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4.51 pm
The Minister of State, Department for Environment, Food and Rural Affairs (Lord Rooker): My Lords, with permission I shall repeat a Statement made in the other place by the Secretary of State for Environment, Food and Rural Affairs. The Statement is as follows:
“I would like to make a Statement on the single payment scheme administered by the Rural Payments Agency.
“In my Written Statements on 9 May and 5 July, and my oral Statement on 22 June, I said that the well rehearsed difficulties in the administration of the 2005 single payment scheme would create challenges for delivery of the 2006 scheme, and I promised to keep the House informed of developments. On this occasion, as on every other, I reiterate the apologies that I have offered to farmers on behalf of my department, and my commitment to remedy the problems. Today I can report progress under the 2005 scheme, and plans for the 2006 scheme. But the interim chief executive of the Rural Payments Agency and I are clear that much more needs to be done to learn the right lessons from the National Audit Office’s recent report and to build on helpful guidance that I am sure we will see in the forthcoming reports from the EFRA Select Committee, the Public Accounts Committee, the Office of Government Commerce and the Hunter review.
“As I mentioned in my Written Statement on 5 July, the total amount to be paid by the Rural Payments Agency for the 2005 scheme will not be known for certain until the last claim is completely validated and necessary corrections are made. However, the latest estimate, at 3 November, puts the figure at £1.528 billion, of which over £1.516 billion— 99.2 per cent—has now been paid. Moreover, 110,244 claimants have received a full payment and a further 4,756 have received a partial payment and are awaiting their top-up. This combined total of 115,000 represents 98.5 per cent of the revised estimated total claimant population—116,661—entitled to a payment.
“All but 50 of the claimants still awaiting any payment are currently calculated to have a claim value of less than €1,000. The 50 cases are all difficult cases, involving issues such as probate or business liquidation, which would be challenging in any year. Dedicated teams are in place to deal with these cases and the other outstanding payments as soon as possible. Similarly, on hill farm allowance payments, some 95 per cent of claimants have received a full or partial payment, and a dedicated team is exploring all avenues to make the outstanding payments as soon as possible.
“During October, the Rural Payments Agency moved the bulk of its processing staff to detailed validation of the 2006 claims. Initial validation of those claims has been undertaken over the summer and has gone relatively smoothly. The same can be said of the 2006 round of eligibility inspections. However, the difficulties involved in completing 2005 claim processing have inevitably impacted on the 2006 payment timetable.
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“Everyone wants claims to be paid in full as soon as possible. I understand that, and the new management of the RPA are dedicated to building stability and predictability into the system so that full claims are delivered in an efficient and timely way. However, the interim chief executive has reported to me that he can not guarantee that the agency can deliver full payments within the payment window for the 2006 scheme. Neither he nor I believe that it is acceptable to expect farmers to wait until next June or beyond for payments. I have therefore agreed with the RPA a challenging formal performance target of paying 96.14 per cent of valid 2006 claims by 30 June 2007, and it is determined to do all in its powers to deliver on that. In addition, I have also decided to pursue a partial payment plan.
“Our aims can be simply stated. First, we want to maximise payments to farmers that arrive on a timely and predictable basis. That means making full payments where possible and partial payments where necessary. Secondly, we want to minimise the risk of late payment penalties and disallowance. Thirdly, we want our decisions this year to help the RPA to establish a new and sound footing for the delivery of the single payment scheme in future.
“I have therefore agreed with the RPA that where full payments are not possible in the early part of next year, partial payments should start in mid-February for eligible claims above €1,000. The RPA estimates that the process will take around three weeks. Payments will be made for not less than 50 per cent of claim value. This reflects the level that EU regulations permit without diverting significant resource away from, and therefore delaying, work on validating claims for full payments.
“Needless to say, I will be keeping the situation under close review, but the interim chief executive of the RPA has set out for me and Lord Rooker the basis on which he is confident that partial payments can be made and we believe, in part on the basis of the partial payment experience in May this year, that the money will be delivered.
“The single payment scheme and its administration have caused distress to farmers. The only way to make good on this year’s problems is to improve the management of the system so that confidence is rebuilt. I have set out clearly that this will not happen overnight, but I believe that the staged approach that I have set out is the only one that is prudent and responsible, and I commend it to the House”.
My Lords, that concludes the Statement.
4.58 pm
Baroness Byford: My Lords, I thank the Minister for repeating the Statement made in another place. We are grateful to him for the update. I remind the House of my family’s farming interest.
I am disappointed by the Statement because the problems that occurred with the 2005 scheme, which resulted in chaotic late payments, have not been addressed and the Statement does not guarantee that
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Of 2005 single payments, 110,244 were paid in full by 3 November, but that still leaves 4,756 partial payments awaiting top-up. Why has it not been possible for them to be paid? When will the problem be resolved? The Minister said that 50 claimants were awaiting any payment at all. He said that this was due to probate or business liquidation. How many fall into either category? When does he anticipate that these issues will be resolved?
