HC Deb 23 October 2002 vol 391 cc124-30WH

1 pm

Sir John Stanley (Tonbridge and Mailing)

In the years that I have been privileged to be a Member of Parliament, I have travelled to agricultural, rural and fruit-producing areas in many parts of the world, including Africa, Asia, the Indian sub-continent and Latin America. I am invariably asked what constituency I represent. Hon. Members would be forgiven for thinking that "Tonbridge" and "Mailing" are not words that command instantaneous international recognition, but they would be wrong. When I say that I represent Tonbridge and Malling, the response all over the world is, "Oh yes, that is where the fruit research is carried out."

HRI East Malling, formerly the East Malling research station, is a research establishment of genuinely worldwide renown. Against that background, it has come as a source of acute dismay, even disbelief, that the Government could be contemplating the closure of that remarkable research establishment, which is of proven international capacity. Indeed, the announcement has been greeted with shock not only in East Malling, but in the British horticultural industry as a whole. I am deeply concerned about and, I believe, justifiably critical of, the content of the announcement and its handling.

Most regrettably, the Department's press release did not even accurately reflect the key recommendation in relation to East Mailing contained in the "Quinquennial Review of Horticulture Research International". Paragraph 1.6.3 of that review states: we recommend that East Mailing is either closed or, preferably, transferred with some of the existing staff to the East Mailing Trust for Horticultural Research. Most regrettably, the key word—"preferably"—was omitted from the Department's press release, implying that the Government are entirely neutral as between the options of closure or transfer to the East Mailing trust.

Inescapably, in those circumstances, closure blight now threatens HRI East Mailing. The key elements in any research establishment are, of course, the people. If there is closure blight people contemplate leaving and might actually do so. Research contracts that are coming to an end might not be renewed, and new contracts will not be entered into. I must tell the Minister candidly, that the suspicion—wholly unfounded, I hope—is that the Government want to close HRI East Mailing in all circumstances. I earnestly hope that he can give me a categorical assurance that that is not the case.

I am also very critical of the timetable for consultation, particularly in the context of HRI East Mailing, which is potentially far and away the research establishment most seriously affected by the announcement. The announcement of possible closure was given in the press release of 23 September. The consultation closing date was announced as 18 November, which is barely eight weeks flat. That is a totally unrealistic timetable in which to put together the non-closure option—in other words, the transfer option to the East Mailing trust.

That transfer will involve the creation of a completely separate charity, or company limited by guarantee, to contain the assets and the business of what is now HRI East Mailing; the production of a detailed business plan and the negotiation and working out of contractual arrangements between the new independent HRI East Mailing and the existing East Mailing trust; and the establishment of the continuing terms, conditions and pension rights of existing HRI staff who are transferred to the new independent East Mailing. It will involve getting clear commitments from the Department for Environment, Food and Rural Affairs as to its future financial policy and placing of research contracts with the new organisation. Those commitments must be sufficient to enable the trust's trustees to take decisions. A substantial amount of work will need to be done by lawyers, consultants and others. It is ludicrous to suggest that all that can be done in eight weeks. I urge the Minister to tell us that the Government will show a sensible degree of flexibility about the timetable for consultation.

To assist the Minister in giving detailed replies, I gave him in advance my eight specific questions, which are as follows. First, DEFRA has stated that, as an alternative to closure, HRI East Mailing should become an independent research station under the auspices of the East Mailing Trust for Horticultural Research. Will DEFRA fund the legal and consultancy fees necessary to bring that structure into being? Unless DEFRA is willing to fund those inescapable fees, a merger or transfer to the trust will not be able to take place, as it would be impossible for the trust, which is a charitable organisation, to engage in large expenditure on professional fees that might conceivably bring no results.

My second question relates to paragraph 1.6.3 of the quinquennial review, which states that interim financial arrangements may be needed to create an independent East Mailing under the auspices of the East Mailing Trust for Horticultural Research. Does the Minister accept that interim financial arrangements will be needed, and are the Government, through DEFRA, prepared to provide the necessary interim finance to enable HRI East Mailing to make the transition to independent status under the auspices of the trust?

