ADAS

HL Deb 25 November 1996 vol 576 cc98-112

8.48 p.m.

Lord Carter rose to ask Her Majesty's Government what public benefit is expected to result from the privatisation of the agricultural advisory service and agricultural research organisations.

The noble Lord said: My Lords, in opening this debate I should declare an interest as president of the British Institute of Agricultural Consultants. I should point out at the outset that the debate deals only with the proposal for the privatisation of the ADAS consultancy business, the ADAS research centres and the Wolverhampton laboratory. It is a serious matter of considerable importance to the agricultural and food industries and I trust that the Minister will spare us the performance we had last week with the starred Question of the noble Lord, Lord Mackie of Benshie.

There will also be an opportunity to debate the merits or otherwise of privatisation generally in the debate on December 4th in the name of my noble friend Lord Haskel. I shall therefore restrict myself to a series of questions about the proposed privatisation. The Minister may not have time to answer them all, so perhaps he will write to me in respect of those questions he does not answer tonight and put his reply in the Library.

The first question is one that I asked last week; namely, why the rush? We understand that it is hoped that the privatisation will be completed early in the new year. The original intention was to ensure that ADAS should achieve 100 per cent. cost recovery by 31st March 1997 and the sale would then take place at some time through the summer or autumn of 1997. The research centres were excluded from the statements which were made in 1995 on the subject, but now they are included. I understand that Mr. Michael Heseltine has pressed for this early sale. I think we all know why: because of the general election in the spring.

There is a fundamental aspect of the proposed sale which is causing grave concern throughout the agricultural industry and for all those concerned with the matter. I studied with care the privatisation documents from PA Strategy and nowhere is there any mention of protocols concerning impartiality, objectivity and freedom from commercial interference and requiring such undertakings from prospective buyers. My honourable friend Mr. Gavin Strang, the Opposition spokesman on agriculture in the other place, sent a letter to Mr. Douglas Hogg, the Minister responsible on 5th November last saying: Will ADAS simply be sold to the highest bidder regardless of any conflict of interest with the independence and objectivity of scientific advice? What view do you take, for example, of the prospect of a large feed compounder, or fertiliser or seed company buying ADAS? Will you publish the full terms under which the privatisation is intended to be carried out?". In his reply the Minister carefully did not answer that vital question. He said: I am not sure what you mean by publishing the full terms under which the privatisation is intended to be carried out. Clearly I am not going to publish anything which might weaken the vendor department's negotiating position in the sale process. I have already published the objectives of the privatisation. We will pursue a competitive sale process. The criteria for evaluating bids will reflect the published objectives". When I read that last sentence, especially the reference to "a competitive sale process" and the criteria for evaluating bids will reflect the published objectives", I had the feeling that Sir Humphrey is alive and well and living in Whitehall Place. It would indeed be an irony if ADAS is sold to a commercial concern and thereby the largest agricultural consultants in the UK would not be able to meet the exacting criteria, for example, of the British Institute of Agricultural Consultants requiring, objectivity, impartiality and freedom from commercial interference". A further question arises. We know that there is talk of a management buy-out. If successful, presumably that would protect impartiality and objectivity at the outset. But what happens if ADAS is later sold on to another buyer? Do the Government intend to protect objectivity in the protocols of the sale by including restrictive covenants to cover this in a sell-on by the first buyer or buyers?

As I understand it, ADAS and its research centres are not allowed to make a profit out of work carried out for government departments or agencies, such as the MLC or the HSCA. They can recover only 100 per cent. of costs but no more. Will that continue to be the position after privatisation? Alternatively, will the new owner or owners be able to build in a profit margin on the contracts that they negotiate with the Government?

If we turn to the documentation itself, I must say that it is an extraordinarily flimsy basis upon which to offer for sale a major government asset. It consists of three very thin pages containing hardly any information regarding the privatisation prospectus. When ADAS or the Government come to work out their figures, I hope they will be a little more careful than those who compiled the ADAS report of 1995-96, which has been sent to all prospective buyers. I say that because on the second table which appears on page 6 regarding commercial consultancy cost recovery, there are two glaring errors. It seems that 100 per cent. cost recovery by ADAS does not extend to proof-reading.

The Government say in their statements regarding the sale that it will be, on the best available terms—that is, terms which optimise the risk adjusted net benefit to the taxpayer". What on earth does that mean? Can the Minister tell us in layman's language the meaning of the words, terms which optimise the risk adjusted net benefit to the taxpayer?". In the statement regarding the sale the Government say that, to ensure that the services provided to MAFF and the Welsh Office from the private sector can be delivered continuously, economically, efficiently and effectively". There is nothing there about objectivity and impartiality. The statement goes on, to provide for a clean break between government and the privatised organisations or, failing that, to minimise any contingent liabilities falling on the Government". What exactly do the words, minimising any contingent liabilities falling on the Government mean? Is there any question of the sort of dowry from the taxpayer which has featured in other privatisations to assist with the costs of pensions and the takeover of employee contracts?

