Textile Industry (Lancashire)

– in the House of Commons at 2:12 pm on 5 March 1993.

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

Photo of Gordon Prentice Gordon Prentice , Pendle 2:30, 5 March 1993

I hope that you will bear with me, Mr. Deputy Speaker, because my voice is somewhat fragile. I shall begin with a story of our times. On 19 January, Smith and Nephew, one of Pendle's largest employers, announced that it was laying off 574 people and pulling out of cotton spilling, gauze weaving and denim production. That decision means that the United Kingdom will no longer make denim. That is a reflection of what is happening across the nation.

The decision might make commercial sense to one company, and the management has explained its reasoning to me in detail, but for the country as a whole the decision makes no sense whatever. It represents a further contraction in our manufacturing base which, as Lord Prior said earlier this week, will take 20 years to rebuild. It represents a cost to the Exchequer of £9,000 per person or over £5 million in total in forgone taxes, benefits and dole payments.

The Government ought to recognise the importance of textiles to the British economy. Even now, after 14 years of Conservative government, textiles have sales of £15 billion, exports are worth £4·8 billion and its work force, although steadily contracting, is just under 400,000. In my area in the north-west, strenuous efforts have been made to make the industry more efficient. Investment has been running at £80 million a year, but there has been retrenchment, closures and redundancies. There has been a real contraction in our manufacturing base and that has significant implications for our balance of payments, which was already in deficit last year for apparel and textiles to the tune of £3·8 billion.

The closures and contractions in textiles can be taken as a proxy for what is happening to manufacturing generally. In my maiden speech I was proud to tell the House that I represented a constituency in which 55 per cent. of people were employed in manufacturing. That was the highest percentage of any constituency in Britain, or at least that used to be the case. At that time, in early May last year, I mentioned a string of job losses in textiles, including 170 in that same firm, Smith and Nephew. There were also job losses in Dawes and Company and in CV Woven Fabrics; and Thomas Mason, a 200-year-old firm, closed its doors for the last time in December 1991.

In 1989, the latest year for which figures are available —and they pre-date the current deep recession—3,800 people were employed in textiles in Pendle. That represents 23 per cent. of manufacturing employment and 12 per cent. of total employment. However, there has been such a haemorrhage of jobs recently that my constituency's distinction of being known as the manufacturing capital of Britain may now be inaccurate. Given the importance of manufacturing, my constituents would have been extremely interested in what the Prime Minister had to say yesterday on the subject. Apparently, he believes in manufacturing. It seems that in the 1980s he was in a minority in the Conservative Cabinet in taking that view, and it was throughout that period that the textile industry in Lancashire was flattened. From 1979 to 1991, nearly 20,000 jobs were lost in textiles. That figure represents the position 14 months ago and takes no account of the recent acceleration in redundancies.

In the United Kingdom as a whole, there are 4,524,000 people employed in manufacturing, a fall of 2,737,000, or 38 per cent., since 1979. In the period in which I am most interested—that since the right hon. Member for Huntingdon (Mr. Major) became Prime Minister—there has been a fall of 555,000 in the manufacturing sector, a contraction of 11 per cent. We can see how the Prime Minister cares desperately about manufacturing.

In the north-west, the figures are chilling. Employment in manufacturing is 560,000, down from 971,000 in 1979. That is a cataclysmic collapse of 42 per cent. and the second worst fall in Britain. But the Prime Minister tells us that he believes in manufacturing. Since he entered No. 10, we have lost another 75,000 manufacturing jobs in the north-west. Another 12 per cent. of these jobs have gone —just vaporised. It has been the third worst fall in Britain.

Unemployment in my constituency has increased by 85 per cent. since the right hon. Member for Huntingdon became Prime Minister. In the north-west as a whole, it has increased by a more modest 37 per cent.

