MONDAY 11 DECEMBER 2000



Members present:

Mr David Curry, in the Chair

Mr David Drew

Mr Michael Jack

Mr Austin Mitchell

Dr George Turner



MEMORANDUM SUBMITTED BY MINISTRY OF AGRICULTURE, FISHERIES AND FOOD

EXAMINATION OF WITNESS

MS JOYCE QUIN, a Member of the House, Minister of State, Department of Agriculture, Fisheries and Food, examined.

Chairman

73.    Minister, welcome again. I hesitate to say this is your last appearance of the year because you never know with this game! We are here on pigs on this occasion. Thank you for coming. We will try and be crisp and to the point. I wonder if you could begin by outlining what responsibility does government have for the pig industry? Where do you draw the line in where you think the government is actively involved, where the government just tries to be a helpful influence, and where you say, "Sorry, chaps, that is your business"?

(Ms Quin)  That is quite a difficult question to answer; it is quite a short question to put. Obviously there needs to be continued dialogue with the industry in order to identify those areas where government can take action and areas where government can at least help to try and improve the environment in which producers are operating. There is a responsibility on government to ensure that European rules are applied fairly and that our own pig industry does not suffer disproportionately compared to the situation regarding the implementation of European rules in other countries, and there is a responsibility on the government to look at the possibilities within domestic agricultural policy to work with and support the industry. However, what the government cannot do, of itself, is prevent all problems that might affect the industry from a variety of factors. And, of course, the possibilities for the pig industry are somewhat more limited than they are for some other agricultural sectors given that the industry is what is euphemistically called a "lightly supported" regime under the Common Agricultural Policy as opposed to other sectors that get more mainstream support.

74.    When you say "make sure the industry does not suffer disproportionately in comparison with other producers", does that mean that when it comes to compliance with regulations and cost of regulations, or in dealing with outbreaks of disease which may also be an occurrence on the Continent that you want to try and make sure that your response is broadly of the same sort of magnitude and at the same sort of level as that received from their governments by competitive producers?

(Ms Quin)  Indeed, and also when aid is either been proposed or seems to be given by other countries which does not seem to us to conform with the rules, to be prepared to approach the European Commission to say so.

75.    It has been put to us that other countries faced with a crisis pay up and then go and ask for permission. Even if permission is refused the money is paid in any case and it is all a bit too late. Is this a line of action which has commended itself to the British Government or does the famous genie of disqualification make it impossible?

(Ms Quin)  Firstly, I do not accept that things are quite as simple as the picture that would be painted in the words that you have uttered. I do not believe that things are as simple as that. I think that most countries are very much closely guided by European rules. All countries face disqualification if they disobey those rules and, indeed, sometimes the European Court of Auditors' reports uncover cases where rules have not been properly applied and payments have had to be given back as a result. There are a number of safeguards in the system which would make the situation you describe an oversimplified one. Nonetheless, we do have to watch very closely what other countries are doing. There are a number of ways in which we do that, both through official contacts and indeed through ministerial contacts, and we need to do as much as we can to make sure that the conditions of competition are as fair as possible.

Mr Drew

76    Sorry to miss your opening remarks; I am sure I will pick them up later. If I can move us on to the Government's responsibility towards the pig industry. Just in outline, Minister, how would you describe the Government's performance with regard to both the restructuring but also the swine fever outbreaks?

(Ms Quin)  I think we have played an active role and we have certainly had a great deal of contact with the industry. Sometimes the negotiations in order to achieve particular results have taken quite a long time, but there has been no lack of willingness on the part of the Government to engage with the pig industry and to work with the pig industry's representatives. I think this has been particularly true in the fact that we agreed to bring in the pig industry restructuring scheme and negotiate it in Brussels even though that tends to be a time­consuming process. I think also the way we have worked with the industry over the promotion of their products, particularly through helping in terms of the meat promotion campaign that was run by the Meat and Livestock Commission, rather a controversial campaign at the outset but one that certainly drew attention to the quality of the British product. I think, too, the work done by our verification officer and work which has now been taken forward within the Food Standards Agency on much better controls over misleading labelling have borne a good deal of fruit and a number of leading retailers have changed labelling procedures as a result, and I think that consumers are better informed as a result and are therefore able to exercise a better choice about what they buy. I think, also, our overall approach to the Rural Development Regulation is one where we have shown we are committed to bringing in schemes which benefit those sectors of agriculture who do not get mainstream Common Agricultural Policy support. The pig industry, the poultry industry and the horticultural industry and others are beneficiaries of that new approach. We are very keen, as you know, to push that approach forward as part of the overall common Agricultural Policy Reform.

