Official Report: Minutes of Evidence

The Chairperson (Mr Irwin): I welcome Joseph Kerr, principal officer; Mark McLean, principal agricultural economist; and David Lynch, deputy principal officer. I ask you to take up to 10 minutes for your presentation, which will be followed by questions from members.

Mr Joseph Kerr (Department of Agriculture and Rural Development): Thank you, Chair, for allowing the Department to present these statutory rules, the Common Agricultural Policy (Control and Enforcement) (Northern Ireland) Regulations 2015. The regulations provide a technical framework to allow the Department to implement key controls for the 2015 CAP direct payment and support schemes.

The regulations cover the final date for applications; the minimum agricultural area; recovery of undue payments; interest for undue payments; powers for inspection; and offences related to the obstruction of inspectors carrying out their duty.

There is nothing new in these regulations; these matters have been a feature of previous EU schemes, such as the single farm payment scheme. It is important that the regulations be made before 15 May to allow the Department to start its control processes at the earliest opportunity to ensure that the statutory controls and, therefore, inspections required by the EU are completed in order to facilitate payments to farmers. Any delay in making the regulations will impact on the Department's ability to start inspections and will, in turn, potentially delay the processing of payments to farmers.

There is a slight change in the interest rate being charged. Previously, the Department, along with other devolved Administrations, used the LIBOR rate. However, there were issues with the credibility of the LIBOR rate last year, and, therefore, it was considered that the Bank of England rate would be more suitable. The EU requires member states to apply interest for undue payments and to set an appropriate rate. These regulations provide legal certainty on the rate that the Department will use.

The authority provided in the regulations for inspections is a key control required for the implementation of the CAP schemes. Without the regulations, the Department will not have the national authority required to conduct inspections. Carrying out inspections is a statutory duty and a key control imposed on the Department by EU regulations. An inspection is nothing new; it has been a feature of EU schemes for many years. Given the regional nature of the new CAP, it is important to ensure that there is legal certainty in Northern Ireland as to the Department's authority to carry out that key control.

The regulations include a section on offences and penalties. They make it an offence for an applicant or any other person to obstruct an inspector carrying out an inspection. The penalty for conviction on obstruction is a fine; that is nothing new and has been a feature of CAP regulations previously. However, as offences and penalties have been included, the Department consulted Department of Justice colleagues, as required, and the DOJ has not raised any concerns.

The cross-cutting nature of this matter and the inclusion of offences and penalties mean that the regulations require Executive agreement.

Before I finish, I would like to apologise for a slight drafting error in regulation 5(3). There is a slight change: interest will be charged from 60 days from the date of the recovery notice sent from the Department for any undue payments. That means that on day 61 we charge interest; not 60 days from the date of the deadline. The deadline will be the date on which the undue moneys are due to the Department. On day 61, we will start to charge interest. We will fix that this evening as soon as we go back to the office.

To end, I stress the importance of making the regulations in a timely way, given the potential to delay inspections and, ultimately, payments to farmers.

The Chairperson (Mr Irwin): You said that you start payment from day 61. Just for clarity, if you are overdue payment, do you pay interest from day 61 on?

Mr Kerr: Sorry?

The Chairperson (Mr Irwin): Does the Department pay interest from 61 days on? You say that you charge interest if someone —

Mr Kerr: Yes, because EU regulations require us to charge interest.

The Chairperson (Mr Irwin): But if you owe farmers money, and it is 61 days overdue, do you pay interest?

Mr Kerr: There is no legal requirement for us to pay interest, as far as I am aware.

The Chairperson (Mr Irwin): That is very interesting. In one way, you charge interest, but, in the other, you do not pay it. You understand where I am coming from.

Mr Kerr: Yes, I appreciate that view.

The Chairperson (Mr Irwin): Tell me more about the powers of inspection. Are they the same as the powers exercised under the single farm payment or are they different?

Mr Kerr: They are the same. They are powers to enter someone's land to look at it and to enter property that is used for farming and agricultural activities. That is the same as we did under the single farm payment.

The Chairperson (Mr Irwin): Can you answer another question on a point that I am not so sure on? I am thinking of cases when there is an inspection and there are breaches and moneys to be recovered from the single farm payment. The other day, I saw a case of a constituent who had an issue and was told that moneys will be retrieved out of his 2014 single farm payment. He has already got his payment, so what happens?

Mr Kerr: The regulations are set. There is a section called "Set-off" under which, if, in 2015, someone owes money from a previous scheme, we can off-set that against any future payment.

The Chairperson (Mr Irwin): But up to now, not?

Mr Kerr: Up to now, it is the same.

The Chairperson (Mr Irwin): The same?

Mr Kerr: It is exactly the same. If you owe us money from 2005, we can off-set that against a 2015 payment. It is a new scheme, but it will work in exactly the same way.

The Chairperson (Mr Irwin): There are no questions from members. Are members content that the regulations move to the next legislative stage?