Department for Environment, Food and Rural Affairs: Foot and Mouth Disease: Applying the Lessons (HC 387-i) Public Accounts Committee 23 Feb 2005

Evidence given by Sir Brian Bender KCB, Permanent Secretary, Department for Environment, Food and Rural Affairs Dr Debby Reynolds, Chief Veterinary Office and Director General of the State Veterinary Service, Mr Simon Hewitt, Head of Exotic Diseases Prevention and Control Division, Mr David Rabey, Director of Purchasing (DEFRA) and Mr Barney Holbeche, Head of Parliamentary Affairs, National Farmers Union

Q48 Mr. Gerry Steinberg (City of Durham): It was mentioned earlier in the meeting that there were still people waiting for money to be paid to them. When I read this report I felt as though not only should they not get that money but we should be getting some money back from those who were paid too much in the first place. In 2002 when we had the meeting, Sir Brian, you assured the Committee that the work the valuers had done was legitimate. Yet, if you go to page 35, paragraph 5.5, the European Commission, doing exactly what your Department should have done, at an early stage, found basically the opposite, did they not? I will read it out: "The Commission considered that the Department's poor control over the valuation process contributed towards higher than necessary compensation payments. The Commission examined a sample of 100 large compensation awards but found that the rationale for the valuation was largely absent from the files. Its enquiries with farmers and valuers produced explanations which the Commission found to be weak and unconvincing. Many of the farmers and valuers contacted by the Commission refused, or were unable, to provide documentary evidence to support claims of pedigree or high productivity". In other words, there was a huge fiddle going on, a gigantic fraud going on, and people were being paid literally hundreds of thousands of pounds of taxpayers' money and Defra just paid out.

Sir Brian Bender: I would not accept the words "fiddle" or "fraud".

Q49 Mr. Gerry Steinberg (City of Durham): We will come to that.

Sir Brian Bender: I would refer you, Mr Steinberg, to the point I made earlier to the Chairman, that the data the Commission have produced indicates that the relative over-valuation that we provided for cattle was actually less than that in Ireland, France or the Netherlands. The figure for the UK under their data was 142%, France 159%, Netherlands 159% and Ireland 172%. The question, however, of course, is the arrangements left a lot to be desired.

Q50 Mr. Gerry Steinberg (City of Durham): Could I just ask you, the policy at the time - correct me if I am wrong - was that the valuers were paid a percentage of the value of the stock, is that right?

Sir Brian Bender: They were. For the future, they are paid per hour.

Mr. Gerry Steinberg (City of Durham): I rest my case. If you say to somebody "I am going to give you 10% of the value of so-and-so, now you go ahead and value it", my reaction is "I will take these for a fortune" which was exactly what they did, was it not? Look at figure 10, for example, just over the page. Remember these are the valuers who were getting a percentage of what they were valuing. Figure 10: "File No 12 - the Commission queried the valuation of a bull, valued at £30,000 due to its advanced age - a nine year old".

Chairman: Are you valued at £30,000!

Q51 Mr. Gerry Steinberg (City of Durham): I am a good old bull, I can tell you! I am a good breeding bull. "The maximum paid at auction for a prime bull in the UK prior to the outbreak was £42,000..." Here was - what we would say in the North East - a hard bull that was ready which was paid £30,00 for. "Six rams purchased in October 2000 for an average of £60 were compensated at £535 per head ..." I will miss the next one out. "... A farmer paid £14,000 for a yearling bull in January 2001. When slaughtered four months later, the bull was valued at £40,000". Are you telling me that the valuers were not taking you for a ride?

Sir Brian Bender: Two or three points on that. First of all, in some of these cases, for example the last one, we did look into it very carefully, the valuer said the valuation took two days and was done in an extremely thorough way. It was because the yearling was due to lay down a bank of semen for use in champion herd. I am not defending, and I would not seek to defend, every single one of these cases. Can I just say looking forward, in terms of the controls, we have a list of valuers ourselves now who are approved by us in consultation with the trade associations.

Q52 Mr. Gerry Steinberg (City of Durham): Were any of these valuers doing this before on the list?

Sir Brian Bender: I will come back to you on that. We will be appointing the valuers of the farmers. They will be paid by the hour not by any other form of commission. We have four monitor valuers who will be providing an oversight of what is happening.

Q53 Mr. Gerry Steinberg (City of Durham): Basically, Sir Brian , I am saying they were fraudulent, you are saying that they were neglectful. Now in either case if they were fraudulent, as I think they were, they should be in court for a criminal action because they were thieving from the taxpayer, if they were neglectful then they should be in court for a civil action because they were incompetent in doing the job which cost the taxpayer a fortune. How many have been reprimanded or taken to court or have you tried to get money back from?

