PBI and NSDO: Possible Privatisation (Hansard, 28 November 1985)

§ Lord John-Mackie
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead)
My Lords, this matter lies within the joint responsibilities of my right honourable friends the Secretary of State for 976 Education and Science and agriculture Ministers. On 21st May 1984 I informed your Lordships that the Government were examining the possibility of privatising the National Seed Development Organisation. However, in the light of the Government's policy to encourage industry funding of research and NSDO's close dependence on plant breeding at the Plant Breeding Institute, consideration is now being given to the possible privatisation of applied plant breeding at PBI as well as of NSDO. We are still examining the matter and shall inform your Lordships' House of the Government's intentions as soon as possible.

§ Lord John-Mackie
My Lords, is the Minister aware that so far as farmers are concerned, it looks as though we are now starting on the gold plate before we have finished selling the silver? Is the noble Lord aware that PBI, East Craigs and Aberystwyth, along with the selling organisation NSDO, have since they were initiated done more for farming than possibly any other research organisation? If, as he said to us, it was last May—one-and-a-half years ago—that consideration of this subject began, is it not pretty obvious that this is a difficult operation which should be left alone?

§ Lord Belstead
My Lords, it is clear that the applied plant breeding work at the Plant Breeding Institute is critical to the future of the National Seed Development Organisation, and that is why we are looking at the two together. It is the Government's policy both to encourage industry funding of agricultural research and development and to consider privatisation, where this might foster sound management, commercial efficiency and good value for money for the taxpayer. Therefore I do not agree with the first words spoken by the noble Lord in asking his supplementary question.

§ Lord Walston
My Lords, is the noble Lord aware of the very serious effects that his Answer to the Question of the noble Lord, Lord John-Mackie, will have on those who are at present engaged in plant breeding? Is he also aware of the already falling morale in agricultural research centres throughout the country as a result of the Government's attitude toward their activities? Is he further aware of the impossibility of extricating the basic research, which is essential for plant breeding and many other forms of research, from the more applied research which is presumably what the Government have in mind when they talk of privatisation?

§ Lord Belstead
My Lords, the staffs are of course the main assets of the Plant Breeding Institute and the National Seed Development Organisation and, despite the uncertainty about the future, the morale of key staff is holding up very well. It is important to end the uncertainty, and the Government will be seeking to take decisions as soon as possible. The staffs will be consulted through the respective governing bodies about the form of privatisation, if that is to take place. With regard to the more general remarks which the noble Lord made about Government support for research and development, the amount of 977 Government money being put into agricultural research and development is still very large indeed.

§ Lord Cledwyn of Penrhos
My Lords, will the noble Lord accept from me that there is acute concern in Wales about the future of the Welsh plant breeding station, which has made an outstanding contribution to agriculture in Wales and, indeed, abroad in the third world as well? If this plant breeding station is working so well, and bearing in mind its contribution, why are the Government interfering with it at the present time? Why are they interfering with the two institutes to which my noble friend has referred, if they are as successful as we know them to be? Will the noble Lord give the House an assurance that there will be no reduction in the status of the Welsh plant breeding station and that the Government will not make it an out-station, but that it will enjoy the same status as Hurley, near Reading?

§ Lord Belstead
My Lords, the Welsh plant breeding station does not fall within the scope of the Question, nor of my Answer, save to this extent. If the NSDO is privatised, it will mean that the AFRC and the agriculture department in the Welsh Office will need to consider separate arrangements for the marketing of future varieties from that station. I should have thought that that would not be particularly difficult to arrange.

§ Baroness Nicol
My Lords, does the Minister recall that earlier this year the Plant Breeding Institute was given the impression that he was awaiting a report from the Priorities Board, due to be published at the end of the summer, so that he could resolve some of the uncertainties? Can he say whether the board has reported and, if so, whether the report is available for outside scrutiny? If not, will he tell us what decisions he has made as a result of the report?

§ Lord Belstead
My Lords, the Priorities Board has not yet reported. We await the report imminently.

§ Lord John-Mackie
My Lords, the Minister laid great stress on profitability, presumably to private enterprise, and so on, which will ultimately help the industry and the Government. I am sure that he must have looked at the profitability figures of the NSDO and will be aware that the royalties from the PBI which must ultimately have found their way to the Treasury are enormous. I doubt very much that he can make a calculation to show that the Treasury or anybody else will be better off after this move.

§ Lord Belstead
My Lords, with respect to the noble Lord, we went over this ground last time. The difficulty, which is not the fault of anybody working at the PBI or the NSDO, is that the real costs of government R & D on material passed to the NSDO are not paid for directly. We therefore do not have a way of knowing exactly what are the costs for the applied plant breeding work of the PBI; and we believe that it would be more efficient commercially to consider privatisation of the NSDO and, indeed, of the applied plant breeding work of the PBI. That is what we are considering at the present time.

§ Lord Elwyn-Jones
My Lords, is to include research institutes not carrying the ideology of privatisation to grotesque and absurd limits?

§ Lord Belstead
My Lords, I can only repeat what I have just said. The arrangements whereby payments are made by the NSDO for the varieties that it receives are unusual. It makes no payments at all, but has a royalty sharing arrangement with and pays a dividend to the Exchequer. The net result is that nobody knows precisely what the applied plant breeding work at the PBI with the varieties going on to the NSDO is costing. That was the basic reason why we originally started looking at the matter.