§ Order for Second Reading read.
§ 3.47 p.m.
§ The President of the Board of Trade (Mr. Peter Thorneycroft)
I beg to move, "That the Bill be now read a Second time."
This Bill extends and slightly amends the Development of Inventions Act, 1948—an Act which, the House will recall, established the National Research Development Corporation. I think that it would be convenient if I started by saying a word about the Corporation itself.
I think the House will agree with me that it is important neither to exaggerate nor to minimise the rôle which the National Development Corporation has to play. It is still, in fact, in an early stage. It represents, of course, only one part of the massive development resources, public and private, which exist in the nation. Its purpose was not to supply these resources but to supplement them. The rôle allotted by Parliament to the Corporation in 1948 was, first, to hold the rights in certain inventions arising from public research, and secondly, to secure commercial development and exploitation by industry of those inventions plus any other inventions where it appeared that the public interest so required. For that purpose, the House of Commons voted the Corporation the sum of £5 million over five years, although it has not, in fact, spent anything like that sum. It is no reflection on those who introduced the Bill at that time that the sum itself was inevitably merely a guess as to what might be required during the period.
The Corporation is an expert body. The managing director, Lord Halsbury, is a full-time member, and I think the House will permit me to say that we are 1624 very fortunate indeed to have his services in this capacity. Otherwise, the members are all part-time experts in their own field, who have lent their services for this particular rôle, and many of them are unpaid. We can be grateful to them for their services.
The Corporation does not itself, and will not in the normal course of its job under the Act, or under the Act as amended by the Bill, conduct development or research. Its job is to collect inventions, to enter into contracts with others to carry out any work that is required, and to license the result to industry to use. In general, the Corporation operates, therefore, through others, sometimes through private firms, sometimes through research organisations, sometimes through universities. In the ordinary course of events it does not, and does not in future intend to, set up elaborate laboratories for the purpose of undertaking research itself.
The Corporation's capital has been provided by the Government under the Act, and up to now £750,000 has been provided. Its revenue is derived from royalties. There has been not serious, but some, criticism that the Corporation has spent too little, which is a rare criticism to hear in these days, but it might be convenient if I say why it has been limited to £750,000.
The reason essentially is that it takes time to work through the small-scale bench work, with which the invention or its development starts, to the finished article or the working prototype which is eventually licensed to the industry; and on quite a number of the inventions the period of heaviest expenditure is yet to come. Expenditure has also been limited because the Corporation has been very careful in what it selected. I make no apology for that. I should be in a very difficult position indeed if I were standing at this Box trying to defend investment after investment by the Corporation which had been made at large expense and had subsequently failed. Instead, I can put forward the case of a Corporation that has kept scrupulously within the terms of reference laid down for it by Parliament and has, therefore, spent on a conservative budget.
§ Mr. Thorneycroft
I am coming to that. This is almost like a Budget, but not quite so exciting. If expenditure was slow, the revenue has been slow too. Indeed, that must be so, because the revenue is received only after the licence has been taken out, production has started, and the royalty return begins to flow in. As my hon. Friend knows, very often the period of maximum return is generally towards the end of the patent period.
The details were published in the last Annual Report, which many hon. Members will have studied. In general, the picture which it shows is that of the Corporation borrowing money and spending it in acquiring patent rights of the inventions assigned to it, and then enhancing the value of these patent rights by further development, and eventually licensing the resultant product in return for revenue.
The revenue in 1949–50, when the Corporation first started, was £3,000. The revenue last year, the latest year covered by the Reports, was £25,000. I understand that the revenue next year is likely to be at least double this, or £50,000. These figures are very small, but they show the trend which is developing. The fact is that as the Corporation progresses, both the amount of money borrowed from the Government and committed on development work and the revenue received from past work are steadily on the increase.
§ Sir Wavell Wakefield (St. Marylebone)
Can my right hon. Friend give an indication whether, when patents which the Corporation exploits belong to Government Departments, provision is made for payment to the Government Departments for the work they have done, so that in addition to the Corporation getting the revenue which it now gets and will expect to get, Government Departments also will receive their share for the work they have done in inventing the invention?
§ Mr. Thorneycroft
I think not, but I will look into the point. The purpose of the Act was to concentrate the rights in these inventions in the one body. Probably it would be desirable to try to get that body working correctly, with its expenditure and with its revenue coming in, without then trying further to channel 1626 out the income from various bits of inventions to various Government Departments. But I shall certainly look at the point mentioned by my hon. Friend.
Now a word on the work that has been done. The Corporation holds some 500 patents at home and 227 overseas. Applications for registering other patents are, of course, in hand. Mostly they are from Government Departments, which is the point my hon. Friend had in mind, and up to the moment necessarily only a small proportion have got to the final stage where revenue is beginning to come in. They do not earn revenue until they are licensed, and the Corporation either has issued itself, or has had assigned to it from the Government Departments, some 250 licences to individual industries to use these things.
As the House knows, the projects vary considerably. The Corporation holds a large number of inventions in the field of the electronic brain. Mostly they originate from the work of Professor Williams and his team of research workers at Manchester University. They hold the rights with regard to a potato harvester, a chick sexer and a light steam engine. I mention these only to remind the House that what impresses one when studying the Corporation's Annual Report is the immense range of technology which it covers.
The first thing that the Bill does is to enable this work to go on. Without the Bill, the work would stop on 28th June this year. I think the House, on all sides, would agree that that would be a pity. It would deny the Corporation the opportunity to benefit to the full from the work it has already done. It would stop the channel between inventions which take place in Government Departments and their application by private industry, and it would deny to private inventors, not the only channel, but one channel which they have for trying out the product of their inventive minds. So Clause 1 preserves the powers of lending, and if necessary, with the consent of the Treasury, the waiving of interest payments.
Clause 2 of the Bill clarifies and slightly extends the scope of the Corporation's activities. I should like to take that Clause bit by bit. Subsection (1) is really no extension of the law as we understand 1627 it. It is simply put in for the removal of a doubt. It appears that there is some doubt whether powers under the original Act exist to carryout research for the purpose of developing an existing invention if this should lead to a substantially new invention. I do not think any side of the House would wish to hamper the Corporation in its development work simply on the ground that it might discover something else. I think that in those circumstances, if there is a doubt, which I understand there is, in the original Act, it is much better that it should be removed.
