Integrated Administration and Control System Appeals Mechanism
The first item of business is a statement by Ross Finnie, on the integrated administration and control system appeals mechanism. The minister will take questions at the end of his statement.
Presiding Officer, I will make a statement on the new appeals procedure for farmers who are penalised in relation to European Union agricultural subsidy claims and in relation to payments under certain other schemes. The new procedure is a commitment under the Scottish Executive's programme for government and I am pleased to report on the implementation of that commitment. The following are the key elements.
The new procedure to accept appeals will be operational on 9 November. It will cover all the livestock and arable support regimes under the integrated administration and control system—known to those of us who love it as IACS. From 1 January 2001, it will also cover the main agri-environment and afforestation schemes that are operated by the department, as well as the sheep annual premium and the suckler cow premium quota arrangements. An information leaflet on the procedure will be issued to all producers later in October. The secondary legislation to implement those arrangements is currently before the Parliament.
I am also announcing appointments to the membership pool for the external advisory panel that forms the second stage of the appeals procedure. A consultation paper was issued in December last year and the proposals for a three-stage procedure were widely endorsed. The three stages comprise an in-house stage, an external panel stage and a judicial element, through the Scottish Land Court.
Since February, we have been working to bring the proposals to fruition. The new procedure will handle appeals against decisions that are made under the main EU schemes, based on IACS 2000, and in relation to the agri-environment and afforestation schemes on decisions that are made from 1 January 2001. Appellants may, as they wish, move through the three stages of the procedure, which reflect increasing levels of formality. The basic aim is to create an accessible system in which, where possible, cases will be resolved at the lowest possible level of formality.
The first appeal stage consists of an enhanced internal procedure, which has been deemed necessary. A formal, in-house panel, consisting of three officials who usually would not have been involved in the original decision, will consider cases. The panel will consider the appeal grounds, a report on the circumstances of the case from the area office or section involved, and the relevant legislation. The panel will normally meet at Pentland House, at which stage appellants can opt for an oral hearing if they so wish, in addition to their original intimation of appeal.
The second appeal stage involves a panel of two external members and the relevant scheme manager from the Scottish Executive rural affairs department. That panel will meet at different venues throughout the country, to make the procedure accessible to appellants. If they wish, appellants can opt for an oral hearing. The panel will review the earlier decision and advise me of its recommendations.
As I indicated, today I announced the pool of panel members. I was pleased with the response to the appointments advertisement. There was a strong candidate list and the 17 members who were chosen demonstrated a wide range of skills, expertise and experience. I am sure that they are well able to carry out this important job.
The final appeal stage is the judicial element through the Scottish Land Court. The court is independent from the Scottish Executive rural affairs department and operates according to legislative procedures. It will consider submissions from the appellant and from the department. The court will decide whether it requires an oral hearing, depending upon the nature of the case. Members will be aware that the chairman of the Scottish Land Court has the equivalent status of a Court of Session judge.
Appellants will have 60 calendar days from the date of a decision in which to move to the next stage of appeal. An aim of the early stages of the new procedure is to provide an affordable and accessible means by which farmers can have a decision scrutinised. There will be no charge for access to the in-house panel. A deposit of £100 will be required for access to the external advisory panel. That will be refunded if the decision is in the appellant's favour. The Scottish Land Court has an existing tariff of charges and the costs will be in accordance with that tariff—£100 per application, plus £125 for each day of oral hearing.
The legislation extending the jurisdiction of the Scottish Land Court, currently before the Parliament, specifies the types of appeal that will be considered. The coverage is wide and will consider matters of fact and of interpretation of the law. Specifically, it will include reductions in subsidy payments, exclusions from payments and recovery of past payments.
That gives an overview of the main elements of the procedure. Those, together with further details, will be included in an information leaflet that will be issued to all producers later in October. A copy will be lodged in the Scottish Parliament information centre.
The new procedure is an example of the Executive's commitment to create an open and accountable system in which our farmer customers, and, more generally, the people of Scotland, can have confidence. The key aims of the appeal procedure are to provide clarity and transparency in the decision-making process, to address the criticism that is sometimes levelled at the department—that it acts as both judge and jury in EU subsidy disputes—and to provide appellants with a second opinion in cases where they feel that a wrong decision has been made under the EU rules.
