81
if.;
(THIS
DOCUMENT IS T H E P R O P E R T Y OF H E R B R I T A N N I C M A J E S T Y ^
GOVERNMENT)
COPY NO.
C(68) 47 27th F e b r u a r y , 1968
CABINET
C O M P E N S A T I O N F O R LOSSES F R O M F O O T - A N D - M O U T H DISEASE
M e m o r a n d u m by the F i r s t S e c r e t a r y of State
I ask the Cabinet to r e s o l v e a d i f f e r e n c e of v i e w in the
A g r i c u l t u r a l P o l i c y C o m m i t t e e on a p r o p o s a l by the M i n i s t e r of
Agriculture r e l a t i n g to c o m p e n s a t i o n f o r f a r m e r s f r o m l o s s e s resulting
f r o m the f o o t - a n d - m o u t h e p i d e m i c .
2.
Compensation f o r stock slaughtered to p r e v e n t the spread of the
epidemic is at p r e s e n t c a l c u l a t e d , under the r e l e v a n t l e g i s l a t i v e
provisions, on the b a s i s of the m a r k e t value of the stock at the t i m e of
slaughter.
A n y payments not on this basis would have to be made
ex gratia.
T h e M i n i s t e r of A g r i c u l t u r e a r g u e s that f a r m e r s whose
stock had to be slaughtered in the e a r l y w e e k s of the e p i d e m i c ( i . e . in
October and N o v e m b e r of l a s t y e a r ) have suffered d i s p r o p o r t i o n a t e l y
because m a r k e t values f o r cattle have r i s e n by 25 p e r cent since then.
The rate of compensation r e c e i v e d by these f a r m e r s has thus been
substantially l e s s than the rate r e c e i v e d by f a r m e r s whose stock w e r e
slaughtered l a t e r , and the M i n i s t e r a r g u e s that this is i n e q u i t a b l e .
These f a r m e r s have a l s o been out of business pending r e - s t o c k i n g f o r
several months instead of the usual six w e e k s .
He t h e r e f o r e p r o p o s e s ,
as a matter of c o m m o n j u s t i c e , that their compensation should be
brought up to the l e v e l r e c e i v e d by f a r m e r s whose stock had the
disease l a t e r .
He e s t i m a t e s that this would c o s t the E x c h e q u e r
£800-£900, 000, of which a p r o p o r t i o n - p o s s i b l y about £200,000 ­
would be r e c o v e r e d in tax.
3.
I should mention a dumber of other r e l e v a n t f a c t o r s ­
( i ) Existing compensation is subject to income tax, and it is
estimated that the E x c h e q u e r w i l l r e c o v e r a substantial
sum in this w a y .
T h e M i n i s t e r of A g r i c u l t u r e is not
challenging this, but points out that it is causing g r e a t
resentment among the f a r m i n g community and a r g u e s that
this strengthens the case f o r his p r e s e n t p r o p o s a l .
( i i ) The position of f a r m e r s who have suffered l o s s e s has a l r e a d y
been eased by two m e a s u r e s designed to take the p r e s s u r e off
i m m e d i a t e r e - s t o c k i n g : f i r s t , a ploughing grant of £10 an a c r e
to encourage a switch to a r a b l e f a r m i n g ; and second, a g r a n t
for replacing slaughtered d a i r y cattle by " d r y s t o c k " , i. e .
cattle which w i l l not produce m i l k f o r the f a r m e r f o r a further
period.
T h e s e two m e a s u r e s w i l l together cost about
S.j m i l l i o n .
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(iii)
It i s open to f a r m e r s to i n s u r e against l o s s of i n c o m e (though
not s p e c i f i c a l l y against the incidence of f o o t - a n d - m o u t h
disease).
But the M i n i s t e r of A g r i c u l t u r e i n f o r m e d the
C o m m i t t e e that, because of the high p r e m i u m s and the l i m i t e d
c o v e r a g e , f e w f a r m e r s in f a c t take out such i n s u r a n c e .
4.
Some m e m b e r s of the C o m m i t t e e w e r e opposed to the p r o p o s a l .
They argued that ­
( i ) T o depart f r o m the existing statutory b a s i s of compensation
a c c o r d i n g to m a r k e t v a l u e would set a dangerous p r e c e d e n t .
( i i ) T h e r i s e in the m a r k e t v a l u e of cattle had brought an
uncovenanted bonus to f a r m e r s whose stock w e r e not affected
by the e p i d e m i c , and if there was any c a s e in equity f o r h i g h e r
compensation to those affected e a r l i e s t , the cost of this should
be m e t by a l e v y on other f a r m e r s rather than by the t a x p a y e r .
( i i i ) Account should be taken of the fact that compensation w a s
n o r m a l l y paid within three w e e k s of slaughter, and those
affected e a r l i e s t had had the benefit of a r e t u r n on their
compensation payment during the i n t e r v a l b e f o r e r e - s t o c k i n g .
5.
Other M i n i s t e r s argued that ­
( i ) A d e p a r t u r e f r o m the m a r k e t value f o r m u l a was justified by
the e x c e p t i o n a l length and s e v e r i t y of the e p i d e m i c ,
( i i ) A l e v y on other f a r m e r s w a s not p r a c t i c a b l e and would in any
case require f r e s h legislation,
( i i i ) The return on compensation payments in the i n t e r v a l b e f o r e r e - s t o c k i n g w a s insignificant c o m p a r e d with the l o s s e s of income incurred. 6.
T h e r e was s o m e support in the C o m m i t t e e f o r a middle c o u r s e ­
i. e. to a c c e p t the p r o p o s a l by the M i n i s t e r of A g r i c u l t u r e and invite
him to d i s c u s s the d e t a i l s of a s c h e m e with the F a r m e r s U n i o n s , but to
limit the total amount of payments to £500, 000 (of which, of c o u r s e , a
proportion would r e t u r n to the E x c h e q u e r in the f o r m of t a x ) .
On
balance, this is the c o u r s e I would r e c o m m e n d to m y c o l l e a g u e s .
1
70 Whitehall, S. W . l .
26th F e b r u a r y , 1968
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