Lords Sitting of 10 February 1984

Preamble
The House met at eleven of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Chelmsford.
Lord Bolton—Took the Oath.

Museums and Galleries: Funding
Lord Strabolgi: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will provide some grant-in-aid, possibly through the Museums and Galleries Commission, to help the Ashmolean Museum Oxford, the Fitzwilliam Museum Cambridge, the Whitworth Art Gallery Manchester and the Dulwich Picture Gallery, all of which are in financial difficulties, in view of the national importance of these collections.
The Minister of State, Privy Council Office, and Minister for the Arts (The Earl of Gowrie): My Lords, I am aware of the problems facing these particular museums and galleries, like others, at a time of necessary financial constraint. In general, university museums and galleries are integral parts of their parent universities and must look to them for support. I will, however, be considering the position of those institutions directly affected by the abolition of the GMC and metropolitan county councils, in the light of the consultations just completed.
Lord Strabolgi: My Lords, while thanking the noble Earl for that reply, may I ask him whether he is aware that, in consequence of the GMC grant being removed, the Whitworth Art Gallery will have to close down its conservation department; that at the Fitzwilliam, the whole museum cannot be opened at the same time during the week; that at Dulwich an important Rembrandt painting was stolen last year and the governors have said that they can no longer be responsible for the collections and that many paintings have had to be removed from the public? Will he please treat this matter with some urgency and importance?
The Earl of Gowrie: My Lords, as I said in my original Answer, I am aware of the severity of these problems. In the case of the Whitworth Art Gallery, the gallery receives, I think, 21 per cent. of its funding from the metropolitan county council and therefore that funding will be part of our consultative process in terms of local government reorganisation. With respect to the Fitzwilliam, I have to stand by my original Answer and say that that is, of course, a matter for the university, although the noble Lord will be well aware that the university is helped by the Government through the University Grants Committee. In respect of Dulwich, I have visited it
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discussed some of their problems with them, and I am glad to say that they are developing most impressive self-help initiatives which I will try to help in any way that I can.
Lord Strabolgi: My Lords, is the noble Earl aware that at Dulwich they require only about £40,000 a year for warding and security services—which is about the equivalent of the extra amount that he awarded to the Soane Museum recently?
The Earl of Gowrie: My Lords, my recollection is that the Soane Museum award was in respect of pensions of employees there where an anomaly needed to be corrected; but I will take on board what the noble Lord says about Dulwich.
Baroness Faithfull: My Lords, with regard to the Ashmolean in Oxford, may I ask my noble friend whether he is aware that, even though he says that the university should be responsible, it seems to me and to those of us who live in Oxford that the Ashmolean is visited by half Europe who come to Oxford during the summer and therefore it is a tourist attraction of great interest? Would it not be possible to give it help other than that which comes from the university?
The Earl of Gowrie: My Lords, I am sure that the benefits of the Ashmolean to the university and to the town of Oxford will be registered by the university that funds the museum.
Lord Taylor of Blackburn: My Lords, may I ask the noble Earl the Minister whether, when he considers this, he will give the same consideration to the Whitworth Art Gallery?—because it is for the benefit not just of the people who live in Greater Manchester but of a lot of people throughout Lancashire who visit that gallery.
The Earl of Gowrie: My Lords, I have already mentioned the Whitworth, but it seems to me to be a central truth that it is enormously in the interests of modern cities and metropolitan centres that they should attract people in to use their arts and leisure services. I am sure that Manchester will be aware of the attractions of the Whitworth to the rest of Lancashire.
Lord Edmund-Davies: My Lords, does the noble Earl the Minister really consider that it is a reply in relation, for example, to Cambridge, to say that they look to the University Grants Committee, having regard to the severe restraints and financial restrictions placed upon that body, however willing it may be disposed to help?
The Earl of Gowrie: My Lords, the University Grants Committee is, of course, subject to financial constraints; but so, my Lords, am I.
Baroness David: My Lords, is the Minister aware of how very frustrating it is for visitors to Cambridge (as I know is the case), knowing that the museum is open from 10 o'clock to 5 o'clock on Tuesdays and Saturdays and half day on Sundays, to arrive there in the morning wanting to see the pictures and finding that the picture galleries are not open until 2 o'clock?

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One disabled visitor I knew was left at the museum hoping to see the pictures—she is an artist—and had to spend two hours, until she was picked up, with the armour—which was not what she wanted at all. Can the Minister not do something by some special grant to help these particular museums? I understand that it will cost only £300,000 for the Fitzwilliam to be open every day of the week, including Mondays. That is not a very large sum.
The Earl of Gowrie: My Lords, I am sure that the noble Baroness and the House will be aware that, as a Minister, I am something of a way station for funding. I have a number of client bodies. I argue and negotiate the money for them in each financial year and then hand it straight over. Unfortunately, I do not have a nice little contingency reserve all of my own for these admirable purposes.
Lord Jenkins of Putney: My Lords, is the noble Earl the Minister aware that if the Government persist in their plans to abolish the metropolitan counties many more museums other than those which are mentioned in the Question will be in difficulty? Will he suggest to his noble friends here and his right honourable and honourable friends in other places that they should not persist in these proposals?
The Earl of Gowrie: My Lords, the noble Lord is well aware that the Government's proposals to abolish the upper tier of local government has nothing to do with arts and museum funding, as will soon be apparent.

Orton and Vera Chirwa: Death Sentences
Lord Hatch of Lusby: My Lords, I beg leave to ask the Question standing in my name on the Order paper.
The Question was as follows:
To ask Her Majesty's Government what action they have taken in conjunction with their EEC partners to save the lives of Orton and Vera Chirwa, under sentence of death in Malawi, and what response has been received.
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, this is an internal matter in which we have no standing. Nevertheless, we and our partners are very aware of the humanitarian aspect of this case and are in close consultation.
Lord Hatch of Lusby: My Lords, I thank the noble Lord the Minister for that reply. May I ask him whether he is aware that in this Question there is no implication whatever of any criticism of the course of justice in Malawi? May I ask him further whether he is aware that life President Hastings Kamuzu Banda is held in great esteem in the country and that it would be a great act of clemency, which would give him considerable standing and reputation in this country, if
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he were to use his clemency to commute the death sentence which has been passed on Orton and Vera Chirwa, who are also held in great respect in Britain?
Lord Trefgarne: My Lords, I certainly agree about the respect in which President Banda is held in this country. The judicial process in this particular case is, of course, now complete, but there is a procedure for consideration of clemency. We understand that under this procedure this case would be referred to the Capital Sentences Review Committee, who would submit their recommendation to the President.
Lord Elwyn-Jones: My Lords, in considering this matter, would not President Banda and his colleagues be well advised to heed the wise and somber words of Winston Churchill: "The grass grows quickly over the battlefield: over the scaffold, never"?
Lord Trefgarne: My Lords, I think we shall take every opportunity to express our views to the Malawian Government in this matter, and we certainly think that the humanitarian aspects of this case ought to be paramount.
Baroness Llewelyn-Davies of Hastoe: My Lords, is the noble Lord aware that the very many friends of this distinguished lawyer and his wife will warmly welcome his statement that Her Majesty's Government are in contact with other governments in the EEC about this, and that we fervently hope that the President, who is known for his humanitarian views, will commute these tragic death sentences?
Lord Trefgarne: Yes, my Lords. I agree with the noble Baroness and, as I say, the British Government and our European partners are considering what the next step might be.
Lord Hatch of Lusby: My Lords, will the noble Lord consider whether he could advise his right honourable friend the Prime Minister that she might take an initiative, perhaps an all-party initiative, before the time is too late, to press, along with other European countries, the claims for clemency in this case and assure President Banda that his reputation would be greatly enhanced if he were to listen to such a plea?
Lord Trefgarne: My Lords, it seems to me that on this rare occasion the noble Lord and I are in no disagreement.

Political Donations and Honours
11.16 a.m.
Lord Jenkins of Putney: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they can confirm that the average contribution made in the years 1979–82 to the Conservative Party by the companies of eight directors of private companies recently granted peerages exceeds £100,000 each and if so what they infer from this.
The Lord President of the Council (Viscount Whitelaw): My Lords, it is not a ministerial responsibility to answer questions about donations to the Conservative Party, but, whether or not the figure quoted by the noble Lord were confirmed, Her Majesty's Government would draw no inference relevant to the award of life peerages.
Lord Jenkins of Putney: My Lords, will the noble Viscount consider that, since 1979, the top 18 contributors to the Conservative Party have received five peerages and nine knighthoods, whereas the top 18 industrial companies have done very much worse than that? Ought not the Political Honours Scrutiny Committee to take a look into this problem, especially having regard to the fact that, while the Conservative Party is filling its coffers in this manner, it is at the same time seeking to diminish the slender resources of the Labour Party?
Viscount Whitelaw: My Lords, the noble Lord asked me whether I will consider all these matters. The short answer to him is that I will not. The reason I will not is that the Political Honours Scrutiny Committee, composed of three very prominent Members of this House, does so.
Lord Boyd-Carpenter: My Lords, does my noble friend recall the wise saying which he might suggest to the noble Lord opposite: pursi omnia pura—to the pure all things are pure?
Viscount Whitelaw: My Lords, I am grateful to my noble friend for translating it for me. It always helps in my case. I am sure that I agree with him.
Lord Paget of Northampton: My Lords, would the noble Viscount agree that you would have to be very pure indeed not to draw the inference made by this Question?
Viscount Whitelaw: My Lords, that is exactly why I have not sought to draw any inference one way or the other.
Lord Elwyn-Jones: My Lords, is this not an appropriate occasion to wish many happy returns of the day to Mr. Harold Macmillan?
Viscount Whitelaw: My Lords, I am extremely grateful to the noble and learned Lord for his very kind remark. I always forget what you call somebody who is in limbo to the extent that Mr. Macmillan now is. But I think that he is Mr. Macmillan and I am sure that there will come a time when this House will greatly welcome him here.
Lord Jenkins of Putney: My Lords, while joining with great pleasure in wishing many happy returns to Mr. Harold Macmillan, will the noble Viscount the Leader of the House suggest to his noble friend that he should not confuse purity with naïvety?
Viscount Whitelaw: My Lords, I am very anxious never to make any suggestions to my noble friend.
Lord Nugent of Guildford: My Lords, is my noble friend aware that the arrival of many Life Peers in this House is a source of astonishment to their friends, and even more to their acquaintances? In those circumstances, would it not be more becoming to the noble Lord, Lord Jenkins of Putney, if he extended the same good faith to other noble Lords as they so regularly and frequently do to him?
Lord Jenkins of Putney: My Lords, I am not questioning anyone's good faith. I am questioning the system.
Viscount Whitelaw: My Lords, perhaps it would be appropriate to leave it there. I am grateful to the noble Lord for saying that he is not impugning anyone's good faith.

Orkney Islands Council Order Confirmation Bill
Brought from the Commons; read a first time, and (pursuant to the Private Legislation Procedure (Scotland) Act 1936) deemed to have been read a second time and reported from the Committee.
Travel Concessions for the Unemployed Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Research and Development: ACARD/ABRC Report
11.21.am.
Lord Sherfield Lord Sherfield rose to call attention to the First Joint Report by the Chairman of the Advisory Council for Applied Research and Development (ACARD) and the Advisory Board for the Research Councils (ABRC) (Cmnd. 8957); and to move for Papers.
The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. Most of your Lordships present here today will recall the publication of the Report on Science and Government by the Select Committee on Science and Technology in December 1982. In this report a number of recommendations were made concerning the way in which Ministers receive advice on questions of scientific policy, and various changes were proposed. In their reply, the Government rejected many of the specific proposals put forward by the committee but accepted in great part the thrust and substance of the report and proceeded to implement it in their own way.
For example, the committee recommended the appointment of a Government Chief Scientist at Second Permanent Secretary level. In the event, the Government raised the rank of the Chief Scientist in the Think Tank, the CPRS, and agreed to reinforce his staff. Then, as it happened, the CPRS was abolished and the Chief Scientist was able to emerge from his cocoon and stand on his own feet.
Similarly, the committee recommended the appointment of a Council on Science and Technology, presided over by the Chief Scientist, which would, among other things, issue an annual "State of the Nation" report on science and technology to Parliament. In the event, the Government proposed a closer working relationship between the Advisory Board of the Research Councils and the Advisory Council for Applied Research and Development and asked the chairmen of these two bodies to prepare joint periodic reports on the state of science and technology in the United Kingdom and selectively to review scientific opportunities and their implications.
Although this is a rather different kettle of fish from that cooked up by your committee and although this first report which we have before us today may not be quite what the committee ordered, I nevertheless wholeheartedly welcome its publication. It gives this House and, indeed, the other place an opportunity to review the working of the machinery for scientific advice to the government and to discuss questions of scientific policy over a wide field. It should also help to promote public debate and interest in the development of scientific policy.
I shall here draw your Lordships' attention to the hope expressed by the authors of the report that some parliamentary time could be found for these matters, so crucial to the future well-being of the nation. I am aware that a long—indeed, an overlong—period of time has elapsed since the report was published and the Motion standing in my name was placed on the Order Paper, and that things may have moved on in the interim. Indeed, I hope that they have moved on.
In their report on science and government your Select Committee also recommended a more constructive use than hitherto of the general machinery for interdepartmental co-ordination so as to meet the need for a more effective review of the broad deployment of effort in the field of science and technology. The Government took this point and decided to introduce a system of annual reviews of research. The first of these reviews, Government Funded Research and Development for 1983, was published last month. This is another welcome development.
I do not propose to try to summarise what is succinctly stated in the introduction to the report. It is admittedly the first attempt to marshal the statistical information into a data-base which will be the essential foundation for future reviews and which, in addition to Government funded research, will next time include the expenditures for the rest of the public sector—in particular the nationalised industries—and will set public sector expenditure against information on the research and development activities of the private sector.
This report takes the definitions of basic, applied and other categories of research from the so-called Frascati Manual drawn up by the OECD in Paris. This manual seems to be very involved. If generally adopted, it will, I suppose, enable accurate comparisons to be made with expenditures on the various categories of research and development with that in other OECD countries, but for the present I
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hope we can keep to the more familiar categories of basic, strategic and applied research.
Thirdly, I want to draw your Lordships' attention to another recently published document, of considerable relevance to this debate. It is the Study of Commissioned Research by Sir Ronald Mason, until recently the Chief Scientist of the Ministry of Defence, undertaken at the request of the chairman of the ABRC and published by the council last November.
This study was set up essentially to inquire into the application of the Rothschild customer-contractor principle, primarily by Government departments in commissions to the research councils and to universities and polytechnics, and within this framework to examine how provision should best be made for strategic research. Sir Ronald Mason marshalled a distinguished group of witnesses. Again, I shall not try to summarise the conclusions of the report but will merely observe that it reinforces some of the anxieties voiced in the Report of the Select Committee on Science and Technology as regards the application of the Rothschild principle, as regards the system for providing scientific advice to departmental ministers, and the role of the ABRC itself. These were matters which your Select Committee thought should be considered by the scientific council which they proposed should be set up. The Government did not accept this recommendation and were inclined to play down the Select Committee's anxieties on these particular matters. Nevertheless, the Mason study, and to some extent the joint report itself, indicates that the system may require further modification.
So at this point I should like to ask the Minister to comment on the progress of the measures which the Government agreed to take following on the Select Committee's report. Is the Chief Scientist now adequately supported and staffed, and what are the channels through which he can report to ministers other than the Prime Minister? What action is proposed to meet the criticisms and proposals in Professor Mason's study on commissioned research? Thirdly, has the Minister anything to say about the unhappiness which apparently still exists in certain quarters about the arrangements for advice on scientific policy in some departments, which is reflected in the Mason study? I find this continuing worry rather surprising, especially now that a Committee of Departmental Chief Scientists, chaired by the Chief Scientist, has. I think, been set up.
A few words now about the joint report itself. The Review of Research 1983, with its statistical information, to which I have just referred, was not ready when this joint report was written. It is therefore of a general nature and sets policy for science and technology in the context of the changes occurring in our society and in our industrial performance. The report provides a framework against which future reports may be read. It stresses at the outset the interaction and the interdependence of fundamental science and the day-to-day application of technology. It describes the pattern of our recent industrial performance, emphasising the decline of our manufacturing industry and the need to recover our position as a leading manufacturing nation.
The report sets out the present level of government support for basic and applied science and notes the

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pressures upon that level of support. It emphasizes and expresses anxiety about government cutbacks in finance for universities and the effect of those cutbacks on university research. In this connection, it draws particular attention, in paragraph 4.7, to the report of the recent joint working party between the ABRC and the University Grants Committee under the chairmanship of Sir Alec Merrison, published as Command Paper 8567 in 1982.
This leads the authors to stress the importance of selectivity and precision about priorities in recommending research projects, and laments the lack of collaborative research as practiced in Japan. In the authors' view, it is essential that the selection of areas on which to concentrate should be sharpened up with a view to improving the industrial exploitation of the research available. We have been inclined—and I paraphrase—to fluff the hard decisions and to spread our resources too thinly. The report goes on to emphasise the need for international collaboration, both in basic and applied science and technology, recognising that this involves long-term commitments which will have an effect on the United Kingdom's domestic science programme by reducing flexibility and limiting the choices available.
More attention should be given to the import of technology and to collaborative international programmes. The report welcomes the extra staff support, which it describes as modest, which will enable the Chief Scientist to give greater attention to international links and a better coherence in policies towards international research and development programmes.
The report then makes some pertinent comments on the relationship between Government and industry in the field of science and technology, stressing the need for longer views to be taken and for more effort—for example, by public purchasing—to encourage the development of new products and their marketability. Reference is made to a number of reports by ACARD on aspects of this question and to your Select Committee's report on Engineering and Research and Development.
There follow sections on the right climate for innovation, on the importance of design, and on the need for more research and development in the burgeoning service industries. Given the increasing importance of those industries (I quote),
"the case for devoting more intellectual effort to their long-term development appears strong, but both the areas for investigation and the mechanism for funding are yet obscure".
Finally, the report stresses the well-worn theme of the need for a responsive educational system—responsive to the rapid changes in science and technology, especially information technology; responsive to the needs of employers; and responsive to the requirements of a population familiar with scientific concepts and open to technological developments.
This is a wide field and I have no doubt that subsequent speakers will seek to enlarge upon one or other of the principal themes. For my part, I will refer to just two aspects on which I should like the Minister to comment, and I will then venture two or three observations.
My first point concerns the serious effects of the Government's approach to the dual support system. While the science budget has remained more or less constant in real terms (although I understand that a declining proportion of it goes to universities) the system's second leg—the general support for universities—has been cut substantially, thus unbalancing the system.
Anxiety about the effects of this run like thread through the joint report. The factual position is stated in paragraphs 3, 12 and 13. The subject comes up again in paragraph 3.16, and a note of alarm is sounded in paragraph 4.6. The recommendation of the working party in Command Paper 8567, to which I have referred, that universities should channel proportionately more of their funds into research and concentrate research funds into selected areas is called a development of "major importance". In paragraph 4.20, the report states:
"The sharp decline in UGC funding…will undoubtedly affect the development of some promising scientific and technological areas within universities".
What do the Government have to say about those anxieties?
The second main concern which runs through the report is really a reflection of the first; it is about the adequacy of support for basic and strategic research. There is a key sentence early in the report:
"the part played by fundamental research is crucial in underpinning the nation's long-term ability to produce new technological concepts".
The authors revert to that theme in their conclusion. Your Select Committee's report of 1982 expressed the view that certain areas of research were being neglected. The Government referred that observation to ACARD and the ABRC, and one outcome was Professor Mason's Study of Commissioned Research. The conclusion of his study was that strategic research, which has never been integral to commissions as Rothschild recommended, is not adequately covered. It is increasingly being supported from the Science Vote, with a consequent reduction of funds available for basic studies, and,
"The links between basic strategic and applied science are not being properly reviewed".
In more than one of its inquiries—for example, that on forestry research and development, and on research and development in the water industry—your Select Committee observed that some government departments have cut down on their support for strategic research. Where contractors' funds run short, it is applied research which tends to be supported and the element of strategic research squeezed out. This is obviously a matter of great concern in the scientific community, and I wonder whether the Government have anything to say about it today.
Speaking more generally, it seems that there may be a belief that shuffling the pack and redistributing some of the cards, without any increase in resources, will help to resolve some of these difficult problems; in other words, that it can be done by mirrors. I have no doubt that, given time, there is scope for reorganisation and rationalisation in the university system and, for all I know, in the fields covered by the research councils. But take the recommendations that the universities themselves should channel more of

