With permission, Mr. Speaker, I should like to make a statement on the single payment scheme administered by the Rural Payments Agency. The House will recall that in my written statements of 9 May and 5 July and in my oral statement of 22 June, I said that the well-rehearsed difficulties in the administration of the 2005 SPS would create challenges for delivery of the 2006 scheme, and I promised to keep the House informed of developments. On this occasion, as on every other, I would like to reiterate the apologies that I have offered already to farmers on behalf of my Department, and my commitment to remedy the problems.
Today I can report progress with the 2005 scheme, and plans for the 2006 scheme. However, the interim chief executive of the RPA and I are clear that much more needs to be done to learn the right lessons from the National Audit Office’s recent report and to build on the helpful guidance that I am sure we will see in the forthcoming reports from the Select Committee on Environment, Food and Rural Affairs, the Public Accounts Committee, the Office of Government Commerce and the Hunter review.
As I mentioned in my written statement on 5 July, the total amount to be paid by the RPA for the 2005 scheme will not be known for certain until the last claim is completely validated and necessary corrections are made. However, the latest estimate at 3 November puts the figure at £1.528 billion, of which more than £1.516 billion—in other words, 99.2 per cent.—has now been paid. Some 110,244 claimants have received a full payment and a further 4,756 have received a partial payment and are awaiting their top-up.
The combined total of 115,000 represents 98.5 per cent. of the revised estimated total claimant population entitled to a payment of 116,661. All but 50 of the claimants still awaiting any payment are currently calculated to have a claim value of less than €1,000. Those 50 are all difficult cases, involving issues such as probate or business liquidation, which would be challenging in any year. Dedicated teams are in place to deal with those cases, and the other outstanding payments, as soon as possible. Similarly, on hill farm allowance payments, some 95 per cent. of claimants have received a full or partial payment, and a dedicated team is exploring all avenues to make the outstanding payments as soon as possible.
During October the RPA moved the bulk of its processing staff to detailed validation of the 2006 claims. Initial validation of those claims has been undertaken over the summer and has gone relatively smoothly. The same can be said of the 2006 round of eligibility inspections. However, the difficulties involved in completing the 2005 claim processing have inevitably impacted on the 2006 payment timetable. I am sure that everyone in the House wants claims paid in full assoon as possible. I understand that, and the new management of the RPA are dedicated to build stability and predictability into the system so that full claims are delivered in an efficient and timely way.
However, the interim chief executive has reported to me that he cannot guarantee that the agency can deliver full payments within the payment window for the 2006 scheme. Neither he nor I believes that it is acceptable to expect farmers to wait until next June or beyond for payments. I have therefore agreed with the RPA a challenging formal performance target of paying 96.14 per cent. of valid 2006 claims by 30 June 2007, and it is determined to do all in its powers to deliver on that. However, in addition, I have also decided to pursue a partial payment plan.
Our aims can be simply stated. First, we want to maximise the number of payments to farmers that arrive on a timely and predictable basis. That means making full payments where possible and partial payments where necessary. Secondly, we want to minimise the risk of late payment penalties and disallowance. Thirdly, we want our decisions this year to help the RPA to establish a new and sound footing for the delivery of the single payment scheme in the future. I have therefore agreed with the RPA that where full payments are not possible in the early part of next year, partial payments should start in mid-February for eligible claims above €1,000. The RPA estimates that the process will take around three weeks. Payments will be made for not less than 50 per cent. of claim value. This reflects the level that EU regulations permit without diverting significant resource away from, and therefore delaying work on, validating claims for full payments.
Needless to say, I will be keeping the situation under close review, but the interim chief executive of the RPA has set out for me, and for Lord Rooker, the basis on which he is confident that partial payments can be made, and we believe, in part on the basis of the partial payments experience in May this year, that the money will be delivered.
The single payment scheme and its administration has caused distress to farmers. The only way to make good on this year's problems is to improve the management of the system so that confidence is rebuilt. I have said clearly that this will not happen overnight, but I believe that the staged approach that I have set out is the only one that is prudent and responsible, and I commend it to the House.
May I first remind the House of my entry in the Register of Members’ Interests? I thank the Secretary of State for his statement, and for considerable prior sight of it, and for fulfilling his promise to make a statement in the autumn.
We must not underestimate the extent of the problem faced by our rural communities. Any Member of the House who has any farming constituents must have real evidence of hardship in their farming communities. There has been a 50 per cent. increase in calls to the Rural Crisis Network; farm borrowings are up by £379 million in just one year; the RPA’s extra administration costs were £46.5 million, which is more than two years’ worth of hill farm allowance; and of course the Government have set aside £131 million for EU penalties.
