Examination of witnesses (Questions 140
WEDNESDAY 13 DECEMBER 2000
and DR DAVID
140. There are two precedents, the previous
Government got the Bail Amendment Bill using the ten minute rule
procedure and there is always the handout bill. Have you considered
either of those two options?
(Baroness Hayman) Both of those were considered and
the advice was that a Private Member's Bill was not an appropriate
way forward. We did look at the handout bill but within departmental
priorities there were other bills that came further up. If you
do not have a large legislative programme it does not make it
easier to get small Bills through. It is something that I would
prefer that we had been able to achieve, and I have to say that
we did not achieve it.
141. You are going to have this meeting with
the Treasury, when can people expect to know if the alternative
routes which you have outlined, particularly in reference to the
employee problems, are going to be resolved? It sounds like an
endless manana argument, if we keep this going there will
be a Quinquennial Review and then there will be something else
and we will never know what the answer is.
(Baroness Hayman) I do not think I was talking about
the Quinquennial Review in terms of resolving the employment issues,
I hope we can make faster progress on that. Although we do need
to sort them out I have been assured that people are not being
disadvantaged, certainly in terms of their pensions, by the current
untidy and unsatisfactory state of employment.
142. Tell me how the legislative circumstances
of HRI are currently affecting its ability to borrow and to finance
its operation? For example, is its wish to borrow money currently
a problem as far as that is concerned, because under the current
status it would count against your departmental budget?
(Baroness Hayman) I think it is hard to bottom this
one up because I think some of the difficulties about borrowing
are more in people's minds than in the actuality of the legislation.
There are opportunities for HRI to borrow. There are, indeed,
issues about our departmental spending limits, but because the
£4.5 million that we are putting in is being met out of MAFF's
budget then the borrowing issue does not arise there.
143. If, for example, HRI sawwe heard
about the excellence of their sciencean opportunity to
develop a facility to invest in some new process, are you saying
that there is not a problem?
(Baroness Hayman) I am saying that I do not believe
that there are insurmountable problems posed by the legislative
framework for borrowing in the sort of circumstances that you
144. Earlier on we had some discussion about
the funding link between MAFF and HRI, and the fact that HRI is
overwhelmingly dependent for its funding on MAFF.
(Baroness Hayman) 50 per cent.
145. Over the last ten years there has been
something in the region of a 25 per cent reduction in real terms
in the funding by MAFF to the HRI.
(Dr Shannon) To keep the record straight it is probably
more like one-third, rather than 25 per cent.
146. Do you feel that MAFF has given HRI sufficient
notice of those reductions in funding for them to be able to incorporate
those changes in their business plan? Given the pattern of restructuring
of HRI do you feel that there is any connection between the reduction
in funding from MAFF and the failure of those restructuring plans
to actually achieve their original objectives?
(Baroness Hayman) We have always tried to give HRI
as much notice as possible of funding reductions, or at least
to warn it of the risk of reductions. I think we have kept them
in the loop in terms of MAFF's overall science budget and the
likely difficulties and repercussions for HRI. It has actually
sustained its funding against a background of reduction in our
total spend, and increased use of competitive tendering. We still,
as you point out, account for some 50 per cent of the R&D
income. There has also been a great deal of investment, as we
discussed, in the infrastructure. There has been a firm commitment
and there has been appropriate information given. Indeed the business
plan that HRI are now looking at is looking towards MAFF funding
over the next three years and recognising the possibility of decline
in that now. If you like, we have two factors that have squeezed
and impinged, one has been the overall reduction in the MAFF science-based
spending and the other has been the enormous pressure, particularly
in areas of animal health and BSE and TSE research.
147. I am not disputing that at all. Obviously
MAFF's commitment to HRI is demonstrated by the amount of funding
that is being made available for restructuring. The possibility
of HRI not being solely dependent upon MAFF funding, that is,
if you like, research programme based, has been raised with the
Committee, but it may actually lead to some greater stability
within HRI if MAFF recognised its commitment to HRI by making
some core funding available because there is no dispute that MAFF
is committed because of the £60 million of restructuring
money that has already been invested. Do you think that may be
a route that could be taken in the future?
