Commons Sitting of 11 March 1988

Preamble
The House met at half-past Nine o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PETITION

  Rating Reform
  9.36 am
  Mr. John McFall: I am grateful for the opportunity to present a petition on Scottish poll tax legislation on behalf of 2,000 constituents in my area. The petition was gathered over a period of three or four Saturday mornings. The number of signatures demonstrates the intensity of feeling of my constituents about the legislation. It is my duty to ask the House to take cognisance of that feeling and repeal the Scottish poll tax legislation.
  To lie upon the Table.

  Engineering
  9.37 am
  Mr. Patrick Thompson: I beg to move,
  That this House urges that consideration be given to the steps now required to build on recent success in United Kingdom engineering industries and to develop engineering performance up to and above the standards of leading industries overseas.
  I welcome the opportunity to open the debate. I am pleased to have the support of hon. Members and of the all-party group for engineering development. It is particularly good to see the chairman of that group, my hon. Friend the Member for Harwich (Sir J. Ridsdale) in his place. He will say more about the aims and work of the Committee.
  This is the first full-scale debate on engineering since 4 December 1980. Therefore, it is not surprising that I have been inundated with a mass of helpful advice and information from organisations and institutions, many of which I shall not have time to refer to. I shall address two main points: first, the crisis in the supply of professional engineers; and, secondly, the need for industry to train its employees more effectively. Other hon. Members will talk about the exciting challenge and opportunity provided from 1992 by the European single market. I shall also briefly illustrate some points by referring to the engineering industry in Norwich, and in particular in my constituency of Norwich, North. I shall be assisted by the publication of a recent report prepared by Peter Townroe and his team from the University of East Anglia. Some of the points in that report are directly relevant to the debate and to the engineering industry.
  In the motion we are asked to recognise the impressive progress of United Kingdom industries in terms of productivity and profitability. It is a measure of the success of Government policy since 1979 that the debate is held against a bright background. That is in sharp contrast to the dark mood that prevailed during the debate in 1980. It is intriguing to note that the spokesman for the Government in that debate was my hon. Friend the Member for Hampshire, North-West (Mr. Mitchell) who is now Minister for Public Transport. In his reply he referred to the need to control inflation, the need for realism and the need to get rid of the "them and us" attitude from the workplace. It is good to be able to feel that since 1980 real advances have been made towards those objectives.
  The economic performace of the engineering sector since 1980 has been remarkable. Although the overall size of the work force fell by almost one third between 1978 and 1985, output was higher at the end of that period than in 1980 and has continued to rise since then. Productivity per head rose by 31 per cent. between 1980 and 1985. The most spectacular gains were in electronics and office and data equipment, where the volume of production rose by over 80 per cent. in the years between 1978 and 1985. Significantly, the percentage of professional engineers, scientists and technologists employed in the engineering sector more than doubled over that same period.
  Too many of the shortcomings described in the 1980 debate are still with us today. That is why the motion calls for steps
  "to develop engineering performance up to and above the standards of leading industries overseas."

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  The need is urgent because as the income from North sea oil continues to decline, so we have to become more successful as an exporter of engineering products.
  I should like to quote from a speech which says:
  "It is internationally acknowledged that Britain is a country rich in inventiveness and creative talent. Yet, with some eminent exceptions, these inventive talents have not been harnessed effectively by manufacturing industry because, compared with Continental Europe and the large part of the world which has followed its lead, there have been neither the cultural nor the pecuniary rewards in this country to attract sufficient of the brightest national talents into engineering in industry."
  Mr. Peter Thurnham: Has my hon. Friend had an opportunity to look at the list of the 200 wealthiest people in the country which was published by Money Magazine the other day? I believe that it was significant for the people it left out as much as for the people it included. I looked at that last night and was pleased to see that at least 12 people listed were engineers.
  Mr. Thompson: I am as grateful to my hon. Friend for that intervention and I support the sense of what he said. I was in the process of quoting from a speech and I shall say where it comes from in a moment. The speech goes on:
  "Great prestige is attached to science, medicine and the creative arts, so that to be associated with their activities is to share in that esteem, but there is no cultural equivalent in Britain, and hence no basis for according similar esteem, to the European concepts conveyed in German by 'Technik'." —[Official Report, 4 December 1980; Vol. 995, c. 461.]
  That quotation came from part of a speech made by my hon. Friend the Member for Eastleigh (Sir D. Price) during the 1980 debate. He was quoting from a well known report — it is still well known — put together by Sir Monty Finniston and his colleagues. It is true to say that we have made little progress on that front. I believe that the Finniston report failed to be implemented partly because it advocated over-bureaucratic solutions and there were far too many recommendations. I have read all those recommendations. I have forgotten the number because it is such a long list. Many of the recommendations were excellent but I think that my analysis of why we have not made much progress since then is fair. I hope that other hon. Members will take up that point later.
  The Engineering Council, to which I am grateful for much of the information provided for this debate, owes its existence to the Finniston report and its follow-up.
  The historical background to all this has been expressed very well by Correlli Barnett in the first of three lectures, initiated by the education for capability group, which was delivered in 1978. He compared the history of technical education in this country with that on the Continent and he described how the pattern of low productivity in the early years after the war together with an unskilled work force and poor technical education has been our legacy from the past. Although that analysis is correct—I think that Correlli Barnett was right to draw attention to it—we have made a great deal of progress since then. However, we have not gone far enough or moved fast enough for the good of the engineering industry and the country.
  Dr. Michael Clark: Does my hon. Friend agree that within the education world and among academics, scientists and engineers are often scoffed at as being ignorant, whereas people who have a knowledge of
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  medieval history or who know something of the pentameter of poetry about ancient Greek vases are considered to be educated?
  Mr. Thompson: I am grateful to my hon. Friend. I would not go quite as far as that. I have found that quite often scientists and engineers are admired for their knowledge and expertise but perhaps do not always receive the support that they need to further their objectives. Otherwise, I agree with the sense of what my hon. Friend said.
  This morning I have received, from the organisers of the Norfolk and Norwich Koblenz Friendship Association, newspaper clippings from West Germany describing its attitudes to technology and the skilled crafts. It would be impossible to find anything quite like that in this country, Therefore, we have a long way to go and we have to follow Correlli Barnett and say that our background and technical education is not as good as that on the Continent.
  It is not surprising that the Engineering Council aims to increase public awareness, improve the supply of qualified engineers and technologists and maintain standards. Nor is it surprising that the Fellowship of Engineers adds to that list the need for investment in skilled training and the improvement of our design capability. I am pleased that my hon. Friend the Under-Secretary of State is listening to the debate because I am aware, as we all are, of his special interest in design in industry.
  The Engineering Council, the Fellowship of Engineers and other bodies interested in engineering are coming up with a whole range of exciting and relevant initiatives and ideas which there will not be time to talk about. Research done by the Engineering Industry Training Board suggests that the number of professionally qualified engineers being recruited by industry exceeds the supply of graduates from British polytechnics and universities. Those extra engineers are being attracted from the public sector, higher education, other occupations and from overseas. However, that process cannot go on indefinitely. After all, employers already face problems arising from the contraction in the number of entrants to first degree engineering courses in the early 1980s. However, it is true that overall numbers have risen since then and that more of those graduates are entering permanent employment in the United Kingdom. Much of that growth has been in electrical or electronic engineering rather than mechanical engineering. Even so, the fact that more firms are competing for such a limited supply creates difficulties.
  The fall in the birth rate and the consequent fall in the number of children reaching 16 are just beginning to affect the labour market and that will continue until the mid-1990s. It means that the problem of making engineering a more attractive career and increasing the number of engineering graduates will become much more acute over the next year or so. Therefore, the urgent need to attract more young people into engineering is clear. Although this is not the moment to debate education in detail, there is no doubt that radical reform is necessary and the Government are right to be tackling education in a radical way at present.
  Mr. Dennis Skinner: What would the hon. Gentleman say to my hon. Friend the Member for

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  Hemsworth (Mr. Buckley) about the appalling announcement that we heard yesterday, that South Kirkby Riddings pit is to be closed? That means that upwards of 2,000 people will be losing their jobs, with all the after effects that that will have on the engineering industry in the area. What would be the chances for graduates and others who are anxious to take up an engineering occupation in that area or in the Mansfield area, where another pit closure has been announced? Does the hon. Gentleman take these matters into account when talking about glorious opportunities that obtain in the engineering industry? We know that the wreckage of the infrastructure of pits will have a massive effect on young men and women who want engineering jobs.
  Mr. Thompson: The hon. Member for Hemsworth (Mr. Buckley) has an opportunity to address those points and raise his constituency interests during the debate. If the hon. Member for Bolsover (Mr. Skinner) takes the trouble to listen to my speech and those of my hon. Friends he will discover that the main theme that I shall raise at the conclusion of my speech is how relevant progress in engineering will lead to the creation of new jobs in this country. I am glad that the question of employment has been raised because the final paragraph of my speech will address how we can improve productivity and performance in engineering and thereby create many new jobs.
  Mr. Roger King: In response to a question that I asked, my hon. Friend the Parliamentary Under-Secretary of State for Energy said that the Government are giving the coal industry £900 million for investment. That investment is being spent in the engineering industry to create jobs. There is no doubt that the Government are supporting the coal industry and, indirectly, the engineering industry.
  Mr. Thompson: New jobs have been created faster in this country than in the whole of the European Economic Community. I resist the temptation to dwell on this matter because I shall refer to it later in my speech. I hope that the hon. Member for Bolsover will stay long enough to hear that part of my speech.
  Mr. Spencer Batiste: My hon. Friend has already said that attitudes are particularly important. Does my hon. Friend agree that it is the attitudes that the hon. Member for Bolsover enunciates so often in the House and outside that are at the root of the problems in the coal industry, and in others?
  Mr. Thompson: It is good to see my hon. Friend taking a positive approach to this debate and I am delighted that so many of my hon. Friends are present to support this motion. Like my hon. Friend, I was surprised by the negative nature of the intervention of the hon. Member for Bolsover.
  I should like to refer briefly to Government policy on education reform. The reforms that are being introduced by the core curriculum—testing at 7, 11, 14 and 16—are relevant to education for young people who wish to enter the engineering profession. The idea of the city technology colleges is also relevant. They will give a broadly based secondary education with a strong technological element, will provide a wider choice of secondary school and a sure preparation for adult and working life.
  I recently met the project director for the new city technology college in Solihull. The excitement and
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  enthusiasm that that new school has engendered in the area must be seen to be fully understood. During my holidays in Italy I visited a new technical school. The contrast between the Continental approach and ours is stark.
  As someone who has worked in education, I am as conscious as anyone of the need for a broad education that is more than just training for a job. When one sees the enthusiasm of well-motivated children who feel that studies are relevant, up to date and exciting, and if one contrasts that with some of the half-baked trendy rubbish that passes for education in some of our schools—which is often intellectually undemanding and of little practical value — one sees why it is a good idea that the Government are promoting other types of schools to introduce more variety and to improve standards.
  In that connection, some industralists have told me that they are not sure about city technology colleges. I have heard the phrase "The jury is still out on this subject". With respect to those industrial leaders, who are thinking long and hard about this matter, it is about time that the jury returned its verdict. We should have more open support for the concept of city technology colleges because at the very least they shall achieve more variety in our education system, and that must be right.
  I should like to refer briefly to skill shortages, particularly among craftsmen and technicians. The decline in the number of craftsmen and technicians undergoing training in the engineering industry must be of concern. In 1977–78, almost 13 per cent. of technicians and just under 14 per cent. of craftsmen in the industry were receiving training. Seven years later, the percentage had fallen to only 8 per cent. for technicians and under 7 per cent. for craftsmen. Although recent evidence shows that it is the shortage of new and experienced graduates in electronic engineering and computer science that is affecting employers, in certain parts of the country — that is certainly true in my constituency — there is no doubt that the shortage of craft and technical skills is very serious indeed.
  The University of East Anglia Townroe report states that local firms are experiencing difficulty in recruiting manual, mechanical and engineering skills, especially toolmakers and technicians with knowledge of engineering and electronics.
  My constituency is fortunate to have many good firms with engineering bases. United Closures and Plastics has a long tradition of skills, particularly toolmaking skills, and it has now been taken over by Metal Box. Defence Equipment and Systems manufactures guns for the Royal Navy. Other examples are Heatrae Sadia, Datron, Diamond H Controls and Beaver Machine Tools, which is a go-ahead firm about which my hon. Friend the Minister and I have spoken before. That firm has resisted the downward slide in the machine tool industry and has developed computer-controlled machining centres very successfully.
  In discussion with those firms and the Machine Tool Trades Association, many of the points that I have already made in my speech have arisen. There is no doubt that the shortage of skilled personnel has caused wide concern. At the suggestion of the chairman of Beaver Machine Tools, Mr. Victor Balding, I attended a meeting with representatives of the Department of enterprise, the Manpower Services Commission, local employers and educationists. It was a good opportunity to describe the

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  many initiatives that exist to help employers to face up to skill shortages. It was a little discouraging to discover that such meetings are very rare and that all too many employers are attempting to deal with the problems in isolation. Matters discussed at the meeting included ways of encouraging schoolchildren into engineering and links between schools and industry. According to Sir Geoffrey Chandler, since Industry Year, 1986, there has been a dramatic increase of 90 per cent. in the links between schools and industry, and that must be a step in the right direction.
  At the meeting we referred to the work of the East Anglian group industrial training centre at the Norwich airport industrial estate, where much has been done to meet the development of training needs of all manpower categories. The centre is approved annually by the Engineering Industry Training Board and runs standards-based courses in all engineering disciplines required by local industry. Recently, the acquisition of new hi-tech equipment has enabled courses to be updated.
  There has been much good news on the local front in Norwich, but there is still a long way to go if we are to get to grips with the problem of skill shortages. Local employers must take as many initiatives and advice as possible and get together to tackle those problems. If I were to describe all the concerns of local manufacturers, obviously my speech would go on for much longer than I intend.
  There is concern in the machine tool industry about cheap imports from Taiwan and South Korea—I hope that my hon. Friend the Under-Secretary of State for Trade and Industry may be able to address that point in his speech — and about the unavailability of suitable statistics describing such imports. With such statistics our market could better identify the way in which it could best meet that competitive challenge. Indeed, as someone said to me recently, "If the Italians can do that, why can't we?" I hope that my hon. Friend will address that point as it is of particular concern and local interest in Norwich.
  It has also been put to me locally that the training of foremen and chargehands is just as important as the training of more senior managers. Although I do not have the time to amplify that point, I fully support it and hope that consideration will be given to it in future debates or discussions.
  I turn now to a comment made to me by the Engineering Council. When I was travelling to Norwich on the train last Wednesday, I picked up a copy of the magazine "InterCity" and was amazed to see a letter in it on this very point. It is all too rare to find engineers or technologists at senior management level or on the boards of directors of large companies although there are plenty of graduates from other disciplines in such positions. That presents a strong contrast to the practice of our international competitors. It is essential that we move in that direction and try to persuade British companies to recognise that their engineers and scientists form an under-utilised source of potential managers. Their professional training gives them a good insight into the demands of modern technology, the skills required to organise physical resources and to produce to a deadline. They understand the basic requirements of production, but what they often lack and, indeed, are not offered, is practical training for management.
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  The Engineering Council has put forward constructive proposals for incorporating business training into the normal career structures of engineers. The proposals involve, in the early years of employment, the development of good communication skills and liaison with other departments. At slightly higher level, in supervision and junior management, there are opportunities to motivate other people, to assess their success in meeting targets and to co-ordinate action with other groups within the firm.
  Many companies do not have the career planning or in-house training to enable engineers to move from their specialisms into management. There is no smooth progression from one to the other. Trained engineers tend to stay within their own expertise. Business education is seen by them as an unnecessary or expensive frill, and that must change. If there is one message that the engineering industry should take from this debate, it is that our competitors already have those bridges between professional specialists and management, whereas a sizeable proportion of our industry does not. Such links must be built internally. I do not believe that the Government can do that. I hope that people listening to the debate or reading the report of it in Hansard will recognise that the time to start is now.
  There are other ways in which Government could persuade and encourage the engineering industry to do more to meet the challenges that I have described in my speech. However, now, just a few days before the Budget, is not the right time to talk about fiscal matters, so I shall resist the temptation.
  What about the idea that has been put forward ever since the Finniston report, that a company should be required by law to state in its annual report the amount that it spends on training? What about the "enterprise bond" scheme, advocated by my hon. Friend the Member for Luton, South (Mr. Bright) and other hon. Members who are interested in smaller businesses, whereby a firm could purchase an enterprise bond from the Treasury out of profits in one tax year and, upon incurring expenditure on research and development or training, be able to reclaim that amount? It is the smallest companies that have the greatest difficulty in training, research and development. I hope that the Government will pick up the many other good ideas that are floating about.
  Let us consider a young person in school, possibly in a sixth form, who is considering his career and talking to his friends, who may be going into the City, accountancy or law. From my time in the sixth form, and from being a school teacher, I can remember how much discussion there is among young people about their future careers. As a result of this debate we want much more consideration to be given to the exciting opportunities in engineering. However, there must be good pay. After all, accountants and solicitors are well paid, so qualified and skilled engineers should be well paid, too. I make no apology for raising that point as strongly as I do. Engineering must be accorded the status that it has in other countries. I have no idea who determines that—it may well he up to the engineering profession itself, but that point needs to be considered.
  There must be media recognition. With the greatest respect to the media, all to often its emphasis is on the trivial and sensational—concepts which go right against the scientific and creative engineering tradition in this country. As time does not permit me to expand greatly, I shall give just one example which, although not relating to

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  engineering, will make the point. Astrology is given far more attention in the media than astronomy — we all enjoy reading our star charts and there is nothing wrong with that, although it causes great excitement among our young people.
  There are many exciting opportunities for the media in promoting creative activity in engineering, which are not being taken up.
  Let us consider, for example, the MacRobert award — Britain's premier engineering prize. When it was awarded recently there was virtually no publicity, apart from a tiny report, a few centimetres square, in The Times and, apparently, that occurred only because of a personal appeal to the vice-chairman of Times Newspapers Ltd.
  We need a renaissance in this country in our attitudes to engineering and science. The media has a large responsibility and could do a lot more good than all the initiatives, the sets of initials and the speeches that we make in this House. I hope that that point will be taken up following the debate.
  In conclusion, engineering is crucial for economic and social progress. However, the real nature and importance of engineering is not widely recognised by the British public. Engineering firms design, make and support a diverse range of electronic, electrical, optical and mechanical equipment, systems and services. New and improved engineering products and services are the main source — [Interruption.] — I hope that Opposition Members are listening — of job creation in industries that use those products. Consequently, the importance of engineering to the economy far exceeds its direct employment or its direct contribution to the gross domestic product.
  Today's employment in transport, the hotel industry, broadcasting, the entertainment industry and in financial and information services originates from yesterday's engineering innovations. Therefore, tomorrow's jobs in the service industries will depend crucially on new hardware and tools being developed today by engineering. That is why today's debate is so important and that is why I look forward to other contributions in the debate and to the reply of my hon. Friend the Under-Secretary of State for Trade and Industry.
  The Department of Trade and Industry has a new name — the Department for Enterprise — and a new logo. Perhaps that signals a new era for engineering enterprise in this country so that we can compete and succeed to the benefit of all, especially our young people who need the challenge that engineering and creativity can offer. That is why it gives me great pleasure to move the motion on the Order Paper.
  10.7 am
  Sir Barney Hayhoe: I begin by congratulating my hon. Friend the Member for Norwich, North (Mr. Thompson) on his good fortune in coming top in the ballot for private Members motions today, and on his good sense in choosing engineering as the subject for debate. As he referred to the parliamentary group for engineering development, I pay tribute to his work as treasurer of that group during its early days and to his continuing contributions to it. I also join him in paying tribute to my hon. Friend the Member for Harwich (Sir J. Ridsdale) who has chaired the group with distinction. I hope that the group will play an increasing
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  part in bringing together people in the House, in another place and in the industry generally, to the mutual advantage of the engineering profession and the country.
  I declare an interest at the outset because I am a chartered engineer and a Fellow of the Institution of Mechanical Engineers. After the sad death of David Penhaligon I believe that only myself and my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) share the distinction of membership of the institution. There are far too few engineers in the House. There are 68 barristers, 30 solicitors, 20 accountants, six doctors and only two mechanical engineers.
  Mr. Thurnham: Perhaps it would be appropriate again to mention the great loss that we suffered with the death in a car crash of David Penhaligon, the former hon. Member for Truro, who had an interest in engineering.
  Moreover, perhaps this is also an appropriate moment to congratulate the hon. Member for Great Grimsby (Mr. Mitchell) on being here and on being the sole Opposition representative in this important debate on an industry which contributes 10 per cent. of the country's gross national product.
  Sir Barney Hayhoe: I am glad that I gave way to my hon. Friend. He is right in what he said about David Penhaligon.
  The hon. Member for Great Grimsby (Mr. Mitchell) is now in splendid isolation. It is remarkable that, in a debate on engineering, the importance of which cannot be in doubt, not one Member of any Opposition party is here. We have the statutory presence of the hon. Member for Great Grimsby on the Front Bench, who I suppose is doubling up as the Opposition Whip. He is a jack of many trades. Perhaps he can act as the representative of the Liberal party, the social democrats, the Ulster Unionists and uncle Tom Cobbleigh and all.
  Mr. Batiste: Would my right hon. Friend care to contemplate the fact that, as Opposition Members have in the past said so little that is of use to engineering, their absence today is a step in the right direction?
  Mr. Deputy Speaker (Sir Paul Dean): Order. I hope that we shall now get back to the motion.
  Sir Barney Hayhoe: As I was saying, there are too few engineers in the House.
  Mr. Austin Mitchell: I would not want the right hon. Gentleman to do my reputation in the Labour party any good by suggesting that I am the spokesman for the Liberal party today. Opposition Members have better things to do on a Friday than come here to sing panegyrics to the Government's performance in respect of engineering. I shall be here to put the critique. Others are in their constituencies battling with the problems caused by the decline in engineering that has occurred under this Government.
  Sir Barney Hayhoe: The hon. Gentleman may be doing his best, but that is a pretty poor excuse for the absence of his right hon. and hon. Friends.
  Engineering is crucial to economic progress and national prosperity. I hope that this debate will encourage more engineers to seek election to the House. Manufacturing industry in general, and engineering in particular, took an awful beating in the early part of this decade. The slow recovery which has followed, leading at last to our regaining the 1979 level of output in

