Environmental Technology and Services

HL Deb 14 January 1998 vol 584 cc1094-109

5.30 p.m.

Baroness Nicol rose to call attention to the need to promote Britain's environmental technology and services industry; and to move for Papers.

The noble Baroness said: My Lords, I must first declare a non-pecuniary interest as a member of the political advisory committee of the Environmental Industries Commission, which I have recently joined.

The term "environmental technology and services", which I shall call ETS for short, covers all those industries which deal with activities which could harm the environment; for example, air pollution control, water and waste water treatment, waste treatment, contaminated land remediation, marine pollution, energy management, noise control and many other areas. Those industries will provide one of the biggest opportunities for enterprises and technical innovation that the industrial world has yet seen.

With increasing levels of public concern about environmental quality and with an ever-increasing need for environmental protection legislation, there is plainly a considerable market for environmental technologies, and the market is expanding rapidly. That market was valued at 280 billion dollars in 1997. It is forecast to grow to 335 billion dollars by the year 2000 and to almost double again by the year 2010.

If British industry is to gain its fair share, action must be taken. Some governments, such as the German, Japanese and United States governments, now see the ETS industry as being of crucial strategic importance in the next century. They already dominate the market and have developed supportive policies on research and development funding, export promotion, tax incentives and regulation to enable them to achieve the lion's share of an increasing world market, estimated to have average growth rates of 5.5 per cent. and 8 per cent. Few business sectors can hope to achieve that rate of growth except, perhaps, those involved in information technology.

The ETS industry is already a significant generator of jobs with obvious potential for increases as markets develop. The Organisation for Economic Co-operation and Development—OECD—estimates suggest that 1,780,000 people were being employed in that field in 1995 in the United States alone and 1 million in Germany—based on German government figures.

We are competing with highly developed industries in the Netherlands, Germany, Switzerland, Austria and the Scandinavian countries which have all benefited from a strong regulatory environment in their home markets to exploit opportunities overseas. The same is true for the United States and Japan. In world terms, the industrial countries—that is Western Europe, North America and Japan—accounted for 90 per cent. of the market in 1992 and will account for 80 per cent. of it in 2010. Clearly the potential size of the business opportunity is very substantial indeed. It is, worldwide, already bigger than the aerospace industry and the pharmaceutical industry.

At present the United Kingdom position is not satisfactory. If we examine the criteria identified in a recent European Union study, we find that the ownership of ETS patents leaves the United Kingdom only sixth in the world league with 6 per cent. as against 29 per cent. in Germany, 22 per cent. in the United States, 12 per cent. in Japan and even 7 per cent. in France.

We are a country with a proud history of scientific and engineering innovation and there is no reason to doubt the continuing abilities of our engineers and scientists. The reasons for our poor performance must lie elsewhere and I propose to spend my remaining time trying to identify those reasons and to offer possible solutions.

The United Kingdom market is moderate but significant and employs about 100,000 people. From a figure of 11 billion dollars in 1990—I use OECD figures—it is expected to rise to 28 billion dollars by the year 2000. Our markets for air pollution control equipment, water and waste water treatment equipment and land remediation services are growing steadily. We have well recognised expertise in instrumentation, marine pollution control and environmental consultancy, to name but three. But despite that, we are not achieving our share of world markets. Last year, the United States exported 14 billion dollars worth and we exported just 1 billion dollars worth and imported 500 million dollars worth. The latest Department of Trade and Industry report in 1997 states: While UK export growth over the period (1989-1995) appears satisfactory, the UK's main competitors have demonstrated an even stronger export performance, implying that the UK is losing ground".

Indeed, that point was made by the then Shadow Secretary of State, Mrs. Beckett, in a speech to a business and environment conference last February when she said: Britain's place in these growing markets is small and getting smaller. British exporters should break into these new markets and reap the economic benefits for our companies".

What is needed is joint industry/government effort to ensure that British industries are not operating at a disadvantage compared with their competitors. For example, the German Government have a foreign aid programme with environmental aid accounting for more than 25 per cent., on 1993 figures, and I understand that it has risen since then, and in 1994, they offered 4.3 billion deutschmarks in low-interest loans for environmental investments. In 1994, the Japanese Government had a 52 billion yen R&D programme and 18 per cent. tax incentives for investment in pollution abatement equipment. The United States Government had similar financial incentives for R&D and export and a strategy to support export for environmental industries.

