TB eradication – Who should pay what and why?
Thursday, 26 January, 2017
For the last two years, the five independent members of the TB Strategic Partnership Group have endeavoured to develop a holistic, long-term strategy to eradicate Tuberculosis in Northern Ireland. The group has consulted with a range of experts and stakeholders and have presented 38 recommendations which they believe offers the most prudent pathway towards complete eradication. The report highlights that even with full implementation, it is still likely to take over 40 years to achieve regional TB free status. However, implementation offers potential savings of £205 million to the tax payer and additional savings to industry over this period compared to maintaining the status quo which is likely to result in ongoing costs to the tax payer of £24-£28 million per year and a herd incidence of about 6-7% (with all of the associated on-farm costs) ad infinitum. The report highlights that this timeline is dependent upon the level of acceptance of the recommendations by all stakeholders whilst recognising that there is a delicate balancing act to be achieved between driving towards disease eradication and ensuring that the measures are not so draconian that they make farming impossible for farmers.
Considering the often opposing views of stakeholders on how to address this disease, it is important to briefly step back to consider the problem within the broader context before debating each of the recommendations individually over the coming months.
During the late 19th century, TB caused 1 in 5 human deaths and as late as World War II, there was still 50,000 TB notifications per year in England and Wales. The implementation of BCG vaccines, pasteurisation of milk and reduction of disease in cattle have all contributed to the effective elimination of the disease as a human health issue within the UK. It is also worth noting that during the 1940’s, the NI dairy cow TB incidence was roughly 33%. However, today cattle incidence has fallen to 0.7%. What has however become apparent over the last two decades, is that whilst our current TB controls are effective at maintaining TB incidence at a relatively low level, these measures appear to be ineffective when it comes to driving the disease towards final eradication. The process has stalled and new measures are required if we are to achieve regional freedom.
Given that full implementation could cost up to £12 million extra per year before we start to see a significant reduction in the cost of TB, it is worthwhile considering the financial background into which the report has been launched as while eradication of the disease will have longer term financial benefits, there will be upfront costs that need to be covered first.
Since the Conservative party launched its austerity programme in 2010, all devolved governments have had their block grants substantially reduced. For DARD/DAERA, this meant a budget reduction of £82 million between 2011 and 2017. To enable these savings, almost 400 staff have left DAERA. Considering this, it is likely to be difficult to acquire the additional funds required from Westminster under the current government. This is an issue because of the historic governance of TB eradication, whereby policy has been created, enforced and paid for by the department. This has created an attitude that TB is principally a governmental problem to tackle and pay for despite the obvious on-farm costs. Given the unlikelihood that there will be significant levels of ‘new money’ to enable implementation, the only option available to DAERA is to reallocate the funds that it currently spends.
Over the last 5 years, DAERA spent roughly £29 million per year on TB, of which roughly 50% was spent on compensation. Given that DAERA has already downsized considerably, and has renegotiated all private veterinary contracts last year (which combined make up the bulk of the other 50% of the TB budget), it seems unlikely that further significant reductions will be possible in these areas. As such, if industry continues to insist that TB is a DAERA issue to control and pay for, then the obvious target area to supply the funds necessary is compensation costs.
Given that the current TB controls are sufficient to protect public health and enable international trade for 90% of our herds which provides a benefit to the broader economy, the majority of future benefits are likely to be experienced by farmers. As such, the beneficiary pays principle suggests that industry should contribute to the cost of these policies. It is a common principle used for the control of various diseases. For example, in Australia industry contributed 50% of the cost TB eradication and in New Zealand industry contributes 60%. It is with this and a number of other behavioural considerations in mind, that the TBSPG has proposed an initial cap on compensation at £1,500 for commercial animals, £1,800 for pedigree animals and £3,500 for one stock bull per year. The TBSPG highlights that 83% of the reactors removed in 2015 would fall below these proposed cap values. They have further recommended that consideration should be given to reducing compensation to 75% of the value within this cap at a later date. The report estimates that implementing the compensation cap would generate initial savings of £1.1 million based on 2015 values. There is no estimate of the savings generated by the compensation reduction. However, based on 75% of the five year average, this could generate roughly £3.5 million. Effectively, industry is being asked to consider contributing £4.5m to £5 million (roughly 12% of the potential total costs).
Considering that the recommendation to control TB in wildlife is the largest cost (ranging from £2.2m to £7.8 million per year) and the historic level of opposition to wildlife intervention by animal welfare groups and urban voters, industry needs to consider how best to make this money available. To date, the position of the UFU has been that there can be no compensation reduction until action is taken to address TB in wildlife. With the publication of this report, the day for that discussion has come. If farmers want TB in wildlife tackled, then we must address how it is to be paid for. If farmers contend that the cost of a compensation cap or reduction is unbearable, then we need to come forward with alternative proposals as without control of TB in wildlife the strategy is unlikely to be accepted. For example, industry could opt to pay for one annual herd test per year (£3 x 1.65 million cows = £4.95 million), or it could introduce a levy on killed cows and milk similar to ROI (€3 per head & €0.5 cent per gallon) which could raise £1.1 and £2 million respectively. Such approaches would represent good value when compared to paying for TB insurance (which isn’t always available) to protect against compensation cuts (roughly £11 for £500 insurable value). However, this would be asking the 90% of herds without TB to pay for the 10% that have. Additionally, as TB incidence falls, the cost to industry through the compensation cap and reduction will fall. Whereas the money raised via levy or paying for testing would be flat until eradication and would result in industry paying more in the longer term unless the rates were frequently reviewed.
As we embark on this fresh attempt to find a solution for how we eradicate TB, it is worthwhile asking the questions ‘who pays what and why?’ Answering these questions will ultimately dictate what recommendations farmers find acceptable. Do you believe that only government should pay? If so, industry will have limited impact on the policies implemented. If industry contributes, it will have more say. Within that, do you believe the herd with TB should pay for its control or as an industry do we want to accept a collective responsibility and spread the pain to ensure that TB in wildlife is controlled?
As always, the UFU will reflect the views of our membership, so make your voice heard and contribute to the debate.