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29 Mar 2006 : Column 281WH—continued

Single Payment Scheme

2.30 pm

Miss Anne McIntosh (Vale of York) (Con): Welcome to the Chair, Mr. Benton; it is a privilege to appear before you this afternoon.

I am delighted to have secured this important debate. I refer hon. Members to my declaration in the Register of Members' Interests and draw their attention to my claim during the last election to have been the champion of the countryside. I said then that I would campaign to promote farming in the countryside; I invite the Minister to state what similar claims he made at the last election.

I shall give a little history to put the debate in context. On 9 March, the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for South Dorset (Jim Knight), assured me in the House that the bulk of payments under the single farm payments scheme 2005 would be paid by the end of March. That has clearly not been the case. Before that, on 7 March, the Under-Secretary, in response to my written question, stated that he was

"pleased to report that the first Single Payment Scheme (SPS) payments were released from the Rural Payments Agency (RPA) on 20 February 2006. RPA is continuing in its efforts to make the bulk of payments by the end of March, and all payments are expected to be made before the 30 June 2006 regulatory deadline."—[Official Report, House of Commons, 7 March 2006; Vol. 443, c. 1258W.]

In the interim, the Secretary of State announced that the fiasco of the non-payment had led to the removal of the RPA's chief executive, who would be replaced, and that the review would be overtaken. As recently as Monday of this week, the House learned that as yet the Government do not seem to understand the gravity of the situation and the distress that it causes. That is the issue that I wish to explore.

The Government have presided over an unprecedented crisis of confidence in all sections of the countryside, from the foot and mouth epidemic to the latest fiasco of the non-payment of single farm payments in North Yorkshire and throughout England. The Government seem incapable of legislating on and administering farm matters.

The Rural Payments Agency is based in Reading, and that speaks volumes. I have nothing against Reading or its inhabitants, but how can someone who lives and works there be expected to have an understanding of and sympathy with the issues that concern those living in rural North Yorkshire? It beats me.

A number of my right hon. and hon. Friends who served with distinction in the former Ministry of Agriculture, Food and Fisheries are in the Chamber. I have consistently argued that since that Ministry was replaced, any person starting work at the Department for Environment, Food and Rural Affairs, or one of its agencies such as the RPA, should work in a trainee capacity for at least three months in every aspect of farming. They should visit auction marts, haulage firms, abattoirs and farmers markets and also supermarkets to see how the end products are sold.

Those officials are immensely powerful. They advise Ministers on what rules can and should be passed in both Westminster and Brussels. We now know the extent
 
29 Mar 2006 : Column 282WH
 
to which EU directives can be and are being ultimately embellished and gold-plated by quite low-placed officials. On top of that, they can never be contacted easily. Like every other Government agency—the Inland Revenue with its tax credits and the Child Support Agency with its child support payments—the RPA has descended into such a shambles. The Secretary of State had to sack the RPA chief executive.

Mr. Douglas Hogg (Sleaford and North Hykeham) (Con): Does my hon. Friend accept that one of the most astonishing things for those of us who have served in a Government is that DEFRA Ministers were not carefully monitoring the workings of the RPA? Will she press the Government on how Ministers could have been unaware of the catastrophe that was building up? Further, does she agree that this is a matter of ministerial responsibility? An Under-Secretary at least should go—probably the Secretary of State as well.

Miss McIntosh : I am grateful to my right hon. and learned Friend for that powerful and eloquent contribution. One of the sadnesses is that on numerous occasions in this sorry saga, a number of my right hon. and hon. Friends and other hon. Members have impressed on the Government, DEFRA and its Ministers that the payments were not being made and would not be made in time.

Mr. Patrick McLoughlin (West Derbyshire) (Con): The situation is slightly worse than my hon. Friend has just explained. The Government were warned by a proper report of a Committee of this House, but they ignored that and relied on officials instead. The dangers were brushed aside; a Minister went on the radio to say that the warnings were a nonsense and that the Select Committee Chairman did not know what he was talking about. However, it seems that the Chairman knew what he was talking about and the Minister did not.

Miss McIntosh : I could not have put that more eloquently myself. We are fortunate in having the Select Committee Chairman and the rapporteurs with us this afternoon.

Mr. Michael Jack (Fylde) (Con): Will my hon. Friend also note that an earlier report of the Environment, Food and Rural Affairs Committee flagged up concerns in October 2003 about the capability of the RPA, the process of change on which it had embarked and the state of its IT system?

Miss McIntosh : I am grateful to my right hon. Friend, and the House is grateful for the Select Committee's excellent reports. I have not had the benefit of reading all of the 2003 report, but should like to highlight two of the conclusions from the most recent report. They highlight the failure of the computer system, which led to cost overruns, and question the whole contract. Conclusion 7 speaks for itself:

"We are deeply unimpressed by the failure of Defra and the RPA to plan properly for the process of administering payments under the Single Payment Scheme."

That lends huge support to what my right hon. and hon. Friends have said.
 
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Mr. Alan Beith (Berwick-upon-Tweed) (LD): The factor that should have loomed large in the Secretary of State's mind was that she had chosen to use a more complex system than that used in Scotland and Wales, where farmers had been paid. Having made that decision, she should surely have been aware of the extra effort needed to make the payments system work.

Miss McIntosh : I agree entirely with the right hon. Gentleman. I hope that he will support our call for Lord Bach at least to be removed from office.

Angela Browning (Tiverton and Honiton) (Con): Before the Secretary of State sacked the chief executive, I had tabled named-day questions asking how many applications for payment had been received and how many payments had been made, nationally and in Devon. That was a pretty straightforward question, but I am still waiting for the answer.

Miss McIntosh : I hope that my hon. Friend receives that answer this afternoon.

David Taylor (North-West Leicestershire) (Lab/Co-op): The hon. Member for Brecon and Radnorshire (Mr. Williams) and I had the pleasure of being the rapporteurs on the Rural Payments Agency during the first inquiry and the immediate aftermath in early 2006. Does the hon. Lady not acknowledge that the problems with the computer system's specification, design and implementation are unique neither to this Department nor to this Administration? The public sector especially contains senior civil servants and Ministers who are particularly susceptible to the blandishments of the snake oil salesmen who populate the computer software package industry. That is at the heart of our problem.

Miss McIntosh : The only issue that I would raise with the hon. Gentleman is that the Government seem to be developing expertise in making computers that do not appear to be fit for purpose.

Mr. Lindsay Hoyle (Chorley) (Lab): I thank the hon. Lady for being generous with her time. The chief executive has rightly gone. The computer system has failed. However, the bottom line is that this is about the plight of farmers, who are not receiving their income. I want a contribution from those computer firms that have let farmers down. Compensation ought to be paid on late payments to ensure that farmers do not suffer. Does the hon. Lady agree?

Miss McIntosh : I am sure that the Minister is better placed to comment on that particular aspect.

May I also draw attention to the Committee's conclusion and recommendation 8? It states:

"Most significantly, we were staggered that, so close to the proposed date for making payments, and nearly a year after that date was announced by the RPA, the Minister could still not give us a definitive statement about when payments would be made, or whether they would be full or partial payments."

I hope that my right hon. Friend the Member for Fylde (Mr. Jack) and his honourable rapporteurs on that Committee will agree that one of the most sinister developments, to which my right hon. and learned Friend the Member for Sleaford and North Hykeham
 
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(Mr. Hogg) just alluded, is that Ministers are distancing themselves from holding any degree of responsibility for agencies such as the RPA. That is totally unacceptable.

Tony Baldry (Banbury) (Con): Ministers have given, as recently as this week, an undertaking in the House that payments would be made by the end of March. Does any Member in this House know of any farmer who has received a payment? I do not believe that a single farmer in the land has received a payment. If payments have not been made by the end of this month, Ministers must account for that.