Thirdly, well over half of HRI East Mailing's income comes from DEFRA contracts obtained competitively. Will the Minister give a clear assurance that DEFRA will continue to place contracts, when competitive, with the new independent East Mailing, which has to exist outside HRI? Without such an assurance, the consultation on a transfer or merger with a trust is a charade, given the extreme dependence of the research establishment on DEFRA contracts—again, I stress the fact that those contracts have been won competitively by East Mailing.

Fourthly, the review rightly says that research institutions need at least 40 per cent. of their budget to be secured over a four to five-year period, and that they cannot survive efficiently with too much of their budget dependent on competitive funding. What assurance will the Minister give that DEFRA will place with East Mailing contracts of sufficient length to make an independent East Mailing viable?

As a Minister, I was involved in the research establishment business in that I had responsibility for the Building Research Establishment. Anyone with that type of experience knows that one cannot run a research establishment in the public sector on a hand-to-mouth basis, with only short-term contracts lasting a year or so. Such establishments need the security of having a significant proportion of their income underpinned by longer contracts, running for four or five years.

Fifthly, the review makes it clear that almost all the Biotechnology and Biological Sciences Research Council's funds are spent at Wellesbourne. Will the Minister give an assurance that an independent East Mailing will have access to BBSRC funding on the same basis as Wellesbourne currently enjoys? That key area of ministerial policy is judged to be very important to East Mailing's ability to make its way independently under the auspices of the trust.

Sixthly, will the Minister explain how it happened that his Department made the welcome decision to finance the new £2.8 million conference centre at East Mailing, which was officially opened on 20 September, only for his Department to announce the possible closure of East Mailing three days later, on 23 September?

Seventhly, will the Minister clarify whether the staff of HRI East Mailing who move to an independent East Mailing will have their present terms and conditions of service protected, together with their pension rights? Will the Department meet the costs of any redundancies?

My eighth and final question is, will the Minister acknowledge that, contrary to the impression given in the review, East Mailing's research focus is not on soft and top fruit alone but extends to ornamental shrubs, woodlands, hops, amenity horticulture and tropical forestry, all of which have considerable commercial potential? It would give some reassurance to those who work at East Mailing to know that the Minister and his Department acknowledge that East Mailing has a much wider operational base than is suggested in the report.

I come finally to the grounds on which the review body based their regrettable decision that East Mailing may be closed. The basis for the review body's conclusion in the report is far from clear, and one suspects that it is financially oriented. If that is the case, I should give the Minister some key facts. The British horticultural industry has a turnover of £3 billion, one third of which links into research carried out at East Mailing. It is clear from the accounts of HRI East Mailing that, given a reasonable level of DEFRA contract placing on a competitive basis, East Mailing can wash its face financially. Surely it cannot make financial sense to contemplate the closure of a nationally valuable research establishment, which is financially viable and which supports a huge industry that is, by definition, import-saving and that has good export prospects and actual exports.

I trust that the Minister will give me a clear assurance that the Government accept that not closure but merger with the trust is the preferred option. In my view, it should be the only option now on the table. He and his Department should make every effort to bring that merger with the trust to a successful conclusion—it is in the national interest that that should be the outcome.

1.14 pm
The Minister for Rural Affairs (Alun Michael)

I congratulate the right hon. Member for Tonbridge and Mailing (Sir John Stanley) on instigating the debate and finding international status for his constituency.

The Government provide substantial funding for horticultural research and development, and we spent more than £18 million on it in Great Britain in 2001–02. At nearly £10 million, DEFRA's horticultural budget accounts for 7 per cent. of our total research and development budget this year. In cash terms, the horticultural programme is the third-largest after environmental protection and BSE.

I am not sure that the right hon. Gentleman did his constituents any favours by being so critical of DEFRA, which is grasping a nettle that has needed to be grasped for some time. Speedy decisions are needed to ensure a secure future for HRI, and he rather contradicted himself by suggesting that further delay would be good for the establishment's future. He is wrong to cast doubt on DEFRA's commitment to finding a sustainable future. HRI is our country's leading provider of horticultural research and development services. It is rightly regarded as a centre of excellence, and DEFRA continues to be its principal customer, providing almost 50 per cent. of its income.

