Section 3: my findings of fact about Rural Payments Agency
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Having considered all the evidence set out in my chronology in Annex A, including the information set out above, I have drawn twelve principal facts from it.
My first finding of fact about the general administration of the scheme is that RPA recognised that scheme payments (and evidence that a farmer would be receiving such payments) were important to farmers.
The payments (and evidence of entitlement to them) formed a central part both of the financial and business planning of farmers and of their income. They were critical in helping farmers to obtain new or continued credit from banks, landlords or suppliers. Delays in making payments (or in providing evidence that such would be forthcoming) were known to threaten the livelihoods and wellbeing of farmers. For example, the two submissions made to Defra Ministers by RPA officials on 30 September 2005 recognised all this.
My second finding of fact is that, before implementation of the Single Payment Scheme, farmers had had reason to expect a reasonably good level of service from RPA as regards the payment of subsidies.
Specifically, farmers were used to receiving such payments close to the beginning of the payment window for each of the individual schemes which preceded (and which were replaced by) the new scheme. This is clear, for example, from the evidence contained within the National Audit Office’s October 2006 report on the administration of the scheme and from evidence given to the Parliamentary Select Committees.
My third finding of fact is that RPA had significant difficulties in mapping the land of potential applicants to the scheme. Mapping was a necessary part of making a valid application to the Single Payment Scheme and to the Environmental Stewardship schemes. The stewardship schemes were the responsibility of the Rural Development Service, but RPA’s role was critical for potential claimants.
In March 2005 the NFU had raised concerns about backlogs in land registration on RPA’s Rural Land Register. In October 2006 the Permanent Secretary of Defra acknowledged and summarised the mapping difficulties during her evidence about the administration of the Single Payment Scheme to the House of Commons Committee of Public Accounts. In response to a question about why there had been so many problems, she said: ‘As the National Audit Office Report highlights, problems with the mapping were probably one of the key challenges. There was a vast increase in the number of mapping changes, which had either not been previously reported or were produced — incentivised — by the new scheme’.
My fourth finding of fact is that RPA had originally hoped to make scheme payments at the beginning of the payment window in December 2005 but it was decided instead that payments would not commence until February 2006. An RPA announcement of 19 January 2005 said RPA would start making payments for the 2005 scheme year in February 2006. An RPA spokesman told the Farmers Guardian, for a story about that announcement, that the intention had been to start making payments soon after 1 December, but ‘one or two delays had caused that date to slip a bit’.
My fifth finding of fact is that RPA had formal business plan targets about the timing of scheme payments – which were never amended and were not met. Those targets were announced in Parliament on 18 May 2005 and publicised widely – and were that RPA would make 96% of scheme payments before the end of March 2006 and that it would do so accurately in at least 98.5% of cases.
These precise commitments contrasted markedly with the previous payment targets which were broader and merely reflected the EU regulatory requirements, which were that 96.14% of payments would be made by the end of the relevant payment window.
My sixth finding of fact is that, from summer 2005 onwards, RPA had good reason to believe that it would not deliver on its public commitments about the timing of scheme payments – with the grounds for doubts growing over time. Defra said, as part of its response to a draft of this report, that the expectation remained throughout that RPA’s targets would be met. It said that, rather than grounds for doubt growing, it was the case that concerns arose and receded as individual problems were dealt with. I think the evidence tells a different story.
As can be seen from the chronology of events in Annex A, RPA’s own internal risk assessment about the schedule for the work to be done to implement the scheme was ‘red’ as at 23 June 2005. An external assessment by the Office of Government Commerce made in the same month explained that:
‘… the programme is in considerable difficulties… The Agency have sought to keep to the February timescale, but the risks of failing have continued to increase… Our assessment is that the current plan to implement payments in February… would require a very fair wind to succeed. And recent experience suggests that there will be much bad weather to cope with.’
A later assessment by the Office of Government Commerce in September 2005 gave RPA only a ‘reasonable chance’ of making all payments by the end of the scheme window on 30 June 2006. Defra commented that, closer to the target payment date, the Office of Government Commerce assessments were more favourable. I am not persuaded that this is a reason to change my finding of fact. As I see it, the evidence in front of RPA always gave it grounds for doubt.
An internal RPA email dated 5 October 2005 recorded the outcome of a meeting held with Defra Ministers the previous day, at which RPA had explained that the establishment of definitive entitlements – a prerequisite for making payments under the scheme – was not projected to occur until 23 February 2006.
The entries in my chronology for 18 October 2005, 17 November 2005 and 15 December 2005 show that the internal RPA risk assessment about the payment schedule was ‘red’ throughout this period.
My seventh finding of fact is that RPA failed to meet the statutory deadline for determining the entitlements of potential applicants to the scheme.
Article 38(3) of European Commission Regulation 795/2004 provided that the definitive value and number of payment entitlements should be established by 31 December 2005 at the latest.
Yet, as can be seen from the chronology of events in Annex A, RPA did not begin to definitively determine such entitlements until 14 February 2006, which it confirmed to my staff during the investigation. RPA also told my staff that the UK did not secure a derogation which would have relieved it from performing the statutory requirement to establish definitive entitlements by 31 December 2005.
My eighth finding of fact is that through 2005 and into 2006 RPA continued to make promises that payments would begin to be made in February 2006 and that 96% of payments would be made before the end of March 2006 when the evidence in front of Ministers and officials showed, increasingly, that RPA was unlikely to keep those promises.
