Examination of witness (Questions 160
TUESDAY 27 FEBRUARY 2001
160. To what extent is there any discretion
given to member states in implementing the system? You have to
check that the minimum standards are met. How much discretion
(Mr Slade) I check the minimum standards and take
the regulations, they are fairly minimum: 10 per cent on-farm
inspections selected on risk analysis. There are some recommendations
as to what the risk analysis to select the claimants for inspection
should incorporate. As regards application of sanctions, our problem,
up until a couple of years ago, was that the sanctions were foreseen
but very rarely applied. Even in cases of fraud or very obvious
negligence, they were not applied. Over the last couple of years,
with the need for these new sanctions, with the need for clarification
of sanctions, we have stressed to member states that they have
a degree of administrative discretion; that is to say, if 100
farmers make errors, something more than obvious errors, which
they are not sanctioned for anyway, transposition of ID numbers
does not give rise to a sanction, it is not necessary, we have
had guidelines on that already, but let us say 100 farmers commit
an error which gives them some financial gain, whether it is deliberate
or through a genuine error at this stage, they nevertheless commit
an error. We have to avoid errors because they cause a charge
on the fund and/or they cause a charge on the administration to
sort them out. So there are good reasons why we do not want farmers
making too many errors. Whether they are deliberate or not, we
can leave aside. Three or four years ago, in doing the rounds
around Europe, I would usually find that in 100 cases down, there
were only very few that had attracted any sanction and in the
great majority, and I mean the great majority, sometimes 100 per
cent, the farmers had been given the benefit of the doubt. This
is obviously an unsatisfactory situation from an audit point of
view and after all, we are supposed to be safeguarding taxpayers'
money. We can understand that member states do not want to apply,
every time there is the smallest error, the sanction. The sanction
should always be fair and proportionate. I must stress that. Putting
in a cow that does not exist out of 50 which gives you a 2 or
3 per cent correction, you still receive 90 per cent of your premium.
We are not talking about full exclusion from the scheme in most
cases. Over the last couple of years, we have convinced member
states that, from an audit point of view, we want to see that
there is a reasoned approach towards the application of sanctions;
that is to say, there has been a uniform procedure to assess the
consequences and that the criteria have been applied equally to
all farmers and in some cases, let us say 60 per cent of cases,
it is decided that there should be a sanction in accordance with
the rules. It is decided that this man should lose 5 per cent,
10 per cent of his premium this year. Next year he will not make
the mistake. That is the philosophy of it. I do not excuse why
we have these sanctions. I believe in them. I always want to make
them proportionate and fair. On the other hand, there may be a
case where in 40 per cent of cases, and I am just throwing figures
here, these are not the rules, the national administration has
decided that the benefit of the doubt can be given to the farmer.
Of course, if he does it next year, the case goes slightly against
him. I think we have had some success in that because, obviously,
three, four years ago we were going round and finding that that
was not the case. Our conclusion was, "You are not applying
sanctions according to my guidelines that my service works to.
There is a 2 per cent flat rate of correction and we refuse 2
per cent of the financing for the expenditure concerned".
Member states reacted to that and we are happy with the way that
they have reacted because we now find that the sanctions are being
applied generally to a more satisfactory degree and in a more
161. The Commission's interest is that they
have a ready and effective way of identifying where sanctions
are supposed to be applied. What member states do above and beyond
that or, indeed, below that by means of a less pressing enforcement
is not of any interest to you?
(Mr Slade) It is because we nevertheless get letters
from farmers and farmers' representatives so that can bury us
in paperwork. We like to see a fair, even-handed approach to sanctions.
The rules are the rules. We are fairly flexible in our intepretation
of them in the clearance of accounts context. That is important.
We do not punish member states because they have sanctioned 90
per cent of their people but in 10 per cent of other cases, they
can show that in an equal way, and this is important, this is
difficult to achieve, of course, it is not as easy as it sounds
when I say it to find that every regional service centre in the
UK, for example, has applied evenly and fairly the same criteria.
No case is identical, of course, so there is a bit of personal
judgment in there also. We want to see that the rules are applied.
If, in some cases, member states have decided that they can accept
without sanction. If they can show that in many others, they have
applied their rules in the same way and applied sanctions to the
benefit of the fund, we are happy in a clearance of accounts context.
I am not a lawyer so I ahve to be careful what I say because the
law is the law, nevertheless.
162. Accusations have been made that some governments,
particularly ours, gold-plate regulations or they enforce them
more strictly and strenuously than they really need. That was
an accusation raised about veterinary inspections as against environmental
health officers at abbatoirs and it is a long-running argument.
Therefore, perceptive Euro-sceptics, namely me, would argue that
there is an excessive gold-plating element in this country. Does
the Commission have any role in ensuring that member states do
not do this because if they are going to do it, it is going to
make the regulations less acceptable and less popular, is it not?
