Oral evidence

Taken before the Environment, Food and Rural Affairs Committee,

Poultry Farming in the United Kingdom Sub-Committee on Thursday 19 June 2003

Members present:

David Taylor, in the Chair
Mr David Borrow
Mr Austin Mitchell
Diana Organ
Mr Bill Wiggin

__________

Memorandum submitted by the TGWU

Examination of Witnesses

Witnesses: MR PETER ALLENSON, National Secretary, Rural, Agricultural and Allied Workers' Trade Group, MR GEORDIE WILCOCK and MR HEATH QUITTENTON, Transport and General Workers' Union, examined.

Q208  Chairman: Mr Allenson, you are the National Secretary of the RAAWTG.of the TGWU.

Mr Allenson: That is right, yes.

Q209  Chairman: Perhaps you would each use 60 seconds to say who you are as that would be helpful to the Committee.

Mr Allenson: I am Peter Allenson. I am a full-time officer in the Transport and General Workers' Union and National Secretary for the Rural, Agricultural and Allied Workers' Trade Group which has responsibility for the poultry industry all the way through from the rearing of birds to the processing end of the process. We are based in London here and this is only my second appearance before a Select Committee.

Q210  Chairman: How many members approximately do you think you have in the poultry industry?

Mr Allenson: Between 7,000 and 8,000 mainly employed in the processing side of the industry, but some obviously on the farms and in the intermediary stages of rearing.

Q211  Chairman: Mr Quittenton?

Mr Quittenton: I am Heath Quittenton. I have been in the poultry sector as a poultry worker for the last ten years. I currently work for Bernard Matthews. I am here representing a National Poultry Workers' Organisation Committee and that is my reason for being here. It is my first time meeting with yourselves.

Q212  Chairman: And Mr Wilcock?

Mr Wilcock: I am Geordie Wilcock. I work for the Grampian Company Food Group. I have been in poultry for the last ten years and I am a worker representative in the poultry industry. It is my first time here today.

Q213  Chairman: Well, welcome to all three of you and thank you very much for giving up your time to give evidence to the Committee today. This is our final formal session and we hope that the report will emerge at a relatively early date. I was interested, when I read your submission, that almost the first thing you said was that, "Alarm has been voiced by our membership around the issue regarding imports coming into the UK from a number of sources". Presumably we are talking about poultry meat and egg at this point. What sort of concerns do your members have and do they express them to you directly?

Mr Allenson: Yes, they do. My colleagues may say more in a moment or two about how individual members of staff experience and voice those concerns to them, but we have at the national level a Poultry Workers' National Organising Committee which brings together all of the major companies or our representatives from those companies in the industry. When I was appointed as National Secretary, which was approximately nine months ago, at the first meeting there was some concern expressed particularly about imports from Thailand at that point. That subsequently became a real issue for us at Christmas of last year with imports of turkey meat from Brazil. It was conveyed to us that it was some 45 per cent cheaper to produce turkey meat in Brazil. Three retailers last year actually decided to source their frozen turkey supplies from Brazil and, as a consequence, shortly after, early this year we actually had the second largest turkey producer in the UK, Brandons Poultry, going into receivership. Of course we have now the situation where their Doulton plant in Yorkshire has actually closed and the other two plants are currently, as I understand it, looking for buyers to take them on at this point in time. It is that level of concern that was raised with us and of course we have contacts with major companies in the industry which similarly raised those concerns with us. We did actually say to those companies that one or two of them had interests themselves obviously in Thailand and indeed in Hungary and elsewhere and we did raise that with them, but, nevertheless, our members are concerned about the level of import penetration.

Q214  Chairman: So their concern is driven by economic factors primarily, but solely? Do they have any welfare or health concerns or quality concerns?

Mr Allenson: Well, first of all, of course it is the impact on jobs here in the UK which would drive the concern, but the concern also was around welfare issues. Anecdotal evidence was certainly given to us of welfare concerns in Thailand and Brazil and the illegal use of some drugs, such as nitrofurans, for example, growth enhancers, and whether in fact there was sufficient testing of poultry meat imports to pick up whether in fact any of that poultry meat was tainted with any of those illegal substances.

Q215  Chairman: The TGWU is looking for what it calls a 'level playing field for the UK industry', and in part within the EU, so let's look at that for a start. I am surprised that you observed that the playing field within the EU is not level. In what way?

Mr Allenson: I think again if you look at enforcement of standards, if you take nitrofurans, there has been a recent case where poultry coming in from Portugal, small amounts though it may be, nevertheless has been found to contain nitrofurans and of course they have been banned within the EU for the last six years, so we tend to be very vigilant, quite rightly, in enforcing regulations. We want to ensure that certainly that is a level playing field within the EU as well as it is in a global situation. The RAAWTG's policy in respect of this situation is clearly that we want to see welfare improvements and other improvements to ensure consumer confidence in particular in the industry, but there has to be a balance in making sure that employment in the industry is also protected and preserved.

Q216  Mr Mitchell: Your argument really ties in with that of the employers. You are saying here that jobs are at risk and that is the main factor.

Mr Allenson: Yes, that is certainly the main factor in our members' minds, but one or two of the arguments have been around obviously the use of illegal substances in poultry meat and also the welfare considerations. It is getting a level playing field on that basis to ensure protection of jobs here.

Q217  Mr Mitchell: I think that is fair enough. What do you think the effect will be of the proposed and the recently implemented welfare rules? What effect will they have on the industry?

Mr Allenson: Well, we have obviously seen the evidence that has been given to the Committee already and we would concur with some of that evidence. Quite clearly there is evidence that that is increasing costs to employers and that is bound to have two impacts on our members, first of all, in terms of pay and conditions and, secondly, on total jobs that are actually available here to the UK. For example, certainly over the years, we have noticed as a trade union the reduction in the number of jobs in the egg industry both in respect of egg production, but also obviously consequently in egg packing. There have been a number of companies which over the years have not just come together to form larger companies, but have in fact actually gone out of business as well.

Q218  Mr Mitchell: Presumably the pay and conditions in this industry of your members are fairly squeezed anyway. It is a low-pay industry.

Mr Allenson: They are, yes, and obviously there is an aspect of retailer influence here because there are some practices by the retailers which squeeze the margins that are available in the industry. Of course if the employer gets squeezed at the top, then our members get squeezed at the bottom and that is the reality of the situation, so quite clearly there is an issue about retailer power within this particular sector as well. There is an issue about Internet bidding for particular contracts within the industry and certainly they have tremendous influence not only in raising standards, but in swapping contacts between processors and doing people out of work as a consequence.

Q219  Mr Mitchell: But in terms of the usual advice that right-wing economists give to employers in this situation, like "Cut your costs" and "Squeeze your workers", that is not an option in an industry which is as hard pressed as this.

Mr Allenson: I am sorry, I did not quite understand that.

Q220  Mr Mitchell: Well, your members' salaries and living standards have been squeezed enough by an industry which is facing a fairly tough trading situation that there is no way of making it more efficient that way by cutting labour costs.

Mr Allenson: No, I think that is absolutely right and if you look at the areas where poultry processors tend to operate, increasingly in order to attract people into the industry and to get the work done, they are having to look to migrant staff from overseas, again paying low rates of pay, in sometimes, I will not call them 'bad', but difficult working conditions because the intensity of production is such that it may not necessarily be a thoroughly enjoyable job working in a poultry processing company these days. It is very much like a production line facility and, hence, in our evidence obviously we have made reference to the issue of line speeds, for example. Therefore, increasingly employers are having to look to migrant labour to fill the need for staff in their factories.

Q221  Mr Mitchell: What about the animal welfare side of it? Tell us what you generally see as being necessary to improve animal welfare in this area.

Mr Allenson: I think again our view is that it is very important to improve animal welfare. All of our members working right throughout the process would want to see that done, but again we would argue that we need to ensure that, in doing that, we do it in a way which ensures that our competitors similarly have to raise welfare standards. There is the argument, and it may seem to coincide with the employers' argument, but we will make it anyway, that if you actually improve the standards here, but they are not improved elsewhere, the likely consequence is that competitiveness will reduce, you will export jobs and you will export the welfare problems overseas where you actually have no influence over them at all.

Q222  Mr Mitchell: So it is a concern. I was delighted to see in your evidence that you want rights extended to whistle-blowers to draw attention to departures from safety and standards, so high marks for that, but I did not quite understand what you were saying about shacklers, largely because I do not know what shacklers are. Why do you want them registered and what is involved here?

Mr Allenson: Well, first of all, catchers are the people who are responsible for going into the sheds and catching the birds to crate them up to be brought into the processing unit itself. From there they would be taken into the first stage of the process and then put into shackles on the production line basically. Now, the people who catch the birds in the sheds are very often on piecework systems of pay, bonus systems of pay.

Q223  Mr Mitchell: Paid per chicken caught?

Mr Allenson: Absolutely.

Q224  Mr Wiggin: Per tonnes of chickens moved more often, is it not?

Mr Allenson: Yes.

Mr Wiggin: I do not think Austin really understands.

Q225  Mr Mitchell: You are right, I do not.

Mr Quittenton: They tend to be paid by the load. They will have six or seven loads per day to do and they are normally given, say, a time of like an hour and three-quarters in which to load them, depending on what the sizes of the birds are. If they can get that load done in half an hour, obviously they can move on to their second load, so if they can get their day's work done in four hours, then they are off home. It was not such a wise idea to move to contract catchers, as several companies did a few years ago, because it is making them rush to load the birds up. It is possible that welfare can go out of the window and there have been reports over the years of crews actually getting into farms and seeing what is going on.

Q226  Mr Mitchell: What would registration do then?

Mr Quittenton: Well, it is like with slaughterman in that they have to be licensed now, so if you have licensed catchers, then at least we know who is allowed to catch and who is not. When the vets do their inspections, as they regularly do, on farms as well as in factories, all they have got to do is ask the catchers, "Can we see your licence please?" and if they cannot produce them, they are removed off the site.

Q227  Mr Mitchell: So it is effective regulation?

