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Wool Textile Industry

Volume 21: debated on Monday 29 March 1982

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10.25 pm

I beg to move,

That the draft Wool Textile Industry (Export Promotion Levy) (Amendment) Order 1982, which was laid before this House on 2nd March, be approved.

With this it will be convenient to take the draft Wool Textile Industry (Scientific Research Levy) (Amendment) Order 1982.

The two orders are closely connected and they can most conveniently be dealt with together. I should explain that it is necessary for there to be two separate orders, although they are closely connected, as the purpose of the two levies is different. One levy is for scientific research into the technical problems of the industry, carried out by WIRA—formerly the Wool Industry Research Association—and the other for the promotion of exports of woollen goods effected by the National Wool Textile Export Corporation.

The effect of the orders, which are under the authority of the Industrial Organisation and Development Act 1947, is to provide for the amendment, first, of Statutory Instrument 1970/349—The Wool Textile Industry (Scientific Research Levy) Order 1970—as amended by Statutory Instrument 1971/881—The Wool Textile Industry (Scientific Research Levy) Amendment Order 1971—and, secondly, of Statutory Instrument 1970/348—The Wool Textile Industry (Export Promotion Levy) Order 1970—as amended by Statutory Instrument 1971/880—The Wool Textile Industry (Export Promotion Levy) (Amendment) Order 1971. I apologise for those details, but I wished to get them on the record. I hope that what I now say will be a little clearer.

The changes proposed in the orders are twofold. Perhaps the most significant one is that the scientific research levy shall cease to be payable in the wool textile industry after the levy period ending on 31 March 1983. The other is that the orders provide that the level of exemption from liability to pay the two levies—for scientific research and export promotion together—will be increased with effect from the current levy period ending on 31 March 1982.

It might be helpful if I explain at this point a little of the background to these statutory levies, which were established in 1950. The scientific research levy was introduced to provide funds for scientific research carried out by WIRA. Those funds replaced grant hitherto paid by the Government in one form or another since 1918. The export promotion levy was introduced to provide funds for the work of the National Wool Textile Export Corporation, which had been financed since 1941 by the Board of Trade. The objective of the levies was to spread the cost of research and export promotion aimed at benefiting the industry as a whole on as equitable a basis as possible to all firms within the industry. The proceeds of those levies are paid over, without deduction, to the two organisations concerned.

As part of a general review of statutory levies in industry, the Department of Industry conducted a poll last year of companies which pay these wool textile industry statutory levies. The result of this poll showed that a significant majority of companies—58 per cent.—had voted for the termination of the scientific research levy and a small majority—51 per cent.—for the continuation of the export promotion levy. It is obviously right that the views expressed by a substantial majority of the industry should be respected.

But having accepted the views of industry on the scientific research levy, we recognise the difficulties that would be created in discontinuing it overnight. Therefore, we have taken the view that a period of adjustment is desirable so that the industry and WIRA might consider possible alternative arrangements. In effect, the provisions of the draft order mean that the levy would be phased out over a period of about two years after the poll was conducted.

It is certainly not the intention of either the industry or the Government that research carried out by WIRA on behalf of the industry as a whole should cease to exist, but rather that as a result of the draft order, and a new system of funding to which it would inevitably give rise, WIRA should become more commercially oriented and responsive to the needs of the industry that it serves. I know that WIRA is confident about its own future in the post-levy period. Many firms have intimated that they would be prepared to contribute by voluntary subscription. It is my belief that a move from a statutory levy to voluntary support, combined with greater reliance on charges for specific services, represents the most effective way of securing this change in direction.

As I have said, both orders contain provisions to assist at once the smaller firms in the industry by raising, with effect from 1 April 1982, the exemption level below which firms do not have to pay levy. Both levies are collected at the same time on one assessment form. The Department of Industry then divides the proceeds in the appropriate proportions between the two recipient bodies. The exemption limit for both levies is therefore the same. The levies are collected in arrears, the collection commencing on 1 April 1982 relating to the levy period 1 October 1981 to 31 March 1982. The present position is that companies are exempted from making payments where the assessed amount would be just under £5, or less, in any six-monthly levy period.

The orders would increase that exemption limit to just under £100 per levy period. At present, about 70 companies, out of nearly 700 assessed for levy, are exempted from payment. The proposed increase in the limits will exempt approximately 200 further companies. That is a substantial increase and in suggesting it, we have, of course, had to have regard to section 9 of the Industrial Organisation and Development Act 1947, which requires that the authority making the order shall satisfy itself
"that the incidence of the charges as between different classes of undertakings in the industry will be in accordance with a fair principle."
We are so satisfied, for three reasons. First, these new exemptions will not increase the levy payable by those which also remain liable. They will pay the same as before. Secondly, the new exemptions will not cause a significant loss of revenue to WIRA and the export corporation. That is important. The loss will be less than 4 per cent. of the levy income of those bodies. Thirdly, many of these smaller companies have, in practice, received little benefit from the activities that the levies finance.

At present the scientific research levy yields about £411, 000 per year and represents about 27 per cent. of WIRA's total income. The remainder of its income is derived from contributions from the Department of Industry towards expenditure on approved Textile Research Council contracts, subscriptions, rent, royalties and the like. The export promotion levy yields about £365, 000 per year and represents over 85 per cent. of the export corporation's total income.

It is estimated that under the proposals that we are considering, WIRA's income will be reduced by about £11, 700 and the export corporation's by about £10, 400 in a full year, or less than 4 per cent. of the amount that it receives from levies. However, the precise amount is difficult to calculate with certainty, because the levies are based by reference to levels of emoluments and weights of fibre supplied, which will obviously vary from one year to another.

As required by the 1947 Act, the Department has consulted organisations representative of persons carrying on the business and those employed in the industry. The industry's representative organisation, the Confederation of British Wool Textiles, supports the proposed changes. The two unions that I consulted—the National Union of Dyers, Bleachers and Textile Workers and the General and Municipal Workers Union—would prefer that both levies should continue. We have, of course, taken serious account of that view from the organisations representing persons employed in the industry. However, we have decided that the scientific research levy should, on balance, be phased out. The matter has been discussed also with WIRA and the National Wool Textile Export Corporation, which have accepted the proposed amendments to the orders, which are essentially based on the wishes of the industry.