But until recently, the United Kingdom Government have shown little interest in our ETS industry and little support for R&D. There have been no fiscal incentives and we have a regulatory and enforcement system which it is commonly agreed is badly in need of overhaul. There appears to have been a belief that environmental regulation costs jobs. But that view is not supported by the OECD report in 1997 which concluded that there was no such case.

There is evidence elsewhere that a strong regulatory system, properly enforced, promotes innovation and eventually employment. Therefore, our Government could stimulate the development and adoption of innovative technologies within their regulatory and enforcement regimes and should seek to identify and remove unnecessary barriers to innovation.

The Government could tackle the failure of many local authorities to enforce the local authority air pollution control regime. I know that some local authorities are doing that, and I am happy to say that my authority of Cambridge is one of them, but many others have not taken any action. Moreover, the Government could stiffen the resolve of the Environment Agency to enforce industrial water pollution control discharge consents.

I have been particularly disappointed by further delays in establishing a regulatory regime to deal with contaminated land. That is something in which I have taken a particular interest. It seems that we delay constantly on any action on contaminated land. I have been disappointed too by the postponement of deadlines for volatile organic compound emissions.

Recently I received a letter from B&Q, which your Lordships will know is a retailer of some size, which is introducing its own policy to label its products which contain VOCs in order to guide customers on their use. It seems to me rather sad that that initiative should be taken by a retailer but is not followed up by the Government.

I believe that the wrong signals are being sent, not only to polluters but also to would-be investors and innovators in the ETS industry. It is important to encourage mainstream industries to invest in environmental technologies. Such investment can lead to actual savings for some industries where pollution is often the result of inefficient processing and wasteful resource management. There is of course a need to establish credible performance data, to acquire venues to test pilot-scale and demonstration scale innovative techniques. The most effective way of encouraging industrial involvement at the beginning is probably by tax allowances. Can my noble friend the Minister say whether any thought has been given to this particular incentive, which seems to have worked so well in other countries?

Perhaps, above all, there is a need for a supportive research and development policy. ETS-related R&D must become a central mission of the research councils. Private investors, particularly in this country, are reluctant to back environmental technologies until quite late in the development phase. Government should be prepared to increase funding for selective technologies which are relevant to critical environment needs, but which require financial support for timely success. Obviously there will be a need for a verification programme to evaluate claims and a suitable regime will need to be established, but with a sense of urgency.

Finally, exports must be vigorously encouraged. There are hopeful signs. The Joint Environmental Markets Unit (JEMU), about which I understand the noble Lord, Lord Wade, who is to speak next, knows a great deal—and no doubt he will tell us more in that respect—has published a draft action plan for green industries. Although it does not match the strategies of some other countries, it is a major step forward.

I am encouraged, too, by the support of government Ministers for the establishment of the Export Services Company of the Environmental Industries Commission, which was recently launched. Many of our environment technology companies are small enterprises which, by themselves, have difficulty in collecting information or making an impact either nationally or internationally.

The Environmental Industries Commission represents a considerable number of such companies—well over 200 making it the largest umbrella organisation in the industry. The initiative is a valuable tool for disseminating information and expertise. But it could operate even more effectively against a more positive and sympathetic background of government support and encouragement for the commission itself.

I look forward to hearing a positive response from my noble friend the Minister. In terms of economic benefits, employment targets and environmental commitments, this must be one of the most important and urgent subjects for the Government to address. My Lords, I beg to move for Papers.

5.43 p.m.

Lord Wade of Chorlton

My Lords, I am most grateful to the noble Baroness, Lady Nicol, for raising the issue today. Like her, I believe that there are enormous opportunities for the environmental technology industry to improve business in this country, particularly in the export field. Indeed, I very much support what the noble Baroness said.

