Supplementary memorandum
submitted by Defra (RPA 12)
Covering points raised at the oral
evidence session on 11 January 2006
1. Account of the process by which permission
was obtained to make a partial payment (referred to in Q.31)
Defra officials made initial contract with the European
Commission shortly after the announcement in January 2005 that
payments would start in February 2006. The Secretary of State
also raised the issue when she met with Commissioner Fischer-Boel
during the latter's visit to England in February 2005 and this
paved the way for a meeting between Commission and both Defra
and RPA officials in March 2005. At that meeting, various options
for making interim payments in England and the devolved administrations
were discussed and the Commission agreed to reflect on what might
be possible under existing or amended legislation.
Defra received a response from the Commission in
May 2005 advising that interim payments would be possible where
all controls had not been completed, but only if secured by bank
guarantee. Our view then was that this was an unreasonable requirement,
not least because obtaining such a guarantee would itself come
at a cost and those most in need would be the most unlikely to
obtain one. Further discussions with the Commission in the following
months, including at Director General level, and with other Member
States who expressed an interest in the possibility of interim
payments (Germany, Belgium and Luxembourg), eventually resulted
in the Commission promising (in September 2005) to propose an
amendment to the relevant EU legislation which would allow for
interim payments without guarantees, but with safeguards to ensure
EU funds were protected. A proposal was seen at the beginning
of October 2005 and adopted at the Direct Payments Management
Committee on 12 October 2005.
2. Cost of administering CAP payments in 2004.
(Qq 53-57)
The cost of administering CAP payments in 2004-05
was £136.9m; this excludes any associated set up costs for
CAP Reform. This represented a cost per pound of 5.7 pence.
3. Figures detailing the cost of various manual
'work-arounds' that had been used in 2005, after the introduction
of labour saving technologies was postponed (Q 58).
All of the elements of the new IT systems required
to complete 2005 claim processing and payment were put into live
usage during 2005.
A significant re-scope of the required functionality
was carried out late in 2004 to ensure that the critical elements
of the system would be delivered in time for the first year of
the Single Payment Scheme. The decision to focus systems developments
to enable the 2005 scheme year payment required a number of manual
workarounds. The cost of these workarounds is based on estimates
of the additional staff resource required to deliver a range of
activities under the following three main categories:
· One
off costs to introduce the Single Payment Scheme - £1.2m
· Costs
in 2005 - 06 only, which principally include the cost of manual
data capture and entry - £3.6m
· Ongoing
costs that are likely to extend beyond the current financial year
- £0.7m
4. A list of the dates of each of the occasions
that the RPA found it necessary to approach Defra for additional
resources (Qq 64-65).
Additional funding to meet the costs of implementation
of the reforms to the EU Common Agricultural Policy was sought
by the RPA in a series of meetings subsequent to June 2003 when
the EU Council of Agricultural Ministers agreed to the reforms.
During that period the costs of implementation evolved
as the scope and methodology of payments under the Single Payment
Scheme became clear.
§ Additional
funding was sought for 2003/04 in that year's Mid-Year Review
on 6th October 2003.
§ On
23rd October 2003 a formal request was raised with Defra as part
of the budget process for the 2004/05 financial year to meet the
additional costs of CAP Reform.
§ This
addition was subsequently reflected in a revised business case
which incorporated the cost of implementing SPS. This business
case was presented to Defra Senior management on 27th November
2003.
§ A
further submission on the funding of the implementation of CAP
reform was made as part of the process for setting budgets for
2005/06 with a further revised business case presented on 20th
January 2005.
§ The
budget process extended over the period between October 2004 and
January 2005 and included further changes to the costs, as the
impact of updated legal and policy requirements were confirmed.
§ The
RPA has also sought extra funding during the current financial
year. This was at the time of the First Quarter Review to ensure
the successful delivery of SPS.
§ RPA
is also seeking further funding for 2006/07.
The Department has fully supported these requests.
5. A detailed response to the issues raised
in a letter, handed to Mr Hewett at the end of the meeting, from
a farmer working for J J Mann & Co, in Gloucestershire (Q
109).
We are in the process of carrying out a detailed
investigation of the Mann case, which will entail further discussions
with, amongst others, Mr Mann this week. However, it is clear
from an initial view of the case that Mr Mann had been in correspondence
with different parts of RPA responsible for land registration
and Single Payment Scheme (SPS) claim processing; and colleagues
in the Rural Development Service, responsible for administering
the Environmental Stewardship (ES) scheme. A detailed response
will be sent to Mr Mann and Mr James Paice MP following completion
of the investigation.
2005 was an exceptional year for land registration
given the huge volume of notifications received and the introduction
of two new schemes, only one of which is administered by RPA.
Consequently there have been occasions when farmers have had to
liaise with RPA and RDS over their notifications and the impact
these have on the SPS and ES. The involvement of a third party
has enabled RPA to increase the throughput of notifications, such
that only 3% of notifications received to date in support of 2005
SPS claims have yet to be digitised.
Following the involvement of a third party, RPA will
start the 2006 campaign with little or no backlog in land registration,
and will thus be much better placed to keep pace with demand.
This will reduce the need for farmers to contact us; and better
enable us to complete registrations in tandem with the SPS claim
processing window. The introduction of the RLE1 form, including
a pre-registration exercise, has been part of the approach in
2006.
6. What proportion of the total 'tasks' involved
in processing the SPS claims is represented by the 400,000 that
remained outstanding, when you gave evidence last week (Q 123).
Around 50% of primary and detailed validation tasks,
excluding customer and land registration activity.
7. Confirmation of the exact date of the trigger
point for payment of the bonuses, (referred to in questions 75
and 76.)
The Chief Executive's bonus payments are based on
the Agency's performance against key performance targets. These
are subject to an end of financial year external validation exercise
by NAO which should be completed by the end of May. The recommendations
from this validation exercise are provided to the Permanent Secretary
for approval in June. This generally leads to any bonus payment
being made at the end of July or August.
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