HL Deb 10 November 1988 vol 501 cc807-28

8.7 p.m.

Lord Carter rose to ask Her Majesty's Government on what basis government-funded agricultural research and development in excess of £30 million has been identified as near market to be funded by the agricultural industry and how they propose that the necessary funds should be raised.

The noble Lord said: My Lords, almost exactly one year ago, on 4th November, I tabled an Unstarred Question asking the Government to outline their future policy on agricultural research and development. I asked whether the Government planned to reduce staff in the agricultural research and development sector.

I do not propose to go through the whole debate we had then, but it may assist your Lordships if I remind you of what the Minister said on that occasion. The noble Baroness, Lady Trumpington, said: I said that there is no specific plan to reduce the number of staff engaged in R&D or advisory work … I repeat that the emphasis is on the balance of funding as between the public and private sectors and the priorities that we should adopt".—(Official Report, 4/11/87; col. 1072.)

That policy has now evolved in at least one respect. We have the Barnes review on agricultural research and development. However, it is still evolving in another respect. We have the Packer review of ADAS. Is that review completed and when will the outcome be announced? There is of course a strong R&D component in ADAS.

Having considered the Barnes review, I have no reason to change the view that I expressed in this House on previous occasions when I compared the review with that undertaken by the Government in the National Health Service—conducted behind closed doors at breakneck speed and designed to produce the answers that the Treasury and the Cabinet Office want. If I intended to be very rude—and I will not—I would describe it as a combination of knee-jerk and ideological spasms. It is no way to organise and review a major scientific effort.

We should set the debate in a wider concept and refer to the science and public expenditure survey of last year from the advisory board. Referring to the health of the science base, it said: The science base exists to serve national needs: it is the essential seed-bed for future marketable technologies and trained scientific manpower. These needs have become more pressing in recent years, and the pressures are continuing to grow, in large part from industry. We welcome this; the nation's future economic success hinges on it. International competition has increased, both in scientific research and in commercial exploitation. We must invest in the science base at a level which will help UK industry to meet this challenge, and which will keep our best scientists in the UK. Society's more widely based aspirations as articulated in the Government's policies, for example, better health, and a cleaner environment at reasonable cost depend in the short and longer term upon research undertaken by the science base.

We have to remember that all this follows the 20 per cent. cuts in R&D implemented between 1985 and 1987. The same report on science and public expenditure that was before Barnes says: The AFRC envisages that some 20 existing research programmes will need to be significantly reduced and in some cases competely eliminated … New urgently needed research to develop farm forestry, and on materials science in food biotechnology and processing, will remain unstarted. The planned further increase in research grants to universities will not be possible".

This was before Barnes. The National Environment Research Council remarked: The volume reduction implicit in current planning figures will, however, prevent redeployment to high-quality new research programmes on agriculture and the environment".

It must be said that R&D in agriculture has been very good value for the taxpayer and the consumer when one considers the 80 per cent. increase in agricultural productivity compared with the 20 per cent. increase in the economy as a whole. I believe that the Government have given themselves a considerable problem with the definition of near market research and the attempt to squeeze projects into the near market definition. Perhaps the most cynical definition of near market that I have seen was given to me by a research director who described near market as intended to measure the length of the piece of string that the Treasury and the Cabinet Office allow MAFF.

Perhaps I may show briefly what are the practical difficulties from the coal face, as it were, from letters that I have received from directors of two research institutes. One letter states: In many respects, the work identified as near market has been identified in what appears to be an arbitrary manner, and in present discussions with representatives of the agricultural industry, they often fail to recognise where the claimed benefit lies. For example, fundamental research on the computer modelling of agricultural systems is said to be near market, perhaps because it is confused with commercial management packages. Even if the near market concept is accepted, there remains a degree of naivity about implementation. The underlying assumption that you can withdraw 50 per cent. or even 10 per cent. of the funding for a commissioned programme unit and still expect the remainder to be viable does not bear close examination. Any part of a programme demands the presence of all the relevant facilities to function and the maintenance of the infrastructure draws on overheads from the full income. Belatedly, MAFF seem to be recognising this, but are now making ominous noises about restructuring the remaining programmes to ensure more efficient use of funding. The combined effect of the above make forward management of research look like a form of Russian roulette".

If it is hard enough now to define near market research, what will happen in the future? The second letter states: Regardless of the merits of the near market concept as a means of determining the broad balance of R&D funding between government and industry, it will generate debilitating uncertainty if applied on an ongoing project-by-project basis henceforth. For instance, MAFF has observed that the near market part of a project may fluctuate considerably from one year to the next. Additionally, research of great fundamental importance may have a substantial near market component. If the latter is of lesser interest and fails to attract industry support it may nevertheless call into question the viability of the former".

I had a very interesting letter from a farmer who is himself the chairman of an experimental husbandry farm. In it he said, as regards a meeting he attended: A point I raised that I felt was not dealt with properly was that it had been comparatively easy for Chris Barnes to have done his current exercise. All he had to do was to go through the list of projects and to decide within his interpretation of near market where cuts could he made on work already in progress. What I think will be much more difficult is how to allocate funds in future. For every project that gets taken up by the industry, there are a good many that may have looked originally to be runners but for one reason or another fall by the wayside. What I want to know is who will decide at quite an early stage which will be the runners. Also at what stage, when and by whom will the decision by made that they are to be defined as near market? I feel that those are a series of vital question; that need to he answered. The future competitiveness of UK agriculture will rely on the answers to those questions just as much as who is paying. I have always felt that negative answers were equally important as the goers. What worries me is that if commercially-financed work comes up with negative results, we will probably be none the wiser. This is already happening with silage additives. Several have evidently been shown to he a waste of time and are still being promoted and sold".

I ask who in future will decide on the boundary between the basic work, the strategic work, the work for the public good and the near market research. This is a very hazy and constantly moving line. When one goes through the list of projects that are supposed to be near market, some of them beggar belief. I shall not attempt to read them all. Some of them optimise fertiliser inputs in cereal production to minimise the risk of pollution. There is work on the pesticides, herbicides and the residues, all of which have a very strong consumer interest. All these have been listed as near market.

