Memorandum submitted by Dr George Thorburn
I am George Cumming Thorburn and was recruited
by HRI as their first New Business Development Manager and Managing
Director (designate) of HortiTech in February 1997 until I was
wrongfully dismissed without notice or leave of appeal on 15 October
This evidence is factual and I am prepared to
swear it on oath should it be necessary.
I am a qualified and experienced Commercial
Manager and Director in the horticultural industry with 35 years
international experience. I am the founder and Managing Director
of Global Horticulture Limited and its wholly owned subsidiary
Hi-Tech Horticulture Limited which owns 50 per cent of a large
scale micro-propagation business specialising in High Health plant
production in China.
I shall present my evidence in three sections:
1. HortiTech and how and why it failed.
2. The current situation at HRI.
3. Recommendations for the future.
The purpose of this section of evidence is to
provide information and facts relating to the failure of HortiTech
and to ask that steps be taken to prevent HRI, or indeed any other
public body from mis-directing and mis-managing such an important
strategic change in an organisation again.
Back in 1995, the HRI Board, MAFF and the Science
Council realised that Government funding was diminishing so quickly
that by the end of the decade the organisation would be insolvent
unless some drastic and challenging action was taken. The Board
invited PA Consultants and various other consultants, accountants
and advisors to help them put a plan together to avoid insolvency
and achieve the objectives set by Government.
The plan involved consultation with staff, industry
and Government and included a round of redundancies financed by
MAFF. Dr Tony Burne, the MAFF official with several hats who is
now an HRI Board member, together with Dr Shannon and the Financial
director of HRI, Mr Tom Heller were all at the forefront of the
plan entitled, HRIThe Way Ahead 1997 Onwards. It was approved
by various Committees and the Board and by Ministers and became
policy. Obviously the compilation of this plan cost a considerable
amount of time and money and commitment. Any suggestions that
the "unrealistic targets" and budgets prior to Professor
Wilson's arrival were not approved by the leaders of MAFF and
the Board are quite incorrect. Indeed it was Professor Wilson's
and Peter Siddall's responsibility to ensure that HortiTech not
only survived but also succeeded. It is unacceptable for any of
the HRI Directors to suggest that the initiative was not their
concern. Mr Heller, Dr Burne, Dr Shannon, Mr Siddall and Professor
Wilson in particular were responsible for making the changes necessary
to allow HortiTech to succeed.
The plan stated quite clearly that a commercial
subsidiary of HRI was required to capitalise on the resources
of the establishment and to earn profits from the sale of products,
services and commercial sector research contracts.
Advertisements (attached) [not printed] were
placed for a Commercial Director of New Business who would also
be the Managing Director designate of the new subsidiary. After
an extensive series of interviews and psychometric tests and medicals,
I was offered the position and commenced my duties on 1 February
1997 after the plans for the future had been debated and approved.
I was told that I would have a subsidiary company by June 1997
at the latest.
I was also given The Way Ahead report and accepted
that the commercial objectives and challenges therein made up
my remit. The result was the formation of HortiTech and its launch
in January 1998. Unfortunately the plans for the company were
based on HortiTech being a subsidiary limited company within HRI,
operating under commercial private sector parameters. This, apparently
was exactly what Non Department Public Bodies were established
to do. To this day however, the limited company has not been formed
largely due to internal Civil Service politics and the unwillingness
and inability of the senior administrators in MAFF and HRI to
allow a private sector company loose in their ranks. After all
commercial efficiency could jeopardise careers, pensioners and
public sector perks!
I made it clear that the Sales and Marketing
plans I put forward for HortiTech could only be viable if the
operational work at HortiTech was run on private sector lines
with private sector remuneration, financial controls and working
practices. I was assured by the Board and by the Senior administrators
that the delivery of private sector products, services and research
would not present HRI with a problem and that I should concentrate
on Sales and Marketing until the limited company was formed.
By late 1998 and into 1999 I was frustrated
by the failure of HRI to deliver and manage private sector work.
Many of the Business Units never got off the ground because they
were not operationally resourced and customers were being let
down by failure to deliver and by delays in obtaining answers.
Efford, the High Health propagation centre of HRI was prevented
from exporting liners and cuttings because MAFF issued an export
prohibition order for pests and disease in the stock. There was
open hostility from many scientists at HRI regarding the formation
of HortiTech and the working practices were more akin to a University
existence than a disciplined commercial business. The over bureaucratic
administration and consultation system ensured that decisions
were painfully slow and difficult to make work rates and output
compared to the private sector were totally unacceptable commercially.
