Telecommunications Technology

Bill Presented – in the House of Commons at 6:58 pm on 22nd July 1987.

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Photo of Francis Maude Francis Maude Parliamentary Under-Secretary (Department of Trade and Industry) 6:58 pm, 22nd July 1987

I beg to move, That this House takes note of European Community Document Nos. 5876/85, 5876/85 Add 1, and the Department of Trade and Industry's Supplementary Explanatory Memorandum of 30th September 1985, and No. 10277/86 on Community research and development in the field of telecommunications technologies (RACE); and supports Her Majesty's Government's intention to agree to the early adoption of Community legislation with a view to stimulating co-operation at Community level in the field of telecommunications technology. This debate is timely. I am pleased to be able to inform the House that today political agreement to the Community's five-year research and development framework programme has been reached on the terms proposed by the Prime Minister at the June European Council. I understand that the programme is likely to be adopted at the Budget Council tomorrow. RACE, which we are now debating, and, indeed, other major initiatives such as the second stage of ESPRIT, which are also part of the overall framework programme, are therefore set to move forward very soon. The reason for this debate is to enable the final decision on the main phase of RACE to be taken before the House reassembles.

The full title of the RACE programme is research in advanced communications technologies in Europe. Its goal is a system communications link based on optical fibres for both home and office, and it can be used for broadcasting or communications, or, indeed, for both together. It would move us forward into the era, some time in the mid-1990s, when telecommunications and broad-casting technologies converge on a common delivery method.

The programme was initiated by the Council of Ministers in 1984 as a key element of the Community's response to the worldwide technological revolution in telecommunications. It reflected a belief among all member states that action on long-term research and development in telecommunications at the Community level was needed if the industry was to be able to meet the challenges of the digital age in the 1990s and beyond and match competition from the USA and Japan.

The research and development effort and the level of funding necessary to develop, and get into the market place, which is important, low-cost high quality equipment to meet telecommunications needs in Europe until the end of the century, given the growing complexity of technological options, are beyond the capacity of even the biggest national telecommunications equipment suppliers in Europe acting on their own. Moreover, it would clearly not make commercial sense for either network operators or equipment manufacturers to commit themselves on their own to such large investments in long-term projects, some of which, in the nature of things, will fail to produce a worthwhile return or, in some cases, any return at all.

Therefore, RACE is directed towards pre-competitive research and development. Its aim is collaborative research through Europe in advanced telecommunication technologies to pave the way for the integrated digital telecommunications networks of the 1990s. The objective is to strengthen the Community's equipment manufacturers and network operators by encouraging them to invest now in the research and development that will be vital to their future success in meeting world competition in this fast-moving area. Only with such investment now will operators be able to offer users in Europe the access that they will demand to advanced, but competitive, services. The availability of such advanced telecommunications technology and the assurance that Europe can keep pace with the rest of the world are crucial to European economies.

RACE was set in motion by a decision of the Council in July 1985. Details were given in explanatory memoranda which were laid before the House. They explained that the aim of the RACE programme should comprise two phases. The first was the definition phase, to establish clear objectives and priorities. The second was the main phase, in which the R and D would actually be undertaken, and then evaluated in readiness for commercial applications.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

Will the Minister he kind enough to enlighten the House as to when that decision was first taken? What was the time scale, and what was the date at which it aimed to have phases 1 and 2 in operation?

Photo of Francis Maude Francis Maude Parliamentary Under-Secretary (Department of Trade and Industry)

The aim was that the definition phase would last until the end of 1986, as it did, and that the main phase of RACE would start as soon as possible thereafter.

Photo of Francis Maude Francis Maude Parliamentary Under-Secretary (Department of Trade and Industry)

If the hon. Gentleman will be patient I shall deal in due course with the aspect that I suspect he is about to raise. If I do not deal with it, I shall give way later.

The first part of the main phase is scheduled to run from around the end of this year until 1992. The second part of the main phase will follow on.

The definition phase began with analytical work, carried out mainly by the network operators in Europe, to formulate an outline specification for Community-wide integrated broad band communications, commonly known in the business as IBC. It would then be possible to explore the various options which would need to be pursued in depth to achieve the most cost-effective solutions and to identify the standards which would be necessary.

IBC will enable subscribers throughout Europe to be supplied by means of a single connection with all available telecommunications services, for example, telephone, two-way video services such as the videophone, high definition television, and a variety of data services would become available. Particular emphasis is put on significantly reducing the cost of optronic components for the local loop to make it an economic proposition to transport the whole range of high-quality services along a single optical fibre channel to ordinary residential and small business customers.

The definition phase work then went on to analyse and evaluate specific topics. This was done on a project basis. It drew on existing R and D, including the ESPRIT programme of research into information technology.

Particular care was properly taken not to duplicate work already being carried out under ESPRIT. Participation in projects was open to all companies of whatever size, universities and research establishments.

The main criterion was that proposals had to be collaborative, involving at least two independent partners in member states.

There was a strong response to the definition phase from European industry. Firm proposals were submitted by some 80 consortia, 32 contracts were eventually placed, and I am delighted to say that British companies were lead contractors in 14. There was a British presence in 26 and, of 192 participants in the various consortia, no fewer than 52 were British. British companies received more than 30 per cent. of the total Community support available for the definition phase. These excellent figures augur well for the involvement of British firms in the main phase and underline the importance which British industry attaches to the European R and D programmes such as RACE. The outcome of the definition phase was extremely positive. It clearly confirmed that there was scope for Europe-wide IBC on a commercial basis, and that a significant Community effort to prepare for it was, therefore, justified.

That brings us to the main phase of RACE. Proposals for this have been before the Council since last year, and the original intention was a five-year programme to begin on 1 January 1987. For various reasons, including lengthy debate within the Community on the R and D framework programme, the programme, which was optimistic from the beginning, could not be met.

Much has been done in the intervening period. We have pressed for, and obtained, improvements in the structure, priorities and cost-effectiveness of the programme. We have removed from it less necessary or duplicative work in order to ensure that the money is well spent. There have been added, largely at our insistence, verifiable objectives and a procedure for the independent evaluation of projects, both of which are crucial to ensure value for money. Even if the main phase had been adopted by the Council last January, that work would still have been necessary before the programme could begin. There is absolutely no point in spending money just for the sake of it. We must ensure in projects such as this that the money is properly directed and well spent.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

My point is crucial, as I am sure the Minister will understand. Is not the reality — the Minister has hinted at it coyly—as I shall explain in a moment, that RACE is one or two years behind its schedule in a highly competitive area in which others are moving fast? The Minister has failed to say that the British Government have been responsible for that delay. Perhaps he will explain why. In the light of that fact, for fact it is, will the Minister also explain how the Government felt able to say in their motion that they are in favour of the early adoption of the Community legislation, when they have been the instrument of its delay?