Miss McIntosh : I endorse what my hon. Friend said. To my knowledge, not one farmer in the Vale of York or North Yorkshire has been paid. I have proposals to put to the Minister to correct that situation. The Minister must agree that there has been a catalogue of errors and misunderstandings leading up to the present fiasco of farm payments, ranging from applications being lost to maps being woefully mismanaged by officials. My hon. Friend alluded to the fact that that has resulted in most farmers in England simply not being paid, whereas in Scotland and Wales farmers have been paid in full. Our farmers have been paid not a penny piece.

Mr. Michael Wills (North Swindon) (Lab): I grateful that the hon. Lady has been incredibly courteous in giving way so often. I do not want to pile on the agony for my hon. Friend the Minister, who I know is a conscientious and diligent man. However, I must ask the hon. Lady whether, in addition to the catalogue of errors that she is listing, there has not also been a woeful absence of common sense in dealing with these problems. May I draw her attention and that of the Minister to the case of one of my constituents who has been engaged in a protracted negotiation with the RPA about a tiny amount of land? The difference between them is 0.02 hectares, which makes a difference in the payment of £4.40. The protracted wrangling over such a tiny sum cannot be cost-effective for the Department and it is stopping my constituent receiving any payment whatsoever. Surely common sense could be applied in such cases and some payment could be made.

Miss McIntosh : I hope that the hon. Gentleman will support my argument that the people involved do not have a sense of the countryside, are failing it and should spend time in it working with its various aspects. I lend support to his comments by quoting an RPA response to correspondence from a constituent of mine who farms at Kilburn in the Vale of York. It stated:

"It is true that the Customer Service Centre (CSC) in Newcastle experienced some problems in the immediate months following its creation in February 2005."

I pause because of that understatement. It continued.

"An unprecedented number of calls and a shortage in experienced staff led to some farmers experiencing difficulties. RPA has addressed these issues and is working to ensure that all 'front-line' staff are able in future to answer the majority of SPS questions put to them. I am sorry that this was not previously the case for"

your constituent.

Mr. Geoffrey Clifton-Brown (Cotswold) (Con): Does my hon. Friend agree that there is an absolute bottom
 
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line that we need to achieve from this debate? At this very moment some farmers are receiving demands, not least from their landlords. If they do not pay their rent, they will be given a notice to quit and they will lose their entire livelihood. Will she press the Minister to ask the European Community to release some money immediately so that, in such cases of real hardship, payments can be made as soon as possible?

Miss McIntosh : My understanding of the legal position is that that will not be necessary and that the situation is quite the reverse; the Government have the money available and are not releasing it, but they will face a penalty if it is not paid before the end of June. My hon. Friend has identified the problem for tenant farmers in particular. They have no assets against which they can borrow.

2.45 pm

Sitting suspended for a Division in the House.

3 pm

On resuming—

Miss McIntosh : There is a catalogue of errors and misunderstandings, spanning a considerable time, leading up to the present fiasco with farm payments. Those errors range from applications being lost, to maps being woefully mismanaged. That left most farmers in England not being paid, whereas Scottish and Welsh farmers have been paid in full. The hybrid approach taken in England has proved unnecessarily complicated; it amalgamates historical payments based on those paid to individual farms in 2001–02, and is paid on a regional basis.

In Wales and Scotland, a far simpler historical calculation has been used alone, meaning that farmers there have been paid in full, as I understand it. That has had the perverse effect of Scottish and Welsh farmers coming to auction marts in Thirsk and elsewhere in Yorkshire and outbidding English farmers, as they can pay more per animal on the back of their single farm payments. To compound the plight of the local farmer, most farmers in other EU countries have by now been paid the single farm payments in full.

Mr. Philip Hollobone (Kettering) (Con): Does my hon. Friend accept the point made by Mrs. Rosemary Eady, a farmer in my constituency, who writes to me to say:

"Given that HMG received EU funding for the SFP in December where is that money now? Why cannot it be paid before validation? . . . Who is profiting by the delay in payment? The answer must be the Exchequer"?

Miss McIntosh : I await with bated breath the Minister's response to that intervention.

3.2 pm

Sitting suspended for a Division in the House.

3.16 pm

On resuming—

Miss McIntosh : Those developments were against the background of a new scheme that was meant to be
 
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simpler and easy to administer. Farmers face hardship locally and nationally. Why have 91 per cent. of Scottish farmers received their single farm payments when only 2.4 per cent. of English farmers had received theirs by the beginning of this week and, I understand, between 13 and 23 per cent. of them have as of today?

Mr. David Drew (Stroud) (Lab/Co-op): With the benefit of hindsight, everyone would say that the hybrid payments were a dreadful mistake, even the Select Committee. However, that does not excuse the fact that historical payments are indefensible in this day and age, because the common agricultural policy needs to be reformed. Does the hon. Lady know who the 50 per cent. additional claimants are? I have been trying to ascertain why the numbers are so drastically wrong and why that was not built into the calculation.

Miss McIntosh : The hon. Gentleman has rightly identified why the scheme is so complicated. Our constituents would be happier if we reverted to a system that was more akin to the devolved Administrations', so perhaps the Minister could throw some light on that.

Fewer than 2,500 farmers in England had been paid their allocation by the end of February 2006, whereas the Scots farmers had been paid in full. A well known local farmer, Mr. Woodhead of Felixkirk, has asked me to raise a case of which the Minister is perhaps not aware. There are number of auction marts in North Yorkshire, not least the one in Thirsk, where the single farm payments have led to an unacceptable distortion of the market. The Scots and the Welsh farmers are outbidding our local farmers because they have cash in hand from the farm payments.

Mr. Hogg : That could be readily cured by a payment of interim payments.

Miss McIntosh : Indeed—my right hon. and learned Friend pre-empts my concluding remarks.

As one farmer told me, the single farm payment was supposed to reduce the bureaucracy associated with the old integrated administration control system. It was meant to replace myriad farm subsidies, premiums and special payments, and it was meant to be simpler, but to date that has not happened.

Mr. John Hayes (South Holland and The Deepings) (Con): For all its faults, the old Integrated Administration and Control System at least allowed for a margin of error and for the Government to recover moneys paid in error. The new system seems to depend on such a level of precision that the money is never actually paid. Surely the Minister understands that. I appreciate that he has perhaps taken his eye of the ball, but now—[Interruption.] The Minister says that that is not his fault—"It's not me, guv"—but that is often the cry of people in such circumstances. Urgent action is now needed. Payments need to be made on an interim basis, with any minor discrepancies sorted out later. People in Lincolnshire and elsewhere are desperate. They want strong action from a Minister who desperately needs to recover his reputation.

Miss McIntosh : I would go further and add that the Minister and the Government need to accept ministerial responsibility.
 
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Farmers Weekly of 24 March said that farm debt had broken the £10 billion mark. The level is estimated to be increasing by £13 million a month in interest payments alone. As I have mentioned, 90 per cent. of English farmers are waiting for the single farm payment to be paid. Farmers are struggling financially to keep their businesses afloat and the knock-on effect on the agricultural supply trade is dire. Farmers still have to pay bills as they come in but they have received no payments for up to a year and face growing debt with emotional and financial pressure on all concerned. That is particularly so for tenant farmers who are unable to borrow because they have no assets against which to borrow.

I want to share with the Chamber representations from the agricultural industries confederation, which is the trade organisation for the agricultural supply industry. It wants us to be mindful of the need for farmers to fund the purchase of inputs ranging from animal feeds to sprays and fertilisers when they face a major hole in their cash flow due to the lack of single farm payments. To date, DEFRA does not seem to have grasped the seriousness of that.

