Identifying and Tracking Livestock in England (HC 326-i) Public Accounts Committee 4 Feb 2004

Evidence given by Sir Brian Bender KCB, Permanent Secretary and Mr Malcolm Hunt, Head of Livestock Identification Division, Department of Environment, Food and Rural Affairs; and Mr David Evans, Director, British Cattle Movement Service, Rural Payments Agency.

Q16 Mr. Gerry Steinberg (City of Durham): It is very clear from events we had a couple of years ago that all cattle need to be continuously traced and their whereabouts need to be known, nobody is going to deny that. What would you say the potential economic cost of the spread of a disease like FMD is?

Sir Brian Bender: The beef industry is worth £11 billion to the United Kingdom economy, that is simply the beef industry for its trade. The economic cost of the Foot and Mouth Disease was £8 billion. There were particular circumstances this Committee examined in relation to what happened in 2001 which were, I would say, unique in the world and the potential cost not simply to the farming economy but to the rural economy widely is potentially massive.

Q17 Mr. Gerry Steinberg (City of Durham): It is a huge amount of money.

Sir Brian Bender: Yes, it is a huge amount of money.

Q18 Mr. Gerry Steinberg (City of Durham): A tracing system is vital. The Chairman has touched on real problems that you are having and I have to go along with everything that the Chairman has said. I read the Report right from the first page to the last and I must admit I certainly was not convinced that the tracing system was actually the answer. Would you agree that the system is needed for the benefit of the livestock producer themselves as well as for---

Sir Brian Bender: Is it needed? Yes, absolutely. What we need to be trying to get is a mix of measures where it is actually in the interests of the livestock sector to have an effective tracing system which will help them sell at the best market price traceable, in this case beef. One comment about the 2001 outbreak, it was spread by sheep primarily and the Cattle Tracing System does not cover that species. The proposals covered in chapter four of the NAO Report refer to future ID requirements on sheep. At the moment we only operate a batch requirement on sheep.

Q19 Mr. Gerry Steinberg (City of Durham): Why does the sheep sector have such a very bad record then?

Sir Brian Bender: It depends on what you many by "bad record". The anomalies that the Chairman was asking about come down to, for one reason or another, errors in the way that cattle farmers input the data, we clearly have a responsibility to have a simpler system. In the case of the sheep industry one of the problems we experienced in 2001 was that a large number of movements of animals, often through dealers, often through markets spread the disease. I hope that the reform of the Common Agricultural Policy which is going to detach, disassociate, decouple the subsidy from the production will mean that any movement of livestock by sheep farmers and by dealers will be surely for the benefit of the market and not simply because if they have it at a particular time they get a subsidy.

Q20 Mr. Gerry Steinberg (City of Durham): Why do you still allow out-of-market transactions to take place? Why do you allow sheep to be sold in the car park and transferred where there is absolutely no record whatsoever of those movements? You have done nothing about that, why?

Mr Hunt: It is not true that we are not doing anything about it.

Q21 Mr. Gerry Steinberg (City of Durham): You are not doing very much, are you?

Mr Hunt: We are trying to improve compliance with the regulations that have been introduced. The Report talks about the Animal Movements Enforcement System we are rolling out to all of the local authorities so that we get a better handle on exactly what activity they are doing and have better and accurate information about how they are dealing with non-compliance, it ranges from oral warnings, written warnings and prosecutions

Q22 Mr. Gerry Steinberg (City of Durham): How many prosecutions have you had for that sort of trading?

Sir Brian Bender: We can give you a list of prosecutions overall, some of which relate to movement. We will let you have a note on that.

Q23 Mr. Gerry Steinberg (City of Durham): It seems to me you are never going to stamp out the possibility of serious spread of disease if you are not doing anything about the illegal transactions that are taking place. You can have the best system in the world but that is not going to work if you have farmers saying, £50, or whatever they do, and they take it away and nobody knows where they have gone.

Sir Brian Bender: When lots come to a market we do not allow them to be broken up and sold. All movements are required to be reported and the role of local authorities is to police these movement arrangements, and, as I understand it, they do police car parks as well as the markets themselves. Our understanding is that in the last few months between 2.2% and 2.7% of movements have been in breach of the stand-still arrangement in one way or another.

Q24 Mr. Gerry Steinberg (City of Durham): How many sheep is that?