In the context of the work which involves pollution I remind the Minister of a remark made by the Prime Minister during her speech at the Royal Society. She said: we are left with pollution from nitrates and an enormous increase in methane which is causing problems".

I am sure that the Minister will tell us about the meeting she has had with sector groups. I have done a little research on the experience of the people who have been to the meetings, some of which were called at less than 48 hours' notice; some with less than a week's notice. Some were called in August when people were on holiday or on their combine harvesters. Information was requested but it was not forthcoming. The interested parties wished to know how the products were identified and costed, when they began and who authorised them.

One director of a farm co-operative who went to such a meeting said that if he had to ask his board of directors for support there was no way that that request could be formulated on the information provided. When it came to discussions on how to raise the money, the discussion just fell to bits. One of the most serious aspects of the whole matter is the question of job losses of trained and scientific manpower. Again in the Prime Minister's famous speech to the Royal Society she said: Everyone here, and no one more than myself, will support Whitehead's statement that a nation which does not value trained intelligence is doomed".

How does this attitude square with the projected job losses? I am sure that the Minister will be familiar with the figures. From the AFRC there will be 740 job losses; from MAFF itself there will be 625 and from Scotland and the colleges and research institutes, 147. That is a total of 1,512 over and above the job losses resulting from the cuts between 1985 and 1987. Does the Minister agree that if the required £30 million is not forthcoming, job losses on this scale will result? Only yesterday I was told that the top man in this country and perhaps in the world on the storage of fruit was on an aeroplane going to America where he has taken up a job because of the uncertainty in this sector at the moment. I am told that many more research workers are considering such a move.

We have the danger of trained and high-quality scientific manpower being lost not because of the quality of their work but because of the particular way in which their projects happen to be funded. I mentioned earlier the R&D component of ADAS. I have seen one forecast which suggests a loss of five experimental horticultural stations, four experimental husbandry farms and one R&D unit, with a total loss of 540 staff. There is another aspect which suggests that ADAS may lose £11 million of funding for near market work. I ask the Minister whether she can tell the House when the industry will know the Government's plans for the future of ADAS, particularly its R&D component, and how this relates to the Barnes review.

There seems to be no guidance from the Government on the crucial question of the funding of near market research. How is the money to be raised? In answers last week to the Select Committee on Science and Technology, the Minister, Mr. MacGregor, raised doubts about the raising of levies from the food industry. This seemed to leave the door open for levy funding from the agriculture industry. The noble Baroness will be aware that mechanisms exist to collect levies on virtually all produce.

Is she also aware that in the case of industrial funding other countries give substantial tax breaks for investment in research and development? In Australia there is a tax break of 150 per cent.; in the United States it is 100 per cent. There is an average of 50 per cent. to 100 per cent. in many other countries. France funds R&D largely by statutory levies and direct expenditure by government. The French equivalent of the AFRC is 90 per cent. funded by government. In Germany it is done by a combination of federal and local taxes. It is fair to say that in other countries in Europe the funding is on a 50/50 basis between industry and government. With all the importance of 1992, we should not be put at a competitive disadvantage. Compulsory levies are the fairest way to raise the money required, despite the present parlous state of farm incomes.

I ask the Minister to consider the objectivity of research funded by private industry and its credibility in the eyes of the public. This is not to impugn the integrity of the researchers, but will the public believe in research funded by those with an interest in the outcome of the work? An extremely important point was put to me only last week by the research director of one of the largest multinationals in the food industry. He said that if industry is asked to fund part of the work that is now done in the public sector, the total and the quantum of the research will not be increased. He will be given a fixed budget by his board of directors. If he has to use part of that to fund research in the public sector, he will be saving jobs in the public sector but losing jobs in his own company. However, the total amount he has to spend will not be increased.

We are told that the Government intend to save £30 million. They intend also to put back into strategic research, as they define it, some £7 million. What will happen to the remaining £23 million? Will it be fed back upstream into the total civil research and development budget which can then be bid for by the agriculture R&D sector, or will it disappear into the Treasury? If the latter is the case, it is a scandal.

The presented funding from industry and agriculture seems to be of the order of £7 million to £9 million. It appears that the Government wish the industry to increase this by threefold or fourfold in only three years. I ask the Minister to understand that the Government must give the industry longer to work out how to raise the money and to set up the mechanisms to do so. The timescale is crucial. Many of the research directors wish to be given a timescale of five years rather than three years. Once the figure in each sector has been agreed they would hope to fund the money by one-fifth each year. That is not feasible on a three-year timescale.

There is another reason for lengthening the timescale. The industry is now confused. We had cuts from 1985 to 1987. We are still awaiting the outcome of the Packer review of ADAS. There is a proposal, which I support from the Science and Technology Committee of this House to merge the AFRC with NERC, and now we have the Barnes review. The Government must be prepared to give the industry time to digest all this.

This exercise shows the need for a body to promote a long-term strategic view of agricultural R&D. This would be similar to the ACOST procedure in the rest of civil research. We need a review of the whole of the commissioning procedure for R&D and some proper and carefully considered proposals for industry funding. Above all, we need openness. This must not be conducted behind closed doors and at a breakneck pace. We are dealing with the long-term future of a great industry and a magnificently successful research and development effort. The whole effort involves 1,512 of our best scientists. They must be given some security and long-term basis for their work. If the noble Baroness were a bright young graduate in the biological sciences, would she go into United Kingdom agricultural R&D, or would she look abroad or at some other industrial sector?

I shall conclude with the words which I used to conclude a debate last year. I said: Lastly, I hope that the Minister will undertake to ensure that both Parliament and the industry will have the chance to discuss the proposals and that they will not be presented with a fait accompli".—[0fficial Report: 4/11/87; col. 1057.]

