Environmental Technology and Service Companies

HL Deb 13 February 1996 vol 569 cc575-88

7.55 p.m.

Lord Beaumont of Whitley rose to ask Her Majesty's Government whether they will develop a coherent strategy to help promote British environmental technology and service companies.

The noble Lord said: My Lords, in introducing the debate I declare that I am an unpaid member of the political advisory committee of the Environmental Industries Commission which contains members of all parties and both Houses. The commission is the new trade association of the UK's environmental technology and services industry. It was launched in April 1995 and has already gained a membership of over 100 member companies.

The party to which I belong has policies set out strongly in Agenda for Sustainability and other documents for achieving the objects mentioned in the Question. I am aware that the Labour Party proclaims the same commitment in its new document Leading the Future: Environmental Technology, Green Growth, and the Stakeholder Economy. We shall no doubt hear from the noble Lord, Lord Haskel, on the subject.

Although we are all full of good intentions, there is a problem with what is actually being done by the Government. This country is missing out on a great opportunity. The Government are failing to compete. The world market for environmental technologies is dominated by Germany, Japan and the US whose governments have recognised the importance of the new industry to jobs, profits and trade balances, and have developed supportive policies. They employ a range of schemes, notably on R&D funding, export promotion, investment incentives and regulation to promote their domestic environmental technology companies. In contrast, the UK Government have relatively few schemes, as we shall see, to help ensure that British environmental companies compete in a growing market.

It is now recognised that the worldwide environmental technology and services industry (ETS) will provide one of the biggest ever opportunities for enterprise and technical innovation the industrial world has yet seen. The OECD's October 1994 meeting of experts reached a consensus that the best estimate is that the world market is currently worth 250 billion dollars. Furthermore, the ETS markets are likely to increase significantly in the future. There are only a few other business sectors, notably information technology, which are expanding at the same rate. It is predicted that the environmental industry worldwide will be worth 600 billion dollars by 2000. Clearly, the potential size of the environmental business opportunity is very substantial. In comparison, the aerospace industry is some 180 billion dollars in size worldwide, and the chemical industry, 500 billion dollars.

Mainstream industry is very concerned about the cost implications of environmental protection. But costs are not the whole picture. Indeed, savings are just as prominent and important a part of what environmental protection brings. Mainstream business can make substantial financial savings from pollution prevention. A host of recent waste minimisation projects, such as the Aire and Calder project, have proved that costs can be cut and competitiveness improved through waste reduction and recycling, reduced material use and energy efficiency. The projects' initiatives incurred short payback periods and produced considerable financial savings.

Pollution costs money. One authoritative study, cited by a recent CBI report, estimated that the full cost for Britain of water, air and noise pollution is more than £22 billion, which is equivalent to 6 per cent. of gross national product.

The crucial question is: which countries' environmental industries are succeeding in winning the lion's share of new ETS markets and why? There are three possible criteria; patents, trade surpluses and job creation. Germany, the US and Japan are dominating the ETS industry with shares of 29 per cent., 22 per cent. and 12 per cent. respectively of the world's patents. They also dominate world trade with trade surpluses, according to OECD figures, of 10 billion dollars, 4 billion dollars and 3 billion dollars respectively. In contrast, the UK had a trade surplus of 500 million dollars. The US, German and Japanese industries have created very large numbers of jobs. Some 1,800,000 were employed in the US in 1995, 700,000 in Germany, and 600,000 in Japan. In contrast, the UK has 100,000 jobs in the ETS sector. That is not good enough.

British companies have identified three crucial areas where the UK Government have failed to act and which constitute the main barriers to growth. The first is inadequate R&D support for ETS entrepreneurs; the second is environmental laws inadequately enforced; and the third a lack of tax investment incentives for mainstream industry. Certainly many far-sighted policy makers—notably the Germans, the Americans and the Japanese—are responding to such concerns from the environmental industry. The OECD in particular supports serious government involvement in the promotion of ETS companies. It argues, for example, that government funding for R&D in this area is, the type of Government subsidy which is relatively more beneficial in economic terms and less actionable in terms of trade counter measures".

As regards Japan's physical incentives for ETS investment, the OECD concluded that, such assistance constituted a useful incentive and did not create significant trade distortions".

