HC Deb 17 February 1988 vol 127 cc1122-30

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

1.10 am
Mr. Nicholas Winterton (Macclesfield)

I wish to raise at this late hour the proposed relocation of the Patent Office from London to south Wales, but in doing so I say to my hon. Friend the Minister, whom I welcome to the Treasury Bench at this uncivilised hour, that the present Government's policy in seeking to challenge perceived norms and accepted wisdom is one that I strongly applaud. It is right that no idea or arrangement, no matter how well-established, should go unexamined or unquestioned.

The decision in recent years to consider the relocation of Government departmental offices to regions outside London is one that I welcome, and I hope that when future relocations are considered, the marvellous facilities offered in my constituency of Macclesfield will not go unnoticed by my hon. Friend, or for that matter, the excellent opportunities provided by the north-west region as a whole.

However, I am not arguing now for the relocation of the Patent Office from its present home in central London to my constituency or the north-west. Indeed, I hope to convince my hon. Friend that he should reconsider what can only be described as a hasty, if well-intentioned, decision to move the home of the Patent Office to Newport in south Wales.

It is not that I have anything at all against Wales or the people of that excellent Principality. I am in favour, as I said, of the dispersal of Government offices from London and the south-east. The reason why I am arguing against the move to south Wales is simply that the proper home for the Patent Office is in London. During the whole of the period of more than 100 years that a modern patent system has been in existence, the Patent Office has been located in the Chancery lane area of central London. That is almost certainly because the function of the office is to grant rights — patents, trade marks and registered designs—which are enforceable at law. It is logical to locate the office close to the High Court, the Inns of Court and specialist counsel, solicitors and patent agents who are concerned with obtaining — and, I remind the House, enforcing—such rights.

The Patent Office currently comprises approximately 1,100 members of staff, headed by the Comptroller-General. Two thirds are administrative, clerical and support staff, while the remainder are highly qualified technical examiners. A patent application is accepted and granted only after a technical evaluation and search carried out by one of the examiners to determine whether the application is directed to novel and inventive subject matter. To perform that important function, an examiner must have a thorough grasp of the area of technology with which the application is concerned.

Taken as a whole, the examining corps is highly qualified and greatly experienced across a range of disciplines covering the full technical spectrum and patent law. In short, they are a highly valuable and specialised asset to our country, in enabling us to make the best use of that great British flair for invention and entrepreneurship.

As my hon. Friend knows, the White Paper published just two years ago on the subject of intellectual property and innovation says: a nation such as the United Kingdom relies heavily on getting value from its intellectual property. We have a limited raw material base and a small home market, but we have a good education system, a tradition of world-leading inventions and of involvement in international trade.

Mr. Paul Flynn (Newport, West)

Will the hon. Gentleman give way?

Mr. Winterton

I shall not give way. I have much to say in a short time.

The White Paper continues: The ability to claim ownership of ideas is a vital step in securing a profit from them. The same White Paper argued that the Patent Office should be made a statutory non-departmental body, to make it more responsive to the needs of innovators, free it from the traditional Civil Service framework, and ensure that it should be self-supporting from fees, and free to finance investment programmes.

I make these remarks about the White Paper to remind the House, which can all too often become too detached from such things, of the real practical value of the Patent Office to British industry and, in particular, to the small company or self-employed individual from whose invention a whole industry could ultimately grow. I make these remarks also to remind my hon. Friend the Minister of the ideas contained in the White Paper. It appears that the excellent proposals have now been shelved. I urge him once again to turn his attention to these matters, albeit that they are now not the main subject of debate.

What is of specific concern is the proposed relocation of the office to south Wales and the impact that that move could have on British inventors.

First, I shall comment briefly on the rather casual manner in which the decision was announced. The first that many of my contacts in industry and in the patent world knew of the matter was a passing reference in a speech by the Comptroller-General of Patents at the annual dinner of the Chartered Institute of Patent Agents on 30 October last — although, with all respect to my hon. Friend, I understand that reference was also made to the decision in another place on that very day. I stress that the decision was announced. It was put forward not for discussion or consultation with those concerned, but as a fait accompli.

At no time prior to the somewhat informal announcement did there appear to have been any consultation with the professional organisations that will be most affected — the Chartered Institute of Patent Agents and the Institute of Trade Mark Agents. Nor had there been any consultation with individual users of the patent and trade mark system or with organisations such as the Confederation of British Industry or the Trade Marks, Patents and Designs Federation, which represent industrial users of the systems.

Concern about the total lack of consultation was registered with my hon. Friend in a letter from the Trade Marks, Patents and Designs Federation on 3 February. The CBI wrote earlier to the Comptroller-General, endorsing the federation's concern at the decision, and the lack of consultation that went before it.

