Cattle Head Deboning Industry

– in the House of Commons at 12:00 am on 13th November 1996.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Knapman]

Photo of Peter Viggers Peter Viggers , Gosport 9:34 am, 13th November 1996

When the BSE tragedy struck this country, I shared with my constituents a sense of distress for the cattle involved and for the agriculture community. I little thought that the BSE problem would have an immediate impact in Gosport, because it is not an agricultural area. We Gosportians—I grew up there, and I have represented the area for 22 years—are proud of our constituency, but the last thing we would claim for it is that it is an agricultural area. One will not see a pig or a sheep in Gosport. We have hardly a horse, scarcely a cow and only a handful of goats.

Because we have so few agricultural animals, we value Felicia park at Forton, which is a mildly eccentric and totally delightful farmlet where children can see live farm animals. Without that opportunity, they may not know what farm animals look or smell like in the flesh. I hope that Felicia park will continue, despite the development in that area.

It was, therefore, a surprise and a shock to receive a plea from a local firm for help following the BSE scandal. Pinnacle Meats has a serious problem: proportionately it is the worst problem of anyone affected by the BSE crisis. It was at that point that I learned about the cattle head deboning industry. I trust that hon. Members had a good breakfast before the debate.

I should say a few words about the trade so as to put the problem in context. Before March this year, cattle were killed in abattoirs and the bulk of the carcase was handled within the mainstream butchery trade. That business is vast: it is so large that it operates from enormous factories, its turnover is huge and its profit margin is correspondingly small in percentage terms. It will be important to bear that in mind when we consider the head meat boning industry later.

By contrast, the cattle head deboning business is tiny. It operates through about 12 firms, typically with 12 to 20 employees. It is a highly specialised part of the trade. It buys cow heads from abattoirs, takes them to purpose-built premises where the edible portions—mainly the cheek—are removed under strictly controlled conditions, and the remainder is dispatched for destruction, also under strictly controlled conditions.

Pinnacle Meats in Gosport is typical. It was set up by Graham Reed and John Gray in 1988, and established itself in the trade with four employees. United Kingdom and EC regulations became more stringent after 1988, and it was increasingly necessary for such small firms to buy specially designed equipment. In 1992, Pinnacle Meats moved to new premises in Gosport and took the lease on larger premises in an industrial estate. To carry on its business, it had to invest in expensive, specialised equipment.

The company had to comply with the EC cutting plant licence for 1992, and the cattle head deboning regulations imposed by the Ministry of Agriculture, Fisheries and Food, which applied from August 1995. I am told that that is the only part of the meat distribution trade in which producers require a special licence.

The rules were strict. I visited Pinnacle Meats and I saw the way in which the rules were observed. The cattle heads were kept at regulated temperatures from the moment of slaughter to the moment of dispatch from the cattle head deboning plant. Temperatures and cleanliness were vetted at every stage by MAFF officials, who had right of entry at all times. The quality of the meat was vetted on arrival at the deboner's premises, and there were strict rules to ensure that the paths of the raw material and the product did not cross.

Record keeping was, by regulation, meticulous, and it had to be available to MAFF inspectors at all times. There were daily audits of stocks, with reconciliation of input and output. Maintaining those standards was expensive. At a cost of £300,000, Pinnacle installed epoxy resined floors, special wall cladding, metal detectors, code-printing weighing scales, vacuum-packed conveyor systems and a special scissor lift to enable the product to be loaded directly into a specially designed bay. The equipment was highly specialised, and referable only to the business of cattle head deboning. Those who have visited any such premises in any part of the country will know that there is no way of readily transferring equipment of that kind and using it to operate any other kind of business in the meat industry, or other industries. It is purpose designed.

As I have said, all that cost about £300,000. Most of the businesses involved were small family businesses. As hon. Members will know, it is normal for banks lending money to small family businesses not just to lend on the security of the company, but to require the security of the home of the proprietors. Pinnacle is typical of many small firms—the trade was chiefly concentrated among smaller firms—in that its proprietors borrowed against the security of their homes. They borrowed because they were told that they had to in order to comply with the regulations. In other words, the Government told them that they must spend the money to stay in business, and they had to take up the security of mortgages on their houses in order to do that.

In that way, Pinnacle and other companies built up a useful and profitable business. Pinnacle was deboning about 300,000 cow heads a year, providing a useful service to abattoirs and purchasers of the product and a profitable business for their employees. The process usually involved the removal of cheek meat, some of which was considered a delicacy. Pinnacle, for instance, exported 10 tonnes of cheek meat a month to France, where it is sold as a delicacy—joue de boeuf. Hon. Members who have had the opportunity to eat joue de boeuf in the Crillon may not know that it probably came from the industrial estate in Gosport. That was a matter of pride to my constituents—until 29 March 1996. Until that day, the business was providing joue de boeuf, meat spreads, sausages, hamburgers and other meat products throughout the United Kingdom and, indeed, Europe. Graham Reed and his partner had a sound, profitable business; they employed 25 people, who produced food in strictly controlled conditions. Then came the BSE scare, and the Government reacted by taking action against cattle. On 29 March 1996 they passed the Specified Bovine Material Order, which states that the whole of the heads of cattle that died in the United Kingdom, apart from the tongues, constitute specified bovine material that may not be sold for human or animal consumption. People who had profitable businesses on 28 March 1996 woke on 30 March to discover that those businesses had been destroyed. I reiterate that they had borrowed money that they now had no way of repaying, because they had no businesses.

Let me make two points about the Specified Bovine Material Order. First, there is nothing wrong with head meat. Foreign head meat is still being sold. It is head meat from cattle that die in the United Kingdom that cannot be sold for human or agricultural consumption; foreign head meat can be and is being sold in this country. We have become importers, rather than having a profitable export trade—Pinnacle had an export trade worth £ 15,000 a month to France alone. That is because the authorities in the United Kingdom are concerned only about the possibility that the method of slaughter used in UK abattoirs will lead to contamination of head meat. They are not bothered about head meat from other parts of the world. Head meat that is eaten now can come from anywhere other than Britain.

Secondly, no one has ever suggested that the UK cattle head deboners have any done anything wrong. They were controlled, and operated in a sterile environment; their businesses were well run and efficient. It is in no way their fault that they have been put out of business—for that is what has happened. The order of 29 March made the product illegal, and ended the trade.

Hon. Members may ask why the deboners do not go and do something else. The trade was highly specialised: it operated on specialised premises, and with specialised equipment. Pinnacle's blast freezer capacity was 30 tonnes a week, which is minuscule in comparison with that of larger meat producers. As I explained earlier, the larger producers operate with vast quantities, and because of that they work on tiny margins. It is impossible for a head deboner who, because of his specialised trade, was working on a margin of about 10 per cent. to compete with the mainstream meat business, which typically operates on margins of between 0.5 per cent. and 1 per cent.

