Answers demanded by the NFU as Defra faces fines for non-compliance
06 Jul 2010
Defra announcement regarding EU audit of England’s agri-environment schemes
The NFU have been informed that the European Commission do not believe that our Agri-environment Scheme (AES) payment checking systems in England are sufficiently robust to prevent unrecoverable payment errors occurring. Therefore they do not believe that our current systems are compliant with EU Regulations.
- What would the changes mean?
The Commission has concluded that payments should be made at the same time each year instead of on a rolling basis throughout the year, to comply with EU law. The Commission has therefore asked Defra to
- establish an annual deadline for AES payment claims of 15 May, the same as for the Single Payment scheme. This is to allow more stringent cross-checking implemented at a fixed point in time soon after the 15th May across the whole population of AES agreement holders (i.e. similar to the way SPS works)
- establish an annual cycle for payments, so that payments can only be made at particular times of the year after the checking has been fully completed.
- What this could mean for our members?
- The exact timescales and the scope (i.e. which AES schemes will be impacted) of the proposed changes are still unclear, but Defra have suggested than any changes would be unlikely before 2011 and only AES post Jan 2007 would be affected.
- A key point is that any changes to the system will not affect the amount of the payments or the total funding which farmers receive under their agreements.
- Talks between Defra and the European Commission are not yet complete and specific details of the changes are yet to be decided. Farmers are being notified now so that they are aware of this situation, and have the opportunity to contribute their views. In the meantime, farmers are being encouraged by Defra and Natural England to continue to apply for new or renewed Environmental Stewardship agreements as before.
- However the NFU believe that there will be other impacts including
- Cash flow disruption to farm businesses
NFU believe that there could be possible cash flow implications for farmers as a result of a fixed cross-check window being introduced. All farming sectors that participate in AES will see some degree of disruption to the timing of their payments and hence impacts on their cash flow. However, the NFU's innitial anlaysis indicates that those hardest hit are likely to be upland farmers, because of the timing of AES payments relative to existing natural annual troughs in upland farm income, existing tight margins and recent increased reliance on agri-environment scheme income following the loss of the Hill Farming Allowance.
- The wider industry
Whilst we continue to believe that a year round application window provides our members with important flexibility, in reality there is every possibility that any major changes forced as a result of having to conduct cross checks on a cohort established up to 15 May will lead to a concentration of applications closer to the close of the annual application window. This also overlaps with very busy times for SPS for farmers and advisers. Hence we are looking at a possible workload bottleneck, not just for the industry, agronomists and advisers but also Natural England and RPA. Recent failures such as the RLR re-mapping exercise along with budget cuts do not instil confidence in how this will be effectively managed and resourced.
- NFU’s reaction - AES are a very important income stream to many of our members and continued participation in them is a key tool in avoiding further environmental regulation. The industry puts its trust in Defra to make sure these schemes are administered in full compliance with EU rules. Therefore, we will be urgently pressing Defra for answers regarding how long they have been aware of the Commission audit problem and whether Defra have explored all legal avenues available to them before embarking on the implementation of potentially costly and disruptive changes to the schemes.
- For further information:
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