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  manufacturing, has been accompanied by great and welcome improvements in productivity and profitability. Nevertheless, much was destroyed during the months of recession and it has not yet been replaced during the years of recovery.
  I shall concentrate more on the engineering profession than on the industry. We need more and better trained engineers. I welcome what my hon. Friend the Member for Norwich, North said about training. We need people to design the products, organise their manufacture and control and ensure their quality to help stem the deeply alarming and increasingly adverse balance of trade in manufactures. One statistic will illustrate the problem. A £5·5 billion surplus in manufactures in 1980 became a £6·5 billion deficit in 1987.
  The growth in services and invisibles is to be welcomed and encouraged, but no conceivable growth in services could replace the wealth creation which must come from manufacturing, and engineering is a crucial part of manufacturing. I exclude my hon. Friend the Minister, but the Government sometimes seem more concerned with City and financial interests than with industry and engineering. Public opinion is much more favourably disposed towards the land and farming than to factories and production, but it is out of factories and production that much of the life blood of our nation comes.
  Attitudes are changing, and I pay tribute to Kenneth Adams, Sir Geoffrey Chandler and the many others who were involved in Industry Year for their constructive contribution, but much more must be done. I am not in any way criticising my hon. Friend the Minister when I say that it is unfortunate that we do not have a Cabinet Minister present. We should have a Cabinet Minister here to take part in such an important debate.
  Engineers are not regarded as professionals. Recent surveys have shown that the public perception of an engineer is of a manual workers or a blue collar operative who works with machines. There is never any confusion between doctors, consultants and surgeons and hospital porters, but there is great confusion between highly qualified and highly skilled professional engineers and skilled or semi-skilled people who work in the industry.
  The public are not to blame. It would be absurd for engineers to blame the public for a fault which lies with them. I accept my share of the responsibility for that. The engineering profession is its own worst enemy. It is hopelessly disunited. The Engineering Council is doing its best, although I do not think that it is living up to the promise that many of us thought possible following the report by Monty Finniston. The chartered bodies and the principal institutions could do more.
  I was very sorry when the Institution of Mechanical Engineers did not merge with the Institution of Production Engineers. Merger would have been in the best interests of members of both institutions. Fresh attempts to achieve greater unity are now required. Unity will bring strength and influence.
  I should like to mention what is happening on the European scene. My hon. Friend the Minister will know that there is a proposed European Council directive on rights of establishment, which is Eurospeak for the right of qualified professionals to practise in other member states. It involves the mutual recognition of professional
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  qualifications. The thrust of the proposal is that there should be a general directive which covers all or most professions.
  There is a subsidiary question, which has not yet been determined, about whether it would be wise and sensible to have a separate directive for engineers. It seems reasonably clear from what one knows of the discussions that have been going on that if the first choice is made of a general directive, it will probably rely upon educational qualifications — upon the higher education of the individuals concerned. That will be the entry key. The second possibility of having a separate directive for engineers would allow for proper account to be taken not only of the educational record but of the training, experience, competence and responsibility in engineering of the person. That has been the tradition of the engineering profession in the United Kingdom. It has not relied upon purely academic qualifications, and it has been absolutely right not to do so, but it has been concerned with wider aspects of training and experience and with people having the competence and responsibility to take charge of elements of the practice of engineering and engineering performance.
  I understand that a decision by the European Economic Community is expected soon. There is pressure during this six months of the German presidency for real progress to be made in that area. The position is complicated by the parallel development involving FEANI, the European Association of National Engineering Associations. That body has suggested that there should be a "European Engineer" qualification. I understand that in this country the representation of FEANI is little more than one man and a boy. It does not seem to provide the right basis for establishing the appropriate qualification for engineers at a European level.
  If there were to be a general directive, almost certainly a four-year full-time degree course would be the basis for the professional qualification. I am not sure that all those involved in the discussions realise and appreciate that such an educational requirement involving a full-time four-year degree would virtually exclude the vast majority of chartered engineers in the United Kingdom. That would be very worrying for their future and the future of our engineering profession.
  Therefore, there is a complicated and worrying state of affairs at the moment for professional engineers in this country. If the wrong decisions are made now at a European level, United Kingdom engineers will be put at a continuing disadvantage. The Department of Trade and Industry is the lead Department in the negotiations. I hope that the officials conducting the preliminary negotiations before the matter reaches ministerial level will be in close touch with the engineering profession — not just the Engineering Council — but the major engineering institutions, the chartered bodies as well. If we can avoid the pitfalls of the general directive for professionals and obtain agreement for a separate engineering directive, that will serve the engineering profession well for the future. I believe that, with enhanced status, the engineering profession must advance along the lines suggested by my hon. Friend the Member for Norwich, North to provide a continuing and important service in this country.
  I hope that the high professionalism of engineering will be more widely recognised in future and that it will be seen as a distinction if people leaving school and going to university look upon engineering as the profession that

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  they want to enter rather than, as happens so often now, as a second choice, to other professions that make less important contributions to the welfare and prosperity of our land.
  10.25 am
  Sir Julian Ridsdale: I thank my right hon. Friend the Member for Brentford and Isleworth (Sir B. Hayhoe) for the contribution that he has made to this first debate initiated by the engineering development group in the House, and particularly for what he said about the importance of manufacturing industry to our balance of payments, with the challenge focused on 1992, when there will be a consumer market of 320 million people in Europe.
  I congratulate my hon. Friend the Member for Norwich, North (Mr. Thompson) on the excellent way in which he introduced the debate. He was right to talk about the supply and training of engineers. One expected him to underline that, because of the contribution that he makes to the House on education, with all his experience in that sphere. Those of us who have a close contact with the engineering industry know how important not only the supply but the shortage of engineers is. The shortage of skill in engineering is holding back the contribution that we should make to our manufacturing industry at present. My hon. Friend was right to underline the profitability and productivity of the engineering industry compared with some time ago, but he was also right to underline the challenge to our engineering industry now.
  I also thank my hon. Friend for helping to get the all-party group of engineering development off the ground and for his initiative in introducing this first debate. My vice-chairman of the all-party group is the hon. Member for Motherwell, South (Dr. Bray), who has made a great contribution. He has apologised for not being here today, but I should like to thank my hon. Friends who are here for supporting the all-party group by attending the debate.
  The membership of the group to date is 54 Members of Parliament, including 15 new Members, 39 Peers, 17 non-parliamentary individuals, and 97 companies, trade unions and other organisations. I am glad to say that our subscription income, with no money from the Government, was enough to cover the running of the group in the past year. We owe a great deal to the Fellowship of Engineering, which acts as the secretariat of the group, and to the Engineering Employers Federation, which has also contributed to the group's activities.
  I have already paid several visits to industry, and so has the group. I am glad to say that the group's visits have been well attended. We went to the Rolls-Royce factory at Derby to see the RB 211 being made. When one visits such a factory, it is encouraging to see the robotics being used. I have seen Fujitsu-Fanuc factories in Japan and what robotics can do there. It is good to see that our facilities in certain industries are as up to date as in Japan. Then we visited Oxford Instruments Group plc, which deals with brain scanning and has experts working on magnetic matters. Some of the research and development done by that company is so interesting that it does not surprise me to find that it is exporting so many of its products worldwide.
  Then we visited Kearny and Trecker Marwin, a subsidiary of Vickers, in the automation equipment industry, and Ricardo Consulting Engineers plc, which has 200 consulting engineers specialising entirely in the internal combustion engine and exporting almost 80 per
  774
  cent. of its know-how. This is exciting, because it shows the path along which our engineering industry is developing and the way in which it is facing up, as we all have to, to world competition. We can no longer look on our island as the only place to sell our goods. We have to sell them in the world as a whole, and we have to think in world terms, not narrow terms.
  We also visited Scicon Ltd, a leading company in computer services, and the Design Centre. I mention these companies to show what is happening in the engineering industry today. It is advancing, but there are challenges. My connections with Japan, and the frequent visits that I have made to industry there, have made my visits to our engineering industries exciting. I find us making much more use of modern technology than we were a few years ago, especially in computer-aided manufacture and computer-aided design. This applies particularly to small industries. I know this from my visits to small industries in East Anglia, particularly in my constituency, where there are several small but important engineering companies exporting to Japan.
  For example, machine tools in carbon fibre manufacturing are going to Japan from my constituency. It is encouraging to see another small firm breaking into the photographic equipment sphere. This shows what can and must be done. Small industry is a pathfinder. It is not generally realised that over 50 per cent. of Japanese engineering production comes from small firms and industries. The production system in these small industries is more advanced in the division of labour and more rationalised than ours.
  I am encouraged now when I go round our industries to find the progress that we are making in computer-aided manufacture, computer-aided design and other systems. I was most impressed to see the work being done by the Cranfield Institute on research and development for small industries in the United Kingdom. I was disturbed to find that the take-up in research and development by the small industries is not as large as it should be. Perhaps my hon. Friend the Minister will refer to this.
  I welcome the visit of my noble Friend the Secretary of State for Trade and Industry and representatives from British Aerospace and Rover to Japan this week. I hope that the tie-up with Honda succeeds. All the time that I have been a Member of Parliament I have had a British car, and 18 months ago my Metro went to Instanbul in three days and came back in four without any trouble. With the prospect of a European market of 320 million consumers from 1992, it is vital that we do everything possible to improve our technology, quality and reliability even more. I am certain that such tie-ups will improve our quality and competitiveness.
  One of my incentives in starting the engineering group was my knowledge of what was happening in Japanese and American industry. I knew how vital it was for us to meet the challenge and to be aware of the efficiency of our competitors. The best way to deal with the huge and successful Japanese economy is by co-operation and not confrontation, although one has to have one's eyes open for certain practices which may prevent the necessary co-operation. Nevertheless, it would be idle if we did not help firms such as KTM to fight for its share in the fiercely competitive automation equipment industry. We must face the reality that the United Kingdom's position in the

  775
  equipment supply industry for automated electronics is weak and getting weaker. This industry is vital in meeting the world challenge.
  In most types of hardware, from machine tools to computers, British supply companies have only a tenuous hold in this growing industry, which is dominated in particular by the American and West German manufacturers. On our visit to KTM we saw that its policy was to strengthen partnerships with other companies. It had a co-operation agreement for the use of software with Hoskyns, a computer and systems house, and with Mitsubishi heavy industries to produce the Japanese company's medical machine centre under licence. It wisely realises that no company in this country can afford to be isolated. Nor can we afford to hold the narrow view that we can protect ourselves from the blast of competition. It is vital for us to realise this if we are to be competitive in the huge European market that will come about after 1992. Our engineering industry is divesting only too well. The companies realise that we must take an offensive rather than a defensive approach.
  Mr. Thurnham: Will my hon. Friend refer to the attitude of trade unions? It is a welcome fact that the electronics union — the Electrical, Electronic, Plumbing and Telecommunications Union and now the Amalgamated Engineering Union — are much more enlightened in their attitude towards comparisons between this country and its competitors. Would my hon. Friend welcome a similar attitude among other trade unions?
  Sir Julian Ridsdale: I certainly would. I was glad to take to Japan with me in early January the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) who is a trade union leader. I find that today's attitude is different from the narrow-minded approach of five or 10 years ago. Now, I am glad to say, trade union leaders are becoming much more aware of the competition that we face and the trade union practices that must operate in this new world. It is important to realise that the company union in Japan is one of the cornerstones of Japanese success. This is another matter, but I thank my hon. Friend for drawing it to my attention.
  It is encouraging to see our companies selling to Japan. Those that succeed know that they must be commercially competitive but, in addition, must ship 100 per cent. defect-free products on time every time. This is as important as anything else in the engineering industry. They must have not only high technicality but practicality, to make, for example, the lock on a British suitcase work. It is no good having lovely material in one's suitcase if there is a defect in the simple engineering of the lock. We used to have a pride that British was best. I am certain that we can have that pride again, but we must realise that there are some defects. We must listen to what some of our competitors say about some of our products.
  Mr. Robert B. Jones: Is not one of the reasons for our success, when we have it—and we have it, for example, with Crosfield Electronics in my constituency, which has 25 per cent. of the Japanese market — not only innovation and, as my hon. Friend says, quality, but the provision of good after-sales service, which is often deficient with British companies?
  Sir Julian Ridsdale: I entirely agree with my hon. Friend and I have seen that in the follow-up abroad. Our technical support must always be of top quality. The views that I have been expressing come from British Timken, a company exporting ball bearings to Japan very successfully. Those ball bearings go to Nissan, and the company knows that it is no good trying to export to Nissan and similar companies unless the product is defect-free. We need a unified attitude to the challenges that we face. That is why I am glad of the existence of my all-party engineering group. We are not talking about party politics; the very existence of our country is at stake, and unless we meet the challenge together we shall not compete in the world as we should.
  I was glad that my hon. Friend the Member for Norwich, North referred to skill shortages, which are a challenge to our engineering industry. In engineering development a vital role is played by research and development activities. In Japan, 98 per cent. of industrial research and development is funded by private industry and only a small percentage by the Government. I should be interested to hear the Minister's comments on Government funding for research and development in this country. According to my figures, 63 per cent. of research and development in the United Kingdom is funded by industry and 30 per cent. by the Government. That is a high ratio of Government support even if we recognise that the Government own certain of the industries. Have we really taken into account the huge amount of R and D investment that Japan is making? The growth rate is among the highest of those for free world nations. In the 1985 fiscal year Japan spent 3·5 per cent. of its gross national income on R and D, of which three quarters came from private industry. That was possible because of the great profitability of Japanese industry. I know that percentages of themselves do not necessarily mean much, but 3·5 per cent. of the income of Japan, which is approaching the largest income of any country, is substantial. That makes one realise the amount that the Japanese are putting into research and development and the challenge that we face.
  I welcome the fact that our manufacturing industry is becoming much more profitable so that we can expect our R and D activities to increase, but the financial conditions in which engineering operates have a crucial bearing on its development. Of course, engineering will be helped by the huge market of 320 million consumers, but stability of interest rates, and lower interest rates to encourage long-term development, as well as stability in exchange rates, are vital. If we are in for another period of high interest rates and exchange rates, I hope that my right hon. Friend the Chancellor realises that he must do something—I would say something as radical as abolishing corporation tax—if industry is to progress as it has in the past few years. Industry is making profits but the burdens on it, including rates, are heavy. I hope that the Chancellor will realise that in the coming Budget because if he does not, his hon. Friends will be pressing him very hard.
  Finally, I underline the engineering theme taken up by Sir Francis Tombs, the chairman of the Engineering Council, who has been a great help in getting the engineering group set up. He emphasised that engineers have a key role to play not only in the nation's enterprise but in its management and business skills. A Japanese friend of mine, who is a director of ICI, drew attention to the fact that in Japanese large-scale manufacturing

  777
  enterprises, 55 per cent. of board members have science and engineering degrees, compared to 34 per cent. in the United Kingdom. The status of engineers is considerably higher in Japan, Germany and the United States than in our country.
  My right hon. Friend the Member for Brentford and Isleworth was right to underline the fact that we must do something to raise standards and to ensure that we have people with engineering degrees. Even in the Civil Service we should have permanent secretaries with engineering degrees rather than just general degrees. Some years ago, a Nobel prize winner said:
  "The most formidable threat to research and innovation is the growing number of executives and politicians who are making decisions affecting research policy and expenditure, whose training and experience does not permit them to understand what it is all about."
  Fortunately, our Prime Minister has a science degree and one member of her Cabinet has an engineering degree.
  Mr. Thurnham: I remind my hon. Friend that our right hon. Friend the Secretary of State for the Environment is a former distinguished member of the Institution of Civil Engineers.
  Sir Julian Ridsdale: That is why I said that there was one member of the Cabinet with an engineering degree. I am only too well aware of my right hon. Friend's qualifications. I hope that I shall leave time for my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) to speak because I recognise his qualifications, too.
  We must adopt a policy of continuous improvement. I hesitate to say this, but it must be more revolutionary than evolutionary because we need to mobilise all our industrial strength to face the challenge. If we do not, we shall find ourselves in an extremely difficult position. Time is not on our side. We have much catching up to do. However, I am sure that we are moving in the right direction and I commend my right hon. Friend's motion to the House.
  10.46 am
  Mr. Peter Thurnham: I add to the congratulations extended to my hon. Friend the Member for Norwich, North (Mr. Thompson) on his motion and on all the good work that he does for the engineering industry, and also for education, on which he expresses sound views. As treasurer of the all-party group on engineering development, he has helped to establish that body. I commend my hon. Friend the Member for Harwich (Sir J. Ridsdale) on the excellent contribution that he has made to the work of engineers throughout the country in founding the all-party group. It provides an excellent vehicle to enable us to express our views and to invite speeches from people outside on these important matters. I hope that our membership will continue to expand, both in the House and elsewhere. I endorse the points made by my right hon. Friend the Member for Brentford and Isleworth (Sir B. Hayhoe) in his excellent and wide-ranging speech, in which he drew attention to some of the problems that the industry faces.
  I should like to comment briefly on those problems and then go on to discuss the excellence of engineering as a career option for children at school. One of the points mentioned has been professional liability, which is of great importance to the members of the Institution of Civil Engineers and of the Association of Consulting Engineers.
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  We have talked about the question of qualifications and entry into Europe and the role of the National Council for Vocational Qualifications. The role of the engineer is of concern to the Institution of Civil Engineers and I know that my right hon. Friend the Secretary of State for the Environment is considering the matter at the moment. It is sometimes a mixed blessing to feel that as one has been on both sides of the fence one can consider the matter with a little knowledge from a previous career. I hope that my right hon. Friend will pay due regard to the interests of the institution when he considers that problem.
  I am proud to be an engineer. It was my ambition when I was at school. My right hon. Friend the Member for Brentford and Isleworth stressed the need to enhance the status of engineers. When I signed the register at my wedding, the vicar said, "Don't put 'Engineer'; it looks as if you are a locomotive driver." I said that I was very proud to enter the word "engineer", and I have always been proud. I declare an interest as a practising engineer. I founded my own engineering business in 1972 and employ more than 400 people in electricial and mechanical engineering. I am a fellow of the Institution of Mechanical Engineers. I also represent the Institution of Civil Engineers and the Electrical Contractors Association in matters relating to Parliament.
  We had a debate on engineering training about a year ago, but I had not realised that there had been no full debate on engineering since 1980. That emphasises the importance of today's debate. In the debate on 12 March 1987, I stressed the need for more professional engineers in the country as a whole and in the north-west in particular. Although the industry has declined, there has been a strong growth in the number of professional engineers, which is approaching 90,000—a 60 per cent. increase in the past 10 years. We still need many thousands more, especially in the north-west.
  I emphasise that engineering is not just a career for boys. It is also an excellent career for girls, and there has been a strong increase in the number of girls entering the profession. The latest figures show that girls form 10 per cent. of the entry to university and college engineering courses, but the figure needs to be much higher to reflect the full proportion of the population. There are certainly very good prospects for girls entering the industry and seeking professional qualifications in the country as a whole as well as in the north-west. I appeal strongly to school pupils, both boys and girls, to consider a career in engineering.
  The Engineering Council has produced an excellent document for this debate which describes careers in engineering as
  "exciting, satisfying, socially useful, fun and well rewarded."
  I remind my constituents, and indeed, the whole country, that earlier this week my right hon. Friend the Secretary of State for Employment declared that he would be offering 12 possible pilot areas throughout the country for which sums of up to £100,000 per year would be available. The aim is for schools and local employers to get together to establish compacts — a concept first developed in Boston and introduced into this country by the London enterprise agency. We should like to see such developments elsewhere in this country. My right hon. Friend has stated:

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  "We now want to hear from any group of local employers and schools who wish to develop Compacts. We stand ready to help potential Compact partners in the target areas who need assistance to put together a full Compact proposal."
  I hope that employers in my constituency will pick this up. Bolton is especially well placed. The Engineering Employers Federation has listed Bolton as well as Leicester, where I have started my own business, as the two areas of the country where the association is the base of the new local employer networks, so in my constituency a compact could well be started between the schools and the employers.
  We need to widen the criteria for people entering engineering. The Institution of Civil Engineers has drawn attention to the need to establish criteria which recognise engineering not just as a highly satisfying career in itself but as a base for engineers to go on to become managers and entrepreneurs and to play a full role in today's enterprise culture. The Engineering Council has pointed out that the profession has many suitable characteristics. It states:
  "Engineers are excellent raw material for management."
  They have to use common sense, they have to be practical, they have to be able
  "to quantify and to measure"
  as well as
  "to make judgments on inadequate information."
  The latter is perhaps an endorsement of the ability of engineers to go on into Parliament and Government.
  Many criteria make engineering both a good career option in itself and a base from which to develop into management, and we must encourage engineers to do that. The recent report by Professor Charles Handy, "The Making of Managers", points out that there are more than 120,000 qualified accountants in this country, but only 4,000 in West Germany and 6,000 in Japan. It also states that in this country only 24 per cent. of top managers are qualified, compared with 85 per cent. in Japan. The writing is on the wall — we need far more qualified engineers to go into management and on to company boards, and less emphasis on accountants. If my right hon. Friend the Chancellor adopts the suggestion of my hon. Friend the Member for Harwich and abolishes corporation tax, we might be able to spend less time consulting our accountants and more time consulting engineers on what needs to be done for the success of the business. I have no doubt that the extraordinary number of accountants in Britain reflects the enormous rates of tax—up to 98 per cent.—imposed by the Labour Government for so many years.
  There is no better career than engineering for school pupils to consider from an early age and to follow through college and university.
  Dr. Michael Clark: I have been following with great interest my hon. Friend's comments about engineering being a good qualification for senior management. Does he agree that many engineers make themselves so invaluable in middle positions in companies that they are not promoted to the top, while those without engineering qualifications, such as accountants, lawyers and arts graduates, obtain the top positions because they are not so useful lower down?
  Mr. Thurnham: The trend is well established in the United States, and it has been pointed out that in Japan
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  people can leave the large corporations to start their own businesses. Many Japanese firms are quite small and in the United States there is an established pattern of people joining large corporations and then leaving to start their own businesses. The more indispensable people are, the greater the potential scope for starting their own businesses and cashing in on their abilities in that way.
  Engineers must consider the broad spectrum of their role. In December 1979, in the 66th Thomas Hawksley lecture, entitled "UK Industry in the 1980s", Sir Peter Carey, permanent secretary at the Department of Industry, emphasised that
  "the engineer must assert himself as … an entrepreneur, 'a man who shows enterprise' …
  The ball is going to be very much in your field. May I express the hope that you will run with it?"
  I believe that engineers are indeed picking up the ball and running with it. I have mentioned the presence of engineers in the league table of Britain's richest 200. The number who have been able to gain such wealth through the engineering industry is encouraging. If one excludes all the land owners, engineers make up quite a substantial proportion of those who have achieved wealth through their own industry. There are at least 12 names, to which one must add those in major building and construction companies which are also acting in civil engineering. The Bamford engineering family figures in the top 16, so the industry is not just attractive as a career in itself but provides an ideal platform from which to go on into management and the running of enterprises on which the wealth of this country must depend in the future.
  In conclusion, the Engineering Council, so ably led by Sir William Barlow, believes that
  "Britain needs more engineers, better qualified and continually updated … not only … in engineering but also in industrial and business management at all levels, Government, Parliament and the civil service, schools and higher education if it is to be competitive …
  Our future success in Europe and the world will depend on sufficient numbers of both boys and girls coming forward from British schools willing and eager to follow an engineering career and suitably equipped with the requisite school leaving subjects."
  I support the motion.
  10.58 am
  Mr. Robert B. Jones: I join my hon. Friends in congratulating my hon. Friend the Member for Norwich, North (Mr. Thompson) on his choice of subject and his good fortune in being able to bring it before the House today. The debate has covered many areas of the engineering profession and has shown the breadth of the concept of engineering. That gives rise to certain problems because the term is used so loosely in this country, describing just about everyone from locomotive engineers to highly skilled professionals who have spent many years learning their profession. There is much to commend the position in many of our competitor countries where the term "engineering" is protected and denotes a very high status. That, in turn has ramifications for the use of engineers in industry and their involvement in general management.
  The sector to which I wish to devote my remarks is civil engineering, with which I have been closely associated for many years. My father is a civil engineer and my sister—
  It being Eleven o'clock, MR. SPEAKER interrupted the proceedings, pursuant to Standing Order No. 11 (Friday sittings).

