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Copley Marshall And Co Ltd

Volume 124: debated on Tuesday 8 December 1987

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

9 am

Just as some of my constituents in New Mill might find it odd and unusual that I can go to bed on Tuesday night, wake up and come to the House on Wednesday morning and still be able to make a speech here on Tuesday, so some hon. Members might think it unusual that I can initiate a debate involving a small company which employs only about 45 people and has a turnover of no more than 1·5 million per annum. However, this is a matter of great concern to the firm in question, Copley Marshall and Co. Ltd. and to all its directors and employees.

The textile industry in my constituency, as in many other parts of west Yorkshire, was hit very hard during the recession, and it is a tribute to the hard work and resilience of companies such as Copley Marshall that they survived. Certainly the company went through a very difficult period, but it has now come through the worst and is beginning to prosper again.

As I have said, it is only a small company employing 45 people, and it is fighting hard to make its contribution to the country's economic revival. It is disheartening, to say the least, when small companies such as this find themselves obstructed by a brick wall of British officialdom and bureaucracy, yet that is exactly what has happened in this case. The company was refused an important licence for a consignment of Egyptian cotton yarn which was of vital importance to its business, although import licences had been issued on previous occasions in exactly the same circumstances.

The purpose of my initiating this debate is to convince my hon. Friend the Minister that he should issue an import licence for the consignment. However, I also hope that he will consider whether he should initiate an internal inquiry in his Department to see whether the procedures followed by the import licensing branch are as efficient and faultless as they might be, and to see how the problem—which was of its making — came about. Let me outline the story behind the case, so that the House can understand the problem that Copley Marshall is experiencing.

The company operates in a specialised field, in which it processes dyed cotton yarns for a number of purposes, one of which is use in car trims. Cotton yarn, when fully processed, is therefore exported to firms such as BMW, Mercedes Benz and Audi, as well as being sold to British companies such as Rover and Jaguar, which in turn export many of their cars. Copley Marshall is playing its part in Britain's export drive.

In 1985, Copley Marshall purchased its first batch of cotton yarn from an Egyptian supplier and received an import licence against an Egyptian export licence marked "Out of quota", and also marked with the initials IP. Following that, the company imported further batches, having obtained Department of Trade and Industry import licences against Egyptian export licences, one of which was marked "Out of quota" and endorsed with the initials "IP". Others were marked "In quota". A number of consignments were successfully and efficiently imported, processed by Copley Marshall and sold to a firm in Leeds, which processed the yarn further before exporting much of it. Incidentally, I should just point out that Egyptian long staple cotton is the only type that is suitable for weaving the narrow fabric required for car trims.

Earlier this year Copley Marshall arranged to import two more consignments of cotton yarn from Egypt and, as in the past, having received the export licence from the Egyptian authorities, arranged to have the yarn shipped to this country. Once the yarn arrived here, however, the company found to its horror that the Department of Trade and Industry was refusing to grant the necessary import licence.

The company made immediate representations to the Department and, receiving no joy, contacted me, whereupon I wrote to my hon. Friend and received, I am sorry to say, the same negative response as the company had received. The reason given for refusing an import licence was that the company had been issued with the wrong type of export certificate by the Egyptians. The fact is, however, that the company had satisfactorily imported previous consignments with exactly the same export licences as it possessed for this year's consignment.

The Department of Trade and Industry admitted in a letter to me, dated 13 August, that its import licensing branch had issued import licences in error against earlier applications. Presumably it was referring to the two earlier Egyptian export licences which has also been marked "Out of quota" and "IP". The company had arranged this consignment in good faith and bearing in mind that there had been no problems whatever with the earlier consignments for which it had had similar export licences, it came like a bolt from the blue to be told that the export certificate issued by the Egyptians was incorrect and therefore an import licence would not be issued. That was news to the company. It was the first time that there had been any problems whatever.

The disturbing aspect of this whole episode is that once the company found itself in this predicament the Department of Trade and Industry seemed somewhat reluctant to do anything to sort out the problem; a problem which was very much of the Department's making, having earlier issued an import licence, albeit in error. The Department suggested to the company that it should seek a new, correct export certificate from the Egyptians. The Egyptians were, however, not in the least bit interested in doing that, because the company had had to pay for that batch of yarn, as it had all the other batches, with an irrevocable letter of credit. The Egyptians already had their money in their pocket and refused to issue a new export licence. So that avenue was closed to Copley Marshall.

The only alternative suggested by the Department was that the company should sell the batch of cotton yarn to a buyer from a non-EEC country, or to a buyer within the EEC, who would guarantee to re-export the yarn to a destination outside the EEC. The company tried all its contacts, in countries as far away as Uruguay, Canada and the United States, but found that no one was in the least interested in buying the product on those terms. So the company has come up against a brick wall and it really does not know where to turn next.

