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Lord Ahmed: My Lords, what level of co-ordination has there been between the department of the noble Baroness, the Foreign Office and the Ministry of Defence?

Baroness Amos: My Lords, I can confirm to the House that there has been a significant amount of co-ordination and joint working between the FCO, the MoD and DfID. This co-ordination has been ongoing; it will continue. The assessment and monitoring team that is going out on Sunday is actually a joint team comprising the DfID and the MoD.

Earl Attlee: My Lords, I am grateful to the Minister for repeating the Statement. I have a certain amount of experience in NGO operations in the former Republic of Yugoslavia. The noble Earl, Lord Sandwich, touched on security of NGOs in Albania and the great dangers for them. Can the Minister say what extra physical security measures she is considering providing for NGO workers in Albania?

The Minister described DfID and UNHCR activity. Does the Minister agree that secondary distribution of aid is fraught with management challenges to avoid it going astray? Finally, does the Minister agree that, if the co-ordinated international appeal is unsuccessful, it could result in even more refugees flooding into Europe at great cost to European social security funds?

Baroness Amos: My Lords, the noble Earl asked me three questions. The first was in relation to the security of NGOs in Albania. I cannot actually give the noble Earl any details regarding plans which have been put in place for the physical security of NGO workers. However, I should be happy to talk to the noble Earl about this matter in more detail. If necessary, I should be happy to write to him and would of course place a copy of that letter in the Library of the House.

I agree with the noble Earl that there are significant challenges to all aid organisations that are working in the field of humanitarian assistance. There are huge logistical problems, there are geographical problems; indeed, numerous problems confront those organisations. However, these organisations have a considerable amount of experience and expertise. The Department for International Development has a great deal of knowledge and experience in this area. I am sure that we can rise to meet any of the kind of management challenges that the noble Earl has in mind. As regards the noble Earl's last question, I can tell him that we do not intend the co-ordination effort to be unsuccessful.

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5.11 p.m.

Lord Freyberg rose to call attention to the role of design in improving competitiveness and quality of life; and to move for Papers.

The noble Lord said: My Lords, it gives me great pleasure to introduce this afternoon's debate on the role of design in improving competitiveness and the quality of life. It is a crucial and yet often undervalued ingredient.

Design, innovation and creativity have the potential to bring great rewards both in the business world and in people's daily lives. While awareness of the importance of design is probably at an all time high in the United Kingdom, many industries have yet to recognise the importance of actually investing in it. Design has an increasingly important place in the country's business and social agenda. As Tony Blair put it in September 1997:

    "It is time to show a fresh face to the world and reshape Britain as one of the 21st century's most forward-thinking and modern nations. I challenge companies to demonstrate that the UK can lead the world by creating products and services that exemplify our strengths in innovation, creativity and design".

As co-chairman of the recently formed All-Party Design and Innovation group, I have a particular interest in the potential applications of design and innovation. I have been on a steep learning curve discovering exactly how wide the design field is, and how it affects everything we use and see, from aeronautic engineering to the handle of a teacup. In between come a huge variety of other specialisations, from graphic design to architecture, ergonomics, computers, product design and fashion.

What constitutes innovation is equally broad and difficult to pin down. As the Economist's Survey of Innovation in Industry 1999 states, innovation

    "is usually thought of as the creation of a better product or process. But it could just as easily be the substitution of a cheaper material in an existing product, for a better way of marketing, distributing or supporting a product or service".
What is undeniable is the fact that innovation is only possible if companies are prepared to invest in new ideas rather than resting on old laurels.

The Economist survey found that the best record of innovation was in organisations where innovation was pursued systematically rather than being left to chance. According to other surveys, the highest performing companies are those which constantly improve their products and services. A 1995 survey of engineering companies found that, while the average company had introduced just 3 per cent. of its product range within the past five years, the most successful 10 per cent. of companies had introduced 62 per cent. of their product range within the past five years.

Design is an integral part of every successful product and service development. Good design is also profitable. Recent research by the London Business School indicated that an extra 1 per cent. of turnover devoted to product development raises turnover and profits by 3 to 4 per cent. over five years.

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It should be emphasised that design is most effective when used as part of a company's overall business strategy rather than an optional extra. Its impact can stretch beyond products, to reducing costs, saving time and effort, delivering innovation, ensuring safety, stimulating and motivating staff, simplifying complex tasks, achieving impact in a crowded market or justifying a premium price. For example, the redesign of the BT Phonebook saved £350,000 in printing costs, enough paper and ink to publish 706,818 copies of War and Peace, and enough aluminium to make 91,150 drink cans. Another field in which design has an important role to play is the environment: products can be designed to use up less energy and materials, thus making huge savings. For example the average weight of a yoghurt pot has fallen from 12 grams to 4 grams over the past 30 years.

It is, however, extremely difficult to spot innovation when it appears. Even in supposedly open-minded countries the hardest task for an inventor is not devising a new product or service but persuading a manager to take it on. The potential of a glue that failed to dry was only picked up when someone used it on bits of paper to mark hymns for a choir practice. Even then, these semi-sticky chits were themselves only turned into a product after a clever campaign to show their worth: the man who believed in them created pads of yellow reminder notes which he distributed among the company's secretaries, thus ensuring they were seen by senior management. When everyone was hooked on them he refused to supply any more until they were officially launched. Thus the hugely successful Post-It notes were born.

If their promoter had not been so persistent, it is unlikely that this enormously successful product would ever have got off the ground. The ability to recognise the potential of a new idea is, therefore, almost as important as the idea itself. Any strategy that can be put in place to recognise and encourage the development of innovation should be welcomed and promoted. You cannot guarantee a lucrative product but you can create the right environment for the germ of a good idea to be properly nurtured. Business needs to cultivate just such a creative milieu.

Another major reason for encouraging design and development with industry is in order to add value to a product. As Sir Terence Conran put it:

    "It is about applying values through every stage of a product's development from conception through to retail. Design adds value by creating choice, but it will only work if combined with business sense".
Thus Philippe Starck's futuristic lemon squeezer, seen as hugely desirable and featured in every style magazine, was a runaway success in spite of being far more expensive than comparable--and some would say more effective--squeezers. Good design can be an excellent competitive tool.

Design is one of British industry's chief resources: we cannot compete in a global market in terms of raw materials, land or access to cheap labour, but we can

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draw on superior knowledge, skills and creativity. The previous Secretary of State for Trade and Industry, Peter Mandelson, claimed that design,

    "enables companies to bring desirable new products and services to the global marketplace--it also influences how new products are conceived, made, used and disposed of. In the best companies, design is a central part of the strategic business process, managed with as much professionalism and rigour as marketing and finance".

In the past, Britain has been woefully inadequate at exploiting its own creative ideas. The Japanese Minister of International Trade and Industry found that over 40 per cent. of major discoveries in the past 50 years have come from the United Kingdom. The Daily Telegraph estimated that UK GNP is around £165 billion poorer than if UK inventions had been successfully exploited. As Peter Mandelson put it,

    "We have talent and creativity galore. What we lack is sufficient capacity to turn our ideas into business, to turn those natural strengths into products and services that customers want to buy".
Britain must learn to exploit to the full the economic potential of the areas in which she leads the world. Car design is one important example. The heads of design at Peugeot, Citroen, Rover, Mazda and BMW all trained at the Royal College of Art in London, while the head of design at Volvo is British. Nine out of 10 Formula One cars are both designed and built in the UK. And crucially for the future, Porsche and Citroen recruit mainly from the Royal College of Art, which, along with Coventry University, provides the pre-eminent training in this field.

However, there is no cause for complacency even here. In the next few years Britain is likely to suffer a severe shortage of young engineers, while moves to lengthen the standard engineering degree course from three to four years may well deter students from choosing an engineering course. Another likely obstacle to engineering creativity is the technological illiteracy rife among managers.

