Select Committee on Agriculture Appendices to the Minutes of Evidence


Memorandum submitted by Professor CC Payne OBE, Head of Dept of Horticulture & Landscape, The University of Reading (D 36)


  In providing the information and views given below, I am responding to the invitation from the Agriculture Committee to provide an appraisal of horticultural research in the United Kingdom and HRI's place within it. From 2 July 1990 until 31 July 1999, I was Chief Executive of HRI. I left HRI to take up an appointment as Professor of Horticulture and Landscape at The University of Reading, a post that I have occupied since 1 October 1999.

  HRI is the leading centre for horticultural research and development in the UK. It is also probably the largest single team of horticultural scientists within the world. Areas of the research undertaken at HRI are of high international quality, with the majority of the research programmes of a high national standard and of specific relevance to the R&D needs of the UK horticultural industry. In creating HRI in 1990, the UK Government initiated the development of a major national and international asset in horticultural research. In addition, the Government made a significant investment in HRI's infrastructure, including £44 million to improve the capital buildings within HRI. This has delivered unrivalled facilities for horticultural research and development. However, throughout its short 10 year history, HRI has had to face and deal with major recurrent funding problems. In addition, some structural issues (eg the absence of legislation to provide common staff terms and conditions of service) have not been resolved since HRI was created in 1990, and have hindered the organisation's development.

  From my perspective the key factors that have hindered the organisation in fulfilling its full potential are summarised below:


  Throughout most of its 10 year existence, HRI has had to adapt to an income for R&D from MAFF that has not kept pace with inflation, or has declined. MAFF's own research budget has also declined in real terms, and priorities have shifted (including the focus on BSE research and other food safety issues). At the time that HRI was established in 1990, the organisation was almost a monopolistic supplier of horticultural R&D for Government customers in the UK. Thus, almost inevitably, as the Customer-Contractor principle for R&D commissioning became more firmly applied in the early 1990's, some work was placed with other R&D organisations. This trend to widen the contractor base continues not only in Government Departments such as MAFF but also increasingly with the commissioning of research by the Horticultural Development Council, another important customer for HRI. Unlike some organisations, HRI has always had to recover the full economic costs of its overall operation from its R&D customers. HRI has no core or seedcorn funding for any of its recurrent costs. In such situations, although HRI can usually compete with most other potential contractors with regard to scientific excellence and relevance, it cannot always compete on price. In situations where the "Value for Money" contractor is sometimes wrongly interpreted as the "cheapest", HRI has lost out. Despite this, HRI has had real success in attracting income from other sources, including the EC, other government departments, levy bodies and commercial organisations; however, it has not been possible to offset totally the reductions in MAFF funding.

  I recall that the consequence of declining funding led in 1990 and 1996 to major reductions in staffing via natural wastage and compulsory redundancy. Recognising that there would be continuing pressure on public sector funds, and consistent with HRI's overall objectives to increase income from commercial sources, the organisation adopted a more proactive strategy in 1996-97 to build its commercial business and to build a better future for its staff. As Chief Executive, I took the view supported by the HRI Board, that HRI should seek to "market and sell" its services and facilities more effectively. The alternative strategy that was considered at this time was to close one or more sites in order to reduce costs. In internal discussions, sites including HRI-Stockbridge House, HRI-Kirton and HRI-Efford were considered for closure. These sites were undertaking valuable research and provided an important interface with the horticultural industry. However, the income for the R&D programmes carried out on each of these sites fell far short of the full economic costs of the work. Despite considerable efforts on the part of many HRI staff over the last three-four years, I understand that the commercial income levels have not increased sufficiently while, at the same time, MAFF funding has continued to decline. I am therefore not surprised that HRI, like any business facing a similar situation, has had to revisit the question of site closure.

  In conclusion, the two issues that I would highlight as contributing most to HRI's recurrent funding problems are:

    —  The absence of core funding and the need to price work to recover, overall, the full economic costs of operation. In the original concept of the Rothschild customer-contractor principle, it was anticipated that 10 per cent of the value of government research contracts should be used as seedcorn or core funding. This important recommendation has never been implemented to my knowledge. This meant that HRI was unable to generate any "profit" from public-sector funded research, to allow reinvestment in the future.

    —  HRI has not been in a position to plan over the long-term for the reductions in MAFF contract funding, with decisions being made by the MAFF customer at short notice. (I realise that MAFF themselves have frequently had to respond rapidly to changing Government priorities and spending settlements for R&D).


  It was the original intention, when HRI was first established in 1990, that all staff would be transferred to HRI Terms and Conditions of Service. The legal advice was that this required primary legislation. Despite the considerable efforts by civil servants and MAFF Ministers, I believe that this legislation has still not been included in parliamentary business. As a consequence, many staff working within HRI are still formally the employees of BBSRC or MAFF. This has had a number of consequences. Firstly, it has been difficult to generate an "HRI-ness" amongst staff. Although staff have co-operated well during the "good times", when the financial pressures have been intense a "them and us" culture can still emerge (as now).

  Secondly, the unresolved employment situation is, I believe, a continuing irritant for BBSRC and MAFF, which is not helpful for HRI's relationship with both.


  It is entirely appropriate that HRI, as an NDPB, should be accountable to its customers and sponsors. However, the frequency of review during the last 10 years has been intense, in addition to the close scrutiny of individual research contracts by customers. Major reviews included scientific visiting groups in 1990 (just before HRI's formation), 1994 and 1998. During the period 1995-97, HRI also participated in the Government's Prior Options review of PSREs, which I recall as a disproportionately protracted process that involved considerable senior staff input and inevitably imposed a planning blight during this period. I was tempted at that time to use the horticultural metaphor, that if you continue to pull up a plant and inspect its roots at regular intervals, then that plant is unlikely to flourish. I firmly believe that HRI has the potential to become an outstanding national and international asset. However, to extend my horticultural metaphor, it needs the right amount of light, nutrients and support from those who wish to benefit from it, in order to enable it to achieve its full potential.

28 November 2000

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