§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pope.]8.48 pm
§ Mr. Paul Keetch (Hereford)
I am delighted to be able to open my first Adjournment debate. In a week when all eyes in Parliament will focus on a private Member's Bill to ban the hunting of foxes, I should like to bring to the attention of the House the slaughter of almost 2 million cattle. That is the number so far slaughtered under the over-30-months scheme. In fact, since April 1996, the total amount is 1,772,000 cattle. That is an incredible number of slaughtered animals—all because of politicians' errors.
The OTMS was of course an attempt to restore public confidence in the beef herd following the bovine spongiform encephalopathy crisis, which came to a head on 20 March 1994. The then right hon. Member for Loughborough, now the right hon. Member for Charnwood (Mr. Dorrell), announced a possible link between BSE and Creutzfeldt-Jakob disease. I have no doubt, representing, as I do, a largely rural constituency, that the management of that crisis cost the former Government hugely on 1 May. The right hon. Gentleman may have escaped the cull of Tory Members of Parliament by moving constituency, but thousands of cattle, of course, did not. The crisis really began in 1988, when BSE was made a notifiable disease. Tonight, I shall restrict my comments to the OTMS.
The OTMS determined that cattle over 30 months old would no longer be able to enter the human or animal food chains. When introduced, it paid farmers compensation of 1 ecu—which was then rated at 85.6p— a kilo liveweight for cows and clean cattle. Since then, however, there has been a steady decline in the amount of compensation paid.
The Tories cut compensation from 1 ecu to 0.9 ecu in October last year. With the growing strength of the green pound, by July compensation had fallen, in real terms, from 85.6p a kilo to just 64.9p a kilo. It is now just 55.7p a kilo. That is because the new Government have also made cuts. First, they cut the rate for cows to just 0.8 ecu and then they imposed an arbitrary maximum weight of 560 kg an animal. Therefore, whatever the weight of a cow for slaughter under the OTMS today, it would be worth only £312. If it were destroyed for being tuberculosis-ridden, the same animal would be worth £580. That is surely not equitable.
We all understand the terrible cost to the Exchequer and the nation of the BSE crisis. I know that the Minister and his hon. Friends in the Ministry of Agriculture, Fisheries and Food have inherited an enormous problem, and they are dealing with it very positively, but by trying to shift the cost of the crisis to farmers, they are adding to the pain that has already been inflicted.
§ Sir Robert Smith (West Aberdeenshire and Kincardine)
I congratulate my hon. Friend on obtaining the debate, especially as I also represent an area that is heavily dependent on farming. He has identified the crux of the matter. There has been a change of Government. The Labour Government are blaming the previous Conservative Government for negligence in not bringing 1059 forward a scheme that could get us back into the European market, which they are genuinely right to do. However, it seems somewhat unfair that the farmers are paying the price for Government negligence. The party in government may be different, but the Government have an inherited responsibility to take on the burden of the previous Government's negligence and not to pass it to farmers. Ministers should illustrate to the Treasury that this seems a classic case for the contingency reserve. It is a short-term contingency crisis for which the farmers are paying the price—when the Government should be paying.
§ Mr. Keetch
My hon. Friend makes a valuable contribution to the issue, as he always does. He is absolutely right.
It should be remembered that cattle farmers have not been equally affected. Dairy farmers, for example, did not have their principal product—milk—dramatically affected by the BSE crisis. Of course, beef farmers did. It is an unfortunate twist of fate that beef farmers who produce prime, distinct herds, such as Hereford herds, have found their businesses most affected. That relates to the fact that, in 1988, the ban on exports began. In August, the imposition of the maximum weight especially affected the bigger beef animals.
The catastrophe of beef herds has not ended. The Government have been suggesting in some quarters that they might exempt steers altogether from the OTMS. There is talk of a £10 charge being levied on cattle passports. Incidentally, it is sad that Northern Irish beef has not been able to be re-exported this week. The dramatic effect is that that underlines the fact that any passport or tagging system that is introduced must have the confidence of our European partners. I stress that to the Government. I am glad of the positive way in which they are dealing with Europe, in contrast to the previous Administration. The British beef industry cannot afford a system that nobody believes in.
