Examination of Witnesses (Questions 1-19)
DEFRA AND NFU
23 FEBRUARY 2005
Q1 Chairman: Welcome to the Committee
of Public Accounts. Before I start the meeting I am afraid our
Committee Assistant, Leslie Young, is leaving us so I would like
to thank her on behalf of the Committee for all her sterling work
she has done. We are dealing today with a very serious subject,
the Foot and Mouth outbreak, applying the lessons. We are joined,
once again, by Sir Brian Bender, who is the Permanent Secretary
at the Department for the Environment, Food and Rural Affairs.
You are very welcome back to our Committee. Would you like to
introduce your colleagues, please.
Sir Brian Bender: Thank you, Chairman.
On my right is Dr Debby Reynolds who is Chief Veterinary Officer.
She took over the job in March of last year. On my left is Glenys
Stacey, who has been appointed to become the Chief Executive of
the State Veterinary Service. She is in post now and will become
the Chief Executive on 1 April.
Q2 Chairman: Thank you, Sir Brian.
Could I start by asking you about compensation. If you refer to
paragraphs 4.2 and 4.5, which you can find on pages 29 and 30,
you will recall that the Members of this Committee did issue a
Report in March 2003. We were very keen on using benchmarks for
compensation or typical market values to inform the valuers' decisions.
Now, why do your interim arrangements not accept this?
Sir Brian Bender: We have appointed
monitor valuers. We have a list of valuers, and the Report describes
that, which I will come back to if the Committee asks. On the
question of whether or not we have benchmarks, we are out to consultation
at the moment, and we are producing standard values for disease
in cattle where we do not need primary legislation, and that includes
TB and BSE. In the case of Foot and Mouth Disease, we would need
primary legislation to have standard compensation. In terms of
benchmarks, the fundamental issue is where there is no market,
such as for pedigree animals and some others, it is difficult
to identify, as the Report says, how we would have a benchmark.
Where there is a market, our intention is to ensure that the Meat
and Livestock Commission disseminates market information to the
valuers as effectively as possible.
Q3 Chairman: When you get your legislation
you are going to use benchmarks, are you not?
Sir Brian Bender: Our intention
is to have much more standard values and compensation values.
As I say, at the moment we are intending to implement it for the
cattle diseases which do not require primary legislation from
the end of this year.
Q4 Chairman: If you look at paragraph
20, which you can find on page six, which deals with the final
cost of the 2001 epidemic, you will see in the middle there that
the European Commission concluded ". . . that farmers were
compensated on average between two and three times the market
value". You know that you put in a claim for £960 million,
did you not?
Sir Brian Bender: Correct.
Q5 Chairman: Instead they agreed
to pay £350 million?
Sir Brian Bender: Correct.
Q6 Chairman: That is a £600
million loss to the British taxpayer. How can you explain the
slap in the face and this grotesque waste of public money?
Sir Brian Bender: There are a
number of aspects to that, Chairman, if I may. The first, as I
said at the hearing this Committee had in 2002, is that the decision
taken at the time was that rapid eradication of the disease, in
what was an unprecedented outbreak, was the best approach to keep
overall costs down. Secondly, in fact the Commission have always
historically been very strict on paying claims. For example, in
their classical swine fever outbreak in 1997 the Dutch received
only 28% of their claim.
Q7 Chairman: The fact that other
people may have also failed to do this job properly is no excuse,
surely. If you are going to apply for money to the Commission,
does it not make sense to at least carry out your compensation
arrangements in such a way that you might have some chance of
receiving compensation on the behalf of British taxpayers?
Sir Brian Bender: Chairman, again,
if I may, two aspects there. First of all, the Commission themselves
produced a table of alleged over-valuation of animals where our
alleged over-valuation of cattle was less than that in Ireland,
France and the Netherlands. Secondly, there are lessons from how
it applied last time.
Q8 Chairman: You are in favour of
benchmarks in comparing yourselves to other countries but not—
Sir Brian Bender: What I am trying
to say is that everybody—according to the Commission—over-valued.
However, the other point is there are plainly lessons in how we
applied financial controls last time. The Committee made some
telling points in its Report after the last hearing and we believe
we have learned those and are applying them looking forward.
Q9 Chairman: The head of the Civil
Service tells us that the new buzz word in Whitehall is project
management. Your project management was pretty weak here, in fact
you had virtually no contingency plan at all apparently.
Sir Brian Bender: Again, the Committee
had exhaustive discussion of this last time. We did have a contingency
plan. Clearly it was not adequate for what we had to face. We
believe, now, and the NAO Report says, that we are now much better
prepared—and I believe we are—in a number of areas,
including financial controls.
Q10 Chairman: Okay. Let us look at
the future. I want to ask you about sharing the cost of outbreaks.
This is dealt with in paragraph 4.9, which you will find on page
31. You may remember that you promised us that you would bring
forward proposals for sharing the cost of outbreaks in the summer
of 2003. It is now winter 2005—February 2005—why have
these proposals not seen the light of day?
Sir Brian Bender: The principle
was reconfirmed in the Animal Health and Welfare Strategy we published
last year. The policy decision that has been taken is that the
issue should be approached in the context of an overview of regulation
of charging in the farming sector, and not simply taken in isolation.