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their reduced resources into research: that can only be done at the expense of something else—and is that something else to be teaching? As the saying goes, "something's got to give". I have an uneasy feeling that there are some false economies in the offing.
The second general observation is that in this report we have a clear message that we have been trying to cover too wide a field and that in order to arrest and reverse our economic decline we need to concentrate much more than we have done in the past on the selective industrial exploitation of research, drawing on what is available both at home and abroad. For only thus shall we penetrate successfully the market-places of the world.
My third observation relates to the importance of developing further international collaboration on major scientific projects. It is no doubt unfortunate that the pound sterling's relative decline has made our participation in some international projects more expensive and placed an increased claim on the available resources. But we should recognise the need to stay in these international bodies and projects, and we can here welcome the recent new arrangements with some of our European partners in fast reactor technology.
Let me conclude by repeating that I welcome this report and its companion piece from the Cabinet Office. In your Lordships' Select Committee's report on Science in Government we said in conclusion:
"What, above all, is needed is a strengthening of the scientific dimension in Government as a whole".
The contents of these recent reports raise hopes that this may be happening. Both reports admittedly have a preliminary character, and fuller reports are promised for the future. We shall look forward to receiving these in about one year's time, but meanwhile we are glad of the opportunity to debate what we have before us. My Lords, I beg to move for Papers.
11.43 a.m.
Lord Lucas of Chihtorth: My Lords, may I start by saying that both I and my noble friend Lord Whitelaw will listen to this debate with the greatest of interest. At the same time, may I say how grateful we are to the noble Lord, Lord Sherfield, for giving the House the opportunity of considering the report. He and his colleagues on the Select Committee for Science and Technology (of which I was once a member: a most useful period in what I might perhaps call my higher education) have brought major issues in science and technology to our attention in recent years, their latest report, on remote sensing, being published only this week. Today we have an impressive list of speakers, including the noble Lord, Lord Todd, chairman of the Select Committee. Indeed, as the noble Lord, Lord Sherfield, has reminded us, the paper we have to consider this morning stems directly from one of the Select Committee's reports.
In their response to Science and Government (Cmnd. Paper 8591, para. 10) the Government said that they would invite the chairmen of ACARD and ABRC to present periodic reports on the state of science and technology and current opportunities.
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May I now record the Government's appreciation of the work of the authors of this report and of the bodies that they lead. Both ACARD and ABRC have contributed much to our understanding of scientific and technological developments over the past years. Their various and individual reports have illuminated areas of scientific and technological advance, and have assisted government in creating conditions in which such advance may take place. Sir Henry Chilver and Sir Alec Merrison will be well known to many in this House. We acknowledge their leadership—now, in the case of ABRC, carried on by Sir David Phillips.
The chairman's report ranges over a broad canvas, and indeed the noble Lord, Lord Sherfield, has touched on what he sees as some of the most crucial areas. If I may, I should like to say something about the Government's approach to some of the principal themes, and in doing so I hope I shall be able to answer some of the questions which the noble Lord addressed to the Government in his opening remarks.
I turn first to the Government's support of universities and research councils. My right honourable friend the Secretary of State for Education and Science is responsible for the Science Vote and for the general grant to the University Grants Committee. The Vote covers grants to the five research councils as well as smaller grants to the British Museum and the Royal Society, and I am particularly pleased that for the year 1984–85 there is a small grant (unhappily it is small, but there it is) to the newly-founded Fellowship of Engineering. The size of the Science Vote in 1984–85 will be £550 million in cash terms, and that has been maintained. The research element in the UGC grant of £1,200 million, although not identified, is frankly estimated at about the same order of magnitude. If I may, I should like to return to say something further about the funding of university research in a moment.
Taken together, the Science Vote and the UGC grant constitute what is sometimes described in shorthand as government support for basic research. Just as Sir Alec Merrison and Sir Henry Chilver have stressed in their reports the interaction and interdependence of science and technology, so we need to be careful about talking of clear dividing lines between basic, strategic and applied research. My point is that few scientists, even when engaged on the most basic research, do not have at the back of their minds some possible application, however far into the future. On the other hand, research undertaken to solve a very particular problem can bring to light a lack of basic understanding of the underlying science, which can then become the subject of basic research.
At the Seminar on Science and Technology in Industry, chaired by my right honourable friend the Prime Minister last September, all speakers stressed the fundamental importance of basic research carried out in our universities, polytechnics and research institutes. This is the essential base for technological growth. In the last resort, of course, everything depends on the quality of the individual scientists working in universities, research institutes and laboratories, and indeed in industry. The quality of the research they produce depends increasingly not only on their intellectual calibre but on access to the essential tools of research. If we are to retain our best

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scientists we have to provide them with the surroundings and the resources they require to undertake this first-rate research.
This takes us straight to the problem which is engaging scientists and government: how to ensure that first-rate research is undertaken within the financial limits, which have become tighter. The Government have responded to the 1982 report of the Advisory Board for the Research Councils by broadly protecting the science budget from the general reductions in expenditure which it has been felt necessary to make. But if I accept that this is a period of remarkable growth in scientific understanding, with the potential for application in many fields, then I have to acknowledge that not all of these potential developments will lead to immediate, or even early, applications. Some may never have any commercial application at all; but one can never really tell.
Here I would like to say a word or two about university and industry links. This is important because both sides benefit. Industry has access to the knowledge and expertise in the universities and polytechnics, while they in turn benefit by participation in the application of their ideas and in the enrichment of their teaching. We can all think of universities which have actively developed strong links with industry, but I think we would equally agree on the great need to strengthen those links and to develop new ones. This will require a change of attitude on behalf of some universities and a positive response from industry.
The ACARD/ABRC report on Improving Research Links between Higher Education Institutions and Industry estimated that in 1981–82 industry spent about £35–£40 million in higher education institutions. As I said, this compares with a UGC grant of £1,200 million and about £200 million spent in universities by the research councils. I must not anticipate the Government response to the ACARD/ABRC report, but I would certainly think that there seems to be considerable scope for more investment by industry. It would be wrong of me to give the impression that either I or the Government think that future problems will be solved by the provision of extra funds. The Government have to consider any increases in public expenditure within the context of their financial and economic policies.
This work of ABRC and the research councils is entirely in line with the annual review of research which the Government announced in their observations on the First Report of this House's Select Committee on Science and Technology (Cmnd. 8591). The Government then spoke of the need to distinguish between vital and dormant areas of research, to identify gaps, disparities and duplications and to consider the opportunity cost of relinquishing certain areas of research. The noble Lord, Lord Sherfield, particularly referred to this; to determine which is the best way to go.
I said earlier that I wanted to say something further about university research and perhaps I ought to turn to that now. A number of recent reports, not least the report of the Joint ABRC/UGC Working Party chaired by Sir Alec Merrison, have expressed concern about the erosion to the research base. Many of the
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Merrison recommendations were addressed to the universities themselves—in particular, that universities should, as a longer-term objective, channel proportionately more of their funds into research and that they should set up research committees to decide research areas on which universities should concentrate.
The Government, in the light of the Merrison report and in response to the 1982 ABRC report, announced in 1982 its "new blood" initiative. Under this scheme nearly 700 extra staff in the natural sciences and technology are to be appointed in United Kingdom universities. The extra funds for "new blood" posts were provided through the UGC. However, the science budget was also augmented by some £2½ million in each of two years to enable support staff—technicians and others—and also equipment, to be provided in support of that new initiative. Because of the concern expressed in the Merrison and other reports my right honourable friend the Secretary of State for Education and Science wrote to the Chairman of the UGC asking the committee to consider what measures might be undertaken to increase the resources devoted to both fundamental and applied research. He went on to suggest that greater selectivity in the funding of research activity both within and between institutions might be necessary. Indeed, one possibility might be the allocation of some UGC funds only after consideration with the research councils of individual universities' research plans. The UGC is now consulting the universities and following the replies from them the UGC will be replying to my right honourable friend later in the year, who will then be considering the recommendations.
Secondly, I turn to the relative roles of government and industry. The Government's role in basic research is clear. It is rightly the principal source of funds; a position accepted in all the major industrial countries. But in applied research and development—and particularly where that research and development is related to the needs of industry—the Government's role is, as the report notes, more complex. It cannot be, and should not be, the main source of funds. Industry is the best judge of where new markets will appear and what new products will be needed to satisfy those markets. Industry will back those judgments with its own investment in research and development.
There are still calls for the Government to take the lead in devising a national strategic industrial plan. Indeed, it was the noble Lord, Lord Gregson, who made this point so abundantly clear not only in his own report but in the debate we had on that report. However, I have to say that it is not for government to devise that kind of plan for industry and technology. Only firms can take the necessary decisions. Firms have access to the detailed and day-to-day information about the market-place. It is their future survival that depends on their getting the decisions right. Where government can help is in their support of the key technologies on which future industry will be based. And here mechanisms do exist for consultation between government and industry; through NEDO, through the various advisory bodies that serve the departments, and of course through ACARD, and perhaps a little more energetically with the

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professional institutes, which, I believe, could play a very much greater role here.
My right honourable friend the Secretary of State for Trade and Industry recently published the strategic aims of his department. It will be seen that the stimulation of innovation is one of three key objectives. Your Lordships will already be familiar with what that department has done to encourage better understanding of the importance of new technology, in industry, through schemes for micro-electronics, information technology and so on. But the main role for government must be to maintain a climate that stimulates and encourages enterprise, and rewards it.
Some of the research and development needed to support industrial technology is carried out in the Government's own laboratories. It is, of course, important that industry should be closely involved in this work. Noble Lords will be familiar with the role of the Department of Trade and Industry's requirements boards, with their strong industrial membership. But the boards are also keen to ensure that the results of the research in the department's laboratories are passed to industry and used. An effective way to make that happen is to involve industry in the programmes by setting up "club" arrangements; sharing with government the cost of programmes and sharing with government the rewards of those results.
Sometimes more formal machinery is needed to ensure the results of public sector R & D are fully exploited. As my right honourable friend the Prime Minister said at the seminar to which I have already referred, a new role was announced for the British technology group. It will in the future concentrate its efforts on fostering an improved flow of technology from the research laboratories into new products and processes in industry.
The dissemination and application of research and information are vital steps in creating wealth from science and technology. Indeed, if I refer again to the noble Lord, Lord Gregson, noble Lords will understand, as I served under him, that I was perhaps a little more involved with that committee's report than with others. It was that Select Committee that called for a review of this process to which I have just referred. The Department of Trade and Industry is undertaking such a study for ACARD. The report specifically requested that the Department of Trade and Industry—the Department of Industry as it then was—carry out this study.
In another area the Government can exercise an important influence on the development of new technologies through their role as a purchaser, and the Government remain fully committed to that. The message has been emphasised not only within central departments but also to the nationalised industries, local authorities, and, indeed, to the suppliers.
However, I think that the point to bear in mind is that both nationalised industries and local authorities are completely responsible for their own purchases. This is, of course, right. The Government advise, but that is really all they can do. However, we have been very pleased with the response that has been forthcoming in recent months.
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Thirdly, I should like to say something about science education. The noble Lord, Lord Sherfield, in his final remarks said that he would like to hear what we felt. The Government have made it clear that they wish to see a shift in the balance of provision in higher education towards subjects of more direct relevance to industrial and commercial development. Over three years the programme to enhance teaching and research in subjects related to information technology will provide about 5,000 extra student places at higher diploma, first degree, post-graduate and post-experience levels.
The planning exercise for 1984–85 undertaken by the National Advisory Body for Local Authority Higher Education, and endorsed in its entirety by my right honourable friend in December last, provides for a substantial further shift of the provision towards engineering, science, technology and business-related subjects. Those plans envisage and provide for the intake of first-year students to full-time and sandwich courses in engineering subjects this year to rise by 15 per cent. relative to 1982; in science and applied science by 7 per cent.; and in mathematics and computing by about 50 per cent. In 1986 the total full-time graduate output from higher education in science and engineering is likely to be about 38,000 men and women compared with 27,000 in 1979.
Several noble Lords very courteously said to me a few days ago that they may wish to say something about the use of the so-called Frascati definition. Indeed, the noble Lord, Lord Sherfield, mentioned this. It may be appropriate if I say something about that now. First, there is nothing new in the Government's use of the Frascati definition. It has been regularly employed in the annual statistics of Government R & D expenditure compiled by the then Department of Trade and Industry and published in Economic Trends. It has also been used for that department's triennial surveys, of which the most recent, for 1981, was published late last year. Secondly, the Frascati definition is, as the noble Lord acknowledged, widely recognised internationally, and so its use enables one to make proper and valid comparisons of R & D expenditures in different countries. In a subject quite bedevilled by different definitions, this must be of great benefit. Thirdly, the Frascati definitions of basic and applied research, set out in the appendix to the annual review, do not make any reference to timescales. I know that there has been some concern about so-called strategic research, which is neither directly applicable nor yet wholly for the sake of knowledge. This may not feature explicitly in this definition, but applied R & D under that definition may have a very long time to application, but I can assure your Lordships that such research is indeed included in the annual review.
I think that perhaps some of the surprise about the use of the Frascati definition stems from the fact that departments have not previously been particularly rigorous in their definitions of R & D when issuing, for example, annual reports. As a result, they have included activities which, although relevant to scientific and technological advance, are not strictly R & D. One of the early achievements of the annual

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review has been that it has revealed such inconsistencies, and as a result we shall have a truer picture of the Government's R & D activities in the future.
I apologise to noble Lords if I am taking an inordinate amount of time, but it is a very wide subject. May I briefly refer to one or two of the more specific points that the noble Lord, Lord Sherfield, made. He referred to a certain amount of unhappiness which apparently exists over arrangements for advice on scientific policy. As your Lordships will know, this subject was studied by his sub-committee in the course of preparing the Science and Government report. The arrangements were then most thoroughly reviewed by the Government, whose conclusions were set out in Cmnd. 8591 only 18 months ago. We do not think that anything has happened since which should cause the Government to revise those conclusions.
Sir Ronald Mason, in his report on arrangements for commissioned research, made comments on that position and on the position of departmental chief scientists and other matters. The noble Lord, Lord Sherfield, asked what the Government would be doing about his recommendations. In Cmnd. 8591 the Government asked ABRC and ACARD to review the links between basic and applied research and in particular to look at the arrangements for long-term but directed research—which is sometimes called strategic research. It was partly because of this, and partly because of concern about the fall in commissions experienced by the Natural Environment Research Council that the chairman of ABRC asked Sir Ronald Mason to carry out this report. Although the conclusions to which the noble Lord, Lord Sherfield, has drawn our attention are as he says, I understand that both ABRC and ACARD are at present considering the report. It will then be for the Ministers concerned to consider any recommendations which affect their departments as a result of the recommendations that may come from the two bodies.
I have trespassed very long on the time of noble Lords who are very much more expert in these matters than I am. As I said earlier, my noble friend and I are anxious to hear them. Let me perhaps reiterate what I said earlier. I have no doubt that other Lords throughout today's debate may well argue, as did the noble Lord, Lord Sherfield, for increased funds for the universities, research councils and other worthwhile research institutions and projects. The Government are always ready to listen to persuasive arguments. We have heard many in your Lordships' House and I have no doubt that we shall hear others. Equally, we have to consider such arguments within the context of our policies on public expenditure.
The Government have protected the science budget, and I underline that fact. They have responded to particular needs and problems, and I think that I have responded to some of those today also. But I certainly could not give an undertaking that some of the problems currently facing scientific research and development will automatically be solved by the provision of more public funds. The noble Lord, Lord Sherfield, spoke about false economies. When I was a younger man I spent many years working for a very large company in this country. I was once asked exactly what I had to do for it. I was a commercial
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business man and my job was to ensure that that company's assets were fully and totally utilised. I think that sometimes in terms of research and development we should look again to see whether that which we already have is being fully utilised to the benefit of society.
That takes me to my very last words. In the report before us nobody can quarrel with paragraph 2. I was delighted to see that it is headed, "Science, technology and society". All three have an inextricable joining. Society needs technology and it needs science. I do not think that I can add further to what are the Government's views at this time. Certainly my noble friend and I shall listen most attentively, and if further advice or assistance can be given to your Lordships, I am sure that my noble friend will give it when he winds up the debate.
12.10 p.m.
Lord Gregson: My Lords, first, I wish to thank the noble Lord, Lord Lucas, for his kind remarks regarding the time that we spent together on the subcommittee. They were very interesting sessions, and I am sure that we both learned a great deal during that period of time. I also wish to thank the noble Lord for his announcement of the study on technology transfer which is at present taking place, and I look forward with great interest to its outcome.
I am grateful to the noble Lord, Lord Sherfield, for introducing this debate on the joint report by the chairmen of the research boards. In my opinion it is an important subject at this time. I also wish to congratulate the chairmen of the council and the board on an excellent and most useful report. I wish, too, to congratulate the chief scientist of the Cabinet Office on the related annual review of government-funded R & D. This is an excellent start, and I know what difficulty he must have had in drawing the information from the many government departments on a comparative basis. Like the noble Lord, Lord Sherfield, I hope that the annual reviews will continue and we shall have many more debates in your Lordships' House.
The general report was published in July last year, and the situation has developed since then. Therefore, first I wish to comment on the situation that the report presents in Section 3. The report clearly recognises the importance of manufacturing industry to the future economic well-being of this country, and it recognises, too, the decline in recent years of this sector of British industry. It also clearly recognises the need to improve the performance and reverse the decline. Furthermore, the report stresses the importance of research and development as one of the key issues without which the improvement is not possible. It seems to me that what the report does not do is to recognise the enormity of the task, nor the urgency with which we must address the problem.
In paragraph 3.4 the report quite rightly predicts the possibility that some time in the future for the first time in history the United Kingdom will have a deficit in manufactured goods. This has now happened, and much sooner than was aniticipated. From the uncorrected figures issued by the Department of Trade and Industry a few weeks ago, it appears that in 1983

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our deficit in manufactured goods was about £3 billion. What I think is of more concern—and which is not commented upon in the report—is the rate of the decline. We were £5 billion in credit in 1981, £2 billion in credit in 1982, and £3 billion in debit in 1983.
Those are very worrying figures indeed. Where does it stop? The report quite rightly points out that there are now whole sectors of products based on high technology which are wholly, or substantially, met by imports. In parallel with this miserable prospect, paragraph 3.6 points out that the overseas earnings from North Sea oil have in a large measure compensated for the decline in our overseas earnings from manufactured goods.
The positive balance of oil trade to the United Kingdom in 1983 from the same source that I have just quoted was nearly £7 billion and this has completely masked the importance of the decline in our overseas earnings in manufactured goods. The report goes on to warn us that it would be unwise to regard this relief as giving us more than a temporary respite and in the end we must re-establish our position as one of the world's great manufacturers.
Here again I do not think that we are fully aware of the urgency of the situation. Perhaps I may quote the second leader in the Financial Times of Wednesday of this week entitled, "The last act of the North Sea Drama". The leader starts:
"Britain's career as a major oil producer is in the process of entering a new and slightly confusing phase".
It later continues:
"Everyone knows, however, that the hand of the clock is almost at midnight. Then the glass coach will turn back into a pumpkin and Britain will, once more, struggle to balance its books. It will suffer a decade of decline in an industry which currently accounts for about a quarter of UK industrial investment, supplies 13 per cent. of the UK tax revenue and which, one way and another, employs about 100,000 people. Barring a major series of discoveries, which no oil company believes to be likely, oil production will peak in 1985 or 1986, and shortly thereafter oil tax revenues will commence a precipitous decline".
In other words, we are but two short years away from the peak out of the maximum flow of North Sea oil. The Financial Times was commenting on the drastic effect that this will have on the Government's revenue, but I would suggest that the effect on the trade balance could be even more serious for, as the output starts to fall, the effect on our trade balance will be immediate, and though the decline beyond self-sufficiency might be much slower, we shall at least lose the £7 billion credit—or whatever the figure might be at the time—and retreat into the trade deficit crisis of the 'sixties and 'seventies. If we add together the steep decline in the manufacturing sector performance with the potential wiping out of the positive oil balance in perhaps three short years from now, I would suggest that the situation is very worrying indeed.
Having said that, I now wish to turn to the annual funding report of R & D and see what the Government have done to support research and development in this vital area of manufacturing industry which will be so crucial to the economic well-being of the country. Under tables 13a and 13b, relating to the expenditure by the Department of Industry in 1981–82, we see that out of a total Government expenditure approaching £3 billion, we spent only £280 million supporting
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manufacturing industry, which provides some £75 billion of our GDP and 43 per cent. of our overseas earnings. We spent about 8 per cent. of the total R & D support.
In fact, the position is even worse than that because if we take out from the Department of Industry figures the support given to the narrow sector of Aerospace we see that the amount spent on supporting the broad spectrum of manufacturing industry is only a little over £100 million—3 per cent. Not for one instance do I think that we are over-spending in the other areas, such as defence, which supports one of the most viable sectors of our industry and provides very considerable overseas earnings, nor in what we spend on basic research through our universities, though it is in itself many times the figure that we spend supporting industry. Where I think we are wrong in absolute terms, and in comparison with our major competitors, is that we are spending far too little in this vital area. Further on, in paragraph 4.18, the report recognises that because of the low profitability of this sector of industry, there is no way that industry can increase its own spending to attempt to reverse the decline.
The last sentence of paragraph 4.18, which suggests that between 30 per cent. and 40 per cent. of the R & D carried out in the private sector is funded by Government, is very misleading. The figure includes the very large defence spending for specialised reasons, and it completely masks the low rate of spending by both Government and industry for the bulk of the manufacturing sector. I would ask the Government to consider seriously the question of further support in this area.
Elsewhere in the report, in Section 4 and subsequent paragraphs, the need for selection is outlined. There is no way, within the resources of the United Kingdom, that the universities doing basic research, or industry in applied research, can cover all the areas of the rapidly developing fields of science and technology. I therefore wholeheartedly agree with the report that selection is essential. What I do not understand, and I shall never understand, is how you can possibly have selection on any logical basis without a predetermined strategy. That I believe to be the logic of Alice in Wonderland. I should be perfectly happy for such a strategy to be industry-led. To attempt to have selection without a strategy seems to me to lead to anarchy. The last thing we need at this time, with the serious situation that we face, is any form of anarchy.
I should like to conclude by referring to another fact of selectivity—that which relates to the universities. Because of the way that R & D in universities is funded, research activity in nearly all fields is spread too thinly. Each university in itself is all things to all men. I know that the University Grants Committee, with the encouragement of the DES, is attempting a change. I do not believe, however, that it is doing enough. The timescale is far too slow. Again, if we are to compete with the other major nations of the Western world, we must return to having centres of excellence where universities specialise in particular areas of activity. We simply do not have the resources to spread the effort thinly across all of them. We shall fail badly if we do not concentrate.
With regard to one particular area—advanced manufacturing technology—this point was well stated

