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Hope for £100m in FMD bills

Mar 2 2004

By Jennifer Mackenzie, The Journal

A court judgment ordering Defra to pay a contractor £5m for work during the foot-and-mouth epidemic should encourage contractors collectively owed more than £100m, according to a North solicitor who is pursuing a different case.

Companies in County Durham, Northumberland and North Yorkshire were used by the Government department to decontaminate sites and transport carcases.

Now the Technology and Construction Court has ruled that Defra should pay JDM Accord the remaining £5m of the cost of the notorious Ashmore burial pit in Devon.

Designed to hold the carcasses of 500,000 dead animals, the pit was never used and was later filled in at a cost of a further £3m.

Last night Defra said the disputed amount was £55m but David Hunter, a partner with North-East legal firm Blackett Hart & Pratt, stood by his figure.

He said: "The experience of JDM mirrors that of numerous other contractors, many in this region.

"In many cases, contractors have been chasing Defra for payment of outstanding debts for nearly three years. Defra has given the same recurring reasons for non-payment, namely that rates charged by contractors to Defra were not agreed; contractors were not instructed to carry out work charged for; and Defra never agreed to pay contractors for particular items of time charged, such as travel time or waiting time."

A Defra spokesman said it had to examine claims carefully to ensure taxpayers' money was properly spent.

Mr Hunter acted for a company in North Yorkshire in November 2001, when it brought an action seeking payment of £3.5m for decontamination and wash-down work. The claim was one of the first to go to mediation and is now the subject of an appeal by Defra, to be heard in the Appeal Court.

Mr Hunter said: "It is a matter of public record that Maff was wholly unprepared for the outbreak of foot-and-mouth disease. It was, to a large extent, the author of its own and Defra's misfortune.

"It failed, at the outset of the crisis and for the first phase of the operations, to have a standard contract with standard rates for the employment of contractors. Curiously, contractors were simply invited to set out their rates for the supply of their services and/or equipment, which they duly did."

He said: "Invoices raised by contractors to Maff were routinely paid. It appears to be no coincidence that upon Maff becoming Defra, payment of contractors' invoices quickly dried up. It also seems to be no coincidence that, as at the time payment of invoices was first being withheld by Defra, foot-and-mouth disease was under some control."

It has been said by ministers Margaret Beckett and Alun Michael that £20m has been spent investigating outstanding claims by contractors to save £80m.

But of about 12,000 cases investigated, the National Audit Office has reported that allegations of fraud had been made in only 18, and six of those have been dismissed.

Defra maintains its records are more reliable and accurate than those kept by contractors.

Mr Hunter said: "Defra has steadfastly refused to pay any part of a contractor's invoice where any discrepancy had been identified, however minor.

"The financial position of many contractors was exacerbated by the fact that some had taken on a financial risk on behalf of Defra in employing sub-contractors to assist in carrying out operations."

A Defra spokesman said: "We have paid all the bills where there were no disputes.

"We have to verify the claims in order to ensure that taxpayers' money is being properly spent.

"There are claims that we have to consider in more detail and where possible negotiate an agreement."