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IT HAS been clear for some time that defra is struggling to live within its means. There was a good example in March this year when, in the middle of the House of Commons Environment, Food and Rural Affairs Committee's inquiry into whether a new Veterinary Surgeons Act was needed, Lord Rooker, the animal health minister, suddenly announced that, following an urgent reordering of the department's priorities because of a lack of resources, plans to update the Act had been shelved. There have, however, been other examples, most notably, perhaps, in 2006/07, when a number of defra's agencies had to make emergency cuts because a £170 million gap had appeared in its budget. A report published by the House of Commons Public Accounts Committee this week looks at how defra has managed expenditure over the past couple of years and provides some insight into what has been happening.1
The kind of difficulty encountered in 2006/07 seems to have continued into 2007/08 and the committee reports that, having received £3617 million for the year from the Treasury, defra failed to allocate final budgets to each of its business areas until five months into the financial year. This was because planned expenditure exceeded the funds provided, because budget holders did not declare all financial commitments from the outset, and because the costs of unforeseen floods and animal disease outbreaks had to be managed. It notes that the situation was similar to that in 2006/07 when the need to make mid-year budget reductions had ‘an adverse effect on performance’. While highlighting failings in financial management in defra, the committee notes that the problems were partly the result of the difficulties inherent in sponsoring numerous delivery bodies, each with its own administrative functions. It reports that more rigorous systems have since been put in place, and that the problems encountered in the past two years are ‘not expected to recur in 2008/09’.
Discussing failings, the committee says that defra's budget-setting process was not flexible enough to deal with events which were unforeseen at the start of the year, noting that handling the floods and the outbreaks of foot-and-mouth disease (fmd) and avian influenza in 2007 required additional resources of £60 million which had to be funded by reducing budgets for other activities. It recommends that defra's budgets should include ‘realistic provision for unforeseen events based on historic experience’. For a department whose remit includes tackling the effects of climate change and dealing with animal disease outbreaks, this could prove challenging. Unforeseen events are by definition hard to predict although, as far as animal health is concerned, one thing that is certain is that animal disease outbreaks will continue to occur. If anything, the stakes are increasing. The latest annual report from Animal Health, the agency of defra responsible for dealing with disease outbreaks, points out that ‘the nature of infectious animal diseases cannot be predicted with precision’ and that ‘the risks posed by notifiable animal disease continue to evolve with globalisation and climate change altering their geographical spread’.2
There can be no excuse for poor financial management and, as the Public Accounts Committee points out, defra's resources must be managed properly. However, as the fmd outbreak of 2001 demonstrated particularly spectacularly, animal disease outbreaks can be expensive, and it is necessary to take a long-term view. There is a need continually to invest in safeguarding animal health, while making proper contingency for ‘unforeseen events’. Without some form of contingency provision, or at least a degree of flexibility, there will always be the problem that some unexpected event will result in cuts being made and activities being curtailed, increasing the risks for the future. In this context, a comment in the Public Accounts Committee's report that the Veterinary Laboratories Agency reduced its scientific surveillance work as a result of the difficulties encountered by defra in 2006/07 is particularly worrying. defra's financial performance is important, but so too is how well things work in the world outside.
The committee's report certainly sheds light on defra's enthusiasm for cost and responsibility sharing and ‘ensuring the right balance of responsibility between government and farmers for the management of animal disease’. There is some irony in the fact that, according to defra's Departmental Report for 2008,3 plans to move forward on this were delayed by last year's outbreak of fmd, but it intends to consult on the issue later this year. Meanwhile, Animal Health's annual report remarks that, despite success in controlling recent disease outbreaks, ‘Animal Health's capacity to respond to a widespread or prolonged outbreak is limited and the question of what emergency capacity Great Britain should have, and how this should be paid for, is one which will continue to occupy significant attention as work on sharing responsibility and costs with the farming and food industry develops.’ Resources are clearly an issue for defra, its agencies and animal health, and will continue to be so until this matter is resolved.
↵1 ‘Department for Environment, Food and Rural Affairs: Management of Expenditure’. House of Commons Committee of Public Accounts, hc 447, September 4, 2008. Available at www.parliament.uk/parliamentary_committees/committee_of_public_accounts.cfm