BSE, the cost of a crisis : thirty-fourth report, together with the proceedings of the Committee relating to the report, the minutes of evidence and appendices / Committee of Public Accounts.

  • Public Accounts Committee
Date:
1999
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Licence: Open Government Licence

Credit: BSE, the cost of a crisis : thirty-fourth report, together with the proceedings of the Committee relating to the report, the minutes of evidence and appendices / Committee of Public Accounts. Source: Wellcome Collection.

    35/68 (page 9)
    [Mr Williams Cont] price of £129 that they were asking of you? They wanted five times as much as you eventually ended up paying them under competitive tendering. (Mr Trevelyan) That is correct. As I said, Chairman, there were a wide range of estimates at the time as to what was a proper price since there was no experience of slaughtering without any revenue from byproducts for the slaughter. We took the view that it was appropriate to take a long view. The Thirty Month Scheme will be with us in all likelihood into the middle of the next decade. If it had two or three months at the beginning where there was a large incentive paid, that was probably an inevitable consequence of the crisis. The important thing was to move towards competitive tendering just as soon as we could and I think the Report correctly identifies that that moment could not come until we had cleared the backlog in November/December 1996. scheme go bankrupt? (Mr Trevelyan) I do not have those figures, Chairman. 22. You are not aware of any off-hand? (Mr Trevelyan) No, I am not. Mr Williams: Quite a lot of the farmers did, of course. I think my colleagues will want to follow up on that further. Mr Wardle? Mr Wardle 23. Thank you, Chairman. Mr Packer, Mr Trevelyan, good evening. Mr Trevelyan, we meet again. I wonder if you would agree, Mr Packer, that when governments act with haste and the civil servants, albeit under pressure, try to respond they do tend to over-spend and someone gets rich. Mr Packer, I am all for people getting rich in a legitimate and sensible and fair way, but do you not think in this case, particularly with some of the abattoirs and renderers, some people have got very rich out of a price crisis? Do you think that makes sense? (Mr Packer) Our objective as the Department was to maintain and to support the essential components of the beef chain which consist of farmers, slaughter-houses and renderers and the schemes were devised to do that and not to compensate anyone for losses as such. Quite a lot of people lost money; it may be some people made money as well. - 24. I bet some people made quite a lot of money while others were losing their entire livelihoods. I want to pursue further what the Chairman was asking you a moment ago about the abattoirs. The Chairman was reminding you of the £82 provisional slaughter fee and then the reduction to £41 and then £25. The £41 figure was reached after examining the industry’s costs. What you said a moment ago implied that you knew all about not just farmers but abattoirs and renderers. Why on earth had you not examined their costs before? Why on earth did not you have at your fingertips sufficient information such that you would have known that £82 was an outrageous random and that £41 should perhaps have been your starting point? (Mr Trevelyan) 1 think that question is for me. I do not think there is any reason why the Intervention Board should have had cost data for the operation of slaughtering lines without any revenue from the fifth quarter. 25. You think that question was for you, Mr Trevelyan, but I think the question was for the Permanent Secretary. You run the Ministry, Mr Packer. Why on earth did not you have that information at your fingertips? We know Mr Trevelyan does not have the information at his fingertips. It is only a matter of a few months ago that he was here trying to explain a black hole in intervention sums to be disbursed. What about you, Mr Packer? (Mr Packer) There would be no reason for us to have that degree of detailed knowledge of an industry. We would need a very much larger department if we did have it. 26. So simply for the occasional inspector from MAFF or some associated agency to visit an abattoir and say, “Let’s just understand the economics of your business”, is something beyond your contemplation, is it? And that will have cost you administratively much more money. I think that is nonsense. (Mr Packer) We do not have a directed system in this country, though there is no reason why we should be aware of the detailed economics of slaughtering animals, and although it is generally appreciated in Meat and Livestock Commission publications that the slaughtering industry in general has been in a rocky position for a number of years. 27. Can we move on then to renderers. Why were there no competitive tenderers until January 1998? There can have been nobody at MAFF who was unaware that farmers up and down the country were muttering about the way renderers were ripping off the industry and the payment scheme here. You cannot not have known about that. Why was there not a competitive tendering scheme before January of this year? (Mr Packer) That is for Mr Trevelyan. (Mr Trevelyan) I have written alongside paragraph 2.34 that it takes a considerable time to break a cartel, Mr Chairman. The rendering industry chose to negotiate with the Intervention Board through their association. We indicated clearly that we wished to have a true competitive tender and throughout 1997 we maintained that position and as a result of maintaining that position we did finally get genuine competitive bids with the result which is reported in that paragraph. 28. So you persisted. I congratulate you for that. You are telling the Committee that there was effectively a cartel operating amongst renderers and, therefore, as with any such cartel, particularly with money flying around in this crisis and none of us deny it was a huge crisis, somebody was likely to profit excessively, is that correct? (Mr Trevelyan) 1 do not think it is any secret that there are a very limited number of rendering companies and some of them operated a dominant position in the industry and that was well known to the public authorities.