It is not just the compensation package that has affected farmers in rural areas. Since the introduction of the scheme, the number of abattoirs available for use in the OTMS has been cut from some 50 to just 29. Many abattoirs were worried about the tendering procedure, and I know from experience in Herefordshire that some decided not to bother to tender. The fact that we now have half the number of abattoirs has reduced flexibility for farmers and has dramatically increased the time and length of the cattle's last journey.
§ Mr. David Drew (Stroud)
I was with a group of farmers yesterday, and I raised that very point with them. They assured me that the geographical spread of abattoirs was done in such a way that they did not face a significant problem. Admittedly, those farmers were mainly dairy farmers, but they were also affected by the scheme. I would ask you to check your facts, because the farmers do not face the problem that you allege.
§ Mr. Keetch
I am not sure which constituency the hon. Gentleman represents, but I can tell him that Hereford does not have a single abattoir. In Wales, there are only 1060 two abattoirs—one on Anglesey and one in Cardigan. If you are suggesting that that is a geographical spread for the Principality, you clearly do not know Wales.
§ Mr. Deputy Speaker (Mr. Michael Lord)
Order. Both hon. Gentlemen have used the word "you". I am not responsible, and I should be grateful if they would try to use our normal parliamentary language.
§ Mr. Keetch
I apologise, Mr. Deputy Speaker.
I happen to know that my hon. Friend the Member for Somerton and Frome (Mr. Heath)—who unfortunately cannot be here tonight because of parliamentary business—conducted a survey of markets in the south-west, which might be helpful to the hon. Member for Stroud (Mr. Drew). My hon. Friend found from his local market in Frome that, in the first week in November, almost 60 cattle were sent to either Birmingham or Kent. Cattle from Salisbury and Shaftesbury markets were also sent to Kent, and cattle from Chippenham ended up in Essex. That is hardly a fair distribution of the abattoirs, and I urge the Government to reconsider their number and geographical spread. The Government should reopen the tendering procedure and cut the time and cost of those poor animals' last journeys.
Most poignant of all is the fate of the so-called casualty cows, some of which are forced to travel hundreds of miles to be dealt with. Farmers used to be able to issue a section 18 certificate, effectively self-certifying casualty cows, but that has been ended. Vets are now required to issue a certificate, which costs between £30 and £40. However, the certificate is valid for only 24 hours and, with waiting lists at some abattoirs of up to two weeks before cows can be dealt with, repeat certificates are almost always needed. Not even the excellent British farmers can anticipate a casualty cow two weeks in advance. The practice is a national disgrace, and the Government must end it now.
In addition, the huge costs of storage of the specified bovine material that has resulted from the OTMS are still growing. Much of it goes into cold storage to wait for incineration, because there are not enough incinerators powerful enough to destroy all possible traces of BSE. Although attempts are being made to build more incinerators, the efforts are being blocked by local councils.
§ Ms Julia Drown (South Swindon)
Does the hon. Gentleman agree that it is important that those involved in considering sites for storage look for the safest methods and buildings and ensure that the most up-to-date precautions are followed? Local residents must be assured that the risks are minimised, but I fear that that does not always happen at the moment.
§ Mr. Keetch
The hon. Lady makes a valid point, and she is right to say that we must consider the safest way to approach the incineration of the products. I am sure that she, like the Liberal Democrats, does not wish to increase the scare stories that surround BSE.
Since the subject of my Adjournment debate was announced last week, I have been inundated with stories about what happens to the waste products from the OTMS. I have been told of fields in Staffordshire on which, allegedly, some 50,000 gallons of such waste are 1061 spread every day. The Environment Agency is concerned about that practice, but the Government must act. We are also told of carcases that apparently carry no risk of BSE being used as landfill waste.
