Annex A: chronology of events 2001-04
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16 October 2001
The Rural Payments Agency (RPA) was established as an executive agency of the Department for Environment, Food and Rural Affairs (Defra). It was formed by the merger of the Regional Services Group of Defra and the Intervention Board. RPA became the accredited European Union (EU) paying agency for Common Agricultural Policy (CAP) schemes in England.
Under the Government’s Spending Review 2000, an additional £130 million was made available in order to streamline and modernise the system of administering claims under the CAP. RPA embarked on a Change Programme to secure the implementation of these changes. According to the April 2003 report on RPA by the House of Commons Select Committee on Environment, Food and Rural Affairs, the aims of this Programme were to:
- ensure 95% electronic delivery capability for CAP schemes by 2004, with the facility for electronic submission of claims for all schemes;
- reduce the cost of CAP administration and the risk of disallowance;
- reduce the average time taken by a claimant to complete a claim for CAP payment;
- pay all valid claims submitted electronically within two weeks of the start of the payment window (or three weeks from the date of receipt where no payment window existed); and
- improve the level of staff and customer satisfaction, measured in annual surveys, by 5% per annum.
26 June 2003
The EU adopted a fundamental programme of reform of the CAP. This programme left a degree of discretion to Member States as to the timing and the method of implementation of these reforms.
As the paying agency for England, RPA became responsible for the implementation and administration of those reforms in relation to English farmers and producers. RPA combined its plans for the delivery of the reforms with its Change Programme.
EU legislation sets out the terms of the Single Payment Scheme. The legal framework derives from Council Regulation 1782/2003. In particular, article 28 of the Regulation provides: ‘Payments shall be made once a year within the period from 1 December to 30 June of the following calendar year’. For the 2005 Single Payment Scheme, this meant a payment window of 1 December 2005 to 30 June 2006.
Among other things, Commission Regulation 795/2004 sets the regulatory deadline for establishing definitive scheme entitlements: paragraph 3 of article 38 provides: ‘The value and number of the payment entitlements allocated on the basis of the farmers’ declarations for the establishment of the payment entitlements in the first year of application of the single payment scheme shall be provisional. The definitive value and number shall be established, by 31 December of the first year of application of the single payment scheme at the latest, after the checks made pursuant to Commission Regulation (EC) No 796/2004 are carried out’. The checks in Regulation 796/2004 are about ensuring that the rules for claiming aid are met. For example, they should identify multiple applications by the same farmer or for the same parcel of land.
EU legislation for the financing of CAP has always provided that aid paid to farmers outside the predetermined payment periods will be treated as irregular and will be subject to disallowance. In practice, disallowance means that the European Commission applies a penalty and reduces the amount of aid it reimburses to Member States. A sliding scale sets the amount of the disallowance, according to the seriousness of the irregularity. The requirement is, in effect, to make 96.14% of the year’s Single Payment Scheme payments on time, that is by 30 June of the following calendar year. The preamble to Council Regulation 1290/2005 says: ‘Community aid should be paid to beneficiaries in good time so that they may use it efficiently. A failure by the Member States to comply with the payment deadlines laid down in Community legislation could create serious difficulties for the beneficiaries and could jeopardise the Community yearly budgeting. Therefore, expenditure made without respecting deadlines for payments should be excluded from Community financing. In order to respect the principle of proportionality, the Commission should be able to provide for exceptions to this general rule’. Article 16 of the Regulation provides: ‘Where payment deadlines are laid down by Community legislation, any overrun of those deadlines by the paying agencies shall make the payments ineligible for Community financing, except in the cases, conditions and limits determined, according to the principle of proportionality’. The current position is governed by Commission Regulation 883/2006. Article 9 gives the percentage of aid that may be left unpaid by the deadline and the penalties that underpayment will incur.
January 2004
In a memorandum to the House of Commons Select Committee on Environment, Food and Rural Affairs, Defra provided background to the reform of the CAP and also informed the Committee that certain decisions concerning the implementation of the new Single Payment Scheme had already been taken by Ministers.
The memorandum explained that the main elements of the reform proposals which had led to the introduction of the Single Payment Scheme included ‘breaking the link between farm subsidies and production by “decoupling” direct subsidies to agriculture’ and ‘cross compliance to make subsidies dependent on meeting standards in key areas like environment, and animal health and welfare, underpinned by a new Farm Advisory System’.
The memorandum also explained that:
‘… some key strategic decisions concerning the implementation of CAP reform have already been made collectively by UK agriculture Ministers. These are:
— implementation of the SPS in the UK will be on a regional basis: Agriculture Departments in England, Scotland, Wales and Northern Ireland will be responsible for implementation in their respective countries; and
— the SPS will be introduced in the UK from the earliest date permitted under the agreement, namely 1 January 2005.
‘In addition the Secretary of State has already announced that, with the possible exception of seed aid, none of the options for partial coupling of payments will be taken up in England.’
It was said that these decisions reflected the clear majority of views expressed by stakeholders in response to earlier consultation exercises.
The memorandum also set out Defra’s view that the reform package would contribute to the achievement of the Government’s Strategy for Sustainable Farming and Food in England in a number of ways. Those included the objectives of ‘reducing bureaucracy’ and ‘providing a long-term regulatory framework that will enable farmers to plan for the future’.
12 February 2004
The Government announced its decision to adopt a ‘dynamic hybrid’ model of single farm payment in England. In its subsequent report on the Implementation of CAP reform in the UK (published on 28 April 2004), the Select Committee on Environment, Food and Rural Affairs described this model as constituting ‘a Single Payment initially based on historical payment levels, but which over time would move to an area basis’.
