Volume 6: Human Health, 1989-96
2. The slaughter and compensation scheme
Introduction of the slaughter and compensation scheme

2.8 A full account of the introduction of the scheme is given in vol. 3: The Early Years, 1986-88. In the following paragraphs, we recap the main parts of that story.

2.9 MAFF officials originally recommended a slaughter and compensation scheme in February 1988. The advice of Sir Donald Acheson, the Chief Medical Officer (CMO), ¹ was sought in March 1988, and on his recommendation the Southwood Working Party was set up in May 1988 to consider the implications of BSE. ² Meanwhile MAFF officials explored the possibility of persuading the industries affected to fund a compensation scheme. On 21 June 1988, the Southwood Working Party communicated its first interim recommendations to Mr (later Sir) Derek Andrews (MAFF Permanent Secretary ³) and to the CMO. ⁴

2.10 It was the Working Party's 'considered opinion' that arrangements should be made to ensure that the carcasses of 'infective animals' were condemned and destroyed by incineration or a comparable method. ⁵ Mr Keith Meldrum, MAFF Chief Veterinary Officer (CVO), ⁶ recalled in his statement to us that this recommendation was significant in the context of the discussions MAFF was having with industry about who should pay for any slaughter and compensation scheme. ⁷

2.11 In a minute dated 22 June 1988, Mr Alistair Cruickshank, MAFF Under Secretary responsible for the Animal Health Group, ⁸ noted that once the industry became aware of the Working Party's recommendation in respect of slaughter, it would have grounds to argue that the Government had no alternative but to require affected animals to be slaughtered. Accordingly, under the Animal Health Act 1981, compensation would have to be paid. ⁹

2.12 On 23 June 1988, Mr Cruickshank provided Mr Andrews with a submission for Mr John MacGregor, the Minister of Agriculture. ¹⁰ Mr Andrews put forward the submission to Mr MacGregor on 24 June 1988. ¹¹ It explained the advice received from Sir Richard Southwood and recommended the introduction of a slaughter and compensation policy with the rate of compensation set at 50 per cent of market value. ¹² This rate was compatible with precedents for other compensation schemes for animal diseases. ¹³ In the minute covering the submission, Mr Andrews commented that MAFF was still pressing industry to meet half the costs of the scheme but he considered that 'the chances of them paying up at the end of the day are small'. ¹⁴ As it seemed that such a scheme would have to be financed by the Government, the submission attached a draft letter for the Minister to send to Mr John Major, Chief Secretary to the Treasury. ¹⁵

2.13 Mr Cruickshank's submission reported that there had been a suggestion from the Chairman of the National Farmers' Union (NFU) Animal Health Committee, Mr Ralph Baker, that he (on a personal basis) 'would be content with a relatively low rate of compensation provided the Ministry agreed to pay 100 per cent in cases' where BSE was not confirmed after slaughter. Mr Cruickshank noted that this was unlikely to present a difficulty as the number of unconfirmed cases was expected to be small. ¹⁶

2.14 Deborah Evans, Assistant Private Secretary to Mr Donald Thompson, the Parliamentary Secretary at MAFF, minuted Mr Andrews on 27 June 1998:

The Parliamentary Secretary has seen the submission from Mr Cruickshank and the Permanent Secretary's minute of 24 June and has said that he is not convinced of the compensation issue and feels that the Industry should be asked what they want without committing ourselves. ¹⁷

2.15 On 28 June, Mr Andrews, Mr Cruickshank, Mr James Coe (MAFF Head of Information ¹⁸) and Mr Richard Gueterbock (MAFF Special Adviser ¹⁹) met Mr MacGregor. The minute of the meeting addressed to Mr Cruickshank noted:

You pointed out that under the Animal Health Act 1981 compensation had to be paid when the Ministers required the slaughter of animals for public or animal health reasons. The problem in this case was that since the recommendation from Southwood was for the action to be taken for public health reasons there was no incentive for the industry to agree to pay the money themselves. The Minister was very concerned about the read-across to action we had taken in the case of other diseases and he felt the letter to the Treasury had to make it clear that the proposed action was for public health reasons and why we felt Government funding was inevitable.

