Memorandum submitted by Dr J Jones, Head
of Farm Management at the Royal Agricultural College, Cirencester
(RPA 11)
BACKGROUND
1. I have been closely involved with the
process of reform of the Common Agricultural Policy (CAP) both
as a researcher and as a stakeholder representative of the Royal
Institution of Chartered Surveyors (RICS). It was in the latter
role that I gave written and oral evidence to the EFRA Committee
inquiry into CAP reform implementation in 2003-04. My involvement
has largely been at a policy level rather than with detailed implementation
and has thus mostly been with DEFRA rather than the RPA. Although
the type of activity I have been involved with has gone as far
as the planning for implementation and even the scheme documentation.
In particular I have been particularly involved with cross compliance
and attended the workshops arranged by DEFRA and IEEP to refine
the cross compliance requirements and documentation.
2. I attended most of the stakeholder meetings
with DEFRA chaired by David Hunter which took place between 2002
and 2004. The last of these meetings took place in the spring
of 2005. Latterly stakeholder engagement has been with the RPA
and meetings have taken place at their offices in Reading rather
than in Nobel House, Westminster. I attended the first of these
meetings on 9 September 2005. But RICS representation since then
has been by a staff member, Mr Peter Fane and (since Mr Fane's
departure from the RICS in October) by an RICS member from Northumberland,
Mr Louis Fell. I have not been directly connected with the mechanics
of the implementation of the Single Payment Scheme (SPS). However,
I attended the DEFRA/RPA roadshow presentation to farmers and
professionals at the De Vere Hotel, Swindon in January 2005. I
sit on the RAC Farms Board and have many points of contact with
those in the farming and the surveying profession that have been
directly involved in applying to enter the SPS.
3. I have canvassed for feedback from various
contacts including members of the RICS Countryside Policy Panel.
I am very grateful to the Earl of Lytton for providing me with
a detailed account of his own experiences of the SPS introduction
and the service provided by the RPA. I have included this as an
annex to my evidence as an illustration of the deep frustration
that in his case led to deciding not to enter his two farms into
the Scheme. This is exceptional but I know that there are also
aware of very strong feelings by a large number of RICS members
who have been involved in the process. It is for that reason that
I have suggested to the RICS that they make their own separate
evidence to the Committee as I am not really in a position to
base my own evidence on enough first hand experience.
4. The questions on which the Committee
seek evidence.
These were given to me as:
— why the RPA is unable to make
payments under the Single Payment Scheme at the start of the payment
window in December;
— the issues involved in making
an interim payment to farmers, in advance of the new February
target;
— what impact the RPA's own Change
Programme has had in the introduction of the new CAP payments
and the agri-environment schemes; and
— the extent to which the RPA's
IT systems have failed to evolve to deliver what is required of
them.
5. I propose to answer these by giving an
over view as I see it of the circumstances. Others will be better
placed to comment on specific logistical and delivery issues.
6. Problems created by the policy formation
and implementation process.
The policy formation process has been exceptionally
complex. The reasons for this in brief are:
(a) The unusual amount of discretion provided
by the June 2003 Luxembourg agreement to Member States in how
they wish to apply the SPS.
(b) The UK decision to regionalise providing
further scope for separate rules and subsidy allocation in England,
Scotland, Wales and Northern Ireland.
(c) The delays and difficulty the Commission
experienced in providing the full legal text and implementing
regulations within which the Member States could exercise their
discretion.
(d) The novelty of the concept.
THE UNUSUAL
NATURE, CONTRADICTIONS
AND COMPLICATIONS
OF THE
SINGLE PAYMENT
(SP) AS A
FORM OF
SUBSIDY
7. The SP is decoupled from production but
nevertheless occupation of "agricultural" land is the
basis of claim. The subsidy itself is not linked to any specific
land parcels (as with Arable Area Aid Payment registration). But
land occupation in 2005 is the basis of establishment of entitlement.
Previous Pillar 1 agricultural subsidies had links with production.
Even most of the Pillar 2 subsidies have specific links with some
kind of production—business diversification, reduced intensity
farming for environmental benefit, food processing and marketing
etc. So having a subsidy with no production link at all seems
very odd both to government officials and recipients.
8. The SPS has land use and other conditions
most of which are an indirect consequence of production (although
some have no link with production at all). This has been highly
confusing conceptually even at the highest levels of those responsible
for creating the scheme rules at EU, Member State and regional
level.
9. Most of the difficulties experienced
in implementing the SPS stem back to internal contradictions that
arise because:
(a) Entitlement is based on past occupation
of specific parcels of agricultural land but is then not linked
to that land.