The statement was an opportunity for the Secretary of State to respond to the National Audit Office report, which found a huge number of errors in the calculation of entitlements. It is increasingly obvious that manyof them are human errors, such as incorrect data entry—no doubt a consequence of large numbers of temporary staff. The report found that the previous Secretary of State knew that the project was off course as long ago as June 2005, yet decided not to use the contingency plan but to plough blindly on. She eventually decided to use partial payments in April 2006, 15 months after I told her that they would be necessary.
Whatever faults the previous chief executive must have, it is clear that no one person could be responsible for that catalogue of incompetence, but it appears that no one else is prepared to be accountable. Will the Secretary of State tell us what is being done to correct all the existing overpayments and underpayments, and when that exercise will be completed? When does he expect the remaining top-ups to be paid? He boasts that 95 per cent. of hill farm payments are being made, but that still leaves 700 of the most hard-pressed farmers without the payment. When will that process be completed? Will next year’s hill farm allowance payment be delayed by the delay in the rural development programme?
Most importantly, will the Secretary of State tell the House what the errors were that caused him to set aside that £131 million? Are they connected to the changes made in April to speed up the process, including the use of an area disregard? If he was not setting that money aside, would the cuts of £200 million to his budget still have been necessary?
As for this year, any payment is better than nothing, but the admission that payments will not be completed in the window to the end of June next year is an admission of failure. Will the Secretary of State confirm that this is money to which all farmers are entitled as a result of the ending of price support—a form of compensation? Rather than claiming to have set the agency a “challenging…performance target” of 96.14 per cent., will he admit that in fact that was the target set by the EU before penalties are levied?
If farmers can be paid in full, we all welcome it, so can the Secretary of State confirm that as a result of his statement every farmer will have received a full or partial payment by mid-March? However, does he understand that what he is offering is in stark contrast to the position of farmers in Ireland or France, who are already being paid, and in Scotland and Wales, where payments will start in December? English farmers will yet again be disadvantaged by the Government. Why cannot partial payments be started in December? Why is the Secretary of State restricting the proportion to50 per cent.? What was wrong with the 80 per cent. used this year?
For the third year running, fruit, vegetable and potato growers are planning their crops without having their authorisation. Will the RPA ever be able to give them the full and accurate information that they need to make their plans?
It is easy for the Secretary of State to look at the issue dispassionately from a distance. Indeed, he constantly speaks of a “single planet”—but sometimes we think that that must be Mars. Farmers live in a real world: they have real bills to pay, and animals and families to keep. For many of them, this payment is their whole net income. Yes, of course, in time they will have to live without it, but they need time for transition. They have a Minister who sounded a lot better than his predecessor, but who, with this statement, has yet again let them down. I urge him, even now, to withdraw the statement: instead of being Scrooge, pay by Christmas day.
Let me go through the eight or nine points that the hon. Gentleman made. I am sure that we are completely united on two things. The first is that none of us underestimates the problems or hardships involved. Secondly, about a third of the way through his questions, he asked whether farmers were entitled to full payment. Of course they are entitled to full payment, and it is the Government’s job to deliver it to them in an efficient and timely way.
I fear that the hon. Gentleman is labouring under a misapprehension about the £131 million referred to in the National Audit Office report; he suggested that it was somehow responsible for, or related to, cash cuts. We are using what is referred to, in Government budgeting, as a non-cash provision, which means that the Government are making allowance for future claims on the sum. It is designed to be a prudent provision, and it precedes the normal audit work done by the European Union. There has been no such demand for £131 million, and I do not think that it is in the interests of hon. Members on either side of the House to talk up the potential for penalties further down the road. I assure the hon. Gentleman that the £131 million referred to in the NAO report is not related to the £200 million deficit with which the Department for Environment, Food and Rural Affairs is working.
The hon. Gentleman asked why I described the96.14 per cent. target as challenging. I did so because the chief executive of the Rural Payments Agency reported to me that there was no chance at all of the RPA’s delivering full payments to all farmers by the date proposed. The hon. Gentleman is right that, as I have said on many occasions in the House, 96.14 per cent. is the minimum level below which late payment penalties are incurred. He asked about Ireland and France, and they, of course, are paying 50 per cent.
The hon. Gentleman asked why we are not paying80 per cent. I referred in my statement to the importance of the EU regulations on the subject. He will know that over the past 10 or 15 years, hon. Members on both sides of the House have thought it important that the EU should have proper regulation for the disbursement of EU moneys, especially in relation to the common agricultural policy; we have been arguing for that. I am sure that he does not want to query the provision of that level of rigour.
