§ 1.25 p.m.
§ Lord Sherfield rose to move, That this House takes note of the Report of the European Communities Committee on new information technologies (27th Report, H.L. 176).
§ The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. I must begin by expressing my regret that because this debate was brought forward from 17th July to today at rather short notice three key speakers have been prevented from taking part in it; so the change has been most inconvenient. On the other hand, the House will have the advantage of a maiden speech by the noble Lord, Lord Kearton, which adds great significance to the occasion, and I am most grateful to the other noble Lords who are forgoing their lunch to take part. It is, I think, unfortunate that these EEC debates are so often relegated to the cellar.
§ This report from the Select Committee on the European Communities covers no fewer than six EEC Commission papers: two are background reports; one is for report; one deals with a proposed Council regulation, one with recommendations on telecommunications and one with a proposal for a Council decision relating to machine translation. But they all deal with applications of micro-electronic technology to communications and information services which our French friends cover with the single word "informatique".
§ This subject of information technologies is a wide one, with far-reaching strategic industrial and social implications. I see on rereading the report that we are unable to avoid the true but already well-worn cliché that we are dealing with a new industrial revolution. While the Commission's background papers cover the field, your Committee concentrated on the specific proposals and recommendations of the Commission, and they therefore did not consider the social, employment or patent aspects of the subject, or the vexed question of confidentiality. The more limited inquiry was sufficiently wide-ranging. I should like to record my thanks to all those who gave oral and written evidence, in particular to the department and to two firms which accelerated the learning curve of some of our members by arranging visits to their research laboratories. As well as the official witnesses, we had oral evidence from the industry and trade associations concerned. We did not take oral evidence from any individual private firm, but some took advantage of the invitation to submit written evidence either to your 962 Select Committee or to the committee in another place, whose evidence was available to us. We also had the assistance of Mr. Christopher Layton of the Commission, who agreed that his evidence could be put on the record. This relaxation of the Commission's rules to permit publication of evidence is most welcome, and, if maintained, will certainly add a new dimension to these Committee reports. For those who need it, we have provided a glossary of technical terms.
§ At the risk of gross over-simplification I shall now attempt a short background survey. If I err I am sure that subsequent speakers will field my errors. The end products of information technology are the result of a number of stages. There is first the manufacture of the tools and equipment for making the chips which are the basic elements of the technology. Computer-aided design, manufacture and test equipment are important in this stage. Secondly, there is the large-scale manufacture and processing of the chips themselves into integrated circuits. Thirdly, there is the incorporation of the processed chips into a wide variety of products. Fourthly, there is the incorporation in turn of these products in systems. The whole sequence is interwoven with, fifthly, software design and application.
§ There is a broad division between applications in the field of telecommunications, primarily the concern of posts, telegraph and space administrations—for example, Telecom in the United Kingdom—and in data-processing, with its multiple applications especially in administrative work of all kinds.
§ Micro-electronics with its applications is probably the fastest developing technology today. The reduction in scale and price of its products has been prodigious, and processes can be outdated in a year or less. It is an industry to which Europe has made important contributions. Yet European firms are falling far behind their American and Japanese competitors in terms of sales. Our report says that European-based computer companies take 16 per cent. of the world market as compared to 73 per cent. for the United States and 11 per cent. for Japan. In terminals and mini-computers, the European share of the market fell from one-third in 1973 to a quarter in 1978. In the micro-electronics component sector, Europe imports over 80 per cent. of the integrated circuits that it needs.
§ The world market is growing rapidly—for telecommunications equipment by 7 per cent. per annum, for data processing systems by 17 per cent., for integrated circuits by 25 per cent.—yet European industry has proved no match for the powerful thrust of a broad-based American industry with defence related support and its continental market, or with the highly integrated, highly subsidised and innovative industry in Japan. So it is steadily losing its share of the world markets, and cannot even supply the European demand. The commercial and strategic consequences of this are extremely serious. An important element in this situation, touched on in the report, is the presence of so many subsidiaries of multinational companies in Europe. They make a major contribution in terms of technology and employment, but in some respects they introduce a complicating factor.
§ This then is the problem which the Commission has been attempting to tackle for the past five or six years. The question came up to the Dublin summit in 1979 963 and the Council and Commission were then instructed by the Ministers to study and seek to deal with it. Hence the papers before your Lordships. In scrutinising them your Lordships' Committee set out to consider whether the proposals were acceptable, and more generally, what the role of the European Commission is or could be in dealing with this large and technologically important subject.
§ It is essential to realise that the means of action at the disposal of the Commission are minimal compared with the magnitude of the problem. The Commission's staff is very small, the financial resources available are extremely slender, and with the budget in its present state there is unlikely to be much more available for this kind of work. In those circumstances the Commission's role is threefold: it can exhort; it can stimulate and co-ordinate action by others; and it can initiate and administer collaborative programmes of research and development. The Commission has attempted all three.
§ Its exhortations to the micro-electronics industry have fallen on somewhat deaf ears; the European firms have not, on the whole, been persuaded; the industry is highly fragmented and each national fragment relies on large subsidies and investments from national Governments. While in our evidence there was general recognition, in principle, of the desirability of getting together, there was considerable resistance to practical steps in that direction. A striking example has been the almost simultaneous production of two very similar information systems by the British and French industries, Viewdata and Teletext. The minimum of collaboration could surely have corrected that kind of duplicated effort.
§ The Commission has been rather more successful in the telecommunications field, and the witnesses from the telecommunications industry recognised that the Commission's initiatives have enabled considerable progress to be made in the past two or three years in the standardisation and harmonisation of protocols and products. The discussions take place not under Commission chairmanship, but in a body called the European Conference of Posts and Telegraphs (ECPT). The proposals of the Commission in this field are only in the form of recommendations: for liberalisation of the markets; for harmonisation; for common standards; and for monitoring of their development by the Commission, which sees itself as an energiser in this field. No Commission money is involved. Most witnesses supported these Commission recommendations, as indeed do your Lordships' Committee. But as far as the proposals for liberalisation are concerned, the essential importance of reciprocity is rightly and positively stressed. The new arrangements may have to be introduced in stages to enable the European industry to meet competition from third countries.
§ In research and development the Commission was able to get under way in 1975 a three-year programme of collaborative research and development in the data processing field, which has since twice been extended. The Commission has now proposed a regulation providing for a combined research and development programme in the first of the stages to which I referred earlier; namely, the development of the equipment for 964 the manufacture of the chips—the machine tools, as it were of the industry—what is sometimes rather infelicitously referred to as the infrastructure. The official witnesses supported this programme; the industrial witnesses at least did not oppose it; and the Committee recommend its adoption. Nevertheless, in spite of its modest scale, the Committee had had some doubts whether the Commission had the resources and staff to administer it without outside assistance.
§ There remains the proposal for research and development programmes leading to the development of a machine translation system of advanced design. There was some scepticism among members of your Lordships' Committee about this, as also among some academic authorities who were informally consulted. But it emerged in evidence that the Commission already used a machine translation system which gave acceptable results, and that further development was essential. It was pointed out that machine translation is needed most for the translation of the flood of statistical or factual material necessarily put out by the Commission, rather than for more sophisticated documents, and further, that 40 per cent. of the whole administrative expenditure of the Commission was swallowed up by the translation services, and 60 per cent. of the expenditure in the case of the Council—and this before the entry of Spain and Portugal. Moreover, the translation of this mass of factual detail caused resentment and frustration among tile translators. So anything which helped to reduce this burden on finance and people was to be welcomed and encouraged. The witness from the British Library gave very strong support to the programme. It is, indeed, a modest one with provision for adequate control, and the committee support it.
§ Finally, your committee recommend that the Commission and member states should increase their existing use of information technology equipment in their own services. In this connection, I was interested to note, subsequently, in another Brussels document that the Commission has recently installed a new ICL computer and configuration.
§ In summary, therefore, the Commission has worked very hard. It has had some success in its co-ordinating efforts, and it has made some sensible, if modest, proposals, for collaborative research. The Commission should be encouraged to continue to do what it can in exhortation, in co-ordination and in encouraging research, and should be provided with sufficient staff for these purposes. But, relative to the magnitude of the problem, the Commission's programme is almost minuscule. The total sum that it proposes to spend for all its projects is 52 million European units of account—or approximately £28 million—over four or five years. This compares with the national expenditure in the United Kingdom of approximately, £50 million per annum, and France and Germany have programmes of similar size.
