Board meeting minutes: 11 March 2004

Present:
Sir John Krebs, Chairman
Julia Unwin, Deputy Chair
Richard Ayre
Sati Ariyanayagam
Chrissie Dunn
Michael Gibson
Ann Hemingway
Valerie Howarth
Iain MacDonald
Andrew Miller
Vernon Sankey
Sandra Walbran
Michael Walker

Officials attending:
Jon Bell –Chief Executive
Rosemary Hignett – Head of Food Labelling and Standards Division (item 2 only)
Stephen Airey – Head of HACCP Project Team, Food Chain Strategy Division (item 3 only)
Tim Foster – Head of Meat Hygiene Division (item 4 only)
Chris Lawson – Chief Executive, Meat Hygiene Service (item 8 only)
Keith Gregory – Board Secretary
Sue Johns – Board Secretariat

Chairman's Introduction

1. The Chairman reminded Board members of their obligation to declare interests before discussion of relevant items.

2. There were no items raised for discussion under Any Other Business.

Item 1 - Minutes of Meeting on 12 February
(Paper FSA 04/03/01)

3. Minutes of the meeting held on 12 February at the International Congress Centre, Birmingham were considered. The Chairman informed Board members of an error in the actions arising table, on pages 21 and 23, where items added had been assigned the code “11Feb03” instead of “12Feb04”. The minutes were confirmed as an accurate record of the meeting with that exception.

4. In considering matters arising and the table of follow up action, the following issues were raised:

• Paragraphs 31 - 38: some Board members recalled that it had been agreed that the data from the audits that had already taken place should be analysed and a report published. The Chief Executive agreed to consider this matter further and bring a report back to the next open meeting.
  Action: David Statham

Item 2 - Promotional Activity and Children's Diets
(Paper FSA 04/03/02)

[Prior to the discussion of this item Richard Ayre declared an interest as occasionally earning fees from advising companies about their media activities. The Chairman noted Richard Ayre's declaration, but agreed that he could take part in the discussion and determination of the issue.]

5. The Chairman reminded Board members of the context in which this discussion was now taking place. Since the FSA had started its work in this area, the debate about the role of the diet in public health had increased markedly. The Department of Health (DH) had launched a major public consultation prior to the publication of a White Paper on Public Health. The Secretary of State for Culture, Media and Sport had also commissioned a review of the broadcast codes of practice in relation to childhood obesity by the independent regulator Ofcom. He informed Board members that the action plan now before them was intended to feed into this wider Government process and should not be seen as operating in isolation. He welcomed Rosemary Hignett to the table and invited her to introduce the paper.

6. Rosemary Hignett informed Board members that the paper was a contribution towards the FSA's work aimed at improving children's diets. The paper's scope had been confined to promotional activities that were particularly targeted at children and had been set out in three sections:

• The first section covered the evidence base, especially the effect of food promotion on children's food-related behaviour. She acknowledged that social science was a complex area that would never yield absolute proof or precise data about the size of an effect. Nevertheless, the conclusions drawn from the FSA funded systematic review of the evidence, and independent expert consideration of that and other related reviews, had been that advertising had a modest direct effect on children's food related behaviour. That modest effect was at the category level in addition to an effect at brand level, for example whether a child would choose an apple or a chocolate bar rather than one brand of chocolate bar over another. That effect would further be amplified by a larger indirect effect mediated by parents and peers who were also exposed to this advertising.
• The second section recorded the views expressed in a range of other fora, including the FSA's Consumer Committee, the devolved Advisory Committees in Scotland, Wales and Northern Ireland, a stakeholder meeting, focus groups on low income families and open debates in London and Edinburgh.
• The third section of the paper set out a package of proposed recommendations aimed at fostering a food environment for children that reinforced healthy eating messages. This had been set out in the text under the headings of “promotions in schools”, promotions in shops and catering establishments”, “promotions in the media” and “other forms of sponsorship and promotion”.

