MPs criticise Defra and oversight of Single Payment Scheme

• Report: Second progress update on the administration of the Single Payment Scheme
• Public Affairs Committee

Edward Leigh MP, Chairman of the Committee of Public Accounts, said:

"A large part of the responsibility for this public administration debacle lies with the Department for Environment, Food and Rural Affairs. It has consistently failed to spot continuing problems with this scheme for paying EU grants to farmers and to get to grips with issues previously raised by this Committee.

"But this lack of attention has been compounded by poor leadership and management information in the Rural Payments Agency.

"It is an extremely serious charge from this Committee that negligible attention has been paid to taxpayers’ interests. The £350 million IT systems underlying the scheme are cumbersome, overly complex and at risk of becoming obsolete and they continue to soak up huge sums of money.

"The information held is riddled with error and efforts to recover overpayments have been woefully slow, haphazard and ineffective, causing anxiety and concern to farmers.

"The Department is still unable to come to terms with its failure, first having confirmed the validity of the National Audit Office calculation of some £1,700 for the average cost of administering each claim and then offering an alternative cost of £700.

"The Committee’s confidence in the Department’s ability to cut costs in future was hardly boosted by its unconvincing explanation why its interpretation was more reliable than that of the NAO.

"The truth is that the Department has either not grasped the seriousness of what has been happening or been reluctant to face up to problems.

"We have now insisted, and the Department has agreed, that it provide us with clear evidence of what progress has been made and explain how it is meeting the NAO’s recommendations."

Mr Leigh was speaking as the Committee published its First Report of this Session.

This is the third time in three years that the Committee has taken evidence on the £1.6 billion Single Payment Scheme in England administered by the Rural Payments Agency (the Agency) and the Department for Environment, Food and Rural Affairs (the Department).

On the basis of a follow up report by the Comptroller and Auditor General, the Committee examined the progress made in addressing our previous concerns and the capacity of senior managers in the Agency and the Department to resolve matters.

Oversight of the Single Payment Scheme is a singular example of comprehensively poor administration on a grand scale. The paucity of good management information in the Agency and the complacent oversight by the Department have acted to obscure the true situation for far too long.

A focus over the last two and a half years in bringing forward payments to farmers has enabled the Agency to bring its deadline forward by nearly seven weeks, but this is still six weeks off the deadline it had planned and a long way short of the standards set in Wales, Scotland and Northern Ireland.

In the meantime, there has been negligible attention to the protection of taxpayers’ interests. Despite all the assurances previously given to this Committee, the Agency has spent £350 million on a cumbersome IT system that can only be supported at huge cost and which is increasingly at risk of becoming obsolete.

The data held in the system remains riddled with errors and efforts to recover overpayments have been slow, disorganised and haphazard.

The root cause of this debacle has been poor leadership within the Agency and a lack of attention by the Department. Each claim costs over six times more to process in England than Scotland and yet the Chief Executive received a performance bonus in 2008–09.

The Department was not able to demonstrate an adequate grasp of the costs of administering the scheme. There has been a high turnover of expensive senior management appointments in the Agency and it appears to have been reluctant to face up to the problems by taking the firm action required to turn the organisation round.

Responsibility rests with the Accounting Officers to resolve this misadministration. The Committee is very concerned at the absence of progress to date and looks to the Departmental Accounting Officer to take personal responsibility for this scheme, develop an action plan and to report back to us regularly on progress.

The Committee expects to receive the first progress report by the end of January 2010 and to see clear evidence that its concerns are being properly addressed.