Subsection (2), and indeed the remainder of Clause 2, is an extension of powers. I think I can explain its purpose best by referring to the Report of the Advisory Council on Scientific Policy which reported last July. Hon. Members who read that Report will probably remember the passages to which I am about to refer. Among other things, it says:We believe that extension of the use of research and development contracts, largely through existing organisations, offers great possibilities in the modernisation of civilian industry and its exploitation of scientific discoveries. We hope that the appropriate authorities will give further, and urgent, consideration to the machinery necessary for this extension.Then it goes on to point out that the National Research Development Corporation will be under some handicaps in carrying out that recommendation, and it says in particular:The Corporation is concerned with the development or exploitation of inventions but it is not expected to see applications for scientific discoveries, nor has it the power to initiate research or to perform the vital function of identifying new needs.I think everyone will agree that the Report of the Scientific Advisory Committee is an important document, and its recommendations cover a much wider field than this particular Bill. The application of these recommendations is being considered by the various Departments, not only by the Board of Trade but by the Lord President of the Council and others who are concerned with these matters. If the Corporation is to play its part in all this, it seems clear that it will need the powers contained in subsections (2) and (3).
Briefly, the object of subsection (2) is to deal with the case of an industry which states a practical requirement that it 1628 wants and for which it desires an invention to be made if inventive genius can make it. In a case like that, it allows the Corporation to promote research work related to that end. The industry need not necessarily come to the Corporation, but it can do so if it wishes.
The purpose of subsection (3) is to deal with the case where the Corporation becomes aware of a piece of research which has resulted in a discovery which, at the moment, is of not practical application, but where the Corporation believes that if there is further research that discovery can be applied to some practical end in industry; that is to say, some piece of research which at the moment is interesting more from a theoretical point of view than any other, but which seems likely, if only a little more work is done on it, to be brought up to the point at which there can be practical application. Subsection (3) allows the Corporation to promote that further research if it so wishes.
Two points should be made clear. First, the job of the Corporation is to promote and assist research. It is not primarily to undertake it, and never to undertake it in competition with industry or with other Government Departments. That would be frustrating and a waste of time. Secondly, it is very desirable that the work of the Corporation should not overlap the work of the universities, or of other Government Departments, or of research orgnisations like the Medical Research Council and the Department of Scientific and Industrial Research. It is for that reason that we have inserted the last two subsections of Clause 2. We think that they are the necessary provisions to ensure that this type of work is approved of not only by the President of the Board of Trade, but by my right hon. and noble Friend the Lord President of the Council, who, as the House will recall, is responsible for the general co-ordination of scientific policy.
§ Mr. H. A. Marquand (Middlesbrough, East)
The right hon. Gentleman is not suggesting that the Corporation should never undertake research unless somebody asks it to do so?
§ Mr. Thorneycroft
No, it can, and subsection (3) specifically deals with the case where it has not been asked to do so but where a piece of research is required to be carried further so that it can be 1629 developed for practical application. It can initiate; but if I am wrong in that, I will have it corrected.
That comprises the purpose of the Bill. I hope that it is in no sense of the word controversial. I have only to say this in conclusion. In the economic situation in which we find ourselves, we clearly need all the help with which science can provide us, and we cannot neglect any of the inventive skills which are available. The House may well agree with the oft-made criticism that our main weakness is not in research but in the application of research to practical inventions, or in the development and exploitation of those inventions to a point where the maximum use can be made of them in our industrial effort.
It is clear that no one body can secure this. There is a vast amount of work to be done by other research organisations such as the Medical Research Council, the Cotton Research Council, the Agricultural Research Council and other bodies of that kind which come under the aegis of the Department of Scientific and Industrial Research. I believe that the National Research Development Corporation has its part to play in this work, and this Bill, if approved of by the House, will enable it to continue and to bring to fruition the work which it has started already, and give it some of these extra and rather wider powers which will enable it to carry on with its work even more effectively in the future.
§ 4.10 p.m.
§ Mr. John Edwards (Brighouse and Spenborough)
I welcome this Bill and I welcome, too, the opportunity to consider the progress of the Corporation and to consider also the place which it can and might occupy in our economy. Certainly, we can say today that the gloomy forebodings of the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton), who is now the Colonial Secretary, have proved to be completely false. At the time the original Bill was introduced he was full of alarm and despondency, but we can say that the record of the National Research Development Corporation, though a modest one, is very good.
The Corporation has behaved with great prudence and common sense, it has been careful not to inflate its staff beyond real requirements, and it has been at the 1630 greatest of pains to use all the help it could get from outside by the use of consultants; and, also, it has co-operated to the full with industry. Taking everything into account, therefore, I believe that the record to date reflects great credit on the-members of the Corporation and particularly on Lord Halsbury and his staff, who have done a very good job. As time goes on I think we shall see further proof of the worth of the expenditure involved.
There is one point about the organisation of the Corporation which I want to ventilate although I recognise that it is not something which can be dealt with on the occasion of this Second Reading. Although the Corporation has a relatively small staff it is a fairly involved and complex organisation dealing with a wide range of not easy operations. I wonder whether the time has not come when the Corporation ought to be organised differently. At the moment we have the members of the Corporation, only one of whom is full-time, and below the managing director we have a number of top level staffs.
I am wondering whether we ought not to consider the possibility of having two bodies: one with the members concerned acting as trustees for the public interest and, below that, a body of full-time executives. That is now the pattern in large-scale industry and in some of the public corporations. I wonder whether we are trying to put too much on the present members and so I should like that to be considered.
I have no special point to make about the Bill which cannot be more properly put during the Committee stage. I only want to urge that the point made by my right hon. Friend the Member for Middlesbrough, East (Mr. Marquand) about Clause 2(2) should be clarified. It is important that we should know how the word "requirements" will be interpreted, so perhaps the Parliamentary Secretary will deal with that point when he replies to the debate.
As I understand, the Corporation, as originally conceived, was primarily one dealing with patents that resulted from public research. The numbers of such patents may be large, but it does not follow that many of them are significant or important in commercial terms. Nevertheless, the Corporation has done, 1631 and doubtless will continue to do, an extremely useful job of granting licences from the flow of patents. I would not think that the point made by the hon. Member for St. Marylebone (Sir W. Wakefield) in an interruption would be desirable; that is to say, I would not think it a good thing if an elaborate process of calculation had to be adopted in order to decide what small part of revenue ought to go to this or that Department because it had been responsible for the work in the beginning.
