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Will the Secretary of State say whether Johnston McNeill, the former chief executive of the Rural
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Payments Agency, remains on full pay, and when that extraordinary situation is likely to end? He will be aware, following the written answer from his Department to my hon. Friend the Member for Twickenham (Dr. Cable) that appears in column 705W of Hansard today, that DEFRA has paid £4,296,268 in annual performance bonuses in the current financial year. That represents an increase of 27 per cent. on the previous year. Does he believe that his Department’s performance has improved by 27 per cent. in that period? What signal does that send the farming community? Will he reassure the House that none of that performance money has been paid to those responsible for one of the biggest bureaucratic bungles ever to afflict rural Britain?

David Miliband: I thank the hon. Gentleman for his support—perhaps “understanding” is a better word —for our decision about the 50 per cent. I can certainly confirm that 50 per cent. is the minimum threshold. As I said in my statement, the RPA will pursue full payment where possible and partial payment where necessary, with a 50 per cent. minimum payment. The relationship between the banks, farmers and the farmers’ representatives is well developed, but I will certainly check that that is the case. It has not been suggested to me that the banks need the heavy hand of Government to help them, as good systems are in place.

The hon. Gentleman is right to say that the investment in stress networks—£300,000, I think—is well made, and we will keep that under review. I addressed the hill farmers’ allowance in my previous statement, when I said that it would continue to be paid separately for 2006, and I addressed the issue of disallowance in reply to the hon. Member for South-East Cambridgeshire (Mr. Paice). The European Commission has not suggested levels of disallowance—it has not suggested any disallowance yet, having just begun the auditing process. The Government and the Department have acted at every stage to balance interests and discharge their responsibilities to the EU as well as to farmers. As I said, it is not in anyone’s interest to suggest otherwise, for obvious reasons.

As for Johnston McNeill, the matter was addressed at length by the permanent secretary in her recent Select Committee appearance, and has been dealt with according to civil service procedures. An offer has been made to Mr. McNeill, and we await his reply. As for performance bonuses, I understand that they were given to front-line staff who were largely responsible for disbursing, for example, partial payments in May, in circumstances that none of us would have chosen. I do not think that the hon. Gentleman would want those people on the front line to be tarred with the brush of incompetence, as they worked hard to deliver those payments.

Mr. Eric Martlew (Carlisle) (Lab): I welcome thefact that things will be more certain in future, as without doubt my farmers have suffered over the past 12 months. May I draw the Secretary of State’s attention to the work force at Edenbridge house, where 400 of my constituents are employed by the Rural Payments Agency on the front line? They work hard, and have changed their shift patterns—it was terrible
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that the Lib Dems denigrated what they have done—so will my right hon. Friend put it on record that it is not their fault that the system has not worked? Will he put his appreciation on record as well?

David Miliband: My hon. Friend speaks with authority and experience in this area, and I am certainly happy to extend my thanks to the hard-working staff in his constituency. It is an old rule that soldiers should never be blamed for the mistakes of their generals, and I am happy to affirm that principle today.

Mr. Michael Jack (Fylde) (Con): The National Audit Office report counsels us that during 2004 and 2005 Ministers found it difficult to have objective and knowledgeable information with which to assess progress in respect of RPA performance. That was because senior officials from the Minister’s Department were, effectively, in bed with the RPA trying to run the payment scheme. What steps is the Minister now taking to ensure that he has knowledgeable and objective advice by which to assess information that comes from the RPA?

David Miliband: I do not know about any bedding arrangements—or arrangements in bed, as the right hon. Gentleman describes it—in previous years. We have the benefit of independent work, not least by Select Committees of this House, and we have the independent expertise of the Office of Government Commerce and the independent review by the Hunter committee. No one could say that the RPA is lacking independent scrutiny at present. We are determined to learn from all of those reviews.

Charlotte Atkins (Staffordshire, Moorlands) (Lab): I wish to ask the Secretary of State about the possibility of bailing out the RPA, so that the impact on British Waterways and the dire consequences for canals, such as the Caldon canal, in my constituency, can be minimised. Many of my constituents cannot understand why the British Waterways grants have to suffer as a result of the problems of the RPA.

