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That is the second unsatisfactory thing. What was happening there was no secret. It had been inspected over the years by various agencies, and if what was happening was unsatisfactory, that should have been dealt with over time.

The noble Lord quoted Judge Vesterdorf, the president of the court of first instance, who said:

On 7 November in the House of Commons, Gwyneth Dunwoody MP described it better as being,

I am not sure that “giants” is the right word in this case.

It is clear that this has arisen because the Food Standards Agency in this country had one set of views about the implementation of the European legislation and the Food and Veterinary Office in Europe had a different view. They both inspected the company within days of each other and came up with a different point of view. There is nothing wrong with that, but the organisations should have got together, sorted out what they thought and come up with a compromise. Instead, they have been fighting each other. The FSA, backed by the Government, spent considerable time supporting the company and opposing the view of the European Commission and the Food and Veterinary Office.

The European Commission, as the noble Lord said, issued one set of instructions to the company, which was overturned in an interim judgment in the European court of first instance. That case is still going on, and I am told that it will take 18 months or two years to come to a conclusion. That court took the view that the company could continue to operate in the mean time. The European Commission then said, “We don’t agree with this. We will bring some different sorts of powers into operation”. Under emergency procedures it issued decision 2006/694 prohibiting the sale of any products. It seems odd that these emergency procedures were brought in when the Commission failed the first time round, but nevertheless, they followed three months after the initial investigation. It does not seem that it was quite such an emergency as to close the company down overnight. Because the Commission issued that decision, and proposed to take infraction measures against the British Government, the Government caved in and stopped fighting the case. They said, “OK, we agree with the Commission after all”.

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Some people think that this is the result of big, bad Europe. If blame is to be allocated in this very unsatisfactory situation, at least a substantial proportion of that blame ought to go to the British Government, who have behaved in a way that at best has not been consistent. They stood firm and said that the FSA’s opinions, after inspecting the company and, as the noble Lord said, going back to negotiate some improved practices, were okay and that the company could continue.

As a result of the British Government conceding the case to the European Commission, they have issued this rather shoddy statutory instrument aimed at one particular small company. The FSA has obviously had to issue new guidance, based on the Government’s new views. Was the statutory instrument issued because the Food Standards Agency had changed its view, or simply because the Government were carrying out the instructions of the European Commission? That is the fundamental issue.

Not surprisingly, the company has had a very bad press over this. Living where I do, I have seen local newspapers as well as the nationals, the farming press, and so on. The allegations in public print sound appalling. There has been talk of mouldy cheese, but the company claims that it removed the mould before using the cheese. There is the question of what is known as “interface” milk, which is a mixture of milk and water, which comes from a result of cleaning pipes that milk has flowed through. We now understand that the Government and the European Commission have accepted that at least in some circumstances interface milk can be used and is acceptable as a raw material for this kind of product.

The most controversial part of it is the question of the screening tests for antibiotic residues in the milk. It has been talked about in the local paper as contaminated milk, and so on. The question is whether milk that fails the rapid screening test can be used if it subsequently passes a more rigid scientific test. It is not about whether the antibiotics are present, but whether the level of antibiotics exceeds the permitted thresholds. It seems that on all sides the European Commission, the British Government, the Food Standards Agency, and everyone else accepts now that there is a dispute on how milk should be screened for antibiotics. We understand that the European Commission is setting up an investigation with experts from across Europe to get a clear definition of which tests are required and how they should be carried out. Have the Government any information about when that inquiry will take place, and when any recommendations might be expected? Have they information about how many and which other companies in this country may well be caught by this in the mean time?

The dispute about science is just that—a dispute about science. As lay people we cannot express a proper opinion. We can look at legal judgments and take into account the opinions of experts. I shall quote from the 47th report of the Merits of Statutory Instruments Committee, which states:

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If the scientific debate remains, and if it is a grey area, why have this emergency procedure to close the company down and throw people out of work virtually overnight? The report continues:

That seems a sensible way forward in a case like this, with a company that has been operating for 10 years. As the noble Lord, Lord Willoughby de Broke, said, nobody has come up with any evidence that anybody has suffered in any way as a result of any product that this company has produced.

