Rural Payments Agency

– in the House of Lords at 6:32 pm on 27th March 2006.

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Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy) 6:32 pm, 27th March 2006

My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given by my right honourable friend the Secretary of State to a Question asked in another place earlier this afternoon. The Statement is as follows:

"In my Written Statement on 16 March, I told the House that the Rural Payments Agency (RPA) had advised me for the first time on 14 March that it would no longer be possible to make the bulk of single payment scheme (SPS) payments by 31 March and that, in the light of this unacceptable situation, a new chief executive would be appointed.

"I fully understand and share anxieties that these events will cause to the farming community and deeply regret that this unacceptable situation has arisen.

"I received an initial report from the acting chief executive (Mark Addison) into the situation at the RPA on 21 March.

"There are substantial problems facing the RPA in getting SPS payments out to farmers, much greater than had previously been reported to Ministers. As I know the House and the farming community would expect, speeding up those payments remains the overwhelming priority of Defra Ministers and the RPA itself. However, it also remains essential that actions taken now in response to these problems are very carefully considered, but are also sure-footed to avoid making them still worse in the future.

"Mr Addison's report identified some initial steps, which should enable us to speed up payments, without losing sight of the need to properly manage the disbursement of a large sum of public money.

"The initial steps which I have sanctioned are: focusing resources in the RPA on making the 2005 payments as fast as is legally possible; removing disproportionate checks from the payment authorisation system to speed up the flow of payments once claims have been validated; prioritising work on validation of claims to release the maximum value of payments as quickly as possible, as opposed to the maximum number of individual claims, an action which will mainly benefit historic customers; centralising key mapping work at the most productive office (Reading); reviewing what further steps can be taken to simplify the process so that decisions can be made later this week; strengthening the RPA's capacity in key areas and changing the RPA's structure to streamline command and control.

"The Minister for Sustainable Farming and Food (Lord Bach) and the RPA acting chief executive have invited senior representatives of the industry to weekly meetings, the first of which took place on 22 March, so that close contact can be maintained with them, and will also be engaging urgently with the banks and other key stakeholders.

"Central to the success of these steps is the team at RPA. I am confident that with Mark Addison at the helm, we have in place the right people for the job in this next stage. Their work and commitment remain key to delivery. They have worked with absolute dedication throughout often in the face of considerable difficulties. I am sure they will continue to do so".

My Lords, that concludes the Statement.

Photo of Baroness Byford Baroness Byford Shadow Minister (Food & Rural Affairs), Environment, Food & Rural Affairs 6:36 pm, 27th March 2006

My Lords, I am grateful to the Minister for repeating in the form of a Statement the Answer to the urgent Question asked by my honourable friend in another place. These are very disturbing times. I have tried twice to table a topical Question on this subject. I have raised the issue of the Rural Payments Agency with the noble Lord on several occasions. It is quite right that we should take this Statement today.

I find the Statement disappointing. It indicates where there are problems, but my reading of it does not actually give any answers to those problems. I will put some questions directly to the Minister, which I hope he will be able to answer. The Statement refers to,

"focusing resources in the RPA".

What resources are those and how will that be done? It refers to "removing disproportionate checks". Which checks are disproportionate and how will that be done? It refers to "reviewing . . . further steps" to simplify the process and so that,

"decisions can be made later this week".

Can that decision be made in time for our debate on Thursday, when we shall at least have a chance to look at the issues more fully? The Statement also refers to,

"engaging urgently with the banks and other key stakeholders".

The banking part is key, because so many farmers are finding themselves unable to pay their bills.

This Statement is long on problems, but short on facts and information. The Secretary of State accepts that there has been total failure and that the situation within the RPA is unacceptable. There are no reassurances, however, as to how this might be resolved, and no timetable is given. Is it just the mapping end that is not completed? How many farms have had their maps agreed and how many are still outstanding? Is it just that the RPA payment system is unable to cope? Is it that the IT system is not up to the job that it has to take on? Or is it that the new mapping exercise does not fit in with the previous maps that were held by many farmers who received historic claims? Considering the delay, will the department consider delaying the date—16 May 2006—by which the new applications for single farm payments are usually made?