77    Can I stay on restructuring, and come on to the swine fever outbreak in a moment. Do you think the 16 per cent figure for the number of outgoers or the capacity is the right figure, or is that too high or too low?

(Ms Quin)  It is the figure that accords with European State Aid rules, which is why the figure exists. We certainly believe that we can meet that in terms of what has already happened since July 1998, which is the period which is considered as the starting period for the operation of the restructuring scheme. Therefore we hope, particularly with the outgoers part of the scheme, that that will be of benefit to many producers who have restructured and reduced capacity, sometimes by a great deal more than that amount, in the last two years.

78    Can you explain to me how you get to the 16 per cent figure, not in terms of what the EU says, but how you manage the mechanics of that in terms of outgoers and those who stay but reduce their capacity?

(Ms Quin)  In terms of outgoers it is my impression that the 16 per cent figure would be easily exceeded, there is no risk of us not being able to comply with the 16 per cent figure, given the changes that have taken place, with which you are familiar, in the pig industry since 1998. Our discussions with the industry have certainly indicated to us that now that the outgoers scheme is open for business we will receive bids to be able to allocate the money in that particular budget. In terms of the ongoers I think the point is much more germane because, in fact, we would prefer if that requirement of the EU was not there as far as ongoers are concerned. It has been a difficult issue in the negotiations. The Commission have said that this is part of a restructuring programme, and the ongoers element is a restructuring programme. In terms of the larger scale pig producers they particularly wish to see that complied with. It will be more difficult to do it in terms of the ongoers, but given that the ongoers depend on a business plan being put forward, which has a forward­looking strategy, we hope that it will be met. It should also be said that 95 per cent of pig producers will not be subject to that requirement and they will be able to benefit, we believe, quite directly from the ongoers scheme.

79    If I can look at swine fever, why did the Minister of Agriculture refer to the outbreak in its early days and obviously the cost to the industry as a normal business risk. Was that the right thing for him to say or was that somewhat risky, given that now the Government have responded by providing compensation? One would have thought he has gone back on what he was implying at that time.

(Ms Quin)  It is true that in farming there are disease risks, and that is something that all farmers, in whatever part of the industry, are well aware of, whether it is animal disease or plant disease. However, during the course of the immediate aftermath of the outbreak of swine fever, and the measures that were taken to deal with it, it became clear that there certainly was a welfare problem in those establishments which were subject to restrictions but were not themselves infected premises. As a result of that welfare problem, the overcrowding caused by the fattening of the pigs, this was a possible area which Government could help to address. Discussions with the industry eventually reached an agreement, which again, as you know, was modified subsequently on a number of occasions following suggestions from the industry to make it a better scheme from the pig producers' point of view.

80    I understand that you have answered why the Government changed its mind. When did it change its mind? Was it in the first few days or did it take weeks? Some would argue that it is still not right.

(Ms Quin)  Through the whole of August, after the first outbreak was notified, there were discussions between the Minister, officials and the industry in order to look at what was happening as a result of swine fever. I do not see it as the Government changing its mind, it is responding to the evolution of the situation. I think that is a perfectly reasonable thing to do. At first it was not known what the scale of the outbreak was going to be, how many premises were going to be affected by this, or what kind of problems would arise on the premises that were either infected or which were in the surveillance zone. It was really as a result of that and the representations that pig producers made that the welfare scheme was brought forward. There had not been a precedent for this in the past, so it was a new scheme which was brought in in these particular circumstances. We felt that it was a valid way of helping those producers who were caught up by the outbreak of the disease because of the restrictions placed on their premises and who otherwise would not have had any compensation, in contrast to those who actually had infected premises where they would have compensation under the normal compensation rules.

81    Did the Government ever consider full compensation? If not, was that because of the role of the EU or is there some other reason?

