The Rural Payments Agency, responsible for paying subsidies to British farmers, overspent by £37 million after a “rigid” system, delivered by Accenture, failed to administer payments properly.
The government agency overpaid subsidies under the Single Payment Scheme by £37 million in 2005 to 2006, and some 20,000 farmers were paid incorrectly, according to the ‘progress update’ report by the Committee of Public Accounts.
A third of claims this year, or 34,499 claims, could still be affected unless farmer entitlements were properly checked, it said.
The agency also overspent by £50 million on a business change project that was intended to meet the new payments scheme, taking total project costs to near £300 million.
“The agency’s service to farmers is still undermined by weaknesses in its IT systems, such as its inability to provide farmers with a predicted amount and payment date to assist them with their financial planning,” the report said.
It is spending £750 to process each farmer’s claim for a subsidy payment, and greater automation of small claims processing as well as better use of electronic payments was “essential” in reducing these costs, the report said.
Its IT system was “rigid and task based”, and was “unsuited” to the agency’s needs, the committee said. The Accenture contract was renegotiated so that from September 2007 to 2009, Accenture will receive a managed service fee of £14 million in total, and risk will be better spread.
The committee said that the Agency had scoped out key project modules, such as the development of software to generate management information on the progress of each claim, but its requirements had proved inadequate. “Staff have not had the necessary tools to process payments adequately or the information to answer farmers’ queries on the progress of their claim,” the report noted.
The Department for Environment, Food and Rural Affairs had “chosen to implement the most complex option for reform in the shortest possible timescale, and the agency had badly underestimated the scale of the task”, the committee said in its report. This led to delays and errors in payments to farmers, and additional project and administrative costs.
The Rural Payments Agency’s IT systems have now been re-engineered and underpinned by new software. The number of “offline databases” had been reduced from 90 to 13, and a testing environment for new software introduced. This “Model Office” had allowed new software to be trialled and staff to be trained before implementation, the committee said. Defra was “confident” the new system would be more flexible.
These changes have enabled most farmers to receive payments earlier than the previous year, the report said.
Edward Leigh MP, chairman of the committee, said: “The agency’s failings in implementing the scheme might lead the European Commission to fine the government hundreds of millions of pounds.”
“Restoring farmers’ confidence will depend on the Agency’s improving its business processes and IT systems to the point where it can process claims efficiently and promptly and tell farmers when they are likely to be paid,” he said.
Other EU countries had taken a “more measured approach” to implementing the payments scheme, Leigh said. Ministers had failed to highlight all the risks of implementing the scheme against a tight deadline.
The Rural Payments Agency said in a statement: "While it is well documented that there were problems with payments during the first year of the scheme's operation (2005 to 2006), the performance of the scheme has improved significantly and the Rural Payments Agency met all of its 2007 payment targets ahead of schedule.
"But of course Defra and the RPA recognise that further steps need to be taken for the Agency to again provide an acceptable level of service to its customers and we will consider this report in that context."
Defra has not yet responded to a request for comment. Accenture declined to comment.