The role of government is crucial to success. The world ETS market leaders—Germany, Japan and the US—certainly understand that and have developed very extensive support programmes.

A major international report from the Environmental Industries Commission, entitled Government Policies as the Catalyst for the British Environmental Industry, reveals that the US Government provided 4 billion dollars in 1994 for environmental technology R&D whereas the UK Government provided less than £50 million. The same applies to the Germans and the Japanese. The US Government have even developed a comprehensive national strategy across all relevant agencies because, America's principal trade competitors, Germany and Japan, have already positioned themselves to support environmental technology innovation and capture a leading share of this global market. The United States now has a limited window of opportunity either to strengthen its own presence in this market, or be left behind".

Why are we not following suit? Indeed, given our natural adaptiveness to such an industry, why are we not in the lead?

The Environmental Industries Commission, a new organisation representing over 100 environmental technology and service companies, makes a number of recommendations. It urges a national strategy for promoting the British environmental industry. It also calls for regulation to encourage innovation. I know that that goes slightly against the Government's philosophy but it is true. It has been proved time and time again that in this field regulation encourages innovation. Regulation has helped our competitors to gain an outstanding lead.

Technology diffusion to mainstream industry must be encouraged. The UK Government could provide a 100 per cent. first-year tax allowance for the acquisition of innovative environmental technologies. Exports must be vigorously encouraged. The UK Government should urgently develop a strategy to co-ordinate and extend DTI export initiatives. Leading member companies in the Environmental Industries Commission have begun consulting on a draft National Export Strategy. A supportive R&D policy is now vital. Investors generally regard the ETS market as risky and uncertain and so tend not to back environmental technologies until late in the development phase.

The UK Government must increase funding. The level of support to British ETS companies must be comparable to that provided by the UK's major competitors. ETS-related R&D must be made a central mission of the research councils. We have great opportunities. We have the kind of industry which takes easily to environmental protection and improvement. We also have a hard core of companies which are working extremely hard in that field and which need encouragement. I look forward to hearing not only what the Government think they are doing about all this but how they intend to improve and increase their efforts.

8.7 p.m.

The Earl of Clanwilliam

My Lords, I thank the noble Lord, Lord Beaumont of Whitley, for introducing this important debate. I congratulate the Environmental Industries Commission, of which he is a member. He has shared his detailed knowledge of the problem and its many implications. The world is becoming more polluted; indeed, it is probably being polluted faster than the fishing stocks are being reduced.

The Environment Act 1995 established clear rules on the liability that we must assume to clean up the mess created by sometimes negligent and at times innocent industries. That applies in particular to degraded land and disused industrial property. The noble Lord, Lord Beaumont, agreed that the UK was strong in engineering solutions to the problem and I should like to give an example.

Perhaps one of the most exciting and profitable areas involves human and animal waste and its disposal and conversion to useful use. It is a worldwide problem. I have spoken previously of the biotechna method of alginate bacteria, biological degradation, using blue-green, and now a new strain of red, algae to convert such waste by photosynthesis into animal feed with methane biproducts which in turn can provide some energy to drive the system.

The research needed to develop the particular strains of bacteria is typical of the work that can be aided by the ETI and the DTI together. The power of those bacteria is truly remarkable. Their application to third world countries which have a large night soil problem in the poorer country areas is vitally important. Different strains of the bacteria can be bred to ingest and remove from solution otherwise unpleasant and toxic materials including herbicides, pesticides and hydrocarbon residues. I am particularly anxious to promote such a method, with my keen ambition to support organic farming. To combine organic farming in third world countries with the proper removal of human and animal waste would be an enormous advantage. That might possibly be of interest to the ODA.

From that, it may also be thought reasonable that if those bacteria can consume herbicides and pesticides, they can also be bred to consume petrochemicals. Indeed, in their progress through the ring, they have destroyed the plastic pipes through which they are pumped.

The other activity in which we have particular strength is in cleaning up soiled properties and mining remains where there are large metal detections. Here, biotechnology offers exciting prospects. A UK company is also working on that potential activity with a machine called the Graessna, which is particularly effective.

I have used that remarkable tale to illustrate not only examples of the need but also the opportunity that is presented to the DTI. The programme "Biotechnology means Business" is apt, indeed. We have the opportunity to be world leaders in the science. The ETI and the DTI need to co-operate fully to exploit the chance.

