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.

    40/68 (page 14)
    [Mr Davies Cont] (Mr Trevelyan) I think that is a question for me but I think it is hypothetical. 56. I know it is hypothetical but how much would that value be? (Mr Trevelyan) We have not done that calculation. Mr Davies: Has the NAO done that? Mr Williams: Does it not say in paragraph 2.23 that the dropping of the price to £45 was estimated to save £200 million over the potential period of the scheme, therefore since the £25 was approximately half of that figure, would it not follow that a further £100 million or thereabouts would have been saved had the £25 figure applied? It is called arithmetic. Mr Davies 57. They are waiting 14 months for the computer system to arrive! (Mr Trevelyan) What I am concerned about, Chairman, is the headline figure “Intervention Board wastes £45 million” because that simply is not the situation we were in. Mr Williams 58. I am surprised you could not give a simple figure like that, that is all. (Mr Trevelyan) You can calculate that sort of figure but it has no meaning in the real world because you are faced with a job to do in circumstances which are entirely different. We could not enter into competitive tendering in April 1996 as the NAO said. Mr Davies 59. What was the price of £87.50 based on? Obviously it was not based upon a market price, it was not based upon a true knowledge of the number of cattle available or a true knowledge of the capacity of the industry. So what was it based on? (Mr Trevelyan) It was based on the assertion of the abattoir owners as to what it would cost them to service the Government’s needs at the time. We did not accept it and we said we will pay you that but we will do so on the basis that we will examine your books as soon as they become available. In fact, we were rather disappointed that they did not become available until August of that year but of course Coopers & Lybrand did have to work on clear months trading so they needed June and July and they needed to analyse those figures before they were available. 60. So in the difference between the eventual market price of £25 and the £87.50 you paid originally, what proportion of that value will or has been recovered by the taxpayers from the abattoirs pulling a fast one? (Mr Trevelyan) 1 think we have made it clear that we did not consider we were in a position to recover any excess paid. 61. Can I ask about the computer system for recording payments. I understand from the Report that it took 14 months longer than envisaged and that as a result there was quite a high incidence of low value errors as they are called. What do you think the actual cost of that delay was and could it not have been speeded up by investing more and getting it done more quickly. (Mr Trevelyan) {| think it is fair to say there was virtually no cost. 62. So it would not have mattered really if there had been 15, 16 or 17 months’ delay. Is that right? (Mr Trevelyan) It would matter in terms of the quality of information which we give the industry. The NAO lists in paragraph 2.59 what they regard as the disadvantages of the Intervention Board not having a computerised system from day one. It normally takes us 12 months or so to build up a computer system for a new scheme. We had no notice of this scheme and those disadvantages are clear in terms of information, in terms of the amount of manual work we had to do. The one on which I might feel vulnerable is delays in making claims for reimbursement from the European Union. As I have said, we operated a safety first policy which led us to under-claim by eight per cent from the Community. In other words, we were claiming over 90 per cent of what was due to us. 63. You will be claiming that money and presumably you will get the interest on the payment you apply for late or have you lost that as well? (Mr Trevelyan) 1 think we may have lost the interest. 64. You mention that the rendering sector of the market was a cartel and it mentions elsewhere in the Report that the Calf Processing Aid Scheme was open to systematic deception. In light of that knowledge, do you not think it was unfortunate that we had no tracking system or computer payment system and in fact the Department had left itself open to be ripped off by organised deception within the industry? (Mr Trevelyan) 1am not entirely at home with the phrase “organised deception”. 65. At the time it was acknowledged that there was a rendering cartel and the Report mentioned that the Calf Processing Aid Scheme was open to systematic deception. Would it not have been wise to have moved more quickly to a tracking system and computerised payment system? At least you would be disciplined in confronting a difficult market place. (Mr Trevelyan) The NAO’s conclusion on the Calf Processing Aid Scheme is that “errors in claims had occurred but checks carried out by the Board and action taken to address weaknesses were adequate.” 66. On the timing of the introduction of these schemes, 3.48 makes out that the tracking system we have been talking about was delayed because of the general election. Is that just blaming politicians for the Civil Service dragging their heels? (Mr Packer) I did not read that paragraph as blaming politicians. It was merely stating a fact, that a final decision to go ahead had not been reached by the general election. That marginally held matters up because obviously it was necessary to put full submissions to new ministers whereas old ministers would have been aware of the background, but that is not a major factor and I would not claim it was.