Swine Fever

HL Deb 22 March 2001 vol 623 cc1607-24

7.44 p.m.

Viscount Cranborne

rose to ask Her Majesty's Government what measures they have taken to relieve the plight of East Anglian pig producers in the light of the recent outbreak of classical swine fever.

The noble Viscount said: My Lords, before beginning this short debate, I should declare a number of interests: first, as President of the British Pig Association, which is concerned primarily with rare breed pigs; and, secondly, as a small-scale breeder and fattener of rare breed pigs and indeed a seller of their products. Perhaps, although it is less directly relevant, I ought also to declare my chairmanship of the Council of the Royal Veterinary College.

I am particularly grateful to those who will be taking part in this short debate and, above all, to the noble Lord, the Captain of the Gentlemen-at-Arms, who will be answering on behalf of the Government. Of course, we are very sorry that the Minister is unable to answer for her department, particularly since I fear I shall have to say one or two disobliging things about it later in my remarks. However, I am consoled by the fact that no one is better qualified than the noble Lord to answer for the Government, because of his unrivalled knowledge and experience of agriculture in general, and of pigs in particular.

It may seem rather odd that I should venture to raise now the matter of an East Anglian classical swine fever outbreak. After all, that outbreak first occurred as long ago as 8th August last, and today the whole country is in the grip of a much more extensive disaster which one would have expected to occupy our attention. Nevertheless, it seems to me that there are at least two good reasons why I should raise the matter.

The first is the matter of compensation. The House will remember that the Minister announced revised payment arrangements for the pig welfare disposal scheme on the 1st November last. Incidentally, the House will also note that he made that announcement nearly three months after the first outbreak. In the words of a civil servant from the pigs branch of the Ministry: The new formula was £12 per pig, plus 55p per kilo liveweight, subject to a cap on total payments per pig of £75 until 30th November, and £67 thereafter. She went on: The payment to the producer will be 80 per cent from the Government, subject to a cap of £50 per pig, with the remainder from the industry. The Government's part of the scheme, as I understand it, was paid promptly. However, the remainder, up to £25, needed parliamentary approval under the Agriculture Act 1967, and the industry needed to be consulted of course, since the mechanism to be employed was a producer's levy. Such has been the extraordinary haste that the Government have demonstrated over the mechanics of the producer levy that my informants tell me that five months after the announcement and eight months after the initial outbreak not a single penny of the producer levy has yet been paid.

The empressement, if I may use that word, of the Minister of Agriculture and his myrmidons in the face of an appalling crisis overwhelming East Anglian pig producers is, by any standards, in a class of its own. If I may venture to suggest it, this makes the reactions of the bureaucracy of the later Byzantines as rapid as those of Mohammed Ali. But there is at last some action. I understand that the Government have today issued a press release saying that they are now in a position to proceed with a producer levy payment. I hope that that is a tribute to the influence of this House: I would like to believe that it was, but I suppose I must somewhat grudgingly say that it is better late than never.

The second reason for my thinking that it is sensible to raise this matter now is rather more general. The outbreak of classical swine fever may have been confined to East Anglia—not a part of the world that I myself know very well—but it was not there a minor event. I understand that well over 200,000 pigs were killed in containing the attack. Its source appears to have been the illegal imports of meat, which is something that the Agricultural Committee of another place recently confirmed in its sixth report. It is perfectly clear that, in spite of the answer given to me by the noble Lord, Lord Whitty, to a supplementary question following a Statement, there are still thoroughly inadequate import controls in place. I hope that when he replies the noble Lord will address himself to that matter.

By common consent, the Ministry's response to the crisis was muddled. In the words of one Norfolk MP, the Ministry was "slow and chaotic". It looks as though the Ministry did not devote enough resources to the crisis; it changed the staff dealing with it frequently; and order was followed by counter-order. This is a situation in which anyone more military than me could easily predict would result in disorder. I am told that it took on average 27 days to obtain the results of blood tests, and in the real world outside the cloisters of Whitehall your Lordships can imagine the effects such a delay had on farmers since they were unable to trade but needed to trade and keep stock while awaiting the results. Meanwhile as more and more animals accumulated on farms, their suffering became acute as overcrowding became a serious difficulty. To make matters worse it seems certain, from those who observed it, that the standards of slaughter inevitably declined as pressures mounted.

Am I alone in finding that this litany has a familiar ring when it is recited in the context of current events? It is clear that the Ministry deserves the highest censure for its handling of the outbreak of classical swine fever. It is also clear that any team of Ministers worth their salt would have examined the lessons of the outbreak and revised procedures to ensure that any future crisis would be handled better. I should have thought that in normal times that would have been a standard response. In an era of food scares under governments of both complexions—whether it be salmonella, a crisis which brought Mrs Currie her vindaloo, BSE, e-coli and all the rest—the failure to do so defies description. That the Ministry has failed to do anything of the kind is horribly obvious from the slow response, the muddle and lack of resources that seem to have categorised the Government's handling of the current foot and mouth crisis, just as it categorised the handling of the outbreak of classical swine fever.

