The Environment, Food and Rural Affairs Committee
has agreed to the following Special Report:C
The Committee has received the following memorandum
from the Department for Environment, Food and Rural Affairs, constituting
Reply to the Seventh Report from the Committee of the 2000-2001
Session, The Implementation of IACS in the European Union,
made to the House on 28 March 2001.
* * *
1. This reply to the Committee's report is submitted
on behalf of the Government by the Department for Environment,
Food and Rural Affairs which, following a Government announcement
on 8 June 2001, took over responsibility for agriculture and the
food industry from the Ministry of Agriculture, Fisheries and
Provisions included in EC legislation are directly
applicable in Member States and are not open to interpretation
We commend the cooperative working arrangement
found in France and Ireland both to MAFF and to representatives
of farmers in the UK (paragraph 12).
2. The Department accepts this recommendation and
will actively consider with the appropriate farmers' representatives
how to develop more proactive and cooperative arrangements.
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 (paragraph 15).
3. The Department notes these observations. There
have been useful exchanges with officials from other Member States
on a number of IACS [Integrated Administration and Control System]
issues including central databases, remote sensing checks, controls,
GIS and area measurement both at meetings of the IACS Experts
Group at specialist meetings. Officials have visited a number
of Member States including France, Denmark, Sweden and Austria
to discuss IACS issues and there have also been exchanges on livestock
issues. The new Paying Agency will consider whether a more structured
approach to visits and exchange would be beneficial.
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 (paragraph 17).
5. The Council of Ministers is actively involved
in the implementation of IACS through the twiceyearly Conference
of Directors of EU Paying Agencies. These conferences, at which
the Commission is represented, provide an opportunity for Member
States to exchange information on best practice and to describe
the efforts they are making to improve scheme administration.
We welcome the European Commission's initiative
to make new agricultural legislation as simple as possible from
the outset and look forward to receiving reports on its progress
6. The Department will continue to take forward the
work on simplification actively. This is of great importance
both to the farming industry, as demonstrated by the work of the
three Red Tape Working Groups set up in 1999, and to the Department
as it moves forward with plan to modernise its implementation
of the Common Agricultural Policy through the creation of the
new Paying Agency.
Work on the simplification initiative is being taken
forward in a Working Group chaired by the Commission. It covers
a wide range of issues: codifying and simplifying legislation;
harmonising requirements on e.g. deadlines, interest rates, import
quotas; a review of reporting requirements; and suggestions for
simplifying the various sectoral regimes. Several Member States,
including the UK, have put in requests for simplification and
the Commission gave an initial response to these at a meeting
on 7 June. The Group has also discussed a draft Commission regulation
setting the detailed rules for the Small Farmers Scheme, which
was agreed by the June Agriculture Council. Work on codifying
and simplifying the IACS rules is being taken forward by an Experts
Group, which met to look at a draft regulation to replace the
current regulation on 2021 June. Further meetings will
be held in September and October with a view to getting the new
rules into place by the beginning of next year.
While it is easier to combine inspections of livestock
schemes, we believe that the businessbased inspection system
should also extend to all other schemes under IACS, including
arable schemes (paragraph 22).
7. Fully integrated businessbased inspection
is a longterm objective for the new Paying Agency but,
given the nature of agribusinesses in the UKand the need
to determine risk factors for both land and livestock schemes,
implementation will necessarily be complex. Moving to a businessbased
approach to the bovine schemes, which is provided for in the new
proposal currently under discussion in Brussels, is a first and
significant step. The implications of this approach, both for
farmers and for Departments, will need to be fully reviewed before
it is widened to cover other schemes.
8. The Department is well ahead with the Combined
Bovine Risk Analysis (CoBRA) project, which aims to select farms
for a combined inspection under all the various beef subsidy schemes
and the cattle identification rules, rather than selecting inspections
on the basis of each individual scheme. This is in line with
what the Commission is proposing.
We recommend that MAFF support the pilot small
farmers' scheme and actively consider amendments which would make
the scheme more appropriate to the UK with a percentage target
(say, 10 per cent) for the number of farmers meeting the criteria.
We also recommend that consideration be given to introducing
a euro limit, which could vary for each Member State in relation
to average subsidies (paragraph 24).