§ It must be recognised, therefore, that the Commission, though it has probably done as well as it could in the circumstances, has neither the finance, the human resources nor the clout to deal with the heart of the problem; that is, the lag of European industry, taken as a whole, behind its competitors—mainly the Americans and Japanese—due in part at least to its fragmented structure. This situation must be 965 dealt with by the industry itself, with support of private and public investment and probably pressure from Governments. The resources required are large and the need urgent. Time is not on the Community's side. Indeed, it is perhaps now not merely a question of catching up but of making a quantum jump as the Japanese did in 1967 and 1976.
Therefore, in asking the Minister to declare the Government's attitude to the Commission's proposals, it is necessary for me to ask him to look wider and to know how the Government are getting on with encouraging and supporting our own industry. For example, how is INMOS doing, and, finally, what is their policy as regards the wider co-operation and better integration of the industry in the Community? For it is clear, as our report says, that:
if in the latter years of this decade European industry cannot manufacture and supply on competitive terms in the world market",
it will mean that this vital industry, which is still falling behind, will never be able to catch up. My Lords, I beg to move.
§ Moved, That this House takes note of the report of the European Communities Committee on new in formation technologies—(Lord Sherfield.)
§ 1.44 p.m.
§ Lord Gregson
My Lords, first, on behalf of the Opposition, may I congratulate the noble Lord, Lord Sherfield, and his colleagues for the timely and thought-provoking report that we are considering this afternoon. I should also like to thank the noble Lord for his explicit and wide-ranging introduction, as it certainly will reduce the length of time that noble Lords may have to listen to my speech this afternoon, which is always a useful start.
I should also like to say how much we are looking forward to a maiden speech by a very great scientist and industrialist. We look forward with a great deal of anticipation to the maiden speech of the noble Lord, Lord Kearton, this afternoon. There can now be few people who do not recognise the importance of micro-electronics and information technology, but I doubt whether many people realise the tremendous impact that these new technologies will have on their daily lives—in the home, in the school, in the workplace and in their leisure activities; and I believe that the most fundamental changes will come about in the workplace, whether it be in the office or the workshop. On an international basis, these technologies are developing at quite frightening speeds. A recent estimate of the world trade in micro-electronics is between £50 and £60 billion per annum—an enormous sum; but what is even more important is that the projected growth rate for the next decade is between 10 and 15 per cent. per annum, which means that by the end of that time the economic scene will be dominated by these technologies.
There is a race on the international scene, led by America, closely followed by Japan, who are catching up rapidly; a failure to enter that race, or to do well in it, will result in other industrialised countries, such as those that make up the Community in Europe entering a decline in industrial output, in employment and in the standard of living of the whole of their population—a decline of a nature never before experienced 966 except perhaps in the Weimar Republic for other reasons. I believe that in the measured language of the Commission and of the committee, a good deal of this message is spelt out. They say that it has been referred to as a second industrial revolution, and I think that "revolution" is the right word. The Commission draws attention to the information society of the future, and I recently listened to the newly-appointed Minister for Information Technology describing new standards of national achievement based on information-rich countries and information-poor countries. On the basis of the Commission's comments that European industry is lagging behind the United States and Japan in these technologies, I thought that there must be cause for concern that the United Kingdom and other countries in Europe may become the new poor.
The committee drew attention to the world leadership enjoyed by USA industry and to how much it owes to the procurement power of the United States Federal Government, and the massive support given to defence and space research and development for these technologies. It gives as an example the 200 million dollar funding for one project alone, namely, very high speed integrated circuits. The committee also draw attention to Japan's remarkable progress stemming from a long-term national plan supported by large Government funds. The committee then describe some of the support provided in Europe. But in paragraph 13 they say that despite this expenditure these European programmes have not redressed the imbalance compared with the United States and Japan and they comment that Europe has so far failed to mobilise its major asset, that of Continental scale.
I should now like to turn to what I consider to be the three most important paragraphs in the report; namely, paragraphs 33, 34 and 35. In paragraph 33 and later in the report the committee welcome the initiative of the Community for their detailed proposals in the three major fields outlined in his introduction by the noble Lord, Lord Sherfield. They are the fields of micro-electronics, infrastructure activity, and for standards in telecom, data processing and peripherals. But they go on to comment that as the Community Budget is now structured, only meagre resources, if any, can be made available for objectives such as these. The committee would expect the UK, in common with other member states, to continue to develop, but on a larger scale, their support for information technology and collaboration between member states. In paragraph 34, the Committee note the lack of planning and the market weakness. In paragraph 35 the committee were depressed by the fragmented nature of the European industry as a whole and even in individual countries compared with the position in Japan, and they state the need for an integrated structure to be on competitive terms later in this decade in the world market place. But they go further. They say, "Indeed, if this does not happen, there must be grave doubt that Europe, which has already fallen behind, will ever be able to catch up", and they recognise that the Commission has neither the resources nor the authority and "clout" to exert pressure for the required restructuring of the industry. In view of the enormity of the problem we are facing, and its crucial effect on the future economic wellbeing 967 of this country and of Europe, those are indeed grave words that the committee have put before this House, and I hope the Government have taken note.
May I now turn to one aspect of the problem which was not considered by the Commission and, therefore, not by your committee, and that is the enormously important influence of defence activity in this field. One must recognise the very large sums that have been spent, and are being spent, by the American Government in this area. In fact, the very chip itself was developed within defence contracts for research and development in the great technical universities of America. One must also recognise that the money being spent in these technologies within defence programmes in Europe are probably greater than the money spent in civil programmes, but the EEC has no defence dimension; it is not within its remit, and whereas the USA can integrate and co-ordinate its programmes with industry, taking account of both civil and defence spending, this is not possible on a European scale and is a further fundamental weakness.
Even taking the financial and technical strength of Germany, France and the UK, coupled with the academic ability, as the Commission says, and your committee concur, we are falling behind in the race. In the out-turn, we must be aware of the dire consequences. In the period of their presidency of the Council of Ministers, the Government have a unique opportunity to organise to reverse this unsatisfactory situation. Recognising that the Commission has neither the resources, not the authority and clout, recognising the fragmented nature of the European effort, recognising the important defence dimension, there is need for a new agency within the Community and within the NATO Countries recognising this common theme, and such an Agency should be given the authority and the clout because the problem is so urgent and so important as to require it. I was indeed disappointed by the statement of the Foreign Secretary to the European Parliament when he launched his themes for the European Communities development, and setting out the aims of the six months' British Presidency. This subject was not even among them, and I would urge the noble Lord to seriously reconsider his priorities. If we spent the money presently being handed out on the common agricultural policy on this technology instead, we might, but only might, be able to rejoin the race for our industrial survival.
§ 1.54 p.m.
§ Lord Tanlaw
My Lords, we from these Benches wish to welcome the committee's report and to congratulate the noble Lord, Lord Sherfield, on his brilliant introduction to what is a complex subject. It was a pleasure serving with him on this committee. I too look forward very much to hearing what the noble Lord, Lord Kearton, has to say in his maiden speech, when his wisdom and experience in this field will be available to our own benefit and education.
Noble Lords will see from the report of the Select Committee that the subject of new information technology is both complex and varied, and under the firm chairmanship of the noble Lord, Lord Sherfield, the committee were able to be directed to what was perhaps the most essential elements that should be drawn 968 to the attention of the Commission. However, before asking Her Majesty's Government to support some of these points in detail, I should like to preface my intervention this afternoon with some general observations with regard to the new technologies brought about by the development of the micro-processor.
The reason I have asked to do this is that it would not appear that the Commission are filled with an adequate sense of urgency to become involved in these new information technologies that are sweeping the world, or to be more precise, Japan and the United States. The Commission could be under the impression that there is plenty of time to try and unite the independent national efforts in Europe in order to compete and in order to survive in the commercial world of the new information technologies of the 'eighties and 'nineties.
We are now familiar with the micro-processor in many forms, but is the Commission really aware of the effect on, say, education? To give a simple example, while I commend Her Majesty's Government in recognising the need to provide every school in this country with a mini-computer by 1982, is the Minister aware that the children of 1992 may be playing with electronic toys and games which their parents cannot operate, and certainly not repair?
