Government rejects full cost recovery

The Government has rejected the Food Standard’s Agency’s plan for the full-cost recovery of meat inspection charges, after concerns that it could adversely affect smaller slaughterhouses.

The news was welcomed by the sector, which claimed the proposed charging regime would have doubled charges and impacted unfairly on the slaughterhouse industry.

The FSA wanted to charge full-cost recovery on an hourly basis charges for the work carried out by vets and meat inspectors in slaughterhouses, meat-cutting plants and game handling establishments, to recover a shortfall between the cost of providing the controls and the income from charges. According to the regulator, this was £31.2m in 2010/11, and paid for by the taxpayer.

The FSA argued that as the regulator, it should not be subsidising the industry, and that the introduction of full-cost recovery would pass costs from taxpayers to meat establishments.

But industry groups say the regulator is a monopoly public service provider with high overheads, and could deliver its meat inspection service more efficiently.

AIMS’ policy director Norman Bagley said: “The FSA is quite wrong to suggest that it is subsiding the industry. Meat inspection is compulsory for our members, but by the FSA’s own admission, not risk-based.

“It does not provide slaughterhouse operators with value for money and cost sharing is essential if small and medium sized plant are to survive until the FSA has negotiated affordable controls.

“FSA has wasted a huge amount of resources on a system that is now defunct and by its own admission, unfair.”

Though EU rules on meat inspection are tight, the industry argues it would be possible for the FSA to outsource inspection in consistently competent meat processing plants to accredited private sector bodies, in line with a key recommendation of Macdonald Task Force.

The FSA has challenged the industry to propose how that would work, which the BMPA is doing.

Director of BMPA Stephen Rossides said: “All along, the BMPA has argued that full-cost recovery should not be implemented until there has been a thorough value-for-money review of the existing system for delivering meat inspections.

“The Government’s rejection of the FSA’s full-cost recovery proposals presents the Agency with a significant budgetary challenge, and further highlights the need to reduce the costs of delivering meat inspections.

“The FSA has challenged us to make a case for an alternative delivery approach. We are working on this in a step-by-step way on the basis of the Macdonald Task Force recommendation on meat inspections. In the new circumstances facing the FSA, the Agency should now commit to working more proactively with industry to develop a new approach.

“In the meantime, it remains unclear how the FSA intends to deal with the rejection of its charging proposals. What’s its Plan B?”

The FSA said it would be considering the Government’s concerns and would be discussing next steps at its next board meeting in June.