Select Committee on Agriculture Minutes of Evidence

Examination of Witnesses (Questions 194 - 199)




  194. Welcome to the Committee. We have in front of us Mrs Janet Purnell of the CAP Schemes Management Division, and Mr Bill Duncan who runs the Reading Regional Service Centre. As you know, we have been looking at the way IACS is administered. I was in Poland at the end of last week and they are trialling IACS in two Polish provinces shortly. I wished them Godspeed and said I hoped they based theirs on the Irish model. As you know, it is a universally held view by all farmers that their own administrations go out of their way to make life as impossibly rigid as they can for them, and that is as true of our farming community as it is for any other farming community. You define your objectives to do what you have to do in accordance with EU requirements and the performance target, which is a 10 per cent cut in the unit cost of administering CAP payments by 2004 and 95 per cent electronic capability by March 2004. We also had here last time a gentleman from Brussels who said he thought that we got too exercised about disallowance in Britain. I would like to begin by saying in looking at what is going to be the most helpful to farmers and not exposing the United Kingdom to disallowance, where do you draw that line? How do they weigh in? How do you keep them in play, as it were, whilst you are administering?

  (Mrs Purnell) I will attempt to answer that. I wonder whether, as Mr Duncan and I have complementary areas of expertise, we could do a double act.

  195. I would be delighted for you to do a double act but I will leave it to you to decide who is replying to what unless a question is specifically directed at one of you.
  (Mrs Purnell) On disallowance, clearly it is the Government's policy to minimise the cost to the taxpayer of EU expenditure, not only our own but that incurred in other Member States, which does give us a strong interest in making sure we implement the schemes correctly and other Member States do as well. As you know, we have a target as part of our group business plan which is to ensure that disallowance does not exceed 0.5 per cent of scheme expenditure and that is done over a two year running average. That is the target that has been set for us as part of our Public Service Agreement and we have to have mind to that. As to striking the balance, it is obviously a question of trying to both take the needs of farmers and going with the grain of the industry in a way which still does not take us outside scheme rules and still does not expose us to what the Commission euphemistically calls "financial corrections". We do not always get it right. On the Sheep Annual Premium Scheme we did implement it in a way which was (as we thought) in line with the needs of the industry—we had two retention periods, we did a fair proportion of our inspections outside retention—and yet we were subsequently disallowed £90 million of expenditure. A third of that was for MAFF and the rest was for the other Agriculture Departments, and we did get criticised by the Committee of Public Accounts when they looked at our record on the Sheep Annual Premium Scheme so clearly we are under pressure on that side. That being said, we do try, consistent with implementing the scheme properly, to take account of the needs of the industry.

  196. Do you ever feel in the back of your mind that because of this concern about disallowance, which we understand, that you are not being quite as helpful or understanding of the industry as you might be? Do you ever get that sentiment and feel that there is a bit of a conflict there?
  (Mrs Purnell) I do not think we do. I think we do try and keep our two hats, our two objectives together and balance them and, clearly, as long as the CAP is in its current form, we need to make sure that farmers are able to claim the subsidies they are entitled to. We are not trying to prevent them from doing that, but we do have to try and make sure that our scheme implementation is correct.
  (Mr Duncan) I think that is right. We have the scheme rules themselves and we have also had quite a long dialogue with the industry over the years since IACS came into being, both when it started and throughout. We also have a mind when we are sitting over there in Brussels to look carefully at the proposals that are coming forward and consulting with the industry as this goes on to try and get reasonable and practical solutions to some of the controls. The thing about the IACS Regulation is that it is fairly black and white. It says, "If you do this, you get that. If you do not do it like that, then there is a series of progressive penalties that come into play." One thing we have done over the years is write a very comprehensive guidance booklet, which sometimes gets criticised as well for being too long. On the whole we have tried our best to strike that balance. Bear in mind that we also do get regular visits from various auditors, both from representatives of the gentleman you saw last week and also from the European Court of Auditors, who do spend an increasing amount of their time out in the field these days looking at the animals and records and fields and what is growing et cetera. We participate actively in these visits and try to strike a balance there as well. I think for the most part in recent years there has been a realisation that things are not black and white and there are areas of flexibility. We do achieve a fair bit of flexibility. Clearly the difficult cases get a very high profile and I have to say those of you present have probably been involved with difficult cases, but we do allow a fair bit of flexibility under our "obvious error" provisions. We are not talking hundreds of cases, we are talking thousands of cases in the arable and livestock sector. On the whole the balance is there. As Mrs Purnell says, at the back of all this lies the target on disallowance. Over the last four or five years we have genuinely had a reasonable record on disallowance; we have not had too much.

