HC Deb 03 July 1972 vol 840 cc34-40
The Minister for Industrial Development (Mr. Christopher Chataway)

With permission, Mr. Speaker, I wish to make a statement about Government support for International Computers Limited.

The Government have discussed with ICL, in the light of the report of the Select Committee on Science and Technology, the finance required for the company's R and D programme. The Government believe that the capability to develop, manufacture and market computer systems which ICL represents should be maintained in this country so that the company can play its part in a strong industry in Europe.

We have agreed, therefore, to provide the support of £14.2 million during the period up to September, 1973, for which the company has asked in order to maintain the momentum of its R and D programme. The Government are in touch with the new management about the company's long-term needs.

Mr. Benn

I am grateful to the right hon. Gentleman for that statement, though to confer £14 million of public money in a statement of 130 words leaves some questions to be asked; and I want to put them.

Will the Minister comment on the discrepancy between the £50 million which the Select Committee recommended and the sum arrived at? In what form is the support to be given? Is it to be given in equity or by loan or by grant? Is the Government director to remain on the board?

Under what powers is the money to be given? Is it to be given under the Industry Bill; and, if so, under what Clause? Is it the Clause that expires at the date of the transitional period for entry into the Common Market?

Do the Government intend to publish comparable figures to those which were published in 1968 when the original support was brought forward? Will there be any provision for parliamentary approval, as there was under the Industrial Expansion Act? Under what conditions has the money been granted? Does the phrase "a strong industry in Europe" convey, as would appear, a total rejection of an American take-over for this company which has been much speculated upon? Does it contain a condition that the company must merge with European computer companies?

Finally, do the Government intend to make any statement about the 20 recommendations of the Select Committee on the Computer Industry dealing with public purchasing policy, with the establishment of a computer purchasing board with preference for British computers, with the establishment of a research and development board, and with the need to publish much more information, in contrast with the brevity of the statement made today?

Mr. Chataway

The right hon. Gentleman asked, first, whether this sum was sufficient, and he referred to the recommendation of the Select Committee that £50 million a year should be granted to the computer industry. The company has asked for support for its R and D of £14.2 million to September, 1973, and the Government are satisfied that this is justified.

The finance will be made available under Clause 8 of the Industry Bill. The intention is that the £14.2 million provided in support of the research and development of the company will be recovered by a royalty on subsequent sales or a levy on profits. In this we are following past practice.

The right hon. Gentleman asked about the approach from Burroughs. The company has had discussions with a number of companies in the past and would no doubt consider any association that might strengthen its commercial position, but the Government's view is that any possible association with an overseas firm should provide for the maintenance of a substantial computer research and development, manufacturing and marketing capability, controlled in this country. The Government are not making it a condition of support for ICL that it should arrive at a merger with other European companies, though the Government take the view in this, the Government give the company their full support—that close co-operation with European companies must make sense.

Mr. Neave

I welcome my right hon. Friend's statement so far as it goes. However, when does he intend to deal with the far more fundamental issues raised by the Report of the Select Committee as to the long-term health of the industry? For instance, does he intend without delay to abolish single tendering?

Mr. Chataway

I am very much aware that there are issues raised by the Select Committee on which the House will wish to have further reactions from the Government. My hon. Friend knows that statements have already been made by the Government on support for the software industry, on the setting up of the Central Computer Agency, and a number of other matters which deal with recommendations by the Select Committee. The Government intend that the arrangements for public purchasing, which were announced in March last year, should continue for the present. I hope that a further announcement giving the Government's response to the remaining recommendations of the Select Committee will be made in the near future.

Mr. Kaufman

Is the right hon. Gentleman aware that in the North-West ICL is synonymous with West Gorton, in my constituency, where the company has its headquarters? Will he assure the House that the welcome announcement he has now made will set ICL on a course which will prevent any further redundancies at West Gorton of the kind which have greatly distressed my constituents and other people in the Manchester area?

Mr. Chataway

ICL is unquestionably one of the leading computer companies in Europe. It is, in fact, the only computer company which has won a larger share of its home market than IBM. Clearly, this is an important national asset. I cannot give the hon. Gentleman any categorical assurance about future levels of employment. That, clearly, would be a matter for the company.

