Draft Regulatory Impact Assessment. Food Hygiene Rating (Wales) Bill

Transcription

1 Draft Regulatory Impact Assessment INTRODUCTION... 3 FOOD HYGIENE RATING (WALES) BILL... 4 Background... 4 Food hygiene regulation in the UK... 4 Food poisoning in the UK... 5 The health impacts... 5 The voluntary food hygiene rating scheme... 6 Potential for improving consumer information... 7 Display of information... 7 Access to information... 8 Rationale for intervention... 9 What is the evidence? Food hygiene rating schemes in other parts of the world Policy objective COSTS AND BENEFITS Options Option 1 - do nothing Option 2 - greater promotion of the existing voluntary scheme Option 3 introduce the mandatory scheme Option 4 introduce the mandatory scheme with cost recovery for food hygiene re-rating inspections Costs Option 1 do nothing Option 2 greater promotion of the existing voluntary scheme Option 3 introduce the mandatory scheme Option 4 introduce the mandatory scheme with cost recovery for food hygiene re-rating inspections Benefits Option 1 do nothing Option 2 geater promotion of the existing voluntary scheme Option 3 introduce the mandatory scheme Option 4 introduce the mandatory scheme with cost recovery for food hygiene re-rating inspections Summary and preferred option Draft Regulatory Impact Assessment for the Page 1

2 Summary table of additional costs of each option SPECIFIC IMPACT ASSESSMENTS Impact on small business Impact on voluntary sector Equality impact assessment Sustainable development impact Rural proofing checklist Impact on Welsh Language Competition assessment Post implementation review CONTACT INFORMATION Draft Regulatory Impact Assessment for the Page 2

3 INTRODUCTION 1. The ( the Bill ) seeks to introduce a mandatory food hygiene rating scheme ( the mandatory scheme ) to provide consumers with information about hygiene standards in food businesses in Wales. 2. The Bill will seek to secure the display by food businesses of information about compliance with food hygiene standards. The requirement for public display of food hygiene ratings will inform consumer choice and will have an added benefit of encouraging food business operators to improve food hygiene standards. 3. The current food hygiene rating scheme in Wales ( the voluntary scheme ) operates on a voluntary basis and there is no duty on food businesses to display their ratings. There is also no duty on local authorities to operate the scheme though all of them currently do so in Wales. 4. This Regulatory Impact Assessment (RIA) aims to appraise the impact of the Bill. Draft Regulatory Impact Assessment for the Page 3

4 FOOD HYGIENE RATING (WALES) BILL Background Food hygiene regulation in the UK 5. There are approximately 30,000 food businesses in Wales. This includes cafes, restaurants, take aways, sandwich shops, bed and breakfasts, manufacturers, processors, distributors, wholesalers, retailers, caterers, schools and hospitals. These businesses must comply with legislation on food hygiene set at a European and domestic level. 6. Responsibility for monitoring compliance with, and enforcement of, the food hygiene legislation is (for the most part) delegated by Government to the 22 local authorities in Wales. In undertaking their duties, the local authorities work in accordance with the Food Law Code of Practice. Under the provisions of this Code the frequency of inspections and other activities designed to monitor and support compliance by businesses with the legal requirements is determined using a risk-rating (interventions-rating) scheme - this is commonly known as the food hygiene interventions-rating scheme'. This incorporates a 'food hygiene scoring system' and is based on the assessment of a number of criteria: the potential hazard; the level of (current) compliance with food hygiene legislation by the business; and the confidence in management and in control systems. Those businesses that represent a higher risk are subject to more frequent interventions by local authorities than other food businesses. 7. The Food Standards Agency (FSA) was established as a UK non-ministerial Government Department from 1 April 2000 by the Food Standards Act 1999 ( the 1999 Act ). It was set up as an independent body to meet growing concerns about food safety and the way in which decisions on food safety were taken. All aspects of food safety and standards in the UK became the responsibility of the FSA from April The main purpose of the FSA, as defined in the 1999 Act, is: To protect public health from risks which may arise in connection with the consumption of food, and otherwise to protect the interests of consumers in relation to food. 8. Responsibility for food law is shared between the FSA and local authorities. The 1999 Act provides the FSA with a range of statutory powers to influence the delivery of national priorities and enforcement activity. The FSA works closely with local authority food law enforcement officers to make sure that food law is applied throughout the food chain from farm to fork. It provides advice on a range of enforcement issues. This advice sets out the rights and responsibilities of enforcement authorities and food businesses, and helps ensure that food safety and legal requirements are maintained and monitored. The FSA also ensures that local authority monitoring of food businesses is carried out correctly by carrying out audits and collating data on local Draft Regulatory Impact Assessment for the Page 4

