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Textile Industry

Volume 498: debated on Wednesday 26 March 1952

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3.32 p.m.

Last week 26 Maltese textile workers and a number of other European textile workers left this country to return to their own countries, to face, in many cases, a future of hardship and uncertainty. They went because they had become redundant in the textile industries of this country. Perhaps, nothing could symbolise better than that simple fact the change in the textile industries which has taken place in the past five years.

Five years ago many of us in the House were stumping Lancashire recruiting workers for the cotton textile industry, but those days of shortage of manpower have gone, and in the past few months the skies have darkened for hundreds of thousands of workers in the textile industries, not only in Lancashire but in all parts of this country. In the past few weeks groups of hon. Members on both sides of the House have been to see the Minister of Labour and the President of the Board of Trade to discuss the slump which has hit the textile industries with unparalleled suddenness.

I want to say that the Ministers have been most helpful. We have had a number of discussions, and I hope that both sides have benefited from the interchange of views which has taken place. But the situation has been deteriorating so rapidly that the Opposition felt that it was desirable to bring this matter on to the Floor of the House, so that hon. Members might have a chance of drawing the attention of the House to the plight of all our textile industries: for this is not a problem which affects only Lancashire or only the cotton industry but applies to many parts of the United Kingdom, and I hope that hon. Members will be able today to put the case for wool, rayon, silk, hosiery, carpets, and all sections of the textile industry.

I do not think that even with the greatest stretch of imagination pottery could be included in the textile industries, but, no doubt, my hon. Friend will have an opportunity later, in the small hours of the morning, of raising the question which, I know, is of the greatest importance to him.

Mr. Lewis Wright, well known to many of us in the House, and President of Weavers' Amalgamation, announced on Monday that he believed that this week in Lancashire there would be 70,000 cotton workers wholly or partially unemployed—that is, between a quarter and a fifth of the total labour force in the industry; and he added that unless the rot were stopped 200,000 would be unemployed by the summer.

In Rochdale this week 26 mills are on short time. In the Oldham area 12 mills are completely closed and 62 mills, the remainder of the number in that area, are working only three or four days during the week. In the Rossendale Valley and Ramsbottom mills which remained open throughout the worst days of the slump in the 1930's are now closing.

In Bacup, two out of every three cotton workers have experienced partial or complete unemployment at some time since Christmas. In Haslingden every one of the 28 mills has had stoppages of various degrees of seriousness since the turn of the year. It is feared in Lancashire that almost the whole industry will close down for 10 days at Easter.

In those circumstances it is not surprising that last Friday the representatives of 300,000 textile workers in Lancashire met together and called for Government action, or that on Saturday delegates from a million workers in Lancashire warned the Government of the consequences of any return to pre-war conditions in the textile industry.

The truth of the matter is—and I think that we must face up to this on both sides of the House—that we have been caught up in a world slump in textiles which is affecting every textile producing country. In the United States there is severe unemployment in the New England mill towns, and some mills have reduced their production by 50 per cent. In Canada for some months the mills have been working short time.

In the last three months of 1951 the textile crisis hit France, Holland, Belgium, and other textile producing countries in North-West Europe. In India production has been cut. In Japan the Government have recommended that production should be cut by 40 per cent., and already a cut of 30 per cent. has been effected. Indeed, one of the most alarming features for the people of Lancashire is the fact that this recession has come upon us at a time when Japanese competition has not yet made itself fully felt.

What the reasons for this recession are are not, I think, completely clear, but there are some features of the situation which, I think, are outstanding. One of these reasons was discussed in the United Nations Economic Survey of Europe for 1951. We are told in that that rising prices after Korea produced a buyers' spree in the early months of last year, but that did not last because people throughout the world waited for prices to fall. Retailers were unable to sell their stocks, and the order books began to feel the effect.

I think it is true to say that until world prices are stabilised the situation will remain as bearish as it is at present. It may take some little time to get a proper stabilisation of raw material prices, but I should like to see Her Majesty's Government taking action along international lines to see whether it would not be possible to stabilise the prices of raw materials used in our textile industries. That may take some time, but in the meantime there are other steps which I believe Her Majesty's Government should be able to take.

The first point I wish to put to the right hon. Gentleman is one which has been widely canvassed on both sides of the textile industry, and there is a most cogent letter in "The Times" today from Mr. Beddington Behrens on the same subject. What Lancashire wants to know is whether it would not be possible to expedite the placing of defence contracts with the cotton industry instead of doing it slowly and piecemeal as at present.

If only that step could be taken, I believe that it would go a long way towards getting the industry through the difficulties it is facing at the moment. I make this further plea to the right hon. Gentleman: if it is possible to help the industry in this way, priority should be given to those areas where virtually no alternative employment but cotton now exists.

During the past few years we have become so export-minded that we have tended to lose sight of the fact that over the last three years 75 per cent. of the total output of the cotton industry has been going to the home market. That means that the level of internal demand and purchasing power is a major factor in determining whether we have a high or low level of employment in the textile industries.

Perhaps at this stage I become just a little bit controversial, but it does seem to many of us on this side of the House that many of the things the Government are doing have the effect of cutting down effective demand; the present tendency is to inflate prices and to deflate purchasing power.

Last Tuesday, the day after the Chancellor of the Exchequer had wound up his "incentive Budget" debate, the President of the Board of Trade addressed the Drapers Chamber of Trade and told them:
"The problem today is not so much one of producing goods. The problem is to sell them."
He went on to add:
"I cannot whip the public into the shops or cajole them into buying."
I think we all welcome the very modest conception the right hon. Gentleman has of his responsibilities. It is true that he cannot force the public, but he can at any rate do something to make it easier for the trade to sell and easier for the public to buy. I do not think he is doing that, and I do not think the Government are doing that, because the more people have to pay for their food, fares, rent and rates, the less they have for buying clothing and household textiles. On top of that is the fact that the rising costs of fuel and transport, and the very doubtful Excess Profits Levy, are placing new burdens on the industry.

I do not think—and perhaps by this time the right hon. Gentleman agrees with me—that the D scheme has helped very substantially towards solving the problems of the industry. It had a very cold reception indeed from both sides of the industry. I do not want to go into the technical objections which have been advanced, and which the President of the Board of Trade knows much better than I do, but I do want to make this very simple point. The effect of the new scheme has been to bring an increased number of textile goods into the range of taxation, and it surely a little ironical that a tax which was originally intended to be a counter-inflationary device to restrict consumption should be still applied, and even extended in its sphere, at the time when, in fact, the completely opposite tendency is in operation.

I urge very seriously upon the right hon. Gentleman that he should consider raising the D level very considerably indeed. Perhaps, if only as a temporary expedient, he might go so far as to advise the Chancellor to remove textiles from Purchase Tax liability altogether until the pipeline is cleared. The really important thing at the moment is to get those high-priced goods out of the pipeline, which are clogging it at the moment. Unless the right hon. Gentleman is successful in doing that, there is a danger of bankruptcies in the industry, a danger of growing unemployment and, perhaps most important of all, a danger of a dispersal of the labour force which has been built up with so much difficulty.

I was glad to see that Mr. Hasty, President of the Master Cotton Spinners' Federation, yesterday urged the importance of keeping in the industry those skilled craftsmen and skilled women who have done so much to contribute to the greatness of our industry, because if those people leave the industry we shall not get them back again. There is another effect, too, and that is that if there is this uncertainty in the industry we shall not get the school-leavers coming in, and the average age of the cotton industry today is probably the highest of any industry in the country.

Perhaps I might now turn to what I conceive as being the long-term causes of our recession. I think that they have an even greater significance for the industry than the ones to which I have referred. They relate, of course, to the restriction of the overseas markets which are available to us. The principal cause of that is the development of textile industries in other countries. It is no good our closing our eyes to the fact that today other countries are producing textile products on a colossal scale.

Every textile producing country in Europe, with the exception of Austria and Czechoslovakia, has increased its total production of all kinds of textiles more than we have done in this country. In some areas there has been an increase of over 100 per cent. compared with before the war. What does that mean? It means two things. It means, in the first place, that those industries are able to satisfy the home demands of their own countries. But it means, too, that in many cases there is a surplus left over for export in competition with the goods which we are producing.

The same situation has developed outside Europe as well. In spite of the temporary recession in Japan, she has met with a fair amount of success in entering once again the African market. In Pakistan she has taken our place as the chief producer of textile goods. Nor do I think we should forget the Yoshida-Dulles Agreement, which was not only a grave diplomatic rebuff for this country, but was a step which may, in the long run, have a disastrous effect upon this country's economic structure.

India, too, has expanded her textile output enormously; new mills are being set up, and she is establishing her own textile machinery industry with the advice of British firms. I do not think that any one of us would begrudge anything that India can do to solve the tremendous problem of poverty that she has to face, and she is making progress. The amount of raw cotton which India will consume this year is twice as much as the average consumption of raw cotton in this country over the last three years. That is an indication of the enormous extent to which India has entered into the cotton markets of the world.

At the same time British companies, with British skill, British experience and British traditions, are starting textile industries in other countries. Lancashire firms are building mills in the cotton fields of Africa. The British Celanese Company, while it is paying off workers in this country, is creating a mill in Colombia, and so it goes on.

In those circumstances, with this enormous growth of competition with this country, it is difficult to see how our textile industries have been helped by the Commonwealth finance talks which the Government were hailing so recently as such a tremendous triumph of Empire co-operation. On the contrary, they seem to have aggravated our difficulties.

I have no wish, and I am sure that my hon. Friends have no wish, to criticise our good friends in any of the Dominions or to underestimate the difficulties they are having to face. I confess that I feel less inhibited about criticising our own Government. It is difficult to believe that when the Chancellor of the Exchequer took part in these talks he presented the case for British industry and British trade with that clarity which we normally expect of him. At the close of the Budget debate, the Chancellor used these words:
"When the right hon. Gentleman the Member for Bishop Auckland asks if there was any understanding that one sterling area country could cut imports from another, I say definitely, no. All aspects of this matter were considered, but we had no idea that that would necessarily develop as a result of our conference. …"—[OFFICIAL REPORT, 17th March, 1952; Vol. 497, c. 2057.]
It is difficult to believe that the talks could have been carried out under conditions of that kind, and it seems, reading between the lines in the Budget debate, that the announcement of the Australian cuts was to the Chancellor as much a surprise as the Yoshida—Dulles agreement was to the Foreign Secretary a few weeks before. There may, of course, have been some misunderstanding on the part of Australia. Whatever the cause, there is a heavy responsibility resting upon the President of the Board of Trade and his colleagues to secure some further alleviation of the damage which the cuts will do to our export trade and particularly to our textile industries. The effects of the Australian cuts on Lancashire alone will be a loss of £26 million during the year.

That is only part of the picture. The figures given in the "Economist" last Saturday show that the effect will be much more serious if all our textiles industries are taken into account. We may well lose £85 million of trade in Australia, £10 million in New Zealand and a further £10 million in South Africa. That is a total of more than £100 million of export trade in the textile industries—one-fifth of our total textile exports last year and probably one-quarter of the amount we reasonably expected to export this year.

Surely the President of the Board of Trade now thinks that it is urgent to discuss with the various Dominion Governments something more than the administrative details which he told us in this House the other day he was prepared to discuss. This is really a matter of life or death to many firms in various sections of the textile industry.

In the Budget debate on 13th March I do not think that the President of the Board of Trade was a very happy man. Earlier the same afternoon, he had been asked about the proposals which he was going to make for mitigating the effect of the Commonwealth Finance Ministers' Conference. What did he say? In reply to my hon. Friend the Member for Burnley (Mr. Burke) he agreed very frankly about the extent of the damage to the Lancashire textile industry, and went on to say:
"I am confident that the cotton industry will do its utmost to offset the effect of these restrictions by increasing their exports to other markets. …"—[OFFICIAL REPORT, 13th March, 1952; Vol. 497, c. 1557.]
Marie Antoinette and the cake were nothing compared with the President of the Board of Trade and the export trade. In what markets will the textile industry be able to expand? Incidentally, I think it is a very great pity that we should have closed the Government-sponsored British Export Trade Research Organisation at the time when its help was most urgently required. Where are the markets to which the President of the Board of Trade is to send our goods? Lancashire, Yorkshire and the other textile areas are wanting to know.