After privatisation I understand that the Government expect that 50 per cent. of the work of the new body will be for the Government or their agencies. How will that actually work out in the case of something like BSE? The expertise is very specialised. Let us suppose that the private owner of ADAS does not like the BSE research contract that the Government are suggesting?

What happens then? The Government cannot go elsewhere to get it. It is clear that the effort to get ADAS to charge for its services which began in 1990 has undoubtedly resulted in a reduction of advice to individual farmers, and particularly to smaller farmers. As a private agricultural consultant, I am well aware of the relative profitability of advising one client for £5,000 compared with 10 clients at £500 each.

What will be the relationship of the BBSRC and the NERC to the new bodies? How will this relate to the work of the new FRCA and where will the FRCA get its research done?

I turn now to the important work that has been carried out on Technology Foresight which identified the function provided by the public sector research establishments as strategically important to wealth creation and quality of life. It emphasised the need for internally competitive science, focused on long term strategic objectives. The Technology Foresight Steering Group made it clear that British industry cannot take foresight forward alone. A clear commitment to a long-term partnership between government, industry and academia was underlined. It is very hard to see how the privatisation of ADAS will fit in with that.

Investment of public funds in basic and strategic research is necessary to maintain the necessary infrastructure, both physical and scientific, to ensure that such investment will maintain a critical mass of staff, facilities, expertise and maintain a reputation which is essential for attracting collaboration with commerce. Loss of investment of public funds will inevitably lessen the amount of basic and strategic research undertaken in the UK. Too high a proportion of short term applied research and a restricted breadth of research will have serious consequences for the UK agri-food industries. Without sufficient investment in basic and strategic R&D the UK will cease to be at the forefront of sustainable, economic and innovative food production.

The other important crucial question is: what is the role of MAFF within UK R&D? I believe its position has been seriously weakened. While that was in part to he expected, given the serious funding cut-backs which have occurred, it was in no way inevitable. MAFF is no longer providing the lead which is so crucial if we are to maintain our agricultural importance within Europe. Instead, ADAS appears to be prepared to allow UK scientists to compete among themselves for funding until the competition becomes totally unhealthy and counterproductive.

It is not that long ago that we emerged from the nonsense over near-market research and public good research. I know that the noble Baroness, Lady Trumpington, who is present this evening, will remember the discussions that we had on the matter. I recall that the noble Baroness gave the only definition of near-market research which made any sense. When I asked her to define it, as I am sure she will remember, the noble Baroness defined it as being something which, "if you want it, you will pay for it; but if you do not want it, you will not pay for it." I believe I observed at the time that that was the Cynthia Payne approach to public expenditure.

I conclude by returning to what I believe to be the central question which the Government must answer. They are clearly determined to get the ADAS consultancy business, the research centres and the Wolverhampton laboratory off their hands before the election. If indeed the R&D part of ADAS is sold off either as part of the sale to a single buyer or separately, the buyer or buyers will have control of the intellectual property rights of the R&D and, through commercial confidentiality, will be able to restrict access to that R&D to benefit that buyer or buyer's commercial objectives. What is now known as "lock-out technology" could have disastrous effects on the British agricultural and food industries if ADAS ends up in the wrong hands. I hope the Minister will give a clear and unequivocal answer to that crucial question.

Will any buyer or buyers of ADAS or any part of it be required to give cast-iron guarantees regarding the impartiality, objectivity and freedom from commercial interference of future ADAS services? Will such a guarantee be further reinforced by restrictive covenants controlling a sell-on by the original buyer or buyers? If the Minister is not able to give that assurance, then we may be sure that ideology has triumphed over a proper regard for the public benefit and the national interest.

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". He continues: 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 mined, it will be mined 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.

9.22 p.m.

Lord Lucas

My Lords, this is a challenging debate to reply to. I cannot remember when I have been asked so many questions in such a short time. I shall certainly take advantage of the offer of the noble Lord, Lord Carter, to allow me to write to him. I shall look most carefully in Hansard at what I have said and try to make sure that I have covered in proper detail all the points that have been raised.

We attach great importance to the maintenance of the scientific base in this country as does everyone who has spoken in the debate. Sometimes this scientific base has to be kept within the public sector facilities; for instance, when the performance of statutory functions or the provision of policy advice to Ministers are concerned. But, by and large, the greater good for the United Kingdom as a whole will be obtained by working with the private sector. That is for a whole range of reasons—better understanding and exploitation of commercial opportunities; better focusing of effort; better cost control and more scope for the most talented employees.

