Business Education

HL Deb 16 March 1988 vol 494 cc1171-205

5.20 p.m.

Lord Peston rose to call attention to the state of business education and the role of business schools; and to move for Papers.

The noble Lord said: My Lords, my first duty and indeed pleasure in introducing this debate is to say how much we look forward to the maiden speech of the noble Marquess, Lord Huntly. I am particularly delighted that he has chosen my debate in which to make his maiden speech.

In introducing the debate I am also obliged to declare one or more interests. At my college, Queen Mary College, we take the subject of business education extremely seriously. We have introduced in our undergraduate economics degree and our masters economics degree a business economics option which in a sense shows our bona fides on these matters. More to the point, we are introducing a business school in Docklands, and the noble Baroness will be delighted to hear that we shall finance that school using private money rather than public funds. Indeed, she will probably be more pleased with that than myself. Be that as it may, we certainly are extremely committed to business education, as I am too.

My other point of departure in introducing the debate is of course the statement to be found in the Department for Enterprise White Paper (I can never remember whether it is Department of Enterprise or Department for Enterprise). Chapter 5, under the heading "Management", says: Management which is educated, trained and aware of new opportunities is the spearhead of a competitive business.

All of us will agree with that. In that sense, although some of the issues that I and other noble Lords will raise are controversial, they are controversial, as it were, with respect to the substance and how to do various things and not controversial in the normal political sense. Indeed, I have myself been very involved with this subject for a great many years. I was horrified to discover that it is more than 20 years since I wrote a hook on the use of highly qualified manpower in British industry. I cannot claim to be the first person who worked in that field, but certainly I was one of the earliest. To say the least, it makes one feel very old to discover that 20-odd years have gone by and that I am now standing in your Lordships' House discussing the same matters.

Another matter which relates to, sadly, a departed Member of this House is the Robbins Report. In that report of the 1960s great emphasis was laid on the importance of management education and particularly on the need to found a couple of major business schools, which we went on to set up.

That is the background. Beyond that there is another kind of background which concerns the state of our economy. I hope we can all agree that taking the longer view and not falling into the trap of discussing yesterday's events, which we will have plenty of time to discuss in due course, we must agree that the future of our country requires us to be not merely as efficient as our competitors but to be one step or more ahead. Many of us believe, and the evidence shows, that at the moment we are still relatively backward. That means that as a first priority we must learn to make better use of available resources and to exploit known technology as efficiently as possible; certainly more effective than we do.

More than that, we must be innovative and in the forefront of technical progress. I have argued in your Lordships' House that one part of our national strategy must be to find more resources for basic science. I have also argued that the whole of our labour force needs to be better trained, and retrained, as other noble Lords have argued on many occasions. I still believe that. My theme today fits in with that and concerns what is called investment in human capital, but this time my emphasis in on management. Simply because I emphasise management I do not intend to argue that the other matters are somehow unimportant. They are all equally important but we cannot discuss everything at the same time.

The problem with education for business is multifaceted. Again, to produce an echo of another debate, it is partly a matter of positive images; but in this case it is, so to speak, a matter of the psychology of industry and of what image industry presents to our young people. It is also a matter of market forces and economics, to which I shall return later.

On the subject of positive images, there is no doubt in my mind that work in industry has not for some time—in fact, perhaps not at all in this century—appeared to be sufficiently attractive to our best young people. They have not seen industry as a place that welcomes the talented. Industry has appeared to them to be anti-analytical, anti-intellectual and anti-cultural. I have to say with regret that they have also seen industry as politically biased and not as an environment in which someone with progressive views can flourish. I should add that I use the word "progressive" not merely to refer to our side of the House but also to refer at least to some views on the government side of the House.

Young people have not seen industry as a place in which people who are concerned with general welfare are at home, or people who have such beliefs more generally would be welcomed. That is the pity. Equally paradoxically, they have not seen industry as a place to welcome the tough-minded either; namely, those who wish to pursue efficiency in what I will call, for want of a better expression, a ruthless fashion. Indeed, for too long British industry and British management have settled for a quiet life.

I make these remarks because in arguing, as I believe most strongly, that we must encourage business education, it seems to me that a part of the problem—perhaps a large part—lies with industry itself. It is all very well to say that schools, colleges and universities must take a more positive attitude to industry. I believe that very strongly indeed. Equally, I believe that industry itself must change if it is to use what the education system is capable of producing. It must take career development more seriously.

This is a topic which has concerned me for many years and I believe that industry must, in particular, take middle management more seriously and pay middle management better. One of the better consequences of the Budget yesterday—I break my rules slightly to say that there are not many good consequences that I can see—is that reducing business perks as a reward to middle management is a most sensible course of action. It is better to pay a proper salary and not, so to speak, fob off middle management or management generally with a minor concession or car.

That leads me to a problem. Simply to say that what we must do in education is to produce what industry wants is absurd. As I have argued on previous occasions, and as other noble Lords have argued, the problem is precisely that industry is not a good judge in this area of what it requires. My own view is that a major task of management education is to educate and persuade management and industry in what they need and the value of business education in the first place.

Having said that, I turn to business education itself. Here again, I come to a possible paradox and possible contradiction. Certainly questions of great difficulty arise. In the first place, it is apparent to me that we need courses of the highest academic standards. I also believe strongly that those courses must have a quantitative bias. That means that we must one way or another remove British management's distrust of the high powered, of the technical and of what is analytical. Its reliance on rules of thumb and on traditional methods must be subject to continual scrutiny.

In my younger days, when I needed the money, I used occasionally to act as a consultant. The most frustrating thing of all was that one would turn up as a bright young man with all kinds of bright, young ideas only to discover that these had no impact because industry was totally locked into a traditional way of doing things and definitely did not want change. The last thing it wanted was bright young men. That was before the days of bright young women of whom we hope to see many more in the future. That has to change.

This is where the paradox arises; namely, that, at the same time, the courses we offer must be practically-minded and practically-directed. My view is that the business schools have not got the balance right. I put this forward as a hypothesis. On the whole what they do is too academic and too little concerned with the practical reality of industry. In that connection I was particularly delighted to see a reference in a paper the day before yesterday to my old colleague Sir Douglas Haig who probably goes a little further than someone more judicious like myself. He refers to business schools as not taking a blind bit of notice of industrial trends. That may be a little strong but one takes exactly the point he has in mind. Business schools must address themselves to the practical needs of industry and not see themselves as solely devoted to academic matters.

It is not true of all business schools and courses when I talk about the lack of practical impact. Interestingly enough, in the lesser known centres—not the least of which are the polytechnics—one will often find courses of a more worthwhile nature than those in places which are more famous and perhaps with a better reputation in academic circles.

Perhaps I may add one other point now that I am in my normal acerbic mood. I do not believe that the business schools to which I have referred in particular have quite got the balance right between what one might call manufacturing industry on the one hand and commerce on the other. To put it crudely, it seems to me that the needs of the City of London are met slightly better than those of medium-sized firms in the North and North-West. This is a subject upon which I hope other Lords will speak. I would emphasise the enormous value of short courses tailor-made to meet the needs of specific firms and specific industries and responding to local and regional demands. I believe that this is an opportunity that is still available. But it is still not met by the various educational institutions we have been talking about.

I should like to raise another matter which, again, is rather controversial. It is the difficulty to which I referred earlier; namely, entrepreneurship. As I understand the Government view, it is that one task of those of us in education—I am at least still somewhat in education—is to encourage entrepreneurship. My difficulty is that the problem is really two-fold. I am not clear that entrepreneurs can be made rather than born. I am not at all clear whether one can do anything at all about the entrepreneurial spirit. I shall be very interested to hear the contributions of the other noble Lords on this subject. It is by no means obvious to me that what Britain actually lacks is entrepreneurs. It seems to me that the problem with our entrepreneurs is that their efforts are excessively devoted to certain areas, notably services, including retailing, rather than producing things. I do not make the vulgar error of assuming that somehow things are better than services. They all contribute to values. But within that situation we still have not got the balance right.

I shall be interested to hear the reply of the noble Baroness. I am not convinced that for this nation encouraging entrepreneurship is what matters. I reiterate the point. The problem with industry is that people in it are still insufficiently appreciative of what we might call first-class and up-to-date management. I believe that many of our entrepreneurs are gifted and intuitive. But they are amateurs. One of their problems is that they sometimes undervalue the professionals.

I have referred to the regional problem and I hope that other noble Lords will join in the debate on that aspect. I believe our regional policies might turn out to be more successful if more of our business education was developed in the regions. In education, in the days when it was very hard to get teachers to work in the less attractive parts of the country, there used to be a view that those who did their teacher training in those parts would be more inclined to take jobs there. That may well still be the case. If our potential first-class managers have some experience of being trained or educated away from London and the South-East, they might find it more attractive to operate as managers in other parts of the country.

I have no desire to detract from the achievements of the London Business School and since I have introduced my own college, I have no desire to detract from the hope that Queen Mary College will be very successful as a business school. I understand that Oxford and Cambridge are moving more strongly into the business school area. I have no desire for them not to be successful. Having said that, I hope that a great deal of future development will occur in Scotland, Wales, Liverpool, Newcastle and similar places.