The President told us the other day that he was in constant contact with the Cotton Board on this subject. What was the result of that contact, and will he tell us today what advice the Cotton Board have given to him, and what hopes they can hold out of being able to expand into other markets from those which we have at present? Perhaps the right hon. Gentleman is contemplating that we can sell more cotton goods in the North American market. We have been trying to do that for the past five years, and we have met with only moderate success. Unless the right hon. Gentleman works a miracle, I do not think that there is much chance of persuading the Americans to cut the tariffs on textiles which we want to send into the North American market.

The right hon. Gentleman no doubt noticed on Monday a suggestion in the "Manchester Guardian" that Canada will be increasing her tariffs to keep out textiles from other parts of the world. That will be another serious blow to our export trade. Perhaps the President has the South American market in mind, and maybe there is more hope of success there than in other parts of the American continent.

We are shortly embarking on negotiations with the Argentine for the supply of meat. They want to sell their meat, and we want to sell our wool and textiles. Does the right hon. Gentleman intend to see, in the course of these negotiations, that the claims of our textile industries are not once again overlooked?

It may be that the President, too, has his mind centred on East-West trade. We know that the Secretary for Overseas Trade has been taking part in discussions in Geneva on this very problem, and it may be that the President will tell us what impressions he has formed as a result of these discussions, and what prospects he can hold out of selling our textiles behind the Iron Curtain.

There is another considerable outlet for our exports and that is provided by those backward areas which will benefit from an enthusiastic application of the Colombo Plan. I believe that certain aspects of that plan are shortly to be discussed in Karachi. It has been suggested in various sections of the trade Press that perhaps it would be a good thing for the Japanese textile industry to be able to expand into South-East Asia, and some such expansion may be necessary, but will the President of the Board of Trade assure us, when he speaks later, that he will see that the interests of the United Kingdom are protected during these discussions?

When discussing the backward areas, will the hon. Member remember that they are already heavily over-stocked, without exception, with textiles which cannot be absorbed at the present time?

I do not think that that is strictly relevant. The reason that they cannot be absorbed is because of the lack of purchasing power in those countries. If we had an effective application of the Colombo Plan it would automatically result in an increase of purchasing power in those countries.

If the Government cannot give us encouraging news on these points, perhaps they will tell us what their views are on the future of the cotton and rayon industry. Already, the number engaged in the industry and its total output are only a fraction of what they were before the First World War. We want to know whether that shrinkage will continue. Do the Government believe that the time has come when we should begin to concentrate our industry, let our labour force run down, and plan our output on the basis of potential long-term demand?

These are points which strike at the very root of the problem and which the President cannot afford to neglect in his discussions with the textile industry, because so long as there is uncertainty about the future he will have skilled labour drifting away and young labour refusing to come in. The Minister of Labour has said on this point that it is not the intention of the Government to run down the cotton industry and to create unemployment in order to man the arms industry.

All of us gladly accept the assurance of the right hon. and learned Gentleman on that point. At the same time, a serious problem does arise. In some areas there is a most unhealthy lack of industrial balance. Figures which I obtained yesterday from the Ministry of Labour through the research department in the Library show that in Haslingden and Nelson 66.5 per cent. and 67.5 per cent. respectively of the working population are engaged in the cotton industry.

Whole villages in North-East Lancashire are virtually dependent upon the prosperity of a single mill engaged in cotton. In whole areas there is virtually no alternative employment open to the people, and unemployment in those districts, however it is caused, is a terrible infliction, as thousands of people learnt in the depression of the 1930's.

Those areas need new industries, and I hope that the President of the Board of Trade will give us an assurance not only that the Government will place no obstacles in the way of new industries going to those areas, but, also, that he will go further and actively encourage alternative industries to go to the textile areas where a danger of redundancy exists.

In conclusion, I hope—and I hope with all my heart—that I have not stated the position and the problems of the industry in exaggerated terms. We do not want defeatism and we do not want empty optimism. It is a time when the textile industries and their representatives in this House need both clear heads and stout hearts.

I believe that the industry is today looking to this House for a lead, and we are certainly hoping to hear from the President of the Board of Trade what policy Her Majesty's Government intend to pursue. Surely all of us are united in wishing for the prosperity of these vital industries and of the men and women who labour in them. I pray that they and we may not be disappointed today.

4.2 p.m.

I welcome this debate. I think that it will be all the more useful for the speech by the hon. Member for Rossendale (Mr. Anthony Greenwood), which was a reasoned and balanced speech upon a serious subject. If I can, I certainly hope to keep the debate upon the level on which it has been started.

It is, after all, the task and responsibility of the House of Commons to draw attention to whatever happens to be the storm centre of the moment, and no one would have any doubt that many of our problems today are focused upon the textile industries which we now have an opportunity of discussing. I suppose that from a Governmental point of view no moment is ever ideal for a debate, for some plans have not yet reached fruition and others are still under discussion, and, in a sense, a debate can only photograph an industry at a certain moment in time.

Nevertheless, this debate is well timed. It comes at a critical moment in the fortunes of the textile industry, and hon. Members on all sides of the House will have an opportunity of elaborating freely and frankly on this problem as they see it both nationally and in their own constituencies.

Textile policy covers a vast field, and I cannot cover the whole of it, but I can set out the facts as I see them, I can give some account of the actions which have already been taken, and I can say something of the problems—there are many of them—that still remain to be faced. I do not seek to—nor could I—give all the solutions to the many problems of the textile industry. As the hon. Gentleman very fairly stated, some are indeed imperfectly within the control of any Government—but I can indicate the scope of the discussions which are taking place and our general approach to the matter.

Many hon. Members are well versed in the background to these problems and the turbulent history of these industries. They have brought much in the way of riches to this country and also, very often, much in the way of poverty. They still retain a great deal of the fierce individualism which inspired them in their early days. Twice, at any rate, the cotton industry has been the stage of a great struggle in world trade. Once was in the 1770's when Hargreaves, Arkwright and Crompton invented the spinning jenny, the power spinning frame and the mule, and enabled this country to sweep into and dominate the markets of the world, until, in 1913, our cotton exports reached the great total of no fewer than 7,000 million yards.

The second stage of that struggle, with the cheap labour of Japan and the rise of domestic industries in other countries, to which the hon. Gentleman referred, reversed in two or three decades the advantage which we had won and held for 150 years. I only want to say about that that the history of those events is not simply recorded in the dry statistics of the Trade and Navigation Accounts, but is written deeply in the hearts and homes of many families in Lancashire, and it is right that we should bear that in our minds when we deal with this problem today.

I now turn to the situation as it has developed. During the last war these industries were concentrated so that the maximum use could be made of the labour and the limited materials which were available. Many whose normal occupation was the manufacture of textiles turned to the sterner tasks which the national need at that time demanded. When peace came, the textile industries flung themselves with enthusiasm into the job of rebuilding the economy. Hon. Members on all sides will remember the efforts which were made to collect again the labour force of the textile industry and to attract women and girls back into the mills.

There was an immense opening. The world was hungry for goods which it had been denied for many years, and it was a world from which Japanese and European competition was still virtually absent. It is worth recalling that the men who faced those difficulties and seized those opportunities are the men who are facing the problems in the textile areas today which the hon. Gentleman so fairly described. We owe them a lot.

And the women.

The picture of a post-war boom which I have been describing has now changed. There is today a world-wide recession in the textile and clothing industries, and the United Kingdom is sharing in that recession. It is to be emphasised, as the hon. Gentleman very fairly emphasised it, that this is a world-wide problem. Japan is hit. America is hit. Japan has cut back her production. There is unemployment in the textile industries in America. As the "Manchester Guardian" put it this morning:
"There is no easy Socialist solution; there is no easy capitalist one."
That is the simple truth of the situation which confronts us.

The recession might have started earlier but for certain events, on which I should just like to touch. The House will remember that early in 1951 America started buying heavily for the stockpile, in particular wool. Wool prices soared. The price level of the wool clip in Australia rocketed and reached record figures. The purchasing power thus injected, and injected particularly into the Australian economy, provide a last-minute artificial stimulus to the post-war boom.

By March, 1951, the public all over the world, with the thought of Korea in their minds, were buying feverishly, with the fear of war-time shortages and of still higher prices ever present to them. During the same period there was the same intense demand not only for wool but for cotton and for rayon. By the early summer of last year, the world market was saturated with wool textiles, and by the autumn the trade recession had spread to cotton and to rayon. Buyers had stocked up and were holding off in expectation of even lower prices in a falling market. These events were taking place not only in our economy but throughout the economies of many other countries.

That was the situation which confronted me when I assumed my responsibilities at the Board of Trade. I want to describe some of the steps which I then took and proceeded to take in the months that followed, not because they were of any major importance or were decisive in their effect, but because I think it is right to follow this story out in chronological order.

The first problem that confronted me concerned the purchase of the raw materials of the cotton industry. It is of very great importance that a manufacturing industry should be able to obtain its raw materials on terms at least as favourable as those of its principal competitors. It can be, or might be, possible on a sellers' market to sustain some handicap of this character at the start. A multitude of handicaps can be obscured upon a sellers' market, but when the sellers' market turns into a buyers' market, handicaps of this kind become of paramount importance. This view, I notice, is shared by hon. Members of the Liberal Party, who have upon the Order Paper a Motion connected with this matter.

I am not discussing its merits.

The problem which confronted us was not made any simpler by the shortage of dollars, which restricted then and still restricts the amount of cotton that we can buy from the United States. The House will remember that the Minister of Materials and I appointed a committee under Sir Richard Hopkins, with the terms of reference that they were to consider and report to us how, in the current foreign exchange position,
"cotton could best be supplied to the United Kingdom cotton industry on the most advantageous terms as to quality and price."
I am pleased to say that the committee have tackled this job with great energy. They have made considerable progress, and I hope to receive and to publish their report quite shortly. I think the House will wish to take an opportunity, when it has the report in its hands, for a discussion of what is one of the most important aspects of this matter.

The second problem that confronted me concerned prices. The House will observe that I am dealing with these matters in the order in which they occurred. I am now talking of November of last year. It became apparent to me then that price control upon a falling market was contributing to some extent to the set-back in the textile and clothing industries. Goods manufactured from high-cost materials were held in stock. They could obtain few purchasers. Goods made from low-cost material were banked up behind them. Traders were being permitted to charge for utility goods only cost, plus a permitted margin of profit. There was no power to average between low-cost-material goods and high-cost-material goods. For some considerable period, complaints had been made that these arrangements constituted a block at what I might call the "exit" end of the industry.

In those circumstances, I gave instructions that the averaging of prices should be permitted. Although events have marched beyond this stage, it is worth while stating for the record that the size of the operation involved in giving even that measure of liberty to the traders required no fewer than 22 Orders dealing with the utility maximum price system and 303 pages of Orders, with their schedules—I understand that this time they were not related but were unrelated schedules. So complex was the machinery that had grown up that it took three months for the calculations of the new prices and the printing of them to take place, to do the simple job of enabling traders to average prices.

If I am asked why I did not then scrap the lot, the answer is that the whole of the machinery was inextricably bound up with the old utility scheme, many of the specifications of which were based on price control. Price control had therefore to be continued until an opportunity could be taken of dealing with the old utility scheme. These events impressed very clearly upon my mind the need to cut through this administrative tangle at the earliest possible opportunity, quite apart from what was told me in Lancashire and Yorkshire, and to which I shall come in a moment.

Shortly after this decision, I had an opportunity of visiting some of the textile areas in those two counties, and of discussing on the spot what, at that time, they considered to be the main problems confronting them. I do not propose to discuss at great length the D scheme—I am not in any way inhibiting other hon. Members—on which we have already had quite a long discussion during the Budget debates. We shall have further opportunities of dealing both with the D scheme, and with the Purchase Tax generally connected with it, in the course of the Finance Bill, particularly on the Committee stage.

However, it would be right for me to say that when these problems were being discussed, the greatest possible stress was laid on getting rid of the rigidities and frustrations of the old utility scheme. This step was held out to me by both sides of the cotton and woollen industries, by trade unions as well as by employers, as the one step which the Government could take to assist the textile industries. Indeed, it was impressed upon me that the matter was one of such urgency that it really could not wait for what, at that time, would be the ordinary date of the Budget, April of this year.

Could the right hon. Gentleman, in his enlightening of the House, now change from the passive voice to the active voice and tell us who made the statement? Many of us have received a very different impression of what took place.

The statement was made by many people. It was impressed upon me by the Wool Textile Delegation, by the Cotton Board, on which there are representatives from both sides of the industry, who were united on this matter, and by the Rayon Federation. It was put to me, not as a matter that would brook delay but as one of great urgency.