8.12 p.m.

Lord Butterfield

My Lords, I am grateful to the noble Lord, Lord Beaumont, for introducing this important topic for debate. My interest in the overall topic was aroused when serving under the noble Lord, Lord Lewis, on Sub-Committee III of the European Communities Committee, concerned with the environment. I certainly had my eyes opened to the kinds of solutions to which companies can contribute when I went with the noble Lord, Lord Lewis, and others on a visit to eastern Europe. It was a fascinating trip.

I must also express my gratitude to the noble Lord. Lord Gregson, who is not present this evening. He stimulated my interest by inviting me, like the noble Lord, Lord Beaumont, to participate in the efforts of the commission that he established—the Environmental Industries Commission. I too am a member of its political committee. That seems a strange hat for me to wear, but I am pleased to do so because it is a very important subject.

My interest in the question of fuel and the environment was strongly aroused about 20 years ago when working with the university in Nottingham. I discovered that the authorities of the city had achieved a good deal of district heating by burning civic rubbish. It seemed to me that that was a very forward looking approach by the Nottingham Council. I became intrigued with the whole issue of the environment when I agreed to support, through the Croucher Foundation in Hong Kong, of which I am chairman, a project to use solar panels in the construction of a hotel on mainland China. I was very impressed by the success of that venture and by the way in which it spared environmental demands for that hotel in that area of China.

More recently I have become interested in the way in which environmental industries are becoming involved with the production of power. Noble Lords do not need me to remind them of the remarkable efforts being made in this country and elsewhere on renewable energy resources. I noticed recently some work which first started a year or two ago in the University of Northumbria where they have been pushing ahead with photovoltaics, which is a way of converting solar energy into electricity. I gather that the potential resource for that form of technology in this country would be 360 TWhs. Our annual consumption of electricity as a country is 270 TWhs. That is a system which could certainly make a very big contribution to our electricity production.

There is only one problem. The sun does not shine all the time in Britain. But in some countries it does shine and if we can develop that technology, it might be an enormous gift to countries such as Oman, which I used to visit a good deal in a medical setting. Oman has wonderful sunshine and desperately needs a successor to oil in the production of electricity. I shall try to ensure that His Majesty the Sultan of Oman hears about that wonderful work in the University of Northumbria.

Our anxiety about carbon dioxide production led us to become involved in the Rio de Janeiro Conference on the environment. We are anxious to get our carbon dioxide emissions back to 1990 levels by the end of the century. We could do that. I gather that the Government's aim involves trying to obtain 1,500 megawatts of electricity from renewable fuels by the end of the century. We have come quite a way and have reached 626 megawatts so far.

How have we done that? Industrial developments have been taking place in this country and the rest of the world. The DTI has been busy encouraging wind power, hydro-electrics, the use of waste—I mentioned the use of waste in Nottingham, but they also have ways of getting sewage gas and landfill gas into energy production—and the use of energy crops from forestry waste, and such like.

I am also very conscious of the enormous number of environmental industries that have developed as a result of the problems of waste disposal. I first became interested in waste disposal when on holiday in the United States where my family has a small house. It is situated in a wood, which meant having to get rid of rubbish. One had to attend meetings of the Minute Men—shades of Boston in the 18th century—to discuss what to do about throwing rubbish onto the land. The first time that I went to throw rubbish away I saw an enormous hole in the ground into which we and our American colleagues were to throw our rubbish. An enormous number of gulls then dived into the hole and enjoyed the pickings. In the evenings they used to sit on the little lakes around that wooded area. It was clear why sometimes one had tummy troubles after swimming in the lakes. One could see the gulls going straight from the pit and resting on the lake. The consequences medically were obvious.

A few years ago I bumped into a man whom I should like to mention for the record. His name is Philip Moore. My full title is Lord Butterfield of Stechford, which tells noble Lords that I am a Birmingham boy. Just outside Birmingham Philip Moore had built a remarkable municipal waste disposal unit. It was a very large tower. Waste was put into it which settled. Moore was able to separate out the metals. He was able to separate out a good deal of plastic and other waste which he turned into little plastic pellets for use on the roads and as fuel. The only problem was that the fuel tended to release quite toxic smoke into the atmosphere which rather damped down the whole project.

