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Lord Phillips of Sudbury: My Lords, I thank the Minister for giving way. I believe I am right in saying that not all risks are insurable. My understanding is that neighbour-to-neighbour infection is not an insurable risk.

Lord Carter: My Lords, the NFU has offered foot and mouth insurance and consequential loss insurance for years. I believe that the relationship has to be on the farm where the animals are slaughtered. I am not sure, but I do not think that the farmer next door can have an insurable risk and a consequential loss. I shall investigate that and let the noble Lord know.

The Government sought to address the issues in a number of ways. Under unprecedented measures, payments were made to producers who faced severe animal welfare problems as their animals were caught by movement controls. Noble Lords should pay tribute to the Government for that attempt to meet that new problem in that way. The payments were made under the Pig Welfare Disposal Scheme--PWDS--which opened on 29th August 2000.

Those payments were unique in respect of animal health measures in the UK--nothing like them was available during the 1986 CSF outbreak--and in part they reflect the exceptionally difficult circumstances that the pig industry went through during 1998-99. However, it is fair to point out that before 1998-99, the pig industry had had some years of substantial profit. As we have said all along, the payments were not compensation, but were linked strictly to dealing with animal welfare problems. In all, payments were made on 181,000 pigs. On three occasions my right honourable friend the Minister of Agriculture, Fisheries and Food accepted an industry proposal to change the payment structure of the scheme, backdated to the beginning of the scheme. By agreeing to those changes, the Government showed themselves to be fully prepared to take on board the legitimate concerns of the pig industry.

The noble Baroness, Lady Byford, asked about the cost to the taxpayer of the compensation measures and the welfare scheme. A total of £4.5 million was paid in compensation to pig farmers under the Animal Health Act 1981 for animals slaughtered. The additional spending on veterinary and other staff costs, together with laboratory costs, amounted to around £3.5 million. Payments to producers under the PWDS were £8.8 million, with the cost of transport, slaughter, rendering and supervision adding a further £5.3 million. That gives a grand total of additional MAFF and Intervention Board expenditure on CSF measures in the region of £22 million, with about £13.3 million going direct to farmers.

To ease the welfare situation further, limited movements under licence between holdings in the same ownership and within the infected area were

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permitted. A slaughter under licence scheme was devised after MAFF negotiated a derogation from European Community legislation. In the event, that scheme was not used, as controls on movement were lifted progressively after the final confirmed case.

As part of the deal to change the payment structure, the pig industry agreed to make a financial contribution, funded by means of an industry levy, to help those affected by the consequences of disease control measures. Pig industry representatives are to be applauded for taking that longer-term and wider view. The outcome of that agreement is the Pig Industry Development Scheme, which has been approved by Parliament and came into force last week. I wonder whether the noble Viscount remembers PIDA--the Pig Industry Development Authority--which was a levy-funded scheme in the 1960s and 1970s. In agriculture policy, if you stand still long enough, the circle comes round again.

The aim of PIDS is to build up an industry fund to be used to provide advice, services, facilities and financial assistance to British pig producers to assist them in the prevention or limitation of the spread of an outbreak of pig disease. It will be funded by an industry levy of 20p per pig slaughtered.

The agreed first use of the PIDS fund is the top-up payment of the government-funded Pig Welfare Disposal Scheme. Once that commitment has been met, it is for the Board of PIDS to decide how the fund might be used. The order agreed by Parliament permits its use for measures connected with foot and mouth disease.

I listened with interest to the fair criticisms that were made of the Government's response to the outbreak. However, it is fair to point out that I was the opposition agriculture spokesman for 10 years. I remember the BSE outbreak and the Phillips inquiry, which revealed a shattering catalogue of incompetence. I believe that the cost of BSE is likely to be £20 billion.

MAFF took immediate steps to contain and control CSF. Movement restrictions were served on premises where swine fever was suspected because of the high risk of spread. If swine fever was confirmed, all the pigs were valued and slaughtered and the carcasses destroyed. In addition, in an attempt to halt the spread of the disease, when CSF is confirmed, the current policy is to slaughter all pigs within a 1 km radius of the infected premises unless there are sound reasons not to do so. Pigs on premises within a 3 km radius will not normally be slaughtered as dangerous contacts unless there are sound epidemiological reasons for doing so. If those precautions had not been taken, the disease might have spread further afield and many more pig herds might have been affected.