5 authorities enforcement activity. Practical support to enforcement officers is available, including training programmes and grants for local programmes. Food poisoning in the UK 9. The Parliamentary Office of Science and Technology Postnote (Number 326) 1 published in February 2009 reported that food poisoning is caused by the consumption of contaminated food or water. Poor hygiene, cross contamination, improper handling and inadequate heat treatment are the most common causes of food borne disease. Food poisoning is believed to be widely under-reported to GPs. In 2007, there were an estimated 850,000 cases of food poisoning, over 19,500 hospitalisations and over 500 deaths in the UK. The major sources of outbreaks were restaurants (at 42 percent of all sources), non-residential caterers (21 percent) and the retail sector (7 percent). The FSA s Chief Scientist s Report for states that each year there are about a million people who suffer a food borne illness, of which 20,000 receive hospital treatment and there are 500 deaths. 10. The main hazards in food processes are contamination with bacteria that cause disease (pathogenic bacteria) such as Campylobacter, Salmonella, E.coli O157, Listeria monocytogenes, and Clostridium perfringens. Vulnerable groups such as the elderly, the sick, babies, young children and pregnant women are most at risk from food poisoning. 11. The UK's largest outbreak of E.coli O157 in Scotland in 1996 resulted in 17 deaths of elderly people. Another major outbreak of the same pathogen in Wales in 2005 led to the death of a child. That outbreak had more than 150 cases, most of whom were children, and 31 people were admitted to hospital. The health impacts 12. Nearly 17 million people suffer from stomach upsets in the UK every year (equivalent of one in four people becoming ill during the year) leading to19 million sick days of which 11 million are working days. Approximately 50 percent of people with infectious intestinal disease (IID) - typically vomiting or diarrhoea, or a combination of the two - took time off from work or school because of their symptoms. B18021: The second study of infectious intestinal disease in the community (IID2) 3 which is the largest of its kind for more than 10 years, looked at the impact of all cases of IID, not just those linked to food, on the UK population. The research was carried out by a group of organisations led by the University of Manchester. 13. For every case of IID recorded in national surveillance there are an estimated 147 that are unreported. Viruses, particularly Norovirus, and the bacterium Campylobacter are the most common causes of IID. Norovirus was identified as the largest cause of IID in the UK. Although many Norovirus infections are 1 available at 2 Available at 3 available at Draft Regulatory Impact Assessment for the Page 5

6 spread by person-to-person transmission, it does have the potential to cause food borne disease. 14. The study also shows that Campylobacter was estimated to cause about 500,000 cases of illness in the UK every year. It is mainly found on raw poultry. This study has confirmed that the burden of IID is substantial in the UK. However, a large proportion of the illnesses reported can be prevented by adopting good basic hygiene. The study s lead researcher from the University of Manchester commented that the research confirms that public health policy should continue to be directed at preventing diarrhoea and vomiting by promoting good personal and food hygiene. The voluntary Food Hygiene Rating Scheme 15. Food hygiene rating schemes are generally designed to provide consumers with information about the levels of compliance with food law requirements at food business premises as assessed by local authority enforcement officers when they undertake inspections to check compliance with the legal framework. 16. The voluntary scheme currently operating in Wales and in some other parts of the UK helps the consumer choose where to eat out or shop for food by giving them information about the level of compliance with legal standards in restaurants, pubs, cafes, takeaways, hotels, and other food businesses to which the public have direct access. Supermarkets and other food shops are also included in the scheme. The scheme is run by local authorities in Wales, England and Northern Ireland in partnership with the FSA. A two tier scheme known as the Food Hygiene Information Scheme is operating in Scotland. 17. Food businesses are encouraged to display a sticker in the window or on the door of their premises. Food business operators are also sent a certificate which details the food hygiene rating and the date that it was determined. The hygiene ratings are also published on a national website The food safety officer inspecting a business, checks how well the business is complying with food hygiene legislation in three key ways: a) how hygienically the food is handled how it is prepared, cooked, reheated, cooled and stored; b) the condition of the structure of the buildings the cleanliness, layout, lighting, ventilation and other facilities; and c) how the business manages and records what it does to make sure food is safe. 4 access at Draft Regulatory Impact Assessment for the Page 6