Like the noble Baroness, I should declare an interest in two respects. First, I am chairman of a non-profit-making organisation called NIMTECH in the north-west of England which, among other projects, operates one which is involved specifically in developing environmental technology and techniques in a number of companies to which I shall refer later. Secondly, as the noble Baroness said, I recently led a delegation of UK environmental technology industries to Singapore for JEMU—that is, the Joint Environmental Markets Unit of the DTI. We were able to take some 30 companies from this country to a special exhibition with a range of technologies, but especially environmental technologies.

At that event we were able to meet a number of major Singaporean companies. We were able to make a presentation to many smaller companies and organisations which had come from the whole of South-East Asia to see us and listen to us; and, we hope, we were able to promote very strongly the enormous skills of and benefits of using companies from the UK.

I should like to take this opportunity to say that I was enormously impressed by the people who run JEMU from the DTI. They are obviously enthusiastic and efficient in what they do; indeed, they are doing a great job for industry in this country.

I should like to follow on from that by referring to the project in which I am involved in the north-west. Under objective 1 and objective 2 funding we have developed a project which will affect about 80 companies. We have divided them into various sectors as regards the various parts of industry. Through that project support we have been able to undertake an investigation into those organisations—that is. each company—and advise them on how they might improve their environmental techniques. That advice may concern their surroundings, the product that they make or even the technique that they use in its making. Alternatively it may relate to the services that they provide to their employees. However, it is in some way related to improving environmental techniques for those companies.

We have not as yet reached the result stage in that process hut, when asked to examine closely their environmental techniques, it is quite fascinating and interesting to note just how many companies, even very successful ones, will know a great deal about the cost of their services and raw materials and the utilities that they use in that respect, while knowing hardly anything about the quantities involved. It is difficult to manage something if you have not measured it. There is a tremendous opportunity for many UK companies to look much more closely at the use of such services and their various inputs and form a clear view on how they can reduce them.

Once companies start to review such matters and certain issues come to light as a result of such advice—this does not apply just to companies in the UK but to those throughout Europe—it is clear that tremendous savings can be made. That leads me to the point with which the noble Baroness began her speech; namely. that we should focus on the drivers who are creating the opportunities for industry and those which develop around the world. The noble Baroness is quite right to say that the first main driver has been government regulation. Indeed, that has forced companies to move in a certain direction as regards the technologies and industrial support which enable them to achieve those standards.

It is interesting to observe how even consumer pressure is now making companies think about the environmental issues which they must address in their own companies so as to make their products more attractive. Quite clearly, the discussion that we had earlier on the Food Standards Agency revealed the fact that that will be another body through which consumers may again bring pressure on suppliers to look more closely at the quality and standards of the goods that they are offering to the public. Therefore, certainly in the Western world, the consumer has now become a major driver in making companies look more closely at the quality and the environmental techniques of their products.

The next interesting stage is the fact that business itself is now becoming a driver in improving its environmental approach. It is starting to realise the commercial benefits which can come from looking much more closely at how the job is done. I suppose that it is very much a factor of having to become more efficient in a more competitive world and of bringing down prices, while improving quality on a continuous basis. Therefore, you have to ensure that all aspects of your business are being run as efficiently as possible. Quite clearly, many matters relating to environmental technology make a big impact; for example, the savings as regards pollution. If you can remove from products that which is just going up into the sky, you can save money. Moreover, if cleaner water can be used, the cost of piping, and so on, will be reduced.

One of the companies with which we are involved in the north-west, under the project to which I referred earlier, is a sweet manufacturer. When we considered the environmental issues which surrounded it, it emerged that there was an enormous build-up of sugar on the pipes as the malt and sugar were driven round the machinery which eventually produced the sweets. It was discovered that the build-up was costing that company some £20,000 per annum. The environmental solution that kept the pipes cleaner saved the company some £20,000 a year in lost sugar. That is one of the many examples of direct benefits that business is now experiencing.

