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Sir Trevor Skeet : Glaxo, Smith and Nephew, and Beecham are in the private sector. If such companies can undertake such long-term work--the hon. Gentleman has already acknowledged that--why not put BTG in the private sector as well?

Dr. Moonie : Obviously Conservative Members have no idea what early technology transfer is about, so it is difficult to convince them of the difficulties of operating in such work. BTG undertakes much of its work before there is any evidence that a specific product is likely to be successful. It takes out patents in no secure knowledge that there will be a return on them. It must look 10 or 15 years ahead.

The pharmaceutical industry may undertake such long-term work, but pharmaceuticals represent just one sector of BTG work, which covers every area of invention. I do not want to repeat myself, but I have already cited the number of sectors in which BTG is involved. I do not believe that researchers or other companies would be happy if a company owned by another pharmaceutical firm, however reputable, took over their ideas and developed them. Those other companies would have taken leave of their senses if they welcomed such a change ; that is why so many of them are opposed to BTG going into the

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private sector. It should remain where it has carried out its job efficiently and well for many years--it should remain in the public sector.

By privatising BTG, the Government have confirmed that they are incapable of seeing the value to our nation of such an asset. I hope that, on reflection, they will think again. The privatisation of BTG is being carried out merely for privatisation's sake, despite the damage that that will cause to British industry, science and technology. That is why we shall oppose the Bill.

6.45 pm

The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Edward Leigh) : Let me deal with the essence othe debate : should BTG be privatised? Should it operate fully within the stimulus and realities of market conditions, or should it be used as an instrument of state intervention?

The hon. Member for Kirkcaldy (Dr. Moonie) should know that Britain's total research and development effort amounts to £6.9 billion spent by industry and £4.5 billion spent by the Government. A total of £11.4 billion is spent on research and development. Last year, the research spend of polytechnics and colleges amounted to £1.5 billion, while BTG's spend on projects and patents was a mere £11 million. The House should set the debate in proper context--BTG spends £11 million, while the value of total research effort in this country is equivalent to more than £11 billion. Those figures suggest that BTG's contribution amounts to less than one tenth of 1 per cent. of total United Kingdom spend on research and development and less then 1 per cent. of the moneys available to its traditional inventive resources--

Mr. Watson : Why the fuss to privatise BTG?

Mr. Leigh : It is the Opposition, not us, who are making the fuss. BTG has a staff of just 188 and a turnover of £30 million a year and by most estimates it would rank as a small to medium-sized enterprise.

In 1985 BTG lost the right of first refusal of public sector inventions and with it inventors lost what they considered to be an implied right that BTG should exploit their inventions. Now the whole purpose of BTG is to turn inventions into profit. It is a commercial company.

The hon. and learned Member for Montgomery (Mr. Carlile) got it right--BTG is primarily a patent-creating mechanism to defend ideas in the increasingly predatory international marketplace. BTG chooses inventions and exploits the science base for one purpose only--profit. BTG, having chosen and patented a product, negotiates the sale and licences it with revenue-sharing agreements.

The hon. and learned Member for Montgomery made a

characteristically frank and robust speech, but he should know that, by its very nature, the work of BTG is already commercial. It is already a commercial, profit-making enterprise, and it therefore sits uneasily and unnaturally within the statutory framework. The case for privatisation is as simple as that.

The hon. and learned Gentleman said that he generally favours privatisations, but the hon. Member for Southwark and Bermondsey (Mr. Hughes) was less sure. The case is simple--BTG is a profit-making, commercial operation, and there is simply no reason why it should not be privatised.

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BTG's operating profits have averaged more than £4 million a year, rising to £6.8 million in 1989-90. It has been self-financing for more than 20 years and it is involved in 1,600 inventions, 8,500 patents and nearly 500 licences. BTG is a strong, indeed an obvious, candidate for privatisation. It is not surprising that the management of BTG has been pressing for privatisation for some time. The hon. Member for Dunfermline, East (Mr. Brown) asked a question of my hon. Friend the Minister which my hon. Friend was unable to answer at the time. It related to an alleged publicity campaign concerned with privatisation. It is not surprising that my hon. Friend could not reply. First, BTG has its own public relations budget and Ministers in the Department of Trade and Industry are not consulted ; secondly, it is merely a proposal from a public relations company to BTG and BTG has not yet adopted the campaign. So how my hon. Friend the Minister of State could be expected to know about it, I do not know. The hon. Member for Dunfermline, East made great play of that. What I have said is surely the end of it.