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by a recent report of ACARD. I believe that the Government have done the nation a considerable service by preparing and publishing these reports. I look forward sincerely to the annual occurrence of their publication. They undoubtedly underline the importance of science and technology in government, but I wonder whether this is yet readily accepted in the Civil Service. There is still a continuing need, in my opinion, to support and strengthen the position of chief scientists and chief engineers within the departmental structures. This will not happen unless Parliament and Government keep constant vigilance on the position. Overall, in science and technology, this nation has no room to be complacent.
12.23 p.m.
Lord Flowers: My Lords, I must apologise to your Lordships for not being in my place for some of the opening speech of the noble Lord, Lord Sherfield. I was a little slow off the mark and then got stuck with the Changing of the Guard. I apologise to the noble Lord most sincerely.
The report that we are debating arises from the proposals of your Lordships' Select Committee on Science and Technology whose own report, Science and Government, was produced under the inspiring leadership of the noble Lord, Lord Sherfield. As the noble Lord will have told you, a further report, the first annual review of government-funded R & D, prepared by the Cabinet Office, has also appeared in response to those proposals. We on these Benches are grateful to the noble Lord for his many contributions to the development of R & D policies, and he himself can feel well satisfied that these particular recommendations have been heeded by the Government. I should also like to say to the noble Lord, Lord Lucas of Chilworth, that the science and technology community was grateful to the Prime Minister for her December seminar, which demonstrated her personal interest in such matters.
I welcome the first joint report by the chairman of the Advisory Council for Applied Research and Development and of the Advisory Board for the Research Councils. It is a sign of closer partnership between two very important bodies in their formulation of advice to government. Their work certainly overlaps, but it should not be forgotten that their major responsibilities are nevertheless distinct, the one concerned with applied R & D and the other with the supervision of the work of the research councils and their support of basic university research. They come together especially in regard to strategic research; in the words of the joint report:
"research in areas where basic principles are known but the final products have not yet been identified".
One contemporary example is information technology.
The membership of ACARD is rightly strong in people from industry with a sprinkling of academics. In ABRC, it is the other way round, equally rightly. As long as the two bodies collaborate—I trust that they will—I hope that the difference can be maintained, for there are tendencies to play down the significance of basic research in this country as compared with the
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United States, for example, where, even in an economic recession, industry itself chooses to fund a much higher proportion of university research than is the case here.
It is in this connection that I should like to draw attention to the recent announcement by the committee of vice-chancellors and principals, of which I am at present chairman, of a new standing committee involving universities, industry and commerce, including small businesses, to encourage further collaborative ventures in the transfer of technology from basic research into industry. We are very pleased that many senior business people have agreed to join us in this new initiative. We have had many additional spontaneous offers of help, for which we are grateful.
The joint report is a bit ambiguous about the relative roles of basic and applied research. Perhaps the two secretariats have not yet settled down in bed together. It identifies the key issue as being the selectivity to be applied to particular areas of basic research where,
"excellence by world standards must be the aim but the underlying emphasis should be the benefit to the nation and especially the development of new products and industries".
It is, of course, in the nature of basic research that one does not know the innovations to which it may eventually give rise. In reading that, one should therefore perhaps bear in mind the emphasis placed earlier in the report upon the way in which science and technology advance through mutual interaction, the one sometimes drawing from, sometimes contributing to, the other. Basic research in solid-state physics, for example, contributed essentially to the development of computer technology while computing has contributed massively to the later advances of molecular biology. However, the report certainly recalls a number of areas of long term strategic significance, such as bio-technology, remote sensing, information technology and marine sciences, where, in most cases, special measures have been taken to stimulate additional activity in response to perceived need.
As the noble Lord, Lord Sherfield, has said, on a number of occasions your Lordships' Select Committee has drawn attention to the relative lack of attention to strategic research, or, rather, to the universal tendency to try to avoid responsibility for funding it. It has proved to be the fundamental flaw in the customer-contractor theory enunciated with such devastating force by Lord Rothschild in 1971. That theory sounded very plausible. The customer asks for the research to be done; the contractor does it, if he can, and the customer pays for it. It is all very well for meeting immediate and obvious needs. For the longer term, however, it assumes that the customer knows what he wants and that, even if he does, he is willing to pay, by way of overheads or otherwise, for strategic research that may be of no use to him until the second or third time round. All too often in this country he is simply not willing, whether he is an industrial firm or a government department. Lord Rothschild did not intend it that way, and should not be blamed for the parsimony and myopia of others. But by recommending an arbitrary transfer of research council funds to government departments to enable them to fund

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longer-term applied research, a climate was created—which exists to this day—in which strategic research was effectively to be squeezed disproportionately as the economic recession began to bite.
The Alvey programme for information technology is a recent and very welcome reversal of that trend which, we must all hope, may become the pattern for the future. Even there, however, I had to draw the attention of this House on 18th January this year to the unsatisfactory funding of the information engineering committee of the Science and Engineering Research Council, which is supposed to fund the majority of the projects which are complementary to the Alvey programme for information technology. The current forward look for that committee shows a downward squeeze over the next five years which is not at all, I imagine, what was intended.
The Study of Commissioned Research by Sir Ronald Mason, published for the ABRC last November, provides some very welcome insights into what has happened to strategic research during the last decade, and I hope its recommendations will be taken very seriously indeed by the Government. His remarks about the essential role of the chief scientists are particularly well-taken by members of the Select Committee. I have particular concern for strategic areas of the earth sciences bordering on the responsibilities of the Natural Environment Research Council: for materials science and technology, where per capita spending in this country is only a tenth of what it is in the United States; and for research into land use, including the conservation technology of natural habitats.
Your Lordships will be aware that a great deal is happening nowadays to bring universities, industry and commerce into closer partnership. The noble Lord, Lord Lucas, has already acknowledged that. I have mentioned the CVCP initiative already, but we have the integrated chairs at Salford; the science parks at Aston, Cambridge, Heriot-Watt and Warwick; visiting professors from industry who take part in teaching as well as research at Imperial College and elsewhere; and a growing volume of contract research and consultancies at many universities.
In yet another report—this one produced for ACARD under the chairmanship of Sir Alan Muir-Wood, to which reference has already been made—a most helpful and enlightened suggestion has been made; namely, that the Government should establish an "industrial seed-corn fund", whose initial value would be £10 million per annum, to support the infrastructure and basic research that will complement effective, industrially-financed applied research. From this fund a higher education institution would be able to earn £1 for every £4 of research contract and consultancy income arising from the private and public trading sector. Muir-Wood proposes to reward successful partnership between higher education and industry by introducing an element of gearing into university finance.
It is possible to criticise the scheme in detail: that it would be an open-ended commitment on government (but that could easily be limited); that it would reward established success rather than encourage new efforts
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elsewhere (but it could be related to the growth in earned income rather than to the absolute amount of that income); and that it might remove the incentive to charge a full economic price for contract research (but that could be monitored). A more fundamental objection, perhaps, is that its rewards are one-sided—it rewards only the universities—and perhaps there should also be some form of reward to the industry that has mounted successful collaboration with a university. This could be particularly helpful to small firms setting out on this path for the first time. I do not think it has been seriously studied by anybody as yet, but it does seem to me to be consistent with the Government's policy of supporting industry directly rather than through subsidies to its customers. I should like to know whether the Government are prepared to listen to suggestions along these lines when the Minister replies.
Modifications to the Muir-Wood proposals are certainly possible, but I hope that full consideration will be given by government to the essential idea of a seed-corn fund for applied university research. It would then be seen as the missing element of the so-called "dual support system" for the funding of university research. This is the arrangement whereby part of the block grant from the University Grants Committee that each university receives is intended to supplement the monies derived from the research councils. In this way it is possible for university staff to conduct exploratory research that is not yet ready to attract more selective funding.
The reduction in UGC support that has occurred in recent years has fallen particularly heavily, we suspect, upon research. In the ABRC it is believed that this element has diminished by more than 10 per cent. since 1981. Certainly the research councils are having to provide for items of expenditure that would have been found from general budget only a few years ago, which is why they are under such great pressure, at the moment, and why the Science Vote has not really been protected.
We in the universities are being urged on all sides—most recently by the noble Lord, Lord Gregson—to apply selectivity in the distribution of block grant, as the joint report itself makes clear. It is even being suggested that the UGC should earmark the proportion of its grant to each university that is intended to be spent on research. We shall of course be considering that, but it must not be forgotten that the purpose of dual funding is precisely to allow for the development of research that has not yet emerged. To chop off that sort of discretionary funding is to starve the seed-corn, and is likely in the end to destroy the most innovative research in the universities.
I am grateful to the noble Lord, Lord Lucas, for his acknowledgement of the importance of university research. But it is right that more attention should be given to whether the universities, and the whole research system of the country, are providing value for public money. We must certainly try to reach agreement with government and with business about whether we are producing the research results and the trained personnel that are needed to create wealth and influence for the country. But since we can none of us be perfect, it is as well to make some international comparisons as well.

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It is often said that we produce more Nobel Prizes per head of population than any other country, so that there can be little the matter with the level of support that we give for science. I am sad to have to say that I doubt whether that is any longer the case. Our research facilities in general no longer bear fair comparison with those of similar countries such as Germany, France and the United States. It seems to me that our research is no longer held in quite the same high esteem internationally as it once was, although of course there are some honourable exceptions. Much of the blame must fall on the decline of the dual support system and the resulting stifling of initiative. The trouble with making a statement like that is that it is very hard to be sure, because it will be several years before we can expect to see the full effect, and by then it may be too late for us to contribute all that we could to the recovery from recession that we all seek.
12.39 p.m.
Lord Todd: My Lords, I propose to be very brief in my remarks, largely because of the admirable way in which the noble Lord, Lord Sherfield, introduced this Motion. The noble Lord covered a wide range of points, some of which I personally would otherwise have made, and therefore I can be brief. I very much welcome the fact that the noble Lord has drawn our attention to this report because it is an important report and we should do well to pay attention to some of the flatters raised in it. As the noble Lord, Lord Sherfield, himself remarked, it is, we hope, only the first in a series of reports of this type which will perhaps be issued annually. The report itself, and these future ones which I expect, stem largely from the report of the sub-committee of your Lordships' Select Committee on Science and Technology on the theme of science and government, which was chaired by the noble Lord, Lord Sherfield. That report was published almost three years ago.
The report that we are considering today does not contain anything very new; it contains very little in the way of new subjects. However, it certainly underlines, once again—just as did the report of the committee of the noble Lord, Lord Sherfield—our continued failure adequately to take care, not only of the scale of the nation's research and development effort, but also of our failure to integrate adequately the very great potential of Government, industry and the academic world, with the result that over the years we have seen a gradual decline in our manufacturing industry—a decline which still continues, and which bodes ill for our national future.
I do not propose to rehearse all the points made in the report. Many of them are familiar to those who, like myself, have been concerned about such matters and have sought over many years, without a great deal of success, to alert the nation to the danger ahead. History provides us with many examples of the fate of nations which fail to keep pace with technological advances. I hope that we shall not provide another, but the hour is late! The manufacturing sector remains of crucial importance to the economy of this country, and well directed research and development is vital if its competitive position is to be even maintained, let alone improved.
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Of the many important issues raised in the report would mention only one: the intelligent use of public purchasing in the promotion of manufacturing industry. In this country the Government and the nationalised industries are major purchasers of products incorporating advanced technology; indeed, in some fields they are the only purchasers. This can have advantages if such public purchasers liaise closely with potential suppliers over future requirements and are willing to be among the first customers for new technology as it is developed. But there is a danger, which has by no means always been avoided in the past, that a monopoly purchaser may adopt rigid and, indeed, idiosyncratic policies which, in effect, cause United Kingdom suppliers to conform to the extent of making them unable adequately to compete in export markets where other advanced products or systems may be required.
To some extent I think that this is emphasised in our case by too high a proportion of the research and development being done by the public purchasers rather than by the suppliers. I agree with the authors of the report that this ought to be remedied if we are to remain competitive in world markets. The stimulus of competition is essential to applied research and development and this tends to be lacking in our public purchasers, although it need not be. I have always been an opponent of government research establishments which lack (as most of them outside the defence sector do) the spur of competition and changing economic objectives. It is my hope that all concerned with public purchasing will read—and will heed—the appropriate sections of the report which we are discussing today.
Although not formally included in the Motion of the noble Lord, Lord Sherfield, there is, as has been mentioned several times today, another recently published report from the Advisory Board of the Research Councils which is relevant to our discussion today and which I feel I should mention. This is the Study of Commissioned Research by Sir Ronald Mason. Briefly put, Sir Ronald looks at the progress made in the matter of commissioned research by government departments—a subject very relevant indeed to the implementation of the so-called customer-contractor principle, which was adumbrated by Lord Rothschild and put into operation following his report in 1972. Sir Ronald, in effect, finds that the commissioning arrangements have not proved satisfactory in practice and that the customer-contractor management technique will not provide real benefit until the scientific advice available to customer departments is enhanced. How true that is!
As long ago as 1948 the old Advisory Council on Scientific Policy, of which at the time I was a member and later had the honour to be chairman, recommended that government departments should have adequate scientific staff and advice available to them to enable them to use research councils and other organisations to carry out, by contract, research which was immediately relevant to their needs. In effect, that was suggesting that a customer-contractor principle should be introduced.
What happened? After an initial flurry the level of scientific staff and advice was gradually downgraded in one department after another, and 22 years afterwards

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Lord Rothschild had to try to grasp the same nettle. If we are to believe Sir Ronald Mason, it would seem that history is repeating itself. Indeed, one might put it this way: we live—but apparently in this field at least we do not learn.
12.48 p.m.
Lord Nelson of Stafford: My Lords, I should like to add my tribute to those of others to the noble Lord, Lord Sherfield, for introducing this debate today, which I think is extremely timely. I should also like to pay tribute to the two authors of this report, who have done an excellent job. The Government are to be congratulated on initiating this regular review for three reasons. First, I think that it is extremely good to look from time to time at what progress has been made on the recommendations of the excellent reports which are published by these bodies.
Secondly, it is extremely encouraging to those who spend a great deal of time on these bodies studying these particular subjects to know that the reports will be reviewed by your Lordships on occasions such as this. Thirdly, it is extremely good that this brings together the ACARD group, which is essentially directing its attention to industry, and the ABRC group, which is essentially directing its attention to the academic and research sides. This helps to bring together these two important functions of research and development—or, if you like, science and technology. In my opinion, this has been the core of the difficulty of trying to bring them sufficiently close together. The report itself does to my mind a great deal of good and, like the noble Lord, Lord Sherfield, I think we can all look forward to future reports. I hope he is right when he says that this will be an annual report. It should be an annual report. This is a fast-moving field and we should look at it at regular intervals.
The report contains a great deal of valuable information and stresses, as has been emphasised by previous speakers: the problem which industry faces in maintaining and improving its competitive position in world markets. I shall touch on one or two points which are particularly important. The report calls for the extension of collaborative research. This is tremendously important and can make a big contribution to a point already made by previous speakers: that we have limited resources and we must be selective. Let us ensure that we use those resources to the maximum effectiveness: this is where collaborative research can play its part.
However, let us not underestimate the difficulty. It is not all that popular. It is not all that easy, and it should be given every encouragement. The Alvey programme is a good start in that direction and is already demonstrating what can be achieved in this area.
The second point which I think is important and which is emphasised is the long-term nature of research and development. This cannot be said too often. You cannot turn research and development on and off like a tap. There has to be a consistent programme. There has to be a steady programme, and only in that way do you build up the expertise, the degree of stability in the team, and the maturity which leads to a competitive product at the end of the
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exercise. I emphasise particularly that point of stability, and I hope that the Government in their thinking on these matters will bear that very much in mind.
Mention has already been made of the contribution that can be made by public purchasing. That is so important that I shall touch on it again. It dictates the product development programme for a large sector of British industry, and I welcome the confirmation from my noble friend Lord Lucas that this policy of the intelligent use of public purchasing to assist our export industries has full government support.
Finally, there is reference to the importance of design. This cannot be over-emphasised and is where we shall succeed or fail in the competitive markets of the world. More has to be done in this field, and greater emphasis has to be given to this subject in the educational courses in the higher technological fields. We are chronically short in British industry of really good designers, and this is something which special steps must be taken to rectify.
There is one matter on which I was going to ask the Government for consideration, but I am not sure whether my noble friend Lord Lucas in his opening remarks answered it or not, so I shall ask it again. One of the big problems we have is to convert the excellent research work done in this country in so many different establishments, in so many areas, into effective product development and finally effective marketing.
In the report of Sub-Committee 2, on which I had the pleasure of sitting under the chairmanship of the noble Lord, Lord Gregson, the problem of transferring research knowledge and information through and into an end product meeting a market need was emphasised. There seems to be a lack of flow here. This is something which the Government should look at. I am not sure whether or not it came within the range of this study on technology transfer to which my noble friend Lord Lucas referred. There is a great deal lost somewhere en route. Work is repeated, time is lost, money is lost and resources are lost. One of the factors may well be the difficulty of transferring personnel, and it is only personnel who can transfer knowledge, information and experience smoothly from one area to the other. I urge on the Government the necessity to have a good look at this. Perhaps it is something which ACARD and ABRC themselves can contribute towards.
My noble friend Lord Lucas referred to relationships between government and industry in this particular field. I have no quarrel with what he said. It is a job for industry to decide what should be done. It should be market-led and only industry can lead it with its knowledge of the market place. However, I do not agree with his rejection of the idea of a national strategy in selected fields of industry, as recommended by Sub-Committee 2 on Engineering Research and Development.
There is a bit of a misconception here. The suggestion was not that this should be a matter for decision by government. It was a matter for all the parties concerned, essentially led by industry. But, if we are going to harness together all the resources which are available and which have been referred to by

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previous speakers, they must know what the objective is. Many of them are not in touch with the market place. Many of them are not even in industry. They are in universities; they are in Government establishments. If it does not exist, how do they know what the strategy is or to what their efforts should be directed? Therefore, I feel there is a need for a means of determining in key industries exactly where this national effort, wherever it may be, should be directed.
I would draw your Lordships' attention to the fact that the Alvey programme is exactly this. It is exactly what it has done, It has taken a section of industry and it has gathered together all the relevant people in government, in industry, and in public bodies and they have produced a programme and everybody is working to it, and that really got things moving in that particular area. This could well be done in other areas, and I would urge the Government to think again on this.
Maybe they do not like the title of a "strategy". Why not let us have "A Programme for Industrial Advancement", or something like that? The Alvey programme is another programme and we can have this in other sections of industry, and thus ensure—and this was referred to by my noble friend Lord Lucas—the utilisation of resources, which he rightly said he had experience of in his own industrial background. Here we would have a means of doing this on a national scale.
In conclusion, may I sound one other warning? It is easy to talk about new technology; it is easy to dwell on the research side of it; and it is easy to think of new technology as being new products and new industries. One of the most important things we have to do is to see that this new technology is in fact brought forward and applied to many of our older industries. It is not just new products and new industries with which we should be concerning ourselves. It is updating and making our existing products and industries as competitive as they can be in world markets: our attention must also be directed to this important task.
12.59 p.m.
Lord Richardson: My Lords, there is little that is specific in this report, and in our discussions up to this point, about the position of medical research. It is for this reason that I am particularly grateful to the noble Lord, Lord Sherfield, for giving me the opportunity of making some points to your Lordships: points that in a way may be quite unnecessary, in that no one can doubt the importance of medical research to the individual, but there are signs of the importance of medical research to the economy of the country.
Sir Alan Hodgkin, past President of the Royal Society and eminent Master of Trinity, has recently spoken of Sir Francis Bacon's understanding of the importance of science in—to quote Bacon—
"the endowment of human life with new inventions and riches".
And medical research, I believe, can do both. Bacon, four hundred years ago, clearly recognised the value of applied and basic research; and the noble Lord, Lord Flowers, has referred to this most eloquently. It is a happy thing that the DHSS and the Medical Research Council have come to a good working understanding and arrangement over these two aspects of research.
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The department now relinquishes commissioning funds to the science budget and the council, for its part, recognises very clearly the department's vital service interests in biomedical work of a research nature.
There is close day-to-day contact between these bodies through their officials and by cross-representation of their members. Both appreciate that the contractor-customer principle, while of prime importance in some definable projects, is not suitable in some areas of medical research. An illustration given to me by Sir Douglas Black, himself a previous Chief Scientist at the Department of Health and Social Security, is that of ex-President Nixon's much-publicised attempt to promote the discovery of a cure for cancer. Of course we still await a cure.
Basic research, like commissioned research, requires adequate and stable funding. The two chairmen whose report we are debating make the importance of stability perfectly clear, and they have in the report a sub-heading entitled "Stable co-operation between Government and industry". The Alvey Report, recently debated in your Lordships' House, makes the point that strategic research may be long term and require consistent support with, again, stability of funding. The Government's appreciation of the importance of research to our national life is shown by the priority that they have given to maintaining the Science Vote in real terms, or thereabouts. This is quite admirable, but there is, I am afraid, a paradox: the UGC's monies have been cut, and thus the one hand has given and the other has taken. The result is reduction in the money available for research for medical purposes as well as for all others in the universities.
Why is this so very important? The answer for commissioned research is self-evident, but for basic research it is difficult for those without scientific training or research experience to understand its paramount importance. In fact, their lack of understanding can lead to the suggestion that basic research has not much to show. This is totally untrue. In the last 30 years, biophysics and molecular biology have led to an extraordinary stride in genetics, in cell transport and in monoclonal antibodies, to mention but a few of the molecular biological advances. Indeed, molecular biology itself was largely created by the basic scientific work of the two Nobel Prize winners, the Braggs, father and son, on X-ray analysis and crystallography.
Such researches in the biomedical field in the last 20 years or so have resulted in the opening up of areas that are extraordinarily wide. They affect the improvement of insulin, the production of vaccines, the treatment of leukaemia, the management of transplants, and renal transplants in particular, and, very important, the delivery of anti-cancer drugs to the target cells. The benefit of these advances to the nation as well as to the individual could be enormous.
Your Lordships may perhaps have seen an article in the Financial Times on 20th December last year. In it was told a story which is now a success story due to an alliance between the Medical Research Council and a commercial firm. The article gave an account of the arrangements between Professor Sir James Gowans,

