IRON CASTING INDUSTRY (RESEARCH LEVY) (Hansard, 8 February 1971)

§ The Under-Secretary of State for Trade and Industry (Mr. Nicholas Ridley)
I beg to move, That the Iron Casting Industry (Scientific Research Levy) Order 1971, a draft of which was laid before this House on 14th January, be approved. The main purpose of this Order, which my right hon. Friend the Secretary of State proposes to make under Section 9 of the Industrial Organisation and Development Act, 1947, is to replace the Iron Casting Industry (Scientific Research Levy) Order, 1967, so that the income obtained from the levy may be increased. The Order continues the imposition of the levy on the iron casting industry to finance scientific research to be carried out co-operatively within the industry by the British Cast Iron Research Association. The proceeds of the levy will continue to be collected by the Secretary of State and issued by him to the research association.
During the last full year the statutory levy brought in £210,000 to the B.C.I.R.A., and the effect of the Order will be to increase that sum to approximately £300,000. The other grant-earning income of the research association in the year ending June, 1970, was £14,000, and it will probably be the same next year. The Government grant of 40 per cent. works out at £114.000 in the year

§ Mr. Arthur Lewis (West Ham, North)
Did I understand the hon. Member to say it has been revised to prepare a hedge against inflation? I was told by this Government that there is going to be no inflation—that they are going to cure it. So why prepare for it?

§ Mr. Ridley
If there is no inflation, as the hon. Member and I both hope, then there will be no change in the amount levied on labour, because the figure of 0.14 per cent. on emoluments will still be the same amount.

§ Mr. Albert Booth (Barrow-in-Furness)
I understood the Minister to say that part of the levy is chargeable on emoluments. Does he mean emoluments assessable to income tax? If so, does he accept that there is an important distinction here?

§ Mr. Ridley
The total emoluments paid to the staff will, of course, vary from case to case, but it is the total amount paid out to all the workers who are directly associated with the iron castings part of each business concerned.
The second change is that the levy on production has been increased from 7½d. per ton to 4p per metric tonne. That, I agree, will take a little bit of working out, but it has been accepted by the industry, and, with the change to metric measure in the iron and steel industry, this will fit into the general practice developing in the industry.

§ Mr. Gerald Kaufman (Manchester, Ardwick)
Is not this in anticipation of the decision on metrication which the Government have promised hon. Members opposite, particularly the hon. Member for Harrow, West (Mr. John Page) will not be made till this House has given them power to decide?

§ Mr. Ridley
No. The hon. Gentleman, as always, is quite wrong. The iron and steel trades have taken a voluntary decision to adopt the metric measure, and they are perfectly entitled to do so, if they wish. The Government have in no sense taken the decision in the matter. They have asked that the new levy should 194 be expressed in metric tonnes, and we have merely complied.

§ Mr. Ridley
I think I have now said enough to introduce the Order to the House. I will, by leave of the House, reply to any points or questions which are raised.

§ Mr. George Lawson (Motherwell)
I think we require very much more information on this Order than we have had so far. [HON. MEMBERS: "Hear, hear."] It seems to me that there are quite substantial sums of public money involved here at the present time, quite apart from the money to be raised from the industry. Part of my case is that information is not to be found in either the explanation given by the hon. Gentleman or the Order itself.
As I understand the position, more money is to be raised than formerly by the industry, and the public purse is committed to meeting 40 per cent. of the sum of money, the minimum of which is £250,000. That is for the first three years. I am referring to the Annual Report of the B.C.I.R.A. itself. That is what I understand it to say. If I am wrong, or if the Annual Report is wrong, I have no doubt that the Minister will put me and the House right. From the Annual Report of the British Cast Iron Research Association for 1969/70, I understand— —

§ Mr. John H. Osborn (Sheffield, Hallam)
Which page?

§ Mr. Lawson
On pages 3 and 4 this matter is discussed. On page 3 the report says: The Income and Expenditure Account for the year ended 30th June 1970 and the Balance Sheet as at 30th June 1960 accompany this Report … Normal grant-earning income amounted to £184,414, enabling B.C.I.R.A., to claim grant of £73,765 from the Ministry of Technology. On page 4 the Report refers to the minimum amount of £250,000 which is required to be raised from industry to qualify for grant. The undertaking to pay 40 per cent. of the amount raised commenced on 1st July, and the minimum amount could be …250,000. The hon. Gentleman shakes his head, but 195 that is my reading. This means a grant of £100,000, and if more than £250,000 is raised, the grant will be correspondingly higher. I should like an explanation of this.
A substantial amount of public money is tied up in this. I am not condemning the use of public money—I have supported my hon. Friends in spending public money on adequate research—but I want it to be understood that this is what we are doing. Despite all the talk we have heard from the Government about industry standing on its own feet, I want it to be properly understood that it is not just money coming from industry that will be spent but substantial sums of public money.
What machinery will be involved in collecting the money? I am not now talking of money coming from the public purse. The State undertakes to collect from the industry the moneys that will accrue from the 0.14 per cent. on emoluments and the 4p calculation on metric tonnage, and this is a substantial job. The Ministry of Technology did a much simpler job, less costly in terms of manpower and less apt to provoke the hostility of the people paying the money. How many people will be employed on collection? The old method was based on a simple calculation of the number of employees in a given firm. Under the new Order the calculation will be based on the emoluments of all the employees, with the exception of the people employed in supplying food. Maintenance men, clerks, directors, pattern makers, manual workers and the chaps who are conveying material by normal transport means will all be included. It is to be total emoluments calculated for income tax purposes, and so overtime and bonuses will enter into it. Producing that information not once but four times a year will be an involved job. I do not suggest that businessmen are dishonest—we know that they are very honest—but there must be adequate means of checking.