Photo of Francis Maude Francis Maude Parliamentary Under-Secretary (Department of Trade and Industry)

I am sorry that the hon. Gentleman has sought to introduce a combative note into a debate on a subject on which there has generally been agreement. I shall spell out to him again, as I have done previously, —it is for other hon. Members to judge whether I did so coyly—that the work that has been going on between 1 January and now would have had to take place in any event, irrespective of when the programme started. I am not sure whether the hon. Gentleman is suggesting that we should have gone headlong into the main phase of the programme without building into the system proper evaluation to ensure that value for money was obtained.

Photo of Francis Maude Francis Maude Parliamentary Under-Secretary (Department of Trade and Industry)

I have told the hon. Gentleman twice that there is no delay because the work would have been essential before the projects could have got under way. I am sure he will understand that it follows clearly from that that there is no delay.

The main phase will be divided into three parts. The first concerns the development of IBC and strategies for its implementation. There will be work on the development of functional specifications, the definition of proposals for IBC standards and to establish interoperability for IBC equipment and services. It is envisaged that much of this work will be funded by the European network operators, who have a strong interest in a successful outcome. British Telecom is very much at the forefront of European work in this area.

The second part is the research phase proper and is aimed at the development of IBC technologies. It will entail co-operation between enterprises in different member states of the Community and, exceptionally, enterprises in other Western European countries. This is the biggest part of the RACE programme and will be carried out under shared-cost contracts with the contractors jointly bearing at least one half of the total expenditure and the Community providing the remainder. There is a real opportunity here for European industry to achieve the economies of scale that will enable it to compete both within Europe and in wider international markets.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Motherwell South

The Minister referred to the industry's contribution being "at least one half." Is he suggesting that the Government have given up their proposal that industry should contribute three quarters?

Photo of Francis Maude Francis Maude Parliamentary Under-Secretary (Department of Trade and Industry)

I understand that the proposal for the main RACE phase is clearly that the Community will provide one half of the cost of the project. Therefore, industry must provide at least one half. Although in certain circumstances it may provide more, that will not necessarily be a requirement.

The third part of the main phase will consist of co-operation between member states to assess operational concepts and experimental equipment, with the objective of validating specifications and proposals for standardisation arising from the work in the earlier parts of RACE. This plainly lies a few years ahead.

I should finally say a word about finance. The Commission's original proposal envisaged that the Community's total expenditure on the RACE main phase would be 800 million ecu, or about £560 million. During extensive negotiations in Brussels, in which we played a prominent part, this figure has been substantially reduced as the programme has been refined to cut out duplication and unnecessary work. [Interruption]. I hear the hon. Member for Yeovil (Mr. Ashdown) sniggering to himself in a contemplative sort of way. I am not sure whether that means that he would have preferred a programme that included duplication and unnecessary work. There is no point in spending money for the sake of it. It must be spent to achieve a purpose. Our work and the prominent part that we have played in the negotiations were directed to ensure that that happened and that money was not simply poured down the drain for the sake of it.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

The money was reduced.

Photo of Francis Maude Francis Maude Parliamentary Under-Secretary (Department of Trade and Industry)

It was ensured that the money spent was on work that had value, and that is what is important.

The final figure is now likely to be about 500 million ecu. The Government believe that this will enable the programme fully to meet its objectives, but the objectives must be kept under constant review, and the Community's legal instrument has built into it provision for annual reviews to evaluate the work done and to consider whether work on particular aspects of the programme needs to be continued. The Government will be vigilant in ensuring that the funding for RACE is spent effectively and that there is full and proper evaluation and re-evaluation of objectives.

British firms which did so well in the definition phase are keen to grasp the opportunities which the much larger main phase offers. I am confident that British enterprises will win a worthy number of contracts and that this will prove of great importance to them in the long term as the European market develops. I am also confident that RACE will prove to be an effective European response to the technological challenge in this key sector of telecommunications and I warmly commend the motion to the House.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Motherwell South 7:11 pm, 22nd July 1987

I was glad to see the Parliamentary Under-Secretary of State opening the debate, but it drove me to look at the list of ministerial responsibilities and to ponder on the reasons for the absence of his colleague the hon. Member for Coventry, South-West (Mr. Butcher), who is listed as having responsibility for this area. We are used to having a tremendous turnover of those with responsibility for industry in the present Government and later I hope that the hon. Gentleman will say whether his arrival on this scene, which is welcome, is permanent or fleeting.

The news that agreement has been reached on the framework programme is important and I hope that it will be ratified at the budget meeting tomorrow. It is long overdue. The general feeling in industry and the research world is that the delays in reaching agreement on the framework programme, for which the Government have been largely responsible, have been substantially damaging because many depositions depend on the particular arrangements made in RACE.

Relations between European and United Kingdom programmes are most important. Last week at the review meeting of the Alvey programme the Chancellor of the Duchy of Lancaster was extremely bearish about the prospects of Government support up to the levels proposed in the IT86 report. The practical effect of that has been to switch the priorities for and preparation of research proposals heavily from the United Kingdom scene into ESPRIT. That is good in so far as there will be strong British participation in the ESPRIT programmes and no doubt some Ministers will boast about this in future, but the work will be undersupported on the United Kingdom side in terms of the matching research necessary within a purely United Kingdom context.

That confusion between the balance of British and European work has been a casualty of the delays. It has not been helped by the fact that, although industry has been strongly supportive of RACE and feels that it has been a useful European initiative, the Government have not made it entirely clear that their misgivings about the management of the research in Europe have related not so much to the RACE or ESPRIT projects as to the joint research centres and the stops needed to tighten management there. It would be much better if the Government would more frequently in the House, and certainly elsewhere, make it clear what their considerations are. To make the research budget of the whole of the framework programme a pawn in the general argument about European Community finance is to take our industrial future far too lightly.

The European Commission has now sent out a call for expression of interest in RACE to be received by 4 October. These will be considered and the awards made in time for work to start early in the new year. Perhaps the Minister would confirm that timetable.

The papers referred to in the motion are rather old. One more recent paper is relevant to considerations in this area —the Green Paper on the development of the Common Market for telecommunications, services and equipment, published on 30 June, but to which no explanatory memorandum has yet been attached. It is Com(87)290 for hon. Members who may wish to look it up when reading Hansard.

The framework programme speaks of telecommunications as the lifeblood of the large market. In its range of applications, in the rate of technological change, in the social consequences and in the volumes of economic activity at stake that is certainly true. The RACE programme states: It has been estimated that during the next decade about 500 billion ecu … (corresponding to 500,000 jobs in average) will be invested in the Community in telecommunication infrastructures, services and terminal equipment and in the next 20 years three times as much … More importantly, however, it is estimated that for those leading in offering advanced information services the employment benefit may be 10 times as large. For Europe's employment prospects the creation of favourable conditions for new and enhanced services is the most significant employment aspect of advanced telecommunications services. Based on these estimates the overall employment at stake may be as high as 5 million by 1990. That was written in 1986 and the time scale may be a little optimistic. The order of magnitude seems much more firmly based. We are talking about 5 million jobs in Europe if we make a success of this compared with only about 500,000 if we make a mess of it. In terms of employment in the United Kingdom it would be the difference between 1 million more jobs and only 100,000. Therefore, the stakes for being at the forefront of offering advanced information services are high.