7 19. At the end of the inspection, the business is given one of the six ratings. The ratings are as follows - Hygiene Rating Descriptor (Compliance) 5 Very good 4 Good 3 Generally satisfactory 2 Improvement necessary 1 Major improvement necessary 0 Urgent improvement necessary 20. Where a business does not reach the highest rating of 5, the inspecting food safety officer will explain to the person who owns or manages the business what improvements are needed and how they can achieve the top rating. A business has a right to request a re-visit for the purpose of re-rating if they provide evidence that they have carried out the necessary improvements. This will take place between 3 and 6 months from the date the request is made. There is also the right of appeal if the rating is considered unfair or unjust. Food business operators are also given a right of reply to enable them to give an explanation of action taken to rectify problems or mitigation for the circumstances at the time of rating. The voluntary scheme has been designed to make sure that the ratings given to businesses are consistent and recognises when improvements have been made. 21. As explained above, under the voluntary scheme there is no duty on local authorities to operate it, although all local authorities in Wales do participate. There is also no duty on food businesses to display the rating they have been awarded. Potential for improving consumer information Display of information 22. An FSA evaluation of a variety of different yet similar schemes in the UK 5 found that only 26 percent of food businesses were voluntarily displaying their hygiene rating. Research has shown that food businesses rarely display a score of less than the midpoint scale i.e. equivalent to less than 3 (generally satisfactory). This indicates a weakness in the current voluntary scheme, as food businesses with a low score of 0, 1 and 2 are much less inclined to display their rating. The information is therefore not readily accessible to consumers without reference to the FSA website. Of the 13,500 or so food businesses in Wales currently provided with a rating since the introduction of 5 Food Standards Agency (2008) Evaluation of Scores On The Doors Final Main Report for the Food Standards Agency GSB Ref: CL984 available at Draft Regulatory Impact Assessment for the Page 7

8 the voluntary scheme in October 2010, around 3,000 have a score of less than The FSA has commissioned research to inform the development of the draft Bill which looks at the display of ratings in 500 establishments across Wales. The research will be published shortly but the initial findings to date are consistent with the earlier evaluation which suggests that those establishments with a higher rating are more likely to display the rating. The survey results will break down the food businesses displaying their stickers by the hygiene ratings provided by their respective local authorities. 24. The initial findings (as advised to the Welsh Government by the FSA) suggest that only 31 percent of businesses in Wales were displaying their FHRS ratings. Of these, 67 percent of the ratings were visible from outside the premises. By rating: a) 66 percent of outlets with a hygiene rating of 5 (very good) were displaying the rating; b) 40 percent of outlets with a hygiene rating of 4 (good) were displaying the rating; c) 21 percent of outlets with a hygiene rating of 3 (generally satisfactory) were displaying the rating; and d) only 6 percent of outlets with a rating of 0, 1 or 2 (urgent, major or improvement necessary) were displaying the rating. Access to information 25. As the display of ratings at food establishments is currently voluntary the only independent way for consumers to find out about the food hygiene rating provided by the local authority is to visit the FSA national website. This is however not an option for those people in Wales who do not have access to the internet (just over 30 percent) and the 73 percent of people aged 65 years or over who do not use the internet 6. It is also inconvenient unless internet access is available when and where the customer actually wants the information. 26. There are many people who do not plan where they will eat but decide spontaneously. Having a food hygiene rating displayed where it can be seen easily by the consumer is the most effective and straightforward way of ensuring that all consumers have equal access to this information. 27. The introduction of mandatory display will require all food businesses to display their hygiene ratings therefore empowering consumers to make informed choices about the places in which they choose to purchase food. Experience with the voluntary scheme reveals that the display of ratings encourages food businesses to raise their hygiene standards. 6 Information on access provided by Consumer Focus Wales Draft Regulatory Impact Assessment for the Page 8

9 Rationale for intervention 28. The rationale for Government intervention is to provide more information about hygiene standards to the consumer. This policy is intended to provide the consumer with the necessary information to enable them to make an informed decision on where to eat and/or buy food. 29. Food safety is a very important health protection issue. The E.coli O157 outbreak in South Wales in 2005 referred to above and the E.coli O104 outbreak in northern Germany (that resulted in more than 50 deaths) demonstrate the risks to health when things go wrong. Such outbreaks cause death and can leave people with serious and long-term health problems. It is therefore important that opportunities that help reduce such risks are identified and acted upon. The mandatory scheme has the potential to raise food hygiene standards and reduce risks to public health. 30. The FSA estimated that the economic cost of food borne illness in England and Wales in 2009 was approximately 1.8 billion. This figures includes the cost to the NHS, loss of earnings and other expenses and an estimate of the cost associated with the pain and suffering. (source: Annual Report of the Chief Scientist 2010/11, FSA). Of the officially notified cases of food poisoning in England and Wales in 2010, almost 6 percent were in Wales. This is broadly equivalent to Wales s share of the population in England and Wales. Assuming that non-notified food poisoning cases share a similar distribution then the approximate cost of food poisoning in Wales in 2009 was 105 million (5.8 percent of 1.8 billion). However, not all of this cost can be attributed to restaurants and food premises some will be a result of the way that food is stored and cooked in the home. 31. An FSA survey found that 95 percent of the public wanted to see mandatory display of food hygiene ratings. A Consumer Focus telephone survey 7 undertaken in October 2011 revealed that 94 percent of people in Wales think it should be compulsory for food businesses in Wales to display their food hygiene rating score. 32. In response to a consultation on the 10 th London Local Authorities Bill (that proposed the compulsory display of information relating to Scores on the Doors (the generic name for FHRS )), the Chartered Institute of Environmental Health supported the introduction of a compulsory scheme Professor Hugh Pennington, the Emeritus Professor of Bacteriology at the University of Aberdeen, gave evidence to the National Assembly for Wales Health, Wellbeing and Local Government Committee in June 2010 on progress with the implementation of recommendations in his report into the South Wales 7 Available at 8 Chartered Institute of Environmental Health (CIEH) response to the 10 th London Local Authorities Bill, available at Draft Regulatory Impact Assessment for the Page 9

