Failures to support subsidy payments made to British farmers could cost taxpayers hundreds of millions of pounds, according to a new report.
The Public Accounts Committee said the CAP Delivery Programme has been "unsuccessful in many respects". In particular it found that as a result of repeated failures in the Programme, "many farmers are being paid later than in previous years".
The Rural Payments Agency (RPA) makes 105,000 payments each year to English farmers and landowners under the Common Agricultural Policy, amounting to £1.8 billion.
"Farmers are working in a volatile world where market prices and weather have the power to make their businesses unprofitable almost instantaneously," said NFU Vice President Guy Smith.
"British food production relies on this support to provide affordable, wholesome food to the growing population."
In January 2013, the Cabinet Office reviewed the Programme and as a result seven significant changes were made, increasing the level of innovation and risk. The Programme was originally forecast to cost £155 million, but this has increased by 40% to £215 million.
In today's Report, the Committee concludes the three key bodies involved in delivering the Programme were unable to work together effectively.
It highlights the impact of "dysfunctional and inappropriate behaviour" between senior officials, "potentially costing the taxpayer hundreds of millions of pounds in financial penalties".
Digital front-end "inappropriate"
The Report states: "Highly paid public servants need to get the job done and such behaviour is unacceptable."
The Programme's lack of consistent priorities and changes in leadership caused disruption and delay, says the Committee. It also describes the Government Digital Service's focus on developing a digital front-end for the Programme as "inappropriate for farmers", noting that "there is poor broadband coverage in many rural areas".
In the Report's recommendations to government, the Committee says the Department "should review its approach to tackling serious failures of management and put in place measures to stop this ever happening again." It also urges the Department to set out "clear milestones" in the coming months for when it expects to pay farmers for future years and when it will return to previous performance levels.
Meg Hillier MP, Chair of the PAC, said: "This Programme was set up to deliver support to UK farmers. Instead, it delivered an appalling Whitehall fiasco.
"It was frankly embarrassing to learn of senior and highly paid civil servants arguing to the detriment of hard-pressed farmers.
"Explanations such as 'We worked on different floors' and 'We dressed differently' are a slap in the face to them and a dismal excuse for failures that could severely hit the public purse.
"A fundamental part of setting up this Programme should have been to establish a clear and robust vision of the final product, focused on the needs of farmers. For it to end up as a digital testing ground was wrong-headed.
"The enduring mental image is of managers, having seemingly lost sight of the purpose of the project, devoting their energies to a childish turf war instead.
"If the Department is to build trust in this Programme and other projects it first needs to rebuild trust with farmers.
"That starts with setting out exactly when it expects to pay them in future and we will be expecting the Department to address this as a matter of urgency."
The Department for Environment, Food & Rural Affairs has a history of failure when developing systems to support subsidy payments for farmers under the Common Agricultural Policy.
The Common Agricultural Policy Delivery Programme was intended to address past failures, but was unsuccessful in many respects. Payments to farmers have been delayed at a time when their cash flow is already stretched.
"Dysfunctional and inappropriate behaviours"
Dysfunctional and inappropriate behaviours amongst senior leaders were inexcusable and deeply damaging to the Programme.
An inability to agree a clear vision for the Programme meant that the frequent changes in leadership were accompanied by changes of direction, shifts in focus and further disruption.
The Government Digital Service was created to help improve IT projects, but instead hindered delivery of this Programme. In addition to delaying payments to farmers, programme costs have risen by 40% and penalties from the European Commission are likely to increase significantly.
NFU Vice President Guy Smith said: "No-one knows the real impact of CAP delivery going wrong better than farmers. Cash-flow problems have been both caused and made worse by the payments delays. And, to top this off, the communication from the RPA to farmers has been shambolic – farmers have largely been left in the dark on when their payment is going to come through.
"At the moment there are still farmers who haven’t been paid despite promises to pay the vast majority of claims by the end of January. We are urging the RPA to tie off all of the 2015 payments so RPA resources can focus on BPS 2016 applications. We are on the eve of the rollout of the 2016 application process and the industry cannot afford any problems in the coming weeks. We are working to a May 16 deadline and there can be not slippage - if there are any problems, the RPA needs to be honest with industry.
"It’s essential that next year the RPA works to the recommendation of the EFRA committee and delivers 90 per cent of payments by the end of December. This is now a line in the sand for what payment timeframe is acceptable and one which the RPA cannot ignore. Defra must ensure the RPA is fully resourced to meet this target."
Better and more regular communications
CLA Director of Policy Christopher Price said: “The Public Accounts Committee report published today confirms concerns we have been raising for many months over the delivery of vital payments to farmers.
“It is very difficult for farms to make essential plans for their business operations when they are under a cloud of uncertainty about when they will receive the payment they are waiting for. We are pleased the Committee’s recommendations support our calls for clear milestones to be set out, by the end of June 2016, for when Defra expects to pay farmers for future years and when it will return to previous performance levels.
“There is a pressing need for better and more regular communications with claimants that are being paid late. We would stress that this sits alongside the need for the RPA (Rural Payments Agency) to ensure that all outstanding payments to farmers are made as soon as possible. Farmers operate on low margins and the impact of late payment on their business’ cash flow should not be underestimated.
“The Committee’s report sets out recommendations to help ensure that the failings in delivery of this year’s BPS are tackled and processes are improved from here on. The application window for 2016 opens later this month and setting out a better path forward is important. We will continue to work closely with Defra and the RPA to ensure that our members do not experience the same frustrations over and again.”
