The
Committee consisted of the following
Members:
Baron,
Mr. John
(Billericay)
(Con)
Burt,
Lorely
(Solihull)
(LD)
Curtis-Thomas,
Mrs. Claire
(Crosby)
(Lab)
Hemming,
John
(Birmingham, Yardley)
(LD)
James,
Mrs. Siân C.
(Swansea, East)
(Lab)
Knight,
Mr. Greg
(East Yorkshire)
(Con)
Liddell-Grainger,
Mr. Ian
(Bridgwater)
(Con)
Lilley,
Mr. Peter
(Hitchin and Harpenden)
(Con)
McCafferty,
Chris
(Calder Valley)
(Lab)
McDonnell,
John
(Hayes and Harlington)
(Lab)
Michael,
Alun
(Cardiff, South and Penarth)
(Lab/Co-op)
Murphy,
Mr. Denis
(Wansbeck)
(Lab)
Singh,
Mr. Marsha
(Bradford, West)
(Lab)
Stuart,
Mr. Graham
(Beverley and Holderness)
(Con)
Thomas,
Mr. Gareth
(Minister for Trade,
Investment and Consumer
Affairs)
Ward,
Claire
(Vice-Chamberlain of Her Majesty's
Household)Rhiannon Hollis,
Committee Clerk
attended
the Committee
First
Delegated Legislation
Committee
Monday 3
November
2008
[Ann
Winterton in the
Chair]
Draft Wool Textile Industry (Export Promotion Levy) (Revocation) Order 2008
4.30
pm
The
Minister for Trade, Investment and Consumer Affairs (Mr.
Gareth Thomas): I beg to move,
That the
Committee has considered the draft Wool Textile Industry (Export
Promotion Levy) (Revocation) Order 2008.
It is a
pleasure to serve under you chairmanship, Lady Winterton. The order was
introduced under section 9(9) of the Industrial Organisation
and Development Act 1947. Since its introduction at the request of the
woollen industry in 1950, the wool textile industry export promotion
levy has provided funds to the National Wool Textile Export Corporation
to promote the export of wool textiles. The statutory levy is collected
twice a year from around 100 wool processors and suppliers of fibre,
and currently raises approximately £186,000 a year, which
accounts for just more than half of NWTECs annual income.
Indeed, the average annual levy payment per company is just less than
£2,000 per
year.
Following
representations about the continuing work and merit of the scheme, the
Government undertook a consultation in 2007 to determine the future of
the levy. We consulted NWTEC, trade associations, trade unions and
other stakeholders but, most importantly, companies that pay the levy.
The overwhelming majority of those who responded to the consultation
wished to see the levy ended as soon as
possible.
Having
taken full account of the consultation, Ministers decided to recommend
the end of the levy. Closure of the levy will allow businesses in the
wool industry to determine for themselves how they spend their money on
overseas marketing. That will bring them in line with other textile and
manufacturing sectors. NWTEC and the Confederation of British Wool
Textiles have been encouraged to work together and with other related
bodies to develop an alternative voluntary funding arrangement to
promote the wool textile sector overseas if, indeed, that is what the
industry
wants.
NWTEC
has been making progress on that front over the past few months, and a
voluntary scheme will begin in 2009, timed to coincide with the end of
the payments that it will receive from levy collected for the period up
to 30 September 2008. It is intended that the revocation order will
come into force, if the Committee so permits, the day after it is made.
It will have the effect that the original order will not impose on any
person any charge in respect of any period after 30 September 2008.
However, all moneys due up to that date will be collected and disbursed
to NWTEC as normal. Therefore, in the current financial year, NWTEC
will still receive its traditional payments that derive from the levy.
With that introduction, I commend the order to the
Committee.
4.33
pm
Sitting
suspended for a Division in the House.
4.48 pm
On
resuming
Mr.
John Baron (Billericay) (Con): May I, too, say what a
pleasure it is to serve under your chairmanship, Lady
Winterton?
On behalf of
the Opposition, I welcome the order, which although short, has a long
and interesting history dating back to the late 1940s. Wool, of course,
has an even longer and more important history. The material was, for
many centuries, interwoven with the economic power and social structure
of England. The Woolsack in the other place bears testament to that, as
do the historic woollen towns of Suffolk, Norfolk and parts of
Yorkshire.