Mr Quittenton: That is right, yes.

Q228  Mr Wiggin: But there are problems with this. One of the things which you have not mentioned is that of course nearly all chicken farms will take all the chickens out at one time to promote bio-security because they cannot afford to leave any chickens behind. Once they are loaded, they have to be loaded in a fairly short time because of the distance they have to travel because they have to be unloaded that same day as we are dealing with livestock here, so there is a certain amount of pressure on the staff to get them in the lorries quickly. Equally, that job then is not available in that particular locality for another 41 days or however long it takes to grow, so there is a problem with getting the skilled staff when you need them and as many as you need for the size of the operation because some are doing a million chickens a week, so these numbers do interfere. Therefore, how would you get over that problem of having trained catchers available all the time at all the chicken growers' plants?

Mr Allenson: I think that is a major problem which we have not given that much thought to at this stage. The necessity of registration really was to ensure that if it was found that people were abusing chickens, turkeys, whatever it may be, then there would be a registration document which could be taken away which would prevent them actually from continuing to work in that particular area. Also the employers should be registered as well so that they have an understanding of the need to ensure welfare standards in that process, and also at the sharp end, the poultry processing unit itself. When the chickens actually go into the shackles on the production line, that again is a crucial area. Line speed is very important and the people at that point will be under pressure to keep that line as full as they possibly can because it is just literally a production line.

Q229  Mr Wiggin: Have you seen it being done?

Mr Allenson: Yes.

Q230  Mr Wiggin: It is a highly skilled job.

Mr Allenson: It is.

Q231  Mr Wiggin: And it is actually something that you cannot physically do for a very long period of time. I think it is an hour maximum or whatever when I have seen it done.

Mr Allenson: Half an hour.

Q232  Mr Wiggin: Half an hour, is it? It is impressively difficult. One of the problems with that is that of course you have to have a lot of people trained. Am I right in thinking that when the chickens are unloaded, at that point there is a certain amount of veterinary inspection, so any producer or grower who delivers damaged chickens is penalised at that point as well, though perhaps not as much as you might like?

Mr Quittenton: The general situation I have found is that obviously the farms are regularly inspected by the vets, the lorries are then loaded, the lorries come into the plant, are unloaded and put on to whatever system is being used and then it is not usually until they reach the throat-cutters that any visible signs are seen as to how the bird is. You might find that the vets or the poultry meat inspectors may have a look round as the birds are sitting in the leverage waiting to be hung on, but until then, until they hit the throat-cutters, they are not visible by many people. There are the boys who hang them on and then they go to the throat-cutters. After that, after they have been plucked, obviously they will hit the first group which is usually the instore poultry inspectors' assistants who will then look at the birds and look for deformities and look for colour and will throw away accordingly. Again when they get on to the evisceration line, they will then be checked internally as well as externally by poultry inspectors' assistants and then thrown out from thereon.

Q233  Mr Mitchell: I am grateful because you carry out a good job of public education and that is why it is important that we get the views of the workers and we do it now so that we really know what is going on, but is there a relationship between an improvement in the conditions of the birds and the improved working conditions?

Mr Allenson: Yes.

Q234  Mr Mitchell: If you have bigger cages, is life easier for the people working there, is the place more salubrious? Do these two things correlate?

Mr Quittenton: Yes.

Mr Allenson: I think in our view certainly if you improve the provisions for welfare of the livestock, chickens in this particular case, then you would improve worker safety as well because if you take the intensification of the process which very often causes our members problems, that also causes the chickens problems because obviously they are treated much less humanely in the process if it is fast, if it is rapid, et cetera, than if you can slow it down a little bit and people can take a little bit more care about exactly what they are doing.

Mr Mitchell: Mr Quittenton was nodding his head.

Q235  Chairman: Mr Wilcock, you do not seem convinced by that, so what is your view on this?

Mr Wilcock: Basically what Heath said is the way I would have brought it forward to you, so basically he said what I would have said. Bill had relevant points there which are quite correct.

Diana Organ: Well, I have a poultry processing plant in my constituency.

Mr Mitchell: Well, I have not and I am learning about this.

Diana Organ: He knows about fish, but he knows sweet FA about chickens!

Q236  Mr Mitchell: The British Egg Industry Council say that if they are free range or they are in a barn, then it is much more messy and difficult to collect up the manure and everything, so improved conditions for the birds do not necessarily mean improved conditions for the workers.

Mr Wilcock: No, definitely not, no. Getting back to what Heath touched on and what Bill touched on about the welfare of the birds, it is abysmal. The birds are not actually checked until they have been slaughtered and they are in the actual second process, as we call it, in the factory. We have a vet on our side walking around, he just glances at the birds all caged up again, but until they are actually slaughtered and in there, you do not know what sort of state the birds are in really.

Mr Mitchell: Chair, I will graciously withdraw from this area of questioning.

Q237  Diana Organ: If the line speed is working as it does, and you are saying that the only inspection that really goes on is once they are slaughtered and eviscerated and then they look at the insides to see if there are any lesions or marks or whatever, just how good is that because the line is going, there are a lot of birds hanging down, you have a meat technician there or a vet, so just how thorough is it?

Mr Wilcock: It is not the actual vet who actually inspects.

Q238  Diana Organ: It is a meat technician.

Mr Wilcock: You have got your vet, but it is your PIAs, your people who are trained. It is a course they actually sit on. Then again I have seen it where people do take these birds off the line and then the employer comes down and if you have taken too many off the line, they say, "Sorry, but these have got to go back on the line. There is nothing the matter with them", and we know there are things the matter with them, but they need the volume out to meet the orders. It is just so, as we have touched on, pressure intensive.

Q239  Diana Organ: So there is the pressure from the company to make sure that as many birds get out the other end and get put into a package and put on the shelf. What you have said is quite interesting in that there is a sort of arbitrary decision, "I will give you six birds if you take two off and you can have three back if you agree that this one isn't good enough", instead of it being a real inspection of every bird, and we are talking about human consumption here, are we not?

Mr Wilcock: Yes.

Q240  Diana Organ: Is that the same in your company because we are talking about two experiences?

Mr Quittenton: No, I tend to find that if anything gets thrown away, that is exactly where it stays. They have been granted power from the vets of the sites that whatever they say goes and he will always back them up, so they have full power with throwing birds away that they feel are not fit for human consumption.

Q241  Diana Organ: Okay, so the question I started with was just how rigorous is the surveillance of the birds as they are going along the line where there is pressure to get them out and the speed is going? I know that in an abattoir the animal is bigger and it is going a bit slower, so I just wondered what your opinion was with that.

Mr Quittenton: We tend to deal with large birds anyway, so you are looking at 18 to 20 kilos, hence the line speeds are a lot lower than they are for chickens. Having said that, it is possible that if the line speed is going too fast, you could miss something.

Q242  Diana Organ: So with the best will in the world, and I know you are dealing with turkeys, Mr Quittenton, and you are dealing with chickens, Mr Wilcock, but people eat a lot more chicken than they eat turkey.

Mr Quittenton: That is right.

Q243  Mr Wiggin: Obviously in any factory you are going to get the situation that you have described. First of all, to the best of your knowledge, if a grower brings damaged chickens into a factory, there is a penalty, which is financial, so there is a profitability element to the factory, so there is no interest from the management of that factory to produce bad food at the end of it. Equally, they do not want to pay for bad chickens. Is that fair enough, though you will always get an anomaly, but by and large that is true, is it not?

Mr Quittenton: Yes.

Q244  Chairman: There are 800 million chickens a year bred and killed, are there not, two million a day or more? I live near a large animal abattoir and talk to some of the people that work there and they acknowledge that their attitudes to animal welfare over the years are cushioned and they become rather desensitised. Is that a feature of the attitudes of your members who work in these plants?

Mr Quittenton: I suppose that is natural because obviously when you first start seeing animals being slaughtered, it is a bit of a shock to you if you have never seen it before, but if it comes to be an everyday thing, then obviously you are going to get used to it. I tend to find that the people I have been with, the majority of them have been conscious about the welfare of the animals. For instance, if a line has a breakdown and birds have been hanging for more than a few minutes, then questions will start to be asked, "Why haven't they been taken off?" They should be taken off by at least six minutes. That is the longest they can stay on a line if they are alive. If it has been known for some companies to leave their birds on there for, say, 15 minutes, then you get the employees kicking off to their management, saying, "We need to get these birds off", so we have the employees telling the employers, "Come on, we need to look after these".

Q245  Mr Wiggin: We have touched on some of the differences between people working in processing plants and people working on the day-to-day management of the farm side and I just wondered if you would like to say anything about that. We talked about catchers, but actually they are not the people who are responsible for the day-to-day management of, say, a growing unit.

Mr Allenson: To be honest, that is a weak side for us. We have not got many people involved in the rearing and breeding side. We have membership in the breeding side, but not necessarily the rearing side, so we are aware of some of the stockmanship issues, but we really could not say too much with any great expertise on that subject.

Mr Quittenton: We could give you a vague account of what goes on, but not an expert one.

Q246  Mr Wiggin: We were talking earlier about licensing catchers, but I would like to know if you know what that would cost the industry and really how the egg and broiler industries manage their training in a similar way, and if you have any comments on that.

Mr Allenson: Certainly again we have no idea of the likely cost to the industry that that may actually bring forward, but we are always mindful of the need to retain consumer confidence in all of this. Vitally important too are some of the stories we have heard about the industry and the practices not necessarily in this country, but abroad, and of course that impacts on chicken sales and turkey sales here in the UK, so we are very concerned about that. We have got no idea of the actual cost, but we do believe that if you had a system where the individual catchers were certificated and they had a risk of having that certificate withdrawn should they be found to be abusing animal welfare standards, then that would do an awful lot to police the situation, but the employers also have a role to play because quite clearly they very often introduce the piecework/bonus systems which drive the system forward. Can I also say, without returning to a particular argument, that I still believe, having seen a lot of these factories in operation, that if worker safety is linked to food standards and also animal welfare, if you have high line speeds, if you have intensification of the system, then unfortunately animals do get treated badly as a consequence.

