In raising the question of the import of gloves into the United Kingdom, I should like to make it clear to my right hon. Friend the Minister of State, Board of Trade, and to the Government that neither I nor the industry are looking to him for a decision which would violate the essential principles of Imperial Preference; nor, I stress, are we looking for a quick reply from him. We are asking very much more—that this matter should receive his mature consideration and that of the Government at a high level, because an important principle is involved.
I am not seeking to raise the question of imports from Japan. As the House knows and as my right hon. Friend is well aware, the amount involved is only small. Some £300,000 worth of apparel is due to be imported under the recent agreement, and it would be most unreasonable to assume that more than a small proportion of this figure should be represented by gloves.
In leaving the question of the Japanese agreement, I simply ask my right hon. Friend for two assurances on behalf of the industry throughout this country: first, that the quota of £300,000 worth of apparel should be carefully supervised and in no event exceeded; and second, whether this is the thin edge of the wedge. I prefer to believe that it is not the thin edge of the wedge, but I ask my right hon. Friend for the assurance that this is so and that next year the industry will not be faced with a position that is far more menacing.
I seek tonight to express far more concern on the much more serious problem of imports from Hong Kong. It is quite different from the case of imports of gloves from Japan. Goods from Hong Kong come into the United Kingdom hampered neither by tariffs nor by quotas, enjoying the full privileges of Imperial Preference. I ask my right hon. Friend to have a good look at the problem, first, to ensure that the privileges of Imperial Preference are extended only to those for whom they were intended, and second, whether the present proportion of manufacturing costs to qualify for Imperial Preference is high enough.
At this point I should like to call the attention of the House to one of the last sentences in a letter—I will not at this stage divulge the contents—written from Hong Kong:
We may add we can easily obtain all the export papers, such as export licenses and Imperial Preference certificates.
I have no detailed information on this subject, but I am saying to the Minister tonight that this is not a matter which can easily be dismissed. If Imperial Preference is to work for those privileged to use it, as I believe is right, and is extended all over the globe, at least it is vitally important that Her Majesty's Government should take every precaution open to them to see that it does not become a racket whereby cheap Chinese goods can be imported into this country. I want to turn to a written answer which was recently given by the Minister of State, Board of Trade to the hon. Member for Leicester, North-West (Mr. Janner) in which it was stated that in 1953 some 154,058 dozen woollen gloves were imported into this country from the Far East. I take the liberty of assuming that those gloves were imported entirely from Hong Kong.
There is an interesting point here. I understand that these gloves were first offered, at least in substantial quantities, in March, 1953. It was, therefore, very surprising that so large a quantity should have been imported during those 12 months, because by March of any year the majority of orders have already been placed.
In March of last year orders had, in fact, been placed to cover the requirements for the home market. It was only because of a subsequent event that these extra cheap gloves were offered to the home market from Hong Kong. I would say that the figure of 154,058 dozen was a very substantial one in the circumstances. The United Kingdom—and I should mention this in order to get the proportions clear—production of woollen gloves per annum is about 800,000 dozen.
It remains for me to say that on this question of woollen gloves if there should be an equally steep rise either this year or in another year in the import of woollen gloves from Hong Kong, it would be a very serious threat to home industry. I want to make it perfectly clear that the glove industry of the United Kingdom is in no way frightened of fair competition. It is perfectly well able to look after any threat of that kind, but there are certain provisos in that connection.
The first is that the competition should come from countries where a similar standard of living is enjoyed; secondly, that the competition should come from countries which, though they may not suffer from the monstrous level of taxation here, at least are suffering more or less similarly; and lastly, that the competition should come from countries where the wage levels are comparable, even remotely. In Hong Kong a 60-hour week is worked and the wages are a quarter of those paid here. I ask my right hon. Friend, how can a home industry compete in those circumstances?
Very much the same conditions and considerations apply to fabric gloves. I have on the bench beside me a fabric glove imported from Hong Kong which I intend to present to the Minister after the debate. My right hon. Friend will notice that it is shaped not unlike a gauntlet. I am not saying anything about its quality. I asked somebody to put it on this afternoon and the result was not altogether favourable to the glove concerned. I am saying, however, that the imported cost of this glove, manufactured in Hong Kong, delivered to the wholesaler in this country, is 30s. 2d. per dozen. The cost of the labour alone for manufacturing such gloves in the United Kingdom is 43s. 3d.; in other words, the wholesale price of this article will be just about double for the United Kingdom product compared with the imported Hong Kong product.
