Select Committee on Agriculture Minutes of Evidence

Examination of witness (Questions 160 - 179)



  160. To what extent is there any discretion given to member states in implementing the system? You have to check that the minimum standards are met. How much discretion is there?
  (Mr Slade) I check the minimum standards and take the regulations, they are fairly minimum: 10 per cent on-farm inspections selected on risk analysis. There are some recommendations as to what the risk analysis to select the claimants for inspection should incorporate. As regards application of sanctions, our problem, up until a couple of years ago, was that the sanctions were foreseen but very rarely applied. Even in cases of fraud or very obvious negligence, they were not applied. Over the last couple of years, with the need for these new sanctions, with the need for clarification of sanctions, we have stressed to member states that they have a degree of administrative discretion; that is to say, if 100 farmers make errors, something more than obvious errors, which they are not sanctioned for anyway, transposition of ID numbers does not give rise to a sanction, it is not necessary, we have had guidelines on that already, but let us say 100 farmers commit an error which gives them some financial gain, whether it is deliberate or through a genuine error at this stage, they nevertheless commit an error. We have to avoid errors because they cause a charge on the fund and/or they cause a charge on the administration to sort them out. So there are good reasons why we do not want farmers making too many errors. Whether they are deliberate or not, we can leave aside. Three or four years ago, in doing the rounds around Europe, I would usually find that in 100 cases down, there were only very few that had attracted any sanction and in the great majority, and I mean the great majority, sometimes 100 per cent, the farmers had been given the benefit of the doubt. This is obviously an unsatisfactory situation from an audit point of view and after all, we are supposed to be safeguarding taxpayers' money. We can understand that member states do not want to apply, every time there is the smallest error, the sanction. The sanction should always be fair and proportionate. I must stress that. Putting in a cow that does not exist out of 50 which gives you a 2 or 3 per cent correction, you still receive 90 per cent of your premium. We are not talking about full exclusion from the scheme in most cases. Over the last couple of years, we have convinced member states that, from an audit point of view, we want to see that there is a reasoned approach towards the application of sanctions; that is to say, there has been a uniform procedure to assess the consequences and that the criteria have been applied equally to all farmers and in some cases, let us say 60 per cent of cases, it is decided that there should be a sanction in accordance with the rules. It is decided that this man should lose 5 per cent, 10 per cent of his premium this year. Next year he will not make the mistake. That is the philosophy of it. I do not excuse why we have these sanctions. I believe in them. I always want to make them proportionate and fair. On the other hand, there may be a case where in 40 per cent of cases, and I am just throwing figures here, these are not the rules, the national administration has decided that the benefit of the doubt can be given to the farmer. Of course, if he does it next year, the case goes slightly against him. I think we have had some success in that because, obviously, three, four years ago we were going round and finding that that was not the case. Our conclusion was, "You are not applying sanctions according to my guidelines that my service works to. There is a 2 per cent flat rate of correction and we refuse 2 per cent of the financing for the expenditure concerned". Member states reacted to that and we are happy with the way that they have reacted because we now find that the sanctions are being applied generally to a more satisfactory degree and in a more correct figure.

  161. The Commission's interest is that they have a ready and effective way of identifying where sanctions are supposed to be applied. What member states do above and beyond that or, indeed, below that by means of a less pressing enforcement is not of any interest to you?
  (Mr Slade) It is because we nevertheless get letters from farmers and farmers' representatives so that can bury us in paperwork. We like to see a fair, even-handed approach to sanctions. The rules are the rules. We are fairly flexible in our intepretation of them in the clearance of accounts context. That is important. We do not punish member states because they have sanctioned 90 per cent of their people but in 10 per cent of other cases, they can show that in an equal way, and this is important, this is difficult to achieve, of course, it is not as easy as it sounds when I say it to find that every regional service centre in the UK, for example, has applied evenly and fairly the same criteria. No case is identical, of course, so there is a bit of personal judgment in there also. We want to see that the rules are applied. If, in some cases, member states have decided that they can accept without sanction. If they can show that in many others, they have applied their rules in the same way and applied sanctions to the benefit of the fund, we are happy in a clearance of accounts context. I am not a lawyer so I ahve to be careful what I say because the law is the law, nevertheless.