I am not alone in thinking this. I refer your Lordships to the Sixth Report of the Agriculture Select Committee in another place. At paragraph 8 on page vii it says of the classical swine fever outbreak: We believe that specific 'wargames' aimed at controlling classical swine fever should have been carried out following the Dutch outbreak. The absence of such contingency planning shows a failure to learn from experience in other Member States [the Dutch outbreak, in particular] and to apply those lessons for the benefit of our own industry and consumers". It seems that the Government were unprepared 'for classical swine fever in August 2000 and they were still unprepared for foot and mouth disease in February 2001. They were worse than the Bourbons—the Bourbons at least forgot nothing as well as learning nothing. The Minister and the Ministry for which he was responsible have learnt nothing, but they have forgotten everything as well.

I was strongly marked under the last Government by my experience of the handling of BSE. This is not a party political point. My observation, as a result of some years in government, is that some ministries may be quite good at the day-to-day grind of everyday administration. With one glorious exception—the Ministry of Defence—I do not believe that Whitehall is any good at handling crises or projects. That failure gets worse when the crises or projects affect more than one government department. What happens is that a senior civil servant—perhaps a Cabinet secretary— talks to the Prime Minister and says: Leave the day to day matters lo an official committee and we will report to a Cabinet committee, perhaps chaired by you". The result is that the civil servants can protect their own backs, and at the same time the recommendations and options presented to ministerial committees can usually allow only one option to be chosen because of the drafting.

When a ticklish problem had to be addressed for which I had been made responsible and which covered more than one department—and there was never anything of this importance—I thought the way to handle it was to have one Cabinet minister responsible and to have a mixed committee of civil servants, politicians, experts and, if necessary, advisers. Apart from anything else, it made the politicians and civil servants behave better when outsiders were present. I should not be surprised that the same trick has been played on the Government in this crisis as well, with the same devastating results for foot and mouth as for classical swine fever—perhaps the noble Lord the Captain of the Gentlemen-at-Arms can satisfy us on that.

The time has come for the Government to take this outbreak and animal health seriously. At last there is some evidence that that is beginning to happen. Yet again, it seems to have happened far too late and the disease has been let out of its bag more than it should have been. Agriculture is in a bad state already. I fear that it will never forgive the Government for their incompetence in the handling of both outbreaks.

Lord Phillips of Sudbury

My Lords, I should like to clarify the statement that the noble Viscount, Lord Cranborne, has made about today's press release. Can he tell us whether that was for the payment of £50 a pig which was promised or anything beyond that?

Viscount Cranborne

My Lords, I am sure that the noble Lord who answers the debate will confirm this. I have only heard verbal reports. I have not seen a press release. I am told that there was never much problem about the payment of £50; it was the up-to £25 as a result of the reduced levy that was not paid. Perhaps as a result of this debate—because one likes to flatter oneself if one can—the Government will be shamed into doing something about it.

7.56 p.m.

Lord Phillips of Sudbury

My Lords, no doubt the Captain of the Gentlemen-at-Arms will tell us about that when he sums up. If it be the case that the top-up figure over £50 is now being met by the Government and not by the industry itself that would be a major advance.

I should like to thank the noble Viscount, Lord Cranborne, for putting down this Question. It is an important debate, even though the crisis of the classical swine fever outbreak is, thank goodness, under control.

The fever broke out last August on the farm of BQP Ltd at Iken, an ancient village on a coastal headland in Suffolk. BQP Ltd is now owned by Dalehead Foods, of which I was a non-executive director for over a dozen years until 18 months ago. They are now the biggest producers of pigs in the country, to add to their pre-eminence as abattoir operators, pork butchers and packers.

The tragic crisis of foot and mouth disease has overshadowed the consequences of classical swine fever. This Question requires us to concentrate on that fever and the plight of East Anglian pig producers. I suggest that we and the Government should also have a care for those whose businesses are intimately and irrevocably connected with pig production, such as the abattoirs. Currently, they are losing massive sums of money, with their fixed overheads, and with no apparent prospect of compensation or assistance.

We should also concentrate on how to prevent a further outbreak of swine fever, given its devastating effects. The MAFF State Veterinary Service and the Veterinary Laboratories Agency published their preliminary findings after an exhaustive inquiry into the outbreak—which, incidentally, was traced back to a pig producer in Norfolk—in the Veterinary Record of 9th September 2000. They did not find any definite source of the outbreak. They mentioned six hypotheses as to the sourcing of the infection— consumption of infected pig product, exposure to infected pigs, exposure to classical swine fever virus by contaminated vehicles or personnel, exposure to aerosol virus from discharges from effluent, exposure to CSF virus in contaminated biological products and, finally, exposure to the virus in contaminated semen.The idea that the infection might have come from a half-eaten ham sandwich tossed by a passer-by into a pig paddock in Norfolk, to be consumed by a pig which then developed the fever is almost Alice in Wonderland. Yet that is what the vets and the laboratories thought was indeed the most likely source of the infection. I checked yesterday with the government veterinary service, and that is still as far as they have managed to go in that respect. If that is the scenario, it makes the prevention of future outbreaks impossible.

