Examination of witnesses (Questions 120
WEDNESDAY 17 JANUARY 2001
GARDINER and MR
120. Does not the two-metre rule exemplify the
nonsense of trying to take a pan-European approach to industries
which are fundamentally different? The whole farce of the way
in which this is handled, and all the distrust and misunderstanding,
must make your membership feel close to despair. It may come back
next year because other Member States suggest that the British
know how to cheat the system because they measure their fields
in different ways. Surely, that is a nonsense, is it not?
(Mr Bennett) That is a valid point. It certainly shows
that flexibility and an element of discretion are important in
these schemes. The Commission has always faced the problem of
big headlines in terms of fraud. If one inserts flexibility it
can be misinterpreted.
121. In the past few years I have had a couple
of interesting cases involving challenge with reference to IACS
payments by MAFF using satellite surveillance technology. In certain
cases, by dint of effort and photographs and records we have been
able to frustrate the desire of MAFF to have some of its money
back. I wonder whether in the context of this exercise you would
like to comment on the use of satellite surveillance. First, have
you encountered the kind of problems that I have encountered?
Secondly, is satellite surveillance used uniformly across all
Member States in looking at the way that IACS operates?
(Mr Pearce) To answer the last part of the question
first, according to my understanding I do not believe that satellite
imagery is used across all Member States. Certainly, it has been
used here and I have seen the same kind of problems that you have
just outlined. The difficulty with satellite imagery is that in
certain circumstances and at certain times of year with particular
crops the position is quite clear. However, there is difficulty
at different times of year with the colour of the crop, particularly
in the autumn when grass has been established or a new cereal
crop is coming through. I do not believe that it has always been
that clear-cut, which is why we have managed to overturn some
of the requests to recover. We had a couple of cases in Northumberland
two or three years ago which dealt with exactly the same issue.
Satellite imagery has its limitations. The fundamental issue to
which one returns is that one needs to have a national register
of all land so that one is starting from a credible basis. When
arable area payments and IACS came in in 1992 we did not have
that; we started on the basis that the land was eligible based
on its use on 31 December 1991. That was a very wide base. People
had different interpretations. Some people bought land at that
time and did not know the position. It was very complicated. I
do not believe that satellite imagery covers all cases.
122. To refresh my memory, is the use of satellites
for surveillance at the discretion of the Member State?
(Mr Bennett) I am certain that it is.
(Mr Pearce) It would be deemed to be a control measure
to achieve the objectives of the scheme in order to determine
that eligibility was correct.
123. In your written evidence you say that a
number of producers each year experience the loss of some or all
of their premium because they have changed their business structure.
Can you explain what you mean by "business structure"?
(Mr Bennett) This is quite complex. When it comes
to making a claim, there is a wrong time to die.
(Mr Pearce) The IACS form is just one aspect, and
the arable area payment side is tied in with that. When IACS came
in it was closely attached to the arable area payment scheme.
The problem arises with mixed farmers and livestock farmers, in
that the other schemes have been dragged into the system and there
is a wide range of livestock support schemes with different retention
periods, different rules and different times of the year. If one
is a beef or sheep farmer it is most inconvenient to die at certain
times of the year. One can lose the support for the surviving
family unless one takes action at the time. Equally, serious illness
may cause problems. For example, two or three years ago a case
arose in the north of England involving a sheep farmer and his
wife. The farmer was seriously ill with leukaemia. His wife could
not cope and sold half the flock during the retention period and
did not think to tell the Ministry. When it found out she said
that she accepted that she had to lose half the premium because
obviously she had sold the sheep. Not only did she lose half the
premium but she was penalised on the remainder and lost all of
it. The interpretation was that because she was a partner she
should have understood all the rules. One has massive changes
in the structure of the business; for example, new partners are
brought in, there is illness or someone dies. If that happens
one changes the basis of the claim. A claim is a legal entity,
and if it is changed during the retention or qualifying period
the claim is changed. Only recently someone left a business and
nobody passed on the information. Sheep premium was to be reclaimed
for three or four past years. The business structure had hardly
changed but two people had swapped over. If one is running a business
it is quite difficult to cope with all the different deadlines
and retention periods. There is not a good time.
124. Is the problem exacerbated if during the
period one acquires land which one did not have at the beginning?
(Mr Pearce) Absolutely. A livestock farmer may acquire
land after he has submitted the IACS form for the holding. Unless
he has acquired a holding which was the subject of a complete
IACS form he cannot count that land towards all the claims that
he makes for the rest of the year, even though the animals on
that land will count against him in the stocking density. The
animals that he grazes on it count but the land on which the animals
are grazed is non-existent.
125. Presumably, the person from whom the farmer
has acquired the land has already made a claim. Will that landowner
continue to receive the payment, and will that be apportioned
on the transfer of the land?
(Mr Pearce) We are talking here about livestock schemes.
If a farmer sells his land after 15 May and he has submitted IACS
forms and made claims prior to that he will still receive payment
for claims made prior to that date. Clearly, there is a legitimate
claim, and the claims submitted earlier are legitimate. The problem
arises for anyone who subsequently buys the land. Clearly, the
original owner has sold the land and so cannot be grazing it.