The Prime Minister is good at wringing his hands and blaming others for the misfortunes that are plaguing the country. He is good at blaming everyone but himself. The right hon. Gentleman has told us about his own experience of unemployment. On 18 November 1991, The Sun reported him as saying: I remember very clearly how it felt morning after morning to go out looking for work, lunchtime after lunchtime finding that there wasn's any. I felt low and demoralised. I wonder how the Prime Minister feels about the unemployed in my constituency, including those who have lost their jobs since he entered No. 10. In my constituency, there are 15 people chasing every vacancy in Pendle. In the north-west as a whole, there are 27 people chasing every vacancy. From where is employment to come from to soak up the cascade of job losses?

The earlier debate, on crime and crime prevention, was opened by the Minister of State, Home Office, the hon. Member for Fylde (Mr. Jack). He achieved some notoriety when he was a Minister at the Department of Social Security. He said on 13 December 1992, following the redundancies at British Aerospace at Preston, Lancashire does have a robustness among small businesses to absorb some of the skilled people who will be liberated as a result of the cutbacks. In Lancashire, we are fed up with being "liberated". My constituents and millions like them throughout the country want jobs. For that to happen, the Government must implement a strategy for industry, including textiles. At present, there is a gaping hole where that strategy should be.

I return to Smith and Nephew to illustrate the point. The President of the Board of Trade, the right hon. Member for Henley (Mr. Heseltine), told the Conservative conference on 7 October 1992 that he would spare no efforts to promote, encourage and support our manufacturing industry. He told the conference that he would intervene. before breakfast, before lunch, before tea and before dinner". Where is the evidence of any intervention? I contacted the right hon. Gentleman the day after the 574 job losses at Smith and Nephew were announced to ask him about his pre-prandial interventions. He told me that while he regretted the closure, it was the company's decision. He told me that his Department received no specific representations about denim or denim cloth during its recent discussions with the textile industry. He said that there were no discussions about denim in the run-up to the two-year extension of the bilateral multi-fibre arrangement. He said that the European Commission was ready to act on claims of dumping, but his Department knew of no approach from any United Kingdom company in respect of denim goods. That man is supposed to be in charge of Britain's trade with the rest of the world, yet he does not know what is going on.

The management say that despite past investment, relentless and increasing competition from low-cost sources in developing countries meant that the country could no longer compete effectively in denim production. They told me of unfair trading practices that put the United Kingdom at a disadvantage and mentioned the wholesale transfer of denim manufacture from Italy and Belgium to the countries of eastern Europe.

What did the Department of Trade and Industry's regional arm do to advise Smith and Nephew when all that was happening? Did the DTI know of the company's difficulties? What representations are the Government making to the EC about the transfer of denim manufacturing capacity to east European countries? Why is that in the period January to November 1992, Germany could export to the United Kingdom denim worth £4·3 million; Italy, £2·6 million; Belgium, £1·5 million; and other EC countries, £6·8 million? The United Kingdom was awash with denim imports, yet did the Government do anything about that?

The Apparel, Knitting and Textiles Alliance— AKT —is concerned about the implications of improved access to the European Community market for the countries of central and eastern Europe. It informs me that imports from those countries in sectors of the textile and clothing trade are growing rapidly—even under present arrangements. The terms of trade with those countries are still distorted by their state trading past.

Manufacturers may be attracted to eastern and central Europe by permissive environmental standards, which can be an important factor in the textile industry The prospects of the cotton industry—and, by implication, the denim sector—have been damaged by foreign Governments subsidising their domestic producers. Egypt, India, Pakistan and China are notorious in that respect. They all export to the United Kingdom, but there is no reciprocity.

India prohibits imports of textiles and' clothing if similar goods are produced domestically, and slap penal tariffs of 200 per cent. or more on the remainder. Taiwan, Japan and other countries allow registration of brand names that falsely imply United Kingdom origin. Turkish textile and clothing producers benefit from large subsidies, the supply of cotton at below world market prices and protection by a whole battery of duties.

South Korea has announced a £2·5 million subsidy scheme for its textile and clothing industries. Even within the European Community, countries such as Belgium, France, Spain and Italy persist in subsidising their textile and clothing industries. I shall he interested to hear the Minister's observations on that point.

