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“In 2004—05, the RPA met all its key performance targets”.—[ Official Report, 2 February 2006; Vol. 442, c. 452.]
As that covered the period when the RPA said that payments would be delayed, it raises the question what performance targets it had apparently met.
During 2005 it became increasingly clear what the problems were—the wrong maps sent to the wrong farms. Sometimes even maps from the wrong counties were sent to farmers. As others have said, fields were added to a farm that had been missed off one set of maps, and other fields were missing from the next set of maps. There was chaos, yet according to the public face of Government everything was going well. Ministers, as we have heard, especially Lord Bach, constantly criticised those of us who said that there were problems. He said that we were causing
“unfounded alarm and uncertainty in the farming community”.
As early as that same day, 19 January 2005, in the House I called for interim payments. Later that year on 9 June the then Secretary of State said that she was not ruling them out. We know the rest. The Government did not make the decision to introduce interim payments until April 2006, nearly five months into the payment window. Clearly, there were serious problems.
I have a number of questions for the Minister about the present, but before I come to those, I want to make one point. The fundamental cause of the problems, aside from the difficulties of managing change, was that no Minister understood the industry that they were dealing with, nor, it seems, did any of the civil servants who were making decisions or giving advice to Ministers. No one seemed to realise the complexity of the dynamic hybrid and that it would take much more time. As the Secretary of State said repeatedly, they underestimated the number of new claims and the amount of land.
Given the definition of a farmer that we heard from the Minister a few minutes ago, one wonders why those in DEFRA did not seem to understand how many thousands of people there were out there who, like the hon. Member for South Derbyshire (Mr. Todd), own a few acres of England and might therefore register and claim. It is not just people who own 5 acres. In my constituency, in the horseracing sector, all the stud farms suddenly became eligible.
When all the problems were reported, no Minister seemed to have the gumption to go out and ask searching questions about why they were getting all those reports, or to go out to farms to look at the forms that farmers were being asked to fill in, and to see the maps that were being sent round and the chaos caused by inaccurate mapping. The Department was full of urban Ministers with no idea of the industry that they were dealing with. The situation was summed up on 2 February 2006 when, in an oral question, I said that the scheme was complicated, and the Secretary of State replied:
“The hon. Gentleman says that it is a complicated scheme, but that is misconceived.”—[ Official Report, 2 February 2006; Vol. 442, c. 454.]
I fear that she did not grasp the complexity of what she was doing.
The final insult to the industry was that that Secretary of State, who was ultimately responsible for the chaos and the shambles, was promoted to Foreign Secretary. As somebody might have said, when she had done her worst, the caravan moved on.
It is worth pointing out, as other hon. Members have, that Germany also adopted a dynamic hybrid scheme and did not face similar problems, which proves that the scheme itself was not the fundamental problem.
In the recent supplementary estimates—this is an estimates debate—the Department has been given £305 million, set aside to cover the costs of the debacle in the form of fines and disallowance from the EU. A recent written answer that I received used the figure of £70 million. In his response, will the Minister give us the Government’s latest estimates of fines and disallowances from the EU for the years 2005 and 2006? If it is as high as the £305 million set aside, that would equate to some 8,500 police officers, which the same rural areas would very much value instead of paying fines to the EU.
What is the up-to-date position on claims that are being reviewed? There are 20,000-odd claims for 2005 where we still do not know—and, more importantly, the individuals concerned do not know—whether people are going to get money back or be given any more.
On this year’s payments, 75 per cent. by value by the end of March is an improvement on where we have been before, but it is still woefully inadequate for the third year of this scheme. This year, the Government, or the RPA to be more precise, demonstrated that interim payments do not necessarily delay the final payment—one of the excuses given in the past. When we look back, we find that although interim payments were paid for some months this year, once the RPA pressed the button to pay the rest of the money it all went out in about three weeks. I therefore suggest that there is nothing to stop the Government producing interim payments before Christmas this year. The National Farmers Union is calling for 80 per cent., although I believe that EU rules might restrict it to 50 per cent. Certainly, I strongly believe that an interim payment needs to be made before Christmas. That would be proof that this new team of Ministers really wants to make a change for the better.
