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Lord McIntosh of Haringey: My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, may I suggest that the Report stage begins again not before 8.42 p.m.

Moved accordingly, and, on Question, Motion agreed to.

Clothing and Textile Industry

7.42 p.m.

Lord Feldman rose to ask Her Majesty's Government whether the state of the British clothing and textile industry is satisfactory.

The noble Lord said: My Lords, I welcome this opportunity to discuss the state of the clothing and textile industry today. In the time available tonight, I shall deal only with the clothing industry.

I have never had a financial interest in the industry, except as a long-term sleeping shareholder in one of London's leading men's tailors. My abiding interest is an affectionate and sentimental feeling for the clothing industry since 1978.

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In late 1978 the noble Lord, Lord Healey, then Chancellor of the Exchequer, invited me to become chairman of the clothing Little Neddy. I rang his office to ask whether he had made a mistake because I knew nothing about the industry. He replied that he wanted me to accept because, it was hoped, I could bring some new ideas to the industry. I accepted willingly and was quite intrigued to do so because at that time I was chairman of the Conservative Party in Greater London and was one of the people trying to bring the party back into government.

At Little Neddy meetings the manufacturers, industry unions, some retailers, trade associations and DTI officials all worked together to get down to basics. Being on the Little Neddy gave me the opportunity to be in direct contact with the industry unions, and I remain in contact with them today.

When I took over in 1978, I wrote a report which I called St Neddy. It included some of the following points. The British clothing industry had in recent years suffered from falling employment, fluctuating or falling production and large increases in the volume of imports. Increases had occurred in low-cost imports but also in high-cost imports from advanced manufacturing countries. Those goods appeared to outscore British-made goods in design, manufacture and marketing. We said that we should aim to encourage professional standards of management in the UK clothing industry, and encourage new entrepreneurs and small businesses.

I spent six interesting and exciting years as chairman of the clothing Little Neddy. During that time, we came up with many ideas, including encouraging some of the leading haute couture designers to work together with retailers in putting better design into the high street. That initiative eventually turned into the British Fashion Council. We attempted to launch a design, branding and marketing project. We tried to set up a British fashion centre in premises in the heart of London so that export buyers and major UK buyers could see virtually the whole of the British clothing industry in one stop. We held numerous meetings to bring together retailers and manufacturers so that they could discuss problems and learn from each other.

In 1982, growing job losses which arose from growing imports led us to establish a "Better Made in Britain" exhibition for clothing, knitwear and footwear. At that exhibition in 1983 40 major high street retailers exhibited their imports and challenged UK manufacturers to obtain the business, not out of patriotism but by strict commercial criteria of competitiveness of design, quality, price and availability.

The initial exhibition was a great success and "Better Made in Britain", which I later chaired as a separate organisation from 1984 to 1995, went on to run 25 exhibitions, some of them for clothing, in 14 different industries. We claim that we brought back for Britain many hundreds of millions of pounds of business and hundreds of jobs.

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We also dealt with inward investment. We arranged for the largest ever group of Japanese manufacturers to visit Northern Ireland. We worked together with the Northern Ireland Development Board and discussed further with the Japanese people the possibility of opening factories there. One or two of them did. We also encouraged clothing retailers from GB to buy from the Province.

A year ago, I joined the All-Party Parliamentary Clothing and Textiles Group. It produced a report which made many of the same points as I first made some 21 years ago; namely, that the industry currently faces the biggest challenge in its history, that low labour-cost suppliers are securing an increasingly large share of world markets, that state aids are distorting competition and that sourcing patterns on the high street are changing.

