Annex A: chronology of events 2007

15 January 2007
RPA’s former Chief Executive gave evidence before the Select Committee on Environment, Food and Rural Affairs.
He explained that the problems – described in previous evidence to the Committee as ‘gumming up’ – which had made RPA realise that the payment timetable could not be achieved ‘… came to light about the end of February because we had started making payments, I think, by 20 February, and we started to realise that batches were not going through’.

The former Chief Executive also said:

‘My recollection is that we made it clear to ministers that this was high risk all the way through this programme. I agree it must sound surprising that within a matter of days we may have moved from a higher level of optimism to having to say, “This is proving to be extremely difficult”, at the eleventh hour. I can only say it came as something of a shock to us.

‘We thought, having defined entitlements at the start of February, having started payments on 20 February and shown that the system worked on an end-to-end basis, with the progress we had made on clearing level two validations, our optimism was somewhat raised that we had finally crossed the last fence and were on the home straight, and, as I say, it came as something of a very serious shock to us when we suddenly discovered that there were serious issues arising.’

Members of the Committee turned to the regular progress reports which had been provided by RPA to Defra Ministers, and in particular the information that had been provided therein that showed that the number of tasks to be undertaken by RPA had been steadily rising over time. The Chairman said:

‘I have to say that the thing I found amazing was that there did not seem to be any sense of concern that this mounting tide of tasks was increasing. There was a sense of somehow it would all be all right on the night.

‘What I find difficult to understand is why the growing awareness that you were not going to make it took such a long time to dawn whereas for lay people… with the benefit of hindsight and with the benefit of looking at the evidence, the tide of undone work and the inability to monitor the progress of that work seemed to be pointing in the direction of catastrophic failure and yet it was a bit like the king is in his altogether and nobody said anything.’

After describing the process of clearing tasks and the initial progress that RPA had made, the former Chief Executive said in reply that ‘… on further reflection and as time went on we started to grow increasingly apprehensive’ that RPA would not be ‘able to get them processed and through this final stage of this batch authorisation in a matter of days’.

In further exchanges, the former Chief Executive, as regards the background to the setting by Defra Ministers of RPA’s Business Plan targets, said:

that RPA ‘were keen to go for the EU requirement which was that payment be made by the end of June 2006, but obviously that was unacceptable because we had been setting new track records on payments for the previous CAP scheme for some time’;

that ‘it was made quite clear that [a target for payment by the end of the regulatory payment window] would be totally unacceptable politically, that you could not have a new SPS scheme, when old schemes were paying out pretty much as the window opened... and expect our customers to be able to wait...’; and

that ‘we were advised [that such a later target] would not even be considered because obviously, and quite rightly – I can understand the point of view – it was the case that farmers had an expectation having had the payments made, particularly for the last few years, almost as soon as the window opened or very shortly after. It would be financially unacceptable, as indeed the difficulties we have experienced with SPS demonstrate, for farmers to wait until June for payment… Legally the window is from December until the end of June but expectation and political understanding of that expectation is that farmers expect to get their money at the earlier stage’.

29 March 2007
The House of Commons Select Committee on Environment, Food and Rural Affairs published its report, entitled The Rural Payments Agency and the implementation of the Single Payment Scheme.

The report, in two volumes, is available at: The ‘Overview’ of the report, set out in Volume 1, said:

‘1. This report is as much about failed policy implementation as it is about a lack of accountability.

8. The RPA took responsibility for IT design but was not well served by its principal IT contractor. Accenture made an unsatisfactory start; while the RPA and Defra disagree with Accenture about whether it was late in supplying parts of the IT system, the systems it delivered were slow and unreliable and not always able to cope with the volumes of work encountered; and its systems were not user-friendly. If Departments are unable to maintain adequate IT expertise to develop their own IT in-house, the Government needs to press on with its efforts to develop the capacity of Departments to procure and manage IT systems intelligently.’

On the implementation of the scheme, the report said:

‘The RPA Customer Service Centre was opened on 14 February 2005 but was almost at once overwhelmed by the number of calls from claimants… although the RPA did commit more resources to the service centre, it was still unable to cope adequately with the large number of calls (12,000 per day at the peak), and the task-based system prevented officials from helping callers with the whole of their claim.’