For 20 or probably 30 years, all political parties in this House have called for reform of the CAP, and I am afraid that much of that historical rhetoric remains
when we hear about the cost to the taxpayer and increased food prices. Indeed, we heard a little of it from the hon. Member for Luton, North (Kelvin Hopkins). Much of that rhetoric ignores the dramatic change of 2003—the biggest change to UK agriculture policy since the introduction of guaranteed prices in 1947. That was the end of the state fixing, in one way or another, the price that farmers receive. There was a widespread belief, which was obvious in the remarks of the hon. Member for Luton, North, that cutting market support would cut food prices. It is ironic that for two of the major world commodities—grains and milk powder, where there is now little market support—there have been dramatic increases in world prices over the past 12 months, not because of market support but because good old traditional laws of supply and demand. It is odd, given the “Vision” document, that in 2003 the Government praised the mid-term review, but then said in 2005 that it needed much more reform.
We need to understand that the CAP is as much a social policy as an economic policy. Those who founded it before we joined what was then the Common Market did so for social reasons. In negotiating the changes that we still believe are necessary, it is important that we understand where the others are coming from. The “Vision” document clearly failed to do that in substance and in process. Its publication, without any consultation, just two weeks before the budget summit, demonstrated a complete failure to understand the real intricacies of the CAP. I share many of the Committee’s views. It was an ill-thought-out document, it was based on many out-of-date facts, it did not fully recognise the changes that had been made, and the Government had no idea how to make it work. Then there was the incredible hypocrisy of cutting the pillar two rural development money by some €400 million, while at the same time, as we understand from discussions in Brussels, losing the opportunity for a rebasing of the mechanism for spending that money.
The Opposition’s view is that the original reform is not sustainable. The budget pressures, including the transition arrangements for the new member states, mean that there will be a reduction in the single payment system by 2012. From the farming industry’s perspective, it is vital that the industry can, sooner or later, hold its head up and stop for ever apologising for and justifying the need to have public money. It needs the ability to plan in the long term—it cannot just turn on the tap and produce more widgets or whatever. Keeping cattle, for example, requires three or four years between an animal being born and it going into production.
We need long-term stability, and it has to be based not just on money, which seems to be the guiding factor in the “Vision” document. Much more fundamentally, it is a question of what we want from our land. On that point, I agree with the hon. Member for Luton, North: it is a matter for not just rural people, but everybody in this country. More than 70 per cent. of the land in this country is farmland, and what we do with it makes a difference to everybody. There have been great changes since the 2003 review, such as the development of biofuels and the argument about food versus fuel. There has been a drought in Australia, which was the partial cause of the shortages I referred to earlier.
Rising demand from India and China, as they become more prosperous, has led to a reduction in world grain stocks, which are now at their lowest level for many decades.
Of course, there has also been increasing recognition of the importance of climate change and its many implications. It is a question of not just agriculture’s contribution to climate change, but the effects of that change on agriculture. Of all the crop land in the world, 70 per cent. is at or close to sea level, and is, therefore, very susceptible to the impact of rising sea levels due to climate change. In the UK, 57 per cent. of our grade 1 land is less that 5 m above sea level. We cannot ignore that.
The fundamental problem with the “Vision” document, therefore, is where it states that
“domestic production is neither a necessary nor sufficient condition for food security.”
That statement should not be a surprise. At the Royal Show in 2003, DEFRA put out a statement saying
“National food security is neither necessary nor desirable”.
That approach sits ill with the Government’s view on energy, about which they are rightly much more concerned, but it also ignores the changes in world supply and demand to which I referred. It ignores the issue of the carbon footprint of food, which is distinct from the issue of food miles. It ignores the environmental degradation taking place in other countries in the world in order to produce cheap food for Britain and elsewhere in Europe.
By the phrase “food security”, we mean not self-sufficiency in the old-fashioned way but the capacity to produce a significant proportion of our food. That means retaining the necessary infrastructure and investment so that if the market demonstrates a shortage through the market signal of a rising price, as it is with grain and milk powder, what matters is that we have an industry to respond to such signals—if such an industry is left. That “if” is the Government’s responsibility.