It is a sorry story. There has been a lot of conflict and confusion. This statutory instrument is a sledgehammer to crack a nut. One of the MEPs in the north-west, my colleague Sajjad Karim, said:

I concur.

Have the infraction proceedings been withdrawn, or are they ongoing? What discussions are currently taking place with the company or the European Commission? What progress is taking place with what we understand to be an ongoing inspection of the British dairy industry on behalf of the European Commission? What sort of scale is it on? We hear of nine sites being inspected. When can we expect results? Why did the Government not defend against the infraction proceedings in view of the robust defence they had mounted, on the advice of the FSA, before they were instituted? Do the Government believe that the use of interface milk—the mixed milk and water from these pipes—is safe? As I asked towards the beginning of my speech, why is this statutory instrument about this particular company, rather than, in a fair and non-discriminatory way, all companies producing this product? Are any other businesses facing closure? If so, how many and where? Are steps being taken on behalf of the Government, the Food Standards Agency or anybody else in this country to conduct a full risk assessment of cheese recovery processes, which is what this is?

I thank the noble Lord for raising this. I look forward to the Minister’s comments.

7.32 pm

Baroness Verma: My Lords, it seems utterly unacceptable that dairy producers in our country—who have, according to our own Food Standards Agency, met the strict standards of hygiene and food safety—are forced to face an uncertain future, with the EU determined to overrule decisions made in Great Britain because of the Government’s refusal to stand up for British dairy producers. That is a shocking example of this country’s inability to set its own food standards and run its own food standards operations.

Either there was an insoluble problem with Bowland Dairy, in which case it should not have been given a clean bill of health by UK officials, or there

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was no problem that could not be addressed, in which case the EU had no business butting in to close down a small UK firm. Which is it? Can the Minister help the House? Can he confirm that the Food Standards Agency had cleared Bowland and had found no practices that would have justified such draconian actions before EU officials intervened?

Bad practices need to be tested and controlled, but this action has even been condemned by the Liberal Democrat MEP Saj Karim as “knee-jerk and headstrong”. He said that Bowland was being made a scapegoat and that the Commission was not impartial but had an axe to grind. How often do we hear Liberal Democrats condemning the Commission’s actions? When a Liberal Democrat attacks the EU, something must be very wrong. Does that worry the Minister?

Surely you have to be certain that there is no alternative before passing regulations that could bankrupt a small firm and put 22 people out of work. Is the Minister telling the House that there is no alternative and that our Government back EU action to cut Lancashire jobs? If the practices are as bad and uncontrollable as the European Commission’s Food and Veterinary Office claims, why did the UK not support action on Bowland in the Standing Committee vote on 6 October? If they cannot justify the action, why did Britain abstain? It is a spineless attitude from a Government who claim to be a friend of small businesses. Ministers were more fearful of upsetting EU officials than concerned to defend a British firm. In the end, we just sat on the fence, pleasing nobody.

Can the Minister confirm that Bowland exported to Ireland, Denmark, Austria, Germany and France? Which, if any, of those countries complained to the UK Government about its products? Do any of those countries have curd cheese industries? Have any complaints been made by the UK Government about cheese products from those countries? How many other curd cheese manufacturers have been closed by EU regulations throughout the Community? Will the Minister share his research on this with the House?

In his Written Answer of 7 November, the Minister said that Britain had now advised the Commission of,

Can the Minister explain what he meant by that? Does it mean what I think it means—that the British Government will simply toe the line in any intervention against a UK firm from now on? Can the Minister assure the House that the “revised approach” he talks of will not affect traditional milk or cheese production in this country? Did the department discuss the letter with the industry before announcing absolute compliance?

The unfortunate position of Bowland has now led to a much wider threat to British industry. The House will be alarmed to learn that the UK cheese industry—a £5.6 billion sector—now faces what is termed a “blitz” by EU inspectors. What other

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countries face such blitzes? What will the Government do to support and protect our dairy products?