An article in the latest New Scientist says that this problem is already appearing between schoolchildren and school teachers who are having to teach children these new computer technologies. It would appear that the pupils are already in advance of knowledge of their teachers. I should like to ask the Government whether anything is going to be done under the new British presidency of the EEC to stimulate a standard procedure of teaching young people a standard computer language in order that the Community children, so to speak, may at least be at one in learning the same basis of how to deal with a new industrial revolution, which has been referred to by the earlier speakers.
The Commission also would appear to be ignoring some of its own word processing problems, which were referred to in Section 283 of the report. I wonder why they seem so slow to be able to use the tools already available, like word processors, which are at their disposal even today. It occurs to me that possibly one of the reasons why the Commission appears to lack the sense of urgency on the subject of the new information technologies is that they do not, and indeed cannot, understand the full implications of them. I believe that anyone over the age of 40 must have difficulty in fully appreciating the power and capabilities of information technology as it exists today, and therefore must have been greater difficulty in comprehending the technologies of tomorrow.
I am prepared to admit to being over the age of 40. I also, as a hobby, design devices that include integrated circuits and micro-processors, yet I am prepared to admit publicly to noble Lords that I still need assistance in order to programme an alpha-numeric pocked-sized calculator that is available on the market today. The danger is that the people who have the power both in Europe and in this country are able to talk about micro-processors but they do not really fully understand yet, in spite of all that has been said and written about them, what this revolution is all about.
I am really wondering, to take up the point of the 969 noble Lord, Lord Gregson, whether or not the Commission requires a new team of advisers of possibly a younger age who are able to explain to them some of the wonders that are available to them and which they can fully understand. In that case they might be more enthusiastic about trying to get more funds than there are presently, as has been said before, being transmitted to agriculture, which is an industry that has almost reached the full peak of its technical development. Is it not time that the Commission combed the straw out of its hair, looked in the mirror, and found out that we are in the 1980s and are looking forward to the 1990s in order to survive, and not just as an industry but as a nation and as a Community?
Another fact which comes out clearly in the report is the need for all Euro-based industries involved in the new information technologies to work together to produce products that will at least compete with the equivalents imported from the United States and Japan. Again, there is a requirement for speed in the execution of a policy of this kind because, by the very nature of the industry, changes take place so quickly through the outdating of products and circuits. Can the Minister convince the House that enough is being done in the United Kingdom to back up the work already being achieved through the National Enterprise Board and by the latest developments of INMOS?
Thirdly, are the Government able to say, in spite of rejecting amendments moved by my noble friend Lord Lloyd of Kilgerran to the Telecommunications Bill, that every effort is being made to harmonise and standardise the United Kingdom telecommunications network with our counterparts in Europe? Will the Government also work closely with the Commission in the harmonisation of the entire telecommunications industry throughout the Community, so at least that can be achieved quickly?—whereas it is accepted that many of the peripherals to this network will be more difficult to standardise at the outset, as is covered in the report.
It would be interesting to hear from the Minister whether a telecommunications authority needs to be set up to look into this matter simply to speed it up. I am not suggesting another Quango be arranged to slow down everything; I am asking for an authority to speed it up. If the noble Earl does not like the idea of a new authority, may I ask how the Government propose to speed up this harmonisation? Unfortunately—if only to repeat what has already been said—if Her Majesty's Government are unable to give the undertakings which have been sought or to be as depressing as some of us feel about the Commission's changes of achieving these objectives, it seems that the EEC will have no other choice but to standardise on a combination of American and Japanese equipment, both for their network operations and perhaps even for a majority of the peripherals that are attached thereto.
Even supposing the Commission is able to be given more powers and money and to be galvanised into greater action, and even supposing there is an agreed policy of harmonisation of electronic equipment within the Community, will there be an adequate number of operators to use the equipment to the best effect when it becomes available? I should be grateful if the noble 970 Earl would report on what progress the Standing Employment Committee of 5th February 1980 (Com. 80/16) has to report on this matter.
Going back to what I said earlier about the technology changing and the requirement for younger people to operate microprocessors and computers, are the civil servants in Europe training an adequate number of properly qualified personnel to maximise the use of these new devices? I have already referred to Brussels having a word processing problem, as mentioned in the report, and apparently not having an adequate number of word processors.
It is not just the United Kingdom, but every country in Europe that is suffering from the crushing unemployment problem affecting young people, and I feel that greater priority and emphasis should be given to training young unemployed people in the basic skills of computer programming and computer awareness. I am not being facetious in saying that, because many of the unemployed have been criticised for playing Space Invaders and other amusement park games, when in fact that is as good a way as any to get through the understanding barrier of how the machines of the future will work. Some young people I have spoken to have a great knowledge of how to win at Space Invaders simply because they understand how the machine works. This is an area about which I should like the Minister to give an opinion as to where the Government are going and whether they realise the urgency about it.
I have only two short points to make about the question of computer language and what was, I believe, a mistake and a deliberate mistake, an example of which was given in the report. The mistake appears in the glossary under "'A' for Ada", which is the European language, devised by the American Department of Defence. It is creditable that the name given to it is in recognition of that noble and talented lady, the Countess of Lovelace, but I feel that as she was Lord Byron's sister—and not Lord Bryon's sister, as mentioned—perhaps the noble Earl, who is well versed in these matters, will confirm that the American Department of Defence has got it right, because if they are to give her this credit, at least they should do so properly.
Secondly, on the question of the deliberate mistake, I come to the computer language machine. I was very sceptical as to the viability, or indeed the desirability, of such a machine. I am now more than partially persuaded that there is need for it, but it occurred to me that in mediaeval Europe the then data bases, the monasteries, were faced with the same problem; namely, the problem of how to harmonise and keep the administration, both secular and clerical, going through the Dark Ages. They did it through a dedicated team of monks and the use of Latin. It occurred to me whether Latin might be the possible language of the Europe of today. I am advised by certain professors who are having to work on the problem of the language machine that that is impractical.
A point which has perhaps not come out in the report—unfortunately, I was not able to be there on the day the evidence was being given—will be apparent if noble Lords refer to what I call the deliberate mistakes and amendments of the system on page 126, especially item No. 7. This is an example chosen by the Department 971 of Industry and it is a very good one. Number 7 is a sentence without a subject and without a verb and with one mis-spelling. Even the best machine in the world does not have a chance to translate that very well, and I do not understand it even in English. Considering the disadvantage from which the machine was suffering it did an extraordinarily good job. Unfortunately, during the correction, both the machine and the corrector missed out the last three words of the translation.
Obviously, there is a long way to go before we get somewhere to help the translators who are objecting to the drudgery of having to translate, because we shall be spending more time correcting. However, I feel there is hope for such machines, though it is quite beyond even the most advanced computers to obtain an A-level in English, because they do not think that way. Computers can absorb information only if it is presented in a proper manner. If a computer is told to translate a sentence, then the sentence should at least be constructed in a conventional way that can be understood by humans, before being translated by a machine.
There is a hope that this machine might actually encourage Eurocrats and civil servants on both sides of the Channel to prepare much shorter and more intelligible documents; documents which are much better written in the sense that they will have to be to go through a machine that is extremely dim-witted. At least this will be a great help to those of us who have to read a large number of documents emanating from both Europe and our own country and who have trouble in understanding them even when written in our own language. I support the EUROTRA project in the hope that when the translators have to become the compilers, both the use of English and the general presentation of documents of all kinds which originate from European government will be improved.
§ 2.10 p.m.
§ Lord Kearton
My Lords, perhaps I may begin by expressing my appreciation for the kind remarks which have been made by my predecessors in this debate when they referred to my baptism in your Lordships' House. It was an inspiration, as the noble Lord, Lord Gregson, said, to sit under the chairmanship of my noble friend Lord Sherfield in conducting this quite complex inquiry. It was also depressing, as I believe was stated in paragraph 34 of the report, to realise, as the witnesses answered questions, that the future was slipping from our grasp. We were in fact contemplating the further decline in both European and British strength.
The proposals from the Commission are in them-selves constructive, as the committee concluded, and are worthy of support. They are, as my noble friend Lord Sherfield has said, very minimal proposals. In this regard the Commission is short of both money and qualified staff. We are faced with a huge, growing industry, as the noble Lord, Lord Gregson, has said, with a current turnover of £55 billion, which looks like doubling in less than five years. This country's share of that is very small and is falling. The United States dominates, for reasons which are well known to 972 us all, but what I think is worth touching upon is the extraordinary growth of Japan. Japan had a standing start only 15 years ago, but by carefully choosing her objectives and through an integration of Government and private industry, Japan has made remarkable progress.