The noble Lord, Lord Desai, said that basic research was equally good in the public sector. I do not disagree with him. I believe that there is a strong role for basic research in both sectors. Certainly, the public sector has a very honourable record in basic research, which we have every intention of continuing. But a lot of the work done within the agricultural research institutes is of a type where there are obvious commercial benefits to come from it and which we believe will benefit from being undertaken in a more commercially oriented environment. Where it is something that requires the distribution of the results to the public or generally broadcasting them, since we shall be paying for it through MAFF, that is something that we can require as part of the contract.

Nowhere is the Government's commitment to the research base clearer than in the food and agricultural sector where the Government have invested, and continue to invest, heavily (about £258 million in 1996-97).

The noble Lord, Lord Mackie of Benshie, asked where we are in the European league table. I do not have an answer and I shall have to write to him about it.

In earlier years the priority was to increase food production; the results were impressive. Now we are looking to make better use of resources by reducing inputs, ensuring that agriculture is truly sustainable and addressing environmental issues. MAFF relies heavily on science to protect the public and to investigate animal and plant diseases. We need to he confident that research is carried out expertly and without bias and that it is also provided in the most effective way.

The prior options programme investigates whether work undertaken by public research establishments still needs to be done; whether it needs to be funded publicly; whether the work needs to be done by a public sector body; whether there is scope for rationalising with other public sector establishments working in the same areas; and how establishments and functions should be managed in the future. It is surely correct to ask those questions about the responsible use of taxpayers' funds, to say the least of it.

I turn now to the particular question of ADAS, formally MAFF's Agricultural Development and Advisory Service. I had always wondered what it stood for. Doubtless the noble Lord, Lord Desai, knew that from his childhood. This is clearly a subject which is dear to the heart of the noble Lord, Lord Carter, and of rather more recent acquaintance to mine, too. I might indeed say, "amo amas ADAS" for both of us, not that that is correct Latin grammar, but it approximates English. All of the commercial consultancy work, laboratory services and all the R&D work of ADAS will be privatised. The work which is not suitable for privatisation—for instance, work connected with payments under environmental schemes—is to be retained in a new executive agency, the Farming and Rural Conservation Agency.

This privatisation has been well presaged. I do not believe that we are rushing at it. The organisation is ready. We have a good opportunity and a large quantity of interest is already evident although we have not yet sent out the full information package, which will be made available to serious buyers only.

I shall tackle in no particular order some of the questions asked by the noble Lord, Lord Carter. He asked what the relationship of the privatised ADAS would be to BBSRC and NERC. The public sector research establishments, including those of BBSRC and NERC, already have a wide range of strategic links with both public and private sector bodies wherever there is mutual benefit. We expect that to continue after the privatisation of ADAS.

The noble Lord asked how privatisation will affect ADAS's BSE work. Not at all. All the R&D work which the Government places with ADAS will be subject to a tightly specified contract with the new owners, as is the normal practice. In the longer term we are building safeguards into the privatisation which will safeguard the MAFF-commissioned work on the experimental farms and that will be done over the long term.

As regards intellectual property rights, the Government are well aware of the need to make appropriate arrangements to safeguard intellectual property rights and ensure that Government-funded R&D results are not high-jacked for commercial purposes.

The noble Lord, Lord Carter, wanted to know what "risk adjusted and net benefit" to the taxpayer means. Perhaps I may translate that as, "Looking for the best deal available in terms of proceeds from the sale and future services to MAFF and the Welsh Office". There are clearly a great many aspects to this with MAFF as a major customer and the Government as the beneficiary of any possible proceeds. It will be difficult to decide exactly what is the net benefit because so many factors come into it. But I do not believe that there is anything in the formula to surprise the noble Lord.

None of the change at ADAS means that we will spend less on agricultural research. ADAS will continue to provide advice and research to the Government, and the volume of work will be governed as at present by the available money and government priorities for that money. Nothing in the privatisation of ADAS will change that decision. It will still feature as a line in the MAFF spending settlement. That matter will be decided independently of whether or not ADAS is privatised. We hope that under a privatised ADAS we will be able to continue the process that has been going on in ADAS for several years, buy research more cheaply and thereby obtain more research for the same amount of money.

Privatisation will bring benefits to a wide range of interested parties. It will bring benefits to the taxpayer because it will allow MAFF to concentrate on its core activities. There may even be some proceeds from the privatisation, although it is a matter for MAFF how it chooses to balance the terms of the sale and whether it looks for guaranteed terms for the future business that it places with ADAS, which may itself bring a benefit, or looks for cash up front.