I believe that it is now up to the Minister to help Copley Marshall get out of this serious dilemma. What, therefore, I want to do is to urge the Government to treat this as a one-off consignment and to issue the appropriate import licence so that the cotton yarn can be processed in the normal way. The Minister can rest assured that the company will never again import Egyptian cotton yarn in this manner. The mistake, to which the Department of Trade and Industry was a party, will, I can assure my hon. Friend, not he repeated.

I do not believe that it is good enough for my hon. Friend to say that the quota for Egyptian cotton has been exhausted for 1987, because the earlier consignments, despite the incorrect export licence, found their way to this country and caused no major problems. So I urge the Minister to make an exception for this one batch, which is now sitting in a bonded warehouse in Bradford, gathering dust. It is paid for and it is just sitting there, waiting to be used.

It is fair to say that this episode has cost Copley Marshall a great deal of money. Warehouse charges to date amount to £2,939, the loss of interest amounts to £857 —a total of nearly £4,000, which is irretrievably lost—and there is still £45,000 outstanding. Whitehall bureaucracy and red tape are hindering British industry when it is doing its best to lead the economic revival that Britain so badly needs.

The chairman of Copley Marshall wrote to me and said:
"There is no hint of an apology in any of the ministry's letters admitting mistakes in the past. I am afraid that it is this sort of high handed attitude that makes one despair of doing business with government departments".
I find it difficult to disagree with him.

I ask my hon. Friend to review the position and grant a one-off import licence to ensure that this company can continue to make its contribution to economic regeneration in my constituency, and to show that the Whitehall machine can respond in a flexible way to specific problems as they arise. If my hon. Friend cannot say that he will grant a licence, I make a plea for him to say that he will not refuse one, but that he will reconsider the matter.

I regret that this saga has had to be aired in the Chamber, but, as the Minister knows, I wrote him three letters on the subject and tabled a parliamentary question, but received no joy. I desperately hope that this morning he will be able to give me a positive message that I can take to Copley Marshall on Friday afternoon when I report the results of today's debate.

I hope that I shall be able to report that this Conservative Government care about small firms such as Copley Marshall in deepest west Yorkshire, and that the Government are flexible and prepared to bend over backwards for small companies that are in trouble. I assure my hon. Friend that if he could give me that import licence to take with me on Friday he would become a hero in New Mill, while at the same time doing his best to further the cause of British enterprise.

9.12 am

I support my hon. Friend the Member for Colne Valley (Mr. Riddick) on initiating this excellent Adjournment debate. I have a constituency interest because Mr. Donald Pedder of D. Pedder and Co. in Rochdale is a constituent, and it is he who has arranged these contracts with companies such as John L. Briery and Co. Ltd. and Copley Marshall and Co. Ltd. I have written to the Department on this issue.

The main thrust of my hon. Friend's speech was that Copley Marshall has been misguided by a mistake in the Department and by the Egyptians into thinking that the arrangements that it has used for some time would continue, and that, against that mistake, it has continued to place business.

We all know that it is not easy, in this day and age, to run a company, with so many orders, and matters that we have to take account of, although in fairness we have simplified matters somewhat. Nevertheless, it is difficult to run a business these days.

In good faith, D. Pedder, my constituent, has placed contracts with the two companies that I mentioned, and, as a result, is in awful trouble; the company has paid for the goods, yet they are rotting in a warehouse. I should have thought, in these exceptional circumstances, that the Minister, if he has not come with the good news in his reply, could say that as it is in a dreadful position these goods could be released and worked on. In the future the company will have to realise that rules are rules.

I am the first person to want quotas on textiles imported into the United Kingdom to be upheld. We fought for that for many years, as did the constituents of my hon. Friend the Member for Colne Valley. We are not trying to break quotas. We are trying to rescue a company that has got itself sandwiched because of a mistake, perhaps partly of its own doing. However, it was issued with the inward processing stamp, which means that goods have to be re-exported outside the EEC.

Therefore, if my hon. Friend the Minister does not have a happy reply for us today, I wonder whether he would be prepared to go back to the Department and say, "I wonder whether in these exceptional circumstances we can get the company off the hook as long as it is understood that in future no more licences will be issued against that quota."

9.15 am

I am grateful to my hon. Friend the Member for Colne Valley (Mr. Riddick) for putting his case in such a straightforward and persuasive manner. I assure him that the disclaimer with which he started his speech relating to the scale of the company and the size of the problem was unnecessary. He put his case in a lucid and persuasive way, as did my hon. Friend the Member for Littleborough and Saddleworth (Mr. Dickens) in his brief intervention. I congratulate both of my hon. Friends on putting their case so clearly.