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secretary of the MRC, and a manufacturing biotechnological company, Celltech, for the transfer of material from academic research to technologically efficient industry geared for commercial development. The arrangements to date largely concern the exploitation in this country—and I emphasise "in this country"—of the University of Cambridge MRC Laboratory's discoveries about monoclonal antibodies. This will be to the advantage of our own industry and the economy, and at the same time will bring new research money to the MRC itself, for this sort of research and for other projects, and will enable them to pursue subjects that would otherwise, perhaps, not be approached.
The developments that have already been achieved are now largely confined to rapid diagnostic methods, the rapidity of the methods themselves being of great importance. Such things as the detection of spina bifida in the unborn and the giving of early warning of cancer of the liver are already showing some progress. This is all very exciting, of course, and it underlines the value to be gained from biophysical research; but it leads me back to my main point, and that is the difficulties and troubles in the universities due to the cut in grants. The effects are serious, and they are multiple.
As the noble Lord, Lord Flowers, has pointed out, new research may not be done at all, it may be delayed, and it may go to other people than ourselves to do it. Furthermore, in the universities pilot studies in research are largely done to decide whether projects are worth pursuing. If this is not done, some real winners may never reach the starting gate, or will be left for others to do. Yet again, much of the MRC work which is done in the universities is done in their units. Professor Sir David Phillips, who (we have already been told) is the new chairman of ABRC and head of the Molecular Biological Department at Oxford, has made the point to me: the units in the university financed by the MRC are nevertheless much affected by what goes on around them by way of the research by the universities themselves that is heavily affected by grant reductions. The two differently funded units are, indeed, interactive, and a disadvantaged state in one affects the other.
It seems difficult to understand why a Government who recognise so clearly the need for the maintenance of the Science Vote should not find it in their capacity—and the noble Lord, Lord Lucas, has made it clear that there will be great resistance to new money—to find more money on a selective basis (and the word "selectivity" has been mentioned frequently in this debate) for this all-important branch of research which affects ourselves and our future as human beings, and indeed, I believe, has a powerful potential effect on our economy.
1.11 p.m.
Lord Zuckerman: My Lords, may I begin by adding my word of appreciation to those that have already been offered to my noble friend Lord Sherfield for having introduced this debate—a debate which, as previous speakers have made perfectly clear, concerns matters which are critical to the well-being of our country, not just in the long term but in the short term,
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too. Successive Governments, ever since the end of the Second World War and even earlier, have recognised the need to narrow what has been a traditional gap between the universities and industry, to eradicate an attitude that a career in industry is not as respectable as one in the professions. Yet we have always known that the science and engineering departments of our universities are the fount of the knowledge which, sooner or later, becomes exploited by manufacturing industries, which transforms public demand and which revolutionises our way of life.
As the paper to which this debate is addressed points out, we also know that the manufacturing sector of our economy continues to be of crucial importance to the United Kingdom's economy. Despite the considerable fall in Britain's share of world trade over recent decades, to which previous speakers have made reference, manufacturing industry still provides a quarter of our GDP. It is responsible for three-quarters of our visible trade exports, and in a period of high unemployment do not let us forget that it is still responsible for a quarter of the nation's jobs. A healthy manufacturing industry remains as vital a factor as it has always been in assuring the national well-being.
No industry today is not science-based, to a greater or lesser extent. Our so-called "high tech" companies—for example, those that are involved in what is becoming known as the information technology explosion—cannot hope to survive if they are not as well informed as our competitors about the new knowledge that emerges from the basic research carried out in universities. The more traditional industries, such as our primary producers, whether of food, coal or steel, need every advantage which scientific knowledge can bring to bear if they are to hold a place in highly competitive markets where they have to contend not only with the industrial and commercial skills of our competitors but also with the distortions due to inequalities in the costs of production and the price of the ultimate product. To keep up to date, our industries cannot do without the universities, and the latter are, happily, far more aware now than they were 15 to 20 years ago, in the days to which the noble Lord, Lord Todd, referred earlier, of the value of the intellectual property which they have to sell.
The central issue which we are debating today has been with us endlessly since the end of the Second World War and has been adumbrated in several reports. Successive Governments have done a great deal to build up our universities, as we all know. When one remembers that the full-time university population of this country in 1939 was estimated to be no more than 40,000, and today it has to be measured in well over 200,000, one realises what has been done. Successive Governments have seen to it that our stock of scientific manpower has been built up, and considerably.
But it is all too clear now that an adequate supply of scientific manpower is not enough. It is a necessary, but certainly not the sole, condition for industrial success. I would say that the general efforts that have been made by successive Governments to build up the scientific and technological power of our country have therefore not been enough. Throughout this period, our status as a pre-eminent manufacturing nation has

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continued to decline and the present state of affairs is set out only too clearly in this report which we are debating today.
I was never one who was much impressed by the late Lord Snow's designation of two cultures, and I am not now. But the message of the part that science and its applications matter to our national well-being has clearly not got across in an effective way. It would seem as though we built up our scientific and technological power on one side of a fence, without those on the other being much affected. Yet what happens on the other side of that fence is even more important in the competitive technological world where other nations, somehow or other, seem to succeed as we fail and where there appears to be no fence.
I recalled that governmental paper on technological innovation, published in 1968, focused entirely on the competition which we then faced from the United States. I re-read that report and there was no mention then, only 15 years ago—and I had something to do with that report—of what was happening either in Western Germany or in Japan. A recent report by the National Academy of Sciences in the United States has now warned that American dominance in electronics, certainly in the consumer field, is dangerously threatened by what is happening in Japan, and if the Americans feel threatened, how much more should we? Things move very fast in the technological world.
It has been said, time and time again, that we in Britain are pre-eminent in the basic sciences and in the generation of fundamentally new ideas. This was stated again earlier in the debate. There are certainly some areas where we have made the basic discoveries that in due course have transformed the scene. I need not take up your Lordships' time in giving any illustrations—a few have already been referred to. But it is no use patting ourselves on the hack because some of our scientists—and I say this with due respect to my very old friend Lord Todd—have won Nobel Prizes. Today, what matters is the fact that there are tens of thousands of other scientists in other countries and that the prizes are mostly now being won by men with American passports. Although they have not yet got into the field, I imagine it will not be long before they are won by men with Japanese passports.
What matters to us in this country is that basic science and applied science are part of one single process separated only by the dimension of time. No greater prestige attaches to the qualities that are called for in the search for knowledge for its own sake, and for knowledge that can be put to use. The differences are essentially terminological. They relate mainly to the time scale in which new ideas, great or small, affect our lives. Applied science, which is only one part of the process of innovation that leads on to market research and then sales, is what counts from the point of view of the realities of day-to-day politics and our national wellbeing.
The report before us, like many before it, paints a sad picture, but it also calls for more direct action than has been the rule so far. So let me turn to a practical scheme that was designed specifically to help to narrow the gap between the universities and industry, and which was commended in another report, issued a month before by ACARD and ABRC, entitled
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Improving Research Links Between Higher Education and Industry. This scheme was launched by the Wolfson Foundation in 1968. I happen to be a trustee of that foundation. Universities were informed directly, by correspondence, that money would be made available to help groups of scientists and engineers to carry out what work was necessary to bring ideas they might have to the point where they could be marketed either as new products or processes. Before applying, the men concerned had to have the promise of industrial co-operation if they were successful technically. That was 16 years ago. Another acceptable objective was the formation of consulting service units. In short, the scheme was an invitation to take part in a competition in the exploitation of practical ideas.
Over the years that the programme has now been in operation, 176 projects were selected for support out of more than 1,000 applications, at a cost of some £17 million. A book will shortly be published giving a record of the scheme up to the year 1981, a record of some 150 projects. The success which has been achieved has far exceeded anything that was hoped for by the trustees when the scheme was launched. The universities have benefited not only from the establishment of what are now more than 100 self-sustaining industrial units.
In the 15 years since the scheme began these units have cumulatively generated for their respective universities far more money than was ever put into the scheme. Jobs have been created for university teachers and specialised staff. Students and academic research workers have been helped to realise that research can be not only intellectually stimulating but also financially rewarding. Industry, and particularly small companies, have been made aware that the new knowledge, of which universities are the fount, can be turned to practical ends and profit. Companies have been formed to manufacture and market new products, one or two as part of the universities, with sales in a few places now mounting to well over £1 million a year. These are small groups starting with two or three men. One of the projects which we support is referred to in the report which we are debating; namely, the magnetic levitation monorail at Birmingham Airport. Others were referred to in the seminar held a few months ago at Lancaster House, to which reference was made earlier in the debate and which was chaired by the Prime Minister.
When this scheme was launched I warned my fellow trustees that we should be lucky if more than one project in 20 of those which we supported succeeded. We were providing only once-for-all support for any single project. But the fact that more than 100 projects have succeeded in transforming themselves into permanent consulting units or university manufacturing companies is remarkable in the light of the modest expectations I entertained at the time and which my fellow trustees were prepared to accept. Those concerned in the universities have had to fight to win, but what they have shown, which is so important, is that there is no dearth of practical ideas, of commercial value, waiting to be tapped in our universities and, I am sure, in our polytechnics, too.
But obviously risk is involved in fostering new ideas. Risk is involved at every stage in the innovative

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process, starting with applied research, moving on to marketing and then to sales. The foundation has helped in dealing with only one, but a critical early band in the spectrum of risk. Financially, the risks become greater the closer the process of innovation approaches the market. That is where the problem of the availability of venture capital becomes so critical, a topic to which no reference has yet been made in this debate. It is a problem which still needs to be solved.
We all know that the big companies—the ICIs the Unilvers, the pharmaceutical companies—know this well. They have their own priorities in development. It costs millions to get a new agrochemical or drug to the market. It costs tens and tens of millions, as many of us know, to succeed in an aviation project. "God spare us from our inventors! I have heard that cry and it has its justifications. There are always very costly failures, but unless the risks, and the risks of failure, are taken there will be no successes.
I have reservations about the sentence in the report that research and development undertaken with an end product in mind is best financed and carried out by the firm that will apply the knowledge gained. That is true, probably, of the big companies, but I doubt whether it is true of the smaller companies, and here help from government, as well as from charitable foundations, is wanted. I recognise that there are constraints on the kind of help which can be given by government. Reference was made earlier in the debate to this problem. But there are many things that can be done.
It is worthy of note that the fiscal measures which are in operation in this country to encourage research and development in companies are not so generous as those which apply in the United States. And we know, of course, that the whole system of support is totally different in Japan. However, if Government help is to be given I would agree with the report that:
"A blinkered approach from the guardians of the public purse will in the long run harm the United Kingdom's economic interests far more than any losses from the risks inherent in adopting new technology".
The same warning should of course be understood by the boards of the new venture capital companies that are springing up.
We must remember that very early in the 19th century the Royal Navy did not want anything better than the semaphore and that, much later in the 19th century, whoever was in charge of the Post Office did not believe that the telephone was required in this country because the Post Office had enough messengers at its disposal. I do not doubt that all of us have worn blinkers from time to time in these matters, but let us remember that the big technological ideas come from the minds of individuals. They are the ones who appreciate best the potential economic value of new knowledge. It is the entrepreneurs in universities who realise the potential industrial value of what they are doing. Dr. Land, a Harvard undergraduate at the time, who invented the polaroid camera, saw what was missing in the market and fought until he transformed the whole photographic industry. The laser was not conceived either in the boardroom of a company or in a committee of the Pentagon. It was the brainchild of a couple of men who failed to persuade their masters
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in industry of the value of what they had done. They had to leave the company, only to be brought hack later. Genetic engineering, to which my noble friend Lord Richardson referred, derived from pure academic research. None of these came out of a committee.
I say that because there is a danger that, if more Government support is given, it will be constrained in a way which does not give the freedom necessary for carrying through a big idea to completion. There was an Englishman named Mees who for many years was vice-president for research with the Eastman Kodak Company. He put the matter this way:
"The best person to decide what research work shall be done"—
and he was talking about applied research in industry—
"is the man who is doing the research, and the next best person is the head of the department, who know s all about the subject and the work. After that you leave the field of the best people and start on increasingly worse groups; the first being the research director, who is probably wrong more than half the time; and then a committee, which is wrong most of the time; and finally, a committee of vice-presidents of the company, which is wrong all the time".
We cannot imagine that the United Kingdom has the resources to compete in all parts of the high-tech. field. President Reagan's 1985 budget for R & D—that is, the federal budget—has just been published and it amounts to 53 billion dollars. Our budget is one-tenth of that figure; our investment in the up and coming bio-technology field is only a fraction of the American investment. We must not be blinded by the high-tech. industries alone. The noble Lord, Lord Gregson, suggested that there was too little Government support in other sectors of technological industry. The Wolfson scheme has demonstrated that there is any number of other ideas of economic value in our universities waiting to be exploited, given the right entrepreneurial spirit of those who command the venture capital that is available, and given that they are ready to listen to the people who really do know the facts.
1.33 p.m.
The Earl of Selborne: My Lords, I should first explain to your Lordships that I am the chairman of the Agricultural and Food Research Council and therefore have a particular interest in the debate initiated today by the noble Lord, Lord Sherfield. From all the speeches made in the House today, it is clearly the case that there is recognition of the need to be selective—be it basic research programmes, strategic research programmes or applied research programmes. The question which concerns many of us is: do we have the machinery to be selective? Shall we be able to sharpen up our priorities? Can we avoid fluffing the hard decisions?—as the noble Lord, Lord Sherfield, asked earlier.
The quick answer is that as a result, perhaps, of the proddings and promptings of the Select Committee we are slowly accumulating at least some of the machinery for these hard decisions. We have the annual review of Government-funded research and development, which has been referred to as the first such document with perhaps more and fuller information to come. But it is a start, and it is a helpful start. The very fact that the Cabinet Office itself has now

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acquired a chief scientist—as the noble Lord, Lord Sherfield, explained—with increased resources, again gives one some confidence that the infrastructure within Government to make these hard decisions will in part be provided for. The report we are considering today from the chairmen of ACARD and the ABRC does give some indications, in general terms, as to the considerations which will have to be borne in mind by those in Government and elsewhere when they come to make these hard decisions.
My noble friend Lord Lucas of Chilworth made it fairly clear in his speech that there is not much hope of extra money from the Government for research. He pointed out that the science Vote has been protected from the worst of the Government cuts, but I have to say that in many ways that is illusory—and the noble Lord, Lord Gregson, made that point with some considerable force. What we have seen—and reference has been made to Sir Ronald Mason's report from all sides of the House—is that just as soon as Government departments' budgets became tight, as was widely anticipated at the time of the debate the Lord Rothschild's proposals way back in 1971 and 1972, there was pressure on those departments which funded research to move away from strategic research and to concentrate on applied research. That is spelt out quite clearly and incontrovertibly by Sir Ronald Mason.
The implication has been that the research councils have had to pick up that strategic research, which otherwise would have been missing. If that has to be picked up without the funding which is required to assume that extra burden, then basic research has to lose out. We know that basic research has already lost out because of the crippling cuts in funding from the UGC. There has been nothing like level funding for science, and there must be recognition of that from all present today.
It is not much good my saying that therefore we should expect increased funding. Perhaps your Lordships would then expect me to put in a plea for the increased funding of biological sciences; after all, we have heard a case for increased funding of medical research. But I am not going to do that because I believe that we must address ourselves clearly to the very real issues which have been posed by the most stimulating speech made by the noble Lord, Lord Sherfield, and in the report.
We have to face the fact that research is getting more expensive, that funds are finite, and that we have to be selective. I believe that is common ground for every side of the House. I therefore ask my noble friend who will be replying on behalf of the Government to consider more carefully the proposal of the noble Lord, Lord Gregson, for a strategy for research in industry.
My noble friend Lord Lucas of Chilworth anticipated that plea; after all, he had every right to as it was a recommendation of the Select Committee. He rejected it because he said that it was not the Government's role to plan industry, but I have to point out that that is not what is being asked. Again, my noble friend Lord Todd made that point. What is being said is that if finite resources are to be deployed with any degree of success, without expensive mistakes and an inability to pick up promising lines of research,
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then there must be an assessment of the resources available, the centres of excellence, the strength of the research, and the strength of industry itself. I entirely agree with those noble Lords who said earlier in this debate that such a strategy—or programme, as my noble friend Lord Todd called it—can be led by industry.
I suspect that the Government somehow shy away from the concept of planning. If they can remind themselves of the great success of the Alvey programme and of the benefits we have already recognised as deriving from that programme, then they will not see this as a sinister move towards a planning of the economy in a way that would be contrary to present philosophy.
In the world of agricultural and food research, we desperately need such a long-term strategic plan to which we can work within our industry. The AFRC has written its own corporate plan, and that seems to be an essential tool if one is trying to deploy resources which, in our case, are diminishing quite fast. The response, however, of the Permanent Secretary to the Select Committee of another place, when looking at the organisation of agricultural research and development was to be most unhelpful and dismissive, I think I would almost say, of the prospect of a strategic plan for that sector of research being of any assistance. I detect that now there is a slight change of heart and that the need for strategic planning within our industry is more widely recognised, and I am absolutely certain that the application of such a strategic plan for other industries is equally apparent.
My second plea—and again it is a point which has already been made a number of times—is that once you have written your strategic plan or, once you have got industry to help you write your strategic plan, you must assume a degree of commitment. The degree of commitment for that research programme will alter according to the nature of the research. Basic research implies very long-term funding; you simply cannot chop and change it, and I do not think anyone has yet accused the Government of so doing. On strategic research, this report refers to a period of a decade as a rough guide, and I certainly would not quarrel with that. A decade in government is obviously a very long period, and it may be asking a lot to expect that commitment once these strategic research programmes have been selected and protected from other cuts and have been fostered at the expense, presumably, of competing programmes. I do say nevertheless that the Government have to get into a frame of mind such that, if they are to assume responsibility for publicly funded research—as they must—there must be a degree of commitment to strategic research for up to that length of time.
Even in applied research, where again, particularly through departmental research budgets, the Government have assumed and will be assuming a degree of responsibility, the length of period for underwriting and commitment will obviously alter according to the nature of the applied research, but it is most unlikely that it will ever be less than one to two years. My own experience is that, as a result of the cuts announced in November by the Chancellor of the Exchequer, the Ministry of Agriculture gave us three months' notice on the funding of the commissioned

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research in the Agricultural and Food Research Council starting in April 1984.
There is simply no way you can run a coherent research programme with that degree of expediency. Publicly funded research implies a degree of commitment, and it must be separated from the vagaries of departmental funding at least to a certain extent. I know that Ministers, when they are faced with Treasury cuts, have to work quickly, and the choice can never be easy. But, if the concept which was undertaken at the time of Rothschild and has been underwritten and continued by successive Governments since is to succeed, then industry and the scientist must know where they stand. I accept that this is asking on behalf of research for something which is not usually granted to other areas of government funding, but I do believe it is a reasonable request.
1.44 p.m.
Lord Swann: My Lords, I, like earlier speakers, think this is an admirable joint report. It covers a whole series of problems and decisions that have to be made in the world of research and development, and all against a very welcome background of concern for our industrial decline—something which has in fact been going on for 100 years or more but which accelerated very much indeed in recent years, and which is all the more puzzling because of the high status of British research.
There seemed to me to be one curious omission from the report, and it occurred to me as I read paragraph 4.29, where it says:
"establishing the right fiscal, financial and regulatory climate for innovation, and ensuring that effective links exist between the originators and exploiters of ideas, will assist greatly, and new ways of achieving such a climate will continue to feature on the agendas of both ACARD and ABRC."
I am very glad that that is going to continue to feature on their agendas, but in fact, of course, it is not just fiscal, financial and regulatory matters that ought to be there.
We have had a brief mention from Lord Zuckerman about investment in venture industries. That seems to be a problem that has defeated us in spite of endless attempts for a long time past. It is undoubtedly a very complicated problem. The problems of union reactions to innovation and new technologies, management reactions, the differential reactions of production departments and marketing departments—there are a vast range of extremely complicated problems. Whereas implicit in the entire report is a recognition of the enormous strength of scientific method for increasing knowledge and, as a result, finding proper solutions to problems, nowhere as far as I can see is there any recognition, or even suggestion, that perhaps our industrial decline itself—what has caused it, the innumerable problems that coalesce to give us a highly intractable system—is a problem crying out for the scientific method.
It occurred to me therefore that I would try and look at the annual review of government-funded R & D and see if I could form any opinion at all of how much government funding went into research on the malaise of industry. The categories are not nearly specific enough for one to be able to do that with even the
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remotest certainty, but it occurred to me that it would be difficult to see that it could be much more than 1 or at the most 2 per cent., and probably a great deal less. Ironically, the one bit of government funding where it is quite specific—but it is not spent in Britain, or not aimed at Britain even if spent in Britain—is the ODA, where it has a category, promotion of industrial productivity and technology, on which we spent £1.5 million last year, which represents some 7 per cent. of the ODA budget. I would hope that sooner or later there will be some figures sufficiently specific for one to have some idea of how much money we are spending on research on Britain's industrial malaise, but I fully recognise it would be very difficult to find out.
I then read once again through the report, and it occurred to me that although one of the bodies of the joint report, ABRC, the Advisory Board for Research Councils, actually is responsible for the Social Science Research Council, now known as the Economic and Social Research Council, it was curious that there is not a single mention of that body in the report, or what it does or what it might do for this problem. Indeed, as far as I can see, the only mention in the entire report of the Social Science Research Council comes in an appendix where the name of the chairman, as being a member of ABRC, is written down.
Of course, the moment you get on to the social sciences, gloom and despondency or cynicism, or even merriment, tends to invade the scene. Your Lordships will realise that I speak against a background of the recent commission given at the very highest level to the Permanent Secretary of the Department of Administrative Affairs, Sir Humphrey Appleby, and his long-suffering Minister in another place, that they should abolish economists! Now that a new scriptwriter has joined the team of, "Yes, Minister", we may, I imagine, expect further instructions of a similar sort applying to other social sciences.
If I may be more serious, natural scientists, of whom I am one, are actually rather more sympathetic to the social sciences than one would expect perhaps, and I think I know why. It is because they, perhaps better than the public, or indeed politicians, realise how difficult the social sciences are. After all, the advances that we now take for granted in the physical sciences that have given rise to all the technologies that we have been talking about took a very long time—centuries—to get off the ground. Even at the accelerated rates that have applied in the last century or more, it took quite a long time.
The biological sciences which are of course inherently more complicated—I would not say more difficult—and more intangible, came a good deal later. It is perhaps significant that it is only in the last century or so that medical science could seriously be described as having been effective when it came to curing human disease. It has only become really effective in this century. A mere 150 years ago the average expectation of life in Britain was under 30 years, and a body with the longevity of this one would have been quite inconceivable. The expectation of life at the end of the century was about 50 years, and it is now well over 70. So it comes as no great surprise to natural scientists that when one wants to cure the ills of human society it is a very long-term operation. It is difficult and one cannot expect rapid solutions and easy success.

