HL Deb 27 July 1988 vol 500 cc252-5

2.41 p.m.

Lord Mottistone asked Her Majesty's Government:

What steps they are taking to ensure that companies in the food and drink industries are receiving prompt payment for export refunds from the Intervention Board for Agricultural Produce; and what arrangements are being made for payment on account until the payment difficulties are resolved.

The Parliamentary Under-Secretary of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington)

My Lords, the intervention board has suffered extended delivery delays and technical problems in implementing its new computerised export refund claims system. Consequently, the board is urgently examining the practicability of some form of payment compensating for unreasonable delays. I hope that a further statement will be possible shortly.

Lord Mottistone

My Lords, I thank my noble friend for that Answer. Is she aware that the amount of moneys owed to food processing companies as a result of these delays is of the order of £200 million for this year? One big company is owed £2.5 million and in recent weeks has received a cheque for £2 and concurrently an invoice for £10.50. Is she further aware that the problem is cash flow, particularly for small companies and now indeed for the big companies? Some small companies have ceased taking up export opportunities because of this delay and because of not having the money. Although my noble friend talks about compensation, will she not take into account the fact that the problem would be solved if companies were given advance payments roughly based on that of the previous year, which could be tidied up later? If a company is owed £2.5 million, an advance payment of £1 million would not he unreasonable. Will my noble friend comment on that?

Baroness Trumpington

My Lords, in answer to my noble friend's lengthy supplementary questions, I know that these delays have had a serious effect on traders. I am very sorry about this and we urgently hope to issue a statement. With regard to the question of advance payments, the possibility of making payments on account was carefully considered. The board concluded that, owing to EC implications, it would be unwise to pursue this proposal. I can go into the EC implications if anybody wants me to.

Lord Gallacher

My Lords, has the noble Baroness seen the annual report of the board for 1987 in which it is recorded that staff turnover for that year was of the order of 24 per cent. and the shortage against the establishment was 10 per cent.? Will she not agree that that combination of figures is in part responsible for the delays about which the noble Lord, Lord Mottistone, so rightly complains?

Further, is it not a fact that there may be a case for considering moving the intervention board's headquarters from a town which is as prosperous as Reading, and which is likely to go on being prosperous, to a part of the country which is more in need of employment and where the overall employment situation would be easier?

Baroness Trumpington

My Lords, I heard what the noble Lord said in the latter part of his supplementary question. However, I must explain that, owing to repeated delays in the delivery of software for the new computerised export refund claims system, technical problems were experienced in bringing the system on stream. The delays in implementation coincided with the introduction of the harmonised custom system and the single administrative document, which created additional difficulties. None of those problems was foreseeable. There have also been staff difficulties and new staff have been taken on. However, the staff who are at present employed there are making excellent progress and the backlog is going down.

Lord Harmar-Nicholls

My Lords, is my noble friend aware that the phrase "European implications" makes it inadvisable to do this? Are we to presume from this that in purely British terms it would be helpful and good to do it, but that outside reasons are preventing us from making the advance payments?

Baroness Trumpington

Well, my Lords, I did warn you! Unfortunately payments in advance could, in Community law terms, amount to an interest-free loan constituting state aid if the trader did not subsequently establish his entitlement to an export refund. Should the Commission consider that a state aid of this kind existed, the amount of disallowance they might propose could be large. In that case substantial sums would fall to he met in full from Exchequer funds.

Lord Somers

My Lords, I should like to ask the noble Baroness whether it is possible that this delay is due to the computer going wrong.

Baroness Trumpington

My Lords, no; the computer has not had a chance to go wrong because it has not properly arrived.

Lord Carter

My Lords, is the Minister aware that, besides the delays in the payments of export refunds to traders, there are also considerable delays in the payments for such things as the premiums on homegrown rape seed? Is she further aware that the crusher has to reclaim the premium from the intervention board before it can be paid over to the farmer? Will she agree that with interest rates at their current level this can be equivalent to a reduction in the farmer's price of 3 to 4 per cent.?.

Baroness Trumpington

My Lords, I think that I have given many explanations as to why this has happened and I have also said that I regret it very much. However, I should like to add that there has been an increase in claims because of international activity. In the first six months of this year we paid more claims than in the whole of 1987. We are now within the target on beef, veal and cereals; sugar and milk are almost on target.

Lord Molloy

My Lords, is it not perplexing that long before these appalling delays occurred—which are irritating and, indeed, sometimes harmful—no excuse could be advanced because of the lateness of computers as computers did not exist and, remarkably enough, nor did the problems about which the noble Baroness has been talking?

Baroness Trumpington

My Lords, from 1984 until early 1988 when the current difficulties began, the time taken to pay claims in the processed goods area averaged three and a half weeks and, on average, was never worse than six weeks. That compares favourably with the legal and Commission view that a period not exceeding two months is reasonable for the complex transactions concerned, and very favourably with many other member states within this sector. The periods that I have just mentioned go back long before the computer.

Lord Mottistone

My Lords, I congratulate my noble friend on her ability to deal with this problem: she is defending the indefensible. Does she agree that her argument against advance payments was not convincing and that it was put up by bureaucrats who ought to be tamed?

Will she also agree that, whatever the complicated answer may be, the matter is worth further study in order to make quite certain that people do not fail to export because they do not have enough money to do so?

Baroness Trumpington

My Lords, I think the best that I can do with that supplementary question is to pass it over to my right honourable friend in another place.

Lord Elwyn-Jones

My Lords, how soon will computer software be harmonised, to coin a phrase?

Baroness Trumpington

I would rather not, my Lords.