Textile and clothing represent the eighth largest manufacturing industry in the UK. It is a major employer in the East Midlands, Yorkshire, the Scottish Borders and Northern Ireland, with a presence in the north and east of London, parts of the West Midlands and the North West. Perhaps I may give some statistics about clothing. In comparing those areas between 1986 and 1999, production in the industry increased by only 8 per cent. Exports grew from £1.2 billion to £2.5 billion. Imports grew from £2.3 billion to £7.5 billion; that is, they more than trebled. The trade gap grew four-and-a-half times from £1.1 billion to £5 billion. Jobs, both in clothing and textiles, fell from 600,000 in 1981 to 300,000 in 1999 and are currently falling at the rate of 30,000 per annum.

In the past five years, 1,300 clothing firms and 400 textile firms have gone out of business. It is clear that unless positive action is taken soon, there will not be a viable industry left in 10 years' time. That would be a tragedy for our country. Today's retailing environment is more challenging than ever before. Retailers are under greater attack on margins and often have to make a trade-off between speed of delivery and price. Design is, and always was, the key. However, if we improve our design and quality so that domestic production becomes a necessity rather than simply an option, that must surely help.

It is clear that more and more basic clothing is being bought from abroad. In the past 10 years, imports from Hong Kong have trebled. Those from Turkey have increased 14 times; those from China 20 times, and even those from major European countries by 350 per cent. Wherever one looks, retailers and UK manufacturers are buying more and more goods from abroad; from a range of low-wage countries which, in the 1980s and early 1990s, were regarded as being unreliable producers.

It is not only a question of retailers buying from abroad; clothing manufacturers themselves are setting up overseas plants. In other words, UK jobs are being exported to those countries. The effect of all that will not only harm our clothing industry directly but will also harm the support industries.

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In recent months, large government grants have been allocated to the coal, motor car and aerospace industries. But unless help is given to the clothing and textile industry, I feel that we shall lose a further 100,000 to 150,000 jobs in the few years ahead. We shall then wake up and ask why we did not do something about it earlier.

Government aid to the clothing industry has been given mainly through regional selective assistance. It has been run at a low level of £4 million to £5 million per year. That assistance should now be reassessed and should be run on a national as well as on a regional basis.

I should add a few words about Marks and Spencer which has unfairly had to take the brunt of the criticism for what has happened to the British clothing industry. From my personal experience I can say that Marks and Spencer carried the industry through many difficult years by buying British, and the clothing industry would have been damaged 10 to 15 years ago had it not been for its help. That should never be forgotten.

I conclude by proposing, first, that the national strategy proposed by the textile and clothing strategy group should be approved en bloc by the DTI and that the necessary money be allocated right now.

Secondly, the DTI should investigate in depth and at speed the way in which Zara, a highly successful Spanish retailer, operates. It has over 700 stores in Spain and Europe and has recently opened several here in the UK. I understand that two-thirds of the clothing sold in the stores is made in Spain. I understand that it chooses the fabric, cuts it and gives out the work to local factories near its head office. I suggest that we send a mission to its headquarters to see what we can learn and how we can adapt its ideas to our country.

In some ways, what it is doing reminds me of the Nissan operation set up in Sunderland where the main factory and its components suppliers were on the same campus.

Thirdly, the GMB union is keen on a "Made in Britain" label. That could help. However, it would help even more if it could be applied to a branding, marketing and advertising campaign with a brand name for quality British goods. Fourthly--and I paraphrase another expression--we need "design, design, design" with a major initiative for young designers and also to attract experienced designers to the industry.

Fifthly, we need to look at the burden of legislation, the climate change levy, parental leave and other matters which add further costs to the industry at this difficult time. We need to look again at providing more financial support for our exhibitors at overseas trade fairs.

Lastly, we need to look at sourcing in the UK more of the NHS spend of £130 million, the MoD spend of more than £100 million and relevant business from other government departments. There was recent publicity about MoD contracts going to a German company which was manufacturing its goods in

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Turkey. I should welcome the opportunity of discussing some of those ideas with the DTI at ministerial level and to offer what assistance I can.

In conclusion, I hope that the Government will do their best to help save the clothing and textile industry from disaster in the years ahead. I look forward with interest to contributions from other noble Lords and with hope to the Minister's reply.

