Lord Bach - " a conspiracy of optimism"

Lord Whitty, not a man given to self doubt, Farming Minister until May 2005, insists the February 2004 policy decision to use complex area calculations (1) for allocating single payment farm subsidies "absolutely right" ( it replaced replaced 11 previous subsidies ) The Single Payment Scheme is worth £1,515 million to 116,000 farmers in England - it replaced replaced 11 previous subsidies. Payments in Scotland, Wales and Northern Ireland were handled by the devolved administrations with few problems.

His successor Lord Bach, booted out in May as a result of the payments scheme's collapse, accused former officials in the Department of Environment, Food and Rural Affairs (Defra) and Rural Payment Agency (RPA) of "misleading" them over the true extent of staff and financial problems.

He said:

"I don't think they were deliberately trying to mislead but I think there was a conspiracy of optimism."

The National Audit Office found

1. Budgeted costs of £76 million had reached £122 million ( with more expected) by March 2006.

2.Defra budgeted staff reductions of 1,800 and efficiency savings of £164 million by 2008-09, there is no prospect of this happening and additional agency staff have been recruited.

3.The NAO examined 363 payments and identified 34 overpayments and 79 underpayments.

4. EU penalties as a result of these difficulties means that DEFRA have had to allow for contingent liabilities totalling some £131 million.

5. The NAO estimates costs of £18 million and £22.5 million (Total £40.4 Mn) in additional interest and arrangement fees on loans to farmers due to delays.

6. The Payments Agency will not remedy matters before payments start for 2006 due to start in December 2006.


... and FINALLY ..... The CEO of the RPA has left and received £71,000 of his £141,000 salary, a bonus of £24,000 for reaching his "targets" and negotiations continue for his pension which will exceed £12,000 annually. He did not appear before the Parliamentary Committee examing the matter yesterday because he was suffering from "stress".

Note (1) England and Germany opted for the “dynamic hybrid” model, where payments are partly based on previous entitlement and partly on a flat rate per hectare, with the weighting transferring to the flat rate by ten per cent a year.