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
Media interest in the issue intensifies
The Minister decides to act

Media interest in the issue intensifies

2.164 On 5 January 1990, Mr Gresty wrote to Mr Maclean notifying him that the North Yorkshire County Council's Public Protection Committee had resolved to ask MAFF to consider a number of BSE-related questions, including:

Why, in view of the fact that BSE infected cattle are being entered at cattle markets, the amount of compensation for farmers is not being increased to 100% value of the animal? ¹

2.165 A press release issued by the County Council ensured that its concerns also received attention in the media. ² In particular, the press reported that animal health officers in North Yorkshire had found seven infected animals in cattle markets. Mr Gresty's view that the rate of compensation for slaughtered animals was insufficient and discouraged farmers from notifying suspect cases was also reported. ³ In an interview with 'Farming Today' on 5 January 1990, Mr Meldrum was questioned about the reports from North Yorkshire. He said that MAFF did not believe that 'any deliberate evasion of the reporting procedures' was occurring. He offered an alternative explanation for the cases that had been identified:

. . . what we believe may happen is that the cattle on the farm are clinically normal, but the stress of moving them from the farm to the market will exacerbate the condition and then early clinical symptoms will be found either in the market or in the slaughterhouse. ⁴

2.166 Media coverage of the issue around this time focused on compensation being 50 per cent. The Independent reported that the North Yorkshire Council 'wants to know why compensation for farmers reporting BSE in their herds runs at 50 per cent of the value of animals slaughtered as a precaution'. ⁵ The Times reported that 'Farmers are attempting to pass off diseased cattle as healthy because the Ministry of Agriculture will only compensate them for 50 per cent of the value of an infected beast once it is destroyed'. ⁶ Mr Harrison, a farmer who gave evidence to the Inquiry, noted that the compensation policy gave the media, particularly the agricultural media, an opportunity to 'do a bit of Ministry bashing':

There was a campaign, without a shadow of doubt, to try and get more compensation because within the farming press that would be something that would endear them to farmers. That would be my opinion. ⁷

2.167 On 10 January 1990, the Meat and Livestock Commission's (MLC) ⁸ Consumers' Committee considered the recent press reports of BSE-infected animals entering the human food chain through livestock markets. The minutes of the meeting record that:

[The Chairman] asked members for their views on the argument that Government should increase compensation for affected animals to 100% in an attempt to prevent this happening. Mr Pratt said he supported the move for increased compensation, but it would be difficult to pass an infected animal through an auction market as the stress would exacerbate the symptoms and it would be obvious the animal was suffering from BSE. All members were very concerned and considered it was important for consumers to be kept informed of developments. They suggested that both increased compensation and slaughter of calves from affected cows should be adopted by the Government. ⁹

2.168 On 15 January, the Chairman of the Consumers' Committee wrote to Mr Hylton Oberst, the MLC Director-General, expressing these concerns and conveying:

[the Committee's] strong feeling that the Government should be encouraged to take any further action which would be seen to be limiting a further spread of BSE and thus help to build consumer confidence in the measures taken by Government. ¹⁰

2.169 On 11 January 1990, Mr Antony Steen (Conservative MP) asked Mr Maclean, during oral questions in the House of Commons, whether he would review the level of compensation for BSE-affected cattle. Mr Maclean replied that the Government would not review the level of compensation, since 50 per cent was 'fair compensation for an animal which is terminally ill and therefore worthless'. On the same occasion, Mr Matthew Taylor (Liberal Democrat MP) expressed concern that Mr Maclean's comments would not reassure 'either producers or consumers that BSE is being prevented from getting into the human food chain'. In response, Mr Maclean said that it was wrong to 'pretend that 50 per cent compensation is somehow leading to infected animals entering the food chain'. ¹¹

2.170 On 15 January 1990, Mr Gueterbock met a group of Dorset farmers. He later provided Mr Gummer and MAFF officials with a note of what had been discussed about the slaughter and compensation scheme:

General concern was expressed about the level of compensation for affected cows. It was suggested that since the Ministry had been instrumental in fixing the regulations governing the rendering of animal protein, then there was an element of culpability and therefore responsibility for the predicament we were in. This was one of a number of reasons advanced for better compensation.

