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House of Lords debate on the Rural Payments Agency 30 Mar 2006

http://www.publications.parliament.uk/pa/ld199697/ldhansrd/pdvn/lds06/text/60330-10.htm#60330-10_head0

Rural Payments Agency

1.26 pm

Lord King of Bridgwater rose to call attention to the Rural Payments Agency; and to move for Papers.

The noble Lord said: My Lords, I start where my noble friend Lady Byford left off by declaring my own interest in this subject. I make no apologies for declaring an interest; it means I actually know a bit about it, and something of the problems. My son-in-law is now involved in running our farm, and he has been trying to cope with that. While I have noticed the maps going backwards and forwards, it was not until I was asked by my noble friend Lady Byford to open this debate that I came to understand just what a scale of shambles that now represents.

I was interested in the exchanges that took place on a Statement in this House earlier this week, when my noble friend Lord Monro said that he thought it was the most disgraceful Statement on agriculture he had ever heard in the House. The Minister challenged him, and thought that that was an unfair comment. With great respect, I do not know if the Minister knows my noble friend well, but he has been in this House or the other place for 44 years, so he has some experience of these matters. He was a distinguished Minister working with me in the Department of the Environment, and is very familiar with agriculture questions. His judgment is one that I respect on this matter, and one that I endorse.

I start from the position that we are now dealing with an industry that the Minister knows—everyone knows—is not the strongest industry in the United Kingdom. It faces major challenges. In many parts of the country, the whole future of farming as we know it is in question, as are the survival of family farms and the fabric of our countryside. It is an industry that is entitled to expect accuracy and efficiency from government. It will not always get everything it wants, but if it can no longer believe anything Ministers say to it, or have any confidence whatever in announcements that are made, that is a very serious situation. Sometimes those announcements may be on policy and strategy. These questions and statements directly affect the financial viability and survival of a considerable number of family farms in this country.

Today the Minister can get away with saying that he has had consultations, he has talked to representatives of the industry and of associated industries, and he has talked to the banks, and they have not yet reported the situation. We are not quite there yet. I do not know what the outcome will be in the next month or two
 
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regarding Lady day—the traditional date for the payment of rent—or the position of tenant farmers who believed the Minister and thought they would have funds available. The state of the industry is no secret to many farmers at present, and the single payment is a critical element in their finances. In many cases, banks feel that they have already over-lent to farms and agriculture, and are not too willing to extend further credit. What the consequences of this may be, I would not presume to comment on in detail today. There have been, in yesterday's debate in the other place and in Westminster Hall, some very serious warnings on this matter. From the distinguished list of speakers who will follow me in this debate, and given their considerable experience, I have no doubt that we will hear clear warnings of what the consequences may be.

Looking at the background to this, I have always had some reservations about the system of key targets. I am sure the Minister might share some of that concern. I see that key target number one in the RPA business plan, accepted by Ministers, is that payments under the single payment scheme should commence by February 2006, and that 96 per cent of valid SPS claims should be processed and paid by 31 March 2006. Has any key target in any government department ever been so spectacularly missed? This is, as the Minister will recognise, key target number one. It will pose enormous problems for those concerned. My understanding is that, far from processing 96 per cent by the end of March, the figure is now 23 per cent—although there may have been some modest improvement on that—and payments to the industry, to farmers up and down England, are now £1.1 billion behind what the Government promised. For an industry facing such financial challenges, that is an incredible figure.

It could be said that this is all very unfair and that Ministers could not possibly have anticipated the problems they now face. So, I look to see just how many warnings the Government received. Warnings were given back in 2003; there was a warning when the announcement was made by the Secretary of State in February 2004; and most significantly, a warning was given by the Select Committee in January. Its report was rubbished by the Minister at the time, but on reading it since, it appears to be incredibly accurate. On making the decision to adopt the dynamic hybrid approach, the All-Party Select Committee said:

    "We believe Defra gave insignificant consideration to the administrative complexity of the chosen model. Defra should also have considered postponing implementation of the SFP until 2006, as allowed for in the CAP reform regulation, to allow more time for preparation, thus avoiding the problems that are now evident . . . the lack of foresight shown by the RPA, and the apparent lack of analysis about the possible impacts of the implementation model are not acceptable. Further, we believe that both Defra and the RPA should have anticipated the extra work involved in this project".

I do not think that anybody would now seriously disagree with that Select Committee report.

The Government chose to pursue what is called in the jargon, the "dynamic hybrid model". They turned their back on the idea of a more transitional
 
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arrangement, as referred to by the Select Committee, and introduced this new scheme into a department which—as all those who have had contact with it over many years will know—is, to put it simply, not the strongest department in government. Remember the BSE crisis or the foot-and-mouth situation, in which the Prime Minister himself realised the limitations of Defra's capacity in this area, turning, at the moment of greatest need, to the Army and the famous brigadier in order to resolve the situation. This is not a department that should have been faced with extremely complicated new arrangements, and then expected to deliver to a very tight timetable. What Ministers asked the RPA to do indicates a serious lack of judgment.

I turn to the background to this. I have read the Select Committee report. At the Oxford Farming Conference the Minister indicated that the target of 96 per cent would not be achieved and that the true figure might be as low as 50 per cent. Following that, the Ministers said that they did not become aware until 14 March that payments would not be made a fortnight later on 31 March, as they had originally indicated. I cannot, in my experience, recall an incidence of more inadequate and incompetent handling, be that by Ministers, officials or the RPA. The fact is that somebody has blundered; there is no question about that. I have some sympathy with the Minister, because he was not around when the decision to follow this particular scheme was taken. The Secretary of State was in another department. Margaret Beckett, Secretary of State at the time, announced the decision in February 2004.

We are now in a situation in which not only did people know that the target would not be achieved by that date, but—as far as I am aware—there is no information about when payments will be made. I understand that there is a legal obligation for these payments to be made by 30 June. If that is correct, can the Minister assure us today that all payments will be made by the end of June? If he cannot give that assurance, what will happen to the people who—if they are able—then have to borrow money and pay interest, possibly at not very advantageous rates if they are already outside, or at the ceiling of, their borrowing limit? What will the Government do about them and this most unhappy saga? Can the Minister at last clarify the situation today?

I turn to the seriousness of this matter. In my own ministerial activity, I was occasionally accused of being a "hands-on" Minister. That is sometimes a criticism; Ministers can become too involved, but sometimes Ministers have to get involved. They have to be able to ask the right questions; they have to be able to challenge their agencies and their officials. At the end of the day—and I hope this is not old-fashioned—I happen to believe that Ministers bear the ultimate responsibility. It is not a matter of there being no bad Ministers, only bad officials. Officials cannot speak for themselves; they must depend on Ministers to stand up for them. I think it has been noticed elsewhere that when the Secretary of State, on being
 
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challenged on this matter in the House this week, was asked about her approach to ministerial responsibility, she gave the unique answer:

    "I am taking responsibility, which is why I removed the chief executive".—[Official Report, Commons, 27/3/06; col. 552.]

It was not the chief executive who took the final decision as to what the system should be. In this situation, the consequences may lead to the bankruptcy of some of the ancillary firms involved. If they were in a strong position that would be an extravagant—maybe unjustified—comment to make. As the Minister knows, some areas of the industry are in great difficulty. What are we going to do about the farmers whose sense of responsibility means they will not order anything they cannot pay for, and have therefore held up their orders for seeds, cultivations and tractors in the current year? What will happen then to those still waiting and who do not know when they are going to be able to go ahead? They run the ultimate awful risk that they might lose the season.

Against all those backgrounds, at the very least today, the House, the country and the agriculture industry are entitled to know when these payments will be made. They are entitled to expect action from those who took the ultimate responsibility for the installation of this new system, when they could have allowed a transitional period to allow the details to be ironed out. They now face a crisis—which it undoubtedly is in many corners of the agricultural industry at the present. I do not expect anything to happen. I do not think that this Government actually accept the convention for ministerial responsibility in the way that I happen to recall that the former Leader of your Lordships' House—in the shape of the noble Lord, Lord Carrington—accepted. Although he did not actually have a direct involvement, at the moment of the Argentinian invasion of the Falkland Islands he immediately tendered his resignation.

My noble friend Lady Byford referred, in much gentler terms than mine, to the need for Ministers to consider their positions. I noticed that the Secretary of State, rather charmingly in her Statement last week, made clear in the fourth paragraph that this was the Minister's area of responsibility and not hers. In this situation, if Ministers have responsibility, for my noble friend to say that the Minister should consider his position was the most modest phrase that she could have used. He chose to deride it as cheap. That was an unfortunate remark to make because there is a serious crisis. The Minister is a decent and honourable man and, at the end of the day, faced with the scale of what has happened, he has the duty to consider his position here today. I beg to move for Papers.

1.42 pm
Lord Grantchester: My Lords, I am grateful to the noble Lord, Lord King, for introducing this debate today on the independent delivery agency, the Rural Payments Agency. At the outset, I declare my interest—as a Peer sitting on the government Benches—as a dairy farmer in Cheshire and as a director of Dairy Farmers of Britain, a co-operative of some 3,500 dairy farmers. I have also been the
 
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president of the Royal Association of British Dairy Farmers and chairman of the Cheshire branch of the CLA, as well as being a member of the NFU. However, my words today are spoken merely as a dairy farmer.

The Government and the Minister at the time, my noble friend Lord Whitty, are rightfully to be congratulated on the announcement on 12 February 2004 that, as part of widespread and continuing reform of the common agricultural policy, England would introduce the single payment scheme on the dynamic hybrid model. Farmers' payments would be based 90 per cent on historical claims and 10 per cent on the area farmed. Over time, this would change from historical predominance to payments per acre of holding. That was part of the process of changing payments to farmers from being production-based towards being based on environmental and other benefits. Payments cannot be justified on some ever-receding historical production level.

While this system is obviously more complex than the purely historical system introduced by Scotland and Wales, among others, that announcement was now more than two years ago. However, complexity has been compounded by further changes—for example, changes to the definition of who is eligible, what is eligible and what are the requirements with adjustments for hardship and national reserve cases, appeals, treatment of common land and set-aside. One might ask whether it was then wise to overlay IT, office and staff changes. There has not been a settled team working in a settled work environment.

