Design and Innovation

HC Deb 21 October 1985 vol 84 cc57-76

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lennox-Boyd.]

5.35 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher)

I am delighted that at long last the House has an opportunity to debate the very important industrial issue of the role of design and innovation in the economic wellbeing of our nation.

I am delighted to report that in Washington DC in August this year I was honoured to receive, on behalf of the Government, a unique award from the Congress of the International Council of Societies of Industrial Design. In his generous tribute, the congress chairman, Mr. Deane Richardson, said that the award recognised the British Government's long term and increasingly active support of design and their unparalleled commitment to the contribution design can make, not only to industry, but to people the world over". Putting this award in its context surely sets the scene for today's debate.

The performance of our manufacturing industry is of critical importance to the United Kingdom's future economic strength and, of course, to standards of living. Manufactures account for 68 per cent. of our total exports of goods and services. Manufacturing is exposed much more directly than many service industries to international competition and its competitiveness is therefore critical to the future of the entire economy. Together with capital investment, the exploitation of innovation provides the driving force for maintaining and increasing our share of today's fiercely competitive world markets.

The importance that the Government attach to manufacturing is shown by the wide range of schemes of assistance provided by the Department of Trade and Industry. Direct financial assistance to industry amounted to around £1,500 million in 1984–85 with over 90 per cent. going to manufacturing. My Department's support for the innovation programme supplements the general assistance available for research and development under the Science and Technology Act by a number of specific schemes aimed at encouraging greater awareness of the new technologies, at providing help with consultancy services and training and, where necessary, at giving assistance with research and development investment.

This Government's support for innovation in industry has increased from almost £94 million in 1980–81 to some £240 million in the current year. In 1978–79, the previous Administration were spending less than £40 million on innovation in industry. This was complemented by a variety of sectoral schemes to encourage short-term capital investment in industries such as drop forging and red meat slaughterhouses. The Government have turned their back on short-term sectoral measures and are encouraging innovatory application of a wide range of enabling technologies that cut across the needs of all innovative industries. Our aim is to ensure a lasting contribution to competitiveness. Support for robotics, microelectronics, biotechnology and optical fibres, for example, has continued to grow and has demonstrated its effectiveness in industry.

We are redirecting our innovation support to deal with the major inhibitions to exploitation and use of technology in industry. Companies are now much more profitable than they were during the recession, when they were investing in short and medium-term product developments in order to stay in business. We now want United Kingdom companies to get ahead of the game and so are encouraging, through publicity and consultancy schemes, an awareness of the new technological products. We want to encourage innovatory, collaborative research and development projects to enhance confidence in market prospects for new products. We want to help companies to extend their technical base through collaboration with universities and polytechnics. For example. our teaching company scheme budget will expand from £3 million now to £5.2 million in two years' time. In cash terms, the Department will be increasing its support of these non-project activities by 50 per cent. by 1987–88. In addition, we are stressing the vital importance of adequate supplies of trained manpower through studies such as the information technology skills shortages committee — which I chaired — which has been instrumental in helping the higher education sector respond more rapidly to the changing needs of industry.

Through these schemes, we are encouraging the development and use of key enabling technologies — information technology, fibre optics and robotics, for example—which draw on several scientific disciplines and which have applications across the mature as well as the new industries. The aim is to help companies over the first hurdle in the acquisition and application of new technology, after which companies can be expected to use their own resources.

Sir Terence Beckett said recently that a company that operates in a competitive environment must innovate to keep up with its rivals. In the modern world, a company's intellectual capital—its designs, patents, know-how and knowledge—are more important than its fixed assets in determining its earning power and even its capacity to survive.

Innovation in British companies, therefore, should not he regarded as a one-off event separate from the rest of business. Innovation should be treated as an essential feature of company operation. The problem is deep-seated, and we must work to bring about the necessary change of attitude. There are now encouraging signs that bankers and financial advisers are paying more attention to intellectual capital in their analysis of investment opportunities.

In the main, today's successful trading nations are categorised by their close attention to the rapidly changing demands of the market place and by the quality and design of their products. In fulfilment of this principle, my Department has been running its quality and design campaigns, both of which are aimed at changing management attitudes.

The British Government are very aware that in design, and in the skill of our designers, industry has the ideal mechanism to reforge and reinvigorate our economy. This mechanism needs constant attention. Having held the Government's design portfolio for three and a half years, I have learnt that there must be a long-term commitment to design from Government if our economic recovery is to be sustained on meeting new and growing sectors of market demand.

We have that commitment. We have a policy that includes a new recognition of the importance and desirable status of engineers, designers and technologists. The Government are committed to maximising the role of all design disciplines in improving our country's economic health and in supporting a higher quality of life.

What is more, we now have the three major building blocks that we need to ensure success. First, we have a design education and training system which is one of the best in the world and recognised as such by our big competitors overseas, many of whom employ British designers in key positions. Secondly, we have the successful industrial firms with established worldwide reputations for excellent design, firms, which can act as standard bearers for the rest of industry. To take the automotive and aerospace industries, for example, we have Jaguar whose XJ12 is, if hon. Members will forgive a little personal prejudice, the finest production sports-saloon car in the world. There is also Hawker Siddeley whose Harrier jump jet is internationally renowned, and the March 84C racing car designed by March Engineering using the world-famous Cosworth engine. The car won the 1985 Duke of Edinburgh prize for design excellence. There were 14 finishers at last year's Indianapolis 500, all of which were March 84Cs.

Thirdly, we have the professional organisations such as the Society of Industrial Artists and Designers, representing 7,000 industrial designers and the representative bodies of engineering designers including the Institution of Engineering Designers. There is also the Design Council, which is the Government's principal agent in design, and which, as the House knows, plays such an important role in promoting the benefits of good design. It is essential that these building blocks are put together in a coherent way if they are to form the foundations upon which success can be built.

My right hon. Friend the Prime Minister chose to discuss this subject at a seminar on product design and market success at 10 Downing street in January 1982 with a group of 60 industrialists, designers, educationists and Ministers. The holding of that seminar was to prove a crucial turning point in this country's attitude to design.

