HC Deb 28 April 1983 vol 41 cc1006-14 3.59 pm
The Secretary of State for Industry (Mr. Patrick Jenkin)

The Alvey committee was set up last year at the request of the information technology industry to investigate the scope for a collaborative research programme in advanced information technology, sometimes, not wholly accurately, called fifth generation computers. That was done in the light of mounting concern in the industry at the increasing threat of overseas competition. I am most grateful to the committee for its extremely valuable report. After detailed consultations with industry I am now able to announce the Government's response.

The future competitiveness of our IT industry is a subject to which we attach the utmost importance. The report outlines the key enabling technologies in which the IT industry must maintain and strengthen its competitive position in world markets. Its theme is the need for collaboration between industry, academic institutions and other research organisations in order fully to mobilise our potential in those technologies. The task is beyond the resources of any single enterprise. The central purpose is to pave the way for IT products, IT processes and IT services that can be sold in the market in competition with the rest of the world.

We therefore accept Alvey's recommendation to establish a programme of collaborative research concentrated on the four main areas of technology set out in the report. Those areas are software engineering, very large-scale integration—advanced chips—man-machine interfaces and intelligent knowledge-based systems. Industy has realised the need for collaborative research in those areas, and it is ready to take part in such a programme. This positive involvement of industry in the funding, management and execution of the programme is crucial to its success, if we are to turn successful research into marketable products.

The key feature of the programme will be this collaboration between companies, Government research establishments and academic institutions. Work carried out in academic institutions will, as usual, be funded 100 per cent. by the Government. In the case of work carried out in industry, Alvey recommended that most of this should be 50 per cent. Government funded, but that some projects should attract 90 per cent. funding. We have considered this last recommendation closely, but have decided that 90 per cent. Government funding does not secure a sufficient industrial commitment and could lead to the programme becoming divorced from industry's needs. I have therefore decided that all industrial work should be 50 per cent. Government funded.

Companies taking part will be required to release know-how and to share results with their project partners. They will also be expected to license results on reasonable conditions to others in the programme, and to organisations outside the programme where this is needed to secure exploitation.

The report estimated that the research would cost about £350 million over five years. The Government stand ready to support a programme of research on this scale. However, the extent of the Government's contribution depends upon industry making its contribution and upon the programme's technical progress.

Mr. Tam Dalyell (West Lothian)

Window dressing.

Mr. Jenkin

The report proposed that academic institutions should carry out some £50 million of research over five years, and industry the remaining £300 million. The full cost of this to the Government would be around £200 million. This money will be provided by the Department of Industry, the Department of Education and Science and the Ministry of Defence and, over the PES period, will not add to existing allocations. The Department of Education and Science will fund research through the Science and Engineering Research Council, mainly in the universities. The Ministry of Defence will fund research of particular importance to the future of our defence industry. The Department of Industry will provide the major portion of the Government's funds and will carry overall responsibility for the management of the programme.

A new, small, directorate will be established in the Department of Industry to co-ordinate the programme. It will be headed by Mr. Brian Oakley, currently secretary of the Science and Engineering Research Council. It will be staffed by people from industry and supported by the Government Departments concerned and the SERC. The directorate will report to a small supervising board of industrialists. Sir Robert Telford, who has substantial experience of the electronics industry, has agreed to serve on a part-time basis as chairman of the board.

This is the first time in our history that we shall be embarking on a collaborative research project on anything like this scale. Industry, academic researchers and the Government will be coming together to achieve major advances in technology that none could achieve on their own. The involvement of industry will ensure that the results as they emerge are fully exploited here in Britain to the advantage of our economy. Information technology is one of the most important industries of the future and therefore one upon which hundreds of thousands of jobs in the future will depend. Collaboration will ensure that the results of the research are widely disseminated, particularly to smaller firms, which have such an important contribution to make to the industry. No one can guarantee success, but the Government are convinced that this programme will ensure for British industry secure access to the new technology and the products and processes on which our future prosperity depends.

Mr. John Garrett (Norwich, South)

We thank the Minister for his statement, which in general we welcome. We agree with him that the programme set out in the Alvey report is crucial to the development of information technology in this country. Alvey repeatedly drew attention to the urgency of the matter and said that the programme should be under way by April 1983. It is unfortunate that it has taken the Government eight crucial months to respond to this important report.

