Press Release - A second progress update on the
administration of the Single Payment Scheme by the Rural Payments
Agency
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.
Mr Amyas Morse, head of the National
Audit Office, said today:
“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.”
Notes for Editors:
-
This is the NAO’s third report on the Rural
Payments Agency’s administration of the Single Payment Scheme in
England (the NAO previously reported in October 2006 and December
2007).
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The Single Payment Scheme was introduced by
the Member States of the European Union as part of the Common
Agricultural Policy reforms which replaces 11 separate crop and
livestock based production subsidies with a single payment based on
land area. The scheme is administered by the Rural Payments
Agency and overseen by DEFRA.
-
DEFRA chose to introduce a ‘dynamic hybrid’
system, which means that payments are based partly on historical
data and partly on a flat rate per hectare. This was the most
complex model available and only England, Germany and Finland have
adopted it, although Germany and Finland are introducing the
‘dynamic’ element in 2010 and 2011 respectively.
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Press notices and reports are available from
the date of publication on the NAO website, which is at http://www.nao.org.uk/. Hard
copies can be obtained from The Stationery Office on 0845 702
3474.
-
The Comptroller and Auditor General, Amyas
Morse, is the head of the National Audit Office which employs some
900 staff. He and the NAO are totally independent of
Government. He certifies the accounts of all Government
departments and a wide range of other public sector bodies; and he
has statutory authority to report to Parliament on the economy,
efficiency and effectiveness with which departments and other
bodies have used their resources.
Press Notice 48/09
All enquiries to Sarah Farndale,
NAO Press Office: Tel: 020 7798 5350
Mobile: 07985 274 421