Basic Payment Scheme

Nigel Adams Excerpts

Thursday 28th January 2016 Westminster Hall

[James Heappey]

I very much agree with my hon. Friend. The term “vast majority” is rather loose, and we will come to that in a second.

There are three key issues in the debate. First, what is the current state of play? How many payments have been made as of today? How many will be made tomorrow—the last banking day of the month? How many payments will therefore be made by the end of January—the line the RPA previously drew in the sand? Secondly, what is the understanding of the Government and the RPA of what has gone wrong this year? How deep has their analysis been? How willing are they to apply the lessons learned to next year’s process? Thirdly, I invite the Minister to assure us, and all the farmers in this country, that these things will not happen again next year or, indeed, at any point in the future.

The difficulty is that there has been a shocking failure of expectation management by the RPA, and that comes down to the agency’s use of the term “vast majority”. When the RPA’s chief executive appeared before the NFU council on 13 October, he implied that about 90% of payments would be made by the end of January—that appeared to be the definition of “vast majority” at the time. However, shortly afterwards, about 17% of farmers were written to and told they would not be paid by the end of January, which indicates that, by default, the vast majority was to be defined as 80% to 85%. As of yesterday, however, only 70% of payments had been made. With one banking day left this month, therefore, we might conclude that 70% is the vast majority. The real problem is that “vast majority” is an awfully hard term to define, although I can say with absolute certainty that the vast majority of farmers agree with what I am saying today.

I hope the Minister will take this opportunity to confirm exactly how many payments have been completed. I hope he can also say with absolute certainty when we will reach the 95% threshold. In the previous year, 95% of payments were completed on the very first day that payments were made—1 December—and 98.5% were completed by 6 February. The year before, 92.3% of payments were completed by 4 December, and 97% were completed by 28 January. The year before that, 91% of payments were completed on 3 December, and 93.5% were completed by 31 December.

Technology is supposed to speed up advances, but in this case it seems to have slipped us into reverse. We need to say as quickly as possible when the remainder of farmers will be paid, and we need to be precise—we can no longer say, “You have an eight or nine-week window in which you will be paid.” People need to know now, with certainty, whether they will be paid in February, March, April, May or June. I hope the Minister agrees that the RPA should have that responsibility for everybody who is left unpaid after tomorrow.

For complex payments—involving, say, common land—we need to make split payments. We need to say that we will make the payment for the home farm now and that everything else can come later. People with complex claims are in real difficulties. Although they might ordinarily expect to be towards the back of the queue, they would still expect to receive their payment around now, and certainly within the next few weeks. This year, however, because of the backlog of more simple payments, they could have to wait much longer, and we must avoid that.

The impact of the delay is very serious. Tomorrow, we across the parliamentary estate will be paid, as will many other people across the country. Next week, standing orders and direct debits will almost certainly come out of our bank accounts to pay our mortgages and whatever other bills we have, and we will be confident that we can meet those bills, because we know what we will be paid tomorrow. Farmers, however, do not have that luxury, and they have not had since they received a letter towards the end of November telling them that the vast majority would be paid at some point in December or January. They expected that to mean that at least 80% to 85% of them, and perhaps even 90%, would be paid, but it appears that only about 70% have been paid in that window.

However, the issue goes further than that. A farmer has told me that he has £12,000 of unpaid invoices on his desk in his farm office. Those invoices are not to big feed suppliers or other big companies, but to small, local companies servicing the agricultural sector. Those companies have been made to wait for their money, because the farmer has not had his basic payment scheme payment. I understand from farmers down at the market in Bridgwater that the value of store lambs this year is depressed because farmers simply do not have the cash in their pockets to go to the market to buy livestock. That is having an impact, too.

There is also the cost of extra credit, as farmers have to go cap in hand—again—to their bank managers to secure an extension to their overdrafts or credit facilities. That comes at a cost, and it is a cost that farmers will bear, not the Government. We must take the impact of the delay seriously. We need to be able to say with absolute certainty when the payments will be made.