Yet the fact is that the outbreak was here in England, even though the infected meat may conceivably have come from abroad. I am not as certain as the noble Viscount, Lord Cranborne, that it is at all safe to assume that the infected meat in this case was from abroad. Indeed, that is not the impression that I get from the Official Report. It also appears to be the case that other countries, such as the USA and Australia, control outbreaks more effectively, and have stricter controls. Perhaps we can learn something from them.

The pig compensation scheme that went through this House very recently appears to be working well, even if it is bringing financial relief too slowly. If the Minister can confirm in his response to the debate that the Government are now paying the top-up over the £50 rather than the industry finding that through its own resources by levy, that will be a major change. However, if that is not the case, it will be interesting to know why there should be a discrepancy between the compensation arrangements for foot and mouth and those that apply in this respect. As we all know, there is no industry provision for foot and mouth compensation; it all comes from state sources.

Like other noble Lords, I should be interested to hear from the Minister why the fiercer legal disciplines that restrain pig movements for 21 days, other than movement for slaughter, should not now be contemplated for sheep and cows. I appreciate that that is not strictly germane to this issue, but different regimes apply. As I understand it, in the case of foot and mouth, some of the infected sheep travelled to seven markets in 14 days, spreading mayhem as they went.

Another matter for consideration is the sale of pigs at live markets, which currently accounts for only 3 per cent to 4 per cent of the total sales in East Anglia. As I understand it, the national quality standards cannot be met where the pigs have been traded in that way. Surely special attention needs to be given to ascertain whether or not the risks of infection are significantly greater for those animals, and, if so, how that can be addressed without making life more difficult than it already is for the small producers and dealers whom I want to see helped rather than squeezed out yet further. It would also be interesting to compare the robustness of health of small batch pig production with large batch production.

The issue then arises as to how to minimise the appalling waste when fever breaks out. Although now mercifully under complete control, the 180,000 to 190,000 pigs slaughtered in the recent outbreak were all rendered, and put to waste. Given that the meat of such animals is perfectly fit for human consumption provided that the pigs concerned have been through the necessary heat treatment, ought we not now to be building that capacity so that, when the occasion next occurs, the devastation will not be total because the meat of the slaughtered pigs can at least be safely used for human consumption? I realise, of course, that there are difficult issues involved about anticipating that outcome in terms of providing the necessary facilities that are presently absent.

I now turn to the problem of breeding sows, 90 per cent of which, when culled, normally go for export—mostly to Germany. With the export ban, they are now unsaleable, as indeed are a high proportion of pig shoulders, which represent nearly a third of the pig, and over a quarter of which tend to find their way abroad. Can the Minister say whether the Government have any thoughts as to how to assist the industry in coping with those thorny problems? After all, the export market is now a critical component of the viability of the British and East Anglian pig industry. No one has yet mentioned the support fund of over half a million pounds, which, I believe, is languishing unused after the last outbreak of Aujezky's disease 15 to 20 years ago. Might that sum now be used to help the cash flow problems of producers, even on an interest-free loan basis?

Finally, I believe that the industry and the Government need to look more closely at ways of meeting the next outbreak of swine fever, because on the ham sandwich hypothesis it would be foolhardy to think that it will not come. Would it not be better to build up an industry fund during the good years, rather than wait until the disaster has struck? Again, I make that comment subject to what may be said by the Minister in his response. An industry levy could be set at a modest level, which would, none the less, build up over the years to a significant amount that could quickly take at least some of the strain. That would demonstrate a statesmanlike approach by the industry in terms of self-help. It would also encourage maximum government financial assistance to ensure that full and timely compensation is available next time round. I look forward to hearing the Minister's response to those points.

8.5 p.m.

Baroness Scott of Needham Market

My Lords, I am grateful to the noble Viscount, Lord Cranborne, for initiating this debate, and to my noble friend and Suffolk neighbour Lord Phillips of Sudbury. I am looking forward to hearing the comments of the noble Baroness, Lady Byford, who also farms in Suffolk. It is rather on account of that East-Anglian connection that I speak in the debate this evening.

I make no claims to be an expert on the pig industry. However, my home county of Suffolk was at the heart of the outbreak last year, so I have taken a particular interest in its effects on our local economy. As a county councillor in Suffolk, I have a further interest in the sense that the county council is one of the leading agencies in managing the effects of such an outbreak. Indeed, the noble Baroness, Lady Hayman, was quoted in the local press as holding Suffolk up as an exemplar of co-ordinated working. I am afraid to say, however, that the liaison did not seem to work both ways. It took MAFF four days to inform the county council of the first outbreak by which time we had heard about it through local radio programmes. Given the role of the county council as regards trading standards in animal welfare, rights of way issues, and so on, that was a far from satisfactory state of affairs.