The reason for specifying 80 per cent. this year is that when the Agriculture Council discussed the issue in 2003, and considered the first year of the new scheme, which is 2005, the Commission said clearly that it would regard 2005 a transitional, exceptional year—a year in which it would be flexible about how partial payments were made. We used that flexibility to deal with the circumstances that arose last May, which all of us wish had not come about. The reason for the 50 per cent. target is that that reflects the EU regulations, to which I think hon. Members on both sides of the House are committed.
The hon. Gentleman asked about starting the payments in mid-February. The advice from the RPA is that it will take the agency about three weeks to deliver all the payments. He asked whether mid-February plus three weeks means payment by mid-March at the latest; that is a calculation that I and others can make, and we are happy to confirm that that is the advice from the RPA.
Finally, I assure the hon. Gentleman that nothing in my statement was meant as a “boast” about the performance of the RPA or the Department, and I would certainly be surprised if that is how it came over. The blow to farmers has, of course, been the most serious result of the failures of the RPA, but there is also the blow to the reputation of the Department, and it is very important to put things right as effectively as possible. However, I must tell the hon. Gentleman that farmers have said to me, time and again, that the most important thing about this scheme year—the 2006 scheme year—is that they are not given promises that are not delivered on. That is why I put such stress on timeliness, and on the confidence of the RPA’s chief executive; when he says that partial payments can be delivered in February, he knows that they can. I hope that farmers will recognise that it is right that we should proceed step by step, secure in the knowledge that each step is a safe step. That is better than raising their hopes only to dash them later.
I welcome the Secretary of State’s announcement of a partial payment plan for 2006. I recognise that it may be unrealistic to expect to deal with 80 per cent. of payments by Christmas, but it is clear that if only50 per cent. of payments are made by mid-February, that will be a real, continuing blow to the farming community. Will he pledge to do everything possible to ensure that the Rural Payments Agency treats the target as a minimum threshold, rather than a glass ceiling? Given that such late payments will againcause enormous cash-flow problems—they totalled£23 million last year—will the Secretary of State use his good offices with the banks to ensure that farmers’ credit needs are accommodated? Will he pledge, too, to ensure that provision for rural stress networks is more than adequate?
Will the Secretary of State assure us, in the light of his announcement that 5 per cent. of hill farmers have yet to receive this year’s hill farm allowance, that next year’s hill farm allowance claims will be processed separately from the single payment scheme, so that it is not delayed again? In his update on the 2005 scheme, the Secretary of State did not update the House on his discussions of disallowed expenditure with the EU, so will he do so now? We very much regret the formal announcement, although we are not surprised that there is no guarantee to meet the payment window in June 2007. Will he assure us that if there is any European Commission disallowance for the 2006 scheme, the cost overruns will be met from contingency funds, and will not result in cuts to the core DEFRA budget, such as crazy cuts to flood defence and animal disease prevention budgets?
Will the Secretary of State say whether Johnston McNeill, the former chief executive of the Rural Payments Agency, remains on full pay, and when that extraordinary situation is likely to end? He will be aware, following the written answer from his Department to my hon. Friend the Member for Twickenham (Dr. Cable) that appears in column 705W of Hansard today, that DEFRA has paid £4,296,268 in annual performance bonuses in the current financial year. That represents an increase of 27 per cent. on the previous year. Does he believe that his Department’s performance has improved by 27 per cent. in that period? What signal does that send the farming community? Will he reassure the House that none of that performance money has been paid to those responsible for one of the biggest bureaucratic bungles ever to afflict rural Britain?
I thank the hon. Gentleman for his support—perhaps “understanding” is a better word —for our decision about the 50 per cent. I can certainly confirm that 50 per cent. is the minimum threshold. As I said in my statement, the RPA will pursue full payment where possible and partial payment where necessary, with a 50 per cent. minimum payment. The relationship between the banks, farmers and the farmers’ representatives is well developed, but I will certainly check that that is the case. It has not been suggested to me that the banks need the heavy hand of Government to help them, as good systems are in place.
The hon. Gentleman is right to say that the investment in stress networks—£300,000, I think—is well made, and we will keep that under review. I addressed the hill farmers’ allowance in my previous statement, when I said that it would continue to be paid separately for 2006, and I addressed the issue of disallowance in reply to the hon. Member for South-East Cambridgeshire (Mr. Paice). The European Commission has not suggested levels of disallowance—it has not suggested any disallowance yet, having just begun the auditing process. The Government and the Department have acted at every stage to balance interests and discharge their responsibilities to the EU as well as to farmers. As I said, it is not in anyone’s interest to suggest otherwise, for obvious reasons.