David Miliband: I share my hon. Friend’s passion for the good work of the British Waterways Board. However, I must address two aspects of her comments. First, the idea that the £200 million of deficit that I was presented with just before the summer holidays arises solely from the RPA is quite wrong; that is responsible for about £25 million of the problem. Accounting changes are responsible for £65 million, avian influenza for £15 million, and pressures from previous years, including for flood investment, are responsible for£70 million to £80 million. So we are not talking about cutting the waterways because of the RPA.

Secondly, as my hon. Friend knows, there has been a reduction in the British Waterways budget of about £3.9 million—against a budget of, at my last count,£59 million. That is regrettable, but the budgets for British Waterways and other DEFRA delivery bodies have gone up by many times over the past nine years.

That money has been very well spent by the British Waterways Board. In fact, I think I am right in saying that its private investment is now well in excess of its
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public investment. Its total budget is now, I think, about £190 million. It is a successful organisation, and we are determined to support it. Of course I regret the difficulties that have arisen, but they should not obscure either the good work of British Waterways or the good work of my predecessors in investing in its good offices.

Sir Nicholas Winterton (Macclesfield) (Con): I wish to associate myself with the concerns expressed by the hon. Member for Staffordshire, Moorlands (Charlotte Atkins), because of the Macclesfield canal, which is a very important facility in my constituency. I also have a simple question for the Secretary of State. This complete debacle with the RPA has caused irreparable damage to United Kingdom farming. Is the Secretary of State prepared to tell the House today what reparation he is prepared to give to farmers to regenerate an industry essential to this country—United Kingdom farming?

David Miliband: I completely share the hon. Gentleman’s passion and support for British farming. I do not have the benefit of the expertise and experience in this issue that he has gathered over many years. I listened to him use the word “irreparable” in respect of the damage. I would not describe it as that; I would describe it as damage, but I do not believe that it is irreparable.

The best way to make reparation is to have an RPA and a single farm payment scheme that work in an effective, timely and efficient way, and that is what I am determined to deliver. Farmers have a right to expect that money from the European Union will be disbursed to them in an efficient and predictable way. That is, I think, the best way in which I can give them the confidence that they need.

Janet Anderson (Rossendale and Darwen) (Lab): Will my right hon. Friend look into the case—I have already raised it with the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Brent, North (Barry Gardiner)—of a farmer in my constituency who has been paid a considerable sum in subsidy that he was not entitled to claim? Will he give me an assurance that action will now be taken to recover this money?

David Miliband: I gather from my hon. Friend the Under-Secretary that my hon. Friend has indeed raised this issue with him, and we are certainly looking at all such cases. I can assure the House that although final figures are not yet available, overpayments are in the single million figure. That is obviously higher than anyone would want it to be, but I can assure my hon. Friend that we will pursue all such claims very carefully and rigorously.

Mr. Roger Williams (Brecon and Radnorshire) (LD): Yesterday in my office, I met Mr. Parry from Bleddfa, in my constituency, who has received none of his English single farm payment and only a small amount of his Welsh one. We are talking about a considerable sum, so I have difficulty in reconciling the Secretary of State’s figure of only 50 farmers who have not received payments of more than €1,000. Will he intervene with the RPA and ensure that there are still enough staff
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dedicated to dealing with the 2005 payments, so that cross-border farmers, those who are having difficulty with common land applications, and particularly hill farmers—5 per cent. of the latter have received none of their payments, and a number have received only partial payments—get the payments as quickly as possible?

David Miliband: We will ensure, and the RPA is ensuring, that there are sufficient staff to pursue that issue. If the hon. Gentleman contacts my office with the name of his constituent, I will pass it on to the RPA and make sure that a proper process is in place.

David Taylor (North-West Leicestershire) (Lab/Co-op): The Government are rightly straining every sinew on behalf of the 115,000 families affected by the Farepak collapse, who have lost £300 to £400 each. Indeed, 115,000 farmers are losing an average of £13,000 to £14,000, or waiting for delayed payments. Can the Secretary of State assure me that, before I go the local branch of the National Farmers Union, which represents scores of farming families, he will do everything that he can to identify the most needy claims, and not prioritise and focus on agribusiness, which does not need the money?