A rule of thumb in the view of the confederation is that the industry has a month-on-month level of indebtedness of around £50 million. That figure was established with some certainty at the time of the foot and mouth outbreak in 2001. It relates to bills that farmers have outstanding at any one time in normal monthly credit arrangements. During the foot and mouth epidemic, that monthly figure rose to £80 million and the confederation believes that there has been a 35 per cent. increase in the level of indebtedness between farmers and their suppliers since the end of 2005. That is in addition to the increased level of borrowing reported by clearing banks. Lloyds TSB recently estimated that increased borrowing due to delayed payments was costing the agricultural industry around £8 million a month. That scale of increase inevitably will place severe pressure on the agricultural industry's fundamental ability to operate and the agricultural supply industry is concerned that that artificially created situation will inflict lasting damage on the UK's agricultural industry and the livelihoods of those working in it.

I want to ask the Minister a number of questions reflecting what right hon. and hon. Members have said this afternoon. Why did Ministers not act sooner to address the problems at the Rural Payments Agency? We and a number of stakeholders gave information on a number of occasions, not least from the Select Committee report onwards. Will Ministers now apologise to farmers for the real stress and financial costs of the delays? What lessons will be learned from the announced RPA review and why is the review not examining what went wrong over the past year? What assurances can be given that the same mistakes will not be made again? Why is there no stakeholder representative from the industry on the review team and why is the chairman of the review someone from DEFRA rather than an independent person outside government? Will the review be published in its entirety and promptly when it is finished and will Parliament have the opportunity of debating it?
 
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The Government must ensure that farm payments are paid immediately and in full. An interim payment of 80 per cent. in the next three weeks would be particularly welcome. It is disappointing that the Secretary of State in response to an urgent question from my hon. Friend the Member for South-East Cambridgeshire (Mr. Paice) this week did not promise interim payments and has so far stated only that windows for payments remain open until the end of June. Will the Minister confirm that there will be immediate payments or that the payments will be made in full? It is unacceptable, but inevitable, that tens of thousands of applicants will have unvalidated entitlements from the 2005 single farm payments and not be paid by the time they must apply for 2006.

Farmers feel badly let down. The Government gave an undertaking that 96 per cent. of the first single farm payments would be paid by the end of March. Farmers consequently budgeted on that promise and have been very badly let down.

Possible solutions, which I hope the Minister will share with us this afternoon, are that payments will be made immediately and, if necessary, the Government will override the computer system so that payments can be made manually. Emergency measures are required and payment within the next three weeks is vital. At the very least, the Government should consider paying interest for the delayed loans. Many farmers owe the banks serious money because of the chaos.

I am delighted to have secured this debate and I look forward to hearing what my right hon. and hon. Friends, other hon. Members and particularly the Minister have to say.

The Chairman : Before I call the next speaker, I shall take the opportunity of reminding right hon. and hon. Members that I propose to start the wind-ups at 4   o'clock. If speakers could be as brief as possible, I shall try my best to call everyone.

3.25 pm

Mr. David Drew (Stroud) (Lab/Co-op): I shall be brief because I have rehearsed the two points that I want to make.

This has been a disaster and the hybrid idea should never have been allowed to be taken forward. To be fair, the hybrid did not come from the Government. It came because farming organisations looked at compromises in the systems that apply to different parts of the industry. I well remember receiving representations one week from the potato committee of the National Farmers Union which was desperate to have area payments in place. The following week I received representations from my dairy farmers who were desperate, particularly those in the south-west, to keep the historical model in place.

I think the Government made a mistake. Fudges never work and this fudge has, with the benefit of hindsight, been an unmitigated disaster. I hope that we shall learn from that.

Paddy Tipping (Sherwood) (Lab): The mid-term review and further changes in the common agricultural policy will inevitably mean new and different forms of
 
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payment. Is not the lesson to be learned from the experience that policy must be backed by good practice and management?

Mr. Drew : I agree entirely and I hope that the Government will learn that lesson wholesale. We must go forward. I entirely agree with the hon. Member for Vale of York (Miss McIntosh) that farmers are suffering. They have been suffering for some time because we have already delayed the payments considerably. Under the old system the payments would be being banked. Farmers have already had to wait and I have never been satisfied with the idea that the banks are expected to take the strain. When farmers are indebted through no fault of their own, they have to go to the banks and build up large debts on which they are expected to pay interest in the long term. The hon. Lady's call for some compensation and understanding is morally justifiable and I hope that the Secretary of State will take account of it.

I have already rehearsed my other point about who is entitled to claim the payments. It is depressing that, according to the figures, we are dealing with a much greater number of people than was calculated when the IT system was set up. Someone, somewhere got that wrong and there is a real problem in the way in which we define farming in this country. It was bad enough under the old system, but we seem to have found another system whereby people whom I do not define as farmers and who do not need the income to be able to carry on with their everyday life are putting in claims. The problem is that one claim cannot be settled until they have all been settled. That is a fundamental flaw in the system. I knew that interim payments would not be popular, but at least that was a way of guaranteeing that those farmers who had received payments in the past and needed the payments to carry on with their everyday farming would receive them. There should have been some way in which that system could be brought forward. Yet many new people are now seeking entitlement and I have serious misgivings about the quasi-market that is developing whereby people farm entitlements, not produce. We have learned nothing from milk quotas: we are creating disaster for the future, when the entitlements will be worth something but potentially will be divorced from the land.

I know that it should not happen that way, and that the Select Committee has been assured that the system will be so clever that it will work. However, the way that it has been set up so far has not been a great success. I shall leave the issue, as I know that others want to say much more about it, but I am not at all confident about relying on an IT system to deal with policy, or to deliver the policy to fruition. My hon. Friend the Member for North-West Leicestershire (David Taylor) and the hon. Member for Brecon and Radnorshire (Mr. Williams) have looked at this much more carefully, and I hope that they will catch your eye in due course, Mr. Benton. What we learned was that perhaps it is unfair to blame only the IT company, as it was forced to deal with attributes that were different from those that were originally set up.

Lynne Jones (Birmingham, Selly Oak) (Lab): The Minister stated in a letter to the Select Committee that the original contract signed in January 2003 identified
 
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that there was to be a mid-term review and that the Commission's proposals had been published, and we were told that

"the impact of reform would not be significant on the overall IT solution".

It was anticipated that there would not be that much difference, yet the annual cost more than doubled, from £18 million to £37.4 million.

Mr. Drew : My hon. Friend has done the numbers. I do not pretend to have the same detailed understanding, but it does say something that we are entirely dependent on the IT system.

The question was asked earlier as to whether we could go back to a manual system. If only it were that easy. To be fair to the Rural Payments Agency, the staff have been working day and night to try to shift the figures. The system itself is fallible, the way in which we approached the policy was wrong, and, dare I say it, the definition of "farmer" ought to nailed down so that we pay money to those people who genuinely need it and who are doing a job that we want them to do, rather than to people who pick it up as spare cash. That is unacceptable.

3.32 pm

Mr. Keith Simpson (Mid-Norfolk) (Con): I congratulate my hon. Friend the Member for Vale of York (Miss McIntosh) on securing this debate. I rise not only as someone who has a fairly large farming community in their constituency but as a former member of the Environment, Food and Rural Affairs Committee and a Front-Bench spokesman on farming. I shall start with some broad issues and then quickly come down to some specifics.

First, there is the question about the competence of the Department for Environment, Food and Rural Affairs. The second question is about the impact on the farming community. It was unfortunate that the hon. Member for Glasgow, South-West (Mr. Davidson) made comments about farmers having their snouts in the trough in the debate on the urgent question. The third question is for all of us who are taxpayers, as we are talking about public money.

