Originally from: Molly Maxwell
Your £1.4bn up in smoke
By Zoe Hughes, The Journal
Taxpayers were made to foot a multi-billion pound bill for the foot- and-mouth crisis because the Government over-compensated farmers by up to three times the value of their livestock, it is revealed today
A report from the Government's spending watchdog, the National Audit Office, states that ministers authorised the spending of more than £3bn in trying to control the 2001 epidemic – half of it on compensation claims.
The Government's actions have also come under fire from MPs, who said "pitifully inadequate" financial controls during the crisis had left taxpayers exposed.
During the outbreak, more than six million animals were slaughtered for disease control purposes or because of restrictions on the movement of animals. In total, the crisis cost the Government £3bn, with £1.4bn paid out in compensation.
However, the NAO report reveals that the European Union ruled compensation claims could have been over-inflated by as much as two to three times.
The EU announced last year it would only contribute £350m towards the costs of the crisis, despite Britain's request for help of £960m.
Today, Edward Leigh, chairman of the Commons Public Accounts committee which works with the NAO, said the report proved their "worst fears" about the extent of waste in 2001 and previous findings that "financial controls were pitifully inadequate".
But a Government spokesman dismissed the claim farmers may have been overpaid, saying valuers used different criteria to set compensation levels for farms. The EU employed a standard rate, he added.
"They didn't take into account the different considerations we had such as the market price when the outbreak happened, pedigree stocks, the supply and demand of animals.
"These valuations were professionally done and once agreed we were bound by them. So it's not quite as cut and dry as it appears and we do have to look at the situation at the time. We are in the process of looking at standard valuations to help valuers. Overall though we are now in a much better position to combat an outbreak of this type of disease again should it ever arise."
And last night Richard Ellison, regional director of the National Farmers' Union, said he doubted whether any farmers were given three times more compensation than they were due.
He said: "Farmers were not putting in their own compensation claims, they were submitted on their behalf to Defra by the valuers. Defra also had records from the slaughter teams on how many animals were culled on each farm so they should have know whether compensation claims were inflated. If claims were grossly over-inflated I would have expected Defra to pick them up.
"Valuers reached compensation figures based on age, condition and value of stock then multiplied it by the number of animals involved to come up with a total. It was all a bit frantic at times and it was the best system that could be devised at the time, although it was not perfect.
"Given the climate and the distress that was being suffered it might well be that valuers erred on the side of the farmers and made sure they were adequately compensated."
Following the outbreak, the Government asked the European Union for compensation to the tune of almost £1bn under rules which allowed member states to claim back 60pc of the costs incurred.
However, only £350m was paid out, leaving taxpayers footing an unexpected bill of around £600m.
The report from the head of the NAO, Sir John Bourn, said the Government had a way to go in implementing the financial lessons of the epidemic, although he said Defra had greatly improved their contingency plans and was "much better prepared than in 2001".
"Defra . still has work to complete, for example to develop a new compensation system for culled animals; to determine how the costs of controlling future livestock disease outbreaks should be borne; to link its central government contingency plans with those of local agencies; and to update Information Technology support for future disease outbreaks."
He also highlighted the need to look at "benchmark valuations" for valuers facing with assessing compensation claims.
"The Department is still considering proposals to share the cost of an outbreak with the farming industry," he said. His report went on: "The Department accepts that the compensation system in use during the emergency was flawed."
Last night Berwick MP Alan Beith said: "It is quite clear especially in Northumberland that the area was ravaged by foot-and-mouth. There was no proper disaster planning for an outbreak on this scale and therefore there probably was significant scope that money was wasted.
"There was a feeling at the time that some people were being over-compensated but there were also lots of other people who were absolutely under-compensated for what they went through. It was a miserable time for many families and there was severe hurt caused for lots of farmers."
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Firms will be taken to court
Investigations are still under way into invoices submitted by 57 contractors employed by the Government during the 2001 foot-and-mouth epidemic.
The Department for Environment, Food and Rural Affairs (Defra) challenged bills totalling £700m submitted by 130 contractors after the outbreak, complaining of irregularities including excessive charges for plant and labour, use of sub-standard materials and shredding of vital documents. Settlements have been reached with 73 contractors, with savings to Defra totalling £40m.
But remaining bills – together worth £260 million – are still under investigation, with a number of contractors facing court action and Defra hopeful of clawing back at least another £17m, according to the report by Whitehall spending watchdog the National Audit Office.
Trail of havoc
The foot-and-mouth epidemic, which wreaked havoc across the countryside, first broke out at a Northumberland farm in early February 2001.
Pigs and sheep from Burnside Farm, Heddon-on-the-Wall, Northumberland, are believed to have been the first infected.
Animals at nearby Prestwick Hall Farm, Ponteland, were the next and 40 sheep from the farm were sold to a Devon farmer at Hexham market on February 13.
This led to a cases in the Devon area as the infection began to spread with outbreaks at more than a dozen farms in Northumberland, County Durham and Cumbria.
