Chapter five: My findings – whether there was maladministration by the Rural Payments Agency in their handling of claims to the Single Payment Scheme generally in 2005 and 2006

316. I make these  findings in the light of the evidence set out in the chronology of events in  Annex A. The chronology is summarised in the key facts section of this report.  My findings also reflect what I have seen in the individual complaints we have  investigated. I have assessed this evidence against the overall standard that I  set out in chapter two.
317. My findings refer  to RPA, but Defra's close relationship with RPA means that what I say about the  executive agency also applies to the Department.
318. Here are two  reminders, from the specific standard, of the context that RPA defined for  themselves in 2004‑05 and 2005‑06. The specific standard is in chapter two of  this report.

     'A customer  focused organisation delivering high quality services …'Provid[ing] fair,  responsive and high quality services to its customers, minimising  administrative burdens placed on the customers it serves.'   

     Source: from RPA's mission and objectives, in their 2004-05 and 2005-06 Annual Reports.

319. Here is a  reminder of what the EU farm subsidies, such as SPS, are for, again from the  specific standard. The CAP support schemes provided for:  

     'direct income  support in particular with a view to ensuring a fair standard of living for the  agricultural community. This objective is closely related to the maintenance of  rural areas.'

     From  the preamble to Council  Regulation (EC) No 1782/2003.

320. In October 2006  the National Audit Office gave their view on RPA's implementation of SPS.

     'Implementation  has not provided value for money because the project has cost more than anticipated  and is not fully implemented as scoped, planned efficiency  savings will not be achieved, relations with the Agency's customer base have  been damaged and there is a risk of substantial disallowance of expenditure by  the European Union.'

     This  is covered in my chronology and key events.

First general finding of  maladministration: RPA failed to get it right, or be customer focused, for a number of cases for SPS 2005 and, to a lesser  extent, for SPS 2006

321. What would 'Getting it right' and 'Being customer  focused' have looked like in this context? If RPA had been operating  effectively it would have:
     • provided timely  written guidance and information that was accurate, comprehensive, clear;
     • provided easy  access to accurate help and information either through local RPA drop-in  centres or via the telephone;
     • planned better  for the level of error in farmers' claims and communicated their approach  effectively to farmers;
     • made meaningful  checks on claim forms;
     • ensured staff  were aware of RPA's obligations under disability discrimination law and  empowered them to act when staff members considered adjustments were  appropriate;
     • managed the  backlogs on the Rural Land Register properly; and
     • made consistent  decisions.
322. However, as I now  go on to explain, despite RPA's intentions, that did not happen. RPA failed to  'get it right', or 'be customer focused', for a  number of cases for SPS 2005 and, to a lesser extent, for SPS 2006. That  failure had serious implications for the farmers trying to claim SPS.

Many farmers  needed tailored advice

323. Parts of the 2005  SPS Handbook, for example, those dealing with activation of entitlements,  special entitlements and fruit, vegetable and potato authorisations, proved  insufficiently clear for some farmers to understand without extra help. The  Handbook spoke the jargon‑heavy language of the EU regulations. It had no index  or other means of cross-referencing between related sections.
324. No handbook can  reasonably be expected to cover every point of complex legislation. The 2005  SPS Handbook could have been good enough, if RPA had given farmers adequate  help in other ways. They did not.
325. Defra and RPA  have made it clear, in their comments on a draft of this report, that they  believe they did give farmers adequate help. I cannot agree. RPA had reduced  farmers' access to face‑to‑face, personalised information and checks on claims  during the last years of the IACS subsidy schemes. That was understandable,  given the evidence we have seen that farmers were used to the IACS rules. But  the evidence we have gathered is that some farmers were still seeking, and  obtaining, tailored information from RPA officers in the years immediately  preceding SPS. And a new scheme was likely to renew a wider need for a more  personalised level of service. That level of service was not available. The  telephone‑based customer service centre, which replaced the level of personal  service RPA used to give farmers, often proved to be either unavailable or  unreliable when farmers telephoned.
326. We have seen,  from RPA's own snapshots in August and September 2006, that letters could  go unanswered until months after the SPS deadline had passed. This was the case  in 2005 and in 2006. The supplementary guidance posted to farmers and the  updates added to RPA's website could not make up for the failings of the core  sources of information: the Handbook and the customer service centre. This was  the first year of a complex scheme. Many farmers needed tailored advice – not  on how to maximise their SPS payments, but on how to complete their SPS claims  properly. They did not get it.