David Miliband: My hon. Friend has spoken many times in the House about this issue. While I would say that all farmers need the money, I agree with him that it is important that there is a suitable prioritisation process. In my statement, I referred to the €1,000 limit that we will establish. That is a form of prioritisation, but I certainly take the point that my hon. Friend makes and I can reassure him that we will not deal with the biggest claims first and work our way down the system. The RPA will try to identify claims in an appropriate and sensible way.

Mr. David Curry (Skipton and Ripon) (Con): Given that the Department cancelled the installation of software that would have given it reliable management information about what was happening at the RPA, and given the number of false dawns that we have already had, how certain is the Secretary of State that the assurances that the agency has now given him are bankable, particularly bearing in mind the huge administrative task that it now faces? A second overhang of payments has been added to the first, and it is possible that a significant number of the payments already made are not accurate.

David Miliband: The right hon. Gentleman asks a question of me that I have obviously asked myself before coming to the House to make this statement. The best way to answer him is to say that both the chief executive of the RPA and I will use the words “bankable” or “certainty” when the money is in farmers’ bank accounts. Equally, my judgment, the affirmation that I have given and the clear timetable that I have set out today—I referred to the middle of February and the three weeks thereafter—is based on one thing that we do know from last year, which is that, once the button is pushed to deliver partial payments, it can be done. The chief executive of the RPA has given
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Lord Rooker and me a clear explanation of how that can and will be done. I am impressed by the way in which he has gone about his job since his appointment in July. He is bringing a rigorous and conservative approach to the issue. He is certainly not making excessive or wild claims. He is determined to make sure that his delivery keeps up with his promises and I am impressed by his work so far.

Jim Cousins (Newcastle upon Tyne, Central) (Lab): Does my right hon. Friend acknowledge that the Rural Payments Agency attempted to solve its problems by hiring agency workers, who were drawn into the processing centres from all parts of England, on a mass basis? Does he acknowledge that more than half the workers at the processing centre in Newcastle were agency workers employed on a short-term basis? That happened for a long time. That is no way to go on. Many hundreds of my constituents would love to have a proper job on a proper basis providing proper service to him and to the farmers of England.

David Miliband: My hon. Friend raises an important point. I have not got the precise figure for the distribution of employment at the Newcastle office, but his basic point is good. That is certainly one of the issues being considered by Tony Cooper, the chief executive, in his moves to get the RPA into good shape.

Mr. Roger Gale (North Thanet) (Con): My understanding is that there are some 9,000 claims pending and several thousand outstanding 2005 queries that still have yet to be addressed. As the Minister said, those are impacting on the current year. As my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) said, that is causing an overlap of yet another year. Hundreds of farmers in the south-east and their families are facing a miserable Christmas as a result. In his statement, the Minister said that payments would be made for not less than50 per cent. of claim value, but in every answer that he has given since, it has become immediately apparent that that means not more than 50 per cent. either. If farmers in my constituency, and others in the south-east, have to wait until mid-February, why cannot the figure be 80 per cent.?

David Miliband: I am sorry that the hon. Gentleman has interpreted my answer to the hon. Member for Eastleigh (Chris Huhne) in that way. The hon. Member for Eastleigh asked whether 50 per cent. was the maximum or the minimum and I thought that I gave a pretty clear answer that it was the minimum. Full payments are being pursued and the final level of payment obviously depends on the second level of validation that is done. The hon. Member for North Thanet (Mr. Gale) asked about the 80 per cent. for last year. I tried to address that earlier. The European Commission was clear that the first year of the new single payment scheme was exceptional and would be regarded as such. That was included in the discussion in the European Council in 2003. That gave us latitude that we do not have in the same sort of way this year. We have tried—I think that this would have support on both sides of the House—to work within European regulations that we have argued for long and hard, from Governments of all complexions, to try to ensure
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that payments under the common agricultural policy around Europe are made in a regular and appropriate way. That is the basis on which we have made the decision that we have today.

Mr. David Drew (Stroud) (Lab/Co-op): I welcome what my right hon. Friend has to say, but will he look again at the idea of de minimis payments, given that there are clearly some anomalies in who receives payment? Will he look again at who is entitled to the single farm payment? This is a farm payment and yet it goes to many people who are clearly not farmers and add little to the land. Will he accept that it would be completely wrong to make any payment to the EU until and unless it reforms its agricultural system? That is rubbing our nose in it, when we should be rubbing the EU’s nose in it.

