Witnesses:
Mr P Small )
Prof F Gordon ) Department of Agriculture
and Rural Development
Mr G Lavery )
Dr B McCracken )
Dr A McCormick ) Department of Finance and Personnel
Mr J Dowdall ) Northern Ireland Audit Office

1.

Mr Beggs: I declare an interest in that I assist on my parent's farm and therefore have an interest in the farming community.

2.

Mr Carrick: I also declare an interest in that immediately prior to the outbreak of brucellosis my son was studying at the Agricultural Research Institute of Northern Ireland (ARINI) at Hillsborough and he worked with dairy cows.

3.

Mr Small: I would like to introduce my team: Mr Lavery is the director of finance; Mr McCracken is the Chief Veterinary Officer; and Prof Gordon is director of ARINI.

4.

The Chairperson: Gentlemen, you are welcome.

5.

We are to deal with the Comptroller and Auditor General's Northern Ireland Audit Office (NIAO) report, 'Brucellosis Outbreak at the Agricultural Research Institute'.

6.

The recent outbreak of foot-and-mouth disease has reminded us of the many animal health problems that local agriculture faces. The Committee appreciates those difficulties. We recognise that there is no absolute guarantee that diseases such as brucellosis will not affect a herd. However, in this case, we wish to ascertain whether ARINI's disease control procedures were as comprehensive as they should have been. Moreover, the Committee wishes to ascertain what lessons can be learned from this unhappy experience.

7.

The problem arose when ARINI purchased eight Meuse Rhine Issel (MRI) cattle from a farm in Armagh. Paragraph 2.6 states:

"Further, there was no other farm locally which had the required number of cattle and was prepared to sell them."

8.

Why were the cattle not purchased from outside Northern Ireland where the brucellosis threat is minimal? Paragraph 4.1 states that, when the herd was restocked, the majority of the animals came from abroad.

9.

Mr Small: The original decision to bring the eight animals into the herd adhered to the institute's policy to source animals locally, wherever that is possible. The local industry would wish to see that, but it is also important for more substantive reasons. To bring animals in from outside always carries a risk of introducing some sort of disease into Northern Ireland. That decision was made before brucellosis was discovered at the institute. Animals from outside must also acclimatise to Northern Ireland, which creates delay and risk.

10.

Perhaps most significantly, the results of the research exercise will be of maximum credibility, on account of the way in which they can be translated into action - if animals sourced in Northern Ireland are being used. A combination of those factors means that the institute prefers to source animals locally.

11.

The Chairperson: I have a question that concerns part 4 of the report. I do not need to remind you that the Committee has highlighted its concerns about economic appraisal in your Department several times. However, paragraph 4.5 tells us that the institute failed to carry out an economic appraisal in advance of its decision to restock the herd. Do you agree that that was unsatisfactory? Why were the rules on economic appraisal ignored? Was there a conscious decision not to carry out the appraisal, or was the institute merely ignorant of the rules?

12.

Mr Small: The answer to the first part of your question is straightforward: an economic appraisal should have been undertaken. However, the institute was not ignorant of the rules. In the circumstances, the institute's decision was wrong, but it was understandable.

13.

The Committee must remember that the institute works on the basis of a three-year strategy and an annual business plan. The strategy and plan, which included dairy research, had been confirmed by the trustees only three months before the outbreak. As a result of the brucellosis outbreak, the institute had to sell the herd to the Department - that, essentially, is what compensation consists of. The sale of the herd had been considered, and rejected, as part of the review of the strategy, and the trustees had confirmed the need to remain in dairy research. I understand why the trustees felt that the process, which they had gone through at length, led directly to the need to restock. To reiterate, a proportionate economic appraisal should have been undertaken.

14.

The Chairperson: Senior departmental officials are among the institute's trustees. Why were they taking decisions without the proper information?

15.

Mr Small: They would have been fully aware of the rules on economic appraisal. However, according to those rules and the "green book", there must be a proportionate appraisal. I understand why, given the process that had been undertaken three months earlier, some trustees might have regarded their actions as being sufficient.

16.

When we carried out the economic appraisal it was self-evident that the right decision had been made. That highlights the reason for the trustees' decision. The absence of an economic appraisal was not as a result of carelessness or a disregard for the rules. The context in which the decision was made makes it more understandable, and the subsequent appraisal proved that it was a good decision.

17.

The Chairperson: It was a good decision?

18.

Mr Small: Yes, absolutely. Given that the appraisal demonstrated such a good return in respect of value for money, it is clear that the right decision was made.

19.

The Chairperson: The figures in paragraph 5.25 show that the annual cost of compensation related to brucellosis has risen from £200,000 in 1996-97, to £9.3 million last year. Does not that huge increase in compensation levels illustrate a worrying failure to get to grips with the brucellosis threat? More than £22 million of compensation has been paid out to date, and that figure is rising. Have you lost control of the situation? What are you doing to keep it under control?

20.

Mr Small: The development is very worrying. Brucellosis, which had been more or less eradicated in Northern Ireland by the mid-1990s, is undoubtedly on the rise again. We have strategies to deal with outbreaks and to warn people of the danger. However, it is terribly difficult to eradicate animal disease, as the past six months have shown. We are doing all that we can to effect eradication. We share your concerns.

21.

The level of compensation is a result of the disease. Farmers receive legitimate compensation.

22.

The Chairperson: I do not suggest otherwise.

23.

Mr Small: Much public money is being spent on eradication, and we are in the middle of a major policy review of the matter.

24.

Mr Dallat: I am sure that you agree that human resources are the institute's most valued asset. It appears that there was another virus there apart from brucellosis. According to the Equality Commission's monitoring returns, the institute has 91 staff, yet no Catholics are recorded because they number fewer than 10. Perhaps you could tell the Committee what you are doing about that.

25.

Mr Small: I confess to being thrown by that question, as that matter was not raised in the NIAO report.

26.

Mr Dallat: I am sure that you agree that human beings are more important than animals.

27.

Mr Small: I agree wholeheartedly. The Department is well balanced and has a clear equal opportunities policy. You have picked a stark example.

28.

Mr Dallat: I quote from the Equality Commission's monitoring returns. I am sure that you accept that.

29.

Mr Small: I do not disagree for one moment. However, other branches of the Department would reveal a different picture. The make-up of the senior team in the Department is reasonably well balanced.

30.

The Chairperson: Perhaps you could send Mr Dallat a written answer.

31.

Mr Small: Yes, of course.

32.

Mr Dallat: I merely made the point that an institute based on the solid foundation of justice and equality is less likely to make blunders.

33.

Mr Small: I cannot accept the implications of that remark.

34.

The Chairperson: Mr Small has assured the Committee that he will send a written reply.

35.

Mr Dallat: According to paragraph 2.21, an aborted animal in the vendor's herd showed a positive reading to a test for brucellosis on 5 February 1999. However, paragraph 2.24 states that it was not until 22 February that the Veterinary Service advised the institute of the breakdown in the vendor herd. Why was there such a long delay in notifying the institute? Why was the restriction notice for the vendor's herd not issued until 10 February when the herd had tested positive on 5 February?

36.

Mr Small: I shall explain the process. It does take a long time, but with good reason. Infection in that herd was first suspected on 5 February 1999 as a result of a positive blood test. The animal was resampled, as was another animal that had aborted on 4 February. They were regarded as reactors on 10 February. The Department first acted on 5 February when it served a prohibition on the movement of animals order. A further order was issued on 10 February when the case was confirmed; that order identified the entire herd as a breakdown herd. A complete herd test had to be undertaken - one or two animals suffering from the disease does not necessarily mean that there is a breakdown in the whole herd. The full herd test was carried out on 12 February, and the results of that test became available on 19 February.

37.

At that point, the Department could establish from which other herds animals had entered the infected herd, and into which other herds animals had moved from it. A complex computer run, which was carried out on the night of the 19 February, was used to establish that. It is not simply a case of putting figures and information into a computer to get a printout that gives you the answers. The findings must be analysed, and only then could we identify ARINI as a recipient. The institute was informed on the working day after the computer run. I understand why it looks like that took a long time, but it could not have been done any quicker.

