rose to move to resolve, That this House calls upon Her Majesty’s Government to revoke the regulations laid before the House on 17 October (SI 2006/2787). 47th Report from the Merits Committee (Session 2005-06).

The noble Lord said: My Lords, I am grateful for the opportunity this evening to bring this sorry matter to the attention of the House. I will explain why I believe that these regulations are both disproportionate and unnecessary and should be revoked. First let me establish the purpose of these regulations. They will ban, with immediate effect, a product that has been on sale for hundreds of years and which, until the European Commission stuck its oar in, was, one must assume, competently and properly regulated by our own Food Standards Agency without any problem.

What are curds? They are that part of milk that is turned into cheese, the remainder being the whey. We are dealing with a healthy and historic product. I remind noble Lords of the redoubtable nursery rhyme character, Little Miss Muffett, who,

“sat on a tuffet

Eating her curds and whey”.

She ate not just curds but the whey as well. Miss Muffett obviously had no problem with her weight.

One of the curd producers in this country is—or was—a small firm called Bowland Dairies, based in Lancashire. On 3 January this year, the dairy was given its annual inspection by the local environmental health officer, who asked for only minor changes. On 12 June, the Food and Veterinary Office of the European Commission inspected the dairy and raised concerns about Bowland accepting milk that had been subjected to what is called a rapid test for antibiotics. On 14 June, the Commission circulated a rapid alert notice stating that Bowland's products were unsafe. On 20 June, the Food Standards Agency carried out a full audit of the dairy and approved continuing production of curds on 26 June, after Bowland had made changes in procedure that were agreed with the FSA.

However, on 4 July the Commission stated that because the milk used by Bowland had tested positive in the so-called rapid test for antibiotics, it did not comply with EU legislation and should not be used by Bowland for further testing and processing. The FSA stated that there was confusion over the type of milk that Bowland accepted and used, and that Bowland did not accept milk that was suspected of contamination.

On 17 July, the FSA confirmed in a statement to the European Standing Committee on the Food Chain and Animal Health that:

“No evidence was found that contaminated milk was used in the production of curd cheese”.

The FSA also issued an alert advising member states that Bowland’s products and systems were clear and that its products were fit for market. The Commission appended its own comments to this alert, to the effect that it did not accept the FSA's verdict, thus effectively maintaining the block on Bowland's sales throughout the EU.

Bowland reacted by going to the European Court of Justice—in this case, the court of first instance—on 8 September. The court of first instance found in Bowland's favour and ordered the Commission to withdraw both the rapid alert that it had earlier issued and its comments about Bowland Dairies. The Commission twice refused to obey that until 12 September, when the president of the Court ordered the Commission to stand aside. I have a copy of the court order with me. Typically, the Commission attempted to massage its defeat by appending its own statement to the court order, claiming that it had lost on a mere technicality. The Court instructed the Commission to strike this out, which it did. The president of the Court, Judge Vesterdorf, went so far as to say:

“It is sad that a company is dying while giants fight it out”.

However, it turns out that neither the FSA nor the Government were giants when it came to protecting Bowland or the British dairy industry.

Let us be absolutely clear about this; the court order meant that Bowland could resume trading and, of course, that it was safe for it to do so. The Court is the ultimate arbiter of EU legislation, not the Commission. It is significant that the Commission could have appealed against the court order but chose not to do so. It carried out a two-day audit of Bowland Dairies on 26 and 27 September, which found no major failings. In fact, Bowland was informed by the Commission auditor who carried out that inspection that any findings would be classed as “non-emergency”.

However, on 6 October the Commission issued Article 53 emergency measures, with the effect that all Bowland products were recalled or banned from use within the EU. The Commission also announced that it would begin legal proceedings against the UK food safety authorities for failing to protect the public against contaminated milk; never mind the fact that the FSA had consistently given Bowland the all clear and the court of first instance had agreed with it.