(Baroness Hayman) At the risk of offending Mr Todd
I will say that I think the funding relationship equally has to
be considered as part of the Quinquennial Review. If there were
issues before then where we believed that there were restrictions
in the management statement which are genuinely preventing it
from exploring its full potential then I think we could look at
that. I think the answer to whether or not you want to core fund
an institution rather than simply fund it as a competitor for
work against other competitors does come back to fundamental issues
about whether this capacity is important for Government to have
maintained in one place and in one particular way, in which case
then core funding may be an appropriate way to do that. I think
it does take us back to some fundamental questions about whether
the organisation and the capacity itself are important to Government
in one place or whether you feel you could meet that capacity
across a range of providers. I think that is the fundamental issue.
The funding then follows that, the funding structure follows that
148. I think Mr Todd might wish to come in.
(Dr Shannon) Could I just add to that. The new MAFF
Science Committee is obviously looking at the priorities across
the budget and will advise ministers about that, but equally they
will look at a whole range of other things, about the question
of should there be core facilities, core expertise, that is maintained
on a different basis from the generality of the MAFF research
programme. I have no doubt the Science Committee will look at
that in the not too distant future.
Chairman: I wonder if Mr Borrow would like to
continue on research now and then I will come to Mark and to Michael,
just for better organisation.
149. When MAFF commissions research at the moment,
to what extent are the resources of that research monitored in
terms of value for money and the effectiveness of that research?
(Dr Shannon) That is probably a rather specific question.
The research is funded on a basis that specifies what research
we expect and then we have annual reports on projects and, indeed,
all of our programme is now on the web so you can see exactly
what projects MAFF is funding and you can see what reports are
available. There are annual reports on the projects and then at
the end of the project is a final report. I should have said it
is knowledge of the final report that is on the web. So you can
get from MAFF copies of the final reports of all the projects
it does. In addition to that we have a formal review of all the
projects within a programme which invites the researchers to present
their work, it has external academic peers who are looking at
the quality of what is done, it has commercial peers or industrialists
who are looking at the relevance of what is done. As a result
of that projects are either dropped or further work is funded.
There is a very fulsome programme of review of the research programme.
In addition to that we do carry out a programme of evaluations
of specific areas of work: did the research provide the answers
and were those answers then effective in changing the policy,
in other words did the research really contribute to policy in
the way that we hoped it would do?
150. You touched earlier on in terms of the
dilemma that exists between mixing pure science research and research
that is directly related to industry. Certainly the feeling in
the industry some years ago was that the model where they were
brought together within the same institution was the model which
should be followed. Certainly we, as a Committee, have heard a
number of thoughts that they should be separated. I wonder whether
that is being reviewed, or may be reviewed, within MAFF or whether
MAFF is happy with the existing model?
(Baroness Hayman) I think it is one of the fundamental
issues that you have to keep under review. Just because ten years
ago the belief was that the synergy was best created by having
a research facility that could go right to near market research
that was commercially funded from very lab based, blue sky, horizon
sky research was the right decision, I do not believe that it
is the wrong decision now but I think that assumption has to be
questioned. You do not not revisit it because it was the right
thing to do ten years ago. I have not been persuaded that people
feel that they are working in such completely different sectors
that their synergies would be better if they were silo-ed into
different compartments. I think there is evidence of the fact
that making the connections is an important area and that people
who work in genomics now are actually going to be doing stuff
that is very relevant to commercial markets quite soon. There
are still scientific advantages to keeping those things together.
It is a legitimate question to be asked and one that I think we
should continue to keep asking ourselves.
151. And if when you are considering placing
a research contract, shall we say a research contract for something
that is very much at the lab end, would you take into account
in deciding in which institution to place that contract how relevant
it is to have that in an institution where there is the industry
end working within the same institution? Is that a factor that
would affect your judgment on giving that contract?