My final comments go back less to business schools themselves than to the business element in other degree courses. I have been convinced for many years of the desirability of introducing a business element into many other kinds of degree course. I am very pessimistic of the future here; but I also believe strongly in the value of sandwich degree courses. We have seen many developments of joint degrees: natural science degrees coupled with business and economics; engineering degrees with business and economics; and language degrees with business and economics. I believe that to be wholly desirable, but much more is needed to be done.

I emphasise the sandwich degree side. It has concerned me while I have been involved in the teaching of economics as well as during the time when I was a student. Most of us involved in this subject as students need to be appreciative of the real world which our subject is about. Yet we have virtually no experience of the real world before we study the subject. I hope I do not shock the noble Baroness before she replies. My own view is that no-one should be allowed to read for a degree in the social sciences without one year of work experience before going up to university. I believe that very strongly indeed. Those students might then have some understanding of what the subject is about.

Particularly as regards business education, one of the worries is that young people on degree courses will have no idea what it is they are discussing until they have left. They will have no feel for the matter. What one would really like for some of our young people is a high-powered programme spread over, say, five years. Within this, one would have an undergraduate curriculum, a sandwich element and even a master's curriculum. I suppose that most people would regard that as rather too high flown and well beyond what we can afford.

That covers most of the ground I wish to explore. It is obvious to noble Lords that I have put forward certain views in the way of statements. As my friends know, that is very much my personal style; namely, I say things positively rather than ask questions. My intention is to ask questions and I look forward to at least some of the answers from noble Lords. I beg to move my Motion for Papers.

5.40 p.m.

The Marquess of Huntly

My Lords, before speaking about what I have clearly set out on the notes in front of me, perhaps I may say that I am very heartened that I do not find myself in total contradiction of the noble Lord, Lord Peston; for to be in that position as a maiden speaker would be an appalling predicament. As I develop what I wish to say, I hope that your Lordships' House will find that I have avoided the controversial element which is so important in the role that I have to play today.

At the point at which I learnt that your Lordships would be discussing this Motion I recognised that it would be the postgraduate business schools that would chiefly be under consideration today. It is true that the stream of graduates that they produce have to compete in the job market with students from the private sector. The jobs that all those candidates seek may be the same.

My reasons for wishing to speak are threefold: first, because I am a product of a business school; secondly, because I retain a financial interest in a business school, and it is the way of this House that one makes such involvement perfectly clear so that self-interest can be seen; and thirdly, because I try to employ the methods and skills that I was taught at business school in the conduct of a complex business life.

I support the view that there is a need for further thought as to the effectiveness of business education and that we are correct to be considering this Motion this evening. If I have any contribution to make in this debate it is on account of the experience that I have gained at business school—a private sector school. I hope that any observations that I make will not be seen as controversial, bearing in mind the respect that a maiden speaker properly accords to all Members of this House. Further, I trust that I shall not be seen as using this unique and privileged opportunity to promote the cause of self-interest.

I am heartened that moves to draw up and monitor standards relating to further education in the private sector are currently under review. That is overdue. There have been some appalling examples of private schools operating in a manner which I do not believe any Member of this House would wish to see allowed to continue. People who know no better have been afforded an opportunity to attend an educational establishment and what they believe will be a good quality course only to learn to their dismay that it turns out to be very much the reverse. Therefore I support such moves.

With regard to business education in this country, we need to be concerned not only about teaching standards, by which I mean whether those who stand up and teach have some business background as well as merely an academic background. We need also to be concerned about the value of the qualifications gained and the use to which they can be put. I believe that is very important. It is self-evident that there is no benefit in gaining what is perhaps a very difficult qualification to have earned in the first place if it is of little use to you in earning your living.

I should like to make three observations about the private business schools in this country, again drawing only from the experience which my involvement gives me. First, though they correctly receive no public funding, they prosper and generate substantial sums of foreign exchange despite extensive competition from Australia, America, Canada and indeed elsewhere as well. Secondly, they offer a more practical business education. It is in this area that I am so gratified to learn that the noble Lord, Lord Peston, and I have a common view. Consumer response indicates that they are correct to do so. They are totally market driven and must satisfy the customer effectively or close down; there is no safety net.

Thirdly, through the alternative syllabuses which they offer, they teach the student to look at business from a practical as well as a theoretical point of view. I believe that it is necessary to understand the jungle that business really is and not just to be allowed to believe in the model of it; to promote the leadership skills and creativity that are to a greater or lesser extent in all of us. Again, it is very difficult not to agree with the noble Lord when he asks whether it is possible to put entrepreneurial flair into someone if it is not there in the first place. That is a very valid point.

Students of business must learn to bang on doors and find out what it is like to be faced with confrontational issues. One of the problems of the classroom or the lecture room is that the opportunity does not exist to learn what it is like to have to pit your wits—which means your money—against somebody else's. One must learn to develop powers of persuasion, and most of all, as is so often expressed by the government of the day, to see things the way the customer sees them.

So in the private business schools that I have known the student begins to learn both sides of the equation; on the one hand, the experience gained while still a student—and that is the important point; discarding the jeans in favour of the dark suit and getting into the community—and, on the other, learning the disciplined syllabus of traditional management training, the marketing, accounting, statistics and so on, so that the growth and development of the target business can be monitored in the correct way.

I trust that I am correct that this evening we are questioning as a body whether we are making the best use of our resources to serve industry and commerce and, as has already been mentioned, the City, through our business training programme. Perhaps I may say heaven help us if further innovative management systems are discovered next week. The biographies of wealthy, prosperous and successful businessmen are thick with theory on the subject, often in contradiction of each other and yet each able to demonstrate success for its own formula.

I admit that I am not a successful tycoon—or at least I am not a successful tycoon yet. However, for my part, in addition to the study of all the basic disciplines, I advocate employing a maximum of common sense, calling on one's wit and judgment and, as a priority, putting time aside to think before taking those all-important decisions.

I am well aware of the breadth of experience that exists on the Benches of this House and that many noble Lords hold or have held the highest office in government and within our educational establishments. But in deference to this and to the enormous breadth of the subject under consideration, I trust that the House will not view my remarks as those of an advocate of grass-root values without regard to the immense contributions made by the growing science of sophisticated financial and commercial management, as was also mentioned by the noble Lord. I wish merely to propose that it may be beneficial to consider a balancing influence between practical and academic training.

I understand that on occasions such as this your Lordships allow the occasional aside. This may be the best opportunity, or the only opportunity, I shall have of saying with genuine humility how enormously grateful I am for the privilege of being able to speak in your Lordships' House. I am able to do so on account of political and military service rendered hundreds of years ago by members of my family.

I should like to add one point. My father held the title of Marquess of Huntly for 50 years and yet he never came to speak in your Lordships' House. I regret that, not simply on account of common courtesy or as a mark of respect, but because he had the most wonderful speaking manner. He never hesitated over his words; nor did I see him with supporting notes in his hand, whether he was speaking to audiences great or small; although, on reflection, perhaps that could be a reprieve for your Lordships as on almost every subject he held the most outrageous views.

I repeat my thanks to the noble Lord, Lord Peston, for the opportunity his Motion has given me to speak on a subject in which I have such an interest. I hope that some of the points I have made may be seen as helpful in the wider consideration of the subject.

5.50 p.m.

Lord Ezra

My Lords, it is with great pleasure that I congratulate the noble Marquess, Lord Huntly, upon his very thoughtful maiden speech and his contribution to our debate based on a double experience; that is, his experience as a student at a business school and now as one who is concerned with the running of a business school. Experience of this kind is extremely valuable in the debates which we have in this House. If we can have people contributing who come here with fresh experience, as the noble Marquess has, that undoubtedly adds to the breadth and importance of our discussions.

The noble Marquess has highlighted some of the issues to which the noble Lord, Lord Peston, referred when he introduced the subject in his important speech. Perhaps the major issue—which many of us will be returning to—is the essential need at all times to ensure that in business training, especially in the business schools, there is a proper balance between the academic and the practical. That fact must never be lost sight of. I believe that we are looking at this question at a very important time in the evolution of business training in Britain.

Last year, two important reports were prepared on the subject; the Handy Report and the Constable Report. In his report, Professor Handy compared the state of business training in Britain with that of our main competitors in the United States. Japan, Germany and France. The conclusion that was reached, after a very detailed survey, was that in all those countries they are taking a much more professional approach to the manager, his training, his skills and his qualifications than we are. There are of course centres of excellence in Britain and firms which have a very good reputation for the training of their managers.

However, on the whole, we demonstrate a spasmodic and intermittent approach to the problem, whereas our main competitors appear—at least on the face of the report—to be taking the subject very much more seriously. Therefore we need to consider how we can adopt some of their methods with the intention, eventually, of overtaking them. This is where the second report, the Constable Report, comes into the picture. That was a report which, on the basis of the findings of the previous survey, put forward various proposals for action.

However, before considering those proposals, I think it is worthwhile recalling the evolution of the attitudes towards business training in this country since the war to which the noble Lord, Lord Peston, briefly referred. I have personally been very much involved for many years in a large organisation which tried to develop its management training in a comprehensive manner. I was also involved in the raising of funds for management training in general, and so was fairly familiar with what was going on.

