Memorandum submitted by the National Farmers'
Union (NFU) (RPA 07)
1 Thank you for your emailed letter of 3rd
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:
a) Rural Land Register (RLR) Mapping Problems
and delays and knock on affect on the Environmental Stewardship
b) 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.
c) 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
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 & 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 12th
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 d) set-aside.
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 15th 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 1st 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 31st 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 (1st 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 1st December
to 30th 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 18th
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 per
cent. of valid SPS claims by value by 31 March 2006". This
was reiterated in Lord Bach's statement of 5th 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 15th May
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 IACS22s 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
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 ommissions and
vague instructions lead the RPA to hastily issue further supplementary
guidance to all farmers from at 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
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 Untied 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 appear to simply did not have a plan B, i.e. 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
What impact the RPA's own change programme has
had in the introduction of the new CAP payments and the agri-environment
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, online 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.
National Farmers' Union