Does that entirely excuse what other noble Lords will be describing today? I believe that most of the problems are consequential on the fact that the mapping process that is obviously required for the area element of the payment has been ineffective. I know that the noble Earl, Lord Erroll, will come up with some interesting theories later concerning that. From my farm, I have received differing maps about every two months or so, each one bearing little relation to the map previously sent to me and no relation to the corrected maps that I return each time. Why should that be, given that I had very adequate maps provided under the IACS system previously applicable?

It is extremely disappointing that this mapping process has not been completed prior to the payment window opening. As I understand it, of some 120,000 applicants, 55,000 have been validated for payment—although I understand that some of these are still incorrect—leaving 65,000 invalidated and with notification of entitlements unreliable. My noble friend cannot be held responsible for the operation of this delivery agency. However, he will be anxious that its performance will be reflected in people's assessment of the Government and their administration. How can my noble friend be told and repeat on 2 February that the bulk of payments would be completed by the end of March and then, some mere six weeks later, on 16 March, be told that only 7 per cent of claims have been paid with only two weeks to go?
 
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Can I tempt my noble friend with some helpful suggestions? It would help customer relations enormously if the agency's attention could change from overindulgent procedures to avoid disallowance and from focusing on the potential fine for failure to implement the EU regulation by June. Instead, let us see what can be done to implement partial payments. After all, 90 per cent of claims are on an historical basis. We should change the process to one in which staff operate as case officers for individual claimants rather than undertake the task-based approach. We should allow communications with claimants so that they can understand to some degree where they are, what they can tell their bank managers and what probable outcomes they must plan for. We should state on entitlement statements the calculations used to arrive at an award, so that claimants can follow and check the validity. We should announce that penalties for late filing will be waived so that errors are not needlessly exported into next year's system. Also, we should get the outsourced mapping contractors into the RPA offices to work as a team, eliminating any IT glitches.

No doubt the Minister is seeking deadlines on which he will expect answers to many problems. Will he say what disciplines he has called for to give this House confidence that everything is being done to expedite matters? The lack of funds into the rural economy is resulting in severe stress, anxiety and economic hardship. I understand that some £10 million as interest is being transferred from farmers to the banks. That money is urgently needed to help the transition that we all seek towards the revitalised sector.

The SPS system is not the only source of funds that the RPA processes into the rural economy. I also refer, as far as livestock producers are concerned, to the compensation payments consequential on disease, especially bovine TB. The House debated the Cattle Compensation (England) Order 2006 on Friday 10 February, although regrettably I was unable to be present.

I am aware that one must be extremely careful when venturing into areas that impact directly on one's own affairs outside this House. However, I can assure my noble friend that this system is in need of urgent improvement. Although it may be effective for a large part of the cattle population, 47 cattle categories are inadequate to do justice to the multitude of herds, ages and standards, especially breed improvement programmes undertaken to add independently assessed value to a farmer's herds. Moreover, these breed improvement programmes have as their main feature longevity and welfare implications. This tabular system is based on the auction system whereby a vendor has to rely on what a purchaser is prepared to pay. It entrenches the system whereby farmers must accept what is offered for their produce, be it cattle, milk, cheese, beef and so on. The tabular system fails to take into account private sales where the vendor can, to some extent, name his price. It also fails to recognise that many herd-improving cattle are not traded at all, as they are retained to produce and pass on genetic superiority to their offspring.
 
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Holstein UK, the registration body for pedigree black and white cattle, which also undertakes registration programmes for six dairy breeds and one beef breed, has been working with the National Audit Office to authenticate price banding according to independently set breed improvement programmes. Information is independently verified by the Centre for Dairy Information. The tabular form is blighting the value of herds, reducing fair comparisons and fair compensation to perhaps the top 20 per cent of cattle and their owners. Genus, a publicly quoted company, is to be congratulated on breeding a bull called Picton Shottle, which has been independently assessed as being internationally superior. His services are much in demand. God forbid, but is he to be valued on the same basis as a herd-bred pedigree bull? I suggest that the NFU should still advise all members to undertake an independent valuation of cattle caught by bovine TB and to attach it to their form, BT1(1/06), on the valuation of bovine animals. We might then be able to follow this up.

I mention that as a further example of resources that are not getting through to rural areas. I could also include diversification grants, set up to encourage new enterprises. My noble friend has direct experience of difficulties that can be encountered if the pace of change is too great. While I applaud the enthusiasm for change shown by my noble friend, perhaps I can tempt him to be aware that these are extremely testing times in the rural economy and that more time may be required to effect a lasting transformation.

1.51 pm

The Countess of Mar: My Lords, I, too, am grateful to the noble Lord, Lord King of Bridgwater, for introducing this very timely debate. I declare my interest as a partner in a small family farm. While we have applied for payments under the single payment scheme—SPS—we are not, thank goodness, in any way dependent on them.

I am deeply dismayed by the complacency displayed by the Minister and his right honourable friend Mrs Beckett to the circumstances of those farmers who are now in dire financial straits because of a series of management failures that were forecast several years ago. I have no doubt that other noble Lords will speak very movingly about the farmers' plight.

Why has this failure occurred? Why is it that nobody seems to have had the courage to tell Ministers that things are going disastrously wrong? As the noble Lord, Lord King, pointed out, even when Ministers were told by the EFRA Select Committee in another place, they insisted that the committee was wrong. Why is it that Ministers were so unaware of what was happening? Were they taking the glossy annual reports, with their glowing record of targets achieved, at their face value? Did they ever ask about targets that were not achieved? Why, when all the alarms were sounding from at least November 2005, and probably much earlier, did Ministers not heed them? Could it be that facing the facts became so repugnant that an ostrich-like mentality set in?
 
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It is not good enough to blame the previous administration, as the Minister did last Monday in his response to the noble Baroness, Lady Shephard of Northwold, when he said,

    "it was the noble Baroness's government who set up the introduction of arm's-length delivery agencies".—[Official Report, 27/3/06; col. 605.]

The blame falls fairly and squarely on the present Government and they must accept that responsibility. It was they who, as the noble Lord admitted, set up the RPA. It has been their policy that has driven the agency and it is they who appointed an apparently incompetent team to run it.

I do not believe I am alone—from what the noble Lord, Lord King, has said, I know I am not—in finding distasteful the Minister's response to the noble Baroness, Lady Byford, despite his kind words to her today. Last Monday, she suggested that the Minister might like to consider his own position, to which he said:

    "we take our responsibilities extremely seriously and I think her remarks were a little cheap".—[Official Report, 27/3/06; col. 604.]

If the RPA were a commercial business, there is no doubt that those responsible for this disaster, whether in the field or at arm's length, would have resigned of their own volition or would have been sacked.

The Minister's right honourable friend Mrs Beckett said in another place last Monday:

    "It has to some extent been asserted that the Government were warned from the beginning that the RPA could not handle the scheme. No, we were not: the RPA gave every assurance that it could indeed handle it. As for whether Ministers take responsibility, I am taking responsibility"—

the noble Lord, Lord King, has already said this—

    "which is why I removed the chief executive".—[Official Report, Commons, 27/3/06; col. 552.]

This is risible and indicates a total failure by the Secretary of State to question the organisation for which she claims responsibility.

Surely the previous chief executive, Mr Johnston McNeill, must have known what the problems were. Surely the RPA senior management team must have known what was happening. What was the RPA's audit committee, which is tasked with the duty to advise the chief executive,

    "in respect of the RPA's accounts, internal control systems and internal and external audit",

doing? As, according to his right honourable friend, the Minister has spent not just hours but days working on this over many, many months, why did he not know what was happening?

I am finding it difficult to understand just what the current position is of the former chief executive, Mr Johnston McNeill. The Minister said on Monday that he had been removed from office and that, as far as the Minister knew, he was still in receipt of his salary. I note from the annual report for the year 2004–05, the latest published on the RPA website, that one individual was in receipt of an annual salary of between £225,000 and £230,000. Will the Minister please confirm that this is the salary of the chief executive, and will he please tell the House what that
 
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salary is today? Is the noble Lord able to confirm that interviews are currently being conducted for his replacement? If they are, how is it that no decision has been taken on Mr McNeill's future duties, as the noble Lord told the House on Monday?

What independent assessment is being made of the competence of the chief executive and other members of the Ownership Board and, if they are found to have misled Ministers as to the true state of affairs at the RPA, what are the sanctions? The noble Lord has said that the former or suspended—we do not know—chief executive is entitled to some rights. Will he tell the House what those rights are? How much are they going to cost the taxpayer?

The next question is: how can we retrieve the situation? The noble Lord, Lord Grantchester, has made some very useful suggestions. Although many criticisms have been levelled at staff who must field the telephone calls of justifiably irate farmers, I have always found them to be courteous and as helpful as they can be in the circumstances. It is not their fault that they are inadequately trained and that they may not understand exactly what they are supposed to be doing. Most of them will probably have no experience of agricultural, let alone rural, life. It is my understanding that staff have been moved around according to the exigencies of the service and that a lot of temporary staff have had to be employed. This must mean that they are given little opportunity to be trained, let alone to settle into a task—another point made by the noble Lord, Lord Grantchester. They are the first point of contact for customers of the agency. Anyone who has ever had anything to do with a business that involves dealing directly with customers knows exactly how important it is to have informed and efficient front-line staff.

It is also my understanding that the computer system is far too ambitious for the job that it was designed to carry out. It strikes me that too much has been expected of the whole organisation since its inception. I wonder whether noble Lords realise that the Rural Payments Agency operates 97 different CAP schemes in addition to the single payment scheme. It will almost take a miracle for the vision, details of which are to be found in the RPA strategy for 2004-09, to materialise.

I believe that much of the problem lies with too much policy and not enough management and practicality. It may be laudable that the RPA wants, as it says in its strategy,

    "To be a customer focused paying agency, respected as the European leader in efficient and effective administration and as an authoritative source of advice to policy makers".

