HC Deb 25 May 1989 vol 153 cc1227-34

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

10.43 pm
Mr. Adam Ingram (East Kilbride)

I wish to make it clear at the outset that this Adjournment debate is decidedly not the best way to discuss the issue of the future of the national engineering laboratory, which is in my constituency and which is recognised throughout the world as a major national asset to this country.

I am grateful for the time that I have been allocated, but the issue should have been handled in an entirely different way, with the Minister coming to the House to explain his original decision. It was absolutely outrageous that the decision to privatise the laboratory was announced by way of a written answer to a question planted by the Minister with the aid of a compliant Tory Back-Bench Member who probably knew neither where the NEL was situated nor anything about the work done there. It is interesting to note that the hon. Member for Derby, North (Mr. Knight) is not present in the Chamber to participate in or even to hear the debate.

The Department of Trade and Industry did not even pay me the courtesy of formally notifying me that the decision was to be announced or that it would result in the loss of nearly 200 jobs—a third of the work force. The way in which it was done exhibits a nervousness on the part of the Secretary of State for Trade and Industry and the responsible Minister. It was a clear attempt to avoid accountability on the issue.

The lack of real interest in the work and worth of the laboratory is shown by the fact that the Secretary of State has visited the site only once, and that was a year ago, six weeks before he announced his initial abortive bid to off load the laboratory to the private sector. His visit lasted less than one hour. The Minister's own indifference to the work done at the laboratory is shown by the fact that he has likewise visited the laboratory only once, and that was after last week's announcement. It is almost as if his decision to visit was an afterthought and a trouble to him.

In a letter the day after the announcement, the Minister told me: I have arranged to visit the National Engineering Laboratory … as I felt it was important to give everyone there the opportunity to hear the Government's view and for me to hear their reactions to our announcement. The truth is that the Minister spoke to no more than a handful of senior civil servants at the laboratory and, like the Secretary of State, he stayed for less than an hour. So much for his express wish to give everyone the opportunity to hear the Government's view and, I would have thought more importantly, for him to hear the reactions of the work force to the announcement. He gave me that assurance in his letter, but he did not stand by it.

Those actions showed sheer, utter contempt for the work force, many of whom have worked there for 10, 20 or 30 years, and who have given so much to make the NEL a world leader in its field of engineering and industrial research.

The Prime Minister is rightly described as an ambulance chaser for the way in which she exploits for publicity purposes every disaster in this country. The work force at the NEL has a not dissimilar view of the Secretary of State and the Under-Secretary of State at the DTI. The NEL staff view them as being the undertakers. I noted that even the Secretary of State for Scotland issued a statement welcoming the decision to privatise the laboratory. As if he really cared about the matter! He has not even visited the laboratory since taking office. The work force at the NEL is expecting him, however, to turn up at the burial.

It is important to put the announcement to privatise NEL in its recent historical context. In February last year the permanent secretary at the DTI notified the trade unions that all four of the industrial research establishments were to be reviewed and that the report was to be completed within a month. The review of the NEL by the DTI's central policy unit appeared to comprise a half-a-day visit by two people.

Last May the Secretary of State dropped in by helicopter. He stayed for just under an hour and told the press that he had been impressed by what he saw. Later in the month, he announced that he intended to privatise the laboratory and that the other three industrial establishments were to be given agency status. Only the NEL was targeted for privatisation.

In August, after much encouragement had been given to the private sector to take over NEL, the foreign-owned YARD company was given the green light to investigate the laboratory and to submit a bid. In October, despite promises of massive state aid, YARD pulled out of the bid.

Undaunted, the Secretary of State pushed ahead with a dogmatic determination to privatise the establishment. He appointed the firm of Touche Ross—at a cost calculated to be in excess of £100,000—to carry out an evaluation of the laboratory and to report to him in April of this year.