In Singapore we met representatives from a number of South-East Asian countries. The social and economic position of those countries is different to that of the West. We must bear in mind that some 1.2 billion people in the world today are poor and undernourished. A large proportion of them are starving to death at this moment. Clearly the leaders of certain countries in South America, Africa, the Far East and South-East Asia are dedicated to improving their economies to bring more wealth and prosperity to those extremely poor people. I believe that is the right thing for them to do. However, their attitudes towards economic growth, development and the use of energy resources now engender great criticism in the West. We argue that if we can make savings in this area, those countries should also do so. I believe that we should take a much more balanced view of this matter. The use of environmental technology can satisfy the development of those countries and the need to conserve energy. We now have ways of developing economies quite quickly and at the same time avoiding the pollution which we experienced in this country in the previous century. We can avoid the situation in central and eastern Europe and other parts of the world where high levels of economic growth have resulted in high levels of pollution.

A number of the company representatives who went to Singapore had expertise in the area of air filtering techniques. Techniques are now available which can remove some 99.9 per cent. of the polluting elements of gases which are produced as a result of certain processes. That will make an enormous difference to the environment. There are improved techniques for purifying water. Such techniques could enable many areas of the world to have clean, fresh water. Many areas of the world desperately need such clean water. I must declare an interest as I am president of the Combined Heat and Power Association. The use of energy from waste to develop combined heat and power processes is of enormous benefit. Instead of having an electricity and heat producing engine that works at 35 to 38 per cent. efficiency, one can now have an engine that works at 85 or 90 per cent. efficiency. The benefits of that are enormous. We can now offer technology to the developing world which will enable developing countries to make a great leap forward. They can develop their economies as they need to do but at the same time they can maintain environmental standards. Both UK industry and government must grasp the opportunities that will present themselves as industry in the developing world becomes more economically viable.

I refer to another hat that I wear. I apologise for referring to so many different hats. I act as part of an international business advisory council to the United Nations Industrial Development Organisation whose role it is to stimulate economies and create more economic opportunity in developing countries. UNIDO was established to work with governments of developing countries. However, governments are no longer the key to economic success in those countries. Over a period of a relatively few years economic power has shifted from governments to businesses, even in developing countries. That has created a different kind of opportunity for exporters. Now one talks business to business. Businessmen used to have to approach governments and hope that they could be persuaded to adopt projects. Now one can do business directly with other businesses in developing countries which can draw on the resources of the World Bank and other organisations and can contact those organisations in a much more direct way. Our businessmen must "get on their bikes" and get out there. If they do not get out there and make contact with people who require our products they will miss opportunities. I am delighted that JEMU and the organisation the noble Baroness is involved with are acting positively to ensure that that happens. I ask the Government to encourage such action in every possible way.

5.55 p.m.

Baroness Young of Old Scone

My Lords, my noble friend Lady Nicol is right to raise the issue of support for our environmental technology and services industry as we run the risk—as she pointed out—of lagging behind other countries in developing this vital business and export sector.

Two old chestnuts have rather dogged the process of improving our performance in this area. One is the thinking that environmental regulation is bad for business and the second is the thinking that environmental standards are bad news for jobs. It has been demonstrated by several countries which are ahead of us in the export race in this area that clean technology is a means of economic expansion and employment creation, and a way of saving costs which helps us to compete internationally.

As regards environmental regulation, there is international evidence that it stimulates environmental technology and services. The largest and most technologically advanced environmental markets in the world have developed in those countries which have the most comprehensive and effective environmental regulations. I refer to Germany, Japan, some of the Scandinavian countries and, in some respects, the United States of America. Wise regulation, which I shall discuss later, has driven that.

As I have said, it is an old chestnut that environmental standards get in the way of jobs and that compliance with environmental regulations creates additional costs that are bad for employment. I believe that the opposite is true. Compliance with environmental regulations constitutes only a small proportion of overall costs even in the most polluting industries such as chemicals, petroleum, pulp and paper and metals. Those costs as a proportion are too small by far to cause job losses. As I have said, the opposite is true. There is considerable scope for job creation in the growing environmental technology and services industry. However, environmental standards and regulations have undoubtedly had an impact on some of the extremely outmoded and dirty industries. I believe that the Government have a role to play in the economy in managing the transition from those industries to the more modern industries that will create growth and employment.

I do not believe one can make the case that maintaining environmental standards increases costs. In many cases they cut costs. Clean technologies and process modifications can reduce the costs of pollution control and of waste disposal. They reduce the risk of environmental liability—that is an important and expanding area—and they enable the conservation and re-use of materials.

