Volume 6: Human Health, 1989-96
2. The slaughter and compensation scheme
The increase in the level of compensation under the slaughter and compensation scheme
Initial reactions to the level of compensation
Continuing dissatisfaction with the level of compensation
MAFF faces further concerns about the level of compensation
The Welsh Office presses for a review of compensation levels
Discussions within Government
Industry and consumer groups press for increased compensation
Ministerial changes
MAFF continues to resist pressure for an increase in compensation

Initial reactions to the level of compensation

2.117 From the early days of the slaughter and compensation scheme there had been complaints from various quarters about the level of compensation payable. The NFU's press release of 8 July 1988 had welcomed the scheme but expressed disappointment at the level of compensation, believing that 100 per cent should have been payable for all slaughtered cattle. ¹ At a meeting on 19 July 1988 of MAFF officials with the NFU and the National Cattle Breeders Association (NCBA), the NFU said that 'if farmers did not think 50 per cent compensation was sufficient, they might not report suspect cases, but sell them on'. ²

2.118 Nor did the BVA believe that the level of compensation was adequate. Mr Young, a former president of the BVA, told the Inquiry:

. . . certainly we were not happy about low compensation, and it seemed to us logical that like any other or most other notifiable diseases 75 per cent compensation was paid and why should BSE not be like any other disease? Why should it be differential? It was illogical and silly. ³

2.119 Mrs Barbara Smith of the Women's Farming Union (WFU) ⁴ told the Inquiry that her organisation was unimpressed with the level of compensation:

It was plain daft, quite honestly. Plain daft. They offered 50 per cent compensation rate of the animals confirmed BSE and 100 per cent if it was not confirmed as BSE and the 100 per cent was not paid until after the postmortem examination . . . The psychological effect of offering a half rate compensation, it was just daft and the Womens Farming Union were very proactive in trying to get that compensation raised, because BSE was not the fault of the farmers. So, you know, it was to protect human health that we were taking these steps and for animal welfare reasons, so it should have been 100 per cent to start with. ⁵

2.120 MAFF officials did not agree that the level of compensation was inadequate. Mr Crawford told the Inquiry that he was not concerned that it might encourage farmers not to declare suspect cattle:

There may have been some attraction to the farmer to try to spot an animal very early in the disease, to get slaughter compensation. I do not think it was going to be a major problem. But I think that the 50 per cent [compensation rate] was based on the fact that these were not clinically healthy animals, they were diseased animals that were going to die. It was judged that 50 per cent was the appropriate level of valuation for these animals. ⁶

2.121 Mr Peter Hewson of MAFF's Meat Hygiene Veterinary Section also emphasised the fairness of the level of compensation:

I think you must remember when valuing dairy cattle - most of these were dairy cattle - that their valuation as they stand as a dairy animal is a great deal more than their valuation as a carcass. So even though the owner may only have been getting 50 per cent, he may have actually been getting more than he would have done if he had sent it for slaughter. ⁷

2.122 Those farmers who gave evidence to the Inquiry were not dissatisfied with the fairness of the 50 per cent arrangement. This was on the understanding that BSE-affected cows 'were on a one way track towards death'. ⁸ The Inquiry heard that humanely slaughtering an affected animal was often a welcome relief, and receiving 50 per cent compensation for it was considered 'a hell of a lot better than nothing'. ⁹ Some farmers went further, stating that 50 per cent 'was quite adequate'. ¹⁰

Continuing dissatisfaction with the level of compensation

2.123 The NFU vigorously lobbied MAFF to increase the amount payable to farmers. Broadly, there were two limbs to its argument for increased compensation:

1. The farmer had suffered the loss of an animal through no fault on his part.
2. There should be no temptation placed in the way of the farmer not to report a suspect case - paying 100 per cent on slaughter would ensure that there was absolutely no incentive to take chances with a suspect animal. ¹¹