Photo of Mr Spencer Batiste Mr Spencer Batiste , Elmet

Can my hon. Friend confirm that the circumstances that he has described are the same in all similar bovine head deboning companies around the country, such as H. J. Wilson in my constituency? The point is that the owners of such concerns never had time to look for other business. They had all borrowed heavily to meet the requirements of the regulations, and on the day on which the order came into force they had no choice but to close their businesses. They did not have the option of looking elsewhere, because of the Government's determination to take action to restore confidence. Why should the owners of such companies bear the brunt of the cost and the anguish of losing their homes because of action that was taken allegedly for the wider good?

Photo of Peter Viggers Peter Viggers , Gosport

My hon. Friend makes a good point. Over the past eight months or so, I have been struck by the similarity of many points put to me by hon. Members.

A trade like cattle head deboning might be expected to range from tiny one-man businesses to larger businesses employing between 50 and 100 people. Not at all: the nature of the trade lends itself very well to businesses employing about 20 people. Typically, these are family businesses, although there are one or two instances of deboning being carried out by larger companies. They were proud of what they were doing, and they had borrowed in order to comply with European regulations. In almost every case, they did not have enough capital to continue unless they borrowed. Virtually all the firms in the trade were small family businesses, which borrowed against the security of houses and subsequently went bankrupt when they had to close. I thank my hon. Friend the Member for Elmet (Mr. Batiste) for citing a company in his constituency.

It is not possible to switch from deboning cattle heads to deboning the heads of pigs or sheep. Some companies have tried, but purpose-built premises such as theirs do not lend themselves efficiently to any other business. It can be done, but it is rather like using a Ferrari to go shopping. This is a highly specialised business, which does not compete well in the normal field of the meat trade.

Photo of Malcolm Bruce Malcolm Bruce Shadow Spokesperson (Treasury)

Is the hon. Gentleman aware—as I have been made aware—that the Government have now instructed abattoirs not to process sheep heads? That alternative has been closed off. Apparently, however, the abattoirs are being compensated for the loss of their business, whereas cattle head deboners are not. Is that fair or consistent?

Photo of Peter Viggers Peter Viggers , Gosport

The hon. Gentleman makes a good point. Let me take this opportunity of saying that concern about the issue extends across the House and, indeed, across the United Kingdom.

I was not aware of the position that the hon. Gentleman describes, but the inconsistencies in regard to compensation are such that, in my view, the present situation is untenable. I cannot look my constituents in the eye and defend what is currently happening.

If we accept that those companies cannot readily move to any other kind of business, we must also accept that the only answer is compensation. By temperament, I am not one to demand compensation for everything—I am laissez-faire on the more hard-right wing—but in this instance, I feel that points should be made on behalf of our constituents. They should be given the opportunity to set up in some other business, perhaps parallel, but different from the business that they were in before. So what of compensation? Would it set a precedent?

Photo of Mr Robert Hughes Mr Robert Hughes , Aberdeen North

I apologise to the hon. Gentleman for not being able to stay for the full debate due to Select Committee business, but is there not an inconsistency in that the Prime Minister talks of compensation for farmers while the Minister of Agriculture, Fisheries and Food talks about stabilising the market? Does the hon. Gentleman agree that, once we land in the area of compensation, we are inevitably driven to the compelling nature of the deboners' case, as the Home Secretary was driven last night into saying that he was initially prepared to compensate only for the loss of handguns, but now accepted that he probably had to give compensation for ancillary materials. It is always difficult to argue by analogy, but there is a parallel here that the Government should consider. There is grave injustice for the people needing compensation.

Photo of Peter Viggers Peter Viggers , Gosport

The hon. Gentleman makes a good point. Over the months, he and I have maintained contact on the subject of compensation and on the difficulties suffered by the trade. It is good of him to find time in advance of his Select Committee to come to the Chamber to support the plea for compensation.

Would compensation set a precedent? I have conducted a little research. I gather that the Oral Snuff (Safety) Regulations 1989/2345 is one sort of parallel, but when oral snuff was banned by the Government with that regulation the people who distributed oral snuff did not suffer particularly because other parts of the tobacco trade made up for the loss. Similarly, the Asbestos (Prohibitions) Regulations 1992/3067 caused some difficulty in the building trade, but few companies specialised in asbestos.

I tried to find a parallel for the Government, by edict, banning a business. The advice that I was given earlier this year by the House of Commons Library ran as follows: I have been unable to find a comparable example of a recent Order with as dramatic an effect as the one to which your enquiry relates". So it sounds as if this is unprecedented.

Let us look for other parallels. The BSE orders allow farmers to be compensated. In a letter to me on 17 July 1996, the Prime Minister said: our policy is to target support at those sectors which are essential for a secure and efficient beef supply chain". Bully for the beef supply chain, but what about the people who cannot carry on and who have been driven out of business?

Another parallel is salmonella. Since 1989, compensation has been paid to chicken farmers for their entire flock, on a varying basis from 60 per cent. to 100 per cent. of its value. The hon. Friend the Member for Aberdeen, North (Mr. Hughes) put his finger on the latest example. It is only 12 hours ago, almost to the minute, that I, for the first time in my 22 years in the House, voted against the Government. I did so on the issue of compensation and gun control.

The Government have decided to ban most handguns and to compensate handgun owners. On legal advice yesterday, the Home Secretary told the House that he would also be compensating for equipment. He was specifically asked—the hon. Member for Aberdeen, North made the point and I reiterate it—by my right hon. Friend the Member for Worthing (Sir T. Higgins) about compensation for people in the gun business. He said: is it not clear that it would be grossly unjust if the money resolution did not cover people who have businesses—for example, shooting ranges with long leases—that will no longer receive any revenue? They are likely to go bankrupt … Will my right hon. and learned Friend assure us that the money resolution will cover such people so that the House can debate the point? The Home Secretary replied: My right hon. Friend is unaware of the precise terms of the revised resolution. I cannot give him the total assurance that he requests, but I have said—I hope that he will take comfort from it—that in deciding the precise scope of the revised money resolution we shall take full account of points made in the debate today, including the point that he has just made.

Photo of Tony Baldry Tony Baldry Minister of State (Ministry of Agriculture, Fisheries and Food)

My hon. Friend is in danger of misleading himself. If he reads on, he will find that my right hon. Friend the Home Secretary went on to deal specifically with that point again. Referring to my right hon. Friend the Member for Worthing (Sir T. Higgins), he referred to the distinction from claims for compensation for loss of trade and business. So far as I am aware, there is no precedent for such claims and I would arouse false hopes and expectations if I were to give my right hon. and hon. Friends any comfort on that point. There is a clear distinction between the two."—[Official Report, 12 November 1996; Vol. 285, c. 181–2.] The Home Secretary said that there is a clear distinction between loss of money in relation to accessories and loss in relation to a business.

Photo of Peter Viggers Peter Viggers , Gosport

That is not the point. I was in the House and I recall the moment well. I prefer the Home Secretary's first reply to his second.

For the sake of argument, let me accept the point of my hon. Friend the Minister of State. I regret the ban on handguns, but if they are to be banned, I suppose that the owners should be compensated. Where is the principle in all this? If it is fair, right and in the public interest to compensate a gun owner for the loss of his gun, which is part of his sport and his hobby, how much more must it be right to compensate someone who has been made bankrupt by Government edict? Surely that is a much more forceful point.