It was obvious that without a limited company independent from
the academic and public sector stranglehold and inertia in HRI,
HortiTech would fail.
Peter Siddall was first apprised of the HortiTech
plans in mid 1997 when HRI were looking for a new Chairman. I
had met Peter Siddall in 1995 and corresponded with him on various
research issues. I suggested that he might be worth interviewing
for the vacancy although I did not know him very well. He was
not appointed and Mr Valentine was made Chairman. Sadly he took
ill within a month of his appointment and died. Dr Burne of MAFF
took the Chair as an interim measure between September and January
1998 when Mr Siddall joined HRI. Chris Payne and I met him on
several occasions and sent him copies of The Way Ahead Report
and more information on HRI. When he became Chairman in January
1998 he was well acquainted with the policy and strategy and only
changed his mind and attitude when a number of senior basic scientists
met with him in secret and complained about the commercialisation
initiative and drive behind HortiTech. It would appear that this
meeting with the scientists convinced him that basic science was
the purpose of HRI and commercial trading of products and services
and research along with development of technology was something
to dismiss. Indeed he publicly stated that at the last Select
Malcolm Bradley, a fellow Director and I brought
the problems to the notice of the various committees and boards
we had to report to including the main HRI Board. We received
no understanding or support from Mr Siddall or the Board and were
ostracised as troublemakers.
Eventually, in September 1999 when Professor
Wilson was by this time the CEO, Sarah Hughes-Clarke my Sales
manager and I gave a presentation to the Executive Directors which
basically said that unless HortiTech became a private sector organisation,
it would fail and we gave notice that the Sales targets could
not be achieved in the current organisation. We also put a proposal
forward to float HortiTech as a private sector company and contract
with HRI on such favourable terms to give them first choice to
undertake work from the company. HortiTech Limited would take
over all of the development sites and execute the development
work of HRI. It would maximise sales by sweating the assets and
acting as sales and marketing agents for commercial science contracts.
HRI would receive a "royalty" revenue stream as well
as be main contractors.
Shareholders and financial and commercial partners
were all in place but the plans which had been drawn up in consultation
with several Directors including Dr Tony Burne and Mr Tom Heller,
were dismissed as too radical, entrepreneurial and commercial.
I made my feelings clear at the HRI Board meeting in September
1999 and provoked by the Chairman's now well known aggression,
engaged in a bad tempered clash with him and Professor Wilson
who were still adamant that I was scare mongering and "HRI
were in a very good position for next year and beyond". Shortly
afterwards I was dismissed without notice and eventually negotiated
compensation for wrongful dismissal.
The papers I submitted to the Board, the Executive
Committee and to the HortiTech Working Party (Shadow Board) [not
printed] are enclosed in support of my evidence.
I was criticised by Directors and Senior Managers
at HRI for being "a disgruntled ex employee" when I
provided Mr Curry and the Committee with evidence and supporting
documentation earlier this year. That is far from the truth. I
have a very successful business, Global Horticulture Limited with
its High Health propagation subsidiary Hi-Tech Horticulture Limited
geared to sell over £1.5 million of tissue cultured stock
globally in 2001 and have no regrets about leaving HRI. It is
however concerning to know that people in command at HRI can trivialise
constructive criticism. I believe that HRI is not in a position
to trivialise or ignore criticism and should take heed of the
comments being made.
As a tax payer and a member of the Horticultural
Industry, I am fearful that the Government will yet again pump
more money into the sinking ship of HRI when frankly all the industry
wants and needs is the Government's financial support in R&D.
HRI was fudged together by government and forced
to operate with two employers, two opposing Ministries and no
commercial freedom to work. The turf war between The Office of
Science and Technology and MAFF was and still is a National Scandal
with both sides showing no responsibility for the mess they have
contrived between them.
