Scottish Government

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Dear Consultee

CONSULTATION ON THE RADCLIFFE REPORT ON THE REVIEW OF THE AGRICULTURAL AND HORTICULTURAL LEVY BODIES

Ministers announced on 15 March 2005 an independent review of the five statutory agriculture and horticulture levy bodies: the British Potato Council, the Horticultural Development Council, the Home Grown Cereals Authority, the Milk Development Council and the Meat and Livestock Commission. The Review was carried out by Rosemary Radcliffe CBE and Rosemary published her Report today.

We would now like to commence consultation on the Report. The consultation period starts today, Friday 11 November and will run for 12 weeks, with a final deadline for responses of Friday 3 February 2006.

Following the end of the consultation period, and subject to the views of respondents to this consultation, Ministers will take final decisions on the way forward. If necessary, there will be further consultation on any proposals for change.

Consultation paper and consultation list

A copy of the Report can be downloaded here. The consultation paper is attached at Annex A. If you have any questions about the consultation paper, please contact me on 0131 244 6403.

The consultation list is attached at Annex B. We have tried to cover all relevant interests but if you feel another party would benefit from seeing this consultation, please pass on a copy.

Responding to this consultation paper

We are inviting written responses to this consultation paper by Friday, 3 February 2006. Please send your response to:

marie.coventry@scotland.gsi.gov.uk

or

Tel: 0131 244 6953

We would be grateful if you could indicate clearly in your response which questions or parts of the consultation paper you are responding to as this will aid our analysis of the responses received.

This consultation, and all other Scottish Executive consultation exercises, can be viewed online on the consultation web pages of the Scottish Executive website at http://www.scotland.gov.uk/consultations. You can telephone Freephone 0800 77 1234 to find out the location of your nearest public internet access point.

The Scottish Executive now has an e-mail alert system for consultations ( SEconsult: http://www.scotland.gov.uk/consultations/seconsult.aspx). This system allows stakeholder individuals and organisations to register and receive a weekly e-mail containing details of all new consultations (including web links). SEconsult complements but in no way replaces SE distribution lists and is designed to allow stakeholders to keep up to date with all SE consultation activity and to be alerted at the earliest opportunity to consultations of most interest. We would encourage you to register.

Handling your response

We need to know how you wish your response to be handled and, in particular, whether you are happy for your response to be made public. Please complete and return the Respondent Information Form (attached at Annex C) as this will ensure that we treat your response appropriately. If you ask for your response not to be published we will regard it as confidential and we will handle it accordingly.

All respondents should be aware that the Scottish Executive are subject to the provisions of the Freedom of Information (Scotland) Act 2002 and would therefore have to consider any request made under the Act for information relating to responses to this consultation exercise.

Where respondents have given permission for their response to be made public, copies will be made available to the public in the Scottish Executive library by 10 February 2006 and on the Scottish Executive consultation web pages by the end of February 2006. Where agreement to publish has been given, we will check all responses for any potentially defamatory material before logging them in the library or placing them on the website. You can make arrangements to view responses by contacting the Scottish Executive library on 0131 244 4565. Responses can be copied and sent to you but a charge may be made for this service.

What happens next?

Following the closing date, all responses will be analysed and considered along with any other available evidence to help Ministers reach a decision on the future of the levy boards. We aim to issue a report on this consultation process by the end of February 2006.

Comments and complaints

If you have any comments about how this consultation exercise has been conducted, please send them to Marie Coventry at the address above.

Yours sincerely

AILEEN BEARHOP

ANNEX A

CONSULTATION PAPER

Your views are sought on a number of the Report's key conclusions and recommendation.

Continuation of Statutory Levy

The Report concludes (paragraph 5.2) that there is still a case for continuing with statutory levies, on the basis of market failure and the changes currently facing the agriculture and horticultural sectors. The Reviewer acknowledges that the case is stronger for a levy in some sectors than others and that some changes are needed to the levy arrangements and other aspects of the present arrangements.

(i) Do you agree with the retention of the statutory levy?

Continuation of Processor Levies

In order to ensure value for money for levy payers, the reviewer has recommended that important changes should be made to the system, in respect of: governance and accountability, where there is a need for greater transparency; activities and priorities, where a common framework of activities is proposed; levy arrangements especially concerning the scope and basis of the levy; and efficient and effective service delivery.

On the arrangements concerning the levy, the Reviewer examines the arguments concerning limiting the levy to primary production (para. 5.23-5.25) in those sectors where currently processors or dealers also pay a levy. She notes that "levy is merely shifted back to primary production" in those sectors were there is a processor levy, and that "lines of accountability for bodies whose levy payers are both primary producers and processors may well be less than clear; the interests of these groups are not the same". However, she also notes that there is a need to have all parts of the supply chain engaged. Her conclusion (para. 5.25) is that the arguments are finely balanced but that the current arrangements should stay as they are, but should be kept under review.