As for Johnston McNeill, the matter was addressed at length by the permanent secretary in her recent Select Committee appearance, and has been dealt with according to civil service procedures. An offer has been made to Mr. McNeill, and we await his reply. As for performance bonuses, I understand that they were given to front-line staff who were largely responsible for disbursing, for example, partial payments in May, in circumstances that none of us would have chosen. I do not think that the hon. Gentleman would want those people on the front line to be tarred with the brush of incompetence, as they worked hard to deliver those payments.
I welcome thefact that things will be more certain in future, as without doubt my farmers have suffered over the past 12 months. May I draw the Secretary of State’s attention to the work force at Edenbridge house, where 400 of my constituents are employed by the Rural Payments Agency on the front line? They work hard, and have changed their shift patterns—it was terrible that the Lib Dems denigrated what they have done—so will my right hon. Friend put it on record that it is not their fault that the system has not worked? Will he put his appreciation on record as well?
My hon. Friend speaks with authority and experience in this area, and I am certainly happy to extend my thanks to the hard-working staff in his constituency. It is an old rule that soldiers should never be blamed for the mistakes of their generals, and I am happy to affirm that principle today.
The National Audit Office report counsels us that during 2004 and 2005 Ministers found it difficult to have objective and knowledgeable information with which to assess progress in respect of RPA performance. That was because senior officials from the Minister’s Department were, effectively, in bed with the RPA trying to run the payment scheme. What steps is the Minister now taking to ensure that he has knowledgeable and objective advice by which to assess information that comes from the RPA?
I do not know about any bedding arrangements—or arrangements in bed, as the right hon. Gentleman describes it—in previous years. We have the benefit of independent work, not least by Select Committees of this House, and we have the independent expertise of the Office of Government Commerce and the independent review by the Hunter committee. No one could say that the RPA is lacking independent scrutiny at present. We are determined to learn from all of those reviews.
I wish to ask the Secretary of State about the possibility of bailing out the RPA, so that the impact on British Waterways and the dire consequences for canals, such as the Caldon canal, in my constituency, can be minimised. Many of my constituents cannot understand why the British Waterways grants have to suffer as a result of the problems of the RPA.
I share my hon. Friend’s passion for the good work of the British Waterways Board. However, I must address two aspects of her comments. First, the idea that the £200 million of deficit that I was presented with just before the summer holidays arises solely from the RPA is quite wrong; that is responsible for about £25 million of the problem. Accounting changes are responsible for £65 million, avian influenza for £15 million, and pressures from previous years, including for flood investment, are responsible for£70 million to £80 million. So we are not talking about cutting the waterways because of the RPA.
Secondly, as my hon. Friend knows, there has been a reduction in the British Waterways budget of about £3.9 million—against a budget of, at my last count,£59 million. That is regrettable, but the budgets for British Waterways and other DEFRA delivery bodies have gone up by many times over the past nine years.
That money has been very well spent by the British Waterways Board. In fact, I think I am right in saying that its private investment is now well in excess of its public investment. Its total budget is now, I think, about £190 million. It is a successful organisation, and we are determined to support it. Of course I regret the difficulties that have arisen, but they should not obscure either the good work of British Waterways or the good work of my predecessors in investing in its good offices.
I wish to associate myself with the concerns expressed by the hon. Member for Staffordshire, Moorlands (Charlotte Atkins), because of the Macclesfield canal, which is a very important facility in my constituency. I also have a simple question for the Secretary of State. This complete debacle with the RPA has caused irreparable damage to United Kingdom farming. Is the Secretary of State prepared to tell the House today what reparation he is prepared to give to farmers to regenerate an industry essential to this country—United Kingdom farming?
I completely share the hon. Gentleman’s passion and support for British farming. I do not have the benefit of the expertise and experience in this issue that he has gathered over many years. I listened to him use the word “irreparable” in respect of the damage. I would not describe it as that; I would describe it as damage, but I do not believe that it is irreparable.
The best way to make reparation is to have an RPA and a single farm payment scheme that work in an effective, timely and efficient way, and that is what I am determined to deliver. Farmers have a right to expect that money from the European Union will be disbursed to them in an efficient and predictable way. That is, I think, the best way in which I can give them the confidence that they need.
Will my right hon. Friend look into the case—I have already raised it with the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Brent, North (Barry Gardiner)—of a farmer in my constituency who has been paid a considerable sum in subsidy that he was not entitled to claim? Will he give me an assurance that action will now be taken to recover this money?