Other signs are more encouraging. A 1998 survey by the Design Council discovered that the status of the value of design has risen most dramatically in schools and higher education along with large service businesses. The creative industries are making a huge impact on Britain's economic-generating revenues, approaching £60 billion a year. They contribute over 4 per cent. to the domestic economy and employ around one and a half million people. The design industry itself has been valued at £12 billion annually and employs 300,000 workers. The UK's design industry is riding high in the world. Exports by British design consultancies have risen from £175 million in 1987 to £385 million in 1997. It has been estimated that between now and 2006 the creative industries will be the fastest growing source of new jobs.

While the UK design industry has grown enormously in the past decade, the use of design by other types of business has been slower and more uncertain. One of the UK's biggest problems is in persuading companies to invest in innovation. A 1996 study by IBM revealed that only 3 per cent. of UK companies have world-class design practice and performance, compared to 9 per cent. of German companies.

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Innovation is inevitably unpredictable. While universities seem to understand this fact, governments tend to think of innovation as a pipeline, and to expect new technology and commercial applications in direct proportion to the amount of public money put into basic research. There is no guarantee that this will be the case; however money put into design is seldom wasted. Good design represents good value. As Mark Fisher stated when at the DCMS,

    "Good design, be it in buildings or equipment, will endure and work well. The cheaper option is not always the best value for money. It may solve short-term options but will not always meet long-term ends".
Educationally Britain lags behind other European countries at GCSE and A-level, though degree level is roughly comparable. While the Government's current focus on literacy and numeracy is understandable, similar attention should be paid to the development of creative and design skills. After all, as Tony Blair has said many times,

    "the future depends on our creativity".
The study of design subjects promotes such skills as problem solving, communication, teamwork and information technology--all of which make an important contribution to the workplace as it is now and the direction in which it is moving.

This is not to say that design is merely a teaching tool; instead it encourages a different way of looking at problems and possibilities, and can kindle a lifelong interest in the wider aspects of the subject from the function and appearance of cars and new technology to furniture. Design has a far greater application than business alone. Good design, from public buildings to beautiful clothes, gives enormous pleasure to everyone who encounters it. Ugly buildings depress people and attract vandals. Pleasant surroundings stimulate a positive response. Design is a democratic art form, usually applied to something practical, and preferably good to look at as well. Even a mass-produced object--from a Swiss army knife to a pair of Ray-bans to Duralex glasses--can be raised to iconic status by dint of its handsome, simple design. The more design literate the population becomes, the higher the standards of design will be.

We all respond to good design. It is an astounding and fascinating fact that, when some 17,000 London bus stops were redesigned in 1991 to make them more attractive and improve the clarity of the information they give, the increased bus use exceeded all expectations and rose by 7 per cent. It had previously been on a steady decline.

Businesses that neglect their design strategy are less likely to thrive in the future. It is essential that the Government are seen to set an example in this field, and I am encouraged to note that, besides publishing a White Paper yesterday on modernising government, a number of their departments are working in partnership with the Design Council to develop best practice in design management. The aim is to improve the cost effectiveness of all government departments and agencies through the more effective use of design. The Design Council is an energetic government-funded body whose current schemes include millennium products--

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highlighting some of the most clever and imaginative products in Britain to encourage British businesses to use innovation and design more effectively.

A country's reputation for creativity can contribute hugely to its economic achievements. I am firmly of the belief that good design is the key to maintaining the UK's position as a strong and competitive nation in a tough global market. My Lords, I beg to move for Papers.

5.26 p.m.

Lord Puttnam: My Lords, I congratulate the noble Lord, Lord Freyberg, on a remarkable speech and for bringing this matter to the attention of the House. His speech was so remarkable that I may rival the noble Lord, Lord Saatchi, in his recently accredited record of making the shortest speech in this House for many years. The seat beside me is littered with everything I have written in the past couple of days, all of which we have just heard. However, I shall try to add a little to the debate, partly by way of definition.

It is said that in order to determine what duty should be levied on an artefact US Customs officials are instructed, "If you can use it, it isn't art". I suppose that today's debate relates to that which is not art. The noble Lord referred to the extraordinary statistic provided by the Japanese equivalent of the CBI; namely, that over 40 per cent.--some say the figure is as large as 56 per cent.--of all Japanese exports around the world since the end of the Second World War have been based on British innovation and British invention.

I argue that we are a remarkably inventive nation. It is the stages after that where things begin to go wrong. We are not innovative in terms of turning our inventions into products. We are even worse at applying those products to markets and we are quite lamentable at the process of product development, which I am afraid includes design. That is not to say that we do not have world class designers. In fact I would say that, pound for pound, our schools, universities and colleges of design in this country probably turn out a better product and more of them than any other nation in the world.

It is simply that British manufacturing still finds itself under the illusion that design is an extra, an afterthought, something that you do because you have to. That is quite strange because we went through that crisis about 140 years ago when Prince Albert and Henry Cole realised that British manufacturing supremacy was being rivalled by Germany in particular, and other countries in Europe, principally because they took design seriously. It was not that our products were not good but other countries were making products that were better designed and therefore more popular. That was one reason for the 1851 exhibition being brought to fruition. It also explains the genius behind the South Kensington collection of museums and colleges. It was a unique concept whereby the Victoria and Albert Museum lay side-by-side with the Royal College of Art and other similar institutions, all designed to sustain and invigorate Britain's competitiveness by way of design

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and product development. That is why I find it so strange, 140 years later, that we seem somehow to have lost the plot. However, I believe that we are beginning to realise what we have lost.

We will never again, certainly not in my lifetime, be a significant manufacturing nation. We have to learn to live by our wits and our talents and it is absolutely correct, as the noble Lord, Lord Freyberg, said, that one of our talents lies in inventiveness and design. We now have to begin to apply those qualities to our own products and to the fruits of our workforce. That is the way forward. The noble Lord gave the House some statistics. They are staggering. The creative industries are a £60 billion business. In this country 173,000 people work directly within the design business. Those are large numbers. No longer will great factory gates crash open and men, and just a few women, walk through to large buildings of mass employment. It is a cruel delusion to think that there is any future for this nation in that area.

Our future lies in small, medium-sized and, if necessary, large design companies producing first-class products which are snapped up around the world. That is precisely the way in which the Italians, with far less to go on, have created a fairly vigorous economy for themselves. It is a design-based economy built around small businesses with a lively appreciation of the market place. We have to learn from the Italian example.

Many years ago John Ruskin said:

    "The education of a young artist should always be a matter of the head and heart and hand".
I believe that that lesson has begun to sink in. For example, we at last have an Arts and Humanities Research Board which will support funding of research in the arts and humanities specifically including design. On 5th March its chairman, Paul Langford, announced its first round of grants. These covered some 300 awards totalling £4.6 million. So things are moving. The school curriculum, although it has yet to be published, will, I believe, recommend that art courses are redesignated art and design. Again that is a recognition of the value of design within the broad concept of art.

I have the privilege of chairing the National Endowment for Science, Technology and the Arts. Our entire thrust will be excellence--finding excellence where we can and promoting it wherever and whenever we can. There is an awareness of the challenge and there is beginning to be a sense of optimism.

The noble Lord, Lord Freyberg, has done the nation a great favour by bringing this issue to your Lordships' attention. It will not go away. It will become a greater and greater component of our economy and therefore a greater and greater component of our lives and of our children's lives.

5.33 p.m.

Baroness Denton of Wakefield: My Lords, I thank the noble Lord, Lord Freyberg, for bringing this issue before the House. I think that the only reason the debate is not better supported by noble Lords is that they are on the M.1, M.3 or wherever it may be. Before I speak on the subject perhaps I may declare an interest. I work

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for a company which is part of a North American group, Young & Rubicam, which also has a design company in its orbit.