7.53 p.m.

The Earl of Mar and Kellie: My Lords, I am grateful to the noble Lord, Lord Feldman, for tabling this Unstarred Question and hence giving us the opportunity to debate this issue. I shall be speaking mainly in a Scottish context, believing that that subject is a matter partially reserved to the United Kingdom Parliament.

Just before I was sent home last November, I began to realise as a consumer that the UK textile and clothing industry in general and the Scottish industry in particular were coming under considerable threat from imported goods. That awareness came from various sources. First, in Clackmannanshire, many textile firms have closed in the past year. That culminated in the final closure of the Paton and Baldwins hand-knitting wool factory in Alloa. In all, 1,000 jobs disappeared in a year.

Secondly, I became increasingly aware of the special context of clothing in Scottish culture, particular for men. Never before have I seen so much flamboyance among the normally shy and retiring Scottish males. Despite their reticence, my fellow Scots have the only workable national dress in Europe.

Thirdly, I began to realise that in the remote areas of Scotland there are products which are worthy of promotion. The issue of the protection of geographic indication--the so-called PGI--is clearly raised in this regard. The Shetland Islands have a long tradition of knitwear which, when combined with the Fair Isle tradition, not only forms a substantial part of Scottish culture and heritage but also has been protected since 1986 by the symbol of the "Shetland Lady" mark. The Shetland knitwear industry contributes £8 million per year to the islands' remote economy.

Similarly, the Harris tweed industry continues to contribute to the even more fragile and remote economy of the Outer Hebrides. Harris tweed has been protected for many years by the "Orb" mark. Sometimes criticised for being too conservative, it is now being produced in a wider range of weights and styles. Perhaps its greatest virtue--that it seems to be virtually bomb-proof--is also its great weakness. Plenty of people bought a Harris tweed jacket years ago and, yes, it is still doing fine.

I was pleased to receive a letter from Kim Winser, the new chief executive of Pringles of Scotland. She was keen to point out that Pringles has every expectation of building up its knitwear business in Hawick. I applaud that, especially as the Scottish Borders have been very hard hit by the closures in the face of international competition.

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So, where does that get us to in Scotland and in the United Kingdom? It is an industry to which most consumers can relate. Individuals can make purchasing decisions. By contrast, noble Lords and, indeed, other citizens cannot go out to buy a ship from the Clyde or a jet aircraft. Our very temperate climate requires us all to have a range of clothing to meet the variety of weather with which we are blessed. My point is that individuals can opt to buy Scottish or UK-produced clothing.

Clearly, it will be cheaper to buy goods from abroad, especially from the third world. I do not decry supporting the third world. Indeed, it is generally a duty which we should take upon ourselves. I recently bought a cap. The material was Harris tweed and it was assembled in Sri Lanka. That admirably met both my objectives.

So I believe that the UK industry must concentrate on the quality end of the market, but not just the luxury end of that market. It should produce distinctive material and style; make certain that the label says precisely where it is made; and trade on that indication. It should not just say "Made in Scotland" when in fact it is made in Brora, Selkirk, Sauchie, Alva, Stornaway, the Isle of Sanday or Shetland.

Penultimately, all consumers need to be reminded that the industry is subject to the slogan, "Use it or lose it". Ultimately, we should promote the idea that we are the ethnic people of the North Sea or the eastern Atlantic and that, as such, we have a distinctive heritage and tradition of dress which is worthy of our own support as well as that of those who visit our shores.

7.59 p.m.

Lord Rogan : My Lords, it is a pleasure to follow the noble Earl, Lord Mar and Kellie, and to welcome him back to the House as an official working peer.

