UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 141- iii

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Environment, Food and Rural Affairs Committee

Food contamination

Tuesday 11 June 2013

Mr David Heath AND Mr Andrew Rhodes

Evidence heard in Public Questions 626 – 701

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Oral Evidence

Taken before the Environment, Food and Rural Affairs Committee

on Tuesday 11 June 2013

Members present:

Miss Anne McIntosh (Chair)

Richard Drax

George Eustice

Barry Gardiner

Neil Parish

Ms Margaret Ritchie

________________

Examination of Witnesses

Witnesses: David Heath, CBE MP, Minister of State for Agriculture and Food, Department for Environment, Food and Rural Affairs, Mr Andrew Rhodes, Director of Operations, Food Standards Agency gave evidence.

Q626 Chair: Good afternoon and welcome, Minister. Just for the record, would you like to give your position and that of Mr Rhodes as well?

Mr Heath: David Heath, Minister of State at Defra, and Andrew Rhodes will introduce himself.

Andrew Rhodes: Director of Operations for the Food Standards Agency.

Q627 Chair: You are both very welcome. Thank you very much indeed for appearing before us as our conclusion to the inquiry into food contamination. Minister, what conclusion have you drawn on the results of the tests on products sold in the UK, on the instance of contamination seeming to be relatively low, but nevertheless concerning? Do you think we have worked through to the end of the crisis at this time?

Mr Heath: First of all, thank you for inviting me back. I think we do have a pretty good understanding now of the extent of the issue. I have to reiterate from the beginning that no level of contamination above the 1% threshold is acceptable, so let us put it in that context. We now have a very clear view about what is going on with beef products in the UK market, with an unprecedented level of testing. The most recent tests that we have published were those done by local authorities for the FSA and Defra on 23 April. There were 514 samples, and they showed that over 99% of the samples tested negative for horse DNA. That is consistent with the industry tests that we had previously; there were 5,340 tests over the six-week period up to 1 March, which was in the same area. We have continued with industry testing; we should have some more results later this week.

However, it is pretty clear that we know the size of the problem in this country. The Europe-wide survey during March has also been published by the European Commission, as you will be aware. They show a slightly higher level of contamination in European products, with about 4-5% of samples proving positive. That is higher but not of a different order to what we have seen in the UK.

Q628 Chair: Are you now in a position to say at what point the contamination entered into the food chain in this country?

Mr Heath: There is a great deal of investigation still going on. A lot of it is in police terms and with colleagues in other agencies across Europe. In terms of Britain, the City of London Police are co-ordinating the investigations across the country. I do not think I am in a position to give you a definitive answer to that at this stage. The police have accumulated a great deal of evidence, but these are complex cases. Something that has been very clearly demonstrated during the process of this investigation is the complexity of the supply chains across Europe and the number of different operatives, some of whom may be aware of what they were buying, while others may not have been. That is what we have to get to the bottom of.

Q629 Chair: I think it was the Secretary of State who said at the outset, in about February, that prosecutions would be brought. However, where there were arrests-and in fact the companies seem to have been given the all-clear-I understand that those are only still out on bail. Will they be cleared, and might they be compensated for false arrest?

Mr Heath: I really cannot comment on that.

Q630 Chair: Shall I ask Mr Rhodes to comment?

Mr Heath: Certainly Mr Rhodes may, but I suspect he may be in the same position. We would certainly like to see, if there is clear evidence, prosecutions mounted and hopefully convictions sought. However, that is obviously a matter for the police and for the courts and not for Government ministers.

Andrew Rhodes: There is not much I can add to that, as the Minister said. It would not be true to say that anyone who has been arrested has been cleared. It is an ongoing criminal investigation, and it will run its full course. They may be on police bail, but that is not unusual in such cases, and the police are continuing to convert intelligence into evidence. It will be for them to decide what steps they need to take next.

Q631 Chair: So there is concrete proof that they are responsible for contamination?

Andrew Rhodes: That is drawing a conclusion from the evidence, which I cannot do. It is for the police to decide whether they feel it is concrete proof, and then for the CPS to decide whether they believe that passes the bar for prosecution. That is quite rightly in the hands of the police and the Crown Prosecution Service, and they will work through that. As the Committee is aware, the Police Gold Group has been meeting regularly. We have been working with agencies across Europe, and that investigation is ongoing.

Q632 Chair: Do you have plans to prosecute suppliers of products contaminated with horsemeat offered for sale in the UK?

Andrew Rhodes: Again, that is part of the police investigation. It is not the FSA that would necessarily bring the prosecution.

Q633 Chair: But this is now June and some months have elapsed since the original contamination took place.

Andrew Rhodes: The FSA cannot directly influence the speed at which a police investigation goes. That is quite deliberate; the police have amassed quite a lot of evidence, which they have reviewed. It is for them to decide whether they feel that passes the bar for formal charges to be brought and for the CPS to believe they can prosecute or not. There is not much more I can say from the FSA on that, because it is a police matter.

Q634 Ms Ritchie: Minister, how do you account for the fact that the UK has the largest number of positive tests for bute across the EU? We understand that there are about 14 out of 16 across the EU.

Mr Heath: I think it is very difficult to give you a definitive answer and I am not going to try to. It may be associated with the level of testing that we have engaged in. As you will recall, once it was clear that we needed to have a review of the extent of potential bute contamination we instituted a testing regime for horses entering the food chain. No, I am not aware that other countries are testing at that level, and therefore I think it would be expected that we would get far more cases that we identified than those who are not doing testing.

Q635 Ms Ritchie: In a supplementary to that, have you or your officials collectively undertaken any further research with other European countries in relation to this issue of bute?

Mr Heath: I am not sure what you mean by "research".

Q636 Ms Ritchie: I mean explorations to find out what they have been doing.

Mr Heath: We have certainly been talking to other countries about their processes. It is probably important to underline the advice of the Chief Medical Officer on this, which is that the levels of bute contamination that have been found are very, very far below what, according to her advice, could possibly cause deleterious effects in human health terms. It is important that we get that message through. Having said that, the system ought to prevent bute getting into the human food chain via horsemeat and it clearly is failing to do that at the moment, which is one of the reasons why we are discussing with the European Commission and with other member states how we can improve the passport system, which is designed to prevent this from happening.

Q637 Ms Ritchie: In that respect, what is your timetable for establishing a single national horse passport issuing agency, in line with the Commission’s recommendations?

Mr Heath: It is the Commission’s timetable that is the crucial one. We would like that at the earlier opportunity. We are discussing with our colleagues in the Republic of Ireland, in particular, what they are doing. We can see that there are ways of implementing a passport issuing process with a database, which is common. We would certainly like to see a common database system for Ireland and for the United Kingdom, but across Europe as well. We hope to continue our discussions with the Commission to suggest that we can provide a solution to this particular problem.

Q638 Ms Ritchie: Have you any idea, or can you give an estimation, of when those discussions will be completed?

Mr Heath: Giving an estimate of when European discussions will be complete is always difficult. I can only tell you that we are pressing for an early resolution of this. There are a number of different areas that we are exploring. One is a new process for a single passport issuing authority for each member state. The second is a separate set of discussions where we are looking at the tripartite arrangement between ourselves, the Republic of Ireland and France, to deal with thoroughbred animals-sporting horses-to see whether there are any improvements that we need to make in that process. The third element is to at least recognise that this will have a knock-on effect for the various breed societies and studbooks around the country, which are currently passport issuing organisations. We do need a sense of the impact on them and therefore an impact assessment will be part of that process.

