House of Commons - Agriculture

Select Committee on Agriculture First Report

MAFF/INTERVENTION BOARD DEPARTMENTAL REPORT 1997 (continued)

BSE-related expenditure

15. The continuing extraordinary expenditure on the various measures and schemes to control bovine spongiform encephalopathy (BSE) remains a very substantial chunk of total MAFF and Intervention Board expenditure as a whole. Cm. 3604 records the total estimated cost of BSE control measures in 1996-97 as £1,370 million, and gave estimates of £729 million in 1997-98, £584 million in 1998-99 and £489 million in 1999-2000[17]. The inclusion of provision for the selective slaughter scheme in the 1997/98 Main Supply Estimates increased these figures, and further adjustments have brought the total estimated expenditure to £916 million for 1997-98, £669 million for 1998-99 and £577 million for 1999-2000[18]. Given that the expenditure outturn for 1996-97 was £1,330 million[19], the total amount of BSE-related expenditure over the four years 1996 to 2000 is now estimated at nearly £3.5 billion. We are concerned by these substantial increases, and will again consider BSE expenditure in our inquiry into MAFF's 1998 Departmental Report.

16. Understandably alarmed by the scale of resources being used to deal with the BSE crisis, the new Government has taken a number of decisions intended to curb expenditure. In particular, the European Commission's Beef Management Committee adopted the Government's proposal that from 4 August 1997 the rate of compensation payable under the over thirty months scheme (OTMS) for cows should be cut from 0.9 ecu/kg to 0.8 ecu/kg liveweight, and that payment would be limited to a maximum weight of 560 kg per animal. Dr Cunningham informed us that, prior to this cut, expenditure on the OTMS had been forecast to overshoot provision by about £70 million in the 1997-98 financial year. The compensation rate cut could be expected to save between £35 million and £40 million, but the remaining net over-expenditure on the OTMS does not necessarily mean that expenditure on demand-determined BSE schemes as a whole will be in excess of provision. The Permanent Secretary pointed out that a number of factors meant that expenditure on the selective slaughter scheme was expected to fall short of provision in the current financial year[20].

17. In addition to the cut in the OTMS compensation rate, the Government has also announced that support for the rendering industry in respect of the costs of disposal of animal by-products will be phased out by the end of the current financial year within the existing spending limit of £50 million. Dr Cunningham justified this decision on the grounds that, on its introduction, the aid had been envisaged as a temporary measure, and the market had had time to adjust. He agreed that the costs arising from the withdrawal of aid would be passed back along the supply chain to producers[21].

18. The various measures adopted by the Government to rein in BSE-related expenditure, combined with the continuing effects of the BSE affair itself and recent revaluations of sterling, have had a direct and adverse impact on the current and prospective prosperity of farmers[22]. The disincentive effect of the operation of the Fontainebleau abatement mechanism in terms of additional EU expenditure in the UK was clearly a significant factor in the Government's consideration of whether to seek compensation for UK producers as a result of the revaluation of sterling[23]. Dr Cunningham explained that about £980 million was theoretically available for such compensation. Half of this could be claimed from the EU budget, but because of the operation of the Fontainebleau abatement mechanism on additional EU expenditure in the UK, 71 per cent of this, or about £340 million, would in effect be met by the UK taxpayer. The Government would also be able to pay some or all of the nationally-funded element of compensation. MAFF informed us that, of those member states which had sought compensation for their agricultural producers following revaluations of their currencies in the past, only Germany, Luxembourg and Belgium had paid any of the nationally-funded element[24]. Dr Cunningham stressed that he had not yet reached a decision on whether or not to seek compensation, and had an "open mind" on it[25]. He also stated that, contrary to reports in the farming press that Hill Livestock Compensatory Allowance (HLCA) rates were to be frozen, Agriculture Ministers had not yet decided on the appropriate levels for HLCAs next year[26]. We are concerned about the financial difficulties facing UK farmers, especially in Less Favoured Areas, and await decisions on these matters with interest. We would not wish to see reductions in the real value of HLCAs.

19. In Northern Ireland the selective slaughter scheme has practically been completed[27], but we are concerned about the Government's slow progress in Great Britain in tracing the large number of animals which have been identified as subject to the selective slaughter scheme but have been sold on from their natal herds and still remain to be traced. In total, as at 7 November 1997 114,000 animals sold on from their natal herds which are liable for selective slaughter had been identified, and 20,000 of those had been traced[28]. Despite the fact that 14,000 of those 20,000 animals were found to be already dead when traced, and a similar or higher proportion of the remaining 94,000 could also be expected to be already dead, we are dismayed at the painfully slow progress made by the previous and present Governments in tracing these animals. It would not be surprising if there were some scepticism about the Government's proposals for extending selective slaughter to take account of possible maternal transmission of BSE[29], given the poor progress on the main selective slaughter scheme itself. We consider the devotion of greater resources and effort by the Government to tracing cattle subject to selective slaughter to be an important priority.