§ Mr. Kaufman
My hon. Friend is making a powerful case. I remind him of the most remarkable point, about the hiving-off—if I may use that term in the presence of the Under-Secretary—of those staff engaged in the supply of food and drink. I have no views about this and 196 its significance, but their exclusion will make the calculation even more difficult.

§ Mr. Lawson
I agree. My hon. Friend has a valid point. I do not know at what level the clerks will be included. Will a youngster who has just entered the organisation be included? Exceptions can make the calculation very difficult. In a very large works many people will be employed in the canteens. Will the people who clean up be distinct from those who serve in them?
If a firm were told that it must calculate its total emoluments bill, that would be one thing. But I take it that directors' fees are also included, and even the money paid to research workers enters into it.

§ Mr. Arthur Lewis
Is my hon. Friend suggesting that part-time directors earning £10,000 or £20,000 a year for two days' work a week also come into it?

§ Mr. Lawson
That is my understanding, and that would add to the difficulty. The calculations would include in respect of a director who spreads his services over a group only that part of his emoluments directly related to this type of work; the firm must calculate what proportion of his services goes into the provision of the type of product with which we are concerned.

§ Mr. Dennis Skinner (Bolsover)
When my hon. Friend talks about part-time directors I am concerned about whether this conflicts with Clause 4 of the Industrial Relations Bill. They should know which union they should belong to.

§ Mr. Lawson
That is a point worth following up. The Order states that there has been consultation with substantial numbers of persons carrying on business in the iron casting industry and the organisations representative of persons employed in that industry appearing to him to be appropriate. It is what appears to him to be appropriate. It does not necessarily follow that that is everybody who is properly involved in this industry. There can be a considerable range of persons employed in it. Have their interests been taken into account? I do not know. That is a matter which we expect the hon. Gentleman to be able to tell us, and not just to give us the name of one federation. We want more than that on a matter of this kind. We want to know whether, for 197 example, the clerical and administrative workers were consulted in this matter. They are a considerable body of people. Has the organisation led by Mr. Clive Jenkins, the Association of Scientific, Technical and Managerial Staffs, beeen consulted?

§ Mr. Arthur Lewis
I am obliged to my hon. Friend for giving way. I am a member of the A.S.T.M.S. I can assure my hon. Friend that Mr. Clive Jenkins has not been approached personally on this. It is shocking that he has not. I understand that a director of Guest, Keen and Nettlefolds, who is a big contributor to Tory Party funds, is now on the Wilferforce Inquiry. When he is spending time on that inquiry, would it be right pro tem to reduce the amount of money that he would have been earning at Guest, Keen and Nettlefolds, £20,000 a year whilst he was in the position of director, to 16 guineas a day on the Wilberforce Inquiry?

§ Mr. Lawson
That should have been an extra charge on Guest, Keen and Nettlefolds. If there are these large fees being paid, Guest, Keen and Nettlefolds should have paid its share.

§ Mr. Arthur Lewis
I agree.

§ Mr. Lawson
How do we establish that Guest, Keen and Nettlefolds pays its full share? It would be easy once, but if it is quarterly how is some department of the Ministry for Trade and Industry to establish that that money was paid?

§ Mr. Arthur Lewis
My hon. Friend is knowledgeable on this matter. This is a serious point. Has he stopped to think that if we have the situation, as we have, of a great organisation like Rolls-Royce going bankrupt because it cannot even price its contracts, what will be the position with more of these big companies like Rolls-Royce which cannot even work out their own contracts?

§ Mr. Lawson
I remember that the previous Minister for Technology gave evidence to the Select Committee on Scottish Affairs of certain difficulties which existed. I will not mention names, but the Minister of Technology told us that many world famous firms kept no proper accounts. This practice seems to be all too common. How can the hon. Gentleman ensure that the method of 198 raising the amount of money we are discussing, which is 0.14 per cent. of the emoluments, is 0.14 per cent. of every person's emoluments in this industry, from the lowest—if I may use the expression—to the highest; that is, from the fellow who does the work to the fellow who supervises and says how well or otherwise it has been done? This is a tremendous calculation, and it must be done four times a year. If it is to be done at all, which I doubt, it can be done only by using enormously expensive manpower, drawn in this case not from the iron castings industry but from the State. In other words, public money will be spent on the supervision and running of the system, the collection of the money, and ensuring that the proper sums are paid.

§ Mr. Kaufman
For once my hon. Friend is a little wide of the mark. Surely this work could be done by computer. If computers were bought for the purpose from I.C.L. in West Gorton, which is in my constituency, some good might come from the exercise.

§ Mr. Lawson
A computer works only on the information supplied to it, and that information will be coming from individual firms. A firm is to be exempted if its liability is less than £3 10s. in the quarter, and every firm has to make its own calculation. One cannot expect a computer to turn incorrect calculations into correct ones. It can work only on the information that it gets.
The State is tying itself to 40 per cent. of a sum——

§ Mr. Arthur Lewis
I know that my hon. Friend is a diligent and hardworking Member representing a Scottish constituency, and that Scotland has many of our important industries. What does my hon. Friend suggest will happen in holiday periods? I have in mind the New Year, Burns Night, and so on. Will there be an extension of the period, because I assume that offices will not be working during those holidays?