(Ms Quin)  I think it is both based on precedents and the way that compensation has been given in the past in the case of animal disease, and also looking at some of the experiences on the continent in terms of trying to negotiate schemes with the Commission. Certainly in localised outbreaks in the Netherlands compensation has not been paid to those caught up in the restricted zones. Obviously in terms of the national outbreak of swine fever, if I can put it that way, in the Netherlands, the very large outbreak, that was different, where the whole of the Dutch market was disrupted. In those circumstances different Community rules come into force which allow access to compensation. In the United Kingdom case the whole of the market was not disrupted, it was a localised outbreak ­ tragic for the people in that area, I am not trying to underplay that at all ­ and, therefore, one could not argue that the whole of the United Kingdom market was disrupted. At that time the pig price, happily, had risen over its previous very low levels and overall the market was looking better than it had for some time.

82    I just want to get clear in my mind the degree to which the Government and its financial controls make this decision, as against going to the EU and saying, "Look, we will put so much in, we can even get the industry to put so much in, but we need you, given your previous record of helping countries that have had serious outbreaks". Where are those three elements? How do they tie together? Where does the Government decide how you get those in some relationships?

(Ms Quin)  It is difficult to answer that. There are a number of factors that are put before ministers in terms of deciding how to proceed. There is the way that Governments traditionally approached issues of compensation when there have been animal diseases. There are precedents in terms of European payments. I have already drawn the distinction between the localised outbreak in the Netherlands and the national outbreak and explained the difference between them. It is really a balance of those factors.

Chairman

83    And the industry itself?

(Ms Quin)  Of course. It is balance of those factors in deciding how to proceed. We did feel that while it was unusual to have a welfare disposal scheme of this kind, this was, at least, a way of affording some compensation to producers and in a way which, because it was a welfare payment, did not necessitate the lending State Aid route, which, given the precedents of localised outbreaks elsewhere, would not have been likely to lead to positive results.

Mr Jack

84    If you would be kind enough to go back, you raised a point, which I would just like technical clarification on. As far as the two outgoers schemes are concerned, you said that there is a State Aid rule in response to Mr Drew's line of enquiry about the 16 per cent. Is that number 16 written into the rules somewhere? Is 16 the number?

(Ms Quin)  I understand that it is, yes. I have been advised that that is the State Aid rule that we were applying.

85    Why 16? What is magic about 16 per cent being the number that you have to hit that magically puts the pig industry right? Did anybody ever ask whether 16 was right?

(Ms Quin)  I asked that myself.

86    What was the answer you received?

(Ms Quin)  I would say that the answer was vague, in that this seems to have been around for some considerable time and presumably was the basis of an original European compromise. That is the figure given in the State Aid legislation. I think I am right, I will certainly inform the Committee if I am not right, that that was the answer I was given.

87    On this 16 per cent, again for technicalities, is it calculated in terms of value, turnover, pigs or what?

(Ms Quin)  It is 16 per cent in capacity.

88    In capacity?

(Ms Quin)  We are talking about pig breeding capacity.

89    Just to be clear, somebody set that in concrete at some point in past history that for a restructuring scheme to be okay from the State Aid's point of view 16 per cent reduction maximum in pig breeding capacity was as far as you could do. I would be very interested to know how this magic number 16 did come about because my next line of questioning is, did anybody in MAFF question whether that was right for the industry at this particular time, and if they did think it was right, why?

(Ms Quin)  Both at official level and indeed ministerial level there has been a great deal of discussion about the details of this particular scheme, including the restructuring requirement. However, I think I am right in saying that actually in terms of the outgoers part of the scheme this did not feature very largely, simply because we are talking about quite a bit of capacity that has already gone through the system, which would fit quite well into those State Aid rules. The difficulty, as I understand it, really only became apparent in terms of the ongoers element and in terms of the Commission requirement, that if you are giving State Aid there has to be a restructuring of large units, otherwise they do not accept that it is a genuine restructuring. The minimum is 16. It is not that you just have to hit 16. If you do not show any restructuring at all they are not convinced that it has passed the State Aid test of restructuring.