38.

Mr Dallat: I accept that you obtain findings from whatever information you put into a computer. I could almost buy what you have said were it not for paragraph 2.29. That states:

"The herd records indicated that a number of abortions had occurred in the vendor's herd"

before the cattle's sale to the institute. Why did the institute not discover that when it checked the herd's health status before the purchase of the infected cattle? Did the institute ask the vendor whether his herd had suffered any abortions? The answer must be "yes" or "no".

39.

Prof Gordon: The answer is "no". We did not ask the vendor because we do not consider the institute to have the expertise to discuss such issues as abortions with farmers. Abortions are reported through the Department of Agriculture and Rural Development.

40.

Mr Dallat: That is absolutely astonishing. Given that the institute was assessing the risk of diseases such as brucellosis, was it not remiss not to have asked about abortions, or, as you say, to have the expertise to make a valued judgement? I hope that you realise how much public money the matter has cost; it has run into millions. You did not have the expertise to make a decision that affected the future survival of the institute's herd, which had been built up over many years at enormous cost - £1.55 million in research costs alone.

41.

Mr Small: The institute rightly asked whether the herd was restricted. If the answer had been "yes", I assume that the institute would not have purchased from it. As I understand it, the institute asked that question and got a negative answer. Therefore, the institute's decision to continue makes sense. It comes back to the question of why the herd had not been restricted. You have drawn attention to the fact that the herd book referred to two earlier abortions. I shall ask the Chief Veterinary Officer to comment shortly, but we understand - since the report was agreed - that the herd book did not refer to those two abortions. The abortions were recorded or talked about in the margins, but the herd book, which is a legally binding document, did not refer to them.

42.

The Department would have tested immediately had it been told of those earlier abortions. Regardless of whatever disease had caused the abortion - brucellosis or any other - a movement restriction would have been placed on the herd.

43.

In those circumstances ARINI would have received a different answer to its question and would have bought elsewhere. Because we did not know about the abortions, no restriction was placed on the herd. Much depends on what was reported to us and how reliable the herd book was. I shall ask the Chief Veterinary Officer to comment, for what was or was not recorded in the herd book is a key point.

44.

Mr Dallat: Before the Chief Veterinary Officer answers, I remind the Committee that 794 cattle were slaughtered at a cost of £1.3 million to the taxpayer. We hear that there were notes in the margin of the herd book; it sounds like the Book of Kells.

45.

Mr Small: There was nothing in the herd book.

46.

Dr McCracken: We have had the opportunity to examine herd books, which farmers are legally required to keep. Those herd books show no evidence - either as main entries or marginally - that there were any abortions. There is circumstantial evidence - I assume that that is what the report is referring to - that the farmer may have had a notebook of his own with other facts recorded in it that was not made available to us. One of our officers has assumed that there may have been two abortions before that reported on 24 January. However, I repeat that the herd books have been examined in detail, and there is in them no recorded evidence of any abortions.

47.

Mr Dallat: How did the public auditor, who is not involved in agriculture, discover information that you could not?

48.

Dr McCracken: Perhaps I did not make myself clear. The issue is not what the herd records indicated: records kept by the farmer in his notebook - not the official herd book - may have contained information about two abortions that happened before the one that was reported on 24 January. I assume that that is what is in the report. Inspection of the herd books produced no evidence.

49.

I appreciate that the farmer in question, like many others, may have had alternative means of recording information. It may be that the farmer had recorded some information in an unofficial document.

50.

Mr Close: You can ask him whether he did that. I hear the qualified language and note the distinction that is being drawn between the herd book and some other slip of paper, but the fundamental question is whether the other book did - or did not - refer to abortions.

51.

Dr McCracken: We do not know. We did not have any other book retained by the farmer, nor have we the authority to take it.

52.

Mr Dowdall: It is slightly puzzling. At paragraph 2.28 of our report, which is on page 32, we quote from a minute from the Department's veterinary officer, which says:

"The initial reported abortion in this herd was recorded on 24.01.99. The [Br2] was issued on 05.02.99".

53.

That is the basis on which the report deals with abortions.

54.

Mr Small: The next sentence refers to the earlier abortions, which is the point under discussion. It says:

"We are aware that a number of abortions occurred during the latter part of 1998 and were not reported."

55.

The member of staff concerned will have heard something. Regardless of whether we like it, a great deal of information is reported anecdotally. The Chief Veterinary Officer is making the point that the herd book, which is the only legally binding document, did not refer to the abortions. That raises several issues, but they are not fundamentally relevant to the point that we are discussing.

56.

The Chairperson: You agreed the Comptroller and Auditor General's report.

57.

Mr Small: That is why I said that, when we agreed with his report, we had taken the information available at face value. We did not pick up the additional information that was not in the herd book at the time. The Comptroller and Auditor General is reporting what we agreed. I accept that point completely.

58.

The Chairperson: That is the point that I want to establish.

59.

Mr Small: It seemed wrong to let that sit, if we subsequently receive information that suggests a slightly different explanation. The Committee is entitled to an agreed report, but I am sure that, if we find out something that changes a fact given in the report, the Committee would prefer to know.

60.

Mr Dallat: The purpose behind such exercises is to ensure that justice is not only done but seen to be done and that such faux pas do not recur. Seven hundred and ninety-four cattle were slaughtered at a cost of £1·3 million; the research department's work was set back for light years. There is no reference to any future measures to ensure that herd books contain records of abortions. Was the farmer prosecuted? He behaved recklessly by not disclosing that there had been abortions on his farm. The public are taking an interest and must be reassured that such a thing could never happen again. I have heard nothing but excuses this morning and nothing to restore confidence in the ability of the institute not to repeat such mistakes.

61.

Mr Small: The report records a range of things that have been done. The institute now has a policy, which was adopted before the Northern Ireland Audit Office examined the issue, of not allowing in any non-pregnant cattle that have not tested negatively for brucellosis in the previous 30 days. The institute is working on the establishment of an isolation unit, and, in future, any pregnant cattle brought in will go into that. So, the institute has taken action to ensure that there is no repeat - as far as that is ever possible.

62.

The Department constantly preaches to farmers on the importance of keeping proper herd books. Several prosecutions of farmers who have not kept proper herd books are under way, although a successful prosecution requires an incredibly high standard of evidence. The Veterinary Service is focused on getting herd books properly completed and kept up to date. That is the law, but it is also important if we are not to diminish our chances of being allowed to export beef again. The European Commission insists on high-quality record keeping, and we have a programme in place to achieve that. Ultimately, however, it comes down to the individual farmer.

63.

Mr Dallat: Mr Chairman, we are now discussing the general practice of keeping herd books. We are here this morning to focus on a particular case.

64.

Mr Small: You raised the question of herd books.

65.

Mr Dallat: I raised the question of the herd book kept by the farmer in question. What has happened in that case? Has he been prosecuted?

66.

Mr Small: There is no evidence whatsoever - I use the word "evidence" in its correct sense - that the farmer failed to keep a proper herd book. In our view, the farmer did not behave unreasonably in assuming that the earlier abortions were not brucellosis-related. The farmer brought the Department in as soon as he thought that his herd might have brucellosis. When we confirmed brucellosis, he instantly telephoned the Agricultural Research Institute of Northern Ireland. Considering the case in the round, we believe that the farmer did not behave in a way that would merit prosecution. Given the facts, I doubt whether any prosecution would be successful.

67.

Mr Dallat: That is all very comforting, but the institute's entire herd was wiped out.

68.

Mr Carrick: You referred to the Department's strategies to eradicate animal disease. Is the present testing system the only strategy for eradicating brucellosis?

69.

Mr Small: There are several strategies, one of which is testing. When there is an outbreak, we focus our attention on the contiguous farms, which are most at risk. The lateral spread of brucellosis is much more common than spread through movement of animals. As a precaution, we also identify an outer ring. That is one of the most effective ways of raising awareness. Our vets also provide advice at events that farmers attend. Our main strategies are testing and, if necessary, slaughter.