  162. Accusations have been made that some governments, particularly ours, gold-plate regulations or they enforce them more strictly and strenuously than they really need. That was an accusation raised about veterinary inspections as against environmental health officers at abbatoirs and it is a long-running argument. Therefore, perceptive Euro-sceptics, namely me, would argue that there is an excessive gold-plating element in this country. Does the Commission have any role in ensuring that member states do not do this because if they are going to do it, it is going to make the regulations less acceptable and less popular, is it not? Do you have any role in ensuring that they do not obsessively gold-plate?
  (Mr Slade) We talk about this with the national authorities. We are interested in efficient, effective systems because they are easy to understand and easy to control so that, for one, is my prime concern. But from an auditors' point of view, we are looking at the minimum legal requirements. I am interested in the quality of the set-up also but the simpler, the better as long as those minimum requirements are made. The gold-plating is for the national authorities to decide. That is for their own powers that be to decide upon. I do not really think that we have a say in that. Obviously, we do get representations. Other parts of D-G Agriculture, not mine, will receive representations from the farmers saying, "The Greeks want the same information ten times over. Can you advise them?" We probably would. That does not fall within my remit but we do have a interest in it, of course.

Mr Drew

  163. Perhaps we can just look at how we in the UK interlock with the Commission. We have been looking at and reflecting on what the British Government do in relation to the Commission anyway. There have been some quite trenchant criticisms both within the country but also within the wider EU about how we currently administer IACS. The Government's response to that is to set up CAPPA. Has that gone down well within the EU Commission?
  (Mr Slade) CAPPA being the new organisation? I have touched upon it but only in passing in the course of my work. It is still being set up. It is still relatively new. It is more than embryonic.

  164. You are saying that it has not formally been registered, as far as you are concerned?
  (Mr Slade) I have colleagues in Reading this week who work in a sister unit of mine who are looking into and will be interested in the new setting up of paying agencies within the UK. I have not had a chance yet to come and see it in operation so I cannot make any comment on that. I guess it is being done for restructuring and improvement purposes.

  165. Given that there was criticism advanced by the EU itself, I understand that the Commission made some general comments specifically about the British Government, although that may be true of other governments, and I would be interested in your response, not necessarily to the detail of CAPPA and what, as a payments organisation, it will do but just conceptually, pulling this altogether and getting rid of the divisions between intervention and other forms of payment?
  (Mr Slade) Yes, we had the nine regional service centres previously of MAFF running direct subsidies and the Intervention Board in Reading and Newcastle, taking care of export refunds and the other schemes, milk intervention and so on. I guess that the different levels and the interplay between those services—and I am guessing now because I do not have any particular inside information—has been decided. If there has been criticism or any observations from Brussels, I am guessing it was to do with the possibly unncessary complexity of the structure as it was and in the face of those observations, the UK authorities have decided themselves to restructure for the better. I am not in a position to say. But that must be the answer. You talked about the public perception of Brussels. I am not going into the politics of it. That is not my job. I do things. I make things work. I make things happen. I enforce them. I do not have any views on what the British or the French think about Europe, to be honest. I try to do my job. I have not been sent here with any political instructions for public image purposes, no, not at all.

  166. That leads me onto my second question which is the issue of gold-plating. We have had the report from the Haskins Better Regulation Task Force. Is that an important issue within the EU as a whole because sometimes we get the feeling from this side of the water that we are pretty much in isolation and everyone is reasonably happy with what is going on. Could you just give us a feel as to what the user view is in terms of regulation?
  (Mr Slade) In the context of IACS I can. You refer to the red tape review.

  167. We have had a red tape review and Haskins.
  (Mr Slade) In particular I would say, in relation to the new schemes that are subject to IACS control, that we had been considering means to simplify and streamline the controls. Two years ago when I visited farms around Europe, I was aware that matters were becoming too heavy because a week later the vets would look at the same animals for more or less the same purposes, which was to verify the database. There is a need to streamline the on-farm control approach and to make it less burdensome for the national authorities and less burdensome for the farmers who do not want to be away from the farm for two days instead of only half a day or one day as is really required. We are conscious of that. During last year "simplification" became an in-word. Not only the European procedures, but also the national procedures in the IACS context, came under review, which was very useful. The French undertook a similar exercise. I know that the Germans were doing a similar thing, so we had three important member states already looking at how things were going and deciding universally that things could be done better and in a more streamlined way. We were already thinking along those lines, but it is less easy to get agreements between 15 member states. For each measure of control there has to be a sanction which is not so easy. Towards the end of last year matters came to a head. There were contacts between the British authorities, the French authorities and I believe the German authorities, and all the reviews led to certain pressure being put on the Commission at the highest level. I was at a meeting with the French presidency with my director general. That is not quite as high as it gets, but that is as high as it gets for me. It was made clear that certain matters needed to be done, which we have taken in hand, and we are trying to push them through during the course of this year. Those reviews had positive effects, yes.