When I studied the outcome of the seminar, the first point that struck me was the extent to which design influences nearly all aspects of manufacture. It affects the ease and economy of manufacture, ease of maintenance, reliability, choice and use of materials, appearance. presentation, ergonomics, fitness for purpose and corporate identity. The second point was that designers and their supporters are full of innovative ideas. We had some 40 suggestions at the seminar and nearly all turned out to be suitable for Government action. It was my responsibility to see that we got on with the job.

We set out within a few months of the seminar to encourage the enlightened use of design consultancy. With the Design Council acting as our agents, we set up the design advisory service-funded consultancy scheme — now part of the Department of Trade and Industry's business and technical advisory service — which provides small and medium-sized firms with financial assistance to use top-flight designers. So far, I am delighted to report, the scheme has received more than 3,200 requests for assistance and nearly 2,000 projects have been completed. Projects completed during the first year are already demonstrating increased market share, increased profits, increased sales, increased production and, of course, increased jobs.

The scheme was not introduced to give birth to a Harrier jump jet or a Rolls-Royce engine. Its purpose is to encourage management in small and medium-sized firms to recognise the practical. balance sheet benefits of design input, and to realise that good design improves market share, is a good investment and should be a crucial part of their business.

I am delighted with the results so far. Apart from the benefits to a firm's bottom line, consultants are reporting that they have formed long-term relationships with new clients and that they are being used to help companies strengthen their in-house design capabilities. Many managers are reporting a higher level of design activity in their companies. To help publicise all these benefits an exhibition of case studies is touring the country.

Having got the funded consultancy scheme off the ground in 1982 we turned our attention to parallel methods of raising senior management's awareness of design. In early 1983 we mounted a brief but intense advertising campaign, its purpose being mainly to get people talking about good design. We put advertisements in national newspapers and specialist magazines over a period of three weeks. We followed that with a series of seminars all over the country throughout 1983 under the title "Design for Profit". They were aimed at senior managers, particularly chief executives and finance directors. They were attended by nearly 1,500 managers and they led to a doubling of applications for help under the funded consultancy scheme.

In February 1984, we held a design seminar for financial institutions to encourage them to take a firm's product design and development policy into account when making investment decisions. We have recently supported a series of four seminars on design management organised by the Society of Industrial Artists and Designers.

There has been a considerable increase in design coverage by press, radio and television since the campaign began. Many managers are reporting a higher level of design activity in their companies and many designers are reporting a greater demand for their services. This is all very welcome.

Alongside the awareness activities we have also begun to support a wide range of activities in education and training. In the context of education, one of our most important tasks is to encourage the sort of cultural change that is needed to ensure that future generations have an inherent understanding of design and an appreciation of the value of well-designed objects. We also need to develop a national culture that honours manufacturing industry as much as it honours pure research or the established professions such as law and medicine. Let me mention just some of our design education initiatives where we have deliberately chosen to work at every level from infant education to postgraduate and post-experience training.

We have asked the Design Council to study existing practice in all design-related education in primary schools and to prepare a report recommending action that should be taken to ensure that best practice is disseminated right through the primary education system. We are concerned in this initiative with design as part of general education, thus helping the cultural change we wish to bring about. We have also noticed that such education can have a dramatic effect on the performance of students assessed as below standard against conventional academic criteria. Ability in reading, writing, drawing and mathematics improves considerably when taught in the context of a design-related subject. For example, a project on the pyramids can and should involve all these skills, as well as the historical dimension.

We are giving support over a six-year period to a curriculum development project which is aimed mainly at helping to fill gaps in the vocational design education curriculum at secondary and tertiary level. Other organisations are playing their part. For example, the Business and Technician Education Council, through vigorous leadership from its board for design, is endeavouring to promote quality in design education by concentrating on the range of skills that a designer should have. In particular, BTEC is promoting the need for students to have as part of their design courses relevant work experience so that their education is set in the context of the real commercial world; "hands on" experience of various forms and uses of new technology and the requirement to develop basic skills in business to relate design to costs and competing in the market place.

At the far end of the scale, we are supporting both the work of the design management unit at the London Business School and the implementation of a report by the Council for National Academic Awards on design management education in polytechnics and colleges. Both of these activities fit in with our aim of increasing the awareness among managers of the benefits of good design by ensuring that they then have the skills to absorb the design input into their corporate strategy.

A pilot scheme, entitled "Young Designers into Industry", has just begun. Under the scheme 12 new textile graduates will spend six months to a year in selected companies on a carefully planned and monitored programme of industrial experience. If the pilot is a success, we hope to extend the scheme gradually to other industry sectors involving up to 200 young designers.

Last year I was satisfied that we had got things moving on a number of fronts. A wide variety of useful initiatives had been taken. The time had come to ensure that the initiatives were all pulling towards commonly agreed aims and objectives. I therefore prepared and published a policy document entitled "Design for Design: A framework for Action". I believe that this is unique and that no other Government have put design into their industrial strategy in this way before.

Hon. Members who have seen a copy of that document may also have noted that it bears the stamp of a designer. It is the first Whitehall policy document whose layout was designed by an outside designer. No doubt its clarity speaks for that particular input. In it, I set out the Government's principal objectives in their design policy. They were, first, to continue to increase awarenesss in industry and commerce of the benefits of good design; secondly, to encourage greater consciousness of good design by customers; and, thirdly, to reinforce the importance of design education and training at all levels.

We sought a mechanism that would structure all future design initiatives so that they met these objectives. As a result, a strategy group was established, based in the Design Council, which reported at the end of 1984. Detailed recommendations for action were prepared and were put to Government for decision. At a meeting with the Design Council several months ago, I was able to welcome the report and provide the council with an additional grant of £500.000 to enable it to get further activities started.

We have achieved quite a lot since the Prime Minister's seminar in January 1982. I think it is clear that we could not have done so without wholehearted support from designers and from their representative bodies such as the Society of Industrial Artists and Designers, from other bodies such as the Royal Society of Arts and colleges such as the Royal College of Art. And, above all, we have had the firm and staunch support of an experienced design promotion body, the Design Council.