2.124 On 2 September 1988, Mr Gordon Gresty, Country Trading Standards Officer at the North Yorkshire County Council, wrote to Mr MacGregor on behalf of the County Council's Public Protection Committee. Mr Gresty conveyed the Committee's broad support for the action taken by the Government in making BSE notifiable and imposing a compulsory slaughter policy. However, the Committee was concerned that the compensation payable to farmers was only 50 per cent of the market value. It felt that this might deter some farmers from bringing animals suspected of having BSE to the attention of the Ministry, and sought consideration of an increase in the level of compensation payable. ¹²

2.125 On 26 September 1988, Mr Lawrence replied to Mr Gresty. Mr Lawrence's letter was typical of what became MAFF's standard response to those who sought review of the level of compensation:

We firmly believe that compensation at 50% of the market value is fair, given the nature of the disease, particularly the fact that the animals are suffering from a terminal illness. It should also be borne in mind that the cattle concerned are valued, for the purposes of compensation, not as terminally ill but as if they are unaffected with disease.

The number of cases which have been reported since the Government introduced these new measures on 8 August does not provide any indication that farmers are attempting to evade the law. Rather the reverse in that there has been a high degree of cooperation between farmers and the State Veterinary Service in tackling this new disease problem. However, we have been trying to get the message home that if farmers do attempt to break the law they will face prosecution. We certainly advocate firm action against anyone who tries to undermine these important animal health measures. ¹³

2.126 Meanwhile, on 6 September 1988, MAFF officials held one of their regular meetings with representatives of the NFU and the NCBA. The minutes record that MAFF updated the meeting on the current position on BSE cases, and commented that, on the basis of the number of suspect cases being reported, there did not seem to be any evidence of under-reporting. Most suspect BSE cases had been reported at farms, but 'a few had turned up at markets and slaughterhouses'. The minutes record the response of the NCBA and the NFU:

The NCBA were somewhat sceptical about the level of reporting, bearing in mind that compensation was only 50% of market value. On the other hand the NFU felt that despite this, farmers would want to know the answer if they suspected BSE in their herd. ¹⁴

2.127 On 27 September 1988, the Milk and Dairy Produce Committee of the NFU met and discussed, among other matters, BSE. The minutes of the meeting noted that the Committee had expressed concern over the level of compensation for slaughtered suspect cases and stressed that it should be at 100 per cent of market value. It was agreed to raise this as part of the NFU's submission on the Annual Price Review. ¹⁵

2.128 On 8 November 1988, Mr Thompson, Mr Meldrum and Mr Cruickshank met representatives of the NFU:

The NFU stressed their worry that if a similar situation arose again there was a danger with compensation only set at 50%, of people taking the law into their own hands. The Parliamentary Secretary replied that the Ministry was aware of this concern but felt that farmers had acted and would continue to act responsibly. ¹⁶

MAFF faces further concerns about the level of compensation

2.129 On 16 December 1988, a veterinary practitioner wrote to Mr Meldrum about his concern about the possibility that farmers were sending their suspect BSE cases either to market or to slaughterhouses rather than reporting them. ¹⁷ He said:

I am totally in sympathy with the efforts being made by MAFF to deal with the disease, and I hope that it will not attract the sort of public hysteria that has been generated by hormones, BST and latterly eggs. However, I do feel concerned at the evidence that I have at first hand, that the rather unique compensation scheme designed for BSE, may in fact be encouraging farmers to submit cases for slaughter or sale, rather than notify them to MAFF. While I appreciate that it seems that the risk of transmission to humans by this route is unlikely to be any greater that that posed by eating scrapie infected sheep, which we have been doing for 200 years, I am even more sure that the chances of convincing the public of this are nil. ¹⁸

2.130 In response to this, Mr Meldrum recalls that he asked Mr K Taylor to provide him with information on the number of BSE cases reported at markets. ¹⁹

2.131 Mr Taylor's reply on 30 December 1988 set out the number of BSE cases reported at both markets and slaughterhouses and a breakdown of what subsequent action was taken for each case. Disregarding those reported cases that were attributed by the examining Veterinary Officer to causes other than BSE, action had been taken at markets and slaughterhouses in relation to 54 animals. According to Mr Taylor, this represented only 2.5 per cent of all animals that had restrictions imposed on them on suspicion of BSE during the period between 21 June 1988 and 31 December 1988. Mr K Taylor concluded that these statistics could be regarded as evidence of 'attempted evasion' or, alternatively, as 'efficient monitoring and prevention of abuse'. As discussed above, the confirmation rate of BSE in these animals was relatively low, a factor attributed to the difficulty of making a clinical diagnosis in an environment where animals were bound to be under stress. ²⁰