From the figures that the Minister has presented, I understand that he will exempt a firm which, at the most, would pay £100 every six months. If a firm were employing 20 people, that would be about 20p per week per employee. Is the hon. Gentleman saying that a firm of that size would not benefit from a research contribution of 20p per employee? Is it not a sad commentary on the industry's approach that it does not think it worth while to spend 20p per employee on research and development?

I do not think that that is the point. The point is whether there should be a compulsory statutory levy.

On the same point, is it not the case that the unions—including the General and Municipal Workers Union, of which I am a sponsored Member—have told the Minister that one of the problems is that in other countries this kind of research work takes place, leading to new products, better products, and better skills in the industry? Is not the abolition of such schemes one of the reasons why we cannot compete?

I would say to the hon. Gentleman, who is very fair minded in these matters, that we are not talking about stopping or in any way substantially reducing research in the industry. That is not the point of the second levy, which is concerned simply with the minute sums that are now being taken in levy from some companies. As at this moment, the figure below which levy is not payable is just under £5. That is a very small sum of money and is scarcely worth the collecting, so I do not think that in putting forward this proposal we are in any sense attacking the concept of research. We are simply trying to reach a sensible level—I do not think that the level has been increased since 1970—below which the levy should not be payable. We sought to find a reasonable point at which the very small firms would not have to pay it.

Some of the firms will benefit from some of the research, but we are again talking about a very small contribution—only 4 per cent. of the total sums raised in levy, not 4 per cent. of the total income, for scientific research. Therefore, we are talking of a very tiny figure altogether. It is a reasonable line at which to draw the balance.

Perhaps I could answer some of the points later, by leave of the House, if hon. Members wish to make their own contributions, as I can see that several of them wish to speak in the debate. I shall endeavour to answer all the points at the end.

The proposal that we have made on the lower limit for levies has been accepted by the industry as being very reasonable. Therefore, as I said, the amendments to the orders that I am now putting before the House have been accepted by WIRA—that is a very important point in relation to what the hon. Member for Batley and Morley (Mr. Woolmer) and the hon. Member for Whitehaven (Dr. Cunningham) have asked me—and by the National Wool Textile Export Corporation concerning the export side, and they are essentially based on the wishes of the industry. I ask the House also to accept the wishes of the industry and to approve the orders.

10.38 pm

The orders are of great consequence for the wool textile industry; in fact, they are of some consequence for the House and its control of the Executive, judging by the Fifteenth Report of the Joint Committee on Statutory Instruments. That Committee came to the conclusion that it was an unusual use of the powers of the Department conferred by section 9.

The report states that the orders substantially raise
" the level below which firms in the textile industry are exempt from paying research levy and the export promotion levyy … The levels are, however, raised very dramatically."
The report states that
"Section 9 …. provides for raising the levy by imposing charges 'on persons carrying on business in the industry' …. The Committee question the Department's general contention regarding the effect of the section."
The report goes on to say that
"the effect of the massive increases in the exemption limits proposed by the Order would be that some third of the firms in the industry would be exempt from the levy, as compared with the ten per cent. of firms that are at present exempt.
" The Committee concludes that this is
"an unusual use of the powers conferred by section 9."
There is no doubt that the Department is pushing to the limits its statutory powers in laying the orders tonight. The Minister skated over this rather quickly in his introductory remarks and I shall want an assurance from the Minister that his legal advice is that the Department is not exceeding his powers. Few industries have been as badly hit as this industry has by the recession, by competition, and by the depression caused by this Government.

The measure will weaken the industry further in research and development, because it has to be coupled with damage to applied research in textiles caused by cuts in university and college funding, the low and falling level of Government-funded research, and the inability of a grossly weakened industry to fund its own research. Ultimately, this measure leads to a loss of research funds of £300, 000 to £400, 000 a year. As a result, the industry will be less competitive, less innovative and less able to cope with change.

Employment in the industry has fallen from 82, 000 to 55, 000 in the past four years. As the Wool Textile and Clothing Industry Action Committee said in January 1982:
"it is difficult to see an end to the haemorrhage of jobs in the year ahead"
In the last two years, 300 mills have been closed, and 45 per cent. of the jobs in the wool textile industry in West Yorkshire were lost between 1973 and 1981.

We do not have to look far to find the reasons for that catastrophic collapse. Consumer demand for textiles and clothing fell by no less than 6 per cent. last year—more than in any other European country. Tight monetarist policies cut demand—that is what they are for. The Red Book published at the time of the Budget sees no end to the process, because consumer's expenditure is forecast to rise by ½ per cent. in the coming year—on very optimistic premises. So the outlook is no growth in the industry. Low growth means high unit costs and no funds for research.

The wool textile Neddy said last October:
"Many in the industry felt that there was little point in identifying and attempting to overcome problems when the main problem was the Government's economic policies"
The usual response from this Government—that of blaming workers—will not wash in this case, because industrial relations are good, wage settlements are modest, wages are well below the average in manufacturing industry, and there is a universal acceptance of new technology. Workers have responded to every proposal to save the industry, and they have been rewarded with the loss of their livelihoods. The industry has been subjected to a blitz of uncontrolled trade dumping, false labelling, unpoliced outward processing, and a tide of imports over which the Government appear to have no control. It is all evidence of a torpid Government watching an industry slide to destruction.

The condition of the industry and the Government's responsibility for it was clearly described in a report by the management consultants Werner International, produced for the Department of Industry. Its conclusions were so distasteful that the Department attempted to suppress the report. It was only pressure from Members of Parliament that made it available to the House, and the trade unions waited three months to see it. Werner said that the EEC had no effective policy for the wool textile and clothing industries in the Community, and that without a policy and strategy of its own the United Kingdom wool textile industry would continue to decline. Werner picked out the adverse factors—the high interest rates and substantial damage done to the industry by the high value of sterling.