In order to pull that off, we need to succeed in RACE and to see the programme, first, in the context of the regulatory regime in which the results of that technology will be exploited and, secondly, in the development of applications which will provide an economic justification for the technological developments. Those are most important considerations. In so far as the Government have run into rough water in the management of RACE, they are open to much more serious criticism on the question of the regulatory regime and the effort put into application development.

I shall follow the Minister in considering the lessons from the RACE definition phase. The committee of management concluded that the integration needed is integration for freedom of access. That is a useful concept. It is not an exlusive or monolithic integration. If one goes into the system in any one place, one may have access to any other place but one wants to go in freely anywhere. The physical integration is less important than coherent and compatible network operation, with efficient, dynamic use of the overall transmission capacity. That is important also in that it brings the idea of IBC—integrated broad band communications — much more into the present era, with the early prospect of direct broadcasting by satellite and the even earlier prospect of the full exploitation of the substantial digital capacity of the twisted pair of our present telephone system. The data transmission side is capable of much fuller exploitation than it now receives.

The third lesson drawn from the definition phase is the importance of OSI — open system interconnection standardisation. That, too, can hardly be exaggerated. It is most important that the very useful lead established by this country—which Europe is building up—in terms of the impact on American and Japanese standards, and the influence on their equipment design, should be maintained.

The economies of scale have been fully borne out, and certainly on the human side it has now been well established that research teams can work happily across national frontiers. As for the financial side, the Under-Secretary may feel that the sums in Europe are large. On a European scale, they may even be diseconomies in co-operative research. However, the cost of our having to do all that alone in the United Kingdom would be absolutely out of the question.

Again, economies of scale in production are such that we shall probably have to move very soon into much fuller consideration of the question of industrial structure in this country. If in the United States the principal semi-conductor manufacturers conclude that they can operate economically only if between them they build a single silicon foundry, how much more true is that of the United Kingdom — or, indeed, of Europe? Ian Mackintosh's book "Sunrise Europe" shows that there is probably scope for only two European designers of a wide band switch, which effectively means only to major prime telecom contractors in Europe. Where does that leave us in terms of United Kingdom industrial policy and the issues raised about the future of GEC and Plessey?

A further lesson was that broad band can greatly improve the cost performance in handling the narrow and medium band services. If we want a higher quality telephone service or an efficient electronic funds transfer from points of sale linking banks, shops, homes and so on, it is far more efficient to do that within a broad band service than simply to try to pile on separate narrow band links. There is the potential for enhancing the traditional carriers; there is also the importance of an evolutionary approach that builds on the systems that we have and deepens the applications. However, perhaps the most important lesson is that there are grave uncertainties in integrated broad band communications about cost performance and user acceptance of the services that it will be possible to provide.

If those are the lessons, the work plan anticipated in RACE and set out in the proposal document seems a bit limited. The material seems to confine itself too narrowly to the technology. Emphasis is rightly placed on the importance of the reference models, the description of the typical consumer and of the typical local switch, and so on. The systems analysis and specification are obviously essential, as are implementation and planning and the development of the enabling technologies. The Under-Secretary referred to fibre optics and opto-electronics. The very important software side of the huge programmes that will have to be written to handle the wide-band switches, the user technologies, the sub-systems, the customer facilities, user access, network functions and trunk exchanges for transmission are all essential. But where is the consideration of the market?

Let us start with regulation. The Government's view is that the market can be left to look after itself. The experience in Japan with the integrated network system, which is held up to us as a tremendous threat and bogey that we must meet, has been severely restricted in its pace of development by the reluctance of consumers in Japan to go digital. There is a big increase in telecoms traffic in Japan, but the bulk of it is simply facsimile transmission, with well over half the total facsimile transmission in the world taking place between one office in Japan and another.

There is considerable consumer resistance to the keyboard and to the absorption of digital systems. We can put that down in this country to the particular script that the Japanese use, but I think that that would underrate the nature of the problems that we face in the market place. What are the dangers if we fail to put adequate work into the development of the market? One of the dangers is that we shall do all the donkey work in the creation of the communications infrastructure, and overseas suppliers will be able to come in with whatever is the equivalent 10 years from now of the computer game, the personal computer or high-definition television and swamp the markets in the United Kingdom and in Europe. There simply is not a market for IBC. It will have to be created, and special steps are needed to create it.

The Green Paper is an important element of that scene. The application development, about which the Government have not yet talked, must be another. The Green Paper makes some proposals in its figure 3. Those proposals are broadly acceptable to Opposition Members. They aim to combine the integrity of the system with the financial viability of the prime network operator, along with a competitive regime of value-added services. Are those principles acceptable to the Government? Is the financial integrity of the prime system operator to be met only by sacrificing the quality of services? That is a threat about which we have heard much from British Telecom customers and in the House in recent days. Do the Government offer a commercially viable path of development for the recabling of Britain? Is the apparatus of the Cable Authority licensing local cable networks going to proceed at anything like a fast enough pace to exploit the opportunities that RACE will open up for us?

The present indications are that the cable operators are just waiting until 1990, when they hope to be given freedom to provide voice telephone services on local cable networks. If that is used as a means of destroying the integrity of the necessary national network, the Government will have destroyed the possibility of our exploiting the opportunities that we are opening up in the RACE programme.

It is not good enough to wait until 1990 and then leave it to Oftel to review the provision of telephone services. The Green Paper that deals with the exclusive provision of special rights for telecommunication administrations regarding the provision and operation of the network infrastructure says: Where a member state chooses a more liberal régime either for the whole or for part of the network, the short and long term integrity of the general network infrastructure should be safeguarded. It is not good enough for the United Kingdom to be the only country in Europe that is going down this route. If we wait until 1990, the inevitable conclusion of Oftel will be that we do not have the evidence or even the basis for the right decision, because steps should have been taken much earlier to develop and explore the market possibilities.

Within the European Commission there is, according to one of its appalling acronyms, SOG-T in GAP. That is the sub-group of the senior official group for telecommunications in the group d'analyse et prévision, which I believe is an analysis and forecasting group. I do not know who those officials are, but I am told that they come from the Department of Trade and Industry. I question whether that group has the necessary background to tackle the huge application and development problems that need to be faced.

