Single Payment Scheme

For once, I can speak about agricultural matters without declaring an interest, because payments in Wales have already been made, so I am unaffected by the problem. However, it does not in any way lessen my concern for the farming community in England, which has been so badly served. Indeed, a series of mistakes has been made not only by DEFRA but by the Rural Payments Agency.

The Minister may say that other countries have used other systems, but Ireland has paid 98 per cent. of its farmers. In historic terms, Austria has paid 100 per cent. of its farmers, Belgium has paid nearly 100 per cent. of its farmers and Sweden, which uses a hybrid system, has paid 90 per cent. of its farmers. Germany, which presumably uses a dynamic hybrid system similar to DEFRA's, paid 80 per cent. of its farmers by December, and Denmark has paid 98 per cent. of its farmers. I have not heard of riots in France, Spain or Italy. I do not have figures for those countries, but I assume that the farmers there have received the majority of their payments.
Mr. Todd : Does the hon. Gentleman accept that one of the differences is that risk has been loaded on risk when trying to address the problem? The Department went through major change a few years back, with new IT systems that did not work properly—this is not the first late payment problem that farmers have faced through the RPA—and then a new complex system was loaded on to that. The loading of risk upon risk increases the risk of failure. That is what we face.
Mr. Williams : The hon. Gentleman makes a good point. I was about to say that the contract was given to Accenture in 2003, before the announcement that there would be a single farm payment scheme in February or March 2004. Indeed, the mid-term review turned out to be much more radical than anyone expected; many of us thought that it would tinker at the edges of the schemes to support farmers. The new firm was given the challenge of dealing with a new scheme. During our inquiry into the RPA, the hon. Member for North-West Leicestershire (David Taylor) and I were told that DEFRA changed the details of the scheme 60 times between initiating the contract and finalising the scheme. At its heart, the problem lies with DEFRA as well as with Accenture and the RPA.
Mr. Dan Rogerson (North Cornwall) (LD): I am grateful to my hon. Friend and to the hon. Member for North-West Leicestershire for serving as rapporteurs on that inquiry. Did my hon. Friend find any evidence that information on how the crisis was growing was being passed back up the chain—that it was being passed from the highest level in the RPA to DEFRA? Ministers said that everything was fine and that there were no huge problems, and they expected payments to be made. Is my hon. Friend sure that the evidence was passed up the line?
Mr. Williams : I thank my hon. Friend for raising that point. We were told that there was regular communication between DEFRA and the senior management of the RPA but, as a result of the failure to deliver the programme, further work needs to be done. Indeed, we have already heard that the Select Committee and perhaps even the National Audit Office may make further inquiries into how it happened. Certainly, the relationship between DEFRA Ministers and the RPA needs to be examined in detail.

The point has been made that, even if payments were made by the end of February, as promised, it would be late in the agricultural year. Many of the payments that were in place before the single farm payment was initiated would have been made already—in September for the sheep annual premium, and in October and November for arable aid, advance payments for the suckler cow premium and the beef special premium.
Farmers have found it difficult to accommodate problems with cash flow. Mention has been made of paying bills, but at the end of this week interest payments will be due on most accounts. That money will be taken out of the farmers' accounts. They will not have to make a conscious decision about it; the money will be removed from their accounts. That may take them above the level that they have agreed with their banks, and they will suffer the financial consequences—not just additional interest, but the other costs involved.
Mr. Hollobone : Given that the EU has given the Government funding for the scheme, interest is accumulating on that money in the Exchequer. Should not that interest be used to facilitate some emergency payment for our farmers?
Mr. Williams : The hon. Gentleman makes a good point. I am sometimes told that the money is drawn from the EU as it is paid, but even if the Government are not accruing interest, the European Union certainly is. The money is being kept somewhere. Interest accrued should surely be passed on to farmers. A large window was set by the EU for payments, between 1 November and 31 June, but it was not the intention that it should be used to delay the main payments under the scheme. The window was set so that some of the difficult and complex applications that would result from a new scheme could be dealt with. It was always intended that payments should be made at the beginning of the window rather than the end.
It was always open to DEFRA to delay the implementation of the scheme for a year. DEFRA decided against that, even though it was clear that the scheme was more complex than previous schemes. Some countries decided not to decouple during the first year—France is one. I believe that DEFRA took the decision because it was at the forefront of advocating a decoupled system, and it felt that it had to implement it in full rather than delaying it for a year. However, DEFRA did not do the necessary investigative work to find out how many applicants there might be for an entirely new scheme—for instance, potato growers and horticulturalists who keep land not entirely for agricultural purposes.
Mr. Todd : I have two hectares of land, and I have been urged by local farmers to make a claim. I have chosen not to do so, but a large number of others in similar circumstances might have done. The RPA appears not to have spotted that substantial burden, but it was widely known in the farming community because those conversations took place a year or even 18 months ago.
Mr. Williams : The hon. Gentleman makes the point that even Members of Parliament are now in the scheme. It is certainly widespread.
Mr. Todd : I didn't do it.
Mr. Williams : No, the hon. Gentleman did not. However, it seems that many chartered surveyors will have made a lot of money. That dilutes the money available to the farming community, a point made by the hon. Member for Stroud.
The Government have a duty, because of their complicity in the problem, to ensure that farmers are adequately compensated for the money that has been taken from their accounts in interest and other fees. As the hon. Member for Ludlow (Mr. Dunne) said, there is a huge amount of stress in the farming community. There is also the question of how we can encourage young farmers into the industry if they see the Government failing to deliver. They are always asked to provide business plans, yet they are confounded when the Government, let alone the various organisations, do not produce the money. The Government have failed English agriculture, and they have a duty to recompense farmers.

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Publish date: 30th March 2006
Modified: 30th March 2006

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