Defra has said that it does not agree that the evidence pointed to the targets not being met. It has also commented that, although Ministers later used ‘promises’ as shorthand when referring to targets, they deliberately did not present RPA’s targets as ‘promises’ at the time. I do not accept Defra’s view of the evidence about the likelihood of meeting the targets, or its distinction between the meaning of ‘promises’ and ‘targets’ to Defra and the generally understood meaning of those words.
A press notice issued on 14 July 2005 – at a time when, as noted above (paragraph 71), RPA’s internal risk assessment about the schedule was ‘red’ – confirmed that the business plan targets would be met. This message – that RPA was ‘on course’ – was also endorsed at stakeholder meetings, such as the meeting of the NFU Council on 10 October 2005 and in Parliamentary answers given during October, November and December 2005. This was despite the doubts, outlined above, which existed internally at the time.
The administration of the scheme was based on the completion of tasks. As can be seen from the chronology of events, regular briefing by RPA to Defra Ministers explained progress in resolving outstanding tasks. Throughout the period during which the ‘on course’ message was being publicly conveyed, the evidence before RPA and Defra showed that little, if any, progress was being made in clearing these remaining tasks. The number of such tasks is set out in the table below. The total number of validation tasks was growing over time – from just under 500,000 towards the end of November 2005, to 631,000 a month later, to 712,000 by 27 January 2006. Progress to clear tasks was also slow. Until the end of February 2006, there were always more than a quarter of a million tasks which RPA had not even begun to address, and often considerably more – with 440,000 as at 21 November 2005, 484,000 at 21 December 2005, and 497,000 at the beginning of 2006.
And yet positive messages continued to be given, for example, by the Defra Minister at the Oxford Farming Conference on 4 January 2006 and before the House of Commons Environment, Food and Rural Affairs Select Committee on 11 January 2006. Even when internal briefing on 18 January 2006 gave further reason to doubt progress, media appearances by the Minister the following day continued to give assurance that the timetable remained valid. On 31 January 2006 a statement to Parliament confirmed that the ‘bulk of payments’ would be made by the end of March 2006. The announcement reflected advice from officials which said that, at best, RPA would make 70% of payments by then. RPA’s target was to make 96% of payments by the end of March.
2005 Single Payment Scheme - outstanding validation tasks
(Source: compiled Ombudsman's Office from the briefings to Ministers from the Chief Executive of RPA, detailed in Annex A)
| Date of update (see relevant chronology entry) |
Effective date of report | Total number of tasks | Approximate number of tasks neither cleared nor already underway |
|---|---|---|---|
| 23/11/05 | 21/11/05 | ‘just short of 500,000’ | 440,000 |
| 30/11/05 | 28/11/05 | 522,000 | 443,000 |
| 07/12/05 | 05/12/05 | 527,000 | 436,000 |
| 15/12/05 | 13/12/05 | 562,000 | 433,000 |
| 22/12/05 | 21/12/05 | 631,000 | 484,000 |
| 06/01/06 | Not known | 662,000 | 497,000 |
| 13/01/06 | 11/01/06 | 687,000 | 379,000 |
| 18/01/06 | 17/01/06 | 708,000 | 362,000 |
| 27/01/06 | 25/01/06 | 712,000 | 328,000 |
| 01/02/06 | 31/01/06 | 713,000 | 301,000 |
| 09/02/06 | 07/02/06 | 731,000 | 282,000 |
| 15/02/06 | 13/02/06 | c. 796,000 | 247,000 |
| 23/02/06 | 21/02/06 | c. 807,000 | 242,000 |
| 07/03/06 | 06/03/06 | c. 802,000 | 188,000 |
My ninth finding of fact is that Defra and RPA rejected criticisms by a Parliamentary Select Committee which raised doubts about whether RPA would deliver against its public payment timetable.
Ministers decided on 30 January 2006 to make an announcement the following day which dismissed the doubts expressed by the House of Commons Environment, Food and Rural Affairs Select Committee in its report published on 24 January 2006 and which re-committed RPA to meeting the payment timetable it had publicly announced.
This was in spite of the doubts about progress outlined above and RPA’s failure to meet the statutory deadline for the determination of establishments. This was also in spite of internal recognition on 18 January 2006 that RPA would not be able to validate all claims by the middle of February 2006. Defra has commented that it had been evident from its announcement of January 2005, when it said payments would start in February 2006 instead of December 2005, that the 31 December date for establishing entitlements would not be met. I disagree. That may have been evident to RPA and Defra. It was not evident to others, particularly in the context of Defra’s assertion about being otherwise on course.
My tenth finding of fact is that farmers only discovered on 16 March 2006 that RPA would not meet the payments timetable when it was announced that the Chief Executive of RPA had been removed from his post and that payment by the regulatory payment deadline of 30 June 2006 could not be guaranteed. This contrasted with the public messages which had been given up until 10 March 2006 that RPA remained on track to make ‘the bulk’ of the payments by the end of that month.
My eleventh finding of fact is that Defra and RPA have apologised for these failures, recognising the adverse impact on farmers, and also accepted that their public assurances about the timing of scheme payments had constituted promises which had been broken.
This can be seen, for example, from the statement in the House by the then Secretary of State on 22 June 2006 and from media appearances by other Ministers (such as on 23 June 2006, 25 October 2007, 5 November 2007, and 8 November 2007). Defra has commented that when Ministers referred to ‘promises’, they were using that as shorthand. As I have said in paragraph 79 above, I am not persuaded by this argument.
My final finding of fact is that Defra and RPA took a number of steps to remedy for the future the systemic failings which occurred in their administration of the scheme but have not provided any remedy for the other adverse consequences of those failings beyond a general apology and the payment of interest on those payments which were made after the end of the scheme payment window.
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