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10.41 am

Mr. David Tredinnick (Bosworth): Twelve years ago, I made my maiden speech on the hosiery, knitwear and textile industries. I went to consult the leaders of those industries in my constituency and asked them, "What are the key points that I should make in the Chamber?" They said, "You must refer to the import of cheap Chinese underwear." I need hardly point out that that was a difficult speech to write.

I have lived and breathed the issue since then, and today I want to highlight the problems in Leicestershire, where the industry is very important and accounts for 9 per cent.--35,000--of all jobs in the county. The problems are exacerbated by the fact that three quarters of companies in the industry employ 25 or fewer people, as my hon. Friend the Member for West Derbyshire (Mr. McLoughlin) pointed out.

The key point that I want to make to the Minister is that high interest rates have had a devastating impact on the local economy, which has contributed more than anything else to companies' difficulties. I know that interest rates have come down, it was too little, too late. It was too late for companies such as Ray Allen Ltd in my constituency. In my constituency, many of those companies have been downsizing.

The Minister said earlier that we were talking down the industry. That was an outrageous remark. I have come to the debate to articulate the industry's problems and tell the Government how serious those problems are. The Minister should remember that, when the previous Government left office, we had a stable economy with low interest rates.

Mr. Battle: Will the hon. Gentleman give way?

Mr. Tredinnick: The Minister will have an opportunity to speak in a moment. He knows that he took over when the economy was in a much better state than it is now and that interest rates have caused the key problems.

The hon. Member for Oldham, East and Saddleworth (Mr. Woolas) and others referred to low-cost competition. [Interruption.]

Mr. Deputy Speaker (Mr. Michael Lord): Order. Time is limited and the Minister will have an opportunity to respond in a minute. Sedentary remarks are not helping the debate.

Mr. Tredinnick: Low-cost competition from overseas is a devastating factor, as are problems with the

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multi-fibre arrangement and possible trade sanctions caused by a dispute about bananas, which were referred to earlier. We had to worry about straight bananas and bent sausages in the previous Parliament, and they are back again.

The Minister must take on board the fact that manufacturers in my constituency blame the Government and hold them to account. We look forward to his response.

10.45 am

Mr. Tim Boswell (Daventry): It is a customary courtesy to thank and congratulate the hon. Member who opens an Adjournment debate, but in this case, it goes beyond a mere formality. I am very grateful to my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning), as the whole House should be, for introducing the subject, and for the doughty way in which she stood up for her constituents' interests.

In no sense are my remarks intended to derogate the major contributions that have been made by hon. Members from all parties, who knew what they were talking about, including the hon. Members for Oldham, East and Saddleworth (Mr. Woolas) and for Tweeddale, Ettrick and Lauderdale (Mr. Moore), my hon. Friend the Member for Bosworth (Mr. Tredinnick) and the hon. Member for Bradford, North (Mr. Rooney). They were an eloquent bunch and explained the industry's problems.

The opening contribution of my hon. Friend the Member for Tiverton and Honiton was helpful in that she set in context the particular problems of one major player and reminded us, as did other hon. Members, of the industry's complexity and wide geographical distribution. As one hon. Member pointed out, the industry directly employs more than 350,000 people, so it counts for us all.

We know that the industry is rich in tradition--it can well claim to have founded the industrial revolution--but it has modernised itself, particularly in the past few years, with a heavy investment programme and radical changes of attitude. It is extremely encouraging, for example, that 60 per cent. of wool production is exported. The problem is that having reformed itself, the industry is now frustrated.

We were disappointed by the Minister's earlier remarks. He can redeem himself in a moment. I make him an offer: we will not run down the industry--we do not seek in any way to do so--if he will not fall into the trap of complacency in dealing with the industry's problems. Megaphone diplomacy about the past, and even the present, is nowhere near as important as a constructive attitude to the future.