There follows from this one important and regrettable result, that under the D Scheme of Purchase Tax the United Kingdom product will attract about 10s. 6d. tax per dozen, whereas the Hong Kong product will attract only a nominal tax of about 1d. per dozen.
I am suggesting to the House and to the Minister that this is an undesired and undesirable result, and I am asking my right hon. Friend tonight to make really strong and effective representations, as a matter of urgency, to his right hon. Friend the Chancellor of the Exchequer. It is only fair to say that the National Association of Glove Manufacturers is appreciative of the consideration which they have received from the officials of the Customs and Excise. I only say that to give myself an opportunity of adding that the views which this Association and the industry put forward two years ago, which I had the opportunity of expressing in this House on the Committee stage of the Finance Bill, are still fully maintained and that there has been no departure whatever from the views then expressed.
I ask my right hon. Friend to give us an undertaking tonight to call the attention of the Government to this obviously unintended result of the D Scheme, namely, that the home product is seriously penalised so far as Purchase Tax is concerned as opposed to the cheap goods imported from overseas, even though it be from the Empire.
I sum up by saying that this industry with which we are concerned is hundreds of years old. It is composed largely of very small concerns. Its main strength lies in the skill and craftsmanship of those engaged in it. At this moment the threat of this new competition is already making itself felt, and there are many manufacturers who are making stock to avoid putting off labour.
I very much hope the Minister will not reply—I am sure he will not—by saying that this is an old problem; because it is not. The Hong Kong glove industry is a very new industry and is a new and serious threat to an old-established home industry. Unlike the home industry, its competitive power is not shackled by high costs and penal taxation. I ask my right hon. Friend to bear in mind most carefully that this is not an industry which comes whining for help. It has nothing to fear from incapacity, but it is worried, not without reason, by the high costs in the economy in which it is compelled to exist and the high taxation it is compelled to carry.
I believe it is the duty of my right hon. Friend and the Government to give this matter, which is a very widespread problem and, I freely admit, not an easy one, most urgent, careful and deep consideration. I hope that he will discharge that duty in the same way as I have tried to discharge my duty by raising the matter in the House tonight.
I want to add a word or two to the appeal which has been made by the hon. Member for Yeovil (Mr. Peyton) in a reasonable and modest way. The Minister will have realised by this time that this is a very serious and important problem in my constituency. I do not say that it affects extremely large numbers of people, but it does affect a substantial number who have been engaged in the trade of making knitted gloves—experienced workers and manufacturers who have been and are producing an excellent article at a reasonable price.
Leicester constituents tell me that it is quite clear that if there is no restriction whatever on these imports the British knitted glove industry will cease to exist. Some have given me official figures and quote from the Colonial Report, Hong Kong, for 1952, where it is stated that the average daily rates paid to workers, female and male, semi-skilled and unskilled, are equal to 6s. 3d. per day. The equivalent costs in this country for female labour are 4s. per hour. The same Report admits that there is a wide range of Chinese firms where wages are considerably lower. From reports which have been received in this country, there is no doubt that the actual rates per hour in Hong Kong amount to no more than 8d., or even less as a day shift consists of nine or more hours. It is quite impossible for British firms to compete against that type of cheap labour.
I ask the Minister not to regard the figures given in answer to Questions in the House with regard to unemployment as a satisfactory answer to the position. In my constituency manufacturers have had to put some men on short time, but in addition they are retaining skilled workers in the hope that something will be done to improve the situation so that they can give them continued employment. I hope that the Minister will listen to the appeal which has been made.
I wish to support my hon. Friend the Member for Yeovil (Mr. Peyton), as I have supported him on other occasions on the same subject. We believe, and I am sure the Minister believes, that the first duty of the Government is to home production, secondly, to the Dominion and Commonwealth and, thirdly, to foreign countries. We want him to protect our own home industries above all others.
I am grateful to my hon. Friend the Member for Yeovil (Mr. Peyton) for the chance of saying a few words on this matter, although I am afraid they will be very few because of the shortness of time. It is a matter on which there is some misunderstanding. My hon. Friend started by referring to gloves which may come in under the Japanese Trade Agreement. I agree with him that the quantity is likely to be very small.
My hon. Friend asked for two assurances. With regard to the first assurance for which he asked, I can promise that the quota will be carefully supervised. I am quite unable to give him the second assurance for which he asked, because I cannot say what arrangements may be entered into in future trade agreements between Japan and this country. We must confine ourselves now to the present trade agreement.