However, the crucial issue identified by Werner concerned Government assistance to the industry in technical back-up and research and in export promotion, compared with France, Germany and Italy. The key passage of the Werner report discusses:
"Do Other National Aid Schemes Give An Unfair Advantage?"—
to our competitors, that is. Its conclusion runs as follows:
"In consequence, although we cannot quantify the effect of these aids on the competitiveness of the United Kingdom, we are nevertheless of the opinion that in comparison with his Italian and French counterpart the manufacturer in the United Kingdom receives less assistance within a more limited range of programmes and that in comparison with all three continental participants the method of granting aid is less beneficial to this sector of industry'.
It went on:
"although the sector has benefited in the past from the wool and worsted scheme and from their location in West Yorkshire, the change in status of this area will now preclude it from any form of regional assistance for development or rehabilitation under Section Seven of the 1977 Industry Act".
That report is an essential background to tonight's debate. It shows the wool textile industry in a catastrophic condition, with the Government standing aside offering platitudes of good will and nothing else.

Research is essential for competitiveness in this industry. The research levy was established in 1950 to provide funds for the Wool Industry Research Association—WIRA—but it replaced a Government grant that had existed since 1918. When the referendum on the levy was tallied, it was found that 57 per cent. voted for abolition and 42 per cent. for continuance. About a quarter of the respondents said that they were willing to pay voluntarily. That might reduce the loss of funds to WIRA to about £300, 000. WIRA accepted the result, but it wanted the phasing out to run to 1984 because of the long lead time of some of its projects, yet this order ends the levy in 1982–83.

I have one question about which WIRA is concerned as a result of the tabling of these orders. The interim raising of the payment threshold exempts a total of 215 companies from payment. The Department knows which those companies are, but WIRA does not and it needs to know. The Department will not tell WIRA—there has been correspondence on the matter which, no doubt, has crossed the Minister's desk—and says that the information is confidential. Why? Where does the order say that it is confidential? Why cannot the Government get permission from these companies to say which are exempted from the levy so that WIRA no longer has to continue servicing them?

Much of the future work of WIRA, which is acknowledged throughout the world as a centre of excellence in this area, depends on what funds the industry is willing to contribute voluntarily, but, as orders fall away, the willingness and ability to subscribe to WIRA voluntarily will fall. If so, important research into new management and manufacturing methods, machinery, fabric quality, fire safety of fabric and consumer protection will also fall away to the detriment of production, employment, trade and consumer interests.

After all, we have an example of what has happened in a similar situation in a similar industry. The Shirley Institute lost its levy some years ago and its income fell by a third. As contributing firms got into difficulties, they cut their voluntary contributions. Today, the Shirley Institute obtains 7 to 8 per cent. of its funding from income from member firms and a quarter from foreign companies. Therefore, it can no longer contribute as well to the state of the art in manufacturing and design as it could before, and that is a permanent loss to the British textile industry.

While WIRA's income is in jeopardy, there have been cuts in funds for wool textile research in universities and colleges. Dewsbury and Batley college of art textile department closed last year. I understand that the University of Bradford textile department faces closure next year, yet Bradford provides the industry with a third of its trained technologists. Research council funds for work on textiles in Huddersfield polytechnic are being reduced. There is already an exceptionally low level of direct Government funding for textile research. Of £83 million dedicated to the five requirements boards in 1981–82, only £1·75 million was earmarked for textiles and clothing, a proportion quite out of balance with the contribution those industries make to the economy.

That allocation should be increased. There should be a higher direct contribution to research by the Department. It should be raised from 25 per cent. to 50 per cent. of project costs.

According to a Comitextil study, the Government make the lowest percentage contribution to textile research of any EEC Government, and it has halved in the last five years. The Confederation of Wool Textiles has asked for a scheme of assistance the central feature of which is funds for product development; yet we see it being cut by this measure, by cuts in university education and by the inability of the industry to fund its own research.

Research in the industry is under-funded. It is no wonder that hard-pressed firms voted to end their contribution. However, a national interest is involved in the level of applied research in this and any other industry. Recession is a time when we should be spending more and not less.

We are pleased to learn that the export promotion levy is to continue. The National Wool Textile Corporation will lose about £12, 000 a year and will continue to receive £350, 000 a year. This could have been an opportunity to review our national effort. If funding for the National Wool Textile Corporation were at the 1950 level it would total £800, 000 a year. Today it is less than half that. The corporation, which has no Government funding, does valuable work in promoting exports, colour and design and in targeting key markets. It has far less money to spend than our main competitors. For example, in France there is a 10 per cent. sales levy for export promotion on the industry's output.

The wool textile Neddy has said that design and marketing is a weakness in the industry. WIRA has said that our industry lacks flair in design and marketing compared with Italy. Coming from a footwear producing area, I know how true that is.

The wool textile industry's marketing effort needs greater support, not less. The trade in wool textiles is barely in surplus, and that is despite our history of being a wool textile producing country.

The Government cut the national export promotion programme by £16 million in 1980. There were cuts in overseas missions, in trade fairs and market research, and yet our competitors stepped up national support in all those areas. Why do not the Government fund co-operative marketing at a regional level in West Yorkshire? Why do they not give manufacturers assistance to attack overseas markets?

We are faced with a Government who refuse to live up to their responsibilities for a major industry. My hon. Friends the Members for Huddersfield, East (Mr. Sheerman), Batley and Morley (Mr. Woolmer), Keighley (Mr. Cryer), Bradford, South (Mr. Torney) and Bradford, North (Mr. Ford) have argued to this effect time and again in the House. They should take back to West Yorkshire the message that the Government do not care for the industry and that they are willing to let it go to the wall.

Employment in the industry has fallen drastically by 31,000 in the last three or four years. The industry is dying because of Government neglect when our competitors are receiving Government help to make them more viable and competitive.

10.52 pm

I am opposed to both the orders. The proposal to abolish the wool textile industry's research levy in 1983 flies in the face of the evidence that more and better research, development and innovation are required, not only in production processes but in the products themselves. While the export promotion levy is to remain, although its coverage by firms will be reduced sharply, the Government have missed the opportunity to bring about a progressive and much-needed upgrading of the export effort in the industry.

