Cotton and Textile Industry

– in the House of Commons at 12:00 am on 16th March 1962.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Noble.]

4.1 p.m.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

In seeking the Adjournment debate on the future of the cotton and textile industry, I am not unaware that there have been two recent debates on this subject. One was on 21st December, 1961, when the hon. Member for Middleton and Prestwich (Sir J. Barlow) addressed himself to the problem. The second was on 23rd January of this year, when my hon. Friend the Member for Rossendale (Mr. Greenwood) similarly performed such a task.

I seek this debate for reasons which are very important, at any rate to me. On both those occasions I considered that the Minister's reply was unsatisfactory. The position in my own constituency has become progressively worse. Consequently, I felt that I should be doing less than my duty to my constituency were I not to raise the matter again. It is in this spirit that I now attack the problem. I hope that I can use this privilege to some effect. Because of my background, which is mining and engineering, I do not claim to be in any way encyclopaedic on this vitally important industry, but I believe that the House will agree that I have tried to do my homework.

At one time, in Burnley, 23,000 people were employed in this vitally important industry. Today, there are less than 5,000. Out of the 35 mills that remain no less than 10 are working short-time. It does not take one long to realise the impact of such a situation. It is typical of north-east Lancashire.

I have no doubt that the Minister's reaction to this aspect of the problem, as was evidenced in the last debate, will be that there are still vacancies in the industry and that there is little, if any, unemployment. This is almost massive deception. It just does not do. At one time, Burnley had a population of over 100,000. Today, its population is just over 80,000. Within the memory of comparatively young people, it has lost about 20,000 citizens. Over the last decade north-east Lancashire has lost 9,276 citizens.

Making comparisons with the national picture, this is what one finds. Despite a 5·3 per cent. increase in the national population there has been a decrease in the population of north-east Lancashire of 5·1 per cent. During the same period there has been a decrease in the insured population—this is rather different, but it is a very important difference—of 9·3 per cent. That is why, there can be no doubt, there are vacancies and no large-scale unemployment.

To bring the position back again to north-east Lancashire and to Burnley, we find—these figures have been supplied to me by the Town Clerk and I have no doubt that they are completely authentic—that in the last decade there was a decrease of 4,332 in population, of whom 2,497 were insured workers. In the textile industry—the one to which I make specific reference—we lost 6,446, 1,057 being lost last year. One can easily see from that that this is a constituency problem of some magnitude. I pause to say, with some significance, that the position of the capital assets and finances of the town is being progressively worsened by this situation. We can, I think with a good deal of justification, connect this unfortunate situation with the decline in the cotton textile industry.

It is an unnecessary decline. If the decline were inevitable there might be some stoical acceptance. One need go back only two years, a very short time in the life of the industry Just two years ago, in 1959, reorganisation was brought about by the present Government. At that time, we find in a local paper the headline "Better Times for Lanes", meaning, of course, Lancashire. I will quote what the President of the Board of Trade said: I am convinced that the reorganisation scheme is going to give a new lease of life to Lancashire industry. There is without question a feeling of more security and confidence that better times are ahead. That statement was unqualified. It was made by the President of the Board of Trade.

Photo of Mr Henry Hynd Mr Henry Hynd , Accrington

Had that statement anything to do with the General Election of 1959?

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

The answer to my hon. Friend—and I am trying not to make this a partisan contribution—is that the the date was 16th September, 1959. The point that I want to stress is that this was said by a very responsible Government official only two years ago and it was entirely without qualification.

What has happened since that time? One had only to listen to the contribution made by the hon. Member for Rossendale. He made the claim, which the Minister did not contest, that the import of cotton textiles into this country has risen by 40 per cent. Indeed, I tell the House—and I do so with some regret—that since this reorganisation, with all the costly apparatus attached to it and all the definite and unqualified promises made by the President of the Board of Trade, the increase of imported cotton cloth into this country has exceeded 200 million yards. I say, with some significance, that this is from non-Commonwealth countries.

