§ 3.3 p.m.
§ The Earl of Shannon rose to call attention to the means whereby British industry may become more competitive in world markets; and to move for Papers.
§ The noble Earl said: My Lords, in rising to move the Motion standing in my name on the Order Paper I, like many others, have a deep feeling of apprehension at our present industrial situation. For nearly four decades it would appear that nationally we have been more concerned with ever more worthy and fair methods of spending our national wealth, rather than giving attention to the business of creating it. Admirable and laudable though this may be, it eventually means that we will run out of resources. That is just where we are arriving, or have arrived now.
§ I am particularly encouraged that so many of your Lordships have agreed to speak in this debate this afternoon. I am also most impressed by the quality and wide experience of those who are intending to participate. In particular, I am most pleased that the noble Lord, Lord Shackleton, has agreed to speak to his own Motion regarding standards during this debate. This is particularly appropriate as his Motion necessarily must form an integral and vital part of any debate or discussion on industrial competitiveness. In addition, three noble Lords have chosen this afternoon to address your Lordships' House for the first time. Like the others participating this afternoon, they will 286 be speaking from a deep knowledge of various different sectors of industry. We wait with the greatest interest to hear what they have to say.
§ I hope that in this debate we will not dwell too long on historical aspects of the present situation, or attempt to apportion or lay blame along party lines. With great respect, there has been plenty of opportunity in the recent past during economic debates for all that to have been done already. I now hope that we may consider constructive suggestions for the betterment of all of us, and our nation in particular. For this same reason I shall not weary the House with lengthy statistics, all of which merely lead to a firm belief in the present situation as we already know it. Most of my contribution will refer to manufactured products, because this has been my industrial background. But in doing so I should like to make it quite clear that I am offering no disrespect to the valuable, invisible services which we offer to the world, or to our large and very important agricultural industry.
§ As is obviously quite clear, I have had absolutely no control over the Chancellor of the Exchequer in attempting to induce him to delay his Budget until he has had the benefit of all the valuable advice which I am sure your Lordships will give him this afternoon. No doubt he has variously done, failed to do, or done the exact opposite of what we think he should do and are about to advise him to do. Do we welcome the Budget? Yes, of course we do. But those little benefits for industry were surely too small, and in many cases were far too late to help many companies which no longer exist. But one must say what a pity it is that there was no cancelling of the now totally indefensible national insurance surcharge payroll tax or of the increase in the heavy oil tax. One really wonders whether such attitudes do not reinforce our belief that Her Majesty's present Government are not joining their long string of predecessors who, over the past decades, in fact gave one cause to wonder whether they were on our side or that of our competitors.
§ Of necessity, of course, we all speak from our own personal knowledge, and this is obviously restrictive in such a wide subject. For this reason I shall make only some very general comments about the subject as a whole by way of introduction. Then I shall concentrate on what is my main interest; namely, technology and industrial research, and the research associations, to which I shall make a number of references purely because I happen to know what they are doing. But this in no way means that they are exclusive in the particular work that they are doing; it just happens to be that I am more acquainted with them. Other aspects of this wide subject will no doubt be covered in detail by the other speakers from their own specialist knowledge.
§ At this time perhaps it is appropriate to remind ourselves of what in fact is competitiveness. I would suggest to your Lordships, first, that it is producing the right product; secondly, that it shall be efficiently produced; thirdly, that it shall be offered at the right price; fourthly, that it shall be effectively marketed; fifthly, that it shall be delivered at the right time; and, sixthly, that it shall be properly supported with after-sales service to ensure that a follow-up order is forthcoming. Then, this is an unusual one, seventhly, which I have added myself; that somewhere, somehow, somebody shall have an intent to be competitive.
287§ Let us take these in greater detail. The product. The right product. It must incorporate the latest technology of its type. We now have instant communication around the world. It is no good offering to a market a technologically inferior product, because people are now well aware of what is available around the world and you will not get away with it any longer. It is no good to say that the old model is still selling. It probably is, but it is losing you reputation and losing you your market. You must have a continuous quest and an awareness of what is available and what is technologically up to date at the moment. Furthermore, it must have an appropriate and attractive design.