What we are doing is working on that overview and our intention
is to go out to consultation on it later this year.
Q11 Chairman: I want to deal now
with farmers who are guilty of poor husbandry. You can find reference
to this on pages 30 to 31 and paragraphs 4.6 to 4.8. Why do you
not take poor husbandry on the part of an individual farmer into
account in determining a levy on farmers?
Sir Brian Bender: As the Committee
may know, we tried to put a requirement in the Animal Health Act
to do this and because of the strong opposition at the time the
Government withdrew that provision. What we are looking at now
is, indeed, this issue in the context of the animal disease levy,
in other words whether there will be some form of shared cost
or, in terms of farm health planning, a lower charge for farmers
that have either worse biosecurity on the one hand or better biosecurity
on the other. It is on the table but not in the form that we were
looking at two or three years ago.
Q12 Chairman: Because, of course,
Mr Waugh's farm in Northumberland where the outbreak started,
it was a filthy farm, he got compensation, did he not?
Sir Brian Bender: He got compensation
for slaughtered animals because there was a legal requirement.
He also got a sentence from the courts.
Q13 Chairman: I want to ask you now
about the delay in settling contractors' invoices. You can find
reference to this at paragraph 21, page six. How can you justify
the fact, Sir Brian, that you still have not paid all your bills?
There is still £40 million outstanding.
Sir Brian Bender: Chairman, I
would justify it by virtue of my responsibility to protect taxpayers'
money because these are not agreed and accepted accounts where
the money is outstanding; these are disputed accounts and we have
had teams of accountants, lawyers, forensic people looking at
the quantum, looking at the volume and seeking to engage with
the individual people. There is a slight update on the data in
the Report. The number of contractors whose final settlement is
agreed has gone up from 73 to 76 in table 12. This position is
moving. There are a number of cases currently before the courts.
We do not wish to litigate if we can avoid it but the delay is
not a wish to delay making due payments, far from it; the delay
arises where we believe on the best advice we have there is not
sufficient evidence that the claim is justified and then we are
trying to resolve those cases individually.
Q14 Chairman: You will know, I am
sure we are agreed, one of the most distressing aspects of the
last outbreak were these mass pyres that we saw with the animals
being burnt. Can you give me an assurance now that in future you
will have sufficient incineration and landfill capacity?
Sir Brian Bender: The Government
has stated in its contingency plan it is not the intention to
use pyres again, except possibly in remote areas like the Highlands,
and it is not the intention to use mass burial sites. As the Report
describes, there is a hierarchy of disposal that begins with incineration
and rendering; for a larger outbreak we would need to use licensed
landfill.
Q15 Chairman: I think it is a very
brave pledge you are giving us but we take it.
Sir Brian Bender: It is the Government's
stated policy.
Chairman: It does not militate against
the fact it is a brave pledge.
Mr Steinberg: Brave Government.
Q16 Chairman: Lastly, disease control
strategies, you have got a cost-benefit analysis coming up soon,
have you not?
Sir Brian Bender: Correct.
Q17 Chairman: You have commissioned,
when will it be available please?
Sir Brian Bender: It will be available
to the Department in the next very few weeks. It will need to
be peer reviewed then but we intend to publish it in the light
of the peer review. I would not like to put a firm date on that,
but soon.
Q18 Chairman: Are you prepared to
share anything from that report about the impact and effectiveness
of a contiguous cull? Again, this was one of the most distressing
parts of the outbreak.
Sir Brian Bender: The cost-benefit
analysis is going to look at four different scenarios, one of
which would be a contiguous cull. There is a separate issue which
I think this Report—the NAO Report—refers to, of the
way different epidemiological experts have examined the data on
the 2001 outbreak and reached different views on the value of
a contiguous cull. The Government does not rule out a contiguous
cull in the future but it would not be the preferred approach.
The EU Directive requires slaughter on infected premises and dangerous
contacts, and then the next stage would be whether or not vaccination
can be part of the armoury.
Q19 Mrs Browning: Sir Brian, this
outbreak has cost £3 billion of which £1.4 billion has
been the cost of the animals which were culled during the outbreak.
For those of us who represent rural seats, such as mine in Devon,
we all know that there is a somewhat more unquantifiable cost
in terms of what this did to the farming community. Could I draw
your attention to page 14, which is right at the beginning of
the Report. Could I ask you, first, do you think Defra could have
been prevented this outbreak?
Sir Brian Bender: Prevented the
outbreak in 2001, no. The risk of diseased meat getting into the
country can never be reduced to zero. We believe that we have
improved control since then. The risk of the diseased meat reaching
animals, susceptible species, can never be reduced to zero; but
through things like the swill controls we believe we have reduced
that risk significantly. The risk of the disease being in a herd
and spreading depends on the biosecurity of farmers and also some
of the controls we have introduced, such as the six day standstill.
We believe we have seriously reduced the risks but I do not think
in 2001 we could have prevented it. I think it would be extremely
brave for me to sit before this Committee and say, "We would
prevent any outbreak in the future".
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