Department fined £9m by EU over headage schemes

Since 1993 more than £9 million in penalties has been imposed on the Department of Agriculture by the EU "for failure to achieve required standards of timeliness" in the administration of headage payment schemes, according to a report of the Comptroller and Auditor General. It describes these penalties as "avoidable expenditure".

It also found that of almost 77,000 applications by farmers inspected under the schemes last year penalties were recommended for 3,700. Of that total more than 900, nearly half of them in regard to sheep inspections, had been seriously negligent or were fraudulent. Grants to producers of livestock accounted for 87 per cent of the total amount paid out.

By the end of June this year a total of £786 million had been paid out to farmers in respect of 543,000 applications made under 1997 schemes. About 93 per cent of the amount is provided by the EU. Grants paid under the schemes now amount to almost half of the aggregate income from farming.

The report says that "while delays in payments of grant moneys have been a persistent feature of the administration of the schemes", real improvements have been made. However, Department target times for payments have not yet been fully realised.

It notes that "in October 1998, 21,800 claimants' cases under the 1995, 1996 and 1997 schemes had not been finalised". However, it says the Department considers most of those applicants not to be entitled to payment.

It also found that "there would appear to be scope for reducing inspection costs" in the schemes and that a significant proportion of inspectors' recommendations were not implemented. The Department, it says, does not monitor the outcome of inspection cases.

There was considerable variation from county to county in the level of irregularities, according to the report, which it says could be due to differences in the incidence of irregularity or in the quality of inspections. It recommends that inspection methods be systematically reviewed to ensure that a consistent standard is applied.

Figures for 1996 show that penalties were recommended in 6.5 per cent of cases inspected in Co Tipperary compared to 1 per cent in Donegal, Kilkenny and Leitrim.

Penalties are laid down by the EU. Where ineligible animals are discovered being claimed for, the amount payable on the remaining eligible animals is reduced by a set percentage. Where more than 20 per cent of the animals claimed for are found to be ineligible no grant is payable at all.

In cases where irregularities are found to be caused by serious negligence the applicant is debarred from the scheme for a year, and where irregularities are believed to be deliberate, the applicant is debarred for two years.

In 1997 about 40 per cent of irregularities found during inspection were classified as obvious errors and did not give rise to penalties. More than half of the irregularities found in cattle inspections led to reductions in payments.

However, "very few of the irregularity cases discovered during sheep inspections were categorised as having arisen due to obvious error". In half such cases payment was reduced, while a quarter were not paid out at all. In 22 per cent of the sheep inspections where irregularities were found it was recommended that applicants be debarred from payment for two years.

The report also found that the Department's information systems were not geared towards providing performance indicators on areas such as the incidence, causes and means of discovery of errors and the monitoring of the underlying level of these errors.