The noble Lord, Lord Puttnam, is right to say that we cannot go backwards. We can only go forwards. I looked up the record of the last debate we had on design. The debate did not even last the dinner hour. So we are already moving forward.

It is always a pleasure to see the noble Lord, Lord McIntosh, on the Front Bench. However, I have a feeling that that says something about the priority given to the subject within the Department of Trade and Industry. I have never noticed a shortage of DTI Ministers but there is not one present today. It is important that the subject should be loved by its own department. I hope that we will overcome that point too.

It is interesting that the Government did not bring together an integrated Front Bench on this subject. It is an integrated subject. The issue of design involves many government departments. It involves the Department of Health because disabled people are some of the most important users of good design. The quality of life of disabled people can be changed with appropriate help. It involves the Department of the Environment, Transport and the Regions. Environmentalists identify the problems but they do not solve them. One needs designers to solve environmental problems. We have to work on that point and I know that the Design Council is conscious of it.

The noble Lord referred to transport. I find it interesting that there are some small cars around which were designed many years ago. A famous one is the Mini, which celebrates its 40th anniversary this year. I would not say that it is totally British. I do not think that Alec Issigonis can be claimed as a British name but the car did not need to have much spent on it still to be out there. A new Beetle is available. It is just about a brand-new car. However, the fact that the Mini is still going shows how good was the original design.

The Foreign Office must be involved with design. I found it strange going around Foreign Office embassies. There were wonderful paintings and settings but not a piece of Parnham-based furniture. Why are we not putting up our modern and competent designers in that situation? Where are our designers going? There was a stage when the only people who could afford a piece of John Makepeace furniture were overseas buyers.

Children are wonderfully creative. In any house that has four year-olds or five year-olds, the fridge, the freezer and the cooker are covered with brilliant and clear drawings. Although we turn out well-educated students, somewhere along the line we educate that clarity out of people. It is important that we keep that clarity in there.

The noble Lord, Lord Freyberg, gave some figures. I should like to refer for a moment to commitment. I believe that design needs passion. It also needs individuals. A woman in Barnsley, Rita Britten, sells £500 dresses. That used to worry me. When I went to the DTI I asked for a visit to be arranged. I found that she sells the dresses on service. But she also sells them because she is committed to the area and to design. She

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is based near Grimethorpe, which had a colliery that was closed down. As I left, I was given the Grimethorpe appeal leaflet. But she also set up a design centre in Grimethorpe to give work to women who were married to the miners who lost their jobs at the colliery. Now her business takes her all over the world.

Another person who has brought his passion and standards to the design world is Paul Smith, who would have been a star anywhere. He still manages to retail--he has 75 shops in Japan--when every other retail market is going down. Peta Levi has had a tough time with the DTI. She runs new business designers. She has tried taking these youngsters over the world. The DTI has helped her by providing people "on loan", but never on a permanent enough basis to build. I would mention Conran--but one does not need to mention him; he will do it himself.

The point about Paul Smith and others is that they can move their products into mass production. I find it sad that even in our retail area here in the UK the mass production which allows design to enter the homes of most people is either Japanese--Muji, with its brown cardboard--or IKEA. We must help the design world to move into mass production. There are lovely things out there, but the chances of most people affording them are very slim. Creating aspiration without the ability to satisfy it is not the way to build an industry.

Noble Lords will not be surprised to learn that I am very pleased to praise the Design Council. I helped it in finding a chairman. It was interesting that the people who were initially brought forward were all engineers. The Design Council needs to be led by a charismatic person, as it now is. It must be kept away from bureaucracy. I am sure that no figures are available, but I should like to know how many civil servants have received a design education. I assure the noble Lord that if he produced the answer I should faint. The matter is important. If the effort goes into the paperwork, the results will not come through fast enough. There is at present a new stage, with the rural development associations entering the middle of the process distributing European money.

I do not know whether the noble Lord can offer welcome guidance on how devolution will operate in the design field. If we are to nurture people, we do not need to nurture a species in every part of the new UK. That will be interesting.

For me, design is something I enjoy and envy, something that I could not copy in a million years, and I know its value to industry. I am grateful to the noble Lord for providing the opportunity to debate this subject.

5.42 p.m.

Lord Newby: My Lords, I, too, wish to begin by thanking the noble Lord, Lord Freyberg, for initiating this debate. It is a great pleasure to follow the noble Baroness, Lady Denton of Wakefield. I can say without fear of contradiction that today is the first time in British history that two former pupils of Rothwell Grammar School have made speeches consecutively from the Benches in this House. I hope that it is the first of many such opportunities.

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The importance of this subject lies in the fact that in the global market-place Britain can no longer hope to compete on price alone. That point was central to the remarks of the noble Lord, Lord Freyberg. The alternative is therefore clear. In order to create a competitive economy we must make better products for which people are prepared to pay a little extra. Design is absolutely key to achieving that. Britain must simply be as creative as, or more creative than, our European partners, Japan, the US, China and Korea. We must make better performing products that sell at a premium. Business must recognise design as a source of advantage and as integral to its success. The design function in business must be viewed as central to a business in the same way that marketing and sales are. I fear that that is still often not the case.

Design must be an identified and central part of all aspects of business strategy. That will require more investment in design R&D than our competitors provide if we are to be successful in international competition. The problem at present is that we are simply not doing that. Last year the worldwide increase in spending on R&D was 10 per cent. In the US, the world's most successful economy, the increase was 17 per cent. The UK only managed an increase of 5 per cent., which meant that we were 27th in the league table of net growth spenders on research and development. Frankly, that is not a satisfactory basis for the future development of our economy.

The challenge must therefore be to promote creativity and design at all levels. That must begin in schools. As the noble Baroness said, very young children are natural designers. One of the problems is that by the time children enter secondary school, in many schools design is not seen as intellectually and academically on a par with many other subjects. Many bright young people are rather pushed away from design towards subjects that are more traditionally academic. Frankly, many of those subjects, although they are typical leaders in the academic field, are often of precious little use to people in later life whereas design develops creativity and the concept of and ability for lateral thinking. It is therefore a central subject and should be seen within the educational world to be equally important to subjects such as physics, chemistry and biology. It will certainly be of more practical significance to young people than many of the more academic subjects they will study.

It is interesting to hear about the UK's success as design education centre. It is the largest such centre in Europe; 30 per cent. of Europe's design graduates are educated in the UK. All that one can say is that they are clearly not working here. They are either coming to the UK from elsewhere in Europe and other parts of the world because of the excellence of the education here and then returning to their country; or, in far too many cases, they are frustrated UK students who find that in order to acquire an outlet for their activity they have to work abroad.

Why are we not spending more on design as part of R&D? What should we be doing? In particular, what might we look to government to do? The macro-economic framework is the starting-point for

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investment in British industry, of which R&D is a part. This Government have placed tremendous emphasis on moving away from the boom-and-bust that has characterised post-war British economic performance. More than anything else, creating a macro-economic climate which gives business the confidence to invest is the single most important thing that government can do in this area.

There are many other areas where government clearly has a role to play. Government is a major purchaser. It is now beginning to promote good design. An example is the design of Inland Revenue forms. I am always amazed to see that the latest Inland Revenue form is thought to be a masterpiece of design. Perhaps it is, but it still quite hard to follow. However, I am sure that a huge amount of effort goes into that kind of activity.

At the other end of the scale, it also gives great satisfaction that the new parliament and assembly buildings being built in Scotland, Wales and London are not utilitarian. They are dramatic buildings. Not only will they be an addition to the public realm; they will send a signal to the communities in which they are based that design to a high standard is a matter by which the parliament and the assemblies set great store.

