Food Fraud

Jim Fitzpatrick Excerpts

Monday 8th September 2014 Commons Chamber

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

I congratulate the hon. Member for Brecon and Radnorshire (Roger Williams) on leading our bid to secure this debate and thank the Backbench Business Committee for affording us the opportunity to have it. It is good to see the Minister and the shadow Minister in their places. I think this is the third time in four days that we have been in the Chamber discussing various issues that fall under their brief, and we look forward to hearing their comments in due course.

I am also delighted to see the Chair of the Select Committee, the hon. Member for Thirsk and Malton (Miss McIntosh), in her place. I see that she issued a press release last week, in which she says:

“Many of Professor Elliott’s conclusions echo those made by the Environment Food and Rural Affairs Committee in its two reports on Contamination of Beef Products and Food Contamination.

In particular, both the Committee and Professor Elliott raised concerns about the reduced capacity for testing in the UK and stressed the need for more Public Analysts to undertake such testing. The Government must set out how it intends to deliver this.

We also welcome the creation of a Food Crime Unit which should help to deter criminals from seeking to defraud consumers.”

I know the hon. Lady will speak extensively on those points, and I will return to them in my comments, too. I do not intend to speak for long. I just want to draw on several of the briefings we have all received over recent days, and I will begin with the National Farmers Union briefing.

The NFU makes two very strong points which are worth reading into the record. It says:

“It is important that the costs of any new regulation, or the proposed food crime unit, aren’t pushed on to farmers, who weren’t implicated in the horse meat scandal.”

That is very important, because farmers may very well end up being looked on, sometimes unfairly, by Governments of different colours as the people who should be funding certain things, but this scandal was not of their making and therefore they very strongly defend their position, which is absolutely correct. The NFU goes on to say:

“This highlights the need for short, traceable, supply chains and the importance of food assurance schemes such as ‘Red Tractor’, which ensures high standards and traceability from farm to fork.”

The Minister may well wish to discuss such schemes that provide assurance to consumers that the products they are purchasing are safe.

The Food and Drink Federation is a very respectable organisation that represents very respectable trade bodies that are, however, vulnerable to unscrupulous traders who damage reputations across the industry. As the hon. Member for Brecon and Radnorshire said, the latest polling of consumer confidence demonstrates that the industry’s reputation has been damaged. It is not the reputation of those involved in criminality or unscrupulous trading that has been damaged, but the reputation of the whole industry—the good traders and good producers. The FDF says in the opening paragraph of its briefing:

“The final report of Professor Elliott’s Review into the integrity and assurance of food supply networks…recognises that UK consumers have access to perhaps the safest food in the world. However any supply chain, no matter how simple or complex, can present risks that need to be adequately managed.”

I want to draw quite heavily on the briefing from Which? It is extensive and highlights the eight key pillars identified in the Elliott report. It refers to

“the National Food Crime Prevention Framework for ensuring the integrity of our food system”

and, of the eight key points, it starts with the “‘consumers first’ approach”, which must be the key priority of any Government. It goes on to talk about zero tolerance and states:

“The Report’s call for the reintroduction of a central register of food law convictions should be acted upon urgently to ensure information is available to consumers to enable them to make an informed choice about the food they buy.”

The briefing also talks about improved intelligence to pre-empt fraud and says:

“We support the creation of an FSA intelligence hub and a ‘safe haven’ to enable industry intelligence to be better shared…The Government should also address the need for mandatory local authority testing and sharing of information in order to identify problems and draw national linkages.”

I would very much like the Minister to address the local authorities issue. We covered it in when we debated puppies last Thursday, when my hon. Friend the Member for Hayes and Harlington (John McDonnell) in particular said it is all very well us all wanting trading standards bodies and local authorities to do a better job, but if local authorities are not resourced, they are not going to be able to do the job we expect them to do. One theme that frequently crops up in the different briefings we have received on food fraud is that the quality of the job the public sector and local authorities are able to do varies across the country. It would be interesting to hear the Minister’s comments on local authority testing and their ability to carry out mandatory testing, and how to make sure best practice is replicated across the country.

