Textile Industry

Part of the debate – in Westminster Hall at 4:26 pm on 21 October 2009.

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Photo of Ian Lucas Ian Lucas Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Business and Regulatory Reform) 4:26, 21 October 2009

It is a pleasure to appear before you for the first time as a Minister, Mr. Gale. I congratulate Mr. Moore on securing the debate. I would like to start by apologising formally to him for the delay in writing to Mr. Pasternak following the meeting we had in the summer; that was quite unacceptable. I was unaware that he had not been written to before, so I am sorry that the letter arrived with him only last week.

The hon. Gentleman is a strong and powerful advocate for the textile industry, and I know the area he represents very well. He has eloquently set out the importance of the industry to his constituency. Of course, the textile industry is an important part of Britain's manufacturing base. I fully take on board its importance and fully recognise that times are very tough for it indeed, as they are for most industries at present. As with all industries, textile manufacturing in the UK is reinventing itself, and the hon. Gentleman referred to the innovation of the textile industry in his constituency and the way it has been able to change, developing from a cottage industry at its inception hundreds of years ago and through the industrial revolution of the 19th and 20th centuries, which saw a massive textile industry develop in the UK as a whole.

Although the industry has of course reduced in size in recent years as intense competition from Asia has hit it hard, it has, as he described, moved up the value chain and specialised in high-quality, niche products or high-tech "technical textiles". That is a journey that most UK sectors in the globalised economy have made, moving up the chain and focusing on quality. That change is vital to the textile industry's continued competitiveness. While the sector is not as big as it once was, I fully accept that it is an important part of the UK's manufacturing base.

For the Government and for me personally, manufacturing is extremely important. We are still the sixth largest manufacturing country in the world. Manufacturing employs 3 million people directly in this country, contributes £150 billion to the economy and accounts for half of Britain's exports. It is responsible for 75 per cent. of our business research and development. The textile industry is part of that industry and deserves Government support. Of course, economic development in Scotland is a devolved issue, and I understand that the hon. Gentleman and representatives of the industry in Scotland have ongoing contact with Scottish Ministers as well. I believe that John Swinney, the Cabinet Secretary for Finance and Sustainable Growth, will be attending the Scottish textiles annual conference tomorrow.

The Scottish Government offer a wide range of support to the textiles industry through Scottish Enterprise, Highlands and Islands Enterprise, Scottish Development International and Skills Development Scotland. It includes innovation and investment grants such as regional selective assistance grants and the Scottish Manufacturing Advisory Service, a resource that has recently been enhanced significantly to ensure timely and specific company support for all manufacturing businesses, including those in the textiles sector.

Those companies availing themselves of the Manufacturing Advisory Service, which has a track record of providing practical advice to improve capabilities, efficiency and productivity, report real benefits from the process. Indeed, Peter Scott & Co. Ltd, which is run by Mr. Ken Pasternak, to whom we have referred, is one of the companies that has benefited from Scottish MAS advice. I understand that after receiving advice, on-time delivery improved from 52 per cent. to 91 per cent. in just three months.

The Scottish Enterprise textiles team is working closely with the industry through the National Textiles Forum and the industry steering group on a programme of activity to support the textiles industry through these challenging times. More widely, manufacturing will play a key part in helping us to rebuild growth across the UK. That is why we have specific help in place for the manufacturing sector. Our manufacturing strategy brings together £150 million of support in the medium term, and will help business to access increased skills and technology support, and to be successful in entering new and emerging markets.

I am conscious that many textiles companies are relatively small businesses. It is vital that small and medium-sized enterprises are helped during a period of economic downturn, as their survival in the current economic climate will be crucial to maintaining employment and economic activity in the short term, and to providing growth as we look towards recovery.

Co-ordinated action is being taken by all relevant Government Departments and agencies in providing real help for business now. Some of the different measures that the Government have introduced include securing legal commitments that will ensure that over the 12 months from March 2009, the Royal Bank of Scotland and Lloyds will lend, on a commercial basis and subject to demand, an extra £27 billion to businesses. Barclays and HSBC have made an additional £6.5 billion of business lending commitments, and an enterprise finance guarantee scheme that will secure up to £1.3 billion of additional bank loans to small firms with a turnover of up to £25 million has also been introduced. So far, £880 million-worth of eligible applications from more than 7,700 firms have either been granted or are being processed or assessed.

The Government have also introduced a £75 million capital for enterprise fund-£50 million directly from the Government, which is augmented by £25 million from the banks-to invest in small businesses that need equity. So far, fund managers have made offers totalling more than £56.4 million to 37 businesses.

Yesterday, the UK Export Credit Guarantee Department launched a letter-of-credit guarantee scheme to assist UK exporters by boosting the availability of short-term export finance. The new scheme should provide further help to UK exporters, particularly smaller companies that export to emerging markets, which is where letters of credit are most used and where new opportunities can be found.

Over the past year, we have also been working to give help to business to ensure that the UK's productive base comes through the recession. We are focused on how we can rebuild growth and are looking at our strengths and capabilities to determine how we can position ourselves to grow in the long term. The central remit of the Department for Business, Innovation and Skills is to invest in growth and to help build for the future. Earlier in the year, we published our strategy in "New Industry, New Jobs", which builds on new ideas to ensure that SMEs are able to grow when the upturn comes, and makes the case for continued investment in innovation and new technologies.

Turning to the specific points raised by the hon. Member for Berwickshire, Roxburgh and Selkirk, I represent a manufacturing constituency myself, and many SMEs in my constituency have been encountering the kind of difficulty that he described. I am well aware of the disappointment, to put it mildly, that is felt in many parts of business and by many individual company and business owners at the attitude of the banks and the line they have been taking.

The Department has a "help for business" team, which has been dealing with many cases that MPs have brought forward. The team has worked with banks to try to resolve particular difficulties relating to specific companies. I availed myself of the service before I became a Minister and have done so since. I have found that its efforts have been greatly valued by many of the companies that approached the Department. If the hon. Gentleman is aware of any companies that wish to avail themselves of the service, he should by all means bring them forward, and the Department will do its best in those individual cases to make contact with the banks and try to take matters forward.

I am grateful to the hon. Gentleman for the point that he made about energy companies, the deposit scheme and up-front payments. The issue had not been brought to my attention before, but I am concerned by what he said. I shall go straight back to the Department and look into it, liaise with other Ministers who may be aware of it and see what the regulator has to say about it. The matter does cause me concern, and I am grateful to him for raising it.

On Skillfast, I am afraid that I cannot give the hon. Gentleman further information. Unfortunately, he received the letter from me only recently, as I said earlier. The Government have not at this stage reached a decision on whether Skillfast should be offered a new licence to continue as a sector skills council, but I expect that Ministers will reach a decision soon.

I have again taken on board the country-of-origin point that the hon. Gentleman raised, which has often been raised in this House in many different contexts. Of course, because of the particular value and style of the products we are discussing-textiles, particularly Scottish textiles-this is an important issue, and I assure him that I will do all I can to take the matter forward. It is extremely important that a distinctive and great British product such as Scottish textiles should be protected fully and should not be undermined by the country-of-origin problems or passing off that he described.

I am grateful to the hon. Gentleman for putting his case to me and for securing this debate. He raised several issues, some of which I shall investigate further because they affect businesses not just in his constituency but right across the country. I am determined to do all I can in my role to assist particular businesses and sectors. I assure him that I regard the Scottish textile industry, which is so firmly based in the borders, as an innovative industry with a great product. It is an industry that exports around the world and an industry for the future, and the Government are determined to do what they can to continue to support it.