What a dream. It seems unlikely that its current structure will allow that to happen. Instead of allowing the RPA to grow naturally, the policy makers seem to have asked it to take on more and more elements when an inadequate management could not say, "Enough is enough". They have failed to ensure that staff are trained and ready to take on the extra work and that they have the tools with which to do it. This seems to be a case where the economies of centralisation are
 
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outweighed by the inefficiencies created by the complexity of the tasks allocated to the organisation. Will the Minister say whether any lessons have been learnt from this experience? He said that a new chief executive or acting chief executive had been parachuted in—not his words, but that was the inference—and I wonder whether he considers the next person on the ladder of command to be a new person, when he has already proved his inadequacy on the board, and whether he is a suitable replacement.

1.59 pm
Lord Desai: My Lords, I have no agricultural interest to declare. I am about the only speaker this afternoon with such a problem. My first job was in agricultural economics in America, when I was involved in looking at payments for dairy farmers. That convinced me that every payment system was a nightmare.

We are all grateful to the noble Lord, Lord King, for introducing the debate. As he rightly reminded us, we have had some serious disasters on the agricultural front in the past 10 or so years. While I have been here—15 years—we have had BSE, which was a major disaster, and then we had foot and mouth disease. The feeling I get, having read the debates and having talked to people, is that, as serious as this situation is, it is not on the same scale as either foot and mouth or the BSE crisis. I am not trying to be complacent, but I am putting down a marker.

In the debate in another place yesterday the honourable Member for Vale of York said that normally farmers carry a debt of around £50 million per month. In the foot and mouth case, it went up to £80 million. She gave an estimate that due to this delayed payment £8 million had been added to the debt burden of farmers. Those are her numbers; I did not make them up. We are talking about, although I do not want to minimise the problem, a 16 per cent extra debt burden on the farmers. This may be unrealistic. As I said, I am not a farmer. I am quoting opposition numbers, rather than government numbers. I will quote government numbers in a minute.

Again without trying to underestimate or underplay the crisis, the Minister said yesterday in another place that 23 per cent of payments had been made by close of play yesterday. That is not anywhere near 96 per cent, which was the target, but 23 per cent of payments had been made by 29 March. My guess, although I am not a Minister, is that it should not be beyond human ingenuity to pay all the money by the end of June, which was the close of the window.

The noble Countess, Lady Mar, asked what lessons can be learnt. Clearly, if you set up an arm's-length agency—regardless of who set it up—Ministers cannot interfere on a day-to-day basis. If somebody comes to them 15 days before the deadline saying that the whole thing has gone belly up, you sack the person concerned and you start all over again. It is bad, but I do not know to what extent you can simultaneously have a devolved agency to do the work and hold the Minister responsible on a day-to-day basis for what that agency
 
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does. People who have been Ministers can probably tell me more about honourable resignations in the past, mentioned by the noble Lord, Lord King. He gave the example of the noble Lord, Lord Carrington, who we all admired when he resigned his position as Foreign Secretary, but I genuinely do not recall how many people resigned in the BSE crisis. I do not think that resignations would help a single farmer get even one extra pound tomorrow. Resignations are, however, a political thing.

Our first lesson is that the whole relationship between devolved agencies and ministries has to be rethought. Second, again and again we have computer systems that do not work. This morning the Financial Times carries the news that Accenture is going to pay £294 million to the Department of Health for a computer software glitch it was responsible for—that is about half a billion dollars. Mistakes like that happen with companies like Accenture. Fujitsu also has noted that it is going to lose money on the software system that it was providing; it has sold its software subsidiary. Clearly the computer system has gone wrong. Again, we have to learn how to do this properly. If there is a reform of CAP going on and the payment basis is changed, it behoves the Government and the agency to start changing the system ever so gently from being based 100 per cent on the new method to a mixed system.

I gather that, with the new system being based on land area, maps are imperfect. Maps were not needed before, because the payment system was not based on maps. If you suddenly want accurate mapping of all of England, it should have been done on time, but it turns out that only the Reading office of the agency can do accurate mapping. Again, the honourable Member for Vale of York asked yesterday what an office in Reading would know about north Yorkshire. I presume that it can read the maps. It does not have to know the problems of north Yorkshire; it only has to know something about the mapping.

The chief executive has been sacked and the new executive put in operation. I have to compliment the new person. He is not giving a hopeful and totally unrealistic estimate of how soon payments can be made, unlike his predecessor. It is a bad situation and people are suffering—I do not deny that. It is difficult, if not impossible, for the Government to pay interest on delayed payments. We have had the discussion about the Government meeting their payment obligations on time over many years, but we have to remember that the resignation tomorrow of every Minister in Defra would not solve any farmer's problems. Rather than calling for resignations, we have to learn the lessons, and next time that happens, we will be much better prepared.

I will make one remark more as an economist than as a farmer. It is very surprising that with an industry historically based on uncertainty in payment receipts and uncertainty of weather and so on, banks are still not able to cope. Banks should have already invented instruments of credit that would take on board such uncertainties. That is a market failure. I am very surprised. After all, people have been doing this for
 
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ages. Why have the banks not up till now invented an efficient credit instrument that will cushion farmers? Why are there no good insurance schemes? If there are, I would like to know. This is a classic case for insurance—again, I speak as an economist. One can see clearly the uncertainties of the profession. There should be in place an insurance scheme. This is again an example of market failure.

In the longer run we ought to worry more about those issues, so that the recurrence of such a problem will have a lesser impact on people who are clearly suffering, than about who is in office or resigning Ministers.

2.09 pm

The Earl of Erroll: Is it me now, my Lords?

Baroness Byford: My Lords, the noble Baroness, Lady Farrington, announced earlier that there had been a mistake. The noble Baroness, Lady Shephard, was due to speak in the previous debate—as she did—but is not here to speak in this one, so it is now the noble Earl, Lord Erroll.

The Earl of Erroll: My Lords, I am sorry. I arrived just after the debate had started so I missed that announcement.

I thank the noble Lord, Lord King, for providing the opportunity to debate this subject. I declare an interest up-front in that I am married to a farmer. This situation, plus all the changes associated with it, has been causing us a lot of grief over the past couple of years and has wrecked a year of our life. We have had to absorb an amount of paperwork on top of all the other legislation that has come out relating to health and safety, cross-compliance issues and so on, so it is not just a simple matter of trying to get one little thing right.

I feel slightly sorry for the Minister because I think that he has been badly misled by the agency. I have always been very concerned about the concept of agencies being hived off—almost as part of the Civil Service but not quite—so that we could never get to grips with them in Parliament. They could always hide behind their remit and were not directly responsible. That allowed a loss of control and a loss of information to occur. I am concerned that we are setting up Natural England in the same way. I can see that we are not learning from our mistakes, and I think that hiving off responsibility to large agencies is very dangerous.

My background is in IT and software development. I wrote a lot of farming software years ago. I then married a farmer, and I have also learnt how to do digital mapping as a result of the move to the mapping system. My wife will not sign off maps unless she knows that they are 100 per cent accurate. The justification for relating what has happened to us is simply that the same thing has happened to 65,000 others. Those people cannot get their money either, and I hope that some lessons can be learnt.
 
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I say to the noble Lord, Lord Desai, that the situation is very serious. Anecdotally, we have heard of three suicides locally. The trouble is that the problem is exacerbated by the paperwork and everything surrounding it. People did not go into farming to farm paperwork. If farmers are already at their financial limits, they cannot extend their overdrafts. Therefore, although the debt burden overall may not seem terribly serious, individual farmers are at their limit. Speaking personally, we are able to weather the problem at the moment but I shall give noble Lords an idea of the situation, given that the farming subsidy structure has been relied on for many years and cannot be cut off overnight.

The last payment to my wife, who is an arable farmer, was in November 2004. Normally she would have been paid in November 2005 and that would have paid for seeds, fertilisers and sprays so that she could continue farming over the next year and pay off some of the debt while the harvest was being sold from the previous year. Currently, she has not received a payment for 16 months, as opposed to a year, and that has to be covered somehow. She has to buy the materials to continue farming for the next year and that is very difficult—her money has to come from somewhere. Without a happy bank manager, basically you have to fold. For arable farmers, the crunch point is now. If they cannot get further loans, they will have to go out of farming—there is no other option. That is why the situation is so serious.

I shall try to describe the root of the problem. The digitisation exercise was started several years ago but, at that point, we had an arable area payment system which depended on certain definitions of land and so on. As the digitisation process went forward, it was not properly explained that there would be new rules on what qualified for future payments. The single payment system and the entry-level scheme suddenly came in but there was no real information on them until much later. In September 2004, we arrived at the point where the maps were based on an old idea of what should be submitted to Defra but a whole lot of new stuff then qualified and had to be included, so suddenly all the maps needed to be revised. I do not think that anyone had realised that until it was far too late.

We submitted the necessary corrections and registered for "fast track" because we realised that the entry-level scheme money would also be vital to the profitability of the farm. To do that, we also needed to get on with our woodland areas and so on. However, the maps did not appear and we could not apply for the entry-level scheme in August. We started to panic and telephoned the agency. Then, around October, we were told, "We're terribly sorry. It's all going to slow down again as there has been a change of policy". I think that that is probably when university students stopped being directly employed to do the work and the department switched to an outsource process. Perhaps that had been planned earlier—I do not know—but there was a huge slowing-down in the process.
 
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Months and months after submitting our application, just before Christmas on 23 December, we received maps covering about 80 per cent of the farm estate with a requirement, set out in an abrupt letter, to return them within seven days—not working days but seven days over Christmas—if we wanted to make any changes.

In the meantime, in trying to enter the entry-level scheme we also established from the Rural Development Service that a lot of the land had been lost and was no longer connected, so nothing tallied. The maps that we received in December were not too bad. When I looked at the overall hectarage of the 80 per cent of the land covered by the maps, it came within 0.04 hectares of what I thought it should be according to our digital maps. Therefore, we concurred because at that stage we were both working from Ordnance Survey landline-based data. We only needed to get the remaining 20 per cent registered and we could then go ahead with the entry-level scheme.

We had a few problems. We got a note from the Countryside Stewardship Scheme, which was clearly working on out-of-date maps with different areas and so on. We also received material from the customer services centre in Newcastle, which showed that the staff there were working from maps with changes on them which went through from 23 December, and from the old 2004 pre-change maps. There was obviously a muddle.