It was agreed that when you met the NFU and the cattle breeders later today you should take the line that we were considering whether it was prudent to have a slaughter policy to maintain public confidence etc. You should also explore with the industry the possibilities for a slaughter and compensation scheme based on the Government rate of compensation of 50 per cent maximum. ²⁰

2.16 Later that day, Mr Meldrum, Mr Cruickshank, Mr Kevin Taylor, Veterinary Head of Notifiable Diseases Section of MAFF, ²¹ Mr John Wilesmith, Head of CVL Epidemiology Department, ²² and Mr Alan Lawrence, MAFF Animal Health Division, ²³ and others, met representatives of the cattle industry. ²⁴

2.17 Mr Cruickshank reported to Mr Andrews after the meeting that the industry was reluctant to give any commitment about funding of compensation arrangements. They were also reluctant to commit themselves to accepting a rate of compensation lower than 100 per cent, although:

broad hints were however dropped that a lower rate would probably be acceptable - though with the qualification that 100% should be paid in cases where post mortem examination failed to confirm that BSE was present. ²⁵

2.18 On 29 June 1988, Mr MacGregor wrote to Mr Major, the Chief Secretary to the Treasury, setting out the background information on BSE and the Southwood Working Party's recommendation and noting that he expected that press concern in relation to the human health risk from BSE would grow. The letter said:

The Animal Health Act 1981, which enables us to require the slaughter of affected animals, provides that in these circumstances compensation must be paid. I am extremely reluctant to introduce new Government-funded disease control schemes wherever they can be avoided. In recent years we did introduce schemes to deal with Aujeszky's disease in pigs and Newcastle disease in poultry. In both these cases we proceeded only because the industry were prepared to provide the funding for the compensation. BSE does however raise very different considerations in that public health may be involved, which was not the case with Aujeszky's diseases or Newcastle disease. While I shall press the industry to contribute financially to both the compensation arrangements and the R&D which is required, it will be difficult to set up arrangements under which this can be achieved. Moreover this will inevitably take some time to resolve. In the meantime it is in my view essential that we implement Sir Richard Southwood's advice. We should be open to serious criticism if we do not take immediately the precautionary measures recommended in relation to public health.

I think that compensation at 50% of the market values would be appropriate, and would leave the industry also meeting considerable costs in relation to an issue which we are having to act upon for public health reasons. On the basis of about 60 cases a month this would cost something in the order of £200-250,000 in a full financial year. The actual costs might be expected to be in the order of £300-350,000. ²⁶

2.19 Mr Major approved the introduction of the slaughter and compensation scheme in a letter dated 6 July 1988. He said:

My agreement to this course is due to the need to protect human health from the risk of this disease, not animal health. This must be made clear in your discussions with the industry and in any public statements about the introduction of compulsory slaughter and compensation. It is also very important that you should, as you propose, press the industry for a substantial contribution towards the costs of compensation and research. ²⁷

2.20 The decision to introduce the scheme was announced in the form of a written answer to an arranged Parliamentary Question to the Minister by Mr Robin Maxwell-Hyslop MP (Tiverton) on 7 July 1988 ²⁸ and by a news release on the same day. ²⁹

2.21 The NFU issued a press release on 8 July welcoming the decision to introduce a compulsory slaughter and carcass destruction scheme. Since BSE had been made a notifiable disease, this further step was thought to be appropriate. NFU Deputy President David Naish was quoted as saying:

We accept that in view of the uncertainty surrounding this disease it is necessary that carcasses of infected animals should be destroyed, the cost of which will be met by the Government. The overriding concern of farmers must be to ensure that not even the slightest suspicion should attach to anything going into the food chain. ³⁰

2.22 On 22 July 1988, a submission was put forward to Ministers seeking agreement to the two orders. ³¹ On the topic of staff and resource implications, the submission said:

Although it is too early to draw any firm conclusions there is some evidence that since BSE was made notifiable the number of cases being reported has risen. This, added to the fact that more than one visit will be necessary in each case, suggests that there will be increased pressures on staff resources. This will be absorbed from within the SVS [State Veterinary Service] budget by putting a lower priority on other work. The cost of compensation and disposal will depend on the number of confirmed cases and the disposal method . . . On the present evidence costs might be in the order of £300,000-£350,000 in the first year. ³²

2.23 On 28 July, the Bovine Spongiform Encephalopathy (Amendment) Order 1988 and the Bovine Spongiform Encephalopathy Compensation Order 1988 were made. ³³ On the same day, MAFF announced in a news release that the Orders had been made, and that they would come into force on 8 August. ³⁴

2.24 Expenditure on the slaughter and compensation scheme from 1988 to 1996 is shown at Annex 2 of this chapter.