That absence of consultation is of all the more concern, bearing in mind that the standing advisory committees on patents and trade marks have been in existence for some years. Surely a proposal of this kind is clearly a natural candidate for consideration by such committees. Therefore, I urge not the abandonment of the idea of relocation—as I said, all new ideas deserve consideration—but, rather, that such consideration should be comprehensive and constructive, and should include full consultation.

Mr. Flynn

On a point of order, Mr. Deputy Speaker. Is it in order for an hon. Member to refer to my constituency, when I am not allowed to speak, and refer to a matter that has nothing to do with his constituency?

Mr. Deputy Speaker (Mr. Harold Walker)

It is a matter that relates to the normal courtesies of the House. It is not a point of order.

Mr. Winterton

Therefore, I ask my hon. Friend to refer the detail of the decision to the standing advisory committee before it is ultimately implemented.

Secondly, the proposal seems to have arisen out of a report that was conducted by Price Waterhouse, a firm of considerable reputation but with no experience of patents. It is my suspicion, and certainly that of many concerned individuals and organisations who have contacted me about the matter, that the decision to move to south Wales arose simply because empty facilities exist there, due to the decision of another Government Department not to relocate in that area, as had originally been planned.

Mr. Rhodri Morgan (Cardiff, West)

Will the hon. Gentleman give way?

Mr. Winterton

I have already announced that I shall not give way. Opposition Members did not approach me before the debate to seek my permission to intervene.

Therefore, if my suspicion is true, such consideration is not the right basis upon which the Government should make commercial or policy decisions. The best interests of the British economy should be the overriding factor in a matter such as this.

Thirdly, in a letter to my hon. Friend the Member for Romford (Mr. Neubert), my right hon. and learned Friend the Chancellor of the Duchy of Lancaster argued that the basic reason for the relocation was to limit the anticipated increase in Government fees which would need to be charged to users if the office were retained in London, with high accommodation costs and a prospective fall in patent registrations.

I challenge that argument. The latest financial statement concerning the position of the Patent Office appears as an appendix to the annual report of the Comptroller-General. The report for 1986 clearly shows that the total accommodation costs for the fee-earning services of the Patent Office amounted to only 18 per cent. of the total expenditure of the office and that receipts over expenditure amounted to almost £4 million—that is to say, there was a profit of £4 million. Even if accommodation costs were to treble, for example, in the future, they could be met within an overall increase of fees of less than 40 per cent. in 1986 terms.

The fees would still be low compared to those in other European countries. More particularly, it should be recognised that the users of the Patent Office's services almost invariably use professional assistance and that Government fees represent a relatively small proportion of the costs incurred. Consequently, it is expected that the increase in professional fees and ancillary costs to applicants for patents which will result directly from the move out of London could substantially offset any possible savings in Government fees.

Fourthly, I urge my hon. Friend to consider once again the impact of the proposed move on the competence of the office to handle patent applications. As I said earlier, that depends crucially on the retention of the corps of technical examiners and any move that results in a diminishing of that corps through reticence to move to that most desirable area of south Wales would be detrimental to the service offered to British industry.

From the letter that my hon. Friend wrote to the Trade Marks Patents and Designs Federation on 20 December last, it is clear that the Government are not only expecting, but hoping for, a reduction in this corps, since he says: Central London locations not only mean high rental but also significantly increased staff costs. By relocation away from London substantial savings are possible. In short, the Government would save money by employing local people in Wales at lower rates, but those people would clearly not have the experience or expertise of the long-serving London personnel. Therefore, that would be a false economy and could lead to a further fall in the number of patent applications because of a lack of confidence, a fall in standards and the resultant inability to enforce patents granted and registered. One reason why we have such a fine reputation in this country is because we can enforce the patents that have been granted and registered.

I should also put on record at this stage the alarm expressed by those who would be affected by the knowledge that the Government are reported to have inquired whether the European Patent Office could handle the examination of United Kingdom patent applications in apparent ignorance of the fact that that would have resulted in a sevenfold increase in fees for patent applications—a level of fees which would effectively rule out many smaller companies from taking out patents. That is strangely inconsistent with the concern that my hon. Friend and his Department have expressed for fee increases simultaneously used to justify the Patent Office move to south Wales.

I seek an assurance from my hon. Friend this evening that that approach will not be pursued now that the European Patent Office has refused to handle the business because of its own backlog of work. The British Patent Office is currently dealing with over 31,000 applications each year. Surely that is a sign of a healthy and entrepreneurial economy, and that the Patent Office is providing a valuable service, at its present location, to British industry.