If Members will indulge me, I would like to suggest what lessons might be learned. I do not expect the list to be exhaustive—it is based on my reflections on what I have heard and on the wish list of the NFU, the Country Land and Business Association and others who have been in touch. However, I hope the Minister will take note of it. Indeed, I would hope that DEFRA and the RPA have already spotted all these things and more, and that work is already well under way to make sure that the lessons are applied to next year’s scheme.

First, what is being done to increase the capacity of the IT system? It crashed because it became overloaded. We need a guarantee that the system will be able to cope with the pressure placed on it next year when all farmers seek to apply for their payments.

Secondly, what is being done to preserve half-completed applications when connectivity is lost? We in rural areas are well used to trying to make a purchase online and going through that awful experience of seeing the broadband fall over at the crucial moment when we have clicked “Pay”, with the result that we do not know whether we have completed our purchase. Buying something on Amazon takes 10 minutes, but someone could have spent a couple of hours filling in their basic payment scheme application this year. If their broadband then fell over, as it so often does in rural areas, they would have had to go all the way back to square one and start again. It cannot be beyond the wit of man to develop an application system where, every time someone clicks “Next”, the application is saved. In that way, if the connectivity failed, or if the site could not cope with the demand, everything someone did beforehand would be there when they returned to it.

Furthermore, given all the problems this year, why not make sure that the data that have been verified for each farm are automatically carried over into next year’s applications? If the data need to be amended because of a change in a farmer’s circumstances, that is fine. What a wonderful help it would be to farmers, however, to know that data they submitted this year, which have been verified, will already be there waiting for them next year.

What is the reversionary option for those with poor connectivity? I believe that the Department has indicated—the Minister might like to nod if this is the case—that farmers will have the option to choose a paper application next year. If that has not been announced, perhaps it would be prudent to announce it in the near future. Many farmers simply cannot soldier through incredibly poor connectivity—below 1 megabit per second—to go through the online application process. Until we can improve their connectivity, it is unfair to expect them to endure that.

What can be done to improve the mechanism for confirming a successfully completed application? The feedback loop at the end of the online application is not particularly reassuring, and that seems to be a bit of an open goal. I am not particularly talented when it comes to IT, but even I have managed to figure out how to put an auto-reply on my email so that someone who sends me something automatically gets something back. People might quite welcome having something as basic as that as part of the online application process so that they immediately get confirmation that their application has been submitted. Thereafter, they could get progress checks, as happens with many mortgage companies, so that they could see how their application was progressing.

What can be done to better communicate an application’s progress and to provide greater certainty over when payments will be made? This year, we have been able to tell people only that their payments will be made within fairly broad spans of time. If we are going towards an online system, why can we not guarantee that once someone’s application has been made and they have been notified when each check has been gone through, they will immediately get an email saying that the payment will be in their bank account on a specific day?

What if the IT fails again? What is the RPA’s contingency plan for processing paper applications in 2017 more quickly? This year the system fell over and the Government rightly said they would accept paper applications, but the RPA clearly was not immediately capable of setting about the verification of those applications—hence the delay.

What sanction do the Government have in their contracts with those who provide the IT system, should it fall over this year or next year? Equally importantly—many farmers will be keen to hear about this—what is the sanction against the RPA and its senior leadership if it all happens again and there is no improvement in its communication? What is the timeline for scrubbing the payments portal to make sure that all the lessons learned this year will be incorporated into the process, both to improve the applications mechanism and to make sure that the guidance that farmers receive for next year’s application will fully incorporate everything that has been learned? Farmers are only two or three months from the time when they will need to apply.

What are the plans to maintain RPA staffing and resource at current levels until the Government are absolutely certain that the 2016-17 payment process is running smoothly? As I see it, the problem is that at the moment the RPA is fixed on having to make this year’s payments. It makes me very nervous that because of the immediate requirement to make payments now, no one has gone off into a dark room to work out what has gone wrong and what needs to be improved, and to make sure all those things get done before people make their applications for next year. It seems trite to say it, but I think it is important to do so: a mistake is a mistake, but repeating it is incompetence. I hope the RPA is painfully aware of how it will look if the same mistakes happen next year.