I believe that the arguments advanced at that time were well founded. Certainly, no alternative solution has been seriously put forward or seriously argued inside or outside the House of Commons that I have heard. It would be a pity if anyone at this stage tried to turn what is an essential reform of the old utility scheme into a scapegoat for the far wider and deeper problems confronting the textile industry at the present time.

I have mentioned these matters because it is right that the House should understand the order in which these problems presented themselves. Having said that, I want to repeat something which I said in the North three months ago. I said then that even if the Government did everything that was asked of them; even suppose they did all they should about averaging prices, about dealing with the problems of the old utility scheme; even if they improved the existing methods of buying cotton, there would be a vast range of problems of immense complexity confronting the textile industries which, if they were to be solved, would have to be grappled with not only by the Government but by the branches of the industry themselves.

Indeed, it seems to me that in some sense the matters of which I have been speaking so far, and which I was discussing with those people, important though they are, are marginal to the main problems confronting the industry. If they were left alone and unsolved and allowed to accumulate, they would do great damage to the industry, but even their solution, if it be possible, leaves many matters for further and urgent consideration. I therefore turn to the situation as I see it now.

As the hon. Member for Rossendale very fairly said, unemployment has been growing in the textile towns. I am anxious neither to overstate nor to understate the size of the problem which that creates. The fact is that in the textile industries unemployment, measured statistically, amounts to some 5 per cent. compared with rather less than 2 per cent. for industry as a whole. But in saying this, let me add that in my judgment and that of my right hon. and learned Friend the Minister of Labour, the figures, on the whole, probably tend to understate rather than to overstate the problem. Probably there is more short-time working than is disclosed in these figures and some married women are not included—to take two examples of the way in which figures do not necessarily give a perfect picture of what is happening.

Moreover, it is not possible to treat of the textile industry as a single whole. All these statistics inevitably cloak wide differences between one town and another and between one area and another. Again, to give but one example, unemployment is often clearly worse where there is very little diversification or other industries to go to.

These, then, are the problems that confront us: a world-wide decline in demand, the emergence of a buyers' market, the problems of competitive efficiency and an increase in unemployment. And these are the problems on which we are now engaged. For example, I had arranged some time ago for further detailed discussions to take place between the Cotton Board and myself upon these matters. I do not intend, nor would it be right, to state in advance of these discussions what precisely I consider all the answers should be. However, I can state our general approach to some of the problems which must be raised.

I do not think that I should be avoiding the responsibility of Government if I said that a large measure of responsibility for future action must inevitably rest upon the shoulders of industry itself. It is not part of the duties of Government to outline in detail the managerial and technical problems concerned with increased productivity. There is a mass of papers and blueprints upon that subject, but the truth is that if Yorkshire and Lancashire textiles are to hold or gain foreign markets—and I do not underestimate the problem which the hon. Gentleman put—they must make the most efficient use of all their resources, of labour, management and equipment.

We should be quite clear about the size of the problem which faces us. The Australian cuts are very present in our minds but, in a sense, they are only one example of what is a much wider problem, about which I will say a word in a moment. Since the hon. Gentleman referred to them, let me say this about the Australian cuts: it seems to me that where there are two Governments, one of which feels that it must take upon itself the unenviable task of cutting imports, and the other of which has the unenviable role of having the cuts imposed upon it, both Governments inevitably come under attack. The worst thing that could happen would be for Canberra and London to start trying to blame each other. Whatever our difficulties, it is worth remembering that, in the last resort, we face a common problem.

May I say, in answer to what the hon. Gentleman said, that, for our part, we have always made it demonstrably clear that we wished, if it were in any way possible, for Commonwealth countries to avoid cutting imports and exports between each other. Equally, the size of the problem which confronted the Australian Government is demonstrably plain. We have drawn their attention not only to details but, in the clearest possible terms, to the impact of their action upon the consumer industries of this country. We shall, of course, follow up that broad approach with detailed instances which are drawn to our attention by individual firms or industries affected.

The action of the Australian Government was a cut imposed by one country in an emergency. What we have to face also is the action of many Governments all over the world. The hon. Gentleman put this point to me very fairly. During the time I have been at the Board of Trade I have had an opportunity of studying what has happened to some of the old-established traditional markets of the textile industry. For example, in 1938 we exported 98 million square yards of cotton piece goods and 12 million square yards of wool piece goods to Argentina. In 1951 we sent less than 1 million square yards of cotton and 0.1 million square yards of wool.

I will not weary the House with lots of figures, but hon. Members who know this field well will bear me out when I say that the same kind of picture can be repeated in one traditional market after another throughout the world. Let us, therefore, be under no illusions as to the difficulties of breaking down these obstacles to trade imposed by foreign countries.

Since I have been at the Board of Trade I have given instructions—I gave them soon after my arrival—that the highest consideration should be given in all our trade negotiations to the problem of seeking to open out in any way possible markets for the textile industry. I might add that it should be remembered by those who sometimes urge us to restrict first this import and then that, on the grounds that in a very tight emergency they are not absolutely essential to bare existence, that if we do cut other people's imports they are very liable to cut ours, and they are very liable to cut British textiles, particularly the high grade British textiles in which this country excels.

However strenuous any British Government might be in these matters, the fact remains that we shall face very considerable difficulties in these restrictions. We are a long way from the days when we used to make piece goods for Brazil, India, China and the Far East, buying their raw materials and manufacturing these articles here. These countries manufacture their own. Indeed, one of the great problems which confront us is not so much competition from third parties, but that the country to which we have been exporting has itself set up its own textile industry and is prepared to supply its own market. It is common knowledge that one of the first actions of an agricultural community is to try to manufacture its own textiles and its own garments.

There is one type of competition about which I am anxious to have special further discussions with the Cotton Board—I have told them of this—and that concerns competition from Japan. I want to talk on two aspects of it—competition in the colonial markets and the import of grey cloth into Lancashire. As to the imports into the Colonies I would say first, that they are, of course, limited by quota, like imports from other countries, on balance of payments grounds. Also, they are lower than they were pre-war, but, as the hon. Gentleman has said, they constitute a very potential danger for the future.

Second, quite apart from the complexities of the Congo Basin Treaties, which those who are familiar with this field know so well, if Lancashire is to hold a substantial share of the colonial markets, that can only be done if she can produce at prices at least not too far removed from those which are available in other quarters. I have also asked the Cotton Board to give me their considered view about this vexed question of the import of Japanese grey cloth.

I should be obliged if the right hon. Gentleman would say a word about the Congo Basin Treaties. I would remind him of the Anglo-French Treaty which relates to free imports into Nigeria: that was denounced in 1936. There was also the Anglo-Dutch Treaty of 1871, which applied to the Gold Coast. Why are some of these treaties always permanently inviolable, whereas all other trade treaties which are not to our advantage seem capable of being denounced?

The legal position is in such doubt that it is very much better not to embark in an impromptu answer upon an analysis of what it is. I do not wish to avoid the hon. Gentleman's question, but, while I recognise that these difficulties are there, I would prefer in this speech to concentrate on the practical problem of filling that market.

On this question of grey cloth, I know that opinion is deeply divided in Lancashire. On the one hand, it is said, with some justice and conviction, that if Lancashire's full production has not been taken up grey cloth should not be imported. On the other hand, it is said that if we import it, it at any rate keeps the finishing end of the industry in full employment, and, indeed, it has provided a basis upon which the colonial markets so far have been largely held.

Can the right hon. Gentleman say how the finishing industry will have more employed in finishing foreign cloth than in finishing Lancashire cloth?

This cloth is used by the finishing industry to turn into products for the colonial market. I did preface my remarks by saying that opinion is deeply divided on this subject. What I can say is this—and I think the House might be interested to hear it. I understand that there are considerable stocks of grey cloth at the present time, and for the present, at any rate, I do not intend to issue any new licences.

There is one other matter to which I should like to refer, and that is the question of diversification. As I have already said, the textile industry in the post-war world seized upon the opportunities in those markets and it was decided at that time—I am not criticising the decision; I am just stating the facts—not to detract from that effort which was so valuable to our economy by seeking to diversify the industry. No doubt, there were powerful arguments for that decision at the time it was taken. There was, after all, a considerable labour shortage in the textile areas. My own view is that there is some danger in any area becoming so dependent upon any industry that there is likelihood of large-scale unemployment in the event of a falling off in the demand for its products.

I want to make it plain that I am not implying that the textile industries have failed. What I recognise is that we live in a constantly changing world, and, if it is in any way possible, it is wise in that world to have facilities for taking up some of the slack at times of low demand. I am not trying to define the future level of the textile industry—although the hon. Gentleman has asked me to assess it, and I do not blame him for doing so. But I think it would be a bold man who, amidst all the imponderables of today, sought to say that he could see a little into the future and say exactly what size these industries were going to settle down to.

In addition, new factories cannot spring up overnight. There are severe limits on steel and building capacity. I do not want to hold out any hopes of actions that can be taken. I will say that, within the stringent limits within which we necessarily live, applications by firms for new capacity will be considered sympathetically in this as in other areas faced with this kind of problem, and certainly we shall encourage firms to use vacant premises where the great practical difficulties of taking them over can be solved.

The hon. Gentleman asked me a number of questions which I would like to answer. He asked me particularly about contracts. I think that we have to look at this question of Government contracts in perspective. It would be wrong to overrate what can be done by placing Government orders. It is wrong to hold out high hopes which would be only disappointing in practice. The quantities of textiles needed for the whole re-armament programme are small in relation to the total capacity of the industry. In cotton, they are the largest, but for the whole four years' programme of re-armament cotton represents only 10 per cent. of a single year's output of the Lancashire mills.

Much is said about the placing of orders abroad in textiles and clothing. The facts are that in the time of the previous Government orders were placed for £36 million of which £25 million were in Europe, £8 million in Japan and smaller amounts in India and the United States. This, again, was based on the fact that at that time there was a shortage of capacity. They were placed in the spring and summer of last year. As soon as we were aware of what was going on, we reversed that policy. Some orders were signed later, but only where negotiations had reached the point where public faith was pledged and failure to sign would involve either a breach of contract or a gross breach of faith. Wherever possible, we cancelled orders. We succeeded in cancelling orders placed in the United States or reducing them from a total of £1,750,000 down to £750,000.

In December, my right hon. Friend the Minister of Supply gave instructions that no future orders were to be placed, except for the most special reasons and then only with his personal authority. Very few contracts have, in fact, been placed and these are of a specialist character, which could be defended individually. This policy will be continued in the future.

Is the right hon. Gentleman referring to cotton only, or to textiles, or certain other things as well?

When I spoke of the total amount of orders placed by the previous Government I was speaking of all textiles, including clothing. The orders already placed amount to half the total re-armament requirements in the case of wool and three-quarters of the total rearmament requirement in the case of cotton.

That is for defence contracts in the United Kingdom. It has nothing to do with contracts placed abroad.

What I am speaking of are Service contracts placed with the Ministry of Supply. I am speaking of all of them and saying that no more of them are being placed abroad, except in the most special circumstances and with the individual authority of the Minister and the matter being referred to him.

We are doing everything possible to bring forward the placing of contracts for military and Civil Defence purposes. The Home Secretary, the Minister of Defence and the Minister of Supply are seeing what more can be done in this direction, but I want to repeat that however this matter is phased there must be some limit to the impact it can make on a situation of the size which confronts us.

I have given some account of the actions which have been taken and some account of the problems which remain to be faced. I have no wish to underestimate these problems nor, I think, have I sought to do so in the speech I have been making, but I think it would be a pity if we in this House or those in the industries concerned became too despondent.

Our worst danger, perhaps, is that we might abandon or relax the great efforts that have been made to build up efficiency, to bring in new machines and new methods, and to invent new fabrics. Both sides of industry have co-operated in trying to improve the efficiency of the textile industries and I pay tribute to them. Much more still needs to be done, but these troubles should not be a signal to slacken in our efforts or abandon experiments, either on the technical side, in double-shift working, or in anything of that kind.

We have to deal with a buyers' market and keen competition. Manufacturers, in those circumstances, have to quote competitive prices if they are to regain old markets, let alone if they are to win new markets. Solutions to all the problems are not within our grasp and I agree with the hon. Member that they are not perhaps within the grasp of any Government. Let us at least tackle those that are. These events, while they present us with great problems and considerable anxiety, should also present us with a challenge and it must be the task both of Government and industry to accept it.

4.46 p.m.