70.

Mr Carrick: I would be interested to know whether there had been any evaluation of the cost- effectiveness of that scheme.

71.

Paragraph 5.11 states that, in the three years after August 1996, when the current brucellosis epidemic started - the disease has been around for 40 years - the Department of Agriculture and Rural Development did not issue any general press releases on the disease: I find that amazing. Despite the historical evidence of the impact of brucellosis, its rapid growth and the spiralling costs associated with it, the Department failed to publicise it. Would not greater publicity have contributed to tackling the threat?

72.

Mr Small: We ought to have done more. It is difficult to say whether that would have changed the trend. Figure 7 on page 58 of the Comptroller & Auditor General's report shows the trend clearly. With hindsight, I must say that we were slower to react than we should have been.

73.

Mr Carrick: Paragraph 5.14 states that the Department set up a working group in September 1998 to examine ways of getting the message on disease control across to the farming public. I assume that that was what you meant when you referred to a major policy review?

74.

Mr Small: No, there is a separate policy review.

75.

Mr Carrick: The report states that it took that working group two years to report and that 12 months later the Veterinary Service was still studying the findings. Is the Department serious about tackling brucellosis? Why did it take the working group two years to produce a report? Why were the recommendations still being studied a year later? Brucellosis costs the taxpayer millions of pounds every year. Should not that exercise have been completed urgently?

Top

76.

Mr Small: I cannot disagree. Today, we are concentrating on one issue, but we also had to deal with several other issues while it was happening. The Veterinary Service has this year been heavily engaged with other matters. Of course, that explanation is unsatisfactory. There are genuine resource problems, but the report should have been produced in less than two years. Allowing for other pressures, the Veterinary Service should have taken decisions by now; I cannot justify the fact that it has not.

77.

Mr Carrick: When will the Veterinary Service report its findings?

78.

Dr McCracken: I cannot give you an exact date, but, as a consequence of the report, the matter will, no doubt, be treated with considerable urgency. That should be in weeks rather than in months.

79.

Mr Carrick: I suspect that Mr Small will follow developments closely.

80.

Mr Small: I suspect that I will.

81.

Mr Carrick: Could you comment on the cost-effectiveness of the present testing scheme? Have you considered alternatives?

82.

Mr Small: Our whole policy is being reviewed. The issues covered by the review will include eradication methods and payment of compensation. In an ideal world, the review would have been completed by now, but it was put on hold because of the foot-and-mouth disease crisis. It seems that nothing was done on it for four or five months. It is now back in action, and we have a target date of March 2002 for completion. It will be a significant piece of work and will raise some difficult policy and practical decisions.

83.

Mr Carrick: I want to return to the matter of abortions. Paragraph 5.22 states that, for at least 10 years, no legal action has been taken against farmers or private vets for failure to report abortions. Paragraphs 5.19 and 5.20, however, state that the non-reporting of abortions has been a problem for a long time. Why has there been no effort to prosecute offenders? Does not the Department's obvious reluctance to prosecute send the wrong message to offenders? A more proactive approach to enforcement would have a valuable deterrent effect.

84.

Mr Small: Only a successful prosecution has a valuable deterrent effect. A prosecution that gets thrown out has the opposite effect. I cannot overstate the standard of proof that is required for a successful prosecution. We are pursuing a significant number of prosecutions in all areas of the Department's business. In the greater scheme of things, the failure of a farmer to report an abortion is a relatively minor offence. Our primary focus is on preventing fraud and breaches of animal health rules. We have limited resources, so we rely on our education programmes to persuade farmers of the sense of reporting abortions. With the resources that are available to us, I am not sure that it would be fruitful to seek prosecution unless we were satisfied that the offence involved a flagrant or repeated breach of the rules.

85.

Mr Carrick: Is there no enforcement policy? Failure to report may be a minor offence, but it has major implications for the taxpayer. Given the financial consequences, you should reconsider your definition of a minor offence. You must get the message across to farmers who fail to report abortions. The quality of the evidence has not been tested in the past 10 years.

86.

Mr Small: That is a fair point. However, given the demand on our resources, we could pursue such cases proactively only by taking our foot off the pedal elsewhere. It is a zero-sum game; we have limited resources. Perhaps, the report will force us to reconsider the balance. However, the Committee should be in no doubt that we have limited resources and that that means making choices.

87.

Mr Close: When in doubt, blame resources. Breaches of the rules are often blamed on resources. Rules can be discarded or set aside for reasons that are not necessarily the best. It is difficult to get the poor farmer to abide by the rules when the Department itself is breaching them. A large part of the problem is that the Department is seen as a soft touch.

88.

Paragraph 5.35 states that

"there are several cases currently under investigation where it is suspected that brucellosis may have been deliberately introduced into the herd in order to obtain a buyout by the Department."

That suggests that the level of compensation is too high - higher than the market value - which will only encourage that type of fraud.

89.

Mr Small: The question of valuation is difficult. Farmers are entitled to fair compensation. The current system is based on a departmental valuation. The farmer has a right to appeal, and he can choose to have a valuation made by another person on our list. That has always been a reasonable and fair method. On a few recent occasions, we found that the valuation given on appeal was unacceptable to us, so we started to use valuers from outside Northern Ireland. On a couple of occasions, the external valuers made valuations that were much closer to our estimates than those made by the local valuers.

90.

There are also questions about what is a fair and correct rate of compensation. Should it be full market value; should it be 75%; or should it be a lower figure? All those matters are part of the policy review and evaluation, because they are difficult issues for the farming community. If we were to introduce a policy of providing levels of compensation in Northern Ireland that were lower than those in the rest of the United Kingdom, that would create other issues. We will have to address those matters in the policy review.

91.

Mr Close: When did you start using outside valuers?

92.

Mr Small: We have been doing it for a long time. The Department carries out the initial valuation; outside valuers are brought in only if the original valuation is appealed. We have used valuers from outside Northern Ireland for the past six months.

93.

Mr Close: That threw me a bit. I understood that there was a list of 12 valuers in Northern Ireland who could be used.

94.

Mr Small: They are the independent valuers whom a farmer can choose.

95.

Mr Close: Northern Ireland is a small place. Farmers probably know those individuals. Given that there can be a difference between the Department's valuation and that done by an independent valuer, it seems preferable that outside valuers should be used. The Department has, in fact, already started to do so, so it must be commended for pre-empting a recommendation that it do so.

96.

What about cases in which there is a suggestion of deliberate infection? Have there been any prosecutions?

97.

Mr Small: We regard deliberate infection as a major offence. Not only is it contrary to animal health rules, it is fraud. One case is referred to in paragraph 5.40 of the report. That matter was passed to the RUC, and enquiries are ongoing. In that case, we have not paid out the compensation. We are to be sued by that individual for compensation, while the RUC is considering whether criminal charges are appropriate. I am not sure that there is a lot to be gained by saying any more on that matter. If the individual proceeds with his civil case against the Department, it will be a unique situation. In another similar case, we were confident of a successful prosecution, but the key witness decided against giving evidence or, indeed, returning to Northern Ireland. It looks as if that case has collapsed.

98.

Mr Close: Is that the case that was highlighted in 'The Sunday Times'?

99.

Mr Small: Yes.

100.

The Chairperson: In a radio broadcast earlier this year, a vet claimed that no farmer would deliberately infect a herd. In a radio broadcast in which I took part this morning, a farmer's representative suggested the same.

101.

Mr Small: I would love to say that that was my view as well, but all that I can do is consider the evidence, which suggests that it does happen. It is a recent development. Bad people will always find new ways in which to commit fraud. We must be aware of that and keep ahead of them. That is one of the reasons why the question of compensation is now part of the policy review and why we have started to bring in people from outside. As Mr Close said, the farmers know the auctioneers from Northern Ireland, and they may well do other business. We have no reason to believe that valuers are involved in anything untoward, but the trends are a concern to us. I want to agree with the farmer's representative, but the evidence does not let me.

102.

