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Sharing the pain

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IT'S still too early to determine the precise impact of the outcome of the comprehensive spending review on Defra's activities in the field of animal health and welfare, but it's possible to form a pretty good idea. Over the next five years, the department's annual expenditure will be reduced from £2.9 billion to £2.2 billion, with a 29 per cent reduction in resource spending, a 34 per cent reduction in capital spending and a 33 per cent reduction in the administration budget. In terms of the percentage cut from its budget, Defra turns out to have been one of the biggest departmental losers in the general scramble for funds.

Following the review, Defra intends to ‘reprioritise its spending, focusing taxpayers’ money on British farming and food production; enhancing the environment and biodiversity; and supporting a green economy resilient to climate change.' To manage the cuts, it will be making savings in a number of areas, as well as cutting administration costs by ‘reducing staff numbers, more efficient IT and procurement practices’. Regarding animal health, the plans outlined by Defra last week specifically state that it will be ‘making more efficient use of resources for animal welfare and disease prevention and control, by taking forward proposals to involve the industry in sharing the responsibility and cost of disease control’.

Proposals for sharing more of the responsibilities and costs of animal health with the farming industry are currently being developed by an independent advisory group chaired by Rosemary Radcliffe, which is expected to report in December (VR, October 9, 2010, vol 167, pp 543–544). With Defra now banking on the concept to make savings, the advisory group's recommendations will be all the more significant.

In 2009/10, Defra's spending on animal health amounted to about £357 million. To make recommendations on cost sharing, the advisory group needs to understand how this money is being spent but, judging from a report published by the National Audit Office (NAO) last week*, this might not be as straightforward as it might sound. The NAO says that the cost data provided to Mrs Radcliffe's committee by Defra are ‘sufficient to give the advisory group a good indication of the nature and relative volumes of expenditure by the department and it's key delivery bodies’. However, it points out that, to obtain the data, Defra had to perform ‘a substantial and time consuming manual exercise’ and that ‘this information, as it stands, is not of the quality that would be needed to implement a comprehensive cost sharing regime.’

The NAO has commented previously that, because of the way its accounting systems are set up, Defra ‘does not have sufficiently robust financial or performance information on controlling disease to assess routinely the costs and benefits of interventions, and to underpin a transparent and equitable cost sharing scheme’ (VR, March 14, 2009, vol 164, p 317). The problem is that its financial recording systems were not designed to measure the full costs of addressing specific disease risks in different farming sectors, nor do they measure precisely the full costs across all the agencies involved.

The NAO points out that current recording systems do not apportion costs accurately to England, Wales and Scotland, which could cause difficulties in allocating budgets if, as some have suggested should happen, animal budgets are devolved. It also notes that expenditure on different diseases can vary significantly from year to year, making forecasting difficult. This may partly reflect Defra's accounting systems, but it must also reflect the unpredictability of disease.

None of the problems highlighted by the NAO is necessarily insurmountable, but, setting aside the political challenges, its report does highlight some of the logistical challenges of making responsibility and cost sharing a reality. Meanwhile, by referring to expensive elements of expenditure such as those on TSEs and bovine TB, it may also give an indication of areas where the Government might be looking to make savings.

Details have yet to emerge, but one thing that seems certain is that Defra's spending on animal health will be reduced. As highlighted in a debate involving the UK's chief veterinary officers at the BVA Congress last month, the aim must be to ensure that animal health itself is not compromised in the process (see p 678 of this issue).

Footnotes

  • * Assessing the cost to public funds of animal diseases – commentary on cost data provided by the Department for Environment, Food and Rural Affairs to the Advisory Group on Responsibility and Cost Sharing. Available at www.nao.org.uk

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