90    For my education, why 66 million, how did that number arise?

(Ms Quin)  First of all, the 66 million was part of the overall action plan for farming, which was a 200 million package, and we wanted to give the pig industry a reasonable proportion of that, given the difficulties that they had been in and the very real public concern there was about the future of the pig industry in our country. I am not saying that the 66 million was set in stone in the way that the Commission figures that you have quoted are, because they are not our figures, but in terms of what we felt would represent a reasonable contribution to bringing forward changes in the industry and helping the industry over the next few years. This 66 million, however, is the total amount over three years, so it is not 66 million a year.

91    You just said it was a reasonable contribution towards a bigger number. I am also interested to know how the numbers were calculated. What was the bigger number? What was the total number to fix the industry, of which you then thought 66 ought to be our contribution? What was the bigger number?

(Ms Quin)  I do not think it was thought of in quite the formulated way in which you are asking the question. The whole package was 200 million and, as I said before, we wanted the pig industry to have a scheme of a reasonable size.

92    I do not want to prolong this line of enquiry. I, for one, would be very interested to know how it was considered that 66 was a reasonable sum out of 200. We heard evidence earlier pointing to something like a 300 million black hole in the accounts of the British pig industry, and it has gone through an unprecedented period of difficulty, which you will be extremely familiar with. I am not saying for one moment the 66 million is not an inconsiderable sum of public money, but people in the pig industry who look at the degree of help which has been provided might be interested to know how it was arrived at and, perhaps, you might be able to let us know a bit more about that? I want to move on to the question of timing, because there is a feeling in the industry that it all took a very long time. It was on 30th March the Prime Minister launched the Government's action plan for farming, according to paragraph four of your evidence to the Committee. Would I be right in thinking that a certain amount of informal discussion would have gone on between your officials and the Commission to establish that you were not crossing difficult lines by putting such a scheme into the public domain?

(Ms Quin)  Firstly, can I just pick up on the point of the 300 million which you mentioned as the figure which had been given as an estimate for the industry's losses. I assume that that figure includes the estimate of the industry in terms of what they felt were the extra charges imposed by the BSE controls which fell on the pig industry, even though BSE had not been present in pigs. Am I right?

93    Yes, I think so. I am getting some nods in the right direction from the industry.

(Ms Quin)  The 66 million was a scheme to take the development of the industry forward. It was not calculated as a compensation for charges falling on the industry from the BSE measures. It was not meant to tackle that at all. If you remember, that was something that was the subject of approaches by the Government to the European Commission, but money to compensate for that was ruled out as an illegal operating aid. Therefore, that should not be confused with the 66 million, which is new money for the pig industry for a new scheme.

94    One would accept that the industry would see this as the first net injection of money into their industry after a period of unprecedented difficulty. Let me turn to the question of timing. There is concern about the time it took to get the scheme up and running. How much preliminary discussion did you indulge in with the Commission to ensure that when the Prime Minister announced this it did not immediately engender a letter from Commissioner Fischler saying, "You cannot do this"?

(Ms Quin)  From my memory it was explored in general terms with Commissioner Fischler. The Commission then required the details to be worked out and sent to the Commission. Can I say on the delay, in some ways dealing with the Commission on these kinds of issues is a frustrating experience, without any doubt. In terms of getting State Aid sanctions there are always a lot of procedural hoops to jump through. There is a system whereby if the Commission raises objections or questions then another two-month process starts, by which the Commission is then obliged to give some further decisions. It is a rather drawn-out process. It may be little consolation to pig producers, but actually given that I understand that the average State Aid application seems to take about 18 months in the European Commission this scheme has been quicker than a lot but, nonetheless, it has still been too slow for my liking.

95    Alternatives. We have discussed, in general terms, the restructuring scheme as it is now published. Did you look at any alternatives? Do you think that the scheme as presently constituted was really the best way to address the problems of the industry? Did you consider any other alternatives and, if so, which?

(Ms Quin)  We originally had discussions with the Commission about offsetting the BSE costs, which would have been obviously of great help to the industry, so that approach had been tried and failed. In terms of this scheme we did try and work it out with the industry as much as possible. I accept that the industry would have liked something that cost more, but at the same time, in terms of the details, we did try and work with them and also share with them information from the Commission in terms of reaction to the original proposals so that the industry felt that it was being consulted and informed, and also that its suggestions were being taken on board.

