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Lord Dixon-Smith: My Lords, I declare an interest as an eligible farmer who, the noble Lord will be interested and pleased to hear, is fortunate to have received his full 2005 payment, for which I am immensely grateful.

I thank the Minister for repeating this Statement today, the more so since I am well aware that he has a particularly busy and crowded day, and putting this in has not been easy for him. He also has my sympathy for the bed of nails on which he finds himself. That said, as the Minister acknowledged, the Statement is about a situation that should not exist. The best that can be said of it is that it has moved from intolerable
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to bad. That is the reality. It is not comfortable for anybody in the department, the Minister's colleagues or for all those involved in the agricultural industry, particularly those adversely affected by not having received the payments they expected months ago.

I was at an agricultural show yesterday, where I spoke to bankers about these problems. Although they were immensely sympathetic and doing all they could to help affected farmers, they made clear that it was as difficult for them as for farmers who have not received their payments. A lot of work has been done by the banks and the agricultural industry to set up temporary loans arrangements to carry matters forward and keep farmers afloat. While on the subject of bankers, I say to the Minister with some gratitude that the prospect of interest payments for outstanding sums after 1 July is very welcome. I hope he will forgive me the rather acid comment that my understanding is that 1 per cent over LIBOR is generally less than a farmer could borrow at commercial rates from a bank. None the less, it is a very welcome move in the right direction.

I also welcome the Minister's remarks on sugar payments funding. Sugar beet growers will be particularly grateful for that statement.

What is the European Commission's attitude to this particular hiatus? The Statement says that we are moving towards the 30 June payments deadline. We still apparently have some £13.8 million outstanding. There is another week to go, so presumably that figure will go down. At 30 June it is possible, as I understand it, for the Commission to impose penalties for failure to pay. It would be interesting to know whether the Government can indicate yet what the likely cost to the Treasury will be of that.

I welcome the extension, to 15 June, of the period in which 2006 applications for single farm payments can be made without penalty. That date has now passed. According to replies given in another place, it looked as though application numbers were dropping. Has the Minister any idea how many applications might have missed that deadline? I imagine that, based on past applications, he will be able to give that figure. More importantly, is he aware of any reason why that situation should have arisen? I always regarded filling in these application forms as about the best-value-for-money task I had on my farm in any year. Any farmer who does not take that view has his priorities seriously adrift, and I cannot believe there are any farmers like that in the country.

I know the Minister is doing all he can to sort this system out, and I hope that he succeeds, as does the whole industry. Yet it would have been better if we did not have to be here at all.

12.50 pm

Lord Livsey of Talgarth: My Lords, I congratulate the Minister on getting things moving but, as I am sure he knows, his inheritance in this matter is absolutely dire. This Statement proves it. The situation has, no doubt, improved since the end of March, but there is
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still a long way to go. We know that it is not the Minister's fault, but the operation of the RPA has been totally unsatisfactory—and that is putting it mildly.

The Statement covers a number of important points. I am particularly concerned about the effect on England. From what I can see, of the approximately 10,500 eligible hill-farm claims 5,000 have been paid in full and a further 900 authorised for partial payments. Am I correct in extrapolating from this that approximately 4,600 hill farmers are still waiting for any payment at all? If that is the case, when will they receive the payment that they are due?

I agree with the Opposition spokesman that one per cent plus interest rate is totally inadequate. A headline in the Farmers Guardian about two weeks ago said that payments were being conducted by hand. Is this still going on, or was that an inaccurate report? The Statement addresses the 2006 claims. What proportion of the 2006 claims have been made by the deadline? There were 120,000 claims made for 2005, which were submitted to Defra in spring 2006. Roughly how many have been received for 2006? I noted that Defra had actually put some quite effective advertisements in the agricultural press urging farmers to get their applications in on time. How successful has this campaign been?

The Minister's department may have some idea about the number and nature of complaints made by members of the farming community to the Parliamentary Ombudsman. What is the scale of that, and is it being pursued? I realise that he cannot make a transparent statement on this, given that they have gone to the Parliamentary Ombudsman, but he may know the volume of complaints made.

It will take considerable time to clear this up, even in the current payments year. Yet I am pleased that Defra has gone ahead with negotiating the possibility of partial payments in 2006. That is a realistic assessment. Also, the tone is radically different from the statements made in March, particularly the RPA's amazing claims on when it would settle the problem. We know now that that was absolute fiction, though we thought so at the time. At least now this measured Statement lays bare the height of the problems confronted by the Rural Payments Agency. I sincerely hope that, when the future of the RPA is examined and reported on, there will be radical improvements to how it operates. It is possible that some totally new organisation will do its job in the future.

