Fourth Standing Committee on Statutory Instruments, &c.


Tuesday 20 May 1986



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The Committee consisted of the following Members:

Chairman: Mr. David Knox

Ashdown, Mr. Paddy (Yeovil)

Ashton, Mr. Joe (Bassetlaw)

Butcher, Mr. John (The Parliamentary Under Secretary of State for Trade and Industry)

Conlan, Mr. Bernard (Gateshead, East)

Cox, Mr. Tom (Tooting)

Deakins. Mr. Eric (Walthamstow)

Hoyle, Mr. Doug (Warrington, North)

Morrison, Mr. Charles (Devizes)

Nelson, Mr. Anthony (Chichester)

Osborn, Sir John (Sheffield, Hallam)

Proctor, Mr. K. Harvey (Billericay)

Sayeed, Mr. Jonathan (Bristol, East)

Shelton, Mr. William (Streatham)

Shepherd, Mr. Richard (Aldridge-Brownhills)

Terlezki, Mr. Stefan (Cardiff, West)

Thompson, Mr. Donald (Calder Valley)

Townend, Mr. John (Bridlington)

Williams, Mr. Alan (Swansea, West)

Mr. D. G. Millar, Committee Clerk

3 Fourth Standing Committee on Statutory Instruments, &c. Tuesday 20 May 1986

[MR. DAVID KNOX in the Chair]

Draft Cutlery and Stainless Steel Flatware Industry (Scientific Research Levy) (Abolition) Order 1986

10.30 am

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher): I beg to move, That the Committee has considered the draft Cutlery and Stainless Steel Flatware Industry (Scientific Research Levy) (Abolition) Order 1986. The effect of the order would be to abolish the statutory levy on the cutlery and stainless steel flatware industry which contributes towards the funding of the Cutlery and Allied Trades Research Association. The levy was last reviewed in 1980, as part of a Government review of all statutory levies, when there was a narrow majority in favour of its retention. Since that time, however, the costs in staff time involved in administering the levy have increased whereas the number of companies paying it has fallen. The effect has been that those costs, which the Department of Trade and Industry cannot recover, now represent about one quarter of the total levy money collected. In view of that, the Department of Trade and Industry undertook a further review in 1985. Representative bodies of both employers and employees in the industry were consulted and the levy-paying firms were balloted on two alternative propositions: either to abolish the levy, or to raise the minimum qualifying turnover from its present £3,000 to £100,000, which would help to reduce collection costs by exempting some smaller companies from liability to pay the levy. The results of the review showed that unequivocal support for the continuation of the levy did not exist. Given those findings, and the disproportionate costs of collection of the levy, the conclusion drawn is that the levy can no longer be justified. The Cutlery and Allied Trades Research Association—CATRA—was also consulted and has been kept fully informed of the outcome of the review and the subsequent proposal to abolish the levy. My honourable and noble Friend the Parliamentary Under-Secretary of State for Trade and Industry met representatives of CATRA to hear its views and visited CATRA's premises in Sheffield to see the association at first hand before the final decision was taken. In 1984 the levy collected amounted to only 27 per cent of CATRA's total income compared to 40 per cent in 1979. On the other hand, CATRA's commercial performance has improved considerably in recent years with income from private sector clients rising from 8 per cent of total income in 1982 to 40 per cent in 1984. However, in order that CATRA can adjust to the loss of the levy income, it is proposed that the termination of the levy should be delayed until the end of 1987. 4 I emphasise that the order is intended to remove a requirement for which the cutlery industry has demonstrated no strong desire and which has become disproportionately expensive to administer. I hope that the order will commend itself to the Committeee.