I shall give three examples. First, there are two large organisations for medical records. One has the unfortunate name of VAMP. It provides computers free to general practitioners in return for information on patient prescriptions. Already it has on record the prescription records of 500,000 patients. Within a year it expects to have 5 million prescription records. One sees why that is a valuable market research tool for the pharmaceutical companies, but it is a monstrously inefficient and potentially dangerous way of handling medical information for research purposes. Should there not be a much firmer grasping of nettles to make sure that the tremendous possibilities that are opening up in health care by the use of telecommunications are properly developed, in the fullest interests of the patient and in the light of the best medical practice?

Secondly, the Dutch Government recently published the report of a committee, under Walter Zegfeld, on the potential market for wide band communications in the Netherlands. It concluded that if we make all the allowance in the world for tele-shopping, on-course transmission to betting shops, electronic funds transference from the point of sale, and so on, the growth of such markets is unlikely to make integrated broad band communications commercially viable. The committee anticipates that the main growth of applications will be, curiously enough, first in health care and then in education. That surprises me a little, but the Dutch may be a nation of hypochondriacs. However, its educational applications do not surprise me.

If one visits the Inter Active Video Centre near Euston, which is supported in part by the Department of Trade and Industry, one sees there a brave, struggling, but hopelessly underfunded, effort to explore the potential of RACE technology in education. There is concern about the quality of education. There is readiness to put effort into curriculum development. There is also readiness to look at innovation, in terms of the responsibilities and the funding of schools.

If schools were offered £1 billion to put themselves on line in a wide band cable system, they would say, "No, thank you. We have greater priorities than that." If, however, we found that by developing these services we could open up the possibility of very much wider use of wide band information services in society as a whole, it is perfectly conceivable that the education system would get the wide band cable service free. That would stand on its head this Government's strategy. They think that value added services can come on the back of entertainment and the proliferation of local cable networks. They may be wrong. We may first need to develop the educational applications by the delivery of well-organised, first-class curriculum material to schools, after which the other markets might grow in this country.

Thirdly, in preparation for the big bang, the City invested a great deal of money and hardware in very simple operations, such as transferring the price of particular stocks, shares and currencies from one bank to another or from one part of the world to another. The main service is provided by Reuters, but the sophistication of the subsequent processing of that information for dealers is minimal. If Reuters is asked why it does not do something with the information, it says, "What benefit would it provide?" The obvious answer of economists is that it would help to stabilise the markets. "In that case," says Reuters, "we're agin it, because we make our money out of the instability of markets." Do the Government want to make their money out of the instability of markets? Would they not prefer a more stable exchange rate regime? Such questions are out of the depth of the DTI officials who sit on SOG-T in GAP. That is a woefully inadequate way of developing an applications philosophy.

The tremendous talent and ingenuity of people in this country could be fruitfully employed in the development of wide band services and facilities, but crucial decisions will have to be taken during the lifetime of this Government. That is a sobering thought for the Opposition. Industry should be assured that a stable regime will be maintained for the necessary long-term developments and programmes and for the investment that needs to be made in the infrastructure and in wide band applications. We are ready to explore with the Government the differences between the two sides of the House that relate to the principles on which wide band will be developed in this country. Those differences of emphasis are not unbridgeable.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Crewe and Nantwich

I have followed my hon. Friend's speech with great care, but many of my colleagues and I are concerned about the fact that this Government appear to have no overall policy for information technology or for the use of satellites for broadcasting. Does my hon. Friend agree that if the French Government can issue hardware to vast numbers of small business men to expand information technology, this Government should come forward with a much more precise plan?

Photo of Dr Jeremy Bray Dr Jeremy Bray , Motherwell South

I agree with my hon. Friend. The problem is that the major dispositions will be made in the next five years. With the prospect of coming into power at the end of those five years, we have to think about how the industry can be given a reasonable assurance of continuity to make possible long-term developments. I think that my hon. Friend will agree that some of us on both sides of the House think that those integrated services are possible, if only we can get ourselves properly organised.

That overall view requires a consideration of the regulatory regime, and certainly the broadcasting considerations in which my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) takes such a great interest. The matters to be considered include the research programme with which we are dealing. We shall need continuing and wide consultation with the researchers, the industry, the broadcasting authorities, the telecommunication authorities, British Telecom and Oftel. We are certainly prepared to take part in such consultations to ensure that there is the strongest possible national agreement about the overall regime in which the industry and applications developers can get on with the work.

Meanwhile, the Labour party is glad to confirm its full commitment to the RACE programme and to wish it every success. We encourage the British partners to participate in it to the fullest extent so that we can benefit from it fully.

Photo of Mr Richard Page Mr Richard Page , South West Hertfordshire 7:31 pm, 22nd July 1987

The House will be delighted to hear that I do not intend to speak for very long or to follow the hon. Member for Motherwell, South (Dr. Bray) by going through all the aspects of the programme and endeavouring to double-guess it. I welcome the news that the programme is to go ahead, because it represents our only way of being in with a chance to match the billions of dollars put into the technology by the Japanese and the Germans. This represents only one aspect of European co-operation in which I believe we need to develop our contacts. As manufacturing technologies expand, we shall need more and more co-operation in Europe if we are to supply products at the right price to reach the gradually expanding markets of the world.

I do not welcome the delay; I believe that the main phase should have started on 1 January, although I do not take the hysterical view of the hon. Member for Yeovil (Mr. Ashdown). While the delay is unwelcome, it will have been vital if it results in all the parties in Europe adopting common standards, aims, and evaluations. Let me produce a poor parallel: we need to get everyone to agree to drive on the same side of the road before we start making motor cars and rushing down it in them. If the delay results in the establishment of common standards in optical communications equipment, the time will have been well spent.

To get anywhere near producing the components at prices that will stand a chance of survival in the world market, we shall need this common research. In turn, we shall be faced with increasing amalgamations between British and European companies. There will be thorny problems ahead when British and European companies face amalgamations with or takeovers by the American and Japanese companies endeavouring to buy the technology that has been accumulated. We shall have to examine that problem carefully when the companies come under threat.

I welcome the measure, because it represents a chance—probably our only chance — of surviving the competition. I conclude by asking my hon. Friend the Minister and his Department to press on—and press on very quickly — so that the telecommunications equipment industry in Great Britain and Europe has a chance for the future.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil 7:34 pm, 22nd July 1987

I was glad to hear the hon. Member for Hertfordshire, South-West (Mr. Page) say that he believed that the programme was important because it would help us to match the enormous funds being poured in by the Japanese and the United States. I agree with him. However, one must ask oneself how that aim is to be fulfilled if the Government reduce the funds available to us. That will inhibit the very activities that the hon. Gentleman seeks to encourage.

