Examination of Witnesses (Questions 380
- 399)
TUESDAY 9 MARCH 1999
MS FRIEDA
STACK, MR
JOHN LONGWORTH
and MS JANET
NUNN
380. I took on board your severe criticism
of there being a levy and how this was an extra burden but, given
that there will be, if there is one, what kind for levy should
there be? Should it just be on retailers? Give your response to
that. Or should it be up and down the food chain? Should it be
on the bigger guys that are making more money or have bigger floor
space or those that are doing Sunday trading?
(Ms Nunn) We want a risk based approach. Look
at the food chain, see where the costs are coming and then target
those on "the polluter pays" principle. Ask for those
parts of the food chain to be putting in the money.
(Mr Longworth) Whichever way you divide up the
levy there is going to be some inequity. There is no question
about that. There are a lot of downsides to whatever measures
you have. You mentioned turnover in this context. One wonders
why successful businesses should be taxed more heavily than unsuccessful
businesses. You talk about targeting tax in a way in which businesses
that are very safe and really put a lot of resource and money
into safe food should have to bear the majority of the cost of
problems which are actually caused by others. Why should that
be? Why should we have a levy situation where retailers and caterers
pay the levy when the majority of food scares in the last 10 years
have come from the medium sized manufacturers and farmers? There
is a question to be answered there. My view is that whichever
way you divide the levy up there is going to be some inequity.
It really has to be funded through the public purse. Food safety
is something for every citizen. We do not fund the police through
a levy on businesses. Why should we fund food safety? It is a
very strange thing to me.
381. Do you have a view about which way
it would be?
(Ms Stack) We are in the fallback position mode.
It has been said several times that the Food Standards Agency
will benefit the food industry. Sorry; that is not true. The Food
Standards Agency will benefit everyone. That is the other logic
for general taxation. If we are in absolute fallback mode the
whole of the food industry should pay and the levy should be graduated
in some way.
Audrey Wise
382. In passing I would just observe that
Mr Longworth has mentioned BSE. I draw your attention to the fact
that your definitions of risk would not have included BSE, so
you might like to think about that.
(Mr Longworth) Why do you say that? I do not understand
that.
383. Because you said microbiological or
chemical toxicity. I do not think that is covering BSE.
(Mr Longworth) We would include any pathogen or
risk agent in that.
384. You are then getting nice and wide
and more like I feel, but it is not what you said. However, back
to the levy. It seems to me that the levy, as my colleague has
shown, has two levels. Should there be a levy at all, and then
there is: if so, what kind? Going back to should there be a levy
at all, which you said was a point of principle, you mentioned
independence. This is puzzling me. How can the payment of a levy
compromise the independence of the agency?
(Mr Longworth) The really important point is how
it is perceived. It has to be seen to be independent and there
will always be a question mark over an agency that is directly
funded. One of the areas of activity of Government that has been
most questioned in relation to its inspection role has been the
Meat Hygiene Service. The Meat Hygiene Service is directly funded
by the meat industry. This is a potential problem in terms of
public confidence. In fact, the matter of the Agency having public
confidence is even more important to Government itself than it
is to the food industry.
385. It seems to me that you are doing your
best to ensure that public perception will be influenced to think
that there is somehow a lack of independence if there is a levy.
How could a payment of a levy by the industry affect the independence
of the Agency?
(Ms Nunn) If you remember through the BSE crisis
there was a time when the Meat Hygiene Service was set up and
there were specific allegations of bullying in abattoirs by staff
of inspectors to pass meat that was substandard. There is a very
real challenge out there in the workplace very often. When you
are being inspected and you are being paid as a worker perhaps
for piecework, if the inspector wants to go outside to the lavatory
you all have to stop work. There are very real issues here and
it is far away beyond our control. It can come down to practical
examples. The perception issue is really very important.
(Mr Longworth) It is to do with public perception.
There is a general view amongst the public about this. I am not
saying for one moment that it will be influenced by the funding
regime but it is a question for public perception. There is always
a possibility that people will say that it is influenced. That
is not very good for us.
386. People like yourself.
(Mr Longworth) No, absolutely not. What I want
is an independent Food Standards Agency that is seen to be independent.
It is extremely important for us and even more important for Government
that citizens have confidence in it.
(Ms Nunn) This is one for the extra costs coming
through to consumers. One in four of our households nowadays is
headed by a retired person. There are now more children living
in poverty than aged people. This is something that needs to be
looked at by consumer groups. It is only one of a whole raft of
costs coming down the food chain on to our customers and we are
concerned about it in that wider aspect.
