Rural Payments Agency

Part of the debate – in the House of Lords at 2:51 pm on 30th March 2006.

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Photo of Lord Livsey of Talgarth Lord Livsey of Talgarth Spokesperson in the Lords, Welsh Affairs, Spokesperson in the Lords (Agriculture), Environment, Food & Rural Affairs 2:51 pm, 30th March 2006

My Lords, I am grateful to the noble Lord, Lord King of Bridgwater, for introducing the debate, which is of absolutely crucial importance. I declare an interest as a life-long agriculturalist and as an applied agricultural economist. Indeed, I am not happy to be here today because this evening I am supposed to be with Brecknock Young Farmers, of whom I am the immediate past president. I am designing with them a competition whereby they initiate and innovate new farm enterprises—for which they will have to keep records and produce cash flows—to win the competition under the expertise of two judges. I shall be giving a cup for that. I cannot get to the meeting because it is too far, but I can assure the Minister that I shall be there before the end.

This is a massive crisis for English agriculture. As we have heard, £2.9 billion is owed in single farm payments and yet, as far as I can see, the payments are flowing only in hundreds of millions a week at the present time, and only £1.1 billion has been paid to date. I am sure the Minister will correct me if my figures are wrong. I know what the situation is in Wales but I am on a learning curve as regards England. I apologise for not being here on Monday when a Statement was made. This was because the chairman of the Select Committee on agriculture and the environment wanted me to make a visit for a nuclear investigation study.

We understand that 96 per cent of the payments may be made by 9 June, when the original target was the end of March. As we have heard in the debate, the legally binding EU deadline is 30 June. From previous Questions that have been tabled and discussed with the Minister, as far as I can establish there are about 120,000 applicants for single farm payments in England. This really is a huge crisis, and we have heard about the sacking of the chief executive of the RPA.

In my view, from my long experience, I believe that when you put IT into agricultural systems, unless you have exact parameters and people who have genuine knowledge of operating the system, it usually ends up with a shambles. The Government have introduced a very complicated system, which appears to be an IT nightmare. As we know, mapping is a major problem, and has been for some considerable time. It took some while to sort out the IACS mapping at the time it was introduced. The impact of all of this is a cash flow crisis for the farming industry as a whole, and an enormous one for individual farming businesses and farming families.

In Wales, we had a payments crisis of much smaller proportions about five years ago. I can tell the Minister that civil servants worked weekends, cheques were signed and part payments made. Some of the deadlines were indeed missed, but at least the payments were sent out and the farming families received their money. The Welsh Assembly after that decided to take in-house responsibility for agriculture. Many of the responsibilities have been transferred to Wales from Defra, and we welcome that.

But this situation has consequences in practical terms for individual farming businesses. This is springtime and, as we know, in cash flow terms, farmers have had to buy their seed, their fertiliser and many other commodities on which they will not see a return—certainly in arable farming—until the autumn. Indeed, that is a normal consequence. In livestock systems, it often takes 12 months for the money to turn over. These are facts within agriculture which no one can deny, given the biological sequences involved.

The dynamic hybrid approach has been applied here when a simpler approach could have been instituted with a one-year delay, and, in my view, it is an enormous error of judgment that Defra did not take advantage of that. This is not being wise after the event. It must be terrible for Ministers to be lectured by people saying, "I told you so". We are not saying that in this debate. But certainly at the time when both Wales and Scotland chose the historical basis, we took into consideration that these were mainly livestock countries and 80 per cent less favoured areas, and we have been right all along in choosing that system. In spite of criticisms which have come across this Chamber from time to time, we took the right decisions. Those of us engaged in agriculture and agricultural policy were horrified at the system that has been put in place in England.

The problems have been graphically outlined in the debate. The result, of course, will be bankruptcies—there have been bankruptcies already—of farmers, suppliers and rural businesses as a whole. We must solve the problems as soon as we possibly can. Certainly if I was in the Minister's position, I would be trying to do something about making 50 per cent entitlement payments immediately to all who are qualified to receive them. This surely should be easy with a 90 per cent historical element in the payment and only 120,000 farmers involved at the other end of the payment. It should not be a big problem in my book.

Single payments have, of course, been made in the rest of Europe. Let me give the Minister some figures. Certainly in Scotland and Wales, it is over 90 per cent; in Ireland it is 98 per cent, so it has improved on the figure given to us by the noble Lord, Lord Plumb; Austria, 100 per cent; Belgium, 100 per cent; Sweden, with a hybrid system, 90 per cent; Germany, with another hybrid system, 80 per cent; and Denmark, 98 per cent. Certainly we have not seen any riots from the farmers in France in recent days so things must be all right there, too.

Who is to blame? Clearly, there is Accenture, the new computer company, and of course the RPA. Over Defra we should perhaps put a question mark. Is it actually Defra's fault when a stand-alone agency has been in charge? My colleague Roger Williams, who succeeded me in Brecon and Radnorshire, said yesterday in the other place that

"The new firm was given the challenge of dealing with a new scheme. During our inquiry"— that is, the agriculture Select Committee inquiry into the RPA—

"the hon. Member for North-West Leicestershire . . . and I were told that DEFRA changed the details of the scheme 60 times between initiating the contract and finalising the scheme. At its heart, the problem lies with DEFRA as well as . . . Accenture and the RPA".—[Hansard, Commons, 28/3/06; col. 298WH.]

I am sure that is quite right.

My noble friend Lady Miller asked what part the RPA ownership board has played over the past six months, chaired by a Defra civil servant. What was the executive review group doing concerning the RPA during the autumn, and what advice did it give the Minister? We are stuck with interest charges now—£25 million to date, so far as I can establish—because of the delays in the single farm payment.

Finally, for the past 20 years we have not been in a resigning culture, and Ministers no longer resign. Politically, that is not on the radar screen these days. They do not resign over things for which they are responsible; that is a regrettable fact for both parties in government. No one in the Conservative government resigned over BSE, when in my view they should have done. I have a great deal of sympathy for the Minister, so I hope that he is listening. He has inherited the RPA problem, and I know that his predecessor was concerned about the application of the single farm payment system in England. Both Ministers were and are honourable men. I believe that they have been let down by the Rural Payments Agency. As the noble Lord, Lord King, said, the problem required hands-on expertise. In my view, Ministers should have put an agriculturally qualified trouble-shooter in to sort it out months or years ago.

I am not asking the Minister to resign but if I, as a practical agriculturalist and an applied agricultural economist, had been in charge throughout the period since the system was initiated and seen the whole thing through, I really believe I would be resigning today. I know that farmers desperately need SFP cash now so I plead with the Minister to authorise interim payments now, which would save farm businesses and farming families. The supermarkets have had more than their pound of flesh from farmers through their ruthless cost-cutting. Will the Minister prevent his own RPA from finishing off the job, and the rest of the farming industry, though incompetence? Please, act now and save the day.