§ In this respect I would refer your Lordships, and any other industrialists, to the Corfield Report, which was issued by NEDO perhaps some two years ago. From that you will see that products must have eye appeal, and not only that but they must be seen to be well thought out. It does your image no end of good to be seen to have given the matter careful thought and to have designed it attractively and efficiently. Furthermore, and very important, it must meet the local standards and regulations of the market where you intend to sell it. That little subject I shall leave to the far abler tongue of the noble Lord, Lord Shackleton.
§ However, I should like to remind your Lordships that technology still moves ahead. The Furniture Industry Research Association has been successful in satisfactorily developing something which has so far eluded so many people dealing with standards for timber. It has produced a surface roughness gauge which will enable standards of surface on things like chipboard to be accurately measured for the very first time.
§ Another point that we want to impress upon our companies in this country is the stimulation of technological awareness. So many companies in this country, when they find falling profit figures, tend to make a dive for the established management consultants who then start talking about cash flow, use of assets, and so on and so forth, and the very last thing they think of is, "Are we making the right product in the right way?" A technological audit and a willingness to submit oneself to a technological audit is something we must impress on our companies if they are going to continue to be competitive and highly satisfactory in world marketing.
§ At this moment might I refer your Lordships to one or two examples of missed opportunities, and fortunately one or two opportunities which have been recently taken. The first one I should like to refer to was a joint operation in a project between a United States company and the Rubber and Plastics Research Association in this country, but it might have been any other laboratory. This project was successful in defining a method for the high level re-usage of rubber from waste motor-car tyres.
§ Unlike many of its previous projects and processes it was going to do so without a loss of property in the resulting product, although a high level of re-usage was involved. The patent rights which were obtained on this process were jointly shared between the American company, which was the sponsor, and the British laboratory. The American continent was reserved 288 for the American sponsor, and the rest of the world to the British laboratory. It was made known, bruited abroad among British industry, that this new process existed, but there were no British takers. However, Sweden and Austria have jumped in and they are going to use it. What a pity!
§ Another one was the increased use of waste paper by eliminating what are known as the sticky contaminants in waste paper, which block up paper mills and cause no end of trouble in trying to make new paper from old waste paper. This was done by a British research association and the work was sponsored by the Department of Industry. It has led to a patented process which is highly successful, and we hope that British industry will not let this one pass by.
§ In the 1950s a British laboratory perfected a process of dust pressing of tableware in the ceramic industry. It was not used for various economic reasons at the time but now, oh dear, a German company is producing the machinery to make this type of tableware. However, on the brighter side in that particular industry the use of photo-polymer plates for decorating tableware efficiently and more cheaply than the present process has been developed in this country and is now fortunately starting to be used by British industry.
§ Another interesting one as a chemical system for producing resins from rock and clay. This was developed by the Paint Research Association, I think from memory somewhere in the region of about eight years ago. It was considered to be technologically brilliant at the time but uneconomic. That was before the oil crisis. In those days petro-chemical feedstock was cheap and easily available. Now, with the oil price rises, how much more valuable is this process, but still unfortunately it has not been taken up by British industry. However, great interest is now being expressed by that one nation that has no oil of its own and is entirely dependent on imported feedstocks. Needless to say, Japan.
§ There is a new process in steel castings. This, I think, will entirely revolutionise the present moulding procedure used in foundries. I do not know how many among your Lordships have actually poured molten metal with your own hands, but I have, both here and abroad. I think that I am in a small way qualified to say that I think this is one of the most revolutionary processes that I have ever seen in the foundry industry. It is a variation of the old lost wax, or cire perdu, process, brought really up to date. I would suggest that when this is finally unveiled as a patented process noble Lords who happen to have foundries in their groups will jump at this quickly, because if they do not their foundries are going to be out of business. Those are just a few examples of some cases where British technology has been adopted and others where, unfortunately, we have missed.