Mr Close: Paragraph 5.40 states that the independent valuers increased the valuation from £375,000 - the Department's valuation - to almost £1·4 million: that is staggering. It suggests that something is wrong. Is that independent valuer still on the list?

103.

Mr Small: Yes, but we use the list in a different way.

104.

Mr Close: However, he remains on the list?

105.

Mr Small: Valuation is not a science. When you look at the Department's compensation figure, and look at what the independent valuer produced, there is a question mark over his evaluation.

106.

Mr Close: If I was going to buy something and had placed a value on it, and someone quoted me four times that value, I would say that he was mad. I would not retain that person on a list. Did someone get it wrong by a factor of four?

107.

Mr Small: I am trying to avoid giving you a direct answer -

108.

Mr Close: Please do.

109.

Mr Small: - because of how my response will be viewed outside. He remains on the list, but we choose three people from it. We offer the farmer a choice from those three. This individual has not been included in the list of three that we have provided to farmers.

110.

Mr Close: So he is not being used.

111.

How many cases of deliberate infection are there?

112.

Mr Small: We are working on five cases at the moment.

113.

Mr Close: Is that the total number of cases?

114.

Mr Small: No. If we suspect five cases, and are working on five cases, there is a risk that there are others. That is a very serious offence. However, it is disappointing that in the two cases to which we referred, the prosecution has collapsed in one and that individual has received his money, and in the other case we are going to be sued for the money.

115.

Mr Close: Do you agree that the amount of compensation that has been paid out from taxpayers' money is not a coincidence? Do you agree that there is evidence of deliberate infection, and that that is something that the Department must get to grips with and deal with more vigorously?

116.

Mr Small: I completely agree.

117.

Mr Close: A letter dated 11 May 2001 in appendix 4 of the report says:

"The Department continues to increase its efforts and intends to strengthen the Veterinary Service investigation and enforcement team."

118.

Why has it taken so long to increase the Veterinary Service investigation team? Brucellosis has been on the increase for more than four years. I would have thought that a Department that was on the ball and that was concerned about levels of compensation would have noticed straightaway that the disease must be dealt with and eradicated. The compensation already stands at more than £7 million. That is taxpayers' money.

119.

Mr Small: Concerns about fraud do not date back to the table that shows the incidence of brucellosis from 1996 onwards. Those concerns have been more recent. In fact, we have strengthened the Veterinary Service Investigation Unit.

120.

I raise a matter that was brought up at another fraud hearing. We have people whose primary job is not fraud prevention; that is only part of their job. We have more than 600 staff, and part of their job is to look out for instances of fraud, be it failure to keep proper herd records, tag-switching et cetera. That is why we had more than 30 successful convictions last year. The year before we had more than 50 successful convictions. Several hundred cases are currently under investigation.

121.

That is a significant drive. Nevertheless, I fully accept your point that you can never do enough on an anti-fraud drive because the guilty are always trying to get ahead of you. We must be alert to trends as they develop, so that we can get ahead on that front. We have applied significant resources to our anti-fraud strategy.

122.

Mr Close: Are you satisfied that your resources and the team that is working on the problem can end this total rip-off of the taxpayer?

123.

Mr Small: The problem's eradication is not only a matter for the investigation unit but for the policy unit. I attach much importance to the policy review, because the framework is as important as the way that fraud is pursued on the ground. I would not say that I am confident that fraud will be eradicated; that would be a reckless claim to make. However, we are determined to attack the problem as vigorously as possible in order to minimise it. Our objective is to eradicate fraud; we shall try, but delivery may be difficult.

124.

Ms Morrice: I wish to examine the food safety aspect, which is important. Paragraph 3.7 says that the salvage value for the carcasses of the herd came to £53,000. Do animal carcasses with a positive brucellosis test reading enter the food chain?

125.

Mr Small: Yes.

126.

Ms Morrice: Can you provide an assurance that there is absolutely no risk that the brucellosis organism could be passed on to human beings through the food chain?

127.

Mr Small: The Food Standards Agency (FSA), whose responsibility the matter is, is aware of the process and has no difficulty with it.

128.

Dr McCracken: No one can give an absolute assurance on any matter that relates to public health. We are on the same wavelength as the Committee. Mr Small is correct to say that it is a matter for the FSA. The FSA decides policy, and, to date, that policy has been that reactors to the brucella test are eligible to enter the food chain, subject to satisfactory ante- and post- mortem examinations. That applies here and - as far as I am aware - in all other European Union member states.

129.

Ms Morrice: You said that no absolute assurances could be given. Surely, if that is the case, it is better to prevent the material from entering the food chain.

130.

Dr McCracken: No absolute assurance can be given, either for a brucella reactor or for an apparently healthy animal that enters the abattoir. I am speaking as a vet. From all available information, the risk to public health exists is minimal. Therefore I can only assume that the FSA is content for such carcasses to enter the food chain. I have no reason to quarrel with that.

131.

Ms Morrice: I would like to hear Mr Small's opinion on the matter of safety without absolute assurances.

132.

Mr Small: My point was picked up by Dr McCracken before I had the chance to make it. The public will be rightly concerned about such an issue. We simply cannot give a guarantee, for there is no such thing as a guarantee in public health, which we have learnt from previous experience. There is a public policy on the issue, with which the Department complies. It would be up to the FSA, not the Department, to change that policy. That policy applies throughout the European Union.

133.

Ms Morrice: Can you not simply give the FSA advice or guidance?

134.

Mr Small: The FSA is not unaware of the issue. It has taken its own view, based on its own advice, and has reached the conclusion that that practice does not pose an unreasonable risk to human health.

135.

Ms Morrice: As long as the FSA is not passing the buck.

136.

Mr Small: I am very aware of the Phillips inquiry and the issue that you raised. However, it would be wrong for me to give you an impression that the Department has the authority to implement change. It could be said that change could be implemented for safety purposes, regardless of the rules. If the Department can get back taxpayers' money, it has a duty to get that money back where possible, so long as that complies with public health rules.

137.

Ms Morrice: You are talking about the £53,000?

138.

Mr Small: Yes, in this case. However, that can become a fairly significant amount across the board. If I, as accounting officer, decided on a whim that it would be safer not to sell slaughtered animals, that would be a hard decision to stand over when the FSA clearly states that it is an acceptable practice.

139.

Ms Morrice: That decision would not be made on a whim; it would be against the backdrop of all concerns about diseased animals in the food chain.

140.

Paragraph 3.18 states that it was only when the NIAO asked ARINI

"to estimate the value of the delay in the dairy research projects resulting from the outbreak"

that a figure was produced. Are details of the expected economic value for each of the research projects not prepared as a matter of course during the research approval process? Is that not done in advance?

141.

Prof Gordon: Economic appraisals on research projects are carried out on a five-year rolling basis on total research programmes that involve a number of projects, rather than on individually assessed projects.

142.

Ms Morrice: Although you must choose the research that has the most economic benefit, how can you make use of research resources in the absence of that information, or if you only receive that information every five years?

143.

Prof Gordon: The five-year basis decides the value and direction of an overall programme. For example, it decides whether dairy, beef and grassland research are not moving in the right direction. The individual projects within those are not appraised individually because it may not be easy to attach values to some projects in an economic appraisal, whereas it may be easy to do that with other projects.

144.

Ms Morrice: There is a lack of information, but how can you decide which research project will be the most economically valuable if you do not have the information or cannot analyse its value?

145.

Prof Gordon: There are many reasons for undertaking research: environmental issues, animal welfare issues or to ensure that there is an economic value to the industry. It is difficult to put values to some of those issues. Therefore, it is felt that it is best to value a package of programmes that move the industry forward in a certain direction because it is difficult to put a financial value on some areas.

146.

Ms Morrice: Paragraph 3.20 states that ARINI claimed that after the brucellosis outbreak, it was able to introduce a new research programme with a much higher economic value than the original programme. Does that not mean that the value of the original programme was not up to scratch?

147.