Photo of John Reid John Reid , Motherwell North

Does the hon. Gentleman agree that the case is slightly stronger than even he makes out? People who may, unfortunately, have bought guns that are no longer available, at least bought them of their own volition. The vast majority of the debt of the deboners whom we are discussing has been incurred for machinery and expenses. It was incurred not on the volition of the owner or the deboners, but precisely because of Government and European legislation. Those deboners are being doubly punished, first, by spending the money at the Government's direction and, secondly, in being that by a second Government edict that they have no way of repaying that money.

Photo of Peter Viggers Peter Viggers , Gosport

That is absolutely right. To comply with Government requirements, these people spent and borrowed money to bring their premises up to standard. That is precisely the point.

Photo of Robert Key Robert Key , Salisbury

May I say to my hon. Friend the Minister of State that there is no parallel here. I listened extremely carefully to what my right hon. and learned Friend Home Secretary said yesterday. He was talking about loss of trade or business in future. What we are talking about, on behalf of our constituents, is an ex gratia payment—if the Government do not like the term "compensation"—for the confiscation of private property to meet the Government's requirements, as advised by the Spongiform Encephalopathy Advisory Committee. That surely, as my hon. Friend the Member for Gosport (Mr. Viggers) would agree, is the point. We are talking not about loss of trade and business in future, but about recompense for confiscation.

Photo of Peter Viggers Peter Viggers , Gosport

The interventions in my speech have again made clear how widely the feeling of anger is shared by hon. Members. Clearly, it goes across the United Kingdom and affects every part of the UK. It is shared by all parties in the House. We have been stirred to anger on behalf of our constituents and we expect something to be done about it.

Photo of Mr Spencer Batiste Mr Spencer Batiste , Elmet

May I ask my hon. Friend to draw a specific distinction between compensating companies for the equipment that they have had to buy to meet their trade, as opposed to a more theoretical argument about future loss of earnings? There is an exact parallel with guns. On the day after the Government's announcement on guns, an ammunition factory in my constituency closed because no business was left for it. Overnight, all the specialist equipment, which is just as specialist as deboners' equipment, became worthless.

Photo of Peter Viggers Peter Viggers , Gosport

I understand that the Government did not start negotiating, but were prepared to receive information from the industry to calibrate the amount of compensation that would be required. I understand that the trade responded by putting together a compilation—I have a copy here—showing that the gross overall value of the trade was about £11 million. The amount of money spent to comply with regulations in the past three or four years was calculated at about £2.25 million. I am told that the trade was optimistic that negotiations would take place, leading to compensation, and that those negotiations, or preliminary discussions, were broken off. The Government are not now prepared to receive information about the value of the trade. Those are the figures should the Government decide to compensate. I support the claims of those who enjoy the sport of shooting, but the claims of the head deboners are absolutely justified, and they have an overwhelming case.

The Minister will have had his speech prepared for him by civil servants who put together what are known as building blocks. The essential building block will be the argument that has been put to me in reply to many letters and parliamentary questions about compensation, so the Minister will read to us: The reason is that we are not able"—

Photo of Tony Baldry Tony Baldry Minister of State (Ministry of Agriculture, Fisheries and Food)

Let me help my hon. Friend because, so far, he has failed totally to address the main point of the debate, and I fear that he has been misled by the House of Commons Library on the Skoal case. Lord Justice Taylor said about that case that is would be wrong for the Government to pay compensation where Parliament, with proper and due diligence, has caused a business to suffer. He said that there was no right to compensation if a business was lost as a consequence of that. That was the judgment of the High Court as recently as 1990. No compensation was offered as a result of the statutory instruments to which my hon. Friend referred, and I fear that he has been misled by the Library.

The point that my hon. Friend has not so far addressed in his speech, and which mine will deal with because I did draft it, is the concept of settled public policy. No Government at any time have ever paid any compensation for the loss of business—[Interruption.]

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

Order. I would prefer to see the Minister's face rather than his back.

Photo of Tony Baldry Tony Baldry Minister of State (Ministry of Agriculture, Fisheries and Food)

No Government at any time have paid compensation for the loss of business, consequent upon a decision of Parliament. My hon. Friend must deal with that fact, but he has yet to do so.

Photo of Peter Viggers Peter Viggers , Gosport

Let me range a little more widely. If my following comments sound irrelevant, I hope to prove their relevance.

I came to the House in 1974 and I was told about a group of widows called the pre-1950s widows. They were the widows of men below the rank of W 1, who retired before 1 August 1950 and who did not receive a service pension. For five years I campaigned on behalf of those widows. I did everything: I introduced 10-minute Bills, tabled early-day motions and initiated late-night debates on the subject. I remember that at one Conservative charity ball I waltzed the then Mrs. Thatcher around the floor and I told her about the case, and she took an interest in it.

I am extremely proud of that five-year campaign on behalf of the pre-1950s widows. Every time I raised the issue in the House, a Minister stood at the Dispatch Box and said that there was no precedent and that it was absolutely impossible to do anything for those women. I was told that the Government could not make ex gratia payments to service widows. Eventually, however. Sir Keith Joseph stood at the Dispatch Box and said that although the rules said we could not do it, the broad view revealed that it was not fair and that we had to compensate them. We did it—we gave service pensions to those widows. It took five years of campaigning and I had five years of Ministers telling me that it was impossible, but then we did it.

I retract my earlier comment to my hon. Friend the Minister about his speech being drafted for him by civil servants. Of course he wrote his own; I always wrote my own speeches when I was a Minister. Other Ministers, however, have explained the refusal to pay compensation to deboners as follows: The reason is that we are not able to make exceptions to the policy of targeting aid at the essential links in the beef supply chain. If we did, we would need to extend the exceptions to cover claims from other groups. We have looked very hard at whether head de-boners could be defined as a unique group but we have concluded this is unfortunately not possible. I do not accept that the problem is insoluble. In 1534 this House agreed that King Henry VIII was head of the Church. If it can do that, it can do anything. If this House said that tomorrow is Wednesday or Saturday, subject to European regulations of course, it would be because this House is virtually omnipotent. Where there is a will, a way can be found. I ask my hon. Friend and his colleagues to look again at the issue and find a way to compensate that small industry.

Photo of Michael Martin Michael Martin Chair, Administration Committee 10:04 am, 13th November 1996

I congratulate the hon. Member for Gosport (Mr. Viggers) on obtaining this Adjournment debate. I also congratulate him on making such an excellent case for such hard-working people. He has covered every problem that they face.

The Glasgow meat market is based in my constituency. I was contacted by Mrs. Fyfe who worked in the meat trade and I was horrified to hear that on a Thursday evening she received a fax from civil servants at the Scottish Office instructing her to stop trading. I challenge the Minister's argument about the decision of Parliament, because Mrs. Fyfe's business was closed down on the instructions of civil servants. From the Friday, Mrs. Fyfe and others had to cease work.

As the hon. Member for Gosport said, it was not so long before that that the same civil servants instructed Mrs. Fyfe and others who work at the Glasgow meat market that, to comply with European Community standards, they had to buy the necessary equipment for their particular trade. Mrs. Fyfe had to go to her bank and say that she had been instructed to buy certain equipment because of EC regulations. She said that she needed a loan to keep herself, her husband, her daughter and her four employees in a job. The bank said that that was fine and agreed to give her a loan, but she had to put up not only her business as security, but her home.