§ May I now go on to the next criterion, and that is that the product must be efficiently produced. Here again we must adopt the latest technology in manufacture. The proper use of technology will enhance the three major, although finite, factors in production; namely, land, if appropriate, labour, and capital. We must use those. Labour relations are of critical importance in production, but noble Lords with far greater experience than I will no doubt address the House on that, so I shall not embroider on that subject save to 289 remind noble Lords of an interesting feature which is not sufficiently well known. That is that those countries which have the greatest population of industrial robots and automated machinery happen to be those countries which have the lowest levels of unemployment. I do not know why that should be the case, but it is.
§ We must give very intelligent thought to the training and retraining not only of our workforce but also of the decision-makers, and here a very efficient system is coming into operation where "hands-on" training is being made available with the latest types of equipment and machinery for managers, managing directors and chairmen so that they themselves can operate the new machinery to convince them that it is what they should buy, not just to train their labour force. We have a vast stock of existing technology in this country and it is through technology, which is a broad field including research and development, management and organisation, that our industry can reach for the greater efficiency, production and profit which we so desire.
§ Then we come to the question of the right price. Goods must be designed for the market for which they are intended. Occasionally we will have the technology push—in other words, the placing on the market of a totally unknown product will take place satisfactorily. But more often we must be concerned with the market pull: what does the market want? not what do we want to sell it? The product and its quality must be geared to the customer's requirements and his ability to pay. It is no good offering a highly sophisticated piece of equipment at great expense to somebody who cannot understand it and does not really want it anyway. It is like offering him a sports car when he has neither the roads for it nor the ability to maintain it, and really what he wants is a pushbike. If the product meets those requirements and is produced efficiently, the price should turn out to be correct. The well-known old story about mousetraps is, with respect, a lot of honey. However good a mousetrap you produce, the world will not beat a path to your door unless it knows you have that mousetrap. You have to find the customer and tell him, and if you have the right product at the right price, it should not be too difficult to convince him he should buy it.
§ Whether we opposed or approved our entry into the European Community, we are members of it, so please let us take it seriously. It is about the largest market grouping in the world and, as part of it, we should take it seriously and try to sell in it. I pay tribute to our ambassador to the European Community, Sir Michael Butler, who has produced from his office a valuable paper telling British firms what to do about the European Community and how to do it. If I had my way, I would make it required reading for everybody above the rank of manager in industry. I understand that this paper is due for publication soon. I urge the Government not to sit on it in the various departments, giving it the nod, but to get it out to industry because it is a most valuable paper.
§ Our products must of course be delivered at the right time. No matter how good a product or how right its price, it is pointless if a customer cannot have it when he wants it. Here the technology of production and labour relations are obviously critical, and in this connection I make my only other comment on labour 290 relations: we must realise that it is very difficult to expect a complete change in attitude from a labour force, whether organised or otherwise, a whole generation of which has been paid what it wants, not what it is worth. Whether that was right or wrong I do not attempt to argue. It is what has happened and we cannot change it overnight.
§ I mentioned to your Lordships last year when speaking in a debate on productivity initiated by the noble Lord, Lord Schon, how the ratio of what we paid ourselves compared with what we produced. In the United States it was 3.6 to 1, 3.6 times more than they produced; in Japan it was 1 to 1 exactly; France, 2.3 to 1; Germany, 1.6 to 1; Italy, 5.7 to 1; and in the dear old United Kingdom, 13 to 1. We paid ourselves 13 times as much for what we did. I admit that in the last 12 months that has come down to 8.5 to 1; that figure I got from the television screen last night when the Chancellor of the Exchequer was talking about his Budget.
§ When a sale has been made, it must be properly supported. Almost every product during its lifetime requires spares, maintenance or repair. We must make sure that our after-sales service is what is necessary to ensure a future sale, even if the after-sales service is only advice on how to use the thing and does not necessarily supply spares and maintenance.
