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9 p.m.
Lord Chapple: My Lords, I am concerned with the content of HRI and the effect that anything that happens to ADAS will have on other associated parts of the industry. I should like to quote first from the Amos Memorial Lecture given by Sean Butler in November. He said that,
- "it is difficult to encompass the contribution of PSR [public sector research], to evaluate it and to capture it, either in terms of outflow from PSR or inflow to industry. It is difficult even to identify the flow of knowledge from academic source to industrial product, because there are so many contributors who add to, enhance, define, develop, and refine that flow. On the other hand, it is sometimes possible to identify specific discoveries or developments made by scientists in PSR, particularly in plant breeding, and then to trace the commercial outcome. It is because academic research can be seen to contribute to 'wealth creation' in both general and specific ways that the precise performance of PSR is so hard to define"
That must surely be a warning that we shall throw the baby out with the bath water if the Government proceed to privatise ADAS and its accompanying departments.
I turn now to HRI. Professor Payne, who is currently its chief executive, wrote a short paper, and I make no excuses for quoting from it again. In it he states:
- "HRI is a public sector research establishment. It was set up by Government in April 1990, following extensive rationalisation, as a MAFF-sponsored Non-Departmental Public Body ... It was intended to be a centre of specialised excellence that would serve and support the UK horticultural industry. It has achieved this goal".
- "The UK Horticulture industry strongly supported, indeed requested the formation of HRI in 1990. Horticulture has great potential to create wealth and rural employment. The industry is largely unsubsidised and operates in a highly competitive world; fresh uncertainty over the future structure of the industry's R&D base is very damaging. The UK horticulture industry requires and uses research to keep abreast of its international competition.
- "UK growers contribute significant sums ... to support applied R&D. Strong Government support for horticultural R&D is justified because the industry is composed mainly of small and medium-sized
- businesses, none of which by themselves is able to sustain a strategic research programme. In addition, innovation in horticulture is essentially a public good to the benefit of the consumer. Any reduction in horticultural R&D in the UK will lead to a reduction in industry competitiveness".
Indeed, it would kill off half of those who are currently involved.
Your Lordships' Select Committee on Science and Technology took the view in December 1994 that,
- "we would prefer the type of rationalisation of institutes undertaken with Horticulture Research International, which occurred as a result of identifying the needs of the relevant industry and then adapting the organisation of the research".
The House of Commons Agriculture Committee report on horticulture published on 9th August 1995 stated that,
- "HRI received almost unqualified support for its work from those who gave evidence ... We consider that MAFF sponsorship of HRI is better suited to take advantage of the vertically-integrated nature of research at HRI and to facilitate technology transfer. We recommend that sponsorship of HRI remains with MAFF".
Professor Payne's report states finally:
- "At present, HRI's mission requires a breadth of coverage of research discipline and horticultural commodity that a private sector buyer is unlikely to be able to sustain. Private sector ownership of HRI, whether as a company or under university ownership is likely to lead to fragmentation and changes in mission which would reduce its effectiveness. It seems unlikely that a UK university will have the resources to endow or support HRI for the foreseeable future as universities are under very similar funding pressures to HRI itself. In addition, unless HRI is seen as a source of impartial advice, it is likely to lose its credibility. Any change that distances the industry would be greatly prejudicial to the future success and competitiveness of UK horticulture".
Both those people are very strongly involved in the industry. They both say simply that if the Government proceed with the privatisation of the industry, it will fragment and we shall be left with a rump of what now exists.
One fear that I have is that most of the departments of ADAS and HRI are situated in areas of countryside, sometimes near towns, and would be prime land for housing or other developments. It concerns me greatly that, if the horticultural industry is ruined, it will be ruined to benefit speculative development of housing on land which is currently used by those divisions of ADAS. I hope the Government will take time to consider and reach a decision on this when they receive the report from the prior options committee. It is rather like walking backwards to Christmas to try to know what "prior options" means in connection with what is happening in the agricultural and horticultural industry. I hope that, before the Government take any action on the report, they will allow comment in both this House and the other place.