Which? goes on to talk about laboratory services and says it

“supports the finding that a more strategic and effective public sector laboratory testing service is necessary.”

It also says that the Government’s

“additional £2 million funding is welcome, but in light of the challenges raised by the Elliott report, a more systematic approach to ensuring future provision is required.”

I would welcome hearing the Minister’s comments on the Which? analysis that the £2 million is very welcome, but is it going to be adequate for the task in hand?

On audits, Which? states:

“The Government should now provide guidance and set minimum standards to help smaller as well as larger players understand the level of action that is appropriate, including the level of testing that is needed. It is also important the FSA leads national investigations and works more closely with local authorities to ensure effective enforcement.”

It then goes on to talk about Government support. It shares the report’s concerns about local authorities’ resources being increasingly stretched. As evidence, it cites a 16.8% drop in food standards interventions and a 6.8% drop in testing the composition of our foods. It states:

“Our research has also found a huge variation in the way that food enforcement is carried out across the UK.”

Will the Minister tell us more about the standard and quality of testing across the different local authorities? On Government support, Which? goes on to state:

“The FSA’s audit process identifies areas of weaknesses within individual local authorities, but now needs to take a more fundamental look at the way local authorities are performing. The Agency must also have sufficient powers to intervene in particularly complex or national cases.”

On leadership and co-ordination of investigations and prosecutions, the Which? briefing states:

“The report raises questions around the effectiveness of penalties and the limits of the current sanctions to deter criminal activity.”

I shall ask the Minister a question about that in a moment. On crisis management, Which? states:

“The Report notes the need for timely support to the FSA from across government in the event of a serious incident.”

It goes on:

“The Report identifies the need for the Government to urge the FSA to be better prepared for responding to future food incidents.”

In conclusion, I want to make a couple of brief comments and ask a few questions of the Minister. My hon. Friend the Member for Ogmore (Huw Irranca-Davies) pointed out to the hon. Member for Brecon and Radnorshire that the machinery of government changes and the weakening of the FSA in 2010 was criticised by the National Audit Office, which stated that the changes had created confusion and offered “no obvious benefit”. The changes included removing responsibility for food authenticity from the FSA to DEFRA, which was thought to have been part of the problem. Do the Government now accept that that change was a mistake?

Professor Elliott’s report, which was commissioned by the Government, was due in the spring. It is now here, and we would be interested to hear about the delay and about what is believed to have been the softening of the recommendations between the publication of the interim report and the final report. The fact that the Government are accepting all the recommendations is good news, however.

Returning to one of the points raised by the hon. Gentleman, serious criminality has been uncovered but, although investigations are continuing here and in many other countries, there has been only one prosecution for breaching food regulations and a lack of traceability of meat. Huge frustration has been expressed over the lack of accountability. Does the Minister envisage more prosecutions as a result of these recommendations, or does he think that the legal examinations and prosecutions have run their course? Are we drawing a line under that and moving on to change the regulations?

I hope that the Minister will also comment on the eight pillars of the Elliott review. Everyone agrees that food security is too important to be left to chance or to unscrupulous traders. It is up to the Government to act, and I am pleased that they will be acting on the Elliott recommendations. We look forward to those recommendations being implemented, but the fundamental question relating to the ability to act revolves around the adequacy of the funding and resources to enable the appropriate agencies, the new structures and the local authorities—especially trading standards officers—to deliver the improvements that we all want to see.

--- Later in debate ---

[Mr Heath]

The hon. Gentleman is absolutely right. One of the earliest actions I took as a Minister was to convene a meeting—I remember it happening—at the Food Standards Agency with all the major retailers. I made it plain to them that they had a very real problem to deal with, and that that problem was not going to be resolved unless they were prepared to do the work that was necessary in terms of testing and of sharing information, which were not part of the culture of the industry at that point. I said that unless they were prepared to do that, it was impossible for the Government to take the steps that would help to restore the reputation of the food industry.

[Jim Fitzpatrick]

Let me reinforce the point that the hon. Gentleman is making. Every food retailer was affected by the scandal. Nobody was left untouched. The most diligent retailer was also being conned by unscrupulous dealers somewhere down the chain. Did the hon. Gentleman get a sense that they were going to invest more in their own testing, or were they looking to Government for that investment? What was the balance there?