The Statement refers to dedicated teams. When they are established, will an individual be allocated to a farmer or is the RPA working to an overall dedicated team approach? What is the position regarding permanent or temporary staff? The Statement goes on to say that the validation of the 2006 payment scheme has gone relatively smoothly. Perhaps the Minister will share with the House what aspects have not gone smoothly and what has been done to rectify this. The Statement refers to the National Audit Office’s report and reflects the Minister’s intention to build helpful guidance. I have looked again at recommendations 23 to 32. Which of these has been actioned, or has no progress been made to date?
Why was Germany, which adopted a similar dynamic system to ours, able to pay its farmers on time and what within our system made that impossible? At the time we had discussions about mapping, IT systems and human error. Were those difficulties also experienced by Germany or do we have lessons to learn from it? Will the Minister confirm that the mapping issues which created great difficulties in last year’s scheme have all been rectified and that the problem will not occur again? Are the IT systems now compatible or is there an ongoing problem?
According to the Statement, those to whom the 2006 payment cannot be paid in full will receive a minimum of 50 per cent. To some farmers that will be a disappointment, because this year when they eventually received it, they were paid 80 per cent as a partial payment.
Some 95 per cent of hill farm payments were paid. That leaves some 700 of the most pressed farmers without any money to which they are entitled. Further to our debate on the delayed rural development programme yesterday, can the Minister tell us more, or will he acknowledge that those hill farmers may be doubly hit by the cancellation of that project?
How confident is the Minister that proper controls have been put in place to ensure that the 2006 system will run smoothly? Has the relationship between the Minister and the RPA chief executive been resolved?
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The sum of £131 million was put aside in case the EU called back on that money because the system ran late. Will that be an additional budget deficit to the £200 million that is already forecast for Defra?
Finally, is the Minister satisfied that the RPA’s new sound footing for the future delivery of the single farm payment is in place? Will he share with us what exactly this new sound footing is? I am grateful to the Minister and look forward to his response.
5.04 pm
Lord Livsey of Talgarth: My Lords, I thank the Minister for repeating the Statement and for allowing us sight of it beforehand. The NAO report on the single payment scheme states in part 4:
“The single payment scheme has cost more to implement than expected and many of the financial savings forecast are unlikely to materialise”.
That is a damning criticism of what has happened. I do not blame the Minister personally for that. A lot of hard work was done by staff to try to rescue this failing scheme, but I note in an Answer in the other place today to our Treasury spokesman that £2.9 million was paid in bonuses to Defra staff last year. I trust that they are not in the employ of the RPA, otherwise they must think that they have won the lottery.
I note, as the noble Baroness said, that according to the Statement, 110,244 farmers have received the full payment but, like her, I note that 4,756, had received only a partial payment. I do not expect the Minister to be able to answer this question now, but I should like him to investigate. There are several hundred farmers on the Welsh border whose main holding is in Wales but who have land in England. Many of them have received no payment at all and yet on the land they occupy in Wales, they were paid in December 2005. They are still waiting for the payment in England in November 2006, but have had nothing. There is a big problem there which I ask the Minister to expedite.
There is a reference to hill farm allowance payments, where the Statement reads:
“Similarly, on hill farm allowance payments, some 95 per cent of claimants have received a full or partial payment”.
I regard that statement as pure spin, because we do not know what is the breakdown between those who have had a full payment and those who have had only a partial payment. What percentage of those farmers remain to receive top-up payments? During the past fortnight, it was mentioned that some applications had been rejected. Have they been resubmitted? What is the situation there on those hill farms? There is a lot of hardship among livestock farmers as a result of that.
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The Minister admitted, via his chief executive, that the RPA would be unstable for a considerable time. At least there has now been a reality check about the situation. Given the shambles that has occurred, the basic policy elicited in the Statement—that full payment will be made where possible in future and partial payments where necessary—is a move forward, but it is the best of a very bad job. The situation is ironic when many of us were advocating partial payment, way back—I am talking about more than 12 months ago. In the early part of next year, I note that partial payments will start in mid-February, which is still late when you think that payments in Scotland and Wales will have been made in December this year, next month. Even then, less than 50 per cent of the claim will be paid during that window of opportunity.
The statement that the Government are confident that partial payments can be made does not inspire confidence in me or, I am sure, many farmers. A staged approach, although very necessary in the situation, is really a back marker. What part has Accenture, the IT consultant, played in all that? The same company is involved in the IT shambles in the NHS contract, where a £12.4 billion cost has been incurred but there is not as yet any delivery of that system. In this case, the contract costs have nearly doubled to £50.3 million, as the NAO report says. Indeed, the total overspend of the implementation is £46.5 million. This is serious money, which farmers would have really appreciated if it had ended up in their hard work. Farming, as the Minister knows, is a relentless occupation. Every penny is hard-earned. One can judge that a different scheme in England, possibly an in-house payment scheme, would have been a far better solution.
The NAO report concludes in part 5:
Surely the problems in this scheme should have been apparent in 2004-05. There are many lessons for the future, and it is clear that a greater hands-on approach by Ministers and senior civil servants would have ferreted out these problems at the time and made it clear that a contingency plan needed to be formed, as it became more and more apparent that the scheme would fail in the future. It was obvious that this was going to happen, but unfortunately Ministers were not told the truth. The story has been one of negligence.