I was sad to hear that Philip Moore was probably going to America, but I am happy to hear that he is now back in this country and is working with Mr. Bellingham, a Member of Parliament in another place. He is making great progress in developing his system, which he hopes to be able to export. Of course, that is something that we must do. However, exporting to America is becoming progressively more difficult because, as has been pointed out, the Americans have gone ahead so quickly, recognising the possibility of developments here.

The noble Lord, Lord Beaumont, gave the House the figures, which are really dramatic. Germany has 29 per cent. of the world trade in these fields; America has 22 per cent.; and Japan has 12 per cent. We are down to a small percentage. It has been pointed out by the commission on which I am now serving that there is an interesting correlation between trade balances and the amount of work taking place in those fields. Germany has a very high balance of trade, while we are far behind.

As a physician, what has intrigued me about the whole of this development is that it really could draw on the inventive abilities and lateral thinking abilities of scientists and applied scientists in this country. I cannot help feeling that, in a way, environmental industries could be very similar to the pharmaceutical industry. The noble Earl, Lord Clanwilliam, referred to biotechnology, which is very important because we are strong in that sphere.

I can see great possibilities for encouraging that entire development by appointing a director of research and development in environmental industries, just as the NHS has recently done. Of course, our NHS has a big lead over other countries, including America, Japan and Germany; we have had that lead a long time and a great deal of experience. The Unstarred Question tabled by the noble Lord, Lord Beaumont, refers to whether the Government: will develop a coherent strategy to help promote British environmental technology and service companies". I believe that the establishment of a national director of research and development in this field would be a terrific stimulus and help to the young men and women who could make very significant contributions.

I have read the work of the Environmental Industries Commission and I have seen its proposals. I hope that the Government will read those proposals, which range from dealing with a national strategy to developing interest in research councils. I hope that they may help to produce a scheme which will promote the development of this potentially important growth industry in this country.

8.23 p.m.

Lord Haskel

My Lords, first, I congratulate the noble Lord, Lord Beaumont, on getting this Question on the Order Paper. I know that he is a doughty fighter for the environment and I ask him not to be discouraged by the small number of noble Lords present. I am afraid that noble Lords are more easily tempted by the bright lights and delights of broadcasting. The environment is lower in profile but is no less important to our quality of life and to the economy.

I suspect strongly that the motive of the noble Lord, Lord Beaumont, in tabling this Question is to find out whether the Government believe in strategies. We know that they believe in markets and that power lies where the money is, but strategies are a different matter. Strategies involve working together with others in partnerships and partnerships seem to be something of a problem for the Government. I hope that we shall find out from the Minister this evening whether the Government believe in a strategy for the development of the British environmental industry or whether their strategy is that they have no strategy. If there is to be a strategy, it is rather late. We have heard how, for some years, it has been recognised that the world wide environmental technology and services industry will provide a major business opportunity.

When launching the Environmental Industries Commission, to which the noble Lords, Lord Beaumont, and Lord Butterfield, referred, my noble friend Lord Gregson said that, there are significant world-wide opportunities to British suppliers of environmental technologies and services which bodes well for the future balance of payments as well as much needed job creation". His thoughts were echoed by the right honourable Michael Heseltine who was President of the Board of Trade at the time. Only last week those thoughts were echoed by the right honourable John Gummer, Secretary of State for the Environment. Those thoughts have been further confirmed by noble Lords this evening.

My noble friend Lord Gregson went on to say that without a strong home market it is unlikely that those companies will develop and be able to compete on the world stage. That is the heart of the matter. The environmental industry is dependent on government policies. That is because in environmental matters individuals cannot act alone. Individuals cannot buy clean air, clean rivers or clean seas for themselves. They cannot monitor and regulate pollution. Those things can be achieved only by people working together. In the same way that none of us can take action by ourselves, a coherent strategy for the environment industry requires a partnership between government, business and local authorities.