During 1953 substantial quantities of knitted gloves came into this country from Hong Kong. The figure the hon. Member quoted for woollen gloves is the same as the figure which I have, 154,058 dozen. The number of fabric gloves coming in was small, only 9,445 dozen.
I entirely agree that it is an industry which has been going for about the last year and a half, and it is quite possible that it may develop further.
I agree that gloves coming from Hong Kong are substantially cheaper than those made in this country. While rates of pay in Hong Kong are undoubtedly low compared with rates of pay in this country, they are relatively high according to Far Eastern standards. The United Kingdom knitted glove industry is a very small section of the hosiery industry. I believe that the hosiery and knitwear industry employs about 130,000 people and the knitted glove section accounts for about 5,000 of them. The known unemployment at present is, to all intents and purposes, nil. I have been able to hear of only 13 workers registered as unemployed, though I agree we do not know the number of unregistered out-workers.
We have no evidence whatever that any gloves other than those manufactured in Hong Kong have qualified for Imperial Preference. We know of no gloves imported into Hong Kong from Japan or China and subsequently sent to this country and which have qualified for Imperial Preference. If any hon. Member has evidence that that is so, I shall be delighted to receive it.
I have done that. It is easy to reconcile the number of knitted gloves. I mentioned 154,000, and 83,000 made of other materials were imported, which is a total of 237,000. I believe the production of the knitted glove industry in Hong Kong is at present about 350,000 pairs a year, so that there is not the smallest difficulty in finding that that quantity was made in Hong Kong.
The qualifications for Imperial Preference, the conditions which must be satisfied, are that the gloves must have been consigned from the Commonwealth and shown to have been grown, produced or manufactured in the Commonwealth. In the case of knitted gloves, the Board of Trade Regulations lay down that 25 per cent. of the value of the gloves must be represented as costs incurred in the Commonwealth. My hon. Friend asked if I thought that was sufficient, and from the advice I have received I think it is. Again, if he or any other hon. Member has any evidence which would lead me to change my mind, I should like to have it. All the evidence I have at present leads me to believe that 25 per cent. seems to be a sufficient proportion to lead to the result which we desire, which is that only gloves genuinely manufactured in the Commonwealth shall qualify.
As my right hon. Friend the President of the Board of Trade said this afternoon in answer to a Question, knitted woollen gloves made in Japan and subsequently embellished or embroidered in Hong Kong would not qualify for the Preference, and the Customs, I am informed, exercise a very strict control over that. Therefore, the position, according to my information and the best advice that I have been able to get, is that gloves coming in under Imperial Preference are limited to those which are genuinely manufactured in Hong Kong.
I have said that a substantial number of gloves have been imported from Hong Kong, and I quite understand the concern of manufacturers. The question is whether any action can or ought to be taken to put this right. We cannot—I want to make this absolutely clear—justify the use of quotas to prevent the import of gloves from the sterling Commonwealth. Quotas can only be justified when they are required to safeguard our balance of payments, and there are no balance of payments difficulties whatever with Hong Kong.
Also, any change in the policy of according free entry to Commonwealth products as far as tariffs are concerned would have the most far-reaching implications. We must also remember the needs of Hong Kong with her greatly increased population and the disruption of much of her traditional trade with the mainland.
Therefore, I am afraid that I can hold out no hope whatever of any action that we can take in either of those two ways. I have mentioned that I cannot at present see any evidence to make me think that the 25 per cent. proportion that we take is not adequate.
I agree that Purchase Tax is considerably higher on the United Kingdom products. I have seen some figures submitted by the National Hosiery Manufacturers' Federation in relation to woollen gloves. The difference in the retail price was 3s. 9d. Of this extra amount, the manufacturing cost accounted for 1s. 8d., the wholesaler's margin was 4d., Purchase Tax was only 6d., and the retailer's margin was Is. 2d. The point is that even if the Purchase Tax limit were doubled—it would have to be doubled to eliminate Purchase Tax—it would make a difference of little more than 6d., perhaps 9d., out of the 3s. 9d., which would still leave the United Kingdom gloves at 3s. dearer.
I am sure that my right hon. Friend will be glad to consider any representations which my hon. Friend has to make, provided that they are accompanied by relevant information. I am always willing to consider representations, too, if they concern our responsibilities. To keep this matter in perspective, we must remember what I have mentioned about the very full employment at present. Fortunately, there is no unemployment that we know of in the industry. Long may that continue.
I hope that the very few remarks which I have been able to make in the short time left to me have gone some way anyhow to alleviate the anxieties which I know that my hon. Friend the Member for Yeovil and the hon. Member for Leicester, North-West (Mr. Janner) feel.