HC Deb 24 July 1967 vol 751 cc283-92

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Harold Walker.]

2.21 a.m.

Mr. Eric Moonman (Billericay)

It is a curious reflection on the interest of the House that in the last 12 hours we have had a range of subjects, including a full-scale economic debate, a reference to the situation and problems of Scotland and to the difficulties of particular industries, without real reference to some of the future planning and technology with which many of those industries and much of the economy is concerned.

For many years, science and technology have failed to make the impact in Western Europe which might have been expected. People holding key positions in Government and industry have failed to pay science and technology due attention. Decisions have been taken about short- and long-term planning without reference to those sections of Government that were encouraging scientific projects, albeit modestly, whilst in industry large numbers of companies in Europe felt it undesirable or unnecessary to appoint scientists or technologists to key positions or on boards of executives. As a result, their voice was not heard, or was not loud enough.

A further consequence of this ignorance by Government and industry has meant that the motivation of successive generations of engineers and scientists has been affected, in particular with regard to industry, management and company strategy. The difficulty in recognising the relative importance of science and technology to a nation is to some extent aggravated by the lack of clarity in definition.

I shall try to be specific. In scientific discovery, Western Europe has contributed greatly, and a great deal of the thinking and stimulus is still to be found here. But in the adaptation of scientific material, the "technology", Western Europe has not been able to keep up with the pace of change, the dynamic, which has pushed the United States and the Soviet Union to the powerful position they are in today.

The case for scientific and technical collaboration in Europe may be best opened by examining the British commitment. Britain, in some fields, is an exception to the trend in Western Europe, due in part to the pressures during the last war, which brought together industry, science and Government. The actual quality of British science is impressive. European politicians and scientists are struck by the range of our advance in nuclear engineering, aerospace and computers, to mention but three fields. This has meant that whatever the outcome of Britain's applications for membership of the E.E.C., there is an increasing interest in what Britain can offer Europe. Britain has consistently advanced her targets and budgets in research and development. We are spending in the public and private sectors close on £1,000 million, which is two-thirds of the total amount spent on the Continent of Europe.

However, another comparison is also relevant. Western Europe as a whole, if we include E.E.C. and E.F.T.A. countries, spends about one-quarter as much as the United States on research and development. Therefore, the scale of science and technology is becoming increasingly uncertain and expensive and, despite the undoubted lead which Britain has given to the world, and to Europe in particular, it now becomes necessary to consider ways and means of rationalising our resources, a question which has been given a great deal of attention by other nations in Europe.

The second broad stream of thinking on this concerns the technological gap. To close this must be the second facet of the plan of campaign. The technological problems of the Western world and the gaps occurring between certain countries, and in particular between Europe and the United States, have raised political as well as industrial questions. It would be a grave error of judgment to imagine that the "gap" could be overcome by either legislating against American firms or that the co-operation of scientific bodies or workers alone would meet the need.

What I would suggest is that European firms and governments will need to devise ways of matching the United States. There should be plans for responding to the challenge, rather than merely reacting. There has been much debate since the subject was, perhaps, first formally presented by the Italian delegation to the Atlantic Council in Brussels in June, 1966. It seems that there are several matters which have to be given prime consideration. There is the question of the disparity, not only in technology, but also in marketing, management and higher education. In many respects, the question of the technological gap can be best seen in terms of the marketing concept.

There must also be a real understanding of what is meant by "collaboration". The question of collaboration amongst European nations and firms must be meaningful. When the term "collaboration" has been used both inside and outside the House, I have often wondered whether the speaker concerned distinguished sufficiently between "collaboration" and "co-operation". Practical forms of collaboration in Europe have already taken place where a project has met the aims of the contributing industries or countries. In other words, it is possible for two or three countries to come to a deal on those aspects of a project of which they have some specialised knowledge or interest. This also provides a larger market. This, again, is a very important question.

