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A RECENT select committee report on defra's financial performance in 2006 makes worrying reading, not just because of what it says about how things were handled during the year, but also in terms of the implications for future programmes.
The report, which was published by the House of Commons Environment, Food and Rural Affairs Committee (efracom) last week following an inquiry initiated last July,* focuses on a £200 million deficit that arose in defra's budget in 2006/07, examining both the causes of the deficit and the consequences for agencies, including the Veterinary Laboratories Agency (vla) and the State Veterinary Service (svs), which depend on defra for funding. The unexpected shortfall and uncertainty about where savings would be made caused considerable concern during the year, not least among those working for the agencies, who were understandably anxious about where the axe might fall (VR, September 16, 2006, vol 159, p 369; November 4, 2006, vol 159, pp 609, 610).
The efracom is highly critical of defra's handling of its budget in 2006/07, describing the episode as ‘a serious failure in the department's financial management’. It notes that last year's avian influenza outbreak in East Anglia and additional running costs for the Rural Payments Agency both contributed to the deficit; primarily, however, it suggests that defra was ‘irresponsibly overoptimistic and complacent’ in its assumptions about the generosity of the Treasury in a tight fiscal period and that, while some factors were beyond its control, the department itself has to take much of the blame for the precarious financial situation it found itself in.
The deficit led to action being taken during the year to reduce the budgets of several executive agencies and non-departmental public bodies (ndpbs). The result, the committee says, was ‘a sudden, unplanned, poorly explained and highly disruptive’ mid-year restriction on the budgets of agencies and ndpbs, as well as some voluntary groups that rely on defra for funding, which found themselves with unanticipated financial problems as a consequence. This led to environmental programmes and projects being postponed. With better management, the committee says, many of these problems could have been avoided.
The committee also takes defra and its ministers to task for the way in which information about the causes and impact of the budget cuts was communicated to Parliament and the public, suggesting that the information was confusing and only made available in a ‘disjointed and piecemeal fashion’.
Although the vla and the svs suffered less than some other agencies, both were subjected to a 3 per cent reduction in their resource budgets, amounting to £2·4 million in the case of the vla and £3 million in the case of the svs. The vla told the committee that most of its cuts had affected its scientific surveillance work; in addition, the cuts had affected the scope of research under its Food and Environmental Safety Programme, including work on antimicrobial resistance. In the case of the svs, a reduction in the total budget was avoided by a reallocation of funds. However, evidence submitted to the committee by the svs suggested that any further reductions could potentially impact on lvi work and that there was little scope for manoeuvre in the future.
The select committee expresses concern that funding will continue to be tight for defra and its agencies over the next few years, suggesting that the department's financial performance over the past two years has not helped its case for a good settlement from the Treasury in the 2007 Comprehensive Spending Review. It is also concerned that financial pressure on the department could be exacerbated by the prospect of having to bear the costs of disallowance penalties imposed on the uk by the eu for not implementing the requirements of the Single Payment Scheme fully or for making payments after the deadline. With funding likely to be constrained, it raises the important question that if, as seems probable, expenditure on environmental work remains a departmental priority, ‘what then will happen to other areas of defra responsibility?’.
The efracom report was published last Friday, just a few days before the Secretary of State at defra, Mr David Miliband, addressed the annual meeting of the National Farmers' Union in Birmingham. In his speech, Mr Miliband reiterated his desire to help create a farming industry that is profitable and competitive, and which makes a positive contribution to the fight against global warming and environmental degradation. He also touched on issues relating to animal health, describing this as ‘core business’ for both government and farmers (see p 278 of this issue). On the matter of eu disallowance penalties, he said his department was determined to fight ‘every inch of the way’ to minimise these.
The Government has two months in which to respond to the efracom's report and, given the nature of the criticisms and the need for defra's programmes to be adequately funded, it is to be hoped that it has some good answers when it does. Safeguarding the environment is clearly important but, from a veterinary perspective, the immediate concern must be that the current preoccupation with this issue, coupled with budgetary concerns, does not lead to cutbacks which could endanger animal or human health.