Value for Money Examination  25:  Administration of Premium and Headage Grant Application    Summary

 The Department of Agriculture and Food (the Department) administers a range of annual grant schemes for farmers producing livestock (mainly cattle and sheep) and certain tillage crops. Most of the funding for the schemes is provided by the European Union (EU) which specifies the rates of payment and rules about eligibility and how the schemes are to be administered. By the end of June 1998, a total of ?786 million had been paid out in respect of 543,000 applications made under the 1997 schemes. Grant payments now amount to almost half of the aggregate income from farming.

Timeliness of Payments

Since grant payments are a significant element in the cash flow of farm businesses, the timing of payments up applicants is a critical issue. The Department aims to complete all the necessary processing and make payments to eligible applicants as quickly as possible within the time frame specified by the EU.

Payments under the 1997 sheep and tillage schemes were made fairly promptly but payments to many 1997 ?attle scheme applicants were significantly later than they could have been. Delaysi in payment arose because the Department has ongoing problems with the computerised mapping system designed to capture details about each farmer's landholding and grant applications and because of extra work associated with Bovine Spongiform Encephalopathy (BSE) and agrimonetary compensation payments. Errors in applications also led to correspondence with applicants and consequential delays in processing of claims. Late inspections may have contributed to delays in payment in some cases.

While delays in payments of grant moneys have been a persistent feature of administration of the schemes, real improvements in bringing forward payment dates have been achieved since 1993. The Department has challenging target times for payments but has not yet fully achieved them.

In October 1998, 21,800 claimants' cases under the 1995, 1996 and 1997 schemes had not been finalised (5,100, 7,500 and 9,200 cases, respectively). However, the Department considers that most of the applicants (particularly the 1995 and 1996 cases) have no entitlement to payment.

Productivity and Costs

The overall cost of administration and inspection in 1997 is estimated at ?18.1 million, equivalent to 2.3% of the grant payments made. The cost of administering individual schemes cannot be identified. Since 1993, the cost of administration has stabiised but the imposition of EU financial penalties for failure to achieve required standards of timeliness and control has resulted in avoidable expenditure of over ?? million being incurred by the Exchequer.

Measured in terms of cost and staff productivity, the levels of economy and efficiency achieved by the Department in administering the schemes have remained relatively constant since 1994.

There would appear to be scope for reducing inspection costs by better matching of staff to workloads and/or by substitution of temporary field resources for permanent staff to achieve possible savings arising from the seasonal nature of inspection work.

Inspection procedures

Department staff carried out inspections of almost 77,000 applications under the 1997 schemes. Around 15% of cattle scheme applications and 24% of sheep scheme applications were inspected. Around 5% of tillage scheme applications were verified either by means of on-farm inspection or by examination of satellite photography. B the vast majority of the cases inspected, the applications were found to be in order.

Inspectors recontirnended the imposition of penalties in relation to around 3,700 (5%) of the 1997 livestock cases inspected. In over 900 of those cases, including nearly half of the sheep cases, the inspectors concluded that the applicant had been seriously negligent in making the application or had made a fraudulent application. As a result, the inspectors recommended that the applicant be barred from the scheme concerned for one or two years.

Recommendations made by inspectors are reviewed by supervisors before formal notice of penalties is given to the applicants concerned. Inspection decisions are also subject to review by administrative staff and by the appeals unit. While there is evidence that a significant proportion of recommendations on some schemes are not implemented, the Department does not monitor outcomes.

The results of the 1996 inspections indicated that there is very considerable variation from county to county in the level of irregularities discovered through inspection. This has implications for the management of inspection activity. The Department systematically review the way inspections are carried out to ensure that the should same standards are being applied everywhere. Quality assurance through supervisory review of inspection work and, in some cases, re-inspection, has been undertaken. Where there appears to be a higher incidence of irregularity, the proportion of cases inspected may need to be increased.

Risk-based selection of cases for inspection has been in use for all schemes since 1996. This was intended to increase the effectiveness of inspections in detecting irregularities. However, the results of the 1998 ewe premium inspection cases calls into question the effectiveness of the criteria used for risk-based selection.

Evaluating the Effectiveness of Grant Application Processing

The Department does not have reliable systems to evaluate the effectiveness of the  administration of grant processing. Apart from limited targets for the timing of payments, no quantified performance targets have been set and the information systems are not geared towards providing performance indicators on areas such as the incidence, causes and means of discovery of errors and the tracking of the underlying level of irregularities occurring in the schemes. No formal programme evaluations of grant administration are undertaken.