I have been a Member of the House for 17 years. I have heard Ministers say how we must encourage small businesses, which are the answer. We have been told that we cannot bring great big factories into cities like Glasgow but we can encourage people to show initiative. I remember when Mrs. Thatcher said the Government would encourage people to show initiative, get on their bikes and create small businesses. The argument was that a small business may employ four or five people, and other businesses with similar numbers of employees may develop, so before long a group of people are in work and have the dignity of employment.

Mrs. Fyfe's husband was a black cab driver in the city of Glasgow. He was out in all weathers and at all hours to raise the money to start their business off. The Fyfes did not make a fantastic living from it, but they earned enough probably to enjoy a decent holiday every year. It was hard work for them, but now they have been left with no livelihood.

The Fyfes have not said to me that they are looking for big money, but, as the hon. Member for Gosport has already said, they want compensation to claw back the money they had to spend to meet EC regulations They want something to enable them to start up another business. It must be appalling to have to say to four or five people, "I am sorry, but I have to let you go." We are not talking about a big organisation, where the employer may pay off people he does not know. Mrs. Fyfe may have employed just four people, but those men and women have worked for her for 20 years. She knows them and their families. She knows the consequences of telling them that she must lay them off. In a city like Glasgow if a person is over the age of 40 the chances of re-employment are slim, especially when the industry that formerly employed him has been closed down.

I went to see Lord Lindsay, and he said, "No, I am not compensating farmers." I could only scratch my head, because all that I had been hearing from the Agriculture Minister was that he would look after farmers. Lord Lindsay said, "No, we are not compensating farmers. We are intervening and buying their cattle." It is a rose by another name. I do not mind if we call it "intervention" for the beef industry, but let us provide compensation.

I was a trade union official. Sometimes bosses would say, "I'm not going to pay overtime, but I'll give good expenses." No one complained if expenses were equivalent to the amount of overtime that people deserved. They could call overtime whatever they liked. If Ministers wish to call compensation "intervention", I shall be happy to go to Mrs. Fyfe and other people who work in the industry in Scotland and tell them, "I'm sorry; they're not going to give you compensation, but they will give you intervention." I would be as happy as Larry with that—as I am sure the hon. Member for Gosport and other hon. Members would be.

I think back to the most recent debate we had on the problems in agriculture and to the words of the hon. Member for East Londonderry (Mr. Ross), who said that the BSE problem does not start and stop at the farm gate, but that it goes beyond and into meat markets and into industries such as head deboning. The Government must face up to that fact. In a few months, as culled cattle enter slaughterhouses, there will be serious problems. The effect of any decision made by Parliament is that some people—such as Mrs. Fyfe—will lose their livelihood, but, as in this case, within the year, other people will become millionaires.

The Government are prepared to pay about £40 per head of cattle that goes to a slaughterhouse. People conducting the slaughter will be able to sell the cattle hides for approximately £20. I am not very good at mathematics and failed my mathematics exam, which is probably why I am a Member of Parliament, but even I can understand that, with 5,000 cattle per week in Scotland—I do not know the overall number for the UK—we are talking about a very large number.

The cattle that will be slaughtered are not suffering from the disease. They are healthy beasts—but the situation must make farmers sick. I do not know much about the farming industry, but I know that a farmer will sit up all night with an ill beast, and that he will spend more on vet's bills for his cattle than he probably would spend on doctors' bills for his family. He knows his responsibility. Farmers will have to take healthy cattle to slaughterhouses because of the Government's actions. But that is another matter.

Mark my words: many millionaires will be created because of this. It is a crying shame that people such as Mrs. Fyfe and those mentioned by the hon. Member for Gosport have to suffer. Those men and women have made great sacrifices. They did not clock in at 8 am and clock out at 5 pm. They worked long hours, and, after working those hours, they sent in reports to civil servants at the Ministry of Agriculture, Fisheries and Food and then did their bookkeeping. We are talking about small family businesses.

I do not like attacking any hon. Member who is not present in the Chamber, because that is not the done thing. However, I was appalled when I saw on television the way in which the Agriculture Minister conducted himself in Europe. It did not help the men and women who are losing out when they saw him strutting about Europe wearing a 1930s-style hat and two watches, like an eccentric Englishman. People's appearance makes a difference, especially if they are in a position of responsibility. The Minister's press conferences and arrogant manner did not help or inspire confidence in people whose livelihoods depend on his decisions.

We are not talking about a great deal of money for compensation. I ask only that people be compensated for improvements that they made in their businesses, which were required by a decision made by Parliament.

Photo of Robert Key Robert Key , Salisbury 10:15 am, 13th November 1996

I congratulate my hon. Friend the Member for Gosport (Mr. Viggers) on saying everything that I would have wished to say. He has, therefore, considerably shortened my speech on those points. I am grateful for that, because I can now say something extra.

It gives me no pleasure at all to be critical of the Government when, at last, matters seem to be coming right for our farming industry. I congratulate my hon. Friend the Minister on the way in which the cull is starting to make a deep impression on the crisis in the countryside. The situation is coming right. However, one problem is not coming right.

On 20 March 1996, my hon. Friend the Minister of Agriculture, Fisheries and Food made a statement to the House on BSE. I asked him about the paramount importance of food safety and the need for market support mechanisms. The answer he gave could not have been clearer. He said: People sometimes suggest that the interests of agriculture and farmers are MAFF's overriding concern, and obviously they are of great concern to us; but our paramount duty is to public safety—the safety of the food chain and of British food. That is the paramount duty owed by my Department, and myself as Minister to the House and the country."—[Official Report, 20 March 1996; Vol. 274, c. 396.] He cared, most of all, for the food industry.

On 28 March 1996, at Agriculture Question Time, I raised the issue of head deboners, warning of the closure of food processing plants. The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, my hon. Friend the Member for Tiverton (Mrs. Browning), replied: While I sympathise with, and have every concern for, my hon. Friend's dilemma, it would be quite wrong for the Government to challenge the scientific advice that we have accepted at this Dispatch Box."—[Official Report, 28 March 1996; Vol. 274, c. 1160.] She said that she had every concern for my dilemma. I was not asking for the Government to challenge the scientific advice.

Nine months later, it is demonstrably clear that the interests of agriculture and farmers are MAFF's overriding concern, and that "every concern" does not extend to the head deboning industry. Nine months later, I am posed another dilemma. On today's Order Paper, I see that my right hon. Friend the Agriculture Minister invites me to congratulate the Government on the action it has taken to deal with the BSE crisis", and to welcome the package of support the Government has provided to the beef industry". That is, indeed, a dilemma.

I think of the case of Touchmead Ltd., in Amesbury—an important town in my constituency, which has suffered job losses because of the situation. I shall listen carefully to what Ministers say in this debate, and in the debate later today, before I decide whether I can, in all conscience, support the Government today.