Today, British
wool manufacturers are producing increasingly niche products and
speciality fibres. AW Hainsworth and Sons Ltd, which is a traditional
family business based in west Yorkshire, produces speciality textiles
such as the green cloth, or baize, used on championship snooker and
pool tables. Woollen textiles have also played a part in our economic
and cultural export. The latest Bond film reminds us of that iconic
British export: the well-made English
suit.
However,
the order will revoke previous orders that established and maintained
the export promotion levy on firms to fund the promotion of wool
exports. As we know, the levy currently raises approximately
£186,000 a year, which accounts for just over half of the annual
income of NWTEC, the body that helps suppliers and processors to market
their products overseas. My understanding is that NWTEC will be wound
down following revocation of the levy and replaced by a new
organisation under the title of British Textiles, with funding provided
on a voluntary basis. We welcome
that.
Alun
Michael (Cardiff, South and Penarth) (Lab/Co-op): Does the
hon. Gentleman agree that getting rid of strings of meaningless
initials that go out of peoples minds within seconds of their
hearing them for the first time is a consummation devoutly to be wished
for?
Mr.
Baron: I agree, but the use of initials can be helpful in
saving time if one has already given the full
title.
Conservative
Members welcome the revocation of the levy, which must be seen as an
attempt to reduce the regulatory burden on business. It is more
appropriate that firms decide for themselves how they will invest their
money in overseas marketing. The voluntary basis is certainly the right
way forward. Having said that, and that I support the order, I am sure
that the Minister will understand if I press him on one or two
points.
First,
although the order is a step forward in deregulation, we know that the
cost of new regulation on business since 1997 has, according to the
British Chambers of Commerce burdens barometer, topped £65
billion. Therefore, the order, although welcome, is a drop in the
ocean. Revocation of the levy will come as a relief to many of those in
the wool textiles industry, particularly in these difficult times, yet
it should be noted thatI am sure that the Minister will correct
me if I am wrongmost of the current payers chose not even to
respond to the consultation. Also, the cost saving to
the
Government is relatively small, at an estimated £32,500. Will the
Minister state the overall cost of the consultation? I suspect that it
may be some time before significant cost savings are accrued by the
taxpayer.
Secondly,
and perhaps more importantly, we must put the spotlight on the health
of the wool textiles industry and ask whether future overseas marketing
support will be adequate. As I said, the industry is doing quite well,
but the size and structure have changed over time. When the 1947 Act
was passed, more than 250,000 people were employed in wool; today, the
number is barely 10,000. More recent evidence of decline can be seen in
the amount of levy collected, which has halved since
2000.
There
is surely room for improvement in our share of developed and emerging
markets. There is already concern that some of our EU
competitorscertainly Italyare stealing a march on us in
the penetration of the Chinese markets. Therefore, I ask the Minister
what level of support the industry can expect from United Kingdom Trade
and Investment. That question is important because much ofI
phrase this for the sake of the right hon. Member for Cardiff, South
and PenarthNWTECs funding currently comes from UKTI.
What guarantee can the Minister offer that levels of funding for wool
textile export promotion will continue from that source? What
comparison has he made between the British contributions and those made
by other EU Administrations? Can he tell the Committee, for example,
how much additional support is provided to Scottish firms by the
Scottish Executive? It would be interesting for the Committee to be
made aware of that. The industry in England believes that it could be
at a competitive disadvantage vis-A -vis the other regions of
Europe, which are receiving considerable amounts of national and
regional funding for profiling and showcasing manufacturing
industry.
My
last question concerns the extra consultation with the unions referred
to in the accompanying notes. I have some concern about that because it
appears to have been over and above the main consultation with the
industry. Will the Minister clarify the purpose of that extra
consultation process? I would be interested to hear whether he is
really suggesting that he would not have brought the order forward, or
would have delayed implementation, if the unions had been opposed. I
read in the notes that commencement of the orderbut not
implementation, as that is retrospectivewas delayed while
consultation with the unions took place. That seems a little
sloppy.
I
am sure that, in preparing for the Committee, the Minister will have
read the debate on the 1970 order, which we are being asked to revoke.