I think we can refer to three periods, the first of which extended up to about 1960. That was a period when very little careful thought was given to the right approach to the problem. Some firms such as Unilever, Shell and also some nationalised industries—I am glad to say because I was involved in one of them—stood out. They paid particular attention to management training. But, on the whole, it was not regarded as a national issue. As the noble Lord, Lord Peston, mentioned, in the early 1960s there was the Robbins Report. I believe it was published in 1963. It recommended the setting up of two major management schools, and that was done, based on the American experience, especially that of the Harvard Business School. I am glad to say that industry, both in the public and the private sector, rallied around that recommendation and funds were raised from enterprises (£5 million in the first instance and another £7 million later on) in order to enable those two centres of excellence and other centres of management training to be set up.

The result of those initiatives is that we now have many centres where the skills of management are being taught, for example, in universities, polytechnics and in private establishments similar to those which the noble Marquess, Lord Huntly, referred to. There is no shortage of places where people are taught management skills but the problem is that there has been no effort to think out a total approach. However, I am glad to say that I believe that this is now being done as a result of the two reports to which I have referred.

A group has been formed under the initiative of the CBI, the BIM (British Institute of Management) and the FME (Foundation for Management Education) to take a new look at the whole status of business training in this country. The group has come to the conclusion that this concept not only needs to be extended in a very big way but that we must take account of the rapidly evolving technological world in which we live.

It is a sobering thought that, of the 2.75 million managers in Britain today, it is estimated that most lack any formal management training. Furthermore, only 21 per cent. are estimated to have degrees of any sort. In the other countries considered, that figure is at least twice as high, so there is a long way for us to go. It is suggested that there should now be established a diploma of skills in management which could create the professional grade of the chartered manager, just as in recent years we have developed the concept of the chartered engineer in order to give more recognition to that vital profession.

It is felt—I must say that I agree with this—that we need to put great effort into creating the concept of the chartered manager; that is, the manager who will have not only the basic skills in management but will also have had a required degree of practical experience. Therefore, if someone describes himself as a chartered manager it will be known immediately by any prospective employer, or anyone he is dealing with, that he has those skills combined with the experience. When this is set up many young people should be encouraged to qualify as chartered managers. That will be the first step.

Secondly, the training of a manager never stops. It is no good thinking, even if this scheme were to be successful—as I hope it will be—that once you employ a chartered manager that is the end of it and he has all the skills he will ever need; that is not true. Therefore a major effort, which will largely be the responsibility of the employer, is required to ensure that there is continuous development in the training of the manager.

As regards the concept of the chartered manager, I think that perhaps the Germans lead the way with their apprenticeship scheme, whereas the Japanese lead the way in attention to the development of management skills. With the knowledge that we have obtained from those other countries and under the momentum of the new initiative that has been taken and very much encouraged by the noble Lord, Lord Young of Graffham, we can gain from their experiences. We can introduce a much broader concept of management training, including the idea of the chartered manager as a basis, and then inculcate throughout industry and commerce the vital need to regard management training as a continuous process, right up to and including the post of chairman.

6 p.m.

Lord Russell of Liverpool

My Lords, I should like to thank the noble Lord, Lord Peston, for giving your Lordships' House the opportunity to debate a subject that will be central to our ability to compete in the international economy. Following the DTI's enterprise White Paper, the Handy and Constable and McCormick reports, the setting up of the Council for Management Education and Development and the Charter Group, now is an appropriate moment to reflect upon what it is that we are trying to achieve, and how we can best achieve that within the context of the rapidly approaching unified European market in 1992.

Like the noble Marquess, I am a member of a species which has been the target of much criticism from both industry and government. I have a master's degree in business administration, albeit not from a British business school but from INSEAD in Fontainebleau, France. I should also declare that I am a member of the advisory council of the Association of MBAs, previously known as the Business Graduates Association. In choosing to go to INSEAD, I made a conscious and rather un-British decision to learn about how the rest of the world conducts its business and to do so in a school that is deliberately multinational and multilingual. It was a salutary and stimulating experience. MBAs have been criticised in this country for a variety of sins—overweening ambition, theoretical rather than practical knowledge, and a know-it-all attitude. Perhaps so, but many top companies find MBAs highly valuable and are able to forgive them their sins and put them to good use. A glance at the INSEAD address book reveals that organisations such as IBM, Courtaulds, Digital, British Petroleum, Barclays Bank and Procter and Gamble gainfully employ large numbers of my fellow-alumni. Nevertheless, the dissatisfaction felt by much of British industry with the business-school product has led directly to the Charter Group initiative.

I welcome that initiative as evidence that the climate of opinion about business education is changing. The Charter Group code of practice may at last force the boards of large parts of British industry to face up to their management development responsibilities and to acknowledge that a trained and motivated workforce is a vital source of sustainable competitive advantage. I shall find it less easy to welcome the concept of the chartered manager until some important issues have been resolved—issues about which I hope the Minister will be able to comment. I raise all of these issues within the context of 1992 and the absolute—there are no half-way houses—need for us to be internationally competitive.

First, on the concept of the chartered manager much has been said of the need to develop a business education system suited to our insular peculiarities. Unless we are careful, we may produce a wholly British invention carrying neither recognition nor conviction in any other country. I hope that the Government will give vigorous guidance and direction in this area.

Secondly, as to the practicalities of what a chartered manager will be, there appears to be a plethora of potential routes to acquiring chartered status. There is a danger that the quality and content of the courses will be so closely related to particular companies and to their particular industries that uniform standards may be near impossible to achieve, thus devaluing all courses whether good or not quite so good. Will the Department of Education and Science, with its embarrassment of current experience in shaping and reshaping curricula, please undertake to offer solid guidance?

Thirdly, a key point of sucessful management is the ability to take risks. Individuals are more prone to enterprise than institutions or organisations. It is a rare organisation that is able to engender a culture that can profitably and creatively challenge the status quo. Does the Minister agree that outside organisations, such as business schools, have a valuable role to play in lifting management development out of the work place and into an uncomfortable world where traditional beliefs can be recast?

Fourthly, and finally, what of the business schools themselves? For all the apparent irrelevance of a business school degree, the top British and Continental business schools are embarrassed by the paucity of places on offer in relation to the large number and high quality of applicants. I am willing to go on public record as admitting that some MBAs can be a pain in the proverbial; but the vast majority of them are making their way quietly and effectively up through their organisations. They can bring to their place of work a breadth of vision that draws on a pool of knowledge based not on abstract theoretical notions of good and bad business practice, but on a syllabus grounded in theories emanating from empirical observations that are often dismissively described as mere common sense.

Common sense is a valuable commodity. Does the Minister agree that the Government will themselves be lacking in common sense if they do not vigorously encourage and promote the activities of our leading business schools? The year 1992 draws too close for us to attempt to reinvent the wheel. While welcoming the Charter Group initiative, let us not neglect to build on what we are already fortunate enough to possess.

6.8 p.m.

Lord Irvine of Lairg

My Lords, I propose to speak on what I believe to be one of the most crucial challenges facing business education today: the education and training of our businessmen to equip them for the Common Market's Big Bang in 1992. That is the internal market to which the noble Lord, Lord Russell of Liverpool, has just referred. It is an attempt to create a single market in goods and services for all EC states by 1992. It is not just that Customs checks are to be abolished and technical regulations for products standardised; about 80 of the Commission's 300 proposals have already been agreed. Those proposals extend from opening up the financial services sector to a general system of mutually recognised professional qualifications; from an end to national bias and public procurement policy to plans for fiscal harmonisation. I pose two questions: will businessmen be adequately trained and educated to meet the challenges and opportunities of the internal market? What steps are the Government taking to ensure that the necessary training and education take place?

The Government have accepted some responsibility. Starting this Friday they are mounting a campaign to increase the awareness of British businessmen of the advantages and opportunities of trading in Europe. I hope there will be more to this campaign than what we know is already planned: working breakfasts—in practice sometimes a contradiction in terms. There is rather more to the education of businessmen about the challenges and opportunities of the internal market than a cosy chat over a good English breakfast, the one matter on which perhaps we have nothing to learn from our Continental friends.

This awareness campaign is apparently to be launched on breakfasts. So also is the promotion of the Government's inner cities initiative, Action for Cities. I ask myself whether a new political issue is emerging—the breakfast issue. I have a vision of policy being lost to sight behind a mountain of breakfasts.

As the European Court has recently put it, the Community is a Community of law. Whether or not we like lawyers that is the nature of the Community of which we are members. Lawyers as a breed are somewhat generally reviled. I well remember at the time of the Industrial Relations Act 1971 that Barbara Castle in another place complained that it would prove to be breakfast, dinner and tea for the lawyers. That seemed to her and to others to be a quite sufficient indictment of the Act. I suppose it follows from that pronouncement of Barbara Castle that a lawyer such as myself should be the last to deny a businessman a good breakfast. But my hope is that the Government have rather more in store than good breakfasts to equip the businessman to trade in the internal market by 1992. I hope that in the reply to this debate by the noble Baroness we may be told what educational substance there will be to this campaign.

A basic understanding of European Community law and practices must be an essential part of any adequate programme for the education of businessmen about the internal market. Businessmen must learn the significance of law and of legal remedies in the Community system. They must understand the significance of competition law; they must know who is the commissioner for competition, what are his powers and what is his policy. They must know what to do if the commission's inspectors arrive on their doorstep and ask to examine their files. They must understand that, if they are obstructed in penetrating a new market by some ingenious non-tariff barrier, they should first think of suing in the courts of the other country rather than rushing off to the DTI or their MP, hoping that he can do something about it.

