Food Standards Agency

NOAH's Comments on the Food Standards Agency Consultation

Executive Summary

1. NOAH represents the companies which manufacture, develop and hold licences for animal medicines in the UK. (A1)
2. NOAH supports the principle of creating a Food Standards Agency and welcomes the many refinements which are included in the latest document. (A1)
3. The animal health industry is already highly regulated, particularly for food animal products, both in UK and EU law. (A2)
4. Consistency and predictability in the approach of Government are essential if confidence is to be maintained. (A3)
5. NOAH's interest in, and analysis of, these proposals has concentrated on the extent to which the Agency will contribute to, or detract from, the goals of interdepartmental consistency and predictability. (A3)
6. The Agency's remit on food production needs clear definition both to concentrate its activities and to avoid overlap with other government bodies. (B1)
7. The Agency's remit to communicate with the public to restore public confidence and explain existing systems of food safety procedures should be strengthened. (B1)
8. "Concordats" on relationships with other departments should be published and subject to public consultation. (B2)
9. The Agency's action on residues surveillance should be to support and publicise the action of existing agencies. (B3)
10. As with all other appointments to the Veterinary Products Committee, Ministers should either be presented with a selection of FSA nominees to choose from, or be free to reject the FSA nomination. (B4)
11. The hierarchy of responsibility for food safety post-devolution needs clarifying to ensure consistent food policy across the UK. (B5)
12. If the Agency considers that it is "unreasonable or impractical" to weigh the costs and benefits of a measure, then it should publish a statement giving its argumentation for such a decision. (B6)
13. Clause 22 is dangerously wide ranging and should be rewritten to incorporate proper democratic controls. (B6)
14. The Agency's Executive should have a strong policy creation and co-ordination role, and be made up of persons with a wide range of relevant experience. (B7)
15. Clause 11 should be amended so that neither the FSA nor VMD is able to publish information submitted in confidence under the Medicines Act without the prior permission of the owners of the data, and so that it is consistent with the planned "Freedom of Information" legislation. (B8)
16. The UK's relationship with the proposed European FSA, and the responsibility for UK representation at EU meetings, needs greater clarification. (B9)
17. Direct Government funding would be fairest, simplest, cheapest and ensure Parliamentary control. (B10)
18. We remain concerned at the lack of built-in controls to prevent the Agency becoming too ambitious in either its breadth of interest or the creation of new layers of regulation. (C1)
19. Due credit should be given to all that is already being done by existing government bodies, while due caution is needed to avoid the potential damage of further legislation. (C1)

A. INTRODUCTION

1. An industry integral to the food chain

A1.1 NOAH represents the companies which manufacture, develop and hold licences for animal medicines in the UK. In 1998, NOAH's members provided approximately 95% (by value) of all the animal medicines sold in the UK. Of these, approximately 60% are for use in food producing animals. Thus we are clearly part of the food chain and the creation of the Food Standards Agency is of great interest to NOAH member companies. We have consistently supported the concept, and welcome the many refinements contained in the latest consultation document.

2. The dangers of further regulation

A2.1 The animal health industry is already highly regulated, particularly for food animal products, both in UK and EU law. The growth of regulation, and the consequent costs, is forcing companies large and small to question the extent to which they can afford to continue serving the food animal sector. It is a worrying indication of the state of senior management pessimism that a recent survey by our EU federation, FEDESA, found that today 70% of company investment in animal medicine research is for companion animals, with only 30% for food animals.

A2.2 For UK companies the prospect of yet another regulatory body with powers over food production can only create more anxiety and uncertainty. Given that healthy food comes from healthy animals, the prospect of a reduction in the number of medicines available to treat our farm animals should be a cause for general concern, both for food safety and farm animal welfare.

3. A consistent and predictable approach across Government

A3.1 Every industry requires confidence in the legislation and regulation that governs it, and in the day to day implementation of the rules, if it is to invest in new products and new production processes. This is supremely true of highly technical industries such as animal medicines, where the development of a new product can consume many years and many millions of pounds. Consistency and predictability are thus essential if confidence is to be maintained.