7. In relation to schools, the FSA was already engaged in constructive discussions with the Department for Education and Skills (DfES) about proposals for school meals and vending. The proposals relating to shops and catering establishments focussed on reducing fat, sugar and salt levels in foods and meals aimed specifically at children and aimed to provide clear consumer information. The proposed recommendations to the media were aimed at addressing the imbalance in TV advertising. It was important to note here that Ofcom, the broadcasting regulator, was currently reviewing its codes of practice and the Board might wish to consider the issue further when Ofcom had published its recommendations. The paper also proposed encouraging programming initiatives aimed at promoting healthier eating. Finally the “other” category covered sponsorship activities and the growing role of new media. The paper recommended that these activities should be used to encourage healthier eating.

8. The action plan was set out in Annex 1 in the form of a draft consultation paper. This described what the FSA might do and made recommendations to Government, schools, the industry and others. If the Board was content, these proposals would be issued for public consultation, and comments invited, particularly on achievability and the timetable for implementation.

Evidence Base

9. Board members acknowledged that definitive answers were not often easily obtained in social science but, having read all the reviews and considered the conclusions of the independent academic seminar, they accepted that advertising had a modest direct effect on children's behaviour and a larger indirect effect. Some Board members also noted that the purpose of advertising was to increase sales; that in itself appeared to support the evidence base. However, one Board member noted that data assembled by the Scottish Executive reported that, by the age of three and a half, some Scottish children were already overweight and some were obese. He drew the conclusion that this effect could not be entirely attributed to direct advertising.

10. Board members noted the importance of looking at the issue of advertising and children's diets in the wider context of the Government agenda to improve public health and recognised the importance of providing consistent messages to the public. The paper therefore set out proposals aimed at influencing and improving the food environment in which a child grows up. However, the FSA must also work in partnership with other Government departments, such as DfES and the Department for Culture, Media and Sport, to promote healthier lifestyles more generally, including physical activity.

Paragraph Fifteen

11. Some Board members expressed reservations about the use of the terms “healthier” and “less healthy” when applied to food products. They noted that previously the FSA had referred to “good” and “bad” diets and had avoided referring to “good” and “bad” foods, and were cautious about moving to a situation where foods were to be designated “healthier” or “less healthy”. They suggested that the terms should continue to be used to refer to types of diet, as a move to designate individual foods as “healthier” and “less healthy” would require some careful definition of how the terms were to be applied.

12. One Board member referred to a recent mailing that had been sent to all Board members by the Advertising Association, which had included a copy of an industry code that allowed such descriptions to be applied to individual foods in specified circumstances:

“In certain circumstances it may be acceptable for a food product unable to claim in absolute terms to be ‘healthy' or ‘good for you' (for example because of its fat content) to make a justifiable claim to be ‘healthier' or ‘better for you', because it contains significantly less of that ingredient than is commonly to be found in such foods, so that its substitution for them would produce a positive benefit.”

He argued that the advertising industry could not choose to allow a positive line, as in the case above, and then tell the FSA that it was unacceptable to propose the use of the term “less healthy” for foods that could not claim to be “healthier”.

13. One Board member noted that, as the paragraph had pointed out, foods had traditionally been prepared in the home from basic ingredients; however, lifestyles had altered and the average consumer was eating out or consuming ready meals far more frequently. Previously it had been possible to distinguish between “good” and “bad” diets as the basic ingredients were whole foods, for example an apple or milk. Increasingly the advice that the FSA had given to the consumer had concerned processed foods. That area was considerably more complex when looking at the nutritional profile of ready meals in terms of their fat/sugar/salt content. Hence the use of the terms “healthier” and “less healthy” might be appropriate in these circumstances. Another Board member noted that any FSA advice on “healthier” and “less healthy” foods or diets would need to take proper account of cultural diversity.