As to terms, clearly the identity of the purchaser will be a matter of keen interest to us. As the noble Lord, Lord Carter, hopes, we will look for objectivity, impartiality and freedom from commercial interference. There is not much point in placing work on pesticides with a pesticide company. No one including the Government believes that that is far enough away from commercial influence on that particular subject. Therefore, the identity of the purchaser will matter to us a great deal because of the future business that we expect to place with ADAS. We will not entertain a situation in which simply the highest price wins; it will be a combination of price and suitability of purchaser.

We believe that privatisation of ADAS will itself provide the stimulus to improve its performance and make the best of its opportunities for growth. ADAS is strongly in favour of its own privatisation. We believe that it will bring benefits to the farmer. It should lead to greater efficiency and a better response to market demand. The noble Lord, Lord Mackie, in particular raised the subject of farmers' use of ADAS. He harked back to the old days when advice was free on almost any subject under the sun. Clearly, we have moved away from that. We demand that farmers ask for advice which they consider is worth paying for. That is a habit which has become easy to those farmers I know. If they cannot afford it themselves they band together in groups to get it. They do not necessarily go to ADAS. As the noble Lord, Lord Carter, knows, there are a number of other thriving agricultural consultancies. The process of asking for advice and deciding whether or not it is worth having is something that is best dealt with by the users of that advice rather than that it should be provided and chosen by the Government, in which case it may well end up in the farmer's waste paper basket as an unwanted and unnecessary piece of advice.

Of course, if we wish farmers to have certain advice it will be open to us—and doubtless we will continue this—to pay ADAS or some other consultancy to undertake the work and disseminate the results free. But if it is information which farmers can properly pay for themselves we see no reason to add to what is already a very heavily subsidised industry.

Lord Mackie of Benshie

My Lords, surely the noble Lord does not suggest that the great rise in production during the period when advice was free in this country resulted from advice which was untrue, wasteful or was thrown in the waste paper basket.

Lord Lucas

My Lords, no; nor do I think it was entirely generated by government-funded research. I believe that a great deal of commercial work, particularly on plant breeding, has been paid for consistently by farmers in the price that they pay for their seed beyond anything else. It is also reflected in the effort that farmers these days put into getting proper advice on their planting and farming practices. We believe that privatisation will benefit the nation as a whole. ADAS has the potential to grow substantially at home and abroad. Privatisation will enable it to do so. Privatisation is the right option for ADAS.

There was no presumption that this would be the case and neither is there a presumption in any other prior option review of public sector research establishments. Of the first 10 reviews of establishments over all sectors, seven will remain in the public sector and three will be privatised. The Directorate of Fisheries Research is to stay in the public sector as an executive agency because it provides a significant amount of policy advice to MAFF and performs many statutory functions which could not readily be supplied by any other body.

A further 19 agricultural research establishments are currently being reviewed in the prior options programme. One of those is an establishment in which I have a small interest, the Silsoe Research Institute, which occupies a house which marked the beginning and the end of my family's fortunes when it was built. How they deal with that liability, should it be privatised, I wait to see.

Lord Chapple's daughter-in-law continues to work at Horticulture Research International so he has an added interest in the subject. The noble Lord, Lord Chapple, indulged in a paeon of well deserved praise for HRI. It is an excellent organisation. Our interest is to safeguard and enhance its future.

The noble Lord stated that the industry was made up of small businesses. That is true but so is farming, and farmers get together when they need advice and so should horticultural businesses if for no other reason than that there is a substantial source of extra funds coming their way under the European Union fruit and vegetable regime. Those funds will be available through trade associations and getting together will be very profitable.

There are many programmes in which HRI is involved which are for the public good and those we will continue to fund whether HRI is privatised. That is not something which comes into the equation as far as privatisation is concerned. If we want that work done, it has to be done whether the body is private or public.

All these agricultural research establishments are being considered on a case by case basis. Decisions on some of them have been made and some decisions are imminent. It is important that we get the answer right for each establishment for the sake of the establishment concerned and of the national agricultural scientific base.

We realise that any review process raises uncertainty, but we believe that all establishments will emerge from the review process, whatever the decision on future management and ownership, stronger and better able to respond to the needs of their customers.

Lord Carter

My Lords, when the Minister has read Hansard, will he please pick up the point about sell-on by the first buyer? I understand that the Government will take all necessary precautions in relation to the first sale, but there could be a later sale to someone that the Government regard as unsuitable.

Lord Lucas

My Lords, the noble Lord, Lord Carter, asked a number of questions which I have only touched on and I will ensure that he is given proper and full answers to all the questions he has asked.

Lord Chapple

My Lords, can the Minister say who carried out the prior options review? It is important to know what their status is in the industry if the people do not work for MAFF.

Lord Lucas

My Lords, I do not have an immediate answer. I shall write to the noble Lord with the answer and comment as fully as I can on why we think they are suitable people to have undertaken the review. The decision will be one for Ministers.

House adjourned at twenty-one minutes before ten o'clock.