Basic academic scientific research and development
research and technology transfer are not the same. The mindset,
motivation and working practices of each group are at opposite
ends of the spectrum. The establishment and operation of a Private
Sector business in such a structure is also totally alien and
unworkable and should never have been conceived unless there was
a resolve to make things happen by the implementation of change
operationally, a discipline Mr Siddall apparently is an expert
The financial management and control of the
organisation was non-existent as far as commercial business was
concerned. Time and job recording did not exist, costings did
not relate to benchmarked and targeted budgets. Commercially acceptable
Purchase ledgers and Sales ledgers were not available; purchasing
was ad hoc and not centralised; there were no controls
on invoicing for work done and many "customers" got
very cheap or free services. Monthly management accounts were
never produced. The most concerning issue financially however
was that HRI were drawing cash from their employees pension funds
on an annual basis to prevent the organisation from running out
of money. This "loan" was re paid before the year-end
every year so that it would not appear in the books. I was only
made aware of this practice in late 1998 and after considerable
lobbying; the Board agreed to stop the practice last year and
have now ring-fenced the pension fund in a separate account. This
however is yet another reason for HRI running out of Cash this
Over £350 million has gone through the
accounts of HRI since it's inception, much of it in the form of
restructuring and redundancy payments. Consultants have been paid
for Business Plans and strategic analysis and planning, staff
have been moved around the country and new offices, laboratories
and other facilities have been built.
Ten years on however, it has failed to deliver
and to balance its books.
Six years ago the public sector cuts were envisaged
and, wisely, the then Chairman and CEO began planning for the
future. The plans were taking root and if the commercialisation
proposals I put to the Directors in September 1999 (attached)
[not printed] had been implemented, HRI would be a prosperous
and hopeful organisation providing the balance of products, services,
technology and basic science its customers required. It is unacceptable
that Professor Wilson and Peter Siddall made a drastic and dramatic
decision to dismiss me and in effect destroy HortiTech without
consultation or debate and without envisaging what damage their
decision last October would cause.
In my opinion their actions were inconsidered,
reckless and taken without the expected due diligence required
of a Chief Executive and a Chairman of a public body.
It is however not surprising that HRI has fallen
when the method of recruiting and filing key posts is analysed.
I was the only manager/director in HRI to have been recruited
by psychometric analysis and skills matching after interviews.
This is a common method in business and ensures that the skills,
experience, mental attitude and motivation triggers and drive
fit the key competencies of the job description and requirements.
Any responsible employer will use these tools to ensure that the
job is matched to the best candidate. HRI is run by Academic Scientists,
Public Servant bureaucrats and a Management Consultant. If the
key competencies of the job each does was analysed and psychometrically
tested I believe that none of the key positions in HRI would prove
to have the correct incumbent for the job in hand. Worse, I believe
that several key competencies and motivating and drive attributes
would be missing. I am sure that this is probably the case in
most Public Sector organisations. It is very irresponsible and
slipshod way to recruit and it is unacceptable for MAFF and HM
Government to condone such practices which inevitably put taxpayers
funds at unacceptable risk. To play game with taxpayers money
and allow this practice to continue is not showing due diligence
and is probably the key reason that Government organisations such
as HRI and the Dome fail.
The announcements of restructuring HRI made
recently have been full of rhetoric and posturing without any
real confirmation of direction and strategy.
The only clear things that have come out are
the closure of Stockbridge House and 150 redundancies being paid
for by MAFF.
The CEO stated that the redundancies would cut
his staff to around 500 and his press release a few days later
stated that HRI will be growing from a less than £20 million
turnover at a loss to over £24 million turnover at a profit.
This sounds fine but we have no explanation of exactly how this
is to be achieved. This would mean an increase in efficiency of
over 73 per cent in two years. Turnover per employee would grow
from the present £27.7k per annum to over £48k. Is this
feasible or are we just being comforted by being told what we
want to hear?
A new business development manager is to be
recruited at a salary of c £60k. The science fraternity and
unions at HRI have already complained about this to Mr Siddall
and Professor Wilson and the advertisement called for a very entrepreneurial
individual who will have the freedom and presumably the resources
to succeed. Is this simply a repeat of previous mistakes or has
HRI changed and become more commercially friendly than previously?
I believe that the appointment of another new business manager
has not been thought through and that there is no business plan
or forecasts and estimates to support the appointment.
Professor Wilson has recently told the Efford
Advisory Committee that he is in negotiations with a Canadian
science organisation and with Southampton Science Park in an effort
to convert the site into a Bio Science Park. This is strange as
he has also stated that HRI will continue development research
and the Efford site will stay open. If however it is going to
stay open as a Bio Science Park where is the development research
going to take place. I also understand that MAFF has agreed in
principle that HRI and or a.n.other may buy the site on favourable
terms. If this is the case, why has it not been made more public?
Is it appropriate to have a Bio Science Park
in the New Forest and does HRI need a Bio Science Park to fulfil
its remit? Why has MAFF agreed to a sale on favourable terms?