There is nothing spectacular about this side of the work of the Corporation, but it is a job that someone has to do and the Corporation is doing it well. After all, its work yields a small revenue which, if put alongside running expenses, is good, considering how short a time the Corporation has been in existence. There are those who expect more, but I think they do so because they do not really appreciate what public research involves. Large sums of money are being spent on defence research and to be effective it has to reach results which can be put into practice; that is to say, it has to be essentially inventive, but it by no means follows that it results in a large number of inventions or innovations which have a commercial use. On the contrary, I suspect that commercial use is exceptional and marginal, so that so far as defence research is concerned, whatever is coming into the Research Development Corporation is not likely to yield any large numbers of commercially exploitable inventions.
If, on the other hand, we turn to public research in the civilian field there is an entirely different pattern. Here I would say that it is exceptional for the work to be inventive. It is fundamental research, involving analysis and testing, but, unlike defence research, it is seldom essentially inventive. I am not saying this by way of criticism. The scientists and the research workers concerned are doing the job they have been set to do. Inventions may and do arise, but they are a relatively small by-product.
That is why I think it important to strengthen the powers of the Corporation so that it may foster the germ of an invention which may have commercial -possibilities and bring it from the potential stage to the point of production. I 1632 am not one of those who think that inventions are lying about two a penny in the back rooms of scientists and research workers. I know that the Corporation has to spend endless time sifting and testing projects and that it is no easy task to find the right ones. I therefore welcome the extended powers which are to be given under this Bill.
Let us consider for a moment what is involved in any project. First, there is the original inventive idea; secondly, the research which turns the idea into some kind of practice; thirdly, the pilot stage or the development of the prototype; and, finally, all the preparatory work preceding actual production. So far the Corporation has been mainly concerned with the third stage and, of course, to some extent with the last. The new power means that the Corporation can come in earlier if necessary and if no one else is going to do the job that is needed. If anyone else can do it, so much the better, but there will be cases where the Corporation can help in these earlier stages.
It is important that we should appreciate that we are concerned not only with whether a thing is done, but when it is done. We are concerned not only that worthwhile projects should be undertaken, but, also, that they should be undertaken quickly before someone else, somewhere else in the world, beats us to it in a new market for a new product. This power to help research, in the words which the right hon. Gentleman quoted from the Advisory Council on Scientific Policyto perform the vital function of identifying new needs;is essential for the continued well-being of the Corporation.
As I understand, the stages which I have outlined become cumulatively more difficult and cumulatively even more expensive. The final production stage may well cost five, 10 or even 20 times as much as the pilot stage. Not only is there expensive tooling up in many cases, but it often means that plant and organisation are obsolete. It is not always easy for a firm to take the risk or to find the capital, even if it appreciates the desirability of the innovation or the new project or process. I say again that time is of the greatest importance. It appears as though American business 1633 concerns are more ready or more able to plunge in, to take big risks, and to rely on the fact that the first comer in the field is the person who reaps the immediate large sales and often large profits.
In that connection, I was very glad to hear the President of the Board of Trade refer to the method of placing a development contract. I think that that method has much to commend it, and the quotation which the right hon. Gentleman gave us from the last Report of the Advisory Council on Scientific Policy can, I think, be followed up by a further more specific quotation relating to the Corporation. Having discussed the place of research associations, the Council goes on to say:Not all the research associations are sufficiently mature to be linked with a scheme such as this; 40 per cent. of the research associations have been started since the war, and it would be a mistake to force the younger ones too precipitately into the development field. Here we suggest that the National Research Development Corporation might help. The association could identify requirements, e.g. for new types of machinery. They could place a design contract with a suitable firm and then call on the Corporation for its help in further development. In some cases Government help might be needed at the design contract stage, but we believe that, in general, industry should bear the costs involved.Where industry can do the job alone, there is no need for the Corporation to be involved, but I am sure there will be cases where a firm needs help in the early stages. Sometimes we may find a project involving a number of different parties where the Corporation might very well be the co-ordinating instrument in bringing those parties together in order to go ahead with the particular project. But we must be clear what this means. We should not mince our words. The truth is that the National Research Development Corporation is now inevitably involved, though in a very modest way, in the provision of risk capital. I do not know the relationship that exists between the Corporation and the finance corporations for industry, especially the I.C.F.C, but I imagine that they have to work together.
There are very great limitations on the way in which the I.C.F.C. works—I think they are well known—and I know of cases in the past where there was need not for help to extend a going concern, but for help in financing an entirely 1634 new venture arising from some new invention or innovation. I believe that in the long run development expenditure yields national dividends. I have no doubt that many of our newer exports have only been made possible by the use of substantial public funds on research and development.
The electronic computator or electronic brain is a case in point. I do not know, but I certainly hope that this extraordinary product of British science and skill will, in due course, earn us money in the export markets of the world. There are other things here, such as the light steam engine, to which reference is made in the Report. This engine would be an absolute god send in many parts of the world. At this time last year I was in West Africa, and I am quite sure that there are many parts of West Africa that would benefit by having this highly original prime mover of a kind that could be used for many purposes. It would be wrong for me this afternoon to take up the time of the House going over the other possibilities, but I think that the ones which I have quoted may provide us with export earnings.
Finally, I wish to say a word about the relationship of the Measure which we are discussing to the broader economic picture. In paragraph 8 of the last Report of the Advisory Council on Scientific Policy it says:Today, we can hardly expect to live by our industry unless we change the pattern of our production and seek to develop new products and processes, which, by depending on the application of our scientific and engineering skills—and these are as good as those of any country—will keep us in the forefront.The paragraph goes on to say:Last year only £34 million out of a total of £2,500 million of overseas exports represented goods…which were unknown before the war. Even if we include such things as newer types of aircraft, the figure still falls short of £200 million, or 10 per cent, of the total of United Kingdom exports. Only continued emphasis on new and more efficient methods of production, and on new product development, as opposed to mere extension of existing production, can provide our manufacturing industry with the advantages it requires in the competitive world of international trade.In paragraph 16—immediately relevant to the work of the Corporation—it says:With our economy severely strained by the excessive demands made on it in recent years, and with industry mainly occupied in 1635 maintaining and modernising the production of established goods and services, it is clear that any extensive move into newer fields will be very slow unless deliberate efforts are made to bring it about.It is elsewhere that we shall look for the great bulk of these deliberate efforts, but it is within the field of the work of the Corporation that we shall also find some of these deliberate efforts to which reference is made in the Report.