As Alvey said, what alerted the Government to the issue was Japanese interest in British research. It said that British universities were in the lead in these technologies, but we could capitalise on the lead only by public enterprise because the private sector would not take the risks. If there were no public initiative, we would lie behind Japan, the United States and Europe in commerical exploitation. I am glad that the Government recognised the fundamental point that we have repeatedly stressed about the crucial role of public funding and direction in new technologies.

Does the right hon. Gentleman agree that the refusal to meet the Alvey proposal for 90 per cent. Government funding of some projects means that many small companies will not be able to join the programme, yet that is an area in which much innovation can come from small companies, as we all know? Furthermore, Alvey proposed 90 per cent. funding specifically to assist the dissemination of key technologies. It was specific about the areas in which it wanted 90 per cent. funding. Will the spread of new systems be hindered by the penny-pinching restriction of funding to 50 per cent?

The Minister touched only briefly on the implications for education, which are great. Alvey said, as we have stressed, that it is no good just providing schools with microcomputers". Alvey called for a massive expansion of teacher training and drew attention to the need now for 500 new trained personnel, 150 new academic posts and 800 new undergraduate places—in effect, a replacement of one quarter of the cuts in higher and university education last year. Is the Minister assured of the will and understanding of the Department of Education and Science in this expansion of higher education staffing? As we know, the Government propose further cuts in university staffing this year.

What is the Government's policy on the multinationals? Alvey said that they should participate in the programme only where it is guaranteed that valuable technical information will not leak abroad. What safeguard does the Minister propose'? It is a startling omission that he did not refer to this matter when we know that multinationals are snooping round this public money and wanting to siphon the knowledge that we have in this country back to their countries of origin.

In spite of all the publicity from the Department of Industry — we have all been showered with press releases from the Department—we have a serious trade deficit in information technology, which Alvey and Neddy believe will be no less than £1 billion by 1990 on present trends. What is the time scale to get this massive and important programme under way? We must be running at least a year late now, and time is essential if we are to hold our own, particularly with the Japanese.

Mr. Jenkin

I am grateful for the hon. Gentleman's welcome to the decision, which is one of the most important scientific announcements that has been made in the House for many years.

The hon. Gentleman complained about the delay. He should understand that this represents a novel system of advancing high technology research. We have done a great deal of research in this country over the years, much of which has never been pulled through to the market. We all acknowledge that. The key part of the programme involves wholehearted collaboration with industry — industry funding, industry helping to operate and, of course, industry providing all the funds for the ultimate exploitation of the results in the market. We therefore had to consult hundreds of companies which may be involved and have an interest in the programme. Of course, that took time. I do not apologise for taking that time because it was important to get the issue right.

The hon. Gentleman asked about the decision not to accept the Alvey figure of 90 per cent. I assure him that we are in no sense being penny-pinching or trying to save expenditure. The Government's commitment will approach 60 per cent. of the total amount involved. Moreover, we wished to ensure that the companies carrying out such research would have sufficient direct interest to make sure that it always remained relevant to the market.

The hon. Gentleman questioned whether small companies would be interested. Small companies are coining forward in large numbers to share in the Community's Esprit programme, where the sharing is on the same fifty-fifty basis. So there are good grounds for assuming that they will wish to do so here.

The hon. Gentleman asked whether we would have the necessary manpower and whether my right hon. Friend the Secretary of State for Education and Science had recognised that need. We have made provision for this. The programme provides for the training of the necessary skills and is designed to go hand-in-hand with the IT new blood initiative which my right hon. Friend has already announced to the House. It will also ensure that the people whom we already have are used for the benefit of the United Kingdom and do not— as, incresingly, in the past—go to work for our competitors.

The hon. Gentleman asked about multinationals. All companies taking part in the programme will be required to meet the same general conditions. They must have research expertise to contribute. They must be ready to collaborate and to accept the rules on intellectual property rights. They must exploit technology arising from the programme within the United Kingdom. Organisations that can meet those conditions will be eligible to put forward proposals to take part. We shall, however, require clear and categorical assurances that work done here does not leak overseas to benefit Britain's competitors.

