HL Deb 25 July 1983 vol 443 cc1379-83

3.30 p.m.

Lord Lyell rose to move, That the draft order laid before the House on 22nd June be approved.

The noble Lord said: My Lords, I beg to move the Motion standing in my name on the order paper. The purpose of this order, which my right honourable friend the Secretary of State for Trade and Industry proposes to make under Section 9 of the Industrial Organisation and Development Act 1947, is to amend the Iron Casting Industry (Scientific Research Levy) Order 1971, so as to consolidate the provisions which were previously made for the computation of levies, and it also makes minor amendments. The 1983 amendment order will introduce a formula which takes into account any changes which may occur in the wholesale price index which is published in British Business, and the order also links future levies to the appropriately based index number. This avoids the necessity of laying a new order each time there is a change in the base rate of the index. Additionally, the present limit of £3.50, which is the minimum levy payable in respect of any levy period, will be increased to £100.

The existing order imposes a levy on the iron casting industry to finance scientific research carried out on behalf of the industry by the BCIRA—which is a pleasant acronym for this body which was formerly called the British Cast Iron Research Association. The proceeds of the levy will continue to be collected by my right honourable friend and will then be released against the association's expenditure on scientific research.

The activities of the BCIRA need to be viewed against the background of the iron castings industry. Many companies in the industry would find it difficult to support their own research activities, but they are nevertheless of vital importance to British manufacturing industry generally. The research association provides the whole of the iron castings industry with a wide range of services, which include general scientific research and contract research, as well as consultancy and advisory services. The high standard and practical usefulness of the association's work is very widely recognised.

Much of the association's scientific research is supported by a statutory levy which is collected from companies in the industry under the provisions of Section 9 of the Industrial Organisation and Development Act 1947 that I mentioned to your Lordships a trifle earlier. The levy was first introduced in 1966 after wide consultations with the industry, and was increased in 1971 to take account of the rise in costs experienced by the association, and again in 1976 to take account of a further rise. This was further amended in 1979, owing to a change in the base year of the index.

Under the orders at present in operation, every iron foundry is liable to pay each quarter a levy made up of two components. First, it pays 0.15 per cent. of the emoluments of those employed in the industry. Secondly, it pays a levy per tonne on fettled iron castings which are produced by the foundry. The rate of the levy per tonne is linked to the index of the United Kingdom wholesale selling prices of iron castings, which are published by my department in the publication entitled British Business. Because of the increase of this index since 1976, the levy has gone up from 11 p per tonne to 23.5p per tonne. As from 8th August this year, this index, presently known as the wholesale price index, will be known as the producer price index.

The part of the formula linked to the index does not allow at present for changes in the base of the index. That base has changed from 1970=100 to 1975=100, and a new order incorporating an updated formula was therefore required. With effect from 8th August 1983, this base will once more change to 1980=100, and this will necessitate a further new order. The new order has been so worded as to preserve most of the terms of its predecessors, and I would emphasise that the rate of levy that will be chargeable from the beginning of October this year of 23.5p per tonne is no different from the rate of levy that would have been reached had the present index remained in use. This new order merely revises the mechanics of calculating the levy and does not change the principles under which it operates.

The major organisations which represent both the industry and the persons who are employed in it have been consulted, and no objections have been received from any of these bodies. For that reason, I would commend the new order to your Lordships' House. I beg to move.

Moved, That the draft order laid before the House on 22nd June be approved.—(Lord Lyell.)

Lord Ponsonby of Shulbrede

My Lords, I should like to thank the noble Lord for his usual very lucid explanation of a potentially complicated order. It would seem that the main purpose of the order is to index-link the payments which have to be made by individual firms under it. One queries why the index-linking is proposed, and one wonders whether the Government are thinking that there will be further inflation in the future and so want to save the annual laying of a new order.

The other proposal in the order is that foundries which would have to pay an amount of less than £100 should be exempted from making payments. I wonder whether the noble Lord can tell your Lordships how many foundries will be exempted by raising the minimum level of payment to £100. Perhaps at the same time the noble Lord can tell your Lordships how many foundries in total are paying at the present time, excluding those which will not be forced to pay in the future. I wonder whether he can also confirm to your Lordships that the levy does not contravene ECSC regulations or EEC regulations Having asked those queries, we welcome the order.

