§ Mr. Cross
I beg to move, in page 34, line 41, after "cloth," to insert "surgical dressings."
It has been represented to us, after discussion with all the interests concerned, that it is desirable that we should add to paragraph (a) of this Clause the words "surgical dressings," and to paragraph (b)the words "rubber hoses," and in addition we take a similar power to that which exists under paragraph (a) to empower the Cotton Industry Board, with the approval of the Board of Trade, to add other articles partly made of rubber. These Amendments have been agreed with all the interests concerned.
§ Amendment agreed to.
§ Further Amendment made:
In page 35, line 5, after "tyres," insert:
rubber hoses or such other articles made partly of rubber as the Cotton Industry Board, with the approval of the Board of Trade, may from time to time designate for the said purposes."—[Mr. Cross.]
§ 9.53 p.m.
§ Mr. Stanley
I beg to move, in page 35, line 33, at the end, to insert:(4) Without prejudice to the preceding provisions of this Section, no determination of the board administering a price scheme shall apply to any sale of goods suitable for use in the manufacture of any of the commodities mentioned in paragraph (a) of Sub-section (1) of this Section, or the manufacture of tyres, 1634 rubber hoses or any other articles for the time being designated by the Cotton Industry Board in pursuance of paragraph (6) of that Sub-section, to a person whose business consists of or includes such manufacture, being a sale which is subject to the express condition that the purchaser must not use the goods otherwise than in the course of such manufacture as aforesaid.This Amendment is put down to deal with a rather difficult case which was raised by the hon. Member for East Willesden (Mr. Hammersley) on the Committee stage. One of the matters which gave us the greatest difficulty in drafting is the case of the mill which is supplying goods entirely for the purpose of the manufacture of those commodities which are inserted under this Clause. Hon. Members will appreciate that they are products which do not come into com petition in any way with the normal products of the industry as they go straight into these exempted manufactures. The difficulty, of course, arises in the case where a firm is making products, some of which go into this special market and some of which go into the general pool and compete with the ordinary products of the Lancashire industry. The difficulty that we have had has been to decide how to define that firm's activities and to deal with its two different sections. The original proposal of the joint committee was that the only people who should be exempted under this sort of provision were the associated firms of firms already exempted in the earlier part of Clause 27, but although that is the sort of thing which is all right to lay down as a general principle, when it came to a matter of drafting we found it completely impossible to carry out. It was almost impossible to lay down an exact definition of what constitutes an associated firm, and whatever interpretation one introduced it would be very difficult to prevent colourless imitations being carried out for the purpose of evading the Clause.
As a result of the difficulty of drafting on different lines, in the Bill we laid it down that any firm that sold two-thirds of its total product in this specialised way, would be exempt under this Clause, but the hon. Member for East Willesden in Committee made certain observations which pointed to the unfairness of a definition like that. He pointed out that where you had a firm 66 ⅔ of whose product was going in this particular way and 1635 33 ⅓ going into general competition, it would be exempted altogether, while another firm alongside, doing half and half, would not share in the exemption at all. You would, therefore, have a tremendous change brought about by quite a small difference in the proportion of the products of the firm. Finally, this difference by proportion would probably inure to the benefit of the larger concern, which would be able to devote a larger part of its capacity to the specialised working, and it would severely hit the smaller firm which does not perhaps get such regularised orders as would enable the proportion at the end of the year to be as much as 66⅔ per cent. Therefore, a substantial case was made out that the definition we had adopted would lead to hardship.
Frankly, if we were unable, as we have been unable up to now, to discover any means of satisfactorily dealing with the associated company by definition in a Bill of this kind, the only way possible to remove the injustice caused by the division according to proportion is on the lines of the Amendment that I now move. The Amendment exempts the manufacturer under Clause 27 in so far as the actual product that he sells is sold for these specialised purposes, and as long as there is a pledge that the product will be used for that purpose, and no other. Therefore, instead of, as under the old provision, the man who only produced 50 per cent. for this specialised production getting no protection at all under this scheme, and being treated as though he were 100 per cent. on the competitive side of the industry; if he produces 50 per cent. he will be liable to come into the price-fixing scheme, and to the extent that he is 50 per cent. competitive in the industry, but not in the other, he will be liable for the obligations under the Bill. It may be said that this opens the door rather too wide. I do not want to do anything more than remove injustice. I certainly do not want to open the door too wide and enable certain Lancashire products to escape the net of the particular scheme, and I shall be ready to listen to any suggestion which may be made which will deal with the difficulties raised in Committee and will avoid the charge that we are opening the door too wide and allowing too much to escape.
