Elliott Review and Food Crime

Kerry McCarthy Excerpts

Wednesday 2nd April 2014 Westminster Hall

[Kerry McCarthy (Bristol East) (Lab)]

It is a pleasure to serve under your chairmanship, Dr McCrea. I congratulate the hon. Member for South Thanet (Laura Sandys) on securing this important debate. She has been interested in the topic for some time and we have both taken part in several debates on it.

I want to add my voice to those who have welcomed Professor Elliott’s interim report on the integrity of food supply networks and his recommendations for stemming the growing tide of food crime. As we have heard, criminal networks increasingly see the potential for what Professor Elliott describes as

“huge profits and low risks”

in the food industry. The hon. Lady said that it was now more profitable and considerably less risky to be involved in food fraud than in the drugs trade. The National Audit Office reports that cases of food fraud reported by local authorities have increased by two thirds since 2010. Results published by a number of local authorities, including West Yorkshire, Leicester and West Sussex, from a survey of meat products on sale in their areas, show that gross contamination of meat is widespread. Leicester trading standards, for example, found that half of the meat products it sampled contained species of animals not identified on the label, which is in breach of legal requirements for composition and labelling. Some of it was probably deliberate fraud and some was probably cross-contamination due to poor hygiene, but it is an obvious matter of concern.

Huw Watkins, who heads the intelligence hub at the Intellectual Property Office, has documented shocking cases of adulterated goods seized in the UK in recent months, ranging from a 40-foot lorry containing over 17,000 litres of fake vodka to cases of goat’s milk adulterated with cow’s milk, which could be fatal to allergy sufferers. I was struck by Professor Elliott’s account of a meat product supplier, who had been asked by a retailer to produce a gourmet burger for a unit price of under 30p. Even using the cheapest available beef from older cows, the lowest possible unit price for the burger that the supplier could produce was 59p. Professor Elliott concluded that the only way to meet the demands of the retailer would be to switch to beef supplied from premises that were not EU approved. That black-market meat would then be ground with cheap offal, such as heart and brain, and the incorporation of meat emulsion, also known as pink slime or soylent pink, and mechanically separated or recovered meat. The product would then have been marketed as a gourmet burger, targeting the top end of the market at a higher price and at a huge profit margin for the retailer, which would be committing fraud by misrepresentation.

The example highlights a culture that Professor Elliott describes as one of casual dishonesty, which he says needs to change to one where food composition is proved, not assumed. He recommends that if retailers consistently buy below the market price, they should check there are no grounds to suspect the goods are criminal property or they risk being guilty of complicity in a crime. In other words, they should know that if they are getting something that seems too good to be true, it is too good to be true and something dodgy is going on.

In the rest of the time available, I want to concentrate on a few concerns. Answers to written parliamentary questions that I have recently tabled reveal an alarming drop in food testing over the past five years. Food composition testing is down 48%; food labelling and presentation testing is down 53.4%; microbiological analyses are down by 25.3%; and food contamination analyses are down by 24.5%. Professor Elliott has warned that cuts to food testing and inspection could put lives at risk. He has said that they could compromise the safety of the food that people eat to such an extent that “people start to die” and has called for “strong” and “well resourced” regulators.

Andy Foster, from the Trading Standards Institute, told a recent “Dispatches” programme on Channel 4:

“You take money out of sampling, you take money out of inspection, you take the money out of the consumer protection system. You will get increased levels of fraudulent activity…When you have some local authorities—like some in London—operating on one trading standards officer, how on earth can they possibly deal with all their demands from fraudulent activity?”

Cuts to trading standards are expected to result in a fall in the number of officers to below 2,000, compared with 3,000 in 2009, while the number of public analyst labs, where food is tested, has dropped from 15 to 11 in the past three years.

In February, when I asked the Minister at Environment, Food and Rural Affairs questions about the shocking West Yorkshire test results, which showed that more than a third of food samples were not what they claimed to be or had been mislabelled in some way, he replied that the 30% figure was

“misleading, because the samples looked at were based on intelligence and from areas where there was greater concern in the first place.”—[Official Report, 13 February 2014; Vol. 575, c. 1004.]