As we heard, during the outbreak over a quarter of a million pigs were slaughtered, and many businesses jeopardised as a result. My noble friend Lord Phillips referred to the fact that, in counties like Suffolk, an entire infrastructure is built around the rearing of pigs; for example, feed manufacturers, abattoirs, suppliers of equipment and vets all suffer for some time after the outbreak is controlled. As they suffer loss of viability, that can further affect the viability of other disease-free producers. As if that vicious circle were not enough, the pig industry in East Anglia was already under enormous pressure due to the high pound, the BSE tax, cheap imports and the lack of European aid for pig producers.

The generally accepted view that the outbreak was in all likelihood caused by discarded contaminated pigmeat shows how delicately balanced the viability of our livestock industry can be, with havoc wreaked by a single random event. But an apparently accidental occurrence should not simply be dismissed as bad luck. I agree with the noble Viscount, Lord Cranborne, that, as a matter of urgency, we should be considering tighter controls of imported pig meat, especially where the exporting country has a high incidence of CSF. There must be a more robust regime of penalties for the illegal importation of pig meat produce.

The fact that last year's outbreak and the other most recent outbreak in 1986 were caused by contaminated pork demonstrates that perhaps we should be working more closely with local authorities and other agencies to see how farms are located in relation to the footpath network, local landfill sites, and so on. There has now been time to look back at last year's outbreak of CSF in a dispassionate way. As we heard, the Agriculture Select Committee in another place severely criticised the Government for their lack of preparedness for such an outbreak. It believes that lessons should have been learned from the Dutch outbreak. I, too, should like to ask the Minister whether such lessons have been learned, or whether a future inquiry into the current foot and mouth epidemic will make exactly the same points.

The 2000 outbreak in East Anglia was initially difficult to bring under control largely because it occurred in areas of extensive pig production. Although such production is highly desirable in terms of animal welfare, it makes disease control more problematic. It is, therefore, more than a little disingenuous of the Government to have taken the position that such outbreaks should be regarded as a normal business risk. Where other generally desirable outcomes, such as greater public access and higher welfare standards, lead to increased risk of disease, and where the effect of that disease will result in measures that threaten the livelihood of the farmer, it is questionable whether that should be defined as normal business risk. The pig industry has little history of subsidy and has taken on itself the need to comply with higher welfare standards which our consumers demand but often do not want to pay for. But even in an industry with a tradition of independence there is only so much that it can take.

After a good deal of anguish on the part of pig farmers, the Government eventually came up with an acceptable deal under the welfare disposal arrangements in November last. I wonder whether the Minister can outline for us the level of payments due to be made during the current crisis. Anything less than full market value will add further pressure to an industry already on the edge. With restrictions on movements and the ban on exports I hope that the EU exceptional market support measures will also be used to operate a "purchase for destruction" scheme.

It became clear recently that money earmarked for the pig industry development scheme earlier in the year was diverted to welfare payments when the outbreak occurred last year. Is there any prospect of that money being redirected back into the development scheme? Can any surety be offered that the money will not be further redirected, this time towards the victims of the foot and mouth outbreak? I also hope that the Government are prepared to take on board the criticisms of the Select Committee of another place that the industry restructuring scheme involved processes which were far more lengthy than necessary.

On a similar point, can we perhaps consider an emergency payments regime to assist farmers at this difficult time because normal living expenses do not stop while MAFF does the paperwork? On a more positive note, I should like to think that we can do a great deal more to promote the fact that British pork is produced to a higher quality and with better welfare standards than in many importing countries. There is a clear need for better marketing strategies to make those benefits clear and a regime for better labelling to assist consumers in making those choices. The growth in popularity of farmers' markets demonstrates the benefits of providing goods which have the confidence of the purchaser. In Suffolk we have supported the "Tastes of Anglia" consortium which promotes the high quality Suffolk ham and pork produce.

Suffolk is still at the moment mercifully free from foot and mouth disease. However, in a strange way last year's outbreak was a forerunner and, of course, many of the issues raised are exactly the same. Recent debates have highlighted for us all the price versus quality issues which go to the heart of concern over classical swine fever, BSE, foot and mouth disease and bovine TB. Perhaps it is time to have a proper independent oversight and research into the issues of animal husbandry, perhaps through the Food Standards Agency if it is given adequate resources.

There seems to be a growing consensus that there must be major changes in the way our rural economy works, but this needs to be judged on a rational basis, some distance in time from the heat of the crisis, and in a rounded way which does not seek to treat agriculture separately from the rural economy and the wider issues of public health and confidence.

For East Anglian pig farmers, suffering the second crisis in seven months, the future is not looking good. I hope that perhaps the Minister will be able to offer some crumbs of comfort to this important part of the East Anglian economy.

8.13 p.m.