It will be seen that such collaboration does not depend on Britain's membership of the Economic Community, but I would suggest that such an association would be enhanced if Britain was a member, because of the larger trading community.

There are two other things that I ought to mention. First, collaboration in Europe does not exclude working with the United States. I think that the phrase "sector co-operation" is of particular relevance here. Sector co-operation can have its advantages, not only as an alternative to a specific project, but, rather, as a complementary element. One immediately thinks, in the field of electronics, of the difficulties entailed in building complete electronic computers on a European basis alone, which can be avoided by a form of collaboration which includes the specialisation of European industry in the production of certain components within a framework of production agreements with the United States.

There is also the question of harmonisation of laws. Real collaboration on a European scale means a great deal of thinking in terms of problems of laws—patents, and so on—which have been considered by countries in the Community. This question must be looked at on a European scale.

A third and last question which must be examined in terms of the case for European collaboration depends on the study of and planning for European industry. The scattering of firms within an industry, the duplication of processes and models, the lack of standardisation, hinder British and European industry in making the best possible use of scientific knowledge. The size of the industrial unit has raised a great deal of debate, and this is fully justified. Whilst I believe that progressive firms will take measures to deal with these problems—and some already have—the cost of R. and D. is becoming such that Government action is required.

Mergers are taking place. This is true in both France and Italy. In France, tax incentives and State loans are encouraging the concentration of industry. In Italy there are tax incentives. Quite apart from the Government measures I have welcomed over the last year, there is also this unique organisation—the I.R.C.—which has done much to promote mergers in Britain.

However, firms are not merging on an international scale. Clearly, discovery has no material value without application. Hence the importance of establishing firms to a size where they can use the existing pool of technology more effectively. One other side effect of the enormous interest of the United States in Europe is the way in which they are able to utilise the trans-national company in Europe itself. This is something with which we are unable to compete because of the structure of British industry. I hope that in his reply my right hon. Friend will give attention to this.

I raise three specific questions. Bearing in mind that any form of technical collaboration will demand close association with industry, what research or studies has the Ministry undertaken either independently or with other Departments or with universities? Modern technology will mean greater rationalisation of resources. Would it not be wise for the Government to remind companies of the need to keep employees informed at key points in the change over? Would it not enhance the aims of the I.R.C. if it were advised to convene a conference of similar bodies in Europe to deal in depth with the need to create a trans-national company outlook? The Minister might make other suggestions on how it is likely to develop in future, but many hon. Members, on both sides of the House, I hope, feel strongly that the I.R.C. has a very important rôle to play in the development of a trans-national company.

For all the reasons stated, I hope that the case for scientific and technological collaboration is made. Britain is a key country in Europe. Because I believe that the degree of collaboration is likely to be more effective with Britain in the Common Market, I hope that those negotiating for the E.E.C. on Britain's application will have regard to the close association between economic and industrial development and technological collaboration.

2.32 a.m.

The Minister of Technology (Mr. Anthony Wedgwood Benn)

I am very sorry that my hon. Friend the Member for Billericay (Mr. Moonman), who has this Adjournment tonight, should have addressed such an empty House, because I share his view that this is a very important issue and I know that he is intensely interested in it. I find myself in agreement with almost all he has said. He was touching on one of the issues which is central to the work of my Department.

In particular, I want to say how much I agree with him about the price we are paying in Britain still, and may be in Europe still, for the neglect of science and technology in our educational system and also in some of our industries over the years. We have, however, got a very considerable investment in research and development in Britain and I agree with my hon. Friend that this country has a great deal to offer to Europe as a member of the European Economic Community.

My hon. Friend referred to the technological gap and said, quite rightly, that this is not so much a matter of tech- nology alone so far as it is technology at all, but involves us very intimately in marketing and management problems which are equally important. He also laid great stress on the link between these things and the fragmentation of British industry and European industry as compared with the United States.