Q639 Chair: Could I just press you on that, Minister? There is an absolute ban on any horsemeat containing bute entering into the food chain. You could say that because we do more testing then that is why we have found more positive bute tests, but there must be concern about the number of positive tests that we have had.

Mr Heath: As I said earlier, any positive test means that somebody somewhere has not been sufficiently assiduous in maintaining a passport in the form in which it should be.

Q640 Chair: We obviously now know that some of this will have entered into the food chain.

Mr Heath: It will have, but again, I stress that the advice from the Chief Medical Officer is that that is very, very unlikely to have had any ill effects for any person eating that.

Chair: But it is still objectionable.

Mr Heath: Of course, yes.

Andrew Rhodes: Since we introduced the positive release system, nothing testing positive for phenylbutazone has entered the food chain produced in the UK. The current test positive rate that we are seeing is less than 2% of horses being presented for slaughter. None of them should be testing positive because none of them should be presented for slaughter. As the Minister has outlined, that means that someone along the line either the veterinarian or the owner has not properly signed that horse out of the human food chain. That is an issue that is being addressed. Just as a point of clarity, nothing that is slaughtered in the UK that is positive for phenylbutazone enters the food chain, because we have a positive release system. We are the only ones in Europe to operate such a system.

Q641 Chair: I do not know how much it must cost-you might like to give us a figure, Mr Rhodes-but the FSA continue to insist that veterinary attendance and supervision takes place in every UK abattoir throughout operations, but this did not help in this particular circumstance and it is not required under EU law. Can you tell the Committee what the actual cost of providing veterinary attendance at such abattoirs will be? Would the resources not have been better devoted to focusing on the areas that we know might lead to something more productive?

Andrew Rhodes: There are two separate points in your question. The first is it would not be correct to say that the FSA insists on veterinary presence; the EU regulations insist on veterinary presence. Those are the subject of debate in Europe and reform as we speak. The cost of the official controls delivery in approved meat premises is less than £50 million. I can provide the Committee with the exact figure based on last year’s accounts. That figure has reduced some 40% in recent years and has been the subject of a recent NAO efficiency study, which we at the FSA commissioned to look at the effectiveness under which we deliver those controls in terms of the value for money. That will shortly be presented at the open board to the FSA next month.

The controls themselves are mandated under European regulations, so we have to carry them out. In terms of veterinary medicines, that is not covered by the veterinary presence regulations. That is covered by controls on veterinary medicines themselves. That is not something that a vet in an abattoir can see or visually check. It is something that must be tested for. We introduced a testing regime for that above and beyond the existing veterinary medicines regime because the normal statutory surveillance identified a problem. We have taken the necessary steps to protect consumers. The two are quite separate issues in reality.

Q642 Chair: How would you respond to the charge that domestic production is perhaps over-regulated, whereas imported meat is under-regulated?

Andrew Rhodes: It depends where the meat is imported from. Any meat imported into the UK must have an equivalency agreement with the EU, which means it has been regulated to a very similar standard. The regulatory burden would be similar; I cannot say it is exact because it will not be exact. If it is meat that has come from elsewhere in Europe it has been regulated to exactly the same standard, as laid out by the European regulations.

Q643 Neil Parish: I have one final question on the horse passports. I think there are something like 70 agencies that can actually issue passports. It is not unusual for a horse to have more than one passport, and on one passport it will be clean, while on the another passport it will not be. Therefore, is there not a fair bit of urgency from the Government’s point of view to do something about this?

Mr Heath: We are very clear about the deficiencies that have been very clearly demonstrated. We are currently working within a European framework. Commissioner Borg has already indicated that he wishes to change that framework. We are very keen to see that change. We want to get the most workable thing emerging. The fact that we have I think 75 passport issuing organisations in this country underlines what a very convoluted system we have at the moment. We think that we can do far better than that; we think we can improve on both the quality and the information that passports can provide. Certainly we would like to see something akin to the sheep regime in terms of identification, which we can then take forward.

Q644 Neil Parish: Are you working towards one central database?

Mr Heath: What we do not want to see is a gap between the abolition of passport issuing organisations and the single database that will replace it, which we think would be more effective in the long run. Of course, this is very different from the old national equine database, which was simply an agglomeration of the different passport issuing organisations, and therefore did not take us very far forward. That is what we are discussing with our Irish colleagues particularly in the first instance, and with the French. Our Chief Veterinary Officer has been working very hard on that. We hope to then have proposals that we can take to the Commission, and say, "Here is something that we believe will work and is consistent with our arrangements, and which we can commend to the rest of the member states."

Q645 Neil Parish: Thank you. Going on to the EU market, nearly 5% of food samples were found to contain horsemeat across the EU. Given the size of the EU food market, this is quite alarming. Were you surprised by the scale and size of the horsemeat problem across Europe?

Mr Heath: Obviously Andrew can speak for himself. I can say that I was surprised at the scale. Again, without wishing to pre-empt police investigations, the suspicion remains that there was an element of organised crime involvement in this across Europe. I do not know that that is the case, and so that is purely conjecture.

Q646 Neil Parish: There is a view within the meat trade that a couple of small guys were picked upon and that the big boys and girls have largely got away with it. Now, this may or may not be fiction, but I believe that with the scale of horsemeat being 5% across the whole EU there were some big players involved, and yet there do not appear to be any big players in the frame. Is that fair, Minister?

Mr Heath: I do not think it is entirely fair, given that there were some very, very big players who were investigated in other member states and found to be wanting.

Q647 Neil Parish: What about here?

Mr Heath: Andrew will have to answer for his investigations. From my point of view-which is a lay point of view and not based on evidence that has evidential value-it does seem to me that there was deliberate fraud involved, that that was carried on a pan-European scale, and that we do still need to accumulate the evidence from across the European Union, not just in this country, as to exactly who was doing what and who was aware of what in the process. Andrew, you can speak about the investigations in this country.

Andrew Rhodes: There are quite a few points to unpick in there. In terms of the European level, I suppose it depends on the percentage level of contamination in the products themselves. Were we surprised? "Surprised" is perhaps the wrong word, but we were certainly very concerned. If you were to take production level contamination, we are talking about a magnifier effect. If we were to contaminate a tonne of beef, and then that is used in comminuted products, you would numerically expect quite a large number of end products to be affected. That does not mean the source contamination is all that large. We have to bear that in mind. We also have to think about the relative prevalence of horsemeat in those countries. There are countries in Europe where you would more likely see cross-contamination and levels of contamination of horsemeat, which may not be solely due to fraud or criminality.

There is an interesting debate as to whether the FSA has particularly focused on some small people versus some large people. We have not failed to investigate anyone at all, which has included the largest retailers, the largest businesses and the largest producers. In order for something to happen, there has to be evidence that they have actually done something wrong, and if there is evidence that they have done something wrong then they will be dealt with. If there is no evidence then they have not done anything wrong and therefore nothing will happen. In terms of these large companies, they have submitted huge numbers of test results to us, which have been assessed, as well as our own assessments of what they have done, including inspections and searches of premises where evidence has suggested that needs to happen. That is something that is ongoing, but so far nothing has emerged that suggests that these companies have necessarily done anything wrong.

