HC Deb 17 February 1984 vol 54 cc476-536 9.35 am
Mr. Don Dixon (Jarrow)

I beg to move, That this House, recognising that the future prosperity of Britain and the jobs of British people depend upon the successful modernisation of existing industries and the rapid development of new industries, including telecommunications, aerospace and information technology, calls upon the Government to undertake a searching review of developments since it came to power in May 1979 and to present to this House new and relevant proposals to prevent any further decline as an industrial nation.

I am not an expert on high technology or new technology. We are facing a new industrial revolution and, unless we take a more positive approach, we shall be in a poor competitive position. It is good to see that I have support from hon. Members representing the northern region. My hon Friends the Members for Newcastle upon Tyne, North (Mr. Brown) and for Wallsend (Mr. Garrett) are here. Our region was in the forefront of the first industrial revolution, and that is why we rely so much on the basic industries such as steel, shipbuilding, coal mining and heavy engineering. We know that those industries are in a state of decline, which is why the northern region has the highest unemployment rate in the United Kingdom, with the exception of Northern Ireland.

The people in our region made the wealth for this country, and that is why we feel that, in this new industrial revolution, they should partake of that wealth. Government and industry should support the people in the regions. We have the skilled people who are easily retrained. I was amazed, when I visited Plessey just the other day with my hon. Friend the Member for South Shields (Dr Clark), at the highly skilled jobs done by those people. They are under threat of redundancy because of company reorganisation. I hope that the Minister will examine the problem at Plessey in the constituency of South Shields and do something to stop those skilled people being put on the human scrap heap of the dole queue.

Industries such as Northern Engineering Industries—Reyrolles of Hebburn are at the forefront of new electronic engineering techniques and applications. Although they are part of the heavy power plant industry, they are involved in research and development which will be of advantage to industry generally. Alan Bradley Electronics at Jarrow is a manufacturer of resistors and other electronic components. Our area needs to retain those industries for the future.

Last night when I left the House late, I returned to the flat and put on the television. Lo and behold, I saw the Minister for Information Technology appearing on "On Time" with Sir Robin Day. The programme looked like a preview of the debate we shall have today, because some of the questions asked by the audience were those that, no doubt, my hon. Friends will put to the Minister.

Being a television addict, this morning before I left the flat I had breakfast television on. I was amazed to see that a Japanese couple were designing a house by computer. Their ideas on the house and the cost appeared on the screen. I was interested because I designed and built my own house with these horny hands of the soil. It took me 15 months, working every night and every weekend to design and build. I dug out the foundations, but I did not lay the bricks because I am not a bricklayer. I am a carpenter. I did the woodwork and all the other work in the house. We have come a long way when we can see people sitting in front of a television set feeding in ideas and seeing the design appear and the house costed.

In the 1983 report to the Electronics Development Council, Sir Ieuan Maddocks said: It cannot be stated too often, or too strongly, that skills in electronics are as fundamental to the society of the future … as the supplies of energy, transport and food. With every year that passes, that truth becomes more self-evident, and the need for concerted action becomes more urgent.

Technology is fast becoming the central tool to ensure the survival of British industry not just today but in the future. Our basic industries are being threatened by loss of demand and competitiveness. Much of that is the result of the Government's economic policies. A 40 per cent. reduction in international competitiveness caused by the over-valuation of the pound, combined with the devastating destruction of demand, is wiping out businesses throughout this country. If we had not suffered from that economic incompetence, our long-term problems would be far more manageable.

Over and above the Government's incompetence, the older industries in Britain and the western world have structural problems. They have to compete with similar industries in the industrial second world. The shipyards of Korea and Taiwan and the textile mills of India have an inbuilt advantage as they can force their workers to live on low pay and on the margins of subsistence. The Government have tried to recreate conditions in which workers can be exploited and forced to accept drastic reductions in their living standards. I assume that even the wildest of the Conservative Back Benchers do not anticipate a return to the conditions seen in the Third world.

Technology is the one means whereby we can regain our competitiveness. Western technology and capital will provide us with an alternative means of regaining our long-term competitiveness. The process has started. British Leyland now uses computers to test the quality of cars as they come off the production line. BL dealers can order parts by telephone on their local computer. Flexible manufacturing systems are being increasingly installed as an aid to productivity.

The British United Shoe Manufacturing Company is expecting to reduce stock and increase production rates following the introduction of its FMS system. The West has, for the moment, cornered the market in the best of the high technology industries. We must be able to use that equipment if it is to protect jobs from the threat of those countries that do not share our social values.

The higher end of the technology industry is equally important. The Secretary of State for Industry admitted in 1982 that if no action were taken we would have a balance of payments deficit of £1 billion in information technology alone. Those are the rapid growth industries of the immediate future in which prompt and dynamic action is called for. It could mean that for once Britain is not the country of which it was said "Designed in Britain, manufactured abroad." In these industries, the failure to take positive action is more overt. In 1970, 31 per cent. of business equipment telecommunications computers were imported. In 1980 the proportion of imports had risen to 55 per cent. That is one of Britain's most successful high technology industries.

Home video is the gravest example of the failure to take advantage of the new technology and the central role it will play in the growth of our economy. That market has a value of £400 million. Over 2 million people have home videos. That is more than in the United States, which has four times our population. The majority of those home videos are imported from Japan. None is produced in this country. We should be encouraging their production in this country to cut the dole queues here and not in Japan.

There is a simple reason why Britain has failed to develop those markets—no one has been prepared to take the risks involved. The Government's economic policy can be blamed for that. Capital required for development and technology can come from two places only. The first is business, and the second is the Government. We know that a long time is needed for the development of new ideas and that their failure rate is high. The hovercraft, for example, was first shown as a working prototype in 1959, but it was not until 1970 that a saleable product rolled off the production line. The transistor was invented in 1947, but it was not used commercially until 1963. It was not until 1971 that it was refined into integrated circuits.

It is not easy to sustain the constant threat that an idea may turn out to be a failure. Only major corporations and the Government can realistically expect to support such products from start to finish. For the small businesses that the Government claim to support, the only faint hope is that they will be lucky enough to remain solvent while producing a new product.

The problem is greater than that. I have already mentioned ideas which have a potential value. Many products emerge from ideas where there was no intention originally to produce a specific product. The National Aeronautics and Space Administration space project is an example of that. The task of putting a man on the moon was conceived as a matter of prestige rather than economics. However, the problems that had to be overcome to achieve that goal went a long way to lay the foundations of miniaturisation which is the basis of today's computer microchip revolution. Beyond that, there is a need for more abstract and non-commercial research. The European fusion programme may produce limitless energy from water. No one expects that to happen this century or the early part of the next, but it may. No business could afford to invest in research based on a vague hope.

Those cases all show how ill-equipped businesses which rely on the profit motive are to deal with the ever-increasing demand for technological advance. Governments must accept that they have a responsibility to foster advanced technology until it reaches the product stage, when the short-term interest of profit can take over.

As we hear every day, the Government do not believe the evidence of a century of technological advance. They believe that, if they wash their hands of the problem, it will solve itself. That may be correct, when one considers the Government's record. It is not enough for the Prime Minister to spend one day in 1983 chatting with business men about how important technology is and believe that a publicity stunt can compensate for a complete lack of polcy.

There could be no more damaging time for the Government to take that attitude. The Government's tenure coincides with the take-off of new technology and a recession that can be best solved by the use of new technology, yet in the fifth year of promises we have no decisive action.

Other countries do not share the present Government's obsession with claiming that only they can manage the economy. Only they admit that it cannot be managed. For example, the Organisation for Economic Co-operation and Development figures show that the West German Government's spending on research and development is roughtly 50 per cent. higher than ours, and the Japanese Government's spending is more than twice that of Britain, although Japanese business is more willing to invest in research and development than British industry. British spending is comparable with that of France and higher than that of Italy, but I shall show that that advantage is lost completely because of the direction and organisation of the British Government's research and development.

It would be well worth the present Government looking at the attitude of the Japanese towards long-term development. Over two years ago the Agency for Industrial Science and Technology produced a 30-year plan designed to shift the structure of Japanese industry by concentrating on three key areas of development — electronics, energy and biotechnology. Ten years previously the agency had made correct predictions about the Japanese move to integrated circuits and office equipment. The basis of the Japanese success is their opposition to the policies espoused by the Government. Unlike the Conservative Government, Japanese Governments of all colours have had the confidence to believe that they can achieve results if they have the will to do so. That confidence is not present on Conservative Benches. Over 4 million people on the dole have had to suffer the consequences.

The Government have maintained a different system of research and development. It is spread across 22 spending Departments. The Cabinet Office supposedly co-ordinates the completely separate activities of those Departments. In the Department of Education and Science there is a co-ordinating body for the research councils, but they are not properly linked, for instance, to the Forestry Commission, which carries out research. There is little overall plan. How the research side links to the development of commercially viable products is another question, nor is everyone in the research community convinced that the Government have stuck to the spirit of their pledge to keep spending levels constant.

With regard to development, the Government replaced the National Enterprise Board and the National Research and Development Corporation with the British Technology Group, which had its finances slashed from £70 million in 1979–80 to £12 million last year. The total amount that the northern region received from the global sum of £12 million was £250,000. We learned from yesterday's expenditure White Paper that the BTG is now to operate on nothing at all. The Conservative euphemism for that is "self-financing". In other words, it will have to act on the business of short-term profit, which other countries recognise is inadquate for the task.

The same refusal to accept the need for real finance is shown in the Government's reaction to the Alvey report on information technology. As this area is the high profile end of the technological revolution, we should have expected the Government to take special care to ensure the success of the project. However, they refused the recommendation of 90 per cent. grants for certain projects. Furthermore, in his statement on 28 April 1983, the Secretary of State said: This money … will not add to existing allocations."—[Official Report, 28 April 1983; Vol. 41, c. 1007.]

Therefore, one project may be given partial help but others will have to suffer to make up the costs. Such projects depend on private industry being able to take more risks, but experience shows that they will not do so. In this year's expenditure White Paper the Government admit: By international standards expenditure by industry on civil R&D is low.

The lack of confidence shown by British business is all the more reason why real resources and determined effort are essential conditions of the success of any Government initiatives. Their haphazard and inadequate attempts to encourage new technology will not solve the problems of nearly 4 million unemployed.

Mr. John Page (Harrow, West)

I am listening, carefully to the hon. Gentleman. I think that he is being a little abrasive with the Government. Does he believe that trade unions are willing to accept the new technological means, especially when—this is difficult for them—the introduction of new technology may reduce the number of old jobs? Will he address himself to that point, in which, on a non-party basis, we are all desperately interested?

Mr. Dixon

Whether I am being abrasive to the Government is like a fair day's work for a fair day's pay. The definition depends whether one is giving it or receiving it. I have no doubt that my hon. Friends do not think that I am being abrasive to the Government. Possibly Conservative Members feel that I am.

The trade unions are prepared to negotiate. They have never taken a Luddite view of high technology. It means a shorter working week and longer holidays. Trade unions want to negotiate and make sure that their efforts are not immediately put into the profits of the company.

Mr. Doug Hoyle (Warrington, North)

Does my hon. Friend agree that the unions are seeking to enter into technology agreements and in many instances have already done so? However, they want to be involved from the beginning in what is happening to the company, and they want to co-operate with the company. That is their aim, so that the future is not jeopardised and they will benefit from it.

Mr. Dixon

I agree entirely with my hon. Friend. I have no doubt that Conservative Members will take his point on board.

Information technology is defined as the manufacture and supply of computer software and hardware, telecommunications and office equipment. The forecasts for the world market vary. There are many, and at times they are not particularly reliable. In 1980 commodities were worth about £55 billion a year, which is forecast to increase to £100 billion by 1985 and £150 billion by 1990. The United Kingdom's share of the market is currently only 5 per cent. Our trade deficit is £150 million and by 1990, as the Minister said in answer to a question that I asked, our deficit, if present trends continue, could be £1,000 million a year.

I appreciate that the Government make grants and that they have done something for new technology. The Minister for Information Technology has given much encouragement and has made funds available. However, our argument is that they are not enough and do not come quickly enough. If we do not do something immediately, we shall lose out on this industrial revolution.

Members of Parliament from the northern region are present today. We are concerned that we should be involved in this new technology. The problem is that the larger and nationally based firms benefit more than small, regionally based enterprises. From the money available under the microelectronics industry support programme to computer-aided design manufacture, in the financial year 1982–83 not one penny came to the northern region. As I have said, of the £11 million provided under the small engineering firms investment scheme, only £250,000 came to our region.

The region has further problems in raising capital. There is no commercial bank in the region. The clearing banks are the main sources of loan capital for new industry, but they lack knowledge of technological innovation and seem reluctant to invest in it and the region's share of total expenditure on scientific and technical assistance is only 1 per cent.

The north-east technological centre in Newcastle will serve companies and educational institutions throughout Tyne and Wear, south Northumberland and north Durham. It is expected to cost about £600,000, including working capital, and to show a trading profit by the fifth year of operation. Its two main objectives are to assist local companies in introducing new products and processes, using the resources of the educational institutions and helping those institutions to market their services for use of industry. Half the £600,000 will be contributed by Newcastle city council, Tyne and Wear county council and educational bodies in the city. The other half will be provided by the Government and business. I hope that the Minister will help to get that centre established. Meetings are now being held about it and it could be quite a boost to the region.

South Tyneside district council covers my constituency and that of my hon. Friend the Member for South Shields. Some of the high technology industries in the district are under threat and employees face the threat of redundacy virtually every other week. South Tyneside is a special development area and I put in a special plug for it today. A 22 per cent. regional development grant is currently available for new plant and equipment. Selective financial assistance may also be available from the Department of Trade and Industry. In addition, the Labour-controlled borough council operates a discretionary financial assistance scheme for businesses wishing to come to the area. There are a number of large industrial sites. One of the largest in Tyne and Wear is now coming onstream at Boldon colliery — the last pit to be closed in my constituency. There are now no working pits at all, although the area was built on the basic industries of mining and shipbuilding. The Boldon colliery site is now available for any business prepared to come to the area.

I have various comments to make on the NEDC report but several of my hon. Friends are present and I do not want to go on too long. If I do, I shall not only bore the pants off everyone but the longer I speak the more the House will realise how little I know about technology. As I said at the beginning, I do not know a great deal about new technology or high technology, but I decided to use today's motion to allow a good debate in the Chamber on what I know is an important subject. Personally, I know so little about technology that when people talk about chips I think of fish rather than silicon valley.

Nevertheless, the third industrial revolution has begun and this country must heed that fact and start modernising its industry. The Government must finance longer-term projects because small companies will not do so.

Conservative Members have asked about trade union attitudes to new technology. I remember being told a story many years ago about General Motors in America. You, Mr. Deputy Speaker, will certainly recall this. Indeed, it may even have been you who told me. General Motors had just built a new factory. It was completely modern and computerised and the production lines were operated by robots. The director took an official from the automobile workers' union all round the plant—not one man or woman could be seen working there—and then took him up to the office for a drink. Referring to all the robots working for hundreds of hours without causing any trouble and taking no notice of anyone, the director said, "You will not get any of them to join your union and cause trouble," to which the union official replied, "No, but you will not get any of them to buy the cars that you produce either." If the unions are to co-operate in new technology, it must be on the basis of shorter working hours, earlier retirement and ensuring that the benefits created by new technology go to the workers who help to create the wealth.

I hope that the motion will provoke a worthwhile debate and that as many hon. Members as possible will be able to participate.

10.6 am

Mr. Ian Lloyd (Havant)

It would be in tune with the convention of the House to begin by expressing our gratitude to the hon. Member for Jarrow (Mr. Dixon) for introducing the debate. Behind that convention, however, lurks the uncomfortable reality that there are no more than two dozen Members in the Chamber. The other 610 are indeed grateful that we are discussing new technology because it allows them to stay away. That is the embarrassing reality on which the hon. Gentleman touched in his speech. The House, like the country, is embarrassed by technology because it is new, strange, uncomfortable, challenging and difficult. We therefore tend to discuss it less frequently than we should and to pay far less attention to it than we should.

I had hoped that today's debate would not suffer from what I describe as the Dalmatian syndrome, whereby Conservative Members see only the black spots and Opposition Members see only the white spots. Perhaps I should reverse that, as the Opposition are inclined to see only the black spots, while the Government constantly draw attention to the white spots. The result is that nobody sees the dog. We concentrate on the black or the white spots according to who has put a new collar and lead on the dog which is the nation. When considering science and technology throughout this country the optimists say that we are doing well, that expenditure is rising, awareness is increasing and things are not so bad as they were—a view with which I agree to some extent—while others say that the dog is ailing and fit only for the pound, and the more extreme pessimists say that it should be put down. As the hon. Member for Jarrow said, however, the nation has no alternative but to live with, absorb, understand, embrace and use new technology to its own advantage. If the House can assist in that process, it will be assisting in something important, constructive and indispensable.

Mr. Lewis Carter-Jones (Eccles)

I am intrigued by the hon. Gentleman's analogy. He said that we talk about the black spots and the white spots, forget about the dog and should be worried about the lead and the collar. The hon. Gentleman did not say a word about feeding the dog.

Mr. Lloyd

I must not press the analogy too far but I am sure that the House would agree that the dog should be fed with a much higher vitamin content of new technology than it is at the moment.

The motion is interesting and suffers little from the Dalmatian syndrome. However, there are a couple of points to which I should like to draw attention. The hon. Gentleman has chosen the following order: the jobs of the British people depend upon the successful modernisation of existing industries and the rapid development of new industries". 1 wonder whether he considered that order carefully and whether it represents a priority. I am inclined to make the same argument but in the reverse order. I would have said that the future of the nation depends fundamentally on the rapid development of new industries and to a much lesser, though still significant extent, on the modernisation of the old. The modernisation of old industries is a much more difficult and exacting process than the establishment of new ones in which there are no stereotypes of behaviour patterns, no fixed ideas about how things should be done, how machinery should be used, which machinery should be used, or what the manning ratio should be. Examination of successful developments in new technology reveals utterly new patterns of human behaviour enterprise, operation and of the man-machine interface, to use the modern jargon. Moreover, such developments are being achieved with the full co-operation and understanding of trade unions and, especially, management. That new interface must be established and developed.

The hon. Member for Jarrow also calls on the Government to undertake a searching review of developments since it came to power". I am a little sceptical about that. Irrespective of which party has been in power, the one thing that we have been extremely good at for the past 15 years is undertaking searching reviews. We have produced report after report on some aspect or other of new technology. The hon. Gentleman referred to the Alvey report but there have been many others by the National Economic Development Council and others. We tend to be long on diagnosis and short on action. I should like that balance reversed.

