http://www.westernmorningnews.co.uk/displayNode.jsp?nodeId=103354&command=displayContent&sourceNode=103331&contentPK=7409445

09:00 - 15 October 2003

£700M FIASCO

Britain could lose up to £700 million in European funding because of the Government's disastrous handling of the 2001 foot and mouth crisis, the WMN has learned.

The European Commission is thought to have grave concerns about the controversial contiguous cull policy, which led to the slaughter of millions of healthy animals. Under European rules, compensation is only payable to farmers whose animals are thought to have been exposed to the disease.

Across Devon, Somerset and Cornwall, there were more than 400,000 animals slaughtered under the contiguous cull.

Sources in Brussels suggest that the Commission is also deeply unhappy about the way that costs spiralled out of control during the crisis, with farmers receiving ever-larger valuations for their livestock as it went on.

As a result, the Commission looks set to slash the Government's claim for aid in paying for the cost of the crisis.

Under European rules, the European Commission would normally refund up to 60 per cent of a member state's costs in compensating farmers for losses caused by the disease.

In Britain's case, ministers have tabled a claim for £948 million - exactly 60 per cent of the £1.6 billion costs that are thought to be eligible. If paid, the money would go directly to the Treasury.

But two years on from the end of the crisis, just £217 million has been paid. And the WMN has learned that the Commission is considering capping the UK's total final payment at just £250 million - almost £700 million less than is being sought.

The revelations are likely to reopen the row over the Government's handling of the crisis at a time when ministers were hoping finally to draw a line under the affair.

South West Euro-MP Neil Parish last night said ministers would have to explain to British taxpayers why they were being short-changed so drastically by Brussels.

Mr Parish, Conservative agriculture spokesman in the European Parliament, said: "I would like to see the UK compensated and it is unfortunate that the Commission will not pay. But it is right that a third party like the Commission investigates what is going on - we all have a duty to be custodians of the European taxpayer if the Government has spent money foolishly.

"I'm afraid it just shows how badly managed the whole thing was by the UK Government.

"It will be for British ministers to explain why this money is not being paid.

"The Government allowed costs to run completely out of control and it should not come as too much of a surprise that the Commission, which is taking this very seriously, is not impressed.

"It seems they are also very unhappy about the contiguous cull. Although we were never able to say categorically that it was illegal, it was certainly a very grey area legally."

Further criticism of the contiguous cull will be deeply embarrassing for Tony Blair as the drastic policy was brought in shortly after he took personal charge of the crisis. Many observers believe the cull was ordered as an overkill policy to ensure the Prime Minister could fulfil his wish to hold a General Election before the summer of 2001 - a charge denied by Mr Blair.

An authoritative report by legal experts at Cardiff University recently concluded that the cull was illegal.

A spokesman for the Department of the Environment, Food and Rural Affairs acknowledged that the Commission's audit was proving "rigorous and vigorous", but denied that the problems were associated with the contiguous cull policy.

He added: "This is the biggest claim of its kind that has ever been dealt with so we fully expected the audit process to be rigorous and vigorous and so it has proved. We have had an interim payment but there is no decision yet on when we will receive a final payment.

"There is no suggestion that there is any withholding of money because of the contiguous cull. It is just taking time."

Asked whether the Government expected to receive payment in full from Europe, the Defra spokesman said: "We have put in a claim for it, but obviously it is a big claim."

Officials from the European Court of Auditors - the body responsible for assessing the UK's claim - travelled to Britain earlier this year for talks with Defra officials and farmers in Cumbria. The Court is believed to have completed its audit and recommended that the Commission cap the UK's payment.

A spokeswoman for the European Commission said no final date had been set for settling the UK's compensation claim.

But she confirmed that an examination of the contiguous cull policy "forms part of the auditors' investigations".

She added: "The auditors have visited the UK to analyse what the Government did and to go through the books with a fine-tooth comb."

David Hill, a former chairman of the Devon National Farmers' Union, who, alone among his neighbours, did not have his animals culled, said he was not surprised at the shortfall in the amount of compensation paid by the EU.

He said: "There was no logical or commonsense whatsoever in the policy of the contiguous cull. If I was the ultimate paymaster I would be saying 'hang on a moment, we don't mind paying, but we are not paying for that'. I'm not surprised if they are thinking twice."

Anthony Gibson, the regional director of the SW NFU, said: "This is really an argument between the Government and European Union.

"The contiguous cull was always of doubtful legality because it seemed to go beyond what was strictly justified by the letter of the legislation.

"If the Government have got into trouble with the EU then frankly they have really got themselves and the scientists who devised the contiguous cull policy to blame.

"Where the contiguous cull was challenged in the courts and the judges found in favour of culling, it was not on the basis that it was legal so much as it was a necessity. It is very likely that the EU auditors are taking a rather less relaxed view of it."

But Professor Bob Lee, co-author of the recent Cardiff University condemnation of the cull as illegal, said that the latest development would not necessarily open the floodgates for legal claims against the Government.

He said: "It would not be too late for people to try to take legal action against the Government, but the problem would be that the courts would not entertain it.

"I think the courts would take the view that even if the farmers did not want their animals culled, and of course some of them did not, they were compensated at more than generous levels, therefore, they have no loss."

Prof Lee said that it would be also difficult for people who had not received compensation to take legal action because of the problem of proving economic loss.

Janet Bayley, the coordinator of the National Foot and Mouth Group, agreed, adding: "I don't think this will open the way for compensation claims against the Government, but it underlines serious misgivings as to the proportionality and reasonableness of the contiguous cull. It again casts grave doubts as to why the contiguous cull was thought of as legitimate."

Guy Thomas-Everard, whose family successfully defeated attempts for a contiguous cull to be carried out at their Somerset farm, said: "This is a pretty shocking indictment of the Government that the European Union has decided not to pay such a large proportion of the compensation claim.

"The EU must be confident in taking that decision because it would be open to challenge by the British Government, which if it did not challenge it would be admitting it was at fault."