INDUSTRY AND SOCIETY

HL Deb 09 February 1977 vol 379 cc1150-66

3 p.m.

Lord ROCHESTER rose to call attention to the need for agreed action aimed at increasing the esteem in which industry is now held in society, particularly among students; and to move for Papers. The noble Lord said: My Lords, I am privileged to have this opportunity to call attention to the present standing of industry in society, and particularly among students. It is particularly gratifying that so many distinguished Members of the House are to speak in this debate. The Motion has arisen in this way. After long experience in industry, I was last year appointed Pro-Chancellor of one of our newer universities, and soon discovered that, of 355 students who had graduated there in 1975, only eight had gone into industry. It is only fair to add that this is a university in which there are no courses in applied science and, happily, also the proportion of graduates there who entered industry last year, I have just discovered, was 2½ times greater than in 1975.

In a students' union debate last summer at the university, I opposed a motion "That industry does not provide suitable opportunities for graduates". The motion was won by an overwhelming majority, which perhaps does not say much for my powers of advocacy; but the experience disturbed me because I knew very well from first-hand experience that industry in fact provides many and varied opportunities for graduates educated in a wide range of disciplines. They have minds trained to think, to display initiative and, after analysis of relevant information, to present the best possible conclusion in a particular situation. Where else, then, could there be more suitable opportunities for graduates than in industry, where their skills and knowledge could be applied in complex situations involving human relations and interaction between technical, financial and commercial considerations?

It followed that many students must either be unaware of the challenging opportunities that were available in industry or chose instead to embark on careers that appeared to be more attractive in the professions, in research and other pursuits. Moreover, the idea seems to have gained ground that careers in industry were not simply unsuitable but, in some way or other, selfish. Yet surely services can be rendered to the community as much in industry as in schools, hospitals and the social services. Indeed, the distinctive thing about industry in this connection, as I see it, is that without it none of those other things could exist at all. I was even more disturbed by the thought that if the views expressed in that particular debate represented present thinking among university students generally, that would have disastrous effects on the future management of British industry, which nowadays calls for leadership of the highest quality. If graduates are not to play a significant part in supplying that leadership, where else is it to come from?

My next move was to try to establish whether what was happening at that one university was of more application that is general. From the Director of the Central Services Unit of Polytechnic Careers and Appointment Services I learnt that over a period of 10 academic years from 1965–66 to 1974–75—the last complete year for which figures are available—there had been a reduction from 53 per cent. to 37 per cent. in the proportion of graduates known to have entered employment in this country immediately after taking first and higher degrees at universities and polytechnics in Great Britain who went into industry. For this purpose, industry is defined as manufacturing, building and the public utilities as opposed to banking, insurance and other forms of commerce.

Proportionately, in universities, industry was more attractive to engineers than to any other type of graduate, yet despite a doubling in the output of graduates generally over the decade the actual number of university engineers entering industry was lower in 1975 than in 1968, and that was not due to lack of demand. Significantly, the most sustained increase in university graduate employment had occurred among those joining firms of chartered accountants. Indeed, over that 10-year period the proportion of graduates as a whole entering accountancy grew from 2.4 per cent. to 9.6 per cent. Your Lordships will draw your own conclusions from those figures. I should add that the most recent figures, published only two weeks ago and relating to the likely supply of and demand for graduates this year, show that an improvement and the long-hoped-for switch of talented people from the public to the private sector appears to have begun.

A question, however, remains as to whether this represents a change in the attitude of our talented young people towards industry, or whether it is simply a reflection of fewer jobs being available elsewhere. Your Lordships will see from the terms of the Motion that I have reached the conclusion that the problem is still there, and that its basic cause is the relatively low esteem in which industry is now held in our society. Others who have studied the problem very closely have formed the same opinion. One, Mr. Kenneth Adams of St. George's House, Windsor, has become convinced that a society which cannot, for whatever reason, affirm the underlying necessity, value and virtue in the principal activity by which it earns its living faces a basic dilemma. It cannot take a positive view of its own future, because it does not take such a view of the activity on which that future depends.