The report of the review contains challenging findings. Paragraph 5 of the executive summary states: HRI has been over-dependent upon DEFRA and should cease to be classified as a Non-Departmental Public Body sponsored by DEFRA. It should continue to operate in the public sector, as a company limited by guarantee with charitable status. As such, HRI should take full responsibility for its financial well being. That is a challenging but positive conclusion. The review team members also stated in their findings: Above all, we urge Ministers to take decisive, active and positive decisions about the future of HRI. Furthermore, we recommend that Ministers engage in a constructive consultation programme on this report. They recommended that East Mailing is either closed or, preferably, transferred with some of the existing staff to the East Mailing Trust for Horticultural Research. That is a clear set of proposals.

The three-month consultation on the quinquennial review team's report runs to 18 November. HRI will continue until Ministers have considered the options and decided the way forward. When that has been done, we will proceed by discussion with all stakeholders, including the East Mailing trustees. There is no question of having to solve the issues of staff and pensions by 18 November, but we are happy to talk to the trust about those important issues.

HRI is at an important stage of its history following the publication of the quinquennial review report. I am sure that the right hon. Gentleman understands that we are not in a position to respond to either all the detail of the review today, or to all his questions. The report was prepared by a distinguished and independent team of experts. It makes a thorough and challenging assessment of the institution's circumstances, as well as some radical and 'well argued recommendations about the future direction of HRI.

It is important to get this right, so the Department has invited stakeholders to comment on the report before Ministers take decisions. We have also commissioned consultants to provide further financial analysis of the review team's main recommendations. We need to ensure that the proposals are robust and tested and that they will stand the test of time.

Staff and other HRI stakeholders are anxious to know their future and that of the institution. I completely understand that desire—having lived through a period of reorganisation in my own professional career, I know how unsettling it is, not only for the individuals involved, but for their families and the wider community. I know understand how it can disrupt normal working and the effectiveness of professional activity, but that is one reason why we need to proceed quickly to conclusions. We shall try to reach and implement decisions expeditiously, but that must not be at the expense of proper analysis of the issues.

We must make sure that our decisions are based on a sound assessment of the various options, and that they create robust and durable solutions. A key consideration in reaching decisions will be ensuring that HRI has a stable platform from which to develop its future business, taking account of actual and potential funding possibilities and business opportunities available to it.

However, it is not for the Government alone to provide for the future of Horticulture Research International. The horticulture industry is a key partner. The Government's primary consideration when they first set up the institution was the industry's wish for an institution that would provide a critical mass of horticultural research capacity. Those involved in HRI's management must ensure that it operates in the most cost effective and efficient manner.

The operation at East Malling is the oldest of the organisations that were merged in 1990 to create Horticulture Research International. It was originally set up in 1913 at the initiative of the local horticulture businesses, supported by grants from the then Board of Agriculture and Kent county council. Like the Ministry of Agriculture, Fisheries and Food before it, DEFRA continues to be a major customer of HRI. This year, we have commissioned research projects worth nearly £3 million. DEFRA has a number of research programmes at East Mailing, including breeding work on top, stone and soft fruit; improving propagation rates; the genetics of hardy nursery stock and fruit quality; pest and disease control in fruit crops; organic apple production; biodiversity of ground flora and tree improvement in farm woodlands. I recognise the scope of the activities that are undertaken at East Malling.

Some of the work is due to end in March 2003, but we hope to commission new projects on apple, pear, cherry, plum and raspberry breeding, subject to the receipt of satisfactory research proposals and the securing of the necessary funding. New projects on tree improvement in farm woodlands and local provenance of trees and shrubs are intended for next year, in partnership with the Forestry Commission. Projects on propagation and the improvement of hardy nursery stock are also planned, with some work in that area being put to open competition or to the joint Government-industry LINK programme.