Do you have any role in ensuring that they do not obsessively
(Mr Slade) We talk about this with the national authorities.
We are interested in efficient, effective systems because they
are easy to understand and easy to control so that, for one, is
my prime concern. But from an auditors' point of view, we are
looking at the minimum legal requirements. I am interested in
the quality of the set-up also but the simpler, the better as
long as those minimum requirements are made. The gold-plating
is for the national authorities to decide. That is for their own
powers that be to decide upon. I do not really think that we have
a say in that. Obviously, we do get representations. Other parts
of D-G Agriculture, not mine, will receive representations from
the farmers saying, "The Greeks want the same information
ten times over. Can you advise them?" We probably would.
That does not fall within my remit but we do have a interest in
it, of course.
163. Perhaps we can just look at how we in the
UK interlock with the Commission. We have been looking at and
reflecting on what the British Government do in relation to the
Commission anyway. There have been some quite trenchant criticisms
both within the country but also within the wider EU about how
we currently administer IACS. The Government's response to that
is to set up CAPPA. Has that gone down well within the EU Commission?
(Mr Slade) CAPPA being the new organisation? I have
touched upon it but only in passing in the course of my work.
It is still being set up. It is still relatively new. It is more
164. You are saying that it has not formally
been registered, as far as you are concerned?
(Mr Slade) I have colleagues in Reading this week
who work in a sister unit of mine who are looking into and will
be interested in the new setting up of paying agencies within
the UK. I have not had a chance yet to come and see it in operation
so I cannot make any comment on that. I guess it is being done
for restructuring and improvement purposes.
165. Given that there was criticism advanced
by the EU itself, I understand that the Commission made some general
comments specifically about the British Government, although that
may be true of other governments, and I would be interested in
your response, not necessarily to the detail of CAPPA and what,
as a payments organisation, it will do but just conceptually,
pulling this altogether and getting rid of the divisions between
intervention and other forms of payment?
(Mr Slade) Yes, we had the nine regional service centres
previously of MAFF running direct subsidies and the Intervention
Board in Reading and Newcastle, taking care of export refunds
and the other schemes, milk intervention and so on. I guess that
the different levels and the interplay between those servicesand
I am guessing now because I do not have any particular inside
informationhas been decided. If there has been criticism
or any observations from Brussels, I am guessing it was to do
with the possibly unncessary complexity of the structure as it
was and in the face of those observations, the UK authorities
have decided themselves to restructure for the better. I am not
in a position to say. But that must be the answer. You talked
about the public perception of Brussels. I am not going into the
politics of it. That is not my job. I do things. I make things
work. I make things happen. I enforce them. I do not have any
views on what the British or the French think about Europe, to
be honest. I try to do my job. I have not been sent here with
any political instructions for public image purposes, no, not
166. That leads me onto my second question which
is the issue of gold-plating. We have had the report from the
Haskins Better Regulation Task Force. Is that an important issue
within the EU as a whole because sometimes we get the feeling
from this side of the water that we are pretty much in isolation
and everyone is reasonably happy with what is going on. Could
you just give us a feel as to what the user view is in terms of
(Mr Slade) In the context of IACS I can. You refer
to the red tape review.
167. We have had a red tape review and Haskins.
(Mr Slade) In particular I would say, in relation
to the new schemes that are subject to IACS control, that we had
been considering means to simplify and streamline the controls.
Two years ago when I visited farms around Europe, I was aware
that matters were becoming too heavy because a week later the
vets would look at the same animals for more or less the same
purposes, which was to verify the database. There is a need to
streamline the on-farm control approach and to make it less burdensome
for the national authorities and less burdensome for the farmers
who do not want to be away from the farm for two days instead
of only half a day or one day as is really required. We are conscious
of that. During last year "simplification" became an
in-word. Not only the European procedures, but also the national
procedures in the IACS context, came under review, which was very
useful. The French undertook a similar exercise. I know that the
Germans were doing a similar thing, so we had three important
member states already looking at how things were going and deciding
universally that things could be done better and in a more streamlined
way. We were already thinking along those lines, but it is less
easy to get agreements between 15 member states. For each measure
of control there has to be a sanction which is not so easy. Towards
the end of last year matters came to a head. There were contacts
between the British authorities, the French authorities and I
believe the German authorities, and all the reviews led to certain
pressure being put on the Commission at the highest level. I was
at a meeting with the French presidency with my director general.
That is not quite as high as it gets, but that is as high as it
gets for me. It was made clear that certain matters needed to
be done, which we have taken in hand, and we are trying to push
them through during the course of this year. Those reviews had
positive effects, yes.
