Raikes, H. V.
Deedes, W. F.Jennings, R.Rayner, Brig. R.
Digby, S. WingfieldJohnson, Eric (Blackley)Redmayne, E.
Dodds-Parker, A. D.Johnson, Howard (Kemptown)Remnant, Hon. P.
Donaldson, Cmdr. C. E. McA.Kaberry, D.Renton, D. L. M.
Donner, P. W.Keeling, Sir EdwardRoberts, Peter (Heeley)
Robertson, Sir DavidSpens, Sir Patrick (Kensington, S.)Vane, W. M. F.
Robinson, Roland (Blackpool, S.)Stanley, Capt. Hon. RichardVaughan-Morgan, J. K.
Roper, Sir HaroldStevens, G. P.Vesper, D. F.
Ropner, Col. Sir LeonardSteward, W. A. (Woolwich, W.)Wade, D. W.
Ryder, Capt. R. E. D.Stoddart-Scott, Col. M.Wakefield, Edward (Derbyshire, W.)
Salter, Rt. Hon. Sir ArthurStorey, S.Wakefield, Sir Wavell (Marylebone)
Sandys, Rt. Hon. D.Strauss, Henry (Norwich, S.)Ward, Hon. George (Worcester)
Savory, Prof. Sir DouglasStuart, Rt. Hon. James (Moray)Ward, Miss I. (Tynemouth)
Schofield, Lt.-Col. W. (Rochdale)Studholme, H. G.Waterhouse, Capt. Rt. Hon. C.
Scott, R. DonaldSummers, G. S.Watkinson, H. A.
Scott-Miller, Cmdr. R.Sutcliffe, H.Wellwood, W.
Shepherd, WilliamTaylor, Charles (Eastbourne)White, Baker (Canterbury)
Simon, J. E. S. (Middlesbrough, W.)Taylor, William (Bradford, N.)Williams, Rt. Hon. Charles (Torquay)
Smithers, Peter (Winchester)Thomas, P. J. M. (Conway)Williams, Gerald (Tonbridge)
Smithers, Sir Waldron (Orpington)Thompson, Kenneth (Walton)Williams, Sir Herbert (Croydon, E.)
Smyth, Brig. J. G. (Norwood)Thompson, Lt.-Cdr. R. (Croydon, W.)Wills, G.
Snadden, W. McN.Thorneycroft, Rt. Hn. Peter (Monmouth)Wilson, Geoffrey (Truro)
Soames, Capt. C.Thornton-Kemsley, Col. C. N.York, C.
Spearman, A. C. M.Tilney, John
Speir, R. M.Turner, H. F. L.TELLERS FOR THE NOES:
Spence, H. R. (Aberdeenshire, W.)Turton, R. H.Brigadier Mackeson and
Mr. Butcher.

Question put, and agreed to.

Proposed words there added.

Resolved, That this House calls upon Her Majesty's Government to consider removing, reducing or amending the Purchase Tax on textiles and to take any measures, including acceleration of orders for textile goods, in order to alleviate the rising unemployment in this industry.