I stress, however, that the procedure, of course, cannot change the EU rules—it will have to work within them. I think that producers well recognise that to qualify for subsidy and to avoid penalties or reductions in their claims, they must comply with the rules as set down, which are embodied in legislation. The new procedure cannot rewrite the legislation or the policy decisions taken in respect of the schemes. It can, however, identify problems of interpretation with the legislation. The Scottish Land Court can offer an interpretation of the law itself and can invite the European Court of Justice to give its view of the proper interpretation of Community law.
I am conscious that we have been criticised for too much bureaucracy in processing claims. However, we must remember that most of the current procedures arise from the burden of EU regulation, much of which does not allow SERAD staff to exercise even a modicum of discretion. Equally, I am obliged to ensure, on behalf of the taxpayer, that the sizeable amounts of public money—approaching £500 million a year—that are disbursed under the main agricultural support schemes are properly accounted for and properly audited.
None of that is to suggest that mistakes in the handling of claims will never be made—I would not make such a silly claim. However, I firmly believe that the appeal procedure that I am announcing today will allow such mistakes to be addressed, will provide an independent view of disputed cases and will provide greater clarity and transparency in the decision-making process.
The implementation of the appeal procedure marks another important step along the way to fulfilling my wish that the department should provide a first-class service to its producer customers. The process of improvement is continuing and more is to come, not least in the development of electronic systems, but the appeal procedure has a major part to play in making the department's service more transparent, demonstrably fair and, I hope, equitable.
I commend the arrangements to the Parliament.
I thank the minister for the advance copy of his statement. As this is my first outing, as it were, in my capacity as rural affairs spokesman, I say to the minister and to colleagues in other parties that I look forward to working constructively with all of them for the good of rural Scotland, although I will be critical from time to time.
I welcome the broad thrust of the proposals, which have been sought and campaigned for by members of all parties. The proposals are long overdue.
Does the minister not believe that it would have been better if the statutory instrument had been laid in draft? That would have allowed us an opportunity to improve it. Does he agree that the inclusion of the scheme manager in the second stage of the appeal process not only offends against the first principle of natural justice—nemo judex in causa sua—but breaches the European convention on human rights? Will legal aid be available should applicants go to the Scottish Land Court, which is the third stage? One would hope so, given the level of agricultural incomes.
Finally, I suggest to the minister that the main problem, which he recognises, is that many farmers and crofters believe that they are being punished and treated as criminals under a set of rules that do not allow for a punishment that fits the crime. In many cases, those rules lead to the loss of a whole year's livelihood as a result of a clerical error.
In his response, will the minister state specifically whether he accepts the suggestion that I made in relation to a constituent's case? That suggestion is that the critical document is the European Commission's document "Obvious errors in aid applications submitted under the integrated system". The minister does not need to apply that document, and he could amend it. If he did so, many of the people involved in the hardest cases would not find themselves punished so disproportionately.
I refer to Fergus Ewing's infelicitous phrase—his "first outing"—and congratulate him on his new appointment. I can safely say that the whole Parliament—even those members who are absent—looks forward to his constructive role. I express severe delight that he will be critical only from time to time. Rarely can elevation to the front bench have so changed the character of a lifetime.
I will now deal with the serious questions that Fergus Ewing put to me. He mentioned laying an order in draft. I hope that he will accept that this is a technical, procedural measure that is designed to extend the jurisdiction of the Scottish Land Court. The cycle of the appeal procedure will include the point at which the powers that we are granting to the Land Court come into play. One either grants the Land Court extended jurisdiction or one does not. I hope that we have worded the instrument in such a way as to avoid placing inhibitions on the extent to which we have granted that jurisdiction.
In relation to the scheme manager, we are not necessarily talking about an official who has been personally connected to the scheme. Rather, we are talking about the person who manages the operation of the scheme. In so far as the composition of that panel is 2:1, the independent external advisers will be able to ensure the balance of natural justice.
Fergus Ewing's third point on access to the Land Court and the availability of people to attend it is well taken. He makes an important point about the disproportionate nature of many of the current penalties. I do not share his view that it is entirely within my powers to amend how the penalties are applied. I have been pressing the matter for some months at a UK level and we are in discussions with other EU member states which, I am glad to say, share our view that some the penalties are disproportionate to the so-called crimes that have been alleged. I will continue to press this matter. The sooner we get some rational, sensible view of applying the penalties in a way that is not disproportionate to the error in the application, the better. I accept that while the new procedure offers more justice in the system, it does not overcome the fundamental problem that I have covered.