I gather from my hon. Friend the Under-Secretary that my hon. Friend has indeed raised this issue with him, and we are certainly looking at all such cases. I can assure the House that although final figures are not yet available, overpayments are in the single million figure. That is obviously higher than anyone would want it to be, but I can assure my hon. Friend that we will pursue all such claims very carefully and rigorously.
Yesterday in my office, I met Mr. Parry from Bleddfa, in my constituency, who has received none of his English single farm payment and only a small amount of his Welsh one. We are talking about a considerable sum, so I have difficulty in reconciling the Secretary of State’s figure of only 50 farmers who have not received payments of more than €1,000. Will he intervene with the RPA and ensure that there are still enough staff dedicated to dealing with the 2005 payments, so that cross-border farmers, those who are having difficulty with common land applications, and particularly hill farmers—5 per cent. of the latter have received none of their payments, and a number have received only partial payments—get the payments as quickly as possible?
We will ensure, and the RPA is ensuring, that there are sufficient staff to pursue that issue. If the hon. Gentleman contacts my office with the name of his constituent, I will pass it on to the RPA and make sure that a proper process is in place.
The Government are rightly straining every sinew on behalf of the 115,000 families affected by the Farepak collapse, who have lost £300 to £400 each. Indeed, 115,000 farmers are losing an average of £13,000 to £14,000, or waiting for delayed payments. Can the Secretary of State assure me that, before I go the local branch of the National Farmers Union, which represents scores of farming families, he will do everything that he can to identify the most needy claims, and not prioritise and focus on agribusiness, which does not need the money?
My hon. Friend has spoken many times in the House about this issue. While I would say that all farmers need the money, I agree with him that it is important that there is a suitable prioritisation process. In my statement, I referred to the €1,000 limit that we will establish. That is a form of prioritisation, but I certainly take the point that my hon. Friend makes and I can reassure him that we will not deal with the biggest claims first and work our way down the system. The RPA will try to identify claims in an appropriate and sensible way.
Given that the Department cancelled the installation of software that would have given it reliable management information about what was happening at the RPA, and given the number of false dawns that we have already had, how certain is the Secretary of State that the assurances that the agency has now given him are bankable, particularly bearing in mind the huge administrative task that it now faces? A second overhang of payments has been added to the first, and it is possible that a significant number of the payments already made are not accurate.
The right hon. Gentleman asks a question of me that I have obviously asked myself before coming to the House to make this statement. The best way to answer him is to say that both the chief executive of the RPA and I will use the words “bankable” or “certainty” when the money is in farmers’ bank accounts. Equally, my judgment, the affirmation that I have given and the clear timetable that I have set out today—I referred to the middle of February and the three weeks thereafter—is based on one thing that we do know from last year, which is that, once the button is pushed to deliver partial payments, it can be done. The chief executive of the RPA has given Lord Rooker and me a clear explanation of how that can and will be done. I am impressed by the way in which he has gone about his job since his appointment in July. He is bringing a rigorous and conservative approach to the issue. He is certainly not making excessive or wild claims. He is determined to make sure that his delivery keeps up with his promises and I am impressed by his work so far.
Does my right hon. Friend acknowledge that the Rural Payments Agency attempted to solve its problems by hiring agency workers, who were drawn into the processing centres from all parts of England, on a mass basis? Does he acknowledge that more than half the workers at the processing centre in Newcastle were agency workers employed on a short-term basis? That happened for a long time. That is no way to go on. Many hundreds of my constituents would love to have a proper job on a proper basis providing proper service to him and to the farmers of England.
My hon. Friend raises an important point. I have not got the precise figure for the distribution of employment at the Newcastle office, but his basic point is good. That is certainly one of the issues being considered by Tony Cooper, the chief executive, in his moves to get the RPA into good shape.
My understanding is that there are some 9,000 claims pending and several thousand outstanding 2005 queries that still have yet to be addressed. As the Minister said, those are impacting on the current year. As my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) said, that is causing an overlap of yet another year. Hundreds of farmers in the south-east and their families are facing a miserable Christmas as a result. In his statement, the Minister said that payments would be made for not less than50 per cent. of claim value, but in every answer that he has given since, it has become immediately apparent that that means not more than 50 per cent. either. If farmers in my constituency, and others in the south-east, have to wait until mid-February, why cannot the figure be 80 per cent.?