Sir Brian Bender: We have been trying to take money back from a number of valuers. I cannot remember the exact number but we have outstanding actions in terms of recompense from a number of valuers who we think were overpaid. I cannot immediately find that.

Q54 Mr. Gerry Steinberg (City of Durham): You can write to me on that.

Sir Brian Bender: Nine valuer firms with the total sums involved being £1.2 million and a further 22 valuers claimed £200 over and above their entitlement. I can provide you with a note setting that out.

Q55 Mr. Gerry Steinberg (City of Durham): Who were they?

Sir Brian Bender: Again, I can provide that. I do not have that information.

Q56 Mr. Gerry Steinberg (City of Durham): Would you agree with me that the policy was wrong at the time and it was a recipe for the industry to sign blank cheques?

Sir Brian Bender: I would not put it in those words. As I said at the beginning of this hearing, in 2002 the fundamental policy decision at the time was nothing should get in the way of a rapid slaughter. However, there are certainly lessons to be learned from last time about how we should have more effective controls in place, as I have just described.

Q57 Mr. Gerry Steinberg (City of Durham): I want to move on quickly because I am trying to draw a picture here. I see the valuation as a major issue but, also, as I read this report, as far as the taxpayer is concerned, I saw how much the cost of disinfecting the farm was costing and that was astronomical, absolutely astronomical. Turn to page 32, paragraph 4.14, please. "Current UK legislation allows the Department to require the farmer to meet the costs of cleansing and disinfection, but this provision was not used during the 2001 outbreak, to ensure a thorough and consistent approach was taken. In 2001 the Department spent around £300 million cleaning and disinfecting more than 10,000 premises - an average of £30,000 a farm." It goes on to say: "However, in the Netherlands, the average cost of initial disinfection was between £70 and £550 ..." a farm. Let us say they were getting it done for nothing, and that was grossly cheap, it is a hell of a difference between £750 or £550 and £30,000. The point I am trying to make here is what with the valuers ripping everybody off, the people who were disinfecting ripping everybody off, the farmers were better off catching foot and mouth, were they not?

Sir Brian Bender: The fundamental difference between what we did in 2001 and what the Dutch did is that the Dutch made the farmers pay for the secondary cleansing and disinfection and we did not. Whether or not ministers will decide that we should change that policy in the future will be part of the overall consultation on the animal disease levy.

Q58 Mr. Gerry Steinberg (City of Durham): Looking at this, quite honestly if I had been a farmer and I was struggling and I saw what was happening, I would have been tempted to put foot and mouth into the farm. You were going to make a fortune. It was the farmers who did not catch foot and mouth who were the ones who missed out. The ones who had it got an absolute fortune off the British taxpayer, that cannot be right. It was encouraging them, there was no deterrent.

Sir Brian Bender: The work we are doing on biosecurity, the tighter controls we have in place and the consultation we will be going out on later this year on disease levy are intended to get those incentives in a better balance.

Q59 Mr. Gerry Steinberg (City of Durham): If there was a future foot and mouth epidemic which, God forbid, will never be as bad as this again, are you saying the policy now will be to ensure that the compensation which will be given will be much better and clearly looked at and the disinfecting of the farms will be left to the farmers themselves to do through an insurance policy or something like that?

Sir Brian Bender: The answer to your question is yes. As I outlined earlier, some of the controls we have in place on valuation will be much more effective. On cleansing and disinfection, we also have much more effective controls in place but the current policy is still that the taxpayer will pay and whether or not that should be passed to the farmer will be part of the consultation on the disease levy.

Q60 Mr. Gerry Steinberg (City of Durham): My last question at this stage: is it not about time that the policy was moved in the direction of the farmer being more responsible for his own livestock and land than the taxpayer and that an insurance policy for farmers, even if it is through Defra - I do not know - should be looked at and they should not depend upon 100% basic payment and compensation from the taxpayer?

Sir Brian Bender: The answer to your question is yes, though the route we prefer to go down and will be consulting on, I hope later this year, is a levy based system with a pump priming shared between the industry and Government. That is still a route to answering your question positively.

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Q125 Mr. Gerry Steinberg (City of Durham): Can I ask a question? I am totally baffled. Why do they not vaccinate animals now?

Dr Reynolds: The national herd and flocks may be vaccinated against particular problems, like leptospirosis and so on, but there is no background vaccination for foot and mouth disease. In fact, it is banned in Europe as a prophylactic measure.

Q126 Mr. Gerry Steinberg (City of Durham): As a what?