Today's challenge and tomorrow's opportunities may best describe the collective position of the textile and clothing trade today in the United Kingdom. I have been involved in the textile business all my adult life. Indeed, my memories go back even further. I can recall, with pleasure, as a child playing hide and seek in webs of cloth in my father's cloth store. Today, I have interests in the yarn spinning and yarn processing businesses in Northern Ireland, England and in mainland Europe. While, undoubtedly, "niche" businesses within the textile industry are fairing well, collectively the industry would say that over the past three decades it cannot recall a time when the overall environment was beset by the scale of restructuring and refocusing currently upon us.

Some noble Lords may also be aware that I have an involvement in a public relations company. My experience in that industry, added to a healthy cynicism engendered from my time in politics, has taught me not to believe everything that I read in the press. If I did, I would believe that the textile industry and the clothing industry in this country had gone for ever, never to return. The reality is that the column inches devoted to recent problems do not tell the complete story.

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As the noble Lord, Lord Feldman, pointed out, the textile industry is fragmented around the kingdom and its success or failure has profound effects upon regional economies. Perhaps I may concentrate on the Northern Ireland region, which I know most intimately, to illustrate the core problems for the UK-wide industry and to identify what I feel are the solutions to those problems. If I refer to some of the more well-worn facts, you will see what I mean.

The textile and apparel industry in Northern Ireland is exclusively responsible for 20 per cent of all employment in Northern Ireland's manufacturing output, as compared to just 8 per cent of the total manufacturing output of the UK as a whole. Similar ratios apply to other textile regions in Great Britain.

Textiles account for over 20 per cent of the Northern Ireland economy's entire overseas exports. That is even more critically important to regions within Northern Ireland, such as the North West, where over 50 per cent of manufacturing jobs depend on the textile sector. Clothing and textiles contribute in excess of £1 billion in revenue towards the Northern Ireland GDP. The industry employs over 20,000 people in a population of 1.5 million. I hope you will forgive the hyperbole: textiles maintain the industrial heart and soul of Northern Ireland.

Those factors apply equally to the other textile regions of the UK, many of which are clustered in already disadvantaged urban and rural areas. From a position of stability and comfort in the mid-1990s, the UK clothing and textile sectors have been browbeaten by a sequence of market forces and consumer trends that have been as damaging as they have been relentless.

They say a week is a long time in politics. Recently, I have experienced many long weeks and hours in local politics, but nothing quite measures up to the prolonged sense of ardour experienced by all those who trade, globally or domestically, in our clothing and textile industry. From 1995 volume output from the sector has dropped 10 per cent and continues to fall. Employment has dropped some 20 per cent, a figure that resonates concern among all political representatives because of the dominant employment exposure that some regions have to the textile industry compared with others.

The introduction of the euro has been instrumental in leveraging an ever-strengthening pound. The impact on exports to Euroland is nothing short of catastrophic. If difficult fiscal conditions are combined with unpredictable high street consumption, a volatile Far East market and cheap labour driven imports, no one can be left in the dark as to the harsh reality of trying to make a profit in the industry today.

What of tomorrow? Forces of change are shaping the textile industry of tomorrow. We must re-invent our wares and the means by which we assemble and sell them if we are not to be replaced in an inevitable one-market economy. I believe that we have the fundamentals with which to do that.

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Last year the top 10 companies in Northern Ireland outperformed both the Republic of Ireland and Great Britain counterparts, each of which is growing rapidly. That was done based on modern design themes, new technologies, brand development and balanced outsourcing strategies. Companies like Desmonds, Ulster Weavers, Ewart Liddell and Ulster Carpets, to name but a few, are sound, profitable enterprises. If the transition period is to be endured without permanent discord, we must now mobilise ourselves to prepare for a new kind of industry. We must begin to develop new skills in logistics and purchasing. We must exploit the fact that our closeness to our current markets allows us quicker response time than competitors from overseas.

We must also look for new routes into global markets. We should develop supply and outsourcing partnerships to reduce costs, to remain competitive and to remain profitable. That would enable us to maintain a base and employment in our UK mills, albeit at lower levels. We are finding new opportunities in joint ventures, combined marketing initiatives and networking visits. Competitive and commercial advantage will return to those businesses that embrace new systems and models of business.