It seems to me, and to many of my hon. Friends, that the present Government, having inherited the problem from the previous Administration, simply do not know what to do with the results and leftovers from the OTMS. They must assure us that all the waste will be either stored safely or dealt with properly. We need a little more transparency and information on the subject, if we are not to have more problems with scare stories.
I want to ask the Minister several specific questions. For example, how long will the OTMS last? Will it, and the calf scheme, last as long as the crisis? How many cows do the Government expect will be processed through it, and do they believe that that number will decline? The Government must also give us assurances about beef imports into Britain. We hear rumours about beef from Russia coming here, and we need guarantees that any beef imported into the United Kingdom has had all specified risk material removed.
During the scheme's existence, the rural communities of Britain have suffered enormously. A recent survey conducted in the county of Hereford and Worcester, for example, suggested that 256 jobs have been lost simply in businesses that supply or buy from farms. Those jobs were not even on farms. Of the firms approached, 56 per cent. said that they had lost business directly during the OTMS, as a result of the BSE crisis. Only 4 per cent. said that they had gained extra business from it.
The Government must also understand that the rural communities are suffering the growing problem of bovine TB. We cannot afford to lose our TB-free status, and I welcome the Minister's efforts to ensure that the Krebbs report will be published shortly.
My hon. Friends and I wish the Government well in their dealings with the rural communities, and in their attempts to end the export ban and to restore confidence. We wish them well in their attempts to breathe new life into the British beef industry. The farmers of Herefordshire, indeed the farmers of all of Britain, deserve that respect. I hope that the new Government will not let them down.
§ 9 pm
§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Jeff Rooker)
I congratulate the hon. Member for Hereford (Mr. Keetch) on his first Adjournment debate, and the way in which he put the case for the beef industry, throughout which the name of his constituency, of course, resonates. It is a beautiful part of the world, which I often visit.
Certainly there is a case to be made, which the hon. Gentleman put succinctly. I must tell him that I would need a little more of what my learned friends call "further particulars" for some of the allegations that have been made before I could promise to take action. Nevertheless, I appreciate the force of his argument.
I shall first try to deal with some aspects of our policy. I do not want to take too long and try the patience of the House, but the issue is important. The Government 1062 welcome the opportunity for the debate. We have no problems about debating such issues, although they are difficult. We understand the fact that thousands of people have been affected, and that BSE and all its implications are costing the taxpayer a fortune—more than £1 billion this year and, we estimate, £4 billion in total. That is an enormous sum, and we must account for it.
It is clear from what the hon. Gentleman said that he is interested not only in the operation of the over-30-months scheme—in the jargon, it is called the OTMS, but I shall try to avoid using that term—but in the policy that drives it, a policy for which we must be accountable.
I shall give a brief rundown of some of the rationale behind both the policy that we inherited and the policy that we are now conducting. The over-30-months scheme provides for the slaughter—the killing—and destruction of cattle over 30 months. That is not to say that all cattle are slaughtered when they reach 30 months. Obviously, many milkers are older than 30 months, but when they have finished their working lives, if they are older than 30 months, they will not go into the human food chain.
That decision went well beyond the independent advice of the Spongiform Encephalopathy Advisory Committee to de-bone cattle in licensed plants supervised by the Meat Hygiene Service. Contributory factors were the views of retailers and catering establishments, which were reluctant to sell over-30-months meat, and those of farmers' representatives, who were keen for the Government to intervene.
Compensation and disposal arrangements were established in European Union regulations in April last year. Maintenance of the scheme is now a precondition of the Florence agreement for lifting the export ban on beef and cattle. Therefore, it is important to remember that the Government cannot unilaterally change the scheme. It is not within the competence of this Government or this Ministry to change the scheme, the conditions or the compensation arrangements, which are enshrined in EU regulations.
Changes have been relatively few and they have to be proposed by the European Commission and approved by EU member states. Most of the changes in the sterling value of compensation payments have not been achieved through regulation, but are attributable to fluctuations in the green pound, which I hope will be the subject of another debate.