I welcome the Under-Secretary of State for Corporate and Consumer Affairs to his post. He is a welcome addition to the Front Bench. However, as the hon. Member for Motherwell, South (Dr. Bray) said, it is interesting to note that the Minister responsible for these matters is not here. It was noted that he was not present at the Alvey conference—at least at the beginning of it. Perhaps the Government's neglect of new technologies is now to be increased — or at best will continue. That neglect, in the past and the future, is very sad. Nevertheless, I congratulate the hon. Gentleman on his elevation to the Dispatch Box. He has learnt the slippery arts of Ministers and their way with weasel words extremely quickly.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

As the hon. Lady says, perhaps it is inherent. It appears that, as soon as an hon. Member arrives on the Front Bench, those gifts are showered upon him.

When I asked the hon. Gentleman the reason for the delay, he said, "What delay? There is no delay." The programme was due to start in January this year. It will not be starting for 18 months or two years, but the Minister says that that cannot be described as a delay. He did not say what it could be described as, and I shall happily give way if he can find another suitable word from the armoury with which he has been equipped as a Minister of the Crown.

Photo of Francis Maude Francis Maude Parliamentary Under-Secretary (Department of Trade and Industry)

If the hon. Gentleman compliments me too much, he will damage my career. I made the point that the work on getting the research and development under way, which is what we are concerned with here, will not be delayed. The fact that no formal decision could be made before a certain time because a number of countries wished to debate the matter further does not mean that the work has been delayed. As I explained, all the work and all the activities of the intervening period would have had to be undertaken even if RACE main phase had been decided on 1 January, which it could not have been.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

I shall return to that point in a minute because there are different views on it. Whatever the Minister says to the contrary, the start of the programme planned for this year has been delayed. The Minister has given his reasons for that. He said that a number of countries were involved. Let us call a spade a spade: the programme has been delayed, for whatever reason. I presume that it does not hurt the Minister to accept that. We now need to establish the reasons why.

The resolution says that the Government are in favour of the early introduction of Community legislation. I have been looking into the Government's record on the early adoption of Community legislation. I do not need to use my own judgments on that. I shall take an independent judgment such as that of the Financial Times or The Independent.

An article in the Financial Times of 5 June 1985 said that the European nations had overcome the objections towards launching the framework programme within which RACE sits but stopped short of giving a formal blessing. A few days later, that appeared to be an optimistic judgment, because the programme had not got off the ground. It had not got off the ground because the United Kingdom Government—not the Governments of other nations as the Minister would so obligingly have us believe—had put up a block to further development of the programme. By the end of 1986, the RACE project had run out of money and was held up—no doubt, the reason for the delay.

Photo of Mr Richard Page Mr Richard Page , South West Hertfordshire

I thank the hon. Gentleman for giving way. I accept that there has been a delay, but I hope that I made the reasons for it clear. I respectfully suggest that the hon. Gentleman cannot put the reason for the delay solely on the United Kingdom's doorstep. Germany and France were equally to blame while the negotiations were taking place. The hon. Gentleman is flogging a dead horse if he tries to blame the United Kingdom Government in such a matter. There must be agreement, especially between the two main partners, because there is no point in having a haphazard research programme.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

Those are not my words—they are the words of the Financial Times. [Interruption.] The comments of the Financial Times should at least be paid a little more than the scant respect that the hon. Gentleman has paid them, especially as that newspaper is not well known for accepting Opposition views.

Photo of Michael Jack Michael Jack , Fylde

I remind the hon. Gentleman of the final paragraph of the quotation from the Financial Times, which says : The hiccup on final agreement came when it emerged that France could not approve another part of the combined package". I believe that that supports the point made by my hon. Friend the Member for Hertfordshire, South-West (Mr. Page).

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

The hon. Gentleman has been careful not to give the date of the article. I do not believe that he was referring to the article of 5 June 1985.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

Then let us look a little further. I do not deny that at various times certain other European nations have been prepared to join us, but the one nation that has been constantly holding this project up has been the United Kingdom. If France was with us in 1985, it had resolved the position by 1986. By the early part of 1986, the West Germans had joined us.

On 9 April 1987, the Financial Times reported that the United Kingdom alone needs more time to consider". I quote verbatim from the article of 9 April 1987. The statement is clear and accurate: All this has exposed Britain to a chorus of complaints from the Commission, the European Parliament, industry lobbies and other member states". On 22 April 1987, The Independent ran this headline: Britain maintains block on European Research scheme". On 21 May 1987, the New Scientist said that the scheme was being held up largely because Britain refuses". On 24 June, the Financial Times said that Britain at this stage was close to a final decision". We understand that, by 10 July, there had been a turnround. The Financial Times of 10 July said: the ambassadors have failed to resolve the deadline"— Conservative Members might like to note— between Britain and the rest". Contrary to the motion's words, the United Kingdom Government have been constantly holding up progress towards the institution of this programme.

Photo of Mr Richard Page Mr Richard Page , South West Hertfordshire

I again thank the hon. Gentleman for the courteous way in which he has given way to my few humble inquiries. I hope that he will accept the words of the European Parliament's rapporteur on the RACE programme. I believe that he contacted quite a few hon. Members. He said that, until April, France, Germany and the United Kingdom had been holding up the programme and that from April until 14 July only Britain had held it up. That is the position accurately.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

The hon. Gentleman has made his point in a different way. Of course, from time to time, other nations have joined us, but the constant barrier to the development of this programme and the framework programme has been the United Kingdom Government. In the light of that incontrovertible series of facts, it is strange, and an example of newspeak of the first order, that the Government claim to commend themselves for the early adoption of Community legislation.

The Minister said that this was all about getting "better value for money". We have heard that expression used all too frequently as cover for the fact that the Government of the day wanted to reduce the amount of money to be put into a programme. That is exactly what has happened on this occasion. This move may well have been conducted under the cover of seeking better value for money, but the truth is that the amount of money which we were prepared to see committed to this great programme was reduced.

Why was the amount reduced? Is there any logic for that? No, because Europe's position on telecommunications is good. This is one of the remaining aspects of new technology in which we can claim to have at least parity with the best in the world. Indeed, in certain respects, we are ahead of the rest of the world. This is a real opportunity to develop something that Europe has been good at and could be good at in future. It is an opportunity to be competitive. That is what is at stake and is being threatened and delayed.

Is there any need for these measures? Yes. The latest figures for 1984 show that, despite the protection of Europe's position, and indeed what was uniquely Britain's position, there has been a massive deficit in the importation of telecommunications goods into Europe. In 1984, United States telecommunications imports into Europe were worth $565 million, whereas European exports, despite a healthy industry, were worth $307 million, giving a deficit to the United States alone of $258 million. The position was even worse in respect of Japan, with imports worth $134 million and the imbalance rated at about 1 to 34 in its favour.

Is it the case that Britain was not going to benefit from this programme? Certainly not. Britain has benefited significantly from the investments that the Government were prepared to make. For every £18 that Britain is prepared to put into EC research and development, it gets £22 back — a net profit of £4 from this type of development. This is happening in the face of a research budget which has been cut appallingly.

