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Mr. Nigel Beard (Bexleyheath and Crayford): Does the hon. Gentleman agree that one of the worrying things about the science base is the way in which the capital foundation, the equipment and the infrastructure of research in universities have been eroded in the past several years? That issue is causing anxiety not only in universities, but in the large part of our industry that depends on research and development. That is one of the issues that has sprung from the Dearing report, which has highlighted it, and highlighted the need for large sums of money to stay where we are, not only now but in future, so that we can keep pace with the rate at which equipment is developing?
Mr. Taylor: I accept some of that criticism. In universities, there are problems with the standard of some
equipment--something that emerged in the PREST report about two years ago. That report showed that we should be profoundly worried about some aspects, although in others we were obviously doing extremely well.
The challenge for universities is to find out how to collaborate, among themselves as well as with industry, so that the best equipment will be available in the excellent research laboratories that we shall require. The challenge is also a factor of money. Some equipment that is required for the top-class research, as I said in an earlier intervention, is becoming extremely pricey, and will go out of date fairly rapidly.
All those matters can be part of a cross-party debate if one wishes. It is much more complicated to get to the root of the problem, and I believe that the Minister for Small Firms, Trade and Industry and the Minister for Science, Energy and Industry will wrestle with the problems that I wrestled with--how one persuades universities to understand how to make the best use of their equipment.
I will not name names, but some universities have not done especially well in that regard. A great deal of equipment seems not to be especially highly utilised. Others have done brilliantly. Birmingham university's completely refurbished chemistry department is a joy to behold. It can be done.
Dr. Gibson:
The hon. Gentleman mentioned the need to fund alpha-rated projects. I shall not trivialise the issue, or he will accuse me of doing so later. What percentages of alpha-rated projects were funded between the years 1992 and 1996? Did the percentage go up or down? I say that it went down under your tutelage.
Mr. Taylor:
The hon. Gentleman--
Mr. Deputy Speaker:
Order. I am sorry to interrupt. I am sorry to rise to my feet again, but the hon. Member for Norwich, North (Dr. Gibson) again used the wrong terminology in the House. Will he please try to remember?
Mr. Taylor:
The hon. Gentleman is far too shrewd and well informed to think that I have the figures at the back of my mind or to ask the question in that way, because in recent years the quantity of applications has increased so that it is likely that the percentage of grants given will have decreased. That is a matter that he can ponder later.
There is bound to be pressure on research councils such as the Medical Research Council. The quality of research in this country is buoyant--it is very good. The applications coming through are remarkable. It will always be a challenge for any budget that is constrained to meet all the desires of all the scientists in this country.
Labour Members mentioned inward investment. Much of the inward investment has brought with it a science relationship. One reason that Siemens came into the north-east with an investment of more than £1 billion was the quality of the five universities in that region. Siemens has invested in close relationships with the universities, and was attracted by their academic excellence and the openness of our university system, compared with the very closed and rigid nature of the German system.
There are many other examples. Motorola has worked with universities in Scotland. Look at how Sharp has functioned in Oxford and at how some of the
biotechnology companies have invested in the United Kingdom. They have continually boosted the science base.
Much of that is blue-sky rather than close-to-market research, but I have never put down close-to-market research. In many cases, universities need to show industry that they are capable of understanding some of the more practical problems faced by industry, if industry is to have confidence in investing in universities' blue-sky research. Thus there is cross-fertilisation between industry and universities.
However, one should not have the impression that the United Kingdom is the poor man in Europe in terms of research because it is the absolute opposite. Some £46 billion of inward investment comes from other partners in the European Union alone, and much of it is closely related to research. For example, in Southampton, Pirelli is doing wonderful work in optical fibres. I do not have time to continue my list of examples but I hope that I have given a flavour of what is happening in that respect.
Technology is vital, and using information technology will be crucial in the future. Many changes will occur over the next few years. Indeed, some people say that the power of computers doubles every year in terms of the capacity of the chip. It is difficult to forecast; real-terms prices are certainly still declining dramatically, which means that over the next few years, the power of a computer at a given price will increase dramatically.
We are seeing a transformation in telecommunications in their broadest sense, allowing businesses to communicate with each other but also empowering smaller businesses to do things which previously only big businesses could do. I refer not just to electronic commerce but to access to information and the ability to analyse information, distribute it and profit from it within the business process--collaborative work that can now be done on line.
All those matters were at the heart of the programme for business initiative that we launched, which was designed to show that small businesses must understand that, if their competitive advantage is to be preserved, they must make full use of those information technology opportunities, or other companies will crowd into their market and reduce their competitive presence.
Having been positive, I want to end on two negative notes. One of Parliament's jobs is to issue warnings when they are required. Two information technology problems are about to run side by side as, sadly, many of the same information technology skills must be used among a limited number of people in the industry. The first problem is the euro, and the second is the year 2000.
On the first problem, a great fallacy into which politicians often fall--some businesses certainly fall into it--is that the euro is only for a few multinational companies and that we need not prepare for it. Another fallacy is that, because it will not be legal tender in member countries until after 2001, it is a long way in the future. For many small businesses, the problem starts now.
For example, if a company like Nissan in north-east England decides to use the euro in all its internal operations from 1 January 1999, one must ask what impact that will have on Nissan's hundreds, if not thousands, of suppliers. Siemens will do the same. I have already mentioned the amount of inward investment from
the European Union into this country. More than 200,000 people in this country work directly for inward investors from the rest of the European Union; the normal ratio of those employed in work closely related to that investment is five to eight times that figure. We then have British companies: I understand that Bass Charrington and Marks and Spencer will use the euro in all their internal operations.
Regardless of whether hon. Members like the prospect of the euro--I shall not get into that debate now--I simply say that British industry must prepare for it. If it does not, it will have a profound competitive disadvantage. If the euro is used in all the supply chains and in its Treasury functions, and is the dominating currency used by companies based in this country, small companies will have to adapt. If they wake up to that fact next year, they will start to panic. A second reason why they may have to panic next year is that Cap Gemini, a computer consultant, reckons that up to 29 per cent. of British gross national product could be at risk because of the 2000 computer problem--the fact that computers will fail to recognise the 1999-2000 date change. That may be a gross exaggeration, but Midland bank reckons that one in five small companies will fail as a result of that computer collapse.
British companies will panic next year. The danger is that they believe that the problem need not be resolved until 31 December 1999; yet next year they will suddenly realise that companies with which they have traditionally dealt will no longer be prepared to deal with them if they are incapable of complying with the 2000 problem well before the deadline. BT and some of the banks are already doing that. Indeed, the Government are already doing it. I hope that the Minister knows that the Government, in their technology platform contracts, already say that unless a company can be compliant with the 2000 problem, it cannot tender for technology framework contracts.
Mrs. May:
Does my hon. Friend agree that another serious problem faced by companies is the combination of having potentially to prepare for the introduction of the euro on 1 January 1999, as my hon. Friend outlined, and the 2000 problem, which means that they face the problem of an insufficient number of people with the IT skills to prepare the system necessary for those two events? Does my hon. Friend agree that the industry and the financial sector are seriously concerned about that problem?
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