The textile industry was last discussed in the House on 17 December, in an Adjournment debate introduced by the hon. Member for Colne Valley (Mr. Riddick), when the Minister mentioned the DTI's restructuring to take account of the importance of textiles. The Minister said that that had been put in hand by the President of the Board of Trade, and included the establishment of sectoral divisions to improve dialogue between the Department and all sections of industry. That has led to the creation of the textiles and retail division. Its specific task, the House was told, was to ensure a high-level dialogue with the industry, good contact at all levels and a good knowledge of the industry."—[Official Report, 17 December 1992; Vol. 216, c. 559.] There was no contact, no dialogue, in the case of 574 redundancies at Smith and Nephew—not a corner shop, but a major company. The announcement must have come like a bolt from the blue to the President of the Board of Trade whose job it is to understand such matters.

I want the Government to give weight to the AKT"s action plan. As the Minister knows, the United Kingdom textile industry is confident that it will be able to compete under a new GATT. It accepts the phasing out of the multi-fibre arrangement over the next 10 years, during which period tariffs will progressively replace quotas—with an important proviso. The GATT rules and disciplines must be strengthened, particularly on subsidisation, surveillance, copyright and access for United Kingdom exports.

hope that the Minister will also urge the Chancellor of the Exchequer not to slap value added tax on children's clothing, which is currently zero rated. According to the Government's own figures, the extension of standard-rate VAT to children's clothing would cost consumers an additional £600 million per year, and would have a devastating effect on poorer families; it would also have serious implications for children's wear manufacturers and for the companies that supply them with fabric and yarn in my part of Lancashire, where a substantial amount of children's wear is produced.

The possible impact of Northern Ireland subsidies is also very important. Many producers in mainland Britain are becoming increasingly concerned about the possible distorting effect of such subsidies on competition. One instance is the recent announcement of an award by the Northern Ireland Industrial Development Board to the Indonesian textile company Texmaco of £14·6 million to set up an operation weaving filament synthetic fabric.

The IDB claims to have carried out market studies which concluded that the output of the new plant would involve products—micro-fibre polyester fabric—that would not compete with the output of companies on the mainland; but there is some doubt about that. Some weavers, including weavers in my constituency, believe that the output will compete, directly or indirectly, with their own products and that a competitor from Northern Ireland with large amounts of Government assistance will have implications for their own activities.

It would be helpful if the Minister could give me an assurance that full studies will be made of the impact on employment in Great Britain before approval is given to any new projects in the Province. I believe that a second filament weaver, Hualon of Taiwan, is trying to secure IDB support. Large quantities of synthetic fibre are produced in my constituency, in Nelson, by William Reed Weaving, and next door in Padiham.

Above all, I want an assurance that the Government are alive to the many problems facing the textile industry, not just in Pendle and in Lancashire, but throughout the country. I want an assurance that they will intervene energetically to ensure that we are on a level playing field with our global competitors.

Photo of Hon. Tim Sainsbury Hon. Tim Sainsbury , Hove 2:47, 5 March 1993

I congratulate the hon. Member for Pendle (Mr. Prentice) on choosing a subject that I know is of great importance to his constituents, on the first occasion when he has been lucky enough to secure an Adjournment debate. I also congratulate him on getting through his speech so well, despite his voice difficulties—with the no doubt welcome support of the hon. Member for Lewisham, East (Mrs. Prentice). We would all like the same kind of support on occasion.

As the hon. Gentleman and the House will know, for centuries the textile industry has been a pillar of the industrial structure of Lancashire, making a tremendous contribution to the economy both locally and nationally. It was said in the 1950s that "Britain's bread hangs by Lancashire's thread". Lancashire is perceived by many as the cradle of the industrial revolution; it was the first area in the country—perhaps in the world—to become heavily industrialised.

