Memorandum submitted by the National Farmers'
Union (NFU) (RPA 07)
1. Thank you for your emailed letter of
3 November 2005 to my colleague Barney Holbeche which invited
the NFU to submit written evidence to follow up of Committee's
earlier report on the Rural Payments Agency (RPA) (sixth report
of session 2002-03 Rural Payment Agency: HC382).
2. The NFU welcomes this follow up enquiry
into the ongoing progress of the RPA with reference to the payment
of the Single Payment Scheme (SPS) and their Change Programme.
The state of the RPA continues to be of major interest to farmers
in both England and Wales.
3. The NFU welcomed the creation of the
RPA as a more open better-focused service provider for farmers
and growers. As time has gone on, we have been concerned that
the continuing external factors, lead by the 2003 CAP Reform,
and continual internal developments through the Change Programme
have lead to the RPA loosing sight of its key mission statement
of being a "customer focused organisation". There is
a concern that the organisation is not helping farmers as it should
be.
4. The 2003 CAP reform demanded a massive
commitment from farmers and huge changes to the way they manage
their operations. Farmers were up for the challenge, but this
process has not been helped by the problems at the RPA. At the
NFU Council meetings in both April and October of this year our
members raised their concerns to senior RPA management relating
to a wide range of issues which included the following:
— Rural Land Register (RLR) Mapping
Problems and delays and knock on affect on the Environmental Stewardship
Scheme.
— Conflicting/Bad Advice from
the RPA—Farmers unable to contact the RPA by phone, examples
of conflicting advice given on such subjects as set-aside leading
to a lack of confidence in the new RPA Callcentre as a result.
— Concerns that farmers could
not accurately register themselves and their land for SPS in time
in the spring.
5. These problems have seriously damaged
farmers' confidence in the RPA and its systems. This will take
time to rebuild.
6. In response to rapporteurs David Taylor
MP and Roger Williams MP terms of reference we have set out our
comments below under the headings contained in your aforementioned
letter.
7. Why the RPA is unable to make payments
under the SPS at the start of the payment window in December?
GENERAL AND
IMPLEMENTATION OF
SPS IN ENGLAND
8. We accept that the RPA functions in a
framework set out in European legislation and that a key responsibility
of the organisation is to implement and administer the regulations
in place. There is a concern that in justifying the implementation
model in England, the RPA/DEFRA seem to be more concerned that
the Commission accepts it, rather than meeting the industry needs
of swift payment.
9. The NFU has been concerned about the
implementation of the SPS in England since the announcement on
12 February 2004 that government had chosen to use a "dynamic
hybrid model". Whilst it may appear to produce a simple compensation
system for farmers in the future when payments are decoupled from
production and historic compensation, it has so far been far from
simple to set up and implement. Added to this was the decision
to implement the reform at the first opportunity in 2005. These
two fundamental decisions have been instrumental in the problems
that have been encountered by farmers since 2004 with SPS.
10. We have been concerned that the implementation
of the new compensation system has involved a number of fundamental
changes to the rules, for example changes to the definition of
who is eligible, what is eligible and what you have to do to be
eligible for payment. These issues coupled to the transition from
the previous compensation schemes to the new payment structure;
adjustments for hardship and national reserve cases (due to the
changing nature of farming in recent years) have meant a very
complicated scheme has been created. In addition to these issues
the RPA has had to address amongst other things the following
along the way:
(a) Moorland line appeals,
(b) treatment of Common land,
(c) fruit, vegetable and potato authorisations,
and
11. These scheme changes have taken place
at a time when the RPA has closed two offices (Crewe and Nottingham),
reduced staff numbers, employed more temporary staff and contractors
to carry on with work and has restructured the handling of incoming
calls and documents.
12. If one looks at the regulatory requirements
of SPS it states clearly that a number of tasks have to be met
by certain dates to ensure payment is made on time:
13. By 15 April 2005, all farmers should
have received their application forms, a significant number seemed
have been posted out right up to this date.
14. By 1 August 2005, the RPA/DEFRA should
have notified farmers if their set-aside required for 2006 was
to change. We are still awaiting the outcome of RPA work on this
area.
15. By 31 December 2005, the RPA/DEFRA should
have by this date determined the definitive value and number of
payment entitlements that farmers will receive. The RPA/DEFRA
have now stated that they are not going to fulfil this requirement
until January 2006 at the earliest.
16. As a result of these issues the RPA
are not in a position to made payment at the start of the SPS
payment window (1 December 2005).
AFFECTS OF
DELAYED PAYMENTS
ON FARMERS
17. What farmers want from the RPA is a
swift payment of SPS monies at the start of the payment window.
The long payment window under SPS which runs from 1 December to
30 June will not help the industry this year or in future years.
Cashflow as you will be aware is critical. With the industry already
weaken by low commodity prices and high input costs, producers
are at the mercy of the buyers, traders and financial institutions.
Producers are being forced to bear the brunt of the financial
costs of extra interest, arrangement fees and then being forced
to accept lower commodity prices as traders see an opportunity
to "cash in" on cashflow problems.
