MEMORANDUM 20
Submitted by the Institute of Trading
Standards Administration
INTRODUCTION
The Institute of Trading Standards Administration
(ITSA) is the professional body representing the interests of
trading standards officers in the United Kingdom. As the James
Report notes, trading standards officers (TSOs) have a wide range
of duties appertaining to the quality, composition, presentation
and advertising of food. The James Report also acknowledges the
inextricable linkages between other duties administered by TSOs
which include animal feeding stuffs, animal movements, food and
general product safety, trade descriptions and weights and measures.
We note that these wider considerations are
beginning to crystallise and are particularly pleased to see the
emphasis given to animal feeding stuffs in Clause 28. This is
an area of work in which trading standards officers can make a
unique contribution.
It is because of these unavoidable connections,
and the emphasis given by the Government to restore consumer confidence,
that we believe the Food Standards Agency should become actively
engaged in working with other government departments to promote
a comprehensive strategy for consumer protection. We would urge
the Joint Food Safety and Standards Group to participate fully
in the work currently being undertaken within the Department of
Trade and Industry to draft a strategy for consumers. Joined up
thinking and joined up action is what the public expects.
ITSA values the work undertaken by MAFF's Consumer
Panel and would seek an early commitment from the Agency to develop
a forum, independent of the Agency, in which consumers could air
their views.
ITSA welcomes the opportunity to comment upon
the draft proposals and looks forward to working with the Government
to make the FSA the success we all want it to be.
COMMENTS ON
THE MAIN
CLAUSES
ITSA supports the basis upon the Agency is to
be established namely:
To strengthen the arrangements for dealing with
food safety and food standards.
To remove the conflict of interest evident in
MAFF's remit of protecting consumer and promoting the interests
of business.
And to critically put the consumer first in all
aspects of food safety.
We seek clarification over the substitution
of the reference in the White Paper to a Commission being established
with a reference to membership of the Agency in the Draft Legislation
(Clause 2). We are unsure as to the distinction between the choice
of words and are consequently unclear as to whether or not this
has any significance over the future management and administration
of the Agency.
We welcome the explicit reference to consider
whether a person has any interest—including a financial
one—which may prejudice their independence in serving the
Agency. We support the need to make appointments to the Agency
which are based upon a person's competence and experience. We
would like to see at least one appointment to the Agency made
from a person with experience of local authority food law enforcement.
We believe that such a move would go a long way towards preventing
grass root problems arising, as well as building upon the trust
that is currently being fostered between central and local government.
Clauses 9-11 go to the heart of the new Agency,
namely to be open, honest and helpful in the provision of advice,
information and assistance. The ability of the Agency to publish
advice given to Ministers is an important step in establishing
the credibility of the Agency in the eyes of the public. We are
of the opinion that the overriding presumption should be to place
the information in the public domain unless there are exceptional
reasons for not doing so. The public interest must be paramount
in all that the Agency does and not commercial sensitivity which
gave rise to recent food crises, and in turn the need to separate
out the functions of MAFF.
ITSA strongly endorses the Agency's right to
set standards and to monitor and audit the performance of local
authorities. Food law enforcement, and consumer protection in
general, has suffered in recent years. The only of arresting this
decline will come through setting clear and achievable standards
backed up by a determination to take action against authorities
who are unwilling or unable to meet the challenges.
Whilst it is important for local authorities
to accept their responsibilities, it is equally important for
Government to ensure that local authorities are adequately funded
to discharge their duties. Where new money is made available,
ensuring that it finds its way to front-line practitioners is
a challenge that the Agency must respond to.
PROPOSALS FOR
A LEVY
The consultation paper states that without the
levy, the FSA will not be viable. The fact that the Agency needs
more money is something which we are not in a position to question—we
would, however, have liked to have seen similar references made
to the needs of local authorities. What is in question is whether
or not a levy is the right way of raising any necessary income,
and whether a flat-rate charge is the most equitable means of
apportioning this burden on business.
The principles upon which the levy scheme is
based are:
(i) To transfer food safety work away from
the tax payer and onto the food industry.
(ii) To be simple to administer.
(iii) To be fair to small business.
These principles will be returned to later.
OPTIONS
The Paper considers three options:
(i) Whether the charge should constitute
a flat-rate levy or a graduated one;
(ii) What, if any, exemptions there should
be; and
(iii) Whether the levy should be collected
nationally or locally.
Before examining these options, ITSA believes
that the Government ought to reconsider the opportunity to fund
these new measures out of general taxation. After all, the Government
is finding "new" money from general taxation to fund
new—and laudable—initiatives in health and education
which in some cases only benefit specific communities, Health
and Education Action Zones for example. We all eat food. The £90
is, therefore, going to be passed on to all consumers. The way
in which consumers pay for these new responsibilities remains
the only bone of contention. ITSA believes that the most efficient
way of raising an extra £41 million for the Agency is through
general taxation.
Many shire districts have less than one thousand
food premises registered with them; some have as few as 3 or 400.
These authorities will have to do much more than just maintain
the Food Register: there will be three further demands placed
on them namely billing, collection and recovery—including
the use of bailiffs where necessary. These four tasks will be
supported by systems and staff (which no one has costed) and arrangements
will then need to be put in train to transfer what might amount
to as little as £25-30,000 to the Agency. An added complication
will be to ensure that County Councils receive some apportionment
of the income for new responsibilities.