The role of government in setting and encouraging high standards and seeing that they are maintained is no longer in doubt. The best of British industry is convinced of that and the Government are pushing against an open door. Recently the CBI produced a report called Efficiency Gains in which it said that, by examining the environmental impact of products, processes and services, most businesses can find new, practical ways of achieving business gains. The environment is not something to be treated separately, but forms part of a culture of quality, efficiency and innovation". Our better firms know that in the long term, higher standards for energy efficiency, engine emissions, discharges to rivers and the sea can make British industry more competitive. They know also that their customers want environmentally friendly products and systems. Some firms have already acted. In 1991, B&Q launched a supplier environment audit programme to assess its suppliers' environmental awareness. Its suppliers are graded on a database and as standards for environmental regulations change, they will be able to identify any supplier which might represent a liability or an opportunity to its business.

Buckland Paper Mill carried out a waste reduction strategy which concentrated on water consumption. That was reduced by 77 per cent. with savings of over £0.5 million per year. Forte Hotels saved £180,000 in 1983 by installing a combined heat and power system in 60 hotels.

It is therefore clear that there is already a market for pollution abatement equipment and technologies to reduce the damaging effect of what is happening now. But companies are looking further. When considering new investments and processes they are looking for clean technology so that they do not create environmental problems in the first place. Moving on from that, the industry is looking for sustainable technologies. A committee of your Lordships' House emphasised that sustainable technology for future generations depends on action being taken now, led by the Government. The noble Earl, Lord Clanwilliam, suggested a sustainable biodegradation system to clean up waste and the noble Lord, Lord Butterfield, told us about solar energy technology, energy from waste, from windpower and from crops.

So how are we measuring up to that business challenge? Noble Lords have told us how we are lagging behind Germany, the United States and Japan. The noble Lord, Lord Beaumont, told us that a recent survey carried out by the European Commission of all the patents issued in environmental technology showed that 63 per cent. were awarded to companies in Germany, Japan and the United States; but the United Kingdom only received 6 per cent.

A further indication of the present state of affairs can be illustrated by looking at the number of applications for awards for environmental achievement in the Queen's Awards to Industry. In April 1995, 140 awards were given for export, 17 for technology, but only six were for environmental achievement. Sadly, applications for environmental achievement awards have almost halved since 1993.

When asked for an explanation of the situation, nine out of 10 businesses in Britain said that central government action to promote higher standards was the main factor driving them to buy environmental technologies. Obviously, the best companies do not need government action, but the rest of them do. By putting together a coherent strategy not only will the Government be making the environment pleasanter for us and for our children, but they will also be encouraging a new source of business and employment. That is the kind of double whammy which is so beloved of the Tory advertisers.

The other partner which the Government must involve in their strategy is the local authority. The local perspective is important for many reasons. In 1992, the Earth Summit in Rio agreed an action plan called Agenda 21. Over two-thirds of that agenda cannot be delivered without the co-operation of local government, working in partnership with local businesses and communities. According to the OECD, a few large firms account for half the output of the environmental industry. The other half is composed of small firms.

Companies of that size and type can gain great benefit from a partnership with their local councils. Local government can act as both a demanding customer to encourage such small firms to improve their products and performance, and also provide them with access to information and advice. That is why Agenda 21 wants to encourage people and institutions to think globally and to act locally.

We are now entering an area where some of Labour's ideas on public and private sector partnership can be effective. Many Labour-controlled local authorities are trying to use the private finance initiative to overcome restrictions which are hindering councils trying to promote economic regeneration partnerships. We have also heard of further elements of the Government's strategy which will help to promote the industry. They could have a structured dialogue with the industry through the DTI. The research councils could be encouraged to ensure that they fully participate in innovative, environmental technologies, as suggested by the noble Lord, Lord Butterfield.

The Government could talk to the environmental industry about setting standards, both for industry generally and to verify the claims of the environmental industry itself. The noble Lord, Lord Beaumont, reminded us that the Government could encourage the development and use of clean and sustainable technologies by a tax policy, which encourages long-term investment by companies and which discourages pollution and resource depletion.

However, as I said at the start, the Government strategy may be not to have a strategy. The noble Lord, Lord Beaumont, suggested that they may be concerned about making life too difficult for sloppy companies with low environmental standards and that they justify this by calling it deregulation. They may hope that the existing sector dialogues will produce some consensus which will offend the least number of people. But, inevitably, it will mean that standards will be low.

I remind the Minister that there will always be countries with lower standards to which such firms can move. In the long term the Government must encourage best practice and support firms to lift their standards. As the MSF Union recently put it: The old view that taking the environment into account would cost jobs is out of date. On the contrary, it is the organisations that close their eyes to this challenge which have most to lose". I wait with interest to hear the Government's strategy.

