Section 2: the basis for my determination of the complaints

Introduction – establishing the overall standard

Comparing what actually happened with what should have happened is generally my starting point for determining whether or not a person has sustained injustice because of maladministration. I need to establish the facts relevant to the complaint. I also need to establish a clear understanding of the standards which governed the exercise of the administrative functions of the bodies and individuals whose actions are the subject of the complaint, at the time the events complained about occurred. This means understanding both the general standard and the specific standards for the circumstances of the case. I call this establishing the overall standard.

The general standard comes from general principles of good administration and, where applicable, of public law. The specific standards come from the legal, policy and administrative framework relevant to the events in question.

Having established the overall standard I then assess the facts in accordance with the standard. Specifically, I assess whether or not an act or omission on the part of the body or individual complained about constitutes a departure from the applicable standard. If so, I then assess whether, in all the circumstances, that act or omission falls so far short of the applicable standard as to constitute maladministration.

The general and specific standards which I have applied to this investigation are set out below.

The general standard – the Ombudsman’s Principles

In February 2009 I republished my Principles of Good Administration, Principles of Good Complaint Handling and Principles for Remedy. These are broad statements of what I consider public bodies should do to deliver good administration and customer service, and how they should respond when things go wrong. The Principles are based on over 40 years’ experience of investigating complaints, built up since my Office was established in 1967, and derived from the practical processes of our casework.

The same six key Principles apply to each of the three documents. These six Principles are:

• Getting it right
• Being customer focused
• Being open and accountable
• Acting fairly and proportionately
• Putting things right, and
• Seeking continuous improvement.

Three of the Principles of Good Administration are particularly relevant to this complaint: getting it right, being customer focused and being open and accountable.

Among other things, getting it right means providing effective services with appropriately trained and competent staff. Public bodies should plan carefully when introducing new policies and procedures. Where public bodies are subject to statutory duties, published service standards or both, they should plan and prioritise their resources to meet them. They should take reasonable decisions based on all relevant considerations, ignoring irrelevant ones and balancing the evidence appropriately.

Being customer focused is about ensuring that customers are clear about their entitlements; about what they can and cannot expect from the public body; and about their own responsibilities. It is also about public bodies meeting their commitments. They should meet their published service standards or let customers know if they cannot.

Being open and accountable entails making public administration transparent and handling information as openly as the law allows. It is about giving people information that is clear, accurate, complete, relevant and timely, and being open and truthful in accounting for decisions and actions. They should take responsibility for the actions of their staff.

Acting fairly and proportionately is the Principle of Good Complaint Handling that I found particularly relevant to this complaint. It entails avoiding a rigid, process-driven, ‘one size fits all’ approach to complaint handling and ensuring that the response to an individual complaint is proportionate to the circumstances. By that, I mean taking into account the seriousness of the issues raised, the effect on the complainant and whether any others may have suffered injustice as a result of the same problem.

Putting things right is relevant to this complaint as a Principle for Remedy. Putting things right entails considering fully and seriously all forms of remedy, such as an apology, an explanation, remedial action or financial compensation. It means, if possible, returning the complainant and, where appropriate, others who have suffered similar injustice, to the position they would have been in if the maladministration had not occurred. If that is not possible, it means compensating the complainant and others appropriately. There are no automatic or routine remedies for injustice resulting from maladministration.

Remedies may be financial or non-financial, and may include an apology or explanation; remedial action (such as reviewing or changing a decision on the service given, revising published material); a revision of procedures to prevent the same thing from happening again; or financial compensation for direct or indirect financial loss, loss of opportunity, inconvenience, distress, or any combination of these. Remedies may also need to take account of injustice that results from pursuing the complaint, as well as the original dispute.

The Principles for Remedy also recognises that, in considering a remedy, it is reasonable for a public body to take into account any way in which the complainant has contributed to, or prolonged, the injustice.

Payments for financial loss should be calculated by looking at how much the complainant has demonstrably lost or what extra costs they incurred. In addition, and as described in the Principles for Remedy, an appropriate interest rate should be applied to payments for financial loss, aimed at restoring complainants to the position they would have been in had the maladministration not occurred. As a general principle, and if there is not a good reason to use another rate, I recommend using the rate specified in the rules for the relevant courts.