10.33 am

Sir John Osborn (Sheffield, Hallam): As my hon. Friend knows, the cutlery industry is based predominantly in Sheffield. It is a great achievement that its commercial income has risen to 40 per cent over recent years. The Cutlery and Allied Trades Research Association wrote to me expressing some dismay that the compulsory levy was not being continued. However, I received a useful letter in April to say that the council of CATRA had met to consider the position. The letter read: "A mood of realism prevailed. We do not propose to trouble the Minister further concerning the Statutory Levy but will paddle our own canoe as your government has indicated we should. We are still convinced that this is to the long term detriment of the Cutlery Industry but we shall work hard to prove ourselves wrong." That is a courageous and reasonable statement to make, after the long correspondence that I have had with CATRA. CATRA now intends to seek membership subscriptions for co-operative cutlery research on a voluntary basis. However, it believes that because that will replace only some of the income provided by the levy, a radical expansion of commercial work will be necessary. I hope that the Minister is conscious of the need for help in that area. CATRA's budget projections show that income from subscriptions and increased commercial work will compensate for the abandonment of the levy in the year ending 31 December 1989, whereas the levy will cease with effect from 1 January 1988. In its letter CATRA says: "Consequently it would help to ensure the long term viability of the industry if the Minister could see fit to postpone abolition of the levy for 12 months." The statutory order seems binding, but, as the Minister has been negotiating with CATRA for sometime, will he comment on its request for a delay in abolition? As a Sheffield Member of Parliament, I wish every assistance to be given to the cutlery industry, and I hope that an impossible burden will not be placed on the industry too rapidly—especially on CATRA. It is interesting to know that talks have taken place and that the industry—especially the research association—has accepted the Government's decision.

10.35 am

Mr. Alan Williams (Swansea, West): It is ludicrous that at a time when the Government are beseeching industry to increase research and development expenditure, they are killing off a source—albeit a relatively small one—of funds for such work. I was intrigued by the Minister's introductory comments. He referred to the consultation that had taken place, and then made the fascinating statement that "unequivocal support for the continuation of the levy did not exist." I wonder what that meant. Normally a Minister would have said that the majority was against the levy, that there was an overwhelming majority against it, or that 5 there was a strong body of feeling for it with a minority against it. However, he said merely that support was not unequivocal. Does that mean that the overwhelming number of representations that he received were opposed to the direction of the order? Which of the organisations and individuals consulted—including the unions—demurred and said that the Government had it wrong? The response to the Government's consultative process has been less than enthusiastic. At the very least, the Government should examine the reasonable suggestion of the hon. Member for Sheffield, Hallam (Sir J. Osborn) that an extension of 12 months should be granted. The cost to the Government would be negligible, and it would be a good-will gesture to the industry.