Q247  Mr Wiggin: Can I ask you one thing about transport as well because I think this fits in. One of the proposals, I believe, is that the animals will travel for the same length of time as the drivers are allowed to drive for and they will be able to be tracked through the tachograph. Is that something you would welcome? You will be able actually to see how long the animals have been in transit by the tacho rather than just by what people tell you.

Mr Allenson: Yes. I think in many respects this is not unlike many other areas where there is already some regulation and standards in place. It is just a matter of making sure that those standards are enforced and that would certainly help.

Q248  Mr Borrow: I would like to ask about working conditions which has come up several times in various aspects which have been raised. I have read the paper you have submitted and you have quite obliquely made comments which will lead a lay person to assume that you are not happy with working conditions and that there are problems around that. Would you like to elaborate on the problems that your members have in the industry?

Mr Allenson: Perhaps I should start and I am sure on this particular subject my colleagues will dive in quite quickly. Certainly the intensification of the process is certainly one area that we have got concerns about. That is really line speeds which can lead to repetitive strain injuries, et cetera, those types of issues. It has been a big issue within the industry, although there has been an awful lot of work which now has been done in respect of that, and that is a big issue for us in respect of working conditions. The other one, I have to say, is pay and conditions themselves because many of the processing companies now are finding it difficult to recruit people at the pay rates and conditions of employment that they offer in the localities that they are. I do not know if this was touched upon by any of the employers that have given evidence, but certainly if you look at the major ones within the industry, with a tremendous number of migrant labour from Portugal, et cetera, from all the former Eastern Bloc countries, in many respects it touches on the gangmaster/agency situation that your gangmaster inquiry touched upon as well, so those are perhaps some of the initial comments, but I am sure that both Heath and Geordie can elaborate on that.

Mr Quittenton: Naturally the environment is very harsh anyway with the excessive line speeds, the long hours you have to work, the fact that the majority of jobs tend to be in stationary positions and that is where you stay for your entire shift apart from your teabreaks, unsocial shift patterns where you tend to find that most poultry units start at six and continue perhaps through until midnight, and it may not always be killing, but there is always some sort of production process going on throughout the whole day and most of them are perhaps 24 hours a day, so you have got very unsocial shift patterns, long hours of work anyway where it is not unusual to have 12-hour shifts, and we currently operate a 9: -hour shift, so I do not think that is good for you, having those hours and conditions. Climates, where you are producing or cutting the meat, it tends to be cold, just above one degree, two degrees, so the actual climate is not very good to work in as well, and it is damp and wet. If you are talking about the live side of the animals, then it is the complete opposite, very hot, very dusty and it can cause chest problems. Other conditions, low pay we have mentioned, we know about low pay, and it always has been a very low-paid job. The way things are going we will be just above the minimum wage come next year. Therefore, you will find that a lot of us have to work many hours by which to gain a sensible wage. It is not unusual for people to be doing 60 or 70 hours a week just to try to maintain an average earning.

Q249  Chairman: What is the typical male/female mix of staff?

Mr Quittenton: I would say 50:50. You tend to find that for the live stuff, before slaughter, it tends to be male, then when you go to evisceration it is 50:50, then when you go to deboning birds and then producing a fresh product again that is 50:50. Youngsters tend to be the main source of employment, but then they come and go. There is a very high turnover in the industry as a whole. You have heard that we are bringing in migrant workers because we cannot find enough people in our areas to fill the positions. Regarding the amount of overtime we have to do in order to have a liveable wage, as I said, it is 60/70 hours a week just so that you feel that you can try and enjoy life in the hours that you have got off. Other harsh conditions, well, I think that covers me for a bit.

Mr Wilcock: Heath has touched on one or two points, such as the very long hours just to earn a decent wage, a 60/70-hour week basically. We have all got families basically at the plant we work at and we have our other halves working as well just to try and get a decent standard of life. As Heath says again, touching on the very bad working conditions, there is a lot of chlorine in the air in these factories. They are very boring jobs with a lot of RSI injuries, strains to the wrists, as anybody who knows about poultry will know. There are a lot of ethnic workers, foreign migrant workers coming in. Basically we are just left with our core workforce being English and the rest are agency, enough people have touched on it, and I think that is how most of the poultry industry works.

Q250  Mr Borrow: In terms of industrial relations within the industry, how do the mechanics work for grievances or if there are health and safety issues which your members wish to raise? Can they raise them or are there problems around that with difficulties for members actually raising those sorts of health and safety issues or grievance issues?

Mr Quittenton: Personally, we seem to have a very good system. If an employee has a problem, then normally they would speak to their first level of command, which would be the line leader or charge hand, and then it would be followed through from there upwards. If they do not have any joy going through the management, then they come and see the union officials and we then go through the channels. Most times you may not get what you want, but at least you get a reason why and the grievances are followed through, so I cannot really complain at that at all. You may not always get the answer you want, but at least it is followed through.

Mr Allenson: Could I just add to that because obviously that is in a company where the trade union is organised and there are procedures in place, representation available, et cetera, but of course there are some companies which are not organised. There is also the situation in respect of migrant labour where what we are trying to do as a trade union is to get those people organised to try and make sure that they are represented properly, that they are treated fairly and equally and also do not undermine the pay and conditions that are already there, poor as they may be, so it is very important to us that people do have some protection in terms of whistle-blowing. We have made the point in our written submission, and I think it is worth emphasising, clearly in terms of food safety, in terms of some practices which need to be exposed which are going on, people need to have the ability to raise that and, if they cannot get a resolution to that difficulty, the ability to raise it outside without fear of losing their livelihood in areas where it is difficult to find work anyway. Quite clearly some of the companies are very sensitive to press speculation, press reports, et cetera, and can react quite aggressively to that particular situation. Again it is reemphasising that point. As far as I am concerned, if you treat people fairly, then you will get, if you like, the animal in the process treated fairly as well and there is a direct link there, and a direct link between worker safety and food safety which is so vital to retaining consumer confidence in the end product which we want to sell and which our members' jobs depend on.

Q251  Diana Organ: I was interested in your comment which says, and obviously it goes hand in hand with what the working conditions are like, that there are practices in the issue of food safety, practices which need to be exposed which are going on. What are these practices which need to be exposed and what has the Union done to expose these food safety concerns that the Union obviously has?

Mr Allenson: If I can just elaborate on that, in terms of the industry generally it was really concerns initially about what was happening with foreign meat imports, the use of illegal substances, and also the recent revelation, although it is not that new, about the issue of beef and pork protein being found in chicken because that holds on to water and adds to the weight of the product. There are and there will be animal welfare practices. I cannot quote exact examples here today, but I can tell you that we have had anecdotal evidence to us in the past about practices which we believe need to be exposed. Now, if people have the opportunity of raising that properly, but they feel threatened with not just their livelihood, but perhaps their promotion prospects or moving on to a different area or moving on to a different shift pattern, they will keep their mouths firmly closed. What has the Union done about that? We have tried in every company where we are organised to ensure that there are appropriate procedures and grievance arrangements in place so that people do feel able to raise these issues, but we need to take that further in the interests of food safety and, as I say, to link in food safety really with consumer confidence. As we have found out from other areas of agriculture, if the consumer has not got the confidence in the product, then the industry very quickly goes down in terms of profitability and in terms of numbers employed.

Q252  Chairman: Would you agree with me that the fact that five firms are responsible for 80 per cent of meat production means that a blacklist of suppliers would be relatively easy to operate?

Mr Allenson: It could well be.

Q253  Chairman: Do you believe that it does?

Mr Allenson: I have no evidence to support that.

Q254  Diana Organ: You are saying obviously that the Union has a real role to play, but of course in the, as the Chairman has just said, five firms which operate and in the 20 per cent which is outside of those firms, they are predominantly not unionised at all, are they, so it tends to be the better employers that recognise trade unions and where the union is able to have a role to play, but in the ones that we might be a little more concerned about, they tend not to be unionised at all and, consequently, they may not be so good with their food safety practices.

Mr Allenson: Possibly.

Q255  Diana Organ: We can assume that, can we not, I think?

Mr Allenson: Possibly, yes.

Q256  Diana Organ: You just said that there is a high turnover of people because the job has real problems, the conditions are not great and that there are a lot of migrant workers, so I wonder if you could tell me about the food safety training that exists and what the existing workers receive and is it ongoing? With a high turnover of staff, how do you keep training up for food safety training?

Mr Quittenton: At great expense. From what I have seen of other companies, some of them will send new workers to a college for a week to give them an insight into the industry before they bring them on to the floor, other companies will have a one to two-day induction before they actually go on to the floor, so they sit them in the offices at work and explain everything to them, and then of course there is the on-line training once they get on to the line. You tend to find that most companies have about a 13-week probation period where that is also their training time. They will have their training instructors with them almost constantly, keeping an eye on the way they work, making sure they work to the correct specifications, making sure they work hygienically and safely, so that 13 weeks is the sort of major crunch point to make sure that everyone has it, and that is also a high turnover point, within those 13 weeks.

Q257  Diana Organ: But of course they have to do it because the benefit to the company is that you both represent companies which have a name to uphold and they do not want somebody getting whether it is salmonella or whatever from the chicken, do they?

Mr Quittenton: No, that is right.

Q258  Diana Organ: How good is the UK poultry industry as a whole at promoting good practices? Both of you have said that your companies are really involved and spend a lot of money on their training, but generally in the industry throughout, how good are we at promoting good practices?

Mr Quittenton: Not as good as, say, beef has been over recent years, you know, "Buy British beef", or "Buy British pork". I do not think there has been as much relevance made to poultry.

Q259  Diana Organ: And yet most consumers, I think, if you ask them what do they think is the dodgiest thing that they might cook, and I am not being sexist here, but it is true that it tends to be the men who barbeque and the women who shout at them how to do it and usually what the women shout out is, "Make sure the chicken is cooked on the barbeque".

Mr Quittenton: Yes, that is right, so they put it in the oven first.