Baroness Byford

My Lords, I begin by thanking my noble friend Lord Cranborne for bringing forward this important matter this evening. Indeed, in his introduction he used strong words and was critical of the Government's handling not only of the swine fever outbreak but also of the current foot and mouth outbreak. His speech reflected inadequacy on the part of MAFF and muddle, which the noble Baroness, Lady Scott, also mentioned.

I should declare an interest. My husband has a family farm at Acton just outside Lavenham, where, in addition to growing arable crops, we run 120 breeding sows. I know from first hand the problems that have afflicted the pig industry both as regards its cyclical nature and most recently as regards the outbreak of classical swine fever. We were one of the fortunate ones in that our farm lay only two miles outside the restricted area. We avoided having an infected herd and also falling within the restricted zone.

My noble friend was right to raise this issue. The swine fever outbreak began on 8th August last year and is estimated to have cost the industry some £20 million. Bank borrowings are rising every day. Around 1,200 producers were trapped by movement restrictions in Norfolk, Suffolk and Essex and lost almost £4 million, which also resulted in rising bank borrowings. On 29th August last year the Government introduced the Pig Welfare Disposal Scheme to deal with the potential welfare problems in recognition of the exceptional circumstances affecting our pig producers because of movement restrictions which were necessary to eradicate the outbreak. I understand that by the end of October 134,000 pigs had been offered for the scheme and claims worth some £4.1 million had been submitted. Was that money paid to farmers in full and, if so, by what date were those payments made?

The figures gained from MAFF officials this year show that some 70,000 diseased pigs were culled and a further 190,000—however, I accept the figure of 200,000 that others have mentioned—were culled under the animal welfare disposal scheme. Have these farmers been paid? As others have said, the crisis has seen some 25,000 jobs lost in the pig industry, with job losses likely to rise to 50,000 in the industry as a whole.

Farmers in restricted zones were beginning to experience animal welfare problems. Pigs needed to be fed and as each week went by they had to be retained on the farms in increasingly cramped, overstocked conditions. The Government came forward with financial aid. Originally they offered a mere £35 for pigs weighing over 60 kilos and £10 for smaller pigs. At that stage the industry considered those payments unacceptable. But after lobbying from the pig industry, ourselves and other parties, an increased offer was made of £50 from the Government and a further £15 in the form of a levy from the pig farmers themselves.

The sixth report of the House of Commons Agriculture Select Committee, to which my noble friend referred, states: There is a lot of frustration within the pig industry at the lack of tangible results from the Government's announcements of last year. Much had been promised. and welcomed, but comparatively little been delivered … We expect the Minister to ensure that all the money originally allocated to the pig industry is paid out in good time". Other noble Lords have already mentioned the lengthy and unsatisfactory way in which this matter has been handled. A pig farmer in Suffolk telephoned me about three weeks ago. He said that he was owed some £27,500 and he was still waiting. Presumably he is paying interest on his bank loans. When the Government give him the initial sum of £27,500, will they also pay him interest to cover the loan that he is due to repay the bank?

On 4th September last year my honourable friend James Paice wrote to the Minister and pointed out that the £66 million scheme announced by the Government at the end of March had still not been put in place and that farmers had not received a penny of the producer levy. And here we are six months later. I hope that the Chief Whip will have the relevant figures when he replies to the debate. We need to know what has been paid out and what is still outstanding.

What progress has been made in identifying the cause of the original infection? That matter has been raised in this House and the other place on many occasions. My noble friends have referred to the ham sandwich theory. Others have suggested that the cause of the outbreak may be due to illegal imports of meat. Others have suggested that it may have been caused by animals that were illegally imported through airports. Some have mentioned pig swill in that regard. But what ever the cause, all of us in this House consider that we need much stronger and stricter formal structures at the port of entry and controls over foreign meats entering our country.

In the past two years some 37,000 tonnes of pig meat have been imported from countries where foot and mouth disease is either in existence or is endemic. The noble Lord will know that our party has consistently asked the Government for closer inspection of imported meat. We have also called for a tightening up of the food labelling system to ensure that meat imported into this country but processed here should not he allowed to be classed as British. I referred to that two years ago when we were taking the Food Standards Agency Bill through the House and cited the pig industry on many occasions. Pig producers were furious that meat coming into our country was being presented as British when it was imported meat but processed here and therefore labelled "British". That is a disgrace.

No sooner had we recovered from the immediate restrictions on swine fever and begun to breathe a sigh of relief than foot and mouth disease hit our country. Again a foreign disease is entering our herds. Although the infection was first discovered in pigs, the spread has been dominated by sheep and cattle. This is another disaster to strike our farmers, who are having to cope with their lowest income for 50 years—an average of just over £5,000 last year. Urgent action is needed.

Since 23rd February slaughter movement from farms not under specific restrictions has been running at 70 to 80 per cent of normal capacity. A steady accumulation of overweight pigs is backing up on farms. I was recently speaking to a big abattoir and processing firm in West Bromwich which, because of the foot and mouth disease restrictions being imposed on it, did not have the ability to take more through the system in a quicker way.