§ Then there is a criterion in regard to the intent: there must be an intent to be competitive, and none of the foregoing criteria will be met if we do not have a will and wish to succeed. Despite what may be political convictions or feelings of patriotism, there is absolutely no doubt that the one really good incentive to everybody is a reward. That must be seen to be there and be seen to be tangible and attainable, but I am sorry to say that recently taxation, the national insurance surcharge, interest rates and uncontrolled prices have all tended to destroy the incentive by reward.
§ It must be very difficult for Governments to exhort others to do various important and valuable things when the Government themselves appear to be slightly uninterested and almost even taking disruptive action in the areas which they control. We must have energy prices in line with those of our industrial competitors, as is clearly brought out by what has happened to our fibres industry, where the United States has been able to send to this country fibre made from subsidised petrochemical feedstock to sell at prices which have absolutely runined our indstry.
§ I take other examples from a light engineering business with which I am acquainted. Their gas prices have risen 75 per cent. in the last two years and the increase will be nearly 93 per cent. over three years. Their electricity has risen 87 per cent. in the last two years, yet during the same period their selling prices have gone up by 10 per cent. in 1979 and 8 per cent. in 1980, and they will have to reduce them by 2 per cent. to hold their market in 1981. One may ask, what have they done to help themselves? They have in fact reduced the energy content of their product from 8 per cent. to 4 per cent.—they have halved it. Yet they cannot but feel that, with those price increases, they are being sabotaged by their home Government. Another company with which I am acquainted have seen their prices remain static here but rise from 20 to 291 25 per cent. abroad, depending on the exchange rate, which is something totally beyond their own control.
§ We were very pleased to see that interest rates have come down by 2 per cent. in the Budget, but what has that kind of reduction meant to companies in the past? In 1978 a small company with 130 employees required to service its working capital interest payments of £4,384. In 1979 it required £10,000, and in 1980 it required £25,130. All of that had to be found from within its gross profit margin, or not at all. I appreciate that heavy users of gas and electricity are due for negotiated reductions, and I appreciate, too, that the lowering of interest rates will help; but is that really enough?
§ I have gone through those seven criteria, and your Lordships will remember that in regard to at least two of them I mentioned that the latest technology is absolutely paramount. A few weeks ago many of us were privileged to hear the Prime Minister speaking at the Parliamentary and Scientific Committee lunch. During that speech she rightly laid great stress on the importance of technology for our industrial future, and she gave a graphic account of a recent party which she had held in Downing Street for inventors. That was magnificent, so far as it went. But I suspect that she has never designed, produced or marketed anything herself; otherwise, she would realise that, while it is wonderful to be an inventor, to leap up from your laboratory bench shouting, "Eureka!", or whatever one shouts, is just the beginning; it is not the end. The real operation is then implementing your discovery. If I may take an agricultural analogy, it would be like producing packets of seeds, but never growing the main crop. Of course, if one is to grow a satisfactory main crop, one must use the best seeds, but there is little future in producing the seeds alone. We have an enviable record of inventive capability, but a miserable record of adopting our own innovations.
§ The Secretary of State for Industry, in a recent address to NEDO, outlined United Kingdom successes—a very impressive list of successes of implementation. What a pity there was not another annexe to the document, showing all the inventions that we had made but never used! I have heard of a major international industrial group, which, as a matter of policy, have decided that the United Kingdom is no longer a suitable manufacturing base for their operations, but consider that its tradition, education and ingenuity make the United Kingdom a very suitable place to carry out R and D for the rest of their manufacturing operations elsewhere. There we are again straight back in the packets of seed business!
§ What incentive do we give to our research and development? We have a well organised Requirements Board system, under the Department of Industry. It suffers a drawback in that the only support it is able to give is limited to payments of 50 per cent. of the cost of projects, the other 50 per cent. having to be found by industry. For short-term research and research directly related to company products it is easy to find the other 50 per cent. But when it comes to what might be called generic research, which is of value to the industry as a whole but not necessarily in any way directed to specific products identifiable with particular companies, it is very difficult to secure 292 the matching 50 per cent. I suggest that Her Majesty's Government may wish to consider whether that kind of generic research should not be funded as to 100 per cent.
