HC Deb 16 July 1980 vol 988 cc1717-28

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

2.20 am
Mr. John Butcher (Coventry, South-West)

A few moments ago, my hon. Friend the Member for Norfolk, South-West (Mr. Hawkins) said that the British should be dragged into the twentieth century. There is some irony in the fact that we are discussing at 2.21 am a subject which is relevant to the ninth decade of the twentieth century because our charming and traditional idiosyncrasies dictate such strange rituals.

I am delighted to have the opportunity to raise the subject and I start by recording my appreciation of the contributions made to the debate on the subject outside the House by the Advisory Council for Applied Research and Development, the Parliamentary Computer Forum, the United Kingdom Information Technology Organisation—UKITO—the officers and staff of the Department of Industry, particularly Mr. Ray Atkinson, and not least to my hon. Friend the Under-Secretary who is being kept from his bed to answer the debate when he may feel that he has already contributed to debates on the subject ad nauseam over the past few days.

I declare an interest, because I have worked in the computer industry for 11 years and am still associated with it, though I assure the House that the topics that I have selected for conspicuous mention in the debate are projects with which I have no direct connection.

The subject of the debate is public purchasing policy for the information technology industries. I should refer briefly to an aspect of research and development for public purchasing which has been vividly and efficiently described in an ACARD report "R and D for Public Purchasing". Paragraph 7.7 reads: We recommend that the Government should review the balance between the R and D carried out by purchasers and that by suppliers in each industry where public purchasing decisions have significant influence". Paragraph 7.11 reads: the Government should consider how the expertise of public sector R and D establishments may be effectively marketed abroad, without, adversely affecting their support for United Kingdom industry or its competitive position. Paragraph 7.14 reads: We recommend that public purchasing organisations should review their arrangements for administering R and D contracts in order that the maximum benefit is obtained for their industries from the contracts placed. Paragraph 7.17 reads: We recommend that public sector organisations with significant purchasing programmes should, where they have not already done so, establish central units to increase the benefits to industry of their R and D and purchasing programmes, particularly in regard to exports. I hope that we shall examine the whole aspect of information technology, the broad range of all those products that we describe under the titles mainframe computers, software, bureau services, telecommunications, minis and microcomputers.

I suppose that the debate is highly topical, as there is some controversy surrounding the placing of a contract for a large mainframe and telecommunications system for the inspectors of taxes. I am sure that my hon. Friend will understand that I must consider this matter as sub judice. I am aware that that debate will probably reach a conclusion in the not-too-distant future.

I am sure that the Government recognise that information technology is an industry of strategic importance, and that perhaps a public purchasing policy could be a better form of aid, as opposed to direct investment, but it should certainly be complementary to investment decisions. Support for British industry must also be borne in mind, but only to the extent that it becomes more competitive and develops export potential. It would be helpful if my hon. Friend could give a definition to those outside the Chamber of what "British" means in the context of information technology products and services. Does it mean a British-owned company, a company where there is a significant production element in the United Kingdom, or a company that is a net contributor to our positive balance of payments in this product range?

A policy on public purchasing should also take account of the growing nationalism and protectionism in this sector, but it must recognise that our major markets are still in the developed countries, and that therefore we cannot simply pursue our self-interest.

We shall shortly have to cope with new EEC and GATT regulations. Although there are restrictions on the level of open tendering—or, rather, there is an exhortation for open tendering in the majority of cases—a case is being made under the GATT and EEC regulations for exclusion clauses for single tendering. These are: For additional supplies requiring inter-changeability with existing equipment. Where prototypes or products are for research, experiment, study or original development in the absence of tender procedures For unforeseeable reasons of extreme urgency Where the products can only be provided by one supplier because of exclusive rights or where no alternative exists". I should like to look at three products or services where I believe a public purchasing policy could be of invaluable assistance to our domestic industry. The first is viewdata, which is an excellent example of co-operation between the public and the private sectors. We have established a lead in Britain, producing a product which is more sophisticated than the French, but which still has a simplicity of operation compared with the French equipment. Viewdata offers easy user access, easy amendment and easy handling of data. In other words, it is what we call a "user—friendly system", which can take decisions in real time in one place in order to carry out decisions in another place. For the first time the general population can use a database and interact with it.

The implications for industry and commerce are massive. Decisions can be taken on moving goods straight from the factor to the consumer. This will have big implications for the distributive trades.