The result is that Bowland's reputation was ruined, its factory closed and 26 people have lost their jobs. Yet it has done nothing wrong. I remind noble Lords that Bowland has always met the requirements of the UK Food Standards Agency. The European Court of Justice found that Bowland’s produce presented no food safety risk and that the Commission had acted beyond its powers. The FSA has repeatedly stated that it disagrees with the Commission's interpretation of its scientific tests.

So where is the beef? Could the Minister please tell the House why the Government have panicked and introduced emergency regulations that are specifically designed to put Bowland Dairies out of business? The regulations are entirely specific to Bowland Dairies. Regulation 3 states:

“No person shall place on the market any curd cheese manufactured by Bowland Dairy Products Limited”.

Those regulations were made on 16 October, laid before Parliament on 17 October and came into force on 18 October. There is not much chance for democratic discussion in that, is there?

Why has Bowland been selected for carpet-bombing like this? Why have the Government and the FSA refused to defend the Commission proceedings and why did they cave in to a Commission line of attack that has been rejected by the European Court of Justice? Is it because they think that curd cheese from Bowland is a health hazard? That cannot be the case because Bowland has always complied with FSA requirements. If the Minister—if I can have his attention for a moment—has any evidence that Bowland's products have ever poisoned anyone, or even that a single sample has been found to be unsafe, I would be pleased to have it. Is it because the Government want to prove their communautaire credentials? That cannot be the case either—Bowland's case has, after all, been vindicated in the European Court of Justice. Or is it because the Government want to deflect the Commission's audit of the UK dairy industry, and busting Bowland is seen as their “Get out of jail” card?

When the Minister replies to these questions, I hope that he will do rather better than the Minister in the other place in the debate on this subject on 7 November. In his winding up, Mr Barry Gardiner, who I understand is a Defra Minister, simply repeated the European Commission’s allegations that Bowland had used contaminated milk. For the record, Bowland has never used products that were not tested and pasteurised as fit for purpose; Bowland did not sell mouldy or contaminated cheese and it did not sell floor waste. But it has been put out of business. Why? I beg to move.

Moved to resolve, That this House calls upon Her Majesty’s Government to revoke the regulations laid before the House on 17 October (SI 2006/2787). 47th Report from the Merits Committee (Session 2005-06).—(Lord Willoughby de Broke.)

My Lords, I thank the noble Lord, Lord Willoughby de Broke, for bringing this Motion to the Floor of the House. It is an important matter and the questions that are raised about the regulations are a source of great disquiet. In many ways, the situation is extraordinary and bizarre because, as the noble Lord made absolutely clear, paragraph 3 refers to only one small company in Barrowford in Lancashire; it does not refer to anybody else anywhere else.

That seems to me arbitrary and discriminatory. If that company was breaking the law in how it made curd cheese, the law should be pressed and it should be taken to court under proper legal action. If the laws of this country are not sufficient to enforce European legislation on food standards, we should have a statutory instrument that applies to anybody and everybody who deals with the particular product. It is unsatisfactory to have a statutory instrument about one small company, employing 22 or 25 people in a part of Lancashire.

I live a few miles away from the company’s base at Fulshaw Head Farm in Barrowford, and if I can do nothing else in this debate, I can teach your Lordships how to pronounce Barrowford, with the emphasis on the last syllable.

I have no connection with the company. My only connection is that I am a member of Pendle Borough Council, which is the environmental health authority that has been involved in enforcing the statutory instrument and in inspecting the company over the years. The company, which has operated for 10 years, and which has been built up to an £8 million business, has been closed down overnight.

That is the second unsatisfactory thing. What was happening there was no secret. It had been inspected over the years by various agencies, and if what was happening was unsatisfactory, that should have been dealt with over time.

The noble Lord quoted Judge Vesterdorf, the president of the court of first instance, who said:

“It is sad that a company is dying while giants fight it out”.

