NAO Reveals True Extent Of Defra Penalties

Jul 15, 2015

The Department of Environmental, Food and Rural Affairs (Defra) has been fined a total £642m in the past ten years according to a new report by the National Audit Office (NAO).  

The penalties, which were issued by the European Commission (EC) are a result of the Department failing to comply with its requirements to control and administer payments correctly under Common Agricultural Policy (CAP).  

The report, Managing disallowance risk, reveals that the UK is incurred 'disallowance penalties' of £2.70 per £100 of CAP funds paid out to country since 2005.  

This is the sixth highest figure in Europe out of 28 member states; just Greece, Romania, Portugal, Bulgaria and Cyprus have managed to receive higher charges.  

"Progress has been made by Defra in the last year in its approach to managing financial penalties imposed by the European Commssion," claimed NAO head Amyas Morse.  

"Nevertheless, the problems giving rise to financial penalties are persisting and there are additional risks arising from the more complex CAP 2015-20 scheme.  

"I am sorry that I have had to return to qualifying my opinion on regularity on the Department's accounts, primarily owing to the fact that penalties for 2012 and 2013 have no been confirmed," Morse added.  

The main causes of disallowance penalties from 2005 to 2014 were late payments to farmers, poor mapping data used to verify applications and shortcomings in cross-compliance controls. 

According to the NAO, improving the quality and completeness of data in the Rural Land Register is likely to cost Defra upwards of £45m - however, if the Department does this successfully, it may avoid fines of between £215m-£370m by 2021.  

Troubled Payments System Must Be Improved  

The troubled online CAP payments system, which received negative press earlier this year for failing to work properly, is part of Defra's attempts to reform and avoid such severe penalties.  

The NAO says that the avoidance of future fines in this area is now entirely dependent on the Department's ability to improve the design of the final system.  



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