It can be said that the Japanese are currently accelerating their technical progress so that the Americans themselves now fear that the Japanese will overtake American technology within the next five years. The fact that there has been Government and industrial collaboration in Japan does not mean that there has been no competition. There are many large Japanese firms competing with each other and for the appropriate ear of Government. The successful firms in Japan have now become extremely large—much larger, in fact, in their turnover and resources than the largest companies in the electrical industry in this country. One of the Japanese companies announced only the other day that its current research strength of 6,000 scientists is to be doubled to 12,000 in five years and that its research budget, which is already 500 million dollars per year, is also going to be doubled over the same period. The Japanese are carrying out a vast multi-faceted research effort and are pulling ahead on a world scale.
It is said that for us to keep pace will be difficult. On the basis of the evidence which was given to us it will not be difficult—it will be impossible. It has been disclosed recently that there are one or two areas where we do have a lead, such as Ferranti's Uncommitted Logic Arrays. But it is equally clear that British companies are reconciled to seeing that lead disappear and only having a tiny fraction of the future world market for this particular development.
On electronics grounds we seem to be relatively prosperous; that is because a lot of business comes from captive markets such as defence and telecommunications in this country. Most countries keep telecommunications as a protected area. There is some export bonus from the defence contracts but so far there is practically no bonus in the telecommunications contracts, and the efforts of industry and the Post Office to develop an export capability in up-to-date telecommunications has made very little progress indeed so far. It is a popular thesis these days that small businesses are going to be the salvation of the country—and this area of specialised applications, especially software, is one in which small businesses have been founded, have got off the ground, and have made rapid progress. But in totality they are very small in the overall scheme of things; they really do not matter all that much.
I thought it was a typical reflection on the British attitude to technology that one of the most successful flotations of recent times has been with a company which distributes imported material in this field. It employs practically no staff, has a high turnover and high profits, and when it comes to the Stock Market is vigorously supported. We need to see that the support that manufacturing industry receives is very much greater than at the moment.
An initiative that has been set up just over a year ago, and which is making very good progress, is the National Economic Development Unit, which is dealing with electronics. There is taking place there a 973 very fruitful dialogue involving industry, the Government and the various people concerned to secure faster growth, faster integration of our electronics effort. But like most things in this country it has a tremendously long gestation period. It is making a good beginning in deciding what it wants to do, but so far it has made practically no progress in actually doing anything.
A point that I think we must be aware of in considering what are called the "sunrise" industries, of which microelectronics and information technologies are prime examples, is that in themselves they do not provide very many jobs. In the committee, when the British Telecommunications people were questioned about their own employment prospects over the next decade, they said that they thought they would be lucky to keep the figure roughly where it is today. Anyone who read the IBM annual report (which came out recently) will have seen that last year IBM—a very dynamic firm and very important in this country, as has been said—is keeping its employment stationary; in fact it dropped a little last year. Similarly, Plessey, one of our great companies in this area, is contemplating a reduction in employment over the next few years. So whereas we must be in this business—this is where the prospects for our future prosperity lie in the creation of wealth—we must also recognise that these new industries will not create jobs in volume.
The application of technology really does assume that there is a very strong independent industrial base and we must halt the decline in our traditional base. We have taken steps in this direction for steel, for instance, as well as for vehicles, and in view of my former long association with it, perhaps I may be permitted to say that I hope there will be the same approach to textiles. Textiles lost 120,000 jobs in the last 18 months or so but, in one form or another it still employs 10 per cent. of the total workforce in manufacturing in this country. It provides a field for the application of this advanced technology. But we cannot apply advanced technology in a vacuum, and we need a very strong general industrial base to take advantage of the new technologies.
We must also remember that technical training will be of increasing importance. Many times we all see the illustrations of British inventiveness and the way in which British inventions are developed elsewhere. But already in the field that we are now discussing—the subject of the committee's report—we are short of trained personnel, and, if I may say so, it seems a very odd time that some thought is being given about, or action is being taken on, possibly reducing the availability of trained personnel from our institutions of higher learning. To me that would seem to be counterproductive on a massive scale.
Although some of my remarks might seem to be critical of what the Government have, or have not, been doing, in conclusion I should like to say that I feel that they are moving in the right direction; slowly, deliberately—but in the right direction. I think that their efforts to get micro-electronics and computers known in schools are absolutely first-class and, as the noble Lord, Lord Tanlaw said, they should be encouraged and emphasised, and given more support.
The programme to increase the awareness in industry of the potential of micro-electronics again has been very well thought out and applied, but needs to be very 974 much increased. It is encouraging that the NEB initiatives on INMOS and other activities in microelectronics have been kept on and further support given to them. Having had something to do with the formation of the company in its early days, I am personally delighted that support has been given to ICL.
One feels all the time, and one felt it on the committee of the noble Lord, Lord Sherfield, that the potential, the possibilities for this country, are as great as, perhaps greater than, they have ever been. But we must still find the will, the purpose and the determination to make the best of the talents of this country. The initiative in this field of information technologies on the Brussels Commission is to be warmly welcomed. But it is only touching on the fringes of what needs to be done. We need a massive rethinking, a massive reorientation, a massive concentration, and I hope that in his reply the Minister will be able to give us some comfort in this regard.
§ 2.19 p.m.
§ Lord Flowers
My Lords, Sir Frank Kearton, as he then was, was created a Life Peer in 1970. Some bashful maiden, this! we might have thought had we not heard the characteristically forceful speech which has now just emerged. We were delighted when, on his retirement from more arduous pursuits, the noble Lord joined us on Sub-Committee F and began to devote more time to the affairs of the House. He brings with him experience, at the highest levels, of atomic energy, the chemical and textile industry, and of the British National Oil Corporation, of which he was the founder chairman. Recently he was also welcomed into the world of education by becoming the Chancellor of the flourishing University of Bath in succession to the noble Lord, Lord Hinton of Bankside. I was glad that, like my noble friend Lord Tanlaw, he spoke of the need for training in the field we are discussing this afternoon. Noble Lords from all parts of the House will wish to congratulate the noble Lord, Lord Kearton, on his speech, and we will hope to hear him speak here many times from his vast wealth of experience.
The report which we are debating today concerns itself with some very complicated matters. That it deals with them so clearly is entirely due to the leadership of the noble Lord, Lord Sherfield, and I am glad to support him in all that he has said this afternoon in his masterly introduction. I only wish that our remit had been wider, for there could be few subjects more deserving of the noble Lord's penetrating attention than the new information technologies, and the effect that they may confidently be expected to have on technology and society everywhere.
As it is, as the noble Lord has said, our study was confined to the three aspects which have been singled out for attention by the Commission of European Communities. They concern matters of no little importance, to be sure, but one is entitled in this debate, even as a member of the sub-committee, to wonder whether these particular problems encompass the most important which Europe faces in its development and adoption of information technology, a full appreciation of which would go far beyond the report which is before us.
975 In the report we made it clear, as several noble Lords have already stressed, that our chief competitors are the United States and Japan. "Competitors" is hardly the correct word, for, as the witness has made plain, we in Europe are several years behind those countries and we shall have to make a colossal and co-ordinated effort if we are ever to catch up. Perhaps one example will suffice to illustrate the point. I have recently seen proposals for the development in Japan of a fifth generation computer system for introduction during the 1990s. It is a very comprehensive document, and it may be this to which the noble Lord, Lord Kearton, was referring. I so agreed with what he said.
I am in no position to pronounce on the practicability of this Japanese proposal, but it is the sheer magnitude of their endeavour that is so disconcerting. It is rumoured that the Japanese investment in this system during the 1980s might be as much as 1 billion dollars, including 200 million dollars to be spent on software development alone. Compared to that, as we point out in paragraph 35 of our report, the joint European effort is both small and diffuse. In the words of our report:Europe has so far failed to mobilise its major asset—continental scale".As so often in Europe the member nations still prefer to compete with each other than to pool resources in order to meet the global challenge. We are "divided by differing standards, products, and methods of application", and are therefore unlikely to be able to compete in world markets. It is not as if we had no experience of collaboration. In the Airbus, to take another field, we successfully built a genuinely competitive European product. We have been successful in various scientific ventures, of which CERN is the most famous. Recently we put up a geostationary satellite with the Ariane rocket, and no doubt this new capability will be of great importance to telecommunications in the near future. These achievements came about by a pooling of skills and resources in a common venture. We do know how to go about it, for these, surely, are lessons enough—none of which, incidentally, required the sacrifice of national sovereignty. But not, it seems, until we have first failed, at great expense, to achieve the impossible on a purely national scale. I therefore hope that the Commission of the European Communities will raise the sights of Governments and of industries and aim for our own fifth generation computing system for Europe in the 1990s. I am absolutely confident that we are capable of it. Between us we have the skills and we have the resources: we need only the foresight and the determination to work together in a common cause.