96    Let me hold you on that point. In the National Pig Association's evidence to the Committee, paragraph 1.2, one of the questions that they pose, if you like, perhaps, to be asked at this juncture, is, "Could the Government have designed a scheme which did not", as this one does, "exclude those producers who are the most efficient and most progressive in the country?"

(Ms Quin)  That, presumably, refers to this difficulty over the 16 per cent. We have certainly discussed this point very hard with the Commission, but we have not found a way around it. In order to avoid protracting discussions any further we would rather go ahead with the scheme as we have it. I hope that the 95 per cent of producers who can benefit from it will derive some benefit from it.

97    Which producers do you think have the best chance of continuing with the pig industry in this country as efficient and effective producers?

(Ms Quin)  That question is not easily answered by saying one side or another. It is very much a question of the commercial way in which pig producers operate, whether large or small. Some small producers have sometimes identified a particular market, sometimes a niche market, sometimes a particular local market which they successfully supply to and where there are prospects for growth, irrespective of whether they get Government support or not. In addition there are some successful large-scale producers who also have become very efficient over recent years and who are in a good position to continue whether or not they get State support in that continuation. Let me also say, the large-scale producers are eligible to apply for some of the Government's new schemes under the Rural Development Regulation. I want to emphasise that point, we have deliberately tried to introduce those schemes as a way of helping people who fall foul of the European system in other ways; even though they may not have access to the pig industry restructuring schemes there are other schemes which they can look at for the future. It does not mean that we are simply ignoring them and the very valuable contribution that they can make to the future of the pig industry.

98    I just want to ask three short questions on the question of the £66 million. Will you guarantee that all sums will have been paid out by March 2003?

(Ms Quin)  I hope they will. For me to give you a guarantee here and now would, perhaps, not be right. For example, we know in terms of the current year that because these negotiations with the European Commission have taken some time and because, obviously, there is the tendering period that has to be gone through, and so on, we are running very close in terms of the current financial year. As the ex­ministers here will know, discussions in those circumstances, where there is under­spend, always take place between departments, and particularly with the Treasury, and I cannot say what the outcome of those will be at the moment. I can say the agricultural ministers are very committed to the 66 million being spent on pig industry matters. Whether it is all spent by the date in question or not I cannot give an absolute guarantee, but I would certainly like to think that if it is not all spent the vast majority of it will be.

99    Can the scheme go on beyond 2003, if necessary?

(Ms Quin)  That is certainly a possibility.

100    What have you done to make the scheme simple to operate? It has all the shades, I seem to recall, of the fishing vessel decommissioning scheme in terms of the structure and approach. That was reasonably effective because as time went on some of the bids became very competitive indeed. Have you designed it with a view to it being simple to operate?

(Ms Quin)  We have designed it in consultation with the industry, so we hope that they will have a good understanding of it. Obviously both the Government and the industry itself can communicate the details to pig farmers. I understand that the leaflets describing this scheme, if they have not reached you already, are being sent to the Committee. We have tried to work with the industry in implementing it. We certainly feel that it has got a good chance of success. Obviously, as in all these schemes, we will need to monitor its implementation and see how it is working in practice. If we feel that somehow or other it is not working or there is a need to discuss modifications, we will try that, even though we know that since it has to go through the Commission that in itself is not particularly straightforward and easy, therefore we would much prefer it if it does work in its current form.

101    What have you got pencilled in as the split between the outgoers and the ongoers as far as the 66 million is concerned?

(Ms Quin)  Originally we were thinking, more or less, in a half and half term. It will depend, to a certain extent, on the level of interest in the outgoers in this first year. Certainly we thought that the first year of the scheme, which we hoped would be the 26 million in this financial year, would be largely for outgoers and the bulk of the rest would be ongoers.

Dr Turner

102    We have had many representations which are quite scathing about MAFF's initial response to the outbreak of swine fever. I have one quote made from Easton Estates which says, "In the past eleven weeks there has been a roller­coaster of misinformation and lack of communication, resulting in immense stress and strain on our whole farming operation". Others tell us that your web pages were three days out of date, more out of date than the representatives of the pig industry itself. Would you accept that MAFF were initially slow in responding and, perhaps, a poor communicator in the early days of this outbreak?