I believe that the programme will be of enormous advantage to our information technology industry. My hon. Friend the Minister for Industry and Information Technology deserves immense credit for the great efforts that he has made over the past two years to advance the interests of the information technology industry.

Mr. Barry Henderson (Fife, East)

My right hon. Friend's statement is welcome, but does he accept that, with a substantial programme such as this, there is always a danger of preference being given to organisations within the London commuter belt and to very large firms with loud voices? Will my right hon. Friend make sure that the benefits of the scheme are spread throughout the country, and that particular attention is paid to the small firms which will be good at innovation? I am sure that if that is done the results of the programme will improve.

Mr. Jenkin

I am grateful to my hon. Friend for what he said. I assure him that it is our intention that universities, other centres of research and large and small firms throughout the country will have the opportunity to collaborate in the programme, if they can meet the requirements. A university such as Stirling, which has a high reputation in this area, will clearly have a part to play. We are determined that all who can help to forward the work will have an opportunity to take part in it.

Mr. David Penhaligon (Truro)

Why does the Secretary of State believe that industry will see the offer of 50 per cent. of the costs as a bargain, when the condition of that contribution is collaboration leading to a wide dissemination of information? Will not the risks involved deter the companies from taking up 50 per cent. of the cost?

Mr. Jenkin

I disagree with the hon. Gentleman. Combining collaboration in the laboratory with competition in the market is something that, in the past, other countries have done better than we have. This is an opportunity for us to show that we can do it as well. As one industrialist said to me the other day, anyone who is not prepared to put up 50 per cent. of the cost of the research cannot have much faith in the programme.

Mr. Tam Dalyell (West Lothian)

In answer to my hon. Friend the Member for Norwich, South (Mr. Garrett) the Secretary of State said that his decision on the 90 per cent. was not intended to save expenditure. Will he be fair to the Alvey committee? It gave a range between 90 per cent. and 50 per cent. in paragraph 8.4 of the summary of recommendations, depending upon the particular activity. Surely this should be a matter for discretion, as Alvey argues, not for a straitjacket. The answer to my hon. Friend the Member for Norwich, South should surely be that the Government will allow some degree of discretion.

Will there be help for computer-aided design? The Minister for Industry and Information Technology is nodding, so I assume that the answer is yes.

Mr. Jenkin

I acknowledge that the hon. Gentleman knows a great deal about these matters. We gave careful thought to what the Alvey committee recommended. The hon. Gentleman will surely acknowledge that too often in our scientific and technological history the Government have funded laboratory research to a very large extent—sometimes 100 per cent. — and that such research has never seen the light of day in the market place and so has never benefited our economy. How far we should go is a question of judgment. Our normal limit is 33⅓ per cent. I hope that the hon. Gentleman heard Mr. David Fairbairn of the National Computer Agency say this morning that the argument is between 33⅓ per cent. and 50 per cent., and that if the Government came up with 50 per cent. he, for one, would be well satisfied.

Mr. Patrick McNair-Wilson (New Forest)

I congratulate my right hon. Friend on his statement and on his positive response to the report, which will be widely welcomed. However, he should now have urgent discussions with the Chancellor of the Exchequer about the rules governing import duties. Currently, substantially less tax is paid on made-up machines than on individual chips. Those rules need revising in the interests of British manufacturers.

Mr. Jenkin

That point has also been made by a number of firms in the market. As my hon. Friend will realise, import duties are a matter for the Commission, but we are considering the question extremely carefully, and if we think it right to do so we shall make representations to the Commission in the usual way.

Mr. John Grant (Islington, Central)

Does not the Secretary of State's statement show a surprising degree of complacency, in view of the Government's loudly proclaimed commitment to the sunrise industries? Does he think that by short-changing industry in the way that he has described, instead of following the Alvey proposals, he will be enabled to compete adequately with the programmes of the Japanese, the French, the West Germans and the Americans, with their huge Government backing?

Mr. Jenkin

I am astonished at the hyperbole of the hon. Gentleman's question. To describe as short-changing industry the programme I have announced, under which the Government will pay nearly 60 per cent. of a £350 million research programme, is an abuse of language.