Before I state my inclination on the matter, which I shall do at the conclusion of my set speech, I should first set out the reasons why imports into the United Kingdom of Egyptian cotton yarn are restricted and the rules governing the issue of import licences, which are needed before goods can enter the country. My hon. Friend the Member for Littleborough and Saddleworth said how important the issue of quotas is. As he knows, I take a great personal interest in that subject. I believe that my hon. Friend the Member for Littleborough and Saddleworth attended the last debate we had on the multifibre arrangement, and I know that both my hon. Friends have intervened on the subject when it has come before the House.

My hon. Friends will know that there has been an agreement for several years between the European Economic Community and the Government of the Arab Republic of Egypt concerning trade in textile products. Under the terms of that voluntary agreement, the Egyptian Government have given an undertaking to restrain their exports of cotton yarn to the Community. They have also undertaken to limit their exports of cotton yarn to a certain level each year for each member state, including the United Kingdom.

The Egyptian authorities implement that undertaking themselves, by issuing export certificates in respect of exports of cotton yarn up to the agreed level in each member state. This system is known as "double control". Anyone wishing to import Egyptian cotton yarn into the EEC must apply to the relevant authorities for an import licence. The import licence will be issued only if the application is accompanied by a valid export certificate issued by the Egyptian authorities.

In addition, the agreement with the Egyptian Government contains special provisions for those shipments which are destined for re-export outside the EEC. Those shipments, which may be re-exported either in the same state or after processing, do not count against the annual restraint levels. The export certificate issued in those cases is the same as that for goods not destined for re-export, but an endorsement of the letters IP is put on the certificate. IP stands for inward processing.

It follows that an application for an import licence in respect of Egyptian cotton yarn which is not intended for re-export outside the EEC can be accepted only if the export certificate does not bear the IP stamp. In the case of the import licence application by Copley Marshall, which is the subject of this debate, the application was refused because the export certificate bore an IP stamp and the goods were not for re-export outside the EEC.

Those are the facts leading to the refusal of the licence application and I do not think my hon. Friend the Member for Colne Valley would dispute what I have said so far. His argument is that, as the Department's import licensing branch had on two previous occasions failed to spot that export certificates bore IP stamps, there is some kind of obligation to make an exception in respect of the application in question.

It is, of course, regrettable that officials did not detect the earlier cases where incorrect documentation had been present. I regret it and make no excuses. All I can say is that about 180,000 import licence applications are handled each year, and even with the most rigorous system of checking, some cases will slip the net. In those cases, importers may, as happened in this case, benefit unjustifiably through receiving a licence to import goods which should not have been allowed into the country.

Of course every effort is made to avoid such mistakes, but I cannot believe that it is contended that we should allow earlier instances of faulty documentation slipping through the net to be accepted as justification for issuing a licence where inadequate documentation has been picked up. That would make a mockery of the import licensing system. It has always been the responsibility of importers to ensure that they are fully aware of the regulations and documentary requirements in respect of any transaction that they undertake.

It is a pity that my hon. Friend's constituents committed themselves to importing the cotton yarn before ensuring that their documentation was in order. I am sorry if they suffered financially as a result of the refusal. It is essential, however, when operating our import licensing controls, that we keep to our agreements, and that we are consistent in our treatment of importers. Privileged treatment for Copley Marshall would be very unfair to any other importers where application has been refused because of incorrect documentation and who may have suffered loss or inconvenience putting matters right.

I very much regret, therefore, that I am unable to reverse the decision to refuse the application for an import licence. I can only repeat the advice which I have earlier given my hon. Friend, that if Copley Marshall is unable to obtain an export certificate without an IP stamp, it should seek a customer for the yarn outside the EEC, or a customer inside the EEC who is in a position to process the yarn and re-export it.

Having heard what my hon. Friend said about the company's efforts to find a customer for the yarn which is in bond and clearly a financial incubus upon it, I shall take one more look at the matter. I emphasise that I make such an undertaking without giving any commitment as to the result. My hon. Friends have stated their case clearly. The Adjournment debate process is meaningless if both parties come to the House in set positions and the debate is simply an exchange between two deaf advocates. I shall reconsider the matter, bearing in mind the company's evident hardship. I must also take into account the possibility of my setting a precedent and the implications of that for others who have had a similar experience but disposed of the yarn having suffered some loss but who are back on the right track.

As I have said, I am giving no commitment as to the result, but I shall re-examine the matter.

Question put and agreed to.

Adjourned accordingly at twenty-four minutes past Nine o'clock am.