14. Board members were reminded of the FSA's advice to eat more of certain food groups, for example cereals, fruit and vegetables and less of those high in fat, sugar or salt. The issue here was how the FSA should communicate that advice effectively to encourage those whose diets were now out of balance in nutritional terms to bring them back into balance. With the increasing consumption of processed foods and those prepared outside the home, which were often high in fat, sugar or salt, balance had become more difficult. Work on defining healthier and less healthy foods had already been carried out across the world so the FSA would be able to draw on that experience. The distinction between healthier and les healthy diets and healthier and less healthy foods was therefore becoming more blurred. The action plan therefore focussed on the latter rather than the former. Whilst the majority of members agreed that it made sense, in the context of promotions of foods to children, to distinguish between healthier and less healthy foods, some disagreed fearing that this would lead to unnecessary emphasis being put on the consumption of individual foods rather than the need to balance the diet as a whole.

15. The Chairman summarised the discussion on paragraph fifteen. Board members had not reached a consensus about the approach described, but had noted that the industry already appeared to accept the principle as certain foods were commonly advertised as “healthier” implying that others could be viewed as being “less healthy”.

Promotions in Schools

16. Board members agreed that the FSA needed to work in close partnership in this area with other Government departments and welcomed the fact that it had already been in constructive talks with DfES. It was noted that the FSA was not confining its action to the areas addressed in the paper, but was also active with DfES in other aspects of school life.

17. Some members felt that the FSA should draw on the experiences of other countries, such as Canada, where work had been carried out on vending machines in schools. Board members noted that pilot schemes with vending machines containing healthier options had been undertaken in the UK. Rosemary Hignett informed Board members that these had involved the replacement of soft drinks with water, milk and fruit juice without significant loss of income to the school. Where pupils had been actively involved in deciding what should go into the machine, even more been encouragingly results had been obtained.

18. Some Board members noted the work that was being carried out in schools on nutrient specification of meals. They noted however that not all children ate school meals and encouraged the FSA, in partnership with others, to identify ways in which healthy meals could be more actively promoted.

19. One Board member suggested that, as part of the consultation, the FSA should actively seek to engage with young people, as had been done in the GM debate activities the previous year.

20. The Chairman reminded Board members that there was already a large range of activities in schools designed to promote healthier lifestyles; it was intended that the action plan would feed into this. If the right messages, with respect to diet and exercise, could be got across to children at an early age (and to their parents) then the chances of improving their health would be increased.

Promotions in Shops and Catering Establishments

21. Board members noted that paragraph twenty two reinforced current FSA policy to improve the clarity and quality of information on food labels and endorsed this.

22. However, some Board members expressed reservations about the language used in paragraphs twenty, twenty one and twenty four. The phraseology was prescriptive and suggested “legislation by the back door”. It would be preferable to adopt a more positive or proactive approach rather than a prohibitive one. Responding, Rosemary Hignett noted that the intention of these paragraphs had been to encourage a greater degree of social responsibility for achieving healthier eating amongst children. By contrast, paragraph twenty three was concerned with the increasing use of nutritional and ‘health' claims to promote some foods, including those aimed at children.

23. One Board member felt uncomfortable about restricting the use of “buy one get one free” promotions, as such offers could be important for those with large families and those on low incomes. The Chief Executive noted that the recommendations only applied to children's products, furthermore he pointed out that the FSA's intention was to encourage the use of these promotions to a greater extent for healthier foods, such as fruit and vegetables.

24. Board members were reminded that paragraph nineteen did not just apply to ready meals but also included cereal products and foods marketed specifically for school lunch boxes.

Promotions in the Media

25. Board members endorsed the approach that this section proposed. They noted that Ofcom was conducting its own review but this did not prevent the FSA's proposed consultation. No conclusions should be reached until the outcome of that review were known.

26. One Board member expressed some concern about trying to influence the editorial content of programmes, whilst another remarked that programmes, especially soap operas, were already an important way to get messgaes across. The FSA had itself used programmes from time to time to promote positive food safety messages. Rosemary Hignett informed Board members that the FSA had been approached by broadcasters keen to develop programming strands which aimed to encourage healthy lifestyles in children.