The year since the first announcement last May has been a period of great uncertainty at the NEL. More than 40 key members of staff have left, 10 of them among the best and the brightest of the scientists employed at the establishment. The blight that has been placed on the NEL, first as a result of the original announcement and now as a result of the decision to push ahead with the privatisation, is suicidal. It is and will prove to be highly damaging to the morale of the work force at the N EL and to work which is done there at the forefront of industrial research and development. It is and will continue to prove damaging to the needs of many hundreds of small companies in Scotland and in Britain which rely upon the laboratory's services. Because of those factors, the Government's announcement has been almost universally condemned in Scotland.

I am sure that the Minister would agree that the key to the success of his decision would be the co-operation of the staff and, in particular, the scientific personnel who determine the quality of the research work undertaken at NEL. That support, however, is not forthcoming.

I want the Minister to respond tonight to the decision taken yesterday at a mass meeting of the Institution of Professional Civil Servants at the laboratory. A resolution passed at that meeting decided: That the IPCS should resist strongly any attempt to legislate for the compulsory transfer of staff from NEL to the proposed NTC"— the national technology centre— and that IPCS should alert and ally support from other Civil Service unions to resist the legislation. In the timetable given for the implementation of the decision no reference is made to the required legislation relating to it. Can the Minister say when the necessary legislation to effect the decision will be introduced and what form it will take?

At the IPCS meeting another resolution was passed that stated: The management have acted deviously in initiating immediate staff selection for the NTC without consultation with the staff side after giving the impression at a previous meeting that a timetable of October 1989 and a plan for redundancy in 1990 would be adhered to. The joint NEL unions should seek the immediate postponement of this selection procedure until full consultations have taken place. I urge the Minister to respond positively to that request and to postpone the compulsory transfer of staff until those full discussions and consultations have taken place with the staff unions.

Another key to the success of the proposed NTC is the attitude of those customers who currently use NEL facilities and who would be expected to continue to be the customer base for the new organisation. Touche Ross, in its discussions with the laboratory's current customers, found that considerable resistance was shown to the idea of ownership by an industrial organisation. That is, of course, likely to be the eventual outcome of privatisation.

The Touche report stated: Much of the work currently carried out is dependent in whole or part on the Laboratory being seen to be independent. A number of potential buyers might also be seen as competitors to other potential customers. There is a view in some quarters that it would be inappropriate for National Standards to be in the hands of a commercial organisation that might be interested in acquiring knowledge of any equipment being calibrated against primary standards. Therefore, although the consultants appointed by the DTI expressed industry's objections to privatisation, the Government have ignored that view and advice and pressed on regardless.

The report prepared by Touche Ross also stated: We would agree with the view of the NEL management that a DTI Laboratory with, say, £9 million of DTI underpinning funding and the ability to trade and compete freely would be preferable to the private sector laboratory from the point of view of its management and staff. However, nothing we have been told by DTI staff leads us to feel that there is any significant chance of such funding or freedoms being made available. We have therefore not made detailed financial projections for such an option. Therefore, industry that uses the NEL is against its privatisation, but the independent analysis by Touche Ross on the need for a properly funded establishment, unfettered by commercial considerations, has been ignored by the Government. It is little wonder that it is considered that the decision on the NEL has been rigged to satisfy the Secretary of State's obsession with privatisation. There certainly is no evidence to show what has been decided will improve the range and quality of the scientific research carried out by the establishment.

The NEL has served this country well for more than 41 years of its existence because the staff employed there have been able to undertake when necessary innovative and thorough research work, driven by the desire to know rather than by the profit motive.

Under the disciplines of the "near market" philosophy favoured by the Government, that expertise and innovative pride could well be lost to the country.

Over recent years the laboratory has provided a vital back-up research facility for many small businesses within the industrial sector. Many of those businesses simply could not afford to pay the commercial rates for the work done. It is likely that that essential support given to the small business sector will cease, again to the detriment of the industrial economy within this country.