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That is not to say that social scientists do not criticise social scientists. They do. I suppose the most general criticism is that social scientists, at least in some areas, are rather prone to getting hold of vast amounts of Government data which have been collected for another purpose, and which are of uncertain accuracy, and subjecting them to extremely elaborate statistical procedures. It might be appropriate sometimes to place rather more regard for the grubby business of collecting one's own data in the way one wants them, however difficult and confusing it may be, because that is how the biological sciences themselves came to reach the position they are now in.
However, that is not an issue I want to go into now. Nor do I want to suggest, the noble Lord, Lord Lucas of Chilworth, will be relieved to hear, that a lot more money needs to be spent. I do not believe that it does. Perhaps there should be a certain amount of redeploying of money, but I think there is a case for a much more earnest attempt to treat the industrial malaise as a scientific problem which deserves to be looked at in its own right. Of course, it is looked at to some extent already. I am chairman of a body—the Technical Change Centre—which was recently set up with money from a variety of sources and which is starting to look into some of these problems. There is the Science Policy Research Unit at Sussex University. There are departments of business studies in universities and there are grants from Government departments, and so on. But those are on a small scale. I believe that they could do with an injection of what happened in wartime; namely, the drafting of many other people into solving desperate national problems. One of the father figures of that sort of scientific revolution in the war—operational research—is the noble Lord, Lord Zuckerman, who spoke earlier.
Above all, I hope that the problem will be looked at as a problem which is itself worthy of the scientific method on a bigger scale than so far achieved, and that that thought will continue to appear on ACARD and ABRC agendas, and perhaps on other agendas elsewhere in Whitehall.
1.55 p.m.
Baroness White: My Lords, I have been induced to intervene in this debate among so many noble Lords who are much more directly concerned with and have a far more profound knowledge of the matter than I can claim; partly because in preparing a brief contribution to the debate last Monday on the fate of the Welsh Plant Breeding station at Aberystwyth I became fascinated—indeed, almost mesmerized—by a brief study of the really bizarre story of certain agricultural relationships in the past two or three years. I spoke of the relationship between the Ministry of Agriculture (MAFF), the Agricultural and Food Research Council (AFRC), the Joint Consultative Organisation for Agriculture and Food (familiarly known, I understand, as the JCO), ACARD, the UGC, and the Advisory Board for the Research Councils. One can add to them the Scottish Office, thrown in for good measure, and I suppose an occasional bleat from the Welsh Office—although that was publicly inaudible.
Even a brief study of this cat's cradle of relationships in agriculture, food and research led me to accept as
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valid the reported comment by one of the AFRC senior scientific advisers that,
"the Agricultural Research Council is one of those very British institutions which, when one tries to explain its organisation to a visitor, emerges as marvellously illogical and more or less incomprehensible".
I mean no disrespect to the noble Earl, Lord Selborne in quoting that. It is reinforced by another quotation from an honourable member of the House of Commons Select Committee on agriculture which reported last summer. He commented that the Agricultural Research Council,
"had grown up like Topsy with no overall plan or strategy".
He continued:
"Professors get bees in their bonnets and if they know how to work the Ministry of Agriculture and AFRC systems they get the money".
That seems to me to be an illuminating lay person's view of the matter.
It would be unkind to proceed further after the truly traumatic experiences being suffered by certain sections of the AFRC with whom, on personal and humanitarian grounds, one must have great sympathy, but these comments even if casually uttered surely serve to explain why a 5-year corporate plan was deemed necessary for agricultural and food research and why this may have to be linked to some further fairly drastic restructuring.
I was much interested to hear today the rather more general comments made by the noble Earl, Lord Selborne, and I congratulate him and his colleagues most warmly on having taken the initiative in recognizing that strategies are needed for the various sections of research with which we are concerned today. That does not mean that I would have sufficient expertise in the matter to know whether the five-year corporate plan is as good or as bad as it is said to be in certain quarters, but the mere fact that this recommendation has come from one of our research councils shows that something of this nature is required. It is perhaps one of the most promising developments in this area in recent times.
Our short debate on Monday was, of course, primarily concerned with a particular problem of national identity rather than with agriculture or science. Needless to say I have no intention of retracing the ground so eloquently described then by my Welsh compatriots. The noble Earl, Lord Swinton, who had the task of replying, was later heard to say that he felt like a fox chased up hill and down dale by a pack of relentless Welsh foxhounds. I do not favour blood sports myself, but it must have been clear that in certain circumstances factors other than over-strict cost benefit analysis or very narrow scientific priorities do have to be given some weight. While the appropriate departments in our university colleges in Wales are on the whole reasonably well treated by the research councils, and sometimes very generously, we suffer from a very small share indeed in institutional research, which to our Welsh eyes seems to be unduly concentrated either within 60 miles of London or north of the Scottish border.
This brings me to an apprehension which is I think growing among a number of the smaller or more remote universities and some of the research institutes. If one considers the now famous, or perhaps notorious, 28 questions emanating from the UGC, it becomes

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plain that among the many pre-suppositions underlying this unique questionnaire is a strong tendency to support the biblical principle of giving to him that hath. I am well aware that many references have been made during our debate today to the need for selectivity. I am not for one moment denying the validity of those arguments. They are of course contained in the report on which my noble friend Lord Sherfield—if I may so call him—has decided to hang the debate.
In paragraph 4.2, for instance, the report also stresses the need to concentrate at any rate basic research facilities on centres of excellence, and states that this trend which is already visible will be continued. The report adds:
"Decisions therefore have to be taken, not only on areas of support"—
subject areas—
"but also on the locations at which basic research in any subject will take place".
Up to a point, this must be so. One must concentrate the use of very high cost and complex equipment and make the most of it. The two chairmen in their report, admit that other considerations apply in the field of applied research, and more especially when dealing with relations with particular industries or firms in those industries. But what the smaller or less prosperous institutions are beginning to be seriously concerned about is that they may be categorised publicly as second-rate or third-rate, or even as "teaching only" institutions. Should that occur, the divisions will inevitably tend to become intensified and perpetuated. The whole structure could then be more or less permanently stratified.
Apart from certain disciplines which are conditioned by the need for especially sophisticated equipment or services, excellence may flourish even in relatively small or remote institutions. If I may give another Welsh example, only a year or two ago the University College at Aberystwyth could boast that in proportion to its numbers it had as many Fellows of the Royal Society as Oxbridge or a prestigious London college. It is true that in the last year or two there have been a couple of retirements, but even now its half a dozen Fellows of the Royal Society is still a very fair proportion compared with some other establishments.
While excellence attracts excellence, I would contend that it is also true that someone of outstanding quality may emerge even in unpromising surroundings to set new standards of achievement. I might even suggest that wisdom can be found outside Imperial College. But with or without our over-elaborate advisory/consultative/administrative/executive structure, as I have described it for the agricultural and food industries, I think it is still true that the spirit floweth where it listeth. I should be much disturbed if we had so close a structure of carefully selected centres of excellence that there was little opportunity for people who did not fit into that pattern to make what could be an extremely valuable contribution in their own areas of endeavour.
We shall have to come to consider the restructuring of much of the edifice of our basic and applied science research funding—which is what we are really talking
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about today. It seems to me that it is a pity that in a sense this debate is both a little early and a little late. It is a little late in the sense that, as the noble Lord, Lord Sherfield, acknowledged, the report on which our discussion is based came out last July. It was, in effect, the swan song as far as ABRC is concerned of Sir Alec Merrison. The current chairman, Sir David Phillips, has now been in post for rather more than 12 months. There may well be certain changes of emphasis which will shortly have to be taken into account.
I am also sorry that we do not have available to us today the forthcoming science budget Forward Look, last published by ABRC in 1982, which I understand is about to emerge on the world any moment now. I have re-read the 1982 report on the prompting of the noble Earl, Lord Selborne, in our debate earlier this week, and I must say that I find it extremely interesting and helpful. I am eager to see the latest edition emerge. I also welcome the recently published booklet from the Cabinet Office which has some extremely valuable statistics, no doubt, which will form a data base for the future. But it does not give one quite such a lively picture of what the immediate pattern of research funding may be.
It seems to me that in many ways one of the most important contributions to this debate is the report which has been referred to several times already—that by Sir Ronald Mason on commissioned research. Just before I came into the House this morning I was interested to see in today's edition of The Times Higher Educational Supplement that this week Sir Ronald had commented:
"The present structure of the research council system makes it unfit to move into the 1990s".
At the seminar at Imperial College he made a very strong hid for a wide inquiry which he indicated is already well overdue.
I should have thought, at any rate for lay people listening to this debate this is a line of thought which deserves following up. The published report by Sir Ronald is, of course, an attempt to answer the question, "Whatever happened to Rothschild?". Other noble Lords who preceded me in the debate, and who know a great deal more about the matter in detail than I do, have indicated that the Rothschild innovation has been perhaps less significant than it was supposed it would be some 10 or more years ago, when it started.
There is great power in a name. I think that as far as the general public is concerned, as opposed to the inner circle of those who are directly connected with high level research, they have imagined that since 1972 most government-financed R & D has been based on the customer-contractor principle. But of course that is not so. As I understand it, no funds were transferred on a Rothschild basis from the Science Research Council, nor from the SSRC as it then was, and it was not very long before the Department of Health and Social Security decided that it would be better to let the Medical Research Council get on with things. And the department pulled out of the scheme.
So effectively the Rothschild reform has been confined, at any rate in recent times, to the Agriculture and Food Research Council and to the Natural Environment Research Council. I was glad that the

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noble Lord, Lord Flowers, referred to that because these are the research councils whose organisation and possible restructuring seem to be causing the most concern. This is particularly so in regard to the Natural Environment Research Council, which has depended considerably on departmental commissioned work. I understand that the resources for that work on commissions from the various Government departments concerned with the NERC has dropped by no less than 33 per cent. over three years. That is a fairly dislocating experience by any standards, and I think that it accounts for much of the unease which has been felt in that particular area of research.
As has already been mentioned, in all this field the role of the UGC is vital, but obscure. It is one of the most essential, but the least open, parts of the dual-support system—a system which is not really a true dual-support system in the sense that there is also the income from public or private commissioned work which provides the third leg of this uneven and unstable tripod.
We can only hope that the Government will really think again about the position of the dual-support system where, as we have been told, the apparent safeguarding of the science budget is largely illusory. I shall not labour the point, but I hope that the noble Viscount who is to reply to the debate will make it clear that he has fully understood what has been said in all quarters of the House about the fact that, if there is a dual-support system, both sides of it must be sustained, and that when, in addition, there is the commissioned research from departments which has also been diminishing in many directions, this adds to the instability of the total structure.
Other speakers also have queried the position of the Chief Scientists and what has been the effect of the demotion of some of them. Even when there has been no demotion, for example, in the Department of the Environment, where there is a distinguished Chief Scientist at deputy secretary level, as I understand it, he does not exercise fully effective budgetary control because most of that has been passed to the individual directorates within the department.
I hope that from what has been said today from all quarters of the House the Government will realise that there is most serious concern about the state of the future organisation of our university and research council activity. In last Wednesday's Guardian there was a leading article castigating academics, in particular the vice-chancellors, who were upbraided—I thought perhaps a little brashly—for their sheep-like behaviour in the face of the stresses imposed on our higher education and research system by comparison with the more combative attitude of the doctors who make sure that the whole world knows what the medical services are suffering. I pass no comment on that, except to emphasise that it is not only the professional scientists and academics who are now becoming seriously concerned about the organisation and outlook of our research programme.
I shall conclude by quoting the words which appear in the final recommendation of The Science Budget—A Forward Look publication of 1982. The report is addressed to the Secretary of State for
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Education and Science from the Advisory Board for the Research Councils. Its final recommendation is:
"Let there be no mistake, this is a time of new scientific opportunities, of great promise, which need to be supported now if our country is to prosper in the future".
The italics are mine, but they have been running right through this debate.
"We appeal to you to secure an increase in the science budget which will enable those opportunities to be exploited and will help to mitigate the damage already done to the university research base".
Those words are now nearly two years old. I would submit that they are still valid today.
2.14 p.m.
Lord Adrian: My Lords, we are grateful to the noble Lord, Lord Sherfield for the opportunity to discuss this First Joint Report by the Chairmen of ACARD and ABRC. We are grateful also to the two chairmen for their report which, if it does not always make very cheerful reading, is a clear statement of where we stand today. Among many important points, it comments upon the dependence of technology on fundamental science and the reverse dependence, that of fundamental science on technology. Again, it mentions the long times, the often very long times, between basic discoveries and consequent shifts in technological advance. These points are well worth making. They are too often forgotten by "high tech" enthusiasts and even by scientists themselves, especially when they search for support.
The report makes a strong case for basic research. The fourth conclusion reads:
"We have also pointed out the vital importance of basic research to the long-term scientific health of the nation. The UK must maintain its strength and capacity in basic research which has as its prime motive extending human knowledge and understanding; in such research, excellence by world standards must be the aim but the underlying emphasis should be the benefit to the nation and especially the development of new products and industries".
Despite the rather subtle distinction that has been identified by the noble Lord, Lord Flowers, in aims, motives and underlying emphasis, it is extremely reassuring to have this clear statement from ACARD and ABRC, even if I believe, as a number of noble Lords have done, that one needs to temper one's assurance by thinking about what is actually happening to basic scientific effort in this country. The 8 per cent. reduction in funds to the University Grants Committee for universities has made the Government's support of the science Vote look somewhat half-hearted. I listened with interest to the noble Lord, Lord Lucas of Chilworth, as he described the present consultations with the universities. I hope that the outcome will be useful and speedy, but from where I sit in the university, I am inclined to agree with what the noble Lord, Lord Flowers, has said about the dual support system.
The present state of universities has been touched upon by several speakers. I should like to look at perhaps the longer term consequences of diminished support for the science base at universities. It may be true that too many of our bright young people have remained in universities, or that they did so in the 1960s and 1970s when universities were expanding in response to Government policy; but the opposite can happen as well. If a university career in science is made

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too unattractive by poor facilities or if too high a proportion of graduate students goes into university, there may be no one left to do the fundamental research or to train those who will do the more immediate applied research or development in industry. In case that seems fantastic, I would point out that the United States is faced with just this prospect. A commission, appointed jointly by Congress and President Reagan has concluded that graduate departments in United States universities face severe shortages of talented doctoral candidates in areas such as engineering and computer science. The commission is recommending, and seems, indeed, to have achieved, substantially increased Federal funding on equipment and instrumentation in American universities, and an increase in Federal support for fellowships there.
New blood appointments in British universities are very welcome but they will need up-to-date laboratory equipment if they are to make much of a mark. There is another way in which support for basic science is being eroded. It has been mentioned by Sir John Mason in a study of research commissioned by Government departments. In his report Sir John says:
"Strategic research which should be integral to commissions is not adequately covered; it is being increasingly supported from the Science Vote, with a consequent reduction in funds available for basic studies".
I believe that we are in real difficulties over the definitions of the various categories of research. The report of the Select Committee on Science and Government referred to "long term but directed research". The Select Committee called it strategic research and expressed the worry that support for it was inadequate. The noble Lord, Lord Sherfield, has referred to the new classification used in the recent annual review of Government-funded research. This Frascati system classifies research and development into three categories. First, basic research, which is experimental or theoretical work undertaken primarily to acquire new knowledge. Secondly, applied research, which is also original investigation undertaken to acquire new knowledge. It is, however, directed towards a specific practical aim or objective. Thirdly, experimental development, which is systematic work drawing on existing knowledge derived from research that is directed to producing new materials, products, processes and services.
It seems to me that this classification means that much that is presently thought of as "applied research" in departmental commissions should be called "experimental development", and that would be a better description of what is in fact involved. Perhaps more importantly, much of the strategic research which now falls either between the research councils and the commissioning Ministries and is not done, or is supported from the Science Vote at the expense of basic research, should be seen to be applied research and, therefore, under the Rothschild principle, unavoidably the concern of commissioning Ministers. If this indeed is the result, the new classification has much to be said for it, however confusing it may seem at first sight.
The report of the Chairmen of ABRC and ACARD contains two interesting sections which have already
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been mentioned. I am referring to the sections dealing with "A Receptive Market" and "The Right Climate for Innovation". The importance to all of us of a successful industry cannot be exaggerated and it is plain that we must do what we can to improve our ability to compete in world markets with the most successful innovators.
It is a constantly repeated complaint that scientists should be more conscious of the exploitable aspects of their work and make greater efforts to ensure exploitation or at least the protection of exploitable ideas, by taking out patents. Scientists are accused of unseemly haste to publish, and of taking no thought of the loss thereby of exploitation rights. Indeed one hears, at the highest level, of indignation that Britain's discoveries are being exploited by America and Japan. But if Japan and America can profit by work published in this country so can we, or rather so could we if we had industry capable and willing to innovate and an economic climate favourable to innovators. I believe that we are in fact learning, even if slowly, and gradually we are beginning to encourage enterprise and innovation, and especially the innovation and enterprise of small firms whose competition may be the most effective way of stirring up established industries.
For the truth is that until recently it has not been easy to raise capital for starting a business, and the processes for establishing a patent were often expensive, complex and slow. There is, however, encouraging evidence of new thinking about the effect of patenting on innovation and the Government's Green Paper on Intellectual Property Rights and Innovation is undoubtedly an important step in the right direction towards easier and faster patenting. But I should like to sound a note of caution on the issue of patenting because I believe that, based on a faulty analysis, too much emphasis is placed on confidentiality and patenting; or perhaps it is better to say that this is an area of misunderstanding between academe and industry. The tradition in science is open publication; and verification by repetition is very much part of the scientific method. We should not lightly give up an idea which has served us so well. I believe that, so far as much basic science is concerned—and I mean the kind that is not initially seen to have any identifiable purpose other than increasing knowledge—it is normally better that it be published and subject to scientific scrutiny, and let he who will, exploit it.
I am aware that this is perhaps an over-simple view and that it is an old-fashioned view, but it is one that I am moved to express here because the contrary position is so often put without question. Last July the Agricultural Genetics Company was founded to exploit bio-technological discoveries in five institutes of the Agricultural and Food Research Council. They are very promising areas of research indeed. But the chief executive of the AGC is reported to have explained (and I quote from Nature):
"that a confidentiality committee had been set up to make rapid decisions on the commercial potentials of discoveries reported in papers that AFRC scientists hoped to publish. Any papers that had to be suppressed to protect commercial interest would still be accredited to the authors' files".
To someone brought up in the more open tradition of science and medicine, such a statement has a very

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chilling sound. In parenthisis, as I have mentioned medicine, may I say how much I enjoyed listening to the wise words of the noble Lord, Lord Richardson, on that topic?
Scientific skills and innovator's flair are only very rarely combined in the same person, though when they are the results can be very startling. The noble Lord, Lord Zuckerman, has already mentioned the remarkable achievements of Dr. Land. So it is extremely important that scientists and innovators should, as far as possible, be brought together. The report that we are considering has much to say on this score. But it is encouraging to see that economic factors are given so much, and such substantial, weight. They are probably the overwhelming factor in achieving successful innovative industry.
Again, I believe that the climate is already beginning to change, and we must thank the Government for that. In a recent number of the Economist an analysis of sunrise industries in the United States of America, Europe and the United Kingdom gives some grounds for hope, and the Economist emphasises the importance of capital availability, a good market in unlisted securities and low taxation of capital gains. I think that there are many encouraging signs that innovation and enterprise are being developed, and in Cambridge especially there is enthusiasm for science parks and for new small "high-tech" firms.
I have spoken for long enough, but before I sit down I should like to echo what the noble Lord, Lord Sherfield, has said. I, too, very much welcome the joint report which we are discussing and the many and various other reports which have been mentioned. I am pleased to think that the efforts of the Select Committee on Science and Technology, of which I had the honour to be a member, had some part in bringing these about. As science and technology play a bigger and bigger part in our lives, so informed discussions of how science is to be organised and how it bears on Government decisions become more and more important. These reports are immensely important—indeed, they are essential ingredients of that discussion—and they whet our appetite for more. I, too, hope that they will become annual events.
2.28 p.m.
The Earl of Bessborough: My Lords, I so much agree with the noble Lord, Lord Adrian, that we should thank the noble Lord, Lord Sherfield, for drawing our attention to this report, which was called for by the sub-committee over which he presided so effectively. For certain reasons I did not particularly want to take part in this debate today; but, having told the noble Lord, Lord Sherfield, what I might say, he said very positively that I must say it. I am not a chancellor or a vice-chancellor of a university, nor even an ex-chancellor or an ex-vice-chancellor and, therefore, I did not feel as well-qualified as most of the speakers this morning and this afternoon. However, I was a member of the sub-committee of the noble Lord, Lord Sherfield, so here goes.
The joint report certainly sets out very clearly how, in 1981–82, the Government spent their £3.4 billion—some half being on defence, from which I hope there has also been some civil spin-off, as there
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has been in the United States. This is not exactly a new subject for me, since I have been involved with the whole problem of what some of us used to call "the science of science" ever since, in the early 1960s, I was Parlimentry Secretary and later Under-Secretary of State with my noble and learned friend Lord Hailsham, who was then President of the Council and Minister for Science, both basic and applied. Then in the 1960s as a Conservative spokesman in opposition I moved two Motions. One was on the administration of government science and technology and the division of responsibility between the Department of Education and Science and the then Ministry of Technology, as well as on liaison between the universities, government research establishments, and industry. That was in 1967, as the noble Lord, Lord Todd, remembers. Then in 1968 I moved another Motion on science policy and manpower.
I am glad to see so many noble Lords in the Chamber this afternoon—and especially, as I say, the noble Lord, Lord Todd—most of whom are on the Cross-Benches and speaking today, and who also spoke in those debates. Some of us may be saying much the same thing today. Plus ça change.
I think present arrangements under the ABRC and ACARD can be said to be working reasonably well in so far as I am able to judge these matters. I also feel that the arrangements 20 years ago under my noble and learned friend Lord Hailsham, and me as his underling, also worked well, since, ministerially that arrangement did bring close together the work of all the bodies involved in basic as well as applied science and technology. It worked especially well with the noble Lord, Lord Todd, as chairman of the Advisory Council on Science Policy, and the noble Lord, Lord Kings Norton—who is soon to speak—as chairman of the council of the Department of Scientific and Industrial Research, the DSIR, and of course the noble Lord, Lord Sherfield, as chairman of the Atomic Energy Authority, so far as high energy nuclear physics research was concerned. In that way, there was truly co-ordinated ministerial responsibility for the research councils, the Government research establishments, the co-operative industrial research associations, the Atomic Energy Authority, and indeed the University Grants Committee and higher education generally.
That was, I thought, an effective arrangement. Of course, my noble and learned friend, now the Lord Chancellor, was uniquely qualified—as he is uniquely qualified in almost any post—to be the Minister for Science at that time, and that arrangement worked well. The only slight friction then was over ministerial responsibility for the National Research and Development Corporation, which is now incorporated in the British Technology Group, in that the NRDC was the responsibility of the President of the Board of Trade, my right honourable friend Mr. Edward Heath. There was then of course no Department of Industry.
Then, while we were still in opposition in the late 1960s, the ACSP became the Council for Scientific Policy, and an advisory council on technology was also set up. It was set up by the Labour Government under the Administration of Mr. Harold Wilson—now Lord Wilson of Rievaulx—and Mr. Tony Benn, in what was part of their dramatic "white hot technological