2.132 On 5 January 1989, Mr Meldrum replied to the veterinary practitioner. He acknowledged his concerns and advised him of the number of BSE cases identified at markets, based on Mr K Taylor's statistics. Mr Meldrum confirmed that MAFF had no evidence 'that farmers are wilfully failing to report the presence of BSE', but that if such cases arose MAFF would have no hesitation in arranging for the person responsible to be prosecuted.

We take the view that, notwithstanding the notifications from both markets and slaughterhouses, we are getting an extremely good response from farmers who are reporting cases to us as soon as they become suspicious. Only time will tell whether farmers are wilfully evading the notification procedures but I doubt whether this is a real problem at all . . .

I see no possibility of increasing the compensation rates for animals that are suffering from a terminal illness unless there is clear evidence of evasion of the notification procedures in the Order. ²¹

2.133 In Mrs James's letter of 23 January 1989 to Mr Bollington, WOAD, she drew attention to the FUW's complete dissatisfaction with the BSE compensation arrangements. The letter stated: 'the low level of compensation may encourage a few less than scrupulous farmers, who have stock showing early signs of BSE infection, to dispose of them on the open market and this is obviously of very great concern to us'. ²²

2.134 On 9 February 1989, there was a meeting of the Public Health Committee of the BVA. It was noted at the meeting that some BSE cases could be going through the abattoir undetected. It was agreed that if compensation to farmers was raised to 75 per cent this would discourage the possibility of early cases being sent for slaughter. It was agreed that the Committee would write to MAFF in support of an increase from 50 per cent to 75 per cent in the compensation to farmers with BSE cows. ²³

2.135 On 17 February 1989, Mr Thompson replied to a Parliamentary Question from the Opposition spokesman on agriculture, Mr Ron Davies, about the level of compensation under the slaughter and compensation scheme and whether MAFF intended to raise it to 100 per cent. He responded:

I believe that 50% compensation is reasonable, given that the animals are suffering from a terminal illness but are valued as if free from BSE. There is no evidence to suggest that owners are deliberately evading their legal obligation to notify the Ministry of cattle suspected of having BSE. Indeed, the number of cases that have been reported suggest a high level of cooperation from farmers in tackling the disease problem. ²⁴

This was the first of a number of similar Parliamentary Questions and replies in the following months. ²⁵

2.136 The Report of the Southwood Working Party was published in February 1989. It made no recommendation regarding the appropriate level of compensation for slaughtered BSE cattle. However, it did include the following passage:

It has been suggested that because compensation is set at 50% some farmers are evading the law and that as a result the carcasses of affected animals are reaching the human food chain. However the evidence does not support this view. The number of suspect cases being reported has gone up since the compulsory slaughter programme was introduced. It also seems likely that should a farmer try to sell an animal for slaughter, rather than report suspected BSE, the transportation to a market and abattoir will exacerbate the clinical signs of the disease . . . In these circumstances the animal will probably be reported at the market or the slaughterhouse through surveillance. In fact from 21 June 1988 to the end of the year BSE was confirmed in only 40 out of a total of 63 suspect cases reported from markets and slaughterhouses. None of these cases was from herds in which BSE had previously been recognised: so there was no evidence that early signs had been suspected and that evasion was deliberate. ²⁶

2.137 In his evidence to the Inquiry, Mr MacGregor commented on his thoughts in relation to compensation at this time:

There were rumours of animals slipping through the net and not being identified and it was essential to act on all such rumours reported and to make thorough checks to ensure that this was not happening. Mr Meldrum confirmed that this was being done. I had in mind that if there was such slippage due to deliberate under-reporting the compensation payable on slaughtered animals may have to be reconsidered but we would need firm evidence before taking any such step. ²⁷

The Welsh Office presses for a review of compensation levels

2.138 On 2 May 1989, Mr Bollington, WOAD, minuted Mr Peter Walker, Secretary of State for Wales, regarding the rates of compensation for slaughtered BSE-infected cattle:

1. At the meeting between the Secretary of State and the Agriculture Advisory Panel last week concern was expressed about the level of compensation paid to farmers following the compulsory slaughter of cattle affected by BSE. Compensation payment at 50% of market value was thought to be too low and might lead to evasion with some farmers tempted to send animals for slaughter at the first hint of the disease thus resulting in infected carcasses entering the food chain.