§ 9.59 p.m.
§ Mr. Dodd
I was partly responsible for this suggestion in Committee, along with my hon. Friend the Member for East Willesden (Mr. Hammersley). The matter was put to my right hon. Friend without very much notice, and he gave an undertaking that he would consider it before the Report stage, which he has been good enough to do. I produced the case of two concerns side by side, where the difference between the proportion of the actual product was small and yet one firm might be exempted and the other not exempted. I have been running through what was said in Committee, and I think that what I intended was a little misunderstood by my right hon. Friend. What I did want to put was that there should be no injustice as between one firm and another; but I did not go so far as to say whether it should be exemption or non-exemption The Amendment was tabled in Committee in such a form that it led to exemption, but I did say in speaking on the Amendment that I did not vouch for the actual wording and that it would fit into the Bill, but pointed out that it was brought for-ward for the purpose of raising a discussion.
We must be very careful before we say that these people should be exempted. It might be wiser not to exempt them, but to do the reverse and bring 1hem all in. What I meant to emphasise was that it was unfair that some should be out and some should be in. My point was that they should all be out or they should all be in. There is a good deal to be said for having them all in. When we consider that the sections of the industry connected with this Clause are supplying the most successful concerns in the industry, such as the sewing thread people, the tyre manufacturers and the Lancashire cloth manufacturers, there is a case for further consideration. I know that before the Bill was introduced these interests had been consulted and they claimed exemption. They were exempt themselves and they also claimed that the people who supplied them should have exemption. That was granted in the Bill to the extent of 66⅔ of their pro ducts, but that was changed during the Committee stage, so that all of them are exempt.
1637 I am wondering whether my right hon. Friend, who has been very generous to us in Committee to-day, and has tried very hard to meet us, would reconsider this matter. I should be glad to know that we are not exempting people when it might be wiser to say that they should all come in. It has been put to me from one interest only to-day that while they are exempt themselves they recognise it might be fairer to have a controlled price for what they might be using in their concern, as their competitors are doing. There is a rather different feeling on this question from what there was two or three months ago. Would my right hon. Friend be good enough to give further consideration to the matter before the Bill is completed in another place, to see whether anything can be done to meet all parties?
§ Mr. Stanley
I hope my hon. Friend will make it quite plain that the Amendment that I am now proposing is the exact Amendment for which he asks.
§ Mr. Stanley
The hon. Member said:I am not suggesting for a moment that the mill should be completely exempted, but only exempted in respect of the particular part of the mill in the same category as a mill doing the same trade."—[OFFICIAL REPORT (Standing Committee C), 13th June, 1939, col. 560.]I am giving the hon. Member exactly the Amendment that he wanted, but I gather now that he does not want it.
§ Mr. Dodd
That really is the case, and I am prepared to admit it. In the Committee stage it is very difficult to assess the points that arise. What I was trying to emphasise was that it was unfair to have one out and one in. The Amendment is in the form which I desired at that time, but I may have altered my views in the meantime. We need to be very careful. I am not partial to the one or the other. It may be right to have them all in or to have them all out; but I want to be satisfied that we are doing the fairest thing, whether we have them all in or all out.
§ 10.4 p.m.
§ Sir C. Entwistle
I am very glad that my right hon. Friend has said that he will be willing to reconsider this matter. It is a very difficult and complicated question. I have a concern in my con- 1638 stituency that would on the face of it benefit under this Amendment, if you can call it a benefit to say that they shall be exempt from any price scheme. They supply goods to firms who are manufacturing sewing thread or the various commodities which are exempted, but they do not want to be excluded from the price scheme; in fact, they want to know why they are to be prevented from having the benefit which the price scheme might confer upon them in respect of these very goods which will now be exempted if the Amendment is passed, being the ingredients of the exempted commodities in this Clause. The difficulty has arisen in this way. The exemption which was agreed to between the cotton trade and these particular industries that manufacture these products was, as the President of the Board of Trade said, only the exemption of those firms who manufactured these particular commodities in their finished state, or their subsidiary or associated companies who manufacture the ingredients for these particular products.