The scheme is very expensive. The over-30-months destruction of cattle scheme is the single most expensive part of the BSE crisis. Scheme expenditure in the last financial year amounted to some £870 million. The budget forecast for the four years from April 1996 is £1.8 billion. Therefore, expenditure on all BSE-related measures over those four years is forecast to be £4 billion, and more than half of that is for the scheme.
I must also remind the House that the EU contributes only to the cost of compensating farmers for the lost opportunity to market the over-30-months animals. The remainder of the compensation bill plus the full cost of slaughter, rendering, storage and in due course the ultimate destruction of cattle entering the scheme is borne by the British taxpayer.
The significant costs have created difficulties for the Government this year—difficulties that the previous Administration also discovered. As in so many areas of life, the previous Administration left insufficient 1063 provision in the budget for this year. As everyone knows—I do not intend to argue this at length—we are committed to maintaining the overall public expenditure programme of the previous Government.
§ Sir Robert Smith:
When we meet Ministers, they explain that when they took over and opened the cupboards, they discovered that the previous Government had been negligent in even starting to address a scheme that would get us back into the European market. Now that the negligence of the previous Government has been discovered, why are the farmers having to pay the price?
§ Mr. Rooker
It is not just the farmers who are paying the price, but the whole of the food industry. The beef industry is certainly paying the price throughout the chain—in transport and retail—for the BSE crisis. There is no question about it, and we are not seeking to hide the fact that an unfair burden has been placed on the beef industry as a result of the BSE crisis—far from it. As I said, the financial constraints within which we are working are well known, and we make no apology, because they were made clear. The fact of the matter is that if provisions are not made, the expenditure cannot be made.
The costs are escalating. We have had to go to the Commission to get agreement to revise the compensation arrangements. Those discussions resulted in the changes introduced on 4 August, which we debated before the summer recess. I do not think that it would be helpful for me to detail all of them tonight. We recognise that those changes have affected farmers' incomes, particularly those of beef farmers, who have traditionally produced animals with a higher value at slaughter than dairy cows would command. However, we had no real alternative but to introduce some financial discipline into this demand-led scheme.
Ministers have gone to considerable lengths to explain our policy to farmers and their representatives. There are no easy options. We have offered the industry an opportunity to produce alternative proposals for a better distribution of the money that is available. That offer has been made throughout the industry. So far, we have not received any suggestions. Certainly, the National Farmers Union has not submitted any alternative proposals. That is not a criticism, but merely a statement of fact. Others have suggested alternatives, none of which is, in our view, practical, cost neutral or successfully negotiable in Brussels.
Some have suggested paying greater compensation on beef cows or removing the weight limit on them, but there are considerable problems in identifying suckler cows and policing a scheme offering different rates. Others have suggested removing steers and, possibly, heifers from the scheme. We agree. Farmers have had more than 18 months to adjust to the production and marketing system, so that they can sell clean cattle at prices well in excess of over-30-months scheme compensation allowances.
It is a source of bewilderment why farmers sometimes leave cattle until they are in the over-30-months scheme, when they could have been sold on the market and gained a higher price. Unfortunately, the Commission does not agree with our idea for a scheme to be restricted to cull 1064 animals. The over-30-months scheme is likely to be around in some shape or form for some time to come. By that, I mean some years to come.
§ Mr. James Paice (South-East Cambridgeshire)
Will the Minister confirm that the Agenda 2000 proposals for reform of the common agricultural policy are based on the assumption that the over-30-months scheme ends at the end of 2001? If that is the case, does it tie in with any of his expectations about the timing of the lifting of the ban?
§ Mr. Rooker
The answer to the second question is no. I have seen no exit date for the over-30-months scheme. I do not think that it is tied to Agenda 2000 in the specific way that the hon. Gentleman asked about. It is a reasonable point, because by then there should be no reason to continue the scheme, as our best scientific advice is that BSE will be eradicated by that date. This year it is occurring at 40 per cent. of last year's rate; last year, it occurred at 40 per cent. of the previous year's rate; and that year it occurred at 30 per cent. of the year before's rate. It is a dramatic, exponential decline. Fewer than 100 cattle a week on average are now diagnosed with BSE.
