Skip to main content

Agriculture and Horticulture Development Board Order 2007

Volume 696: debated on Tuesday 4 December 2007

rose to move, That the draft order laid before the House on 13 November be approved.

The noble Lord said: My Lords, the Agriculture and Horticulture Development Board Order 2007 is made under the Natural Environment and Rural Communities Act 2006. It abolishes the existing five levy boards from 1 April 2008 and replaces them with a new board, the Agriculture and Horticulture Development Board. The order also provides for the establishment of subsidiary companies for each sector. It is intended that companies will be created for six sectors: beef and lamb, cereals and oilseeds, horticulture, milk, pigs, and potatoes. The scope of the new board will be same as the scope of the existing boards, with the exception of the red meat sector, where separate arrangements are being introduced in Scotland and Wales.

Restructuring will improve accountability to levy payers, with the sectoral companies having boards made up mainly of levy payers. It will also improve the efficiency of the levy arrangements by providing more scope for co-operation and collaboration across the sectors. The shadow board has already proposed to locate all the boards and companies on one site, at Stoneleigh, with an estimated efficiency saving of £12.7 million over five years.

To improve accountability, the order also makes provision for a ballot of levy payers in each sector should 5 per cent of levy payers request such a ballot. However, to allow the levy board and its subsidiary companies time to prove themselves, and bearing in mind the proposed business case for the new organisation, which seeks relocation to Stoneleigh in 2009, it is right that there should be a moratorium on the right of levy payers to call a ballot for the first few years. Levy payers will be able to call for a ballot from 1 April 2012, which will be three years after the relocation and some four years after restructuring. The ballot provision was widely welcomed during the public consultation on the order.

The opportunity has also been taken in the order to make improvements to levy collection and reduce the regulatory burden; for example, by removing obligations to register in the horticultural, potato and cereal sectors and by increasing the levy threshold in the horticultural sector.

In summary, the order introduces a new structure that should improve the governance, accountability and efficiency of the levy arrangements. Accordingly, I beg to move.

Moved, That the draft order laid before the House on 13 November be approved. 2nd Report from the Statutory Instruments Committee.—(Lord Davies of Oldham.)

My Lords, I thank the Minister for presenting the order to the House. I remember from my history lessons a ministry of all the talents. No one would say that this Government are a ministry of all the talents, but at least the noble Lord can lay claim to be the Minister of all the talents. I am grateful for the way in which he has presented the case for the order.

I am an active member of a family farming and horticultural business. In this matter I have more of an interest than I do on most occasions when I speak to my brief—although I have no livestock interests. We grow potatoes, cereals, vegetables, bulbs and flowers. I was also a founding member of the Horticultural Development Council, and at that time was chairman of the bulbs and outdoor flowers panel. So I have previously been involved with the horticultural research institutes, particularly the former Glasshouse Crops Research Institute at Littlehampton, with East Malling, and in commissioning panels and ministry consultations.

If noble Lords think that I am painting myself as an expert, I should tell them that I certainly am not. I am an expert only to the extent that I recognise the complexity of getting these things right and how easy it is to upset them. One of my first experiences of interacting with government—it was a formative political experience—was some 20 years ago when I was working alongside the then chairman of the HDC, the late Frank Thomlinson, on trying to establish a viable levy-collecting system which we found MAFF was not much exercised by. It was my first experience of seeing how Governments enact and then move on, as if their role stopped at that point.

The HDC was set up to fill the gap in near-market research as a result of government withdrawal from this area. It has remained a research rather than a promotional body, which has coloured its thinking about these proposals. It is worth remembering that Rosemary Ratcliffe’s report identified the Horticultural Development Council as the most effective levy board.

There is concern that a sector which includes some 300 different crops may find it difficult to have its voice heard in joint working with single commodity boards. I have a copy of a long letter about the proposals which Colin Harvey, the chairman of the Horticultural Development Council, sent to Defra.

It has been said—I think by way of reassurance—that horticultural levies will be ring-fenced. Will the Minister confirm that? Where in the order is it stated?

Horticulture is vulnerable to overseas competition. Only 10 per cent of the £2 billion-worth of flowers sold in this country is grown here. It needs research and development and for that to be properly focused. Is the Minister satisfied that science will be at the heart of industry-levy companies’ activities?

Relocation could also present difficulties. The Minister mentioned the relocation of the bodies concerned to Stoneleigh, but I understand that horticulture is seeking to remain at East Malling, where it receives charitable support. What is happening in that regard? Is there concern that relocation will lead to loss of expertise? Does the Minister have an estimate of what percentage of staff will not move? I am reminded of the relocation of staff to Newport under the statistics and registration Bill, which the Minister mentioned, and all the problems with that. That is a similar case of expertise in an important area. How secure is the relocation deal with Advantage West Midlands, which has promised an incentive payment of around £7 million for the relocation?