Before I try to answer his argument with a presentation of my own outlook on these problems, may I deal with the questions he put to me. First he wanted to be satisfied, and I am quite sure that this is right, that we keep in close touch with industry and asked what joint projects we have with them involving a study of the effect of British entry to the European Community. I can answer him in only one way. My Department is in continual contact with all the industries for which we are responsible, with all the industries which we sponsor. My industrial divisions in the Ministry are therefore very well acquainted with the views of the industries we work with about the problems of entering Europe and about the opportunities which will be created by that. I shall certainly take account of his suggestion that there should be further more detailed joint studies. He will know that industry itself has done quite a lot of work in this respect. There has recently been the C.B.I. Report on entry into Europe, and a number of other interested industries and firms which are concerned have devoted their own resources to this problem.

The second point that he put was about the rationalisation that would follow from the creation of larger European firms, and he wanted to know what would happen to those people likely to be concerned by such rationalisation. This does not depend upon our entering Europe, of course. There are already some firms that stretch across the European frontiers. There is the new Ford of Europe which was established recently. The problem that he referred to is equally serious inside this country. Some recent examples have been brought to my attention by hon. Members and, indeed, one has occurred in my own constituency where rationalisation has led to the sudden closure of a plant. This can cause very serious problems for those working in that plant and raises in an acute form the need for adequate consultation.

I should like to stress to those firms which are engaged on the rationalisation process that if they really want people to make an intelligent approach to the problem of rationalisation it is up to the firms themselves to consult the unions at every stage in the operation. It would set back the cause of rationalisation and hence the cause of efficiency in British industry if this consultation were neglected.

The third point my hon. Friend made related to the possible rôle of I.R.C. in trying to bring about stronger European firms. He will know from the way in which I.R.C. was established that it is responsible to my right hon. Friend the First Secretary and Secretary of State for Economic Affairs. I do not want to say anything tonight which would indicate that I have responsibilities for I.R.C. that I do not have. It is true that I.R.C. is able to operate internationally and I know from my talks with I.R.C. board members that they are very conscious of the fact that they are able to do that. Whether it would be wise for the Government to put a special responsibility upon I.R.C. in the sense that my hon. Friend said, I would somewhat doubt, but I can assure my hon. Friend that I.R.C. is aware of this and it regards it as part of its function to keep its eyes open for international grouping.

May I turn to the problems raised by this debate and put the argument as it appears to me. Perhaps I should begin by saying that this is a Government that really does not need any encouragement on the desirability of scientific and technological collaboration with Europe. Many of my right hon. Friends, including the Prime Minister in his famous Guildhall speech, and the Foreign Secretary in his recent speech at The Hague on 4th July, have laid great emphasis on the rôle of science and technology in building for us a new and bigger community in Europe.

As has been said already tonight, we are driven to this by two factors: first of all, the very high cost of research which makes it necessary to establish companies lame enough to be able to afford it; and secondly, the high cost of marketing and the need to have very large markets in order to be able to sustain this research and development and produce an economic product. We are handicapped here, as my hon. Friend said, by the fragmentation not only of European firms but of firms in this country. When we talk about the American economic strength in Europe, we are not only thinking of the United States as a political unit. We are thinking of the very large American corporations — Westinghouse, I.B.M., Ford, General Electric, Pratt and Whitney, to name only a few of them.

In Britain, although some of our large corporations are of world size, it is broadly speaking true that the scale on which they operate is too small. It is one of the principal objects of Mintech to try to bring about larger units in the British engineering industry. We are now engaged in carrying through the Geddes operation with the help of the Shipbuilding Industry Board. That is an act of consolidation, designed to give greater strength to our ship building. We have achieved some consolidation in the aircraft industry—not, in this case, through Government action—in the fusion of Rolls Royce and Bristol Siddeley to create an engine company of world size. In telecommunications, I.R.C. has been asked to examine the position, and in computers, there has been a link up between Elliot Automation and English Electric.

