Lords Sitting of 19 February 1987

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Manchester): The LORD CHANCELLOR on the Woolsack.

Gibraltar
Lord Boyd-Carpenter: 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 the conversations in January between the Foreign and Commonwealth Secretary and the Spanish Foreign Minister resulted in decisions by Spain to withdraw the Spanish military guard on the Gibraltar frontier and to withdraw the ban on the use of Spanish airspace by British military aircraft approaching or leaving Gibraltar airport.
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, no, although both issues were raised by my right honourable and learned friend. We shall continue to pursue these matters with the Spanish authorities.
Lord Boyd-Carpenter: My Lords, I thank my noble friend for that reply. Will she say whether the Spanish Foreign Minister during the discussions when this matter was raised gave any explanation whatever of the unfriendly conduct which both these matters represent by a fellow member of NATO and the EC?
Baroness Young: My Lords, these matters were discussed with the Spanish authorities. We entirely take the point made by my noble friend, but we no longer think it appropriate to have a military guard at the frontier between two Community partners and NATO allies. We very much hope that the Spanish authorities will take the same view.
Lord Cledwyn of Penrhos: My Lords, it has been reported that some measure of agreement was reached between the Foreign and Commonwealth Secretary and the Spanish Foreign Minister on the use of Gibraltar airport by Spanish citizens. Will the Minister say to what extent that is true? Perhaps I may take the supplementary question of the noble Lord a step further and ask whether it is possible that Her Majesty's Government might discuss with our partners in the European Community their participation and co-operation in order to achieve a settlement as regards Gibraltar?
Baroness Young: My Lords, the use of the airport is one of the matters which is currently being discussed between ourselves and the Spanish Government. We have not yet come to any conclusions, although we should like to make progress on this, as we should on other matters.
Lord Mellish: My Lords, is the Minister aware of the fact, and does she take it into account, that the vast majority of the people who live in Gibraltar express the desire to remain under British control? Is that to be completely ignored?
Baroness Young: My Lords, on the contrary, we have made our position absolutely plain. We stand by the preamble to the 1969 constitution.
Lord Kennet: My Lords, will the Government agree that this difference between two members of the European Community poses a certain historical political difficulty on one side, and that the governments are animated by the maximum good will towards each other? Therefore it behoves the parliaments of both countries to play it very cool.
Baroness Young: My Lords, I am sure that it is valuable that parliamentarians from both the British and Spanish Parliaments should meet to discuss these matters. They may come to a greater understanding of each other's viewpoints.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that, uncharacteristically, she did not answer the question I asked as to what explanation the Spanish Foreign Minister gave for his country's attitude to this matter, other than perhaps that it was in breach of the Tenth Commandment?
Baroness Young: My Lords, it is always difficult for a British Minister to speak on behalf of another government as regards their views. However, I am quite sure that if my noble friend, who is so wise on so many matters, reflects upon this he will no doubt see that the Spanish authorities also have their political difficulties over the matter.
Lord Caccia: My Lords, will the noble Baroness also agree that it is rather sad to see a once proud, and rightly proud, nation behaving in what can only appear as such a petty manner?
Baroness Young: My Lords, yes. We very much hope that these matters of the ceremonial guard and the use of the air space will be resolved. That would create an atmosphere of greater confidence, which would be helpful.

Trident: Number of Warheads
3.4 p.m.
Lord Mayhew: 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 with how many independently targeted warheads they propose to equip the Trident fleet.
The Minister of State for Defence Procurement (Lord Trefgarne): My Lords, as the noble Lord well knows, the information sought is highly classified and cannot therefore be given.
Lord Mayhew: My Lords, is the noble Lord aware of the statements of Ministers that, since the Trident fleet will carry not more than two and a half times the number of warheads carried by Polaris, the level of nuclear escalation is two and a half times? That ignores the greater size of the Trident warhead, its greater accuracy, its greater range and its ability to be independently targeted. Will the Minister look into this matter more carefully, including ministerial statements, and try to give the House a more objective and less political assessment?
Lord Trefgarne: My Lords, the noble Lord may be assured that Ministers have examined this matter. Indeed, I have given the noble Lord some of the answers to which he has referred. However, I am not prepared to give information which would be of value to our potential enemies, and I hope that the noble Lord is not prepared to do that either.
Lord Morris: My Lords, is my noble friend aware that, if any member of the Alliance had had experience in office, he would never have asked that question?
Noble Lords: Oh!
Lord Trefgarne: My Lords, it is the fact that the noble Lord, Lord Mayhew, once served in the Ministry of Defence that makes this question so puzzling.
Lord Mayhew: My Lords, is the noble Lord aware that the Government are fully entitled to withhold information on security grounds? As a Minister I have done that myself. However, the Government are not entitled to replace that information with propaganda statements.
Lord Trefgarne: My Lords, I do not believe that answering the noble Lord in the way that I did was propaganda.
Lord Paget of Northampton: My Lords, is the Minister aware that all of us know enough to realise that if the warheads we are getting were unfortunately to blow up in these islands, the explosion would be sufficient to incinerate every particle of carbon in the whole country? As we are built up as to about one-third of particles of carbon, it would definitely be awkward for us.
Lord Trefgarne: My Lords, that is why it is so important to ensure that that never happens.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that the purpose of this question is to ascertain whether or not Trident is to be acceptable to the Alliance? It would seem that if the Minister can give the noble Lord a satisfactory answer, the Alliance will be able to support him on Trident. Therefore, he will possibly try a little harder. Is the Minister also aware that on the question of Trident, there is no halfway house: one is either for it or against it?
Lord Trefgarne: My Lords, as I understand the matter, and I confess to some confusion here, the
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policy of the noble Lord, Lord Mayhew, and his colleagues as regards our nuclear deterrent is a policy of "rust away" while the policy of noble Lords opposite is one of "give away".
Lord Kennet: My Lords, if a man ordered a two-litre car, then cancelled the order and replaced it with an order for a four-and-a-half litre car promising the world that he would somehow reduce its capacity to two litres, would the Government regard that as a wise purchasing policy?
Lord Trefgarne: My Lords, the purpose of Trident is to replace an independent deterrent which, by the mid-1990s, will be becoming rapidly less credible. That is why we have ordered the system which we have ordered and, as a matter of fact, the number of warheads available to Trident at the time of its introduction will be substantially fewer than the opposition will have at that time.
Lord Diamond: My Lords, is the noble Lord aware of the principle, which I believe lawyers generally accept, that if something untruthful is said and you do not object at the time, you may be held to be accepting that untruthfulness? In those circumstances can the Leader of the House advise me how I am to deal with the extraordinary statement made by one of his supporters that no member of the Alliance has ministerial experience?
The Lord President of the Council (Viscount Whitelaw): My Lords, perhaps this would be a suitable moment for me to say that I do not think that the noble Lord needs advice from me, and I doubt whether he would take it if I gave it to him. I think the only advice I should give him at the moment is that possibly we are getting a little wide of the orginal Question and should pass on to the next one.

OAU: Chairman's Visit
3.11 p.m.
Lord Merrivale: 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 make a statement on the visit this week of the chairman of the Organisation of African Unity, H E Colonel Denis Sassou-Nguesso, President of the People's Republic of Congo.
Baroness Young: My Lords, President SassouNguesso paid a working visit to the United Kingdom from 16th to 18th February in his capacity as chairman of the Organisation of African Unity. The president was received by Her Majesty the Queen and met my right honourable friend the Prime Minister. Talks were also held with senior Government Ministers and with leaders of the Opposition parties.
Lord Merrivale: My Lords, I thank the noble Baroness for that brief statement. In view of the elaborate arrangements made for the success of the president's visit, can one take it that there is a

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welcome, increasing interest on the part of Her Majesty's Government in francophone Africa? Secondly, was there any discussion on the rescheduling of repayments by the Congo? Was any assistance suggested to enable a British firm to continue and complete the halted, important Brazzaville to Kindamba road project?
Baroness Young: My Lords, I can assure my noble friend that we welcome the visit by President SassouNguesso and his party. Very useful and friendly discussions were held both on African issues and on matters of bilateral concern. On the question of the road that my noble friend mentioned, I can only say to him that projects cannot be looked at in isolation from broader aspects of the IMF programme agreed with the Government of the Congo, and Congo's overall external debt.
Lord Cledwyn of Penrhos: My Lords, when the Prime Minister met President Sassou-Nguesso, can the noble Baroness confirm that her right honourable friend raised with him the possibility of a constitutional conference on the problems of southern Africa? If that be the case, could the noble Baroness say what were the terms of reference of that proposal and whether it was discussed with our partners in the European Community?
Baroness Young: My Lords, as the noble Lord will understand, details of my right honourable friend the Prime Minister's conversation must remain confidential, but I understand that my right honourable friend said that while it is of course for the people of South Africa to work out their own future those wanting progress in South Africa should focus their attention on practical steps to bring about a dialogue. Such steps might include, for example, laying groundwork for a constitutional conference attended by all political and racial groups in South Africa. The noble Lord will therefore see that there was no question of discussing this with our Community partners.
Lord Cledwyn of Penrhos: My Lords, I am grateful to the noble Baroness for that full and interesting reply. In fact the Prime Minister did go as far as proposing a form of conference which we, on this side, I think, would, subject to detail, be prepared to support. Could she say what the reaction of the president was to that proposal and whether it has been possible to take it a stage further?
Baroness Young: My Lords, I, of course, note with interest the point that the noble Lord makes about his party's support for such a conference. I have explained the position, and this was one of the matters that President Sassou-Nguesso noted in the course of his talks. But I ought to make it clear that from the point of view of the Government there is no United Kingdom initiative to propose such a conference.
Lord Hatch of Lusby: My Lords, while congratulating the noble Baroness on her welcome for this visit, may I ask whether she would agree that it is a remarkable feat for the OAU to have existed despite
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all its problems—similar problems to those of the EC and the Organisation of African States—for nearly 30 years? Would she agree that the closest association and communication between Her Majesty's Government and the OAU can only bring benefit to the people of Africa, and indeed to the people of this country?
Would the noble Baroness agree that when the Prime Minister is prepared to meet the chairman of the OAU it shows a welcome sympathy between the British Government and British people and the people of Africa?
Baroness Young: My Lords, I am glad that the noble Lord, Lord Hatch, should recognise what my right honourable friend the Prime Minister has done in regard to these friendly and useful meetings on this occasion.

High Technology: Work Permits for US Citizens
3.16 p.m.
Lord Orr-Ewing: 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 how many temporary work permits are granted annually for USA citizens coming to the United Kingdom to work in the high technology industry, and what is the average delay between the application for and the issue of such permits.
The Secretary of State for Employment (Lord Young of Graffham): My Lords, in 1986, 303 work permits were issued to United States citizens for work in the high technology industry. Of these, 60 were for employment of less than 11 months. The average time taken to process such permits is not recorded but 83·5 per cent. of all work permit applications received in 1986 were decided within eight weeks.
Lord Orr-Ewing: My Lords, I thank my noble friend for that satisfactory Answer. Has he seen the report in The Times that 471 electronic companies were asked in which EC country they wanted to invest, and the great majority said that Britain was the best and that they intended to create 9,000 new jobs here in that industry in the next two years? Bearing that in mind, will he see whether in special circumstances the average time can be speeded up, since it would appear that one skilled electronic engineer may create as many as a hundred jobs in this country?
Lord Young of Graffham: My Lords, I am grateful to my noble friend for his question. I am even more glad that many companies throughout the world are now beginning to recognise the great benefits of living in a country where the economy has seen such satisfactory and steady progress. Sixty two per cent. of all applications received in 1986 were replied to and permits issued within four weeks. We shall always respond urgently to applications.
Lord Beswick: My Lords, leaving aside the nonsense with which the noble Lord prefaced his remarks, can

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he say why the decision takes eight weeks? If there is an application from an American, ought not the response to be almost automatic? What criteria keep the application eight weeks on the stocks before permission is given?
Lord Young of Graffham: My Lords, I shall refuse to leave aside the nonsense, as the noble Lord describes it, because it happens to be the reason why we receive so many work applications from high technology companies. They realise and recognise the benefits of working here. Putting aside that statement, we must ensure, whatever happens, that those who come into this country have skills and talents that are not readily available today among those living here. That is why we take eight weeks. It is not a very long time on average. As I said, 62 per cent. of applications are dealt with within four weeks. We shall always have regard first, to the skills of those looking for work in this country, and then we allow these applications.
Lord Hatch of Lusby: My Lords, is it not more important for Her Majesty's Government to pay greater attention to the training of British people in high technology, where we have failed lamentably to keep up with many other countries of the world, than to import Americans to do the work which could be done by British people if there were sufficient training facilities for them?
Lord Young of Graffham: My Lords, the Manpower Services Commission spends £30 million a year in training expenditure for high technology as part of a total budget of£½ billion for training. We are seeing that we are making up for many years of neglect in training. I think that the facts speak for themselves.
Lord Tordoff: My Lords, would the noble Lord care to read the leader which appeared in The Times this morning?
Lord Young of Graffham: My Lords, I shall certainly read the leader in The Times this morning. I even read the leaders in other newspapers.

Business
3.20 p.m.
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Lucas of Chilworth will, with the leave of the House, repeat a Statement that is to be made in another place on the Rover Group.

Keble College Oxford Bill [H.L.]
Read a second time, and committed to an Unopposed Bill Committee.
Selwyn College Cambridge Bill [H.L.]
Read a second time, and committed to an Unopposed Bill Committee.
University College London Bill [H.L.]
Read a second time, and referred to the Examiners.

Channel Tunnel Bill: Select Committee
3.22 p.m.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, I beg to move the Motion standing in my name on the Order Paper.
I do not propose to detain the House by explaining all the provisions of the Motion, which is mainly routine; but it is appropriate that I comment on the fifth and sixth paragraphs which are unusual. Many of your Lordships will know that during the earlier stages of the Bill there was a great deal of discussion about the access arrangements to the Folkestone terminal site. The Select Committee in another place decided against amending the Bill in that respect, since the amendments proposed at that time would have had operational disadvantages and were strongly opposed by Eurotunnel.
There is now an alternative proposal called "joint southern access" which is acceptable both to the local authorities and to Eurotunnel which involves some, but not all, of the scheduled works in the earlier alternative proposals. The Government have said in Standing Committee in another place that they will give the proposals a fair wind in your Lordships' Select Committee and this provision follows through that commitment. It is also obviously sensible to establish a deadline for petitions against such authorisations which is later than the closing date set for petitions against the Bill, including those calling for alterations.
Moved, That, as proposed by the Committee of Selection, the Lords following be named of the Select Committee on the Channel Tunnel Bill:

Ampthill L. (Chairman)

Elliott of Morpeth, L.

Galpern, L.

Gray of Contin, L.

Harris of Greenwich, L.

Holderness, L.

Shepherd, L.

That four be the quorum of the Committee;
That, notwithstanding the practice of the House that appearances on Petitions shall be entered at the first meeting of the Committee, appearances on Petitions against the Bill shall be required to be entered as and when the Committee direct;
That the evidence taken before the Committee shall be printed and delivered out from day to day;
That it be an Instruction to the Committee that they have power to consider and, if they think fit, to make any amendment to the Bill with respect to the access to or egress from the terminal area by road which was included among the amendments proposed before the Select Committee on the Bill in the House of Commons in connection with which plans, sections and a book of reference were deposited in the Office of the Clerk of the Parliaments on 31st July last year;
That any Petitions against any such amendment shall be deposited not later than 27th February 1987; and
That the Committee do meet at 4 o'clock on Wednesday next.—(Lord Brabazon of Tara.)
On Question, Motion agreed to.

Channel Tunnel Bill: Instruction
Lord Taylor of Blackburn Lord Taylor of Blackburn rose to move, That it be an Instruction to the Select Committee on the Bill that they consider whether there will be any adverse consequences in any region of Great Britain arising from the construction and maintenance of the Channel Tunnel and that they report to the House any recommendations they may have to alleviate such adverse consequences.
The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper.
The reason I do this—I do not want to detain your Lordships long—it is simply because many of us felt after listening to the debate on Second Reading that very little was said about the effect of the tunnel on the various regions throughout Great Britain. Therefore, as the committee has now been set up, we feel that this is an appropriate time to move the Motion in my name.
Moved, That it be an Instruction to the Select Committee on the Bill that they consider whether there will be any adverse consequences in any region of Great Britain arising from the construction and maintenance of the Channel Tunnel and that they report to the House any recommendations they may have to alleviate such adverse consequences—(Lord Taylor of Blackburn.)
Lord Brabazon of Tara: My Lords, I wish to make it clear that the considerations which I believe underlie the Motion of the noble Lord are some that the Government believe to be of the greatest importance. The Government are convinced that the Channel Tunnel project is capable of bringing great benefit to all the regions in the United Kingdom, both while it is being constructed and when it is operating. During the construction period orders for equipment and materials will need to be placed both by Eurotunnel and by British Rail totalling in the region of £1 billion. By far the greater part of this expenditure will take place outside the South-East, mainly in the Midlands, the North and Scotland.
Once the tunnel is working the Government believe that the whole of the British economy will benefit from improved and more reliable links with Europe, including and in particular through running freight trains. Nevertheless we recognise that action is needed to maximise those regional benefits. That is why the Government have accepted, subject to improvements in both drafting and substance, a new clause put forward by the Opposition in another place requiring British Railways to draw up a plan for the dispersal of rail traffic, including their proposals for regional distribution centres and depots.
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That is why the Government also strongly support the joint Eurotunnel-British Rail regional survey of the opportunities that the tunnel will offer to industry. It is also why the Government believe that it is of great importance that the potential effects of the Channel Tunnel are taken fully into account in the continual process of monitoring the economic situation in the regions, for which my right honourable friend the Secretary of State for Trade and Industry is responsible.
Nevertheless the Government believe that there would be considerable dangers in imposing a further burden on the Select Committee, which this Motion, if accepted by the House, would imply. First, it would mean that the House would be instructing the committee to look at a major area of public policy which should properly be dealt with on the Floor of the House. The function of a Select Committee on a hybrid Bill is to look into those matters which cause the Bill to be hybrid in the first place; that is, to consider the effects of the Bill upon private rights and interests.
It is of course the case that Private Bill Committees sometimes need to consider matters which impinge upon areas of public policy, and this is well-established. But a hybrid Bill is not a private Bill; it is a public Bill and the matters of public policy which it contains are, according to the established practices of the House, dealt with by a Committee of the Whole House in the usual way. To instruct the Select Committee to consider this matter would be to confuse the functions of the two committees and set an unfortunate precedent.
Secondly, it is already clear that the Select Committee faces a formidable task even to discharge its appropriate responsibilities. I understand that by the closing date yesterday some 1,460 petitions had been received. I think it would he imprudent to add further to this burden and we should not underestimate what might be involved. To comply with the proposed Instruction the committee might well conclude that it needed to return to the House for a further Instruction authorising it to hear specialist evidence and even to appoint specialist advisers. I think the nature and the purpose of the committee would be radically changed in a wholly inappropriate way.
I hope, therefore, that the noble Lord will take note not only of the difficulties that the Motion would impose on the committee which has now been appointed, but also of the Government's commitment to maximising the benefits of the tunnel when it is built for all parts of the country. In view of these considerations I hope the noble Lord will judge that he should not pursue this Motion.
Lord Taylor of Blackburn: My Lords, although I do not accept everything that the Minister said in the earlier part of his statement, and I do not accept that there has been sufficient study within the regions, I certainly see the administrative worries of going to a Select Committee, with all the questions that one would like to put, all the evidence to be taken and all the research that will have to be done. I realise that the Select Committee has a terrific task on its hands to do what it has to do now. Therefore I feel that I should

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withdraw this Motion. Nevertheless I hope that at a later stage we shall have an opportunity to put our views from the regions to some committee or to the whole House later. I beg leave to withdraw the Motion.
Motion, by leave, withdrawn.

Local Government Finance Bill
3.28 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Skelmersdale): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That it be an instruction to the Committee of the Whole House to whom the Local Government Finance Bill has been committed that they consider the Bill in the following order:

Clause 1,

Schedule 1,

Clauses 2 to 7,

Schedule 2,

Clauses 8 to 10,

Schedule 3,

Clause 11,

Schedules 4 and 5,

Clauses 12 to 16.

—(Lord Skelmersdale.)
On Question, Motion agreed to.

Criminal Justice (Scotland) Bill [H.L.]
The Minister of State, Scottish Office (Lord Glenarthur)The Minister of State, Scottish Office (Lord Glenarthur) rose to move, That the Bill be recommitted to a Committee of the Whole House in respect of Clauses 48 to 51; and that Standing Order 44 (No two stages of a bill to be taken on one day) be dispensed with to enable the remaining stages of the Bill to be taken on the same day as the Committee (on recommitment).
The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Your Lordships will recall that on Tuesday last I explained to the House that at the request of the noble Lord, Lord Morton of Shuna, certain amendments to the Bill relating to serious fraud would be recommitted to a Committee of the Whole House on Thursday, 26th February. The Motion standing in my name enables this to be done. It also enables us then to proceed to receiving the Report in respect of those clauses and to take the Third Reading of the whole Bill as had originally been intended. I beg to move.
Moved, That the Bill be recommitted to a Committee of the Whole House in respect of Clauses 48 to 51; and that Standing Order 44 (No two stages of a bill to be taken on one day) be dispensed with to enable the remaining stages of the Bill to be taken on the same day as the Committee (on recommitment).—( Lord Glenarthur.)
On Question, Motion agreed to.

Territorial Sea Bill [H.L.]
3.30 p.m.
Baroness Young: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Baroness Young.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 agreed to.
Lord Denning Lord Denning moved Amendment No. 1:
After Clause 1, insert the following new clause:
("Sovereignty over air space and sea bed.
.( ) The rightful sovereignty of Her Majesty, her heirs and successors, in right of the United Kingdom extends not only to the territorial sea as above defined but also to the air space above it and the sea bed and subsoil below it.
( ) The provisions of the Territorial Waters Act 1878 relating to the trial of offences shall extend to the whole of the sea, air space, seabed and subsoil over which Her Majesty has sovereignty as aforesaid.")
The noble and learned Lord said: This is an important Bill, one much to be welcomed. It extends the historial three-mile limit to 12 miles around the coast of the United Kingdom. The three-mile limit has existed for hundreds of years. It was supposed to be the limit over which we could command obedience by reason of three miles being the length of a cannon shot. That three-mile limit has continued over the years and is still maintained by some great countries, notably the United States of America. But now, by this Bill—and, as I say, it is much to be welcomed—the breadth of our territorial seas is to be extended to 12 miles. But the Bill says nothing about the air space above or the sea bed or the subsoil below it.
In my submission—it is my reason for putting down amendments—our sovereignty and jurisdiction should extend not only over the sea itself but also the air space and the sea bed and below. That desirability is exemplified by the incident reported in today's newspapers. I have analysed the reports as best I can. A trawler, the "Summer Moon", registered in County Down in Northern Ireland, was fishing in the Irish Sea off the Isle of Man. A United States submarine was cruising below the surface, although, as I see international law, it had no right to do so. It could only proceed on the surface flying its flag.
Cruising below the surface, the submarine caught up the nets of the trawler and dragged her backwards for 2½ hours over a distance of 10 miles. Helicopters were called out on a rescue operation but eventually the trawlermen managed to cut themselves free. In so doing, pieces of the submarine's equipment marked as being of United States origin came up in the nets.
The submarine could have, and perhaps did have, equipment and devices by which it could and should have detected the position of the trawler. Her commander could be said, in not using that equipment, to have been negligent and perhaps criminally negligent. If it had taken place within the jurisdiction of this country, then he would be liable to prosecution under our own law for criminal damage.

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If any of those on the trawler had been drowned he might even have been subject to a charge of manslaughter.
The question is: was that United States submarine subject to our law? At the moment, it is not, because it was not within three miles. It was probably 10 miles off the coast of the Isle of Man. But if this Bill is passed the limit would refer to 12 miles off the Isle of Man.
What would be the position? This goes back to one of the greatest cases in our law, filling nearly 200 pages in the law reports of 1876. The case concerned a German ship, "The Franconia", which set sail from Hamburg for the West Indies. In the Channel, twoand-a-half miles off Dover she ran into an English ship, "The Strathclyde", which was on its way from London to Bombay. The German ship sank "The Strathclyde". Passengers were drowned and killed, including Jesse Young. For that, the commander of "The Franconia" was brought before our courts and charged with manslaughter.
Had our courts jurisdiction? Even though it happened only two-and-a-half miles off Dover, had our courts jurisdiction? A special court of 14 judges was brought together and the minority—and I would have been in that minority—going back to Hale and Coke, our great authors, said that the territorial waters were part of the realm of England and that we had jurisdiction over them. But the majority, I am sorry to say, held the contrary: that we had no jurisdiction over a foreign ship passing within our own territorial waters.
The result of the case is stated in one of the leading books on international law by Mr. O'Connell. It says at page 470:
"The English jurists of the seventeenth and eighteenth centuries attributed to the King not only a jurisdiction over the seas adjoining the coast of England but also a property right in the waters and the seabed beneath. The latter was taken to be as much a part of the realm as the dry land itself".
Then he goes on to the case of R. v. Keyn, which I have just mentioned to your Lordships, in 1876. This is the next page:
"R. v. keyn thus clearly decided that the territory of England ends at the low-water mark and that the jurisdiction of the Admiral which begins at that point did not, historically, embrace foreign nationals".
There follows a description of what happened subsequently:
"To avoid the embarrassment of not being able to exercise police control over foreigners in British territorial waters, Parliament intervened and in 1878 enacted the Territorial Waters Jurisdiction Act".
By that statute, the ruling of the majority in R. v. Keyn was overruled and it was held that the territorial waters around England, within the prescribed limits, were under the sovereignty of England.
That is why I suggest that we should make it clear that this Bill deals only with the sea itself. It does not deal with the waters underneath or where the submarines go. It does not deal with the air space where the helicopters go. If the case of the Northern Irish trawler I have mentioned came before our courts, there would be a great deal of argument about our courts having no jurisdiction over this United States vessel. Even if our own people had been killed, we
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would have had no jurisdiction. It would be the same if it was a helicopter. In the case of a helicopter from a United States ship going through our territorial waters, crashing and injuring people in boats below there is no jurisdiction. I submit that this ought to be put right by Parliament itself.
In framing my amendments I have gone by the very words of the convention in 1958, which was ratified and signed by this country and by the Russians, the United States and so on. I have taken the very words of the articles of the convention. For instance, in regard to the first amendment I have taken the words of Article 1 of the 1958 convention:
"The sovereignty of a State extends, beyond its land territory and its internal waters, to a belt of sea adjacent to its coast, described as the territorial sea".
That convention did not deal with the 12 miles or the three miles, because they had not been settled at that time. Article 2 goes to to say:
"The sovereignty of a coastal State extends to the air space over the territorial sea as well as to its bed and subsoil".
That is all I have put into my first amendment.
I then deal with the Territorial Waters Jurisdiction Act, which as it stands applies only to the sea but which should also apply to the seabed and the air space above it. My purpose is simply to deal with that in order to cover the case which I have been describing of the trawler in the North Sea.
I now come to the last amendment and here I go by the Geneva Convention of 1958, which has been approved by all and which I have mentioned. That states in Article 14 that ships of all states enjoy the right of innocent passage through the territorial seas. Paragraph 6 states:
"Submarines arc required to navigate on the surface and to show their flag".
Is it not very important that that should be part of the law of England? Does not the incident in the Irish Sea show that? Apparently the United States submarine was under the water and could not be seen or detected. She was not going on the surface or showing a flag. In framing these amendments all I have done is to go by a convention to which this country is a party and to which it subscribed. As we have sovereignty over the seas it ought to be included.
During the Second Reading debate my noble friend Lord Cledwyn raised these points and my noble friend Lady Young replied. She said (at col. 398 of the Official Report of 5th February):
"The limit applies generally to the water, the sea bed and the air space".
Then in regard to submarines she said (at col. 400):
"I can confirm that ships of foreign states enjoy innocent passage, but submarines would not be able to pass through the area except on the surface, and aircraft could not overfly".
I welcome and agree with every word that the noble Baroness said, and I have put them in these amendments. But what I have to tell your Lordships is that what my noble friend Lady Young says in this House, which is recorded in Hansard, forms no part of the law of England. The judges are not even allowed to read Hansard to see what she has said. If she should say that it is in the treaty, I must reply that the treaty is no part at all of the law of England until it is embodied in a statute of the law of England.
Although I welcome the noble Baroness's statement, and agree entirely with every word of it, I suggest nevertheless that in this important development in our law we should declare not only that the territorial waters are 12 miles wide—differing from the United States on that—but that our sovereignty extends to the air space above, to the sea below, to the sea bed and to the subsoil, whatever may happen there. We should have jurisdiction. Submarines should travel on the surface showing their flag and they are not to go below the surface in our territorial waters.
That is all I want to say on my amendments. They all stand or fall together. I expect that the noble Baroness will say that it is international law already. I doubt it. Is it international law in the case of the whole 12 miles when that has never been agreed and the United States says differently? International law does not say that at the moment the limit is 12 miles; we say that by our own statute.
All I am suggesting is that we embody the sovereignty of this country over the seas around our shores and have jurisdiction over not only ships but submarines that travel underneath and helicopters and other aircraft that fly above. We should have laws for them. We should legislate for them over what is our own territory and we should not debate points of international law which are not part of the law of England. I beg to move.
3.45 p.m.
The Chairman of Committees (Lord Aberdare): Amendment proposed, after Clause 1, insert the new clause as printed. There is a printing error in the second line of the new clause. After the words "not only", the word "to" has been omitted.
Lord Cledwyn of Penrhos: The Committee will be extremely grateful to the noble and learned Lord for raising points of great importance and for his interesting speech. He was right to remind us of the case of the Irish trawler and the United States submarine which has highlighted our debate today. He also referred to the famous case of the "Franconia", with which I also dealt in some detail on Second Reading when he was unfortunately unable to be here.
Let me refer very briefly to the two matters under discussion: first, the question of air space and, secondly, the question of the sea bed. Sovereignty over super-adjacent air space has been firmly entrenched in international law since the year 1919. It was later embodied in the 1944 Convention on International Civil Aviation, the Territorial Sea Convention and the Law of the Sea Convention. The question of the status of air space had been triggered off, as I have read, following the use of balloons during the Franco-Prussian war of 1870.
Secondly, on the question of the sea bed and subsoil, this became a matter of discussion and debate at a later stage. As the noble and learned Lord has said, the matter was not properly dealt with until the 1930 Hague Convention, when it was agreed that there should be an article—and I shall read it because I think
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it is relevant to what we are now debating—stating that:
"The territory of a coastal state includes also air space above the territorial sea as well as the bed of the sea and the subsoil".
The question which arises is whether additional national legislation is needed over and above the international law which exists. Given international law, are the amendments of the noble and learned Lord necessary? I should be grateful to the noble Baroness if she can tell us how those amendments would change the present functioning of the law governing the territorial sea and whether or not there is significant violation of the sovereignty of air space and the sea bed. If so, will the new clause proposed by the noble and learned Lord remedy that? Lastly, do other countries have such legislation on their statute books at present?
Perhaps I may ask whether the noble and learned Lord was moving both his amendments at the same time. If that is the case, I should like to deal with the matter of innocent passage now. If that is not the case, I shall speak to it later.
Lord Denning: I was only moving Amendment No. 1. However, I was speaking to the other amendment as well, because they go together.
Lord Cledwyn of Penrhos: In that case, perhaps I may say a word about innocent passage at this stage. I shall try to be as brief as possible. As I understand it, the right to innocent passage is the only right which foreign ships have in a territorial sea. Therefore, one must ask whether the new clause is absolutely necessary. Can the noble Baroness say whether there is evidence of abuse of the right of innocent passage and, if so, whether such a new clause will assist in preventing further abuse?
The question of the rights of warships and of nuclear-powered ships is notoriously controversial, as we know. That much was evident when New Zealand made her declaration against giving facility to American nuclear-powered ships. Other countries have qualified the right of innocent passage with respect to nuclear-powered ships. In 1964, for example, both Spain and the United Kingdom took action to regulate the passage of nuclear-powered vessels.
Can the noble Baroness say whether Her Majesty's Government still exercise any regulatory control over the passage of nuclear-powered ships and, if so, would this amendment moved by the noble and learned Lord create difficulties with respect to such regulations?
As regards the question of submarines to which the noble and learned Lord has referred, it is already a principle of international law that they travel on the surface. At times it has been demonstrated that that rule is not always observed. There was the case in 1981 of a Soviet submarine which was discovered in Swedish waters. Can the noble Baroness say whether such a violation of international law occurs frequently and whether there are grounds for believing that firmer and further action should be taken to deal with such matters?
Lord Campbell of Croy: I was going to inquire when I rose to speak whether we should be taking

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Amendment No. 2 for discussion at the same time as Amendment No. 1, which has been moved by the noble and learned Lord, Lord Denning. As that is the case, I shall also speak to Amendment No. 2; I think that that course will be for the convenience of the House, particularly as the noble Lord, Lord Cledwyn, has just done so.
I have read and studied the amendments tabled by the noble and learned Lord and I have listened to what he has said. I agree in principle with everything he has said. However, I hope that when my noble friend Lady Young replies, she will be able to tell us that it is not necessary to add these new clauses to the Bill, that the Bill will have the effect when enacted of extending to 12 miles the present three-mile territorial sea and that everything which applies to the territorial sea now will apply within the new 12-mile territorial sea.
Furthermore, I hope that my noble friend will tell us that the Bill as drafted implies that the rules and conventions accepted by the principal maritime nations for the territorial seas of the world will continue, but that they will in future obtain over the much broader band of 12 miles.
The noble and learned Lord referred to the submarine incident reported in the press today. The important point seems to me to be whether that submarine was submerged within the territorial sea of either the United Kingdom or the Irish Republic. Provided it was outside three miles, which is the territorial sea for both the United Kingdom and the Irish Republic at present, then it has not committed an offence by being submerged if it was 10 miles from land, as was reported.
The noble Lord said that the incident had been reported by the press to have occurred 10 miles from the Isle of Man. I should point out that the Bill does not in fact automatically include the Isle of Man. In Clause 4 it states that the territorial sea may be extended in due course to the Isle of Man. However, I agree with everything that the noble and learned Lord has said, in that if the territorial sea had been extended to 12 miles by this Act a year or two before the present time, then that submarine should not have been submerged. Nevertheless, from all the reports in the press it appears that under the present circumstances no offence was committed.
The noble and learned Lord referred in his speech to the law of England. I absolutely understand that because he has been working in his very distinguished judicial career in that jurisdiction. However, I am concerned about the fact that the Bill will extend the territorial sea and therefore the jurisdiction of Scotland and Wales under English law and Northern Ireland, which is also covered by this Bill.
As regards the question of the seabed, I should like to ask my noble friend to confirm that the territorial rights to the seabed apply under the territorial sea, so that we shall possess sovereignty over the seabed up to 12 miles which we have enjoyed up to now to a limit of three miles. However, we have rights beyond that limit. We have rights to hydrocarbons below the seabed on the Continental Shelf. We are drilling for oil and gas, and producing them, because we have rights under international agreements well beyond the
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territorial sea, but we do not claim ownership of the seabed there. We have rights to the hydrocarbons and minerals in the seabed, although we do not claim ownership of the seabed.
If I may turn now to the second amendment containing the other new clause, I understand the situation as it exists now in the three-mile territorial sea is very much what the noble and learned Lord has referred to in his drafting. I should perhaps have a small argument about the word "ships" because nowadays there are fishing boats, mobile drilling rigs and other things which ought also to have the right of innocent passage. Therefore, perhaps "vessels" or some such word should be used. Here again I hope that my noble friend will say that this amendment is not necessary because the purpose of this clause is already understood all over the world among the maritime nations as applying within territorial seas.
I should like to go a bit further on that matter. Sometimes there is confusion between the right of innocent passage, which is within the territorial seas, and the right of navigation through international straits. During the Conference on the United Nations Convention on the Law of the Sea, Britain and other countries tried to get arrangements for transit passage regimes through straits such as Gibraltar, Malacca and, in our own case, Dover and the Fair Isle gap. There are different rules applying under those regimes provided they are reciprocal. For example, it is possible for submarines to go through such straits submerged, and there are also various other differences of that kind. Therefore, I hope that my noble friend will be able to tell us something concerning that matter. Are we prepared to give those additional navigational transit rights through the Straits of Dover once the 12-mile limit is extended, and are we sure that we shall be able to get the same rights in straits which are not only important to our commerce but also to our defence? France already has a 12-mile limit, so the Dover Straits would be covered by territorial seas. That is perhaps more important than the right of innocent passage which is already accepted pretty well worldwide.
I conclude by saying that I agree in principle with what the noble and learned Lord, Lord Denning, has suggested but I cannot see that the amendments are necessary. If they were put into the Bill it might even be confusing to those who thought that this already existed.
4 p.m.
Baroness Young: In moving Amendment No. 1, the noble and learned Lord, Lord Denning, said that he would speak to both his amendments. With the leave of the Committee, I shall take advantage of this opportunity and reply to both amendments at the same time. I was very glad to hear from the noble and learned Lord that he supports the purpose of the Bill. I have studied with great care the amendments that he has put down and I hope I can show that we can cover the points he has raised. Perhaps I may also say that I am grateful for what my noble friend Lord Campbell of Croy has just said because I agree with his interpretation of the Bill.
On the first amendment, the sovereignty of the United Kingdom has been clearly established in the