I conclude by asking that we do not have a knee-jerk reaction towards regulation. I was interested in the remark of the noble Lord, Lord Wade of Chorlton, that we were now seeing not only regulation as the driver of these industries but also the power of the consumer and business itself. Nevertheless, regulation is still the primary driver and we must not shy away from sensible environmental regulation. By sensible, I mean regulation such as is now welcomed by the CBI, the trade union movement and individual businesses. I refer to regulation that is stable and predictable, and allows business to adapt, with sufficient time to retool to meet improving standards over time.

In trying to promote these industries we may well have a good "win-win" situation. If we can drive environmental standards up, we shall see economic growth in this fast emerging sector. We shall see the creation of employment. We shall see the reduction of costs. We shall see an improvement in our export position. It sounds like an extremely good deal to me. I urge the Government to support it in every way.

6 p.m.

Lord Beaumont of Whitley

My Lords, we are indeed indebted to the noble Baroness, Lady Nicol, for bringing this subject to the public eye—if that is what one can honestly call a debate in your Lordships' House—or, rather, bringing it before Ministers and civil servants. At this stage I wish to own to the same interest as the noble Baroness, Lady Nicol; I am on the political committee too.

At first sight it is difficult to see what there is to debate—to underline, yes, but to debate? There does not appear to be any opposition to the proposition that the noble Baroness puts forward, and nor should there be. We wait with enormous interest to see what comfort the Government will be able to give us to help in our endeavours.

It is common ground that the world is pressing up against its limits. The statistics produced by World Watch on the decreasing production of the essential necessities per head of the population means that there is a constant threat to our environment. And Britain is no exception so far as this threat is concerned, given that England is one of the most overpopulated countries of the world and has one of the largest and least acceptable global footprints. That means that, both globally and at home, environmental technology and services must be one of the growth industries. It follows that a Government who are keen on increasing the well-being of our environment and that of the world and on increasing our own export performance must be giving the maximum encouragement to this industry. No one, surely, disputes the need. Nevertheless, those who are promoting this industry have need of help. I remember one of your Lordships, who unfortunately is not taking part in the debate but who was immensely supportive of Adrian Wilkes and his fledgling Environmental Industries Commission, expressing the opinion that it had taken on too difficult a task. Fortunately. those fears are proving groundless thanks to the great energy put into the commission by Mr. Wilkes and his colleagues.

But one thing is still necessary. That is, as the noble Baroness pointed out, a rigid insistence on enforcement of environmental controls. One must be cruel to be kind. And this Government have shown few signs of an ability to be cruel to be powerful. There is great need to ensure that those who should obey the law and standards which have been put forward are made to do so in order to encourage our industry to produce the necessary machinery.

I underline one matter at this moment. I do not think that it has been raised by any other noble Lord. It is the necessity to produce the right kind of machinery and exports for developing countries—the need to produce intermediate and appropriate technology. Your Lordships will probably be aware of the work of Intermediate Technology (IT), a body founded by Fritz Schumacher, which produces basic and environmental technology in countries all over the world in forms that they can use. It is no use our producing large scale equipment which deals with matters in the Western world if it cannot be adapted to deal with issues arising in smaller units in the developing world.

IT has been developing special stoves and solar lanterns in Kenya, small hydro-electric projects in Nepal, small scale food processing in Peru and cycle trailers in Sri Lanka. I have just returned from Sri Lanka, where I saw the cycle trailers in use on the streets. IT has developed donkey ploughs in Sudan and peanut butter processing in Zimbabwe. Throughout the world there is need for technology which can be used where there is a large supply of labour and little capital to invest. In dealing with this extremely important matter, I hope that both the industry and the Government will apply their minds and ambitions to improving the amount of intermediate technology that can be supported and supplied to the developing world.

6.5 p.m.

Baroness Seccombe

My Lords, when I read that the noble Baroness, Lady Nicol, was to introduce this debate I was delighted. Not only does she have a great enthusiasm for all matters appertaining to the environment, she also has a deep knowledge and understanding of the subject. Her speech today was informative and addressed a particular problem facing our exporters. I therefore wish to congratulate the noble Baroness on bringing this matter for debate in your Lordships' House today. It has been a fascinating debate, if somewhat short, with well-informed contributions perhaps of quality rather than quantity.

