In one of its most critical ever reports, the National Audit Office has slammed the way in which the Rural Payments Agency has administered Single Farm Payments to farmers. It accused the agency of showing ‘scant regard to protecting public money’. The agency has wasted around £700m, the capital equivalent of building thirty secondary schools.
The average amount paid to about 107,000 English farmers is about £15,300 a year. However, the watchdog found there were substantial overpayments totalling between £55m and £90m but the data was so unreliable the auditors were unable to find out the precise sum. £280m has been set aside to pay Brussels penalties for administrative errors and late payments to farmers, but a further £43m of overpayments are likely to be irrecoverable.
What the report brings out is the high transaction costs incurred even in a supposedly simplified system of subsidies. It is estimated to cost £1,743 to process each farmer’s claim for cash, a rise of 20 per cent in four years.
It is argued that some of the problems arise from the payment system chose by Margaret Beckett, at one time in charge of Defra. The devolved regions opted for a simpler system based on historic payments made to farmers. In Scotland the cost of administering payments is £285 per farmer. However, one reason for choosing an area farmed system was to try to break away from the ‘to him that hath shall be given’ aspect of the subsidies system.
Of course, some might think that we would better off by phasing out subsidies altogether.
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By my calculations 60,492 out of the total of 155,604 payments made by RPA in 2008 were for sums less than £1,743 cost of administration. That’s 38 per cent.