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international practice of this country by its ratification of the Territorial Sea Convention 1958, a point referred to by my noble friend. That convention confirms that sovereignty extends to the seabed and air space. This position is reflected in our national law where this country has exercised its sovereignty by legislation on many questions on territorial waters and also on the seabed, such as for the protection of wrecks, the protection of ancient monuments, the protection of pipelines and the protection of the coast from erosion. Indeed the Court of Appeal has also recognised it in the case of the Post Office v. Estuary Radio. In the same way our legislation on air navigation and the use of air space has been extended where appropriate to cover the air space over the territorial sea as well as over our land territory.
The noble and learned Lord quoted the case of a United States submarine. The submarine was not as far as we know in territorial waters. It is therefore not the case that the submarine did not have the right to travel submerged.
The noble Lord, Lord Cledwyn, raised a number of points. The amendments would not affect the position in international or national law. The law which we have established in the Territorial Sea Bill will apply in the extended area of air space without the amendments. I hope that I have made this fact clear.
The second subsection of the first amendment refers to the Territorial Waters Jurisdiction Act 1878. I do not see that it is either necessary or desirable to alter in substance the wording of the Bill. Criminal offences have been created by law in the air space or on the sea bed when the need for them has arisen. A general alteration or reform in the criminal law of the territorial sea would require further consideration of air space unconnected with the extension of limits which is the sole purpose of this Bill. This is a very important point which the noble and learned Lord made himself early in his remarks. To broaden a single provision of the Bill on the lines of the amendment would not produce a satisfactory result. Its effect on other criminal law would certainly have to be further considered. We should not and need not delay this Bill while such consideration is undertaken.
I note that this clarification was not thought necessary with a three-mile limit, and I do not therefore see that it is any more necessary with an extension to 12 miles. With that explanation, which I trust meets the noble and learned Lord's concerns, I hope that he will withdraw his first amendment.
His second amendment is concerned with the right of innocent passage. This country has already recognised the right of innocent passage in the territorial sea. It has done so on many occasions. The clearest example lies in its ratification of the Geneva Convention on the Territorial Sea 1958. Article 14 says that,
"ships of all states, whether coastal or not, shall enjoy the right of innocent passage through the territorial sea".
It is evident that it was not thought necessary to adopt legislation on this point at that time.
On the particular point raised by the noble and learned Lord and indeed by the noble Lord, Lord Cledwyn, about submarines, I can assure both noble Lords that we already have the right to require
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submarines to travel on the surface. With those explanations, I hope that the noble and learned Lord will feel able to withdraw his amendment.
Lord Denning: Perhaps I may make this observation. If it is said that this is already part of international law, I would respond that at the moment international law does not say how wide the territorial waters are. If there was an incident in an area between three miles and 12 miles, what does international law say? Is there jurisdiction over those intervening nine miles? International law can say nothing about it because international law does not say that the limit is 12 miles. At the moment, international law extends to three miles. Other countries have not agreed to 12 miles. International law as at present understood does not cover it. It does not cover the position between three miles and 12 miles. I have drafted these clauses absolutely word for word from the conventions. No one can really challenge them. I spoke of the submarine incident. That is right. At the moment the territorial waters are only three miles. This incident took place 10 miles out. If this Bill is passed and the limit is extended to 12 miles, what will be the position? I wish it to be said—and that is why I tabled the amendments—that this country will have jurisdiction and sovereignty to deal with an American submarine of this kind, will be able to say that it should go on the surface flying its flag and that it should not go underneath the water, submerged and able to go hitting trawlers.
In answer to the arguments, I say that it is not to the point to argue that this is already covered by international law. At the moment international law covers only the three-mile limit. It does not cover the 12 miles to which we are extending it. That is my submission. I do not feel inclined to withdraw the amendment at the moment. I should like to know whether other Members of the Committee have any views on the matter.
Baroness Young: I hope that the noble and learned Lord will consider very carefully before he decides to press this amendment. I hope that I have explained the position. I should like to make clear my firm advice on this point that international law covers the new limits. It does not lay down the extent of this limit in each case. As I said at Second Reading, almost all countries have recognised a 12-mile limit. If we were to go down the path that the noble and learned Lord is suggesting, we would be doing something which we have not felt it necessary to do under the three-mile limit. We do not therefore see any reason for doing this on a 12-mile limit because the same arguments that apply to the three mile limit will apply to the l2-mile limit. We should therefore be creating other complications within the Bill. Perhaps I may remind the Committee that the Bill was welcomed on all sides of the House. It has been a matter on which we have wished to legislate for some considerable time and its purpose is to extend the territorial limits. It is not concerned with the regime within those limits.
Lord Campbell of Croy: As we are in Committee, it may be helpful to the noble and learned Lord if I speak as briefly as possible once on both amendments.

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The noble and learned Lord was talking about a 12-mile limit not being enshrined in international law. He will not have had the time to follow, as I and other noble Lords did at the time, the conference that went on for six or seven years on the United Nations Law of the Sea Convention. Had that convention been accepted by everybody, as the 12-mile territorial sea was enshrined in it, it would have been international law.
It was a quite different matter that caused the breakdown and the fact that the Americans were not prepared to sign that convention—all to do with deep sea mining a long way from anybody's shores. The fact that the limit is not technically international law does not mean as much as the noble and learned Lord suggested, because virtually the whole world agreed to the 12-mile territorial sea. If it had not been for that accident, it would now be in a convention agreed by virtually the whole world.
Lord Denning: I thank everyone for their comments. In view of what has been said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 2 not moved.]
Lord Beaverbrook: This may be a convenient moment to take the Statement. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Rover Group
4.11 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, with the leave of the House, I shall now repeat a Statement being made in another place in connection with the Rover Group. The Statement is as follows.
"With permission, Mr. Speaker, I should like to make a Statement concerning the Rover Group.
"I am pleased to be able to announce today the Government's approval of the Rover Group's 1987 corporate plan. The plan is reviewed annually to cover a rolling period of five years ahead; the strategy in this plan, which relates to the period 1987 to 1991, will evolve in that period to meet market developments. In accordance with usual practice I am today placing in the Library of the House a summary of the plan, excluding commercially sensitive details.
"The plan sets out a positive course for the continuation of Austin Rover as a major producer and luading exporter of cars made in Britain. The prowramme of model collaboration with Honda will be taken forward with a new medium-sized car, AR8, for which a manufacturing agreement should shortly be concluded. The future relationship between the companies will of course continue to develop in the light of experience, but it is the intention of both companies that the relationship should be a long-term one and should endure beyond the life of existing design and production contracts. The Government very much welcome
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this joint intention to continue to strengthen links in the future.
"The corporate plan provides for the new K series engine to be taken forward to full production and used in Austin Rover's smaller engined cars. This engine will equip the company for the next decade with a new high economy engine designed to meet new emission controls and will also make a major contribution to Austin Rover's strong presence in the small car sector which, with the planned further development of the model range, is a vital element in the company's marketing plan.
"Turning to Land-Rover, the plan takes account of the launch of Range Rover in the United States this year which will be a major step in diversifying Land-Rover's market base.
"On the commercial vehicle businesses my honourable friend, the Minister of State for Industry, told the House on 13th January that the sale of Leyland Bus to a management buy-out had been completed. I told the House on 2nd December that Rover Group was also holding commercial discussions with DAF in relation to Leyland Trucks and Freight Rover, and separately with Paccar in relation to the trucks company. Following these negotiations, Rover Group and DAF have proposed that Leyland Trucks, DAF Trucks and Freight Rover shall combine to form a new Anglo-Dutch joint venture.
"As recommended by the Rover Group board, the Government have accepted these proposals which create a company with the capability to achieve a major presence in the European commercial vehicle market. The agreement will also include the associated parts operations and certain overseas operations. These proposals build upon important existing distribution links between companies. Rover Group will take a 40 per cent. shareholding in the new grouping based on the value of the assets they bring to the merged operations and will have board representation. DAF will hold the remaining 60 per cent. Market conditions permitting, it is the firm intention of Rover Group and DAF to float the company within two to three years.
"Within the joint company Freight Rover, which is planning to invest in a major model replacement programme, will continue to manufacture vans at its Common Lane site in Birmingham. Leyland will continue as the focal point for truck manufacture in the United Kingdom, and I expect the Albion plant to have a continuing role in the joint operation as a producer of axles.
"These decisions take place in the context of severe overcapacity in Europe. As I made plain in my Statement in December, all the commercial options open to Rover Group in relation to the trucks business would involve significant rationalisation and restructuring, with inevitable job losses. I regret these. The Scammell plant at Watford will be closed and its production transferred to Leyland. The engine and foundry plant at Leyland will not be part of the new company and activities will be gradually run down for closure by the end of 1988. Some 1,700 jobs will

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be lost through these closures and a further 560 through slimming of the Leyland and Albion operations. Employment levels at Freight Rover are expected to be maintained.
"I believe that this agreement offers the best prospect of building a secure long-term future for Leyland Trucks and Freight Rover, and the House will be pleased to know that the plan developed by the two companies envisages significant expansion of truck production at Leyland, including for export, and an important expansion of the export of Freight Rover vans.
"As part of this restructuring the Government intend to write off the accumulated debts from Leyland Bus and Leyland Trucks left in Rover Group and the restructuring costs resulting from their sale. The Government have notified the European Community Commission of this intention and the normal procedures are in train. The Government intend to provide up to £750 million for this purpose. I am laying an order today under the Industry Act 1980 and Rover Group will hold a general meeting in March.
"The proposals which I have announced today will strengthen both Rover Group and the vehicle industry in this country. Success now depends on achievements in the market place. Mr. Day has focused sharply on the need for commercial success in recent months and I am encouraged by news that Austin Rover's market share so far this year is sharply up on that of recent months. With new marketing initiatives increasing sales, recent successes in the fleet market, such as the orders by major car rental companies, and the launch of the Sterling and Range Rover in the United States this year, Rover has the opportunities and skills to succeed.
"In short these proposals will give the go ahead to Rover Group's corporate plan, safeguard the manufacture of trucks within the UK in the context of a new European joint venture, and free Rover Group from the accumulated debt of the truck and bus businesses."
That concludes the Statement, my Lords.
Lord Williams of Elve:: My Lords, the House will be most grateful to the Minister for repeating the Statement made by his right honourable friend in another place. The Statement leaves certain questions unanswered and announces what we on this side of the House would regard as sad news. Perhaps I may ask the noble Lord certain questions that seem to be unanswered.
Are we to take it from the corporate plan that the Government have now approved that Rover will continue as a volume car producer with a full range? In asking that question, I very much hope that the reply will not be that the Rover corporate plan is just to slim down the operation in the short term for reasons of privatisation. Are the Government ready for the long haul?
We are pleased that the Government have abandoned their plans to sell Land-Rover abroad. Are those plans now buried for good? Or is it still possibly
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on the agenda that Land-Rover might be part of some other deal which this Statement does not mention?
I turn now to the commercial vehicle business. This, indeed, is a major shake-up and there is, as the Statement says, bad news for the communities in the North-West and probably in the West Midlands, too. Why was Freight Rover included in the DAF deal when it was not included in the deal with Paccar? Was it put in as a sweetener, or was there some commercial justification that we do not know about?
Is the noble Lord the Minister aware that the proposals outlined in the Statement do not, in fact, constitute a joint venture? It is a 40–60 company where control remains with DAF. What assurances can the noble Lord give, first, about the powers of the Rover directors on the new board and, secondly, about the shareholding of the company after it is floated, as is the firm intention according to the Statement? Will the noble Lord also tell the House what will be the effect on component manufacturers, other than Albion which is to be included in this particular transaction?
The worst news comes, of course, in the destruction of the engine and foundry plant at Leyland. Will the noble Lord tell the House what the Government feel will be the effects on the community in the North-West arising from the loss of some 1,700 jobs immediately and a further 560 jobs through the slimming of various operations? Does the noble Lord really believe that the Leyland workforce, which has been a dedicated workforce and has soldiered on throughout the years, will accept those losses happily and conveniently?
I turn now to the last part of the Statement. What guarantees can the noble Lord give the House that the manufacture of trucks within the United Kingdom will be safeguarded? Is there any provision in the agreement with DAF to safeguard that? It will not surprise the noble Lord to know that we on this side of the House feel that it is another example of industrial retreat. It will have a serious effect on the communities involved and a serious effect on the morale of the workforce and those who have served loyally in this industry. Will the noble Lord please take on board the fact that these are areas where we must have a proper sense of industrial renewal and purpose and not simply sell our businesses out to the nearest bidder?
Lord Diamond: My Lords, on behalf of these Benches, I offer our thanks to the noble Lord the Minister for repeating the Statement. May I say immediately that we welcome those parts of the Statement which broadly we can call good news and we do not need, therefore, to ask further questions on those matters. We must concentrate on the proposed merger which has very unhappy possibilities attached to it.
Before I come to the major difficulty, I have one or two minor questions to put to the Minister. These relate, first, to the share of directors. We are told that it is a merger based on the respective value of the assets. We understand that very well. As a result, there will be a shareholding of 40 per cent. and 60 per cent. and there will be board representation for Leyland. Can we be told what that board representation amounts to in the first place? What will be our share on

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the board? How many directors will Leyland have? It is the board which makes the decisions and runs the business, and we are therefore very interested in that angle.
The estimate is that some 2,260 jobs will be lost. That is bad enough, but much larger figures have been suggested. Therefore, I want to know whether the Government consider that this figure covers not only the immediate losses but also losses, say, over the next five years resulting from this decision. Does the figure include not only losses of those directly employed but also the indirect losses relating to the component and other manufacturers who serve Leyland and who will be affected by this?
If it is a merger where both sides are putting in their assets, how many job losses are contemplated in Holland? Surely it is not the case that there will be sacrifice on only one side. One side is composed of two companies and the other side of one company, but there are simply two sides. Surely it is not the case that each side should put its assets into this merger and as a result there will be an immediate loss of 2,260 jobs in the United Kingdom and no loss of jobs in Holland. That cannot be a merger, can it? That is a one-sided sacrifice. We want to be absolutely clear on that point.
Going beyond that, the Statement, which is set out in very clear terms, states that discussions have been going on with DAF—that is, the Dutch company—in relation to two groups: Leyland Trucks and Freight Rover. There have been separate discussions with Paccar, the American company, relating only to the trucks group. Therefore, these discussions are not comparable. The bids which have been put in for one cannot be compared with the bids which have been put in for the other. We are talking about two separate sets of negotiations.
We are told which set of negotiations it is proposed to accept. I ask, why? What has happened to the negotiations with Paccar? That is a large, profitable American company which already owns Foden in the United Kingdom. I am told that Paccar states that there will be no job losses if it takes over. It has also held out the prospect of selling more than 3,000 Leyland trucks in the United States—the seven-and-ahalf-tonne truck which I believe is called the Road Runner. Therefore, on the face of it the Government have very good reasons for negotiating with the American company for the same deal that they have negotiated with the Dutch company. Why have the Government offered one deal to the Dutch company and something else to the American company and then proposed to come to terms with the Dutch company only? On the face of it, there are very good reasons for negotiating to a conclusion with the American company.
I do not know the answers to those questions and it is for the Government to give them to us. It is for the Government to tell us why they have not proceeded with negotiations with both parties for selling the same two things. If for some reason they have not done so, perhaps I may suggest very strongly to them that they should not finalise the negotiations with the Dutch company until they have pursued negotiations to a conclusion on the same basis with the American
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company. We should then know which was the better deal. Until that has been done I think that the Government should completely postpone coming to a final conclusion on this deal.
4.30 p.m.
Lord Lucas of Chilworth: My Lords, I am most grateful to both noble Lords for their reception of this Statement. I shall certainly do my best to answer the main questions that have been put to me.
Let me say straight away that as regards the Rover Group corporate plan, the Rover Group and Austin Rover will continue with a full range, commensurate of course with the market place and the commercial decisions of the company. I think that it is a little mischievous of the noble Lord, Lord Williams, to suggest that the acceptance of the corporate plan by the Government, as I set out when repeating the Statement, is in any way related to other events that may come to pass over the next few months.
I turn to the point that was raised by both the noble Lords, Lord Williams and Lord Diamond, concerning the two transactions and the relationship with Paccar. It is true that Paccar is a substantial company with whom the Rover group negotiated, but it was Paccar which decided that it did not wish to negotiate on the basis of the truck business and Freight Rover, whereas, on the other hand, DAF wished to do so.
Perhaps if I may answer the question from personal experience in that highly competitive business, van and truck go together neatly. Van on its own would not be acceptable, so there is no question of not comparing like with like. One was looking—as indeed the Rover Group was looking—at the best possible deal that could be made for the truck and the Freight Rover van business. Undoubtedly the new joint company will open up great opportunities for Leyland, particularly in the light truck area and more particularly in that of van, in that it will be able to move into a very much larger market place, where DAF is already established and where Leyland Trucks and Freight Rover do not have an established distribution.
I cannot possibly accept from the noble Lord, Lord Diamond, that there should be any postponement of this decision. We have been talking about the decision for many years now. That brings me rather naturally to the last question that was asked by the noble Lord, Lord Williams, as to why we are doing this and his suggestion that it is absolutely an industrial retreat. It is not an industrial retreat at all. It is a structural solution to a structural problem that has been with the commercial vehicle market for many years, and it has to be set against a world overcapacity as well as a European overcapacity. This joint company will strengthen both the Dutch company and our own in meeting the competition that lies ahead.
As regards the question of the 40:60 relationship, I think that the noble Lord, Lord Williams, suggested that those two figures showed an imbalance. It is a joint company. Let there be no mistake about that. The Rover Group will be represented on the board of the new joint company by the Rover Group chairman and the finance director. They are there representing a major shareholder with 40 per cent.

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Some component manufacturers may be affected in the short term. However, we believe, as does the Rover Group board, that the new joint company will offer greater opportunities. There is already evidence that Freight Rover production will be increased. We believe that there will be greater opportunities and that in the longer term there may well be further job opportunities.
The noble Lord asked me about security in the long term. I believe that the sacrifice that is being made today, the inevitability of which has for some years been evident to all who have studied this market, will secure in the long term a viable commercial vehicle operation based in the United Kingdom and employing a lot of United Kingdom people. As noble Lords will recall from when this matter was discussed in 1985 and last year, it is the long-term viability of this section of the automotive industry that we have been seeking to secure. We believe that this joint company will do that. DAF has made it clear that it intends to continue with production in this country and I have no reason to suppose that it will not do so.
I think that I have answered the question on job losses from the noble Lord, Lord Diamond, and his questions on Paccar.
Lord Tordoff: My Lords, I do not think the Minister has quite answered the question put by my noble friend about how many job losses there will be in Holland.
Lord Lucas of Chilworth: My Lords, I do not know the answer to that question. I do not think that there is any relationship whatsoever. The interest that the Rover Group and the Government have kept to the forefront is the interest of our commercial vehicle industry. We know that there will be some job losses. Let me say quite bluntly that whatever may be the position in Holland, had we not concluded the negotiations (which had been going on for a long time), inevitably there would have been very many more job losses in the United Kingdom, because the truck industry, as represented by Leyland, could not have been sustained in the face of the competition in view of the overcapacity in the market place. I believe that there is a net gain for the work people in the truck industry in that there is a secure and viable future for them. I have suggested—and I believe—that the expanded market and the greater opportunities that are offered will in their turn give further job opportunities in the industry.
Lord Williams of Elvel: My Lords, I must press the Minister on two questions. He accused me of being mischievous about the privatisation plans which may lie behind the Rover corporate plan. Is not he himself being less than frank? Is he now saying that the corporate plan has been devised not for the purposes of privatisation but for the purposes of ensuring that this company will remain in the public sector?
Secondly, the Minister commented on the question put by the noble Lord, Lord Diamond, about job losses in Holland and so forth. He has accepted that control of the joint venture—I repeat, control—will be with DAF. As any commercial animal will know—and the Minister is a commercial animal—it is
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the controlling shareholder who makes the commercial decisions at the end of the day. Any assurances that may be given now or any ideas that the Minister may put forward to this House, failing proper guarantees, can be overruled by the controlling shareholder. That is the fact of the matter.
Lord Lucas of Chilworth: My Lords, with regard to the privatisation of British Leyland, the Government have never made any secret of the fact that it is their intention to return that company to the private sector as soon as practicable. That remains the Government's stance.
I said that the noble Lord, Lord Williams, was being a little mischievous; I think that he was drawing a red herring when he referred to the control of the new joint company. I have said how it is to be set up. I have said that it is the firm intention of both partners in this joint venture company to float it within the next two or three years. I do not know, and nor can I tell, how the shareholding will then fall. Notwithstanding what the noble Lord says, it must be in the long-term interest of those employed in the truck and van industry in this country to have an arrangement such as this, and so relieve British taxpayers of the necessity to pour ever more money into a loss-making company, an operation that loses about £1·5 million a day. We and the Rover Group board believe that this arrangement will lead to the best opportunity for the continuance of a truck-and van-building business in the United Kingdom.
Lord Hatch of Lusby: My Lords, the noble Lord has spoken of wider markets, jobs and over-production. Does this new merger have any plans to re-open the Bathgate British Leyland works which were shut two years ago because the Nigerians were unable to purchase the lorry kits that were being manufactured at that plant? He talked about over-production. Is he aware that there is gross under-production of the trucks which are needed in many parts of the third world, particularly in Africa, to transport food to those who are dying from starvation? Can he give the House any assurance that the work British Leyland was doing to provide Nigeria with the trucks it needed to save those lives will be resumed under this new arrangement?
Lord Lucas of Chilworth: My Lords, there are no plans, or none that I know of, to re-open the Bathgate plant. With regard to wider markets, it is for this new Anglo-Dutch company to decide in which markets it wants to engage. I understand the concern of the noble Lord, Lord Hatch of Lusby, about the humanitarian aspects and the inability of some countries to transport food aid because of the lack of trucks. I suggest that that is well outside the area of the Statement and the setting up of a joint company. It is for that joint company to make its commercial decisions about the world markets that it will tackle.
Lord Diamond: My Lords, I thank the noble Lord for some of the answers that he has given me which go some way, but not the whole way, towards answering the questions that I have asked. We are anxious to know whether this is a merger or a takeover. Let me be precise. The noble Lord said that we will have two

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directors and 40 per cent. of the shares. Can the noble Lord say whether DAF will have three directors in proportion to the shareholding, 2:3? That will confirm that it will have a majority on the board and a majority of the shareholding, and so what the noble Lord, Lord Williams of Elvel, has suggested is therefore right.
We also want to know the position with regard to job losses in Holland. If there were a proportionate sacrifice as well as proportionate assets, there would be over 3,300 job losses in Holland. Surely the Minister knows whether the Dutch company has said that it is prepared to adjust production proportionate to the assets (as takes place in a normal merger) and will therefore allow production to fall in Holland to the extent of 3,300 jobs. We want to know whether it is a merger or whether once more the Government are hauling down the Union Jack.
The noble Lord said that Paccar was not prepared to make an offer for the two groups for which DAF was prepared to make an offer. With all respect, I ask the noble Lord to check his Statement. He will be embarrassed if Paccar puts out a statement that it is prepared, and has been prepared ever since it knew that two groups were on offer, to enter into negotiations to purchase on better terms the same articles as DAF is purchasing.
Lord Lucas of Chilworth: My Lords, I thought that had made it clear that this is neither a takeover nor a merger. This is a new company; 40 per cent. of that company will be United Kingdom owned and 60 per cent. will be Dutch owned. We shall have representation on the board. It is a new joint Anglo-Dutch company. I should have thought that the noble Lord would be pleased that we have been able to secure an agreement for the reasons that I have described with one of our European partners. It will help us enormously to secure our share of the European truck and van market. The other matters that he raised are commercial decisions for the board of the new company. It is not for Her Majesty's Government to tell it in which areas it should engage. That is precisely the point of encouraging the new company.
I have answered the point about Paccar. At the time of the negotiations, Paccar was not interested in the van business. What was being negotiated and the assurances that Paccar gave, set against what the new joint company was offering, caused the Rover Group board to believe that the new joint company was in the best interests of those engaged in the business. That was a decision with which Her Majesty's Government agreed.

Territorial Sea Bill [H.L.]
4.48 p.m.
House again in Committee.
Clauses 2 and 3 agreed to.
Clause 4 [Short title, commencement and extent]:
Lord Campbell of Croy Lord Campbell of Croy moved Amendment No. 3:
Page 3, line 37, leave out from ("on") to end of line 39 and insert ("1st January 1988").
The noble Lord said: This is a probing amendment. The Committee will recall that I mentioned this point on Second Reading. In the comprehensive reply that my noble friend Lady Young gave to that debate she did not have time, in response, to say when the Government intend that the Bill, if enacted, should come into force.
As far as I can see, the Bill should pass through Parliament without delay. I should be surprised if it is not enacted before the Summer Recess. Under Clause 4 the Bill can be brought into effect at any time after that on the advice of Ministers. I understand—and my noble friend mentioned this in her Second Reading speeches—that there is some urgency with regard to the Channel Tunnel and that the Government think it would be convenient that the territorial sea should be extended to 12 miles in good time. However, should there be some unforeseen delay over the Channel Tunnel—I shall not raise all those points—will the Government nonetheless still be wanting to bring the Act into force at an early date? I should be grateful to hear from my noble friend what the Government's intentions are.
If one looks at Clause 4, it is drafted so that different parts of the Bill can be brought into force on different dates, again on the advice of Ministers. I should be grateful if my noble friend, when she replies, could also indicate why that should be necessary and what parts of the Bill the Government think would need to be brought in at different times. This is a probing amendment to enable the Government, having been given notice of some days, to tell us what their intentions are about bringing the Bill into force after it has been enacted.
Lord Cledwyn of Penrhos: I have a little sympathy with the purposes of the amendment moved by the noble Lord. I would be interested to hear from the noble Baroness why a date for the initial Order in Council putting the Bill into effect cannot be included in the Bill itself.
I wonder whether the noble Baroness can also clarify another point in connection with Clause 4(2). Does it mean that orders under Clause 3(2) do not have to be made at the same time as the initial order putting the Bill into effect? If that is the case, then it is understandable that flexibility in making orders is necessary.
Baroness Young: May I say at once to my noble friend Lord Campbell of Croy that I share entirely the aim which lies behind the amendment that he has moved. I should like to give him, and indeed the noble Lord, Lord Cledwyn, the assurance that our intention is to bring the whole Act into force at the same time subject to the making of any necessary secondary legislation to deal with technical matters. In practice, I am advised that this is likely to take place some two months after Royal Assent. I would therefore hope that it would be well before January 1988. That is the point that both my noble friend Lord Campbell and the noble Lord, Lord Cledwyn, wanted to hear. I hope very much that that will be the case. It is not in any event dependent upon what might happen over the Channel Tunnel. The Bill stands on its own. I can give that assurance.

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On the other specific point that the noble Lord, Lord Cledwyn, raised—I shall write to him if I am not correct on this point—flexibility is often written into a Bill because it may be affected by the subordinate legislation. However, our intention is that the whole of this will come in as soon as possible after Royal Assent.
Lord Campbell of Croy: I am grateful for the interest and support of the noble Lord, Lord Cledwyn and also for the very clear reply which my noble friend has given. She and other members of the Government will know that I have been urging the Government over several years to introduce a Bill of this kind. It is very good news to know that despite what may happen to the Channel Tunnel or other matters, it is their firm intention to make sure that the Bill comes into force as soon as is reasonably practical after it has been enacted. With that, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Schedule 1 [Minor and consequential amendments]:
Baroness White Baroness White moved Amendment No. 4:
Page 5, line 23, leave out ("three") and insert ("twelve").
The noble Baroness said: This is a very modest little amendment. It is simply to extend to designated nature reserves the possibility, without having to go through an Order in Council, of being within the 12-mile limit instead of within the three-mile limit.
As I explained on Second Reading and as I have had confirmed in correspondence with the Nature Conservancy Council, there is no immediate prospect of designating nature reserves outside the existing three-mile limit. On the other hand, I hope that we are legislating for some time to come, and if there are innovations, as I have suggested, in diving techniques and so forth, there is at least a possibility that later it might be desirable for designations to take place beyond the three-mile but within a 12-mile nautical limit.
I should perhaps explain to any Member of the Committee who is not aware of it that a marine nature reserve is not simply constituted by a decision of the Nature Conservancy Council. Any such reserve has to be designated by the appropriate Secretary of State—for the Environment, for Wales or for Scotland, as the case may be. There is therefore no risk of some unsuitable area being designated. It is perfectly adequately controlled.
The Nature Conservancy Council itself says that it is not aware of the Government's reasons for this provision and that in its view, while nothing immediate is likely to impede any designation, the Order in Council route "seems to be a complication". I am asking the noble Baroness to agree that we bring this matter within the ambit of the Bill as a whole and do not place an unnecessary restriction, as it appears to me, in legislation if we do not need it. I beg to move.
Lord Cledwyn of Penrhos: The question of why marine reserves were not to extend to 12 miles along
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with the extension of the territorial sea limit raised a number of comments during the Second Reading of the Bill. My noble friend Lady White, the noble Earl, Lord Cranbrook, and myself mentioned this issue when we spoke at that time. The noble Baroness, Lady Young, was sympathetic in her response. She explained that there was not sufficient data to say whether a 12-mile limit would be necessary and that if it were found to be so, then an Order in Council could be used to extend the limit. Clearly, not all Members of the Committee were entirely satisfied by the answer of the noble Baroness. Indeed, while there is some apparent merit in the argument, it is still not absolutely clear why there should not be such an extension.
In order not to detain the Committee I shall put the following short questions to the noble Baroness. First, what would be the effect of extending the limit in this context? Secondly, when does the noble Baroness envisage there being sufficient scientific data if it is possible to make a calculation of that kind at this stage? Thirdly, what programmes exist to allow the acquisition of all this necessary data? Finally, if the noble Baroness is to delay the extension of the limit, then the Committee must be assured that every effort is being made to see that the delay will be no longer than is absolutely necessary.
5 p.m.
Baroness Young: May I say in response to the amendment that has been moved by the noble Baroness, Lady White, that I am very glad of the opportunity to make clear that the proposed power by Order in Council to extend the area for marine nature reserves is not intended to be restrictive. Of course in preparation for this Committee stage I did look again at what the noble Baroness, Lady White, had said at Second Reading, as well as my noble friend Lord Cranbrook and the noble Lord, Lord Cledwyn, and I understand their concern. What I believe the noble Baroness said in moving her amendment—I did make a note of her words—is that she did not think that at the present time there was any immediate prospect of designating nature reserves outside the three-mile limit. Indeed, my understanding is that the Nature Conservancy Council itself is not pressing for the immediate extension proposed in the amendment. The fact is that, as she herself said, an extension may be needed later on, and we share the noble Baroness's quite justifiable concern for conservation, But we believe that it is prudent to await more information on the three-to 12-mile area before extending the limits.
The noble Lord, Lord Cledwyn, asked me a number of detailed questions about what may be happening. I believe—and I trespass here in a world that I am conscious many are much more familiar with than I am—that there is still, as I said at Second Reading, considerable discussion about the nature reserves within the three-mile limit. I believe one has been designated at Lundy, and others are under discussion. The reason why they are under discussion is not that there is unwillingness about this, but because, as is so often the case in these matters, there are various views which have to be taken into account before a decision can be reached. As far as I know, there is not a set date by which there will be sufficient scientific data

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concerning the extension from three to 12 miles, nor is there any particular programme in existence. My understanding of the position is that a number of nature reserves within the three-mile limit are currently being considered. When those are agreed, or not, as the case may be—and more need to be considered—then the way the Bill would operate is that there would be an Order in Council to extend the territorial sea in order to meet this consideration.
So I hope very much—for we are all agreed about the importance of this, and we believe that we have the necessary mechanism—that the noble Baroness, Lady White, will see that there is no difference in principle; it is really a question of timing. The fact is that the Nature Conservancy Council has not been able to make a great deal of progress on its marine conservation review, and it will be some years yet before we can determine the nature and characteristics of arrangements for deeper waters.
If I may sum up, we do not rule out an extension, and certainly intend to look at any proposals. The Bill in its present form makes prudent provision for action at the appropriate time. I hope therefore that with that explanation the noble Baroness will feel able to withdraw her amendment.
The Earl of Cranbrook: Before she sits down, may I ask my noble friend whether she knows of any real scientific objections to allowing full freedom to establish marine nature reserves within the 12-mile limit?
Baroness Young: The noble Earl, Lord Cranbrook, will know I am sure far better than I do myself, because he is very familiar with the detail of this, that there has been much discussion on the nature reserves within the three-mile limit. There are many matters that need to be considered. I do not in any way wish to make some excruciating pun about going into difficult waters, but I believe fishing is one of the issues that need to be considered in relation to this. One therefore has to get agreement from a number of people before a nature reserve can be established. We have not yet got agreement within the three-mile limit. When it is thought suitable—when at least an area is identified for a nature reserve in the three- to 12-mile limit —then of course we can look at that but we have not yet reached that position.
Baroness White: All I can say is that I am deeply disappointed in the noble Baroness; I thought she had more common sense. What conceivable harm could be done by accepting this amendment? I fail entirely to see why she needs to resist it. As I tried briefly to explain, there is no possibility of any nature reserve, at whatever distance legitimately from the shore, being designated without the full consultation by the appropriate Secretary of State and the various interests which the noble Baroness has very properly referred to. Therefore what conceivable harm would be done to anyone by allowing this extension, forthwith to the legislation which is before us?
The use of the permission to move a little further out in consonance with the general purposes of this Bill is very carefully guarded by the necessary consensus
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which the Nature Conservancy Council would have to obtain. The noble Baroness must know as well as I do what happens in the Civil Service if somebody who does not particularly like what is being proposed is able to say: "Ah, yes, but that would involve an Order in Council". It would act as a possible deterrent to somebody who was perhaps eager to suggest an exercise of conservation in an area which had not been attempted before because we did not have adequate scientific or technological expertise. I cannot see—and I am sure this is an unintentional insult to our intelligence—why the noble Baroness cannot accept in this legislation the suggestion that we add to the Bill, whose purpose as a whole is to extend the 12-mile limit, the possibility—no more than that—that at some time a nature reserve may be established within the 12-mile limit instead of the three-mile limit.
I quite agree with the noble Baroness that consultations have to take place. It was rightly mentioned that within the shallow littoral areas that we are working in now these consultations take an interminable time. But that in itself is no reason why we should not exercise good sense and not discriminate unnecessarily in a restrictive way in the legislation which is before us and which we hope will be effective for many years to come. I am afraid I do not feel disposed to withdraw my amendment.
Baroness Young: Perhaps I may add further to what I said earlier on. The fact is that the Wildlife and Countryside Act of 1981 was drafted with inshore and coastal waters in mind. The machinery which was developed to consider the proposals for marine nature reserves may not be appropriate for areas lying in the wider limit. I hope that the noble Baroness will understand that there may be serious complications, both in shipping and in fishing, to resolve in administering reserves in the more distant areas—issues which we have not really considered fully. As she will know, in consideration of marine nature reserves, it is necessary to balance all the interests—the needs of conservation, but also the rights of access of Community fishermen between six and 12 miles, and the right of unimpeded innocent passage of foreign vessels, which are more likely to make use of deeper waters.
None of these matters is insuperable, but each does need to be considered a step at a time. As we have not already completed our negotiations up to the three-mile limit, it seems better to leave the legislation as it stands with the quite proper provision that, if we want to extend, the machinery is there to do so.
Baroness White: The machinery is there in any case. All that is needed is for the Secretary of State concerned to inform the Nature Conservancy Council —being sensible enough no doubt to consult in advance—and say, "I am very sorry, but you will appreciate that this is not a situation in which I feel able to designate."
Lord Campbell of Croy: Before the noble Baroness concludes her remarks, I should point out that over the years, she and I have been trying to get a Bill such as this introduced into Parliament. Now we have it. As regards the last amendment my noble friend gave us the excellent news that it is the Government's

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intention that the Bill, which will go through Parliament quite quickly, will be brought into effect as soon as possible after its passage. The noble Baroness and I, and many others in your Lordships' Committee, are extremely pleased that that is happening.
I understand the point that the noble Baroness makes. I heard her speak about it at Second Reading and she has done so again today. However, if there are problems which the Government think should be looked into—for example, problems associated with fisheries, shipping and so on—I ask the noble Baroness to accept the great bonus of the Bill and the fact that it will be enacted soon rather than cause the Bill to be held up through the Government having to consider problems which they have put aside to deal with later.
Lord Monkswell: It appears to me that the constraints under which a marine nature reserve would be set up under the three-mile limit must include provision for shipping and fisheries. Shipping does not suddenly occur outside three miles; it occurs inside that distance. Therefore, provision must exist already for shipping and fisheries to be taken into account when determining the area of a marine nature reserve. Surely the same constraints as apply within three miles would automatically apply within 12 miles.
Our concern on the subject is that effectively a great deal of civil service, administrative and government time will be consumed in trying to determine at some later stage whether to go from three miles to 12 miles with regard to marine nature reserves, whereas if we were to accept the amendment, the criterion for judging whether a marine nature reserve should extend between three and 12 miles could be considered under the Wildlife and Countryside Act.
Baroness Young: I very much hope that I have made the position plain. I am most grateful once again for the intervention by my noble friend Lord Campbell of Croy. The fact is that the arrangements in the schedule apply within the three miles, but the position is not quite the same between three miles and 12 miles. For example, the water is deeper, there are more ships and there are more fishermen. The situation is different outside and, therefore, there would be different machinery. Other pieces of legislation come into play. At the risk of being thought not to have any common sense and bearing in mind that we all want the Bill, perhaps I may suggest that what the noble Baroness, Lady White, would like is possible. I hope that she will accept that.
Baroness White: I certainly do not want to hold up a Bill for which, as the noble Lord, Lord Campbell, has rightly said, both of us have been waiting for quite some time. I am still unhappy about the reply which I have received, but I do not wish to press the amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1 agreed to.
Remaining schedule agreed to.
House resumed: Bill reported without amendment.