Mr Small: No, it says that time has moved on; new ideas have been introduced. In normal circumstances, once you start a research programme the logic is to see it through. In our circumstances, the dairy research programme was cut short by that external event. That enabled a new programme to be developed with new, up to date information. In a sense, it is a different programme. I take your point; it puts a question mark in your mind as to what we were doing originally.

148.

Ms Morrice: Exactly. Why did the institute have to wait until the herd was wiped out to come up with an even better, sparkling, shining new programme? Are you not attempting to put a positive spin on it, when in fact the new programme is not better? How can you evaluate that?

149.

Prof Gordon: It is important for the Committee to realise that an economic appraisal was carried out on the "old programme". That appraisal's findings were extremely positive. In its corporate planning process, the institute is always making changes, and it had a vision of where it wanted to go. Normally, to effect those changes - for example, in the genetics of the dairy herd - would have moved us slowly towards an upgrading of the programme. When the herd was wiped out, we had an opportunity to make the step up to the next level. We would have been getting there six months later. On average, we got there six months earlier than we would have achieved.

Top

150.

Ms Morrice: By saying that, you are stating that it is not the case that it did not do as much harm as implied because you got a good programme out of it. You would have got that programme in six months anyway.

151.

Prof Gordon: Yes.

152.

Mr Small: We have deliberately not made any play of the issue that we have a more valuable programme because it was not a policy decision that that happened; it was pure coincidence. The institute has maximised the result of a bad event. That is almost coincidental. The bad event occurred, and you would expect us to make the best of that, as the institute has done. That does not prove anything one way or the other. All it has done, as Prof Gordon has said, is to move this world forward six months. All that it demonstrates is that the new research programme is worth doing, in the same way that the old one proved to be worth doing. We just moved to the new, more valuable programme more quickly.

153.

Ms Morrice: What lessons have you learnt about the economic appraisals of individual projects and their returns? What have you learnt about the amount of investment that you put in at the beginning of a project, which is the case with this new research programme, and how you can reap better benefits from it? Have you learnt lessons from this episode?

154.

Mr Small: We are appraising the episode on a rolling programme basis. Do you suggest that we should consider cascading that programme at least one stage to undertake a further appraisal of the component parts?

155.

Ms Morrice: Yes. The point that you have made about benefits that can be measured economically, such as environmental benefits, has been taken on board, but every project must be evaluated. There are measurements now for environmental impact et cetera. Is it not valuable to have all those at your fingertips?

156.

Mr Small: I see what you are suggesting. I see value in that in certain circumstances. I am reluctant to simply say that you are right because there are some relatively small projects in the programme, some that total less that £10,000. I would be reluctant to give a commitment to an individual appraisal of everything. I fully accept the point that you are making. I would prefer to have an opportunity to reflect, because I do not want to give a commitment that we cannot deliver on or that would be wrong to give. I understand the principle that you pursue, but it may not make sense to do a full economic appraisal of certain components of the programme.

157.

Ms Morrice: However, you could do with other components?

158.

Mr Small: Yes.

159.

M Beggs: In the case of abortions in cattle, you said that it was not unreasonable for the farmer to have assumed that brucellosis was not the cause of the abortion and, therefore, not to have reported the abortion to the Department. I am shocked, because, by law, all abortions must be reported to the Department. You send out an ambiguous message to the farming community.

160.

Mr Small: I am certain that all our messages to the farming community emphasise that it is essential to report abortions to the Department in order to give us an opportunity to investigate and establish the cause.

161.

Mr Beggs: Why were you making excuses?

162.

Mr Small: I was not making excuses. I said that we did not prosecute the farmer because we had looked at all the circumstances that surrounded the brucellosis outbreak. The farmer was wrong not to have reported what had happened, because all abortions should be reported. However, I was not convinced that a prosecution would have stood, given the circumstances that the farmer faced.

163.

Mr Beggs: Perhaps it was because of the Department's failure to publicise the matter.

164.

Mr Small: That is a fair point. I have acknowledged that the Department's response was slower than it should have been. I suspect that, at that time, had we prosecuted the farmer, he might have defended himself by saying that he did not know that there was a brucellosis problem.

165.

Mr Beggs: Paragraph 2.29 of the report on the brucellosis outbreak tells us that, as a result of the vendor's failure to report abortions in the herd,

"the Divisional Veterinary Officer referred the matter to Headquarters for a written warning."

166.

However, no written warning was ever issued. Why was it not issued? Why did the Department not take that breach of the regulations seriously? Has the Department changed its procedure to ensure that all written warnings will be issued in such circumstances in the future?

167.

Mr Small: You have asked a range of questions. There is no regulation that states that a written warning will be issued in every circumstance. Each case must be dealt with on its merits.

168.

Mr Beggs: The law is clear that abortions must be reported. What happens if someone fails to do that?

169.

Dr McCracken: I accept what you are saying. However, at that time we had no objective proof that indicated that abortions had occurred in the herd prior to 24 January 1998. Had we had proof, we would have followed the standard procedure for abortion. Because we lacked objective proof, it was not appropriate for us to issue any formal warnings. We had no evidence to support our claims.

170.

Mr Beggs: Paragraph 2.31 states that the Department decided not to prosecute in that case. Surprisingly, given the impact of the case on the Department, there is no record of the decision or the basis on which it was made. Why was that important decision not recorded?

171.

Mr Small: I cannot give you a satisfactory answer to that. That was bad administration. It would be more satisfactory for you, and for me, if we were able to discuss the rationale underlying that decision.

172.

Mr Beggs: Who decided not to prosecute the farmer and not to record that decision?

173.

Mr Small: That would have been someone in the Veterinary Service.

174.

Mr Beggs: Can you tell us the level of responsibility of the associated officer?

175.

Dr McCracken: My understanding is that it was the responsibility of the senior principal veterinary officer in charge of brucellosis.

176.

Mr Beggs: Given that the overall cost to the Department amounted to £3 million, would you, Mr Small, have been consulted?

177.

Mr Small: If you delegate authority to individuals, you must let them exercise that authority. If we took a prosecution to a court of law and said that one of the reasons for prosecuting the individual was that he had cost the taxpayer money, the case would be laughed out of court. In a prosecution, the two things are not linked.

178.

The behaviour of the farmer had to be assessed, not the results of his actions. Therefore, your second point is irrelevant in considering whether a successful prosecution can be pursued. To establish whether the charge can be proven is more relevant. The Department of Agriculture and Rural Development is saying that there was no objective evidence. The discussion could almost be ended at that point, because if there is no evidence, on what basis can a case be brought.

179.

Mr Beggs: You said earlier that there was no evidence in the herd book. Paragraph 2.7 of the report seeks to reassure why the institute had confidence in that herd. We are told that institute employees made two visits to the vendor's farm. Paragraph 2.7 states:

"The purpose of these visits was to confirm that the farm operated sound management practices, that pedigree information was available on the animals, that the animals had appropriate type characteristics, were officially recorded for milk yield and composition, were healthy and would be suitable for the research programme."

180.

For many herds, detailed records are kept on cows' pregnancies, lactation periods and milk yields. I am sure - and correct me if I am wrong - that in a premier herd such as the vendor's information would have been available and should have formed part of the institute members' investigation. Those records would show that if abortions had occurred - by way of evidence that a second pregnancy had occurred within a short period - or if there was poor fertility among the herd.

181.

Prof Gordon: The records that the institute staff examined at the farm were official milk-recording records which provide information on official yields, mastitis and somatic cell counts. It would be impossible - or it would take a lot of work - to work out such details as calving dates. Abortions are not recorded in those records.

182.

Mr Beggs: Is fertility in cattle an important issue for ARINI?

183.

Prof Gordon: Yes, it is very important.

184.

Mr Beggs: Did you examine that in the vendor's herd?

185.

Prof Gordon: It was irrelevant whether the animals had a high or low level of fertility. We were interested in the genotypes. That breed of animal, which had special attributes, would contribute to the institute's research programme. The programme aimed to help the industry move forward in an area of major difficulty - the declining reproductive performance.

186.

Mr Beggs: Do you accept that if there was poor fertility the institute would not be assisting as well as it should be?

187.

