Failings in the implementation of the Basic Payment Scheme in England have cost the taxpayer more than £60 million and compromised Defra’s ability to pay farmers early and accurately, according to the Government’s financial watchdog.
About 30,000 farmers in England are expected to receive their Basic Payments today, December 1, as the EU Basic Payment Scheme (BPS) window formally opens.
But as the money starts to flow, the National Audit Office has published a heavily critical report on the botched efforts to introduce a digital only application system.
The NAO blamed ineffective collaboration between Defra, the Rural Payments Agency, Government Digital Service (GDS) and other bodies for failings in delivering the new system, which have resulted in soaring costs and potential longer-term problems, including increased risk of EU disallowance.
The problems with delivering the new CAP in England came to a head in March when Defra and RPA made the decision to abandon the online-only approach to BPS applications ‘in response to serious failings of the system’.
The NAO was clear the decision to replace the online system with ‘paper-assisted digital’ was the right one.
“This was a speedy and effective change to the Programme that has increased the likelihood that the majority of farmers will receive their basic payment scheme (BPS) payments in December,” the spending watchdog said.
But although it stressed Defra was making ‘good progress to meeting its target of paying BPS claims for the majority of farmers in December’, it said the failings meant Defra faced ‘difficulties paying farmers accurately and at the earliest opportunity’.
But it found the costs of delivering the system had increased by 40 per cent from the original £154m budget to £215m in the latest business case submitted by Defra to the Treasury in September, despite reductions in the planned level of functionality.
This reflected cost overruns leading up to the withdrawal of the applications system in March 2015, and subsequent recovery actions.
Furthermore, the focus on resolving immediate issues diverted attention from long-term goals of improving the service to farmers, minimising future EC penalties and achieving other intended benefits such as addressing the land data issues that are causing current penalties, the NAO.
The one-month extension to June 15 in the application deadline also impacted the RPA’s ability to make interim payments for the Environmental Stewardship Scheme. As a result £200m worth of payments that otherwise could have been made from August commenced in October.
The CAP Delivery Programme was established in 2012 to address failings in how the previous CAP was delivered in England and to adapt to the increased complexity of the new regime.
It was meant to be a collaboration between Defra, RPA, GDS and other bodies but the original vision and design of the Programme was narrow, according to the NAO.
It focused largely on procuring IT systems and did not set out the wider organisational transformation required.
The report found the Programme had been set back by numerous changes in leadership, including four ‘senior responsible owners within the space of a year’, causing ‘disruption and uncertainty and confusion for its staff’.
It said: “Defra failed to prevent counter-productive behaviours, with deep rifts in working relationships and inappropriate behaviour at the senior leadership level at many stages of the Programme’s three-year history.”
It noted GDS did not provide the support Defra believed it needed to adapt to the changes, including building the Department’s digital capability – its support was reported to be ‘patchy and with limited continuity in personnel’.
The Department expected applicants to be able to register using the government’s identity assurance system, Verify, from October 2014.
But farmers soon discovered Verify was not sufficiently ready in October 2014 and, initially, no alternative had been put in place, despite warnings by the Verify team Defra would need to make alternative means available to access the service.
In the end the vast majority of applicants registered using the RPA’s existing process, supported by drop-in centres and the RPA’s telephone helpline.
NAO head Amyas Morse said: “The Department, the RPA and Government Digital Service have not worked together effectively to deliver the Common Agricultural Policy Delivery Programme.
“There are serious lessons in this episode for all three. This means that costs have increased and systems functionality has not improved at the rate expected, either in the back office or the user-facing front end.
“This does not represent value for money at this stage.
“One consequence of this is that the Department faces difficulties paying farmers accurately and at the earliest opportunity.
“While the Department is now making progress towards its target of paying BPS claims for the majority of farmers in December, significant challenges remain for the Programme.”
A government spokesperson said: “The new Common Agricultural Policy (CAP) is widely acknowledged as the most complex ever and a new IT system was needed to handle this additional complexity and to make claiming as simple as possible for farmers.
“While there was a problem with one part of the online interface that enabled farmers to put data directly into Rural Payments, the system has always worked and has successfully started making accurate payments to thousands of farmers on the very first day of the payment window.
“The Rural Payments system will be further improved next year to make it easier for farmers to apply for their CAP payments.”
The agency received just over 88,000 BPS applications and the payments represented at least 38 per cent of those who claimed.
The RPA said it would continue to work hard to pay the remainder of claims as soon as possible and remained on track to pay over half of eligible BPS claims by the end of December and the vast majority by the end of January.
While the RPA has never formally specified numbers, Mr Grimshaw has suggested about 10 per cent of the claimant population with ‘complex cases’ could still be waiting for their money in February.
These include potentially about 4,000 commons farmers, cross-border claims, probate cases, farmers who have been inspected and large ‘super-complex’ claims, such as the National Trust, RSPB and Woodland Trust.
The RPA is writing to farmers who its knows are unlikely to be paid by the end of January to help them manage their cash flow.
Deputy Farming Minister Rebecca Evans has said she expected the majority of part-payments, worth in the region of 80 per cent of the estimated full payment value, to be made during December.
The vast majority of the remaining part-payments is expected to be made ‘early in 2016’.
She said that farmers in Wales would start to receive their BPS part-payments on December 1.
“In fact, over 50 per cent of claims have already been processed and their part-payments should be with them within the first week," she said.
The final balance is expected to be paid during April 2016.
Rural Affairs Secretary Richard Lochhead said payments would be made in two instalments of 70 per cent and 30 per cent.
But only a quarter of Scottish farmers are expected to receive their first instalment by the end of December, with only ‘the majority’ receiving their part-payment by the end of January.
Some will not receive the first tranche until the end of March.
The balance payment of 30 per cent is to be delivered to all claimants by the end of April.
Northern Ireland’s Agriculture Minister Michelle O’Neill announced in mid-November DARD would make payments to 95 per cent of eligible applicants in December.
This figure will include the majority of cases selected for inspection.