As a society, in recent years we have refused to accept that we cannot continue to consume that which we do not produce. We have put off the day when we shall have to experience that truth for ourselves by borrowing, and thus living on the work of those in other countries who produce more than they consume. Furthermore, in an impoverished world in which so many people lack the bare necessities of life, we are unable to assist in their development, for clearly we cannot dispose of that which we do not possess. Worse still, perhaps, as Mrs. Shirley Williams pointed out at the last Labour Party Conference, in spending annually £1,000 per family more than we earn, we are even denying our children the freedom to do what they choose with a substantial part of the value of the goods and services they will produce, by obliging them to use that part to pay back the debts that we have incurred. What a way in which to treat posterity!

The reasons why industry is held in relatively low esteem in our society are, in my view, many and varied. Apart from obvious ones, such as rewards that are lower and employment that is less secure in industry than in, for example, the Civil Service and local government, they lie deep-seated in the history of the last 150 years, in popular attitudes and misconceptions, in ecological and even ethical constraints, in an education system that is less closely linked to industry and commerce than in, say, France or Germany, in industrial relations, in minority Governments and in the insularity of politicians, of employers and educationists alike.

I further believe that the elements in society mainly involved, particularly government, employers, trade unions and education, at a number of levels, are all, in part, responsible for the predicament in which we now find ourselves, and that there are measures that all need to take to help get us out of it. For this reason, I express my personal hope that the Motion before us will be debated as constructively as possible, and that we will do our best to avoid a situation in which those of us having an interest in any of the elements involved simply go on the defensive, and place the blame for our troubles on the others. Indeed, it seems to me that the more we are willing to acknowledge what can be done to help by the group with which we are mainly identified, the more likely we are to establish common ground on which we can unite. Regarding myself still primarily as an industrialist, I will endeavour to give a lead in that direction before I sit down.

A related point, on which I feel equally strongly, is that our industrial problems will not be solved until those involved in them are prepared at all levels to identify them more closely, and confront them face to face. In support of this view, I wonder whether I may draw on my experience of training in industry. I well remember that analysis of the problems thrown up in that connection often showed that the problems were concerned with things like communication, relationships, even trust between people. Moreover, the people involved in them usually came from a number of different levels or sections in the overall organisation. For instance, in the matter of communication, whether those on the particular training course were managers, supervisors or shop stewards, one was always led to believe that communication was excellent up to the level undergoing training at the time, and that it was above that level at which everything went wrong. It was only when people from various levels or sections were brought together that they were obliged to face up to the fact that their communication with those below or alongside them was not as good as they had supposed, and I am convinced that this is not a phenomenon which is peculiar to industry alone.

I think further that it is only when political Parties begin to place themselves in a position where they can mark out common ground, by discussing some of our major national problems together, that large-scale industry will secure the stable conditions in which it can plan five or 10 years ahead, as it needs to. In saying this, I believe that I am representing not only the view of the Liberal Party, but also the view of many people in all Parties and none. Incidentally, in my view, the case for a change in our electoral system, bringing with it some form of proportional representation, is just as strong on industrial grounds as it is on more general economic and political grounds. I hope that I have said enough to justify the basic proposition that there is room for improvement in the present standing of industry in our society.

In the last few months various proposals as to what should be done have been made on the educational side, and your Lordships will observe that the Motion calls for agreed action. On many of these problems I do not feel competent to speak, but there are a number of eminent educationists who will be taking part in this debate and who will, no doubt, be dealing with that aspect of the problem. I note, however, that most of the proposals that have been advanced involve structural changes, and that a number will take time to effect. My aim, at the interface between education and industry, is a more modest and immediate one—to encourage those involved in the problem at all levels to confront it together within existing structures.

I said earlier that I would try to give a lead in suggesting what employers can do to help. I believe that they can do more to ensure that students generally have a much closer and clearer conception of what actually goes on in industry, the attractions it has to offer to talented young people, and the great service that can be rendered in it to the community. In my view, large industrial organisations have little to fear in presenting themselves in this way, warts and all, for comparison, as it were, with other large institutions in society. There is talk of the rat race in industry, but from what I have seen and heard of life in schools, hospitals, the Civil Service and even in political Parties, one can find in them rats just as rapacious and as competitive as any in industry and, as has been well said, "Work in any organisation can become a rat race. The question is whether you have the strength and determination not to become one of the rats!"