Prof Gordon: The records available on the farm would not record fertility as I understand that term. For example, it would not record conception rate.

188.

Mr Beggs: I hope that you accept that that would be an important area to examine in the future.

189.

Paragraph 2.8 states that the institute assessed as low the risk of brucellosis on the vendor's farm because it was a closed herd and because the divisional Veterinary Service was willing to provide a movement permit. That is a low level of insurance that would apply to the majority of farms in Northern Ireland. Given the value of your herd and its importance to the Northern Ireland dairy community, other features, such as double fencing, should have been used to instil confidence. Was there double fencing on the vendor's farm?

190.

Prof Gordon: As far as I am aware, there was not double fencing. The institute takes the issue of management of risk to its resources very seriously, and that also applies to the disease situation. One must remember that the risk to the institute of contacting a disease such as brucellosis comes from lateral spread from neighbouring farms, which is by far the major risk, or by bringing in new cows. Evidence shows that 64% of infections come from lateral spread and only 8% come via the unfortunate route that we experienced.

191.

Mr Beggs: Paragraph 5.7 states:

"The Department said that there have been many problems encountered in the control and eradication of brucellosis in Northern Ireland, including the high level of cattle movement, both legal and illegal, across the border from the Republic of Ireland, where there is a greater incidence of brucellosis".

192.

Do you accept that there is a greater incidence of the disease in the Republic of Ireland? How far was the farm concerned from the nearest outbreak of brucellosis in Northern Ireland and the nearest outbreak in the Republic of Ireland? How far was it from the border?

193.

Mr Small: The farm was four miles from the closest outbreak in Northern Ireland. I do not know the distance from the farm to the border or to the nearest outbreak of brucellosis in the Republic of Ireland, but I will give you the relevant details in writing.

194.

Mr Beggs: Was the institute aware that there had been an outbreak four miles from the farm concerned?

195.

Mr Small: I do not see the relevance of the question.

196.

Mr Beggs: If I were purchasing cattle and knew that there was an outbreak four miles away, I would be nervous.

197.

Mr Small: Why would you be nervous?

198.

Mr Beggs: With the conacre system, there is always the risk that the disease will spread even further. Was the institute aware that there had been an outbreak of brucellosis four miles away?

199.

Prof Gordon: No, the institute was not aware. The institute asked the farmer whether there had been any outbreak in the local area, and he said there had not. I would define the local area as being the area within three miles or 5 kilometres. We were also aware that the herd was not restricted in any way, suggesting that the Department of Agriculture and Rural Development saw no risk at that farm.

200.

Mr Beggs: Should not the institute have sought its information directly from the Department of Agriculture and Rural Development, rather than by word of mouth? The report referred to a test that had been carried out 12 months previously, which turned out to have been 18 months previously. Why did the institute not obtain factual information from the Department?

201.

Mr Small: The Department of Agriculture and Rural Development would not pass that information on to the institute; it would be treated in the same way as any other farming buyer. There are data protection issues involved. If the institute had asked the Department whether there was any reason why it should not buy from that individual, the Veterinary Service would, on the information available at the time, have said that there was not. The Veterinary Service would not regard an outbreak four miles away as relevant; brucellosis is not an airborne disease. The fact that the Veterinary Service confirmed that there were no movement restrictions on the farm would also have been relevant.

202.

We should ask whether we ought to do more to disseminate information more widely. The report suggests the use of a bulletin board; that is an excellent idea, and we will pursue it. The onus is on us to establish what information we can legally and correctly make public, so that farmers who are buying have access to the information to which they are entitled.

203.

Mr O'Connor: Does the Chief Veterinary Officer accept that there was a failure on the vendor's part to report abortions?

204.

Dr McCracken: I can work only on objective evidence. We have anecdotal evidence that there was an abortion in November and another in December, and a member of our staff was quoted in the report making reference to those two animals. In the absence of objective information, I cannot say whether I accept that there was a failure to report abortions.

205.

Mr O'Connor: We were told that only a limited number of staff had had the appropriate enforcement training and that other cases had a higher priority. Apparently, the vendor of the cattle could not be interviewed under caution because staff were not available at the time. Could that not have been done later? He might have admitted it.

206.

Dr McCracken: That is possible. I am not trying to dodge the issue, but it is a fact of life that we have to set priorities for enforcement. A reasonable number of staff is involved. We have regarded other issues as being of higher significance than the possible failure to report an abortion.

207.

Mr O'Connor: You are trying to dismiss this as unimportant: all breakdowns are important. Why did you not ensure that you had enough people to interview in all cases, rather than having to prioritise? Mr Small says that he takes fraud very seriously, but you tell us that you have to prioritise workloads.

208.

Mr Small: It was not fraud.

209.

Mr O'Connor: It is untruth. We are investigating inappropriate behaviour.

210.

Mr Small: We do not have the resources to pursue every failure to comply precisely with the rules.

211.

Mr O'Connor: The Department pays out £9 million of taxpayers' money in compensation every year. The Department has a responsibility to them, but you are not prepared to investigate fraud or inappropriate behaviour.

212.

Mr Small: We do not believe that that individual could be successfully prosecuted. There is no objective evidence.

213.

Mr O'Connor: Who is he?

214.

Prof Gordon: His name is Armstrong; he is from Armagh.

215.

Mr O'Connor: Paragraph 2.45 of the auditor's report states that the movement and rotation of cattle at the institute was recognised as a possible route for disease entry and was always seen as a risk. On several occasions over the past 10 years, the institute considered the need for an isolation facility. It chose not to develop one. Why? When was that last considered? What was the justification for not developing it?

216.

Mr Small: There must be a judgement of risk. Having suffered the breakdown, the institute would now assess the risk differently. On the basis of the new evidence, the institute has concluded that an isolation facility is needed. Two or three years ago, the incidence of brucellosis was low, and there was no absolute trend. An isolation facility would have used up scarce resources, and the institute made a judgement that it could not justify putting the money into an isolation unit.

217.

Mr O'Connor: There was a steady rise in the number of compensation payments in 1997-98.

218.

Mr Small: The institute would not have had information about compensation payments or about the extent of the increase in the incidence of brucellosis. The Department should have moved more quickly to publicise the increasing incidence of brucellosis.

219.

Mr O'Connor: Is that situation ideal?

220.

Mr Small: No, it is not. It is important that we do not treat the institute preferentially, but it was entitled to better information about the developing trend in brucellosis.

221.

Mr O'Connor: Exports of Northern Ireland beef were stopped because of BSE and one thing and another. However, there was a traceability system that answered some public concerns. The development of an isolation unit could have been part of a bigger package to increase public confidence in Northern Ireland and elsewhere.

222.

Mr Small: The existence of an isolation unit at ARINI would not have had an impact on the drive to export beef again. The institute's decision was not linked to the Animal and Public Health Information System (APHIS) traceability system. The institute made a free-standing decision about the facilities that it would require to optimise animal safety, and the decision that it took was understandable. Following the outbreak, the institute had a different body of information to assess, and it made a different - and correct - decision.

223.

Mr O'Connor: Following the outbreak at the institute, an animal health working group was set up. That group was established to consider the lessons that could be learnt. Despite that, there was an outbreak of brucellosis at the Department's Greenmount College of Agriculture and Horticulture at the beginning of the year, in which 200 breeding animals were lost. What were the circumstances of the Greenmount outbreak, and why were no lessons learnt from the Hillsborough outbreak?

224.

Mr Small: I am not sure that the work of that group would have had any impact on the Greenmount outbreak. We are still unsure how the Greenmount breakdown occurred. It is important that we learn lessons from such an event, and all the recommendations of that working group have been implemented.

225.

Mr O'Connor: Are you confident that the lessons have been learnt and that the Public Accounts Committee will not have to discuss the matter again in a year or two?

226.

Mr Small: Yes. I hope that the lessons will be applied, which should ensure will that those circumstances are not repeated. We cannot guarantee, however, that brucellosis or some other disease will never get into the institute or somewhere else by some other route

227.