Mr. Kenneth Warren (Hastings)

I welcome my right hon. Friend's statement, but I suggest that the problem lies less in research and development, in which we are at least 10 years ahead of what the Japanese are trying to get from us, than in marketing. Will the Government, therefore, consider accepting proposals on the marketing of end products rather than just giving all the opportunities to research and development? Is it not possible for the Government to sponsor ideas as to what should be marketed, bearing in mind that the Government are the largest single purchaser of information technology and that the Ministry of Defence, with 10,000 microprocessors on order, could at least supply us with common interfaces for hardware and software?

Mr. Jenkin

I am aware of my hon. Friend's expertise in such matters. However, he will know that the Alvey report was largely produced by people in the industry and represents what they thought necessary. They recognise that in the area of what in my statement I called enabling technology we cannot yet have an effective place at the table in international collaboration. However, we are determined to see that the research results in marketable products for the benefit not only of this country but of the industry in this country. That is why I laid such stress on the importance of industrial collaboration. This is what industry has wanted—in essence, if not in every detail —and I believe that we are setting about it in the right way.

Mr. Geoffrey Robinson (Coventry, North-West)

Does the Secretary of State accept that there is a wide welcome on the Labour Benches for the views of the Alvey committee, on which there were several fully paid-up members of the Labour party? Does he further accept that in deviating from that committee's recommendations he has simply watered down the policy that we would have approved? That is well known to the Minister of State, who served on a board with one of the members of the committee. The Secretary of State should inform himself.

Will the right hon. Gentleman confirm that even now we are still spending far less than our major competitors? Will he take great care that companies already heavily committed and supported in defence research do not benefit disproportionately from this further funding? Will he also ensure that the directorate has sufficient powers to cut corners and push measures through the bureaucratic machine in Whitehall to make sure that something comes out of the programme and reaches the market?

Mr. Jenkin

The hon. Gentleman mentioned bureaucracy. That is why we have gone for a much simpler structure than that recommended by the Alvey committee. In addition to Mr. Brian Oakley, we envisage perhaps four directors—one for each of the key enabling technologies —with industrialists being seconded to do some of the leg work. I entirely endorse what the hon. Gentleman says about the need, perhaps not to cut corners, but certainly to move swiftly. As it is a five-year programme, we must start quickly. I hope that the directorate will be in position within a couple of months and that the first contracts can be put out before the end of the summer.

I hope that the hon. Gentleman will not try to make political points about the membership of the committee. We chose good people. If some of them happened to hold misguided political views, that is nothing to do with me.

Viscount Cranborne (Dorset, South)

Does my right hon. Friend agree that the general welcome for the proposals among Conservative Members is noteworthy for their acceptance of a proper Government role in economic investment? Has any substantial financial commitment to the programme been made by private industry in terms of the 50 per cent. that it is expected to contribute?

Mr. Jenkin

We have had clear assurances from a large number of firms that they are ready and eager to put up their share of the funding for a programme that they recognise to be essential if we are to keep up with the field in this important area. There are no specific commitments yet, because until the directorate gets under way there are no specific projects to which firms could subscribe, but I am certain that we shall have no difficulty at all in finding the industrial commitment. If industry puts up its money, the Government will do the same.

Mr. Sydney Bidwell (Ealing, Southall)

Has the right hon. Gentleman heard of the plan to close the department of building technology of Brunel university? Will his announcement save that department?

Mr. Jenkin

I rather doubt it, somehow, but I shall certainly draw the matter to the attention of my right hon. Friend the Secretary of State for Education and Science.

Mr. Richard Page (Hertfordshire, South-West)

I thank my right hon. Friend for his statement. Is there not the usual danger that the ivory tower attitude of the academics will prevail? When projects are considered, will the views of the industrialists be taken into account and indeed have priority, as it is they who will provide the jobs and the employment prospects in the future?

Mr. Jenkin

My hon. Friend's last point is absolutely right. There will be substantial industrial involvement. Industry will contribute money and people and will play a major role in the management of the programme. The programme will not remain in an ivory tower. We must ensure that the results of the research come out of the backroom and into the showroom and result in products, processes and systems that will be marketed throughout the world.

