Select Committee on Agriculture Seventh Report


Division of responsibilities

8. EC legislation lays down detailed requirements with regard to the framework for control of expenditure (Council Regulation 1258/99) and rules for accredited paying agencies in Member States (Commission Regulation 1663/95).[8] Another Commission Regulation (EEC) No. 3887/92 sets out detailed rules for the implementation of IACS, including the proportion of claims subject to inspection and the risk criteria for selecting them, the sanctions to be imposed for over-declarations and late applications, reimbursements of over-payments and penalty provisions.[9] These provisions are directly applicable in Member States and are not open to interpretation. However, much is left to the national law of the Member State to determine, ranging from the minimum size of a land parcel to criminal offences.[10] Member States are also responsible for setting the period during which animals must be kept on farms to qualify for the various schemes (retention periods) and the number of claims an individual farmer may make in livestock schemes.[11] In addition, national authorities design the claim forms and scheme guidance issued to farmers. The European Commission, from the auditor's point of view, is interested only in "the minimum legal requirements".[12] The national authority is responsible for translating the regulations into "the type of language that a) the customer will understand and b) that our staff in administering the scheme will understand and follow".[13] This division of responsibilities must be borne in mind when considering how each Member State implements the IACS system.

Differences in practices in other Member States

9. It should be noted at the outset that IACS matters more in certain Member States than in others. All must follow the same rules but the amount of money involved varies greatly between the different Member States as figure 1 below illustrates. Although the duties imposed by the system on national authorities are identical, the weight of the burden and the scale of the benefit this represents will obviously be relative to the number and value of claims.

Note: SCP - suckler cow premium; BSP - beef special premium;

EXP - extensification premium; SAP - sheep annual premium.

Source: MAFF, Ev. pp. 62-4.

10. It is also clear that differences in the way in which IACS is administered and the difficulties faced by authorities in applying the rules will depend on local farming practices and traditions. For example, the system will be much simpler to apply where farms tend to be all of one type. Mr Slade pointed to Austria as a country whose good record on implementation was assisted by the fact that it had "fewer animals, fewer variations in crops, fewer surfaces for cropping" than some others.[14] In Ireland, the IACS forms had been reduced to the contents of one A4-sized piece of paper. MAFF officials argued that the differences in the level of detail demanded on IACS forms between the UK and Ireland was explained by the tendency in the UK towards large and complex farming operations which led to greater complexities in the information which had to be provided.[15] They also noted that Ireland had relatively few arable area claims compared with England.[16] National traditions and practices can also make a significant difference. The IACS and Inspections Working Group, which examined scheme literature from seven Member States (including the UK), concluded that "any differences in administration were often a reflection of different national situations, be they legal or social".[17] Examples of the former would include the long-established land registry used in Germany or France. The latter could refer to the "different tradition of civil society" which persists in some countries where membership of a local chamber of commerce is compulsory, providing a natural conduit between the officials and the farmers.[18]

11. Hard examples of differences cited to us often shared a common theme of investment by Member States in technology which had allowed them to improve the system within the existing rules. Mr Curry, for instance, praised the Netherlands for its exploitation of a computerised national cattle register established in the early 1990s to simplify the forms for farmers;[19] whilst the Irish Government's investment in a digitised mapping system (with the aid of EU money) had enabled it to provide clearer maps and simpler forms.[20] Similarly, the NFU identified investment in IT and databases as key factors in advances made in other Member States from which the UK could learn.[21] MAFF officials accepted that some countries had invested earlier in technology or, as in the case of Sweden, had established their systems at a later date, with the result that their IT was more up to date at the moment than that of the UK.[22] Rather unconvincingly, MAFF argued that the effect of these changes might be diminishing since developments in technology meant that even the Irish system now required updating.[23]

12. Nevertheless, we found that the major factor in the differences was undoubtedly the cultural attitude towards administration in each Member State. In both France and Ireland we observed that the officials worked much more closely with the farmers and their representatives than in the UK. In the case of Ireland, the Government had gone back to first principles to rewrite the application forms and reduce paperwork to the bare minimum. A protocol on direct payments, agreed with the unions, set out in clear language exactly what the farmer could expect from the system and what his own duties were. Mr Slade from the European Commission told us that in other countries officials completed the forms for farmers, requiring only their signature.[24] Although we endorse Mr Curry's conclusion that "farmers in other Member States regard the systems as bureaucratic and burdensome",[25] we also recognise that where the bureaucrats are available to help, these burdens can be lightened considerably. Moreover, it is notable that both in Ireland and France we discovered a more positive attitude amongst farmers' representatives to selling policy to their members once it had been agreed with the government. By becoming involved at an earlier stage, the representatives identified themselves with the outcome of decisions and took on more responsibility for making the system work. We commend this co-operative working arrangement both to MAFF and to representatives of farmers in the UK. Later in this Report, we make practical suggestions for changes which would demonstrate a change towards a more user-friendly culture on the part of MAFF.

The view of the European Commission and disallowance

13. Differences in administrative practices do not necessarily indicate that the system is unequally implemented or enforced throughout the EU. A central part of Mr Slade's job at the European Commission is to inspect exactly how Member States are fulfilling their obligations under IACS and to judge their performance. One measure he used was the amount of disallowance applied.[26] Figure 2 below sets out details of disallowance in each Member State from 1993-99, with the same information represented in figure 3 as a proportion of IACS scheme expenditure.

Source: MAFF, Ev. pp. 62-4.

* The average disallowance over the period 1993-99 has been expressed as a proportion of total expenditure in 1999. Source: MAFF, Ev. pp. 62-4.