(Dr Shannon) If it was placed competitively we would
look at whether the bid that comes forward addresses the policy
objective that the research is being carried out to underpin.
Then we would look at the context in which the research was being
carried out and the quality of the science that is contained within
it and, at some point, obviously the cost of the project. We would
look at whether the people were capable of doing the research,
whether we had high confidence that the people were capable of
delivering a good research project and that the project was focused
on the issue we wanted it to be focused on. Clearly the facilities
and the other work around it are quite often a strong element
in convincing that the project will be successful.
152. Just one question. Why do you think £12.5
million is the right number for your contribution to HRI?
(Baroness Hayman) £12.5 million as the R&D
153. Yes. Your input to HRI. Why is £12.5
million the right number?
(Baroness Hayman) I think you have to ask whether
the MAFF horticultural and potato R&D programme is the right
number, and that has to be asked in the context of overall priorities
for department R&D, and then whether what HRI gets out of
that is the correct slice of it. Both those figures are around
£11 million at the moment.
154. Tell me why you think the slice is correct?
Why are you content with this number?
(Baroness Hayman) I am content with the number because
I know we are undergoing a thorough evaluation of the research
programme and we will be questioning the amount that goes into
horticultural R&D in the sense of setting the overall science
strategy. I am not just relying on what historically has been
there in the past, I am also involved in a process that is assessing
that. Out of that, 85 per cent of that work goes to HRI and 25
per cent is out to competitive tender. Again, one looks at each
of those as to whether it should go there. The figure is not that
we have decided to spend £12 million, the figure is organically
produced by the contracts that are won by HRI.
155. So is this a bottom up budget or a top
(Baroness Hayman) It is a bottom up budget in the
main but there are two sets of research contracts that are put
with HRI. Some of it is out of the competitive budget, that goes
out to tender, and some of it is out of the horticultural budget.
(Dr Shannon) HRI is a major contractor for us in relation
to horticulture. The £11 million does contain elements of
work on nitrates in relation to horticulture. HRI does attract
budgets, it does attract funding from other elements within the
overall MAFF programme. The question you ask is one that we ask
repeatedly. Of course we have to look after public protection,
the environment and then look amongst the agricultural sector
and the horticulture sector to make some judgment about what the
relative spend should be in relation to horticulture versus pigs,
poultry, and other sorts of sectors. The one feature, of course,
that horticulture has is that it is a large contributor to the
GDP of the agriculture and horticulture industry. I think something
like £1.8 billion of added value is added by the horticulture
industry and the horticulture sector. That is a very large slice
of the added value across the whole of the agriculture sector.
156. My final question is, if it is a bottom-up
budget what was the sum total of the elements by how much it was
reduced. Take the total horticulture spend, you have to divide
up the cake with a number of competing outcomes, but if they are
bottom-up budgets you add up all of the bids and then you have
to cut something off the top. What was the pile of the bids and
what was the cut-off?
(Dr Shannon) We normally do a PES-type exercise asking
policy customers what research requirements they think they have
and what research they need. That exercise usually generates about
20 per cent or 25 per cent more than the budget we have to spend.
We then have to do a rigorous assessment of what we think the
priorities are and then allocate the budget on the basis of that.
It has been the R&D Committee within MAFF that has done that
and has advised ministers on that in the past. It will be the
Science Committee that will advise ministers in future on the
balance of expenditure between sectors and on things like environment
(Baroness Hayman) Am I right in saying there are some
sources of income for work, whether it is European work or anything
else, that are funded by a number of partners? So it is possible
that MAFF funding levers-in funding in from other organisations,
whether it is the commercial sector or the EU as well. There is
that wrinkle to it in addition.
(Dr Shannon) The obvious one is the LINK programme,
there is very large horticulture LINK programme which is 50/50
funded with the industry, I think it is worth £15.9 million
over a number of years.
157. You will already have the thrust of my
agenda on this, I think. I will not go through the way in which
I think the Ministry has led this process poorly, to date, incidentally
not purely under the watch of this Government. Could I add one
other thought to the way in which this should be re-evaluated
in future, which is the horticulture industry unusually does not
rely on subsidies in its normal activities. Many of the other
areas you talked about do, and this is one of the very few ways
in which the Government makes any significant contribution to
assist the sector. Would it not be better to empower the growing
community more to purchase their requirements more effectively?