The President of the Board of Trade told us that the difficulty arose in de fining associated or subsidiary companies. There is a definition of them in the Companies Act, and I understand that they will be satisfied with that definition. I have not gone into that point and I cannot really say, but apparently, because of the difficulty of arriving at a satisfactory definition of associated companies, the door was opened wider in the Clause than in the original proposals of the joint committee which were agreed to by the people who wanted the exemption. The door having been opened a little wider than the original proposal, it was seen that by widening it so as to include all people, two-thirds of whose turnover was in respect of these products, there might be an injustice between people making two-thirds or more, and those making less, and in order to meet the injustice we have now thrown the door completely open.
The result will be that there will be excluded from this price scheme the manufacture of commodities which are certainly part of the cotton trade, and which it would be very undesirable should be excluded. Under this Amendment any product which is to be utilised for the manufacture of the definite exempted products is exempted if it is sold to a person who manufactures, either in whole 1639 or in part, the particular commodities which are exempted. Suppose a firm is supplying yarn or cloth to another firm which is partly making these definite exempted products and partly products which are normally competitive with the cotton industry, such part of the yarn and cloth used for these purposes and exempted from the price scheme could be sold at any price however low. Yarn and cloth could be sold for other purposes and you would, in fact, get evasion of the price scheme with regard to commodities intended to be covered by the scheme.
There are further dangers. There is also power given to the Cotton Industry Board, with the approval of the Board of Trade, to extend the list of commodities that are defined in this Clause, and naturally there will be great pressure to have that list extended. You might easily, as a result of this Amendment, have the door opened extremely wide. I submit to the President of the Board of Trade that the safer plan would be to adopt the suggestion of my hon. Friend the Member for Oldham (Mr. Dodd) and go back to the position of closing the door rather than opening it wider. I beg of my right hon. Friend to keep the exemption of these commodities on the basis of those firms who are actually manufacturing sewing thread or tyres, and so on, or their associated or subsidiary companies. Unless we can get the exemption related in some way to these original proposals there is great danger of exempting people who arc intended to be covered by the enabling provisions of this Bill. This problem is extremely difficult to under stand and difficult to explain, but it is a matter about which the Joint Committee are very anxious. I hope that the pro visions will not be widened but contracted in order to obtain equality without the risk of the dangers which will follow from the Amendment in its present form.
§ 10.11 p.m.
§ Mr. Silverman
The right hon. Gentle man the President of the Board of Trade is being given very poor credit for his attempt to meet his critics in Committee, and I am afraid that I am on the same side. The question of the value or the validity of this Clause is its legal machinery. The object is to exempt from these provisions persons using their products in a particular way, as long as what is sold to them is sold subject to the ex- 1640 pressed condition that the purchaser must not use the goods otherwise than in the particular source of manufacture. I wish to point out the extreme difficulty of enforcing any such condition. How will you know that the condition of the exempted sale is broken, or to what extent it is broken; and if you know that it has been broken, what follows? If the pro duct has been used and the condition on which it was enabled to be bought at a certain price, probably less than the mini mum price, has not been observed, who has the right to decide what penalty should follow? It is extremely difficult, if you have a Clause of this kind, to make it workable. I cannot see how it can be made workable.
§ Mr. Stanley
It is quite plain. If it were not used for the purpose, it would not have the benefit of this Sub-section, and therefore, if it were sold, as presumably, it had been, below the fixed mini mum price, it would be a contravention of the price scheme and subject to the normal penalties.
§ Mr. Silverman
It is possible that I have not understood it. I thought it was a question of selling it for manufacture at a later stage, and that it was the original vendor who was exempted, and not the user of the cloth or yam. If that is right, the man who buys the article, subject to the condition that it shall only be used in this way, commits no offence, as I see it, and I do not see how you could follow the substance right through and keep track of what he bought and what actually became of it in the long run, or enforce the conditions.
§ 10.15 p.m.