I am glad of the opportunity to draw attention to the present serious situation in the Lancashire cotton towns. While I am aware that this debate is concerned with textiles generally, I can only speak, of course, of the cotton industry. I can speak most definitely for that part of Lancashire which we know as the weaving area—North-East Lancashire, the part that stretches from Blackburn right across to Nelson and Colne—the Burnley area, and by the Burnley area I mean the Burnley Exchange area which covers Nelson and Colne and a number of smaller places.

In that area are towns which are literally cotton towns. They have, as the President of the Board of Trade said, only one industry—places like Great Harwood, where 80 per cent. of the insured population work in the few cotton mills which are in that town. The rest of the insured population is made up of postmen, policemen, school teachers and people like that. When the cotton industry is hit in those towns, it means that the whole town practically dies.

That situation is prevalent in a very large part of North-East Lancashire, which is the Burnley area. I know from conversations which I have had previously with the President of the Board of Trade that there is no great need to press upon him, or upon the Government, the seriousness of the situation, but I should like to tell him of the alarm and despondency which is felt in that area by the sudden turn of events that seems to have overwhelmed the population.

The right hon. Gentleman spoke about 5 per cent. of unemployment. I am afraid he is seriously under-estimating the situation. There is a great deal more than 5 per cent. unemployment in Burnley, at all events. When we talk of unemployment, as the President of the Board of Trade said, we do not really begin to touch the problem because, apart from those who are temporarily stopped, there are thousands of people working full-time but getting half wages. The problem there is not one of temporary or of permanent unemployment; it is one of permanent full-time working with people underemployed, and, therefore, drawing only half wages. But the Minister will know—

Are the people of whom the hon. Member is speaking paid on piece-work rates, or are they day or hourly workers? How can they be working full-time and earning only half wages? Are they pieceworkers?

That shows how little knowledge of Lancashire has penetrated into outside districts. Under-employment in Lancashire is known perfectly well. A weaver ordinarily works six looms; she is paid piece-work rates. When she has only three looms to look after, she turns only half the product, but she has to be there the whole time. These people may well—indeed, in previous times, many of them did—earn less for full-time work than they could have got at the employment exchange.

The President of the Board of Trade will be aware, from the deputations he has already met, of the seriousness that is felt in the area. He will know that immediately the decision was known about the Australian embargo, the Manchester Chamber of Commerce telegraphed him and, I believe, sent a deputation. He will know, too, that they sent him a telegram asking him not to put into operation the D scheme. I do not want to go into that, however, because I agree that it would be wrong to confuse the serious issue of Lancashire's present position with the Utility scheme, although it has some bearing on part of the problem.

The President of the Board of Trade will know that the Council of the Textile Factory Workers' Association is so concerned about the position that they are sending a deputation to meet Lancashire M.P.s. I ought to tell the right hon. Gentleman that in the North-East Lancashire area, about which I am speaking, all the local authorities have been so much concerned that they have met the regional officers of the Board of Trade, the Ministry of Labour and the Ministry of Supply. They have also met—I hope that the President will take note of this—the Cotton Board, but have got very little satisfaction from it. I hope that when he meets Sir Raymond Street, the right hon. Gentleman will ask him to take a little more helpful attitude towards the problem of diversification in industry than he has shown up to the present.

What has happened is that in a very short time the area has been overwhelmed with large-scale unemployment. I remember what Lancashire was like in the old days before the war, and in the House I fought for diversification of industry there. I was once successful in the Ballot and asked Sir Kingsley Wood, who was then President of the Board of Trade, to appoint a committee to go into the problem. As a result, the problem was investigated and we had the Barlow Report, but unfortunately war came, industry expanded in Lancashire, and we did not become a Development Area. In consequence, we are now slipping back to the position of many years ago. Every Lancashire cotton town in the weaving area is now concerned very much with the same problem.

While I was waiting to be called, I received a green card asking me to see one of the Lancashire textile leaders who is very well known to many in the House. I asked him what was the latest position in Burnley. He tells me—and this disproves the point that the President of the Board of Trade was making—that two or three mills are closed down until Easter and that 16 other mills are closed down this week. The number of unemployed in Burnley is about 2,560. That is a very serious position. It is a good deal more than 5 per cent.

What does this unemployment mean to a town like Burnley, where until October of last year the weavers were earning £7 or £8 a week but now come down to half wages—for some of them, £3 or £4 a week—and with others down to 26s. a week? It means that every shopkeeper will lose £s per week. It means that in Burnley alone the shopkeepers will be missing about £10,000 or £12,000 worth of trade a week.

It does not mean only that the cotton trade is hit. When unemployment is brought into the weaving sheds, it means also unemployment in the spinning factories, in the engineering shops, the mills, the machine shops, the warehouses, the bleach works, the die works and the finishing works. It runs right throughout the whole of the area, and to Lancashire a stoppage in the cotton trade is one of the really dreadful things.

I received only two days ago a letter from a lady—a stranger—who has been in Burnley, and I should like to read a few remarks about her impressions of Burnley as she saw it last week as compared with what she knew some time ago. She says:
"The impression I got was that after so long a spell of full employment, the present turn of events has hit them very hard. They seem bewildered and greatly distressed. I am certain that anything you can say down there"—
that is, in the House—
"will help them considerably in their present unhappy state."
That period of security has gone, and what Lancashire is afraid of is that we shall slip back again to the old days as-we knew them before the war.

Would my hon. Friend allow me to say this? Due to the method of short-time working in the cotton industry, those who are on short-time can be worse off than those who are totally unemployed, because they are not eligible for unemployment benefit.

That is perfectly true. Furthermore, a lot of married women do not go to the employment exchange to register as unemployed. It is difficult to convey to people outside Lancashire, who see only the employment exchange figures, an adequate picture of the distress which is rampant there.

Will the hon. Member allow me to clear up this point? What he describes is not the situation in Bolton. The tendency this time in Bolton has been to work one day less a week—to work four days or, at the worst, even three days—and on the days when people are working they are largely on full-time. His accurate description of what happened before the war does not apply in Bolton now.

Bolton is not so much a weaving area. It is a spinning area. They do things a little better, perhaps, in Bolton to get the maximum from the Government. In Burnley we are honest about the thing, and we are suffering.

Last week I asked the Minister of Labour the present number of vacancies for cotton operatives in Burnley as compared with October of last year. This shows the suddenness of the change. In October, the employers were looking for employees—there were 400 vacancies. On 15th February, there were only 27, and these, probably, now have been filled. Instead of employers looking for 400 people, as they did in October, 2,500 operatives are now looking for work.

The Minister of Labour, in reply to a supplementary question, assured me that it was not the intention of the Government to keep a pool of labour in the cotton industry for drafting elsewhere. But whether it is the intention or not, the unfortunate part about it is that there is a very large pool of labour there at the present time, and we want something done to absorb that pool. We would prefer that it was absorbed in the cotton trade.

I do not share the pessimism of many people about the cotton trade. I believe we can go a good way towards restoring its prosperity. After all is said and done, it has been through difficult times before and we did recover the situation. The difficulty now is that there has been a change. We did achieve more confidence in Lancashire, but now a situation has arisen, and the change has so alarmed the people that they are feeling very depressed.

The Government may be able to tell us about something they can do to reassure people in that area. In June, 1951, in the whole of Burnley area there were only 89 male workers registered as unemployed. Of those 89, 48 were disabled people, and half of them were over 56. In fact, we had a situation in Lancashire, at least in the weaving area round Burnley, of complete confidence in the future up to September and October of last year. It has been said that the change was taking place before September and October. I do not know. I only know this, that right up to the Election we had vacancies and no unemployment. Now we have no vacancies and lots of unemployment.

If the hon. Gentleman wants any proof he has only to visit Macclesfield where we had 60 unemployed last year, and the figure in October had gone up to the 700 mark.

I do not know anything about the Macclesfield area. I am talking about the weaving area in Lancashire and the problem facing the Government at the present time.

It is said that we ought not to have sent orders abroad. But every loom was fully occupied. There were warps in every room and every spindle was working, and there was no point in keeping those orders here. Now the situation has completely changed, and I was glad to hear the President of the Board of Trade say that he proposed to issue no more licences with regard to Japanese grey cloth. It may be there are differences in the cotton trade with regard to the finishing of grey cloth, but I cannot see why, if grey cloth is brought to this country to be finished in order to keep the finishers at work, they cannot be equally kept at work if the cloth is manufactured in this country. That is one of the problems which will have to be tackled.

I am of opinion that the Government would do a great deal for the cotton trade in this country in every way if they would say that there will be no more Japanese cloth coming into this country, but that the cloth which goes out for export will be stamped that it has been spun, woven and finished in Britain because we lose a great many markets owing to stuff coming into this country and being finished here and going into our markets presumably as British cloth. That might help considerably.

So far as the Australian quota is concerned, we lost there 123,000 square yards. The Minister says that 10 per cent. is all that the contracts will give us. But if it gave us 10 per cent., the Lancashire cotton trade having lost 20 per cent. in Australia, it would put back half the Australian trade. When we lose 123,000 square yards it means we have lost the work of 10,000 looms and, at four looms to an operator, we have lost the work of 2,500 operatives. So at least, by looking at the problem of contracts, part of the damage which has been done by losing the Australian trade could be put right again straight away. I hope that that problem will be considered very seriously.

May I ask the Government to have a look at the problem of Utility from this point of view? It is having some bearing on the trade of this country. We do not want to go back again to shoddy goods. The week-end before last I went into a shop and asked the price of a certain garment. I was told it was 26s. They said, "If you buy today it is 26s., but if you leave it till next week it will be 27s., because it will go outside the Utility range." I went into a tailor and asked the price of a suit. I was told that it was 30 guineas but that if I left it till next week, it being a good suit, it would come down to 27 guineas. So hon. Members will see that the people who can still afford the best will get the best. It would be a good thing if the Minister would consider, with the Chancellor of the Exchequer, the question of wiping out the Purchase Tax on all textiles at the present time.

I would ask the Minister, when he gives out the contracts, to give them straight to the mills and not to work through agents. It would be very much better for Lancashire if they went straight to the manufacturers instead of going to a man who has a little office in Manchester with a table and a chair in it. Last week I heard of a mill which was making sheeting and which is closed down until after Easter. I heard of an agent who placed an order for sheeting with a firm which had never done sheeting before, while the mill which could have done the job is out of a contract. I ask the Minister to consider that problem.

Returning to the question of diversification, in the old days people wandered away from Lancashire because there was no trade. Whole families went, and when the family went the women who could staff the mills went too. I know the Cotton Board and the cotton employers are afraid of diversification, because they say that if other industries are brought in, the people will be taken into those industries and there will be no one left for cotton.

I believe they are wrong. They have been proved to be wrong in the case of Chorley and Clayton. If we get other industries there we shall get the families, and what Lancashire needs is some industry for male labour so that the males will not go away and take the females with them as they did in the old days. I suggest that the Minister has a serious talk with Sir Raymond Street and tells him he ought not to be as afraid of diversification as apparently he is.

I ask the President to look at the question of contracts, of Japanese competition, of diversification and the Purchase Tax as well. If he will give serious consideration to those matters, I think he can bring back to Lancashire the confidence that we built up to October of last year.

5.9 p.m.

Before the conclusion of this debate many expressions of opinion will have been voiced about the causes of the depression which has overtaken the cotton trade of this country. There is no doubt that many of those opinions will be completely at variance one with the other. But however much we may differ on the question of causes, there is at least one thing upon which I feel hon. Members on both sides of the House can agree; and that is that we all share a common anxiety about the increased unemployment which has occurred as a result of the persistence of this depression.

In examining the problem, the first thing upon which we should be clear is that this depression is not peculiar to this country. It is world-wide in extent and a similar anxiety is being expressed in other countries as well. Therefore, we should look outside rather than inside this country for the causes of this depression.

As the hon. Member for Rossendale (Mr. Anthony Greenwood) pointed out, in Belgium and in other European countries, short-time working is now the order of the day. France has banned any further importation of Japanese cloth. Many firms in France are working fewer than 30 hours a week. In the United States of America a very limited off-take is reported.

It may be of interest to hon. Members that whereas last year American cotton spinners consumed more than 10,500,000 bales of cotton, it is expected that this year they will consume fewer than nine million bales. That shows at once that there is a total loss of production, over the whole of the United States, of more than 15 per cent.