168. I was struck by the visit that we paid
to Ireland, where theyby which I mean the Government, the
farmer representatives, presumably allied closely with the EUset
about redefining their forms and the way in which the mechanism
operated. Are the British, particularly the civil servants, still
somewhat aloof and not clear as to how to play the game, which
is to write the rules yourself and negotiate them with the EU?
We tend to wait until everybody else has moved and then lock ourselves
into some long-winded bureaucratic mechanism so that we never
quite catch up.
(Mr Slade) It is not for me to answer that question,
but I shall take the plunge. Yes, I think that there is a bit
of that. The Irish are a little more close. It may be the case
that agriculture is more important to Ireland than it is to the
UK. That is not a belief on my part, but that may be the case.
Maybe they keep their ears to the ground and maybe they decided,
after seeing the reaction of the Commission to the examination
of their systems and controls, that there was a possibility of
cutting the red tape and they seized that. The only time I had
ever done anything like that before was when I accompanied my
former director, Mr Holmqvist, to Ireland, to a special agriculture
committee, like this, in Dublin. We were asked similar types of
questions. I believe that that was part of their review process
and I believe that a year later those improvements started to
take effect, if they are improvements. I have yet to audit them.
Maybe I shall go there and find that there are serious deficiencies
in the Irish system that were not there before. Then there would
have to be consequences as usual. I do not anticipate that but
one never knows.
169. You have intimated that you have looked
at disallowance and what happens in different parts of Europe.
Where is the UK in all this? Are we overly worried about disallowance?
(Mr Slade) Yes. I would like to enlarge on that. Yes,
a few years ago there were high financial consequences in the
sheep premium, for example, the ewe premium. That is the so-called
sheep annual premium in the UK. The total disallowance, as you
call it, the total financial consequences approached £100
million over three marketing years, if I remember correctly. That
was for the whole of the UK. That was a severe knock-back. Of
course it is all relative to how much the UK pays. The UK is the
biggest beneficiary of the sheep annual premium scheme. The financial
corrections ranged from 2 per cent to 5 per cent and 10 per cent,
depending on the region and on the control forms that were judged
to be inadequate. Those cases were being dealt in 1995, 1996 and
1997. Of course, as part of the team that took part, I think the
consequences were correct; I think it was done for the right reasons;
we made a case. As a result of that I feel that there has been
a knee-jerk reaction by the UK authorities, who have a perception
of myself and my colleagues as being people who stamp around Europe
and at the slightest misdemeanour are willing to make a swingeing
5 per cent fine and refuse financing. They are accountable for
that to the authorities and to Parliament. I understand their
caution. I do not want to criticise in that respect. However,
in some cases the financial consequences have been over-emphasised
and possibly misunderstood, and I believe that the over-reaction
has gone a little too far.
170. In relation to Ireland, the Irish Government
and the Irish farmers have a common interest in trying to maximise
how much they get out of the system so that they can work together
cheerfully. The French used to have that approach and I believe
that they still do, although it depends where France sits in the
net contribution league table. But that is not true of the UK,
is it? The farmers want to get more out of the system and the
British Government does not. We are net contributors and the CAP
is a burden. It is more difficult for the British to play the
system advantageously simply because we do not have a financial
interest in that sense. That is a political comment.
(Mr Slade) Leaving aside the fact that it is possible
to manipulate the rulesit is my job to find out about that
and if I do, the French and the Irish paylike a good accountant,
we will find the ideal system to minimise your tax, legally of
course. Such is the case in a number of member states. Yes, I
believe that France and Ireland have that approach to facilitate
claims by their farmers. I do not necessarily agree that the UK
does not have that approach, but in those countries they do have
it. In Mediterranean countries, Portugal, Spain and Italy, often
the local farmers take their details to a local farming union
representative's office, or to a local branch of the ministry
of agriculture to have his form completed for him. In some countries
there may be a lot of peasant farmers, but their forms are immaculately
filled in because they are all done by someone in the office whose
job it is to do that. They are all typed out and the data is put
into a computer and printed out. That is a way of maximising the
benefits. That is legal and within the system. Why not? Databases
would help that.
171. You can then have remarks made by a number
of people. When we visited our regional offices the officials
said they are policemen and they think of themselves as being
policemen and not facilitators.
(Mr Slade) That would depend on whom you spoke to.
It is the job of my colleagues in Reading, to whom I referred,
to see that the structures are properly set up, that the agency
is dispersing the funds and that the operations are well separated.
There has to be a division of duties. It would depend on whom
you spoke to. Some people in the regions effectively are policemen.
Their job is to control and to find irregularities, deliberate
or otherwise. On the other hand, I have visited four or five of
the nine regional services and they always had someone on the
end of a telephone who could give advice and there is always an
office where the farmers can come for advice and help in completion
of the forms. My job is to ensure that those same people giving
the advice are not the ones who the next day will go to see the
farmer. Generally, that is not the case. I do not believe that
all of them feel like policemen, and they should not.
