Textile Industry

Part of the debate – in the House of Commons at 12:00 am on 1st July 1963.

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Photo of Mr Ernest Thornton Mr Ernest Thornton , Farnworth 12:00 am, 1st July 1963

The Government have certainly not provided the"prosperous national economy". In fact, in the meantime, the economy has nearly gone bust, and a few months ago we had the highest level of unemployment for many years. It is equally clear that the Government's statement on import policy has failed, and failed badly, to provide the basis referred to.

I agree at once that the industry is not free from fault. To take one of the three related points mentioned by the Estimates Committee—marketing—the industry has moved all too slowly towards integrating the production processes with the marketing arrangements. It is true that there has been some perceptible movement in recent weeks but, in the main, it has been the merging of firms that already have their own marketing sections. The spinning processes, dominated by the Lancashire Cotton Corporation, the Fine Spinners and Doublers Association and Combined English Mills, remains predominantly horizontal in structure. A break through here should be organised.

I do not suggest that vertical integration is the answer to all the problems—it is not. The probability is that, from the point of view of production costs, the difference is only marginal, but it is a necessary contribution if this problem of orderly marketing and the ironing out of booms and slumps is to be solved. In recent years, of course, it has been all slumps and no booms.

With regard to the other two related problems referred to by the Estimates Committee—imports and the fuller use of plant and machinery—the fault clearly lies outside the industry's control. In the last year or two, the relationship of imports to domestic production has meant that many efficient producing firms operating a two-and three-shift system have had to knock off one shift because of shortage of orders—and a few have gone out of business altogether. I particularly call the attention of the hon. Member for Bury and Radcliffe (Mr. Bidgood) to this point.

We really have cause to worry, cause to say that something is seriously wrong with the industry's opportunities. When our most efficient firms, operating on a three-shift system—and our efficient firms are as good as any in the world—cannot keep their plant running because the markets are not there for the long runs necessary for this highly-productive machinery, there is something seriously wrong with the conditions under which the industry has to operate.

As the Estimates Committee pointed out, there was a crisis of confidence in the industry, and since the issue of the Estimates Committee's Report the Government have done nothing at all to restore that confidence. That lack of confidence is high-lighted by the almost certain failure of the re-equipment phase of the Cotton Industry, Act, 1959. If that Act does not succeed in getting substantial re-equipment it has failed completely, and a lot of public money has gone down the drain.

Much has been said about the damaging effect of the large volume of cheap-price imports. The United Kingdom was once the world's largest exporter of cotton textile goods—it is now easily the world's largest importer of those goods. The United States of America, with three and a half times our population and probably seven or eight times our purchasing power, imports, quantitatively, only about two-thirds of the cotton textiles that the United Kingdom imports.

The difference is not due to efficiency, but mainly due to restriction of entry. As has been pointed out by the hon. and learned Member for Darwen and other hon. Members, the United Kingdom proportion of imports to domestic requirements has varied in recent years from 25 per cent. to 40 per cent., whereas in the United States the figure is 5 per cent. or 6 per cent. No other industrial country—with, perhaps, the exception of Sweden, with its 7½ million population—approaches anything like the United Kingdom proportion.

Our present system of uncontrolled imports under ceilings for individual countries, Commonwealth and others, is clearly unsatisfactory. I agree with the hon. and learned Member for Darwen. There is price disruption, inability to book long runs, which are so essential with highly productive, new and expensive plant, and there is absence of adequate categorisation. All these three problems are interlinked. We on this side of the House, and doubtless hon. Members opposite, met representatives of the industry this afternoon. The picture that emerged was certainly one of chaos in the industry, in marketing, in the back-door entries, and the rest. There is a clear need for adequate machinery for planning, categorising and timing these large imports.

We have to accept substantial imports, for a variety of reasons, not least the needs of developing countries such as India and Pakistan. I freely admit this, but why cannot we control imports more effectively so that they do the minimum of damage instead of very nearly the maximum damage as is now the case? The United States does it and Switzerland does it by different means. Other countries do it as well. If all other countries take steps to prevent disruption, when they have only a low percentage of imports, how much more important is it that we should take these steps with our relatively much higher percentage of imports?

Within the framework of an outward-looking trade policy which a great trading nation like ours should pursue, there is much that the Government can and should do. All the countries represented at the recent G.A.T.T. long-term cotton textile arrangements, importing and exporting nations alike, recognised and wrote into the document recognition that the United Kingdom was saturated with cotton textile imports.

