The Pig Industry
Restructuring Scheme
3. The Pig Industry Restructuring Scheme (PIRS) was
announced as part of the Government's Action Plan for Farming
on 30 March 2000, with the objective "to encourage the restructuring
of the pig industry in order to improve its long term viability".[4]
After the summit, it emerged that the scheme was to have two elements:
an outgoers scheme aimed at reducing pig breeding capacity and
an ongoers scheme which offers preferential loans to those restructuring
their businesses in order to stay in pig production.[5]
The scheme was intended to last for three years, with expenditure
in the first year of £26 million.[6]
Funding of £20 million for each of the two further years
was confirmed following the Spending Review 2000, making a total
of £66 million in all to be spent by March 2003.
4. The industry welcomed the announcement of the
scheme and has worked with the Government to develop the proposals.[7]
However, the positive response has become somewhat muted as a
result of the long delay in implementing the scheme. Although
the timetable was not precisely laid out, both the Government
and the industry expected at least the outgoers element to be
in operation by early summer 2000. The National Pig Association
(NPA) originally expected it to open to pig producers in June
2000,[8]
which accords with the assertion of the Rt hon Nick Brown MP to
us in late May that the scheme needed only "fine tuning"
and was "almost there".[9]
The Government's bulletin on the Action Plan for Farming issued
in July was still optimistically stating that the NPA and the
Meat and Livestock Commission "aim to have the outgoers element
of the scheme open for applications in July";[10]
but further slippage occurred until, in the event, the outgoers
scheme opened for applications on 4 December 2000 and the ongoers
finally began on 22 January 2001, nearly ten months after the
original announcement. In the meantime, producers were "desperately
treading water" and "many have concluded that the government
has no intention of channelling cash to them as a matter of urgency,
if at all".[11]
5. This protracted delay raises three concerns, one
specific to the PIRS and two with more general application. On
the specific, the late commencement of the scheme makes it unlikely
that all of the £26 million earmarked for the pig industry
in 2000-01 can be paid out by the end of the financial year. This
raises the possibility that the money will be lost to the industry
due to Treasury accounting rules unless the Minister can persuade
the Treasury to roll-over the money into the next year. The Minister
has repeatedly assured the House that "It is my intention
that every penny of the £66 million that was allocated to
the pig industry scheme over three years will be spent on the
pig industry".[12]
To achieve that objective, he has held discussions with his colleagues
in the Treasury but no announcement has yet been made. We support
the Minister in his endeavours and welcome his statement to the
recent NFU conference that "any underspend this year will
be carried forward to next year".[13]
It would be deeply unfair on pig producers to lose out on funding
because of delays for which they bear no responsibility. We
recommend that the Treasury and MAFF reach a decision in principle
that the £26 million allocated for this year may be spent
in 2001-02 if necessary and that the Minister make an early official
statement to this effect, to end the speculation in the pig industry
and ensure that producers are able to plan on the availability
of money which they have been promised.
6. Our two general concerns relate to the explanation
for the delay in launching the restructuring scheme - the need
to gain European Commission approval for the funding of state
aids. We stress that both concerns are aimed at MAFF, rather than
the EC itself. In the first place, it is apparent that the process
was more lengthy than was necessary. The European Commission was
notified of the scheme on the day of its announcement (30 March),
and further information was provided by MAFF in response to various
concerns raised by the Commission on five occasions between 10
May and 17 November.[14]
Ms Quin attributed the delay to the "procedural hoops"
in gaining approval which involved a new process beginning every
time the Commission raised objections or questions.[15]
Clearly, when dealing with such an approval system, it is crucial
that preliminary discussions are held before the bid is submitted
in order to reduce the number of queries from the Commission to
the bare minimum. In this case, we do not think it sufficient
for MAFF to have "explored [the proposed scheme] in general
terms with Commissioner Fischler"[16]
before working up the details for the Commission. The number of
further requests for information supports the view that closer
co-operation between the Commission officials and MAFF would have
been beneficial from the earliest stages. We have in mind the
criticisms made in the recent Better Regulation Task Force report
on Environmental Regulations and Farmers of the lack of engagement
between the UK civil service and Brussels, which makes negotiations
more difficult than they need to be. We welcome the Government's
positive response to the Better Regulation Task Force report and
recommend that MAFF put in place mechanisms to ensure that it
explores every opportunity for reducing the time span between
announcements and EU approval of schemes.