8.26 p.m.

Lord Graham of Edmonton

My Lords, I am indebted to my noble friend Lord Carter for asking for the debate and also to the Minister who was most anxious to be here to respond. I am grateful to her. We all understand that she has had to undergo some problems of a personal nature over the past few months. My heart, and I am sure the hearts of her many friends in the House, goes out to her at this time.

The debate takes place against the background of the Question which I asked on this issue when the House resumed in October. Therefore, we are in the process of building on knowledge. I have two interests to declare. First, I am proud to be the president of the Institute of Meat. That gives me a general interest in this matter. Secondly, I play a prominent part in the affairs of the Co-operative movement, a consumer movement with 8 million or 9 million members. While I would not be so presumptuous as to speak on behalf of the consumer, the views of the consumer should be heard in this debate. I wish to assure the Minister that if she is concerned with value for money, cutting out waste and making more effective R&D efforts, she will have no enemies in this House. However, it appears to us that she is being advised to go about it in the wrong way. I cannot believe that this exercise is being handled in the best interests of the industry and in the best interests of relations between industry and the Government.

We want protection for the consumer. We want a responsible industry and a government responsive to the needs of health, safety and security. We shall not get those if the Minister and her colleagues persist in their present handling of these matters. In answer to my Question of 10th October the Minister indicated at col. 582 of the Official Report that there had been "discussions in depth". To me "discussions in depth" means that everybody with a view on the issue is consulted. In a discussion on food I should have thought that the Minister would want to hear views on refrigeration and refrigeration methods. Yet the Institute of Refrigeration wrote to the Minister on 10th October and said that it was deeply concerned about the proposals.

The institute certainly was aghast because at that stage, although it may have been put right since, it was not really party to the various consultations that were going on. I know that whatever list is drawn up there are always some people who will say, "You have left me out". However I hesitate to think that the Minister would agree that a proper body to be left out, when one is talking in terms of food, is the Institute of Refrigeration, because it plays such a massive part in the food industry.

The institute is concerned that decisions have apparently been taken which affect the funding of refrigeration research without any discussion having taken place with it. I think that the Minister is entitled to comment on this, and indeed she is supported tonight by the biggest Box of advisers that I have ever seen. In fact, when they came in I thought that they were a spill-over from some of the debates we have had in the House where people come from long distances in order to help us in our discussions.

The Parliamentary Under-Secretary of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington)

My Lords, perhaps I may just reply to the noble Lord on this point. He said that we had not consulted everyone. I can assure him that the presence in the Box shows just how many different sectors and organisations we have consulted.

Lord Graham of Edmonton

My Lords, I only hope that we do not get "the frozen mitt" from the people who would like to tell us about refrigeration. I am quite certain that all the ladies and gentlemen that I saw trooping in are well familiar with this place. However I am grateful that they are here, not just to assist the Minister but also to assist the House better to understand the background to the matter.

If we have a situation where an important body like the Institute of Refrigeration is able to say well into the consultation process that it has not been consulted, I think that the Minister is entitled to comment. Moreover, I shall read another little bit from the institute's letter which will keep the Box busy: It appears from comments in the press that the government considers that research at these Institutes and research stations is carried out for the benefit of food producers and focd processors. This is at best less than half the truth. Major benefits in quality improvement accrue to the consumer from the work of these organisations. Changes in industry practice for the long term benefit of the consumer are often engineered by these Institutes". So I should like the Minister to tell us about the consultation with those organisations. In another part of the letter the institute says: It takes many years to build up effective research teams such as those which exist in Bristol and Aberdeen. These teams can be destroyed and scattered within a few months if morale is allowed to drop beyond the point of no return". My noble friend Lord Carter gave us a personal illustration of that situation. Further, I know that the Minister in a parliamentary reply said that the reason for the speed is to get the decisions quickly and stop the rumours and the confusion. However, I do not think that at this stage she is helped in that matter.

I look now at the points which especially concern me on this issue. I have asked the people I consulted. "What will be the effect, if we accept the near industry categorisation of some of the things which are being talked about as being near industry if they are withdrawn?" I shall tell the House what I was told, especially in respect of salmonella and the manner in which we all recognise that it is of crucial importance as regards poultry and poultry products.

One of the near industry projects or proposals that is on the table is that relating to the use of specific organisms to inhibit the growth of pathogens, if necessary using genetically-engineered microbes— for example, by lactic acid bacteria in fermented food products—to prevent attachment or carriage of salmonella in poultry. If it is true, as I am told, that this project is scheduled for the chop—I hope that term is acceptable, because I speak on behalf of the meat industry, so I think I may use it—by March of next year, I am aghast and horrified. The Minister will put my mind at rest and, I am sure, millions of other people's if she can tell us that such projects are not due to be terminated as a result of some diktat from the Treasury that money must be saved at all costs.

I turn now to the other aspects which I should like the Minister to comment upon. I should like to know whether she is concerned about taking the many elements in the industry along with her in such matters. Perhaps I may tell her what Mr. Chris French of the National Farmers' Union said in September. He spoke on behalf of 40 national agricultural organisations. They had expressed their united opposition to the Government's plans to cut, they say, more than £32 million, and so on. He said: We need time to consult farmers to discover which sectors will he willing to pick up the bill which the Government is leaving, and to examine the whole structure of farm and horticulture R&D in this country. We are at one"— that is 40 organisations; not firms or individuals but organisations— in deploring both the extent of the cuts proposed and the extraordinary haste with which they are being pressed upon us". I am sure that the Minister will understand that it could be seen to be procrastination. For instance, the Minister offers a timescale and someone says, "Well, let us have a bit more time". We understand that kind of situation. However, if the Minister wants to keep friends in the industry and wants the industry to help her and her advisers to work out the best means of reducing the amount of public money which is spent, she must answer two questions.