Sir Brian Bender: It would be a lot of animals.

Q25 Mr. Gerry Steinberg (City of Durham): We have millions of sheep being moved round the country where nobody has the faintest idea where they are going or where they have been and what is likely to happen to them. You can have the best system in the world, you can trace every single animal that is going through the markets but you have two million sheep wandering the countryside -baa - and nobody knows where they are.

Sir Brian Bender: I think you are exaggerating, Mr Steinberg.

Q26 Mr. Gerry Steinberg (City of Durham): Was it 200,000 sheep? Is 2% 200,000?

Mr Evans: The 200,000 figure related to cattle.

Q27 Mr. Gerry Steinberg (City of Durham): It is two million sheep. I was right the first time.

Sir Brian Bender: All trade in and out of the sheep flock needs to be recorded in flock records. The local authorities are responsible for policing the movement arrangements. We have a concordat with them on consistency of application. There have been some high publicity cases, there was a farmer in Cheshire fined £17,000 on three counts of moving stock in breach of the notice. There is, of course, a balance to be struck. The original restriction the Government introduced as foot and mouth disease was abating was a 20-day movement, and that tipped things the other way as far as the industry was concerned because they thought it was too rigorous and therefore they were more likely to disobey the rules.

Mr. Gerry Steinberg (City of Durham): I will move on because I think I have made the point on that and I am only a quarter of the way down the first page and I have got five pages to go, so we are here until eight o'clock tonight.

Chairman: You may have five pages but you have only got five minutes!

Q28 Mr. Gerry Steinberg (City of Durham): It is quite clear from the Report that the existing Animal Movements Licensing System appears to be more effective and certainly more popular with the industry. That is what I got from the Report. We know farmers are never more happy than when they are moaning, we know that, but are they justified in this instance to have more support for this scheme, their own scheme, than the tracing scheme? Is it easier to administer, is it more effective, or what?

Sir Brian Bender: This links to the point I was trying to make just now which is in the immediate aftermath of foot and mouth we had a system that required a stand-still of 20 days. That was very unpopular within the industry. They felt it was imposing an unnecessary burden on their ability to do business. It was the maximum safety for security reasons. Minister looked at this, I guess, about a year ago and reduced the requirement to six days but with tighter enforcement, and that has had industry support.

Q29 Mr. Gerry Steinberg (City of Durham): So which is the best scheme, because you do not want two schemes, do you?

Sir Brian Bender: Where we are at the moment is a better situation than last year in the sense if there is not sufficient industry buy-in then they will try and find their way round the rules more often and it will be very difficult to police.

Mr. Gerry Steinberg (City of Durham): The taxpayer is paying millions of pounds in subsidy to the farmers.

Jon Trickett: Tens of millions!

Q30 Mr. Gerry Steinberg (City of Durham): Tens of millions of pounds. Why should the farmers not pay for the system themselves? Why should the taxpayer pay for a system that benefits the farmers more than anybody else because it is them that go out of business and when they go out of business we as the taxpayer have to pay subsidies to them to put them back into business. Why in the name of heaven should they not pay for the tracking system? Why should the Government be having to foot the bill?

Sir Brian Bender: It was the original intention that the cattle industry's tracing system should recover its costs from the cattle industry. The decision was taken by ministers in, I think, 2000 to provide a holiday for that recouping payment because of the state of the industry. That holiday at the moment still exists. It is the intention of the Government to end that holiday but no decision has been taken as to when, looking at the overall state of the industry and the other changes it faces and burdens on it. The other issue is that the raison d'être of the Department's Animal Health and Welfare Strategy is to get a better sense of partnership between government and the industry on sharing responsibilities.

Q31 Mr. Gerry Steinberg (City of Durham): If you read paragraph 9 (which I was going to read out but I will not) it really is an indictment of the scheme itself. It says that the Cattle Tracing System is inaccurate, the movement records for one in eight animals are incomplete, the current location of 2% of animals is uncertain, et cetera, et cetera, et cetera. Out of all those faults in the system how much is fraud?

Sir Brian Bender: I am sorry, how much is fraud?

Q32 Mr. Gerry Steinberg (City of Durham): How much is it deliberate fraud?

Mr Evans: The evidence we have from off-farm inspections and following up queries when anomalies are discovered is that the vast majority of it is errors, mistakes, people making simple errors about recording dates or the exact ---

Q33 Mr. Gerry Steinberg (City of Durham): All right, but how much fraud is in the system?