The hon. Gentleman suggests that there should be "new and relevant proposals". I entirely agree. The one fascinating aspect of new technology is that the rate of change is exponential—it doubles every two or three years. Circumstances with which we may think that we are familiar after intensive reading and discussion are wholly out of date 18 months later. Therefore, we are constantly in need of new proposals.

Mr. Barry Henderson (Fife, North-East)

Apart from his constituency involvement, my hon. Friend's interest in the industry is well known. He might have seen on the tapes this morning that IBM has just announced a portable version of its personal computer. For many business men, will make business quite different on Monday morning from what it was last Monday.

Mr. Lloyd

My hon. Friend introduced a most apt illustration. Those of us who attempt, however inadequately, to keep up with the fascinating technical press on the subject find that the developments are endless, interesting and powerful.

We have called what is happening the computer revolution and many other names. It is essential that we understand what lies at the basis of new technology. Future historians will not call it the computer revolution but the digital revolution. The entire base of the new technology is the ability of the human species to represent amost all forms of analysis, signals, activity and communication in a stream of digits. We can now send streams of digits between satellites at about 10 million bits a second. The ordinary television signal received in our homes, if it is in digital form, comes in at about 1 million bits a second. The fundamental part of all new technology, computers and the devices which depend on them is the digital transfer of information.

There are three fundamental questions that must be asked. The House should be pre-eminent in this matter. We should represent the nation's interest and anxiety. Is it adequately equipped to measure, understand and deal with the digital revolution? I think that we are a good deal better equipped that we were five years ago but in the perspective of history we shall be seen to have made an advance of about 5 per cent.

The House has two excellent quasi-parliamentary organisations — the Parliamentary and Scientific Committee and the Parliamentary Information Technology Committee. However, they are quasi-parliamentary institutions and play a peripheral role in the House. We have the Select Committee on Education, Science and Arts which is theoretically responsible for science as well as education. I shall consider that theoretical responsibility later.

The House does not have an institution which has adequately replaced the old Committee on Science and Technology, although I am the first to concede that the Committee of that name in another place has done an excellent job. We are not doing that here. There is a serious gap that has not been filled and it is unlikely to be filled until we take the matter much more seriously.

An institution that the Commons does not have but should have is one such as the United States Congress has developed—the Office for Technology Assessment. I have a report of that organisation to Congress entitled, "Automation and the Workplace". It is a fascinating, informative and revealing document. We have no such organised input, although I would not wish for one moment to disparage the valuable work of the scientific section of the Library. It is helpful and well informed. Nevertheless, we now need a new institution to serve Parliament. We should construct it around our needs and purposes. Parliament is inadequately served to discharge its responsibility for monitoring new technology and science as a whole.

Secondly, are the Government adequately equipped to deal with new technology? That is a substantial argument and we could have a two-day debate on it. I wish that we could. We discuss the matter far too seldom. I do not wish to make a party political point but ever since I have been in the House — it is now some 20 years — no Government have been adequately equipped to deal with the scientific revolution that has washed round the shores of the country and is now lapping round Westminster. Many Governments have made many changes. They have tinkered with the problem with more or less seriousness but we have now created Government by acronym. We have all sorts of scientific bodies—the Advisory Council for Applied Research and Development, the Advisory Board on Research Councils, NEDDY and the rest. All of them have, to some extent, a specific and central scientific responsibility.

Who speaks for science at the centre of Government in Britain today? My right hon. Friend the Minister for Information Technology is the person who, a long time ago, I should have wished to speak for science in Britain. I have argued this point with my right hon. Friend the Prime Minister, because I still believe that science is inadequately served in this Government as it was in previous Governments. There is a serious gap.

I wonder how many times the Cabinet has discussed science policy during the past three or four years. I may be shot down in flames by my right hon. Friend, who may say that it is discussed every week. I should be gratified so to be shot down, but I suspect that I shall return with my fuselage just peppered on the tail, and no more. How many times have the major points of the Alvey report been discussed in the Cabinet with my right hon. Friend the Minister present? He is one of the few Ministers who understand the full significance of what Alvey argued. That report said that this front line of technical policy is so vital to the future of the nation that if we get it wrong we shall slide sadly backwards, but that if we get it right we may reattain the pre-eminence that Britain has not enjoyed since the middle of the Victorian era. So important are Alvey's arguments that the Cabinet should review them once a fortnight, if not once a month. However, I suspect that, because no one speaks for science at the centre of Government, it is probably discussed once every six months.

I yield to no one in my admiration of the Prime Minister—I have no competition from the Opposition Benches—and it is understandable that, being the first scientist to be a Prime Minister, she should have wished to maintain a personal responsibility for science policy. I have argued this point with her privately and in public, so she has already heard what I am about to say. No Prime Minister, however powerful, brilliant, well-equipped or scientifically trained, can discharge the role of Prime Minister and the role of being responsible for science policy in this day and age. As science and its application and development are so fundamental and so likely to create a different view—there will be arguments in every Department and on every aspect of policy—it should be the responsibility of someone who is dedicated to this point of view, who has a wholehearted understanding of its significance and who is prepared to go in there and deal with the matter.

Only this morning I came across an illustration that makes my point more formidably than I could ever hope to do. In the public expenditure White Paper, which has 175 pages, I looked for some mention of science. I found, on page 71, half a column dealing with science under the heading of "Education and science". My main contention about that is that my right hon. Friend the Secretary of State for Education and Science will naturally and inevitably devote 85 per cent. or more of his time to education, since it is so overwhelmingly important, and will neglect science. The analysis in the White Paper reveals that completely.

To summarise it, out of "Education and science", science represents only 5 per cent. or half a page out of 175. The words "and science", are purely descriptive. There are only two vague glimpses of policy. The first is that The plans allow for the present level of provision to be broadly maintained in 1984–85. The second is that There will be some change in the balance between work carried out in Council's own establishments and that funded in higher education institutions.

There will be no growth. There are no figures in the body of the statement, although there are some in the summary at the beginning. The sum provided in 1982–83 was £482 million, which was expected to rise to £590 million in 1986–87. To put that into perspective, the budget of one major company in the United States, Bell Laboratories, is more than $2 billion. Who speaks for science? Who argues its case? Who fights this corner? Many may try, but no one carries the central responsibility and, therefore, no one succeeds.

However, I do not wish to suggest that all is gloom. The Government are doing some excellent work, and tribute has already been paid to my right hon. Friend the Minister, whose position, power and budget should be greatly reinforced. I wish to give publicity to another aspect of the work of the Department of Trade and Industry. Some of the most excellent reports produced by the Civil Service are those written on new technology and science by our scientific attachés at overseas embassies. They are published by the overseas technical information unit, which is a subsidiary section of the Department, and they are invaluable. They are authoritative and highly informative. I have not made a special study of the matter, but from time to time I ask industrialists whether they have read those reports and assessed the significance of that scientific work to their companies. The answer is invariably, "What are they and where do we get them?" That is symptomatic of the position in the country as a whole. There is not enough awareness and willingness to go up front, find out what is happening and say, "What is the significance of this to my commercial or industrial operation?"

The Government have done a great deal to enhance the capability of the country to make such assessments, especially small firms which do not have the necessary resources to produce a report such as the one from the science counsellor at our Washington embassy. A representative visited 25 biotechnology firms in the United States over a period of three weeks and reported on what he discovered. It is a fascinating report that is indispensable to anyone interested in biotechnology. I must refer to one of his points because of what the hon. Member for Jarrow said. This is not my conclusion, but that of a civil servant, based on his experience. The report states: With such a rapidly expanding small company sector, it is no surprise that no one sees any need for government assistance. Most considered government's function as supporting a strong scientific research base in the university and public sectors and in minimising regulations. There are no analogues, therefore, of the generic research and financial support programmes funded by our Department of Industry.

At the beginning of his analysis, he says exactly the same thing: that most of the entrepreneurial scientists who are responsible for this major take-off of biotechnology in the United States are doing so under their own steam and without direct Government assistance. It can be done where there is the understanding, the scientfic capability, the entrepreneurial awareness, the capital support and the necessary regulations.

The Alvey report says that the only option is to have a domestic capability in the enabling technologies", which the report defines. I shall not bore the House by reading more, because I am sure that every hon. Member here today will have read the report and will know what I mean. One thing that we must take on board, not only from Alvey but from similar analyses, is that we now need ruthless specialisation in narrow areas of research and development, technology and production. The reason is simple. With the best will in the world, we in the United Kingdom can undertake only about 10 per cent. of the total research and development of the western world. However, the other 90 per cent. is likely to be of equal significance. We have no reason to assume that it will be better or worse or less significant than our own. Therefore, it is necessary for us as a country to choose, sometimes making very difficult choices, because allocating resources or encouraging the allocation of resources in one narrow sector often results in the deprivation of other sectors, all of which will be equally worthy of receiving those resources, all of which are just as good, and in all of which the science is just as important.

In Great Britain we must specialise and only by so doing will we be able to attain standards of excellence that will ensure that in those sectors where we remain we are pre-eminent and paramount and that the world will beat a path to our door because only in Britain is the highest standards in these sectors continuing and only in Britain are the first-class industries at the frontier of these sectors to be found. With our 10 per cent. we have the resources and with our first-class educational system we have the people to make such a choice policy possible. Therefore, we must have an unimpeded and unqualified ability to assess, apply, import, license and use the best technology available world-wide in sectors where we do not have the research and development capability and performance.

I mentioned earlier that Bell Laboratories has a budget of $2 billion. If we look at what Japan is spending on semiconductors, on what the United States is spending on higher technology, what Germany and France are spending in these sectors, we see that it is essential that we should retain access to the results of that, particularly if the results will produce, as they will, equipment, expertise and scientific knowledge, without which our own centres of excellence will not be able to attain that excellence. This is a world of rapidly integrating science and technology, throughout the western world and beyond national frontiers. The thinking that for generations has lain behind the national frontiers, that one can in some way protect by tariffs and other somewhat simplistic devices and, by that protection, ensure the development that we want, is obsolete and dangerous. If policy conforms to those criteria, we shall get it wrong. It is my sincere and earnest wish that we get it right.

10.32 am
Mr. Doug Hoyle (Warrington, North)

First, I declare an interest as vice president of the Association of Scientific, Technical and Managerial Staffs. The union has a deep interest in this subject through its many members. I followed with great interest the speech of the hon. Member for Havant (Mr. Lloyd). He is always very knowledgeable—I have heard him in Committee and elsewhere—about high technology. I agree with him in deploring the apparent lack of interest not only by other hon. Members but by the media in a debate about the country's future.

When the hon. Member started to speak about the man and the dog syndrome I thought that he was about to tell the old story of a visitor to a completely automated plant. On arrival he could see only a man and a dog. He asked what they were there for and was told that the man was there to feed the dog and the dog was there to stop the man interfering with the machinery.

When speaking about the Prime Minister, the hon. Gentleman could have added that, while she regards herself as representing science at the centre, she is, in addition to being Prime Minister, Foreign Secretary and Chancellor of the Exchequer and is keeping a watching brief on the Home Office. It is no wonder that science suffers in such circumstances.

I thank my hon. Friend the Member for Jarrow (Mr. Dixon) for giving us the opportunity to debate this important subject. We are doing so against a sombre background of a decline in our manufacturing industry. It was estimated that, for the first time since the industrial revolution, we had, in 1983, a £3 billion trade deficit. In 1981 we had a surplus of £5 billion and in 1982 a surplus of £2 billion, but now we are in deficit and unless something is done urgently, manufacturing industry could be in terminal decline.

Unlike the hon. Member for Havant, I put much of the blame on the Government's policies of free competition and allowing unrestricted imports of manufactured goods. The hon. Gentleman said that restricting imports does not work, but I remind him of Japan. One thing is certain. We cannot allow an industry that is as vital to our economy as the manufacturing industry to continue to decline. Even now, with this decline, it accounts for 25 per cent. of our gross domestic product and for 75 per cent. of our visible exports. Even in the areas of high unemployment represented by the Opposition, such as the north-west and Scotland, it accounts for 25 per cent. of employment.

The problem comes on the other side. No other country can compare with our record of a 20 per cent. fall in manufacturing industry since 1973. That is the real tragedy of what we are debating. The truth is that we have no fall-back from our manufacturing industry. We cannot depend on tourism, important though it is, even in constituencies such as that of the hon. Member for Havant and others on the southern coast, because there is insufficient sunshine to attract enough people. We cannot rely on invisibles, important though their part is in our economy. One of the tragedies of the work of the City is that £12 billion that could have been invested in industry here has gone overseas, and some of it is financing and strengthening the base of our competitors such as Japan.

Often, Conservative Members say that the future lies with service industries, but they can be prosperous only as long as we maintain our policy of exporting, and for that we have to provide our own manufacturing industry base. If we lost the benefit of North sea oil, which provided £7 billion last year, the only result would be lower living standards, and that would affect the service industries.

The Minister for Information Technology (Mr. Kenneth Baker)

I accept the hon. Gentleman's argument that it is impossible to envisage the British economy without a major manufacturing base, but I ask him not to be disparaging about the capacity of the service sector to create jobs. Look at what has happened in America where, in the past year, 12 million new jobs have been created, which is more than the OECD countries have done collectivelly over five or seven years. The great majority of those jobs have been in the service sector. We are moving towards a more service-based economy, and the hon. Gentleman's union has a large membership from the service industries. Therefore, I hope that his remarks will not be looked upon by a wide audience as being disparaging of the performance of the service sector and its growth.

Mr. Hoyle

I thank the right hon. Gentleman for his intervention, and I respect his view of the service industries. However, the manufacturing industry creates the wealth. It may well be that many of the new jobs will be in the service sector, but we must develop our export-earning potential. That is why I am concerned about the deficit. Although North sea oil is producing about £7 billion, if we continue to allow manufactured goods from abroad to pour into Britain, destroying our industrial base, our standard of living will be cut. That will mean, in turn, that people's capacity to buy from the service industries will suffer, and consequently jobs in the service industry will be lost.

Mr. Peter Shore (Bethnal Green and Stepney)

I am grateful to my hon. Friend for giving way. I am provoked to some extent by the Minister's intervention, but not in the sense that we are engaged in a great controversy. He has raised an extremely important point. We need crucially to know how many of the service jobs that have been created are intimately linked with the manufacturing jobs, the decline in which concerns all hon. Members in all parts of the House. If we suffer a further and radical decline in manufacturing industry, will there not also be a substantial loss of related service jobs?

Mr. Hoyle

I entirely agree with my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore). Obviously, many of the service jobs are tied up with the need for industry to be efficient and to expand. If manufacturing industry continues to suffer a decline, many of the service jobs are bound to be affected. Equally, if we cannot compete with other nations in the markets of the world, our manufacturing industry will decline, and our service industries will also suffer. Indeed, that is the crux of my argument.

Unfortunately, we show no signs at present of doing anything about our manufacturing base. We have left that problem until it is dangerously late to deal with it. The motor industry is in crisis, not only because of the advent of Nissan—we may have mixed views on that—but because of the determination of multinational companies to use our motor industry purely as an assembly plant. That is bad news for the component industry, on which a million related manufacturing jobs depend.

With regard to the aerospace industries, we are all waiting with bated breath to know what will happen to the A320, and the new V2500 Rolls-Royce engine that is being developed by a consortium, but this will be dealt with in greater detail by my hon. Friend the Member for Eccles (Mr. Carter-Jones). There are, however, lessons to be learnt by British Aerospace and even Rolls-Royce from what the Japanese have recently said about their determination to be one of the leading nations in aerospace in the not-too-distant future. That will affect British Aerospace and it will certainly affect Rolls-Royce. Apart from the companies in the United States, Rolls-Royce is the only real aeroengine manufacturer in the world. Will British Aerospace and Rolls-Royce be able to stand up to Japanese competition? Certainly they will be unable to do so without Government aid. I am sure that my right hon. Friend will be dealing with that problem.

I want to concentrate on the experience of two of our new science-based industries. There will be general agreement in all parts of the House that one of the tests today in determining the real industrial nations is whether they have a mass-produced silicon chip industry. Not long ago, the usual test was whether a developing nation had a steel industry. One of the other follies in determining the status of developing nations was whether they had their own airlines. But the test for the future will be whether a nation is involved in the mass production of silicon chips. In that context, the Government's intentions in regard to Inmos are ludicrous. It is absurd even to contemplate selling Inmos to GEC, which has not shown any great determination to go into that area. Indeed, GEC has backed off on every possible occasion. To sell off Inmos to one of the American giants could not possibly be in our interests.

I was often a critic of the previous Labour Government, but I pay tribute to the way in which they looked ahead in setting up Inmos in 1978. They did so for two reasons. One was that an industrial nation needs to have its own silicon chip industry. Secondly, the Labour Government foresaw the chronic shortage of mass-produced silicon chips, not only in Britain but all over the world. They were right, because today there is a rationing of the supply. Therefore, it is ridiculous even to contemplate selling off Inmos. On the contrary, we should be putting more capital into it. It has been in operation for six years and £100 million of British capital has been put into it. It lost £15 milion last year but it is poised to break even in the coming year.

Indeed, Inmos has just announced a new breakthrough by what it calls its "transputer"—T 424. When it was launched, The Guardian said on 7 November: The T 424 will provide the power of a hundred home computers. It will handle 10 million instructions a second—working 10 times faster than the average big office computer. It will contain a quarter of a million components. It could itself hold and manipulate all the words in this article—and roam through a whole library in seconds. The T 424 is a razor-thin fragment of silicon a quarter of an inch square. But the T 424 is not the only product in the market; indeed, when it comes into operation it will probably be in the middle of the range of companies developing that technology. The difference is that the T 424 is faster and easier to programme than its competitors.

It is absolute madness that we should contemplate allowing American companies such as A T & T or Western Electric — which is interested only in the plant at Colorado Springs — to take over Inmos I can do no better than quote what was said in Electronics Weekly on 7 December about Inmos and the Government's intentions. It said: With profitability round the corner, credibility as a processor of high-volume silicon at Newport being established, and a reputation for technological excellence acknowledged by every company in the business, the UK Government would be mad to risk the independence of Inmos by selling chunks of it to foreign rivals. Even more so when a couple of South Korean rival companies have begun an investment programme which is currently projected at half a billion US dollars each to get to the same stage that Inmos has reached now.

One of the problems of Inmos in breaking even in a market in which there is a shortage has been the Government's reluctance for a long time to invest more money. Far from selling off Inmos, the Government should be investing more in it. They must do so if they mean what they say about science-based industries providing our future.