9. The Government has been broadly supportive of
the Commission's proposal to introduce a "Small Farmers Scheme",
which was agreed by the Agriculture Council in June. However,
discussion of the detailed rules has only just begun and Ministers
will need to consider the outcome of these discussions, together
with the results of the consultation exercise, before deciding
whether or not to introduce the scheme. The report records concern
that only very few farmers in the UK would meet the eligibility
criteria. The Committee may care to note that recent analysis
suggests that some 15% of those UK farmers who currently receive
payments under those schemes covered by the proposal would be
eligible to apply.
We recommend that the UK Government continue to
push for improvements to the penalty regime, which make a sanction
proportionate to the offence (paragraph 27)
10. In common with other Member States, the Government
is pushing for simplification and indeed better proportionality
in the application of administrative penalties. However, the
Commission which is concerned that proper control is exercised
over expenditure on the CAP and sees the penalty regime as an
effective disincentive for farmers to make inaccurate claims,
is reluctant to soften its impact. While the UK generally supports
measures that help to prevent CAP fraud, the Government feels
that it would be possible to strike a better balance between fairness
and deterrence and will continue to press this view during the
discussion on the IACS changes.
We recommend that MAFF press the Commission for
clarification on how environmental measures are to be dealt with
within the IACS system and ensure that environmental objectives
are not undermined by IACS rules (paragraph 28).
11. The IACS system is primarily concerned with controls
and the proper enforcement of rules agreed by the Council for
agricultural support measures. There is no intrinsic reason why
these controls should jeopardise environmental objectives. A range
of benefits and safeguards for the environment already exists
in the land management practices permitted by the setaside
and extensification rules. MAFF advice on setaside highlights
these environmental advantages and maximises flexibility within
the rules. The Commission is fully committed, as is the Council,
to the integration of the environmental objectives into the CAP
under the Cardiff process: as recently as April 2001, the Council
agreed further conclusions driving forward this process of integration.
The Government will continue to press for environmental objectives
to be kept to the fore during any negotiations to reform the CAP
12. On the specific issue of the maximum width of
field margins that could be included in claims for arable area
payments, the Committee is already aware that, following intensive
contacts between the Government and the Commission, a satisfactory
outcome was achieved that took account of environmental concerns.
We welcome the Government's commitments on influencing
European policy made in response to the Haskins report and we
expect these principles to be applied to the details of implementation
as well as to the formulation of new regulations (paragraph 30).
We recommend that MAFF ensure that the IACS
scheme literature and supporting advice system be reviewed in
time to implement the 2002 scheme guidance notes, regardless of
the development of CAPPA (paragraph 34).
We recommend that MAFF use the data gathered
at the time of the submission of IACS forms to access the real
cost to farmers of the paperwork involved (paragraph 35).
The current error rate on application forms
is unacceptable and must be reduced. As a first step, we recommend
that MAFF conduct detailed analysis of not only what errors are
commonly made but how and why they are made in order that the
results may inform the future design of claims forms (paragraph
We recommend that MAFF conduct a full analysis
of the Irish forms with a view to reducing UK IACS forms along
similar lines (paragraph 38).
13. These recommendations are noted and accepted
in principle. However, while the Department undertakes to review
the issues raised by the Committee and to make changes to the
2002 scheme literature where possible, significant change and
innovation can only take place as the new Paying Agency implements
its IT strategy and working practices. The Department will also
consider whether it would be beneficial to adopt some aspects
of the shorter Irish IACS forms. However, given the very different
structure of farming in the Republic of Ireland and in England,
where there are many more large arable farms, some additional
complexity is likely to remain. Indeed, it is here that the most
immediate benefits of electronic IACS forms, with their builtin
frontend intelligence, are likely to be realised.
14. The Committee commented that the high rate of
errors in aid claims was unacceptable. The Department accepts
the need to bring the error rate down, both by simplifying the
IACS rules and through the development of electronic forms and
databases by the new Paying Agency. However, it also has to be
recognised that the 'obvious error' rules, which allow certain
types of mistake in claims to be corrected without penalty, are
of benefit to farmers.
We recommend that MAFF develop plans to address
the concerns expressed by the IACS and Inspection Working Group
as to assisting the understanding of eforms by the industry
and ensuring that Government does not lose sight of the needs
of those businesses which cannot embrace ebusiness (paragraph
15. The Department's objective is to make full use
of etechnology as part of the developing strategy for the
Paying Agency strategy. Further promotional work will be undertaken
to build on the introduction of eforms for IACS this year.