March 2004
RPA published its Business Plan 1 April 2004 – 31 March 2005. In the Foreword, the then Chief Executive explained that, during the period covered by the Plan:
‘RPA will implement the new Single Payment Scheme which is a major part of the radical change to the Common Agricultural Policy agreed in 2003. The delivery of the scheme now represents the main focus of our Change Programme that will transform the way we work and deliver major benefits to our customers and the taxpayer. The successful delivery of the scheme provides an opportunity to reduce the bureaucracy farmers face by rolling a plethora of subsidies into a single payment which is not linked to what they produce. During all of these changes we will continue to meet our normal targets and maintain continuity in the service that we provide to our customers.’
In section 1.5 of the Plan, the contribution that RPA would make to the delivery of Defra’s objectives was set out. The particular targets set for RPA in order to achieve this included delivery of a customer focus performance target under a service delivery agreement. This target was that RPA would ‘Process and pay CAP claims on time, specifically to avoid any financial correction for late payments’.
Section 2.3 of the Plan also set out the ‘key targets’ that had been set for RPA. Those included targets ‘To process and pay at least 96.14% of valid [Integrated Administration and Control System – IACS] claims by value within the EU deadline’ (that is, by the end of the payment window for each scheme) and ‘To process and pay at least 98.5% of valid claims correctly’.
(Note: The different payment windows for the schemes which operated before the introduction of the Single Payment Scheme were set out in a Parliamentary Written Answer given on 18 October 2004 (HC Deb column 429W).)
14 May 2004
The then Minister for Food, Farming and Sustainable Energy, Lord Whitty, wrote to all farmers and growers in England. His letter was entitled ‘Major changes to CAP payments from January 2005’ and aimed ‘to explain the changes coming into force next year as a result of last year’s agreement on the reform of the Common Agricultural Policy’. The Minister noted that ‘these reforms may have an impact on your business’.
After describing the new arrangements as constituting ‘the biggest change farmers will have faced since we joined the EEC in 1973’, the Minister said that farmers would ‘need to make some important decisions during the months to come’. He explained:
‘We will be sending you the information that will enable you to consider your options. We will also be placing information on the Defra website and we will be making a number of announcements in Parliament, the farming press and at key agricultural events. You should look out for this information in the coming months.’
Annex C to the letter contained a timeline of‘ 'key dates’. This said that RPA ‘will advise applicants of their entitlement amounts’ in autumn 2005, and that RPA’s objective ‘is to make payments as early as possible within’ the payment window of 1 December 2005 to 30 June 2006.
17 June 2004
Defra’s Management Board was told by its Director General for Sustainable Farming, Food and Fisheries that Ministers expected RPA to be in a position to make scheme payments as from 1 December 2005.
14 July 2004
The Select Committee on Environment, Food and Rural Affairs published the Government’s reply to that Committee’s April 2004 report on the Implementation of CAP reform in the UK.
The Committee had expressed concern that RPA was:
‘… being asked to deliver a new and complicated Single Payment Scheme against a tight deadline. It is an administrative process which will initially bring with it all of the problems of introducing a historic scheme whilst at the same time having to manage the transition to an area-based payment.’
It had recommended that Ministers pay close attention to the steps taken by RPA to ensure that all necessary systems were in place on time. In reply, the Government said:
‘The Government recognises that the timetable is an ambitious one. This is why Defra and RPA have a joint “policy to delivery” implementation programme which reports to the Permanent Secretary and to Ministers.
‘This is a significant programme for the Department and every effort is being made to ensure that we deliver the new arrangements in time for the 2005 scheme year. A considerable amount of work has already been done on policy and operational development.
‘The Government recognises the Committee’s concern about the ability of new systems to be delivered on time to implement the new scheme…’
July 2004
RPA issued an information leaflet, Single Payment Scheme: information for farmers and growers in England. This included a timeline, which said that ‘information about entitlements’ would be sent out by RPA in August 2005.
November 2004
A further updated information leaflet was issued by RPA. This again said ‘August 2005 – Information on the value of entitlements sent out to applicants’.
6 December 2004
A status report on the scheme implementation programme was provided to the joint Defra-RPA Executive Review Group.
This report, like subsequent such reports, rated the risks in meeting the objectives and targets associated with the delivery of the scheme according to a ‘traffic light’ system. A ‘green’ label denoted that the milestone was on track for delivery; amber denoted a potential issue with achieving the milestone; and red denoted that the milestone was under serious threat of not being achieved and that urgent remedial action was required.
The report set out RPA’s assessment of the risks within six categories, which were:
- the business case, covering the updated costs and benefits of the programme;
- the scope of the project, covering the strategic direction of the programme and its wider environment, such as Ministerial involvement;
- the schedule, covering those risks likely to impact on the delivery timetable and overall performance against the timeline;
- resources, covering the risks associated with staffing and other key resources;
- stakeholders, covering those risks from the farming industry, such as communications with farmers; and
- risks/issues, covering all other risks not covered elsewhere, such as the risks of industrial action.
In this status report, those risks were graded as follows:
- business case – red;
- scope of the project – red;
- schedule – red;
- resources – amber;
- stakeholders – amber; and
- risks/issues – red.
(Note: The source for the material in this entry and subsequent similar entries on the risk matrix is Appendix Six of the Comptroller and Auditor General’s October 2006 report on the administration of the scheme.)
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