In March, we were worried as we started to receive maps with completely new areas on them. I realised that I was probably looking at a new mapping system based on the Ordnance Survey master-map series, and that maps had been changed in the middle of the operation. We had problems because people had made arbitrary decisions about where the field boundary lay and that did not concur with the old information. That was particularly the case with the old Countryside Stewardship Scheme agreements, where a boundary might date back well before certain other things had changed in the fields. Therefore, if you did not go back to the old boundaries, you would have to rewrite legal agreements as well. We were left in confusion and with problems.

Yesterday, we received some maps and we are now down to only two-thirds of the farm estate being mapped. We seem to have lost an awful lot, so I suppose that I have to go through the whole lot and send them back again. The problem with the mapping, and the reason that it is so important, is that it triggers everything else. The maps are the key to everything: nothing can happen until the maps are agreed. Out of them come the tables from the customer services centre and therefore the entitlement statements. The Countryside Stewardship Scheme, the entry-level scheme, the farm woodland grant scheme and the Forestry Commission woodland grant schemes are triggered by the maps. The sad thing is that, according to the unverified statements sent out not very long ago from Newcastle, we were within four-tenths of a per cent of agreeing the total area for the single payment system claim, but we will not receive anything.
 
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Money is the key to this. I think that the Minister is responsible for sustainable farming, but you cannot sustain farming without money. An online poll in January showed that 62 per cent of farmers were already in financial trouble. I do not know whose money it is. Who is accruing interest on the billions of pounds that are sitting there? I do not know whether the amount is £1.6 billion or £3 billion—I read different articles. Presumably the Government are getting the interest on that money, so why can they not pay it out to keep farmers, and perhaps the bank managers, a little happier?

I have a question. My wife told me that after 30 June this year, the EU will cease to have to pay this money and the Government will have to pay it from UK funds instead. Is that true? There are further problems. What happens if two payments arrive next year? What about the tax issues? Will we be allowed to refer one tax liability back to this year? We have an enormous tax hit. As you have to pay your tax up-front for the following year, that will bankrupt a few people too.

By 16 May we have to fill in the next SPS forms, but which areas do we put on them? If we show the same areas that we put on the previous form, will we receive penalties if penalties had to be paid on that one? Will we get penalties over two years just because we are sticking to our guns and, inadvertently, did not realise that there was a mistake? We hear that there are heavy penalties with regard to cross-compliance. An eastern region farmer has been penalised 15 per cent for going over the top with some fertiliser on an FP209 recommendation. People are heavily active on the penalty side. It is sad that there is no Smithfield this year. I am sorry—I am jumping all over the place.

In conclusion, what is the way forward? I am not sure that promoting the second in command, who was probably responsible for instituting these procedures, into a position of control is the answer. For those who have digitised their farms accurately, the digital maps could be accepted. We need to speak one-on-one with the people doing the mapping to sort out the boundaries. We need to know why they are moving the boundaries, so that we can agree them.

We could make historic payments. Ninety per cent of the single farm payment is supposed to be based on historic payments. We know what those are, from last year. It could, therefore, be 90 per cent, as long as we know the base years being used for those of us who have rebased. We do not even know whether that has been accepted, or if the data have been lost. There are a lot of complications. I am happy to talk to whoever about how they can be sorted out, as I have quite a bit of experience.

2.20 pm
Lord Dixon-Smith: My Lords, I, too, thank the noble Lord, Lord King of Bridgwater, whose enormous experience of government made him a very appropriate person to open this debate.

When dealing with the government Statement on Tuesday, the Minister appeared somewhat surprised that the opinion of my agricultural acquaintances—
 
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I declare my interest for the second time today as a farmer—was rather less complimentary than he appeared to think that it ought to be. I hold up a paper to demonstrate why that is so. The Minister recognises it instantly as the March version of Farming Link from his Department. It came out with a survey requesting information on the quality of the service that it provided a fortnight after it was announced that the payment system was broken down, with the headline:

    "Full payments on track for farmers".

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Bach): My Lords, it did not come out a fortnight after 14 March. It was being distributed both before and after 14 March, and we are putting out a correction to the headline, of course. I should be grateful if the noble Lord would just keep to the facts.

Lord Dixon-Smith: My Lords, I am grateful to the Minister, but my copy arrived after the announcement was made. That may be due to vagaries that are beyond his control. This is part of the problem: so much is beyond the Minister's control.

During the debate, the Minister sought to make some capital from the fact that independent service agencies were a Conservative Party invention. That was a perfectly reasonable thing for him to do. In discussions on this subject, the Minister has said from time to time that they are independent agencies, so if they give assurances that all is well, that should presumably be instantly accepted by Ministers. I would not have commented on their independence had I not found the remarks made by the Minister's honourable friend Mr Bradshaw in a debate in Westminster Hall yesterday. He states:

    "On 20 February payments began to flow as had been forecast. However, on Friday 10 March, after fellow Ministers had requested a qualified update of actual payments being made, the RPA still advised that 51 per cent.—one could argue that that represented the bulk—would be made by 3 April and that 96 per cent. would be made by the end of June. Just four days after that, on Tuesday 14 March, at a meeting with the Secretary of State, the RPA chief executive reported for the first time that the forecast of the bulk of payments being made by the end of March would not be met. He reaffirmed that 96 per cent. of payments would be made by the end of June. The next day, on the advice of the DEFRA permanent secretary, Mr. McNeill was removed from his post".—[Official Report, Commons, 29/3/06; col. 303WH.]

What is the independence of an agency if the head of the organisation can be instantly removed? But that is not what I want to talk about today. I merely make the point.

It is fortunate that I am following the noble Earl, Lord Erroll, because he was discussing problems of mapping, which is probably at the heart of this whole disastrous affair. I am sure that no one wants to be in this Chamber today having this debate; we would all prefer that the need had not arisen. I refer to the experience of one estate owner, and the noble Earl says that the problem goes back a long way.

The estate owner's experience began in September 2003. Version one of the maps ran to some 32 pages, of which only three contained no
 
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errors. The necessary corrections to the remaining 29 pages were duly made and returned. Version two of the maps was sent in September 2004. He was told that it was the final version and that any adjustments would have to be made on the IACS 22 forms. Version three of the maps arrived on 16 March 2005, and version four on 4 April 2005. By the time he sent his SP5a form to the RPA on 10 May, the areas were still not agreed, and version five of the maps was received in May 2005.

To date, there have been seven versions of the maps, none of which has been without error. By the time version six arrived, the number of errors had been reduced to six. One might think that that was progress. However, on 26 October 2005, he received version seven. Although the six errors had been corrected—hooray—something in the region of 50 new errors had crept into that version, which varied from the inclusion of tracks that appear to have been made by pigs historically crossing fields, to the disappearance of land amounting to almost 300 hectares.

Following the receipt of version seven, a visit was made to the RPA offices in Reading in an endeavour to sort out the problem, and a new version of the maps was promised within two weeks. Having heard nothing by December, the landowner telephoned the office, and a promise was made that the maps would be produced by 19 January 2006. There has been no explanation why the maps for this estate cannot be printed, save that the RPA staff said on the telephone that the computer systems were unable to cope. On 2 March this year, the estate owner received the entitlement statement dated 21 February, stating that no payment could be made by the RPA until the claim was fully validated. In turn, the claim could not be fully validated until the digital mapping queries had been resolved.

Over that period, the problems had gone from bad to worse rather than from bad to better. What will happen if the person's map cannot be validated? There is virtual agreement between the landowner and the RPA, but it cannot be validated for technical reasons by the date on which the payment has to be made, lest the Government lose their subscription from the European Commission for failure to make those payments. In his opening remarks, the noble Lord, Lord King, sought assurances about time limits. The indications are that, because of the mapping problems, that question cannot be resolved, or at least the Minister will find it difficult to resolve the time issue, unless he knows something that we do not know and something has happened since this lot came out.

In case it might be thought that that is the only example, which encapsulates almost every error that could go wrong, I have another one concerning someone who applied for the entry level scheme on the environmental side in May 2005. When he got his maps back, 40 hectares of land were missing. On 27 November, it was stated that his mapping problems were nearly resolved but involved "unusual"
 
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printing, so he was told that it would take a while to complete. He phoned on 10 March to discover that the maps had been lost.

There is a real technical problem here. The real difficulty that I foresee is that these technical problems may not be capable of solution before the date by which the payments are required to have been made under European law and practice. Heaven help the agricultural industry with having to deal with that as individuals, but the serious question for the Minister is: what happens if that finally proves to be the situation?

2.30 pm

The Earl of Arran: My Lords, I, too, thank my noble friend Lord King for introducing this debate this afternoon. His timing is profoundly poignant. First, I declare an interest. My wife is a farmer—and a very much better farmer she is than I would ever be. Where I come from, which is on the edge of Exmoor, the sad fact is that, until the supermarkets are prepared to pay a fair price for beef, lamb and milk, the single payment will make the difference between profit and loss, and survival and extinction, and it will be what keeps the rural world going round. The disgraceful fiasco over the single payment is not only putting farmers' businesses at risk; in the north of Devon alone, it is also damaging hundreds of other small businesses that supply feed, fertiliser, machinery and 101 other goods or services to the farming community. They have not been paid because, without the single payment, farmers do not have the means to pay them.

That situation is nothing short of scandalous. The worst of it is that it was entirely predictable. The Government chose the most complicated model of single payments that it was possible to devise. They then asked the staff of the Rural Payments Agency to implement it at the same time as threatening large numbers of them with redundancy. Finally, they relied on assurances from people at the top of the RPA, whose record has been shown to be rather less successful at delivering projects on time than the constructors of the Wembley Stadium and rather less forthcoming in their communications than the old Soviet politburo. This is probably the most incompetent piece of government administration ever known in a government department. It certainly rivals that of foot-and-mouth disease. It is utterly deplorable.

Humility still counts for an awful lot. Perhaps the word "regret" as used by the Minister could be changed to the simple words: "We are very sorry. We got it wrong". However, I suspect that, as happens all too often, the Government could not give a toss for the plight of the rural economy. One day, they will deeply regret that. In the mean time, farmers the length and breadth of the country are furious and fuming.