Q260  Diana Organ: It is one of these things, is it not, of all of our foods where probably the consumer feeling is that we have to be most concerned about how we cook and prepare chicken?

Mr Quittenton: Yes.

Q261  Diana Organ: Are you saying that we have not got the message over that actually British poultry is probably the safest option to buy?

Mr Quittenton: Not at all. The point is that you can see that by the sales figures, the fact that more and more retailers are opting for imported chickens than they are UK chickens.

Q262  Diana Organ: I wonder if you could say a little bit about the concerns that you have got about the UK border checks and food safety inspections for imported chicken.

Mr Allenson: I do not think there is too much we can say in detail other than to say that in the short period that I have been responsible, certainly a number of occasions have arisen where it seems that there are insufficient resources to check frequently whether in fact the meat is safe, whether it is meeting EU standards, et cetera. You asked earlier about how often was chicken checked on the line in a UK factory. Well, I think also we would certainly argue, again from perhaps anecdotal evidence, but from evidence nevertheless, that there are not many checks for checking imported chicken as it comes into this country either, and that is an area which does need to be looked at, improved and controlled better than it is at the present time, but nothing more than that.

Q263  Chairman: Okay, is there anything else that, on reflection, you want briefly to comment on in addition to the things you have said? Mr Wilcock?

Mr Wilcock: I just want to repeat what Peter said there about imported chicken. It worries me and quite a lot of our members as well that most of these British companies, the bigger companies, may I add, are actually starting to buy factory outlets in Thailand, Hungary, Portugal and places like that. As we say, long term are we basically going to become a packing industry for foreign meat? I think that if nothing is done, that is what will eventually become of the UK poultry industry, that we will be packing plants. As Peter touched on, we do not know what is in these things. We have read reports from Portugal about these added chemicals and what-have-you. It is worrying.

Q264  Chairman: Mr Allenson?

Mr Allenson: Perhaps I could just finish by saying that obviously there are some very important World Trade Organisation talks due to take place in Cancún in September and I read quite recently that the expansion of the EU has led obviously to a number of additional countries coming in, and some meat licences have been issued, and they will probably be red meat in addition to poultry meat, but they have been issued in a number of those countries which will enable them to import into this country, although not meat to EU standards until some considerable distance of time in the future, for example, in Poland some 332 licences, but the deadline for meeting the EU regulations in respect of all of the environmental, health and safety and welfare standards, et cetera, is December 2007. There is a whole list of those things. When we talk about creating a level playing field, I have no problem with coinciding with the employers' arguments because it is our members' jobs and livelihoods, and as difficult and as low paid as they may be, nevertheless, in rural areas where there are difficulties finding jobs anyway, it is important that we maintain those jobs wherever we possibly can. I would just really like to leave you with that thought about what we mean by the level playing field.

Q265  Chairman: You have painted a very vivid picture of a low-paid, highly stressed, long hours industry and it sounds even worse than the conditions in the Organs' back garden with that mix of smoke and swear words that she seemed to be suggesting was typical of a Sunday afternoon in her part of the world! However, thank you very much indeed. We are grateful for your time and if there are further reflections you want to let us have, do that very speedily and we will ensure that they form part of the public record and part of our considerations, but for the moment, thank you. If you wish to hear the evidence now to be extracted from whichever Defra Minister we have, you are most welcome to stay.

 

Memorandum submitted by Defra

Examination of Witnesses

Witnesses: LORD WHITTY, a Member of the House of Lords, Parliamentary Under-Secretary of State, and MR ANDREW SLADE, Head of Milk, Pigs, Eggs and Poultry Division, Department for Environment, Food and Rural Affairs, examined.

Q266  Chairman: Welcome again. We see you frequently. I am sure that eventually they will rename this room the "Whitty Room", we shall see, but thank you for coming this afternoon to give us evidence as part of our inquiry into the UK poultry industry. Can I kick off with a broad question on the Government's approach to the poultry sector. In evidence, Defra say, "In line with overall UK policy, there is no prospect of action to increase tariff protection or block imports". They go on to say, "UK poultry meat producers will therefore increasingly have to rely on producing quality products which command a price premium". The two major producing bodies in the industry have both called for tariffs to be maintained, not least because they believe that the alternative sources of supply are operating to different standards of safety and welfare. Have you made the poultry industry well aware of your approach, the Government's approach, to the WTO negotiations, Lord Whitty?

Lord Whitty: Well, I think both the poultry sector and other farming sectors are well aware of the approach we are taking to the forthcoming WTO talks and indeed the points, as far as tariffs are concerned, that the EU is taking. Certainly the commitment of the Government to make a success of the next stage of the Doha rounds in Cancún would involve us looking both at the internal support, for which this industry receives nothing virtually from EU sources, and at tariffs and export support, so they will know that whatever the degree of it, the tariffs are likely to reduce rather than increase or be maintained.

Q267  Chairman: When you say that you think that the industry are well aware of the Government's attitude, do you mean that you hope they are or you have evidence that they are?

Lord Whitty: Well, since they have made the same representations to me and to our officials as they have clearly made to you about it, they are aware that our policy is pointing in a different direction. I think it is true to say that although our engagement with the poultry sector is not quite as intense as it is with other livestock sectors, principally because there is not the subsidy situation that there is with beef and sheep, for example, we are in very regular contact with the industry both at the trade association level and at the individual company level, and certainly there is pretty close contact between various levels of our officials and the industry. So I do not think there is any doubt that they are aware of it and indeed I do get letters from time to time complaining about the Government's position, but I think they are not likely to be thinking that we are going to change that position, that indeed the EU position going into Cancún will be one which foresees some reduction of tariffs and increase in market access rather than the opposite. There are of course within that WTO context concerns which the EU want on the table in relation to welfare standards and in relation to other non-trade issues, but that is the terms on which freer trade operates rather than the fact that the general direction will be in the direction of freer trade.

Q268  Chairman: The picture painted by both of the two producer organisations and by this afternoon's evidence from the TGWU on behalf of those who work within the industry was of an industry under real competitive stress and in short-term fear, I think, of what might happen to it in the months and years to come. Does the Government provide any help, assistance or advice to help the industry adjust to what we might call these more liberal market conditions?

Lord Whitty: In terms of subsidy or cushioning, the answer to that is no. Of course none of these tariff changes are going to happen overnight, so there will be plenty of time for the industry, as with other sectors, to adjust to these changes, but it is an unsupported sector and has been throughout and it has largely managed to maintain a competitive position and reasonably profitably over the years. Now, there has been an increase in the poultry meat side of imports, but it is still, at a very substantial part of the market, managing to operate reasonably successfully, so a further liberalisation of world trade I do not think is likely to move in too adverse a direction because I think there is a general view that the British industry is relatively up to the mark in terms of innovation, in terms of marketing, in terms of structure and is likely to be able to compete in all but the very bottom of the market. I should say in terms of the WTO that of course in relation to the non-trade issues there is an EU position which would allow, if you like, Pillar 2 of the CAP, should the conclusions of Luxembourg today prove favourable, to provide some help for meeting higher welfare standards. The scope of that is not yet clear and the degree to which the British Government will be able to take advantage of that is not yet clear, but there is the possibility of allowing state aid or possibly state aid with matched funding in that area, but that would be a green box support and not one that was designed to offset competitive pressures.

Chairman: Three colleagues want to ask a supplementary.

Q269  Mr Mitchell: This seems rather callous advice to give to the industry. Here you have a situation where you say imports are going to have to rise because of WTO liberalisation, where you are asking the industry to maintain higher safety and food standards by enriching cages or free-ranging or whatever, where you want to keep jobs in rural areas to keep those areas going, but when it comes to down to giving them any support to face the intensifying competition from cheap labour countries without the same effective regulation of standards and without the same welfare legislation, your advice is, "Hard cheddar, do it yourself."

Lord Whitty: In a sense it is no different to the advice that we give to any competitive trading industry ---

Q270  Mr Mitchell: Except the manufacturing industry, which has been let go already. The Common Agricultural Policy is a protective framework which is designed to maintain rural life (I was going to say peasant communities but that does not apply in this country) and rural activity.

Lord Whitty: The Common Agricultural Policy has not provided any support to the poultry sector. The poultry sector has operated effectively without support.

Q271  Mr Mitchell: Now it cannot.

Lord Whitty: The same cannot be said in relation to the rest of the livestock sector. Of course, as I say, none of these changes are going to take place overnight either in terms of the CAP or the WTO. What we are saying to the industry, as to other industries, is that with the coming trade round there is going to be an gradual liberalisation of trade and the industry needs to adapt to that. The issue of maintaining higher welfare and safety standards than the rest of the world is something of course that not just the UK industry but the whole of the EU will be facing. We are all operating under the same regulations and the EU has registered in the WTO context that there are issues relating to non-trade concerns, including animal welfare, which need to be considered and, at least to the limited extent of noting that position of the EU, the WTO negotiations have taken that on board. But we are not removing any support, we are simply saying that the tariffs will be reduced over time if the WTO process is successful. Of course, whilst this may have an impact in other sectors of agriculture, there will be some benefit from the liberalisation of some of the sectors under the WTO agriculture chapter in that some of the inputs to the poultry industry will become cheaper.

Q272  Mr Mitchell: Frankly, it is difficult to see the benefits of the industry south of Grimsby as I see it. I think it is a monstrous imposition to say we are going to impose on you a framework of regulation - because this industry is pretty well regulated in this country - and welfare standards that competitors do not have to face, but we are not going to support you and help you to come through it. Why do you not put your money where your mouth is? If you want higher welfare standards the industry has got to be helped to reach them.

Lord Whitty: This is a relatively competitive industry, it is one that has managed on its own without the CAP ---

Q273  Mr Mitchell: You are saying it is going to get worse.

Lord Whitty: It is not going to get worse, the trade will become more intense. Certainly there will be a part of the market we will not be able to compete in, but that applies in a sense already. As far as eggs are concerned we supply virtually all our own. There are areas relating to powder and to poultry meat where there has been an incursion of imports and it is only going through the same process as many other sectors have gone through in that respect.