The long distance movement scheme for pigs, from breeding to rearing to finishing, has not yet started. Perhaps the noble Lord will respond to that. I understand that the scheme involves a time-consuming, complicated system of cleaning and disinfecting lorries which will have to be streamlined.

Farms under restriction have not sold a thing since 23rd February this year. Estimated figures of pigs in infected areas are provided by Assured British Pigs, which embraces about 80 per cent of all pigs. Inflating its figure of 15th March by some 20 per cent yields 55,000 sows and 600,000 growing pigs. As other noble Lords have said, their old sow market has fallen. We normally sell approximately 6,000 per week, of which 90 per cent go for export; that market is closed.

The urgent problem must be solved if our UK herd is not to lose long-term productivity. It is also critical for our breeding companies—our genetic future—to be able to start trading again at least in the UK market. We are really living in very troubled times.

I am left worrying about our farmers. I understand that the Government have this afternoon announced a scheme for our pig farmers. I should be grateful for clarification. My understanding is that it is a foot and mouth welfare scheme, as opposed to a swine fever scheme; the noble Lord is nodding. Therefore—I stand to be corrected—I think we need to talk about two different schemes.

I understand that the offer provided by that scheme is £75 for culled sows and £15 plus 55p per kilo for all other pigs, to a maximum of £70. I also understand that the Government themselves have not undertaken to finance that top-up scheme but that it takes the form of a loan. Perhaps the noble Lord will also clarify that point. The Government's response will indeed be welcome, but many will find that, although a loan will help, they will have to eat into their capital. They were hoping for much more government support.

We have previously suggested that, in these very difficult circumstances in which we find ourselves, there may be a role for the reopening of smaller abattoirs to cope with the back-up problem of animal welfare, where we cannot move enough of our pigs that are in restricted areas at the moment. I should be grateful if the noble Lord would also deal with that matter.

Classical swine fever came from abroad; so has foot and mouth disease. Our British farmers care for their animals. They have set the highest standards. We have some of the finest herds, of which we are all rightly proud. Our farmers care for and take great pride in their stock. The swine fever outbreak, and now the foot and mouth disease outbreak, are destroying not only the animals but those whose lifetime's work is being culled before their eyes.

We look forward to the Minister's response, and I again thank my noble friend for introducing this very important debate today.

8.25 p.m.

Lord Carter

My Lords, in replying to this extremely interesting debate, I declare a former interest. The farming company of which I was a director and shareholder before I entered government had a very substantial pig unit in Hampshire and Wiltshire, not in East Anglia. I hasten to add that my shares are in a UK-based trust and that I have resigned all my directorships.

From my lifetime's working experience in farming, I am well aware of the problems that face the industry. In the time available, I am not sure that I shall be able to answer all the questions that have been asked, but, as always, I shall ensure that every noble Lord who has spoken receives an answer from me, either in the debate or in writing.

I think I am grateful to the noble Viscount, Lord Cranborne, for raising this issue today, and to the other noble Lords who have spoken in this short but useful debate. As the noble Viscount, in his charming way, said, he had occasion to be disobliging. This has been an important debate. At this time of crisis in the livestock industry, we should not forget that, as has been made clear, the pig producers of East Anglia have previously been here, and not all that long ago.

The classical swine fever outbreak in East Anglia between August and December 2000 may not have had the media impact of the foot and mouth disease crisis; nor did it affect as many farmers, animals or members of the general public. But for those caught up in the outbreak, either directly or as a result of their pigs being subject to movement controls, the shock was just as great, and the consequences equally daunting.

In the course of my speech I shall give a brief summary of the outbreak. I shall set out what the Government did in response to the consequences of the outbreak and what it was asked to do but, for various reasons, could not do. In doing so, I hope to address almost all the points raised, including the foot and mouth disease outbreak, though this debate is about classical swine fever.

The outbreak started on 8th August with a confirmed case of classical swine fever on a holding in Suffolk. Investigations suggested that the original infection was introduced in early June to a breeding unit in Norfolk, which then appears to have spread to pig rearing premises with the movement of infected, weaned pigs. The lateral spread appears to have taken place from one of those to two neighbouring holdings. Others were infected by either the movement of infected pigs or the movement of vehicles or people.

CSF was confirmed on a total of 16 premises during the outbreak: one in Essex, six in Suffolk and nine in Norfolk. Nearly 80,000 pigs, classified as infected or dangerous contacts, were slaughtered. Controls were finally lifted on 29th December 2000. I think it is well known to noble Lords that the Government pay compensation to producers whose herds have contracted CSF or are thought to be dangerous contacts and must be killed. Under Schedule 3 of the Animal Health Act 1981, producers of animals with swine fever are recompensed at 50 per cent of their value preceding infection, and at full market value for healthy animals.