  Business of the House
  11 am
  The Lord president of the Council and Leader of the House of Commons (Mr. John Wakeham): With permission, Mr. Speaker, I should like to make a short business statement.
  The business for Monday 14 March will now be as follows: Social Security Bill (Allocation of Time Motion). Followed by consideration of Lords amendents to the Social Security Bill.
  The business originally announced for Monday will be taken at a later date.
  Mr. Frank Dobson: I thank the Leader of the House for making this late adjustment to our proceedings next week. It has the merit of providing a proper opportunity for the House to consider the Lords amendments to the Social Security Bill, and in particular it gives us the opportunity to endorse their proposals for the annual uprating of child benefit, which I hope will be agreed.
  We regret that the Government have decided that they need a guillotine motion to complete the business on Monday, which we think rather extraordinary. However, we welcome the opportunity to debate the important Lords amendments, and our amendments to them, without prejudicing the proceedings on the equally important Housing (Scotland) Bill at a later date.
  Mr. Wakeham: I am grateful to the hon. Gentleman for what he has said. The Social Security Bill is an important piece of legislation. The timetable for its earlier stages was negotiated through the usual channels, and no undue difficulties arose. Discussion of the Lords amendments on Monday 14 March was announced in the business statements on 3 and 10 March after discussions through the usual channels. I very much regret that those arrangements were not acceptable to the Opposition.
  Mr. Alastair Goodlad: Is my right hon. Friend aware that it is by their own ineptitude that the Opposition have yet again deprived the House of an opportunity to discuss Scottish business? This will be widely resented in Scotland, despite the fact that no Scottish Labour Members are present today. Perhaps that is because they do not wish to discuss the Housing (Scotland) Bill, which is such a sensible measure.
  Mr. Wakeham: I share my hon. Friend's regret that the Scottish business has had to be postponed, but never fear, we shall find a day for it in the near future.
  Mr. David Steel: The Housing (Scotland) Bill is both complicated and contentious. The Leader of the House owes Scottish Members rather more of an explanation and an apology for disrupting the business of the House at such short notice—[Interruption.] All I am saying is that there should be some explanation and apology. The right hon. Gentleman will be aware that Scottish Members make advance travel arrangements, so the taxpayer will have to pay the cost of sending out the amended Whips' notice. This sort of disruption requires more of an explanation and an apology than the right hon. Gentleman has given thus far.
  Mr. Wakeham: As I said, I would have been content to go ahead with the original business, but that was
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  unacceptable to the Opposition. It seemed to be in the best interests of the House to alter it. I regret any inconvenience to hon. Members, and I especially understand the difficulties of those who come to the House from a long way off.
  Mr. Neil Thorne: If my memory serves me correctly, the Leader of the Opposition accepted the original business statement on 3 March. Does that mean that the Opposition are entirely out of control and cannot deliver next Monday? Is that why the Government have had to reorganise the business?
  Mr. Wakeham: I am not sure that my hon. Friend is being entirely fair to the Opposition. The hon. Member for Holborn and St. Pancras (Mr. Dobson) appeared to be in control today—although there are not too many Labour Members around. I was grateful to the hon. Gentleman for what he said in reply to my statement.
  Mr. Robert N. Wareing: Only five weeks, which is not an inordinate length of time, were given to the important Social Security Bill in Standing Committee. Is it not utterly disgraceful that for four full days next week we shall be debating handouts to the rich? What are the Government afraid of? They are crippling the poor by imposing a guillotine on an important debate that will affect millions of people who are already living in poverty and who are being ground down by this evil Government.
  Mr. Wakeham: If anyone is frightened of anything, it sounds as though the hon. Gentleman is a little frightened of what might be in the Budget. However, I know no more than he does about what it will contain.
  The timetable motion, which will be tabled later today, will allow a generous amount of time to discuss the Lords amendments, all of which are either technical or are improvements to the Bill. As the hon. Gentleman knows, the majority of the amendments were passed by another place on or before 3 March. The amendments that it passed yesterday were not opposed by the Opposition.
  Dr. Michael Clark: Has the business for Monday been arranged through the usual channels? We were told yesterday about the business arrangements for next week, and we assumed that the usual channels had been at work to agree the arrangements. If the hon. Member for Holborn and St. Pancras (Mr. Dobson) is in control, is he not, in fact, in control simply of a shambles?
  Mr. Wakeham: It is easy for those who are not party to the usual channels to attribute incompetence to those who struggle to organise our business. When we made the business announcement, we had every reason to think that it had been agreed. However, difficulties arose and I did my best, as I usually do, to try to meet them.
  Mr. Nigel Spearing: Irrespective of negotiations through the usual channels, which we all recognise as part and parcel of the business arrangements for the convenience of hon. Members on occasions, does the right hon. Member not appreciate that, with a large Government majority, the business arrangements should, wherever possible, be made well in advance of the proposed dates? Why, following the Cabinet meeting on Thursday morning that agreed the business, is there now this late change, which might inconvenience many hon.

  783
  Members? Is there any precedent for introducing a guillotine motion on Lords amendments, especially at such short notice?
  Mr. Wakeham: I remind the hon. Gentleman that the proposed business for Monday was first announced on 3 March, not yesterday. The hon. Gentleman should look at the record of his Government, who brought to the House Lords amendments to major Bills on the very day that they were passed in the other place. I do not complain about that, because it is not an unusual procedure—[Interruption.] The hon. Member for Liverpool, West Derby (Mr. Wareing) has had a go, rather ineffectually, and if he keeps quiet I shall do my best to reply to his hon. Friend the Member for Newham, South (Mr. Spearing) who asked a rather more intelligent question.
  There are many precedents for guillotining Lords amendments, but what is new is the necessity to do so when the previous stages of the legislation have been completed without the need for one. The reason for that is rather more a question for the Opposition than for the Government.
  Mr. Peter Thurnham: My right hon. Friend will be aware that, prior to his statement, the House was debating engineering. Would he like the engineers in the House to look at the mechanism of the usual channels if that is not working? Or is it simply the problems of the Opposition that have led to the altered business arrangements?
  Mr. Wakeham: The engineers could give us an oil can or two, which might help.
  Mr. Dennis Skinner: Is the right hon. Gentleman aware that although some hon. Members may not be party to the usual channels, they believe that it is indecent that a Government who are sinking into the gutter should, only 24 hours before a Budget that will almost certainly give more tax concessions to the top taxpayers—many of whom are included in the 20,000 millionaires in Britain — introduce Lords amendments which, under the new social fund, will deprive 7 million people of the ability to live above the poverty line and take away 500,000 free school meals from children in almost every constituency in Britain? The pattern of events shows that the Government are concerned with handing out large tax concessions to the rich and hammering the poor into the ground. The guillotine on Monday is part and parcel of that tawdry, rotten programme.
  Mr. Wakeham: I suspect that the hon. Gentleman would have made that sort of intemperate remark whether we or the Labour party were in power. I fear that a Labour Government would take about as much notice as I shall. His remarks reveal that he has no idea of what the Lords amendments are about.
  Mr. Spencer Batiste: The contribution from the hon. Member for Bolsover (Mr. Skinner) demonstrated clearly the difficulties faced by the usual channels in reaching agreement on business.
  Mr. Skinner: The usual channels — what do they matter?
  Mr. Batiste: Neveretheless, this statement and that interjection in particular illustrate the difficulties created for Scots Members by the further disruption of business—[Interruption.]
  Mr. Speaker: Order. The hon. Member for Bolsover (Mr. Skinner) has had his say at some length.
  Mr. Batiste: Many Scottish Members will be concerned again at the further disruption of another day of Scottish business. Is there not now a case for reviewing the whole timetabling procedure, with a view to timetabling all major Bills from the outset?
  Mr. Wakeham: Perhaps I can modestly say something in defence of the usual channels. Normally we manage to find an acceptable basis for the way that business proceeds. The hon. Member for Holborn and St. Pancras and I are fully paid up members of the usual channels—
  Mr. Dobson: I do not get paid.
  Mr. Wakeham: Perhaps the hon. Gentleman should remember the proverb of the labourer being worthy of his hire. We do our best. Most of the time we succeed, and we shall struggle on in our inadequate way.
  Mr. Max Madden: Who is the Leader of the House trying to kid? He comes to the House on a Friday morning to tell us that a Government with a majority of more than 100 do not control the business of the House. He knows, and so does everybody else, that he controls the business. Is he not ashamed to announce the steamrolling through of this Bill, which will rob millions of the worst off of even more money than they are left with now? Why does he not announce that the £8 that is owed to the 170,000 people, including pensioners, in compensation for the Government getting the retail prices index wrong will be paid? Why does he not withdraw the Bill rather than steamroller it through? Why does he not announce an increase in pensions, rather than cuts in housing benefit which will leave thousands of pensioners worse off? Why does he not announce an increase in child benefit, rather than rob thousands of school children in Bradford of free school meals? Why does he come to con the House, rather than to give us the truth?
  Mr. Wakeham: I apologise to the hon. Gentleman for making this business statement at rather short notice, because if he had had a bit longer and had thought about what he wanted to say he might have made a better job of it. What I have demonstrated is that the Government are in charge of the business. That is the purpose of a timetable motion. Therefore, I am not trying to kid anybody. One tries to organise the business through the usual channels for the benefit of everybody. If that is not possible, unfortunately from time to time timetable motions must be used.
  Mr. Roger King: My right hon. Friend has a reputation for compassion. What steps has he taken to acquaint the hon. Member for Livingston (Mr. Cook), the Opposition spokesman on such matters, about his decision on what will take place on Monday, just in case that hon. Gentleman happens upon the Labour party conference in Scotland?
  Mr. Wakeham: I hope that smoke signals are reaching that hon. Gentleman from somewhere, but I have not looked upon it as part of my responsibility to tell him.
  Mrs. Ray Michie: I am still puzzled, and perhaps the Leader of the House will help me. Is he saying that it is because of the Official Opposition that we have lost the Scottish business on Monday night — [Interruption.] — or that it has been postponed? It is important that we in Scotland know whether that is the case, because I would want to be able to go home this weekend and tell the people that once again we have lost our business, or that it has been postponed.
  Mr. Wakeham: The hon. Lady has not been long in the House, but she observes the proceedings well and makes welcome contributions. She would do best to draw her own conclusions. I have announced the position as best I can, and I shall not add to the troubles.
  Mr. Barry Field: Will my right hon. Friend confirm that the workings of the House will soon resemble a Chinese Parliament if Opposition Members keep welshing on deals that they do behind the Chair?
  Mr. Wakeham: Over the years I have done a good deal of business with the Chinese, and I know them well. I would not want to insult them by making such a remark.
  Mr. Dobson: In case some hon. Members on both sides of the House do not understand the purport of the statement, can the Leader of the House confirm that on Monday the Social Security Bill will now be debated at length in prime time, rather than dealt with extremely late at night, when it would be highly inconvenient for all the people in the Press Gallery to give it the coverage that it deserves? Will he further confirm that it is the Government's desire to get the Housing (Scotland) Bill through as quickly as possible, and that it is the Opposition's desire to prevent or delay its passage as long as possible?
  Mr. Wakeham: I shall certainly not answer questions on what the Opposition want to do, but I can say that my timetable will enable the allocation of time motion and the Lords amendments to the Social Security Bill to be debated. If not too long is spent on the allocation of time motion, more time will be available for the Lords amendments to the Social Security Bill, which will be in what the hon. Gentleman refers to as prime time.

  Engineering
  Question again proposed.
  11.17 am
  Mr. Robert B. Jones: All my illusions are shattered. I thought that my right hon. Friend the Leader of the House had come hot-foot to the Chamber, as he is an accountant, to reply to the points that my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) was making about the surfeit of accountants in the engineering profession as opposed to genuine, professional engineers.
  Mr. Batiste: Did my hon. Friend observe that while many Labour Members appeared to be able to come into the Chamber for the business statement, as soon as we return to the debate on the engineering industry they all disappear?
  Mr. Jones: In many debates in this Parliament Labour Members have not been present, and that shows their lack of interest in yet another subject rather than a distinctive lack of interest in engineering.
  Before the statement I was relating my interest in the civil engineering sector. My father was a civil engineer and I am pleased to say that my sister was an engineer, which is comparatively rare. I worked for the Federation of Civil Engineering Contractors for many years and took a close interest in the industry and, on its behalf, in the workings of the House. For those two to come together in this debate is particularly welcome.
  The civil engineering industry is especially important for our balance of payments. It may interest the House to know that the consultant side of civil engineering has 13 per cent. of the world market and the contracting side 6·5 per cent., which makes the United Kingdom important out of all proportion to the size of its economy and workforce. We are particularly strong in the middle east, Asia and Africa, but it is worth pointing out that we are not strong on the European mainland. Curiously enough, the countries that have strength there are the Scandinavians and the north Americans. Why can countries that are outside the EEC, and therefore have no inside track into the market, come out ahead of the United Kingdom's profession and contracting industry? We should be in an advantageous position because of our location. There is a great source of indirect exports through plant and materials, for example.
  The civil engineering industry should be in the vanguard of efficiency and innovation. The term "engineering" is derived from the same root as "ingenious", and it is on that basis that the industry has established its reputation over the years. Unfortunately, it tends sometimes to fall behind the times. For example, I find it extraordinary that the Association of Consulting Engineers should not allow its members to advertise. This gives an advantage to firms which engage in design and build and disadvantages many of our top professional firms.
  The implications of liability put the industry at an especial disadvantage. British civil engineers are over-cautious, or fail correctly to establish a balance between risk and cost. The strengthening of the Severn bridge is an example. Comments were made about in in New Civil Engineering. The article stated:
  "It is now capable of carrying a nose to tail jam of overloaded 40 ton lorries in all lanes, at the same time as a

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  ship is colliding with one of the piers and a Boeing 747 with a tower—all of this during a gale of such strength as has never yet been recorded."
  When the industry's cautious approach is taken to foreign contracts it loses out, especially to the north Americans and the Germans, who have a better appreciation of balance. We must examine why we take a cautious approach. I believe that it stems from our law of liability, which I accept has been reformed recently in terms of the law of latent damage. Until that reform, the law was almost entirely unclear. It may be that the descendents of Christopher Wren would have been liable for any defects in St. Paul's cathedral. That is clearly an absurd supposition. I know that the Government examined the problem carefully before supporting reform of the law.
  In the United Kingdom we have effectively 15-year liability. This places a particular burden on consultants who are retiring, especially if they are single principals. In overseas countries there is invariable decennial law. The cost of the additional five years in the United Kingdom contributes to the industry's lack of competitiveness in some areas.
  In practice, consultants without cover do not get sued. There is no point in suing someone if the action will not lead to substantial damages being paid. This acts as a deterrent to the industry as a whole, and especially to legitimate, large-scale professional firms and contractors. There are the most absurd anomalies, and I shall use the Channel tunnel as an example. With decennial law in France and 15-year liability in the United Kingdom, there will be a rivet in the middle of the tunnel that is the subject of 10-year liability that will be bolted into something that is the subject of 15-year liability, for example. Is that sensible? With the single market just round the corner, is that sustainable?
  Research and development was referred to ably by my hon. Friend the Member for Harwich (Sir J. Ridsdale). Research and development is critical in civil engineering. It is from R and D that new techniques arise, and new techniques enable us to steal a march on our competitors. We spend only about 0·56 per cent. of turnover on R and D, and it is directed mainly to products and materials, not techniques. Less than half of the expenditure on R and D goes into design. Within industry as a whole, 2·3 per cent. of turnover is directed to R and D. This means that the civil engineering industry is spending only one fifth of the overall expenditure on R and D. In agriculture, 3·3 per cent. of turnover is being invested in R and D. We must find some way of improving our domestic performance on this front. In the building industry, it is significant that almost all the new products coming on to the market and making things possible that were not possible before—shuttering, for example—come from Scandinavia and West Germany. The insulation materials produced by our continental rivals are very much better than those which are produced in the United Kingdom. We are losing out.
  The Single European Act will dominate our debates on many subjects over the next few years and I make no apology for referring to it now. We must be prepared if we are to take advantage of the opportunities that come our way. The form of contract used in Continental countries is different from that which is used in the United Kingdom. That is not surprising as we derive much of our tradition from common law whereas many Continental
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  countries derive their traditions from Romano-Dutch law and Napoleonic law, for example. As contract law follows the flag—this applies to other European countries and when we are trading in the middle east or Asia—this has a bearing on our exports. I hope that the Government will be putting all the force that they can behind the British case for our form of contract being used for civil engineering works under the new single market system.
  It worries me greatly, for example, that in the Cotswolds, where there is a beautiful form of stone building, and natural slate, that if a planning authority wishes to deem these as acceptable materials to be used in new developments, it runs the risk of being ruled against as a result of the Single European Act. That is because local materials advantage the United Kingdom and disadvantage our competitors. It will give rise to considerable worry in the United Kingdom if that sort of problem can occur. We must ensure that that is not allowed to happen when the final details are sorted out.
  We do not get as much of the European market as we would like, and that is a result of some of the factors that I have outlined. I believe that we are best when we participate in joint venture projects. That applies to markets other than the European market. The Koreans are proving to be extremely successful in the management of manpower, which is a lesson that our trade unions might profitably learn, and learn quickly. We are exceptionally good at managing projects, which reflects competence of our consulting engineers, to put together a package and to operate in far-flung parts of the world. Of course, in the European market, it makes sense to get together with local civil engineering companies and make sure that we have the advantage of their local know-how, knowledge of terrain, the law, planning, and so on. We should expand joint ventures.
  When one touts for new work abroad, people ask "What have you done at home?" Of course, for many years, the civil engineering industry suffered from a lack of work load in the United Kingdom. I am happy to say that the latest work load survey of the Federation of Civil Engineering Contractors for the January-March quarter is the best on record. That is a tribute not only to the competitivenes of our civil engineering industry but to the priority that the Government have placed on investment in infrastructure over recent years, now that we have come out of the recession.
  The trouble is that profits have not followed suit. It is perfectly true that the industry is getting more work, but profit margins are low. It may interest my hon. Friend the Minister to know that there has been only a 2·5 per cent. price increase between January 1983 and January 1988. We are trying to keep inflation down — I strongly support that — but when we compare that figure with the price increases that have been possible for other industries we shall appreciate the impact on profitability of prices being held down to that degree.
  To strengthen the domestic market, we must look at many more innovative approaches to financing. The growth in private sector financing of public capital projects is to be welcomed. I congratulate my right hon. Friend the Secretary of State for Social Services, who, when he was Secretary of State for Transport, secured the Dartford-Thurrock crossing deal, which is certainly one of the most beneficial deals that the country has ever had. There have been many advantages, not only in tapping private sector resources, but in making sure that such

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  projects are carried out ahead of time. The RYRIE rules, which were laid down by the Treasury and recently updated, ensure that there will be relatively little growth in that respect, because of the failure to take account of the advantage in bringing forward a project and working out the balance between public and private financing. I hope that my hon. Friend will pass on to the Treasury my comments on that point. It seems to be slow, considering that it welcomed this as an initiative, to come up with its part of the goods, laying down a proper framework. A request of the civil engineering EDC of 24 November 1986 led to the updating of the RYRIE rules, which was reported to the National Economic Development Council on 16 February 1988. That is a deplorably long time in which to come up with something that all Ministers whom I have ever heard speak on the subject have referred to as an excellent way of harnessing private sector talents.
  Civil engineering is important to the country, because of the balance of payments, employment and its general contribution. It is an exciting industry. It is the modern equivalent of the great 14th and 15th century explorers, who set out to discover new worlds. Engineers, too, drive back frontiers and do things that, hitherto, we thought impossible. Civil engineers turn deserts into fertile ground and bring prosperity to countries that have been deficient in infrastructure and, therefore, have had low standards of living. It is well worth debating civil engineering.
  11.33 am
  Mr. Neil Thorne: I am pleased to follow the remarks made by my hon. Friend the Member for Hertfordshire, West (Mr. Jones) about the civil engineering industry and its great contribution to the world of engineering. He made many important points. The Latent Damage Act 1986, which came into force not so long ago, contains some extremely interesting provisions. My hon. Friend's point about St. Paul's cathedral and the Wren family was particularly interesting. Nevertheless, as a result of the Latent Damage Act, there are considerable misgivings about what might happen in future, for the simple reason that the period is not limited to 15 years, but runs for 15 years after a material defect is discovered. That could be a much longer period.
  It is extremely difficult for engineers to find the necessary insurance to cover their liability well into their retirement. It is even possible that large claims could be made many years later against widows and families who inherit the assets of a deceased engineer. That is worrying. It must inhibit the functioning of a civil engineer. We shall have to watch how the legislation progresses and consider what effect it will have when it reaches the courts. The courts' interpretation will be important.
  My hon. Friend said that people in developed countries, and also in previously under-developed countries, are now trying to promote their engineers. The type of work that traditionally came to this country is now much harder to find. Until recent years the level of invisible earnings produced by engineers working overseas amounted to no less than £500 million a year. Last year, for the first time, that figure declined to £420 million. The reason for that decline is the fact that competition is much greater.
  My hon. Friend mentioned the Association of Consulting Engineers resisting advertising. We have a genuine dilemma. It is possible to compete in respect of
  790
  fees and types of services, but it is difficult to compete in respect of both. Few people understand precisely what they are getting for their money, and therefore it is difficult for them to be able to compare like with like. The Government rightly want to ensure that competition is free and fair throughout society, whether in industry, the trade union movement, or the professions, but it is a difficult problem because, quite clearly, the professions want to maintain a high standard.
  Mr. Robert B. Jones: My hon. Friend is obviously referring to the views of the Association of Consulting Engineers. I ask him to contrast that view with that of the Institution of Civil Engineers, which is quite happy for its members to advertise. We have in mind, not the unsolicited direct mail shots, but the general form of advertising. The wedge has already been driven in. The Association of Consulting Engineers is in danger of being the last bastion of fuddy-duddiness, when we are trying hard to be even more competitive.
  Mr. Thorne: I am sorry that my hon. Friend called the Association of Consulting Engineers fuddy-duddies. Its performance has been extremely high. Its standard of engineering throughout the world has been second to none. We have an extremely good reputation in the world. The association is reluctant to give way unless it is certain that the standard can be maintained. I am sure that we will reach a satisfactory solution, but it should not be rushed.
  The areas in which we have competed are particularly interesting. We have contributed to many major civil engineering contracts throughout the world. By doing so, we have created employment and exports. Clearly, when consulting engineers are being employed from this country, they have extremely good contacts and they know what products are produced here. Therefore, they would not exclude those products from the market.
  Much capital was made out of the fact that the second Bosporus bridge was constructed by a Japanese company. We seem to have forgotten that that Japanese company was helped by considerable quantities of goods from this country, particularly steel for steel wire. We have to thank the British consulting engineers for encouraging the Japanese to buy from this country. Too often we tend to forget or ignore that point.
  The same principle applies to other sectors of engineering, such as when taxes are applied to goods that come into this country for use in making another product here. We must be careful about that and ensure that we do not freeze ourselves out of world markets by adding taxes to a product from overseas as this may prevent us from making a substantial profit on more complex products. We must watch carefully the contribution that British industry makes in the world so that we can see what extra facilities in civil engineering and what extra profit we can engender in British industry by adapting what can be produced elsewhere.
  My hon. Friend the Member for Norwich, North (Mr. Thompson) is to be commended for the way in which he introduced this important subject. I welcome the remarks that he made and agree that we should pay our engineers the rate for the job. All too often we tend to overpay other professions—I hesitate to name any, but there are a few about that know exactly where the finance can be found. Engineers tend to specialise in providing a good service, but do not get the recompense that they deserve. Unless