Q274  Mr Mitchell: It is called rigor mortis.

Lord Whitty: No, I do not think so, this is quite an innovative industry and it is an industry that has restructured itself and adapted to changing regulations, changing demand. It is one where consumer demand in the UK is pretty buoyant and where at least a sector of the consumers will pay a premium for well-produced and higher value-added British poultry meat and certainly British eggs, which have probably the highest recognition of any assurance standard. They have done pretty well so far. I have reasonable confidence that they will be okay, not everyone, but they will be okay in a gradual move to a more liberal market.

Q275  Mr Wiggin: Unfortunately I do not share your confidence. The reasons for that are first of all we have got nitrofurans coming in from poultry from Brazil. Apparently, recently that has decreased but it is still going on and the problem is not that this is happening but that when it happens nothing is done.

Lord Whitty: That is not true.

Q276  Mr Wiggin: Well, it is still coming in.

Lord Whitty: Where a source has been identified as having nitrofurans or additives in them then supplies from that source have been stopped.

Q277  Mr Wiggin: What percentage do you check?

Lord Whitty: In those areas I think I am right, and Mr Slade will correct me if I am wrong, where it had previously been identified, which is Brazil and Thailand, we check 100 per cent.

Q278  Mr Wiggin: You check every chicken?

Lord Whitty: Each consignment. Previously to that it was a much higher level of checking for poultry meat than it was for beef and lamb. It is about 50 per cent of every consignment.

Q279  Mr Wiggin: What you are saying is because you have identified Brazilian chicken as having these things in, you are now checking every consignment so that we can be confident that none of that chicken is making it into the human food chain in the UK?

Lord Whitty: There is no such thing as nil risk but the degree of checking is as at the highest level of any form of food that comes into this country.

Q280  Mr Wiggin: I accept what you are saying. What I do not accept is that you are then allowing UK meat production to be on a level playing field with that in Brazil because you cannot guarantee - and I do not blame you but you simply cannot - that the Brazilian chicken is as good as the British chicken. You just cannot guarantee that, can you?

Lord Whitty: I can guarantee that Brazilian chicken coming in here will be checked. I cannot guarantee that Brazilian chicken will be produced to the same welfare standards as European chicken, but that is a feature of the WTO; you cannot discriminate on trade on the basis of different production methods.

Q281  Mr Wiggin: But you are talking about people's consumption of this product, and the quality of what is coming in has a human health implication.

Lord Whitty: No ---

Q282  Mr Wiggin: You are allowed to do that. You are not allowed to feed growth promoters to people in this country.

Lord Whitty: You are not allowed to import them into this country either.

Q283  Mr Wiggin: But you cannot stop it, you have just told us.

Lord Whitty: I cannot stop cocaine coming in but it is still banned and it is still not legitimately imported into this country and the fact of the matter is that the level of checking at ports, as a result of having found this problem, is the highest level of any checking of any foodstuffs that are imported into this country or indeed into Europe.

Q284  Mr Wiggin: I am delighted to hear that. Let's turn to eggs now. It is the same issue because the egg production people have got the same problem with the government. Once we had the change in cages - and I had to speak to Elliot Morley about this myself - there was a move from this Government to allow the implementation of enriched cages earlier than was necessary and even at some stage there was a discussion that this would become unacceptable and cages would be ruled out altogether. This has a seriously damaging effect on investment by the egg production sector. Do you not agree with that?

Lord Whitty: No I do not, because there was some discussion as to how we would transpose the regulations and some options were involved and, as you will probably know, some other European countries were themselves, if you like, gold-plating ahead of the timetable laid down at the European level and so the issue of whether we should do so was one that we considered. There was considerable representation from welfare groups and so forth that we should do so. In line with our general policy of not gold-plating new EU legislation we did not go ahead. That was after the normal period of consultation in which we took the industry's views fully into account. I do not think investment was diverted as a result of that because as far as investing in Europe then they will be faced with the same or tighter requirements.

Q285  Mr Wiggin: That is fair, they did not not invest as a result but obviously with the potential change, a cage would last for 20 years, people will wait until they have a final situation when they can then make a concrete decision. It is that inability of the Government to give a clear steer as to what the real facts are going to be that has meant that people have held back. That is what I meant.

Lord Whitty: The Government engages in a period of consultation before we finally make up our mind, that is the way we do things. In this case we certainly took on board the concerns expressed by the industry and it is now clear how we are transposing them.

Q286  Mr Borrow: On the WTO I think it is clear to everybody in the industry that as a result of the Uruguay Round the removal of trade barriers and subsidies for agricultural production is inevitable because that was what was signed up to years and years ago, and what we are seeing now is a rearguard action by the United States and members of the EU to stop or slow down that liberalisation which was agreed to at the WTO ten years or more since. The assumption is therefore wrong that all those trade barriers will go. The key thing for issues around poultry is whether or not we in the United Kingdom or EU are able to impose on poultry that is sold or imported into this country certain standards around animal welfare and health and safety issues which are currently not taken into account by the WTO and whether or not we are able to in those negotiations ensure that we can insist that poultry that is sold here is produced to high animal welfare standards. If it is produced in Brazil or Thailand it does not really matter as long as it is produced to the same standards we would want here. What is your perception of the likelihood of any success in the WTO negotiations in September of reaching some of the outcomes that we would want?

Lord Whitty: As far as EU food safety standards and human health standards are concerned, then the EU has the right to insist that they are produced to the same health standards, which is why we can ban certain stuff from Brazil if we find it is contravening that. As far as animal welfare is concerned, we do not have that right under the current WTO rules let alone future ones. What the EU are seeking in registering their concern about animal welfare issues is that if the Member States of the EU provide support for meeting higher welfare standards, then that would not be ruled a protectionist measure, it would be a green box measure, and the signs are that we may be able to get that. Of course it is true that not only the developing countries but also the United States and Australia and the other Cairns Group members, Brazil and so on, all regard our concern for animal welfare as a bit of hypocritical disguised protectionism, so it is not an easy negotiation even to get that. But certainly that is the EU's position and we will need a collective EU position at Cancún in order to achieve that.

Chairman: A day or two ago Austin Mitchell memorably described the offices in Portcullis as "enriched cages" compared with the batteries over there. He now wants to develop a parallel point.

Q287  Mr Mitchell: First of all, I want to follow up on a couple of points. What you are saying on the green box issue is that you could provide subsidy for higher welfare standards if you had a mind to.

Lord Whitty: Yes but to achieve higher welfare standards, not to resist competition.

Mr Mitchell: No, but in maintaining higher welfare standards it would be resisting competition. Is that on an EU basis or on a national basis because the traditional position is they subsidise their people and we do not subsidise ours on these occasions, like fishing.

Q288  Chairman: Do not answer the question on fishing.

Lord Whitty: It is an entirely different issue. The EU could provide under an extended Pillar 2 of the CAP EU funds, which would probably have to be matched by Member States (under present rules anyway) for enhanced welfare farming standards. They could also have a view that that is not something the EU would spend money on but that they would enable state aid to be paid without transgressing the state aid rules, so either approach could be there. The problem is of course - this is why I refer to the on-going Luxembourg negotiations - is there is not a huge amount of money going to be in Pillar 2 in any case, certainly nothing like we would like to see by way of a shift of agricultural CAP money from Pillar 1 to Pillar 2. It will not happen to the degree that we would want and therefore the scope for a welfare tranche of that being very large for any sector is limited and therefore it comes back to whether we would be allowed Member State provision on that front.

Q289  Mr Mitchell: Of course given the Franco-German accord it is going to be very difficult to get anything at all. You said, and it seems to be government orthodoxy, that the consumers are prepared to pay a higher premium for higher welfare standards.

Lord Whitty: Clearly some are.

Q290  Mr Mitchell: Is that really true? A few middle-class consumers, maybe not the majority because they all go for cheapness. Fish is a very close competitor of chicken. It strikes me that they are prepared to pay a bit of a premium on fish if the costs go up but not chicken, they overwhelmingly go for cheapness.

Lord Whitty: I think there are different tranches of the market, and if you take eggs then clearly there has been a significant number of consumers who have gone for free range or organic eggs. It may not be a majority but there is a premium paid for that. There is a sector which will go for higher quality, a sub-set of which is going for higher quality because they assume British is higher quality, which in most cases is probably true, but of course a lot of chicken is at the lower end of the market and a lot of chicken is in processed food. At that level it is almost certain that they will go for cheapest price. If you are talking about what they buy off the shelf at the supermarket there is at least a significant section of consumers who will pay at least some premium for quality.

Q291  Mr Mitchell: Okay, let me move on. As we sit here in this enriched cage, just help me through the argument because I am not quite sure what it is. We are proposing to allow enriched cages to stay on after 2012 after the conventional cages have been got rid of, that is the situation, is it?

Lord Whitty: Yes.

Q292  Mr Mitchell: Is that a unilateral position for Britain or is that going to happen all over Europe?

Lord Whitty: That will happen all over Europe unless any individual Member State takes a different view.

Mr Slade: That is quite right, yes. The unfurnished battery cage dies a death in 2012 and the only kind of cage allowed across the EU thereafter is an enriched or furnished cage.

Q293  Mr Mitchell: And that will be allowed because that is a way round what I thought was the requirement of a universally free range regime after that.

Lord Whitty: That is not the case. The enriched cage will be allowed and I think a number of Member States have indicated they would not wish to go further than that but those are the European rules as they stand. We are of course reviewing all of that in 2005.

Q294  Mr Mitchell: Producing further uncertainty for the industry of course.

Mr Slade: EU-wide.

Lord Whitty: EU-wide.

Chairman: For the whole of the EU.

Q295  Mr Mitchell: I will not give you my reactions on that. How does Defra weigh up the welfare benefits of enriched cages as against economic costs? Is this a straightforward calculation that the industry will close down unless you keep enriched cages going?