About 45 per cent. of the British wool and worsted cloth production goes in exports. With increasing export competition, surely research, innovation, design, marketing and export development should be closely interwoven. It is wrong for the wool textile industry to be regarded as old and a yesterday industry that is losing financially to the declining giants or modern and futuristic technologies. The wool textile industry deserves and requires more positive and forceful development and encouragement. In the orders, the Government have failed the industry yet again.

I shall outline the importance of the industry to West Yorkshire. The industry involves much more than the production of cloth. It involves spinning and the production of tops. Since the Government came to office, unemployment in West Yorkshire has risen by 71,000, or 161 per cent. In 1980–81 textile and clothing workers lost 30,000 of their 70,000 jobs. That illustrates the importance of the industry to the area.

I shall briefly highlight the effect of that on individual communities, so that the House may understand why West Yorkshire looks especially closely at these orders. Since May 1979, unemployment has increased in Bradford by 133 per cent., in Leeds by 146 per cent., in Keighley by 192 per cent., in Dewsbury by 200 per cent., in Halifax by 218 per cent., and in Huddersfield, in the constituency of my hon. Friend the Member for Huddersfield, East (Mr. Sheerman), by 237 per cent.—in the town which is the traditional home of the fine worsted industry of the British wool industry. The House will therefore understand why the orders are of great significance.

Yet those textile areas are to lose their assisted area status at the very time when they are losing so many jobs. Almost as an aside in this debate, therefore, I ask the Minister to consider yet again the forceful case made by the local authorities of West Yorkshire and to see whether it is not appropriate for them to retain the assisted area status that they are in danger of losing.

It is tempting to take the wool textile industry for granted and to assume that it will always remain prosperous, but the Wool Textile Economic Development Committee stated on page 1 of its 1980 report that
"employment fell drastically in all sectors: total fibre consumption fell by 20 per cent., top production fell by 17 per cent., worsted yarn deliveries were down by 13 per cent., woollen yarn production decreased by 23 per cent., fabric deliveries were down by 14 per cent. and employment fell by 21 per cent."
That situation applies right across the board in the wool textile industry. The Government have managed to preside over a massive decline. Yet their reaction is to come to the House today with orders that reduce the effort of the industry in research and in export promotion.

The hon. Gentleman should be reminded that, as my hon. Friend said, the industry itself is in favour of this move. It is certainly not true to say that the industry is backward looking. Many of the jobs which, tragically, have been lost have gone because the industry has modernised itself and put in new machines. Many companies are producing as much or more material than they did 10 years ago with a fraction of the number of workers. Therefore, it is certainly not a backward-looking industry and it supports the change proposed by my hon. Friend.

The hon. Gentleman will see that the unemployment figures reveal two striking characteristics. One is that under the Labour Government, under the wool industry scheme, employment stabilised, but in the last two or three years it has fallen massively. The hon. Gentleman himself represents a textile area. He will not go back to West Yorkshire and deny that employment has fallen massively because of the depressed home market, major imports penetration and the problems of export markets.

The 1981 annual report of the Wool Textile Economic Development Committee, in tables 2 to 6, which I suggest that hon. Members should study at their leisure, reveals a very worrying feature. The tables show that wool textile exports, which until 1977 were rising, then became stagnant and in the last couple of years have been declining. The decline in exports is therefore another very worrying feature in the wool textile industry. Most worrying is the decline in woollen and especially worsted fabrics—the type of product for which we have expected exports to continue to improve year after year.

There is no doubt that the industry has been hit by a deep recession in the home market, growing import penetration and now by threatened export markets. I do not say that falling export markets—and they are falling in volume terms—are the entire problem. The problem is caused in part by an overvalued pound for the manufacturing industries, in part by new and growing competitors—it is easy to forget that China is the largest purchaser of New Zealand wool—and in part by the wool textile industry's lack of drive into new national and product markets.

I recognise the efforts made by the industry, the unions, the export corporation and the little NEDC—bigger and new ideas have been introduced into marketing and design—but the response of the industry has often been inadequate and much more needs to be done.

The little NEDC of the textile industry recently asked the chairman of the Textile Research Council to give his views on research and development in the industry. He said that in the past eight years:
"industry initiatives in seeking government support for work of an innovatory nature have been running at a miserably low level. Whilst first reactions were that industry was being dilatory and short-sighted, it is now clear that this low level is a reflection of low profitability within the textile sector."
The chairman went on to point out that it was likely that the Government's hope and aspiration that the industry in a deep recession would be willing to take over these responsibilities was little more than pie in the sky. There is serious concern in the textile and clothing industries, not only about the cuts in research and export marketing, but about the cuts in textile research and training in further and higher education.

In a recent letter to the hon. Member for Macclesfield (Mr. Winterton), the Under-Secretary of State for Education and Science said that he accepted that there was a sharp downturn in the volume and range of textile courses available and that he shared the anxiety of the textile industry about the viability of some of the remaining provision.

The industrial training boards are to be wound up by April 1983, with the exception of that serving the clothing industry, yet all this is taking place at a time when the textile industry should be increasing the supply of technically qualified people who will be required to produce and to manage new products and new production technology.

What is the Government's view on what has happened? How is it that the textile and clothing industries in France and Belgium receive Government assistance, while our Government lack any coherent or positive policy towards industries that are so important to jobs and exports?

We lost one job in five in 1980 and many more last year. The orders stem from two facts—the Government's wish to reduce co-operative effort by industry and anything that smacks of an industrial policy and, secondly a business man's natural inclination, when asked to vote for or against paying more money, to vote against it. The surprise is that the vote was as close as it was. Time has passed since the industry was asked its views and we now have a new Secretary of State for Industry.

In replying to the debate, I hope that the Minister will give the House his assessment of the research, development, innovation and export marketing for the future of the wool textile industry so that hon. Members on both sides of the House can reach their views on his judgment and whether the efforts in those different directions have been adequate.