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  we ensure that that is put right, we run the risk of losing many able people. The engineering profession is one through which this country has achieved enormous success, and I hope that it will go on to even greater things.
  11.42 am
  Mr. Roger King: I am grateful to my hon. Friend the Member for Norwich, North (Mr. Thompson) for promoting this debate. It is extremely relevant because of the tremendous change that is taking place in our engineering industry, represented by the recent announcement that British Aerospace proposes to merge with, or take over, the Rover Group. Those two companies, with a combined output of £7 billion, employing a large number of people and with a substantial export market represent, almost uniquely, all that is good and all that is bad and troublesome about British industry.
  I can speak with a slight personal knowledge because I am an ex-engineering apprentice. I never reached the august heights of being a qualified professional engineer. I was an apprentice with the old British Motor Corporation. In fact, I was a Nuffield apprentice. The company was known as Nuffield before becoming the British Motor Corporation, British Motor Holdings, British Leyland Motor Corporation, BL Cars and now the Rover Group. Therefore, it has had many names and one tends to remind people of one's age when referring to the fact that one was a Nuffield apprentice. However, I shall not go into details of my age.
  The negotiations that have started between British Aerospace and the Rover Group ought to have widespread debate because they represent an enormous change and a challenge for the car industry and the engineering industry in Britain. Now that we have had time to digest the implications of the proposed British Aerospace takeover of the Rover Group, we should step back and ask a few questions.
  I was one who welcomed the proposals. I do not look at the takeover with hostility because it has many merits. British Aerospace is a talented and gifted company and it has proceeded along a path of prosperity in an accelerated way since becoming part of the private sector. We need to seek some assurances and examine what alternatives there might be, if any, for the remaining large sector of our motor industry, which is still British owned.
  Although British Aerospace has said that it intends to honour the Rover Group's five-year corporate plan, as timescales go that is not very long. Markets change and the attitudes, aims and objectives of management have to adapt accordingly. We have to ask ourselves, in terms of that five-year plan, of which there can be only about four years left, what sort of manufacturing sector we shall have within our motor industry at the end of that time.
  Some pundits—there have been many in the technical press, tabloid papers and more serious papers — have said that British Aerospace would seek to develop the Rover Group as a British-type BMW market-orientated business. In other words, low volume but high profit. The sort of low volume envisaged must be around 200,000 cars per year, which would clearly put into question the viability of Rover's twin car plants which are situated at Longbridge in my constituency and Cowley.
  Although we have had verbal assurances that British Aerospace will not be able to dispose of the Austin Rover
  792
  business for at least five years, as far as I know that will not cover plant rationalisation or market volume. Indeed, it could not seek to cover those aspects of the deal because it would be unreasonable to do so in a normal commercial transaction. However, this deal is much more than that. Volume of manufacture has implications beyond the car manufacturing units themselves. Halving Austin Rover's production level would have a disastrous knock-on effect within the engineering components industry, which is predominantly situated within the west midlands but which can be found the length and breadth of the country. It would have an equal effect upon distribution and sales outlets. There are 1,200 Rover dealers employing, on average, 100 employees each and that is not a force to be ignored. Neither sector can earn a living without strong volume presence.
  It is vital that any new owner should categorically commit itself to at least present output levels. Without that, all the painstaking hard work by tens of thousands in rising to the challenge to create a future for the car side of the company will be put in jeopardy. We saw on Thursday just how much has been achieved by the Rover Group. It made a small profit but has a long way to go before it could ever be a viable entity in its own right; some of us would say that perhaps it never could. However, it is a substantial performer with a £3 billion turnover, over one third of which is in the vital export market.
  I wish the talks well although I reserve my view on the synergy between British Aerospace and the Rover Group. There is no doubt that engineering excellence is present in both companies in many and varied disciplines. In fact, what is being achieved at Rover, much of which has yet to see the light of day, is by anyone's standards outstanding and is gradually ripening for commercial exploitation. That accumulation of technical wealth, which should become commercial wealth, makes me wonder whether the value of the business is far greater than the quoted "give away" being promulgated. I recognise British Aerospace's interest in satisfying its shareholders that it is concerned with picking up businesses that will mean something to it and which are not just a rag-bag of worn-out assets.
  We do not know what the value of the business is to anyone else because British aerospace has exclusive rights to negotiate until 1 May. Obviously it will seek the best terms possible without bothering whether they represent the best deal for the taxpayer. Who can blame it? However, for those who are interested in jobs, which is a pre-eminent consideration, a one-horse race for ownership is not the best way forward.
  I am pleased that in his statement my right hon. and learned Friend the Chancellor of the Duchy of Lancaster said that the Government would have to consider alternative offers. The difficulty faced by an alternative party is whether such an overture would be truly welcomed or whether it would cause embarrassment. Therefore, the Government must spell out more clearly their attitude to any bidder, so that on 1 May the terms negotiated between parties that are involved at present—which perhaps may involve debt write-offs and capital grants — can be known, so that alternative offers can be tabled.
  A British solution would be preferable, but is that entirely realistic in the strict sense of the future prosperity of the car business? The car industry is so international, with global markets, that a wholly owned United Kingdom solution, while satisfying many, will not do

  793
  much to unlock the potential for Rover Group profits. British Aerospace will not bring one extra outlet for those products if the deal comes to fruition.
  In many respects we have been here before, because two years ago we had the tussle over Land Rover—General Motors and the secret Austin Rover-Ford talks. Both failed because neither company was prepared to say what future they could offer. It is not the American way of doing things to tell people what aims and objectives they have. They prefer to keep their cards close to their chest because they are aware of the competitive nature of the industry. Faint heart never won a fair lady, and unless one spells out what one wants to do with a business, the future becomes more important for those who will be affected by any takeover.
  Those earlier talks were all pie in the sky. At that time, the Rover Group was in poor shape. In the intervening two years, it has moved forward substantially, both financially and in products and technology. It is now a different animal and is attractive, not as a rag-bag of dubious assets but as a viable business with good potential, given the right commitment.
  Any potential suitor must spell out clearly what the potential market might be, how it would handle the Rover marque in the market, what sort of volume production it would envisage, whether it would remain committed to a replacement Metro or something similar, which is so vital for component jobs, and what it would do for Land Rover.
  Earlier, I mentioned that Ford and General Motors had been involved in talks. What would happen if they were to renew their interest? I do not know whether they will, but Ford has been looking for an up-market image for some while, as its unsuccessful talks with Alfa Romeo, which subsequently collapsed when Fiat marched in, showed. With its worldwide dealership total running at 7,000 and its market dominance in many countries, the statistics could be mind-boggling.
  It is well known that Ford has in preparation a replacement for the Ford Fiesta. Although it will appear to be a completely new car, the engine is of old-established design. However, suppose it wished to specify the new Rover Group K series engine, which is all alloy and much sought after. The Rover Group plans to make 300,000 units per year on the most advanced technologically based equipment yet available in the motor industry. That is a testimony to its engineering expertise and to that of the component industry. I am proud to say that the Rover Group will be manufacturing those engines in my constituency. If Ford became involved, up to 1 million units would be required every year. Think what that would mean for Longbridge and the subcontractors supplying pistons, bearings and ancillary equipment. These are all questions that must interest us.
  The same is true with regard to the new R8 model that the Rover Group is developing in conjunction with Honda. It will be sold as an alternative to the Escort through existing Rover dealers and new ones that any new company might bring. Positioned in the market where Audi is at present, the sales potential could be substantial. The future for jobs, which must be our prime concern, would look very exciting indeed.
  I have mentioned Ford but, equally, General Motors could make a success of the business. Many manufacturers have secondary marques — Volkswagen has Audi, Peugeot has Citroen and Fiat has Alfa Romeo. All those secondary marques have experienced growing success,
  794
  after years of going nowhere, as the parent company has invested in models, plant and opened up new markets. I make no personal choice; my sole aim is to say that there should be a choice.
  The Britishness of such an arrangement must be in question, although Ford and General Motors become upset if they are viewed as alien businesses, given their immense investment in the United Kingdom. If that is the price to pay for the opportunity that beckons — any suitor must spell out those opportunities to try to win our hearts and minds—perhaps we should give it more than passing consideration.
  I do not know who will form a queue for the Rover Group — probably no one. The future status of the company must be decided one way or the other. I welcome the British Aerospace bid because it ends the hiatus over ownership sooner rather than later.
  The Rover Group's financial results show a vast improvement over the past years, which is a testament to its management and employees. Much more progress must be made to ensure its future as a semi-volume car producer. Can it find its resources internally? Perhaps not, although it has a chance. Some of its new models, which have yet to see the light of day, are very advanced in design, technology, performance and finish. The new R8 may well be a volume seller in the old sense of the word, in line with the Mini and Austin 1100 of 20 years ago.
  Can British Aerospace provide the constant financial commitment to keep the business moving forward on a broad model front? At best, we do not know and at best we should.
  The Rover Group is a substantial part of our engineering heritage. Almost every modern car owes something to the brilliance of its engineers, particularly Sir Alec Issigonis, who showed the world how to build a small car. The tragedy is that we threw it all away for reasons that are now history. However, there is such expertise and ingenuity in the Rover Group today. Porsche engineers are reported to have gasped in amazement when presented with a V6 prototype engine that was sent to them for a second opinion. In terms of weight and performance, it was a revelation. The two-litre M16 engine, which is built at Longbridge, has won a Design Council award, and the K series engine which is a replacement for the engine used in the Mini and the Metro at present, is exciting the motoring fraternity even before it is in production.
  The influential motoring magazine, "What Car?" has voted the Rover 820SE as the best executive car and the Montego 2·0 Mayfair estate was voted best estate car. The Metro came top in a recent "Car" price-quality audit. These are all examples of how much is being achieved by the company at present.
  The partnership with Honda has been beneficial to both parties. However, we can never be sure whether it is long term, and it has done little to resolve Rover's problems of market size and economy of scale. The Rover Group has the products, but it does not have the market size or distribution outlets, and until it has it cannot achieve the economies of scale of some of its larger competitors.
  There is no doubt that the British Aerospace deal is exciting, but can it give what the Rover Group truly needs, or does its future lie elsewhere? We must address ourselves to those questions. In the light of the information available to us we cannot give a definitive answer.
  It may be that an all-British solution is best, but should we not look at any other offer and judge each on its merits?

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  We must get it right because there can be no further chances for the Rover Group. The west midlands economy demands that we get it right; the engineering economy of the west midlands and of the country demand that we get it right.
  Is it right to negotiate the future of a very large section of our engineering heritage behind semi-closed doors? Should we not know the facts, proposals and hopes for the future of the company if it is to become part of a bigger group?
  I hope that British Aerospace will endeavour to win the hearts and minds of all the employees and show all the opportunities that a relationship with it would offer. The future of the Rover Group is exciting, but it needs a commitment, resources and good management. Given the resources of a bigger and stronger partner, it could bring prosperity to the country, continue to be part of the cutting edge of technology in this country and give us a key to our future prosperity over the next few years.
  11.59 pm
  Mr. Spencer Batiste: First, I should like to join my colleagues who have congratulated my hon. Friend the Member for Norwich, North (Mr. Thompson) on his good fortune in winning the ballot for this debate, on his good sense in choosing a subject that is so important, and on the clarity and excellence of the speech with which he introduced the debate.
  I should like to comment on one particular aspect that he raised, although I wish to be associated with the breadth of his comments. The motion falls into two parts. The first congratulates the engineering industry on its past progress. I endorse that fully. Successful manufacturing industry is crucial to the success of this country. It is crucial as a wealth creator and makes a vital contribution to our balance of payments. It is also crucial for employment, especially to many skilled people.
  However, it is important that we separate debates about employment from debates about the success of manufacturing industry. They are two quite separate debates, and the dangers in confusing them are that we measure the success of an industry by the number of people that it employs rather than by its productivity and performance.
  The success of the engineering industry in Britain today is largely attributable to the fact that it has addressed so many of the problems that we have inherited from the past. I make no apology for saying that it has been able to do so because it has been operating in the 1980s, in the framework of the revitalised enterprise culture which is the objective of Government policy because the Government's role in creating that framework is crucial to the success of manufacturing industry.
  In all those congratulations, however, one message must come over clearly from the debate: that we cannot possibly afford to rest on our laurels. The pace of change that we all face is accelerating all the time. That came home most clearly to me many years ago in a debate in my law office when we were discussing whether to replace the computers that we had brought in only two or three years earlier but which had already become long outdated. In that debate an elderly consultant of the firm, who had distinguished service in the first world war and who, as a young man, rode to work on his horse and left it in the
  796
  stables behind the office, asked whether we would like to know about our firm's first debate on high technology. We asked him to tell us. He said that it was about the telephone and whether we should have one. After an agonised debate the firm's partners decided that they would have to move with the times and that they would buy a telephone, but, because nobody would use it very much, they put it in the stable with the horse.
  During his working lifetime, that consultant had moved from the horse to the microchip. I wonder how far we will have to move in our lifetimes, from the technologies and methods of industry and the organisation of our society that we take for granted today to the things that our children and grandchildren will take for granted in the future.
  We are at the threshold of even greater and faster change than at any time in our history, and it will dwarf everything that has gone before. We face changes in our products, methods, and skills and in the demands that we make on our industry, but, above all, in the markets in which we must compete, and our attitudes to those markets. Our continued success in the 1990s and beyond will depend upon how successfully our industry adapts to those changes and, in the medium term, how we face the challenges and opportunities that will be opened up by the completion of the European market in 1992, on which I shall concentrate today.
  Jacques Delors, the President of the Commission, said:
  "Europe has had to run the 100 m hurdles, while others run the 100 m sprint."
  In America and Japan, our competitors have the benefit of being organised on the basis of a large home market, without internal obstacles. They have been able to come to Europe and, in many cases, to run rings around our indigenous companies because they have the benefits of scale at home.
  Mr. William Cash: Does my hon. Friend agree that one of the most important things at the moment is to invest strongly in new products and to attract training and training potential of the highest calibre? Does he also agree that one feature of those other countries that he mentioned is that there is a continuous dialogue between Government and industrial leaders, and that that is something that we should encourage as much as possible?
  Mr. Batiste: I am grateful to hear that my thinking on this subject and the remainder of my speech match closely the analysis that my hon. Friend has made. I fear that when the hurdles start to come down in 1992, French and German industry, which has been planning for a fast start, will be ready to run the sprint, whereas we shall still be jumping long after the obstacles have gone.
  In 1992 Europe will be our home market. It will not be the preserve of the export sales manager. Every British company should now, as a matter of urgency, be reappraising every aspect of its business plans. Because the Government are so important to the framework in which industry operates, they should be there out front. The Department of Trade and Industry—the Department for enterprise—should be there, signposting to our business men the high ground that they have to capture between now and 1992 and smoothing the path to achieving those objectives.
  It is disturbing that the French and German Governments seem to be moving so much faster in mobilising industrial awareness and action in their

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  countries. I have heard it said, in relation to France, that that is because French industry is not as well oriented to world markets and to adapting its methods when major changes come to be made in meeting new markets. I am cynical about that because I think that it is much more to do with the fact that the French are realistic when it comes to assessing the needs of their national industries and identifying the problems of 1992. They are determined to ensure that their companies will not lose out.
  We must start with the very structure of our companies. Where should their offices be located? Where should we place our manufacturing, sales, distribution, transport and servicing facilities? What communications systems will be needed? Those of us who, like myself, represent northern industrial constituencies — mine is Leeds, which has a wide range of different industries involved in engineering — will wish to be satisfied that the Government are doing everything possible to balance out the inevitable disadvantage that our companies face by being remote from the centre of balance of the market.
  The Channel tunnel can, indeed, give us easier direct access to the Continent, but in our regions we must have the inland facilities, linked to the rail and motorway networks, to ensure the smooth passage of our products. I do not want to see the barriers removed from Dover but reimposed in London.
  We must also consider our attitude to competition and mergers policy. We have just heard an exceptional speech from my hon. Friend the Member for Birmingham, Northfield (Mr. King) demonstrating his depth of knowledge and awareness of the motor car industry, which is so important in his constitutency. Many other companies around the country face great challenges as we come to the period of the completion of the European market. We should ensure that, wherever possible, the artificial boundaries that exist in our society are removed and that balancing factors, in terms of infrastructure and organisation, are created.
  In the motor car industry, as in many other engineering industries—especially the high technology industries—once and for all we shall have to face the fact that other companies, especially those operating in Japan and the United States, are organised on a scale that dwarfs our companies in Britain. If we are to play in those markets, we must be aware that mergers between large companies in Europe are an essential signpost of the way forward to success.
  Mr. Roger King: I thank my hon. Friend for his kind comments. I agree entirely with what he has said about the necessity for being large enough to take on world competition. He knows, as we all know, that at present in this country if one has over 40 per cent. of a certain market, one is in danger of becoming a monopoly. Has that put a constraint on British companies being big enough to face European competition in 1992? When we go into Europe, in the true sense, in 1992, Europe will be our home market, and 40 per cent. of the United Kingdom market might mean only 10 per cent. of the European market. Therefore, should we perhaps not review our position and attitude to monopolies?
  Mr. Batiste: My hon. Friend makes his point and mine most eloquently. We must rereview the position of our engineering companies and the framework of competition policy within which they operate. Artificial limits, such as
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  market share being the sole motor of competition policy, cannot be sustained in sensible regional policy of sensible European policy. If for no other reason than the huge resource demands of successful research and development, mergers will continue to take place in Europe. The issue is whether British companies take part and therefore share in the success. There may be some sentimental value attached to soaring like an eagle into last place, but I prefer to hear the Japanese awarding us gold medals in the business olympics.
  We are often told that a company is only as good as the people who work in it. How many British companies are seriously considering the personnel implications of 1992? The number of 18-year-olds in Britain is projected to decline by up to one third by then, and much of the country faces skill shortages which are becoming quite serious. We face an explosion in demand for skilled people. Too many people leave school without the training that they need for the jobs that are available. How many of our engineers are learning the languages of what will be our home market in the 1990s? We have heard much about the need to create more engineers, but surely we must broaden the educational experience of everybody, because we face radically different challenges.
  Too many people leave school without the training that they need. I have just completed what I believe is one of the longest running Committee stages of a Bill — the Education Reform Bill. When it becomes law, it will give industry a major opportunity to participate in schools, colleges, polytechnics and universities. Like the youth training scheme, which has provided an opportunity for more basic training, it is not window dressing, but its success depends on industry's willingness to become involved as it never has before. The Government are creating the framework, but industry must take up the challenge.
  Engineering needs to enthuse young people. They cannot be press-ganged into joining. I regard high tech and space industries and their spin-offs as the motor for enthusing young people. That is what is happening in the rest of Europe. Pay and productivity are inextricably linked. There must be vision and motivation, but there must also be working practices which are attractive to young people. That is how to get them in.
  For a great deal of my working life as a lawyer, I have been involved in the technology transfer from universities to industry. There has been a substantial change. The transfer was more or less non-existent 10 years ago, but we are now making a showing. It is not good enough if British academics with brilliant research behind them prepare themselves for a Nobel prize ceremony but ignore the practical implications of their work and disclaim any responsibility for the conversion of their ideas to the market place. It is no use industry saying, "We are not prepared to look at work that scientists are doing in universities because we do not think that it is yet sufficiently close to the market place to give us a product." The gap in Britain is all too obvious, but the Japanese and Americans seem to be able to fill it far more effectively.
  Britain's expenditure on research and development as a proportion of gross domestic product compares with that of the United States, Japan, Germany and France, but industry's portion is far too low. The latest figures which are available to us are for 1985, so the pattern may have changed significantly. If it has not, there is a serious problem. Ten years ago, industrialists may have said that

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  their company's profits were simply not big enough to enable them to invest heavily in research and development and that they were into survival, but survival depends every bit as much on research and development as on short-term considerations. Any engineering company, small or large, which does not realise the fundamental importance of planning its products for the future has only a short-term future.
  Mr. Cash: Does my hon. Friend recall that, only recently, the Japanese announced that they had conducted a survey of which countries had come up with the most new ideas? It shows that about 80 per cent. of new ideas since the second world war have come from Britain. Perhaps we can build on the idea of our being awarded a gold medal for generating new businesses by matching research and development to the number of ideas that we have generated.
  Mr. Batiste: I can confirm what my hon. Friend says on the basis of personal experience of the university for which I have acted for many years. I have seen many ideas which everybody knows will one day be winners but which need a great deal of money and time to develop. Time and again, the way in which we fund research and development and its integration with companies means that we run out of money too early, so our competitors fish successfully in our intellectual pool.
  What worries me is that much of the work on standards for new products is taking place in Europe. Standardisation, which is fundamental to completion of the internal market, is under way. I am told that some 80 committees are at work on standardisation in Europe, and that 45 of them are chaired by German business men. I do not object to the Germans fighting their corner. What I am worried about, if that is true, is where our business men are. It will be no good British engineering coming to the Government in 1993 and saying, "We do not like the standards that Europe has adopted. They do not help us very much." The time to say that is now. They should be getting out there now and doing something about it.
  The message to the Government and engineering from the debate must be to think now and act quickly, because we cannot afford to miss the boat. We have overcome the legacy of the past, and we must now face the challenge of the future.
  12.17 pm
  Mr. Lewis Stevens: I, too, congratulate my hon. Friend the Member for Norwich, North (Mr. Thompson) on selecting this subject for debate. It surprised me to learn that there has been no such debate since 1980.
  I agree with much of what my right hon. and hon. Friends have said about engineering having to perform in the future. My hon. Friend the Member for Elmet (Mr. Batiste) spoke about 1992 and said how important it is for engineering to be ready to participate fully in what will then be our home market. It is important to remember, however, that engineering is not one single industry, but a multitude of industries involving many skills. It is spread throughout the country. It is dangerous to generalise about whether it is good, bad or indifferent.
  We have come through a difficult period and new industries have been introduced. Today's is not the same
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  industry as that of 10 or 15 years ago. Many industries have gone and some have declined, but they are being replaced by different needs and different skill requirements. The difficulty is meeting those requirements, but we must if we are to survive. The various reviews that have been carried out recently suggest that we are now encountering skill shortages, in both craft and technician abilities, and in professional engineering.
  The development of professional engineering, particularly the mechanical, production and electrical areas, has improved over recent years. The courses being offered at universities are more realistic. My hon. Friend the Member for Elmet criticised the fact that many engineers do not learn languages as well. My hon. Friend might be aware that a polytechnic runs engineering courses which include language tuition, and one year of the course is spent working abroad. My hon. Friend the Minister and I know that polytechnic well.
  Dr. Michael Clark: In my hon. Friend's list of engineers he mentioned production, mechanical, electrical and civil engineers. Will he add chemical engineers? If he does so, he will be the first to mention them in the debate.
  Mr. Stevens: I owe my hon. Friend an apology for not mentioning the chemical engineers. Many more skills than I mentioned are required in the engineering industry.
  Improvements are being made in the number of engineers and in the number of those being trained in universities and polytechnics, but that development still has a long way to go to meet the needs of the future. In many respects, engineering is not so attractive to people. Some of the factories are not streamlined and high-tech. Industry Year tried to get rid of the attitude that factories are always grimy, dirty and gloomy places. But, indeed, some of industry still is like that and will continue to be. It will not necessarily be inefficient, but it is not always the most pleasant of environments. Many people from the industrial areas know full well that their parents and their families did not want their children to follow them into certain industries—such as into the pits or the steel industry. It was much more acceptable to go into another profession, such as the law or accountancy, than to go into the engineering industries. It may have been a misguided idea, but it was real. Some people still have that attitude, which is understandable.
  One must also consider a simple thing called pay, which has been mentioned in the debate. Engineering is not the highest paid profession, even if one splits it into different areas. Perhaps the civil engineers are the highest paid. I notice that a recent Confederation of British Industry—Manpower Services Commission survey referred to increases over 12 months compared with the average pay increase. The production engineers did not even achieve the average level. Not so many years ago it was reported that more people were studying the Welsh language than production engineering at university.
  One of the keys to improvements in engineering must be our manufacturing systems. This is where Japan in particular scored over other nations because of its ability to develop its manufacturing systems. For many years it developed, not its design and product capabilities, but its production systems and manufacturing techniques.
  If our young people are to be encouraged to go into engineering, a career structure must be realistically painted for them. In many professions, if one qualifies there is an