Sir R. Cary

Will my right hon. Friend's announcement be helpful to individual computer centres such as Manchester College of Science and Technology? We must have a thriving computer industry in this country.

Mr. Chataway

I believe it will be helpful. I agree that it is very much in the interests of computer users in this country that there should be a healthy British computer company.

Mrs. Shirley Williams

As another Member for whom ICL is one of the largest employers in a constituency sense, may I ask the right hon. Gentleman, first, to be more clear about what he means by the continuation of the present tendering arrangements "for the present"? He must be aware that the computer industry has found the "Buy British" policy very significant as a form of support. Secondly, will he tell us about his intentions beyond 1973? As he will appreciate, launching aid for research and development makes sense only on a long-term programme. A one-year programme alone will not create much confidence in the British computer industry.

Mr. Chataway

I accept what the hon. Lady has said about the importance of the longer term. As I mentioned, we are in touch with the company about its longer-term needs, but it was more concerned at this time with its research and development until September next year. The Government's procurement policy at the moment includes single tendering primarily wth ICL for large and associated computers. The details were given by my hon. Friend the Under-Secretary of State in March last year. We are looking at a number of the Select Committee's recommendations. The Government's present intention is that that policy should continue.

Mr. John Hall

May I ask my right hon. Friend, first, whether the royalty is to be paid on all sales or only on sales arising out of equipment derived from the new research and development? Secondly, following the question asked by the hon. Member for Hitchin (Mrs. Shirley Williams) will he give the House some idea of the long-term research and development projects of this company, because it is inconceivable to me that it could stop at £14.2 million? [Interruption.] That is likely to be only for the first year, and it is unlikely that sales will generate enough funds to maintain that research and development without considerable additional help. Will he give some indication of what that is likely to be?

Mr. Chataway

My hon. Friend is right I do not know why it should give rise to ribaldry that a company engaged in advanced technology of this kind must have a long-term research and development programme. For that reason I made it clear in my statement that we are discussing with the company the nature of that programme beyond 1973. I will certainly inform the House as soon as we have a clearer picture of that aspect.

My hon. Friend asked about the exact naure of the recovery of the £14.2 million. We are still negotiating with the company whether it should be recovered by means of royalties on subsequent sales or by a levy on profits. In either eventuality, it would be related to the research and development for which this money is given in support.

Mr. Strang

While welcoming this necessary help for ICL's research and development programme, may I ask the Minister to bear in mind that ICL is not the whole British computer industry? Is it the right hon. Gentleman's intention to make a full statement in the near future outlining the Government's comprehensive reaction to all the proposals of the Select Committee? In particular, may we look forward to substantial assistance for other sections of the British computer industry?

Mr. Chataway

I entirely appreciate the hon. Gentleman's point. The Select Committee's recommendations go beyond the needs of ICL. I hope to be able to make a statement on those recommendations with which I have not dealt this afternoon.

Mr. Edward Taylor

Does my right hon. Friend agree that, while his statement will be greatly welcomed by ICL and those who work for it, he must bear in mind in future that many foreign-owned computer companies which employ substantial numbers of people, particularly in Scotland, are facing a difficult situation because of apparent discrimination against foreign companies?

Mr. Chataway

We very much welcome the presence of American computer companies in this country. My hon. Friend is absolutely right. Honeywell and Burroughs and a number of other companies make substantial contributions, particularly in Scotland. I accept that the policy pursued by the British Government must be fair to them.

Mr. Benn

Is the right hon. Gentleman aware that the House will want to debate this matter more fully: first, to consider whether the scale is adequate compared with the needs; secondly, to consider what guarantee there can be of continuity of support, as he has chosen a Clause in the Industry Bill which expires in 1977; and, thirdly, to consider why the Government should not have adopted the policy of the Labour Government that when research and development aid on this scale is to be put up it should be in the form of equity specifically authorised by Parliament? Will he ask his right hon. Friend the Leader of the House to provide time quickly to allow his statement and the long and detailed report of the Select Committee to be debated?

Mr. Chataway

The question of a debate is not for me. Concerning Clause 8 of the Industry Bill, we are intent upon ensuring that there is continuity and certainty. By putting a date into that Bill, as my right hon. Friend the Secretary of State has previously explained, we are giving an assurance that these arrangements will be maintained for some time.