The Minister may blame his advisers and his civil servants all he likes, but, in the final analysis, this mess is of the Government's own making. Having cleared that up—as we hope he will very soon—as an
 
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honourable man, he should, as my noble friend Lord King said, seriously consider his future in that department.

2.34 pm
Lord Plumb: My Lords, first, I regret that I was not here on Monday to hear the repeat of the Statement made by the Secretary of State in the other House. We have had a few days to reflect on that Statement and to express our concern about the further delay that we now anticipate. I am very pleased to be able to support my noble friend Lord King for introducing this debate about the RPA and the single payment scheme. My noble friend is a man of great political and ministerial experience. He speaks with some feeling, not just about the affairs of the countryside, but as a great politician.

I declare an interest as a farmer and a hopeful—still hopeful—recipient of the payment under the agreed cross-compliance rules. I must tell the Minister that this is the biggest shambles and piece of incompetence that I have witnessed during my life as a farmer and my time involved in agricultural policy during the past 60 years. I could cite problems from the past, but never have I experienced the situation that we face at present. It has been clear for some time that the scheme created—I repeat, created—by the policy makers in Defra from what I believe was a very simple CAP reform when it was first issued was far too radical and complicated. It was too ambitious to expect the SPS to be implemented in 2005. The sad lack of pragmatism and efficiency has been obvious in the way in which the RPA has chosen to administer the scheme. As with many Defra projects, the IT, mapping, and so on and so forth, on which the scheme is built has turned out to be a complete shambles, in my opinion.

I confess that I have some sympathy with some of the people who have been working during the past two years in the RPA, who themselves were totally confused and unable to cope with the very complicated procedures. I have some sympathy, too, with the Minister, who takes on a mantle that appears, at present, to be very hot indeed.

I tabled a Written Question about a year ago asking what training people had to help by telephone those who wanted information on the operation of the scheme. I was told in a Written Answer that there was full, intensive six-week training and that there would be further training on dealing with telephone calls, perhaps from irate farmers. Therefore, when my son had a query, I asked him to phone the helpline. After three hours, and a lot of words, he asked: "What training do you have for this job?" The girl at the other end said: "We do not have any training. We are just given the book and told to get on with it". I only cite what my son said, who was trying to get an answer to a particular problem. Incidentally, he phoned the NFU helpline and told me that he had a very good and responsible reply.

So when we hear of the numerous examples of correspondence that is flowing—very slowly—between the RPA and farmers, as the RPA tries to
 
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account for, say, 0.01 of a hectare, we must ask: where has the common sense gone? The Rural Land Register, which acts as a linchpin for the whole of the SPS, has been another farce in its failings and another cause of frustration to many farmers up and down the land.

Why it is so difficult to map land with modern technology, of which the noble Earl, Lord Erroll, rightly reminded us? It is available and I can offer it to any local farmer who is looking for it. Why have the processes being slowed down? That is, perhaps, due to an overzealous desire for unreasonable accuracy. How can so many errors be made? Fields go missing on maps, as my noble friend Lord Dixon-Smith just told us. Whole maps go missing. There are repeated requests for land information that has already been given. I could continue by talking about various cases for the rest of the day. If the Minister doubts my word, I invite him to join me on Sunday morning and meet my neighbours—he does not live too far away—and he would hear about the rest. The list of errors is endless.

It is estimated that the appalling delay in payments under the SPS has already cost farmers something like £32 million in England. Farmers are therefore justified in feeling betrayed by Defra, and I think they have been a lot more tolerant about a lot of this form-filling, map-checking and tree-counting than they might otherwise have been. They willingly entered into an agreement with the Government to manage the countryside to the best of their ability in a sustainable manner, in return for which they expected and believed they would get a fair price for the work to be done in an environmentally friendly way. They have begun to comply with their part of the bargain, but Defra has failed miserably.

Supply traders are suffering as much as farmers. As we have just heard from my noble friend Lord Arran, the supply trade is, if anything, being penalised even more. Farmers will not—indeed, cannot—buy or pay for the fertilisers, seed and replacement equipment they need. The only suppliers that might be perceived to benefit are the bankers, as farmers go further into debt. I note that the Minister is likely to see the bankers shortly. That is fine, if we can have lower cost credit. The bankers will lend the farmers money, but the debts are still accruing and in an already shrinking business. There seems to be little concern for food security in this country.

I am a born optimist, and yesterday I heard a lot of young farmers speaking at a conference with a lot of enthusiasm. But many of them are going abroad. I could name 90 young farmers who have recently gone to France to buy land because they feel that there are opportunities to start there. That is sad. Eastern Europe is making offers, and so are countries elsewhere. The key problem is the definition of the policy. We now know that Scotland and Wales have benefited very clearly from applying the historically based system, which seems to be working better for them. We would not be in this mess had we had a timetable for planning. As my noble friend Lord Dixon-Smith said, we would not be here—we do not want to be here—discussing this issue as we are having to do at the moment.
 
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I know of no other country in Europe where payments have been delayed as they are here. One of the young farmers told me yesterday that, for 130,000 farmers in Ireland, 90 per cent of the payment was made on 1 December. I therefore wonder whether the Minister agrees that we need a comprehensive review of Defra's entire role for the good of the whole economy, not simply for the good of Defra itself. Surely such a review must involve the whole of industry and the environment agencies. That, of course, should be led by a totally independent chairman. Even when the 2005 SPS farce is over, the farming industry must look forward to the same RPA being responsible for inspecting and enforcing much of the cross-compliance regime. Given current experience, the pragmatic and practical approach needed for inspection is sadly still missing. If the taxpayer, Defra and the farmers are to get the most from a single payment scheme, the scheme must be simplified, and the subsidies on the end product must subsequently be removed or replaced.

2.44 pm

Lord Willoughby de Broke: My Lords, I, too, am most grateful to noble Lord, Lord King of Bridgwater, for introducing this debate at this key moment. I declare an interest as one of the 80 or 90 per cent of farmers who have yet to receive their single farm payments or their digital maps. I was very interested to hear about the difficulties experienced by the noble Lord, Lord Grantchester, and the noble Earl, Lord Erroll, in getting their farm holdings registered. I have had exactly the same experience, as has the noble Lord, Lord Dixon-Smith, so I can assume that this is a common thread running through the whole problem.

Few of us are as surprised as Defra Ministers appear to be by the mess in which we find ourselves. It looked like an administrative nightmare from day one. The sheer volume and complexity of paperwork was always likely to end in tears. A new system, new rules, new mapping requirements, inadequate IT systems, new guidance and, as my noble friend Lord Plumb said, inadequate staff training were always a recipe for disaster, and so it has proved. It is not as though the Ministers were not warned by the NFU and industry that this would happen and that they were making a rod for their own backs by trying to put this new system in place without any sort of trial run. I do not know why the Government chose to do this instead of keeping the old IACS for a year, which I gather they are entitled to do under the CAP regulations. That system worked perfectly well, and I do not know why they did not keep it while they bedded down the IT systems, trained the staff and got the digital maps organised ready for a launch this year rather than in 2005. That would have been the sensible and practical thing to do.

I am sorry to say that the Government ignored the warnings they were given. The Minister might be regretting the dismissive remarks he made in his Answer to a Starred Question asked by my noble
 
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friend Lady Byford on 24 January in this Chamber, when he rubbished the conclusions of the report of the House of Commons EFRA Select Committee. But the EFRA committee is absolutely right, and the Minister is absolutely wrong. Its criticisms have been proved right time and time again. I hope that the Minister will at least have the grace to apologise to Members of the House for misleading them on that occasion about the date of the final payments. I also hope he will come up with something a little more positive and will reassure farmers about the future, which is what we are looking for, rather than making too many recriminations. I am sorry that the Minister thinks that is a joke. It is what I feel; we should try to be positive about this.

The most pressing reassurance we need, which nearly every speaker has mentioned so far, is whether it is possible to give some firm commitment to the date of payments. That is what farmers throughout the country are looking for. Will those payments be made within the June window, and what are the consequences if they are not? The consequences for farmers are of course serious, but what about the consequences for Government if they are not made within the allowed EU CAP process? As other noble Lords have asked—I know that this has been asked in the House of Commons—will the Government take responsibility for overdraft interest incurred by farmers beyond the end of March? I quite accept that the payment window was to the end of March; it moved from February to March. But farmers were expecting to be able to pay their bills by the end of March; indeed, they must have told their banks and their suppliers this. They were not expecting to incur further large overdraft interest costs. The Government repeatedly told farmers that they would receive their payments by the end of March. It is entirely the fault of Defra, not the farmers, and I do not see why farmers should be expected to carry the can for Defra's incompetence and pay penalty interest charges. Will the Minister say something about that in his winding-up remarks?

What comfort can the Minister give to farmers whose new single-farm payment application forms will come thumping through the letterbox any moment now? As the noble Earl, Lord Erroll, pointed out, it will be extremely difficult—impossible, in fact—for them to fill those in accurately because we do not have accurate digital maps.

It is true—again, the noble Earl, Lord Erroll, is absolutely right—that the digital maps will trigger everything. At the moment, the current forms which are coming through have to be fully and accurately completed by 15 May. Is that still Defra's deadline for the completion of these forms? If so, will it consider moving the deadline? How will it advise farmers to fill in the new forms when they do not have accurate maps on which to base their areas? The question of mapping is central to the whole problem. I should like to know whether the date can be moved and how farmers are to fill in their new forms. It may be beyond the possibility or the remit of the Government to move the date. It may be that they are acting as an agency for the agricultural directorate in Brussels and that Defra is
 
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simply a creature of the Brussels directorate. We would be much better off running our own agriculture, as this shambles has shown.

The noble Lord, Lord Plumb, said that we need a review, and I believe that the Secretary of State, Mrs Beckett, has said that she would be carrying out a long-term review of the Rural Payments Agency. Of course such a review is badly needed, but asking Mrs Beckett to carry out a review of the RPA is rather like asking King Herod to carry out a review of the future of male babies. It does not make sense at all. What we need now is not a long-term review but short-term action and reassurance. I hope we will get that when the Minister comes to wind up the debate.