A3.2 For a predominantly international industry such as animal medicines, the extent to which UK law is predictable and consistent with EU and international law will have significant implications on whether, for example, products are developed for the UK market and manufacturing investment is located here. Inconsistent and unpredictable activity by national authorities could result in international investment focusing elsewhere and UK becoming a technological backwater.

A3.3 With this in mind, the relationship between FSA and

(a) other UK departments and agencies

(b) the devolved assemblies

(c) EU and international bodies

are all of significance and we are concerned that insufficient consideration seems to have been given to preventing dispute and ensuring a consistent and predictable approach.

A3.4 Two particular aspects seem to have been overlooked:

(i) that, particularly in the early years, the Agency may be tempted to justify its existence by excessive new regulation and interference in the work of other agencies and departments

(ii) that, in time, inevitably, different political parties will be in control in Westminster and the devolved assemblies, leading to different policies

A3.5 As representatives of a UK industry whose products are aimed at animal health and welfare, but which are scrutinised for their effect on operator safety, the environment and farm economics as well as food safety, NOAH's interest in, and analysis of, these proposals has concentrated on the extent to which the Agency will contribute to, or detract from, the goals of interdepartmental consistency and predictability.

B. THE DRAFT LEGISLATION

1. Aims of the Agency

B1.1 The Aims of the Agency are "to protect public health from risks which may arise in connection with the consumption of food (including risks caused by the way in which it is produced or supplied) and otherwise to protect the interests of consumers in relation to food" (clause 1(2)).

B1.2 It is unclear how far the Agency's brief on food production will go. Will they be able to move "upstream" - not just on to farms, but to farm inputs? (We note that animal feed responsibilities will transfer from MAFF to the Agency.) Unless their remit on food production is closely defined there will be a continual prospect of inter-departmental dispute. Its first task should be to conduct an audit of all that is already being done to protect the public, and then to co-ordinate this work.

B1.3 We have argued in previous submissions that part of the problem with the crisis of public confidence in food safety is that not enough is being done to explain to the public what is already being done to protect them. Although the need to communicate with the public is recognised in clause 10, and the welcome recognition of the need to avoid causing undue alarm is in clause 19, since the "main objective" in clause 1(2) could be used forevermore to argue about what is the job of the Agency (and what is not), some mention of communication with the public in this clause would be extremely helpful.

B1.4 The Agency's remit on food production needs clear definition both to concentrate its activities and to avoid overlap with other government bodies.

B1.5 The Agency's remit to communicate with the public to restore public confidence and explain existing systems of food safety procedures should be strengthened.

2. Veterinary Medicines Directorate

B2.1 We welcome the proposals for the VMD to remain completely within MAFF, which is something we argued for following the publication of the James Report.

B2.2 We note that while the FSA will be consulted on general policy issues relating to animal medicines which are relevant to food safety, the VMD will retain responsibility for all aspects of the authorisation process. However, it is not clear what form this consultation by VMD with the FSA will take: could it be open to abuse by FSA to prevent VMD from making decisions?

B2.3 The Government envisages that the relationship between the Agency and other departments should be underpinned by administrative concordats, which would be published documents setting out the duties and responsibilities each will have in relation to the other: there is clearly need for consultation with affected external interests when drafting these "concordats".

B2.4 "Concordats" on relationships with other departments should be published and subject to public consultation.

3. Residues surveillance

B3.1 The residues surveillance programme will remain with VMD, but with the introduction of structured and transparent processes for determining the scope and priorities of the programme. We welcome both these proposals.

B3.2 The Bill also provides new surveillance powers which could be exercised by the Agency in relation to residues of animal medicines. The very extensive surveillance programme already undertaken by VMD does, we believe, render further surveillance by the Agency unnecessary, but we welcome any steps which can be taken to further reassure the public that there is no health risk from residues of animal medicines in food.

B3.3 The Agency's action on residues surveillance should be to support and publicise the action of existing agencies.

