HL Deb 28 April 1983 vol 441 cc1063-9

4.20 p.m.

Lord Trefgarne

My Lords, with your Lordships' permission, I shall now repeat a Statement being made by my right honourable friend the Secretary of State for Industry in another place about the Alvey Report. The Statement is as follows:

"The Alvey Committee was set up last year at the request of the IT industry to investigate the scope for a collaborative research programme in advanced information technology in the light of mounting concern in the industry at the increasing threat of overseas competition. I am most grateful to the Committee for their extremely valuable report. After detailed consultations with industry I am now able to announce the Government's response.

"The future competitiveness of our IT industry is a subject to which we attach the utmost importance. The report outlines the key areas of technology in which the IT industry must maintain and strengthen its competitive position in world markets. Its theme is the need for collaboration between industry, academic institutions and other research organisations in order fully to mobilise our potential in advanced information technology. The task is beyond the resources of any single enterprise. The central purpose is to pave the way for IT products, IT processes and IT services which can be sold in the market in competition with the rest of the world.

"We therefore accept Alvey's recommendation to establish a programme of collaborative research concentrated on the four main areas of technology set out in the report. These areas are software engineering, very large scale integration, man machine interfaces, and intelligent knowledge based systems. Industry has realised the need for collaborative research in these areas, and is ready to take part in such a programme. This positive involvement of industry in the funding, management and execution of the programme is crucial to its success, if we are to turn successful research into marketable products.

"The key feature of the programme will be collaboration between companies, Government Research Establishments, and academic institutions. Work carried out in academic institutions will as usual be funded 100 per cent. by Government. In the case of work carried out in industry, Alvey recommended that most of this should be 50 per cent. Government funded, but that some projects should attract 90 per cent. funding. We have considered this last recommendation closely, but have decided that 90 per cent. Government funding does not secure a sufficient industrial commitment and could lead to the programme becoming divorced from industry's needs. I have, therefore, decided that all industrial work should be 50 per cent. Government funded.

"Companies taking part will be required to release know-how and to share results with their project partners. They will also be expected to license results on reasonable conditions to others in the programme, and to organisations outside the programme where this is needed to secure exploitation.

"The report estimated that the research would cost about £350 million over five years. The Government stand ready to support a programme of research on this scale. However, the extent of the Government's contribution to the programme depends upon industry making its contribution and upon the programme's technical progress.

"The report proposed that academic institutions should carry out some £50 million of research over five years, and industry the remaining £300 million. The full cost of this to Government would be around £200 million. This money will be provided by the Department of Industry, the Department of Education and Science and the Ministry of Defence and, over the PES period, will not add to existing allocations. The Department of Education and Science will fund research through the Science and Engineering Research Council, mainly in the universities. The Ministry of Defence will fund research of particular importance to our future defence industry. The Department of Industry will provide the major portion of the Government's funds and will carry overall responsibility for the management of the programme.

"A new, small, directorate will be established in the Department of Industry to co-ordinate the programme. It will be headed by Mr. Brian Oakley, currently Secretary of the Science and Engineering Research Council. It will be staffed by people from industry and supported by the Government departments concerned and the SERC. The directorate will report to a small supervising board of industrialists. Sir Robert Telford, who has substantial experience of the electronics industry, has agreed to serve on a part time basis as chairman of the board.

"Mr. Speaker, this is the first time in our history that we shall be embarking on a collaborative research project on anything like this scale. Industry, academic researchers and Government will be coming together to achieve major advances in technology which none could achieve on their own. The involvement of industry will ensure that the results as they emerge are fully exploited here in Britain to the advantage of our economy. Information technology is one of the most important industries of the future and therefore one upon which hundreds of thousands of jobs in the future will depend. Collaboration will ensure that the results of the research are widely disseminated particularly to smaller firms which have such an important contribution to make to the industry. No one can guarantee success, but the Government are convinced that this programme will ensure for British industry secure access to the new technology and to the products and processes on which our future prosperity depends."

My Lords, that is the Statement.

4.26 p.m.

Lord Bruce of Donington

My Lords, we on this side of the House should like to thank the noble Lord for having repeated that Statement. We should like to say straightaway that we wish to put ourselves behind the broad thrust which is contained in the Government's Statement, which gives an outline of the steps that they propose to take and the finance they propose to make available. We say this in particular because we are very glad to see the conversion of the Government to the whole concept of public funding, which has long been one of the cardinal principles behind most of the policies pursued by us on this side of the House.

There is I believe a concept—I hesitate to use the term "Victorian values"—which was popular in the Government at one time and may even be now that industry itself ought not to have the burden of Government interference; that industry itself should be self-supporting, and with the enterprise, thrift and drive for which it was renowned it should be able to generate its own funds for research and development, and matters of that kind. We on this side of the House welcome the conversion.