Why will MAFF not offer Stockbridge House to The Stockbridge Trust
on favourable terms? Is the Park going to be a private sector
or public sector concern? Who are the investors and Directors
and are they linked to any existing Directors of HRI or to any
When Professor Wilson joined HRI he was quite
convinced that a Swiss/German bioscience organisation was going
to invest heavily in HRI and everything in the garden would be
rosy. Nothing has happened in the twenty months since he first
informed us at HRI.
When he left STRI in Scotland he left a very
embarrassed Scottish Office and considerable unrest because another
scheme involving mystery investors failed to materialise.
I believe that it is essential for the Committee
to obtain the truth about this situation as it could have a major
impact on HRI's ability to deliver its remit and it could also
have yet another negative effect on the balance sheet and cash
situation at HRI.
The current situation is untenable and shows
a complete lack of understanding and ability by the Board and
the Senior Executives of HRI. HRI has not listened to its customers
and appears to have lost its ability to understand and deliver
its remit. The situation cannot be allowed to continue.
The organisation is in effect bankrupt and only
held together by government handouts. It is obvious to those of
us who know the organisation well that the so called re-structuring
taking place at the moment is no more than a cry for more money
and no real, commercially acceptable plans are in place to prevent
a re-occurrence of this scenario or to make HRI self financing.
The organisation has appeared to re invent the
wheel every two or three years and now that Mr Siddall and Professor
Wilson have killed HortiTech they are already planning another
game plan. If HRI gets another business consultant to replace
Mr Siddall will we be subjected to yet another restructure and
new business plan?
Frankly, it would be better to wind up HRI and
re-think the way that government could support horticultural R&D
in this country.
The recommendations I put forward are:
1. Place a winding up order on HRI and dismiss
the Board and most of the Senior Executives. Put the organisation
into administrative receivership with a qualified receiver.
2. Re-organise HDC so that it becomes "lean
and mean" and extend its right to collect levies from wholesaler
and retailers as well as growers. Empower HDC to provide R&D
and generic marketing support for the industry on the same basis
as the Dutch, Britain's main competitor.
3. Agree to allow MAFF to grant aid the levy
board on a two or three pounds for every one pound collected basis
so that the levy board can commission, control and manage R&D.
Civil servant scientists and bureaucrats have no place in modern
business to manage, commission and control research. The levy
Boards should be accountable and authorised to commission research.
4. There are over 30 organisations in this
country other than HRI which are capable of carrying out R&D
in horticulture. There are hundreds of organisations globally
and basic science can be brought and commissioned anywhere. HRI's
basic science ability is far behind many commercial and public
laboratories at home and abroad. There is no sound reason for
British Research to require the services of a specific laboratory.
Market forces will ensure that the R&D is efficient and effective
and the need for government officials to meddle in everything
will be curtailed.
5. The financial management and obvious
lack of care and concern about waste of resources and cash is
very concerning. Working practices, which do not improve efficiency
and the inability to work at commercial pace, is something that
needs to be investigated. I recommend that the National Audit
Office be asked to make a full and detailed audit together with
recommendations to prevent such waste in the public sector in
6. Care should be taken in listening to
the evidence and speeches of HM Ministers of agriculture on the
matter of HRI as, it is quite obvious from recent reports that
the Civil Servants responsible for HRI or who sit on the HRI board
and advise Ministers are also the same people who write the speeches
and advise the speech writers of content. In such circumstances,
the Ministers statements must be deemed to be flawed and they
certainly cannot be declared impartial. Consideration should be
given to stop the nepotism in such situations.
7. This sorry tale has shown that Non Department
Public Bodies are a complete waste of time and money. Government
should either make something a Public Body or put it into the
private sector. Half way houses are fudges and disasters like
this are inevitable. The quango type of Board is also totally
ineffective in managing and running a business or organisation
dependent on "sales" and being operationally efficient.
The HRI Board costs well over £160k per year in fees, expenses
and administration costs and no one is held accountable or responsible
for results. The Nolan/Cadbury rules prevent continuity and allow
maverick like changes to policy to occur without question until
disaster happens. The recommendation here is to disband all Non
Departmental Public Bodies.
Finally, I recommend that all senior public
sector employees are given psychometric tests and their key competencies
are matched to their job requirements. All recruitment and promotion
should also be similarly tested to protect the interests of the
18 November 2000