How Brexit could improve the U.K.’s Rural Payments Agency

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The U.K.’s Rural Payments Agency has long been renowned for its inefficiencies in processing timely and accurate financial support payments to farmers across the country. But now industry figures expect Brexit will lead to an improvement in performance due to a loosening of the EU-driven bureaucratic regulations.

Administered by the RPA as part of the Basic Payment Scheme (BPS) in the U.K., Common Agricultural Policy (CAP) payments are estimated to represent around 55% of a farm’s income and approximately £1.6 billion of these payments are made every year. They were introduced by the EU, both as a form of income support for farmers and to subsidise food prices for consumers, with the exact payment a farmer receives dependent on how much land they own.

Research undertaken earlier in 2018 by the Department for Environment, Food and Rural Affairs Committee found that many farmers still face unacceptable delays between applying for and receiving vital CAP payments.

“Farmers make an application on an annual basis each May, but then there’s a big lag time between the application going in and the payment being received,” said Richard Wordsworth, a senior advisor at the National Farmers’ Union on the BPS. “By June 2018, we still had a number of farmers who hadn’t received payments they applied for in May 2017.”

The major sources of complaint have been both the lengthy time window for payments to be issued and the lack of communication from the RPA. While the majority of CAP payments are made each December, farmers who do not receive payments during that month can face a period of up to six months of uncertainty as late payments can be issued at any point between January and the end of June.

“It’s very difficult to get information from the RPA as to why there’s been a delay, when exactly the payment will be processed and why a payment has been reduced or a penalty applied,” Wordsworth said. “And if the money hasn’t come in on time this has quite a profound impact, as margins and cash flows are already under pressure because of the cyclical commodity prices in the industry.”

In response, the RPA said it is trying to improve the efficiency of the system.

“We have made improvements to our overall payment performance, including 96% of 2017 BPS payments delivered by the end of March 2018,” said Paul Caldwell, chief executive of the RPA. “We recognise that our communication with farmers has not been good enough, which is why we are making changes.”

However, while the RPA has taken much of the blame for delayed payments, the National Farmers' Union says that the major problems lie in the complex structure of EU legislation which underlies CAP payment processing, and causes these lengthy waiting periods.

“The RPA are largely beholden to a set of processes and timescales that are out of their ability to manipulate,” Wordsworth said. “The way the system works is that support payments are initially funded by the treasury, the treasury then puts an invoice into the European Central Bank and the treasury gets reimbursed. But if EU auditors find that the RPA isn’t performing all the processes and checking procedures that they demand to manage any potential fraud risk, then treasury’s invoice won’t be paid in its entirety. There’s a safety-first mentality because of that EU disallowance risk element.”

However, because the delivery of CAP payments is an EU scheme, if the U.K. moves outside of the EU legislative framework altogether as the Brexit process takes shape in the next few years, the farmers' union predicts there will be an opportunity to create an entirely new rural payments scheme based on a domestic agricultural policy.

“We do see opportunities which could benefit everybody,” Wordsworth said. “A new policy could try to engineer out some of the issues that we’ve had with the CAP regarding timing of payments and the level of bureaucracy that needs to be followed. Hopefully it will lead to a payment scheme which works, is more agile and is more cost-effective for government in that it doesn’t need to spend so much time doing things just because that’s what the EU rules and regulations say.”

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