Biotechnology has already been mentioned. Another success story in the public sector also involving venture capital is Celltech. It was set up by the present Government in 1980 with capital of about £12 million. At that time, I think the British Technology Group owned 44 per cent. It has been a success story, in that it has been able to marshal developments at the Medical Research Council and to relate that to its own activities. MRC was very keen on developing this innovation. The tragedy previously was that much of the benefit from MRC was going to our American competitors, because its knowledge was sold very cheaply. But Celltech, in co-operation with MRC, has been involved in many exciting discoveries in genetic engineering and cell fusion. One of the problems with Celltech is that it needs more money because it cannot capitalise on everything that it has done in this area. Yet instead of investing more money, the public shareholding is being reduced from 44 per cent. in July to 28 per cent. Celltech is now looking for partners, and where does it have to go? The answer is Japan. With the Japanese firm Sanko, it is bringing onto the market two genetically engineered hormones. They are important breakthroughs. One is the tissue plasminogen activator, which is important for treatment of heart diseases and strokes. It dissolves the blood. Present medical science does no more than thin the blood, with the risk of haemorraging. Yet that important medical breakthrough will be marketed by Japan.

Another hormone, calcitonim, can treat chronic and crippling destruction of the bones. It is another tremendous breakthrough, yet, again, its marketing will be in conjunction with the Japanese company. How silly that is. Would the Japanese be so generous to us? Celltech should be encouraged with additional investment.

A new company set up by BTG deals with agricultural genetics—an important development. It is the country cousin of Celltech. It will develop crops that can resist frost and a product to help plants to soak up nitrogen. It will also study biological control of pests. All that is important for the future of Britain in a vital area where we are in competition with the remainder of the world.

The problem with Celltech and the agricultural company is that they are small companies competing against world giants. In America they face Cenetec, and in Switzerland, Biogen, both of which have massive investment programmes. If we are really serious about technology, we should actively encourage our firms.

Yet our problem lies partly with a resistance to change. When research and development was debated in another place last week, Lord Zuckerman said of the Post Office in the middle of the nineteenth century that whoever was in charge then did not want introduction of the telephone into this country because the Post Office had a surplus of messengers. Of course, many of us view new developments in that way. We do not want radical change in our tasks and activities, yet we cannot resist what is happening in the remainder of the world. Unless we seize the opportunities, we shall be left behind.

Britain's expenditure on research and development compared with other countries is a sick joke. The Minister is shaking his head, but I am speaking the truth. We spend only one tenth of what is spent by the United States. No one would suggest that we could match the United States, but we should spend more. Although our expenditure on research and development amounts to £3 billion, only £280,000 of that is spent on manufacturing industry. That is suicidal. Most of the remaining investment is swallowed up in defence, with no spin-off for other industries. It is tragic that there is no link between private companies that could develop any spin-off and the companies engaged in the defence industry.

Mr. Ian Lloyd

I sympathise with what the hon. Gentleman is saying, especially about the spin-off from defence. I believe that there is a considerable amount of spin-off, but it is too little in relation to the immensity of the technology being undertaken and the importance of that being transferred to industry.

Mr. Hoyle

I do not deny that. It is difficult to quantify these matters. Certainly there is some spin-off, but nothing like what it should be. Many defence companies are involved solely in defence, and do not realise that there should be a relationship with other companies.

Mr. Paddy Ashdown (Yeovil)

Is the hon. Gentleman aware that the greatest advances made in the voice-operated computer technology are not American or Japanese, but British. They come from the Royal Aircraft and Radar Establishment in Berkshire. Because of our secretive system, we have to buy that technology from silicon valley in America, which obtains it from the more open system in the American defence establishment, which, I understand, obtains it from the Royal Aircraft and Radar Establishment in Berkshire. Is that not an example of how our secretive system operates against the development of proper technology in Britain?

Mr. Hoyle

The hon. Gentleman makes a powerful point. The secrecy element is important. The Minister might wish to reflect on what will happen when British Telecom is privatised. Many of its communications are top secret, yet shares in the company may be sold to foreigners.

Too much of Britain's investment in research and development goes to defence without the necessary spin-off for private companies. We are approaching the matter from the wrong direction. We are falling behind the United States, where encouragement is given to companies—especially small companies—to innovate and develop. That has proved especially successful in cancer research. There is not enough knowledge or innovation in British industry and not enough encouragement is given.

France gives great help to its new technology, especially information technology. It proposes to set up a complete town with all the facets of information technology. The French Government are also helping the establishment of biotechnology. Germany, too, offers great help for technology.

However, we really should consider what is happening in Japan, which is poised to overtake America in consumer electronics because of the partnership between Government, finance houses and industry. There is no shortage of capital to develop new projects and new techniques. Japan is moving to the forefront of industrial nations. It will surpass America not only in electronics, but in many other areas.

Japan does not go across the whole area of industry, but picks the winners, and is currently spending a great deal of money on biotechnology. Japan decided that aerospace was a winner, and made sure that there was no shortage of capital. It is developing that industry from a closed market and now exports to the remainder of the world.

There are lessons to be learnt. The Government's economic policies will not help our manufacturing industry. Free competition and unrestricted imports have had a terrible effect on our manufacturing base. The Government's view that everything in the public sector is bad and must be flogged is short-sighted. I have pointed to Inmos and Celltech as examples to disprove the Government's view. We should not be selling public assets.

We are speaking at a late hour. North sea oil production will peak in two years and will start to decline thereafter. It is still vital and will play an important role for many years, but we need to develop a manufacturing base that includes science-based industries if we are to compete with other nations and to earn the wealth on which our people's standard of living depends.

11 am

Mr. Richard Tracey (Surbiton)

I am sure that the House will thank the hon. Member for Jarrow (Mr. Dixon) for initiating the debate. I hope that the hon. Gentleman will not take it amiss if I say that it seems appropriate that the hon. Member for Jarrow should initiate such a debate.

I pay tribute to the energetic efforts of my right hon. Friend the Minister for Information Technology, who never loses an opportunity, whether on television, in the press or in the House, to promote British high technology. I am sure that he will answer many of the questions that will be posed in the debate.

My hon. Friend the Member for Havant (Mr. Lloyd), who is extremely knowledgeable about these matters, approached the subject on a broad front. I shall concentrate on the narrower aspect of broadcasting and communications, in which I have considerable experience and interest.

I worked for the BBC for nearly 15 years. Although some of my hon. Friends may be critical of other aspects of the BBC's work, I pay tribute to the BBC and the independent broadcasters for developing broadcasting and constantly pushing out the boundaries of technology.

When I began broadcasting about 17 years ago, we were well beyond the era of the crystal set, but the massive leap in the use of technology during that period is a good and graphic example to the British people of how technology has developed in this country.

The BBC's engineers won the Queen's award to industry for their work in developing the transmission of colour television, but that is the icing on the cake. Many of the best examples of the leap forward in technology can be found in the process of making programmes.

When I began in radio broadcasting, if we went on an outside story we had to take technicians with heavy recording equipment and put the programme on tape. Within 10 years, we had started using smaller recording equipment, and reporters for the BBC and independent radio stations can now use hand-held recording machines which produce the high quality of recording required by the listener.

The same applies to the making of television programmes. About 15 years ago, we had to take out a crew of four or five technicians and a film camera. Having recorded the story, we had to take the film back, get it processed in a laboratory and cut and edit it into shape. It took a considerable time before the programme could be put on the screen.

We have moved rapidly into electronic news gathering—ENG, as it is known in the industry—which involves the use of electronic cameras and portable video cameras. The reporter, with fewer technicians — that is an important aspect which I shall deal with later—can record material and have it ready for broadcasting in a short time. It may not even be necessary to take the material back to a studio. There have been considerable advances in outside broadcast techniques. Material can quickly be transmitted back to the studio and rebroadcast for reception in the home.

That has become part of the normal way of life for people sitting in front of their television sets or beside their radios, but it is a significant demonstration of how our technology has progressed with the support of engineers, Governments and Parliament.

We are beginning to see what Sir Ian Trethowan, the former director-general of the BBC, called the third age of broadcasting. It revolves around the possibility, which is quite close, of direct broadcasts by satellite and the reception of those signals and programmes in the home. The other important development is the dissemination of material through cable television.

When discussing the motion, it is important to examine the link between broadcasting and communications information technology. For example, Ceefax and Oracle provide information on the television screen in pages of words, as distinct from the pictorial transmission of information. Ceefax and Oracle are comparatively recent developments and they are important examples of the advance of high technology.

In a lecture which is now being published in a useful little pamphlet, Sir Ian Trethowan warns that there is enormous proliferation of these various areas of broadcast technology which may baffle the public and create problems in the industry. When he talks of baffling the public, he points out that in addition to the ability to receive signals on radio and television sets and to receive Ceefax and Oracle, there is now the possibility of direct broadcasting and of cable programmes, with a whole range of new channels of information technology receipt. There is also the other development, which we have seen grow apace in the past five years, the video cassette recorder. It is now possible to watch one television channel while recording another or not even be in the house when recording one or two channels on a video cassette recorder to watch at another time. There is a tremendous bank of technology entailed in this, and I can understand the view that it will lead to baffling experiences for some people.

As for the industry and the ramifications for employment, as I have said already, the BBC and the independent broadcasting authorities have made great strides in developing broadcasting. However, there is a problem, and I have been worried by it for many years. Unfortunately, so much of the equipment used in broadcasting, recording and transmission is not British manufactured. From the very beginning of my radio career it bothered me that the only truly flexible small tape recorder that we could use for outside broadcast recordings was made in West Germany. The position has not changed. The tiny machines now being used by radio reporters are still not manufactured in Britain. It seems as though we lack the ability to produce the equipment when the BBC and the IBA want it for their programming.

Recently when I visited the BBC television studios at Shepherds Bush I was slightly surprised to see that a small new flexible studio camera was German and not British. I took the matter up with the director-general and the director of television immediately afterwards. I asked them why the BBC was using German equipment. They told me that their engineers had investigated whether British manufacturers could provide this type of camera, only to be told that it would take two years to develop it to the standards required by the BBC. That is extremely worrying.

Similarly, we are buying more and more colour television sets and video cassette recorders. In almost all cases that equipment is manufactured by foreign companies. We see a massive proliferation of Japanese colour television sets and video cassette recorders in this vast and growing market. We have Sanyo in Lowestoft and Sony in South Wales. They are very happy to produce this machinery for the British market. It is a great shame that it is not being produced by British manufacturers, and I see no prospect of any change.

Mr. John Page

Why are there no British manufacturers of this equipment in an enormously expanding and popular market? Has my hon. Friend any idea?

Mr. Tracey

I wish that I could supply the answer to my hon. Friend. It may be that my right hon. Friend the Minister for Information Technology has some thoughts about it. I cannot believe that we do not have the technical know-how and inspiration. With such people as Sir Clive Sinclair in the business, it amazes me that we are not able to produce the competitively priced television set and video cassette recorder that the public want to buy. The reason could be the difficulty of competitive pricing, and that may arise from the cost of the labour required to produce them. It may be that the speed of development is insufficient to bring the equipment up to standard when the public or the broadcasting authorities want to buy it. I am sure we all agree that it is very worrying. It would be excellent if we could break through in some of these areas.

I have been considering the consequences for employment prospects of the development of new technology. There is no doubt that they are considerable. We are moving further and further in cutting down on support crews, for example. A BBC electronic news gathering team no longer requires to take out a lighting technician. It no longer needs as many people to carry heavy equipment. It is obvious that there will be fewer and fewer employment possibilities. This has to be looked at carefully by both sides of the industry — both management and unions.

The unions have not been completely blameless. I understand their fears. In no way do I wish to minimise their worries about their members' futures. But we have seen graphic examples of almost Luddite behaviour by unions when confronted with new technology. Other hon. Members may wish to speak in greater detail than I can about recent behaviour in Fleet street, but even 20 years ago the newspaper unions were talking of the horrors and dangers of new technology. That attitude persists. as we see from more recent disputes in Fleet street.

The same applies in broadcasting, and the facts must be faced. It is obvious that there will be fewer jobs available if we are to take a grip and capitalise on the technical development which is so important. I am as interested as anyone in the views of hon. Members about how the facts of life should be explained so that we do not see Luddite behaviour by union officials effectively setting back the most important onward march by new technology.

11.20 am
Mr. Paddy Ashdown (Yeovil)

It is a pleasure to follow the hon. Member for Surbition (Mr. Tracey). I agreed with much of his speech, the burden of which was that we have great expertise and should be making more of it.

I am grateful, as is the House, to the hon. Member for Jarrow (Mr. Dixon) for choosing this subject for debate. As Mr. Speaker's Office is aware, I have been seeking a debate on the same topic under the Adjournment procedure for some time. I am, therefore, delighted to have the opportunity to hear other hon. Members speak on the subject.

There is general agreement about the vital importance of new technology for the new industrial base—some call it the third industrial revolution. My view is that Britain will have to create a new industrial base that must move away from our traditional base in the world—from the high resource, relatively low value-added based economy, to a low resource use, high value-added based economy. Upon our success or failure in that task depends Britain's future prosperity. I have no doubt that our future lies in espousing enthusiastically the new technologies and ensuring that they increase our industrial efficiency.

The Minister for Information Technology who is to reply to the debate is a foremost advocate of that policy. I agree with the Government's rhetoric on this subject, but I have some differences with the Government in relation to the gap between their rhetoric and their actions. I am in broad agreement with the Government's rhetoric and determination as expressed by the Prime Minister.

The Government have been conspicuously successful in some areas and they deserve to be congratulated. I refer in particular to the microprocessor application project and the CADCAM experience which have produced excellent results. The Minister is entitled to feel proud of that and I am sure that he will refer to it.

The Government have also set some useful precedents for co-operation between Government and industry, particularly small industry. I refer to the British micromanufacturers' group and its development of a British standard for computer networking. I understand that that is due in August. It is a useful example to set for the future. I believe that much benefit will spring from Inmos, although it has experienced problems, with which other hon. Members will deal, and which cause concern.

The Alvey programme shows the Government's concern about moving into the fifth generation in an appropriate fashion. I have some reservations about Alvey, particularly since it seems to be directed too much towards the big computer firms and not sufficiently towards the small firms.

Yesterday I spoke to Mr. Nigel Smith, the chairman of the British micromanufacturers' group. He said, "It simply has not happened. Alvey will not produce anything for the small manufacturer. It is not there to assist us—it is a carve-up for the giants." I understand that Mr. Smith had a meeting with Department of Trade officials and Ministers at which a senior Minister said that the small firms should band together and create a full-time participant for Alvey. I am told that it is beyond their capacity to do that and Mr. Smith's comment was, "We will be left with the crumbs. There is nothing in it for the small man. Alvey is a beautiful instrument for large companies to obtain low cost R and D."

I recognise the Government's concern for small industry. I hope that the Minister will take seriously the possibility of ensuring that the smaller manufacturers have a chance to participate fully in Alvey.

I am sure that the Minister is aware that computer science graduates are having difficulties. Last year a significant number were coming up, but there was a danger that many would not obtain their degrees because they could not arrange sandwich courses with the firms that should have been able to offer such facilities. The Government stepped in and said that they would pay half the cost of such sandwich courses. That was useful. However, the Manpower Services Commission came along and said, "We are sorry, but because of the cuts the scheme must be substantially reduced."

A small manufacturer of computers told me the other day that initially he wanted to take on six sandwich course students, but because of the cuts he could take only two. He believes that at least two of the other four students have not obtained their degrees because they could not complete the sandwich element.

Last year the Government funded only 200 places in the scheme. For this year, students must find themselves sandwich course places by the end of this month, but the MSC is not due to announce its decision on how many students it will assist until May. I hope that the Minister will comment on that and that he will see the need to keep up the technological expertise of our young graduates so that they can attend the vital sandwich courses.

If all is OK internally — I congratulate the Government on what they have done internally—all is not well with our capacity to co-operate and trade with others in high technology overseas, I have no doubt that the Minister will refer to ESPRIT — the European strategic programme in research and development in information technology. ESPRIT is a huge combined European programme. One has some idea of the scale of it when one considers that in the first five years of operation about £850 million will be spent on it. That compares with the £350 million for the Alvey programme. The lion's share of ESPRIT funds comes to Britain. Firms such as Plessey, GEC, SDL, Scicon, British Leyland Systems, Marconi, Logica and many of our universities have participated in the pilot programmes and will continue to participate in the major projects.

The Prime Minister has welcomed ESPRIT, as have Ministers. I wrote a letter to the Secretary of State for Trade and Industry, to which I shall refer later. In his reply the Secretary of State said: In Europe, we are supporters of and participants in a collaborative programme of research known as ESPRIT. The letter was dated 9 February, and yet last week it became apparent that, far from following that rhetoric, the British Government are the only Government who have blocked the development of ESPRIT beyond the pilot programme. I rang Brussels at 9 o'clock this morning and received confirmation that the other eight Governments have agreed to the second stage of ESPRIT, but that the British Government have blocked it. That is totally contrary to what the Secretary of State told me on 9 February.

I believe that matters have come to such a pass that last week President D'avignon made a special visit to the United Kingdom to appeal to the Prime Minister to go ahead with ESPRIT. The House has a right to know what on earth is going on. Is the Minister misleading me, or does he simply not know? Is it a question yet again of the left hand not knowing what the right hand is doing?

If the Prime Minister and the Government view ESPRIT as a stick with which they can beat the European Community over the budget issue, there is no clearer case of cutting off one's nose to spite one's face. The ESPRIT programme will do this country an immense amount of good and we already have a lion's share in it. It is worth noting that in 1975 the European Community had an information technology trade surplus of £1.7 billion; in 1984 it has a new technology trade deficit of £5 billion; and by 1985 that deficit is predicted to be £9.7 billion. In the face of those figures, surely the Government must place their commitment behind ESPRIT. I am told that the next opportunity for us to come clean on this matter is 28 February at the research Ministers' meeting in Brussels. I hope that the Minister will make a clear commitment to go ahead with ESPRIT and that this matter is not bound up in the Government's battle with the European Community about budgets. That would be equally damaging to Britain and Europe.

For many years, our high technology industry has suffered because of the inability of the Department of Trade and Industry to stand up to United States industry in particular. I refer to the disgraceful case of the recent IBM letter sent to its United Kingdom customers. I do not blame IBM for sending that letter, because I understand that it was under great pressure from the Americans to do so. I should like hon. Members to take particular note of the fact that the IBM letter required all those who held American computers in Britain to ask the American Government for an export licence whenever they wanted to move those computers.