Angela Browning : As a member of the Public Accounts Committee, I suggest that Sir John Bourn and the National Audit Office should investigate the matter and do the analysis that is needed. Would my hon. Friend support that suggestion?

Mr. Simpson : Yes. To be fair, instead of amateurs like us, a body such as the Public Accounts Committee should have a look at the issue.

I would not mind so much if the problem had not been flagged up years ago. In fact, I participated in the Committee wherein the old intervention boards were abolished and the Rural Payments Agency was set up. The verbatim account of that Committee indicates that other hon. Members and I put forward two sets of questions to the then Minister, now the Minister for Climate Change and the Environment. The first was about who was accountable. The Minister said that it was, of course, the chief executive of the RPA, but that responsibility and accountability ultimately lay with
 
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Ministers. So let us not have any shuffling off of responsibility. I am not getting at the Minister who happens to be sitting in the seat on this, but there is a case for ministerial accountability.

Secondly, we flagged up the whole business of whether the RPA could manage the computer system. The Secretary of State got the wrong end of the stick when I made this point during the urgent question. She said that we were dealing with an entirely different system that had to be brought in because of the single farm payment, but she missed the point. Five years ago, we were raising questions about a relatively simple system, not a complex one. I agree with the hon. Member for Stroud (Mr. Drew). I believe that there is something in the culture not just of Whitehall but of DEFRA that needs to be examined. It could not manage even a simple system.

I would have thought—there are colleagues here who have been Ministers—that, given that track record, just out of self-preservation, they would have asked some difficult, hard-nosed questions. It is not enough for the Secretary of State to say that she has taken responsibility by sacking the chief executive. That is not my definition of taking responsibility. After all, she introduced the single farm payment scheme, and she is ultimately responsible.

I would like to put a few brief questions to the Minister, very much along the lines of those asked by my hon. Friend the Member for Vale of York. As we all know, the key issue is that the payment window closes at the end of June 2006, yet when pressed on that in the urgent question, the Secretary of State stated:

"I cannot give him"—

that is, my hon. Friend the Member for South-East Cambridgeshire (Mr. Paice)—

"a pattern of payment between then and now."—[Official Report, 27 March 2006; Vol. 444, c. 545.]

The question is, why not? At what stage does the timeline run out? We are discussing not just the livelihoods of thousands of farmers but the wider rural community, and, as hon. Friends have said, we are running up against next year's scheme as well. There is a timeline, and Ministers must have some idea. Perhaps they could share that with the House.

The second issue—non-validated interim payments—has already been raised. It has been put to me by many farmers in my constituency. Once again, the Secretary of State's comments during the urgent question were inadequate. She stated:

"We are not ruling out the potential for interim payments, but we are reluctant to make interim payments if there is any possibility of their jeopardising the time scale for making full payments."—[Official Report, 27 March 2006; Vol. 444, c. 545.]

When will the Minister know that the timeline has been passed? Officials in the RPA must have some idea. My fear is that they will realise that the system will not work but will be unable to make interim payments in time to stop many farmers going bankrupt. We all have large numbers of such cases in our constituencies.

What conversations and discussions have Ministers had with the major banks about tiding farmers over during this period? Evidence has already been produced
 
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by my hon. Friend the Member for Vale of York that the deadline was 25 March for the half-yearly payment for a large number of tenant farmers. We really are up against the wire.

The Minister is carrying out a review, but what confidence can we have that the IT will be able to cope with the mapping, which now seems to be the key issue? It is not something that will make any difference to the current crisis, but it is something that we must get right.

My final comment is from Mr. William Brigham, a farmer in my constituency who e-mailed me. He spoke briefly about the e-mail, paper and telephone chase that he had been having over the past few months. He was not angry. I believe that he is like an old soldier—he just expects such problems. He concludes by stating:

"It is interesting to note that our area"—

mid-Norfolk—

"is covered by the Northallerton office, we sent our application to Carlisle, and all the latest contact is with Exeter."

I rest my case.

3.39 pm

David Taylor (North-West Leicestershire) (Lab/Co-op): We must not lose sight of the fact that, irrespective of how many tonnes of metaphorical slurry we dump over the heads of civil servants, and irrespective of how many Ministers are transferred to the silo of the Whips Office or the wide open spaces of the Back Benches, the people who are suffering are our constituents: farmers who went into the system in good faith. Of course, post mortems do not revive bodies and I am pleased to hear from farmers present that DEFRA has started to prioritise what seems to be a reasonable group. It has decided to prioritise the middle range of historical claimants, but will not yet be drawn on what the exact definition of that band is. It would be useful if the Minister were to tell the House what those definitions are later on.

Regarding the rate at which payments are made, we heard yesterday the statement that around 23 per cent. of claims by volume had been paid and about 13 per cent. of payments by value, so an awful lot of money is still to be paid to people who have been really hard pressed for a good number of years.

Tony Baldry: The debate has quite rightly focused on payments, but as my hon. Friend the Member for Mid-Norfolk (Mr. Simpson) said, we must have some focus on mapping. Many farmers still cannot get at the payments until the mapping is sorted out. In a typical case, one farmer in my constituency has had 10 different sets of maps sent to him—all inaccurate—and has been threatened with prosecution because a 0.01 error is alleged against him. That is crazy.

David Taylor : I acknowledge that. I spent three decades in the world of information and communications technology and large-scale systems. We do not have the time to deal with that but my fellow rapporteur, whom I shall call my hon. Friend the Member for Brecon and Radnorshire (Mr. Williams), looked in particular detail at that when we went to Reading.

My hon. Friend the Member for Stroud (Mr. Drew) made the point that the complexity of the system is at the very heart and root of the problems experienced, which
 
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is partly true. It was always possible for the Government to have a hybrid system where in year one the historical element was 100 per cent. In other words the transfer and increase in area payment could have started in year two. That was always a possibility and it was always likely that there would be problems in such a system on the scale we have seen.

It is easy to be wise after the event, but I have never encountered such a large-scale system in which the estimates of resource required were taken directly from the volumes of people in receipt of historical payments. It would have been professionally desirable or even expected to take small samples of land holdings in various parts of the country, analyse the expected volume and complexity expected to arise and then extrapolate from that. That would have produced a far more accurate picture of what the RPA was facing, so I do not accept that the hybrid element is necessarily at the root of the problems.

It is very much a human tragedy for some farmers. I quote from an e-mail that I shall anonymise:

"At a recent NFU meeting at Oaks in Charwood (where there were around 120 farmers) not one farmer had had their payment and not one had had a validated entitlement form either!"

The e-mail continues:

"I have had to take out more borrowings from the bank to bridge the difference in my cashflow, and to keep my business afloat. I am not on my own. I have outstanding invoices from other farmers dating back from last November as they cannot afford to pay me."

A particularly incestuous spiral is being pressed down because of the enormous amount of inter-trading that goes on in agriculture.

Patrick Hall (Bedford) (Lab): On my hon. Friend's point about compensation, given the fact that the bulk of farmers had a clear expectation that they would receive full payment by the end of March, does he agree that there is a reasonable case for compensation to be made by the Government in at least the form of an interest payment on bank overdrafts that have to be carried from April until payments are received?

David Taylor : I have a great deal of confidence in the Minister and I have every expectation that in a masterly winding-up speech he will lead to a climax that announces just that sort of compensation. It is morally necessary and economically required for the reasons I gave.

Like other MPs with a rural or mixed constituency, I am in regular contact with the National Farmers Union and its members in my area, and during my nine years in this place, I have never encountered the depth of concern and angst now being experienced. I include a comment from Pat Stanley, the chairman of the North-West Leicestershire NFU:

"To make matters worse, the helplines that the RPA has put in place, have proved ineffective. There is now a growing sense of frustration and anger over the RPA's inability to make the system work. The RPA and Ministers have made a series of promises about the performance of this new scheme and all the evidence to date suggests that these are being consistently broken."

