House of Commons - Environment, Food and Rural Affairs

Select Committee on Environment, Food and Rural Affairs Written Evidence

Supplementary memorandum submitted by Genesis Quality Assurance

1. Further to Genesis QA's previous submission to the Committee's inquiry into Information on Food, we were concerned to read in the uncorrected transcripts of oral evidence that the National Farmers' Union (NFU) had described Assured Food Standards (AFS) as an independent organisation and that this statement had not been challenged.

2. The NFU has claimed the Red Tractor logo (of which the NFU steadfastly retains ownership) is administered by an independent body on previous occasions, but on no sound basis.

3. The Committee may be aware that the current version of AFS (Assured Food Standards 2003) replaced the company originally given responsibility for the logo (Assured Food Standards Ltd.) because of criticism of the earlier company's lack of independence. This criticism came from various quarters, but most notably from the Government-appointed Policy Commission on the Future of Farming and Food, chaired by Sir Don Curry[36] and also Sir John Krebs, Chairman of the Food Standards Agency. [37]

4. Whilst there has been some change to the structure of AFS Ltd. in its transition to AFS 2003 it is not immediately apparent why the new body should be considered any more independent or impartial than the old.

(We would point out that impartiality is of equal, perhaps greater, importance to independence in a body seeking to fulfil the functions ascribed to AFS 2003.)

5. There are at least three substantive challenges to the validity of any claim to independence for AFS 2003:

It lacks structural and constitutional independence and retains a predomination of industry interests;

Despite requiring sector schemes to be accredited to EN 45011, AFS 2003 is not itself accredited to EN 45011 or subject to the same tight scrutiny;

Most of the personnel have simply switched from AFS Ltd. to AFS 2003.

6. To elaborate briefly on each of these points.

STRUCTURAL AND CONSTITUTIONAL INDEPENDENCE

6.1 AFS 2003 is a Private Limited Company owned, according to papers filed with Companies House, by two industry organisations, the National Farmers' Union and the British Retail Consortium.

6.2 The National Farmers' Union itself retains ownership of the Red Tractor logo and has only granted a five year licence to AFS 2003. There is no understanding to what happens after the five year period in terms of what costs are involved in future licensing or purchase of the logo. The logo is currently being promoted with the use of public grant monies and membership fees but is not owned by AFS 2003. Why do the National Farmers Union who are a private commercial membership company still retain commercial control over this logo if they have no intention of exploiting financial gains from the logo in the future ? This is wrong when others are paying of the promotion.

6.3 The Policy Commission on the Future of Farming and Food recommended that: "The Red Tractor and the standards underpinning it need to be owned by the whole food chain, and managed by Assured Food Standards on their behalf." As already stated the Policy Commission envisaged that AFS would be an independent organisation—it is hard to see how AFS 2003's current ownership is consistent with that aspiration. It would appear that the balance of power still rests heavily with industry bodies.

6.4 The Articles of Association for AFS 2003 do allow for independent representation on the Board of Directors, but only up to a maximum of six "Independent" Directors[38] on a possible Board of 18[39]. Even then, the first of the Independents is to be appointed by the owners of the company[40] (see paragraph 6.1 above). A quorum may include just one Independent Director, provided a third of the total Board is present. [41]

6.5 It is also the case that those with industry interests effectively have a veto over the main Board. Among the "Industry" Directors, as of right, sit the six Chairmen of individual "Sector Boards" (effectively assurance schemes in their own right and owned, almost exclusively, by industry bodies). In the event that the Sector Boards—which are responsible for setting standards within each sector—are in disagreement with the main Board, there must be a meeting between the Sector Board and the Directors of AFS 2003 to seek to resolve the issue. If they are unable to reach agreement the Sector Board can require the Directors to call a general meeting[42], thus handing control of the dispute back to the company's owners (see 6.1 above), thus, potentially, nullifying any scrutiny from Independent Directors.

