The National Audit Office slammed DEFRA over the Single Payment Scheme

The 2003 Common Agricultural Policy reform introduced a new system of direct payments – the Single Payment Scheme (SPS) under which payments are independent of production. The UK was one of the first EU Member States to introduce the Single Payment Scheme in 2005. The scheme is administered by the Rural Payments Agency on behalf of the Department for Environment, Food and Rural Affairs (DEFRA).

The Rural Payments Agency has paid £1.63 billion for SPS 2008.

The National Audit Office has recently published a report on the progress made by the Rural Payments Agency in administering the Single Payment Scheme in England. The head of the National Audit Office, Amyas Morse, has said “This is the third time we have looked at the Single Payment Scheme and there are still significant issues to be resolved. There has been a serious lack of attention to the protection of taxpayers’ interests over the administration of the scheme.” Moreover, he said “(…) DEFRA should urgently address the risks to ongoing IT system support and the inaccuracy of the scheme’s data, explore alternative payment systems and resolve the ongoing management issues.”

According to the NAO´s report the Rural Payments Agency and DEFRA have shown "scant regard for the proper management of public funds, and the ongoing administration of the scheme does not represent value for money.”

Although NAO has recognised that farmers were paid earlier under the 2008 scheme, it has stressed that “the cost of the scheme is high and increasing.” According to the report, the average cost for administering each claim in England, in 2008-09, was £1,743 whereas in Scotland was £285.

The report concludes that the efficiency of the scheme has not improved and that “the IT systems are expensive and cumbersome.” The NAO has estimated that the costs of the scheme’s IT systems have amounted in total to nearly £350 million. Moreover, it pointed out that “The IT upgrades and maintenance since 2007, costing £130 million, have resulted in heavy customisation of the IT systems (…), with complex software that is expensive and reliant on contractors to maintain.” According to NAO “With many of the Agency’s contracts for ongoing support due to end in 2009, there is an increased risk of obsolescence.”

Furthermore, the report has stressed that since 2005 “the Agency has incurred additional administration costs of £304 million as a result of needing more staff than anticipated in the 2005 business case for the scheme, the Department has had to set aside £280 million for disallowance and penalties, and the Agency anticipates that a further £43 million of overpayments will be irrecoverable.”

The NAO´s report has stressed that progress in recovering overpayments has been slow due to several management failures of the Agency “such as a lack of an effective strategic approach, poor co-ordination of different teams and a wider lack of capacity (…)”

According to NAO`s report, overpayments to farmers are likely to be between £55 million and £90 million, since 2005, whilst the Agency has already paid back around £85 million to the European Commission for potential overpayments.

Moreover, NAO has estimated the costs of correcting earlier mistakes in processing claims around £119 million. The report pointed out that by May 2009, the Agency had only recovered £25 million of overpayments.

The NAO recalls that, in January 2008, DEFRA and the Rural Payments Agency ensured the Committee of Public Accounts that “the problems with the original implementation of the scheme were largely resolved and that progress was well underway to rectify mistakes and recover overpayments” however NAO considers that “there is still a long way to go and that progress has been slow and costly.”

The report stressed that “Until the Department and the Agency address the ongoing weaknesses in managing the scheme, there is a high risk that costs will continue to rise, and that the errors and inaccuracies will increasingly become embedded within the data.”

According to BBC, Nick Herbert, shadow environment secretary said that "Vast sums of taxpayers' money has been wasted on excessive administration costs and fines to the EU, yet typically ministers who should be held accountable for this dismal state of affairs still refuse to accept their responsibility.”