Rural Payments Agency and Common Agricultural Policy reform – the history

RPA, set up in October 2001, is England’s paying agency for the Common Agricultural Policy (CAP) schemes. The Chief Executive of RPA reports to the Defra Secretary of State and Permanent Secretary. In June 2003 the European Union (EU) started a fundamental reform of the CAP and RPA was responsible for implementing CAP reform in England. It made the reforms the focus of its own ‘change programme’ which it had begun in 2001.

The Single Payment Scheme was part of the CAP reform. It brought several EU agricultural support schemes into one. By January 2004 it had been decided that the agriculture departments in England, Scotland, Wales and Northern Ireland would each implement the Single Payment Scheme in their own parts of the United Kingdom. In England Defra Ministers decided to use the dynamic hybrid model and implement the scheme from the earliest possible date of 1 January 2005. Dynamic hybrid meant it would base early payments on historical payment levels, which had been based on production. Payments would move gradually to being based on land area.

The National Audit Office report published in October 2006, The Delays in Administering the 2005 Single Payment Scheme in England, explained what RPA intended to achieve:

‘From its inception in 2001 the Agency [RPA] had embarked on a business change programme to improve efficiency but had to revise its approach in November 2003 to include the development of the single payment scheme which then became the key element of business change. The way the scheme was implemented was designed to achieve efficiency savings by enabling staff in different offices to work on any tasks relating to any claim, rather than for the same individual or small team to process a whole claim from end to end. The Agency [RPA] anticipated that this “task based” approach would enable faster processing and improve staffing flexibility.’

The specific standard – Rural Payments Agency and the 2005 Single Payment Scheme

I set out here the administrative and legislative background to RPA’s implementation of the Single Payment Scheme. It is the specific standard for this investigation. The dates in bold refer to the relevant part of the chronology in Annex A.

The statutory timetable

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. Commission Regulations provide the detailed rules for the implementation of the Regulation.

An entitlement is a right to a payment under the Single Payment Scheme. A definitive entitlement is the basis for future claims and is an asset that can be traded or used to secure loans. 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.

There is a further statutory deadline for RPA to meet as a paying agency for EU aid. 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, which gives the percentage of aid that may be left unpaid by the deadline and the penalties that underpayment will incur.

Rural Payments Agency’s targets and customer service standards

RPA’s 2004-05 business plan, published in March 2004, included some targets. Three targets given in the plan were that RPA would ‘process and pay CAP claims on time, specifically to avoid any financial correction for late payments’; and ‘process and pay at least 96.14% of valid IACS^[3] claims by value within the EU deadline’; and ‘process and pay at least 98.5% of valid claims correctly’. There was also a commitment in the plan, from the then Chief Executive, that RPA would continue to meet its normal targets and maintain continuity in the service it gave its customers.

In March 2006 RPA published an updated version of its leaflet Our commitment to good customer service. It set out RPA’s service standards in similar form to previous editions of the document. Under the heading ‘The service you can expect’, the leaflet said:

‘We are committed to providing a consistently high standard of service. We aim to make sure that you are dealt with quickly, politely and professionally at all times. We publish our performance targets in our Business Plan, and details of how we are performing are given in our Annual Report and accounts…’

The service standards set out in the leaflet included the following:

when dealing with telephone calls, ‘we will make sure that we deal with your call quickly, politely and professionally’;

• ‘we will make sure the information we give you is understandable, up to date, and correct’;
• when dealing with letters, ‘we will provide a full reply to letters within 15 working days of the day we receive them or, if this is not possible, we will tell you the reason for the delay’;
• when dealing with emails, ‘we will confirm that we have received your email within one working day. We will then send you a reply within 15 working days or, if this is not possible, we will tell you the reason for the delay’;
• ‘we will use our website… to publicise our services and provide the latest information as quickly as possible’; and
• ‘we are committed to paying claims within set times each year’.

The leaflet also explained that RPA was ‘dedicated to meeting the needs of our customers. We will offer you choice in the way you can contact us and will make sure that the information we provide is easy to understand’.

In May 2005 the Secretary of State set out RPA’s targets for 2005-06. They included starting Single Payment Scheme payments ‘by February 2006’; processing and paying 96% of valid claims by 31 March 2006; and processing and paying valid claims with at least 98.5% accuracy.

Rural Payments Agency’s messages to farmers, Parliament and the public

In May 2004, a letter to farmers and growers in England from Lord Whitty, then the Minister for Food, Farming and Sustainable Energy, included an annex of key dates which gave autumn 2005 as the date that RPA would ‘advise applicants of their entitlement amounts’ and said RPA’s objective was ‘to make payments as early as possible within’ the payment window of 1 December 2005 to 30 June 2006. Two RPA leaflets about the Single Payment Scheme, published in July and November 2004, said that RPA would send out information about entitlements in August 2005.