On 7 November in the House of Commons, Gwyneth Dunwoody MP described it better as being,

“an argument between two groups of bureaucrats”.—[Official Report, Commons, 7/11/06; col. 236WH.]

I am not sure that “giants” is the right word in this case.

It is clear that this has arisen because the Food Standards Agency in this country had one set of views about the implementation of the European legislation and the Food and Veterinary Office in Europe had a different view. They both inspected the company within days of each other and came up with a different point of view. There is nothing wrong with that, but the organisations should have got together, sorted out what they thought and come up with a compromise. Instead, they have been fighting each other. The FSA, backed by the Government, spent considerable time supporting the company and opposing the view of the European Commission and the Food and Veterinary Office.

The European Commission, as the noble Lord said, issued one set of instructions to the company, which was overturned in an interim judgment in the European court of first instance. That case is still going on, and I am told that it will take 18 months or two years to come to a conclusion. That court took the view that the company could continue to operate in the mean time. The European Commission then said, “We don’t agree with this. We will bring some different sorts of powers into operation”. Under emergency procedures it issued decision 2006/694 prohibiting the sale of any products. It seems odd that these emergency procedures were brought in when the Commission failed the first time round, but nevertheless, they followed three months after the initial investigation. It does not seem that it was quite such an emergency as to close the company down overnight. Because the Commission issued that decision, and proposed to take infraction measures against the British Government, the Government caved in and stopped fighting the case. They said, “OK, we agree with the Commission after all”.

Some people think that this is the result of big, bad Europe. If blame is to be allocated in this very unsatisfactory situation, at least a substantial proportion of that blame ought to go to the British Government, who have behaved in a way that at best has not been consistent. They stood firm and said that the FSA’s opinions, after inspecting the company and, as the noble Lord said, going back to negotiate some improved practices, were okay and that the company could continue.

As a result of the British Government conceding the case to the European Commission, they have issued this rather shoddy statutory instrument aimed at one particular small company. The FSA has obviously had to issue new guidance, based on the Government’s new views. Was the statutory instrument issued because the Food Standards Agency had changed its view, or simply because the Government were carrying out the instructions of the European Commission? That is the fundamental issue.

Not surprisingly, the company has had a very bad press over this. Living where I do, I have seen local newspapers as well as the nationals, the farming press, and so on. The allegations in public print sound appalling. There has been talk of mouldy cheese, but the company claims that it removed the mould before using the cheese. There is the question of what is known as “interface” milk, which is a mixture of milk and water, which comes from a result of cleaning pipes that milk has flowed through. We now understand that the Government and the European Commission have accepted that at least in some circumstances interface milk can be used and is acceptable as a raw material for this kind of product.

The most controversial part of it is the question of the screening tests for antibiotic residues in the milk. It has been talked about in the local paper as contaminated milk, and so on. The question is whether milk that fails the rapid screening test can be used if it subsequently passes a more rigid scientific test. It is not about whether the antibiotics are present, but whether the level of antibiotics exceeds the permitted thresholds. It seems that on all sides the European Commission, the British Government, the Food Standards Agency, and everyone else accepts now that there is a dispute on how milk should be screened for antibiotics. We understand that the European Commission is setting up an investigation with experts from across Europe to get a clear definition of which tests are required and how they should be carried out. Have the Government any information about when that inquiry will take place, and when any recommendations might be expected? Have they information about how many and which other companies in this country may well be caught by this in the mean time?

The dispute about science is just that—a dispute about science. As lay people we cannot express a proper opinion. We can look at legal judgments and take into account the opinions of experts. I shall quote from the 47th report of the Merits of Statutory Instruments Committee, which states:

“The scientific debate remains over the appropriate way to test for traces of antibiotics in milk”.

If the scientific debate remains, and if it is a grey area, why have this emergency procedure to close the company down and throw people out of work virtually overnight? The report continues:

“The investigation did not identify any specific food safety risks, but did result in the company agreeing to change a number of their processes and working practices and to improve their food safety management system”.