I referred to engaging with banks. I understand that many farmers are at their wits' end and I have referred one case to the Minister. I am very grateful to him for taking it up. We should not, however, be in the position of having to take up individual cases because an agency has totally failed to do what it should do. In engaging with banks, will the Government consider providing an emergency fund where perhaps the banks are not willing or able to extend credit any further? As one tenant farmer said:

"I am close to my overdraft limit, with the rent to pay on 5 April, and with no single farm payments money to hand".

I have also contacted the Farm Crisis Network, which records that farmers have been calling it regularly over the past three weeks, very distressed that late payment of their subsidies is causing cash-flow problems. It has a knock-on effect not only on them but on their suppliers and the banks. Many callers are saying that fuel suppliers, feed merchants and others are refusing to allow farmers any more supplies or credit and that some banks are refusing to increase their overdraft facility. I ask the Minister what the Government will do about that and whether the Government will pay interest on the money that is outstanding.

I understand that the helpline has taken 50-plus cases in the south-west alone. In each of those cases the problems have been exaggerated because of the late payment under the single farm scheme. These cases affect not only the farmers but their families. Not all of the calls in the south-west were received by the helpline itself; many were received directly at the volunteers' homes. They are even looking into a case where a farmer has committed suicide, partly caused, they believe, by the anxiety of this terrible state of late payments.

I know that in another place some Members have called for the Minister's resignation. No doubt he will consider his own position. He may feel it unfair that he should be the one to be singled out and in the firing line when the responsibility clearly lies with the Secretary of State herself. I have asked some very real questions. I expect answers to those questions. If they are not forthcoming, we will certainly expect them when we debate the matter further on Thursday.

Photo of Baroness Miller of Chilthorne Domer Baroness Miller of Chilthorne Domer Spokesperson in the Lords, Environment, Food & Rural Affairs 6:41 pm, 27th March 2006

My Lords, when this subject was debated in a Starred Question on, I think, 24 January, it was believed that some of the questioning was actually questioning the very substance of CAP reform. I say now on the record that we have always supported CAP reform. We have been very clear about that. I think that we really need to separate the two issues. Any criticisms which I may now level are certainly not about reform, which is welcome, but about its implementation.

I too have found no answers in the Statement, but perhaps I did not expect to find any at this stage. If there had been anything more positive to say, the Government would have come forward with their own Statement rather than respond to a Question. However, a number of questions arise now. The first question for farmers who are in really desperate circumstances must continue to be whether the Minister has a more definite timetable in mind. In particular, in answer to a Written Question, it was said that claims would be processed randomly according to the order in which they came in. Has the position changed, and will they be processed in a more orderly way?

Secondly, the RPA is responsible for nearly £3 billion of payments—£2.9 billion, I think—and it costs £249 million a year to run. Defra has an RPA ownership board and an RPA executive review group, both of which I believe are chaired by a senior Defra official and both of which I presume report regularly to Ministers. How was it that these groups did not spot the problem earlier? I have gone back through all the Written Questions and Answers and the problem clearly arose well before it became apparent to farmers that they were really going to suffer.

I presume that the Government are maintaining their position on not paying interest because they do not feel that it is appropriate. I note their reason for saying that, which is that the payment window runs until 30 June.

According to an Answer given to my honourable friend Dr Cable in another place, the number of people employed by the RPA decreased by almost 500 between March 2005 and February 2006. If the RPA was to undertake such enormous changes and it could have foreseen the amount of work that would result, why did it choose that time to cut staff, just when it was so busy? Did the number of RPA vacancies increase substantially during the period of the problem? In other words, how many vacancies is the RPA suffering from?

Farmers are, of course, in the front line and are having enormous difficulties. Nevertheless, as we learnt from foot and mouth, what critically affects farmers also affects the whole of the wider rural economy. I think we will want to return to that in the debate on Thursday.

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy) 6:46 pm, 27th March 2006

My Lords, I thank both noble Baronesses for their comments and questions. The noble Baroness, Lady Byford, asks what I was saying about resources. One of the initial steps that the new RPA chief executive suggested to us last week, and which we have taken up, was that we should focus more resources in the RPA on making the 2005 payments as fast as is legally possible. The RPA is a large organisation, as we have heard; it has centres all over the country. A lot of resources have already been applied to payment of the subsidy. He is suggesting that more resources should be applied to them from within the RPA. We agree with him.

At the very last stage before payment it was necessary for there to be six different authorisation processes before payments could be sent. The new chief executive suggested that that number could be decreased to two. That has been implemented at once.

