Select Committee on Public Accounts Third Report

4 Applying penalties for irregularities

24. The Department only applies penalties where the European Commission requires it to do so—that is, for late submission of claims and shortages of sheep at inspection. The level of penalties actually applied for claims irregularities in Northern Ireland has been relatively low, compared with the rest of the UK.

Increasing the rate of penalties applied

25. In a comparison of statistics across the British Isles for 1998, the proportion of the Department's farm inspections that led to reductions in claims was the lowest, by some measure—3.1% compared, for example, with England at 4.9% and the Republic of Ireland at 6.5%. Similarly, the proportion of scheme claims reduced as a result of checks was markedly lower in Northern Ireland than elsewhere. The Department conceded that the statistics reflected the more slack inspection regime which it had been operating. It pointed out, however, that the situation has been improving with 7.3% of inspections in 2002 leading to reductions in claims. While this is welcome, it does serve to underline the extent to which there was scope for improvement. A penalty system, properly applied, can provide a strong deterrent effect to farmers who might otherwise fail to observe the rules of the scheme. It is important, therefore, that the Department rigorously enforces the EU rules at every opportunity.[24]

Introducing penalties for poor flock records and markings

26. On those aspects where there is discretion to apply penalties, such as poor flock records and markings, the Department has no penalty system. In making the policy decision in 1997, the Department estimated that a strict enforcement of rules on proper flock record-keeping would result in some 50% of cases being penalised. It decided not to enforce the rules on flock records right away, but to 'toughen-up' the following year. However, this toughening-up never materialised.[25]

27. The Department has stated that, provided the correct numbers of sheep are present at inspection, it has no authority to reduce the payment of premium, irrespective of the poor standard of flock records and markings. When this Committee looked at the Sheep Annual Premium Scheme in England, we recommended a separate system of graduated penalties for shortcomings in flock records. We are in no doubt that the introduction of a similar system in Northern Ireland would go a long way to raising the overall standards.[26]

28. We are keen that recommendations which we make for England are translated across to Northern Ireland. However, this has not been happening as effectively as it should have been. While we expect the Department of Finance and Personnel to play a pivotal role, the process would be enhanced if Northern Ireland departments were to liaise closely with their GB counterparts, not just on matters of policy, but also on Public Accounts Committee reports.[27]

24   Qq 146-149; C&AG's Report, paras 4.2-4.7 and Appendix 4 Back

25   C&AG's Report, paras 4.8-4.12; 38th Report from the Committee of Public Accounts, The Sheep Annual Premium Scheme in England (HC 362, Session 1999-2000) Back

26   Q 16 Back

27   Qq 16-19 Back

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