Responsibility and Cost Sharing

Venue
Date
Speaker

History 1

• 2002 - Anderson report into FMD (2001)

• 2006 Joint Industry Working Group Report (Sharing
Responsibilities and Costs of Exotic Diseases)
• 2006 & 2007 Consultations on principles and next steps for
sharing responsibilities and costs for animal disease
• 2006 Public Accounts Committee Report
• 2009 National Audit Office Report
• European Commission has been discussing RCS for some
time. Proposals for EU harmonised cost sharing
arrangements due 2010/11.

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Benefits of sharing costs and decisions 2

•Reduced levels and costs of animal diseases

•Better value for money from investment in disease
prevention and management
•Fairer sharing of costs and risks between beneficiaries
•Greater confidence of the livestock industry - Trust
By:
• Better (informed) and depoliticised decisions
• Greater involvement of livestock industry in decisions
• Financial incentives to reduce costs for all
• Financial incentives to better manage risk
• Greater financial transparency and accountability to
livestock industry

Consultation Proposals 3

In preparation and to influence Commission decision on RCS;

proposal expected in 2011:
Establish new arm’s length body for Animal Health in England,
having embedded partnership working
• Non Ministerial Department (NMD) – like the FSA
• Non-Departmental Public Body (NDPB) – like AHDB or Natural
England
Share
S a e costs through
g compulsory
p y registration
g of livestock keepers
p ((and
compulsory insurance) for unbudgeted exotic outbreaks
• In addition to public funding (currently £400 million)
• Livestock sector contributes initially to costs of exotic disease outbreaks,
preparedness and surveillance work – 50:50 split of £44M = £22M each

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Scope of the New Body 4

• Everything as Defra – all livestock and livestock

policies are in scope
scope, except animal welfare
welfare.
Including policy on and budget for:
• R&D;
• Preparedness, surveillance, vaccination, movement
controls;
• Import controls;
• International trade;
• Compensation arrangements.

Animal Welfare to Remain in Defra 5

• High level of general public concerns, wide breadth of interests,

moral and religious aspects to choices, political nature of
issues (e.g. circuses, fur, animal testing, slaughter, tail docking)
• Appropriate that Ministers remain directly accountable to
Parliament and electorate
• Doesn’t prevent essential connections between animal health
and animal welfare being maintained under new arrangements
• Defra policy already split this way, but all areas are involved in
the case of an outbreak (trade, commodities, welfare etc)

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Independent Board 6

• Chief Exec reports to appointed Board of between 8 – 10 part time

independent individuals including chair and deputy chair
• Board would have an understanding of industry, financial and corporate
governance, public sector management, public health, and wider issues
• Recruitment would follow Nolan principles, could be a role for industry
bodies in recruiting and selecting individuals of a suitable calibre with
relevant skills
• Access to scientific and expert advice – using formal livestock sector
groups and scientific advisory councils?
• Body can change funded activities, co-funding rates, and maximum
contribution rates (via consultation and secondary legislation)

Principles for Operation of New Body 7

• Informed by best evidence, subject to external

scrutiny and challenge;
• Open, transparent, independent decision making;
• Decisions & Actions clear, consistent, proportionate
to risk, cost/benefits and better regulation;
• Pursue best practice for vfm, effective, efficient;
• Full account taken of UK obligations under
domestic, EU and international law/treaties;
• Accountable to Parliament through Ministers; also
to livestock sectors, other stakeholders and wider
public.

4
Delivery Landscape 8

• Agencies would retain their existing status

• Other delivery relationships would transfer from Defra to
new body (e.g. Local authorities, UK Border Agency)
• New Body (and its agencies) could continue to offer costed
services to Devolved Administrations
• Preferred location – London (staff retention and affordability
issues)
• B
Body
d staffed
t ff d by
b core DDefra
f staff
t ff dealing
d li with
ith animal
i lh health
lth
policy – currently about 240 staff – who would continue as
now, reporting to Chief Exec and Independent Board

Financial Framework for new body 9

Funding sources
• Public funding
g – budget
g transferred from Defra
• Fees and charges for individual services
• New revenue streams from livestock keepers
• 50% co-funding rate for preparedness and surveillance
• Compulsory insurance contributes 50% towards exotic
di
disease outbreak
tb k costs
t

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Registration 10

• Keepers of farm livestock (including horses?)

required
q to register;
g ;
• Keepers provide annual self-declaration of
maximum livestock numbers kept previous year
and estimate for coming year;
• Annual fee calculated on maximum numbers kept
or p
o places
aces aavailable
a ab e for
o d
different
e e livestock;
es oc ;
• Seeks to strike balance simplicity/low cost and
fairness;
• Payment threshold? Discounts for lower risk status?

