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
Catalogue details

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.

    37/68 (page 11)
    i et el [Mr Wardle Cont] of data fields. That took a great deal longer to develop and it was not possible to develop it until well into 1997 because this scheme was not stable; we did not safely operate. Mr Wardle: In the midst of all of this nightmare, Chairman, I am encouraged by Mr Trevelyan’s frankness and by the hint of progress being made. Bearing in mind that I hope to catch your eye when we come to a further session of this Committee before the evening is over, I think I will leave it at that. Mr Steinberg 40. Is it correct to say at the present time there are still approximately 4.25 million cattle over 30 months which will still qualify for the scheme? (Mr Packer) That is broadly correct, Mr Steinberg. 41. So when do you envisage the 30 month scheme will actually end? I ask this question because many, many farmers are putting this question to me. (Mr Packer) We would not envisage the scheme completely ending, although it would be very much phased down, until such time as the last animal born before 1st August 1996 is slaughtered or dies. So we are talking about the final, final ending of the scheme in perhaps 15 years’ time. 42. Good heavens! Can I return to the questioning that the Chairman and Mr Wardle were on? I got the impression when I read the report that in the Department’s case to get the scheme moving very quickly the taxpayer—and I think the Chairman used the word and I have written it down as well—appears to be getting ripped off by both the abattoirs and the renderers. The question was asked but you did not seem to concentrate on a response. I would have thought that where there were over payments these over payments should be repaid in some way, because the amount of money paid out and the amount of profit these people made was absolutely outstanding. Should there not be a system of getting some of this money back? (Mr Trevelyan) As I mentioned earlier, we did reflect in August 1996, when we had the results of the Coopers & Lybrand open books exercise, as to whether given that the mean price, the cost of slaughtering, was about £45 per head we should not attempt to recover that. There were practical difficulties in that this scheme was extremely unstable in its early days with slaughter houses coming in and out of the scheme as they arranged their affairs with their commercial side. As you will recall, the industry was very conscious of the risks of engaging in the 30 month scheme work at the same time as running commercial services, and a number of abattoirs went out having started in. There was also the question of motivation. We were up against the biggest crisis in the operation of the scheme, which was the autumn of 1996, and to enter into a recovery exercise at that point we regarded as having a major disincentive effect. So we took the view, and as Mr Packer has said the scheme has a very long run ahead, that we had to see this additional cost in the early stages as something which was borne by the scheme over its life. 43. Ihave listened to that and I am a total layman in agriculture, but as senior civil servants and top civil servants you seem to be giving the impression that you expression, of what was actually going on. I get the impression that not many questions were asked, for example, about the abattoirs and renderers. You seem to say, “This is nothing to do with us. We are not really au fait with that part of our industry and we know nothing about it.” It seems incredible to me. It is a major part of the industry and yet you seem to be saying you did not know what was going on. I read the report, and I am not very technical, as I say, and keeping it simple it seems to me that both the Board and the Ministry were not on the ball at all. The Board did not seem to understand the capabilities of the abattoirs or the renderers, because somewhere in the report you were requesting tenders and these people could not even tender to the brief you were asking for. That was the Board. The Ministry, for example in one part of the report, said they were not expecting many beef cattle being brought in the scheme which resulted in huge payments and too much compensation. I am astounded that you seem to be so woefully ignorant of what was actually going on and I would be interested in your comments. (Mr Packer) It is no good our pretending to knowledge we do not have, Mr Steinberg. As I was explaining earlier, it really is not the Department’s job to be aware of the detailed economics of all the industries for which we are responsible. Of course, the over 30 month scheme was, I think it is fair to say, an unprecedented scheme. It was introduced at a time of very great lack of confidence in the industry and it was not possible for anyone to predict how many clean cattle, to use the example you gave, would be entered for it. Not merely was it not possible, nobody actually did predict it at the time. It was not just us, nobody else did either. When it became clear that clean cattle were being entered in the scheme, we pressed the Commission to reduce the ratio. We have already touched on that. It took them two or three months to agree to do so. It was unfortunate but it was not our responsibility. We also reduced the rate of payment in line with market prices. It is true that at the early stages the compensation payable under the scheme was high, but that was again a European Commission proposal voted on in the management committee. 44. It just seems strange to me, or unreal to me, that professional civil servants were serially oblivious to what was going on. There was a huge backlog of unsaleable cattle, yet the Ministry did not seem to catch on that this was actually happening, and that eventually it took them six months before it registered and that was around September. I can remember that I received a letter in July 1996 and I wrote to the Secretary of State at the time, not because I knew anything about it but because a farmer had written to me and was playing hell at the time because he could not get his cattle to the abattoir, he said he was finding it impossible. I wrote to the Ministry and pointed this out in July 1996. I was absolutely fobbed off although I accepted the answer given to me because I knew nothing about it. I was telling you and presumably