10.39 am

Mr. Butcher: I thank my hon. Friend the Member for Sheffield, Hallam (Sir J. Osborn) for reporting the latest position of CATRA. I agree that CATRA has reacted boldly to the proposal. He was right to remind the Committee that CATRA still has the option to enhance the proportion of its income that comes from voluntary subscriptions. The letter that he has read into the record today signals CATRA's businesslike response to the changed circumstances. It is still free to benefit from DTI innovation support, which will be in the 25 per cent to 30 per cent band for collaborative research ventures. The right hon. Member for Swansea, West (Mr. Williams) will know that there are examples of levies being abolished in the past where a particular research association has taken exactly the same view as CATRA and has continued to pursue its objectives. I refer particularly to the wool industry levy, which was abolished in 1982. That research association is still functioning, however. The furniture industry was affected by the abolition of its levy in 1981, and the cotton, silk and man-made fibres levy was abolished in 1970. In each case, the research associations have changed their profile of fund raising and their methods of operation in order to continue to serve customers on a research but market-driven basis. I listened carefully to what my hon. Friend the Member for Hallam said about a further extension, which may help the CATRA to get through an especially difficult period. As my hon. Friend may know, such an extension would have a pretty good chance of taking us into the next Parliament, which, even in a Standing Committee considering an order such as this, raises a constitutional, albeit with a small "c", issue. There is, however, no legal impediment to extension, and there may be an opportunity for me to talk to my hon. Friend should the situation continue to be as difficult as CATRA currently suspects it may be. However, when the Question is put, it will relate to the proposal that is before us, and I invite my hon. Friend's support on that basis. I take up the point raised by the right hon. Member for Swansea, West. I, too, smiled at the almost whimsical nature of words to the effect that "unequivocal support" was not forthcoming. The ballot posed two choices—first, abolition of the levy; secondly, an increase in the minimum qualifying turnover, above which a firm must pay the levy, from £3,000 to 6 £100,000. The results showed that only six of the 77 companies which replied favoured retaining the levy at its present qualifying level. Of the rest, 36 firms voted for abolition and 35 for retention with the higher threshold. That may show why we had to choose those particular, albeit inelegant, words to describe the feedback. Of the firms with a turnover above the higher threshold, a narrow majority favoured abolition—17 against 15—and one favoured retention of the levy as it stands. Of all the firms voting, 41 favoured retention and 36 abolition, although their total turnovers showed £10.6 million to be for retention against £11.3 million for abolition. I hope, therefore, that the right hon. Member for Swansea, West will understand why we used the particular wording to which he referred. It is interesting to note from the figures that, if we are moving towards voluntary subscriptions, those who voted for retention, albeit on a slightly different basis from the current procedure, will, I assume, be those who will be most receptive to continue their current support on a voluntary basis. However, those companies which have been most reluctant to continue with the levy may find that CATRA will make new overtures to them, perhaps on a slightly more market-driven, business proposition basis, and the DTI would be the first to congratulate CATRA if it were successful in that objective. With those brief remarks, I commend the order to the Committee.

10.44 am

Mr. Williams: I apologise for intervening again. The Minister's remarks show the value of the advice given to all new Ministers that they should say as little as they can get away with saying. The Minister came out with a rather novel proposition which intrigues me. He said that he had discovered some constitutional inhibition on acceding to the request of his hon. Friend the Member for Hallam. I do not claim to be an expert but I can think of no such constraint that has ever inhibited past Governments from setting appropriate dates on their orders and legislation. I should welcome clarification of the constitutional impropriety that the Minister sees. If he feels that he should not commit in advance what he clearly sees as a different Government coming into office, may I, on behalf of that different Government, give a forward commitment? The Opposition would be only too happy to co-operate in any way to ensure that the industry gets the extra 12 months that it wishes. Lastly I invite the Minister to explain—as briefly as possible—the constitutional issue.

Mr. Butcher: I did say that it was constitutional with a small "c". Perhaps the word "conventional" would have been nearer the mark. As I understood my hon. Friend the Member for Hallam, the extension he sought would have taken us to 31 December 1988 which, I think, would take us into the next Parliament. If that were so, my colleagues and I would be prepared regardless to talk to my hon. Friend should he, as a continuing member of the majority party in the next Parliament, wish to reapprise us of the then emerging situation at CATRA.


10.45 am

Sir John Osborn: There is one slight but unfortunate inaccuracy. I have indicated already that I shall not be standing at the next general election, but I shall be briefing my successor and I shall take him to the CATRA offices. Until the election, I urge my hon. Friend to delay abolition until the end of December 1988. Perhaps we may have discussions on that.

Mr. Butcher: As I have said, I should like to put the order in its current terms for approval in its unamended form.


10.46 am

Mr. Williams: My humane kindness and good will to the Under-Secretary of State prevents me from pursuing the matter further as, clearly, it should be.

Question put and agreed to.

Resolved, That the Committee has considered the Cutlery and Stainless Steel Flatware Industry (Scientific Research Levy) (Abolition) Order 1986.

Committee rose at thirteen minutes to Eleven o'clock.



Knox, Mr. David (Chairman)

Butcher, Mr.

Morrison, Mr. Charles

Osborn, Sir John

Proctor, Mr.

Sayeed, Mr.

Shelton, Mr. William

Shepherd, Mr. Richard

Thompson, Mr. Donald

Williams, Mr.