18. The NFU welcomed the announcement on
the 18 May 2005 by the Secretary of State that payment of SPS
monies would take place early in the payment window, via
the target set for the RPA to achieve of "commence payments
under the single payment scheme by February 2006 and to process
and pay 96% of valid SPS claims by value by 31 March 2006".
This was reiterated in Lord Bach's statement of 5 October 2005.
The government, RPA and DEFRA would appear to understand the importance
to farmers of issuing payment promptly, given the adverse cash
flow implications of switching from the "old" commodity
payment regimes to the "new" Single Farm Payment scheme,
but payment will critically be late in this first year. As we
near this payment target, the NFU and farmers are concerned that
this will be missed, given the current progress of work involved
in getting to the stage of payment. The period immediately before
and after Christmas 2005 will determine whether the RPA payment
targets will be met.
19. The farming industry in England at the
moment cannot compete on equal terms with other areas of the United
Kingdom and Europe because of these payment delays. The industry
is suffering real financial hardship and as a result leading to
strained relationships between financial institutions and the
supply industry. There is a real possibility of failure of viable
businesses as a result.
20. The NFU continues to be supportive of
the efforts taken by the RPA and its staff and want it to succeed
achieving its targets and plans. We understand that this year
has been difficult and they are operating in a pressurised situation,
but they will be judged by external performance figures, payment
of the SPS being number one.
21. We are concerned there is no further
slippage in the payment timescale set by the Secretary of State.
The majority of applicants would appear to be receiving their
payment by the end of March 2006. As has happened in the past,
there is a real concern for those who are not paid in the first
wave, circa 2-4% of the 120,000 applicants. Some farmers
and growers will not have payment until June 2006.
22. If swift determination of SPS payment
entitlement values and payments is critical to the process and
if this is not achieved by the RPA, then there will be problems
in the rollout of the 2006 SPS scheme (application packs/data)
and ability of farmers to comply with the rules and timescales
set next year. The fundamental cause of this situation is that
the payment window for SPS runs "into, through and past"
the following years application period, we are concerned that
farmers will be put at a disadvantage because of this.
23. The affect on 2006 scheme year is particular
critical to two groups of farmers.
(a) A significant number of farmers as a
result of the impact of the introduction of SPS, will have to
adjust their arrangements for 2006 which were put in place in
2005. Swift determination of payments entitlements is key to allow
farmers to trade these payment entitlements so to allow them and
others to unravel the administrative mess created in spring 2005
and be in a position to submit a claim before 15 May 2006.
(b) Farmers who farm in England and Wales
or England and Scotland for example, have to contend with dealing
with only one government administration, but have to supply two
sets of SPS applications forms, one for each country. These farmers
have to date been extremely concerned with the progress of their
applications and the interaction between different administrations
who are implementing the SPS using different models.
THE RURAL
LAND REGISTER
24. We must question the RPA's planning
for the introduction of the Rural Land Register. It is clear that
inadequate management and funding has lead to the wholly unacceptable
delays in the digitisation of field parcels under the Rural Land
Register (RLR) with knock on implications for delivery of the
single payment and introduction of the Environmental Stewardship
Scheme. That the RPA still has a large backlog of IACS 22s is
testament to the scale of land registration and change within
the industry. We have seen therefore widespread concern, anger
and bemusement at the problems reported by the agency through
its slowness to appreciate the scale of the task in hand and how
this has had severe impact on the Rural Development Service managed
Environmental Stewardship schemes (ES) and particularly the Entry
Level Scheme option, which is a key element of government policy.
25. The processing of IACS 22 forms (which
contain the field areas that need to be digitalised by the RPA
for the RLR) has been our biggest concern and threat to payments
of SPS. The RLR process has lead to the RPA fire fighting without
what it seems a plan to follow. Initially there was denial there
was a problem, then realisation that resources were not going
to be able to deal with the problem, then various changes in policy
from using internal staff to external contractors have occurred.
26. Given that we have an area based SPS
system and the new Environmental Stewardship Scheme is fundamental
part of Defra's new sustainable land management approach, it is
extremely disappointing that the processing of land registration
has not been cleared up well before the SPS payment window. The
industry pointed out to the Government and the RPA some 18 months
ago that changing the SPS land eligibility criteria, coupled with
ability to include areas of non-traditional IACS land for Environmental
Stewardship, would create a huge increase in work if this land
had to be entered onto the RLR as a pre-requisite to SPS and ES.
The delay in this registration has meant that farmers wanting
to enter ES have been delayed from doing so, environmental benefits
that may have been gained have been postponed and cashflow problems
as the associated conservation payments have not reached farmers.