27. One Board member noted that option B in paragraph twenty eight of the paper was fully supported by the evidence base.

New Media and Other Forms of Sponsorship and Promotion

28. One Board member noted that the BBC was considering its policy on licensing characters. Rosemary Hignett informed Board members that discussions were continuing and that the text in paragraph thirty three of the paper reflected the current situation.

29. The Chairman summarised the main points raised in the discussion.

Evidence Base
The Board had:

• accepted that the evidence base supported the view that that promotional activity can influence children's eating behaviour although it is not the only influence.

Paragraph Fifteen
The Board had:

• not come to a unanimous view on the approach described in paragraph 15 of the paper; some Board members were content to endorse it, others were not. The Chairman suggested that the Executive look again at the language used in the paragraph in the context of the need to encourage children and parents to adopt a balanced diet. He also emphasised the need to look at this issue in the context of cultural diversity.

Schools
The Board had:

• agreed that the school environment was an important influence on children's behaviour, but that the responsibility for helping children to make dietary choices did not lie with teachers alone;
• encouraged FSA staff to continue to work with education departments across the UK to help improve children's diets;
• supported the further work on vending machines and school meals; and
• noted the role of exercise in a healthier lifestyle.

Shops and Catering
The Board had:

• accepted the proposals put forward, but were concerned about the tone of some the recommendations; and
• welcomed the idea of extending these in greater number to healthier foods.

Media
The Board had:

• accepted the proposals, though they recognised that final conclusions should not be reached until the findings of the Ofcom review were known; and
• recognised advantages of television programmes carrying helpful messages about eating.

New Media/Other
The Board had:

• accepted the proposals arrived at on the use of new media and other promotional activities not dealt with earlier.

The Board agreed that the action plan, modified in light of the discussion, should be issued for consultation. The Chief Executive agreed that young people should be encouraged to respond to the consultation. He also informed Board members that, once the views of stakeholders had been canvassed targets and timescales should be more easily identifiable.
Action: Rosemary Hignett

Item 3 - Action Plan for the Implementation of Food Safety Management Based on HACCP Principles
(Paper FSA 04/03/03)

[Prior to the discussion of this item Michael Gibson declared an interest as a supplier to the catering trade and as someone who has a business that implements HACCP principles. Sandra Walbran declared an interest as a local authority enforcement officer. Chrissie Dunn declared an interest as a non-Executive director of a meat marketing company. The Chairman agreed that these were not material interests and that Michael Gibson, Sandra Walbran and Chrissie Dunn could participate in the discussion and determination of the issue.]

30. Stephen Airey introduced this item by reminding Board members that they had last discussed the FSA's Food Safety Management strategy based on HACCP principles in February 2003, when they had agreed to focus on small catering businesses. Since that time, considerable progress had been made. The paper presented a summary of the progress to date and a detailed action plan to take the work forward. Much of the on-going work focussed on working with the industry to produce relevant guidance materials; in particular, guidance for small catering outlets that make up the bulk of food premises in the UK. Information set out in the Annexes to the paper showed how that guidance had been developed to provide the necessary support. Because the range of catering businesses was large, there could be no “one size fits all” solution. The FSA had worked towards developing a toolkit approach which individual businesses could tailor to their own specific needs.

31. Training had been an important aspect of this work. The FSA had been working with the industry to enhance the training provision for food safety management, so that the competencies needed by businesses in order to be able to comply with the new legislation, due to come into force in 2006, were at the core of the courses. Developing the whole package had involved working with a wide range of stakeholders: local authorities, the industry (through trade bodies), and the business support networks of the Regional Development Agencies. He concluded by reminding Board members that this was a long term plan and that the FSA needed to continue to work in partnership with others in order to move this forward to the benefit of public health.

32. Board members congratulated the team on the progress that had been made since the last paper in February 2003 and noted that the proposed action plan looked achievable. Some Board members had been able to see some of the work as it progressed during the year and commended the “Salford” model in particular. They further acknowledged that, as a result of this work, a large amount had been learned about how to provide support for micro businesses.

