Examination of Witnesses (Questions 120-139)
LORD BACH,
MR JOHNSTON
MCNEILL,
MR IAN
HEWETT AND
MR JOHN
O'GORMAN
11 JANUARY 2006
Q120 (11.01.06) Chairman: Can you
put a number on this?
Mr McNeill: A number on?
Q121 (11.01.06) Chairman: You keep
saying there are a large number—how many?
Mr McNeill: Of outstanding issues?
Q122 (11.01.06) Chairman: Yes.
Mr McNeill: Because it is a task-based
system, there is the issue of the number of the tasks, and then
obviously how many claims that affects.
Q123 (11.01.06) Chairman: Well, how
many? You keep telling us there are a lot of them.
Mr McNeill: Currently, 400,000
tasks remain to be resolved.
Q124 (11.01.06) Mr Williams: How
many claims do you think that covers?
Mr McNeill: It is related to 70%
of claims. On the level two validations there are 400,000 tasks
relating to 70%—
Q125 (11.01.06) Chairman: So only
30% of all the claims currently are "tick in the box",
fully okay?
Mr McNeill: Through all the stages
of the process.
Q126 (11.01.06) Chairman: But 70%
of all the claims still have to be worked on in some way or another?
Mr McNeill: Certain issues and
tasks have to be resolved. Some will be resolved by system fixes
and in some cases that could be a very substantial number as in
tens of thousands; others have to be resolved by contact with
customers; others have to be resolved by scrutiny by our staff.
Q127 (11.01.06) Chairman: Let's explore
for a second the numbers which are going to have to be resolved
by customer contact. Are you yet in a position to be able to say
how many there are which will be needing, if you like, conversations
with the landowner?
Mr Hewett: Could I try and explain
the process?
Q128 (11.01.06) Chairman: You can
try and explain it, but it sounds to me like you have a lot of
work and a lot of phone calls to make.
Mr Hewett: Not all, in fact a
very small minority of that number, would require customer contact.
Mr Williams talked about the mapping of land being pretty much
behind, and that is correct, but a lot of the tasks—and
that is what they are called in the system—which are left
to be resolved derive from land where there is a mismatch between
the land on the claim and the land we have found on the register.
We have outsourced all the registration work and the vast majority
of that has now been completed. Some of it still has to be up-loaded
into the system, and it has been explained there are risks around
that and we have managed those down, but until that land is back
into the system there are mismatches. Some of those are very straightforward
and indeed the Minister saw examples of that when he visited Reading
just before Christmas, where the system is saying, "Claim
says X, system says Y", but we now know, thanks to the up-load,
"System says X". That is straightforward and we have
to just correct that and it is, to use your phrase, Chairman,
a "tick in the box". In other cases, it is more of a
detailed issue. Where the land has been digitised, there still
appears to be an issue between X and Y, the land claimed and the
land on the system. That may be because the customer was seeking
to digitise a completely different piece of land and we still
have an issue, or it may be that the boundaries of the parcel
which has been digitised overlaps with other parcels, or a number
of other reasons. So there are a number of land tasks in the system.
We also find that some tasks are coming through the system because
more than one customer has claimed on it—dual claims—or
there is an over-claim. "Claimed area says five hectares,
found area four hectares." We need to identify that and there
may be very good reasons for that. I mentioned earlier that one
of the key controls is to inspect a proportion of our claims population.
As we up-load that data into the system, we may find an issue
on that and there is a whole gamut of reasons why we might find
issues on that, some of them very straightforward, some resolved
through system fixes or some where we require contact with the
customer.
Q129 (11.01.06) Mr Williams: I can
understand why this is quite complicated, from personal experience,
but you are never going to get this perfect, so is there a margin
of error that the Commission would be happy with so you could
make this system work? It does seem to me that if you are going
to hang on forever to get it perfect, then the farmers are not
going to get their money at all.
Mr Hewett: This is exactly the
argument we have been exploring with our colleagues and ministers
on a regular basis. We need to make sure at the point of determination
we can be satisfied and ministers are satisfied that we have got
to a level of accuracy which allows us to make that determination
and the claims are accurate.
Q130 (11.01.06) Chairman: You have
been exploring it with ministers? When did this voyage of exploration
begin?
Mr Hewett: Apologies for the language.
We have been keeping ministers informed as we progress, and this
is the position we are proposing now.
Q131 (11.01.06) Chairman: But surely
there must come a point at which Lord Bach, as the responsible
minister, will have to make a decision? If, at the end of the
day, you are not yet decided, Minister, what is an acceptable
level of accuracy, you could be informing each other until the
cows come home?
Lord Bach: We know what the acceptable
level is.
Mr McNeill: Chairman, what we
have done is analyse the various groupings of these tasks and
we have taken a view as to the consequences of proceeding with
outstanding tasks in various categories. Some we must clear up
because the Commission will take a very dim view if we were to
proceed and make payments in that situation. We have also considered
what level of outstanding tasks would have what impact when we
actually take the view or define the tasks, which of course is
the next crucial step in this process, and the clearing up of
the issues relating to particular claims will continue. It might
mean that some claims will not be paid as quickly as others and
there will be outstanding tasks on those particular claims. So
the major issue for us is, at what stage are we confident, considering
disallowance, the view of the Commission and indeed the information
we receive on a daily basis—
Q132 (11.01.06) Chairman: What I
am slightly unclear about in this exercise of defining what is
accurate is, is the decision a United Kingdom Government one or
has it been laid down by the European Union?
