The Charges for Residues Surveillance Amendment (Scotland) Regulations 2026: final business & regulatory impact assessment (BRIA)

Section 3: Assessment of Impact on Business, Investment and the Economy

3. Costs to businesses

The direct cost to businesses is based on a cost-per-animal basis and a sector-by-sector basis. The national programme is based on collecting around 30,000 samples in all sectors across the whole of Great Britain, split between commodities based on risk, with the apportioned costs based on the cost of each sample. Since the charge is for headage or per weight depends on the commodity, the increase in costs is applied proportionately to all sizes of slaughterhouses and food processing facilities.

To determine charges, VMD uses a formula based on the volume of animals processed and the costs of sampling the sector. This approach has previously been considered a fair and consistent way of applying charges to producers. The main cost drivers are the rising costs of sampling, processing, and testing, but it is the latter cost of testing specifically where the VMD has seen recent significant and unexpected cost pressures. During the 2024 to 2025 financial year there was a 4% increase in general costs compared to previous years, but VMD forecast that in the 2025 to 2026 financial year there was a 35% increase in costs, and anticipate costs to continue to increase by an average of 5% per annum over the next five years.

VMD calculate charges for the red meat sector by doing the following (a similar approach is taken for commodities charged by weight):

• obtaining the figures for the estimated production of each type of livestock for the coming year in England, Scotland, and Wales, based on data from the previous year provided by Defra,
• calculating the number of samples required to be taken and what analysis needs to be carried out on those samples,
• determining the costs of collecting and analysing the samples,
• then calculating the fee per carcase necessary to recover the above costs,
• quarterly invoices are raised for all abattoirs and meat processing plants, based on their throughput multiplied by the fee per carcase. The charge is based on the number of animals processed by a business in a particular period, rather than the number of samples taken from that site.

A flat rate percentage increase to all rates across all sectors risks a disproportionate impact on certain sectors alongside cross-subsidisation, as VMD’s sampling costs vary. Differing sectors cost profiles are due to different sampling and testing arrangements, which are decided each year based on risk assessments and other factors. The proposed 31% change for cattle compared to 15% for most other types follows a tailored approach for each sector based on their sampling plans and cost profiles. HM Treasury guidance on managing public money requires that VMD’s actual costs are recovered from each of the livestock sectors. For example, annual sampling in the bovine sector is proportionally larger than in other sectors, this combined with overall bovine production being lower means costs being spread across fewer carcases and therefore resulting in a higher per carcase charge. Sampling in other sectors is more proportionally similar.

The VMD continuously works with the Scottish and Welsh Governments, delivery partners and commercial experts to monitor and audit the NRCP to ensure value for money. Any cost savings are immediately passed through to businesses in the NRCP. The Treasury rules on managing public money do not permit the VMD to make nor retain any profit.

3.1 Other potential impacts on business or the wider economy

The proposals would apply to all Scottish industry partners engaged in the NRCP at the same time. Businesses uninvolved with the NRCP will not be directly impacted by these proposals. No other unintended business consequences were raised during the consultation, and the costs to industry partners are considered equitable based on differing surveillance costs. Possible changes to the NRCP’s approach to residues surveillance was outside the scope of the consultation and remains outwith the current proposals, but the Governments have noted industry feedback and will feed this into wider plans to review the NRCP.

3.2 Benefits to business

The proposals aim to ensure the NRCP programme continues to provide assurances about food safety and supports food exports, and programme costs remain aligned with actual surveillance costs, emphasising cost effectiveness for involved industry partners.

3.3 Specific small business impacts

No specific impact on small businesses is anticipated compared to other sized businesses given the proposal’s limited nature and its equal application to all food business operators (independent of size) within each of the livestock sectors that take part in the NRCP.

We did not look specifically at an island-versus-mainland comparison, though most micro-abattoirs in Scotland are on the islands. Actual changes to costs will vary based on throughput. For example, for a typical micro-abattoir on an island slaughtering 100 cattle per year, the increase in the first instance would be ~£23 for the 2026-27 increase, and a further ~£2.50 from April 2027.

3.4 Impact on Scottish firms’ competitiveness

The impact on Scottish firms’ competitiveness is anticipated to be neutral, given the proposals have been implemented in England and Wales and pending Scottish application there would be no divergence of rate charges across Great Britain. Our ongoing approach to residues surveillance is equivalent to international standards which have also been adopted by the UK’s trading partners.

The proposals are not expected to have a disproportionate impact on Scottish processors specifically as any anticipated changes would apply GB-wide. By way of background, the table below details the regional location of stakeholders in the NRCP (more than 70% of businesses in each sector covered by the NRCP is in England except for trout and salmon which are all based in Scotland):

3.5 Impact on Scottish firms’ ability to trade internationally

The impact on Scottish firms’ ability to trade internationally is anticipated to be neutral to positive, given the proposal would continue supporting the NRCP, a programme that helps to provide assurances about the safety of food products, and supports UK food exports. No specific impact on imports, exports, trade flows, or technical requirements on goods have been identified. The NRCP conforms to international standards which are underpinned by the World Trade Organization agreement on sanitary and phytosanitary (SPS) measures.

The requirement for control of residues in products of animal origin (POAO) forms part of international obligations on SPS measures and are intrinsically linked to trade. This is most clearly demonstrated in the case of the European Union, which explicitly approves trading partners for different types of POAO under Commission Implementing Regulation (EU) 2021/405 based on their residue controls. GB is listed in the annex of this Regulation, with approval dependant on GB a) having a residues control plan in place that is equivalent to EU standards and b) submitting our plans and results to the EU on an annual basis. Without having residue controls in place to meet these standards we could not provide assurances on the quality and safety of our POAO to international markets, which would have detrimental monetary and reputational impacts on GB trade.

3.6 Impact on investment opportunities for Scotland and Scottish firms

The proposals are expected to have a neutral effect on Scotland’s attractiveness to investment given the proposal’s limited scope and its relation to a statutory requirement. The policy is not anticipated to result in Scotland being less attractive to investors than other parts of the UK given the broad application of the NRCP.

3.7 Impact on Employees

Impact on employees is expected to be neutral given the limited nature of the proposals and specific percentage increase tailored for each industry sector. A majority of consultation respondents expected low or no impact to profit margins.

3.8 Impact on Consumers – The Consumer Duty

Impact on consumers may range from neutral to partially negative, if additional costs on operators were not absorbed or transferred down the chain by NRCP participants and instead passed down to consumers through increased prices.

3.9 Impact on Regulators

No specific conversations have taken place with regulators due to the limited scope of the instrument.