4. Veterinary Products Committee

B4.1 Under the present wording of Schedule 2, paragraph 8(2), one member of the VPC "shall be appointed by the Ministers on the nomination of the FSA": this appears to mean that the Ministers will have no choice. At present a wide range of organisations nominate people, and Ministers choose from among them: the FSA appears to be given a unique patronage, removing that choice from the Ministers (the people's representatives): is this just or democratic?

B4.2 Such a system undermines the necessary independence of VPC members who are appointed for their individual expertise, not as representatives. There is a clear danger that the FSA nominee's independence would be suspect.

B4.3 We also note that this places the Agency in a superior position to other agencies (EA, HSE etc.) who can only send staff to observe / advise.

B4.4 As with all other VPC appointments, Ministers should either be presented with a selection of FSA nominees to choose from, or be free to reject the FSA nomination. The wording of Schedule 2 clause 8(2) must be changed.

5. Devolution

B5.1 Under the Scotland Act 1998, the Government of Wales Act 1998 and the Northern Ireland Act 1998, the new authorities in these parts of the UK have devolved responsibility for food safety and standards. It is therefore possible that they could take their own action (provided it is within UK and EU law) in these areas, and thus a UK-wide Agency could be helpful in providing a consistent approach, and we welcome it.

B5.2 However, attention needs to be given to the longer term, when different parties may be in control in Westminster, Wales etc. - this has the potential to lead to damaging and confusing dispute, undermining both producer and consumer confidence.

B5.3 The hierarchy of responsibility post-devolution needs clarifying to ensure consistent food policy across the UK.

6. Costs and benefits - over-regulation

B6.1 Clause 19 puts a duty on the Agency to assess costs and benefits, and the nature and magnitude of risks and any uncertainties. This is welcome, though past experience shows that assessments predicting very large costs have had very little impact on the decision made in some cases. Historically, such government cost/benefit analyses have applied only to direct costs, and not indirect costs from, for example, cost of compliance - this should be addressed.

B6.2 The wording of clause 19(3)(a) is confusing, and should be amended so that, should the Agency consider that it is "unreasonable or impractical" to weigh the costs and benefits of a measure, then it should publish a statement giving its argumentation for such a decision.

B6.3 Of key concern is the supplementary powers in Clause 22 which enable FSA to do "anything" to facilitate the exercise of its functions. This carte blanche provides almost unlimited scope to an ambition agency and seems to free it of any Ministerial or Parliamentary constraint.

Clause 22 is dangerously wide ranging and should be rewritten to incorporate proper democratic controls.

7. Members of the Agency Executive

B7.1 In contrast to the James Report, the Bill does not set any quotas for membership of the executive, merely stating that it should be between 10 and 14 members, with a reasonable balance of relevant skills and experience. This is welcome as it removes the suggestion that a majority of members be "consumers" (which we always found strange since all of us are consumers), but also means that there is no mention of experience in any particular field, such as veterinary medicine or farming - we trust that in the appointment of members such important knowledge and experience is not overlooked. Furthermore, as the work of the Agency develops over time, the make-up of the Agency's governing body should be reviewed to ensure expertise relevant to the work being done.

B7.2 We are also mindful of the experience from other major agencies (HSE, EA etc.) where policy seems to be driven entirely by the staff, and the Executive's role seems entirely limited to business management and retrospective endorsement of officials' decisions.

B7.3 The Agency's Executive should have a strong policy creation and co-ordination role, and be made up of persons with a wide range of relevant experience.

8. Freedom of information

B8.1 Clause 11 allows the Agency to publish advice or information, including advice to Ministers. However, it does not require it to do so. The Agency "must take account of any considerations of confidentiality attaching to that information but may publish that information (or any of it) if it appears to the Agency to be in the public interest to do so." We are concerned that there is no statutory appeals procedure for preventing the release of commercially confidential information.

B8.2 This is particularly relevant since the Act would lift Section 118 of the Medicines Act to allow VMD to provide any information submitted in confidence to the Agency.