There are other aspects to the lifting of the ban. I and my ministerial colleagues have said before that the Florence negotiations are so imprecise that it becomes a moving target simply to know whether we have met the preconditions. That is extremely difficult. The previous Prime Minister was the last person to offer advice to the present Prime Minister about negotiating skills in Europe, considering the Florence agreement on lifting the ban.
We have an open mind on alternative compensation arrangements. If someone is prepared to come to Ministers with a cost-neutral scheme that we can put to Brussels, which must be the final arbiter, we shall consider it positively and confidently. We are keen to find practical alternatives.
The hon. Member for Hereford spoke at some length, understandably, about operational matters. Many people have been critical of the decision to reduce the number of abattoirs working on the over-30-months scheme. I have visited only two cattle abattoirs—both on the same day— since I became a Minister. The first was fairly small, and it was the owner's last day of working on the over-30-months scheme.
The owner did not whinge, but told me what he had lined up for the following week and how he would move his facilities around and be positive for the future. That is not to say that the scheme did not cause him problems, but he was wholly positive in his approach: a really can-do abattoir owner. I was pleased, because I understand that others are less can-do. I shall not embarrass the gentleman in question by mentioning the abattoir that I visited.
We keep an open mind, but there is no possibility of additional funds. Our expenditure on BSE is considerable. We cut the number of abattoirs because the Intervention Board put the issue out to tender. I sat through many statements from the previous Government about what happened when the scheme was first introduced, and the costs of the scheme and the payments to the renderers.
We currently have 29 abattoirs working for the over-30-months scheme, following the tender. The tender exercise is there to get best value for money for the 1065 taxpayer. We expect it to yield savings of more than £12 million in a full year, and that is not to be sniffed at. The key point is that, while contracted abattoir capacity has reduced, so has demand for the scheme. The backlog of animals awaiting entry to the scheme was eliminated about the turn of the year, leaving capacity well in excess of throughput. Contracts awarded by tender carry more than sufficient capacity for the number of animals expected to enter the scheme in most weeks of the year. Additional capacity is factored in as necessary to deal with increased seasonal demand—
§ Mr. Keetch
The competitiveness of the abattoirs is not in doubt; nor is the fact that they may not have tendered. What is in doubt is their geographical spread.
§ Mr. Rooker
Oddly enough, I was just coming to that. Some journey times have inevitably increased, with fewer abattoirs working for the scheme. However, we have no evidence that animals are travelling further than they were before the OTMS was introduced. Indeed, some are travelling shorter distances. The anecdotal evidence that I have shows that, much to my amazement, animals have always travelled hundreds of miles to slaughter. They have never gone to the nearest abattoir. Nevertheless, we do not seek to force farmers and animals to travel further than is good for the health of the animals on their final journey to death and rendering—[Interruption.] Let us not beat about the bush: it is their final journey. Those journeys perform no function for the human food chain; they are a tragic waste of good, healthy BSE-free animals.
We believe that the contracts awarded provide a good geographical spread, with more capacity around the main cattle-producing regions. Where no acceptable bids were made in a particular region, the Intervention Board had no alternative but to provide sufficient capacity in neighbouring regions. Just because there is no abattoir in the wonderful county of Hereford, that is not to say that there is none just across the border. There is one in Bromsgrove and another in Bristol. Between them, they can kill 1,700 animals a week in normal conditions. Both plants recently had their permitted weekly kill increased to reflect seasonal demand. The Intervention Board is not aware of access problems at either plant.
The hon. Gentleman has made representations about a particular abattoir in Hereford, but as Ministers have explained, it did not submit a bid for tender, so under the terms of the contracts, and for reasons of value for money and fairness to those who did bid, the case was not made.