The present position is not a happy one, which is demonstrated by representations that my hon. Friend the Member for Tiverton and Honiton and I have received. The British Apparel and Textile Confederation says tactfully that the economic situation is very difficult and points out that exports in the first six months of last year were 20 per cent. down on the comparable period of the previous year. The Confederation of British Wool Textiles says that there are no signs of any improvement and 1999 will clearly be another traumatic year for the industry.

Surveys show that last year, when consumer demand was comparatively buoyant and rose by 3.3 per cent. in the first half of the year, employment dropped by 4.3 per cent. That is the absolute figure and does not take account of short-time working. There is a difficulty.

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A possible trap for the industry is that it will pursue niche markets. Of course it is important that every industry should target an appropriate market, but I hope that the Minister and anyone listening to the debate will not feel that the answer to the industry's problems is to select a particular sector and disregard all the others. Two areas of clear excellence in this country are bespoke tailoring and designer clothes. From my days in education, I have links with Central St. Martin's college. It is great to go to its student shows, particularly when one remembers that previous students have been called Galliano and McQueen. However, that is only a small percentage of the industry. When selecting markets, Savile row and the catwalk are all very well, but underpants matter too.

That brings me naturally to Marks and Spencer, which is the major player in the industry, and other important and well-known brand names. Those companies face severe commercial difficulties at the moment, arising from flat domestic demand, which has led to overstocking. That leads to a sales and sell-off culture, which has repercussions as people hold back their purchases for the best opportunity and can yet further depress prices. I am sure that companies represented by interests in the UK and people who know the industry well will devise strategies for trading through that, but there is likely to be a further shift abroad of parts of the supply chain and a reduction in UK employment.

The Government cannot duck their responsibility for the problems arising from the exchange rate. The exchange rate is coming down at last, but it has added to problems which have been further compounded by the weakness of the south-east Asian economies in particular.

As the hon. Member for Bradford, North reminded us, we must remember the industry's potential. In the White Paper on competitiveness, the Government acknowledged that import pressures will increase further when the existing quotas are phased out in 2005. Several hon. Members mentioned the specific and immediate problems arising from the banana war and its impact on the cashmere industry. It is reasonable to ask the Minister and his colleagues at the highest level to be as robust as possible in standing up for British interests.

I must mention the internal solutions that the industry is seeking with the assistance of Government. The White Paper conceded that, despite all the efforts that have been made recently, productivity is still higher in Europe than in the United Kingdom, but the textile industry wants to do something about it. Like other hon. Members, I especially welcome the efforts made by the social partners on both sides of the industry to develop an action plan to make the industry more productive. That may include some requests for Government help and, in particular, export promotion. We can argue endlessly about who did what, but the point is that there is a strong interest in expanding the British footprint in that sphere.

We need to keep a careful eye on our European competitors in order to produce a level playing field. As the hon. Member for Bradford, North said, either we can do more or they can do less, but it needs to be on a fair basis.

A point that has not been flagged up as clearly as it should have been is the need for a constructive, industrywide approach to staff training, development and

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retention. I know that the Minister met representatives of both sides of the industry on 24 November to talk about the action plan, and it will be helpful if I leave him time to tell us where we have got to with that.

The innovation and excellence of the industry, and its determination to modernise itself and to fit itself for international competitive trading conditions, could come to nothing if sensible general economic policies are not pursued. If the industry is suffering now, before the national minimum wage has come into effect or, indeed, before the working time directive has come fully into effect, the implication is that there will be further pressure on the industry later. The same is true in respect of further taxes which are building up on business generally.

What we ask of the Government is realistic intervention--yes, we will use that word--to help the industry to overcome its internal difficulties and to fit itself for the future. Above all, we ask for a sensible macro-economic policy which will steer this industry and others in the right direction. The Government have their responsibilities to the industry and more generally, but nothing can compensate for the failure of economic policy, a failure already apparent in the difficulties that the industry, despite all its efforts, is facing.

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