HC Deb 21 July 1970 vol 804 cc440-9

1.55 a.m.

Mr. Dick Douglas (Clackmannan and East Stirlingshire)

I welcome the opportunity to follow the eloquent speech of the Under-Secretary of State, Department of Health and Social Security, and I also welcome the opportunity of entering into the ancient practice of this House whereby we ensure that no Supply is granted without redress.

I wish to speak on the specific Supplementary Estimate, Class IV.11.0, the National Marketing Council. I intend to indicate to the House the objectives of the Council, then briefly to deal with the vindication or otherwise of supporting the Council, then to look at the need to support marketing in the British economy, and lastly to look at one or two suggestions for improvements in this type of organisation in the future.

My first task is to look at the objectives of the Council. It held its first meeting in September, 1965, I am informed. The date is important, in view of what I have to say later. The objectives of the Council are, first, to assist and as necessary, reinforce the efforts of existing organisations which are dedicated to the promotion of a wider knowledge of marketing and the adoption of sound marketing attitudes and practices and, secondly, to support the needs of the national economy by guiding industrial and commercial effort in line with marketing requirements in general and exports in particular. I do not think that hon. Members on either side would quarrel with those general objectives. They are laudable and should be supported. But difficulty arises in trying to implement them.

The reasons for the difficulty are many and varied, but two at least should be brought to the attention of the House. The first is the composition of the Council. It is much too widely based and, as a result, there is difficulty in getting the efforts of the Council to gel. Serving on it are representatives of industry, the professional experts and their organisations, and the universities and other academic interests.

The second is the need in a body of this nature to realise that different industrial groupings require different marketing outlooks. I shall say a little more on that latter point in my concluding remarks.

Industry's traditional views of economies throughout our history have been directed to trying to produce economies of scale which were distinctly related to plant size. The people who dominated and controlled our major industrial companies tended in the main to be production engineers, with the result that the importance of gauging the market became a secondary consideration. This is still true. Economies of scale in plant size are important. In the chemical industry, for example, they are perhaps of supreme importance. But now other economies are just as important. There is the economy of research and development, the economy in marketing and, indeed, the economy of management.

I draw to the attention of the Minister, if he has not already seen it, the C.B.I.'s report on Industry, Science and the Universities—the Docksey Report. I draw his attention, in particular, to its wide ranging definition of activities covered by research and development: An activity which involves the application of the scientific approach and method to the improvement of all aspects of the activities of the company. This covers the organisation and management of the industrial unit the development of the relevant technologies, and the manufacturing processes, as well as improving the design and use of existing and new products. That strikes me, as it did the Docksey Committee, as a more wide-ranging definition of activities covered by research and Development. The Minister ought to look at the implications of that wide-ranging definition for the investment decision and, therefore, the importance, before the investment decision is taken, of gauging the market accurately. All too often in British industry—there are numerous examples—we have involved ourselves in research and development expenditure and in investment decisions without gauging the market properly.

I refer the Minister to two reports in particular—there are other examples that I could quote—where this was illustrated. The first is the Report of the Plowden Committee of Inquiry into the Aircraft Industry, Command 2853, paragraph 343: A successful civil aircraft programme must be backed by an effective market research organisation. In Britain the quality of the market research has been uneven. Sometimes it has been good. Thorough studies preceded the launching of the BAC 1–11; and the Committee have been impressed by much of the work undertaken by Rolls-Royce. But in general it has not been good enough. Optimistic expectations of sales have too often been belied; and the British share of the markets has consistently been over-estimated. Here is an important British industry which has suffered, in the view of an important Committee, from inadequate market research.

Another important industry very dear to my heart is the shipbuilding industry. Again, I quote from an objective appraisal of the industry's status, the Geddes Committee's Report, Command 2937, paragraph 141: The fundamental but intangible change required on the part of shipbuilding firms is one of attitude and outlook which can be summed up as becoming more market-orientated. Assessments of future market requirements, based on market research, must govern the firm's central policy decisions. That further quotation indicates clearly that these investment decisions in the past have not been taken on a sound basis of assessing the market.

I have referred to two instances in the private sector. However, in the public sector we have some examples of industries being re-orientated because they have adjudged anew the market. A good example is the work of the Gas Council and the various Gas Boards which in this case had a product with the aura of Victoriana about it, but were capable, through good plant design and anticipating future market requirements, to refurbish the industry.

The electricity supply industry is another example. I particularise the excellent work done in the North of Scotland by the North of Scotland Hydro Electric Board. This is a good example of public enterprise anticipating the needs of consumers and going out to persuade consumers that they should take a particular product.

