asked Her Majesty’s Government:

What cuts the Department for Environment, Food and Rural Affairs has had to make withinthe department as a result of deficits incurred bythe Rural Payments Agency arising from thesingle farm payments information technology programme.

My Lords, the Rural Payments Agency business change programme did not lead to deficits that required cuts within Defra.

My Lords, I may be wrong, but in his original Answer to the previous Question I thought I heard the Minister refer to cuts in the Rural Payments Agency. Will the noble Lord explain the further £200 million cuts in the Defra budget this year? Many of us feel that that is very much related to the massive overspend in the Rural Payments Agency and its problems with the single farm payments scheme. Surely, the shortfall should have come from the contingency fund and not from slashing vet services at a time when we must be concerned about bird flu. There are also problems in the Environment Agency, and we have just heard about the cuts in Natural England.

Yes, my Lords. So that there is no confusion, the Rural Payments Agency business change programme did not lead to these adjustments. The £23 million comes in elsewhere. In fact, the Rural Payments Agency has had additional funds made available to it to cope with the difficulties that have arisen over single farm payments. I could give the House a lecture—it would not thank me for it—about the resource elements and the capital elements. The fact is that the figures stack up. Of the £200 million, only about £23 million—about 11 per cent—is the responsibility of the RPA, but that is not the cause of the deficit in relation to the change programme because the Rural Payments Agency had extra funds to deliver that. It is true that there are some difficulties, but one cannot blame the single farm payments or the Rural Payments Agency, in the way that has been done in the media, for the £200 million adjustment.

My Lords, when does the Minister expect the single payments scheme to be running properly so that the farmers are paid correctly and on time?

My Lords, I say to my noble friend, as I have said before, our expectation is to get the system running adequately. With the changes that need to be made to it, it will be 2008 beforehand, and we need to go through the 2006 and 2007 payment years before we get there. In other words, as the chief executive said, supported by Ministers, it will be at least a couple of years before it is up and running in a stable way.

My Lords, will the Minister give the House an assurance that people applyingfor entry- and higher-level payments under the environmental schemes will not lose out as a result of the deficits in the Rural Payments Agency?

My Lords, I have no reason to believe that they will, although those schemes have a degree of flexibility. It is not easy for everyone to get into them because of the points system and the red tape, but it is not as a result of the adjustment that we have had to make.

My Lords, does the Minister accept the finding of the National Audit Office that there were no checks, no matrixes and no proper management in the arrangements for bringing inthe single farm payment? I will give him some examples: the Accenture contract was estimated in November 2003 as being £27.5 million but turned out in March 2006 to be £50 million; the land register was estimated at £6.8 million but eventually turnedout to be £16.1 million; and the customer communications contract was originally estimated in 2003 at £1.2 million and turned out to be £9.8 million. Did the department not realise that it would have some customer inquiries due to those major changes?

My Lords, this is not a happy tale. Anyone who wants further and better particulars can go and sit in the gallery of the Public Accounts Committee of the other place this afternoon, because it will be taking evidence on the report that it published some 10 days ago. There have been difficulties with the planning. I am concentrating on the present and the future. Plenty of other people are looking at what happened in the past. We have to try to learn the lessons from the past, which is why the system cannot be turned out overnight. At least a year was lost—between November 2003 and November 2004—through gaps in the planning and implementation of the arrangements, but the same start date was kept to, which probably explains something about what happened.

My Lords, with reference to the sad saga, the Minister has today confirmed that there were £200 million in cuts which he described in terms of segments, but if I recall rightly, the Treasury imposed cuts in the previous financial year. Will he remind the House of the size of those cuts, notwithstanding the fact that some will run into the new financial year? Will he also say to what extentthe EU commission intends to levy fines on us for the shambles in the Rural Payments Agency?

My Lords, the answer to the latter question will have to wait for at least a couple of years before we have closed down the accounts for this year. It will take time. I know nothing about the cuts for last year, if that is the word that was used. The fact of the matter is that this is in-year a technical adjustment to the budget. It is unusual, but we have to do it.

My Lords, is my noble friend in a position to assure the House that there is no truth in the rumour of a £3 million cut in the veterinary service? Does he agree that there would be deep concern were such a cut to be put into effect, as it would cause many people to doubt the capacity of the veterinary service to deal with future outbreaks of diseases such as foot and mouth disease?

My Lords, I am grateful for mynoble friend’s question on the ground that there have been some myths abroad about the so-called cut of£3 million to the State Veterinary Service. There has been no £3 million cut to the State Veterinary Service this year. In fact, there has been no cut to the State Veterinary Service this year. The overall budget for the SVS remains the same after a switch of funding where money was switched around from the capital budget, which was increased by £3 million to replace resource money. The budget for the State Veterinary Service has been increased this year by £16 million, and another £3 million will be made available for avian influenza preparedness, giving a net increase of £19 million for 2006-07, the year we are in at the moment. There has been no £3 million cut. It is true that there was a cut in the resource area, but that was money swapped from capital. It did not lose any money. The State Veterinary Service got the same amount of money as was in the original budget, so talk about a £3 million cut is not correct.

My Lords, did any of the overspent money go to farmers?

No, my Lords.