We can be proud of this achievement. We can be proud of our designers. We car be proud of our successful manufacturers, whose design and quality-led attack on international markets is winning back for us some of our lost market share. They are the companies where jobs are secure because they are based not on artificial subsidies but on real profits derived from success. We want more companies to follow this example, and that is what we are working towards.

By the end of this financial year the Government will have trebled the spend on design initiatives since 1982 and helped over 3,000 firms to improve their design capability and therefore their profitability.

This Government have a unique commitment to the sponsorship of design as a major force for industrial innovation, and so over the last four years the Government have increased expenditure on design promotion from £4 million in 1982 to nearly £12 million in 1985–86. I can think of no more cost-effective item of public expenditure on the industrial front.

I welcome — if that is what is happening this afternoon — the politicisation of the design debate, though not in party political terms but as a method of raising the general awareness of the importance of good design as a key factor in improving the competiveness of all sectors of industry and commerce.

Britain's industrial problems are largely due to a mismatch in our economy — that is, an economy which has until recently committed too many of its national human and capital resources to the production of goods for which demand is low or stagnant and not enough of such resources to the production of goods for which demand is high and growing. Our talented designers are the key link between market demands and a company's production facilities. As such, they are a key element — in my view, the key element — in leading our national industrial fight back.

5.59 pm

Mr. Geoffrey Robinson (Coventry, North-West)

The whole House will agree that today's debate is important. It is the first time in about 20 years that we have debated industrial innovation and design in a linked context. it is unfortunate that today's debate has been so severely contracted by the important preceding private notice question and statements. Nevertheless, in the time that is still available to us certain important points need to be made direct to the Parliamentary Under-Secretary of State for Trade and Industry who seems to be living in a completely different world from that which is known to me as it concerns manufacturing industry in the west midlands, through the continuing loss of market share and the continuing inadequacy of product and process innovation in British industry.

It does the Minister no good to indulge in orgies of self-congratulation and complacency, because he knows that innovation in design, particularly in manufacturing, has never been worse. A recent report on overseas trade by the Select Committee on Trade and Industry makes it dramatically clear that the crisis facing British industry, particularly in those areas to which the Minister referred as being growth areas, is acute and becoming worse. Under unchanged Government policies it can only become even worse, to the point of being terminal.

The Minister rightly directed most of his remarks to industrial innovation. Before dealing with that I shall refer to the Design Centre and the Society of Industrial Artists and Designers, to which the Minister also referred. We welcome the award to the Government and we do not wish to spoil the flourish and obvious personal delight that the Minister took in going to Washington to receive the award.

I shall put to the Minister some questions which have been put to me by various bodies, notably by the Society of Industrial Artists and Designers about its centre for design studies.

Throughout the debate we shall come up against the Government's credibility gap — the gap between what they say and what they do. Unlike President Truman, who advised observers of the political scene in America not to read his speeches but to look at his budgets and spending, this Government plead with us to believe their speeches despite the directly contradictory evidence of their Budgets and spending cuts.

Within the greatly increased design budget. will the Minister support the SIAD initiatives in establishing a centre for design studies? I am sure the Minister is aware of the purposes for which that centre is being established. It aims to bring design more closely in touch with manufacturing industry, to bring the institutions teaching design in closer touch with the manufacturing sector and to bring design studies more closely within the secondary education system. They are laudable aims. Does the Minister intend to commit himself to provide money to support his words?

Can the Minister explain why design, which has been declared a priority in education, has not been allocated a penny piece? I accept that this is not the Minister's direct responsibility, but there is an overlap in which he has a direct interest. Priority for this Government simply means to be spared the chop.

The Government's cuts are having a severely deleterious effect in other areas. One has only to look at the bleak, forbidding appearance of the Tottenham Court road police station and contrast it with the private sector modernisations in the Tottenham Court road shopping area—Habitat, Heal's and Laskys—to realise how far the Government are from setting an example in design.

The economic benefits of good design are becoming increasingly accepted and understood, thanks to the excellent work, despite the hostility displayed by the Secretary of State for Education and Science, of the science policy research unit at Sussex university. Social benefits could be exploited by a Government committed to relating in a meaningful, human way to the people whom they represent and with whom, through various offices, they are daily in direct and widespread contact.

In computer parlance, the Government should go for a "friendly approach", but that language and such concepts are foreign to the Government's ideology. The quality of the social environment—the interface in hospital waiting rooms, police stations and jobcentres—could be much improved. The scope is enormous.

Such an achievement requires the Government to practise what they preach. Like any other service, good design needs customers and purchasers. The Government could and should be major purchasers of good design. They could influence and promote good design by an enlightened and benign public sector building programme. The Government cannot adopt such a policy because they are hung up on the perverted logic that Government spending destroys jobs and inhibits initiative. Meanwhile, fully trained architects and designers join the brain drain or the dole queue. About 500,000 construction workers are eager to be back at work.

Design, important and central though it is, and integral as it must be to the manufacturing and process industries, cannot be a substitute for product and process innovation. Britain has a proud history of industrial innovation. We are pioneers of the industrial revolution. Britain is the land that gave birth to the jet engine and radar, to penicillin and cephalosporium. It has made a long and proud contribution to the world's industrial and medical progress.

More recently, publicly funded research through the Medical Research Council discovered the fundamental genetic code of human life, the double helix. Crick and Watson are two outstanding Nobel prize winners. Their work has been continued by Cesar Milstein, who is also a Nobel prize winner and is also working at the MRC laboratory at Cambridge. On his fundamental research into monochromal antibodies will be built not only life saving drugs to cure cancer, and to prevent rejection in transplants, but the industries of the 21st century and the forthcoming biotechnological revolution which will equal, if not surpass, the microelectronic revolution of today in its implications for food production, energy creation and the prolongation of life itself.