I have recently been reading a somewhat difficult book by Professor Rostow entitled, "The Process of Economic Growth." In this book the author uses certain somewhat original concepts including what he calls "propensities." Three of these he puts in this way. First of all, the propensity to develop fundamental science; secondly, the propensity to apply science to economic needs, and, thirdly, the propensity to accept innovations.
If I had the time this afternoon, I believe I could show that the distribution of our resources at the present time is such as to produce a lack of balance between the resources devoted to fundamental research and those devoted to development. I believe that they are out of balance, and that it is possible to demonstrate that statistically. I am not suggesting that we should do less about fundamental research, but I am insisting that we ought to do more about development.
When the economic history of our generation comes to be written, I believe it will record that our propensity to apply science to economic needs was too weak. I believe it will record that our propensity to accept innovations was too weak. I also believe that our economic future depends in large measure not only on the quality of the scientists, research workers and technicians, but on how we use them. The greatest contribution that could be made now to the long-term solution of our balance of payments problem would be to increase the resources that are devoted to this kind of development. I welcome the Bill as a modest—perhaps I should say a very modest—step in what I believe to be essentially the right direction.
§ 4.30 p.m.
§ Sir Wavell Wakefield (St. Marylebone)
I also welcome the Bill. I have something of a personal interest in it because about 12 years ago I had lunch 1636 with the present secretary of the Parliamentary and Scientific Committee, Commander Powell, and Mr. Bennett, also of that Committee. We discussed the possibility of forming a corporation such as the National Research Development Corporation. As a result of that discussion, we prepared a memorandum which was put before the Parliamentary and Scientific Committee. Towards the end of the war, that Committee made representations for the setting up of just such a corporation as was set up. It made those representations to a Cabinet Committee, which favourably considered them. Then, after the war, the Socialist Government implemented those representations in the Act of 1948
The history of the Corporation is one of support from all parties. I remember very well that, in the early days when we discussed possible functions, the critics said that the existing industrial research organisations were sufficient to enable inventions to be developed properly. They said that either the Corporation would be so cautious in its expenditure of public funds that it would do no good, or it would be wildly extravagant and there would be unjustifiable expenditure. In fact, because of most capable management, we have seen cautious but satisfactory progress.
In the early days when we discussed the need for a corporation, our minds ran very much along the lines described by the right hon. Member for Brighouse and Spenborough (Mr. J. Edwards). We considered the need for the speedier application of inventions and the quicker development of the results of research for the benefit of mankind. We thought that inventors who perhaps had difficulty with industry would be able to approach the Corporation and, as a result, there would be a speeding up of the application of inventions.
There is no doubt that the Corporation is of value to the inventor. He feels that there is an organisation to which he can submit his inventions for impartial consideration, whereas perhaps industry might want to do him down for some reason, or not wish to take up the invention. The fact that we have a National Research Development Corporation gives confidence to inventors. That is highly satisfactory. On the whole, we can congratulate Lord Halsbury and his staff on 1637 the excellent work done in the last five years. There is no reason why the value of the work should not be shown in increased returns to the National Exchequer from different parts of the world and in various ways. That is exactly what we want. It is only by living on our wits, as the Duke of Edinburgh so rightly said not long ago, that we can hope to maintain our standard of living.
I ask the Minister whether those in Government Departments who make inventions receive any benefit. I put that question because in industry usually a firm has an arrangement with its research staff that, when a man makes an invention, patents for it are taken out jointly in the name of the individual and the firm. The firm pays the overheads and provides the means for research, but it is the brain of the individual which produces the invention. There is a partnership, and it is only right that in such a partnership both the firm and the individual should benefit.
I should like to know whether that procedure is followed in Government Research Departments. Do people who invent something benefit in partnership with their Department? Such an arrangement would be an excellent incentive. Human nature being what it is. it would be most beneficial. The Corporation is the medium for commercially exploiting the inventions made in Government Departments. The Corporation does a lot of extremely useful work and it ought to be rewarded for it; but part of the financial return by way of royalties should go to the Government Department concerned and to the people in that Department just as if they were employed by an outside firm. The Corporation in partnership with firms develops new inventions. I should like to feel that the same kind of practice as exists in industry also exists in Government Departments.
The Bill, modest as it has rightly been called, is useful in that it enables the Corporation which has made a promising start to continue its activities and also to widen its power to do useful work. The results of research and development do not become obvious for some time. The life of a patent is something of the order of 16 years. After an invention it may take up to four years to bring the product from the laboratory stage through the prototype and into production. 1638 Clearly, much of the work done by the Corporation in the past four or five years will show its results in the next 10 or 15 years. The steady increase in revenue from royalties to meet the expenditure is most satisfactory. I should have been alarmed if I had seen spectacular results. They are not wanted. A steady, increasing development shows that the Corporation is being managed on the right line.
I should like from the Government back benches to express appreciation of the work of the managing director and his staff in this most important field of developing inventions and making available at the earliest possible moment the results of research in Government Departments in the United Kingdom.
§ 4.40 p.m.
§ Mr. Austen Albu (Edmonton)
The Bill by which the National Research Development Corporation was first set up was introduced a few months before I entered the House, but I remember that the hon. Member for St. Marylebone (Sir W. Wakefield), who played such a distinguished part as Chairman of the Parliamentary and Scientific Committee on that occasion, gave his full support to the Bill in face of the extremely heavily facetious humour which at that time we were accustomed to expect from the present Colonial Secretary. His support, however, was justified and, as my right hon. Friend the Member for Brighouse and Spenborough (Mr. J. Edwards) has said, the Colonial Secretary's criticisms were not, because there is no doubt that the Corporation has fulfilled its function. That function was described by my right hon. Friend the Member for Huyton (Mr. H. Wilson) when he introduced the Bill. It is quite a narrow function.