David Miliband: I am not going to get into nose rubbing. The point about de minimis payments is interesting. That is not allowed under the current regulations. My hon. Friend will know that about 30,000 to 40,000 of the 120,000 or 115,000 claims are for relatively small sums. We will certainly explore that as we proceed.

Andrew George (St. Ives) (LD): Further to the point made by the hon. Member for North-West Leicestershire (David Taylor), and in the spirit of wishing to be constructive and to look forward, rather than back, will the Secretary of State be prepared to consider the point made by the hon. Member for Stroud (Mr. Drew) and thus ensure that the payments go to full-time farmers with small, family farms who receive the majority of their income from farming, but have experienced serious problems and additional marginality because of a lack of adequate cash flow? Will the Secretary of State be prepared to ensure that those farms are the first priority and make sure that there is not only a floor, but a ceiling, for the priority on which the RPA concentrates?

David Miliband: I am genuinely grateful to the hon. Gentleman for the serious and constructive tone and content of his question. I know that he speaks about the matter with the interests of his constituents at heart. Since May, I have learned that it is unwise of politicians to make arbitrary judgments about levels of payments. The €1,000 minimum that I chose was based on close consultation with the chief executive of the RPA about the way to maximise resources and the impact of the work of the RPA’s staff. I do not want to set an arbitrary maximum because there will be hard cases on all sides.

I have also learned that one should proceed with great care when making changes that have an impact on the RPA’s operating procedures. I will consider what the hon. Gentleman says and discuss it with the chief executive of the RPA. However, I want the chief executive to make management judgments about the best way forward for the delivery of the scheme, and I think that that is the best way to serve the hon. Gentleman’s constituents.

Paul Flynn (Newport, West) (Lab): The Minister appeared to link directly the chaos in the RPA with the cuts in the payments to British Waterways to the extent
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of £25 million. Why is that? Does it not put at risk the great work that has been done to revitalise the canal system in Britain, and especially the work done on the flight of 14 locks in Newport, which is developing into a fine tourist attraction?

David Miliband: I am sorry that my earlier answer was so unclear. In response to my hon. Friend the Member for Staffordshire, Moorlands (Charlotte Atkins), I tried to explain that 10 per cent. of the financial difficulties faced by the Department was the responsibility of the RPA, not 100 per cent. My hon. Friend makes a passionate defence of the work of British Waterways—I share his sentiments—but let us not forget that there has been £40 million of investment over the past nine years to clear the backlog that was left when we came into office. There has also been£30 million of additional investment on top of that. The £3.9 million reduction that we have had to make is deeply regrettable and it means that important work by British Waterways will not go ahead. However, let us not fall for the fallacy that that means that no work will be done by British Waterways, or that all its good work will be eliminated. There are £3.9 million of cuts, but more than £50 million of Government grant a year. There is a budget of £190 million, and there has been more than £70 million of new investment over the past nine years. That record is a good one on which to build. Our responsibility in the Department is to ensure that its finances are managed in such a way that it is able to support good organisations such as British Waterways.

Mr. Douglas Hogg (Sleaford and North Hykeham) (Con): Given that the RPA cannot make full payments before 30 June 2007, it would clearly be churlish not to welcome the partial payments. However, may I suggest to the right hon. Gentleman that it would be fairer still if he would agree to pay interest on the balance of the payments that cannot be made before 30 June, but will be paid after the window closes?

David Miliband: I think that I understand the right hon. and learned Gentleman correctly, but I will be happy to write to him, or he can write to me. If he is saying that the Government will have to consider next year whether to pay interest on payments that are not made during the window period, he is raising a wholly legitimate point. The Government faced that situation this year and have paid interest on the payments made outside the window. Although I cannot make a commitment today, he raises a perfectly legitimate point if he is saying that if—I underline that word—next June, there are payments that have not been made in the window, we must consider Government practice on the matter, given that there is an established precedent. However, at the moment, all my energies are focused on making sure that the payments are made.

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