The Comptroller and Auditor General, has published his audit opinion on the 2011-12 accounts of the Department for Environment, Food and Rural Affairs and the Rural Payments Agency.

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Amyas Morse, the Comptroller and Auditor General, has qualified the respective accounts of the Department for Environment, Food and Rural Affairs and the Rural Payments Agency.

Defra’s accounts have been qualified on the grounds of regularity, because of penalties totalling £46 million from the European Commission.

The Rural Payments Agency’s and Defra’s accounts have also been qualified on the grounds that the Agency has not been able to make an accurate assessment of the value of overpayments and underpayments which have been made to farmers since the Single Payment Scheme began.

During 2011-12, Defra has recognised penalties imposed by the European Commission of £46 million because EU regulations have not been applied correctly in the processing of EU schemes. This includes penalties of £29 million in respect of a scheme for Fruit and Vegetable producers. Defra’s accounts also include provision for a further £125 million of estimated penalties, including £95 million for the Single Payment Scheme in England for 2010 and 2011, £20 million for Fruit and Vegetables producers and £11 million for the Rural Development Programme in England.

Penalties have been incurred as a direct result of weaknesses in the management and administration of the Rural Payments Agency, particularly during the early years of the Single Payment Scheme. The Agency continues to experience considerable difficulties in quantifying the value of overpayments and underpayments made to farmers under the Scheme. However, today’s report on the Rural Payments Agency notes progress has been made by the Agency in the last financial year.  In particular, the Agency has published its “Five Year Plan”, incorporating a “Strategic Improvement Plan” to remedy the problems of the Single Payment Scheme, and a “Future Options Programme” to prepare for Common Agricultural Programme reform.

"I have again had to qualify the accounts of the Department for Environment, Food and Rural Affairs. This is because the Department has had to pay penalties to the European Commission for non-compliance with regulations over a number of years up to 2009 which led to incorrect payments to farmers and others."

"While I welcome the progress made by the Agency in the last financial year, there continues to be a significant loss to the taxpayer because of weaknesses in the administration of the Single Payment Scheme by the Rural Payments Agency."

Amyas Morse, head of the National Audit Office

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