As for whether we will have more information by the time of our debate on Thursday—I believe that the other place also is debating this issue, on Wednesday—the new chief executive is coming forward later this week to the Secretary of State and me with other proposals. He has, after all, been in position for a total of only 11 days. I hope we will be able to say something about his proposals in those debates, but I cannot guarantee that.

(13)The noble Baroness asked about the 15 May deadline for farmers to apply under the 2006 scheme. The 2006 scheme literature, including sample forms, is already on the RPA website. Forms pre-populated with data will be distributed shortly. Of course we appreciate that some farmers would wish to have additional certainty on the detail of their entitlements before submitting a claim for next year, but we can see little chance of amending the deadlines which are set in legislation agreed by all EU Agriculture Ministers. But we will see what we can do to deal with the problem that she raises.

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy)

No, my Lords, I think I am obliged first to answer questions from the Front Benches. I will of course answer other questions in due course.

Of course the delays are causing real hardship. We appreciate that very much, which is why we were so disappointed not to receive until 14 March of this year the advice which first told us that these payments would not be met in bulk by the end of March. The advice we have received from the banks so far is that they are not seeing any change in the number of farm business failures and that no otherwise viable business is likely to fail as a result of the timing of payments. On Thursday I will be seeing the banks; I saw them last December; and, in answer to the noble Baroness, I am also seeing the suppliers AIC later this week.

The noble Baroness asked about who we are focusing on. In practice we are giving priority to those who received payments under the old CAP schemes, which the single payment scheme has replaced. They are the ones for whom cash flow may be an issue, as their annual income is traditionally supplemented by a CAP payment by this time of year. New applicants in 2005—there are many of those—generally have much smaller payments due. These are people who did not apply under the old schemes but who are applying under the new scheme because it is based on land rather than on production.

As to the noble Baroness's comments about the Secretary of State and myself, we take our responsibilities extremely seriously and I think her remarks were a little cheap.

In response to the noble Baroness, Lady Miller, I have already mentioned that we are focusing on those for whom cash flow may be a really important issue. We accept that there are a number of those.

I was asked about a more definite timetable. I want to be cautious. In the past there has probably been too much easy forecasting and not enough solid fact. Until we get the next advice from the new chief executive, I am not prepared to make forecasts about future payments. I can tell the House how much has been paid to date, and at my weekly meetings with the NFU, CLA and the TFA we will regularly let them know what the weekly figures are as they advance. In the past week £60 million of claims were met and in the three and a half weeks before last week £75 million of claims were met. So there was a considerable improvement during the course of the past week.

The noble Baroness, Lady Miller, will know that a further review is to start immediately to ensure that we get some results in time to affect next year's scheme. We will not allow the remainder of the review to interfere in any way with what we need to do to get the 2005 payments out, which is the absolute essential and our first priority. This review will involve a team of consultants and will focus on getting all the processes right, especially for next year. It is essential that we have a good look at how the RPA works and how it is run. It is a big organisation and that is what the Hunter review will do.

The precise details of the RPA's actions are for the new chief executive to firm up. We are focusing resources—a priority for medium-sized claims—to maximise the value of the payments, not the actual number of claimants. With regard to disproportionate checks, some did turn out to be either duplicated or of very little value. As I have told the House already, four out of six checks at the payment stage have now been dropped. The noble Baroness asked about RPA staffing. I shall write to her or answer her if she raises these matters in the debate on Thursday.

Photo of Baroness Shephard of Northwold Baroness Shephard of Northwold Conservative 6:54 pm, 27th March 2006

My Lords, the Minister said that he became aware on 14 March this year that payments could not be made on time. I am very surprised by that statement. Is he not aware that, as many as four years ago, warnings were given in the other place about exactly this eventuality arising, not only in the Chamber during the passage of legislation but also in Select Committee? How is it that, four years on, the noble Lord claims that he was surprised by this new knowledge?

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy)

My Lords, it was the noble Baroness's government who set up the introduction of arm's-length delivery agencies as one of the major Civil Service reforms of the 1980s. The RPA is precisely one of those arm's-length delivery agencies—even though it may have been created well after that time, we are dealing with such an agency. This agency's job is to pay out these sums. It is for Ministers to get advice from such agencies and to take action accordingly. All the advice we had from the agency up until Tuesday evening of 14 March was that the bulk of payments would be made by the end of March. Earlier advice from the agency was that we would begin payments in February. That advice was right; we did begin payments of the single payment subsidy on 20 February. The advice on bulk payments was wrong. Ministers first heard about it on 14 March.