The compensation attempts to address the immediate financial difficulties faced by those who have the disease on their holdings. What it does not do is address the consequential losses of those farmers and the problems faced by farmers who have not had the disease on their holdings but are unable to market their animals because of movement controls. I shall return to that point when I deal with the Pig Welfare Disposal Scheme (PWDS).

I should point out that the consequential loss for those farmers who have had their animals slaughtered is an insurable risk. One farmer I know well has substantial consequential loss cover of £300,000 in the event that his animals have to be slaughtered as a result of an outbreak of disease.

Lord Phillips of Sudbury

My Lords, I thank the Minister for giving way. I believe I am right in saying that not all risks are insurable. My understanding is that neighbour-to-neighbour infection is not an insurable risk.

Lord Carter

My Lords, the NFU has offered foot and mouth insurance and consequential loss insurance for years. I believe that the relationship has to be on the farm where the animals are slaughtered. I am not sure, but I do not think that the farmer next door can have an insurable risk and a consequential loss. I shall investigate that and let the noble Lord know.

The Government sought to address the issues in a number of ways. Under unprecedented measures, payments were made to producers who faced severe animal welfare problems as their animals were caught by movement controls. Noble Lords should pay tribute to the Government for that attempt to meet that new problem in that way. The payments were made under the Pig Welfare Disposal Scheme— PWDS—which opened on 29th August 2000.

Those payments were unique in respect of animal health measures in the UK—nothing like them was available during the 1986 CSF outbreak—and in part they reflect the exceptionally difficult circumstances that the pig industry went through during 1998–99. However, it is fair to point out that before 1998–99, the pig industry had had some years of substantial profit. As we have said all along, the payments were not compensation, but were linked strictly to dealing with animal welfare problems. In all, payments were made on 181,000 pigs. On three occasions my right honourable friend the Minister of Agriculture, Fisheries and Food accepted an industry proposal to change the payment structure of the scheme, backdated to the beginning of the scheme. By agreeing to those changes, the Government showed themselves to be fully prepared to take on board the legitimate concerns of the pig industry.

The noble Baroness, Lady Byford, asked about the cost to the taxpayer of the compensation measures and the welfare scheme. A total of £4.5 million was paid in compensation to pig farmers under the Animal Health Act 1981 for animals slaughtered. The additional spending on veterinary and other staff costs, together with laboratory costs, amounted to around £3.5 million. Payments to producers under the PWDS were £8.8 million, with the cost of transport, slaughter, rendering and supervision adding a further £5.3 million. That gives a grand total of additional MAFF and Intervention Board expenditure on CSF measures in the region of £22 million, with about £13.3 million going direct to farmers.

To ease the welfare situation further, limited movements under licence between holdings in the same ownership and within the infected area were permitted. A slaughter under licence scheme was devised after MAFF negotiated a derogation from European Community legislation. In the event, that scheme was not used, as controls on movement were lifted progressively after the final confirmed case.

As part of the deal to change the payment structure, the pig industry agreed to make a financial contribution, funded by means of an industry levy, to help those affected by the consequences of disease control measures. Pig industry representatives are to be applauded for taking that longer-term and wider view. The outcome of that agreement is the Pig Industry Development Scheme, which has been approved by Parliament and came into force last week. I wonder whether the noble Viscount remembers PIDA—the Pig Industry Development Authority— which was a levy-funded scheme in the 1960s and 1970s. In agriculture policy, if you stand still long enough, the circle comes round again.

The aim of PIDS is to build up an industry fund to be used to provide advice, services, facilities and financial assistance to British pig producers to assist them in the prevention or limitation of the spread of an outbreak of pig disease. It will be funded by an industry levy of 20p per pig slaughtered.

The agreed first use of the PIDS fund is the top-up payment of the government-funded Pig Welfare Disposal Scheme. Once that commitment has been met, it is for the Board of PIDS to decide how the fund might be used. The order agreed by Parliament permits its use for measures connected with foot and mouth disease.

I listened with interest to the fair criticisms that were made of the Government's response to the outbreak. However, it is fair to point out that I was the opposition agriculture spokesman for 10 years. I remember the BSE outbreak and the Phillips inquiry, which revealed a shattering catalogue of incompetence. I believe that the cost of BSE is likely to be £20 billion.

MAFF took immediate steps to contain and control CSF. Movement restrictions were served on premises where swine fever was suspected because of the high risk of spread.. If swine fever was confirmed, all the pigs were valued and slaughtered and the carcasses destroyed. In addition, in an attempt to halt the spread of the disease, when CSF is confirmed, the current policy is to slaughter all pigs within a 1 km radius of the infected premises unless there are sound reasons not to do so. Pigs on premises within a 3 km radius will not normally be slaughtered as dangerous contacts unless there are sound epidemiological reasons for doing so. If those precautions had not been taken, the disease might have spread further afield and many more pig herds might have been affected.