  168. I was struck by the visit that we paid to Ireland, where they—by which I mean the Government, the farmer representatives, presumably allied closely with the EU—set about redefining their forms and the way in which the mechanism operated. Are the British, particularly the civil servants, still somewhat aloof and not clear as to how to play the game, which is to write the rules yourself and negotiate them with the EU? We tend to wait until everybody else has moved and then lock ourselves into some long-winded bureaucratic mechanism so that we never quite catch up.
  (Mr Slade) It is not for me to answer that question, but I shall take the plunge. Yes, I think that there is a bit of that. The Irish are a little more close. It may be the case that agriculture is more important to Ireland than it is to the UK. That is not a belief on my part, but that may be the case. Maybe they keep their ears to the ground and maybe they decided, after seeing the reaction of the Commission to the examination of their systems and controls, that there was a possibility of cutting the red tape and they seized that. The only time I had ever done anything like that before was when I accompanied my former director, Mr Holmqvist, to Ireland, to a special agriculture committee, like this, in Dublin. We were asked similar types of questions. I believe that that was part of their review process and I believe that a year later those improvements started to take effect, if they are improvements. I have yet to audit them. Maybe I shall go there and find that there are serious deficiencies in the Irish system that were not there before. Then there would have to be consequences as usual. I do not anticipate that but one never knows.

  169. You have intimated that you have looked at disallowance and what happens in different parts of Europe. Where is the UK in all this? Are we overly worried about disallowance?
  (Mr Slade) Yes. I would like to enlarge on that. Yes, a few years ago there were high financial consequences in the sheep premium, for example, the ewe premium. That is the so-called sheep annual premium in the UK. The total disallowance, as you call it, the total financial consequences approached £100 million over three marketing years, if I remember correctly. That was for the whole of the UK. That was a severe knock-back. Of course it is all relative to how much the UK pays. The UK is the biggest beneficiary of the sheep annual premium scheme. The financial corrections ranged from 2 per cent to 5 per cent and 10 per cent, depending on the region and on the control forms that were judged to be inadequate. Those cases were being dealt in 1995, 1996 and 1997. Of course, as part of the team that took part, I think the consequences were correct; I think it was done for the right reasons; we made a case. As a result of that I feel that there has been a knee-jerk reaction by the UK authorities, who have a perception of myself and my colleagues as being people who stamp around Europe and at the slightest misdemeanour are willing to make a swingeing 5 per cent fine and refuse financing. They are accountable for that to the authorities and to Parliament. I understand their caution. I do not want to criticise in that respect. However, in some cases the financial consequences have been over-emphasised and possibly misunderstood, and I believe that the over-reaction has gone a little too far.


  170. In relation to Ireland, the Irish Government and the Irish farmers have a common interest in trying to maximise how much they get out of the system so that they can work together cheerfully. The French used to have that approach and I believe that they still do, although it depends where France sits in the net contribution league table. But that is not true of the UK, is it? The farmers want to get more out of the system and the British Government does not. We are net contributors and the CAP is a burden. It is more difficult for the British to play the system advantageously simply because we do not have a financial interest in that sense. That is a political comment.
  (Mr Slade) Leaving aside the fact that it is possible to manipulate the rules—it is my job to find out about that and if I do, the French and the Irish pay—like a good accountant, we will find the ideal system to minimise your tax, legally of course. Such is the case in a number of member states. Yes, I believe that France and Ireland have that approach to facilitate claims by their farmers. I do not necessarily agree that the UK does not have that approach, but in those countries they do have it. In Mediterranean countries, Portugal, Spain and Italy, often the local farmers take their details to a local farming union representative's office, or to a local branch of the ministry of agriculture to have his form completed for him. In some countries there may be a lot of peasant farmers, but their forms are immaculately filled in because they are all done by someone in the office whose job it is to do that. They are all typed out and the data is put into a computer and printed out. That is a way of maximising the benefits. That is legal and within the system. Why not? Databases would help that.

  171. You can then have remarks made by a number of people. When we visited our regional offices the officials said they are policemen and they think of themselves as being policemen and not facilitators.
  (Mr Slade) That would depend on whom you spoke to. It is the job of my colleagues in Reading, to whom I referred, to see that the structures are properly set up, that the agency is dispersing the funds and that the operations are well separated. There has to be a division of duties. It would depend on whom you spoke to. Some people in the regions effectively are policemen. Their job is to control and to find irregularities, deliberate or otherwise. On the other hand, I have visited four or five of the nine regional services and they always had someone on the end of a telephone who could give advice and there is always an office where the farmers can come for advice and help in completion of the forms. My job is to ensure that those same people giving the advice are not the ones who the next day will go to see the farmer. Generally, that is not the case. I do not believe that all of them feel like policemen, and they should not.