10 E.coli outbreak in In addressing the committee, he stated that a FHRS would be an inexpensive way of driving significant improvements in food safety. 34. Lord Young was asked by the UK Government to carry out a review of health and safety legislation: his subsequent report Common Sense Common Safety 9 was published in October The report makes a number of recommendations in relation to the FSA s responsibilities, particularly to the voluntary scheme. Lord Young considers that the voluntary scheme should be adopted on a national basis and that consistency is essential for this approach to be effective. His report acknowledged that a mandatory food hygiene rating scheme would deliver the maximum benefit to consumers and minimise the costs to businesses, and that a single scheme should be rolled out across all local authorities in Wales, England and Northern Ireland. The report s recommendations include one to Encourage the voluntary display of ratings, but review this after 12 months and, if necessary, make display compulsory particularly for those businesses that fail to achieve a generally satisfactory rating. The voluntary scheme has now been in operation for over a year. 35. The mandatory display of food hygiene ratings is strongly supported by Consumer Focus Wales who recognise the ability of consumer power to drive up food hygiene standards by making information publicly available on the hygiene performance of individual businesses. What is the evidence? Food hygiene rating schemes in other parts of the world 36. There is considerable evidence that food hygiene rating schemes improve food safety, and a number of countries and states across the world have such schemes in various forms. 37. The New York City Health Department began their mandatory programme in July 2010 and have reported that Preliminary results from the first six months of letter grading suggest that restaurants are taking actions to improve their food safety practices A scheme in Los Angeles running since 1998 has seen a 20 percent decrease in reported food related hospitalisations 11. Research on that scheme offers explanations as to why the display of a hygiene grade (grade card) may improve health outcomes and reduce food-related hospitalisations. They suggested that hygiene grade cards have led restaurants to increase hygiene standards by about 5 percent. They deduced that grade cards also led to an 9 available at 10 Farley, T. New York City Department Health & Mental Hygiene (2011) Restaurant letter grading: the first six months) available at month-report.pdf. 11 Jin G; Leslie P (2003). The effect of information on product quality: Evidence from restaurant hygiene grade cards. Quarterly journal of Economics 118(2) Draft Regulatory Impact Assessment for the Page 10

11 increase in food hygiene scores and for consumers to become more aware of the importance of restaurant hygiene. They conclude that, Providing people with better information causes them to change their purchase decisions and causes firms to modify their behaviour, leading to improved health for people. The standard format display was found to be important in getting restaurants to display the information. 39. In Toronto, Canada, where their Dine Safe scheme has been running for 10 years, results show that one year after introduction, 98 percent of the public and 82 percent of food businesses supported the scheme and 71 percent of the food businesses reported that inspectors were fair or impartial. A review of the disclosure scheme for food hygiene inspections in Toronto concluded that there had been increased compliance and continuous improvement in food safety as a result of the programme A Food Premises Grading Scheme operates in parts of New Zealand. Food premises must comply with food safety regulations and are graded as excellent, very good or ungraded. Each shop/restaurant must display its food grading certificate so that it is visible to the public upon entering the premises. 41. In Europe, Denmark has a comprehensive scheme called the Smiley System which has been running since Research into the Danish scheme in 2007 shows that 99.8 percent of consumers are aware of the scheme and 97 percent thought it was a good idea. It has helped consumers make more informed choices, with 67 percent saying they would turn down a restaurant with a bad smiley, and 59 percent having chosen another restaurant because of a bad smiley. 88 percent of food business operators in Denmark think the scheme is a good idea and 19 percent had carried out improvements to avoid a poor score. Overall, the Danish food authority asserts that compliance levels have improved and that the scheme has been an outstanding success. 42. Other countries are also introducing food hygiene rating schemes. One example of this is in Germany where they plan to introduce a new hygiene rating system in 2012 based on a "traffic light" scheme. Green rankings will go to eateries with the highest marks for cleanliness. Yellow will indicate some concerns, and red will point to those with contraventions. Policy objective 43. The Welsh Government s Programme for Government launched in September 2011 includes a number of key actions to prevent poor health and reduce health inequalities. One key action identified is to introduce the Food Hygiene 12 Basrur, S. (2003) Evaluation of the Food Premises Inspection and Disclosure System available at See also Anon. (2009) Food Safety and Food borne Illness in Toronto available at 13 available at Draft Regulatory Impact Assessment for the Page 11