(ii) Your views on whether processor or dealer levies should continue for potatoes, meat, and cereals are sought. If the meat processor levy were to continue, the Reviewer proposes that the general and promotional levies should be combined: do you agree?

Basis for calculation of levies

The Reviewer suggests that it would be desirable to move to value-based arrangements for all levies (paragraph 5.26). She does not propose any changes to the basis of the horticulture, milk or oilseeds levy but does suggest that the arrangements for potatoes, meat and cereals should change to being based on turnover and consistency should be applied to small producer exemptions. She also recommends that there should be a 'Fresh Start' to calculating levies, so that the rate of levy is directly related to the strategies for the sectors.

(iii) Your views on these points would be welcome. Do you agree with the 'Fresh Start' approach to calculating levies?

Activities and priorities

On activities and priorities, the Reviewer considers that some activities are "always appropriate" for levy bodies ( e.g.R&D, benchmarking), whilst some are "sometimes appropriate" ( e.g. the provision of producer market information) and some are "not appropriate" ( e.g. general promotional campaigns) (Box V.1, p. 87).

(iv) Do you agree with this classification, and in particular with those activities that are deemed inappropriate?

The New Model

The Report proposes abolishing the existing five levy bodies, and setting up separate companies for the different sectors (SectorCos) which would be responsible for delivering services to levy payers and would be subsidiaries to a single overarching body (NewCo).

NewCo would be responsible for the raising of levies, would be the sole public body and would be accountable to Ministers. A key attribute of the proposed New Model would be the flexibility to deal with changing circumstances in the agricultural and horticultural sectors, together with an emphasis on placing the bodies in the 'ownership' of producers. It is therefore proposed that NewCo would (with suitable Parliamentary oversight) also have the power to wind up SectorCos or establish new ones but would have to take account of levy payers' views (para 5.41 and Box V.3). To improve accountability to levy payers, therefore, the Report proposes a 'nuclear button', ensuring that levy payers can trigger a vote on whether a particular levy is to be continued.

(v) Do you agree that levy payers should have the right to trigger a vote on whether a particular levy and/or SectorCo is abolished, or new ones established?

The SectorCos should allow for improved accountability to levy payers; they would be closely involved in setting the levy and would receive the net proceeds and would take the detailed decisions on activities and priorities (para. 5.37 to 5.39). The Reviewer suggests that there should be separate sector companies for milk, cereals & oilseeds, potatoes, and horticulture, one for pigmeat and one for English beef and sheepmeat. In addition, Wales and Scotland may also wish to establish separate sector companies for Welsh and Scottish meat respectively (see Box V.2).

(vi) Have you any views on the proposed arrangements for sector companies?

Common services would be provided to SectorCos through a central body (ServiceCo), aimed at enhancing efficiency and lowering costs (para 5.46 to 5.49). The Report proposes that the implementation of the New Model and abolition of the five existing levy boards should be complete by the start of 2007/08 financial year. With regard to the cost-benefit analysis of the New Model (para 5.50 to 5.52), the Report forecasts that the " project breaks even during year two and delivers net savings of £913,000 per annum thereafter".

(vii) Your views are sought on the proposed New Model (of NewCo, SectorCos and ServiceCo), associated cost-benefit analysis and the recommended implementation timetable.

Quality Meat Scotland

Quality Meat Scotland ( QMS) currently carries out the functions of the Meat and Livestock Commission in Scotland and is accountable directly to Scottish Ministers.

(viii) Do you have any views on the establishment of QMS as a SectorCo or, alternatively, the establishment of QMS as a separate NDPB with voluntary links to NewCo and ServiceCo?

We would also welcome your comments on any other points mentioned in the Report but not specifically referred to above.

ANNEX B

LIST OF CONSULTEES

Dairy UK Scotland

First Milk

Highlands & Islands Enterprise

Horticultural Trade Association

Institute of Auctioneers & Appraisers Scotland

NFU Scotland

National Beef Association (Scotland)

Quality Meat Scotland

Royal Highland & Agricultural Society of Scotland

Scottish Agricultural College

Scottish Agricultural Organisation Society

Scottish Association of Meat Wholesalers

Scottish Association of Young Farmers Clubs

Scottish Consumer Council

Scottish Council for Development and & Industry

Scottish Crofters Commission

Scottish Crofting Foundation

Scottish Enterprise

Scottish Federation of Meat Traders' Associations

Scottish Organic Producers Association

Scottish Potato Trade Association

Scottish Rural Property & Business Association

Scottish Seed & Nursery Trade Association

Scottish Tenant Farmers' Association

VTSC Growers' Association

Consultation paper only:

British Potato Council

Horticultural Development Council

Home Grown Cereals Authority

Meat and Livestock Commission

Milk Development Council

ANNEX C

RESPONDENT INFORMATION FORM: CONSULTATION ON THE RADCLIFFE REPORT ON THE REVIEW OF THE AGRICULTURAL AND HORTICULTURAL LEVY BODIES