I therefore see the programme of the Community in the information technologies as deficient and unexciting, unlikely to make a significant world impact. Nevertheless, the present proposals are useful and should be supported. In micro-electronics they are intended to provide the tools which are needed for component manufacture, rather than the components themselves. It is the infrastructure industry that it is intended to support by Community action—the equivalent in micro-electronics, as Mr. Christopher Layton put it, of the machine tools industry in normal manufacture— 976 such things as electron beam fabrication and computer-aided design. These will undoubtedly help with hardware manufacture.
But the other side of the computing coin, my Lords, is software—the complex system of concepts, languages and instructions whereby the hardware is made to perform the tasks required of it. The word "software" occurred hardly at all in any of the documents presented to us. Most of our witnesses freely acknowledged that software played but a small part in Community thinking. Yet increasingly software is beginning to dominate the computing scene in effort and in cost. Time and time again, computer manufacturers have failed to provide viable systems not because their hardware would not work but because their software was inadequate. I very much fear that this lesson has still not been learned, either in Britain or in Europe generally.
I cannot stress too much that the success with which the new information technologies can be applied, potentially to an enormous range of practical and social problems, will depend crucially upon the effectiveness with which software can be developed for each application environment, and can then be maintained effective as that environment evolves in accordance with need and experience. It can be argued that the software should be provided by the computer manufacturers, on the one hand, and by applications specialists, on the other, and that may well be so. What seems to me to be lacking, just as with the hardware, is the equivalent of the machine tools; software developed especially to enable designers to construct major software systems reliably, responsively, maintainably and economically; tools by which an application can be analysed, a requirement can be stated, a system can be specified and later validated.
Ability to do this will, in turn, depend upon the development of an engineering discipline—let me call it "software engineering"—with its underlying scientific base, its proven methods, its tools, its professional standards and its trained people. In the United States, the Department of Defense initiated a major activity of this kind with its Stoneman project, an integral part of the Ada concept referred to in our report and to which Europe contributed. This approach has now been identified under the generic term "Programming Support Environment" in many circles, including some of our own departments of Government, industry and the community.
But, with few exceptions—and even then often with American support—current work in Europe seems to lack clear objectives and adequate scale as compared with Japanese and American endeavours. If the Community wishes to be concerned with the provision of tools so that others can finish the job, let us not forget the software tools. I hope that the Minister will tell us what the Department of Industry propose to do to encourage their colleagues throughout Europe to pay more attention to software support. I apologise to him that I gave so little warning of my question. Let me add that the same problems that beset software are now being met in developing and describing the logic that is to go on the chips, except that the problems there are even greater for the languages that chips understand (speaking very loosely), are even more remote from normal human usage.
977 Thus, as the level and density of integrated circuit technology increases, the chip manufacturer will increasingly face the same problems, and unless something is done, he will make the same costly mistakes. What I have been saying about software, therefore, applies equally to telecommunications and to micro-electronics. Whatever the progress made with the standardisation and compatibility of hardware will be of little avail unless more emphasis is placed on software development. I can, for instance, see System X running into very serious software difficulties with the system software doubling every two years or so and rapidly becoming unmanageable. Professor Antony Hoare of Oxford recently drew attention to this kind of instability in the context of "Ada" in his Turing Lecture quoted in The Times of 1st July.
I come now to the subsidiary programme, "Eurotra", for a machine translation system of advanced design. It is a continuation of a research programme that has been under way for some years, and it is intended to help with a major problem of the Community, the need to translate and to issue documents in many languages. Undoubtedly the multi-lingual character of the Community contributes greatly to the cost and complexity of its administration, so there is no doubt about the need. The question is whether one can hope to find a solution in the foreseeable future. It is a problem that does not lack for enthusiasts. It would, indeed, be wonderful if one could speak into the telephone in English and have it come out at the other end in French or Greek, or, perhaps, both at once in different places. Technically that could certainly be done; it is merely that the meaning would not be what had been intended, and it is the meaning that matters in communication.
Personally I do not believe there will ever be such a thing as automatic machine translation. The reason has to do with language and the human mind rather than with machines. Language is full of allusions, associations, ambiguities and imprecisions. Without them, sophisticapted discourse between human beings would be impossible. Can one imagine what would happen in diplomacy or love if what was meant was precisely said? We but rarely define the meaning of the words that we use leaving it to the general context to make our meaning clear. If I utter the simple sentence, "walking to the bank I lost my money in the grass", what is the meaning of the word "bank"? Is it a house of commerce, or an excrescence in the landscape? Only the context will make the choice clear. If my sentence is to be correctly translated the computer must, therefore, be able to take into account the context intelligently. Perhaps that simple choice would be within its capacity. But if, with its laser eyes, it were to read:Twas in the season when th'Eternal Light entered the Beast that workt Nemaea's woehow could it possibly know that the poet merely meant the month of July? Poetry is different, you might say; but I will hazard a guess that the proceedings of many Community meetings are much more obscure and allusory than that.
Of course, we can programme a computer so that it can accept its input and its instructions in, let us say, the English language, or Latin, if you prefer. It is, 978 however, only the English language at first sight. It is really a computer language employing symbols which happen to be English words, each precisely defined, each having within a given context a one-to-one relationship (as the mathematicians say) with some aspect of the system's operation and content. That is not how human beings normally use language, and if we did it would be impossible to convey anything beyond the most simple ideas. So it is only in that very restricted sense that automatic translation is possible, between restricted languages recognised by the computer because each has been put into one-to-one relationship with it in a given context.
Fortunately, Community regulations are just of that kind, or at least they should be. They deal with precisely defined activities and products and they say, or should say, precise things about them. So automatic translation of regulations from one language to another is clearly possible in principle, and the Eurotra programme has made some headway, as the example given on page 126 of our report illustrates, although even there much human intervention was still required.
I rather regret that so much of the work of the Community appears to be concerned with issuing routine regulations. If the drudgery is too great, I would rather reduce the number of regulations. But to the extent that regulations have to be issued it does seem that a measure of computer assistance is possible which may lead to a reduction in the number of translators, or at least in the drudgery of their work. I ask only that the success of the Eurotra programme should be judged not only by the enthusiasm of its protagonists but by the extent to which it does in fact reduce the load on the translation services. I personally doubt whether it will.
§ 2.37 p.m.
My Lords, as can be imagined, I rise with some diffidence to speak in this debate as I am the only speaker other than my noble friend Lord Gowrie who is not a Member of Sub-Committee F. However, I rise to thank the Committee for their thoroughly excellent and wholly fascinating report. I particularly welcome the opinion expressed in paragraph 13 of the report. I believe that this is a key opinion and I also believe it is of such importance and is so cogently expressed that it merits quoting:Europe has so far failed to mobilise its major asset—continental scale. Its total informatics market is half as large as America's, but is divided by differing standards, products and methods of application. In telecommunications the separate national monopoly administrations have developed their own distinct technologies, procure from firms based in their own countries, and implement distinctive tariff and service policies of their own. The result is that trans-national business services do not exist of the character, low cost and scale of those in the USA.I believe that one of the keys to righting this wrong lies in the example of Her Majesty's Government in their liberalising the telecommunications monopoly within the United Kingdom. I can only hope that the Commission do everything in their power to encourage member states of the Community to follow suit.
While I appreciate the problems created by shortage of time available to hear and examine witnesses, I was a little surprised to learn that IBM United Kingdom was 979 not invited to give evidence. My surprise arose for two reasons. First, it must have been inevitable that reference would be made to perhaps the major corporation in the field, both in America, this country and Europe—and indeed it happened. Secondly, not to invite, either directly or as a member of a trade association, a leading contributor to the information technology industry of this country and Europe, I respectfully suggest, could be likened to not inviting British Telecommunications to give evidence. They of course did give evidence.
