Page last updated at 07:47 GMT, Thursday, 15 October 2009 08:47 UK

Farm subsidy system 'in a mess'

A farmer ploughs a field in East Sussex, UK
The EU pays farmers money to maintain their land

The EU farm subsidies system is a "masterclass of misadministration" in most of the UK, the head of the Commons Public Accounts Committee has said.

Edward Leigh MP was responding to a National Audit Office report condemning the high cost to the taxpayer.

Farming minister Jim Fitzpatrick has disputed figures showing average claim processing costs were £285 in Scotland, but £1,743 in England.

He said "real progress" had been made but conceded serious problems existed.

The EU's Single Payment Scheme provides grants to farmers for maintaining their land.

When asked if he could find anyone who thought the system worked well, Mr Fitzpatrick told BBC Radio 4's Today programme: "I think that would be a difficult thing to produce... the answer, I suspect, is a straightforward no."

The NAO's report accused the Rural Payments Agency (RPA), which administers the scheme, and the Department for Environment, Food and Rural Affairs (Defra) of showing scant regard for protecting public money in the process of handing out the grants to farmers.

The agency has been heavily criticised in the past for shortcomings in its operations.

Delays to farmers' payments in 2006, blamed on computer failures at the agency, cost millions of pounds and were described by MPs in a 2007 report as a "fiasco".

There was widespread anger at the time that no ministers or civil servants resigned as a result.

'Unforeseen costs'

The National Audit Office said the current average cost of processing a claim in England was now £1,743.

This is often much more than the value of the claim itself and is far more than the average of £285 under the simpler Scottish system.

The report said that since the scheme's creation in 2005 it had racked up more than £680m in "unforeseen additional costs", including £304m in extra staff costs and £280m in penalties for late payments and administrative errors.

It has also overpaid farmers an amount totalling somewhere between £55m and £90m.


The report did find some improvements - in particular, fewer payments being made late to farmers - but NAO chief Amyas Morse said there were still "significant issues to be resolved".

"There has been a serious lack of attention to the protection of taxpayers' interests over the administration of the scheme," he said.

"Previous assurances on overall progress in recovering over-payments from farmers proved optimistic and reflect a lack of reliable information on actual progress.

"Defra should urgently address the risks to ongoing IT system support and the inaccuracy of the scheme's data, explore alternative payment systems and resolve ongoing management issues."

Mr Fitzpatrick said they "did not accept" the NAO figures on claims costs. He said they believed the average cost of processing farmers' claims outside Scotland had reduced recently from £750 to £700.

He said they had cut the number of administrative staff from 4,500 to 3,500, had introduced an online system for farmers to use, and were re-mapping the country to improve the accuracy of claims submitted.

"There has been some real progress made because we recognise how vitally important these payments are to farmers, and we have got to get it right."

'Get a grip'

Conservative backbencher Mr Leigh accused the RPA of "lamentable" communication with farmers, who he said often had little idea what they would be paid or when.

It is taxpayers who are picking up the tab for the whole sorry mess
Peter Kendall
National Farmers' Union

Shadow environment secretary Nick Herbert said: "Vast sums of taxpayers' money has been wasted on excessive administration costs and fines to the EU, yet typically ministers who should be held accountable for this dismal state of affairs still refuse to accept their responsibility.

"It is time for a fundamental overhaul of the agency to get a grip of the farm payments scheme once and for all."

The Lib Dems echoed that call for a new system.

"This needs to include a minimum payment figure of around £300 so that the smallest claims are filtered out and farmers get their payments efficiently, effectively and on time," rural affairs spokesman Tim Farron said.

The National Farmers' Union president Peter Kendall accused Defra of rushing to implement a "hugely complex model".

"Initially, it was farmers who paid the price, but now it is taxpayers who are picking up the tab for the whole sorry mess," he said.

The government previously announced that a review of the Single Payment Scheme would be carried out by 2013.

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