Prevention of Terrorism (Temporary Provisions) Act 1984 (Continuance) Order 1987
5.15 p.m.
The Minister of State, Home Office (The Earl of Caithness)The Minister of State, Home Office (The Earl of Caithness) rose to move, That the draft order laid before the House on 27th January be approved.[9th Report from the Joint Committee.]
The noble Earl said: My Lords, the draft order has been considered by the Joint Committee on Statutory Instruments which did not comment on it. The provisions of the Prevention of Terrorism Act are temporary in two ways: first, because the Act will not remain in the statute book for more than five years, and secondly, to remain in force during that period, it has to be renewed, in whole or in part, every 12 months. The effect of the order would be to keep the whole Act in force for another year from 22nd March.
Terrorism, which lies at the heart of our debate tonight, is the use of violence for political purposes. That violence may be directed against the forces of law and order, leaders or representatives of the state to which the terrorist is opposed, or ordinary members of the public who happen to be standing by when a bomb goes off. Whatever his targets, the terrorist's primary aim is to bring about political change. But one of his secondary aims is to provoke a government into reacting savagely to his activities so that he can claim that it is oppressive and undemocratic. It is vital, therefore, that in their fight against terrorism, democratic societies use only right and necessary forces and powers, and use them justly and fairly. One of those powers in our own society is the Prevention of Terrorism Act, the renewal of which we are to debate now.
I need hardly remind your Lordships that prevention of terrorism legislation was introduced in 1974 in response to atrocities committed by Northern Irish terrorists on the mainland. Some of the powers available to the Secretary of State under the Act only apply to acts of terrorism designed to influence public opinion of government policy with respect to affairs in Northern Ireland. One of these is the power to proscribe terrorist organisations. Another, about which I shall have more to say later, is the power to exclude from Great Britain, Northern Ireland, or the United Kingdom a person who the Secretary of State is satisfied is or intends to be concerned with acts of terrorism related to Northern Ireland.
In Northern Ireland, the number of deaths from terrorist incidents mercifully declined between the mid-1970s and the beginning of this decade, but it has remained tragically constant for the last four years. The 61 people who died in terrorist incidents in the Province last year testified to the necessity of continuing the campaign against terrorism there. The Prevention of Terrorism legislation continued to play its part in that campaign.
In Northern Ireland in 1986, 1,309 people were detained under the Act; that is, on suspicion of involvement in terrorism. In 483 of these cases my right honourable friend the Secretary of State for Northern Ireland used the power given by the Act to extend the period of detention beyond the 48 hours

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allowed on the authority of the police by between one and five days. On the mainland, 147 people were detained under the Act in connection with Northern Irish terrorism, 37 of them for more than 48 hours.
We are all aware, however, that it is not only terrorists whose objectives centre on Northern Ireland that threaten innocent lives on the mainland. We also have to face the menace of international terrorism. Thus, since 1984, the powers of detention under the Prevention of Terrorism Act have applied to those suspected of involvement in international as well as Northern Irish terrorism. In 1986, 55 people were detained in England and Wales on suspicion of being international terrorists, 20 of them for more than two days.
Your Lordships will understand that I cannot tell the story behind many of these detentions under the Act, either with respect to Northern Irish or to international terrorism. Some of them led to those detained being charged, and the cases are still sub judice. But I should like to refer, as my right honourable friend the Home Secretary did in another place, to one particular instance of action taken against international terrorists under the Act which could not—and I wish to emphasise this point—have been taken against them under any other legislative powers.
Six people of various nationalities were detained in late September and early October of last year on suspicion of membership of Abu Nidhal, an international terrrorist group. Of these, three have now been deported; my right honourable friend the Home Secretary agreed that two should be allowed to make a supervised departure from the United Kingdom; and the sixth is currently detained awaiting the outcome of an outstanding appeal against deportation. It has been suggested by those who believe the Prevention of Terrorism Act is unnecessary in the fight against terrorism that the Immigration Act 1971 provides sufficient powers for the authorities to proceed against international terrorists. I can assure the House that the case of these six demonstrates how mistaken that view is. Five of them had been in the UK for several years, arriving between 1978 and 1984. All were given leave to enter and all of them had valid leave to remain in the UK at the time they were detained: four as students, one as a visitor, and one by virtue of marriage to a British citizen. With one possible exception, they had not contravened our immigration law.
It is true that once the Secretary of State has decided to deport someone, as he did in four of these cases, and they have been served with notice of that intention, the Immigration Act provides a power to detain that person. However, this detention can only be in order to proceed with the deportation, (allowing for any appeal rights); it cannot be used to investigate suspicions about the person detained to allow my right honourable friend the Home Secretary to decide whether or not that person should be deported. Nor, when informaton was received that indicated the six might be members of Abu Nidhal, was it possible to arrest them under the Police and Criminal Evidence Act on suspicion of a particular offence. Thus the police had no alternative but to detain them under the Prevention of Terrorism Act, and indeed it proved
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necessary to do so for the full seven days. We can only speculate on the possible consequences if these six had not been stopped in their tracks. I submit to your Lordships that this case amply illustrates the necessity that the Prevention of Terrorism Act detention power should continue to be available to the police.
No one denies however that this and other powers available under the Act are some of the most serious that can be exercised by the executive in this country. They should only be available to it if Parliament is convinced that there is still a need for such measures in order to combat terrorism, that they are being used properly and that the curtailment of individual liberties is the minimum necessary. This is why the Act has a limited life and is subject to annual renewal. Furthermore, in accordance with an undertaking which the Government gave to your Lordships at the Bill's Report stage, the operation of the Act is subject to annual scrutiny by a person appointed by right honourable friend the Home Secretary, but independent of him.
I am sure that your Lordships would want me to express the gratitude of this House to Sir Cyril Philips, who carried out this scrutiny for 1984 and 1985. He felt unable to continue this task after his appointment as chairman of the Council on Tribunals. The Government are grateful that my noble friend Lord Colville of Culross accepted my right honourable friend the Home Secretary's invitation to succeed Sir Cyril. He brings to this important work not only all the necessary abilities but also a wealth of relevant experience as a practising barrister, a former Minister of State at the Home Office, and a former UK representative on the UN Human Rights Commission.
The report prepared by my noble friend was placed in our Library on 29th January. In preparing his report, my noble friend has visited police forces, especially at air and seaports. He has had discussions with officials in London, Belfast and Edinburgh and there examined files relating to exclusion orders, and to extension of detention under Section 12 of the Act or Article 9 of the Prevention of Terrorism (Supplemental Temporary Provisions) Order 1984. Last but not least, my noble friend has welcomed representations from interested parties, in writing or face to face. These representations were invited by means of a parliamentary Answer last October and when my noble friend visited Belfast last month by means of newspaper advertisements, which, as he says, the BBC chose to augment by a radio interview. I believe the House will agree that my noble friend's report is detailed and perceptive. I am sure that his work will focus and inform Parliament's consideration of the operation of the Act last year.
In general, my noble friend's report shows that the operation of the Act gives no cause for concern. He does, however, make one suggestion in particular that I know the House will expect me to respond to today.
My noble friend suggests that tighter security at the ports (and presumably inland) might make it possible to dispense with the power of exclusion—if not this year then by the time the Act is next due for renewal in 1988. I need hardly remind your Lordships that Sir Cyril Philips made a similar suggestion last year: namely, that for several reasons, the time was right for

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Parliament to consider afresh the need for Sections 4 and 5 of the Act (under which people can be excluded from Great Britain or Northern Ireland respectively) and that, if these sections were to be kept in force, the Government might undertake not to make any exclusion order under them against people who had not previously been subject to such an order. I know that during your Lordships' debate on the continuance order last year several noble Lords urged the Government to adopt Sir Cyril's suggestion, if not immediately, at least within the coming year. However, my noble friend Lord Glenarthur told the House that, while the Government would not quarrel with the view of Sir Cyril Philips that the power of exclusion was objectionable in principle, it did not believe the time had yet come to jettison it.
Before explaining the Government's reaction to the proposal this year by my noble friend Lord Colville, I should say something about the operation of the exclusion power, particularly during 1986. My right honourable friend the Home Secretary gives personal consideration to every application by the police for an indivdual to be excluded from Great Britain (or from the UK if he is currently in Great Britain). Under the Act, the Secretary of State needs to be satisfied that the person in question has been concerned in the commission, preparation or instigation of acts of terrorism (or might attempt to enter Great Britain with a view to being so concerned) before making an exclusion order against him or her.
Thus exclusion is not justified if the person merely associates with terrorists or belongs to a certain political organisation. My right honourable friend looks for evidence that he or she has been personally and actively involved in terrorism (though not necessarily by planting a bomb or pulling a trigger) usually within the past three years. Moreover, the Act allows someone who has been excluded to make representations against the order, and their case must then be referred to one of the advisers appointed by my right honourable friend the Home Secretary, with whom the person excluded is entitled to an interview in most circumstances.
Thirteen cases were referred to an adviser in 1986, and 10 of the people concerned were interviewed. My right honourable friend accepted his adviser's recommendation in each of these cases, and revoked three exclusion orders.
Under the 1974 and 1976 Prevention of Terrorism Acts, exclusion orders remained in force unless and until they were revoked. The present Act gives new orders a limited life of three years, and provides that all orders made under the earlier legislation will expire on 21st March this year unless they have already been revoked. Consequently, almost all those earlier orders have now been reviewed, the majority of them, 157, last year. My right honourable friend the Home Secretary decided not to renew 103 of those 157 orders (even though in about half of those cases the police had applied for a new order), but in the other 54 cases he made new orders, because he was satisfied that those individuals still constitute a threat to the safety of Great Britain. He also made nine new orders excluding people from Great Britain, one of which was revoked on the recommendation of an adviser two months
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later. Thus, while 211 exclusion orders made in Great Britain were extant at the end of 1985, only 114 were in force at the end of 1986. In Northern Ireland, where my right honourable friend the Secretary of State for Northern Ireland exercises the power, there were 26 orders in force at the end of last year.
The exclusion provisions of the Prevention of Terrorism Act still serve to restrict the freedom of operation of over 100 individuals who my right honourable friends are satisfied are implicated in terrorism. My noble friend Lord Colville of Culross, says in his report that such usage is not sufficient to stem the tide of protest against what he calls a system of internal exile. The Government do not accept that, because a power is—quite rightly—used sparingly, it follows that it can be done away with. Moreover, my noble friend says that the deterrent effect of the exclusion power is not to be underestimated even if it cannot be quantified.
The crux of my noble friend's argument against the continuation of the exclusion power is, as I understand it, that this would be less acceptable to public opinion than a marginally more intrusive use of the powers which the order gives to the police to interview, and if necessary detain, travellers at ports and airports. This may be so, though my right honourable friend the Home Secretary receives complaints that the use of these powers is already too intrusive. However, what the Government must also judge is whether a more stringent use of port powers, or any other measures that might be put in the place of the exclusion power, would be equally effective in frustrating terrorist activity. We are not at present convinced that they would be. If those who might otherwise be subject to exclusion orders had free movement throughout the United Kingdom, it seems to us that the police would need both a capacity to detect that movement and to be able to keep the person under surveillance in order to make sure that he did not fulfil the terrorist objectives which could be prevented by exclusion. Having said all this, my right honourable friend the Home Secretary made clear in another place that we will look seriously and thoroughly at the possibility of replacing the exclusion power before the Act is next due for renewal.
I should now like to turn to the other major power available under the Act: that of detention on suspicion of involvement with terrorism. I have already indicated to your Lordships the extent to which this power was used last year in respect of Northern Irish and of international terrorism, and given you one example of how vital it was in one of the latter cases. In his report, my noble friend discusses the criticism that, because such a small proportion of those detained are charged with offences under the Act this legislation is ineffective. He points out that the Prevention of Terrorism Act itself creates few offences, of a not particularly serious nature, and that charges under other legislation following detention under the Act should also be taken into account.
Last year, in Great Britain 18 per cent. of people detained under the legislation were charged with a criminal offence. In Northern Ireland, the figure was 28 per cent. Furthermore, nine people, as I have said, were excluded from Great Britain, and eight had deportation orders signed against them, following

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detention under the Act. The essential point which is made by my noble friend but so often missed by critics of the Act is that these are pre-emptive powers. If the police use them to prevent a terrorist crime being committed, then obviously no one can be charged with that crime. We surely should not have to wait for the bomb to explode before the police can take action.
My noble friend refers to another criticism of detention—and port examinations—under the Act; namely, that these, "are often 'fishing trips' to gather information rather than an exercise directed at people who might themselves be terrorists" (paragraph 7.3). As my noble friend says, to detain a person under Section 12 of the Act merely in order to collect information would clearly be an abuse of the section. The power of arrest and detention under Section 12 arises where there are reasonable grounds for suspecting a person to be guilty of certain specific offences or that he is or has been concerned in the commission, preparation or instigation of acts of terrorism.
The power of arrest under Section 12 is therefore available in cases where the police do not, at the time of arrest, have evidence which would justify criminal charges, but where they have reasonable grounds to suspect the person arrested of involvement in acts of terrorism. The police may expect to develop their suspicions to the point where they have evidence to justify charges or to consider applying to the Secretary of State for the exclusion of the person concerned under Sections 4, 5 and 6 of the Act, or, if appropriate, for their deportation.
The detention of that person under Section 12 is the process by which the arresting officer's suspicion can be clarified. The person concerned may be questioned, forensic evidence may be sought. The obtaining of information is an important and inevitable feature of the exercise of the powers but is not the purpose of the section. Even if the person concerned is not charged, excluded or deported, the process of questioning and investigation may nevertheless provide the police with information, of a variety of different kinds, which may be of value in the prevention of terrorism. That is quite inevitable. How could and should the police erase from their memory, and reject from all subsequent consideration, something which they may learn in such a case? But information gained in that way is essentially a by-product of the powers in Section 12.
The Government welcome the opportunity provided by the annual review, and by the debates on the continuance order in this House and in another place, for a thorough scrutiny of this legislation. The Government believe it should only remain on the statute book if Parliament is satisfied both that the powers it gives continue to be necessary, and that they are being properly used. I have described the continuing threat from terrorism, be its origins far from us or nearer to home. My Lords, I know we are all agreed that this threat must be combated and contained. The Government's contention is that this legislation must remain in force to assist in that task. Therefore I commend this order to your Lordships.
Moved, That the draft order laid before the House on 27th January be approved.[9th Report from the Joint Committee.]—(The Earl of Caithness.)
5.34 p.m.
Lord Mishcon: My Lords, the House will want to thank the noble Earl for the way in which he has introduced this order which comes before us year by year with, as he has rightly said, a heavy responsibility upon this House. I believe I am quoting his very words: he said that Parliament should permit powers under this Act to continue only if it considers that those powers are necessary.
It would help so much in my view—and I have respectfully submitted this before—if year by year in exercising these rights which we have and which are so important we were allowed to look separately at the various parts of the original Act that we are called upon to continue. There are various parts to that Act, as your Lordships will remember, and Part II, for example, deals only with exclusion orders, a matter to which the Minister referred in the course of his speech.
Despite the fact that the Minister says—and his right honourable friend also says it in another place year by year—that these powers must not be continued if Parliament does not think they are necessary, we cannot say that certain powers are not necessary, such as exclusion powers, because we either say that the order shall not be passed, in which case nothing passes at all by way of continuance, or we have to say that we are in favour of the order, in which case everything continues.
Again on this occasion especially I ask the noble Earl to consult his right honourable friend and say whether, in their joint view, it is consistent with what is repeatedly said year by year, that we should consider these powers and pass them only if necessary, if we have no opportunity whatever of dealing with the powers separately.
It is a great difficulty. Speaking from these Benches—and I make this absolutely clear—we know, as do the Government, that to go outside the normal boundaries of our criminal law hits at our great fountain of justice—if I may mix my metaphor—which all of us hallow and which has been hallowed over the centuries. But we are all prepared to do it if there are exceptional circumstances; and indeed they exist when we have to meet this ghastly plague of terrorism with which our century has been afflicted.
Having said that, one goes on to the next thought that the Government must consider. The noble Earl said, and said quite rightly, that an annual scrutiny takes place in order to help the Secretary of State and Parliament as a whole to do their job in considering whether there should be a renewal. The noble Earl was absolutely correct when he paid a well deserved compliment to his noble friend Lord Colville of Culross, who is held in such respect in your Lordships' House.
What is the situation for Parliament, if the annual scrutiny is to be there in order to guide the Secretary of State and Parliament, if the Secretary of State, certainly for the last two years if not before, adopts the recommendations which say that the powers should continue but ignores, or certainly does not favour, the result of a detailed scrutiny when doubt is cast upon the continuance of certain powers?

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Your Lordships may well wish to know the background against which I am speaking today in regard to the serious responsibilities that rest upon every one of us. I can do no better than quote from the report on the operation in 1986 of this Act by the noble Viscount, Lord Colville of Culross, of his scrutiny. I quote from page 36, paragraph 7.2:
"The PTA is extremely unpopular with the Irish community in Great Britain, and, as with all the emergency legislation, in Northern Ireland too. I heard from one staunch Republican who denies the right of Westminster to legislate for the Province at all. Others denounce terrorism whether domestic or international but say that the legislation has cast a blight over the Irish population in Great Britain and is counterproductive in Northern Ireland, because, among other things, it alienates the population and discourages the public from any attempt to help in rooting out terrorism. It creates martyrs and tends to cause misplaced sympathy for people who on any rational view have committed terrible crimes. It is not for me to advise whether it would be possible to abolish all emergency legislation in Northern Ireland, and rely on the ordinary criminal law; but it is a suggestion seriously made to me. The EPA has just been renewed in January 1987 with all party support".
I reflect with your Lordships on the background of the effect in Northern Ireland that has been summarised in the paragraph I have just read and on Irish people in our own country. That does not mean that an order carrying out certain parts of the Act should not meet with the favour of all your Lordships. But I repeat, what is the point of scrutiny when Sir Cyril Philips last year said that the exclusion orders should be among the first powers to go and recommended that no new exclusion orders should be made? The Home Secretary said that he did not accept the recommendation that no exclusion orders should be made.
We then come to this year's report from the noble Earl's noble friend, Lord Colville of Culross. What has he to say about exclusion orders? I shall not read a large portion of what he said to lead up to his conclusion, but if the Minister thinks that I am being unfair in the part that I select, I invite him to stop me immediately and I shall read any other portion that he wants me to read. I am reading from paragraph 2.3.6 on page 10 of the report:
"Vigilance against terrorist inroads would have to be ensured as well from Northern Ireland as from the rest of the world … In my view this would be more acceptable than a system of internal exile; any resultant criticisms would have to be considered sympathetically but in the light of the abolition of a power which the public may have seen as necessary to restrict the movement of Northern Ireland terrorists and contain their activities, but which now is not sufficiently used to stem the tide of protest. The deterrent effect is not to be underestimated, even if it cannot be quantified; but the police have other powers to prevent outbursts of Northern Irish terrorism in Great Britain".
The Secretary of State in another place a year ago said clearly that the term "internal exile" was quite inappropriate and misleading in regard to the exclusion order. How strange that the very words are used by the noble Viscount, Lord Colville of Culross, in his scrutiny this year. Does it not mean that the Secretary of State is ignoring the advice which he is supposed to be seeking? Ought not your Lordships draw his attention to the matter by what is said in this debate?
There will be no vote against this order so far as I am concerned on behalf of my noble friends, but we ask the Secretary of State to take another look at the way
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he is behaving in the face of the reports he is receiving from quite independent and very responsible sources.
I move on to Section 11 of the Act which has been drawn to the attention of your Lordships year by year. I remind your Lordships that it is most extraordinary so far as our criminal law is concerned. It provides that if a person has information which he knows or believes might be of material assistance and he does not give it to the authorities, he commits a crime if that be proved and if he has no reasonable excuse for not giving it. He is liable to a quite substantial term of imprisonment on conviction.
From time to time and from all parts of the House doubt has been cast upon the wisdom of including this power in the continuance order. But we have no right at all, unless we throw out the whole order, to say that this power ought to be removed. The only reference made to it in the report of the noble Viscount is on page 6, where he draws attention to the fact that there were:
"a few charges under s. 11 (withholding information about acts of terrorism). There have only been 25 charges under the latter section or its equivalent since 1974, leading to 13 convictions".
Ought we not year by year, until this Act ceases in a couple of years' time to have the right to debate these separate powers and to agree to continue with certain of them but not to continue with others? However, we are helpless in view of the way this has been presented to us.
I now pass to what may seem to be a very small matter, though it is not small to the people concerned. The noble Viscount in regard to exclusion orders pointed out that what now happens is that if somebody is sent back by way of removal of an exclusion order—it may be from England to Ireland or from Ireland back to England—he is handed the grand sum of £2·50 to find his way. I drew the attention of the House last time to this mealy-mouthed behaviour which can cause so much distress to somebody who wants to join his family. After all, the exclusion order has been released and presumably that means that there is no more danger for the community. He has £2·50 in his pocket to travel to wherever he has to travel and to have some subsistence meanwhile. Is that what your Lordships would want to happen?
The reply given last time was that this is a practice that exists and it will be looked into; but I know of no way in which this has been altered in the meantime and no further explanation has been given. Perhaps the noble Earl will give an explanation when he replies.
One of the most important parts of the recommendations made by the noble Viscount was not referred to, unless I missed it, in the noble Earl's speech to the House recommending the continuance order to your Lordships. That was the feeling that he had, and he expresses it very cogently. It is illogical, untidy and not very good legislative practice to have a temporary Act which has a lifetime of another two years and which deals with both international terrorism and the troubles that we unfortunately endure in regard to Ireland and the terrorism arising from that country.
He rightly points out by inference that in regard to international terrorism there are arrangements which are to be made internationally; that we wish to tell other nations, especially in Europe, what our

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legislation is and to suggest, I have no doubt, that there should be co-operation in regard to that legislation so that it is European-wide, if not worldwide, among civilised powers.
Unfortunately that would seem to be a matter which is not of a temporary nature at all and so there ought to be permanent legislation, it may be he says, to deal with international terrorism. But it is a separate issue to deal with the political problems of Ireland and what arises out of them, with a prayer which I suppose all of us would utter that it is a temporary matter and a matter upon which we legislate year by year, especially as we are dealing with our own United Kingdom in that regard. I was surprised that the noble Earl did not refer to this at all. If he did, and I did not hear him, I apologise at once. But I hope that in his reply he will say that that matter is being given very careful consideration by his right honourable friend and himself.
I repeat: this House is united in its abhorrence of terrorism. This House is united—if it is not, it should be—in its decision to obey the duty of Parliament to secure the safety of innocent citizens in our land. We realise that in these troublous times extraordinary rights may have to be taken; but if Parliament is to exercise its proper duty it ought to have those powers dealt with separately, as I indicated. I hope that will be the position next year.
All of us must experience regret, and must have the reservations I have mentioned. There is no point in having a scrutiny in this thorough way year by year by an independent person without Parliament not only listening carefully but, unless there is very good reason to the contrary, carrying out the recommendations. Subject to those reservations, there will be no vote from these Benches—and I talk with responsibility in regard to my own Front Bench—against this order, upon which a vote has already taken place in another place.
5.54 p.m.
Lord Meston: My Lords, in the unavoidable absence of my noble friend Lord Wigoder, I should like to join in thanking the noble Earl for his detailed introduction of this important order. I would also wish to join in paying tribute to the noble Viscount, Lord Colville of Culross, for his report on the operation of the Act during 1986. As one would expect—from the brief opportunity I have had to study it—the report is a lucid and stimulating document which provides clear guidance to this House and also, perhaps more importantly in this context, to the Government. I would certainly join in asking that the Government pay particular attention to the call for rationalisation in the final paragraphs of the report under the heading "Broader considerations."
It seems entirely right that we should have an annual opportunity to consider this legislation. It is peculiarly an area where the law has to strike a balance between civil liberties and the protection of the community from the horrors of terrorism. From these Benches, we say that the balance must come down in favour of the protection of the community. It is on that basis that we support the order, subject, of course, to the annual process of scrutiny by Parliament and to the report of the noble Viscount. This is quite properly a temporary
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statute—a concept with which the House is peculiarly familiar as a result of recent debates on other legislation. We must see how it works in the coming year and we must look carefully at it again after the expiry of the period of one year when it has to be reconsidered for renewal.
I join in questioning the effectiveness of Section 11. As the noble Lord, Lord Mishcon, has told your Lordships, that section creates the offence of a failure to disclose information. I would ask how many prosecutions there have been. I see from page 6 of the report, to which the noble Lord, Lord Mishcon, referred, that there have been only 25 charges. I do not know whether that means 25 actual prosecutions. I would also like to know what has been the heaviest penalty imposed following any successful conviction under that particular section. With those comments, I would join in welcoming the order.
5.58 p.m.
Lord Monkswell: My Lords, I too would like to thank the noble Earl, the previous speakers and also the noble Viscount, Lord Colville of Culross, for his very illuminating report. I do not want unduly to prolong the debate; so I shall not elaborate on the horrendous damage that the Prevention of Terrorism Act does to our constitution and to the civil liberties of the citizen. I shall highlight some aspects of the report by the noble Viscount and then explain the positive effect of doing away with the Act.
Detention under the Act should be based on reasonable grounds for suspicion of terrorist involvement. In practice, as the noble Viscount recalls, it is probably based on the instincts of a police officer. I ask: is it right that instinct should replace reasonable grounds? In practice, detention is being used for general intelligence gathering, for intimidation of particular political groups and for the prevention of political demonstrations of opposition. Also in practice, the way detention operates causes real hardship and anxiety for those detained and for their friends and relatives. To have a situation where people can literally disappear and the police present a blank face to inquiries is very chilling, reminiscent, as it is, of the dirty war in Argentina and the current scene in some central American countries and in South Africa.
When we consider exclusion orders, I am sure we are all grateful at last for the official recognition that this means a sentence of internal exile with political Ministers as judge, jury and executioner. The report makes clear that the Act and the way in which it is implemented actually supports the arguments that may be used by some people to justify acts of violence for political purposes. By having this Act and using it, we deny the validity of our argument that all acts of violence committed for whatever reasons are criminal acts and that their perpetrators are criminals.
I should like now to look at the effect of doing away with the Act or, more accurately, letting it lapse by not renewing it. To start with, we must make clear—and I am sure the whole House will join me in this—that we do not condone violent acts for any purpose whatsoever. The first practical effect of refusing renewal will be to free police manpower from their effective political role under the Act and enable them

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to concentrate on the prevention of crime and the taking and bringing before the courts of criminals who conspire to commit criminal acts or who have perpetrated criminal acts. We shall also release government Ministers from their role as directors of police operations and their role as judge, jury and executioner of internal exile.
Let us rely on our courts—not politicians—to deal with criminals. We can then make a clear distinction between politics and crime. We consider that crime is for the police and the courts, and that politics is for the people and their elected representatives. Let us in this House say to all the elected representatives of the people, "It is your job to listen to the arguments of your opponents and if you disagree to argue your case. But do not try to use the law or a position of political power to silence your opponents, because that way will only provide the seedbed in which violence for political ends can flourish."
I conclude with this quotation from the noble Viscount's report:
"it is never possible to prove a negative, so nobody can tell how well [the Act] works".
I believe that the Act encourages violence for political ends. I believe that such violence is criminal and should be treated as such. At the end of this debate, I will seek to divide the House and I invite noble Lords who share my beliefs on this issue to join me in opposing the renewal order.
6.3 p.m.
Lord Hylton: My Lords, this order is short and unamendable and, as the noble Lord, Lord Mishcon, has already said, it is a question of all or nothing; either we accept it or we reject it. For those reasons, I should like to look at the report recently made by the noble Viscount, Lord Colville of Culross, who is gathering ever-increasing experience in human rights matters. He was, I thought, particularly thorough on the police aspects of this question. I am very glad that he mentioned the conditions of suspects held for examination or interrogation, and that he further went on to discuss for how long and in what circumstances persons should be held incommunicado. My only regret about the report is that it contains no list of those persons and organisations who gave written or oral evidence, and I should like to ask the Government whether they would consider printing the names of those people in the Official Report.
I come now to exclusion orders and I am glad that the noble Viscount did not shrink from using the words "internal exile" to describe exclusion either from Great Britain or from Northern Ireland. It is perhaps ironic that we should be debating the continuance of these orders so soon after the release of Dr. Sakharov from internal exile in the Soviet Union. I am very glad that the noble Viscount said,
"there is no doubt that hardship can occur in these cases",
and I very much hope that the Government will look most carefully at his paragraph 2.38, which deals with the human treatment of excluded persons.
I should like to ask—and just one sentence of the noble Earl's introductory speech gives grounds for, I think, a little hope—will the Government abolish the
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power to exclude in 1988? Can they give us that assurance? I ask for that assurance even if orders which will then be in force have to remain in force for those persons affected. It has, after all, been the unanimous view of Sir Cyril Philips and the noble Viscount, as well as of the Standing Advisory Commission on Human Rights in Northern Ireland, that these orders should no longer be allowed to continue. I refer the Government to the 12th Report of the standing advisory commission and in particular to pages 13 and 14.
That brings me to port powers, and on page 31 of the report we find mention of some loopholes to which I have tried to draw attention in your Lordships' House in previous debates on this subject. The existence of these loopholes throws some doubt over the whole of the rest of the elaborate and expensive powers and checking procedures.
Finally, I was very pleased indeed to read the final chapter of the noble Viscount's report which is headed "Broader Considerations". This takes the long-term view and does not hesitate to mention such things as "fishing trips" and plain intelligence gathering. I agree with the noble Viscount that we need minimum permanent powers to guard against and combat international terrorism, as well as separate and distinct temporary powers for dealing with terrorism arising from Northern Ireland wherever that may appear, as was pointed out by the noble Lord, Lord Mishcon.
I should like to ask the Goverment: can they make any comment on this section of the report today? If not, will they at least start preparing for new legislation on a better footing than this Act, which, as we know, emerged from one particularly horrific incident in 1974? Will the Government also examine and take into consideration comparable legal systems in other European countries?
6.8 p.m.
The Earl of Caithness: My Lords, I am grateful to all those who have taken part in the interesting debate on this subject that we debate annually, and particularly for the measured tones in which the noble Lords, Lord Mishcon, Lord Meston and Lord Hylton, made their remarks.
If we are to continue to fight against terrorism in connection with the affairs of Northern Ireland, and on the wider international scale, we must have the powers that Parliament has granted us in the Prevention of Terrorism Act. The fact that there have been no Irish Republican terrorist incidents on the mainland during the last year or so does not signal any change of heart or lack of commitment on the part of those terrorist organisations which have made such murderous attacks in the past. Anyone following events in Northern Ireland will know that there has been no decrease in terrorist violence over there.
It was only in 1984 that some of the powers in the prevention of terrorism legislation were extended to cover international terrorism. The fact that for the past two years about a quarter of those detained under the Prevention of Terrorism Act or the supplemental order were detained in connection with international terrorism shows, sadly, how right Parliament was to take that course of action.