By February 25, most of the UK had been declared a contaminated area and European countries were slaughtering animals exported from Britain.
Foot-and-mouth hit Ireland and Scotland in early March. By the middle of April, more than 1,000 cases of the disease had been reported.
The number of outbreaks slowed throughout the summer of 2001 and the last new case was on September 30.
By the end, more than six million animals had been slaughtered and more than 10,000 farms had been affected.
Foot-and-mouth is one of the most infectious diseases of animals and is characterised by a fever followed by severe blisters on the mouth and feet.
It affects sheep, cattle, pigs and goats, horses, elephants, hedgehogs and rats.
Government to blame for overblown payouts
Blame for vast compensation overpayments incurred during the foot-and-mouth crisis should rest squarely with the Government and its mismanagement of the outbreak, North-East farmers claimed last night.
Landowners who were among the worst-hit in Britain during the 2001 agricultural catastrophe, last night said "draconian" measures introduced by ministers, including the culling of millions of healthy animals, was responsible for the hefty bill faced by taxpayers.
They lambasted the decision to try to eradicate the disease by clearing out otherwise untouched farms whose neighbours had been affected by foot-and-mouth – the so-called contiguous cull.
That controversial policy, they claim, was a main factor in sending the compensation bill sky-rocketing.
And there was further condemnation from those whose sheep and cattle had managed to avoid the slaughtermen. Imposed with severe restrictions on movement, and with no markets for their livestock, their incomes began to dry up while the bills mounted up.
Otterburn farmer Malcolm Corbett, who was chairman of Northumberland National Farmers Union during the crisis, said he fully agreed with the NAO findings.
"Far too much was paid out, but the farmer cannot be blamed for that," he said. "It's down to the Government employing a slaughter policy that was woefully inadequate.
"Resources were poured into trying to get ahead of the disease, which meant destroying healthy animals which had to be compensated for. It was woeful mismanagement by the Government all round, which has cost the taxpayer dearly and caused immense heartbreak and loss of livelihood in the countryside."
Mr Corbett added that those who avoided the cull had found themselves in an equally dire situation. "By not being able to move or sell our stock, we lost tens of thousands of pounds. If the Government had adopted the findings of the 1967 Northumberland Report, it need not have got to that stage."
Robert Robinson, who farms near Alnwick and is president of the National Beef Association, agreed: "The Government was warned about this in the Northumberland Report, and for those whose farms escaped the cull, the knock-on effects were very serious."
Lessons learned, say civil servants
Professional valuers who settled compensation payments for slaughtered animals were briefed to come up with a fair deal both for farmers and the tax-payer, Defra said last night.
The system for sorting out compensation during the FMD crisis involved independent livestock valuers visiting affected farms, assessing the value of sheep and cattle to be culled and submitting a figure to Defra.
Last night, Defra admitted lessons had been learned.
But it said changing the valuation system during the crisis could have led to delays in slaughtering infected animals and it had been felt that rapid disease eradication was the best way to keep costs down.
Valuers took into account factors such as the age and condition of animals, regional variations in the value of certain types of animals, whether animals were pedigree or breeding stock and an assessment of the real costs of the loss of livestock to the farmer.
Valuers also had to make their own assessment of the likely current market price of animals after the FMD epidemic closed down livestock trading.
The rules of the compensation scheme meant Defra was legally obliged to pay the amount agreed on by the valuers. However, there were claims that farmers were allowed to choose their own valuers, including cattle dealers.
A month into the outbreak, the Government introduced guideline valuations for livestock substantially higher than general market levels, resulting in more compensation for farmers whose stock were culled after that.
Tourism businesses 'missed out on aid'
North tourist businesses last night claimed they had been completely overlooked by the Government's compensation policy in the aftermath of the foot-and-mouth disaster.
Last night they said their needs would have to be addressed in any repeat outbreak.
When the slaughter started on farms near Prudence Marks's thriving bed and breakfast in Eglingham, Northumberland, in April 2001, she lost one 10-day booking, worth £700, and was then left with an empty reservations book until August.
Last night, nearly four years on, she told how only hard work and the help of the business community – rather than any Government support – had seen her through the foot-and-mouth crisis and its aftermath.
"I did get a small amount of financial aid from a local business organisation, but nothing that really addressed the damage to my trade over the next 18 months," she said. "Basically, businesses like ours were left to their own devices.
"I certainly hope more will be done by Government if something as dreadful as this should happen again, because it was a disaster for the tourist industry.
"The Government needs to learn a lesson from this – whether it will is another matter."
Farm centre boss Donald Slater faced a drastic situation after he was told by ministry men to close his gates to visitors for 12 weeks at the height of the tourist season.
His family business at Whitehouse Farm Centre near Stannington lost up to £90,000 in the normally busy run-up to Easter. Since then, he has left the business to be run by sister Heather, who says the experiences of 2001 have ruined his health. "There should have been something from the Government to take situations like ours into consideration," said Heather.
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