The creativity and design flair emerging from local colleges needs to be given access to the cutting edge of new product development. The Internet and e-commerce must become essential elements of the selling and marketing process so that we can take prominence in a global shop window that holds as much opportunity for United Kingdom manufacturers and producers as anywhere else in the world.

The way forward for our industry is now to allow for a period of subsidised transition to follow its course. Once regeneration is firmly under way, all of our businesses should look to turn prevailing market forces to our advantage and reassert the United Kingdom's position as a leading global provider of value-added, well-branded and high quality textile and clothing products. Given a fair wind and government support, I am confident that that is a position that the UK clothing and textile industry can achieve in the short to medium term.

8.8 p.m.

Baroness Miller of Hendon: My Lords, I thank my noble friend Lord Feldman for introducing this important and timely debate, bringing with him his considerable experience in this area and enabling other noble Lords to speak from their experience.

In the centre of this Chamber is the Woolsack, a symbol that dates back to the 14th century, illustrating the importance of wool to our economy. In these days, when the history of our country is no longer taught as it was when I and most of your Lordships were at school, with the emphasis on British achievements, I imagine that the average school child, on being asked what a "spinning jenny" was, would guess that it was a member of a girl's pop group.

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But in the 18th century the whole of the world's textile industry was revolutionised by three major British inventions: the spinning jenny, the mule and the flying shuttle. The great inventors, Sir Richard Arkwright, Samuel Crompton and John Kay, were largely responsible for the great wealth that the production of textiles generated for Britain and also inspired a whole engineering industry which led the great Industrial Revolution that made Britain a world power.

And yet into what a parlous state our once great textile and clothing trade has fallen. In Victorian times it was the country's largest employer and the world's largest producer. Although Britain was once a world leader, between September 1998 and September 1999, some 36,000 textile and clothing workers lost their jobs. That represents some 650 jobs a week.

The British Textile and Apparel Federation has said that there is every sign of more than 30,000 losses this year and up to 100,000 over the next four years. These losses have largely been in packets of 50 or so here and 100 or so there. Each job lost is a personal tragedy in its own right but goes largely unnoticed nationally.

But imagine what a furore there would be if these job losses, running into thousands--as is threatened in the motor industry--were announced on just one day? However, they also form part of a pattern. Since May 1997, some 250,000 jobs have been lost in manufacturing industry, which represents a loss of 10 an hour. That has happened under the rule of a party which in its election campaign had the effrontery to accuse the Conservatives of destroying this country's industrial base.

The honourable Member for Amber Valley introduced a most instructive debate in the other place on 14th March in which she stated:

    "The Government must stop writing off the industry. They must accept and believe that it is not just a sunset industry".--[Official Report, Commons, 14/3/00; col. 2WH.]

Indeed it is not.

As my noble friend Lord Feldman reminded us, the entire sector of textiles, clothing and footwear is still the eighth largest in the United Kingdom. It has sales in excess of £17 billion and currently employs 306,000 people. One quarter of those jobs are concentrated in the East Midlands. However, although the industry is larger than agriculture, the motor industry and aerospace, it receives only a fraction of the assistance that these and other smaller industries get.

The problem is largely, if not entirely, caused by large volumes of imports from countries with very low labour costs. Ironically, Britain, among other countries, helped to set up textile factories in emerging third world agricultural countries as an easy means of creating industry. As Clare Booth Luce once said,

    "A good deed never goes unpunished".

However, it is not only the low labour costs and low infrastructure expenses in these countries that cause the problem. There are some self-inflicted wounds that the Government have caused to industries struggling

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against third world competitors. The British Apparel and Textile Confederation wrote to one of my researchers to say,

    "The legislative burden is growing. We certainly do not need an increase in the national minimum wage this year, nor do we need the climate change levy, nor payment for parental leave, to name but three".