I do not often praise Liberal Democrats, but Saj Karim was surely right when he said:

What are the Government doing to check this cloak-and-dagger game? As the Minister will be aware, the FVO threatened inspections of the dairy industry across Britain in November. What dairies and cheeses have they targeted? Can the Minister report the latest situation to the House? No doubt his own officials are informed and monitoring the threat closely.

I hope that the Minister can assure the House that there will be no gold-plating by his department. Not long ago, he was defending the regrettable interference of UK agencies as regards traditional Stilton cheese. He said that he would look into that matter further. What has he done about it since then? How has that situation been resolved? In the light of this new threat, can he assure the House that the FVO will not be intervening against Stilton production?

The House will be most grateful to the noble Lord, Lord Willoughby de Broke, for alerting Parliament to this EU action against one small firm, which our officials had not seen a need to close, and for highlighting a wider emerging threat to our cheese industry. That industry is entitled to expect vigorous defence from its Government. I see little evidence of that in response to the FVO’s blitz on British cheese. I, too, ask many of the questions posed from the Liberal Democrat Benches by the noble Lord, Lord Greaves.

The Minister of State, Department of Health (Lord Warner): My Lords, I understand the importance of supporting the UK dairy industry and the concern over the treatment of a relatively small cheese-maker in Lancashire. The Government have not panicked, but this is a complex case and I need to explain as carefully as possible what has happened in order to answer some of the concerns expressed.

First, I shall speak about the interim judgment, to get it out of the way. It required the Commission to withdraw a notification that it had placed on the rapid-alert system, which is the mechanism to notify other member states of food incidents that may affect them. The court of first instance did not make any judgment about the safety of the curd cheese produced at Bowland, nor did it prevent the Commission taking the further action that it took against the company. People may disagree with the Commission’s action, but the court of first instance did not prevent it doing so and it did not go into the merits of how the curd cheese was produced.

I shall now address the key issues arising in a highly unusual case. I shall begin by describing the background to the event that resulted in the Commission using emergency safeguard provisions to adopt Commission Decision 2006/694/EC prohibiting the marketing throughout the European Union

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of curd cheese manufactured by Bowland Dairy Products Ltd in Lancashire. I shall also explain why, in the Government’s view, this statutory instrument, which gives effect to that Commission decision in England, should not be annulled.

The background to the decision is complex. During an audit of the UK’s implementation of new EU food hygiene legislation in May and June this year, which was carried out by the Commission’s Food and Veterinary Office, FVO inspectors visited Bowland, which was producing curd cheese for sale to other EU member states for further processing. The FVO inspectors examined documentation at Bowland and identified what they considered to be the sale of dairy products made from raw materials unfit for human consumption. At the end of the audit, the FVO demanded immediate action to address the issues identified. It was supported by officials of the European Commission’s Health and Consumer Protection Directorate General, known as DG SANCO, in Brussels. They immediately called into question a number of the procedures and operations employed at Bowland, including the practice known as cheese cleaning or cheese recovery, involving the removal of mould from cheese, and repackaging the cheese, which was then despatched to other businesses for further processing. The Commission also questioned the production of curd cheese using milk that had been rejected by other companies for failing a rapid screening test for antibiotic residues, but which Bowland tested further and used if the result was negative. The Commission also had concerns about the use of interface milk, which is a mixture of milk and water, and whether such milk contained residues of cleaning chemicals. It argued that all such practices gave rise to unacceptable risks to consumers and should be halted forthwith.

The Food Standards Agency, the central authority in the UK responsible for food safety matters, urgently launched an investigation into the FVO findings. To assist in that process, the company closed voluntarily for 10 days, during which the FSA and enforcement officers from the local authority fully audited the premises and the controls and procedures then in place. The purpose of that investigation was to determine whether the practices identified by the FVO should be allowed to continue and, if so, under what conditions.

I should stress at this point that the FSA investigation did not identify any specific food safety risks arising from the curd cheese production procedures, but the company agreed to implement changes recommended by the FSA to a number of its processes and working practices and to improve its food safety management system. The cheese recovery operation was halted permanently, and the company was informed that it could restart operations only following the granting of the required approval from the local authority. On that basis, the company restarted curd cheese production towards the end of June, and the Commission was informed of the outcome of the FSA’s investigation.