2. The Government's view so far has been that compensation at 50% of market value is fair given the terminal nature of the disease. Also it should be borne in mind that the market value is assessed as if the cattle were unaffected and not valueless for all practical purposes. There is no evidence that 50% compensation is in any way influencing farmers not to report the presence of disease. Nevertheless both the farming unions in Wales see this as a possibility and are pressing for full compensation. Panel Members share this concern and would like to remove the risk of non reporting altogether by paying compensation at full market value for affected animals as with non affected animals. The cost of doing so would be relatively small in disease control terms but not insignificant and MAFF would need to take up with the Treasury the need for additional funding. Expenditure on compensation in 1989/90 at the current level is expected to be £2,040,000.

3. The Secretary of State may wish to write to Mr MacGregor proposing a review of the compensation arrangements. ²⁸

2.139 The minute attached a draft letter for Mr Walker to send to Mr MacGregor. The draft letter noted that a number of farming interests in Wales had been expressing concern about the level of compensation. It stated that setting the level at only half market value was thought to be too low and 'might lead to evasion of reporting with farmers tempted to send animals to slaughter at the first hint of the disease'. The letter conceded that there was a lack of hard evidence of this occurring. However, it sought review of the situation. ²⁹ On 5 May 1989, Mr Walker wrote to Mr MacGregor in these terms, adding one additional passage:

I realise that full compensation might be hard to justify and would obviously cost more. But presented in terms of our determination to protect the food chain, however remote the risk, it might bring some political advantages. ³⁰

2.140 Mr MacGregor replied on 15 May 1989:

It is of course only to be expected that farmers will use whatever arguments they can to justify a higher rate of compensation. I have been responding that the rate of compensation is reasonable given that the animals are affected with a terminal disease whereas the compensation payment is assessed on their value in a healthy condition. If there were any evidence that the rate of compensation were such as to discourage farmers who felt that they had an animal that was suffering from the disease from reporting it, then I would be concerned and I would be looking for ways of dealing with the problem. But so far no such evidence has been put to me.

If it were to become apparent that the rate of compensation currently available was prejudicing our efforts to deal with the disease, then we would have to consider what action we needed to take. This could include proposing a higher rate of compensation. But under present conditions I see no justification for increasing the rate of compensation, nor do I see the remotest possibility of getting the Treasury to agree to such an increase. ³¹

Discussions within Government

2.141 On 25 May 1989, an article appeared in the Guardian reporting the Government's intentions to introduce a ban on the inclusion of certain types of bovine offal in human food. It noted growing concern 'that farmers, who have been offered only 50 per cent compensation, are sending suspect animals for slaughter'. ³²

2.142 On 1 June 1989, the President of the NFU wrote to Mr MacGregor about BSE:

We are becoming increasingly concerned at the level of incidence of BSE amongst dairy cattle and the very high profile which the disease is now getting in the media. We feel strongly that everything possible must be done to eradicate the disease and to maintain the highest possible level of public confidence in beef and lamb . . .

I must reiterate our concern at the level of compensation which is neither justified nor prudent. However much one may deplore it, one hears persistent unconfirmed reports of producers taking the risk of disposing of animals through normal outlets; animals which they may themselves suspect have early symptoms of BSE. ³³

2.143 Allegations of infected cattle 'slipping through' were causing concern within the Government. On 6 June 1989, Mr Cruickshank minuted Mr MacGregor, copied to various MAFF officials, about the possibility of BSE-infected cattle being passed through slaughterhouses:

We have heard many allegations that farmers are sending BSE cases for slaughter instead of reporting them as required. Regional Veterinary Officers have been asked to follow up these reports wherever possible, but there has never been proof to support the allegations. It might well prove difficult to mount a case in practice, bearing in mind Southwood's advice that the clinical symptoms, which might not have been apparent beforehand, are likely to become apparent when an animal is subjected to the stress of being moved to a market or abattoir.