On the mapping problems, the report said:

‘Digitised mapping of claimants’ land parcels on which their area-based claims would be made was a fundamental part of the SPS process, and involved taking a picture of the land, marking the boundaries and turning it into a part that could be put into the IT system. EU regulations had been adopted in July 2000 introducing a requirement for a digitised Rural Land Register (RLR) from January 2005. Following the 2003 CAP reforms, the RPA set itself a deadline of April 2004 for completing the RLR, but it was only in September 2004 that it went live. …Not only did the process take longer than expected, but many of the maps sent back to claimants for them to check proved to be seriously inaccurate. We received many consistent reports of claimants having to attempt repeated corrections in an effort to get the map of their land right, and of previous corrections being lost.’

The report gave this description of the volumes of work:

‘The deadline for completed SPS claims on 16 May 2005 saw over 120,000 SPS applications made, many more than the 80,000 applicants under previous CAP schemes. In addition, the RPA had to cope with more than 100,000 changes in land registrations: a 1,000% increase on a typical year’s 9,000 such changes. …Farmers had previously been required to register all their land, even that which was not relevant for subsidy purposes, but in many cases did not do so. Under the SPS it was advantageous for them to do so, hence the large number of land changes… These higher than expected demands led to problems with the availability and stability of the RITA system…’

9 July 2007
The former Chief Executive of RPA gave evidence before the House of Commons Committee of Public Accounts.
One Committee member focused on the briefings provided by RPA to Defra Ministers regarding progress on the administration of the scheme on an approximately weekly basis.

(Note: See the entries for 21 and 29 September 2005; 6, 12 and 26 October 2005; 9, 16, 23 and 30 November 2005; 7, 15 and 22 December 2005; 6, 13, 18 and 27 January 2006; 1, 9, 15 and 23 February 2006; and 7 and 10 March 2006.)

In particular, the member was concerned to establish why the language of those briefings, when describing confidence in the ability of RPA to deliver against the timetable, had changed over time. He asked (citing the words of the briefings):

‘We continue to work towards full payments starting by the end of February. What caused the reduction from “we will achieve” to “we work towards” between September and November?’

The former Chief Executive replied:

‘Lord Bach was receiving regular briefings face to face from the director of operations, myself or the programme director. He was being briefed on progress certainly on a weekly basis and, as I mentioned earlier, towards the latter end he received almost daily Reports. They influenced his stance when he made comments or observations about progress.’

The member continued:

‘“We continue to work towards” continued through November, December and January, although by January had been added the words: “it is clear that not all claims will be fully validated by that point”. The words disappeared in February. Was it in February that it was made clear to you that there was a serious problem and that you were regarded as the cause of it?’

The former Chief Executive replied:

‘No, in February we had actually succeeded in defining entitlements and had started making payments, proving that the system worked and that all the work that had gone before would suffice. Our confidence at that stage was actually quite high.

‘We thought, “This is very good”. It was then that we realised that it was not the system’s problem but that we could not get the tasks through the system to enable sufficient payments. They were going through, but not fast enough… The system worked, but it was clogging up, as others have said.’

There then followed this exchange:

‘[Committee member]: But between 28 February and 10 March it became clear that the whole thing had clogged up.

‘[Former Chief Executive]: Yes, it had clogged up. That is exactly right.

‘[Committee member]: Why were you not yelling out that that was happening before?

‘[Former Chief Executive]: We yelled out on 10 March.

‘[Committee member]: You were effectively called in and told by Ministers that it was clogging up on 10 March, but –

‘[Former Chief Executive]: No, we told Ministers that it had clogged up on 10 March. That was in a note from me to Lord Bach explaining what was happening.’

Another Committee member returned to the issue of when RPA had known that it was unlikely to meet its payment delivery targets, asking:

‘You have said that it was somewhere between 20 February and 10 March when you became aware that it was not do-able. Can you pinpoint more precisely when?’