We note too from the Statement that the principal impetus for it comes from what the Minister says, in the light of mounting concern in the industry at the increasing threat of overseas competition". The noble Lord can say that again. It has been well known in this country, not merely confined to governmental circles, that the Japanese have been funding their basic research in this field 100 per cent., and they have been doing it for a number of years. Yet even this Statement comes out eight months after the report has been made available to the Government. There does not appear to be the great degree of urgency here which I would have expected. However, of course it is well in tune with Government policy in this field in the past. The noble Lord will recall the somewhat stringent comments passed by the Financial Times about a year ago about the former Secretary of State dithering over whether to support Inmos or not, so there have been some delays. But in broad and general terms we welcome the Statement, although we suspect that one or two matters have not received the Government's attention.

I now turn to these matters in asking the noble Lord some questions that arise. We note, for example, that the support offered by the Government as per the Statement is about £200 million. But the noble Lord will be aware that the Alvey Report recommended two-thirds of the total expenditure, so that means that the Government have cut down the Alvey Report recommendation by some £34 million. Is there any particular reason for this?

Then, in the Statement itself there appears to be no emphasis at all upon, indeed no mention of, the educational implications arising from this. If the noble Lord turns to the Alvey Report itself—I shall not read it—and addresses himself to Sections 7.8 and 7.9 he will find some very pungent observations by Alvey concerning the adequate provision of proper educational facilities, not only in universities but also in the schools. Alvey makes it quite clear that the mere provision of micro-computers in schools will serve very little purpose other than that of teaching basic computer language, and that much of that may have to be unlearned at a later stage. Also, Alvey makes some very important educational recommendations which would involve the Government allowing the public to claw back one-third of its cuts in the university educational field.

Another point concerns security. The Alvey Report made particular mention of how necessary it was, where multi-national firms were involved, that there should be guarantees of security. In the Government's Statement there is no emphasis on that although it is one of the most important recommendations of Alvey. There is a further point concerning the extent of the grant. Alvey recommended 90 per cent. and 50 per cent., and the Government propose 50 per cent. aid throughout. Are the Government sure that this is not going to discourage the smaller firms who have a very great contribution to make, even in the field of dissemination? Is he sure that the Government are giving small firms sufficient encouragement? Finally, I observe that the Government say that they have had consultations with industry. Does "industry" include the Trades Union Congress as well? There are of course two sides of industry and the TUC has a very considerable technical expertise at its disposal in this field. I should like to know whether at any point the Government have consulted with the TUC.

4.32 p.m.

Lord Avebury

We on these Benches thank the noble Lord the Minister and welcome his Statement so far as it goes in endorsing the recommendations of the Report of the Alvey Committee. Can he remind us exactly when it was that this Report was received by the Government and explain why they have taken so long to come forward with these proposals, bearing in mind that if our reaction time is always as long as this we are not going to stand very much of a chance in competing with the Japanese anyway?

The Report mentions four key areas and the noble Lord repeated those, but the Government Statement omitted communications, which are identified as—and I quote the Alvey Report: absolutely vital to the success of the AIT programme". The report said in paragraph 4.6.3 that the network connecting participants should be based on the PSS network system, connection to which would be very expensive. Have the Government decided whether or not they will fund that project? The Alvey Committee said that wide dissemination of results was to be stipulated when industrial projects should be 90 per cent. funded. Do not the Government now require companies to share know-how with partners and to license generally outside the programme? Does the noble Lord not think that this will reduce the number of participants, because the incentive will not be sufficient if they have to fund as much as 50 per cent. of the project, if the rewards have to be distributed over the whole of the industry, as suggested?

Can the Minister tell us, for comparison, how much the Japanese are now estimated to be spending on the fifth generation computer? Some figures are given in Alvey, but I am quite sure that those need to be updated. Will the Government take the point made in Alvey that on specific projects it might be a good idea for us to co-operate with the Japanese so that on the basis of a big programme in this country we would have something to offer them? By interchanging the technology we could get the best of both worlds. On the arithmetic, is the noble Lord able to confirm—I believe that this is what he has said already—that the Government have cut the total amount which was recommended by Alvey to be spent from £234 million to £200 million? Does he think that this kind of cheese-paring is really appropriate in the foremost technology with which this country has to compete in the world?

We also are dismayed that nothing was said in the Statement about the educational aspects of the programme. May I specifically ask the noble Lord whether it is the intention to increase the number of graduates in subjects related to information technology by 780, as is recommended in paragraph 7.11, and also to strengthen post-graduate education? We very much welcome the appointment of Mr. Brian Oakley as director of this project, who I am sure will make an outstanding success of it.

4.35 p.m.