§ Mr. Lawson
I do not imagine that holiday pay would be included in the calculation. We have an extended holiday at New Year. At one time it was New Year only, but now it includes the Christmas period. But I doubt whether 199 holiday money would enter into the calculation, any more than superannuation and pension contributions would, but perhaps the Under-Secretary will be able to tell us.
Has the hon. Gentleman calculated what the scheme will cost the State to run? The collecting will be done four times a year, and the State must ensure that each firm, whether it be G.K.N. or a little firm round the corner, pays its due share. How does the Hon. Gentleman propose to do that, and what will it cost?
Why are we tying ourselves to 40 per cent. of the sum to be raised, with a limit of £250,000? If wages go on rising, and if salaries and directors' fees go on rising, that 40 per cent. will rise, too. I know that three years hence it is to fall to 35 per cent., but that will still be a very large sum of money.
I am all for the principle; I am all for supporting research and development. But I should like the hon. Gentleman to square this with his political philosophy. He likes to talk about the Conservative Party philosophy. I think that he has to try to square this practice with that philosophy. I hope that he will explain the points which I have put, but I am sure that my hon. Friends will have more points to put to him tonight.

§ Mr. Ray Carter (Birmingham, Northfield)
. It is with some reluctance that I intervene. However, it is a serious matter for me, because the British Cast Iron Research Association's premises, workshops, and so on, are only just outside my constituency—in the small village of Alvechurch in the division of the hon. Member for Bromsgrove (Mr. Dance).

Hon, Members
Where is he?

§ Mr. Carter
I do not know. I was about to say that I hoped not to trespass on what is rightly the hon. Gentleman's preserve tonight. I had also hoped that the hon. Gentleman would wish to intervene in the debate, because I sure that he knows rather more than I do about this subject.
A number of the people who work at the B.C.I.R.A. live in my constituency. I do not know them personally. Around 200 my constituency there are a number of establishments like the B.C.I.R.A., and the people to whom I have spoken, who are employed in similar capacities, are extremely disturbed at the attitude being expressed by the Government—in particular, the Department of Trade and Industry—about scientific research and development programmes.
This has moved me to put down a Question to the Prime Minister asking him if he will reduce the number of junior Ministers at the Department of Trade and Industry by two. Judging by the laughter which I have witnessed coming from the Government Front Bench this evening, I feel justified in putting down that Question. So far that Question has not been answered; it is still on the Order Paper.
Frankly, I am extremely suspicious about the Order for a variety of reasons, but principally because the Government spokesman in the Upper House said that the Government wanted to increase the levy upon the various firms within the cast iron industry in order to make up a shortfall which, as the Minister has made clear tonight, has been apparent for the past four years. I could quote what was said, but I understand that that is not in order in this place.

§ Mr. Arthur Lewis
I should be interested to hear the quotation. If it is from a Minister's reply I think that my hon. Friend can quote it. I have not read it, so perhaps my hon. Friend will quote it.

§ Mr. Carter
Perhaps you, Mr. Deputy Speaker, will rule whether I am out of order in quoting from this speech.

§ Mr. Deputy Speaker (Sir Robert Grant-Ferris)
Order. If it is from a Minister's statement it is in order; otherwise not.

§ Mr. Carter
It is from a speech by Earl Ferrers.

§ Mr. Arthur Lewis
If it is from a Minister, I should like to have it.

§ Mr. Deputy Speaker
Order. I think I made a mistake. The hon. Member is entitled to quote from a speech made in the Upper House.

§ Mr. Carter
Thank you, Mr. Deputy Speaker. I will quote what was said: My right hon. Friend is satisfied that the Research Association does require an immediate increase in its income if its programme of 201 research is to be carried on at the required level and that the Levy should therefore be increased. The income from the present Levy has been virtually constant, and rising costs have already obliged the Association to cut back its activities and reduce its staff. My right hon. Friend is conscious of the role played by the Association in the iron casting industry and he is satisfied that, the British Cast Iron Research Association should not be allowed to suffer now because of insufficient income. In preparing the draft Order he has consulted and has received support from representatives of the industry and of the foundry workers both to the proposal to increase the yield of the Levy and to the suggested new methods of calculating the charges payable."—[OFFICIAL REPORT, House of Lords, 2nd February, 1971; Vol. 314, c. 1135–6.] It strikes me as an act of insincerity on the part of the Minister for him to come to this place and say that he wants to increase the levy because the net income of the association is not high enough. Frankly, that line does not square with what he has been saying in the past about research associations and the total rôle of Government in research and development.
The Minister is on record, in answer to Questions that I have put to him, as saying quite boldly, "We want industry to bear a higher part of the cost of research and development", yet he comes to the House with a different set of reasons when he wants to increase the levy on the industry in order to aid a research and development organisation.
If we look back to the Chancellor's economic statement just after this Parliament assembled, we see in it a deliberate action on the part of the Government to reduce Government aid and assistance to the research associations, of which the Cast Iron Research Association is one. The reduction amounted to about £2 million per year. I put it to the House that the real reason why the Government are increasing the levy on the component firms which contribute to the research association is to make up not for the shortfall in income but for the reduction in the grant given to it each year by the Government. That is the first point of fact on which I challenge the Government.
The second matter about which I disagree with the Minister is the method that he has proposed to raise the levy. Is it the right way? I submit that it is the wrong way, for the simple reason that the new levy is based upon the total 202 emoluments paid out in any one year, or sub-division of that year as my hon. Friend said, and a proportion of that comprises the levy. I submit that this is a positive disincentive to firms to employed highly skilled manpower.
Let us consider, for example, firm A. It may, by comparison with other members of the industry, be inefficient. This is probably due to the fact that it does not employ the right quality of labour, and hence, because it does that, the emoluments that it pays to its workpeople of that calibre are smaller than those paid by firm B, which has a high record of efficiency, due to the fact that it employs highly skilled manpower. Yet we find that the firm which is producing this increased efficiency, and hence, one must assume, this high output, is penalised, whereas the firm employing less skilled manpower and producing less output, and probably output of less quality, is in a better position. The way in which the levy is being raised is counter-productive and not in the interests of the industry as a whole.