The UK emerges fairly badly from these figures. We were told that this was for historic reasons relating to the administration of the sheep annual premium scheme in 1995-7.[27] Mr Slade assured us that "for the most part, in recent years, the UK has avoided such financial consequences by good, proper, in the main, implementation of the control and sanction rules that apply".[28] He agreed that the UK's experience had left MAFF overly concerned about disallowance, offering the opinion that "in some cases the financial consequences have been over-emphasised and possibly misunderstood".[29] Other Member States were still suffering financial consequences because they had "failed to implement IACS to a satisfactory degree", including Greece which was "nearing the top of the list relatively in terms of financial consequences".[30]

14. In general, Mr Slade agreed that all farmers and their representatives complained of harsh treatment and that in each Member State "the ministries are usually convinced that they are ... more strict than anywhere else".[31] He pointed out that characteristics such as the complexity of agriculture patterns made it more difficult for some countries to control IACS payments and that federalised structures also made it difficult for central authorities to get "totally adequate and complete information".[32] In some cases, authorities had been unable to supply reliable information to the Commission as a result.[33] Nevertheless, Mr Slade concluded that, while "things do not run perfectly ... anywhere", "there are good aspects in all Member States."[34] His own view was that the UK authorities were not the strictest but were "certainly not the most lenient", depending on "which areas ... which aspects of the legislation we are talking about".[35]

Suspicions and secrecy

15. The degree of national discretion allowed in the implementation of IACS is perhaps one of the drivers behind the lack of "confidence that the system is applied uniformly throughout the EU" and "the belief amongst claimants in England and Wales that the system is simpler and far more efficient in other Member States."[36] The widespread existence of this belief is undeniable, as is the strength with which it is often expressed. Yet, it is notable that very few real, detailed examples are given of discrepancies between the Member States in applying IACS. We received no evidence at all, or even accusations, of specific practices abroad which breached the rules. The NFU suggested that there was "immense difficulty" in gathering information on how other Member States operate IACS and that "the information available from other Member States is scant and appears shrouded in secrecy".[37] The NFU Deputy President explained that despite the network of contacts with counterpart unions in the Member States, the complexity of the system made it difficult to get "clear and accurate information".[38] On the other hand, MAFF officials had found "no element of secrecy there at all" in their discussions with other national officials.[39] From our own investigations, we conclude that there is little intentional obfuscation of national practices but we agree with the NFU that the complexity of systems devised initially in Brussels but operated within Member States, particularly where there are federal constitutional arrangements, makes it difficult to gain a comprehensive picture of the realities of implementation. Where suspicions already exist, this can only exacerbate them. We also note that MAFF officials have had no brief to analyse systematically all alternative models. They should do that on a regular basis.

Increasing understanding and best practice

16. In order to produce a definitive answer to the question of whether UK farmers are particularly disadvantaged in the implementation of IACS it would be necessary to spend a considerable amount of time in each of the Member States. We have not been able to conduct such an inquiry. Nevertheless, we believe that Mr Curry was correct to conclude that "enforcement and the fear of disallowance led every Member State to apply the regulations as rigorously as possible", with the result that "All farmers in every Member State believe that their government are over-zealous in implementing European rules".[40] Like the IACS Working Group, we do not believe that "a more detailed study would have led to substantially different conclusions".[41] However, we do firmly believe that greater knowledge of practices in other Member States would be valuable in two ways. First, it would allow checks to be made on allegations or vague suppositions that certain Member States are not playing by the rules, thus providing hard evidence that competition was fair or alternatively that measures should be taken to ensure such fairness and reassuring those who feel over-burdened by the demands of the system. Second, it would allow the identification and dissemination of best practice throughout the EU.

17. Faith in the reliability of the information gathered would depend largely on which body took on responsibility for this task. Although there are existing fora for the exchange of ideas between national officials,[42] we believe that the European Commission could play a much greater role in this area. Mr Slade accepted that the Commission did have a role as regards best practice, and he indicated that following audit visits, letters were sent to Member States, "containing not only observations, criticisms, recognition of good points and encouragement, but also recommendations as to how matters can be improved."[43] He also stressed that his 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."[44] Nevertheless, he believed that its duty to provide Member States under investigation with a fair hearing would make it difficult for the Commission to share the information it gathered on how States operate IACS.[45] We appreciate the sensitivity of this matter but the Commission's central position in the implementation of IACS and its checking and monitoring procedures make it the only body which can publish reliable information on all Member States. We recommend that the UK Government, through the Council of Ministers, press the Commission for the publication of regular, up to date reports on the implementation of IACS in individual Member States. We further recommend that the Commission be required to highlight instances of best practice in such reports and to encourage the adoption of such practices throughout the Union, while realising that the central administrative role is a national matter.

8  Ev. pp. 41-42, para 7-8. Back

9  Ev. p. 41, para 5. Back

10  Ev. p. 41, para 6. Back

11  Q 148. Back

12  Q 162. Back

13  Q 199. Back

14  Q 156. Back

15  Q 215. Back

16  IbidBack

17  IACS Report, p. 14. Back

18  Q 291. Back

19  Q 17. Back

20  Q 22. Back

21  Q 82. Back

22  Qq212, 214. Back

23  IbidBack

24  Q 170. Back

25   IACS Report, p. 14. Back

26  Q 137. Back

27  Q 169. Back

28  Q 137. Back

29  Q 169. Back

30  Qq 137, 155. Back

31  Q 137. Back

32  Q 159. Back

33  IbidBack

34  IbidBack

35  Q 137. Back

36  Ev. p. 15. Back

37  Ev. p. 16. Back

38  Q 73. Back

39  Q 209. Back

40  Q 8. Back

41  Q 15. Back

42  Ev. pp. 44-45, paras 25-6. Back

43  Q 176. Back

44  Q 177. Back

45  Q 157. Back

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