RPA's  inadequate claims checking

327. RPA's initial  checks on claim forms in 2005 (and in 2006) were basic. They were so basic that  forms on which the farmer had failed to claim any subsidy could pass the  checks. Within RPA, at least one officer recognised that RPA might have a  responsibility that went beyond their legal obligation. In April 2005 an  RPA lawyer pointed out that RPA had no legal obligation to return forms at all,  or to query incomplete data. But he also pointed out that, from a policy  perspective, 'there could be a customer  service driver that encourages RPA to do its best to ensure that as many  eligible applicants as possible apply to the scheme' (see Annex A). The  Defra Permanent Secretary has told us that this was the opinion of one lawyer,  not a collective view. We have seen no other papers that explain RPA's reasons  for deciding against contacting claimants whose forms had clear anomalies. I  have concluded that in 2005 RPA decided on a narrow interpretation of what  customers could expect from them, contrary to their public statements about  being a customer focused organisation.

A backlog of  mapping forms and correspondence

328. The Rural Land  Register was a further problem area for RPA in 2005. The problem ran into 2006.  My chronology explains how the Register went live, late, in  September 2004. The problems meant that land data was not fully accurate,  or agreed with all farmers, in time for SPS 2005 or for SPS 2006. It also meant  the land details on forms were only partly preprinted. Significant numbers of  farmers with mapping queries were unable to get timely replies from RPA by  phone or by letter, although RPA were able to answer many queries. RPA dealt  with the worst of the mapping problems by relaxing the absolute requirement to  have land on the Rural Land Register in order to receive SPS. But that still  left a backlog of mapping forms and mapping correspondence. Mr I's complaint  shows what that could mean for individuals.

RPA's  service to customers with disabilities

329. We have seen no  evidence that RPA recognised that SPS claimants with disabilities, or  communication needs, could be at a disadvantage in attempting to make a  successful SPS claim. Because of that failure, RPA did not take disability issues  properly into account when considering applications by claimants with  disabilities. They labelled claimants as business people who, with or without a  disability, had a duty to look after their own needs in dealing with RPA.  However, whether someone is or is not a business person is not a relevant  consideration when considering their disability needs. Taking it into account  prevented RPA from acting properly in terms of the relevant Code of Practice.  It said:

     'The duty of  reasonable adjustment is best met by the service provider trying to anticipate  the types of problems which could arise and by training its employees to  enquire rather than act on assumptions.'

Misleading  comfort messages

330. In this context,  RPA's comfort messages to farmers were misleading. We have seen that in April  and May 2005 RPA heard farmers' worries about RPA's administrative  problems and about the risk to farmers who made mistakes. RPA's response was to  say they would try to be flexible and to talk about the 'obvious error' provisions  for correcting mistakes. We have seen no messages in the run‑up to the  May 2005 deadline that referred to the difficulties likely for claims  where farmers had made the type of error made by the complainants in this  investigation.

A lack of  timely information

331. RPA were often  unable to give farmers accurate, or timely, information about the outcome of  their claims – over the telephone or in writing. Farmers who had failed to  activate some or all of their entitlements in May 2005 discovered their  loss only after they received their payment statements and asked RPA to  explain. Even farmers who had received letters about dual claims had to wait  for the payment statement to show whether RPA had applied penalties, and, of  course, RPA were unable to pay the bulk of farmers by the end of  March 2006, as planned. The first partial payments went out in  May 2006.

