Farm subsidies fiasco leaves taxpayers to foot £500m bill

Taxpayers have been left with a bill exceeding �500m as a result of the farm subsidies fiasco, latest figures from the National Audit Office have revealed.
Taxpayers have been left with a bill exceeding �500m as a result of the farm subsidies fiasco, latest figures from the National Audit Office have revealed.
Have your say

TAXPAYERS have been left with a bill topping £500m from the farm subsidies fiasco.

The National Audit Office (NAO) revealed the full cost of the bungled handling of the Single Payment Scheme as it refused to sign off Whitehall accounts for a third year because of failings in administering the subsidies.

Problems at the Rural Payments Agency (RPA) – which have left farmers with lengthy delays for payments or being paid the wrong amount – have now left the Department of Environment, Food and Rural Affairs (DEFRA) with European Commission fines topping £500m.

Thirsk and Malton MP Anne McIntosh, chairman of the Environment, Food and Rural Affairs Select Committee, has already written to Ministers asking for bonuses at the RPA to be halted until performance improves and said the inability to sign off the accounts was “very worrying”.

“We hope DEFRA will gets its house in order, and the RPA,” she said. “These are historic problems but we did alert them [DEFRA and the RPA] to our concerns – it’s something the committee will wish to keep under review.”

Auditors at the NAO have grown frustrated with failings at the RPA, releasing a devastating report in 2009 that accused the agency of showing “scant regard for the protection of public money”.

An overly complex computer system has been unable to process claims accurately and administration costs in England are six times higher than under a simpler system in Scotland.

At the time the Commons Public Accounts Committee branded the RPA’s handling of the scheme a “masterclass of maladministration”.

Since the election, the coalition has carried out a review of the RPA and Farming Minister Jim Paice is heading up an improvement board in an attempt to finally turn around the organisation – which also has a new chief executive – but MPs say they continue to be inundated with complaints.

Hundreds of farmers faced delays in getting their payment again this year as the agency focused on ensuring subsidies were calculated correctly, and the NAO revealed that £2.9m was spent on external consultants last year in an attempt to sort out problems.

But the NAO said it was qualifying the 2010-11 accounts of both DEFRA and the RPA because they were not able to make an accurate assessment of underpayments and overpayments to farmers since the scheme began.

The European Commission fined DEFRA £145m last year in relation to its administration of the single payment scheme in England in 2007, 2008 and 2009. Penalties totalling another £30m were imposed in relation to problems in the administration of other schemes.

DEFRA’s accounts also include provision for a further £84m of estimated penalties, including £53m for the single payment scheme in England for 2010.

“Disallowance penalties have been incurred as a direct result of weaknesses in the management and administration of the Rural Payments Agency, particularly for the early years of the single payment scheme,” said the NAO.

“The agency continues to experience considerable difficulties in quantifying the value of overpayments and underpayments made to farmers under the single payment scheme. However, the report on the Rural Payments Agency notes some improvements, including in core financial controls and the appointment of a new senior leadership team.”

Auditor General Amyas Morse said: “I welcome the appointment of a new senior leadership team at the agency which should now urgently address the issues which have led to my qualifications.”

A spokesperson for DEFRA said it had “consistently sought to maximise value for money for the taxpayer in all the department’s activities”. He added: “While it has been necessary to make provision for financial penalties in 2010-11, which were anticipated in advance due to well known historical problems with the administration of the Single Payment Scheme, the Department is taking steps to minimise the possibility of further penalties related to the administration of EU schemes and a new senior management team has been put in place.

“For example, significant attention has been paid to improving the administration of the Single Payment Scheme, following an internal review of the Rural Payments Agency and work to upgrade the RPA mapping system.”