---

Rural Payments Agency

My Lords, with permission I shall repeat a Statement made in the other place by the Secretary of State for Environment, Food and Rural Affairs. The Statement is as follows: ““I would like to make a Statement on the single payment scheme administered by the Rural Payments Agency. ““In my Written Statements on 9 May and 5 July, and my oral Statement on 22 June, I said that the well rehearsed difficulties in the administration of the 2005 single payment scheme would create challenges for delivery of the 2006 scheme, and I promised to keep the House informed of developments. On this occasion, as on every other, I would like to reiterate the apologies that I have offered to farmers on behalf of my department, and my commitment to remedy the problems. Today I can report progress under the 2005 scheme, and plans for the 2006 scheme. But the interim chief executive of the Rural Payments Agency and I are clear that much more needs to be done to learn the right lessons from the National Audit Office’s recent report and to build on helpful guidance that I am sure we will see in the forthcoming reports from the EFRA Select Committee, the Public Accounts Committee, the Office of Government Commerce and the Hunter review. ““As I mentioned in my Written Statement on5 July, the total amount to be paid by the Rural Payments Agency for the 2005 scheme will not be known for certain until the last claim is completely validated and necessary corrections are made. However, the latest estimate, at 3 November, puts the figureat £1.528 billion, of which over £1.516 billion—99.2 per cent—has now been paid. Moreover, 110,244 claimants have received a full payment and a further 4,756 have received a partial payment and are awaiting their top-up. This combined total of 115,000 represents 98.5 per cent of the revised estimated total claimant population—116,661—entitled to a payment. ““All but 50 of the claimants still awaiting any payment are currently calculated to have a claim value of less than €1,000. The 50 cases are all difficult cases, involving issues such as probate or business liquidation, which would be challenging in any year. Dedicated teams are in place to deal with these cases and the other outstanding payments as soon as possible. Similarly, on hill farm allowance payments, some 95 per cent of claimants have received a full or partial payment, and a dedicated team is exploring all avenues to make the outstanding payments as soon as possible. ““During October, the Rural Payments Agency moved the bulk of its processing staff to detailed validation of the 2006 claims. Initial validation of those claims has been undertaken over the summer and has gone relatively smoothly. The same can be said of the 2006 round of eligibility inspections. However, the difficulties involved in completing 2005 claim processing have inevitably impacted on the 2006 payment timetable. ““Everyone wants claims to be paid in full as soon as possible. I understand that, and the new management of the RPA are dedicated to building stability and predictability into the system so that full claims are delivered in an efficient and timely way. However, the interim chief executive has reported to me that he can not guarantee that the agency can deliver full payments within the payment window for the 2006 scheme. Neither he nor I believe that it is acceptable to expect farmers to wait until next June or beyond for payments. I have therefore agreed with the RPA a challenging formal performance target of paying 96.14 per cent of valid 2006 claims by 30 June 2007, and it is determined to do all in its powers to deliver on that. In addition, I have also decided to pursue a partial payment plan. ““Our aims can be simply stated. First, we want to maximise payments to farmers that arrive on a timely and predictable basis. That means making full payments where possible and partial payments where necessary. Secondly, we want to minimise the risk of late payment penalties and disallowance. Thirdly, we want our decisions this year to help the RPA to establish a new and sound footing for the delivery of the single payment scheme in future. ““I have therefore agreed with the RPA that where full payments are not possible in the early part of next year, partial payments should start in mid-February for eligible claims above €1,000. The RPA estimates that the process will take around three weeks. Payments will be made for not less than 50 per cent of claim value. This reflects the level that EU regulations permit without diverting significant resource away from, and therefore delaying, work on validating claims for full payments. ““Needless to say, I will be keeping the situation under close review, but the interim chief executive of the RPA has set out for me and Lord Rooker the basis on which he is confident that partial payments can be made and we believe, in part on the basis of the partial payment experience in May this year, that the money will be delivered. ““The single payment scheme and its administration have caused distress to farmers. The only way to make good on this year’s problems is to improve the management of the system so that confidence is rebuilt. I have set out clearly that this will not happen overnight, but I believe that the staged approach that I have set out is the only one that is prudent and responsible, and I commend it to the House””. My Lords, that concludes the Statement.