It was also said that the failure to pay full compensation was providing the wrong message to consumers. Genuine concern was expressed that this could knock on to meat consumption unless full compensation was paid to farmers. A distinction was made between the more aware farmers who would not contemplate passing an infected cow off as fit and the less responsible producer who could not afford to miss the extra £200 available if he sold the affected animal . . .

If we are not going to increase the compensation, and I gave the accepted justification for our position, then we do need to consider if we are getting our message over to producers. I do believe that we under-estimate the ability of farmers to turn this into a real consumer issue unless we can deal with the implication that insufficient compensation is allowing meat and milk from affected cows into the food chain. This issue is likely to be raised at all NFU AGMs in dairying areas and possibly at the national one. ¹²

2.171 The General Purposes Committee of the NFU also discussed the level of BSE compensation at a meeting on 17 January 1990, concluding that the 'rate of compensation should be brought into line with brucellosis and TB'. ¹³ During 1990, the compensation rate payable for brucellosis and TB reactors was:

. . . 75 per cent of their market value subject to an upper limit which is adjusted monthly. This limit varied during the year from £567 to £672. Full market value is payable for dangerous contacts. ¹⁴

2.172 On 19 January 1990, an article by Mr Maclean, the MAFF Parliamentary Secretary, appeared in Today defending the Government's handling of BSE. In relation to the slaughter and compensation policy, he gave the following response to the suggestion that the Government should pay more compensation to farmers to avoid encouraging them to send infected animals to market:

True, there have been a few cases found at slaughterhouses and markets - our vets believe that the stress of the journey can bring on the signs of the disease. We have stepped up our surveillance to catch such cases. The compensation farmers get is half of what the animal would have been worth in its healthy state - this is not bad for animals which in practice are not worth anything.

And just in case an infected animal does get slaughtered, we have banned the organs likely to contain the BSE agent from human food: the meat itself is totally safe. ¹⁵

2.173 On 23 January 1990, Mr Peter Jinman, a veterinarian from Hereford, wrote to Mr Gueterbock suggesting that the level of compensation payment to farmers with BSE-affected cattle was too low. In his view, the early signs of BSE were so insignificant that only the farmer would notice them. Outside observers looking at stressed animals at markets or slaughterhouses would attribute their behaviour to the stress of the situation rather than the disease, but many farmers who really knew their cows and had BSE cases in their herd could diagnose BSE at an early stage. Mr Jinman argued that the Government should increase the compensation for farmers:

100% payment will encourage people to report suspect cases; even then some farmers will not be happy as they will still incur the costs of buying and settling a new cow into the herd, i.e. 100% compensation is not the true cost of changing from one cow to a new one . . . Unlike Foot and Mouth and sheep scab, there is nothing obvious to see in/on the carcass. The government should therefore encourage the farmer to declare the problem. ¹⁶

2.174 On 24 January 1990, Mr Maclean replied to Mr Gresty's letter of 5 January:

The number of animals suspected of being infected with BSE that are known to reach markets is very small - 56 between 21 June 1988 and 30 September 1989. There is no evidence that these cases were the result of deliberate evasion. Compensation for animals suspected of suffering from the disease at the slaughterhouse is likely to be lower than those detected at the farm, which would reduce any incentive to evasion. But the key point is that the tissues most susceptible to carrying the BSE agent must be removed from human consumption. So even if infected animals do escape detection on the farm the consumer is safeguarded. ¹⁷

The Minister decides to act

2.175 On 25 January 1990, Sir Simon Gourlay, President of the NFU, ¹⁸ wrote to Mr Gummer noting the 'rising public concern about the risks from BSE affected animals':