1419
revolution". As now, with the ABRC and ACARD, there was, appropriately I think, some overlapping in the membership of those two bodies.
I still wonder on reflection, however, whether there may not have been some merit in the creation of the Central Advisory Council on Science and Technology of which the noble Lord, Lord Zuckerman, was chairman. I listened to his speech with great interest but he did not mention it. But, for some reason which I have not altogether fathomed, that central council met only once or twice. I suppose it was thought that there had to be a limit to the number of advisory bodies; yet I continue to believe, pace whatever the noble Lords, Lord Todd and Lord Zuckerman, may think, that there was a good reason for its formation, which co-ordinated both basic and applied research and development although not necessarily its exploitation.
On exploitation, my Lords, I agree with what the noble Lord, Lord Sherfield, said (as did others, particularly my noble friend Lord Nelson) that we should be selective. Seeing now the noble Lord, Lord Zuckerman, in the Chamber, I remember very well his report on technological innovation. Much of what was said in that report is in my view, highly applicable today. However, as I say, I think that present arrangements may well be appropriate, and Sir Henry Chilver as chairman of ACARD and Sir Alec Merrison (and now Sir David Phillips) as chairman of ABRC, together with Dr. Robin Nicholson, Chief Scientist in the Cabinet Office (formerly in the CPRS) have made, and do make, admirable advisers to my right honourable friend the Prime Minister who, as I rather understand it, is herself, in effect, Minister for Science and Technology. Certainly, never before has this country enjoyed a Prime Minister so admirably qualified as such, being herself a scientist and a former Secretary of State for Education and Science. My only fear is that, highly qualified as my right honourable friend undoubtedly is—and she is now a Fellow of the Royal Society—it must be extremely difficult for her, with all her vast other pre-occupations, to give time and attention to these highly complex questions.
I would join with the noble Lord, Lord Sherfield, in asking whether my noble friend Lord Whitelaw, Lord President of the Council, considers the Chief Scientist in the Cabinet Offices to have sufficient staff support and back-up to fulfil his role, although I know how very able he is himself. I also know that he has some able representatives from industry in his office, as well. At all events, I am very glad that Dr. Nicholson was retained in the Cabinet Offices when the Central Policy Review Staff was dissolved. Also, like the noble Lord, Lord Sherfield, I shall be interested to hear what my noble friend the Lord President has to say about the criticisms of Sir Ronald Mason on commissioned research as well as the criticisms of Mr. Bryan Silcock in that rather formidable article somewhat emotively entitled The Stangling of Science in the Sunday Times of 5th February. He referred specifically to the more than 100 bio-technologists who, in the past five years, have left the country to work abroad. I wonder whether that statistic is in fact correct.
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My Lords, towards the end of my remarks, I should like very strongly to stress, as did other noble Lords, the importance of exploiting the research and development work done by the various government research establishments as well as by industry itself when it is funded by government.
When we had our debate on 18th January on advanced information technology, the fifth generation of computers and the Alvey report, it was a very happy occasion and there seemed virtually, and in principle, unanimous approval on all sides of the House of what the Government had done, and also among the principal industrial firms involved which I mentioned in that debate. There seemed agreement that the implementation of the Alvey programme appeared to be proceeding satisfactorily and on the right lines, even if it is perhaps early days to make any kind of mature judgment. For this, we must certainly congratulate my honourable friend the Minister of State Mr. Kenneth Baker and Mr. Brian Oakley, the director of the Alvey programme.
When I say that there was unanimity, I am not forgetting that the noble Lord, Lord Flowers, and the noble Earl, Lord Shannon, who was in the House just now, made some minor criticisms as well as some very useful suggestions, of which I hope the Government have taken due note, in a very interesting debate covering what is undoubtedly a booming industrial sector. In connection with Alvey, I hope we shall not forget the European dimension, not only the European strategic programme into research in information technology, but co-operation in other forms of R & D between member states; and, as the noble Lord, Lord Sherfield, stressed, the importance of international co-operation generally is something that must continually be borne in mind.
I thank the noble Lord, Lord Sherfield, for initiating this debate and also the ABRC and ACARD, and especially Sir Henry Chilver, that great authority on robotics, for having agreed to provide annual reviews of this kind. I hope, in conclusion, that if we have no specific Minister for science and technology in the Cabinet, apart from my right honourable friend the Prime Minister, an existing Secretary of State—either, perhaps, my right honourable friend the Secretary of State for Education and Science or my right honourable friend the Secretary of State for Industry—will take on the task of speaking up for both in Cabinet. This is something that came out of the Select Committee's report. They would speak up for both as my noble and learned friend Lord Hailsham did over 20 years ago, when he used to speak of the seamless robe in education, science and industry.
I am grateful to my noble friend Lord Sherfield for giving us the opportunity to air our views on this vast subject today and, most especially, to my noble friend Lord Whitelaw for agreeing to wind up the debate. We must all await his speech with great interest.
2.43 p.m.
Lord Kings Norton: My Lords, we are now in the last stages of what I think we shall all agree is proving to be a most interesting and valuable debate—a debate in which we have to thank the noble Lord, Lord Sherfield, not only for his Motion and his speech today, but for the extremely valuable spadework

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which he did as the chairman of the Committee on Science and Government, which is at the root of what we have been talking about this afternoon. I could not help but be deeply interested in what the noble Earl, Lord Bessborough, had to say about the way in which we organised these things in the distant past. In the days of the DSIR and the advisory council, two decades ago, I felt that we were more or less developing along the right lines, and was naturally sad when it all came to an end. Nevertheless, we have to develop our methods again, and I think we are making a certain amount of progress, albeit rather slowly.
In the debate today I was most interested in what the noble Lord, Lord Gregson, had to say about the support for R & D in the manufacturing sector. I was looking at the figures in a rather different way. I agree with what the noble Lord, Lord Gregson, said. Nevertheless, I had developed a sort of mild optimism because of what seemed to me to be a change in the right direction in the attitude of the Government.
This change I deduced in a way that I should like to mention to your Lordships. Particularly in view of what I have heard this afternoon about the cuts which have been made in a number of areas, my optimism is perhaps unjustified and the figures may need further analysis. However, in the joint report which we are discussing the total amount of government spending for 1978 is given as £1,650 million: £1,060 million on defence research and development and £590 million on civil research and development. The corresponding 1982 figures in the recent Annual Review of Government-Funded Research and Development, which has been referred to several times today, are as follows: £3,381 million, divided into £1,688 million on defence research and development and £1,680 million on civil research and development. Those two figures are nearly equal.
I am not asking noble Lords to do mental arithmetic this afternoon, but when they read Hansard on Monday, making allowances for inflation in the intervening years, I hope that they will agree with me that the figures mean, in real terms, that the Government have kept their defence research expenditure roughly constant while increasing their civil research expenditure by about 80 per cent. That, to me, was encouraging. I admit that my optimism has been a little diminished by what I have heard today, but I hope that we can regard the tendency I have discovered as encouraging.
Still looking at the figures, I feel that the table on page 7 of the report may be misleading. The figures for the United Kingdom do not correspond with the figures to which I referred in the preceding paragraph. Clearly they come from different sources, and presumably are based on different assumptions. One of the difficulties in presenting statistics of this kind is to determine reliable figures for expenditure on civil research and development by companies, few of whom isolate research and development expenditure in their published accounts. I wish more would do so. I cannot help querying also the astonishingly low defence figure that is given for West Germany. The table is based on the latest figures which were available at the time this report was drafted—almost a year ago. But new information is now available, and as that table makes most interesting and valuable
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comparisons it would be worthwhile looking at it again and then publishing an up-to-date version.
In this most interesting and valuable review it is tempting to comment upon and discuss many of the sections. Many of them have already been discussed today. I shall resist that temptation except in the case of the section on page 17—the importance of design, to which the noble Lord, Lord Nelson of Stafford, has referred. The point is well made that advanced technology by itself will not command market success. It is necessary, says the review, to meet customers' functional needs, satisfy aesthetic requirements and diminish manufacturing and maintenance problems.
The other vital component to which the review draws attention is standards, to which I referred in the debate, on 4th July 1983, on engineering research and development. In my view, it is of such importance that I want to refer to it again, particularly as it has not been referred to at all this afternoon. As the report says on page 17, the importance of standards in encouraging good design has been recognised by the Government. Nevertheless, there is an important respect in which I believe that more Government support is needed.
I am not sure that the distinction is always understood between, on the one hand, the quantitative requirement demanded in a British Standards Institution specification which the Government clearly wish shall define high quality in our manufactures, and, on the other hand, the means of measurement available in industry to check that the specified quantitative requirement has been met. Uniformity and accuracy in the latter are achieved by relating them to national standards—and the refinement, maintenance and application in industry of national standards, the creation of new standards, and new methods of measurement of standards are all highly sophisticated activities requiring research and development.
This is the major work of the National Physical Laboratory, where the national standards of measurement are located. I still believe that more resources should be available at the National Physical Laboratory in support of this work—the importance of which, in relation to the quality of British manufactures, can scarcely be exaggerated. I ask the Government to look again at this matter, to see whether the financial allocation made to that work, which is not a large one by current standards of expenditure, can be increased.
Like other noble Lords who have spoken this afternoon, I feel that we can congratulate the authors of this first joint ACARD/ABRC review on the way they have outlined the basic framework on which our scientific and technological policies should rest. In their conclusions they have admirably summarised their views, which I hope they will develop in their later reports. In their penultimate sentence they express the hope, as the noble Lord, Lord Sherfield, pointed out, that parliamentary time can be found for the matters they have reviewed. We are finding time this afternoon, and I hope that when their later reports are published we can discuss them as well. There are few matters more important than the scientific and technological advance on which our economy and our prosperity depend.
2.52 p.m.
Lord McIntosh of Haringey: My Lords, the debate today has ranged widely from the wellsprings of scientific discovery to the day to day problems of the applications of science and technology in industry. My lack of either scientific or technical qualifications makes it essential that any contribution I can make shall be at the latter end of the spectrum. I am going to talk almost entirely about the exploitation of science and technology, with some wary forays into issues of technological and scientific policy which have been discussed today.
The issue before us today—which is always the issue before private industry—is one of choices and of priorities. The recommendation of the joint report that we should be more conscious of our selectivity of the areas for expenditure in scientific and technological research very much confirms that. My noble friend Lord Gregson has pointed out that the very necessity of making choices and of deciding which areas are worth going for means that we must have some general strategy on scientific policy. Otherwise, as my noble friend said, we will simply land up with anarchy. I suspect that there is an element of anarchy, and that despite the satisfaction which some noble Lords have expressed at the present way in which we conduct the Government's reponse to the problems of science and technology, there is something wrong.
Many noble Lords have referred to the lack of collaborative research. In a debate last month, the noble Lord, Lord Nelson of Stafford, referred to the collaborative research which his company is undertaking with other companies and with academic institutions. The noble Lord, Lord Zuckerman, referred to an experiment going on for a period of more than 15 years in a collaboration between industry and the academic world. The noble Lord, Lord Flowers, very rightly recommended to your Lordships and to the Government the Muir-Wood proposals for industrial seed-corn funding. None of these add up to a real widespread collaboration either between industrial firms or between industrial firms and the academic community. The fact of the matter is that industry is unwilling to commit itself to projects of longer-scale research and development, and it is unwilling in particular to allow outside bodies—whether they be research institutes or university research departments—to be involved in its own research and development priorities.
The second piece of evidence that I adduce in saying that something is wrong is in the Mason report on commissioned research. Sir Robert Mason says quite bluntly that the Rothschild principle has not worked; not, he says, because it could not work but because there has not been any serious attempt to apply it. I am going in a moment or two to suggest that there are some reasons concerned with the instability of decision-making in Government departments why that should be so.
Something is wrong, too, in the supply of candidates for places in higher education in science and technology. If I may be personal for a moment, my stepson is, at the age of 25, applying for a mature studentship in teacher training. He has the good fortune to have a degree in physics and chemistry. He
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is told that there are many vacancies in all teacher training colleges and departments in those subjects, whereas all the social science courses have already been filled up for September and October 1984.
Something is also wrong in the use by the public sector itself of the advances of science and technology. It is, after all, the ability of scientists and technologists to have some sort of captive market in the public sector which provides the starting point for the practical application of their discoveries. Your Lordships may have seen in the press in the last few weeks the example of a body-scanner developed in a medical research institute, or I think it may have been a company, in this country. It was offered to area health authorities in the National Health Service and the take-up was so poor that the cost at the level of production indicated would have been something around £50,000 for each unit. The press report says that the manufacturer of that body-scanner has gone to the United States where the demand in hospitals for that product is such that the unit cost is more like £15,000. We have lost the advantage of that technology for our health service, and we have lost the employment that would have gone with it.
We have to ask: is that a question of resources? The first answer must be that, if indeed it is true that our research and development expenditure is of the order of 10 per cent. of that of the United States—and I am referring now to government research and development expenditure, because we have no way of knowing what research and development expenditure there is in private industry—if it is true that we are talking about £3½ million in the United Kingdom and 50 million dollars in the United States, that must at least cause us to think whether there is something wrong in that relationship, and whether there is a possible source of future trouble for us.
Then we must look at the issue of high defence expenditure. I hesitate to cross swords with the noble Lord, Lord Kings Norton, but, if he will look at page 6 of the annual review of Government funded R & D, he will see that the proportion of the total R & D expenditure taken up by the Ministry of Defence in 1973–74 was 45 per cent. and that the figure in 1981–82 is 51·5 per cent. That indicates to me that defence R & D expenditure, as a proportion of the total, is actually increasing and not decreasing. I shall be interested to compare our two figures when we read Hansard tomorrow morning.
This is not just a matter of the amount of defence expenditure. Defence R & D expenditure does not contribute to the workings of the universities or the research institutes in the way that other kinds of R & D expenditure do. If we again look at that annual review we see that over 60 per cent. of defence R & D expenditure is placed with private industry and nearly 30 per cent. is carried out within the department itself. So that is not making a contribution to the broadly based research and development capability which I think would be the wish of your Lordships. Indeed, Sir Ronald Mason himself, in giving evidence to the Select Committee in this House, admitted that there was no proper organisation within the Ministry of Defence to see that the advances made in defence R & D were in fact available to private industry for other purposes.

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Is it a question of organisation? We are so swamped with acronyms—advisory councils and departments of this and committees of that—that I confess I find I have not anywhere near got my head above water. The common theme that I see is the problem of Government departments—of what Mason calls the "proxy customers". My own experience of contracting with Government departments is that one must set a very short period to complete a contract. It must be in months rather than years if one is not to have at least one change in the customer with whom one is working. That was the problem I found in other areas in applying the customer-contractor principle to working with Government departments. It is a fact that there is a high degree of instability in the individuals—I do not mean in their personalities, but in the changeover of posts—with whom researchers have to work. I fear that, again, Sir Ronald Mason does not actually make it easier in his recommendation that chief scientists should be recruited on a two-year or three-year contract basis. I cannot see how that will contribute to the stability which is required for Government departments to play a conscious and coherent rôle in the commissioning of research and development.
Is it an issue as between the universities and the research institutes? We have had powerful pleading from the noble Lord, Lord Flowers, that research should be concentrated in the universities. I must say that I tend to agree with him on the grounds of the interaction between teaching and research, but not in any way in terms of the inadequacy of the research institutes to carry out effective research work.
Instead of asking a question, let me now put forward a proposal. I suspect that the heart of the problem is that in all of this a three-way collaboration between Government departments, researchers and the ultimate users is needed. I suspect that behind this lies a fragmentation in Government policy-making which has made it virtually impossible for that three-way collaboration to work smoothly. The Government are, I suspect, issuing conflicting signals to the research community. On the one hand they are lauding the necessity for expenditure on advance information technology, and your Lordships' House has rightly welcomed the progress made in that area. However, at virtually the same time, in March 1981, drastic and unilateral cuts were made in the UGC budget without any apparent understanding that making cuts of that kind cannot be done without cutting the research capability of the universities, and therefore cutting the confidence of government departments and the users of research and development in the ability of the universities to continue in a stable collaborative pattern.
None of this gives me any great confidence that there is any conscious scientific policy, despite, or perhaps because of, the large number of bodies which have been set up to discuss scientific policy. In my business it is a commonplace that the less you understand the phenomenon the more variables you need to analyse in order to describe it. I suspect that that is the position we find ourselves in today.
3.5 p.m.
The Earl of Halsbury: My Lords, I joined your Lordships' House over 41 years ago, and ever since my maiden speech I have been banging away on this particular subject. At that time I was the only scientist in your Lordships' House who was actually working at the laboratory bench. The noble Lord, Lord Rothschild, was, of course, a scientist but he was most gallantly working on bomb disposal. I have been at it for a long time. I do not know how much longer I shall get at it. I shall confine my remarks to paragraphs 3.14 and 3.15 of the report, where the trend to place more contracts with industry and less with in-house Government laboratories is notified.
I think that here the figures could be—I do not say that they are—misleading, owing to confusion of research and development on the one hand with design and development on the other. If you can, broadly speaking, design something off the drawing board, you can be pretty sure that it will work, but you do not know how well. If you want a new armoured fighting vehicle, you probably have to make something like 10 of them and submit them to processes of destructive testing. You fire armour piercing shot at them and you race them across the desert to see how the tracks last, and so on. By the time you have done that, you have spent an awful lot of money, but none of it is development resulting from research, although some of the equipment on the tank might indeed be developed from the results of research.
Another good example to take would be the Brabazon aircraft, which was the largest aircraft in the world in its day. It was so large that a special hangar had to be built to keep the weather off and a special runway had to be built because the aircraft could not take off on any of the runways then existing in England. All the structural engineering on the hangar and all the civil engineering on the runway went down as the development of the Brabazon. The figure looked very big at one time. But if one is going to use these figures to determine the results of policy-making, one must subtract out the development of designs on the one hand and the provision of capital facilities on the other.
May I return to the subject of placing contracts with industries? I believe that you get better value for your money if you do it the American way and contract with industry rather than running in-house laboratories. The computer industry of this country was built entirely on orders that I placed with the future computer manufacturers while I was managing director of the National Research Development Corporation. I had a long talk with Sir Vincent de Ferranti, who built the first Manchester University machine, which was designed by Williams and Kilburn on a contract which Sir Ben Lockspeiser had placed when he was at the Ministry of Supply and which he took with him to the Department of Scientific and Industrial Research.
Ferranti were perfectly prepared to develop that themselves into a commercial computer, but Sir Vincent de Ferranti said to me, in the course of a long conversation, "I do not want a development contract. I want orders. If I have the orders, I will do the development". After consultation with my colleagues I placed an order with him for 10 Mark One Stars at

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£100,000 each, estimated cost. He was to take 7½ per cent. as a manufacturing commission, and after deducting a 2½ per cent. selling commission as our selling agents, I was to pocket the mark-up, which in fact came to 20 per cent. on costs; and I made £200,000 on that £1 million contract. I did exactly the same with its successor, the Pegasus. I started the Emidec 2400 series on that basis. The whole of the computer industries in this country were started in those days in industry by industry.
The other university which built a computer was Cambridge, where Professor Wilkes built the Edsac, which was re-engineered by Leo Computers, a subsidiary of J. Lyons and Company, and English Electric developed the original Ace on a contract with the National Physical Laboratory and then re-engineered it themselves—known as the Deuce—and followed it up with the KDF 9. Then came all the mergers between the various different companies, and we now have ICT as the result. It was done without any development contracts. It was done by placing orders and taking the risk; and the risk-taking propensity praised by the noble Lord, Lord Zuckerman, is of course the most important factor in this matter.
The noble Lord referred to the growth of the Japanese electronics industry. Why did that happen? It happened not through any outstanding merit of the Japanese but because the whole American electronics industry was overladen by space research and the Korean war, and they subcontracted out to Japanese manufacturers a very great part of the consumer electronics—radios, transistor sets, the manufacture of semi-conductors, and so on. The Japanese had the benefit of the whole of the American know-how and took off there.
I should like to end with a little, sad story with which I was connected, and again I refer to the noble Lord, Lord Zuckerman. I am sorry that he is not in his place——
Noble Lords: He is.
The Earl of Halsbury: Oh, he is behind me. I did not notice that he had secreted himself. The first laser lased in the hands of a chap called Maiman in August 1960. By March 1961 I had got an engineering team manufacturing lasers for sale to universities at a small electronics company in this country—the subsidiary of a big company of which I was a main board director—and I was chairman of that company. I knew that the laser was going to have a future. I did not know what the future was going to be. I knew that a new scientific discovery always leads to an industry, and I thought that selling the lasers to the universities which would use them as tools on research grants from the research councils was a good enough market to start with.
I did quite well for about two years. Then I found that I could not make a profit on lasers against American competition. Why? Because the American Government were placing orders with industry on research contracts to design lasers of which industry got the benefit; it got the benefit of the design, and the costs were paid for. I could not compete on that basis
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because I was paying for my own development costs. So I went to the Ministry of Technology, which had come into being by that stage, and said, "Can't you help me keep my head above water?" They said, "No, we are sorry, we can't do that". I never got any help at all.
During that period when I was struggling to keep my head above water more money was being spent in Government laboratories in laser research and development than would have been necessary to keep me afloat, and they never produced a single saleable laser during all that period. I told the Ministry that what I had started on my own authority I should terminate on my own authority, and that was that; I did. As your Lordships know, the laser is now a tremendous research tool. It may even turn into a weapon; we do not know.
The first two instances to which I have referred are examples of what one can do by contracting with industry, by placing orders for a product. The other instance is an example of what one does not accomplish if industry is not given research contracts. I believe that the way to do it is by placing orders. If I had the power to do so, I would close down some of our in-house Government laboratories and contract with industry to do the work that they are doing—give the chaps their notice, and say. "There are jobs waiting for you in industry". I believe that one could slim down the whole Government side of it a great deal and that there would be more value for the money if it was spent in industry. Moreover, one would get the know-how where one wants it for future industrial developments. What is the sense of having the know-how in an in-house Government laboratory and the manufacturing facility in industry, and the two cannot get together because they have different kinds of orientation? Do it in industry and one has the know-how where one wants it right from the very start.
I am not going to say any more (it is almost the end of the debate) but there are two noble Lords whom I should like to thank for their contributions—one is my old friend the noble Lord, Lord Todd, and the other is another old friend the noble Lord, Lord Kings Norton—because they both resumed their seats before the clock reached 10 minutes, and that is exactly what I am going to do now.
3.15 p.m.
Lord Kaldor: My Lords, I had not intended to speak. I had thought that the debate would be concerned with the administration and organisation of research which is outside my sphere of competence. However, as the debate has broadened out into a much wider field—it is one of the best debates I have had the privilege of hearing in this House—I should like to take up a few minutes of your Lordships' time to fill out some of the statements already made concerning the ominous prospect of the decline of our manufacturing industry. This was emphasised in the speech of my noble friends Lord Gregson and Lord McIntosh and received even stronger emphasis in the admirable speech of the noble Lord, Lord Zuckerman, not to speak of others.
I wonder whether it is known how unique and how big has been the decline on our manufacturing output. It is now 20 per cent. below what is was 10 years ago.