The present ceilings on imports are too high but they have been accepted up to 1965, notwithstanding protests from this side of the House in June of last year against the last increase that was made. An assurance should be given to the industry that limitation will continue after 1965. The limitation should be global, as suggested by the hon. and learned Member for Darwen. If new exporters gain markets here and some of the existing exporters increase their share, others must lose out, at least until such time as other advanced countries come near to matching our United Kingdom performance. Special regard, however, should be given to India and Pakistan. They have tremendous problems, including a serious balance of payments problem. But this does not apply to Hong Kong.

Hong Kong is not a poor Colony. It has no balance of payments problem. I agree that it has other problems. The hardship among the population of Hong Kong could be ameliorated by having a reasonable taxation system. Why should the extremely wealthy people in Hong Kong—European, British and Chinese—get away with such a low level of direct taxation?

A great deal has been said already about the issues of categories, trade distortion, and quota periods. I would only add on the last named subject that Hong Kong did not have a carry-over last year. It had a carry-over in the preceding year of 10 million sq. yards. I understand that this year India has a carry-over of 37 million sq. yards. Pakistan has a carry-over of 6 million sq, yards and Formosa one of 1 million sq. yards. I understand that India's 37 million sq. yards carry-over has already been delivered in this country. It would appear, therefore, that in 1963 we shall have from India 232 million sq. yards compared with 195 million sq. yards. Is it surprising that in those circumstances the industry in Lancashire remains depressed and that the upturn has not come about? Is it surprising that prices remain disruptively low and that confidence is at a record low ebb?

Another point to which reference has already been made and which ought to be emphasised is the need to redefine Commonwealth goods. Enough has been said on this subject. I do not want to go into further details, but there is a point to which I should like to draw the attention of the President of the Board of Trade. The right hon. Gentleman should have a further look at the provision for an automatic increase in allowable imports when the average order book in the Lancashire industry reaches 15 weeks. An order book of 15 weeks is not unreasonably long. In saying this I do not deny the fairness of making some provision of this kind, because excessively long order books are not good in the long run.

The Government have clearly failed the industry. The suspicion has long existed in Lancashire that the industry was expendable. That suspicion is now a near certainty. Why does every other advanced industrialised country consider its cotton textile industry an important part of the economy? Why have this Government done so much to create conditions for the industry which make it increasingly impossible for it to survive? We warned the Government when the"scrapping" phase of the Cotton Industry Act, 1959, seemed so successful that unless they created confidence on this import issue the re-equipment phase would fail and much public money would have been wasted. This is happening, if it has not already happened.

The hon. and learned Member for Darwen asked what the Labour Party would do. I think that from the way he put the question he already accepts that it will be a Labour Government that will have to resolve these problems. When the Labour Party comes into power, which cannot be long delayed now, a real attempt will be made to establish conditions of fairness and to restore confidence to the Lancashire industry.

A Labour Government will reopen negotiations at G.A.T.T. and seek to secure an early and substantial liberalisation in the 1962 Agreement. The broad principle of that Agreement, of a 5 per cent. per annum increase in imports seems generous in itself. It is in fact a high rate of increase but, of course, it starts from a ridiculously low rate. It will be 10 years before a real contribution is made to the problem of the needs of the developing countries for cotton textiles, assuming that the scheme is implemented and works successfully. These developing countries cannot afford to wait 10 years. It would be far better for all concerned to have an immediate substantial uplift in imports by the developed countries followed by a 2 per cent. per year rate of increase instead of the 5 per cent. on the very low base.

A Labour Government will establish machinery to bring order out of the present chaos, to regulate the imports of cotton goods into the United Kingdom. The present high level to which we are committed to the end of 1965 will be handled in such a way as to minimise price disruption and iron out the ups and downs of supply and demand which have been a bugbear to the industry for years. Further integration will be encouraged by financial grants for modernisation in those firms which undertake approved integration schemes.

A Labour Government will demonstrate that with order and planning it is possible to maintain a viable cotton textile industry without damaging the economies of the developing Commonwealth countries. Orderly adjustments have been achieved with agriculture and coal. It can be done with cotton if there is the will to do it.

The statement of policy, which will be made in full by my right hon. Friend the Deputy-Leader of the Opposition in Manchester on 19th July, will, I feel sure, go a long way to restore the confidence which the present Government have so lamentably failed to create.