16. The Paying Agency is developing a strategic architecture
for electronic forms in order to establish a common approach to
all claim forms. The Agency is looking to use webform development
tools to provide a userfriendly interface that: leads users
through the questions in a way that is efficient and easy to understand;
which reduces the time taken to complete the forms; and makes
them attractive to complete. The aim is to develop an "inclusive"
approach to electronic service delivery, supporting and encouraging
both those who have access to the Internet and those who do not,
so that both communities can share in the benefits of ecommerce.
The Agency will, of course, continue to provide facilities for
those who are unable or unwilling to access this new technology.
We recommend that MAFF support moves towards
a paperless system of claims for support payments (paragraph 41).
17. This recommendation is accepted. The Department
agrees that the bovine schemes may provide the initial opportunity
for the development of a paperless claims system once the Cattle
Tracing System is fully accredited by the European Commission.
We recommend that MAFF establish a permanent
external panel on the simplification of IACS forms and guidance
and related matters, along similar lines to Scotland (paragraph
18. The Department notes this recommendation and
accepts it in principle. As the Committee is aware, there are
already informal consultation processes in place for all CAP scheme
literature but there is merit in a more structured approach.
Given its name, the degree of integration between
the administration and control of different scheme within IACS
is far too low and we recommend that MAFF move towards a fully
integrated system, either at its own discretion or through initiating
changes at European Union level as necessary (paragraph 45).
19. This recommendation is agreed in principle and
is one of the objectives for the creation of the new Paying Agency.
This provides a unique opportunity for progress but, as acknowledged,
some adjustments will also be needed to EU legislation. These
are being addressed as part of the simplification process.
It is clear, from the reaction to GIS and to
eforms, that the industry is willing to embrace change and
to make it work B
if farmers can be persuaded that it is practical and desirable
and has some direct benefit to them. Above all, it is vital that
any new systems are designed so as to reduce the bureaucratic
burden on farmers and administrators and to make the process less
complicated, rather than more so. This means that there should
be a preference within MAFF for reducing the number of forms,
which a farmer has to complete, regardless of whether they are
on paper or on line. Moreover, the technology has to work. IACS
payments are too important to farmers to risk any mistakes or
delay in their delivery. We expect MAFF, in implementing GIS
and new computer systems, to show that it has learnt the lessons
from failed Government IT projects of the past and has also taken
steps to benefit from the experience of those parts of UK Government
like the Inland Revenue which have had IT success as well as from
other Member States which have already established similar systems
20. This recommendation is accepted. The Department
is committed to reducing paperwork and is using the strategy suggested
by the Committee. All forms are reviewed for need and content
at least once every 3 years, often in consultation with industry.
All new forms require the approval of Ministers and are trialled
with users before being issued.
21. The Department accepts the need to monitor large
IT projects, such as the implementation of a Geographic Information
System (GIS) carefully and to learn the lessons of both earlier
failures and successes.
We will continue to monitor progress on CAPPA
and strongly recommend that if at any stage significant problems
are identified, MAFF Ministers delay the CAPPA project rather
than compromise the high standards required (paragraph 51).
22. The Department is taking a pragmatic approach
to ensuring that the high standards of service necessary to make
prompt and accurate payments to applicants are not jeopardised
during the transition to the new Paying Agency. The transition
will continue at a pace which takes account of other pressures
on the business and will be guided by the risk management strategy
already embedded within the Regional Restructuring Programme.
Evidence of this approach can be found in the Quarterly Report
on the Programme that was submitted to the Committee on 8 May.
The decision has been taken to delay the timetable by six months
in order to implement essential work that was not undertaken as
a result of the suspension of the NURAD development. In addition,
whilst the Department is continuing to drive the programme forward
wherever possible, a decision has been taken to delay elements
that depend on user input until the staff resources that have
been diverted onto Foot and Mouth Disease duties can be recovered.
This has required further reworking of the programme timetable
and has added a delay of at least 3 months.
We support the establishment of an independent
appeals mechanism in England in accordance with the industry's
wishes and look forward to examining details of the outcome of
the consultation (paragraph 55)
23. The farming industry responded positively to
the Department's proposal for a threestage appeals mechanism
for IACS in England. A good deal of detailed work remains to
be done but the aim is to work with industry so that the new arrangements
can be introduced as soon as possible. A summary of the responses
to the consultation exercise is attached at Annex A.
First, MAFF could demonstrate more clearly its
recognition of the burdens imposed on farmers by the IACS system
and ensure that the impact on the industry of new or amended regulations
is fully taken into account during negotiations and implementation.