387. So when you say the public purse you
mean of course taxation. If corporation taxes are increased to
pay for this will you say, "Jolly good show", or will
you, as business usually does, complain bitterly about extra burdens
and how you will have to shed staff or take some other action?
(Mr Longworth) In the overall context of taxes
of course businesses do not like taxes. That is absolute fact
because we have to run businesses. It is a cost to our shareholders
or to the consumer, or to employment. That is what effectively
business taxes are. They have to be paid somewhere by shareholders
or employment or the consumer pays in the end, but it would be
better if this were funded through taxes as are most other similar
services in society, than if it were funded by some arbitrary
choice of levy within the food industry.
388. You would be quite agreeable to corporate
tax being increased to pay for this?
(Mr Longworth) Corporate taxes would be a better
route than a levy on sections of the food industry.
389. With regard to who it should be on,
we did get an answer on why it was not manufacturers etc. The
answer was that if the levy was placed on manufacturers or food
producers here, that would not catch imports. Do you think there
is any validity in that?
(Mr Longworth) No, I think there is no validity
at all. The suggestion that a huge, multinational manufacturer
would in some way be competitively injured by having to pay a
few hundred pounds for a few sites in the United Kingdom is absolutely
absurd.
390. I do not think it was just about huge,
multinationals being competitively injured; it was about people
manufacturing food here and paying towards the Food Standards
Agency whereas people of whatever size and wherever manufacturing
outside our immediate shores were not having to pay towards the
Food Standards Agency.
(Mr Longworth) It still comes back to the point
I am making. We are talking about relatively small sums of money—very
small sums of money, in fact—in terms of individual facilities.
Do not forget we have large numbers of outlets. Manufacturers
tend to have one or two. These are very small sums of money by
comparison with overseas manufacturers. Taken in the context of
overall costs of doing business in the United Kingdom and the
choice about what standards you want in the United Kingdom to
begin with vis a vis overseas areas of trade, it seems to be an
absurd argument to be made. It should also be remembered of course
that it is a rather odd thing that we, as a multinational retailer,
should have to bear that cost in the United Kingdom. It is the
same argument.
(Ms Nunn) Food produced elsewhere and imported—those
businesses will have met costs where they are produced. They are
inspected and surveyed either in the EU or other third countries.
In one sense, I suppose, it would have been a double hit for them
to be separately targeted, but the fact is, if they are being
sold on this market, it is right for the government to ensure
that they are safe anyway. They would need to be brought under
the inspection regime.
(Ms Stack) It should be the whole of the food
chain. There will also be issues of inequity within each section
of the food industry. There are large manufacturers and I must
honourably speak up for the small manufacturers who have just
the same problems as small shops. The international commitments
issue is a non- starter. They have a food committee in Sweden,
presumably funded by taxation. They do not go on about it. This
is an internal United Kingdom issue and there are equity arguments
and they should be addressed.
Dr Brand
391. Can I ask Ms Nunn a very quick question
about the exemptions to the proposed levy? Is there a risk that
we are going to have shops which currently have a reasonable spread
of snacks including some sandwiches and fruit and that sort of
thing having to restrict their output to crisps and Mars Bars?
(Ms Nunn) Our concern is it seems that the exemption
was well intentioned and perhaps let off the very small newsagents
and so on. An awful lot of outlets that originally started off
in those kinds of businesses have moved away from the ambient
foods to the higher risk foods such as sandwiches or milk. We
would argue that, to have integrity on this point, they should
come within the remit of the levy if we are to go down the route
of worst case scenario. It seems in the wording at the moment—it
is not tightly worded—that such premises could be exempted
which surely is not right from a food safety point of view.
392. They will only be exempt, as I read
it, if they sell wrapped products.
(Ms Nunn) If you wrap a sandwich——
Dr Brand: They have
to be manufactured somewhere, have they not?
Mrs Organ: If they
are selling a sandwich, it is a food. Wrapped means wrapped sweets
and crisps.
Dr Brand
393. Have you had any evidence from the
feedback you have had from your members that people will reverse
that, I think, desirable trend, where people should open out and
give more choice because of the threat of this levy?
(Ms Nunn) No. If anything, I have had members
comment that you can have food safety issues with a vending machine.
You get mice going everywhere. In one sense, there is no logic
in allowing any exemptions at all. That is the only specific comment
I have had on that issue.
Ms Keeble
394. You have mentioned the need for the
independence of the Agency. Do you think there are any potential
pitfalls for the Agency's remit to act independently of specifically
sectoral interests?
