HC Deb 29 June 1976 vol 914 cc343-8

10.31 p.m.

The Under-Secretary of State for Industry (Mr. Les Huckfield)

I beg to move, That the Iron Casting Industry (Scientific Research Levy) (Amendment) Order 1976, a draft of which was laid before this House on 8th June, be approved.

Mr. Speaker

Order. I will allow two minutes for the Chamber to empty of those hon. Members who wish to leave.

Mr. Huckfield

Thank you, Mr. Speaker.

The purpose of the Order, which my right hon. Friend the Secretary of State for Industry proposes to make under Section 9 of the Industrial Organisation and Development Act 1947, is to amend the Iron Casting Industry (Scientific Research Levy) Order 1971 so as to increase the income of the British Cast Iron Research Association. The existing Order imposes a levy on the iron casting industry to finance scientific research carried out by the association. The proceeds of the levy will continue to be collected by my right hon. Friend and then released against the association's expenditure on scientific research.

The performance of the iron foundry industry is crucial to the success of British manufacturing industry generally. Iron castings are used in nearly all industries, and the availability of castings in the right quantity, at the right quality and price, is of importance to all the consuming industries and to the economy generally. It is for these reasons that ferrous foundries were one of the areas selected for attention as part of the Government's industrial strategy and were also provided with a scheme of assistance under the Industry Act 1972.

The activities of the British Cast Iron Research Association must be seen against the background of the iron foundry industry. Many companies are small and unable to support their own research activities. But they are nevertheless of vital importance to their customer industries. The British Cast Iron Research Association provides the whole of the iron castings industry with a wide range of services which include general scientific research, contract research, and consultancy and advisory services. An increase in the association's income is required merely to enable it to maintain its existing programme of work.

Apart from that, recent legislation on environmental and health and safety matters will impose significant additional requirements on the industry, and the association has therefore embarked upon an increased programme of work in these fields to help the industry to meet in the best practicable way the future demands placed upon it.

The association has, of course, examined its expenditure very closely, and is seeking economies wherever possible. It is also making every effort to increase receipts from sources other than the levy. It is quite clear, however, that unless the levy is increased the association will have to cut back all parts of its planned programme of work, and the whole industry will be placed at a further disadvantage.

The new Order proposes an increase in the levy on emoluments from 0.14 per cent. to 0.15 per cent., and in the levy on production from 4p to 11p per tonne. It is estimated that the annual yield of the increased levy will be about £660,000 compared with the present yield of about £420,000. The Order also makes provision for the rate of levy per tonne to be automatically adjusted annually. It is proposed to do this by linking the tonnage levy to the index of wholesale castings prices published by my Department in Trade and Industry. In preparing the draft order, we have consulted representatives both of the industry and of the workers in it and have received a wide measure of support for the proposals, which I invite hon. Members to support.

10.37 p.m.

Mr. Michael Marshall (Arundel)

I thank the Under-Secretary for the way in which he has introduced the Order. He has given us a clear statement of the situation, and because of our understanding of the industry's thinking we do not seek to oppose it. But we would like the Minister to tell us precisely what are the views of the industry and of the Department about the present situation. I accept that this could involve questions which the Minister might find it difficult to answer in full. Perhaps he will write to me if any matters arise which are outside his knowledge.

The hon. Gentleman said that there was general satisfaction within the industry. I take that to mean among the management and on the shop floor. It is important to relate the Order to the general issue of the industry's future and its relationship with the Government. The iron castings industry is an important part of the industrial scene. The preeminence of the industry's technology is not widely understood in the House or outside. One has only to highlight the construction of tunnel segments and the way in which the construction of underground railways was pioneered in this country to recognise the importance of the industry. It has, therefore, a number of opportunities in this country and for exporting.

It would be helpful for the Minister to say more about how the industry stands and the way in which its research and development is likely to impinge on its future activities. The background information made available from the Department of Industry refers to research in terms of the environment, health and safety, but it does not seem to touch on research and development in the pure industrial sense. Any information which the Minister can give about the way in which the broad activity of research and development is carried out within those main headings will help our understanding.

The hon. Gentleman referred to the satisfaction of the industry as a whole about the proposed arrangements. Are there any differences of view within the industry? Any of us who have had knowledge of the industry in the past must recognise that there are large and small iron foundries and that a levy based on levels of employment and levels of output could in some cases work to the disadvantage of some of the small companies in the industry, which may sometimes feel that they are in a less flexible position than some of the larger producers.