I appreciate that that is a factor; it was a risk-based assessment, so areas of concern were being targeted. However, West Yorkshire’s public analyst, Dr Duncan Campbell, believes the authority’s results represent what is going on nationally. Felicity Lawrence of The Guardian, which covered the results of the survey, concluded:

“Because it was looking, West Yorkshire found problems”.

It is clear that routine sampling, as well as that based on intelligence, is vital if cheats are to be caught and food safety standards maintained. Dr Duncan Campbell explains that well:

“Go into a pub and the bottle optics behind the bar will be filled with leading brands of vodka or whisky. If trading standards never check they are what they claim to be, and the publican is having his margins squeezed, there is a huge incentive for him to refill his bottles with cheaper generic spirits from the cash and carry.

That principle holds true across the whole retail and manufacturing sector. If you don’t have routine sampling in each area, you don’t find the cheats, and there is no deterrent to protect the public.”

[Mr Gregory Campbell (East Londonderry) (DUP)]

Does the hon. Lady agree that with the fall in the amount of testing and sampling, and price increases affecting both production and the retail margin, 12 months from now things are likely to be worse, not better, unless the trend is reversed?

[Kerry McCarthy]

Yes. There is a double incentive. One is that people are perhaps more likely to do things that they think they can get away with. The other is that profits are being squeezed and there are limits on the price that people can charge for products and still manage to sell them. That is entirely true.

In his interim report, Professor Elliott called for both risk-based and random testing to protect the consumer. Will the Minister make that FSA policy? The enforcement of standards has become increasingly random as council budgets are slashed. In answers that I have received from the Under-Secretary of State for Health, the hon. Member for Battersea (Jane Ellison),about funding for food testing, the Government have insisted they have increased funding through the provision of additional funding from the FSA to local authorities. That has increased to £2.2 million for 2013-14 from £900,000 in 2010-11. That is welcome, but it does not compensate for severe cuts to local authority budgets, which have resulted, for example, in 743 job losses in trading standards at council level between 2009 and 2012. Leicester city council’s head of regulation, Roman Leszczyszyn, said that trading standards officers had been encouraged by central Government to pursue intelligence-led enforcement, rather than random sampling, to

“reduce the burden on business and remove unnecessary inspection”.

I am deeply concerned that the Government’s ideological commitment to deregulation is trumping their responsibility for food safety. As the Elliott review says, consumers should be put first—something that does not seem to be happening under the present Government.

Last week, I raised with the Minister Professor Elliott’s concerns about the potential for budget cuts to affect the integrity of our supply chains, but he replied as if my question was solely about the horsemeat scandal of last year. However, as today’s debate has highlighted, we have moved on from the fraudulent use of horsemeat in beef products to the much wider investigation of food crime and our complex food supply networks. Would the Minister like to have another go at answering my question of 27 March: does he agree with Professor Elliott that budget cutting could reach the point where the safety of the food we eat is compromised to the extent that “people start to die”, or is the Professor just overreacting?

I know that the hon. Member for South Thanet is passionate about the cause of ensuring that people eat better food and do not resort to cheap food. It is a difficult issue. People’s budgets are under pressure. It is one thing to educate them about what is in their food, and to make sure that marketing of food reflects what is in it, and that it is of good quality. However, the cost of living is still an issue. My right hon. Friend the Member for Birkenhead (Mr Field), who is no longer in his place, is mounting an inquiry into the question of how to square people’s inability to afford to pay a great deal for food with the fact that we should not be encouraging them to buy cheap food. That is quite a job. The important point is that no matter how much people pay for their food, they have a right to know what is in it. They should not be given food that is not what they think it is.

--- Later in debate ---

[Huw Irranca-Davies (Ogmore) (Lab)]

It is a great pleasure, Dr McCrea, to serve under your stewardship this morning in what has been a good and wide-ranging debate. I will try not to diminish the quality of the contributions. I congratulate the hon. Member for South Thanet (Laura Sandys) not only on securing the debate, but on her introduction to it. She has been a consistent campaigner on this and related issues. Her expertise showed in how she comprehensively went through a range of issues. I will start with some of the comments that she and other colleagues made.