The hon. Gentleman alluded to the proposed £10 charge for cattle passports. I would ask people to read what we say. They will cost between £5 and £10. We are trying to keep the price as low as possible. It is not so much a charge for the passport as part of the funding of the British cattle movement service, which in turn is part of the computerised traceability system for every animal in the country, under the Florence agreement. As always, we seek the most cost-effective option—we do not seek to impose on people. When we made our recent announcement, we thought it right to give farmers an idea of what the costs would be.
§ Mr. Paice
I accept what the Minister has just said about the cost of cattle passports, but will he give an 1066 undertaking to the effect that the final cost will amount to no more than the true audited cost of running the system? There must be no question—this is suspected in many farming circles and in the farming press—of the Treasury gaining. I repeat that the cost to farmers must be no more than the cost of running the system.
§ Mr. Rooker
That is a legitimate question. I alluded to that subject only as a courtesy to the hon. Member for Hereford, who mentioned it in his speech.
I have not come here to make any statements—all I can say is that we shall make statements in due course when the decisions have been made. It is not our intention to impose unnecessary burdens on the industry; by and large, it is the industry that gains from the setting up of the computerised cattle tracing system. We hope to have it up and running on target, although we have made changes, even since my announcement in August, as to the way in which it will be paid for through the passport. We have considered many options, as did the previous Government. I cannot go beyond what I have already said, but I promise that we shall make an announcement in due course and be fully accountable for it to the House.
The hon. Member for Hereford and my hon. Friend the Member for South Swindon (Ms Drown) raised the issue of storage. Speaking now without the benefit of brief, I believe that it is not true to say, as the hon. Gentleman said, that most of the over-30-months cattle are in cold storage. By far the minority are in cold storage; the vast majority have been rendered into meat and bonemeal. These days, the blood is rendered as well—I would need further and better particulars to accept the notion that there is a field somewhere in Staffordshire on which 50,000 gallons of blood have been sprayed.
The rendered remains are being stored in safe, environmentally approved dwellings around the country, all of which are subject to planning permission. The stores are usually in old warehouses and factories and not, generally speaking, in heavily built-up areas. I cannot account for all of them, but I did visit one. I said, "A picture is worth a thousand words—I have to see what a few tonnes of bonemeal look like." I visited an old factory up north near Chorley, where 17,000 tonnes are stored and there is capacity for another 15,000 to be stored safely, with full planning permission. Nowhere that is being used has not been approved.
We currently hold vast tonnage in stock. I can illustrate how much quite well because, over the summer, I said to my officials, "I shall be quoting figures of hundreds of thousands of tonnes to the House. I need to know what it looks like and what is the scale—how many London buses?" They had already worked out an answer, which is that the volume of bonemeal is the equivalent of 32 Big Bens—it is bigger than Westminster Hall. We are required to dispose of those rendered carcases. A small percentage of the animals go directly for incineration and we are trying to use that as the main means of disposal, because it reduces transport needs and so on.
All the storage facilities are subject to planning permission. The Ministry of Agriculture, Fisheries and Food and Department of the Environment, Transport and the Regions do not impose extra burdens on local authorities or on the Environment Agency—all the checks and balances are already there. We are not trying to cut corners. Nevertheless, there is now a substantial amount 1067 of bonemeal and tallow—more than 100,000 tonnes of tallow—to be disposed of. It is all stored securely and none is being dumped on landfill, as the hon. Gentleman alleged. The only use of landfill is for farmers to dispose of fallen cattle, which is perfectly legal, provided that farmers do it properly and take all necessary precautions. There are no over-30-months cattle or BSE cattle going into landfill: if there are, that is a breach of all the regulations and we will take the most rigorous action against anyone caught bending the scheme in that way. I really mean that.
1068 I give an assurance to the House that we are looking for safe means of disposal. Ministers are actively considering what to do with the bonemeal and tallow. We are not complete masters in the matter—we require approval from our European partners—but we hope to make an announcement as quickly as possible.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-three minutes past Nine o'clock.