I welcome Fergus Ewing to the Opposition front bench and pay tribute to his predecessor in that position, Alasdair Morgan. He has been a tower of wisdom at times, and certainly a tower of strength in the Rural Affairs Committee. [Applause.] I do not usually get applause—it will put me off.
I welcome today's announcement. Virtually every party that stood for election last year included the appeal procedure in its manifesto, and it is a pleasure to see it appear in the form of a statutory instrument—the Agriculture Subsidies (Appeals) (Scotland) Regulations 2000—that will benefit the farmers who suffered as a result of previous decisions.
Many people have written to me and, I am sure, to other members, complaining about decisions that took place in the lead-up to the introduction of the scheme. I wish to be reassured as to exactly when appeals will be entertained and about whether we mean 60 days back from 9 November, or 60 days back from 3 October, when this instrument was laid before the Parliament.
The explanatory note attached to the regulations says:
"The process is designed to comply with the Human Rights Act requirements in relation to Article 6."
Incorporation of the ECHR took place in Scotland with effect from 1 July last year, with the coming into force of the Scotland Act 1998. There is uncertainty about the position of those who have had cause to make complaints, or who may have cause to do so, between 1 July last year and the date on which the scheme will effectively become open to application. Does the minister believe that there is any likelihood of legal appeals against refusal to accept applications made in that period?
I thank Alex Johnstone for his broad welcome of the new procedure. It was remiss of me not to say this earlier—so I now wish to associate myself with his remarks about Alasdair Morgan. I have spent the past few days wondering what on earth Alasdair Morgan said to deserve his translation to the Justice and Home Affairs Committee. It is condolences that we should extend to poor Alasdair, while at the same time thanking him for his contribution in rural affairs.
Let us be clear about the 60-days rule: people have 60 days from the point of introduction—from the effective date when appeals can be heard. There is no attempt to footer about and cause confusion. When 9 November arrives, people have 60 days in which to decide what they want to do about an appeal. The date on which the Scotland Act 1998 was passed does not make any difference. All it did was introduce the European convention on human rights into our legal framework.
The convention makes no provision for retrospection. A nation state is required—as are we in the Scottish Executive—to ensure that any legislation or subordinate legislation that is introduced complies with the ECHR, but the ECHR does not provide a right to retrospection. Therefore, we are perfectly entitled to introduce secondary legislation that says that the starting date is as stated—the IACS year 2000 will commence on 16 May. If a person has made an application that has been processed and that application gives the putative appellant a basis on which to appeal, that person has 60 days from 9 November to appeal.
I, too, welcome the introduction of the scheme. National Farmers Union members in my constituency frequently raise with me the problems that they encounter and the bureaucracy that is involved in applying for a subsidy. One local farmer told me that he spends up to 22 hours a week on paperwork. Such complexity can lead to mistakes. Can the minister advise the chamber of any other measures that he is considering taking to deal with that? How is he consulting the industry on how such measures can be taken forward?
I am pleased by that warm welcome for the broad thrust of the proposals. The related and important issue of how we deal with the complexity of filling in an IACS form was addressed in the red tape review, particularly when it was conducted in Scotland. As members know, I accepted the 23 recommendations of that review and invited the farming industry group that took part in the review to continue in a new capacity to drive the changes forward. All the arrangements that we are making with a view to simplifying—such as we can—the forms and introducing electronic means of completion have been driven forward by that group. Therefore, there is a continuum of consultation.
I extend my condolences to the minister for having to answer a question from a member of the Justice and Home Affairs Committee.
Will he be clear about any continuing disputes? Is he saying that matters that are currently being considered in his department can be referred to stage 1 of the new appeal process, or indeed to stage 2 of that process?
No. I am saying that the procedure that I am introducing today, which will enable appeals to be heard, applies in the first instance to IACS applications made in 2000.
My first question was stolen by Alex Johnstone and my replacement question by Elaine Murray but thankfully I have a couple of questions in reserve.
Do not feel obliged.
As I have said many times before, it is not compulsory to ask a question.