The Government also have a major role to play as a promoter of UK design within their overall role of promoting the UK. A poll of business last year showed that 90 per cent. of businesses surveyed said that a modern, creative image of Britain helped exports and helped to attract inward investment. Seventy per cent. thought that the Government could be doing more. I do not think one needs to go overboard on the concept of Cool Britannia to believe that the Government should be spending less time promoting Beefeaters and castles and rather more time promoting the Dyson vacuum cleaner and even the Dome. In that respect, the Millennium Products Initiative, launched about 18 months ago and run by the Design Council, and which has the enthusiastic support of the Prime Minister and the Government, is extremely valuable in demonstrating the Government's commitment to making the most of the best of British design.

The Government are in a plethora of ways a provider of funds and advice which can help the design process. They are a funder of the Design Council, which does tremendous work. But it is not just these national initiatives which will be important in changing attitudes about design. One of the things which the Government do, through the Design Council, is to fund design counsellors through the Business Links network. The role of Business Links in getting in at the grassroots level with a large number of small businesses could be very significant because it spreads good practice at all levels across the economy and does not simply concentrate on the biggest companies in the land.

The devolution of economic decision-making and economic development through the RDAs offers a chance for more of this kind of good practice to operate at regional level. I have been particularly impressed in this respect by an initiative which has been established in Yorkshire called the Yorkshire: European Region of Design Excellence. I am sure that when the noble

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Baroness was growing up in Wakefield, just as when I was growing up in Rothwell, "design" was not a word that was associated with that part of the country. Many other words were associated with West Yorkshire, but design did not feature among them. The noble Baroness talked about a dress designer. It is interesting that the part of the country in which she is based, Barnsley, and, in particular, Grimethorpe, was a place of huge musical creativity. Men who were brutalised in their working lives used their spare time to make some of the most beautiful brass-band music in the world. We now have the opportunity to encourage those same people and their sons and daughters to develop their lives through creative use of time.

The Yorkshire design initiative was launched in Leeds on a wet Friday evening in late January. It drew over 100 people to it, including the most senior representatives of the design industry and business more generally across Yorkshire. We were fortunate in having the Secretary of State for Trade and Industry, newly in post, attend the meeting. I hope that the initiative may serve as a model elsewhere. It has brought people together to look at specific design initiatives, ranging from the possibility of setting up a centre for design excellence to practical matters such as a new design for a Yorkshire taxi. In doing so, it has brought a tangible focus to a tremendous amount of enthusiasm for design. By operating at a regional level rather than looking to the Government or the Design Council, it has released a lot of energy that would not otherwise have been brought to bear.

We have heard some discussion about the importance of design and related activities to GDP in this country. The notable feature about that is that while design-related activities generate 1.8 per cent. of GDP, they employ 1.2 per cent. of the workforce. The whole process of design has significantly higher productivity than the economy as a whole. That in itself demonstrates why it is so important as a driver of economic activity for the future.

I have concentrated on competitiveness rather than quality of life, but one only has to look at the history of public sector housing in this country and both the downside of bad design and now, with some of the housing associations, the upside of good design, to see how fundamental design is. Indeed, it permeates many aspects of human activity. Bad design is economically suicidal and depresses the human spirit. Good design, by contrast, can give us a competitive edge and enrich all our lives. Design is central to our economic and social welfare. I hope that this is an issue to which the noble Lord, Lord Freyberg, and the House as a whole will return at regular intervals.

5.55 p.m.

Lord Grenfell: My Lords, perhaps I too may say how grateful I am to the noble Lord, Lord Freyberg, for initiating this debate. I found his speech highly informative, very persuasive and, on the whole, very encouraging.

I suspect that one way of bringing a smile to the face of my noble friend the Minister who will respond to the debate is to quote George Bernard Shaw to him. He is

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a devotee of the great man, as I am, but he has the advantage over me that he actually met him. I thought that in honour of that I might begin my speech by giving a short quotation from The Doctor's Dilemma. It is the dying Louis's credo in the fourth act. He says:

    "I believe in Michael Angelo, Velasquez, and Rembrandt; in the might of design, the mystery of colour, the redemption of all things by Beauty everlasting, and the message of Art that has made these hands blessed. Amen. Amen".
I note those words "the might of design", and I would add my own, third Amen.

Theatre and design have gone hand in hand for a very long time. The relationship has sometimes been quite unusual. Among the first of the American industrial designers were quite a number who had a theatre background. I think in particular of Norman Bel Geddes, who was first a producer of plays and opera. He moved on to theatre design and then to designing typewriters, refrigerators, radios and even stoves.

Men like Bel Geddes and others from the worlds of theatre and advertising, such as Walter Dorwin Teague and Raymond Loewy, combined the skills of businessmen with their gifts as artists to play a vital role as industrial designers in ensuring that many of the large corporations survived the Depression of the 1930s.

When I speak in your Lordships' House, it is usually on economic subjects. The relationship between design and economics has always held a certain fascination for me, so I do not feel that I am trespassing too much on the terrain of the noble Lord, Lord Freyberg, if I say something about that today. I shall take just two examples.

The post-war economic miracles in West Germany and Italy owed an enormous amount to design. As noble Lords will recall, economic recovery in Germany in the immediate post-war years was pretty slow off the mark, but, with the boost given to it by the Marshall Plan, German production had reached pre-war levels by 1950 and the Wirtschaftswunder, the German economic miracle, was then up and running. From then on, America influenced not only West German production processes but also product design. I intend no denigration to the German designers of that period when I say that the Opel Kadetts of the 1950s were little more than replicas of American cars. What was crucial and important to Germany's economic future was that the government of that time saw industrial design as a key factor in economic regeneration.

By 1952 the Ministry of Economics had set up a design council and established professorships in industrial design and technical universities. It is interesting and instructive to recall that it was after hearing a lecture on the links between art and industry that the brothers Artur and Erwin Braun took a fresh look at their firm's design policy. They employed top design consultants and the rest was design history. Their functional, monochromatic products, usually in white, grey or black, epitomised by its mechanical products such as electric shavers, calculators and clocks soon became globally famous. It was also extremely helpful to the German economy.

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Another example is Italy. In the aftermath of the war Italy received much less aid from the United States but, like Germany, it was influenced by American culture, particularly its functionalism and rationalism in design. That predominated in Italian industrial design as the economy modernised in the first five years after the Second World War. Its portable typewriters became world famous as did those quintessential expressions of youthful modernism (if I may so put it), the Lambretta and the Vespa. The Italian consumer boom of the 1950s was boosted by the discoveries of oil and gas and the chemical and plastic industries, the latter providing a very rich field for Italian designers, such as Ettori Sottsass who designed the famous red plastic Valentine typewriter. Italy's post-war economy benefited hugely from the talent of its designers. That is the point that I really want to make.

I make this brief excursion into the post-war economic history of these two countries solely to emphasise the essential link between design and competitiveness and quality of life and to show that they are not new and can have huge economic consequences. Since the 1980s design has become an increasingly important part of daily life in this country. Perhaps we have tended to overuse the word "designer" with our constant reference to designer jeans, designer vacuum cleaners and even designer stubble. But they are now all part of our lives and "designer" has passed into everyday language.

But it seems to a layman in these matters like myself that we are now redefining design after the conspicuous consumption of the 1980s and now see it more as a tool for improving the quality of life, not least as an expression of our environmental concerns, with (dare I say) a more muted appeal to our strictly aesthetic senses. Others will make more expert judgment on that matter than I do.

I return to the economic dimension. The briefing produced by the Design Council provides some impressive and encouraging statistics, of which the noble Lord, Lord Freyberg, gave us some highlights. I should like to cite just a few that particularly caught my eye. As the noble Lord pointed out, across the British economy as a whole expenditure on design and related activities is estimated at over £12 billion annually, which is equivalent to 1.8 per cent. of UK GDP. That is very impressive. It is also pointed out:

    "Design contributes directly to the UK balance of payments, with some 70 per cent. of UK design businesses active in overseas markets ... Sectors that invest heavily in product development and design--such as mechanical engineering, aerospace and chemicals--are also those in which the UK has a trade surplus".