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  expectation that, provided one keeps up to date with, for example, changes in the law and so on, a career structure will develop along a straight line. In many cases, that is not so in engineering. The speed of change in industries does not necessarily give continuity or the prospect of continuity in a company. Changes do not necessarily constitute a continuation in a very specific area of that engineering ability, be it electronic or mechanical engineering. One is much more likely to be forced to change in the engineering profession than in almost any other. Not everybody welcomes that.
  In the engineering profession, moving upwards has often meant having to move out of the environment in which one is a specialist. There may be a move into management. The survey showed that about 24 per cent. of people at director level are graduates or professionals in engineering or the applied sciences, which is not good. That has been commented on. However, it is not easy to move into the higher paid jobs without moving out. We lose many engineers, not so much into management as out of the engineering industries, where they can obtain higher wages in other types of commercial activity.
  The present developments in training are in the right direction, but how much time do we have? We have until 1992, which may seem to be quite a long time now that we are producing more engineers, but, what happens in an engineering business if one does not have the skills at the level that one wants? The company does not cease to function. It is not like having a solicitor or a barrister who is not available to go into court because that qualification is needed. What happens is that a slightly lower ability and qualification are used and the industrial project continues at a lower level of performance. The eventual result is that the company or the industry performs at a lower level and gradually loses its competitiveness and ability to be in that market. We need to have those skills available. Our education system must help to encourage far more people to become engineers at all levels.
  Our status as engineers will always be a little in question because there is a gradual development in status from the craft or lower skill level right through to the full professional qualification. People work together and help each other, and are in the same team. There is no rigid structure in the profession, and there is never likely to be, which means that only the professionals do one thing, and only people with another qualification do another. There is a mixture. This creates problems of how we are to develop our education system. More people need to be educated at the higher levels. An initiative has been taken by some universities, which have produced a brochure saying that if one has no mathematics or science A-levels, one can still be an engineer. That is an important move. People must have the mathematical abilities, but the initiative lies in trying to open a much wider gateway for people who want to enter the engineering profession.
  We must ensure that sufficient people are encouraged into the engineering profession to give us the levels that we need. Many of our industries have suffered tremendously from reductions because of overseas competition. The machine tool industry, in which I worked at one time, has been reduced to a tiny industry compared to what it was 15 years ago, but it is still required for supplies.
  If we are to develop our engineering and manufacturing bases we need machine tools, and if we cannot provide them ourselves they must come from abroad. Therefore, we are under tremendous pressure. Unless we can resurrect
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  some of our manufacturing areas, we shall lose a great challenge and an opportunity in trade. As a consequence, as our economy expands we shall have to buy in from abroad. Our industry will not be able to move fast enough to take advantage of such an expansion. The situation can be improved by collaboration between British companies and some overseas companies.
  Engineering is a complex business, whether it is in the manufacture of machine tools or of cars. The risks factor in setting up and developing an engineering industry is much higher than in other industries. The need for skills, research and development, training and education is critical. It is probably too late to do anything in this Budget, and I do not know what my right hon. Friend the Chancellor will do, however, at some stage we will have little choice but to give extra impetus to the development of the engineering industry by looking at how taxation affects it and what tax incentives can be given. I know that there are incentives and initiatives for high technology and so on, but subsidising industry is not a wise way forward. I have no doubt that my hon. Friend the Minister, with his support for the manufacturing industries, recognises their difficulty, particularly among the small engineering and manufacturing firms. Our tax regime does not help those industries, and perhaps he can pass that message on to our right hon. Friend the Chancellor. These industries need special encouragement and support from the Government, not through subsidy, but through tax incentives.
  The engineering industry is critical to everything that we do — for example, medicine and other service industries — and particularly to manufacturing and production. It gives us wealth in terms both of cash and standard of living. If it does not develop we shall have a much poorer standard than our competitors. It has improved significantly in the past few years, and if we want to build on that improvement there must be real efforts between the Government, industry and the engineering companies and professions. The situation must he examined and discussed with a view to bringing about an improvement in engineering opportunity.
  12.32 pm
  Mr. Gary Waller: When I spoke in the debate on the Finniston report in June 1980 I said that the report described the implementation of its proposals as "an engine for change". I also said:
  "We may think that that implementation will be enough and that as a result all the problems will be solved. Nothing could be further from the truth … The engine will need continually to be fuelled and to receive regular maintenance if it is to operate efficiently and to the benefit of engineering and of Britain as a whole." —[Official Report, 13 June 1980; Vol. 986, c. 1066.]
  Considerable progress has been made in the past eight years, particularly with the creation of the Engineering Council, which was the principal recommendation of the Finniston report. At best, these changes have enabled us to hold our own, but our international competitors have moved ahead swiftly. It is true that productivity in the British engineering industry has increased by over 60 per cent. in this decade, and that is a remarkable performance. However, we still lag behind several other highly developed countries that are our competitors.
  Perhaps today, even more than in 1980, the challenges that we face and the problems that we must overcome are essentially ones of human resources. Because unskilled and

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  semi-skilled jobs have been taken over by machines, the need for technologically qualified people has increased greatly, and it will increase even more.
  When we compare the proportion of our directors and senior managers who have engineering qualifications with the relevant figures, for instance, in West Germany, our deficiency is particularly apparent. Eight years ago, I referred to the benefits of broadly based education courses which provided training and practical experience not only in engineering but in management techiques. Unfortunatly, the industrial technology and management course at Bradford university to which I referred then is no longer in existence. On the other hand, there is greater recognition of the need for the right kind of education and training. That has to be a continuing feature in a changing industry and a changing world.
  The Finniston report took into account the proposition that the status of engineering and engineers was too low and needed to be raised. Despite the good work of the Engineering Council and numerous other bodies, that remains the position today. Too many people think that engineering is all about metal-bashing and dirty overalls. Few appreciate the intellectual challenges involved. One of the problems that we identified in 1980 was the generally poor image of the private sector, in which a high proportion of engineering jobs is located. Vastly improved profitability and the Government's nurturing of the enterprise culture have done much to correct that state of affairs. However, engineering still suffers in comparison with other parts of the private sector.
  If we are to change that attitude, as we must, we cannot start too young. The inclusion of science and technology in the national curriculum which is an intrinsic part of the Education Reform Bill, is a big step in the right direction. However, only if the courses are taught with imagination and are stimulating — and only if companies can demonstrate to school leavers the career opportunities and attractive conditions in engineering — will the most talented and highly motivated young people become potential recruits to the industry, in which skills shortages are becoming daily more apparent.
  I am sure that my hon. Friend the Member for Elmet (Mr. Batiste) is right to say that the industry will have to enthuse young people and draw them towards it.
  My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) made an important point: half those potential recruits — the girls — will not even consider engineering unless they come to realise that engineering is just as much open to them as it is to boys. That is something to which the Engineering Council has rightly devoted considerable attention with its initiative devoted to career breaks for chartered and technician engineers who are women. There is evidence that gender expectations are imprinted at a very early age. On my many visits to schools in my constituency I always look hopefully for signs that girls are not led to believe that certain jobs traditionally associated with boys are closed to them.
  Integration may not always be the right answer.
  Mr. Barry Field: My hon. Friend may be interested to know that I recently went round Fawley oil refinery with the Industry and Parliament Trust. I was surprised to find, in the hard environment of an oil
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  refinery, that all the control room engineers were women. That shows that more and more women are becoming engineers.
  Mr. Waller: That is encouraging news, as is the fact that the proportion of women trainees is increasing. However, it is increasing from a low base. We are now up to nearly 10 per cent. whereas the figure was perhaps half that when we debated the matter eight years ago. We have a long way to go, although I am encouraged by what my hon. Friend says.
  I pointed out that integration at junior school level may not always be the right answer. The other day I visited Ingrow first school in Keighley. I was interested to see a group of girls playing together with construction and engineering-type toys. The teacher pointed out that if boys and girls play together, the boys invariably elbow the girls away from those toys, so the girls are allotted a separate time when they have full use of them. That seems a practical response to the circumstances that have probably prejudiced many girls against engineering and technology in their most formative years.
  I spoke a moment ago, as in 1980, about the status of engineers. A factor that has put Britain at a disadvantage in the past is the unfortunate way in which status has been judged. It is not to do with white collars or blue collars or whether one has a key to the executive washroom. The successful companies that I visit are nearly always those which show a more positive recognition of the fact that everyone—management and shop floor workers alike—has an interest in achieving success for the company.
  Here I believe that great progress has been made in recent years. As the need for an ever larger proportion of the work force to possess engineering qualifications continues to increase in the future, good employers will and must give priority to programmes which involve continuing training throughout working life. They must also develop their links with educational establishments in their area, especially as demographic factors in most areas mean that the available pool of potential recruits will become smaller.
  Like my hon. Friend the Member for Nuneaton (Mr. Stevens), I wish to say something about the importance of the machine tool industry. I have a constituency interest as Keighley has traditionally been linked with that sector. Landis Lund in my constituency has won contracts to provide machine tools to many motor manufacturers and in the most recent year it won the Queen's Award for technological achievement. It is one of the leaders in the industry. Another famous company, Dean Smith and Grace, has retained jobs by keeping in the forefront as new advances have taken place and by changing its range so as to compete effectively. Unfortunately, many other machine tool companies have gone down with the loss of many jobs, but those which have shown their willingness to embrace change have survived.
  The European market now takes nearly 40 per cent. of our exports. The significance of that market is shown by the fact that the largest growth in all our export markets in 1987 was in Spain, which increased from £800,000 in 1986 to £17·9 million in just one year, becoming our fourth largest market abroad. That is because previous tariff barriers were removed and that market was opened up to us. That is clearly a pertinent example. Reference has already been made to the completion of the European market in 1992. If British skills and enterprise are to pay

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  dividends, we must take full advantage of the opportunities that that offers. Great strides have already been made in the area of common qualifications, with the Engineering Council leading the way, but British companies still lag behind many of their European counterparts in their perception of the challenge posed by the completion of the European market.
  In 1987, the machine tool sector improved its position by expanding total export production, but our estimated share of world machine tool exports is ridiculously small at 2·9 per cent. in 1986 compared with West Germany's 22·9 per cent. I do not believe that the future need be so bleak. I believe that the downward spiral can be reversed. A major threat, however, not just in export competition but in import penetration, comes from the far east. Taiwan, for instance, nearly doubled its share of the British market in 1987. British industry is anxious to compete on equal terms, but many firms such as Dean Smith and Grace point out that they cannot compete with the credit terms offered by companies in Japan, Taiwan and Korea. Too often, we have lost orders not through failures of quality, price or delivery time, but because our competitors could offer much better credit terms backed by their Governments. The Department of Trade and Industry—the Department for enterprise—must devote attention to that area to understand the concerns of the industry and the threat to thousands of jobs.
  Anyone who doubts that we need a strong engineering industry should consider the example of Switzerland, which has an enviable reputation in the services sector but also does very well in engineering, as shown by the fact that it has more than 9 per cent. of the world export market in machine tools — a far greater share than Britain, which is a much larger country than Switzerland.
  A thriving service sector can exist only with a thriving manufacturing base to service. To some considerable extent, in this country that means, and will continue to mean, engineering. The future of engineering is exciting, and whether we make the most of the opportunities depends, above all, on whether the industry gets the human factors right.
  12.45 pm
  Dr. Michael Clark: I am grateful for the opportunity to speak this today, because I wish to bring to the attention of the House and my hon. Friend the Minister the chemical engineering industry and all that it contributes to the standard of living and the wealth of the nation. I remind my hon. Friend that for many years I worked in the chemical engineering industry at ICI, managing plants constructed by engineers, and working with them in commissioning such plants. I should declare an interest, as I am a parliamentary adviser to the British Chemical Engineering Contractors Association. I am proud and pleased to be so, because I am aware of its valuable work in helping in the manufacture of the bulk chemicals that help us in so many aspects of our lives.
  By their very nature, chemical engineering companies are large and are heavily dependent upon professional engineers. As my hon. Friend the Member for Norwich, North (Mr. Thompson) said, the training of professional engineers is as vital to the chemical engineering industry as it is to all the other engineering industries. I congratulate my hon. Friend, not only on coming first in
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  the ballot, but on choosing for debate a subject as important as engineering. As he said, it has not been debated in the House for eight years.
  The chemical engineering contractors are important resources of trained engineers. As a viable industry, it offers engineers employment that will give experience in feasibility studies, design consultancy, project management, procurement, commissioning and the maintenance of heavy and complex plant. During the last year for which figures are available, the major contractors had a combined turnover of about £500 million, but installed capacity of machinery was about £3 billion. Therefore, there is an escalator from the work obtained by the large contractors to other contractors and suppliers, which then benefit.
  About 30 per cent. of the contracts obtained are exported, and with export orders there is always the opportunity for work to be placed in this country. It is therefore important that Britain provides a good, substantial basis of chemical engineers to pass jobs to smaller companies which could not have obtained such work without the marketing help of the larger companies.
  The growth in chemical engineering has been largely in the nuclear industry. I am sure that the House will be pleased to know that chemical engineering contractors are helping with the reprocessing of nuclear waste and effluent treatment to ensure that all discharges, whether gaseous, liquid or solid, are reduced to as harmless a state as possible. Indeed, the effluence now going into the Irish sea from the Cumbrian coast has so little pollution that, in many ways, it is cleaner and more purified than discharges from conventional industries.
  The growth of work in the nuclear industry was necessary to offset the decline in work in the oil industry. It is perhaps surprising that we have heard little about the engineering that is taking place in the oil industry, particularly in the North sea. While I understand that production engineering, as mentioned by my hon. Friend the Member for Nuneaton (Mr. Stevens), is vital, and mechanical engineering, as mentioned by hon. Members including my hon. Friend the Member for Birmingham, Northfield (Mr. King), is also important, heavy structural and chemical engineering have enabled us to exploit our North sea oil. Some concentration should be given to that.
  The major chemical engineering contractors employ 10,000 people, a large proportion of whom are highly trained professional engineers whose disciplines are multiple. There are structural, mechanical, civil, instrument, stress and chemical engineers. Ever since I took a great interest in science at school I have believed that science enhances the standard of life of people throughout the world. Science has enabled us to have better housing, and improved food and more of it — although, unfortunately, still not enough in some parts— and it has revolutionised our clothing by the use of man-made fibres, which are better and cheaper than many natural ones.
  As a chemist I have been proud to be part of a profession and industry that have contributed towards pharmacy and improved our standard of health, getting rid of disease and pestilence — some of it being erradicated altogether. That has been achieved through new scientific materials and developments in science and chemistry. Although it is first done in test tubes or glass flasks in laboratories, ultimately, when we want to use these materials in thousands of tonnes, we must construct

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  chemical plants to manufacture the materials in the quantities needed. This is where chemical engineering contractors some into their own, devising the massive plants that can reproduce on the 10,000-tonne scale that which a scientist will produce in a small test tube in a laboratory.
  Chemical engineering contractors have contributed to the development of nuclear fuels. All nuclear plants are built by contracting engineers and they exist to provide not only cheap electricity, but the electricity that is essential for the future when the fossil hydrocarbon fuels run out. If nuclear energy is controversial, let us bear in mind that large contractors are also involved in providing the machinery and equipment for alternative energy sources, such as windmills, wave machines and barrages across rivers.
  Contractors have a part to play, not only in offshore oil and gas production, but onshore, where exploration is taking place, as it has done in my county of Nottinghamshire for many years since well before the war, and now in the south of England on Wytch Farm and elsewhere. Coal processing and conversion into other materials is another part of the work carried out by chemical engineering contractors. At present, environmentalists are worried about the amount of sulphur in flue gas. It is the chemical engineering industry that will find the right equipment to take the sulphur out of power station flue gases to prevent so much acid rain, not only in the United Kingdom, but in Scandinavia and Germany.
  If it were not for the large artificial fibre plants developed largely in the north of England to produce terylene, nylon and other polyesters in large quantities, the man-made fibre industry could not take advantage of scientific experimentation and development. I worked for some time in the plastics industry. When I worked in County Durham and Yorkshire, the large plants at Wilton and Billingham were developed and built with great skill by people from that part of the country. A host of experience was brought together to produce the plants to enable plastics to be brought forward that could revolutionise manufacturing, whether for the motor industry or the aircraft industry, for domestic appliances in the home or for use in myriad ways throughout the country.
  In 1945, when the war was over, polythene had been used only to help develop the radar system. ICI considered that there would not be a market for more than 500 tonnes a year. It was considered to be a scientific polymer with particular application due to its dialectric constant. As I have said, it was used in the development of radar to help us win the war. There is now a polythene market of well over 25 million tonnes. That demonstrates how the market has developed.
  We know that not everything is plain sailing in the engineering industry. There have been some setbacks. The price of oil has fallen and the high cost of the pound, which has made the value of oil so low in terms of sterling, has meant that exploration in the North sea has been greatly curtailed. The orders placed with large chemical engineering contractors have been cut. Britain is not the country with the cheapest interest rates, and I well understand why that is so. Britain has a booming economy, and we must be careful with interest rates so that we do not fuel inflation. However, if interest rates are high,
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  major contractors are not helped when they wish to obtain orders overseas. Similarly, high interest rates are not helpful in terms of export credit to overseas companies. In recent years, few large-scale chemical plants have been built. If there are fewer plants, there are more competitors for them. Countries such as Japan and Germany are giving credit on better terms than can be given from this country.
  Despite all that, engineers in general, and chemical engineers especially, are not whingers. They get on with the job. They see the problem and they solve it. They treat difficulties as opportunities. Is that not what engineering is all about? Problems are seen as opportunities, and engineers use their skills to overcome them.
  It is important that we retain a basic British chemical engineering industry. It is important that we retain expertise here so that we do not have to import all the time. It is essential to ensure that we have services that we can export for foreign currency to keep our balance of payments right. We want British chemical engineering companies that can develop and become repositories for advanced technology. We do not wish to import a piece of advanced technology for four or five years and then let it go back to the United States, Germany or Switzerland. We want to develop advanced technology and retain it. We must ensure that our advanced technology capabilities grow by experienced engineers being able to pass on their knowledge to young trained professional engineers who are entering the industry. We wish to provide direct employment for professional engineers who are leaving our universities. By having a British chemical engineering industry we can ensure more effectively that the subcontracts that are placed go to British companies, not overseas companies.
  It is important that the profits of large engineering companies should remain in Britain and not be remitted abroad to parent companies. If there is remittance abroad, we can be sure that investment will take place abroad. If profits remain in this country, they will be invested here and our engineering industry will develop a larger base.
  The desire of most British companies to export, and the Government's desire to assist them to do so, come together happily. I know that chemical engineering contractors greatly appreciate the assistance that has been given by the Foreign and Commonwealth Office towards obtaining contracts abroad. Indeed, chemical engineering companies in this country have shown their appreciation by helping the Foreign and Commonwealth Office to run training courses for commercial officers, and, five or six times a year over the past few years, have helped to ensure that commercial officers in overseas posts are aware of the availability of British expertise and the need to use it abroad.
  Therefore, it was somewhat disappointing when, in his report last year, the Comptroller and Auditor General, commenting on the work of commercial overseas posts, criticised companies for concentrating too much on large firms instead of attempting to bring about additional exports through promoting small and medium-sized companies. Small and medium-sized companies are close to my hon. Friend's heart. In large, heavy engineering, such as the chemical engineering industry, it is difficult for small firms to get orders that are appropriate to their size. It is difficult to get orders worth £10,000 to £30,000. If a large engineering company gets a major contract, the spin-off for smaller companies is significant and important.