The hon. Lady wisely said that we should have been able to see the problem coming, not least through the disconnect between commodity prices and the retail offer. There were other things that could have been seen, not least the disappearance of horses from Ireland, Northern Ireland and Wales. They ended up in north Wales or elsewhere, but they did not emerge somewhere else. Some connectivity of intelligence would have suggested that something was happening. There were also wider European issues. The hon. Lady made the point exceptionally well that we should have been able to see the problem coming, and that is one of the big lessons in the recommendations in the Elliott report.

My hon. Friend the Member for Bristol East (Kerry McCarthy) is also a long-term campaigner on food and related issues. She raised a vital issue that was picked up in the Elliott report. There are worrying reductions in the capacity for testing, which are linked to the capacity for detection, investigation and early intervention. That is not simply about Europol, it is about what is happening down on the ground at the grass roots, in local authorities and at a co-ordinated UK level. It is worrying if that capacity is diminished, and it is not just my hon. Friend who says that—as she said, the Elliott review also says that clearly.

The hon. Member for Thirsk and Malton (Miss McIntosh), who has great expertise from her constituency background and knowledge, made some good points about the inconsistency in how some meat production is treated at EU and UK level. I strongly agree with her call for definitive action after a series of reports into food fraud and food crime, and an end to the hiatus and vacuum in the FSA chairmanship. That is critical, because if the Elliott report says nothing else about the FSA, it screams out for leadership not only within the Government and internationally, but at the heart of the matter, which includes the FSA. That leadership is needed to drive the issue forward, not least when the full report is produced. Someone—not just the Minister, but the head of the FSA—must take a steer and say how strongly the recommendations will be pushed through.

The hon. Member for Strangford (Jim Shannon) brought a different perspective to the issue, and I thank him for talking about the need for consistent application of what eventually comes out of the Elliott review regardless of national borders. That relates to the big issue of long supply chains. We cannot suddenly make them disappear. There will be long global supply chains—that is the reality we now live with, even with the approach that Tesco and Asda are taking of shortening supply chains and so on. We therefore need commensurate transnational measures to deal with supply chains and to ensure that we can give consumers confidence on not only provenance but safety. A year ago, the issue was primarily provenance; the next one may be food safety. We must ensure that good crime analysis is comprehensively pushed out transnationally. We can do a lot about that.

All hon. Members who spoke referred, in various ways, to squaring the circle of cost, and having safe, affordable, nutritious food, while also having fair reward for producers. Those matters are not unconnected. They hang together coherently, or they should. The hon. Member for South Thanet referred to her consistent theme about the need for education and awareness so that people can do a lot with good food affordably. She is right, but that must be balanced against the reality of, for example, a single parent rushing between a couple of jobs and dealing with child duties. They will look for convenience foods, so our frozen, convenience meat products must be safe, nutritious and affordable—not simply cheap, but affordable. I know that she accepts that, and getting it right is important.

The Elliott review is important, and if we look at the scale of the industry, we see why it is critical to get the matter right. It involves not just consumer confidence but jobs and industry. According to the most recent figures from the Library, the food and drinks industry is worth £188 billion. The food and drink manufacturing industry is the single largest manufacturing sector in the UK, with a turnover of £92 billion and gross value added of £24 billion, accounting for 18% of the total manufacturing sector by turnover. It employs just over 400,000 workers, which is 16% of the overall manufacturing work force in the UK.

The latest figures that I have—I admit that they go back to 2012, so I suspect that they are slightly bigger now—suggest that just in the sectors responsible for the processing, production and preservation of meat, poultry, fish, crustaceans and molluscs, as referred to by the hon. Member for Strangford, there were nearly 3,500 enterprises of various size and scale, with more than £32 billion spent, employing more than 176,000 people. We therefore need to get things right—post-horsemeat and post-Elliott review and its final recommendations—not only for consumer confidence but because if we do not, that is what is at risk. Our deserved reputation for good, safe, well provenanced food was shaken last year. We need to get it right back in kilter for the domestic market, consumers, the industry itself and our export potential.