Regional Panels

20. One of the first decisions made by Dr Cunningham after he became the Agriculture Minister was to abolish the nine English Regional Panels, which dated back to 1972. The Regional Panels were non-statutory advisory bodies which provided a link between MAFF and the interests of producers in the regions. In place of the panels, Dr Cunningham made each of his three departmental Ministers responsible for a large swathe of England, comprising the territory previously covered by three of the panels. He argued that this would help in allowing a wider range of people, including consumers and environmentalists, to express their regional concerns to the Ministry, thus "developing an atmosphere of openness, trust and understanding". Ministers would regularly visit their adopted regions, "listening to local views to ensure that special regional concerns are fully reflected in policy discussions".[30]

21. In oral evidence, Dr Cunningham told us that, between them, his three ministerial colleagues had made some 50 visits wearing their regional hats. The main concerns expressed to them had been about the effects of the beef export ban, rural unemployment and deprivation, and difficulties of communications and loss of facilities in rural areas[31]. We commend MAFF's Ministers on their industry, but we are not convinced that, with such large areas to cover, and with the frequency and nature of visits subject to the exigencies of crowded ministerial diaries, the new system will prove to be more effective than its predecessor. We recommend that the new arrangements be appraised for their effectiveness in providing a workable and open consultative mechanism for the full range of country and consumer interests.

Badgers and bovine tuberculosis

22. MAFF's twentieth report on bovine tuberculosis (TB) in badgers[32] records a further increase in the number of tuberculosis cattle herd breakdowns in Great Britain. In the Western Region of England[33] there were 329 new confirmed herd breakdowns in 1996, a rise of 4 per cent in the number of breakdowns over 1995. Eighty per cent of these were attributed to tuberculosis infection in the badger population[34]. There are clear signs that the disease is spreading geographically, with an increase of 48 per cent in confirmed breakdowns in Herefordshire between 1995 and 1996[35]. In July 1996 the previous Government appointed Professor John Krebs to chair an independent review of policy on bovine TB in badgers, and he was originally expected to report in the early summer of this year. Dr Cunningham told us that Ministers had not received the final report, although he expected that it would not be "too much further delayed"[36]. Bovine tuberculosis in badgers is a matter of great concern, particularly in the West Country and spreading into the Midlands, affecting not only the livelihoods of farmers but also the health and welfare of badgers themselves. We very much welcome Dr Cunningham's indication that the Krebs report will be published as soon as it is received by Ministers[37], and look to the Government to expedite action on this seemingly intractable problem.

Ministerial move to Nobel House

23. Shortly after taking office, Dr Cunningham decided that MAFF Ministers and senior officials should move from their offices in Whitehall Place to premises already occupied by MAFF in Nobel House. To make room for Ministers at Nobel House, 120 officials from the Ministry's Chief Scientist's Group are being decanted into temporary accommodation at St Christopher House in Southwark, where they will be until June 1998. The total cost of this move is about £930,000[38]. Dr Cunningham said that, considered as part of the wider, necessary re-organisation of the Ministry's property and accommodation, the move to Nobel House would make MAFF more efficient, and reduce its overheads[39]. The Permanent Secretary stated that the money for the move would come from within MAFF's existing administration budget[40]. We do not dispute the need for MAFF to rationalise its property estate, nor that the Whitehall Place building is relatively run-down. However, given that there is a short-term inefficiency involved in incurring extra costs in placing staff into temporary accommodation while space in Whitehall Place remains empty, awaiting decisions on the building's future, we remain to be convinced that the move to Nobel House is a considered and cost-effective part of the rationalization of the Ministry's property estate. We presume that a full cost-benefit analysis was completed prior to authorising the move and would welcome its publication.

Conclusion

24. It will be clear from the content of this Report that much of the evidence which we have taken in this inquiry has been concerned with developments since the general election. In future years it is likely that we will revert to the approach adopted by our predecessors in their examinations of Departmental Reports by focusing on the Reports themselves, with the Permanent Secretary as the main witness in a single oral evidence session. We look forward to a constructive and open relationship with MAFF in our work in the course of this Parliament.

17 Cm. 3604, p 13, para 2.4 Back

18 Q 168; Ev. p 45 Back

19 Q 18 Back

20 Q 151 Back

21 Qq 46-8 Back

22 Q 180-1 Back

23 Q 49 Back

24 Ev p 42 Back

25 Q 53 Back

26 Q 58 Back