Perhaps I may turn to some specific problems which have been raised with me and which I shall raise in turn with the Minister. A change from the draft order has been made to Article 5(1), whereby it now states:

“The Agriculture and Horticulture Development Board may establish a subsidiary company for each of the industries within the scope of this Order and may establish other subsidiary companies as may be conducive”.

In the past, the word used was “must”. Why has that change been made? It makes people suspicious, which is not what you want to create if you want to gain confidence. Similarly, there is a change in Article 5.2, which states:

“The Board may delegate any of its functions to a subsidiary company, but may continue to carry out any function it has delegated”.

What exactly does that mean? Does it mean that they will both be doing things together? Who will be responsible? Perhaps the Minister can explain the meaning of that paragraph.

The Minister mentioned the ballots and the date of 1 April 2012, mentioned in Article 11(6), as the embargo date before which it was invalid to have a ballot. However, in discussions in the consultative period, Defra’s response said:

“In response to the views expressed by a large majority of the respondents, both cross sectoral and sector specific, regarding what was considered too long a moratorium period (no … ballots until April 2013) it is proposed to reduce the moratorium period from five years to three years (April 2011) in the SI”.

So it seems a little odd that we are now looking at April 2012 as the deadline date. Why have the Government changed their position?

Noble Lords will know that these are matters of trust, that getting these things right is important and that changes weaken trust. All commodity boards depend on farmer and grower support. It is not just about paying a levy but about keeping involved and responding to initiatives. Keeping the industry onside is important and is a major factor in the effectiveness and success of any body set up in this manner.

Lastly, on costs, the Explanatory Memorandum goes into a lot of detail about the potential savings that may be available through the merged body. Accenture is certain that there will be savings, but the Minister knows that farmers and growers’ instincts will tell them otherwise. Is the Minister sure that they will be proved wrong?

My Lords, the noble Lord, Lord Taylor, has been most complete in his questioning on this order. It is not an order that we have any difficulty with at all; we welcome it, as it fully complies with what was set out in many of the consultation papers and some of the questions that we raised during the passage of the Natural Environment and Rural Communities Bill. I commend the Government especially on moving forward on some of the recommendations made in the consultation, and especially on the issue of ballots. I have just one question for the Minister. Does he believe that any ballots will take place at the appointed time? I do not believe that that has been the case in the past.

We welcome the developments. There is a slight problem in that it is very unfortunate that the corn levy instituted in 1880 and unamended since then is to be repealed in full. However, it is a welcome measure which will be very helpful to the industry in reducing costs, leading to a great deal more understanding and a slim-line version of the levy boards.

My Lords, I am grateful to both noble Lords who have spoken in this debate, the noble Lord, Lord Redesdale, for his brevity and the noble Lord, Lord Taylor, for his kind words. Let me assure him, however, that although we are a Government of all the talents, the only talent that I have is an inability to say no when pressed to take on an obligation for the Government on occasions such as this. I shall do my best to respond to the questions that he has asked; they are very appropriate questions, as I would expect from the noble Lord with his degree of expertise. He will recognise that I have no chance at all of matching him in his extensive knowledge of the issues underlying the order, but I hope that I can address myself to the main points that he has raised and I shall write to him if there are any that I miss.

Ring-fencing is definitively provided for in Article 6(6) of the order. That intention is stated there, so I can give the noble Lord an assurance on that front. I recognise his anxieties; it is much more difficult to represent a part of the industry where there are many products as opposed to the single product that others look after. I see the clarity being brought to that case, which will escape the new horticultural board in that respect. We recognise the vast experience that the noble Lord has in that area, and I hope that the ring-fencing provides a degree of assurance on that front.

The noble Lord asked me whether science would be at the heart of the development of this work. Science certainly has a part to play; it will be very much a question of the pressures from the boards with regard to what necessary research they expect to be done. No serious board could conceive of fulfilling its obligations without the appropriate application of science and looking ahead for changing circumstances. We all know what challenges are presented to agriculture by changing scientific opportunities, so I agree with the noble Lord that science should be at the heart of the work.

The noble Lord asked, too, about staffing movements. Although I bow to his experience with regard to agriculture, he will forgive me if I chide him by saying that I cannot see the problems associated with the relocation of the board being quite on the level of those of the Statistics Board. First, the numbers involved are very substantial. As we discussed in debates on the statistics Bill, we were in any case in midstream with regard to the process when feathers were at their most ruffled, so I was not at all surprised at the intensity with which the issue was debated during the passage of that Bill. With regard to the boards, I hope that sufficient consultation will go on so that feathers are not ruffled—very far from it.

Staffing interests are of course taken into account while the broad objective of the instrument is delivered, and it will be important that staff have full consultation and confidence in what is being proposed. After consultation, Stoneleigh was overwhelmingly the preferred location for the united board, so we are building on a clear expression of opinion. However, I recognise that there will be difficulties in some areas; staff will need to be consulted, but they will also need their full employment rights safeguarded. Of course, the Government undertake that they will be consulted and that, if it is the case that they decide to be made redundant rather than move to the new location, their full terms and conditions will be complied with on such an occasion. The noble Lord would expect the Government to do no less than give a full undertaking on this.