What assessment has the Department made of the value of work which has been undertaken by the British Cast Iron Research Association? How far does this work fit into the Government's thinking in terms of their overall relationship with the industry, which we see at its most obvious in the ferrous foundries scheme.

Finally, will the Minister comment on the NEDC review of the industry? Presumably that review will have its impact on research and development, as indeed it will on many other areas within the industry.

10.42 p.m.

Mr. Les Huckfield

I shall do my best to reply to some of the very important points that the hon. Member for Arundel (Mr. Marshall) has raised. If I cannot succeed in answering all of them, I shall write to the hon. Gentleman giving information on the points I have not answered.

The hon. Gentleman asked particularly about the reactions of the industry and the consultations that my Department has had. We have been through a very wide-ranging series of consultations. We have been in touch with the Council of Iron Foundry Associations, the British Iron-founders Association, the British Cast Iron Research Association, the British Steel Corporation and the Confederation of Shipbuilding and Engineering Unions. I hope the hon. Gentleman will recognise that most of those have said that they support this levy increase and its purposes.

Apart from that, I think the hon. Gentleman recognises that there are some 40 different members of the association's governing council, and they have their views and their ways in which they can express their views. They represent a very wide strand of opinion and interest within this part of the industry.

Mr. Michael Marshall

I do not wish to be difficult about this, but the Under-Secretary mentioned that most of the related outside organisations were in favour of the levy. I want to be quite clear. Is the hon. Gentleman reflecting a majority view or saying that overall there has been no voice of dissent?

Mr. Huckfield

If the hon. Gentleman has done some research, he may have discovered for himself that the British Steel Corporation was in some doubt over this increase, but has, with the other participants and members, accepted it.

The hon. Gentleman asked about the activities of the association and what the money would be used for. As he probably knows, the association serves the iron-founding industry as a centre for research, development, technical advice and information. Its investigations and advisory services cover the whole field of iron castings production, including raw materials, production processes, plant and equipment, control and instrumentation, operating economics, working conditions and environmental aspects, applications and service properties of iron castings. That is a fairly wide range. As I said, the association is up to date on these activities continuously, particularly in the light of some of the recent health and safety at work and environmental legislation.

The hon. Gentleman asked me about differences of view within the foundry industry. He knows that foundries are of diverse size. I have told him that the British Steel Corporation initially had doubts but, of course, has now accepted the increase.

As to the question of the little NEDC review, this was very much borne in mind when my right hon. Friends the Secretary of State and the Chancellor of the Exchequer decided to make the ferrous foundries industry one of the selected areas of industry to which we wanted to give particular attention. Many of the developments in the scheme, which has now been going for some time—the closing date for applications will be the end of this year—were inaugurated after the findings of the NEDC report were received.

The marrying or harmonising efforts of the association and the ferrous foundries scheme are carried out by the close contact that the Department maintains with the association and in the way in which my Department has been monitoring applications and the grants which it has been making under the scheme. I assure the hon. Member that close contact is being maintained between the research association's activities and the possibilities under the ferrous foundries scheme.

I have tried to answer some of the hon. Member's questions. I hope that if he has others he will not hesitate to get in touch with me now or at some other time. The association is doing valuable work. It needs an increase in the levy to continue its existing work and to do much important work in future.

Mr. Michael Marshall

The Minister has tried to answer a number of my points, but he has reminded me of another question. I hope that he can answer it briefly. Is any work being done in the EEC with a view to cooperative research? This seems to be a direction in which the association might wish to move into broader areas to improve unit costs.

Mr. Huckfield

Of course, the association is anxious to look towards any avenue which may produce operating economies. It is an association which gets its income not solely from levy but from consultancy services also. I shall look in greater detail at the point about potential economies by co-operation on a European basis and write to the hon. Gentleman.

The increase in levy is necessary to enable the association both to continue its important activities and to extend its scope and keep abreast of modern legislation and its future effects for the ferrous foundry.

Having said that, I hope that the hon. Member and his hon. Friends will feel able to accept the Order.

Question put and agreed to.

Resolved, That the Iron Casting Industry (Scientific Research Levy) (Amendment) Order 1976, draft of which was laid before this House on 8th June, be approved.