Land has other roles apart from food production. It plays a role in producing our energy, it is the location of many of our leisure pursuits and it plays a major role in water management through flood prevention, and the retention of water in our wetlands by getting it into aquifers rather than letting it run off to sea. It plays a role in relation to the environment and biodiversity. We need a holistic approach to land management and land policies.
Kelvin Hopkins: Will the hon. Gentleman give way?
Mr. Paice: I am sorry; I really do not have time.
Next year, we have the health check of the CAP. The first priority must be total decoupling throughout all countries, and in relation to all commodities. There is also no need for production controls, so we wish to see an end to set-aside; we strongly support the National Farmers Union’s call that it should be reduced to zero next year. The phasing out of export subsidies needs to begin, we need to see the end of ridiculous regimes, such as the one dealing with tobacco, and we want an increase in compulsory modulation. Beyond 2012, we need to move on and ensure that support for public goods
comes through the pillars that allow that to happen. That means “pillar two” in today’s jargon of the CAP and the ability to make direct payments. If there is to be enough money in pillar two, we must increase compulsory modulation, matched by a decrease in voluntary modulation. After 2012, we believe that there is increasing justification for co-financing, which would go some way towards tackling the budget and the rebate—they rightly worry the hon. Member for Luton, North.
A common theme has run through the two reports that we discussed tonight. It is clear that the Government have no natural feel for or understanding of land, farming or the uses of our countryside. The Committee has done the House a great service in bringing the issues to our attention.
9.40 pm
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Jonathan Shaw): I thank hon. Members for their kind words of welcome to me in my new post. It is a privilege to have it, and I approach it enthusiastically. I look forward to the challenges ahead.
The hon. Member for South-East Cambridgeshire (Mr. Paice) said that I was Lord Rooker’s spokesman on earth, but given the impression that we heard from the Chairman of the Select Committee, perhaps he was trying to be my noble Friend’s spokesman on earth. It was a good impression and those of us who know my noble Friend well realise that he would have enjoyed it.
First, let me deal with the report on the Rural Payments Agency and the implementation of the single payment scheme. Sadly, I need to begin by apologising for the delay in responding to the Select Committee’s report. The Government’s response was sent on Friday, but although Committee members may have had a chance to read it, I appreciate that other hon. Members will not. Of course, it has not been published yet. The problem, given the issues that the Committee’s report outlined and that were discussed extensively this evening, is that they simply were not departmental matters, as the Chairman said. It was necessary to secure advice from elsewhere in Whitehall. Although that is not an excuse for breaching the normal convention of responding in two months, I hope that hon. Members appreciate that recent ministerial and machinery of government changes have diverted the attention of those responsible for the past couple of months.
However, let me consider the substance of the report. I have come fresh to its contents and it is clear that it is a thorough piece of work—I genuinely thank Committee members for their evident efforts in producing it. It reflects the feeling of the farming and rural community about the failures of the Rural Payments Agency and the single payment scheme and the effect on farmers throughout the land.
I cannot pretend that the report made pleasant reading. Along with the National Audit Office report, which I read in preparation for the debate, it makes clear the scale and nature of the problems that the delays in implementing the scheme caused to individual farmers and the rural community generally. I am grateful to the NFU president, Peter Kendall, who arranged for me to speak to some farmers who were
affected by the scheme. I understood from them exactly what those delays meant, especially the cash flow problems that they caused. I therefore add my apologies to those of other Ministers involved for the distress that has been caused by that failure.
Clearly, lessons need to be learned. My hon. Friend the Member for North-West Leicestershire (David Taylor) did not want me to say that, but I must say that it is true. We set out in the Government response some of the lessons, which a wider review of DEFRA’s governance structures and its delivery bodies has taken up. The agency has taken others forward in the way in which it processes claims and communicates with its customers. In particular, the change from task working to whole-case working means that a claimant now has a named official who is responsible for their claim. A number of hon. Members raised that issue. A farmer could make a claim that could be dealt with by any number of people and in any number of the five different offices. That was simply unacceptable and a recipe for chaos.