(Ms Nunn) Transparency is probably the key to
ensuring that the public has confidence in the Agency. I can understand
that there might well be very good reasons sometimes for keeping
commercial information shared with government, say, on passing
new foods before they go to the marketplace. That needs to be
handled very carefully and opened out fully to whatever scrutiny
committees are in place. We would urge that there be full transparency
and ability for people to comment. It needs to be a very open,
inclusive culture and that leads us neatly on to another of our
main concerns about it. It is proposed to have a register, which
is excellent, for any members or in due course I presume advisory
committee members to declare interests. Yet it is clearly also
intended from the notes that anybody with an interest would not
then be a member. That would exclude not only food industry people,
academics, consumer groups. You would be ruling out an awful lot
of people who have practical experience and a very real, live
contribution to make.
395. You have mentioned two bits of the
independence and the credibility issue, which is what the independence
is aimed to achieved. You have mentioned procedural integrity,
but there is also an issue about personnel. You mentioned the
composition. I think most people assume that independence means
people who are not earning a living from the industry, selling
or producing food, rather than people earning a living from being
a consumer group. There is strong public feeling about not having
it packed with people who are active in the food industry. Do
you think that poses a problem if you have people who do not know
enough about the industry?
(Ms Nunn) I think it is a weakness just to have
academics or consumers, however well intentioned and well plugged
into their own particular constituencies. I think it needs to
be practitioners. The food retailers have seen some food scares
and perhaps the way government in the past has assessed and managed
risk would have been improved if some of the people involved in
the day to day challenge of giving, say, foods to the market place
had been there at that risk assessment stage.
396. There is a flip side to that as well.
There are strong feelings about making sure the consumer interests
are represented because consumer confidence is what has been missing
from quite a lot of the food scares. In quite a few of the consumer
organisations, the consumer is represented by the PR and marketing
agencies and so on from some of the food companies. Can you name
organisations that can best represent the consumer interest? How
do you think that should be done? Personally, I do not find it
satisfactory that it should be PR people from a big supermarket,
however well intentioned they might be.
(Ms Nunn) As long as you know where they are coming
from, I think they would have a very valid contribution to make.
We are aware, as retailers, of the weakness that we have seen
in the past decade or so in the way that consumers have fed into
a number of advisory committees. For example, they have been involved
with genetic modification right from the Polkinghorn Committee.
There has been a constant consumer presence on these committees.
397. On the Polkinghorn Committee, that
was looking at rather different issues, different from the ones
that are currently surfacing. If you look currently at really
big food scares, what has been missing has been a clear consumer
voice. I do not see how we are going to get it on this FSA and
I wonder if you have any suggestions.
(Ms Nunn) There is no one particular body that
we think stands out above any other on this. Clearly, three or
four high profile consumer bodies who have a very valid contribution
to make——
398. Who are they?
(Ms Nunn) They are the National Consumer Council,
the Consumers' Association, the National Food Alliance and the
Consumers in Europe Group. They have some very valid pieces of
work. They are good contacts to bounce ideas off but of course
quintessentially no one person can represent the whole of the
nation.
Chairman
399. Could I just ask Jill Wordley if she
would like to clarify the situation? Jill Wordley is from the
Food Standards Group. We have a team of them sitting with us.
(Ms Wordley) I did just want to clarify one small
factual point. Janet Nunn suggested that the notes on the draft
Bill said that any interests would automatically debar anyone
from membership of the Agency. I think it is important to be clear
that the Bill does not automatically debar anyone with an interest.
It requires the Secretary of State to consider interests and the
explanatory notes say that the Secretary of State would need to
consider whether those interests might compromise their position
but they go on to say, "This does not necessarily mean that
such interests will automatically disqualify a person from appointment
as a member." Clearly, the issue is one of judgment as to
whether it might compromise their ability to serve as a member
of the Agency.
(Ms Stack) The issue of consumers on scientific
and advisory committees was raised. My experience of talking to
consumers in the Consumers in Europe Group—and I think Philip
James did say it yesterday—is that there was a real change
of culture in those committees because a consumer was there. The
way we in the Co-op would see membership of the board of the Food
Standards Agency is that consumers and independents would be in
the majority but people with direct experience of the industry
would carry out a very similar role to consumers in scientific
committees. They would make people talk in a different sort of
way. In the scientific committees, consumers no doubt make scientists
explain why they are doing things and what they are doing. It
would be a similar thing for the Agency. You do need both sides.
(Mr Longworth) It is a healthy challenge within
the structure of the Commission to have that sort of interactive
debate.
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