Q648 Neil Parish: I have one final question. There seems to be quite a lot of horsemeat missing from the amount of horses slaughtered compared to the amount of horsemeat that is being traded. Have you any ideas about where this horsemeat is?

Andrew Rhodes: It could be any number of destinations. It is quite likely to be in pet food or disposed of. The demand for horsemeat exists mostly in continental Europe.

Q649 Neil Parish: I will interrupt you there. Surely if the companies had this meat and it was going into pet food they would be immediately declaring that. Therefore, what is happening to it? What has happened to all this undeclared horsemeat?

Andrew Rhodes: The horsemeat that has been slaughtered in the UK has almost exclusively been exported. We obviously cannot physically see what happens to it after that because it is outside of our borders. If there is insufficient demand for it, it will be channelled into other products as well. That is as much as we can say. The question that you are trying to get to is: has any surplus horsemeat been used illegitimately? That is part of the European investigations. In terms of what we found in the UK, with the exception of some investigations-which the Committee is aware of and knows I cannot comment on-we found the horsemeat being pretty much exclusively exported, particularly to France, Belgium, parts of northern Italy and the Netherlands. All of the authorities in those countries, as we know, are investigating what is happening generally with horsemeat. That is where the demand to eat it is.

Q650 Chair: You seem remarkably complacent, Mr Rhodes. There is nothing to reassure us in the Committee or the consumer that this horsemeat did not reemerge in processed food. For the Commission to say that they do believe that this is the result-as the Minister has said-of criminal activity, it seems extraordinary that there has not been a high level of prosecutions and people being brought to account.

Andrew Rhodes: The question I was answering is: what happens to the horsemeat? I have given the best explanation I can.

Q651 Chair: Let us do it in stages. I am going to turn to Mr Gardiner in a moment. Were you not alarmed that this huge amount of horsemeat that seems to be unaccounted for going to mainland Europe could have come back in processed form, given that we know what has been happening since March last year?

Andrew Rhodes: The investigations we have seen so far have not suggested that UK horsemeat has come back in processed form, but those investigations in Europe are not complete. What we have seen so far, in terms of all the traceability exercises that we have conducted with others across Europe, is that the origin of the meat appears to be legitimately slaughtered horses in approved premises in Eastern Europe, which has then made its way across Europe and at some point has been used fraudulently.

Q652 Chair: You did say earlier that it is a requirement of EU law to have vets placed at slaughterhouses throughout the EU.

Andrew Rhodes: That is right, yes.

Q653 Chair: Can you confidently say today that Spanish vets were at Spanish slaughterhouses and French vets were at French slaughterhouses, where horses have been slaughtered, and followed the process of where the carcasses went after slaughter?

Andrew Rhodes: Those are two different questions. Yes, they will have to have a veterinary presence as mandated by European regulations.

Q654 Chair: There is a difference between a requirement and it actually happening. We are going to come on to the review that has just been concluded and the new review that has been announced, which talks about better co-operation with other authorities. Presumably you will be in a position to say, because you will speak to FSA Ireland and you will speak now to your counterparts in other countries. Can you say, hand-on-heart, that these checks have gone on in other slaughterhouses across Europe, where these horses have been slaughtered?

Andrew Rhodes: The second half of my answer was that the Food and Veterinary Office, on behalf of the European Commission, independently audits these countries and publishes the audit reports. I have absolutely no reason to belief that the veterinary presence has not taken place; I have not seen any evidence that that is the case. The issue we have here is that animals must be supervised in terms of animal welfare, their fitness to enter the food chain, and hygiene production. After the slaughterhouse process, the receiving company must have backwards traceability as to where their products have come from. That is not part of the veterinary supervision regime. Where there is production going on, in terms of, "I’m taking some meat, I’m turning it into another product," that is completely different to the slaughterhouse environment. The question you asked me is about veterinary supervision, which is to do with slaughter. The other half of the question, I think you were asking me, is to do with production. Those are actually regulated in two different ways.

Chair: That is helpful.

Q655 Barry Gardiner: Minister, you have rightly said at the beginning that it was only conjecture, and I do not want to lead you down the road of conjecture. The EU Commission did tell us, however, that they believed that the contamination was the result of fraud and not of inadequate legislation. Let us deal with what is officially in the public domain. I do not know whether you have read it, but you may well be aware that there was a report by the Irish Department of Agriculture in March of this year on equine DNA. In paragraph 3.2.4. of that report they talked about the consignment of meat that had been rejected by Rangeland and come to Freeza Meats. We dealt with that in our last oral evidence session-or perhaps it was the one before.

The next paragraph talks about a different package of horsemeat that was rejected-again, by Rangeland-and it states very clearly that it came from another UK trader, not from Flexi Foods, and it was destined for the Netherlands. Now, it is believed that that UK trader was Norwest, where Ray MacSharry Jr has an interest, and that the holding transhipment company in the UK was Dino’s. The destination in the Netherlands was Selton, the Dutch launderer where Polish workers have already gone on record as saying that they have been mislabelling product there and handling horse for the past five years. Sorry, they did not say "mislabelling"; they only said handling and mixing up horse and beef for the past five years. That is what is there. What I am trying to get at here is the complexity of the inter-country transfer that is going on here.

Mr Heath: Precisely so.

Q656 Barry Gardiner: And the way in which we can begin to get a grip on European regulations that can control that. It looks as if, in this particular instance, documented by the Irish Ministry of Agriculture, the modus operandi was that Irish horsemeat came up over the border into Northern Ireland. It was mixed with horse and beef that had come in from Europe. It got mixed and relabelled with fake labels, which we know had been the speciality of one of our previous witnesses back in the 80s, Jim Fairbairn. It looks as if that was mixed at Freeza Meats and then repackaged, relabelled, and shipped back out over the border to ABP and to Rangeland. Now, given the complexity of that supply and repackaging and relabelling operation, when we know that labels have been found that were fake labels-the Polish authorities have already said that in their reports-what European regulation can be put into place that is going to cut through that sort of complex fraudulent activity?

Mr Heath: I think that is a very good question. You have set out very clearly the complexity of what has been going on and the difficulties that are attendant on that. One of the things that has been abundantly clear since we started looking at this in detail is exactly that: the supply chains are very complex, even in entirely legitimate operations. That is not to say that every complex supply chain is fraudulent. It is not, but even those that are perfectly legitimate are very complex. This is why we have welcomed Commissioner Borg’s five point plan, which he has brought forward, for hopefully addressing some of these issues. We want to see progress on all of those points, and we have asked for this to be on the agenda, yet again, for the next Council of Ministers-not the June one, which I am afraid will be entirely taken up with CAP reform for obvious reasons, but the July meeting-and we will be pressing for effective action in those areas.

Now, there is an additional line of work, which I think is important to the Committee, which is the review that we have commissioned. Professor Elliott has been asked to lead the review for us, which has quite a wide brief. Not, I fear, to set regulation for the whole of Europe-I think that would be beyond the scope of what we can expect-but certainly advising both my Department and the Department of Health on where there are inadequacies in the present arrangement, if indeed there are, and how we can address them. It is a very wideranging brief that has been given to that review.