Since consumer perception of risk is such a significant factor, I would ask you to look again at the question of compensation. Raising the compensation to a more realistic level would be the most effective way of reassuring the public that there is no temptation for any farmer deliberately to send to market an animal with incipient BSE. I would be most grateful for your consideration of this request for higher compensation as a matter of increasing priority. ¹⁹

2.176 The sustained pressure on the Government, including increasing media coverage of the issue, was beginning to have an effect. The perceived need to 'reassure the public' began to influence policy. On 25 January 1990, Mr Lebrecht, Principal Private Secretary to Mr Gummer, minuted Mrs Elizabeth Attridge, ²⁰ Mr Capstick, Mr Meldrum, Mr Lowson and others in MAFF, reporting, among other things, on a recent discussion between Mr Gummer, Baroness Trumpington (the MAFF Minister of State), and Mr Maclean:

The Minister of State also pointed out that if ever there was an appropriate moment for seeking an increase in the compensation payable for BSE-affected cattle, it was in the context of the additional burdens now being placed on the industry (export ban etc). The Minister agreed that if we were to seek and obtain an increase (and this was not decided) it would have to be part of a package of measures. He asked the Parliamentary Secretary to explore with officials the costs of various options for increasing compensation and the ways in which a brief for an increase might be presented. ²¹

2.177 On 29 January 1990, the Minister's Principal Private Secretary sent a briefing note on BSE to Downing Street in preparation for the Prime Minister's ²² meeting the next day with Mr Gummer. The note listed four areas 'where it may be felt we are vulnerable'. Slaughter and compensation was one of these:

We currently compensate farmers whose animals are infected by BSE at the rate of 50% of the animal's value as if it were healthy, up to a ceiling of 62.5% of the market value for cull cows. This has been considered fair on the grounds that the symptoms of the disease would in any event reduce the animal's value well below that which it would otherwise have obtained. This approach however has led to criticism that some farmers might be tempted to try to market their animals rather than declare them infected, thereby putting the public at risk. ²³

2.178 The same day Mr Meldrum minuted MAFF colleagues saying that he had requested Mr K Taylor to examine files on compensation paid to farmers and then relate this to the ceiling applicable at the time:

We believe that the compensation paid is very close to the ceiling and therefore to the cull cow price in which case it is hardly true to say that farmers are only getting 50% compensation and it would be more true to say that farmers are being paid the cull cow price for the animals that we slaughter. ²⁴

2.179 These two statements were in contradiction. Under the BSE Compensation Order 1989 the 'ceiling' was based on the market value of bovine animals and not cull cows.

2.180 On 29 January 1990, Mr Curry hosted a dinner for agricultural industry representatives from south-west England. The discussion over dinner turned to BSE:

. . . the Parliamentary Secretary was pressed to justify the 50% compensation rate for BSE animals, when higher rates were paid for other notifiable diseases, eg tuberculosis, brucellosis. The industry representatives felt strongly that this rate discouraged farmers from reporting disease symptoms and claimed to have evidence from auctioneers of the numbers of sick animals being sold. The Parliamentary Secretary responded that a 50% compensation rate was felt to be reasonable recompense for a sick animal, though recognised that there were other options available. ²⁵

2.181 Mr Gummer described his meeting the following day with Mrs Thatcher as the 'nodal moment' when he sought to present the case to the Prime Minister for an increase in compensation. ²⁶ At the time, such an increase lacked support from MAFF officials. Mr Gummer reflected on this fact when explaining why he recommended a change to the policy:

In deciding to take the initiative and recommend this change to the Prime Minister I had of course taken the CVO's views into account, but I had decided that his argument was too complex a response to those who took the simple view that farmers had a financial incentive to cheat. Although we had no evidence to support that view, it was clear that while the risk was remote it was not perceived as such by the public. I felt it was therefore better to remove any doubts. The action taken did not go beyond the scientific advice, which was that we should remove diseased animals from the food chain. Instead it provided an additional support to the belt and braces approach that we had instituted. There was also the further change in farming circumstances that was the reverse side of the CVO's argument. The industry had been increasingly badly hit by the BSE crisis and the growing number of cases meant that some individual farmers were particularly badly hit. Increasing the level of compensation was a way of helping them and the industry more generally. ²⁷