These are inadequate and irrelevant proposals, put forward by a Government who have no determination to build on the strength of the wool textile industry and the skills of its workers. The Government should withdraw these orders and bring back totally new proposals aimed at increasing the size and relevance of export, research, development, design and marketing efforts of the wool industry and of its closely associated, but equally important, clothing industry.

I hope that the House will be able to speak strongly against these orders tonight. I ask the Government to think yet again about the positive and progressive policies in this industry, which is still very important to West Yorkshire and its people.

11.6 pm

I shall divide my comments into two parts. As chairman of the Joint Committee on Statutory Instruments, I emphasise that that is an all-party Committee. The all-party Committee recommended that the orders should be reported to the House on the grounds of the unusual use of powers. Secondly, it must be clearly demonstrated that there is no power to make exemptions. The elastic minds and interpretations of civil servants—unfortunately backed by Ministers—have produced some extraordinary results.

I hope that hon. Members have considered the evidence of civil servants called before the Committee last week, which was available in the Vote Office. I asked about applying principles of fairness, which must be applied according to the parent legislation. The evidence reads:
"there has been a massive increase from 70 to 270 payments out of the 600 or 700 that are subject to the levy. It is an enormous increase, is it not?"
The reply was:
"Yes. I think it is only possible to answer that question by saying that these days some larger firms could fall within what we feel to be small firms. I really cannot put it any other way."
That was the curious justification of the massive increase and exemption of some firms which raising the limit allowed. There is no statutory basis for any exemptions being made. However, I pursued this line of inquiry and asked:
"would you feel, for example, that you could exempt a section of the industry by making an order which would, say, exclude 40 or 50 per cent. of the industries specifically?"
The reply was:
"I would suggest that that is within the powers. It is true that the section says we should impose charges on persons carrying on business in the industry."
It continues:
"Equally, it could have said, to make the matter plain, if that was the intention of Parliament, that the charge should be imposed on all persons in the industry or all persons except those whom the Secretary of State may exempt, but we would take the view that those words do allow the Secretary of State to select, among the persons carrying on business, those whom he wishes to impose a charge on and, indeed, thereby to exempt others."
That is precisely what the legislation does not state. It does not give any grounds for exemption. Of course, there were exemptions because of firms below the level at which the levy was imposed in the past. That was not brought to the attention of Parliament and was simply an administrative convenience. The cost of collecting the levy was more or less evenly balanced by the revenue from the levy.

Therefore, the Department said that it would draw a line where the cost roughly equalled the revenue. These orders raise the number of firms dramatically to about 270. Almost half the firms in the industry are now exempt by a highly elastic interpretation of legislation which does not allow any exemptions. That is the Committee's basic concern. Our legal adviser tells us that it is an unusual use of powers. After careful investigation, the Committee came to the same view. However, the evidence was that the industry had taken trouble to consult all the firms.

I turn to the merits of the order; and here I part company entirely from the Committee. It in no way questions the merits of the order. It is concerned about its application under the primary legislation and any unusual use of powers. If the Minister is concerned about the democratic processes, he should withdraw the order and seek fresh legislation. That would place the matter beyond doubt. A Committee of the House has questioned the position.

Do the Government have powers to end the levy and not merely to alter the exemption?

There are powers to end the levy in the primary legislation. The Committee was concerned with the application of the levy

The Department of Industry consulted the industry. I am particularly concerned about the research order. The figures are given in the evidence. There was a poll of 77 per cent. on the scientific research levy. Many might consider that to be high.

The Government have imposed polling standards elsewhere. With great foresight and intelligence, the two unions said that they would prefer to keep the levy. In polls concerning the closed shop, the Government require evidence of an overwhelming majority in support of it. By statute they have fixed the poll at 80 per cent. of those eligible. They insist there on an overwhelming majority, but they are prepared to accept the view of the industry on a markedly lower poll. The poll was only 77 per cent., and a significantly smaller proportion supported the ending of the levy.

The industry is already creaking. In many respects it is not a progressive industry. It has excellent industrial relations, as has been said. Traditionally the unions have been extremely co-operative and at times almost inert. Industrial action has been sparse. Modern methods have been widely accepted. Even then, I hear from constituents complaining about employers who intimidate them to prevent them joining a union.

The industry is facing difficulties. The MFA renegotiation has created a lack of confidence. The erosion of WIRA could be a blow. It was the first co-operative venture of its kind. It was established in 1919. The hon. Member for Brighouse and Spenborough (Mr. Waller) wrongly said that technical innovation necessarily reduces the number of jobs. At the end of the second wool textile scheme there was a slight increase in employment. The Department of Industry survey showed that the investment had enabled the industry to improve quality and to compete with foreign goods in international markets.

Therefore, there is a strong possibility that investment and development improve an industry. WIRA was playing a part in that development. It was open to negotiate research and development for contractual purposes, apart from the income and services provided by the levy. I believe that WIRA was providing an excellent service. The fact is that some parts of the industry are backward about taking advantage of the opportunities to see that a research levy of this nature is to the long-term advantage of the industry and not to its disadvantage.

I emphasise with all the power at my command that the Minister should have resisted the view of the industry on this matter. He should have decided to keep the WIRA levy on a longer basis. The industry is in difficulties. There is import penetration. There are the difficulties of the multi-fibre arrangement not being clear and its poor basis, and the difficulties that arise from membership of the Common Market and the lack of control by the EEC Commission over dumping, which has been experienced over the past few years.

All those difficulties can be combated to some degree by having a forward-looking industry that is prepared to accept innovation and development. The removal of the levy is a step in the wrong direction. I hope that the Minister, on technical grounds and on grounds of merit, will withdraw the orders.

11.17 pm

The Opposition have made an excellent case. They have given statistics and marshalled the evidence from learned reports and investigations into the textile industry.

I shall add my voice to those of my hon. Friends who oppose the two orders, not only because of what they will do, but because of what they show to be the Government's general attitude towards the industry, which many of us feel is the backbone of Britain's industrial future.

