asked Her Majesty’s Government:

What progress has been made on the 19,000 2005 single farm payments currently being reviewed by the Rural Payments Agency.

My Lords, I apologise for the length of this Answer. The figure mentioned by the noble Baroness in her Question is the original number of claims that the Rural Payments Agency identified for review in September last year. Further cases were identified over the winter so that the total reached some 25,000 cases, as announced by the Secretary of State, David Miliband, in February of this year. As reported by Written Ministerial Statement yesterday, taking account of both those cases now reviewed and the further cases identified, the net number of outstanding cases currently stands at approximately 22,000.

It should be noted that, apart from 24 cases, 116,000 claimants have received over £1.5 billion of single farm payment 2005 money. The cases now under review are to check for accuracy and to see whether claims have been underpaid or, indeed, overpaid. The sums involved are often very small.

Our immediate priority now is to complete payments under the 2006 single payment scheme. Of course we will continue to review the 2005 claims, because these have an effect on processing claims in subsequent years.

My Lords, I thank the Minister, but does he agree that the RPA is still failing and that, if it was a private contractor, it would probably have been sacked? Will he also admit that some farmers—he mentioned 22,000—are actually worse off today than they were a year ago when David Miliband took over as Minister? How confident is he that the 2006 target of 96 per cent will be achieved by the end of June?

My Lords, on the last point, we are obviously working towards that target—96.14 per cent is an EU requirement. I do not accept what the noble Baroness said about the RPA. When the history of this comes to be written, the 2005 year of single farm payments may well turn out to have been the easiest year. The reason was that there was no 2004.

Oh!

No, my Lords, the impact on 2006 of 2005 and, from today, 2007, because yesterday was the closing date for forms, has the enormous consequence of being able to close this down. That is part of the reason why cash flow for farmers this year—I challenge anyone to contradict this from their experience—has been far superior to cash flow last year. Nevertheless, it will still be an effort to meet the target.

My Lords, has the Minister undertaken a study on the number of man hours undertaken by other Defra officials to meet the RPA workload, especially in the north-east, which has its own problems, and what impact that has had on other Defra programmes?

My Lords, we do not have to undertake a study; it is constantly ongoing. The original plan was for the RPA staff to diminish following the introduction of the scheme. That did not happen. Those manpower targets have had to be spread around the rest of the department, although not to the same numbers. That has had an impact on the rest of the department. No one denies that, but it has not stopped us putting the necessary manpower into the RPA to deliver the programme. Some of that consists of temporary, part-time staff.

My Lords, I am sure that the Minister will agree that the RPA situation has generated a complete lack of confidence among the farming community with respect to many things in Defra. What are he and his department going to do to regenerate confidence in Defra’s interest in farming?

My Lords, I make it absolutely clear that none of this is as a result of the efforts of the staff of the RPA. Both last year and this year, the staff cannot be blamed; it is the system that they are expected to use and the difficulty that we have in changing the system that are to blame. I have said repeatedly in this House that it will be 2008 before we can stabilise the system.

On confidence of farmers, I can say that probably the second-best regional paper in the country, the Yorkshire Post, yesterday gave the important information that the UK agricultural industry’s total borrowing dropped by £253 million in the quarter to March 2007. The March 2007 figure represents the lowest quarterly bank lending figure since the end of September 2005. At the end of March, UK farmers had the highest figure for deposits in banks on record. The cash-flow situation improved dramatically this year compared to last year, so I hope that farmers will trust that we are doing our best to run the system.

My Lords, has not the excellent work done by people in Defra in west Cumberland to sort out this problem proved that my noble friend’s decision in 1997 to bring the British Cattle Movement Service to Workington was an excellent one?

My Lords, I pay tribute to all the staff at the five RPA offices, all of which I visited for the second time during the Recess. I add that the staff at Workington have already started to process the 2007 claims. I understand that the initial processing of some 8,000 claims was already completed before the close at midnight last night. That is where the initial validation will take place.

This year, we paid out money earlier than last year. Clearly, we hope and expect to pay out earlier this year. We must meet the targets set by the European Union to ensure that we do not suffer disallowance penalties and late-payment penalties, none of which have yet arrived at the door of Defra. Contrary to press reports, there have been no penalties imposed on the Government.

My Lords, can the Minister say whether the Government have at any time regretted the system that they have adopted, and its complexity, when the Scottish have adopted their simpler single payment system? What snags for the Scottish farmer will be as difficult as the ones from the complex system for the English farmer?

My Lords, I cannot answer that question. Since I have been at Defra, I have spent my time, as has David Miliband, looking at the present and the future, learning where we can from the past. It is not in our interests as Ministers at the present time to delve into the past. Plenty of others, including members of Select Committees of both Houses, are doing that.

My Lords, is the Minister prepared to speculate on what the Government would have done to me if I owed them as much money as they owe me?

My Lords, I hope that we do not owe the noble and distinguished Lord very much, although it is true that some payments are still owed. We had paid out some 95 per cent of the money by 30 June. That is our legal requirement for this year. Where payments have been delayed, we have paid interest—more than £1.1 million to late claimants for 2005. It is too early to say what will happen this year, because we hope, and we are trying hard, to meet the target.