2.182 Mr Andrew Turnbull, the Prime Minister's Principal Private Secretary, ²⁸ recorded Mr Gummer's discussion with the Prime Minister:

Mr Gummer did, however, feel that there was a case for increasing the rate of compensation for BSE cattle compulsorily slaughtered. Paying only 50 per cent compared with 100 per cent for foot and mouth disease could be justified on the basis that the loss was confined to infected beasts and did not involve the slaughter of a whole herd. Present losses, while increasing, were still small in relation to a national herd of around 10 million. Mr Gummer thought, however, that a higher level of compensation could be justified on two grounds. First, the losses were increasing and had been made worse by the restrictions on trade imposed by Germany. Secondly, it was argued that unscrupulous farmers had an incentive to pack off to market any cow that was looking a bit off-colour. By going for full compensation the Government would be able to disarm the critics by demonstrating that it was doing everything possible to keep BSE infected cattle out of the food chain. Such a move would, however, need to be handled carefully as it could be misinterpreted as either an admission that the Government had under-estimated the risks in the past or had received some new information pointing to greater risks.

The Prime Minister felt the latter provided a better case as it could be presented as a move to reduce an already remote risk even further. The former was open to the criticism that the Government was prepared to step in to help farmers whenever their incomes were threatened in a way which it would never do in other sectors of the economy.

Summing up the discussion, the Prime Minister agreed that Mr Gummer should work up a proposal for an increased rate of compensation in consultation with the Treasury. This should then be put to colleagues. ²⁹

2.183 On 31 January 1990, Mr Gummer reported the outcome of his meeting with the Prime Minister to MAFF officials:

. . . The Prime Minister had however considered that it was worthwhile exploring the possibility of paying 100% compensation on BSE-infected animals and he had agreed to prepare a paper assessing how this might be achieved. He had made clear that the cost of this could not be found from within current MAFF resources.

As a first step, the Minister called for an internal paper setting out the basis on which we could best move to 100% compensation. The paper should look at how to present such a change in order to make the best possible impact but should also analyse any disadvantages which the change in policy would involve. ³⁰

2.184 On 5 February 1990, Mr Lowson circulated a detailed paper to Mr Gummer and senior officials within MAFF concerning the 'proposal for enhanced compensation' for cattle slaughtered on suspicion of BSE infection. The covering note mentioned that the Minister wanted to announce the changes at the annual general meeting of the NFU. This would mean that an Order would have to come into force the following day to avoid problems with ex gratia payments of compensation. The paper identified three options for the payment of compensation. These were:

1. Payment of compensation for the slaughter of all animals, not just negative cases, at their market value up to the existing ceiling of 125 per cent of the average market price.
2. Payment of compensation at 100 per cent of the average market price.
3. Payment of compensation at 100 per cent of the cull cow value. ³¹

2.185 Presentation of the change was considered in some detail:

Attempts to present any change as a technical measure, or as a response to changed circumstances, represent the best way of justifying a change publicly without calling the effectiveness of previous measures into question or leading to farmers demanding retrospective payments. But such a presentation could easily be presented as a transparent attempt to fudge the issue, and it would not be possible to guarantee that the credibility of the Government's whole approach to dealing with BSE would not be harmed.

. . . With hindsight, it might have made more sense in public relations terms to have offered a higher rate of compensation from the outset. But there are bound to be real doubts about whether changing the arrangements now will yield any overall benefit . . . ³²

2.186 The paper also described the early results of the initial ante-mortem inspections:

We have received the first, incomplete, results of the checks being undertaken by veterinary staff on suspect cases being found in slaughterhouses. During December and January, in nearly 300 visits to over 180 slaughterhouses, 1,663 animals were inspected and one suspect case was identified. This supports the contention that present arrangements are adequate. ³³

2.187 On 6 February 1990, a lengthy discussion spread over two sessions, took place between Mr Gummer, Mr Maclean, Mr Curry and MAFF officials. ³⁴ One of the main topics was the level of compensation and, in particular, which of the three options identified by Mr Lowson in his minute dated 5 February 1990 was preferable.