Inconsistent decision making

332. RPA's approach to  dealing with the mistakes farmers had made in claim forms was inconsistent –  between cases and in the assurances RPA had given the NFU. RPA had said that,  in cases of genuine error, they would try to be flexible. In practice, RPA's  appetite for being flexible ran out sooner than their customers might reasonably  have expected from RPA's public statements, and without an explicit explanation  to RPA customers of what was happening. We have seen RPA issuing guidance to  staff on how to treat mistakes. But RPA have confirmed that processors and  caseworkers applied different standards to similar cases, quite apart from the  evidence we have seen when looking at the nine complaints. This meant RPA  failed to treat people in similar situations consistently. A further layer of  delays and errors made the inconsistency worse for some farmers, including some  of the complainants in this report.
333. Some farmers,  such as Mr H, found that RPA said they would pay them, only to find that RPA  changed their mind later. Others, such as Mrs A, received payments, only  to have RPA recover the money because they had paid it by mistake. And a  further group of farmers, who also made mistakes, received payment and were  able to keep it. This inconsistency was unfair.

Summary

334. In summary, what  would 'Getting it right' and 'Being  customer focused' have looked like for RPA – in an imperfect world where  computer systems fail, deadlines are immovable and the experienced staff have  already left the organisation? 'Getting it right' and 'Being customer focused' would have been  RPA taking a step back to look again at what their customers could expect from  them. Had they done so in the way my Principles set out, they would have done  more than they did in terms of putting out additional guidance. They would also  have tried to contact farmers who had submitted forms but claimed no SPS  payment at all, and they would have done that within the time available to  correct the claims.
335. Taken together,  RPA's many mistakes and shortfalls amounted to maladministration. RPA's  handling of SPS claims in 2005 and 2006 fell short against several of my  Principles, but in particular, they failed to 'get it right' and they failed to  'be customer focused'.
336. In commenting on  a draft of this report, the Defra Permanent Secretary said:  

     '…in the first  year (2005) of a new and complex scheme, where farmers were asked to make a vital  one off application of entitlements, the absence of a claim for payment against  any of those entitlements could have signalled that the claimant had  misunderstood what was required in order to receive a payment. A customer  focused response would have been for RPA to double check the intentions of  those farmers. However, where farmers had activated some of their entitlements,  that demonstrates an understanding of a need to do so and double checking their  intentions then goes beyond good customer care.'

     I am persuaded by the Permanent Secretary's argument  on this issue.

Second general finding  of maladministration: RPA failed to respond appropriately when it came to 'Putting  things right' for individuals affected by the failures of SPS 2005 and 2006

337. RPA had an appeal  process and a complaints process. Their position on remedy was, and is, that  they make ex gratia payments where administrative error has had adverse effects  on customers. This reflected HM Treasury's guidance for government departments,  in 2005 and since 2005. The specific standard summarises RPA's position on ex  gratia payments.
338. What would  'putting it right' have looked  like? RPA would have scoped the problem they had identified properly;  considered all the options available to them and made reasonable decisions,  taking into account all relevant considerations.
339. Set against RPA's  own standards, RPA failed to respond appropriately when it came to 'Putting  things right' for individuals affected by RPA's failures in setting up SPS  2005. Let me explain why.
340. My first finding  of maladministration focused on RPA's administrative mistakes in setting up and  operating SPS before and after the first SPS deadline in May 2005. I  am going to look now at what went wrong once RPA began to see the growing evidence  of how the troubled implementation of SPS had affected farmers. The facts in  the chronology, summarised in the key facts section of this report, describe  how RPA staff lacked a case management system that would give timely and  accurate decisions on claims or all the relevant information for each claim;  how their task‑based computer system created unexpected backlogs of SPS 2005  work; and how experienced staff had left under voluntary severance terms just  before RPA launched the new scheme. RPA repeatedly updated their guidance to  staff on how to treat claims that had mistakes. It is far from surprising that  staff failed to make consistent decisions in those circumstances.

Scoping the problems

341. What did RPA know  about cases like Mrs A's? They were aware from April 2005 that some  farmers were making mistakes on activation. By August 2006 they had put  the figure of 11,000 on the number affected. They did not know how many of  these claims reflected mistakes and how many reflected deliberate choices by farmers.  They had given their staff guidance, updated several times, on identifying  claims which might meet RPA's test for 'obvious error'. In August 2006  they knew they still had many claims which they did not feel able to pay within  the EU Regulations. In RPA's own words: 'Misunderstanding  the scheme rules is not the basis for obvious error'.