Even in Japan troubles are so great that the Japanese Government have decided to force on the industry a reduction in production of something like 40 per cent. Although this question of recession, or slump, is being argued in many quarters at present, there are people not unfamiliar with the textile scene who are firmly of opinion that the recession in Lancashire need only be a temporary recession.

They hold the view that this recession is the direct result of choking up of the pipeline which has become over-stocked with goods largely as a result of the panic buying which took place because of the war in Korea. There is no doubt that until that pipeline begins to clear itself in some way a resumption of buying must, of necessity, be on a restricted scale.

Another important factor is the "bearish" sentiment which exists about the future trend of raw cotton prices. In the case of Egyptian cotton, the general belief is that the Alexandria market is on a completely false basis and that, in spite of the efforts which are being made by cotton interests in Egypt to bolster up an artificial price, Egyptian cotton will have to suffer a considerable reduction in price if it is to attain parity with world values for other cotton.

When we remember that about one-half of our total number of spindles are engaged upon the spinning of Egyptian or Egyptian type cotton, it is easy to understand the extent to which the uncertainty about cotton prices affects the trade of Lancashire.

In the other parts of the industry where American or American type cotton provides the raw material, there, again, there is a feeling that the prices for the raw material are too high, though not for the same reasons as those which obtain in respect of Egyptian cotton. Lancashire spinners have been complaining for a long time that the price charged for American cotton by the Raw Cotton Commission is higher than the world value.

This places Lancashire spinners and manufacturers—the whole of the trade—at a grave disadvantage with foreign competitors who can buy the same type and quality of cotton at a price lower than that which the Raw Cotton Commission charges Lancashire spinners.

The reason for that is the dollar shortage. Because of the stringency in the supply of dollars the Raw Cotton Commission has had to search the markets of the world for non-dollar cotton which may be used as a substitute for the more popular American cotton. The demand which has thus been engendered by buying those cottons has forced up the price of non-dollar cotton to such an extent that the average price for the whole of the cotton bought by the Commission is higher than world prices.

A short time ago the price charged to British spinners by the Raw Cotton Commission for American cotton was as much as 6d. a lb. higher than the world price. But today, because of the lack of demand caused by the depression, the price of those outside growths has receded until the average price of cotton now quoted by the Commission is only 1d. a lb. higher than the world price.

But even that is too much. It is quite enough in the present position, when there is such a scarcity of business, to push what business there is into the hands of our foreign competitors. Indeed, any price higher than the world price is too much if Lancashire is to hold its own in the fight for world trade.

When buying is resumed exactly the same conditions will prevail once more unless dollars can be made available with which to buy the American cotton which Lancashire needs. I suggest that this is one way in which the Chancellor of the Exchequer can help, by ensuring that the endeavours of the cotton industry are not hampered in future by an insufficiency of dollars with which to finance her raw material needs.

In an effort to beat the depression, both spinners and manufacturers in Lancashire have already taken their medicine and have already reduced their prices to the absolute minimum. The operatives, for their part, have also taken a knock by the short time which they have worked and which, much to their credit, they have accepted without embarrassing in any way the efforts of the industry to deal with the situation.

For a long time Lancashire has been Egypt's best customer for Egyptian cotton. It is now up to the cotton interest in Egypt to decide how much of the knock they are prepared to take and how far they are prepared to reduce their prices to bring them in keeping with world parities and thus restore the confidence in raw cotton prices which is needed.

Also, we must not forget how the cotton trade is affected by the balance of payments crisis. That the crisis extends far beyond the shores of this island and that there is no easy and comfortable way of dealing with it has been brought to our minds in no uncertain manner recently by the action which has been taken in other parts of the Commonwealth. The sudden decision of the Australian Government to bring their imports to a virtual standstill was a forceful reminder of the widespread nature of this crisis.

Though no one can dispute the right of Governments to deal with their own problems in their own way, there is no denying that this decision by the Australian Government was a grievous blow at Lancashire's textile trade. Though consignments which are actually in transit are to be admitted into Australia, they will have to be counted against future quotas.

But that does not alter the fact that there are still large orders which have been placed, which are not yet completed and for which the raw material has been secured. The manufactured goods made from these materials will finish up in the warehouses and the cellars on this side of the world unless something is done to find some outlet for them, and I can assure hon. Members on both sides of the House that that is much easier said than done. It is actions of this kind by Governments which make the cotton industry, dependent as it is for its welfare upon a healthy export trade, particularly vulnerable, and, if this sort of thing is to be allowed to develop, then efforts to stimulate and expand the export trade will be rendered meaningless.

My hon. Friend the Member for Bury and Radcliffe (Mr. W. Fletcher), who is just coming into the Chamber, has put forward on many occasions a point which is troubling all sections of the cotton industry at the present time, and particularly the exporting section of the industry. It is the apparent disregard which is being shown by Governments for the sanctity of contracts. The recognition and carrying out of contracts is virtually the corner stone upon which all trade is built, and the moment Governments or individuals cease to recognise that salient truth it will be the end of all honourable trading between Governments and individuals alike.

In what way can the Government help in this crisis? Lancashire does not expect the Government to place defence orders merely for the purpose of stimulating trade. Nevertheless, I was glad to hear from the President of the Board of Trade the assurance that there will be no undue hold-up in the placing of these defence orders, and I hope that instructions will be given to the responsible Government Departments that a fair share of these orders will be given to the textile industry by placing as many orders as possible with the Lancashire mills at the earliest possible moment.

Now, may I say a word or two which I hope will be heard in the Colonial Office? During the past few years, when the sellers' market prevailed and Lancashire's order books were full and long-dated, the Colonial Office was anxious to ensure that the populations of the Colonies were not kept short of essential supplies of cotton goods, so they arranged for extensive importations of cotton goods from Japan. In the Lancashire cotton trade today, there is a considerable fear that the Colonial Office in London and the various authorities in the Colonies are not fully aware of the change which has taken place in Lancashire during the past few months, and that they do not realise that all the facilities are available in Lancashire to supply any amount of cotton goods to the Colonies which they may require.

Reports have been received in Manchester giving the impression that further orders are liable to be placed with Japan, unless some action is taken to prevent it. It would certainly give great satisfaction indeed if the Government would tell Lancashire quite plainly that steps are being taken to limit the import of Japanese cotton goods into the Colonies and to direct as much of that trade as possible to Lancashire.

Finally, I should like to stress this point. It must not be assumed by anyone that Lancashire has lost heart. Today, the cotton industry of Lancashire is far stronger, from the point of view of technical efficiency and organisation, than ever before in its history and, being aware of this, it is facing the situation, which is a difficult one, with realism and determination. All that it asks from the Government is that the Government, in their turn, shall also play their part in the way which Governments can do, and that the Government will deal with this problem in the same spirit and temper, and with no less realism and determination, than that which is being shown by the industry itself.

5.26 p.m.

I have been very interested, in listening to the speech of the President of the Board of Trade and of the hon. and gallant Member for Rochdale (Lieut.-Colonel Schofield), to find that they have discovered the world crisis. There has been some difference of opinion among hon. Gentlemen opposite in the last few months as to the exact cause and nature of our economic difficulties, but of one thing I am quite sure. It is that the longer this Government continue in office, the more will the world crisis have a role in their speeches.

I think we all remember enjoying from the President of the Board of Trade, in his previous incarnation on this side of the House, speeches which delighted us, in which he made great game of the economic difficulties of the Labour Government. The right hon. Gentleman had not then discovered the world and the influence which it exerts on our affairs, and we are glad to see that office has educated him so rapidly.

The speech of the right hon. Gentleman was very moderate in tone and very conciliatory, but I am afraid that it was extremely disappointing in content, and it certainly did not measure up to the spirited challenge which was given in the able speech of my hon. Friend the Member for Rossendale (Mr. Anthony Greenwood). When the right hon. Gentleman, at the beginning of his speech, embarked on a long historical treatise, my heart sank, because I know that, whenever a Minister starts a speech with a historical treatise, we can be sure that it will not end up with a blue print for action, and that is what has happened this afternoon.

We have been left with a very vague and indecisive impression by the right hon. Gentleman, and it really will not do, because this situation is one which is striking at the roots of the economic and psychological security of a very important area of this country. It has been said that we must not get the position out of focus, that we must not overemphasise the difficulties or alternatively under-estimate them, and I certainly agree that we must keep a balanced view of what is happening and of what we must do to meet the situation, but it would be a fair statement to say that, first and foremost, unemployment in Lancashire is still rising and that nobody in any responsible position in Lancashire today is prepared to say that he can see a trend for the better.

The second point is that the rate of unemployment in Lancashire is running at something like three or four times the national rate. In that situation, anyone who represents a Lancashire constituency in this House is entitled to something more encouraging, more positive and more decisive than we have had from the right hon. Gentleman this afternoon.

I hoped that, when he began his comprehensive survey, we should be given some impression of how the Government size up the situation and where they think Lancashire is going, because Lancashire is asking that question. It is undoubtedly true that what is threatening Lancashire is nothing less than a slump. Lancashire is asking two things. First, is this a temporary situation, or is it the beginning of a new and enduring depression? Secondly, is this accidental or is it, to some extent, deliberately created by Government policy? [HON. MEMBERS: "Oh!"] Just a moment. I think hon. Members opposite ought to be a little more thoughtful before they start saying "Oh!" It demonstrates the frivolity of their approach to this problem.

When we consider that we are embarked upon a re-armament drive, it is obvious that the Government are trying to run down some industries. It would be quite wrong to inject a big re-armament programme into our economy and not to run down some industries. Is it, therefore, a partisan point to ask the Government whether, in the economic pattern it is evolving, Lancashire is expected to contribute some manpower? I think we have the right to ask the Government whether it is part of their policy to help man up the re-armament drive by running down the cotton industry.

I understood the hon. Lady to say that the Government had deliberately brought about this state of unemployment for a political purpose of their own. She is now saying that if the Government had of necessity to move some labour, that was another matter. Will she say exactly what she means?

If the minds of hon. Members opposite were not so clouded with partisanship they would understand what I meant. I never mentioned political purposes. I merely asked whether this recession in cotton was deliberate or accidental, and, if it was deliberate, whether it was part of the economic plan for the re-armament drive.

The hon. Lady's question presupposes that she believes it is in the power of any Government in this country to bring about a big recession in cotton. The whole tenor of the two Front Bench speeches this afternoon was that it was not within the power of this country to do that. Therefore, it seems that her argument is on an entirely false basis.

I think that is a very peculiar argument. If it is not in the power of any Government to reduce consumption in certain industries, then no Government can ever organise a rearmament programme or a defence against inflation. Surely, the whole financial and budgetary policy of the Government is to do just that, to divert demand from certain industries in order to free manpower for the manning up of the re-armament programme. I must say I think that is a remarkable intervention by the hon. Gentleman who I always thought had a high level of intelligence.

Is my hon. Friend aware that Mr. Lewis Wright, the President of the Lancashire Weavers, and a most responsible man, made similar statements in Manchester last Saturday afternoon?

I am glad to be reinforced from such an excellent source, and I go forward encouraged to resist the interventions of hon. Members opposite.

I return to my point, because Lancashire is asking these questions. This problem has been steadily accumulating since November, and it shows signs of getting worse, not better. How long do the Government intend to wait before getting down to fundamental answers to fundamental questions? We have had nothing fundamental from the President of the Board of Trade today.

I am delighted to see that I am getting under the hon. Gentleman's skin.

I ask the Government for a reply today. Lancashire will certainly not consider that this debate has gone anywhere near the root of the matter unless replies to these questions are given. Is it the intention of the Government deliberately to divert cotton workers to armaments in the Lancashire area? That is the first point. The second point is that if it is their intention, where is the work to which these workers are to be deliberately diverted? Where are the contracts, the factories and the raw materials for them?

If there is no such intention, then may we have some estimate from the Government of what they visualise as the role of the cotton industry in the light of our current economic position? Is that too much to ask? Is it too much to ask the Government to let us have a clear picture of whether they believe that this industry, which has been so buffeted and bruised by world events and is now beginning to be knocked about again, is undergoing a new phase or not?

We have heard a good deal this afternoon from all sides about what is happening to our export markets; how this one has gone and how that one will not be regained, and so on. I suggest that this is a job the Government ought to do. Instead of being left to make our own estimates of trade trends in an amateur way, we ought to have a White Paper on the whole matter telling us what is happening in the international trade field and what the Government think ought to be the size of the cotton industry today, and what manpower should be employed in it.