Mr O'Connor: In 1999, there were 50 successful prosecutions; last year, there were 30. Does that reduction mean that we are getting things right and the behaviour of farmers is improving? That does not seem to be the case.

228.

Mr Lavery: We have already told the Committee that we are developing an anti-fraud strategy, which will bring in categories of case closure. By examining those, we will be able to monitor the reasons behind the statistics on prosecutions. Currently, we have only the kind of ballpark information that does not let us examine the underlying reasons.

229.

Mr Small: I can understand the point. It looks as if the trend is going the wrong way.

230.

Mr O'Connor: You said that there were 12 independent valuers and that one had - unofficially - not been used. Does not that leave the individual concerned free to bring a case against the Department on inequality or unfairness grounds? Would it not be better simply to remove him from the list?

231.

Mr Small: The act of removing somebody from a list can, of itself, lead to a series of implications. As part of our policy review, we hoped to develop a brand new list. That is the right way of doing it, but we still have a duty to the taxpayer to minimise the risk of overvaluation.

232.

Mr McClelland: Some of the answers that I have heard cause me serious concern. I sat among many learned journals in the library at Newforge Lane, and I would be surprised to find that no veterinary text book suggests that, in the absence of an isolation unit, the only reasonable policy is to pre-test all the animals in a vendor's herd. Is the Chief Veterinary Officer not aware of that?

233.

Mr Small: The EU rules, under which we operate, state that pre-testing is not required until after a certain number of incidents. Mr McClelland has just given one opinion on pre-testing. For whatever reason, all the experts in Europe have taken a different view and decided that pre-testing is not necessary until a certain threshold is reached.

234.

Dr McCracken: There were isolation facilities at the institute to prevent other diseases from getting in. In those limited facilities, cows could not calve down. Brucella is unique in so far as the infection may not become apparent until the animal calves down or aborts. That is why the existing isolation facilities failed. I accept that pre-movement testing is an option and that entire herds could be tested. Even with that, we could not completely rule out brucellosis, but there would be a better chance of detecting the disease in some animals, especially if they are not pregnant.

235.

Testing is not yet required. The regulations on the requirement for pre-movement testing are soundly based. I have no doubt that if the situation gets worse, we will have a major issue on our hands. Pre-movement testing of all animals would be logical and sensible in those circumstances. Even following the outbreak, we did not move entirely to pre-movement testing, simply because it is not legally required. We do not have the resources to do it at present, but it is part of the review.

236.

Mr McClelland: Professor Gordon's response also troubled me. At an earlier hearing, Mr Small said that when the accounting officer gave evidence on the rural development programme last October, he said that project appraisal systems had become progressively more rigorous from 1995. Prof Gordon said that there was no requirement to carry out an investment appraisal for each project.

237.

Professor Gordon: I was not referring to a particular case but to general policy on research funded by the Department of Agriculture and Rural Development.

238.

Mr McClelland: There are well-established Department of Finance and Personnel rules about that. Do those rules not apply to the institute or the Department of Agriculture and Rural Development?

239.

Dr McCormick: The appraisal of options must be proportionate to the context and situation. That applies generally throughout the public sector, including non-departmental public bodies.

240.

Mr McClelland: I would like to have that clarified later. Prof Gordon said that it would be difficult - even impossible - to put financial values on some of the issues. However, page 54 of the report shows net present values. Are those figures rubbish? Have certain things, on which it was impossible to put a financial value, been omitted? We cannot have it both ways. You cannot say that it is impossible to carry out an investment appraisal because certain things cannot be given a financial value, while presenting us with the results of an appraisal and telling us that they are legitimate.

241.

Mr Small: Page 54 of the report refers to a specific option appraisal that demonstrated that restocking was the right option. Prof Gordon was talking not about a specific case, but about a long-term programme. I have acknowledged that there may be circumstances in which we should look beyond the appraisal of the overall programme and establish whether component parts ought to be appraised.

242.

We should not view an appraisal as a black and white issue - that is not the case. Dr McCormick rightly used the term "proportionate". It is important that proportionality be applied to appraisals. That is why I said that we would consider in detail what components of the programme, at specific project level, might lend themselves to sensible appraisal. I do not want to give a commitment to appraise everything. There may be circumstances in which an appraisal need be no more than a couple of sentences, leading to a self-evident outcome.

243.

Mr McClelland: Was that adequate for the decision to restock?

244.

Mr Small: No. I was certain that the decision to restock ought to have been the subject of a full economic appraisal. I could understand why the decision to restock was taken; it was evident that restocking was the answer. However, a proper economic appraisal should have been undertaken.

245.

Mr McClelland: To the layman, the information seems to be conflicting. Dr McCormick told us about the requirement for investment appraisal. You say that investment appraisal is not a black and white issue and that there are difficulties. I have with me a report on forestry in Northern Ireland in which there is cost-benefit analysis. It is confusing to hear Dr McCormick saying that investment appraisal is a well-established part of the Department of Finance and Personnel's rules. I seem to hear something different from the institute and the Department of Agriculture and Rural Development.

246.

Mr Small: Dr McCormick and I have said exactly the same thing.

247.

Dr McCormick: Yes.

248.

Mr McClelland: I may need to pick up on that later.

249.

The Chairperson: Did I detect, Dr McCracken, that you disagreed with the contents of paragraph 2.28 and 2.29 of the Audit Office report?

250.

Dr McCracken: No. What I said was that the official herd records, which we have a right to inspect and which we do inspect regularly for all herds in Northern Ireland, contain no evidence of abortions. However, anecdotal evidence suggests that the farmer may have had other private herd records that may have contained details of abortions. I am not questioning the report; I am merely stating that we have checked the official herd records, and we know that they do not contain details of abortions.

251.

The Chairperson: My understanding is that it is the abortions that cause the brucellosis. If there was brucellosis in the herd, there must have been abortions.

252.

Dr McCracken: Brucellosis probably arrived in that herd in December or January, although I cannot be certain about that. It could have arrived by many means. It causes infection in animals without any apparent signs until such times as one of the animals aborts or calves down while infected. At that stage, there is a dramatic spread of infection to all animals in contact with that animal.

253.

Virtually every farmer in Northern Ireland keeps records in a notebook or something similar. That information is for his personal use, and we have no legal right to it. There are legal requirements relating to the herd book and records of animal movements. I am referring to the official herd books.

254.

Mr Small: That is why this is an important point. This issue came up when we were trying to explain to the Committee why we had not pursued prosecution. We are trying to distinguish between the formal herd book, which is a document that a farmer is required to keep by law, from informal herd records. In this case, the herd records appear to have referred to two abortions. We have no right to those records. If we try to pursue this case, those records could disappear and there is nothing we could do. The only thing we have a right to do, and the only thing the farmer is required in law to keep, is the formal herd book.

255.

However, the Comptroller and Auditor General's report is correct when it states that one of our staff clearly saw informal herd records that referred to earlier abortions, and that is why the quotation from the internal memo makes the same reference. We do not disagree with the report.

256.

The Chairperson: Why did they not act on those records at the time?

257.

Mr Small: The member of staff put a memo into the system, and the senior officer who made the decision on whether to prosecute would have been aware of other circumstances. That senior officer would have been conscious of the fact that herd records can disappear. The formal herd book is the only legally binding document, and it showed no evidence of abortion.

258.

The Chairperson: That clarifies the situation. Do any other herds under the Department's control have brucellosis?

259.

Mr Small: The herd at Greenmount College of Agriculture had a brucellosis breakdown. We have completed a full and formal economic appraisal of restocking, which demonstrated that restocking was the right approach. The college is doing that.

260.

Mr Close: I accept that there is a difference between official records and informal herd records, but something seems to be missing from the Department's calculations. Cattle were introduced into a herd at the institute. Paragraph 2.40 of the report states that

"Certain sub-groups of cattle within the Institute herd had a quite unique genetic base."

261.