[Mr Heath]

We made it clear that testing was the retailers’ responsibility. Retailers had not only a legal responsibility but a moral responsibility to their consumers to ensure that the material they put on their shelves was what they said it was. They were put in no doubt whatever that they had to up their game, and they did, and all credit to them. I have no criticism of the actions that the retailers took to meet the demands that we placed on them for this very comprehensive testing regime, which took place not just once but time after time to ensure that the incidents that had been identified had been eliminated and remained eliminated. I have one caveat, which the Minister may wish to address: I did not feel that I had the same level of commitment from the catering industry. I am worried that as a lot of food arrives unlabelled on tables across the country through the catering industry, that might perhaps still be a weak spot. I would like to think that continuing pressure will be placed on the catering industry to be as assiduous as I hope the retailers now are about composition, testing and ensuring the integrity of their systems.

--- Later in debate ---

[Mr Heath]

They should indeed. People should also be aware—the hon. Member for Tiverton and Honiton (Neil Parish) made this point in an intervention—that the more price wars we have in our supermarkets, the more dangerous it is for good, honest suppliers, and the greater the propensity for those in the middle to try to scrape an extra margin through unfair practice. That is why I worry when our major retailers engage in food price wars, because although it may seem that that is in the interests of consumers of modest means, it is not, because those people are just as entitled to get good-quality produce for the money they spend as those paying much higher prices.

Although they are beginning to do this, retailers need to raise the status and increase the independence of those they employ to carry out testing throughout the supply chain. That will mean that if the testers suspect that something is wrong, they can say, “This has to be looked at,” and the matter will be considered at board level so that appropriate action can be taken. I do not want to start a hare running or to suggest that something very wrong is happening in the catering industry, but I worry that the quality of products that sometimes find their way into catering establishments is not as high as those sold on retail supermarket shelves.

The Food Standards Agency has a crucial role to play, but one of the difficulties that I faced as a Minister—the current Minister will face the same situation—was that I had no responsibility for the agency, so I had to answer questions in the House that were strictly speaking nothing to do with me, in the sense that the FSA had an independent role. The distinction is important, because the food industry’s sponsoring Minister should not also be its regulator, and we saw many years ago that if that happens, the public lose confidence in the regulator. However, it is important that there is the greatest possible co-ordination between DEFRA and the FSA. We had that, and I pay tribute to the agency and its officers for the work that they did with me and for their help, which I appreciated. It is important that such co-ordination take place at a high level.

I worry that local authorities do not always play their part. We need a comprehensive local authority testing system. Some local authorities are very good, but others, frankly, are not. It is easy for anyone to say, “Oh, it’s about resources,” but there is no direct correlation between the resources available and whether an authority does a good or bad job. It is more a case of whether an authority recognises that it has an essential and primary responsibility to keep people in its area safe. Just as central Government have a responsibility, so does local government, so local authorities need to carry out testing. There is a question about the laboratory service—the recommendations on the laboratory and public analysis services are crucial aspects of the package—but I do not accept that local authorities should be let off the hook if they say, “This is a low-priority area and we want to spend our money elsewhere. It’s all the Government’s fault.” That is not the case, and local authorities must recognise their responsibilities.

[Jim Fitzpatrick]

I take the hon. Gentleman’s point that resourcing is no guarantee of local authorities providing good services, because there are some very good authorities and others that are not so good. The practice of various local authorities shows that this is not a party political issue either. However, one of the Elliott report’s main recommendations is that there should be an examination of what is happening in local authorities so that we can identify the good guys and those who are not doing such a good job, find out what is best practice and how it can be achieved, and then share that information.

[Mr Heath]

I entirely agree, although I suspect that the Food Standards Agency knows an awful lot of that information already because it works directly with local authorities from day to day and will know of the results it receives from local authority analysts.

