Sir John Bourn, head of the National Audit Office, today reported to Parliament on the Ministry of Agriculture, Fisheries and Food’s administration of the Arable Area Payments Scheme*. This is the largest European Union Common Agricultural Policy scheme in England with payments of £1.1 billion each year to some 47,000 farmers. The report examines the cost and robustness of the Ministry’s controls to detect and prevent irregularities. Their in-office checks are appropriately targeted, field inspections identified 1,000 cases of irregularity in 1996, and remote sensing has become more cost-effective. But the report identifies potential efficiency savings in the administration of the Scheme, and scope for improvements in the collection, analysis or use of management information.
Disallowance by the European Commission
Failure to comply with scheme regulations can lead to the European Commission’s refusal to reimburse expenditure. Given the size and complexity of the scheme, the potential for disallowance is large. The Ministry paid out £2.5 billion in England in the first three years of the scheme from 1993 to 1995, and has only had to accept disallowance in respect of £195,000 for those years. Judged by this criterion the Ministry has been largely successful in safeguarding funds in this area. The National Audit Office’s recommendations should assist the Ministry in ensuring that control systems remain effective.
The efficiency of claim processing
The Scheme is complex and claims are often difficult and time consuming to process. In 1997-98 the cost of administering the Scheme represented just one per cent of payments to farmers. The cost was £12 million, some £254 per claim. However, the cost of checking claims has risen by nearly 64 per cent in real terms since the Scheme was introduced in 1993-94, in part due to the need to refer back to previous years’ data. In 1996-97 the average time taken by regional offices to process a Scheme claim varied from 9 hours per claim to 18 hours. The National Audit Office analysed the wide disparity in the apparent efficiency of the Ministry’s nine regional offices, and found that:
- the reasons did not appear to lie in regional differences in the number or type of claims processed;
- there is scope for efficiency savings of at least £1.6 million a year if the five regions spending the highest average time to check a claim were able to match the efficiency of the other four; and
- the Ministry has now established a new unit seeking to identify reasons for variations and to develop benchmarking and other management techniques.
The National Audit Office recommended that the Ministry should:
- take whatever steps it can, including the establishment of performance targets, to get average processing time in the regions to the lowest possible level while maintaining standards.
Preventing and detecting irregularities
The Ministry has implemented a system of controls, which combine in-office checks, field inspections and remote sensing, to prevent and detect irregularities. Information is not available on the full amount saved as a result of all these checks. However, the Ministry must comply with European requirements for the level and nature of checks regardless of their relative cost and benefit yield. Since 1996, the Ministry has improved the management, timeliness and conduct of field inspections, which are based on physical verification of field sizes and crops. The National Audit Office made the following recommendations:
- more data should be collected on the value of errors found by each type of check. This would enable comparison of regional office efficiency in identifying errors, and review of whether checks are targeted at areas of highest risk and are effective in detecting irregularities; and
- in order to judge the quality and consistency of field inspections, there is scope for further improvements in the monitoring and comparison of performance at regional offices in the time spent and methods adopted for such inspections.