Photo of Mr Spencer Batiste Mr Spencer Batiste , Elmet

My hon. Friend touched on a very powerful issue. If there is a need, in the public interest, to take action—as, for example, in the case of guns or of beef—we can agree with the principle, but the action must be applied with justice if the Government want to have the support of their Back Benchers. That is the message that the Minister should take away from this debate.

Photo of Robert Key Robert Key , Salisbury

I am grateful to my hon. Friend. I shall now reinforce the point that he has so clearly made.

Touchmead Ltd. of Amesbury constructed a whole new plant. It moved out of the centre of town to a countryside location. It did so to conform to new regulations. In 1995, that new plant was once again upgraded. The head deboning section was renewed. The firm was working for the quality end of the market, supplying some of the best-known food chains in the country. It was a major exporter of some of its products, particularly to France, as my hon. Friend the Member for Gosport has pointed out. "Waste not, want not" was a pretty worthy phrase to use with regard to head deboners—a little-known part of the British food chain.

We are talking about large quantities of food. Touchmead Ltd. was dealing with 800 bovine heads and 900 porcine heads a day, and a tonne of bovine flank and rib and two tonnes of offal every week. A veterinary report on the company said that public health risks were very well catered for. It continued: Particular attention has to be paid to the safe handling and disposal of Specified Bovine Offal. Changes have been made in the handling techniques with the advent of the new guidelines.The present management has a very positive attitude to meat hygiene. They regard themselves as being at the forefront of their particular field. They often turn to the OVS"— the official veterinary surgeon— for help and guidance in the resolution of meat hygiene related problems.As the proprietor is always anxious to seek new markets, a considerable effort has to be made to ensure that he is aware of the requirements for these.Because of the restricted hours of attendance it has been our"— the vets— deliberate policy to vary the time of day at which we attend the plant. That report was made on 26 February.

On 28 March, I received a letter from the veterinary officer who was responsible to MAFF for looking after that company. He said: This purpose built factory conforming to EEC standards has been visited by us on every working day for the past 2 years.In our opinion they carry out a good job in their function of removing useable meat from bovine and pig heads for further processing.To our knowledge they have complied with all requirements from the Ministry of Agriculture, Fisheries and Food, where necessary amending their techniques to conform to any new legislation.We feel it is ridiculous for their factory to be under threat of closure due to proposed changes in legislation which are likely to prohibit the use of any useable meat derived from bovine heads.

On 29 March, Touchmead Ltd. was closed by the Government. A decision was taken somewhere along the line not to pay any compensation. There is no alternative use for the deboning capital equipment, and the irony, as my hon. Friend the Member for Gosport has said, is that imports are continuing of foreign head meat-meat subject to less stringent controls than our own.

I feel very sorry for my hon. Friend the Minister. It is a peril of collective responsibility that he has drawn the short straw today. I would rather see my right hon. Friend the Chief Secretary to the Treasury, with whom I have had many discussions on the matter, sitting on the Front Bench. Ultimately, of course, it is his decision whether this tiny amount, this maximum of £11 million, is paid. Farmers have received £2.5 billion to cope with the crisis that affects them.

A line always has to be drawn somewhere concerning any payment and it is the unpleasant duty of Ministers, acting on the advice of their civil servants and MAFF's accounting officer, to decide where to draw it. Clearly, with such decisions, natural justice should not be offended. The decision should not be arbitrary but should properly take into account all relevant factors—in this case, compulsory new investment. The decision taken by the Government not to pay anything to the small number of firms in the head deboning industry is unfair. It offends natural justice and it is arbitrary. That is bad government. I do not mind whether the help is called compensation, ex gratia payments, intervention or market support. If there is no precedent, it is time to set one. Mention has already been made of firearms, salmonella in eggs and other inconsistencies.

During the BSE crisis, the Government have been accused of many things. Let us face it, that is partly because 80 per cent. of hon. Members do not understand rural affairs very well. They do not therefore understand that the entire rural industry—be it animal feed, machinery or Land Rover dealers—has been shaken by BSE and the cash flow in the rural economy has simply stopped. Even lawyers and accountants have had to wait for their bills to be paid. The banks have been very understanding about head deboners. I talked to the bank manager concerned and he was very helpful. I talked to the collectors of taxes on behalf of my friends in the head deboning industry, and they were very understanding. The Inland Revenue has behaved impeccably. Even travel agents have been affected by the BSE crisis in the industry. Things are becoming right at last—but not on cattle head deboning.

What has happened to the head deboners did not happen to farmers, who have been through hell but have at least had £2.5 billion to help them during the crisis. What has happened to the deboners did not happen to the livestock transport firms, which have been very busy indeed. I dare say that some of the people involved will end up millionaires, and good luck to them. The same did not happen to the abattoirs or the renderers, which have worked very hard and are doing very nicely, and good luck to them. The same did not even happen to the livestock markets. They lost massive revenue but could limp through the crisis, and their market trade is returning. The head deboning industry will never return. The Government had to act on SEAC's advice, but they did not have to confiscate private property, put hundreds of people out of work and not pay a penny piece to help.

It is the ill-fortune of the deboning industry that it comes within the remit of MAFF. The DTI would not have treated it in the same way, nor would the Department of Health. The industry got tangled up in MAFF and has been treated as the tail-end Charlie of this awful crisis. One Minister has been quoted as saying recently, there is no cattle head deboning industry and that's tough". It is especially tough for Mr. and Mrs. Ron Styles and their 60 former employees, who did everything that was asked of them and have been let down.

What is to be done? It is not too late. The Government do not have to wait to be forced into action by the courts. There is something else, of course, that they can do: contribute the modest amount of money that we are asking for on behalf of our constituents. When the nightmare of BSE is behind us and farmers, consumers and the food industry have regained their old confidence and worldwide markets once again respond to the excellence of British food from British farmers, we shall have to revisit the reform of MAFF itself. The food production industry can hold its own with any industry. It belongs in the DTI, and so does the fishing industry, given the chance.

Land stewardship and land use are increasingly integrated into the responsibilities of the Department of the Environment. Perhaps those functions belong there. Food regulations and standards should long ago have gone to the Department of Health. Consumers would prefer that and as a result would have more confidence than they do in the self-policing of poor old MAFF.

Photo of Bob Ainsworth Bob Ainsworth Opposition Whip (Commons)

I was rather hoping that the hon. Gentleman would tell us about the consequences of the closure of the company in his constituency for the people who ran it. The principals of two companies in my constituency—Lilacmead and A. J. and J. A. Cattermole Ltd.—have lost their businesses and their homes as a result of the crisis. Was that the consequence of Touchmead's closure as well?

Photo of Robert Key Robert Key , Salisbury

Two generations of the Styles family, the owners of the business who started it from nothing in the town of Amesbury, have been affected. More than 60 families have been directly affected due to lay-offs as a result of the arbitrary action. Many, I am glad to say, have been re-employed, but too many have not.

After the BSE crisis, we need to make a new start. I ask my hon. Friend the Minister, even at this stage, not just to tell us that there is no precedent and that he can do nothing about the problem but to be prepared to look again on behalf of all our constituents, as my hon. Friend the Member for Gosport has so eloquently requested, to see whether a way through can be found. We do not mind what the help is called, but we do mind about the reputation of good government.

