Consultation outcome

Summary of responses and government response

Updated 27 August 2024

Introduction

From 17 January 2024 to 28 March 2024, the Veterinary Medicine Directorate, the Scottish Government, and the Welsh Government published a joint consultation on revised charges for the National Residues Control Programme (NRCP).  The consultation was conducted using Citizen Space, our online consultation tool.

This document provides a summary of responses received to the consultation as well as a government response.

This analysis is based on the formal responses to the consultation which we received through Citizen Space.  In developing the government response, we have also taken account of other views expressed by stakeholders in other discussions.

Background

The Veterinary Medicines Directorate (VMD) is an Executive Agency of the Department for Food, Environment and Rural Affairs (Defra).  The VMD manages the National Residues Control Programme (NRCP), which is a statutory programme that is designed to help protect human health by identifying unsafe residues of banned substances, veterinary medicines, and contaminants in products of animal origin before it enters the food chain.  The NRCP helps to protect human health.  It also provides assurances to the UK’s trading partners about the quality and safety of exported food products of animal origin.  The programme helps to support international trade worth approximately £12 billion per annum to the UK economy.

Residues policy and surveillance is a devolved matter so the VMD works in close partnership with the Scottish Government and the Welsh Government to deliver the NRCP in Great Britain.

The programme operates on a full cost recovery basis, so food business operators in each of the livestock sectors that take part are invoiced each year.  The programme currently costs approximately £5 million per annum, and this is forecast to reach approximately £8 million per annum by 2028.  This is due to a rise in the costs of procured services which are necessary to deliver the programme such as sampling, testing, and consumables.  Without the proposed revisions to the current charges that NRCP participants pay, it is forecast that there will be an under recovery of the costs of the programme by £1.2 million the current financial year, and the deficit is expected to rise to £3 million per annum by 2029.

There are currently more than 500 companies across the various sectors included the NRCP.

Overview

Number of responses received

7 responses were received via Citizen Space (our online consultation tool).

A list of organisations who responded to the consultation is set out below. 4 respondents stated they wished for their response to be kept confidential, so the names of their organisations have been omitted.

Methodology

The main questions in the consultation paper were qualitative, so a thematic analysis has been conducted. Each response was analysed twice to identify both the themes raised by respondents and policy recommendations put forward. The responses to each question were summarised to produce the overall summary of responses below.

Headline messages

Most respondents agreed with our recommendation that the most equitable approach to setting the new charges would be to base the calculations on the specific production volumes of each sector (see option C below). This approach would prevent some sectors unfairly cross subsidising others.  The new charges are set out in Table 1.

Half of respondents noted that, it was a challenging operating environment for some small abattoirs due to the dominance of large operators, leading to low market prices and slim profit margins.  They requested more transparency in how their specific charges are calculated, and for methodology that took account of the size of their business.  They also felt that the charges should be borne by farmers not the food business processors.

Summary of responses – by question

The consultation document explained the reasons behind the need to increase charges for businesses covered by the NRCP.  It set out the following three options with a recommendation for Option C:

A: Do nothing. Charges would be maintained at current levels. This would risk food safety and international trade obligations.

B: A flat rate 65% increase to the charges applied across all sectors taking part in the NRCP. This would risk sectors cross subsidising others.

C: A specific percentage increase tailored for each industry sector based on their specific sampling plan and production levels. See Table 1.

Question 1 asked:  to what extent do you agree or disagree with our assessment that the most equitable approach to amending Schedule 1 is option C?

All respondents preferred Option C.  Their main points were as follows:

• this option seemed to be the least detrimental scenario, although the preference would be not pay additional charges at all
• 30% of respondents queried why the charges fell to food business operators instead of farmers or foreign companies and importers
• some respondents emphasised the need for more clarity in how charges are calculated and a focus on value for money

Question 2 asked: are there any other factors the UK Government, the Scottish Government and Welsh Government should consider?

The main themes from the responses were as follows:

• the use of historic industry production levels as a component for estimating future charges may unfairly burden some businesses, especially if their individual production had reduced significantly in recent years
• a risk based approach to surveillance could be implemented – prioritising specific locations that are known to be at risk or, producers with the largest volumes of production or those known to regularly use veterinary medicines
• a need to ensure that the VMD’s delivery partners and collection agencies were providing best value for their services

Question 3 asked: what impact would you expect the revised rates to have on your profit margins?

Respondents generally acknowledged that any increase in costs impacts profits.  65% of respondents noted that higher charges may impact more on smaller abattoirs because of they are currently operating in a difficult economic environment where all other costs have also risen – for example they cited the general increase in inflation faced over the last 2 to 3 years, and the expected impact of a rise in minimum wage from April 2024. Respondents also stated that smaller companies in the pig farming sector were already operating at a loss.

Question 4 asked: would you expect to absorb this additional cost or transfer it to your customers?

Most respondents were not specific about how they would manage the increased costs arising from the new charges.

Response to question	Number of respondents
Absorb	1
Don’t know	3
Transfer	1
Not answered	0

Question 5 asked: how will this affect the demand for your goods and services?

Most respondents noted that this would be an additional cost for their businesses, which may not be possible to pass on to customers in the current operating environment. 

The following additional themes were also made:

• there is an increasing cost differential between identical UK and EU products.  A risk based approach to sampling and surveillance may help to reduce costs for UK producers
• suggestions that the NRCP program costs should be recovered through taxes on imported meat products (such as pig meat).  This effectively would mean foreign producers would cross subsidise UK agriculture and meat producers.