§ On the whole, longer-term research is the proper function of universities, as part of their real mission in life, which is education, not, as some are now tending to do, acting as troubleshooters for industry. I think that that is brought about by a feeling that they should try to make themselves more apparently industrially relevant and, of course, in order to ease the cash situation. In doing that, they are usually merely duplicating an already existing facility, and doing so at a hidden and totally uneconomic cost.
§ I wish once more to refer to the address to NEDO of the Secretary of State for Industry. A very interesting statistic which was mentioned concerns what is spent on R and D funding in relation to industrial productivity. Germany spends 10 per cent., France spends 10 per cent., other EEC countries spend 8 per cent., and the United Kingdom spends 4 per cent., of which 3 per cent. goes on civil transport, so we really spend only 1 per cent.
§ I should like to compare that situation with the funding of industrial research in other countries. India makes no grants to industry for research, but 100 per cent. of the cost of all in-house company research and development is recoverable out of taxes—not gross profits. Pre-approved R and D projects qualify for 130 per cent. recovery from taxes. In France, the centres techniques are financed most successfully on a parafiscal system to the tune of around 80 per cent. in most cases, and such money is obtained for the benefit of R and D for French industry by a levy on imports. I wonder whether in fact this is not a breach of the Treaty of Rome, though, even if it is, I very much doubt whether it would worry the French much. May we contrast that system of getting foreign manufacturers to support home industry with the British system of applying national insurance surcharge, from which foreign imports are relieved, as a tax on British products?
§ In this country we have for some time had a system of statutory levy. It was imposed on various industries in the past at their own request, to pay for general research for the benefit of the whole industry. It leads to results which may not be patentable, and it presents a fair way of ensuring an equitable division of the costs among all beneficiaries, while not allowing "cowboy" or "pirate" firms to benefit from the results without making a reasonable contribution towards the cost. I understand that it is Conservative Party policy if possible not to allow that kind of levy. Recently, two surveys have been conducted by means of a questionnaire, in the furniture and cutlery industries, to discover whether they wish to continue with such a levy. Such levies are of great value to the industry as a whole, and it is unfortunate that it has been decided that the furniture industry shall not be allowed to continue with such a levy, although the industry voted for a continuation of the levy by a majority far greater than that by which the Conservative Government won the last election.
§ In conclusion, may I refer to one of our greatest competitors, the Japanese? Like many others, I am greatly impressed by their sense of purpose. Here we 293 have the National Economic Development Office and ACARD. They have produced most valuable reports, but only in an advisory capacity. Our Prime Minister has been heard to refer to "United Kingdom Limited", and may I respectfully remind her and her predecessors that she is, and they were, the chairman of the board of directors of UK Limited. So far as I can remember, we have had little or no major decisions on industrial strategy from that board.
§ One example of Japanese success was the top level strategy decision, taken no doubt after much deliberation, that motor-cycles were for them. The Japanese did not invent motor-cycles, but decided that this was their market. So they went for it and they took that market. Of course, any Japanese manufacturer was free to make hula hoops if he so desired; but if he did so he was on his own and he did not get the extra assistance available to those who supported the major strategy.
§ Now what can we do along these lines? At present, we give assistance mainly on a geographical basis in an attempt to make a locally depressing situation slightly more palatable temporarily. But why do I have hopes that we might follow the Japanese principle? I will tell your Lordships. Because we did once emulate the Japanese; we once decided that North Sea oil was for us and we went all out to get it, and look what a great success it is. Great credit must be given to those companies who responded to this challenge, for the way they have worked, and for the new technology which they have created. Of course, it may be said that this was so obvious a decision, but how do we know that there are not others? After due deliberation and considering the wealth of expert advice available to them, could not our board of directors start making a few decisions along these lines, instead of being so preoccupied in sharing out the misery in an unimpeachably fair manner?