I want to draw the attention of the House to one final area. I understand that the United Kingdom is currently asking the EEC to locate the Community Trade Marks Office in London. The Government's proposal to move the Patent Office to south Wales is likely to be regarded in Europe as a reflection of a lack of interest in the United Kingdom about intellectual property, and much will be made of that by the Spanish, Dutch and Germans who are the other prime contenders for the location of the Community Trade Marks Office. Such a move by the Patent Office could effectively sabotage the bid for the Community Trade Marks Office.

Considerable advantages could flow from the location of the CTMO alongside the Patent Office in London. It would provide close liason and a pool of professional advisers both within and independent of the offices. The proposal to move the Patent Office out of London should be reviewed immediately and steps should be taken quickly to reassure industry of the Government's commitment to support intellectual property rights and its innovative ability, which should rightly be seen as the basis for the continued regeneration of United Kingdom industry.

A Patent Office providing industrial property services at senior level is surely of vital importance to industry and should be accessible from all parts of the country. I believe that that can be ensured only by locating the head office —albeit a residuary head office—in the capital city to which inevitably the most efficient communications are provided.

In conclusion, I want to thank my hon. Friend the Minister most sincerely for receiving me and representatives of those concerned — Mr. Ralph Walter of the CBI, an ex-employee of Unilever, Mr. Tony Gibson the president of the Trade Marks, Patents and Designs Federation, Mr. David Votier, president of the Chartered Institute of Patent Agents and Mr. David Tatham, also of the Trade Marks, Patents and Design Federation, a senior executive of ICI—in his office at the Department of Trade and Industry on Monday afternoon. We had a full and frank exchange of views and I know that those who accompanied me appreciated my hon. Friend's understanding of the problems and the sympathetic hearing that he gave us.

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

May I begin by thanking my hon. Friend the Member for Macclesfield (Mr. Winterton) for the manner in which he has pursued his arguments tonight and on previous occasions. I respect his sincerity and strength of feeling on this issue. In the course of my observations, I will try to deal with the very important points that he has raised.

I am grateful for the opportunity presented by the debate to explain more fully the reasons behind our proposal to relocate the Patent Office in south Wales, and — I am bound to say — to rebut some of the misunderstandings that have appeared in the press recently about our plans for the Patent Office.

To begin with, it is necessary to step back and take stock of the changes that are occurring in this area. This country and a number of other European states joined together in 1977 to establish the European Patent Office. Under the system administered by that office, a company seeking broad protection for its inventions may file a single patent application in Europe as an alternative to going to each of the member states individually. This system is very successful and the European Patent Office is now the major office in Europe. Our national office has correspondingly declined over the same period. Input is down 30 per cent. over the past five years and looks set to decline by a similar amount over the next five years. The European system is particularly attractive to large companies, with the result that applicants to the United Kingdom Patent Office are increasingly drawn from small and medium-sized enterprises.

On the other hand, the work of the trade marks registry of the Patent Office is increasing by leaps and bounds following an amendment to the trade marks legislation in 1986 permitting service industries to register their marks and logos. As a result, trade mark applicants face long delays as the registry seeks to obtain sufficient staff and train them in the necessary skills.

The patents branch also faces similar problems in obtaining and retaining staff in central London, and both branches attract frequent complaints from the professions about the level of service provided. It is worth bearing in mind that, in the general service grades, the staff turnover in the Patent Office is over five times what it is in the Companies Registration Office and the Business Statistics Office in south Wales.

I shall come to the questions of the comparative labour and salary costs, but the accommodation costs in central London are spiralling upwards and in 1988 are expected to exceed £8 million, an amount borne on the patent side by fewer and fewer applicants as the input declines. It might be thought that, as the input declines and the staff with it, the office will need less space. But that is not the whole story. The patent search files consist of over 4 million documents and grow each year, so that the office's requirements for space cannot simply be adjusted in line with input. Overheads are set to climb steeply if the office remains in London.

It is reasonable to ask ourselves whether the situation should be allowed to continue unchecked, or whether we should take positive steps to put the office on a sounder basis so that it can provide the continuity of services that its customers rightly expect, at prices they can reasonably afford. The answer is plain. We would be failing in our duty to industry and commerce if the situation was allowed to drift out of control.

The first question that must be asked is: would it be cheaper to transfer all the patent work to the European Patent Office? It is clear that the European Patent Office has not the capacity to take on extra work from the United Kingdom Patent Office. Even if it had, the charges would be higher than the cost of doing the work in our own office. Moving the office to cheaper accommodation in south Wales would move the costs of our own operations out of the range of the European Patent Office. There are therefore no plans to transfer functions of the United Kingdom Patent Office to the European Patent Office. I would like to underline that statement, because recent press reports suggesting the contrary have caused some anxiety to the staff of the office.