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  I shall illustrate that by giving three quick examples. They represent total contracts of £480 million. These contracts provided 1,200 man-years of work to chemical engineering contractors, but those 1,200 man-years of work became 20,000 man-years of work for smaller suppliers. Therefore, there was a multiplier factor of 16.
  My first example is a chemical plant. It was built abroad and supported by the Export Credits Guarantee Department, and well supported at that. The contract was worth £175 million. Of that £175 million, £136 million went to equipment suppliers, fabricators and subcontractors. That contract was worth 800 man-years of work for the contractor, but 10,000 man-years of work for sub-contractors and suppliers. Six hundred suppliers were involved, each one of which passed on work to smaller sub-contractors. It is believed that, overall, about 2,000 or 3,000 small companies benefited.
  The geographic spread of the work is also interesting. Although the contractors may have had head offices in London, the work that they were able to farm out was 14 per cent. in Scotland, 30 per cent. in the north of England, and 21 per cent. in the midlands, leaving only 35 per cent. for Northern Ireland, Wales and the rest of England. Many companies benefited from that major contract, and most of them were in Scotland and the north of England.
  The second example is a town gas plant — also abroad — the contract for building which was won against Japanese competition and Japanese financing. In this case the contract was worth £22 million. Of that £22 million, £15 million was spent in the United Kingdom, again proving the point that if a British company wins a contract, work comes back to the United Kingdom. In this case 60 per cent. of the work that came back to the United Kingdom was in Scotland and the north of England, representing 517 orders for 300 companies; the average order value being about £10,000. Those £10,000 orders could not have been obtained easily, if at all, by smaller companies.
  My third example is a major industrial complex, also abroad, and also well supported by ECGD, for which the contractor was grateful. The contract value was £250 million, of which 62 per cent. was spent in the United Kingdom, again distributed among 500 United Kingdom companies and bringing to them 9,000 man-years of work.
  I am sure that my hon. Friend the Minister, with his interest in small businesses, will appreciate what large businesses do to help small ones and, conversely, what small businesses do to help large ones. The industrial structure of any country, particularly this one, is complex and interrelated. We need small and medium-sized engineering and manufacturing companies and they, in turn, need the large chemical engineering contractors, and they need them to be British if they are to receive a fair share of the work that is being obtained by them.
  Those large contractors need a steady and reliable flow of top rate professional engineers. That can be achieved only if the Government continue to ensure that they support universities, which are training the professional engineers. Without that seed-corn coming from universities, the rest of the chain breaks down.
  It is important that we have debates like this more often than once every eight years. Industry is ever changing. If we wait eight years before trying to adjust the controls on industry, we will find that the pendulum has swung too far.
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  I am grateful for having had the opportunity to speak and I again congratulate my hon. Friend the Member for Norwich, North on tabling the motion.
  1.6 pm
  Mr. Barry Field: I should like to associate myself with the remarks that have been made by several speakers who have congratulated my hon. Friend the Member for Norwich, North (Mr. Thompson) on choosing this subject for a debate. I should like to thank my hon. Friend the Minister who has stayed throughout the debate and listened to all our speeches. I say that because I am probably tail-end Charlie. It is unusual to find Ministers staying in the Chamber throughout the proceedings on a Friday.
  I hope that my hon. Friend the Minister will forgive me if I scurry away before I hear all that he has to say. Courtesy of British Rail Engineering Ltd., the trains are no longer running to Portsmouth Harbour station and I have to catch a coach in order to catch my ferry.
  My hon. Friend the Member for Elmet (Mr. Batiste) rightly drew attention to the incredible span of progress that we have seen in engineering and technology, particularly that which our forebears have seen from the age of the horse to the microchip. I thought that he was going to tell us something we did not know when he said that the telephone had been placed in the stable. I thought that perhaps we were going to hear about a horse that could answer it.
  It might seem a little extraordinary, given my long background in a service industry, that I should choose to speak in an engineering debate. However, I am particularly proud of being a member of the Worshipful Company of Turners, a city livery company. It was the first of the city livery companies to sponsor technology in colleges and to place lathes around the country. It runs an award scheme every year with the Institution of Mechanical Engineers and provides a first prize of £1,000 for the young students who come forward with the most excellent technical drawings and mechanical innovations.
  I sometimes sit at the award ceremonies, seeing the master and his wardens in their fur-trimmed robes in ancient surroundings. I sit with the nervous young students who come from universities and technical colleges from around the country. They come to London with their mums and dads to receive their awards, which are usually accompanied by a gold, silver or bronze medal. I contrast that with the view that the nation has of engineering. It is seen as being represented by a grubby blue overall covered in oil stains. I wish to address my remarks to the status of engineering in this country. All too often the perception is of a dirty and noisy industry and grubby hands.
  The best example of the way in which we denigrate engineering is that of the nation's housewife. My wife continually tells met that she calls out an engineer to repair the washing machine. I continually tell her that she calls out a trained mechanic. Quite how that washing machine knows to break down just as I arrive at the House I have never worked out.
  In Germany, an engineer would be called "Herr Doktor." In Japan and America, the engineer equates well with the rest of the professions. In Britain, we think of engineers as being people who repair washing machines and televisions.
  The motion on the Order Paper says:

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  "to develop engineering performance up to and above the standards of leading industries overseas."
  One of the ways in which we can do that is by highlighting the report of the Engineering Council entitled "Management and Business Skills for Engineers". The council argues that Britain's rivals overseas appear to make much better use of qualified leadership in the running of their industries. The proportion of company directors who have graduate or other professional qualifications in the United Kingdom is 24 per cent., compared with 62 per cent. in West Germany, 65 per cent. in France, and 85 per cent. in Japan and America. We must ask whether we are making the best use of the potential of those who train as engineers.
  We need more incentives for our young people people to train as engineers. My hon. Friend the Member for Norwich, North in his excellent speech, spoke of the decline in the number of young people between the age of 16 and 19 coming forward for training.
  He may be interested to know that in a recent Manpower Services Commission report on the travel-to-work areas in the south-east region, the Isle of Wight showed the greatest projected demographic reduction—of 15 per cent. — in 16–19 year olds throughout the region. That shows that we must gear ourselves to train those who are in other skills, or who are unskilled, to become mature people working in engineering. Otherwise we shall be faced with a tremendous skills shortage in this country.
  For the life of me I have never been able to work out why we pay the same student grants to those who wish to become sociologists or artists as we pay to those who wish to become engineers. I could pose the question why we pay grants at all. Perhaps there should be loans, but that is a separate issue and I do not want to enter those unchartered waters.
  The nation is crying out for engineers of every type. Chemical engineers in particular are in short supply at the moment. I cannot understand why we do not pay a substantial premium to students who wish to pursue engineering disciplines.
  Mr. Batiste: Does my hon. Friend welcome the growing incidence of major companies who sponsor engineers at university with a view to familiarising them during their course with the activities of their company and taking them on board once their course is completed?
  Mr. Field: My hon. Friend raises an interesting point. Often when I go round factories in my constituency and ask managing directors what they think of the training of colleges and universities, they say that they must begin all over again before they can employ the people at the workplace. The scheme to which my hon. Friend has alluded is very helpful in that regard. There must be much more practical knowledge of the uses to which we are putting our graduates' educational qualifications than there has been in the past. I believe that the Department of Education and Science is now addressing that and that such ideas are becoming much more fashionable in education. I am sure that my hon. Friend will agree that the universities are becoming much more attuned to industry's needs. Although we have a long way to go, the position is definitely improving.
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  If one examines the figures relating to engineering in this country, one can begin to see its tremendous value for our economy, both at home and abroad. It is estimated that engineering employs over 2 million people. As has already been said, almost 10 per cent of our gross domestic product is accounted for by the engineering industry, which provides 30 per cent. of our exports. It is estimated that in 1987 there was £95 billion of engineering sales, of which £34 billion were exports. From those figures we can begin to see the tremendous effort that goes into engineering and the way in which it influences our economy.
  I give my hon. Friends a few illustrations of the way in which engineering affects our lives. My constituency, the Isle of Wight, has a small population of just 133,000. We have the second highest retired population of any county in the United Kingdom. From that, one can see that the working population on the island is probably quite small. However, if my hon. Friends are lucky enough to find themselves serving on one of the Select Committees that are going to some of the more exotic parts of the world—as has been commented on from time to time—and if they happen to find themselves travelling on a Boeing aircraft, the chances are that the wing assembly was assembled by Westland Aerospace in East Cowes. When they come into land — I hope that it will be a happy landing—and especially if landing in China, the chances are that the weather radar that pilots the aircraft into the airport was manufactured in West Cowes by Plessey. If the motor car that takes them from the airport to their hotel happens to be a turbo model, it is a 50–50 chance that the turbine in that turbo was manufactured on the Isle of Wight at Ryde by Truecast Engineering. If, perchance, they travel to their hotel from the airport by train, there is a sporting chance that the air conditioning in that train—it is almost a 100 per cent. chance in this country—was manufactured by Temperature, part of the Norcross Group, at Sandown. If while travelling on the aeroplane they are busy playing with their IBM personal computer, the membrane keyboard of that would almost certainly have been manufactured by Nameplates for Industry in Newport on the Isle of Wight.
  I hope that that gives my hon. Friends and, indeed, some of the young people listening from the Strangers Gallery, a flavour of what engineering is all about. Indeed, it may encourage those young people to look forward to a career in this industry which, time and time again—
  Mr. Patrick Thompson: Does my hon. Friend agree with the point made earlier in the debate that it is not just manufacturing industries which benefit from more and better engineering skills, because the service industries depend on engineering products which have been designed by our engineers, and that we can get more jobs for our young people in the service industries by having a more successful engineering industry?
  Mr. Field: My hon. Friend has raised a pertinent point. I began my speech by telling the House that I am a member of the Worshipful Company of Turners. An eminent speaker once addressed our livery company and excelled himself by saying what a pity it was that our craft had died and was no longer in being. As a result of that, the liverymen's sponsorship scheme began. We are also associated with the Royal Electrical and Mechanical Engineers and have an annual award scheme for it.

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  People seem to think that engineering does not affect their lives. Somebody once told me that when we eat a loaf of bread, we should remember that an engineer has produced it because he probably made the spindle on the oven that baked it, or the bearings or the shaft that drives the stones that milled the wheat. Engineering is the fabric of our society. It has brought tremendous advantages. I hear people saying how sad it is that the craft of turning has fallen into disuse, but I wonder how they think the wheels on their car go round.
  Dr. Michael Clark: While the craft of turning may have fallen into disuse, it has done so only as a result of advanced engineering which has enabled numerically controlled machines to come in. While one engineering skill may decay, another takes its place. Engineers feed on engineers, and that enables some technologies to leap forward while others become redundant.
  Mr. Field: I hope that my hon. Friend accepts that there is just as much craft in turning on a multi-headed machine which has a computer programme as there was in the previous generation when a chap applied the tool to the lathe.
  Opposition Members often talk about the decline in industry. In my constituency, Thorn EMI makes parts for the Kenwood mixer. The spindle which goes through the middle of the mixer used to take one and a half minutes to machine on three different machines. It now has a multipurpose machine which produces the spindle in 30 seconds. That is where the jobs have gone.
  The British Hovercraft Corporation, which succeeded Saunders Roe, at East Cowes, and which is now known as Westland Aerospace, once employed more than 5,000 people. There have been a substantial number of redundancies. It makes many products and some of the company's subsidiaries are at the forefront of electronic engineering technology. One of the more interesting components that it produces on a multi-headed machine is the air intake for the E101 European helicopter, which is made in titanium. It is a difficult component and comprises several turnings. Each component is worth £10,000. They are not very big. If the engineers set the machine up slightly wrongly, an incredible value is written off in scrap.
  1 hope that my hon. Friend the Minister will consider why we do not load incentives in favour of students who wish to study engineering. Engineering is a difficult qualification to obtain. It is a discipline in itself. I have long puzzled over why a nation which is short of engineers is not prepared to give incentives to students in the form of grants. Indeed, we might give no incentive at all to students who wish to pursue disciplines which are in surplus. It always seems extraordinary to me that year after year we turn out more sociologists than we need, who then spend their lifetime trying to gain employment in the House, whereas the nation is crying out for engineers.
  1.24 pm
  Mr. Austin Mitchell: I congratulate the hon. Member for Norwich, North (Mr. Thompson) in his absence on winning the ballot and introducing the motion. I hope that he will come back in time to hear my congratulations to him on the sensitive wording of the motion, which is wet speak for, "Things have been bad but they have been getting better lately. Please do something
  814
  about it before we get clobbered in the engineering industry." The rest of the debate has reinforced that message to the Government. It has set the tone for an interesting debate.
  I am becoming a connoisseur in my role as "Leader of the Opposition (Fridays)". On some Fridays I am the sole Opposition Member as well as Leader of the Opposition. Fridays can become a Back-Benchers' play school. Some odd creatures come out from under some odd stones and talk some extraordinary economic rubbish. Thanks to the sensitive wording of the motion, today's debate has not been like that.
  Opposition Members have not been apparent in large numbers, largely because of the odd and silly terms of debate on previous Fridays, particularly last Friday. That has put them off attending Friday debates. But today has been different. While the Labour cat has been away, the mice have played on the Conversative Back Benches to great effect.
  We have heard an interesting analysis of the problems of the engineering industry. There have been some strong indictments of the Government's record on the industry. The right hon. Member for Brentford and Isleworth (Sir B. Hayhoe), again in wet speak, gave a strong critique of the Government's record. The hon. Member for Harwich (Sir J. Ridsdale) put in a passionate plea, which Opposition Members would second, to get interest rates down and allow industry to compete on more equal terms. The hon. Member for Birmingham, Northfield (Mr. King) gave a damning critique of Government policy towards the Rover Group and the car industry in general. Emphasis has been laid on the inadequacy of training and of research and development.
  In all, there has been a chorus of complaint, again in wet speak. I do not expect Conservative Members to start saying to their Minister, "You are making a mess of it," but they have said that in carefully modulated code. The essence of what they are saying is "Things are not well in the industry. Do something about it." That is the message that has come over.
  Mr. Roger King: The hon. Gentleman said that I had offered a damning indictment of the Government's failure to back the car industry. If he reads my speech, as I hope he will, he will notice that I said that the company has invested large sums of money in new products, is represented in the market place by cars that are considered to be outstandingly successful, and has enjoyed its best ever financial year. Surely that is not a damning indictment.
  Mr. Mitchell: I enjoyed the hon. Gentleman's speech. I endure most speeches by Conservative Members. I do not want to remove the effect of that enjoyment by correcting what the hon. Gentleman said. He said that there were problems with Rover's continuance as a volume car producer and that it might not make it. That is a responsibility of the Government. Will they back the company as a volume car producer? The hon. Gentleman said that he did not want negotiations to be solus cum cola with British Aerospace — other bidders should be allowed. I draw the inference from that that the Government should continue to back Rover. In fact, they are washing their hands of Rover. The hon. Member made a good speech about how the position of Rover does not tie in with the Government's policy, so it is asking the Government to do something.

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  That is not uncommon in the engineering industry. I have here an editorial from The Engineer of 10 March, the latest edition, on the trade figures in the manufacturing trade. It says:
  "The really worrying part about the figures is that high technology and growth sectors where we are doing well are numbered in single figures. The sectors where we do best are all too often 'traditional' product, which is a euphemism for industries whose heyday has passed … Every sectoral deficit indicates goods which British companies and consumers are apparently keen to buy, but which British manufacturers make in insufficient numbers, or to the wrong spec, or the wrong quality, or the wrong price."
  The problem with all these complaints about the engineering industry, its training and competitiveness is a Department of Trade and Industry that knows nothing about trade and is not characterised by any industry or any knowledge of any industry except advertising. We have Lord Young of Graffham, Saatchi and Thompson, who knows little about the needs of industry, although he might know about the needs of property development, and a Department of Trade and Industry which has embarked on a hands-off policy towards industry, and which is concentrating its resources on spending. This year it has a budget of £13·3 million for advertisements to convince industry that it is doing more, when it is doing less. This Department does not have an industrial policy, and in today's world that is a policy for the death and decline of industry. Industry is involved in an international struggle. It is up against competitors who are backed and supported to the hilt by their Governments and who, in some cases, are financed by their Governments. They are certainly helped in that international struggle to a far greater extent than is our industry by a Department of Trade and Industry that wants to wash its hands of the whole business.
  Mr. Barry Field: I am sure that, like me, the hon. Gentleman will remember the Labour Government's attempt at directing the industrial base with a selective employment tax which was supposed to move employment away from the service sector and into industry. The result was that thousands of people went on the dole. That was a failure of policy.
  Mr. Mitchell: If the hon. Gentleman wants to plough through his scrapbook for 1965, I shall leave him to get on with it. We are talking about the 1980s and the struggle that our industry has to survive. Industry, especially engineering industry, is sent into that international struggle with nothing better than the Prime Minister's sermons and Lord Young's advertisements ringing in its ears.
  Dr. Michael Clark: Let us not go back with scrapbooks, but stay with the 1980s, and in particular the next few days. Would the hon. Gentleman welcome a reduction in taxation in a way that would help companies to be more competitive? For example, would he welcome a reduction in corporation tax if that should come about next Tuesday?
  Mr. Mitchell: That is all clever political stuff, but the main burden on industry is electricity charges, which have been increased to fatten up the electricity industry for privatisation. Another one is high interest rates, which are higher here than in any of our competitors, and another
  816
  is an exchange rate that is rapidly becoming grossly overvalued. All these are shackles on industry's ability to compete. The hon. Gentleman asks me to anticipate what will happen in the Budget. I am not an expert in abnormal psychology. I cannot do that, but I can say that these are real and present burdens imposed as a result of Government policy.
  Mr. Patrick Thompson rose—
  Mr. Mitchell: I shall give way in a moment, but I wish first to pursue this theme. There is lack of consultation, characterised particularly in the engineering industry. The Engineering Employers Federation has made consistent attempts to enter a dialogue with the Department of Trade and Industry. It particularly wants to do so before the creation of an internal market, which will sharpen competitive pressures on the industry. It requires close co-operation between the Government and industry, because a uniform internal market will harm the peripheries. It focuses growth and development on the expanding centre, and unless there is co-operation between industry and Government Departments, that tendency to weaken the peripheries will be heightened.
  Mr. Patrick Thompson: Surely the hon. Gentleman will concede that it is wrong to return to the gloom that was purveyed during that debate in 1980, when all the evidence suggests that engineering manufacturing production and productivity are up. It is irresponsible of him to give a gloomy picture, it goes against all the facts.
  Mr. Mitchell: As I said, the hon. Gentleman's motion is very sensitively worded. It is true that the production and productivity figures are up — largely on those for 1981 rather than on those for the 1970s. They are certainly not as high as those of our competitors. That is the problem. I shall deal with that distinction in a moment.
  I am talking about the failure of the Department to co-operate with the industry, particularly with the Engineering Employers Federation, which seeks to enter into a dialogue with it. At the CBI conference at the end of 1986 James McFarlane presented a paper calling for an industrial strategy for engineering. The Government have consistently refused to get involved. Indeed, at the Engineering Employers Federation dinner in February, Lord Young attacked the need for an industrial policy.
  The Engineering Employers Federation has given up the idea of trying to work with the Government and has gone in for an industrial forum—an industry-only think tank. It thought, "We will do it ourselves because Lord Young will not play ball." An editorial in The Engineer of 25 February said:
  "It's all falling on deaf ears because the government, and Lord Young especially, appear to have the fixed idea that talking to industry and giving industry advice and intelligence has to mean controlling industry down to the fine detail. It doesn't have to be that way, and it isn't that way in Japan, in West Germany, and other countries where governments have apparently fruitful partnerships with industry."
  The Government dogmatically refuse to co-operate with the industry. That is the subject of the motion. Their attitude is also characterised by their unwillingness to help the industry in the crucial matters in which it needs help—not only in training, but in research and development. Our spending on R and D is low. According to a written answer on 16 February, research and development financed by industry in the United Kingdom was 1 per cent. of GDP compared with the Federal Republic of

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  Germany, 1·6 per cent.; Japan, 1·8 per cent.; and total spending on research and development as a percentage of GDP in the United Kingdom was 2·3 per cent. compared with the Federal Republic, 2·7 per cent. and Japan, 2·6 per cent.
  Even those figures may not be wholly indicative because, as the aerospace manufacturers point out, many Ministry of Defence contracts are not real research. The Government's efforts have been fairly minimal in an area of activity crucial to the economic health and the competitive edge of British industry.
  Sir Julian Ridsdale: The reason why Japan can spend so much on research and development is that its manufacturing industry makes huge profits. Thanks to the Government's policies, we too are now making very good profits in our industry and we shall be able to make improvements where they are needed.
  Mr. Mitchell: The hon. Gentleman's fire was well concentrated on the Government when he attacked their high interest rate policy. I do not want to attract it to me. I would point out that the Government allocated £25 million to spend on gallium arsenide research. That was just over a year ago and the money has still not been spent, although the advertising budget has been pushed up to £13 million. The Department is providing only £5 million for a super-conducting centre at Cambridge, whereas Japan spends £150 million on its international super-conducting centre.
  It is not only profits that we lack; it is Government support for research and development. It is vital that the Government should help industry. The engineering industry particularly needs help to recover from the mess that the Government have created. The hon. Member for Norwich, North mentioned the debate that took place in 1980, at the height of the period of damage to the real economy, and particularly to manufacturing and engineering sectors. The hon. Member for Harwich nearly referred to the Prime Minister as an engineer.
  Sir Julian Ridsdale: A scientist.
  Mr. Mitchell: Yes, he corrected himself. I have heard the Prime Minister referred to as a barrister, a mother, a dishwasher and a preparer of meat paté. She is clearly a woman of many parts and a great dramatic actress, but she is no engineer, except in the sense that Hoover, who "drained, ditched and damned" the United States in three years, was said to be a great civil engineer.
  The Prime Minister's economic achievement was similar. We had high interest rates, an overvalued pound, deflation of demand in this country and a drastic deterioration in the terms of trade. The loss in manufacturing industry, which hit engineering primarily, amounted to one fifth of capacity, 28 per cent. of employment and 1·8 million jobs. There was nothing inevitable about it. No other country experienced a decline on such a scale. It was caused by overvaluation of the pound, which made imports cheap and exports dear, pricing us out of the market and slashing profits.
  The hon. Member for Harwich is right. Profits in British industry have been consistently lower than those of our competitors. In 1979–81 they were cut to the bone—indeed, they went into negative figures. Because profits have been low, investment has been low. In the period when profits vanished altogether, everything that makes
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  for competitiveness — research, design, development, skills, and especially training—was jettisoned simply to survive. The Engineering Industry Training Board has pointed out that from 1978 to 1984 employment in the industry fell by 30 per cent., but training fell by 50 per cent. The present figures are appalling. As the board's economic monitor for 1987 shows, in 1978–79 total craft and technician registrations with the board were 24,500. In the last year shown on the table, 1986–87, the figure was just 9,870. We are gobbling the seen corn, we are not training the next generation, and that failure has characterised the whole engineering industry.
  Dr. Michael Clark: Does the hon. Gentleman appreciate that what stops research and development and training more than anything else is inflation? The Labour Government allowed inflation to rise to 27 per cent. and were thus largely responsible for the decline.
  Mr. Mitchell: I wish that the hon. Gentleman would not insist on making on such silly, petty political points. Research and training increased under the Labour Government, as the figures show. Investment also rose. Investment falls when firms do not make profits, and they were not making profits because of the way in which the economy was being run. What happened between 1979 and 1982 was a disaster for British industry, and there is no way of concealing that fact, so let us not quibble about it in a party political fashion. It is clear that the whole problem dates from that holocaust.
  The success story that we have been told today is merely a bounce back, and it is inadequate to recover the ground lost in that earlier disastrous performance. The engineering industry is simply heaving a sigh of relief because it has come through and recovered from all that the Government did to do the industry down. That is not success—it is merely survival. That is not the story in Japan, West Germany, South Korea and other economies with which we have to compete.
  Those countries realise that comparative advantage, which is the mainspring of success in international trade, does not spring from the climate of Lancashire encouraging the cotton industry because it is rainy and damp, or from the native intelligence of the people, but is something that can be created and built up. Those countries started with a competitive exchange rate, which encouraged investment in manufacturing because exports paid.
  Let us consider the car industry—the very kernal of engineering. The Volkswagen "Beetle" has been one of the most successful cars in the world. It was a far worse car than the Morris Minor. It was a success story, not because of advanced technology—it was designed in the 1930s and was an outdated, inadequate and clumsy car that was somewhat dangerous because the engine was in the back—but because it was cheap because of the exchange rate. As the profits for Volkswagen were high, it could plough those profits back into investment and achieve economies of scale, spreading the cost of research, design and development over a massive output that was never attained with a Morris Minor.
  That simple contrast shows how comparative advantage can be created. If a firm is successful, the network of training, suppliers, contacts and business connections and the whole sustaining supporting web that keeps industry moving builds up and is strengthened. That is how