§ It will not always be possible to be right. The Japanese have made some mistakes and they have gone up unprofitable alleys, but this should not be an excuse for ducking decisions. There is only one thing worse than making a wrong decision and that is to make no decision at all and to give no leadership. My Lords, I beg to move for Papers.
§ 3.43 p.m.
§ Lord Shackleton had given notice of his intention to call attention to the importance of standards in contributing to the efficiency and competitiveness of British industry and the quality of its products, the need for progress in implementing the Warner Report and the desirability of considering these issues within an international context, with particular reference to the European Communities; and to move for Papers.
§ The noble Lord said: My Lords, I rise to support my noble friend; I call him "my noble friend", but that does not mean I am a Cross-Bencher, nor even a social democrat, but he and I have been working together on a number of matters and he has played a very big part in initiating the Science Centre Project in addition to his activities in the research associations. In fact, he has shown all that experience and quality that one would look for from a retired professional soldier. I think we have all been very impressed.
294
§
Under the ingenious procedure we have in this House, the noble Earl has allowed me to insert into this debate a Motion that I have on the Order Paper and which, for the sake of the record, because it is not formally before your Lordships, I would like to read to your Lordships:
To call attention to the importance of standards in contributing to the efficiency and competitiveness of British industry and the quality of its products, the need for progress in implementing the Warner Report and the desirability of considering these issues within an international context, with particular reference to the European Communities; and to move for Papers".
In a way, I regret having to confine myself to this subject since the speech made by my noble friend has been so interesting that it was a worthy sequel to the first-class debate we had in your Lordships' House a few days ago. There are many issues to which I would like to have referred. I would not have agreed that the Prime Minister was not very good at marketing. She seems to have marketed the Conservative Party up until now with some success. It is not a question of our running out of resources; it is our failure to use those resources that we are most concerned with.
§ I am very glad that my noble friend referred to the energy problem. He said that he did not dislike the Budget. Frankly, I do. I dislike it very much and I do so because I am also involved in industry; I happen to be chairman, among other things, of a large aluminium smelting undertaking where the cost of power—which the excellent NEDO Report may lead to being improved—and the rate of exchange are very serious handicaps.
§ I want to talk about a subject with which not all your Lordships may be familiar, and I must apologise if I fail to make my comments very interesting. Furthermore, because I have myself found difficulty in understanding all the technicalities involved, I will stick rather more closely to a brief than I usually do. I must say that when I came out of Government I found that I made much better speeches in Opposition than I did from the Government's Front Bench when I had to stick to the Minister's brief.
§ I am delighted that the noble Earl, Lord Gowrie, is going to reply to this debate and I am quite hopeful that we shall hear some valuable comments on many of the matters to which I will now refer. Indeed, standards are an unknown quantity to many people yet they affect our lives in many ways. They do have an important contribution to make to our efficiency and competitiveness. And by standards, I do not mean physical standards of weights and measures, but technical agreements.
§ I apologise for giving the following rather turgid description: a standard is a technical specification or other document available to the public, drawn up with the co-operation and consensus or general approval of all interests affected, based on the consolidated results of science, technology and experience and it is aimed at the promotion of the optimum community benefits. It has to be proved by a body recognised at national, regional or international level. In this country the body involved is the British Standards Institution, of which I am a past president, in common with the noble Baroness, Lady Seear, who has also been president of that admirable institution. This definition is rather 295 complicated, but standards are not easy to describe. There are different types of standards to meet different needs; glossaries of terms to ensure that those involved in some particular fold speak the same language, so that they know what they are talking about. There are also methods of test, which are self-explanatory; specifications giving a set of requirements which a product should meet, and codes providing advice on accepted good practice.