  197. The European Union makes a distinction between the advisory function and the controlling and auditing function. We got the impression from our travels that in England the barrier came down at the front office of the regional service centre because the farmer came in, handed in his form, it was checked to see whether he had filled in all the bits that ought to be filled in, but not whether it had been filled in correctly. I think we got the impression elsewhere that perhaps the barrier is a little bit further back into the administration and there should be more active involvement of officials in helping the farmer fill in the form or spotting things that are not quite right at an early stage, notifying them, and putting it right. Would you accept, first of all, that this distinction is permitted and therefore the Civil Service could, if they wished to, fill in the forms for farmers so long as it was kept separate from the audit and control functions? Where does that frontier lie between making sure the form is filled in and that there are no silly, obvious errors and the point at which it moves into the other side of the wall, as it were, into the audit and control function?
  (Mr Duncan) That question of where does the dividing line lie is a very difficult one to answer. I suppose in some sense it lies in who is making the claim. There is no way that any civil servant can take it to the stage where everything on that form except a signature on the bottom of it is being done by the civil servant. What happens is quite right, there is a quick veracity check carried out. Many farmers still bring their forms, as you know, to the office. We check various things to make sure there are entries in all the right places. There is no particular validation at that point in time. That comes later after data entry takes place. There is an issue in that generally farmers have got five or six weeks to complete the form, the vast majority of which come in in the last couple of weeks, and if they come in with a form there is not a lot of time to do that sort of verification check which is largely done on the computer once the data is entered in. To some extent that is the driving reason for changing our handling arrangements to be more e-conscious, so that we can do more of that. One of the important things that came out of our trial in East Anglia last year was by using electronic application forms we were able to build in a certain amount of front-end validation which eliminated many of the common mistakes which it is quite difficult to find if you sit with a farmer for five minutes and there is a long queue of other farmers waiting to get there. Their primary idea is get the form in and hand it to somebody so they can prove they have handed the form in. Clearly the farmer as owner or manager of that business is the only one who knows actively what is happening either with his animals or his fields. So, yes, we can and we do give advice as to what is possible for certain areas, but we do make it clear that the responsibility is theirs.
  (Mrs Purnell) One of the results that came out of the electronic trial last year was that all the forms that were submitted electronically cleared validation straight away whereas normally it is about 40 per cent.
  (Mr Duncan) On the first round about 40 per cent clear validation. Of the 76,000 IACS applicants we have got 60% with issues of one kind or another, some very simple ones, others more difficult.

Mr Jack

  198. To follow on the line of the Chairman's questioning, have you as an exercise been onto a farm and sat down with a farmer who is filling in his scheme forms just to see how he does it—large-scale and small-scale enterprises—and to see what practical problems he encounters?
  (Mr Duncan) I have not sat down the whole way through it but I have many visits with forms and without forms and I have a good idea how some of them do it. There is a vast difference between the small practical farmer and the large agri-businesses. The large agri-businesses are usually pretty well-organised with computer facilities of their own and the smaller farmers are quite often sitting there with documents even to the point of having to walk out and make sure they have got the right thing. I do visit farms on a regular basis at that end and also at the audit end and sometimes on a small farm we are rummaging around looking for bits of paper in various places, but in the large office it is completely different. So I think we have a good idea what goes on.

  199. Let me move on to the question of the relationship between the Regulation as originally produced as a result of Council of Ministers' decisions and what then happens to it in turning into a Member State's understanding of what is required. I was not personally at last week's evidence session but I have read some of the script and the flavour from Mr Slade was very interesting. He said that it is very much down to Member States to interpret and, in fact, in your own evidence to the Committee you talk under paragraph 15 about what your responsibilities are and it says "interpretation of scheme rules and guidance to regional service centre staff through scheme chapters and system manuals". I think, Mr Duncan, you said at the beginning that the schemes were black and white, in other words, if you do something, you can get something. In fact, if you read the back of this very helpful submission, which summarises in what I thought was a very clear way the essence of each scheme, it seems to me there is not much room for interpretation. If you keep an animal on a farm for a particular period of time after that time has elapsed you can, if you want, claim some money. That does not seem to me to require a great deal of interpretation and yet this word keeps cropping up. It lies at the heart of our inquiry; different Member States interpret the Regulations in different ways. Give me a commentary about this question of interpretation. Why should something which you describe as "black and white" and "clear" require any interpretation at all when it comes from the Regulation into our rules?
  (Mr Duncan) I think, as you say, we start with the Council Reg and then we have the Commission implementing Regulation which sets out the requirements. The interpretation and work that then happens is to translate that Regulation into the type of language that a) the customer will understand and b) that our staff in administering the schemes will understand and follow. We do two things, the first interpretation, if you like, comes out in the scheme literature to the farmer saying what this scheme is all about, what the rules are in relation to IACS, what they have to do in order to get the money that they are claiming under other schemes. As far as the administrator is concerned, we then have to do two things. First of all, we have to draw up a set of validation procedures to validate claim applications and claim against two areas, first of all, the scheme rules and then the overarching IACS rules, and, having done that, we then need to write detailed instructions for the staff on how to do it. For example, if the discrepancy between the area found and the area claimed is more than three per cent we have to apply a progressive penalty, and we have to set out how to do that. I would agree with you that there is very little reinterpretation as such. It is taking what we have got and applying it.

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