I can tell the hon. Member for Glasgow, Central (Mr. Watson) that management look forward to being freed from restrictions on its borrowing powers and obligations to submit approvals to the DTI. Also relevant is the inappropriateness of the domestic statutory duties laid on BTG decades ago and the direction which BTG wants to take on the international stage. Already BTG derives some 70 per cent. of its licence income from outside the United Kingdom, mainly from Japan, the United States and the European Community.

I welcome my right hon. Friend the Secretary of State back to the Chamber. He has just arrived back from India, where he was opening the largest ever trade fair there. BTG was exhibiting at that fair. No doubt the whole House was unimpressed by the carping remarks by some Opposition Members about my right hon. Friend.

Points about BTG's international involvement were made forcefully by my hon. Friends the Members for Bedfordshire, North (Sir T. Skeet) and for Amber Valley (Mr. Oppenheim). My hon. Friend the Member for Bedfordshire, North made a very pertinent point about BTG being unable to exploit a patent in Turkey.

Sir Colin Barker, BTG's chairman, heads a successful international profit- making organisation. He looks forward to BTG entering private life as an independent and integral organisation. I assure my hon. Friends the Members for Bedfordshire, North and for Leeds, North-West (Dr. Hampson) that we believe that our objective of privatising so as to maximise the net returns to the Exchequer, consistent with a good prospect of BTG's technology transfer activities continuing, is the correct way forward.

That objective provides the flexibility to accommodate the privatisation options of public flotation, private placing, trade sale, or management buy -out, and the involvement of any parties with potential interests, such as companies, universities, institutions and BTG's staff. It recognises the reality that the future of a privatised BTG must essentially be a matter for its new owner, management and staff.

I was delighted to read the comments of the hon. Member for Kirkcaldy in The Independent yesterday that a group of British universities was interested in taking over BTG, backed by money from investment funds. How pragmatic of him to enhance and advance the case of capitalism so publicly.

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Dr. Moonie rose --

Mr. Leigh : If the hon. Gentleman wishes to retract what was in The Independent, I shall give him the opportunity to do so.

Dr. Moonie : One possibility is that a group of universities, backed by money, might take it over. I do not at present have any knowledge of such a group. It would be wrong to leave the Minister with the impression that I do.

Mr. Leigh : Of course, it would be wrong for anyone to expect the Opposition spokesman to look at the matter with an open mind. One might think that there was nothing intrinsically wrong with the proposal that the hon. Gentleman was advocating in The Independent. Clearly, his knuckles have been rapped and he is beating a hasty retreat.

Privatisation of BTG would not in any way weaken the Government's policy on innovation. Although BTG makes a significant contribution to the United Kingdom's innovative performance, it has rightly not been given a special role in the Government's innovation policy support measures. For example, although BTG's prime focus is as an exploiter of the science base, it has no special role--I use those words carefully--in the LINK scheme for collaborative research between companies and higher education institutions. Nor has BTG any special role in my Department's support for technology transfer through regional technology centres and overseas missions. The absence of such a role for BTG is quite deliberate. I do not believe, and I am sure that the chairman of BTG would agree with me, that an organisation successfully operating within the commercial disciplines of BTG should also act as an instrument of Government support programmes.

The Opposition ask why there is a need to privatise BTG ; cannot the same objective be achieved, they say, by removing the present statutory constraints? I am sure that, when hon. Members think carefully, they will agree that bodies in the public sector must have monitoring arrangements. Loosening constraints will not get around that requirement. It is not for Government to second-guess the commercial decisions of companies, which must subject themselves to the discipline of the marketplace.

The Opposition view is that these proposals are tantamount to tampering with BTG's business. They say that BTG fills a gap where the United Kingdom is weak--turning ideas into products. I stress that we are not tampering with BTG's business of turning ideas into marketable products. BTG's management believes that privatisation will afford it the opportunity to compete more effectively without bureaucratic constraints.

It has been suggested that privatisation will not bring new capital to BTG. I disagree. The United Kingdom has the advantage of being one of the largest and most sophisticated capital markets in the world. There has never been a problem in attracting capital for worthwhile investments.