May I ask the hon. Lady how she thinks anyone, either on the Government Front Bench or on the Opposition Front Bench, can possibly forecast what the future of the cotton trade is going to be? That is a question which can only be answered by the people in Lancashire and other areas who are in daily contact with the markets of the world.

I have a very simple answer to that one. Clearly, the picture must be drawn with the aid of the men on the spot, but the job of co-ordinating the information and of putting the matter into its proper perspective is the job of the Government. Therefore, I ask the Government to say, if there is to be no deliberate diversion of these workers to re-armament, what they think is the level of consumption that will have to be met and what manpower will be required to meet it.

Finally, all the talk this afternoon has been of a reduction in markets, and so on. If the cotton industry has got to settle down to a lower level of production, then where is the plan for the alternative industries which will keep Lancashire employed? If there is one thing about which Members representing Lancashire constituencies are convinced it is that Lancashire will not tolerate another period of stagnation and decay. It is determined that this time there shall be no drift, but effective action. After all, the Government have now had nearly six months in office.

The hon. Gentleman was very effectively answered by the hon. and gallant Member for Rochdale, who said that the cotton industry today faces this new crisis better equipped technically, and with greater organisational efficiency, than it has ever had in its history. That is due to the fact that in the last six years we had a Government which had a policy for the cotton industry and which did something about cotton.

Had the Labour Government been in office now we should not have had the rather vague speech which we had from the President of the Board of Trade today, but a plan of action in order that we might keep our promise that never again should Lancashire be cursed and darkened by the shadow which fell upon it in the inter-war years. We have a right to expect something more positive at this stage.

It is not as if, when the right hon. Gentleman took office, this was a virgin field. The cotton industry has been more examined and reported upon and analysed and statisticised than any other industry in this country. Some of that work was done, and very rightly and very effectively done, by my former right hon. and learned Friend Sir Stafford Cripps when he was President of the Board of Trade. I know something about it because I had the privilege of being his Parliamentary Private Secretary at that time.

I know that his first interest and anxiety on taking office was to make sure that in the post-war period Lancashire should enter upon a new period of stability and prosperity; and up to now it has had such a period. But it is quite wrong for the right hon. Gentleman the President of the Board of Trade to suggest that it was because the industry "flung itself" into an exploitation of post-war possibilities. It had to be pushed; and it was pushed very effectively by the Labour Government. It was done by a series of co-ordinated plans by Sir Stafford Cripps.

As early as October, 1945, he set up the Cotton Working Party to gather together evidence already available—piled up during the war by such bodies as the Cotton Board post-war committee and other important committees which had been examining these problems. As soon as he had their report he did not brood upon it like a hen for six months. It was only a short while before he had made up his mind and was offering the industry a spinning subsidy scheme.

We estimated the post-war prospects in Lancashire and worked very successfully to a plan. It was based on two primary assumptions. The first was that we could take it for granted that we should find after the war a continuation of the pre-war trends in international trade. That is to say there would be a world expansion of the consumption of cotton goods but a reduction in the world trade in cotton goods because, of course, other countries would be developing their own industries and new rivals would be appearing.

Therefore, at that time we never expected that the export position for cotton when the war ended would be likely to be an easy one. Nobody in Lancashire has ever assumed that. But the second assumption upon which we worked was that we could expect that Lancashire could stabilise itself in meeting a home consumption of something like 5 per cent. over the pre-war level—that increase being due to the fact that we were to have full employment and a fairer re-distribution of income and, therefore, a more stable and sustained home demand.

How has that post-war plan worked, and what has suddenly gone wrong? Unless the Government really go about the task in same way as Sir Stafford Cripps did we may be asking for the wrong answers because we have not analysed the problem properly. I have been trying to do a little of my own amateur research into the problem because the Government have not been doing it for me.

It is very interesting to see in the Cotton Working Party's report a table giving the Cotton Board's estimates of postwar trade, based upon certain assumptions which I have mentioned and which were certainly not over optimistic assumptions. Nobody who helped to compile those cotton reports—and they were all men from the industry—was feeling optimistic. Therefore, they were assuming adverse developments in our export trade and no excessive expansion in our home trade.

But if one studies those figures it is very interesting to find that their estimate of our export figure was at just about the level at which it was in fact running in 1951. The Cotton Board estimate was that, even on the least optimistic assumptions, exports of piece goods would be running after the war at about 750 million square yards a year. As far as I can make out, the actual yardage at the moment is 1,083 million; and as that includes about 260 million yards of Japanese grey cloth, it works out at just about the figure they estimated.

The hon. Lady is quoting figures for 1951. I want to be quite fair, but surely she agrees—and it has been admitted on all sides of the House—that in the 12 months after the commencement of the war in Korea practically every country, fearing a fresh world conflagration, stocked up and that is why the pipeline is full now. So 1951 is not really a fair example of what production would normally have been.

Obviously I am quoting 1951 because these are the latest figures available. I agree it was a year when some of those influences were being felt. I am only giving the picture for what it is worth up to the end of last year and saying that the estimate on the export side just about works out right. But the interesting thing is that the estimated consumption on the home market, which the Cotton Board table gives as 2,300 million square yards, has not been reached. I believe the consumption on the home market has been running at something like 1,500 million square yards.

Therefore, up to the end of last year, the deficit has not been on the export side. It has not been in that respect that we have been falling down. On the other hand, we have not yet reached the home consumption figure to meet which the post-war development of Lancashire industry was planned. That is very relevant to our consideration, because whereas it is quite true there is now a new threat to our export trade, and that probably the figure at the end of 1952 will not be as high and the estimate will not be reached in the current year, we are still left with the fact that we have to set off against that a situation in which the home consumption, on which Lancashire might have planned to depend, is not being reached. And in such a situation it would be crazy to do anything which would reduce our home consumption of goods.

Therefore, I suggest that in attempting to meet this situation the Government must have a two-fold plan. They must have a plan on the export side and a plan on the home market side. I think we should agree on one thing—that our immediate difficulties with exports would appear to spring not so much from that natural expansion of industries in other countries as from the new wave of artificial restriction of trade which has followed the Korean war and the world-wide effects of the re-armament programme. It is quite true that the natural expansion of home industries in other countries is there; but to some extent it had been allowed for in the post-war plan, and it had not, up to the end of the last war, prevented us from reaching the post-war export estimate.

What does hit us now is this new wave of import restrictions which we played our part in setting going, and which is now circling round the world in a downward spiral and threatening to plunge us all into a world-wide recession of trade. We are suffering now from the interaction of each country's balance of payments difficulties upon the others.

Clearly, in that situation, there is a field in which Government action could be effective without restricting the normal rights of expansion of other countries. If we are all going to settle our problems internationally by dropping world trade to a lower level than it need be, we are not dealing with natural causes but with very man-made causes of the economic difficulties from which we suffer.

Taking the case of Australia, which has been quoted so often, I think that we have a very legitimate cause for saying that the actions of the Australian Government have been planned, not of course with malice, but with short-sightedness amounting almost to stupidity. Even assuming for a moment that Australia could not solve her problem merely by cutting out non-sterling goods—because she says that so large a part of her imports have been sterling imports she could not have balanced her trade without some cuts in sterling goods—there is ground for saying that the selection of the items she has cut is the height of folly when one considers the question in terms of the Commonwealth family as a whole and the needs of that family.

I was interested to read, in the "Observer" of 9th March, the following:
"Details of Australia's emergency import licencing, … were disclosed by the Minister for Customs, Mr. O'Sullivan. They show that British exporters of machinery and capital equipment, already hard put to it to meet delivery dates, are likely to be least affected, whilst exporters in industries already having difficulty in selling goods abroad will face the most critical time since the 'thirties."
The outstanding example of the second category is, of course, the textile industry. In other words, we have Australia meeting her sterling problem by cutting our textile imports and trying to enter into the queue for capital goods that we can sell in any part of the world. I think that the fact that that problem was not discussed at the Commonwealth Conference shows that nothing worth-while could have been discussed. What else was there to discuss, if we did not discuss the simple problem that Britain faces—the fact that we can sell our capital goods but we cannot sell our textiles? "O.K." says Australia, "we will cut out your textiles and buy your capital goods."

If our Commonwealth family is not to have a common Commonwealth plan, I think we should do what has had to be done more than once in the last six years —enter into bilateral arrangements of conditional sale and say "All right, if you want any capital equipment you have to take so many textiles as well." That is what we had to do in our various bilateral European trade treaties and it is up to the Commonwealth members themselves to decide whether they are going to settle these things in an amicable way or whether they are to be settled in the harsh way—

I have here a statement issued from Australia House in regard to the restrictions placed on imports from the United Kingdom. It clearly draws a line of demarcation between consumer goods and capital equipment, as the hon. Lady says; but to get the matter in its correct perspective, it does definitely say that capital goods will be subject to quota treatment by administrative control. It is a different form of restriction, but it is a restriction on capital goods.

I agree. I was not denying that. They are both subject to import licensing. But the details, according to the "Observer", show that those least affected by the import restrictions will be the capital goods exporters. The effect of the restrictions imposed depends entirely on the size of the quota, and it seems to me to be quite clear from that report that the quotas for capital goods will be very much more generous than those for textiles, although our capital goods are the goods we have the least difficulty in selling anywhere.

The second artificial restriction in the world today to which I should like to draw the attention of the House is one that is really quite crazy when one considers the extent to which we face a dollar problem in the sterling area—and that is the tariff position in the United States. I think it is high time that the British Government took a rather stronger line on this question. I read with great interest a report of a Commerce Mission sent to Europe by E.C.A. in 1949 to study this problem of the dollar gap, and what Britain and America could do about it. I recommend the Minister to read the report, because it shows quite clearly, having gone through all the factors in the situation, that
"Expanded sales in the United States of products from the participating countries,"—
that is E.R.P. countries—
"their dependencies, and other areas stand out, in spite of their many difficulties, as the main solution of the dollar gap problem."
It goes on:
"In summary, a weighing of alternative courses of action leads to the conclusion that the present critical lack of balance in world trade should be corrected"—
and, in their italics—
"primarily by stimulating an expansion of exports of goods and services from other countries to the United States."
That was a report in 1949.

In another section it points out that the exports to the United States of the countries most needing dollars have been diminishing and not expanding. Those exports, in 1937, for instance, were 2 per cent. of the gross national production of the United States, whereas by 1948 they had fallen to 1.2 per cent. and one of the reasons, the Mission frankly admits, is the system of tariff barriers deliberately put up by the United States of America against the entry of our goods; and anybody in textiles knows how high some of those barriers are.

Does the hon. Lady realise that since that date the national income in the United States has increased by 25 per cent.; her imports by 50 per cent. and, since 1948, she has reduced her tariffs by 28.3 per cent.?

I do not think anybody would say that the tariff problem does not remain. We know it does. I think it is of relevance. I am quoting from a report prepared by American businessmen.

I dare say; but we have not had the dramatic response to the situation which is clearly outlined not by the American State Department or politicians but by the businessmen, based on the economics of the dollar gap.

Is it not also true that it is precisely since that date that there has been a falling off in textile exports from this country to the United States of America?

That is so. I think the House agrees that it is a ridiculous anomaly that, while we are struggling to dispose of our goods and to earn dollars, we should be faced with these barriers.

The third artificial barrier which remains to bedevil our position and to make our problem more severe is that increasingly artificial barrier between the East and the West in the development of our trade.

It is ridiculous that we have a situation in which Britain has a strategic stockpile of timber, of which a substantial element comes from the Soviet Union, and yet for strategic reasons we cannot go to the Soviet Union and say, "You want machine tools. Very well, you can have some machine tools provided that you take some British textiles." I should have thought in any case that it was extraordinarily difficult to decide the exact differentiation between a civilian and military use of a machine tool.

These strategic restrictions are further drying up the channels of world trade. So long as that process continues, only one thing faces us, and that is an increasing recession and a downward spiral of the standard of life of every country participating in it.

Finally I turn to the second side on which the Government ought to have a clear and decisive policy, the home market. It is crazy that at a moment when the textile trades are heading for a slump, at a moment when, as the figures I have quoted show, we have not reached the level of home consumption which we estimated for the post-war period, we should extend Purchase Tax to new sections of what was once Utility clothing. It may be perfectly true, as the right hon. Gentleman says, that when he went to Lancashire he was told by the Cotton Board and other bodies to get rid of the Utility scheme. But is he prepared to say that they are happy at the alternative which the Government have now put forward? Are they not now beginning to realise what will be the effect of deliberately sending up the price of clothing on the home market by the D scheme being at its present level?