Photo of Viscount Bledisloe Viscount Bledisloe Crossbench

My Lords, I declare an interest as a farmer who is awaiting this money with ever-increasing impatience and ever-diminishing faith. I thank the Minister for the frankness of his Statement. I am pleased to see that a head has rolled. However, I very much hope that no real question will arise of the noble Lord's departure. I am sure that nobody in the farming community would want to lose a Minister who both listens and cares, and I hope that the noble Lord and his colleagues will take that to heart.

Does the Minister recognise that these payments are vital to the vast majority of farmers, who are attempting to live on the proceeds of farming and that these delays create intolerable burdens? The noble Lord spoke of anxieties; it is not just anxieties, but burdens and problems. He has not yet answered the questions about interest or compensation. What is the position on that? If a farmer is late with his taxes, he is charged interest. Will the Government treat the tax-paying farmer equally and pay proper interest and, where appropriate, compensation for this inexcusable delay?

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy)

My Lords, I thank the noble Viscount for his kind remarks; I very much appreciate them. I accept the premise of what he says: this is a serious state of affairs for many farmers. That is why we regret so much that this has happened. I am afraid that I cannot offer to pay compensation. The issue of compensation does not arise, as the EU regulations governing the scheme provide for a payment window—as I think noble Lords know—until 30 June. It is not the end of March yet. Farmers have been aware for more than 12 months that payments would not be made until February 2006.

Photo of Lord Monro of Langholm Lord Monro of Langholm Conservative

My Lords, I am sad to say it, but this must be one of the most disgraceful Statements ever heard on agriculture in either House. How does the Minister expect farmers to continue to survive when there has been a failure to make their basic payments by the end of March? Maybe not April, maybe not May. I declare an interest as a Scottish farmer. I was paid in January. If Scotland and Wales can do it, why on earth can't England? What were Ministers doing in November, December, January, February and March? Were they actually checking that the cheques were going out? Were they making any effort to see that the crucial payments to farmers were made? They have left agriculture in a parlous state, grossly short of cash that they should have received in this financial year—probably ending on 5 April—and apparently, from what the Minister has said, with very little hope of payment in the next few weeks.

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy)

My Lords, I am surprised that the noble Lord, given his vast experience of public life, should say that this is the worst Statement he has ever heard during his career.

Photo of Lord Monro of Langholm Lord Monro of Langholm Conservative

My Lords, it is the most disgraceful Statement.

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy)

I am very grateful for the clarification, my Lords. However, I have to say that I find it hard to believe.

Our objective for the use of this sizeable sum of public money—some £1.6 billion a year—is to promote a truly sustainable English agriculture industry; in other words, the subsidies paid to farmers for years and years on the basis of production alone constituted a system that should have disappeared a long time ago, if we were to have a properly sustainable farming sector in this country. So I make no apology for our adoption of these measures as a result of the latest CAP reforms. I wish that the noble Lord's government had done something to modernise farming in any way at all while they were in power.

The system we are using in England is different from the model used in Scotland and Wales. They base their payments on an historic basis alone. In accordance with our hope of achieving a sustainable farming sector, we have a mixed historic and flat-rate system. Indeed, there are rumbles in EU countries that have adopted the historic system alone that they are beginning to wish that they too had a mixed system in place.

Photo of Lord Neill of Bladen Lord Neill of Bladen Crossbench

My Lords, I declare an interest as one of many thousands of farmers who remain unpaid. For me, the two most startling points in the Statement were the late discovery that the level of chaos in the RPA was such that not until 14 March did it reveal to the Government that it could not comply with the promise, made on many occasions, that the bulk of the payments would be through by the end of March. That is completely extraordinary. The other matter of dismay to the country is that the Minister is not in a position today to give any forecast of when these payments will be made. I accept the integrity of the position he takes: he is not giving us a false forecast. But it is a very desperate position when a Minister cannot say that, "at least by the end of April" or "by the end of May", the payments would all be through the machine. He cannot even say that, which is deplorable.