If, however, we did find a case where there was adequate evidence of an intention to evade the notification requirement, we would certainly try to mount a prosecution. There could well be merit in putting our intentions on the record, and I attach a draft arranged [Parliamentary Question] for this purpose. ³⁴

2.144 The draft Parliamentary Question asked what action would be taken against anyone who deliberately attempted to evade the law by selling cattle showing clinical signs of BSE instead of notifying suspicion of the disease. The draft reply was in the following terms:

I would consider any such attempt to evade the law to be a very serious matter indeed. Deliberate failure to notify suspect BSE is likely to lead to a prosecution under the Animal Health Act 1981. The maximum penalty for such an offence is £2,000. ³⁵

2.145 The possibility of some BSE cases not being notified or detected was discussed by Mr MacGregor and Sir Richard Southwood at a meeting on 7 June 1989 to discuss the proposed Specified Bovine Offal (SBO) ban. The minutes describing the meeting recorded Sir Richard as saying that he 'was not persuaded that many animals showing clinical symptoms were slipping through the net'. ³⁶

2.146 On 9 June 1989, Mr MacGregor wrote to Mr Kenneth Clarke, Secretary of State for Health, proposing a ban on certain types of bovine offal in human food. In support of this proposal he made the following observation:

We cannot be sure that all diseased animals are prevented from entering the food chain. There is much talk that some animals are not being offered for slaughter but are being slipped through and I have strong suspicions that this is right. It is also possible that some are simply not being detected. The action I propose below would deal with that. It would also enable us to respond to much industry and media pressure to increase the rate of compensation for slaughter in order to prevent the temptation to producers to avoid identifying their animals as being suspected of BSE. ³⁷

Industry and consumer groups press for increased compensation

2.147 On 14 June 1989, the National Consumer Council wrote to Mr MacGregor congratulating him on MAFF's decision to ban the use of certain bovine offals in human food. However, the letter went on make the following comments:

As farmers only receive fifty per cent compensation for infected animals, there is every incentive for farmers to send a cow for slaughter at the earliest sign of disease. The situation is hardly likely to ensure that the meat of affected cows does not enter the food chain. The compensation arrangements must be reviewed. ³⁸

2.148 On the same day, Mr MacGregor met representatives of the NFU. The Deputy President of the NFU, Mr David Naish, handed the Minister a letter about BSE and is recorded as saying that the NFU would 'not back down from their view that compensation should be at 100%'. ³⁹ The letter included the following:

The first line of defence must remain the slaughter and destruction of all cattle suspected of having BSE. To make this as effective as possible, I feel I must ask you again to review the level of compensation. In our view it should be 100 per cent. ⁴⁰

2.149 At the meeting, Mr MacGregor, 'speaking very privately', defended MAFF's position by pointing to the 'political problems on compensation':

We were now proposing to exclude any remotely dangerous material from the food chain. Moreover, people could point to the fact that the carcasses on which we were paying 50% compensation were in fact worth very little. To go any higher would therefore risk a very serious backlash and this was not in the NFU interests. ⁴¹

2.150 An article in Farmers Weekly on 14 June 1989 reported the Government's announcement of its intention to ban certain bovine offal in human food. It also noted calls by Mr Ron Davies for compensation levels for slaughtered cattle to be raised to meet full market value:

At present compensation is limited to 50% of what a healthy animal would have fetched at market. Mr MacGregor described this as 'reasonably generous' and disputed suggestions that infected cattle were being slaughtered and sold for human consumption, as alleged by Mr Davies. 'We check hearsay and we have no real evidence that it is taking place,' he told FARMERS WEEKLY.

