Basic Payment Scheme

George Eustice Excerpts

Thursday 28th January 2016 Westminster Hall

[The Minister of State, Department for Environment, Food and Rural Affairs (George Eustice)]

I congratulate my hon. Friend the Member for Wells (James Heappey) on securing this highly important debate. I completely understand—a number of hon. Members have discussed this—the importance of these payments to farmers, particularly in a year when farmers have suffered low commodity prices and when sectors, such as the dairy industry in particular, have been in the doldrums and suffering severe difficulties.

I will begin by agreeing with the hon. Member for Ross, Skye and Lochaber (Ian Blackford), who has the analysis of what has caused these problems this year absolutely spot on. He was no doubt briefed by the Scottish Government, who have had similar problems. The root cause of our difficulties is the new common agricultural policy. We aimed to get a simpler CAP in the last Parliament. However, we have ended up with something far more complex, because the European Commission was determined to add what it called the greening of pillar 1 payments. We therefore have to map every hedge in the entire country, and there is a whole plethora of rules about the minimum width of a hedge, the maximum width of a hedge, what size a gateway can be, what type of crops can be grown over the other side of a hedge—and it goes on and on forever. There is an incredibly complex set of greening rules, including the three-crop rule that every farmer must now grow three different crops on their holding.

In addition, we have seen the integrated administration and control system—a very intensive system of enforcement —brought into the pillar 2 schemes, which has also added complexity to our countryside stewardship scheme, which is causing a parallel problem.

To deal with all those problems, we needed a new IT system. The truth is that the core of that system—the bit that processed the rules—actually worked well. It was made by a company called Abaco, which had a track record in this area. The bit that processed the rules worked well, as did the payment engine—sometimes called the back end of the system—which is successfully paying people.

The bit that we had difficulty with at the beginning of last year was the interface at the front that was supposed to enable farmers to do their online applications. We realised by the time that we got to the end of February that it would not be possible to make that dovetail successfully at the correct speeds needed to do online applications last year, so we had to switch to a paper-based application and delay the deadline for a month.

I want to put on record my praise for the work that the RPA has put into the scheme. A number of hon. Members have been critical of the RPA, but I think that it falls to me, as the person who is dealing with it week in, week out, to praise its work. We have had between 800 and 1,000 people in the RPA working on this seven days a week to try to get these applications on the system and to get payments out to farmers as quickly as possible.

My hon. Friend the Member for Selby and Ainsty (Nigel Adams) asked whether we had the right expertise in the RPA. It is true that, in a typical year, we would have about 400 people working on BPS applications. We have brought in additional people from other agencies, as well as what is called the surge force of civil servants working in the Cabinet Office—a flexible team of people who can be deployed to unexpected workloads. Therefore, people are there who have not traditionally been in the RPA; nevertheless, they have worked incredibly hard to get to where we are now.

Turning to the RPA’s leadership, my hon. Friend the Member for Wells pointed to the exceptional track record we have had over the past three years. It was not always like that. A decade ago, things were in an incredibly bad state. Today, the same leadership team are turning around the difficulties we had at the start of this programme. They have delivered the exceptional results that he pointed to, and I have great confidence in them.

I will just point out what has been achieved to date. We took on this difficult position and paid 33,000 farmers on day one—on 1 December—when the payment window opened, and we had paid more than half by the end of December. As of yesterday—a number of Members have pointed this out—we have paid 61,278 farmers. That takes us to just over 70%. As I speak, we are working on the final batch of payments, which will go out before the end of March and will take us to the vast majority of payments having been made.

[James Heappey]

I suspect that the Minister misspoke, but I invite him to clarify what he said. He said that we are working today on payments to be made by the end of March. Does he mean the end of the month?

[George Eustice]

Sorry, yes, I meant by the end of the month—I am sorry if I said by the end of March. We will have a final batch, which will take the figure probably above 75%, but it is not certain; that is still being worked on now.