These actions have provided a framework in which we can play a much larger part in the European programme, to which my own Department is so deeply committed and involved. But, when our share is examined, it is still true that international frontiers hinder the establishment of wider groupings. One calls to mind the recent attempt at bringing more closely together Agfa and Gevaert—an attempt which resulted—because of differences in national company law—only in a loose association.

We want a climate favourable to large companies, if we are to stand up to the very strong competition from across the Atlantic. It is this type of argument which shifted the Government's view of Britain's entry and which, frankly, shifted my own view on the European question and on the issue of our joining the E.E.C. It was the acceptance of the fact that technology imposes an inexorable scale in our economic life, making it necessary for us to think in bigger terms than in the past, that made us change our views. It is not so much that one was attracted by new institutions but that we believed that a wider Europe was Britain's proper place and inevitable place.

We were influenced, too, by looking at Europe with its potential market of 300 million in the 'seventies and believing that it was right for this country to develop its technology even farther. If we stayed out we should find ourselves committed to the production only of the less sophisticated equipment of the 'forties, 'fifties and the early 'sixties, whereas, as the Prime Minister said earlier this year, the United States would be able to establish itself firmly as the producer of those things needed in the 'seventies and the 'eighties.

I have never seen the idea of a special institution created for this purpose as being absolutely central to the acceptance of this task; and indeed, if one looks at the organisation of the European Communities, one sees that there is no new Executive following the fusion of the European Coal and Steel Community with Euratom. It is more important to see that there is the machinery and the proper agencies available to deal with the research which will be necessary, and to see that there are proper industrial links between firms designed to strengthen their marketing position, and to deal with such matters as metrication, standards, calibration, law, patents, contract provisions, licensing and sub-licensing, the deployment of skilled manpower, and problems associated with the "brain drain". These are the matters which are important, and they are the very subjects with which Mintech is concerned.

If I may use the term, it is a sort of "Eurotech" administration that is needed, linked to industrial policy through the machinery of administration and to some sort of detailed work in industry and technology such as we are tackling at home. I am sure that there is huge scope for this, because we already have some projects—Concord and the airbus—in being and a great deal in computers, machine tools, telecommunications and electronics still to be done.

But we must not think of this prospect only in terms of institutions. We must think of it in a much broader sense, in the sense of the development of closer co-operation between nations and between firms within nations. This is really the key to Britain's application to join the Community. Bilateral collaboration, valuable though it is, is no substitute for the things of which I am speaking, and for Europe the advantage of having Britain as a full member of the Community is great just because we are able to contribute so much from our side to the links which we need to build up.

Now, another general word about the role of technology in international relations. What excites me in the job which I now have to do is the way in which technology is opening up what is called in the jargon, the "interface" between societies. In earlier days, international relations depended on explorers, then on soldiers, then on minstrels, on missionaries, on scholars, on diplomats and on traders. Now, we have the advantage of co-operation and contacts between technologists, which open up far more fruitful avenues for collaboration than ever before. When a missionary or explorer came home from a. strange country, he reported how different things were there. Now, wherever we go, we are surprised and delighted to find how similar the problems are.

One feels a sense of excitement—I say this having led a mission to the Soviet Union earlier this year—at going to a country with a different ideological and historical background and yet finding how the problems there are the same as ours. In our relations with the E.E.C., the Soviet Union, the United States or Eastern Europe, wherever it may be, there is this superb opportunity for cooperation. Essentially, there is no controversy, there are opportunities for cooperation in research, in know-how and in planning, and, moreover, there is a vested interest in seeing that the other side succeeds in what it is trying to achieve.

If we are to give a little life and vitality to technology, if we are to make it more than a hard inhuman record of man's achievement in building hardware, we ought to remember that it is opening up for us great political opportunities not only in our relations with Europe but in relations with every other country of the world. This is not at all a bad basis for the policy upon which we have now set ourselves.

Question put and agreed to.

Adjourned accordingly at eleven minutes to Three o'clock a.m.