12 Rating (Wales) Bill to ensure that the public have better information about the hygiene ratings of food establishments. 44. The key policy objective is to introduce a mandatory requirement for local authorities to rate food businesses and for operators to display food hygiene rating information. This will be achieved by the Bill: a) creating a compulsory FHRS for food businesses in Wales; b) placing a duty on local authorities to operate the scheme (broadly speaking, this means to carry out all of the activities which they currently undertake voluntarily in relation to the FSA scheme); c) placing a duty on food business operators to display their food hygiene ratings in a designated position at their establishment while giving them rights of appeal and a right of reply similar to those in relation to the FSA voluntary scheme; and d) making it an offence for food business operators to fail to display their food hygiene ratings in the manner prescribed under the scheme or to tamper with or falsify those ratings. Draft Regulatory Impact Assessment for the Page 12

13 COSTS AND BENEFITS 45. This section of the Regulatory Impact Assessment presents four different options in relation to the policy objectives of the Bill. Each of the options is analysed in terms of how far they would achieve the Government s objectives, along with the risks, costs and benefits associated with each. Options 46. The Welsh Government proposes that the mandatory scheme should be modelled on the voluntary scheme. 47. The voluntary scheme in operation across Wales is both well-established and achieving its main aims. Because the existing scheme is operating well, and because of the high level of costs for developing and implementing a new scheme, the Welsh Government decided very early on that the main components of the voluntary scheme would wherever possible - be replicated in the mandatory scheme. 48. The options presented below therefore relate to the adoption and adaption of the voluntary scheme operated by the FSA. 49. The options are a) Option 1 do nothing b) Option 2 greater promotion of the existing voluntary scheme c) Option 3 introduce the mandatoryscheme d) Option 4 introduce the mandatory scheme with cost recovery for food hygiene re-rating inspections. Option 1 - do nothing 50. Under this option, the voluntary scheme would continue to operate on a voluntary basis only, and all food businesses within the scope of the scheme would continue to be given a hygiene rating. The FSA website would continue to display the hygiene ratings, and it would continue to be optional for food businesses to display their rating. 51. The key disadvantages of this option are that a) Local authorities can currently cease their involvement in the voluntary scheme at any time. Any such withdrawal would lead to a fragmented approach to rating food hygiene in food businesses operating in Wales. To be fully effective the scheme requires full participation by local authorities and food businesses in Wales. b) Food businesses are not required to display their hygiene ratings at Draft Regulatory Impact Assessment for the Page 13

14 their establishments. Whilst some food businesses do choose to display their ratings, others do not. This results in an inconsistent and fragmented approach to display, and places consumers at a disadvantage where there is no hygiene rating upon which to make an informed choice about where to eat. Food business operators with low scores are likely to continue to avoid displaying their ratings. 52. This option offers no opportunity for developing and improving the voluntary scheme and could lead to a demise of the scheme in future if local authorities were to withdraw from it. Option 2 - greater promotion of the existing voluntary scheme 53. This option proposes strengthening the existing voluntary scheme by increasing consumer awareness of it. 54. By increasing consumer awareness, it is expected that more consumers will look for a food business s food hygiene rating on the FSA website. Consumers may also challenge businesses that fail to display their rating voluntarily at their establishments. Market forces, driven by increased consumer focus, might encourage food business operators to display their rating but this is unlikely to be uniformly effective. 55. It can be anticipated that a publicity campaign would raise knowledge about the voluntary scheme, but it is unlikely that such a campaign would be able to deliver a significant improvement in the standards of food hygiene and access to food hygiene ratings to consumers at individual establishments. Option 3 introduce the mandatory scheme 56. This option proposes legislation to establish and operate the mandatory scheme for all food businesses in Wales providing food direct to consumers. 57. The Bill is intended to create new obligations on food authorities and the FSA to operate the mandatory scheme, and for food businesses to participate in the scheme and display the rating which their establishment have been awarded. 58. The statutory requirement to establish and operate the mandatory scheme in Wales will encourage businesses to raise their food hygiene standards to obtain higher ratings in order to retain existing customers and attract new ones. Whilst all 22 local authorities in Wales currently participate in the voluntary scheme on a voluntary basis, this option will require their mandatory participation in future. 59. This option will ensure that consumers in Wales have direct access to food hygiene ratings in Wales that will help them make informed decisions of where to buy or shop for food. The expected improvement of hygiene standards should reduce the risk of food poisoning. The mandatory scheme will include Draft Regulatory Impact Assessment for the Page 14