There is also the employment factor, to which the noble Lord, Lord Puttnam, referred. In total 173,000 people are employed in support of design and product development within British industry. Further, 20,000 people in the UK work in design consultancies. That is very impressive. But then the following caught my eye:

    "Provision of design services is dominated by small and medium-sized enterprises--there are around 4,000 design consultancies in the UK. However, the value is heavily concentrated in the biggest firms--the largest 100 accounting for 75 per cent. of the industry's turnover".

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This caused me to ask myself a question (which needless to say I could not answer): is this an indicator of under-financing in many small and medium-sized enterprises? Is there a desire there to invest more in design capability which is frustrated by capital restraints? I believe that this was also a matter in the mind of the noble Lord, Lord Newby.

I am a very great believer in small and medium-sized enterprises. As the Design Council itself said:

    "Small and medium-sized enterprises ... are a critical part of the UK economy. According to the Design Council, research awareness among SME managers of the importance of design is growing. Between 1997 and 1998 the number of small manufacturers climbed from 44 per cent. to 62 per cent.".
But I ask whether that awareness is matched by an ability to fund access to high quality design capabilities. I do not know and I should very much like to know. Perhaps my noble friend the Minister shares my hope that the recently announced help for small companies in the form of the new 10 per cent. starting rate of corporation tax will encourage more investment in design by small manufacturers. Perhaps the Chancellor's extension earlier this month of first-year allowances for small and medium-sized businesses investing in machinery and plant will free up resources, some of which may be devoted to more investment in design. Maybe serial entrepreneurs can help through their investment in Enterprise Investment Scheme companies. I just wonder whether these types of recent government initiatives in favour of small and medium-sized enterprises could lead directly or indirectly to a greater level of investment in design. I certainly hope so.

As the Design Council informs us,

    "Among smaller manufacturers, perhaps perceived as less likely to exploit the potential of design than their larger competitors, those describing design as essential climbed from 44 per cent. to 62 per cent. over the year".
They describe it as essential, but do they have the means to put that into effect? I suspect that for many finance is a constraint. I leave noble Lords therefore with the thought that if there is such a constraint we need to find ways to facilitate a higher level of investment. Design is far too important to our economy to have it left underfunded.

6.7 p.m.

Lord Hankey: My Lords, if I slur my words it is because yesterday morning I returned from China and this morning I went to bed at 4 o'clock. My jaw drops and my eyelids close. Please sit me down quietly. I have been in China to look at two provinces: Sichuan and Chongqing. They hold a fascinating lesson. They are changing their institutional policies. We are helping them to promote good design and environmental planning, tourism, trade, good management and the integration of services--all to achieve economic sustainability. Chongqing includes the Three Gorges Dam area and planning for the future of minority cultures. The resettlement of some 1.2 million people is being done by the Chinese themselves. Vast engineering works have been carried out to consolidate the new 150 foot high change in water level.

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Having seen China grow over the past 10 years I am fascinated by the fact that they have learnt the lesson of the importance of the design process in responding to function requirements and the need for multi-sectoral co-operation. In projects and products both large and small they are learning how to plan for economic business success. It is very difficult to try to teach them about the market. Assessing market revenues and the limits of affordability are also matters that are just on the fringe of what they are learning to do. The difficulty that we have in introducing design and management initiatives in a totalitarian and relatively closed society, where middle management fears to take the initiative, is also a fascinating challenge.

I am very concerned by the growing power and ability of China, with one quarter of the world's population, to be extraordinarily competitive to what we are trying to do here and our long-term sustainability. I am concerned about the great competition our economies of western Europe are going to have in the next 50 years. Here in Europe I maintain that our safety will be in our innovation, integrity of service and in quality of design if we are to compete with the reinvigorated and possibly fiery dragons.

I came back through the new Hong Kong airport. I was totally fascinated. It is a British product, with a pure economy of concept; grandly impressive and human in scale. It is a wonderful advertisement for the United Kingdom and its humanity held through the ordering of its hierarchy of spaces. It has wonderfully strong detail and appropriate originality and innovation--all of the principles advocated in the Design Council brief. Like a good human perhaps, the design is not excessive in any of its traits, but it is attractive in its quality and considerate towards the function it provides.

As I understand it, Britain has few natural products. We pay for our standard of living through the ingenuity and innovation of our goods and services; through our knowledge and our abilities in applying both knowledge and craft skills; and in the excellence of our design. I believe that Britain's future is going to depend more and more on our competitiveness with such dragons as I have described.

I believe that design relates not only to the physical product, but also to the means of managing the process of manufacture and delivery. Consultant designers, like politicians--they do not think of themselves as designers, but they are some of the most important designers that we have--and many other classes of people are so often good at defining the objectives, as I have seen among engineers in cities like Ningbo in China, but they are weaker at understanding the management requirements for implementation, as the noble Lord, Lord Puttnam, correctly said.

The mistakes that we can see in development situations relate to the lack of management abilities of all the many factors to be considered at the larger scale of project. The small object is easier for an individual to understand, but the individual's ability to relate to the management and teamwork required of a larger project is very demanding. Ultimately, design is for the human being. The ability of the design to reflect human values is often the critical factor in its success.

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I would like to expand on that idea. In industry the human value of a worker in its mass production process is extraordinarily important. I believe that the humanity in our planning and development of urban areas are all ultimately more important than the simple and more obvious functional operation of the urban infrastructure. The urban task force, led by the great architect, the noble Lord, Lord Rogers of Riverside, made a useful start in a most complex quest to increase density for good economic reasons, but also to improve the quality of human life.

I believe that there are strong but very hard to measure relationships between the quality of the environment and the levels of crime and alienation caused by the dissatisfaction felt by the residents and workers in a poor quality environment. We have examples of estates such as those in Manchester and others in Glasgow and Sheffield which have had to be demolished through the ill-considered understanding of the human factors involved when they were created.

I believe that there is a common discipline between the design of the physical world and the creativity needed to design, implement and motivate the new political and social world. Human values underpin all reason for the respect, development and retention of our existing physical environment. So, I believe, those same human values are essential parts of our work in the politics and planning of social and institutional improvements. However, like great planning and engineering projects, proposals for institutional change are often not designed with respect for the inclusive and consultative consensus building that good design should accommodate. In my opinion, policy which is not inclusive sets up opposition among alienated stakeholders.

I believe that we have witnessed the arbitrary nature of change without design proposals in your Lordships' House over the past two days. Good design with adequate respect and the promotion of trust in the human dimension is vital to the quality of both the physical world as well as to the social and political world within the United Kingdom.

I believe that the humanity of our design considerations also applies to the international world where trust, respect for cultural difference and the design of good policy and trusting trading relationships are the core for the United Kingdom's future trading and the prosperity of our children. I suggest that there is a strong relationship between this creativity and orderly thinking; of good design in the physical world and the innovative and detailed considerations that must underwrite the success of human relationships both within the United Kingdom and abroad.

The noble Baroness, Lady Denton of Wakefield, said that design is an integrated subject. I believe that that is absolutely correct. The danger of our thinking both as sponsors and designers for change and novelty is that we often take a narrow and sectoral view of our roles in life in the design of systems of government, the Greater London Authority, the devolution of regions and the construction of the past

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as new environments. The human values are often subordinated to the machine, the engineering and the tangible factors or the political ideal.

I am encouraged by the DTI's Creative Industries Export Promotion Advisory Group (CIEPAG) bringing together different departments of government. It can help in the co-ordination and marketing of UK Limited abroad. That is a very essential service especially with the growth in the SMEs, the small and medium-sized enterprises of the United Kingdom. That involves the design of communications between the SMEs of the United Kingdom and the international markets.

