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Public Bill Committee Debates

Draft Wool Textile Industry (Export Promotion Levy) (Revocation) Order 2008

The Committee consisted of the following Members:

Chairman: Ann Winterton
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 NWTEC’s 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 people’s 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 that—I am sure that the Minister will correct me if I am wrong—most 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 competitors—certainly Italy—are 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 of—I phrase this for the sake of the right hon. Member for Cardiff, South and Penarth—NWTEC’s 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 order—but not implementation, as that is retrospective—was 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 party’s 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 unions—the 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 Executive’s 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 o’clock.

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