7. Secondly, it is incumbent on MAFF to ensure that
the process which must be gone through to implement any such proposals
is clearly spelt out at the time of announcement. There was no
indication at the time of the Action Plan for Farming summit that
approval by the European Commission could take so long, nor that
it was typically such a "frustrating experience", as
Ms Quin rightly described it.[17]
The industry naturally expected the funding to be made available
within a few months and it would assist MAFF's own relations with
producers if it had been clearly explained that this was not likely
to be the case. MAFF's optimism on this point is puzzling in view
of Ms Quin's understanding that "the average State Aid application
seems to take about 18 months in the European Commission".[18]
We recommend that all announcements of new schemes or funding
packages for the agriculture industry should include details of
the decision-making mechanisms through which the proposal must
pass before it can be realised, together with a realistic timetable
for the completion of the process. Managing people's expectations
in this way need not blunt the impact of good news; but it should
allow those most closely involved, who may be relying on the new
scheme for the survival of their business, to plan more accurately
for the future.
The classical
swine fever outbreak
8. MAFF is engaged in separate reviews of the lessons
to be learned from "the administrative handling of the CSF
outbreak" and of insurance issues in connection with animal
diseases.[19]
We look forward to receiving the results of these reviews and
we do not intend to pre-empt their conclusions in this report.
Nevertheless, we have one concern which we wish to draw to the
attention of the Government in terms of planning for such epidemics.
Although the UK has been free of CSF since a minor outbreak in
1986, there was a major outbreak in the Netherlands in 1997-8
which spread into Germany, Belgium, Italy and Spain and which
should have acted as a warning to MAFF of the possibility of recurrences
in this country. In addition, as Ms Quin pointed out, the regulations
on control of CSF have changed in the meantime.[20]
We asked what contingency planning had taken place within MAFF
after the Dutch outbreak and were concerned to learn that MAFF
relied solely on disease simulation exercises carried out by the
State Veterinary Service as general planning for any "epidemic
disease for which we have a slaughter and compensation policy".[21]
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 and
to apply those lessons for the benefit of our own industry and
consumers.
Conclusion
9. 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 has been promised, and welcomed, but comparatively
little has been delivered. We are pleased that the two elements
of the restructuring scheme are now open and we note that the
strong response from producers indicates that they are much needed.
We expect the Minister to continue his negotiations with his colleagues
to ensure that all the money originally allocated to the pig industry
is paid out in good time. However, we believe that the development
of the scheme from its announcement to commencement highlights
important lessons for MAFF to absorb and act upon in future.
10. Since we completed taking evidence for this inquiry,
the United Kingdom has been hit by an agricultural disaster on
a scale far greater than the classical swine fever outbreak. The
discovery of foot and mouth disease in pigs in an Essex abattoir
has led to a temporary ban on all exports and on the movement
of animals within the UK, as further cases are identified across
the country and in other sectors of the livestock industry. At
the time of writing, it is impossible to predict with any confidence
the extent or the repercussions of the current outbreak. We shall
of course monitor developments very closely. Whilst it would be
premature to summon the Chief Veterinary Officer and the Minister
to give evidence to the Committee at this critical time, we will
keep under consideration appropriate action for us to take and
we expect to make an announcement on this in the near future.
2 Third Report from the Agriculture Committee, Session
1998/99, The UK Pig Industry, HC 87-I. Back
3 Q
2. Back
4 The
Government's Action Plan for Farming, 30 March 2000. Back
5 HL
Debates, 11 April 2000, WA 35-6. Back
6 Action
Plan for Farming. Back
7 Q
5. Back
8 Q
18. Back
9 Min
of Evidence taken before the Agriculture Committee, 23 May 2000,
HC 525-i, Q 78. Back
10 Action
Plan for Farming Bulletin, July 2000, p. 2. Back
11 Ev.
p. 2, para 1.4. Back
12 HC
Debates, 1 February 2001, c. 424. Back
13 Speech
to the NFU Annual Conference 2001, 7 February 2001. Back
14 Ev.
p. 15, para 4. Back
15 Q
94. Back
16 Q
94. Back
17 Q
94. Back
18 Q
94. Back
19 Q
108. Back
20 Q
103. Back
21 Ev.
p. 39. Back
