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11:00 - 05 November 2005

Ministers are bracing themselves for a possible 18 million payout to dozens of farmers who were banned from feeding catering waste to their pigs in the wake of the foot and mouth disaster.

The accounts of the Department for Environment, Food and Rural Affairs reveal secret plans for a possible compensation payout to a small group of farmers who fed their pigs on swill.

Ministers have always insisted there is no case for compensation, despite the fact that some of those affected suffered major losses as a result of the ban. But the latest move suggests the Government fears it may be criticised by the Parliamentary Ombudsman, who is investigating the swill ban.

Former Agriculture Minister Nick Brown banned swill feeding in May 2001 after the practice was blamed for sparking the foot and mouth outbreak.

Ministers insist the ban was introduced properly, but farmers claim it was a "knee-jerk" response that was not justified scientifically. Many had invested heavily in processing equipment and say they were effectively put out of business by the ban. A small, group has continued to press for compensation.

Several MPs reported the case to the Parliamentary Ombudsman, who has been considering the evidence for more than a year.

The Ombudsman's report is expected early next year, and if Defra is found guilty of maladministration, the department could feel compelled to introduce a retrospective compensation scheme for affected farmers. Under a section on Defra's "contingent liabilities" for the year ahead, the accounts identify a sum of 17.9 million for the "potential creation of an 'out-goers scheme' for swill feeders, who have had to restructure their businesses".

Andrew George, Lib-Dem MP for St Ives, one of the MPs who referred the case to the Ombudsman, said: "Many of those concerned were encouraged by the Government to make significant investments, only to find they were effectively closed down overnight. I would have thought morally the Government has a responsibility to those who were put out of business. I think they have a very strong case for compensation and I am pleased, if surprised, to hear that the Government is looking at it."

Westcountry farmer Vivian Cock lost his entire swine farming operation after the rules on swill were changed. He was feeding his pigs on fish brought up from Newlyn to his farm at Newbridge, near Penzance, and had just spent 120,000 on new processing equipment.

Mr Cock, who now works as a lorry driver, was cautious about the news of Defra setting aside money for compensation, as he has been battling for several years to get money for loss of earnings.

"Just because this money is being set aside doesn't mean we are getting it," he said. "We hope they will compensate us but when I speak to the Government Ombudsman about a decision we keep getting put off. Whether it will happen now, I don't know.

"It was a major injustice and hopefully at the end of the day it will be put right, but it has been a long, hard slog."