As has been said, its main function has been to ensure the development and commercial exploitation of inventions originating in Government establishments, hospitals and universities. Experience of the Corporation and its annual reports show that there is not a vast number of private inventions at present which cannot find development. I wonder whether this does not belie the argument which is sometimes used that lack of risk capital is holding back the development of inventions, except to a small extent and perhaps more along the lines which have been mentioned by my right hon. Friend.
1639 It may be that long-shot inventions and inventions which for final application in production require a very heavy capital expenditure may be held back, but I do not think that there is any argument that a great number of inventions are not being developed by industry through lack of capital, at any rate in the early stages. It is clear from the inventions which have been communicated to the Corporation over the last three years, for which it has reported, that out of a total of 3,036only 1,242 were inventions from private sources, whether individuals or industrial undertakings. About one-third of the total number of inventions led to serious discussions, but only a tiny fraction to any final agreement for their commercial exploitation. It is interesting that of this total one-sixth of the public inventions have now reached a stage of being actually in operation in industry. The proportion of private inventions is very much smaller.
This may not be very surprising in view of the overwhelming concentration of scientific skill and knowledge, outside the universities and the Government and public research establishments, in large industrial establishments, which are capable of carrying out developments themselves. I do not know of any figures that are available in this country, but a very interesting report has been published recently in the United States which shows that the situation is just the same over there. The report is made by the United States Department of Defence and is entitled" Scientific Research and Development in American Industry."
It shows that in 1951 three-quarters of all the research workers out of a sample of about 2,000 firms investigated were in the aircraft, electrical machinery, chemicals, scientific instruments and machinery industries. About half of the work which was being done was being done for Government establishments. Two-thirds of all the research engineers and scientists were employed by 220 companies with 5,000 or more employees—only 11 per cent. of the whole sample. It is interesting to note, by the way, that the amount spent on research represented about 2 per cent. of turnover compared with 1.4 per cent. of firms investigated by the F.B.I, at about the same time.
It would be interesting to know what proportion of research which is being 1640 undertaken by industry in this country is for defence and what for civilian use. It is difficult to obtain accurate figures of the amounts that are being spent on research development by industry and the Government as a whole. I have tried to make an estimate. As far as I can see, the total amount spent in 1951 on industrial research and development was £268 million, of which civilian research appeared to account for £70 million. It is extremely difficult to provide figures because, undoubtedly, there is some overlapping. In view of the very large amount of money which is at present being spent on Government account for research and the inevitable by-products of defence research, it seems to me that the Corporation has a very important job indeed in ensuring that the fruits of this research are used in industry not only for defence purposes but for civilian purposes as well.
It must be quite clear to nearly everybody that our developments in civilian jet aircraft are by-products of a very large amount of money spent on research and development of military aircraft. One of the examples given in the annual report of the Corporation, that of an invention in plastic structures, is based upon work that is being done to some extent in industry but is largely being co-ordinated at the Royal Aircraft Establishment, at Farnborough. That is a good example of work done primarily for defence purposes producing inventions which, through the medium of the Corporation, can find applications in industry.
Reference has been made to Clause 2, which is perhaps the main new aspect in the Bill, and particularly Clause 2 (2) which is intended to enable the Corporation to carry out the recommendations of the Advisory Council on Scientific Policy for the placing of research and development contracts for civilian purposes. It is undoubtedly a very useful Clause, but probably its use is rather narrow. There is no doubt that it might be, and should be, used to stimulate backward industries. To a large extent the major industries, especially those with large and very active industrial research associations, can look after themselves. Some of them feel some anxiety about Clause 2 (2) on the ground that it might lead to some overlapping. The President has referred to that point.
I hope that it is intended that Clause 2 (4) shall be used not purely in a ham- 1641 pering sense, but to ensure that there is full co-operation between the Corporation and others in the same field and that suitable machinery for co-operation will be set up. There is certainly a feeling in some industrial research associations that sometimes projects in their field are carried on at Government establishments of which no one outside knows anything at all. The result is that overlapping takes place.
If the Parliamentary Secretary could develop that point it would reassure industrial research associations and others who are engaged in this field. Apart from its work for the exploitation of public inventions in the research and development field, the main use of the Corporation perhaps falls in between one of the limits which are normally fixed in particular industries, or between particular fields of scientific method, where a whole number of scientific methods are required to solve a problem. It is here that very often a new idea falls down because there is no existing organisation with enough experience or interest to carry it through.
Industry is fairly good on the short-term things but the medium-sized and smaller industries certainly are not so good at looking into the developing long-term projects, particularly revolutionary changes in process methods. Many of these new changes in method, of course, involve completely new scientific knowledge and new types of skill for which very often production engineers and managers or those responsible for production in an industry have no background knowledge, skill and experience.
It is important to try to fill a gap which sometimes seems to exist in this sort of case. The great growth of modern chemical engineering has produced a whole range of new materials for which new machines and equipment have to be used so that they can be turned into goods. Very often the people in the industries concerned have too narrow an experience to exploit them. One example which comes to mind and seems to fit very much into this Clause of carrying out research and development likely to lead to inventions satisfying specific practical requirements is that of machine tools required in the aircraft industry.
I do not know whether the President read a report of the remarks of Mr. Woodley, of Vickers Armstrong, at the 1642 recent conference on aircraft production, in which he was strongly critical, either of the industry itself or of the machine tool manufacturers, for not looking ahead to produce the large forging presses and other types of machine tools that would be required for what is known in the industry as "the shape of wings to come." It is no good producing completely revolutionary designs, and very often basing them on revolutionary materials, if revolutionary methods by which the goods may be produced are not also devised. Very often the Corporation ought to step into this field.
I wish to refer to a remark of the hon. Member for St. Marylebone on payment to Departments. I think that if there were a representative from the Treasury present, although it is a House of Commons responsibility, there would be very strong objections to removing control of expenditure from a Department. But the hon. Member is on a good point. I believe that there is some sort of advisory committee which looks into the question of payments to civil servants for inventions. Perhaps the Parliamentary Secretary can deal with the matter, which, I think, is very important. I hope that some way of giving credit to Departments may be found, even if it is not financial. We must not overlook the fact that the Corporation will not only be an earner of foreign exchange, as we hope, but may soon be a substantial dollar earner. I believe that much of the work in developing electronic computers may be a dollar earner.