I believe that good design requires a holistic approach to the problems of the living and working environment. It is responsible for the success of trade, tourism and, above all, for user satisfaction that all over the world is increasingly intellectual and selective under the influence of television and other forms of media.

I believe that the message is quite clear. We must stay ahead with our education. We must invest in understanding the generalities as well as the particularities of design both for joined-up government and for joined-up private and public sectors. I thank the noble Lord, Lord Freyberg, as I hope the whole House will, for bringing this fundamental subject to your Lordships' attention.

6.20 p.m.

Lord Hughes: My Lords, when I read the Motion in the name of the noble Lord, Lord Freyberg, I was so interested that I made certain that I should be present to hear his speech. I am glad that I did so. I have seldom heard so much interesting, useful information crammed into such a short period of time. I thank him for that. It is because of that that I am persuaded to break my usual habit over recent years of being a listener rather than a speaker.

I am old enough to remember the days when Japanese manufacturers were accused of being innovators of nothing but masters of copying other people's work. The accusation was that they worked so well on that aspect that they included in their production any fault in the original material. I do not know whether there was any truth in that allegation but, if so, that factor has disappeared over the past 40 years.

The Japanese have shown that they are masters of innovation. But they have done better: they have also made certain that they took advantage of their innovations. We have seen that in so many fields--electronics, the car industry, watch making, calculators, and so on. In this country, we would have been much better off if our manufacturers, in particular the small manufacturers, had had the initiative to follow up their innovative idea by production of it.

It may well be, as the noble Lord, Lord Grenfell, said, that the answer is that small manufacturers do not have the necessary support to follow up ideas they have produced. The result is that wonderful ideas which have begun in this country have not been developed here but abroad. I do not know the extent to which industry listens to

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anything said in your Lordships' House. However, I suggest that it would do industry no harm to read the speech made today by the noble Lord, Lord Freyberg.

6.22 p.m.

Lord McNally: My Lords, when the noble Lord, Lord Hankey, began his speech, I thought that he was going to be an example of the Lord who dreamt that he was making a speech in the House of Lords and woke up to find that he was. I can assure the noble Lord that he stayed awake, and so did we.

There was dangerous talk from the noble Lord, Lord Puttnam. He said that he had torn up half his speech because his remarks had already been made. If that kind of thing carries on, this place will grind to a halt!

I congratulate the noble Lord, Lord Freyberg, on this last debate before Easter, turning the eyes of the House outwards after a couple of days of contemplating our own navels. A number of my friends have queried why I am speaking in the debate since I am not noted as a dedicated follower of fashion. Part of the reason is that I have had what American management experts now call a portfolio career. I served in the early 1980s on the Select Committee on Trade and Industry. Even then we undertook a study about competitiveness and the factors that damage British competitiveness. Since then I have worked for an electronics trade association, a management quality certification company and, like the noble Baroness, Lady Denton, for an American conglomerate with a design capability--although not the same one.

I draw from those experiences to talk mainly about manufacture. I take slight issue with the noble Lord, Lord Puttnam. He said that we will never again be a significant manufacturing nation. It is too easy and very dangerous to write off our manufacturing base. That was part of the silliness of the 1980s when, as far as I could see, the theory was that the financial services industry and theme parks would be enough of a base for this country. It was a foolishness warned against with great eloquence, I recall, by John Harvey-Jones in a Dimbleby lecture over 10 years ago.

We need a manufacturing sector; and we need the policies to back it up. But change has occurred. We are no longer an industry of muck or even brass. We are more and more dependent on our small and medium-sized enterprises. The noble Lords, Lord Grenfell and Lord Hughes, made vital points which I hope the Minister will convey to the DTI about the importance of helping small and medium-sized enterprises export innovation by access to good design.

As the figures quoted demonstrate, the problem has not been a lack of ideas in Britain over the past 50 years but a skill in taking those ideas to market. Globalisation and technological change offer us a second, third or even fourth chance. We can still catch up with the best if we get our policies right. Again I agree with the noble Lord, Lord Hughes. I belong to the generation who remember jokes about shoddy and imitative Japanese products, and who saw those products become a benchmark for quality and design.

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Broadly, the priorities of the Government since they came to office are right. They include rights to give priority to education; to invest in technology; and the encouragement of productivity. Britain's future lies in a high skill, high tech, high productivity and high value added economy--a so-called skill-based society. But if we know that, so do others, and they will follow a similar strategy.

So what will be the X factor? I believe that it will be quality and design. I am told that Japanese companies spend twice as long at the product design stage compared with comparable western companies. There are real benefits in investment in design for manufacturers. Assessments can be made of the environmental impact--it is of growing importance--safety implications, product liability, matching performance requirements, risk analysis and the guarantee of overall quality.

That quality and design approach to manufacture has tangible benefits for both manufacturer and consumer. Early identification of manufacturing/service problems reduces the cost of wasted time, effort and materials during production and service. It is estimated that the cost of poor quality is 10 times greater at the end of a process than at the beginning. There is the greater likelihood of completion of projects on time. With effective planning and a clear view of the project milestones and timescales, management can be more in control of progress with early identification of any potential problems that may affect the life of the project.

Design and quality control offer more effective cost control. Estimates are increasingly more important for the viability of commencing any project. Finally, there is customer satisfaction. The end result of all the work and input must result in that.

I mentioned my background in consumer electronics. We are on the verge of what has been described as the digital revolution. That offers a multi-million pound opportunity for Britain as we produce the products to meet the interactive, multi-choice broadcasting age. It is interesting to note that the manufacturing capacity for that is in the UK and much of the research and development has been carried our here.

The digital revolution will be driven by programme quality--and I hope it will not be 200 channels with the best being "I Love Lucy"--reception quality, which is of importance to the Minister, and design. We recently debated digital radio and the Minister may be interested to learn that four British manufacturers are now committed to producing digital radio. Therefore, there is manufacturing and research capacity and design talent. There is also an opportunity for Britain to manufacture and export goods.

However, I agree with the noble Baroness, Lady Denton, that we shall need joined-up government. As my noble friend Lord Newby said, that means a new status for designers and engineers. It means a creative use by the Government of their own procurement capability. As a number of speakers have said, it means design as an integral part of our education.

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In this millennium year, the great Dome should be used as a showcase for British design. Lottery funds should be used to promote design criteria. Yesterday, the noble Lord, Lord Puttnam, came to St. Albans, the city in which I live, to open an extension to our museum built on the basis of lottery money. The very design of that building has lifted the spirit of the city. The same exhibits are on show inside, but a new shape has been given to the museum. The number of schoolchildren who visit has increased incredibly. That is one example of the good use of lottery funds to produce good design. Perhaps I may pay tribute to the Design Council and its millennium products initiative. As a professional in this field, I thought its brief was a model of its kind for a parliamentary debate.

The noble Lord, Lord Puttnam, mentioned the V&A. Part of my briefing for the debate were V&A notes. The noble Lord gave us a timely reminder of the vision of Henry Cole and the 19th century museum creators. They bequeathed a great legacy in the use of design in museums. Due to time constraint, I will not go through the V&A's programme, but it is entirely contemporary and encourages designers, particularly young ones. In addition to inventing the new, we should appreciate what we already have as a basis for encouraging design within our society.

Design can capture the spirit of an age. Government are not there to back winners; that is for the entrepreneurs. But they can create the climate in which enterprise, creativity and quality can flourish. As the noble Lord, Lord Grenfell, indicated, they can do so by the way in which they manage the economy, the way in which they regulate and use their powers of procurement and persuasion. They must not endorse the tacky and ephemeral--perhaps some Downing Street guest lists could be examined in that regard.

The talent exists. The mistakes of the past have been identified. The millennium is a time to celebrate our national talent for creativity and to recognise our designers as major contributors both to our economic success and our quality of life.

6.34 p.m.

