1 Controlling and sharing the costs
of a further epidemic
1. Compensation for slaughtered animals accounted
for £1.4 billion of the cost of the 2001 outbreak. The European
Commission disallowed some 60% of the UK's claim for reimbursement
of compensation costs, agreeing to pay only £254 million
of the £652 million claimed.[3]
The Commission considered that there had been poor control over
compensation arrangements and it estimated that payments to UK
farmers were around two to three times the true value of the animals
slaughtered. The Department's approach in 2001 had been based
on controlling overall costs by rapid eradication of the disease.
2. For the future, the Department intended to appoint
livestock valuers from an approved national list, paid by the
hour rather than as a percentage of the valuations, with four
"monitor" valuers to quality assure the valuers' work.
The Department had also issued detailed instructions on how valuations
should be undertaken. The Department was introducing standard
valuations and compensation for animals (including cattle) slaughtered
for other types of animal disease, but would need new primary
legislation to do so for Foot and Mouth. The Meat and Livestock
Commission would, however, disseminate market information to valuers
to inform the valuation of standard animals. The difficulties
of validating the reasonableness of valuations placed on pedigree
and other valuable animals remained.[4]
3. The Department no longer planned to pay compensation
for animals slaughtered on welfare grounds although it would pay
for the cost of disposal. It considered farmers to be responsible
for their animals, and for feeding them, and its current contingency
plan made provision for licensed movements to ease welfare problems.[5]
4. The European Commission had disallowed 80% of
UK expenditure on the cleansing and disinfection of farms affected
by the outbreak. In dealing with the 2001 outbreak the Department
could have required farmers to meet the cost of cleaning and disinfecting
farms. Instead, the Department reimbursed farmers at an average
cost of £30,000 a farm. This approach had led, in the Department's
view, to a thorough and consistent process, reducing the likelihood
of re-infection, and it remained current policy. Whether the cost
should be passed on to farmers would be part of its consultation
exercise on an animal disease levy.[6]
5. Four years after the end of the 2001 Foot and
Mouth epidemic, the Department had still not settled extended
contractual disputes with 76 contractors who had claimed some
£40 million. The poor financial controls over expenditure,
highlighted in our predecessors' Report, contributed to the Department's
difficulties in verifying sums claimed. The Department has put
in place new contracting arrangements for future outbreaks, including
contingency contracts and prearranged prices to reduce the scope
for contractual disputes.[7]
6. The Department confirmed its intention to bring
forward proposals for sharing the cost of outbreaks in its Animal
Health and Welfare Strategy published in 2004. It intended to
consider the issue as part of a more general review of the regulation
of charging in the farming sector more generally. Consultation
on the broader agenda would take place later in 2005. The Department
had been unsuccessful in its initial plans to link the amount
of compensation payable to the standards of biosecurity maintained
by the farmer. In the Department's view, biosecurity could not
be assessed objectively. The Department was, however, considering
proposals for an animal disease levy to share the future costs
of disease outbreaks with the industry. Standards of poor biosecurity
might be taken into account in such a scheme, for example through
lower charges for those farmers with better biosecurity.
3 The UK's claim of £960 million comprised £652
million in respect of compensation for slaughtered animals and
£308 million for other costs. Back
4
Qq 2-3, 50-52, 66-68 Back
5
Qq 39-40 Back
6
Qq 57-60, 108-109 Back
7
Qq 13, 48, 62-65 Back
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