She concludes:

"It is vital for the farming industry that the payments get to producers as soon as possible. Please can you do whatever you can to impress upon Defra and the RPA the difficulties which their non performance is causing for the industry and the need for immediate action to put matters right."

 
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That is the purpose of this debate.

Mr. Hayes : The hon. Gentleman is speaking with characteristic candour and clarity about the matter. Farmers in my constituency, such as Tony Gent and Robert Congreve, have also been in touch, and I wonder whether farmers in his constituency are pressing him in a similar way to ask the Government for a timetable for what is about to happen. Spring is coming up with all its associated costs, such as farmers' input costs, rent charges and so on. It is vital that we get action and a timetable for action quickly because cash-flow problems beset our farmers. Has the hon. Gentleman received such representations? If so, will he pass them on to the Minister in his speech?

David Taylor : That is a fair point, and the Minister will have heard it.

In my experience the 80–20 rule comes into play. Once the system is broadly in place, perhaps 20 per cent. of the administrative effort will handle 80 per cent. of the cases that the system is designed to process, but substantial and disproportionate amounts of effort will be needed for some of the more complex cases. It would be a serious and fundamental mistake to extrapolate the situation at some date in late May, mid-June or whenever from the figures that I cited earlier about 23   per cent. of claimants having been dealt with by yesterday.

I shall make two further points, and then sit down because so many people want to speak. The RPA and its senior management massively and negligently underestimated the work involved. That was clear from day one, from the first few seconds when we walked through the door of the RPA office in Reading. I do not hold responsible the middling ranks of staff at the RPA in Reading and elsewhere. They have worked tremendously hard under the worst possible circumstances, such as the threat of redundancy, the use of agency staff and a lack of clear information. That process was driven by Accenture, which I hold rather more responsible than my hon. Friend the Member for Stroud does. The fact that its revenue costs have doubled during the development period of the system is absolutely dreadful.

I hope that the Minister and the Government will learn from that, and cool their ardent love affair with the private sector in the design and implementation of large-scale IT systems. I ask the Minister to listen to the people in the departments concerned, and involve them in the process. They have given their lives, careers, energy and commitment for a very long period to their area of interest: in this case, the RPA IT application system. Listen to them; do not be too persuaded by the blandishments of firms like Accenture. I do not hold responsible the middling ranks of people in the RPA.

Finally, the farming community, this House and the taxpayer deserve a full explanation of why interim payments could not have been made and could not have been built into the timetable for all claimants. The fact that there was a need to calculate all payments before any payment can be made was absolutely barmy. It flies in the face of logic and the face of finance. It would have been possible to pay three quarters of the estimated amount and allow for the fact that there would be a
 
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variability in other things still to be calculated. That was wrong, and I hope that future Ministers in other Departments and in other Administrations will learn from the debacle we have seen during the past 21 months.

3.49 pm

Mr. Philip Dunne (Ludlow) (Con): I shall try to keep my remarks as brief as I can. I congratulate my hon. Friend the Member for Vale of York (Miss McIntosh) on securing this excellent and important debate. I remind the House of my entry in the Register of Members' Interests. I am a partner in a farming business, which, incidentally, received a letter of entitlement indicating that we farm 90 hectares more than we do. As a consequence, we are in the category of the unvalidated—or the great unwashed.

I deeply regret that we are having to have this debate at all. I shall not dwell on the reasons for the chaos in the Rural Payments Agency, because they have been well catalogued by other hon. Members. I should like to touch on the scale of the complexity and the numbers from the perspective of my constituency.

We are told by the Department for Environment, Food and Rural Affairs that there are 120,000 farms in England. I think that it means 120,000 holdings, and there is a difference between farms and holdings, which may in part explain the confusion about numbers. I am led to believe that only 68,000 of those farms are more than 20 hectares. Some Labour Members have referred to the fact that farms below that level are, in many cases, hobby farms, although there are some specialist farmers who farm small acreages. It is the larger farmers for whom the payments are so critical to the viability of their business.

There is a business in my constituency, Farming Online, which maintains a database of about 35,000 mostly larger, arable farms. Its director, Peter Griffith, told me when I was preparing for this debate that the survey he has conducted through Farming Online's website indicates that, of 2,210 respondents as of this morning, only 140 have been paid their single farm payments—a mere 6.3 per cent. of respondents. That compares with the Government's statistic, in the Library briefing, that 32.5 per cent. of farmers have been dealt with correctly. There is an enormous discrepancy between those numbers. An even more startling figure is that, of those who replied to the survey, 86 per cent. have received unvalidated entitlement letters.

The chaos in the Rural Payments Agency is apparent to all of us from constituency cases. I shall illustrate a couple that have come to my attention. At a meeting of the National Farmers Union West Midlands last night, DEFRA was considered as much a part of the problem as the RPA. Previously, a farmer could at least rely on being dealt with by one case officer at DEFRA or its predecessor, the Ministry of Agriculture, Food and Fisheries, however unhelpful they may have been, but now, papers get shuffled from one office to another—in the case of one of my constituents, from Crewe to
 
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Reading to Exeter. No individual case officer is responsible, so no one takes responsibility for a case, and there is no telephone line to follow it up.

Mr. Richard Benyon (Newbury) (Con): I, too, have a declarable interest as a receiver of payments. Does not my hon. Friend agree that the questions that Ministers must face also relate to the fact that there has been a complete lack of common sense? At a time when it is introducing a complex system, the RPA is being forced to close two of its offices, and it is reducing staff numbers, as we have heard from Labour Members, and employing large numbers of temporary staff and contract labour. Does not my hon. Friend agree that Ministers must consider how a system could be brought in when such bizarre employment practices are being carried on?

Mr. Dunne : My hon. Friend makes a good point. There is a clear difficulty in bringing in large numbers of contractors who have not been properly trained to operate systems that do not work properly. Inevitably, there will be chaos.

Tony Baldry : Is not one of the many problems for farmers the fact that they cannot find anyone to talk to? When they get in touch, they are either told to go to the website or sent another form. They find that it adds insult to insult.

Mr. Dunne : Indeed. There is a paper trail going wrong in every direction. One office cannot speak to the other, and it has no idea where the files are. I have a good example. Mr. Howard Fish, a farmer in my constituency, rang the RPA in Newcastle and was informed that it still had outstanding issues with the digital map that he submitted, which he needed to correct. It was suggested that he contact the Reading office, which he duly did, only to be told by Reading that his map was correct. One side does not know what the other is doing.

One of my constituents is so angry with the delay, she is thinking of charging DEFRA interest on the monies due to her. She is prepared to go to court to do so. I hope that the Minister will address that when dealing with the points made by Labour Members.

Tim Farron (Westmorland and Lonsdale) (LD): I am sure that the hon. Gentleman is aware that farmers in less favoured areas are suffering even more than average, not only as a consequence of the nature of their business, but because the majority of them have yet to receive their hill farm allowance, irrespective of the fact that single farm payments have yet to be made. Will he comment on that?

Mr. Dunne : The hon. Gentleman speaks with some authority on that subject, as he is chairman of the all-party group on hill farming, on which I have the pleasure to serve. I completely agree. That issue must be addressed, and I hope that the Minister will pick up on it in his winding-up speech.