Mr. Eric Martlew (Carlisle) (Lab): I congratulate my hon. Friend on his promotion, which is well deserved. He knows Carlisle well and is aware that we have a large Rural Payments Agency office there. I am sure that he would not attribute any of the blame for what has gone wrong to the people who have been making the calculations. I wonder whether he would visit the Carlisle office next time he is in the area to see how hard-working the staff are.
Jonathan Shaw: I am grateful for my hon. Friend’s words. He is right. What he have heard this evening is that a complicated system was introduced at the same time as a radical change. I have read through the evidence from former Ministers and, as has been said, had they thought more clearly about the issue and had the foresight, it would perhaps have been clear that introducing such a scheme was not the right thing to do. The consequence has been the difficulties that we have seen. I pay tribute to the hard work of the staff of the Rural Payments Agency and in particular to that of Tony Cooper, the interim chief executive, who has turned the organisation around and is making a real difference to staff morale. He makes visits regularly, has welcomed the challenge and deserves our support and thanks, as do the rest of the staff.
David Taylor: We need to underline the fact that on each and every occasion, from the first visit of the rapporteurs to the signing off of the report, members of the Committee did not attribute any blame to the tattered and bloody remnants of the 3,500 staff with whom the whole process had started or to the losses that they endured. We attributed the blame to the generals who had led them into that unwinnable struggle.
Jonathan Shaw: My hon. Friend makes his point in his characteristic way.
Senior DEFRA officials worked closely with the RPA chief executive and his team in pursuit of the objective that the Government had set out. However, responsibility for delivering the scheme and for advising Ministers on the RPA’s ability to meet the
timetable rested solely with the chief executive. There have been criticisms, which are highlighted in the report, about the alleged fact that there were two people at the helm and about whether that would lead to additional problems. We recognise that and we must accept those criticisms.
Looking forward, I am afraid that there will be no quick fixes to the issues faced by the agency. However, we are seeing improvements. As my right hon. Friend the Secretary of State reported on 2 July, it is pleasing that the agency has succeeded both in making the majority of payments earlier than last year, thereby boosting farmers’ cash flow, and in meeting its formal target of making 96.14 per cent. of payments by 30 June. I reiterate my thanks to RPA staff, who have worked long and hard to make that happen.
However, it is also clear that there needs to be further improvement in the RPA’s performance before it can be said that it is again providing an acceptable level of service. The next step in achieving that will be to complete the work on the 20,000 cases from 2005, which have been referred to, where entitlement values have been identified for review and possible adjustment, upwards or downwards, to 2005 and 2006 payments. RPA resources are now being switched to that work. We look forward to seeing real progress on those cases in the coming months and we shall of course keep the House informed.
Mr. Jack: The Minister is aware that his Department is planning for level cash as its income in the next comprehensive spending review round. He is also aware that a further £55 million will have to be found over the next three financial years to carry out some of the improvements to which he has adverted. Could he therefore explain to the House where that money will come from within the DEFRA budget and what the policy and reality implications are of spending more on the RPA and, by definition, less elsewhere?
Jonathan Shaw: The right hon. Gentleman should wait for the outcome. He has levelled some detailed questions at me. I have many questions to answer, and I will do my best to do so this evening.
The RPA has already begun to process the 106,000 or so claims that have been submitted under the 2007 single payment system. The agency’s targets for 2007-08 were set out in a statement by my hon. Friend the Member for Brent, North (Barry Gardiner) on 26 June, and they include a target to pay 75 per cent. by value of valid 2007 SPS claims by 31 March 2008, and 90 per cent. by value of valid 2007 SPS claims by 31 May. That target represents a greater degree of challenge for the agency in the coming year, while reflecting the fact that it is still in a recovery period.
I understand those who have called for a commitment to make partial payments in December this year. That might look like a simple matter, but there are real issues around the legal basis for such payments, the division of resources entailed in making them and the potential disallowance risks involved. As my hon. Friend the Member for Brent, North said in his statement, this is an issue, and we will return to it in the autumn, alongside the progress that we are making in processing those claims. I look forward to having further exchanges on that matter.
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