Lord Trefgarne

I am grateful to both noble Lords who have spoken for their response to this Statement. I shall deal with as many of the points that have been put to me as I can. The essential point on funding is that the Government decided that 90 per cent. of funding of projects was not appropriate because, as we say in the Statement, this rather reduces the commitment of the companies involved to ensure that they could at least argue that the research was conducted as effectively as it should be, and that the company concerned retained the necessary commitment to the project. We thought there was a risk that where projects were funded at the rate of only 10 per cent. by the companies concerned they would perhaps be conducting research projects just for the sake of research and that those companies might not have the necessary application to the programme that we think is so essential.

The effect of that decision was that the total level of funding required by the Government dropped, naturally; but in volume terms the programme remains the same as it would have been had we funded it on the more generous level for some of the projects. Even Alvey of course did not suggest that all projects should be funded at the rate of 90 per cent., and it remains the position that some of the research programmes in the institutions will be funded at the rate of 100 per cent., principally by the Department of Education and Science. The noble Lord, Lord Bruce of Donington, and the noble Lord, Lord Avebury, asked me why it had taken eight months to produce a response to this report. As the noble Lord, Lord Avebury pointed out, we received the report in September last year. The answer is of course that it was necessary to consult very widely and obtain a real commitment from industry to participate in the programme in the necessary way.

In answer to the specific point put to me by the noble Lord, Lord Bruce of Donington, about consulting the TUC, I understand that the TUC was sent a copy of the report but it did not provide any response. The noble Lord, Lord Avebury, also asked me about the network project. I understand that that is to be funded on a 50–50 basis. The department have studied the network requirements in detail and we are ready to implement this in due course. I am afraid that I have no reliable figures available on Japanese expenditure beyond those that are given in the report; but something on which I believe we can be sure is that their expenditure is fairly substantial and we shall certainly need to work hard to maintain our position vis-à-vis the Japanese and indeed vis-à-vis some other countries which doubtless will follow the Japanese along this route. I believe those were the principal points that were put to me.

Lord Avebury

Can the noble Lord deal with my point about co-operation with Japan?

Lord Trefgarne

Yes, the noble Lord, Lord Avebury, asked about the possibility of co-operation with Japan. This is certainly not ruled out in the future but it is not envisaged under the present proposals.

Viscount Hanworth

My Lords, speaking from these Benches, we naturally welcome this Statement. I was going to make the point that has just been made from the Liberal Benches about the limit of 50 per cent. for industrial firms. It seems to me that there may be cases where no one will undertake the work without perhaps a larger subsidy. Therefore perhaps the Minister would consider not closing the door on this completely because to get a vital bit of work done is worth paying for. One is not convinced in all the areas that, bearing in mind that information has to be disseminated, it will necessarily attract a suitable firm to carry out the work. May I ask the Minister how the participation of individual firms, academic and research bodies will be decided? Will they apply in certain cases or will they be approached, or has that already been done? How does the scale of this programme compare with what I believe is being done by other European countries? Finally, how soon is the scheme likely to get started and work really to commence?

Lord Trefgarne

My Lords, as for which companies are to participate in this programme and how they are to be selected, a number of firms have been identified already for participation in this programme and discussions will proceed with others as the programme develops. We certainly hope that the programme can be underway just as soon as possible—it is to be hoped by the summer of this year; in other words, no delay at all. As to the co-operation within Europe, the noble Lord will be aware that the European Community have a programme, the Esprit programme, which is not too dissimilar from this one and in which some British companies have already been participating. Our European partners are already well seized of the opportunities that are offering themselves in this particular industry and are participating in a pretty enthusiastic way. As I say, we, too, are playing a small part in that particular programme.

But it is clear, if I can develop the point raised by the noble Lord, Lord Avebury, that the Japanese are making a major national initiative in this particular area, and clearly it is necessary for us to respond in an appropriate way. The philosophical impetus for this programme is that the Government must create the right environment for British firms to be able to take the best advantages that are now offered in this scheme. The response required to the Japanese initiative is not one that individual companies themselves can be expected to undertake. That is why it is that we bring this programme before Parliament today.

Lord Avebury

My Lords, both the noble Lord, Lord Bruce, and I asked about human resources recommendations of Alvey. I put to the noble Lord the specific question whether the increase in the number of graduates in subjects related to information technology recommended by Alvey would be implemented.

Lord Trefgarne

My Lords, it will be necessary for organisations and enterprises other than the Government to respond to the programme that we are bringing forward. On the specific point that the noble Lord has put to me, I should like to take some more advice, if I may, and write to him.

The Earl of Bessborough

My Lords, can my noble friend tell me whether, in regard to the European programme, the Esprit programme, a certain proportion of the funds which have been mentioned in the Statement will be going to support that European collaborative programme?

Lord Trefgarne

No, my Lords. The Statement that I have repeated this afternoon is the basis of a British national programme in this particular area. The Esprit programme is quite separate; but that is not to say that some British firms are not participating in the Esprit programme, because they are.