Recently I saw a report on the process of printing by electronic circuits, a new development. But I understand that this is one in which the Corporation is interested and that it is largely based on a British invention. What worries me is that Americans always seem to be publishing new ideas as if they had suddenly produced them. Very often we find that they are British inventions, and that we are to get substantial royalties from them. The Corporation, or someone, should do a little boosting for some of these inventions which appear in American trade or technical papers as if Americans had suddenly produced them. I know that very often there are commercial and other secrets which prevent the explanation of the true relationships between the Corporation and some of its licensees. Nevertheless, I think we should 1643 get a good deal more credit for some of the development work going on in this country in the last few years. There is no doubt at all that only in this way shall we solve our balance of payments problem.
The future of this country can only lie in our selling more and more goods that others have not learned how to make—as I have said very often. We must not concentrate on competition of price, which would lower the standard of living of our people, but on the competition in brains and invention. In that way there is no doubt that the Corporation can play a very significant, although, we agree, a limited part. It can have a specific effect in stimulating some of the backward industries and smaller research establishments and act as a stimulus to the rest of industry in what I consider to be one of the most important features of our public life today.
§ 4.55 p.m.
§ Mr. Richard Fort (Clitheroe)
My hon. Friend the Member for St. Marylebone (Sir W. Wakefield) referred to one of the reasons why he and others associated with him on the Parliamentary and Scientific Committee originally promoted the ideas which led to this Bill. That is now nearly 10 years ago. He mentioned private inventors fearing that their inventions would not be taken up by private industry. That fear has been expressed on various occasions, but whenever it has been investigated by impartial bodies, such as the Swan Committee a few years ago, it has always been discovered to be founded on singularly little fact.
Far from not wanting to take up inventions, industry—which to a great extent lives on inventions—is leaning over backwards to find ideas which it can take up and develop. The private inventor, if he has any real originality or anything which is commercially practicable, is immediately welcomed. How few inventions by private inventors can be taken up is shown not only by the broad statement I have made, but by figures which the Corporation has given in its appendix. It shows the striking disparity between the number of inventions communicated to the Corporation in the last year by private firms and individuals—which is more than 300—and the number of patent rights actually assigned to the 1644 Corporation, which is 11. I think that shows that a great many of the communications had nothing in them of substantial importance.
Clause 2 is important in clarifying the Corporation's legal position. But it also brings out a rather important principle in the whole problem of developing patents. The hon. Member for Edmonton (Mr. Albu) has been talking of a recent and extensive study in America. He pointed out that a large number of patents in America, where they are blessed with more statistics than we ordinarily are, have been granted to individuals working in large corporations there. I think that is a comment on two very important factors in this situation and should be clearly understood.
The first is how often a modern invention comes not from a single man having a brilliant idea of his own but from teams of people, each contributing a specialised knowledge to the problem which has to be solved. On the whole, those teams of people are in large corporations. There have been memorable exceptions in small corporations in America, such as Universal Oil Products, which originated the oil-cracking patents.
The other important feature is that patents not supported by "know-how," that is, experience and technical information, are unpractical things. What those who are to exploit the patents want is not only the claims, in the written documents, and the knowledge of scientific principles on which the claims are based, but also the whole technical knowledge of how to put those ideas into actual practice. That "know-how" is far more likely to be acquired by a group of people working together.
Clause 2 of this Bill seems to me to be necessary, not only to clarify the original Act, but to make an important addition to it if the Corporation is to do what it was intended to do. As I understand it, the Corporation has felt, in regard to many of these inventions from Government Departments and universities, that it has been legally inhibited from undertaking the necessary development work on an idea incorporated in a patent—without having the necessary "know-how"—to make it possible to interest private industry in exploiting what may be a good idea.
1645 The industry itself may hesitate to undertake the development work necessary, or it may feel that the bare patent is not sufficient in itself, because there is uncertainty as to where it will lead. I think the position of the Corporation will be strengthened by the new or more clearly defined powers contained in Clause 2. We all wish to ensure that these patents will bring benefit to our industries in the various ways which have been outlined, and I think the proportion will be much higher if their development can be carried a step further than the Corporation has found possible to do in the past.
It is clear from this debate and from the reports published by the Corporation, that one of its main functions is to be an organisation to which may turn those who are not quite certain about who are the right people to contact with an idea expressed in a patent. It has undertaken wide activities even with the rather uncertain powers it has possessed up to now. It has acted as a sort of catch-all for technical information which does not fall into clearly defined departments.
It is a great credit to the management of the Corporation that it has built up such a reputation. When some technical problem arises in Government or university circles and no one is certain how to take advantage of the benefits which may be apparent upon its solution, people have confidence in the National Research Development Corporation to consult it and find out if such benefits can be fitted into some industrial organisation.
One learns from the reports of the large number and extraordinary range of projects which the Corporation has been asked to undertake, including those connected with raw materials, for cortisone, with liquid gas plants, and with light steam engines—about which I know considerable hopes are entertained in the under-developed parts of the world—and so on. This whole range of activities is possible because the management has built up this sense of confidence to which I have referred and which it will be possible to increase by the provision of these additional powers. The Corporation will be enabled to put ideas before manufacturers and others interested with rather more "know-how" attached to them, and in a stage of greater development, which will make the use of such ideas even 1646 more marked in the coming years than at present.
Although this small Bill will not revolutionise the industrial life of this country, it refers to an organisation which has made a very useful, if not an overwhelmingly important, contribution to our industrial life. In adopting the provisions contained in this Measure, we shall be sending that organisation on its way with even better chances of success in its activities than during the past years.
§ 5.6 p.m.
§ Mr. M. Philips Price (Gloucestershire, West)
Like the hon. Member for St. Marylebone (Sir W. Wakefield), I remember very well when the National Research Development Corporation Bill was first discussed in this House. At that time I occupied the position of chairman of the Parliamentary and Scientific Committee, which the hon. Member now holds. I remember that there was general agreement on both sides of the House about the value of that Measure though there were some discordant notes which we have not had today. Particularly were they evident in the expressions of the present Colonial Secretary who, I think I may say without offence, was not exactly at his best on that occasion. It is gratifying to note the agreement today about the importance of this small Measure.