Q657 Chair: That is a partial answer, but I think we are interested in the EU regulations, if you could address that aspect?

Mr Heath: To sum up, we are, to an extent, one voice amongst many on this, but I think we are the leading voice amongst many in saying that we need to have better controls at a European level. I think Commissioner Borg appreciates that there is a need for action. What we will be asking for now is for the five point plan to be given some substance in terms of how it deals with exactly the sort of cases that you are putting forward, Mr Gardiner.

Q658 Barry Gardiner: Mr Rhodes, clearly the FSA’s expertise is in foods, sampling and the risks relating to that, but I am wondering what you do in terms of assessing risk that might look at the connections between companies. Let me, again, give you an example in the public domain. If you go on the site Duedil, which, I presume, is short for due diligence, you can pull up connections between Norwest and a circular network of companies that are owned by the same beneficial owner, Norwest, via Ireland: Claddagh Foods, Celtic Foods Trading House-that is a "u", not an "r". You can go right back and trace those connections to Hibernia Foods and to Navona, which is the same name as a company set up by Goodman back in the 1980s. They are still connected in. There are 288 companies owned or with some shareholding ownership by Ray MacSharry Jr from Norwest.

What sort of risk analysis are you doing by examining the corporate structures and the links between these companies to look at the beneficial ownerships involved? To my mind, they gave as clear a picture of who is doing what to whom and for whom as any investigation into the sampling of meat that you can carry out.

Andrew Rhodes: The nub of your question is a key point about who owns which companies, why, and how they behave. We have seen growth in the privateequity ownership of food companies within the UK. That does not necessarily translate into something, but it does make us ask questions as to how these companies may behave and how they are steered.

Q659 Barry Gardiner: Can I ask you to be specific on that? Have you made those investigations, therefore, into the company structures and the ownerships? Have you done that due diligence? Were you aware that Ray MacSharry Jr had a beneficial interest in 288 directorships?

Andrew Rhodes: I am not personally aware of one you have cited there. That does not mean that detail is not recorded in the formal investigation, however. I would not know every single element of it.

Our role is to ensure hygiene and physical standards. In cases where we have reason to believe there is a risk, we may well investigate further into the companies and look at linkage, particularly if we are tracing a product or we are interested in contamination. That would not mean we would profile the ownership and directorship of every single company that we are involved in regulating. We regulate 347 slaughterhouses and over 1,000 cutting plants. We would not necessarily profile the ownership of all of those companies.

Q660 Barry Gardiner: Mr Rhodes, you said that you thought the surplus was going into pet food. Have you ever seen a label on a can of pet food that said anything other than, "This is beef," "This is lamb," "This is chicken," or, "This is turkey"? Have you ever seen one that says "horse"? Because I have not. If they are not labelling it as such, what confidence do you have that this is where it is going? If it is, is this not, equally, fraud? If I object to eating horse, I might also object to feeding it to my dog.

Andrew Rhodes: I was referring to Europe; I was not referring to the UK. My answer to the earlier question was merely that this was one of the places the horsemeat can go to, if it is not going into the human food chain. I am not saying that all of it goes into pet food. However, horsemeat sometimes is used in pet food, but generally less so in the UK, because pet owners are often squeamish about eating horsemeat themselves and they do not always want to feed it to their cats and dogs either.

Q661 Barry Gardiner: Finally, Mr Heath, again specifically referring to the issue of fraud, you will recall that, in his address to the Dáil Éireann, Minister Coveney referred to the company B&F Meats and their relationship with the Czech company. He said to the Dáil Éireann that it was not fraud to have labelled this as beef, because both parties knew it was horsemeat and indeed the Czechs had requested that it should be horsemeat, although it should be labelled as beef.

Are you as astonished as I am that this was an excuse for not prosecuting for fraud? Certainly, under English law-and, I presume, under Irish law-it would constitute conspiracy to defraud.

Mr Heath: It is a perfectly reasonable hypothesis to say that, under English law, it would indeed be that. I am not an expert on either the law of the Republic of Ireland or the Czech Republic.

Barry Gardiner: You do not wish to conjecture.

Mr Heath: I would not like to speculate on whether it comprises an offence under either of those jurisdictions.

Q662 Barry Gardiner: If it does constitute an offence in law, would you be surprised?

Mr Heath: If their laws are in any way consistent with the English common law system, I would then be surprised, but they may not be.

Barry Gardiner: Of course, you are absolutely right.

Q663 Chair: Could you clarify, Minister, one thing you said in response to Mr Gardiner? Is the May package of proposals to improve and increase testing and traceability operational, or is that something that will be adopted in July?

Mr Heath: Do you mean the European fivepoint plan?

Chair: Yes.

Mr Heath: Parts of it are in motion. For instance, EUwide testing has been done as a one-off. We are urging that it be repeated later in the year so that we have a clearer picture of what is happening. Some parts of this are things that will continue to be worked on, where the Commission have not yet produced concrete proposals. Some of it is work that is already in progress in other forms: for instance, countryoforigin labelling for meat products is already a matter that the Commission is looking at. We have asked for that work to be accelerated, so that we have a clearer view of what is going to emerge.

Q664 Chair: Do you think the package addresses Mr Gardiner’s issue, that it will prevent future contamination and lead to better traceability?

Mr Heath: I do not honestly think that I can make that assessment until I see exactly what emerges from the discussions. I certainly hope that it will and I hope that if we can influence the decision of the Commission towards greater rigour across member states, it would be to our advantage. I certainly hope that Professor Elliott’s review will inform us in what we should not only be asking our authorities to do, but others as well.

Q665 George Eustice: I wanted to dig down a bit more, because it is going to be important to learn the lessons from this review. Could you tell us a little bit more about the terms of reference? You started to talk about this. What areas is it going to look at, specifically in terms of the supply chain and the potential weaknesses and vulnerabilities of it?

Mr Heath: As a matter of fact, we provided very wide terms of reference. I can provide the Committee, if it has not already had it, with a written copy of the terms of reference.

Perhaps I can give the headlines: "To provide advice to the Secretary of States"-that is, of the two Departments-"on any inherent weaknesses in the current regulatory/enforcement framework that leave foodsupply networks vulnerable to fraudulent activity"; "how best to support consumer confidence"; "the audit, testing and other verification within supply networks by regulatory and enforcement authorities"; the role and responsibilities of food businesses including manufacturers and caterers; any changes that we need to make in the regulatory framework, the legal background and how we work with industry in order to press for those changes; and how we might work within Europe with other member states to improve things across the board.

It is a very wideranging review. We have asked for interim findings, if at all possible, by December, because we think there is a degree of urgency, but we expect the full report next year.

Q666 George Eustice: Will it also cover the role and remit of the FSA?

Mr Heath: Yes, it will. It will not entirely replicate the Troop review, with which you will be familiar and which has already taken place, but it will certainly look at how the FSA fits into the regulatory framework and any advice that we should be giving to the FSA. That is one of the reasons why it is a joint review to the Secretaries of State for Defra and for the Department of Health.

Q667 George Eustice: You talked about the possible need for additional regulation, which the EU might need to consider. Given that we have a single market and that you cannot stop the movement of these goods, what has really happened here is that there was a weak point somewhere in terms of enforcement. Do you think it is more a problem of enforcement, rather than a lack of regulation?