The IBM letter states: As you are aware, transactions within the United Kingdom involving 'Advance Systems' are also subject to the obtaining of United States export licence approval. I shall not dwell on the infringement of our national sovereignty entailed in that action, nor on the larger point of extraterritoriality. The Americans have been seeking to impose their laws on us. Recently, the Secretary of State has said that what happens in the United Kingdom is the subject of United Kingdom law alone. The matter of extraterritoriality is a larger subject.

Despite what the Government are seeking to do, Britain remains 90 per cent. dependent on United States' computers. Those computers are in Government Departments—Inland Revenue, the Ministry of Defence, and even in GCHQ. Therefore, any action could have the most disastrous and long-term consequences, perhaps even to the integrity or our defence systems. That action is planned. The information has been published and has not been denied by the American Adminstration. The United States Department of Commerce in Washington has said: If any company tries to move licensed commodities within the United Kingdom without our permission, there will be big trouble. They will be subject to legal investigation and will suffer the consequences. Furthermore, a United States Department of Defence spokesman has said that a complete embargo will be placed against any country which refused to comply with United States regulations". I am told on good authority that we have perhaps as little as three to six weeks' supply of spares for those American computers on which the Government, the Ministry of Defence, perhaps even the GCHQ and the whole of our industry depend. The United States Government are threatening this action in a way that could do more damage in bringing GCHQ to a stop than the unions could ever do. This is a serious problem.

I brought this matter to the attention of the Secretary of State for Trade and Industry before he left on his recent American trip. I wrote him a four or five page letter making those statements. I understood that the Secretary of State was to see the chairman of IBM and have high level discussions. I regret to say that, on the key issue of our national sovereignty and perhaps even the integrity of our defence system, the Minister returned empty-handed. He returned with no reassurances for us on this serious matter. According to press reports of a press conference, — I paraphrase what was said — the firms that had received letters requiring them to obtain United States export licences to move their goods within the United Kingdom should obey United Kingdom law but look after their commercial interests. If that is not a Janus-faced attitude on the part of the Department of Trade and Industry, I do not know what is. The Department is saying that those firms must obey United Kingdom law, not United States law, and should look after their commercial interests—in other words, if a firm has an American computer, no doubt its commercial interests will point it in the opposite direction. I should have thought that the Department would have been prepared to take on its own back the burden of assuring British industry that it does not suffer from such interference. The Department should have the strength to say—I hope that the Minister will comment on this point—that if there are repercussions for United Kingdom firms for not obeying the strictures of the American Government, they will be dealt with entirely by the Department.

Mr. Ian Lloyd

I am following the hon. Gentleman's point with the greatest interest. He is implying that he would like to see the withdrawal of the instruction by the American Government through IBM. He mentioned that it was a threat to the integrity of United Kingdom defence systems. Does the problem not arise from the fact that there is a greater threat to the integrity of the defence of the West as a whole? If that letter were withdrawn, how would the hon. Gentleman advise the Americans to meet that threat, because we know that the transfer of this type of technology in multifarious ways and for many purposes significantly alters that balance?

Mr. Ashdown

I am grateful to the hon. Gentleman for that intervention because it brings me on to my next point. I recognise that it is necessary to ensure that the export of technology to the eastern bloc should not be done in such a way as to weaken our defence system. It is right to have a structure within which that technology should operate. I leave it to the hon. Gentleman and other hon. Members to decide whether it is appropriate that the American Government should treat one of its allies in this fashion in relation to internal movement. I believe that it is not right, and that it is a clear infringement of our sovereignty and something we should not expect from our ally.

I turn to the question raised by the hon. Gentleman about the structure by which we inhibit that trade—the Co-ordinating Committee Controlling East-West Trade. COCOM is an old committee. I am told that it dates from 1949. I asked the Library of the House of Commons about its genesis, but the information was somewhat confused. The subject of COCOM has never come before the House. I hope that I shall demonstrate to hon. Members that it has a severe restrictive capacity on our foreign trade in high technology. It is the mechanism through which that trade is regulated, and, supposedly, has sprung from the NATO agreements. In fact, COCOM does not include Iceland, but includes Japan. It is not listed under the NATO agreements. COCOM is now so out of date that it is, practically, ridiculous. I am afraid that it is now so much in the hands of the American Administration that it is being used as an instrument by which the Americans regulate trade to their advantage. I am aware that that is a serious statement, but I hope that hon. Members will follow me as I back it up with facts.

The COCOM list of embargoed products is out of date. I am told that it springs from about 1976. It now includes a vast variety of items that are in common use. I am told that if people leave Heathrow airport wearing a digital watch such as the one I am wearing, technically they are infringing the COCOM agreements unless they have an export licence. The chips in the digital watch are on the COCOM list and an export licence is required to take them from this country. If a person leaves Heathrow airport wearing a certain brand of heart pacemaker without an export licence, that person is technically infringing the COCOM agreements and the Export Licensing Act that springs from them. That shows how ridiculous the list is. I mentioned that in my letter to the Secretary of State and it was undenied. So ridiculous is the list and the interference that the ZX80, a toy that we might give to our children at Christmas — which was available for sale from W. H. Smith and Son Ltd. on the duty-free side of the barrier at Heathrow airport—was, on the insistence of the American Defence Department, not allowed to be sold from that side of the duty-free barrier without an export licence. I am ready to be contradicted if that statement is wrong.

The present COCOM list is not just inadequate; it is out of date and practically unenforceable. Another list has been proposed by the American Government. It contains no fewer than 400,000 items of new technology. It is, effectively, an inventory of the entire American technological warehouse. For us to agree to that list in its entirety—I am aware that the Government have made representations that we should not—would be an act of technological suicide. The list must be up to date and refined to the new technology that has defence implications and strategic value.

I said that I believed that the Americans were now using COCOM to promote their trade against ours. In a recent confidential report from ICL, which I sent to the Minister, the company referred to the American attitude as nothing short of technological imperialism. Those are not my words.

I will give some examples. The first is in relation to our trade with China. I have been in correspondence recently with Plasma Technologies, a firm in Bristol which is one of the few firms in Europe to make the chips. It has been seeking to sell to the Chinese for some time, and there is a good deal of Chinese interest in its products. The firm was aware that American salesmen were in China seeking to sell goods which they knew were on the embargoed list. The firm had about £1 million of order interest from the Chinese. Without any reference to the Department of Trade and Industry, on 23 November the American Government unilaterally relaxed COCOM's regulations to allow the American firm to sell the goods that Plasma had been seeking to sell. The Chinese are still interested in Plasma's high technology equipment for making chips. The company knows that American salesmen are still in China seeking to sell goods that remain on the embargoed list. The company and I fear that when the high technology exhibition is opened in May by President Reagan in Peking there will be further unilateral relaxation. Meanwhile, Plasma Technologies, despite letters to the Minister and the Prime Minister, has failed to obtain an export licence for its goods, and is told that the trade cannot continue.

I mentioned that matter to the Minister and I will quote from his reply: I have noted the views of certain UK companies about the COCOM rules as they apply to China. Let me assure you that American companies wishing to export embargoed goods to China must go through the same procedures as companies in the UK and other COCOM member states. Indeed, the US Government has stated categorically that it will continue to submit exports to China for COCOM review as in the past.… However, we shall take every possible step to avoid the danger of the rules being manipulated to give unfair advantages to any one COCOM member state. My Dept is in touch direct with John Hadland Ltd"— John Hadland Ltd suffered the same problems in relation to exports to China— and Plasma Technologies Ltd whose letters to you on this subject you attached to your letter. I take that as some reassurance. However, in his reply to Plasma Technologies, the Minister said that the United States wished to relax the COCOM rules further to enable those exports to China. He said, however, that the other COCOM countries were blocking that move. Who is doing that? Are the Government blocking any further relaxation?

I fear, once again, that a major and successful high technology firm will be blocked from exporting vital goods to China that will help our trade and that the Americans will relax the rules unilaterally, move in and clean up.

While United Kingdom high technology exports to China remain blocked, it is interesting to note that the United States computer business with China has increased dramatically. In 1981, United States high technology trade with China amounted to $71 million; in 1982 it was $118 million and in 1983 it was $500 million. I am told that those figures come from the Department of Trade. That is an extraordinary increase during a period when our exports were blocked by the COCOM rules and we were unable to take a strong stand in support of the United Kingdom high technology industry. The same thing is happening with the eastern European bloc.

I believe that the COCOM rules are being manipulated. Hon. Members will remember the tremendous storm about the export of a VAX 11/82 computer from Sweden which was believed to be being smuggled to eastern Europe. That is precisely what the firm was doing. The VAX 11/82 is nothing more that two VAX 11/80s pinned together with an interface board between. The interface board is important but not essential. It is something that almost any computer technologist could fit. The Americans have sold VAX 11/80s which are in Moscow hospitals. There are also British microcomputer programmers working in Moscow hospitals programming those VAX 11/80s who are earning £1,000 a month. The Americans are raising enormous steam about the export of a piece of equipment that is already in Russian hands.

Similarly, the export of a DEC PD 11 computer, about which there has been considerable anxiety recently—I believe a court case involving a firm on the south coast which wished to export is pending and therefore one must be careful about what one says — is being blocked. Meanwhile, the Americans have an agency selling PD 11s in Yugoslavia. According to DEC's figures, they have already sold 30,000 machines to eastern bloc countries.

Mr. Rob Hayward (Kingswood)

I do not want to distract the hon. Gentleman, because he is making an important point. He cited figures about rates of pay for programmers in Moscow. I find them somewhat surprising. Will he check them because they may be inaccurate? They seem to be staggeringly low. They are about one-third lower that I would expect programmers' monthly rates to be.

Mr. Ashdown

I am grateful to the hon. Gentleman. I believe that I said £1,000 a month. It should be £1,000 a week. That makes the case even worse, but I will say how I think that may be altered and how it has worrying ramifications for the future.

At a time when the Government have been asked by the American administration to withdraw a ZX80 toy computer from the other side of the duty-free barrier at Heathrow, the Americans have admitted selling 30,000 DEC PD1 Is to Eastern bloc countries.

Tasbian, a company in Plymouth that makes printed circuits board for microcomputers, has contacted me recently. It uses a Racal—Redac system for computer-aided design. Some of its spare parts are British. Tasbian tells me that its Racal—Redec computer-aided design mechanism has recently broken down. The company has applied to the United States for a licence to re-export from America the British-made spare parts. The company has been waiting for two or three months for the export licence, which has been blocked. Yet there is evidence, which is available to me, that the United States is selling those same British-made parts to eastern bloc countries. So while United Kingdom firms cannot get British-made spare parts from the United States, the United States is selling those parts, in finished machinery, to the East. It cannot get the spare parts because that would require an export licence.

I heard recently of a software house that was banned under the COCOM regulations from selling simple accounting software to Hungary. While the United Kingdom's high technology exports seem to be being blocked and while simple accounting technology has not been allowed to be sold to Hungary, United States exports of high technology goods to Hungary have leapt from £12 million in 1980 to £26 million in 1982. There are similar increases elsewhere. In Bulgaria, they have risen from £4 million to £8 million and in Czechoslovakia from £21 million to £27 million.

The hon. Member for Havant (Mr. Lloyd) is a well-respected figure in this area. He said that we must be preeminent and paramount. Indeed, we must be. However, even if we were, such is the structure of the COCOM regulations, so out of date and manipulated are they, that they are being used against us so that any ascendancy that we have is quashed by those trade restrictions. I agree that we should have a tariff-free system for trade. When he returned from the United States, the Minister said that he wanted a free flow of technology and ideas. I wish that we had a free flow of trade. The problem is not so much that we should not have tariffs but that certain unfair trading systems appear to be operating against us.

On the Minister's visit to the United States we hoped that he would stand up for Britain, or, in the phraseology of the Prime Minister, bat for Britain. However, he has returned empty-handed — indeed, slightly worse than that, as I shall try to reveal. He was proud of the agreements that he had arranged for technology transfer. I fear that unless the Department of Trade and Industry is prepared to stand up for the high technology industries in Britain, there will not just be a technology transfer system from America, but we shall be inferior and subservient to America. I ask for a free flow of trade. The Minister has missed his opportunity. I am aware that it is a brave man who will stand up and call the Minister wet but, in failing to stand up for Britain and British high technology exports, he is behaving in a manner that can only be described as wet.

We have missed the opportunity to tell the United States that we shall no longer accept its manipulation of COCOM and other agreements so that British high technology exports are blocked and United States industry can move in and clean up. That is how things stood, but I am told that things are now worse than I imagined. I shall read the notes that I received from a well-respected journalist of a meeting that he held with Department of Trade and Industry officials earlier this week. He was informed that the United States was attempting to embargo all computers over eight bit.

  • Embargo all except the most obviously commercial software.
  • Seeking to control the movement of individuals with software knowledge."
That was put rather pleasantly in the euphemism of "intangible materials". The officials also said that the United States was Refusing entry to UK nationals to US computer related conferences. Attempting to control at source all academic and scientific development in certain computer areas … The officials acknowledged that the US had not notified the UK about the change in controls relating to China introduced on November 23rd 1983. Continuing with attempts to impose US domestic licensing requirements on UK companies. In particular, the US had attempted directly to force ICL UK to use US licences for all computer sales, i.e. in the UK. I am also told that it was accepted at the meetings, and stated by the legal representative of Hewlett Packard, that the United States was attempting to force United Kingdom subsidiaries to provide to the US a compete list of all customers including in the UK in order to get new general export licences. I do not wish to plunge the House into a fit of anti-Americanism. It is important for us to realise that we are vitally dependent on our cousins on the other side of the Atlantic. However, it is unacceptable that we should allow this to continue. It seems that the Department of Trade and Industry is prepared to lie down in front of the United States high technology industry and invite it to walk over us. Of course, the Americans are only too happy to oblige, with enthusiasm. The major United Kingdom high technology industry is in severe danger of dying, because of its exports record. It remains the case that nine tenths of Britain's computers are American. The installations used by the major Government Departments are American.

The hon. Member for Havant asked whether the Government are adequately equipped. They are, but with American, not British, computers. The major banks, the stock exchange, the Inland Revenue and the Ministry of Defence use United States computers. Yet it seems that we must ask the permission of the United States Government to move them.

Mr. Henderson

I think that it would be fair, when the hon. Gentleman makes such claims, if he said that many of the American computers to which he refers are made and sometimes were developed in this country.

Mr. Ashdown

I accept that. However, I am told that the mainframe computers to which I referred are made in and imported from the United States. I am not saying that that is not how it should be, but I am saying that it is deeply dangerous, when it seems—I do not take this seriously, but I wish the Government would make it more clear—that we have to ask the American Government's permission to move those computers, and when the Americans are operating so effectively as to block off our high technology exports elsewhere.

The policy of the Department of Trade and Industry is moving Britain into permanent technological subservience to the United States, so that we are assuming the status of a technological satellite to the United States high technology industry. There is undoubtedly, as other hon. Members have said, great potential in Britain. I congratulate the Minister on recognising that and pursuing it, but now is the time for the Department to stand up for the British high technology industry and give the encouragement and support to high technology exports that is needed so that the industry can survive and prosper, and realise the potential that we know it has in abundance.

Several Hon. Members


Mr. Deputy Speaker (Mr. Harold Walker)

Order. The House has been debating the motion for nearly two and a half hours, in the course of which there have been five speeches. It is obvious that if we do not improve on that average some hon. Members will be disappointed.

11.57 pm
Mr. John Page (Harrow, West)

I accept your suggestion wholeheartedly, Mr. Deputy Speaker. Having listened to the last 36 minutes of the speech by the hon. Member for Yeovil (Mr. Ashdown), I feel completely out of breath before I have even started my speech.

Like other hon. Members, I am grateful to the hon. Member for Jarrow (Mr. Dixon) for giving us the opportunity to debate this subject. If I am not here for the whole of the debate, I hope that you will accept as a good excuse, Mr. Deputy Speaker, that I am going to a meeting to discuss the exports of British high technology.

The hon. Member for Jarrow said that he did not consider himself a great high technologist. I feel the same. I have been working for the same manufacturing company for the past 35 years. I think that both he and I speak, if not for the grass roots, for the oil rags of our industry. There is a danger of some of our debates being dominated by experts. In a defence debate, it is often worrying to find that everyone else knows far more than oneself and that the ordinary man in the street does not have a go. I am reminded of an occasion when I had spoken, rather brilliantly I thought, on the Ecclesiastical Jurisdiction Measure. When I left the Chamber, a colleague, Lady Gammans, said, "Jack, I want to congratulate you on your excellent speech." I said, "Muriel, that is very kind of you." She replied, "I felt that you were speaking for all of us who know nothing whatever about the subject."

The hon. Member for Warrington, North (Mr. Hoyle) spoke of the decline of manufacturing industry. Having heard speeches from the hon. Gentleman before, I was delighted to find that I agreed with a great deal of what he said today and I congratulate him on the well-informed way in which he presented it. He may not agree, however, with my view of the recipe that has led to the industrial decline of this country. First, I believe that there was a cosy conspiracy between management and unions to go for a quiet life and to neglect the service and marketing of their products, especially for export. Secondly, overtaxation of manufacturing industry by successive Governments meant that there was insufficient capital for reinvestment. Thirdly, Governments should not have listened to the CBI's invitation in the 1950s to establish a pool of cheap labour from the Commonwealth, leading to mass immigration. That is a major reason why high technology did not come into our industries earlier.

The hon. Member for Jarrow said that trade unions were not reluctant about the introduction of new techniques. I hope that he will use his authority and position to explain to them that, although in the short term the introduction of technology must lead to a loss of jobs, in the long run it is the only way to safeguard employees and to create new jobs. Almost the greatest problem in industry today is the introduction of new techniques.

In general, I believe that competition is the secret of industrial success and that overprotection causes complacency which in turn leads to uncompetitiveness. Nevertheless, I shall read and consider carefully what the hon. Member for Warrington, North has said. It is indeed surprising that the Japanese manage not to become complacent although they have a highly protected market. Perhaps that has to do with the attitudes of the Japanese compared with those of the British.

Nevertheless, certain new industries, especially technological industries, must be protected in their early stages so that they are not snuffed out by overseas competition. In the microcomputer industry the great power of the United States and Japanese industries allows them to flood this country with cheap, developed microcomputers, possibly pushing out British manufacturers.

In this context, I refer to the Central Computer and Telecommunications Agency—a matter about which I spoke to my right hon. Friend the Minister for Information Technology some months ago. I believe that the agency is currently under the Treasury, although I am not absolutely sure. When I asked questions about this last year it came within the Civil Service Department. I wish to raise two points. First, due to my respect for the dynamism and generalship of my right hon. Friend, I believe that the CCTA should be transferred entirely to his Department where there is knowledge, expertise and informed enthusiasm for microcomputers and telecommunications.

