§ 6.15 p.m.
§ Lord MELCHETT rose to move, That the Draft Iron Casting Industry (Scientific Research Levy) (Amendment) Order 1976, laid before the House on 8th June, be approved. The noble Lord said: My Lords, I regret to say that I have been caught slightly unawares by the speed of the previous business in your Lordships' House, and, if I may, I will speak in general terms about the order in front of us because at the present time I have not with me the papers that I was intending to use. I was busy getting rid of the papers I had had most of the afternoon on the Agriculture (Miscellaneous Provisions) Bill, and I regret to say that I do not have the papers on this particular 495 order with me. As your Lordships will know, the order we are discussing is designed to enable the British Cast Iron Research Association to raise the levy which enables it to do the necessary research. I am glad to say that I now have no less than two sets of papers in front of me, which I think will enable us to make slightly better progress than we have made up to this point.
§ The purpose of the order, which my right honourable friend the Secretary of State for Industry proposes to make under Section 9 of the Industrial Organisation and Development Act 1947, is to amend the Iron Casting Industry (Scientific Research Levy) Order 1971 so as to increase the income of the British Cast Iron Research Association. The existing order imposes a levy on the iron casting industry to finance scientific research carried out by the Association. The proceeds of the levy will continue to be collected by my right honourable friend and then released against the Association's expenditure on scientific research.
§ Iron foundries are one of the less glamorous parts of British industry, but they occupy a central position as suppliers of castings to almost the whole of the engineering industry. Their performance and the quality of their products are thus of vital importance to the future of British industry as a whole. The British Cast Iron Research Association provides a wide range of services to the iron castings industry. These include general scientific research, contract research and consultancy and advisory services. The scientific research is of particular importance as many iron foundries are too small to be able to support their own research activities, and in this field the Association has achieved a worldwide reputation for excellence. A large part of the Association's research is supported by a statutory levy collected from the firms in the industry under the provisions of Section 9 of the Industrial Organisation and Development Act 1947. The levy was first introduced in 1966 after wide consultations with the industry, but an increase was necessary in 1971 to take account of the rise in costs experienced by the Association.
§ The present order imposing the levy is the Iron Casting Industry (Scientific 496 Research Levy) Order 1971. It provides that every iron foundry is liable to pay, each quarter, a levy of 4p per tonne on the leviable iron castings which it produces, plus 0.14 per cent. of the emoluments it pays to those employed in the industry. This basis was adopted in order to provide a charge which was reasonably equitable between the different types of foundries. The tonnage and emolument elements contributed roughly equal amounts to the levy when the present order was introduced in 1971, but the rise in wages and salaries as a result of inflation and the decline in the tonnage of castings produced by the industry since 1971, due to the general recession, have altered these proportions so that the tonnage component now contributes only one-third of the levy.
§ What is more important is that the levy no longer provides sufficient income to support the Association's scientific research activities. An increase in the Association's income is required merely to enable them to maintain their existing programme of work. But recent legislation on environmental and health and safety matters will impose significant additional requirements on the industry, and the Association has therefore embarked upon an increased programme of work in these fields to help the industry to meet in the best practicable way the future demands to be placed upon it. Although the Association is seeking economies wherever possible, and making every effort to increase receipts from sources other than the levy, it is clear that unless the levy is increased all parts of the Association's planned programme of work will have to be cut back, to the detriment of the whole industry.
§ The new order proposes an increase in the levy on emoluments from 0.14 per cent. to 0.15 per cent. and in the levy on production from 4p to 11p per tonne. It is estimated that the annual yield of the increased levy would be about £660,000 compared with the present yield of about £420,000. The order also makes provision for the rate of levy per tonne to be automatically adjusted annually. It is proposed to do this by linking the tonnage levy to the index of wholesale castings prices published in Trade and Industry.
§ In preparing the draft order we have consulted representatives of the industry 497 and of the workers in it and have received a wide measure of support for the proposals, which I commend to your Lordships. I beg to move.
§ Moved, that the Draft Iron Casting Industry (Scientific Research Levy) (Amendment) Order 1976, laid before the House on 8th June, be approved.—(Lord Melchett.)
Viscount LONGMy Lords, I am grateful—as, I understand, are my noble friends, to the noble Lord, Lord Melchett, for the detailed information he has given on this order. I should also like to congratulate him—remembering an occasion on this side when the noble Lord, Lord Balogh, was not in his seat and I was left high and dry to try to move an Amendment—on holding forth while his brief was on its way. I know that he has been working extremely hard for these last few hours and I would not wish to keep him for too long. The iron casting industry is a vital and important one as noble Lords on all sides will agree. Therefore it is essential that we should give them all the help we can. I should like to ask the noble Lord whether there is a particular reason for the increase in the levy. So many of these small iron casting businesses are now no longer in existence. It is a very hard business, employing only a few workers in any particular firm. I wondered whether that was part of the reason for further help being needed. The scientific side always needs help in any industry and is now becoming extremely costly and therefore we welcome this draft order which I believe is to come into operation on 1st July. I would say that it is essential to increase the levy.
§ Lord MELCHETTMy Lords, I am grateful to the noble Viscount for his welcome to this order. I think that the main reasons that the levy has to be increased are not that some of the small foundries have gone out of business; the smaller ones were generally below the level at which the levy becomes payable. I think the reasons are, first, in the recent decline in the amount of work being done by the foundries because the levy is raised in proportion to the tonnes produced. There is also the fact that there is going to be a great deal more research work to be done in this industry in the near future because of the burdens that recent legislation will place on the industry.
498 I agree with the noble Lord about the importance of the industry. That is why the Government introduced the Ferrous Foundries Industry Scheme. The noble Lord may like to know that we have already had 200 applications under the scheme and have provided assistance to the value of £10.1 million which has resulted in a total investment in ferrous foundries of £45.8 million. I think he would agree that this is a considerable new investment in the industry since the scheme started in August 1975. All applications have to be in by the end of this year. This is encouraging for the future of the industry which this levy will, in a small way, assure.