The continuation of that proud heritage of outstanding intellectual achievement, derived from unique scientific research and development, is put at risk by the Government's policy. The perversity is hard to believe. The Government, recognising the achievements and even, as today, schizophrenically proclaiming them, are cutting back systematically and destructively year in and year out on Britain's scientific research effort. I say that the Government are perverse because their simpliste argument is that. because we are good at research and not so good at exploiting it, if we cut back on research we shall achieve better development and application. That argument is all wrong. It is a total non sequitur.

Certainly, our basic research has been good. Certainly, we have not exploited it as we should. There is no reason for us to be complacent about our achievements in basic research, but the Government's cuts in research budgets in all the research councils, the cuts in the universities' capacity to promote research and the cuts imposed on the University Grants Committee have not been made good in real terms through product innovation, as the Minister knows.

I shall deal later with the five months moratorium and the disastrous effect that it had when the Minister of State succeeded his predecessor and promptly undid the little good work that had been done previously. To emphasise the importance of the commercial exploitation of research, and indeed, as I would, to go further and accord to it as great an intellectual and cultural distinction as that traditionally recorded to basic scientific research. does not, and cannot be allowed to, lead to the destruction of the latter. However, that is where the Government's policies are leading us. If the Minister does not believe me or the clear statements made by the Labour party and the TUC, he should listen to the most distinguished scientists charged with the research and development effort throughout the country, who for the last three years have been pleading with the Government for a change of policy.

The president of the British Association for the Advancement of Science threw away a prepared speech and delivered an impassioned plea to the Government to reverse their policies. In its heavy document "Future Business", the TUC pointed out only too clearly that the future was being prejudiced by short-term cuts.

Sir John Kingman, chairman of the Science and Engineering Research Council, and Sir David Phillips, chairman of the Advisory Board for the Research Councils, have pointed out that the Government are hacking away at the scientific base to a point where Britain will no longer rank among the best in the world. They have said that, not only because it is right that Britain should be at the forefront of fundamental scientific research in its own right, not only because we are good at doing that, not only because British fundamental research and science have been the envy of the world, but because they understand that we should not hinder or stand in the way of the application of that research and development but that, on the contrary, without it we should have even less chance of proceeding and developing as an industrial nation.

Those were the very words used by Sir Hans Kornberg, president of the British Association for the Advancement of Science, when he threw away his prepared speech at Strathclyde university a month or two ago, and said: I am convinced that in the long term we cannot hope to prosper as exploiters of imported ideas, any more than we can hope to prosper as the assemblers of imported parts. That is the message that the Government must take on board. Our future must lie in exploiting the fruits of basic theoretical research. We cannot do that by cutting research. It is not a question of robbing Peter to pay Paul; it is robbing Peter to starve Paul.

Where have Government policies led us? Has there been any switch from theoretical fundamental research into applied research and development in manufacturing industry? Of course there has not. What has happened to research? The Minister talks about record profits and industry now being able to embark on a process of industrial and product innovation, product improvement and the things vital to the recapture of industrial markets in a highly competitive world economy, but what has happened? Overall, the figures since the Conservative party took office show that research and development have fallen in manufacturing industry by no less than 6 per cent. In the sector with the highest growth rate worldwide, information technology, since the Government took power a relatively neutral position in our balance of trade has been turned into a deficit of £2.3 billion. With unchanged policies, that deficit is projected to reach £10 billion. Employment in that sector has fallen by 12 per cent. since 1980 and British production has increased by only 44 per cent., while imports have increased by 110 per cent. That is the real world, and the one which the Minister appears to be ignoring. If there is time, when he replies to the debate, I hope that he will address himself to that world.

Every impartial observer knows that the position is grave. What is true of information technology is true of the whole spectrum of British manufacturing industry. Lack of industrial innovation is pervasive and increasing. The United Kingdom is losing out because of lack of product and process development in one market after another.

Let us again consider information technology and look at the NEDO report published at the end of last year, entitled "Crisis facing UK Information Technology". It states that it is concerned that the industry is close to a threshold below which an independent, broad-based UK IT industry would no longer be viable. Perhaps the Minister will square that with his earlier remarks. The report continues We believe that new policies are urgently needed, on the part of industry and of government, to attempt to reverse the decline before it is too late. The decline is there, and it is pervasive. It is happening in information technology and microelectronics, and the only reaction from the Government was a five-month moratorium imposed at the end of last year and surreptitiously introduced while my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) was at the Dispatch Box, the outcome of which was to cut the already grossly inadequate support for industry by £10 million. Those are the facts and the figures which we have put across from the Dispatch Box time and time again.

If the Minister does not believe me, he should read what the former Secretary of State, predictably elevated to chairman of his party, said—that there would be less in real terms. Of course there is less in real terms—that is the whole burden of this Government's policy. It is to provide less and expect industry to do more. That would work if other countries felt the same way, but we know that they do not. Other countries are investing far more in their support for innovation and the design and development of new products and processes in their industries. It would work if there was any evidence that industry was, in fact, making that investment, but all the evidence is to the contrary. Research and development investment is down 6 per cent., and investment itself is down 25 per cent. From where will the rebirth and the regeneration come?

If the Minister does not accept what I say, let him read what Richard Bullock has said. I believe that he was a deputy secretary in the Minister's Department. He is a formidable mandarin and no supporter of my party. He is now secretary of the Electronic Components Industry Federation. He said about Government support for innovation: We are pleased the electronics grants have been released from the moratorium but in comparison with our European competitors the money looks pretty feeble. Of course it does, because it is.

Last year—the most recent figures available—the Government invested £38 million in electronics — a growing sector and the centre of what is happening in information technology. That compares with West Germany's support of £61 million and French support of £188 million. That is the true face of Government support for industrial innovation—accept the minimum that the Treasury will concede and then cut it further to show the Prime Minister what good boys they are. We expect the Department of Trade and Industry to support innovation in industry, not to kow-tow cravenly to the Treasury's obsessive preoccupation with cutting Government expenditure.