2.51 pm
Lord Livsey of Talgarth: My Lords, I am grateful to the noble Lord, Lord King of Bridgwater, for introducing the debate, which is of absolutely crucial importance. I declare an interest as a life-long agriculturalist and as an applied agricultural economist. Indeed, I am not happy to be here today because this evening I am supposed to be with Brechnock Young Farmers, of whom I am the immediate past president. I am designing with them a competition whereby they initiate and innovate new farm enterprises—for which they will have to keep records and produce cash flows—to win the competition under the expertise of two judges. I shall be giving a cup for that. I cannot get to the meeting because it is too far, but I can assure the Minister that I shall be there before the end.

This is a massive crisis for English agriculture. As we have heard, £2.9 billion is owed in single farm payments and yet, as far as I can see, the payments are flowing only in hundreds of millions a week at the present time, and only £1.1 billion has been paid to date. I am sure the Minister will correct me if my figures are wrong. I know what the situation is in Wales but I am on a learning curve as regards England. I apologise for not being here on Monday when a Statement was made. This was because the chairman of the Select Committee on agriculture and the environment wanted me make a visit for a nuclear investigation study.

We understand that 96 per cent of the payments may be made by 9 June, when the original target was the end of March. As we have heard in the debate, the legally binding EU deadline is 30 June. From previous Questions that have been tabled and discussed with the Minister, as far as I can establish there are about 120,000 applicants for single farm payments in England. This really is a huge crisis, and we have heard about the sacking of the chief executive of the RPA.

In my view, from my long experience, I believe that when you put IT into agricultural systems, unless you have exact parameters and people who have genuine knowledge of operating the system, it usually ends up with a shambles. The Government have introduced a very complicated system, which appears to be an IT nightmare. As we know, mapping is a major problem, and has been for some considerable time. It took some
 
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while to sort out the IACS mapping at the time it was introduced. The impact of all of this is a cash flow crisis for the farming industry as a whole, and an enormous one for individual farming businesses and farming families.

In Wales, we had a payments crisis of much smaller proportions about five years ago. I can tell the Minister that civil servants worked weekends, cheques were signed and part payments made. Some of the deadlines were indeed missed, but at least the payments were sent out and the farming families received their money. The Welsh Assembly after that decided to take in-house responsibility for agriculture. Many of the responsibilities have been transferred to Wales from Defra, and we welcome that.

But this situation has consequences in practical terms for individual farming businesses. This is springtime and, as we know, in cash flow terms, farmers have had to buy their seed, their fertiliser and many other commodities on which they will not see a return—certainly in arable farming—until the autumn. Indeed, that is a normal consequence. In livestock systems, it often takes 12 months for the money to turn over. These are facts within agriculture which no one can deny, given the biological sequences involved.

The dynamic hybrid approach has been applied here when a simpler approach could have been instituted with a one-year delay, and, in my view, it is an enormous error of judgment that Defra did not take advantage of that. This is not being wise after the event. It must be terrible for Ministers to be lectured by people saying, "I told you so". We are not saying that in this debate. But certainly at the time when both Wales and Scotland chose the historical basis, we took into consideration that these were mainly livestock countries and 80 per cent less-favoured areas, and we had been right all along in choosing that system. In spite of criticisms which have come across this Chamber from time to time, we took the right decisions. Those of us engaged in agriculture and agricultural policy were horrified at the system that has been put in place in England.

The problems have been graphically outlined in the debate. The result, of course, will be bankruptcies—there have been bankruptcies already—of farmers, suppliers and rural businesses as a whole. We must solve the problems as soon as we possibly can. Certainly if I was in the Minister's position, I would be trying to do something about making 50 per cent entitlement payments immediately to all who are qualified to receive them. This surely should be easy with a 90 per cent historical element in the payment and only 120,000 farmers involved at the other end of the payment. It should not be a big problem in my book.

Single payments have, of course, been made in the rest of Europe. Let me give the Minister some figures. Certainly in Scotland and Wales, it is over 90 per cent; in Ireland it is 98 per cent, so it has improved on the figure given to us by the noble Lord, Lord Plumb; Austria, 100 per cent; Belgium, 100 per cent; Sweden,
 
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with a hybrid system, 90 per cent; Germany, with another hybrid system, 80 per cent; and Denmark, 98 per cent. Certainly we have not seen any riots from the farmers in France in recent days so things must be all right there, too.

Who is to blame? Clearly, there is Accenture, the new computer company, and of course the RPA. Over Defra we should perhaps put a question mark. Is it actually Defra's fault when a stand-alone agency has been in charge? My colleague Roger Williams, who succeeded me in Brecon and Radnorshire, said yesterday in the other place that

    "The new firm was given the challenge of dealing with a new scheme. During our inquiry—

that is, the agriculture Select Committee inquiry into the RPA—

    "the hon. Member for North-West Leicestershire . . . and I were told that DEFRA changed the details of the scheme 60 times between initiating the contract and finalising the scheme. At its heart, the problem lies with DEFRA as well as . . . Accenture and the RPA.".—[Official Report, Commons, 28/3/06; col. 298WH.]

I am sure that is quite right.

My noble friend Lady Miller asked what part the RPA ownership board has played over the past six months, chaired by a Defra civil servant. What was the executive review group doing concerning the RPA during the autumn, and what advice did it give the Minister? We are stuck with interest charges now—£25 million to date, so far as I can establish—because of the delays in the single farm payment.

Finally, for the past 20 years we have not been in a resigning culture, and Ministers no longer resign. Politically, that is not on the radar screen these days. They do not resign over things for which they are responsible; that is a regrettable fact for both parties in government. No one in the Conservative government resigned over BSE, when in my view they should have done. I have a great deal of sympathy for the Minister, so I hope that he is listening. He has inherited the RPA problem, and I know that his predecessor was concerned about the application of the single farm payment system in England. Both Ministers were and are honourable men. I believe that they have been let down by the Rural Payments Agency. As the noble Lord, Lord King, said, the problem required hands-on expertise. In my view, Ministers should have put an agriculturally qualified trouble-shooter in to sort it out months or years ago.

I am not asking the Minister to resign but if I, as a practical agriculturalist and an applied agricultural economist, had been in charge throughout the period since the system was initiated and seen the whole thing through, I really believe I would be resigning today. I know that farmers desperately need SFP cash now so I plead with the Minister to authorise interim payments now, which would save farm businesses and farming families. The supermarkets have had more than their pound of flesh from farmers through their ruthless cost-cutting. Will the Minister prevent his own RPA from finishing off the job, and the rest of the farming industry, though incompetence? Please, act now and save the day.
 
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3.03 pm

Baroness Byford: I thank my noble friend Lord King of Bridgwater for securing this short debate this afternoon. Like other noble Lords, I take no joy in our being back for the second day in your Lordships' House this week to debate the Rural Payments Agency. The Minister smiled when we said it, but it is meant genuinely. We would all much rather have seen a smooth transition from the old system to the new single payment system. All of us regret the circumstances that farmers find themselves in through no fault of their own. Frustration, anger, deep anxiety and stress are being borne by many—with, to date, inadequate answers to the questions that they raise.

In his introduction, my noble friend Lord King asked where we are going, since many family farms are under severe stress. He raised the issue of tenant farmers, and their obvious regard to having to pay rents that are due within the next couple of days. The question of bank overdrafts was raised; I can tell the noble Lord, Lord Desai—to whose contributions I always listen with great care—that many of them are already up to their limit. That is the problem. On the key target that my noble friend mentioned concerning the Rural Payments Agency, it was said that 96 per cent of the bulk would be paid. Warnings were given when that dynamic hybrid model was chosen with a very tight delivery date.

I should remind the House of our family's farming interest and of my involvement with several rural organisations such as the RSIN, the RABI, the NFU, the CLA, the Countryside Alliance and the National Trust—to name but a few. They are constantly fielding questions from distraught farmers. My noble friend Lord Inglewood is disappointed not to be taking part in the debate. Since he has such a direct interest, regardless of the intrinsic merits of the current system, he felt that it would not be right or appropriate for him to take part. I am glad—oh! The Minister says, "What about others?". If none of us was speaking, how would he know what was actually going on out there?

Lord Bach: My Lords, I wonder what the difference is between the noble Lord, Lord Inglewood, and others with an interest in this field.

Baroness Byford: My Lords, that is for my noble friend Lord Inglewood, to decide. I cannot, as he is not here. The Minister will have to be patient and ask him himself. There were no speakers on the government Benches except for the noble Lord, Lord Desai, and the noble Lord, Lord Grantchester—whose contribution, raising his very relevant problems, was well worth having. If the Minister is saying that people speaking on behalf of other parts of the House—from the Cross Benches or Liberal Democrat Benches as well as the Conservative Benches—should not speak, my goodness, heaven help the farmers. The Minister has been ruffled before he came in, which is a shame as I hope that I will be helping him along his way.

The noble Lord, Lord Livsey, referred to the figures achieved by other countries. I, too, would like to highlight three of them. If the Minister wishes to listen,
 
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he can. If not, it does not matter for I will continue anyway. The truth is that Sweden moved to a hybrid system and 90 per cent of its farmers were paid on 2 January, while Germany used a dynamic hybrid system and 80 per cent of its farmers had received theirs by December. In Denmark, where there is the other hybrid system, 98 per cent of farmers were paid to date. If those three countries can do it, it begs the question: why not this one? What have we set out to do that was not done in other countries? When the Minister comes to respond, perhaps he will tell us.

Other noble Lords have highlighted specific areas. The noble Countess, Lady Mar, highlighted the management of this problem and the failure to resolve it. My noble friend Lord Plumb said, quite rightly, as others have done, that the frustration and delay involved in trying to contact the helpline—you would think that you would get an answer from a helpline—has been beyond belief. Common sense should have kicked in. Other noble Lords quite rightly highlighted the difficulty that the supply trade and other suppliers have. I support the call for an independent review.

I understand that the noble Lord, Lord Bach, had a meeting with the industry yesterday in which they discussed where we are and where we are going, and I seek clarification on some issues. I shall not repeat what I said on Monday, but it still stands.