The former Chief Executive replied:

‘Well, it became apparent that claims were moving through level 1 validation, which is a basic check on name, address and whatnot, and then level 2 validation was more complex. They were sticking in level 2 validation…

‘Staff were working twilight shifts and maximising use of the system. They would clear a certain category of task only to discover that the impact of that would not be realised until the next day, because the system has to run overnight to enable you to understand the impact on the remaining tasks, or how many tasks would result. It started to become apparent that, indeed, additional tasks were being generated.’

The Committee member then asked:

‘The doing of the tasks created more tasks: and indeed, paragraph 20 of the [Comptroller and Auditor General’s] Report said that you were not able accurately to predict how many new tasks would be created by the performing of tasks. At what date, then, did it become clear to you, between 20 February and 10 March, that it was not do-able?’

The former Chief Executive replied that ‘the payments went out on 20 February, and it became clear that it was not do-able when we started to monitor payment performance’.

When asked ‘after how many more days did you become aware that it was not do-able?’, the former Chief Executive replied: ‘I do not recollect that detail, but it was a relatively small number of days, after which the Agency went back and began investigating in detail what was happening’.

24 July 2007

The Select Committee on Environment, Food and Rural Affairs published the Government’s response to its March 2007 report on the administration of the scheme. This set out responses to each of the conclusions and recommendations which had been made by the Committee in its report.

As part of the introduction to the response, it was said that:

‘The Government acknowledges with regret the significant difficulties experienced with the delivery of the new SPS and the impact that this has had on individual English farmers and the wider farming community.

‘The RPA paid over 90% of the money available for the 2005 SPS within the required EU Regulatory timeframe (by 30 June 2006) but this was after the Government had made a commitment to pay the bulk of payments by the end of March.’

The response also said that:

‘The RPA was responsible for developing and implementing a system to ensure that correct payments to farmers under the SPS were made by the internal target date recommended by RPA and agreed by Defra Ministers.

‘However, responsibility for delivering the scheme and advising Ministers on RPA’s ability to meet the timetable rested solely with the Chief Executive. Any other arrangement would have compromised the Agency’s accountability and undermined the arrangements under which the Department oversaw its functions.’

The response continued:

‘Once it became clear that the announced timetable would not be met, the Department acted swiftly to replace the Chief Executive and to ensure the flow of payments was expedited. Details of these actions are set out in the evidence Defra has provided to the Committee.

‘The RPA’s processes for handling SPS claims have already been streamlined, helping the Agency to achieve its formal target for
SPS 2006 by making 98% of payments by 30 June 2007, and further improvements are in hand as part of the RPA’s Recovery Campaign funded by the Department.’

6 September 2007
The House of Commons Committee of Public Accounts published a report, entitled The Delays in Administering the 2005 Single Payment Scheme in England. This report followed on from the October 2006 report by the Comptroller and Auditor General.

The Committee’s report set out a number of conclusions and recommendations. Those were preceded by the following text:
‘The Department and the Rural Payments Agency failed to implement the single payment scheme effectively. By the end of March 2006 it had paid farmers only 15% of the £1,515 million due, compared with its target of 96%, causing significant hardship. Taxpayers will have to pay additional implementation costs.

‘By May 2007 there were 24 claims, mostly probate cases, which remained unpaid, but the Agency was still reviewing the accuracy of a substantial number of claims already processed and making adjustments both for over and under payment.’

The detailed conclusions and recommendations were said to constitute ‘lessons to be learned by the Agency, the Department, and government bodies more widely’ – and included the following:

‘… vi. Without an individual or small team processing a whole claim end to end, claimants found it difficult to obtain advice and information on the status of their claim and Agency staff were hampered in their attempts to resolve claimants’ queries. The Agency had instead decided to adopt a task based design for claims processing to enable staff in different offices to work on any tasks relating to any claim, but it did not adequately consider the customer interest in following their claims through the process and the consequent impact of the new way of working on customer service. The development of new business processes should take the customers’ requirements into account in the design of the proposed system and any potential contingency arrangements.

