Select Committee on Agriculture Minutes of Evidence


  1.  Following its appearance on 10 May 2000, HRI has been invited to appear before the Select Committee on 13 December 2000. The following information is submitted as a "progress report" on events since May.

  2.  The Committee will recall HRI's difficult financial position, as detailed in the Seventh Inquiry Report of 11 July 2000. The Committee said at the time "We expect the necessary cost reductions to be carefully managed to ensure that HRI's science and staff base is not damaged irreparably".

  3.  HRI needs a small operational surplus to be able to fund essential upgrading and replacement of assets. HRI had an operational deficit of £1.64 million in 1999-2000 and is forecasting a deficit of £2.17 million for the current financial year. This situation is the result of rising operational costs combined with declining public sector funding for R&D. Although HRI has successfully increased its competitive public and commercial income by more than 60 per cent in recent years, this has been insufficient to match the decline in public funding.

  4.  The restructuring options considered by HRI's Board ranged from an even spread of the necessary 15 per cent cut, thus keeping but damaging all sites, to closing all sites except Wellesbourne and concentrating the entire R&D effort in one location. Each option was analysed in detail over several months, assessing real or possible impacts (positive or negative) on our ability to sustain income and maintain delivery to customers as well as generating the necessary £3 million net saving on the "bottom line". We particularly benefited from the advice of our "industry" members on the Board. HRI Board members, together with senior MAFF officials and Ministers, were fully involved in these discussions, which also included Trade Union representatives. Because of their sensitive and confidential nature, and to minimise damaging speculation and resultant staff anxiety, little public disclosure was possible before September.

  5.  On 11 September 2000 HRI's Chief Executive announced the package of cost reduction measures which had been agreed with, and will be financed by, MAFF through a one-off restructuring grant of £4.533 million.

  6.  The restructuring programme is designed to restore HRI's viability, to make the necessary savings in recurring costs of £3 million per annum and to return HRI to financial surplus within two years. The restructuring plan is on schedule to be completed in March 2001.

  7.  The key decisions taken were as follows:

    I.  145 posts will be lost throughout HRI (out of a total staff complement of 637). Selection of redundant posts, against agreed criteria, was made so as not to damage HRI's ability to carry out its business. The number of compulsory redundancies has been kept to the minimum (68), whilst 29 staff have been accepted for voluntary redundancy and another 48 posts are being lost through natural wastage (retirements, resignations, vacancies).

    II.  HRI Stockbridge House will close on 31 March 2001. HRI deeply regrets that this action must be taken, but it was imperative that HRI secured the future competitiveness and cost-effectiveness of the organisation as a whole. Stockbridge House was selected for closure as the reduction in fixed costs and overheads can be made without seriously compromising HRI's overall capacity. There are no specialist facilities at Stockbridge House that are not either portable or available elsewhere in HRI.

    III.  Operational changes at Kirton and Efford are being made in order to consolidate research and development effort, while providing a more integrated and viable future for these smaller scale HRI sites.

    IV.  At the same time, HRI announced that it would be strengthening its senior management team by recruiting a Head of Business Development and an Operations Manager, to fill posts vacant since October 1999 and August 2000, respectively.

  8.  Regrettably, despite our best efforts, eight of the 10 key staff at Stockbridge House whom we wished to redeploy within HRI have opted to be made redundant. HRI does, however, continue to retain a talented, professional and customer-focused workforce. Detailed plans for the transfer of ongoing projects from Stockbridge House to other parts of HRI have been drawn up and discussed with key customers. The changes in management and their impact on future programmes and services provided by HRI have been discussed in an extensive, recent series of meetings with UK horticulture industry representatives.

  9.  HRI has naturally sought to address the challenging task of minimising the impact of restructuring on its staff skills-base and on effective delivery to customers. HRI is eager to engage in constructive forward planning to secure a more competitive and effective future for all parties. To this end, we initiated a series of open discussion meetings with varous interest groups representing UK horticulture: the NFU, HDC, APRC, East Malling Trustees, Grower and Avisory Groups, and others. Inescapably, the UK horticulture industry and the unique and extensive R&D resources, skills, knowledge and technology transfer capabilities of HRI are interdependent and function to mutual advantage. We must all work constructively in developing a positive future.

  10.  HRI continues to pursue, particularly following the report from the Agriculture Select Committee of 10 May 2000, effective resolution of its outstanding operational staffing issues. Given the poor prospects of securing early time for primary legislation, efforts are being made to seek alternative avenues to progress matters. Discussions and consultations continue between HRI, MAFF and BBSRC. Representatives from all three are due to meet with Treasury on 21 December 2000, to discuss pension arrangements.

  11.  The Agriculture Committee has already drawn attention to the need for HRI's Commercial Sales and Marketing Department (HortiTech) to be reconstituted with a realistic recovery plan. HRI can now report that positive action is being taken to address this situation. Following a thorough review of the true profitability of each of the former Business Units, a strategic decision was made to link all present and future commercial R&D opportunities and private sector contracts to one of HRI's three overarching R&D Themes (ie Crop Protection; Plants and their Environment; Crop Improvement). This will ensure that profitable commercial opportunities will be pursued in a co-ordinated way and non-viable projects will be identified in a more timely fashion. An appointment to the post of Head of Business Development will be made as soon as possible, to accelerate the expansion of HRI's commercial R&D and to facilitate the transfer of knowledge to the horticulture industry.

  12.  Throughout this exercise, it is essential that HRI maintains and develops its current industrial and public sector customer base. To help achieve this, HRI has reorganised its scientific management to develop 15 multidisciplinary teams, which span and integrate work across all its sites. The work of the teams is strategically planned and co-ordinated by SCICOM, a committee of the most senior scientists throughout HRI. SCICOM has recently completed an extensive and critical review of HRI's overall Research and Development strategy. It will now consult with industry and public sector stakeholders on future plans to deliver value-added R&D. A series of internal and external peer reviews have also taken place to assess the quantity, quality and focus of HRI's R&D portfolio to prepare for an Institute Assessment Exercise, conducted through BBSRC, in 2001.

  13.  HRI must also develop new income streams to ensure the future stability and growth opportunities of the organisation. The Chief Executive and other senior HRI staff are taking a lead in these efforts, and prospects look encouraging. Initiatives are being taken that could lead to major investments at most of HRI's sites through the creation of new Food, Health and Environmental Bioscience "Enterprise Hubs" in conjunction with Regional Development Agencies, and public-private partnerships to exploit HRI's IP portfolio.

  14.  HRI is conscious that it must rebuild more efficient and formal lines of communication with the UK horticulture industry, producers and consumers alike. As part of our new Business Development Strategy, we will further enhance our current customer care and account management procedures. The future of HRI will depend on establishing successful mixed economies at each of its remaining sites.

5 December 2000

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