Several hon. Members have discussed the fact that this is a critical time for the business viability of farms. Tenant payments and fertiliser payments are due, and hon. Members must remember that the single farm
 
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payment relates to the entirety of 2005. For many farmers, their support payments have been pushed back and back, year in, year out. People used to receive their payments in November. Then it was pushed to December, then it became January, then we were told March, and now I am told by somebody who attended the NFU meeting last evening that the talk is of August. At that point, the Government will incur significant EU penalties. I hope that they do not go down that route.

I should like to touch on the human consequences of this tragedy, because they are not purely financial. Last week, I hosted in this House a meeting of the Rural Stress Network, chaired by the former Bishop of Hereford, in whose diocese my constituency lies. The network covers five rural counties in the west midlands: Shropshire, Herefordshire, Worcestershire, Warwickshire and Staffordshire. The caseload of that group, which is staffed almost entirely by volunteers, is rising dramatically. Farmers are under particular pressure at this time of year, with lambing and calving as well as land work, and the financial situation is giving rise to severe stress and mental concerns.

The network brought to my attention a particularly tragic case. Less than a month ago, a farmer in north Herefordshire, who lived not far from where I farm, got in touch with the network, because of his increasing distress over the non-arrival of his payments. I am afraid to have to tell the House that he committed suicide at the end of February. A female Rural Payments Agency officer who was in touch with him was, understandably, extremely distressed by the consequences of her discussions with him. If DEFRA cannot offer farmers any apologies or support, will the Minister at least give some assurances that RPA personnel get support for the circumstances with which they have to contend?

I should like to ask the Minister a few quick questions. First, we have already heard that, in Wales, interim payments of 80 per cent. were made on the basis of historical entitlements, and that 94 per cent. of them were paid by 2 March. We learn today that all have now been paid. Will the Minister, as a matter of extreme urgency, now authorise immediate payments to those farmers in England who have had their entitlements validated? Secondly, will he instruct payment of an interim award of 80 per cent. of historical entitlements to the vast majority of farmers whose claims have been returned as unvalidated?

Thirdly, does the Minister recognise that the failure to make those payments for 2005 is having a serious knock-on effect for the whole rural economy, much of which depends on the cash flows generated by farmers? Does he agree that it is appropriate to pay compensation to farmers who have suffered additional substantial interest payments? Finally, when will the appropriate Minister take responsibility for this fiasco?

3.59 pm

Mr. Roger Williams (Brecon and Radnorshire) (LD): I, too, congratulate the hon. Member for Vale of York (Miss McIntosh) on securing this debate at such an appropriate time.
 
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For once, I can speak about agricultural matters without declaring an interest, because payments in Wales have already been made, so I am unaffected by the problem. However, it does not in any way lessen my concern for the farming community in England, which has been so badly served. Indeed, a series of mistakes has been made not only by DEFRA but by the Rural Payments Agency.

The Minister may say that other countries have used other systems, but Ireland has paid 98 per cent. of its farmers. In historical terms, Austria has paid 100 per cent. of its farmers, Belgium has paid nearly 100 per cent. of its farmers and Sweden, which uses a hybrid system, has paid 90 per cent. of its farmers. Germany, which presumably uses a dynamic hybrid system similar to DEFRA's, paid 80 per cent. of its farmers by December, and Denmark has paid 98 per cent. of its farmers. I have not heard of riots in France, Spain or Italy. I do not have figures for those countries, but I assume that the farmers there have received the majority of their payments.

Mr. Mark Todd (South Derbyshire): Does the hon. Gentleman accept that one of the differences is that risk has been loaded on risk when trying to address the problem? The Department went through major change a few years back, with new IT systems that did not work properly—this is not the first late payment problem that farmers have faced through the RPA—and then a new complex system was loaded on to that. The loading of risk upon risk increases the risk of failure. That is what we face.

Mr. Williams : The hon. Gentleman makes a good point. I was about to say that the contract was given to Accenture in 2003, before the announcement that there would be a single farm payment scheme in February or March 2004. Indeed, the mid-term review turned out to be much more radical than anyone expected; many of us thought that it would tinker at the edges of the schemes to support farmers. The new firm was given the challenge of dealing with a new scheme. During our inquiry into the RPA, the hon. Member for North-West Leicestershire (David Taylor) and I were told that DEFRA changed the details of the scheme 60 times between initiating the contract and finalising the scheme. At its heart, the problem lies with DEFRA as well as with Accenture and the RPA.

Mr. Dan Rogerson (North Cornwall) (LD): I am grateful to my hon. Friend and to the hon. Member for North-West Leicestershire for serving as rapporteurs on that inquiry. Did my hon. Friend find any evidence that information on how the crisis was growing was being passed back up the chain—that it was being passed from the highest level in the RPA to DEFRA? Ministers said that everything was fine and that there were no huge problems, and they expected payments to be made. Is my hon. Friend sure that the evidence was passed up the line?

Mr. Williams : I thank my hon. Friend for raising that point. We were told that there was regular communication between DEFRA and the senior management of the RPA but, as a result of the failure to deliver the programme, further work needs to be done.
 
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Indeed, we have already heard that the Select Committee and perhaps even the National Audit Office may make further inquiries into how it happened. Certainly, the relationship between DEFRA Ministers and the RPA needs to be examined in detail.

The point has been made that, even if payments were made by the end of February, as promised, it would be late in the agricultural year. Many of the payments that were in place before the single farm payment was initiated would have been made already—in September for the sheep annual premium, and in October and November for arable aid, advance payments for the suckler cow premium and the beef special premium.

Farmers have found it difficult to accommodate problems with cash flow. Mention has been made of paying bills, but at the end of this week interest payments will be due on most accounts. That money will be taken out of the farmers' accounts. They will not have to make a conscious decision about it; the money will be removed from their accounts. That may take them above the level that they have agreed with their banks, and they will suffer the financial consequences—not just additional interest, but the other costs involved.

Mr. Hollobone : Given that the EU has given the Government funding for the scheme, interest is accumulating on that money in the Exchequer. Should not that interest be used to facilitate some emergency payment for our farmers?

Mr. Williams : The hon. Gentleman makes a good point. I am sometimes told that the money is drawn from the EU as it is paid, but even if the Government are not accruing interest, the European Union certainly is. The money is being kept somewhere. Interest accrued should surely be passed on to farmers. A large window was set by the EU for payments, between 1 November and 31 June, but it was not the intention that it should be used to delay the main payments under the scheme. The window was set so that some of the difficult and complex applications that would result from a new scheme could be dealt with. It was always intended that payments should be made at the beginning of the window rather than the end.

It was always open to DEFRA to delay the implementation of the scheme for a year. DEFRA decided against that, even though it was clear that the scheme was more complex than previous schemes. Some countries decided not to decouple during the first year—France is one. I believe that DEFRA took the decision because it was at the forefront of advocating a decoupled system, and it felt that it had to implement it in full rather than delaying it for a year. However, DEFRA did not do the necessary investigative work to find out how many applicants there might be for an entirely new scheme—for instance, potato growers and horticulturalists who keep land not entirely for agricultural purposes.

Mr. Todd : I have two hectares of land, and I have been urged by local farmers to make a claim. I have chosen not to do so, but a large number of others in similar circumstances might have done. The RPA appears not
 
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to have spotted that substantial burden, but it was widely known in the farming community because those conversations took place a year or even 18 months ago.

Mr. Williams : The hon. Gentleman makes the point that even Members of Parliament are now in the scheme. It is certainly widespread.

Mr. Todd : I didn't do it.

Mr. Williams : No, the hon. Gentleman did not. However, it seems that many chartered surveyors will have made a lot of money. That dilutes the money available to the farming community, a point made by the hon. Member for Stroud (Mr. Drew).