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The Act is not used selectively in respect of any one group of people or to harass any section of the community. Its function is to prevent acts of terrorism occurring in this country, and the Government firmly believe it achieves its purpose.
The noble Lord, Lord Mishcon, asked whether we could have separate debates on each part of the Act. The Government take the view that the Act should be renewed as a whole. In those circumstances, he will understand that it is difficult to debate each section of the Act individually.
Lord Mishcon: I wonder if the noble Earl will admit that we cannot carry on a debate on this subject now. However, there is little point in introducing an order, as the noble Earl did so eloquently, by saying that Parliament has to be satisfied that each power is necessary if Parliament cannot debate each power.
The Earl of Caithness: The noble Lord underestimates his powers of persuasion. The noble Lord has referred to a number of powers under the Act and his words will be studied very carefully by my right honourable friend. I am sure that he will welcome any constructive suggestion on this piece of legislation, as with any other legislation. We have discussed the provisions of this Act with the Irish. They are aware of, and they understand, the problems we face. In fact, Irish governments have themselves introduced special measures to deal with the scourge of terrorism.
The noble Lord, Lord Mishcon, mentioned exclusion orders. The Government have always recognised that the power of exclusion is an exceptional power and one which infringes normal civil liberties. We do not take issue with the view that it is objectionable in principle. That is why I said that my right honourable friend is prepared to look seriously at whether or not the time has come to abandon the power. But I must make it clear that the Government would not be prepared to abandon the power if there were any question in so doing of putting lives at risk or putting the safety of our country into jeopardy.
I understand the strength of feeling on this subject. However, I must point out that people who are excluded are excluded for a very good reason—to prevent acts of terrorism. The people excluded from Great Britain are not, by virtue of the 1984 Act, people who have lived here all their lives. If they have lived here more than three years, they will not be excluded. I hope that that answers one of the points raised by the noble Lord, Lord Hylton.
I was surprised by the noble Lord, Lord Monkswell, who said that he was glad that we had officially accepted the words "internal exile". If he had listened to what I said, he would know jolly well that I had not accepted that, and nor have the Government.
The noble Lord, Lord Mishcon, drew attention to the sum of £2·50. Any released prisoner who is travelling to a destination within the United Kingdom, including one excluded by order from Great Britain to Northern Ireland, receives a discharge grant. This is an advance payment in lieu of social security benefit to which the released prisoner would be entitled in any
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case. For this reason, discharge grants are never payable to released prisoners whose destination is outside the United Kingdom.
On the rare occasions when a prisoner is to be excluded from the United Kingdom on discharge, his fare will be paid and he will receive a subsistence allowance. The amounts involved are small. However, I must stress to your Lordships that these allowances are intended solely for the period of the journey. It is for such a person's own government to pay his expenses in that country. Also, that person will have on him the money that was in his possession when he was detained. My noble friend, in his report, did mention a second case.
Turning to the queries raised concerning Section 11 by the noble Lords, Lord Mishcon and Lord Meston, the noble Lord, Lord Mishcon, again raised the criticism of not being able to debate individual parts of the Act. This is an exceptional piece of legislation because it deals with exceptionally serious problems. Section 11 covers one of those problems. Perhaps I may write in detail to the noble Lord, Lord Meston, on the point which he raised. However, I can say to him, in answer to part of that point, that the published statistics show that the heaviest penalty imposed following conviction under Section 11 was a term of imprisonment between one and five years.
The noble Lord, Lord Hylton, asked me three questions. I am grateful to him for giving me advance notice of them. He asked, first, whether the Government would publish a list of those who made representations to my noble friend in the course of his report. As I said earlier, my noble friend received quite a number of representations from individuals and organisations. I cannot list them in full because some of the representations were given in confidence, and it would be wrong for me to do so. However, there were representations from the Irish Embassy, the National Council for Civil Liberties, the Irish in Britain Representation Group, the Irish Commission for Prisoners Overseas and West Midlands Prevention of Terrorism Research, among others.
The noble Lord also asked about the exclusion power. However, I dealt with that in answering an earlier question by the noble Lord, Lord Mishcon.
Finally, the noble Lord asked whether we had any comment on the final section of my noble friend's report entitled "Broader Considerations". That was a point also raised by the noble Lord, Lord Mishcon. My right honourable friend the Home Secretary referred to that section in his written response to my noble friend dated 5th February. He said that it was too soon to formulate any proposals for legislation to replace the present Act. However, he accepted my noble friend's view that we need to consider the structure of controls against terrorism, both Northern Irish and international. Therefore, the views of my noble friend will be important in the Government's consideration of the future of counter-terrorism legislation.
The noble Lord, Lord Monkswell, asked whether we were aware of the horrendous effects of the Act. I would say, "We are aware of the effects of the Act; is the noble Lord aware of the horrendous effects of terrorism?" Had it not been for the Prevention of

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Terrorism Act, we would have not been able to deal with the six members of the Abu Nidhal group to which I referred earlier.
It is a paradox that in order to ensure our freedom against the scourge of terrorism the Government have had to seek powers which are in themselves severe. But I believe the House has seen today that the powers given to the authorities under the PTA are used sparingly and reasonably. The Government believe that the continuing threat from terrorism means a continuing and regrettable necessity for the Act. That is why I ask the House to approve the renewal of the Act for another year.
The Deputy Speaker (Lord Wells-Pestell): The Question is that this Motion shall be agreed to. As many of that opinion will say, "Content". To the contrary, "Not-Content". I think the Contents have it. Clear the Bar.
Tellers for the Not-Contents have not been appointed, pursuant to Standing Order No. 51. A Division therefore cannot take place, and I declare that the "Contents" have it.
On Question, Motion agreed to.

Civil Research and Development
6.21 p.m.
Lord Sherfield Lord Sherfield rose to move, That this House takes note of the report of the Select Committee on Science and Technology on Civil Research and Development.(1st Report, 1986–87, H.L. 20.)
The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper.
When the Select Committee on Science and Technology was set up in 1980, its first report, after a short trial trip on Electric Vehicles, was entitled Science and Government. This drew attention to the fragmented nature of policy-making on research and development at all levels, and recommended a clearer recognition of the scientific and technoligical dimension now present in every field of national endeavour. It proposed the setting up of an advisory council chaired by a senior Minister to oversee the whole of science and technology activity, divided as it was between the Department of Education and Science, the Department of Trade and Industry, the Ministry of Defence and other individual departments. These recommendations were rejected by the Government. But two significant steps were taken as a result of the committee's report.
The first was the strengthening of the position and authority of the Chief Scientific Adviser and his staff in the Cabinet Office, and the second was the inauguration of the Annual Review of Research and Development issued by the Cabinet Office. This review, which has been improved and extended year by year, has given to Parliament and the public, for the first time, a view of the Government's activity and the expenditure on research and development across the board. Without it the committee's inquiry would have been much more arduous.
Since 1980 your Lordships' Select Committee has submitted a number of reports to the House on the
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state of several disciplines and areas of science and technology, and in every case the same fragmentation, the same lack of coherence, has been identified. So the present report and its conclusions reflect experience gained in these previous inquiries.
While the committee cannot claim that all its recommendations have been successful, a good number have been accepted, directly or indirectly. We have tried to make public policy in research and development more coherent, and to give science and technology a higher profile in the public eye. Next week the Select Committee will publish another report, on Innovation in Surface Transport. In a fairly narrow field, it will, like its predecessors, illuminate and support most of the general conclusions of the present report. I commend it to your Lordships.
Over the past five years the policy of cutting back on higher education, combined with a squeeze on the research councils, has crippled the dual support system on which the health of the research community depends, and, though the research budget has been kept more or less level in real terms, for a number of well-known reasons the amount of research that it can support has declined year by year.
The storm and distress signals flying from every part of the scientific community and the signs of a revival of the brain-drain led your Lordships' Select Committee to inquire into The Policy, and Practice of Public Support for Civil Science and Technology in the United Kingdom, the full title of the report. But since this subject is a very wide one the Select Committee identified and addressed four main topics: first, the organisation of civil research and development; secondly, the sources of funds for basic, strategic and applied research and development; thirdly, the working of the customer/contractor principle, established by the report of the noble Lord, Lord Rothschild, in 1971; and fourthly, the civil implications of defence research. On the second topic, funding, the Select Committee soon saw the importance of the interface between the public and private sectors, and realised that the report would be misleadingly incomplete without consideration of the contribution made to the national research and development effort by the private sector.
The Select Committee appointed two specialist advisers, Sir John Charnley, late of the Defence Procurement Executive, and Professor Roger Williams of Manchester University. Their services were invaluable. The inquiry generated a huge volume of evidence contained in two fat volumes accompanying the report, which itself contains a balanced review of this evidence. All this placed a heavy burden upon the shoulders of the committee clerk, to whom our thanks are due.
The sections of the report dealing with organisation covered more or less the same ground as Science and Government but were buttressed by fresh evidence. It is perhaps not surprising that with some amendments and refinements the Select Committee came to the same broad conclusions in 1985 as in 1980. Once more it recommends a much more public and explicit recognition by the Government of the essential importance of the advance of science and technology to the economic recovery of the country and the

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creation of wealth. Once more it rejects proposals for a Ministry of or for Science. It repeats its previous recommendation for a Council for Science and Technology at the highest levels of government, presided over by a Minister, to oversee the whole of the national scientific and technological endeavour and the distribution of resources covering the academic community and the research councils, the public sector including defence, and industry.
Advanced science and technology are vital to the country's economic recovery. The committee therefore recommends—and this is new—that the council should be chaired by the Prime Minister at least once a year. In effect the Select Committee proposes not a new organisation but rather an evolution of what already exists. While the Advisory Council for Applied Research and Development—ACARD—would be subsumed in the superior council, its important function would continue. As regards the research councils, the Select Committee encouraged the Advisory Board for the Research Councils to assume a more executive role without at this stage proposing the creation of a single council.
Reading between the lines of the evidence, the Select Committee infers that in the existing Cabinet structure a committee has now been set up to oversee the national endeavour in science and technology. We are not of course supposed to know about the existence of the committee, but most of our members regard this particular bit of security as smacking of bureaucratic mumbo jumbo. It is a good move, but it should be acknowledged publicly. Without threatening collective responsibility, this could help to demonstrate to the nation at large the strategic importance that the Government attach to science and technology for industrial recovery and for wealth creation.
On the issue of the funding of civil research and development, I can be brief. The overwhelming weight of the evidence was that in most areas British research and development was underfunded absolutely and in relation to what our main industrial competitors are doing. Making every allowance for the fact that many of our witnesses had a strong interest, the Committee concluded that the case was made out. In countries where the budget squeeze is also on, for example, in the United States and Australia, the research and development budget is being increased while other departmental budgets are being cut—in other words, there is a reassessment of priorities in favour of research and development.
The Committee, only too well aware of the competing claims on the public purse, considers that a similar assessment of priorities should urgently be undertaken in this country—not just priorities within the research and development budget, but the place of research and development in relation to other areas of public expenditure.
It is not just the Government who are responsible for the present situation; it is also industry and the institutions that finance it. Again, both absolutely and in relation to the industrial contributions of our main international competitors, the contribution of British
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industry to research and development—with of course some honourable exceptions—is inadequate. The committee considered what steps, in addition to exhortation, could be taken to remedy this inadequacy. Its suggestions are set out in paragraphs 6.80 to 6.96 of the report. Perhaps I should mention one in particular, since it is controversial and is disliked—perhaps feared—by many industrial firms. It is that legislation should be introduced to require companies to disclose their research and development expenditure in their public accounts. But the other suggestions—for example, more tax incentives—if they were followed up, would also help.
Thirdly, the committee inquired into the working of what is known as the customer/contractor principle, first adumbrated and elaborated by the noble Lord, Lord Rothschild, in his report, Cmnd. Paper 4814 of 1971. This principle was to apply to the arrangements for commissioning research by government departments. The committee recognised the validity of the principle, but found that it had never been applied in the manner that the Rothschild Report had recommended. In particular, the report had proposed that a general research surcharge be added to each contract to provide for underlying research support, for orderly transfer of staff between projects and the like. The 10 per cent. surcharge has in practice seldom, if ever, been included in the departmental contracts, and our report recommends that in future it should be added to all government contracts for commissioned research.
I should now inform your Lordships that the noble Lord, Lord Rothschild, has written to me to say that his report has been misinterpreted in one important respect. His recommendation was that the 10 per cent. should be an average surcharge. He illustrated this by referring to two Shell laboratories, of which of course he was once the research co-ordinator, one of which was exclusively concerned with general research while the other was concerned with technical services and did no research so that one would receive much more than the average, and the other, little or nothing. I am most grateful to the noble Lord, Lord Rothschild, for what in diplomatic circles is known as a mise an point; but I was at the same time reminded of the old story about the porter on an American Pullman coach who was asked by a passenger what the average tip was. "The average, Sir", he replied, "is $5 but most gentlemen, Sir, give me the average." Government departments, please note!
Here I should draw your Lordships' attention to what the report says about research in general. In the previous inquiries the Select Committee has found that in a climate of reduced funding the main casualty is not basic and applied but strategic research, that is, research undertaken with eventual product applications in mind, although these cannot at that stage be clearly specified. While basic research is protected to a large extent, and quite rightly so, increasing emphasis is being placed both by government departments and industry on short-term contracts. The committee therefore proposes that strategic research should be explicitly recognised and funded. We are specially concerned to ensure that that strategic research leading to wealth creation should be adequately financed and that industry and academic research should be drawn

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together into work with long-term benefits for the country.
Fourthly, defence: here the main point is that over 50 per cent. of the research and development expenditure of the country is devoted to defence, with consequences to which the Committee draws attention, but which raise major policy questions outside its terms of reference. In particular, we must be aware how large a part of our scarce manpower resources is taken up by defence research and development; otherwise, the main issue is the level of spin-off for civil purposes achieved by this high expenditure, which is generally considered to be far too low. Steps have already been taken by the Government to try to remedy the deficiency. The committee, while welcoming these moves, urges that more should be done in this direction.
The world does not stand still while Select Committees are deliberating. A number of steps were taken by the Government and other bodies while our inquiry was in progress, and we admit to feeling at times that we were operating on a moving staircase.
The Government initiatives were generally welcomed by the committee. Thus, during our inquiry, an important document was published by ACARD entitled Exploitable Areas of Science, which recommended that a process should be evolved with the object of identifying those areas of scientific research most likely to lead to economic benefit. The committee, and I believe the Government, favour this initiative; but the manner by which this process should be controlled is still under consideration by the Government with the assistance of consultants.
Then there is the so-called Link initiative, launched in December by the Government to promote collaboration between universities and industry in research and development on the basis of shared funding. This is also welcomed by the committee, which had advance notice of it. Perhaps the Minister can tell us this evening how these initiatives are progressing, and in particular how they relate to one another.
The important difference between the committee and the Government in regard to these initiatives appears to be that the Government think that they can be launched without the injection of new government money while the committee does not consider that this is realistic if the proposals are to achieve anything significant. I ask the Minister what action the Government propose to take on Sir Austin Bide's report, IT 86, entitled Information Technology: a Plan for Concerted Action which came out at the very end of the committee's inquiry and which is referred to in paragraph 6.88 of the report.
Before I sum up I wish to draw your Lordships' attention to a rather fundamental issue; namely, whether there is a link between expenditure on research and development and a country's economic and industrial performance. The Government, through the mouth of the Treasury, told the committee there was not. The committee recognised that this link is difficult to substantiate: nevertheless, the committee finds it hard to accept such a negative view when all our industrial competitors take the opposite one and are still increasing their expenditure
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while the United Kingdom is contracting its expenditure and planning to continue to do so.
We cite the Australian position in the report. In the United States of America there is now powerful bipartisan agreement that a strong science base is essential for industrial success. The President recently advocated increased Federal investment in science to foster industrial competitiveness and has proposed that the National Science Foundation budget should be doubled in five years and that there should be increases in research both for NASA and the Department of Energy.
It is often said, and it was reported to have been said again yesterday by one of Her Majesty's Ministers, that the United Kingdom spent a lot of money on research and development in the 1950s and 1960s and yet went into industrial decline; but I suggest that that result is due, at least in great measure, to the failure of British industry to apply the information available, while our overseas competitors not only took it away and developed it but took some of our best scientific and engineering brains with it. To use that as an argument for not giving maximum support to research and development today is surely a counsel of despair for it implies that British industry is incapable of learning from experience and so we might as well give up.
The committee's report is a substantial one and I cannot cover it all in a speech that is already over-long. I hope that subsequent speakers will develop and illuminate other aspects of it and that the debate in general will assist the Government in formulating their views on the committee's conclusions and recommendations. I do not expect a substantive reply from the Ministers this evening. I appreciate that because the report is a heavy one, more time is needed to frame replies to the committee's recommendations, but I hope that the Government's reaction this evening will be a positive one and that Ministers will assure the House that the Government are taking the report very seriously and urgently and will give the House their considered views before the Summer Recess. I remind the Government that, as we said in the report,
"Cosmetic adjustments to the status quo will not be enough."
The report may be critical in places but it is firmly based on an impressive weight of testimony. It is intended to be helpful and constructive, to point the way to a reversal of a downward trend in our performance in research and development which has already gone too far, and to revive the morale of the scientific community which is much too depressed.
The committee have recommended a high profile for science and technology, dynamic leadership at the centre and a new approach to funding research and development. These all matter greatly; but what matters most is the determination of both the public and private sectors to create a new confidence and to restore the United Kingdom's prosperity and its international position in science and in industry.
Moved, That this House takes note of the Report of the Select Committee on Science and Technology on Civil Research and Development.(1st Report, 1986–87, H.L. 20)—(Lord Sherfield.)
6.45 p.m.
Baroness Hooper: My Lords, this is a vital and challenging topic, but before I give an overview of major developments by the Government in this important area I should like to thank the noble Lord, Lord Sherfield, who introduced the Motion and who chaired the Select Committee which has produced the valuable report that we are now discussing. Perhaps I can also say how much we welcome the opportunity that the debate gives us to hear for the first time in this House from the noble Lord, Lord Dainton. We look forward to his contribution with considerable interest.
Five years ago the noble Lord, Lord Sherfield, chaired the Select Committee which produced another most important report entitled Science and Government. It was government acceptance of the main thrust of his earlier report in July 1982 which has largely determined scientific and technological input to policy-making during the past five years. In outlining the Government's position and in referring to significant developments since July 1982 I should perhaps mention that I am dealing more with the science-based aspects, while my noble friend Lord Lucas of Chilworth will largely concentrate on the industrial side. I hope that your Lordships will readily appreciate, from what in the time available can only be a brief overview of some government initiatives, that we are very much aware of how important civil research and development is to the growth of new technology-based industries, to the creation of jobs and to the continued prosperity of the country.
In 1982 the Government concurred with the Select Committee's outline of departments' need for advice and its view that what was needed was a strengthening of the centre rather than wholesale re-organisation. The Government also agreed with the committee that the machinery by which advice is to be tendered is less important than the ability, will and perserverance to seek and use such a device.
The major changes introduced in 1982, already referred to by the noble Lord, Lord Sherfield, provided an expanded remit for the Advisory Council for Applied Research and Development—commonly known as ACARD—and improved resources in the Cabinet Office for supporting the Government in their responsibility to secure an adequate scientific and technological input to decision-making. Better interdepartmental co-ordination was introduced through the establishment of the Committee of Chief Scientists and through the awareness afforded by the Annual Review of Government Funded Research and Development, which was first published in 1983. Stronger links were initiated between ACARD and the Advisory Board for the Research Councils (ABRC) to strengthen the interaction between basic and applied science and between science and industry.
I should like to highlight significant developments which have occurred since 1982 in some of these areas. Turning first to the role of what was in 1982 the Chief Scientist, Central Policy Review Staff, and is now the Chief Scientific Adviser in the Cabinet Office, your Lordships will be aware that the Chief Scientific Adviser is now formally located in the Cabinet Office. Since 1982 this central scientific advisory role has been enlarged to include responsibility for advising and
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representing the United Kingdom in international science and technology. This has led to a particularly heavy involvement of the Chief Scientific Adviser with European Community research and development programmes and policies.
This reflects the growing importance that the Government attach to European collaboration especially on industrial science and technology. The United Kingdom played a major role in setting up EUREKA, for example, with United Kingdom firms participating in 39 of the 109 market-led projects already launched, worth in total some £2·5 billion. The Government are also giving priority to industrial collaboration within the proposed new Community research and development framework programme.
A more recent enlargement to the Chief Scientific Adviser's responsibilities, which I was pleased to see is welcomed by your Lordships, is the establishment under his authority of the Science and Technology Assessment Office. This office has a responsibility to make comparative assessments of the contribution of all government-financed research and development programmes to industrial performance and wider economic benefits. The Government are grateful to the Select Committee for its welcome of this new body. The Assessment Office is not yet fully staffed but is beginning its work, much of which will be done jointly with departments in evaluating their programmes. The aim is to help develop stronger evaluation procedures within departments and provide more information on indicators of relative effectiveness to help those taking decisions at various levels of government on R&D priorities.
The work of the Advisory Council for Applied Research and Development in advising government on scientific and technological issues has resulted in an increased awareness, both within government and the scientific community, of the need to ensure that research and development contributes to the creation of wealth and to the competitiveness of British industry. Those are both points that the noble Lord, Lord Sherfield, emphasised. ACARD's comments since 1984, which have been confidential to government, on the Annual Review of Government funded Research and Development have been particularly valuable in this respect. In addition ACARD has continued to publish reports. An early one in 1982 entitled Facing International Competition: the Impact on Product Design of Standards, Regulations, Certification and Approvals led to the quality assurance advisory scheme and to a government White Paper in July 1982 from which a major government quality initiative has developed. More recently, reports were published last year on Software: a vital key to UK competitiveness and on Medical Equipment, and the Government are considering their response to these two reports.
The second joint report by the chairmen of the Advisory Council for Applied Research and Development and the Advisory Board for the Research Councils was published on 12th December 1986. This report, The Science Base and Industry, recognises that industry and the nation depend on the maintenance of a strong and innovative science base able to contribute to the development of new

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technologies and advanced skills. They describe promising initiatives which are bringing the academic world, industry and government closer together to harness the science base for the economic benefit of the nation. These valuable initiatives include the special directorates of the Science and Engineering Research Council; the Teaching Company, cooperative research grants, and co-operative awards schemes of a number of research councils; programmes through which large companies directly support university research; arrangements to give individual researchers and their universities incentives to exploit their research; and, most recently, as the noble Lord, Lord Sherfield, has welcomed, the development of a national process to identify the most promising exploitable areas of science. However, the chairmen of ACARD and the ABRC also say in their joint report:
"In the final analysis it is industry operating in the competitive environment of the market place that must recognise it has the ultimate responsibility to see the potential of research performed under the aegis of the science base and use it to enhance its own innovative capacity. Firms that do not have a commitment to innovation and a healthy R&D base, with staff at all levels capable of recognising the opportunities afforded by the results of their own and others' research and able to formulate what research is necessary to meet future needs, will not flourish. We would urge industry generally to give a higher priority to R&D and to recognise the sometimes irreversible damage that low levels of R&D investment can have on their competitiveness in market places that are increasingly assailed by innovative products".
In recent years the Advisory Board for the Research Councils has exerted increasing influence over the deployment of the science budget. It has promoted a redistribution of funds between the research councils in relation to its assessment of national priorities; it has sought to increase research councils' ability to respond flexibly to urgent needs and has created a flexibility margin at board level to assist in this; it has encouraged research councils to shift emphasis toward areas of economic benefit and directed programmes; it has emphasised the need for research councils to manage their resources more effectively, including the need to rationalise and concentrate resources; it has encouraged research councils to prepare corporate plans which bring together scientific, financial and management considerations; and it is itself preparing a strategy document which will be ready in the spring.
One of the important responsibilities of the Committee of Chief Scientists, under the chairmanship of the Chief Scientific Adviser in the Cabinet Office, has been to provide guidance on the preparation of the annual reviews of government funded research and development. The fourth such review was published in December. Although the content of the reviews has followed much the same pattern since their introduction, there has been substantial development and evolution within this overall pattern. The latest review has nearly 200 pages, compared with 52 in the first review. The statistical data used to describe government funded research and development have been collected in a survey of all government departments and research councils conducted by the Department of Trade and Industry. This survey, which has been in operation for many years, has been developed and extended to fulfil the objectives described in the Government's response to
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the Select Committee five years ago. The 1986 review also contains information on research and development by nationalised industries as well as on research and development expenditure in industry funded by government. The 1987 review will contain information on research and development by companies in the private sector.
As a result of the Select Committee's recommendations five years ago we now have in the annual review a most comprehensive series of data on research and development which enable Ministers to take an across the board view of research and development expenditure and to consider both the present and planned levels and distribution.
In outlining major developments since July 1982 I have largely concentrated on structural changes. However, I should like to close by reminding your Lordships of the progress which is being made in fostering a community of interest between the academic world and industry. I know that that is of considerable interest to many of your Lordships. Important in this is the new LINK initiative. My noble friend Lord Lucas will address LINK's benefits from its contribution to industrial success. I am particularly aware of the benefits to the academic world and am pleased to reply to the noble Lord, Lord Sherfield, at least in part by saying that it is expected that the first LINK programmes will be announced shortly and that they will be funded jointly by government and industry.
I look forward to hearing the debate which will I know be a valuable and timely contribution to the Government's response. I should again like to say that we are considerably indebted to the noble Lord, Lord Sherfield, and to all the members of his Select Committee for their analysis and recommendations. The Government will continue to accord civil research and development the necessary high priority in policy decisions to ensure the United Kingdom's prosperity and international position in the scientific and industrial worlds.
6.58 p.m.
Lord Williams of Elvel: My Lords, your Lordships' House will be most grateful to the noble Lord, Lord Sherfield, for his clear exposition of the contents of the report. I should like to join the noble Baroness, Lady Hooper, in thanking him for his contribution as well as thanking other noble Lords who served on his committee.
The report is the result of hard and meticulous work and anybody who has read through it must be impressed by the diligence with which the Select Committee of your Lordships' House performed its task. I should like to join with the noble Baroness also in welcoming the noble Lord, Lord Dainton, who is a maiden speaker today. This is a subject on which he is a great authority and we all look forward to hearing him speak. Having read the report, I must say at the outset that it makes pretty depressing reading. As the noble Lord, Lord Sherfield, said, the message from the committee is almost exactly the same as the message that was conveyed in 1981; namely, that success in science and technology is essential to our future as an industrial nation. It is a very simple and straightforward message. As the noble Lord said, that message

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went pretty well unheeded in 1981. Today having listened to the noble Baroness I have to say that it seems to me to have gone unheeded again.
As the noble Lord, Lord Sherfield, pointed out, it is not as though the rest of the world is standing still. Other competitor countries have forged ahead. For instance, in proportion the gross domestic product spent on research and development, including defence research and development, in the United Kingdom was at 2·27 per cent. in 1983. In Japan, the United States and West Germany it was at about 2·55 per cent. or 2·65 per cent., with much larger gross domestic products than ours. They are now probably over the 3 per cent. level whereas between 1981 and 1983, when the original message was put forward, our proposition of gross domestic product spent on research and development declined.
Some of your Lordships may ask, "Does it all matter? Why should we be worried if the total R&D spend by our competitors is well in excess of ours?" As the noble Lord, Lord Sherfield, said, the issue is no more and no less whether we are to survive as an industrial nation of the front rank and not sink into a nation that makes other people's products, invites tourists, sells services, lives off the proceeds of certain pockets of activities and cannot keep up with the first rank. That is the issue.
Noble Lords opposite may not believe me. There is no reason why they should. Let me quote in support the Assistant Secretary for Productivity, Technology and Innovation in the United States Department of Commerce, Dr. Merrifield, who said:
"There is no question that manufacturing is undergoing profound change and we are on the threshold of a new industrial revolution.… It is already here; it is going to accelerate; it is going to happen with us or without us.…… If a country does not realise this is going to happen, your manufacturing will be done by somebody else for you".
He goes on to say that research and development is by far the most important industrial priority.
"It's absolutely essential for survival. It is the single most important thing. In any nation, R&D in excess of 3 per cent. of the national product is now required for survival and growth".
He concludes:
"A nation that does not accord the utmost importance to R&D has made a decision not to be in business in five to ten years".
That is what this debate is about. I do not intend to, and I could not even if I did, cover all aspects of what is a comprehensive document. My task will be draw out one or two themes, set out the Opposition's attitude to the report's major conclusions and address myself to the problem of funding in particular.
The report, as the noble Lord, Lord Sherfield, said, is of an inquiry into the policy and practice of public support for civil science and technology in the United Kingdom. It would be wrong, as he pointed out, not to see the findings as part of a larger picture. The committee did so by commenting at some length on the division of responsibility between the public sector and the private sector in research and development.
I thought the committee quoted rather wryly ICI's evidence that unless something is done soon, the research funding problem will solve itself in a disastrous way: there will be so few good young
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scientists coming forward that even with limited funding we shall be able to support them all. That seemed to be one of the report's most depressing points.
If training is part of the larger picture, then so is capital investment. Because it is not sensible or useful to increase research and development unless we have proper investment and training programmes to make use of the R&D input; in other words, the "D" can convert the results into commercially viable products, and capital investment and trained manpower are there to produce, package and market the products. We see—and I emphasise this—this increased R&D effort not as an end in itself but as part of a comprehensive programme for industrial renewal which embraces investment and training across the whole of manufacturing, conversion and extraction. If any one of those components is missing, the programme has no chance of being successful.
Secondly, any future effort in support of R&D must—and I stress the word "must"—take account of regional disparities in the United Kingdom. It would not be right or sensible for the regional problem to be ignored in this whole debate. If it is ignored, the North-South divide, the comparative depression outside the South-East and South-West, would be aggravated instead of ameliorated.
By an intense effort and by the change in attitude for which the Select Committee calls, we could revitalise our industrial base, not only in the prosperous areas of the South but in Scotland, the North-East, the North-West, many parts of Wales and the Midlands. That is a national imperative alongside the general imperative to increase our R&D effort.
Thirdly, there are the obligations which the Select Committee did not mention and I shall mention briefly. They are obligations that we have as a civilised community towards the poorer parts of the world. If we are to succeed properly in industrial renewal, based on an enhanced R&D effort, we must be prepared to export that technology to those countries of the third world which are in desperate need of the means of development.
By that I do not mean subcontracting manufacturing to Hong Kong, Singapore, Taiwan or whichever country happens at that time to enjoy the lowest manufacturing costs. I mean much more than that. We must be prepared to share the results of our effort with the poorer countries of Africa, Latin America and the Indian sub-continent. We owe it to them and to ourselves to do so. Those are my general comments on the Select Committee's report.
To be more specific, there are two recommendations of the committee's report that can be accepted without incurring any great expense. The first is in the central structure for R&D, and the second is the use of central government purchasing power. We accept the view, and the next Labour Government will implement the proposal, that there should be a Minister who carries responsibility and answers for science and technology across the range. Although, as the noble Lord, Lord Sherfield, said, we are not allowed to speak in public about Cabinet committees, it would also seem sensible that that responsibility should be at the highest level but should be carried out

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in close liaison with the Department of Trade and Industry, which must in our view be the main motor behind the new effort in civil R&D.
We also accept the view, and will implement the recommendations of your Lordships' committee, that there should be a Council for Science and Technology, absorbing ACARD and charged with overseeing the whole range of scientific endeavour. We accept without hesitation the Select Committee's arguments that only the Prime Minister's close involvement and a clear horizontal view across the full range will produce the necessary political impulse.
We also accept the Select Committee's view on the role of public purchasing in encouraging the private sector to undertake more R&D and to become more internationally competitive. We recognise, as the committee recognised, the dangers of a cosy relationship being built up between government and private industry. But we are as impressed as the committee was by the finding of a report made by the US Office of Technology Assessment, which is quoted in the report, that federal government have a far greater and more positive effect in their purchasing on private R&D expenditures than does federal R&D itself. There is a lesson here which should not escape us.
One last and short point on the theme of public purchasing which spills over into international and community collaboration which the noble Baroness, Lady Hooper, stressed in her speech bothers me a little. It concerns the Joint European Torus project near Oxford. This and other projects of a joint nature have to be encouraged but they need caution in their implementation. I have been astonished to receive advice that UK staff on the project are paid approximately half their Euratom counterparts—leaving aside expatriation allowances and other benefits that Euratom staff receive. I also understand that this matter has been the subject of litigation against the European Commission without success. I obviously do not expect a reply from the Minister this evening but I should be most grateful if the noble Lord will look into the matter and write to me about it. If what I am told is true it shows how sensitive we have to be in implementing these joint collaborative projects with Europe and internationally.
Up to now I have discussed matters which require no serious financial outlay. Reorganising the central structure of government and re-orientating public purchasing will not cost a great deal. But, as the noble Lord, Lord Sherfield, said, we have to address the problem of money since the whole tenor of the Select Committee's report is towards higher expenditure, and in particular higher public expenditure. Its view is most clearly set out at the beginning of Chapter 6 of the report and has been reiterated very clearly by the noble Lord in his excellent introduction to the report.
There are two questions to consider. First, granted that the present R&D effort in British industry is wholly inadequate, what is the best way to improve it? Secondly, in those areas for which the Government are directly responsible—such as basic research and strategic research—how much should the Government spend and where is the money coming from? I believe
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that there is a political difference between the Government and the Opposition on the first question. The Secretary of State for Trade and Industry is quoted in the report as seeing it as,
"central to the Government's philosophy that the motivation for spending more on R&D must come from industry itself".
Our view is rather different. We believe that British industry has to be induced to step up its R&D effort by incentives. There has to be a kind of kick-start to get the engine going properly in the expectation that when the engine is going properly it will continue of its own accord, and indeed move into higher and higher gear as the change in the attitude with the Select Committee is looking for actually starts to seep through. If there is no kick-start of that kind then we are afraid that there will be no change and the engine will continue to tick over. There will be no great progress, and it will come to the point where the engine will simply peter out.
The committee considered a variety of ways to give that kick-start to the system. I believe that in doing so it accepted our view that it required positive action from the Government. As the noble Lord said, there are a number of ways in which this can be done. The United States and Japan—to take only two examples—have a very elaborate system of fiscal incentives for R&D. The French and Germans have a slightly different system which mixes fiscal incentives with outright grants and cheap rate financing, particularly risk capital. But I think the committee was right to focus on the Australian solution which did two things. First, it concentrates benefits for R&D carried out in Australia rather than carried out anywhere else. Secondly, by putting a time limit on the scheme it made sure that everybody would start now in order to benefit from the six years that they had in fiscal incentives. We have only one problem with the Australian scheme which might be aggravated if it were transferred to the United Kingdom. I have the greatest respect for the Inland Revenue and for Inland Revenue inspectors, but I am not entirely convinced that they would make the best judges of what would be a qualifying scheme for the purpose of tax relief. Furthermore, tax relief helps only those companies which are making a profit. There are certain to be occasions when companies which are not making a profit and not able to benefit from tax relief will need to have some form of support. I therefore think that we should be looking more along the lines of a grant system rather than a tax incentive system such as the Australian one.
As far as direct public expenditure is concerned, in funding R&D through departmental programmes in basic and strategic research we really must reverse the trend of cuts to which the noble Lord referred in the real value of the science budget. It is immensely depressing I am afraid to read the advice that has only this month been tendered by the Advisory Board for the Research Councils to the Secretary of State on the allocations of the science budget among research councils and which was published only last week. After noting their dismay and restating the increased demands made on the UK science base, not least in the AIDS emergency, the ABRC produce this paragraph:
"It would appear that the Government have set aside these arguments. The Government's declared policy, nonetheless, is to maintain and enhance the strength and quality of the science base.