172. I understand that the directors of the
various paying agencies in different countries meet perhaps twice
a year to discuss various issues. Who controls that agenda?
(Mr Slade) That is a good question. They take place
every six months, I believe following the presidency. It is the
member state that organises the conference, in consultation. I
have a colleague who helps and facilitates the interpretation,
the fundingI believe that there is some funding from Brusselsso
between them they fix the agenda. I believe that the member state
decides, in consultation with other member states or other directors
who have a great deal of autonomy. They may fix the whole agenda
themselves. I do not think we play a part at all. It depends what
is topical and in what they are interested.
173. Is that seen by the Commission as a mechanism
for spreading best practice?
(Mr Slade) Yes, certainly. I think it was instigated
by ourselves, one way or another; or at least, if not instigated,
it was encouraged in the early stages. It is important that the
people who know go.
174. A few minutes ago we were discussing the
fact that different member states have different approaches to
implementing what should be a common policy. If it is a common
policy across all member states, it should be implemented in a
common way as far as the farmer is concerned.
(Mr Slade) I agree. We like to ensure that the national
authorities treat their farmers with equal weight across frontiers,
175. Does the Commission see part of its role
as a responsibility to examine the way in which different paying
(Mr Slade) Yes.
176. Does it also have a role to seek out best
practice and to ensure that that best practice is followed across
all member states? How pro-active is the Commission in that process?
Is it simply a matter that is left for the directors of the paying
agencies to have their six-monthly chats and decide whether or
not they should do anything?
(Mr Slade) No, it is not left to them at all. I am
not sure what they do. That is another issue. I am pro-active.
After 10 years in the animal premium sectorI moved out
of that recentlyI have been around and I see what are good
practices and what is good control and what is not. All controls
have to have an objective. Do not go somewhere, spend a day doing
nothing and come away and write a report. There has to be an objective.
My colleagues, and Commission and myself are pro-active in trying
to get across best practice. We try to cut out those pieces that
we find that are inefficient and useless. We do not want armies
of inspectors going around doing nothing. We want them working
in an efficient way. We regularly make recommendations. After
what we call a "mission", after each on-the-spot audit
that can take a week, we send a letter containing not only observations,
criticisms, recognition of good points and encouragement, but
also recommendations as to how matters can be improved. We try
to put some of them into the regulation. We drafted Article 6
of 3887. That gives a minimal content of what is a decent control.
It cuts through the chaff and gets to the essence of what we believe
is necessary. We did not want "hello-goodbye" controls;
we wanted them to have constructive, effective content. Everyone
has to do that. If they do not, we apply financial constraints.
That is already done in member states. We want best practice,
but my forte is on the control side. Administrative areas and
form-filling are not really my area.
177. On that last point, I recognise that from
your perspective you are looking at it from an audit point of
view and, therefore, you want to ensure that money is not paid
to people who should not receive it. In terms of the Commission
as a whole, from the Commission's point of view is there an emphasis
on spreading best practice, and saying that you want to ensure
that every farmer who is entitled to a payment receives it and
that the systems that are set up actually enable that to happen?
(Mr Slade) I would hesitate to say that the Commission
was pro-active on that side of things. However, we must not forget
that there are twice-monthly management committee meetings organised
by the Commission in Brussels at which all member states are represented.
There are many forums for the exchange of views. Whether the farmers'
interests are among them, I am not sure. That may be the case.
Perhaps I can return to one matter. I want to stress that my service
sees it as an obligation to ensure that there is fair and equal
treatment to the member states, to the farmers across the EU.
I would be failing in my job, and I would be criticised for it
at a later stage by other services, if it were found that I had
not accepted some things in some member states but had let them
go in others. That is very close to my heart and very close to
the heart of my service.
178. Referring to the document that MAFF submitted
to the Committee, there is a reference to the Panta Rhei Group.
Can you tell the Committee what it is and what it does? Who is
responsible for it and who is on it?
(Mr Slade) Certainly, I can give you some background
information. It is an informatics group that meets fairly regularly,
perhaps two or three times a year. There are delegations from
all member states. They meet in different countries. It is organised
by our informatics expert who is in a sister unit, in a clearance
of accounts unit, but a sister unit to the IACS one. Really Panta
Rhei is an exchange of information on aspects of technology in
the context of paying agencies, clearing the accounts, financial
declarations of expenditure to the Commission and so on.
179. On inspections, we understand that since
the autumn consideration has been given to a single control inspection
per farm rather than one for each aid scheme. What progress has
so far been made on that?
(Mr Slade) MAFF came to see us to discuss the possibilities
of the framework last October or November. Did you say this autumn?