Mr Heath: I do not want to pre-empt the review, because, as we have already said in your Committee, as recognised, this is an extremely complex area. Certainly, I will say that the two go together: you must have adequate regulation. The initial findings-Andrew may correct me, if I have misinterpreted this-of the Troop review were that there was not a failure of the regulatory framework, but that you need to be able to enforce it not only within this country, but elsewhere.

Q668 George Eustice: Mr Gardiner hinted at this very complex and long supply chain. A lot of the evidence we have had is that a shorter supply chain would be easier to enforce and would improve things. Do you think there is a bit of a danger that the whole traceability system has lulled purchasers and tracers into a false sense of security: they believe what is on a label, rather than actually going to trusted sources, the people they actually know where the meat has come from and have seen the cattle from which the meat was produced?

Mr Heath: I am going to give a subjective view in response to that. In my discussions with major retailers, this has actually been an alarm call in terms of what they are currently doing. They are recognising that there is consumer demand for bettertested provenance, which is also influencing their behaviour. That is not to say there will not be circuitous and complex supply chains in some areas, but there is a view, certainly amongst the bigger retailers and the major processors and catering companies, that if they can simplify their supply chains they would perhaps be better placed to be able to give the assurances in terms of what is on the plate, which they are, actually, legally required to do.

Q669 Richard Drax: Lord Rooker, who is currently Chair of FSA, told this Committee he thought the Scottish model was, "openly and transparently non-conflicted, because it is not also responsible for the economic sponsorship of the food industry." The Scottish Government intends to create a new food body, which will be responsible for food safety, in addition to nutrition and labelling. What further consideration have you given to this option for England?

Mr Heath: Can I be clear? The reason we have the Food Standards Agency is precisely to avoid that potential conflict, which was evident in previous historical episodes: to take the Departmental interest in producer activity away from the regulatory functions of the FSA. The FSA is answerable to the Department of Health for the very good reason of that separation. In terms of operational control we do already have that separation in English terms.

Q670 Richard Drax: The next question takes this on a little bit further; perhaps you have answered it. Do you think the FSA should have greater independence from the Government, so there can be no danger it could be seen as working to protect the interests of UK food producers? The example we have is that it has been argued that the FSAI, for example, has attempted to protect the Irish beef industry. I take it from your previous answer you do not think it needs any further independence.

Mr Heath: Certainly I would argue that the previous Government that took that decision and made that separation was right to do so, because that level of separation is important. Clearly, there is a potential conflict in the mind of any Minister who had responsibility for both sides at the same time. That may be the case in Ireland; it is not for me to comment on arrangements in the Republic of Ireland. The FSA value their operational independence, not only from my Department, but, because of the way they are set up in operational terms, from the Department of Health as well. Andrew, you might want to comment on that.

Andrew Rhodes: I would not say anything on the past few questions; it would be wrong for me to do so. Being independent of the two main Departments but reporting through them to Parliament, the FSA does everything in open session in order to demonstrate openness and transparency and show that it is not doing anything at the behest of industry. We publish everything: we publish all our consultation responses; we publish all our policy papers; and we hold all our meetings in public. That is all to the same end your question is getting at, which is whether or not the FSA is being unduly influenced by industry or is in any way conflicted. That is the way the FSA does business and that is the way it has done business all through this. The difficulty in this incident, of course, is that we cannot comment on operational matters in terms of investigations, which leads people to ask questions, as were asked earlier, as to whether we have gone after the right people, which is a slightly more difficult issue.

Q671 Richard Drax: Minister, bearing in mind that all of this happened, are you happy with the position that the Government and the FSA are in at this stage? I mean with hindsight, which is a wonderful thing to have, I accept.

Mr Heath: I am still absolutely clear in terms of the machinery of Government that you have a separation between the implementation-which is the responsibility of the FSA, the training centres and officers in local authorities-and the broad policy on food labelling, which falls within my Department or, in terms of the nutrition elements, within the Department of Health.

The Troop review suggested that this was not always understood fully by some staff within the Agency and some outside bodies. If so, there is a communications issue that we need to address; I accept that. However, it is not unusual for agencies in Government to have separate responsibility for executive actions away from the policy determinations, which remain with Ministers. It is a perfectly appropriate model.

Of course, this is one of the things Professor Elliott and his team may have comments on in due course. I do not want to pre-empt the review that will take place. I simply say that I am certainly comfortable with that separation as it currently is.

Q672 Barry Gardiner: Mr Rhodes, who do you work for?

Andrew Rhodes: I work for the Food Standards Agency.

Q673 Barry Gardiner: Who pays your salary at the end of each month?

Andrew Rhodes: The Food Standards Agency does.

Barry Gardiner: It is not the Government.

Andrew Rhodes: The Food Standards Agency is a Government Department.

Q674 Barry Gardiner: Minister, perhaps the issue is less the conflict with the FSA as the conflict with the Government. In Scotland the responsibility for policy on labelling-and policy in general, actually-is the domain of the Food Standards Agency in Scotland. There is no suggestion that the Department that is responsible for setting policy on labelling is also the Department that is responsible for advocating for the industry, as there could be in England. Surely, that is the issue here, is it not? There is still this lingering perception that there could be-I am not saying there is or that it has made anything that the Government has done improper-a conflict of interest here between your role in setting labelling policy and your role in advocating for the industry. We know that one of the key elements of this fraud has been mislabelling.

Mr Heath: I do not accept that. Ministers very often have a responsibility for setting policy for regulation across industries for which they have other responsibilities. I can look at a large number of Departments of State where that is the case. There is clearly logic in it. I am here, now, defending the machinery of Government changes that were not my Department’s responsibility, of course. However, there is a clear argument for the Ministers who need to go and have a view on these matters at European level-and who need to agree or not agree to proposals from the European Commission-having a handle on the policy formation.

Yes, of course those who wish to suggest inappropriate linkages will do so, but it is a matter of fact that this is the case. That being the case, it is far better for the policy advice, the Civil Service advice, to be given directly to Ministers, rather than mediated through the Agency. That is my view; clearly, you could construct it in a different way. Indeed, it was, at one point, constructed in a different way, but I do not see any evidence that it actually produced a different outcome. It just provided more ponderous Civil Service machinery in order to come to the same point.

Q675 Chair: If you look at the FSA as being an independent regulator-perhaps the most unhappy moment of any independent regulator was when the last Government threw the independent Rail Regulator out the window-like other regulators such as Ofgem and Ofwat, they are truly independent and are one step, physically, removed from the Department. I note that it is a health expert you have appointed to do the strategic review into the FSA. Obviously, there are two Departments on the review. Who will look at the food and non-health aspects?

Mr Heath: I am confident the review team will cover all aspects. Professor Elliott is a good candidate-I hope the Committee would agree-to marshal those arguments. Coming back to the point you make: yes, you have arm’s length agencies who are responsible for actually running the operation of a system, but it is not a rail regulator that determines the legal framework within which they are operating. It is Ministers in Parliament.

Q676 Chair: You saw the conclusions of our first report; they speak for themselves. We were quite blunt: we did say the FSA in its present form did not appear fit for purpose. Surely, the Department must have given some thought-and had discussions with the Department of Health, as well-as to whether or not this actually is a good moment to look at the FSA and whether or not it should be a bluesky thinking, standalone regulator, the policeman.