Lancashire's textile industry thus became a foundation of the industrial revolution. The first cotton mill was built at Stalybridge in 1776. Throughout most of the 19th century, Lancashire's population and labour force rose at rates well above the national average; at its peak in 1912, 622,000 people were employed in the textile industry, and in 1951 1,750 cotton mills and finishing works were still in production in the textile belt of the north-west.

Of course, the advent of new technologies and stiff competition from overseas has caused the textile industry in Lancashire—and, indeed, throughout Britain—to contract considerably since its heyday. The 1970s saw substantial shrinkage, both in employment in the sector and in the number of firms. Synthetic fibres and cotton-synthetic mixtures, to which the hon. Gentleman referred, have replaced pure cotton in many uses.

The declining employment is, of course, partly due to increasing competition from imports, but I hope that the hon. Gentleman will agree that, to a large extent, it also reflects great increases in productivity as the industry has become more mechanised and the work force more highly skilled. Nationwide, output per employee in the textile industry rose by no less than 73 per cent. in the two decades between 1971 and 1990. There was considerable growth in the output of household textiles—one sector of the textile market—in the 1980s and, by 1988, the household textile market in Britain was worth more than £1 billion at the retail level, with much of the manufacturing concentrated in the north-west. The sector became a highly fashion-oriented industry, emphasising style and colour. The industry also developed the ability to respond more quickly to changes in consumer requirements: turnround times from order to delivery are now often measured in just a few days. Substantial investment has been made by the industry to achieve those changes.

In 1988, capital expenditure in the textiles and clothing sector in the north-west was more than £100 million—about 20 per cent. of total United Kingdom investment in the sector. Although the textile industry has declined in importance, the Government recognise that the industry continues to play a most important part in the economy of the north-west, especially of Lancashire. In 1989, some 83,000 people worked in the industry in the north-west —nearly 13 per cent. of the region's manufacturing employment. According to the 1990 census of production, output from the textile and clothing sector in the north-west was almost £1·2 billion, or 18·2 per cent. of the United Kingdom total. There is a strong concentration of employment in textiles and clothing in the east Lancashire and Manchester area, especially in parts of north-east Lancashire.

The industry, as the hon. Gentleman knows, faces stiff competition from far eastern producers and, increasingly, from producers around the Mediterranean rim. That competition must be expected to intensify as foreign producers become more efficient and more skilled at responding to market requirements. It is proposed that the successful conclusion of the Uruguay round of multilateral trade negotiations will entail the phasing out over 10 years of the multi-fibre arrangement, under which the United Kingdom and other developed country textile producers have had a measure of protection from imports from low-cost sources.

I firmly believe that the Uruguay round package, on the lines now being negotiated, will be strongly to the advantage of Britain. It will result in a massive stimulus to international trade. It will improve market access for our manufactured products to overseas markets in developed and developing countries, and our textile and clothing industries stand to benefit from the increased export opportunities that will result.

The gradual liberalisation of our domestic market as the MFA is phased out will bring benefits. Increasing exposure to international competition will provide British consumers with much improved choice and greater purchasing power through being able to buy goods from British or overseas suppliers that offer better value for money. The hon. Gentleman referred to the importance of textiles to families with a number of children; that is important to them as well. The increased purchasing power of overseas textile producers will result in increased purchasing opportunities for our exporters.

Throughout the negotiations, the Government have been in close touch with the industry and the Apparel, Knitting and Textiles Alliance. The message that we get from the industry is that although it feels that the proposed agreement is far from perfect, it acknowledges that it is the best on offer, and better than solutions that would not solve the problem of trade distortions. That is in line with the Government's view: the proposed settlement is the best compromise that we could hope for as it offers a constructive framework for an orderly integration of the industry into the GATT system.

I am very glad that so many of our textile and clothing companies have realised the importance of responding to international competition, not by calling for protection but by improving their performance in such key areas as value for money and quick response, improved quality and more emphasis on good design and marketing.