In the public sector, particularly in the public administration of the United Kingdom, a number of application areas can be suggested. My hon. Friend the Minister for Housing and Construction recently shepherded the Housing Bill through the House. I know that he is interested in the mobility of labour and in the flexible use of our housing stock. He might be interested in a register of council properties so that exchanges could be facilitated between tenants living in the areas of different local authorities. There could be a closer exchange of information between the town hall and the tenant and between local authority and local authority.

My hon. Friend the Under-Secretary of State for Education and Science—the Member for Sutton and Cheam (Mr. Macfarlane)—has taken a great interest in the facilities that can be offered by terminals and a viewdata type of equipment to assist us in areas of shortage, particularly of maths and science teachers. Programmed learning schemes using these devices could give a teacher an analysis of the weaknesses of a particular pupil and perhaps allow the teacher to concentrate on problem children.

Looking at public utilities, we see an excellent example in the Sealink booking service. I hope that other public utilities will follow this example. But Government Departments generally are in the business of assembling, distributing and processing information and I am sure that there are many applications inside our public utilities and administrative departments which would lend themselves to this particular form of dissemination of information. In dealing with viewdata I pay tribute to British Telecom and hope that it will continue its admirable campaign of promoting this product. I make a special plea that the Post Office should assist industry outside by the mass purchasing of viewdata adaptor kits and renting them out to the general public and business markets.

Fibre-optic cabling is a second project which I think is worthy of our consideration this evening. This is a product which is comparable, and in some cases superior, to those of our foreign competitors. We have developed, in co-operation with the Post Office, facilities to transmit data at eight, 34 and 140 megabits per second. I am delighted that British industry has seized this opportunity.

Such co-operation is highly commendable but there is a danger that, though initial costs have been incurred, research and development work done and prototype production facilities built, we might not sustain the level of orders for this type of cabling in order gradually to reduce production costs and keep together the teams of experts in the supplier companies.

I hope that my hon. Friend will consider the requirements of the police and British Rail in relation to telecommunications services. British Rail may need a form of cabling immune from interference from the electricity supply on its electrified services. The police may greatly welcome their own secure circuits.

My third candidate for special examination is the system X telephone exchange. Here I must declare an interest, in that this device is manufactured and has been developed predominantly in Coventry. System X is more than a match for foreign competition. It incorporates the latest techniques in digital switching, full store programme control, common channel signalling and VLSI circuits. I believe that orders have been placed for 16 exchanges and the first installation in London is progressing satisfactorily.

The price of this first generation of system X exchanges is comparable with existing electro-mechanical exchanges. We have, therefore, reached the crucial stage where forward orders will need to be placed for the second generation. As with fibre-optic cabling, the Japanese are preparing for an aggressive world-wide marketing operation and it is at this stage that I wish to examine the common themes that emerge from an analysis of the dilemmas facing those whose responsibility it is to place orders for these three products and, indeed, for the whole range of information technology devices which are manufactured in the United Kingdom.

First, research and development should not be financed for its own sake or purely for domestic demand. It should be financed for products that are exportable. Secondly the build-up of orders should be gradual and should not follow an erratic pattern of batches of orders. Thirdly, public corporations and Government agencies should be understanding when the supplier is forced at short notice to switch products to the export markets. I have more than a tiny suspicion that this is precisely what the Japanese do when, in spectacular fashion, they get their products to their customers very quickly indeed, and very rapidly after initial development has taken place. Fourthly, if purchasing contracts do not follow the research and development and prototype phase the enthusiasm and expertise within supplier companies may be dissipated.

The Department of Industry has a significant role in co-ordinating the whole of the public sector, not only Government Departments. There must be a pooling of information, a monitoring of performance under GATT and EEC regulations and strategic advice on the best methods of promoting the interests of British information for the British information technology industry.

I hope that the Minister will consider a revamped CCTA. I hope that that, incorporated in the existing structure in the Department of Industry, will assist the Secretary of State and his colleagues in their decisions. I do not agree with some of my hon. Friends that there should be a special Minister for information technology.

An enlightened public purchasing policy should take cognisance of the strategic importance of information technology, particularly as it relates to defence and telecommunications. It is in the front line of the prospects of our whole industrial and commercial future. Our purchasing policy must be in the full glare of the scrutiny of the Public Accounts Committee. That means that occasionally we must be prepared to make mistakes. The Post Office and officials in Government Departments might be tempted to believe that no decision is better than a wrong decision. Advancement to many in the public service often goes to people who make the fewest mistakes.