27. The biggest problem and frustration
to farmers has been the profound instability of the IT software
used by the RPA to digitalise and capture field parcels on the
RLR. It would appear to be unstable when (1) interacting with
printer software, (2) retrieval of data and (3) transfer of data
to the RDS for ES (who use a different IT application, which has
inevitably created further delays). This is leading to instances
of farmers submitting having a full set of RLR maps with all there
fields on and then wanting to make a number of new changes, when
farmers eventually receive back their RLR maps, the changes may
have been added on, but previously highlighted fields attached
to the farmers holding are now missing. Also when the farmer goes
to the RDS and asks for the relevant paperwork and associated
illustrated maps for ES showing the farm these fields are again
also missing, leading to the application being delayed or not
being possible to proceed with an application.
PROBLEMS IN
APPLYING FOR
SPS AND RPA FOLLOW-UP
ACTION
28. We have already highlighted at the beginning
of this letter that there were problems even before the RPA received
SPS application forms back from farmers and growers. This did
not set the processing of application forms off to a good start
and the RPA have never really recovered. When there is change
to application forms, there needs to be help at hand to guide
applicants through the paperwork, as with any change applicants
are anxious to get things right and understand the changes and
not make errors. Unfortunately the guidance booklets supplied
to applicants with the application form in certain key areas did
not assist, but hindered them, this was particular concern given
that the RPA (and MAFF beforehand) had produced a range of pre
SPS guidance to a high standard. The result of omissions and vague
instructions lead the RPA to hastily issue further supplementary
guidance to all farmers from the beginning of April, some applicants
by then had already submitted their application forms. Communication
of changes and clarification of rules were posted on the RPA and
DEFRA websites during the spring also, but many farmers and growers
simply failed to be aware of them or more importantly did not
have access to the internet.
29. The combination of a new scheme, new
rules, poor guidance, increased numbers of applicants lead the
RPA's helpline to be simply overrun with calls, leading to further
concerns from applicants. This had a number of affects, the RPA
had to take on more staff or shift resource internally to cope,
thereby taking staff away from other SPS work and with poor/rushed
training lead to poor, wrong or bad advice being given when callers
got through. Because of these delays, application forms were no
doubt have been submitted incorrectly and for the vast majority
gone in late, thereby preventing the RPA from starting their work
to validate the claims early. A further consequence of poor initial
instructions to applicants was the slowing of processing caused
by applications received and then enquires having to be made to
applicants.
The issues involved in making an interim payment
to farmers, in advance of the now February target
30. Recently further help has been forthcoming
from the EU Commission allowing for an interim SPS payment to
be made, this option has been taken up by other territories within
the United Kingdom. Unfortunately due to the complexity of the
implementation model introduced in England the impact of this
development will be minimal at best. The reason for this is the
RPA simply did not have a plan B, ie to pay some compensation
at the start of the payment window. The RPA/DEFRA have stated
to the NFU and others that software had not be developed to cater
for such a payment and now belately it would appear they are developing
software to deal with a two part payment. The problem is that
we are told that even this interim payment will not start before
February 2006, with the balance following before June, so no different
to the current envisaged payment of all moines due to the farmer.
This interim payment will not be affective in England for this
reason and therefore leading to the financial hardship already
mentioned.
What impact the RPA's own change programme has
had in the introduction of the new CAP payments and the agri-environment
schemes
31. The RPA set out on the road to complete
modernisation through its ambitious change programme but whilst
cost savings will no doubt come, improved customer service has
not been felt by farmers to date. The RPA change programme has
yet to pass back benefits to farmers that have been promised such
as easier access to quality information, on-line submission and
interaction.
32. In retrospect there appears to have
been a tension between internal modernisation goals for the RPA
and that of retaining local contact and its knowledge base.
33. The delivery of reduced bureaucracy
under SPS has not yet been felt by our members. A key element
of the change programme apart from the RLR already mentioned has
been the new database of customer information held by the RPA.
However, the initial way the Customer Registration Form (Creg01)
and accompanying guide was introduced is an illustration of poor
customer focus. The form and guidance are just too long and confusing
for the vast majority of recipients and as result caused numerous
problems to applicants. First the form had to be completed by
new SPS claimants in the spring of this year before they could
obtain an SPS application form and guidance, this requirement
was soon dropped due to delay in getting application forms out.
The form then had to be completed by those who had what it would
appear minor business changes to their details causing further
paperwork. The number of new applicants coupled with applications
being received from existing farmers and growers has lead to a
delay to SPS application processing, this has been a resource
hungry activity undertaken by the RPA.
The extent to which the RPA's IT systems have
failed to evolve to deliver what is required of them
34. We are told by the RPA that their software
is up to the job, we are concerned that new IT could be the final
nail in the payment target coffin. We have heard reports to date
that the software already installed and being used, whilst it
works in principle when used in anger by a large number of operators
has broken down with faults occurring and delays to progress of
work, our concern is that it simply has to perform, as there appears
to be no plan B.
35. The key element that has yet to be used
in anger is the payment calculation function of the operating
system. Because of complicated method of determination of payments
we will not know how it will work until early next year.
36. We hope that the new software being
use will not disrupt payments as was the case in Wales when they
introduced similar changes in 2002. The proof will come from payment
performance.
Richard Wordsworth
Single Payment Scheme Adviser
December 2005
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