I am sorry that the hon. Gentleman has interpreted my answer to the hon. Member for Eastleigh (Chris Huhne) in that way. The hon. Member for Eastleigh asked whether 50 per cent. was the maximum or the minimum and I thought that I gave a pretty clear answer that it was the minimum. Full payments are being pursued and the final level of payment obviously depends on the second level of validation that is done. The hon. Member for North Thanet (Mr. Gale) asked about the 80 per cent. for last year. I tried to address that earlier. The European Commission was clear that the first year of the new single payment scheme was exceptional and would be regarded as such. That was included in the discussion in the European Council in 2003. That gave us latitude that we do not have in the same sort of way this year. We have tried—I think that this would have support on both sides of the House—to work within European regulations that we have argued for long and hard, from Governments of all complexions, to try to ensure that payments under the common agricultural policy around Europe are made in a regular and appropriate way. That is the basis on which we have made the decision that we have today.
I welcome what my right hon. Friend has to say, but will he look again at the idea of de minimis payments, given that there are clearly some anomalies in who receives payment? Will he look again at who is entitled to the single farm payment? This is a farm payment and yet it goes to many people who are clearly not farmers and add little to the land. Will he accept that it would be completely wrong to make any payment to the EU until and unless it reforms its agricultural system? That is rubbing our nose in it, when we should be rubbing the EU’s nose in it.
I am not going to get into nose rubbing. The point about de minimis payments is interesting. That is not allowed under the current regulations. My hon. Friend will know that about 30,000 to 40,000 of the 120,000 or 115,000 claims are for relatively small sums. We will certainly explore that as we proceed.
Further to the point made by the hon. Member for North-West Leicestershire (David Taylor), and in the spirit of wishing to be constructive and to look forward, rather than back, will the Secretary of State be prepared to consider the point made by the hon. Member for Stroud (Mr. Drew) and thus ensure that the payments go to full-time farmers with small, family farms who receive the majority of their income from farming, but have experienced serious problems and additional marginality because of a lack of adequate cash flow? Will the Secretary of State be prepared to ensure that those farms are the first priority and make sure that there is not only a floor, but a ceiling, for the priority on which the RPA concentrates?
I am genuinely grateful to the hon. Gentleman for the serious and constructive tone and content of his question. I know that he speaks about the matter with the interests of his constituents at heart. Since May, I have learned that it is unwise of politicians to make arbitrary judgments about levels of payments. The €1,000 minimum that I chose was based on close consultation with the chief executive of the RPA about the way to maximise resources and the impact of the work of the RPA’s staff. I do not want to set an arbitrary maximum because there will be hard cases on all sides.
I have also learned that one should proceed with great care when making changes that have an impact on the RPA’s operating procedures. I will consider what the hon. Gentleman says and discuss it with the chief executive of the RPA. However, I want the chief executive to make management judgments about the best way forward for the delivery of the scheme, and I think that that is the best way to serve the hon. Gentleman’s constituents.
The Minister appeared to link directly the chaos in the RPA with the cuts in the payments to British Waterways to the extent of £25 million. Why is that? Does it not put at risk the great work that has been done to revitalise the canal system in Britain, and especially the work done on the flight of 14 locks in Newport, which is developing into a fine tourist attraction?
I am sorry that my earlier answer was so unclear. In response to my hon. Friend the Member for Staffordshire, Moorlands (Charlotte Atkins), I tried to explain that 10 per cent. of the financial difficulties faced by the Department was the responsibility of the RPA, not 100 per cent. My hon. Friend makes a passionate defence of the work of British Waterways—I share his sentiments—but let us not forget that there has been £40 million of investment over the past nine years to clear the backlog that was left when we came into office. There has also been£30 million of additional investment on top of that. The £3.9 million reduction that we have had to make is deeply regrettable and it means that important work by British Waterways will not go ahead. However, let us not fall for the fallacy that that means that no work will be done by British Waterways, or that all its good work will be eliminated. There are £3.9 million of cuts, but more than £50 million of Government grant a year. There is a budget of £190 million, and there has been more than £70 million of new investment over the past nine years. That record is a good one on which to build. Our responsibility in the Department is to ensure that its finances are managed in such a way that it is able to support good organisations such as British Waterways.
Given that the RPA cannot make full payments before 30 June 2007, it would clearly be churlish not to welcome the partial payments. However, may I suggest to the right hon. Gentleman that it would be fairer still if he would agree to pay interest on the balance of the payments that cannot be made before 30 June, but will be paid after the window closes?
I think that I understand the right hon. and learned Gentleman correctly, but I will be happy to write to him, or he can write to me. If he is saying that the Government will have to consider next year whether to pay interest on payments that are not made during the window period, he is raising a wholly legitimate point. The Government faced that situation this year and have paid interest on the payments made outside the window. Although I cannot make a commitment today, he raises a perfectly legitimate point if he is saying that if—I underline that word—next June, there are payments that have not been made in the window, we must consider Government practice on the matter, given that there is an established precedent. However, at the moment, all my energies are focused on making sure that the payments are made.