I said that I was not an expert on this industry, but that I had tried, imperfect creature that I am, to do my homework. I have a quotation to make from the Daily Express. This is what was said by its commercial reporter, Mr. Philip Ditton, when writing about the cotton textile industry: This means that 60 per cent. of Britain's cotton cloth last year came from overseas—and no other country bought so much. In the U.S. imported cloth and yarn accounted for only five or six per cent. of home needs. In Europe the figure is probably two or three per cent. The article is headed: The Once-proud Tag That So Often Lies. I can tell the House about that. The significance is that we have a situation today in which manufacturers as well as cotton importers are buying cotton cloth, making some conversion in their establishments, and then sending it out ostensibly as stuff which has been manufactured in Lancashire. It is said, possibly with a great deal of justification, that this is done to amortise costs. That is the thin end of a most dangerous wedge which can destroy the industry if it is driven in hard enough.

I do not want to give the impression that it is there that the trouble lies. That article, by a responsible journalist, shows that 60 per cent. of our cotton cloth came from overseas, not 40 per cent. as was cited by my hon. Friend the Member for Rossendale. I offer another illustration, a quotation from the Guardian. This is an opinion expressed by the French cotton industry in relation to our own and to the degree of husbandry which the Government show towards it.

As time is short, I shall quote only briefly. The article said: The British Government is accused of deliberately sacrificing its cotton industry by opening up its markets to India, Hongkong and Pakistan, and the association states that the textile industries of the Six must be concerned about the entry into the EEC of a country which has accepted the destruction of one of its most traditional industries. It is not only imports from Commonwealth countries, but, as can be clearly seen by the figures I have quoted, importation from other countries that has made a disastrous impact on the industry.

The commercial editor of this newspaper says: The French syndicate therefore urges that the British Government should introduce a system of quotas for imports on a scale which would permit the greatly reduced Lancashire industry to operate with confidence and efficiency. It considers it ludicrous that the Government should offer re-equipment grants to Lancashire while encouraging the imports which undermine the mills' position. I believe that to be a fair observation. I said that I would quote people who know the industry wall. I now quote what a Free Trade thinks about this. The hon. Member for Bolton, West (Mr. Holt), in a contribution to our last debate on this subject, said: The trouble concerning Lancashire is that, whatever Ministers think about it, the Lancashire textile industry does not know what policy the Government have for it. It has been a mixture of toughness with unfairness—no other industry has been treated in the same way—and political expediency just before the 1959 election, when votes were required."—[OFFICIAL REPORT, 23rd January, 1962; Vol. 652, c. 167.] That is a quotation from a Liberal Free Trader. I must agree that it has a great deal of substance in it.

I would like to take the argument a stage further, to the point which we may be rapidly approaching—the question of ourselves and the Common Market. I shall not discuss the pros and cons of the Common Market, except to say that I have serious misgivings about the wisdom of our joining but that it would seem that the Government intend to go in. Therefore, how wrong am I when I say that, during this particular time, there should be almost massive re-equipment to meet that challenge?

At this time, it is important to remember that there is a crisis of confidence in the industry which betokens ill if and when we join the Common Market. It cannot possibly face the initial challenge from European countries with the present scale of importations from Commonwealth countries. In our last debate, the Parliamentary Secretary said: Surely the overriding interest in this country must be to devote itself to those industries in which it can compete with other countries."—[OFFICIAL REPORT, 23rd January. 1962; Vol. 652, c. 171.] That is a clear statement. If that is precisely what he means, he should tell the cotton industry.

I do not accept that the competition faced by the industry is fair. I spent twenty years negotiating wage rates and conditions in the engineering industry, and I know what I am talking about. It is not only a matter of wage rates. In this country, there is also legislation, the implementation of which entails a lot of money. The competition from abroad is not something which the Government should hurl at our industry, with hand on heart, saying, "I am asking for something from you that I would not be prepared to face myself".

I have three questions to put to the hon. Gentleman. Does he regard the situation in the cotton textile industry as unsatisfactory? If so, does he agree that excessive imports are the main contributory cause? If the answer to these first two questions is "Yes", what precisely do the Government intend to do about it? I have every right to ask these questions. It is within my memory, and ought to be within the memory of the Government, that between 1945 and 1951 this industry made a massive contribution to our balance of payments. It was almost indispensable to our economic well-being. Having made such a contribution at that very important time, it is fair that the industry should ask the Government to give practical recognition of it by dealing out fair play and not dispensations.