§ Perhaps standards have rather a dull ring because so little is known about them, even though it has been estimated that something like half our GNP is affected by them. Life would be more difficult, more dangerous and more expensive without standards. They define and establish fitness for purpose so that a supplier of, say, manhole covers can be confident that if his product meets the standard it will meet his customers' needs, and his customers in turn will have a similar assurance. In other words, standards describe good practice; guiding, for example, those who are engaged in the safe use of cranes or ensuring access to buildings for the disabled. Standards reduce unnecessary variety. They make production more economical and efficient and they ensure compatibility. The absence of standards has severely handicapped some industrial developments in the past. This was true of computer systems, and unless we achieve good standards the whole of information technology may well be seriously affected. The difficulty in that area is fundamental to the success of our own industry. To move to another simple example, there was once a difficulty in finding candles to fit candlesticks. That was an early stimulus for standardisation.
§ Standards make available research and they reflect, or should reflect, market requirements, international as well as national. They are important for promoting trade, international and national; and a country which has national standards has to spell them out to meet its own market needs. But it is grossly uncompetitive to work to a number of different standards. Therefore, there is now an impetus, and a good one, towards international standardisation which has been particularly strong in the post-war period. Here again the representation of British interests—and I stress "British interests"—in the alignment of differing national standards is of major importance to United Kingdom trade.
§ The process of reference to standards offers Governments a simple economic instrument, for example, in the fields of health, safety and consumer protection. Where different Governments have adopted separate approaches, the result has been the creation of additional barriers of trade between countries as opposed to tariff barriers. A move towards dismantling these has been the work being done in the European Community in pursuing a programme of directives (some of which I hope will be more acceptable than some of the directives that we have had recently from Brussels). These are related to harmonised standards wherever possible, and here again the British Standards Institution has a role to play, particularly in providing the leverage which is so essential. This leverage has been made clear and its importance brought under the spotlight by Sir Fred Warner's report, Standards and Specifications in the Engineering Industry. Sir Fred will be well known to many noble Lords in connection with the great con 296 sultant firm of Cremer and Warner. He is my successor as president of the British Standards Institution.
§ Here I should like to pay tribute to the NEDC and the work of some of the sector working parties in recognising the value of standards in reducing unit costs, in improving quality and delivery and creating better export performance. What is needed is a reduction in the endless proliferation of specifications and certification schemes for similar products.
§ The Warner Report sought to establish the scope for achieving this and the reason why I put down this Motion was my anxiety at the lack of progress on this fundamental report which is now four years old; and although some circumstances have changed many of the messages are relevant today. The potential of standards is not fully exploited. It is a pity that more progress has not been made in public purchasing in regard to British Standards, which accounts for over half our national expenditure. I hope that the noble Earl when he comes to reply, in view of the rather encouraging remarks which the Secretary of State for Industry made recently, will be able to report some progress in this area. This was recommended in a White Paper in 1967 but, 14 years later, too much of the public sector continues to insist on specials instead of standard products. So I think that any initiative from the Department of Industry will be vital to achieve progress in this area and I look forward to hearing something encouraging.
§ A recent example of a good decision has been that to convert British telecommunication standards to British Standards and, incidentally, we welcome the abandonment of public sector standards. I am sorry to be so technical but these are technical questions, of great importance to our progress, and the Government might examine the scope for similar initiatives in other public sector bodies.
§ There have been some positive achievements. Recognising that legislative requirements could produce a further diversity of specifications, the Warner Report said that the Health and Safety at Work Act should refer to British Standards and codes of practice and the Consumer Protection Act should be implemented by reference to standards. I am glad to say that progress here has been made. The inspectors support the voluntary use of appropriate British Standards and there is reference to British Standards in the regulations, and a great deal more could be done. A list of standards could be drawn up which might be produced jointly. The Consumer Protection Act allows for reference to standards but has the rather cumbersome Affirmative Resolution legislative procedure. This means there is a certain delay and we do not get the appropriate reference to independent certification except by a rather tedious process.