I understand that numerous validation schemes had very small errors—indeed, some were tiny. It has been suggested that claims for less than two hectares or up to 3 per cent of the area, whichever is the lower, would be paid. Will the Minister confirm that? I understand that the agency will be paying the middle range of claimants. What does he define as the middle range?

The centralisation of the mapping work has been returned to Reading. There is a move afoot for one person to be responsible for individual claims from farmers, which will ideally be linked up with a person at Reading. How will that be achieved? Many of these claims have been dealt with in other agency buildings around the country. Are the Government saying they will all be moved to Reading? How can there be mapping alongside one person at the same time and the same place?

I understand that the contract work for the mapping will be recalled. Again, I would be grateful for clarification. I also understand that there may be a ban on RPA staff giving out their personal phone numbers to applicants so that they can get a quicker result to their inquiry.

It is possible that some of the redundant quality checks will be set aside, which should free up extra staff. Can the Minister confirm that there will be a direct push on the conclusion of the mapping? How far has the agency got with its mapping exercise? How many of these outstanding claims—and our family farm is invalidated—are due to insufficient mapping detail? I would be grateful for clarification. I also understand that there is a problem with dual claims. Will he tell us more about that and how it can be overcome?
 
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It has been suggested by some noble Lords and by others outside that if this will take too long, historic payments which were originally due through the IACS claims should be paid first. On the whole they are already agreed, although under this new system there are still queries. It has also been suggested that the claims of people who were not entitled to payments before should wait until the others have been dealt with.

One of the reasons for things going really wrong was, as noble Lords have suggested, that this country adopted a very complicated system. During a noble Lord's speech, the Minister indicated that our party agreed to this. I remind him, as I have done before, that Hansard shows that I warned at the time of the difficulty of choosing different systems, even within the UK. I said that in Wales, Scotland and Ireland—particularly Wales and Scotland—it would be different, which could have repercussions. I also raised the question of competitiveness with our EU colleagues. These things have not happened by mistake but because a conscious decision was taken.

I hope that the Minister, having listened again to the many issues that have been raised, will deal with them constructively and answer some of these pressing questions. I have not attacked him; I said what I said on Monday. He is indicating that my noble friend Lord King did attack him, and I think he was quite right so to do. I have not attacked the Minister; I have given him some concrete suggestions, and what I seek from him, for the good of everybody, are some concrete answers.

3.14 pm

Lord Bach: My Lords, I congratulate the noble Lord, Lord King, on securing this debate—or perhaps I should congratulate the noble Baroness, Lady Byford, on securing it and inviting the noble Lord, Lord King, to make one of his occasional visits to the Front Bench to give us a House of Commons speech which I found quite unfitting for the way in which this House normally approaches these issues.

Baroness Byford: My Lords—

Lord Bach: My Lords, I would much rather not give way. I have a lot to say in my 20 minutes. When I have finished trying to answer the questions that the noble Baroness and others put to me, I will happily give way.

Baroness Byford: My Lords, does the noble Lord—

Baroness Farrington of Ribbleton: My Lords, my noble friend does not have to give way at this stage. He indicated that he will give way when he has finished speaking. I ask the noble Baroness to be patient.

Baroness Byford: My Lords, I wanted to say that a mistake was made. I was not going to move the noble Lord, Lord King, from the Dispatch Box in the middle of his speech. It was an error.

Lord Bach: My Lords, what was the error? Was the error in inviting him to open this debate, or was it in inviting him to the Front Bench?

Baroness Byford: My Lords, I was quite happy for the noble Lord, Lord King, to move this debate. The
 
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mistake arose because he would normally have done so from his place, as does everybody who moves a debate. There was an error. He came from behind the Dispatch Box; he had already started speaking; and I certainly was not going to interrupt him.

Lord Bach: My Lords, I am grateful to the noble Baroness for that explanation, if that is what it was. I have congratulated the noble Lord, Lord King, on securing this debate. A number of very important points have been raised on this very topical and important issue. I will address them as best I can.

The focus of the debate is the Rural Payments Agency. It was clear from many of the contributions today that a large number of concerns centred on one aspect of the agency's work; namely, the implementation of the single payment scheme. Perhaps I may take a few minutes to put the introduction of that scheme into context.

In June 2003, the EU Council of Agriculture Ministers agreed what amounts, frankly, to the most important reform of agricultural policy in generations. Key to the reform was the introduction in 2005 of the single payment scheme, which gives farmers greater freedom to meet the demands of the market by decoupling subsidies from agricultural production, and helps reduce the negative impact of farming on the environment by removing artificial incentives to maintain production and introducing a new regime of cross-compliance. At last, we have started to get rid of the curse of constant subsidy. I cannot help but point out that none of this happened under the previous administration, who claimed to be so much on the side of the farmers. No reform was even attempted of the ridiculous system which had prevailed for much too long in these islands. It is not hard to guess why they did not seek reform in this area.

After the disaster of foot and mouth, such reform of the CAP was a key recommendation of the Curry commission, and it lay at the heart of our strategy for sustainable farming and food. In truth, we are only at the start of this transformation, but we need to see it through if British farming is to have a future. The difficulties which we have encountered with this year's payments are, sadly, a distraction for many in the farming industry who would otherwise be focusing on modernising their businesses. That is important.

The economic benefits to the UK farming industry of introducing the SPS are estimated to amount to some £100 million during the next few years as a result of improved market orientation and removal of many of the rules and distortions associated with production-linked subsidies. Importantly, the new scheme also simplifies the subsidy system by consolidating 11 previously separate CAP payment schemes into one, thereby contributing to a real reduction in paperwork for farmers once the system beds in.

Many noble Lords compared the model of the SPS that Ministers have chosen to implement in England with that chosen in Wales and Scotland. They were
 
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right to say that we have adopted a different system in England, but I would describe it as being more sustainable and modern rather than more complex, as some others have described it. I agree with the spokesman for the Opposition in another place who said on Monday that the Secretary of State,

    "decided, rightly, to introduce a complicated hybrid scheme".—[Official Report, Commons, 27/3/06; col. 545.]

Is that still the view of the Opposition three days later? If it is, it did not come out in any of the contributions from the Front Bench. I assume from this that the Opposition support our decision to introduce such a scheme, but I could be wrong about that. After all, this modernising move was long overdue after the minimal efforts they made to make the industry more sustainable during their 18 years in office.

By contrast, Scotland and Wales have chosen to use a historic system to make payments. Under it, farmers continue, now and for the future, to be paid on the basis of what was received by someone farming the same land between 2000 and 2002. That appeared to us, and no doubt to the party opposite, to be neither beneficial in reconnecting farmers to the market, nor something with which taxpayers or farmers would be content for long. If we accept the principle that subsidies should not be linked to production—I hope that all parts of the House do—it is both unfair to farmers and unjustifiable to the general public to make future payments on the basis of crops and livestock that farmers had five years ago. There are indeed already rumblings in member states that have maintained the historic system about how unsatisfactory it is; and that dissatisfaction is bound to increase as time goes by.

Comparisons about the timing of payments in other parts of the UK must also take into account the vastly differing number of claimants that each country has received: 120,000 in England compared with 22,000 in Scotland and 18,000 in Wales. I am surprised that there has been no mention of that point in the debate. Much has been said today about the payment timetable in England. The flat-rate model was chosen by Ministers only after a full consultation was carried out. It also followed advice received by Ministers at that time from the RPA that the introduction in 2005 of the SPS model chosen was achievable. At that time, stakeholder representatives and Ministers were greatly reassured. Indeed, as I understand it, it was the Opposition's belief that 2005 was the right date to start making the payments.

It was always known that there might be a risk of European regulations changing—as indeed they did several times during 2004—to the extent that it might affect the payment timetable. As a result, the RPA announced in January 2005 that the most likely date for the first payments to be made would be February 2006. Payments under the single payment scheme indeed began—despite committees elsewhere saying it was unlikely to happen—on 20 February this year, and entitlement statements were sent out to all but 1 per cent of claimants soon afterwards to allow trading to begin.
 
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As I made clear to the House on Monday, and I want to reiterate it as clearly and firmly as I can, Ministers fully share farmers' concerns about the current problems and understand the distress many of them feel. After 20 February, Ministers had expected and been led to believe that more payments would have reached farmers by now than has been the case. It was only late in the afternoon of Tuesday 14 March that Ministers were first told by the RPA that the bulk of SPS payments would not be made by the end of March. We greatly regret that this situation arose.

Several Members of the House have asked whether the Government would consider compensating farmers for late payments. As I tried to explain on Monday, payments, while later than any of us would like, remain well within the payment window specified in the relevant European regulations, which give us until the end of June 2006 to make these payments; hence the question of compensation does not arise. We are also acutely aware of the fact that, under the old CAP subsidy schemes, farmers would potentially have received payments at different times of the year, while the single payment scheme is just that—a single payment. Indeed, this is one of the main reasons why we made the announcement over 12 months ago, so that farmers would know that payments would not start until February.

We know that the change in the timing of payments has caused difficulty to a number of farmers as they adjust to the new scheme, which is why I have been in regular contact with the leaders of the farming industry, their suppliers and their bankers. I have met all these groups in the past 24 hours, and I talked this morning to the Agricultural Industries Confederation to update its representatives and, more importantly, to hear their views on the current situation and their perspective on how matters are affecting their farmer customers.

I have to say that, as far as one can be in this situation, I was encouraged by the message that I took from my meeting with the banks this morning, and indeed from discussions with the NFU, CLA and TFA yesterday morning. There have been no difficulties in securing loans up to the level of the expected payments and none of the unions involved, nor the banks, nor the AIC, knew of cases of bankruptcy that have followed from the fact that we are not going to meet the bulk of payments by the end of March. I do not say that there will not be any, but there are none now, and it is not right to scare on the basis that there have already been some. The issuing of entitlements statements, even where not fully validated, has helped in that respect. In the same vein—and I repeat this, because it is important—I was told unequivocally by the banks that no viable farming businesses are failing as a result of single payment issues.