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7.45 pm

Although the FSA was content for the Bowland curd cheese manufacturing operation to resume, officials in the Commission’s DG SANCO were not so persuaded. The Commission did not inform other member states of the FSA’s position on Bowland by means of the rapid alert system. There followed several months of intense discussion and negotiation between DG SANCO and FSA officials about the legality and safety of the practices in question. Despite those discussions, there remained differences of view about how the legislation should be interpreted and the science underpinning the interpretation. In the mean time, the company found it increasingly difficult to trade, largely because of the reluctance of the authorities in other member states to permit the resumption of trade in a product which the Commission continued to regard as unfit for human consumption.

At DG SANCO’s request, the FVO carried out a further inspection at Bowland at the end of September to audit the company against the revised procedures specified earlier by the FSA. The FVO did not provide any immediate feedback on its findings to the UK authorities. However, it did report to DG SANCO in Brussels that the company was continuing to manufacture curd cheese using milk that had failed a rapid-screening test for antibiotic residues and to use interface milk. The FVO also criticised the UK’s approach to the enforcement of EU food hygiene rules.

As a result of the FVO’s findings, Commission officials announced three related measures: first, that the Commission would take appropriate action itself in respect of Bowland Dairy Products Ltd; secondly, that it would initiate legal proceedings against the UK for failing properly to implement and enforce EU food hygiene legislation; and, thirdly, that the Food and Veterinary Office would be asked to carry out a follow-up mission to the UK in late November to inspect the entire UK dairy industry.

So far as the first of those actions is concerned, the Commission concluded that Bowland’s continued production of curd cheese using milk that did not, in its view, comply with EU hygiene legislation presented unacceptable risks to public health and that such risks could be contained only by Community-wide measures. Accordingly, the Commission used the emergency safeguard measures provided for in the General Food Law Regulation 178/2002 to table a draft decision for consideration and vote by EU member states on 6 October. The purpose of the decision was to require all member states to prohibit the placing on the market of all curd cheese manufactured by Bowland and to trace, detain and dispose of all curd cheese from the company. The decision’s recitals set out in some detail the Commission’s interpretation of the legislative requirements relating to testing milk for antibiotic residues.

The UK was unable to support the Commission’s decision. In a statement for the minutes, the UK made clear that it took food safety matters very seriously and shared the Commission’s desire to protect public

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health. It indicated that the FSA had taken a number of corrective measures at the company since June and had worked with the Commission to reach an appropriate solution. However, it was necessary for the Food Standards Agency to act on a sound evidence base and, in protecting the consumer, to be proportionate in its actions. In this case, there were genuine differences of view on the science behind testing for antibiotics in milk, and they had not yet been resolved.

Because of different views of the science underpinning the Commission’s interpretation of the rules relating to testing for antibiotics in milk, the UK abstained and made that full statement. Of 25 member states, 22 voted in favour of the Commission’s proposal, so, even if the UK had voted, there would have been an overwhelming majority in favour.

The Commission subsequently formally adopted the decision into Community law, and it fell to all member states to give legal effect to it. In England that was achieved by means of the Curd Cheese (Restriction on Placing on the Market) (England) Regulations 2006. Similar steps have been taken to implement the decision in Scotland, Wales and Northern Ireland. As a consequence, the company’s approved status was withdrawn by the local authority, and measures were put in hand to detain and dispose of the remaining curd cheese stored at Bowland.

As well as taking direct action in respect of Bowland Dairy Products Limited, the Commission initiated accelerated infraction proceedings against the UK for failing in its duty to properly implement and enforce EU food hygiene rules in the dairy sector. In considering how to respond to this legal action, the Government took into consideration a number of different factors. In particular, we recognised that almost all member states had implicitly agreed to the Commission’s interpretation of the legislation regarding the testing of milk for antibiotic residues, as set out in the Commission’s decision applying to Bowland. In addition, the Commission made a commitment to discuss antibiotic testing of milk with a wide range of experts across the EU, and to undertake a risk assessment of cheese recovery operations in the EU.

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