The decision to restructure and privatise NEL does not have the support of public opinion in Scotland. I need only quote from Scottish newspapers at the time of the initial announcement. The Scotsman said: In this instance, the dogma of privatisation has taken priority over everything else. The Glasgow Herald said: We have learned better than to expect the Government to pay much attention to Scottish sentiment in such matters. The Evening Times said: Events prove he"— that is, the Secretary of State— lied to the people of Scotland and the 650 NEL staff. Public opinion within Scotland is not convinced that the announcement is any different from that original announcement.

The decision to restructure and privatise NEL does not have the support of industry and it most decidedly does not have the support of the people who work at NEL, 200 of whom will lose their jobs, while those who remain will lose pension rights and conditions of service.

In the run-up to 1992 the Government should be trying to invest in industrial research, not divesting itself of a key asset critical to industry's future. I ask the Government to think again about the proposals and to give serious consideration to retaining NEL within the public sector and providing it with sufficient funding and freedom of action to allow it to serve the industrial and engineering research needs of British industry.

I am most grateful for the support tonight of my hon. Friend the Member for Motherwell, South (Dr. Bray), who I understand wishes to make a few comments on this issue.

Mr. Deputy Speaker (Mr. Harold Walker)

The hon. Gentleman has the consent of both the hon. Member for East Kilbride (Mr. Ingram) and the Minister.

10.57 pm
Dr. Jeremy Bray (Motherwell, South)

I rise on behalf of the Opposition, perhaps a bit unusually, but this is a key issue both for our strategy towards the engineering industry and fox Scotland in particular, to give our full support to the case which my hon. Friend has put. This is a quite extraordinary example of damage to, and ignorance of, the dynamics of the engineering industry. The idea that the engineering industry could take over a major research facility, entirely changing the research strategy of a major part of its activities in a short time, and come up with an efficient solution is quite absurd, and so it has proved very quickly.

We ask simply that the damage should be minimised by affording the maximum transitional period, realistic funding and a clear mission for what is still a major national resource which has a great part to play in the future.

10.58 pm
The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Eric Forth)

I start by congratulating the hon. Member for East Kilbride (Mr. Ingram) on obtaining this Adjournment debate. The House will recognise the very understandable concern that he has expressed so eloquently on behalf of his constituents and others at the very major changes which are in the process of happening to the national engineering laboratory.

I acknowledge the sense of the comments made by the hon. Member for Motherwell, South (Dr. Bray) as well.

I do not hesitate in acknowledging the great uncertainty that has obtained for quite a long time among the staff of this most important resource. That is something that is always to be regretted because uncertainty tends to breed unhappiness and difficulty.

I accept some of the criticisms that the hon. Gentleman has made about the method and timing of the announcements made recently. I state here and now that at the very least they could have been more felicitously organised. I offer the hon. Gentleman an apology for that, which was due to the speed at which the announcement had to be made. In retrospect, we could have announced it in a different and better fashion. I hope that the hon. Gentleman will accept my apology for that.

Before I give a more extensive background to the Government's position, I shall seek to answer directly two of the important questions posed by the hon. Gentleman. First, it is, at the very least, unlikely that any legislation would receive Royal Assent before this time in 1990 at the earliest. I would not be giving away too many secrets if I said that it was unlikely to meet even that time scale.

As the hon. Gentleman will recognise, the time scale for the necessary retructuring and investment in the site given in the Touche Ross report spans a period of many years. We have made no secret of the fact that it is unlikely that the process described in the Touche Ross report, which we have substantially underwritten and agreed to, can take place in less than a period of some years. Therefore, we are not talking about something which is to be done hastily. It will, of necessity, take some time.

In answer to the hon. Gentleman's second point, I have been told that assurances have already been given to the staff on the site at East Kilbride that there will certainly be no redundancies during this calendar year. They have been told that there will be no staff reductions before consultations with them have taken place in accordance with the procedures agreed with the trade unions involved. We do not intend to take any peremptory or hasty actions. I expect that the fullest possible consultations on the agreed and understood basis will be undertaken in order that any adjustments may be made in the proper way.

