Select Committee on Agriculture Minutes of Evidence

Examination of witnesses (Questions 120 - 135)



Mr Drew

  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.

Mr Jack

  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.

Mr Hurst

  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 year?
  (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 together.

  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 forward?
  (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 factors?
  (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.

Mr Jack

  133. As far as appeals are concerned—I apologise if I should have read something but have not done so—your 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 should.

  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.

previous page contents

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 20 February 2001