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Scottish plants risk closure over inspection charge hikes
Published:  19 June, 2017

Some Scottish meat plants risk closure as a result of “excessive” meat inspection charges planned by Food Standards Scotland (FSS), according to the Scottish Association of Meat Wholesalers (SAMW). 

The organisation has slammed the proposals to increase inspection charges by up to 11% an hour per vet, claiming it could place smaller plants under threat of closure.

“Despite engaging in emergency talks with FSS officials on this issue, during which we were promised a future charging review, our members are still to have increases of up to 11% in inspection charges imposed on them with immediate effect,” said SAMW president Frank Clark. “This is unacceptable and belies any thought that the promised review is being approached in the correct manner.”

SAMW member companies were first told of the increase in early May. At the time, FSS stated its costs would remain broadly in line with the previous year, according to a system jointly agreed by industry and the Scottish government. This meant, it was stated, that costs would rise by just 0.5% from the total amount charged in 2016-17.

“In reality, however, the new costs are to be applied to significantly less work than was required in 2016/17,” said Clark. “According to our calculations, FSS is imposing a 0.5% cost rise for 7% less work, a budget move which we believe is adding more than £400,000 of unjustified cost to members’ businesses.”

Clark said the 7% reduction in the FSS workload was due to increased operating efficiencies by SAMW members, a reduction in livestock numbers, the closure of a major poultry processing unit in Scotland and structural changes in poultry meat inspection systems generally.

“The net result is that member companies will end up being charged up to 11% more per hour for red meat inspection,” he added. “In effect, this is an accounting ploy which hides the fact that FSS is imposing an excessive increase on the Scottish red meat chain, largely because it has failed to adjust its own staffing requirements to current demands.”

Clark also objected to another change he claimed forced SAMW’s beef and lamb producing members to cover the bill for FSS’s loss of a poultry inspection requirement at a major Scottish chicken plant. He said this was nothing to do with either the beef and lamb sector or SAMW, whose membership does not include poultry processing plants.

“We are also disgusted that FSS, while accepting the case for a review, is pressing ahead with the new charges. This places some plants at risk of closure, due to the fact that the new costs would outstrip profit margins. The fact that a review might subsequently reverse the cost rise, at least to a degree, will be of no comfort to businesses which have already disappeared.

“Clearly, this would be an unacceptable set of circumstances at the best of times, let alone the high pressure period we are now facing due to Brexit negotiations and the uncertainties created by the UK government election result. We will continue to press FSS to put their charging increase on hold until a full and fair review has been carried out.”

FSS said every plant in Scotland benefitted from a discount system and the smallest plants which SAMW claimed were under threat received a 80% discount on throughput below 1,000 animals. It added that the increase amounted to £0.90p per hour for a vet. These rates have also been subject to an external audit and FSS believe these levels of inefficiency do not justify additional support from taxpayers.

The FSS said EU law required it to charge businesses for all essential meat official controls work carried out by meat hygiene inspectors and official veterinarians in slaughterhouses in Scotland.
 
FSS estimated total costs for delivering official controls for 2017-18 at £5.9m which is a 0.5% increase in overall costs from last year. Hourly rates for Official Veterinarians and Meat Hygiene Inspectors had to be increased due to fewer chargeable hours being recorded by the industry and because it had inherited the contract it said. Costs were being spread over fewer hours, increasing chargeout rates, it added.  
 
EU regulations and the Scottish Public Finance Manual set out an expectation that FSS will achieve full cost recovery. Despite this, FSS said it had maintained a subsidy of 30% (£1.3 million) in each of the past three years which all slaughterhouses have benefited from and had altered rules, giving an extra £80,000 to industry.
 
FSS director of operations Ian McWatt said: “No increase is ever welcome, but we have been working with the industry to explain the circumstances which have given rise to the change and to encourage them to make changes which could enhance efficiency and therefore reduce their costs through more effective use of FSS’s time. It’s hoped that these changes will encourage industry to continue working with Food Standards Scotland to find ways to reduce the cost of regulation whilst ensuring the protection of consumers.”
 
FSS said it had extended its existing contract for the delivery for official controls by a further year. It would undertake a procurement exercise during 2017-18 for future service provision, where further efficiencies and value for money would be sought for food businesses and taxpayers, it said.