Research in Britain is seriously threatened in the long term. What the EC has been doing for British research has been beneficial not only to Europe but to Britain. It has been enormously to our advantage not only in pure monetary terms—which, as we all know, is the way in which the Government judge these matters — but in terms of what British firms are doing. With this programme alone, a significant proportion of work has come to some of Britain's foremost firms. A number of outside commentators have said that Britain holds a lead in pressing forward developments in telecommunications and common systems such as RACE. We could do even better.

Photo of Michael Jack Michael Jack , Fylde

indicated assent.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

I see the hon. Gentleman nodding. He is right.

The British firms include those that one would expect to be involved, such as GEC, Plessey, STC, Thorn EMI, British Telecom, and firms that one would not expect to be involved, such as the BBC, the IBA, MARI and Pilkington, which have gained a significant amount of work from this programme. But the Government have been the chief instrument in reducing the amount of money going into the programme. University college, London, the university of Strathclyde, Imperial Software Technology and so on have been involved. Meanwhile, other firms have had parallel technologies and developments from which they too have benefited. Developing test systems for communications standards has been the work of bodies such as ICL, Olivetti and BAe.

In short, the United Kingdom has a lead and could have benefited enormously from a more progressive Government view. Instead, in this matter as in so much else, we have a Government who know the cost of everything and the value of nothing. If they had invested a little more progressively, we could have got this programme off the ground in a way that would have benefited Europe and at least ensured that we kept pace with the competition. It would have returned to Britain a direct benefit in economic costs, monetary terms, jobs and opportunities for the future.

According to the rhetoric of the Government, that appears to be what they would have liked to do. The former Minister for Information Technology, the hon. Member for Chertsey and Walton (Mr. Pattie), spoke at the Esprit conference in Brussels on 1 October 1986. He said: I have no doubt that our success in the industrial exploitation of information technology is a basic requirement for achieving more competitive European industries. That is correct, but it is a pity that he did not follow those words with some action.

On 1 July 1986, the Minister spoke to British companies. He said: I do not regard support for international collaboration as a substitute for supporting research and development at home. As we know, research and development in Britain has been cut and damaged. Its future has been put in jeopardy. Research and development in Britain is now facing a crisis on a broader scale. This is at a time when the Government gave away £3 billion in the Budget. The research and development that was being carried out by the research councils in Britain was brought to a grinding halt due to the lack of about £9 million to £18 million. A thousand scientists a year are leaving Britain's shores because the opportunities for research in this country are not as good as those elsewhere.

The Government are removing resources from universities. One wonders whether the Government have a policy on information technologies, other than one that ensures that in the long run those technologies will continue to decline. British high technology industry is growing at a rate which is half that of the world average. In the future we will face a massive balance of payments crisis in new technologies due to the narrow-minded, mean-spirited attitude that the Government have so clearly displayed.

We had another example of that attitude very recently. The National Economic Development Office unit which was dealing with information technology has been abolished. Some Neddies have been retained. It is interesting to note that the Neddy that deals with knitting has been retained, yet the one that deals with information technology has been abolished. Perhaps that is a reasonable comment on how the Government see the future of Britain. They do not need assistance with information technology, but they will keep the knitting committee going. Britain is allowed to knit in the future, but it cannot develop a decent high-technology industry.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Crewe and Nantwich

I am sure that the hon. Gentleman would not want to underplay the role of knitting. Whether it is done by hand or machine, it is an industry which in the past has earned us a great deal of money. It would be sad if we lost those skills under this Government, which is likely to happen.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

I am sure that the hon. Lady would agree that, although the maintenance of an ancient industry such as knitting is important, British industry must begin to develop new technologies for the future so that they can be applied to traditional industries, including knitting and textiles. The extent to which that happenss depends on the Government's attitude.

The shame and sadness of this matter is that the commodity for the future development of our industry is not any particular piece of hardware or raw material but information. That is what will make our industries of the future run. Just as our Victorian forebears laid down an infrastructure that was capable of transporting coal, steel and iron around the country for their industries and jobs, so in future we will need to lay down a modern infrastructure for the transportation of information. That is a key requirement and it is where the opportunity presented by RACE is so important. We are on the verge of a massive breakthrough in industry and society.

Two things are now technically possible. It is technically possible for the Government to know everything about everybody all the time; it costs a lot of money, but it is technically possible. It is technically possible for the Government to deliver to every house in the nation — the French have made a commitment in this regard — all the information that is known in the world.

There are two completely opposite directions in which to go, but there is a massive difference in the sort of society that we would achieve, depending on which of those routes we follow. We are currently following the first of those routes. That is not unnatural for a Government who believe in centralising everything. We have 53 million names on the DHSS central computer and we have about 30 million names on the Inland Revenue computers——

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Crewe and Nantwich

They cannot find most of them.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

That may be true—[Interruption.]

Photo of Mr John Taylor Mr John Taylor , Solihull

What about the membership of the Liberal party?

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

If the hon. Gentleman wishes to intervene I shall happily give way to him, or is he maintaining his usual practice of intervening from a sedentary position?

Photo of Mr John Taylor Mr John Taylor , Solihull

What about the merger?

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

The hon. Gentleman should observe the convention of not intervening from a sedentary position.

The population of this country are on national data banks that are in the hands of the Government.

There is an alternative route. Some Governments, notably the French, as the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) said earlier, are following a progressive policy and making a commitment to deliver a decent, national broad-band computer communication network which is capable of reaching every house. Would it not be better if we had that not only on a national scale but also on a European scale?

The hon. Member for Motherwell, South has done some research into that matter and he tells me that such a computer communications network in Britain would cost £6 billion. I am told that that is about 50 per cent. more than British Telecom intends to invest, but what a national investment that would be. Would that not turn round our industry in the future? Would it not offer new opportunities for enterprise? Would it not generate the sort of jobs that the hon. Member for Motherwell, South mentioned?

It would not end with industry, for it would revolutionise the nature of our society. It would give breath and new life to our democratic systems. It would give the opportunities to deliver education into every home and create a totally decentralised and more responsive network for our welfare and health systems. It would revolutionise the nation in which we live and the nature of our society. We would move to becoming a modern nation that is capable of facing the demands of the future.

I strongly suspect that the post-industrial democracies that will survive and prosper will be those that are capable, able and brave and imaginative enough to make that investment. That is why the RACE project is so important. It offers an opportunity to achieve that, not just for Britain but for a European network. For the Government to have treated this project in the narrow-spirited, mean-minded way that they have by delaying, cutting and holding it up wherever possible is an act of folly not only for the future of our industry but for the development of our future society.

I plead with the Minister and his Government: here is an opportunity that should not be missed. The Government have held back the project and reduced the funding that has gone into it, but they should grab the opportunity that is available. If they do so it could set Britain and Europe on a path to the kind of society that could establish the basis for a modern industrial system that is capable of challenging those who are dominating the sector, such as the United States and Japan. That is the opportunity that is before us, but it is one that, sadly, the Government have missed.

