Thank you for your letter of 11 November setting out a number of questions identified by the Committee based on the evidence that I gave at the session on 27 October. Responses to the questions are set out below.

  You also requested a copy of the Government's report "Proportion of domestically produced food used by government departments and also supplied to hospitals and prisons under contracts negotiated by NHS Supply Chain and National Offender Management Service (previously HM Prison Service)". The report is available online and can be found at: http://www.defra.gov.uk/farm/policy/sustain/procurement/awareness.htm.

Q.  BPEX provided details to the Committee of the financial assistance provided to pig farmers by the French and Irish Governments to help with the cost of converting accommodation for pigs in order to meet animal welfare legislation due to be introduced into the EU. BPEX has also provided details of financial assistance offered by other EU countries to help farmers with the implementation of environmental legislation (please see attached information provided by BPEX). I would be grateful if you could confirm that this information is correct. If EU farmers are getting help to move to the higher welfare standards and to implement environmental legislation, but UK farmers are not, are UK producers at a disadvantage as a result?

  A.  I am sure that the information from BPEX was provided in good faith but I am unable to corroborate all the details which are derived from their own research.

  The Government does not favour the use of taxpayers' money to fund operators to meet their obligations under EC legislation in the way that France and the Irish Republic have decided to do, according to BPEX. Nevertheless the Government has been sympathetic to the plight of the pig industry and we have invested taxpayers' money and effort in helping the industry to adapt and encourage the development of the market for high welfare standard pork and bacon products over the years. A number of examples were provided in Defra's written evidence to the inquiry. Some of those which relate to specific support for the UK pig sector are:

—  in 2000-01, the Government invested directly to help secure the longer-term viability of the sector by granting £37 million (over three years) state aid approved restructuring finance. That was a very significant, but one-off, grant to allow the sector to take sole responsibility for its long-term economic future in support of those businesses that were investing in higher welfare standards;

—  direct support in export promotion, including re-opening markets closed as a result of EU/UK animal disease outbreaks. Following the Foot and Mouth outbreaks last year Defra has been working hard, with the industry, to re-open profitable non-EU markets. Many key markets are now open—including Japan, US, Canada, Philippines, Malaysia and Thailand. China lifted FMD related import restrictions on 7 August 2008 (meaning that the export of breeding pigs can resume) and have just agreed a protocol on pigmeat which is a big step towards eventual acceptance of our exports (estimated to have a potential value of more than £10 million per annum);

—  also in the aftermath of the animal disease outbreaks last year Defra gave a £12.5 million package of aid to the livestock farming sector. While this mainly benefited non-pig sectors it included £2 million to promote the marketing of red meat, including pork and bacon.

  It is our view that having encouraged the pig industry to adapt to higher welfare standards at the turn of the century they have a much stronger marketing advantage than their EU competitors who are struggling to catch up.

Q.  What discussions did Defra have with producers over the removal of the agricultural buildings allowance in 2007, and did Defra make representations to HM Treasury on this issue?

  A.  Budget 2007 announced a major package of reforms to enhance international competitiveness, encourage investment, promote innovation and ensure fairness across the tax system, in line with the key principles that have underpinned business tax policy since 1997. This included an extensive set of reforms to the capital allowances regime to remove outdated incentives, some of which date from the immediate post-war period, and move to a simpler two-tier system for plant and machinery allowances.

  As part of the package of capital allowances changes, and consistent with the Government's general policy of not allowing relief for capital investment in land and buildings, it was announced that the Agricultural Buildings Allowance (ABA) would be phased out from 2008-09 to 2011-12. As a result, the effective rate of allowance fell to 3% in April 2008 and will fall to 2% from 2009 and 1% from April 2010, with full abolition taking effect from April 2011.

  Defra officials have not had specific discussions with the pig industry on this issue but did have discussions with the National Farmers' Union, which provided a paper proposing some changes to the new capital allowances which would be of benefit to the farming industry. Although the Government does not consult on changes to (or abolition of) tax rates and reliefs, it did consult on the three new features of the capital allowances system (Annual Investment Allowance, integral features and first-year tax credits) in July and December 2007. A comprehensive Impact Assessment of the whole package has been published and is available at http://www.hmrc.gov.uk/ria/capital-allowances-tech-note.pdf. Defra officials have since been working with HM Treasury and HM Revenue and Customs officials to ensure that the official guidance clearly reflects how the rules on plant and machinery capital allowances, and in particular the new Annual Investment Allowance, apply to expenditure on slurry storage facilities.

Q.  Do you intend to discuss the finding of the report of the Pig Sector Task Force with Richard Lochhead, Cabinet Secretary for Rural Affairs and the Environment, Scottish Executive?

  A.  I do not have any intention at this stage of formally discussing the findings of the report with Richard Lochhead. However, there are always lessons to be learned from such reports so I will watch with interest the outcomes of this exercise. There is ongoing contact at official level between the Scottish Government and Defra on the challenges facing the GB pig industry and we are aware of the issues raised in the report. These are however matters for the Scottish Government to address.