Photo of Malcolm Bruce Malcolm Bruce Shadow Spokesperson (Treasury) 10:29 am, 13th November 1996

I join other hon. Members in congratulating the hon. Member for Gosport (Mr. Viggers) not just on securing this debate, but on the consistent work that he has done from the outset on behalf of head boners. I know that that work is appreciated on both sides of the House and across the country. We welcome the fact that the hon. Gentleman is continuing to press the case and we are glad to have the opportunity to back him up.

I have said before that my constituency is probably more affected by the BSE crisis than any other. It is affected across the range of the industry, from hill farms to abattoirs—there are two abattoirs in my constituency, but with the new boundaries there will be three. I represent a range of aspects of the meat processing industry. To take some of the edge off his support for the Government's measures on the cattle cull, I can tell the hon. Member for Salisbury (Mr. Key) and the House that Scottish farmers will not be satisfied until the Florence agreement is implemented and the selective cull is in process. That is essential before the ban can be lifted or a timetable for that lifting can be drawn up. The industry is 30 per cent. dependent on exports.

Photo of Malcolm Bruce Malcolm Bruce Shadow Spokesperson (Treasury)

I understand that the proportion is even greater there. We need progress towards the lifting of the ban.

We are addressing the particular problems of the head boners this morning. Mr. John Troup, who lives in Deystone in my constituency, was the principal of T and T Meats, a small company that used to exist in Aberdeen. He is in the same desperate plight as other hon. Members have had to bring to the attention of the House. His small business employed five people, specialising exclusively in taking the meat off cattle heads. He was trading profitably, making between £50,000 and £60,000 on the business in the previous full financial year. He had reinvested that money in the business and, like others, had extended the mortgage on his house.

Mr. Troup is desperately fighting a rearguard action to save his house, working as a fish packer to get some money to try to meet his basic overheads. His wife has been forced to abandon the further education course that she was pursuing and take a manual job in an attempt to keep enough cash coming in to avoid the house being recovered by the building society.

That is the effect on a previously successful small business that has been closed down by Government edict. The Government have said only that they are not paying compensation because it is not Government policy to do so. There is no legal remit: the Government have simply decided not to.

I have a letter—I am sure that other hon. Members have similar letters—from Lord Lindsay, the Scottish Office Minister responsible for agriculture, to the solicitors representing the Scottish head boners. He says: I sympathise with the head deboners"— I am afraid that sympathy will not be enough— whose business activities have been greatly affected by the measures introduced on 29 March and I fully understand the difficulties this has presented for them;"— I wonder whether he does— but as has been made clear previously, the purpose of the financial assistance which the Government has made available is to provide market support to keep the essential links in the beef supply chain operating while companies adjust to the changed market circumstances. It is not, and has never been, Government policy to utilise public funds to compensate businesses for losses incurred as a consequence of decisions taken to strengthen public health controls. That says only that it is a policy because it is a policy. The House must recognise that the distress of those businesses requires the Government to revisit the policy and decide what to do about it.

We are not talking about business failure resulting from the cumulative effect of a number of measures over time. We are talking about people who went to work as usual one morning to find a fax on the machine telling them to cease business immediately—the same day—without compensation and that disregarding that fax would be a criminal offence. That is quite different from going out of business because of various measures that make the business non-viable, which usually allows for some time to readjust and retrieve something, rather than having the entire business taken away.

I understand that the Association of Cattle Head De-Boners is taking the Government to the European Court of Human Rights. Lord Lester QC has advised that there is no domestic remedy, but the European route has a high probability of success. The association's solicitors say: the Junior Counsel engaged on the drafting of the documentation believes that the chances of the members succeeding has increased greatly since the initial consultation with Lord Lester.

I do not want to intrude on the Government's grief in their experiences in European courts, but it would surely be better for them to face up to their domestic responsibilities than for the issue to be resolved in the European Court of Human Rights, creating another cause of potential humiliation and perhaps anger in some quarters of the Government. They can avoid that by taking action in advance.

The issue may not affect many businesses or jobs—I think that the estimation is that 100 jobs will be affected in Scotland—but the loss of livelihood for the individuals involved is of unprecedented proportions, coming with no warning or opportunity to find any other compensation or alternative business. Whatever the Minister's brief, I hope that he will not close options and will undertake to revisit the issue. Saying simply that the Government have no policy to pay compensation is not a good enough answer. These people deserve compensation. They were doing their business and had their livelihoods removed as a direct result of a faxed instruction from the Government. The Government must accept their responsibility.

Photo of John Whittingdale John Whittingdale , Colchester South and Maldon 10:35 am, 13th November 1996

I congratulate my hon. Friend the Member for Gosport (Mr. Viggers) on his determination and persistence in pursuing the case for the head boning industry and on the eloquent way in which he has put the case this morning, which will allow me to be comparatively brief.

Until the beginning of the year, I was unaware of the existence of the head boning industry. I became aware of it when I received a letter from my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food informing me that a firm in my constituency, Latchingdon Fresh Meats, had failed to make the necessary changes to its premises to comply with the Fresh Meat (Hygiene and Inspection) Regulations 1995.

The proprietor, Mr. Ken Pearson, had requested a derogation, but my hon. Friend was minded to turn it down. However, she offered to meet Mr. Pearson, and we met on 19 February. I pay tribute to her sympathetic and understanding attitude. As a result of that meeting, it was agreed that Mr. Pearson would make the necessary changes. He has spent some £30,000 to bring his premises up to European requirements. That is a substantial sum for a business of that size, but he was able to borrow the money because he was running a thriving, successful business. The business concentrated on the sale of fresh meats, but 40 per cent. of it was in head boning. He was boning some 400 ox heads a week.

The Government's announcement six weeks later wiped out that part of his business at a stroke. He immediately had to lay off two people and was left with £15,000 worth of virtually unsaleable stock. The loss of the ox head boning business also affected the rest of his business, more than halving his turnover. Six months later, after the Government's measures, he is just about going, but it is still a struggle.

Although there are only about 30 head boning firms in the country, I soon discovered that a second one, Pearce Meats, was also located in my constituency. Bigger than Latchingdon Fresh Meats. it is exclusively a head boning business. Before the Government's measures, it was boning some 2,000 ox heads, and between 4,500 and 5,000 pig heads a week. The Government's measures have wiped out between 25 per cent. and 30 per cent. of its business. The company immediately had to lay off four people.

Like Mr. Pearson, Pearce Meats had also invested to meet European standards—some £80,000 to £100,000 during the previous four years. On each ox head, it previously made a profit of about £3. The Government's ban immediately cost the company around £6,000 a week. As a result of expanding the pig head business, Mr. Pearce has just about got the company back into profit, but it has taken four months, during which he did not think that his business could possibly survive. Those whom he was forced to lay off have not found new jobs.

The general point, which was well made by my hon. Friend the Member for Gosport, is that, whether the ban was justified is arguable; foreign head meat is still being sold. However, I accept that the ban is here to stay. The point is that both firms in my constituency did everything that they were required to do. They invested substantial sums at the behest of the Government yet, a few months later, the Government wiped out their business at a stroke.