There is no doubt that the environment is high on everyone's agenda. We are all aware of the damage that can be done to whole communities by a lack of concern. This is brought home to us most graphically as we see the pictures of factory chimneys in eastern Europe belching out poisonous fumes; we watch the tempestuous weather experienced around the world in recent days; we know that more and more children appear to be suffering from asthma; and we see every day the ever-increasing number of cars on our roads, and the damage that that is doing.

Of course there are many other examples which make our minds think positively about the changes that have to be made if we are to pass a clean and pleasant land on to future generations. Public awareness is, I believe, a very important step in charting the way forward. As my noble friend Lord Wade of Chorlton said, I believe that the consumer is now the driver. I pay tribute to my right honourable friend Mr. John Gummer for the measures that he took, and I am pleased that the present Government are taking the matter equally seriously.

Government have a vital role to play in providing a framework and formal environmental policy for all business both large and small. This policy has to be clear and set appropriate environmental objectives. There must in addition be a thorough assessment of costs and benefits. Big business can often absorb any extra costs, but I am sure we are all aware that small and medium-sized businesses can experience difficulties in this field.

Of course many initiatives are taken worldwide, and it is essential that discussions take place with international bodies in order to develop a concerted approach to tackle the global environmental problems. Government can play their part by giving incentives to industry. These may be by taxes or tradable permits to encourage the adoption of better environmental practice.

Regulation has a role, but I feel that it should not be too heavy handed. It is not the role of Government to prescribe specific technological solutions, and of course advice must be based on sound scientific principles and a thorough assessment of costs and benefits.

Due to government initiatives over the years, the United Kingdom has gained an expertise in environmental protection and is now exporting British environmental technologies and services. Naturally most of the companies involved are small and encounter the known difficulty of competing internationally. I was most interested to read of the launch of the UK green technology export drive by the Minister of State for Industry, Mr. John Battle. I support the objectives and shall watch the development of the initiative with great care.

I hope, however, that the Government will work closely with industry, liaising with and listening to, for example, the CBI, trade associations, suppliers. regulators and, very importantly, the research community. Such discussions raise the profile of "the environment" in its widest sense. That benefits us all, and enables everyone to understand the challenge it poses. We all have to take responsibility and make our views known and acted upon.

Industry, in the main, accepts the importance of its actions. Good environmental management is purely and simply good management. We have to keep up the pressure. Debates such as this assist in that process. I therefore thank the noble Baroness, Lady Nicol, once again.

6.10 p.m.

Baroness Farrington of Ribbleton

My Lords, I am grateful to my noble friend Lady Nicol for tabling this Motion. I echo the praise given to my noble friend during the debate in recognition of her interest in and knowledge of the subject. Perhaps I may also echo the words of the noble Baroness, Lady Seccombe, in recognising the contribution made by my right honourable friend the Secretary of State's predecessor, Mr. Gummer, whose commitment was doubted by no one. We all recognise, support and value the work he has done.

As we move closer to the millennium, it becomes even more important to concentrate not on looking back but on looking to the future. It is important to think of the industries of the future. Environmental technology and services are important now; but, as was stated by noble Lords in relation to a wide range of points, they will become even more important in the future. They are a key element in achieving sustainable development.

Noble Lords will recall that our manifesto stressed the importance of policies which combine environmental, economic and social objectives. Achieving all these objectives at the same time is what sustainable development is about. In creating wealth and jobs while protecting the environment, the environmental technology industry provides a fine example of sustainable development in action.

Since this Government came to power, we have demonstrated the impact that a government committed to the environment can have at the highest levels. The Prime Minister highlighted that at the G7 Summit in Denver in June last year and at the Earth Summit in New York immediately after. The Foreign Secretary has put the environment generally at the heart of his foreign policy. It featured as an important item on the agenda at the Commonwealth Heads of Government meeting in Edinburgh. Noble Lords will be aware that the Deputy Prime Minister undertook two world tours in the lead-up to Kyoto; and at Kyoto itself the UK played a central role in ensuring a successful outcome.