Exchange rates are also having an effect. I do not believe that it is the strength of sterling that is causing the problem. The value of the pound against the dollar has remained more or less constant since January 1999. But the weakness of the euro makes our exports to Europe comparatively expensive and imports from there comparatively cheap. A few years ago we had a trade in balance with the EU, whereas last year it was £6 billion in deficit.

There has been a great deal of criticism of Marks and Spencer for its shift from its "Buy British" policy. At one time, and for many years, the company proudly proclaimed that 99 per cent of its goods were manufactured in Britain. What a big boost that was to the British textile and clothing trade. Some 16 per cent of United Kingdom textile sales are made through Marks and Spencer.

Now, large volumes of the company's goods are purchased from abroad and some of its manufacturers are being encouraged to move their production to other countries. My noble friend Lord Feldman reminded us of that point. I am not here to act as an apologist for Marks and Spencer, but, as my noble friend also pointed out, it is not a part of Marks and Spencer's responsibility to subsidise the British textile industry by overpaying for the goods it wishes to purchase. That may sound brutal, but the company has two main duties: one is to its shareholders to operate in a profitable and efficient manner without infringing ethical rules; the other is to ensure that it does not damage its own business and so put the jobs of its workers at risk. Unfortunately, it seems that Marks and Spencer can survive in a highly competitive market only by buying much of its supplies from overseas, as indeed do many other retail chains operating in this country.

Then there is the matter of sourcing of goods by Her Majesty's Government. Some £1 million worth of waterproof jackets for the Navy have just been purchased from Germany. A further £6.5 million worth of combat kit for the Army was also purchased in Germany, putting 100 jobs at risk in Cumbernauld. One hundred and twenty thousand camouflage jackets and trousers were purchased from Belgium. Army boots were ordered from Brazil, forcing the closure of the last footwear factory in Wales, with the loss of 65 jobs.

The excuse for the German uniform deal was that it offered "best value for money". However, "best" according to what convoluted criteria? The Ministry of Defence has saved some unknown but obviously trivial amount compared with what the goods would have cost if they had been purchased from United Kingdom manufacturers. However, the hidden costs to the Treasury will be the unemployment pay and social security that will have to be paid to the hundreds

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of British employees thrown out of work, along with the cost to local communities dependent on the factories where they work.

The spin doctors of Millbank claim that we now enjoy the benefits of "joined up" government. If the Ministry of Defence cannot understand the dire and expensive consequences of this piece of penny-pinching, then I doubt if it is even capable of understanding, never mind joined-up government, but joined-up writing! Instead of state aid, what we see in the examples that I have cited to the House is state sabotage.

Can noble Lords imagine the reception that a British manufacturer of the same kinds of uniforms would get if it tried to sell its goods abroad? It would be told, "Why should we purchase from you when your own Government will not do so?" I wonder how many uniforms were purchased from abroad by the German and Belgian armed forces?

In Germany, the Belgian money is funnelled into its textile industries via regional and state governments, while Italy supports the industry in the poor south by government subsidies. From 1996 to 1997 regional support for the industry was £12.5 million. In 1997, under the present Government, that support fell to £5.86 million. It now stands at a paltry £4,175,000.

The next problem is that of dumping. Apart from cheap imports, we are also faced with the problem of illegal imports. Paul Gates of the National Union of Knitwear, Footwear and Apparel Trades complains that illegal imports are not being clamped down on. That includes forged designer goods.

That brings me, in conclusion, to the recommendations made by the Textile and Clothing Strategy Group which was set up by the Government. It has produced some 25 recommendations. My noble friend Lord Feldman suggested that they should be adopted en bloc. Briefly, those recommendations include working with retailers to establish more efficient supply chains; integrating United Kingdom design talent and exploiting technical expertise resources; promoting the United Kingdom's reputation for quality and excellence; and strengthening marketing skills.