That seems a sensible way forward in a case like this, with a company that has been operating for 10 years. As the noble Lord, Lord Willoughby de Broke, said, nobody has come up with any evidence that anybody has suffered in any way as a result of any product that this company has produced.

It is a sorry story. There has been a lot of conflict and confusion. This statutory instrument is a sledgehammer to crack a nut. One of the MEPs in the north-west, my colleague Sajjad Karim, said:

“All common sense and logic has been thrown out of the window and this row has escalated beyond reason”.

I concur.

Have the infraction proceedings been withdrawn, or are they ongoing? What discussions are currently taking place with the company or the European Commission? What progress is taking place with what we understand to be an ongoing inspection of the British dairy industry on behalf of the European Commission? What sort of scale is it on? We hear of nine sites being inspected. When can we expect results? Why did the Government not defend against the infraction proceedings in view of the robust defence they had mounted, on the advice of the FSA, before they were instituted? Do the Government believe that the use of interface milk—the mixed milk and water from these pipes—is safe? As I asked towards the beginning of my speech, why is this statutory instrument about this particular company, rather than, in a fair and non-discriminatory way, all companies producing this product? Are any other businesses facing closure? If so, how many and where? Are steps being taken on behalf of the Government, the Food Standards Agency or anybody else in this country to conduct a full risk assessment of cheese recovery processes, which is what this is?

I thank the noble Lord for raising this. I look forward to the Minister’s comments.

My Lords, it seems utterly unacceptable that dairy producers in our country—who have, according to our own Food Standards Agency, met the strict standards of hygiene and food safety—are forced to face an uncertain future, with the EU determined to overrule decisions made in Great Britain because of the Government’s refusal to stand up for British dairy producers. That is a shocking example of this country’s inability to set its own food standards and run its own food standards operations.

Either there was an insoluble problem with Bowland Dairy, in which case it should not have been given a clean bill of health by UK officials, or there was no problem that could not be addressed, in which case the EU had no business butting in to close down a small UK firm. Which is it? Can the Minister help the House? Can he confirm that the Food Standards Agency had cleared Bowland and had found no practices that would have justified such draconian actions before EU officials intervened?

Bad practices need to be tested and controlled, but this action has even been condemned by the Liberal Democrat MEP Saj Karim as “knee-jerk and headstrong”. He said that Bowland was being made a scapegoat and that the Commission was not impartial but had an axe to grind. How often do we hear Liberal Democrats condemning the Commission’s actions? When a Liberal Democrat attacks the EU, something must be very wrong. Does that worry the Minister?

Surely you have to be certain that there is no alternative before passing regulations that could bankrupt a small firm and put 22 people out of work. Is the Minister telling the House that there is no alternative and that our Government back EU action to cut Lancashire jobs? If the practices are as bad and uncontrollable as the European Commission’s Food and Veterinary Office claims, why did the UK not support action on Bowland in the Standing Committee vote on 6 October? If they cannot justify the action, why did Britain abstain? It is a spineless attitude from a Government who claim to be a friend of small businesses. Ministers were more fearful of upsetting EU officials than concerned to defend a British firm. In the end, we just sat on the fence, pleasing nobody.

Can the Minister confirm that Bowland exported to Ireland, Denmark, Austria, Germany and France? Which, if any, of those countries complained to the UK Government about its products? Do any of those countries have curd cheese industries? Have any complaints been made by the UK Government about cheese products from those countries? How many other curd cheese manufacturers have been closed by EU regulations throughout the Community? Will the Minister share his research on this with the House?

In his Written Answer of 7 November, the Minister said that Britain had now advised the Commission of,

“a revised approach to the application of EU hygiene rules in the dairy sector which is in line with that taken by the Commission in the decision”.—[Official Report, 7/11/06; col. WA 120.]