5.11 pm
Lord Rooker: My Lords, I shall do my best in the time available to answer as many of the questions that have been asked as possible. I will have to write to any noble Lords whose questions I have not answered, because I am limited to answering questions from the Front Benches.
It is no good asking me for guarantees. Both the Secretary of State and I have made the Statement, so that is it. It is absolutely clear, and we have confidence in it, based on the information that we have received from the Rural Payments Agency. We are not going beyond it; it is as simple as that. We are trying to learn the lessons from what has happened this year, and we need to give people confidence, but extra promises
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The noble Baroness asked me about 20 questions, some of which I will not be able to answer. The £130 million is not cash, and it will not be called on, as the Secretary of State said in the other place. It does not do to talk this situation up. We have paid within 1 per cent of the legal requirement by 30 June. In other words, we have paid within 1 per cent of the 96.14 per cent. We do not know what will happen about disallowances and penalties from the European Union; it may be a couple of years before we do. That is nothing to do with the budget deficit of the £200 million. As I said, it is not a cash sum.
We will give partial top-ups as soon as possible. I cannot say how many of the 50 payments involve probate or business partnership disputes, because other factors are involved. Those are the two examples that we have given, but there are more, and they would have happened in the normal course of events under the old payment schemes. Only 50 are above €1,000; all the rest are less than €1,000.
The dedicated teams are working on the payments that we have not made, as well as on the hill farm allowances, for 2005. The system of working will be different for 2006. It will not be task-based as under the old system, in which a farmer’s form was dealt with by any one, or possibly by up to three or four, of the RPA offices around the country at any one time. Once all the farmers’ forms have been divided up, each form will be dealt with in one of the offices by a team of 12 or 25 people—I cannot remember the exact figures. They have been training for that process throughout the summer.
The validation process has gone relatively smoothly. The first stage, which is relatively easy, was all done in one office at Workington. I visited it when the validation was being done. That is the easy part. The second stage of validation is the one that takes the time. That is when the full payments are made, which is why we can say that we will make full payments where we can and partial payments where we cannot. So it is true that some farmers will get full payments, because they will have gone through the validation process by the time the buttons are pressed.
I will get further information on Germany, which had problems with its system. The RPA staff went to Germany to discuss whether there were any mutual problems, which I fully accept is a point that comes up constantly.
Bearing in mind that we have paid most of the claims for 2005, except for those with which we have had problems, we should not have too many mapping problems in 2006. Most field boundaries do not change. However, it is surprising how many change through the sale of fields or fields being split up. There will be those difficulties, but I will not rest on that. I do not say that the mapping issues will be on the same scale as last year—clearly they will not—because 40,000 extra customers to whom we had not paid food subsidies in the past and whose fields we did not know about were brought into the scheme. Those fields are called “pony paddocks”—
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The IT system is evolving. The plans for this programme beggar belief. I will not go over the past, but I have to live with it. Updates and other aspects of the system have to be dealt with constantly. It is agreed that sugar has to be incorporated into the programme in order that the 17,000 sugar farmers will get their subsidy, which was done differently this year. There are some programme upgrades that still have to be done. It is not one system that is in place and on which we can just press the buttons in the following year and out will come the money. It is not like that. Starting in mid-February, we are confident that a minimum of 50 per cent of each claim will be made 10 weeks earlier than 80 per cent of partial payments were made last year. That has to be a massive boost to and improvement in cash flow for farmers in comparison with what happened this year. I realise that a few farmers received payments early this year, but the vast majority got partial payments in the middle of May. I cannot go beyond what I have already said on the hill farm allowance, but I will give a further report because we still need to do that.
As I said in the Statement, we are confident that there are good relations between ourselves and the new management of the RPA. Members of the other place have a representative capacity. I have promised that I will hold surgeries during the winter on a weekly basis, if necessary. I met three dozen representatives recently. It is important for them to know that they can come to see the Minister every week. I will have someone from the RPA with me so that we can iron out problems as they arise. There has to be more contact between the Minister and farmers’ representatives. I do not say that people in this House do not have contact, but I am doing the surgery for Members of the House of Commons, which was well received.
I am not playing around with the Statement, but as regards putting the RPA on a sound footing for following years, I do not want to work one year at a time. On the basis of what we do this year, I want the RPA to be thinking about 2007. At the moment, I am still looking at the form for 2007, which we will sign off shortly. I want the RPA to know that it will not work piecemeal each year with one scheme to another. I am not saying that partial payments will be at the same times next year, but I want the RPA to be set up so that we can have as near the same system as possible each year until we can make substantial changes.
I have come to the end of the time allocated for the Opposition Front Benches. In respect of Wales, we are checking the problems of the border. I was asked about the bonuses to staff. The RPA deals with the single farm payment scheme. It also pays out on 41 other schemes relating to food and agriculture. It pays subsidies—the biggest goes to Tate and Lyle, which gets some £120 million. The idea that farmers get most of the money is not true. I repeat—the RPA administers 41 schemes. Because there has been a problem with a
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