Ministry of Agriculture, Fisheries and Food and the Intervention Board : BSE, the cost of a crisis report / by the Comptroller and Auditor General.

  • National Audit Office
Date:
1998
Catalogue details

Licence: Open Government Licence

Credit: Ministry of Agriculture, Fisheries and Food and the Intervention Board : BSE, the cost of a crisis report / by the Comptroller and Auditor General. Source: Wellcome Collection.

    36/130 (page 30)
    30 Determination of slaughter fees E22] At the outset of the scheme, as competitive tendering was not used, the Intervention Board negotiated with abattoir trade organisations a temporary slaughter fee of £87.50. An initial asking price of £129 had been sought by abattoir representatives. The Board required that the fee be subject to adjustment based on the results of an open books examination of the costs of slaughtering. This was conducted by Coopers and Lybrand and submitted to the Intervention Board in July 1996. The examination covered the fixed and variable costs incurred by abattoirs in undertaking Over Thirty Month Scheme work. P22) This examination found that the costs of slaughtering in 12 abattoirs ranged from £39 to £51 per animal and concluded that reducing the slaughter fee to the mid-point of this range (£45) would save up to £45 million in a full year and £200 million over the potential period of the scheme. These figures did not take account of the value of the hides which Coopers recommended abattoirs should be free to sell and for which there was then an emerging market. In the light of these findings, the Intervention Board reduced the slaughter fee to £41 from 26 August 1996. At the same time they agreed a number of supplements to compensate abattoirs for expenses not reflected in the main fee, relating to weekend working, heavy animals and the preparation of carcasses for cold storage. This fee structure remained in force until 13 July 1997 when rates fixed by competitive tendering were introduced. E224 The Board considered backdating the £41 fee to 16 June 1996 and thereby reclaiming the over-reimbursement of the abattoirs’ costs, a course which the Treasury favoured. With the agreement of the Agriculture and Treasury Ministers, the Board decided not to do so in order to maintain the goodwill of the participating abattoirs, to avoid the risk of disrupting the throughput of the scheme at a time when there remained a large backlog of animals awaiting slaughter. Having set the slaughter fee at the lower end of the range suggested by Coopers and Lybrand, this resulted in some recovery of the excess cost reimbursement provided by the initial temporary fee.