Nor would I like to give the impression by anything I have said that the Patent Office is declining at such a rate that it is about to disappear through lack of customers. We would not be taking so much trouble thinking about the future of the office if that were the case. Even at its lower level of activity, the office is still a major division of the Department of Trade and Industry. Currently, it receives over 30,000 patent applications a year, over 30,000 applications to register trade and service marks and over 8,000 applications to register designs.

If the office were moved to south Wales, accommodation charges would fall from £8 million per annum to under £3 million. Staff costs were, I noted, the subject of a sedentary intervention. A further £1.5 million would be saved in London weighting, which would be a genuine saving. But the salary grants are the same, and the salaries paid, London weighting excepted, would be, grade for grade, the same in south Wales as in London.

In the context of a budget of £35 million, those figures cannot be ignored. South Wales is preferred, because the Department of Trade and Industry already has two large establishments in the Cardiff-Newport area, and it makes operational sense to place the Patent Office in the same region. The case for decentralising the office looks overwhelming.

While officials examine the implications of a move, talks have already started with the professions to consider what needs to be done to ensure that users would not be inconvenienced by a move away from London. I know that my hon. Friend feels strongly about that. A major part of the patent and trade mark profession is located in London within easy reach of the Patent Office in High Holborn. Plainly, its costs could rise considerably if its members had to spend their time travelling backwards and forwards between London and Wales to file their applications, or attend hearings. Likewise, members of the patents bar could be seriously disadvantaged if their time was divided between the Patents Court in London and the comptroller's court in Wales. Clearly, it would defeat the whole purpose of a move if the costs of the Patent Office were reduced at the expense of the professions, because at the end of the day it is the users who bear the costs of both.

In order to maintain a convenient service to users, the Patent Office plans to retain an office in London employing 60 to 70 people who would receive patent, trade mark and design business. This office would have on-line computer links with the relocated main office to give access to register information and would provide facilities so that ex-parte and inter-parte proceedings could be conducted in London.

We have previously debated the importance of the new data highways, the new broadband networks and telecommunications links. This is a classic case of taking advantage of such technology.

Some talks took place on 5 February with the Chartered Institute of Patent Agents, the Institute of Trade Mark Agents and the Trade Mark, Patent and Design Federation to ensure that the necessary facilities are available in London for the efficient conduct of their business should the proposd move take place. We would of course need to ensure that sufficient numbers of skilled staff needed for the proper continuity of services transfer with the office. Staff have been informed about the possibilities under consideration, and more detailed talks with staff representatives will begin in the near future. It is also important to appreciate that a move of an important office like the Patent Office would provide valuable new job opportunities in south Wales. A move would create at least 500 jobs locally.

Some agents have asked where such a decision would leave our bid to host the Community Trade Marks Office in London. The issues of the location of the national Patent Office and the Community Trade Marks Office are unconnected. The Community institution will not depend in any way on the United Kingdom Patent Office. I am determined that the United Kingdom bid stands in its own right and on its own independent merits. Our bid for the Community Trade Marks Office has always depended upon the advantages of London itself, its links with the other Community states, the United States of America, Japan and other countries, and on the wealth of trade mark expertise available. This is still the case and our claim to that office is still unrivalled on any objective basis. We shall press strongly on the Commission and others those objective critera.

My hon. Friend has spoken of the need for consultation and has expressed the view that more consultation is necessary before any proposal to relocate the Patent Office out of central London is entertained. I hope he is aware that I am sensitive to his comments not just in this debate but on previous occasions. Consultation with users about the future operation of the Patent Office is necessary. However, the overall management of the Civil Service, of which the Patent Office is a part, is a matter for the Government. We have a manifesto commitment to improve public services, to make them more effective and to reduce their costs. It is for Government to be satisfied that these goals will be achieved. For the Patent Office, the financial savings to be derived and the operational improvements that can be attained by a move to south Wales make the case conclusive.

Having made a decision on financial and operational grounds, I readily agree with my hon. Friend that there is thus a need for consultation about its implementation. We shall carefully examine the record of this debate to pick up the sensitivities about which my hon. Friend feels consultation is in order. As I have said, this process of consultation has already begun. The Comptroller-General has offered further meetings to the Chartered Institute of Patent Agents, the Trade Mark Patents and Designs Federation and the Institute of Trade Mark Agents to discuss the sort of services that they would like to see provided by the London office and the links that that office might have with the main office in south Wales. That is a very important form of consultation, but I cannot accept that Government should have consulted on the basic question of how to manage and locate the Patent Office. This is an issue of central Civil Service management and it is an issue for Government.

A transfer will enable the Patent Office to provide a better service through the greater availability and continuity of staff, a cheaper service for the benefit particularly of small and medium-sized enterprises, and a more secure future away from the high costs of London.

Mr. Winterton

Would my hon. Friend be prepared to consider the appointment of the head office in London—

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

Adjourned at twenty minutes to Two o'clock.