9.8 p.m.
Lord Desai: My Lords, my first job was in agricultural research. I was employed by an agricultural economics department of the University of California to do research on the dairy industry. I tell you that because it was a publicly-funded research post at a publicly-funded department in a land grant college. All those things meant that the United States put public
money into agricultural education and research. To this day it continues to put public money into agricultural research. It is one of the most successful research communities that we know of. Like everywhere else, there are under-funding crises there, but across the spectrum the government of the United States of America are a big investor in research because they know that research is essential to economic growth.When the Minister replies he will probably say that we always oppose privatisation. He will say, "So what is new?" Let me therefore draw a line at the fact that there are known areas of research and education--and in health, though I do not want to go into that--in which it has been demonstrably proven that public ownership and public funding are more efficient and superior, bringing both direct and indirect benefits to the country. I know of no study which shows that privately conducted basic research is less costly than publicly conducted research. To measure the benefits of research is more difficult. As the noble Lord, Lord Chapple, said, there are direct and indirect benefits. But we know from larger studies, in economics and elsewhere, that investment in research and development is a very important and crucial input to growth.
In this case and also in the larger case of funding public research and research in universities, the Government have continuously and inexorably made us privatise; they have made us either cut resources so that British science is a cry outside, or they have made us more marketised. The consequence of this--and it will follow in ADAS--will be that research will be more expensive.
The Minister will ask where the money is to come from. The Government spend £350 million on management consultants. I am sure that a lot of that expenditure was not required previously because there was in-house capability to answer those questions which the Government now have to go outside to have answered. Something is not value for money just because it happens in the private sector; it will probably be value for money in the public sector as well. If value for money is defined in terms of profitability of an enterprise, then a government-owned enterprise will not work.
I agree with my noble friend Lord Carter. This is not to do with efficiency; it is to do with obtaining some money to reduce the PSBR. The problem is that in other areas finances have been so badly managed that the Government now have to sell everything to make a small reduction in the PSBR. I believe that the privatisation of the Agricultural Development and Advisory Service and agricultural research organisations will be a tragedy.
9.11 p.m.
Lord Mackie of Benshie: My Lords, I follow the noble Lord, Lord Carter, in hoping that we shall have a serious debate and a serious reply. I follow him in putting a question to the Minister. In his reply to my starred Question on 19th November he finished by saying:
- "As we have a minute left, perhaps I may say what are the principal objectives that we have set ourselves. First, we want to transfer the functions of ADAS and associated risk to the private sector on the best available terms".
I presume that that means for the most money.
- "that is, terms which optimise the risk-adjusted net benefit".
Perhaps the Minister will be good enough to explain that phrase to my simple mind. He continued:
- "Secondly, we want to ensure that services provided to MAFF and the Welsh Office from the private sector can be delivered continuously, economically, efficiently and effectively".
I should have thought that the services should be provided to farming. He then said:
- "Thirdly, we wish to provide a clean break from the Government and minimise contingent liabilities". [Official Report, 19/11/96; col. 1199.]
I presume that must mean that he wants to save the Government money.
Perhaps I may put a question on which the Minister will have time to consult the available authorities. What is our position in the table in Europe for spending on agricultural research and advice? Are we at the bottom or half way down? Where are we? If he is able to do so, perhaps the noble Lord can answer that question directly and not by letter.
I turn to Scotland and quote from my own experience and background. I have an interest to declare because my grandfather was a founder member of the North of Scotland College of Agriculture; my uncle John was the chairman of governors; my father was the chairman of governors; my brother, Lord John-Mackie, was a vice-chairman of the governors; my other brother, Maitland Mackie, was the chairman; and my nephew is at the moment the vice-chairman of the combined Scottish college. So I have a certain interest to declare.