Sir Brian Bender: If you vaccinate on a regular basis in order to avoid the animal catching the disease, that is prophylactic vaccination. That is not considered a cost-effective measure and it is not advised by the veterinary experts.

Dr Reynolds: Furthermore, if I can just add, it does mean that you have got a considerable ongoing cost of vaccination, so it is of very great advantage it is free.

Q127 Mr. Gerry Steinberg (City of Durham): We do eat vaccinated meat now but vaccinated for other diseases, is that right?

Sir Brian Bender: Correct.

Q128 Mr. Gerry Steinberg (City of Durham): So what is the difference between meat vaccinated for one disease against another disease?

Sir Brian Bender: None.

Q129 Mr. Gerry Steinberg (City of Durham): What did you say? None? What the hell is all the trouble about?

Sir Brian Bender: People in Argentina have been eating meat vaccinated for foot and mouth for many years, so there is no public health issue here and the Food Standards Agency are on the record as saying that.

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Q137 Mr. Gerry Steinberg (City of Durham): If they vaccinated and let the animals live but we would still not eat the meat, would that have been more expensive than the cull that took place and the compensation? Do you understand what I mean?

Sir Brian Bender: I understand the question. I do not know what the position was in 2001. By the time we were at the crucial stage of whether or not to vaccinate, the number of cases per day had already peaked, or was about to peak, but I do not know whether overall it would have been more cost-effective or not.

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Q177 Mr. Gerry Steinberg (City of Durham): Presumably you have been to New Zealand, Sir Brian?

Sir Brian Bender: Actually I have not, I wish I had.

Q178 Mr. Gerry Steinberg (City of Durham): Really, that does surprise me.

Sir Brian Bender: My loss.

Q179 Mr. Gerry Steinberg (City of Durham): Permanent Secretaries are usually always going round the world seeing things. If you go to New Zealand - I have been to New Zealand - when you get off the aeroplane, you are immediately confronted by dogs sniffing for food. Is that a good idea?

Sir Brian Bender: Yes, in the appropriate circumstances. As the Department said in the Treasury minute that responded to your report from the 2002 hearing, you cannot compare the situation in the UK with the situation in New Zealand because of the larger number of passengers and, indeed, the fact that we have to abide by EU regulations. Subject to that, having sniffer dogs is a good thing and customs will have, or are moving up to, about ten by this April.

Q180 Mr. Gerry Steinberg (City of Durham): Ten? For the whole of the country?

Sir Brian Bender: Yes. They also have 3,500 detection officers who are trained in the detection and seizure of products of animal origin.

Q181 Mr. Gerry Steinberg (City of Durham): Can I tell you of an experience that I had last year at Newcastle Airport. I was standing waiting for my bags to come off the carousel after coming back off holiday and, as usual, I just watched everybody's bags going round and round and my bag was not on the carousel going round and round. There was this one bag at the end going round and round, mine was not there. I was standing there like a big pudding and then suddenly I looked at the carousel and there was blood all over the place. I called the customs' officer who came over and opened the bag and found a dead goat in the bag which was bleeding, the blood was all over the place. The bloke whose bag it was - I assume it was a bloke - whoever's bag it was had scarpered. That was illegal meat being brought into the country presumably.

Sir Brian Bender: I would assume so. Customs had made some 15,800 seizures in the year ending last March of illegal imports of this sort.

Q182 Mr. Gerry Steinberg (City of Durham): The point I am trying to make is if it had not been for the fact that my bag had been lost and I was standing watching this bag going round --- It was a good job it was a dead goat because it could have been somebody in the bag really, could it not? There was not a dog in sight. I have got off a plane from the Canary Islands and there were dogs sniffing you as you came in, in case you were bringing in drugs. I would have thought a little dog at Newcastle Airport would stop this happening. I was told that this is a regular occurrence, people bringing in dead animals to eat presumably.

Sir Brian Bender: There is a large importation of meat products for personal consumption and a lot of that is illegal and that is why we have passed it over to customs who have the expertise on dealing with illegal imports. As I said, the number of seizures was about 15,800 in the year to March 2004. They have increased their enforcement activity. That accounts for about 186 tonnes.

Chairman: On our draft programme for 21 May, Mr Steinberg, there is a hearing on illegal meat imports, so we very much hope that you are still a Member of the Committee on 21 May.

Q183 Mr. Gerry Steinberg (City of Durham): I very much doubt it. I shall be consulting for Defra. I am finished, so if you ever need any consultants.

Sir Brian Bender: Judging by the representative of the National Farmers' Union who can sit in the back row and then make a contribution ---

Mr. Gerry Steinberg (City of Durham): I am very cheap. A pound of steak!

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.