2.151 On 29 June 1989, Dr David Clark, Opposition Spokesperson on agriculture, asked Mr MacGregor during oral questions in the House of Commons whether the Government would offer farmers 100 per cent compensation for slaughtered BSE-infected animals to 'ensure that there is no temptation for farmers to send dubious animals to market'. Mr MacGregor replied:

It appears that there is still a great deal of misunderstanding about the compensation that we are offering. Such animals are not worth very much in the market, but the compensation is 50 per cent of the original market value, which is well above what they would now be worth. The other important point is that the action that I have recently announced - to deal with susceptible offals and ensure that they do not enter the food chain - deals with this problem. ⁴²

Ministerial changes

2.152 The ministerial changes in July 1989 appear to have brought a change in attitude about compensation levels. One of the new MAFF Parliamentary Secretaries, Mr David Curry, entered the debate shortly after his appointment. On 6 September 1989, he sent a minute to Mr Gummer suggesting that MAFF should be 'well-prepared should we find the BSE situation deteriorating'. He expressed his dissatisfaction with the current level of compensation under the slaughter and compensation scheme:

Compensation at 50% is inadequate. The possibility of a farmer slipping an animal into the food chain cannot be absolutely denied and there is beginning to be an incentive because the 50% compensation is now well below the cull cow price. 50% is also the lowest compensation we pay anywhere (ie 75% brucellosis and TB, 100% for FMD; 60% salmonella).

I have asked officials for a note on the compensation trends and the cost/benefit of a 60% compensation.

I recognise the problems posed financially but they pale into insignificance against the problems of a real 'scare' about BSE meat getting into the food chain. ⁴³

2.153 On 12 September 1989, Mr Andrews responded to Mr Curry's request for advice about compensation arrangements:

We have, of course, held the line on the 50% rate of compensation. I was concerned to see the reference in an article in The Times last Friday reporting concern among Ministers about the level of compensation. The pressures have been there all along from the agricultural industry for a higher figure. But if we were to conclude that the present level was not sufficient to ensure that suspect cattle were being sent for slaughter, a move to 60% would not deal with the problem or persuade anyone. I am sure that we would have to go at least to 75% . . .

I am not, of course, arguing that if the present rate of compensation is seen to be too low, then we cannot justify the public health risks of leaving it unchanged. But if we do have to concede an increase, there will be inevitable costs as a result of cutbacks in other areas of our work. These will not show up in any cost benefit study relating to policy on BSE alone. ⁴⁴

2.154 On 19 October 1989, Mr Lowson also responded to Mr Curry's minute. He treated the issue slightly differently:

If BSE is diagnosed and the animal slaughtered, compensation is based on the value of the animal if it had been healthy; 50% of this value is paid if the diagnosis is confirmed, or 100% if not, up to a ceiling. The maximum amount of compensation payable currently amounts to about 75% of the cull cow price. Compensation is paid to provide fair recompense to farmers who have animals slaughtered at our behest. Although not directly intended as an encouragement for farmers to report suspected disease, as that is a legal obligation, that aspect must be a consideration. There are continuing suggestions that 50% compensation is insufficient to prevent unscrupulous farmers acting illegally by sending suspect cases to abattoirs in the hope of obtaining a greater payment for the animal or of avoiding the inconvenience, loss of possible export business or stigma of having infection confirmed. There remains no firm evidence to confirm that this happens but intuitively it is likely that some farmers are evading the requirement to notify. The questions are therefore: does 50% provide fair recompense, and do we need to increase compensation to reduce the likelihood of suspects reaching the abattoir?

As far as fairness is concerned, it needs to be borne in mind that BSE is inevitably fatal and causes symptoms that will markedly reduce an affected animal's value - loss of condition, loss of productivity, difficulty in handling. In many cases, 50% of the value of a healthy milking animal will be more than the animal is worth at slaughter. On the other hand an animal which is showing only early signs of the disease might fetch more at slaughter than the compensation payable - although at present the gap between cull cow values and the maximum compensation payable is narrower than when compulsory slaughter was introduced. Overall there is little reason to question existing rates of compensation on grounds of equity - and in practice not many farmers are doing so.