§ Mr. Kaufman
My hon. Friend is being far too kind to the Government. I suggest that what the Government are doing on this emolument-based levy is infinitely more sinister than he suggests. If he considers the matter carefully, he will realise that the implications of their action go much further.

§ Mr. Carter
I am prepared to believe that, particularly as I recognise that my hon. Friend is one of the most observant and erudite hon. Members in the Chamber. I am prepared to back up what he says by my own personal experience at the hands of this Department, through Questions which I have put to it and answers which I have received from this very Minister who is here tonight. The answers have been most evasive. I have always said that the most important things in politics go by unseen. Many of us who are sincere in our efforts do not attempt to conceal what we are doing—if there is concealment, it is fortuitous—but with this Government I get the impression that there is a deliberate attempt to conceal their policy.
The levy should be made so as to increase the levy positively at the point of collection. I agree with all that the 203 Minister said about the research association: it does very fine work and I have nothing but praise for its staff, and I hope that it prospers. But while it can do good work in its own right, I should have thought that the firms themselves could make a positive contribution of their own.
Problems of research and development are very important so far as they affect British industry. I do not believe that this Government understand the true nature of their reports. An indication of the way in which they think and act is to be seen in their attitude towards employment and productivity. One of the first things they did when they recast the Ministries was to drop the word "Productivity" from the name of the Department of Employment. This is the clue to their thinking and to their absolute barrenness of thought about the basic problems of British industry. I could speak at length—[Interruption.] If the hon. Member wishes to intervene, I am prepared to give way: there is plenty of time.
I am concerned particularly about the problem of the small and medium firms for which the research association caters. About 50 per cent. of British industry is comprised in this category. [An HON. MEMBER: "More than that."] I wish the hon. Member could give me a precise figure. [An HON. MEMBER: "Seventy five to 80 per cent."] That is an increase on the figure that I mentioned. But if only a marginal increase in productivity could be obtained in this large slice of our industrial and economic life, great benefits would accrue to the nation.
Therefore, while I support the principle of increasing the grants and the total income of the research associations, and the B.C.I.R.A. in particular, I do not think that the method of obtaining the levy proposed in this Order is the right way of going about it. I know that the same principle is followed with respect to other research associations, but two wrongs do not make a right.
I ask the Minister to consider this point, to go away and come back with a proper Order. It may take the Government some time to draw up an Order that is worthy of the debate that we are having tonight, but it is a very necessary job for all the reasons which I have 204 given. Small and medium sized industry needs the sort of facility which can be provided by this research association. I would have liked an Order that was equal to the task with which the research association is confronted. Therefore——

§ Dr. John Gilbert (Dudley)
If I may interrupt my hon. Friend, he has often used the phrase "small and medium sized firms". Could he define the term so that we could be clear what he has in mind?

§ Mr. Carter
I would say that a small firm employs 500 people or fewer.

§ Mr. Kaufman
With respect to my hon. Friend, surely he is arrogating to himself something which he should not do. On page 2 of the Order he will see a reference to the Act of 1889. Surely, it is for that Act to interpret what is a small or large firm.

§ Mr. Carter
I have not looked at the Order as closely as my hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) has. Perhaps my hon. Friend will be called, in which case he can tell the House of the very profound points that he has evidently carefully considered. I have listened to him in the Tea Room, and I know that he has a point with which the House should be acquainted.
I suppose that when one refers to a small or medium sized firm one has in mind 1,500 workers downwards—that sort of category. An earlier speaker said that this area of the economy comprises something like 80 per cent. I would have said it was rather lower than that.
This Order is not worthy of the task with which it is supposed to deal. I urge the Minister to redraft the Order and he will then probably get the support of this side of the House.

§ Mr. Deputy Speaker
Mr. Booth.

§ Mr. Arthur Lewis
On a point of order, Mr. Deputy Speaker. With respect, is it not the custom to call hon. Members alternately from either side of the House? I am not criticising the Chair—I think that you may have overlooked the fact—but two hon. Members on the other side of the House rose when the 205 hon. Member for Birmingham, Northfield (Mr. Carter) resumed his seat. I think that you may have been looking this way and did not notice them.

§ Mr. Deputy Speaker
I am obliged to the hon. Gentleman. Perhaps the hon. Member for Barrow-in-Furness (Mr. Booth) will be kind enough to wait. Mr. Osborn.