The Labour party believes that it is not yet too late to deal with the fundamental problems. There is no need yet to become fatally pessimistic about British industry's capacity to innovate and regain markets in key technologies. The key technologies are well known to all hon. Members — microelectronics, computer-aided design and manufacture, second generation robotics that have vision, biotechnology and fibre optics. What is needed is a policy along the broad lines of the Lords' report, which comes hard on the heels of numerous other reports—to all of which the Government have turned a deaf ear before they have read them.

We need a sound basis of continuing and greater Government support. We need the creative, positive use of Government purchasing power to back British products and British innovation. We need the provision of medium-term risk capital, working capital and capital for investment in plant, machinery and marketing over a medium-term period, at modest rates of interest. We need also—over a period of time because it will be difficult to get it—a determined effort to switch the emphasis of Government-funded research and development away from defence to civilian projects.

As all Opposition Members will be aware, the Minister's speech was an abject exercise in self-congratulatory illusions—illusions that the Government are supporting British design, when the public sector, its architecture, premises and facilities offer some of the lowest standards of design. When confronted with an opportunity to extend the economic case for good design to the social enhancement of people's relationship with Government Departments, with inevitable bureaucracy the Government have resolutely refused to put their money behind their words of support.

Even worse than the Government's refusal to take a lead and set an example in the area of design has been their three-pronged attack on Britain's ability to carry out industrial innovation. They have cut our research establishments, cut the research carried out at universities, and cut the output of key graduates in the key technologies that we need for the future. There are fewer people now graduating in engineering, electronics and computer technology than when the Government took office. Above all, they have reduced their support for innovation.

Those policies must be reversed. We must have a positive planning mechanism for deciding key innovative technologies for the future. We must have the will to finance them, jointly with the private sector, in a medium-term programme. We must have a sustained programme of support for fundamental research in the universities and research councils. All of that can be done only by a Government who believe in working with industry, who believe that British industry can innovate and compete, who believe that British industry can regain lost markets and who believe that it is the job of the Government to work with industry to enable that to be done.

The present Government have lost faith in British industry. Nothing that we heard from the Minister today can lead us to any other conclusion, ignoring the rhetoric and considering only the facts. Before the doom-laden prophesy of the Lords' report is borne out, the Labour party will be returned to power to carry forward industrial product and process innovation as a basis for rebuilding our manufacturing sector.

6.21 pm

Mr. Kenneth Warren (Hastings and Rye)

We thought that this would be a quiet debate at the end of the Session, but it is clear from the peroration of the hon. Member for Coventry, North-West (Mr. Robinson) that it is likely to be livened up somewhat. However, it is not inappropriate to hit at the question of innovation and design because the subject has been neglected for long by the House. I suppose that, as a subject, it stretches all the way from Habitat, the company, to Hiroshima, because there are good and bad things about design.

While I have no desire to upstage the hon. Member for Coventry, North-West following his remarks about the report from the House of Lords, he should recall that the House of Commons Select Committee on Trade and Industry, of which I have the honour to be Chairman, reported on the subject matter of the debate a year ago and drew the attention of hon. Members to the fact that we are in a parlous situation in terms of our manufacturing industry.

The Lords pointed out that if our oil ran out at the end of this century, we should be faced with a balance of payments problem, which would have to be solved, of about £10 billion a year. This represents about 1 million jobs. We shall have to solve that problem, but it will not be solved in the way in which some of the economics twitterers sitting on the safe perches in Fleet street believe it can be solved, simply by switching to service industries.

Following the excellent start that the Minister gave the debate, I hope that my hon. Friend will appreciate that those of us who are deeply interested in the success of manufacturing in Britain are concerned about the wellbeing of the skills that are in industry and about the way in which, we hope, we can revive those skills to improve the employment and the wealth of the nation. While we have time to recognise the problems and do something about them, we do not have time to believe that such problems do not exist.

At the conclusion of this debate we shall probably all agree that action is essential, and I hope that the Minister will assure the House that the comments of hon. Members will give rise to action, because there is much in the fertile seeds of innovation that lie in the palm of the Government to develop, the Government being the bigget single customer in Britain and having the duty, whether they are or are not interventionist, to be an entrepreneur. In other words, the Government have a duty to respond to the opportunities that can be presented and to lead by example.

I declare an interest as an engineer with several patents to my name or to which I have contributed and as a Fellow of the Royal Society of Arts. I have noticed in the work of the Royal Society of Arts during the five years or so during which I have been a Fellow that each year the society turns its attention to the way in which for many decades innovation has been neglected in Britain. I am pleased, therefore, that the Government are today rising to the chance as well as to the challenge of making innovation and design a catch phrase in their programme.

It is certain, in historical terms, that whether the opportunities of design and innovation come from the cultural and historical style of the Renaissance or from the needs of war, encouragement is essential and patronage by people and Governments has been proved in the past to be essential to make that flower flourish. One cannot make people innovative. They can only be encouraged to do so. It is fascinating to note, for example, that more than a century ago a Select Committee of this House looked into the whole problem of arts and manufactures and the way in which to encourage innovation. Sir Lyon Playfair said at about that time: The engines of Watt and Stevenson have already expanded the wealth and resources, and even the territories, of England more than all the battles fought by her soldiers or all the treaties negotiated by her diplomats. The Prime Minister did a marvellous job yesterday in the Bahamas, and I hope that the Foreign Office is on her side. The fact remains that in the present situation, which is not new, the contributions from the back benches of industry have advanced the abilities and wealth of the nation much more than they have been given credit for doing.

Innovation takes time. From invention to innovation — the encouragement of invention so as to achieve innovation — can take a great time. Simple and commonplace devices can take much longer to reach the market place than one might imagine. For example, the ballpoint pen took 58 years from invention to reaching the market place, and where would the House of Commons be today without that device? Detergents took 42 years to reach the market place. Magnetic tape recording — beloved by many of us, though I must be careful about the way in which I put this, considering the interests of our secretaries—took 39 years. The jet engine, to which the hon. Member for Coventry, North-West referred, took only 13 years, but with the incentive of war. The zipper, without which we could not do anything, took 32 years to reach the market place.