Let us suppose that she tells the industry that it must do something and the answer she receives is, "We are not inclined to do it". In that case I hope that she will reflect upon what she has said. I have with me a letter from her to a parliamentary colleague in which she said: If the work is not judged to be important by industry then the Government should not be supporting it". Therefore let me ask the Minister this. If the industry considers that something as vital as research into salmonella is not important to it, is she really saying, "We shall not be supporting it either"?

My noble friend Lord Carter raised issues about the timescale and the strategy and importance of these matters. I should like the Minister to tell us what she and her friends have in mind if they stick to a view that certain things are near industry and the industry, which is expected to pick up the tab, declines to do so? Where does that leave us as regards public safety?

I can tell the Minister that in conversations which I have had with two very large retailing organisations they have said that they are disinclined to pay directly as an organisation in order to subsidise this kind of research. They fully recognise that ultimately their industry, or their firm, is likely to be the beneficiary. However, there is a point at which there will be a dispute as to whether they are going to pay.

I asked them what they would do if the research establishments came to them and said "We need a subvention". Let us say that it was a £1 or £2 million. They said that they would examine very closely whether they could get the products they wanted from some other place, for instance, another country, which may be a penny or two cheaper.

The Minister knows that in the harsh economic world of 1988–89—never mind about 1992—in the food industry and in many others they are looking at slivers of a penny. I say to the Minister that she and her colleagues are in grave danger in the next few months of earning the reputation of being more concerned about saving public money than ensuring public safety and public health.

The point has been made more than once by my noble friend that we are not just talking in terms of sense and sensibility; we are also talking in terms of jobs. Because I was president of the Institute of Meat I went down to Bristol and watched what they were doing. I have also been to other meetings with the noble Lord, Lord Gallacher. Indeed, I attended a function only last week at the Worshipful Company of Butchers where I took the opportunity of discussing with those in the meat industry what their concerns are. Quite frankly, there are many people who fully understand the need for their industry, as well as any other, to be examined critically in order to ensure that they are not wasting public money.

In the exchange a month ago the Minister told me that no decisions had been made. I am glad to see the nod of her head. I hope that before decisions are made she satisfies herself that the proposal is not only viable but practicable and that all the elements of the industry are willing to make it work. If they are unable or unwilling to make it work and the Treasury saves a few pounds, a great many people's future health and happiness will be put at risk and the Minister will have a great deal to answer for.

8.40 p.m.

Viscount Brookeborough

My Lords, I should like to add my sympathy to that expressed by the noble Lord, Lord Graham, to my noble friend. I also thank the noble Lord, Lord Carter, for initiating a debate on this important subject. I very much support his views and those of the noble Lord, Lord Graham, on the definition "near market" and the other reservations they have expressed relating to R&D funding in agriculture. As a landowner and active farmer I must declare an interest. I have also talked to the Ulster Farmers' Union to discover its views on the subject.

I note that we are talking about the whole of the United Kingdom of Great Britain and Northern Ireland. The Barnes report refers also to Northern Ireland. In the rush to implement the reduction in R&D funding the Government seem to have overlooked or ignored the problems in Northern Ireland that will have to be faced. The first is the legislation (the industrial Organisation and Development Act 1947) which enables the collection of levies on industry. However, that legislation applies largely to Great Britain only and not to Northern Ireland. How do the Government intend to get round that point? Will an Order in Council be produced—I remind your Lordships how unpopular they are in the Province—or will primary legislation be prepared? If the latter choice is to be taken up, how will the Government cope with the delay incurred?

Assuming that that hurdle has been overcome, there will then be an additional delay of up to two years before sectoral development councils could be established. If the Great Britain legislation is followed in Northern Ireland, the establishment of such councils would have to be preceded by a poll of producers in the appropriate agricultural sector. In addition, there will be a requirement for detailed and formal consultations about the use of the funds to be raised. In that respect, will my noble friend give an assurance that those consultations will include the Ulster Farmers' Union, the legitimate voice of the industry in Northern Ireland? How will the Government sort out all of that to keep up with their intended timetable? There are more problems to come, unique to Northern Ireland. To save time, I shall not go into detail on each sector of agriculture, but I shall give one example.

We are the only part of the United Kingdom with a land border with another country (the Republic of Ireland). In the case of livestock, for instance, will there be a levy on the abattoirs and, if so, how will the Government cope with the livestock exported and slaughtered across the border?

In general, the farms are much smaller in Northern Ireland than in Great Britain and, dare one say it, less profitable. Should the measure be introduced in its entirety at short notice and in one go, it will have an unfairly disproportionate effect in the Province.

I should like to turn briefly to an anxiety felt by the industry and those involved in R&D. At present all research and development results are made available throughout the industry in the United Kingdom. However, work carried out in different areas, and specifically from my point of view in Northern Ireland, will surely be, as a result of those who fund it, the property of that area's agricultural industry. Does my noble friend expect that information to be freely available to others in the remainder of the United Kingdom, is it to be sold or will industrial spying have to play a part? As an example, I point out that the Agricultural Research Institute for Northern Ireland, and Dr. Gordon in particular, is a world authority on research into grassland management. Its findings are of great benefit to those farmers involved in grassland production in the remainder of the United Kingdom. I appreciate that Northern Ireland would be in the reverse position in many other agricultural fields. The other areas will no doubt have the same questions to ask about what will happen to the researches that they have funded.

The United Kingdom is working towards the open market in 1992. During the run up we must endeavour to put ourselves and the industry into the most advantageous and competitive position possible. The industry and government were making determined and successful headway in that direction. However, an intention to reduce government funding at such a crucial time seems to be near suicidal. I am sure that the industry would have looked favourably upon a request from government to raise extra funds in addition to those available at present to help put it on an even better footing by 1992 rather than have, as we have at present, a percentage reduction running up to that time.

I realise that in many countries the practice of funding near market R&D by the agricultural industry is well established, but what a time to introduce it here and cause a massive hiccup during our preparations for the open market. In addition, it is being done at ridiculously short notice with little consultation, preparation and planning. Will my noble friend inform the Minister of Agriculture of the strong and informed opinion expressed this evening from both sides of the House and in particular of the problems relating to Northern Ireland?