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Our advice has to be that this policy and the cumulative tenor of the Government's financial decisions can be reconciled only by reducing significantly the scale of the science base in terms of the numbers of fields in which world class effort is maintained; the numbers of researchers employed and the numbers of laboratories. This kind of contraction will require substantial restructuring funds. We shall be addressing the implications of a major contraction in the strategy paper which we hope to have ready as a basis for consultation in the first quarter of next year. But our strategy paper will also restate our firm view that it cannot be sensible to reduce (whether by default or by overt policy) the research capability of an advanced industrial economy at a time of rapid scientific and technological development".
That is from the ABRC and does not augur very well for the future. The Government will no doubt argue that they do not have the money and that in a period of financial stringency every programme, including civil R&D, has to be vigorously controlled. Let me put to the Government one very simple proposition. We are now told on all sides that the Chancellor of the Exchequer has some £4 billion to give away next month. Coincidentally, give or take a few hundred million, £4 billion or so has been raised by the Government in this financial year through its privatisation progamme. We must remember that privatisation proceeds are once-for-all proceeds. One cannot sell British Gas twice. Would it not make sense, and would it not be logical, to reinvest the proceeds of the sale of assets in the industrial future of our country instead of cutting the standard rate of income tax as is apparently proposed? Would it not be a course of action which is wholly consistent with good business practice as well as fiscal prudence and integrity? Is this not, by the Government's own logic, where the money should come from?
Even at this late stage, the Government may repent. The Select Committee has called for a fresh start and a sense of urgency. The Opposition accept that both are needed. The challenge is now to the Government. I repeat the words of Dr. Merrifield:
"A nation that does not accord the utmost importance to R&D has made a decision not to be in business in five to ten years".
I only hope that the Government realise what is at stake.
7.20 p.m.
Lord Flowers: My Lords, we on these Benches thank the noble Lord, Lord Sherfield, for initiating this debate, and for so effectively leading the inquiry that gave rise to it, of which I was so honoured to be a member.
I unreservedly echo what he has said, and I broadly agree too with what the noble Lord, Lord Williams, has said. The crux of the matter, as the Save British Science Society has recently emphasised, is that it would take at least an additional £2½ billion annually, taking government and industry together, to bring our civil research and development funding to the levels that pertain in comparable countries. That shortfall is the single most important consideration. I shall try to avoid histrionics, however, and speak instead about strategic research, mentioned briefly by the noble Lord, Lord Sherfield, because in my view that is a central issue in the consideration of policy for science and technology.
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However, science policy is often confused by the use of ambiguous words like "pure" and "applied". Lord Rothschild showed that it is more a matter of who pays for the research and with what motivation, than of what happens in the laboratories. I apologise for seeming pedantic, but I want to avoid that confusion. Pure research is research in any subject—chemistry, sociology, engineering—undertaken primarily in order to expand the frontiers of knowledge. We are still rather good at pure research in this country, but we are finding it increasingly difficult to hold our own with the funds at our disposal. Applied research is research, whatever the content, undertaken because someone considers that there might result to their advantage some benefit commensurate with the cost, and is prepared to pay for it. "Pure" of course is not synonomous with "useless", as some seem to think. As Sir George Porter said only yesterday, there are really only two kinds of research: applied and not yet applied, although it is not always applied as at first imagined.
For example, secure message encoding depends on the properties of very large prime numbers; a subject foundly thought by mathematicians not so very long ago to the utterly useless. The commercial value of this discovery would surely cover the cost of all mathematical research since Euclid initiated the theory of numbers.
What then is strategic research? You can call it pure or applied as you wish; that is in the eye of the beholder. It is research undertaken in order to expand the frontiers of knowledge, and therefore, by our definition, pure. But it is undertaken in fields deliberately selected because they seem likely to contribute significantly to some desired applications. To that extent it is applied.
The most quoted examples today concern the enabling technology, so-called: research into fields like information technology, biotechnology, and the technology of materials, which underly, and study of which should therefore ideally precede, almost everything else that we want to do. Not applications in themselves necessarily, but enabling a wide range of applications to be made. That is clearly a very important matter.
Unfortunately the ambiguity of classification of strategic research so often proves its undoing. Those responsible for the support of pure research regard it as applied, while those responsible for applied research regard it as pure. At times when money is short—and money for research has been getting shorter and shorter, whatever the Government may say—strategic research becomes nobody's prime concern. Insufficiently speculative for the academic, too far from profitable application for the industrialist, it is so easily squeezed out in an economy drive.
The principal responsibility for funding pure research lies with the research councils and the University Grants Committee, both working within the budget of the Department of Education and Science, as befits the prime purpose of pure research, which is to expand the frontiers of knowledge. The responsibility for funding applied research lies with the interested customer and the proxy customer: principally, that is to say, with the industry and with

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departments or agents of government who deem it in their interest, or in the national interest, to sponsor it.
In pressing the case for strategic research, your committee does not suggest that there should be a third source of funds, a third responsibility. Perhaps it is especially important that I make that clear speaking from these Benches. It is not that there is a dichotomy between the practitioners of pure and applied research and sensible people who are sick of them both. On the contrary, we should all feel responsible for the definition and furtherance of the strategic elements of research, because that is how new products and processes and other innovations of economic value are most likely to be discovered, developed and sold.
It is for that reason that we were enthusiastic about the concept of "exploitable areas of science" offered by the Advisory Council on Applied Research and development—ACARD. Their aim is to draw together the two perceptions of what is possible in scientific and technological terms and what is commercially desirable. Research in the exploitable areas of science is synonymous with what I have called strategic research. What seems new about it is that ACARD has suggested that there may be some systematic process by which exploitable areas may be identified. Whether or not something systematic results—and I am sceptical about that because other countries have tried and failed—the essence of the process must be to obtain a consensus among those responsible for pure and applied research about what areas of basic research seem most likely, after objective analysis, to become applicable within a reasonable time if additional effort and funds can be devoted to them. The consensus must be between industry, research councils, universities and government. That requires political will, and it is for that reason, among others, that we need the Council for Science and Technology proposed in our report, able from the centre to exert powerful influence upon all parties.
Many noble Lords will realise that I am doing little more than spelling out the notion of selectivity and concentration which figured large in the policies of the research councils some 20 years ago. By and large it failed to generate significant application. It failed not because the exploitable areas were ill-chosen, but because the potential users were bystanders rather than participators in the strategic research programme. There was no contribution and no commitment on the part of industry, and therefore precious little real interest. They were spending the Government's money, so it did not matter. Report after report has shown that the same has still to be said today. It is the genuine participation of the potential user that is the vital element in a truly strategic research programme. That should be the prime consideration of the Council for Science and Technology.
Of course there are exceptions, but the only one to offer real encouragement is the Alvey programme in the highly exploitable area of information technology, because it was conceived from the outset as a genuine partnership between industry, research council, university and government in which everyone participates. There have been deficiencies even here—for example, the failure to cover university
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overheads, a matter about which government departments are rather bad in general. However, the Government, and especially Mr. Kenneth Baker in an earlier incarnation, nevertheless deserve our warm congratulation for the vigorous way in which the Alvey programme was mounted. Of course it will be some time yet before we know whether it has improved our commercial performance. That can only be assessed in the longer term. What Alvey has shown is that research scientists normally engaged in pure research are perfectly willing and able to turn their attention to strategic research, given the leadership of government and the participation of industry.
Therefore, what I find quite incomprehensible is that the Government have not yet seen fit to build on their own success by mounting Alvey-like programmes of strategic research in other exploitable areas.
Responsibility for selecting and funding strategic research in the exploitable areas of science is at present too widely distributed. On the one hand, we have the research councils, the prime responsibility of which is the support of pure research selected on the basis of merit, but nowadays, as the noble Baroness has said, increasing their effort in the exploitable areas. They are loosely supervised by the Advisory Board for the Research Councils, which advises the Secretary of State about his reponsibilities for science. As the noble Lord, Lord Sherfield, has said, your committee hopes that the ABRC, and none too soon in my opinion, will gradually assume greater executive control over the research councils.
The University Grants Committee also has responsibilities for the funding of research under the dual funding system and is nowadays trying to be more selective about it. Although the UGC will obviously take into account subjects selected by the research councils in coming to their own decisions, too close a degree of detailed co-ordination, and too restrictive a view of selectivity, would be undesirable because the UGC provides the seed corn.
However, the UGC is also responsible for teaching, which is the other half of what the universities do. That responsibility is shared with nobody else. In the desire to be selective about research the UGC already pays scant attention to the requirements of good teaching, which are not identical with those of good research. I should not want to encourage that trend at present by proposing that the policies of the UGC should be too closely co-ordinated with those of the ABRC. No doubt we shall develop our views on that when we debate, as I suppose we shall, the recent Croham Report.
The responsibilities for applied research, on the other hand, are even more widely distributed among many government departments and agencies, and among that extremely inhomogeneous collection of institutions known as "industry". From the centre ACARD keeps a watching brief over some of them and offers the occasional nudge. However, it is confined to applied research and development, and over much, especially the defence programme and the associated industries, it has no say. We need a body similar to ACARD, but of higher profile and

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empowered to oversee the whole of science and technology—pure and applied, civil and defence—whether in university, industry or government.
The Council for Science and Technology, under the leadership of the Prime Minister, no less, should be charged especially with responsibility for identifying the exploitable areas of science in which strategic research can most effectively be mounted, and for winning the participation of all concerned. That is how new products and processes are most likely to emerge from the nation's research expenditure, and how research can most readily be harnessed to meet economic objectives.
I must not keep the House any longer. We are all looking forward to the maiden speech of the noble Lord, Lord Dainton. I have known him for many years. He is one of the wisest men in England.
Many of the recommendations of this report were made or implied in the earlier report entitled Science and Government of five years ago. That report was largely ignored by government. Let us hope that they heed your Lordships' committee this time. Competition in research, and in the technologies that are so dependent on research, is nowadays so fierce that there is not likely to be another opportunity.
7.35 p.m.
Lord Dainton: My Lords, alone among the list of speakers my name carries parenthetically the letter "M". I feel as if I were a learner driver, and it induces in me a proper degree of respect for the conventions of your Lordships' House and also a proper degree of trepidation. I suspect that I am also alone in the fact that over 42 years ago, when I gave my first lecture in Cambridge, I was criticised for my presumed defects, not directly but indirectly. It was a lecture theatre which the students entered from the rear and I entered from the front. Not unnaturally, the first few rows of the lecture theatre were unoccupied, which I did not consider to be a personal affront to me. However, I felt it necessary, in view of the fact that I had prepared my lecture with such loving care and wanted all the words to fall on the ears of my audience, to say—foolishly as it turned out—"Can you all hear me"? There was a slight pause and then a student in the first occupied row said "Yes, sir, I can hear you, but I am prepared to exchange places with someone else!"
As I looked at this report, my mind went back to Francis Bacon and his famous remark: "Knowledge itself is power." That, of course, is only a half truth. If knowledge is to be translated into action, human and material resources must be allocated, first, to exploit existing knowledge—that is really the "D" in R&D—and, secondly, by research, to extend and expand the knowledge that we have.
As I read rough the report, there seemed to be a kind of leitmotiv of the two perennial problems which have faced governments ever since science came of age and enjoyed state patronage. The first question was: how much should government and industry spend on research and development in science and technology? The second question was: how can one manage government investment in research and development
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to ensure that one gets the best value for money and the best outcome for the country?
Your Lordships will know that just about 70 years ago two remarkable men who were to become members of your Lordships' House—Viscounts Addison and Haldane—made what I still believe to be the most profound remarks about the second problem. I do not wish to go into them now, but I do not doubt that 70 years hence our successors will still be debating this question. However, because I believe that progress in this difficult field of science and government can only be made if past decisions are carefully scrutinised and monitored and the lessons learned from them applied, I merely wish at the outset to welcome the recommendation in paragraph 116 of Chapter 6 which says that some proportion of the money—about 1 per cent.—which government spend should be used to evaluate the results of past decisions. By the same token, I welcome the already established Assessment Office.
The report repays careful study. I cannot deal with the details, especially as I am aware of the convention about maiden speakers. However, I have formed a very clear impression that the analysis and the conclusions are broadly correct; they are certainly consonant with my own experience. It is undeniable that the percentage of the gross domestic product which has been applied to civil research and development has declined and, to a newcomer like myself, it appears that this decline cannot be right in a competitive world in which science and technology now offer, and will increasingly offer in the future, beneficial opportunities for the prosperity of the nation through industrial and commercial activities.
I believe that it is also self-evident that to gain the maximum benefit from the world's store of knowledge, to which every country has access, the United Kingdom must have enough people with the requisite skills, imagination and initiative to maintain an across-the-board capability from basic research to application, to manufacture and indeed to marketing. It must also have good machinery for making wise choices in the public sector. It must induce in the private sector a greater willingness to invest in and to exploit research and development. By and large, there must be a public willingness to accept that, as a result of the information revolution through which we are now going, change will be the norm and not the unusual, and that research and development in science and technology will from now on be the engine of that change.
Our record with respect to people has been touched upon, and in recent years it has not been good. In the last quarter of a century there has been a significant swing away from science in our schools. It is almost 20 years since the committee under my chairmanship reported on that and I find it sad to relate that the recommendations about a broad span of studies up to school leaving, which that report advocated, are only now somewhat tardily and, may I say, slightly timidly being tackled by governments.
As has already been commented upon, we allow some of our very best talent to leave our shores. I was dismayed when, last March, I received the list of candidates to be elected Fellows of the Royal Society,

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to note with some interest that 20 per cent. of those Fellows who had been educated in this country, and trained here in research, were now permanently resident abroad. They are indeed the best gifts that we could make to our rivals.
Much of the report is concerned with the machinery of government. The Select Committee recommends that the advancement of science and technology should be adopted as a central government objective and I wholeheartedly endorse that. It also recommends that there should be a Minister of Cabinet rank to preside over the new central council which is to oversee the whole of government science and technological effort. There are obvious difficulties associated with this idea which have been faced before in this country. They include how much consideration of, and due deference to, any central strategy a hard-pressed departmental Minister can give when faced with immediate problems which demand the full utilisation of all the resources at his disposal? On the other hand, how can the Cabinet Minister at the centre ensure that departmental policies conform with the central strategy if control of the purse strings lies in hands other than his own?
Nevertheless, I believe that the balance of argument has now shifted and points in the direction which the recommendations of the report indicate. If for no other reason than that our future is so closely linked with our competence in science and technology, this aspect of our national life should have a much enhanced visibility in the political arena, no less than in education and in the media.
However, on the question of the organisation of the research councils, I would beg to differ somewhat from the report. It has always seemed to me that science is a seamless robe; that the divisions within it called "subjects" are there for the convenience of the division of labour, and their existence, when they are institutionalised into separate research councils, are more harmful than beneficial. Moreover, science changes rapidly. Increasingly both the advancement and the exploitation of science require milti-disciplinary approaches.
When I was chairman of the Council for Scientific Policy, and later of the Advisory Board of the Research Councils in its first days, I was clear then that the research councils' interfaces—that is to say between the research councils—needed to be made more permeable and more fluid. I now believe that I would go further, and even further than the report. I think that we need a more effective instrument than the five research councils. We need a unified body—call it a national research council or national science foundation, if you wish—simply because there is much greater ease and speed of redeployment of human and financial resources, necessary if the obstacles to the implementation of policy change are to be reduced.
A second reason is that such a body could take a view right across the whole of science, engineering and technology and be better able to identify what the broad priorities should be where they transcend subject boundaries. I sense that some Members of the Select Committee share this view. I wonder whether
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they also feel that we should not delay. I quote Bacon again:
"He that will not apply new remedies must expect new evils; for time is the greatest innovator".
I should like to refer momentarily to the question of pay-offs for scientific and technological research and development. In advanced countries one finds universally that there are three loci for this work: institutions of higher education, national laboratories and sometimes international laboratories, and industry itself. It is beyond question that the best place for basic scientific work is within the universities and institutions of higher education. As the noble Lord, Lord Flowers, has commented, that is probably also the best place for some strategic research. That arrangement yields very many pay-offs. First, we have the cadres of well trained researchers coming from institutions where teaching and research are kept up to date. It helps to cultivate an awareness over the whole field so that we do not miss those opportunities based on work which is done outside this country and which is part of the international harvest of knowledge.
Furthermore, we must never forget that the mainspring of some of those most radical innovations which have blessed this country and other countries have had their roots and origins in basic research. I need only mention names like penicillin, cephalosporins, the cavity magnetron and lasers to make the point, because there are many others.
In these Houses of Parliament I suspect that we are more interested in the economic pay-off of scientific research and development, where the ultimate result must be the sale of the process or product at a profit in the world's markets. Increasingly, it seems to me that the salability of what we have to offer will, to a very large degree, depend on its technical superiority over the products and processes of our rivals. If British industry is to succeed, it must learn from its competitors in the USA, Japan, Germany and so forth, that it must invest more in R&D and follow it through.
Twenty-eight years ago I was the Arthur D. Little Professor of Chemistry at the Massachusetts Institute of Technology. Arthur D. Little was a chemistry graduate of that institution who founded a consulting firm about 100 years ago. He was very fond of writing and saying that research is the mother of industry. Significantly, when he died he bequeathed the whole of that great consulting firm to an academic institution—to MIT itself.
I have worked a fair amount of my life, one way or another, in the United States of America. Among the contacts I have met have been Dr. Guy Suits of the General Electric Company who, for 20 years, was in charge of its distinguished research laboratory at Schenectady. One lunchtime I remember him telling me never to forget that an industry cannot be successful without research because,
"research is the best form of industrial insurance".
For all these reasons, therefore, I heartily endorse the recommendations of the Select Committee which refer to the need to stimulate industry to invest more in research and development. I think that the two measures proposed—tax incentives, well known in the United States, and also requiring annual accounts to

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show how much has been spent on that in individual firms—are measures which I would wish to commend to your Lordships.
Perhaps, too, as a last thought, I could put it this way. It has often seemed to me, in my public life concerned with scientific research and development in the public sector and in my academic life, that we have been constantly asking over the years—and quite properly too—what is the cost of doing this or that piece of research or development. I would suggest that perhaps our decisions might be a little better, and certainly would be better in industry, if we also asked and tried to answer the question: what is the cost in the form of a penalty in the future of not doing this or that kind of research? I thank your Lordships for your indulgence.
7.51 p.m.
The Earl of Cranbrook: My Lords, if it were not for the fact that I feel I speak for the whole House it would be almost presumptuous of me to congratulate the noble Lord, Lord Dainton, on the calibre of his maiden speech. In a way what the Select Committee did has sprung from work that he initiated. He was of course chairman of the Council for Scientific Policy working group, on which the noble Lord, Lord Flowers, and I believe the noble Lord, Lord Kearton, also sat, which in 1971 reported on the future of the research council system and which was effective in setting up the ABRC that we now have.
It is a pity in a way that the second half of Cmnd. 4814 is sandwiched behind Lord Rothschild's report because it has at least as much weight and at least as much importance. We are very glad indeed to have heard the noble Lord tonight, and we look forward to hearing a great deal more from him in the future.
I was particularly interested in his views on the Unified Research Council, which is referred to in the Select Committee's report. At present, as a result of another report from the Select Committee on Science and Technology, I am sitting on what can perhaps be referred to as an interface sub-committee which is attempting to co-ordinate research from three research councils. It is an odd role. With this experience, I am very much inclined to put a great deal of weight on the advice that the noble Lord has just now given us.
I should also like to take this opportunity of elaborating briefly on two aspects of the report of the Select Committee on which I had the honour to sit under the chairmanship of the noble Lord, Lord Sherfield. I want to speak briefly about manpower resources and also about criteria for the public support of research.
Those of your Lordships who managed to read the large volumes of evidence will have found them well worth reading. They are large in both senses. I must register a slight protest at the change in size of these books. It means that I have to reorganise my library completely if I want to keep them. It is an annoying feature that they have suddenly doubled in size.
In this evidence your Lordships will find one strain constantly repeated. I take, for instance, from page 44, the words of the British Microcirculation Society,
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which expressed their anxiety over young research workers who leave research or go abroad; in simple terms, the brain drain. The Engineering Council referred to the difficulties experienced in recruiting and retaining skilled staff. It said:
"The salaries of academic staff need to be competitive with industry if research establishments and academia are to attract and retain graduates of the highest quality".
The Engineering Council was afraid that graduates would leave academia and go to industry, but if we read the words of industry in the person of ICI, one of our largest and most research-oriented public companies, it finds:
"barely enough good people … for our own recruitment".
There is no contention that salaries in research and in universities in general are low by comparison with the rewards offered to exceptional young graduates in almost any other career. These bright people are therefore lost to research. The world abounds with anecdotal stories. Some of the salaries paid by financial institutions to their star performers still in their early twenties are three, four or five times as much as what a young man could expect if he were to enter a research career. I heard yesterday of a young London journalist who, good luck to her, was earning a lot more than a professor before she had reached 25. This is the brain drain.
The direction of the brain drain though nowadays is almost exclusively to the United States. When I was beginning my professional career almost the whole world was available to us. There was a university expansion going on in every quarter of the globe, and we could, and did, find places in many different countries. But now the brain drain is almost exclusively to the United States of America. If Australia is about to found two new universities, there will perhaps be a slight addition in that direction if they recruit internationally. But otherwise that is the direction in which we are looking.
I believe that the Royal Society is shortly to publish new statistics on this point. I believe that it will be found that, although perhaps in quantitative terms the loss is not great, in qualitative terms it is frightening. Quite recently we learnt of a 24 per cent. pay rise negotiated by university teachers. This may serve to ameliorate their circumstances to some extent, but on the other hand it simply intensifies some of the problems faced by the research councils and other grant-giving bodies.
If salary costs are increased in this way within budgets that are fixed on level funding terms, projects that are already under way and budgeted for require increased allocations. These projects run for up to three years ahead in general. The extra costs can only be met either by reducing the number of projects which are funded or by cutting research funds elsewhere. Therefore, it is a double-edged knife.
Let us look at the United States system; let us look at the United States mechanisms for university education and research. We are struck immediately by its diversity; the existence of state, federal and independent institutions. There are some colleges where the primary duty of the staff is simply to teach. Little research is expected from them, and in fact they achieve rather little research. But on the other hand

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there are famous names among the universities with a high percentage of staff whose whole career is devoted to research, and again there are some research institutes of superb calibre.
If we look at the terms on which the staff are engaged we also find that these are variable. The nine-month contract is quite a frequent form of engagement, leaving the employee free to spend the remaining three months earning money much as he will. There is a great variety of short-term contracts and even tenure within the American system. It does not give the security for life that we find among the less flexible system that exists in our universities. It is true that within our universities, out of necessity, ways and means have been devised, particularly let us say in faculties of medicine or engineering, to allow staff members to earn more by working outside their contract terms.
I recognise clearly the strength of some of the initiatives that Her Majesty's Government have taken in the last two years, as listed for us by the noble Baroness, Lady Hooper. I have felt the impact of them, as I sit on the Natural Environment Research Council. There have been considerable changes, I judge, in the operation of research councils. Is it now time to look at our universities and to undertake a radical review of our university systems to try to create opportunities for high salaries for high performance? A challenge lies before the universities and the Government to examine the systems in other countries, particularly the United States, and to see what structural reforms could be adopted to the service of our scientific and research community.
The second point I want to speak on briefly concerns the criteria for public support of research. The report of your Lordships' Select Committee recognises that within basic science the peer group assessment system is the best available method for determining what research is supported. This involves a judgment by leading practitioners in the relevant fields of research and it includes two considerations. The first is the expectation that results will lead either to new concepts or to new explanations of known phenomena. The second point for evaluation is the worth of the research for training and for the strengthening of the research capacity of the people involved.
The academics who are involved in making peer assessments in the case of basic research would probably agree that they are not necessarily the right people also to judge the commercial potential of strategic research. There have been moves to adjust the composition of research councils and to bring in more people who have experience of the world of commerce and industry as it impinges upon the world of science. But some other method which is not yet clear to us is envisaged in what have been called the exploitable areas of the science process.
Both reports—the report by ACARD and that from your Lordships' Select Committee—emphasise, on the other hand, that not all strategic research is amenable to, or even is desirably evaluated in terms of, commercial exploitation. The report in paragraph 6.66 identifies the Department of the Environment especially as one government department in what is called a non-commercial field, where the research is
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concerned to benefit sections of the public at large. But this can be expressed in much stronger terms.
There is now evidence that our natural environment is stressed in three main areas. It is stressed in the atmosphere. We see phenomena such as ozone depletion, carbon dioxide accumulation and acid precipitation. The natural environment is distressed in the marine area. For example, any noble Lord who tries to sail across the Kattegat in the Danish North Sea in summer will find it stinks; it is rotting. Our local inshore coastal waters are also too rich—too foul perhaps I should say—in their burden of contaminants. Land is a problem. There are wide complaints about the degradation of our natural environment by agriculture in this country under what is seen as the stimulus of the common agricultural policy. More widely in the world there is serious degradation in terms of erosion and depletion of land quality.
Research in these areas leads to something which is much more than merely the words "public benefit", as used in our committee's report. Reseach is essential to develop policies that will safeguard the natural resources. I reiterate the question asked by the noble Lord, Lord Dainton, just now. We must examine research in these spheres in terms of the penalty for not doing it. That in my view is a full economic justification. It is not in terms of cash, but it is in terms of damage limitation and resource conservation. These extra funds cannot come from the DES Vote. They must come from a government who take proper care of their people, their nation and their environment.
The noble Lord, Lord Williams, referred briefly to AIDS. This is an even more critical problem. It faces the whole of mankind and it again requires a response which I think is outwith the science Vote of the DES. I should not expect the MRC to seek funds from the ABRC flexibility margin but rather to obtain funds from the Government to promote research into this medical problem.
This leads to the final question. We agree that resources are limited. I think that no one—although I felt that noble Lord, Lord Williams, was getting dangerously near—feels that our problems can be solved by splashing out money on a large scale in an indiscriminate fashion. More money is needed, but some research may have to be stopped. The criteria I suggest for supporting research have to be turned on their heads to find some rational basis, some grounds for policy decisions, to say that there are fields of research which need not continue in the national interest; something where exploitability is not clear, where the training value is not apparent and where the protection of the environment is not of obvious significance. That is something which has to be considered with as much care and scrutiny as do the grounds for strengthening our support for research in other fields.
8.7 p.m.
Lord Gregson: My Lords, I first add my congratulations to the noble Lord, Lord Dainton, for what I should describe, as an engineer, as a Class 1A maiden speech. It is indeed a measure of the value of this

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House that a man of the stature of Lord Dainton can add to the debate of the Parliaments. We should be conscious of that.
I pay tribute to the chairman of the Select Committee, the noble Lord, Lord Sherfield, who chaired this inquiry. His wisdom, his expertise and long experience, arising from distinguished service to the country over many years, was tested to the full by the importance and complexity of the subject dealt with in his report. He came through with flying colours, as the House might expect. We were grateful to the noble Lord, to our clerk, to our many advisers and other people who helped to produce what I consider to be a very important report for the future wellbeing of this nation.
Over many years in connection with a number of organisations with which I have been associated I have had a unique opportunity to study at close hand the activities of most of our world competitors and potential competitors—in Europe, North America and especially the Far East and the Eastern bloc, particularly Russia. I must admit my deep concern that we in the United Kingdom are failing and failing badly to keep up with the rapid pace of the development of technology that is taking place all round the world. Since we in this country have to earn our living in international trade, I believe this situation is untenable.
I have no doubt that your Lordships are all aware that over the last three years this country has had a negative balance in manufactured goods for the first time since what is known as the Industrial Revolution around the end of the 18th century. But I wonder how many are aware of the alarming rate of change there has been from a positive to a negative balance. In 1981 we had a positive balance of £5 billion; in 1986 we had a negative balance of £6 billion, and I would suggest that for a trading nation which depends on its overseas trade to maintain the standard of living of its people, this must give rise to considerable concern. In normal circumstances we should be in an extremely serious balance-of-payments crisis—more serious in fact than anything we have experienced previously. The reason we are not in crisis, or apparently not in crisis, is of course North Sea oil.
May I at this stage correct once and for all the misguided conception held by some Members of Parliament and many newspaper editors that we in this country, by some miraculous means, could earn our living and maintain our standard from our net earnings from services? The GDP of the United Kingdom is roughly a little more than £350 billion. The output from manufacturing is nearly £200 billion: over half our wealth. Most of the rest comes from the extractive industries and from farming. That is the internal account, the housekeeping money.
We import nearly £80 billion-worth of goods from abroad and we pay for them by exporting £60 billion of manufactured goods and a net £7 billion of services. The difference is presently made up by exporting North Sea oil. The manufacturing industry is absolutely vital to the economic wellbeing of the United Kingdom. In recent years the decline in our manufacturing earnings abroad has been almost
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exactly the reciprocal of the build-up of the sale abroad of the surplus of North Sea oil, over and above our own needs. In other words, the total balance was slightly positive.
I fully recognise the contribution which services and overseas investment make in earning our living, but they really do not come anywhere near substituting for the £60 billion that we earn from manufacturing exports. It is the erosion of that manufacturing base, without the prop of excessive North Sea oil earnings, that is the root of my concern for our economic future.
Since the United Kingdom is not rich in physical resources other than energy in the short term, our ability to compete in the world markets with our goods and services is entirely dependent on adding value to the materials and resources which we import from abroad. That means we must rely primarily on the quality of our human resources, their skill, their enterprise and their versatility—in other words, technical knowledge and the intellectual capability to apply it.
A most important feature of the 20th century is the rapid emergence of new technologies, and the pace is accelerating. The Office of Technology Assessment of the United States Congress recently did an assessment of the development of computer science. Their conclusion was that knowledge in this subject has a half-life of 2·7 years: in other words, in the time of the average first degree a graduate is already out of date. This exponential increase in technology appears to be a factor which we in this country have failed to realise. It takes more and more effort to keep up with the front runners: you cannot rest on your laurels or assume that the provisions we made yesterday to compete are sufficient for today; and they are certainly not sufficient for tomorrow.
Another feature of new technology is that it is all-pervasive. There is hardly an area of man's endeavour that is not affected today and will not be more and more affected as we follow technology up the exponential scale. To remain competitive in the world markets we must be at the forefront of a good many of the developing technologies, if we cannot be at the forefront of them all.
Unfortunately, as I said at the beginning, we are falling behind our competitors in the rest of the developed Western world. In general we are not keeping at the forefront of science and technology. In general we are not applying innovation to our endeavours in manufacturing industry, and, since this will drastically affect our ability to earn our standard of living, it simply must not be allowed to continue. For our sakes, but more particularly for the sake of our children, we have got to climb back by hook or by crook to being a leading manufacturing nation on a world scale. It concerns every one of us, and every one of us has a part to play.
There is no doubt of this country's competence in science: the whole world acknowledges it. The regrettable fact that over the past few years we have failed to provide the resources to maintain that capability I am sure will be dealt with by other speakers in this debate. But the great failure of this nation over many, many years is the failure to exploit the scientific discoveries which have come from our

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universities and research laboratories. I believe that that failure lies equally at the door of government and of industry.
We have heard a great deal over the past few months of the disastrous effects on industry of the short-term outlook of the institutions of the City of London, which are now by a very substantial amount the majority shareholders of British industry. There is no doubt in my mind that, coupled with poor management and interest rates that border on usury, the short-term approach is a fundamental cause of British industry retreating into technological obsolescence, which is so damaging to this country's potential in world trade. In these days of universal and rapid communication, you can no longer sell yesterday's technology anywhere in the world. The days of selling pig iron to India and rice bowls to China have long since disappeared. If we are to remain a major trading nation it is a nonsense to rely on a low exchange rate as a sole basis for improving competitiveness. Prices are no longer the all-dominant factor. Technology content and quality are becoming fundamental and unless we want to enter into competition with the third world, flogging native artefacts and shoddy goods, we have to improve the input of technology to industry.
This was very apparent in the period when the dollar was very strong in the exchange markets. If your Lordships remember, last year the pound nearly reached parity with the dollar, and it was quite frightening to realise that during that period although we increased our exports for such things as fine china, fine worsted and a semi-antique car, there were very few technological goods that America wanted to import from the United Kingdom. But the American markets were flooded with technological imports from Germany and Japan: by comparison with those countries, our trade balance with America hardly moved.
We should be very stupid indeed to ignore the warning signs of that experience. The essential weakness of British industry is that it has got out of the habit of spending money on R&D, particularly on the expensive phase—development—which costs maybe a hundred times as much as the original research. Industry has got to be led back to the understanding that it is morally wrong for the future of UK Ltd. to increase dividends in the short term at the expense of developing the products and processes which are essential for the long-term wellbeing of the company and the country.
Industry must not be allowed to hide its failure. It is not in the public interest for it to do so. Companies must be required to publish their spending on R&D. Those who underspend must be shamed into spending more. Those City analysts who want to spot companies with a good future in high technology should be given the figures to do so. Those who only look for short-term profit should be reminded about the long-term future that is necessary for the continued well-being of the country. The mood of the City ought to be moving fast towards greater disclosure, in the light of recent scandals, and disclosure certainly needs to include R&D spending.
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Make no mistake, my Lords, industry will need a great deal of help to recover from the bad habits it has been forced to adopt, and this help is simply the role of government. Pump priming is the key and the Department of Trade and Industry has a most crucial role to play in this. I only hope it will heed the gipsy's warning!
May I now turn briefly to the other component of our disastrous decline, the failure to exploit the intellectual capability of our people to earn our living. There can be no question that our educational system at all levels is devoted to teaching people to spend money or to shove it around the City, but certainly not to earn it. We have the smallest percentage of our children proceeding to higher education. We have the smallest graduate community compared with our competing nations. Within that small graduate community we have the lowest percentage of technologists, and that tiny fragment of our population that we are training to be technologists in order to earn our living in the world has the poorest level of qualifications.
Your Lordships might say at this stage: "How stupid can you get? How could we possibly contrive to get ourselves into that position?" But the situation is even worse than that, because as yet I have only mentioned this tiny community of technologists as they leave our universities and out polytechnics. They then go into industry, and here we have the lowest level of expenditure on training among our competitors, 0.015 per cent. of turnover compared with an average 1 per cent.—eight times less.
Then, unbelievably, despite the fact that technology is expanding on an exponential scale, we do not systematically up-date this tiny minority of technologists, who are charged with the awe-inspiring burden of earning a living for all of us in the 40 years of their working life, in spite of the fact that the half-life of the underlying technologies is less than three years. I consider that to be unbelievable.
I readily admit that there are exceptions that prove the rule, but what I have said is substantially correct. And the net result that does prove the rule is that industry is desperately short of the skills of the technologist in the midst of 3½ million unemployed. That is unforgiveable. Fact is indeed stranger than fiction! So what can we do about it?
We must, of course, in the longer term change the whole attitude of the nation—Sir Keith Joseph's famous cultural shift; we must convince our children of the need to earn money before we spend it or even shift it around; we must improve the teaching of maths and physics in our schools; we must motivate our children to qualify for science and technology courses in the universities and polytechnics and we must provide more places to accommodate them.
We must realise that a first degree is no longer a qualification in technology. We must strengthen the provision for postgraduate education as Japan, Germany and America have already done, so that the first degree becomes a general degree and specialisation does not take place until the second degree. We must provide for a continuing education throughout the whole career of our technologists and scientists. I realise that we in the United Kingdom now face an

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enormous task if we are to restore our place as a major trading nation in the world, but even before we attempt to do that we have to climb out of the abyss of technological obsolescence.
I believe that, taken with our report, the two steps I suggest would at least initiate the process of the long recovery. Implementation of the report will cost money both from government and from industry, but I must say that not to spend this money now could be the greatest error of omission ever committed in the economic history of this nation.
8.25 p.m.
Lord Ezra: My Lords, in his remarkable maiden speech, the noble Lord, Lord Dainton, reminisced about his experiences some 40-odd years ago as a university lecturer. I, too, should like to go back some 40 years, because that was the first time I met the noble Lord, Lord Sherfield. He was then, as Sir Roger Makins, a powerful figure in the Treasury and he was chairman of a committee which co-ordinated our overseas trade. I had to appear before that committee to beg them to let us export some coal which was then in very strong demand. I always used to prepare for those meetings with great care because of his logical and probing approach, which of course we have seen in full measure today in the speech with which he introduced this report.
I should like to concentrate on R&D in relation to manufacturing industry and I know that the noble Lord, Lord Lucas of Chilworth, will be dealing with this issue when he replies. Of course, the importance of the problem of R&D in relation to manufacturing industry comes out very clearly in the report and has been referred to already in speeches by many noble Lords. It was underlined in the report produced by the Overseas Trade Select Committee, whose chairman, the noble Lord, Lord Aldington, will, I am glad to see, be speaking later in this debate.
There is not the slightest doubt that R&D is an essential ingredient in industrial recovery and growth. I find it very hard, as the noble Lord, Lord Sherfield, found it hard, to follow the reasoning of the Treasury in this respect. I tried to understand its language in the evidence it gave. But that language was so convoluted and complex that I gave up and simply concluded that the Treasury was, on balance, rather against R&D.
Of course, it is difficult to tell what the level of the R&D effort should be, as the noble Lord, Lord Dainton, emphasised. It is also important to recognise that civil R&D, particularly industrial R&D, is primarily the responsibility of enterprise, but government none the less have a powerful role to play in stimulating the necessary level of effort.
As to whether the effort of civil R&D in this country is adequate, I think this is conclusively shown in a quotation from pages 24 and 25 of the report which reads as follows:
"Of the five leading industrial nations, the United Kingdom now devotes the smallest share of its gross domestic product to civil R&D. This disadvantage in quantity is not offset by any generally greater effectiveness of R&D in Britain".
That is not what the committee said. That is what the DTI said in its Science and Technology Report for
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1984–85. So I think we can take it as read that we are deficient in our R&D compared with other countries.
Reference has been made to the undue proportion of R&D which goes on defence expenditure in this country, matched only by the United States. But, in the United States, it looks as if the spin-off for civil uses of its massive defence R&D effort is relatively greater than ours. So we suffer by comparison with others and the forward estimates of expenditure put out by the Government suggest that this difference between the defence expenditure on R&D, on the one hand, and public civil expenditure on R&D on the other, will, if anything, widen in the years ahead. That appears to be the forecast. So what we now regard as serious will become even more serious in the next two to three years if government plans materialise.
There are two ways of remedying the situation so far as industrial R&D is concerned. The first and main initiative must be taken by industry itself. However, that initiative must have a full measure of support from government. How should that be brought about? The report is clear in this respect and I believe that there are four measures, some already referred to by other noble Lords, which should be taken to remedy the situation.
The first measure is that enterprises should publish their expenditure on R&D in their annual reports. This is of vital importance, in my opinion, because we are all suffering in industry today from a short-term attitude. One way of reminding ourselves that there is a long term is to be told what the effort is in research and development in terms of expenditure. We do not know what that expenditure is. I am glad to note that in the next annual review that the Government will produce on government-funded R&D they will have a shot at indicating what the level of private R&D is. I think this is of great importance and I think the lack of information on R&D expenditure in most annual reports of private enterprise companies contrasts unfavourably with the reports of nationalised industries, on which I speak with some experience.
So far as the National Coal Board, as it was then known, is concerned, we produced a whole chapter on R&D and indicated fully what we were doing, as well as setting out what the expenditure was and how that compared with the previous year. We took a pride in that, and I believe that that sort of pride should be taken by all companies in this country in their R&D effort. In my opinion, that would be a very good move.
Looking to the longer term, we have to recognise, as British Aerospace said in its evidence, that a 10 to 15-year planning horizon is required for the introduction of a new technology. One starts research today and, if one is lucky, one gets the results in 10 to 15 years' time. It is essential that the long-term view be introduced into the thinking of companies and into their annual reports.
Secondly, there is the question of the role for the DTI, which is already very important. It is, after all, the key ministry in the whole industrial sector. It is doing a good deal of funding already. However, as the report indicates, the totality of its funding could well be concentrated on the single Alvey project on advanced information technology. If that were done properly, there would be nothing left over for anything