(Ms Quin)  On the whole, no. I believe that both officials and ministers worked very speedily in August, which is probably not the ideal time, but nonetheless officials and ministers did work very, very quickly in addressing the problems of classical swine fever. I do feel that there were some communication failures in the very initial phase, but, nonetheless, I believe that was quickly sorted out with the establishment of the helpline, which was well used, and efforts were quickly made to bring the information up to date. There certainly were a number of visits of the Chief Veterinary Officer and others to the area. There was a lot of extra veterinary support drafted into the area and I feel that actually a lot of people are to be congratulated for the effort which they put into this.

103    We have already noted and have been told that you did in fact divert resources from the bovine TB project to cover the outbreak. That does indicate that in fact MAFF is not quick to handle this sort of emergency problem.

(Ms Quin)  No, I do not think so. We also brought in some veterinary help from other parts of the country and there was also some help from abroad as well. MAFF does have contingency arrangements and has had experience of dealing with a number of different animal disease outbreaks. It is true that it is some 14 years since the previous outbreak of classical swine fever and it is also true that the regulations governing that situation have changed in the meantime, that now there are European rules in place whereas I think in 1986 it was done under domestic legislation.

Chairman

104    They changed in 1990 I think.

(Ms Quin)  I believe actually MAFF is well-organised for that. That is not to say that we cannot learn anything from this particular outbreak, obviously we do need to look at the experience. Indeed devising the pig welfare disposal scheme was something which had not been done before, and I am also very glad that as a result of what has happened the Government and the broader farming industry are discussing how issues of, say, insurance and of trying to mitigate the economic consequences of the losses due to animal health problems can be tackled in future. So there are things we can learn from it but, nonetheless, I can understand people, particularly in the early days when suddenly this problem arose, being very worried about it. Any attempt to get information which was not immediately answered would seem to be indicative of a problem, but I actually do believe that some of the problems were magnified and actually MAFF did act very speedily.

Dr Turner

105    You would accept that there is a very big difference in the views we are hearing from the industry and what you are saying. I am pleased to hear you say that there may be lessons to learn, the industry has already said that they want to see a proper review of what the Government did and I think we would welcome that being wider with how the industry responded as well. What is the initial response of MAFF to that suggestion of the industry? Are you are going to accept there is some work to be done and, if so, will it be done on a suitable timescale and will it be published in the public domain?

(Ms Quin)  In terms of the work we are doing with the industry on the wider insurance issues and the economic issues raised by this, we want the study to be complete by the end of March.

106    Will it be published?

(Ms Quin)  I am not sure a decision has been made on that but we would certainly want to inform people of the outcome. I cannot imagine we would want to keep the conclusions secret, particularly since they were negotiated and drawn up by the Government with industry. I would very much doubt, even if one would want such a thing to be secret, one would be able to keep it secret. I am sure it will be published.

Chairman

107    I am sure if we were to invite you to share it with us, you would find that an irresistible invitation.

(Ms Quin)  Absolutely, yes.

Dr Turner

108    Clearly the situation with communications did leave people fraught, and that must be quoted in that review.

(Ms Quin)  Well, the review is particularly looking at the insurance issues. Parallel to that process, we have also said we will look at what lessons we can learn from the administrative handling of the CSF - classical swine fever - outbreak and we will certainly do that. The suggestions of the industry to us about ways to improve in the future will also be looked at as well.

109    One of the other heart-felt cries which we had representations about was what was seen as a volte face by the Government in its position on full compensation. We were told by at least two submissions from East Anglia that the Government had in fact in the Pig Meat Management Committee meetings routinely and regularly been supporting a policy which would in fact have seen full compensation being paid, and it is being said to us - and I am not sure I have read the necessary documents directly - that in fact there is a difference in the Government's position from what it had been arguing throughout 1997 and 1998 in terms of there being full compensation.

(Ms Quin)  I am not sure whether you mean full compensation to infected premises or whether you are talking about compensation in the surveillance zones.

110    What is being said to us is both. Baldly put, if I may quote from the memorandum from the East Anglian Pig Advisers Association, "In 1997 and 1998 the policy of this government was to support full market value compensation for the disposal of pigs locked in surveillance and protection zones."