We know that there has been an impact on consumer confidence over the past year, because although frozen meat and poultry sales grew, those of frozen and processed meat products plummeted by as much as 40% for some sellers immediately after what happened, and there has been a slow recovery since. According to Euromonitor, consumer confidence in frozen and processed meat food is still low. As hon. Members have mentioned, the situation has been a boon for butchers, farm shops and the like, but it has also caused re-engineering towards shorter supply chains by organisations such as Asda and Tesco. I recall, as everybody will, Tesco’s “We get it” advert last year, which came, not coincidentally, at the same time as the National Farmers Union conference saying, “We get it. We will change the way we operate”. However, it was not simply Tesco—that was the biggest organisation to be confronted with the problem, but others have also started re-engineering. There is work to be done, and I keep a close eye on that, but they are starting to change how they operate.

[Kerry McCarthy]

I am somewhat baffled about how there can be such long supply chains in the manufacture of food products and yet the price is still so low. It seems common sense that the more travel is involved, and the more countries and the more different elements, the more the price will be bumped up. I suspect that I am putting my hon. Friend on the spot, but I very much welcome the fact that supply chains are being shortened, so that we know where our food is coming from.

[Huw Irranca-Davies]

My hon. Friend makes a very good point, but I think we have to accept that in international food transactions, some food products do not have a UK market. There are some products created in the UK that UK consumers do not consume. For example, if we look at some of the products that are consumed in other nations from the slaughter of chickens, there is currently no UK market for them. They are exported. Conversely and curiously, many of our farmers are finding at the moment that the premium prices for Welsh lamb, pork and so on are not primarily in the UK, so the market is operating in a way that is turning some of the product flows on their heads. Although I welcome a drive towards shorter, more clearly identifiable food supply chains, there will always be an element of longer supply chains, and that is why we need to deal with the issue in both ways.

[Kerry McCarthy]

I want to clarify that I am not really talking about us exporting our products or importing products, but at the time of the horsemeat scandal, when we were looking, for example, at what was in lasagne, about 11 different countries seemed to be involved. Meat might have started out in Ireland, but then it went to Spain, Romania and so on. Surely lasagne can just be made in one or two countries, rather than having to be sent on a tour of Europe before it gets to us.

[Huw Irranca-Davies]

My hon. Friend makes a very good point—I am sorry, I did not realise that she was referring to that specific example. She is right; in fact, in some examples, as many as 20 transaction points were in the food cycle, which is astonishing. Meat was hurtling across Europe for different parts of its processing. I suspect that it went beyond Europe as well, because there was an important, interesting sideshow going on. The US had banned the slaughter of horses for meat production, but most people had accepted that all they had done was exported that to South America—and where was it going from there?

My hon. Friend is absolutely right. One welcome move from some supermarkets and retailers is that the big ones are now following the established practice among others, such as Waitrose, Morrisons and the Co-op, of not only identifying local and UK sourcing—within England, Wales, Scotland, Northern Ireland and, I have to say, Ireland as well—but being much more specific for consumers. They are saying, “We can tell you where the product comes from and how close it is to market”. That is a welcome innovation.

I turn to the evidence of growth in food fraud and food crime. As hon. Members have mentioned, when the FSA set up the food fraud database in 2007, it received less than 50 reports of food fraud, but by last year it had received more than 1,500. According to the National Audit Office, local authorities reported 1,380 cases of food fraud in 2012, which was up by two thirds since 2010.

Professor Elliott wisely makes the distinction between food fraud and food crime. There have always been elements of food fraud going on; some noticeable ones are currently pending prosecution in different parts of the UK. However, food crime goes beyond the

“few random acts by ‘rogues’”—

they have always been out there operating, unfortunately, and they need to be stamped down on—into what Professor Elliott calls

“an organised activity perpetrated by groups who knowingly set out to deceive and or injure those purchasing a food product.”

It is on a grand scale and it is worrying.