Mr. Ingram

I accept those assurances, but will the Minister say whether there are likely to be redundancies, and if there are, how are they to be effected?

Mr. Forth

We have made it clear throughout that we hope that any changes in staffing levels will be made, as far as is humanly possible, through either early retirement or voluntary redundancies. That would be our hope and aim. At this stage it is too early to judge whether further redundancies will have to be made.

When I made my brief—and I acknowledge that it was brief—visit to the site last week, the limited number of people with whom I was able to speak gave a mixed response to the announcement which had only recently been made. In some laboratory departments, and among some of the management, there is a degree of enthusiasm for what has been suggested.

It is too early fully to judge the likely impact. Until further information is available, further consultations have taken place and the way in which the suggested changes will affect the staffing levels is known, I remain optimistic. I hope that the impact will be more easily managed and will involve the minimum unhappiness—I hope that there will be no unhappiness—among those involved. However, that remains to be seen, and I hope that everyone will enter into consultations in as positive a spirit as possible, even though they will appreciate the background which the hon. Gentleman has outlined.

We must acknowledge that the laboratory, whoever owns it, is, and will remain, a major national resource. It has facilities which are unique in this country and, in some respects, in the world, for large-scale mechanical testing of structures and components, earthquake simulation and, as I saw, the world's most comprehensive facilities for measuring the flows and pressures of oil, air and water, and mixtures of them.

The reason why our objective is the privatisation of the laboratory has been made clear. However, I shall put it on record again because it has been challenged again in the debate.

Mr. Ingram

The Minister has said that the laboratory would remain a national resource. Will he give an assurance that it will remain a British-owned national resource?

Mr. Forth

In all honesty, I feel that it is too early to embark on such assurances, for reasons that the hon. Gentleman well understands—although I think I know why he has asked his question. The process is at an extremely early stage. Touche Ross has made some comprehensive and, in some ways, exciting proposals, which we have largely accepted. Until we know much more clearly where further investment in the site will go and what emphasis it will be given, and what the science park section will mean, I do not think that it would be sensible for me to give the undertaking for which the hon. Gentleman has asked. I am sure that this is not the last time that we shall hear his point; he has got it on the record and we shall take it into consideration.

My right hon. and noble Friend the Secretary of State for Trade and Industry told the other place on 7 June 1988 that the review of the Department's research establishments had shown that Roughly three-quarters of the work at NEL currently falls into the category of industrially relevant R and D. The principal beneficiary is industry, not Government, and strong signals from industry are needed in guiding the development and direction of the work. This 'market pull' is more easily provided and understood when the R and D is carried out in an organisation whose progress depends directly on its success in providing services to industry."—[Official Report, House of Lords, 7 June 1988; Vol. 497, c. 1398.] That remains the fundamental justification for our policy. The announcement made last week about the more detailed means of carrying it into effect—involving restructuring, a more commercial approach and, indeed, further investment—is now clearer to all concerned with the publication of the various forms of the Touche Ross report. My right hon. and noble Friend has made it clear that the considerable skills that will remain at the laboratory are best provided in a framework that gives opportunities for commercial drive and commercial expansion where possible. That, we believe, will best he achieved through the routes announced in the last week.

The laboratory must be developed so that its work is increasingly orientated towards meeting its market demands. Its skills and facilities are second to none, and we want to give them the opportunity of succeeding in the market place. I emphasise, however, that the Government are, and will remain, an important customer, on the basis that the laboratory will pay for the work that the NEL can do to support necessary Government objectives—for example, underpinning statutory, regulatory and policy work.

I would be very sorry if the House failed to see last week's announcement of our aim to establish a national technology centre as a very positive factor in the future of the laboratory and of the site as a whole, thus benefiting East Kilbride, Scotland and the national economy. The announcement was made after the most careful study of all the options, and careful consideration of the strengths and, indeed, weaknesses of the arrangements at the laboratory. We are not rushing into hasty decisions.