15 requirements for public institutions such as schools and hospitals to display their ratings. The introduction of the mandatory scheme would be supported by a number of other enforcement measures including fixed penalty notices. Option 4 introduce the mandatory scheme with cost recovery for rerating inspections 60. This option is similar to Option 3 but includes an additional component in the form of mandatory charging of food businesses where they request re-rating inspections. Making the display of a rating a legal requirement is expected to lead to an increase in requests from food businesses for re-rating inspections solely for the purpose of attaining a higher rating. This in turn could lead to increased pressure on local authorities (who administer and operate the scheme) to deliver re-inspections and may result in resources having to be transferred away from carrying out their other statutory duties. 61. This proposal to charge for re-rating inspections for the purposes of a food hygiene rating under the mandatory scheme would not extend to charging for enforcement inspections under the existing Food Hygiene (Wales) Regulations Local authorities do not charge for re-visits requested in connection with the voluntary scheme. They may only make a charge of this kind where there is a legal basis for such an action. This option proposes to place a duty on local authorities to recover the cost of carrying out a re-rating inspections where the request for that inspection comes from a food business operator seeking a higher rating. This option might lead to pressure on local authorities resources prior to any mandatory requirement to charge coming into force as food businesses request re-rating inspections to avoid incurring any costs. 63. Because the charge would be used to recover the costs of local authorities undertaking the re-rating inspections, this option proposes the income generated being retained by local authorities rather than passed to the Welsh Government. Costs Option 1 do nothing 64. As this option proposes no change it is considered that there are no additional costs associated with this option. Option 2 greater promotion of the existing voluntary scheme 65. The direct costs associated with this option would be for an ongoing marketing campaign aimed at improving consumer awareness of the scheme. Such a Draft Regulatory Impact Assessment for the Page 15

16 campaign could include bus-stands, newspaper advertising. Such a campaign would be most appropriately run by the FSA, and the costs are estimated to be 200,000 per year. 66. For local authorities, who have been operating the voluntary scheme since its introduction in October 2010, there have been costs associated with operating the scheme in addition to those previously incurred for undertaking food law enforcement inspections. The costs are principally around notifying a food business of a rating, administering any appeals submitted against the rating or right of reply, additional administration costs and the cost of hygiene rating reinspections under the voluntary scheme. 67. The promotion of the voluntary scheme in the way proposed in this option would not result in direct costs falling to local authorities. It may however result in indirect costs associated with re-inspection of those establishments that the local authority would not otherwise re-visit, i.e. 3 and 4 rated businesses (those with lower ratings would automatically be revisited in any case). Such requests could arise because food business operators are keen to have the highest rating because of increased consumer awareness. 68. For food business operators, the voluntary scheme has had little impact in terms of actual costs other than that of making improvements to better comply with food hygiene legislation, thereby securing a better food hygiene rating. The business is encouraged to display its rating sticker but this activity involves minimal associated costs. This option is unlikely to raise the costs for food business operators.. Option 3 introduce the mandatory scheme 69. The Welsh Government considers that there would be costs associated with this option that would fall to a) local authorities; b) food business operators; c) the FSA; and d) the Welsh Government. Costs to Local Authorities 70. The introduction of the mandatory scheme is expected to generate additional interest in the scheme throughout Wales. Food businesses are likely to devote more attention to the hygiene ratings they have been awarded under a mandatory scheme. This is likely to result in local authorities having to invest more time to the scheme including undertaking more requested re-rating inspections to 3 and 4 rated businesses which they would not otherwise carry out. 71. It is estimated that local authorities will need to invest additional time in a mandatory scheme, in part because it is anticipated that the requests for re- Draft Regulatory Impact Assessment for the Page 16