Photo of Michael Jack Michael Jack , Fylde 8:08 pm, 22nd July 1987

I am pleased to be able to speak in the debate, and I am glad that the motion asks us to take notice of various European documents that are concerned with telecommunications.

Sadly, in many of the debates that I have attended in this Chamber I have heard a negative view from the Opposition Benches. I shall briefly deal with one or two of the points that have been raised. Part of the alleged delay on this project may have been due to a small but not insignificant event called the general election. I am glad that the Government have had the courage—certainly in the sector of telecommunications and advanced communications technology—to unleash the forces of invention and investment by the privatisation of British Telecom. Without a doubt, that has speeded up the pace of technical development and we certainly would not be as pre-eminent in Europe, if not the world, in fibre optic technology had we not been able to do that.

I believe that commercial companies, with their inventiveness and perception of the market place, have a major role to play in providing the future equipment that telecommunications and data transmission require. Equally, they have a role to play in co-ordinating our effort within Europe. I am glad to see so much unanimity within the House about the RACE project.

I am not a telecommunications expert. In fact, I am very much a layman in these matters, but my interest in the documents and the debate was aroused because within my constituency of Fylde we have a classic example of good European co-operation with the work that is being done on the European aircraft programme, hopefully leading to the European fighter aircraft. For British Aerospace, international communication of data will be vital. Therefore, the developments that come from a project such as RACE could have long-term implications for companies such as they.

In looking to the background of the RACE project, I am concerned about the attitude of the telecommunications industry in this country. I should like to quote some remarks made in the magazine Computing by Ken Hoyt, the marketing director of Plessey Telecommunications and Office Systems, in which he talks about the need to ensure that the RACE project and its objectives have a strong commercial drive built into them. In other words, it should produce products that the market place requires. He said : There are many real obstacles. We have to convert all this"— meaning research— into real products sold to real people. The companies have to agree over marketing and intellectual property rights and there are many companies who are not used to working together who will have to look at each other more seriously as commercial partners. That point has been alluded to. That presents Europe, certainly Britain, with some fundamental problems. If a company such as British Telecom can be pre-eminent in fibre optics, that is a commercial advantage and it is something that it would wish to hang on to. Obviously, there is the question of sinking one's differences for the joint European benefit.

I should like to deal with one or two other areas of concern. I support European co-operation in this vital area, but I hope that developments that come from RACE will not be deemed to be a form of technological protectionism. We are not dealing just with a European communication problem, whether it be of data, voice or information: we are dealing with a world problem. There are many powerful American and Japanese companies which have participated indirectly with RACE which would be interested in the development, eventually, of a world communications network. We should not forget that, although much of our business goes to Europe, a large amount goes across the Atlantic to the United States and other parts of the free world. Who knows what we may see in the far distant future in terms of worldwide telecommunications with other parts outside the free world.

It presents some delicate and difficult problems in striking a balance between national interest and European interest. As I said, I should not like to see RACE developed as a barrier to a world communications network. I believe that RACE offers significant opportunities for British companies to take advantage of technological developments to obtain orders. The hon. Member for Yeovil (Mr. Ashdown) listed a number of companies which have already identified such opportunities. That is the positive part of the development, and one that I am pleased to support.

Photo of Mr John McWilliam Mr John McWilliam , Blaydon 8:14 pm, 22nd July 1987

I begin by delcaring my interest as a Member sponsored by the National Communications Union, engineering section.

I do not wish to follow the line taken by the hon. Member for Fylde (Mr. Jack), but I assure him that there now exists a world communications network. The dirty bit is about who gets what within it. That is what RACE is all about and that is what we are supposed to be talking about now.

Before I spend too much time on RACE, I should say that I welcome the EEC Green Paper on telecommunications policy. I hope that the Government welcome it as much as I do because they have gone further down the road than the Green Paper suggests and have fallen into one or two of the pitfalls that the Green Paper suggests could be fallen into by telecommunications administration. However, that is not what we are debating tonight and I do not want to spend time on that.

One of the things that one learns as an old-fashioned telephone exchange switching systems design engineer like me is that the rate of change of technology is logarithmic. Obsolescence of the existing equipment is a reality and it is happening now. We are talking not about the next set of technology, but the set after that. We have to look at that in a world context. Japan and America are determined to try to dominate the world market. They have not succeeded in dominating our market, the French or the German markets, but they have succeeded in dominating many other markets within Europe.

There has been a convergence between computer technology and communications technology. If one looks at that and at multinationals such as IBM, one will see that there is a simple choice ahead. We can compete with each other within Europe and be destroyed by the Americans and Japanese, or we can co-operate and compete for the world market. That is what RACE is about and that is why I support it. It is simple. We can spend as much as we like on research and development in telecommunications technology as can the French, the Germans, the Italians and other Europeans. However, separately we cannot compete in the race. Collectively, if we play our full part, not only can we compete, but we can produce a product that is as good as or better than that produced by anybody else in the world. That is what RACE is about and that is what we should be doing.

Postes, Telegraphes Telephones, the trade union in Europe concerned with telecommunications, supports fully the RACE programme. We believe that we have the research expertise. We have the basis upon which we can put together a programme that will enable us to produce the equipment that Europe and the world will want to buy in the 1990s. However, we can only do that collectively. We cannot afford to do it separately. Therefore, it is vital that RACE is supported fully. It should be fully supported by the Government.

I will not follow the hon. Member for Yeovil (Mr. Ashdown) in his argument because he put the case more adequately than I could as to why delays have happened. However, delays certainly did happen. I am not certain that the Government are prepared to put their money where their mouth is. I look to the Minister tonight—we are much more familiar with looking at him outside the Division Lobby doors than across the Chamber——

Photo of Mr John McWilliam Mr John McWilliam , Blaydon

He did in 1979. We are much more familiar with him in that context.

I look to the Minister for a clear undertaking that the Government will not just say that RACE is a good idea but will wholeheartedly embrace it and put money into the research that is desperately needed. At the end of the day, if the Government do that, they will provide jobs. If they do not put money in, they will not. The jobs will be in France, Germany or, much more likely, in America or Japan.

We have seen the market projections for telecommunications equipment and for the employment that will be generated by such market predictions. I want those jobs in Britain. The only way in which such jobs will come to Britain is by the House wholeheartedly supporting RACE and putting in the money that should be put in. The Government do not have a good record of putting money into European research projects.

For the benefit of all those in the telecommunications manufacturing industry and the people who install and otherwise look after telecommunications, I need a commitment that the Government will not be stingy, that they will play their full part in the programme and put money in. If they do that, they will create not only the jobs that we need but the basis of technology that will take off in other directions as well. The argument about conversion technology works the other way. If computers are now telephone exchanges, telephone exchanges are now computers. Research and development will also spark off jobs in other directions. Unless we are prepared to play our full part and compete effectively within Europe, we will not succeed, and we will not be entitled to do so. I hope that the Minister will give a full commitment to put in that money.