We are also strong supporters of the new organic research and conference centre that was opened at East Malling in September. That was made possible by a grant of more than £2 million won competitively from the Treasury's capital modernisation fund, with financial support provided by the East Mailing Trust for Horticultural Research. HRI also deserves credit for attracting the enterprise hub with the support of the South East England Development Agency.

I recognise that the review team's recommendations about the future of the site—including its view that it might have to be closed—cannot make comfortable reading for HRI's staff and customers. However, I note that the review team considered that the site has the potential for a successful future as a regional centre for applied research and knowledge transfer, provided that it receives the necessary support from DEFRA and the horticulture industry. With that in mind, the Department's officials have been in contact with the East Mailing trust to discuss what role it might play in the site's future. That dialogue will continue. I do not think that it would be right, as the right hon. Gentleman suggests, to put all our eggs in one basket, but the time being spent in discussion with the trust shows that we have responded positively to the report in that respect.

The right hon. Gentleman asked some specific questions, and he might be reassured to know that I think that they are the right questions. However, we need to reflect on stakeholders' responses to the current consultations, and we have not yet reached the end of that process. There is also a need for discussion with the board and management of Horticulture Research International and with the East Mailing trust, before all the questions can be answered.

The right hon. Gentleman will understand what I mean when I say that he has both asked for immediate answers to certain questions, and suggested the need for time to work through some of the issues. We need to move quickly if we are to achieve a secure future for the organisation, but it would be inappropriate to answer some of the questions in advance of the discussions, or to rush to judgment.

Paragraph 1.6.3 of the quinquennial review, to which the right hon. Gentleman referred, suggests that interim financial arrangements may be needed. That was the finding of an independent team of experts, whose recommendations will be considered in the light of responses to the public consultation exercise and the results of further financial analysis. It would be inappropriate to give a yes or no answer until that has been done. I am not answering no to the question today, and I understand that it is important to the right hon. Gentleman and to people in East Malling that those questions should be considered and fully answered.

The right hon. Gentleman asked for an assurance about the placing of contracts. As I have already said, there is no reason why East Malling should not continue to receive research income from DEFRA, provided its work continues to meet our objectives and satisfies the criteria for selecting proposals. He also sought assurances in relation to the statement in the review that research institutions need to have at least 40 per cent. of their budget secure over a four to five-year period. We need to discuss that detailed matter with the East Malling trust—assuming that, as a result of the discussions that are taking place, it wishes to take over the site. We are sympathetic to the argument that DEFRA work placed at the site should have an element of stability, but the future of East Malling will depend largely on the site's ability to attract a range of work from customers in the public and private sectors, not only from DEFRA. It is important to achieve the right mix so that the new organisation is competitive. That is the secret of its secure future.

Sir John Stanley

Will the Minister answer a key question and tell us whether DEFRA is willing, at least in principle, to pay the cost of the considerable professional fees that will be incurred, without which it will not be possible to begin the work of creating a separate entity for HRI East Mailing, of negotiating a memorandum of understanding between East Malling and the trust, and of developing a business plan?

Alun Michael

I am not ruling that in or out, but as I have said, it is one of the issues that we will consider, not least in discussion with HR I's management and the East Malling trust.

The right hon. Gentleman also asked about the opening of the conference centre on 20 September 2002, three days before the review's findings were announced. There is no link between the two events. With the Department's support, in 2000 the Treasury awarded a grant of £2.2 million from its capital modernisation fund to enable HRI to build its new organic centre; the East Mailing trust subsequently provided additional investment of £500,000. As I have explained, the quinquennial review report was prepared by an independent team of experts, which started work in December 2001.

The right hon. Gentleman asked about employment arrangements. We cannot deal with that matter in advance of decisions about the future shape of the organisation. We shall certainly try to reach early decisions so as to minimise uncertainty for staff, whose representatives will be consulted in the normal way. I understand the difficulty presented by uncertainty, but the best way to achieve long-term certainty for staff is to ensure that the outcome of the discussions provides a robust platform for the long-term security and future success of the organisation, which, as the right hon. Gentleman said, has an international reputation.

Mr. Deputy Speaker

We must now turn our attention to the final topic for debate today.