They must also appreciate that competition in the new internal market of 1992 will mean inward competition as well as outward competition. They must be prepared to meet competition on their own home patch. They must learn that an open market for public procurement means an end to "sweetheart" deals with government departments. There are hard lessons for business to learn if it is not to let itself down and the nation in the process.

I hope that in the reply to this debate we can hear what serious educational content the Government's campaign will have. Above all, if there are to be seminars and courses of instruction, what, if any, use is to be made of the unrivalled expertise of our universities? All our universities now include Community law in their law degrees and some are highly distinguished in the field. One such centre for education in Community law and practice is the Centre of European Governmental Studies at the University of Edinburgh. For 25 years it has been organising seminars on the subject.

It was disheartening to hear its distinguished professor, Professor Edward, a Queen's Counsel with many years of legal practice behind him, as well as great expertise in Community law, complaining recently on the radio that his offer to the noble Lord, Lord Young, that his centre would be enthusiastic in taking part in the process of education for businessmen in the run up to 1992 was brushed aside. The noble Lord wrote to Professor Edward on the subject of the awareness campaign: Apart from the national launch, there will be a series of seminars and events throughout the country. We are still in the early stages of planning but I have asked my officials to keep in touch with the programme as it develops and we will let you know if opportunities for your involvement arise". That was on 16th November 1987. It is now mid-March 1988. Professor Edward of course has heard nothing. I hope that the noble Baroness who will be replying to this debate will inform her noble friend Lord Young that I have called attention to this correspondence.

I think it is a fair comment on the noble Lord's letter to Professor Edward that it should surely not be a matter of the Government graciously considering giving the universities opportunities. The question is whether the Government have the common sense to take advantage of and to encourage business to take advantage of the opportunities which the universities can make available to the Government and to business.

So I ask: are the Government really interested in involving the universities in the education and training of businessmen to make them ready for 1992? Adequate information for businessmen needs a combined effort of government, the universities, institutions such as the CBI and the Institute of Directors and businessmen themselves.

I hope that in the reply to this debate we may be given some detail about the educational content of the Single Market Awareness Campaign to be launched on Friday. We should be told whether the accumulated expertise of the universities is to be drawn on. The law faculties of our universities are particularly adept at constructing courses geared to the needs of busy people. The universities, for example, as their contribution to the Law Society's scheme for the continuing legal education of solicitors in busy legal practice, are putting on special courses to update solicitors on new developments in particular subjects and even to teach them wholly new subjects. The seminars take place at the weekends or in the evenings and are constructed to meet the convenience of those in full-time employment.

I endorse the remarks of my noble friend Lord Peston about the need for our academic institutions to fashion courses tailor-made for particular requirements of business. I see no reason why the law faculties of the universities in our major commercial centres should not design courses in Community law and practice for British businessmen in the run-up to 1992. They should be encouraged by the Government to do so and the Government should encourage businessmen to participate.

Working breakfasts are costly PR. They have the authentic ring of the really phoney. Education, by contrast, is not PR but is substance. So I hope that we shall hear in the reply to this debate from the noble Baroness what precisely, as part of their Single Market Awareness Campaign, the Government will be doing to promote the education and training of businessmen in the run-up to 1992 and to what extent they will ensure that our universities are involved.

6.19 p.m.

Lord Taylor of Gryfe

My Lords, I put my name down to speak in this debate because I wished to assure the noble Lord, Lord Peston, from these Benches that we share his concern for the promotion of business education. I want to make a general comment and deal briefly with the position in Scotland, for which I assume the Minister has no responsibility whatsoever. Before doing so, I wish to congratulate the noble Marquess, Lord Huntly, on a model speech. I had always associated the title of the Marquess of Huntly with estates in Aberdeenshire and the grouse moors. How delightful it is to see that the noble Marquess is an MBA and a practical teacher in the field of management studies. That I think indicates the changing climate in relation to management studies.

I was interested to read the report of Professor Charles Handy when he made the comparison—to which the noble Lord, Lord Ezra, referred—between ourselves and other countries in the industrialized world in the field of management education. Professor Handy states: Management in Britain has traditionally been more to do with pragmatism than professionalism. Common sense, character and background have been thought more important than education, with experience the only worthwhile school. These things are still widely held to be true, but the complexity of modern business and the rising levels of both education and expectation among younger managers have brought demands for a swing towards professionalism. I believe these words to be profoundly true. They should be learnt. How often have we heard, particularly those of us who have been in business for a long time, the words, "Oh, it just needs a hit of common sense and experience and you are all right"? The companies who take that view and reject professionalism in management very often find themselves the victims of takeovers by companies which have professional managers and can exercise their skills.

One of the factors that affects the changed attitude to management education is inward investment. I have seem this in the Scottish scene. On my doorstep there is a huge factory of IBM. Not so far away is the new Nippon Electronics factory—an import from Japan. If one looks at those successful companies one will see that they have brought professionalism in management into the industrial scene. They have raised the whole standard of management in other neighbouring industries which are competing for employees.

When I talk about the impact of the companies coming in in changing attitudes to professional management, I think that we must recognise that professional management is very mobile and that the competition for management is great. People with the appropriate qualifications can move readily with high rewards to the United States and to other parts of the world where their professionalism is recognised and valued.

If we are going to train professional managers let us be sure that we give them standards that are internationally recognised. The noble Lord, Lord Russell of Liverpool, made that point very strongly.

There is a great proliferation of business schools. I have seen some of the courses and I have sat in on some of the courses that are being taught because business schools have become a big thing in universities. Many universities naturally are taking advantage of this new interest. They are also taking advantage of the fact that by running business schools they can sometimes attract funding from industries which will benefit from the graduates who will emerge. So it is attractive to the universities to have business schools.

I think that the one thing that has been achieved in the United States is a reasonable standard for their MBAs. It is not a uniform standard. It varies a great deal. But nevertheless if one looks at the Handy Report one will see that the United States has four times the population of Britain but over 40 times the number of graduates with business qualifications that we have. I believe that that is an important lesson to learn. Not only must we produce more graduates but we must observe a standard that will be recognised in the market place.

I wish to say a few words about the Scottish scene, where there are eight universities, five of which have reasonable business schools. I underline the word reasonable because the great opportunity that Scotland has missed is the creation of a Scottish Harvard in Stirling University. It is just the right size for that. I found in discussing the development of business education in Scotland that there was a great desire for all the universities to protect their own little patch and their own little group and to have their own little business school.

I believe that in a country the size of Scotland it would be desirable to establish a high standard business school with an MBA which would be universally recognised. I am delighted to see that in Stirling at the present time a school for Japanese studies has been developed. Apart from Sheffield and Oxford it is the only university that has developed such a school in a serious way, as it recognises the importance of Japan in our future industrial development. However, I should like to see a greater co-ordination of business education in Scotland with a view to raising standards and achieving standards that would be universally recognised.

I shall say a few words about the content of business school training. It should not all be about training accountants and producing people who are good at corporate planning. People have to be trained to make things too. Managers are required on the shop floor as well as in the merchant banks. I would certainly stress that point.

I think it was the noble Lord, Lord Peston, who said that too much of the management training is academic and too little is practical. I believe that a balance has to be struck. Indeed I would go so far as to say that in the modern business world and in the modern business school there might be a department which trained students on ethics in business.

I am encouraged by the fact that Sir Hector Laing and some of his peers are encouraging companies to release on secondment some of their young managers to work in inner city development, in urban renewal, and in business in the community, offering advice and guidance to small firms. I believe that a good manager requires experience, sympathy and a feeling for people which goes beyond a purely academic achievement.

Finally, I wish to mention that in my experience of living in the United States I observed that the business schools promoted the principle that their professors and teachers should be actively involved in business. A colleague of mine was a professor of marketing at New York University but he also ran his own business on the side. He had practical experience of applying his teaching there.

It was not uncommon at Harvard to find professors who were on the boards of companies. I believe that it is important that teachers in business schools should not be remote from the industry in which their students are going to practise their skills. They should be encouraged to become involved in the community and also in practical business.

6.30 p.m.

Baroness Carnegy of Lour

My Lords, we are all extremely grateful for the opportunity which has been given to us for this fascinating debate. The skill and expertise of managers is crucial not just in business, as has been discussed by noble Lords so far, but also in the health service, in local government and in schools, particularly under the impending regime. My noble friend Lord Huntly spoke in his eloquent speech of business schools in the private sector. I wish to speak particularly about open and distance learning for management education. In order to do that, I wish to draw on my experience of the Open University, where I am a member of the governing board. It may be that the noble Lord, Lord Graham, who also has extensive involvement there, will wish to add to what I have to say.

The Open University believes that there are some 2½ million managers in Britain. Of those, fewer than 20 per cent. have degrees or the equivalent. Seventy per cent. of all managers have no training at all for their present positions. The Open University also believes that the average amount of training which managers receive is less than one day per year.

One of the major problems is that managers, by definition, are key people. They make a considerable economic contribution to their firms and they cannot easily be spared. They also do not wish to be spared in order to go off for prolonged training courses. Smaller firms can easily be put off by the cost of traditional courses, and many managers do not live within reach of courses which take place in the evenings. That was one of the reasons why, in 1983, the Open University set up its open business school by means of which managers, wherever they live and whether or not they have any previous qualifications, can study, as all Open University students do, at home and in their spare time. They have available to them at their own firesides high quality and practical teaching on the subject which they want to learn by means of the best of modern distance and open learning techniques.