We must not set out rigid structures for the FSA that impose testing regimes for no benefit. The system must be based on intelligence and proportionality. Earned recognition, if appropriate, is an important way of redirecting resources effectively but, as Professor Elliott says, that must be coupled with spot checks to ensure that what one thinks is going on is actually going on. Nevertheless, it would be foolish to redirect FSA resources, which are always under pressure owing to the extent of its responsibilities, to testing that serves no useful purpose.

I understand exactly what Professor Elliott says about the concept of a food crime unit, but I have a concern. Food crime and fraud cover a wide spectrum of offences, ranging from low-scale inadvertence and very minor adulteration—frankly, it is not difficult to pick up and prosecute such practice, and it should be well within local authority or FSA officials’ power to take appropriate action to deal with it—to the large-scale fraud that the horsemeat scandal revealed, which I think is based on organised crime. Such fraud might require action at a much higher level, such as through the National Crime Agency, and to deal with that sort of organised crime, we need a sophisticated approach and co-operation with counterparts throughout the world, such as Interpol and Europol. I worry that if we are not careful, the food crime unit could fall betwixt and between those two ends of the spectrum, and we might have something that is ineffective at dealing with the big guys, but over-designed for the little guys. The Government need to give serious thought to the terms of reference and composition of the food crime unit, as well as to how it reports and feeds into the gangbusters in the NCA.

The one thing that worried me enormously when I was a DEFRA Minister—it still worries me enormously, and I think it will worry me more and more—was the resilience of the Department itself. DEFRA is a good Department. It does an awful lot of good work and has to cover a huge number of contingencies, but its funding and resources are now such that it would find it difficult to deal with a major incident. I hope that the Treasury and leaders in government recognise that if we have a major incident to which DEFRA is unable to respond, the consequences could be enormously damaging. I am not saying that we are at that point yet, but we must be cautious that we ensure that we do not stretch what is already a thin line—a thin blue line, red line or whatever; let us think of a colour—

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)]

I congratulate the hon. Member for Brecon and Radnorshire (Roger Williams) on securing the debate. He expressed some disappointment about the number of Members attending, but we have had a really substantive event; it does not take away from the gravity of the subject because the speeches made have really got to grips with the issues. Let me start by making it absolutely clear that food fraud is totally unacceptable: it is a crime, and this Government will not stand by while consumers are duped and deceived.

As my hon. Friend the Member for York Outer (Julian Sturdy) made very clear, food and drink manufacturing is important to this country. It is our largest manufacturing sector, a significant contributor to economic growth and a big employer. British food is renowned throughout the world for its quality, and our farming industry is world-renowned for our high animal welfare standards. The integrity of our food supply chain is essential for the great reputation of our exports, as well as for the confidence of consumers at home.

I want to say a little about the action that the Government and others have already taken since the horsemeat scandal broke at the beginning of last year. First, there has been robust testing of meat by industry and by the Government, with more than 50,000 tests of processed beef products carried out during that time, and I can say that no horsemeat was present in any of those 50,000 tests undertaken since the initial scandal at the beginning of last year. The Government have provided an additional £2 million of funding to local authorities for food sampling in the current financial year to help them carry out that vital consumer protection role.

We have commissioned additional sampling and testing for authenticity in response to intelligence that has been received. The hon. Member for Brecon and Radnorshire cited the example of lamb kebabs that did not contain as much lamb as they ought to have done. There has been comprehensive sampling of take-away meals to seek undeclared meat and undeclared allergens, which are another cause of concern. We have also instigated the development of new testing to ascertain provenance and country of origin, so that we can check that the country of origin that is stated on the label is correct and that those who claim that products come from the UK are being honest.

Finally on testing, we are developing and road-testing a new method to detect undeclared offal in processed meat products. The hon. Member for Ogmore (Huw Irranca-Davies) asked me what area we would look at next and where we think there might be additional problems. This is an area that we highlighted very early on. That is why we have been developing testing in the area.

At the end of last year, the FSA set up a new intelligence hub to collect, analyse and share information on emerging risks. We have also taken action to empower consumers to understand where their food comes from. That includes improved country of origin labelling requirements for products such as lamb and pork that have been set at an EU level, which take effect from April next year. The UK argued strongly for those changes. We are also improving the public procurement of food and catering services to provide schools and hospitals with high-quality British food.