There is a long time constant between the reality of saying what we want to do and the actuality of a good product at a recognisable price in the market place. It is true, however, at the other end of the scale that commodities such as oxygen in steelmaking took only three years, and synthetic penicillin, thank goodness, took only two years to get from the invention stage to the market place.

I endorse the praise of the Minister for the Royal Society of Arts, the Design Council, the Society of Industrial Artists and Designers and BTEC. A clear theme emerges. We know how to innovate, how to design and how to get the tasks completed by producing products in the market place. The trouble is that time and again—this was stated in 1835 when, as I said, a Select Committee of the House looked into the very subject that we are debating today—we seem to have to invent the wheel. I am almost inclined to feel that a wheel is circular because it is a compromise of design, with hon. Members sitting round it trying to work out the optimum shape.

Six aspects are clear as to how to get good design going. The first is to achieve well designed artifacts. That means the ability to exchange knowledge about markets, designers, engineers and profit in such a way as to balance the whole. That is a feature of good companies strong in innovation and design, and it is nothing new.

The second aspect is good market research — an understanding of what people want — because the problem with innovation and design is to make sure that there is not just scientific push put market pull. The video cassette recorder is a good example of that. Wherever it was invented, Mr. Morita of Sony realised that the public wanted it before they knew they wanted it, and he pulled them towards the cassette recorder. Hence Japan's domination of that market.

The third aspect is product support; the fourth is represented by the good old word "flair"; the fifth is design authority to make sure that somebody at the top of a company knows that there is a requirement for design authority and sees that it is exercised; and the sixth, probably the most important, is the need in companies to make sure that there is commitment and concern throughout top management to good practices. These requirements apply to manufacturers and to service industries such as tourism where the customer measures his own investment by the quality of the product. It all adds up to an attitude of mind.

There is another problem and it was identified by the Select Committee a year ago. The Select Committee in another place has also drawn Parliament's attention to it. Over the past 30 years the West Germans and the Japanese have increased their market share to the level that Britain enjoyed 30 years ago. Over the same period Britain's market share has just about halved. These are figures that cannot be ignored. They reflect the realities of competitiveness in the market place.

Over the past 30 years import penetration in manufactured goods has increased. In the 1950s, only about 5 per cent. of our manufactures were imported, but imports are now 30 per cent. What are the reasons for that?

Everyone argues that we must be competitive, and I suggest that there are two features to which we must pay attention, the first being price competitiveness. We are all familiar with the well-rehearsed arguments that are advanced on both sides of the House about inflation rates, the cost control of wages and the value of fluctuating exchange rates. I suggest that we do not pay enough attention to non-price factors.

It is unfortunate that there is not enough information on non-price factors and that that which is available is not particularly recent. The most recent information that I have found relates to 1965 and 1971. I ask my hon. Friend the Under-Secretary of State to consider turning the resources of Government to the task of ascertaining what is going on in this area. About 20 years ago the following question was posed: "Why buy foreign machine tools in Britain?" Since then the machine tool industry, especially in the midlands, has suffered dramatically from not understanding the problem. Delivery, specification and the superiority of product support accounted for 84 per cent. of customer choice. Opportunities for reciprocal trade accounted for 11 per cent. and the price factor accounted for only 5 per cent. We must not believe that to contain ourselves within a low wage economy will make us export competitive. I believe that everyone should give a fair day's work for a fair day's pay, but there should be a fair day's pay for a fair day's work.

Customer choice of non-price factors may explain why we see so many over-priced German cars on our roads. The Americans found that they were successful exporters when they had a high-wage economy. It is extraordinary that the non-price factors account for nearly two thirds of customer choice. It seems that price is not the most significant factor. If a company offers a good quality product and supports it well, it will attract customers. If price is so important, surely the United States, Switzerland and Sweden should have as much unemployment as we have.

My hon. Friend the Under-Secretary of State made an excellent speech but I must challenge what he said about designers going abroad. He claimed that it was a good thing, but I find it a dangerous trend. Designers have gone abroad — the Royal Society of Arts conducted an investigation into this—because they are underpaid in Britain. Those with higher degrees or degrees find that they are earning only 5 per cent. more than those who have not bothered to qualify. That leads many to ask, "Why qualify?" About 60 per cent. of those who have qualified in fashion design are unemployed. I am sure that my hon. Friend does not wish skilled people to be faced with such a shortage of employment opportunities.

There are real problems for the future and this can be measured by the way in which patents are being registered. In 1984, six out of the top 10 companies in the United States registering patents were foreign owned and there was not one British company among them. The Americans are worried because they had only four out of the top 10. I am worried because Britain was not represented at all.

We have real opportunities to innovate and to use the skills of our designers. I commend to my right hon. Friend the Secretary of State the work of the science policy research unit at Sussex university, which is examining how design and innovation can be encouraged. We have the ability to grow faster than we have so far. I am not happy with the present position. We must look to the Government to re-think their investment programme in terms of education and investment in basic science and technology. I commend that approach to the House.

6.36 pm

Mr. Ian Wrigglesworth (Stockton, South)

I am pleased to be able to take up some of the remarks of the hon. Member for Hastings and Rye (Mr. Warren), who has reminded the House of some of the harsh realities that face the country. He chairs the Select Committee on Trade and Industry, which has often done the same.

On behalf of the Social Democratic party and the Liberal party I welcome the debate, which is directed to a subject that is sadly neglected by the House and, unfortunately, by many sectors of British industry. If the debate helps to draw attention to the importance of design in industry, it will have performed a useful function.

I welcome the support which the Government have given to design and which the Minister outlined. The role that he and the Prime Minister have played in supporting design and seeking to highlight the importance of it in industry is commendable and to be welcomed. I welcome their endeavours to draw more attention to the importance of innovation. I shall be critical of some aspects of Government policy, but I hope that the Minister will take my remarks so far as encouragement to do more and to do better and not as negative criticism. As I have said, I believe that the Government have taken on board the importance of design and innovation in their policy.