Lord Whitty: It is a bit more complicated than that. I will ask Andrew to help me out here in a moment. The issue is not one directly of welfare as against cost because there are welfare issues involved in free range poultry and in barn based poultry, for want of a better word, as well as in the caged variety. The enriched cage, on the best advice, gives better welfare conditions than the previous battery cages did, in terms of access to feed and in terms of room to move and in terms of the numbers of chickens within the confined space. There are also some behavioural things which do not occur in the cage whereas they might, in terms of birds attacking each other and so forth, in more open environments. There is therefore a welfare downside of every method of egg production, so it is not direct cost against welfare, but we do look at the cost of introducing enriched cages as against the cost of abolishing them completely or the cost of replacing them, or we did prior to the ---

Q296  Mr Mitchell: But the egg people did tell us that banning enriched cages would have a devastating effect on the industry, so is it a question of keeping them going?

Lord Whitty: Obviously that was our view and why we supported the continuation of enriched cages in the end. I do not know whether Mr Slade wants to add anything for clarification of that.

Mr Slade: I have not got much to add to what the Minister has said other than to say a programme of research is underway. These furnished enriched cages are relatively new as a concept. There is some experience in Sweden and one or two other countries but it is still a relatively low level understanding of what the benefits bring and some of the problems that are thrown up by the system. The research is underway at Leethorpe(?) and Roslin Institute and that will all play into the review in 2005, but on the economic side I would say we have watched what has been going on in Germany (where they are proposing a unilateral ban earlier)and there is some evidence to suggest and I should say that Germany is historically a net importer of eggs anyway - that production is going elsewhere, including Poland, which will by 2008 or when the ban comes into place be an EU Member but which intends to allow enriched cages for the future to be maintained.

Q297  Mr Mitchell: Why is the Department so equivocal on enriched cages? The Farm Animal Welfare Council told your Department that they could meet the requirements for acceptable standards of welfare and yet the acceptance of them was equivocal. Ministers concluded that there are insufficient grounds at present to justify a unilateral ban. What does that mean? You are thinking there might be a unilateral ban at some stage in the future. That is a very uncertain proposition. Can you tell us whether they will be maintained until 2012 and beyond.

Lord Whitty: All I can tell you is the EU as a whole will be reviewing the situation in 2005.

Q298  Mr Mitchell: So it will pass out of our hands?

Lord Whitty: We can still take a unilateral decision to go further than the EU but the evidence we have got at the moment does not justify so doing and whilst there is further research going on on both the benefits and the downside of enriched cages, there is certainly no indication that we would change our mind in relation to that, but we do have the right to. I was not sure whether you were making an anti-EU point or an animal welfare point there.

Mr Slade: When I referred to some of the problems associated with the enriched cage, my colleague has just reminded me that at Leethorpe they had to cull out one of the flocks because of marked feather pecking and cannibalism. Those are the sorts of issues that we will need to look at.

Q299  Mr Mitchell: I will give you that. A final point, since Germany seems to have announced a ban on enriched cages from 2012, what do you think the prospects are for keeping the system going and maintaining enriched cages or securing a ban on enriched cages?

Lord Whitty: It depends on the evidence. There is considerable concern among some of the welfare groups that enriched cages are not much better than closed cages. We do not think there is any evidence for that but then, on the other hand, there are some incidents like the one Mr Slade just referred to and there may be further research which would cause us to re-think that position. As he says, there is relatively little experience of enriched cages and how they operate, particularly if they operate as a norm for a whole industry, and I think it is right that we keep an open mind were new information to come to us on how they operate here or indeed in any of the European countries.

Q300  Mr Mitchell: But the industry needs certainty. You seem to be saying you are waiting for the "Ides of Brussels" and that is no certainty for the industry for the investment that has got to carry on and is occurring now.

Lord Whitty: Well, it is true that the EU have set the pattern for the 2005 review and the 2012 timetable. If that applies on a whole range of regulations, both national and European, and no industry can be absolutely certain that further evidence will not be presented to a government which makes them change their minds, so I do not think the poultry industry is particularly unique in that respect.

Q301  Mr Mitchell: They are in a very difficult situation, they are being asked to invest in enriched cases, which is a big investment for most of them, and yet you cannot give them any certainty that that position will be maintained.

Lord Whitty: The motor car industry is asked to invest in better emission standards, and a few years down the line no doubt we will make them tighter but quite when and in what form, we do not know. All industries face a degree of uncertainty about future government action. What they do know of course is that whatever standards come through those standards will almost certainly be EU standards and will be operated across the EU.

Q302  Mr Mitchell: It sounds to me disastrous that here that you are asked by the industry what it is to invest in and the answer is a shrug.

Lord Whitty: It is not the government's job to tell them what to invest in precisely.

Q303  Mr Mitchell: You can give them some on certainty.

Lord Whitty: We lay down the regulations as of now based on the European standards and we give them a pretty long timetable for implementation. A lot of industries are faced with changing their procedures overnight compared to this. We build in a review process which might throw further light on what we need to do in the long term. That seems to me to be sensible regulation not precipitate imposition on the industry.

Q304  Chairman: A short time ago we were advised of the existence of enlarged, enriched cages. It would be possible for Defra to allow, encourage or require the use of those at the appropriate time, or would you view that as gold-plating?

Lord Whitty: At this point I would regard requirement as gold-plating but there is a possibility that those enlarged, enriched cages prove better in terms of welfare, and in which case then I think we might have to consider the situation, but if you asking as of today, then there is no reason for going further than we have.

Chairman: Let's move from eggs to meat. It is the case, is it not, that the chicken meat sector is unique in livestock areas in having no present EU farm animal welfare standards, and I would like Bill Wiggin to come in on that point.

Q305  Mr Wiggin: I understand that Defra is actually looking at putting a Directive together on the meat sector. Is that true?

Lord Whitty: There are proposals that we should do so. We are at a relatively early stage.

Mr Slade: There was a Welfare Code put out last July in terms of the standards at a national level and codes can be called on in cases of prosecutions as evidence of standards met or not met. An early draft of a Directive and EU-wide approach on meat chickens is doing the rounds and we have tried to ensure that we have got maximum coverage with our stakeholders and an opportunity to comment. You get into quite a lot of interesting issues about ventilation and stocking density and so on because a lot of the early standards were built around buildings that did not have modern ventilation systems and so on.

Q306  Mr Wiggin: To what extent would you like to see higher standards than those that re already operated in the United Kingdom?

Lord Whitty: Again research is part of the issue behind that, and representations from the industry as a result, but an EU-wide standard is something we would be looking for.

Q307  Mr Wiggin: Okay. One of the fears we have got is that this will simply lead to more red tape, less jobs, less of a UK high welfare industry, particularly when it runs into WTO. Can you give us any sort of assurance that that is not going to be the case?

Lord Whitty: I think the two are not really connected. We may have EU welfare standards for meat fowl but we do not have at the moment but the competitive situation applies whether or not we move to those standards because I think I am right in saying that if we had an EU agreement tomorrow they would be, roughly speaking, the same as we have got in the United Kingdom.

Q308  Mr Wiggin: That is helpful.

Lord Whitty: And if they were ratcheted up they would be ratcheted up on a pan-European basis. There is a competitive issued involved anyway as far as poultry meat is concerned and one where the industry is going to have to upgrade its performance in terms of what parts of the market it remains competitive in.

Q309  Mr Wiggin: We have got one little welfare question that CIWF have brought up which is that they believe that broilers are being bred to reach slaughter weight at 41 days and this leads to leg and lung problems. To what extent has the development of rapidly growing broilers contributed to animal welfare problems, in your opinion?

Lord Whitty: Let me separate two things. There is a case on which I am strongly advised not to comment which CIWF have bought on this basis and therefore I will not comment on precisely what the CIWF are saying. Clearly there have been some breeding effects and some growth effects which we would not consider very beneficial, but the standards which we are operating at now seem to us defensible.

Mr Wiggin: Good, I am glad to hear that because from what you were saying in the earlier part of my questioning one of the things we are very worried about is that it is not European-wide competition that will deliver the problems for British meat production, it will be the Brazilian, Thai and the international competitors that will do the damage and are already doing tremendous damage to our domestic production.

Chairman: Only three people in this place fully understand CAP reform and here is one of them, Austin?.

Q310  Mr Mitchell: I understand that it is not likely to take place. Prospects are held out for this usual pot of gold at the end of the rainbow from Europe - money for subsidisation, participation in assurance schemes, for meeting standards, investment aid to help farmers achieve new standards and then there is a pot of gold if we achieve CAP reform. Defra however points out that that is fairly unlikely in the immediate future. Is there any support the Government can provide if we get a CAP agreement which promises those benefits at some stage in the future to help the industry through the transition period?

Lord Whitty: As of today this is an extremely difficult question to answer. As of last night the proposals which were being discussed did envisage a significant shift into Pillar 2, more significant than the February proposals. Whether that is agreed or not is not yet clear. If it were agreed then there would be some scope from European funds which would almost certainly have to be matched if not 100 per cent at least to some degree with UK funds for meeting those objectives. I think we have pretty well convinced Commissioner Fischler a) that he needs to increase the size of Pillar 2 and b) he needs to make it more flexible and quality directed in terms of helping farmers and the trade to meet standards. I expect some of that to be reflected in the final outcome of the CAP. What the quantum will be and therefore how much real scope we have got for using EU funds remains to be seen. As you know, we start from a position of very substantial disadvantage in Pillar 2 in that we have far less than we should have in the current expenditure.

Q311  Mr Mitchell: The interim period?

Lord Whitty: The Commission have said to us that because of various commitments we have, not least from the Curry Report and the agri-environment side and so on, that whatever situation applies in terms of the mandatory modulation in Pillar 2 that we will have to discuss some transitional arrangements in terms of the UK government's current commitments and that they are happy to do a bilateral arrangement with us for that transitional period. Quite how long that transitional period is will depend on where the cross-over between where we are going and the final mandatory modulation comes in.

Q312  Mr Mitchell: You will have to get money from Treasury for that?

Lord Whitty: At least on the agri-environment side we have got the money from the Treasury, subject to the pilot schemes coming good, and we would anticipate that we would have sufficient money in order to meet what is our current expected expenditure under the voluntary modulation. Clearly, as with everything else, if we are talking about additional money in this spending round over and above what is already there, that is more difficult, but we would have to talk priorities with the Treasury for a period beyond that.