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There is no other industrial country in the world to which this has happened. I have not been able to check the figures, but I do not believe that there is any other country whose manufacturing output in 1983 was less than in 1973, let alone 20 per cent lower. In our case this was due to the fact that manufacturing imports rose so much faster than manufacturing exports, and this divergence has accelerated in the last five years. Our imports increased in volume by 10 per cent. a year at compound interest. Our exports increased by only 4 per cent. a year. This made it inevitable that sooner or later the lines should cross and, as my noble friend Lord Gregson has pointed out, we became a net importer of manufactured goods for the first time, in a full year, for 200 or perhaps 300 years.
The lines are still diverging. We can expect to become a net importer of manufactures on an ever larger scale. For a moment, this does not seem to matter. If we earn so much on oil, we do not need manufactured exports for our balance of payments. But, as has already been pointed out, it would be foolish to reckon on this. Oil is only a temporary source of wealth. It is not a renewable or permanent source of wealth like manufacturing production.
Many people (including the Chancellor of the Exchequer, according to something that he is reported to have said recently) regard the shrinkage of manufactures as the consequence of North Sea oil. That is not correct. The decline would have happened even if we had never had North Sea oil. All that North Sea oil did was to allow it to happen without immediately disastrous consequences. It is true that North Sea oil accelerated the process of decline, but it did so for reasons that were not inherent or necessary but due to short-sighted Government policies, or rather the lack of advice received by Ministers about what the situation required.
Oil is a peculiar industry in that only 2 per cent. of the value added goes into wages and salaries. This is in contrast to the coal industry which was also a source of net exports before the First World War where 80 per cent. of value added—not 2 per cent.—goes into wages and salaries. This means that oil does not generate consumption demand. It does not generate the type of incomes that increases the demand for goods or services. Hence, in order to derive any real benefit from oil, from this additional source of income, we should have increased our aggregate demand correspondingly—we should have increased our investment by at least as much as the value of our oil output, or, rather, the net improvement in our balance of payments as a result of oil. Had we done that, other countries, such as Germany, could have paid for our oil in terms of investment goods or manufactured goods, machinery et cetera, without detriment to our manufacturing industry. If the effects were detrimental it was only because they occurred at a time when the Government's anti-inflationary policy dictated a very cautious attitude to demand, and not an expansionary attitude. It was unfortunate that the two things happened to coincide.
The International Monetary Fund, in one of its——
The Earl of Halsbury: My Lords, will the noble Lord give way? I should like to ask the noble Lord what his doubtless very well-informed remarks have to
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do with the topic which we are debating, which is the first joint report by the chairmen of ACARD and so on?
Lord Kaldor: My Lords, I began my remarks by saying that I did not wish to speak to this Motion precisely because I do not feel competent to speak to the subject set out in it. But in fact the debate was broadened by many noble Lords, including the noble Earl who preceded me, far beyond the terms of the Motion, to the general economic consequences relating to the lack of development of new products and the lack of expansion of science-based industries. It is the latter factor to which the International Monetary Fund has attributed our comparatively very poor performance since the war.
In the first instance, industry is primarily responsible for that situation. As Sir Kenneth Corfield said in a speech which I quoted on an earlier occasion, product development and a choice of products to be developed is entirely a managerial responsibility and of no one else. Therefore, our industrial management should be held responsible if there were not enough contact between the scientists who invent things and the industrialists who develop them.
In the second place, I think that the Government also are to blame in that they gave no guidance or direction to industry—and I am referring here not only to the present Government, because this is equally true of earlier Governments. There is a very old tradition in this country going well hack into the 19th century that the Government should not meddle in the affairs of industry; that any such "meddling" means that they go into matters about which they know nothing; and that industrialists alone are the best judges of how to invest and of the products they should develop. That is in contrast to the attitude of Japan where the whole post-war development was closely directed by what the Japanese call the "administrative guidance" of the Government. To a lesser extent it is also true of France and a number of other countries.
I do not know what one can do about this, except that I believe that in future the Government ought to take a more positive role in ensuring that industry does exploit the potentialities which arise out of new knowledge and new ideas.
3.25 p.m.
Lord Shackleton: My Lords, I shall not follow my noble friend Lord Kaldor, though I am bound to say that his remarks were relevant to the ACARD-ABRC Report, which discusses these very issues. I am glad that my noble friend was able to speak to them. Furthermore, I am rather glad that someone else, who is not a scientist, even though he is a very distinguished economist, has taken part in the debate besides the noble Lord, Lord Sherfield, and one or two of the rest of us.
First, I want to say to my noble friend Lord Sherfield that he can be very well pleased with this debate, with his own contribution and, indeed, with his handling of this joint report. I rather hope that this is an eye-opener to the noble Viscount, whom I managed to persuade to take part, and I am very grateful to him for doing so. I told him that this would be an important debate. I doubt whether he will have heard a debate of

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such high quality in the whole of his parliamentary career. Not only did a number of distinguished scientists take part, but six, maybe seven, Fellows of the Royal Society and several leaders of industry also took part, including the noble Lords, Lord Nelson of Stafford and Lord Kings Norton, and my noble friend Lord Gregson. Tucked away among this galaxy were one or two of us who are not scientists at all.
The noble Lord, Lord Richardson, raised an important point—and I shall not attempt to comment on the whole of the debate—when he said that it is difficult for the layman to appreciate the importance of basic research. I do not agree with him. It is important that the layman should be prepared to listen. In his very interesting speech he gave a number of examples of the results of basic research, all of which I knew about because I take the trouble to read at least the first 10 pages of Nature and then I look at the headings of the rest of the articles because I do not understand them. The important thing is that the layman can listen if the layman is prepared to do so. This applies particularly to politicians, and I shall have to say something about that.
The noble Lord, Lord Todd, may feel inclined to think that this is rather a déjà vu occasion. After all, most of the remarks we have made today he refrained from saying he said 10, 20 years ago, when we had the Advisory Council on Scientific Policy, to which I shall refer in a moment.
I want to make just two or three main points and then comment on machinery, rather than seek to answer or comment on all the detailed issues which have been so very fully deployed. I am grateful to the noble Lord, Lord Lucas, for his contribution, but it is no use saying that the science Vote has been protected, because it has not. That has come out clearly in this debate. It may have been technically protected in certain ways, but the situation as regards the dual-support system and the position of the UGC shows that real damage is being done. I do not seek to make a party point; I am merely making a statement. This is a subject on which we can be pretty frank with one another.
The science Vote is not protected. The Government may think that in the present situation. When their attempts to curb public expenditure are not as successful as they would like, there are limitations on what they can do. They can think more intelligently about it than they have done and acknowledge some of the facts.
That brings me to the very point raised by my noble friend Lord Gregson and other noble Lords of the importance of getting some strategy into Government. The noble Lord, Lord Gregson, was a very good chairman of the Committee on Engineering Research and Development. These committees are not partisan, they are all-party committees, and when good and sensible men get together they sometimes come to views which may not always commend themselves to the Government's particular party philosophy or other policies. The report says:
"The Committee recommended that the Government should devise a national strategy for industry and technology, which would designate those sectors and technologies on which industry should concentrate".
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The Government replied—and this was Sir Humphrey Appleby at work again and interpreting what he thought was best for his Minister—
"While accepting that this country cannot expect to be preeminent in all sectors of manufacturing, the Government cannot agree with this approach".
The answer is that they do not totally disagree because there are areas where they are taking initiatives. They have focused very much on information technology. I have no doubt that they will respond to our new report on remote sensing and digital mapping, and indeed have already anticipated some of our recommendations. The message that has come out—and the noble Earl, Lord Selborne, and others have said this—is that it is necessary for the Government to be rather more positive as to their activities.
We do not want to have an essentially planned economy just at a moment when countries like Hungary are dismantling their central planning machinery, as I am sure the Prime Minister will have noted when she was there. In the light of the urgency that has come into this debate there is a need for a more positive approach from the Government. This again is a message that has come through strongly.
There is a wealth of advice available. I should like to pay tribute in particular to the scientific bodies and to the Royal Society, which has been so helpful to the Select Committee. Before I sit down—and do not let me make noble Lords too hopeful—I should like to refer to some of the recommendations in the report of the Select Committee on Science and Technology and Science and Government which the noble Lord. Lord Sherfield, was too modest—or too determined to keep his speech short—to refer to.
We very much appreciate, as he said, the action that the Government have taken on a number of the recommendations. They have gone quite a long way. In particular they accepted the importance of upgrading the role of the Chief Scientist in the Central Policy Review Staff—although not quite as highly as we should like. The result is that he was not actually left high and dry when the policy review staff disappeared, because the Government have also given him some extra support which meant extra machinery, and it is extremely valuable.
No one will ever be able to replace that polymath Lord Zuckerman as Chief Scientist. This was the great difficulty we had with Lord Zuckerman: he was unique, so it was impossible to think of a successor, and they have had to devise something else, which is going rather well. This is satisfactory. On the other hand, the Government did not accept all our arguments. We recommended something equivalent to the old ACSP, the establishment of a Council on Science and Technology. I still believe that the present arrangement, although a good deal better, is an untidy one.
Admirable though the report of the two chairmen of the ABRC and ACARD is, and their preliminary reports were, they did not—as the noble Lord, Lord Sherfield, made clear—quite in the long run meet what we wanted, but then the statistics were not available. May I say in passing on the statistics that Frascati has confused me more than any of the other definition of science? Indeed. I wonder whether one could not play

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a good game based on the Government having applied or not applied the Frascati definition accurately. I remember that the noble Lord, Lord Rothschild, at one time produced 32 definitions of different kinds of science and research.
However that may be, we have these two reports and they add considerably to our knowledge. But what we were looking for was a body of sufficient authority really to take an across-the-board look at the whole of science and technology. One may say that that is too broad, that it is better to do it in penny packages: but the Canadians and others have such a council, I see their reports and they tend to bring things together. I do not think that as yet we have gone quite far enough.
There were some other very strange arguments. There was, for instance, the argument against having a Chief Scientist, which we proposed for the Scottish Office. It was said that it was impracticable to require a single scientist to deal with the whole range of scientific advice; that it may need five separate departments within the Scottish Office. I have no doubt that the noble Lord, Lord Zuckerman, could deal with 10 different departments. Indeed, a chief scientist like Sir Ronald Mason at the Ministry of Defence covers an enormously wide area. Sometimes, as I say, Sir Humphrey Appleby comes up with what appears to be a useful way of getting off a political hook which does not entirely succeed. Nor did they meet our arguments on the fact that demoting a Chief Scientist in status, removing him, and then having two more junior scientists in the Ministry of Agriculture and Fisheries means that they have the benefit of two Chief Scientists instead of one—because it is assumption that there are some people who really do not understand how the hierarchy in Whitehall works. Nonetheless, we were pretty grateful at the way that Government reacted on this point.
I wonder, again, whether the Chief Scientists are making use of some of the modern technologies for change—and this is why I am very grateful for the contribution from the noble Lord, Lord Swann, and for the intervention of my noble friend Lord Kaldor. The ordinary, generally-identified scientists, the physical and biological scientists, are not the only people to contribute effectively to change. It is interesting that not only do we have the Centre for Technical Change but that in industry now some of the big companies, when trying to introduce new policy, employ psychologists to help the managers to think of what they are trying to do, and why they are trying to do it and, later, to bring it about.
I do not want to make too much of it, but I want to make a plea that, although the pure sciences and applied sciences are important, I would not wish emphasis on them to be to the disadvantage of the humanities. As a classicist myself and therefore privileged to speak in this company, nonetheless I would not wish to see a steady erosion of the position of the historians, the philosophers and the others.
I should like to turn now to the rôle of the noble Viscount, Lord Whitelaw. Some years ago, before the Government moved on it, I said that an important rôle for him would be to go and rule Northern Ireland. About a year later, he found himself doing so. I think that if he had gone there a year earlier things might have been rather different. I have got another job for
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him now. To begin with, I should like to ask him to ask the Prime Minister to read this debate. It is the sort of thing that (if I may say so without being patronising) she is good at, is interested in and is very prone to take up as an interesting development.
Furthermore, the report of the committee of the noble Lord, Lord Sherfield—and I shall stop referring to all the other areas that we mentioned—mentioned the importance of having a Minister who would be concerned in this matter. We chose our words very carefully, and the comment on this was an interesting one:
"The Government believe that the stronger machinery at official level outlined above, together with this role of the Prime Minister, means that scientific or technological issues are unlikely to be lost or forgotten. They do not believe that there is—within the British system of Cabinet Government—at present an identifiable and viable role for a co-ordinating minister, and accordingly, do not agree with the Committee's recommendation.".
I make two comments on that. We know that the Prime Minister is interested and was put out when the House of Commons abolished their Select Committee on Science and Technology. That gave us our opportunity. The noble Lord, Lord Sherfield, and I put together memoranda as a result of which we had this committee and this debate today. But, interested though the Prime Minister is and much as we are grateful for the initiative which she developed when she had the great conference, it is really not practicable for the Prime Minister to fulfil the role that we sought. The role that we sought was not that of a co-ordinating Minister. We made it very clear that we were not seeking even something as modest as the Minister of Science, about whom the noble and learned Lord who sits on the Woolsack said that he could get the whole of his department into a bus in those days.
We are wanting somebody, for reasons that we set out very clearly, to be concerned. The reason is:
"Their experience of many Committees, including those of Cabinet, persuades them"—
that is, us—
"that a case without an advocate is liable to be lost or forgotten, It is in the nature of Government that the decisions which have to be taken at Cabinet or Cabinet Committee level are difficult and always subject to several conflicting arguments…the scientific issues may come to the fore through the Departmental brief or a Cabinet Office brief, but they depend on the willingness of someone present to advocate them, when Departmental or tactical interests"—
in other words, Sir Humphrey Appleby—
"might dictate otherwise, and they are almost bound to be subordinate to the economic issues which have one or more certain advocates."
The noble Viscount has had as much experience of Cabinet Government as anyone and, although we are not supposed to refer to certain Cabinet Committees, I do not know whether the Government have a Cabinet Committee on science or technology or who chairs it. But what we are saying was that some existing member of the Cabinet should have the responsibility of thinking about, and speaking for, science and technology and should be recognized as such. It is something less than co-ordination. It is, in fact, somebody in Cabinet who would have the advantage of the Chief Scientist and who would have somebody to go to. I was going to say that they could resurrect the noble Lord, Lord Zuckerman, but he does not need resurrecting.

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It has to be somebody in authority without departmental responsibility, and the obvious person for this is the noble Viscount, Lord Whitelaw. I would ask him to take some of these arguments seriously, because it struck our committee at that time that there was a difficulty in thinking across the board. Today we have had many ideas and suggestions put forward which need to be married up and thought about. I shall not go into the details of the official machinery and the role of the Chief Scientist, but I happen to believe that a senior Minister has a role to play.
I think that the noble Lord, Lord Sherfield, can be extremely pleased with the way in which this debate has gone and it will now be a matter of the Select Committee going on to other activities. The great advantage of your Lordships' House is that we are able to find the time one way or another, even if it is a Friday, to pursue this kind of subject and not just accept the first thoughts of the Government in reply to our ideas.
3.45 p.m.
Viscount Whitelaw: My Lords, I am grateful to the noble Lord, Lord Shackleton, who did, indeed, ask me whether I would reply to this very important debate. I said that my noble friend Lord Lucas of Chilworth would present the Government's case in full—which he most certainly did, and I am sure that the House is extremely grateful to him for doing so. I said also that I would consider whether it would be possible for me to wind up the debate. If the noble Lord hoped that in doing so I should receive an eye-opener he was perfectly correct. I have learned more in one day than I have learned on a great many other days in my ministerial career. However, as I started by knowing nothing, perhaps it is only an example of what I should have know before. As, however, the noble Lord has used the occasion to advocate a further job for me, I would say to him that recently I seem to have been attracting jobs, though not always, apparently, carrying them out very successfully. Therefore I doubt whether I should take on any more. However, I note what the noble Lord, Lord Shackleton, has said. I assure him that I shall speak to my right honourable friend the Prime Minister about it on Monday and will ask her to read the report of what I regard as having been an extremely important debate in this House today.
I felt that it was right to respond to the debate because of the eminence of so many of the speakers who have taken part in it. It has been a humbling experience for me to take part in a debate with so many people whom I have greatly admired for their eminence in their different fields, though always previously from afar. To hear them speak was very instructive for me. It will be difficult for me adequately to respond to them. However, I shall do my best.
This debate arises from the work of the Select Committee on Science and Technology of this House, a highly respected body. In their observations on the Select Committee's report, the Government requested this joint report from the chairmen of ACARD and ABRC, a request specifically welcomed by the
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chairmen in their report. It is significant also that they say:
"We would like to think that, in addition, some parliamentary time could be found for these matters, so crucial to the future wellbeing of the nation".
They have certainly had that parliamentary time today. Some noble Lords feel that it has been too long in coming, while others believe that it has come too soon, before other developments have taken place. But nobody can say that we have not found a considerable amount of time for this debate, and I am grateful to all noble Lords who have taken part in it. In particular I am grateful to the noble Lord, Lord Sherfield, who initiated the debate, who has done so much work in this field and who has encouraged us all by it.
I thought it would be right to say something, first, about the machinery, in response to the noble Lord, Lord Sherfield, following on Lord Bessborough's account of the responsibilities he had, with my noble and learned friend the Lord Chancellor, at one time. Realising how important his work was then, I am grateful to my noble friend for taking part in the debate, and I want to respond to one of the points he made. It relates to the position of the Government Chief Scientist in the Cabinet Office. The noble Lord, Lord Shackleton, was correct when he said that now he has about 10 people working for him, compared with four previously. The Cabinet Office is able, through him, to maintain a closer network of links with other departments—another factor which many noble Lords have requested in today's debate. I can assure your Lordships that it will indeed happen.
The noble Lord, Lord Sherfield, asked about the channels through which Dr. Nicholson would advise ministers other than the Prime Minister, a subject to which the noble Lord, Lord Shackleton, returned. In Cmnd. 8591, Dr. Nicholson became one of the very few civil servants to have his job set out for him in a White Paper. It says that his advice is available not just to the Prime Minister but to the Cabinet Office generally and, hence, to the committees serviced by the Cabinet Office.
The question then arises (and the noble Lord, Lord Shackleton, would put it to me if I did not seek to answer it at once): is any use made of him by other Cabinet Ministers? First, I should say that my right honourable friend the Prime Minister is exceptionally jealous of her knowledge in science and of her position in dealing with these problems in the country as a whole. At the same time, whether or not she is always the first to appreciate it—although I think she does appreciate it—the fact is that she has a good many other things to do as well, and therefore it is important that other Ministers do inform themselves and have contact with the Chief Scientist. I will report that feeling to her as well.
I can go slightly further for the benefit of noble Lords who have expressed their worries today. I have the absolute right, as one of the Cabinet Ministers concerned, and as one with considerable close association with the Cabinet Office, to avail myself of the Chief Scientist's views. I will most certainly seek to discuss with him what has been said in the debate today; I will take his advice and learn from him. I have not done so before; I believe that I should have done so, and if this debate has done some good to me it is

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that I have learnt of something that I ought to do. I can assure noble Lords that I will do that, and I hope it will help. I will also discuss with my right honourable friend the Prime Minister the other matters put by the noble Lord, Lord Shackleton.
I accept the point that has been made by many noble Lords that there is a need for co-ordination. The noble Lord, Lord Shackleton, said that he did not want a centrally planned economy. He gave some very cogent reasons, and I would agree entirely with what he said. At the same time, it is possible for a Government to take a positive role in many issues. I have been in Government long enough to know that Government sometimes do not take a positive role because varying Government departments quite understandably feel that they like to keep people with positive ideas off their own particular grass. That will always be the case, but I believe that a positive, combined role is important and we will certainly seek to develop one.
That is to some extent the answer I should like to give to my noble friend Lord Selborne, whose work in the Agricultural and Food Research Council is so extremely important. Not only in the council but in the industry as a whole—of which I have some knowledge and experience—this is perhaps a time when new thoughts and ideas will have to come forward, because the problems facing the farming industry not only in this country but all over the world are very considerable today.
It is in the same role that I would answer the noble Baroness, Lady White. She sought to continue her knowledge of the subject following the debate on the Welsh Plant Breeding Station, about which I have already heard, needless to say, from the noble Lord the Leader of the Opposition, Lord Cledwyn of Penrhos, who sought, as your Lordships would expect, to keep me well informed of his views on the subject. I know exactly how Welsh Members feel. I equally well understand why the noble Baroness felt that there was some lack of co-ordination. I am not sure if that is true, and, whether he was a hunted fox or not, she received a very good reply—as this House always does—from my noble friend, Lord Swinton,
The noble Lord, Lord McIntosh of Haringey, referred to the need for priorities. That point was made by many other noble Lords, and it follows on from the comments of the noble Lord, Lord Adrian, who viewed this from the point of view of the universities. He stated that he was glad there were to be consultations between the Secretary of State for Education and the universities as to how best they should order their priorities. He thought that was right. At the same time, he said he was worried by the somewhat diminished support for science in the universities. He made a very important point about fundamental research and the American experience. All of this we will certainly take on board.
In reply to those noble Lords who asked about the Government's response to Sir Ronald Mason's report, I think it is fair to point out that both ACARD and the ABRC are looking into the report. They are considering it and will report to my colleagues as to what they have found. I will undertake again to suggest to the Chief Scientist that I should discuss with him
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what he feels about the observations made on the Mason report and how we should carry them forward. I will make certain that this particularly important part as far as the Government are concerned is conveyed directly to my right honourable friend the Prime Minister.
I should now like to turn to one other point, before coming to what was perhaps another main feature of the debate. Naturally, I heard with the greatest respect what the noble Lord, Lord Richardson, said about medical research—something I think we appreciate only too well, and perhaps the older we get the more we appreciate the importance attached to it. So I take very careful note of what he said about the Science Vote in real terms. But that has been disputed by Lord Shackleton, and I am not going to enter into a statistical argument except to say that, when looking at the universities' priorities, clearly what Lord Richardson had in mind is extremely important and must be accepted. I think perhaps it should also be said that universities need not only to get their priorities right. I am coming to the noble Lord, Lord Zuckerman, and he made clear how money from outside, and from charitable sources, can also sometimes help as well in universities. I think that is something that should not be neglected, and I am sure Lord Richardson, in his particular field, would not seek to neglect that, either.
I turn now to what was a major feature of the debate, raised in the first instance by the noble Lord, Lord Gregson. He pointed to what the annual review had to say about our desperately worrying situation as far as our manufacturing industry is concerned, the position of our industry today, and said that that was emphasised by the problem that North Sea oil revenues are going to decline and that anyone who tried to deny that or tried to pretend that it will not create problems in the future would be very unwise indeed. The noble Lord, Lord Kaldor, made this point, as indeed did many other noble Lords. It is something which comes out in this report, and is very important; and, of course, it clearly brings together the position of industry and research in industry generally, on which much of our success in getting hack these markets must depend in the long run. So that is an enormously important point.
The noble Lord, Lord Gregson, said that lack of profitability was one of the reasons why manufacturing industry could not produce more of its own research and development. I think that if one took that over the last few years it would be true. I quite accept that this is only so in different fields today, but I think there are signs that in some fields there is a considerable rise in profitability. Where that is true, is there not then a case where an opportunity should be taken for industry to spend more on its own R & D in order to recapture some of the position which Lord Gregson outlined?
I have to apologise very much to the noble Lord, Lord Flowers. I had to go out for a prearranged engagement at one moment, which I could not avoid. I do apologise to him, as indeed to Lord Todd, whose speech I also missed. I was extremely sorry to do that in his case, of all people. I did hear just the end of his speech. The noble Lord, Lord Flowers, hoped that the Mason Committee's recommendations would be taken on board by the Government. I think I have