When I blamed the right hon. Gentleman earlier, he was out of the Chamber at the time, so that is probably why he is still smiling. I may say that I thoroughly disposed of him in his absence: I said then that his lack of decisive action was unfair to Lancashire, and I will give him one example of a field in which he has had a good deal of time to make up his mind. It may be a small item, but all these items contribute.

I raised this matter with him during his speech on the Budget debate but he waved it aside as relatively unimportant. It was the question of the uplift in the valuation for the Purchase Tax of the manufacturer's selling price where he sells direct to the retailer. It may be that the right hon. Gentleman does not know much about the subject, but he has had representations from the retailers about it. The net effect of that little anomaly is that a higher level of Purchase Tax is levied on those items than would otherwise be necessary. It is a highly tecnical point with which I will not weary the House, but the President of the Board of Trade ought to know about it, and he ought to have dealt with it by now.

Finally, is it not clear that the whole of the financial and budgetary policy of the Government, which has been unfolded to us in a succession of revelations since last November, is deliberately designed to give us in general, and Lancashire in particular, the worst of all possible worlds? Here we have a consumer industry heading for a slump. As I have shown, that slump springs largely from the lack of effective demand in the home market. Yet at that moment what does the Government do? It gives us the classic formula for turning a threatened slump into a permanent depression. It gives the formula of raising prices on the one hand while, through the operations of the Bank rate and other financial mechanisms, cutting demand on the other.

What sort of a hope is held out to Lancashire when the Government raise the cost of food and other necessities by cutting subsidies, when the Government raise the cost of clothing by putting Purchase Tax on goods that did not bear it before, when the Government raise the cost of transport by increasing the petrol tax, when the spiral is going upwards and upwards on the price side, and demand is being cut by an increase in the Bank rate and restrictions on credit?

I am sure the hon. Lady would not deliberately mislead the House from her suggestion that it is the actions of the Government which have to some degree caused unemployment in the clothing industry. Hon. Members opposite took part with me in a deputation from the clothing industry only about a month after the Election to make complaints about unemployment in that industry. I am sure the hon. Lady would not like to give the impression that those conditions arose only since the Budget was framed.

He cannot have been in here when I was giving the background, because I gave a clear assessment of how the situation arose. It is equally true to say that the actions of the Government since they came into office have substantially aggravated the situation, and we are only at the edge of that aggravation. I want to say this to my Lancashire friends who put up a most sincere appeal for the diversification of industry to solve this problem: diversification of industry in the circumstances of the economic and financial policy of this Government is a complete mirage.

What industries can be brought in? What alternative consumer industries can be developed or, indeed, what other kind of industries? Already in Blackburn I know of an engineering firm whose livelihood has been cut to ribbons by a steel allocation which has brought it face to face with bankruptcy simply because it is serving a useful home purpose by making dairy machinery. Yet because it is not engaged 100 per cent. on export trade or 100 per cent. for defence, its steel allocation is giving it a headache which is already sending it reeling.

How can industry be diversified in that way? The policy which this Government have embarked upon is a deliberate policy of reducing the standard of life, and that is a policy of reducing consumption. [HON. MEMBERS: "No."] Certainly, because that is how the re-armament programme and the export drive are to be paid for—if they are ever to be paid for at all. In that situation how can industry be diversified? What industries can be introduced which will not be affected in the same way?

The right hon. Gentleman the Chancellor of the Exchequer is going to balance his Budget by cutting the capital investment programme. In that case how can industries be expanded? There has been a wonderful expansion of industry in Blackburn, during the last six years, as the right hon. Member for Blackburn, West (Mr. Assheton) knows. In that time there has been more industrial building, more diversification, than Blackburn has seen for over a generation, but that is to come to an end. Industrial building will be cut, capital investment will be cut. That is how the Chancellor is facing our economic difficulties, and I say that if that policy continues then Lancashire faces slow death.

I should warn the House that a great many hon. Members wish to speak. I hope all speeches will not be as long as those we have been experiencing.

6.10 p.m.

I have no specialised knowledge of the textile industry, and I would not follow the hon. Lady the Member for Blackburn, East (Mrs. Castle) in the intricacies of the argument she put forward, except to say that the whole tone of her speech was as unhelpful and as unrealistic as the tone of the speech of the hon. Gentleman the Member for Rossendale (Mr. Anthony Greenwood), who opened this debate, was both helpful and realistic.

I trespass shortly on the time of the House to put forward a suggestion which may help to provide some alleviation of the difficulties which the textile industry is going through at present. I do not pretend that what I have to say is in any way a long-term or far-reaching remedy. I leave such proposals to other hon. Members who have far greater knowledge of the textile industry than I.

The sellers' market has come to an end in the textile industry quicker than in any other industry; indeed, its end has come with great suddenness. In the six months ending February, 1951, the then Government found it necessary to place orders abroad to the extent of £6 million worth of textiles because the home industry was not able to fulfil the orders—for military clothing, and the like. This certainly showed a lack of foresight on the part of that Government, who could have held those orders and fed them to the industry as and when the industry was capable of dealing with them.

Does the hon. and gallant Gentleman realise that, in making that remark, he is in great peril of joining the group to which my hon. Friend the Member for Blackburn, East (Mrs. Castle), who has just spoken, belongs? Those orders were placed in pursuance of a re-armament programme held to be urgent, and the Government of the day could have adopted the suggestion of postponing the re-armament programme, which my hon. Friend wanted them to do.

That really is not so. If they had held on to the orders for clothing, it could not have been said that the whole of the re-armament programme was being held up. It was an error. It was an understandable and, perhaps, a not very serious error; but it was an error; and this Government is the heir to that error. I am glad to hear from the President of the Board of Trade an assurance that that mistake will not be repeated in the lifetime of this Government.

In February, 1951, the industry's order books were full. Six months later, in August, there were 13,000 unemployed. Today, there are 70,000. They represent some 5 per cent. of the total labour force, not including short-time workers.

The problem that we have to face of unemployment in the textile industry is different from that which we have to face in other industries. The greatest danger we have to guard against, where unemployment is concerned throughout industry as a whole, is a shortage of raw materials. In the textile industry that is not the case. Unemployment is being brought about by the jamming of the congested pipeline of stocks through lack of demand by buyers. It is towards a solution of this immediate, pressing problem of dwindling markets that I wish to make a suggestion.

May I point out that it is entirely wrong to say that in the textile industry it is not the case that a shortage of raw materials can create unemployment, because in the rayon industry, unless we get sulphur, the industry, being synthetic, is destroyed?

Is the hon. Gentleman opposite aware that Courtaulds closed a factory recently, and that British Celanese have, as well, because they have too much raw material at present? The trouble has nothing to do with a shortage of materials.

I did not say that it was impossible for the textile industry to suffer from a lack of raw materials. Of course, it is. What I am saying is that the problem with which we have to cope is not a shortage of raw materials at present, but the difficulty of finding markets.

The hon. Gentleman the Member for Rossendale asked the President of the Board of Trade in what markets the textile industry could expand. I go further and ask how the Government can help in finding markets which can take up some of the slack now existing in the industry? It is, obviously, a very limited field. The responsibility must rest with the industry. However, I believe that the Government can help, and, so far as it is possible, I am sure that the Government will help by placing defence orders—for uniforms, and the like.

It is here that I have a suggestion to make. There are 850,000 refugees in Palestine at present. A constituent of mine has recently returned to this country from Palestine where he was acting as a sort of welfare officer in the various refugee camps. The standard of life of those refugees it pitifully low. They have virtually no resources of their own, and they are entirely dependent for the bare necessities of life on charity provided by the United Nations Relief and Works Agency. They need clothing. Could we not provide it for them?

The United Nations General Assembly has recently approved a three-year programme of relief for those refugees costing £80 million, of which some £25 million is to be spent in the first year. Of the £25 million the United States Government have offered to contribute the dollar equivalent of £17 million, and our Government will contribute some £4 million. Could not some of this money be spent on providing clothing for those unfortunate people who are in such dire need of it? Could not the orders for this clothing be placed in Lancashire?

I would suggest to my right hon. Friend that he makes representations to the Foreign Secretary that, say, £2 million worth of clothing be ordered and paid for out of the United Nations fund. Divided among 850,000 people, £2 million is not a very large sum. It is something just over £2 per head per year on clothing. It could be paid for either out of this country's contribution to the United Nations fund, or, better still, it could be regarded as a purchase by the United States, and paid for out of their contribution to the fund, and we should then receive payment in dollars for the clothing.

I am not talking about our balance of payments. I am talking about the fund set up by the United Nations General Assembly, a portion of which is to provide clothing for those people, many of whom are almost stark naked.

My interjection was to ask whether it is not the case that that money was meant primarily to be spent on food, on which people are first of all dependent. The more money that is spent on clothing, the less money there will be to spend on food, and then somebody, somewhere, has to find extra money for food.

It was never intended that the £25 million was to go for food alone. Some of it is to go to clothing. I submit that £2 million could be spent on clothing those refugees in Palestine. I do not pretend that this suggestion is anything but a temporary arrangement, and it in no way attacks the root of the problem, but it could provide some degree of relief to the industry, and it has a considerable advantage inasmuch as, once this is agreed upon, orders could be placed immediately. I hope that this suggestion may be found to be of some use.

6.19 p.m.

I listened with interest to what the President of the Board of Trade had to say in reply to the very good speech of my hon. Friend the Member for Rossendale (Mr. Anthony Greenwood). Before I begin what I originally wanted to say, I have one or two points to put which are relative to what the right hon. Gentleman said. With regard to price control, there was no reason whatever why any trader, retailer or wholesaler, could not have reduced prices even when price control was on. A maximum price was set, and to my mind the right hon. Gentleman's statement this afternoon was very misleading.

The D scheme, as it stands, is nothing but a tax-raising device. It has no other use. The old specification on which people could depend has gone. In my speech in the Budget debate, I agreed that some measure of flexibility had taken place, but nothing like as much as either the Douglas Report or the President of the Board of Trade made out at the time. There was a considerable amount of specified clothes being made. I will point out later why it is a misfortune that a lot of those specified clothes have disappeared; in a few months' time it may be necessary to be able to identify clothes, but, unfortunately, the President of the Board of Trade has lost that power through the Financial Resolution.

With reference to competition from Japan, I am very pleased to know that the right hon. Gentleman has given instructions that no more licences will be issued. That may appear to be a good thing. I dare say it is. But the most important question at the moment in that connection is: What will happen to the cloth already in stock? Will the right hon. Gentleman allow the stock that has been bought for export to come on to the home market? If any cloth that has been bought comes on to the home market, there can be no argument to justify any importation of Japanese cloths.

I ask the right hon. Gentleman to give us an answer to the question: Is any of the Japanese imported cloth being put on to the home market in competition with our own textile goods? If there is any element of that, no argument can be advanced to justify the importation of any more. The whole purpose of the importation of Japanese cloth was to keep open textile markets in other parts of the world, and if that is not being done, for goodness' sake scrap the idea altogether and stop any more cloth coming in.

The right hon. Gentleman exhorted the industry to use more machines. Does he realise that the circumstances of the textile industry make it almost impossible to put in any machines? Does he realise that a machine which is the fruit of the work of the Shirley Institute for the last two years, a machine the use of which is very desirable throughout the length and breadth of the cotton industry, and, to a certain extent, of the wool industry, cannot be bought by Lancashire textile mills at the present time? Or if it can be, the orders are not coming forward. I understand that only two or three of those machines invented by the Shirley Institute have been ordered for our industry, yet America is prepared to take them as fast as she can get them.

It is all very well our talking in this House and giving data or information that we can pick up in journals, and allowing that sort of thing to go on. It means that in the sizing department America can beat us hand over fist by using our own machines, which we cannot afford to buy. It may be that it is the outcome of initial allowances disappearing in the last Budget. That is nothing to do with the right hon. Gentleman; my right hon. Friends were responsible for that. On the other hand, the restriction the Government have put upon credit, and also the reduction in capital investment, will play their part in putting Lancashire and Yorkshire industries gradually behind scratch as time goes on.

The hon. and gallant Member for Rochdale (Lieut.-Colonel Schofield), who made a very good contribution, made a very fair statement, but it would have been fairer if, when pointing out the disparity of 6d. a lb. between the price at which the Raw Cotton Commission was selling and the price at which it could be bought overseas, he had also mentioned the margins of the yarn spinners in Lancashire, and pointed out that the reduction they made three weeks ago of 10d. a lb. for 32s had more significance than any disparity in the Raw Cotton Commission prices for the past six months. The hon. Member for Louth (Mr. Osborne) knows about this, because a lot of 32s goes into the hosiery trade.