§ Mr. John H. Osborn (Sheffield, Hallam)
My hon. Friends will know that I am interested in the problem of financing research, and, in particular, to financing and management of industrial research in this modern age. Some hon. Members will be aware that I am interested in the foundry industry as such, but few may be aware that I am a Fellow of the Institute of British Foundrymen, although I must confess that, having been in the House for many years, my active interest in the foundry industry is now non-existent.
I listened to the contributions made by hon. Members opposite. I could be unkind and say that they have had a lot of fun, but I should like them to know that those running the iron industry at present are concerned with its future and that if hon. Members had seen some of the reports produced by the appropriate E.D.C.s they would find that existing capacity is likely to meet orders in the foreseeable future because of a surplus in manufacturing capacity.
Another problem that faces the iron foundry industry is that to an increasing extent it is tied to the motor industry an industry which at present is not renowned for its ability to provide a continuous flow of orders coming from its suppliers, for a variety of reasons. The hon. Member——

§ Mr. Carter
Are not the points I made earlier amply borne out by the problems in the motor industry, part of which I have in my constituency? Would the hon. Gentleman not agree that a great deal more capital, research and development, and advanced technology in general is required within the foundry section of the motor industry? Would he not agree that this rather measly Order is not adequate to the needs of the motor industry in particular?

§ Mr. Osborn
Hon. Members opposite must make up their minds whether they welcome the levy and the fact that money is being raised from the industry to finance its own research, whether they want just to criticise the levy as such, or even oppose the order.
I remind hon. Members there have been Orders in 1966 and in 1967. When the hon. Member for Willesden, East (Mr. Freeson), then Parliamentary Secretary to the Ministry of Power, introduced the Order of 1967 he said: The Order is acceptable to the bodies with whom it has been fully discussed in accordance with the 1947 Act. His final comment was: We have had full consultation with the industry and the various organisations in it…"'—[OFFICIAL REPORT, 28th June, 1967; Vol. 749, c. 706–10.] Those words are almost identical with those used by my hon. Friend the Under-Secretary of State. The fact is that there has been full consultation with the industry as to how best to devise the levy. The hon. Member for Motherwell (Mr. Lawson) when he referred to the annual report and to the Order, commented on the peculiar nature of the formula that has been used. I can share his surprise. But if he looks at the 1967 Order he will find that the rate referred to is based on (a) "7½d. per ton of leviable iron produced" and (b) "on 6s. for every leviable worker employed by that person". He may comment on the nature of the agreement between the Minister and the industry on the alteration of the term of the levy, and particularly on how the levy has been prepared, but he must bear in mind that this is not a new measure but one that hon. Members opposite as supporters of the then Labour Government accepted as a reasonable way of financing research in the iron foundry industry.

§ Mr. Kaufman
With respect, the hon. Gentleman is not taking into account the very significant differences between this Order and the Order of 1967. It is all very well to say that there was consultation in 1967 and that there has been consultation now, but the Prime Minister has shown at Singapore that the idea of consultation under this Government is very different from that under the previous Government.

§ Mr. Osborn
Those who are actively concerned with the industry will treat those remarks with the contempt they deserve.

§ Mr. Arthur Lewis
The hon. Gentleman has castigated my hon. Friend the Member for Motherwell (Mr. Lawson) and suggested that he is against the levy now although he supported a similar levy in 1967. My hon. Friend was at pains to explain that he was in favour of the principle but not in favour of the means of collection.

§ Mr. Osborn
This is a new Order. A formula has been worked out by the industry and agreed with the Minister. It is legitimate to ask how the money will be collected, but it is not as though the industry has not been used to applying similar formulae. Without having had a Statutory Instrument, obviously the industry has somehow over the years had to find ways of raising money with which to finance development.
This passage from the Annual Report has been quoted: During the year, continuing the policy of the previous year, B.C.I.R.A. has had to operate on a reduced scale of activities in order to keep current expenditure reasonably in line with income. For some time those running the research association have been faced with a problem in financing their activities.

§ Mr. Arthur Palmer (Bristol, Central)
There is a very serious point here. The hon. Gentleman has referred to the industry's difficulty in obtaining sufficient money. There is this difference between this Order and the previous one. Previously the grant from public funds was 40 per cent. of the amount to be raised by private levy. It has been reduced to 35 per cent. in this Order. The absolute amount of money may be greater, but there is a reduction from 40 per cent. to 35 per cent. Did the industry have any opinion to express on this?

§ Mr. Osborn
I am not a spokesman for the industry. I am merely arguing that this is an Order to help finance the activities of the research association. I have merely been approached by one or two members of the industry to inquire whether I as an individual back bencher would support this further Order. This 208 matter has been approved once by hon. Members opposite—in a different form of Order, it concede. When a further Order designed to help finance research comes forward, it is logical for someone who has been associated with the industry at least to contribute to the debate, although I have every intention of voting for the Order if we have to go into the Lobby.
I can only quote from the Annual Report on the question of grant: Grant continues at the rate of 40 per cent. of grant-earning income for the three years commencing 1st July, 1970, and reduces to 35 per cent. for the two years commencing 1st July, 1973. For two years it continues at the old rate and then it reduces. The minimum amount which B.C.I.R.A. is required to raise from industry to qualify for Government grant is increased to £225,000 for the year commencing 1st July, 1970, and £250,000 per annum for each of the following years..". Those are the figures given in the Annual Report of the B.C.I.R.A.
If there has been a change, I have not been notified of it perhaps because a communication which might have been sent to me has not arrived on account of the postal difficulties. This is the formation I am working on, and that is the reason why I questioned the hon. Member's observation.

§ Mr. Palmer
I think that that confirms what I said, that there is a drop to 35 per cent. finally.