Baroness Seccombe: My Lords, it is a pleasure to speak in this debate. I add my congratulations to the noble Lord, Lord Freyberg, on raising this exciting and important subject today. It was a delight to listen to his speech and I wish him well with his all-party group, which I am sure is in good hands. It has been a privilege to listen to noble Lords bringing their own specialist knowledge to the debate, and the enthusiasm evident in all the contributions has been most infectious.

Design is one of Britain's comparative national advantages. Britain enjoys a £12 billion design industry, which is large by world standards. Design is essentially a creative activity that covers a wide range of industries. Fortunately, creativity is a trait at which the British excel, as the noble Lord, Lord Puttnam, informed the House.

Design is of particular current relevance because of the strain that exporting British manufacturers are experiencing. At a time when they are shedding staff,

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the trade deficit is widening and people are moving business offshore to avoid the strong pound and increasing tax and social burdens, British design remains a hope for the future. That is particularly so for small business, as outlined by the noble Lord, Lord Hughes.

What do we mean by design? It covers a broad range of activities. It is not easy to separate it from the rest of the economy. But in the wise words of Walsh, Roy, Bruce and Potter in 1992, the common link is the creative visualisation through plans, ideas sketches aimed at,

    "providing the instructions for making something that did not exist before, or did not exist in that form".
So design comes in the form of some wildly varying fields: experimental design; design engineering; fashion design; production design; interior design; graphic design; and so forth. They all have in common the creative flair to make something better. Fortunately for Britain, creative flair is one of our advantages.

I was intrigued to read that in 1996 the Economist quoted an estimate by Holland's Design Institute that £4 billion was spent on graphic design across the whole of the European Union. Britain alone spends three times that amount. We see examples of British design excellence. The noble Lord, Lord McNally, mentioned the digital age. At home, we have one of the new digital boxes. My son, who is very interested in design, asked me to look at the design of the remote control. Compared with the old television and video remote controls, the design was so exciting and pleasing to the eye.

The potential benefits of these developments are enormous. Vehicles designed by British consultants are in production in Europe, North America and Asia. While the rest of British car manufacturing is suffering under the burden of the strong pound and increasing tax and social burdens, General Motors recently made the decision to give greater independence to its British design team, allowing it to expand and sell its services to other companies.

Glasgow has secured this year's UK city of design and architecture. A recent survey undertaken by the Glasgow Design Initiative showed that industry in Glasgow now includes more than 500 design consultancies, sustaining 5,000 jobs with a turnover of £225 million.

Across the UK economy, design employs more than 300,000 people in both consultancies and manufacturing. The Design Council estimates that a 1 per cent. increase in turnover devoted to design in manufacturing would raise manufacturing growth by 0.7 per cent.

In many ways, the increasing impact of design represents a shift away from the heavy industries which followed the war. The industries of the German and Japanese post-war economic miracles were based on heavy industry, heavy engineering and production excellence in mid-technology products such as cars, chemicals, engineering and metal.

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Many of today's leading companies depend not on heavy industrial investment but on intellectual capital and IT networks of which design is such a crucial part. How things change. In 1948, there were 900,000 miners and 100 people in the computer industry. Today there are fewer than 10,000 miners and 2 million people in the computer industry and hundreds of thousands in the design industry.

I was intrigued to hear from the noble Lord, Lord Newby, about the importance of design for children's development. It is sad to see that many take their talents abroad so that we lose them. But the new jobs are for network engineers, website designers and writers of interactive programmes. Those are creative professions in which design principles are crucial.

Design tends to be an outward-looking, export-orientated activity. The Design Council estimates that design makes up one-quarter of overseas earnings and it has been shown that sectors which invest more heavily in design tend to sell a greater proportion of their output in export markets. It was fascinating to hear of the visit by the noble Lord, Lord Hankey, to China, and what he had to tell us.

Design-intensive industries such as aerospace, mechanical engineering and chemicals are areas in which the UK still has a trade surplus. At a time when last month's trade deficit was the highest on record and many firms are being squeezed by the strength of the pound, that is a sector of exporting which cannot and must not be ignored.

But design is vulnerable to the strength of the pound. One of the most important things the Government can do to help export-orientated designers is to ease pressure on interest rates in order to restore our currency to a more realistic level. The level of the pound has been of particular concern to the fashion industry whose manufacturing bases are forced increasingly to go overseas. As the director-general of the British Apparel and Textile Confederation said last August:

    "The strength of sterling is causing considerable pain and there will be more closures and lay-offs. Exporters that had built markets in Asia are suffering a double whammy, and they can't easily turn to the domestic market because High Street sales are flat. You cannot replace those markets overnight".

It is extremely difficult to measure with any precision the impact of design on economic growth. Apart from the fact that design of itself is difficult to measure, being so integrated with manufacturing, fashion and other sectors of the economy it also happens in the context of the economy as a whole. Different elements of the design process will almost certainly have some influence over economic growth and trade performance.

It is clear that design has a major role both in manufacturing and consultancies. British manufacturing spends an estimated £10 billion on product development and design, making up 2.6 per cent. of manufacturing turnover. Design and manufacturing is responsible for the employment of 172,000 people which is about 4.5 per cent. of the workforce. Our aerospace and motor vehicles industries are world leaders.

The quality of life has been mentioned and is very important, as illustrated by the noble Lord, Lord Grenfell. Design has other unmeasurable benefits in

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relation to what we call quality of life. That area is improved by an increase in attractively designed and easy-to-use products. That aspect of design cannot be measured by economists. It often comes down to aesthetics and subjective judgments. But it may mean also that consumers are able to do something with a product which had previously been unimaginable and, just as important, design creates employment in a field where creativity is a prime virtue. Job satisfaction is likely to be higher in a field where a person can see his creative imprint on the final product.

I feel upbeat but not complacent about the future. By allowing people to make products differently and better, design is undoubtedly one of the best ways in which British industry can add value and compete internationally. We are already world leaders in many areas of design. In order to allow it to flourish into the future, we must have an economy which encourages small and flexible firms to compete internationally. We must not fetter them with too many regulations and tax burdens. If we expect them to trade internationally, we must ensure that the exchange rate does not penalise them. We have had some excellent contributions, all pointing to the growing importance of design in all our lives and of course in the life of our country. I am sure that we shall soon revisit this subject.

7.45 p.m.

Lord McIntosh of Haringey: My Lords, it is only right that I should start by saying a few words to the noble Baroness, Lady Denton, in relation to my being here and not, as she said, a DTI Minister. I must confess to her that when the matter arose at the DTI parliamentary meeting, I begged to be allowed to respond to this debate.

I do that both for public policy reasons and for personal reasons. Fundamentally, the public policy reason is that I speak also for the Department of Culture, Media and Sport which is very heavily involved in design matters together with the DTI and other departments. In the Department of Culture, we have carried out the first comprehensive mapping of the cultural industries in this country. That has been a difficult but pioneering project. It is a huge element of the British economy and the cultural industries taskforce is continuing its work.

But there is also the Design Council's initiative, referred to originally by the noble Lord, Lord Freyberg, to ensure that government procurement itself is design conscious and that we recognise the need for best practice in design management in government itself. After all, the Government are buying £24 billion worth of goods and services every year. That initiative involved originally the Department of Culture, Media and Sport, the Foreign and Commonwealth Office, the Department for Education and Employment and the DTI. But, as the noble Baroness rightly recognised, there are other departments. She mentioned the Department of Health which has a strong interest. I have

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no doubt that that department will be joining in that project in times to come.

The other more personal reason that I wanted to take part in the debate is that I share the passion which the noble Baroness, Lady Denton, has evidenced in design, although I do not share her expertise. My noble friend Lord Puttnam referred to the 1851 exhibition and he and the noble Lord, Lord McNally, referred to the work of the V&A and the South Kensington complex which followed the 1851 exhibition.