I cannot leave this point without acknowledging the work that has already been done to find common ground not only by many firms and schools but also by organisations such as the CBI, the Science Research Council, the Careers Research Advisory Centre, the British Association for the Advancement of Science and the Industrial Society, with their long-standing, highly participative and down to earth Challenge of Industry conferences in schools of all kinds. I believe that trade unions also have an indispensible part to play in improving the present standing of industry in society, by collaborating with employers in increasing the rate at which goods and services are produced for the benefit of the community at large. It is significant that the name of one of the organisations that has been most active in promoting this collaboration is the Working Together Campaign, run, like the Industrial Society, not only by employers but also by trade unionists.

One way in which, in my view, trade union leaders at all levels can help most is in the training of shop stewards in what I hope may be called, without offence, the economic and industrial facts of life; for example, that if we are to compete successfully in international markets there is need to invest in new equipment, which will enable work to be done by fewer people, and that in the long run we shall not create more jobs by continuing with restrictive practices to protect existing jobs that are unproductive. In my experience, such training is best undertaken in conjunction with management, but it certainly will not be done at all without courageous trade union leadership. There is not time for me to develop this theme any more now, and, if it is to be pursued constructively in the debate, I think, anyway, that it comes much better from the other side of the House than from me.

Finally, my Lords, what action should the Government take? May I first say what in my view they should not do. They should not introduce further legislation likely to be judged by other Parties to be so extreme that, first, we resume squabbling among ourselves, instead of concentrating on our main task of conquering inflation and improving our industrial performance; and that, next, the offending legislation is reversed as soon as the Opposition become the Government. It is industry which is then left to clear up the mess.

The most immediate instance of what I have in mind is the Bullock Report on Industrial Democracy. This is not the moment at which to debate that question; we are to have that opportunity, I understand, in a fortnight's time. But in my view it is imperative that a consensus should be found on that question, or, among other things, industry certainly will not be held in higher esteem by talented young people. I am sorry to say that the effect of the recent Government Statement on this subject has been to damage still further the morale of industrial management. The feedback from junior managers to students in polytechnics and universities is nowadays very swift. I put it like that because the morale of management, and particularly of senior and middle management, was already low.

In that connection I should like to make plain my view that the present heavy rates of taxation applicable to that key group must soon be reduced if for no other reason than that, as a trading nation in competition with others, we simply cannot afford to do without the willing co-operation of such people. Again there is not time for me to develop that theme, but I am sure that other noble Lords who are to take part in the debate will wish to amplify it when they speak.

Let me try to end on a positive note. The Prime Minister especially has been brave in stating clearly that there is no speedy way in which unemployment can be reduced and that the reorganisation of British industry can be achieved only through co-operation. I rejoice that the current agreement between the Government and the trade unions on incomes policy is still holding. I rejoice also over the progress now being made under the aegis of the NEDC by Working Parties representing Government, employers and trade unions in the various sectors of industry.

Government must continue to take the lead, but it is not for Government alone to act. Having now spent a little time in political and academic life as well as in industry, what has come home to me most clearly is how interdependent are the various elements in our society. I think that perhaps the most relevant question that we can now all ask ourselves is: How can we help each other? It is in that spirit, my Lords, that I beg to move for Papers.

3.24 p.m.

Lord CARR of HADLEY

My Lords, I am sure that your Lordships will all be extremely grateful to the noble Lord, Lord Rochester, for choosing this subject for debate today and for introducing it in the way that he has. He comes to the subject—as so often I find is the case in your Lordships' House—with the unmatchable qualification of great knowledge and experience of the subject on which he is speaking. We are most grateful to him. I am sure we would also all agree that the subject which the noble Lord has chosen does indeed go to the heart of our national problem. It is one of the paradoxical features of the British scene that, while the people of Britain continue to expect a high and rising national standard of living, they persist at the same time in their tendency to hold in low regard the industrial and commercial activities which alone can provide them with the actual wealth which this high and rising standard of living demands.