The Government have a duty, because of their complicity in the problem, to ensure that farmers are adequately compensated for the money that has been taken from their accounts in interest and other fees. As the hon. Member for Ludlow (Mr. Dunne) said, there is a huge amount of stress in the farming community. There is also the question of how we can encourage young farmers into the industry if they see the Government failing to deliver. They are always asked to provide business plans, yet they are confounded when the Government, let alone the various organisations, do not produce the money. The Government have failed English agriculture, and they have a duty to recompense farmers.

4.9 pm

Mr. Peter Ainsworth (East Surrey) (Con): I shall try be brief because the Minister has a large number of questions to answer. I know that he looks forward to doing his best.

I congratulate my hon. Friend the Member for Vale of York (Miss McIntosh) on the excellent way in which she introduced what has been a sombre and serious debate—and a timely one. She set the tone by highlighting the long history of problems, of which many hon. Members were fully aware before the proverbial hit the fan earlier this month. One of the great mysteries is why the Government and Ministers appear to be unaware of problems about which hon. Members were fully aware because they were told about them many months ago by farmers in their constituencies.

This has been a good debate with interesting contributions. The hon. Member for Stroud (Mr. Drew) was critical of the hybrid scheme that the Government chose to adopt. My hon. Friend the Member for Mid-Norfolk (Mr. Simpson) said that he flagged up these issues many months ago, and talked about something going wrong in the culture of the Department for Environment, Food and Rural Affairs. He also raised the vital issue of the banks, which are yet again being prevailed upon to be tolerant. They are being tolerant, but there is a limit to the tolerance that we can continue to expect of commercial banks.

The hon. Member for North-West Leicestershire (David Taylor) made a moving contribution in which he spoke about a local farmer who has severe financial
 
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problems. There are such cases across the country. My hon. Friend the Member for Ludlow (Mr. Dunne) spoke about the tragic consequences that can occur as a result of financial hardship and other pressures on the farming industry.

Ministers have recognised that this is a serious problem, but have not said what exactly the problem in the Rural Payments Agency is. We all know that there is a problem and are seeing the consequences of it, but it would help if the Minister told us precisely the nature of the problem; he owes that to the House.

We have heard moving stories about the difficulties caused to the farming community, which has borne with enormous fortitude, over many years, the accumulating problems posed by declining farm incomes, the chill wind of globalisation, and the relentless pressure from supermarkets on one hand and increasing EU regulations on the other.

This debacle illustrates the important point that there is a lack of even-handedness in the way in which the Government deal with the farming industry. Whenever a farmer makes a small mistake, the weight of authority comes down on them and they are penalised, but when the Government make a large mistake, they seem to go unpunished. The current situation is that the Government have made a serious mistake, the exact nature of which is unclear, but who is paying for it? The farmers, not the Government. That raises disquieting moral questions about how DEFRA has conducted its affairs for many years. Indeed, it goes back to before the creation of DEFRA, to the old culture of the Ministry of Agriculture, Fisheries and Food.

Mr. Geoffrey Cox (Torridge and West Devon) (Con): I, too, declare an interest as a receiver of payments.

Does my hon. Friend agree that there is a crucial question for the Minister to answer regarding the massive incidence of inaccurate statements of entitlement? We are coming to the period when we need to start filling out forms and making applications for 2006, and I want to know whether farmers will be penalised for those inaccuracies in 2006, in the way in which my hon. Friend describes. Will the Minister give an assurance today that they will not, and that the inaccuracies inherent in the statements that they have been receiving will not be held against them in 2006?

Mr. Ainsworth : My hon. Friend makes an extremely good point, and asks an important question. I hope that the Minister will answer it, if I allow him time to do so, along with the many other questions asked this afternoon.

I add to the point made by many hon. Members about making partial payments soon—manually if necessary—to tide over farmers with immediate problems.

Paddy Tipping : It is essential to have a repair programme. Might not interim payments delay final payments? Should not we wait for the report of the new chief executive to take us forward?

Mr. Ainsworth : The Secretary of State made that point earlier in the week. If there are genuine problems of that kind, they need to be taken into account.
 
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Whether or not interim payments are made, there is a strong case for making interest payments on money that rightfully belongs to farmers and not the Government. I hope that the Minister will reconsider the Government's position on that.

I want to touch on the question of ministerial accountability and responsibility. We accept that Ministers can work only with the information that they receive, but it is an important part of their job to make sure that the quality of information being provided is sound and accurate. There are no fewer than five former Agriculture Ministers present on the Opposition Benches who will know that that is an important task for any Minister. That is part of the Minister's job. Ministers cannot be absolved from all responsibility when things go wrong.

The Secretary of State's remark earlier in the week should go down in the annals of history about ministerial responsibility. In answer to a question asked by my hon. Friend the Member for Mid-Norfolk, she said, "As for Ministers taking responsibility, I am taking responsibility, which is why I removed the chief executive."

We Opposition Members are fair-minded people, but I cannot understand how Lord Bach can expect on this issue to command the respect of Parliament or, more importantly, the farming community with whom he must have day-to-day contact. It always seems, with this Government, that when something goes wrong, it is someone else's fault. Lord Bach should consider his position, and if he is not prepared to do that, the Prime Minister should consider it for him.

4.16 pm

The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Ben Bradshaw) : This has been a good, serious and constructive debate, and I will endeavour to cover as many of the points and questions raised by right hon. and hon. Members as possible. If I fail to address them all, I promise that I will get my noble Friend Lord Bach to write to hon. Members on any outstanding questions.

I apologise that the Minister who speaks on these issues in the Commons, the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for South Dorset (Jim Knight), is unable to respond to the debate, because he has commitments in the main Chamber on the Natural Environment and Rural Communities Bill.

As the Secretary of State made clear in her response to Monday's urgent question, she deeply regrets the circumstances in which we find ourselves and profoundly understands the distress that many farmers feel. I am sure that she would extend—

Mr. Jack: Will the Minister give way?

Mr. Bradshaw : I will give way to the right hon. Gentleman because he is the Chairman of the Select Committee on Environment, Food and Rural Affairs Committee, but I hope that hon. Members understand that I have to make some progress.
 
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Mr. Jack : I am grateful to the Minister. In the light of what he has heard, and his opening remarks, does he think that Lord Bach was justified in saying that my Committee's report on this matter was misleading and that it created unnecessary concern and uncertainty in the farming community?

Mr. Bradshaw : I shall come to that point in a little while, but my noble Friend has already responded to that point.

I was about to extend my sympathy—I am sure that hon. Members will join me in this—to the family of the constituent of the hon. Member for Ludlow (Mr. Dunne), about whom he told the Chamber a terrible story. I also want to reassure the hon. Gentleman regarding the support being given to Rural Payments Agency staff. I have been involved only on the edges of this issue because it is not my area of responsibility, but one of the first questions that I asked when this blew into a major crisis two or three weeks ago was whether the RPA staff were feeling more demoralised. I urge hon. Members on both sides not to add to any possible demoralisation. The staff have done a fantastic job in difficult circumstances.

As accusations and challenges have been made regarding my noble Friend in the other place, I remind hon. Members of the sequence of events that preceded the decision on Wednesday 15 March to remove Johnston McNeill, the chief executive of the Rural Payments Agency, from his post. Ministers had repeatedly been assured that it would be possible to implement the English model of the single farm payment scheme within the EU's payment window. As long ago as early 2005, the RPA announced that it would commence payments this February, and that 96 per cent. of payments would be made by the end of March. In mid to late January, the RPA advised that the 96 per cent. figure would not be achievable by the end of March due to "unforeseen complexity" in validating the claims, but that the worst case scenario was that the bulk of payments would be made by the end of March.

