"This is the third time we have looked at the Single
Payment Scheme and there are 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. There has been a lack of senior management ownership
of the scheme in the Agency and DEFRA, even though the risks were
previously highlighted by the Committee of Public
Accounts.
"Previous assurances on overall
progress in recovering overpayments 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 the ongoing management
issues."
Amyas Morse, head of the National
Audit Office, 15 October 2009.
The Rural Payments Agency and DEFRA have shown
scant regard to protecting public money in their administration and
management of the EU’s Single Payment Scheme in England, according
to the National Audit Office. The IT system does not meet the
scheme’s needs, the cost of processing claims, already very high,
has continued to increase and the administration of the scheme is
not value for money.
The Department and Agency have brought forward
the payments to farmers, but they have not adequately addressed the
concerns over value for money previously raised by the National
Audit Office and the Committee of Public Accounts. Farmers were
paid earlier under the 2008 scheme, with over 96 per cent paid by
mid May 2009, compared to 80 per cent by the same month for the
2006 scheme. However, the cost of the scheme is high and
increasing: we calculate that the average cost per claim is £1,743
and this is an increase of 22 per cent on the 2005 scheme. It
compares to a cost of £285 per claim under the simpler Scottish
system.
Since April 2005 the Agency has incurred
additional administration costs of £304 million as a result of
needing more staff than anticipated in the 2005 business case for
the scheme, the Department has had to set aside £280 million for
disallowance and penalties, and the Agency anticipates that a
further £43 million of overpayments will be irrecoverable.
The IT upgrades and maintenance since 2007, costing £130 million,
have resulted in heavy customisation of an IT system that has now
cost £350 million in total, with complex software that is expensive
and reliant on contractors to maintain. With many of the Agency’s
contracts for ongoing support due to end in 2009, there is an
increased risk of obsolescence.
The NAO has calculated that the cost of
correcting earlier mistakes in processing claims has amounted to
£119 million. Progress in recovering overpayments has been slow and
the Agency does not have a clear picture of the extent of
overpayments, which the NAO estimates is likely to be between £55
million and £90 million.
Publication details:
HC: 880, 2008-09
ISBN: 9780102963182