The noble Lord asked about the issue of establishing subsidiaries and the word “may” in that regard. I hope that he will forgive me if I am slavish in my attention to my note on this matter, as it is rather precise with regard to the law. The change is a technical one. Although I would hope to show some insight into the broad principles behind the order, I am easily adrift with regard to technical matters.

The technical change is a result of the wording of paragraph 1(1) of Schedule 10 to the Natural Environment and Rural Communities Act 2006. The wording of that provision specifies that an order,

“may include provision … enabling the board to establish subsidiaries,

but not requiring it to do so. Because “enabling” is used in the parent legislation, our legal advice is that the wording of this order should use “may” rather than “must” because the parent Act does not make the obligation mandatory.

As sector company chairmen make up the majority of the board, they will certainly be able to ensure that sector companies are established, so the noble Lord need not have excessive anxieties on that score. That is the reason for the change: it is a purely technical change deriving from the original Act. He also asked me about the date.

My Lords, Article 5 (2) suggests that functions can be delegated to the subsidiary companies but that the board itself will also carry out the same functions. What does that mean? Why has that been added? Is there some thinking behind it that has passed me by, because it seems gobbledygook to me at the moment?

My Lords, I do not think that I am going to be able to reassure the noble Lord in detail on that point. It may be an area that I will have to write to him about. Article 5(2) allows the board to continue to undertake functions delegated to the sector companies. The provision enables the Agriculture and Horticulture Development Board to carry out research and development even after it has delegated that function to the sector companies. For example, research concerning some environmental issues would be carried out at board level because of its relevance to all sectors, whereas there will also be a need for sector-specific R&D. It is to preserve for the board the capacity to carry out the functions while at the same time guaranteeing to the sectors that they can also do so. That is the principle behind Article 5(2).

My Lords, I certainly do not want to make a meal of this—in fact I am thinking of a meal yet to come—but there is the whole question of ring-fencing. The Minister has implied that levies collected by the subsidiary companies will not be ring-fenced. I am trying to look at Article 6 to find where it says that each subsidiary company’s funding will be ring-fenced. All I can see is that the levies themselves will be ring fenced in the sense that they will not be taken into general taxation. I cannot see any wording that says that the subsidiary companies’ funds are their own and will in no way be sacrificed for some general purpose, which is what the Minister has implied that Article 5(2) provides for.

My Lords, the noble Lord will recognise that some general functions are bound to be carried out by the overarching board. I am merely explaining that within the provision in this article, the overarching board can carry out its research and development functions while at the same time recognising that the individual companies will be doing the same for their own areas.

I understand the noble Lord’s anxieties, but he will appreciate that the concept behind the order is to set up the single board, but at the same time ensure that the sector companies have the maximum amount of delegated authority to carry on their activities. As I indicated in my opening contribution, I think that we have got the balance right on that. No great anxiety was expressed on that score during consultation on this matter, although there was on other points raised by the noble Lord.

In particular, he asked about the issue of the 2012 date. The concept that levy payers should have the right to a ballot is recognised and appreciated, and the significance of that is of the greatest import. He asked why there was a postponement. The concept behind the ballot is that it should be a valuation every third year of the performance within the industry. It seems a little unfair in the circumstances where significant reorganisation and relocation to work at Stoneleigh is involved, to do anything other than to say that the first ballot ought to happen after the board has settled down in its position at Stoneleigh. The ballot should take place three years after that. Otherwise, we would be getting a judgment on the work of the new arrangements before they had had a chance to show themselves in their settled state.

That is the reason for the postponement. It is not in any way sinister: it is a reflection of good management in circumstances where there are bound to be elements of change and the dislocation that the noble Lord referred to when he said that some staff might have difficulty in moving to Stoneleigh, and all that had to be worked through.

The noble Lord, Lord Redesdale, asked me to venture into prediction. Goodness gracious me, I have been long enough at this Dispatch Box to recognise the dangers of that, certainly while the noble Lord, Lord Oakeshott, is sitting just behind him. I will not get involved in too much prediction. I have met that in other areas and it has been to my cost. He will forgive me if I do not.

We hope that the industry and the levy payers are satisfied enough with the arrangements to want to show reasonable confidence in the way that the arrangements are developing. A demand for a ballot is in itself a challenge and an indication that things are not working as well as people want. They want to express their concern. They might even through the ballot effect very significant changes indeed. That is the proper democratic right for the industry. That goes without saying and it should it be built into the legislation. But I hope that we have got the broad structure about right. Therefore, if the noble Lord is pushing me for a prediction, it will not happen in the foreseeable future.

On Question, Motion agreed to.