Mr. Bob Cryer (Keighley)

After four years of free enterprise, the market philosophy and industrialists standing on their own feet, is it not an admission of failure for the Government now to have to intervene in this way to provide collaborative projects between firms and to recognise the importance of co-operation rather than competition?

Will the Minister tell us more about the supervising board of industrialists? Will its members have financial interests in the industry or will they be independent?

What policing methods do the Government envisage to ensure that multinational companies with important assets in a wide range of countries cannot obtain Government money and then move the ideas from the United Kingdom to wherever they choose? Does not the best means of achieving that lie in public ownership of the ideas and the licensing of users who wish to take advantage of them? Is that not the only sure way to police the use of taxpayers' money and the results achieved?

Mr. Jenkin

If the hon. Gentleman still believes that that is the solution to our industrial difficulties, heaven help him. Public ownership by itself has involved huge, enormous, massive expenditure of public money and in many cases, as the "Horizon" programme showed, has produced absolutely nothing for the market—no jobs, no exports and no added value for this country. The hon. Gentleman's view is utterly wrong. We have never taken a dogmatic view on this. We have always made it clear that there is a role for Government. When the leader of the high-level German industrial delegation that has been here for the past couple of days was asked by the press in which area of British achievement there were lessons for Germany, he said that it was the way in which the British managed research in advanced technology. It is a mixture, a collaboration, a partnership between the public and private sectors and I will defend it until my dying day.

Mr. Gary Waller (Brighouse and Spenborough)

I congratulate my right hon. Friend, not only on the farsighted approach in his statement but on the firm way in which he dealt with the suggestion made by the hon. Member for Keighley (Mr. Cryer). Both will be greatly welcomed by everyone in the industry.

Although few members of the British population will have heard of fifth generation computers, let alone understand much about them, does my right hon. Friend agree that in the longer term there is probably unlimited scope in this area? Does he agree that user friendliness and expert systems mean that fifth generation computer systems will probably be available directly to the great majority of British people, providing enormous scope for industry to develop the talents available in this country for the future?

Mr. Dennis Skinner (Bolsover)

The hon. Member is scared of my hon. Friend the Member for Keighley (Mr. Cryer).

Mr. Jenkin

Electors in the constituency to be contested by my hon. Friend the Member for Brighouse and Spenborough (Mr. Waller) and the hon. Member for Keighley (Mr. Cryer) will no doubt get to know a great deal about these matters. I am sure that they will have no difficulty in choosing the candidate for whom they should vote.

I assure my hon. Friend that in what we rather chillingly describe as the man-machine interface the user friendliness of the equipment is extremely important if we are to make the most of these great advances in technology.

Mr. Barry Sheerman (Huddersfield, East)

The Secretary of State says that he is not dogmatic, but British universities have suffered four years of dogmatism from people such as his colleague the Secretary of State for Education and Science. The university sector, especially the research element, has been driven into virtual hibernation and many of its most able and highly qualified people have been driven out. Is it not about time that we heard some positive comments from Ministers about the way in which the universities have led in this area of research while private industry has lagged behind and failed to take up the developments in which the universities have led the way? Will universities such as Bradford and Salford, which have been so cruelly used by the Government, receive some of the funds announced by the right hon. Gentleman to expand their programmes?

Mr. Jenkin

The hon. Gentleman would do well to read the statement made by my right hon. Friend the Secretary of State for Education and Science when he met a delegation from the Association of University Teachers the other day. He spelled out the enormous amount that the Government have done for the universities since we came to office.

I do not think that it is helpful to apportion blame because we have not always been able to exploit in the market place the results of the research that we have done. I am sure that the hon. Gentleman would acknowledge that there has developed in the universities in this country a most unfortunate ethos that somehow to make money out of their work is wrong.

Mr. Dalyell

Oh, no—10 years ago.

Mr. Jenkin

Happily, that is changing, and changing rapidly, and not before time. What we want to see is something of that spirit of entrepreneurship which can be seen in so many American universities, where discoveries in the university laboratory which have a commercial potential are swiftly exploited in the market, to the benefit of the individual, the local community and the country.