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else. This is an area which certainly merits substantial additional funding on selective projects, on targets and in such a way as to supplement, support and stimulate investment in R&D by the firms themselves.
Thirdly tax incentives have been referred to. Many countries, as the noble Lord, Lord Williams, emphasised in his important speech, have devised ways in which R&D expenditure can be stimulated by fiscal measures, by grants and in other ways. We are at such a difficult and indeed critical stage in this matter that I should have thought it essential that some way of stimulating R&D fiscally or by appropriate grants should be undertaken.
Finally, I refer to public purchasing, which was also mentioned in the report. Public purchasing is a very potent weapon for stimulating effective R&D activity among suppliers. I was saddened to read in the report that the enlightened public purchasing policy, which seemed to be part of the approach of the Government to the problem a few years ago, now has a low profile. I hope that that is not true. However, it was said in the report, based on the evidence received.
That would be a regrettable situation. I found in my experience with the coal industry—we were big purchasers, buying in those days about £1 billion-worth of supplies—that we could achieve very competitive quotes from British firms if we worked hard at it and joined with them in the R&D and in testing and marketing. We knew that those products were competitive because they were being sold throughout the world. When I used to visit the stockyards of pits, the bulk of equipment which I saw on the surface, waiting to go down the mines, was made in Britain. When I visit the shop floors of factories, the bulk of machine tools that I see on shop floors is made abroad—in Switzerland, Germany, America and elsewhere. Very few of those pieces of equipment are made in this country and they are usually of the older type.
If there is a determined approach to this problem, particularly through the purchasing route, that situation can be altered. We need to bring to bear on the issue all the pressures we can to change the situation.
As to the morale of people in the research and development sector, I, like the noble Lord, Lord Williams, was approached by the people employed on the JET project at Culham. I was amazed to learn of the discrepancy in the salaries which are paid to British personnel, compared with almost twice as much paid to the other Community personnel. That is leaving out of account the expatriation grants which are also very substantial. I should be happy to receive a copy of the letter which I hope the noble Lord, Lord Lucas, will be able to send to the noble Lord, Lord Williams, on that subject, if he is not able give a response when he speaks. I am very much with the noble Lord, Lord Williams, in saying that we have to see the whole question of reactivation of R&D as part of the reactivation of industry generally. There are three ways in which that has to be done.
First, we have to make sure that we have an adequate level of investment in industry. I regret to say that I do not think we have. Just a few minutes ago,
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over the tapes, information was made available by the DTI to the effect that in the fourth quarter of 1986 investment in manufacturing industry was 10 per cent. below the fourth quarter of 1985. During the whole of 1986, it was 4½ per cent. below 1985. We know that in 1986 we had a bigger than ever deficiency in our balance of payments on manufacturing products. I therefore fear that on one of the three legs of this regeneration effort—investment—we are not yet there. We need to get that aspect right.
We also need to get our training right. Much has been done to increase the level of training in this country. The noble Lord, Lord Gregson, remarked upon the fact that in the midst of all our unemployment we are increasingly short of skilled personnel. Surely, we can get that right after all these years. I have been much involved in industrial endeavours and export endeavours, and I have not known a time of economic recovery since the war when we have not been desperately short of skilled personnel. Surely the day must come when we can avoid that difficulty. After all, when we are short of products made by skilled personnel, we find no difficulty in importing such products from abroad. Evidently, other countries can meet their increased needs because their economies are rising in concert and still have enough over to supply us. This is an area to which we must devote a great deal of attention.
The third leg is R&D. We must do the research for the longer term future and development for the medium term so that investment can be put in and trained personnel can operate the processes and equipment. It all makes a whole; it is the firm basis for industrial regeneration which has been fully recognised in Germany, in Japan, in the United States and in France—all our major competitors. We cannot afford much longer to ignore such a strategy.
I should like to conclude by quoting once again from this excellent report. It refers to the fact that in 1903 the Royal Society said in its yearbook:
"Expenditure by the Government in scientific research and science institutions, on which its industrial prosperity so largely depend, is wholly inadequate in view of the present state of international competition".
The hope I express is that the Royal Society yearbook for the year 2003 does not contain those same words. Whether or not it does depends entirely on what we decide to do today.
8.40 p.m.
The Earl of Bessborough: My Lords, with other noble Lords, I welcome this report and congratulate the noble Lord, Lord Sherfield, on his presentation of it. It certainly has had a very good reception in the media, and it must be giving us all cause for grave concern. Incidentally, I was very glad to learn recently that, like my right honourable friend the Prime Minister, the noble Lord, Lord Sherfield, had become a Fellow of the Royal Society. He is to be congratulated on that. I also congratulate the noble Lord, Lord Dainton, on his quite delightful and very wise remarks in his maiden speech. We certainly all hope that we shall be hearing him frequently.
At the outset I must apologise to the House, and in particular to the noble Lord, Lord Lucas, who understands my predicament, and to the noble Lord,

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Lord Sherfield, that due to a prior engagement I shall not be able to remain to hear the winding up speeches. I hate having to do this but in this case I have no option.
I fully appreciate that because of the importance and breadth of the recommendations involving several departments the Government response to the committee may not be completed until well after this debate. I appreciate therefore that my noble friend Lord Lucas may not be able to anticipate the Government's reply to specific recommendations. I appreciate, too, that the Government response must be co-ordinated through the Cabinet Office and that this may not be completed much before the Summer Recess. I hope, however, that a White Paper will be produced before then and we look forward to my right honourable friend the Prime Minister presenting it to Parliament.
Although I was not a member of the sub-committee of the noble Lord, Lord Sherfield, in this case, I was a member of the committee when it produced its report on Science and Government which led to the Government response in Cmnd, 8591, which, as I understand it, still provides the basis of arrangements for scientific advice to government. Although the Government accepted, as the noble Lord, Lord Sherfield, has said, most of the recommendations of the committee in that earlier report, they did not accept the proposal for a Cabinet Minister to speak for science and technology; nor for a council for science and technology. I am glad, however, that as a result of that report stronger central machinery at official levels and the broadening of the field of study have been introduced.
I was also interested to note that my right honourable friend the Prime Minister said in a Written Answer in another place already in October 1979 that since issues may arise which straddle the responsibility of several Ministers, it would not be sensible to ask one of them alone to take the lead, and that in such a case my right honourable friend would herself play the co-ordinating role.
I quite understand that my noble friend Lord Lucas may not perhaps be able to go much further than that this evening. However, my main message is that I wish that science and technology could be given a larger profile. I think that this did happen to a certain extent in the early 1960s when my noble and learned friend the Lord Chancellor was Lord President of the Council and Minister for Science and I was his humble number two. My noble and learned friend spoke often of the seamless role in exactly the same way as the noble Lord, Lord Dainton, did in his maiden speech. That took me back a few years.
We all seem to know, even if we may not be supposed to know that there is a Cabinet Committee dealing with science and technology generally. This more or less emerges from Chapter 6, paragraph 5, of the Select Committee's opinion. Having been a member of more than one Cabinet Committee in the past, I agree with the Select Committee that conventions of secrecy about Cabinet Committees are not helpful when there is a need to project the public image of science and technology and no one is allowed
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to admit that any ministerial machinery exists to draw up priorities. The Select Committee is rightly convinced that more than this is required. Recognition of the vital, primordial role of science and technology in the life of the nation, which has been mentioned by so many noble Lords this evening, should certainly be public and visible.
The economic future of this country must depend to a large extent on government support and promotion of new technologies in the world as a whole, although I agree that industry and the City might well do more for themselves when one considers that 50 per cent. of R&D funding is already paid for by Her Majesty's Government and that this is, as I understand it, high compared with some of our competitors. I recognise that some friends in the City sometimes expect returns on a short-term basis and that this discourages companies where R&D programmes must run over a longer period.
This is certainly a problem when one has to consider the interests of shareholders. In my view shareholders should nonetheless be asking companies what their R&D programmes are and obtaining more information about them, recognising that research may well be more of an asset than a liability. The well known firm of Plessey, which I know quite well, is a very good example of a firm which declares its R&D expenditure—£81 million in the past year, more than 5 per cent. of its turnover, plus £237 million jointly with customers such as the Ministry of Defence. Despite this we cannot ignore what its head of research, Professor Gosling, said in The Times today about the need for government intervention. Above all we must recognise that under the leadership of my right honourable friend the Prime Minister, the Government have defeated inflation as well as reactionary trade unionism and feather-bedded management. In the words of Mr. Peregrine Worsthorne in the Sunday Telegraph last Sunday,
"industry and commerce are now leaner, fitter and more competitive".
Now therefore seems to be the time to promote more effectively our undoubted capabilities in science and new technologies. The rest of the world wants to know what we have to offer to our mutual benefit. I know this from my many travels abroad promoting our abilities in these fields. In my view we must give our scientific and technological capacity a higher profile. I know it is common knowledge that there is a new science adviser to the Government in Dr. John Fairclough. I cannot help feeling that it might help him if our policies in science and technology were given more public and international prominence.
As Sir George Porter, the President of the Royal Society, suggested in his speech to the Parliamentary and Scientific Committee yesterday, it will be a good thing to follow the recommendation of the Royal Society that a high level national science council, under the chairmanship of the Prime Minister, be set up to raise the profile and assist the science adviser in the task of co-ordination, promotion and exploitation of the efforts of our very well qualified scientists and engineers, who should, I believe, be as well rewarded in Britain as they are in other parts of the world if we are to reduce the brain drain. With other noble Lords including the noble Lord, Lord Ezra, I also was briefed

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on this point by our laboratories at Culham. I also consider that there should be no shortfall in the funding of education, teaching, research and training. I noted the vice-chancellors' call for urgent action in this respect.
Although the recommendations in the present report are somewhat similar to those in the Committee's earlier report on science and government, there are, I note, certain subtle differences, and in particular in regard to the Japanese experience. I hope that the Government have been looking at the Japanese model, which I have studied in some detail.
Finally, as my noble friend Lady Hooper has done, I stress the importance of European technological co-operation. I apologise to your Lordships for having been doing this so often over the past 25 years, and most recently last summer and autumn in our debates, on Second Reading and in Committee, of the European Communities (Amendment) Bill, ratifying the Single European Act, which includes a substantial package on technological co-operation. As I said more than once then, it is only through such co-operation that we can hope to compete effectively with the United States and Japan. I only hope—I trust that my noble friend Lord Lucas may be able to comment on this—that the budget of the European research and development framework programme of 7.7 billion European currency units will not be too drastically curtailed by Britain, France and Germany. I think that I have told my noble friend about this, and arranged for him to be further briefed on the subject.
As usual, the noble Lord, Lord Sherfield, and his committee have produced a most important report and they must be given full credit for it. I feel sure that the Government have been giving it, and will continue to give it, very serious thought.
8.45 p.m.
Lord Swann: My Lords, although he has had to leave, I want to add my tribute to the noble Lord, Lord Dainton, a very old friend of mine, for his characteristically perceptive maiden speech. I want also to congratulate the noble Lord, Lord Sherfield, and his colleagues on an extremely valuable report. I can only hope that the Government will not merely welcome it, as so often happens with such reports, but will actually do something about it, and especially the first three recommendatons.
Much has already been said with which I agree. I want only to comment quite briefly on one or two aspects of the report that might have been emphasised more than they were or where I have some reservations—but that in amplification rather than criticism.
We are fortunate in Britain in having a mulitiplicity of sources for the funding of research and development of every sort. There is no single source of far-sighted wisdom in this world, and everyone involved in making decisions about the funding of research ought to heed the well-known academic aphorism; namely, that peer review is a splendid method of eliminating bad research and, along with it, the very best.
The most famous example, of course, is Mendel, who laid the foundation of genetics and molecular
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biology, and hence most modern medicine, and with that, for example, the possibility of finding a cure for AIDS. But despite the fact that he sent his classic paper to every distinguished biologist in the world in his day, it was totally and utterly ignored for 40 years; so one could rate his chances of getting a research grant from a research council or a government department as anything but pretty depressing. Fortunately for him, however, and still more so of course for us, he did not need research grants. He was the abbot of a monastery in Czechoslavakia.
It is for this reason that I have reservations about the suggestion in the report, stemming, it would seem, from the Advisory Council for Applied Research and Development, ACARD, that strategic research and its close relative, now known as exploitable areas research—those areas, in short, that lie midway between pure basic research and straightforward applied research—should be funded by a new process and presumably, although the report is not wholly clear on this, by a new body.
I do not believe that a unitary process with a unitary body is the best way to go about encouraging these important but neglected areas. I am sure that the research councils should regard such research as part of their responsibility, as should government departments, one hopes with their chief scientist and customer/contractor mechanisms strengthened. Indeed, the committee so recommends. But to impose a new central mechanism on top of this seems to me unwise.
For similar reasons, I have suspicions about the idea of a unified research council. Central decision-making in the area of research, like peer review, is liable to eliminate not just the bad but the very good along with it, and with no possibility of the right decisions being made somewhere else in a decentralised system. Research is simply too incalculable to be left safely to central decision-making. This may be irritating to politicians and civil servants, who like tidy structures, but it is an inescapable fact of life.
Turning elsewhere, the report has a lot that is valuable to say about industrial research and development. Here again, I have a reservation. Research and development is not an end in itself, like basic research. It is a central part of the mechanism of innovation and the subsequent introduction of new products and new processes through the market. It is only this that generates wealth for society.
The report, I think, tends to overemphasise R&D at the expense of the other aspects of innovation. Unless R&D, and particularly the "D" part, on which the report rightly lays much stress, actually produces saleable goods and services at a price that enables the producer to thrive, it is likely to be money wasted. R&D effort, in short, has to be matched by good management, marketing effort, training and much else if successful sales are to be achieved.
Does the volume of R&D expenditure by a company predict its commercial success? By no means necessarily, it would seem. Moreover, it has to be remembered—and this is a point made by the noble Lord, Lord Sherfield—that around 30 years ago the United Kingdom was one of the heaviest spenders on R&D. But the lesson learnt then, and since apparently

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forgotten, is that it is the use made of R&D, deriving from the quality of management of the business, that determines success and not just the number of pounds actually spent on R&D.
It follows that simply exhorting companies to spend more on R&D will not necessarily produce results; and bribing them to spend more by tax concessions may only produce creative accounting. The emphasis must surely be placed on encouraging the whole managerial process of innovation. Once performance improves R&D growth will follow automatically. Industrial R&D without the will, understanding and ability to exploit it may help our competitors but it will not help us. The plain and depressing fact is that the crucial gap in United Kingdom performance is the lack of confidence on the part of all too many British managers and entrepreneurs that R&D can be turned into profitable innovation. It is an intractable problem that the report goes only part of the way to grasp.
I have touched on two of the problems that beset us in the support of research and development with a view to the ultimate benefit of society. They are the problems of choosing what R&D to do in the first place and of how to cope with the whole managerial process of innovation so that R&D is translated into commercial success. There remains a further difficult area; namely, that not only are managers suspicious of and resistant to technological change but so also is the workforce for fear of losing jobs.
This trio of areas—the choice, management and acceptability of technological change—lies at the heart of Britain's industrial problems and they too demand investigation and research. The report has some comments to make on that score. There are, for example, recommendations for more evaluation and in particular—a point raised by the noble Lord, Lord Dainton—for a small percentage of government-funded research money to be spent on various forms of evaluation. There is, too, a call for more information to be made available on the pattern of R&D and the amount of money spent on it.
Fortunately, some research on these problems goes on. There are one or two private institutions and a few units and individuals in universities involved in it. The Economic and Social Research Council has realised the importance of this trio of problems and is funding work on them. I should tell the House that I have a particular interest in this myself as chairman of a body called the Technical Change Centre; a small research organisation that the council funded. It is devoted specifically to a study of the choice, management and acceptability of technical change, and directed by a former industrialist, himself responsible for a number of highly significant technological innovations.
The various organisations and individuals involved—all, it has to be said, financed on a small scale—have a range of deeply intractable problems to wrestle with but they are doing valuable work. If we do not use the methods of research to guide us in how best to choose and manage R&D and how best to overcome the many obstacles to getting innovation accepted I fear that industrial progress will continue to be very slow.
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Market forces having failed all too often to do the trick, this is a crucial area of practical research. I hope the Minister can assure us that it will have every support and encouragement from the Government.
9.4 p.m.
Baroness White: My Lords, before turning to the main subject of this debate, I, too, wish to proffer my congratulations to the noble Lord, Lord Dainton, on a maiden speech of outstanding quality. I do so with particular pleasure as I sat under his chairmanship some time ago when I was a member of the University Grants Committee, over which at that time he presided.
Delighted as we are to have the noble Lord, Lord Dainton, with us, I am sure he will understand if I point out that one scientific swallow, however distinguished, does not make a summer. As a lay member of the Science and Technology Select Committee, and a former chairman of the European Communities Committee, with its seven subcommittees, I echo the opinion expressed yesterday by the President of the Royal Society, Sir George Porter, at the function referred to by the noble Earl, Lord Bessborough, and presided over by my noble friend Lord Gregson. Sir George said that in the Upper House,
"the country is fortunate to have a few highly qualified scientists and technologists as well as some others who are well informed about science. If ever the Upper House were to disappear or be substantially changed, many of us would wish to know how this important source of independent scientific opinion was to be replaced at parliamentary level."
I give your Lordships that quotation because with the recent public discussion as to whether or not the Prime Minister should advise Her Majesty to take account of the needs, rights or expectations of minority parties, little attention has been paid to the unique value to the British body politic of the particular specialist knowledge and experience which some Members of this House can contribute; knowledge and experience mostly acquired by persons of considerable achievement who would never dream of taking on the quite different responsibilities which are inherent in being elected to the other place and with which some of the rest of us were engaged before coming here.
While we have lawyers a-plenty, a good many financiers, a sprinkling of busy industrialists and some excellent Bishops when they can spare the time to be with us, we are in real danger of running short of Members who have the knowledge of science in its very rapidly changing modern manifestations—knowledge which is needed to enable this revising and advisory Chamber to do its work as effectively as we all wish.
Of course we are deeply indebted to those of our company who do spend a great deal of time with us, often at great inconvenience or expense to themselves. It must be within our knowledge and experience that some of our most respected and knowledgeable scientists, through advancing years, find it difficult to play as full a part as heretofor. It would be invidious to list individuals, though the names of the noble Lords, Lord Ashby and Lord Zuckerman, must surely come to mind.

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Those of us who have some experience of trying to formulate scientific policy—a subject with which this debate is partly concerned—recognise how essential it is to strengthen our lay committees not only with our admirable specialist advisers but also with at least a dependable minority of colleagues who have the experience and standing in the scientific and engineering worlds to help guide our deliberations. In this field, which is of increasingly urgent and indeed vital national importance, generalists and highly experienced scientists or technologists are not entirely interchangeable. So I strongly support the concern that was expressed yesterday by Sir George Porter that this House should remain an "important source of independent scientific opinion" and I hope that his sentiments may secure in high quarters the attention that they undoubtedly deserve.
Having made that point and as there are many speakers in the debate, I shall try to concentrate on two other topics only. One concerns the attitude of the Treasury, the City of London and manufacturing industry to the true importance to be accorded to the main subject of our report; namely, civil research and development. Do they share our view that unless there is an urgent and profound change of attitude in these all-important sectors of our society, Britain will face the possibility of such a rapid decline that we could indeed be transformed into what has been called the industrial peasantry of the 21st century?
That may sound like an exaggeration. However, let me give your Lordships one recent illustration of this process. Anyone who listened to the news on the radio this morning must have been severely shaken by the announcement of the Japanese exploitation of a novel method for recording music and sound. It could displace the newest type of compact disc that is being manufactured in Britain and they are hoping to bring it to this part of the world before we in Britain have had time to get our product fully established, let alone to have reaped the full commercial benefit from it. That is just one example, but to my mind a rather frightening one, of the speed with which modern technology is developing.
Several speakers have already referred to the rate of obsolescence with which we are faced, not only in products but also in skills, and which means that the labour force will have to be retrained not just once or twice in a lifetime but every five or 10 years at a minimum. I am sure that other noble Lords will have been as interested as I was in the series of articles on technology that has been appearing in The Times this week. Those who have read those articles must be full of well founded apprehension that as a country we may not be able to keep up. That was the inference that I felt obliged to draw from some of the information contained in that extremely interesting series.
Some of us have tried to come to terms with CAD. CAL and CAM, to which we must now add CIM (Computer Integrated Manufacture). It is not just computer "aided" design, learning or manufacture; it is "integrated" manufacture. There is a new spectrum of exploitation which is only just starting but which in a few years in certain areas may carry all before it using multi-purpose machines with a fantastic range of operation in manufacturing heterogeneous products.
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We need managers who can keep pace with such a speed of change. Do we have them? I doubt it. Obviously there are some, but not on the scale that we need if we are to maintain the kind of standards and position in the world which I am sure we all hope to achieve.
The noble Lord, Lord Gregson, has dealt eloquently with some of those considerations. I do not wish to traverse the ground which he has covered with far greater knowledge and experience than I could command. I am sure that the recommendations made in our report should be taken seriously not only by government and industry but by our financial institutions, which should heed the emphasis that we lay on the point that they should regard it as part of their normal procedure to tell the world what they are doing and what importance they lay upon their investment and effort in research and development.
We need to try to change the whole ethos and emphasis of our financial institutions and the investing public. I hope that such influence as this report may command will help in that necessary process. It is not only in those institutions that change is needed. I felt, and I think that at least some of my colleagues felt much the same, that the evidence which we received from Her Majesty's Treasury was the most depressing contribution to our inquiry. We commented on it in the report in paragraphs 6.8 and 6.30, with, I think, considerable restraint.
In paragraph 6.30 we come to the other topic that I wish briefly to touch upon. It is the appointment of a new Minister. In that paragraph we suggest that one possibility would be to place that responsibility not merely on No. 10, Downing Street, but in the Treasury itself. Of course, the Prime Minister is First Lord thereof. In the paragraph we explain how disturbing it is:
"that a department as powerful as the British Treasury has … as a consequence of its particular evolution, a definite blind spot in science and technology. Requiring a Treasury Minister to speak to the science and technology brief in Cabinet would eventually upgrade the Treasury's own understanding and appreciation of science and technology, a development which could only be to the general benefit".
I expect that there will be some sceptism about our recommendation for the appointment of a Minister for Science and Technology without the back up of a major department and a large budget over which he, or conceivably she, might have control. It is not the first time that we have experimented with a Minister for Science and Technology. The noble Earl, Lord Bessborough, reminded us that way back in the period 1959 to 1964 that position was held by the noble and learned Lord on the Woolsack, the Lord Chancellor, Lord Hailsham.
It was rather a chequered experience because at that time he combined the offices of Lord Privy Seal and Lord President of the Council (he alternated between the two) and Leader of the House of Lords. In 1962, he also took on responsibility for sport. In 1963, he added to that the further responsibility for employment in the North-East, which even at that time was causing deep concern. In November, 1963, he disclaimed his hereditary peerage and reverted temporarily to the House of Commons, where he became Secretary of State for Education and Science, a position which has persisted since then. He seemed to have lost

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technology on the way, but that was later picked up by Mr. Tony Benn in the 1960s.
We need not necessarily judge the requirements of the present day by the experience of what is now, after all, nearly 30 years ago. Times have changed. At that time we had overcome the worst of the difficulties of the immediate postwar world. We then still thought that we could muddle through. Nowadays, surely even those of us who are least concerned with science and technology must appreciate that we can no longer muddle through and that we must therefore take the most serious and intelligent decisions that we possibly can.
I have spoken for long enough and I must go no further. I emphasise only what I believe to be the great importance of the recommendations in this report. I repeat that primarily the report is addressed to the Government, but it is also addressed to the other industrial and financial institutions and not only to the scientists and technologists themselves.
9.20 p.m.
Lord Aldington: My Lords, it is a long time since I have spoken immediately after the noble Baroness. However, I am glad to be able to assure her one point. Although the comments of the committee on Her Majesty's Treasury were made with restraint, I do not think that my comments will be quite so restrained. Perhaps therefore the noble Baroness will wait to hear them.
This has been a fascinating debate. However, I feel that some noble Lords will agree with my belated protest that it is outrageous that in a debate as important as this the 12th speaker out of 26—for that is what I am—rises at twenty-past nine in the evening. I hope that my noble friend Lady Hooper will pass on that comment to her noble friends.
We are enormously indebted to my noble friend Lord Sherfield for introducing this debate and for being responsible for what I consider to be a masterly report. It has taught me an enormous amount. I am, in the terms of the noble Baroness, a lay person in these matters. However, I listened with great interest today to many noble Lords who have great distinction in the scientific world. I felt in particular privileged to be able to listen to the elegant maiden speech of the noble Lord, Lord Dainton, which was full of wisdom and experience. Perhaps I may add my tribute to his very attractive delivery. I am glad to welcome the noble Lord back into the Chamber.
I say that I am a layman and I feel rather an unworthy participator in this debate. But I do not think it can be surprising to many noble Lords that one who shares with the committee a concern and anxiety about Britain's manufacturing industry in the increasingly competitive world should wish tonight to add his small voice to the warnings and wise advice offered to us in the report. The report covers the whole of the chosen area and has valuable points to make. I cannot attempt to tackle more than a few of them.
However, I start by emphasising the gravity of the situation as reported to us. I venture to suggest to your Lordships—as another Select Committee tried to make clear in its report—that the reason for the gravity
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of the situation, and the answer to such questions as why we are underspending on R&D and why the morale of the scientific community in industry needs raising urgently, cannot be found simply by looking at policies and events in the last seven years or even in the six years which preceded them.
Rather than spend time and argument on looking backwards, we should follow the committee's lead and consider what has to be done today. We have in this field to look first—as we did in the overseas trade report—at the attitudes in the nation as a whole, and that includes attitudes in the Government. I quote from the report, paragraph 1.11,
"The key issue is one of attitudes: the determination to make the United Kingdom industrially successful, combined with new hope for those engaged in science and technology".
It goes on,
"Cosmetic adjustments to the status quo will not be enough".
I have heard the noble Lord, Lord Sherfield, comment on cosmetic adjustments before, and I would guess that his pen wrote those words.
The simple fact is that industry cannot succeed except by applyng to its products the best scientific and technological knowledge, both in the selection and design of the product, and in the making of it. There is nothing new about that. What is new is that the speed of change is accelerating every day, and the time taken to explore science and then to develop from that exploration for industrial use is growing longer every day, and with it the cost both in person terms and in the machines and instruments needed. The market dictates the speed of change in its requirements.
The importance of change to industry was stressed by Dr. Merrifield, whom the noble Lord, Lord Williams of Elvel, quoted. It is no surprise to some of us, but I think it is a surprise to some people in the Treasury, judging by the answers they gave to your Lordships and the Select Committee, and the memorandum which they put in and which I shall come to. It is this speed of change which forces greater attention to R&D in any industrial country.
One Minister has been reported as saying that the report is a bit apocalyptic. I hope that that kind of smothering of the important things which it says will not detract from the importance of the report to the public opinion as a whole. It looks from the excellent and impressive leader in The Times today that at least our principal daily newspaper has got the point of the report. I have to say that The Times has so disappointed me recently that I was just about to give it up, but if the editor minds what a person like myself thinks about him, I promise him, following that leader, that I will continue to buy The Times every day as I have done for the past 50 years.
Of course we shall hear defensive arguments from within the Government. The committee heard something. I am sure we all have in mind the points that my noble friend, Baroness Hooper, and other noble Lords have made, about the good things that have been done and the improvements that have been made by the Government and their predecessor in recent years. Alvey is a good example, as the noble Lord, Lord Flowers, said. But as I have said before to your Lordships, one of Britain's weaknesses, so it seems to me, is to concentrate on comparisons of

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present performance with past performance in Britain, rather than to compare our performance and policies today with the performance and policies of other leading industrial countries. This weakness is to be found inside governments as well as outside governments. It is even to be found among your Lordships. That insular approach is rather comfortable sometimes, but it is unrealistic in a world where competition in industrial matters is global and not national.
Chapter 4 of this report is headed "International Comparisons". It is very important, as is the warning in paragraph 6 that conditions and classifications differ greatly, and that it may not be sensible:
"to copy systems appropriate to different political and social environments and cultures".
However, what does the evidence show? It shows that the level of public funding of civil R&D in Britain is woefully below that of our European competitors and that the total funding of civil R&D as a percentage of gross domestic product is the smallest of the five leading industrial nations.
The Times on its Spectrum page on Monday last had a chart showing in a most graphic way how our relative expenditure as a percentage of GDP had fallen behind what the United States, Germany and Japan have been doing, and what a tremendous spurt France has been making while we have held steady. Some of us have been preached to by economists and the Treasury for not understanding about market forces. However, when looking at R&D, surely one of the most relevant of the forces in the market place is the level of effort on R&D thought right by our competitors. They think it essential to spend more on R&D and to increase that spending faster than we do. How can Britain be so arrogant and so stupid as to assume that they are wrong, especially when we look at their rather better economic success?
I was appalled to read in paragraph 6.8 of the report that the Treasury think that there is no:
"direct relationship between the health of the economy, or sections of it, and the levels of expenditure on R&D".
No wonder the noble Lord, Lord Ezra, formed the impression that the Treasury was rather against R&D. However, surely even the Treasury must know that there cannot be industrial growth without R&D and that there cannot be faster growth without more R&D. I take on board all that the noble Lord, Lord Swann, said about the importance of management. The importance of training and the importance of capital investment—points which were also made by other noble Lords.
However, today we are talking about R&D, and there seems to be no doubt at all that the more R&D, the faster growth can be, but the less R&D, the less likely we are to have fast growth. I simply do not understand why these excellent men in the Treasury—for so they are—try so hard to defend the indefensible with such fervour as they show in the supplementary memorandum which is appended to the end of their evidence on page 311 of Volume II of this massive work. There is no sign of any urgency. There is an apparent contentment that while every other leading industrial country is increasing its
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support for science and techology we should move at a slower rate and actually—to use their words—contemplate a reduction. I am sure that they are right in saying that industry ought to do more. However, we shall not get things better if government shelter behind that argument and do nothing themselves, any more than we shall get things better if industry shelters behind that argument and does nothing itself.
There is the constant refrain that all government have to do is to ensure the right climate for industry to increase its effort in R&D. However, that does not seem to have worked so far, does it? Even it it were working better, surely British industry is entitled to be supported by its government on research and development as much as its competitors are supported by their governments.
There is another shortcoming in our current attitudes that has been mentioned in the debate, and that is the concentration on the short term rather than the long term. That of course can cause more damage to science and research and development than anything else—even more than investment. I hope that within the Treasury they do not suffer from "short termitis".
The point has been made that there are signs of "short-termitis" in the City and among financiers. There are signs that "short-termitis" has found its way into managing directors' offices. The problem of "short-termitis" in the funding of manufacturing industry goes wider than R&D. I very much agree with what the report has to say, and with the Bank of England that much can be done to improve the understanding of the financiers by a fuller disclosure of R&D spendings and an explanation of them. However, in the short-term I do not think that that will be enough if we are really intent upon getting bigger expenditure on R&D inside industry. Government simply cannot wash their hands of underspending on R&D wherever it is. They can exhort; they can and should increase the DTI's support for innovation in the ways suggested; they can and should help through public purchasing, as has been mentioned by some of your Lordships. However, I think that they would be wise to consider carefully the evidence given to the committee about the need for incentives, including tax incentives.
The committee has stressed the urgency of tackling the underfunded R&D in Britain, and I do not apologise to your Lordships for concentrating my remarks on that matter. There is no way of securing the necessarily quick results without a lead from the Government, which means more money. One Minister has described such a process as "spraying cash". He says that spraying cash will not work. However, without more cash we shall not solve the problem. As the noble Lord, Lord Williams, has said, happily every day we read of the large harvest of surplus revenues which is accruing to the prudent Chancellor. I cannot believe that he will pass by the opportunity of using some of this harvest for the very best form of seed-corn: greater support of civil research and development.
In the Chancellor's colleague's elegant phrase, as the Chancellor sprays cash among either departments or taxpayers, the cash he sprays at R&D will work even

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better at securing the economic growth that he requires than any other way of spraying the cash.
Thus I think that the report under debate is even more timely than might have been expected. I very much hope that the Chancellor will bear in mind the closing conclusion of the Committee's most valuable report. The paragraph begins as follows:
"The Committee's enquiry has revealed the gravity of the United Kingdom's prospects in R&D".
I shall not read the rest of the paragraph but I hope that the Chancellor will have in mind the whole of it when he makes his Budget decisions.
9.38 p.m.
The Earl of Selborne: My Lords, I read the report with a great sense of relief and I have listened to the debate with an equal sense of relief. When in the fullness of time the Government give their response—and we quite understand that we shall not have a full response tonight—it may not necessarily be all that we seek. However, at least there will be a feeling abroad, particularly among the scientific population, that the problems are now well understood.
If ever there was demonstrated a need for making a strong case, it is the astonishing evidence given by the Treasury officials, which has been referred to by a number of speakers tonight, not least my noble friend Lord Aldington. In that evidence there is set out clearly the problem against which the science Vote has had to fight: the illiteracy of the Treasury—perhaps I should say the innumeracy of the Treasury—in trying to determine what can be expected of publicly-funded research. Many speakers tonight have clearly and demonstrably pointed out the failures of government and the failures of industry to recognise the contribution which can, and will, be made by science if only it is correctly funded towards the long-term growth of the country's economy.
Just to complete the story—and this may be a little uncharitable of me—I must also say that I think that scientists themselves have perhaps fallen short of what might be expected of them in this respect. I am a layman, as are so many other speakers, though I am chairman of the Agriculture and Food Research Council, so I at least get involved in part of the administration of research funding. Scientists could have done more over the last few years to demonstrate the value and the worth of assessments and evaluations of research projects.
The Select Committee's report makes a recommendation—and Professor Ashworth in his evidence suggested—that about 1 per cent. of the value of any research project could often usefully be spent on an economic evaluation. It is clearly the case that much basic research does not lend itself to economic evaluation. Some research, such as that which my noble friend Lord Cranbrook referred to, is going to be much harder than other work to assess. If it is research work on damage limitation, in giving government options or formulating policy, clearly it is an indefinite science.
That is why scientists have been so cautious about trying to give an economic assessment or evaluation of their research findings. But this has led directly to the
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view held in the Treasury—which the committee suggests charitably has a blind spot so far as science is concerned—that, because it is very often so difficult to make an economic assessment, therefore it cannot be done, and therefore it follows that there is probably no such correlation in the economy as that between the value of science conducted and the value of the research done.
Having said that evaluation is essential, I believe that research councils, universities and other research contractors using public funds have an absolute duty, first of all, to refine rather better the science of evaluation, and then to put it over in a much more assessable form. I know that there will always be criticisms of this evaluation, but it does not mean to say that it should not be attempted.
To demonstrate the need that there is to make such assessments available within government, let me quote the case of agricultural research, with which I have been directly involved. As it happens—and this is just of historical interest—agricultural research in the last three or four years has been quite heavily cut back. It has been cut back for reasons which probably largely lie in the cost of the common agricultural policy. It is widely perceived that the CAP has got badly out of control. There is concern in the Treasury that this amount of support was not intended for farmers, or perhaps even for the food industry, and that something must be done to cut costs.
What has happened is that overall costs right through the Ministry of Agriculture and the other agriculture departments in grant aid of one form or another have included the cost of research and development. This was done in isolation from the overall strategic look at the research requirements not just of those agriculture departments and the industries to which they relate but also the research requirements of other departments and industries which go well beyond agriculture and food.
This short-sighted approach is now quickly being shown to have damaging implications for an area which goes way beyond that which was ever suspected when in January 1985 the public expenditure White Paper was published. This demonstrates the need for the Council on Science and Technology. I am certain that the Select Committee is right when it says that there must be a forum in which the overall strategic considerations for research in the Ministry departments, research within the research councils and indeed research in industry (publicly funded, as some of it is) should all be considered together.
The problems in agriculture became rather more severe as a result of Rothschild, when the agriculture departments were given responsibility for commissioning research. When that happened the amount of the science funds which were put at risk by departmental cuts increased.
If there had been a council for science and technology sitting four or five years ago—when quite sensibly the government of the day would have pointed out that their requirements for agriculture were changing, that the cost of agricultural support was getting out of hand—there would have been consultation with the Department of Employment about the consequences for rural employment and