Q313  Mr Mitchell: My guess would be there will be the usual Franco-German jack-up and it will end up with no substantial reform of the CAP. However, that is just an aside.

Lord Whitty: That may take hours.

Q314  Mr Mitchell: They will tell us we should have joined the euro and then we will have more influence on that kind of decision. That is the likely outcome. As you say, it could take hours. The Department point out in the evidence that payments under new optional measures would be competing with other rural development money - and you have just said that yourself - and other development options could provide more easily identifiable public benefits. If poultry welfare is not an "easily identifiable public benefit" why is the Government imposing higher welfare standards?

Lord Whitty: There is a public benefit in the sense that there is public concern about welfare of farmed animals and therefore something which enables the industry to meet those standards, either in terms of the initial upgrading or the longer term, would be desirable. On the other hand, it is slightly difficult to have a continuous basis of effectively using the taxpayers' money to subsidise producers for obeying the law. It is not something we normally do.

Q315  Mr Mitchell: It is something you have imposed.

Lord Whitty: Government imposes all law.

Q316  Mr Mitchell: Rightly in my view, you and the EU want to raise standards, but neither of you is prepared to help the industry to raise standards financially.

Lord Whitty: Well, there may be the possibility of some help. If you are saying should that be a permanent feature of long-term Pillar 2 expenditure then I think there is some difficulty, which is why we have to make choices here of defending the money to the poultry industry for meeting what are the legal standards at that point as against, say, paying money to farmers, landowners and rural enterprise of all sorts in terms of keeping up the quality of the landscape, creating new businesses, raising the standard of training and qualifications in rural areas and so forth, all of which are visible ways of keeping the rural economy going.

Q317  Mr Mitchell: Agreed that, but look at it the other way now, does the government have a responsibility for encouraging consumers to fulfil their responsibilities by paying more for food, in this case poultry and eggs, that achieve animal welfare improvements?

Lord Whitty: I think the government in terms of education probably does have some responsibility but the prime responsibility is bound to be borne by the trade itself in achieving high and recognisable assurance standards which, by and large, the egg sector and poultry industry have achieved, and by convincing consumers through the retail end that is what they want and they are prepared if necessary to pay a premium for it. There is a government role in that but it is not a government role that either subsidises the consumers or subsidises the industry for achieving it. It is more of an educational role.

Q318  Mr Mitchell: It gives us advice.

Lord Whitty: Gives advice, yes, and it is regrettably true that the general public probably believe advice from non-government agencies more than they believe it from government agencies.

Q319  Mr Mitchell: Does government believe its own advice? What part do minimum standards of animal welfare play in government procurement policies, in school meals purchase, and all the other government purchases? When you are asking people to look for best value, does best value include some recognition of the higher costs produced by higher animal welfare standards?

Lord Whitty: That is part of a clutch of issues that relate to sustainability of supply. We are currently engaged in trying to inculcate a recognition of that in public procurement of food. There are of course some constraints on that, both in terms of discrimination against other competitors and in terms of the cost restraints which the budgets impose on various public sector purchases but we are engaged, led by Defra, in a major effort with other government procurement agencies to look for sustainable solutions which at the very least do not of themselves create barriers to them being supplied locally by British food. We are engaged with the Prison Service, the MoD, schools and local authorities and the NHS in looking at ways in which we can better do that. It is an area that the government does have some responsibility for.

Q320  Mr Mitchell: That is "Buy British" rather than ---

Lord Whitty: It is "Buy High Welfare", some of which is British.

Q321  Mr Mitchell: Bio-sustainability.

Lord Whitty: Sustainability does include an animal welfare dimension.

Q322  Chairman: Can we move on to imports. It will not surprise you to hear that a common theme in all evidence from the egg and meat producers, from welfare organisations, from the trade unions has been that there are significantly lower costs in competing countries abroad and that is eroding the ability of the British industry to survive in the face of the welfare standards that it has. Do you take into account when you are framing new legislation for the poultry industry the very low costs that do exist abroad and sometimes low standards of health and safety and animal welfare?

Lord Whitty: The reason we regulate, whether at national or at European level, is primarily to protect the consumer or for animal welfare purposes; it is not for competitive purposes or driven by what the competitive position is either positively or negatively relative to other jurisdictions. Clearly the way in which that legislation is framed has to take into account the industry's anxieties about any costs or lower levels of standards which would affect our production. As I have said earlier, whilst the EU is able to exclude imports of food which are of lower public safety/human safety standards and to some extent animal health standards, they are not able to exclude them on grounds of animal welfare under WTO.

Q323  Chairman: One of the few guarantees you were willing to give a while ago was that imports would be subject to inspection and I would like to hear from you what steps are taken to ensure that imports from outside the EU do in fact meet United Kingdom and EU standards? What sanctions do you have available on the company or countries involved if you meet regular and widespread breaches?

Lord Whitty: As far as the safety standards are concerned, the EU has a responsibility for checking the production standards within the countries we are dealing with. Then when they come across the border in the United Kingdom, as I was saying earlier, they are checked, historically to 50 per cent of all consignments and currently to 100 per cent of all consignments from those suspect areas which are high risk. If they are discovered not to be meeting those standards then they are confiscated and further consignments from those areas banned. In some cases there may be prosecutions but, frankly, prosecutions are at a very low level. The real cost, however, is not the level of fine but the loss of the goods which were destined for the European market, and they would be confiscated and destroyed.

Mr Slade: At the importer's expense.

Q324  Mr Wiggin: How many countries have been banned now from importing to the UK?

Lord Whitty: I do not know the answer to that; it is locations rather than companies. In poultry specifically I do not know the answer to that.

Mr Slade: I do not know the answer to that, I am afraid.

Q325  Mr Wiggin: Would you let us know? If you say there is a sanction we ought to know how effective that is and how often that is used.

Mr Slade: It may be worth saying that at EU level and to a degree at national level we are following up with the countries concerned that there are problem consignments coming in. There has been quite a lot of work with the Thai authorities, less so with Brazil although we are increasing our liaison with the Brazilian authorities so they can go back to the source farmers and take appropriate action.

Q326  Mr Wiggin: When you identify what it is that makes Brazil able to compete, despite the huge distance they have to export their chicken you will see that they do not pay a minimum wage, they are able to feed genetically modified soya to their chickens and they have a natural advantage in terms of heat. GM is a government issue, the minimum wage is a government issue so apart from the actual government-influenced elements there is very little that makes it advantageous to grow chickens in Brazil as opposed to Britain.

Lord Whitty: I suppose that is broadly correct, yes.

Q327  Mr Wiggin: They are housed by and large, so it really is government influence that stops our production being competitive.

Mr Slade: They have a climatic advantage in respect of the production of soya and the availability of land.

Lord Whitty: Land is extremely cheap compared with European land prices.

Q328  Chairman: Sticking with imports, when the British retail consortium gave evidence to us they acknowledged how difficult it was to apply any meaningful inspection regime on their suppliers when their suppliers were located in, say, Brazil or Thailand. Is there anything the government can do to assist that process?

Lord Whitty: To assist whom in that process?

Q329  Chairman: To help reassure the British consumer about the standards that are in existence from major countries that export to us.

Lord Whitty: There are EU inspections, and the facilities which supply them in third countries are subject to the EU inspecting them and also to the negotiations with the authorities in those countries. The key guarantee in terms of safety to the consumer is that the consignments are being inspected at the border and there is a very heavy level of checking at the border. Clearly you can get, even from premises which have been checked, rogue consignments and therefore the fail-safe is that you check carefully.

Mr Slade: One the things we have got to be careful about is that a number of European operations now have bases in these third countries are building new factories that meet the spec and a product which meets the quality, Mr Wiggin was talking earlier about nitrofurans. I think from memory about 0.9, a fraction less, of all consignments that we have checked have shown up a problem, the majority last year, less so latterly now we have gone back to the authorities. We have got to be careful when we talk about third country imports being sub-standard that that is right. In many cases, it is not.

Q330  Chairman: I am now going to tempt you down the line which was the nemesis of your equivalent Minister in a previous administration by putting to you a point that the British Egg Industry Council put to us, which is that they say: "Imports of shell eggs from Spain which did not conform to the rigours standards demanded by the Lion Quality Scheme were at the centre of outbreaks of salmonella in the human population." They believe import of eggs and eggs products should be rigorously monitored. This was within the EU so what steps are the Government taking to ensure in a rigorous and convincing way that imported eggs are indeed safe?

Lord Whitty: Spanish egg production is supposed to be the same standard as the rest of the EU and where it has been found not to be those facilities have been revisited by the Spanish authorities and consignments have not gone into the food chain. At the end of last year it was Spanish eggs that were found to have the highest incidence of salmonella and the steps were taken with the Spanish authorities accordingly. I do not know if you have any more details we can helpfully give, I may have something in here.

Mr Slade: It was a type 14B that was found to be the problem in this outbreak last year and it was linked to imports of Spanish eggs. The Food Standards Agency took this up with the Spanish authorities. Around about the same time but not directly inspired by that incident, the Commission's Food and Veterinary Organisation was in Spain or had just finished carrying out in Spain a fairly rigorous inspection, and I believe a report has now gone forward to the Commission. This is a rolling programme country-by-country and in Spain it identified one or two issues that the Spanish have to address. Within this country responsibility on this side falls to the FSA and they are about to very shortly launch a survey of imported eggs from within the EU and elsewhere to look at issues such as salmonella.

Q331  Mr Mitchell: Why did we wait for British people to be poisoned before we did that?

Mr Slade: I do not think that is fair.

Q332  Mr Mitchell: But true.

Mr Slade: I think the idea of increased surveys has been on the cards for some time. It may well have accelerated the timetable for that but, as Lord Whitty said, the Spanish and others should have been operating to the same standards as the rest of us in the Community.

Q333  Mr Mitchell: If we do not check the imports, we do not know what proportion are infected with things like salmonella as compared to British production. Do we know?