We welcome the progress made in this area with the ongoing simplification
process but the difficulty caused by the inadequate notification
of changes to the two metre rule shows that such consideration
are not firmly embedded in MAFF's current thinking. Second, MAFF
should recognise the importance of IACS payments to farmers and
aim to pay all but contested claims on the very first day of the
payment window. MAFF's current plans to meet this target are
reliant on the industry moving to electronic forms. We believe
that MAFF should be able to do this even with paper submissions,
by planning backwards from that target date. Third and perhaps
most importantly in terms of proof of change in attitude, MAFF
should recognise that it is too restrictive in its definition
of the advice function of its staff (paragraph 57).
24. The Department accepts the need to keep the industry
informed of changes to scheme rules. On occasions, as in the period
leading up to this year's IACS deadline, when it was imperative
to provide farmers with the flexibility on scheme rules that they
needed to cope with the impact of flooding and Foot and Mouth
Disease (FMD), changes have to be introduced at short notice.
Farmers were informed of these changes by letter. However, the
Department accepts that in normal circumstances adequate notice
of changes should be given.
25. The Department also recognises the importance
of IACS payments to farmers. Although this year's processing
of claims will be complicated by the changes to scheme rules,
and in particular, by the facility for farmers to make adjustments
to their claims up until 15 June, the Department will endeavour
to make as many payments as possible during the period from the
beginning of the payment window on 16 November.
We recommend that MAFF establish plans, within
the new arrangements for IACS administration, to be more proactive
in its assistance to farmers, always keeping the right side of
the European Commission rules on control (paragraph 58).
26. The issue of culture and practice is indeed important
and an objective of the new Paying Agency is to develop its business
in a way which minimises burdens on applicants. The aim is therefore
to develop a culture, which improves the way customers interface
with the Agency and provides them with the information they need
to make their claims efficiently, so that payments can be made
27. The issue of advice is a sensitive one. Advice
and information needs to be unambiguous so as to ensure the customer
can make appropriate claims. However, the Paying Agency must
work within the legislation and there will always be cases where
applicants will need to take specialised advice on practical issues.
The Department does, nonetheless, accept that it is important
for guidance to cover the regulatory requirements adequately and
that the Government should strive in the European context to seek
practical solutions that meet the industry's needs.
No explanation was given as to why three per
cent had been chosen as a target reduction for MAFF's efficiency
indicators relating to CAP administration; some effort should
be made to justify this figure (paragraph 59).
28. During 2000/2001, the Regional Service Centres
worked to the targets for CAP administration set out in the bullet
points in paragraph 59 of the report. As part of the process of
improving their efficiency, they were also set a 3% efficiency
target in respect of 3 types of processing cost. These provisional
targets were set within the Business Plan for the Regional Services
Group for that financial year and were derived from data for earlier
financial years With the transition to new regional structures
and the creation of the new Paying Agency, the Department now
has a Public Service Agreement target for improving value for
money, which is "To achieve a reduction of 10% in the unit
cost of administering CAP payments by March 2004" ".
We recommend that MAFF undertake a benchmarking
exercise between the four paying agencies in the UK which operate
similar systems (paragraph 60).
29. The Department keeps in close touch with the
Agriculture Departments in the other parts of the UK which operate
similar systems of direct payments to farmers. There are regular
meetings and exchanges between those involved in the operations
of the four paying agencies and these provide opportunities to
exchange information on best practice and innovative projects.
Further consideration will need to be given as to whether it
would be beneficial to undertake a more structured benchmarking
exercise on particular aspects of scheme implementation.
We recommend that MAFF examine the possibility
of developing an agreed protocol with farmers' representatives
in England on improvements in the quality of service, its delivery
and the information provided by MAFF and its agencies to farmers
with the emphasis on those matters which are most important to
farmers (paragraph 61).
30. The Department is already committed to introducing
IACS appeals arrangements for farmers in England.The new Paying
Agency is giving serious consideration to how best to interact
constructively with the industry and has established an Industry
Forum to enable major customer representative groups to input
into its development. Once these developments are in place, consideration
can be given to whether an agreed protocol with farmers' representatives
would offer additional benefits.
We cannot make recommendations aimed a private
sector organisations but we hope that farmer's representatives
will give positive support to any attempts by MAFF to simplify
the system and to change the culture of administration (paragraph
31. The Government notes the Committee's comments
and would welcome support from the industry on its drive to simplify
CAP schemes and their administration.
Department for Environment, Food and Rural Affairs
2 August 2001