Secondly, the Government should use their power as a purchaser to encourage British industries. I asked two questions about this some time ago. Luckily, when I visited the Library a few minutes ago, the excellent British-made Cifer machine from Melksham in Wiltshire turned up the references immediately so that I could look up those questions. When I asked how many British microcomputer companies were on the list of approved firms, a rather strange list appeared, containing the names of many well-known foreign firms. On asking a further question, I discovered that if there was a British majority shareholding in the company selling or processing the goods here, the company was regarded as British.

Nothing could be simpler for an overseas company than to install a British end called Such and Such (United Kingdom) Limited with a majority United Kingdom shareholding. The cost of components sent here can then be arranged so that no profits are made here but the goods appear on the Government list and can be sold as British manufactured products.

I trust that I shall receive an accolade from you, Mr. Deputy Speaker, for concluding my speech now. I hope that my right hon. Friend the Minister will bring my comments to the attention of his colleagues in the appropriate Department. I in my turn will write to my right hon. Friend the Prime Minister on Monday so as to increase his empire.

12.6 pm

Mr. Lewis Carter-Jones (Eccles)

I, too, shall be brief, as all hon. Members who have attended the debate should have the chance to speak. The hon. Member for Harrow, West (Mr. Page), an old sparring partner of mine, has set a good example. The Minister will not be surprised to hear that I intend to deal with two items—my old friend the airbus and the use and consequences of technology for disabled people.

My main point about the airbus was to have been about delay in decision making as I have been very worried about the delay in reaching a decision about the A320. Members of all parties when they meet in die corridors have constantly been asking, "When is the Minister going to make a statement about the airbus?". I believe in my bones that a favourable statement is to be made. A Conservative Member said to me only yesterday that it was a good thing that the statement had not yet been made because if the Minister had made it when we first asked him the answer would have been no, but now there is a chance of winning. Nevertheless, that attitude should not be taken as an example for indefinite use. The Minister's own boss, the Secretary of State, told local councillors that delays in decision making often affect the outcome. Nevertheless, I will let my right hon. Friend off for now and deal with the airbus.

There are three component elements in an aircraft, unless it is a glider—the engine, the airframe and the avionics. For the purpose of this exercise, I classify the wheels as part of the airframe. I believe that a decision has been made to allow a British component in the power plant to be used in the A320. That decision is vital to the people of Derby and surrounding areas and it is a good decision. The airframe is the big question. For nostalgic reasons, I want high technology wing sections to be made in Chester, where the old Mosquito night fighters were made. Above all, I want it to be made so that we maintain our ability to produce high technology wing sections. If we do not have the A320, we can forget about that. We have the engine and I hope that we have a large part of the airframe.

What about the avionics? A few right hon. and hon. Members will remember that in the dark days of the 1940s we navigators used to change course at 60 deg, calculate the drift on the bomb sight, turn back to port 60 deg, follow the bomb sight, straighten up and work out a new air speed and direction having spent two minutes on each leg. It is most disconcerting sitting up at the front of an A300 and seeing the fellow who does one's old job pressing a button and getting the air speed and direction immediately. He presses a button and discovers his estimated time of arrival. That used to be the calculation that gave me the most difficulty. He can even press a button to discover the best airport to go to in the event of difficulty. I am anxious the Britain should have a share of that action. I am asking that that which we have made shall be manufactured in Britain.

There will be difficulties if a favourable decision on launch aid is not made. If the Government decide not to provide launch aid, an important aircraft will be manufactured and it will not contain the essential British components. It would be a disaster if we did not proceed with the aircraft, but perhaps the Minister will tell us today that the Government will provide launch aid for the airframe. If that is so, this debate will have been worthwhile. I admire my hon. Friend the Member for Jarrow (Mr. Dixon) for initiating it. The Minister would make his day if he made such an announcement.

I shall now deal with accidents when filing information. I am delighted that a substantial number of Opposition Members present represent constituencies from the north. I have done some work in regard to kidney transplants and the care of kidney patients. A dear friend of mine from St. Thomas's hospital recently asked me why I did not spend some time working on oxygen concentrators. I said, "What?" He said, "Oxygen concentrators. They are superb things." I therefore checked with other experts, who told me that they are one of the best things since sliced bread for people who have difficulty in breathing. All the Opposition Members present represent industrial areas where industrial diseases that affect respiration are common.

I chaired a meeting yesterday at which a Minister spoke. He was much admired for what he said. I speak of another Department, the Minister of which is blameless. His private office is also blameless, but an unknown civil servant is sitting on vital information. However, it is funny how it is possible to get hold of information if one wants it. I was promised in a parliamentary answer that information in a survey on oxygen concentrators would be in the relevant Minister's hands on 18 January and that copies would be available. I thought, as the person who made inquiries and as an elected representative, that I should have had sight of that document. It is not secret, although some civil servant must have stamped 'Highly Secret" on it. I have now seen that document, having obtained it from other sources. The significance of the case is that a bureaucrat is holding tight on an important possible development in the care of people with respiratory difficulties such as miners, steelworkers, slateworkers, textile workers, the elderly and those who work with asbestos.

As the House is probably unaware of the technology to which I refer, I hope that it will allow me to read the following: An exciting and recent development in medical technology is the home oxygen concentrator. This offers a dramatic improvement in the cost effectiveness of continuous oxygen therapy for patients with chronic respiratory disease often associated with certain industrial diseases. The concentrator is a piece of movable equipment the size of a small coffee table which continuously supplies the patient with oxygen. I do not fully understand how it works, but the machine filters out nitrogen and emits pure oxygen. That is of tremendous value. Moreover, it works in the home as well as in the hospital.

Right hon. and hon. Members may now be saying, "But Lewis, you are squandering money again." It is not me but the Department which is squandering money. I remember being involved in the perinatal campaign and trying to show that such care is vital. Between 1951 and 1980 I discovered that there were about 30 reports on the subject. One could bet one's bottom dollar that the same man wrote each of the conclusions. They all said the same thing.

A tremendous amount of work has been done on oxygen concentrators. There has been a survey in Sheffield and the supply division has examined the machine. The report which I now have, but not because of the Department, says clearly that the machine is in the best interests of the patient. The concentrator should appeal to the Government because it is cheap. The normal method of supplying a patient with oxygen costs £4,000 a year. The concentrator lasts 10 years and costs about £1,500.

However, such is the nature of the dead hand of bureaucracy that there is to be yet another inquiry. For what? To confirm what the previous report said when it merely confirmed what the report before it said? The Minister for Information Technology now has a job. He must get hold of his colleagues and say, "You must shake some of your civil servants who are denying people in need something which they require."

The concentrator is a superb example of advanced technology being usable for social benefit. The Minister talked of the service industries. I always like to think of the compassionate face of technology. We must bear it in mind that the administrator is the servant, not the master, of the House. When some of us have done enough work to prove that something is good and cheaper than the alternative, is technically possible, morally right and economically sound, no administrator should be allowed to get away with delays.

At yesterday's meeting with the Minister we discussed an idea that may be of great advantage to the disabled and which may have strong commercial overtones. We were delighted to see the Under-Secretary of State for Health and Social Security and my right hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley). Many of those who attended the meeting said that it was nice to see hon. Members from both sides of the House coming together in a good cause. It sounds nice, but it was talk, and, as the hon. Member for Havant (Mr. Lloyd) said, we have had too much talk and too much paper. What we really want is action.

The invention that we saw yesterday was the use of the Palantype machine—one is not being used in the House today, and I must not spy strangers — which records spoken words in print. It was modified by electronic experts from Southampton university, sponsored by the National Research and Development Council and taken up by Possum Controls. It gives an instant print-out of what is said when it is said.

Hon. Members may say that that is a minority interest, but it depends on how one defines a minority interest. There are about 10 million people in Britain who are either deaf or who suffer from some deficiency in hearing. However, the machine could serve another useful purpose. One of the most dreadful things in our society is that it takes a long time for defendants in trials to know whether they are innocent or guilty, and they suffer a great deal while waiting for a decision. This device could be used in the courts to provide the necessary information quickly so that judges can make their decisions and suffering is reduced. It might also in the long run change the pattern of the way in which an office is run.

It is interesting that a lay person thought of the idea. Mrs. Ashley, the wife of my right hon. Friend the Member for Stoke-on-Trent, South, said to him, "Would it not be nice, Jack, if you could read shorthand?" There is a problem with that, as the shorthand writers here today will realise — one cannot always read someone else's shorthand. From that came the idea of converting the Palantype phonetics into electronic signals, so that the words are reproduced instantly on a screen. My right hon. Friend uses the machine regularly, and at present it is 95 per cent. efficient. If the English language were not so difficult — we should use Welsh, which is purely phonetic—it would be 100 per cent. efficient. However, I must not say that we should change the language of the English.

The Minister's job is to consider events, and I beg him to emphasise the need to speed good decision making. The Minister must support the best. Let us have boldness instead of procrastination. As I said earlier, let us have less paper, less talk and more positive action.

12.23 pm
Mr. Barry Henderson (Fife, North-East)

I, too, congratulate the hon. Member for Jarrow (Mr. Dixon) on his good fortune in the ballot and on his choice of subject, not least because of the broad terms in which he worded his motion, which has enabled us to have a wide-ranging debate. Since hon. Members have chosen to talk about different aspects of the subject, I hope that the hon. Member for Eccles (Mr. Carter-Jones) will forgive me if I no not follow his line of argument, which emphasised medical technology. When my hon. Friend the Member for Havant (Mr. Lloyd) was talking about the analogy of the spotted dog, the hon. Member for Eccles intervened and asked, "What about feeding the dog?" The thought occurred to me that if the dog were well trained and well exercised, and otherwise in good shape, hunger would force it to go out and search for food.

Mr. Carter-Jones

Tell that to a postman.

Mr. Henderson

The hon. Member for Jarrow said that in many respects British industry does not meet the demands of the home market. However, in several areas, not least in home computers, Britain has had considerable success in supplying the domestic market. It is a curiosity of British manufacturing industry that there have been great achievements in export markets, with one third of all goods produced in Britain being exported. No country among the major industrial nations exports anything like that proportion of its gross domestic product. Japan, which is held up so often as the great example of an exporting nation, does not export as large a proportion of its GDP as does Britain. We sometimes talk ourselves into such a position that we do not recognise our achievements. We have had great success in exporting goods, competing in the toughest markets and against the toughest competitors.

I agree with the hon. Member for Jarrow that, during the past decade or more, Britain has had some problems in maintaining its share of the home market. He gave the example of home videos. In the range of consumer durables, that is one of our greatest weaknesses, and I hope that British industry will direct its attention to this area. During the past year there has been a significant and useful increase in retail sales. The economic indicators at the beginning of this year are much better, and much more in agreement about the not wildly exciting, but optimistic, signs for the future. If they come to pass, it will mean an increase in the growth of the consumer durables business, and I hope that British industry will exercise its marketing skills in identifying the requirements, and its productive skills in producing what is necessary to meet the growing home market. Above all, a small percentage increase in the recovery of the share in the domestic market that we have lost would have a dramatic effect on our economy and on creating jobs.

The hon. Member for Jarrow said that much of Japan's success was achieved under Governments of various colours. I thought that the Government of Japan had been only one colour for a long time, and the fact that they were not Socialist might have had something to do with their success.

Mr. Ashdown

Yes, they are Liberals.

Mr. Henderson

What's in a name, least of all this one? My hon. Friend the Member for Harrow, West (Mr. Page) raised the problem of what is British, and it is to this that I shall address my remarks. What is a British company, particularly when we are dealing with high technology? I spend a considerable amount of time, although not as much as my hon. Friend the Member for Havant or my right hon. Friend the Minister, trying to find out which companies are doing good things in the British economy and with British companies, and what we can do as a Parliament, or what the Government can do, to encourage their success. It is not easy to define a British company.

I hear hon. Members talk about ICL as a major British computer company, but it does not have any activity other than marketing and sales in Scotland, when a company such as IBM employs hundreds of people, and has done for a long time, in areas of Scotland with considerable employment difficulties, and has steadily grown. That is a Scottish company, as far as I am concerned. It has played a major part in the economy and social life of Scotland.

IBM is at Greenock, and there is also NCR at Dundee, which is the other side of Scotland. It had a difficult transition from the older types of equipment to the more modern, and its work force is not what it was, but the economic impact of that company on Dundee was dramatic. Today, there are many small companies in the area that were started up by people who learned their trade, skills and management technique and the new technology because of the arrival of NCR in that city some years ago.

Burroughs is another example, as is Digital at Oban. Recently we heard the news of the further development of Hewlett Packard in Scotland. That is another foreign company, which has roosted in Scotland since 1964. In that time it has contributed greatly to the Scottish economy and society. Virtually everyone who works in that plant in South Queensferry is a Scot. It has research and development facilities and is a total package, not just the productive limb of a larger organisation. I welcome its continuing commitment to Scotland.

What is important is that in the operation of these companies there has been a transfer of technological know-how and management and technical skills. I want to emphasise that point to my right hon. and hon. Friends in the Government because such a transfer in skills and technology is a worthwhile thing for the British economy, quite apart from the jobs that are produced directly. If companies want to come here to set up shop and use cheap labour to produce articles, I hope that as a free trading nation we shall never prevent them from doing so, and I welcome the jobs that are immediately produced. However, I am not satisfied that the encouragement of such companies would he a proper use of taxpayers' money. We use the taxpayer to encourage investment here, whether it is investment by indigenous or overseas companies, and the quality of the total package should be an important factor in the Government's decisions as to what support they will give the entrepreneurs.

The inward investment in Scotland of electronics companies, particularly from America and recently from Japan, has been of great benefit not only to the Scottish economy but to the British economy, and I hope that it will continue. One of Scotland's greatest attractions is that within an hour and a half's journey from a factory in central Scotland one can be visiting any one of seven universities. I do not know many places in the United States where one can do that. Some of those universities were established before Christopher Columbus sailed the ocean blue, and they have a high quality of academic achievement and modern technological capability.

We are all agreed about the need for the development of indigenous companies, and we all want to see that. One of the disappointments of the past 20 years or so is that as these companies have come in from abroad, bringing with them skills and knowledge. there has been less spin-off from them than there might have been in their own native country in the setting up of new indigenous companies. It is happening now, and with increasing speed.

Earlier, I mentioned Burroughs as one of the companies which has come into Scotland. Rodime at Glenrothes is a new indigenous company which started there, making Winchester discs better than anyone else in the world. Its products sell like hot cakes in the United States of America, dramatically changing the economics of mass storage, particularly for micros. That company has shown that it can develop a new product as a spin-off, with people coming out of one of the larger companies. Crucially, for survival in a rapidly changing business, it has had the ability to develop additional and new products to assure itself a continuing and important lead in the market place.

We are all delighted to see new small businesses starting, but it is a matter of concern that British companies sometimes seem to be frightened of becoming big. In some cases the limit of their ambition is to get on the unlisted securities market, after which they ease off.

Ferranti has been at the forefront of technology for most of the century and has always been an innovative company. If it had managed to retain the market share in computers that it had in the 1950s, it would today be one of the largest corporations in the world, but it moved out of computers when the mass market developed. It is curious that, particularly in high technology companies, there is sometimes a reluctance to grow big and to create the jobs that go with growth.

When new companies are being formed, more attention must be paid to the characteristics which will enable them to develop further products from their initial product. They must be encouraged to grow and by doing so to provide more jobs. But, in addition to encouraging high technology companies, we need to encourage the more traditional companies to take advantage of new technology.

There is a textile company, Scott and Fyffe, in my constituency. Hon. Members will know that the textile industry has gone through a very difficult period in Britain during the recession, but that company employs today the same number of people that it employed when I was first elected to the constituency in 1979. I do not think that many firms in the textile industry can match that performance. The reason for its success is that, although it is a long-established family business, it is still innovative, grasping new technology and adapting and using it for the benefit of the industry.

In agriculture and fishing, the most traditional industries in my constituency, notable advances have been made. On going into the wheelhouse of a fishing boat in Fife, one finds that it is crammed with the most sophisticated electronic equipment. Our fishermen can show the world the most advanced techniques in pursuing their traditional industry. The same is true in agriculture, where people have adapted particularly well to new technology.

When small businesses are starting, they need to seek the financial backing which their skills and ideas deserve. We are told that there is plenty of money available and that what are needed are good profitable ideas. I should like to see some co-operation between the financial institutions, so that, instead of small businesses with limited resources having to send people round the city or the country looking for financial support, their representatives could get together in one place and hear the story from those institutions. It would be a War Office selection board type of process, with a competitive element.

Mr. Timothy Wood (Stevenage)

Financing of new developoments is crucial. I am concerned about my hon. Friend's reference to Ferranti. One reason why it could not proceed with commercial computers was the enormous cost of development of the Atlas computer, and other large machines. It could not resource further development on its own.

Mr. Henderson

There is a great deal in what my hon. Friend says. However, in those days I was competing against Ferranti products when I worked for a company then called ICT. There was absolutely nothing wrong with the Ferranti computers—they were way ahead of their time. But Ferranti did not sell them hard enough to customers prepared to buy them. Perhaps the lack of innovation in potential customers was one of the problems.

The national computing centre has done valuable work in helping small businesses to put together a package to enable them to present their financial requirements and business plans in a way that gives them the best chance of attracting funds.

I pay tribute to the work done by my hon. Friend the Member for Havant, who created the parliamentary information technology committee. Since its foundation, there has been a much wider awareness among hon. Members about the prospects and needs of the information technology industry. It is encouraging to see, on a day like this, so many members of the committee present in the Chamber.

The work of the committee both in helping the industry to put its case together and in helping the House's understanding of the problems has been of great help—just as my right hon. Friend's work in the Department in providing for the advancement of the interests of information technology as a job-creating sector of industry is to be warmly commended.

12.42 pm
Mr. Roger Stott (Wigan)

It may be for the convenience of the House if I intervene now in this interesting debate to put the Opposition's view on the subject. Before I do that, I thank my hon. Friend the Member for Jarrow (Mr. Dixon) for introducing the debate and choosing this important subject of new technology. The wording of his motion has allowed hon. Members the opportunity to discuss a wide range of complex issues that are being faced in Britain.