§ The third major recommendation called for the Government to set an early target for the completion of metric conversion. This is a very sore subject. Governments are frightened and this Government have been even more frightened than their predecessor. Noble Lords—including the noble Earl, Lord Halsbury, who is to take part in this debate—will remember the somewhat heated debate that we had on the subject of decimalisation. However much we may have preferred pounds, shillings and pence, the fact is that it is very expensive for us to have stopped. Now we 297 have, in effect, two separate standards, one imperial and the other metric. I hope that the Government will take a more positive view because the change needs Government support. It cannot be left to industry, although much of industry has succeeded in doing a great deal.
§ There is another aspect of standards to which I should like to refer and that is certification and the quality assurance. The Warner Report said that the reduction in numbers of specifications and certifying bodies would help to reduce multiple assessment of suppliers and the sector working parties should report on this problem of multiple assessment and the feasibility of central registration of all quality assurance schemes. Here again, I hope the Government will give a great deal of emphasis. I should like to pay tribute to some of the civil servants who have been involved, but I should like to see a great deal more pressure coming from the top. Now we have had a Government publication, A National Strategy for Quality and a debate in NEDC on "An Approach to Quality" and, as one practical development, the establishment of the National Test Laboratories Accreditation Scheme. The decline in recent decades of Britain's reputation for products of the right quality continues to give rise to debate and there is still great scope for quality assurance and certification schemes in British industry.
§ I apologise for speaking so much about the work of the British Standards Institution but they are the people who have been doing the work and giving the lead. But they cannot achieve the results they want without more support and without a Government lead. British standards for materials, components and processes are the backbone of quality assurance programmes and British standards for sampling, inspecting and measuring are basic tools for quality assessment.
§ A new development of particular importance is a group of British Standards giving guidelines to assist companies in achieving and maintaining quality throughout production, from design to marketing, and after-sales service. The central one is British Standard No. 5750, Quality systems. No company should be without it. The Government should circulate this to every company, for I know of many companies who have never heard of it. It is based on a very successful quality assurance programme which was instituted by the Ministry of Defence 10 years ago.
§ Many noble Lords will remember the BSI Standard title "Kitemark" which was applied to third party certification schemes. There is again need for more promotion in this area. British industry is already required to provide proof of compliance with other countries' technical requirements in overseas markets. I do not want to take up too much of your Lordships' time in this technical way, although I could go on at considerable length on the subject of BS 5750. I should like to emphasise that standards are produced by partnership between all the interested parties—the users and the suppliers. They are effective only if they meet the needs of those involved. It is our responsibility to see that they do and they are used.
§ I should like to emphasise again to the Government that we should like to see a much stronger Government initiative and commitment to the use of British Standards throughout the public sector. Such an example 298 from Government should help to secure recognition of the value of standards at boardroom level. I believe that many large engineering users would respond, if they had not done so already, to an initiative by Government. This is essential if the potential of standards is to be fully exploited. To increase our industrial competitiveness Government should vigorously promote BS 5750.
§ I should like to end by referring to one country which I will not say is further ahead than we are but none the less is an example that we should note. It is often said that some countries, particularly West Germany, achieve their strength and success in export markets because of their strong national standards system. I should have liked to have followed the noble Earl, Lord Shannon, in discussing the secrets of success particularly in Japan and France and the influence of MITI which the noble Earl will know in relation to Japanese industry.
§ However, I should like to refer to DIN, the German standards organisation, as an example. Their influential position in the German economy plays a major role in the success of German production. There we see the full and active participation of users of products both in the public and private sectors. There is a very strong relationship in policy and participation between the standards body in West Germany and all the governmental and public sector authorities.
§ Through legislative provisions—and perhaps I may say a more conformist society—there is a marked attitude among manufacturers, users and purchasers that compliance with DIN standards will meet their needs and give confidence to others. This owes a good deal to the marketing of that German organisation's skills. An enhanced national status for German standards through an aggressive policy of partnership supports their trading success. There are some parts of the world where it is decisive now and will be decisive for years. This is the message that we should leave with the Government. We hope that some policy for action will be taken as a result of today's debate.