Many members of the Government seem to believe that the textile industry can be written off and forgotten. The orders are symptomatic of that view, which is exemplified by the attitude that runs through the Government's relations with other Departments dealing with the industry.

When we think of the textile industry and of any healthy industry that plays a significant part in our industrial life, we must think more closely in terms of a culture or an infrastructure. Whichever word we use, the culture that surrounds an industry or the infrastructure that supports it is essential. If at any time that infrastructure or culture is in danger of being destroyed, we must look closely at the process by which it is being destroyed.

In the last few years, when that process has been accelerated under the Government, we have seen the decline in almost every aspect of the life of the textile industry. As my hon. Friend the Member for Norwich, South (Mr. Garrett) said, we have seen that decline in higher education. He may not be a historian, but he made a good case based on the number of places in higher education that are no longer available for training the more highly qualified textile professionals. That decline can be seen also in the training of the skilled technologist, apprentices and those at the shorter-term qualified levels of the industry.

There used to be many small schools, institutions and colleges in Lancashire and Yorkshire that provided training and grounding for research and development and the accretion of industrial knowledge. Over the past 20 years there has been a gradual decline in the number of places in education at every level. That has brought us to the crisis that we now face. The acceleration of the decline has taken place in only the past three years. There are many in higher education who believe that by the end of the Government's term of office the only major centre for the study of textile technology will be at Leeds university.

The orders will be seen by the textile industry as a clear indication that the Government have written off the future of the industry and the future of those who work within it. the Minister seems to feel that it is not important that those in an industry should make a contribution to the training within it, to the export effort and to marketing and design.

That is typical of the Goverment's attitude. They do not realise that the significance of a small firm's tiny contribution is considerably greater than can be measured in money terms. It is important that firms are seen to make a positive contribution and to have a stake in the enterprise of export promotion, for example. It is sad that the Government took a poll but ignored the opinion of the trade union movement. They heeded the 57 per cent. majority in the industry that voted in favour of the orders.

So be it. The percentage is not really important. Of course most firms will grab at any cost reduction if the Government have reduced the morale of the industry to such a low level. I do not blame the manufacturers for deciding by not an overwhelming majority to go for a small respite in an otherwise bleak climate.

The recommendations of the Werner report have been brought to the attention of the House. It surprises me that any Minister could read the recommendations and present the Government's recommendations to the House. Bearing in mind the recommendations that have been made within the industry and the deficiencies in marketing and design, no right thinking person with the industry's interests at heart could suggest a reduction in vital areas of enterprise within the industry. Every little piece of evidence that we have seen, especially in the past three years, suggests that the Government should examine the textile industry and say "What can we do in positive terms to turn back the clock and try to renew the textile industry before it is too late?"

A Government who have presided over the tremendous increase in unemployment and the decline in our industry during the past three years should, even at this stage of their period in office, bring proposals to the House to regenerate the industry. Instead of nibbling away at what remains of our industry, let us have a new set of proposals—a 10-point plan—to renew our industry at this late stage. That should be led by Government intervention that matches the Government intervention in any other country. If the Government responded positively, some employers and workers in the textile industry would take every opportunity to co-operate to the fullest extent regardless of the political complexion of the Government.

It is true that the industry is fighting against great odds in a competitive market. However, does the hon. Gentleman accept that no one is in a better position than the companies involved in the industry to judge whether they get good value for money from the payment of the levy? Many companies have gone out of existence. Those that are still competing have been innovative and have put much effort and expense into research and development, and especially design, where we were previously deficient. Those companies are best placed to determine whether they get value for money. The fact that a majority appear to have said that they believe that they can use the money better themselves is surely significant.

It surprises me that the hon. Gentleman can make the remarks that he has this evening and still represent a textile constituency. Of course we are aware that employers know their industry, but the hon. Gentleman must accept that the workers of the industry—his consituents and mine—also know it. He will have heard me make the point that in the psychological climate that the Government have introduced into industry generally, and in the textile industry especially, the easiest road is for a manufacturer to cut costs, if that appears in the short term to be beneficial.

However, it must be the Government's responsibility to consider not just the next two or three years, which is usually the perspective of most trading companies—at the most, five years—but to consider the five, 10 or 20-year perspective. These mean orders will do nothing for the industry in that time.

I was making the point as strongly as I could that there is still time for the Government to change their mind on a range of decisions and issues that have deeply hurt the textile industry. My hon. Friend the Member for Batley and Morley (Mr. Woolmer) pointed out the loss of intermediate status. That loss to most of Yorkshire is a bitter blow. It affects industry day after day. It affects the possibility of grants from the European commission and it is hampering industry. If the hon. Member for Brighouse and Spenborough (Mr. Waller) wishes to direct his comments to the welfare of the industry, he would be better off trying to persuade those who make the decisions in his party to start making decisions that benefit his constituents.

Two recent remarks by Ministers deeply disturbed me. In mid-afternoon, at a time when many people do not listen to the radio, I heard a programme as I was driving to the House on which the Minister for Industry and Information Technology said that the recession would be ended not by demand pull but by information technology push. I wondered, on hearing that remark, what my constituents would make of it. Is the Minister so out of touch—he represents St. Marylebone—that he believes that the people of our constituencies who are working in the industry will accept that the problems of that industry will be solved by information technology push? The people in the textile industry believe that the problems of the industry will be solved by creating demand in the economy and giving people the purchasing power to buy decent worsteds and woollens, the cloth that our industry can provide.

A visit was recently planned for the Minister for Trade to the West Yorkshire area, particularly to Huddersfield and Brighouse. At very short notice it has had to be cancelled. One of the firms that the Minister was to have visited was C. and J. Firth. Only a week after the Minister's planned visit the company went into liquidation. That was a very sad event. It was not a redundant, old, worn-out business. It had invested and reinvested. It had modernised. It had a new product line and was exporting a very high percentage of its production. It had a product line geared to the American market.

The Government know very well the problems of the industry, but they are so imprisoned by their ideology that they would rather let a fine industry die, would rather allow jobs to continue to disappear, than to start governing and do something about an industry that has served the country well.