The development of industry over recent years indicates that a body such as the National Research Development Corporation is increasingly necessary. It fills gaps which need to be filled. Over a large area of our national economic life we now have public utility corporations, or publicly owned corporations, and we need a body which can do what for the moment private industry cannot perform. It is now all the more important for our export trade that we should be at the top in the efficiency of our production. For some time past a weakness in our industry has been that, although we are first-rate in pure science and lead the world in that respect, we are still not up to the level of America in the application of scientific discoveries to industry; although to some extent, as a result of our efforts, we are narrowing the gap.
Recently, I was in the Middle East and had occasion to see some of the competition which our exports there have to meet. I found, in Iraq, that we have lost bridge 1647 buildings contracts to the Germans. Some say that that is due to the fact that the Germans are not putting in the same quality of material that we put in, and that our workmanship is still the best in the world. That I am prepared to believe. On the other hand, there are those who say that in bridge building the Germans have found some way of lowering their costs which is not, as yet, clear to us. I do not say that that is true, but it may well be, and if so, it is certainly a matter which requires investigation. We must be ready on every occasion to ensure that we are not caught out by any scientific invention which the Germans—or the Japanese for that matter—may be applying to industry and which we are not.
It is often the case that to lower costs and meet competition a new scientific invention can be introduced to maintain, and even extend, our exports. As has already been stated in the debate, there are many large firms which are engaged in their own research and can give a very good account of themselves. It is rather more difficult for smaller firms to find resources for research and development of inventions. Judging by the Sixth Report of the Advisory Council on Scientific Policy, it seems as if we are still tending to stick to the old lines in our export trade. Figures were quoted by my right hon. Friend the Member for Brighouse and Spenborough (Mr. J. Edwards) which appeared to show that new types of exports are still far too low a percentage of out total exports.
At the same time, we can lead the world in certain forms of production, as with the jet aircraft. Government research and development contracts have, of course, gone a long way in assisting the aeroplane industry. The trouble in the case of small industries is that there is too long a time lag between the discovery of a scientific principle and its application to industry. Some small industries could not afford, even if they had the resources, to look ahead far enough. They require relatively quick results. It is for the purpose of looking ahead for some years and discovering something which will bring results before many years pass, even if it does not do so immediately, that we require further development of the Corporation and its powers.
1648 From the legal angle, it appears that the 1948 Act did not possess the powers which ought to exist now. At any rate, if there is any doubt about it, that doubt ought to be removed, as seems to be the case under the Bill. The Corporation ought to be able to take the initiative, look for new scientific processes and initiate research into practical developments for industry.
It is also necessary that the Corporation should have very close relations with the research associations which are financed partly by private industry and partly by the D.S.I.R. These are very important research associations in all forms of industry. The Sixth Report of the Advisory Council on Scientific Policy says, on page 8:The associations could identify requirements, e.g., for new types of industry…and then call on the Corporation for its help in further development.I believe that the Bill will go some way towards making that possible. There appears to be no doubt about it. Clause 2 (3) says:Subject to the provisions of this section, where it appears to the Corporation that a course of research has resulted in any discovery such that the continuation of the research may lead to inventions of practical importance, the Corporation shall have power to assist the continuation of the research.That certainly gives the Corporation powers which will enable it to exploit a new and fruitful form of activity.
I noted that the President of the Board of Trade rather took the view that the Corporation had spent less than £1 million because there had not yet been sufficient time for inventions to develop. I hope that that is so, but when I saw the figures I could not help feeling that it might also be due to the fact that the Corporation's sphere of activity was not sufficiently wide. Anyway, I am sure that the country is very much indebted to the chairman, Lord Halsbury, for the able way in which he has managed the Corporation so far, and I am sure he will make the fullest use of the increased powers contained in the Bill.
§ Mr. J. Edwards
My hon. Friend will no doubt be aware that Lord Halsbury is the managing director and not the chairman of the Corporation.
§ Mr. Philips Price
I apologise for that slip.
1649 We can all welcome the Bill in that it provides a new source of power which industry needs. I repeat that it is vital for our export trade that we should be absolutely up to scratch. During the last few months I have seen evidence that some of our exports in the Middle East are in danger and I believe that that is the case in other parts of the world as well. We must not only not lose ground but also gain ground if we are to close the gap in our balance of payments. I believe that the Bill will help somewhat in solving the problem.
§ 5.16 p.m.
§ The Parliamentary Secretary to the Board of Trade (Mr. Henry Strauss)
The Bill has had a most friendly reception from every quarter of the House. That is a tribute not merely to the fact that everything we seek to do in the Bill commands the assent of hon. Members, but also to the work of the Corporation. I was very glad that the right hon. Member for Brighouse and Spenborough (Mr. J. Edwards) paid a deserved tribute to the Corporation and that hon. Members on both sides of the House have agreed with him.
There has been some discussion about the position and importance of the private inventor. Several hon. Members have mentioned that the number of private inventions which has been developed by the Corporation is small, as one would expect, compared with the number which has come from Government Departments and publicly financed research, and so forth. It may be wise to remind ourselves what the Corporation has said on this subject. It dealt with the matter at some length in its first Annual Report, which is a most admirable statement of the way it has proceeded and co-operated with the various organisations in the country with which co-operation is so important.
On page 7 of the First Annual Report there are three paragraphs dealing with the private inventor which answer a number of questions put by hon. Members. The Report states:The statistics given in Section 7 indicates that of 485 inventions submitted from this source 358 were rejected and 105 were in a form too incomplete to permit the Corporation to form any opinion as to their merit. The greater part were of an obviously minor nature, and only three survived the test of assessment by experts. In two of these cases 1650 the inventor was willing to collaborate with the Corporation on terms judged equitable by both parties. In the third case the inventor eventually made private arrangements for finance.A significant number of the submissions from the private inventor show that too many inventors, either through inability or unwillingness to keep in touch with current trends in technical progress, devote energy and effort to devising inventions which industry either does not want or cannot use without complete dislocation or reconstruction. This experience is not exceptional and is paralleled by that of other organisations elsewhere. This does not mean, however, that the Corporation does not give the most careful examination and consideration to all inventions submitted to it which appear to have some technical merit or economic value.By contrast with this state of affairs it is of interest that all three of the inventions selected by the Corporation as meriting public support lay in the domain of applied mechanical engineering and all three were the designs of qualified engineers with experience in the inventive field to which they had directed their attention.What the Corporation has said on the subject of private inventors in its Second Annual Report explains, I think, why comparatively few of the inventions coming from this source came within its terms of reference. At the bottom of page 8 it says:Notwithstanding the fact that we do not accept responsibility for these inventions, few if any of which would fall within the field covered by any reasonable interpretation of the words 'public interest,' we endeavour to put the inventor in touch with likely entrepreneurs or possible users if any are known to us and in one or two cases we know that this has led to a successful association of the parties.Our own interpretation of the Corporation's responsibility to the private investor lies along the lines of paying for the development work necessary to give practical embodiment to immature but fertile ideas of a sufficient public importance. This can, in our opinion, be best achieved by demonstrating a fully engineered prototype to 'a firm engaged in the industry concerned' and thereby proving that the invention is a sound one. It is along these lines that we have been working.That is the attitude which the Corporation has taken to private inventors, and I think it is a line which was fully justified and which the House approves.