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with the Department of Education and Science on the consequences for other sources of funding on the science vote. There would have been consultation with the Welsh Office, which always takes a great interest in employment in Wales; with the Department of the Environment, which, as my noble friend Lord Cranbrook pointed out, has a great interest in matters concerned with conservation and the countryside; and with the Department of Trade and Industry, with its concern for the biotechnology programmes.
If we put that altogether and at the same time work out what is needed for an agricultural industry—which is required to be very much more competitive in the market place and will have to live in a position which it has not been used to; that is, exposed to market forces such as it has never experienced before—I suspect, though I may be wrong, that the conclusion of such a council would have been, "Yes, by all means reduce the support for the agricultural departments, but, having reduced it, make sure at least that the research which is there to support that industry and areas much wider than the agricultural industry is protected or even increased to ensure that the industry, which has been so responsive in the past to science and research and development, is given a fighting chance of surviving in this harsh climate".
That did not happen, because the way we operate in this country is that we cut funds to departments when they are seen to be out of line, without consideration for the interlocking interests of other departments. I say again that I do not believe this would have happened had some body been responsible for taking the overall view.
As a final commentary on this sad episode of these cuts, one of the laudable proposals was that the agricultural industry should be encouraged to pay more for its own research. It is quite correct that it should and it is a sad reflection on agriculture that it has contributed little to its own research in the past. To achieve this funding it was necessary to put a Bill through Parliament, the Agriculture Act 1986, which allowed the Home-Grown Cereals Authority, the Horticultural Development Council and other statutory bodies to raise money for research if the growers and farmers so wished, which in the event, they have.
However, because there was no strategic oversight because the cuts were enforced within months of that White Paper, the infrastructure to conduct the research on behalf of these industries was already in the process of being dismantled by the time the Government, wearing their other hat, had put together on the statute book the legislation that allowed such funding to take place. That again is a farcical, but nevertheless true, commentary on the disorganisation from which so much of our research seems to suffer.
Scientists are disillusioned, not necessarily because of cuts—though that certainly is disillusioning enough—but because when cuts are proposed they are proposed in such a disjointed way. There must be a view determined, if one is to fund research from public funds, as we clearly must, which takes a longer-term look than the three-year public expenditure reviews. If one is funding research in basic, strategic or even applied areas, one often will be funding work for five
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or 10 years. It is totally impossible for research contractors to respond within months, as in the case of the Agriculture and Food Research Council, when the funding is suddenly removed—and that in isolation from advice which is probably coming from the Advisory Board for Research Councils and others. I say firmly that if ever a need for a council of science and technology has been demonstrated with hindsight, it is in the sad story of the last few years of the funding of agriculture and food research.
9.50 p.m.
Lord Tedder: My Lords, I should like to begin with a personal welcome to the noble Lord, Lord Dainton, whose lectures I had the good fortune to attend as an undergraduate at Cambridge. I had better not say how many years ago that was. Quite a number. Also, I must crave your Lordships' indulgence in that I hope to catch a train back to Scotland tonight. I shall remain in the House for as long as I can, but I hope that your Lordships will forgive me if I do leave.
I welcome the report of the Select Committee. I do not wish to take up your Lordships' time in discussing details covered in the report. I shall not therefore discuss the need for adequate funding of research and development. I am going to assume that better funding of civil research will be provided, and I want to consider how it will be allocated.
I am mainly concerned with the allocation of funds to the universities. In particular, I am worried by the concept of centres of excellence which, if incorrectly applied, could be absolutely disastrous. If active research was to be restricted to the largest universities I am prepared to predict that within a decade the quality of research in the universities would deteriorate, and in 20 years it would become moribund. Topics of scientific research are like living organisms which start with a burst of activity, attain maturity and then quite rapidly wither away, to be replaced by new topics.
A wide variety of research is essential. Obviously, not every university should promote research in every field, but every university should have specific areas of research which would be funded by the UGC. The number of chosen research areas would depend on the size of the university or, more particularly, on the size of the chosen department. Thus a very large university might have five or six areas each in chemistry and in physics while a small university might have only one area of sponsored research in physics and another in chemistry.
A member of staff at a university or polytechnic could choose to join a UGC-supported team or opt to work on his own. I never know whether to say "he" or "she"—perhaps I should use the words alternately. If he/she chose not to work in an established team, he/she would only get the most basic facilities from his/her university.
Baroness Seear: Perhaps I may advise my noble friend simply to say "he".
Lord Tedder: I am grateful to my noble friend. If he chose not to work in the established team, he would only get the most basic funding from his own university and would have to raise money for his

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research either from the Research Council or from industry. In contrast, a member of staff who elected to work as part of the established team would have access to funds provided as part of the university's annual grant.
The areas of UGC's chosen research must be under continuous review, and a staff member working by himself who proved to be a successful researcher could become the nucleus of a new team. Support for university research must depend on its scientific quality and the competence of its research workers and not on the size or antiquity of the university involved.
9.55 p.m.
Lord Mottistone: My Lords, I hope that the noble Lord, Lord Tedder, will forgive me if I do not immediately follow him in his contribution which was too specialised for me. This debate has already been conducted for the past four days in The Times and it is pretty well exhausted there. I have to say to your Lordships that I prepared my speech yesterday and the similarity of my views to several of those of my right honourable friend Mr. Geoffrey Pattie is purely coincidental.
One point which was particularly made by Mr. Pattie is worth repeating: the market approach does not mean leaving everything to market forces. Some government direct investment in R&D is of course necessary and my noble friend Lady Hooper has shown us some of the things that the Government are doing. However I believe that a great deal more should be left to industry than is currently the case, is recommended by the Select Committee or appears to be wanted by the noble Lord, Lord Williams.
The summary of conclusions opens with the words:
"The advance of science and technology, which is essential to the economic recovery of the country, must be a central objective of government policy.
Yes, my Lords, but how to do it? Successive governments for far too long have been seeking to direct matters from the centre with all too little success. For example, there is some evidence that the best engineering systems are produced commercially rather than in response to closely controlled government contracts. Certainly that was an impression that I formed when closely concerned with the development of naval radio equipment in the 1950s and early 1960s, and I have had no reason substantially to modify that view since.
So maybe government should stand back from close involvement with civil R&D and use their "money" as tax incentives to commercial firms for identified R&D, rather than as grants for specific projects. Many noble Lords have touched upon that as being necessary and indeed the report itself makes mention of it, but it does not make mention of it as a principal way of encouraging R&D in industry. This view has indeed recently been recommended to my right honourable friend Mr. Norman Lamont, the Financial Secretary to the Treasury, by the Conference of Electronics Industry which is an association of most of the electronics manufacturing trade associations.
This same approach might indeed be more widely adopted for much more defence R&D than has
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hitherto been the practice. With a massive change of attitude that such a new approach would need, defence could seek out all possible opportunites for decentralisation of R&D, excluding only the few really secret or genuinely specialised matters that really need special treatment. If this could be achieved there could be a massive saving in defence in-house R&D expenditure, a substantial reduction in security problems, a better chance of defence inspired R&D having a civil application, as has been called for in part J of paragraph 6 of the report, and almost certainly the possibility of better engineered products.
On the last point, there is evidence to show that a lot of American manufactured defence equipment has over the past 50 years been better engineered than British equivalents. There seem to be at least three reasons for this. First, engineering and engineers have been accorded greater importance in the USA than has been the case here; secondly, central government control of defence projects has not been so technically detailed as in this country; and, thirdly, British firms that tried in the 1960s and 1970s to take a long-term view of investment in R&D, as was called for by my noble friend Lord Aldington, turned out all too often to be the companies that were particularly stricken by industrial relations strife. This malady did not, on the whole, apply in the United States.
Extending this suggestion that our problems may be better solved by less government intervention rather than tidying up the present system, one wonders whether the Select Committee might not have accepted the recommendation of a single research council and examined ways of making it work, rather than dismissing that option and seeking to justify the retention of the present research council setup.
I was delighted that, in his excellent maiden speech, the noble Lord, Lord Dainton, who I should very much like to congratulate on his speech and who really knows about these things, suggested the same approach.
To take another point, what about the funding of basic research? I commend to your Lordships a most interesting article on page 25 of last Friday's Economist. Among other interesting points, the article commends the University of Surrey for selling on a long lease 11 acres of prime greenbelt land with planning permission as a science park to BOC for £4 million. Not only did that bring extra money into the university and hence less reliance on state funds; it also puts a science park alongside the university so that an easy exchange of ideas between the industrial and basic research scientists is possible.
At a lunch of the Parliamentary Scientific Committee yesterday I happened to sit next to a geologist. I said to him: "What do you think can be done to improve the situation?" He said: "Put science parks alongside universities". That is what we are told that the University of Surrey did. They also made money in the process; is that not splendid?
The University of Salford is also commended by the Economist for bringing in extra income by attracting overseas students who pay more to them and by winning more research funding from Government and from private industry. It seems to me that self help is

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the keynote of those actions. Perhaps this is a welcome sign of a change of attitude.
Indeed, it is a change of many attitudes that I believe is required. The basic pessimism of the report that we are debating seems to me to be based on a disappointment that the present system does not work and perhaps on an unexpressed assumption that it would work if only the Government would put more money into this part of the bottomless pit.
I suggest that we have tried that particular approach of centrally controlled science and technology for far too long. It does not work in peacetime and some of what the noble Lord, Lord Swann, said seemed to me to confirm that he had views slightly in the same direction—although I would not accuse him of having views totally in the same direction!
The more we encourage the advance of science and technology through private industry, the more likely we are to succeed. Tax incentives and dependable industrial relations legislation are the way forward for encouraging British industry to invest more in R&D for the long term. I hope that that is the line that the Government will continue to follow.
10.4 p.m.
The Earl of Halsbury: My Lords, I rise to express three points of agreement with the noble Lord, Lord Aldington, who I am sorry is no longer in his place to hear me give him a measure of agreement.
First, I wish to thank the noble Lord, Lord Sherfield, and his colleagues for this long, painstaking and detailed report. Secondly, I wish to protest, along with the noble Lord, Lord Aldington, and to the usual channels, that a report of a Select Committee of our House should have been so maladroitly launched at half-past six. It is now around 10 o'clock and I do not suppose that I shall get home until midnight. The noble Lord, Lord Aldington, protested at that, and I protest in exactly the same way.
Thirdly, I wish to say of my noble friend, Lord Dainton, whom I have been privileged to know for many years, that his maiden speech is exactly what I would have expected. It was a pleasure to listen to, and we hope to hear from him on many occasions in the future.
I very much agree with my noble friend Lord Swann and equally with the noble Lord, Lord Mottistone, about the dangers of centralism. It is a will o' the wisp to suppose that one could draw up an organisation chart for science in the country. It is far too delicate and ramifying a network. One can understand it only by getting into it and finding one's way around it from the inside.
For the rest, I want to deal with what I think are the proper functions of government in research; first, executive control of everything connected with standards. I refer to physical standards—the standard weight, the standard yard and the standard metre. Then there are health and safety standards—safety on roads, safety in the air, safety in the environment and industrial safety. These should be the responsibilities, in so far as they have a research element attached, of the Ministries which are answerable through Parliament to the nation for these standards of safety
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and so on. The terms of reference to the Permanent Secretary of each Ministry should be, "Do it or get it done on contract, but you are answerable either way for it being done." Do not tell me that a Permanent Secretary could not take a directive on those lines. Of course he could.
Then there are the proper functions of government on the lines of services—the Meteorological Office, the Geological Survey, the Ordnance Survey. All these involve research problems. These are properly the problems of government research. There are the problems of coastal defence, the problems of water pollution, the problems of flood control and so on.
In one sense, responsibility should be taken for the universities. I want to define for my own purposes a university as a self-governing body of scholars dedicated to the conservation, dissemination and expansion of knowledge, regarded as a good in itself. The conservation of knowledge is its library function. A university without a library would be unthinkable. The dissemination of knowledge is its teaching function. A university that did not teach would not be serving a useful function. Finally, there is the expansion of knowledge, its research function.
Just because universities are communities they tend to be equalitarian in their sharing out of the loaves and the fishes. Therefore, if you want to have selective encouragement of the high flyers in particular universities, you need selective bodies to do that. That is what the research councils are for. We have five. I do not need to run over the course. They carry out the selective non-egalitarian research based on quality only by peer selection. The first priority is that the high flyers in our universities should be given 100 per cent. support for what they need, because the high flyers are not necessarily the most expensive ones.
I turn from the universities to another big demand for money made by "big" science and the international projects on which we are engaged and obliged to continue by treaties solemnly entered into between the high contracting parties. There is the fusion project of JET to design something that will produce nuclear fusion. It involves a training ground for the most advanced engineering of its kind in the world. There is the work on nuclear physics and particle physics at CERN. Why should we do it at all because nobody can think of any use to which we shall put Quarks or Higgs particles even if they exist? Again, it involves a training ground for the most advanced control engineering in the world. The same is true with radio astronomy at Jodrell Bank and space research and rocketry.
All these are international projects. We are by treaty obligation bound to meet the cost escalation. We must not do that by cutting the science budget. There must be no fudging in this respect. There must be no cutting of the high flyers at our universities merely in order to comply with treaty obligations undertaken solemnly with the high contracting parties who are our partners.
Between those, I want to deal with a very great body of research that is carried out under government auspices and where I believe my line is very much that of the noble Lord, Lord Mottistone. I would transfer an enormous block of government research out of government control altogether into industry on

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contract for a five-year term to let it keep itself. Let industry take it over and be paid for doing so for a limited period. And then, at the end of that period, if it had something to sell, perhaps the Government would buy it or someone else would buy it. But we cannot keep armies of people doing research ending up with no product, nothing to sell.
When we talk about research, one can end up in one of two ways only—being able to do something or being able to make something. If people who think they are doing applied research do neither the one nor the other, they should be redeployed in as painless a way as possible.
I know very well that in this field I am a total iconoclast, and my noble friend Lord Sherfield gave me an opportunity to attend the committee and tell him this. I do not think that the committee agreed—the fact was not included in its report—but my iconoclasm needs further examination in this respect.
There are one or two other points that I should like to mention. I believe that a central committee presided over once a year by the Prime Minister quite literally is a fudge. I do not believe it. I do not think that anything would ever come of it. What matters is that the chief scientist in the Cabinet Office should have the confidence of the Prime Minister and the confidence of all the people to whom his influence radiates as the result of decisions taken centrally.
The noble Baroness, Lady White, was discussing the career in science of the noble and learned Lord upon the Woolsack. But, my Lords, with the Development of Inventions Act 1954, I got into this up to my neck, and I have been there ever since. If I had been at Harrow instead of at Eton, I should be singing "Forty years on" at this point because mutatis mutandis I have seen a Labour Government sitting on the Front Bench and Lord Cherwell making the kind of speech that I have heard from the noble Lord, Lord Mottistone, this evening. Viscount Samuel led a debate exactly like this evening's when I made my maiden speech. This is about the fortieth edition of my maiden speech, which I publish every year.
In the old Department of Scientific and Industrial Research, before the split was made between the Department of Trade and Industry on the one hand and the research councils on the other, the two best Ministers we ever had in my opinion were the late Lord Salisbury, who was not a scientist at all, and the noble and learned Lord now upon the Woolsack, because they were patient and dedicated to their clients. They were senior Cabinet Ministers; they could pull a lot of weight if they wanted to; they could listen patiently to the exposition of a case and say, "The Treasury will never wear that, so go back and do some more homework". Then they would get it through for us.
I beg everybody: do not have the illusion that one can have a central Minister for Science. I will tell your Lordships exactly what would happen. Set up a new Ministry, and every Permanent Secretary in the land will say, "We are not going to be junior to him." So he goes right to the bottom of the pecking order from the word "go". Is that the way your Lordships want to
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encourage science, by having such a single Ministry? That is not the way to do it.
I have been at this so long that I feel I could almost say with the poet, "here I go round the prickly pear". I have been listening to these speeches for nearly 40 years. That is why I am an iconoclast. As Bernard Shaw said in one of his prefaces, old men should become more revolutionary as they get older because they ought to be more disillusioned with things as they are.
10.15 p.m.
Lord Beloff: My Lords, I must begin by craving the indulgence of the Minister and of the noble Lord, Lord Sherfield, that I may not be here for their winding up speeches for the reasons already given, I very much hope that the authorities who conduct our affairs will look into the question of having our business unnecessarily interrupted earlier in the day and making this debate even later than it would have been in the normal course of events.
It is also a pity that the remarkable maiden speech of the noble Lord, Lord Dainton, should have been made on an occasion when the House is clearly worried about the nature of its own procedures in a matter of this importance. It is a matter of great importance and I share the view expressed by the noble Lord, Lord Gregson, and others, that this is a critical situation for this country. In fact, looking not so much at the report but at the evidence on which this report was produced I wonder that the noble Lord, Lord Sherfield, and his colleagues are not, like Robert Clive, astonished at their own moderation. I think that if I had been writing that report the punches would not have been pulled to quite the same extent in some respects.
There is a difficulty and one must not go in the other direction and believe that scientists are infallible and that all we need is to find ways of channelling resources to them. Scientists, like administrators, make mistakes and those mistakes can be costly. What happened to Nimrod? If we take civil research, who now remembers British Rail's high-speed train, which spilt soup all the way from Glasgow to Euston and was never heard of again? There is the failure to prevent, on a 125 which has been in service for years, the smell of the brakes coming into the carriages every time it pulls up. There are a great many reasons for thinking that our scientists, and particularly our engineers, have not achieved the degree of infallibility which would make us consider ourselves merely their servants.
However, when that has been said it still remains a fact that, by any reckoning on the international comparisons which have been adduced by a number of noble Lords, we are doing very badly and are likely to do worse. However, I think that some of us feel—I certainly do—that because the situation is so grave the positive proposals made in the report, though themselves unexceptionable, are hardly likely to make the difference that is required. A Council on Science and Technology with the annual appearance of the Prime Minister at its head would attract, no doubt, a headline or two in the next day's papers, but it is difficult to believe that the proposals would have on society as a whole—and this is a social problem, not an

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administrative problem—the kind of effect that we believe is needed.
What seems to me to come out from these volumes of evidence is that we live in what can perhaps best be described as a sclerotic society—a society in which the effort needed to bring about any considerable change is obstructed by many forces and many institutions. The Treasury has been mentioned. People are surprised that the Treasury cannot see, in spite of the statistics, the relationship between research and development and the prosperity of our industry in export markets. Since a few years ago the Treasury could not see any connection between studies of engineering in this country by students from overseas and the place from which they were likely to buy their equipment in the future. I have given up hoping even for the modicum of common sense that a government department might be expected to have. Indeed, the whole of my historical studies, going back long before the present Government and before the war, suggests to me that on the whole the Treasury has been a greater damping force on the energies of British society than almost any other single institution.
However, it would be unfair to blame the Treasury alone. We have trade unions, and I think that the noble Lord, Lord Mottistone, referred to them. It is true that an enterprise that is considering innovation on a great scale is not likely to find its trade union representatives jumping for joy. They did not, for instance, jump for joy at the Channel Tunnel, which is likely to bring massive advantages to the working population in many parts of the country. Incidentally, I see in the report that the TUC gave written evidence but that it has not been reproduced. I find it difficult to understand the reason for that and perhaps the noble Lord, Lord Sherfield, will inform the House about what happened in the interval between drawing up the list and printing the evidence. Even at my most malicious, I can hardly believe that the evidence was not printed because it was not thought worth printing.
Let us consider just one branch of the trade union movement—for example, the AUT (the Association of University Teachers). The noble Earl, Lord Cranbrook, called our attention to the situation in the United States, where a great many financial and other differentials are made in order that institutions may attract and retain the best staff. The slightest hint of differentials given on national or any other grounds will be resisted to the nth degree by the Association of University Teachers.
Of course sacred cows exist not only at that level. They also exist in the sphere of education. I think it is very important to remember that, because the human resources part of our problem is very great. If the energies that have been devoted to social engineering had been devoted to engineering, the schools might have been able to fill some of the skills vacancies to which many speakers have called attention.
I do not think that anyone has mentioned specifically one very important gap in our supply of skills; namely, girls trained in science and engineering. What is the reason for that gap? It is the passion for co-education. Everyone knows that the record in science and engineering of girls coming from single sex schools is a great deal better. That is true for both the
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maintained and the independent sector. Those who take seriously the notion that this is an untapped reservoir of national talent ought to be prepared to review their educational assumptions in order to bring about such desirable recruitment.
As I have said, it seems that in our society and as individuals—for whatever reason it may be, and historians may trace it back over many decades—we have lost the capacity to enthuse people with risk-taking. We have lost the capacity to find a way in which society can make people feel that taking risks, whether in research or industry or in discovering or producing things, is something infinitely worth while. That is at least a partial if not a total explanation of the brain-drain, the evidence for which is now, I think, conclusive.
On that subject I should like to make another remark, which is that by singling out science and technology we may overlook the fact that universities and other institutions of higher education have to be viewed as a whole. It is only in an institution which is throughout full of innovation, dedicated to research and concerned with teaching that the right atmosphere will be created. Although much less fuss is made about it (I agree that the immediate economic effects are harder to measure) the fact that we are now losing scholars in the humanities to the United States at an increasing rate is a course of worry to me.
I hope that at some time your Lordships' House will not be satisfied with having a Select Committee on Science and Technology, useful though its deliberations and reports are to all of us. I should like to see a committee, perhaps permanent, perhaps ad hoc, on this country's human resources. Earlier in the debate someone said (it may have been the noble Lord, Lord Gregson) that the human resources are roughly what we have. I do not think that we make the best of them. It is our business, going beyond these desirable administrative improvements, to take a serious look at why it is that we do not.
10.26 p.m.
Lord Carver: My Lords, I must also apologise to the House, to the noble Lord who will wind up and to the noble Lord, Lord Sherfield, for the fact that I am unable to be here at the end of the debate. I have an important engagement in the country first thing in the morning and I must catch the last train home. I am most grateful to the noble Lord, Lord Nelson of Stafford, for agreeing that we should change places in the speaking order so that I may do so.
I wish to draw your Lordships' attention to that part of the report which discusses and makes recommendations on the relationship between civil and defence research and development. I must make it clear that, although I am a member of your Lordship's Select Committee on Science and Technology, I was not a member of the sub-committee which produced this report and I made no contribution to it. My excuse for commenting on it is that I have direct experience of that relationship.
I made some comments on this subject when last year your Lordships discussed the report on marine science from the sub-committee on which I served. As on that occasion, I find that there is a considerable

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degree of confused thinking on the subject, leading to recommendations which tend to conflict with one another. In this report the committee has tried to clarify the issue, but I am afraid that in an attempt to reconcile conflicting opinions it has supported some views which are in conflict and at variance with one another.
What do the critics say? They can be divided into three categories. The first comprises those who deplore the fact that the Ministry of Defence spends so much on research and development. Secondly, there are those who suggest that the Ministry does not spend enough on research, whatever it may spend on development. Finally there are those who do not dispute the amount spent but suggest that it should be spent differently.
If I may, I shall take them in turn. First, there are those who deplore the disproportion between what the Government spend on defence R&D and that which, through other government departments and via the Department of Education and Science (through the research councils), they spend on civil R&D. In addition to the latter, there is the considerable sum handed out through the UGC to support research in new universities.
The report effectively dismisses the simplistic view that if the government finance devoted by the Ministry of Defence to R&D were reduced, it would be reallocated to the civil science budget. But it supports the criticism that defence R&D, both in-house and in the defence industry absorbs a high proportion of what are called QSEs (qualified scientists and engineers), of whom there is a national shortage, to the detriment of their employment in civil work, which would enable us to compete more effectively in world markets and so become richer, and thus be able to afford more and better defence. That is linked to another basis of criticism: that the major defence firms have been feather-bedded with cost-plus contracts so that they have been able to employ large numbers of QSEs in a wasteful way, paying them high salaries but making no effort to see that their work had a spin-off in the civil field.
I think that much of the criticism on that general score is exaggerated, if not actually false. However, I believe that there is some substance in the criticism that the major firms in the defence industry have been less cost conscious than they should have been and have expected the Ministry of Defence to foot the bill for many extravagances, including all the research and development which lay behind the product, whether finished or unfinished—sadly, often the latter, of which Nimrod is only the latest in a long line. I recognise that the Government have made efforts to remedy this disease and I shall comment on the whole vexed question of spin-off later.
There is one simple solution to the criticism that the Ministry of Defence spends too much on R&D both in proportion to civil R&D and to its own equipment programme as a whole; that is, to buy equipment that has been developed by somebody else. That would also often assist standardisation either within NATO as a whole, if it were American in origin, or in Europe, if it were French, German, Italian, Dutch or Belgian.
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It could either be bought outright or manufactured under licence, as many items of service equipment already are. All those QSEs, technicians and skilled workers who are now involved in the development and production of defence equipment would then be free to concentrate on meeting the needs of civilians, boosting exports and replacing the imports which every surge in personal income attracts.
But would that be the result? I beg leave to doubt it. I think that a large proportion would become unemployed, or seek work overseas, as would many scientists and research workers in firms, universities, polytechnics and Government civil research institutes, as well as in defence R&D establishments. A great many firms would protest, as they often have, that, far from releasing resources for them to compete more effectively in world markets, it would gravely prejudice that, and I am inclined to support that view.
What then of the criticism that the MoD should spend more on research? Those that take this line make unfavourable comparisons with the Pentagon, which is prepared to place research contracts in industry, in universities or with research contractors for the type of basic or strategic research which in this country we expect the research councils to foster. The Ministry of Defence's answer is that the money it extracts from Parliament must be spent on R&D directly related to the provision of equipment for the armed forces, and that it is not its job—and in any case it is not given the money for it and cannot afford to spend it—to go in for speculative research which might or might not have a significant defence application. Nevertheless it funds some research in this field jointly with the Science and Engineering Research Council. But I get the impression from scientists who are working on such contracts that they would prefer them to come directly from the Ministry of Defence, SERC's involvement merely in their view adding an unnecessary bureaucratic interference.
My experience and impression is that the Ministry of Defence has become significantly more parochial in this respect over the last 20 years as the cost of equipment has escalated, leading to reductions in the number of equipments and therefore of combat forces and to constant pressure for economies. The Government's decision to make severe cuts in the ministry's R&D establishments, farming out R&D in theory to industry, has aggravated the situation. The R&D establishments maintain a much closer link with academic research staffs and laboratories working in the civil field than the defence industries have ever done, with a cross-fertilization that has benefited both.
The criticism that the MoD's obsession with secrecy, which has been compared unfavourably with that of the Pentagon, is one of the principal obstacles to a more enlightened attitude to research, may have some validity in a few cases. However, it is seldom as restrictive as the secrecy practiced by industry for fear that a rival firm may profit from the research and development that it has initiated or undertaken
The ministry's critics on this score tend to overlook this cross-fertilisation between scientists working in the Ministry of Defence's establishments and those working elsewhere, including those on extra-mural research contracts placed by those establishments in

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universities. There is a tendency on the part of industry to wait for academic scientists to come along and suggest that they might have something to contribute, rather than to go out looking for ideas. And the Ministry of Defence, I suggest, has a better record in that respect. No doubt it could be improved, and perhaps we need to get back to that fruitful relation between military staff and scientists that was created in the Air Ministry half a century ago, of which radar was one of the outstanding results.
Finally, what about the suggestion that the Ministry of Defence should maintain its level of R&D funding but spend it in a different way? I have already discussed one aspect of that, but one which would involve more expenditure on research. This other criticism concentrates more on the development aspect, suggesting that more should be done to see a greater spin-off in the civil field from the development of defence equipment.
There are widely differing views about spin-off. The Ministry of Defence itself wavers between claims that there is a considerable spin-off, particularly in the electronic and aerospace fields, and a cautious warning that, on account both of the wide divergence between defence and civil requirements and of security considerations, too much should not be expected. In general, the firms which are engaged in defence contracts on a large scale claim that there is an appreciable spin-off in both directions; defence profiting from developments initiated with the civil market primarily in mind and vice versa, while those who are not engaged in defence work, or only on a minor scale, protest that much more could be achieved in both directions.
The research councils paint a picture of almost total separation, but that is because Ministry of Defence research contracts placed in universities or with the research councils' own laboratories, unless they are joint ones with the research council in question, do not pass through the hands of those councils.
Surely nobody can doubt that in general terms research and development to meet defence needs has had very significant spin-offs both in the academic and in the commercial fields. There are valuable spin-offs in the creation and maintenance of a body of highly qualified scientists and engineers whose knowledge and skill is available in non-defence fields, and a very important one in materials research, which is stimulated by the demanding criteria of meeting defence needs. It is materials research which is at the bottom of an enormous amount of development: in actual hardware, aircraft, the whole field of sensors, computers, radio communications up to and including the use of satellites, both for communications and for remote sensing, optical instruments of all kinds, lasers, launchers to place objects in space—all those have originated in military requirements. However, when they have reached an advanced stage of development, effort devoted to their further improvement for military purposes may contribute little spin-off in the civil field, which by then will have developed its own specialised requirements. It is at that stage that we should look carefully to see whether a considerable effort on defence R&D in that particular field is bearing fruit, or whether it might not be better to adapt
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for defence purposes what has been developed to meet a civil need. That is what has largely happened in the military vehicle field.
Of the recommendations on this subject, which are summarised on page 66 of the report, I fully support paragraph 37; that civil and defence R&D budgets should normally be recorded separately and that a thorough examination of defence R&D should be an early task of the Science and Technology Assessment Office, and the proposed Council for Science and Technology. I also support paragraph 739, which suggests that a more detailed annual report on defence R&D should be published. I am afraid that for the reasons that I have explained at some length I have reservations about the other recommendations in those paragraphs and in 738. That said, however, I fully support the general theme of the report and its principal recommendations. I consider it to be an extremely valuable one, to which I hope the Government will respond positively.
10.40 p.m.
Lord Butterworth: My Lords, I should like to add my congratulations to the noble Lord, Lord Dainton, upon his excellent maiden speech which was as authoritative as it was graceful. I am delighted that he has been able to join one of the committees of the Select Committee on Science and Technology.
Undoubtedly the main theme which has emerged this evening is the serious under-funding of science. However, I should like to spend a little time upon a factor which lies behind it and to which somewhat less attention has been paid this evening. I am referring to the need for selectivity which will continue even if the funding for science is much improved.
Research is becoming so expensive; equipment and apparatus are becoming so costly; and too frequently manpower is in short supply that we have with us, as a permanent factor, the need to select the projects to be funded. No longer can we assume that we can afford all worthwhile projects. As a result of the need for selectivity, we begin to need a co-ordinated programme of priorities continually updated over what is necessarily a wide, complex area. That is one of the reasons why the council was put forward.
There are three complex areas: first, the science base represented by the work in universities and research council laboratories; secondly, the research and development undertaken by government departments themselves; and, thirdly, the research and development undertaken by industry. Your Lordships will be aware that this process of selectivity has already gone a long way in each of those three wide areas.
The UGC has undertaken its selectivity exercise in relation to the grading of science departments in universities. That exercise is important, because it contains a very important shift of policy. It has inevitable long term consequences which may well bring fundamental changes to the whole university system.
While the universities are themselves in favour of selectivity, they are concerned about the problems that have arisen for them because of the decay of the dual support system. There is a fundamental dilemma here which will require a great deal of thought and

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planning. On the one hand, selectivity among departments is becoming increasingly necessary. There are distinguished chemists who point out that the cost of equipping chemistry laboratories to international standards are now so great that this country will soon be able to afford no more than 10 or 12 departments equipped to that standard.
On the other hand, the UGC's contribution to the dual support system ensures that young researchers are enabled to develop during that crucial period before their work becomes so mature as to enable them to apply to the research councils for full research grants. If universities can no longer make provision for those young scientists, the next generation of young scientists will simply not be developed. The need for selectivity in industry has already been commented upon this evening. I would not wish to express a concluded view about ACARD's recent report on a process for identifying exploitable areas of science. It is too early yet to tell. However, recently an interesting report published in America showed that even there, with their enormous wealth, what a hit and miss business commercial breakthroughs are from a scientific base. The report quotes how Sir James Black took the idea of Tagamet to Smith Kline, an American chemical firm, after ICI had turned it down. Eventually Tagamet was the world's first drug to achieve sales of over 1 billion dollars.
It is interesting that in Smith Kline the eventual success of the drug is alleged to have been due to a bunch of stubborn British employees who refused to stop working on it. I believe that behind this there lies a very important lesson: inventors and scientists alone do not make commercial breakthroughs. Success needs teams of people and co-operative managers working in industry. Breakthroughs often occur when the product is pushed through by technology and not market-led.
I turn to government funded research and development. This causes particular problems for selectivity because each department determines its own research programme to support its own policy objectives in the light of its own priorities and in relation to its other costs. It is therefore particularly difficult to arrange priorities between different research programmes of different government departments. I understand that it is for that reason that the Cabinet has set up the committee, which was referred to earlier, so that priorities can be accorded to government research.
There are therefore two major problems: first, to raise the whole significance of science and technology to a higher power in national consciousness and at the same time to be more selective and concentrate our effort in research and development whether it is funded as part of the science base, or is funded by government or industry.
It was for those reasons that the Committee made its recommendations that the Prime Minister should be identified with the science and technology dimensions and that in Cabinet a specific Minister should be responsible for science and technology issues.
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Perhaps I may spend a few moments speaking about the Council for Science and Technology. The committee did not give great detail about how it might work. I believe that some of us were inclined to think that this would be a new British model which would, to some extent, follow part of the Japanese experience. What is needed is almost a new type of body. It is quite an interesting constitutional problem. It simply cannot be an advisory body working at a distance and independently of government, for such a body would not discharge the tasks that we had in mind.
On the other hand, it is quite clear that the Government must take the decisions alone. The problem is that neither industry on the one hand nor government on the other can themselves determine the priorities and complex programmes over these very wide fields. Such complexity requires a great amount of detailed work, and if on the council there come together members from government, industry, if scientists are included, academics and others, those members must be willing to work within government guidelines and policy, and they need to be serviced by a strong team probably drawn from the Cabinet Office. An expanded ACARD could not meet this need, for ACARD is a simple advisory body, although, as the report suggests, the ACARD function could be absorbed into the council if it were to be established.
One extra point I wish to add about the council: I do not think it would be effective if it dealt only with research. I think it would have to have within its terms of reference not only research but training too for the reasons that have been given earlier. Research and training in this field must be considered together. Training is quite fundamental.
I wonder whether I might be allowed to give just one specific example which has occurred recently. There are a significant number of school-leavers who would like to become engineers or mathematicians but who have wrecked their chances of so doing because they took the wrong A levels. Indeed, the output of higher education is often thought to fall short of the national need in respect of the numbers who become mathematics and physics teachers, and of course those who become engineers.
The number of physics and mathematics teachers and engineers could be increased if courses were provided which assumed that entrants did not have the correct A levels. Such courses would obviously take longer. They would take four years. The real obstruction to putting such courses on is the difficulty of getting mandatory awards for each student for the full length of four years. If my noble friend the Minister could prevail upon her right honourable friend the Secretary of State for Education to help in this matter, he might be asked to ensure that a more positive attitude should be adopted to this problem by the awards branch of his department.
The new council then could help to create new national attitudes towards science and technology, research and development; land from a recruitment point of view research and technology have to be fun and they have to be financially rewarding, otherwise the brains will flee, like the hearts, to where they are best loved. It must be a matter of great concern today

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that Britain's most assured export seems to be our well-trained technical people.
I have only one last point to make, and I do not need labour it. But listening to the evidence from some quarters, I too formed the view that too many were unaware of the real nature of our problem. Indeed, listening to some, I formed the view that today maybe our greatest danger is ignorance of ignorance.
10.55 p.m.
Lord Nelson of Stafford: My Lords, I add my warm congratulations to the noble Lord, Lord Dainton, on his excellent maiden speech, which reflected, as one would expect, his depth of experience and characteristic wisdom. I also pay tribute to the noble Lord, Lord Sherfield, for the excellent report which we have reviewed this evening and which I fully support.
At this late hour, having listened to the very good speeches we have heard, I shall not dwell on the problems. They have been well aired and it has been made clear in the report that they are serious. I concentrate my remarks on some thoughts on what might be done in the short term to improve the situation.
My first thought stems from my experience and privilege of being a member of your Lordships' Committee on Science and Technology. All the reports we have had in recent years, particularly the one which the noble Lord, Lord Sherfield, presented to us, bring out one thing in my mind, and that is the extreme danger when, quite rightly, the Government are attacking public expenditure of the very blunt tools that are available to them.
I have in mind particularly the so-called cash limits. We have seen on many occasions the application of those cash limits, good as they are and good as the objective is, reflecting more than proportionately on the research and development spend in the areas affected, possibly because that is easier, possibly because it is not so publicly obvious.
But there is another danger—that what is cut out is the more expensive element in the research and development programme; the "D", the development. It is the development that ultimately makes the research into an end product, as was explained by the noble Earl, Lord Halsbury. It is the "D" that finally produces the results. The equipment which is provided for the scientists to enable them to do their work is also in danger of being cut. It is no good spending the money on research—it is no good spending it on development for that matter—if the right equipment is not available. These are the two things which tend to be cut out. I commend to my noble friend the Minister that in attacking this grave problem of public expenditure that special steps are taken to ensure that research and development is not damaged in those areas where it is of vital importance to the country.
My next thought relates to an area in which I have spent a lifetime; namely, manufacturing industry. I have always been in an industry which has had a very high research and development activity, the electrical industry. The company with which I have long been
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associated has a vast research and development programme. It is currently running at £285 million per annum in the civil field to its own private account. This is a massive programme.
Two things strike me. The first is that it is not in the end the amount of money that is spent—one has to spend it—but how it is spent. This is something we have to keep our eye on all the time. It is no good saying, "Spend more money. Throw money at it", as has been said earlier in a number of speeches, but how will it be spent. Are we getting value for money?
Secondly, looking back over my experience where there have been failures—there are failures; we have had failures and other people have had failures—it has nearly always been for lack of development. It has not been for the lack of research; it has not been for the lack of ideas. But the development has been starved and the product has not been seen through to completion. This is the matter to which we have to address ourselves.
With that background, your Lordships will appreciate that I do not dissent from the report's recommendations that industry should do more. I agree with that: so it should. But there is a role for government as well and I should like to emphasise two points which are made in the report, and quite rightly too.
First, the Government have to maintain the fundamental research base. That has been touched on by a number of speakers and I do not think it needs further emphasis. It is vital. The second point is that government have to create the right climate whereby industry is stimulated and encouraged to invest in its own research and development.
Here there are two specific areas, both of which are vital and both of which, I am glad to say, are touched on in the report. First of all there is the role of public purchasing. That has been touched upon already but I am going to spend a little more time on it because I think it is one of the most important matters of all. Public purchasing in a number of areas means that it is the sole British customer; it is the sole home market. It determines the R&D programme of the companies which are supplying those industries.
People will say this is already being done and that public purchasing supports British industry. So it does in some areas, and I would quote one of them. When the noble Lord, Lord Ezra, was chairman of the National Coal Board it had an excellent programme in supporting British industry and developing mining equipment. The result was that the British mining equipment industry sold its equipment all over the world, and it was developed during his period as chairman. That is a perfect example to my mind. But it is not happening everywhere. There are large areas of public purchasing where it is not happening and people cannot see that they are setting the standards for British industry. I was reading the other day an ACARD report on medical equipment. Here it is. It makes the point that that is not happening in the medical equipment field. I could quote other examples.