The State Veterinary Service and the ministry devoted significant resources to eradicating the outbreak. Emergency disease control centres were set up in Bury St Edmunds and London as soon as the disease was confirmed and they operated seven days a week throughout the crisis. More than 500 SVS staff did spells of duty in those centres on secondment from

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elsewhere in the country. Additional help was provided by private vets in the area, appointed as temporary local veterinary inspectors for MAFF. Vets were brought in from the Netherlands, Ireland, the USA and elsewhere to help out. Local authority staff were also heavily involved, for example in the enforcement of movement controls. SVS staff made about 5,600 farm visits, investigated more than 240 cases of suspected disease and traced more than 2,300 movements of pigs, vehicles and people.

The problem with the timing of the payment structure of the PWDS was that the only vehicle available to introduce a compulsory levy on pig producers that did not involve primary legislation was an MLC-originated development scheme under the Agriculture Act 1967, as the noble Viscount said. However, the nature of the procedures for introducing a scheme are complex and time-consuming and include a 56-day consultation period, followed by independent arbitration and affirmative procedure statutory instruments in both Houses. The scheme also required clearance from the European Commission as a state aid. The formal consultation period was launched by the MLC on 24th November and ended on 23rd January 2001. After a report from the independent arbiter, the MLC wrote to agriculture Ministers on 26th January recommending that parliamentary approval be sought for the introduction of the scheme. The orders were laid and the scheme came into force on 14th March.

I cannot deal with all the points that were raised, but I shall deal with some of them. I understand that all the payments from MAFF have been made. I shall come back to the point about the industry and the top-up payments under PIDS. The EU, including the UK, imports only from countries that are CSF-free. That is why the question of illegal imports has been raised. Regarding the famous ham sandwich, the SVS will continue to investigate the source of the CSF outbreak. If the import was illegal, a contaminated pork product is a possibility, but noble Lords will appreciate that proof of that will be very hard to find.

We have tightened up the interpretation of the 1996 food labelling regulations in respect of origin marking and new guidelines have been issued, but they cover only legal imports. We have to grapple with the problem of illegal imports.

An announcement has been made today about the Welfare of Livestock Disposal Scheme. Given the effects of FMD, it is worth pointing out that 85 per cent of the normal throughput of pigs has been achieved through the abattoirs. That is a higher proportion than for other animals. I believe that the figure for cattle is about 50 per cent and that for sheep is only 38 per cent. At least pig producers seem to be able to market 85 per cent of their normal throughput in the abattoirs, although whether the price is satisfactory is another matter.

I can confirm the figures that the noble Baroness gave on the compensation under this scheme. They are £15 per animal plus 55p per kilo up to a maximum of 100 kilos per pig, the average of the batch weight for a lorry load and £75 per head for sales.

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The Government are looking at how to help with the payments under PIDS, for example by providing a loan to allow the top-up payments to be made immediately. As I understand it, a grant would be classified as state aid and would not be allowed under EU rules.

There were some measures that the Government could not take or decided were not appropriate in the circumstances of the CSF outbreak. For example, we could not introduce a scheme to compensate producers for business losses. EU state-aid rules specifically exclude government payments of that type. The introduction of exceptional support measures would have required the UK to demonstrate that the disease situation had been directly responsible for severe market distortion. In the event, the market price had followed the normal, seasonal trends throughout the period of the CSF outbreak.

I have had to give my reply extremely quickly and have now gone over my time. I know that we should be finishing the debate. I can assure all noble Lords that I shall write to them about the detailed points that they have raised.

There are always lessons to be learned from any disease outbreak. Noble Lords should remember that the last major outbreak of foot and mouth disease in this country occurred in 1967--that is, 34 years ago. A small outbreak in 1981 was controlled extremely quickly. Therefore, we have had 34 years without a major outbreak of the disease. That indicates that the slaughter policy has worked.

Noble Lords will know how hard the Minister, Nick Brown, and my colleague Lady Hayman have worked in recent days. I appreciate the remarks made at the outset by the noble Viscount. I am here this evening in place of my noble friend and I answered a Starred Question for her on Thursday. I know that your Lordships will understand that she is much better employed dealing with FMD out in the field. I hope that, in her place, I have replied adequately to this debate.

One of the, in a sense, ironic results of the current crisis of FMD is the commitment given by the Minister to instigate, once the crisis is over, as it will be eventually, a thorough examination of the role of farming, the countryside, abattoirs and the food chain. From that, we may well learn things to our advantage.

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