Fourth Standing Committee
on Delegated Legislation
Tuesday 11 March 2003
[Mrs. Marion Roe in the Chair]
Draft Apple and Pear Research Council (Dissolution) Order 2003
The Minister for the Environment (Mr. Michael Meacher): I beg to move,
That the Committee has considered the draft Apple and Pear Research Council (Dissolution) Order 2003.
The Chairman: With this it will be convenient to consider the draft Horticultural Development Council (Amendment) Order 2003.
Mr. Meacher: The purpose of the motion is to transfer the work of the Apple and Pear Research Council to the Horticultural Development Council, and that will be achieved by dissolving the APRC and extending the remit of the HDC to cover apples and pears.
The HDC is an executive non-departmental public body funded by a statutory levy on growers of horticultural produce. The council was established by the Horticultural Development Council Order 1986, under the provisions of the Industrial Organisation and Development Act 1947. The main function of the council is to commission research and development on behalf of the horticulture industry. The order excludes apples, pears and hops. The Apple and Pear Research Council is also a levy-funded executive NDPB and it has a research and development remit in respect of apples and pears. Also founded under the provisions of the 1947 Act, it was established in 1989 as the successor to the Apple and Pear Development Council, following a statutory review of that body. I think that that is the last acronym that I have to introduce.
Agriculture department Ministers appoint the chairman and council members of both councils, but there is no public funding involved. The HDC raises about £3.6 million from the levy, of which about 11 per cent. is spent on administrative expenses. It commissions near-market research, building on strategic horticulture research programmes, including that of the Department for Environment, Food and Rural Affairs, carrying results through to market application. The APRC is a much smaller organisation, and its levy has been declining with a contracting apple and pear industry. It raised just under £261,000 in the year ending 31 March 2002, when administrative expenses were running in excess of 33 per cent. of income.
Research funded by both Councils has been directed at crop protection, reduction of input costs, increased efficiency and yield, improved quality and post-harvest technology. Among other things, the research is helping to meet the demand of consumers and retailers for food that has been produced using fewer chemicals.
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As organisations established under the Industrial Organisation and Development Act 1947, both councils are subject to statutory review at five-yearly intervals. The purpose of the reviews is to determine whether or not they should continue for a further term and, if so, whether any changes are required to their structure or remit. The last review of the HDC was completed in 1999 when, following a consultation exercise and a poll of levy payers, agriculture Ministers agreed that the council should continue for another five years. One of the conclusions from that review was that at the next review of the APRC the possibility of a merger with the HDC should be considered.
The statutory review of the APRC commenced last year. A crucial part of any statutory review is the prior options review, which considers various options for conducting the business of the body, including abolition and merger with another body. As part of the APRC review, an independent economic evaluation of the council was undertaken by a team of consultants from the university of Reading. This evaluation was intended to contribute to both the prior options and subsequent parts of the review. Two particular terms of reference for the evaluation were to consider whether there was a continuing rationale for a levy-funded body dealing with near-market research relating exclusively to apples and pears and to assess the implications of a merger of the APRC and HDC in terms of efficiency, research quality and value for money.
The report from the economic evaluation concluded that there continued to be a requirement for a levy-funded organisation carrying out near-market R&D in support of the UK apple and pear industry, and recommended that the functions of the APRC and the HDC should be merged. The continuation of a separate development council solely for the apple and pear industry was seen as unsustainable in the face of declining levy income and the proportion of the council's income that was being devoted to running costs. The report highlighted the expectation that economies of scale resulting from a merger would lead to more of the apple and pear levy being devoted to research, and saw the existing technology transfer mechanisms employed by the HDC as an improvement on current APRC arrangements.
The recommendations of the economic evaluation were subject to consultation with the industry, which was supportive of the proposed merger of the two councils. All Great Britain Agriculture Ministers supported the recommendation. The orders that we are discussing today effect the merger by dissolving the APRC and extending the remit of the HDC to cover apples and pears. The opportunity is also being taken to extend the remit of the merged council to allow it to undertake market research and generic promotion, thereby implementing recommendation 28 of the report of the Policy Commission on the Future of Farming and Food—the so-called Curry report. The HDC's remit to commission research into health and safety issues is also clarified.
Essentially, the Horticultural Development Council (Amendment) Order makes the following changes. It allows the HDC to raise a levy from growers of apples
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and pears, on the same basis as the current APRC levy. It adds an additional member to the council, who will represent the interests of growers of apples and pears. It extends the council's remit to allow for market research and promotional activities. It clarifies the council's health and safety remit. The amendment order also makes a change to the maximum permissible rate of levy for apple and pear growers. The Apple and Pear Research Council Order 1989 provides for a maximum permissible levy rate of £25 per hectare planted with apple or pear trees. The actual levy rate is currently £24.50, so there is little scope for future increases. We are therefore increasing the maximum permissible levy rate to £35. I must emphasise that this will not result in any increase to the current levy rate; it merely increases the maximum ceiling rate.
The APRC (Dissolution) Order will wind up the council and transfer its assets and liabilities to the Secretary of State. Once the liabilities have been dealt with, the remaining assets will be transferred to the HDC to fund apple and pear research. The two councils are co-located in East Malling in Kent, and in the run-up to the merger they have been working together to ensure a smooth transition with the minimum of disturbance to levy payers.
So the merger of the APRC and the HDC is something that can only be of benefit to payers of the apple and pear levy, and I am pleased that the industry has given its approval to a move that will make it stronger in the future.
Mr. John Hayes (South Holland and The Deepings): I shall not detain the Committee unduly. Indeed, I think that I would be stretching the patience of the Committee if I were to speak in a manner that led to a long and tortuous debate, although not stretching your indulgence, Mrs. Roe, which is legendary.
The matters before us relate, as the Minister has explained, to important issues relating to fruit growing. The proper concerns that people had about the measure were that the continuity and quality of research should be maintained, and that cost-effectiveness should be ensured. It seems to me that the measures satisfy those three important tests. That is evidenced by their acceptance by the industry. I shall make some particular points in a moment, but broadly speaking there is a general view that the measure is a sensible and practical step forward.
I have here the latest copy of APRC News, which as you can imagine Mrs. Roe, is high on my reading list. It says on the front page:
''Over recent months we have been working closely with the HDC to ensure a smooth handover.''
It goes on to say that the APRC believes that continuity of research will be maintained, and that the legacy of research and development funded by the levy is secure. So there is certainly no question that those associated with these important matters in any way challenge the assumptions that lie behind what the Minister has recommended to us.
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I simply ask two important questions. There will be general agreement that we need to maintain top-quality fruit research. The Minister will be aware, however, of real doubts about horticultural research in general. This is not the time to explore them; I simply flag them up. Apple and pear research is important, but so is all other horticultural research and, as the Minister will know, there is uncertainty about the continuation of that research.
I seek a further assurance about competitive edge. The quality of horticultural research, including apple and pear research in the United Kingdom has been significant, and it has given us a considerable competitive edge. I want an assurance that there is no danger that that will be eroded. I do not think that there is, but it is important to put such an assurance on the record.
I acknowledge what has been said about the economic evaluation, but I want to add something about the need for continuity of research in respect of accountability and management. As the Minister will know, it has been suggested that there needs to be a continuing role for a research manager. I know that a committee will be set up within the Horticultural Development Council to deal with apples and pears, but there is an argument for preserving the post of research manager to provide a focus and accountability.
Having made those small points, I am delighted to say that I have succeeded in my ambition not to detain the Committee unduly, and that the orders can enjoy the support of the whole Committee.