Cost recovery discounting prompts further industry concern

An industry body has aired concern over the Food Standard Agency’s (FSA’s) “lack of urgency” in dealing with full cost recovery discounting, following an independent review of the organisation’s efficiency, commissioned with the aim of saving £5m.

Yet according to Peter Hewson, a consultant working for the Association of Independent Meat Wholesalers (AIMS), the FSA is failing to act quickly enough on the National Audit Office (NAO) review of its efficiency, which included reforming its charging and discounting system, among other recommendations.

“The NAO said there was a variation in the costs of big and small businesses, because the controls are not proportionate,” said Hewson. He claimed there was substantial variation between plants, which needed to be “ironed out” in order for the FSA to make substantial savings.

The NAO’s report also noted that FBOs must be provided with value for money and needed to have “stronger incentives” to use FSA resources more efficiently.

British Meat Processors Association (BMPA) director Stephen Rossides agreed that the current discount system was unfair and was a disincentive for plants to be more efficient. He said the FSA should be open to exploring alternative ways of delivering meat inspection.

Although the review did acknowledge that total costs had reduced by 40% between 2005/06 and 2011/12, through staff reductions, it explained there was now a limit to making further savings in a similar way as “there would be increasing risks to the quality of inspections provided”. One suggestion was for the FSA to look at the “scope for further incremental savings through operational improvements”, such as inspection time and costs.

Hewson told that the FSA needed to tackle full cost recovery issues, including discounts, before EU legislation came into force. “We would like to see some urgency in the FSA’s planning.” he said. “When the EU regulations come into force, which could be in 2016, discounts will become a thing of the past.”

A spokesperson for the FSA said: “The FSA considers there to be no basis to this criticism, considering the NAO review has just been published and discussed by the FSA Board this month, and the first meeting of the stakeholder group under an independent chair is scheduled for August. The NAO found that the FSA had made considerable headway in reducing costs, but that further savings could only be achieved by the industry working with the FSA to reform the discount system.”

The NAO report on the FSA's efficiency was published by the NAO on 8 July and discussed at an FSA Board meeting on 16 July.

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