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  comparative advantage is created. By the same token, if it can be created in competitive economies, it can also be thrown away. We have thrown it away through the harm that has been done to manufacturing industry.
  As industry contracts, shackled by interest and exchange rates, it cannot compete internationally, so suppliers go into liquidation, training is cut, the whole sustaining network frays and weakens and industry goes into a spiral decline. That is what has happened in Britain. Faced with problems with the economy—let us regard it as a car—industry is not moving fast enough. What do we do? The Japanese try to boost industry, and the Government and industry co-operate, but we knock the hell out of the engine, the drive motor of the economy. Manufacturing and industry suffer the first effects of over-valution and high interest rates, and are therefore shackled on the international market. The result has been a disaster.
  There has been some measure of recovery since 1982. It is interesting to note how many Government statistics now start their run in 1981, as though 1979 to 1981 had never happened. Gross fixed capital formation in manufacturing in 1987 was 35 per cent. up on 1981—but it was also 10 per cent. down on 1979. It is lower now than it was in every year under the Labour Government, other than 1976. In British manufacturing industry—which includes the major trunk of engineering—from 1981 to 1986 there was a net disinvestment of £1·17 billion, compared with a net investment under Labour of £1·15 billion. We are eating the seed corn.
  Mr. Roger King: Has the hon. Gentleman read the 1987 financial results for the Rover Group? Its exports are at an all-time high for the past nine years. It is exporting more than at any time since 1979. One in three of its cars goes overseas and, for the first time, it has exceeded £1 billion of sales in the overseas market. That does not fit the hon. Gentleman's catalogue of misery and difficulty supposedly faced by exporters because of currency problems and so on.
  Mr. Mitchell: I gave the hon. Gentleman an opportunity to redeem his reputation following his devastating critique of Government policy towards Rover. I wish that he would not try to redeem it so vociferously. Rover's share of the domestic market has dropped substantially, where the main threat is from imported cars. That has come about partly because of the exchange rate. I shall deal with exports in a moment.
  The net disinvestment is appalling, and it dates from that holocaust of 1979 to 1981. I want to give some of the facts and the figures, because it is important that we realise the disastrous consequences of what has been done. Engineering employment has dropped by one third since 1978, with more than 1 million jobs lost. The size of the vehicles and parts industry is half what it was in 1978. The decline is universal and there is no subsector of engineering where employment is anywhere near what it was 10 years ago.
  According to British Business of 4 March 1988—so the figures are official—engineering output as a whole was only 12 per cent. higher than in 1980. None of our competitors had such an inadequate increase in output. Mechanical engineering, which accounts for half the total output, was 89 per cent. of the total in 1980. A comparison of the figures for 1979 with those for September to
  820
  November 1987 annualised shows that output in mechanical engineering was down 16 per cent., in motor vehicles down 25 per cent., in metal goods down 10 per cent., in basic electricals down 14 per cent., in electrical goods for industry down 15 per cent., in machine tools down 26 per cent., in mining and construction machinery down 20 per cent., and in foundry and forges, which are always basic indicators of the state of the engineering industry, down 48 per cent. and 42 per cent. respectively. That is a pathetic and disastrous record.
  While that has been going on, imports have increased their share of the domestic market by far more than exports have increased in eight of the nine engineering subsectors dealt with in the figures. The balance has changed for the worse in seven of the nine subsectors. In 1978 only one of the nine subsectors in engineering was in deficit; by 1986 it was five. A positive engineering trade balance of £3·2 billion in 1978 has been turned into a negative balance of £3·4 billion because the Government run the economy, not for industry, but for money. In other words, the engineering balance has turned round by £6·6 billion over that period, and it is getting worse. For group 7 of the SITC figures, comparing 1979 with September to November 1987, the surplus in 1979 was £1·7 billion, whereas annualised for the three months it was £6·8 billion. That is the turn round in engineering trade.
  Import penetration in our domestic market in vehicles is up 45 per cent., in electrical engineering up 55 per cent., in mechanical engineering up 30 per cent., and in instruments up 8 per cent. It is a tragedy, and all else springs from that. In the modern competitive world, as the hon. Member for Harwich, well knows from the experience of Japan, success compounds, but so does failure. Once the wind-down is started, it goes on unless it is checked.
  Even now skill shortages are building up — the Engineering Industry Training board gave evidence to the Employment Select Committee in February 1987 about the figures for skill shortages—yet we are doing less in terms of training. We are not doing enough to remedy the shortages even at our reduced level of activity, let alone at that of the 1970s.
  The average company spends only one sixth of what our competitors spend on training. Fewer people are trained by our industry. Japan produces 80,000 engineering graduates a year, whereas we produce 9,000. In Germany, 750,000 young people are apprenticed trained each year; our figure is 10 per cent. of that. How can industry succeed if that is our record on training? Between 1980 and May 1987, 6,500 apprentices were made redundant in the engineering industry. First-year apprenticeship training has declined. Figures produced by the National Institute of Economic and Social Research in January reveal that the number of youngsters gaining craft qualifications in France rose by 60 per cent. between 1975 and 1985.
  In mechanical and electrical engineering, France trains between two and a half and three times more qualified craftsmen and technicians per head of the work force than Britain, and they are trained to standards that are often higher than equivalent qualifications in Britain. There is nothing inevitable about the decline. It is the result of the Government's incompetence and their failure to manage the economy so that industry can flourish, compete and expand in the world market.

  821
  The success that we want to see the engineering industry achieve does not spring fully armed from the head of Lord Young. Nothing apart from advertisements springs from Lord Young's head. Competitiveness and success spring from a healthy industrial base. The new developments that we all want — the new technologies and the new industries—will grow only from the present industrial base. If we kill or harm that base, nothing will develop. The only logic of what was done by the Government during 1979–81 is that which is to be found in the belief that phoenix will rise from the ashes. In other words, the more ashes the Government created, the better the industrial health of the country and the greater the number of phoenixes. That is the only explanation that I can give of the Government's policies.
  Everything that is done by the Government in their non-interventionist policy moves us towards a low-wage low-skill, low-investment and low-profit economy that will be unable to compete in the world market. All the studies of our training, investment and competitiveness reveal what is going wrong when comparisons are made with other countries. A fascinating study of Britain's productivity, machinery and skills—it was based on a sample of British and German manufacturing firms—in February 1985 reveals that our investment and training record is entirely inadequate. There are stockbrokers' reports on engineering training in France and West Germany. We know that in West Germany productivity in the engineering industry is high. Productivity in France was 79 per cent. of that of West Germany, and in the United Kingdom it was only 56 per cent.
  I do not want to be too churlish. I merely wish to set the record straight. I accept that there are success stories. There are successful niche industries. Training boards are doing a better job, and the same is true of the Engineering Council. The Design Council is right to begin a two-year programme to improve industrial design. However, these successes cannot be grafted on to a decaying industrial base. First, we must make the industrial base healthy so that it can respond and bring changes to the United Kingdom. The well-being of industry is vital.
  Under this Government we have seen the continuing decline of the industrial spirit. The economy has been run for finance, high interest rates and an over-valued pound. These are policies that benefit those who have, but they all harm industry, the great, vital beating heart that is the powerhouse of the economy. It is only industry that can provide growth, jobs and the exports that enable us to survive in the world market. Industry provides only 23 per cent. of employment, but even now it provides over 50 per cent. of exports. The only sector of the economy that will enable Britain to survive in the 1990s has been harmed by the Government. The Government have driven us down to a low level, and now things are turning sour again. The nominal exchanges in February showed an increase of 12 per cent. when set against that for February 1987. The terms of trade in engineering are worse now than in 1981, when we were at the height of the holocaust.
  How can industry survive and compete with these shackles? The Government must co-operate with industry, encourage it and work with it in the way that other Governments have done so successfully, thus forearming it for world competition. Unless the Government run the economy in a way that establishes a competitive exchange rate and low interest rates, rather than high interest rates that reinforce an over-valued exchange rate, we shall find
  822
  ourselves facing the same difficulties that confronted us during 1979–81. The best future for the engineering industry lies in allowing it to compete in the world market without a ball and chain round each leg, one being high interest rates, and the other an over-valued exchange rate. We must let the industry generate profits, rather than lock it, as the Government are doing, into a remorseless spiral of decline.
  The Government have run the economy, not for the interests of people who make things to sell on a world market or for the interests of jobs, but for the interests of finance, capital and the City. Such interests do not provide jobs or well-being for the great majority of our people. When it comes to power, Labour will run the economy for jobs, manufacturing and expansion, with a competitive exchange rate and a sensible interest rate policy that will allow industry to compete.
  2 pm
  The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. John Butcher): The hon. Member for Great Grimsby (Mr. Mitchell) made many points, for which I thank him. It appears that, as the Friday speakers, the hon. Gentleman and I have come to a mutual pact, which is never to repeat the speeches that we made on the previous Friday. That makes things far more entertaining for us and makes life much more of a challenge. My major thanks go to my hon. Friend the member for Norwich, North (Mr. Thompson), who provided an opportunity for many hon. Members to contribute to the debate.
  It is significant that this is the second occasion within eight days on which we have discussed the business of wealth creation. Some hon. Members consider that we devote an awful lot of time to sometimes heated arguments about wealth distribution when, perhaps, we should give equal prominence to wealth creation issues. We may discuss such issues when we talk about the Budget or macroeconomic policy, but what economists call microeconomic measures, such as those that we have discussed today, are important. I hope that there will be further opportunities to discuss matters such as the engineering industry generally and all the enabling skills that combine to help us to generate the wealth on which the quality of life for the whole community depends.
  Apparently, it is the custom in this debate to say which part of engineering has touched us or for which part we speak. I confess that I was not trained as an engineer, but, after 12 years in the computer industry, I can claim that a little knowledge of electronics, and systems engineering has passed my way through the process of osmosis and the need to earn my living.
  Before I take up the major themes that were raised by my hon. Friend, I congratulate his constituency on the presence of such an excellent company as Beaver Machine Tools, operating in a tough market in which technologies are rapidly changing. Beaver's moves into CNC techniques and quality equipment are to be commended.
  We often hear tales of woe about great difficulties being experienced by whole sectors. It is sometimes alleged that a whole sector is in difficulty. But, within each sector, there is always a company that proves that it can do business, with good management, excellent training and a good work force, no matter how great the pressure or difficulties may be. There is always a company that shows that it can

  823
  be done. We must try to define the ingredients for success and determine how Governments can help to spread best practice.
  My hon. Friend said that he would like to see more engineers at top board level. The engineering profession will have cheered him for making that statement. The profession will know that many first degree engineering graduates acquire other qualifications and skills. An awful lot of covert engineers head many of our major companies. Some of them no longer practice under the title of engineer, but, to a great extent, they understand engineering disciplines.
  Dr. Michael Clark: My hon. Friend said that some heads of companies are probably engineers but no longer trade under that name. Does he agree that he has put his finger on one of the problems facing the engineering industry? When people who are engineers later become accountants or lawyers, they are more proud to be called an accountant or a lawyer than an engineer.
  Mr. Butcher: I should like to see an Italian habit gaining ground in this country—just one. If one speaks to the chief executive of an Italian company who has had an engineering training, his business card will probably show the letters "Ing" after his name which stand for ingegnere. An Italian would be proud of that. It would distinguish him by way of the qualifications he brought to his job. As we have heard from three or four speeches today, that distinction does not seem to be coveted by any of our similarly qualified people. It is a great shame because British engineers can hold their heads up when it comes to a comparison with the expertise of virtually any other country's engineers. The difficulty is that our good people are the very best in the world but there is a gap in the middle ground that the German, Japanese and French seem to fill, but which we do not. We seem to have a large no-man's land between our top flight, elite engineers and those at technician level. People have remarked for decades about the way in which the Germans have a solidity and depth to their engineering capability that we have yet to achieve.
  My right hon. Friend the Member for Brentford and Isleworth (Sir B. Hayhoe) is a qualified mechanical engineer. I notice that his curriculum vitae shows that he was a toolroom apprentice on his way to achieving those qualifications. He talked about the need for us to do whatever we can to see that mutual recognition of professional qualifications across Europe is achieved, not through a general directive, but through a separate directive for engineers. My right hon. Friend, who I am sure will read the record of today's debate, can be assured that I shall look into that in considerable detail. I have taken a careful note of what he said and I shall respond to him with an account of our latest negotiating position. We shall take great care and I can assure him that we shall stay in touch with the professional bodies as he advised.
  The central themes raised by my hon. Friend the Member for Norwich, North and several of my hon. Friends were training, shortage, the feedstock coming from schools and what happens in our further and higher education sectors. No one in the House would deny that now, perhaps more than at any other time in our economic
  824
  and industrial history, we need the very brightest and best of our youngsters to go into manufacturing and engineering.
  Industrial and commercial warfare is taking place in the international market. To a major extent it is free and fair, although there are a few warts and defects. To a large extent we are locked into that open competition. We cannot afford to fight that battle without the assets of our brightest and best going into the front-line business of earning orders for the United Kingdom and making and selling things in the international market.
  How do we go about that? We need to change the culture in the schools. We need to build on the craft, design and technology programmes that are now starting to bear fruit. We need to build on the technical and vocational education initiative. At the risk of bringing a little political controversy into the debate, I have to say that we need a core curriculum. We cannot have our youngsters opting out of mathematics and physics at the age of 14. In most cases they study those subjects until 16 but, if our young people, boys and girls, do not have the basic foundation upon which they can graft changing demands for skills throughout their working life, we shall handicap those who wish to train them in maturity, such as employers.
  Mr. Stevens: Does my hon. Friend agree that, to attempt to broaden the scope for and numbers of people entering the profession beyond 16, there should be a broader-based education system than there is at present in our schools and sixth forms?
  Mr. Butcher: There is a sort of Friday culture that encourages candour and a fairly relaxed response to questions such as that. That is the moment at which a little alarm bell should ring at the back of one's head and subconsciously send a signal, "Steady on." I am not entirely sure that I agree with the implication of what my hon. Friend is saying. I want a core curriculum until the age of 16. My right hon. Friend the Secretary of State for Education and Science must make decisions about what happens after that age. Speaking as a representative of industrial and commercial interests, I believe that we should not erode the quality control of the A-level system. Yes, let us strengthen education up to the age of 16, but we must not erode the quality of A-levels. I hope that, by my reporting faithfully what industry is saying to me, my right hon. Friend the Secretary of State for Education and Science will bear that very much in mind. That is all I have to say on that subject on a Friday, having spoken in an earlier debate at 4 am. I do not wish to trust myself with any looser statement than that.
  City technology colleges are something that our competitors, the Germans—my goodness, we have been going on about them this morning—would recognise instantly. They never changed. While we were messing around with our secondary education system in the postwar period they kept their Hauptschule, Realschule and Gymnasium. They kept their technical schools, but we only toyed with the idea. We fiddled about with them for a brief period after the war, but we did not stay with them and we should have done so. Now that we are having to re-invent them, those who have brought them forward can point to the German experience and say, "There is one of the reasons why they have a depth to their engineering and industrial capabilities." We should not be ashamed to borrow ideas when they have proven to be successful in the international world.
  Mr. Patrick Thompson: Does my hon. Friend agree that those who are enthusiastic about city technology colleges should pursue industrialists more vigorously and say, "This is an idea that is of benefit to you; let us have a great deal of support for it"?
  Mr. Butcher: My hon. Friend, who used to be a school teacher, is right. This is not a one-way crusade on which the Government have embarked. We have brought forward a set of proposals that invite participation from demanders of skill as to how we produce those skills at statutory education ages. I hope that, having extended the invitation to those who told us that this was the way that we must go, they will accept it, participate and, if necessary, provide hard cash if they wish to back their ideals, particularly in the inner cities.
  We can extend an invitation to engineers—whether they be on the shop floor or in the boardroom, or whether they be trade unionists or members of the Institute of Directors — to serve on the governing bodies in the schools that are being reformed to carry out this option by my right hon. Friend the Secretary of State for Education and Science. The cross-pollenation that we all consider worthwhile is beginning to happen, but we need far more of it.
  I think that the hon. Member for Great Grimsby will agree, if I interpreted his remarks correctly, that it was right for us to give the bulk of increases in places in the higher education system to the polytechnic sector. That is where the more vocational attitudes are to be found and it is where we can channel our resources. Some 60,000 extra full-time students have now been placed in the polytechnic sector, compared with the year that I know the hon. Gentleman would choose—1979.
  As to skill shortages, for one year I chaired a committee called the skill shortages committee. Inevitably, the DTI produced a report. That report gave the numbers and quantities, by type of discipline in engineering, for which we should be providing. From memory, I believe that we said that we wanted 4,500 additional graduate engineers in disciplines such as physics, maths, information technology, and electronics engineering.
  However, on the way we discovered that the United Kingdom did not necessarily require only pure information technologists. As we progressed through the year we found that a new kind of engineer was demanded. We were fairly sure that we could predict that demand for such an engineer would increase dramatically during the 1980s. I refer to the engineer called the manufacturing systems engineer — a multi-disciplinary engineer who is well-versed in the science of production and in what goes on on the shop floor.
  As my hon. Friend the Member for Harwich (Sir J. Ridsdale), who spoke eloquently about the Japanese experience will confirm, the Japanese have been investing in such people for a long time. They would give their eye teeth for some of the schools in our engineering professions. We must produce our manufacturing systems engineers with particularly British tricks to bring to the trade. If we do, we can reap the same benefits, which are massive savings in production costs and in work progress. Those savings could be invested in state of the art equipment, which could be used to improve quality, which can be used to go for non-price factors in the market share. That is the benign cycle at which my hon. Friend was grasping in his speech earlier.
  826
  I turn now to the youth training scheme. I sometimes wonder how many engineering employers know that they can use YTS to discount the first-year costs of their apprenticeship schemes by 100 per cent. How many know that they can use it to discount the costs of their second-year apprenticeships by as much as 80 per cent.; and how many know that new proposals have been produced quite recently about the accreditation of the formal training elements in those apprenticeship schemes? If there are any engineering companies out there that do not know that, I hope that this debate, with its central theme of educational awareness, will at least have done its part in getting that message across.
  I do not think that anyone in the House would disagree with the now often asserted statement that we must tackle the skill shortage problem. The tragedy is that while most of the weaponry that is required to tackle that problem is there, few of our companies are enlightened enough to use it.
  There is a further under-utilised national resource, this time at the higher education level. How many of our engineering companies have heard of the teaching company scheme, by which postgraduates can go into companies and become involved in clearly identified projects in those companies? Young postgraduates, charged with state of the art development, and paid for in major part by the taxpayer, can work to projects that are agreed between academia and the user company. I do not know of any company that has used the scheme that has anything bad to say about it. It does not appear to have an enemy. We are to double the size of the scheme. The Government can help and we can use taxpayers' money to good effect.
  My hon. Friend the Member for Harwich should write a book. He has two particular lines of experience that he brought to our debate today. The first is his commitment to engineering, which came through strongly. The second is his knowledge of the Japanese experience. Those lines of experience are highly relevant to every issue that we have discussed this morning.
  I could exchange views with him at great length on automation and robotics. Western Europe missed a trick when the Japanese and Americans started setting de facto standards on, for example, controllers. That is a huge industry. However, a company that is located just three miles from here, across the river, is bringing forward controllers that knock spots off the Japanese. I wish that company well. Perhaps my hon. Friend's group could visit the company as it is so near.
  Unless management training is correct, unless the management systems are right, and unless a company understands what manufacturing systems engineering means, there is no point whatsoever in throwing automation at the problem. That will only compound the weaknesses in the company. Automation is not an answer in itself.
  I shall respond in letter form to what my hon. Friend the Member for Harwich said about the Cranfield engineering research programme. When he said that we have to be competitive in world terms, he encapsulated what the debate is about. There is no such thing as a home market any more. Any company will find that, unless it can compete on the world market, it will not have a home market. We have to test our products all the time in such a hypercompetitive environment because, if we do not, surprise, surprise, our competitors will test their products

  827
  in our home market. That is the way of today's world and it is why 1992 is so important. I noted carefully what my hon. Friend said about the chairmanship of the European standards-making institutions.
  My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) reminded us that we cannot afford to turn our back on 50 per cent. of the nation's intellect, which is what we do if women and girls are deterred from going into the allegedly male-dominated professions. We all know how much we need engineering skills. We all know how acute the problem is. Women have the same aptitudes as men if they are given a chance to develop them. It is another of those tragedies that, at 14, many girls opt out of the O-level and general certificate of secondary education subjects which give them at least the option of going into engineering. We have a job of work to do in that respect.
  There is another element of the enterprise initiative which was not debated very much when the White Paper was published. Many commentators missed a significant issue. I refer to the programme to get 10 per cent. of our teachers into industry and commerce each year to gain work experience. Moreover, all of our young people, presumably at about 15 or 16, will have experience of the commercial and industrial world, and teachers in training colleges will have the same opportunity. Such steps help to solve the problem caused by our underusing 50 per cent. of the nation's intellect.
  My hon. Friend the Member for Hertfordshire, West (Mr. Jones) asked me to consider liability. I shall. He brought a new dimension to the Channel tunnel question. He asked about research and development spending. There was an increase in private sector research and development spending of 12 per cent. in real terms between 1983 and 1985. We do not have the statistics for 1986, much as I think that I would enjoy displaying them today. There has been an increase in the proportion of research and development funded by industry from 70 to 77 per cent., which is in line with our competitors. The Government's spending is a higher proportion of gross domestic product than in the United States or Japan.
  My hon. Friend talked about civil engineers. Civil engineering output was to the value of £22·7 billion in 1986. Civil engineering new orders in 1987 amounted to £17·5 billion. Those are almost record levels and, perhaps more than any other statistic, a measure of confidence in the future. The mechanical engineers are turning over £20·36 billion and the electrical engineers £17·76 billion, which shows that we should not underestimate the civil engineering sector in terms of employment and wealth creation. I accept what my hon. Friend said about the need to use our big companies to better effect. The information that he gave about the multiplier effect was powerful.
  My hon. Friend the Member for Ilford, South (Mr. Thorne) reinforced the point about liability. He also mentioned consulting engineers and the extent to which they exert influence on the placing of contracts for raw materials, sub-assemblies and structural componentry.
  My hon. Friend the Member for Birmingham, Northfield (Mr. King) made a Northfield speech, which was powerful and closely argued. He will understand exactly why all that I shall say in response is this—the best guarantee of the long-term future of jobs at Longbridge and in the Rover Group is to keep making
  828
  profits, no matter who owns the plant or what the shareholding structure is. We have made it clear that there will be no other bidders during the exclusive negotiating period agreed with British Aerospace. If agreement is reached, it will not be appropriate to negotiate with others. So, there will be no negotiations with others provided that the two current parties agree terms by the end of April.
  Mr. Batiste: My hon. Friend referred to profits being the most important signpost of the way forward. Did he notice that in the speech of the hon. Member for Great Grimsby (Mr. Mitchell) from the Opposition Front Bench, that word was curiously absent?
  Mr. Butcher: I have to disagree with my hon. Friend because the hon. Member for Great Grimsby mentioned profits. He said that investment goes down when the firms are not making profits. If he assumes that investment goes up when firms are making profits, the Friday culture must have got to him. This is a seminal moment because he has said for the first time that I have heard it stated so clearly by a Front-Bench Opposition spokesman what Conservative Members have been working on ever since Edmund Burke first commented on the French revolution. I congratulate the hon. Gentleman. I hope that that has not damaged his career too much. He said that he was Leader of the Opposition (Fridays). His contribution was far better than that which oftens comes from the real thing. I wish him every success and look forward to seeing him next Friday.
  2.27 pm
  Mr. Patrick Thompson: I am grateful for the opportunity to say a few words at the end of a most encouraging debate. It has been much more encouraging than the debate in 1980, which has been mentioned on several occasions today. I hope that the House will be able to accept the motion on the Order Paper.
  I thank my hon. Friend the Under-Secretary of State for a positive and interesting reply. I was attracted by his remarks on the youth training scheme. It is true that not all industrialists—it happens in Norwich as well—are fully aware of all the opportunities that are open to them. I am glad that the debate has been used in that way, to bring the attention of everyone involved in engineering to what is available now, as well as to point the way to the future.
  I thank the hon. Member for Great Grimsby (Mr. Mitchell) for attending and speaking in the debate. I might come back to his remarks if there is time.
  I thank all my hon. Friends who have taken part in the debate. Many other hon. Members show an interest in doing so. I am therefore especially pleased that I had the opportunity to introduce it. I thank my right hon. Friend the Member for Brentford and Isleworth (Sir B. Hayhoe) and my hon. Friend the Member for Harwich (Sir J. Ridsdale) for their support in the debate. Indeed, I am grateful for the support of all the members of the all-party group for engineering development. Time does not permit me to thank all my hon. Friends individually. There were a large number of interesting contributions, which will make good reading in Hansard and will be worthy of future study.
  A study of the report on education and training for new technologies by the House of Lords Select Committee on Science and Technology in 1984 makes interesting reading

  829
  because it reiterates so many of the points that were raised in the debate. What a pity it is that Opposition Members were unable to take part in this debate. They were around, because they came in for the statement. It is a pity that the hon. Member for Great Grimsby was here all on his own. I am grateful for his contribution. I thank everyone for taking part in an excellent debate.
  Question put and agreed to.
  Resolved,
  That this House urges that consideration be given to the steps now required to build on recent success in United Kingdom engineering industries and to develop engineering performance up to and above the standards of leading industries overseas.