Q.  Could labelling be made clearer to the consumer within current labelling rules?

  A.  The Food Standards Agency has issued Guidance on Clear Food Labelling on its website to help industry to produce labels that provide information in a clear way that is helpful to consumers. Since I gave evidence to your Committee, the Food Standards Agency has also issued Guidance on Country of Origin Labelling that aims to encourage industry to help consumers through the provision of consistent, informative and transparent labelling practices. The Food Standards Agency has also produced Guidance on Clear Food Labelling on its website to help industry to produce labels that provide information in a clear way that is helpful to consumers. These Guidance documents are being fed into the process of negotiating the new European Food Information Regulation. Links to the Guidance are found below.

  http://www.food.gov.uk/foodindustry/guidancenotes/labelregsguidance/clearfoodlabelling

  http://www.food.gov.uk/foodindustry/guidancenotes/labelregsguidance/originlabelling

Q.  Whose responsibility is it to ensure that food is labelled clearly?

  A.  As was explained to the Committee during oral evidence, it is the responsibility of industry to ensure that food is labelled clearly—so this falls to the manufacturer, producer or retailer who is producing the label on their product. It is the function of Trading Standards Officers to ensure that food labelling rules are enforced at retail level and that the consumer is not misled.

Q.  How might the consumer be educated to distinguish between meat that has been reared in the UK, or in accordance with UK welfare standards, and meat that has not?

  A.  The Public Sector Food Procurement Initiative (PSFPI) is linked to "Think Food and Farming (previous Year of Food and Farming)" which is an industry-led initiative aimed at helping children to understand more about where our food comes from and to involve them in memorable first hand learning experiences—http://www.thinkfoodand farming.org.uk.

  This is one of the best ways of educating future consumers to be more aware of the way in which livestock are reared to higher welfare standards in the UK.

  We are also encouraging key stakeholders to disseminate the advice published in PSFPI guidance that among other things covers animal welfare standards, eg "Putting it into practice", "Food Policy in Schools—Catering and Food Procurement Supplement" and "Sausage and Mash and Sustainability".

Q.  What is Defra doing to encourage Government departments to buy bacon raised to British welfare standards?

  A.  Defra's catering toolkit includes a model specification clause covering farm assurance and organic standards that Assured Food Standards and the NFU are promoting to public bodies through their own leaflet.

  One of the aims of specifying farm assurance standards was to help create a more level playing field for our producers given that the standards of husbandry are generally higher in the UK than in most other countries. By including the model clause in the contracts public bodies could use their buying power to improve methods of production and animal welfare by specifying and accepting, where appropriate, Red Tractor criteria or equivalent as evidence that suppliers met these standards. The model clause also provided the option of supplying food produced to higher standards such as, where appropriate, Linking Environment and Farming (LEAF) or equivalent for integrated farming and EC Regulation 2092/91 for organic food.

  Defra is now producing a model specification covering the procurement of pork and bacon for inclusion in OGC's new food commodity quality standards, launched in November 2008—http://www.ogc.gov.uk/food_food_ingredients.asp. To keep within the rules the specification will need to be non-discriminatory and clearly set out and explain the welfare requirements which, if they exceed the minimum requirement of EU law, should wherever possible be supported by scientific evidence demonstrating the benefits to the consumer and be relevant to the subject of the contract.

  The aim is to clear the model specification for pork and bacon with lawyers and ministers before the end of the year. The specification could also serve as a model for other commodities for use in OGC's other food quality standards that cover some 40 food categories. The inclusion of key criteria in OGC's quality standards makes it more likely that farm assurance might in due course be integrated into public sector contracts.

  Advice to other Government Departments will also be given on which farm assurance schemes already meet the required standards, eg those marketed under the Red Tractor, Linking Environment and Farming (LEAF), BPEX Quality Standard Mark and RSPCA Freedom Food labels. Under the procurement rules buyers must accept other evidence proving equivalence to these standards.

Q.  Can you give examples of the responses of public sector organisations when Defra has encouraged them to buy pigmeat which was raised using equivalent welfare standards to those in this country?

  A.  Examples of public bodies' response to encouragement to specify equivalent welfare standards are given in the second report on the "Proportion of domestically produced food used by government departments and also supplied to hospitals and prisons under contracts negotiated by NHS Supply Chain and National Offender Management Service (previously HM Prison Service)".

Q.  Have any public sector bodies refused to follow such a policy? If so, was cost the reason? What does Defra do in such cases?

  A.  Within the legal and public framework governing public procurement there is plenty of scope for public sector bodies to pursue sustainable development considerations in their procurement of food and catering services. Defra is using this flexibility to encourage public bodies to adopt a more innovative approach and in determining quality to pursue PSFPI objectives, which include animal welfare. Cost constraints and the requirement among public bodies to achieve savings in their procurement of goods and services remains a barrier to progress. Defra is however working with OGC to promote the PSFPI through their collaborative food procurement programme. For example, building on OGC's food quality standards.

  I trust this answers your further questions.

Rt Hon Jane Kennedy MP

28 November 2008