33. Some Board members questioned whether the FSA had in fact met its Service Delivery Agreement target of thirty per cent of food premises having food safety management procedures based on HACCP principles by April 2004, as had been suggested in the paper as the supporting data did not look particularly robust. In response, Stephen Airey noted that the team had drawn on the best available data and was of the opinion that this indicated that the target had been met. Board members noted the timetable on page thirty three of the paper, but felt that seventy nine per cent compliance by 2010 was ambitious.

34. The Chair of the Northern Ireland Advisory Committee stated that he had every confidence that the data for Northern Ireland was robust. Stephen Airey also pointed out that the “Eat Safe” scheme in Northern Ireland was one example of how consumer confidence could be built up. This work had also led the way in using HACCP as a tool to help to prevent cross contamination with respect to allergens.

35. Some Board members expressed concern about funding. They noted that Scotland and Northern Ireland were fortunate in having secured extra funding from their devolved administrations and, although each region was distinct and separate, it was hoped that lessons learned from work done in those areas could be transferred to the rest of the UK. One Board member enquired whether the lack of funding in England had led to resource problems in local authorities. In response, Stephen Airey informed Board members that experience had shown that local authorities had been prepared to put in the necessary resources due to the benefits they gained as a result: successful implementation of food safety management principles had been shown to require less subsequent enforcement activity.

36. Board members noted the need for appropriate training packages to be developed and led by competent trainers. They welcomed the work that the FSA had been doing with small businesses to identify the critical issues that required the most support.

37. One Board member expressed concern that small businesses might face formal legal proceedings if they failed to implement food safety management requirements before the regulations came into force. Stephen Airey reassured Board members that local authorities would continue to follow the advisory and graduated approach set out in the existing enforcement Code of Practice.

38. Board members asked for a further report in the autumn with regular oral updates in the meantime. They noted that further work needed to be carried out to identify exactly what compliance with the new legislation would look like, given that there was no “one size fits all” solution.

39. The Chairman summarised the main points raised in the discussion. The Board had:

• congratulated the team on the significant progress made;
• noted that the targets were optimistic and felt that the work required to achieve them should not be underestimated;
• asked to look at this issue again once the pilots had been completed; and
• requested a report in the autumn with regular oral updates, as appropriate, in the interim.
  Action: Stephen Airey

Item 4 - Meat Hygiene Service (MHS) Performance Targets for 2004/05
(Paper FSA 04/03/04)

[Prior to the discussion of this item Michael Gibson declared an interest as a butcher and primary producer. Chrissie Dunn declared an interest as a non-Executive director of a meat marketing company. The Chairman agreed that these were not material interests and that Michael Gibson and Chrissie Dunn could participate in the discussion and determination of the issue.]

40. Tim Foster introduced the paper by reminding Board members that its purpose was to secure the Board's agreement to a new and improved set of targets for the MHS. Given the key role that the MHS had played in protecting public health and animal welfare at slaughter, it was essential that the MHS be given a clear mandate by the FSA on the desired outcomes and results that it needed to achieve. The package proposed fewer, more specific, targets than for previous years. The package also included the use of a wide range of key performance indicators to enable the FSA to get a more rounded picture of MHS performance. Finally, the identification of key risks enabled the MHS to devise appropriate counter measures. The result would be clearer data and a MHS that was seen to deliver the required service professionally, effectively and efficiently. The package had the general support of stakeholders and had been endorsed by the Meat Hygiene Advisory Committee (MHAC). The targets would be published on the FSA's website.

41. The Chairman of MHAC reminded Board members that they had seen the proposed package before and that alterations to it had been highlighted in bold type for their convenience. He reiterated that the package had the full support of MHAC.