It is the subsequent owner who holds the land and has the stock
on it, but he cannot make the claim. Basically, from May to the
end of the year the land is non-existent.
126. It is a bonus for the scheme but a disadvantage
for the producer?
(Mr Pearce) It is certainly a disadvantage for the
producer. We are becoming increasingly concerned about this area,
particularly in the the case of LFAs and hills. When we have a
new area payment it will be quite a big issue. We find that as
new entrants go into the upland areas of England and Wales potentially
they will not be able to claim payments for the first year because
they have acquired the land after 15 May. When one starts off
the last thing one wants is to be excluded from the payments that
are deemed necessary to support one for farming that type of area.
127. If all scheme dates are harmonised and
linked to IACS it would not solve the problems that you highlight
but it would help to some extent?
(Mr Pearce) It is not as simple as that. One cannot
harmonise all the retention periods because they are there for
a purpose. There needs to be a recognition that farming businesses
are living, breathing entities, not just paper transactions. The
discussions that I have had with MAFF officials, from those on
the ground and all the way up, reveal a real understanding of
the issues, but to try to put that into a legislative framework
with Commission officials is exceedingly difficult. I have been
to Brussels and tried but it is not accepted. Everything is black
and white; one either qualifies or meets a deadline or one does
not. Anything in between just does not exist.
128. Are these EU requirements or those adopted
in this country for the purposes of implementation?
(Mr Bennett) They are EU requirements.
129. Is it beyond the wit of man to have apportionments
during the year to take account of the changes that we have discussed
and for there to be back payments on a residual claim the following
(Mr Pearce) For many of the issues that we face in
terms of business changes I see no reason why something should
not be in place to apportion or to deal with the situation. We
are not talking about somebody who tries to claim on animals or
land that do not belong to him or are not under his control. There
is no question of fraud or anything else, because people must
still submit a form and comply with all the scheme rules. The
problem is the technicality of attaching the claim to an area
of land which has been registered at a different time of year.
There must be some way to cope with that by pulling all of this
130. Probably the answer is to have apportionment
or back residual claims. Another area which has caused problems
is appeals against the system. MAFF has made certain suggestions.
You are critical of the speed with which the matter is moving
(Mr Bennett) The IACS Working Group made that recommendation.
When we submitted the response to you we said that we had not
yet received any consultation. However, since then we have received
consultation and must respond by the middle of March. However,
it is not very satisfactory. Scotland already has its appeal system
in operation, unlike England and Wales.
131. Is the fact that we are so slow in this
matter due simply to the wonders of devolution, or are there other
(Mr Bennett) It is a matter of devolution. The Scottish
Parliament promised an appeals procedure some time before it was
promised in England and Wales.
132. Following on from appeals, one comes to
penalties. Your written submission is fairly reticent in relation
to that matter. Is that because you feel that there is an inevitability
about it, or do you believe there is a possibility that a more
benign regime can be produced than presently exists?
(Mr Bennett) I believe that you can deliver a more
benign regime. The problem here is that the scheme itself is drawn
up by the Commission in Europe and is then administered by each
Member State. The Commission, which has no interest in administering
the scheme, is not very flexible. The United Kingdom is extremely
nervous about disallowance. Therefore, we have to deliver more
flexibility at the European end which will allow our officials
to provide flexibility in this Member State.
133. As far as appeals are concernedI
apologise if I should have read something but have not done soyour
earlier remarks reminded me of the inflexibility of most IACS-based
schemes. Your expression was "black and white". As to
the revised appeals procedure, do you believe that blurred areas
will be created in terms of rules which will allow some rulings
to be overturned, if you like, under the new arrangements?
(Mr Bennett) We support the appeals procedure but
we are concerned that we shall come up against the inflexibility
of interpretation so that even with the appeals procedure we shall
have a black and white problem. The mention of the auditors, even
in the appeal system, will keep coming up. For that reason, I
believe that ultimately if flexibility is built into the system
it must be approved at a European level.
134. Mr Pearce referred to a very interesting
case involving the farmer's wife who, without malice aforethought
but out of ignorance and personal pressure, disentitled herself
to sheep annual premium. You and I as reasonable people may assume
that such a case should be appealable, but I do not have the impression
that such circumstances, once reviewed in an appeal mechanism,
will enable money to be restored to the lady in that case. Is
that a fair assessment?
(Mr Bennett) Yes.
135. Are there areas in which you would like
to see appeals with more flexibility? Are there any indications
that other Member States have managed to get a little more flexibility
in the administration of these seemingly rigid rules than ourselves?
(Mr Bennett) As we indicated earlier, the precise
information about implementation in other Member States is difficult
to come by. This is one of the key areas in which we should like
to have more information about relative flexibility in appeals
on forms in other Member States. I believe that there is a case
for having a little more information about the practice in other
Member States. However, as MAFF administers the scheme there is
very little leeway open to it. An appeals procedure is important,
but if a little more flexibility is not created at European level
inevitability the appeals procedure will not work as well as it
Chairman: Gentlemen, thank you very much. The
Committee is to visit France for a little while and carry out
its own investigations. We have been interested in what you have
said. We hope that at the end of the day we can come up with something
that is of interest to you.