A great deal has been done, but this debate has focused very much on the final report of Professor Christopher Elliot, which was published last Thursday. I want to say at the outset that the Government have accepted all Professor Elliott’s recommendations. As I said earlier, many of them are already being implemented. We will be taking forward other improvements that were recommended by him to ensure that consumers have absolute confidence in the food that they buy. I think that there can be a universal consensus around the House about the key point that Professor Elliott made: the consumer must come first.

Chief among Professor Elliott’s recommendations was the formation of a new food crime unit, based within the Food Standards Agency. That will build on the intelligence hub that was established in the FSA at the end of last year, but will add investigative powers. We have made a commitment to establish the unit and it will be fully operational by the end of the year. Initially, it will focus on building the intelligence and evidence picture of the risks and nature of food fraud in the UK.

It is important to note that Professor Elliott made it clear both in his interim report and his final report that the incentives for organised crime to get involved in food fraud are high. The hon. Member for Poplar and Limehouse (Jim Fitzpatrick) highlighted that in his contribution. Although Professor Elliott stated that he was unable to find any credible evidence of serious organised criminals operating in this area in the UK, he highlighted the serious risk of that happening, given the incentives. The Government are not at all complacent about that. If there is any evidence of criminality in our food supply chains, we are determined to find it and fight it.

A number of Members, including the hon. Member for Ogmore, highlighted the importance of whistleblowing. That is the subject of one of the main recommendations made by Professor Elliott. There is a concern that employees and others who have knowledge of food fraud do not feel that they have the right mechanism through which to alert people. The FSA has had a whistleblowing service, but it is fair to say that the awareness of it has not been sufficiently high. The FSA is looking seriously at steps that can be taken to increase people’s knowledge of the whistleblowing service. In addition, steps are being taken by the food industry to put in place similar measures to make it easier for whistleblowers to report wrongdoing.

Linked to that issue is the need for better intelligence gathering and sharing across Government and the industry to improve our ability to protect consumers. As a number of hon. Members said, Professor Elliott spoke about the need for a safe haven for industry so that businesses can share intelligence in a way that does not compromise commercially sensitive information. The FSA has made a commitment to improve its systems for dealing with sensitive information and to facilitate the kind of intelligence sharing and analysis for which Professor Elliott called. We will work with the industry to facilitate its development of a safe haven to contribute to that intelligence-sharing process.

A number of hon. Members, including the Chair of the Environment, Food and Rural Affairs Committee, my hon. Friend the Member for Thirsk and Malton (Miss McIntosh), and my hon. Friend the Member for Tiverton and Honiton (Neil Parish), talked about the importance of supply chain audits. That is another key theme throughout Professor Elliott’s report that we want to learn from. Professor Elliott highlighted the action that the food industry has already taken to assure the integrity of its supply chains and restore consumer confidence following the horsemeat fraud.

Professor Elliott made a number of key recommendations for the industry on that issue. First, he said that there should be a shift of emphasis towards the use of unannounced audits and the use of sampling as part of the audit process to act as a deterrent. My hon. Friend the Member for Tiverton and Honiton made the point powerfully that we need to have unannounced audits if the audits are to be meaningful.

Secondly, Professor Elliott made an important point about duplication in the audit process. The hon. Member for Ogmore has talked about Government Members being negative about regulation. We believe in having regulation where it serves a purpose, but we should all share the hope that we can remove duplication. Professor Elliott made the point that a lot of retailers are doing similar audits, but with slight differences. There is a good case for the British Retail Consortium bringing its members together to review their audit standards and give consistency to their approach to audits so that there is a single industry audit system. He also called for the introduction of a new fraud module in the audit, which is incredibly important.