11.32 pm

I hope that the Government will think again about these orders, withdraw them and, if necessary, produce something better. Even if the textile industry today were comparatively affluent, if would still be wrong to pursue these orders in the face of some of the industry's structural problems.

Two issues arise to be discussed. One is the levels for exemption from the order. The other, which is the more important, is the ending of the levy in respect of scientific research.

On the level of exemptions and contributions, it is worth reminding the House—the Minister referred obliquely to this—that the system was derived from the report of the wool textile working party in 1947, which was set up by the late Sir Stafford Cripps——

I was not in the House at the time. It reported to the now right hon. Member for Huyton (Sir H. Wilson), who was then the President of the Board of Trade. The system that was derived for operating the levy had regard to the realities of the industry and the large number of small firms in it.

To say that, as a result of the polls, it can be seen that people do not like making the contribution, is to use a fallacious argument. This problem has been around for some time, during which the affairs of this industry have been discussed. If the public and the industry were polled on every occasion that a tax was suggested, I venture to suggest that no proposals would ever go through. We have to make a judgment as to what is in the interests of the industry. In such an industry, where there is a large number of small firms, it is short-sighted to go into exemptions, particularly if, as has been suggested, there would be a problem in ascertaining who had contracted out and whether they were to receive any benefits from the services. This consideration applies in parallel with the export levy because, again with small firms, the problem of exporting must be substantial.

When a small number of persons is employed in management it is a significant burden to have two or three people employed abroad. Certainly those companies cannot indulge in anything like market research. There again, the reality of the industry requires this structure. On balance it is a pity to move away from it.

I am much more concerned about the possibility of the levy ending. We have to look carefully at the orders to realise that there is not just a transition involved, which, in itself, would not be very important. There is the possibility of the levy ending. I am concerned that, so far, the Government have not adequately explained how they propose to fund and guarantee the levy on research expenditure that the industry requires and which, in the current situation, is vital for the industry's survival. I hope that the Minister can reassure me.

11.37 pm

Any outside observer, listening to some of the comments made tonight by Labour Members, might have been forgiven for failing to understand that the House is dealing with comparatively modest orders. It is important to get what we are discussing into perspective. The hon. Member for Norwich South (Mr. Garrett) talked about a substantial increase in the level at which exemptions take place. Although the number of companies being exempted represents a comparatively large increase, we are still talking only about very small sums of money.

The debate has gone a good deal wider than the terms of the orders and I am sure, Mr. Deputy Speaker, that you would not allow me to respond in depth to the many points that have been made. I wish to reply to the points that have been made about the orders. I will say one thing on the more general aspect. Of course I do not minimise the difficulties of the industry, but we have debated the textile industry on many occasions since I entered the Department and I think that I have been present on most occasions.

The Government have been fighting to obtain as tough a re-negotiation of the multi-fibre arrangement as can be achieved in the international discussions. We recognise the industry's problems. The Werner report has been mentioned. It is unfair to accuse the Government of not making it available. At an early stage, we put a copy of it in the Library and published it. However, it is a long report and, therefore, expensive to publish. However, we did so, and made the report available to the House and the industry from the outset.

On 8 March, the Confederation of British Wool Textiles met my hon. Friend the Minister for Industry and Information Technology to discuss the Government's response to the report and the report generally. My hon. Friend agreed to study a document that the delegation passed to him and to consult colleagues about the possibility of encouraging the European Commission to tighten up guidelines and to control better the scale of textile aids. That was a fairly recent meeting and following it, work is continuing.

The House no doubt wishes me to deal with the points raised by the order. The hon. Member for Norwich, South, (Mr. Garrett) asked why WIRA was not being given the names of the companies that would be exempted from the levy. I shall consider that point, but, as he knows, we must operate under the Industrial Organisation and Development Act 1947. In general, section 5 deals with restrictions on the disclosure of information. Section 5(2) states:
"Returns or other information furnished subject to provision made…shall not, without the consent of the person carrying on the business to which the returns or information…be disclosed otherwise than…
(a) in the form of a summary".
We have given WIRA the summary of the returns, but under that provision we should be able to give the details of the firms only if the firms gave us their permission to do so. We have not yet asked the firms that will be exempt, because, for obvious reasons, the order has not yet completed its passage through the House. We have not yet asked them if they would be prepared to disclose their names, but I take note of that point and will consider it.

The hon. Member for Batley and Morley (Mr. Woolmer) began by criticising the proposal on the ground that the export levy would be sharply reduced. However, as I have said, raising the levels of exemption involves a reduction in the income from the levy—not the total income of either of the bodies—of about 4 per cent. Therefore, he should accept that "sharply reduced" is a great exaggeration of the amount of income lost to the organisation as a result of the proposed change.

I criticised the Minister for abandoning the research levy and for losing the opportunity to increase the export promotion effort. Perhaps the Minister's recollection is a little faulty.

I think that the hon. Gentleman said that the proposal would sharply reduce the export levy. I agree that he also said that he would like it increased. The point is that a 4 per cent. reduction will hardly be sharp. That is another reason why we must keep the matter in perspective.

Several Opposition Members mentioned the importance of design, marketing, export selling and so on. I accept those points, but it is important to recognise that much of this work—particularly in design and marketing—is done by the firms. We are talking only about one aspect of the industry's total effort. I know of several firms in the industry, which—even in this difficult period—have been increasing their exports and doing well, because they have concentrated a great deal of their resources on improving design, marketing and export selling. It is important to bear that in mind, because that point has not been made. We are discussing only a small change in the export levy.

Surely the Minister must acknowledge, together with the National Economic Development Council, the Werner report and the industry, that the countries with which our wool textile industry competes have a far higher level of Government support for design, marketing, and export selling and it is better directed than in Britain. We lose in competitiveness because of the Government's unwillingness—unlike other Governments—to support the industry directly in exports.

I have two points to make in response to that intervention. First, the Werner report did not come to any clear conclusions about the comparative levels of aid across the Community as a whole; in fact, that section of the report left it very much open for conclusions to be drawn. Secondly, in the orders tonight we are talking about the contribution that the industry makes and not about the level of Government aid.