Thus it is that far too few of our ablest children are encouraged by their parents—and still fewer, I fear, are encouraged by their teachers at all levels—to seek their careers in the wealth-producing sectors of industry and commerce in this country. Rather are our children encouraged to become civil servants or local government officers, or to go into one of the professions. These are the prestige careers of the modern age. Of course they are all not only honourable but vital activities which, for the good of our country, must attract a fair quota of our most gifted and dedicated young people. But surely there is something seriously wrong with a society which, on the one hand, expects a high and rising material standard of living but which, on the other, holds in relatively low regard the activities which alone can increase the national wealth.

One thing certain—and I think we can all agree about this—is that it is now urgent to take serious action to change this attitude in our country. I hope we can also all agree that, in doing this, every interest group in our society must play its part, not blaming each other for what may be wrong at the moment but each making a positive contribution. Government, management, trade unions, teachers and educational administrators—all have a positive contribution which they must make.

I was very glad, looking at one interset sector, when last April the CBI took an important initiative in launching a project which they called "Understanding British Industry". As they said at the beginning of their explanatory booklet about that project: In a rural community no one can fail to be aware of the social and economic importance of agriculture. In a complex industrial society, the corresponding role of manufacture and trade in creating wealth and employment to support the standard of living is not so obvious ". That, I think, is undoubtedly true. It is in order to make the role of manufacturing industry and commerce more obvious that we have to bend our attention.

Probably there is a favourable opportunity to do so at the present time—a more favourable opportunity than for a long time past—because there has been a growing realisation over the last year or so that we in this country cannot for long go on living beyond our means and doing what we want to do by seeking always to redistribute the same stock of wealth, and that if we want to maintain, let alone improve, our standards of living (not only in personal terms but in terms of our social and community environment, whether it be health services, housing, education, leisure activities, or whatever field you like to look at) then we must create new national wealth and give more attention to creating it than we have done over recent decades. That can be done only by improving the productivity of our industry and commerce in order to provide the goods and services which we in this country and people in other countries wish to buy, and can buy, in greater quantities than at the moment. Therefore, the need is to convert this growing sense of reality into a live understanding of the real worth in overall social terms, as well as just in selfish personal terms, of working in the wealth creating sectors of industry and commerce in this country.

At the moment there can be little doubt that students—and by "students" I mean pupils moving from school right up through all forms of further education—tend to think a number of rather hard things about life in industry. They tend to think that work in industry is a matter rather of exploiting than of caring for the needs of people. In many cases they tend to think that jobs available in industry and commerce are not really likely to stretch the intellectual abilities which their education has helped them to acquire; that perhaps success in industry and commerce is more (if I may put it crudely) a matter of sharp practice than of hard thinking. Students also seem to think that they are more likely to meet and work with others of their own kind and interests elsewhere than in industry and commerce. These are all very serious and false misconceptions, but however false they may be we must face the fact that they exist to an uncomfortable extent. So I know that I must speak in summary headline form and therefore in macroform, as I well realise that the solution of the problem is to a large extent microaction in many detailed things. I must speak in summary headline form on what I believe needs to be done to counter these feelings by management, by trade unions, by the educational world and by Government.

Like the noble Lord, Lord Rochester, I shall have most to say about the role of companies and management, because like him this is where my own sphere of experience mainly lies, and if one has to embark on what is rather like lecturing or preaching a sermon to people, it is better to do so in a field where one has had actual experience rather than in fields where one has not. So I shall have more to say about companies and management than about the other fields. Anyhow, I believe that that is the most important area.

As a director, I must be careful not to make this analogy too close, but if there was truth in the statement that there are no bad soldiers, only bad generals, there is also some truth in the belief that there are no bad employees, only bad managing directors and boards of directors. As I say, if I wish to maintain my position on the boards on which I serve, I must be careful not to press that point of view too hard! However, there is some truth in it. Certainly it is true that they must have the prime responsibility. Leadership can only come from the top in industry, and if they do not do the job of changing the feeling of young people towards work in industry, no one else can. If they lead, other people can support them.