We appreciate that the right hon. Gentleman inherited much of the present debacle from his subsequently promoted predecessor. Nevertheless, in the light of the National Audit Office report, the House was entitled to expect that the right hon. Gentleman might do more about the fundamental problems, particularly of personnel and management, that led us to where we are. Will he at least give a firm and binding assurance to the House that the methodology for establishing entitlement—that is, the mapping—is robust? Unless he can do so, farmers in Lincolnshire and elsewhere will worry that the problems will continue year on year.
I say two things to the hon. Gentleman. First, there are a number of reports in preparation, including from the Environment, Food and Rural Affairs Committee, and we want to learn the lessons of all of them. To borrow a word from the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg), it is a little churlish of him to say that I have not made a statement about the NAO report, when the priority for farmers was to know their financial position for next year. The hon. Gentleman’s second question was about mapping. Of course we want the mapping to be as robust as possible in Lincolnshire, as in the rest of the country.
From the remarks that he made in his opening statement, the right hon. Gentleman appreciates that several thousand people have still not been paid either fully or at all for 2005, and it seems that several thousand will not have been fully paid by June 2007. A number of those are in my constituency. Will he recognise, as I am sure he personally does, and will he encourage those in the RPA to recognise, that this is not just a financial or a statistical issue, but a human problem? Those are farmers with families to feed and tax bills to pay, so the matter requires his personal attention. I believe him to be a man of good will and I trust that he will be encouraged by the partial support, at least, that he has had from Opposition Members.
I am grateful to the hon. and learned Gentleman for his support for the actions that I outlined today. I entirely understand his point that the problem is a human one, not just a problem of calculating machines or computers. If I can give him a glimmer of hope, I can say that Her Majesty’s Revenue and Customs has made it clear that it will look carefully and sympathetically at the situation to which he alluded—that people should be paying tax on money that they have not received. HMRC has been clear that it will consider that. The first meeting that I had as Secretary of State was about the RPA, for the simple reason that it is the most important thing that has to be sorted out, and I continue to have monthly meetings about it. My colleague, Lord Rooker, has weekly meetings both with the RPA and with a wide range of farming and other organisations. It is essential that we get the matter sorted out. We must not promise a false dawn. That is why I said in my statement today that it is a step by step process to rebuild confidence. I am grateful for the way in which the hon. and learned Gentleman has taken that. Let us take those steps and make sure that they are carried out competently, and ally competence to the good will of which he speaks.
In answer to an earlier question from the hon. Member for Newport, West (Paul Flynn), the Secretary of State feared that he might have been unclear. He was not unclear; he was unpersuasive. Why are the problems of the worst Government policy and administrative failure for many years being visited not just on the long-suffering English farmer, but on a range of other bodies which have the bad fortune to fall within the purview of his Department? Did he ever ask the Chancellor of the Exchequer for help for a contingency fund for organisations such as British Waterways?
The discussions that I have with the Chancellor should probably remain as collegial and internal discussions. [Interruption.] That is certainly the way that I would prefer it. Let me address the important point that the hon. Gentleman makes. I am a member of the Government and I support the Government’s economic strategy. Central to that economic strategy is the control of public expenditure, and central to the effective control of public expenditure is the principle that Government Departments take responsibility for the funds that are at their disposal. We have moved to three-yearly budgets, for which there is support in many parts of the House. The important thing is that, except in the most exceptional circumstances, Government Departments work hard to live within those budgets. At a time when we have a comprehensive spending review ahead, we will be able to address in the round the issues of DEFRA’s budget. My judgment is that one cannot support the Government’s economic strategy on the one hand, and on the other, go running to the Chancellor for funds every time there is a problem.It is about being a responsible Government andalso a collegiate Government who recognise our collective responsibilities, as well as our individual responsibilities.
My constituent, Mr. Colin Evans, of Bartie farm, Dudleston, farms 580 acres, half in Wales and half in Shropshire, very efficiently. The incompetence of what he has been through in not receiving a payment by the end of August is exemplified by the fact that it took two weeks to inspect one of his farms, the process not being accelerated by the inspector’s going to sleep one day in the corner of one of his fields. What measures is the Secretary of State taking to ensure that there is competent co-ordination between the Welsh authorities and the English authorities so that constituents such as mine with holdings on both sides of the border are not penalised? [Interruption.]