The question of the incentive to bypass slaughter is of course linked to the equity factor. The concern over suspect animals being sent to abattoirs, deliberately or not, is that infected materials might enter the food chain. The number of suspect cases found at abattoirs is very low (52 in first 6 months of this year compared to 3,738 cases on the farm) and by no means all of these will indicate deliberate deception. We intend to strengthen surveillance at domestic slaughterhouses by introducing random ante-mortem inspections by veterinarians, so that at least a proportion of any unreported cases will be picked up, with a consequent deterrent effect on those who seek to evade their obligations. However, even if cases do slip the net and are slaughtered the ban on the use of specified offals for human consumption will still act as a safeguard against the risk of potentially infected tissues reaching the food chain. Overall therefore the risk of potentially vulnerable material reaching the food chain is very slight. And it must be questionable whether a limited increase would make more than a marginal difference. Compensating at the rate of 75% of the value of a healthy animal would increase forecast costs for 1990/91 by some £1.8 million. Overall therefore officials recommend against pursuing the idea of increasing the level of compensation. ⁴⁵

2.155 In conclusion, he asked Mr Curry to 'agree that there [were] no grounds for seeking to increase the level of compensation for BSE cases'. ⁴⁶

2.156 In his response Mr Curry did not agree with the conclusion but considered that there was 'little chance of changing this position in the light of financial constraints'. He felt that MAFF could not be certain that farmers were not putting suspect cattle into the feed chain and felt that the incentive of more than 50 per cent compensation was required to prevent this. ⁴⁷

2.157 On 27 October 1989, the National Animal Health Panel met MAFF. The note of the meeting records that the 'question of the 50 per cent compensation level was raised'. It was noted that it appeared that MAFF was 'unlikely to move on this issue'. ⁴⁸

2.158 On 6 November 1989, Mr Lawrence minuted Mr Gummer stating that the allegations of under-reporting of BSE suspects were not supported by MAFF's evidence. He noted that in the first nine months of 1989, 73 suspect cases were reported at slaughterhouses compared with 5,898 on farms. Two-thirds of the slaughterhouse suspects were subsequently confirmed as BSE cases and it was noted that 'of those it may have been the movement from the farm that precipitated the clinical symptoms'. ⁴⁹

2.159 On 10 November 1989, Mr Andrews minuted Mr Curry inviting him to confirm whether:

. . . the present policy, which includes the rate of compensation, should be maintained. Unless you tell me otherwise, I have to take it that you are in agreement with the present policy including the compensation arrangements. ⁵⁰

2.160 Mr Curry responded that, following the announcement of the random ante-mortem inspections in slaughterhouses, he was now 'content with the present policy including the compensation arrangements'. However, had this measure not been introduced, Mr Curry 'would have continued to argue that there was a considerable loophole and that higher rates of compensation were necessary to reduce the temptation of farmers to put suspect animals into the food chain'. ⁵¹

MAFF continues to resist pressure for an increase in compensation

2.161 On 4 December 1989, Mr R Cooper, a director of J Sainsbury plc, wrote to Mr Maclean, ⁵² Parliamentary Secretary at MAFF, setting out the views he had expressed to Mr Meldrum at a meeting that day. He said that his company still felt:

most strongly that full compensation should be given to farmers for any BSE infected cattle rather than 50%. Every encouragement should be given to the farming community to isolate diseased cattle. The cost to the government is small whilst it would be seen by both farmers and consumers as a sensible and balanced initiative. ⁵³

2.162 Mr Maclean replied on 21 December 1989, saying that there was 'little incentive for farmers to send animals exhibiting clinical signs to slaughter intentionally', and further:

Compensation is calculated on the basis of the value of the animal if it had been healthy - that is, taking no account of the fact it is suffering from a terminal disease and has lost condition and value as a result. This means that in many cases the owner of a suspect animal gets more compensation than the price that would actually be received for the animal if it were sold. Also if the animal proves not to be infected the owner will get compensation based on full value. ⁵⁴

2.163 On 21 December 1989, Mr Maclean wrote to retailers in response to their requests for information on BSE 'in the form that you can draw on in answering any queries from your customers or your store managers'. The letter confirmed MAFF's stance on the level of compensation payable under the slaughter and compensation scheme. ⁵⁵