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy)

My Lords, we too were surprised and shaken to hear for the first time on Tuesday 14 March the news that the bulk of the payments could not be made by the end of March. I share completely what the noble Lord has said about that. I regret that, although I would love to do so, I cannot give the House a date by which all the payments will be made. Nothing would give me greater pleasure than to be able to do so from the Dispatch Box today. However, that would be irresponsible of me. We have put the new chief executive in place and, in his first report to the Secretary of State and me last week he said that he wanted more time before he could make a judgment on that crucial figure.

All I can say to the noble Lord—and it is not much comfort—is that payments are being made as we speak. They certainly have not stopped, but I cannot give him a date by which they will all have been made.

Photo of Lord Cavendish of Furness Lord Cavendish of Furness Conservative

My Lords, I also declare an interest as a hopeful farmer. The Minister spoke of farmers with cash-flow problems. Surely he is aware that all farmers rely entirely on positive cash flow. Is he further aware of the extraordinary distress caused to my neighbours in Cumbria? I know that the noble Lord is sensitive to criticism, but will he look at the Statement again and accept that its language suggests total indifference to all of us who work in the countryside?

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy)

My Lords, I hope that I am not overly sensitive. Of course I shall look at the Statement again, but it is an answer to an emergency question asked by an honourable Member in another place. We are sensitive to the issues that have arisen. There are considerable problems for many farmers because half the amount will not be paid by the end of March. I repeat what I said earlier: payments are continuing. But I am not prepared to give a date by which those payments will have been completed. I cannot say anything else to the noble Lord at this time.

Photo of Lord Carter Lord Carter Labour

My Lords, does my noble friend agree that part of the problem is the complexity of the system adopted for England as opposed to those used in Scotland and Wales? Is £1.6 billion the total cost of the single payment scheme? If so, can the noble Lord give me the cumulative figure of what has been paid out so far? He mentioned a series of figures quite quickly. If there are any further problems, would it be possible to make advance payments to farmers on account of their final payment?

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy)

My Lords, I am grateful to my noble friend. In broad terms, £1.6 billion is the very sizeable sum of public money that will be paid out under the single payment scheme. Let me give the latest figures: at the close of business on Friday last, March 21, the RPA had made payments to 18,507 claimants, which is 15.4 per cent of the total, to a value of over £135 million.

Photo of Lord Carter Lord Carter Labour

My Lords, will my noble friend respond to my question on advance payments?

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy)

My Lords, we are not ruling anything out until we hear more from the chief executive, but if advance payments are effectively part payments, there are considerable dangers in doing that. We would have to be satisfied that they would not arise. We would have to make sure that the systems set up to make such payments actually worked. In addition, making part payments might well affect whether the 2006 payments are made on time.

Photo of The Countess of Mar The Countess of Mar Crossbench

My Lords, does the noble Lord know that the extra payments made to hill farmers are dependent on the single farm payment in the first place? It is now lambing time for hill farmers, who are supposed to be buying supplementary food for their ewes so that they can cope with their lambs, but they are not able to because they cannot get credit from feed companies any more.

Can the Minister say what will happen to Johnston McNeil? I must say that when I first heard that he had been appointed to the Rural Payments Agency, my heart sank because I had seen how he coped with the demise of our abattoirs. I had a lot to do with that issue at the time. Is he still on full salary? If so, for how much longer will that go on? Has he told the Secretary of State how much he knew about the disastrous state of the agency? Finally, a report in Private Eye stated that immediately after Mr McNeil left the agency the IT system crashed yet again, losing quantities of data. What data have been lost and what effect will that loss have on payments?

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy)

My Lords, I shall respond to the noble Countess in a moment. Earlier I referred to Friday 21 March, but of course it was Friday 24 March.

Let me just say that Mr McNeil has been removed from office because we needed to strengthen the leadership at the RPA. No decisions have yet been taken on his future duties. Also, so far as I know, he is in receipt of his salary at present. However, I do not think that I want to say anything further on that because he is entitled to some rights, as are the farmers who are suffering today.

I accept what the noble Countess has said about the particular difficulties caused by this situation for hill farmers currently involved in lambing.

Photo of Lord Brooke of Sutton Mandeville Lord Brooke of Sutton Mandeville Conservative

My Lords, I understand that Reading is the best performing office. How many offices are there in total; which are the three worst performing; and if Reading was performing at 100 per cent, which in percentage terms is the worst performing office?