The response since 1983 speaks for itself. In that year, 998 managers registered for the courses of the open business school. By 1987 the number had risen to 6,372. In less than five years, 18,500 managers have joined courses. Over 22 per cent. were women and 21 per cent. came from businesses employing 100 people or fewer. It is interesting to note that two out of three of those students were sponsored by their firms, with the total of sponsoring firms being no fewer than 2,500.

Until now, that has been done without recourse to public funds, with finance being a combination of fees, support from industry and a welcome grant at the outset from the Foundation for Management Education. That approach has proved so popular that it is being incorporated this year with the help of government finance into a new school of management within the Open University. That faculty will bring together staff who have worked within the existing business school and others who have contributed to management programmes elsewhere in the university. They will work with external consultants from business and other institutions.

The existing courses which have been carried out until now will be used as a base for a professional diploma in management. The DES has now agreed to fund the development of an MBA programme within the next three to five years. It is interesting to note how the Open University's way of working, which operates across all the subject areas for some 150,000 students, is proving to be particularly successful for students of management.

Why is that? First, managers can take part, as can all Open University students, wherever they live, whether or not they have any previous qualifications, whatever their educational background and on the job, without having to be absent from work. They fit the course in with their own home and family lives. The course is especially designed to build on their current and previous experience of work. That Open University way of doing things has proved to be very attractive to management students.

Secondly, it is possible for management students, as for all Open University students, to benefit from the teaching of a wider range of academics and practitioners using a wider range of teaching methods than is often possible for students who attend traditional courses which may be on offer locally. Each Open University management course is designed by a team which is based at Milton Keynes.

In the team there are academics who are usually people with recent practical business experience. They bring together their knowledge of the subject on the ground with their experience of research at the frontiers of the subject and the frontiers of distance learning and teaching methods. Working with them is a BBC production team backed up by photographers, artists and librarians, as well as management practitioners who come in to advise and help. One of those courses may take the equivalent of ten man years to complete, with as many as 50 people contributing. Yet because so many people follow the course, it is possible to set the fees at the full market price and still produce an extremely cost-effective operation.

Thirdly, it is possible to make full use of modern technology in that kind of education. Students learn by means of an ever-developing variety of methods—well-produced and attractive printed materials, television and radio broadcasts, video and audio cassettes, computer conferencing and assessment by computer. People enjoy using those combinations of modern media. Properly delivered, it is extremely effective in management education.

Fourthly, as elsewhere in the Open University, management students each have a local tutor assigned to them. That is a crucial element in the course. They meet the tutor from time to time on their own or with other students in the locality to discuss problems, clarify parts of the course which they do not understand and receive help in relating the course to their current work experience. Students often meet in the absence of the tutor to help one another with problems they come across. The tutor also assesses the written assignments which students undertake. It is important that that is done wherever possible by someone who knows the student personally. The examination at the end of the course can be taken at a centre located somewhere close to where the student lives so that attendance is not too difficult.

Lastly, when a firm or other institution wishes to run a management course in-house, the Open University materials can be provided in a package so that the staff of the firm can assist students to follow the course. I think that is a response to the sort of tailor-made provision which the noble Lord, Lord Peston, called for.

All those ways of working which apply throughout the Open University are clearly especially suitable for management students. It is interesting that at the present time, of those taking courses at the Open University 67 per cent. are between the ages of 26 and 40; 30 per cent. are junior managers; 35 per cent. are middle managers; and 53 per cent. have less than five years' experience as a manager. Forty-four per cent. of all students left education before they were 18. Six out of every 100 have no 0-levels at all, while 31 per cent. have degrees.

What can be learnt from the Open University experience for future management education in Britain? Open entry and distance learning, properly combined, are undoubtedly a very useful way forward. I draw to the attention of my noble friend the proven success in that respect. The Open University has demonstrated that open and distance learning is very much more than having, as it were, a factory at the centre churning out films, cassettes and written material, sending them to students and waiting for the students to respond. There is a large and developing area of teaching expertise in this multi-media approach in representing first-class and up-to-date material in such a way that the student can relate it to his own experience, take it unto himself, make it his own and increase his effectiveness as a manager.

The Open University goes on learning. It is in no way sanguine about its current offerings. The noble Lord, Lord Peston, has made clear the need for more and better management education. It is clear also that the Open University and other bodies with distance and open learning provision have a significant contribution to make. I ask the Government to consider carefully whether there is something that they can do to increase the provision of such facilities in various institutions throughout the country.

6.42 p.m.

Lord Graham of Edmonton

My Lords, it is a pleasure to follow the noble Baroness, Lady Carnegy of Lour. What she said was interesting and familiar and must have given great pleasure to the House. It will surely have been particularly pleasing to the first Vice-Chancellor of the Open University, the noble Lord, Lord Perry of Walton. He contributed a great deal to the foundation of that body, which is so well used, and was among the pioneers of the tutorial and academic staff. I am one of a trio of noble Lords who are proud to speak in the Chamber whenever possible on this subject. The noble Baroness, Lady Carnegy, gave an excellent outline of the place of the Open University, thus relieving me of the necessity to do so, for which I am grateful. There are other interests that I wish to serve in the debate.

Can the Government tell us what they are doing and what they have in mind to improve the role of business schools? Perhaps I may develop this a little. I have attended a prize-giving in Edmonton in the last seven days. The prizes were given by Brenda Dean, the eminently respected trade union leader. I sat through the prize-giving knowing that this debate was to take place and wondering how much energy the department is devoting to the objective of producing good British business managers in 20 years' time from among youngsters now aged 15 and 16. Can the Minister say how concerned the Government are not only that youngsters should go on to further education but that, from among today's school-leavers aged 16 and 17, there should emerge good managers for the country?

I have also attended in the last seven days Thurrock Technical College where I was pleased to give the prizes. The college does excellent work of a high standard. The students were naturally proud and pleased to receive their awards in the presence of a great range of representatives of local industry. The college is well endowed both physically and in terms of a dedicated staff. The students afterwards told me some sad news. They said that although they had been well sustained by local industry in their apprenticeships, they were receiving in one hand prizes and awards from local companies and, in the other, their notices because they had been trained without the guarantee of a job. The jobs do not exist. Can the Minister tell us what action the Government are taking to alleviate the frustration and depression not only of young people and their parents but of dedicated staff like those at Thurrock Technical College?

The Open University has evolved gradually. We are indebted to the noble Baroness, Lady Carnegy of Lour, for having given an excellent outline and for describing the progress that has been made. I am particularly interested in what she said about the MBA diploma and the work undertaken in conjunction with the British Institute of Management; one awaits the concept of the chartered manager with optimism.

The Open University is properly called open because it does not lay down criteria that must be met before an applicant can be accepted. If someone wishes to reach the top, it is not necessary to climb over hurdles that could prove difficult for a young person. It is frequently not the large companies that are laggard in regard for training but the small and medium companies. Can the Government confirm that they are taking account of the desperate need to ensure that small and medium companies respond in terms of training and encouragement and in making opportunities available to their employees?

I acknowledge my indebtedness to the Co-operative movement. The Co-operative College at Stamford Hall has much to its credit. I observe that the noble Lord, Lord Taylor of Gryfe, is nodding his head vigorously. He has known the college perhaps even longer than I have. He will be proud of its place in trying to improve the education and ability of working people. The noble Lord, Lord Jacques, my noble friend Lord Gallacher and I are ex-students and graduates of the college. Although I was the first Member of Parliament to be given a degree by the Open University, a Co-operative colleague of mine, John McFall is also a graduate of the university.

It is right and proper that we should have what might be called almost an elite or a cult of elitism. However, it has to be recognised that, even though one can quote impressive figures—numbers growing from hundreds to thousands and to tens of thousands—the acme of perfection may well be seen to be the MBA. It is not the be-all-and-end-all of business education for there is a range of things that can be done, indeed, they are being done by many people.

Documents that I have received from the Open University contain a list of major businesses and organisations that support the business school of the university—Beecham, Boots, the Co-operative Wholesale Society, the John Lewis Partnership, ICI and Nalgo among many others.

I should like to mention a document I have received from the Co-operative College. It might be useful to give some details of that organisation which has developed its techniques and last year earned more than £2 million in consultancy fees advising not only small companies and businesses in this country but also governments abroad. It offers a range of courses: non-food marketing strategies; stocking and selling wines; fresh food in supermarkets; women in management; senior dairy managers; dairy selling; funeral department management; motor trades management; dairy business diversification; and training skills for funeral managers. In a debate that concerns itself with the product of business education and business schools, we should remember to pay tribute to such organisations.

It is a sobering fact that in the retail industry—which is an aspect of industry about which I know perhaps a little more than I do about some other parts—there is a lack of women who rise to the top and achieve management positions. The Government ought to be telling us their intentions in that respect. I should also like to draw attention to the collaboration that exists to improve the quality of management within the retailing industry. I am told there is a consortium of retail teaching companies and that most of the big companies support its aim to improve the quality of retail management education.

There is one final point I wish to make. I happen to be closely associated with the British Business Graduates Society, a body originally started by students from the Middlesex Technical College. The college is of particular interest to me. The students have become successful managers. They did not have the benefit of one or two years of highly concentrated education and had to do most of their studying in the evenings and at other times. I believe that we should pay due tribute to such organisations.

