CAP reform proposals 12 October 2011
CAP reform consultation
SPS Payment Check
SPS: Dual use and obvious errors
2012/13 USDA forecast
Our first look at 2012 - 2013
Cereal S & D trends
Published: August 2011
The Rural Payments Agency (RPA) has sent letters to around 1100 farmers (covering 550 dual claim occur-rences) asking for documentation where Single Payment Scheme (SPS) and Environmental Stewardship (e.g. ELS) are claimed on the same parcel of land by different parties. Dual use has never been permitted in Scotland and is no longer permitted in Wales. It has been flagged as a potential issue in England since the start of the year. The debate concerns whether each party can actually fulfil their specific obligations for the scheme they manage.
An important situation for the arable farmer is seasonal letting for specialist cropping where the grower claims the SPS income and the land supplier the ELS income. Whether or not there are ELS options in the let field, the land supplier receives ELS payments based on the area and a number of conditions have to be met (occupation is not a requirement for receipt of Environmental Stewardship payments at present). Some agreements make the tenant aware of their environmental obligation but not all. Where there is no written agreement the respondents will be asked to describe their obligations in a letter. Failure to respond within 21 days will hold up payments.
The irony is that where a licence arrangement is used (enabling the land supplier to claim SPS and ELS) the problem would not be evident to the RPA, although there is some doubt that the arrangement would be treated as a valid SPS claim by the EU.
A decision such as made in Wales would have important ramifications. Both Defra and the RPA would like the status quo to be maintained but this may not be within their power to grant.
At the strategic level, the distinction is unnecessary; the flexibility of the current arrangement allows land to be entered into the ELS that would otherwise be excluded. Natural England gains the additional environmental areas and there is no duplication of payment.
One of the most frustrating aspects of the SPS scheme is the unreasonable way that the RPA deals with ‘obvious errors’ and the uneven treatment of applicant errors compared with RPA errors. Much of the problem appears to result from the RPA’s almost pathological fear of being fined by the EU and, given some of the bizarre rulings, perhaps reasonably so.
There are situations where claimants’ errors have resulted in the loss of their entire payment even though the error would not have resulted in an increase in payment over that which they were entitled to. Many errors occurred where applicants have been given poor advice by the RPA. For an ‘obvious error’ claim to be successful, it has usually been necessary to show that the application form is inconsistent.
A case has been taken to court by Burgess Salmon, acting on behalf of Peter Strawson Ltd. Peter Strawson Ltd won the case and payments were reinstated.
The case involved the 2007 claim when occupation of the land area used to activate entitlements had to be for 10 months (not one day, as is now the case). The error occurred when (some of) the land acquired on the 1 December 2006 was accidentally entered on the application form with an activation date of 1 October. This choice of date meant that the occupation period for the 2006 and 2007 claim years overlapped.
Not for the first time, telephone advice given by the RPA was incorrect and subsequently denied. In addition, conflicting letters were sent by the RPA on consecutive days. Peter Strawson Ltd made stage 1 and stage 2 appeals and while the Appeal Panel decision stated: “It was clear to the panel that there was no intent of fraud and that this was a genuine error,” the penalty was still enforced. The identification of a ‘genuine error’ by the panel sleuths is not the same as an ‘obvious error’.
The appeal was taken to court on four grounds:
1. The land was available for 10 months so a penalty should not be applied. The RPA successfully argued that the wording in the legislation stated that the 10 months should be from “the date nominated by the farmer” and consequently this argument failed.
2. Amendments could be made to applications already submitted up to 31 May. Peter Strawson Ltd did not make the amendment within this window and this claim was dismissed.
3. It was argued that the error should be classified as an ‘obvious error’. Judge Mackie stated that while an ‘obvious error’ would “generally be a mistake that is evident on the face of the application it is made clear that each case depends on its own facts”. In this case, the Judge extended the definition of obvious error to include checks against the RPA database and made the point that there was no fraudulent claim because the error did not result in the receipt of money that would not otherwise be due. This aspect of the claim was upheld.
4. The final argument was also won. It was argued that following the receipt of letters from the RPA suggesting that the claim could be amended there was a legitimate expectation that payment would be made.