2.188 Mr Lowson noted that paying 100 per cent of the cull cow price should be 'enough to reassure the public, though it would not be universally welcome to farmers'. Mr Gummer said that he would prefer paying the average market price on the basis that 'many farmers would be tempted to send infected cows to market in order to avoid the stigma of infection, if there were no positive additional incentive to declare the animal to the authorities'. Some concern was raised that payment at average market price might be seen as too generous to farmers and could prove counter-productive if it 'gave rise to public fears that our real motive for the change of policy was lack of confidence in our existing safeguards'. Mr Gummer, however, expressed doubts that the press and public would readily distinguish between the cull cow price and the average market value, provided MAFF 'made it clear that what we were paying represented 100 per cent'. He said that payment of the lower cull cow value would lead to MAFF being seen as 'mean' and the 'accusations that infected animals were still being sent to market would persist'. ³⁵

2.189 Mr Gummer told the meeting that policy in this area was affected by 'two streams':

. . . first, reality as supported by scientific evidence, and secondly the effect on this 'reality' of what farmers, the press and public were saying. If the public felt strongly that there was a need for policy changes, this must be taken into account even if the scientific evidence suggested that no change was necessary. ³⁶

2.190 In discussion of the issues Mr Gummer said that if he had been responsible for the policy upon its introduction he would 'undoubtedly have gone for 100 per cent compensation so as to prevent it being in the farmer's interest to market infected animals'. He said that it was necessary to raise the level of compensation now and that this should be able to be achieved 'without undermining confidence in our existing measures'. Mr Gummer added that, if the Government did not act now, public opinion could force it into taking the same action at some later time. ³⁷

2.191 The prospect of pressure for retrospective payment of the increased level of compensation was raised. Mr Gummer said that he was 'relaxed' about this issue and would wholeheartedly oppose it. He indicated that his real concern was 'to be satisfied that announcing an increase could be achieved without it having a deleterious effect on public confidence in our existing policies'. He stated that the essential point to convey was that the Government was 'doing the decent thing' by being fair to farmers unfortunate enough to be hit by the disease and that the policy change had 'nothing to do with the protection of public health'. On this basis, Mr Gummer proposed to write to the Treasury proposing to increase compensation for animals declared infected by BSE to 100 per cent of the average market price and, subject to Treasury agreement, to announce this measure at the annual general meeting of the NFU. Although Mr Lowson remained convinced that it would be better to continue to meet MAFF's critics 'on the basis of present policies', others at the meeting were persuaded by Mr Gummer's arguments. In particular, Mr Andrews said that 'the arguments had persuaded him that the present level of compensation was not defensible. He believed that it would be possible to change without opening Pandora's box.' ³⁸

2.192 On 7 February 1990, Mr Gummer wrote to Mr Norman Lamont, Chief Secretary to the Treasury, outlining the proposal for an increase in compensation payable to farmers of cattle slaughtered on suspicion of being infected with BSE. He stated that, although the Government had defended the level of compensation since its introduction, 'developments in the progress of the disease, in the reaction of consumers and in the [European] Community' now made it necessary to reassess the situation. ³⁹ The letter identified the 'key factors' for change:

1. Widespread concern that farmers were sending animals for slaughter which they suspect to be suffering from BSE. Mr Gummer noted that he 'did not believe that this [was] happening to any great extent', but that it was 'impossible to mount a wholly convincing case.' He noted that failure to react to public concern in this area could turn consumers against cattle products. He also stated that it was 'hard to defend an arrangement as fair under which a farmer can receive less compensation if he reports early suspicion of infection than if he sends an animal to slaughter'.
2. The pattern of infection was becoming clearer and many more cases were emerging than was originally forecast. Mr Gummer noted that the 'burden on industry is therefore mounting steadily'.
3. The wider economic consequences of BSE were becoming more marked. Mr Gummer stated that the burden on industry was growing and the 'possibility that farmers might try to pass off suspect animals for slaughter in order to maximise their returns must be growing too'. ⁴⁰