We should highlight the fact that we worked quickly to get the dairy support fund out. It went out earlier than expected in the middle of November to help hard- pressed dairy farmers.

[Nick Smith]

I was just listening to the Minister’s comments. Will he confirm whether he thinks that the “vast majority” is 75% of farmers? Is that the definition he is using?

[George Eustice]

We could agonise over the definition of “vast majority”, but as far as I am concerned, “over 60,000” is a vast number of applications and a vast amount of work has gone into processing them.

We should recognise what has been done on the entry level and higher level stewardship schemes. Again, we had a difficult start because of the paper application process, but 97% of applicants have now had their first instalment and 60% have received their second instalment a month earlier than normal. We have made progress, but there is further to go.

Some people will ask why we cannot just pay and why things are so complicated. As the hon. Member for Ross, Skye and Lochaber said, there is a good reason for that. Under regulations and law, the EU requires certain inspections and verification to be carried out. The truth is that we tried to get the Commission to relax those requirements to enable us to expedite payments this year, but it refused. We cannot make those payments from the EU until those various checks and the validation of claims have been completed.

A number of hon. Members referred to communications. In November, we wrote to around 15,000 farmers whom we anticipated would not be paid by the end of January. The two primary groups are some 4,700 farmers with common land—I will come back to them—and around 9,000 farms that had inspections of one sort or another.

A number of hon. Members mentioned part-payments. We considered this, but we ruled it out and I will explain a couple of reasons why I think that we were right. Scotland has decided to make part-payments. It has 3,500 farmers and, according the latest figures I have seen, around 18% of them had received a part-payment of 70%. Compare that with this country where 70% of farmers have received everything. That is a better position to be in. Had we taken a decision in November at the end of last year to start chopping and changing plans again and messing around to try to get part-payments out, even fewer farmers might have received them, never mind receiving full payment.

[Sir Henry Bellingham]

I accept the Minister’s point about the overall strategy at DEFRA, but what about those really difficult and deserving cases with very complicated problems of reconciliation, cross-compliance and so on, such as those with commons? Surely, there is an argument in those few rare cases to go for part- payment.

[George Eustice]

I will come to that, but we should remember the experience of 2005. Some hon. Members have said we should learn lessons. Let us remember that in 2005 no one was paid in December, no one was paid in January, no one was paid in February and no one was paid in March. The first farmer to be paid was paid in March. Then, the last Labour Government decided to switch to a part-payment system and got themselves into a complete muddle that took a couple of years to sort out because of all the reconciliation that had to be done afterwards. They found that farmers had received inaccurate payments and it caused all manner of difficulties. For that reason, we should be cautious.

We should realise that, as a number of hon. Members have pointed out, the payment window does not open in May, but closes in May. The next application window opens in March, which is not long to go—five or so weeks. I want staff in the RPA to be working on making sure we get next year’s applications right and through, rather than messing around doing part-payments of this year’s applications.

I want to say what we have done. We have introduced a hardship fund. We have worked closely with groups such as the Farming Community Network that provide a triage process. If a farmer is suffering real hardship and cannot, for example, buy feed for their cattle, they are fast-tracked. In some cases, if we can we speed up an application, we make we sure we get it through as quickly as possible. In other cases when we suspect they will not be paid in a hurry, we have in many cases made part-payments on account cash-flowed by the Treasury—not EU-funded, which would expose us to difficulties, but on account from the Treasury.

[Geoffrey Clifton-Brown]

Will the Minister give way?

[George Eustice]

I will not give way because I want to cover a few more points and leave time for my hon. Friend the Member for Wells.

Some hon. Members have talked about the banks. I have been meeting them regularly and encouraging them to show forbearance to farmers. One reason why we sent a letter last November to those who were not expected to get their payment at the end of January was that they could take it to the banks, which were ready for that.