Mr Heath: That is something I would certainly expect Professor Elliott and his team to look at. As I say, they have a very wide remit. The only thing they are actually excluded from looking at, in the terms of reference, is the matter we were talking about earlier, Mr Parish: the horse passports and equinedatabase issue.

Chair: We will move on to the powers of the FSA.

Q677 Neil Parish: The Chair has talked about the report that we did. One of the recommendations was that the FSA be given statutory powers to require testing by retailers and local authorities. What further consideration have you given to that idea?

Mr Heath: Can I ask Mr Rhodes to answer, in the first instance, so that he can explain where we are at the moment?

Andrew Rhodes: Certainly. Professor Pat Troop outlined her initial findings last week to the FSA board in open session. She will publish her report later this month. One of the things that she has identified in her review is exactly the issue you have raised, which is whether or not the FSA should have powers to compel businesses-she did not restrict it to retailers-to test products or to share their test findings. Most of them do a huge amount of testing anyway, but they are not compelled to share that information with us. She has raised that, amongst other things, in relation to the powers the FSA does or does not have.

Q678 Neil Parish: Quite a lot of testing takes place at the moment but those companies actually keep that private to themselves, do they?

Andrew Rhodes: It is their testing; it is part of what they do for the microbiological and pathogenic assessments of their products to make sure that they are safe and they are what they are supposed to be. They carry out a tremendous amount of testing every year on their product before they ever reach sale.

Mr Heath: That is, of course, in line with their legal responsibilities to their consumers. One would expect them to be doing that. One of the early issues that we had to face, in dealing with this matter, was bringing in the major companies and saying, "Look: you now have to share these results, because we need to know exactly what is happening." They were not overly reluctant. There was an initial, "Well, we do not do that." I said, "Sorry, you have to do it, because we need this." They were very happy to co-operate and I applaud them for the degree of their co-operation.

Q679 Neil Parish: That leads me on to my next question. Retailers are rightly responsible for ensuring their products are accurately labelled and for checking the assurances of their suppliers. In this case, they have failed. How can the system be made more effective, especially in a processed product?

Mr Heath: You can answer that on several different levels. What I have been trying to impress upon both retailers and processors is that they need to be able to show that at each stage they have taken the appropriate level of care to know where things have come from. That does not, I am afraid, prevent them from being victims of fraudulent mislabelling. That is where the regulatory process, the testing regime, comes in, which has to be intelligence-based if it is to be cost-effective. Otherwise, you are wasting a huge amount of money for no benefit. It has to be intelligence-based, but it certainly has to be accurate and effective. It needs to be effective not just in this country but across the whole of Europe, which is what we are trying to achieve.

Q680 Neil Parish: Are you looking at the labelling of processed products? I have said this for many years: many of those labels do more to confuse than they do to enlighten. Therefore, they are, "Product of more than one country", or, "Product of the EU", or, "Processed in the UK and product of the EU". It does not really give us any real idea of exactly where those products are coming from. Do you not think this is an opportunity to do more about it?

Mr Heath: Not only is it an opportunity, it is something that is in process through the countryoforigin labelling proposals that are going through the Commission at the moment. As a Government, we are very clear that we believe that labelling should be clear and honest and that it should actually inform the consumer, rather than confuse-exactly as you have said. Obviously, there is a trade-off between the mountain of information you put on a label and the extent to which that helps the consumer make an informed choice. We think, however, that origin is a key part of that. This is relatively simple, when you are talking about a joint of meat. It is much more complex when you are dealing with a processed product, which may have many constituent parts from many different places.

There are a number of things that we are currently looking at and discussing with the Commission and processed meat products is certainly one of them. We are looking, for instance, at how you helpfully label additives to meat: whether water has been added, for instance, or protein from a different species to the one that is the obvious source of the meat. There is a great deal of complexity in this; it is about getting the balance right so that you have appropriate and useful labelling without providing an absolute nightmare either for the consumer or, indeed, for the producer as well.

Q681 Neil Parish: The most major retailer is very keen to have all products from the British Isles, which will include the Republic of Ireland. If that is the case, they will have to have in place a very robust-

Mr Heath: I am not sure the Republic of Ireland identify themselves as a British Isle.

Neil Parish: I think you will find they are. If you look at the-

Mr Heath: We see it that way.

Q682 Neil Parish: If a retailer is convinced that they want to make sure a product comes from the British Isles, are you sure that there is a robust system in place that this will be the case?

Mr Heath: We are working on this with the Commission. Mr Parish, you need to have a discussion with your neighbour in the Committee as to exactly what is the appropriate nomenclature.

Q683 Chair: We will let them have a little dialogue. Do you think, Minister, the Government should have a greater oversight or monitoring role of the food industry?

Mr Heath: It depends how you define Government in these terms. It is very important that we have the independent regulator that we have doing most of that work, and that local authorities play the part that they are required to play in this, as well. If you are asking whether or not Defra should be doing this, my answer is no. I do not think we should be doing it, because we have other organisations that are tasked with that job.

Q684 Barry Gardiner: Minister, you will recall the oral evidence given to us by Elizabeth Moran and Dr Duncan Campbell, the public analysts, and the Association of Public Analysts. In that, Ms Moran, who is the President of that organisation, said, "Certainly, the level of sampling and analysis that is being done at the moment is not sufficient to pick up emerging problems." Ms Moran said, "Targeted sampling, looking at particular products that are likely to be adulterated, does have a place and currently there is no provision for that in the system."

Under questioning from the Chair, Ms Moran said that, "There is no central funding or any kind of baseline funding for publicanalyst laboratories, the laboratories are completely dependent on the income they get from testing. If they are not receiving many samples, they have no income to invest in new equipment and in new expertise. This is a case in point: although all these labs are official control laboratories, they all have to be accredited for the testing we carry out; when we have a national crisis like this less than half of the labs have the capability to do any testing."

There would appear to be huge pressure on the capacity of our public analysts to fulfil the requirements that they have. We know that local authority spending cuts are one pressure upon them, but, equally, they have made a very strong case that there should be increased funding to maintain a baseline and that that funding should come from central Government. Is that a concern that you have taken on board? Will you be looking at the resourcing of public analysts and their laboratories to ensure that baseline capacity-I would have said "is maintained", but they are actually saying that it is not there at the moment.

Mr Heath: I did see their evidence. I have some difficulty, in that the advice we have received during this whole episode-where, obviously, a very large number of samples were being taken-is that, actually, despite that unprecedented level of testing, the official control laboratories did not have demonstrable capacity issues. They were able to deal with the influx. When you add to that the industry’s own very substantial testing-and, of course, some of that was outwith the official control laboratories; I understand that-our national capacity for doing testing seemed not to have been overstretched in the process.

Again, Mr Rhodes may be able to give you more information on that. I do have figures here in terms of the sheer numbers of tests that were carried out, which we can share with the Committee. I am not sure it entirely supports the contention that these are laboratories that are either starved of funds or lack capacity, at present.

Andrew Rhodes: There is not a lot that I can add to what the Minister has said; it is absolutely correct that throughout the incident and the testing there was no issue with laboratory capacity, despite the huge volume of testing that took place. There were no issues around capacity. It is true that there is a question for public analysts in terms of the strategy for how they go forward and how that should be funded. That is a very large question, but there is no sign in terms of capacity and in terms of what we saw during the incident at all.

