Examination of witnesses (Questions 40
WEDNESDAY 13 DECEMBER 2000
and MR DAVID
40. I hope they do compete with you in the north.
Did you take into account, when you made the decision, that it
was not going to lie down and die?
(Mr Siddall) Their decisions are their decisions.
Our job is to look after HRI and the core capability of HRI. Our
mission is quite clear: to deal with research and development
for horticulture in the UK. We have too much capacity. We had
to close a site and we chose Stockbridge. The reasons we have
given many times are clear. We believe they are the right reasons,
others do not. Whatever happens to Stockbridge is not our problem.
We realise it might be difficult in the light of current developments
and that they are going to cause some undue competition. We did
not anticipate that. We do not think it is in the best interests
of UK horticulture, actually, and we really feel that our duty
is to concentrate on the main job which we have, which is to look
after the core capability of HRI.
41. Mr Siddall, you are someone who has made
a business in management outside of horticulture.
(Mr Siddall) Yes, I have been accused of this before,
I seem to remember.
42. So have I! Do not worry. I am conscious
that you must have advised your colleagues who are less experienced
in this on the risks involved in this closure should an alternative
body take over this site and successfully trade in a niche in
your market place. I think your accountant has indicated that
if that were to happen that would place HRI at significant risk
of a further need to make substantial reductions in its cost base.
Is that a reasonable assumption?
(Mr Siddall) No, I do not think it is. I certainly
take your point that there were risks here. I do not think we
saw the risks in the way that they have actually turned out. Hindsight
is a wonderful thing.
43. You did not think that these guys would
say "I think we can do this job for ourselves"? I must
admit that would havein your business and minebeen
an obvious risk.
(Mr Siddall) I do not think it is up to me to comment
on the viability of what they are proposing. I think this is up
to them. Our view is that there is a certain amount of money to
go round in this sector and it is not sufficient to support all
of these activities. So we wish them well, but we have severe
44. You think that they will talk a lot but
it will not come off?
(Mr Siddall) It might well come off because it will
be supported by local funds, but I do not think it will be viable.
45. But while it trades it will have a significant
impact on your ability to generate revenue.
(Mr Siddall) I think "significant" is a
word which we would probably
46. Let us quantify it. We have heard £650,000,
perhaps a bit more.
(Mr Temperley) The total turnover of Stockbridge House
is of the order of £1.2, £1.3 million.
47. You have assumed that virtually all of that
will be transferred straight into other HRI activities.
(Mr Siddall) Most.
48. If that were not to happen, then that would
really have a major impact on whether this restructuring was going
to be successful at all.
(Mr Siddall) No. I think the point we need to make
clear is that the type of business we are talking about here,
even the commercial contracts which have been referred to, at
Stockbridge House is not actually what we see as the future business
that HRI will be looking for. It comes under the heading of "sweating
the assets". It is actually producing crops which we do not
see as our primary task. Our primary task is to do with the science
and the development and the linking of those things through to
the benefit of the industry. That is what we do.
49. Just to get absolutely clear, your business
assumption was that in the short term income would transfer to
other parts of HRI but in the medium term this was not a sector
you were particularly keen to focus on anyway.
(Mr Siddall) That is right.
50. You would be, therefore, happy for the funds
that are allocated to be allocated to other bodies, either a successor
at Stockbridge or universities, or whoever else?
(Mr Siddall) Yes, I think that is right, and it does
come back to your earlier point about a monopoly; we are not a
monopoly provider. We are subject to risk, we are subject to competition
from universities which are subsidised. As you have seen from
Professor Payne's submission, they are coming in at cut prices
with which we cannot compete. So competition is nothing new. That
makes us even keener to make sure that we have got the business
proposition of HRI clear and that we are concentrating on getting
business from those sectors which will remunerate us best and
for which we have the best capability. We have got an excellent
team of scientists, we have a well-established capability
51. Has that message got across to your customers,
that you are basically in the medium term saying goodbye to a
large chunk of their business and saying "Well, actually,
that does not turn us on very much, because it does not make a
return on our assets. Please do place it somewhere else."?