Ministers had expected RPA to be able to make Single Payment Scheme payments from 1 December 2005, according to what Defra’s Director General for Sustainable Farming, Food and Fisheries had told Defra’s management board in June 2004, but in January 2005 RPA announced that it would start making payments in February 2006. It said that was ‘the earliest date to which farmers, their advisers and banks should plan’.

In February 2005 RPA published the Single Payment Scheme Handbook and Guidance for England 2005. It explained the payment window but did not mention the timetable for payment. A leaflet published by RPA the same month said ‘…RPA have announced that the most probable date for payments to start is February 2006. During autumn 2005, once all claims have been processed and validated, we will let you know the probable value of your entitlement’. Later the same month the Financial Times reported that the Defra Secretary of State had told the National Farmers Union (NFU) conference that she was ‘bloody livid’ at the delay to the planned start of scheme payments until February 2006. In April 2005 a Defra Minister responded to a question about arrangements for interim payments if there were delays in implementing the Single Payment Scheme. He said ‘The Rural Payments Agency has announced that it expects to begin payments under the single payment scheme in February 2006, well before the deadline of 30 June 2006 set in EU legislation. The Government are considering what action can be taken to improve on this position or to help in other ways’. At this point, April 2005, RPA still expected to send out information about the value of Single Payment Scheme entitlements in autumn 2005. Applications for the 2005 scheme closed in May 2005 and RPA said the 116,322 applications received included claims from about 20,000 new customers.

In July 2005 an article in the Farmers Guardian, titled No payment window slip, said ‘Food and Farming Minister Lord Bach has refuted NFU claims that the Single Payment Scheme window has slipped again, from February to March’. RPA’s Annual Report and Accounts 2004-05, also published in July 2005, included its aims and objectives. It said RPA would aim to ‘deliver a high quality service that is responsive to the needs of its customers and operates as economically, efficiently and effectively as possible, in accordance with EU accreditation requirements and policies laid down by the Secretary of State’. It also said RPA was focused on meeting its customers’ needs, which means the ‘timely and accurate payment of claims, good communication, involving customers in the development of our business and dealing fairly with complaints’. It said that in 2004-05 RPA had met all its customer-facing targets.

In October 2005 Defra issued a press statement titled Defra takes further action to ensure payments to farmers in February 2006. Among other things, it said RPA would tell farmers their definitive Single Payment Scheme entitlements as early as possible in 2006, instead of issuing provisional entitlements in the autumn of 2005. Also in October, the then Chief Executive of RPA told the NFU that RPA was on course to begin payments in February 2006 and that most would be completed within three weeks of that. Later the same month the Secretary of State told the House of Commons that RPA remained on course to start payments in February 2006. RPA also updated its Single Payment Scheme information leaflet in October 2005. It said RPA remained committed and on target to start making scheme payments in February 2006. The leaflet said RPA would send out entitlement statements as early as possible in 2006. During November and December 2005 the message from Defra was that RPA remained on course to start payments in February 2006 and to have made most payments by the end of March 2006.

In January 2006 the Minister for Food and Farming told the Oxford Farming Conference that farmers ‘can be assured that I am taking a close personal interest in ensuring that the commitment is kept, to start making payments in February with 96% made by the end of March…’. The same Minister appeared before the House of Commons Environment, Food and Rural Affairs Select Committee a week after his speech in Oxford and faced questioning about the timetable for and nature of scheme payments. He said there would be a payment, full or partial, by the end of February 2006. He repeated that message in an interview with the Farming Today radio programme and, later in January 2006, rebutted the doubts about timing raised by the Select Committee’s report. He repeated that payments would start in February and 96% would be made by the end of March, although he said it was possible that the payments would be partial payments. On 31 January 2006 Defra Ministers made a statement to both Houses of Parliament. It said RPA would establish definitive entitlements on 14 February 2006 and send those to farmers within two weeks of that date. It also said that payments on fully validated Single Payment Scheme applications would start before the end of February and RPA would make the ‘bulk’ of payments in March. It said the validation process would continue beyond March ‘in the minority of cases where queries remain unresolved’.