On 30th March the Minister for Competitiveness told the other place that the Government were, "considering these recommendations carefully". Perhaps I may ask the Minister: are they doing so? Furthermore, can the Minister tell noble Lords when the results will be available? In my view, and I believe in the view of all noble Lords, it could not be more urgent at this time.

8.18 p.m.

The Minister for Science, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, I am delighted that the noble Lord, Lord Feldman, has given us the opportunity to debate this issue. The textile and clothing industry occupies an enormously important place in the UK economy and is of particular importance as an employer in some of the most hard-pressed parts of our country. The noble

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Lord made that very clear, as did the noble Earl, Lord Mar and Kellie, who described the situation in graphic detail. Like him, I have a particular affection for the industry, having for some time been the owner of a small clothing company that made children's frocks for M&S. I have also seen this from the viewpoint of being a small manufacturer dealing with a large retailer, which was extremely good for the soul, if not for the pocket.

There is no point in denying the fact that the clothing and textile industry is going through a tough period. There is no single reason for it. The increase in competition from low-cost supplier countries clearly plays a part; the purchasing policies of major retailers has had an impact; export-dependent companies face difficulties, not least because of the weakness of the euro. There are other reasons, too.

The competition from low-wage countries is long term--undoubtedly the most important factor in the labour-intensive parts of the industry--and is the reason why we are not the only country which has seen a contraction in its textile and clothing industry. Germany and France are in a similar situation, though Italy has survived remarkably well due to its strengths in design, marketing, investment and collaboration. There is a lesson to be learnt in that; that is, that those are the routes by which we can regain the competitive edge against low-wage countries.

As the noble Lord, Lord Feldman, made clear, major new countries are entering the industry, and countries like Morocco are having a major impact simply because they pay wages that are one-tenth the level of ours. That makes it extremely difficult to compete in a labour-intensive market. However, let me say to the noble Baroness, Lady Miller, that we do not regard the textile industry as a sunset industry. There are ways of combating that kind of competition, but it requires a high level of management skill and creativity.

We must accept that those factors will not go away and the only way that we can achieve success and a prosperous long-term future for the industry is by increasing its value added. This means improving marketing and design; increasing the level of skills in the industry; improving supply chains; harnessing better technical expertise and moving into areas of growth such as technical textiles. Those arguments apply to all regions of the country, even those that are the most dependent on the industry.

Those factors are some of the areas being addressed by the national strategy for the UK textile and clothing industry, which is being prepared by the industry-led Textiles and Clothing Strategy Group. That is an impressive body. It is well-representative of the industry and is industry-led. However, DTI Ministers encourage the work of the group and provide it with secretariat resource.

It is important that the group should be industry-led because we believe it is only the industry which can understand and solve the problems. As I understand the situation, the Textiles and Clothing Strategy Group is revising its strategy report in the light of

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comments it received from various parties interested in its consultation exercise. Altogether it received more than 50 written responses and I expect it to publish its final report shortly.

It is premature for me to offer responses to specific recommendations until the report is published and I cannot commit en bloc to those recommendations. But it is an impressive document and I can assure the House that the DTI Ministers will respond positively to the recommendations once they have been finalised. We have made sure to keep closely in touch with the group's work and my colleagues--the Secretary of State for Trade and Industry, the Minister for Small Business and E-Commerce and a Parliamentary Under-Secretary of State for Competitiveness--attended meetings of the group. The DTI Ministers will be meeting the group again soon to discuss the recommendations once they have been published.

The report is impressive in that it tackles the issues at the heart of the competitive industry--issues such as education, training and skills. One of its recommendations--taking the point of the noble Lord, Lord Feldman--relates to learning and best practice in manufacturing and retailing overseas. He mentioned a Spanish retailer in this context. We are actively considering how to take that point forward because, like him, we believe it is important to learn from best practice, particularly the sort of "just-in-time" manufacturer that he mentioned.