42. One Board member compared this paper (FSA 04/03/04) with the information paper (NOTE 04/03/01) also included in the papers for the day's meeting. The latter highlighted the areas where the MHS faced its greatest challenge (around cleanliness and hygiene) and asked whether those areas had been sufficiently addressed in the new package. Tim Foster informed Board members that hygiene enforcement would be covered by a range of key performance indicators, as set out in Annex B of the paper, but particularly those that would give a measurement of the old system against the new one.

43. One Board member referred to paragraph seven of the paper and enquired whether further responses had been received after the consultation deadline and, if not, why the response rate had been so low. In response, Tim Foster informed Board members that he had not been made aware of any late responses and that the response rate in such exercises had typically been low.

44. One Board member suggested that Annex B of the paper would be simpler to understand if some of the key performance indicators and risks had been better aligned against their targets/outcomes. Tim Foster agreed to see if the Annex could be clarified.
Action: Tim Foster

45. The Chairman summarised the main points raised in the discussion. The Board had:

• noted the consultation exercise;
• agreed the proposed performance targets and assessment methods;
• noted the intention to publish the targets on the FSA's website; and
• requested that the presentation of Annex B be clarified.

Item 5 - Chairman's Report

Over Thirty Month (OTM) Rule Review Update

46. The Chairman reminded Board members that, in July 2003, they had advised Health Ministers that a move from the OTM rule towards the implementation of BSE testing was proportionate in terms of public protection and public health. Since that time, various pieces of new evidence had come to light which could have a bearing on the original risk assessment; for example, at the end of 2003 the Secretary of State for Health had announced the possibility of human transmission of vCJD through blood transfusion. As a result, the FSA had decided to reconvene the Risk Assessment Group. The Chairman emphasised that this was not a signal that the FSA was about to change its advice; his intention was merely to check that the risk assessment remained robust.

Item 6 - Chief Executive's Report

Report of the Select Committee on Environment, Food and Rural Affairs' Inquiry into toxins in shellfish

47. The Chief Executive informed the Board that the Select Committee had reported its findings to the House on 20 February and that the FSA now had two months in which to prepare the Government response to its recommendations. Board members would have an opportunity to see the draft response before it was submitted to Ministers. In the meantime, the investigatory work that the FSA had commissioned was progressing satisfactorily. There had been no atypical results this year. However, if another atypical result were to be seen, the FSA would need to take the same precautionary approach as before in order to ensure that public health remained protected in the light of the continued uncertainty about the cause of the findings.
Action: Andrew Wadge

GM Policy Statement

48. The Chief Executive Board members' attention to the government policy statement on GM made by Rt Hon Margaret Beckett (Secretary of State for Environment, Food and Rural Affairs) earlier in the week. in dealing with environmental issues, the statement had gone wider than the FSA's remit. He reminded Board members that two new EU regulations would come into effect in April 2004. These covered the labelling of derivatives and the percentage limits applicable to the non-declaration of the adventitious presence in food of certain classifications of GM products. GM materials or derivatives authorised for food use in the EU could be present at up to 0.9% without the need for labelling; those without EU authorisation but which had received a favourable risk assessment from an EU scientific committee, could be present at up to 0.5%. The FSA had discussed with stakeholders how could the new rules could best be put into practice and would be consulting soon on its proposed guidance on this.

Local Authority (LA) Monitoring

49. The Chief Executive told Board members that, following last month's consideration of the unsatisfactory nature of the quality of data submitted by LAs on food law enforcement activity in the UK, action had been taken in a variety of areas. The Chairman had now written to the Local Government Association and to the equivalent bodies in the devolved countries to seek their support in improving the situation. Meetings had also been set up with senior LA managers and plans had been put in place for officials to meet with enforcement officers through the established network of local food liaison groups. The FSA was planning to carry out twenty focussed audits this year and would look particularly at the data problem officials would also be looking at the monitoring forms to see whether they could be simplified. Finally, a letter would shortly go to all LAs and professional bodies informing them of the action the FSA had taken already and that which it proposed to take in the future.