8.47 p.m.

Lord Butterworth

My Lords, reference has been made this evening to the fact that sub-committee I of the Science and Technology Committee is undertaking an inquiry into the future of agricultural and food research, including its links with other biological sciences. The Government's intention to cease funding near market research in those areas in anticipation of industry funding it is of great interest to the committee, and its final report will consider those matters.

I do not wish to anticipate any views which the committee might express in its report, but if I draw attention to some of the views put forward by witnesses in evidence to the inquiry I hope that that might give my noble friend the Minister an opportunity to explain how government policy will be implemented. In particular, we have a considerable interest in the discussions, which have already been referred to this evening, that my noble friend has been holding with sectors of the agricultural industry affected by the change of policy.

The Agricultural and Food Research Council has said that it is: adamant that because most AFRC research is basic and strategic rather than at the near market level, little if any cuts should be passed on to AFRC". As the noble Lord, Lord Carter, said, the AFRC has suffered considerable and severe cuts in the past few years. As a result there have been dramatic staff reductions.

Much of the resulting rationalisation is widely regarded as a good and necessary development, but Professor Stewart, the secretary of the council, has said that a period of stable funding is now essential if strategic planning is to be successfully undertaken. The AFRC will say that the rapid removal of these funds at this stage will make it hard for it to maintain an integrated research and development programme with the right balance between basic and strategic research on the one hand, and applied work on the other.

Professor Stewart has said: I cannot believe that a Government which appreciates the importance of the Research Councils will allow the Council's budget to be reduced in this way. If they do it will have a major effect on the totality of the biological sciences base of the country". I hope therefore that the Minister will he able to inform us this evening what effect the Government's "near-market" policy is likely to have on the income and the work of the AFRC. Are funds saved on near-market research to be redeployed on basic research in the biological sciences?

Other witnesses, including the Institution of Professional Civil Servants and the Home Grown Cereals Authority, have emphasised the damage that could be inflicted on the research base by further cuts in government funding. They suggest that whole areas of research may have to be abandoned and establishments closed. The IPCS also suggest that financial support from industry or individual projects will not provide that continuity that public funding can provide and could make it difficult to attract high quality staff and maintain expensive facilities.

The short timescale over which the 'Government intend to implement the policy has also, as has been mentioned tonight, been strongly criticised as being unrealistic and almost certain to mean that industry is unable to organise a response in sufficient time to prevent some projects from being completely lost. The AFRC says that the damage would be reduced if cuts were phased over several years. The council, of course, has a good record in this respect, having quadrupled its income from non-government sources to £14 million—that is to say 12 per cent. of its total income—in the last four years. Again I have to mention that the lack of consultation in formulating the policy has been widely remarked upon.

Other witnesses have suggested that the Government are taking a narrow view in assuming that research which industry will not pay for can reasonably be dispensed with. As has already been mentioned this evening, industry is only likely to take an interest in research which will lead to increased profits, while research for what might be termed public good is likely to be neglected if government funds are not forthcoming. I hope that the Minister will be able to tell us what is the Government's intention for support of research in, for example, areas such as animal health and welfare, the environmental effects of agricultural practices and the reduction in levels of inputs such as agrochemicals.

Finally, the National Farmers' Union explained to us why it is difficult for the industry to make a substantial additional contribution to research. The obvious point was made that agriculture is a diverse and fragmented industry with many small producers and with differing requirements and commitments. Organising a co-ordinated response will therefore be difficult and contain many problems. Farmers and growers have in any case considerably increased their support for research in recent years through, of course, the sector organisations such as the Milk Marketing Board and the Apples and Pears Development Council. In some commodity sectors, the mechanisms have only recently been established. Demands for members to increase their contributions substantially before they have experienced any benefits from their new involvement in funding research can act as a deterrent. The National Farmers' Union also points out that farmers have recently been faced with charges for the advice and other services of ADAS and therefore are already meeting the costs of work formerly financed out of the public purse. As I said at the outset, it would not be proper for me tonight to consider what may well be recommended in the report of the committee. I hope that in replying to the noble Lord, Lord Carter's Question, the Minister will be able to comment on the concerns and difficulties which have been mentioned by our witnesses. She may be able to tell us what progress she has made in her discussions with those sectors of the industry which are now very concerned about this policy.

8.56 p.m.

Lord John-Mackie

My Lords, I wish first and foremost to endorse what noble Lords have said about the attendance of the noble Baroness, Lady Trumpington, here tonight. I thank her for her tremendous courtesy and the attention she has given to what I have said over the many years during which I have faced her across the Dispatch Box. This is my last appearance as Front Bench speaker on agriculture and I thank her for her courtesy. I am also grateful to my noble friend Lord Carter for raising this issue.

I do not propose to go into any great detail since the four previous speakers have made a very strong case and I see no reason why I should try to emulate what has already been said. I have no illusions about the Government's intentions. I think my noble friend Lord Graham put the matter properly when he said that it is a case of money saved at all costs. I am a little worried that a tremendous amount of work must have been done, one way and another, in producing all the details that were circulated which I have received on the various cuts and the numbers of people who might or might not be made redundant.

Over a long period in politics and in the Ministry for a while, I have found that once a major survey of one kind or another has been undertaken it is very difficult to stop. I hope that what has been said tonight will have some effect in trying to prevent the cuts or perhaps not so much the cuts as the effort to move the funding of agricultural research and development in the direction which the Government wishes. The loss of about 1,500 personnel which has been emphasised by other people is something which we must watch carefully. As was said, well-educated first-class research workers in all fields are scarce in this country.