He will be aware of the intense controversy at the time about the
retrospective effect of that order, about which the Select Committee on
Statutory Instruments expressed grave concern. It is an historical
curiosity, to say the least, that this order should also be
retrospective, even if by only a month, but as was acknowledged in that
debate,
no
one worries about retrospective legislation when it exempts the citizen
from a liability.[Official Report, 4 March 1970;
Vol. 797, c. 565.]
On that ironic note, and
subject to the reservations that I have expressed, I wish the order
well.
4.55
pm
John
Hemming (Birmingham, Yardley) (LD): I am pleased to serve
under your chairmanship for the first time, Lady Winterton. One
sometimes worries when all parties support a piece of legislation, but
this is another situation in which all parties support it. Fewer than
half of levy payers responded, but very few of those said that they
wanted to keep the levy going. Although £2,000 a year is a not a
massive sum for a company, the order seems to be a positive
step.
As
a member of the Select Committee on Regulatory Reform, I point out that
this is a regulatory reform order, although it does not have to go
through the Select Committee, as there is another way to do the
process. I wonder how it will be trapped by the regulatory reform
processes to ensure that the order, which is a valid regulatory reform
and a proper use of the phrase, is tracked in statistics to measure
what is going on. However, all parties support
it.
4.56
pm
Mr.
Thomas: I am grateful to the hon. Member for Billericay
for his comments. In particular, he helpfully charted the history of
the wool industry, mentioning especially that some of towns in west
Yorkshire used to depend on the woollen and textiles industry. He
noted, rightly, how the industry has moved into a series of niche
products. Green baize, tennis balls, ceremonial military uniforms and
aircraft seat covers are just some examples of where the industry still
has an effective niche. I heard his comments about better regulation
and reducing administrative burdens. He will understand if, in the
spirit of his comments, I draw attention to his partys
opposition to the reforms that we introduced for small business rate
relief. However, I shall not press that point, as we have conducted
this debate in a fairly non-partisan way to
date.
On
the question of the level of consultation, 163 questionnaires were
issued in total. Some 91 went to companies that pay the levy, 42 to
companies that are liable to pay but fall below the threshold, and 30
to various representative bodies and other stakeholders. The hon.
Gentleman was right to draw attention to the fact that a decision was
taken to ensure that we consulted properly some of the other people who
would be affected: the trade unionsthe representatives of those
who work in the industry. They should have been consulted at the time
of the original consultation. The further effort to talk to trade
unions was made to correct any mistake made in the initial
consultation. I do not have the exact cost of the total consultation. I
will write to him with that figure if we have it to hand.
The hon.
Gentleman also mentioned the Scottish Executives seeking to
promote firms based in Scotland. He will be aware that the regional
development agencies also have a role in promoting industries and
businesses based in their regions. Along with UKTI, the Scottish
Executive, the Welsh Assembly, the Northern Ireland Administration and
indeed particular councils, the RDAs play a role in selling British
business overseas. I do not necessarily accept that woollen and
textiles businesses based in Scotland will have a competitive advantage
or any more support than is available through the RDAs in
general.
On the
contribution expected from the industry from UKTI and the question
whether that support will continue, I reassure him that we will
continue to support targeted events. I am told that there are at least
two key events in the wool textile calendar for which, on an annual
basis, firms and the trade association can put in bids for support to
UKTI, and that will continue. UKTI is providing some £222,000
for event support this year and forecasts spending £229,000 for
2009-10.
The trade
association is also receiving regional challenge funding of
£35,000 to target more effectively the emerging markets in
China, which the hon. Gentleman mentioned. The money will also be used
to support efforts to target the Japanese
market.
Mr.
Baron: I thank the Minister for his response. He may not
be able to supply the figures now, but how does that support compare
with the amount our EU competitors spend in promoting their wool
textile industries? I know that £220,000 sounds like a lot of
money, but if we are well behind the curve compared with our
competitors, perhaps we need to consider the matter again. Can he come
back with those
figures?
Mr.
Thomas: I am happy to consider further the information
that I can give on that. However, I put in a gentle caveat: our
industry is inevitably different to that of France and of Germany, so
we are not comparing like with like. However, since the hon. Gentleman
has asked the question, I will endeavour to give him, in writing, as
valuable an answer as I can.
Question
put and agreed
to.
Committee
rose at two minutes past Five
oclock.