Currently the HDC is a major player in discussing with Government
and with the HRI their particular goals, but, to be honest, does
not have a particularly strong purchasing relationship of its
own. Would it not be better to see Government resources transferred
to the HDC so that they can make their own commercial choices
of where they should place their proportion of research activity?
(Baroness Hayman) I am trying to think through some
of the implications about that sort of transfer of funds and how
it would be viewed in terms of competitiveness.
158. It is a levy body which has a quasi-governmental
(Baroness Hayman) Exactly and, therefore, one has
to think about the model. I am thinking technically about the
modelling difficulties, which I think is not the right way to
take your approach which I suspect is more about getting a more
direct link between the customer and making them a smarter customer.
159. That is right, a stronger purchaser/provider
relationship. There have been criticisms of too cosy a position,
perhaps because HDC does not really have enough resources of its
own to manage that process as rigorously and as effectively as
(Baroness Hayman) One of the things that has emerged
from my conversations with HRI is the need to strengthen their
understanding and communication both with HDC and with growers
themselves in different sectors of the industry. One of the things
I have learned and want to do within MAFF is I do not have specific
responsibilities for horticulture as an industry, I have responsibilities
for science and science institutes and, again, that is the possibility
of a gap and not being a smart enough customer, whether you do
it through transfer of funds or whatever. I think joining up and
getting closer to making sure that you do not have too convoluted
a relationship, too many Chinese whispers, between the people
who want the work done and know what is necessary and the people
who are doing it is a lesson. Whether you do that by not having
direct MAFF funding and channelling it through HDC, for example,
is something I do not want to commit to.
160. Not even I would suggest that was the total
route because there are clearly longer term research objectives
which the HDC would be a poor evaluator of because they have nearer
to market goals. The impression one has of this sector is of a
diffuse sector of procedures, a relatively loose network that
drives the HDC and a relatively small institution to make judgments
on their behalf. That could be improved substantially by additional
Government support to the HDC's own levy based research activity
to put a little bit more power into their relationship with not
just HRI but the other producers of research which could be available
(Dr Shannon) Could I make perhaps two comments. One
is the Link Scheme is a very direct way in which the industry
can leverage, if you like, more money out of Government in relation
to the issues that are important to the industry. The other one
is that we do have a very close relationship with HDC and my staff
constantly provide information of what MAFF is funding and we
take note of what the HDC is planning to fund, so that we do try
to create some sort of seamless whole out of the overall spend.
It has not been Government policy to transfer taxpayers' money
to organisations like HDC in the past.
161. Is it a reason not to do it now?
(Baroness Hayman) Although I would not like in any
way to undermine HDC or what they are doing, or indeed what we
are doing, or David's colleagues, I think communications and relationships
and cutting out middle men are usually good things to work on
in terms of getting the job done properly. So, taking some of
those issues on board and considering them without prejudging
what the end result will be I certainly undertake to do.
(Dr Shannon) The terms of the Link Scheme were carefully
worked out with the European Union to ensure that we did not end
up providing national aids, which is against Community rules.
Chairman: Thank you very much indeed both of
you. Neither of you two, of course, are in the position that we
are, we all face our Quinquennial Review quite shortly. In any
case, I have a feeling that we will want to follow this one quite
Mr Todd: A rather less hidebound timetable than
the Minister has indicated for this.
162. We may want to keep a close eye on this.
I am intrigued by Dr Shannon's remarks that there are quite a
lot of organisations that are in the same boat. Any list he wishes
to give me would help us to sort it out and we will do our best.
Thank you very much indeed for coming. This being the season of
the year, Happy Christmas. You may well want to join Horticulture
Research International at the Salvation Army carol concert in
Westminster Hall; salvation is something we are all in need of.
(Baroness Hayman) Absolutely. Thank you.