Calculation of Levy 11

Costs to be shared – cross-cutting, not disease specific

• Surveillance
• Movement recording and control
• Contingency planning
• Laboratory infrastructure and research
Allocation to sectors
• Gross output of sector – reflecting scale of benefits to each
sector from disease control – any alternatives?
Viability/affordability considerations
• Impact on average costs of sector?
• Impact on average farm business incomes?

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 Levy Calculation

Preparedness & Surveillance Expenditure =

£44m
Source – Defra
Business
Source Plan
– Defra
50% Industry Share = £22m 2007
Source –
Business Defra
Plan
Business Plan
2007
2007
Split by Main Sectors (4/5 Farmed Species)

Using Gross Output (Sector) to calculate

Share
Source – Defra
Statistics
Source 2007
– Defra
Source –
Statistics Defra
2007
Statistics 2007
Number of animal places Source – June
Agricultural
Source – June
Census
Source2007
– June
Agricultural
Agricultural
Census 2007
Rate per animal place Census 2007

Levy Payments – max animals on holding 12

Species Rate / place Farm Example

Dairy £4.80 180 dairy cows, 85 female* calves (including

25% followers),
followers) 85 male calves
calves* - £1,375
£1 375 / year
(*depending on use of calves, and whether all retained
on farm)

Beef £1.20 120 lowland beef - £144 / year

Combined Cattle £2.50

Sheep £0.09 500 breeding ewes, 16 tups, 550 lambs - £96 /
year
Pigs
g £0.82 325 sows (+ 35 gilts), finishing 7150 pigs (in
2,400 finishing places) - £2,263 / year

Poultry £0.04 300K layers, 1 flock / year - £12,000

120K broiler unit, 7 flocks / year producing
840K meat birds - £4,800

Horses £10.50

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Compulsory Insurance 13

• Current proposals are for compulsory insurance for a

proportion of exotic disease outbreak costs
• Insurers are discussing this with Defra
• If viable, would be subject to a further short consultation this
autumn
• If not viable,, we would look to extend levyy to cover outbreak
costs – collected in advance of an outbreak (prospective
levy) or following an outbreak (retrospective levy). Both
models have benefits and drawbacks.

Timetable for Consultation and Legislation 14

• 30th March 2009: Third consultation launched

• 30th June 2009: Consultation closes
• Late Summer 2009: Ministerial decision /
announcement
• Before June 2010 – General Election: Publish Draft Bill
(scrutiny from both houses)
• Sept/Nov 2010: Introduce Bill (1st Session)
• Nov 2011: Royal Assent
• April 2012: Earliest proposals could come into effect

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Devolved Administrations 15

• Animal health policy is already devolved

• Currently Defra pays for exotic disease outbreaks across
GB and certain costs in relation to endemic diseases –
e.g. BSE
• Working on devolving Defra’s GB wide animal health
budgets (including contingent liability for exotic disease
outbreaks) - giving full financial and political responsibility.
• Continue to work closely with the DAs to develop a
compatible approach to RCS.
• Commission’s harmonisation proposals expected in 2011

Regional Workshops 16

Location Venue Date

Okehampton Lewtrenchard Manor, Devon, EX20 4PN Thursday 14th May
Sh t Mallet
Shepton M ll t Ch lt H
Charlton House, S
Somerset,
t BA4 4PR F id 15th May
Friday M
Ashford Boys Hall, Kent, TN24 0LA Tuesday 19th May
Oxford Old Bank Hotel, Oxford , OX1 4BJ Wednesday 20th May
Chelmsford Writtle College, Essex, CM1 3RR Thursday 21st May
York Livestock Market, York, YO19 5GF Thursday 28th May
Newark Newark Showground, Notts., NG24 2NY Friday 29th May
Swaffham Ecotech Centre, Norfolk, PE37 7HT Monday 1st June
Skipton Rendezvous Hotel, North Yorks, BD23 2TA Wednesday 3rd June
Carlisle Shepherds Inn, Carlisle, CA1 2RR Thursday 4th June
Newcastle Newcastle Falcons Rugby Club, NE13 8AF Friday 5th June
Market Drayton The Four Alls Country Inn, TF9 2AG Monday 8th June
Stourport Stourport Manor Hotel, Stourport on Severn, Tuesday 9th June
DY13 9LT

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Contact: 17

RCSharing@defra.gsi.gov.uk

020 7238 4953

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