§ Sir Joseph Nall
The important point is that internal transactions of a combination should not be interfered with; they should be excluded; but outside transactions should be included. I do not think it should be impossible to distinguish between these two cases. As I understand the position, they do not want to interfere with internal transactions carried out by the same combination, including subsidiaries, but that they do not want that exemption to apply to transactions which may take place in what may be the surplus of their production which they may at any time put upon the market. I would suggest to the right hon. Gentleman that he might meet that point in another place.
§ 10.16 p.m.
§ Mr. Radford
I hope the right hon. Gentleman will withdraw the Amendment and look further into it to see what its effects will be, before the Bill goes to another place. One of the main objects of the Bill is to prevent the selling at less than cost, except where it is necessary in order to meet foreign competition. The Amendment says:Without prejudice to the preceding pro visions of this Section, no determination of the board administering a price scheme shall apply to any sale of goods suitable for use in the manufacture of any of the commodities mentioned in paragraph (a)of Sub-section (1) of this Section, or the manufacture of tyres, rubber hoses or any other articles….The result would be that price schemes relating to cotton yarns, some of which are suitable for this purpose, or to cotton cloths, some of which are also suitable for this purpose, would once more be outside any price schemes which may be de signed by the industry, and we should be thrown back into the old evil period of dog lights, yarn against yarn, cloth against cloth, and the cutting of prices. It would make confusion worse con founded. There would be war between the spinners of yarn which are going to be sold to sewing cotton manufacturers, there would be war in the supply of cotton cloth which was going to be used by tyre makers; it would upset entirely the price schemes in which these producers were concerned, and the only result would be that the manufacturers of these finished articles would be securing their materials at less than a reason able and equitable price. I hope the Minister will take the appropriate steps to enable this matter to be more fully considered before the Bill finally becomes law.
§ 10.18 p.m.
§ Mr. Stanley
I have already indicated that I am perfectly willing to reconsider the matter, but I only hope that in another place my courtesy will not be quite so unfortunate as it has been to-night. I must point out that when this particular Amendment was proposed in Committee only one speech was made, and that was in favour of it, and that the hon. Member who has spoken for the Joint Committee did not at that time see the dangers to which he has referred this evening.
§ Sir C. Entwistle
That does not quite represent what I said. I said that the Clause as it stood opened the door a little wider than the original proposal. That was accepted, there was no criticism; but with this Amendment the door is opened much more, and if this is the only way of producing equality we had better go back to the original proposal.
§ Mr. Stanley
I want to point out only that the Amendment is practically the same as that which was proposed in Committee by the hon. Member for Oldham (Mr. Dodd).
§ Mr. Stanley
I only wish the hon. Member had then said that he had these objections. I confess that I thought I was trying to meet the grievances which were agreed to by the Committee as a whole.
§ Sir C. Entwistle
The points raised by the hon. Members for East Willesden (Mr. Hammersley) and Oldham (Mr. Dodd) were not on an Amendment on the Order Paper, but on the Question, "That the Clause stand part of the Bill." They were sprung on us by surprise, so that it was hardly possible for the Joint Committee or anybody else to raise the objections that are now being raised when we see the proposal in concrete form.
§ Mr. Stanley
My hon. Friend the Member for Oldham (Mr. Dodd) moved an Amendment which was on the Paper, the effect of which was to insert:regardless of the total quantity of products of the industry manufactured by him.I am not complaining. I am merely explaining to the House that I thought I was meeting a unanimous desire that was expressed by the Committee. If there is serious complaint about the new Amendment and its effect, naturally it is some thing which has to be taken seriously and looked into. On the other hand, although I promise to look into it, I am not too optimistic about the prospect of solving the problem on the lines on which my hon. Friend rather airily desired me to do so, for he will realise that it was only because, after a good deal of consultation with the Joint Committee, we were un able to solve the problem, that we put in the provision that was originally in the Bill. Therefore, to think that in the few 1643 days between this stage and the time when the Bill is dealt with in another place we shall be able suddenly to find a solution which we have not been able to find so far may be slightly too optimistic. What I have to consider is whether, if we find the other thing impossible, the Amendment does not produce greater difficulties than the Clause as it originally stood. Therefore, if we cannot find a way of dealing with things on the lines originally proposed, it might be better to go back to the Clause as it was in the beginning. Certainly, I will look into the matter between now and the time when the Bill is taken in another place with a view to trying to find a solution.
§ Amendment agreed to.