Select Committee on Agriculture Seventh Report


The Agriculture Committee has agreed to the following Report:-


All farmers in every Member State believe that their government are over-zealous in implementing European rules - Mr Don Curry, Chairman of the IACS and Inspections Working Group.[2]

This Report sets out to examine the validity of this claim in the context of the way IACS is implemented in England.


1. The Integrated Administration and Control System (IACS) is an anti-fraud and expenditure control mechanism for payments made to farmers under the European Union Common Agricultural Policy (CAP). Introduced as part of the MacSharry CAP reforms implemented in 1993, IACS applies in all Member States and currently covers nine arable and livestock schemes directly, in addition to providing cross-checks for some measures under the Rural Development Regulation.[3] The system requires individual fields (or groups of fields known as "land parcels") to have a unique identification code and all animals to be identified and recorded. It provides for an inspection system to ensure that a farmer's claim is correct and a penalty system where it is found that a claim is inaccurate. Furthermore, there are provisions to inflict financial penalties, or "disallowance", on a Member State, where checks by the European Commission or the European Court of Auditors reveal deficiencies or irregularities in the control on expenditure exercised by the paying agency within a Member State.

2. In order to claim payments under IACS, farmers are required to submit an annual IACS declaration form, covering both their forage and arable areas. This declaration then supports separate applications for each of the livestock schemes. The IACS process is important to farmers chiefly because it entitles them to the subsidy payments. In 1999 74,561 farmers submitted IACS forms to the Ministry of Agriculture, Fisheries and Food (MAFF) and they received a total of almost £1.3 billion in IACS subsidies, with an average of over £20,000 each for arable area payments, £4,000 for sheep, £1,100 for beef cattle and £4,000 for suckler cows.[4] In the same way, IACS matters to both the European Commission and national governments both because of the need it imposes for stringent controls and because of the large amounts of money involved. The development of the IACS regulations to take account of new schemes and new technologies ensures that the responsibilities placed on both Member States and the Commission by the system will continue to increase for the foreseeable future. In the UK farmers regard the forms as a considerable burden in terms of the time taken to complete them, their complexity and the administrative process to which they are subjected. The related inspection regime is also a source of some irritation, as are certain of the more restrictive IACS rules.

3. The centrality of IACS to the CAP and its use in all Member States makes it a useful marker by which to measure the commonly-held view that UK farmers are uniquely disadvantaged by the way in which the UK Government implements EU regulations. The argument is not only that farmers in other countries benefit from a much less stringent and more "understanding" official attitude towards the implementation of regulations. There is also a firm belief in many quarters that UK officials incline towards "gold-plating" and excessive attention to the rules, thus resulting in a double burden on farmers in this country in their attempts to compete with their counterparts elsewhere in the EU. Those who hold this opinion are strengthened in their conviction by a seeming lack of information on exactly how other Member States implement common systems such as IACS. In this inquiry, therefore, we set out to uncover evidence to dispel, or alternatively confirm, the belief and to separate perception from reality. In doing so, we have borne very much in mind the recognition that the differences in implementation of the IACS system depend on factors well beyond national decisions on the specific regulations: they stem from the prevailing culture and relationship between government and the farming industry in individual Member States. In France, for example, there is a far greater sense of officials and farmers working closely together at the regional level than in the UK, because a greater proportion of administrative decisions are devolved to each département and the civil servants working for the regional office maintain daily contact with the local chambre d'agriculture, membership of which is compulsory for farmers.

Conduct of inquiry

4. We announced the terms of reference for this inquiry on 21 July 2000, calling for evidence on the implementation of the Integrated Administration and Control System (IACS) in the Member States of the European Union; the efficiency and effectiveness of the administration of CAP schemes relating to IACS in each country, including England, Scotland, Wales and Northern Ireland; the EU and national regulatory requirements, interpretation of those requirements, administration by the various authorities, the application procedure, processing of claims, inspection regimes and enforcement practices; and evidence of both best practice and gold-plating or under-implementation of the relevant regulations.[5] We sent invitations requesting evidence to a wide variety of organisations, including the London Embassies and the main farmers' unions of each EU Member State. We are grateful to all those who responded to our invitation, although we note that the response rate was far lower than we would normally expect for such an inquiry. Following on from the written evidence, we held three sessions of oral evidence in Westminster, hearing from Mr Don Curry, Chairman of the IACS and Inspections Working Group (see paragraph 6 below); the National Farmers' Union of England and Wales (NFU); Mr Malcolm Slade, DG Agriculture, European Commission; and Mrs Janet Purnell and Mr Bill Duncan, officials from MAFF. A separate but related evidence session was held on 7 February 2001 with Mr Johnston McNeill, Chief Executive Designate of MAFF's new CAP Payments Agency (CAPPA).[6] We also visited Northern Ireland to compare IACS administration in another part of the UK, and the Republic of Ireland and France to learn at first hand how other Member States have addressed similar challenges. We should like to thank all those with whom we exchanged views, either formally or informally, for their frankness and for the contribution which they have made to our inquiry. We acknowledge, of course, that we have only managed to "sample" the issue. Nonetheless, we believe that our conclusions represent a valid summary of the debate.

5. Our specialist advisers for this project were Professor Alan Swinbank, Department of Agricultural and Food Economics, The University of Reading and Graham Kerr, Rural Business Unit, Scottish Agricultural College. We are grateful to both for their expert advice and assistance throughout the inquiry.

The IACS and Inspections Working Group

6. In September 1999 Mr Don Curry, Chairman of the Meat and Livestock Commission, was invited by the Government to chair a working group on the IACS system and inspections on farms. The Group reported their findings to the Minister of Agriculture, Fisheries and Food three months later, making 29 recommendations which aimed to relieve the regulatory burden, to minimise overlap and duplication and to review the procedures for dealing with non-compliance.[7] We have found the Group's analysis of the problems and its proposed solutions, together with the Government's response to its recommendations, useful background to our own investigations. Our Report is not an attempt to update the Curry review of regulatory burdens but we have drawn upon its findings where possible as an authoritative account of the particular difficulties posed to farmers by the administration of IACS in the UK.

Structure of the Report

7. The Report is structured as follows. Section II examines the current arrangements for the implementation of IACS throughout the EU, highlighting differences and explaining how these come about. In Section III we focus on the European Commission and procedures to simplify the complexities of the system and those complaints - concerning inspections, the number of forms demanded and penalties, for example - which emanate from European-wide rules and can only be addressed at the level of the Commission. Other complaints, although common to many Member States, relate to matters of national discretion and are therefore within the competence of MAFF itself. These include the complexity of forms and the level of and attitude towards bureaucracy. We attempt a detailed examination of such issues in Section IV. Section V contains our conclusions and a summary of recommendations made in this Report.

2  Q 8. Back

3  Ev. pp. 40-41, para 4. Annex B to MAFF's memorandum to the Committee contains a detailed description of each of the seven schemes operated in the UK: arable area payments scheme (AAPS), beef special premium scheme (BSPS), suckler cow premium scheme (SCPS), extensification payments (EPS), sheep annual premium scheme (SAPS), slaughter premium scheme (SPS) and hill livestock compensatory allowances (HCLAs)/hill farm allowances (see Ev. pp. 49-57).  Back

4  Ev. pp. 43-44, para 20. Back

5  Press notice 38, Session 1999-2000, 21 July 2000. Back

6  This evidence was published as HC 231, Session 2000-01. Back

7  Report by the IACS and Inspections Working Group to the Rt Hon Nick Brown MP, Minister for Agriculture, Fisheries and Food (IACS Report), December 1999. Back

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