Why are industrial innovation and design so important? Visual enjoyment is important in all our lives. We must not lose sight of the fact that good design, whether it he in industry or any other part of our lives, helps to improve the quality of life. Good design is about more than creating new businesses or new jobs, although that will be the main focus of the debate. We should seek to encourage good design generally. I am sure that the main thrust of the debate will be on the contribution that design can make to the creation of jobs, new businesses and the improvement of the economy.

In the good old days, whenever they were, great importance was attached to design in industry, especially in the Victorian period. I read a book over the weekend in which there was an account of the Royal mining engineering industrial exhibition of 1887 in Newcastle. I read another report of the great exhibition which took place in 1908. The Anglo-French exhibition gave an area of London — it is one with which many of us are familiar because it includes the site of the BBC television centre—the name of White City. It was an enormous exhibition which included fine arts, visual arts, design, engineering and all other facets of British and French industry. It was much larger than the great exhibition of 1951. That reflects the spirit of those times and the importance which was attached to innovation and design. The new products and innovations that were such a hallmark of that period were brought into being and brought to the attention of the public generally by the professional institutions that are to be found in Newcastle, the area of Teesside which I represent, Darlington, other parts of the northern region and many other areas throughout the country.

I hope that the message to go out from this debate will be that, through innovation and good and new design, we can create jobs and new businesses. New businesses, products and technologies are important, but we sometimes spend so much time talking about new technologies that we forget that old products with new designs have enormous markets overseas and at home. Sometimes we forget that the new design of old products is important to the success of our industry.

Last Christmas I was sent a remarkable Christmas card from the Middlesbrough college of art and design. A small flat object snapped out into a box when it was taken out of the envelope. One side of the small tag on the red string hanging from the box said, "Here is a Christmas box for you." The other side said, "Have a drink on us." When the red string was pulled from the box there was a tea bag on the end of it. That was an ingenious attractive design with a potential for business success, but, as a Christmas card, it was not a new product. The Scandinavians, Italians, French and other overseas competitors have become leaders in the sale of domestic products because of the inventiveness of their designers.

There are many examples of similarly successful businesses in Britain. Sir Terence Conran's Habitat and similar businesses have good design as their hallmark. The marvellous Laura Ashley business—it is sad that Laura Ashley has died — is based upon good and striking design. Such design has created a successful business in rural Wales. Tremendous Government support was not needed to get it off the ground—innovation and design did so. There is a message for the regions: Through such design and innovation businesses can be developed—not in new but in old products—to satisfy customers in a manner that we would all welcome.

Design is an important aspect of our industrial life. Anyone who is tempted to underestimate its importance should remember its role. We should remember the superbly designed Concorde and the crowds of people who went to airports just to see it. That is what our businesses must take on board if they are to compete with the Benettons of this world which place so much emphasis on design and succeed as a result.

The Government have taken this point on board. They have started to provide additional support to the Design Council. I understand that this year they will give an additional £1.5 million to the council, bringing its central funding up to £4.8 million. The precariousness of this funding is illustrated by the fact that it has only just now recovered to its 1980 level after substantial cuts in previous years and the fact that it is renewed on a year-by-year basis. I hope that the Department of Trade and Industry will give the Design Council longer-term security in the schemes and promotions in which it is involved. Uncertainty about future budgets inhibits the council's work.

I welcome the backing given to the £350,000 campaign to promote the use of industrial product design by United Kingdom managers. This is a welcome development, but there is no guarantee about how long it will continue. It would be helpful if the Under-Secretary of State were to look at the longer term when giving such grants to the Design Council and similar bodies.

Industrial design and innovation are important aspects of a strategy to promote competitiveness which should include other non-price factors such as quality, reliability, delivery, marketing and after-sales service. Such a total product approach involving services and goods is essential if the decline in Britain's manufacturing competitiveness is to be reversed.

Horrendous figures face us on this front. In recent years, our manufacturing competitiveness has declined dramatically. The Design Council's report "Design and the Economy" shows a reduction over the past 30 years from 25 per cent. to 9 per cent. in the United Kingdom's export share of world trade in manufactured goods. This contrasts with an increase in imports from about 6 per cent. to about 30 per cent. of total sales. The import figures for some of the worst product areas show an increase in imports of 84 per cent. for music centres, 80 per cent. for scissors and 43 per cent. for electric cookers. Home production of many products has been almost decimated. We face an enormous task if we are to overcome the effects of the blow that has hit British industry during the past decade.

Cuts in training and education have played a major part in this decline. The United States, with approximately 60 scientists and engineers employed in research and development per 10,000 of the labour force, has roughly twice as many people employed in this work as the United Kingdom. Japan leads the field in expenditure on research and development, having almost doubled research and development expenditure in a recent eight-year period. Other countries cited in the Design Council's report have made significant increases. The United Kingdom alone decreased expenditure by more than 20 per cent. Distribution in other countries of research and development expenditure differs significantly from the United Kingdom where three sectors alone — chemicals, electrical engineering and aerospace—account for 71 per cent. of total research and development activity. Figures on research and development and on the number of engineers and others who are crucial to innovation and design show Britain's devastating position.

I hope that the Under-Secretary of State will encourage those of us who want a comprehensive training and education system—rather than the ad hoc-ery of the past few years—the restoration of some grants to research councils and a proper dovetailed system of training and education so that those on YTS are given credit for the work that they have done, enabling them to qualify in other spheres. This is part of the building-block approach to education which can help Britain to involve similar numbers of people in training and education as are involved in Germany, Japan and the United States. Without that basis of innovation and industrial design policy and the education to back them up, we shall not achieve any of the goals that the Government have set themselves and that the rest of the country would like to be achieved.

6.49 pm

Mr. Tim Rathbone (Lewes)

I should like to return to the subject of design and mention first the considerable achievements that we have made in this country in recent years. Her Majesty's Government are doing more than any other Government in the world to promote design as an instrument of competition. Following my right hon. Friend the Prime Minister's celebrated design evening at Downing street, an immense flood of activity has poured forth.