The point I would make—particularly in the context of our role within the Commonwealth, though not solely in relation to the Commonwealth. in response to the point made by the noble Lord, Lord Beaumont of Whitley, regarding the importance of intermediate technology—is that we believe it applies to the identification of "appropriate" technologies in the environmental field. It means: appropriate relative to the local circumstances. Provided improvements are achieved on an incremental path, we cannot make judgments from outside as to what would be best in the context of individual circumstances.

Sustainable development, including the environment, is clearly one of the central items on today's political agenda. It is an extremely important aspect in terms of the UK's profile and the way in which it has been raised as a result of the Government's commitment in the fast-growing environmental market and to the way in which the UK can improve its success within it.

Speakers referred to different estimates that may be used to support the importance of this sector of industry. The current global market stands at about 280 billion dollars, and is estimated to be rising to over 640 billion dollars by the end of the next decade. That includes both developed and, as the noble Lord, Lord Beaumont of Whitley, and other speakers remarked, developing countries, which are of increasing importance. Various figures are given, but there is absolutely no doubt that the industry itself is large and growing. Our turnover within the UK is responding well to these markets. It is some 12.3 billion dollars, including 1.2 billion dollars' worth of exports. That represents over 4 per cent. of the global market, as was remarked by the noble Lord, Lord Wade.

I should like to pay tribute to the noble Lord, Lord Wade, not only for his contribution today, but also for his personal efforts. I am aware that the noble Lord participated in the recent, highly successful environmental trade mission to Singapore. As I am sure he will agree, we cannot afford to be complacent. We welcome and recognise the contribution that the noble Lord makes to work in this field.

The importance of an action plan for green industries was referred to by my noble friend Lady Young. The Labour Party's manifesto commitment highlighted the huge potential to develop Britain's environmental technology industry, to create jobs, to win exports and to protect the environment.

The Government have an interdepartmental unit, the Joint Environmental Markets Unit (JEMU), specifically to look after and promote this important sector of industry. I am sure that those who are involved in this important work will appreciate and be grateful for the very kind words of well-recognised and supported praise for their work in this unit. The Department of Trade and Industry and the Department of the Environment, Transport and the Regions are working closely together through JEMU to promote the success of the industries involved. JEMU's aim is to provide market information, contacts and events for the industry and to raise its profile on the world stage. It provides a focus for a whole range of government services which are available to this sector.

Within a few months of coming into office, the Government published an action plan and consultation paper to help green industries boost exports and become more competitive. We set out a number of key proposals for JEMU to develop a strategy in partnership with the industry. I stress the importance of "partnership-; the Government are well aware of, and support, the points made by the noble Baroness, Lady Seccombe, about the importance of working in consultation with all those involved—those who are to be regulated where the question of regulation is appropriate, as well as those involved in the industry and the production of environmental technology items in order to meet stricter controls.

In a thoughtful contribution, my noble friend Lady Young raised a question regarding regulation and how it should be handled. The noble Lord, Lord Beaumont of Whitley, asked whether the Government are prepared to tackle the issue of industrial pollution. I assure the House that we are determined that all significant violations of environmental standards shall be dealt with vigorously; everyone in industry should understand that these rules must and shall be dealt with and respected.

The importance of the export focus of environmental technology is well understood by the Government. If Britain is to thrive and prosper, its economy must continue to keep pace with global change. The world economic scene is undergoing rapid transformation. As barriers to international trade and investment fall away, business is increasingly thinking globally and exploiting the revolutionary changes that are taking place in communications and IT.

It is important to recognise the work of the Export Forum which the Government established to assess the effectiveness of current arrangements for helping British business seize these commercial opportunities overseas. Its firm conclusion was that there continued to be a sound economic case for effective government support for export promotion, not because such activities determine Britain's export performance—ultimately that depends on the overall competitiveness of the UK economy—but because they help more UK firms take advantage of overseas business opportunities than would otherwise be the case. The forum has proposed—and indeed published—a number of specific recommendations designed to improve the effectiveness of present schemes for export assistance, and these are now being implemented.

