Farm payments body 'not fit for purpose' says damning report

Britain facing 190m bill over farm payments

Agriculture Minister Jim Paice will now stake his own career on dragging forward the agency which has left farmers in crisis and cost the UK Government 190m in fines for botched payment of EU subsidies.

Mr Paice will personally take charge of tackling the problems by chairing a board to oversee improvements after repeated criticism for the high cost of processing claims, the failures of the IT system and mistakes in paying subsidies.

But after heralding the latest report as a "starting point" for turning it around, he ruled out scrapping the agency altogether or introducing a new computer system because of the costs, and rejected a recommendation it should be rebranded because its associations were now perceived as toxic.

A search for a new chief executive will begin soon after last week's sudden announcement that Tony Cooper would be leaving for "personal reasons", while Mr Paice said new finance and operations directors will also be installed because those positions do not currently have permanent appointments.

The new management team will have to cope with a cut of nearly 25m in the 169m budget for running costs this year and meet tough targets to slash the cost of processing each claim – which hit 1,043 last year – by hundreds of pounds.

While the review, ordered by the last Government, insisted the organisation as a whole was "not considered broken", it said it was not well run or fit in its current state to cope with changes to the Common Agricultural Policy (CAP) payments due in 2013. It also criticised RPA bosses, whom it said made the authors' work "unnecessarily difficult" and "attempt(ed] to disrupt the review".

William Worsley, president of the Country Land and Business Association, said the report was a "damning indictment" and warned he had been meeting Ministers over the problems for four-and-a-half years.

"The challenge that Jim Paice is undertaking should not be underestimated," he said. "This is not an easy fix. The pain this causes farmers is terrible and as a whole this should have been dealt with a long time ago."

National Farmers' Union President Peter Kendall said: "It is vital that we get a line drawn under the mess of the past as soon as possible, but what we don't want are more over-optimistic promises and deadlines that aren't, and can't be, met. Defra and the RPA must now knuckle-down and do everything that is needed to get the payment system onto an even keel."

Years after farmers first experienced delays and frustration in receiving their subsidies – and with continuing complaints about ongoing problems – the Public Accounts Committee chairman recently labelled the organisation's processes for paying out 2.3bn a year in farming subsidies a "masterclass in misadministration".

The latest report by Defra – led by David Lane working with Deloitte, PWC and Gartner – made wide-ranging criticisms and said the RPA did not focus on value for money but simply on delivering payments on time, which, in the past, it had failed to do for many farmers.

It said its leadership had "largely served its purpose" and suggested that, given the negative connotations of the RPA "brand", the organisation should be rebranded to mark a new lease of life, although this was immediately dismissed by Mr Paice who said he would not be "faffing around with names and notepaper".

It also recommended bringing in targets for costs per claim, potentially taking away some of the other schemes it handles such as monitoring cattle movements and bringing in a target to achieve 100 per cent of online claims.

Mr Paice said the RPA will be expected to bring down the cost of processing each claim from around 1,043 to 870 this financial year and 644 by 2013 but ruled out changing the flawed IT system because the current system of payments may end in two-and-a-half years because of European reforms.