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  • Reportby the Comptroller and Auditor General

    Department for Environment, Food & RuralAffairs

    Progress on the CommonAgricultural Policy Delivery Programme

    HC 727 SESSION 2016-17 24 OCTOBER 2016

  • Our vision is to help the nation spend wisely.

    Our public audit perspective helps Parliament hold government to account and improve publicservices.

    The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), SirAmyas Morse KCB, is an Officer of the House of Commons and leads the NAO, whichemploys some 785people. The C&AG certifies the accounts of allgovernment departments and many other public sector bodies. He has statutory authority to examine and report toParliament on whether departments and the bodiesthey fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports ongood practice help government improve publicservices, and our work led to auditedsavings of 1.21 billion in 2015.

  • Report by the Comptroller and Auditor General

    Ordered by the House of Commons to be printed on 24 October 2016

    This report has been prepared under Section 6 of the National Audit Act 1983 for presentation to the House of Commons in accordance with Section 9 of the Act

    Sir Amyas Morse KCB Comptroller and Auditor General National Audit Office

    14 October 2016

    HC 727 | 10.00

    Department for Environment, Food & Rural Affairs

    Progress on the CommonAgriculturalPolicy DeliveryProgramme

  • The National Audit Office reported in December 2015 on progress by Department for the Environment, Food & Rural Affairs and the Rural Payments Agency in implementing a new Common Agricultural Policy (CAP) Delivery programme to process new CAP scheme payments to farmers in England.

    National Audit Office 2016

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    Links to external websites were valid at the time of publication of this report. The National Audit Office isnot responsible for the future validity of the links.

    11309 10/16 NAO

  • The National Audit Office study team consisted of: Richard Davis, Sebastian Groth, AsifMalik and Emma Parkinson, underthe direction of Simon Helps.

    This report can be found on the National Audit Office website at www.nao.org.uk

    For further information about the National Audit Office please contact:

    National Audit Office Press Office 157197 Buckingham Palace Road Victoria London SW1W 9SP

    Tel: 020 7798 7400

    Enquiries: www.nao.org.uk/contact-us

    Website: www.nao.org.uk

    Twitter: @NAOorguk

    Contents

    Key facts 4

    Introduction 5

    Part OneTimeliness of payments 7

    Part TwoAccuracy of payments 15

    Part ThreeFurther developments during 2016 18

  • 4 Key facts Progress on the Common Agricultural Policy Delivery Programme

    Key facts

    16%proportion of farmers who had not received any money as at 31March 2016

    87,500total number of Basic Payment Scheme claims received from farmers and agents for the 2015scheme

    80%proportion of farmers applying online for 2016 Basic Payment Scheme

    1.39 billion total paid to farmers under the Basic Payment Scheme up toOctober 2016

    27.4 million amount the RPA states it has paid, by early October 2016, tofarmers after their initial Basic Payment Scheme payment

    6,900 number of farmers who received at least 1,000 less than they wereentitled to in their initial Basic Payment Scheme payment

    8 percentage points

    margin by which the RPA missed its March 2016 target for proportion of claims paid

  • Progress on the Common Agricultural Policy Delivery Programme Introduction 5

    Introduction

    1 The National Audit Office (NAO) reported in December 2015 on the progress that the Department for the Environment, Food & Rural Affairs (the Department) and the Rural Payments Agency (RPA) had made in implementing a new Common Agricultural Policy (CAP) Delivery programme to process new CAP scheme payments to farmers in England.1

    2 The Committee of Public Accounts held a hearing on the NAOs report in December2015 and reported its findings and recommendations in March 2016.2 Thegovernment provided its response to the Committees report in April 2016.3

    3 The NAO report highlighted that significant challenges remained to make sure the payments due to be made from December 2015 were timely and accurate, to prepare for future years, maximise Programme benefits and minimise disallowance penalties. This memorandum sets out how well the Department and the RPA have metthosechallenges.

    4 The RPA issued the first payments made under the new schemes and IT systems in December 2015, and committed to three payment targets between December 2015 and March 2016 alongside a regulatory target for 30 June 2016.

    Background

    5 The Department has overall responsibility for the CAP, paying English farmers andlandowners under two funding pillars:

    Pillar 1 primarily provides direct support to farmers through the Basic Payment Scheme (BPS), including additional payments to assist young farmers and a greening element which aims to provide ecological benefits such as crop diversification under the three crop rule. This is usually fully reimbursed by the European Union from itsfunding for farmers; and

    Pillar 2 provides funding for rural development programmes, such as the Environmental Stewardship Scheme and the Countryside Stewardship Scheme that replaces it. This is jointly funded by the European Union and the UKExchequer.

    1 Comptroller and Auditor General, Early review of the Common Agricultural Policy Delivery Programme, Session2015-16, HC 606, National Audit Office, December 2015.

    2 HC Committee of Public Accounts, The Common Agricultural Policy Delivery Programme, Twenty-sixth Report ofSession 2015-16, HC 642, March 2016.

    3 HM Government, Government responses on the twenty-first to the twenty-sixth reports from the Committee of Public Accounts: Session 2015-16, Cm 9260, April 2016.

  • 6 Introduction Progress on the Common Agricultural Policy Delivery Programme

    6 The RPA, which runs BPS for the Department, encountered problems with the implementation of the previous CAP changes in 2005 leading to inaccurate and late payments to farmers, but it had addressed most of these problems by 2014.4 Thetargets to make 90% of payments in December each year and for 99% accuracy infirst payments were met by the RPA for many years.

    7 We highlighted in our previous report the difficulties that the Department had encountered in implementing the CAP Delivery Programme. These included the failure of the online application system leading to a return to paper-based applications, and evolving system functionality and data control weaknesses, which made it difficult for theRPA to maintain its payment record.

    Scope and structure of the memorandum

    8 This memorandum provides an update on the reports by the NAO and Committee of Public Accounts on the early progress of the CAP Delivery Programme. It focuses primarily on BPS payments. These make up around 80% of the total payments made under CAP and it was the RPAs priority to develop the functionality to make these payments. The functionality to enable online applications for the Countryside Stewardship Scheme under pillar 2 is expected to be ready for use by December2016. The memorandum is based primarily on analysis of RPAs payment data and our interviews with Department and RPA officials.

    Part One sets out the Departments performance on the timing of payments under the 2015 BPS;

    Part Two assesses the accuracy of payments under the 2015 BPS; and

    Part Three examines developments in the Department and the RPA to improve delivery of the Programme in 2016 and beyond, including reporting on the governments progress against the recommendations included in the Committees March 2016 report.

    4 Comptroller and Auditor General, Department for Environment, Food & Rural Affairs, and Rural PaymentsAgency, Thedelays in administering the 2005 Single Payment Scheme in England, Session 2005-06, HC 1631, NationalAuditOffice, October 2006.

  • Progress on the Common Agricultural Policy Delivery Programme Part One 7

    Part One

    Timeliness of payments

    1.1 Expectations regarding the timeliness of payments have been created through statements by the Rural Payments Agency (RPA) and the Department for Environment, Food & Rural Affairs (the Department), and performance in previous years.

    1.2 In t

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