The present situation lacks a central focal point for the consideration of the systems of other countries, as several noble Lords have pointed out. I had the pleasure and privilege of visiting Japan for a short period. I was most impressed by the way in which business, education establishments, the government and the community seem to have got their act together. In this country I do not think that we have done so. There is no recognition by the community—not even perhaps by the Government—of a lack of management education and training. That is a significant handicap to British business. I certainly support everything that has been said about the work of Professor Handy, Professor Constable and Mr. McCormick who have made some very wise observations.

Time defeats me and I am conscious of my responsibility to those who will speak later. However, I hope that the Minister will be heartened by what has been said. The noble Baroness will never be able to satisfy everyone on all points but she should know that there are Members of your Lordships' House with long experience of industry who have a deep commitment to this aspect of it and who want to ensure that she is successful in promoting in the community the idea that training for successful business management is well worthwhile.

6.54 p.m.

Lord Auckland

My Lords, the noble Lord, Lord Peston, has made it possible for the House to debate this subject at a very timely moment. The Education Reform Bill will very soon come before your Lordships. We shall be discussing the whole spectrum of education and, I hope, the question of managers for the future.

Unlike many noble Lords I have no interest in or connection with a business school or university. Because of National Service I did not go to university and in 1948 went straight into the insurance world where I have spent the bulk of my working life. I recall very clearly the manager of the office where I started work at the age of 22 saying to me, "I think you are settling down well, but, my boy, may I give you a word of advice?"; I said, "Yes, sir". It is rather different nowadays with young people, but time marches on. He said, "I have been in this firm for 43 years and I am still learning".

The moral of that remark is that management is always learning. Of course 40 years ago computers and videos were virtually unknown and there was far more person-to-person contact. I believe that one of the problems that we face in business management, and indeed in management generally, today is the lack of personal contact.

I should like to say a few words about the Chartered Insurance Institute College of Insurance at Sevenoaks in Kent. I have no interest in the organisation but the principal happens to be a longstanding friend of mine in the insurance business. Management training through management courses is one of the main aims of this college. There was roughly a 57 per cent. pass rate for last year's entrants, which is very encouraging for the future. In his presidential address in 1987 Mr. Alan Cleary made the very apposite remark: There is in the UK insurance industry (unlike the American insurance industry) a noticeable lack of visible top management commitment to insurance education and training". That observation is not, I believe, to be confined entirely to insurance. One of the problems is that managers today are frequently very much younger than managers were 30 years ago and they do not perhaps command quite the same respect from their juniors.

It is quite clear that the complicated Financial Services Act which is now on the statute book will have an enormous impact upon management, particularly in the field of commerce. It will revolutionise—in fact it has already done so—much of the world of insurance and the impact will fall particularly on management. There is therefore the added need for management to pull its act together and to ensure the success of our insurance industry (and indeed the City in general), particularly in view of the increasing competition not only from Japan and America and the larger countries but from some of the smaller countries as well.

I believe therefore that in management training communication is more important than almost anything else. Some years ago I spent a short time as a management consultant and had the privilege of helping to run a course at the Management Centre, Europe, in Brussels on the subject of effective public speaking and business-letter writing. Those noble Lords who know the Management Centre, will know that it is a very prestigious establishment. It does not command a fee. It is regarded as an honour to be asked to speak there. On the course were a number of persons not only from the country but from overseas. I believe that this point is germane: the standard of English which they spoke, even 15 or 20 years ago, was rather higher than the standard of our managers speaking French, German or Spanish. As was mentioned in your Lordships' House not long ago, a knowledge of foreign languages is all important. I am sure that the Minister will take that point on board.

I was at a school concert in Surrey the other evening. It is a school that both our daughters attended. The point was made by the headmistress about the vital importance of languages. It is a girls' school, and it is good to see that there are more and more women going into management, in particular in the catering industry, which, although not always regarded as being in the field of business, is nevertheless an industry which earns currency for this country. Through very much better management our catering industry has done enormously well compared with even 10 years ago. The University of Surrey is due much credit for that.

I should like to ask the Minister what significance the Government are putting on communication in the business and other schools under their jurisdiction. The challenge in the future of business management, and management in general, in a very competitive business world is to be able to impart the knowledge that one has gained in student days.

7.3 p.m.

Lord Taylor of Blackburn

My Lords, I am very grateful to my noble friend Lord Peston for introducing this debate. I congratulate the noble Marquess, Lord Huntly, on contributing in the way that he did. I know that it is the tradition in this House to say, "Long may he continue to do so", but I say most sincerely that what he had to say was absolutely first class.

Sometimes I agree with my noble friend Lord Peston and sometimes I disagree. I am pleased to say today that I agree with most of what he has said. I have wished for a long time to put forward ideas about training teachers and people in universities. I have felt that they were out of touch with what is going on in industry and commerce. Very often I find that people in the teaching profession go from school to college, from college to university and from university back into teaching. Then after a number of years, because they have come from this background, they start acting like the children whom they are teaching. It would be good for them to have experience outside their profession.

I am a late developer. I am learning every day. One of the matters that I have learnt in your Lordships' House is that when one becomes the 10th batsman on the list many points have already been made that one would have made. However. I took the precaution of having a word with the Whips today. I said that I should like to speak later in the debate; I did not wish to be one of the front-runners. I felt that I should like to bring in a new dimension. I tried to anticipate the way in which this debate would go.

I should like to bring in another aspect on business training and to speak on the role of the colleges of further education. I believe that they play an important part in business training. It would be interesting to know how much the average British businessman knows about present day business education. Even though his business may be in a perilous condition, his workforce in a state of disarray and his organisation crying out for new ideas and fresh stimulation, the answer could very well be that he does not know very much, if anything at all.

If pressed, one or two businessmen may think back to the days when education finished on their last day at school, and training, if any, was carried out by sitting next to the only employee who could be bothered to show them the ropes, and never mind if bad practices were picked up along with good ones. Business studies qualifications could be obtained in those days only by a long, wearisome series of night classes at the local tech, where the teacher's blackboard notes were copied down by the students, learnt and then thrown into the waste-paper basket after the examination. It is little wonder that many businessmen still talk in despairing terms about business education at colleges of further education. What they do not realise is that times have changed. Colleges now house thriving, bustling, aggressively competitive business studies departments, very much in touch with the needs of modern businesses and as eager as any other business to find clients and to satisfy their requirement. Complacency is a thing of the past. Traditional methods of delivery are disappearing. Flexibility of approach is the order of the day. Business training can now be delivered in exactly the package that the businessman requires. Does he want one person or a dozen trained? Does he want the training to take place on or off the job? Does he want it spread over a number of weeks, or does he want it concentrated in a few days? No problem!

Let me give your Lordships' a couple of examples of the type of activities covered in my area in the Blackburn College. A large company operates a policy of appointing all its supervisors from its pool of operatives. It has found, however, that good operatives do not necessarily become good supervisors overnight. Traditional forms of training were out. The company did not want all its supervisors off the site at the same time each week. The solution was simple. The training was carried out by means of a series of distance learning packages which could be worked through the supervisors when time was available. Tutor back-up from the college was at hand when it was required.

At the other end of the spectrum a woman with a part-time job and a young family who wished to update her secretarial skills but who found difficulty in attending regular classes was able to take advantage of the business studies drop-in open learning scheme. That was a good scheme. She could return during the hours she chose, arrange for a tutor and at the end she was able to accept some qualifications and responsibilities.

An old saying is put your money where your mouth is. If a product is good enough it should sell and it can attract customers. The Manpower Services Commission is traditionally a hard customer to satisfy. It wants to know what value it is getting for its money. The fact that it is actively involved in many local collaborative training projects with colleges indicates the increasing significance of the role of such colleges in business education.

The fact that colleges are moving forward along those lines, attracting more people to take part in this type of business education, is an achievement in so many ways. Today young people are more anxious than ever before to achieve as much as possible and to get a great deal out of business. In many cases the only way in which they can do that—forgetting the universities and independent business studies—is by going to their local colleges of further education where they can achieve their objectives. I should like to impress on the noble Baroness that it is worth while and that the Government should consider giving a great deal more help than they are giving at the present time.

7.12 p.m.

Lord Williams of Elvel

My Lords, the House will be grateful to my noble friend Lord Peston for introducing this debate on a matter which is now recognised as being of the highest importance but which was not recognised as such 10 or 15 years ago. Judging from the debate, it is a matter on which all noble Lords agree. There is unanimity in the House that we must concentrate intensely on this important problem. As the noble Lord, Lord Russell of Liverpool, and my noble friend Lord Irvine of Lairg have said, 1992 is getting closer and the skills that we shall then require in the internal market are not those traditionally associated with British management.

I am extremely disappointed to note that noble Lords who should have contributed to the debate have not seen fit to take part. I mean noble Lords who are captains of industry and who, I believe would have had a great deal to say about business education and education for 1992. The speakers' list consists of a number of noble Lords who are academic, a number who are failed tycoons, such as myself, and a number of tycoons-to-come, such as the noble Marquess, Lord Huntly. However, we have had no contributions in the debate from a real live tycoon. That is unfortunate because we are missing an experience that we should have had.