We in Burnley balance our economy on three industrial pegs—coal, cotton and light engineering, not necessarily in that order. If any of these pegs is dislodged, then Burnley is in serious trouble—there is no doubt about that. I serve notice on the Government that I would fail in my duty if I were to sit idly by while these pegs were being dislodged, and I do not intend to fail. The hon. Gentleman has listened with courtesy to me, and I will listen to him with courtsey.

4.20 p.m.

Photo of Mr Niall Macpherson Mr Niall Macpherson , Dumfriesshire

I apologise to the hon. Member for Accrington (Mr. H. Hynd) for not allowing him to speak, but time is getting on and I have short enough time to deal with the rather gloomy picture painted by the hon. Member for Burnley (Mr. D. Jones). The hon. Gentleman spoke about a crisis of confidence, but it was precisely to try to restore confidence and to increase efficiency that the Cotton Reorganisation Schemes were designed to enable the industry to compete with other countries. The essential background to that scheme was that we in this country have Commonwealth free entry. We have an obligation to accept goods from Commonwealth countries which they send to us as a means of increasing their standard of living. Secondly, as a nation we depend for our livelihood on exports and we depend to a greater extent on them than ever before. That being so, we are bound to try to remove obstacles to trade. We cannot expect to export unless we are willing to import.

The aim of the Cotton Reorganisation Schemes made under the 1959 Act was to encourage the industry to modernise itself by a programme of scrapping and replacement. Some firms had already started that process and were inclined to criticise the Schemes as helping the laggards rather than the more enterprising firms. The scrapping scheme for spinning, doubling and weaving ran for a year and ended on 31st March, 1960. Nearly half of the total installed capacity in spindles was scrapped and two-fifths of the looms at an estimated cost to the Exchequer of £10·6 million. Practically all the labour displaced which desired re-employment had no difficulty in finding new jobs, admittedly not always in the same place.

The Scrapping Scheme for finishing ended last December having run for nearly 18 months. The installed capacity eliminated was about one-fifth and the cost to the Exchequer is likely to be £1·2 million. The Government assistance took the form of payments of two-thirds of the compensation payable for machinery scrapped under the Schemes.

The other side of the Government assistance was designed to encourage those in the industry to plan to re-equip or modernise their mills. The expenditure occurred in the purchase and installation of machinery or equipment is eligible to the amount of one-quarter of the cost provided that application is made by 8th July, 1962, and the installation or modernisation is completed by 8th July, 1964. The House may be interested to know that so far 697 applications have been received covering expenditure to the extent of £40·3 million and involving an Exchequer grant of approximately £10·1 million. That admittedly is below expectations. No doubt the reason why better results have not been obtained so far is the admitted lack of confidence.

Is that lack of confidence justified? This is what we are discussing. It is true that the labour force has declined. During 1961 the industry lost 20,000 workers which represents nearly 10 per cent. of the labour force. But scrapping and modernisation was bound to result in a decline in the labour force. The trade unions accepted that in making itself more efficient the industry would have a decline in its labour force. The important thing from the point of view of labour is that there does not seem to have been much difficulty in absorbing those who left the industry into other jobs although I say again not always in the same place. It may well be that labour is attracted to other industries—

Photo of Mr Henry Hynd Mr Henry Hynd , Accrington

Not married women.

Photo of Mr Niall Macpherson Mr Niall Macpherson , Dumfriesshire

Undoubtedly some married women do not want to work except in cotton—

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

And the population erosion.

Photo of Mr Niall Macpherson Mr Niall Macpherson , Dumfriesshire

That applies to some extent. The percentage unemployed, including some part-time workers, is 2·1 per cent. in the cotton belt which is practically the same as for Great Britain as a whole.

Photo of Mr Henry Hynd Mr Henry Hynd , Accrington

That does not include the married women.

Photo of Mr Niall Macpherson Mr Niall Macpherson , Dumfriesshire

The proportion of machinery actually in use does not reflect the extent to which it is employed for shift working. But it is worth telling the House that the proportion in January was 87 per cent. for weaving, 85 per cent. for spinning and 79 per cent. for doubling.

I wish now to deal with the vital question of imports. It is true that retained imports of piece goods rose considerably up to this time last year. But in the fourth quarter they were running at only three-fifths of the level of the first quarter. It is true that the January figure was higher this year and imports are running at about the same level as in the third quarter of last year. But the main sources of imports are now under control and it does not matter in which month they come in.

