Committee of Public Accounts


Press No. 3 of Session 2003-04, dated 18 December 2003


THIRD REPORT: THE SHEEP ANNUAL PREMIUM SCHEME (HC 64)

Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, said today that the Department of Agriculture and Rural Development has been failing in its duty as custodian of the public purse and needs to get a much firmer grip on the Sheep Annual Premium Scheme.

Mr Leigh was speaking as the Committee published its 3rd Report of this Session, which examined the administration of the Scheme in Northern Ireland. Sheep farming is a major component of Northern Ireland's rural economy. Between 1995 and 2002, £170 million was paid under the Scheme, a European Union support mechanism for producers who receive a 'headage' payment for eligible sheep.

The Committee found a catalogue of errors and control failures, all of which pointed towards a particularly slack regime. In the Committee's view, the Department has consistently neglected the interests of the taxpayers, over a long period of time, in favour of the interests of farmers. What is needed to successfully administer a scheme of this nature is to get the right balance between the efficient payment of income to farmers and the controls which protect the integrity of public money. The Department has clearly failed to do so in this case.

The Department's failure to properly address the weaknesses in control, highlighted by the European Court of Auditors in 1994, was a serious error in judgement. Given the risk of disallowance for failing to enforce EU controls, the Department's disregard for the auditors' recommendations, especially on flock records and markings, was irresponsible. The Department has to understand that ignoring EU requirements is not an option as it creates a liability which the taxpayer may have to repay.

The Committee emphasises that a '£' of EU subsidy is as much taxpayers' money as any other form of voted money-it makes no distinction between the rigorous safeguards that it expects to see operated for EU subsidies and any other form of grant payment. The Department must be in no doubt that the Committee expects all of its schemes to be administered in line with best practice.

The Committee's overall impression is that the Department has in the past been soft on fraud and this has contributed to unacceptably high levels of fraud within Northern Ireland agriculture. Indeed, having carefully examined the evidence, the Committee is convinced that many fraudsters would have regarded an attempt to cheat the scheme as a risk worth taking, given the slackness in control and the Department's poor record of prosecution. However, the Committee welcomes the Department's assurances that it now operates a policy of zero tolerance to fraud and that attempts to cheat the system are being tackled in a much more vigorous way.

Mr Leigh said today

"It is clear that this scheme has not received the close management and supervision that it deserves. The most damning aspect of the Department's handling is the extent to which key requirements of the scheme were repeatedly ignored, over a long period of time. Non-compliance was not confined to unscrupulous claimants - there is evidence that Departmental staff were at times complicit in turning a blind eye to the rules. As a result, the integrity of the scheme has been undermined. With non-compliance often leading to overpayment of premium, we can only conclude that the Department has been failing in its duty as custodian of the public purse.

The Department of Agriculture and Rural Development needs to get a much firmer grip on the scheme and demonstrate that ignoring the rules will no longer be tolerated."


Click here to view Report