8.35 p.m.

The Minister of State, Department of Trade and Industry, (Lord Fraser of Carmyllie)

My Lords, I should like, first, to thank the noble Lord, Lord Beaumont, for taking the time and effort to introduce such an important debate. We certainly recognise that the scale of the opportunities for environmental goods and services, both domestically and overseas, is vast. I had hoped that the noble Lord, Lord Haskel—being in possession, as I know he is today, of a Labour Party document on such matters which has been conveniently leaked to me before it is available for the rest of the world to see—would have taken the opportunity to tell us just exactly what the document contains. However, we shall doubtless have to wait for another opportunity before the noble Lord reveals the details of the document to us.

As the noble Lord, Lord Beaumont, said, the world market for environmental goods and services is already bigger than a wide range of well-accepted international trading applications; for example, international aerospace or pharmaceutical sectors. The OECD has estimated that by the year 2000 it will be bigger than either of those. While I cannot agree with the noble Lord's figure of 600 billion US dollars—the figure that I have is 300 billion US dollars—I must say that by anyone's reckoning it is a vast sum.

Our view is that the UK environmental industry is well placed to take advantage of those opportunities as it is competitive internationally and is also, potentially, a very successful exporter, building on past successes. Our exports accounted for just under 4 per cent. of the world market in 1992—that is something like 8 billion US dollars—and will grow to an estimated 4.5 per cent. to 5 per cent. by the year 2000. At that rate of growth, the UK could take some 28 billion US dollars of business in 15 years' time.

Those are colossal figures, but we cannot afford to be complacent. As in all other sectors, competition is fierce and, further, the markets themselves are in a state of flux with customers increasingly demanding—and I stress this point—co-ordinated solutions to their problems, requiring companies to bring together diverse expertise from engineering applications and design, manufacture and installation to consulting and finance.

I believe that the noble Lords, Lord Beaumont, Lord Butterfield and Lord Haskel, were concerned that we are failing to develop overseas markets. That is something of a misconception. UK firms are as active and as successful as their major overseas competitors. My department recently published, without difficulty, two successive booklets each giving 100 success stories of UK environmental companies overseas. They range from massive contracts by Anglia Water for a waste-water treatment plant in Wellington New Zealand to noise insulation in Japan, meters for the Swiss police and rotary kilns in the United States.

I recognise the fact that there is an extraordinarily wide range of technology and scientific expertise to be exploited. My noble friend Lord Clanwilliam dealt correctly on what is probably the most interesting of them all. I have no doubt that there are quite remarkable applications that the expertise available in this country could be deployed in pursuing not only in the developed world but also—and this is probably just as important—in the underdeveloped world. I acknowledge the emphasis that my noble friend placed upon it, and similarly the emphasis that the noble Lord, Lord Butterfield, placed on the contributions which might be made as regards the expertise being developed in such places as the University of Northumbria, and elsewhere. That is clearly most important. I hope that the noble Lord will do all he can as the "sponsor Minister" for the north of England to bring to the attention of the wider world just what is going on in that part of the country.

I must tell your Lordships that it is not that we have a strategy to have no strategy; it is our clear belief that it is first and foremost for the industry itself to develop a strategy. I hope that my next comment will be taken in a positive sense. My department would be happy to facilitate this process, recognising as we do that the relatively young United Kingdom environmental industry is highly fragmented, having its roots in more traditional industries. It is for that reason that we set up the Joint Environmental Markets Unit (JEMU)—I hope that I may be permitted to use that acronym—to increase awareness of the opportunities and to help United Kingdom companies exploit them.

Based in the DTI the unit works closely with other parts of government, individual firms, trade associations, chambers of commerce and other organisations. One of its first priorities was to commission a major report on the state and competitiveness of the United Kingdom environmental industry. It is this report—which I believe will be well known to your Lordships—which has probably provided many of the facts and figures which have been quoted. Unhappily, the report revealed a lack of co-ordination in the sector. Fragmentation made it difficult for the industry to respond to customer demands and in particular the trend towards integrated solutions to environmental problems.