Nearly 60 per cent. of our retained imports of cotton piece goods come from India, Pakistan, Hong Kong and Spain, All these are limited by inter-industry agreements, supported by the Government, which are to continue in force to the end of this year. Imports from Japan, Formosa and the Sino-Soviet bloc countries are subject to control by quota. Therefore, on current figures, 65 per cent. of the imports are subject to some form of restraint. If we add the imports of piece goods from Western Europe, and from the United States and Canada, these sources account fox 95 per cent. of our imports.

The President of the Board of Trade has stated that, if imports again increase sharply, exceed the level of the base year envisaged in the Short Term Geneva Arrangement, and cause disruption, he would consider what action would appropriately be taken within the limits of the Arrangement. That Arrangement expires on 30th September, but there has been recently drawn up in Geneva a five-year arrangement for cotton textiles to take effect from that date.

The basic provision is that imports which cause or threaten disruption can be restrained at a level not less than the trade in the twelve months ending three months before the request for restraint, so that if there is a sudden surge it is possible to restrict imports back to the level three months before the time when restraint is requested.

The Arrangement will also contain provision for increases in quotas already maintained by the industrialised countries on imports, especially from the under-developed countries. During the negotiations, the Government negotiators were advised by industrial representatives from Lancashire, who were kept in close touch with the discussions and whose assistance was most helpful.

The Government now has to decide whether or not to accept the Arrangement. In this, they will be guided by the views of the Lancashire industry, and it will be necessary also to take into account the views of Hong Kong. If the Government accept the Arrangement, they will do so subject to the reservation that they would not be committed by the Arrangement to allow increased access of low-cost textiles to the British market. It was generally agreed during the Geneva discussions that we were entitled to make such reservation in view of the large volume of low-cost textiles we were currently importing, and the decline in our industry over the last ten years.

What happens as regards the Asian Commonwealth countries after 1962? Agreements with Commonwealth interests are involved, and it is not possible for me to make a statement today, except to say that, in consultation with the Cotton Board, the Government are already considering what should be done. We appreciate the need for an early decision. In any case, the Government have made it clear that restraint on imports from the Asian Commonwealth countries will undoubtedly be necessary throughout the whole period of the re-organisation and re-equipment of the cotton industry in Great Britain. It is our hope that the problem can be dealt with by agreement with the industries concerned, and I would not wish anything to be said that might prejudice agreement.

As my right hon. Friend said yesterday, there is no certainty in this world, and it is not possible to give the cotton industry—or any industry, for that matter—complete certainty as to the future. Undoubtedly, as the hon. Gentleman said, because of the Common Market negotiations, the present is necessarily a period of more than usual uncertainty, but there is no reason why a modernised British cotton industry should fear Continental competition. On the contrary, entry into the Common Market should give it new opportunities and, certainly, there is no reason why we should continue to be net importers from such countries as Canada and the United States of America.

As to imports from low-cost Asian Commonwealth countries, I hope that what I have said will help to restore confidence to the industry. One thing is certain; the industry is much more likely to be able to hold its own if it re-equips and modernises now than if it does not. My right hon. Friend therefore very much hopes that those who have not yet submitted modernisation plans will do so in the course of the next fifteen weeks. Submitting a plan will not commit a firm to expenditure; failure to submit a plan will deprive it of the chance of Government assistance.

Although low-cost imports now account for about 30 per cent. of the market, the major sources of low-cost imports are now subject to some form of limitation or restraint. The remainder of the market is there for the industry to win in competition with countries whose standards of living are much the same as our own, but it will not be able to compete effectively unless it takes the fullest advantage of the opportunities for re-equipment. That was the whole purpose of the re-equipment scheme. One can dispute whether it was brought in too soon or too late, but that was the purpose of the re-equipment scheme; and unless our industry takes advantage of it, it will certainly have less chance of competing and sustaining its position. Therefore, whatever the future may bring, there can be no question that the need to increase efficiency to the utmost is over-riding.

I understand very well the hon. Member's anxieties, and the anxieties of all places, many of them in Lancashire—and many of them, also, in Scotland—that are losing population; but, at the game time, we must have an efficient industry—

The Question having been proposed after Four o'clock and the debate havingcontinued for half an hour, Mr. SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.

Adjourned at twenty-nine minutes to Five o'clock.