Enlightened purchasing should be Government policy. It can take place within cash limits, provided that the limits do not impose sudden peaks and troughs in the orders placed. Enlightened purchasing can take place within the overall strategy of reducing public expenditure. The use of the products of information technology can assist us to stabilise current costs of administration and to make better use of the time of our public servants, particularly those who distribute and administer the so-called social wage.

When a world mini-recession is looming, and when our domestic economy is going through a period of retrenchment, I hope that the Minister will see this issue, as he might see the whole of public purchasing, as one on which we must maintain courage in order to continue our capital investment programmes. We must reject the easy option of capital investment programmes while the costs of public adminstration remain obstinately high.

2.37 am
The Under-Secretary of State for Industry (Mr. Michael Marshall)

I am grateful to my hon. Friend the Member for Coventry, South-West (Mr. Butcher) for raising this important topic. It follows the debate last Friday, in which my hon. Friend took a notable part, as did my hon. Friend the Member for Fife, East (Mr. Henderson), who is present.

I want to avoid covering the ground covered last Friday. My hon. Friend raised a number of new topics which I shall study. I appreciate the way in which he put his questions, especially in regard to the timing of the debate and about the Inland Revenue PAYE computer. That matter is sub judice. We are hoping to see in the ACARD report evidence of an independent review which will be published later.

My hon. Friend talked about the British definition. That raises a difficult question. I spend much of my time trying to attract inward investment to Britain. On Friday I was able to say that the substantial capability in the production of the standard microchip will be largely underpinned by the inward investment which has been achieved in recent years by bringing multinational companies into the country.

My hon. Friend will appreciate the balance that must be struck in treating companies as being on all fours. I regard companies which employ British workers in this country as British operators. To be more discriminatory would be self-defeating. My hon. Friend singled out a number of cases that he suggested called for special examination. I shall turn to those later.

I reiterate that, although information technology is relatively new, major elements—namely, computing and communications—have been with us for a long time. The current interest has been sparked by an increasing awareness of the role of information in industrial and economic matters and by the circumstances of the advances in microelectronics, which have enabled the necessary information, storage and handling equipment to be produced at relatively modest costs and in small convenient sizes.

There are many—doubtless there will be more—who call for Her Majesty's Government to do more to promote the development and expansion of all facets of information technology in the United Kingdom. They point, as some hon. Members did last Friday, to the activities of countries such as Japan and France. I repeat the argument that I advanced on Friday, that in a number of instances comparisons need to be made very carefully. The French "telematique" programme is often pointed out in admiring terms. I quite agree. However, I repeat that from a relatively low telecommunications and computer base the French authorities have embarked on a substantial development programme.

It is essential that we do not sell ourselves short, especially to others. That is why I welcome my hon. Friend's three special cases. In the United Kingdom we have significant developments going on in most of the principal component areas of information technology, even if we do not lump them all together and invent a new heading for the activity. I give some general examples. Very substantial Government support has been provided for development in the microelectronics industry and in the promotion and utilisation of microelectronics in industry. Industry schemes exist and are used for the development of the hardware and software needed in information technology. But calls for greater Government investment and procurement should bear in mind the very substantial investment programmes of the Post Office, amounting to about £1.5 billion over the next three years in improving and modernising our national telecommunications network, introducing packet switching and applying fibre-optics. We should make adequate recognition of the very significant expenditure incurred by the Post Office in the development of the world's first public viewdata system, still the only public system operating today.

The development of Ceefax and Oracle by the BBC and IBA in many other countries would be pointed to as an example of the coherence of the public programme on information technology which had been consciously adopted. I shall come back to some of these achievements later in my speech if I have time to do so. What I wish to emphasise, however, is that public purchasing and support have already had a substantial effect on the development in the United Kingdom of an infrastructure to enable advantage to be taken of the advances which are being made in information technology. It will continue to do so, for we have already made clear our commitment to the role of public procurement and the use of Government purchasing power to increase the efficiency and competitiveness of United Kingdom suppliers and manufacturers. I know that my hon. Friend has received that assurance directly from the Prime Minister.

Industry will have to play its part. It will have to co-operate with purchasers and provide the required goods to the required standards at the required time and at competitive prices.

I turn to the specific cases to which my hon. Friend referred, namely, viewdata, fibre-optics and system X. There is one area in which Britain has pioneered not only the invention but the development and marketing, and that is in viewdata. Teletext, the service broadcast by the BBC and IBA, is now received by about 75,000 TV sets, and there should be nearly double that number in use by the end of the year. As I have mentioned already, in many countries investment by BBC and IBA in such a service would be counted as Government investment.