Unlike other parts of the meat processing industry, which will recover in time, there is no prospect of recovery for the head boning industry, yet it is the other parts of the industry that have been given substantial sums in compensation. I must tell my hon. Friend the Minister that that is unjust. The amounts involved are not great, but my constituents deserve better treatment than they have so far received. I urge my hon. Friend to listen to the arguments and to give us something today that we can take back to our constituents.

Photo of John Reid John Reid , Motherwell North 10:39 am, 13th November 1996

The number of hon. Members who wish to speak in this debate is testimony to the breadth of support for the case put by the hon. Member for Gosport (Mr. Viggers). I will make my remarks as brief as possible so that other hon. Members can participate.

I have no pecuniary or commercial interest in the matter, and I have no specialised knowledge of it—indeed, I find it difficult to pronounce some of the words associated with this great problem, far less get my mind round them. However, I have two interests in the matter. One, of course, is public health; the other is that I know an injustice when I see one and I believe that there is an injustice in this case.

We need not rehearse what happened on 29 March or before, but I want to make two points, the first of which has been made by everyone. I wrote to the Minister as soon as the injustice of the case was brought to my attention by a company in my constituency, as was the case with other hon. Members. I refer to Wilson Young Ltd., part of the National Products Company in Shotts. I have still not had a satisfactory answer or explanation. Why were companies based in the United Kingdom, even in areas such as Scotland with an extremely low incidence of BSE, prohibited from entering the trade, when the same products could be imported from countries that had instances of BSE, some on a small scale but some on a par with the Scottish experience?

The most important issue is compensation. On 29 March, my constituency firm was hit by a whirlwind. We have heard from my hon. Friends the Members for Glasgow, Springburn (Mr. Martin) and for Midlothian (Mr. Clarke), and from the hon. Member for Gosport, about faxes saying, "Cease trading immediately." That is what happened in my constituency.

The Minister should think again. I am left, as are other hon. Members, with constituents who have complied with every Government regulation, observed the rules as laid down by the Government and the EC and who have invested in machinery specifically for the purpose. Compensation is available for farmers, for market support to help the essential links and supply chains, for abattoirs and for the beef stock transfer scheme, but none of that offers any consolation to people such as our constituents.

Head meats sourced from outside the UK are a sufficient problem, but when there is no compensation at all, their importation adds a gross injustice to an insult to many of our people. In most cases, the debts were incurred neither as a result of investing to speculate and to accumulate nor as a risk taken on the market, but as a direct result of Government instructions and Government regulations. It seems to me that there is a clear distinction between compensation for future trading profits and recompense for debt incurred as a direct result of Government instruction. I plead with the Minister, as other hon. Members have, to rethink the Government's position and to make some recompense to people whose lives were destroyed on 29 March.

Photo of Tony Baldry Tony Baldry Minister of State (Ministry of Agriculture, Fisheries and Food) 10:43 am, 13th November 1996

I say, first, to my hon. Friend the Member for Salisbury (Mr. Key) that I have no difficulty dealing with the brief from the point of view of collective responsibility. Some of my hon. Friends have given the impression that some of the decisions that have been taken are capricious or arbitrary. I hope that my hon. Friends accept that my right hon. and learned Friend the Minister of Agriculture, Fisheries and Food and all the other Agriculture Ministers have taken great care over the issue. Of course we have listened carefully to the representations made to us by my hon. Friend the Member for Gosport (Mr. Viggers), whom I congratulate on introducing this Adjournment debate. He did so very fairly and in full deference to the interests of his constituents. I fully understand his concerns.

We have, of course, looked at the matter time and again over this summer. Our decisions have, as I hope to explain to the House, been by no means capricious or arbitrary. They have been taken with great care, having regard not just to the Government's policies at the moment, but to long-standing, settled public policy and settled UK law.

The debate concerns established principles of compensation. I fully recognise that several issues such as compensation and market support have been raised, and I hope that I can distinguish them for the satisfaction of the House this morning.

The long-standing public policy on compensation is clear. There is a well-established principle in public law for paying compensation for loss of property as a result of Government action. The European convention on human rights requires the payment of compensation where property is expropriated. That principle means, simply stated, that when an individual is deprived of his property, fair compensation for that deprivation, subject to any overriding circumstances in the public interest, is properly due.

Where, under the over-30 months scheme, it has been necessary for cattle to be slaughtered, that is, in effect, the confiscation of property, and compensation flows from that action. Compulsory purchase is an example of compensation for loss of property. It has, however, also been a long-standing matter of settled public policy that no Government are under any obligation to pay compensation to a business for any loss of opportunity of carrying on that business which may arise from Parliament's properly considered legislative decisions.

Photo of Rt Hon David Trimble Rt Hon David Trimble Leader of the Ulster Unionist Party

The Minister talks about compensation for loss of property. Does he accept that that principle should extend to cases where property is rendered valueless as a result of Government action, which is what has happened to the equipment purchased in this case? The Minister referred to the European convention on human rights. Will he give us an assurance that if the action taken under the first protocol is successful, the Government will implement any decision immediately?

Photo of Tony Baldry Tony Baldry Minister of State (Ministry of Agriculture, Fisheries and Food)

There is a considerable distinction in that no property has been expropriated. The case to which I referred in my intervention during the speech of my hon. Friend the Member for Gosport is relevant to this point. As the hon. Member for Gordon (Mr. Bruce) made clear, no one involved in the matter has made any attempt to suggest to the High Court or to any of the courts of the United Kingdom that the Government's actions have been outwith UK law. If people feel that they have a remedy elsewhere, such as the European Court of Human Rights, they must investigate that remedy. It would be hypothetical to suggest what may or may not happen.

Photo of Tony Baldry Tony Baldry Minister of State (Ministry of Agriculture, Fisheries and Food)

I will not give way because there is an important principle to be made clear. I will give way to my hon. Friend if I have time later.

In this case, there has been no confiscation or expropriation of private property. What has happened is not a loss of property. We should be clear that we are talking about the loss of a business. Here the principle is clear. The Government do not compensate for loss of business. That was demonstrated clearly in the case to which my hon. Friend the Member for Gosport referred. Indeed, in many ways, the Skoal case may have been based on stronger grounds than is the head boners' case. As Lord Justice Taylor made clear in his judgment of the case in 1990: The applicants challenged by way of judicial review the decision of the Secretary of State for Health … to make the Oral Snuff (Safety) Regulations 1989. The Regulations provide that no person shall supply, offer to supply, agree to supply, expose for supply or possess for supply any oral snuff …During 1984, the applicants were looking for a manufacturing and packaging base outside the United States. They discussed with the Department of Trade and Industry and the Industry Department for Scotland the possibility of setting up a factory to market these products in Scotland. They were encouraged by the Government departments to do so and were offered a Government grant by way of incentive. In the result, the applicants built a factory at East Kilbride, near Glasgow, which was opened in 1985. They received £193,357 of Government grant. The company had been encouraged by Government grant to set up in the United Kingdom.

Photo of Robert Key Robert Key , Salisbury

Will my hon. Friend give way?

Photo of Tony Baldry Tony Baldry Minister of State (Ministry of Agriculture, Fisheries and Food)

I shall give way when I have finished this point.