The original announcement was made some time ago. It has been refined and developed; it has been looked at by Touche Ross experts who made comprehensive proposals based on the facts and figures. I do not believe that there is any reason for pessimism or doubt about the future, provided that all concerned view positively the proposals made by the Department of Trade and Industry and the Government and through the Touche Ross reports.

Mr. Ingram

Does the Minister accept the uncertainty identified by Touche Ross? There is a possibility that, if the NTC is transferred to the private sector, the competiting private companies and industries will not view it as an independent consultancy giving free advice—that it will be run for profit and not for the quality of the research that it funded.

Mr. Forth

Again, I understand the hon. Gentleman's concern, but I am sure that that will not happen. I believe that we can develop an approach that will combine the fact of private ownership, in whatever form it may emerge—it is too early to form a complete judgment about that—with retaining the status and reputation of the facility as a respository of national standards. I see no contradiction in that sense and I believe that the two can be managed together. That will be one of our principal objectives. We will have that in mind as we develop the policies in detail. We shall also provide funds for the restructuring and refurbishment of buildings and facilities as appropriate. Although the plans are at an early stage they are being developed rapidly. The Touche Ross report said that refurbishment totalling £3 million over three years would be required. We shall be ready to provide the necessary funds to help management to achieve the required improvements. In addition, the site will be developed as an attractive location for incoming industry. The restructuring programme will be directed towards matching the work of the laboratory with real customer requirements, whether the customers are in the private sector or the Government. I believe that the laboratory has a lot to offer.

The hon. Member for East Kilbride rightly emphasised the likely reduction in employment. It should be noted that an alternative approach consistent with Government policy on the research establishment might have been to reduce the size of the laboratory to that needed to meet the work necessary to meet the Government's needs and to keep that reduced size laboratory within the Civil Service. However, as was revealed by the Touche Ross report, doing that would have involved reducing staff numbers to 226 as opposed to the present proposal which involves keeping some 400 jobs. The Government have therefore opted for an approach which will seek to maximise the opportunities for the laboratory, the site and the staff. I have already said that reductions in staff will not be carried out hastily. The intention is that they will largely take the form of transfers within Department of Trade and Industry transfers to other Government Departments and retirements, including some early retirements. Furthermore, some staff may set up small companies operating within the science and technology park. This part of the restructuring exercise will take place during 1990. As I have said, at the same time work on developing the site as a science and technology park and in preparing staff to meet market challenges will proceed as quickly as possible if, as we hope, the park is a success there should in due course be more jobs on site than there are at present. I am sure that that will be an increasing possibility as we develop our plans.

As regards staff who will not be working in the national technology centre, my Departments will do everything possible to assist and advise them in dealing with the changes in their careers and circumstance. The legal position is that the transfer of civil servants to the new company—the National Technology Centre Ltd—would be covered by the Transfer of Undertakings (Protection of Employment) Regulations 1981. They provide that transferred staff would enjoy terms and conditions having the same effect as those which staff currently enjoy, apart from occupational pension schemes. Any legislation in connection with the transfer could facilitate the transfer, including making provision to enable responsibility for redundancy compensation to be taken over by the new company.

We expect to find ways for NEL staff to be able to share in the financial rewards which will arise if the restructuring leads to successful privatisation.

In the short time available, I have tried to answer as many of the hon. Gentleman's questions as possible. I hope that I have gone some way to reassuring him and, through him, all those involved at NEL, that, in spite of the considerable changes that the Government are seeking to bring about on the site, we and the management of NEL are approaching this in the most positive light. Within the framework of the policy—which we are not prepared to change—we believe that there are considerable grounds for optimism, provided that everybody on the site will come together with the Department and management who are keen and enthusiastic, to take the opportunities of the investment available to seek to make the future of the site the best possible. I am confident that that can be the case and I hope that that message can go from the House to everyone involved on the site in the hope that, in spite of the changes involved, something real and positive will come out of this for the future of NEL and the national technology centre.

Question put and agreed to.

Adjourned accordingly at thirteen minutes past Eleven o'clock.