B8.3 Clause 11 should be amended so that neither agency is able to publish this information without the prior permission of the owners of the data, and so that it is consistent with the planned "Freedom of Information" legislation.

9. Relationship with Europe

B9.1 As so much of UK legislation is derived from Europe, we were surprised to see so little reference to the relationship between the UK authorities and Europe. There need to be adequate procedures to ensure that the UK view is fully represented in Europe, with a united front, without disagreement between FSA, DH and MAFF.

B9.2 We also note, elsewhere, that there are plans in Brussels to create a European FSA. However, the consultation document makes no mention of this or what the relationship between the two bodies will be.

B9.3 The UK's relationship with the proposed European FSA, and the responsibility for UK representation at EU meetings, needs greater clarification.

10. Funding

B10.1 The funding of the Agency is enfranchised by clause 23, and has been the subject of a separate consultation to which we have produced a separate paper (attached). In our analysis direct public funding would be the fairest and simplest approach, ensuring proper parliamentary control.

C. CONCLUSION

C1 As in our response to previous consultations, NOAH supports the principle of creating a Food Standards Agency and welcomes the many refinements which are included in the latest document.

C2 We do, however, remain concerned at the lack of built-in controls to prevent the Agency becoming too ambitious in either its breadth of interest or the creation of new layers of regulation. Given the current level of public debate about food safety, it would be all too easy for the Agency to justify any expansion of its activities as being "in the public interest".

C3 Due credit should be given to all that is already being done by existing government bodies, while due caution is needed to avoid the potential damage of further legislation.

Food Standards Agency

NOAH's Comments on the Proposal for a Levy Scheme

Executive Summary

1. We are concerned at the vagueness of the figures for the costs to be raised by the levy, which equate to a "blank cheque".
2. A new regulatory impact assessment should be made, to include full compliance costs to industry of any new Agency activities.
3. Clause 23 effectively gives the Agency free rein to do whatever it chooses and then sent the bill to industry.
4. Clause 23 provides opportunity for a troubled Chancellor to raise money without increasing direct taxation.
5. A flat fee is manifestly unfair, while defining exemptions is a nightmare.
6. Linking fees to the commercial business rate would be fairer, and reduce collection costs.
7. Direct Government funding would be fairest, simplest, cheapest and strengthen Parliamentary control.

1. The Cost of the Agency

1.1 Nowhere does the document state the actual cost of running the Agency; however, calculations based on the 1998 White Paper have put this at £250m p.a.

1.2 The Government proposes to raise part of the cost (the "new" activities and setting up costs) by a flat fee of £90 on all 490 000 eligible food outlets. It is said this will raise £41m, but a fee of £90 on 490 000 outlets would raise £44.1m (a 7% variance) - to raise £41m the fee need only be £84.

1.3 The consultation document emphasises "all costs are provisional" but that "at the outset" the sum to be recovered "will not exceed £50m" (which equates to a fee of £102). What are the costs to be - £41m, £44.1m, or £50m? What will the fee be - £84, £90, or £102? How long is "the outset"? What happens after that?

1.4 The setting up costs are put at £12m p.a. for three years. What happens then? Will there be a cut of 29% in the levy?

1.5 We are concerned at the vagueness of these figures, which equate to a "blank cheque".

2. The True Cost of the Agency

2.1 The consultation document focuses on the level of fee to be paid by businesses. However, the real cost of any regulation to a business is the cost of compliance - what extra measures the business must take to comply with the legislation. As argued in our response to the main consultation paper, we are concerned that the new Agency will want to introduce further, new, regulations - not least to justify its creation.

2.2 The Regulatory Impact Assessment makes little reference to this aspect of creating the Agency, which will inevitably be much higher than the "£40 million" proposed as the initial levy on the food industry.

2.3 A new regulatory impact assessment should be made, to include full compliance costs to industry, of any new Agency activities.

3. The Future Size of the Levy

3.1 Although the consultation document makes clear the present Government's intent to keep the levy and individual fee "small", legislation outlasts governments and government policies change.