(Mr Siddall) That is not correct. I really wish to
52. Fair enough. This is your opportunity to
get that message really clear about your strategy, because that
is what I think I am getting from my question.
(Mr Siddall) There is a long answer to this, I am
afraid. It goes back to the initial assumptions behind the commercial
strategy of HRI, which was launched in the sort of late-1990s,
associated with the name of HortiTech. The idea there was that
HRI had surplus capacity. It had been known for many years that
HRI had that surplus capacity. Again, Professor Payne's paper
(I commend it to you) does cover this; he was the Chief Executive
at the time. He said that at that time we shied away from closing
more sites and we went for "Let's try and do something on
these sites because they are free". Unfortunately, that was
the HortiTech strategy which the board, at that time, supported
and MAFF supported. That, effectively, got us into areas of work
which are not, as we see it now, the core business of HRI. It
is not actually science, and it is not actually technology transfer,
but it is actually production. There is no group of people who
shouted louder than the growers themselves when they saw what
HortiTech was up to, and when HortiTech started to get into trading
with China and importing plants for use in the UK, which was one
of the bright ideas that arrived late in the history of the previous
incumbent, there was hysteria, I am afraid. We do not do this.
We are devoted to the industry and bringing science and technology
to the industry as fast as we can, and we know that we have to
be better at that and that our lines of communication with growers
and consumers are not as good as they should be. So that is the
rationale. We do not want to go back to the days of planting things
for the sake of filling our capacity, filling our fields and filling
53. Even if it has customers?
(Mr Siddall) It has customers but it does not
54. But they do not pay enough of a return?
(Mr Siddall) It is very marginal. Certainly the future
strategy of HRI will not be successful on that basis.
55. Can I suggest to you, lastly, that it would
help if you produce a very clear mission and strategy for your
customers which gets across, I think in rather sharper terms than
you put it to us, exactly what this business is about and, perhaps
just as critically, what it is not about?
(Mr Siddall) Yes, I agree. Thank you for that.
56. For the record, why was Stockbridge House
built where it is?
(Professor Wilson) For the history of Stockbridge
House, my goodness that is long before my time. I believe it was
compulsorily purchased during the war, I do not know which war.
I was not born. My understanding is that it was put there, initially
I think rhubarb featured highly in its programmes, and obviously
salad crops and so forth. Why it was acquired by ADAS, or run
by ADAS, or built by ADAS and became part of HRI, I am sorry I
cannot fill in the history. One could equally argue for building
an institute or a site in Cheshire or in Dundee.
57. The reason I ask that question is just to
seek from a scientific standpoint that in your judgment there
is nothing unique about the micro climate, the soil or any other
characteristic about Stockbridge House which makes that a special
site? Because, as Mr Mitchell elicited earlier in his line of
question, there is a strong sense of feeling that the northern
half of England is being abandoned as far as horticulture research
is concerned and combining Lancashire with Yorkshire you would
have, if you like, across that band one of the most important
locations for horticultural crops, both protected and field.
(Professor Wilson) The proximity argument is a clear
one and this was why we expected some of the reaction we got.
I am advised by those who participated in the discussions, and
indeed in the decision making, that micro-climate was a feature
particularly in favour of Efford, which sat in the light corridor
and the soil quality was a feature of Kirton which sits on the
black soils of Lincolnshire and all that business. None of those
arguments I heard from any of my horticulturalist or agronomist
friends and colleagues in HRI. No-one spoke up on any of those
criteria that Stockbridge House had to be maintained.
58. You are not convinced by the good Yorkshire
phrase "Where there's muck there's brass"? In the main
there are lower operating costs in the northern half of the country.
Is it more expensive to do the type of work which Stockbridge
House has undertaken at other locations or is it the same?
(Professor Wilson) It is exactly the same. Our staff
pay rates are the same.
59. Right. During the campaign, and particularly
as reported in the august publication The GrowerI
may say I read it every week for any Grower representative
who might be here, please keep sending me the magazine
(Professor Wilson) I have come to read it.