I am old enough to remember as an 18 year-old the 1951 exhibition. That was certainly the occasion when my eyes were opened to the wonder of design. I remember the Skylon designed by Powell and Moya, and the Dome of Discovery, a small predecessor of our millennium dome, designed by Ralph Tubbs. I remember the Ernest Race antelope chair which was a steel and plywood chair used in all the outside cafes and restaurants on the South Bank. We must not forget typography. Gordon Cullen, who was later a friend of mine, was responsible for all the external lettering of the South Bank part of the 1951 exhibition. I see from the Design Council reports at the time that his chosen typeface--a "square serif egyptian"--was considered better than the characterless Gill which might have been the alternative. I am not sure we would say that about Gill type-faces 48 years later.

I have a personal memory of one of the first concerts at the Festival Hall with Stokowski in May 1951. But it was not just the South Bank; it was also in the Battersea pleasure gardens, in the Lansbury neighbourhood in Poplar, and exhibitions and events all over the country. Those of us who remember them have added reasons to look forward to what is going to happen in millennium year, not least for design, because, as the noble Lord, Lord McNally, would wish it to be, design is a very heavy and vital element not just in the Millennium Dome but in all the other millennium projects which are going to be unveiled around the country during the next 18 months.

The motto for the 1951 Exhibition was, in the words of Herbert Morrison, to celebrate the British contribution to civilisation in the arts, in science and technology and in industrial design. We probably would not use the phrase "industrial design" now but it is a perfectly good motto to be using 48 or 49 years later.

I have not yet paid tribute to the noble Lord, Lord Freyberg, for introducing this debate, but everybody who has taken part seems to me to have widened our horizons and to have made this a quite remarkable display not just of expertise but also of enthusiasm. I think it is true to say that the Government agree with the consensus which I have sensed around the Chamber today that design must be at the heart of our economy and of our society. It is not just a thing that happens to create a pleasant appearance after the research and development process has been completed; it is a continuing process, as your Lordships have said, from the idea to the product, through the process and then to

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the user, the purchaser and the marketplace. The examples that have been given have been enormously valuable and I am very grateful for them.

I have to say to the noble Lord, Lord McNally, with his example of digital radio, that maybe the noble Baroness, Lady Seccombe, can afford these but before many people can have access to them they, first, had better bring down the price below £800. Of course the quality of life aspect of this Motion is important too. It is important for worthy reasons and for aesthetic reasons. The worthy reasons include a sustainable environment and that can mean, as has been said, providing cheaper and less damaging materials rather than changing the appearance. One can use materials that last a lifetime rather than fading away after a limited period of time. There can be design for lower energy use and also for waste minimisation.

My noble friend Lord Grenfell seemed to think that there could be a conflict between those worthy objectives and the sheer pleasure which we all look to get from good design. I do not think that there is a conflict: the two can very well go hand in hand. If they do, then I think we achieve what the noble Lord, Lord Hankey, rightly called Schumann values in design.

I turn now to the economic issues which were referred to by, among others, the noble Lords, Lord Newby and Lord Grenfell. I was grateful to the noble Lord, Lord Newby, for virtually quoting from the Treasury weekly economic briefs, when he said that we need a macro-economic climate which gives business the confidence to invest. That of course is exactly what the Chancellor has been saying and doing for nearly two years. His most recent Budget, as the noble Lord knows, provided further tax breaks for research and development, particularly in smaller firms.

It is very difficult, if not impossible, to identify design as an item in an income and expenditure account, just as it is very difficult to identify design in a creative industry's taskforce mapping exercise. However, I think we know it when we feel it, if you see what I mean, and I think the Chancellor is directing his attention in that way to ensure that there is investment in research and development, which in turn will mean investment in design. And when that is coupled with the ongoing reductions in corporation tax, I hope that your Lordships will feel that the Treasury, at any rate, is doing its share in encouraging a climate in industry in which design can flourish.

Of course it is not just the Treasury which has responsibilities. The Department of Trade and Industry is the grant-giving body to the Design Council whose excellent briefing has surfaced--shall I say?--in a number of speeches today. The Design Council, as has been said--I do not need to repeat elements from the briefing--is deeply involved in national partnerships with the CBI, with the British Quality Foundation, with the curriculum authorities and, locally, as the noble Lord, Lord Newby, said, with Business Links, nearly

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all of whom now have design counsellors as well as marketing counsellors.

Other government departments are involved with the school curriculum where, as my noble friend Lord Puttnam said, there is good hope that art (including design) will be given a more formal place in the national curriculum. There is also the role of the Design Council in Millennium Projects which the Prime Minister launched in September 1997, in the speech which the noble Lord, Lord Freyberg, quoted. Four hundred and thirty three products have already been designated under the Millennium Projects Initiative, and there will be more later this year; rather similar to the stock list, which was the basis for admission to the pavilions in the 1951 Exhibition. Certainly I can confirm to the noble Lord, Lord McNally, that they will feature in the Dome. They are of course already being exhibited overseas, and will continue to be exhibited.

He spoke about lottery money and I was glad to hear about the Verulanium Museum and also to hear of my noble friend's part in its opening. That is being repeated in dozens of places all over the country and with all these openings and new projects there are new opportunities for design. My noble friend Lord Puttnam is also responsible of course for the National Endowment for Science, Technology and the Arts. That has a very great part to play in that most difficult issue identified by many speakers of how to make progress from an idea to something which is actually marketable. NESTA is based in part on the idea that venture capital markets have not proved themselves to be sufficient for that purpose. For that reason, confirmed by the very welcome intervention of my noble friend Lord Hughes, NESTA has its part to play in what we all wish for and what has been expressed in this debate.

I should now like to respond to the noble Baroness, Lady Denton. First of all, on devolution, the Design Council will of course remain a body covering the whole of the United Kingdom but it will be working closely with Scottish Design, Welsh Design, the Advisory Service and the Design Directorate in Northern Ireland. Of course, where they overlap with education, education is a devolved responsibility.

The noble Baroness asked about new designers in business. I can confirm that Miss Peta Levi continues to receive support from the department and help towards running costs and to exhibit overseas.

As many noble Lords said, design is one of our great strengths. I am not sure that I believe some of the figures about the size of the industry that were produced, for the reason I have already indicated. It is certainly true that the industry is enormously important both in terms of turnover and employment. Of course, it is important internationally and it contributes to our overseas trade balance. The Department of Trade and Industry and other government departments do everything they can to encourage exporters to make use of design capabilities that exist in this country and can assist in our export drive.

I do not know how many civil servants there are with design qualifications, but with 62,000 design students

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in 119 universities and colleges it is a fair bet that a considerable number will, in one way or another, enter public service.

I have found the figures I was looking for. The turnover of the creative industries is £60 billion and there are 1.4 million people employed in such industries.

I have reached the end of the recommended time. I reiterate my thanks and the thanks of the Government to the noble Lord, Lord Freyberg, who instigated the debate. I want to conclude with the words of the noble Baroness, Lady Seccombe. Like her, I believe that the Government are upbeat but not complacent about design.

7.1 p.m.

Lord Freyberg: My Lords, I want to thank all noble Lords who have contributed to this debate. We have had a wide-ranging and thought-provoking discussion. I especially want to thank the Minister for his helpful reply. I look forward to reading it in Hansard. In particular, I want to thank the noble Lord,

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Lord Hughes, for his kind words and for breaking his own rule of not speaking in the gap. In the meantime, I wish all noble Lords a happy Easter. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.


Baroness Farrington of Ribbleton: My Lords, in moving that the House do now adjourn, may I echo the wishes of the noble Lord, Lord Freyberg, that all noble Lords present and those not present have a rejuvenating Easter period. I also thank all our staff, who have had a particularly taxing week, not least those who produce Hansard. They are not seen as clearly by us now, but they too have had a taxing week.

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

        House adjourned for the Easter Recess at three minutes past seven o'clock until Monday 12th April next.

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