(b) Payment is related to occupation of "agricultural
land" but does not require agricultural production.
(c) Most of the cross compliance and other
conditions relate to production but the SP is not a production-based
subsidy.
THE NATURE
OF THE
BASIS OF
PAYMENT FOR
THE SPS IN
ENGLAND AND
WHY IT
IS HAS
CREATED EXTRA
DIFFICULTIES
10. The choice of a transitional hybrid
as the basis of payment made the establishment of appropriate
levels of payment about as complex as it could conceivably have
been.
11. A system based purely on "historic"
subsidy receipts has the complexities of force majeure claims
(special cases of those disadvantaged by the choice of reference
period) as well as both voluntary and compulsory categories of
national reserve claims. But by focusing payments on just those
who have been in the system in the past it avoids the complexities
of spreading payments to all occupiers of land defined as "agricultural".
This contains the numbers as well as sticking to those on whom
there are some established records. There are still plenty of
complications because not all of the past subsidy schemes were
based on defined areas of land but simply on head of stock. In
the case of dairy based subsidy it gets even more complicated
because it relates to milk quota either leased or owned on 31
March 2004 and not to either cows or land.
12. A system based on spreading payment
out and allocating the total funds available on an area basis
has some advantage over the "historic" system in that
it avoids the complications of going back into past subsidy claims.
But it has the disadvantage of potentially bringing in every occupier
of more than 0.3 hectares of "agricultural" land. This
is made particularly difficult if a broad definition of what is
"agricultural" is adopted ie by including land not in
production or receiving any kind of agricultural support payments.
In England the definition used has included land used for grazing
horses for instance which is not "agriculture"—at
least in terms of various other forms of legislation. So there
are vastly more potential applicants in total and many have been
previously outside the subsidy system. It would seem that the
numbers are roughly double what they would have been under a pure
"historic" system and there are naturally plenty of
oddities. It is inevitable when the definition of what qualifies
is rather open to interpretation that land occupiers may "try
it on" to see if their park, polo ground, nature reserve,
firing range or what ever can qualify. Especially as there was
only one opportunity for all time to latch on to the subsidy.
But spreading the subsidy net in this way is bound to bring in
a lot of difficult and unusual cases. This makes the job of validating
claims much harder.
13. The regional average basis also brings
with it some additional technical complications that are not shared
by a history-based system. It would be difficult to explain all
of these. But I can offer two examples:
(a) The set-aside requirement, which can
simply be attached to the amount of AAAP based subsidy under the
historic system, has to spread out across all land that could
be in arable. In the English lowland this reduces the rate from
10% to 8% and applies it more widely on land where no set-aside
has been used in the past. However, because the subsidy is not
linked to any specific parcels of land a rule has to be created
about identifying a separate category of "set-aside"
entitlement. The set aside rate under the history system is fixed.
But under the regional average system rates cannot be established
until it is known how much land has been entered and of what type.
This has only become more complicated because there are three
separate sub-regions each one of which has its own set aside entitlement
rate.
(b) Common land creates difficulties under
both systems but this becomes greater and more contentious when
the land acquires a value for subsidy purposes even though those
who are entitled to occupy it have no stock on the common. Under
the historic system only commoners who have had stock on the land
in the past will be in consideration. Under the regional average
system all those who have rights to graze the common generally
have a right to apply for the subsidy.
14. A transitional hybrid that starts with
a strong emphasis on "historic" and moves during a period
to the Regional Average Area Payment (RAAP) basis suffers the
difficulties of both systems in its establishment. But without
having any of the advantages of each system operating independently
of either restricting it to past claimants only or being able
to ignore payments "history". However, even this level
of complication has been added to by basing the RAAP element on
three separate areas. The third area of which was a sub-division
of what the Government originally proposed as just one area having
been split only after lobbying from the industry.
ADDED COMPLICATIONS
DUE TO
THE CONCURRENT
ROLL-OUT
OF ENTRY
LEVEL ENVIRONMENTAL
STEWARDSHIP (ELS)
15. The roll-out of the ELS targeted at
70% of farmers has certainly added to the demands for maps and
on the RPA for data. Given the complexities of the SPS it might
have been better, with the benefit of hindsight, to have delayed
the process. But the introduction of SPS alters farm economics
pretty fundamentally making it advisable to close existing schemes.
So there was an argument for making the changes simultaneously
in order not to have to go through an interim phase with existing
schemes or to arrest the process of increasing agri-environment
participation as envisaged in the England Rural Development Plan
(ERDP).