Q685 Barry Gardiner: There is no sign of any capacity issues and yet we know that, in fact, 7 million people in England live in local authorities that take no foodstandards samples. You do not see a contradiction in that. Minister, in your own county, which I believe is Somerset, there has been a 30.96% reduction in testing in the past year. There are a number of authorities that take no samples whatsoever. To finish with the President of the Association of Public Analysts quotation to this Committee, "If you take that to its logical conclusion, by 2020 we could end up with no enforcement system left at all." Yet the two of you are sitting here and telling this Committee that there is no problem.

Mr Heath: With respect, Mr Gardiner, you are conflating two different issues: one is the capacity of laboratories, as they are, and the second is the propensity of the local authorities to do testing and the capacity or desire that they have for doing testing. If you recall the previous session in which I gave evidence, I expressed my concern that there are a number of authorities who have reduced the amount of testing they are doing. I believe they should be doing more. They have a very clear responsibility, on behalf of their constituents, to make sure that this is done. They have a duty to protect the health of people in their areas and, of course, also to ensure that trading standards are maintained in terms of composition. If they are not doing that, I hope the Committee will remind local authorities that they do have that clear duty.

If every authority were to increase the amount of testing and it was shown, then, that the laboratories could not cope with that capacity, I would then agree with you that I ought to be looking at the capacity of the laboratories. All I am saying is, at present, the capacity of the laboratories was sufficient to cope with an unprecedented demand over the period of our key investigations.

Q686 Barry Gardiner: Minister, let me welcome your admonition to local authorities who are not carrying out any testing to protect the 7 million residents who are living in those areas.

Mr Heath: Precisely.

Q687 Barry Gardiner: I welcome that. However, the connection you said you did not see how I was drawing is precisely the one that Ms Moran had outlined to this Committee, in that she pointed out that because there is no central funding and the laboratories are completely dependent on the income they get from testing, if they are not receiving many samples they have no income to invest in new equipment and expertise. For that reason, given that there has been almost a 50% reduction in the tests that are being carried out by local authorities and others-but mainly by local authorities-it means that their capacity to continue is being depleted all the time. That is why I asked the question about whether there should be some sort of baseline support from central Government to ensure that it does not fall below that level.

Mr Heath: As I say, at the moment they have spare capacity, as has been demonstrated by what happened. We hugely increased the number of tests taking place over a limited period of time and they could cope without capacity issues. Obviously, if local authorities were to be doing more testing, the income would then go up to those laboratories. That would not provide a difficulty until you reach physical capacity issues for the laboratories. I understand the point you are making, but I do not think it is demonstrated by the history of what has happened over the last few months. It clearly would be a concern, if we were to see the point at which local authorities completely abandoned their responsibilities in this area and there were a massive reduction in the number of tests taking place, which put the viability of public laboratories at risk. However, what I am saying to you is that my perception is that we have not reached that point.

Again, I am very conscious of the fact that, certainly, I am one removed from this issue. Mr Rhodes may have a different view, which he ought to share with the Committee.

Andrew Rhodes: Part of the question presupposes that the testing must be done by public analysts. They have to be qualified to a certain level. There have been a decreasing number of publicanalyst laboratories, but, as the Minister said, there has not been an issue with capacity.

The other half of your question is about local authority testing. The figure you have quoted of 7 million comes from a parliamentary question, which I would have filled in the answer to, which was on the number of local authorities that had reported no tests. As I have said in previous evidence, that is not quite the same as not testing. Some of those did not report test results for various reasons, but had carried out tests. There are, however, a number of local authorities who have done no tests at all and I named, in previous evidence, three that had consistently, in the last two years, conducted no tests. That is certainly an area of concern, in terms of what they are doing to protect consumers, not just in their areas, but also who may be buying food that had been produced in those areas. That is a concern of ours.

Q688 Ms Ritchie: As a follow-on from Mr Gardiner’s question, the data on food sampling suggests significant variation between local authorities, with three carrying out no food sampling at all in the financial year 2011/2012. The first question is this: is there a need for greater central direction over food sampling rates? Secondly, because of the lack of proper funding within local government for this particular area of expertise, is there not a case for local government and councils to be ringfencing funding for food sampling? Is there a case for the Government providing directives to local government to ring-fence such funding to ensure that it takes place?

Mr Heath: First of all, I have already expressed my view that this is extremely important work for local authorities. Local authorities have a very clear duty in this area and they ought to be carrying it out. It is just as important as making sure that they can fight fires. This is a matter of public safety and public confidence; they have a clear responsibility. I am in danger, here, of taking a view on behalf of the whole of Government, which I perhaps am not entitled to do other than through collective responsibility, but the Government’s general view is that we do not direct local authorities in the decisions they take on behalf of the people in their areas. We do not ring-fence funding in general terms. We allow local discretion to determine priorities. I would simply say that this is a priority and I would hope that any responsible local authority would see it as a priority.

Q689 Ms Ritchie: As a supplementary to that, am I interpreting you correctly in thinking you are saying that local authorities should be ringfencing funding because of the priority they should give to this particular type of work?

Mr Heath: I would only say that, when I was leader of an authority, I considered providing this sort of support to be a very high priority. I would expect responsible leaders of councils to take the same view.

Q690 George Eustice: I wanted to ask Mr Rhodes a question. Obviously budget cuts are a reality all local authorities have to deal with. In some previous evidence, you mentioned that a number of them are looking at innovative solutions such as shared services and regional coordination. Could you give some more tangible examples of which local authorities are doing that and what it looks like in practice?

Andrew Rhodes: Typically, local authorities are sharing services where they no longer have critical mass. We have seen it happen on the south coast, where a number of authorities have banded their functions together. We have seen it with a number of London boroughs, who now share enforcement officers, because, geographically, it makes logical sense for them to do that. There is a coalition of authorities centred on Worcester, who have formed a sharedservices agreement where their enforcement officers now work together, although they still report to elected members. There has not been a blurring of the electoral boundaries, however; that would obviously be a concern, because electors should be able to vote for the services that they get etc. We have seen this increasingly happen in order for local authorities to form a critical mass for the functions they need, which means they, in a lot of cases, do more work with possibly less people and certainly work more effectively across larger geographical spans. That is tending to be what happens.

We have also seen, through trading standards bodies, this happen a bit more with animal feed work, which of course is spread much more widely geographically, where we are seeing officers and funding being spread through partnership organisations as well to deal with this. They are increasingly moving away from dealing with things solely in their local authority areas and working on greater partnership. Although that has been happening for a number of years, it has obviously increased somewhat over the last few years.

Q691 George Eustice: Is there any correlation between those local authorities that are sampling effectively and those that are taking part in such joint partnerships?

Andrew Rhodes: I could not answer in detail. I am sorry; I would need to check. I would need to look at the question of whether or not there is a correlation between those who are not sharing services and those who are not testing. I do not think that there are enough that have formed shared services for us to say whether that is statistically significant or not, but I am happy to provide the Committee with a written answer afterwards as to what we find in that.

Mr Heath: It may be affected by local government reorganisation, as to whether you have small unitary authorities or large county authorities. Large county authorities normally have the critical mass.