That leads me to perhaps the biggest issue in the debate, and the one that I suspect farmers are most nervously awaiting: the Minister’s absolute assurance that he and his Department are 100% confident that what happened is just a teething issue for year one, that all the lessons will be learned and applied, and that next year we will be back to the same success rate for the making of payments at the start of December as in previous years.

There is another area of uncertainty. This year has gone badly. We hope next year will be better, but what of the year after that, if the nation votes in a referendum to leave the European Union? That is causing great uncertainty for farmers, and although I do not necessarily want the debate to descend into that issue, I will quote a comment made in June by the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Penrith and The Border (Rory Stewart):

“It is vital that, whatever happens in the vote on the European Union, the Conservative party—indeed, all parties in this House, I hope—and this country continue to provide deep support for farmers…We must take responsibility ourselves; we must say we believe in the support farmers currently get from Europe, and, whatever happens in the vote, we must continue to provide it”.—[Official Report, 1 June 2015; Vol. 596, c. 431.]

The NFU and farmers generally are rightly nervous about the outcome of the referendum, and I hope that the Minister, who is the Farming Minister, will agree with the Under-Secretary that it is inconceivable that the UK Government would not support agriculture if we were outside the European Union, in the same way that the EU currently supports it.

[Nigel Adams (Selby and Ainsty) (Con)]

Does my hon. Friend share my concern that when asked at the Oxford farming conference how things might look for agriculture if we were outside the EU, the Secretary of State confirmed that the Government had not made any investigation of, or spent any resource on, what an exit might look like for agriculture?

[James Heappey]

I very much agree with my hon. Friend’s point. It does seem remiss. I understand why the Government do things in that way—in my last job in the Army I had a staff appointment at the Ministry of Defence when the Scottish referendum was announced, and we were told in no uncertain terms that there would be no contingency planning. The Department of State of which I was a very small part would continue to work on plan A and would address plan B thereafter. Farmers are putting up with an awful lot of uncertainty now. It is all self-inflicted for us this year, because of the BPS, but in future years it will be because of the referendum. I unequivocally support the referendum, but it would not take much for DEFRA to agree as a statement of principle that our farming sector is an essential part of the country’s economy and security, and therefore to agree, as the Under-Secretary of State has already done, that committing to support it is easy, and common sense.

The basic farm payment is another example of a public sector IT project going badly wrong. Our farmers, who have already had a tough couple of years, have once again been asked to carry the cost. We cannot be casual about the future of the farming industry. Food security is too important—as important as any other part of our national security. We need to know today when the remainder of the payments will be made and what lessons have been learned. We also need a guarantee that those lessons will be ruthlessly applied to next year’s process, so that the same thing does not happen again. Finally, we need to know that the Minister has absolute confidence in the RPA, that the 2016-17 payment scheme will run smoothly, and that farmers will get their money at the beginning of December as they have done in previous years.

--- Later in debate ---

[Sir Henry Bellingham]

I am grateful to my hon. Friend, who represents many farmers who are in the same position as mine. He makes a good point, because some of the smaller farmers will not even have a tax bill. Certainly some poultry and pig farmers in my constituency will be paying no tax, because they are not making a profit.

That leads me on to the possibility of partial payments. When the Minister winds up, I hope he will have a good look at the possibility of those farmers who have had their basic payment delayed receiving some sort of partial payment immediately. I understand from farmers in my constituency that some of the delays have been brought about by a series of problems, such as with cross-compliance or common land. In fact, it amazes me how much common land there is in my constituency—virtually every parish has common land and, although it is often owned in conjunction with local landowners, it is often farmed on long leases or by local estates. All sorts of problems lead to delays and I know of examples of farmers who have ticked every single box correctly and had no problems in the past, but because of one small issue over something quite trivial, everything has been delayed. Therefore, when there is no element of doubt about the farm, the business in question, and its record of paying taxes and abiding by rules and regulations, surely in such circumstances there must be scope for making a part-payment.