Government response

The consultation was launched with a press release and uploaded to Citizen Space. It was also published on VMD-Connect, our specialist stakeholder engagement portal, and we also sent a letter to NRCP participants. The UK Government, The Scottish Government and Welsh Government are grateful for the insightful and constructive comments received to this public consultation. Whilst the number of responses received represents 1% of total participants in the scheme, the high quality feedback provides a helpful litmus test and will form part of policy discussions about the future charging arrangements for the NRCP.  The low response may be due to several factors, including that pre-EU Exit, participants tended to engage with the NRCP purely from an operational and compliance perspective, and have historically had little policy interaction. Furthermore, this would be the first increase in NRCP charges since 2011.  We will continue to actively seek views and engage with participants to better understand sector-specific issues.  We strongly encourage stakeholders to continue the conversation by contacting the VMD Residues Team at residues@vmd.gov.uk.

The responses centred around the following key themes:

• changing the methodology used to calculate charges to make it more tailored and reactive to the changing production levels of individual businesses
• focusing on value for money and changing the approach of the surveillance programme to focus on sectors or areas of greatest risk; thereby reducing the burden on producers in low risk areas
• a view that the current economic environment is difficult for businesses due to increased operating costs, reduced profit margins and competition with imported products

The legislative basis of the NRCP was detailed in the consultation paper.  This explained that the approach we take to residues surveillance is based on equivalence with international standards, which have also been adopted by the UK’s trading partners. These standards were assimilated into domestic legislation, and as a result help to underpin £12 billion worth of annual exports of UK products of animal origin (£8 billion of which is destined for the EU market). Proposals to change the NRCP’s approach to residues surveillance are currently outside the scope of this present consultation exercise and would require the gathering of robust evidence to ensure the NRCP still meets the standards which have been established to protect human health.  However, the government has noted industry feedback, and will feed this into wider plans to review the NRCP.

The government notes the comments about the difficult operating environment that businesses face, and the increased costs.  These same factors have led to a need for us to amend the charges for the NRCP for the first time since 2011.  The VMD continuously works with our delivery partners and commercial experts to monitor and audit the NRCP to ensure value for money.  Any cost savings are immediately passed through to businesses in the NRCP, and this partly explains our ability to have prevented any increases since 2011. HMT rules on managing public money do not permit the VMD to make nor retain any profit.

As set out in the consultation paper, our financial forecasts show that costs are likely to continue rising in future years.  The VMD is proposing to increase charges on the 1 October 2024 and on the 1 April 2025 to allow us to return the NRCP to full cost recovery while we consider future charging options and methodologies.  It is our intention to continue to monitor the operation of the scheme and to bring forward a further public consultation if other changes are required.

As explained in the public consultation, the VMD, the Scottish Government and the Welsh Government will separately bring forward the necessary legislation to update the charges as per option C in the consultation paper and set out below in Table 1.

Annex 1 – List of organisations who responded to the consultation

Some respondents do not appear on this list as they have asked for their responses to be kept confidential. However, their views have still informed our analysis of this consultation and are incorporated in the figures presented throughout.  The following list is presented in alphabetical order.

• J&E MEDCALF
• Pickstock Foods Ltd
• Pig Veterinary Society
• Salmon Scotland

All respondents

Type of respondent	Number of respondents
Individual	1
Industry	4

Location of respondents

Location of respondent	Number of respondents
England	3
Scotland	1
Wales	1

Table 1: changes to Schedule 1

Type of animal or animal product	The Charges for Residues Surveillance (Amendment) Regulations 2011 (£)	Proposed charges (£) in 2024 to 2025	Actual increase (£)	Proposed charges (£) in 2025 to 2026	Actual increase (£)
Bovine	0.5106 per carcase	0.7007 per carcase	0.1901 per carcase	0.7617 per carcase	0.0610 per carcase
Goat	0.0507 per carcase	0.0691 per carcase	0.0184 per carcase	0.0751 per carcase	0.0060 per carcase
Sheep	0.0507 per carcase	0.0691 per carcase	0.0184 per carcase	0.0751 per carcase	0.0060 per carcase
Soliped	0.3536 per carcase	0.4287 per carcase	0.0751 per carcase	0.4660 per carcase	0.0373 per carcase
Swine	0.0543 per carcase	0.0676 per carcase	0.0133 per carcase	0.0735 per carcase	0.0059 per carcase
Game and wild game	1.0461 per tonne	1.0461 per tonne	0 per tonne	1.0461 per tonne	0 per tonne
Poultry	0.5568 per tonne	0.5917 per tonne	0.0349 per tonne	0.6432 per tonne	0.0515 per tonne
Eggs	0.0179 per case of 360 (32,345 per quarter)	0.0206 per case of 360 (37,197 per quarter)	4,852 per quarter	0.0206 per case of 360 (37,197 per quarter)	0
Milk	0.0276 per 1000 litres	0.0373 per 1000 litres	0.0097 per 1000 litres	0.0405 per 1000 litres	0.0032 per 1000 litres
Fish other than trout	2.1265 per tonne of marketed product	2.1660 per tonne of marketed product	0.0395 per tonne of marketed product	2.3546 per tonne of marketed product	0.1885 per tonne of marketed product
Trout	1.6840 per tonne of fish food	2.5963 per tonne of fish food	0.9123 per tonne of fish food	2.8222 per tonne of fish food	0.2260 per tonne of fish food