Photo of Francis Maude Francis Maude Parliamentary Under-Secretary (Department of Trade and Industry) 8:22 pm, 22nd July 1987

The debate has been helpful. Telecommunications debates attract true believers and people with a frightening degree of expertise. The hon. Member for Motherwell, South (Dr. Bray) spoke with a great deal of knowledge and information about the subject. He commented on the fact that a careful scrutiny of the list of ministerial responsibilities does not demonstrate that telecommunications figure high among my responsibilities. However, we are all Ministers from the Department of Trade and Industry. We all like to think that we keep a working knowledge of all the matters within the purview of the Department. I would not say that we are all renaissance men, but we like to keep our hands in on all matters. I hope that the hon. Gentleman does not consider that I have made too bad a fist of doing something that is not entirely my direct responsibility.

We have had a good debate. The issue is important, and every hon. Member who spoke in the debate has recognised that fact in full measure at every stage. The United Kingdom has fully supported the research and development framework programme. We must decide the important part that it has to play in promoting the competitiveness of European industry. Resources must be targeted at that objective—not on large, across-the-board increases in spending just for the sake of spending. The agreement that we have reached on the framework, based on the terms that were proposed by the Prime Minister in June, will ensure that such a well-targeted programme can be satisfactorily funded within available resources. I repeat: there is no point in spending money for the sake of spending money or of being able to boast that 1 million ecu or £1 million has been spent. We must show that we are getting value and results for that money.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Crewe and Nantwich

What thought has been given to firms in this country that are taken over by basically Japanese or American manufacturing units? Has any consideration been given to what would happen if technology were transferred from companies in this country and the purpose of the research were to be diffused?

Photo of Francis Maude Francis Maude Parliamentary Under-Secretary (Department of Trade and Industry)

The hon. Lady has mentioned a proper point. She is quite right: the purpose of the programme is to enhance and develop European industries. If such a development were to take place, it would need to be considered carefully.

The Labour party's response to the debate has been more measured, informed and sensible than the response from the Liberal Benches. The hon. Member for Motherwell, South raised many serious issues that deserve serious consideration. They will be considered. He said that his party will be keen to be involved in any discussions to emphasise to our partners in Europe the consensus that exists in this country on the importance of such development.

My hon. Friend the Member for Hertfordshire, South-West (Mr. Page) characterised the hon. Member for Yeovil (Mr. Ashdown) as hysterical. That is going a bit far—tetchy, perhaps, and a little excitable — but one understands that there is a certain amount of stress on members of the Liberal party at the moment. In all seriousness, I say to him that it is an important subject and he should not allow party political rancour to intrude. The hon. Gentleman attacked the overall research budget. He talked rubbish. From 1981 to 1985 the Government's research and development expenditure increased in real terms to £4·6 billion. Industry has an obligation to do the same. Frankly, we are not always satisfied that industry has done the same, but it must do likewise if it is to keep up. If the hon. Gentleman were to vent his spleen on trying to persuade industry to do the same as the Government are already doing, it would be a more worthwhile use of his vocal power.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown , Yeovil

The case that the Minister seeks to make is that there is no crisis in research and development. One wonders whether he has read any of the articles or the pleas and cries from the heart of universities and others involved in research over the past two or three months. It appears not. Why not? If everything is so wonderful in research and development, why must the Prime Minister take the crisis into her own hands to resolve?

Photo of Francis Maude Francis Maude Parliamentary Under-Secretary (Department of Trade and Industry)

For the simple reason that it is an important matter and it deserves attention at the highest level. That is why the Prime Minister is dealing with it in that way. Certainly in my memory—it is not quite as long as the hon. Gentleman's — there has not been a time when there have been no complaints from research establishments and universities about inadequate funding. It is almost a natural condition of life. There is nothing particularly new about that. However, that is not to downplay the importance of research and development. The fact that we regard it as important is well illustrated by the fact that the Prime Minister has taken a high profile on the subject.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Motherwell South

I do not wish to push my luck with my colleagues or with the Minister, but he will be aware that, in the White Paper published this week, the Government said: The Government recognise the importance of increasing civil R & D as a share of public R & D, and are taking action accordingly by restraining the real level of defence R & D. The most distinguished electronics defence research laboratory in Europe is the Royal Radar and Signals Research Establishment at Malvern. Will the Minister give an assurance that the immense potential of that laboratory and of the Ministery of Defence generally will be switched into important research programmes such as RACE?

Photo of Francis Maude Francis Maude Parliamentary Under-Secretary (Department of Trade and Industry)

I cannot possibly deal with that kind of detail at this stage, but the Government already spend more on research and development than the United States and Japan. Our record is by no means bad, but we are not prepared to rest on our laurels.

My hon. Friend the Member for Fylde (Mr. Jack) spoke with knowledge and concern. He made the valid and forceful point that all research of this kind must be closely geared to getting equipment on to the market. There is no point in spending money contemplating our own navels. We must ensure that something solid and marketable that people wish to buy will emerge at the end. The main emphasis of the programme must therefore be on the companies themselves in collaboration, proposing projects and seeking approval for them.

The Government have been strong supporters of RACE since its inception two years ago. The Department of Trade and Industry has devoted a great deal of attention to ensuring that information about RACE has percolated down to industry—to large and small firms alike. I pay tribute to the work done by the Telecommunications Equipment Manufacturers Association to assist in that process. We have also done our best to ensure that the programme itself is structured and funded in the most effective and beneficial way. British firms did well in the definition phase, which ended last year, and I am confident that they will do as well, if not better, in the main phase which is soon to begin.

The Commission estimates that by the year 2000 up to 7 per cent. of the Community's GDP will result from telecommunications, as against only 2 per cent. today. As a number of hon. Members have pointed out, that is a remarkable rate of increase, and we must ensure that the increased employment that will certainly flow from it accrues to this country as much as to anywhere else. It is to that end that the programme is aimed. One has only to consider the City, which falls within my direct responsibility, to see how important the rapid growth of telecommunications in business can be. Increasingly sophisticated and cost-effective communications are an engine for growth in the economy as a whole, with all the attendant benefits of wealth and job creation entailed by such growth. RACE provides Europe with the opportunity to keep pace with other major world economies in this key enabling sector of telecommunications. I commend the motion to the House.

Question put and agreed to.

Resolved, That this House takes note of European Community Document Nos. 5876/85, 5876/85 Add 1, and the Department of Trade and Industry's Supplementary Explanatory Memorandum of 30th September 1985, and No. 10277/86 on Community research and development in the field of telecommunications technologies (RACE); and supports Her Majesty's Government's intention to agree to the early adoption of Community legislation with a view to stimulating co-operation at Community level in the field of telecommunications technology.