I think perhaps the first need is to explain the function of profit. It seems to me that by allowing "profit" to become almost a dirty word we have perhaps created one of the main causes of the low esteem in which our industrial and wealth-creating activities are held. Frankly, the making of profit, if it be the end all and be all of industry, hardly strikes young people at least as offering a great opportunity for satisfaction and service. So directors and managers must do much more than they have done in the past to improve the popular understanding of the responsible and literally vital contribution which industry and commerce make to the life of our society; the extent to which the majority of individual enterprises accept and practice a high degree of social responsibility towards their employees, their customers and their communities and the extent to which they can only do that so long as they are also profitable.

The first test of management is naturally the capacity to make a profit. I do not believe that companies should be defensive or apologetic about this because profit is the lifeblood of any industrial or commercial enterprise. If the supply of profit becomes inadequate and enterprise grows weak, for the obvious reason that it lacks the power to invest on which its future life depends, and if the supply of profit is cut off altogether for more than a very short time, an enterprise must die.

This truth is so simple that it is incredible that it is not more widely understood. But the fact remains that it is not, and that is why I say that it is therefore one of the major responsibilities of those who direct companies to explain the need for profit to their employees, to their customers, as well as to the public at large. Perhaps in order to do so those of us who are engaged in directing companies will need to give profit a new definition and perhaps even a new name. Perhaps people can understand the concepts of adding value and of creating worth more than they can understand the concept of this financial profit as it has come to be understood—or perhaps I should say misunderstood—in our society.

So let us make quite clear that the first responsibility of management and the first test of its capacity is to make profits, but at the same time and in the same breath industry must make clear—as we have not usually managed to do hither-to—that profit is the means to an end and not the end in itself. It is only by making adequate profits that an enterprise gives itself the power to serve society by providing its customers with better products and services; by providing its employees with better paid and better protected and more satisfying jobs; by using resources more economically and by contributing increasingly to the life of the communities in which it operates its factories, offices and so forth. So the test by which we want to lead people to judge the value of an industrial or commercial enterprise is surely the double one of its capacity, first, to make a profit and, secondly, to use that profit to the genuine benefit of society. It is the profit which is the means and the service which is the end and until industry itself can carry that message with conviction I do not believe we shall make the progress we must make in raising the esteem in which our industrial and commercial activities are held by the country at large and by young people in particular.

But companies of course must do much more than that. First—and this was mentioned, very rightly and strongly, by the noble Lord, Lord Rochester—companies must make much closer contact with schools and colleges and universities and obtain a much greater under-standing of them, because I think the CBI are also right, in launching the project to which I have referred, to make the statement that relatively few teachers have had the opportunity to gain firsthand experience of industry or access to up-to-date information about it, and that, similarly, few people in business have more than a superficial knowledge of the work and problems of present day schools, and indeed of colleges and universities as well. So each and every company must surely act to put this right and do far more to help teachers at all levels to provide to their students an informed and balanced picture of what industry is and what it is doing.

Secondly, companies must surely be more active than many of them have been in the past in the communities in which they operate. They must make contact with parents as well as with teachers in the communities in which they operate. They must support local activities of every kind. They must also, I believe, provide people as well as money to help with the work of communities in which they have centres of operation. I have the honour to be the president of an organisation which was formed a few years ago called the Action Resource Centre. I cannot go into the detail of that at the moment, but its object is to persuade companies to second people—not just to give money but to second people and to bring their people's skills to the problems of a local community and so to help local communities to help themselves and not just do things for them. I am glad to say that an increasing number of companies are joining in the work of the Action Resource Centre. I have quoted just one example by which individual companies can alter the general understanding and the general esteem which is felt about them in the areas of their operation.

I have spoken in terms of action by individual companies because I believe it has to start at the level of individual companies. But, of course, it has to be supported nationally, by the CBI, by trade associations, by chambers of commerce and by professional management organisations. I also have the honour to be chairman of a body called the Consultative Council of Professional Management Organisations, and I know that each one of those is now giving more serious attention to attracting recruits by presenting the true nature of the careers which the pursuit of professionalism in management can offer by way of satisfaction as well as material reward.