I want to address my remarks principally to the future of the information technology industry. Before I do so, I want to touch upon the subject raised by my hon. Friend the Member for Eccles (Mr. Carter-Jones) — who, unfortunately, is not in his place—of the A320. He and I recently visited Airbus Industrie in Toulouse, where we found a great deal of enthusiasm for the project. I am sure that the Minister is aware that there is all-party consensus on that matter. We have had several debates in which unanimity has been highlighted. I hope that next week the Secretary of State will tell the House that the Government will back that very important project, especially as it affects the British aerospace industry. We need to be in that industry; we need to be in that technology—and I am sure that the Government are fully aware of that.

The world has now embarked upon what is generally recognised as the third industrial revolution. The emergence of the sunrise industries has presented us with major challenges for the future, as well as for the present. Today's debate gives us an opportunity to examine how the Government have responded to that challenge, and to look in some detail at those responses.

As long ago as the early 1970s, the Select Committee on Science and Technology, chaired by the late Airey Neave and subsequently by the hon. Member for Havant (Mr. Lloyd), suggested that the Government should be spending £50 million a year on computer industries to match the larger subsidies being made available to Japanese, American and French industries. A Sub-Committee of the Select Committee recommended mergers of co-operation between ICL, Siemens and Honeywell Bull possibly on a European basis.

This Government have recognised the pivotal role of information technology in our industrial and economic development. They have appointed a Minister for Information Technology. Much has been said about the right hon. Gentleman and I pay tribute to him, because he is a good ambassador for the information technology industry. However, I offer the right hon. Gentleman a word of advice. He would do well to continue being a good ambassador and to spend less time flogging off British Telecom.

The Government have also recognised the value of the Alvey report, but I note that my former colleague in the House, Mr. John Garrett, said in response to the Secretary of State's statement: Will the spread of new systems be hindered by the penny-pinching restriction of funding to 50 per cent?" — [Official Report, 28 April 1983; Vol. 41, c. 1008.] Alvey recommended funding up to 90 per cent., and other criticisms of the Government's response have been made in the debate and in the scientific press.

The Alvey report pointed the way ahead, and I regret that the Government's responses so far have not been encouraging, especially in the light of the serious threat of widespread import penetration.

The sectoral working party on information technology recently produced a very good report that graphically outlined the seriousness of the situation and made some key recommendations for Government action. I am sure that the House would welcome an opportunity to debate the Government's response to that report, so that we can be given a clear idea of how they see the future.

The working party considered the information technology industry to be of vital importance to the United Kingdom, partly because it is the sort of business that we need if we are to maintain our place as an advanced industrial nation, but much more because IT is essential to the competitiveness of virtually all other manufacturing and service industries and contributes materially to the quality of life in many ways.

A strong indigenous IT industry both encourages and helps the wider adoption of information technology. The United Kingdom has a successful industry, with an output of £3 billion a year and a growth rate of 20 per cent. a year. It employs 150,000 people, but it faces intense international competition. Many of our overseas competitors are actually or potentially stronger in world markets because of their size, their economies of scale and the vitality of their home markets. Their size and the structure and nature of the national policies supporting them give them an added advantage.

Viewed in isolation, many of the current United Kingdom trends in information technology are satisfactory. United Kingdom output, domestic sales and exports continue to rise by about 20 per cent. per annum. The trade deficit has fluctuated between £100 million and £200 million a year. Taken in an international context, however, the performance of the United Kingdom IT industry has been less successful, and it is a matter for concern that the industry's full potential is unlikely to be realised if the present trends in the international markets for information technology continue.

The nature and extent of those current trends are very worrying when we consider that the world market in information technology in 1980 was £55 billion and is growing by about 15 per cent. per annum but that here in the United Kingdom we have a trade deficit now of about £150 million in information technology systems, and the sectoral working party predicts that by 1990 this trade deficit could rise to at least £1 billion per annum.

The United States of America and Japan are the world's principal competitors in IT, and their growth rates are about double that of the United Kingdom. In addition, while the United Kingdom accounts for only about 5 per cent. of the IT world market, the United States of America has established a position of significant dominance in IT-based industries on its home market, which is dynamic and represents nearly half of the world markets. Through its competitive and demanding home market and its uniquely political and industrial structure, Japan is powerfully placed to challenge the United States of America's dominance of world information technology markets.

The United Kingdom's nearest geographical competitors, France and Germany, are encouraged to develop their information technology industries by their own Governments assisting them and providing them with the necessary finance with which to do it.

What has been happening here in the United Kingdom? With the sun rising on the third industrial revolution, Britain is now a net importer of manufactured goods—for the first time in our industrial history. Britain's decline as an industrial trading nation has greatly accelerated under the right hon. Gentleman's Government. The volume of imports of manufactured goods has risen by 29 per cent. The volume of exports has fallen by 7 per cent. Both those developments occurred between 1978 and the first quarter of 1983. In almost every sector, new and old, British manufacturing imports have risen while exports have fallen under the stewardship of the right hon. Gentleman's Government.

Imports have taken an increasing share of home markets for the sunrise industries under this Conservative Government. In electrical engineering imports, the share is up by 14 per cent. In instrument engineering, the import share is up by 8 per cent. In aerospace and vehicles, the import share is up by 11 per cent.

The rise in imports has not been compensated for by any real, meaningful increase in our exports. In telecommunications and in electrical machinery, a 1978 surplus has been turned into a 1983 deficit. In office machinery, computers, household electronic goods, electrical components and microcircuits, the deficit has worsened substantially. In telecommunications equipment and electrical switchgear, a trade surplus has been reduced substantially.

I draw the Minister's attention to the remarks of the sectoral working party in its report. I have already pointed out that it predicts an import imbalance of £1 billion a year by 1990. It goes on: The … deficit may well accelerate faster than implied by this forecast particularly in telecommunications following liberalisation. Did not we tell the Government that? My hon. Friend the Member for Blaydon (Mr. McWilliam) will confirm that that is what we said during our consideration of the Telecommunications Bill in Committee. We spelt Out those facts to the Government. Lo and behold, the sectoral working party backs us up.

The working party also says: the United Kingdom supply position continues to be very weak in peripheral equipment. Liberalisation of cable television … and the future management of the allocation of radio spectrum offer major potential for giving British industry the opportunity of gaining strengths relevant to world markets—they could equally lead to a damaging increase of imports unless very astutely managed. I remember the Under-Secretary of Stae for Trade and Industry responding to the hon. Member for Amber Valley (Mr. Oppenheim) during the Third Reading debate on the Telecommunications Bill. He said that as a consequence of liberalisation a substantial amount of telecommunications equipment was being imported into the United Kingdom and attached to the system. That bears out what we have been saying.

The exact reverse of what is happening in the United Kingdom is taking place in France. The French Government are pouring millions of francs into their telecommunications and computer industries. All the contracts for the terminals supplied in France are being awarded to French firms. Perhaps we should take a leaf out of Mr. Mitterrand's book on the promotion and semi-protection of indigenous industries. I cannot over-emphasise the seriousness of the problem for the United Kingdom. If something is not done soon, the sun will be setting on the sunrise industries.

My hon. Friends have already mentioned research and development expenditure. Recent reports highlight the United Kingdom's deficiences in this key area. Little of Britain's R and D expenditure goes on manufacturing, but much of it goes on defence. We spend more on defence R and D than any other OECD country except the United States.

Britain's civil R and D spending, as a proportion of GNP, is lower than it is in West Germany, the United States, Japan, the Netherlands and even Switzerland. If that is not an indictment of this Government, I do not know what is.

The British share of patents taken out in the United States has been falling steadily. Between 1963 and 1981 it fell by one third in chemicals, by over one half in instruments, and by over two thirds in machinery and electrical and electronic goods.

R and D activity fell further behind in the recession, according to a recent CBI survey.

A recent report by the Fellowship of Engineering states: R and D spending is alarmingly low in key industries and materials of the future. In the motor car industry; Britain spends less on R and D as a proportion of value added than the USA, Japan, West Germany and France. The UK is failing to develop new materials for production processes which will become widely used in industrial production". The most alarming aspect is that the United Kingdom already faces a shortage of microchips—the crude oil of the 1980s; the enabling technology. Britain's demand for chips is less than half that of the United States and Japan. With the recovery in the United States, the chip shortage has become worse because the United States semiconductor industry supplies over 60 per cent. of the world market. As a result, the United Kingdom is becoming increasingly dependent upon Japan. Many fear that Japan will not go on supplying its competitors' full needs. We are one of its competitors. The United Kingdom is already having to rely on yesterday's technologies.

What is the Government's reaction to that serious problem? I can think of only one word — predictable. Their reaction is criminally predictable. There is a world shortage of microchips and the Government's response is actively to encourage the selling off of their 75 per cent. share in Inmos. I tell the Secretary of State with all the strength at my command that any such proposition will be vigorously opposed by the Opposition, especially since the company most likely to acquire Inmos, if press speculation is anything to go by, is the American competitor, the giant AT and T.

According to a recent article in the business section of The Economist. AT and T's motives may not be altogether pure. The article states: The current front-runner is the US telecommunications and electronics giant, AT & T. It is now confirmed that AT & T bid outright for Inmos recently but then retired hurt. Then … much to Inmos's surprise—AT & T came back with a modified bid. Says a top US semiconductor industry consultant who advised the British government on Inmos's prospects: 'I really cannot see that AT & T is a hot prospect. AT & T has a long hit list in Europe, and Inmos is just one company on the list. Clearly, AT & T doesn't want Inmos's technology, it's got plenty of its own. Its only reason for wanting Inmos is to be able to put "local" components into its products for the European market.' That is why AT and T wants to buy Inmos. I warn the Government that in the national interest it is imperative that Inmos remains British and that the Government maintain their share of that key industry on behalf of the British people. The Opposition will resist any sale of Inmos to AT and T or anyone else.

If the United Kingdom is to take full advantage of the opportunities in the rapid growth of information technology, it is essential that we have a policy of producing the skilled personnel required. The trends are worrying. British industry faces a major and growing shortage of skilled personnel. To develop and fully utilise major products and processes and to achieve major innovations, Britain needs professional engineers, technicians and skilled craftsmen. On a per capita basis, Germany and Switzerland have twice as many engineers and technicians as Britain.

In the information technology industry, there is an estimated shortage of 30,000 skilled personnel, according to David Fairbairn, the director of the National Computing Centre. In electronics, a National Economic Development Office survey found that skilled shortages represent 10 per cent. of company needs. According to an article of 7 May 1983 in Technology, that skills shortage will mean that Britain's high technology industry loses about £2 billion a year in home and overseas sales, and that is predicted to continue until 1990.

We face a serious problem. The number of apprentices alarms our engineering industry. In Germany, leaders of chambers of commerce have lobbied their Government to subsidise further technical training. In Japan, electronic training is being increased in line with a doubling of demand for programmers and electronic engineers. In the United States, where there is an estimated 35,000 shortfall of computer and electronic engineers, it is expected that by 1985 the Government will increase their capacity to enable institutions of learning such as universities and technical colleges to provide the places required and to train those engineers.

As if that were not sufficient, the United States is searching for skilled people throughout Britain, south-east Asia, India and Israel. I was interested to read an article in The Engineer on the conference called by the American computer company, Sperry, which heard from Sir Ronald Mason of Sussex university. He said: British universities are appalling at systems engineering. Speaking to an audience that included Brian Oakley, the head of the Alvey Directorate at the Department of Trade and Industry, he said: 'We are going to have to look to government research and development establishments for much of the work—and they are being cut back. There is just no move to the systems engineering approach within our universities.' He added: 'With very few exceptions, British universities are ill-structured to take a systems approach embracing sociology, mechanical and electronic engineering. There would be a much more coherent response to the needs of Alvey from Aachen in Germany and Stanford in America'. That is possibly true. As we have seen to our cost, there is an alarming shortage of skilled people to develop these new technologies for Britain. Perhaps the Minister will touch upon some of those points when he replies.

There is another matter upon which I should like to address the Minister. The hon. Member for Yeovil (Mr. Ashdown) has already mentioned it. The Minister will be aware that I wrote to him on 15 January on the points raised by the hon. Member for Yeovil about the United States Government's extra-territoriality. The Opposition are worried about that for the same reasons as the hon. Member for Yeovil. I received a reply from the Under-Secretary on 9 February. He said that the Secretary of State would raise the subject of the IBM letter and hoped to be assured that it was the result of a mistaken interpretation of the territorial scope of the United States law. The Secretary of State returned with a dud cheque from the United States, because nothing appears to have changed. He obtained no concessions from the United States Government.

It is completely unacceptable to the Opposition that an ally and friend should impose such conditions within the United Kingdom. I hope that today or in the future the Minister will rebut those suggestions and tell the United States Administration that that is not the way to act commercially and that they must not impinge upon British sovereignty by instructing British firms what they can or cannot do with their computers. That matter worries the Opposition a great deal.

I have identified some of the weaknesses in the Government's approach to this vital subject. Time is not on our side. The United Kingdom has some excellent high technology industries and excellent skills, and I pay tribute to them. We are world leaders in some products but our home market is small. Import penetration is growing. We lack venture capital—something that other Governments provide—we have still not yet resolved the problem of our skill shortage and we do not have the ability to produce high volume, low cost, products.

The sectoral working party has made several recommendations to the Government as to how best we can tackle that growing and urgent problem. I would go further. If we as a nation are to reverse our industrial decline, positive steps must be taken now. We must ensure that the information technology industry is given priority because that is the industry on which the nation's future success depends. We need to maximise the job opportunities and wealth creation that will flow from a properly managed Government initative in information technology.

We need a proper procurement policy for purchasing in the public and private sectors, and we need to ensure that the Government's procurement policy is aimed at purchasing Britain's high technology equipment. We need direct Government investment in pilot and demonstration projects. We need vigorously to promote the export of System X telecommunications systems. We need to reorganise the industry so that we can identify the product ranges that we shall be capable of producing at high volume and low cost. We need to ensure that there is a proper policy on reversing our skill shortage and that that policy is implemented as soon as possible. We also need to ensure that our research and development programmes are adequately resourced, which they are not, and the statistics prove it.

We might need to look to collaborative efforts in the EEC. ESPRIT was mentioned by the hon. Member for Yeovil (Mr. Ashdown). The reason why the Government have put that project on the back burner is that they want to use it as a lever in the budget negotiations now taking place in the Community. I, too, condemn that because it is far too important an initiative to be embroiled and enmeshed in the problems and difficulties of the European budget. What is also required is the reactivation of the National Enterprise Board as a vehicle that will be instrumental in bringing about the dynamic thrust that is now needed to ensure our survival in the industry.

Those are not impossible demands. Other Governments around the world are taking positive steps to assist and promote their information technology industries. The sectoral working party document states what measures other countries are taking to promote, protect and further their IT industries. The Government should take note of that and try to emulate it.

I read in the Financial Times earlier this week, rather to my surprise, that France wishes to formulate what is called a "grand alliance". The article states: In the past few months, the French Government has mounted something of a national crusade for a united front in the battle for the world's electronics and information processing markets. Unless action is taken soon, officials warn bleakly, no European country will be able to hold its own against U.S. and Japanese competition. The issue is whether Europe will continue to exist as a real power in important sectors,' according to M. Louis Mexandeau, Posts and Telecommunications Minister. `Failure to collaborate would mean that a variety of European industries would be turned into subsidiaries, sub-contracting for major American and Japanese groups.' In a real sense, the `enemy' is already within the gate. It may be necessary in future to embark on collaborative products. We cannot do that unless we get our own industry right and unless we address ourselves to the serious problem that the industry now faces. What is required in Britain is a positive, firm and resolute stance by the Government. They should stand by the industries, promote them and try to eliminate some of the problems that I have highlighted. If we do not do so, we shall not be able to repeal the American and Japanese onslaught in this key sector of our industry.

1.14 pm
The Minister for Information Technology (Mr. Kenneth Baker)

First, I add my congratulations to the many already offered to the hon. Member for Jarrow (Mr. Dixon) on initiating the debate. Some hon. Members may have been surprised that it was he who initiated the debate, as he readily admitted that he was no young technological whizz-kid and that perhaps he should have left it to a Labour Member with those qualifications. That, however, would have been difficult as there is no Labour Member of that description.

The hon. Member for Jarrow spoke from the long and worthy tradition of the common sense of the Labour movement. He comes from a traditional craft background —he referred to his horny hands—and from an area of the country which contributed to the wealth and prosperity of Britain in Victorian and Edwardian times through its strength in the traditional engineering, steel and coalmining industries. Nevertheless, the hon. Gentleman has an instinctive, commonsense feeling that the future of our country and of the part of it that he represents will lie in other areas and that we should therefore debate and discuss these matters to try to agree a strategy which, am glad to say, is remarkably non-political.

It is one of the tragedies of debates in the House that we spend far too much time debating the problems o1 the past and not enough on the opportunities of the future. There has only to be the threat of the closure of a shipyard, steelworks or coal mine for a. debate to take place in prime time—and I understand that, in view of the worry and anxiety of the people working in the industry concerned. Nevertheless, there are very few debates in prime time in which one can step back and consider what is going to happen to our country and to consider the question that politicians of all parties must answer—what will happen to Britain when the oil runs out?

The hon. Member for Jarrow made his comments against the background of his own region and I begin by dealing with some of the points that he raised about the north-east. The whole northern region, both the north-east and the north-west, is moving—but rather slowly—into the electronic age. There are some success stories. I have seen some for myself. There is Joyce Loebl on the Team Valley industrial estate at Gateshead. A team of representatives from Japanese companies recently visited that firm to study its new machine for making ultra-thin high-technology coatings. That company manufactures the electronic equipment involved. Another success story is that of Isocom in Hartlepool, which is being set up to manufacture components based on semiconductors for aerospace or industrial use. That may involve as many as 500 jobs.

Electronics is one of the growth sectors of the region's economy, ranging from scientific and industrial instruments to electronic components, computers, radio, radar and radar electronics, and the number employed has increased from about 3,000 in 1975 to 16,000 in 1981. I must confess, however, that if I lived in the north-east I should not be satisfied with that. The uptake of Government support schemes in the north-east and parts of the north-west is not so great as in other parts of country, despite considerable promotion by the Government and the availability of money. There is no question of the money not being available. We have, of course, addressed ourselves to the problem of the low take-up. It is not that people in the north-east are less inventive, creative or talented than those in other parts of the country. There is a great deal of inventiveness. Probably the problem is due to a variety of historical, sociological and cultural factors, the deep reliance of the area on traditional industries and the greater difficulty experienced in moving away from them. Nevertheless, I assure the House that the schemes that we have put in place are available throughout the country and we are making considerable efforts to ensure that that message gets across to all parts of the country.