In a large and expanding public sector there are other requirements of guiding the market and conditioning it. We are persuaded that in future we ought to have much more participation in the economic decision-making process. We have managed in our deliberations and endeavours through the centuries to emancipate the electorate in the political decision-making process. Our difficulty with a massive and, we hope, expending public sector is to get the same degree of participation in the economic sector.

Both sides of the House are concerned with trying to get value for money and with trying to anticipate the new needs both in the private and the public sector. I submit that this is the function of the entrepreneur. The private sector is rightly concerned with its market for projects and services, and so ought the public sector to be.

In my past endeavours I have had some association with the Salvation Army, and I have always taken the view held by General Booth, that the devil should not have all the best tunes, so I am naturally anxious, as a Socialist, to ensure that the public sector gets the same degree of attractiveness for its products as the private sector. I therefore want to see some of the market research techniques put into the public sector to persuade people that they ought not to assess their standards of living purely on their disposable income, but to take into consideration, through certain advertising blandishments if one likes, the value of certain public expenditure.

I am intrigued by the Government's introduction of business men into the public sector to examine certain areas of public expenditure. I had hoped that if this was developed we could have expected an expansion of public sector expenditure based on the assessment and anticipation of new needs. However, I am told in an article in the Guardian of 18th July, and I quote the appointment of Mr. Mark Schreiber, that The long-term objective is to focus the pattern of Government spending more closely on the needs of the 1970s, and to reduce Government expenditure considerably. I submit that if we apply the techniques of market research on this, and I know that some of the Prime Minister's appointments have been marketing people; one, Mr. Meyjes, was marketing co-ordinator—

Mr. Deputy Speaker (Miss Harvie Anderson)

Order. I hope the hon. Member will recognise that the discussion permissible on this Vote is rather narrower than he is making it. I do not want to confine the discussion more closely than I need to, because of its narrowness, but I hope that hon. Members will not extend the scope of the debate too much.

Mr. Douglas

I accept your Ruling, Mr. Deputy Speaker, but one of the functions of this Council—and I quote from the objectives of the Promotional Committee—is to ensure that a greater awareness of the need for better marketing is spread among the business community, Government and the public at large in the most speedy, practical and effective way. If that is one thing that we are supporting, we ought to make use of it, and I am submitting that the Government are making use of marketing techniques by employing people. My doubt about this appointment is that I am not so sure of Shell.

In my concluding remarks let me look at what has been happening to this Council, and try to put forward one or two suggestions which the Minister might consider to improve the position. I have drawn attention to some of the deficiencies. The body was established in 1965 and, from my investigations, has done very little work. It has supported one or two international conferences which no doubt have been valuable, but the basis for work in promoting marketing research orientation in industry, the universities and other institutions of higher education has to be founded anew. I am not privy to the decisions of the C.B.I. but I understand that the C.B.I. is aware of this deficiency and I suggest that the Minister should contact the C.B.I. to see whether Government, industry and the universities can start anew. It is very important. I believe that four or five years have been wasted. We need an organisation which is broadly based, representing industry, the Government, possibly the professional organisations and certainly the universities and other institutions of higher education—and industry should include both public and private sectors. If we are to have a market-oriented outlook, an organisation such as the Consumer Council must be consulted in this broadly based structure.

But there is much more hope if we try one or two experiments on a regional basis. As a tentative suggestion, to which I cannot expect an answer now, I submit that a possible way to do it is to look at Scotland as a fruitful base. I say that because my alma mater was the University of Strathclyde, and in that university we have the largest management school in Western Europe. There is no lack of individuals concerned who might associate with industry and the Government to get off the ground an organisation which might persuade Scottish industry to more market orientation. There is emerging in Scotland a business school, and this strikes me as a good opportunity to give the University of Strathclyde, which has this management school and large resources for building up the nucleus of marketing, a chance to experiment with both sides of industry and consumer organisations to see whether we can persuade Scottish industrialists to be more market oriented than has been the case in the past. If we were to enter the European Economic Community—

Mr. Deputy Speaker

Order. The hon. Member must not test the Chair again. He is stretching the debate too far from the Vote, which is much narrower than is the last subject which he mentioned.

Mr. Douglas

With respect, I am drawing to a conclusion. Whether or not there is an extension of the Common Market, we shall be involved in intense international competition, and therefore it is very important to get our industry to adopt market orientation. This type of organisation which we have been supporting in the past does not strike me as a fruitful organisation for continued support, and I hope that the Minister will examine my suggestions and that we shall see some action. It would not involve an enormous amount of Government expenditure. Indeed, it would involve very little.

2.14 a.m.