17 rating inspections to all businesses will increase because of the desire to obtain a better food hygiene rating. The Welsh Local Government Association calculate the overall cost of a typical inspection at about 150. In the first year of the voluntary scheme there were 500 re-rating inspections (estimated existing cost 75,000), and it has been estimated this would rise to an anticipated 1,800 visits on the introduction of the mandatory scheme. This would amount to an additional 1300 visits with an estimated cost of 195,000 each year falling to local authorities. There is also expected to be an increase in the number of appeals with the introduction of the mandatory scheme from 40 to 60. An appeal on average takes an hour to consider at a rate of 40. This would amount to an additional 20 appeals at a cost of 800. There will be costs to local authorities for implementation and subsequent enforcement action estimated at 110,000 to be funded by the Welsh Government (paragraph 85 refers). 72. It is anticipated that the increased costs are likely to peak between and it is expected that the majority of the remaining 17,000 food businesses without a hygiene rating will be provided with a rating during this period and also because food businesses will wish to improve hygiene ratings before the mandatory scheme comes into force. A gradual reduction is expected thereafter. 73. Option 4 (see below) proposes cost recovery for re-inspections; it is not a feature of this option. Enforcement, including fixed penalty notices and prosecutions 74. It is proposed that the mandatory scheme will make it an offence for food business operators to fail to display their food hygiene ratings in the manner prescribed under the scheme or to tamper with or falsify those ratings. It is intended that local authorities will be able to issue Fixed Penalty Notices (FPNs) for non compliance. 75. The Bill sets out that FPNs will be 200, although the penalty will be discounted by 50 (25 percent) if the fine is paid within 14 days. 76. It is expected that the vast majority of food businesses will comply with the requirement to display their hygiene ratings in accordance with the mandatory scheme. Further, it is anticipated that the initial implementation of the scheme will be through persuasion rather than imposing penalties. It is therefore anticipated that the proceeds from FPNs will be minimal. In any case, the FPNs represent a transfer payment (from food business to Government) and are therefore excluded from this economic analysis. The proceeds from FPNs will be returned to Welsh Ministers for possible redistribution to the FSA or local authorities for use on food hygiene training, dependent on the actual sums involved. 77. We hope that with public support, consumers will report food businesses who are not displaying their ratings to local authorities. High levels of business compliance and public support should help limit the need for policing of the Draft Regulatory Impact Assessment for the Page 17

18 display of ratings by local authority officers. The option to prosecute will be available to the local authority to consider on a case by case basis. The powers are intended to be used as part of an overall graduated enforcement approach and to deal with the deliberate fraudulent display by a food business or to take action against persistent offenders. Costs to food business operators 78. Food business operators must already comply with the existing legislation relating to hygiene standards and a rating is already provided as part of the existing process. As this option proposes creating a similar (but mandatory) scheme it is considered that there will be no additional costs to food business operators associated with the rating of the business. Similarly, the additional costs to businesses associated with the physical process of displaying the rating is expected to be minimal. 79. However, the mandatory display of the rating may have a negative impact on an individual food business in cases where a generally satisfactory 3 rating is awarded. In such cases, the business operator will need to invest (time and/or money) in improving hygiene standards and requesting a further inspection (and re-score) or risk losing customers and revenue to competitors. This would equally apply to food businesses with poorer ratings that the local authority would follow-up in any event. 80. The net economic impact of any re-distribution of revenue between food businesses is expected to be broadly zero with any decline in revenue in one business being matched by an increase in revenue at another business or businesses (with comparatively high ratings). 81. The Bill provides for a food business operator to request a re-rating inspection.. It is very difficult to estimate how frequently requests for re-rating inspections will occur and the cost of improving hygiene standards is likely to vary on a case by case basis. It will be for food business operators to balance the costs of improving food hygiene standards against the negative impact on the business from retaining the original rating. Costs to the Food Standards Agency (FSA) 82. The Welsh Government, in discussion with the FSA, considers that the anticipated increased interest in the mandatory scheme by food business operators is unlikely to result in major additional costs for the FSA. 83. The FSA expect to deal with increased enquiries from businesses and consumers and an increased demand for stickers. FSA staff time for this activity will be met from within existing budgets but may have some impact on other FSA objectives. Draft Regulatory Impact Assessment for the Page 18

19 Costs to the Welsh Government 84. The voluntary scheme is operated by local authorities in Wales and coordinated by the FSA. The Welsh Government funds the FSA in Wales, and for the current financial year (2011/12) this funding is 3,242, The main cost implications for the Welsh Government will be in relation to providing funding for local authorities in Wales to enforce the mandatory scheme and training for local authority staff in Wales. A total of 120,000 is expected to be incurred in the first year of the operation of the mandatory scheme. This includes 110,000 for enforcement and 10,000 for training local authority staff. The 110,000 for enforcement will be repeated in the second year. Staff time for this activity will be met from within existing budgets. Option 4 introduce the mandatory scheme with cost recovery for food hygiene re-rating inspections 86. The costs associated with this option are broadly similar to Option 3, the exception being how re-visits are funded. Costs to food business operators 87. Under this option, local authorities will charge food businesses for cost recovery where they request a re-visit. As noted above, if the mandatory scheme is introduced, the demand by food business operators for re-inspections to potentially improve their ratings could increase significantly and become a burden for local authorities. Whilst local authorities are resourced to meet their statutory obligations, significant numbers of re-rating inspections could impact on resources to undertake statutory enforcement visits. The introduction of cost recovery power to charge for re-rating inspections for the mandatory scheme would allow local authorities some flexibility in managing the implications of that scheme but would impinge on the food business. 88. Making the display of a rating mandatory is expected to lead to an increase in the number of re-rating inspections requested from 500 to approximately 1,500. The number of anticipated re-visits is 300 less than in Option 3 above because there is an associated charge under Option 4. Based on an estimated average cost of 150 per visit, this represents an additional cost of 150,000. The total cost of re-inspections (including the 500 per annum that are currently undertaken) will be approximately 225,000. In this option, this cost is borne by food businesses. The number of re-rating inspection requests may rise prior to the mandatory scheme taking effect and may also increase in anticipation of the introduction of a charge for re-rating inspections. We estimate a potential additional pressure of 55,500 (notional figure) arising from requests by food businesses for re-rating inspections prior to the mandatory scheme coming into force. Local Authorities currently undertake these re-inspections as participants in the voluntary scheme but are not under a duty to do so. They are unable to recover the cost of such inspections. Draft Regulatory Impact Assessment for the Page 19