The report also highlights the importance of increasing added-value through increasing the design content of products, strengthening branding and exploiting high value niche markets. Those are all concepts about which the Government are extremely enthusiastic and the noble Lord can be assured that we shall do everything we can to promote that agenda.

Although the textile and clothing industry is part of the UK's traditional manufacturing base, it is nevertheless an industry driven by constant innovation. The DTI is working on a number of fronts to ensure that the wealth of talent and innovation in this country is more effectively engaged with the textile and clothing industry. For instance, we are working with the DfEE and the national training organisations for textiles and clothing--the National Textiles Training Organisation and CapitB--to develop an integrated national strategy for liaison between further and higher education and the industry; to directly influence and provide positive guidance to pre and post-16 school pupils while at the same time providing a two-way education channel between education and industry; to improve the calibre of entrants to SMEs in the apparel manufacturing industry; and to strengthen work placement and industrial staff development schemes.

Another area of innovation we are actively supporting is technical textiles. We are in dialogue with a number of companies with a view to supporting collaborative projects which will increase technical innovation in the sector. For instance, we are already supporting a company in Lancashire which is researching new methods of bonding non-woven

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materials. In that context it is interesting that the textile industry walked away with two of only 14 Foresight Link awards earlier this year. That is a tremendous achievement and shows that the industry is capable of moving forward aggressively on the innovation front.

The question of sterling was raised. We all appreciate how painful that situation is for the industry. Equally, as the Government have made clear a number of times, we do not feel that action which will effectively abandon macro-economic stability is the right way to deal with the issue.

In relation to retailer purchasing policies, I agree with the noble Lord, Lord Feldman, that it is wrong to point the finger at a company like M&S, which showed enormous loyalty over many years to the British industry. It is now under extreme competitive pressures and is having to review its strategies. I should be delighted if UK retailers increased the proportion of British-made goods they sell. But in the end that has to be their own commercial judgment. It is wrong to ask them to take those decisions on non-commercial grounds when they are under pressure from their own shareholders. We must work with the manufacturing industry to make that decision the most attractive commercial decision for them to take.

There have been a number of calls for the introduction of compulsory country-of-origin labelling. That is an issue which has been frequently considered. The simple answer is that our EU obligations do not allow us to compel manufacturers or retailers to label their products with the country of origin. There is absolutely nothing to stop manufacturers and retailers voluntarily labelling their products. I mention here that as part of its policy Marks & Spencer has done that for many years. It reports that it is not a great deal of help to the situation unless it is linked with very clear examples where that labelling may lead to an association with value for money.

We shall not be introducing legal requirements, but we are interested in working with the industry to find examples of generic brands that can be more effectively promoted. Examples that spring to mind are Harris tweed, Scottish cashmere, Nottingham lace and Yorkshire wool fabrics. That is a constructive way forward, linking origins with other considerations which consumers value and are prepared to pay for.

Perhaps I may also say to the noble Lord, Lord Feldman, that we are working closely with the British Fashion Council on the implementation of the designer fashion action plan which is again about linking high fashion to the manufacturing industry.

There have been calls from many quarters for the Government to increase their support for the textile and clothing industry. There are many schemes through which we help the industry. There are also many general schemes in which the industry can apply to take part, which can also be used for that purpose.

In conclusion the United Kingdom textile and clothing industry is currently facing a very difficult time. There is no doubt that concerted action needs to

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be taken by a number of parties, including government, to address the issues it faces. It is greatly to the credit of the industry that it is doing just that. The national strategy for textiles and clothing can provide an excellent focal point around which a number of bodies can co-ordinate their actions. I very much hope that the process of collaboration which the textile and clothing strategy group has initiated, can be continued, expanded and deepened.

As I have said already, I and my colleagues look forward to receiving the group's final recommendations. We shall respond extremely positively. Perhaps I may say once again how delighted I am that the noble Lord, Lord Feldman, drew our attention to this important area of the British economy. Working together we can do much to ensure that this industry has a prosperous future in a modern and forward-looking economy.

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