Q692 Ms Ritchie: Moving on to the issue of labelling, although this incident is seen to be the result of fraud, rather than that of problems with labelling regulations, is the Government confident that labelling regulations for loose and processed meats are sufficient?

Mr Heath: As I say, we are engaged in dialogue at the moment with the European Commission, which is bringing forward proposals on processed meats and the labelling requirements there. It would probably be better for me to say that we await with interest what emerges from that and we will respond accordingly. I certainly have the view that, where we can establish country of origin, for instance, more clearly, it is helpful to the consumer. I do not, however, underestimate the difficulty when we are dealing with processed meats, because it is quite complicated.

Chair: We will be coming on to that.

Q693 Ms Ritchie: I have a further question, then, to Mr Rhodes. Next Wednesday, the Northern Ireland Food Standards Agency, which is a constituent part of the wider UK network, is launching a significant foodlabelling branding exercise, shall we say. Is that to do with or in response to the horsemeat scandal or is it for other reasons?

Andrew Rhodes: It probably helps if I say that in Scotland, Northern Ireland and Wales, policy on labelling remains the responsibility of the FSA. This will be standard work that they are doing, but, no doubt, they are very mindful of what has happened recently in relation to consumer concerns about labelling and the horsemeat incident itself. It will not necessarily be provoked by it, but it will be informed by it.

Q694 George Eustice: I want to move on to sanction penalties, just briefly, because we are running out of time. The Commission have said that the fines on those processors that commit fraud should be commensurate with the economic gain they get. Are you supportive of that basic principle?

Mr Heath: That must be the case, although, of course, within the English and Welsh jurisdiction we are bound by our laws, in terms of the Fraud Act and other provisions, if the offence is fraud. That can carry a prison sentence, of course, as well.

Q695 George Eustice: On my earlier question, you touched on an interesting point in this area as well, which was that retailers are already obliged to ensure that what they mark it as is what they say it is. Is that the case? Is it considered a valid defence to say, "I relied on the label, which complied with a particular system"? Is that not a defence? I am thinking about how you could translate responsibility through the system. Should there be tougher fines for people who stock meat that is not what they say it is, even though they accepted it in good faith based on the labelling?

Andrew Rhodes: If you were a retailer buying from a manufacturer, to simply rely on information would not, on its own, be enough. We would look at the systems of control you had for verifying these things, as well. In the case of the large retailers in particular-although this is also true of the manufacturers-they will conduct traceability exercises, audits and various other checks and measures, which would be part of their system. We could debate whether that was sufficient in this case, which it was not, in preventing this. That is something that will be reflected on. Simply relying on information, however, is not generally enough. You would expect other steps and other checks and balances in place, but it will depend, obviously, on the exact circumstances.

Q696 George Eustice: Are those criteria set down in case law or are they somewhere in primary legislation?

Andrew Rhodes: Primary legislation will dictate exactly what should be labelled. In terms of an accusation of fraud, you would then be looking at whether somebody had taken reasonable steps to protect their customers from an act of fraud or whether they had been negligent in some way.

Q697 George Eustice: That would be jurisprudence, rather than legislation.

Andrew Rhodes: Yes, it would be. If somebody received an invoice simply saying "one ton of meat", I would argue they had not taken reasonable steps to ensure that meat was exactly what they had ordered.

Q698 George Eustice: Finally, the Commission also said that official control should be unannounced checks and things like that. Is that something you think is a good idea?

Andrew Rhodes: Unannounced checks would always be our preference. Unannounced checks give you a true view of what is actually going on in a business. That is how local authority enforcement officers carry out foodhygiene inspections. They are unannounced. There is a role to be played by some announced visits, where you need to have access to very detailed information that would not ordinarily be available on the shop floor, but, in the main, unannounced visits would always be a preference, yes.

Q699 Chair: As we close the session, Minister, could I ask about the lessons learned? Certainly, locally, fresh meat sales seem to have gone up hugely. Obviously, that is very pleasing in a livestock area such as my own. There is still concern, however, about restoring confidence in the processedmeat sector. What steps will you take to go about restoring confidence in the processed and, indeed, frozenmeat sector?

Mr Heath: First of all, we need to repeat what has been done in order to test the situation at present. People should certainly not be complacent, but there is some reassurance that 99% of the tests were negative for contamination, which means the vast majority of processed meat that was on sale was perfectly as it should be. That does not excuse for one moment the 1% that was not, but, nevertheless, people need to understand that this is the case.

The message, as far as fresh meat is concerned, is something that has had a degree of resonance with the consumer. That is evidenced by freshmeat sales. As the Minister for Agriculture, I can only applaud the fact that people are tending to buy British meat products, which they know they can trust. There is a clear message to retailers that they need to be absolutely satisfied that what they put on the shelves is what it says it is. I believe that message has got home to both retailers and, indeed, catering operations as well, because we very often forget the catering operations.

Q700 Chair: Is there any evidence that there is more homeproduced meat going to processed and frozen foods?

Mr Heath: It is too early to tell whether that is a permanent effect. Certainly, some large retailers have announced they will now be sourcing from homeproduced sources. There are some that always have and have actually received a reputational boost from the fact they are always obtaining their meat from local sources. I do not think we can necessarily extrapolate that to a longterm trend, but I certainly would not be arguing against it, as far as the industry is concerned. I want to be absolutely clear-this is the message we have attempted to convey all the way through-that it does not matter whether meat is expensive or cheap. Even the cheapest meat must still be what it says on the label. That is an absolute responsibility.

Q701 Chair: Is there better collaboration now between the FSA and local authorities and the FSA and other equivalents across Europe?

Mr Heath: In terms of the collaboration between the FSA and local authorities, Mr Rhodes can speak for himself, but my perception is that has always been very good and remains good. We have established better links-this, again, is my perception-with other European agencies. What will emerge from Commissioner Borg’s work on this subject is a better integrated system across Europe. I sincerely hope that is the case, because I think that is actually what we need.

Q702 Chair: Obviously, the cost of meat will be a factor in sourcing, locally, more homeproduced meat into processed and frozen foods. In the fourth written evidence that we received from the FSA, I understood that the cost of official controls delivered to the meat industry were reduced from £56.4 million in 2010/2011 to £50 million in 2011/2012. Presumably, however, there will have been a massive increase because of the additional testing that has been done. Has this been reflected in meat prices?

Andrew Rhodes: Those are different things. The testing that has been done has been done by local authorities with some funding from the FSA. The controls to which you are referring there are official controls in approved meat premises. That is for the physical inspection that we undertake. Authenticity testing does not factor into that cost rate. It has no bearing on the cost of meat in that respect at all.

Mr Heath: There is one element there where there is a completely new cost, which is the universal bute testing. That is a significant cost, which, at the moment, is borne by Government.

Andrew Rhodes: That is right.

Q703 Chair: However, that will be passed on, too.

Mr Heath: Whether or not it is sustainable for Government to bear the full cost of that forever and a day remains to be seen.

Chair: May I thank both of you, on behalf of the Committee, for being so generous with your time and, especially, for rearranging the evidence session because of the business last week. It will enable us to report to the House before we break for the end of the summer term. We are very grateful indeed.

Mr Heath: Thank you very much.

Prepared 14th June 2013