So, my Lords, I hope I have said enough to indicate to your Lordships that it is in industry that the main lead has to come in raising the esteem in which industry is held by the country at large. But I think there also has to be action by the trade unions. I really hope that the trade unions will do all they can to emphasise the degree of common interest which exists in industry. I know that a great majority of trade union leaders know this and try to support it. I hope they will do as much as possible, and even more in public, because there is a common interest. Equally, there is conflict. There is a common interest in creating wealth, and the conflict may be about how you distribute the wealth. But let us at least do all we can to stress the common interest in creating more wealth. I hope the trade unions will do as much as possible, and will be seen to be doing as much as possible, because I know the trade unions well enough to know that they do much more than the general public realise to prevent strikes rather than to cause them. I think I am right in saying that most trade union leaders spend 99 per cent. of their time trying to stop strikes and not 1 per cent. trying to cause them. This is not generally realised, and I wish they would make it more generally realised.

Last April I was driving somewhere and had my car radio on. I heard Mr. Jack Jones being interviewed, and he was saying that what we need is to concentrate more on how we talk in and less on how we walk out. That is what we want. I say to my trade union friends that they should wear their hearts on their sleeves a little more in these matters, because they rather unfairly appear from time to time, perhaps particularly to the young, to be warring barons rather than peace-making leaders. Then I would hope that the trade unions could take a more constructive attitude to profits. Profit, fairly earned, whether it be a nationalised industry or a private one, is the lifeblood of successful wealth-creating enterprise. So these are the areas in which the trade unions can help.

Of course, the world of education must respond; this is the other side of the coin of what I was saying about industry's attitude to the schools and colleges. Industry must take the initiative, but educators must respond. I shall leave my noble friend Lord Elton, who I hope will be speaking later in the debate, to deal with education far more knowledgeably than I could, even if I were not trespassing too much on your Lordships' time.

May I end by saying just a few words about what the Government should do. The Government have the overriding responsibility in our society, not only for specific policies but for setting the attitudes and creating a favourable environment. Recently the Prime Minister and some of his senior colleagues have been showing far more understanding and giving far more encouragement in this field than previously. I do not want to be partisan, but one must not underestimate the damage which I am afraid certain members of this Government did in this field in the early days of this Government's period of office. But we sincerely welcome what appears to be a real change of heart and the new emphasis which the Prime Minister and his colleagues are giving in their speeches to the importance of the wealth-creating function and the vital role in that process both of the private sector and of managers and technical people as a whole.

But words have to be backed up by deeds, and, above all, they have to be backed up by deeds in levels of pay and personal taxation. Financial incentives are by no means everything, but they are quite important. In the long run I do not see how we can expect a sufficient quantity of our young people of the highest capacity and dedication to go into industry if they can see that by going into the Civil Service or local government service or the academic world they can over their lifetime earn salaries at least as high as they would in industry, with much greater security and far better pensions. I do not want to take away from the attractions of the public sector, but I say that you cannot have this discrepancy without it having a drastic effect, particularly over a period, on the number of young people who are seeking their careers in the wealth-creating sectors of our economy. This discrepancy must be put right, and only the Government can create the necessary pressures and attitudes for it to be done.

We must realise, as a report on the front page of the Financial Times made clear yesterday, that managers in Britain feel that they are at the moment being unfairly treated. As a result, many managers are showing an increasing reluctance to work in Britain. I wonder how many of your Lordships saw the actual chapter and verse given about one particular aspect of this by Mr. Ray Pennock, a Deputy Chairman of ICI. He was talking about his own company. He told the world yesterday that 200 managers working overseas in ICI were earning more than ICI main board directors, and were unwilling to fill vital posts in the United Kingdom; there were 200 in that position this year compared with 18 last year. That is a terrible trend. I suggest that those conditions which are making British managers wish to stay overseas rather than come home, even for promotion, will also be affecting the minds of young people not yet starting their careers when they decide whether or not to go into industry.

This is an important subject. Greater success for wealth-creating sectors of our economy is the only means by which our country can achieve greater success as a whole. In the end success depends on people, on the wealth-creating sector being able to attract and inspire both the ambitions and the sense of service of a larger number of our most able and dedicated young people. As in every other sphere, it is people who matter and who determine success or failure. While I have, rightly I think, stressed the importance of financial rewards, basically we have to attract people to industry by appealing to young people's sense of service and desire to find satisfaction and not only material reward in their work. I have suggested some ways in which companies, managers, trade unions, educationalists and government should attack that task.