The Parliamentary Secretary to the Board of Trade (Mr. Anthony Grant)

The hon. Member for Clackmannan and East Stirlingshire (Mr. Douglas) has a short advantage over me in that he made his maiden speech on 9th July—I was not privileged to be present to hear it, but I read it with considerable interest—whereas I, alas, have to make my maiden appearance at this Dispatch Box today. I suggest that we have this in common; we would wish this appearance had taken place at a more congenial hour. The hon. Member's speech was interesting and constructive, and it will be studied with interest not only by the Government but by other bodies concerned with this subject. In so far as the hon. Member's suggestions did not involve the expenditure of public money I can assure him that they struck a sympathetic chord.

The hon. Member has chosen a very wide subject, and has rightly placed it in the widest context, subject to the rules of order. The subject is wide because the term "marketing" does not simply embrace what might be called the marketing skills, the art of promoting, advertising and selling products; it includes a theory of business organisation. There are many definitions of marketing and the marketing concept, but the essence of them is that business enterprises, in the manufacturing or the services section, should be organised and directed so as to use their resources to satisfy the needs of the purchasers and consumers for the benefit of, them both. Companies that aim at meeting the requirements of their markets are naturally more competitive and in the long run more profitable.

In defining marketing and its importance to the individual firm one is to a large extent also explaining its importance to the national economy. The strength of our economy and our exports depends on the efficiency and competitiveness of our industry. Marketing assists firms in planning and using their resources to maximum advantage; marketing skills and techniques are a necessary element of a firm's competitiveness. Just as important, the object of marketing is also to satisfy the consumer; consumer satisfaction is not measurable in terms of our national income statistics but it is one of the main points of our economic effort.

I should make a special mention of the need for companies to be market-orientated in their approach to exporting. It will only be by chance that a company has a product that will meet exactly the requirements of foreign buyers. It is necessary therefore for companies to be sensitive to the needs of the overseas markets to which they are selling. There are exceptions—in some cases the "foreign-ness" of a product may be a strong selling point—but in the main exporters must be prepared to adapt their products and, if necessary, their business organisation if they are to develop their overseas trade to the full. This can be done only if firms have proper information about the characteristics and potential of the market at which they are aiming. Adequate and continuing market research is a vital part of marketing strategy.

The hon. Member has raised this subject in the context of the grant in aid which the Government are to make to the National Marketing Council. I should explain that the reason that the money was requested under the supplementary procedure was that until this year the National Marketing Council received its grant from the Government through the British Productivity Council. It was decided by the previous Government, following the reorganisation of Departmental responsibilities, when the sponsorship of the British Productivity Council was transferred to the Department of Employment and Productivity, that a separate Vote should be created for the National Marketing Council. That decision was taken after the main Estimates had been prepared and gave rise to the present Supplementary Estimate. The grant is not a new one.

The National Marketing Council was set up in 1965 to supplement the efforts of the existing marketing organisations in promoting better knowledge and acceptance of sound marketing methods, and to support the needs of the national economy by guiding commercial and industrial effort in line with existing requirements in general and exports in particular. The Council has provided a point of contact between the main bodies concerned with marketing. It is perhaps more widely known for its work in securing candidates for the marketing courses that it helps to arrange or publicise each summer at Harvard, Fontainbleau and Cambridge. The Government's grant is and has been intended to assist with the administrative expenses of this work. So far, some 800 senior and middle management executives have participated in the courses at these institutions and one hopes that it has been to their benefit and that of their firms.

The hon. Gentleman was pushing a little about what the Government's policy was towards the National Marketing Council and to marketing generally. As I think I showed earlier, the Government are concerned that management at all levels should be aware of the importance of marketing and its relevance to their business activity. There is a need to promote this awareness and an acceptance of modern marketing techniques and methods. The question of how best this can be done is at present under consideration by the National Marketing Council and by the C.B.I., together with the other marketing bodies. This consideration also includes the future of the National Marketing Council itself.

It is my view and it may have been the view of the previous Government that the task of convincing management of the importance of marketing and the need to integrate marketing into their business organisations can only be undertaken by industry itself, or through a body which commands the support of industry in general. Unless those who are committed to the marketing philosophy and practice it are prepared to demonstrate their commitment, no amount of exhortation by others will be successful. For this reason, I welcome the acceptance by the Confederation of British Industry of the need to consider ways of spreading the marketing message.

I am pleased to tell the House that the C.B.I. decided last week to establish a marketing committee composed of members of the C.B.I., and representatives of the marketing organisations. This will provide a forum for the discussion of means of increasing wider acceptance within industry of the marketing concept: I welcome this initiative. I cannot forecast what may be decided or what arrangements may be made about the National Marketing Council, but I have listened with great interest to what the hon. Member has said, and others concerned with this subject will also have taken note of his concluding remarks. I assure him that I and my Department will take a close interest in marketing and developments in this field in future.