There are several stands in this discussion and I should like to draw attention to four of them. The first is: how do we bridge the divide between the practice of business and formal education? Secondly, in the words of the first boss of the noble Lord, Lord Auckland, how do we ensure that there is continuing education in employment? Thirdly, how do we get rid of the difference between training and education? That may appear to be a slightly semantic point but it expresses something which is most fundamental and I shall return to that in a moment. Fourthly, in the words of my noble friend Lord Peston, how do we try to educate industry, if that is what must be done, to want the products of the various organisations such as the business schools and the Open University?

My noble friend's Motion concentrates on business education and puts emphasis on management by referring to the role of business schools. However, my noble friends Lord Graham of Edmonton and Lord Taylor of Blackburn reminded the House that we must not forget the lower echelons, if I can describe them as such. In that respect I now turn to the difference between training and education. The Handy Report brought out the fact that there is a greater flow of management talent coming up from the junior ranks and artisans in other countries than there is in the United Kingdom. I am afraid that somewhere we may be locked into a post-imperial class problem, where our traditional education is turning out people designed for a certain role in life which is no longer relevant.

The fact that there has been an extremely disappointing response to the Open College, which was designed by the Manpower Services Commission to give training for adults, is extremely significant. According to one newspaper article the whole thing is near collapse because it is not working; it is not receiving sufficient candidates and it is in need of a relaunch. Even more disappointing is the fact that those who are not availing themselves of this important new initiative are the small and medium-sized firms which particularly need this type of continuing educational input. I regard that as saying something rather worrying about the education formation, if I can use that expression, of people as they go through their working career. It is those people who must be trained, retrained, reformed and brought up to the point at which we hope they will take on a more supervisory role, as my noble friend Lord Graham said.

Clearly there is a point to which the Government must pay considerable attention. If the Open College is failing, what kind of schemes are the right schemes? Is it a question of relying on local authorities? Is it a question of relying on Open University-style programmes? Is it a question of relying on the colleges of further education? Someone must answer that question quite quickly. The question which underlies that is: which government department is in charge of that programme? Is it the DES or the DTI? In that respect we get down to the point to which we shall finally return.

My noble friend Lord Peston concentrated on management and most noble Lords have followed him along those lines. When reading through the Handy Report and the Constable Report, it is unfortunate to note how far behind we are in management education. It makes rather depressing reading. In all countries studied by Professor Handy there is a consistent belief that the real basis for continuing learning in management is experience at work allied to continuing education. That must be the principle on which we all stand. However, the noble Marquess, Lord Huntly, and the noble Lord, Lord Ezra, were absolutely right in pointing to the necessity of having a practical application in the business school and other programmes which were applied to the managers in business.

The differences between the countries that were studied by Professor Handy seemed to lie in the interaction between the institutions providing such formation, education—use whatever words you like—and business itself. In Japan it is formalised. For almost every individual in a Japanese company there is a programme of what is known as self-enlightenment. As he goes through his career in one company—because the Japanese tend to stick to one company—he is put through a series of courses of an incidental nature, which may be evening classes, day release or sandwich courses and he updates his knowledge on a monthly and yearly basis. Therefore, he is kept fully informed about the progress of management techniques and the technology of the firm for which he is working.

In the United States it is rather different, because the market for managers is rather more diverse and people move from company to company quite easily. The tendency seems to be that the development of managers, as Professor Handy says, is opportunistic and individualist. In other words, people take their own responsibilities and say, "I am going to develop my career in this way and I am going to learn outside the job I am doing".

Professor Handy notes that in the United Kingdom the development is accidental; it depends in which company you happen to be working. Some companies are extremely good and others are extremely bad. To me that is the nub of the problem. Not only do the companies that are extremely bad not recognise the virtues of entrepreneurship—because I agree with my noble friend that you cannot educate people to be entrepreneurs. They do not recognise that there is a skill in management that can be taught. It is those companies to which the Government must direct their attention.

I believe that there are programmes available. The noble Baroness, Lady Carnegy, very impressively set out what the Open University has to offer. There are other programmes available. There is the Charter Group, to which I shall refer in a moment. There are possibilities. However, as my noble friend Lord Peston said, you first have to educate many people in industry that they actually need these products, and that is the fundamental problem that we have.

Management development in the United Kingdom clearly must be more systematic than it is at the moment. The Charter Group is a start of that and the DTI has become a member of that group. I confess that I share some of the doubts of the noble Lord. Lord Russell of Liverpool, about the charter. The Constable Report puts forward a programme that formation management should be similar to that of professionals; and indeed, we are very good at educating and forming our professions—for example, the accountancy profession has a very good record. I am slightly doubtful whether that is the right formula for industrial business management but it is what we have. It is an initiative and it must be developed. I am not going to knock the Charter Group but I join with the noble Lord, Lord Russell, in some of the doubts which he expressed.

In its recent White Paper the DTI put its finger on what I believe to be the real problem. That White Paper states: Experience suggests that market forces on their own will not bring about the necessary improvements in the quality of British management, or, at any rate, not quickly enough". Such a sentence coming from the department headed by the noble Lord, Lord Young of Graffham, must be taken very seriously because he is a great protagonist for market forces. If he in his White Paper says that market forces will not produce the desired result, that is a proposition that we must take seriously.

I am quite clear about it. I do not believe that the response that the noble Lord, Lord Young, made to the professor in Edinburgh of my noble friend Lord Irvine of Lairg is in any way adequate. I believe that the Government must intervene much more actively in the process of training. They have to persuade people and not just encourage and facilitate. They must reward and penalise companies that do not get a move on, because I believe that is the only way to do it. If the Government sit back and say, "Our job is to do little things here, promote programmes here, join the Charter Group there", I am afraid that some of the predictions that noble Lords have made, including my noble friend Lord Irvine, about 1992 are correct. We will go into the internal market wholly unqualified to do business in a completely different environment. If that happens the whole question of management education becomes more or less a theory and no more than that, because we shall find that the people in Germany and France who are learning about our ways will start knocking us out of business rather faster than we can knock them out of business.

I therefore ask the noble Baroness to draw the attention of the House and her noble friend the Secretary of State to the prime necessity of government intervention and government intervention in a purposive manner in management training so that we can meet the challenge of the internal market and ensure that this country can hold its head up in the battle that is to come.

7.26 p.m.

The Parliamentary Under-Secretary of State, Department of Education and Science (Baroness Hooper)

My Lords, we welcome the opportunity to debate this important topic and I add my thanks to those of others who have already thanked the noble Lord, Lord Peston, for introducing his Motion and providing us with this opportunity to learn from so many who have contributed their very wide knowledge and experience to this debate. I also welcome the fact that at least two contributions have come from the products of business schools and I believe that augurs well for the future of those schools. It also gives me great pleasure to add my congratulations to my noble friend Lord Huntly on his excellent maiden speech. We shall look forward to hearing from him on many occasions in the future.

The subject of business and management education is a very wide one, as has been demonstrated. There may not be time to cover all the aspects to which I should like to draw attention, but I shall try. It has emerged, not only from this debate but from the great debate outside your Lordships' House, that there is wide agreement that we need more and better education for business and management in order to keep the United Kingdom competitive in world markets, particularly in the light of 1992 and the completion of the internal market.

Industry is quite properly taking the lead in trying to develop a coherent framework for management education which will meet the country's requirements for the future. The Government—like the noble Lord, Lord Ezra, and others—recognise the message of the Handy and Constable-McCormick reports; namely, the specific needs for more and better educated and trained managers. The Government are always concerned to know what the customer wants, and the international comparisons that these reports provide are indeed most valuable.

The Constable-McCormick Report looked at the making of British managers. Both the reports point out the need for a cultural change to make management development and training an established part of the life of the country. That cultural change has been referred to by many of your Lordships. The acquisition of management competences needs to seem desirable and prestigious in the eyes of aspiring managers. This may come in part from the establishment of some more specific recognition that is currently available.

However, it is hard for changes in attitude to occur overnight, although there are heartening signs that our society is becoming more realistic and responsive to the economic facts of life. So while we hear from the two reports that change is necessary, we know that conviction is needed before the change will take place. That conviction must stem from the customers and particularly the employers.

Therefore, it is entirely right that the CBI should be leading the response to the two reports. That lead was particularly welcomed by the noble Lord, Lord Ezra. We look to the new Council for Management Education and Development, which brings together representatives of industry, government and education to tell us precisely what employers want from the management education system. Indeed, we expect that to include the need for a proper balance between the practical and the academic, as has been mentioned.

Can a structure of qualifications be devised which will be as relevant to managers in heavy manufacturing industry as to those in local government and the service industries? Some of the educational issues which the council are grappling with are associated with the recommendation in the Constable-McCormick report that there should be a new diploma in business studies. Professor Handy called it an MBA Part 1.

This was conceived as an exam-based qualification for the aspiring manager up to 25 years of age. I think that the recommendation may encourage some carefully conducted experiments. The MSC and the DES have put together a programme of pilot projects which will be designed to try a number of different approaches. I trust that this will go some way to reassuring the noble Lord, Lord Russell of Liverpool.

Once we have decided on the curriculum and the qualifications, we must then consider how to put in place a number of different delivery mechanisms—including open and distance learning—which will allow young managers at the most effective stages of their careers to take on board the training that will enable them to progress even more quickly up the ladder of job advancement. I believe that this too will coincide with the aims stated by the noble Lord, Lord Williams of Elvel.

