Foot and Mouth (Hansard, 6 January 2004)

§ Brian Cotter
To ask the Secretary of State for Environment, Food and Rural Affairs how much has been spent by her Department in investigating the validity of payment claims submitted by businesses to her Department for work undertaken in connection with the foot and mouth crisis. [145319]

§ Mr. Bradshaw
[holding answer 5 January 2004 ]: To date, and from information held centrally, the Department has spent £19.81 million on professional services investigating the validity of payment claims submitted by businesses for the £1.3 billion expenditure on goods, services and works arising out of the 2001 foot and mouth disease outbreak.

§ Brian Cotter
To ask the Secretary of State for Environment, Food and Rural Affairs how many invoices have been settled after the due date by her Department in relation to work undertaken by businesses in connection with the foot and mouth crisis; what the combined value was of the original invoices submitted; and how much interest has been paid on these settlements in accordance with the Late Payment of Debt Act 1998. [145320]

§ Mr. Bradshaw
[holding answer 5 January 2004]: The Department believes that, on the basis of the professional advice it has received, in almost all cases, no due date has arisen because Defra has legitimate grounds for withholding payments. This includes instances where the due date has not yet arisen because the businesses have not provided sufficient and necessary evidence to enable their charges to be verified.
The Department's payment terms are the payment of valid invoices within 30 days of receipt and agreement of valid invoices for goods, services and works requested by the Department. The Department is disputing payment in those cases where it believes on the basis of the quantum, accounting, legal and technical advice it has received that it was overcharged for goods, services and works during the foot and mouth disease outbreak. In all other cases bar the one identified as follows, the Department believes it has paid businesses in 260W accordance with contractually agreed terms for the goods, services and works provided in connection with the outbreak.
The Department believes that the direct cost to the public sector of the expenditure on goods, services and works during the outbreak was £1.3 billion. The Department is still receiving invoices from contractors some 24 to 29 months after the outbreak in 2001. These are the subject of forensic examination and investigation.
To date, the Department has received 11 claims for interest allegedly due on the late payment of commercial debts. These total £132,879.23. Applying the terms of the Late Payment of Commercial Debts (Interest) Act 1998 to these claims has resulted in the agreement and payment of £4,057.90 of the claimed sum. All claims are considered on the facts of that claim.

§ Brian Cotter
To ask the Secretary of State for Environment, Food and Rural Affairs how many invoices submitted by businesses to her Department for work undertaken in connection with the foot and mouth crisis have not yet been paid; what the total value is of these unpaid invoices; and how many invoices have been outstanding for a period of more than(a) 30 days, (b) six months, (c) one year and (d) two years. [145321]

§ Mr. Bradshaw
[holding answer 5 January 2004]: Information as to how many invoices submitted to businesses for work undertaken in connection with the foot and mouth disease outbreak have not yet been paid can be provided only at disproportionate cost for the following reasons: the facts of each case are not necessarily similar; some contractors issued few large value invoices; some contractors issued significant numbers of lower value invoices; other contractors submitted statements of account or applications for interim payment; some invoices are rejected in their entirety; other invoices are rejected in part; forensic examination of contractor accounts focuses on the valuation of the entire account.
A large number of businesses received significant payments on account pending final verification of their charges. Other businesses were paid in full or partially 261W paid in the honest belief at the time that their charges were valid only for subsequent examination and investigation to reveal that legitimate grounds existed and continue to exist for Defra seeking to recover these payments by way of restitutionary proceedings.
Currently, the Department is withholding £55.698 million from businesses in connection with charges arising from the provision of goods services and works during the outbreak. This figure will increase as the Department is continuing to receive invoices from some contractors which the Department on the basis of forensic examination and investigation will not be accepting as valid.
As the Department has paid businesses on the basis of the contractual terms agreed it does not believe there are any valid unpaid and outstanding invoices, submitted by businesses to the Department, for work undertaken in connection with the foot and mouth outbreak.
The Department is disputing payment in those cases where it believes on the basis of the quantum, accounting, technical and legal advice it has received that it was overcharged for goods, services and works during the outbreak. In all other cases, the Department has paid businesses for the goods, services and works provided in connection with the outbreak in 2001.
The Department understands from the Forum of Private Business that the All Party Parliamentary Small Business Group has, or is collecting, evidence that 20 or so contractors are still owed in excess of £10 million for goods, services and works claimed to have been provided during the outbreak in 2001. The Group has pledged it will write to the Department on these cases and Defra will respond once the evidence is to hand.

§ Brian Cotter
To ask the Secretary of State for Environment, Food and Rural Affairs what estimate she has made of the average amount of time taken by her Department to investigate the validity of each payment request submitted by a business to her Department for work undertaken in connection with the foot and mouth crisis. [145322]

§ Mr. Bradshaw
[holding answer 5 January 2004]: I refer the hon. Member to Recommendations 12 and 13 of the National Audit Office Report into 'The 2001 Outbreak of Foot and Mouth Disease'. The report can be found on the National Audit Office website at www.nao.gov.uk. I also refer the hon. Member to section (xiii) page 9 of the Fifth Report of Session 2002–03 on 'The 2001 Outbreak of Foot and Mouth Disease', issued by the House of Commons Committee of Public Accounts on 5 March 2003. The Report, together with Proceedings of the Committee, Minutes of Evidence, and an Appendix is available at www.parliament.uk.
The Department, along with other Departments in Civil Central Government, reports its payment performance annually to Parliament.
262W The Department is unable to provide an estimate of the average amount of time taken to investigate the validity of each payment request submitted by a business to the Department for work undertaken in connection with the foot and mouth outbreak. The variable nature of the factors governing the processing of the accounts renders any average figure meaningless. These factors include but are not limited to the following:

(i) the absence of any substantiating evidence on the part of some businesses including the supply of basic records evidencing the work done;

(ii) some businesses refusing to co-operate with the Department in relation to the supply of such information, directly contributing to the time taken to process their accounts, and where such refusal has led to the Department valuing the account on the evidence available to it;

(iii) some businesses seeking payment applying the incorrect contractual rates or being obliged to re-invoice Defra months, and in some cases years. after the original invalid charges;

(iv) the Department is still receiving invoices for alleged work done some 2½ years after the foot and mouth disease outbreak;

(v) the Department is unable to proscribe with certainty the timescales for forensic examination, investigation, litigation and alternative disputes resolution procedures.

The Department has a public law duty to protect the public purse and will do so unfailingly in all circumstances where the evidence is sufficient and necessary to meet legal requirements in either a civil or criminal context.

§ Miss McIntosh
To ask the Secretary of State for Environment, Food and Rural Affairs if she will introduce vaccination as a means of preventing the spread of foot and mouth disease as part of the Foot and Mouth Contingency Plan. [144177]

§ Mr. Bradshaw
Prophylactic vaccination remains prohibited under the new EU Directive 2003/85 on the control of foot-and-mouth disease (FMD). However, the Directive does give greater prominence to the potential use of emergency vaccination in the event of an outbreak.
The Government's response to the independent inquiries into the 2001 FMD outbreak acknowledged that emergency vaccination would be considered as part of the control strategy from the start of any future outbreak of FMD, where measures additional to culling of susceptible animals on infected premises and dangerous contacts were needed. The latest version of Defra's FMD Contingency Plan includes details on the arrangements that are in place to allow for emergency vaccination in a future outbreak.