§ Mr. Osborn
Yes. But on the real issue at stake here, one cannot, at this hour of the night, pursue the philosophy of financing the research associations.

§ Mr. Osborn
The hon. Gentleman can make his own speech. I have had many interruptions.

§ Mr. Griffiths
This is a suitable hour, is it not—namely, midnight—for discussing this industry, which has been the Cinderella of the steel industry for far too long?

§ Mr. Osborn
It is a matter for debate whether the iron industry regards itself as the Cinderella of the steel industry. But I shall not pursue this issue now.
The question which we have to answer as a nation, as others have had to answer 209 it, is how to finance research, and where. I have asked my hon. Friend the Under-Secretary many Parliamentary Questions, and he has given me details of expenditure on grants to research associations in recent years. I take this from col. 194 of HANSARD of 18th January last: in 1966–67, these grants were £3.5 million; in 1967–68, £3.7 million; in 1968–69 £3.7 million; in 1969–70 £3.6 million; and next year they will be £3.6 million. But what is interesting is that expenditure on industrial research and support contracts has steadily increased, rising from less than £1 million five years ago to £4.4 million in 1970–71.
Wishing to have more detail than that, I also asked my hon. Friend how the annual grants for the various research associations had operated in 1969–70, and he was able to give me a detailed breakdown for all research associations. This is in col. 191 of HANSARD of 18th January. The information is most instructive for those who want to see the full picture as it is now. Last year the annual grant to the cast iron industry was £80,405. The grant percentage of industrial income was 40 per cent., but there was also a capital grant of £60,000. I presume that that went into the financing of new building construction. In the Annual Report there is a fine picture of new laboratories, and I have assumed that the capital grant was for this purpose.
If I wished to be awkward, I could quote from what was said by my hon. Friend the Member for Barkston Ash (Mr. Alison) when the levy Order was before the House in 1967. He asked for an assurance that 'scientific research' ensures—probably presupposes—that a lot of this money will be available at the individual plant, and not spent simply on setting up new laboratories and new buildings". The hon. Member for Willesden, East gave an assurance that the money will continue to be applied not just to laboratory work but more essentially to applied science".—[OFFICIAL REPORT, 28th June, 1967; Vol. 749, cc. 707–10.] I think that my hon. Friends were satisfied with that assurance, but we still have to come back to the iron foundry industry, as well as others, and consider how to devise ways of financing their research. It is fair to assume that my hon. Friend will continue the policy of previous Governments to reduce the per- 210 centage grant provided out of public money to research associations. This has been a continuing policy. The original object of grants from public money was to set up research associations. Thereafter by a variety of means, whether through a high rate of levy, or by contract or sponsored research, to an increasing extent they were expected to be self financing.

§ Mr. Osborn
No, I will not give way. The hon. Gentleman has made his speech and interrupted me several times.
We have the problem now among many research organisations of devising means of continuing funds for the essential research, particularly in a basic industry; such as the iron foundry industry. This industry has made proposals to the Government based on two previous Orders. It has asked hon. Members to support these Orders, and I hope that, while hon. Members opposite are entitled—indeed it is their duty—to query the formula for raising the levy and details of the Order, they will accept the fact that the Order is based on agreement between the Government and the industry and will agree to support it.

§ Mr. Albert Booth (Barrow-in-Furness)
There are many criticisms that could be made of the Order. Paragraph 7(2)(b) gives a list of the persons whose emoluments should be taken into consideration to determine the total amount of levy. Strangely enough, included in the persons to be taken into account are those engaged in: activities carried on for the purposes of scientific research and development in connection with the industry. This appears to have the effect of placing a greater levy upon those casting firms which maintain a fairly high level of research on their own account than upon those which carry out no research, which I would have thought was the reverse of what should be done.
There is a more serious difficulty in the way in which it defines what are leviable iron castings. Of the two components used for determining the amount of levy, by far the simpler one to determine should be the weight of leviable iron castings. Paragraph (2) says 'leviable iron castings' means iron castings as fettled, excluding pig iron and and any 211 other cast iron material re-melted or to be re-melted into other leviable iron castings. I submit that this is an impossible definition. No foundry worker can possibly say, at the time that he is making a casting, whether at some time in the future the casting might or might not be broken up and re-melted into another leviable iron casting. With the increasing obsolesence of iron castings it seems highly likely that a fairly high proportion of castings made in the next few years will subsequently be broken up and re-melted. If that is the case, is the Minister seriously suggesting that all of these are to be excluded from levy? I do not think that he can mean this.
The main criticism advanced by my hon. Friends is that this Order complicates the levy system where simplification might be desirable and leaves unchanged or simplifies an area where refinement might be desirable. My hon. Friends have dealt with the complications, the keeping of records and the working out of emoluments. I will turn to the second difficulty; namely, the simplification where refinement is required.
That is to be found in paragraph (7)(b), where the amount calculated at the rate of 4p for every metric tonne of leviable iron castings produced in the relevant production quarter is the formula used. It seems that the crudest of instruments is being used. Consider the man who is casting ballast blocks for cranes. He is putting through a high tonnage by a very simple casting process needing very little research, and yet he is having to pay a higher contribution towards the research levy than someone who is dealing with a highly intricate shape and possibly needs all the research assistance he can get.
Finally, I turn to an aspect that the Minister has not mentioned; namely, the question whether any contribution is to be made by overseas managers of B.C.I.R.A. to the cost of carrying out the research being done. I can mention three firms all based in South Africa which are members of B.C.I.R.A.—Ace Pattern Makers and Founders, African Malleable Foundries, and Central Engineering Works, Johannesburg. Are those being asked to contribute at this rate? Has Parliament any jurisdiction over the 212 contributions of these members—or are British firms and the British Government to help out these South African firms as a form of overseas aid?
The point might be made with a somewhat wider reference to some other firms overseas who are rightly members of B.C.I.R.A., such as Badische Maschinen, in Germany, which carries out some intricate and high quality casting.
My hon. Friends and I have shown that much about this Instrument is open to objection, and unless we have a much more enlightening reply from the Minister I hope that my hon. Friends will divide on it.