Although some of our companies are world beaters—I am happy to acknowledge that—the report found that the United Kingdom industry's image overseas was not as high as it deserved while its profile at home was also, regrettably, understated. It also pointed to a lack of reference standards for performance and, for newer technologies in this rapidly developing industry, the absence of good demonstrators. The report stimulated a debate which confirmed the industry itself shared these concerns. JEMU is therefore helping industry address these issues. Working with industry and our embassies abroad, it has been publicising UK technologies and services and UK successes overseas. I wish to underline that our export services now treat environmental technology as a priority sector in nearly two-thirds of what we would consider to be our top 80 markets.

I would say to my noble friend Lord Clanwilliam that we recognise the importance of biotechnology—I hope he has understood that from my earlier remarks—but our programme, Biotechnology Means Business, will, we hope, help by ensuring that companies are fully aware of the new market opportunities around the world. We hope it will also stimulate the supply and demand sides by raising awareness.

JEMU has done much to raise awareness of the global opportunities in the United Kingdom. It has published overseas market opportunity briefs on some 57 countries. It has worked with the regulators to issue sector-by-sector reports on best available technology to help UK suppliers benchmark their performance and identify new opportunities. It has produced guides to successful exporting and to sources of public support among its many other activities. It is interesting that a report which has been published recently, sponsored by the United States Environmental Protection Agency in Washington DC states, Even France and the United Kingdom have a headstart in the global environmental market principally by virtue of their privatised water infrastructure which has given them an advantage in international privatisation projects". I doubt whether the noble Lord sitting on the Opposition Front Bench ever thought it would be possible to pray in aid that economic change to secure such environmental improvement around the world. I am happy to provide him with a copy of the full report if he wishes to see it.

Lord Haskel

My Lords, if I want to see that report would I have to read it in a secure environment, as we were discussing this afternoon?

Lord Fraser of Carmyllie

No, my Lords, I can promise the noble Lord it will be environmentally friendly. Overarching all the work that JEMU undertakes is the efforts we are making to help and encourage the industry to overcome the major problem of fragmentation. I cannot stress that too much. The industry comprises a high proportion of small companies. It is served by a multitude of trade associations and other bodies, many of which are unrepresentative, under-resourced and unable or unwilling to provide their members with the range of services which competitive industry demands. Prime responsibility for overcoming this lack of cohesion must inevitably rest with the industry itself; with the companies within it and its trade representatives.

I believe there are now some encouraging signs of industry tackling the problem. As I have stressed, we are anxious to facilitate the process. We recently published model trade association guidelines. We are also exploring with industry the development of a commercially based co-ordination group to strengthen the United Kingdom's ability to respond to demands for integrated packages by customers in the world markets.

The noble Lord, Lord Butterfield, asked about a national R&D centre. This is one of the issues that we are discussing in the context of our work with the industry on an industry-led co-ordinating mechanism. These have been JEMU's priorities thus far; but we remain, as I have indicated with the example I have just used, in dialogue with the industry to explore what can be done to address the broad range of factors that influence competitiveness.

I appreciate that I have al limited time in which to respond to the debate and I regret if I omit some of the points that have been raised. However, the noble Lord, Lord Beaumont of Whitley, asked me specifically about tax allowances to aid technology diffusion. We already give 100 per cent. tax allowances to the environmental industry for the costs of research and development of new technology. However, capital allowances to the industrial purchasers of certain environmental equipment—which I think he might urge—would be contrary to our policy of maintaining a neutral tax regime with low rates of tax and special reliefs.

This has been an important debate. I hope that I have been able to respond to it in the time available to me as fully as your Lordships would wish. I stress in conclusion that as regards the DTI, it is not that we have a strategy to have no strategy; we believe it is for the industry to develop it itself. I wish to see carried forward a positive and constructive dialogue between the industry and the unit. I believe that there is considerable credit to be given to the industry thus far, not only in a domestic but also in an international context. We are more than willing to work with the industry. It offers to us all a real opportunity not only in terms of commerce and exports around the world but also as a positive contribution to the cleaning up of the world when for too long too much has been despoiled.

Lord Chesham

My Lords, I beg to move that the House do now adjourn during pleasure until no earlier than five minutes before nine o'clock.

Moved accordingly, and, on Question, Motion agreed to.

[The sitting was suspended from 8.48 to 8.55 p.m.]