6.6 The Articles of Association specify that, in total, there may be up to 10 Industry Directors[43]. In conjunction with the six permitted Independent Directors that would give a maximum Board of 16, plus the Chairman and the Chief Executive (effectively Managing Director) making 18. It is believed that the current Board consists of 13 Members of whom five would be defined as independent under AFS 2003's own criteria.

6.7 There is no requirement in the Articles of Association for the Chief Executive Officer to be Independent and the Board has the exclusive right to appoint any person it wishes. [44]

6.8 Responsibility for the appointment of the Chairman rests with the owners of the Company[45] and although precluded from employment within the food industry or food assurance sector during his/her tenure, Genesis QA believes that this is a less stringent requirement than would be needed to comply with EN45011. As drafted, the Articles of Association would not preclude a Chairman of AFS 2003 having interests in the food and farming sector nor would they require any "hygiene period" between leaving a position in the industry and taking up the Chairmanship.

ADHERENCE TO EN 45011

6.9 As the preceding point illustrates (see 6.7), although AFS 2003 requires other assurance schemes to be accredited to EN 45011, it is not itself subject or accredited to the same standard. As AFS is itself neither a Scheme or a Certification Body, it has no requirement to be accredited by the United Kingdom Accreditation Service (UKAS). This places Schemes and Certification Bodies in a difficult position. They are required to comply with EN 45011 themselves and are therefore inspected by and subject to the requirements of UKAS, but they are also subject to the requirements, rules and whims of AFS 2003. Because of the recommendations of the Policy Commission AFS 2003 has taken unto itself significant and dominant powers despite being merely a Private Company—as Ministers have recognised—and one that is owned and controlled by industry bodies.

6.10 There is a danger that this situation, of itself, places considerable stresses on schemes and bodies that are accredited to EN 45011. They have little or no control over the, sometimes extravagant, claims made for the Red Tractor by AFS 2003 and those responsible for the Red Tractor's promotion, but they do provide the mechanism which allows the Red Tractor mark to be used on the end product. UKAS inspections for EN 45011 focus on the mechanisms for delivering the standards within the individual schemes and food sectors, but not the use of the Red Tractor, the claims made for it and the way it is promoted. Those equally, if not more, important issues are covered by AFS 2003 as the licensing authority for the NFU's logo.

PERSONNEL

6.11 Even if the changes made to AFS Ltd. in developing the new AFS 2003 had been sufficient to deliver an independent and impartial organisation for the assurance sector, it would require a considerable leap of faith to believe that the AFS leopard had changed its spots. Most of the personnel, particularly those in key positions, have simply transferred across from the old organisation to the new. These were the same people who, as part of the old structure, made repeated public pronouncements about the independence of AFS Ltd. and who allowed statements and claims that were disproportionate to what the Red Tractor actually delivered to be widely disseminated. The FSA and the Policy Commission found that such high praise could not be justified and that its real benefits were rather more modest.

CONCLUSIONS

7. Genesis QA believes that our analysis, above, demonstrates that personnel from AFS Ltd, and AFS 2003 have simply sought to perpetuate a system dominated by industry interests. Some progress has been made. The AFS 2003 structure does at least now recognise that the Chairmen of Sector Boards, regardless of their individual stature, cannot be deemed Independent Directors of AFS 2003 given that they owe their positions on the AFS Board to their appointment as Chairmen of individual schemes owned by industry bodies. AFS personnel had previously argued against this case—indeed it had been one of the cornerstones on which they had based their claim for the independence of AFS Ltd. They, themselves, now seem to recognise that this was an untenable position, but seemingly only because others have repeatedly challenged the claimed independence of the organisation they built.

8. Changing the name of an organisation is remarkably easy: changing the culture within it remarkably hard. If key personnel believed and stated publicly that AFS Ltd. was independent, what should we believe now when they tell us that AFS 2003 is independent too? Independence and impartiality are essential to the role picked out for AFS 2003. If the culture within the organisation could not recognise their absence then, can we have any more confidence now?

July 2004