3.2 The wording of clause 23 of the draft Bill is very wide ranging, allowing recovery of "some or all" of a wide range of central and local government costs. The White Paper made it possible to calculate current costs of around £250 million. Given an ambitious Agency, these costs could eventually be much higher.

3.3 Clause 23 effectively gives the Agency free rein to do whatever it chooses and then send the bill to industry.

4. Increased Taxation

4.1 It should be noted that the principle costs of the Agency are for staff and activities currently paid for by local and national taxpayers. The consultation document gives no indication that any transfer of cost from the taxpayer to industry will be balanced by an equivalent reduction in general taxation.

4.2 Clause 23 provides opportunity for a troubled Chancellor to raise money without increasing direct taxation.

5. The Levy System

5.1 The current proposals indicate that a levy of £40 million will be raised by a levy on the retail food sector. However, the draft Bill does not contain any such constraint. There is nothing to stop an ambitious Agency, having chosen to extend its activities "upstream" to agriculture and the suppliers of agricultural inputs, from similarly extending its fee "catchment" to these areas.

5.2 We welcome the Government's declared desire to equally impinge upon home produced and imported food and agree that a levy on retail outlets is a fair and simple way to achieve this (but see below).

5.3 We welcome the Government's aim to minimise the cost of collection, and acknowledge that a single flat rate levy on all relevant businesses would be one way of achieving this.

5.4 However, the flat rate system would be manifestly unfair to the smallest businesses, and far too generous to the largest retailers:

• a major retail outlet fulfils the role of many traditional "High Street" shops (butcher, baker, delicatessen, fishmonger, greengrocer, grocer etc.) each of which will have to pay a levy, while the supermarket pays only one.
• a major retail outlet will have a turnover of many millions, unlike the small independent outlets with which it competes
• while accepting that some "economies of scale" will apply when inspecting one supermarket compared to several small shops, it is also true that as the supermarket will serve many more consumers, the consequences of safety failure could be much greater
• while welcoming the exemption for shops selling simple packaged sweets etc., it should be noted that today such outlets frequently sell a wide range of other foods - canned drinks, ice cream, prepacked sandwiches, simples groceries etc.: this is all for the convenience of the public. Unless the exemption is widely drawn, the net "regulatory impact" could be to reduce consumer convenience and deter entrepreneurial activity.
• no mention is made of theatres and other places of entertainment or sport, many of which rely on the sales of sweets and snacks for financial survival. Will they too be exempt, or will this become another "tax on the Arts"?

5.5 A flat fee is manifestly unfair, while defining exemptions is a nightmare.

6. Alternative Fundraising

6.1 As outlined above, we welcome the intent to contain collection costs, but believe a flat rate unfair. One simple alternative would be to link the fee to the Commercial Business Rate for registered food outlets. This would provide a broad relationship between size of business and fee paid , which would be fairer, while the existing collection system would reduce collection costs to one of simple internal financial transfer within the Treasury.

6.2 Linking fees to the commercial business rate would be fairer, and reduce collection costs.

7. The Case for Government Funding

7.1 The principle arguments for the Agency being fully funded by Government have been well rehearsed by others - not least the point that consumer confidence will be strengthened if it is felt that the food sector will have no financial influence on the Agency.

7.2 However, developing the points already made, the following are worthy of consideration:

• if no "fee" is to be paid then the problem of "fairness", collection cost, and defining exemption are also avoided.
• assuming the Agency is successful in its task of reducing food related disease, the cost of the Agency should be balanced by savings to the National Health Service
• we have already expressed our concern at the lack of mechanisms to constrain the ambitions of the Agency, not least because it would be politically difficult to block any expansion of their activities "to protect the public".

7.3 Funding the Agency from Central Government taxation would not only force the Agency to argue its case in the rigours of the annual Public Spending Review, but it would provide a further, and quite proper, opportunity for full Parliamentary scrutiny of their activities.

7.4 Direct Government funding would be fairest, simplest, cheapest and strengthen Parliamentary control.