Item 7 - Reports from Chairs of Advisory Committees
(Papers FSA 04/03/05, FSA 04/03/06 & FSA 04/03/07)

Scotland

50. The Chair of the Scottish Food Advisory Committee (SFAC) reported that the Committee was currently finalising guidance on farmers' markets for FSA Scotland. It was possible that it might have wider UK application. The report on wild game was due in April and the working group considering shellfish issues was now up and running under the Chairmanship of Andrew Miller. The first of the two SFAC HACCP conferences had been judged a success and the open stakeholder meeting on the promotion of foods to children had been attended by more than 300 people.

Wales

51. The Chair of the Welsh Food Advisory Committee drew Board members' attention to paragraph one of her report. WFAC members had expressed some concern about the findings emanating from the Welsh evaluation of the “Catering for Health” initiative and had asked if the findings mirrored outcomes reported for similar initiatives in England. The Chair asked whether this issue could come back to the Board for consideration. The Chief Executive undertook to commission a short paper on this, which could be brought to the Board for a short discussion at a future meeting.
Action: Tom Murray

Northern Ireland

52. The Chair of the Northern Ireland Advisory Committee (NIAC) informed Board members that he had attended the finals of the Young Consumers' Competition on 5 March, organised by the General Consumer Council and the Trading Standards Service. A new strand in the competition had been for a team of year ten pupils to produce a newsletter on the themes of rights, responsibilities, food safety and diet and nutrition. This had only been made possible by the sponsorship provided by FSA Northern Ireland, and the input of the time and expertise of staff.

53. He informed Board members that a joint meeting had been arranged for early June 2004 between NIAC and the Food Consumers Affairs Group of the General Consumer Council.

Item 8 - Information Paper: Review of MHS Performance Against Targets 2003/04: Progress to 31 December 2003
(NOTE 04/03/01)

[Prior to the discussion of this item Michael Gibson declared an interest as a butcher and primary producer. The Chairman agreed that Michael Gibson could participate in the discussion of the issue.]

54. The Chairman explained that, as the information paper suggested that the MHS might fail to meet one of its targets, he had invited the Chief Executive of the MHS to come to the table to take part in a brief discussion. He invited him to introduce the paper.

55. The Chief Executive of the MHS reminded Board members that the MHS had not yet failed to meet the target. He reported that up to the 10 March the MHS had accumulated ten major non-compliances out of a total of one hundred and seventeen audits. That equated to eight and a half non-compliances per hundred audits, against the target set by the FSA of a maximum of eight non-compliances per hundred audits. Audits were still being carried out and the position could change. He urged caution until the year end figures were available.

56. There were two other areas that he wished to draw to Board members' attention. There had been problems installing the communications links for the IT in plants project. As a result, whilst all plants should have the IT hardware by the end of March, training would continue until June or July. It was also unlikely that a live system would be available by the end of March, but there would be a test system on which people could become familiar and develop their expertise. The second area was diversity: it seemed unlikely that the MHS would meet all actions planned for this year. A report on activity was being prepared for MHAC. It would be for them to consider and advise the Board on whether it judged the target had been met or not.

57. One Board member asked whether the new targets were better than the previous targets and whether they would allow the MHS to take remedial action during the year. The Chief Executive of the MHS confirmed his view that they were considerably better. Whilst they were challenging and because they were outcome based they celebrated success rather than highlighting failure.

58. One Board member enquired whether the delay in installing the IT system would lead to additional costs. The Chief Executive of the MHS replied that it would not cost more in terms of the hardware but there would be opportunity costs because of the need to divert staff from other planned work.

59. Some Board members noted the role of MHAC and asked for clarification of its remit compared with that of the Board in respect of the MHS. The FSA Chief Executive commented that ultimately the Board was responsible for the overall governance of the MHS, but that MHAC was there to provide advice to assist in support of this work. He reminded Board members that the roles and responsibilities of all bodies involved with the MHS were the subject of a review at present.

Item 9 - Any Other Business

60. There were no items of any other business.

Date of Next meeting

61. The next open meeting would be held on 13 May 2004 in Inverness.