Mr Borrow

  172. I understand that the directors of the various paying agencies in different countries meet perhaps twice a year to discuss various issues. Who controls that agenda?
  (Mr Slade) That is a good question. They take place every six months, I believe following the presidency. It is the member state that organises the conference, in consultation. I have a colleague who helps and facilitates the interpretation, the funding—I believe that there is some funding from Brussels—so between them they fix the agenda. I believe that the member state decides, in consultation with other member states or other directors who have a great deal of autonomy. They may fix the whole agenda themselves. I do not think we play a part at all. It depends what is topical and in what they are interested.

  173. Is that seen by the Commission as a mechanism for spreading best practice?
  (Mr Slade) Yes, certainly. I think it was instigated by ourselves, one way or another; or at least, if not instigated, it was encouraged in the early stages. It is important that the people who know go.

  174. A few minutes ago we were discussing the fact that different member states have different approaches to implementing what should be a common policy. If it is a common policy across all member states, it should be implemented in a common way as far as the farmer is concerned.
  (Mr Slade) I agree. We like to ensure that the national authorities treat their farmers with equal weight across frontiers, yes.

  175. Does the Commission see part of its role as a responsibility to examine the way in which different paying agencies operate?
  (Mr Slade) Yes.

  176. Does it also have a role to seek out best practice and to ensure that that best practice is followed across all member states? How pro-active is the Commission in that process? Is it simply a matter that is left for the directors of the paying agencies to have their six-monthly chats and decide whether or not they should do anything?
  (Mr Slade) No, it is not left to them at all. I am not sure what they do. That is another issue. I am pro-active. After 10 years in the animal premium sector—I moved out of that recently—I have been around and I see what are good practices and what is good control and what is not. All controls have to have an objective. Do not go somewhere, spend a day doing nothing and come away and write a report. There has to be an objective. My colleagues, and Commission and myself are pro-active in trying to get across best practice. We try to cut out those pieces that we find that are inefficient and useless. We do not want armies of inspectors going around doing nothing. We want them working in an efficient way. We regularly make recommendations. After what we call a "mission", after each on-the-spot audit that can take a week, we send a letter containing not only observations, criticisms, recognition of good points and encouragement, but also recommendations as to how matters can be improved. We try to put some of them into the regulation. We drafted Article 6 of 3887. That gives a minimal content of what is a decent control. It cuts through the chaff and gets to the essence of what we believe is necessary. We did not want "hello-goodbye" controls; we wanted them to have constructive, effective content. Everyone has to do that. If they do not, we apply financial constraints. That is already done in member states. We want best practice, but my forte is on the control side. Administrative areas and form-filling are not really my area.

  177. On that last point, I recognise that from your perspective you are looking at it from an audit point of view and, therefore, you want to ensure that money is not paid to people who should not receive it. In terms of the Commission as a whole, from the Commission's point of view is there an emphasis on spreading best practice, and saying that you want to ensure that every farmer who is entitled to a payment receives it and that the systems that are set up actually enable that to happen?
  (Mr Slade) I would hesitate to say that the Commission was pro-active on that side of things. However, we must not forget that there are twice-monthly management committee meetings organised by the Commission in Brussels at which all member states are represented. There are many forums for the exchange of views. Whether the farmers' interests are among them, I am not sure. That may be the case. Perhaps I can return to one matter. I want to stress that my service sees it as an obligation to ensure that there is fair and equal treatment to the member states, to the farmers across the EU. I would be failing in my job, and I would be criticised for it at a later stage by other services, if it were found that I had not accepted some things in some member states but had let them go in others. That is very close to my heart and very close to the heart of my service.

  178. Referring to the document that MAFF submitted to the Committee, there is a reference to the Panta Rhei Group. Can you tell the Committee what it is and what it does? Who is responsible for it and who is on it?
  (Mr Slade) Certainly, I can give you some background information. It is an informatics group that meets fairly regularly, perhaps two or three times a year. There are delegations from all member states. They meet in different countries. It is organised by our informatics expert who is in a sister unit, in a clearance of accounts unit, but a sister unit to the IACS one. Really Panta Rhei is an exchange of information on aspects of technology in the context of paying agencies, clearing the accounts, financial declarations of expenditure to the Commission and so on.

Mr Hurst

  179. On inspections, we understand that since the autumn consideration has been given to a single control inspection per farm rather than one for each aid scheme. What progress has so far been made on that?
  (Mr Slade) MAFF came to see us to discuss the possibilities of the framework last October or November. Did you say this autumn?

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