I welcome the minister's statement. Many aspects of IACS have been running sores for many years. I trust that speed and simplicity will be the guiding principles from now on.
As other members have said, the current system is a bureaucratic nightmare. I visited some farmers in Maud, in Banff and Buchan, recently and I could not believe the expense and the amount of paperwork involved. That is why I welcome the comment at the end of the minister's statement about the planned development of electronic systems. I ask for assurance that there will be no costs to the industry when we come to implement those systems. Will the minister elaborate on what stage the development is at?
Secondly, many people want next year's IACS payments brought forward, as has happened in previous years. That is especially the case in the north-east of Scotland, where the arable sector is suffering from poor harvests and high drying costs. I appeal on behalf of the industry for the minister to refer to that in his reply.
I am pleased to respond to Richard Lochhead's third and fourth choice questions. I do not disagree with his general tenor—that the system is a bureaucratic nightmare—but we must be clear about the effect of that. There are about 21,000 IACS producers in Scotland generating about 71,000 applications, some 95 to 96 per cent of which are processed without any cause for appeal or determination. Of the remaining 3,300 cases—the remaining 4.7 per cent—about 2 per cent are partial penalty claims and only about 1.4 per cent lead to full penalty. Not all of those would lead to appeals. Although I understand and share Mr Lochhead's concern, I would not wish the impression to be given that 50 or 60 per cent of all IACS claims result in a penalty or another process.
Mr Lochhead mentioned reducing and simplifying the system and the introduction of electronic systems. I hope that we will do that in a way that does not add to the cost burden, as that would be somewhat self-defeating. We may have to consider schemes that will allow people access to personal computers and software. Mr Lochhead will understand that that is important in some small areas. We will have to consider ways of sharing facilities and simplifying methods.
Before I answer the question on whether I am prepared to bring the IACS payment date forward, I would prefer to await the outcome of the current year's events. In the context of today's discussion, it is not unreasonable to hold that view at the moment.
As the Liberal Democrat spokesman on rural affairs, I would like to add my voice to the welcome for Fergus Ewing.
The minister's announcement will be welcomed throughout the farming community in Scotland. There is no doubt that farmers who are in dispute over alleged inaccuracies in official returns and claims forms will be greatly helped by this robust appeals procedure. Does the minister recognise that not only does his announcement fulfil a key commitment in the programme for government, it fulfils a key Liberal Democrat manifesto commitment that both he and I were sent to this Parliament to fulfil?
I recognise a tricky question when I hear it and you, Sir David, will understand my hesitation in responding. I like to gather my thoughts before I fall into any trap. Yes, Mike, it was a Liberal Democrat commitment and I am very pleased to have announced it. More important, I think that members on all sides share the concern about the department incurring opprobrium for apparently acting as judge and jury. The effective mechanism that we are putting in place today removes that concern and gives a much better, more independent and more transparent form of dealing with appeals.
I too would like to welcome today's statement. Is the minister willing to give farmers and crofters access to officials prior to submitting their forms? If forms could be checked over by officials from within the department, clerical errors could be picked up, which could avoid the need to use the appeals system.
When the rural affairs officials who are out in offices round the country joined the department, they did so because they wanted to help the farmer/producer in every way possible. Unfortunately, as the volume of European legislation has risen, and as the European auditors have placed penalties upon us and reduced our level of discretion, that has had an effect on those officials: they have moved slightly towards a policing role rather than a helping role. I have made it clear—and I have heard no objections from within the department—that we want to move back to being the assister to the farming community.
However, if we were to have a discussion between officials and farmers on all 70,919 applications, there would be complaints that we had not processed them in time and that payments were being made late. There is a balance to be struck, and I am happy to consider that further. The real solution is not so much to allow people access to officials before submitting their forms as to try to make the forms more user-friendly and easier to complete. That is the task that we have to address, rather than considering assistance with the existing forms.
As a member who on more than one occasion has been critical of the department's relationship with its farming clients, I am delighted to welcome the minister's statement. I hope that it will lead to an improvement in that relationship. I particularly welcome the fact that the procedure will provide appellants with a second opinion in cases where they feel that a wrong decision has been made, and the fact that appeals can relate to reductions in subsidy payments, exclusions from payments and recoveries from past payments.