I did not hear what the hon. Member for Macclesfield (Sir Nicholas Winterton) said from a sedentary position, but it involved the word “exhaustion”. I do not know whether he was referring to me or to the RPA inspectors.
The hon. Member for North Shropshire (Mr. Paterson) raises an important point. Farmers’ land plots do not recognise some of the geographical lines that exist in our United Kingdom. I will find out for him the nature of the discussions that take place between the RPA and the Welsh authorities. The Welsh authorities are taking an historical approach based on early-1990s payments. For reasons that we can go over another time, the English authorities are not taking that approach. I will drop the hon. Gentleman a line, if I may, about how the English and Welsh authorities are co-ordinating their activities.
The Minister said that he does not believe that the damage being done to farming is irreparable, but it is certainly recurring, and there are only so many punches that British farming can take before it is completely knocked out of business. I was delighted that he told my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg) that he will consider interest payments for those farmers who get themselves further into financial difficulties, through no fault of their own, because they have not been given full payment. Will he also consider actual costs to farmers, particularly if they have to pay arrangement fees and commercial rates of interest? Finally, can he reassure us that this will be the last time that he will feel it necessary to come to the House to make such a statement?
On the hon. Gentleman’s last point, it would not be appropriate for me to say that I will not keep the House informed. I have made two written statements and two oral statements. When I first joined the Cabinet, my right hon. Friend the Leader of the House gave me this advice: “If you’ve got difficulties or problems in your Department, make sure that you’re open and honest with the House of Commons about it.” I think that it is right to come to the Floor of the House to report on progress, notwithstanding, Mr. Speaker, your right to say that you are tiring of my voice and my appearances here.
The hon. Gentleman speaks in a dedicated way for the farmers in his constituency and elsewhere. He is right that there are difficulties in British farming—or in English farming, which is my responsibility—but I hope that he will reflect on the following point. When the Bank of England published last week its latest figures on the finances of the farming industry, the National Farmers Union put out a press release saying, “Let’s recognise the strong financial performance of many parts of British farming shown in this report.” It did not say, “Let’s thank the Government for the strong performance of many parts of British farming”, but “Farmers deserve credit for the way they are innovating and working and winning market share both at home and abroad.” I am sure that the hon. Gentleman will agree that it is in none of our interests to cover over the problems that exist, but equally we must not talk down the many successes in British farming.
Surely we should start from the premise that this is not the Government’s money but farmers’ money, and it is the Government’s duty to get as much of it as possible to them as quickly as possible. The Minister has said that there is nothing in the regulation that prevents more than 50 per cent. from being awarded as an interim payment. Can he tell the House what will be the target amount for farmers’ interim payments and what criteria will affect the decision on their quantum?
It is obviously taxpayers’ money that is paid to farmers on the basis of their historic payment and their acreage. I would be happy to write to the hon. Gentleman with further details of the EU rules. I have said that a minimum of 50 per cent. should be paid and that the EU rules require a high level of validation before partial payments can be made. There are then specific limits on what proportion of the payment claim can be made. I have been clear in stating that we will not pay less than 50 per cent. and that every partial payment must, in accord with the EU rules, be at least that. As I said, I would be happy to write to the hon. Gentleman with more detailed information about the precise way in which those rules operate.
I remind the House of my entry in the Register of Members’ Interests. No doubt the Secretary of State is a reader of the Yorkshire Post and is aware of its campaign for interim payments to be made by the end of the year, rather than February, as announced today. Farmers in the Republic of Ireland have not only received interim payments already, but expect full payment by the end of the year. Does not the Secretary of State realise that farmers, particularly hill farmers in north Yorkshire, also have to buy Christmas presents for their kids?
Of course I recognise that. I said in my statement that we sought to balance a variety of factors: first, getting timely and efficient payments to farmers; secondly, minimising the risk of late payment or disallowance; and, thirdly, getting the Rural Payments Agency on to a stable footing. I would have thought that those three factors would be acknowledged throughout the House. Frankly, a December payment cannot be justified on that basis, and February—three months earlier than this year’s payments—strikes the right balance. I have tried to explain clearly the basis on which that date was chosen.
Farmers in the Kettering constituency and across Northamptonshire will be bitterly disappointed at the ongoing problems with the Rural Payments Agency. Can the Secretary of State offer any assurance that minor changes in applications will not lead to disproportionate delays in receipt of payments?
The best commitment that I can give the hon. Gentleman and the House is thatthe RPA wants to pay validated payments in the appropriate way with the minimum of fuss and the minimum of disproportionate or other difficulties. That is the best that I can say: it wants to get on with its job and to carry it out as effectively as possible.