It is quite remarkable what research over the past 40 years has done for our industry. I do not wish to take sides, but I always put plant breeding at the top of the list. Many other research institutes with which I have been associated have done a tremendous job for agriculture. The effect of it has been an enormous increase in production to the benefit of the country in so many different ways which have already been emphasised. I wish particularly to mention the matter of raising the £31 million, or so, to replace the Government's funding. It will not be possible to obtain that sum from the industry today. There is no question that most agricultural projects are feeling a financial squeeze. Farmers do not know what is going to happen in the next two years, but they are in no mood to dish out money without a very good reason.

I wish to make the same plea as all the other speakers have made for much more time to carry this out. I have no illusions about what the Government are going to do. They will carry their intention out, but I should like them to take a close look at how this money can be raised in the industry in five years' time. That time span has been mentioned, I believe.

Looking at the scheme simply, if we take 31 million acres of ploughable land, the money comes to £1 an acre. But that would be an unfair levy because a 1,000 acre cereal farm would have to pay far more than a 200 acre dairy farm with 100 cows. I throw the following out as an idea, but it might be possible to impose a fiat rate levy of, say, 50 pence an acre and then place a monetary emphasis on various projects such as dairying, and raise the money that way. It will take time to work such a scheme out, but I do not see any reason why that should not work. Therefore the contribution would become an overall contribution from the industry. If that could be done reasonably quickly, we might be able to carry on with present research.

I am not suggesting that there should not be changes and that different emphasis should not be placed on certain research projects. I see that the noble Earl, Lord Selborne, is present. I am sure that he would agree with me on this matter. The Agricultural and Food Research Council, of which he is chairman, controls research projects. That body changes, where necessary, the emphasis on research projects. It does that very well indeed. If a research project will result in savings to the industry, or if a project requires more money, the research council will deal with it.

I hope that we shall give the industry time to decide whether it will agree to the scheme. We must not upset the industry.

Some bodies within the industry have been threatened with losing men; some of them have been threatened with closure altogether. That is a tragedy that we should avoid at all costs. I appeal to the Minister to consider that.

I must admit that a difficulty arises as regards overlaps in research. An instance of that is research into the production of milk and everything to do with milk itself. But there is also research carried out into the machinery to provide food for that industry. In that case there is an overlap between arable farming and stock farming. I am not in any way suggesting that there will not be difficulties in following what I am suggesting. But I hope that the Government will give it thought. Whatever the Government decide, I hope that they will give the industry and the research and development institutes time to prepare themselves for this very radical change.

9.4 p.m.

Baroness Trumpington

My Lords, this debate has been characterised by quality, if not quantity. The noble Lord, Lord Carter, and other noble Lords have raised a great many issues this evening. I shall do my best to deal with them as fully as possible in the time available.

I wish to say how grateful I am for the personal note introduced by my noble friend Lord Brookeborough and the noble Lords, Lord Graham of Edmonton and Lord John-Mackie. One of the nice things about this House is that it does not matter whether we are facing each other or whether the enemy is from behind; we are all good friends. I am sure I speak on behalf of all noble Lords here when I say that it is indeed sad that this is the last appearance of the noble Lord, Lord John-Mackie, in the particular place which he has adorned with great distinction over a long period. He has so much experience in the field of agriculture.

However, the fact that the noble Lord is moving his seat back a range or two will not mean, I am sure, that I shall not suffer the slings and arrows of outrageous fortune marked at me with unerring aim by the noble Lord for many years to come. I wish the noble Lord very well in the future on behalf of those present. I am sure that many other noble Lords share that feeling.

I should like to begin by emphasising that, while the Autumn Statement has been made, final decisions on the future level of Government funding have not yet been taken. We are consulting the industries concerned in order to establish their willingness to fund near market work which will in future not be funded by the Government. Only when these discussions have been completed next year can further Ministerial decisions be taken on the level of public funding in the longer-term.

Perhaps I may just say here to my noble friend Lord Brookeborough that I am most grateful to him for giving me prior information as to the contents of his speech. I am equally grateful to him for agreeing that I may write to him concerning the specific points he made which affect Northern Ireland.

We are striving to strike the right balance between minimising the period of uncertainty for research staff and maximising the time industry has to decide which R&D to support. Accordingly, on my return from West Africa, I was dismayed to find the Institution of Professional Civil Servants publicising its views on job losses and closures in considerable detail. When no decisions have been reached or can be reached until the position on increased industry funding is known, I think it most unhelpful for the IPCS to claim to have identified definite job losses and site closures. There will need to be rationalisation of facilities as programmes change to take account of the Government's future needs and industry's requirements. But I cannot yet say what the impact will be until our discussions have been concluded.

The review of the agriculture department's research programmes and its commitment to stop funding near market R&D is not a sudden change of course on our part, but rather a development of our initial moves towards greater industry participation which began nearly four years ago. We announced in January 1985 that planned expenditure by the agriculture departments was to be reduced by £20 million over two years to reflect the Government's aim that the industry should make a greater contribution to R&D from which it benefits. We had discussions with agricultural organisations and gave them every encouragement to increase the rate of industry funding, including for example facilitating the establishment of a horticultural development council, as has been mentioned this evening. I recognise the very considerable efforts made since then by producer bodies in raising funds for R&D.

The noble Lord, Lord Carter, will appreciate that no government could, then or now, enter into longterm commitments over future priorities for public expenditure. But it would be equally wrong to suggest that, because industry had demonstrated that it could raise funds, the Government are now seeking to take advantage by cutting back their contribution. My noble friend Lord Butterworth will be aware that the philosophy behind the recent review of funding of R&D is that for work which is close to commercial application industry is in the best position to judge what research should be undertaken. That view is not confined to agriculture alone: it is a policy which runs across all government-funded R&D programmes.

Last year, in the White Paper giving the Government's response to the first report from your Lordships' Select Committee on Science and Technology, we accepted the Committee's view that responsibility for funding applied work of direct benefit to industry should rest mainly with industry itself. For work which is close to commercial application, industry is in the best position to judge what research should be undertaken. We also announced in that White Paper that we had begun to undertake a searching review of R&D priorities across the whole field of government, with a view to increasing the contribution of publicly-funded R&D to the efficiency, competitiveness and innovative capacity of the UK economy.