‘vii. A lack of information was the principal cause of frustration and complaint within the farming community. Automated telephone lines provided unhelpful responses such as “there is nothing that the call centre staff can tell you about your payment”. Farmers were discouraged from pursuing queries by being told that “If you contact us, this will divert resources away from the urgent tasks of completing validations and making full payments”. A communications strategy should be developed which keeps all concerned but particularly customers in touch…’

Dealing with the impact on farmers of the delays in making scheme payments, the report said:

‘In consequence of the Agency’s failure to administer the 2005 single payment scheme, a significant minority of farmers and their families experienced stress and increased financial costs, threatening the financial viability of their businesses. 16% of farmers postponed purchases or investments and 14% delayed payments to suppliers… with consequent impacts across the farming sector.
‘On advice from the British Bankers’ Association the National Audit Office had estimated that the delays could have cost farmers between £18 million and £22.5 million in interest and arrangement fees on additional bank loans and increased short term borrowing on overdrafts, excluding any estimate for interest foregone by farmers whose bank accounts were in credit.’

The report continued:

‘Staff contacted by claimants lacked the knowledge to deal with queries, partly because the Agency had adopted a business process which allocated tasks across the organisation rather than enabling staff to deal end to end with individual claims. As pressure mounted, day to day communications with claimants became strained, and a lack of information on the progress of claims increased the stress and frustration amongst farmers.’

The report also recorded that:

‘In October 2006, the Agency paid £386,200 in interest to 2,559 claimants who had received payment after 30 June 2006, although a further 13,144 did not qualify for payment as their interest fell below the £50 eligibility threshold. The interest was calculated from 1 July 2006, at 1% above the London Interbank Offered Rate. The Department defended the rate of interest as that used in other cases of maladministration, such as those determined by Ombudsmen, for example.

‘The Department confirmed that it would be unlikely for any farmers to find themselves in the position of owing tax on a payment they had not received. Her Majesty’s Revenue and Customs would take a pragmatic view in these circumstances and be prepared to help where applicable.’

The reference to the rate of interest paid by RPA on scheme payments made after the end of the payment window was based on written evidence supplied to the Committee by Defra by way of a Supplementary Memorandum dated 26 July 2007. This Memorandum explained that:

‘The decision to use the London Interbank Offered Rate (LIBOR) + 1% as the rate to calculate interest levels for eligible 2005 SPS claimants who had not received their final claim value by the regulatory deadline was based on interest levels paid to similar cases under the former Integrated Administration and Control System (IACS) regulations.

‘Because of delays in making payments, 17% of claims had not been paid by the deadline. A review of a particular claim… by the Parliamentary Commissioner for Administration found that MAFF should pay [the complainant] interest for the period his payment was delayed. The rate was set at LIBOR + 1%.

‘LIBOR + 1% is now the standard rate used in cases where it has been decided to pay interest to claimants who have not received their payment within the regulatory timeframe. It is also the rate used in England when EU Regulations require Paying Agencies to recover any overpayments and interest on those overpayments made to claimants.’

25 October 2007
Appearing on the BBC Radio 4 programme Farming Today, the Defra Minister, Lord Rooker, said that he could not, for the 2007 scheme year, give any assurance as to the timing of scheme payments other than that they would be made in line with legal obligations within the payment window.

When it was put to him that this reluctance to set definitive targets was because of the problems which had arisen in the 2005 scheme year, when what appeared to farmers to be promises made by Defra and RPA had been broken, said:

‘Yes, there were cast-iron promises made… absolutely cast iron, they had dates, they were told the money was going to start to flow on a specific date. It didn’t.’

5 November 2007
Lord Rooker, appearing on the BBC Radio 4 programme The Westminster Hour, apologised again to farmers ‘for the delays in payments and what’s more the uncertainty they suffered in the first part of 2006’.

Informing listeners that RPA had paid ‘within one per cent of what we’re legally obliged to do by the end of June’, the Minister said ‘it’s true farmers were promised the money in February though and March, I accept that, and we still haven’t finished the payments, but we got pretty close’.

8 November 2007
Lord Rooker appeared on the BBC Radio 4 programme PM. The Minister again apologised for the problems in the administration of the 2005 scheme, saying:

‘This has not been a good year for us making the payments notwithstanding the fact that we’d paid ninety-five per cent of the money out by the end of June. The fact is the farmers were promised it way back early in the year, in January or February, so it hasn’t been good.’