Action by industry is also important. The Government cannot, nor should they try, to do everything. The industry must organise itself so as to be able to take advantage of the opportunities on offer. We wish to work with all concerned to ensure that we maximise the strength of the diversity in this field as well as avoid the weaknesses that fragmentation brings. Fragmentation is probably one of the most serious weaknesses and it is important that the Government work to ensure that customers do not face a difficult dialogue with a fragmented supply chain.

Companies and their representative bodies need to find innovative ways to work together across traditional boundaries to respond to increasing calls for integrated solutions to environmental problems.

My noble friend Lady Nicol raised the question of the Government's attitude towards the Environmental Industries Commission. The UK environment industry is large and diverse, with several subsectors. Some of these already have effective representative bodies. No one group or organisation can—or, I believe, does—claim to represent the whole industry comprehensively. The Government are committed to continue to work with all those bodies that can make a constructive contribution to common objectives on behalf of their members.

The Government have recently awarded a grant of over £270,000 under the Sector Challenge to a new export services company. This will help SMEs in particular—a point referred to by the noble Baroness, Lady Seccombe—in the environmental technology and services sector to put together the commercial response to specific market opportunities.

We also welcome efforts by leading trade associations to develop working partnerships and initiatives, such as certification schemes, which will help to raise awareness of the quality of our technology and services. This is one of the most effective things that the Government can do for the sector. We need to encourage all businesses to think ahead and to plan for a cleaner world.

The Government will shortly begin consultation on a new sustainable development strategy for the United Kingdom. I have referred to the contribution of the environmental industry. I would stress, however, that all businesses will have a key part to play in developing, but above all in implementing, the strategy. We want to encourage companies, large and small, to make sustainability a key element throughout their planning and operations.

The innovation which is needed is extremely important in order to ensure that companies which manage their environmental performance effectively can reduce their costs and gain a competitive edge in the marketplace. This has been one of the clear messages from our Environmental Technology Best Practice Programme. I am sympathetic to the point made by my noble friend Lady Nicol about the role and scope of applied engineering research. Government funding is used in a number of ways which contribute to both the UK's competitiveness and its quality of life. The Engineering and Physical Research Council's programme covering engineering for infrastructure, the environment and healthcare, worth roughly £26 million each year, addresses precisely these issues. The Natural Environment Research Council, the UK's leading body for research, survey, monitoring and training in the environmental sciences, has been allocated £165 million for the financial year 1997-98.

We also have the UK Foresight Programme which aims to bring together government, industry and researchers to define a common agenda. Its Natural Resources and Environment Panel seeks to encourage business to make more use of the scientific and technological expertise in the UK science base in order to respond positively to future environmental challenges and market opportunities.

We in the UK can be justly proud of the research which has enabled us to develop world-class engineering and technologies in the environmental field. With that credibility, combined with unquestionable growth in the global environmental market, it is our hope—and mine in particular—that young people will increasingly perceive science as a worthy career option. For too long young people have gained a perception that a career in science and engineering is a problem-creating rather than a problem-solving career. It is extremely important that we get across to young people that it is a problem-solving career.

If there are detailed points which have not been answered, I shall reply in writing. Much is happening in this field. With their ability to create employment, generate wealth and deliver solutions to some of the most pressing problems facing us all, these are clearly the industries of the future. I am grateful to have had this opportunity to set out what the Government are doing to help the UK environmental industry to achieve the reputation and success in the global markets that it deserves.

Finally, in again thanking my noble friend Lady Nicol for introducing this debate, may I say from the heart that if everyone were as committed to this subject as she is the world would be a better place for generations to come.

6.28 p.m.

Baroness Nicol

My Lords, it is not usual for movers of these short debates to sum up and I do not propose to do so. It has been a strangely harmonious debate; I wish we could have this kind of exercise more often in this House. If I have any fault at all to find with what my noble friend on the Front Bench said, I would add that I am very ambitious as far as this country is concerned; I am proud of our history in technology and science and want it to continue; but it will not continue unless the rewards for those who design and innovate are sufficient. Unless the Government continue to take a positive line, we may not get our fair share of world markets, in spite of some of the comforting things that my noble friend said.

This has been a useful debate. I am extremely grateful to everyone who has taken part, and I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.