12.55 pm

Lord Rooker: My Lords, I am grateful for the response from the noble Lords, Lord Dixon-Smith and Lord Livsey. I made absolutely clear that 2006 will be a difficult year, and the tone of the Statement indicates this, leaving aside what has happened in the past. I am interested in what has happened in the past from a technical viewpoint, but my main priority is the present and the future. That has been what David Miliband and I have concentrated on in the past few weeks. We will not be talking up 2006 because, as the Statement says, we are limited in what we can actually
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do. 2006 has already started and 2007 applications are only nine months away. We really must be careful about making fundamental changes to a system that has not delivered.

To answer the specific questions, I am grateful for the welcome of the Statement on interest payments. There will never be enough done, but we do not know how much will be paid until 30 June, because we cannot measure them until then. Some days after that date we will know how much has been paid out. The Statement was made today for the reasons I explained. There were Defra Questions in the other place, but there was none on the single payment scheme. We wanted to update the House as soon as possible. I also welcome the response on the sugar payments. It was bad enough seeing what had happened, but major changes on sugar for 2006 had already been agreed. Paying them separately is an advantage to the sugar beet producers for this one year, because the money stays within the family.

I will be more attuned to respond on the EU attitude to penalties after 30 June. There will be an opportunity to answer the question then because the House will still be sitting. We are moving heaven and earth to pay as much out as possible before then. I appreciate that the extension date of 15 June for applications for 2006 has already passed. The deadline was originally the middle of May, extended to 31 May. By 15 June we had received more than 4,000 applications which would have been subject to a penalty because they had missed the deadline of 31 May. We are grateful to the Commission for this, as some 4,000 farmers will now not be subject to the penalty. I was then asked whether any applications had come in since. Yes, the latest figure I had was some 60 plus, and they are still trickling in.

I will use—with his permission, although it is in Hansard—the words of Farmer Dixon-Smith, that the best value-for-money job he ever did as a farmer was filling in the forms. Filling in forms means you get money. That is what I have tried to put across. It helps to sign the forms when you have filled them in. The number of forms we receive without a signature is frankly unbelievable, but it does happen. As I say, it is now a trickle so we do not expect many people to be subject to a penalty next year. I cannot be tied to exact figures, but we have received some 110,000 plus out of the 118,000 that were requested. That 110,000 includes the 4,000 that came in after 31 May but before 15 June.

Of the 4,000 hill-farm payments that have not been made, priority is being given to making full or partial payments for the hill-farm allowance. The RPA set up a dedicated unit. That is the question I was asked, though I do not have the answer. The implication is that they cannot have the hill-farm allowance until the single payment is paid. That is one of the problems. Some of the 4,000 may have had a partial single payment but not the hill-farm allowance.

Before I sit down later, having answered other questions, I will try to have a more specific answer. I do not know anything about any ombudsman's inquiry but, given the scale of the letters that I keep signing to
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Members of the other place I would not be at all surprised if there had been applications to the ombudsman on the grounds of maladministration. I know of no payments made by hand. I regret that I did not see the story in the Farmers Guardian; I missed that; it was not drawn to my attention.

We are trying to use the system to make the payments. It is true that we have said that, if push comes to shove at the end of next week, we will do what we can, possibly including bypassing the system. We are very reluctant to do that because that in itself will create problems closing down the 2005 computer framework. Nevertheless, there are other ways to do that if we cannot get the payments out. I understand that there are two more payment windows before next Friday, so we will have a better view of the position by the middle of next week, but we have put in hand processes to try to maximise the payments to farmers.

I cannot be certain about the date of the 2006 payment. The first time that anyone will get a date from me about 2006 payments is when I know that the first one has been made. Given what happened earlier this year, we will be very reluctant to make promises, because we will not be believed. Therefore, we will under-promise and over-deliver. Either way, I have already had a complaint from some stakeholders that we did not tell them that 841 partial payments were to be made last week—I think that they were to hill farmers. Until the buttons were pressed, we were not certain that they had gone through the system, so we were not going to say, "By the way, we expect to make those payments", because we could not be certain. As I said, there are two more payment windows before 30 June and I cannot be certain how many will be covered. I know estimates of what may be covered but they are not promises that I can share with the House.

Finally, it is worth mentioning again that our top priority is those owed more than €1,000. Of course, there is a considerable number of people who have not had a penny whose claim will deliver less than €1,000—about 12,000 of them. They cannot be a priority. I know that it is important for some of them; £600 or €1000 is a lot of money if your total income is only five grand. I understand that, but they are not the top priority; the top priority is those owed more than that—the last 2,000-plus who have not had a bean and whose claim is more than that. Some sums owed are very substantial—into six figures, I understand. That is our top priority.

1.02 pm

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