Shoppers to pay the price in plans for powerful food-standards agency

Food prices seem set to rise to fund a new agency to be established under government plans to clean up the food industry. Food producers will have to fund some of the agency's costs, with a bill of up to pounds 200m. Our Legal Affairs Correspondent has the details.

Ministers plan to charge manufacturers for food licences to help pay for the Food Standards Agency and and the implementation of tougher regulations, according to the White Paper establishing the body, a copy of which has been seen by The Independent.

The bill to the food industry could be pounds 200m, which will raise fears that prices could have to rise. It will also raise concern that the industry will expect trade-offs for funding the scheme. The leaked White Paper, due to be published in November but delayed to next month, also proposes a new advisory committee on animal feed. It is intended to meet concern over the use of genetically altered feed such as maize given to animals and its affects on human health.

The document, marked "final draft", contains wide powers for the agency, including a key role in identifying and recommending balanced and nutritious diets for the general public. Overall, the proposals will create one of the most powerful food watchdogs in Europe. The White Paper is thought to have been delayed after intervention by the Minister without Portfolio, Peter Mandelson, apparently echoing fears by the food industry that emphasis on nutrition would deflect the agency from its other tasks.

The "final draft" says the agency, to be created by 1999, should play a "key role" in developing nutrition policy. In particular, it should help provide the definition of a "healthy diet", and propose laws on nutritional aspects of food, including "labelling and claims, dietary supplements sold as food, fortified foods and functional foods". Critics are watching to see if the proposals are watered down. The Health Department has lobbied hard to keep control over nutrition policy.

But it is clear the food industry will be dismayed by the plan to charge them for food licences to fund many of the White Paper's objectives. In a key passage, the document says " ... the Government believes the food industry should bear the bulk of the costs of improving food safety and standards. The food industry as a whole will benefit from the improved public confidence in food safety and standards that the FSA is likely to bring". The best way of achieving this is a "comprehensive system of licensing with charges", it says.

The White Paper makes big claims for the FSA, which will be based in Whitehall and divided into a commission and an executive arm called the agency, modelled on proposals by Professor Philip James in his 8 May report. In his draft preface, the Prime Minister says the plans will "transform" the way food- standard issues are handled, and promises to do away with the "old climate of secrecy and suspicion".

A key part of the paper allows the agency, which will be responsible to the Department of Health, to publish not just its decisions but evidence on why they are made. It will operate under "guiding principles" including protecting public health in food and the need for unbiased assessments.

A controversial guideline is the requirement that the agency's actions on food health are "proportionate" to the risk and take into account the likely cost to industry and consumers. The Consumers Association believes such "political" judgements should be left just to ministers.

The crucial part of the proposals is the separation of food production issues, which will be retained by the Ministry of Agriculture (MAFF), and food consumer protection, which will pass to the agency. The two were seen as conflicting interests, a factor exposed in recent food crises such as the salmonella eggs scare and BSE.

The agency, whose annual expenditure will be more than pounds 100m, will take over the role of advising ministers on policy and the need for new laws in areas such as food safety, food standards and public information and education on food-related matters.

A Health Department source said there have been battles in MAFF over which powers it will retain. The agency will be given the power to intervene legally - under existing or new powers in the 1990 Food Safety Act - in farming practices where these affect food safety. This will ensure it can operate across the whole food chain, from "plough to plate", says the White Paper.

Critics will doubt whether the agency will be given the resources and have the motivation to intervene effectively in what will remain MAFF's main area of responsibility. The agency, which will have the power and funds to commission research, will also have a "major strategic role" in developing a national strategy on the control of animal pathogens - which can cause disease in humans - in the food chain.

The Consumers Association said it broadly backed plans for the FSA, but was concerned about industry funding it.

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