In the course of their excellent evidence delivered to the committee. the Department of Industry, at paragraph 8, stated that the United Kingdom certainly do not share the Commission's apparent obsession with the problems caused by the multi-nationals and specifically by the United States multi-national corporations. That view was similarly stated later on in the evidence of the same witness from the Department of Industry where he said:We regard companies like IBM and other multi-nationals which manufacture in this country as a very important part of the national electronics scene".That is a view with which I entirely agree. It reflects a view held by many that a company is British to the extent of its contribution to the employment in this Kingdom and its internal generation of capital, both direct and indirect. Provided there is goodwill towards the host nation, the nationality of the proprietorship or control is, I believe, of minor importance. However, further on in its evidence, the department said:… although the multinationals are very important in terms of jobs and in terms of technology, their record in terms of helping the balance of payments is pretty poor. I cannot remember what the turnover of IBM is but its contribution, I think, to the balance of trade has never exceeded more than about between £5 million and £8 million, which is really just double that of some of our software companies".I believe that last observation could be quite seriously misleading. In 1980 the United Kingdom balance of trade figures for computer hardware in the country as a whole showed a deficit of some £200 million. The contribution of IBM (UK) showed a surplus of £60 million. In addition, to compare their hardware contribution with that of United Kingdom software companies could hardly be described as comparing like with like. It so happens that the contribution of their development laboratory at Hursley to United Kingdom invisible exports amounted to some £35 million in 1980.
In answering a most pertinent question put by the noble Lord, Lord Kearton, in paragraph 42, I believe that the Department of the Environment did scant justice to IBM (United Kingdom) by answering in part,I really do not know what happens in IBM, and they have in this country in Hursley a science centre, and in France they may have manufacturing facilities of various kinds".In fact, the IBM has two manufacturing plants in the United Kingdom at Havant and Greenock, employing nearly 4,000 people, in addition to the development authority at Hursley and a scientific centre at Winchester. Altogether, IBM (United Kingdom) employ in excess of 15,000 people and provide in addition nearly 3,000 jobs through supply companies. This performance is in fact nowhere near matched by United Kingdom software companies.
980 If I may just finish by turning to the radio side, it is a well-known fact that just after the war 80 per cent. of the British domestic radio market and 60 per cent. of the export market was provided by British firms. Today's figure is approximately 5 per cent. in both cases. This leads me to beseech Her Majesty's Government to transfer the responsibility of planning the use of the radio spectrum from the Radio Regulatory Department of the Home Office to the Department of Industry. Efficient use of this vital resource is becoming increasingly important in the light of development, information and telecommunications technology. I believe this move would command widespread support throughout the industry and would be in line with the excellent ACARD report on information technology which was published last September.
§ 2.45 p.m.
The Earl of Halsbury
My Lords, having sat in committee many a time with my noble friend Lord Kearton, when I saw the letter "M" after his name on the speakers' list I could not believe it. Having listened to the charm, assurance and authority with which he addressed your Lordships' House this afternoon, I still feel that it was almost a printer's error. But, none the less, I shall look forward to hearing him on many occasions in the future, as I am sure your Lordships will, too.
Getting on for 20 years ago, there was a wisecrack going the rounds to the effect that, after a brilliant period of gestation, the computer was now entering upon its infancy, and that wisecrack could be equally true today. The headlong pace of development has been continuous from the start, with the effect that the leads and lags between the most advanced technology and the tail end following on are getting larger and not smaller.
Many a time, I have said in this House and elsewhere that the pioneer producer is helpless in a world of stick-in-the-mud consumers, and if you want to get the consumers up from down under you must have some kind of general staff that can specify what he needs. Nobody knows what he needs, but in the field of American procurement, as mentioned in paragraph 10 of the report, you have the equivalent of a general staff and if it does not know what it needs, at least it can specify what it will pay for. Anything which is a means to that end will have the necessary finance and boost put behind it.
Whether history will regard astronautics as an obsessional neurosis, or a high scientific adventure, there can be no question but that the development of micro-circuitry has been a by-product thereof. It was the firm determination of those in charge of the space programme to control it with computers, with a degree of reliability which only micro-circuitry could achieve, which led to the immense expenditure on them—expenditure which could have never been supported by industrial investors in the ordinary course of events. At times, it was thought crazy, and the chances of success very slender, and yet the cost per unit came down and down until it fell into the commercial range.
That was only part of the story. My memories of this subject are rather like geological strata; they go back, decade by decade, to the beginning of the story. 981 In the 1950s, the great boost was based on the radar defences of America with a string of duplicated computers. It was known as Project Sage. I think there were 35 of them strung along the Arctic Circle in Canada, as part of the radar defences of North America. The contract for that went to IBM and the massive recruitment of first-class personnel in which they were able to indulge, all paid for ultimately by the American taxpayer, left them with the pick of the very finest technological staff, and they fell free for redeployment when that project was finally consummated. The counterpart of these situations simply cannot be postulated as foreseeable in Europe, and we have to accept that the Americans have an unbeatable lead in some of these fields.
As regards the Japanese, in the early 1960s I was part of an OECD mission to Japan to study the relationships between industry, the universities and government in that economy. It became clear to me that, in Japanese industry and administration, decisions are taken by very few people, but having been taken they are followed up on the lines of military campaign planning. The ruthless efficiency with which Japanese commercial industry has captured the market in high-grade cameras, binoculars, telescopes, transistor radios, music centres and now computers is, from the standpoint of military campaigning, wholly admirable. But it is certainly not our industrial lifestyle, as it were.
Again, we have to remember that the Japanese struck very lucky at the time of the Korean war, when the American electronics industry was beginning to be overladen with weapons work and sub-contracted a very great deal of the entertainments side of the industry to Japanese manufacturers, who got the benefit of all American designs and know-how as of that date. They got, from that point of view, a flying start. We must not suppose that we can reproduce this frame of mind in Europe. Decisions here are not taken by very few people, and it will require more than a boost of the telecommunications industry to overcome our national and international propensity for having too many cooks stirring the executive broth.
In this field I am reminded of the old Chinese proverb that if rape is inevitable, relax and enjoy it. We might as well accept firms like IBM, Sony and others here as British manufacturers. Provided that the goods we buy are made here, there is no real deterioration in our economy. All that we should ask in exchange is that our designers should have a fair place in the design teams. Do not let us be ashamed of the situation in which we find ourselves. Transistors are an American device and will remain so, and all the micro-circuitry which goes with it. But the jet engine is British and Rolls-Royce can still design world-beaters. Let us be proud of the things which we do well, and go on doing them, and not try to compete, ineffectively, with those things which other people have had a better start on.
For years past, the computer as such has been the software-dominated switchgear at the centre of a data processing complex. Attached to it are peripherals, and its arithmetical facility is merely one of those peripherals. As I have for many years been chairman of the Software Committee of the Science Research Council, of which the noble Lord, Lord Flowers, was the executive chairman overall, he and I are, as it were, 982 "old buddies" in the field of software. I can economise on anything I want to say by merely saying that, as he would well know, I agree with everything which he has told your Lordships about it.
There then comes the question of strengthening the industry in peripherals. This is one of the matters where what the report has to say should be studied very carefully. It is an activity which is open to us, not an impossible one such as catching up on an "uncatchable-up" lead taken by others in certain fields.
Standardisation is another activity where what the report says could be studied with great profit. We must pursue it in Europe. Typically, the laser-based optical systems for telecommunications channels are a field in which our own Post Office is well to the fore, but, if it is going to fall into the shallows of unstandardised data communication systems, of course nothing could come of it.
There is a field for public intervention, both European-wise and nationally, in some of the big quantum jumps which have to be made in computing systems, where whole systems like the IBM 360 series of the ICL 1900 series have not, more often than once a decade, to be replaced with something else. This is a very, very sensitive area of decision-making, it is a very costly operation and it seems to be a proper field for seeing whether or not public finance can be put at the disposal of the entrepreneur.
It is important, too, to help wherever we can people with original ideas. It is very important that we should not allow the big lead that firms like IBM have in the field of installation and hardware to become an intellectual monopoly of the growth of ideas. That is something which we should resist. The typical instance has already been mentioned by one speaker. He instanced the advances made in this field by that admirable firm Ferranti Limited.