2.193 On the basis of the factors listed above, Mr Gummer concluded that the level of compensation should be increased:

Had we known how much public concern would be generated by the disease, and how many cases would emerge, it would have been right to set it at a higher level from the start. This would be a clear demonstration that the Government is willing to do everything necessary to meet public concern that any risk to human health, however slight, is completely eliminated. On the other hand while we can certainly take credit for this aspect we should not rely on it as the sole justification, because this would lead to suggestions that our past measures have been inadequate. I will therefore want to stress as much as possible the changing situation which the industry faces. If I am unable to act quickly, pressure could mount for more radical and damaging changes in the future. ⁴¹

2.194 Mr Gummer's proposal received prompt support from other parts of the Government. On 9 February 1990, the Secretary of State for Scotland, Mr Malcolm Rifkind, wrote to Mr Lamont commending Mr Gummer's proposal. He noted that there was 'distinct concern within the agriculture industry that farmers are not bringing forward potential cases for fear that the rates of compensation being offered by the Government are not adequate to encourage them do so'. ⁴² The Secretary of State for Wales, Mr Walker, who had sought a review of the level of compensation the previous May, offered similar support for the measure. ⁴³ Mr Clarke, Secretary of State for Health, wrote to Mr Gummer in similar terms on 12 February 1990, acknowledging the pressures he had been under and offering support for the move. ⁴⁴

2.195 In his letter to Mr Lamont, Mr Gummer outlined his preferred method of increasing the level of compensation and estimated that this would increase spending in 1990/91 by £1.8 million and by £0.36 million in the current year (1989/90). He sought agreement to make a call on the Reserve for the whole of the additional sums required. ⁴⁵ A submission on this proposal to Mr Lamont from a Treasury official, Janet Barber:

. . . reluctantly recommends that you accept Mr Gummer's proposal, but make it clear to him that he must do more than he has offered to meet the cost. ⁴⁶

2.196 The submission commented that the costs of the increased compensation rate were more likely to be £2.4 million on the basis of the latest figures of 200 cases per week. Further, by increasing the BSE compensation rate to 100 per cent, there would be increasing pressure for Government to increase all slaughter and compensation schemes, especially salmonella. This would mean the 'potential cost of increasing the BSE rate is more like £4.2m rather than the £1.8m quoted by Mr Gummer'. The submission concluded:

There is no genuine public health reason for the proposed increase in the BSE compensation rate. Nor is the burden of BSE on the industry any reason for more generous compensation. The only possible advantage is that, by removing the disincentive for farmers to report all suspect cases, public confidence in food safety and public health will be restored. This is essentially a political matter, and on this basis you may wish to agree. The Prime Minister is thought to be sympathetic to Mr Gummer. ⁴⁷

2.197 On the basis of this assessment, Mr Lamont wrote to Mr Gummer on 9 February 1990 'reluctantly' agreeing to his proposal. He noted that this agreement was on the understanding that:

1. Mr Gummer would do his best to absorb the cost in all years, if necessary by making transfers from MAFF's cash limited votes;
2. Mr Gummer was certain that there was no legal case for making the increase retrospective and would resist industry pressure to make it retrospective;
3. Mr Gummer would not cite the increase as a reason for increasing rates of compensation for any other slaughter and compensation schemes; and
4. if research demonstrated that BSE could not be transmitted to humans, the slaughter and compensation scheme would be reassessed with a view to transferring costs to industry. ⁴⁸

2.198 Once the decision to change the level of compensation had been made, the necessary legislative changes were arranged quickly. The desire to introduce the change as soon as possible was such that MAFF's Legal Department had to advise officials that the necessary Order could not be made and brought into force on the same day as that would amount to applying it retrospectively. ⁴⁹ The speed with which the Ministry sought to implement the decision meant that further calls for urgent review of the level of compensation, such as a letter from the Livestock Auctioneers' Market Committee for England and Wales dated 9 February 1990, ⁵⁰ and a press release from the WFU dated 12 February 1990, ⁵¹ were overtaken by events.

