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Rural Payments Agency

My Lords, on the actual payment of interest, the Statement made in the summer pointed out that it would never be enough but that we had taken advice on a formula. It was the London bank rate plus 1 per cent, and that was the rate we paid. However, the central point is why no interest is paid if the payment would be less than £50. One of the lessons we have tried to learn in this scheme, and something which has caused a problem, is that some 30,000 to 40,000 of the 120,000 claims accounted for 2 per cent of the money. We paid someone a penny in interest. The computer system is set up for 120,000 claimants and some of those claims are worth tens of thousands of pounds, but elsewhere we are dealing with tiny payments. We have a major problem here because there is no de minimis on the payment. We are going to bring in a de minimis when we are able to do so. It certainly will not be this year and I do not think it will happen in 2007, but we are not going to compound the sin of not having a de minimis payment on the single farm payment by not having one on interest payments. We could have ended up sending out cheques for a few pennies, so that the letter would be worth a couple of pounds less than the stamp. We decided to set a de minimise payment of nothing under £50. That was done in the interests of good administration, otherwise we would have had loads more staff on the job, it would have cost us a fortune to work out and send off the payments, and we would have then been criticised for sending out chicken feed. This is one of the issues that has caused problems surrounding single farm payments in the first place—no de minimis payments.