Speaking as I am towards the end of the debate, anything else I might have wished to say has already been covered by other speakers. Therefore, may I end with an apology to the noble Duke who is to follow me and to the noble Earl who is to reply for the Government? My afternoon engagements are such that I must slip away at three o'clock. I therefore apologise if I am unable to sit through the whole of the proceedings to follow. I regret having to make this apology but there is no alternative.
§ 2.55 p.m.
§ The Duke of Portland
My Lords, in the first place I wish to congratulate the noble Lord, Lord Kearton, on his very interesting and highly instructive speech. I trust that now that he has begun, we shall hear him frequently.
My Lords, I do not believe that the general public have any real understanding of the effects that electronic technology will have on the future development of our civilisation. They do not realise that it will prove the most revolutionary new industrial technology since the invention of the steam engine. The prospects offered by electronics in terms of increased economic activity, employment, wealth and the quality of life are boundless, but these benefits will accrue in the first instance to those countries whose Governments 983 and industrial leaders fully realise that it is necessary that they should take urgent and effective steps to participate in the development of this technology.
The European Economic Community have issued a number of reports which were examined by sub-Committee F of the Select Committee on the European Communities and form the subject of the report now under consideration by your Lordships. But I fear that the advance of micro-electronic technology is not being viewed as a matter of the utmost importance, and there is little realisation of the fact that if the European Community is to co-operate effectively and to be in a position to face up to Japanese and United States competition, they will have to pay for it.
As previous speakers have reminded us, the United States and Japan are both far ahead of Europe in the development of electronic technology. That the United States should be in this position is due largely to the electronic requirements of their defence and space programmes. On the other hand, the Japanese Government were determined that Japan should be independent of, and able to compete with, the United States in the electronic field. They are therefore encouraging and financially supporting co-operation between leading Japanese firms. That was admirably set out by the noble Lord, Lord Kearton. As an indication of the success and the good prospects of the Japanese I would mention that the German Seimens company, for whose management I have considerable admiration, have formed a joint electronic components company with Fuiji Electric, I presume on the principle "if you can't beat them, join them."
The total aid which it is proposed that the Community shall give to assist research and development projects in the electronic field amounts to a paltry £28 million over four years. It will probably be said that there are no prospects of fresh European Economic Community funds becoming available, but surely it is more desirable to devote such funds as are available to furthering and speeding the advance of new industries that are acknowledged to be of vital importance, than to allocate those funds to propping up industries that are unfortunately moribund.
I submit to your Lordships that there is another aspect. When the Treaty of Rome was concluded and the European Economic Community was formed, funds were made available for the reorganisation of European agriculture. On the whole, that has been a success, albeit an expensive one. Surely it is time now to devote similar funds to making electronic technology and its fruits easily available to the industries of the European Economic Community countries in order that they may reorganise so as to take the best advantage of the technological revolution that is upon us, whereby the industries and services of the Community will generate new products and services on such a scale that the new jobs created will far outnumber those lost. If the Governments and industries of the European Economic Community do not take swift and determined action, theirs will be the responsibility towards future generations if an irreversible economic decline relegates Europe to a third world status of once-industrialised countries.
§ 3 p.m.
The Minister of State, Department of Employment (The Earl of Gowrie)
My Lords, may I add my words of congratulation to the noble Lord, Lord Kearton, on his maiden speech, which came as a surprise to me too, because once when from the Opposition Benches I was making a speech about the British National Oil Corporation I think the noble Lord almost got to his feet but on that occasion he contained himself, to our benefit today. I may say, in retrospect, looking back I think it will be no surprise to the House that he was right on that occasion and I was wrong, and I am sure that will occur again. It seems to me that it is typical of the noble Lord that he is associated so strongly in our minds with energy issues, atomic energy and of course oil, but that he reserves his fire, so to speak, not for a present and past success but for what we all hope will be a future success, and he looks ahead as we would always expect of him. I hope he will not wait a further 11 years before he contributes to us again, if only to keep us on our toes on the development of this subject.
I welcome very much the Select Committee's report and would like more than conventionally to congratulate the noble Lord, Lord Sherfield, on his chairmanship, on the way it was introduced this afternoon, and indeed the many noble Lords who have spoken in this debate and who sat with him. It seems to me that I have nothing to add except agreement about the importance of the issue. I endorse entirely as an employment Minister what my noble friend the Duke of Portland has just said about the job generating potential of these new industries. Of course, there will be transitional pains and transitional job losses, but the net effect in job terms can only be very large, and very devastating to us if we do not move apace in this area.
The noble Lord, Lord Sherfield, expressed some anxiety because the time of the debate had been changed, and I will of course draw this point to the attention of my noble friend the Chief Whip. Nevertheless, I think it has been a very good debate. The House of Lords is perhaps at its best when a relatively limited list of speakers all with expert knowledge are talking to a specific subject. Therefore, I cannot really regret that this debate has taken place today. I would just say to the noble Lord, Lord Sherfield, that he will, I am sure, appreciate, in respect of my friends the business managers, that the nature of our year in Parliament is that the legislative pressures are very heavy on this House in July and that therefore general issues, however important, usually have to give way to legislation.
The Government of course recognise the importance of this rapidly growing industry. Perhaps the greatest earnest of their interest is the appointment of my honourable friend Mr. Baker as Minister with special responsibility in the field. Our recognition of the importance applies, of course, not merely in this country but throughout the European Community. But, as many people have referred to it, may I start with what we are doing in this country.
In the United Kingdom we have taken a number of initiatives to try and stimulate and develop our information technology industry. We have put proposals before Parliament which will enable a substantial liberalisation of the Post Office's telecommunications 985 monopoly and so have a determining influence on the provision of the modern telecommunications that are so important to the application of information technology. We have provided £80 million of direct support. That has been put aside over the next four years to help industry research, develop and manufacture new products and processes in the information technology field. This is, of course, in addition to the £110 million provided for the Micro-processor Applications Project, known colloquially as MAP, as well as the Micro-Electronics Industry Support Programme, this, as I say, absorbs £110 million.
The distinction between them—to remind the House—is that MAP helps you adapt your industry to this new technology whereas the Micro-electronics Industry Support Programme helps you if you are acually in the business of providing the hardware, as it were. The Government have also said that whenever appropriate we shall encourage indigenous technology—such as Viewdata and Prestel—and the "pulling through", so to speak of innovative products by means of public purchasing.
A major awareness campaign, where information technology is concerned, through 1982 has been launched by my honourable friend the Minister and 1982 has been designated Information Technology Year. This will involve exhibitions, seminars and special events, and will be supported by appropriate studies, trials, demonstration projects and supporting literature. The highlight of the campaign will be a major conference on information technology in December 1982. Any ideas which noble Lords may have as regards how we can use this year to promote greater awareness will be most gratefully received.
I am grateful, too, to the reference that the noble Lord, Lord Kearton, made to our work in the education field, and the Department of Industry's "Micros in Schools" scheme which aims to put a micro-computer in every secondary school by the end of 1982. That scheme is being implemented in parallel with the Education Department's Micro-electronics in Education Programme and it is hoped that it will be extended in due course to primary schools as well as schools for the handicapped. My own department, the Department of Employment group, including, of course, the Manpower Services Commission, are heavily involved in this field and currently there are over 4,500 people doing TOPS—Training Opportunities Schemes—computer courses. We are spending about £7.25 million on TOPS courses in computer training alone, and naturally we would hope to augment that as needs and resources permit. That, I hope, answers Lord Tanlaw's question about the MSC's attitude towards promoting the understanding of these new machines.
Turning to Europe, the Government have welcomed the "Davignon initiative", because of the importance of information technology and because we consider this to be an area where action at Community level is essential. We endorse the Select Committee's assessment that the Commission may not have the resources to implement all of the plan. We have, therefore, urged the Commission to press ahead with practical proposals where results are likely to be achieved quickly and perhaps act as a kind of pump-priming operation for further stimulus in this area.
Ideally the Commission's recognition of the importance 986 of information technology should be reflected in the resources allocated to it and, of course, I must acknowledge that it is unlikely that large-scale funds will be available in the short-term. We shall therefore have to concentrate on areas which do not involve substantial funding and on working through existing organisations—for instance, where competition rules are concerned and where standards are concerned. I refer the House back to an interesting debate on standards in this respect in the names of the noble Lord, Lord Shackleton, and the noble Earl, Lord Shannon, I think at the end of last year.