20 89. The impact that charging for cost recovery may have on the demand for rerating inspections is unclear. Businesses will need to balance the cost of the re-rating inspection and likelihood of an improvement in rating against the negative impact on the business from retaining the original rating. Benefits Option 1 do nothing 90. It is considered that there are no additional benefits for consumers, food business operators, the FSA or local authorities from this option. Option 2 greater promotion of the existing voluntary scheme 91. It is considered that the key benefit of this option would be increased consumer awareness, generated from publicity campaigns, about the voluntary scheme. However it considered unlikely that this awareness, in isolation, would generate a significant change in behaviour that would influence all food businesses to display their ratings. The option is therefore very unlikely to have any impact on food hygiene standards, or consumer choice. Option 3 introduce the mandatory scheme 92. The mandatory display of hygiene ratings represents a natural progression from the voluntary scheme. In order for the scheme to work effectively it needs all food businesses to participate and for them to display the hygiene ratings provided by their respective local authorities. If there is a choice of whether to display or not, as is now the case, food businesses would be unlikely to show a low hygiene rating that could deter customers from frequenting their food business. The only fair and equitable way is for all food businesses to be required to display their rating this is also the most logical way to ensure that consumers are provided with relevant information in all establishments that are subject to the scheme. 93. This will require those businesses with low ratings to display them, allowing consumers to make informed choices of where to eat or to buy food. Businesses with low ratings could find themselves losing custom and this would act as an incentive for them to improve their hygiene standards. Food businesses with good hygiene ratings are likely to see a commensurate increase in their custom. The more businesses that decide to take action to improve their ratings, the better in terms of increasing food law compliance. The benefits of mandatory schemes have been identified in other countries and represent a positive step forward for Wales in attempting to address and reduce the public health risks associated with food. 94. As has been noted previously, there is international evidence on the benefits of mandatory food hygiene rating schemes. For example, research in Denmark suggests that 19 per cent of food business operators had implemented Draft Regulatory Impact Assessment for the Page 20

21 improvements to hygiene standards in their establishments whilst Jin and Leslie (2003) reported that a similar scheme in Los Angeles led restaurants to increase hygiene standards by about 5 per cent and commented that in the period following the introduction of the scheme, food related hospitalisations had decreased by approximately 20 per cent. 95. It is very difficult to quantify the impact the policy will have on the number of food poisoning cases in Wales, not least because there is currently no data on how many of the existing cases are a result of poor hygiene standards in food establishments and how many are the result of poor hygiene in the home. However, for illustrative purposes and based on the estimates reported in paragraph 29, if making the display of a rating mandatory results in a 0.5% reduction in the number of food poisoning cases in Wales each year, the benefit to the Welsh economy would be approximately 0.5 million per annum. This would be broadly equivalent to the estimated additional annual cost of the mandatory scheme. 96. All local authorities in Wales have agreed to participate in the voluntary scheme. In future, mandatory participation will recognise the major role of local authorities in delivering the mandatory scheme in Wales and that without their input the scheme would not function. The mandatory requirement to participate secures the sustained involvement of all local authorities in Wales in the mandatory scheme and the future of the scheme in Wales. Option 4 introduce the mandatory scheme with cost recovery for food hygiene re-rating inspections 97. This also secures all the benefits of Option 3 but additionally the mandatory charging for re-inspections under the mandatory scheme will contribute to the local authorities resources for food law enforcement inspections, and offer some protection against the expected increased demand associated with the introduction of the mandatory scheme. 98. There are currently approximately 500 requests for a re-visit and re-inspection, with the cost of each re-visit currently borne by the relevant local authority. Under this option, the cost of the re-visit will fall upon the food business and therefore, compared to the Do Nothing option, there is a cost-saving (benefit) to the local authority. Based on the assumed cost of 150 per re-visit, this represents a cost saving to local authorities of approximately 75,000 per annum. Summary and preferred option 99. Whilst the voluntary scheme has been operating in Wales for little more than one year, it is evident that its main weakness is the inability of the FSA or local authorities to require food businesses to display their ratings, particularly when these might be lower scores of 0, 1, and 2. Draft Regulatory Impact Assessment for the Page 21