2.199 The details of how the scheme was to operate remained to be settled. On 9 February 1990, MAFF officials, including Mr Meldrum, Mrs Attridge and Mr Lowson, met Mr Curry to 'discuss what sort of scheme to recommend to the Minister to accompany the increase in the rate of compensation for BSE to 100 per cent'. Mr Meldrum noted that a 'flat rate of compensation for cases in which BSE was confirmed' would lead to 'many occasions when compensation paid would be greater than the value of the cow'. On this basis, he proposed that compensation should be 'based on the real value of the cow' and be paid 'up to the average market price'. ⁵²

2.200 The meeting also addressed the question of compensation for farmers whose animals were slaughtered but then found not to have BSE and, in particular, whether it should be set at a higher rate than for those that tested positive:

On the one hand, animals which were proved to be tested negative were probably suffering from other ailments that reduced their value. On the other, farmers might note that the maximum rate of compensation had been brought down from 125 to 100 per cent of the average market value. ⁵³

2.201 Mr Curry noted that Mr Gummer would prefer a system 'in which those farmers whose animals proved negative did not do better than those whose animals were proved positive'. It was finally agreed that farmers with animals confirmed as having BSE would receive 100 per cent of their value up to a ceiling of the average market value and those whose cattle turned out not to have the disease would receive up to 125 per cent of the average market value. ⁵⁴

2.202 On 13 February 1990, Mr Gummer spoke at the annual general meeting of the NFU. As planned, he took the opportunity to announce the Government's change in policy on compensation for BSE-infected animals:

. . . it is clearly right to ask whether our compensation arrangements continue to be right when even without new infection the number of cases of cattle affected by BSE will continue to rise and cannot be expected to decline until after 1993. The 50% compensation did not seem unreasonable when most farmers were faced with a very limited number of cases. It seemed right that they should bear at least some of the cost of the outbreak. However now the effect of the disease on the farming industry is becoming greater. There are cases in an increasing number of herds and an increasing proportion of these herds have lost more than one animal.

Having taken these changed factors into account, I have decided that compensation for an animal in which infection is confirmed will from tomorrow be equal to 100% of the value of the animal, up to a ceiling of the average market price. I am announcing the details in Parliament today . . . ⁵⁵

2.203 The announcement was confirmed on the same day in a written reply by Mr Gummer to a Parliamentary Question and in a MAFF press release:

Compensation will be 100% of the market value of the animal or the average market price, whichever is the less. There will be no change in the basis of compensation for animals in which the disease is not confirmed. ⁵⁶

2.204 On 16 February 1990, the Department of Agriculture for Northern Ireland (DANI) announced increased levels of compensation for cattle compulsorily slaughtered on or after 14 February 1990 in line with the changes introduced by MAFF. ⁵⁷

2.205 The Bovine Spongiform Encephalopathy Compensation Order 1990 came into force on 14 February 1990 in England, Scotland and Wales. It raised compensation for confirmed BSE cases to either 100 per cent of the animal's market value, or the average price, whichever was less. If BSE was not confirmed, compensation was equal to the market value or 125 per cent of the average price, whichever was less. The average price was calculated on the basis of returns for sales of commercial grade Friesian cows and heifers in milk and in calf, rather than bovine animals generally. ⁵⁸

2.206 The change in the level of compensation was warmly welcomed. The Daily Mail reported in an article entitled, 'Gummer doubles "mad cow payout"', that 'the deal removes any incentive for unscrupulous farmers to slip infected cattle into the food chain'. ⁵⁹ Mrs James of the FUW wrote to Mr Podmore of WOAD stating that the FUW 'very much welcomes the announcement'. ⁶⁰