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made clear that they will be, and that we will respond to them. He also raised the point about the seed-corn fund, and asked would we be prepared to listen to this. The answer to that, again, must be, yes, we will do so.
The noble Lord, Lord Todd, hoped that the reports would be annual. I think it is important to say yes, provided the two chairmen believe they have something worthwhile to say. At the present time they would undoubtedly say that they had something worthwhile to say, and I think it was Lord Gregson who said this was a quickly developing situation. But there might come a time in the future when in some years they did not think they had something worthwhile to say, and no one, least of all the two chairmen, would bless me if, today, I commit them always to produce annual reports in the future. Subject to that, I think we should expect them to produce views whenever they feel it important to do so from their standpoint, and that I can undertake they will most certainly do.
The noble Lord, Lord Todd, talked about the very important need for closer links between customers and suppliers. That was something which many noble Lords will agree with and clearly, with his knowledge, it is an important point. My noble friend, Lord Nelson of Stafford, Who has considerable experience in an important field, talked about the need for collaborative research. I hope we have shown, through our support for the Alvey programme, which he welcomed, that we also agree with him on that. He also asked for a clear answer about information technology transfer. My noble friend Lord Lucas of Chilworth believes that he said "Yes" to my noble friend. If he did not, I am saying "Yes" in my answer now.
I turn now with great trepidation to the noble Lord, Lord Zuckerman, whose contribution in this field is of such outstanding importance to our nation. I do not suppose anyone will ever be able to repay him for how much he has done in this field for the nation. He made the point, to which I have already referred, concerning the Wolfson Foundation, the private money coming into this, and how many projects had succeeded because of it. Obviously that is extremely welcome. He also paid considerable attention to the links between the universities and industry. I believe other noble Lords referred to that and clearly it is very important. He pointed out some of the things which have happened in Japan and how we still have so much to learn and, probably, so much to fear in those fields. His contribution was therefore extremely helpful to us all, as one would expect.
The noble Lord, Lord Kings Norton, referred to good designs and standards. Again, that is of such enormous importance for the quality of our British manufacturers. His great experience in this field is also very important and he made a point which I am sure everyone accepts.
I come towards the end of what I have to say and to the very robust and, as he pointed out himself, very brief contribution from the noble Earl, Lord Halsbury. He gave me a lesson and, although I have not been as brief as I should have liked, I have tried to keep my
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remarks within a reasonable time and at the same time reply to the debate. The noble Earl also spoke from his very great experience. He came back to design and he came back to the Alvey programme. Again, we all took very careful note of what he said.
The noble Lord, Lord Swann, produced an interesting and, as one would expect from him, important and novel thought; that we ought to give thanks for all the other reviews we are having and that we should be having some research into what is the malaise in British industry—how has it arisen and how many factors, both human and sociological, come into it? Many noble Lords will have considered that to be an extremely important point.
I have done my best, very briefly, to refer to many of the very important speeches which have been made in this debate. I should like to say once again that they will be most carefully studied by my colleagues and by myself. I can only add that my time today in this House has inspired me with a new interest and a new determination to follow it up. If I can do any good by that perhaps I will have done something in response to the great efforts put into the House today.
Lord Sherfield: My Lords, we have had an interesting and wide-ranging debate and many important points have been raised in the course of it. The noble Baroness, Lady White, said that she thought the debate had come rather late in the day. Perhaps she overlooks the difficulty which someone from these Benches has in getting time for a debate. I hope that noble Lords will agree that, late though it has been, it has been well worthwhile.
I should like to thank all those noble Lords who have given up their Friday pursuits to take part in the debate. I am particularly glad that the voice of medicine was heard in the person of the noble Lord, Lord Richardson, and of agriculture in the person of the noble Earl, Lord Selborne. In the United States the Academy of Sciences has a scientific, engineering and medical component. I am sure that in any general debate about scientific policy the role of the Medical Research Council and other medical research institutes should be included. As for the noble Earl, Lord Selborne, I have some knowledge of the extensive programme of reorganisation of research in the agricultural sector which is taking place under his auspices.
I thank also the Ministers for their opening and closing statements. I was especially glad that the noble Viscount, the Leader of the House, wound up the debate. Historically the Lord President of the Council has had a great responsibility for the work of the Research Councils and for the formulation of scientific policy generally. That responsibility was removed in the course of successive reorganisations of the system. I am encouraged to hope, from what the noble Viscount has just said, that the present Lord President, now that he has replied to this debate, will continue to keep a keen eye on the development of scientific policy and will maintain his interest in it. My Lords, I beg to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Reuters: Proposed Flotation
4.6 p.m.
Lord Grimond Lord Grimond rose to ask Her Majesty's Government whether they are satisfied that the interests of the public will be properly safeguarded by the proposed flotation of Reuters.
The noble Lord said: My Lords, I understand that it is unusual for your Lordships to sit so late in the afternoon. I shall do my best to curtail my remarks. They will be delivered in more telegraphic style instead of in my usual rotund oratory. But there is a very important matter before us which is no less than the future of Reuters. No one doubts that Reuters is a most important institution. It is one of only four international news agencies in the world and is one of only two genuinely independent news agencies. Further, it has always been so regarded, and its impartiality, freedom and wide coverage have been something of which Britain has been very proud.
A week ago in another place it was said again and again both by the Minister, by a very distinguished ex-Labour Prime Minister and by others that this was a matter of great public importance. I particularly want to draw your Lordships' attention to the debate in 1941 which was raised by my late friend and colleague Clement Davies, in which the then chairman of Reuters, Samuel Storey, as he then was—somebody who was known to us—explicitly said that Reuters was not to be treated simply as a commercial asset and that its future was of great public importance. He insisted that, if possible, its control should rest with independent trustees.
At the moment the theory is that Reuters has suddenly become a very valuable property, not owing to its news gathering but to its excellent exploitation of Monitor, and the proposal is to sell off the shares in the market. I do not suffer from the general paranoia about press barons. There are no doubt good and bad press barons. Nevertheless, there is considerable anxiety in this country about the treatment of the press as simply a commercial property.
Some people feel that the assurances of some press barons have not always been carried out and, candidly, there is some suspicion of them. But equally I do not understand how they suffer from agoraphobia. They are Members of this House, and I should have thought that their Lordships could have come here to explain to the public through this House what they stand for. They are an important element in our affairs. They believe in investigative journalism. They are keen to examine other people's affairs but they show less enthusiasm in coming into the open about their own. However, they are engaged in deciding what future set-up will be instituted in Reuters, and we can only hope that they take note of the public anxiety and of the general view that Reuters cannot be dealt with purely on commercial grounds.
It is absoluely right that the Government and your Lordships should express their view about this. Again and again the Government have said that they would agree with that, though they do not want to interfere. It is one thing for a government to interfere and try to control Reuters. It is a far different thing for a government to interfere with a view to guaranteeing the freedom of Reuters. After all, the Government
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interfered, or promoted interference, with the Royal Bank of Scotland when it was threatened with takeover and also, for instance, with Sotheby's; and in my view, important as those institutions are, they are much less important than Reuters.
Of course, the danger is that once Reuters is put on the market no one knows where it will end. It could, for instance, end in the ownership passing to other people who have not the same interest as the present owners in news gathering, and then sources of information would be closed down because they were troublesome or uneconomic. It could end in the news being slanted, or in Reuters falling into the hands of people who have a definite interest in actually controlling and distorting the news.
Therefore, to my mind, there must be some safeguards if Reuters is to be sold off in the market. I appreciate the reasons for doing so; the press needs money and some newspapers do not want to have so many of their assets locked up in Reuters. As I have said, the press owners at present no doubt have an interest in impartial information, and therefore so long as Reuters remains in their hands, people may argue, we should not be too concerned.
However, I must point out that in 1941 when this kind of matter last arose a document which calls itself a trust agreement was drawn up explicitly to ensure the future of Reuters. Under the document so-called trustees are appointed by the Lord Chief Justice and it is stated in the document that the trustees are not to be dismissed other than by the authority of the Lord Chief Justice. Again I refer to Sir Samuel Storey, who as I have said, insisted that Reuters should be controlled by a proper trust. I refer to his view that the trust was not in fact a proper trust, and that has turned out to be the case. Legally it is merely an agreement between different parties, and the theory is that it can be abolished by them. That was certainly not the spirit in which it was drawn up. Sir Christopher Chancellor, the chairman of Reuters, again and again reassured people all over the world about the independence and impartiality of Reuters by pointing to the trust and saying that Reuters was bound by it.
The first point I want to make is that I believe that this House and the Government should make it absolutely clear that they think it desirable that the spirit, at least, of the trust should still prevail and that the Lord Chief Justice should set up an inquiry into the proposals now before Reuters, but if he is not himself prepared to do that (which one could understand) he should get some other of the numerous authorities to do it—for instance, the Press Council. The Press Council has been strangely muted over Reuters, and I am told that the reason is that it hopes to obtain a very considerable amount of money as a result of the sale. But whoever does it, I think that there should be an inquiry into the present proposals, and I should have thought that the Press Council should show an active interest in the whole matter.
Secondly, I should have thought that the package which we are told will emerge very soon from the press owners themselves about the future of Reuters should contain an absolutely clear determination to set up a proper trust; that is, a legally enforceable trust, with trustees who will represent no doubt the newspaper

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industry and also the public, and who will be independently appointed. I also think it vital that these trustees should have some sanction. For many years I was myself a trustee of the Guardian newspapers and the great asset which we had as trustees was that we owned the paper and therefore, unlike the members of numerous other trusts which have been set up to guide newspapers, we had some power of sanction; and that trustees must have. In the case of Reuters the position could be guaranteed by having a certain class of share which holds the ultimate control, or even one share, as has been done by the Government when they have denationalised or semi-denationalised certain industries. I know that some of the institutions in the City do not like two classes of shares, but this is not a normal commercial undertaking. As I say, it involves the handling of a great national asset, and I believe that in this case two classes of shares would be amply justified. There have been other proposals to split the Monitor and the news gathering. That would no doubt deprive the news gathering side of the finance that it may want.
Reuters may not be unique, it may not be the only source of news by any means, but if it should fall into hands that either polluted it or curtailed it, this would undoubtedly be very serious for all sorts of other institutions. If, for instance, it was proposed to privatise the BBC—perhaps that will happen—then, certainly, some safeguards would be insisted upon. But the BBC depends a great deal upon Reuters. Therefore, if we interfere with the Royal Bank of Scotland and Sotheby's we should not be afraid if necessary, to interfere. I hope that it will not be necessary. I hope that the proposals, when they come out, will be satisfactory. Will safeguard the interests of Reuters, and will ensure that it is free from control or domination by any interest, whether Government or otherwise, that could be to the detriment of the free gathering of news and the independence and impartiality of this great national asset.
I should like the Government once again to reiterate their belief that this is a matter of public interest in which they would be prepared, in the last resort, to intervene to safeguard the public interest and the freedom of Reuters. I hope that your Lordships will express to the newspaper proprietors and those now considering the matter that this Hose will return to it if necessary, that it believes and hopes that the proposals soon to come forward may be satisfactory but that if not it will not scruple to take up the matter again, standing as we do for the public interest, to ensure that a vital part of the running of our affairs and the gathering of news upon which all our deliberations are ultimately dependent will not be put into a position where it might fall into tainted or prejudiced hands.
4.17 p.m.
Lord Bruce of Donington: My Lords, the House will be most grateful to the noble Lord, Lord Grimond, for having provided an opportunity to discuss such an important matter. Unfortunately, owing to the arrangements that have already been made, I understand, for the termination of our proceedings this afternoon, there will not be sufficient time for Her Majesty's Opposition to express any definitive views in
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so short a period. Four-and three-quarter hours were occupied in another place in debating this most important subject on 27th January. While the importance of a debate is not necessarily measured by the length of speeches, there has to be some minimum time in which an argument can be deployed on behalf of Her Majesty's Opposition. That time is not available to us this afternoon if our debate is to stop at the scheduled time.
I shall therefore content myself with endorsing 99 per cent., or nearly 100 per cent., of the remarks of the noble Lord, Lord Grimond. There is little need for me to underline the various factors that he considers to be important. What is more important in the time available is that the Government spokesman, the noble Lord. Lord Lyell, should give explicit answers to the important and definite questions posed to the Government by the noble Lord, Lord Grimond. In order that the noble Lord, Lord Lyell, may not be able to call in aid lack of time to give definitive answers, I propose to terminate my observations here and now and to give notice to the House that. At the earliest convenient opportunity when it is possible to secure adequate time, I shall seek to give voice to the views of Her Majesty's Opposition on this very important topic.
4.19 p.m.
Viscount Barrington: My Lords, may I put on record, as one of the seven people present, that I hope everyone will read this very important debate tomorrow as they have not had the opportunity, through no fault of their own, of listening to it today. I thought that someone should say that, in view of the fact that the House is so thinly attended.
4.20 p.m.
Lord Lyell: My Lords, in spite of the late hour I am sure that your Lordships would agree that the House is immensely grateful to the noble Lord, Lord Grimond, for raising this fascinating and extremely important subject in his Unstarred Question this afternoon. The noble Lord has given your Lordships the opportunity to discuss—albeit somewhat briefly—a matter of national and considerable interest. In doing so, as the noble Lord has mentioned, he has followed the Liberal tradition, for it was his late right honourable colleague Mr. Clement Davies, the then Member for Montgomery, who initiated the first debate on Reuters which was held in 1941 and from which the noble Lord quoted.
Of course the noble Lord is quite right in pointing out that, following the debate in another place two weeks ago, your Lordships' House should have the opportunity to demonstrate that concern about the independence and integrity of our news supplies is of great importance to your Lordships. Naturally enough, there has been comment on the proposed flotation in the media and, indeed, elsewhere recently, but we believe that some of that comment has been rather premature. We also believe that it should be noted that the company has yet to determine all the details of the proposals which it is considering.
The noble Lord, Lord Grimond, referred to the 1941 document, which he is quite right in saying is

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labeled "an agreement of trust". After the debate in 1941 in another place, a document—the so-called agreement of trust—was concluded between the shareholders of Reuters. This document set out the principles by which Reuters was to operate. In spite of the constraints of time, I shall very briefly recite those principles. They are as follows. First, that Reuters shall at no time pass into the hands of any one interest, group or faction. Secondly, that integrity, independence and freedom from bias shall at all times be fully preserved. Thirdly, that its business shall be so administered that it shall supply an unbiased and reliable news service to British, Dominion, colonial, foreign and other overseas newspapers and agencies with which it has or may hereafter have contracts. Fourthly, that it shall pay due regard to the many interests which it serves in addition to those of the press. Fifthly—and we believe that this is equally important—that no effort shall be spared to expand, develop and adapt the business of Reuters in order to maintain in every event its position as the world's leading news agency.
It is clear that the arrangements were made to ensure that, in the national interest, Reuters' independence and integrity continued—to ensure that the hands into which it fell were not unsuitable ones. So it was written down that its:
"integrity, independence and freedom from bias shall at all times be fully preserved".
That concludes a fairly important declaration.
With the benefit of 43 years of hindsight, we now know that the various anxieties which were expressed at that time were not well-founded. Despite the fears, whatever the legal status of the so-described "agreement of trust"—or "trust agreement"—there have been 43 years of integrity. I should like to pay tribute to the way in which the directors and the trustees of Reuters have run the company in accordance with the principles set out in 1941—principles which naturally remained intact when in 1953 the ownership of Reuters was widened to embrace Commonwealth press interests as well.
The noble Lord, Lord Grimond, has just touched on the position of Reuters today. I should like to stress on behalf of the Government our belief that Reuters is much more than just a news agency. It has a long history of providing financial and, indeed, other information to private subscribers. Of course it is only in the last decade that the company's long-nurtured ambitions to market its intelligence services electronically have been able to come to fruition. Reuters' own accounts are a testimony to its forethought and, above all, to the success that it has achieved. Its turnover rose from £17 million in 1973, to £53 million in 1977, and to £179 million in 1982. In the light of its results in 1981, it felt able to pay its first dividend, a dividend of £1.9 million, and 1982 of course brought better results and a dividend of £5.6 million. That may cover some of the interest in the financial results of Reuters.
I turn now to the people who work for Reuters. The company now employs over 3,200 people, nearly 40 per cent. of whom work in the United Kingdom. Its employment has increased by 70 per cent. over the last 10 years. We wish that other companies could show similarly successful track records.
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However, much of Reuters' national importance lies in the fact that it is such a highly successful purveyor of financial information as well as being an international news agency of the highest repute. Given its record and, indeed, its prospects for further expansion, its management has had to consider its future financing needs. The new technologies, although rewarding, are expensive businesses in which to invest. The noble Lord, Lord Grimond, will appreciate that fact, as he has been concerned in the press, as we heard from his excellent comments. No one is supposing that the proceeds of the flotation that is currently under consideration will be wholly for reinvestment in the operations of the company as opposed to helping the businesses associated with its shareholders. However, the Reuters board has indicated that a proportion will be. The board's statement of July 1983 specifically referred to:
"a study of the future financial structure of the company and methods of financing further growth".
That was after the Reuters' management had proposed that Reuters should consider issuing stock to raise cash for future investment.
Both the noble Lord, Lord Grimond, and the noble Lord, Lord Bruce, expressed their worries about the role of the Government. Indeed, they believe that there is great public concern as to the role of the Government. We note the comments of the two noble Lords, and we understand that there have been suggestions from elsewhere that the Government should intervene in some way to preclude the possibility that, after a flotation, Reuters will pass into the control of persons who might discontinue the news agency side or, indeed, operate it in a way other than in accordance with its long-established principles.
Given the statement of objectives of the board and the trustees, we think that that does not seem to be a likely outcome: but we understand that there is public concern that the independence and integrity of Reuters should not be jeopardised. This is so even with the growth in the number of sources of news, including the news-gathering capabilities of television. These have taken place over the years and mean that Reuters is no longer in precisely the same position as it was in 1941.
However, Reuters remains the only British and Commonwealth international news agency—a news agency with a reputation second to none in the world. The safeguard for this reputation does not lie in Government intervention, because that would jeopardise the very reputation for integrity and independence which it was sought to protect. Rather, the safeguards lie in the professionalism of Reuters itself and in the professionalism of its staff and their concern for Reuters' reputation and reliability. These are matters which no Government can guarantee. Naturally, the Government acknowledge the significance of Reuters' past standards of integrity and independence being maintained. But the Reuters board is proposing neither a merger nor a take-over. In this light there are no Government powers to intervene; nor, indeed, would it be in the interest of press freedom for the Government to seek to intervene.

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Your Lordships will be aware that Reuters operates all over the world. It operates from countries governed by very different political regimes and standards of behaviour from our own. We believe that it is vital for Reuters' reputation for independence that it is not seen to be under the influence of anyone. Reuters' independence is the main and, indeed, the entire source of its strength. That is true for independence from the British Government along with others, and it is very important that Reuters is independent of the British Government, for its position in other parts of the world would be weakened were it to be seen yielding to any sort of pressure from the Government of the United Kingdom.
I accept that the calls for Government intervention have sprung from the very best of motives. But I am sure your Lordships will appreciate that actions from the best of motives would be the self-justifying cloak for outside interference in Reuters, which we would certainly be loath to see. We believe it is better not to start down that path.
A good many Governments have the capacity to convince themselves that the interventions they might contemplate would truly be with the best of motives. Some of them might even believe this, and that is one of the dangers. The noble Lord, Lord Grimond, gave two examples of Government interference, Sotheby's and the Royal Bank of Scotland. I think he will accept, and I am sure the noble Lord, Lord Bruce, would accept that these were situations of mergers. There might have been other factors, but primarily the reason the Government became in any way involved was that they were merger situations.
There is no indication that the Government are concerned with a merger situation here. We do not believe that this is the situation at all. I would stress to the noble Lord, Lord Grimond, that the company's own declared intentions make this particular issue hypothetical. If particular changes of control were in contemplation, the position would need to be considered in the light of any circumstances that arose then. There are powers in relation to changes in control of companies which are set out in, among other places, the Fair Trading Act 1973. Were such a situation to arise my right honourable friend in another place would need to consider the position in the usual way, including taking into account the advice of the Director General of Fair Trading.
The noble Lord, Lord Grimond, also raised the functions of the Lord Chief Justice. I am given to understand that the Lord Chief Justice was unaware of any functions ascribed to him according to any of these documents until November 1983 when the matter appeared in the national press. The Government and the office of the Lord Chief Justice have no record at all whether the Lord Chief Justice of the day in 1941 agreed to be empowered to appoint the chairman of the Reuters' trustees. There is no record whether he was consulted at all about this. These records do not show that any Lord Chief Justice has been consulted at all on these matters since 1953. Some minor reference may be implied at about that date, but that is the only expressed or implied
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reference known since 1941. Whether the Lord Chief Justice has any function is not, and has never been, a matter for the Government. The incumbent for the time being of the office of Lord Chief Justice has no function in this matter in terms of duties of that office.
As a completely separate point, I am advised that the arrangements entered into appear to be a matter between private individuals contained in a private deed. Such an agreement could not ordinarily impose any obligation in law on any third party, whether holding public office or otherwise. They certainly appear to impose none on the Lord Chief Justice. What the Lord Chief Justice might intend to do is entirely a matter for him, but any request for him to act in his capacity as Lord Chief Justice would fall entirely outside his duties as such.
The Question asks if the Government are satisfied that the interests of the public will be properly safeguarded by the proposed flotation of Reuters. I have reminded your Lordships that the board and trustees of Reuters have had some things to say on this—the board and the trustees of Reuters who are all responsible people. With the record of Reuters behind them they are entitled to be believed when they say that their purpose is to conserve the objectives which were set down in 1941.
Of course, the future can never be certain, but the history of Reuters endorses the view that the company does best when its independence from Government is not compromised. Government interference is not the way to preserve the integrity of Reuters, and at best this would be liable to embalm the company rather than preserve it. But the dangers, we believe, are greater than that. All too easily, albeit unwittingly, Government interference could endanger the very independence and integrity it is sought to preserve. It is better by far that the board and the trustees of the company should, as they have said they will, safeguard the continuing integrity and independence of Reuters.
House adjourned at twenty-six minutes before five o'clock.