The business was closed as a consequence of legislation. The applicants complained to the High Court that they should receive compensation because they had been encouraged to set up the business. On that specific point, Lord Justice Taylor said: the decision to ban the applicants' products is tantamount to a breach of contract or a breach of representation and, as such, is an abuse of power. However, a Minister cannot fetter a discretion given him under statute. Provided he acts within his statutory powers, rationally and fairly, he is entitled to change his policy.

Several hon. Members:

rose

Photo of Tony Baldry Tony Baldry Minister of State (Ministry of Agriculture, Fisheries and Food)

I shall give way in a moment, but I wish to make my points in some order as it is important to establish the principles relating to these important matters.

In giving judgment, Lord Justice Taylor held that it would be absurd to suggest that some moral commitment to a single company should prevail over the national interest and that the company's loss of business, though consequential on legislation, did not justify a legal claim for compensation from the Government.

Photo of Robert Key Robert Key , Salisbury

The Meat and Livestock Commission was offering grants to the companies. My constituent's company, Touchmead, was pursuing the possibility of such a grant, but it did not work out. Surely that was a clear indication that the Government were inducing companies to borrow money and take risks in exactly the way that the Minister has described.

Photo of Tony Baldry Tony Baldry Minister of State (Ministry of Agriculture, Fisheries and Food)

My hon. Friend clearly did not hear me correctly. In the Skoal case, the company was given a grant to set up in business in East Kilbride. To that extent it had a better case or was at least on all fours with the case that my hon. Friend mentions. In that instance, the High Court ruled that provided the Minister acted properly, there was no cause for compensation if the business ceased to trade as a result of a decision by Parliament.

Photo of Elliot Morley Elliot Morley , Glanford and Scunthorpe

I expect that the Minister is absolutely right in the legal sense, but the arguments that have been put by hon. Members on both sides of the House go beyond that in terms of the Government's moral obligation in respect of the hardship that has been inflicted on the companies.

I appreciate that the Minister is under certain restraints in terms of Treasury budgets, but will he consider two quick suggestions? He knows that there was substantial overpayment in compensation to slaughterhouses, which has never been clawed back. I do not know whether some agreement has been made, but there may be some scope within existing budgets to redirect some money towards this sector of the industry.

Secondly, the Government stopped the marketing and processing grants scheme, which is an EU scheme. Will he reconsider that scheme, as it might provide some assistance to companies that have moved into other sectors such as pig head deboning?

Photo of Tony Baldry Tony Baldry Minister of State (Ministry of Agriculture, Fisheries and Food)

I am endeavouring to explain to the House that our decisions have been taken on long-established principles of public law. The fact that we have been unable to offer head deboners the assistance that hon. Members are urging upon us is not a matter of being moral or immoral, but of following long-established public policy and law.

That was made clear in the House yesterday by my right hon. and learned Friend the Home Secretary. Perhaps I should have read the whole exchange between my hon. Friend the Member for St. Ives (Mr. Harris) and my right hon. and learned Friend. My hon. Friend the Member for St. Ives specifically asked: Will he take fully into account compensation for the stock of weapons and accessories that such businesses hold and for loss of trade? My right hon. and learned Friend made it clear that there should be a distinction between claims for compensation for loss of trade and business. He said: So far as I am aware there is no precedent for such claims and I would arouse false hopes and expectations if I were to give my right hon. and hon. Friends any comfort on that point."—[0fficial Report, 12 November 1996; Vol. 285, c. 182]

Photo of Bob Ainsworth Bob Ainsworth Opposition Whip (Commons)

The Minister is not prepared to set a precedent on loss of trade, and we all understand that. Although there might be a moral argument for compensation, it is not necessarily being sought at the moment. In compliance with the regulations, businesses have spent money on equipment that has been rendered totally useless by a further regulation. Can the Minister not compensate those businesses purely for property that they bought to comply with the regulation and is now of absolutely no use to them? If he has to cover himself by confiscating it, he should do just that, but there should be some compensation.

Photo of Tony Baldry Tony Baldry Minister of State (Ministry of Agriculture, Fisheries and Food)

We have not been uninterested in the representations that have been made to us by my hon. Friends the Members for Gosport and for Salisbury, among others.

On at least two occasions we have taken counsel's opinion to see whether we can provide further help to cattle head deboners under established law. Contrary to what some people think, Ministers do not have powers capriciously and freely to dish out public money. They have to have some legal authority to do so. When we took counsel's advice, we thoroughly reassessed the case for a change of public policy on supporting deboners, following the meetings that my hon. Friend the Member for Gosport had with my hon. Friend the Parliamentary Secretary. We then sought further advice from leading counsel in the field. Of course we considered the matter carefully.

Counsel's opinion was that, having regard to established law and public policy, the cattle head deboners were not entitled under domestic law to compensation for the loss of their business resulting from the decision to classify the whole cattle head as specified bovine material.

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

As there is all-party support on the matter, surely the solution is perfectly simple. Blow the QCs—we should bring in a perfectly simple Bill that would be backed by both sides of the House.

Photo of Tony Baldry Tony Baldry Minister of State (Ministry of Agriculture, Fisheries and Food)

My hon. Friend, who I suspect may have supported the Government last night—

Photo of Tony Baldry Tony Baldry Minister of State (Ministry of Agriculture, Fisheries and Food)

I am sad that we did not have her support, but she will have recognised that, in a number of instances, such as with firearms, companies go out of business as a consequence of certain Acts of Parliament. This is another such instance. [Interruption.] The hon. Member for Glasgow, Springburn (Mr. Martin), whose contribution to the debate was to make gratuitously offensive comments about my right hon. and learned Friend the Minister of Agriculture, Fisheries and Food, scorns. Of course there is a precedent. As a consequence of the Firearms (Amendment) Bill, certain companies will go out of business. Last night, I heard no Labour Member urge that those companies should receive compensation for their loss of business. Clearly the Opposition pick and choose what they consider to be easy issues to attract public sympathy.

Photo of Tony Baldry Tony Baldry Minister of State (Ministry of Agriculture, Fisheries and Food)

I shall not give way to the hon. Gentleman, who makes gratuitously offensive comments.

Ministers have to ensure some consistency in public policy, and we shall do that. The value of the cattle deboning industry has been assessed at some £l1 million. We have provided support and assistance to deboners because some cattle head deboners, as cutting plants, have benefited from the beef stock transfer scheme under which the intervention board has purchased unsaleable stock at 65 per cent. of the pre-crisis market price. Cattle head deboners have, therefore, benefited to the tune of some £6.7 million under that scheme.

Out of the total value of the business of £11 million, cattle head deboners have received £6.7 million, and the company that my hon. Friend the Member for Gosport mentioned has received more than £100,000 under that scheme. It was also open to the cattle head deboners to apply for unsaleable stock to be taken off their hands under the separate disposal scheme that we introduced for downstream sectors. I appreciate that those who have companies wish the Government would come up with the money, but hon. Members have not addressed today the long-established principle of United Kingdom law that no Government, at any time or in any circumstances, in any way, have paid compensation for the loss of a business following a legitimate decision of the House.