That was not just any old farm; that herd was unique. One of the sub-groups was built up over seven years. It took seven years hard, meticulous work on that group to make its genetic standards the highest in Northern Ireland and the fifth highest in the United Kingdom in 1998. The Department held that unique, important and precious asset on behalf of the taxpayer. However, the deal was done verbally with a farmer who did not know the difference between brucellosis and leptospirosis. The farmer did not know when the last inspection had taken place - he said that it had been about 12 months previously, when it had actually been about 18 months previously. The farmer did not know that there had been incidents of brucellosis only a few miles down the road and did not seem to care. What concerns me is that the institute did not care. It did not do enough to protect an asset that it held on behalf of the taxpayers.

262.

It is all very well to say that there was nothing in the book about such an incident. However, if a farmer had such a unique herd, he would take every possible precaution to ensure that moving other cattle into the herd did not risk introducing brucellosis. A farmer would have done tests before he moved the herd, and if that had not been possible, he would have checked the official and unofficial documents. A farmer would have checked and double-checked, but the institute thought that it might as well go ahead - it would not have to face the consequences, and no one at the institute or in the Department would lose any money. The institute thought that it would be the poor, silly little taxpayer who would pick up the bill?

263.

Mr Small: I would not express things in that way. The institute had risk management procedures in place, but evidently those did not work in this case. Mr Close's description of the situation was harsh.

264.

Ms Morrice: One should not even introduce a goldfish into a fishbowl without taking precautions.

265.

Mr Beggs: Students move in and out of Department of Agriculture and Rural Development training institutes at, for example, Greenmount or Hillsborough, and there is a mix of farming stock at those premises. Should there not be a legal requirement for the highest possible standards of pre-testing, so that the risk of spread to other herds in Northern Ireland is minimised? The statistics given in figure 7 of the report on the brucellosis outbreak go up until June 2000; can we have the up to date figures?

266.

Mr Small: I accept your first point 100% - we must have the best possible procedures. The institutes have already adopted new policies and practices. I will ensure that all the lessons are learnt.

267.

We can give you the up to date figures, but those figures will show a drop in the number of brucellosis cases. During the foot-and-mouth crisis, we were unable to test for brucellosis, so I expect that the figures will be artificially low.

268.

The Chairperson: Paragraph 5.45 of the report states that, in 1999, the Department decided to produce the quality review. The scheduled completion date for that was March 2001. I realise that the foot-and-mouth outbreak interrupted that review and that has been given as the reason why the review was delayed, but the outbreak of that disease did not occur until February 2001. Could not the policy review have been completed on time?

269.

Mr Small: The report refers specifically to the foot-and-mouth outbreak, and that is why nothing was done on the report from February until recently. Other pressures on the Department meant that even before the foot-and-mouth outbreak, the review did not proceed as quickly as it should have because those working on it had to be deflected to other things.

270.

The Chairperson: The Committee recognises that tackling brucellosis is difficult and puts a strain on the Department and on its resources. The shortcomings that have been examined today hint that there may have been complacency in the institute about the risk of brucellosis. There was a failure to address those risks adequately. I am worried that there seems to have been a slow response from the Department to the brucellosis threat and the connected spiralling costs. You said that lessons had been learnt - we shall wait and see about those, and we look forward to hearing from you.

271.

Will you respond in writing on the other issues raised by Members?

272.

Mr Small: We will follow that up quickly.

273.

The Chairperson: Thank you for coming today and subjecting yourself to such rigorous questioning.

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At the NI Assembly PAC Hearing on 27 September on the NIAO Report on Brucellosis at ARINI, you raised an important issue about the community breakdown of staff employed at the Institute.

As the Equality Commission's Summary of 2000 monitoring returns shows, less than 10% of ARINI staff at that time were from a Roman Catholic background. I can confirm that in spite of efforts by the Institute - described below - to change this balance, that remains the current position.

I should say at the outset that I share your concern and I have decided to have a specific review undertaken to establish if further refinements/improvements in practices can be introduced. Having said that, I can assure you that ARINI management adheres to legislative requirements governing Equal Opportunities and has a strong commitment to equality. It has devoted appropriate resources and has worked closely with the Equality Commission (at approximately 3-monthly intervals) and other relevant bodies to ensure equality for all job applicants.

Among the employment practices adopted by the Institute to eliminate discrimination and promote equal opportunities are training of panels in non-discriminatory recruitment and selection techniques; wide advertisement of posts, including placement of vacancies in newspapers read mainly by the Roman Catholic community; inclusion of advertisements in Northern Ireland of an affirmative statement ("welcoming applications from the Roman Catholic community and females"); opening up of promotion opportunities to open recruitment to widen the pool of suitable applicants; and the use of objective criteria and job descriptions.

Wider policies to promote equal opportunities include the development of an Equal Opportunities Policy; consideration of equal opportunities issues at meetings of the Board of Trustees; production of an Equality Scheme; reviews of recruitment, training and promotion practices; and consideration of whether jobs can be part-time or subject to flexible hours etc.

Despite all these efforts, the balance is clearly unsatisfactory and, as I have indicated above, I have instigated a Departmental review.

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APPENDIX 2

Correspondence from PAC to Mr Morris McAllister Northern Ireland Director of the Food Standards Agency

Risk of Brucellosis passing into the Human Food Chain

In September 2001, the Public Accounts Committee at Stormont examined the Department of Agriculture and Rural Development about the control and eradication of Brucellosis in Northern Ireland. The witnesses included the Departmental Accounting Officer, Mr Peter Small and the Chief Veterinary Officer, Dr Robert McCracken.

We were advised in the course of the hearing that animal carcasses with a positive Brucellosis test reading enter the food chain and that the Department cannot provide an assurance that there is absolutely no risk that the Brucellosis organism could be passed on to human beings. A transcript of the relevant section of the hearing is attached for your information [Minutes of Evidence paras 124 to 139].

The Department stated that the policy, with which it complies, has been set by the Food Standards Agency. Given the implications of what we were told, can you give us an assurance that the Agency is satisfied that the passage of animals with a positive Brucellosis test reading into the food chain does not pose a risk to public health?

I am copying this letter to Mr Peter Small, Accounting Officer of the Department of Agriculture and Rural Development, Mr Michael Walker, Chairman of the Northern Ireland Advisory Committee of the Food Standards Agency and Martin Higgins - Chief Executive of the Food Safety Promotion Board.

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APPENDIX 3

Extract from Correspondence of 23 October 2001 from Mr Peter Small, Accounting Officer of the Department of Agriculture and Rural Development

Outbreak of Brucellosis at ARINI

Mr Dallat raised a question (page 10 of the evidence) on what the Institute was doing about the religious imbalance of staff at ARINI. As the Chairman requested, I will be sending Mr Dallat a written answer and will copy it to you. [Appendix 1]

Mr Beggs raised a series of questions (pages 62 and 85 of the evidence).

Question

Do you accept that there is a greater incidence of the disease in the Republic of Ireland?

Answer

Based on the number of Brucellosis breakdown herds in Northern Ireland and the Republic of Ireland at that time and an approximation of the number of animals tested for Brucellosis, Veterinary Service estimate that the incidence in ROI was approximately twice that in Northern Ireland.

Question

How far was the farm concerned from the nearest outbreak of Brucellosis in Northern Ireland and the nearest outbreak in Republic of Ireland? How far was it from the border?

Answer

The farm concerned was approximately 4 miles from the nearest outbreak of Brucellosis in Northern Ireland and approximately 2 miles from the border. The Department's understanding is that the nearest outbreak of Brucellosis in the Republic of Ireland at that time was approximately 5 miles from the border and approximately 16 miles from the farm concerned. Futhermore, the farm concerned was not included in any inner or outer contiguous rings to a Brucellosis outbreak in the Republic of Ireland at that time.

NOTE: The measurements above are straight line measurements and are not to the same point on the border.

Question

Can we have up to date figures on outbreaks of Brucellosis after June 2000?

Answer

See attached histogram which is an extension to Figure 7 of the NIAO report.

Note See Para 267 of Minutes of Evidence.

The drop in the number of Brucellosis cases from February 2001 is due to the inability of the Department to test for Brucellosis during the Foot-and-mouth crisis.

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