The textile industry is only one part of the whole United Kingdom manufacturing industry, and the Government have always fully recognised its importance. I hope that the hon. Gentleman will agree that productivity is as vital to the textile industry as it is to other parts of industry. Improvements in productivity, such as those achieved in the 1980s by British manufacturing industry when our productivity grew faster than that of any of our major competitors and increased by more than 50 per cent., are absolutely vital to its continued success. The encouragement of those improvements must be a key element of any policy that constitutes an industrial strategy.

It would be disastrous if the Government were to show that they recognised the importance of manufacturing industry by giving handouts to unsuccessful companies or through the nationalisation of businesses that failed. It is sad that the Opposition still appear to believe that such action would constitute an industrial strategy. Successful, efficient and productive businesses will succeed not only in the home market but in overseas markets.

Photo of Gordon Prentice Gordon Prentice , Pendle

Does the Minister accept that although productivity is important, the overall size of the industry is also critical? The textile industry is contracting to such an extent that we are losing the critical mass necessary for it to remain viable.

Photo of Hon. Tim Sainsbury Hon. Tim Sainsbury , Hove

I agree that the size of our industrial base is important across a range of industries, but we shall not have an expanding industry if it is not productive. That is the message I am trying to put across. It is the efficient industry which will have the opportunity not only to obtain a greater share of the home market but to make gains in export markets.

I should have liked to say more about exports, but I must respond briefly to what the hon. Gentleman said about Smith and Nephew. I understand why he wanted to comment on that particular firm. He mentioned the firm's recent decision not to close but to restructure by concentrating on supplying the high-tech medical textiles sector and to cease its denim weaving operations.

My Department has maintained links with Smith and Nephew for many years, and I visited the company myself on 22 August 1990. It showed me the difference between the medical textile sector, which is clearly a growth area and requires particular skills, and the denim weaving sector to which the hon. Gentleman referred. I am aware of and understand the concern to which the changes announced by the company have given rise in the hon. Gentleman's constituency. He has several times drawn attention to the consequences for employment there and elsewhere.

The difficult decision, sadly, means that a number of jobs will be lost, but ultimately commercial decisions by firms as to what will keep them competitive and efficient in the marketplace must be for them to make. There seemed to be a hint in what the hon. Gentleman said that he would have liked the Government to step in either with a hand out or to tell the company what to do. It is not what I regard—and I hope that it is not what he would regard —as a sensible move for the relations between Government and manufacturing industry. Commercial decisions have to be taken by the firms themselves. They have to bear in mind the constant need to maintain their competitiveness. Smith and Nephew's decision will mean that its position is more secure in the competitive market by concentrating on the more profitable part of its business.

The hon. Gentleman referred to unfair competition. I agree that we must continue to deal with it, wherever it is found. We must have effective measures for so doing, such as those against dumping or export subsidies. The draft GATT agreement to which I have already referred will continue to commit the European Community to take action in such cases. Indeed, the revisions to the GATT anti-dumping code proposed in the Uruguay round will tighten procedures and make them more transparent. Some of the new procedures envisaged, such as sampling, are already being practised by the Commission.

The hon. Gentleman also referred to the textile industry in Northern Ireland. I am aware that some companies in the United Kingdom textile industry have expressed concern about a recent decision by the Industrial Development Board for Northern Ireland to provide selective financial assistance to the Indonesian company Texmaco for a project to make micro-denier polyester fabrics. The companies are worried that the project could deflate output at other factories already operating in the United Kingdom. It is a matter for my right hon. and learned Friend the Secretary of State for Northern Ireland, but I can say that the Northern Ireland Industrial Development Board's assessment concluded that the company could achieve its forecast output primarily at the expense of imports rather than domestic production.

I end by repeating what I said earlier. The Government fully recognise the importance of the textile industry through the textiles and retail division in my Department. We keep in close and continuous contact with the industry and will continue to work with it to help it become more efficient, more productive and, therefore, more successful.

Question put and agreed to.

Adjourned accordingly at Three o'clock.