Considering the options

342. And what did RPA  do about these cases where claimants seemed to have misunderstood the SPS  rules? They took a narrow view, which was at odds with their public statements  in 2005. As I said in my first finding of maladministration, RPA had linked  genuine error with the scope for flexibility. In practice, RPA took a different  approach. In October 2006 RPA's operational management team discussed three  options for dealing with these cases. In the words of the operations director,  they decided to hold a firm line and not review individual cases. They would  check on the number of representations and appeals and take action to avoid the  same non‑activation problem arising again. That meant that they gave individual  consideration only to people who challenged RPA.
343. In looking at  just these three options, RPA failed to consider how their own administrative  error might have contributed to farmers' mistakes and misunderstandings. They  then failed to consider how their guidance on ex gratia payments provided a  route to remedy the effect of their administrative error. That was unfair.

Good decision making?

344. This was poor  decision making. RPA decided to send the non‑activation claimants down the  appeal route. They should have been aware that that was unfair. And they held  to their decision, despite internal concerns about it being unfair. In  December 2006 a senior RPA lawyer refers in an email to the continuing  concerns of the Interim Chief Executive (paragraphs 169 and A96). I have also noted the further concerns of RPA staff working on  appeals – like the staff in RPA's Exeter office who looked at Mrs A's case  in 2007 (paragraphs 185 and E13 and E14).
345. The decision was  at best ill‑considered because it did not consider why misunderstandings had  occurred. At worst, it was illogical. That is because the appeals system was  set up to measure cases against the Regulations, not to deal with what RPA's  policy paper had called 'misunderstandings'. The appeals process would  fail to provide a remedy in the absence of a clear direction from management  that there could be scope for ex gratia payments to remedy the injustice  identified by the misunderstandings paper.

RPA's  failure to remedy

346. RPA's approach to  the non‑activation cases throws light on their overall approach, for SPS 2005  and SPS 2006, when the nine complainants in this investigation raised problems  with their SPS claims. RPA focused on the legalities and failed to consider the  effects of their own administrative actions and/or omissions. As a result, they  also omitted to consider how their own guidance on ex gratia payments might be  the means to remedy the injustice they had identified. Statutory payments  should be made before ex gratia payments are used. That does not mean  stretching regulations beyond their properly intended reach. Where statutory  payments are not due, because of administrative error by the public body,  consideration should be given to the scope for making ex gratia payments.
347. It is  understandable that RPA had difficulty separating legal issues from  administrative issues in considering complaints about SPS. Much of the  legislation is about the administration of SPS. But RPA were the only body with  the information and expertise to tell the difference between maladministration  and the requirements of the law.

Summary

348. In summary, what  would we have seen if RPA had acted without maladministration when they  considered how to put things right for the problems with SPS 2005 and SPS 2006  claims? They would have looked properly at the effects of their own errors and  omissions on their customers. They would have considered all the options for remedy  available to them, including the guidance on ex gratia payments.
349. RPA's  October 2006 decision making on the non‑activation cases was so poor that,  taken on its own, it was maladministrative. Taken together, their other  administrative failings also amounted to maladministration. These were the poor  information for farmers about decisions and payments; inconsistency in the  decisions about claims; and the general failure to look properly at the effects  on customers of RPA's own errors and omissions.
350. Again, RPA's  actions on SPS fell short against several of my Principles, but in particular,  they failed comprehensively to 'put things right'.
351. In commenting on  a draft of this report, the Defra Permanent Secretary said:

     'I acknowledge  and accept that there are a number of lessons for Defra and RPA in how it plans  and executes significant changes in such schemes. That is relevant, in  particular, to the forthcoming 2013 CAP reforms which the RPA will need to  implement in due course and I will ensure that those responsible are aware of  what needs to be done differently in future. I also accept that there is a need  for more immediate changes in the way the the Agency considers the needs of  disabled people and handles both complaints and appeals. I know [the Chief  Executive of RPA] is determined to make  early progress in these areas.'

Conclusion

352. In chapter five I  have set out my general findings of maladministration, based on the evidence in  my chronology in Annex A (which I have summarised in the key facts in chapter  three) and on the evidence drawn from what happened in the cases of the nine  complainants. In the next chapter I set out my findings of maladministration  and injustice for the individual complainants.