The situation we found ourselves in when the RPA reported its revised assessment of the situation on 14 March was simply unacceptable. That is why we supported the decision of the Permanent Secretary to replace the then chief executive of the RPA with Mark Addison, a senior civil servant with outstanding experience and abilities, and charged him to come
 
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forward urgently with a report on the steps needed to get us back on track. The RPA still faces a significant challenge in getting SPS payments out to farmers, and I know RPA staff are doing their best and working all hours that God sends. But speeding up these payments—consistent with our responsibilities in handling public funds—remains the overwhelming priority of Defra Ministers.

Noble Lords have asked questions on the detail of the steps being taken to speed up payments. There have also been some questions on the detail of the RPA's administration of the scheme, particularly mapping and the IT system. On the question of mapping, since September 2004 there have been more than 100,000 requests for new land to be registered or for boundaries of registered land to be amended. In the past five months alone around 45,200 holdings have had fields mapped, and as at the week ending 24 March around 5,000 holdings were awaiting one or more fields to be mapped. The Rural Land Register now comprises some 2.1 million land parcels, and by area is estimated to be approximately 98 per cent complete for SPS purposes. The remaining 2 per cent of incomplete cases are generally where farmers have still to provide maps. Their land will be digitised but their payment may be delayed, because until it is digitised it is not valid for payment. The new acting chief executive realises that mapping is one of the considerable problems, as many noble Lords from all parts of the House have stressed today, and he is taking a close personal look to see what can be done to improve the mapping process. Any advice from noble Lords on that important issue would be very welcome.

The development of the Rural Land Register is a significant achievement. It will be used widely within Defra not just for processing single payment scheme applications, but for other schemes such as environmental stewardship.

On IT issues, the noble Countess, Lady Mar, asked a question on Monday about computer crashes and lost data. Expanding on the answer that I gave, I emphasise at this point that the RPA is satisfied with the performance of its SPS IT system. To progress payments, the RPA is utilizing the system for 15 hours per day during weekdays, and up to eight hours per day during weekends. However, it is sometimes necessary to temporarily stop the processing of individual claims so that the system can carry out certain automated system-wide tasks such as identifying which claims are now ready for payment or have completed certain validation procedures. As I said on Monday, all the main IT systems are in place and have produced the entitlement statements and first payments as planned. However, we also know that it has not been possible to ramp up the validation and distribution of payments as planned.

The key objective for the acting chief executive is to identify the problems and develop and drive forward the plans to overcome them. He has identified several actions, some of which I outlined to the House on Monday, which would enable us to speed up payments without losing sight of the need to properly manage the disbursement of a large sum of public money.
 
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There is no question of the UK Government receiving interest on this money. It belongs to the EU, and is then transferred to us to hand on to farmers. There is no question of it being in UK Government bank accounts where interest can be gained. I hope that once and for all that canard can be put to rest.

The acting chief executive has removed disproportionate checks from the payment authorisation system to speed up the payments; prioritised work on validation of claims to release the maximum value of payments as quickly as possible; centralised key mapping work; and strengthened the RPA's capacity in key areas. Those were initial steps. He is now, with the strong support of the Secretary of State, taking the following steps. He is reforming RPA processes to deliver customer focus by dedicating teams of staff to work on individual claims in the entirety, rather than the current task-based approach. Also as part of that change—and this is significant, as noble Lords with experience of this may appreciate—processing staff will be allowed to phone applicants directly to work through any outstanding issues. A discrepancy tolerance of two hectares or 3 per cent, whichever is the lower, will be implemented for validation of claims. That is also important. There has been too tight a process with regard to small pieces of land.

Redundant quality checking processes will be stopped to allow staff to work on claims processing. People doing the mapping work will be joined up with those actually processing claims in the same office. Where mapping correspondence is outstanding—and we all know examples of that; we have heard about them today—payments will be made on the basis of the information the agency has. A senior manager will be appointed to take delivery of the 2006 claims processing, which we cannot forget.

In his initial assessment of the reasons for delays, the acting chief executive has not identified lack of overall staff resources as a concern for the completion of the 2005 SPS statements. In addition to these steps I can also announce today, after receiving representations about the need to provide more time for farmers to notify transfers of entitlements in order for the transferee to claim on them under the 2006 scheme, that we are arranging for the necessary changes to be made to both EU and domestic legislation. In practice that means the deadline will be moved back from 2 April to 23 April, an extra three weeks. While that may not be the most major thing the House wanted to hear today, I hope it will be considered an important step.

I shall quickly try and answer some questions. The position of the ex-chief executive is that he is on paid leave of absence until the department is in a position to determine and agree the terms of his departure. There is all-party support to introduce the new scheme in 2005 to help modernise the industry. We only went ahead with it after the RPA advised that the task was achievable. The noble Lord, Lord Plumb—whose contribution to these proceedings I always listen to with great care—will know, although this is not what
 
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he asked for, that there is to be a thorough examination of the RPA to see whether the agency is generally functioning in the way it should. That review is starting now.

Like the noble Lord, Lord King of Bridgwater, when he was a distinguished Minister, I too am a hands-on Minister. I have, for good or bad, spent a long time over a number of months talking to the RPA and listening to what it has to tell me about what progress was—or was not—being made. I have to tell the House that it was not until Tuesday 14 March that we learned that the bulk of payments would not be made in time. This is from a standalone agency of the sort that was the model for the Conservative government from 1979 to 1997. What are Ministers supposed to do when they get advice of that kind? We checked, checked, and checked again. There has never been any complacency; there was continual challenge. Our priority was to see payments made. Until 14 March, the advice given in the face of continuing ministerial challenge was that the bulk of payments could—and would—be made on schedule. The RPA is an arm's-length delivery agency, and Ministers are reliant on the advice received from it. We understand our responsibilities. The government of which the noble Lord was a distinguished member was not noted for its resignations, the noble Lord, Lord Carrington, being a very honourable exception. Perhaps the noble Lord would name a Minister who resigned over the BSE farce?

3.36 pm
Lord King of Bridgwater: My Lords, I start with an apology. Old habits die hard: I realise that I should not have spoken from this Despatch Box, but perhaps that is a matter for this side of the House and nobody else. I apologise for any embarrassment caused.

I thank all the noble Lords who have taken part in this very serious and most unwelcome debate. The noble Lord, Lord Livsey, and my noble friend Baroness Byford both made the point that nobody wanted to be here; I certainly did not, but this issue cannot be ignored. There was no mention of the Rural Stress Information Network today but, as the Minister will know, it was mentioned in the debate yesterday. The right reverend Prelate the Bishop of Hereford chairs one branch for four counties. The network has seen a huge increase in the number of calls and, tragically, the suicide of somebody facing financial problems. None of us makes any apology for raising these issues.

I am very grateful to the number of noble Lords who have spoken with great experience—and, indeed, personal experience—including the noble Earl, Lord Arran, who spoke of the problems in Exmoor, a place that I love and used partly to represent. The noble Lord, Lord Grantchester, spoke with great authority on the dairy industry in particular, as well as other aspects of agriculture and the problems that people are facing. He brought up the issue of mapping, as did the noble Earl, Lord Erroll, and the noble Lords, Lord Dixon-Smith and Lord Willoughby. Clearly the mapping issues that have arisen are a real
 
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impediment, as I understand it—although I am unfamiliar with some of them—to the Minister being able to resolve the current crisis quickly.

I would like to query one point made in the Minister's speech. This is where the noble Lord, Lord Desai, with his economic background, may be able to help. I have never heard of £1.5 billion being transferred from one organisation to another without anybody making any attempt to earn interest on it. It may be my economic illiteracy, but this must, presumably, reduce the Government's borrowing requirement; it must make some contribution to the economic world. The noble Lord, Lord Desai, is much better qualified to tell me whether I am right.

Lord Bach: My Lords, the money remains with the EU—with the Commission. If anyone makes money out of it, it is that body, not the UK Government.

Lord King of Bridgwater: My Lords, I understood from the Minister's contribution that the money had been transferred, but, if I am incorrect, I am grateful for the clarification.

I also pay tribute to the contribution of the noble Countess, Lady Mar, who, with her obvious personal and considerable interest in the matter, asked very pertinent questions. Above all, I think that the whole House recognises the quite exceptional experience that the noble Lord, Lord Plumb, brings to these matters and to which the Minister paid tribute. I am very grateful to the noble Lord for taking part in this debate, because he speaks with such enormous authority and experience on these matters.

I asked one question of the Minister and I think that I know why he would not answer it. When are these payments going to be made? I understand that some people in the industry say that this may raise false expectations. He said one interesting thing in his contribution: that as the window existed until the end of June there would be no question of any compensation. The indication for some people listening to that remark would be that all payments would be made by the end of June. If I am wrong in that, he might like to correct me, but that would be the implication.

Lord Bach: My Lords, we very much hope that all payments will be made by the end of June, but I am not prepared—because there have been too many easy forecasts in the past—to give a guarantee of any kind. We did not appoint the new acting chief executive to give us the sort of forecasting that Ministers and others might want to hear if that was not based on solid fact.

Lord King of Bridgwater: My Lords, I am grateful for the statement that that is what the Minister now hopes to see, because we have not had that in the various exchanges in the other House and here until now. It will certainly be an encouragement to the industry.

On the agency, the Minister has made a brave speech. I understand entirely that he has been put in a very difficult position. Somebody else chose this
 
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system. He was then given the task, late in the day, of seeking to see it carried through. However, his Government set up the agency. When the agency was set up—it was discussed in another place yesterday—the Minister was Elliot Morley. He was specifically asked who was accountable. He said that the chief executive had the initial responsibility, but that the ultimate responsibility and accountability lay with Ministers. That was at the time when this Government—to which the Minister belongs—set up the agency.

We have just heard the Minister announce a number of perfectly sensible improvements, which he hopes will speed up the process. What this is all about and what I do not understand—what so many people up and down the country do not understand—is how it is possible that, two weeks before the date on which most of the payments should be made, somebody decides that it will be another 14 weeks before that can be done. I cannot understand how questions were not asked, and how there was not some examination. The charge for the Minister is: why were those questions not asked? How could that happen?

We have discussed this matter fully. It is a tragic situation and, like the whole House, I hope and I pray that the damage will not be as great as many fear that it might be. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.