Environment, energy and sustainability

Report of the Comptroller and Auditor General on the Rural Payments Agency 2010-2011 financial statements

The NAO has published its report on the 2010-11 accounts of the Rural payments Agency.

"Yet again I have qualified the accounts of the Department for Environment, Food and Rural Affairs because of material disallowance penalties following incorrect payments to farmers. "There continues to be a significant loss to the taxpayer because of weaknesses in the administration of the Single Payment Scheme by the Rural Payments Agency. I welcome the appointment of a new senior leadership team at the Agency which should now urgently address the issues which have led to my qualifications."

Amyas Morse, head of the National Audit Office, 20 July 2011


Amyas Morse, the Comptroller and Auditor General, has today qualified the respective accounts of the Department for Environment, Food and Rural Affairs and the Rural Payments Agency.

Defra’s accounts have been qualified on the grounds of regularity, because of penalties totalling £175 million from the European Commission.

Both the Rural Payments Agency’s and Defra’s accounts have also been qualified on the grounds that the Agency has not been able to make an accurate assessment of the value of overpayments and underpayments which have been made to farmers since the Single Payment Scheme began.

During 2010-11, Defra has recognised disallowance penalties imposed by the European Commission because EU regulations have not been applied correctly in the processing of EU schemes. The disallowance includes penalties of £145 million in respect of the administration of the Single Payment Scheme in England in 2007, 2008 and 2009. The remaining penalties relate to the Fruit and Vegetables Scheme (£24 million); and the Rural Development Programme for England 2007 and 2008 (£6 million). Defra’s accounts also include provision for a further £84 million of estimated disallowance penalties, including £53 million for the Single Payment Scheme in England for 2010.

Disallowance penalties have been incurred as a direct result of weaknesses in the management and administration of the Rural Payments Agency, particularly for the early years of the Single Payment Scheme. The Agency continues to experience considerable difficulties in quantifying the value of overpayments and underpayments made to farmers under the Single Payment Scheme. However, the report on the Rural Payments Agency notes some improvements, including in core financial controls and the appointment of a new senior leadership team.

Publication date: 20 July 2011