That is the background against which we commissioned the Barnes review. The Government remain committed to supporting basic and strategic research, as well as work of a public-good nature in support of statute or policy in relation to issues such as environmental protection, animal welfare and food safety. But we do not believe that it is right that the taxpayer should be asked to continue supporting work which directly assists the industry at which it is aimed to gain an economic benefit. Only by seeking industry support for such work can we ensure that it is properly targeted to the needs of agriculture, fisheries and food now and in the future. We have also made clear that, if industry does not wish to take on the funding of particular programmes or projects, the Government will not continue to do so.

Lord Graham of Edmonton

My Lords, will the noble Baroness allow me to intervene? I appreciate that she has confirmed what I had said were her views. But will she answer the following question? She is seeking the support of industry to take over some of the funding of R&D and she has just said that if industry decides not to do so the Government will not do it. Is she not saying that in such crucial areas as the illustration that I gave, research into salmonella in poultry, and in areas of public safety, health and hygiene the public health will be at grave risk?

Baroness Trumpington

My Lords, the noble Lord has taken the words right out of my mouth. Much as I respect him, I think that he has got hold of the wrong end of the stick. There is no intention to cut funding for work related to food safety, particularly with regard to salmonella in poultry, which he mentioned. The Government are extremely sensitive to concern about salmonella. That work will not be cut. I hope I make myself clear.

Lord Graham of Edmonton

My Lords—

Baroness Trumpington

My Lords, may I go on? Perhaps then if I have not explained myself sufficiently clearly the noble Lord can come back to me.

For the benefit of the noble Lord, Lord Carter, and the noble Lord, Lord Graham of Edmonton, I should like to repeat that we shall continue to fund work in the public-good category. I am aware that some people are claiming otherwise, but that is a misunderstanding. The Cabinet Officer's annual review of government-funded R&D shows that over the past five years the proportion of MAFF's externally commissioned research in agriculture and food which is carried out for policy and statutory purposes has risen from 10 per cent. to 35 per cent. That trend will accelerate over the next three years as we progressively concentrate our resources on public good and strategic research.

It is at best mischievous for the IPCS to claim that our withdrawal from near market R&D will have devastating consequences for animal welfare, public health and the environment. For instance, it is incorrect to claim, as IPCS do, that research into reducing the use of nitrogen is to be cut. The true position is that work aimed at investigating losses of nitrate to ground water is being maintained as well as work on other pathways of loss such as the volatilisation of ammonia which has been implicated as a contributory factor in the formation of acid rain. Nitrogen studies which are aimed at increasing the efficiency of production on the other hand have been identified as near market and accordingly will have their public funding withdrawn within three years.

I do not want to dwell over-long on this topic but I should like to stress that we are maintaining and strengthening our research efforts into such areas of public good as the development of integrated and biological control of outdoor crops; the assessment of the impact of agrochemicals on wildlife habitats; the development of environmentally safe measures for the control of weeds, pests and diseases; the development and evaluation of humane and effective stunning and slaughter place procedures to improve animal welfare; the development of methods to ensure the safety, quality and efficacy of viral and related verterinary products; the development of housing systems for livestock which safeguard the health and welfare of the stock and the farm workers; investigating metabolic disorders in poultry such as lameness, broken bones, broiler sudden death syndrome and digestive heart failure, and of course BSE.

Lord Carter

My Lords, is the example given by the noble Baroness about the application of nitrogen just an illustration of the difficulty of distinguishing between near market and basic research? If work is done on the optimum supply response to nitrogen, one will be told that one's crops will increase if one puts on more nitrogen; and that is near market. If one does work on the leaching of nitrogen, one will be told that if the application of nitrogen is increased, one will increase the loss of nitrates. Just how does one distinguish this work?

Baroness Trumpington

My Lords, I think that it is an extremely complicated matter for me to go into now. Noble Lords will have to look at what I have said, and perhaps if they are not satisfied perhaps they will ask me to write to them and I shall place a copy of the letter in the Library if they so wish.

Lord Graham of Edmonton

My Lords, I am grateful to the noble Baroness. I want to assure her that those who advised me of their interpretation and their conclusions after discussions will not only be grateful for what the Minister has just said, which is on the record, but will feel that they must have attended an attributable briefing at which the tape recorder broke down.

Baroness Trumpington

My Lords, I was not there, either. I must say to the noble Lord that the Government fully accept responsibility in relation to public safety and public health. However, I would remind the noble Lord that industry has responsibility too.

The Barnes review itself examined carefully and thoroughly the research and development programmes and projects funded by the agricultural departments. It identified that work which offered the prospect of commercial exploitation or application within a reasonable timescale, whether as a product, process or system—and thus near to the market and suitable for industry funding. I can assure the noble Lord, Lord Carter, that, in conducting his review, Mr. Barnes held extensive discussions with those responsible for commissioning and undertaking R&D, as well as with industry.

I understand that industry needs time to consider our proposals before it can reach conclusions but I cannot accept your Lordships' criticism of the handling of the consultations. I should like to say to the noble Lord, Lord Graham, that we have in fact consulted the Food Manufacturers' Federation, retailers and food research associations to ensure that all views are in perspective. We are entirely ready to listen to consumers' views. I must tell the noble Lord that we consulted some 80 organisations. We had absolutely no intention to leave out in the cold the refrigeration body; I apologise and will write and contact it if it feels aggrieved.

We have gone to considerable lengths to explain both the rationale for and the detail of our proposals. We have issued a good deal of information at programme unit and project level, and I know that the formal discussions have led to further bilateral contacts between representatives of industry and people from the research establishments involved. We have not acted with undue haste but we have had to bear in mind the uncertainty among the staff affected.