In early February 2006 the Secretary of State acknowledged that the ‘bulk of payments’ meant less than 96%. A month later, in early March 2006, a Defra Minister said RPA remained on track to complete the bulk of payments by the end of March 2006. The Minister for Food and Farming told the Farming Today programme that Defra still expected the bulk of payments to be made by the end of March 2006. He asked farmers to be patient. On 16 March 2006 the Secretary of State announced that it was no longer possible to make the bulk of scheme payments by the end of March 2006.

The Rural Land Register and the Environmental Stewardship schemes

The Rural Land Register, run by RPA, holds digitised maps of all registered land parcels. To be eligible for payments under the Single Payment Scheme or under one of the Environmental Stewardship schemes run by the Rural Development Service, a sister organisation of RPA (see paragraph 110 for more on the Environmental Stewardship schemes), land must be on the Rural Land Register. The report published in March 2007 by the House of Commons Environment, Food and Rural Affairs Select Committee, The Rural Payments Agency and the implementation of the Single Payment Scheme, summarised the task expected of the Rural Land Register:

‘Digitised mapping of claimants’ land parcels on which their area-based claims would be made was a fundamental part of the SPS [Single Payment Scheme] 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.’

The Rural Land Register was also significant for work on the Environmental Stewardship schemes, as I explain in my account of Mr Y’s experiences (paragraph 109 onwards).

What happened in practice: some snapshots

Snapshot: 12,000 calls in a day

‘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.’

Source: March 2007 report by the House of Commons Environment, Food and Rural Affairs (EFRA) Select Committee, The Rural Payments Agency and the implementation of the Single Payment Scheme (March 2007 EFRA report), paragraph 79.

Snapshot: repeated corrections

‘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.’

Source: March 2007 EFRA report, paragraph 8

Snapshot: a 1,000% increase

‘The deadline for completed SPS [Single Payment Scheme] 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 [RPA’s claims and payments computer system]…’

Source: March 2007 EFRA report, paragraph 86.

Snapshot: customer behaviour

‘We had a mixture of people catching up with notifications and amendments to their land holding that they should probably have made under the old scheme and the incentive element of the new scheme, for example to the people with land that had not previously been covered, but also to existing claimants to maximise the areas of land and then there was customer behaviour … The surprise was the scale of the work, as it were catching up with the historic backlog and the incentivisation effect, which was involved in sorting out the land.’

Source: the Defra Permanent Secretary’s 15 May 2006 evidence to the House of Commons Environment, Food and Rural Affairs Select Committee.

Snapshot: increased stress

‘RPA had paid 95% of the Single Payment Scheme payments by the end of June 2005 and 96% by the end of July. Most farmers had received some money by the end of June, but almost 9,000 [out of 116,000 claimants to the Single Payment Scheme] had received none. Research commissioned by the National Audit Office revealed the impact on farmers: 20% said delayed payments had been a source of increased stress; 5% said they had considered leaving farming; the problem had been particularly acute for farmers where the subsidy was a large proportion of their family income, such as hill farmers; a significant proportion of farmers had taken action to save or raise money because of the delay; and many farmers had postponed purchases or investments.’

Source: the National Audit Office report published in October 2006, The Delays in Administering the 2005 Single Payment Scheme in England.

Rural Payments Agency’s targets and commitments, in summary

Let me spell out, in simple terms, what farmers and growers were entitled to by law; what I have concluded they could reasonably expect from the public statements made by Ministers and in statements from officials or on the Defra and RPA websites; and what they were told to expect by RPA’s service standards.

By law, farmers and growers were entitled to have their entitlements under the Single Payment Scheme established by 31 December 2005 and to receive their payments any time between 1 December 2005 and 30 June 2006.

RPA’s messages in its public statements were, at first, that farmers and growers should expect entitlement statements in autumn 2005. That changed, from October 2005, to a message that RPA would send out entitlement statements early in 2006. RPA’s early message on payment was that it would make payments as soon as possible in the payment window of 1 December 2005 to 30 June 2006. That changed in January 2005 to the message that payments would start in February 2006. RPA’s business target was to make 96% of payments by 31 March 2006, three months earlier than the target set for it by EU legislation. Those dates were used until 16 March 2006.

RPA’s published targets and service standards said, among other things, that it would continue to meet its normal targets; it would reply in full to letters and emails within 15 working days or tell customers the reason for the delay; it would make sure the information it gave people was understandable, up to date and correct; and it would pay within set times each year.

Footnote

[3] The Integrated Administration and Control System, set up by the EU in 1992, is a database. A very simple definition of its purpose is that it allows the EU to track, and to some extent cross-reference, claims for and payments of EU agricultural aid.

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