I also hope that the Minister will look at the farmers affected by the recent appalling floods. Scotland is under a different regime, but I have a friend, Mr David Baxendale, who farms in the borders at a place called Stanhope, on the upper reaches of the Tweed, and his area suffered its worst ever floods. He has seen damage to a large number of dykes and fencing, and his farm is under real pressure. I have no idea of exactly how big the damage bill is, but the answer is huge. Farmers in Scotland are suffering delays to their payment, too, and I hope that the Minister will look at them, as well as at farmers in Lancashire and Cumbria who might not have received their payment, but because they have been badly flooded face additional crises and problems to sort out. Will he look specifically at them?

My hon. Friends the Members for North Dorset (Simon Hoare), for Mid Dorset and North Poole (Michael Tomlinson), for Berwick-upon-Tweed (Mrs Trevelyan)—she has just departed the Chamber—and others made mention of the need for some sort of certainty. Given any delays or issues between a farmer and the Rural Payments Agency, I understand from the NFU and the CLA that communications have been poor. Will the Minister explain why those communications, letters and discussions have not gone more smoothly? Why has the RPA not been more understanding and more proactive? Perhaps it is about the staffing, as my hon. Friend the Member for Mid Dorset and North Poole said, or perhaps there are RPA people who do not understand enough about farming per se. Surely none of that is an excuse for any form of incompetence or lack of keenness on the part of the agency to provide a better service. Those farmers who have not had their payment, or may not get it in the next few weeks, above all else need some form of certainty —the information and communication.

[Nigel Adams]

We are not talking only about indicative chatter. I have met with many farmers, including almost 30 of them two Saturdays ago—incidentally, four of them had received their payment and several had received letters saying that they would not be paid in December and January—and quite a few have explained to me their frustration with what seems to be a severe lack of knowledge when they speak to the RPA. It was admitted to one farmer that a bunch of students were working there temporarily, and they simply did not understand the forms. Does my hon. Friend share my concern about that?

[Sir Henry Bellingham]

I certainly do share my hon. Friend’s concern. The NFU briefing stated that often the

“letters were vague and unhelpful”—

and that there was no clear commitment to improving communications. Furthermore, the Minister should be aware that the NFU is saying that the call centre has been unsympathetic and at times offhand and even rude to farmers. That is simply not acceptable.

Other hon. Members want to say a few words, so I will conclude with the one lesson that we must take away from the debate. Food security in Britain is incredibly important. The farming sector is one of our most important economic sectors, if not the most important for job creation, if we include food manufacturing and processing. It is a crucial sector. On the one hand, the Secretary of State and her team of Ministers, to give them credit, have been championing the sector. On the other, if the scheme is not improved and they do not get a grip on it, the very sector that they are championing will suffer unnecessarily. The Government pride themselves on competence and on Ministers really getting a grip on things, so I hope that the Minister present will live up to those expectations.

--- Later in debate ---

[Simon Hoare (North Dorset) (Con)]

I had wanted to speak here, and while I thought that the Energy Bill Committee would preclude my attendance, such progress was made that we were able to have the afternoon off. I am therefore grateful to catch your eye, Mr Betts. I am incredibly lucky to represent North Dorset and predominantly the Blackmore vale and the Cranborne chase, where agriculture and all types of farming are deep within the DNA. Thomas Hardy, Dorset’s famous son, described the vast majority of my constituency as the vale of the small dairies. Against the trend, that remains the case, and long may it do so.

Back in the warm, balmy summer, as we sat under the awnings at the Gillingham and Shaftesbury show with the NFU in pouring rain, soaked down to our boxer shorts—another British summer of delight for farmers—I recounted the oft-told story of the two ladies who came up to London during the war. They were on a spree and wanted to have a look around the place, so they stopped a policeman and said, “Which side is the Foreign Office on?” and the policeman said, “By rumour, ours.” In relation to basic payments and the Rural Payments Agency, I said that we had had sound encouragement from Ministers and officials that the agency had got it and that clearly it was going to be on the side of farmers.