  Coal Mining Subsidence
  2.29 pm
  Mr. George J. Buckley: I beg to move,
  That this House calls on the Secretary of State for Energy to introduce within this session of Parliament the necessary measures contained within the recently published Government Response to the Report of the Subsidence Compensation Review Committee (Cm. 235), so as to enable a proper and fair system of compensation for coal mining subsidence damage to be established.
  My motion concerns subsidence. This subject is particularly relevant to the mining industry and also to engineering.
  It being half-past Two o'clock, the debate stood adjourned.

  London Borough of Newham (Resources)
  Motion made, and Question proposed, That this House do now adjourn—[Mr. Alan Howarth]
  2.30 pm
  Mr. Ron Leighton: What I and my hon. Friend the Member for Newham, South (Mr. Spearing) ask for is a fair deal for Newham from national resources. I emphasise fair, for my case is not special pleading or asking for special treatment for Newham. The truth is that Newham gets a raw deal, an unfair deal, from Government distribution of rate support grant and capital allocations. I shall demonstrate this. The bias against Newham is blatant and striking. So much so that to an impartial outsider it must look like discrimination — almost a vendetta against the borough. If the Government are acquitted of malice, it must he mismanagement or incompetence. Whatever the cause it should, in the name of equity, be rectified.
  Under the old system of the urban programme, up until last year, there were eight partnerships selected for extra help, 23 programme authorities, and 16 other designated districts for a lower level of assistance. Newham was denied partnership status, even though the borough, on Government figures, suffered a higher level of deprivation than seven of the eight partnership authorities. How does one explain or justify that?
  The partnership authorities in London received an extra £10 million per annum. So, over eight years, Newham was unjustly deprived of £80 million. That is a scandal.
  Newham was also denied programme authority status, even though it was more deprived than all the 23 authorities which were granted it. How can we explain that? In London, programme authorities, such as Tory Wandsworth, which the Minister will know, received some £4 million to £5 million per annum extra, but Newham, as another designated district, was granted only about £500,000 a year. Where was the equity in that? When, previously, I made the case to the former Under-Secretary, the hon. member for Ealing Acton (Sir G. Young) he did not seek to justify the injustice. He agreed that I had made a valid case but, rather shamefacedly, said that the Government were unwilling to put more money into the urban programme to rectify the injustice. Next week's Budget will show that that money is available now.
  In 1987–88, changes were made in the urban programme and all ODD authorities, including Newham, became programme authorities. Initial urban programme allocations for the coming year were announced on 9 February. Newham is to receive an extra £500,000, making £2·75 million. This slight improvement is welcome as far as it goes, but it is nowhere near enough. The announcement came in a written reply to the hon. Member for Kensington (Sir B. Rhys Williams), Why him? Possibly because "deprived" Kensington got an extra £600,000, compared to Newham's £500,000.
  Even with this modest increase, Newham's £2·75 million compares, for example, with £11·75 million for Lambeth, £9·65 million for Islington, £4·5 million for Wandsworth — and so it goes on. All those are authorities less deprived than Newham, yet they are getting more money. Perhaps someone will explain. However, what I have mentioned so far is not the half of it. We have to consider the assaults on Newham's capital

  831
  allocations, including its housing investment programme. In 1979–80, at September 1987 prices, the capital allocation for housing was £47,370,000. It was then continually slashed until in 1988–89, it is just over £17,026,000. In other words, it was cut by almost two thirds. The cumulative loss of HIP allocations over the nine years from 1979–80 has been a colossal £203,958,000. Is it any wonder that this has induced a horrendous housing crisis in the borough? By comparison, the cost of building a new home for each of the 572 families in bed and breakfast accommodation would be under £30 million. To this must be added the cumulative loss over the same period at 1987 prices, of £14,911,000 in education, nearly £13 million in social services, and more than £6 million in other services. Altogether, Newham has lost £237 million in capital allocation under the present Government, as well as being denied the £80 million that it should have received from partnership. It is impossible to bleed these enormous sums out of the borough without debilitating and damaging it, and that is why I am spotlighting its plight today.
  A further cause of discrimination against the borough is the unfair basis of the Department of the Environment's grant-related expenditure assessment, which underestimates service needs in Newham in three ways. First, although it is difficult to imagine a borough more inner city than Newham, the Department persists in classifying it as outer London. As a result, the council loses GRE of more than £7 million. In theory that is partially offset by the borough's not having to pay inner London weighting to some staff, but in practice paying less makes it difficult to attract staff of the right calibre. The resulting shortage of qualified staff in some services is so acute that the only way to fill the posts is to adjust salary scales upwards. Therefore the council loses twice. The extra costs have to be paid, but there is no compensating rise in block grant. Secondly, the GRE does not adequately reflect the council's need to plan services for the growing population of very young and school-age children resulting from the borough's high birth rate. In addition, the equivalent of a new town is being built in the docklands area. The GRE assessment takes account only of these developments after the growth — including growth in population — has occurred. However, the council has to organise its services——social, educational and environmental—to meet the needs of the developments now, not in a few years' time.
  Thirdly, and very important, the GRE makes no allowance for homelessness. This is putting Newham on the rack. Because of the cut in the HIP allocation which stops building, and the sales of council houses which reduces relets — that is as a direct result of the Government's policy—the numbers of homeless people are rocketing faster in Newham than in any other London borough, at a huge cost to the council. There is a statutory obligation to house homeless families. The costs involved are probably the least controllable part of the council's budget, because the council cannot control the numbers presenting themselves as homeless. Yet the Government provide no extra grant to cope with the crisis. The actual costs of homelessness to Newham since 1983–84 have been as follows: in 1983–84, £52,000; in 1984–85, £138,000; in 1985–86, £605,000; in 1986–87, £1,900,000; and in 1987–88, £5,400,000. Those prodigious sums reflect the increasing
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  demand for accommodation and the increasing prices charged by hotels. Although the Government caused the crisis, they do not pay a penny towards it through grant.
  It is estimated that in 1988–89, homelessness costs will approach £8 million. All this week councillors agonised and wrestled with the problem of closing a budget gap of that size. To maintain a relatively low rate increase, they had to make painful decisions to close libraries, old people's day centres and youth centres—basically to pay for the cost of homelessness. By the end of this year we shall have paid out £16 million on homelessness, yet have nothing to show for it.
  After the general election Ministers started to talk of the need to do something about the inner cities. They suddenly seemed to have realised there was a crisis. One wondered what they had been doing for their previous eight years in office. What are they going to do? Is there a policy? If so, nobody knows what it is. We had been expecting a White Paper, but all we had was a vacuous press conference last Monday, which announced nothing new. Certainly so far it has been a cashless crusade. There has been no new money; on the contrary, for the previous eight years money was drained out of the inner cities. One thing is sure. Any policy initiatives can succeed only if they work with the local people and their elected local authorities, rather than seeking to bypass, usurp, and undermine them. Those elected councillors in Newham are a responsible group of men and women of integrity, dedicated to doing an honest job for their area and its people, as any Minister who has visited them will testify.
  When the Audit Commission investigated London local government last year it had no criticism of Newham. The council has indulged in no extravance and no excesses of creative accounting to spend "funny money". In the run-up to the last election certain newspapers set up and staffed special desks to collect damaging stories about Labour councils, but they could discover nothing derogatory about Newham. Newham comprises about half of London's traditional east end; its position is pivotal. It will he impossible to regenerate London's inner city without regenerating Newham and tackling its problems. Those problems, not of its making, are of a severity found in few other parts of the country, and can be approached only by a combination of local and central Government actions, and that is what I ask for.
  In reminding the House of the profile of the borough, I do not want it to sound like an unremitting tale of woe. The area has many strengths—first and foremost the people, who have many qualities including resilience. Newham is well placed to make the necessary changes. What it needs is the essential pump-priming expenditure to kick-start its regeneration. Special Government money and assistance has been given to the London Docklands development corporation to spend in docklands, but the worst urban problems in Newham are found outside that area. Only 6 per cent. of the borough's population live in docklands, and there is an urgent need for resources for the 94 per cent. who live in other parts of the borough. At the moment, according to the Department of the Environment's analysis, Newham is the second most deprived of all the 365 local authorities in England and Wales. Moreover, its problems have worsened drastically since the 1981 census. Unemployment is now 50 per cent. higher and homelessness has more then doubled.
  Much of Newham was built in the latter part of the 19th century as cheap homes were provided for workers

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  employed in the docks and in rapidly developing industries. That Victorian urban expansion has left us with an inheritance of environmental and physical problems. Much of this cramped housing, built a century or more ago, is badly in need of repair. The post-war rebuilding of Newham has added problems of high density high-rise estates. We have 112 tower blocks, some of them of the Ronan Point type, nine of which have had to be evacuated because they are unsafe. That is why the borough has voids—it is not a question of mismanagement. Unless extra resources are spent on maintaining the housing stock in the borough it will decay further and the housing crisis will continue to worsen. In whose interest can that be? Currently Newham has more than 46,923 unsatisfactory dwellings, 8,146 households without a bath and 5,290 households lacking an inside toilet. Each of those figures is the highest for any borough in London. It gives me no pleasure to report that the condition of Newham's housing is the worst in London. Most of that dereliction is in the private sector, in houses built before the first world war. Without resources it will deteriorate further, and the downward spiral of inner city decay, from which Newham desperately wants to escape, will continue.
  Let us look briefly at education. Many of the schools were built before the first world war. The Department of Education's analysis shows that Newham has the highest level of educational need of all 96 education authorities in England and Wales, but that its expenditure per pupil is lower than that of similar education authorities. In 1987–88 Newham spent £27 per head in its primary schools compared with an average of £32 for outer London boroughs. In secondary schools, Newham spent £54 compared with an average of £68. We know that educational attainment is largely determined by social background. It is not surprising, therefore, that Newham has the lowest proportion of pupils achieving five or more O-levels/CSEs and that only two other education authorities in the whole country send fewer pupils on to higher education.
  Despite this, in the past two years Newham has been forced to reduce the capitation grant by 10 per cent. In 1987–88 it cut its low level of expnditure on education by 5 per cent. or £4,183,000, lost 122 teachers, and cut back on school repairs and maintenance. This week it was forced to shut centres for the unemployed, cut back on educational equipment and furniture, reduce grants to voluntary groups, increase the price of school meals, reduce the budget of the careers service, charge for the teaching of mother tongue languages, and much more of the same. What other advanced country in the world would allow that to happen?
  Newham's economy has taken a battering. From industrial restructuring and the early years of Government monetarism, the decade to 1981 saw a reduction of 25,000 jobs in dock work, manufacturing and transport. The closure of the docks and their related industry has had a devastating effect on the borough.
  In October 1987, 14,638 people were registered unemployed, nearly one in five males being jobless. The damage that this does, the financial problems that it causes, the family break-up, the health and psychological problems, cannot be overestimated. Forty-three per cent. have been unemployed for more than a year, more than 26 per cent. for more than two years. Many of those in work earn low pay. Of Newham's women who have jobs, only 42 per cent. work full time. Many combine work with
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  child care. Their low earnings are a cause of poverty, particularly among single parent families or where the woman is the only member of the household with a job. The prevalence of low paid, low skilled work and large scale unemployment has brought a rising tide of poverty locally. Financial hardship is squeezing more and more families into multiple debt and dependence on benefit. Currently more than 32,000 people claim benefit in Newham.
  New jobs will be created in docklands, but, because of a skills mismatch there is a danger that many of these could go to outsiders and the development pass local people by. I am activating myself now to see that all those concerned — the LDDC, the developers, the incoming firms, Manpower Services Commission, the industrial training boards and others — agree to specific target numbers of jobs for local people and to ensure that the appropriate training and education is available and that the mechanism is put in place to see that local people get a fair share of the jobs.
  Newham's people belong to many races and cultures. About a third come from ethnic minorities, and in some wards the figure is more than 50 per cent. Often they suffer twice, enduring the problems of others plus racial discrimination, resulting in high unemployment among ethnic minority youth. The languages of Urdu, Punjabi, Gujerati, Bengali, Hindi, Tamil and Malayalam are in common use. Many groups have their own specific needs, and the diversity of population means that Newham's community as a whole has a much greater range of needs, aspirations and outlooks, so the task of fulfilling those is more complex and expensive than in other localities. Central Government should make greater financial recognition of that.
  As might be imagined, Newham social services carry a heavier burden than many other areas. Yet, despite that, Newham has the lowest expenditure per capita on social services of all comparable authorities. Is that not astonishing? It has the worst problems and the least money. It actually spends 16 per cent. less than its grant-related expenditure. In terms of social need, Newham can be compared only with the 13 inner -London authorities, plus Brent and Haringey. Of those, Newham is the second most deprived. Hackney having the unenviable distinction of being first. On social services expenditure per capita we are 16th — bottom; on social and community worker staff employed per 1,000 of the population we are again 16th—bottom; on the provision of day nursery places per 1,000 for the under-fives we are again 16th—bottom; on the provision of meals-on-wheels we are again 16th—bottom; on telephones for the elderly, we are also bottom. Any further reduction in provision can be regarded only with horror. The hard-working social services staff in the borough are so over-stretched that it is amazing we have not had one of those disasters that hit the headlines.
  To sum up, the general picture is of an area which, historically, has served London and the country well in both war and peace, but which has been hit hard by industrial and social changes. It is beset by multiple problems, not of its own making, yet still has many strengths and much potential — the classic inner-city syndrome. What is to be done? The situation is getting worse, not better. Sometimes I am tempted to despair, but then I remember this time last year, when parliamentary debate and ministerial visits resulted in an increase of £7

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  million in the absurd expenditure limit for Newham that was then being proposed by the Government. So, by campaigning constructively, we were able to soften the blow and lessen the cuts last year.
  Are the Government serious about wanting to improve the lot of the inner cities? If so, they cannot ignore so strategically important an area as Newham. They must approach it in partnership, in every sense of that word. If they do, they will find an elected council with no ideological block against co-operating pragmatically with central Government in improving the environment, the economy and the prospects of the local community. I propose that the Government send a senior Minister, either the Secretary of State for the Environment, or his right hon. and learned Friend the Chancellor of the Duchy of Lancaster, to spend at least a day meeting the civic leadership and the council's officials in Newham. They can look at the books, put all the cards on the table and work out a mutually agreed, fair deal for Newham, not a continuation of the present malaise, which is only storing up problems for the future.
  I put that forward in a constructive spirit and hope for a constructive reply.
  2.48 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope): In the time available I shall be delighted to put the Government's case again on the issues and problems in Newham. Last July I replied to a debate introduced by the hon. Member for Newham, North-West (Mr. Banks), whom I am pleased to see present.
  I would first like to deal with housing. Recognising the case made by the London borough of Newham at the housing investment programme meeting in September 1987 and in the borough's HIP strategy and programme, the Government are increasing the borough's initial HIP allocation from £17·5 million in 1987–88 to over £18 million in 1988–89. It was one of eight boroughs which received an increase in their HIP allocation to reflect their particular problems.
  Further HIP support is available through the Government's estate action programme to help underpin measures to improve the management and quality of life on difficult-to-let estates. Newham has taken full advantage of such funds and recognises the importance of supplementing these with private-sector funding where possible, for example at Woodlands estate. If current bids are approved, the total additional HIP support through the estate action programme could increase from £1·9 million in 1987–88 to nearly £3·3 million in 1988–89.
  In the current financial year, Newham's HIP allocation has been increased by a further £1·2 million to bring back into use empty dwellings for homeless families. This is reducing the number currently being placed in bed-and-breakfast accommodation on the one hand and reducing the number of the borough's empty properties on the other. Newham has the highest percentage of empty local authority dwellings—some 9 per cent.
  Mr. Leighton: Will the Minister be careful not to mislead the House? That figure comes from nine tower blocks, which have had to be decanted. If we eliminate those, the number of voids in Newham is lower than that in Wandsworth.
  Mr. Chope: I can accept the hon. Gentleman's first point that there are some 900 empty units in eight Taylor Woodrow-Anglian tower blocks, the Ronan Point-type, which the borough has decanted for safety reasons. Nevertheless there is ample scope for improvement in the number of voids.
  Mr. Tony Banks: If the empty tower blocks are discounted, there are fewer voids.
  Mr. Chope: The hon. Gentleman suggests that if the empty tower blocks are discounted, Wandsworth has more voids as a percentage than Newham. He is wrong. If we discount the 880 units, which I am prepared to do, 6 per cent. of the borough's stock is empty compared with only 2·8 per cent. in Wandsworth. Even discounting the empty tower blocks, if the present voids were used to house the homeless, it would not be necessary for Newham to have anybody in bed-and-breakfast accommodation.
  Mr. Leighton: Give us the money.
  Mr. Chope: The hon. Gentleman says "Give us the money." As he has already accepted, having people in bed-and-breakfast accommodation costs the borough a great deal of money. Most responsible councils are finding scope for using their empty stock to reduce the need to rely on bed-and-breakfast accommodation for housing homeless people.
  The borough has ample scope to improve its efficiency. At 1 April 1987 its rent arrears stood at over £3 million, which is 11 per cent. of the total rent bill. If these could be reduced, clearly it would help to produce the revenue needed for repairs to turn round the vacated property more quickly. Average rent levels are currently about £18 a week, significantly below the equivalent rent levels in Wandsworth. Nevertheless there is a higher percentage of rent arrears.
  Mr. Leighton: Does the Minister know that this week the borough council agreed to increase rents in Newham higher than the guideline recommended by the Government?
  Mr. Chope: I did not know that, but I welcome it because at present the rents are significantly below those of some other boroughs and it is important, if council tenants are to be given the quality of repairs that they rightly demand, that they should be expected to make a proper contribution towards the cost of council housing. If the rents have increased above the guidelines, that should help the finances of the borough, but it will not help them as much as if the borough recovered the rent arrears and ensured that it got the rent in when it fell due.
  With the borough proposing to dispose of eight empty tower blocks in 1988–89, together with other properties, the prospects for a substantial increase in capital receipts are good and will be further enhanced by the recent dramatic upturn in right-to-buy sales in the borough. The hon. Gentleman probably realises that by increasing rents, families in a position to purchase are often more inclined to purchase because by doing so they can avoid paying those higher rents. That is a way of generating additional capital receipts, which can be ploughed back and used for further investment in housing.
  Mr. Nigel Spearing: Is the Minister suggesting that capital receipts from the sale of redundant tower blocks plus capital receipts from the sales of council houses will be sufficient to build an equivalent number of

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  new houses? Would the council be allowed to do that if it were found that the receipts were sufficient to enable it to be done? Surely the receipts would not be sufficient to achieve that objective.
  Mr. Chope: I cannot say exactly how much it would cost to build that for which the hon. Gentleman is asking. There is much evidence to suggest that, currently, the borough is not using its best endeavours to sell as many properties as it can under the right-to-buy-legislation. It appears that it is not using its best endeavours to sell all vacant properties. I have said, however, that I am pleased to note the progress that is being made. It will ensure that in future the borough will have a greater income from capital receipts to supplement its housing investment programme allocation.
  The Government are concerned to see a greater involvement of housing associations in the provision of social housing. To this end, the Government are increasing the size of the Housing Corporation's approved development programme in the borough from £13 million in 1987–88 to £14·1 million in 1988–89. Taking the capital side as a whole, from returns made by the authority, it appears that Newham had more than £5 million spare capital resources within the control system in 1986–87 than the council chose to use. The margin in the current year seems likely to be at least as large.
  It has been argued that Newham has more of the nature of an inner-city borough rather than that of an outer London borough. That is an arguable assertion. It is an education authority, unlike inner London boroughs which have to contend with the Inner London education authority. I agree that Newham shares many of the problems of our inner cities. The borough will therefore benefit from the enhanced measures announced by my right hon. Friend the Prime Minister on Monday. The Government have committed £3·7 billion through the Department's group of programmes since 1979. That is an addition of main programme housing and local government resources. This sum has attracted over £2 billion in private investment. Between 1979–80 and 1988, real terms expenditure on the group will have increased by about 58 per cent.
  The urban programme was the first major public spending programe targeted solely on the inner cities. This year, it will have funded 10,000 projects through specific grant to local authorities. It is helping local people help themselves, and it is encouraging enterprise. It is supporting nearly 90,000 inner-city jobs and training places. The new simpler city grant for private sector will build on the success of urban development grant and urban regeneration grant. Estate action has allocated £75 million this year — there are over 100 new schemes—which is improving the quality of life on run-down housing estates. Funding is rising to £140 million next year.
  Having already dealt with the resources available to improve housing in Newham, which will make a major contribution to reducing inner city deprivation, I draw attention to the London Docklands development corporation. About 28 per cent. of the borough's
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  boundaries come within the corporation's area, and the corporation has made a major contribution to the economy in that part of London.
  Concern has been expressed that some of the residents in Newham will lack the skills necessary to win the jobs that will become available. There will be new employment opportunities. This is an issue for the local education authority to address. It is important that the education performance of the borough should be improved so that residents and their children are trained to the level that will enable them to take up the new job opportunities. I am sure that the hon. Member for Newham, North-East (Mr. Leighton) will welcome the massive new job opportunities that the LDDC has generated.
  In the light of the progress made by Newham in its first year as an urban programme authority, its allocation for 1988–89 has been increased to £2·25 million. That is a cash increase of nearly 30 per cent. I hope that the borough will also be able to benefit from the schemes initiated by the private sector under the new, simplified city grant that was announced on Monday.
  There is some good news for the people of Newham. I am pleased to say that, to an extent, the borough council is co-operating in recognising that it must work with the private sector and encourage enterprise and initiative. That is the way in which the problems of Newham will eventually be solved.
  Mr. Leighton: Will the Minister respond to my invitation to the Secretary of State or the Chancellor of the Duchy of Lancaster to spend a day in Newham discussing the borough's problems with the borough, to see whether it is possible to arrive at a mutually agreed response to what we describe as a fair deal for Newham?
  Mr. Chope: I am not in charge of my right hon. Friend the Secretary of State's diary. The hon. Gentleman knows that my hon. Friend the Minister for Housing and Planning visited the borough last October and had some useful meetings—
  The motion having been made at half-past Two 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 accordingly at Three o'Clock.

CORRIGENDUM
Official Report, 8 March 1988, Written Answers, c. 122:
At line 10 from end of column, insert the following:

CORRIGENDUM

  Mr. Charles Powell
  Mr. Dalyell: To ask the Prime Minister when Mr. Charles Powell was appointed to her Private Office; and for how long he is expected to serve in that office
  The Prime Minister: Mr. Powell was appointed to my office in June 1984, and will serve until the time comes for him to leave."
  [See column 859.]