(Ms Quin)  I do not think that is correct. As far as I know - and I have to say I am not the Animal Health Minister so in that sense I have not been in the forefront of discussions, so if I need to correct myself I shall do so - I am not aware that the Government has changed policy. I thought it was the policy of both this Government and indeed the previous Government to pay compensation for slaughtered animals in protection zones but not to pay compensation for animals in the wider surveillance zones. This Government has changed that in terms of bringing forward the pig welfare disposal scheme.

Dr Turner:  It might be helpful, Chairman, if we could have something in writing, because something different is baldly stated in at least two of the memorandum.

Chairman

111    Perhaps the Minister would do that?

(Ms Quin)  Yes. I certainly do not want to mislead the Committee. I am explaining the situation as I understand it.

Dr Turner

112    Logically, Minister, what was put to me by people in the industry at the time was that if you had a pig with the illness you got compensated, and that seemed to be clear-cut and not argued about, but if you had a healthy pig and you could not do anything about it, you could not move the pig, you were arguing like mad to try and get fair compensation. We have already been through the steps there were which did leave to substantial improvements when the first angry farmer picked up his phone to me, certainly, but it does not seem very logical, does it, that we have to almost encourage the disease to be on your farm to get compensated? It does seem perverse that those who do not have the illness are almost encouraged to get it. There were hot tempers around at the time, and I would not think some of the things being said at the time were properly intended, but it was being said loosely that some people were going to want to get this disease on their farm because then they will get properly compensated rather than being left in serious financial problems. Does the present rule book in Europe not seem perverse?

(Ms Quin)  This goes back slightly to the question I answered from Mr Drew earlier on when we described that the formal Government position, and I think the previous Government's position, was to offer full compensation for the infected animals which were slaughtered. In terms of those in the containment zones, the restricted zones, we responded to the very concerns that you have put forward by bringing in the pig welfare disposal scheme. In terms of incentives, it is obviously important to have an incentive for farmers to report incidents of the disease when it occurs, and the present rules certainly do that. I think farmers are also well aware that we are talking here about a highly contagious disease and anything which would spread that contagion in the end risks undermining the whole of the industry. Farmers I believe are responsible in their attitude, and in recognition of that responsibility and also in recognition of the welfare problems that some of the farmers in the restricted zones are having to cope with, we then brought in the pig welfare disposal scheme.

113    The industry said to us that they were giving you advice to be more draconian in terms of your response, in particular a proposal there should be within 3 km a complete killing policy, and they argued that there seemed to be some delay in their advice being taken and indeed lessons being learnt from the Continent. I am wondering if you could respond to that?

(Ms Quin)  I do not feel that is a fair comment on the situation. In fact, looking at it now and, hopefully, the restrictions on the remaining two areas can be lifted very shortly - I think it is fair to say we would hope to make progress with the one entirely in Suffolk possibly even by the end of this week and the other zone hopefully before the end of December or perhaps at the latest the first week in January - I think the success in dealing with the outbreak and getting a phased lifting of the restrictions across Norfolk, Suffolk and Essex has actually been well-handled.

Chairman

114    Why did you decide that the felicitously entitled "Pig Industry Development Scheme for Disease Risk Management" was necessary? Were there alternatives?

(Ms Quin)  This was agreed after discussions with the industry as a way of arranging a top-up to the pig welfare disposal scheme. We looked at various ways of facilitating this. The only way which it could be seen to be done was by bringing in an Order to permit the levy to be raised, and that of course does take up some time because there is a consultation process first and then a parliamentary procedure to be gone through, but it was the outcome of discussions with the industry and we believe that given the actual amount that the levy is going to mean for pig producers there is a good chance of the consultation being successful.

115    The industry is obviously a bit concerned in case this is seen as a precedent for future action, where the Government might say, "This is a jolly good wheeze, we can offload our own responsibility." Are you prepared to say that this scheme will not continue beyond its present purposes, that it is specific and will come to an end?

(Ms Quin)  At this stage the Government is simply wishing to facilitate the scheme. We would then discuss with the industry as to what their experience of operating the scheme was, how valuable they felt it was, whether it could provide a role in the future. But let me say we are not trying to offload, so in terms of the thought behind your question it is not some kind of new policy which has been devised, it is simply a way of looking at all the different possibilities for helping the sector at this time. But we would not then say, "Now the Government has no responsibility at all in this area." Not at all, far from it.

