Animal By-Products, Pet Passport and Animal Health (Fees) (England) (Amendment) Regulations 2023

Baroness McIntosh of Pickering Excerpts

Monday 5th June 2023 Grand Committee

[The Minister of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)]

My Lords, these regulations were laid before the House on 18 April. This instrument seeks to make amendments to the Animal Health (Miscellaneous Fees) (England) Regulations 2018 and the Animal By-Products and Pet Passport Fees (England) Regulations 2018 to ensure that there is no under-recovery or over-recovery of costs. These amendments do not contain any changes to policy or processes, only to the fees that the Animal and Plant Health Agency can collect on behalf of the Secretary of State in relation to statutory animal health services carried out by the agency.

The fees are designed to fund APHA’s front-line statutory animal health services for safeguarding animal health and supporting our domestic and international trade. These are: inspection of consignments and licensing of facilities involved in the trade of livestock semen, eggs and embryos; inspection and licensing of facilities involved in the handling, storage or incineration of animal by-products not destined for human consumption; inspection of live animals arriving from third countries at our border control posts; surveillance of commercial poultry flocks for salmonella; licensing and proficiency testing of private laboratories carrying out salmonella tests under our national salmonella control programme; and registration and approval of premises intending to export breeding poultry, day-old chicks and hatching eggs from Great Britain.

The proposed amendments also include the removal of the fees regime for pet passports, as APHA is no longer involved in the issuance of passports for the movement of pets to and from the UK and other countries. Following public consultation, new fees for these services were last introduced in 2018, with a commitment to businesses that fees would be reviewed biennially to ensure the charges and exemptions were appropriate.

Due to the agency’s focus of effort and resources on EU exit work, Covid and avian influenza, these reviews were put on hold and the fees for these schemes have consequently not been refreshed. As a result, businesses are being charged in a way which does not reflect full cost recovery for APHA. The schemes are failing to achieve recovery of their full costs, with a deficit of between £0.4 million and £0.5 million per year. This shortfall is currently being funded by the public purse.

Following the cost recovery principles of the Managing Public Money guidelines, APHA and Defra finance teams have developed a new fee schedule to deliver full cost recovery. No additional margins or profits have been included, and my counterparts in His Majesty’s Treasury have approved the approach taken.

The average increase to overall scheme fee income to achieve full cost recovery would be 51%. Given the substantive cost increases for some elements within the fee schedules, in designing this instrument we have balanced a proportional approach for businesses with the need to cover costs. We are proposing to follow the approach agreed in the 2018 consultation and apply a phased increase in fees over two years, with 50% of the fee uplift delivered in July 2023 and full cost recovery for the services delivered from July 2024. Border control post services are the exception to this phasing option. Here, we are proposing to increase fees and achieve full cost recovery from July this year. This will help us avoid any operational conflicts with changes that may follow the review of the new borders and boundaries fees process.

Delaying this uplift further would only increase the gulf between cost and recovery, and the impact of the changes would be even greater because of the impact of compounding factors such as inflation. APHA has continued to engage with business users and business associations on service performance and service fee schedules following the 2018 consultation, and these businesses are aware of the proposed new fee schedules and have engaged solely on service performance, rather than the fee increases themselves.

This statutory instrument applies to England only. The Scottish and Welsh Governments are following a similar approach, as APHA provides the same services to both Administrations. The Scottish and Welsh Governments have laid their own corresponding legislation. I commend the draft regulations to the House.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am grateful to my noble friend for presenting the regulations before us. First, can he explain when the last consultation was? He said that there had been a consultation in 2018. Paragraph 10.1 on page 4 of the Explanatory Memorandum refers to a consultation but seems to indicate that the last one was held in 2018, which is five years ago.

Secondly, these are huge increases. They are not 5% or 10%; we are looking at a 41% increase for the cost of animal by-products regulations, a 53% increase in the current fees of the animal health regulations, 65% for the animal health regulations relating to artificial breeding controls, and a more modest 21% increase for animal health regulations relating to the poultry health scheme. In the context of the general situation and the increases we have seen in public sector salaries, everyone balked at a 14% increase and 5% or 10% increases. I quite accept that, as my noble friend said, there has not been an increase since 2018, but these are huge increases. Can he put my mind at rest and say that there has been a more recent consultation with the industry, which is feeling fairly beleaguered?

Earlier, the noble Baroness, Lady Anderson of Stoke-on-Trent, referred to the cost of living crisis. What is becoming clear is that, while supermarket prices are going up, those increased costs are not being passed on to, for example, producers of meat and poultry. I am concerned. I realise that they are spread over two years but these are really big increases. If there has been a more recent consultation, I would be interested to know what the feedback from the industry has been in this regard.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I thank the Minister for his introduction to this important SI, which wraps two previous SIs up into one and deals mostly with the levying of fees.

The Explanatory Memorandum indicates that the fees will use the actual

“cost to the agency and are not uplifted using inflationary rates”,

and that “no profit element” is involved. The noble Baroness, Lady McIntosh of Pickering, has already said very eloquently what a large increase there has been in these fees. The fees also cover seven different service areas provided by the Animal and Plant Health Agency, APHA, which is an executive agency of Defra. The fees have not been updated for some time, as the Minister said, with Brexit and Covid somewhat dominating the agenda.

Paragraph 7.3 of the EM gives details of how the costs will be calculated and the fees collected by APHA, stressing again that inflation will not be considered. I wonder whether this is wise. If there is no allowance for inflation, how will the true costs be calculated and passed on to those involved? An annual review—if not uplift—in fees is generally accepted in all other areas of life, so why not here? The Treasury requires, quite reasonably, that true costs be recovered. If there is no annual review of these fees and inflation is not to be considered, it is not going to be very long before a full-scale review is needed again. I would be interested to hear the Minister’s comments.

Paragraph 7.9 of the EM, relating to border control posts, indicates that documentary and identification checks will be conducted by authorised vets

“to prevent the introduction of diseases harmful to animal and public health”.

This is especially important. However, we have had debates over the years, especially since the advent of Brexit, about the availability of adequately qualified vets to conduct this inspection work. This type of work is not high on British vets’ “must do” lists. It is nevertheless extremely important that these border checks be conducted and carried out thoroughly. Is the Minister confident that sufficient trained vets are available to implement the necessary checks?

I note that, in the instrument itself, there is a category on page 7 headed “Animals not covered by any other category”. Can the Minister say whether this includes Camelids—that is, llamas and alpacas? If not, where are they covered in the instrument?

Lastly, the uplift in fees will be implemented over a two-year period, as the Minister said, with some this year and the rest in 2024. The cost will fall on businesses, charities and voluntary bodies that have not had an uplift since 2019. It is to be hoped that they will be expecting this uplift. Whether they have looked at the fees listed in the APHA section of the Government’s website is another matter; I did not find my search of that website a terribly rewarding exercise. None the less, I am happy to support this SI.