The Earl of Shannon

My Lords, I too am grateful to the Minister for explaining the order in detail, and I was most pleased to hear him at the beginning of his speech extolling the virtues of the activities of the research association. There is, however, one question that I should like to ask him. I wonder whether he and his department are aware that BCIRA—the old British Cast Iron Research Association—has been in discussion with the Steel Castings Research and Trade Association regarding ways of rationalising the research and development activities of the two organisations with a view ultimately to creating a single organisation to serve the technical requirements of the entire United Kingdom cast metals industry. As I understand it, these discussions have recently been actively encouraged by the Department of Trade and Industry.

Since the problems of such a rationalisation would be greatly simplified if there could be found a common basis for funding, will the noble Lord therefore consider the introduction of a similar statutory level to cover the requirements of the steel foundings sector, bearing in mind the obvious difficulties of trying to create a single organisation which would cover both voluntary members on one hand and pressed members on the other?

It is now about 12 years since this question with regard to a statutory level for the steel castings industry was last considered in your Lordships' House. On that occasion the department had carried out a very detailed survey of the steel castings industry, with the result, if I remember correctly, that between 80 per cent. and 95 per cent. of the industry were in favour of having a statutory levy similar to that for the cast iron industry. Yet the then Conservative Government did not consider that statutory levies were at all suitable as a method of conducting research for an industry. The Motion on that occasion was refused.

I know that the Minister said that the steel castings industry did not have objections. However, it did have an existing, on-going system to which the industry was accustomed. Does he consider that, if he carried out a survey under the same circumstances to those which applied in the case of the steel foundry industry, he would get anything like the same support? Will he also say what is the present attitude of the Government with regard to statutory levies as a method of conducting research for a whole industry?

Lord Lyell

My Lords, I wish to thank the noble Lord, Lord Ponsonby, and the noble Earl, Lord Shannon, for their close attention to the particularly complicated order that I have introduced. Thankfully, neither of them has asked me to try to explain the intricacies of index linking which they, and I am sure your Lordships, will he fascinated to see in paragraph (4) of Article 2 of the order. If either of the noble Lords who have spoken wish for further guidance, I can certainly write to them.

The noble Lord, Lord Ponsonby, asked me about the number of foundries that we thought would be exempted if the minimum levy payment was increased to£100. We estimate—I have to stress this word—that between 205 and 210 foundries would be exempted if the minimium levy payment was increased to £100. This is out of a total of just over 500 foundries which were contributing in 1982. I understand that the current number, at the latest available date, is 453. The noble Lord will therefore see that 207 of the smaller foundries will be exempted from the levy proposals.

The noble Lord also asked whether the EEC would have any influence or would be concerned about the regulations in the order. I am able to tell him that the ECSC and the EEC measures do not cover cast-iron research and, above all, the levies that we are discussing.

The noble Earl, Lord Shannon, brings a great deal of technical knowledge to the issue. Indeed, he was kind enough to give me the benefit of some of his technical knowledge last week when he explained to me that steel was iron with a little more carbon in it. I think that I see him nodding in quasi-assent. His scientific and technical knowledge is much valued by your Lordships.

The noble Earl mentioned discussions involving the Steel Castings Research and Trade Association. I shall not attempt to put into words that little acronym, SCRATA. It could he interesting. But the noble Earl, like the House, will be interested to know that discussions between BCIRA and the research division of SCRATA about the possibility of merging their research and development activities in ferrous castings have been taking place actively for three years or more. It is their own initiative although the Government would consider making a financial contribution to any costs incurred in merging. I stress that the Government would consider this.

I am able to inform the noble Earl that there is no consideration of a levy for the Steel Castings Research and Trade Association. I understand that its research activities will continue to be funded as before for the members of that association. Indeed, it is a matter for the members of that association as to how they wish to fund their research. The Government believe that it should be left that way.

Any mergers or joint association of research we believe is entirely a matter for the two bodies. We are an interested onlooker in those discussions. I hope that this answers satisfactorily the questions raised by the noble Lord, Lord Ponsonby, and the noble Earl. I hope that I have covered the complications of this order satisfactorily. With that, I beg to move.

The Earl of Shannon

My Lords, before the Minister sits down, I wonder whether I may apologise to him for obviously having been an extremely bad instructor. Cast iron contains slightly more carbon than steel, not the other way round.

Lord Lyell

My Lords, that just goes to show that I was considered too foolish to do science at school. After two years of compulsory science. I was told to take up languages as more suited to my talents. I am grateful to the noble Earl. I shall continue with free science lessons in your Lordships' dining room. I commend the noble Earl to any of your Lordships who, like myself, are deficient in knowledge of science. I think however, that we may continue the conversations outside the Chamber. I beg to move.

On Question, Motion agreed to.