29 November 2007
Treasury Ministers laid before Parliament the Government’s response to the report of the Committee of Public Accounts on the administration of the scheme. This began by explaining that Defra:
‘… acknowledges, with considerable regret, the significant difficulties experienced with the delivery of the new scheme and the impact that this has had on individual English farmers and the wider farming community.

‘The Rural Payments Agency (RPA) paid over 90 per cent of the money available for the 2005 Single Payment Scheme (SPS) within the required EU Regulatory timeframe (30 June 2006), but this was after the Government had made a commitment to pay the bulk of payments by the end of March.’

The response continued:

‘Many of the lessons learned have been fed into the Department’s wider review of its governance of delivery. Actions from this review are being taken forward as part of  the Department’s response to its recent Capability Review.

‘The RPA has also adopted a wide range of actions to improve performance, including development of leadership and management skills, changes to the way claims are processed for payment and enhanced IT systems and testing procedures.
‘These enabled the Agency to make 98 per cent of the 2006 SPS payments, against a target of 96.14 per cent, by the close of the payment window on 30 June 2007.’

12 December 2007
The Comptroller and Auditor General published a report, entitled Department for Environment, Food and Rural Affairs and the Rural Payments Agency: a progress update in resolving the difficulties in administering the Single Payment Scheme in England.

The purpose of the report was to examine the progress made by Defra and RPA in resolving the outstanding problems from the 2005 scheme, in processing the 2006 scheme payments, and in preventing similar problems in the future. The report was set against the problems which RPA had encountered in administering the 2005 scheme, which were described in the report thus:

‘In the first year of the scheme (the 2005 scheme), the Agency had experienced considerable difficulties in capturing and processing the data required to process payments, and as a result failed to meet both its own target to pay 96 per cent of the fund by the end of March 2006 and the European Union legislative requirement to pay 96.14 per cent of the fund by the end of June 2006 to avoid late payment corrections.

‘Many farmers experienced financial hardship as a result and the then Chief Executive of the Agency was removed from post. The Agency made a commitment to pay outstanding payments on the 2005 scheme by the end of December 2006 and to implement its recovery plan by April 2008. The Department agreed to provide an additional £40 million to help the Agency recover and make changes to its IT and processes.’

The report then analysed the work completed or under way to resolve the outstanding queries and other work related to the 2005 scheme, progress to date in administering the 2006 scheme, and the plans to stabilise the scheme by April 2008.

The report’s ‘overall conclusion’ was that:

‘Until the Agency is able to routinely meet the 30th June deadline each year and is confident that it can process payments within an acceptable tolerance of error, there is a risk that, as with other EU funded schemes, it will incur financial corrections (effectively penalties) from the European Commission and farmers may not have complete confidence in the Agency’s administration of the scheme.

‘In the interim, however, the errors in the first year of the scheme (the 2005 scheme) would have been largely repeated in the second year (the 2006 scheme) and the Agency has not yet paid all those claimants who were underpaid in the first year, nor recovered the sums from those farmers who were overpaid. As a consequence, the Agency was not able to administer the 2006 single payment scheme in a fully cost-effective manner.’

As regards the administration of the 2005 scheme, the report’s ‘key findings’ were set out in paragraphs 6 to 8 of the report’s Summary. Those were that:

‘Virtually all of the outstanding 2005 scheme claims were paid by the end of December 2006. The Agency managed to pay the claims for all 24,730 outstanding 2005 claims (out of a total of 116,474), bar 24 claims with legal issues beyond the Agency’s ability to resolve, such as probate queries or divorce settlements.

A separate review was undertaken of one computer run in August 2006, which is known to have resulted in substantial errors. In this computer run of 672 claims, duplicated payments amounted to £4.4 million, including six farmers who were overpaid by over £100,000 each. To avoid the need to go back to farmers more than once to make corrections, the Agency decided, early in 2007, that it would not pursue these overpayments until it had finalised its data review. Senior management approved a more detailed strategy to deal with such cases in September 2007 and confirmed that it has now started the process of recovering overpayments.’

Back to top