Mr Evans: There is a low level of fraud.

Q34 Mr. Gerry Steinberg (City of Durham): Put a figure to it?

Mr Evans: I cannot put a figure to the value of the fraud because the fraud generally would be against a subsidy scheme perhaps in the data made available, or due to illegal reidentification and adding value to animals.

Mr. Gerry Steinberg (City of Durham): Right, well, it looks as though my time is up.

Chairman: Just to answer Mr Steinberg's question, at any one time, Sir Brian, how many sheep are lost?

Q35 Mr. Gerry Steinberg (City of Durham): I do not think they could answer it, that was the problem.

Sir Brian Bender: Can I provide a note back with what we understand is the position with sheep.

Mr Hunt: We do not monitor sheep individually as we do cattle.

Q36 Mr. Gerry Steinberg (City of Durham): I think you would be falling asleep!

Sir Brian Bender: So we are talking about batches.

Mr Hunt: The control is not just at marts or markets. There are on-farm inspections by local authorities. These sheep have to be bred somewhere. They then go through perhaps dealers, then on to market and then they have to be slaughtered and sold to somebody and there are controls at all those links in the chain so I think that someone could have a flock of sheep that bypasses all of those checks would be unusual. I am not aware whether local authorities have reported to us a complete flock of sheep which nobody had had any knowledge of.

Chairman: Thank you.

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Chairman: Just a few supplementary questions if you do not mind. Mr Gerry Steinberg?

Q125 Mr. Gerry Steinberg (City of Durham): Just a couple of quick ones. It seems to me that electronic identification is clearly the way forward, there is no doubt about that at all. Could you tell us what progress has actually been made on that and how quickly we can expect some sort of system to be brought in? Just put me right on one other point, does Workington also include sheep in their brief or not?

Sir Brian Bender: On your first point, Mr Hunt may want to elaborate but we have yesterday let a contract with ADAS for piloting the proper ID of sheep. So that pilot will begin and I think it is not going to report finally until next year but it has some interim results in the course of this year - 70,000 sheep - to look at the practicalities, costs and benefits of electric ID. The EU agreement, as I said in a supplementary memorandum to the Committee before Christmas, requires electronic ID for individual sheep by 2008. We are piloting it now.

Mr Evans: At the moment we deal with the cattle business only. The database we are migrating to now and developing is built to offer multi-species capability so when individual identification of sheep is required ---

Q126 Mr. Gerry Steinberg (City of Durham): So you could handle that?

Sir Brian Bender: That will be their responsibility.

Q127 Mr. Gerry Steinberg (City of Durham): Fine. Finally, the last point is that paragraph 4.27 on page 38 shows what can happen and how quickly things can change in terms of calculation of finance. We are talking about in December 2001 initial combined costs of over £200 million and then I think, if I am reading it rightly, in 2003 the calculation of the cost totally changes and then if you put that in line with the beginning of paragraph 4.25 which says: "The projects developing the Cattle Tracing System and the Animal Movements Licence System are being supplied by the Department's IT division using established government agreements with suppliers" that paragraph then terrifies you because we have seen what happens to IT projects with government suppliers and how costs escalate, in some terms even double in cost. Are you feared that that may happen here and do you really think that perhaps there should be a cooling down period before these sorts of contract are gone into?

Sir Brian Bender: I am not sure "cooling down period" is the right phrase but we are looking at the business case again now in the light of the Department's own IT strategy (which is referred to in the Report) the work we have been doing recently on e-services take-up and the December Agriculture Council agreement, and the aim will be to have an updated IT strategy by June. That will look at the costs and benefits once again and work forward from that.

Q128 Mr. Gerry Steinberg (City of Durham): You will not be coming back in two years' time and saying "Well, the IT was difficult, we could not get the software, unfortunately we have got to the Report and it has doubled in cost", because if you do not you will be the only department who has not said that.

Sir Brian Bender: This chapter of the NAO Report gives us a cautiously positive assessment of our risk management for future projects. This is a risky project; it would be folly of me to say there are not going to be any problems.

Mr. Gerry Steinberg (City of Durham): I will read about it in two years' time in the newspapers or find it on the web.

Chairman: Thank you, Mr Steinberg.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee. Neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.