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But if we are to have the equipment necessary to do the job at home and to sell overseas, we must have a fully co-operative approach on the part of both user and supplier. We have heard on many occasions of the success of Marks and Spencer in just that. The same holds, to my mind, inthe public sector. Perhaps I may say to my noble friend the Minister, "Please see that all public sector purchasing activities are directed to this end, and also those which are being privatised but are still monopoly services".
The second thing I should like to do—and this comes right back to my noble friend's department—is to reinforce the suggestion made in the report that there should be more DTI support for industry. I am not asking for more money to be thrown at industry. What I am going to draw your Lordships' attention to is what our competitors do, particularly those on the Continent. They go in for many more demonstration projects, jointly funded by industry, by the user and by government. That is very, very effective because it attracts money from industry and gives stability to the programme. It gives the home customer an opportunity to introduce innovation into his service and at the same time proves to the overseas customer that the project is being properly developed, is being demonstrated in service and has the full backing of industry, user and government.
That is an extremely effective way of ensuring our success in a new technological field, particularly where innovations are involved. I commend this most strongly to the Government. More could and should be done in this field, and it would attract a lot more money and a lot more business from outside in the process.
The report recommends the publication of R&D expenditure in company accounts. The company with which I have been long associated has been publishing its R&D figures for years now. I fully support the proposal, or at least I have no objection to it. But one has to be aware of the problems. If this is to have the effect of discouraging "short-termism", or whatever is the latest phrase for a short-term outlook in the financial world, I am all for it. That is very good. It is exactly what we want to have. But is it? Is it going to be clear to the analyst what these R&D figures really mean
If you ask somebody what they are, the standard answer of the department and elsewhere is "Ah, the FRASCATI formula". But look at the FRASCATI formula. It defines basic research. It defines strategic research. But when you come to development, it is as long as a piece of string. Is a new process plant development or is it production investment? Is a new productive process development? The noble Baroness, Lady White, referred to computer integrated manufacturing systems. Is that development or is it production investment? If someone is introducing a novel new product under a contract, is that development or is it contract work? There is a wide range of definitions of what is research and development.
What I am afraid of is that unless you are very careful, unless there are clear definitions of what R&D
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means, the analysts will make what they like of it and it will not necessarily be helpful to the cause we have in mind. So I ask if this is followed up, and if legislation is introduced on this matter, please let us have clear-cut definitions of exactly what is to be included.
There is one final point that I would make to the Government. I think that they should go more public in emphasising their support for civil R&D. It can be talked about around Whitehall and so on, but you must put it across to industry as a whole. It must be seen that the Government are receptive to ideas for research and development. If they are to encourage industry to do its own thing, let it be seen that it has the encouragement of the Government. The Government must go much more public in putting this across. Equally, they must demonstrate their willingness to come in with industry in key areas where our research and development will bring us real benefits in the future.
11.7 p.m.
Viscount Blakenham: My Lords, I believe that the structural recommendations made in the report are very important and they do not cost money. A compact Council for Science and Technology, absorbing ACARD and chaired by the Prime Minister or a senior Minister, a streamlined and more executive ABRC working closely with the research councils and the councils themselves working more closely together, should produce more direction and better results.
It is late and I shall be brief, but as a business man I should like to address a few further remarks to your Lordships' House in the hope that the Department of Trade and Industry is also listening. None of these remarks will be expensive. First, the general disclosure of R&D expenditure in company accounts, to which my noble friend Lord Nelson referred, the importance of which has been pointed out by many noble Lords, just will not happen unless it is made compulsory. It happens in a few cases but, on the whole, it will have to be made compulsory, and the sooner it is made compulsory the better. Of course there will be problems, but I think that the analysts will appreciate it, because it will give them the ammunition to ask the right questions if they do not get the picture straight away.
Secondly (and I am thinking here of merger policy) the DTI should do what it can in this and other ways to encourage investors to take a longer-term view than many take at the moment. Thirdly, tax incentives would be encouraging in the short term, and in the long run would prove to be cheap. I should risk the danger of creative accounting.
Fourthly, I should like to draw attention to two private enterprise initiatives designed to get more "D" our of R&D. With both I am pleased to declare a commercial connection. The first is Defence Technology Enterprises, which is mentioned in the report. I quote from page 21:
"DTE has privileged access to MoD scientists for the specific purpose of identifying and exploiting spin-off opportunities in the defence research establishments. DTE has a 'ferret' in each of the main establishments with access to both classified and unclassified

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work to spot potential civil applications… In the first twelve months 450 items have been identified for circulation to its 150 associate members, many of them small companies. When an item is selected by a company DTE is prepared to assist, if necessary, with the raising of finance for exploitation".
The second initiative is a national on-line database named BEST—British Expertise in Science and Technology—which enables subscribing companies to know who is doing what research in which British university, polytechnic or government research establishment and how to get in touch with them.
I hope that these two initiatives will establish themselves commercially without needing financial backing from the Government. But because the sums, in Government terms, are small and in spin-off and multiplier terms could be extremely large, I believe these are the sort of projects on which the DTI should keep a close eye, with a view to helping in whatever way it can.
The point I wish to make is that the resources for research and development are scarce and as a result, I think both Government and industry must combine closely to make the most of what is being spent.
Finally, as a member of the committee that produced the report, I should like to thank the noble Lord, Lord Sherfield, for the brilliant way in which he chaired our meetings.
Baroness Seear: My Lords, the hour is late and I shall be extremely brief. Your Lordships have had a quite outstanding debate this evening and I can only echo other noble Lords who have said what a pity it is that we were not able to have it at an hour in which it would have been heard by a far greater number of people, as it undoubtedly deserves to have been.
Of the remarkable contributions which we have had this evening, I think that all your Lordships will agree with me that perhaps the most outstanding came from the noble Lord, Lord Dainton, in a maiden speech which I think few of us have heard paralleled at any time. If I may humbly echo the noble Lord, I was particularly impressed by his suggestion for a single research council. It would be a means of breaking down barriers between different faculties and subjects at a time when what we surely need is a great deal more multi-disciplinary research in order to approach many of the problems confronting us which require research at the present time.
The noble Lord did not make it quite clear whether he intended this, but I hope that in that single research council could be included the social sciences as well as the natural and physical sciences. I think that it is the joint working together of all the sciences which will be most likely to help us solve the problems with which we are confronted by advancing knowledge in the whole area.
That said, I wish to spend a very few minutes on one aspect which I think has not been discussed tonight, though one or two noble Lords have touched upon it. We have talked a great deal about research and about development. This is what the report is about. But it is also about the application to the problems of the economy of research and development, and unless
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they are used to improve the position of the economy, of industry and of manufacturing industry particularly, although not exclusively, the future for this country is extremely bleak. This is a matter of the greatest urgency.
We have spent six hours talking about the subject but time is running out, not only in your Lordships' House. Time is running out for dealing with the problems that we are discussing today. Other noble Lords have referred to the articles in The Times this week—and very alarming they are—about our position in comparison with other countries. Research and development are essential but it is no use having research and development unless we have the people in the country at all levels capable of making use of the research and development. This means not only the scientists and the technologists but the technicians and the great mass of people. They must join in the application of the newly discovered and developed ideas and apply them up and down the country in new industries and in old industries if we are to have the recovery which we are seeking and which is the focus of the discussion tonight.
That means education. We have talked a good deal about education in one way or another in your Lordships' House over the past two or three weeks, but the fact remains that unless there is a quantum leap in education we can spend money on research and development and it will have precious little effect on the economy, on rebuilding industry—the manufacturing sector and elsewhere—and on recovering our place in the world economy. It is not something over which we can afford to delay or with which we can tinker.
We are woefully behind in comparison with our competitors in the level and type of education that we give to our school-leavers; we are woefully behind in the proportion of our young people who go to polytechnics and universities. This is a most extraordinary moment to be cutting down on government support for universities both on the teaching and on the research side, as is going on at the present time. We need to be improving and increasing, not cutting down. Unless we do this the money that is being put into research and development will be of no use because it will not be applied. This is where we have failed so lamentably in the past. We have had great ideas and great scientists but we do not follow through in application and development because we have a totally inadequately educated and trained labour force.
It is no use the Government saying that 20 colleges of technology is the answer to the problem. What is needed is a general lift throughout the whole education scene; at the school level, at the university level and, above all, at the retraining and the re-educating level.
The burden of the report—this point has been echoed in many of the speeches today—is that the rate of change is now so fast that people have to learn and relearn. As one noble Lord said, they are out of date by the time they have finished their first degrees. This requires an investment, and I use the word "investment" deliberately. So often we talk about education as if it were purely a consumer good. It is

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indeed a consumer good; it is also and essentially an investment. Without the money put into that investment the aims behind the speeches of noble Lords this evening will be lost.
I do so hope that the Government will at last recognise—and I know that with the difficulties there have been in the schools it is hard to take the overall view that is required—that this is a matter of the greatest urgency. Unless they do so the present decline will continue. It is no use the Government pointing to some increase in the GNP and to some improvements in productivity. The general trend has been downwards. I hope that the Minister will not insult the intelligence of the House by telling us that everything will come well if we leave it to market forces. This is a matter of great urgency and this is the area on which we desperately need to concentrate.
11.20 p.m.
Lord McIntosh of Haringey: My Lords, the House and the country owe the noble Lord, Lord Sherfield, and his colleagues a great deal for the signal service that they have performed. They must feel, as I do, that it cannot simply be an accident that the business managers have chosen that the debate should take place so late and that so much of it should take place without the benefit of television cameras. I make no apology for saying that it is a debate that ought to be at the forefront of political discussion—politics in the widest sense. I do not believe that this is a technical matter. I believe that it is a matter on which the survival of our society depends. That is what I take politics in the best sense to be about.
There cannot be any doubt about the state in which we find ourselves. It needs only two sets of figures to be quoted, and all the excuses drop away. The first figures that have to be quoted are those showing the proportion of our gross domestic product that goes in civil research and development in comparison with our major competitors in world markets. I will not go back into history. There is no point in saying that this is what happened under this or that Administration in the past. The fact is that we now spend 1.6 per cent. of our GNP on civil R&D, the French spend 1.7 per cent., the United States, which has a vastly higher defence research and development expenditure, spends 1.9 per cent., and Japan and Germany both spend 2.5 per cent.
I said now, but, of course, the figures stop at 1983, a fact that The Times describes as putting our heads in a paper bag. We do not have adequate data since 1983 on the total of our research and development expenditure. I was encouraged to hear that it is intended that the annual review will this year make an attempt to cover all the figures.
I will not bore the House with the second set of figures. It is well known that our industrial production, our manufacturing, is lower now than it was in 1980. It has been creeping up again in the last couple of years, but it is still lower than it was seven years ago. This is in contrast to the performance of our rivals in world markets. We cannot draw a causal connection
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between the two sets of figures, but we cannot deny the coincidence of them, and the fact that they both work in the same direction gives us some cause for concern.
It is against that backdrop that I find the attitude of the Treasury, brilliantly exposed by the noble Lord, Lord Beloff, to be so inadequate and so pathetic—the idea that it is not possible to identify a link between industrial success and research and development expenditure. It was not just the noble Lord, Lord Beloff. The noble Lord, Lord Aldington, made the same point, as did the noble Lord, Lord Ezra, to quote only those who are still present. It is simply not adequate for government or the executive to make that sort of feeble excuse to try to get away from the responsibility for changes in policy.
The words used by the Minister of State in The Times today—that government policy should be to act as a catalyst—are simply nowhere near adequate to meet the gravity of the problems that we face. We must spend a moment or two looking at the causes of the problem.
My noble friend Lord Gregson set out the problem of our intellectual capability very clearly. It starts, as many noble Lords have said, at school with a school system where there are large numbers of unfilled posts in mathematics and science; where, even when the posts are filled, they are filled by people who are unqualified, or inadequately qualified, in the disciplines; and, even where the posts are filled by people who are adequately qualified in the disciplines, there is a concealed deficiency because there is not enough time-tabling going on in the schools for science and technology. That can hardly be an adequate basis for producing a higher education system which in turn will do the job which the country requires of it.
However, when we come to the higher education system the situation gets progressively worse. We have, as my noble friend Lord Gregson said, one of the lowest participation rates in higher education in the developed world. Within that low participation rate we have one of the lowest percentages of technologists in the total number of students. Even among those technologists who do graduate from higher and further education in this country a higher percentage do not go into industry or do not stay in this country. So in every way the whole process of our educational system militates against a large and adequate number of trained people in our industries.
Again as my noble friend Lord Gregson said, even if we accept that the entry qualifications are adequate, the amount of adult training available in technological subjects is simply not enough to maintain the capability of our workforce to deal with the changes in technology which take place throughout our working lives.
The failings of our industrial organisation were exposed in a devastating way by my noble friend Lord Gregson. The fact is that not only do we not have an adequate level of research and development—that has already been said—but there is no real incentive for large parts of our industry to have adequate research and development. I make obvious exceptions. The noble Lord, Lord Nelson of Stafford, quoted the figures from his own company. I think he will agree

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that there are comparable figures from Plessey which were quoted in The Times only today. There are other shining examples of adequate research and development.
However, it goes against the whole grain of our industrial strategy with pressures on our industrialists, who are all the time being forced to make short-term decisions, to push up dividends, to push up share prices and to resist all the pressures for take-over and merger which are considered far more important than the longer-term issues of industrial development. We do not have an adequate industrial society to encourage the research and development which we need for our survival.
Is the cure in the organisation of civil research and development? I do not in any way devalue the proposals made by the committee. My noble friend Lord Williams stated his support for many of the recommendations of the committee. Personally, I do not think that a Ministry for Science and Technology would be particularly effective. I agree with the noble Earl, Lord Halsbury, on that; though I think a Minister in a powerful position with that responsibility certainly would be valuable. I agree with the suggestion for a Council of Science and Technology. There is a great deal of difficulty in some of the suggestions as to what the UGC might do. Certainly it has improved its selectivity, and that means, inevitably, that it is moving towards centres of excellence; but there are doubts about the analysis method which is used by the UGC in producing that selectivity.
The noble Lord, Lord Dainton, in an excellent maiden speech, made a strong case for a national science foundation. I know that it works well in the United States and I know that it includes both the physical and the social sciences. There may be some mileage in that. Certainly there appears to be general agreement that disclosure of research and development expenditure by companies would be a valuable addition to public awareness and would put pressure on companies not to skimp on research and development. There are also other valuable suggestions such as the use of public purchasing power.
But, when it comes down to it, what must lie behind all this is the question of how we are to get the level of effective expenditure closer to that of our industrial rivals. How shall we go from 1·6 per cent. to, let us say, 2·5 per cent., as in Germany and Japan? It is not just Mr. Gosling of Plessey and the noble Lord, Lord Nelson. Sir Peter Swynnerton-Dyer said that it is not a question of the balance between the channels of funding, but a matter of there not being enough money going into any of the channels, and that is the problem.
The preference of my party on this matter and the policy that I urge on your Lordships mean fundamentally that increased and more effective expenditure must be pulled by demand for the products of research and development rather than pushed by technological possibilities. It must be very closely associated with industry rather than thought of as an extension of academic subjects. Of course, we could increase the science Vote. We could almost certainly add another £400 million or so to the science Vote by approving all the alpha projects instead of
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only 75 per cent. of them. We could certainly do better by providing competitive salaries in international terms to those working in research and development. There are some things that we could do in government research and development in energy, the environment and so on, and we could perhaps spend another £200 million in those fields, but I do not see them as being of central importance.
In order to achieve 2·5 per cent., we must talk about an additional £4 billion spent by industry on research and development that is encouraged and partly financed by government. I do not understand the distinction made by the noble Lord, Lord Mottistone, between fiscal measures and grants, because in effect both of them involve public expenditure, whether foregone or made directly. In order to spend that amount of money it is quite clear that there will have to be very great controls over the effectiveness of the expenditure. It is also quite clear that there will have to be improvements in manpower, and that in order for the expenditure on research and development to be of any value, there will have to be the possibility of investment in the results of research and development, and that must represent a very much larger amount than the amount spent on research and development itself. The gearing is absolutely critical.
We are not talking about something that is outlandish or outrageous; merely an additional £600 per employee in manufacturing industry possibly. That is a far smaller increase in expenditure per employee than there is already in the more advanced of our industrial sectors.
If we have learned one lesson from Dr. Bruce Merrifield, President Reagan's adviser on this matter, it is that the need for technological advance and change will apply increasingly in all industrial sectors and not simply in those that are thought of as high technology sectors. In terms of the achievement that is needed in order to bring us up to international standards, we are not considering something outrageous but something which is manageable and which ought to be within the sights of government.
At this time of night I shall not go into the economic arguments about where the money might come from or what other expenditure or tax cuts might be used to finance it. I come back again simply as a last point to Dr. Merrifield. Unless we are making a decision to make technological research and development the highest priority, we are making a decision, Dr. Merrifield says,
"not to be in business in five to ten years".
That is what it comes down to, my Lords.
11.34 p.m.
Lord Lucas of Chilworth: My Lords, I have found the past few hours to be one of the most interesting and exciting experiences that I have had the pleasure of in your Lordships' House. It has been that kind of debate. Perhaps I should say straight away that, in common with other noble Lords, I am sorry that the events of the day's proceedings meant that we started a good deal later than we should have wished. I shall certainly ask my noble friend Lady Hooper to convey the feelings of your Lordships to those who are normally described as the usual channels.

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In the preparation of the Government's response, we shall want to consider most carefully everything that has been said today. I take note of the general tenor of the remarks of the noble Baroness, Lady Seear, in that context, although we believe that our education policies are moving in the direction that she would like, as indeed are some of our other policies.
It is difficult to answer the noble Lord, Lord McIntosh, with his broad sweep of the issues that the debate has covered. Were this 4.30 p.m. or 5 p.m., I should have liked to have followed him down the path along which he tempted me when he set out his party's views, but I do not think that your Lordships would like me to spend what little time we have today on that.
Let me say straight away that the Government are aware of the value of civil R&D in wealth creation and the generation of benefits to the economy and to the social environment in which we live. My noble friend Lady Hooper outlined the major developments initiated by the Government in the five years since the Select Committee's Report on Science and Government. These actions reflect this awareness. We cannot, however, agree (I say this to the noble Lord, Lord Sherfield) with the committee's conclusion that:
"The overall picture conveys an impression of turmoil and frustration".
On the contrary, government policy has scored some notable successes. Universities continue to be world leaders in many areas of science. I note, for example, that we must congratulate Sir David Phillips, who while being chairman of the Advisory Board for the Research Councils continues to be a working scientist. He, together with Professor David Blow, has been awarded the prestigious Wolf prize in chemistry for work on protein X-ray crystallography.
British industry, although still having a great deal of ground to make up, is becoming increasingly involved in Europe and other parts of the world in high technology developments with major commercial potential, such as that on high definition television. There are a number of sure signs of success.
The House will probably accept from me and recognise that with 40 recommendations in the report, all of which address fundamental issues involving several departments, careful consideration is required. Such consideration necessarily takes time. The noble Lord, Lord Sherfield, acknowledged that we hope to be able to reply fully before the Summer Recess. Noble Lords will understand if I do not anticipate our response to specific recommendations in the report but try to concentrate on the general issues which the report raises and some of the points which have been raised this afternoon.
One of the major questions to which the Select Committee addressed itself and to which many noble Lords have spoken is how the Government should organise themselves to support and promote civil R&D to the national benefit.
The committee's proposals for a Cabinet Minister to be responsible for science and technology and the promotion of R&D and for a council on science and technology need careful analysis. I rather enjoyed the comments of the noble Earl, Lord Halsbury, on that.
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I suspect that my sympathies lie somewhere alongside his.
The Government fully recognise the importance of ensuring that science and technology receive proper weight in all our deliberations. As my noble friend Lady Hooper described, there has been considerable evolution in the role of the exisiting advisory bodies such as ACARD and in the role and office of the Chief Scientific Adviser in the Cabinet Office.
I listened carefully to what my noble friends Lord Mottistone and Lord Butterworth had to say in that direction. I see no sense in demolishing what we have because there may be gaps in its effectiveness. What we have to do, and what we shall do—I give this assurance—is to consider whether further changes in that structure would be advantageous and if so what form such changes should take.
Another major issue addressed by the Select Committee is the functioning of the research councils and the ABRC in supporting the science base of the country. Again, we recognise the importance of strong management, clear decisions about priorities between the councils and for the science budget as a whole. Significant steps have been taken. In recent years, despite the science budget growing by more than average inflation, the increasing real costs of undertaking research and the growth of scientific opportunities have meant that difficult choices have to be made. Selectivity between areas of science, building up centres of excellence, giving proper weight to the economic contribution which advances in science and technology can make, are essential. I know that my right honourable friend the Secretary of State for Education and Science welcomes the strong guidance given by ABRC in this direction.
As Minister in the Department of Trade and Industry I welcome the emphasis that the Select Committee have placed on the industrial research and development contribution. I felt that the remarks of my noble friend Lord Nelson of Stafford in this direction were pertinent. Indeed, the committee pointed out that within R&D the main responsibility for D—the development—rests with industry. They also rightly emphasise the major role which must be played by the financial institutions in the City if there is to be sufficient investment for our future technological advance and growth. There has been support for this aspect of the committee's report from the noble Lord, Lord Gregson, and my noble friends Lord Bessborough, Lord Nelson and Lord Blakenham.
The Government accept that they also have a role to play but I believe that the committee—indeed, perhaps noble Lords here—have under-estimated the significance of the measures that the Government have taken. We have indeed given strong signals to industry and to shareholders of the importance of research and development in a number of ways of which I shall mention two. I mention these two because the noble Lord, Lord Williams, made this point. The scientific research allowance has been retained when other capital allowances against corporation tax were cut. Research and development has been included as a qualifying activity for the business expansion scheme. Those are just two of a number of measures.

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LINK, which has been mentioned, will be a major force in further increasing collaboration between science, industry and commerce. This will generate a constant stream of new industrial technologies, products and services. I should perhaps say that through LINK the Government will support up to half the cost of collaborative programmes between the scientific community, industry and government laboratories with the Government's contribution planned to reach £210 million over the next five years. Overall, this initiative will, we expect, generate a total expenditure of some £420 million over five years.
Perhaps at this point I may respond to some of the points that were raised. On the exploitable areas of science, and its relationship with LINK, I notice that the noble Lord, Lord Sherfield, nodded his approval when my noble friend referred to this in her opening speech. I should like to say no more than that, but welcome the support that the noble Lord, Lord Swann, gave for this process. Perhaps I could write to the noble Lord further. I should quickly say—since he asked me specifically about the Bide report, IT 86—that we have just received this document. As the noble Lord, Lord Sherfield, said, it was published at the end of last year. We are currently canvassing views and we shall issue the Government's response once this consultation is completed. I suppose that will be in a few months' time.
A number of noble Lords, including the noble Lord, Lord Sherfield himself, my noble friends Lord Aldington, Lord Mottistone and Lord Nelson, and indeed the noble Lord, Lord Gregson, all referred to the level of spending on research and development. The Government share the Select Committee's concern at the overall level of civil R&D expenditure in the United Kingdom. We do consider that the way the sourcing of funding is carried out and the extent to which the private sector's commitment is engaged are as important as the level of funding itself. In particular, public support of civil R&D for economic growth and productivity is unlikely to be effective if industry is not adequately engaged.
Government funding of civil R&D expenditure is comparable with other technologically advanced countries. It is higher as a proportion of GDP than the civil R&D spending of the USA and Japan. Despite the fact that the Government support R&D in industry to a substantial degree, it is in the performance of the private sector that the United Kingdom compares poorly with international competitors. I make no secret of that. In 1983, only 63 per cent. of R&D expenditure by industry was funded from industry's own resources in the United Kingdom. This compares with 73 per cent. in France, 82 per cent. in West Germany, and 98 per cent. in Japan.
I should like to refer to the reports recently published by the ABRC on spending on British science compared with major competitors. The reports, I accept, leave no room for complacency. However, the picture painted by them is not as black as suggested. Again I say that United Kingdom government spending on the science base is in fact higher as a proportion of GDP than that of Japan and the USA. The Royal Society study for the ABRC shows that in
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1982 the number of scientific papers published by United Kingdom scientists exceeded those of other countries.
The noble and gallant Lord, Lord Carver, raised the matter of skill shortages resulting from defence R&D. It is difficult to quantify an issue such as this, but we do accept that defence R&D is competing for skills, particularly in terms of numbers and quality of manpower. This is a major reason why it is government policy to seek to obtain economic benefit from defence R&D. In fact the Ministry of Defence is a partner in a LINK programme.
Turning to public purchasing, I broadly agree with what the noble Lord, Lord Williams, was saying on the question of public purchasing. I should like to assure my noble friend Lord Nelson of Stafford and the noble Lord, Lord Ezra, who emphasised the importance of exploiting public purchasing as an instrument for stimulating R&D in the private sector, that I agree with this view. It has always been this Government's policy that public purchasing should continue to enjoy a high profile as a means of stimulating innovation. Indeed it should be used to improve the competiveness of British industry. I believe that this does not necessarily mean always going for the cheapest price. Cheapest is not always best in the long term. There are the longer term considerations to take into account; I believe these were points made by noble Lords. We have to ensure that we get the best value for the taxpayers' money. That is why the central unit on purchasing, set up 18 months or so ago, is looking at this sort of issue and I have little doubt will be spurred in its work by what has been said in your Lordships' House.
We have spoken quite a lot about strategic research. The Government accept that support for such research is of crucial significance. The Government spending on this sort of civil research was £488 million in 1984–1985 and nearly a quarter of that—just over £2 billion in total—the Government spend on civil R&D. In part, that relates to what the noble Lord, Lord Sherfield, had to say. I noticed that the noble Baroness, Lady White, referred to Sir George Porter. The noble Lord, Lord Ezra, quoted the Royal Society's report as did my noble friend Lord Bessborough. Oddly enough, no one quoted Sir George Porter when he told the Parliamentary and Scientific Committee yesterday:
"We cannot blame the Government, because British firms received a much higher proportion of their R and D funds from government: 30 per cent. here compared with 16 per cent. in Germany and 2 per cent. in Japan".
That is perhaps a rather telling remark.
I turn to tax incentives which were raised by my noble friend Lord Mottistone, in part by the noble Lord, Lord Ezra, and by the noble Lord, Lord Dainton, in his remarkable maiden speech when he spoke about personal taxation and the brain drain. I noted carefully what the noble Lord, Lord Williams of Elvel, had to say on this matter, because it bears a little on his own party's policy in this area. Therefore, I say to the noble Lord that I note what he had to say.
The issue of stimulating private research and development through the tax system must be seen in a wider context. After all, substantial tax relief is already available on research and development expenditure. I have mentioned the 100 per cent. first year scientific

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research allowances for plant, buildings and other capital expenditure. In addition, for development, there are allowances for capital spending on plant and buildings and most current spending on R&D is allowable as a deduction in calculating profits. It is not clear whether further tax relief would be effective in stimulating additional research and development.
It may not be necessary, but I remind noble Lords of the Government's achievements in lowering coporation tax. I also remind the House of what Sir Robin Nicholson said in his evidence to the Select Committee. I paraphrase: "How much of the £3 billion reduction in taxation resulting from the removal of the national insurance surcharge did industry invest in research and development? The answer is, depressingly little". Nevertheless, we keep options for tax relief on research and development under review as, indeed, we keep matters of tax generally under review. It is in that context that one has to see the reduction in personal taxation that has occurred over the last two or three years.
The noble Lord, Lord Sherfield, mentioned the 10 per cent. surcharge for Government contracts. For the record, I was very glad to have the views of the noble Lord, Lord Rothschild, relayed to your Lordships by the noble Lord. However, I think it would be best if I wrote further on that subject.
The noble Lord, Lord Swann, asked me a specific question about evaluation. My noble friend Lord Selborne also made some comments in this area. It concerns the Select Committee's recommendation that approximately 1 per cent. of all government R&D expenditure should be devoted to evaluation. It is helpful to have the committee's views on this matter. It is difficult to say what is the right figure. It depends, in part, on how much the administrative and decision-making process is classified as "evaluation". The new Science and Technology Assessment Office has the job of developing best practice among departments. It will most certainly be considering how much effort to put into the various stages of the evaluation process.
I do not think that I can add much on the subject of international collaboration, to which my noble friend Lady Hooper referred in her opening remarks. However, in connection with Euratom and the pay scales, I shall write to the noble Lord, Lord Williams.
I make one short comment to the noble and gallant Lord, Lord Carver, and to my noble friend Lord Blakenham with regard to the spin-off from defence research and development to the civil sector. The Select Committee's report rightly emphasises the importance of encouraging spin-off of this expenditure to the civil sector. While the primary role of the defence research establishments' programme is to support the procurement of equipment for the armed forces, the Government accept that they have an important contribution to make to the broader national economy. A number of initiatives have been taken in recent years, and in particular Defence Technology Enterprises Ltd. has rapidly established itself as an important channel between the work of the MoD scientists and engineers and civil industry.
Selectivity in university research, which was mentioned by both the noble Lord, Lord Flowers, and my noble friend Lord Butterworth, is perhaps worth
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mentioning further tonight. The challenge of allocating selectively the resources provided to the universities in support of their research is one which we have taken up. The grants committee has, for the first time, explicitly identified those university departments with particular research strengths and its new method of funding favours universities with good research records. The new method of distribution is an important step towards the more rational allocation of public funds to the universities, and its introduction within a relatively 'short time-scale is an important achievement on the part of the UGC.
While talking about universities, perhaps I may refer to one particular point of interest raised by my noble friend Lord Cranbrook. There has been criticism of the pay of our university scientists as compared with the salaries which they can achieve overseas. I believe that our policy of selectivity and concentration will increasingly improve the facilities available to our best scientists. Indeed the Government have also offered to make additional sums available to finance higher pay in return for a flexible salary structure. That will enable higher awards to be made available for appointments in shortage subjects and for those whose performance merits them. We believe that this is a positive step towards improving morale in the scientific community.
I took note of the point raised by the noble Baroness, Lady Seear, my noble friend Lord Beloff, the noble Lords, Lord Ezra, Lord Gregson and Lord Dainton, on the shortage of skilled personnel as regards earlier education and training. I believe that they know that we have this matter in mind.
Lastly, I turn to the comments of the noble Lord, Lord Williams. He asked for a kick start. We believe that we have done just that. We have done more. We have given industry the fuel on which to run by providing a stable climate with low inflation, low interest rates and low taxes. With inflation brought down and significant improvements achieved in company profitability, liquidity and capacity utilisation, companies should be prepared to plough back more of their gains from these substantial benefits into investment in future commercial success, including innovation and the exploitation of research and development. I have already indicated that the City can also be a major influence in creating the right climate for research and development. The Government agree with the Select Committee that disclosure of research and development expenditure in company accounts would encourage a valuable change of attitude to research and development.
I noticed that a great number of noble Lords—the noble Earl, Lord Bessborough, the noble Viscount, Lord Blakenham, and the noble Lords, Lord Nelson and Lord Gregson—urged this. I welcome the progress being made by the Accountancy Standards Committee in drafting a standard on disclosure. I hope that support from noble Lords in this debate will encourage early implementation of the work.
I am conscious that I have rattled through a great number of important points. I appreciate that perhaps I have not dealt totally adequately with some points that noble Lords have raised. If the noble Lord, Lord

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Sherfield, and others will allow me, may I read carefully what has been said and identify those areas where I have not been able to make a comment, or where perhaps I should make a comment before the official Government response. If that is so, I shall write to noble Lords, placing, as is the custom, copies of my letters in the Library.
To conclude, I should like to thank the noble Lord, Lord Sherfield, his committee, and indeed the secretariat, for their valuable work, and thank noble Lords who have taken part in today's debate. Perhaps I may leave noble Lords with the assurance that the Government will give the closest attention to everything that has been written and said, and we shall hope to respond before the Summer Recess.
Lord Sherfield: My Lords, at this very late hour I shall be brief. I must express my regret that the debate was shovelled down to the end of the day's Order Paper. I realise that this may not be the responsibility of the noble Lord and the noble Baroness on the Front Bench, and I appreciate what the noble Lord had to say on the subject. Nevertheless the Government must have realised that this was an important debate which would attract an impressive list of speakers. I just hope
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that the impression will not get abroad that the priority that they have given to the debate reflects the priority that they give to the subject matter.
I have three points. First, I want to express my thanks to the noble Lord, Lord Dainton, for his interesting and attractive maiden speech. His experience will be invaluable to the House and in particular to the Select Committee. Secondly, I should like to thank all noble Lords who have taken part and supported me in the debate and particularly those who have managed to stay the course. Thirdly, I should like to thank the Ministers for their speeches without at this stage commenting on them. We shall scrutinise their remarks and also their figures with the greatest care.
Let me make just one last point. At the end of the day—and I think this came out in the speeches of several noble Lords—the crucial issue in my view is the priority to be given to research and development in relation to other areas of government expenditure. My Lords, I commend the Motion to the House.
On Question, Motion agreed to.
House adjourned at four minutes past midnight.