It is not for me to prescribe solutions to these problems here and now. The Council for Management Education and Development must be supported in its work, not pre-empted. But I am bound to say that it seems very probable that employers are going to favour the route which interrupts the company's business the least. This means that we can expect to see emerging an increasing number of training schemes tailored for particular firms, pursued part-time and in the evenings. Such schemes may lack educational breadth and depth. When the new structures are in place there may be less need for this sort of course. But that will take time and we cannot postpone all remedial action.

My noble friend Lady Carnegy of Lour and the noble Lord, Lord Graham of Edmonton, reminded us of the valuable role of open and distance learning.

The part-time distance learning approach is increasingly popular with individual managers, for whom it offers flexibility and the chance to make use of the newly-acquired skills without delay. As the CBI has made clear, it is equally attractive to employers. The result has been a sharp rise in the number of managers studying in this way. As my noble friend said, the Open University's open business school, to take but one example, had over 6,000 registrations in 1987 and now, with government help, is developing an MBA programme. But Constable McCormick are clearly right to stress that even more extensive use of distance learning methods is essential if a major expansion of management education is to be achieved. We endorse that. Indeed, the Open College, which has been referred to, is intended as a further step in this direction.

At a meeting on the two reports arranged by the Foundation for Management Education last May, I understand one industrialist voiced the fear that if more were done to encourage suitable young people to become managers then this would simply aggravate the shortage of engineering and technology graduates. Clearly we need to plan the balance of our higher education provision carefully; but for the moment, the Government plan for 35 per cent. more undergraduates entering science courses and 25 per cent. more entering engineering by 1990, and this is being achieved at the same time as a planned increase in business and management graduates.

The past mismatches arose for a number of reasons. Not least of these has been the narrow curriculum in many schools. The Government's plans for a national curriculum, with its inclusion of English, maths and science as core subjects, and craft design and technology, and a compulsory modern foreign language as foundation subjects, should help to redress that balance. I trust that the noble Lord, Lord Graham of Edmonton, will welcome wholeheartedly those proposals when they come before your Lordships' House.

I accept, as I expect that most of your Lordships do, that there should be a clear ladder of progression for managers to climb. The stages of progression need labels. The labels, and what they mean in terms of competences, need to be understood properly and universally. Employers must find them reliable guides to performance. There must be opportunities to get on to this ladder of progression from all levels of the workforce. This ladder must not be solely for an elite. All employees deserve the chance to reach their full potential. Some would argue that there are extremely demanding management posts at the lower levels where there is not much to distinguish the junior manager from his, or her, workmates—from whom he is only one step removed—beyond added responsibility.

This ladder of progression and its accompanying qualifications do not imply concentration on knowledge alone. We must not lose sight of the skills of leadership and the management of people to get that balance.

A revised ladder of qualifications, more emphasis on training and open access to it, may be of most immediate relevance to the young and successful. There are, and will be for some time to come, many serving managers who for age or other reasons will not become directly engaged in a new structure of qualifications and training. But these people have valuable experience. They have influence within their firms. Their help and advice, perhaps as mentors, could contribute greatly to the success of improved management education and development.

The expansion of management education which is being envisaged will require additional teachers. I am told that schemes to enable some of these experienced managers to help meet this requirement are being worked on. Indeed, business studies feature in the DES teacher recruitment campaign as a shortage subject and applications are up 23 per cent. this year.

Perhaps I may say to the noble Lord, Lord Peston, that we welcome the enterprise initiative to which he referred that has been made by Queen Mary College to set up a major new business school in Docklands. There are a number of colleges already providing business courses. The noble Lord, Lord Irvine of Lairg, referred to some and the noble Lord, Lord Graham of Edmonton, referred particularly to the Co-operative college. I fully recognise those contributions.

There are other organisations such as the Institute of Directors, the British Institute of Managers, the Institution of Independent Managers, and the Chartered Institute of Insurance to which my noble friend Lord Auckland referred. They all make valuable contributions and increasingly work together.

There is also the pickup programme, to which I shall refer in more detail. There are firms such as W. H. Smith, Shell, and Rank Xerox, to name but a few, which have schemes in being. Therefore, we already have some experience to build on. In this context, I also endorse the value of "Business in the Community", which has been recognised by the Government in their inner city policies.

The noble Lord, Lord Peston, referred to enterprise in higher education. There is a clear need for more business and management enterprise awareness for all those who are benefiting from higher education. The Government are committed to encouraging enterprise throughout society. Today's rapidly changing world of work demands not just highly qualified people but those who are innovative, enterprising and competent in business skills. That is why the Department of Employment recently launched, with the Department of Education and Science, the enterprise in higher education initiative.

The initiative aims to develop more enterprising graduates by forging closer links between higher education and business and with, in particular, small firms. All higher education institutions have been invited to participate. The MSC funding for each project accepted will be up to £1 million over five years. We are also expecting industry and commerce to provide substantial financial support if this initiative is to succeed. Succeed it must if our businesses, however small, are to achieve that competitive edge that they need in order to grow.

It has been said that entrepreneurs are born and not made. I recognise that we need to support them by ensuring that our educational institutions are ready to provide that necessary support. Many noble Lords referred to the need for encouraging the development of business and management short course provision. This has also been a priority of the Department of Education and Science and its pickup programme. Under this programme, support has been provided to promote various continuing professional development schemes including a major project concerned with the continuing education and training needs of engineers and technicians. The scheme was recently launched and it is being run jointly with the Engineering Council.

Both the National Advisory Body for Public Sector Higher Education and the University Grants Committee have made moneys available under their pickup selective exercises to support the development of business and management education. The pickup programme covers many individual projects, including a scheme with which I was recently involved. It involves the Royal College of Veterinary Surgeons and emphasises the need to provide management and business skills for those vets who essentially run small businesses as well as updating their professional and technical skills. The pickup programme is also involved with collaboration with universities in export language centres. This provision fills the gap which has been referred to by many of your Lordships.

The noble Lord, Lord Peston, mentioned the regions. I should like to draw attention to the regional management centres which have been set up in many parts of the country based upon polytechnics. The northern RMC involves Newcastle, Teeside and Sunderland polytechnics and co-operates with Durham University Business School in the provision that it makes. The noble Lord referred to Scotland in particular; it was also referred to by the noble Lord, Lord Taylor of Gryfe. A substantial contribution is made to business education in Great Britain. I understand that in 1984–85 there were almost 20,000 students on business and management courses in higher education institutions in Scotland. The subject has not been missed out there.

As the Minister responsible for further education, I particularly welcome the references made by the noble Lord, Lord Taylor of Blackburn, in stressing the contribution of further education colleges. I cannot claim that all colleges come up to the ideal described in the HMI NAFE In Practice report on business studies. However, it provides an explanation of a variety of practice and it has been followed up by HMI at both local and national levels.

Like the noble Lords, Lord Williams of Elvel, Lord Irvine of Lairg and Lord Russell of Liverpool, I acknowledge the importance of suitable preparation for the single European market and its completion by 1992. I agree that an awareness of EC law and practice in particular and knowledge of languages for communication purposes will be an increasingly important aspect in the social, economic and political context of which managers must be aware. I have no doubt that the development work for qualifications will bear this in mind and that institutions will respond to the demand for short courses. I shall certainly draw the attention of my noble friend Lord Young of Graffham to the remarks that have been made in the course of this debate.

Many of us, like the noble Lord, Lord Taylor of Blackburn, may feel that we are late developers. I certainly feel that I can carry on learning with considerable benefit. I believe that we have a consensus this evening that business and management education has rarely been as important as it is today. There may be a long way to go but the Government are supporting industry and commerce as they articulate their needs in the light of the Handy and Constable-McCormick reports. I am confident that the considerable challenges posed by the rapid development of the business world can be met by industry and commerce, education and government working together in partnership.

Lord Irvine of Lairg

My Lords, before the noble Baroness sits down, perhaps she will give way and answer this question. What will be the precise educational or training content of the awareness campaign to be launched by the Government on Friday with a view to the single internal market which comes into being in 1992? I wonder whether the noble Baroness can allow the House the benefit of that information.

Baroness Hooper

My Lords, I believe that we are running out of time. If the noble Lord is not satisfied with the numerous ways I have described in which we are going to meet this challenge, perhaps I may be permitted to write to him.

Lord Irvine of Lairg

My Lords, I shall be content with a short answer. I should like to know whether there is any specific educational content to this awareness campaign, which is only a couple of days away from its launch.

Baroness Hooper

My Lords, I shall be as brief as possible. The answer is, yes.

7.46 p.m.

Lord Peston

My Lords, I thank noble Lords for taking part in this debate and the Minister for her response. I believe it is a besetting sin of your Lordships' House that we tend to be a trifle self-congratulatory. This has been a very good debate and I for one have learnt a great deal from it. Not least of the contributions has been that of the noble Marquess, Lord Huntly. He referred to his father as having one or two outrageous views and it may be that the noble Marquess has one or two such views himself. In that case I look forward very much to hearing them. If it will encourage him, he ought to know that one or two others of us have opinions which are occasionally a trifle outré. We can be persuaded to say a word or two to your Lordships on those matters.

This is an enormously important subject. I hope that we can return to it on other occasions, but for the moment I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.