What does the right hon. Gentleman consider is the difficulty in Lancashire? Does he consider it as just a recession, or does he consider that it is a slump? It may be too early for the Government to have made up their minds. It may be too early for the Cotton Board and the trade as a whole to have made up their minds. On the other hand, it is not too early to expect that the Government should at any rate be able to assure us that they are planning in case this should prove to be a slump, and I beg the right hon. Gentleman to give us some indication, before the debate is over, of the plans on which the Government propose to work.

What were the factors leading up to the present situation? Until July of last year, the Cotton Yarn Spinners' Association were still instructing and advising their members to keep their commitments to within a six-months' period, which meant that many spinners were booked to the end of the year.

During the six years since the war, there have been many difficulties in the supply of raw cotton. The hon. and gallant Member for Rochdale covered that point, and I will not labour it, but the main one was the shortage of dollars. The next one, which he did not mention, was the physical shortage of cotton in the 1950–51 season, which forced the Raw Cotton Commission to go into other markets—Brazil, Uganda, Sudan, Egypt and the rest—to buy cotton at far higher prices.

If my recollection serves me right, the disparity between the prices at which the Raw Cotton Commission were forced to buy and the American prices ruling at the time was far higher than that suggested by the hon. and gallant Member for Rochdale. It meant that prices were gradually rising, and there is no incentive to purchase like rising prices, because when one has the goods in one's hand it is a grand thing if they are appreciating in value while one holds them.

Other difficulties about raw cotton did a tremendous lot in West Africa, East Africa, Sudan, Uganda and other parts of the world to set those countries on their feet, and the fact that during that period there was this demand for cotton from Lancashire did more good to these peoples than any Colombo Plan, however idealistic may have been its conception. The difficulties Lancashire suffered on account of cotton acquisition and the difficulties the consumer had to face on account of higher prices must surely be softened by the knowledge that those countries have woven something into their economies which, we hope, will benefit them for a long time to come.

I believe that the over-optimistic estimate on 8th August—and it was over-optimistic because the Cotton Bureau in America suggested that the cotton crop would be something in the region of 17½ million—really set the seal on the decline in prices. Just about that time, too, we could see the rise in the productivity in countries in Western Europe, India and Japan coming to their post-war peak, so we had two factors: one, a plentiful supply of cheap raw material in prospect, and the other, many producers glad to make the goods. As soon as that happened, there was buyers' resistance all over the world.

I am sure that the hon. Member with his expert knowledge would not wish to mislead the House. He said that Japan's efforts were reaching their post-war peak. Surely he is aware that Japan is only operating five million spindles now against 13—million spindles pre-war, so she cannot be near her postwar peak.

I am saying that it is her post-war peak. I am not talking about her pre-war peak. It was then nine million to 10 million spindles. Her postwar peak was reached in the middle of last year.

The hon. Member is not suggesting that is the limit to which she is going in the coming years?

Certainly not. Neither am I deceived by the reasons for the reduction in Japanese output at the present time, and I hope nobody else on the Front Bench opposite is.

I will tell the House what is the reason for the restriction of output in Japan. It is not because they cannot get rid of their stuff at near-cost prices; they are waiting for the inevitable slump in raw material prices. If hon. Gentlemen will watch this situation they will in time, I think, agree with me. The Japanese are very astute operators in this market.

The hon. Member says that Japan is waiting for the drop in raw material prices. Does he not accept that in point of fact that is what the cotton producers are doing throughout the world?

Yes, of course it is; but in the case of Japan a lot of people have the idea that Japan is prepared to operate at any time irrespective of conditions in the raw material market, and I am saying that Japan is doing this for that particular reason. So much for overseas. At home it was the cost of living, prices too high, talk of crises, talk of an early Election, fear of the restriction of credit with the buyers holding on—and a Tory Government did the rest. The hon. Member for Blackburn, East (Mrs. Castle), was nearly right when she said that it was aggravated. In November the Government said one thing and in the Budget they said another.

In November, the Government acted on a basis of restriction of credit which was to curtail consumer goods. When they came to the Budget, the Government had to change their minds because of pressure of opinion and the situation in Lancashire, and they told the House and the country that they could now carry on with the 1951 amount of consumption in consumer goods.

I do not want to weary the House, but the point I am making is a constructive one, and I feel that what I have said is quite necessary in order to point the way to what I am about to say. In the debate last week on the Export Guarantees Bill, I expressed the opinion that this question of exports of consumer goods was really approaching a new phase.

I said that at the end of the 19th Century and the beginning of the 20th Century competition in Western Europe for consumer goods for overseas trade was coming to an end, that a new pattern was emerging. I believe myself that there is a big shake-out taking place. So the question we have to ask ourselves is: How much can the trade itself and the Government influence and shape events? One thing that no trade or Government can do is to force someone to buy stuff that he does not want. Let us approach the matter from the practical end. The important thing is that we should be on the spot, ready and able to supply when trade revives.

I do not wish to quote figures to the House—there are masses of them to draw from—but the statistics that are available show that in each successive depression or slump, such as in 1919–22 and 1929–32 which both followed the same pattern, there is a recession, a raw material collapse, and then the entry by the low-cost producers of the world into markets that we had previously enjoyed. I contend that it is the two years after a slump has begun that set the pattern of how much trade can be expected to be retained when trade begins to flow again.

If we neglect any opportunity from now on, we shall rue the day. None of our textile industries in this country can exist solely on home trade. They must have a life-line overseas. Whilst the slump is on, it is not possible to distinguish between the efficient and the inefficient, because when distress selling is taking place the efficient and the inefficient are doing the same thing, often selling at half price. Prices fall further and the slump touches bottom at the moment raw materials reach this lowest price.

Improvement in trade follows when there is confidence that no more money will be lost in a falling market. It is then, and then alone, that the conversion factor comes into its own. It does so in the costing of any yard of cloth. It sorts out the efficient firm from the inefficient firm at that very moment. It is precisely at that time that the pattern of trade will be determined for many years. It is important that the early purchases should be from us. A slump every now and again suits a low-cost producing country down to the ground; such countries get into new markets. This time we must see to it that we are organised as an industry to cope with the situation.

With regard to cotton, the President of the Board of Trade should immediately, if he has not already done so, start consultations with the Cotton Board, and with the trade generally on the revival of British Overseas Cottons Limited or another organisation to improve on it. It was formed in the early war years to co-ordinate the different interests concerned with the making of cotton cloth— the spinners, weavers, finishers and converters. The right hon. Gentleman must not be fobbed off by objections from interests at the converter end. He should look at the problem as a whole. Let him examine it, take honest opinion on it and then act on it.

I am convinced that there will have to be co-ordination of effort not only between the Government and the industry but between every branch of the industry if we are going to do what I have in mind, namely, that we should hold on to every yard of cotton exports from now on. I have warned the President of the Board of Trade that the possibility is that any yard of cloth that we lose in exports during the next year or two will never be regained. The danger of losing our share in world wool markets is not so dangerous as in cotton. Nevertheless, we cannot afford to lose a yard.

There again, I would ask the President of the Board of Trade to consult with the Wool Export Corporation and the Export Credits Guarantee Department, together with all the other interests in the trade, including chambers of commerce, and get down to a basis where we can have a better spearhead for our exports, particularly in the dollar markets. I am not grumbling about what the wool trade has done. It has the finest record of exports to the dollar market, considering the difficulties that it had to face immediately the war was over and the way it was run down in regard to personnel. It has done a marvellous job. But we must now think about the preservation of its export trade, and I ask the right hon. Gentleman to act now.

My next constructive proposal is this. Never in this century has there been a better financial background to the textile industry than now. The hon. and gallant Member for Rochdale agreed that was so. He said that it was in good shape from a financial point of view. It is. It has been enabled to make profits which are now of great advantage to it. I say to my hon. Friends on this side of the House: in an industry which is dependent upon raw materials coming from abroad, which is subject to the vicissitudes of either fashion or demand all over the world, if the firms which are engaged in it are not allowed to make a profit in good times, who is going to pay the losses in bad times? [HON. MEMBERS: "Hear, hear."] Yes, but I am coming on to something which is not so palatable. It could be that with the selling of stocks at distress prices, firms will not be showing such good results before very long.

Of course, but even now there are firms who are paying 25 per cent., 30 per cent. and in one case 45 per cent. in dividends. I say emphatically that that is wrong at this time.

Would they be paying those dividends on the nominal capital or on the capital used in the business?

I do know a look at the statistics part of the "Economist" will not only give the hon. Gentleman that information, but will also give the yield against the money values which the hon. Gentleman mentioned.

The hon. Gentleman has raised on many occasions the allegation which he has just made about the textile industry. Surely he will agree that the rate of distribution in the textile group of industries since the war has been very modest indeed, more modest than in any other group of industries.

So modest that it is the highest in the century. [An HON. MEMBER: "No."] Yes. I ask the President of the Board of Trade: please conserve the assets that are now in the industry. Do not allow anybody from now on, in co-operation with the Chancellor of the Exchequer, to distribute dividends in excess of 5 per cent. I ask the Chancellor of the Exchequer to pay particular attention to this point. We must not lose the assets that the trade now have in their possession. High dividends should not be distributed.

I am afraid I cannot give way. Time is getting late now, and I want to allow somebody in before 7 o'Clock. [Interruption.] It is only fair.

The next point is about the D scheme. Can the President of the Board of Trade tell us whether the Chancellor of the Exchequer was serious when he spoke about consumption being as high in 1952 as it was in 1951? I do not for a moment think that that is going to be achieved. If this is to be one of the things which the Chancellor hopes will help to revive the textile industry during the coming months, I do not believe it will be done. This D scheme, with all its anomalies, will make it difficult for that result to happen. The Chancellor of the Exchequer is now the boss at the Board of Trade, so far as the consumer goods industries are concerned, and I ask him to take off the whole of the Purchase Tax from goods within the textile field, as a gesture to the textile industries. There are so many anomalies that I think he will be glad when he has done it, if he will but take the plunge.

Another point is—at The Hague at the present time there is an organisation under N.A.T.O. for ordering and distributing textile goods. I understand that considerable orders are being given out and that most of them have been taken up by countries such as Italy, Belgium and France. Would the right hon. Gentleman see to it that we are well represented on that organisation, and that at least we have a chance of getting orders if we are at all competitive?

I am not as pessimistic as some people may be. We can weather this storm. It may be that there is a contraction, but the energy and the capacity of the people of Lancashire and Yorkshire, the West of England and of Scotland, will be equal to the task.

6.56 p.m.

I am sure that the House welcomed the last remark made by the hon. Member for Ashton-under-Lyne (Mr. Rhodes). I particularly endorse it, and I think we can all agree with much that he said.

Except for one contribution, in which some appalling suggestions were made to which I am not going to refer now, so fantastic were they, the debate has been in the nature of a Council of State, so often advocated for debates in this House but so seldom attained. I hope that the remainder of the debate will be continued in that strain. It is only in that way that we can fully do justice to the very serious situation which has arisen in the textile industry.

Some of us who were here in the 1930's remember the similar situation which arose then. It is, indeed, a disappointment and a sad day for us that something on similar lines seems to be starting, although we hope and pray that it will not develop into the depths of unemployment we reached in those days. Any hon. Member who has any regard for the people in his constituency must feel depressed at the thought that we are passing into a very anxious time. We gradually restored the position before the war started in 1939, but the trouble about the present slump—if it is to be a slump—is that it has come about so suddenly and is so thoroughly unexpected.

One thing that stands out is that it is through no fault of the present Government. At Christmas, 1949, there was a small recession in the spinning section of the industry. Again, in August and September, 1950, mills were stocking cotton yarn because salesmen could not find a ready market. Then came Korea, which rescued that situation. Last autumn, there was a recession and the position has not improved materially since that time. That was many weeks before the General Election. Therefore, I say again that the present position is certainly no fault of this Government; nor, as has been said by other speakers, are we alone in this matter. It is worldwide. Six months before last Christmas they were on short time in the United States—and the position has not improved since then—and the same situation applies in Japan and India. Many reasons have been given for this and—

It being Seven o'Clock, and there being Private Business set down by direction of The CHAIRMAN OF WAYS AND MEANS under Standing Order No. 7 ( Time for taking Private Business), further Proceeding stood postponed.