In the three areas where the Commission has produced proposals the United Kingdom Government have taken a positive attitude. We believe that microelectronics is not only a vital technology but one where European co-operation could be fruitful. If that seems a pious wish I can tell the House that before coming to the House this morning I was engaged in discussions about our Presidency with the Danish Labour Minister and we were debating among ourselves how the Presidency could be used to get more social funding for the field of information technology education. That certainly is something which we agreed should be pushed hard during our Presidency. So we are trying to get on with that. But no one will be surprised in this country at this time, as well as in the many European countries—all, in fact, who are facing great difficulties with unemployment—at the immense competing claims in the fields of social spending. One must recognise how important it is to spend money on the engine, as it were, as well as on the repair of the carriages.
The multi-company, multinational approach proposed is one which could not be undertaken by any national Government acting alone. I agree with the committee there very much. Although the proposed finance is, as I have said, relatively modest—52 million units of account—and is unlikely to have a massive impact, nevertheless it is a good first step and will be encouraging a form of industrial activity which has never before been undertaken in Europe on a significant scale. The Government believe that within our overall policy of restraint of public expenditure, in order, in fact, to release resources for the very industries which we are discussing, and within our policy about the United Kingdom's contribution to the Community budget, this expenditure should indeed be given priority in budget discussions. It will be our objective to bring forward the regulation for decision during our Presidency, and we welcome the Select Committee's support for our position.
It is unrealistic to believe at present that it is practical for Europe to be entirely self-sufficient in strategic technologies. Nevertheless, it is a fair objective and the micro-electronics regulation is a useful first step towards achieving it.
Lord Bruce of Donington
My Lords, if the noble Earl will forgive me, will he inform the House whether the 52 million European units of account, to which he has referred, are payment appropriations for the year 1982 or commitment appropriations?
The Earl of Gowrie
My Lords, no, not without notice, but I shall write to the noble Lord on that point. On the telecommunications recommendations, 987 the Government intend to continue to endorse the principles of the Commission's proposals. We should like to see the recommendations strengthened, though we have some doubts about the practicability of some aspects. Nevertheless, the recommendations could be an important contribution in Europe to our efforts to secure assurances on reciprocal market access following United Kingdom liberalisation. We wish to see substantial progress on that during our Presidency. Our aim in negotiations will be to reach a practical compromise quickly and we fully endorse the importance which the committee attaches to reciprocity, and we welcome again the Select Committee's support there.
In conjunction with these recommendations we are taking an initiative with British Telecom and the United Kingdom suppliers to overcome some of the practical problems currently obstructing genuine European cross-border trade in telecommunications equipment. For instance, it is currently very difficult for manufacturers in one member state to design equipment for the network of another member state. We are therefore encouraging British Telecom and British suppliers jointly to seek European-wide discussions and, where appropriate, under Community auspices, in order that some of these underlying technical and practical problems may be resolved.
Although outside the maintsream of the Commission's activities in information technology, the Government welcome the Select Committee's support for the Commission's machine translation proposals. Translation costs account for some 60 per cent. of the staffing costs of the Secretariat of the Council and about 40 per cent. of the staffing costs of the Commission. There will always be a need to translate documents which contain legislation applicable in member states. The proposed research programme is comparatively modest here, but provided that it is kept—as I think the noble Lord, Lord Flowers, put it—to the very restricted possibilities for language translation by machine, the approach seems sensible. When the noble Lord, Lord Flowers, said how useful it would be to be able to pick up the telephone, speak in English and have someone in Greece understand one in Greek, I thought how useful maybe, but also how awful, knowing well that questions of language and nuance are quite different from those which a machine can cope with. But the noble Lord, Lord Flowers, I am glad to say then answered his own proposition and went into the importance of context and indeed poetry. Personally, I would be sceptical whether in this direction much can be done. It would still seem to be a far safer bet for people to learn each other's language than to rely on a machine to do the job for them.
There is an area which the Select Committee have touched upon and which the noble Lord, Lord Flowers, also touched upon in his speech, and that is the lack of support for software in the Commission's plans. Of course, the Commission has recognised the importance of software. In other areas, the multiannual programme in the field of data processing has provided 15 million ECUs for a support scheme to promote the development of software and applications of data processing. 6.4 million ECUs have been allocated to 988 developments of the "Ada" language, and a further 4 million ECUs was allocated last year to 14 projects concerned with software or applications of data processing. The Government have also recognised that software is important, and the Software Products Scheme was introduced to develop this area in the United Kingdom. Approximately £1 million a year is spent on this scheme. I can also say that we have played a major part in pushing the multiannual programme through the Council's machinery.
The noble Lord, Lord Sherfield, asked me how INMOS was getting along. I think it is too early for me to give any indications of commercial success but I can say that my advice is that the technical progress has been good and has been well received. I very much welcome Lord Gregson, from the Labour Benches, stressing the importance of defence and defence procurement. I shall draw the attention of what he and other noble Lords have said in that respect to the Minister of State for Defence Procurement, who is my noble friend Lord Trenchard.
With the noble Lord, Lord Tanlaw, I am not sure that a new authority is always the way of speeding things along. We have, as I said, made a new Minister, and I really would prefer to leave it at that. I am not sure whether—though I do not share everybody's anxiety about Quangos in all cases—a new one would necessarily get the speed that we all want. I shall write to the noble Lord, if I may, on the question that he posed to me in respect of the Standing Employment Committee, as, without notice, I do not know the answer.
To sum up, the Government attach considerable importance to information technology. We acknowledge, with many noble Lords who have spoken, that the future trading performance and hence the jobs outlook of the United Kingdom and Europe will be affected by the speed at which business takes up this technology, and the ability of manufacturers to develop innovative products which are competitive in world markets. We believe that there is a role in this field for the Community organisation, and the areas that the Commission have identified seem sensible.
But as many speakers have warned us, an important aspect is time. If we are to compete effectively with Japan and the United States over the next decade—and that is our overall objective—it is vital that we act at once. We have urged this on the Commission. We shall continue to do so, and I have given some indication of what we ourselves are doing at home. I should like finally to thank again the Select Committee for their efforts in producing such a clear statement of their views, and such an overall supportive and helpful report.
§ Lord Gregson
My Lords, before the Minister sits down, may I draw attention to something I said in my speech and ask whether he would give it consideration? The problem about the European activity is that it has no defence dimension. We all know that very much more money is being spent in this area in the defence field than in the civilian field. It really is a crippling situation that the European Community should be attempting to drag Europe, if you like, into the new technology without this other dimension being available to them. Will the Government give consideration 989 to the possibility of promoting a new agency within Europe that can take the defence dimension into account in promoting this technology?—because, without it, it really is a sham.
The Earl of Gowrie
My Lords, there may not be a common defence programme, as it were, but of course the European countries have substantial defence industries, and their own procurement, not least our own—and one thinks of the French—have had an important role in the life of GEC, Racal, Ferranti and many of our great companies in this area. But that said, I shall of course examine what the noble Lord said, and perhaps in return he will bring his very sensible views to bear on some of his rather less sensible colleagues in another place.
§ 3.21 p.m.
§ Lord Sherfield
The countryside beckons, my Lords, and I shall be brief. I agree with the noble Earl, Lord Gowrie, that the debate, late though the hour, has been well worth while. I thank him for his opening remarks and for the substantive and informative statement he has made to the House. I also thank all the speakers who have taken part, first and particularly the noble Lord, Lord Kearton, for his effective and weighty maiden speech; I greatly value his support on the sub-committee and I hope that the tributes that have been paid to him will encourage him to come more often and participate in the debates in this House.
I welcome the references by the noble Lord, Lord Gregson, to the important aspect of defence in this matter, and the emphasis placed by the noble Lord, Lord Flowers, on the importance of software. I can confirm from my own experience the risk of launching products on the market for which the software has not been sufficiently developed. The noble Lord, Lord Morris, expressed some surprise that IBM had not been invited to give evidence. There was in fact a frequently repeated general invitation to all interested parties to submit written evidence to the sub-committee (as indeed there is to all sub-committees) and several large firms took advantage of that invitation to submit written evidence, but IBM did not choose to do so. I will not repeat what I said in my opening speech, but of course the sub-committee is well aware of the major contribution that IBM and other multinational companies make to the industry in this country.
A number of references were made to machine translation, and indeed this formed an interesting part of the debate. The examples given in the report remind me of nothing so much as my juvenile efforts to translate English into French. The result, I think, was always intelligible, but the French was very poor.
§ On Question, Motion agreed to.