Can the Minister explain what he meant by that? Does it mean what I think it means—that the British Government will simply toe the line in any intervention against a UK firm from now on? Can the Minister assure the House that the “revised approach” he talks of will not affect traditional milk or cheese production in this country? Did the department discuss the letter with the industry before announcing absolute compliance?

The unfortunate position of Bowland has now led to a much wider threat to British industry. The House will be alarmed to learn that the UK cheese industry—a £5.6 billion sector—now faces what is termed a “blitz” by EU inspectors. What other countries face such blitzes? What will the Government do to support and protect our dairy products?

I do not often praise Liberal Democrats, but Saj Karim was surely right when he said:

“The commission is playing a dangerous cloak and dagger game with the UK’s … industry”.

What are the Government doing to check this cloak-and-dagger game? As the Minister will be aware, the FVO threatened inspections of the dairy industry across Britain in November. What dairies and cheeses have they targeted? Can the Minister report the latest situation to the House? No doubt his own officials are informed and monitoring the threat closely.

I hope that the Minister can assure the House that there will be no gold-plating by his department. Not long ago, he was defending the regrettable interference of UK agencies as regards traditional Stilton cheese. He said that he would look into that matter further. What has he done about it since then? How has that situation been resolved? In the light of this new threat, can he assure the House that the FVO will not be intervening against Stilton production?

The House will be most grateful to the noble Lord, Lord Willoughby de Broke, for alerting Parliament to this EU action against one small firm, which our officials had not seen a need to close, and for highlighting a wider emerging threat to our cheese industry. That industry is entitled to expect vigorous defence from its Government. I see little evidence of that in response to the FVO’s blitz on British cheese. I, too, ask many of the questions posed from the Liberal Democrat Benches by the noble Lord, Lord Greaves.

My Lords, I understand the importance of supporting the UK dairy industry and the concern over the treatment of a relatively small cheese-maker in Lancashire. The Government have not panicked, but this is a complex case and I need to explain as carefully as possible what has happened in order to answer some of the concerns expressed.

First, I shall speak about the interim judgment, to get it out of the way. It required the Commission to withdraw a notification that it had placed on the rapid-alert system, which is the mechanism to notify other member states of food incidents that may affect them. The court of first instance did not make any judgment about the safety of the curd cheese produced at Bowland, nor did it prevent the Commission taking the further action that it took against the company. People may disagree with the Commission’s action, but the court of first instance did not prevent it doing so and it did not go into the merits of how the curd cheese was produced.

I shall now address the key issues arising in a highly unusual case. I shall begin by describing the background to the event that resulted in the Commission using emergency safeguard provisions to adopt Commission Decision 2006/694/EC prohibiting the marketing throughout the European Union of curd cheese manufactured by Bowland Dairy Products Ltd in Lancashire. I shall also explain why, in the Government’s view, this statutory instrument, which gives effect to that Commission decision in England, should not be annulled.

The background to the decision is complex. During an audit of the UK’s implementation of new EU food hygiene legislation in May and June this year, which was carried out by the Commission’s Food and Veterinary Office, FVO inspectors visited Bowland, which was producing curd cheese for sale to other EU member states for further processing. The FVO inspectors examined documentation at Bowland and identified what they considered to be the sale of dairy products made from raw materials unfit for human consumption. At the end of the audit, the FVO demanded immediate action to address the issues identified. It was supported by officials of the European Commission’s Health and Consumer Protection Directorate General, known as DG SANCO, in Brussels. They immediately called into question a number of the procedures and operations employed at Bowland, including the practice known as cheese cleaning or cheese recovery, involving the removal of mould from cheese, and repackaging the cheese, which was then despatched to other businesses for further processing. The Commission also questioned the production of curd cheese using milk that had been rejected by other companies for failing a rapid screening test for antibiotic residues, but which Bowland tested further and used if the result was negative. The Commission also had concerns about the use of interface milk, which is a mixture of milk and water, and whether such milk contained residues of cleaning chemicals. It argued that all such practices gave rise to unacceptable risks to consumers and should be halted forthwith.