What we have sought to do is to indicate at the earliest possible opportunity the type of work from which funding will be withdrawn and to provide a guide to the value of that work so as to give industry as much time as possible to prepare for the public expenditure reductions on near market R&D. That has unfortunately meant that the discussions have had to be held at a time of year when many farmers were busy harvesting. However, it was of great importance in my view to give the research in question a better chance of continuing without a break by sounding prior warning of the need to increase industry's contribution to its funding.

Speculation on the outcome of the Barnes Review and continuing uncertainty about its impact on individual research establishments is of course unsettling for research staff. My right honourable friend the Minister in another place and I are well aware of this, and yet another of our principal aims in undertaking the speedy consultations with industry was to minimise the length of this uneasy period for research personnel. But equally important, we are conscious of the need to give industry as much time as we possibly can to consider what R&D they wish to fund. I must stress that the effects on research establishments of government withdrawing funding from near market research and development cannot be assessed until the extent to which industry will fund its own near market R&D can be estimated with some degree of confidence.

The noble Lord, Lord Carter, asked how we propose that the necessary funds should be raised. This is a matter primarily for industry itself. While there is very good progress by producers in funding R&D, the total expenditure by the farming industry is still under £20 million annually, which is small compared to the public funding of some £170 million. Indeed, total expenditure by the Government on the R&D related to the areas for which agriculture ministers are responsible is in excess of £200 million annually, a substantial sum by anyone's standards. The scale of the problem is very different in food research in that about 80 per cent. of all R&D is already funded by industry, but the same principles apply.

I accept that for farmers and growers to increase their spending on near market R&D the appropriate funding mechanisms will be necessary. This is something we are discussing with industry in the consultations to which I have referred. In practice a number of arrangements already exist together with an opportunity for farmers to comment on whether they want levy funding and on what scale. As your Lordships can imagine, I am thinking of such bodies as the HDC, the Apple and Pear Development Council, the Home-Grown Cereals Authority, and the Meat and Livestock Commission.

These are backed by statute, and functioned in this way only after consultation with the industries concerned whether by poll or other means, and of course a number of other bodies such as the Milk Marketing Board and the Potato Marketing Board also fund R&D. A system of funding already operates across a substantial proportion of agriculture using a variety of mechanisms. In the past two to three years the contribution to R&D that has come through these mechanisms has been increasing and is projected to increase still further. The United Kingdom is not out of line with our major competitors according to the Treasury report on taxes in other member states in 1986.

MAFF and DAFS R&D expenditure has been reduced by £5 million for 1990–91, and by £14 million for 1991–92. Together with the reduction announced last year of £5 million in 1989–90 and £10 million in 1990–91 that produces a cumulative reduction by 1991–92 of £24 million. To relate the PES outcome to the illustrative figures contained in the detail papers which form the basis for our consultations with industry (copies of which can be found in the Library) costs which fall outside the agriculture programme need to be included—for example, superannuation. That produces a reduction by 1991–92 of £30 million at full economic cost.

The noble Lord, Lord Carter, and my noble friend Lord Butterworth will appreciate that the Government have to determine their priorities across the whole field of research and development, civil and defence, in the knowledge that the total funds available are not unlimited. A great deal of attention has been focused on our intention to withdraw funding near market R&D because we believe it to be industry's responsibility, not government's. However, less attention has been paid to our intention to increase funding for the science base. The large increases in expenditure on basic science announced in the Autumn Statement are to be funded in part by our withdrawal from the financing of near market R&D.

As can be seen, it is not simply a one-way process. The Government intend to fulfil their responsibilities. We hope that industry will meet its responsibilities.

Lord Carter

My Lords, the Minister said "in part". I asked what would happen to the £23 million that would be saved—£30 million less £7 million—for strategic research.

Baroness Trumpington

My Lords, I hate to correct the noble Lord against myself; but the figure is £5 million, not £7 million.

Lord Carter

My Lords, £2 million and £5 million total £7 million.

Baroness Trumpington

My Lords, it is £5 million, not £7 million as the noble Lord claims. It is what one might call a reverse point scored. That money will go back into general funds to be decided for future use.

Lord Carter

My Lords, research funds or the Treasury?

Baroness Trumpington

My Lords, the Treasury.

Let us return to our onions. The noble Lord asked about the future, in particular how we shall define near market work. For the future the increasing emphasis of our research programmes on public good, and strategic work to meet statutory and policy needs will continue as will research geared to provide the underpinning platform on which industry can build. Exciting new work will be undertaken in areas such as biological control, farm woodlands, land use, the greenhouse effect and air pollution. Money saved from elsewhere will be part of that. We intend to give greater emphasis to MAFF-industry programmes in pre-competitive R&D. Advice from the Priorities Board for R&D in agricultural food together with the regular review cycle of the agriculture and fisheries programme provides a strategic view of national research needs of these industries. However, we shall wish to discuss the future strategy for R&D sector by sector with industry so that together public and industry funding can support co-ordinated and integrated programmes.

Funnily enough the subject of horticulture, which is very near and dear to me, did not arise in the debate. I have been speaking for a long time. I should like to make it clear gratuitously that I am aware of the concern expressed by growers over the high proportion of horticultural R&D involved. I understand the worries of horticulturalists, who feel that they have been singled out for special treatment. In fact, the treatment was the same in every sector. It just happens that horticulture uses a great deal of near market research. I pay tribute to its efforts to raise money to pay for R&D. I hope that the future will be secured in the form of the HDC going on and gathering strength.

So many points have been raised that I think I had better write to noble Lords. I accept that there is pressure on farm incomes and that farm businesses are often one or two person business operations. In most cases the near market R&D from which public funding is being withdrawn represents less than one fifth of 1 per cent. of the value of output of the sector concerned. If viewed in isolation the total funding to be withdrawn by government from near market R&D looks large, but in terms of each agricultural sector and of individual contributions from farmers the amount is relatively small—not insignificant but not large either. So each and every farmer must realise that he holds the key to the future of commercial R&D in his own hands.

House adjourned at half-past nine o'clock.