Mr. Bruce Milian (Glasgow, Craigton)
I am grateful to my hon. Friends and the Member for Sheffield, Hallam (Mr. J. H. Osborn) for their comments on the Order, which was introduced in an extremely cursory and offhand speech by the Under Secretary. Before we pass it we should have more information about it.
It has been accepted on both sides of the House, as a general philosophy, that we should encourage co-operative research of the kind represented in this case by the British Cast Iron Research Association. It has also been accepted that that research should be financed partly by industry and partly by Government, and that the Government's contribution should be based on what the industry itself contributes. From that point of view I accept the intention of the Order. Nevertheless, when we have a new Order like this, which increases the amount of the levy, we are entitled to expect the Government to indicate what the additional moneys will be used for, and whether the Government are satisfied about the contribution that the association is making.
The Under-Secretary said that the Order would increase the levy from about £209,000 last year to about £300,000, although after the various adjustments have been made in respect of the Government's contribution and so on I gather that the total increase in the association's revenue will be rather less than the figures I have quoted might have suggested. But the Government have not told us why this increase in the levy is required. The Under-Secretary said that he was satisfied 213 that it is required. He may be, but he is under an obligation to tell the House why he is satisfied, and at what speed the activities of the association are to be expanded.
When we pass this Order this evening—as I hope we shall—are we making up for deficiencies in the last two or three years or, in allowing the industry this additional levy, are we allowing it to expand its work into fields in which it is not working at present? Anyone who reads the association's annual report will be impressed by the scale and variety of the activities in which it engages—and we would all wish to support its work. But we require from the Under-Secretary a more precise explanation where the additional money is to go than we had in the jumbled set of figures that we had at the beginning of his speech.
The second thing about which we require a little more information is the change in the formula. Looking at the formula, and comparing the Order with the 1967 Order, it is by no means clear to me why the formula is being changed as it is at the present time. For example, the levy on emoluments is now expressed in percentage terms instead of in per capita terms, and it is also taking in a very much wider range of workers than the 1967 Order.
My hon. Friend the Member for Motherwell (Mr. Lawson) raised a number of pertinent points about this, and it was not clear from the Minister's speech why we should now be moving from the levy based on a comparatively limited and restricted range of workers, which was the 1967 basis, to a levy which is based on a very much wider range of workers, and which might raise, as my hon. Friend pointed out, difficulties of definition and, perhaps, rather greater administrative costs and inconvenience than the 1967 levy. We require some explanation from the Minister on that point.

§ Mr. Eddie Griffiths
Would my hon. Friend not agree that the reason why the Minister was vague on this point was that he is widening the scope of types of employees involved in this levy and doing so to cover up the fact that the number employed in the industry has been reduced considerably in recent years?

§ Mr. Millan
This may well be so, but I think it is only the Minister who can give us the explanation for this. I know, for example, that there has been in recent years very considerable contraction of the industry in Scotland, a matter which worried us very much indeed, though I think it is reasonably stable at the minute; but, again, that is simply confirming the point I have made, that we require rather more explanation from the Minister than we have had so far this evening, and I intend to sit down in good time to give him ample opportunity to clear up these various matters.
The third thing I want to raise with the Minister is this. He said that there had been consultations with the industry, the various representative organisations in the industry as well as the research association itself, but he did not tell us whether the industry was satisfied with the arrangements which are being put forward in this Order. In particular, he gave us no indication, as I recollect, whether the industry had accepted willingly, or had accepted under protest, or not accepted at all, the proposition that after three years commencing 1st July, 1970, the rate of grant from the Ministry to grant-earning income shall be 40 per cent. and then be reduced in the two subsequent years to 35 per cent. We require from the Minister some explanation why that reduction is being made. We particularly require the Minister to tell us whether the industry accepted the proposition which the Government put to it to reduce the grant from the Ministry to the industry.
Finally, and this is very much related to the point I have already made, the Minister said that the present Order was without prejudice to the review which the Government are carrying out of help to the research associations. I do not know what the Minister meant by that. We have been told on a number of occasions that the Government are reviewing the whole field of science policy and particularly Government assistance to research and development whether through Government establishments or through research associations. I have complained before, most recently when considering the Atomic Energy Bill, of the very considerable uncertainty that there is now in industry about Government policy on this matter, and I have pointed out the 215 extreme desirability of the Government's bringing their review to a conclusion, and letting the House and industry know what their conclusions are as soon as they possibly can.
I must say that it seems to me to be no encouragement at all to the British Cast Iron Research Association or to any other of these co-operative research associations—I think there are now 43 of them—to hear this qualifying phrase being put in by the Minister tonight. What exactly does it mean? Does it mean that the Government, having reviewed their policy towards research associations, will conceivably come along in a month or two months' time and say, "We are sorry. This promise we gave you of 40 per cent. grant for three years and then 35 per cent. in the next two years no longer stands, and we intend to reduce it to 25 per cent., or we shall eliminate it altogether"? Or do the promises which have been made to the association stand, regardless of the outcome of the Government's review?
Before we pass the Order we should have an indication whether the Government have taken on a firm commitment to B.C.I.R.A., or whether the commitment is subject to change in the way I have suggested once the review of the research associations has been carried out by the Government.
We have had an extremely off-hand introduction to the Order. I am grateful to my hon. Friends for raising these important points, and I hope very much—in fact I insist—that the Minister in winding up will give us more precise information about the many important points which have been raised.