The hon. Member for Batley and Morley referred to assisted area status, which we have discussed on many occasions. As he will know, one of the most difficult problems is to establish the relative position of any individual area and to ensure that any action taken does not produce a boomerang or mushrooming effect elsewhere.

We have made it clear on many occasions that we look regularly at the position of individual areas, to see whether there is evidence of permanent structural decline relative to other areas. The hon. Gentleman's representations frequently ensure that we look at it on a regular basis, and that would remain the position.

The hon. Member for Keighley (Mr. Cryer) referred to the Joint Committee on Statutory Instruments. The reason why we have held back the orders until this evening was to enable the Committee to look at the orders, to discuss the matter with officials from the Department and to report to the House. I remember well what the hon. Gentleman said on the last occasion when we debated levy orders in the Chamber.

I assure the hon. Member for Norwich, South that we are satisfied that this is a legal use of the powers. There was reference to an unusual use of the powers, but there have been exemptions of long standing, and the only question that we are discussing this evening is not whether that is legal and permissible but whether the level to which we are raising the levies is reasonable.

The industry acknowledges that what we are attempting to do is reasonable. The Committee was perfectly entitled to draw attention to an unusual use of the powers. There was a similar situation last year, when the House passed the orders, and I think it is perfectly in order for us to ask the House to do so again.

With regard to the total response to the questionnaire, and the weighted response on the basis that a £1 levy equals one vote, the return on the scientific research poll was 91 per cent. and on the export promotion poll 79 per cent., so the return was very substantial and is a reasonable indication of what the industry felt.

It was suggested that we should have resisted the view of the industry. Here, there is a genuine difference of view between us. We felt that it was right to respond to the view of the industry. The hon. Member for Keighley would prefer that we resist it.

Several comments have been made by Labour Members about the raising of the minimum to £100. The most significant point is that a substantial number of the small firms voted against the export promotion levy. It is perhaps understandable that they did so, because several of them are unlikely themselves to be involved in exports. In answer to the point made by the hon. Member for Dewsbury (Mr. Ginsburg), even though they do not contribute to the levy because they are below the minimum, there is no reaon why small firms should not benefit from any of the work that is being done. A substantial number of the small firms voted against the export promotion levy, and that is one reason for taking it into account. A second reason is that the minimum level has not been raised since 1970. Although I suppose that on a purely index basis we would not reach the figure of £100, nevertheless it seemed to be a sensible position to take in view of the changes that have occurred, and also taking into account the costs of raising the levy.

There is a third matter which I, as Minister for small firms, bear very much in mind. For many years there has been constant criticism—it is very strong at present—from small firms that the Government impose burdens and compulsory obligations on them of one sort or another which are not suited to small firms, which they find difficult to understand, and from which they benefit little. In making this modest change we are taking account in a small way of that general criticism by small firms, without significantly altering the income that comes to either body.

Surely WIRA is exactly the sort of organisation that benefits small firms which cannot develop their own design, research and development facilities in the way that larger firms can do. It is the sort of organisation that should be retained and developed to help to nurture small firms.

We are talking about an £11, 700 reduction in WIRA income from the levy. There is no reason why small firms should not benefit from WIRA's research activities. All that we are doing is removing an additional burden on small firms, in terms of contribution, for very little change in the research activities. The chairman of WIRA says that raising the levy to £100 is "very sensible.".

It is a matter of abolishing the research levy, not simply of reducing it by £11, 000 in the first year. Will the hon. Gentleman say now what he thinks will happen to WIRA because there are grave doubts: whatever has happened in the past, in the future, in the kind of recession that we are in, it is feared that WIRA will not be able to grow in the way that it should?

I shall come to that matter, but the question asked by the hon. Member for Keighley was about the small firms that were being exempted, and it was in that connection that the chairman of WIRA said that the increase to £.100—which I agree lasts only until the compulsory levy is abolished—was "very sensible." I shall come to what the hon. Member for Batley and Morley (Mr. Woolmer) said, taking into account what was said by the hon. Member for Huddersfield, East (Mr. Sheerman), who, in a speech that was related more to the wider problems of the textile industry than to the orders, said that these orders would be seen in industry as "Government writing off the textile industry." That is far from the truth. The Government are not writing off the textile industry. That is a ludicrous charge. We are responding to the wishes of the textile industry.

That brings me to WIRA. In the February 1982 edition of WIRA News, under the headline
"A Positive View of the Levy Poll",
one reads:
"Indication of future support 'Bodes well' says Wira chairman."
It is worth studying what he said:
"This bodes well for the future…We have set up a Wira Board and Council Sub-committee to study the needs of the industry in relation to modern technology and to devise a new Wira to be ready for the post-levy period".
Mr Lambert emphasised that WIRA would serve the industry through the Eighties, and added:
"The facilities and capabilities which Wira has available will be shaped to the industry's needs"—
that is an important point. He said that by making it respond through voluntary contributions and through contracts and research contracts and other things of that sort it would be responding positively to the industry's needs. I share that view. The hon. Gentleman asked me for my view.

The chairman went on:
"Wira and its staff are committed to providing a first class technical service to all Members and customers, and will continue to do so as long as the industry supports them".
It should be remembered that WIRA is also supported by the Department.
"Dr. Brian King, director and chief executive, underlined in his report the 'very satisfactory number' of new research projects that had received Department of Industry Requirements Board approval for support during the year under review. No fewer than nineteen new projects had been approved."
It should be borne in mind that a good deal of WIRA income comes from areas other than the levy. In my view, WIRA will have an important future, and will continue to respond to the industry's needs.

We have consulted substantially throughout. We have taken nearly a year to reach this decision through careful consultation. It is important to stress again that in both of these orders we are responding to the wishes of the industry and, in consultation with the two bodies affected, WIRA and the National Wool Textile Export Corporation. I commend the orders to the House.

Question put and agreed to.


That the draft Wool Textile Industry (Export Promotion Levy) (Amendment) Order 1982, which was laid before this House on 2nd March, be approved.