The Food Standards Agency, the central authority in the UK responsible for food safety matters, urgently launched an investigation into the FVO findings. To assist in that process, the company closed voluntarily for 10 days, during which the FSA and enforcement officers from the local authority fully audited the premises and the controls and procedures then in place. The purpose of that investigation was to determine whether the practices identified by the FVO should be allowed to continue and, if so, under what conditions.

I should stress at this point that the FSA investigation did not identify any specific food safety risks arising from the curd cheese production procedures, but the company agreed to implement changes recommended by the FSA to a number of its processes and working practices and to improve its food safety management system. The cheese recovery operation was halted permanently, and the company was informed that it could restart operations only following the granting of the required approval from the local authority. On that basis, the company restarted curd cheese production towards the end of June, and the Commission was informed of the outcome of the FSA’s investigation.

My Lords, I have listened to the whole of this debate and would like to put four brief questions to the noble Lord, which he does not appear to have answered. First, do the Government think this product is safe? Secondly, has anyone been made ill by it?

My Lords, it is in order for noble Lords to speak before the Minister sits down.

My Lords, I regret that I did not utter those words, but I did not think it was essential. My second question was mentioned by the noble Lord, Lord Greaves, and my noble friend Lord Willoughby de Broke, and I do not think that the Government have answered it. Thirdly, in these circumstance, what about compensation for this wretched company? Fourthly, does not this story, to which I have listened with sadness but no surprise, demonstrate the utter futility and dishonesty of subsidiarity?

My Lords, the noble Lord will be astonished to know that I do not think that this issue in any way affects subsidiarity. I do not know, and have no means of knowing—nor, I suspect, does anybody else—whether anybody has ever been made ill by Bowland’s products because those products were used across Europe. We are talking about the processes agreed across Europe as the basis for investigating products consumed by human beings. I have explained at great length those processes and how things have come to pass in this instance. I must ask the noble Lord, whose views on the European Union I know very well, to accept that there was due process—although he may not like the outcome—in this case.

My Lords, before the Minister sits down again, will he answer the question I asked about interface milk? Do the Commission and the Government now accept that it can be used by processing firms in the dairy industry? Secondly, can he say whether his officials are talking to the owners of Bowland Dairy Products Limited with a view to resuming production under an acceptable regime?

My Lords, as I said, it is down to the local authority initially to decide whether Bowland can resume production. I will have to take advice on the issue of interface milk, but, as I said, the reason for concerns about Bowland was that residues of cleaning materials were found. That is the advice that I was given and the point that I was making. I will look into the more general issue of interface milk and write to the noble Lord.

My Lords, before the noble Lord sits down, can he answer the question raised by the noble Lord, Lord Pearson, about compensation to the firm?

My Lords, I am certainly unable to answer that question. I shall see if I can throw any light on it by taking further advice, but I would not presume to know the intricacies of the law relating to compensation in these circumstances.

My Lords, I am most grateful to all noble Lords who have spoken in this debate, including the noble Lord, Lord Greaves, and my noble friend Lady Verma on the Front Bench, for whom, I gather, it is a first appearance. I am delighted that she gave such a robust performance. They both called it a sorry story; I think that the Minister himself would agree with that. He presented the situation very fairly and clearly. I am grateful to him for that.

What he was really saying—wasn’t it?—was that we do not agree with what the Commission has done, nor does the Food Standards Agency, but we will have to comply anyway because of our so-called treaty obligations through our membership of the European Union. That is not an attractive story.

When I secured this debate, I gave an undertaking that I would not call a vote, although I believe that I am entitled to do so. Although I undertook not to press it to a vote, I am very tempted to be a naughty boy and call one, because I think that we would probably win it. However, under the circumstances, with some reluctance, I feel obliged to withdraw the Motion.

Motion, by leave, withdrawn.