We must recognise what the industry has done to restore confidence in the food supply chain. I commend the work that the Food and Drink Federation has done to introduce a guide to help its members protect themselves against the risk of food fraud. My hon. Friend the Member for Thirsk and Malton referred to that. Although a number of hon. Members, notably the former Minister, the hon. Member for Somerton and Frome (Mr Heath), highlighted concerns about the catering industry, it is important to note the good work that is being done by the British Hospitality Association to engage small catering businesses on good practice in food authenticity, and its work with Whitbread to develop an audit standard for larger food service businesses. He is right to highlight the concern and there might be further difficulties in making progress on that front, but we welcome the work that the industry has done.

The shadow Minister spoke about the machinery of government. He asked why, after the interim report called for a change in the machinery of government, Professor Elliott seems to have stepped back slightly from that. Professor Elliott spells out the reason quite clearly on page 49, where he highlights the fact that representations were made to him regarding the machinery of government changes. He says:

“The review investigated this issue and was able to ascertain that the winding down of the FSA’s food authenticity programme was initiated prior to the machinery of government changes. While not attributing any blame for this decision, it was certainly not helpful”.

The final point he makes is that wherever the boundaries are drawn in the machinery of government, there will still be a need for different parts of the machinery to work together. That is why his ultimate conclusion is that wherever the boundaries are drawn, the most important priority is to have better co-ordination. That is exactly what we will deliver with the food crime unit.

The hon. Member for Poplar and Limehouse spoke about the vital role of local authorities, and around 2,500 trading standards officers provide an important part of our field force in that area. As he knows, we have made available an extra £2 million per year, and the Food Standards Agency runs training programmes for those 2,500 officers in the field. Local authorities have a legal responsibility to do that work under the Food Safety Act 1990, and a number of protocols and service agreements that the FSA has with local authorities set out exactly what is required, which is monitored centrally by the FSA. The hon. Gentleman is right to say that there could be a mixed picture, with some local authorities being better than others, but the FSA monitors them and holds them to their service agreements and requirements.

[Jim Fitzpatrick]

In my exchange with the hon. Member for Somerton and Frome (Mr Heath), I accepted that this issue is not necessarily about extra funding, and it is certainly not about party political control because there are good and bad local authorities. The hon. Gentleman said he believed that the FSA had information about which local authorities were good and which could perform better. Is the Minister personally examining that in discussions with the FSA or with ministerial colleagues in the Department for Communities and Local Government? Getting those local authorities to raise their game, whatever the reason, is an objective that I am sure the Minister holds. Will he reassure the House that he is considering that issue?

[George Eustice]

The FSA manages and monitors the work of local authorities, but one of Professor Elliott’s recommendations is that we should have a new committee on food integrity and food fraud. I will chair that committee, and it will be attended by my colleagues and a Minister from the Department of Health. We will discuss those issues and monitor the situation to which the hon. Gentleman alludes.

Let me mention some of the other points that Members have raised. Sanctions were mentioned, and it is important to note that the maximum penalty is already 10 years. Sentences are ultimately a matter for the courts and the Ministry of Justice, but 10 years is quite a significant sentence. A number of Members asked why we have been so slow to get prosecutions, but as many will know, the City of London police are leading the investigation. There have been five arrests and two prosecutions, which are currently going through the courts. Hon. Members will understand that it is not appropriate for me to comment on ongoing legal cases, but we should recognise that the City of London police have faced challenges as they have had to engage with many different police forces across the European Union to bring prosecutions together, which has taken some time.

My hon. Friend the Member for Thirsk and Malton raised the issue of labelling in the European Union. From April next year we will introduce improved country of origin labelling measures for pork, lamb and goat. In future—just as has been the case for beef for the last decade or so—pigs and sheep must be reared and slaughtered in the country that claims to be the country of origin. That is similar to the situation that pertains for beef production. On traceability, provisions have been in place for more than 12 years, and EC regulation 178/2002 requires all member states to establish a means of monitoring where the food has come from at every stage of production. That legal requirement is enforced by the FSA in this country and by other member states.

My hon. Friend made the good point—my hon. Friend the Member for York Outer also alluded to this—that however good the traceability and labelling systems in place, a long supply chain is not conducive to eliminating food fraud. It is important for retailers to look at their supply chains and try to shorten them. It is also encouraging that many consumers have taken more interest in where their food comes from, and we need both consumers and retailers to take a little more interest.