Mr McNeill: The European Union
lay down a clear raft of requirements to ensure that funds are
protected and expect us to make sure that certain controls are
in place, then we are paying out those funds on the basis of those
controls, and we are then subject, as has been mentioned, to intense
audit by the NAO, the European Court of Auditors and—
Q133 (11.01.06) Chairman: So you
know by virtue of what the European Union say, the degree of accuracy
that you should be achieving?
Mr McNeill: We understand what
the Commission and others would require of us and are looking
at our position in the light of that to take a view as to whether
or not we can proceed to define entitlement and to start payments.
Q134 (11.01.06) Chairman: So when
are you going to be able to give a definitive judgment on this
matter accurately to the Minister?
Mr McNeill: The next check point
on that is at the end of the month. We are still within sight
of defining the targets by 14 February and commencing payments
in February. If we are not in a suitable position because we think
we are at risk of disallowance, that will have to be considered
as part of the complete risk assessment and the Minister's options
would be, is it worth another few days' or weeks' effort to get
full payments out—and we know a number of stakeholders have
said that may well be the case—or do we go for partial payments
with the resulting risk in delay to potentially other payments
as well and the fact that could well impact on next year's payments.
That is the assessment which has been adduced for ministers and
others to consider.
Q135 (11.01.06) Chairman: So that
is what you are going to be able to give the Minister a definitive
assessment of by the end of the month?
Mr McNeill: We will provide the
latest up-date on our performance, where we stand and the assessment
of the level of risk in terms of disallowance, countered with
the need to get these payments made in February, and that will
enable the Minister to take a view.
Q136 (11.01.06) David Lepper: I wonder
if you could set my mind at rest on one point, in view of the
use of the word "validation", which I know can mean
a number of different things. There is no suspicion that a significant
number of people are trying to fiddle the system, is there?
Mr Hewett: No, but we are required
under the EU regulations to make sure that everything is in order,
and that starts with the amount of land on which customers claim
right through to, in a small proportion of cases, physically inspecting
the whole thing to make sure everything is order. As you will
know, the Single Payment Scheme is predicated around good agricultural
and environmental conditions which require a cross-compliance
inspection to be undertaken. But it is entirely possible, and
I can tell you now, there are some tasks which suggest more than
one customer has claimed on a land parcel. We need to investigate
if that is the case. I think in certain extreme circumstances
that is just about technically possible because of the complexity
of the scheme rules, but in the majority of cases we would find
that is not right and that only one of those potential beneficiaries
is the right claimant.
Q137 (11.01.06) David Lepper: But
the suspicion is that that arises more from a mistake on the part
of supplying information or in the mapping rather than a deliberate
attempt to mislead?
Lord Bach: One hopes so.
David Lepper: We hope a lot of things,
Lord Bach! Thank you.
Q138 (11.01.06) Mr Drew: Following
on directly from David Lepper's point, should you not have been
more rigorous in defining who is eligible to claim? I have some
real worries that amongst those 40,000 people we will be paying
money to some of the richest people in the country who, with the
best will in the world, are not farmers, are not defined in terms
of agricultural land, they just may keep a few horses on a piece
of suitable land. I have raised this before, and this is about
defining what we mean by farming activity and we are still far
too loose in this country on how we define it. I suppose the Minister
ought to answer that.
Lord Bach: This subsidy, this
Single Payment Scheme, is based, as I understand it, on use of
land and what needs to be shown by the claimant is that he or
she has some claim over this land and uses it at least to the
extent of making sure it satisfies cross-compliance principles
including elementary environmental principles. That would be the
basis of the number of entitlements and then of course there would
be a historic element which has to be shown by the claimant that
in the years 2000-02 that he was able to claim subsidy on, whether
it be livestock, wheat or whatever it was. That is the way the
calculation works.
Q139 (11.01.06) Mr Drew: All I am
saying is, if we had been more robust from the outset, those who
are existing and genuinely agricultural in what they are doing—and
maybe new claimants who come into the scheme—stand to gain.
So in a sense, because we have opened the door, a can of worms
has been seen in the corner.
Lord Bach: I am not sure that
is exactly fair.
Mr McNeill: Chairman, the robustness
is what happens as part of this process of assessing where we
get two claimants. Whilst we will not engage in arbitration, where
it is apparent to us that one of the claimants has had previous
claims with the Agency and has farmed that land and had that land
at his or her disposal, we will be able to point to that and will
be able to take the view that that is the claimant. This is a
particular issue of concern to the Tenants Farmers' Association
which they have indicated to us. What we have said though is that
where there is a more complex discussion and debate to take place,
we do not see the RPA engaging in arbitration. What we can do
is ask colleagues to resolve the issue but the fund will not be
at risk because we will not pay either until we resolve where
they stand.
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