My interest springs from a long experience of the advice given by the Scottish colleges--as separate bodies when I was farming, although latterly together. The advice was free and it was impartial. The great thing about it was that one could be sure that advice from the college was given without prejudice. Furthermore, one could also be sure that you could tell any neighbour who was in trouble or any farmer who did not realise that such advice was available that he could have that advice and have it free.
Today the Scottish Agricultural College is one college, and that is right. It is run on a fairly commercial basis. I think that it is well managed and that it provides good advice. But it provides advice on a commercial basis and the price is about £50 an hour. That is not dear for good advice but that is what it costs. The fact is that the amount of use of the college has fallen since the introduction of a commercial standard. That is not bad in itself, but if one wants to put it on a fully privatised basis one ultimately moves to a state in which the objective is to make money.
That is not the objective of a college. The objective of a college is to give good advice and to make money for its customers. If it goes on to a fully privatised basis, in my view it will ruin the whole basis that has been so successful in the past.
I pursued investigations in my home territory and telephoned various people, asking for their experience. I found that the amount of advice given--the use made of the service--had gone down with the constant rise in price. The Government have dropped the allocation of money to the service every year and it has had to put up the charges, with the result that only the most efficient people are using the service, not the kind of people who need to use it. Surely, that is not the object of the exercise. It is a very dangerous position.
I went further and telephoned a friend who is a very competent farmer farming 400 or 500 acres of good land in the Howe of Strathmore. He is an energetic chap. He grows new crops and he seeks niches. He grows very good asparagus as well as everything else. I asked him, "How much do you use the college for advice?" and he said, "Frankly, hardly ever. I don't have a sprayer because I use a contractor and so I take the advice of the chemical spraying company." It is a highly dangerous position when that sort of thing is going on with a highly intelligent and very capable farmer. He said, "I know that it's not free. I don't pay anything but in the long run I know that I am paying."
There we come to the essence of agricultural advice; namely, that it should be directed at farmers for their benefit. But it should also be such that the public trust it. Never in my lifetime--I have been in farming for a long time--have I known a time when the public distrusted more the methods of farming. It is quite extraordinary. The great example is BSE. The whole industry has been thrown into extraordinary confusion, loss and so on, by the feelings of the public. British beef today, with all the precautions that are taken in cutting out the spinal cord and removal of any unfit offal, is probably safer than it has ever been. But a large section of the public do not trust it. Therefore, every advisory body should and must be a body whose impartiality cannot be questioned.
A very able chemical company is producing a bean. It is the only bean resistant to the weed killer it sells. That is a smart move but the implications are not such as to make the public put any trust in it. The Government believe they will save money and that ADAS as a private company will be efficient and competent. That attitude is enormously shortsighted. I should like the Minister and the Government to think again.
When we come to research we are in an even more difficult position. Again I shall quote from Scotland which I know well. The Rowett Institute, the Macaulay Institute and the Moredun Institute are all famous bodies. They are dependent for more than half their income on private firms. That must influence their impartiality. It is good that they should get what we call near market jobs but the basic research is so essential and the basic research into the issues which bother the public is so vital that if the Government are aiming to save money it is a very short-term attitude indeed.
I have just come from a meeting of the agriculture and rural development committee of the Council of Europe. We heard evidence from four members of the research bodies looking at fishing--both aquaculture in
the ecology of the fishing and the general hunting of fish. We were trying to find out whether the research was being co-ordinated. When I talked to the Danish member of the committee who knew her British colleagues well I asked her why among those four people there was no mention of a lack of funding. She said that the only people who suffered from a lack of funding for research were her British colleagues who were always complaining that they did not get it. That is a very dangerous situation.
Certainly, privatisation might produce tightly run bodies. But does it fulfil the main object? I do not think it does. I think this is a highly dangerous move. I hope the Government will think more about the long term and much less about the short term in this matter.
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