My hon. Friend the Minister, despite the mealy-mouthed condemnation of the hon. Member for Coventry, North-West (Mr. Robinson), should receive credit for what has been achieved. There is not a soul in the design world who would not wholeheartedly acknowledge his tireless work. That was marked internationally when in August he received, on behalf of Britain, an award in recognition of services to design. There is no credibility gap there, as suggested by the hon. Gentleman: there is world acknowledgement.

Next summer, the annual design conference, which includes architecture —not so far mentioned—will be held in Aspen, Colorado, and four and a half days will be devoted entirely to design in the United Kingdom. There is no credibility gap there either.

A great deal is going on abroad, but a great deal is going on at home. For example, over 2,000 companies have benefited from the Department of Trade and Industry's funded consultancy scheme. That is design in action. The British Institute of Management is increasing its activity on this subject. NEDO has established a working party to review the state of design in Britain and how it can become a more integral and effective part of manufacturing. It will report next summer. That is also design in action.

We also have design in education, as my hon. Friend the Minister said. While the National Advisory Body is reviewing the distribution of courses, it is clear that the general thrust is to make design courses relevant to work. In March this year, a two-day conference of principals of colleges in the United States met in Philadelphia to discuss the new style of design education evolving in the United Kingdom. There is no credibility gap there. The results of a job survey held among all students who completed BTEC higher national diplomas in design last year were especially encouraging. Within three months four fifths of the students had full-time jobs and 95 per cent. of those jobs were in the subject studied. A further 13 per cent. of young designers had started their own firms or were freelancing. That may be a new trend in our society.

Hon. Members will also be aware of the highly successful series of "Design by Experience" seminars held around the country last year. Organised by BTEC, their aim was to bring companies and colleges closer together. That initiative was supported by my hon. Friend the Under-Secretary of State at the Department of Trade and Industry, my hon. Friend the Under-Secretary of State at the Department of Education and Science, who was listening to the debate earlier, and my hon. Friend the Member for Hastings and Rye (Mr. Warren.)

At a different level, the London Business School runs an oversubscribed course of design management in its Master of Business Administration programme, and a few other business schools are beginning to do the same. That all illustrates design in action. There is no credibility gap there. However, despite all that push and action, there remains a huge gap between the enthusiasm of the protagonists and the reluctant behaviour of large swatches of manufacturing.

We are approaching the start of 1986, which is designated as industry year as an initative of the Royal Society for the Encouragement of the Arts, Manufactures and Commerce. That is a rather quaint old name, which disguises enormous vitality and energy. Its aim is to increase understanding of industry's role and its service to this country. We must ask why industry is still reluctant to embrace good design. Why can that be? Britain has the designers. There is no other place on earth where one can find such a concentration of internationally experienced designers. They may sometimes be found within the House, but certainly they may be found within one or two miles of it. It is a pity that a major nationalised industry such as British Airways felt it necessary to go abroad for its recent major livery redesign when Great Britain can offer the best in the world. Our designers' skill is often better understood in other countries, as my hon. Friend the Member for Hastings and Rye said.

In the past year alone, the top six offices earned some £50 million in foreign revenue. That helps the balance of payments, but it also means that we are helping our competitors. It has been said that there is no important automotive firm in Europe and no important fashion house without British designers in senior positions.

If we have those resources, skills and effort, why do not more British firms accept the role of design in their affairs? Could it be that too many companies are run by financial men, who care more for cutting costs than the products they make? That perhaps goes for the Treasury as well. Is it because the City has such a short time-frame that it does not encourage companies to invest in new products, but rather looks for short-term profit, or is it because business men think of design as art—nice, but not necessary, the type of trim that is added to make something look nice? Is it the old belief that the public do not like good design? My goodness, if Sony, Suzuki and Toyota produced ugly goods that would prove it, but they do not. Is it that even our engineers believe that design is peripheral, as if people, users, and customers do not matter?

The problem is a management one. In that regard, it is notable that the London Business School funded the world's first design management programme. Manchester is now following. The essential task is to bring understanding into business that design matters—design not as decoration or taste, but in the fuller sense of thinking matters through and creating the goods that people want and will pay for.

Mr. Robert Banks (Harrogate)

I am following with care what my hon. Friend is saying. I agree with what he says. Does he agree that it is symbolic that British industry rarely has a designer on the board of directors?

Mr. Rathbone

That is a good illustration of the point that I was making. I hope that industry will follow the example of motor companies in the United States, which do not just have designers on the board but have designers as chairmen.

While much excellent work is being done, a note of warning should perhaps be sounded. Design by itself will not do the trick, nor will the notion that design is about taste. I do not mean that design should be ugly, but rather that its purpose, like the purpose of industry, is to satisfy customers. Products make profits only when effectively marketed through proper packaging, brand identification and communication. Brand reputation depends to a large degree on corporate reputation and identity. I wonder whether the consultancy scheme is sufficiently directed to such ends. I speak as someone involved with a company that undertakes such consultancy programmes and one who hopes that the scheme will be promoted in that way.

If there is one other practical step that my hon. Friend the Minister could now accomplish it would be to encourage the Design Council to regard design as part of a process for satisfying customers. The relationship between that process called marketing and design is too little understood.

To conclude, I should like to return to my first point. My hon. Friend the Minister is doing a famous job by encouraging better design, ably assisted by my right hon. Friend the Prime Minister. This evening, my hon. Friend has outlined how he is planning further encouragement of design and manufacturing. More strength to his elbow.

6.59 pm

Mr. Robert Banks (Harrogate)

This is a historic debate, as the hon. Member for Coventry, North-West (Mr. Robinson) said. It was rather surprising that there was not one single Back Bencher on the Labour Benches during the whole of the hon. Gentleman's speech. He was rather like a parade sergeant on an empty parade ground barking orders with no one to hear. It is right that we should be debating this subject because it is of immense importance for the creation of new jobs and for the regeneration of our industry. It is perhaps strange that in the long history of this parliamentary body that industry, during the time it was supreme in the world, during the Victorian period and in the early part of this century——

It being Seven o'clock, and there being private business set down by THE CHAIRMAN OF WAYS AND MEANS under Standing Order No. 7 (Time for taking private business), the motion for the Adjournment of the House lapsed, without Question put.