A number of hon. Members talked about communications. As I said, a letter went out in November and a further letter has gone out to those not receiving payments now, in January. The RPA has held almost weekly meetings with key NFU office holders and regularly attends NFU councils, so I do not accept the allegation that people have been kept in the dark and not informed. What I can understand is the understandable frustration among farmers who have not yet received their payments. That is spilling out in criticism of communication, which is probably a little unfair.

I want to talk about next year. A number of hon. Members asked about lessons. The reality is that we now have all these data on the core system. For next year, farmers will start from the position they left off in this year. We are confident that having done all the difficult work to get those applications on, from here forward it will be far easier. We will offer paper applications to those farmers who want them next year, but we hope that those who were previously online—about 70% up until 2014—will return to being online.

I want quickly to cover the issue of commons, which was raised by a number of hon. Members. We had a legal challenge from a local authority in Minchinhampton. It challenged the very basis on which we used to make payments and it caused huge difficulty for everyone. The issue is not about just having a plan B; the problem is that the methodology that it has now forced on us through its challenge means that it is impossible to pay anyone on a common until we have resolved all those claims. Our biggest difficulty in relation to many of these commons is that the National Trust has a large, complex claim that has always taken a long time to resolve. That has caused us a particular difficulty with common land, but we are recognising that and doing what we can to try to speed things up.

I want to leave a bit of time for my hon. Friend the Member for Wells, but I will answer these questions. My hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown) asked about the deadline for this year. It will be May; it will go back to the normal time. My hon. Friend the Member for Brecon and Radnorshire (Chris Davies) talked about some of the difficulties that the Welsh Government have experienced with requirements imposed by the EU, particularly in relation to accurate mapping and the difficulties with shade from woodlands. This goes back to my initial point. We are now in an era with an incredibly complex CAP, causing many difficulties.

We have had a very important debate, covering many different issues. We have not got on to the exciting issue of the European Union and the potential impact of the referendum, but we will have much more time to discuss that in the months ahead.

[James Heappey]

I thank all hon. Members who have spoken in today’s debate and all those who made themselves available to brief us so that it could be so well informed. I would like to pick up a couple of points. I am very grateful to the Minister for attending. He is a worthy champion of our nation’s farming and fishing and has addressed the vast majority of the issues raised in the debate. He will expect us to hold him to account as we move forward. An uncertainty does remain, and that uncertainty is deeply worrying for our farmers; we have to recognise that.

We need to be absolutely clear about when the remaining payments will be made. I appreciate that it is very difficult to do that from the Minister’s place in a debate such as this, but I assume that the RPA is watching and I know that he will chase it when he gets back to his office to make absolutely sure that the plan for the remaining payments is communicated accurately and urgently, so that people know when their money will come. The point about speaking with colleagues at the Treasury to discuss what can be done about the looming tax deadline is a very good one, and I hope that the Minister will work on that.

The Minister spoke about the IT system being good enough for Government work in its core process and in the payment engine. I just hope that he will note my suggestion, which has been made to me by others, that a system that is rural-proof—and that therefore saves every time someone clicks “next”—would be an important development.

[George Eustice]

I can confirm that the system already enables people to save part-prepared applications. I can confirm also that we are in constant dialogue with the Treasury and HMRC to encourage them to show forbearance.

[James Heappey]

My time is slipping by quickly, but I believe that that is an active decision to save. An automatic one, because people are not in control of when their system crashes or their broadband drops out, might be a worthwhile improvement.

Most important of all, will the Minister reassure us that the RPA, although it is in very close contact with the big issue of making the remaining payments, has the space also to plan for what might come next year, and that these lessons can be applied? It would be unforgivable to have all the right urgency in making the remaining payments, but then for the lessons not to be applied for next year, so the same mistakes are made again. The Minister will expect us to hold him to account on that as we go forward. It is an urgent issue. We need to ensure that the mistakes are not repeated in relation to this year’s applications and next year’s payments.