On 20 February payments began to flow as had been forecast. However, on Friday 10 March, after fellow Ministers had requested a qualified update of actual payments being made, the RPA still advised that 51 per cent.—one could argue that that represented the bulk—would be made by 3 April and that 96 per cent. would be made by the end of June. Just four days after that, on Tuesday 14 March, at a meeting with the Secretary of State, the RPA chief executive reported for the first time that the forecast of the bulk of payments being made by the end of March would not be met. He reaffirmed that 96 per cent. of payments would be made by the end of June. The next day, on the advice of the DEFRA permanent secretary, Mr. McNeill was removed from his post.

Mr. Hogg : Will the Minister tell the Chamber what reasons Mr. Johnston McNeill gave for that shortcoming?

Mr. Bradshaw : The reason, as I understand it, was that although the payments had begun, the speed of the payments could not be ramped up because of the
 
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complexity of the task. I will come on to some of the   action points that have been taken to rectify that since.

On the following day, Thursday 16 March, the decision to remove Mr. McNeill was announced, along with the appointment of the new acting CEO for the RPA, Mark Addison, a senior DEFRA civil servant. He was our acting permanent secretary for several months recently and is a man with extensive experience of delivery in both the public and private sectors.

Within four days of his appointment, by Tuesday 21 March, Mr. Addison had compiled an initial report that recommended a number of actions aimed at speeding up payments while retaining proper regard for the disbursal of large sums of public money. Those actions were set in train immediately. They were outlined in the answer given by my right hon. Friend the Secretary of State to Monday's urgent question, and I will remind hon. Members briefly of them.

First, disproportionate checks will be removed from the payment authorisation system in order to speed up the flow of payments once claims have been validated. Secondly, the validation of claims will be prioritised to release the maximum value of payments as quickly as possible as opposed to the maximum number of individual claims, which will mainly benefit the large number of middle-sized historical customers. I am afraid that I cannot give the exact figure to my hon. Friend the Member for North-West Leicestershire (David Taylor). The farming industry does not want the figures given out either, because the figures are not rigid. We do not want people to expect their payments to happen quickly and for them not to happen.

Thirdly, key mapping work associated with clearing validation at the Reading office will be centralised. Fourthly, the RPA's capacity will be strengthened in key areas and its structure will be changed to streamline command and control.

Mr. Addison gave his second progress report to Ministers yesterday evening. It showed that payments had reached more than 13 per cent. of the total value or 23 per cent. of the number of payments.

Miss McIntosh : Why was a DEFRA official appointed to such a sensitive position to carry out the review? Will the Minister explain why no timetable for delivery has been given and whether the computerised mapping system will, in the Department's view, ever work properly?

Mr. Bradshaw : I will come to the mapping system in a moment. If the hon. Lady is asking about the immediate review by Mark Addison, the new chief executive, he was appointed because the Secretary of State, on the advice of the permanent secretary, thought that he was the best man for the job. In the meetings that I have had with him on the issue, although it is not my area of responsibility, and in the meetings that he has had with the industry, the feedback has been very positive. He is an excellent public servant and the actions that he has already put in place have shown that he is getting to grips with the challenges that he faces.
 
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I was about to tell the Chamber that Mr. Addison's figures mean that, under the latest payments, £119 million has been paid out in the past seven days, compared with only £85 million in the first four weeks after payments started on 20 February. That shows significant progress. Mr. Addison, having managed in less than two weeks in the job to visit every RPA office in the country and listen to front-line staff, had a number of further recommendations that he made to Ministers last night that have now been approved. They will address, I hope, some of the concerns raised during the debate.

First, RPA processes should be reformed to deliver greater customer focus by dedicating teams of staff to work on individual claims in their entirety. That was the point raised by the hon. Member for Ludlow. That would replace the task-based approach, which meant that bits of paper were being sent round from one office to another.

Secondly, as part of that change, processing staff should be allowed to contact applicants directly on the telephone, to work through any outstanding issues. Thirdly, a discrepancy tolerance of 2 hectares, or 3 per cent. of the total area claimed, whichever is lower, should be implemented for the validation of claims. Fourthly, the over-pedantic quality checking processes should be stopped so that staff can concentrate on processing the claims.

Fifthly, the people who do the mapping work should be in the same office as those who process the claims so that they can talk to each other when there is a problem. Sixthly, where mapping correspondence is outstanding, payments should be made on the basis of the information that the RPA already has from farmers. There will be further discussion with the industry on the mapping issue next week.

Mr. Todd : Will the Minister give way?

Mr. Bradshaw : I want to get to the end of my list, and then I will give way to my hon. Friend. I still have a lot of questions to get through. I have lost count, but Mr. Addison's next recommendation was that a senior manager should be appointed to take charge of the delivery of 2006 claims—another area for concern that has been raised. Finally, the potential obstacles in the current employment procedures of the RPA that would prevent the retention of experienced staff should be addressed.

Mr. Todd : As someone who ran a major processing operation, I am startled that those seem earth-shattering statements. I welcome them; they seem entirely to be common sense. However, it is alarming that they have not been applied many months before.

Mr. Bradshaw : They seem to be common sense to me, as well. That is why what I said what I did about the abilities of the new chief executive of the RPA, who has been in the job, as I say, for less than two weeks.

Mr. Ainsworth : Will the Minister give way?

Mr. Bradshaw : No, I will not. I have only four minutes left to cover a great many questions, and I would rather get through as many as I can.
 
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A number of hon. Members have called for partial or interim payments. The Government have made it absolutely clear that we do not rule out the possibility of the need for such payments if there is no alternative. I remind hon. Members—this was acknowledged by the hon. Member for East Surrey (Mr. Ainsworth), I think—that that has potential disadvantages, including the impact on the 2006 payment timetable. I would like to add that at every turn in the past two weeks the industry has been kept fully informed. My hon. Friend, Lord Bach, and Mr. Addison met the industry leaders last Wednesday. They met again earlier today to take stock of the situation and to discuss the actions points that I have just announced. After today's meeting, I am told, the industry said that it welcomed the steps that had been taken. It thought that they would be helpful.

The hon. Member for Vale of York (Miss McIntosh), and a number of others, raised the question of whether the way in which we have chosen to pay the single farm payment was part of the problem. They are right to say that we adopted a different system in England, but I would describe it as more sustainable rather than more complex, as some have described it. The system was supported during the debate on Monday's urgent question by the hon. Member for South-East Cambridgeshire (Mr. Paice) as a system that was chosen correctly.

The hon. Lady was right to point out that Scotland and Wales have chosen different historical systems but, as she and other hon. Members will be aware, a number of member states chose to adopt the historical system and are beginning to wonder whether they made the right decision. In 10 or so years' time, would it be sustainable for farmers to be paid money based on what they had received 10 years before? We made the judgment that would not be sustainable, which was supported by the official Opposition Front Bench if not by the hon. Lady and my hon. Friend the Member for Stroud (Mr. Drew). However, we still think that that was the right system.

The hon. Member for East Surrey asked for my judgment of the problem with the RPA. As a Minister who has come to the subject relatively fresh in the past few days, nearly having to stand in for the Secretary of State on Monday and having to answer to today's debate, my judgment is that it was a problem of leadership trying to manage a complex organisation and a real problem of aversion to risk.

Mr. Ainsworth : How confident is the Minister that all payments will be made by the June deadline?

Mr. Bradshaw : One of the things that we and the new chief executive of the RPA are absolutely not going to do is to put down another timetable, given the fact that it has become patently obvious over the past few months that the RPA has over-promised and under-delivered. Mr. Addison is determined that he should not repeat that mistake. He and Ministers are determined that the payments should be made as quickly as possible, and they will be.

A number of hon. Members asked whether the Government would consider compensating farmers for late payments. I remind hon. Members—

Mr. Joe Benton (in the Chair): Order.
 
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