The Post Office's Prestel service, operated by television sets linked to telephones, is now received by nearly 5,000 customers. It is still the world's first and only fully public viewdata service operating via the ordinary telephone. The public sector, through the Post Office, has made a very large investment in Prestel and computers are already installed in London, Birmingham, Nottingham, Edinburgh and Glasgow. Industry is responding to the challenge of the new services and new markets: almost every week new viewdata products are announced. Prestel itself has now been sold to Holland, Switzerland, Germany, Austria and Hong Kong. Within central Government we are pioneering the use of Prestel-type viewdata for disseminating information to the public, and for internal use within Departments. My Department—I think that this is in accord with what my hon. Friend suggested—has commissioned a feasibility study for a pilot scheme of 30 to 40 terminals, designed to improve the collection and retrieval of information by divisions at different locations inside the Department. I am sure that internal viewdata systems such as we envisage will play a major part in introducing the system to the office of the future, and we in Britain are world leaders.

Already our intention to operate a pilot system has attracted much interest and attention from industrial companies in this country. Other ways in which my Department is assisting in the promotion and development of Prestel include the support of a programme by the Ministry of Agriculture, Fisheries and Food to provide an up-to-date agricultural information service to farmers in support of a British Library programme for the use of Prestel in public libraries. There are a number of other examples I could quote, all of which are indicative of the action which the Government are taking to stimulate, by example, the development and wide utilisation of a key activity in the information technology sector.

I turn to system X. As my hon. Friend has remarked, one of the most striking influences on the development of information technology will be the introduction of system X and the creation in the United Kingdom of a fully digital telecommunications network. This will permit the high quality transmission and switching of speech, data, and telex on an integrated system throughout the country. It will enable a wide range of the most advanced electronic attachments to be connected to the network and intercommunicate at great speed and reliability. Telephones, teleprinters, computers, viewdata sets, and so on, will use the same network.

This digitalisation of the network is just commencing. Already a system X exchange is in process of installation in London. Reports are that it is proceeding very smoothly and, I believe, ahead of schedule. Later this year another system X exchange is to be installed in Woodbridge, Suffolk, and this is to be followed by another dozen or so exchanges over the next two years. I was present last year at the Telecoms 79 exhibition in Geneva at which system X was unveiled and can confirm from personal experience the world-wide impact it made on that occasion. We have a splendid new product and over the next few years I hope to see it make its impact not only in the United Kingdom but in export markets worldwide.

I turn now to fibre-optics. Hon. Members are aware that the United Kingdom, in common with the majority of the PTT's post and telecommunication departments of the other industrial nations, is installing fibre-optic units. By 1982 we shall have 450 route kilometres operating with data rates up to 140 megabits per second. Plessey, GEC and STC are active in this area and clearly there are significant markets for fibre-optics in the telecommunications sector, particularly in the main trunk routes, submarine routes and in switching facilities.

In this sector we rank alongside or above most of our colleagues in Europe, although compared with the United States and Japanese positions Europe is coming from behind. Overall, however, the market is developing more slowly than was predicted and, although a number of sectors have been identified which might benefit from the use of fibre-optics, the number of trial systems and implementations have been small. One example of how the Government can help in this area is the case of British Rail. Again, I have noted my hon. Friend's comments about the opportunities for co-ordination in these areas.

British Rail is one of many nationalised industries for which fibre-optics could be of great future value for data transmission but for which conventional systems are still adequate and involve no development costs. By helping British companies with some of their development costs the Government have made it possible for them to offer British Rail a fibre-optics system in which these development costs are spread between the three parties. This should create a technology shop window for the rest of the world. The alternative would have been to use conventional technology and wait until developed systems became available in a few years from overseas.

I am sure that my hon. Friend will recognise that in this way and in the other examples that I have quoted a good deal of work is going on. I certainly appreciate the opportunity that he has given by raising the subject tonight for me to expand on these matters in more detail. Certainly these are a number of examples of the role of collaboration between the Government and the public and private sectors on which my hon. Friend has invited discussion.

The House certainly appreciates my hon. Friend's interest and knowledge, and I am grateful for the opportunity we have had to look once more at a subject that will continue to be debated here. It is a matter which is not easily resolved in a short debate such as this, but because we have had an opportunity to expand in particular on the three areas that my hon. Friend highlighted I certainly feel that they show that in this country work is under way which is not just of short-term importance but which will have a long-term impact. It is work that brings together not only the work of my Department but that of a number of other Departments. I shall certainly want to reflect on a number of my hon. Friend's suggestions—

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at ten minutes to Three o'clock am.