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy)

My Lords, Reading is the best office in terms of mapping. No one would argue that any office was particularly better than another overall, and I certainly do not have any information to that effect. But the mapping issues have worried noble Lords for a long time. One of the first steps taken by the new chief executive has been to remove mapping from the other offices where it has taken place and to concentrate it in Reading. I cannot answer the noble Lord's other questions.

Photo of Lord Northbrook Lord Northbrook Conservative

My Lords, in the Statement the Minister said that the RPA faced substantial problems in getting SPS payments out to farmers. We have not heard many details of what the problems were and how we can avoid them happening again. I declare an interest as a landowner. The noble Viscount, Lord Bledisloe, suggested that interest be paid on late single farm payments. Is that a possibility?

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy)

My Lords, I have answered the noble Viscount, Lord Bledisloe, on compensation. I am afraid that it is not an answer that the noble Lord will want to hear: we are still waiting to hear what has stopped it being possible for the bulk of payments to be made by the end of March. It clearly has something to do with the validation of claims. It certainly had something to do with authorisation of claims. As I have already said, the new chief executive has acted on that. It is clear that Ministers should have been told earlier that the RPA was not likely to meet its target of making the bulk of payments by the end of March.

Photo of Lord Palmer Lord Palmer Crossbench

My Lords, I am delighted to hear that Reading is such a fine centre of excellence because I was born there and my title is of Reading. I am a little disappointed that the Minister has not yet answered my noble friend Lady Mar's question about the computer crash. Will he take up the point made by the noble Lord, Lord Carter, about an interim payment? In Scotland I have already had 81.9 per cent—a magical percentage—of my single farm payment, but an interim payment would ease the burden of hardship on an enormous number of farmers. Even 50 per cent would be something. One must not forget that, particularly with the very wet spring that we have had, most farmers are at least a month behind in their cultivations, which means that harvest will be a month late and payments for arable farmers' harvests will be in turn a further month behind.

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy)

My Lords, I repeat that part payments have not been ruled out altogether; we are awaiting further advice from the chief executive. As I pointed out, part payments involve problems of their own: they affect IT systems and the ability to make 2006 payments.

On IT failure, we believe that the real issue is leadership of a complex organisation, not IT issues. All the main IT systems for the single payment scheme are in place and have produced the entitlement statements and first payments as planned. However, we know also that it has not been possible to ramp up the validation and distribution of payments as planned. The key objective of the new chief executive is to identify the problems and to develop and drive forward plans to overcome them.

Photo of Lord Dixon-Smith Lord Dixon-Smith Shadow Minister (the Environment), Environment, Food & Rural Affairs

My Lords, I apologise to the Minister, because I was not here for the Statement, but I have read it. I am afraid that I let my attention wander from the annunciator in my office. Mentioning the word "Defra" or anyone employed by Defra to any of my agricultural friends—I declare an interest as a farmer—raises a combination of amusement, despair and horror. Were not large sums of money involved, the gates in Essex would be shut, if Defra representatives came to farms nowadays. The situation is that bad, and it is a matter of great regret that it should be so.

I plead with the Minister to consider seriously the issue of advance payments. Payments on account, which is what any other commercial organisation would have in these circumstances, would go a long way to relieve the problem. While I understand the difficulties in doing so, the Minister's attitude that it cannot be done will only increase farmers' derision about Defra at present. It is a matter of immense sorrow. However, does the Minister accept that responsibility for this difficulty really lies not with the agency—the idea for which might have originated under a Conservative government—but with the people who took the decision to put the system in place and required the agency to implement it?

Photo of Lord Bach Lord Bach Parliamentary Under-Secretary, Department for Environment, Food and Rural Affairs, Parliamentary Under-Secretary (Department for Environment, Food and Rural Affairs) (Farming, Food and Sustainable Energy)

My Lords, the noble Lord must have misheard me. I did not say that part payments could not be made; it is clear that they could be, but we have to make sure that they will be successful in IT terms and that they will not affect adversely the 2006 payments. The people to whom he may speak about Defra will of course tell him what he has told the House. The people I speak to think that the improvement in the department of the environment, which includes farming, is a huge improvement on the former Ministry of Agriculture, Fisheries and Food.