I agreed with much of what the hon. Member for Wigan (Mr. Stott) said. He said that we must seize the opportunities. It is right for me to point out that in the past three or four years the Government have done a great deal to ensure that those opportunities are not lost. When we came to power, Government support for information technology amounted to about £50 million a year. As the White Paper, which was published yesterday, shows, that support rose to some £231 million last year and we plan that it should rise to £269 million this year. That is the area of fastest growth in Government expenditure during the Government's tenure of office. That is something that I proudly point out to the Prime Minister on every possible occasion. The money is well spent.

We regard the commitment, not as open-ended public expenditure but as providing a form of catalyst. I shall run through some of the schemes that extend throughout the range of what is now called the support for innovation programme. The Labour Government had the product and process development scheme. We have pulled all the various schemes together under the generic title "support for innovation." It covers a wide range of activities.

I shall remind the House of the schemes that we have introduced in the past four years. Some £58 million goes on the scheme for fibre-optics. Fibre-optics happen to be a British invention. They were invented by a Hong Kong mathematician in 1966 who was working in a laboratory in Middlesex. We still have a lead in that technology and in the optical electronics and laser technology that go with it. There are now at least four substantial cable operations which make fibre-optic cable and export some of it throughout the world.

We are also doing pioneering work on submarine fibre-optic cable and probably the first such cable will be laid by a British company from Britain to the continent. We are also after some of the big projects. It is important that the £58 million be made available to those companies whether in the form of grant aid for research and development or, in some cases, for investment in capital equipment. There is also the microelectronics support programme for microchips, with which I shall deal later as it is extremely important.

We also have the software products scheme, which we relaunched. There used to be a modest scheme, which was revitalised and which I launched in 1982. Since then more than 160 innovative projects have been offered support.

Money is available. We provide grant up to 33.3 per cent. to companies that come to us and say that they have an innovative idea in regard to writing software. So far about £21 million has been allocated. That is a high gearing factor £ it generates about £75 million-worth of investment as we only pay one third of it. It is invidious to single out cases, especially as we treat such matters as being commercially confidential. However, as the company has publicised the fact, I can refer to the support given to the software elephant £no, we have not got round to supporting that yet; I mean the sofware element £of the Apricot microcomputer which is manufactured by ACT.

Mr. Henderson

In Glenrothes.

Mr. Baker

My hon. Friend is right. I shall deal with the impact of electronics on Scotland shortly. ACT is one of our most successful new information technology companies. It began life as a software bureau and has now become a wide-ranging group which employs 500 people directly and has interests that cover the entire range of microcomputer activities.

We cannot be complacent about our skills in software. Like many others, I have often said that software is one of the jewels in the crown of the British high technology industry. The United Kingdom writes excellent software. The scheme has helped and encouraged that area of excellence.

Other schemes include the computer-assisted design programme and the CADCAM scheme—the computer-assisted design scheme for the electronic industry. I have visited Parsons in the north-east, which is one of the great engineering giants there, where I saw the enormous high technology projects that it has put in hand. It has a huge computer-controlled design centre and one for milling and grinding. It has very large engineering components that may be as tall as the Chamber. It is the most advanced that I have seen in the world, and there it was in the north-east, supported by the Government.

The hon. Member for Wigan asked the Government to sponsor projects in the public sector, especially in office technology, since office equipment is a great growth area of the revolution. I draw to his attention the office project scheme, under which we have supported about 20 different projects in the public sector at a cost of £250,000 each. We have tied up an area in the public sector with a British manufacturer, who has introduced an electronic modern automated office. I launched such a scheme last Friday between the National Coal Board and Wang which, although it is an American company, is building a factory in Stirling for the manufacture of office equipment. It is putting in a sophisticated electronic office to deal with the personnel records of the National Coal Board.

The Government are supporting such programmes to give experience to public sector companies of advanced methods of office automation. One factor in office automation is that the technology is already there. We can have a wired office, and we can do away with filing cabinets and put everything on screens. The difficulty is not the technology but the psychology, because if such automation is introduced into the office environment one upsets the relationship between senior managers and junior managers. Senior managers are usually middle-aged men who do not have keyboard skills. They have secretaries to do it for them—that is why they are middle and senior managers. We are sponsoring those office schemes because they tend to upset relationships within the office.

Microchips are the nuts and bolts of the digital revolution, as my hon. Friend the Member for Havant (Mr. Lloyd) called it. In this area there is good news for Britain. On the production side, Britain's output of microcircuits has doubled from about $117 million in 1978 to $330 million in 1982. One sign of the number of microchip circuits being produced in the United Kingdom is the dramatic increase in the consumption of gold, which is used in their manufacture. In 1978 the microchip industry used 40 per cent. of the amount of gold that Germany uses; in 1981 that had increased to 77 per cent.; and in 1984 we might overtake Germany. Companies in that sector are expanding rapidly.

Mr. Shore

The Minister said that the output of circuits had doubled between 1978 and 1982. Was that a figure for value or for volume?

Mr. Baker

For value.

Mr. Shore

Allowing for changes in price, what is the volume increase?

Mr. Baker

I do not have the precise figures, but I shall provide them when I have.

In spite of the figures that I shall now give, there is still a trade imbalance in microchips in the United Kingdom, but the companies in this sector are expanding rapidly. Ferranti has become the fastest growing specialised manufacturer in the world, with an annual growth of 40 per cent. in 1982–83 and an estimated growth of 35 per cent. in 1983–84. This company has established a world lead with its uncommitted logic array. Plessey has just announced a £50 million investment in developing gallium arsenide technology, which is the technology post-silicon. Standard Telephones and Cables has committed some £50 million to a major expansion of chip production. The General Electric Company is also significantly expanding its chip factory in Lincoln and I visited that factory a few months ago. Mullard, down at Southampton, has become the major chip manufacturer in Teletext Viewdata chips in the world. In addition, there are substantial investments by overseas companies in making chips in the United Kingdom. The National Semiconductor Corporation and Motorola have committed themselves in the past two years to an investment of over —100 million in the United Kingdom for making microchips.

There is our own Inmos, which I am glad to say is trading profitably, doing well and expanding its production. The yield that it is getting from its output of wafers is rising significantly at Newport. I have been asked about Inmos and I am glad to say that it has become profitable. The Government have provided support of about £100 million and have not starved Inmos of any financial support needed. The company is now able to look to private sources and markets for further capital resources. The Inmos board is examining various approaches and I expect that it will come to conclusions and recommendations in the course of the next few weeks. I have every hope that the money that will be needed in the future for the continual development of Inmos will become available.

Mr. Stott

Before the right hon. Gentleman leaves the point about Inmos, there is a question. He has said that the board of Inmos will come to its conclusion on the matter. Do I take it that the Secretary of State has a veto on that conclusion, particularly if the board recommends that the Government's 75 per cent. shareholding is disposed of and that AT&T purchases Inmos? Does the Secretary of State have a veto on that decision?

Mr. Baker

Any proposals concerning the future of Inmos have first to be made by the board of Inmos and then vetted by the shareholder—the board of BTG—and then they come to Ministers.

There is another startlingly good piece of news on microchips, in which Britain can take a good deal of pride. In 1983, Britain consumed and used in manufacturing more microchips than did Germany. One would not expect that because the German economy is larger and in some respects stronger than the British economy, but Germany's share of the integrated circuits used in Europe has fallen from 32 per cent. in 1980 to 26 per cent. in 1983, while the United Kingdom share has risen from 20 per cent. to 29 per cent. In 1983 we consumed 29 per cent. of the microchips in Europe compared with Germany's 26 per cent. We now have the fastest growing integrated circuit industry in Europe, and that is an expanding market.

I have been told to have a look at the French experience to see what they are doing, but I remind the hon. Member for Wigan that we have the fastest growing electronics industry in Europe. He urged me to follow, or to do, what the French Government are doing, but did he see this week that the French PTT—the equivalent of BT—has had its profits stripped out of it by the French Government in order to support the losses in other parts of the microelectronics industry? I am sure that the hon. Gentleman would be the very last person in this House to urge me to take away the profits from BT in order to support loss-making electronic companies, but that is part and parcel of the French Government's initiative.

The reason why we are consuming, within our manufacturing industry, so many microchips is that there has been a microcomputer boom in Britain. I do not think that anyone in the House five years ago could possibly have forecast that Britain would become a major manufacturer of microcomputers. Most people would have said, "It must go to the Japanese or the Americans. They are streets ahead of us. How can we in little Britain do it?" We have done it. We have become a major manufacturer with, of course, famous names such as Sinclair, Acorn and ACT, as well as many smaller companies. It is good for Britain because it shows that if we have the determination and confidence we can achieve a breakthrough.

On Wednesday, I was asked to open a factory near Reading which makes advanced electronic equipment,. robots and robotic devices. The tape was cut by a robot, not by me. As far as I could see, I was there only for the beer. One of that company's products is radar for small ships—yachts, fishing boats and so on. I was told by my officials three years ago that in no possible way could small ship radar be made competitively anywhere but in Japan; that Japan had cleaned up the market and that all we could expect was to provide radar for big ships, for military purposes, and for sophisticated air uses. The company at Reading decided not to take that advice and has now won back a position in small boat radar, selling 1,000 items of equipment last year compared with 200 previously, in the United Kingdom.

It is necessary for people to have confidence and to believe that things can be done. If we start from the basis that the Japanese and the Americans are to inherit the world, that is pure defeatism. The developments in technology in Britain in the past few years refute that idea.

Mr. Henderson

Will my right hon. Friend agree that one of the interesting aspects of the exciting things that he has been telling the House is the interlinking between old and new skills? Often the new products developed by one company are manufactured by another company whose skills happen to be in manufacturing and who did not happen to have a product on line at the time in question

Mr. Baker

My hon. Friend has made a very good point. The new technology that I have been talking about is needed not only in the electronic companies; it has to be introduced in the traditional companies. We have to persuade the traditional companies, whether they be in Newcastle, Jarrow, Wolverhampton or anywhere else, to use the new technologies. If they do not use them, they will not be in business in the course of the next five years.

There are many examples where a traditional manufacturer of mechanical equipment has moved into electronic equipment. The Reading company that I mentioned, apart from making small boat radar, also makes vending equipment and coin-slot machines. It has moved from the old style of mechanical engineering into electronic ware, using electronic guides and electronic measurements of the size of coins, and so on. It has moved into an entirely new area of opportunity and it is now exporting on a substantial scale.

In our space industry we now have advanced technology. When most people think of the space industry they think of the American shuttle or the Russian space achievement, but in Britain today we are manufacturing nine satellites. It is an important industry for us. There are 3,500 well-qualified engineers working in the industry. The turnover has increased from £85 million in 1979 to well in excess of £200 million in 1983.

I am anxious to develop the ground segment of the space industry, not just the satellite area. I hope that we shall be the first country in Europe to launch a privately financed satellite — the famous DBS satellite. Negotiations are continuing between the various parties. It will be the first privately financed satellite to be launched in Europe in 1986–87—an important industry.

Again, only last week, I launched the product of a small company in Chelmsford that makes receiving dishes for satellite communication. That company did not exist two years ago. Now, in association with BT and Extel, it is manufacturing dishes. That is an important market. Satellite communication, direct broadcasting by satellite, and so on, will be a large market.

I was asked about aerospace by several hon. Members. including the hon. Member for Eccles (Mr. Carter-Jones) and Wigan. The Goverment have committed a substantial level of financial support to the civil aerospace industry. Since 1979, some £130 million has been contributed to civil aerospace research and development projects. In addition, launch aid has been approved for several projects — £41 million for the Westland WG30 helicopter, £60 million to Westland for its share of the collaborative Anglo-Italian Eh101 helicopter and £70 million for the Rolls-Royce RB211 5354 programme.

On 3 February my right hon. Friend the Secretary of State announced the Government's approval for the participation of Rolls-Royce in the collaborative V2500 aero-engine programme. Launch aid arrangements will be announced when they have been finalised. As regards the Airbus A320, British Aerospace has sought substantial launch aid for its share of development costs. Discussions with the company on the funding of that project are continuing, and we hope that it will be possible to reach a conclusion soon.

We really cannot be accused of starving the civil aerospace industry of substantial research and development funds and launch costs.

Mr. Carter-Jones

Although we think that the engine aspect of the industry will develop, we are worried about the airframe aspect—on which the record is not quite so good. Of course, that would be put right if the Government give good launch aid for the A320.

Mr. Baker

I appreciate what the hon. Gentleman says. He can read between the lines of what I have said.

The Alvey programme is probably the most important research and development programme since the jet engine. The hon. Member for Jarrow said that he did not know a great deal about new technology. A good guide to the fifth generation, fourth generation and third generation appeared in The Times today. If the hon. Gentleman is taking the train to Jarrow later today, he might read that guide, which is both simple and helpful in explaining the jargon. Basically, it means the generation of computers that will be available within the next five to 10 years. They will be computers to which one can talk, and written words will come out. Written words can be fed in, and instantaneous translation will come out. They will be sophisticated machines, which do not currently exist.

We have established a large research programme of £350 million— £200 million from the Government and £150 million from industry. It is the first major attempt in Britain for companies to come together with universities and Government on pre-competitive research, something at which the Japanese have been so successful. Large and small companies are involved. The hon. Member for Yeovil (Mr. Ashdown) was concerned that the small companies would not get anything from the Alvey programme. I assure him that the Alvey directorate will involve small companies in the development of its various projects. Already, that is going ahead strongly.

Individual research projects can now begin, and we have already received more than 130 applications —which is further evidence of the importance that both industry and the Government attach to the programme.

Mr. Ashdown

I am grateful for those assurances, but I hope that they will be carried through into action. The British micromanufacturers group is not a small organisation; it is a representative group and it believes that Alvey offers it nothing. I hope that there will be action to help that sector.

Mr. Baker

I know that some of the companies that form the group are close to Alvey. I shall ensure that the others know what is going on.

The hon. Member for Jarrow mentioned the social implications of new technology. The revolution that is taking place will have a profound effect on all our lives and on the lives of our children at work, at home and in our leisure. The Government have devoted considerable funds to education. There is a microcomputer in every secondary school in Britain and by the end of this year there will be computers in three quarters of our primary schools. No other country can say that. As soon as a school has one computer, it wants half a dozen or a dozen.

Some of the best educational software in the world is being written at Newcastle polytechnic for the schools programme. That is important, because our young people are an electronic generation—infinitely more electronic than their parents or grandparents. It is important that when they leave school they should at least be able to operate a computer.

We have gone beyond that and established a network of information technology centres across the country. They take some of the most unpromising educational material—boys and girls who have left school at 16, probably with a low grade CSE or 0-level. They are unemployed and feel that they have been left behind by the rush of progress.

Those young people attend the centres for 40 or 50-week courses in computer operation and programming and electronic assembly. Those centres are by far the most successful training centres in the country. About 80 per cent. of the youngsters get jobs and many do not finish their courses because they are offered jobs before the end. I emphasise that those were educationally low attainers.

There are 10 ITECs in the north-east, at Peterlee, Newcastle, Sunderland, North Tyneside, Cleveland, Gateshead, Aycliffe, Hebburn, Cramlington and Durham. That is another sign of the Government's commitment to education. I do not think that I need emphasise to the House the enormous sums that the Government are providing for the training of young people, particularly in new technology, through the youth training scheme.

The hon. Member for Eccles mentioned how technology can help the disabled. The technology has a compassionate face. Information technologies deal with communication and we can help the disabled, the handicapped, the blind and the deaf to communicate better. We are giving substantial support to a variety of projects.

I remind the House of some of our assistance that is not generally known. In the past 18 months, we have helped to fund more than 100 projects aimed at encouraging new developments in this area, ranging from educational technology for handicapped children to such futuristic technologies as eye movement control of computers and voice input devices.

The House will have seen the moving story of police constable Olds on television recently. He was receiving help from an American professor and I am pleased to tell hon. Members that PC Olds will from next week be receiving treatment nearer home. A small Welsh company in Port Talbot, with the appropriate name of Enablement Technology, which originally had no Government funding, developed functional electronic stimulation. It is not an elegant name, but it describes a walking frame with microcomputers attached which gives stimulus to the leg muscles. I have seen it in operation and it enables a paraplegic or a cripple to get up and walk. The device was developed in a garage and the Government are now supporting it. We have just committed a further £50,000.

I witnessed another example of British genius this week. A small company, VA Robotics, went to America and snatched about £40,000 of orders from under the noses of major American companies. That company is involved in robotics for the disabled.

We are supporting many projects and it is interesting to note that they are usually run by small companies with only half a dozen or so employees. They are all making devices to help the handicapped.

Not only do the Government have a range of supportive programmes for industry, education and training, but we have been searching out new areas of opportunity, as my hon. Friend the Member for Surbiton (Mr. Tracey), who is an expert in these matters, mentioned.

Another example is cable. The reason why I was, and still remain, an enthusiast for cable is that it will provide jobs in Britain. It is an area of new opportunity. Already new co-operative ventures are starting up in cable. There is the Anglo-American venture, Plessey-Scientific Atlanta, and we have GEC linking up with Jarrold and developing advanced switch star systems. None of this would have happened if we had taken the line that we did not want cable. Similarly, with DBS satellites, new opportunities are opening up and new companies are being formed, as they are in radio cellular networks. If we had decided not to go ahead with radio mobile telephone networks, two of which will be operating in January next year, we would have not have got the investment of Motorola and 600 new jobs making mobile telephones. We have to be inventive as a nation in finding new areas of activity.

Earlier in the debate, I was challenged about video machines. It was pointed out that this was a major area of import penetration because the technology likely to win in the world was the Japanese VHS technology. In 1981–82 there were floods of imports from Japan with 92 per cent. or 93 per cent. of the market being provided by imports. I am glad to say that since then we have taken action to encourage British manufacture. In 1984, United Kingdom production, with at least four United Kingdom manufacturers, is expected to reach 500,000 units. That will reduce the penetration to about 60 per cent. or 70 per cent.

Mr. Shore

No Opposition Member wishes to diminish British achievements, especially in this area, because we understand that the future lies very much in it. The Minister has given some helpful news about video. But the real question to which we have to address ourselves is how the Japanese got so far ahead in an area where in the past British thinking and research and development had been in the lead. We knew all about video in the research and development sense years before the Japanese. Now we are boasting about how we are clawing back a part of what is already Japan's biggest export market. We should be providing not only for our own needs but for exporting as well.

Mr. Baker

The reason why we were not in the video recorder business is that back in the 1960s and 1970s not enough British companies believed that it was an area that they should be developing. It is as simple as that. In such other areas as microcomputers, thank heavens, British companies did not take that defeatist line. It is absurd to believe that we can re-invent video recorders. We have to try to ensure that as many video recorders as possible are made in the United Kingdom.