16. What are the implications of the
circumstances under which the SPS has been introduced for the
RPA as the administering authority?
(a) A much higher volume of applications
as a result of moving to the RAAP.
(b) A much larger number of cross-border
issues as a result of adopting the three-region model in England
and choosing a different system to that adopted in Wales and Scotland.
(c) A large number of new applicants not
already on the system requiring additional set up and vetting.
(d) More applicants who are outside of mainstream
agriculture as a result of adopting the RAAP and a loose definition
of what qualifies as "agricultural".
(e) Both EU and DEFRA were behind schedule
in providing regulations, definitions and categorisation.
(f) A greater tendency to have to deal with
unusual, spurious or marginal claims compared with a pure historic
system that only deals with those who have claimed agricultural
subsidies or owned milk quota in the past.
(g) The amount of the RAAP and the required
rate of set-aside cannot be determined until all claims to entitlement
are lodged and validated.
(h) Confusion for farmers and advisors as
a result of the novelty and complexity of the concept and the
scheme rules plus late changes or clarifications. This in turn
has created more errors, queries, duplications and other such
problems.
(i) The time scale has been compressed by
the nature of the process at EU, UK and regional level. But also
by the delay over choosing what system to go for in England then
opting for almost the most complex model conceivable and later
altering the sub-regional structure of this.
(j) The demand for maps and data was increased
by the roll out of ELS and made worse by the initial approach
of setting quarterly deadlines for submission (later relaxed to
monthly to smooth out the workload and lessen the urgency).
(k) New audit requirements requiring co-ordination
with more bodies than was the case under the old production-based
schemes. So for example breaches of the cross compliance condition
GAEC 8 on rights of way is through Local Authorities. These are
not only more numerous than dealing with the centralised operations
of DEFRA or the Environment Agency but it is an arm of government
that the RPA has not had to deal with before.
COULD THE
RPA HAVE PERFORMED
BETTER?
17. The RPA have come in for a great deal
of criticism from farmers, landowners and their professional advisers
and representatives. I don't think I know of a single farmer that
has not provided me with several examples of frustration over
agreeing the forms, the information that should be on them, receiving
maps and forms on time, etc. So it would certainly appear that
the task could have been performed much better to achieve a more
acceptable level of customer satisfaction.
18. I do, however, feel considerable sympathy
for the RPA because of the circumstances I have outlined. They
were given an immensely difficult task. Clearly bringing in external
resources and additional casual labour has been necessary to keep
the task anything like on schedule. But this in itself must have
created problems. There is no doubt that their work would have
been more likely to run smoothly had the Government taken decisions
earlier and opted for a more straight forward system. I also feel
given the extra resources that have been required to smooth out
the problems later on that much more resources should have gone
in at an early stage in getting clarity from Brussels and the
regions as to how to proceed. Having dealt quite closely with
the process through the stakeholder groups I am rather horrified
at just how much reliance has been placed on certain individuals
to do this work. It may be part of the reason for the need to
send out additional documents and revised rulings. This has made
the applicants confused and annoyed with the RPA as the organisation
at the sharp end of the application process. It has also made
it harder for the RPA to train their staff, create the forms,
do audit work, etc in a timely fashion.
19. The specific questions to which the
Committee seeks answers relate mostly to making interim payments
and to delays. It may seem as though I have gone a long way about
providing an answer to these. But I think it relates to the whole
background. It is not hard to see why there might be performance
issues once the nature of the task is appreciated more fully.
20. Frankly I can't really see why an interim
payment cannot be made to those with undisputed historic entitlement
not subject to appeal. Other than the fact that it would create
another layer of complication in what is already a complex picture
for an organisation struggling to deliver what is required of
it.
21. But the bigger question is not so much
whether an interim payment could be made but whether the final
payment can be made by the end of March. If this deadline is not
met it means that transfers of SPS entitlement, which are a significant
issue for most tenancies and sales involving agricultural land,
will be held up badly and possibly for another whole year. This
is because entitlement cannot be traded until "activated"
by receiving the first payment. Once this has been received the
RPA requires six weeks notice for a transfer. Therefore any application
that comes in less than six weeks before 15 May will not be transferred
in time to allow the new holder to apply before the IACS submission
deadline. In order to make the final payments the RPA must have
processed all (or nearly all) the claims because until this takes
place the amount of the payment cannot be established. So it is
really vital that the processing is complete by the middle to
end of March. That has to be the RPA's priority and failure to
meet that deadline will create even bigger problems.
December 2005
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