The State Veterinary Service and the ministry devoted significant resources to eradicating the outbreak. Emergency disease control centres were set up in Bury St Edmunds and London as soon as the disease was confirmed and they operated seven days a week throughout the crisis. More than 500 SVS staff did spells of duty in those centres on secondment from elsewhere in the country. Additional help was provided by private vets in the area, appointed as temporary local veterinary inspectors for MAFF. Vets were brought in from the Netherlands, Ireland, the USA and elsewhere to help out. Local authority staff were also heavily involved, for example in the enforcement of movement controls. SVS staff made about 5,600 farm visits, investigated more than 240 cases of suspected disease and traced more than 2,300 movements of pigs, vehicles and people.

The problem with the timing of the payment structure of the PWDS was that the only vehicle available to introduce a compulsory levy on pig producers that did not involve primary legislation was an MLC-originated development scheme under the Agriculture Act 1967, as the noble Viscount said. However, the nature of the procedures for introducing a scheme are complex and time-consuming and include a 56-day consultation period, followed by independent arbitration and affirmative procedure statutory instruments in both Houses. The scheme also required clearance from the European Commission as a state aid. The formal consultation period was launched by the MLC on 24th November and ended on 23rd January 2001. After a report from the independent arbiter, the MLC wrote to agriculture Ministers on 26th January recommending that parliamentary approval be sought for the introduction of the scheme. The orders were laid and the scheme came into force on 14th March.

I cannot deal with all the points that were raised, but I shall deal with some of them. I understand that all the payments from MAFF have been made. I shall come back to the point about the industry and the top-up payments under PIDS. The EU, including the UK, imports only from countries that are CSF-free. That is why the question of illegal imports has been raised. Regarding the famous ham sandwich, the SVS will continue to investigate the source of the CSF outbreak. If the import was illegal, a contaminated pork product is a possibility, but noble Lords will appreciate that proof of that will be very hard to find.

We have tightened up the interpretation of the 1996 food labelling regulations in respect of origin marking and new guidelines have been issued, but they cover only legal imports. We have to grapple with the problem of illegal imports.

An announcement has been made today about. the Welfare of Livestock Disposal Scheme. Given the effects of FMD, it is worth pointing out that 85 per cent of the normal throughput of pigs has been achieved through the abattoirs. That is a higher proportion than for other animals. I believe that the figure for cattle is about 50 per cent and that for sheep is only 38 per cent. At least pig producers seem to be able to market 85 per cent of their normal throughput in the abattoirs, although whether the price is satisfactory is another matter.

I can confirm the figures that the noble Baroness gave on the compensation under this scheme. They are £15 per animal plus 55p per kilo up to a maximum of 100 kilos per pig, the average of the batch weight for a lorry load and £75 per head for sales.

The Government are looking at how to help with the payments under PIDS, for example by providing a loan to allow the top-up payments to be made immediately. As I understand it, a grant would be classified as state aid and would not be allowed under EU rules.

There were some measures that the Government could not take or decided were not appropriate in the circumstances of the CSF outbreak. For example, we could not introduce a scheme to compensate producers for business losses. EU state-aid rules specifically exclude government payments of that type. The introduction of exceptional support measures would have required the UK to demonstrate that the disease situation had been directly responsible for severe market distortion. In the event, the market price had followed the normal, seasonal trends throughout the period of the CSF outbreak.

I have had to give my reply extremely quickly and have now gone over my time. I know that we should be finishing the debate. I can assure all noble Lords that I shall write to them about the detailed points that they have raised.

There are always lessons to be learned from any disease outbreak. Noble Lords should remember that the last major outbreak of foot and mouth disease in this country occurred in 1967—that is, 34 years ago. A small outbreak in 1981 was controlled extremely quickly. Therefore, we have had 34 years without a major outbreak of the disease. That indicates that the slaughter policy has worked.

Noble Lords will know how hard the Minister, Nick Brown, and my colleague Lady Hayman have worked in recent days. I appreciate the remarks made at the outset by the noble Viscount. I am here this evening in place of my noble friend and I answered a Starred Question for her on Thursday. I know that your Lordships will understand that she is much better employed dealing with FMD out in the field. I hope that, in her place, I have replied adequately to this debate.

One of the, in a sense, ironic results of the current crisis of FMD is the commitment given by the Minister to instigate, once the crisis is over, as it will be eventually, a thorough examination of the role of farming, the countryside, abattoirs and the food chain. From that, we may well learn things to our advantage.

Baroness Byford

My Lords, before the noble Lord sits down, perhaps I may thank him for standing in for the noble Baroness, Lady Hayman. We quite understand why she is not here. I want to ask him two things. The question of insurance was raised. Some pig farmers do insure against swine fever. However, when the matter is considered again, perhaps he would raise the question of what happens in relation to reinsurance. I believe that some people are experiencing difficulty in obtaining reinsurance cover.

My other comment is that he reflected the sadness that was felt at the lack of competence when BSE broke out. If three outbreaks have occurred and they are still reflecting incompetence, surely we need to get to grips with what we do and how we do it. However, I thank the noble Lord for the way in which he responded.