There are other areas, of course. A good example is that of new television sets. We have a highly efficient and highly competitive television set manufacturing industry. This includes not only the Japanese companies, but Thorn-EMI, which has probably the most efficient television set manufacturing company in Europe down at Havant, and it is exporting a great many. The company is developing new types of high definition television. We have to ensure that there is sufficient research and development money available for it to go on doing that, because that will be development within industry.

There is not a great deal of political difference between us. The Opposition would like to see more state direction and ownership, but we would not. Much of the vitality in the past few years has come from the small and medium-sized companies which do not fit into state ownership schemes. We are providing an enormous magnet for major investment from overseas, as my hon. Friend the Member for Fife, North-East (Mr. Henderson) said.

Only this week Hewlett Packard announced another 700 jobs at south Queensferry. More people in Scotland are now employed in the electronics industries than in heavy engineering, steel and coalmining. Scotland has somehow got the act together. Part of the reason is the education framework and part that people are being trained in the new technologies at school, polytechnic and university levels. We want that magic to be spread more widely throughout the country.

The basic question that faces us all is what will happen when the oil runs out. My answer is simple. We must ensure that by the time that the oil runs down and eventually runs out, we have built a sufficiently strong base of expertise and strength in the new technologies—the new information technologies and new microchip technologies—so that they can provide the source of wealth for the next 25 to 50 years.

Several Hon. Members


Mr. Deputy Speaker (Mr. Paul Dean)

Order. I see that four hon. Members still wish to speak. If they restrict themselves to speeches of a little under 10 minutes I shall be able to call them all.

1.56 pm
Mr. Robert C. Brown (Newcastle upon Tyne, North)

I congratulate my hon. Friend the Member for Jarrow (Mr. Dixon) on initiating this important debate and on making a first-class contribution which led to a good debate.

The north-east probably has a greater vested interest in new technology than any other area of the British mainland since it has the highest unemployment levels. These are directly caused by the rundown of basic industries. Coal, steel, heavy engineering and shipbuilding have been devastated by the Government's policies.

I represent a borough constituency, but it now contains more farms than industrial undertakings when, by any standards, it should be an industrial area. That is one reason for our major disappointment when we failed to secure Inmos for the north-east. We are determined that the new sunrise industries shall be steered to areas such as the north-east which so badly need the benefits of new industry.

My hon. Friend the Member for Wigan (Mr. Stott) and the Minister emphasised research and development. I hope that the Minister will take note of my words. It is high time that a Government—I hope this Government—invested in a Government research and development establishment in the northern region. No Government have yet done that. It is high time that such a project, financed by the Government, was set up in the north-east. The north-east is the only region in the United Kingdom without such an establishment.

God knows, R and D establishments and the new industries are running out of the Thames valley's ears. I do not ask for transfers from the Thames valley, but I say to the Government, for God's sake put some of it into the Tyne valley.

Technological change is one of the most important issues facing Britain today. Our survival as an industrial nation in the 1990s and beyond will largely depend on whether we can apply the range of new technologies at least as quickly and as extensively as our international competitors. Without a successful industry, as we have seen over the last three or four years, our economy will falter, setting back our hopes for full employment, raised living standards and improved public services. The men and women in industry must be at the forefront of the debate on the new technology. It is among the work force that the many critical issues in relation to new technology will be decided. They are at the sharp end in this extremely important matter.

The changes accompanying the widespread use of microelectronic technology in British industry have major implications for the craft work force. In some areas, the use of industrial robots may erode craft skills or even make the skills redundant, thus threatening job security, bargaining power and, of course, job satisfaction. On the other hand, the introduction of technological change will require skilled workers to acquire new skills and to adopt a role different from that of traditional craftsmen. The skills possessed by craft workers are one of the most vital resources of British industry. Those skills are being destroyed by the Government's economic policy, and it is impossible to expect workers to respond to dramatic technological changes if there is constant fear for their jobs.

New technology is essential to the success of industry. It can be used to the benefit of the people generally and workers in industry, provided its introduction is not controlled by market forces alone. As well as relying on company strategies, the Government must have a more positive attitude towards a co-ordinated programme to encourage technological change. In Sweden, new technology has not been used to displace vast numbers of workers—rather, they have adopted practices related to a shorter working week and shift patterns that reduce the pressure on workers. Therefore, when we consider the introduction of new technology and the resultant effect on industrial relations, industry and Government must be aware that the widespread use of robots in industry still requires an adequate supply of certain skills.

We would be misleading ourselves if we did not recognise that dramatic technological change can destabilise industrial relations. Changes in traditional customs and practices might lead to suspicion and disruption. Workers fear that new technology results in deskilling and that many traditional plants will be changed and deskilled by technological change. They fear polarisation of their skills. There is a danger that, through the introduction of industrial robots, there could be polarisation of the work force into a higher skilled minority and a deskilled majority, creating an elitist attitude within the workplace. That is one of workers' constant fears. They are willing to take up new skills. If robots are widely introduced, there must be mutually agreed training programmes enabling people to acquire new skills and to begin new careers.

Behind many industrial relations problems lies the matter of job satisfaction. There is a danger that, through technological change, there will be a considerable reduction, at least in the initial period, in job satisfaction. I do not believe that the Government have given any consideration to creating the environment in which the impact of robotics and new technology in general can be aired by workers in industry. That could have dire results on industrial relations.

We should be encouraging workers and their trade unions to participate in the central role of determining the impact of robotics. The Opposition's aim is to maintain stable industrial relations. The speed of the introduction of transfers, the way they operate and the effect on employment are important. There are many examples of successful transfers from traditional processes to the use of robots and new technology.

In engineering, many of the skills that were exclusive to machinists can now be incorporated in programmes prepared in drawing offices to operate numerically-controlled machine tools. Programmes containing the information to perform difficult tasks can be transferred from machine to machine. That means that the machinist's skills now form part of a computer programme.

Many trade unions have been faced with employers arguing that numerical control and computer numerical control machines promote multi-machine manning. Where that has been successfully introduced, particularly with small-batch production, it has meant a significant fall in the craft work force.

To maintain healthy industrial relations, it is essential that industry accepts the need to retrain those operatives. In the example that I have given, the machinists could take over the responsibility for programming through acquiring basic programming skills. That means replacing some of the traditional skills, which were acquired by time-served training, with the new skills more suited to the technological age. That brings into question the job description of machinists. The machinists, through the acquisition of the new skills, have become technicians.

Employers must accept that the trade unions should be fully involved from the planning to the implementation of technological change if good industrial relations are to be maintained. Fear exists that the introduction of computerisation will increase the control of the state and employers. Where computerisation has been introduced it reinforces managerial control, giving managers more control over the job and those who perform it.

The introduction of robotics must ensure that job control, founded on job security, is at the heart of everyone's attitude to the new technology. If the Government created an atmosphere for joint regulations within the work place instead of increasing the tension between employers and trade unions, the trade unions would recognise their responsibilities to contribute to the development of industry.

Sadly, the Government have done nothing but destroy the developing working relationship which, under normal circumstances, is essential in industry but which is a prerequisite when changes of any magnitude are being made. That was a major theme of the Bullock report, and the White Paper on industrial democracy that was produced as a result said: the advantages of industrial democracy will not be won unless employees in companies and nationalised industries alike have the opportunity to take part in the development of corporate strategy, to contribute to decisions before they are taken and, equally important, to share in responsibility for their implementation. I have no doubt that the majority of industrial disputes related to the use of robotics or any technological change are due to the lack of consultation and information, and the failure of employers to take their work forces with them as changes are introduced.

Telecommunications, CNC machine tools, industrial robots, automated warehouses and computed-aided office equipment present major minefields for labour relations. If robots are to be introduced in the negative context of seeking reductions in unit costs, there will be damaging job losses. To ensure minimum disruption we must jointly work towards using robots and new technology to create increased output and jobs, even, as I have argued, if those jobs are as technicians rather than traditional craftsmen. The trade union movement must be an integral part of that strategy. The trade union's crucial role is more challenging now than ever.

We should not be sharing out less work to avoid increasing unemployment because of introducing industrial robots, but more positively we should be setting job creation targets for enterprises. Much of that programme depends upon a close understanding by the Government and employers of the issues facing working people, together with the role that the trade unions can play in promoting changeߞnot on the basis of bullying and forcing change, but on the basis of consent.

If industry is to regain lost markets, we must accept the need to use new skills and innovations. Even with the full co-operation of the work force, technical change cannot be obtained easily, and, unfortunately, Britain still lags behind other countries in the exploitation of robot technology. We must recognise that further developments in robotics are, in one sense, simply a matter of time.

Therefore, if we accept it, new technology will become as much a part of our life in the future as some of the most basic machinery is at present. We must accept that the most valuable skill a worker possesses today is the capacity to adapt. Therefore, to move forward in new technology while at the same time retaining stable industrial relations, we must explain the benefits that can be gained from innovations and ensure that benefits are distributed fairly.

Reliance on market forces alone will not be enough for us to meet the challenge of using industrial robots. It is only through our own capacity of co-operation that we can develop and meet changing demands. It is up to the Government to lay the foundations for co-operating rather than abdicate that responsibility.

2.12 pm
Mr. Timothy Wood (Stevenage)

I shall not speak at length, but the subject of the debate is of the utmost importance to this country. If Britain is to be a successful, competitive and contented country, it needs to embrace new technologies with much greater effectiveness than it has done for many years. We have many skilled and inventive individuals who produce remarkable new products and services. In my constituency of Stevenage, there are many exciting developments at British Aerospace, both on the satellite side, which my right hon. Friend the Minister for Information Technology mentioned, and on the missile side. There is also the computer industry, represented by ICL, and the information technology industry represented by the Standard Telephones and Cables development programme. In many respects my constituency is fortunate. As in many new towns, there have been many new developments. I sympathise with some of the areas in which old industries have not made the transformation necessary to meet the challenges of today and, even more so, tomorrow.

While many skilled individuals are working hard to develop new technologies, I doubt whether enough of our people have the relevant education and training. In part, that is a matter of attitude. I believe that on the whole our attitudes have been far too complacent, and we have been reluctant to adopt new ideas and schemes. I am afraid that I criticise aspects of our education system. We still tend to concentrate on pure science at the expense of technology. I disagreed with my hon. Friend the Member for Havant (Mr. Lloyd) when he said that in the documentation on public expenditure there was only a short section on science as against education. Education much more generally needs to embrace the impact of new technology. I welcomed the references in the expenditure White Paper to initiatives that are being continued.

My right hon. Friend the Minister mentioned ITECs and the technical and vocational education initiative. My constituency has also taken advantage of that and progress is encouraging. Only last night, I listened to a radio programme on the TVEI in Stevenage. There have been many initiatives by the Government but those initiatives must be matched by further developments in education and training. We must transform attitudes so that people appreciate that the new technologies create the tools for a better life and should not be feared, because they are the prerequisites for a more successful and competitive Britain.

One of the most encouraging developments in the past couple of years has been the widespread use of home computers, especially among children. At this very moment my daughter may be playing with a home computer. In an hour or two she may be battling with my son about whose turn it is next. I do not wish to encourage home battles or indeed any others, but the excitement that young people are finding in the new technologies gives us great encouragement for the future. I believe that that excitement has been generated partly by the Government's initiative in ensuring that there is a micro in every school. The acceptability of such machines is fundamental in encouraging our society to adapt to the changes involved.

There is also a role for Government in financing major developments in new technologies and ensuring that they go ahead. I echo the comments that have been made about the A320 airbus and I hope that it will go forward with Britain playing an active part. It must be a matter of concern, however, that Europe remains such a fragmented market. In the development of new and high technologies it is of the utmost importance to achieve co-operation between countries so that countries do not decide to buy only from their own industry or from the United States and other countries outside Europe.

I welcome today's debate and I am grateful for the opportunity to discuss new technology, because it is essential that we develop new technology even faster in the coming years.

2.17 pm
Mr. Ted Garrett (Wallsend)

I was most encouraged by the Minister's favourable references to the northern region. My hon. Friend the Member for Jarrow (Mr. Dixon) could not have achieved a better objective than selecting the motion and drawing such encouraging comments from the Minister. The Minister will be aware, however, that we have some way to go before we can reach the high level of technical efficiency required to compete on equal terms with areas such as Scotland.

The Minister also made some very encouraging remarksߞsome might say rather soothing remarksߞin relation to the rest of the country. It is clear from the debate that in the United Kingdom and elsewhere there is still a great deal of ignorance, fear and bewilderment about the development of technology in the future.

My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Brown) emphasised some of the problems facing the trade union movement, which will undoubtedly play a part in the advancement of human knowledge in this respect. In my younger days, I was employed by ICI and witnessed the rapid change from the coal-gas process to the petrochemical process for the industry's basic feedstock. Hundreds of jobs disappeared but, because the British economy was expanding, most jobs were absorbed in the chemical industry and those who were displaced were able to get jobs elsewhere. We have not yet reached that stage in this recession. If employers, the trade unions and the work force co-operate, people in the industrialised world will gain far more material satisfaction through shorter working hours and the rest.

The Luddites have been mentioned today. If employers had been more tolerant and understanding and better able to communicate the advantages of spinning looms the unfortunate Luddites would not have been taken to York prison where they were interned, and even executed. That was one of the lessons of the industrial revolution which it took us a long time to learn. We can now learn much more about co-operation and openness to one another. If we learn those lessons we shall, even within my lifetime, make enormous strides in improving our standards of living, happiness and tolerance towards each other.

I am sorry that I have had to cut my speech short. Although this is a private Member's motion, both Front Benches have abused the time available for debate.

2.21 pm
Mr. Rob Hayward (Kingswood)

I am grateful for the opportunity to speak, if only briefly. I should like to consider a few of the problems that my constituency faces with new technology. In cutting my speech short, I shall have time to raise only a couple of specific problems. In so doing, I do not want to appear critical of the Government's efforts. In the past five years they have made major efforts to increase and improve the standard of investment in high technology such as were not seen in the previous 15 years.

What the right hon. Member for Bethnal Green and Stepney (Mr. Shore) said about what has happened in regard to video recorders went to the nub of the problem. We lost 15 years and are now trying to regain them in a hurry. The problems in my constituency are rather different from those in other parts of the country. My right hon. Friend the Minister referred to the efforts the Government have made to put computers in primary schools as well as secondary schools.

Having got hands-on experience, many children find that they are unable to take either O or A-level examinations in computer science. Hands-on experience is crucial for the vast majority of people but if they are to become computer programmers or analysts, as was my hon. Friend the Member for Stevenage (Mr. Wood), they need to take relevant examinations. About 30,000 children take O-levels in such subjects throughout the country but children in Avon, which is the education authority in which my constituency falls, stand only two thirds as good a chance as children in other parts of the country of taking O-level computer studies. They also stand 25 per cent. as good a chance as other children of taking A-level computer studies. There is apparently an enormous variation in the extent to which education authorities encourage students to take such examinations. The fact that students in my constituency are 25 per cent. less likely to have the opportunity to take the relevant examinations must be a reflection of my education authority's lack of effort. That is probably true of other authorities and contrasts with the considerable efforts being made by some authorities, especially my neighbouring authorities of Somerset and Gloucestershire.

When students leave school, they can go on to technical colleges. Soundwell is in my constituency. My right hon. Friend the Minister referred to assistance for installing CNC equipment in industry and technical colleges. There is a problem in providing that money. Although it is provided for the purchase of CNC equipment, there is not enough money available to some technical colleges to purchase the relevant CADCAM equipment that goes with it. People will gain experience in one area but not in the other, which is crucial for the future of the industry.

As my right hon. Friend the Minister is only too aware, much of the money that has been invested in CNC equipment, either in technical colleges or in industry, has gone to overseas companies such as Waldrich Siegen from Germany, Schiess from Austria and Makino or Komatsu from Japan. They have filled the gap left by British companies, and only a few companies, including Wadkins, can compete on an even footing with the Japanese, German and American companies such as White-Sunstrand. They are trying to catch up, but they need more Government assistance. We have encouraged industry to direct its thoughts towards high technology, but it must now direct its thoughts towards British high technology, especially in industrial machining centres.

Far too many British craftsmen, to whom the hon. Members for Jarrow (Mr. Dixon) and for Newcastle upon Tyne, North (Mr. Brown) referred, work with overseas equipment. In the coming years we must provide investment to ensure that British companies can compete on a sound basis with the overseas companies that I mentioned. They must compete not only in a few limited areas but over the entire range of industries. The Minister referred to vertical and horizontal borers of an immense scale, but no British company can compete in providing that equipment.

The hon. Member for Wigan (Mr. Stott) challenged my right hon. Friend to say whether Inmos would be sold to a British or to an overseas company. As Inmos has bases in Bristol and in Newport it affects my constituency. We tend to think of Inmos as a British company, but it is riot. Investment has been inadequately directed to Britain and has gone instead to Colorado. Britain has suffered in the long run.

The Government and BTG should specify three criteria for the sale of Inmos, whether to an overseas company or to a British company such as GEC or Plessey. First, the purchaser must commit itself to research in the United Kingdom, not only on memory systems but on the production of microcomputers. Secondly, that research should not be associated specifically with the branch operations which far too many American and other international companies regard as being the British speciality. My hon. Friend the Member for Wiltshire, North (Mr. Needham) will know that many overseas companies invested, for example, in Northern Ireland, but that at the first sign of a recession they pulled out. I hope that the purchaser will commit itself to substantial long-term expansion in jobs and investment.

Thirdly, if Inmos is sold, it must be at a realistic price. There are many ways of judging a realistic price. The hon. Member for Yeovil (Mr. Ashdown), who is no longer in the Chamber, referred to one of the few British companies that manufactures microchips, but my right hon. Friend the Minister said that that was no longer the case and that many companies now manufacture chips. The number is growing monthly. It is possible, by judging large and small companies, to set a realistic price not only in terms of Inmos's current value, but its potential value. My right hon. Friend says that Inmos is now making a profit, and I hope that it will make increasing profits. Those are the three specific points that relate to my constituency.

The problems of high technology have been highlighted by the debate, but far too many hon. Members have referred to the past and not to the future. They have referred to the problems that people face and how we might, by negotiation and progressive change, get away from them. The children who are coming from universities and schools do not want a step-by-step approach. We are on to the fifth generation of computers and we have gone through a series of generations in two decades. We should not adopt a step-by-step mentality to take us into the future, through the end of this century and the beginning of the next—

It being half-past Two o'clock, the debate stood adjourned.