116    Given the number of people who have voiced a concern, that reassurance is helpful. As you know, there is a real cash flow problem, is there any way in which you can provide temporary payments, payments in advance, as it were, on account, to cover the period before the top-up scheme is in operation - the industry refers to it as a bridge - because there is a real fear of the immediate financial crisis? Is there a way in which you can help address that cash flow problem?

(Ms Quin)  Very difficult in fact. Obviously if the scheme depends on parliamentary approval, to give money in advance of parliamentary approval would simply seem to be pre-empting the decision of Parliament, and that is not procedurally a correct way to go. The other thing is, in terms of public accounting rules this would be felt to be improper, you would actually be giving money for which there was no absolute guarantee it was going to be recouped. So on those two counts, I think it is not a viable proposition.

117    It is the statutory consultation, which is the problem, I guess.

(Ms Quin)  It is the consultation and the fact that you have to have an Order passed in this House and also in the Scottish Parliament. So although we believe that the Orders would pass in both places, we cannot assume they are going to pass in advance, and that is what would make the payment in advance improper.

118    So you cannot make the Order until the consultation process is finished?

(Ms Quin)  We are getting legal advice as to whether it could possibly be done concurrently, but I would not like to raise hopes at this stage. Obviously we cannot act contrary to parliamentary procedure. Another possibility which has been raised is the possibility of accessing some of the Aujeszy's Disease money. That is an avenue we are looking at but it would need consultation with the people who manage that particular fund.

119    But the conclusion we draw is that you are aware of the problem and are actively looking to see if it is possible to find a way to address it. Would that be fair?

(Ms Quin)  That would be a fair summary, yes.

120    You referred to the rule change, the European rules introduced in 1990, and then of course in 1998 there was a big Dutch outbreak, and you said yourself we had not had a serious outbreak for a very long time indeed. Did any alarm bells ring with the Dutch outbreak? Did you do any sort of war games? Did you say, "This is getting a bit close. We have these new rules, we have this much bigger outdoor pig sector than the Continent, would this be the time to sit down and do some planning as to what we might put in place if the worst came to the worst?" Did that process take place?

(Ms Quin)  As far as I know, and I have to stress I was not in the Department at that time and it is also not my specific area of responsibility, the situation was monitored obviously in the Netherlands and there were discussions within the Department about it. I think it is perhaps an area where, if I can get some supplementary information, I should send that direct to the Committee because I am conscious I do not personally have the background knowledge.

121    We would much rather have someone who said they do not know than blather for five minutes and we draw the conclusion ourselves that they do not know.

(Ms Quin)  The trouble is, you cannot say, "I do not know" to every question!

122    Literally in one minute, you are faced with a new outbreak and you have drawn the conclusions from this one, just telegraphically, as the Italians would say, what do you think you might do the same and what do you think you might try and do differently?

(Ms Quin)  I think getting an immediate system of communication up and running is tremendously important, and ensuring that is also up-dated as expeditiously as possible, and having consultations with the industry right away. We did have consultations with them early on but certainly the importance of dialogue with the industry cannot be over-estimated.

Mr Drew

123    We have obviously this scheme in place, we have got compensation for BSE, we have bovine TB, is there not a case for having some consistency in the way in which we react if you have an outbreak of animal disease - I am not talking about the human side of BSE but purely the animal disease? So you have a scheme which you can almost lift off the shelf, where there is some consistency and ease of operation, rather than every time to ratchet in a new form of compensation, with arguments as to where it is going to be set and who is going to get it.

(Ms Quin)  I think there is a lot of merit in that and that is basically the process we have begun domestically in our discussions with the farming industry generally on insurance issues. However, you are right to flag up the European dimension because of being part of the Single Market and the CAP, and I think it would make sense, provided we get some interesting conclusions from the work we are doing, to share that with our European partners and to look at these issues. There is no doubt that in a very piecemeal system you can get discrepancies, you can get distortions of competition, you can get allegations of unfairnesses and we want to eliminate those as much as we possibly can.

Chairman

124    Minister, thank you very much indeed. We are going to see you again quite shortly, I imagine, on other issues. Thank you very much for this. You have a date in advance, at some stage, when you have finished your review. Thank you for coming.

(Ms Quin)  Thank you.