It has also been suggested today that a privatised BTG would no longer be obliged to act in the public interest. Where the public interest coincides with commercial interest, there should be no problem. However, where the two diverge or are in conflict, it will be up to the management to act in the best commercial interests of the company.

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It has been suggested that BTG's business is so inherently long-term and risky that it is impossible to pick winners, and that only a public sector organisation can carry out this function ; but many private sector organisations look to the long term--for example, in the oil and pharmaceuticals industries, as my hon. Friend the Member for Amber Valley said--and any prospective purchaser of BTG will also be looking to the long term.

We have heard very little in the debate of the Labour party's plans for BTG. At the beginning of my few words, I said that we must set BTG in perspective, remembering that it spends about £11 million a year out of a total research effort of over £11 billion. From what we understand from its policy document, "Looking to the Future", it seems that the Labour party would give an enhanced role to BTG. That smacks of the old -fashioned dirigiste interventionist approach. We did not hear from the hon. Member from Dunfermline, East one word about the old National Enterprise Board. The Bill abolishes the NEB. My hon. Friends may be surprised to learn that the NEB is still alive. It has been in long hibernation, no doubt awaiting the arrival of the hon. Member for Dunfermline, East to awaken it. He will not. The Bill kills it off. The powers of the NEB which remain on the statute book are frightening. It can borrow up to £750 million, it can form companies, it can buy shares and it can make acquisitions-- [Interruption.] How significant that the Opposition now laugh about the NEB ; how significant that they are no longer prepared to defend it. It is not surprising, given its history. Have they forgotten Chrysler, with £160 million poured into that company only for it to go bust within a couple of years? Have they forgotten Nexos, mentioned by my hon. Friend the Minister of State, which went into liquidation owing the taxpayer about £32 million? That is the history of the NEB.

The Opposition are not prepared to accept the resuscitation of the NEB, but they have various sons of NEB in view. They have the BTE, the NIB, the RDA and the LIC. These are only initials to my hon. Friends, but in the unlikely event of a Labour Government, the names would become all too familiar--a national investment bank and regional development associations. They are the same policies, repackaged and revamped. The Bill will abolish the NEB, and I commend it to the House.

Question put, That the Bill be now read a Secondtime :-- The House divided : Ayes 275, Noes 198.

Division No. 63] [7 pm

AYES

Adley, Robert

Aitken, Jonathan

Alexander, Richard

Alison, Rt Hon Michael

Allason, Rupert

Amess, David

Arbuthnot, James

Arnold, Sir Thomas

Ashby, David

Aspinwall, Jack

Atkins, Robert

Atkinson, David

Baker, Nicholas (Dorset N)

Baldry, Tony

Barnes, Mrs Rosie (Greenwich)

Batiste, Spencer

Bellingham, Henry

Bendall, Vivian

Bennett, Nicholas (Pembroke)

Benyon, W.

Bevan, David Gilroy

Biffen, Rt Hon John

Blackburn, Dr John G.

Blaker, Rt Hon Sir Peter

Bonsor, Sir Nicholas

Boscawen, Hon Robert

Boswell, Tim

Bottomley, Peter

Bottomley, Mrs Virginia

Bowden, A (Brighton K'pto'n)

Bowden, Gerald (Dulwich)

Bowis, John

Braine, Rt Hon Sir Bernard

Brazier, Julian

Bright, Graham

Bruce, Ian (Dorset South)

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Column 787

Buchanan-Smith, Rt Hon Alick

Buck, Sir Antony

Burns, Simon

Butler, Chris

Butterfill, John

Carlisle, John, (Luton N)

Carlisle, Kenneth (Lincoln)

Carrington, Matthew

Carttiss, Michael

Cash, William

Chapman, Sydney

Chope, Christopher

Churchill, Mr

Clark, Rt Hon Alan (Plymouth)

Clark, Dr Michael (Rochford)

Clark, Rt Hon Sir William

Colvin, Michael

Conway, Derek

Coombs, Anthony (Wyre F'rest)

Coombs, Simon (Swindon)

Couchman, James

Cran, James

Critchley, Julian

Currie, Mrs Edwina

Curry, David

Davies, Q. (Stamf'd & Spald'g)