The Paper says that the Government does not
believe that there is a realistic alternative to applying a levy
at the final point of sale. It says that the £90 will not
create significant problems for the great majority of businesses.
The paper dismisses ITSA's suggestion of the Non-Domestic Rates
as an alternative to collecting the charge at a local level, as
being complicated to manage. It is important for us to deal with
each of these issues.
Applying the levy at the point of sale will
ensure that the tax treats imported and British manufactured goods
equally. It will, however, provide an exemption for all food manufacturers,
businesses who take a disproportionate amount of our time and
who, arguably, could afford the tax the most (the village shop
will pay £90 but Northern Foods, for example won't pay a
penny).
The statement that charging £90 will not
create significant problems for business, fails to recognise the
true plight of small village shops. How much "extra"
turnover must a small shop make—one that is already facing
extreme competition from the out of town supermarkets—in
order to find this additional sum of money. The sum may equate
to two days profit, at a time when most small shops are working
seven days a week to make ends meet. What too of farmers selling
bags of potatoes at the kerb-side, the Levy will surely put pay
to their little side-line as well as the current attempts being
made to establish farmers markets? The current exemptions would
not exempt local authority establishments so every school and
social services establishment providing meals would be subject
to the charge. ITSA wishes to know whether the allowance made
for local authorities to collect the levy would include the extra
cost by councils having to pay many thousands of pounds in registration
fees themselves.
As for using district councils' food registration
schemes as a basis for collecting the levy, not enough consideration
has been given to the way in which this would be implemented and
the associated costs. It is going to require over 400 councils
investing in new technology, employing staff to administer it,
plus the costs of sending out reminders, summons and so on. If
the £90 levy is not paid within three months then it doubles
up to £180 and the process of securing this civil debt through
the local court, and the prospect of using bailiffs for non-payment
of the debt looms. It is not surprising to find that some are
already branding the levy as a "food poll-tax".
The integration of the food levy with the non-domestic
rating system would reduce start up costs: the system is already
functioning and it would not take a great deal of ingenuity to
put a marker against "food premises" to levy an extra
charge against. The collection system is already in place and,
more importantly, it lends itself to a graduated levy which is
what is fundamentally required. The non-domestic rates is based
upon rateable values of property which is more likely to take
account of a businesses' ability to pay and would also widen the
tax base to allow manufacturers to make a reasonable contribution
towards the attention that they warrant from local authority enforcement
staff. The logic that they should have been exempt from the flat
rate levy of £90 because it places foreign competitors at
an advantage shows a poor grasp of reality. Major national and
international companies would not blink at handing over £90,
unlike the local village shop.
There is some mention of exemptions, but they
are limited to occasional charitable sales and to premises that
sell only wrapped goods, newsagents for example. It still throws
up a number of anomalies like the market trader who operates from
several market sites. Will that trader have to pay several levies
because he operates from two or three sites in different locations?
CONCLUSION
It is now appropriate to return to the three
principles upon which the levy scheme is based, namely:
(i) To transfer food safety work away from
the tax payer and onto the food industry.
(ii) To be simple to administer.
(iii) To be fair to small business.
Starting with the first point, to transfer the
cost from the tax payer onto the food industry. The assumption
seems to be that the industry will simply absorb the cost. That
may well be possible for the likes of the major supermarket chains
but not for the majority of small and medium-sized food premises.
The cost in these cases will be passed on to the consumer—the
tax payer.
Taking the second point, the ease of administration.
Could anything be more difficult and less efficient to administer
than 400+ districts creating new (and perhaps different) systems,
to chase sums of £90 (this figure may in theory reduce as
£12 million of the £40 million is set aside for start
up costs over the first three years). The only winners are likely
to be IT consultants, software manufacturers and bailiffs. It
is interesting to note that in a recent local government publication
Lord Bassam, Leader of Brighton and Hove Council went on record
as saying that millions of pounds could be saved on housing benefits
administration if district councils banded together. Brighton
used their local arrangements with neighbouring authorities as
an example of Best Value—isn't this one essential feature
regrettably missing from the proposal for districts to collect
the levy?
The third principle seems to be a throw-away
remark, one which does not appear to have been considered in any
depth. Could anything be less fair to small business? To provide
exemptions to the levy for national and international manufacturers
who create a vast amount of work for local authority practitioners,
whilst taking no account of the capacity of a business to pay
is anything but equitable. What tax—direct or indirect—doesn't
take account of different classifications of person, property
or product?
This tax—for which local authorities are
to be allowed a modest amount towards the cost of administration—has
little to do with raising standards. Charging the local cafe owner
£90 will not improve his/her ability to do a better job,
and they will not be de-registered if they continue to contravene
food hygiene regulations. The emphasis of the levy is on using
local authorities to collect revenue for the coffers of the new
Agency.
General taxation is the most equitable and efficient
way to fund the Agency. The Non-Domestic Rates is the most efficient
and equitable way of collecting the revenue on a local basis.
Licensing is a better way than registration to improve standards.
The local flat-rate Levy has none of these attributes. We would
strongly urge the Government to think again about its introduction.
March 1999
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