§ Mr. Ridley
I shall be delighted to try to respond to some of the questions which have been put to me, with the leave of the House, and to deal with them in the way that they were put to me.
The hon. Member for Birmingham, Northfield (Mr. Carter) may be aware that my hon. Friend the Member for Bromsgrove (Mr. Dance) is seriously ill, which is why he is not here this evening. If the hon. Gentleman knew that, the tone of his remarks in relation to my hon. Friend were not well-considered, because he is clearly unable to be here.

§ Mr. Carter
I was not aware that the hon. Member for Bromsgrove (Mr. Dance) was ill. I certainly meant no offence in what I said.

§ Mr. Ridley
I am sure the House will be grateful to the hon. Gentleman for that withdrawal.
I am glad that all the hon. Gentlemen who have spoken in the debate appear to be in favour of the Order. I wondered why so much criticism was brought against the Order when nobody seemed to wish to oppose it.
The main point raised by the hon. Member for Glasgow, Craigton (Mr. Millan) was about what work the research association has been doing and will do, and how we justify this. It is not for me or for any hon. Member to specify exactly what work is being or should be done. This must be a matter for the research association, and I am sure we can leave it safely to the association to decide what work it is undertaking. In the last few years the activities of the association have had to be curtailed and reduced because the value of its income in real terms fell with the declining value of money. I do not think this is what the House would want, and it is not what the industry wants.
As my hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn), said, the industry has been widely consulted on this and supports the proposed level of the income for the research association which will result from the Order and from the Government grant. The association believes it to be necessary for its purposes. The question which arises for the Government, and, therefore, for the House, is whether we are prepared to make available the share from public funds which will result as the percentage of the statutory levy on the industry.

§ Mr. Eddie Griffiths
Is the hon. Gentleman saying that the research association is more than happy with the contribution made by the Government?

§ Mr. Ridley
I am coming to that point. I was saying that the people who will pay the levy are satisfied with the programme of research undertaken by the research association, and I am now 217 coming to discuss the Government contribution about which many hon. Gentleman have raised points, particularly the hon. Member for Motherwell (Mr. Lawson).
Let me give the facts of the matter first. The Government's contribution has been negotiated for a five-year period, from 1970–71 to 1974–75. During the previous five years the grant was at 60 per cent. It is now at 40 per cent., and it is proposed to be at 35 per cent. for the next quinquennium, after 1973–74. This is not part of any policy change caused by the present Administration. It is part of a continuing pattern of reduction of Government contributions to research association funds which was started under previous Administrations and supported by the last Government just as it is by this Government. The maximum that the Government will provide in this quinquennium is £140,000 per annum. The cost is expected to be £120,000 in the next financial year, so it would take a very marked expansion of activity in the industry if we were ever to reach the maximum. The statutory control of the House over this expenditure is the limit of £140,000 built into the Government's liability to this particular association.
The Government are not bound to provide this money under any legal obligation. It is merely an agreement between the Government and the association. It could, without anything being wrong at all, be varied upwards or downwards in years to come.
I was asked whether the industry has accepted the drop in the percentage grant from 40 to 35 per cent. at the end of the present quinquennium. It has accepted it. Nobody likes to see his Government grant being cut, so it can hardly be said that this has been welcomed with open arms. But it is well known that all Governments have had a policy of reducing Government contributions to research associations, and this forms part of the normal pattern which both parties have supported and which this Government continue to support.

§ Mr. Dick Douglas (Clackmannan and East Stirlingshire)
This is an extremely important research association to Scotland. Would the hon. Gentleman look at this relationship anew? He will 218 readily agree that in the casting industry the value of the castings is going up while the tonnage is going down, and the number of employees is going down. The basis of calculation in the Order does not strike me as being valid into the mid-1970s and 1980s. In considering the method of calculation, has the association examined the formula that assesses the contribution from the industry on the basis of a percentage of sales rather than a percentage of tonnage?

§ Mr. Ridley
I am coming to the method of calculation, but I must deal first with the Government's review of research association policy.
We are aware that uncertainty is not helpful, and are pressing on as fast as we can. The Government are conducting a thorough-going review of the whole of their attitude towards research associations, and, therefore, we do not want to upset the agreed and accepted method of carrying on at present. We shall consider what our policy should be, and when the review has been concluded we shall announce the results in the House.
The hon. Member for Motherwell asked about machinery for calculation. It is unchanged by the Order. The Department will still calculate the amount in exactly the same way as before. The collection costs about 4 per cent. of the proceeds of the levy, and we do not expect that percentage to vary. It is paid directly over to the research association by my right hon. Friend's Department.

§ Mr. Lawson
The method of checking the continued accuracy of the contribution is much more involved. Would the hon. Gentleman explain how this is done?

§ Mr. Ridley
I want to deal with this. First, on the definition point of what are emolument——