Day, Stephen

Devlin, Tim

Dicks, Terry

Dorrell, Stephen

Douglas-Hamilton, Lord James

Dover, Den

Dunn, Bob

Durant, Sir Anthony

Eggar, Tim

Evans, David (Welwyn Hatf'd)

Evennett, David

Favell, Tony

Fenner, Dame Peggy

Field, Barry (Isle of Wight)

Finsberg, Sir Geoffrey

Fishburn, John Dudley

Fookes, Dame Janet

Forman, Nigel

Forsyth, Michael (Stirling)

Fowler, Rt Hon Sir Norman

Fox, Sir Marcus

Franks, Cecil

French, Douglas

Fry, Peter

Gale, Roger

Gardiner, Sir George

Garel-Jones, Tristan

Gill, Christopher

Gilmour, Rt Hon Sir Ian

Glyn, Dr Sir Alan

Goodhart, Sir Philip

Goodlad, Alastair

Gorman, Mrs Teresa

Grant, Sir Anthony (CambsSW)

Greenway, Harry (Ealing N)

Greenway, John (Ryedale)

Gregory, Conal

Griffiths, Sir Eldon (Bury St E')

Griffiths, Peter (Portsmouth N)

Grist, Ian

Ground, Patrick

Grylls, Michael

Hague, William

Hamilton, Hon Archie (Epsom)

Hamilton, Neil (Tatton)

Hampson, Dr Keith

Hannam, John

Hargreaves, A. (B'ham H'll Gr')

Harris, David

Haselhurst, Alan

Hayhoe, Rt Hon Sir Barney

Hayward, Robert

Heathcoat-Amory, David

Hicks, Robert (Cornwall SE)

Hill, James

Hind, Kenneth

Hogg, Hon Douglas (Gr'th'm)

Hordern, Sir Peter

Howard, Rt Hon Michael

Howarth, G. (Cannock & B'wd)

Howell, Rt Hon David (G'dford)

Howell, Ralph (North Norfolk)

Hughes, Robert G. (Harrow W)

Hunt, David (Wirral W)

Hunt, Sir John (Ravensbourne)

Hunter, Andrew

Hurd, Rt Hon Douglas

Irvine, Michael

Jack, Michael

Janman, Tim

Jessel, Toby

Johnson Smith, Sir Geoffrey

Jones, Gwilym (Cardiff N)

Jones, Robert B (Herts W)

Jopling, Rt Hon Michael

Kellett-Bowman, Dame Elaine

Key, Robert

King, Roger (B'ham N'thfield)

Knapman, Roger

Knight, Greg (Derby North)

Knight, Dame Jill (Edgbaston)

Knowles, Michael

Knox, David

Lang, Rt Hon Ian

Lawrence, Ivan

Lee, John (Pendle)

Leigh, Edward (Gainsbor'gh)

Lennox-Boyd, Hon Mark

Lester, Jim (Broxtowe)

Lilley, Peter

Lloyd, Sir Ian (Havant)

Lloyd, Peter (Fareham)

Lord, Michael

Luce, Rt Hon Sir Richard

Lyell, Rt Hon Sir Nicholas

MacGregor, Rt Hon John

MacKay, Andrew (E Berkshire)

McLoughlin, Patrick

McNair-Wilson, Sir Michael

McNair-Wilson, Sir Patrick

Madel, David

Malins, Humfrey

Mans, Keith

Maples, John

Marland, Paul

Marlow, Tony

Marshall, John (Hendon S)

Marshall, Sir Michael (Arundel)

Martin, David (Portsmouth S)

Maxwell-Hyslop, Robin

Mayhew, Rt Hon Sir Patrick

Mellor, Rt Hon David

Meyer, Sir Anthony

Miller, Sir Hal

Miscampbell, Norman

Mitchell, Andrew (Gedling)

Mitchell, Sir David

Moate, Roger

Monro, Sir Hector

Montgomery, Sir Fergus

Moore, Rt Hon John

Morrison, Sir Charles

Moss, Malcolm

Neale, Sir Gerrard

Neubert, Sir Michael

Newton, Rt Hon Tony

Nicholls, Patrick

Nicholson, David (Taunton)

Norris, Steve

Onslow, Rt Hon Cranley

Oppenheim, Phillip

Page, Richard

Patnick, Irvine

Pawsey, James

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