Mr Slade: It is only latterly we are checking again on a random basis eggs produced in this country for salmonella.

Lord Whitty: In that period according to the FSA (which, as you know, is not my Department's responsibility) five per cent of the Spanish eggs tested proved to have salmonella whereas none of the British Lion ones did and none of the French ones did and none of the American ones did, and a very small proportion of non-Lion UK producers did. In other non-EU countries it was somewhat higher. As compared with the prevalence of salmonella a few years ago, this was a major result for food safety standards not only in the EU but throughout the world.

Q334  Mr Mitchell: We should create a new authority and put Mrs Curry in charge. Bring her back.

Lord Whitty: I could not possibly comment.

Chairman: The brand name "Curried Eggs" springs to mind!

Q335  Mr Wiggin: Just talking about the amount of stocking density in terms of chickens kept to produce meat for the table, I believe the Defra welfare recommendation is 34 kilograms per metres squared. Do you think the general public knows that the assured chicken production standards exceed those of the Defra Welfare Code, and what is your view on farm assurance standards set below those recommended government welfare codes?

Lord Whitty: I am not sure of the exact figures in that respect and I do not know if Andrew Slade can clarify that, but it is the case that the assurance standards in chicken, eggs and other areas are an industry responsibility, they are not a government responsibility. They do raise standards and give some assurance to consumers but they may not be optimum standards, they are the standards which the industry is prepared to work to. With a general approach to standards, following the Curry Commission and so forth, we wanted to bring clarity of the standards and higher awareness of the standards that have so far been achieved in many fields. It is certainly true in the egg field that the British public have recognised the Red Lion so much they had to bring it back when they dropped it, but in many of the other areas, including poultry meat, the public awareness of the standards and what the standards mean is much more limited, and that is one of the main conclusions from the Curry Commission. This is not Mrs Curry, nor indeed your Chairman but Sir Don Curry. We need to do a lot more work both on the standards and to generalise them and make sure that they are more understandable and accepted by the public as a whole. I think in terms of your question it is probably true that the public are not aware of that discrepancy but they are not aware of many other things relating to standards, including what they are intended to achieve. It is part of government policy to support the industry but allow the industry itself to deliver higher standards and more readily communicable standards.

Q336  Mr Wiggin: Do you think the government should play a statutory role in ensuring that farm assurance standards are adhered to?

Lord Whitty: Not in any direct sense, no. This was considered by the Curry Commission as to whether the government should in any sense be responsible for farm standards and, except in a few limited areas, that is not the case generally and there is no particularly good reason for it being so. In most industries the industry itself sets standards subject to government regulation on safety and so on. I think in a medium-term strategy there ought to be some synergy between what the trade standard is, what we expect out of the move to whole farm regulation and what farmers work to, and to that extent the regulatory side would support the standards side and vice versa, but we are not at that point yet and it would not be, even in those circumstances, a direct enforcement by the government of the standards.

Q337  Chairman: One of the standards, the Assured Chicken Poultry Production Standard - requires companies to demonstrate that feedstuffs do not contain antibiotic growth promoters. Earlier this month there were widespread press reports that these have been slipped in or reintroduced. Do you think that farm assurance schemes of this kind can in general be credible if that sort of thing is happening?

Lord Whitty: I saw the press reports, I am not aware they were talking about chicken which was allegedly to those standards. This is again FSA territory rather than Defra territory.

Mr Slade: Two antibiotic growth promoters are licensed for use in chickens - avilamycin is one and I am afraid I cannot remember what the other one is called. They are due to be phased out on an EU-wide basis in 2006, therefore there is nothing illegal about an assurance scheme having those within its framework. I recall from the press report that there was concern about whether they were being used for their correct purpose as opposed to some sort of health benefit, but there is some evidence from Denmark and other places that there is a sub-clinical health benefit from ACPs. I believe that it was because of the increase in instances of hock burn, which results from wet litter, that the ACP chairman decided he wanted to allow the use of ACPs within the scheme.

Q338  Chairman: The British Egg Industry Council put to us a concern that in recent decades there has been little recognition of cost of production during their negotiations with multiple retailers. Defra has made the right noises about ensuring that the prime producer gets a fairer share of the final retail cost at the check-out, as it were, but do you believe, Lord Whitty, that the cost of higher welfare standards that are imposed by legislation are borne unduly by farmers and producers rather than the whole supply chain?

Lord Whitty: I think if you take the food chain as a whole then the answer is almost certainly yes. In the particular case of production of eggs then of course the supply chain is much simpler than it is, for example, in red meat. Even in poultry it is relatively simple compared with red meat and the number of stages in the chain probably make the disadvantages to the farmer greater, so I would not necessarily say the sector we are discussing today was the worst sufferer from that. Nevertheless, as with everything else, for farmers or even large manufacturers the power of the supermarkets in particular as negotiating partners is very substantial and there are consequences of that in terms of the price that they can get and the contract conditions that they can get.

Q339  Chairman: How satisfied are you, moving on to another related area, with the operation of the voluntary Code of Practice on supermarket dealings with suppliers. The BPC were reluctant to give particular examples because of retaliatory action by supermarkets and they feared loss of business, but they say demands have intensified, in other words implying that this voluntary Code is not working.

Lord Whitty: As you know, the OFT are currently reviewing the Code. I am not sure that I am stating a government position here but my impression is that it is not working and it is not working partly because people are afraid to put their head above the parapet. This applies not only to farmers supplying directly or indirectly to supermarkets but also to some major companies who deal with supermarkets. The Code does require the complainant to be identified and indeed in some cases it would be difficult to examine the complaint where the complainant had not been identified because the complainant is worried about future delisting or other sanctions that might be imposed on them even if the finding of the OFT were to be in their favour. The OFT are looking at those issues now. I myself am having some discussions with the OFT as well as with various other parts of the food chain and the supermarkets themselves. I do not think the objective which came out of the Competition Authority's recommendation for the Code has yet been achieved.

Q340  Chairman: Would it make it more effective simply by making it mandatory and extending it beyond the big four?

Lord Whitty: I think some sort of Code should apply beyond the big four but the big four are the major players in the game and if you cannot get it right for the big four you are not going to get it right for the chain as a whole. The balance of power is significantly greater if you are dealing with somebody who has 20 per cent of the market than if you are dealing with somebody who has three per cent of the market.

Q341  Chairman: We believe you are the experts on the Integrated Pollution and Prevention and Control system and I am going to ask Bill to test that theory.

Lord Whitty: I do not know you told you that!

Q342  Mr Wiggin: All new livestock producers must apply for a permit by 31 January. The BPC reported that difficulties have arisen in obtaining the IPPC permit for new poultry operations and that despite collaboration with the Environment Agency, it knows of four applications and reports that "Each application has taken on average the equivalent of one person four months full time work estimated at approximately £11,500. In addition, for each site there have been costs of £10,000 for testing and surveys required by the Environment Agency. A site nitrate survey alone costs £5,000. On top of these costs there has been an application fee of £3,024 and an annual subsistence fee of £2,537, provided that the farm is complying with Standard Farming Rules. The total costs so far per PPC application are estimated at a staggering £27,000." How satisfied are you with the initial operation of the Standard Rules for IPPC?

Lord Whitty: There are two points. I am very satisfied with the rules of the IPPC. They set minimum standards for large operations. In terms of poultry we are only talking about operations those who are dealing with more than 40,000 places, which will be regulated in about four years' time. The registration process does of course apply to new plants ahead of that but it is something that has to be negotiated with the Environment Agency. Within the United Kingdom, of course, we are not gold-plating the IPPC Directive whereas a number of other European countries are in that their thresholds for operation in the poultry field are considerably lower - and I see from this that France is 20,000, Finland 10,000, Sweden 10,000 - so there is some gold-plating going on which the UK government is not engaging in.

Q343  Mr Wiggin: That must be a first.

Lord Whitty: Not at all, and we have just talked about it. If I can digress into a general attack on the alleged fact that the UK Government is always gold-plating. When you examine these issues, whether in this field or others, you often quite find a) that is not the case and b) some other countries are gold-plating in certain respects far more than we are. There is a second point however in what you are saying which is why is the cost of this on the applicant? The answer to that is that in general we think that the costs of regulation should be internalised and there are areas of agriculture where that is not yet by any means the case, but in the case of the Environment Agency, as with non-agricultural applicants, they do charge the cost to those whom they regulate in almost all areas of their operation. I do not recognise the particular figures to which you referred but I have no doubt that that reflects that overall approach to which the AS and many other regulators are subject. I agree that is not always the case in other countries.

Q344  Mr Wiggin: Given all the environmental, animal welfare and food safety regulations faced by the poultry industry, at what point does government say: "The industry is being regulated enough"?

Lord Whitty: There is no answer to that question. It is undoubtedly true that with environmental concerns, public health safety concerns and animal welfare concerns, there is an increasing societal requirement that we need to achieve higher standards in all of those fields. Whether one needs to achieve them through the type of regulation we in Europe currently engage in is entirely another matter. I think that much of the European regulation in this and other areas has been too prescriptive in the past and has related to methodology and production methods rather than outcomes. I think therefore there is a serious question which we in the European Union have to face which is what the nature of regulation. I think the need for some form of regulation or other form of control of these externalities of production is not likely to diminish but is likely to grow and we have to find better ways and less onerous and less distorting ways of delivering those objectives, which is why we are engaged in discussion on all farm plans where we are trying to gear Europe more to outcome-related regulation and why we are trying to insist that Europe always engages in regulatory impact assessments in the way we do here and we are trying improve the quality of ours here. There are lots of questions about the quality and delivery of regulation but I do not think the demand for regulation is going to go away.

Chairman: The question and the answer summarise the whole theme of what this inquiry has been about. We are now at the end of the final evidence session. I am grateful to colleagues for their time and energy and involving themselves in this inquiry, to our advisers and particularly to those who have given evidence and yourself, Lord Whitty and Mr Slade. Thank you very much indeed, and you will hear from us further. Thank you very much.