Rural Payments Agency unable to track farmer pay scheme

The National Audit Office (NAO) has found the Rural Payments Agency (RPA) still cannot say how much it has overpaid and underpaid farmers since the Single Payment Scheme began

In 2010, the RPA was heavily criticised for its highly flawed and “rushed” £350 million farmer subsidies system implementation, which led to incorrect payments being made.

This is the fourth year that the RPA has been unable to provide audited versions of the figure for overpayments, and the third year for the underpayments amount.  

 “The agency continues to experience considerable difficulties in quantifying the value of overpayments and underpayments made to farmers under the scheme,” the NAO said.

Furthermore, the Department for Environment, Food and Rural Affairs (Defra) is expecting the European Commission (EC) to impose an estimated fine of £94.5 million for 2010 and 2011, related to weaknesses in the RPA’s administration of the Single Payment Scheme.

Amyas Morse, head of the NAO, said: “[The RPA] has continued to work to quantify the value of Scheme trade receivables and Scheme trade payables by resolving the underlying issues in the quality of data. In particular, the agency [...] has recovered some historic overpayments and agreed recovery plans with farmers who have made a claim against the Single Payment Scheme 2011.”

But he added: “However, the agency has not made sufficient progress during 2011-12 to identify all Scheme trade receivables and trade payables, and to confirm their value. [This is why] I am unable to remove my qualification.”

Qualified accounts

The lack of clarity in the accounts of the RPA and Defra has led to them being ‘qualified’ by the NAO – a technical term that means that the auditors do not believe the picture of an organisation’s activities presented is true, fair and complete.

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Morse said: “I have again had to qualify the accounts of Defra. This is because the department has had to pay penalties to the European Commission for non-compliance with regulations over a number of years up to 2009, which led to incorrect payments to farmers and others.”

During 2011-2012, the European Commission imposed penalties of £46 million on Defra because it had not applied EU regulations correctly in processing EU schemes.

The department has also made a provision in its accounts for a further £125 million in estimated penalties, which includes £95 million for the Single Payment Scheme. Since 2008-09, the total value of finalised and estimated penalties currently stands at £590 million.

In the RPA’s 2011-12 financial statements, it said that the farmers owed £14.9 million to the Agency, due to overpayments made to them. This had fallen from £24.5 million in 2010-11.

Conversely, the agency said that it owed £56.9 million – up from £54.5 million last year - to farmers, due to underpayments.

The RPA’s system was built by a range of contractors including Accenture and Steria, with a number of heavily customised Oracle-based systems. An independent review, commissioned by the government, found that many of the systems were highly troubled.

There were major problems on the interface between RITA, the main system for claims processing, run by Accenture, and the Oregon finance system for making payments, run by Steria, even though both systems run around the same base of Oracle software.

Part of the problem was the rushed “re-customisation” of RITA in 2005, leading to a system that is fragmented, “does not conform to sound architectural principles” and is hard to upgrade, according to the review.