The right hon. Member for Brighouse and Spenborough (Mr. J. Edwards) added, I think excellently, to the quotations which my right hon. Friend had made in opening the debate from the Annual Report of the Advisory Council on Scientific Policy which was published 1651 last July. I agree with the importance of the further quotation which the right hon. Gentleman made, which, I quite agree, had a direct bearing on the problem before us. I think I am right in saying that while the House will have an opportunity to consider that matter further at a later stage, the powers necessary to achieve what the Advisory Committee wish are conferred by the amendments to the law that we are introducing in Clause 2, about which I will say more in a moment.
My hon. Friend the Member for St. Marylebone (Sir W. Wakefield) asked me an important question about the position of inventors in a Government Department. I think I should draw his attention to the fact that this is dealt with in the Second Annual Report of the Corporation. The position is that if a Government servant, in the course of his work, makes an invention of substance, the question of a reward is an ex gratia matter. Nevertheless, if the invention is exploited commercially, an ex gratia payment can be made. The matter is dealt with in the Appendix to the Second Annual Report, which contains a direction to the Corporation from the Board of Trade and, as an Appendix to that direction by the Board of Trade, a Treasury Circular to the Departments.
Perhaps I should read paragraph five of that Circular, which I think answers my hon. Friend's question:Their Lordships consider that it will be appropriate for Departments to determine the amount of the awards (if any) to be made to their officers in respect of the commercial exploitation of their inventions by the Corporation. The Corporation are in agreement with this and will be prepared to pay out of their receipts the amounts which Departments certify as reasonable and proper. Departments should, however, consult with the Corporation in each case on the question of the commercial value of the invention concerned, and, where appropriate, the Corporation should be represented by assessors on Departmental Awards Committees.The hon. Member for Edmonton (Mr. Albu), who explained to me that he would be unable to be present during my speech owing to an important function which he has to perform in the Parliamentary and Scientific Committee, raised some interesting questions. He was quite right in assuming that the object of subsections (4) and (5) of Clause 2 was not to discourage the use of the new powers con- 1652 ferred by subsections (2) and (3), but merely to avoid the overlapping which he said certain of the research associations feared. I quite agree with what has been said on both sides of the House about the utility of these new powers.
Let us take the sort of case in which it is necessary or desirable to have these provisions in order to prevent overlapping. Obviously, most work in the development of inventions and discovery is done by industry in its own laboratories and on its own initiative. In the majority of cases in which Government help is needed, it is expected that it will be provided by the existing machinery of the Department of Scientific and Industrial Research or the other Government Departments.
There may, however, be occasional cases in which the Corporation can properly serve either as manager or paymaster or both in a process of research and development. Let us take, for instance, the case, which I think the hon. Member put to me, where the subject does not fall wholly within the province of a single research association, or where the research has to be done in a field of technology in which the Corporation already has considerable experience. In those cases, it may be convenient that the research shall be done by the Corporation under the new powers conferred by subsections (2) and (3) of Clause 2 of this Bill.
My hon. Friend the Member for Clitheroe (Mr. Fort) dealt with certain points with which I have already dealt, and also paid a deserved tribute to the value of the Corporation in providing a centre to which anybody who had a valuable invention but did not know how to proceed might go, at any rate, for advice. I think that this body at present fills a great need, not only on account of what it has already done, which has been mentioned both by my right hon. Friend in opening the debate and by other hon. Members since, but in giving confidence to inventors that their ideas can be and will be considered by an expert body.
The hon. Member for Gloucestershire, West (Mr. Philips Price), who has always taken great interest in this whole subject as I remember from many previous debates, pointed out that, in spite of our great skill or indeed pre-eminence in 1653 certain branches of pure science, in the development and exploitation of these ideas, we have sometimes lagged behind in comparison with some of our competitors, and that it was important that this should no longer be the case.
I think it was the hon. Member for Edmonton, but it may have been the right hon. Gentleman who opened for the Opposition, who mentioned that the development and exploitation of the ingenuity which led to these inventions might produce very important returns in dollars. That is undoubtedly the case, and one hon. Member mentioned the invention or group of inventions popularly referred to as the electronic brain. I assure the House that the necessary patents have been taken out so that these ideas are protected all over the world, and it may well be that these developments will produce the return which various hon. Members have mentioned and desire.
The hon. Member for Gloucestershire, West also mentioned, and said he was a little worried about, the comparatively small sum which had so far been spent by the Corporation, but I do not think that any such deduction as he feared should be drawn from that fact. The actual amount spent by the Corporation is largely a matter of chance, and it does not necessarily give any measure of the work which they are doing. For instance, if they are able to place an invention with an industry prepared to do the entire development and exploitation of the patent, the Corporation reserving, of course, a right to receive royalties, the invention may then be developed without any great expense to the Corporation except the expenditure on the patent, and so forth. Another reason for the small expenditure is that there has been no really major invention which they have had to develop, though that position may be altered at any moment. What I would impress on hon. Members is that the 1654 amount of money which the Corporation has expended gives no indication of the importance or, indeed, the amount of work which it is doing.
I have, in the course of my reply, dealt, I think, with the various points raised in all quarters of the House. The Government very much welcome the friendly reception of this Bill, which they have no hesitation in commending to the House as a very useful Measure, and they hope for its early passage into law.
§ Question put, and agreed to.
§ Bill accordingly read a Second time.
§ Committed to a Committee of the whole House.—[Mr. Vosper.]
§ Committee Tomorrow.