We all know the backdrop, but it is worth briefly rehearsing it. There was the fall in the milk price—I am sure many of us have received a communication from Arla this week to say that its prices will go down still a bit further—and the reduction in commodity prices, compounded by bad weather in my constituency and many others in the south-west and the pernicious problem of bovine tuberculosis. That added up to farmers asking who could they look to for support and protection. I was able to say clearly, “Look, we have a majority Conservative Government and the Conservative party is many things, but, if it is anything, it is the party of the countryside. We understand the importance and vitality of the agricultural sector.”

Today, we have spoken about percentages. I am not sure whether 85% is the vast majority or whatever, but I always make this point: for a farmer waiting for that payment, non-payment is 100%. They cannot pay the feed bill, the vet’s bill, the fuel bill or for the car insurance just because their farming neighbour next door luckily got his payment. Farmers will be anxious about that.

That is why I raise this point. It is not the cheap knocking point we often make about officials and civil servants, but one is inexorably led to say that if perhaps there were more people with agricultural experience in the agency, they would understand more acutely and, as was mentioned my hon. Friend the Member for North West Norfolk (Sir Henry Bellingham), with greater sensitivity the importance of the payments. The basic payments are not the icing on the cake—for many farmers they are the cake. They are the difference between staying in business and going out of business.

[Nigel Adams]

My hon. Friend has put his points eloquently. Has he had any conversations with his farmers about the potential impact downstream—not too far downstream—of the national living wage? I have spoken to many growers who are very concerned about it. Does he share my worry on behalf of farmers, who will need some time to adapt?

[Simon Hoare]

My hon. Friend makes an incredibly valid point. Spiritually, I am a huge supporter of the living wage. It is a good thing and it is a credit to the Government that it has been announced, but it will clearly have a harder and greater impact on sectors of our national economy that trade at more marginal levels, and farming and agriculture is one of those. Given the good offices of the NFU and the fact that it is campaigning strongly on that, I hope that those messages will be heard in the Treasury and perhaps some form of taper might be introduced to ease in the living wage and stagger the impact.

Let us consider a catastrophic failure of UK agriculture. Farmers trading at the margins—my hon. Friends the Members for Brecon and Radnorshire (Chris Davies) and for Berwick-upon-Tweed (Mrs Trevelyan) represent some of the upland farmers and areas with strong dairy sectors—have been buffeted and blown around by so much over the years, but this is the last piece of wood in the game of Jenga to be pulled out, so the tottering edifice suddenly finds that its foundations are so flimsy that it collapses before our eyes.

Of itself, that would be devastating, but it is worthwhile to set out the impacts. It would clearly have an impact, as referenced by my hon. Friend the Member for Wells (James Heappey), on food security. In a wider sense, it would have a deleterious impact on the nation’s biodiversity. It would have a huge impact on tourism, because our landscape, as we know, is not a natural one in great part. It is the product of centuries of farming and, when that goes, the beauty of the British countryside will be impoverished. For those farmers giving up, it will by necessity have a huge impact on their health—physical or mental—with a concomitant increase in demands on services. It would see an increase in the welfare bill, as farmers who have only been trained to be farmers and who are not in areas where diversification into other trades is readily possible suddenly find themselves at the end of their working career long before they envisaged. It would have a huge impact on so many areas of our national life.

There is often nothing more exhilarating than seeing the rural Conservative party in full cry after a Minister, but I think we will look to him this afternoon—our tails are up, our noses are down and he is giving good scent—[Laughter.] We are hunting within the law. We are not looking for a kill, but we are looking for clarity and certainty from him that he has confidence in the agency’s ability to appraise itself and not just trot out the phrase “lessons will be learnt” and then say, “Right, we have used that phrase, so we can go back to our usual management speak,” but ensure that the lessons learnt from the process are picked up. The agency must play its part along with others to ensure the long-term viability and vitality of our vital UK agricultural sector.