Was retrospection considered for the appeals procedure? I am unable to find a crumb of comfort in the statement for the many people who have contacted members and who feel that they have a just case that would almost certainly receive attention and possibly a positive outcome under the new appeals procedure.
I considered retrospection. We had a long and agonising discussion on that. This is a difficult issue on which I receive letters on tricky questions from Alex Fergusson, Fergus Ewing, Richard Lochhead and almost every member who is in the chamber this afternoon. I take those letters seriously. However, when introducing a new procedure one has to draw a line and set a starting date to avoid any confusion. My decision was not made easily, but I think that it will be prove to be the correct one in the longer run.
I thank the minister for the statement, which is most welcome. One hundred pounds is one thing to somebody who owns thousands of acres in East Lothian but quite another to a small crofter in Sutherland. Will the minister consider varying the charges in future? A lower charge for crofters might be appropriate as, after all, our way of life in the far north depends on crofting. Secondly, there is a perception that our officials are rather more zealous in enforcing rules than their colleagues in other EC countries. Will the minister examine the application of rules in Scotland as opposed to other EC states?
I am not an economist so I do not know whether a pound is worth more on a croft than it is elsewhere—that is an interesting concept.
We have set the deposit and the potential charge for the second stage of appeals at a level that will not recover the cost. The issue of differentials was difficult. I considered the nature of claims and the source of more persistent complaints. The more complicated cases involve larger areas, where the scope for error is very much greater. There was also the consideration that we did not want frivolous complaints. I am reasonably satisfied that a deposit and potential charge of £100 is not over-onerous.
Whether our officials apply the rules more zealously than do those in other countries was examined by the group that looked at the IACS review. Its report, which was lodged with me some months ago, concluded—much to its astonishment—that there was no tangible evidence of the rules being applied more zealously in Scotland than elsewhere in the EU.
I will refrain from commenting on changing the lifelong characteristics of my husband, as that might take some time, but I will ask the minister a direct question. He has referred several times to the difficulties that are caused to the IACS scheme by European Union regulations. Has he spoken directly to the commissioner? If not, when will he do so? Is there any way in which the Parliament can influence the decisions that are taken in Europe?
I am obliged to Mrs Ewing for not extending the qualities of her husband as a matter for debate.
Mrs Ewing raises a serious question. I have had more discussions with officials on the matter. Our experience seems fairly typical. Sometimes we delude ourselves that commissioners are au fait with the details that give rise to such serious complaints. We have taken examples of the difficulties—many of which members will be familiar with—to officials and explained them. In response to Fergus Ewing's question, I said that the current discussions are taking place at official level. There are other European states that agree with the proposition that the disproportionate penalties arising from the regulations is a matter for concern. I wish we could have a little more impetus. The Parliament can have an influence on that.
We have made it clear that we regard tackling disproportionate penalties as a high priority. It brings the whole European Union into disrepute and I cannot think that the Commission would regard that as a sensible way in which to proceed.
I congratulate the minister on establishing the appeal procedure. It is a welcome initiative and long overdue. I empathise with the difficulties faced by crofters and farmers in complying with the regulations and filling in the forms. The forms kept changing and unless every i was dotted, every t was crossed and the tick was in the right box, the applicants were penalised. They were introduced to a new technology; they were required to identify fields with six-figure grid references; and they were required to convert acres to hectares. It was very complicated.
Although the legislation is welcome, there are anomalies—as with all legislation. There is a standard fee to be lodged by the appellant, irrespective of the cash value of the claim. I suggest that the minister consider introducing a graduated scale of fees to ensure that farmers and crofters of small concerns in disadvantaged areas are not discriminated against.
I thank John Farquhar Munro for his general welcome of the scheme. If it is of any comfort to him, I confess that I still think in feet and inches rather than hectares. Do you recall rods, poles and perches, Presiding Officer?
Yes.
I thought so. That was a trick question—a Presiding Officer should not have to reply to that.
The evidence that we have is that, by far and away, smaller disputes and minor disallowances are resolved between the department and the claimant. Greater difficulties arise where there is a much more serious discrepancy, particularly with continuous flock records, in the amounts entered in the claim. It is difficult to generalise, but we are talking about greater sums of money and more substantial breaches of the regulations. I do not believe that the charging regime that we have introduced is in any way out of proportion to the overwhelming majority of appeals.