Tight deadlines and late changes blamed
Inadequate deadlines and too little testing of IT systems contributed to the problems in paying subsidies to farmers earlier this year.
According to the National Audit Office (NAO) report into the delays to the EU's Single Payment Scheme, which is worth £1.5bn to 116,000 farmers across England, the risks and complexities of the project were not fully appreciated.
The scheme replaced 11 previous subsidies to farmers, based on agricultural production, with one payment for land management.
The Department for Environment, Food and Rural Affairs and the Rural Payments Agency aimed to start payments in February and make 96 per cent of payments by the end of March. But by the end of March only £225m had been paid out (15 per cent) and it took until the end of June for 95 per cent of payments to be processed.
The cost of implementing the scheme was budgeted at £76m but by March 2006 this had reached £122m, with further cost increases likely, the NAO said. And there is "little prospect" that hoped for savings of £164m by 2008 to 2009 will be realised in that timeframe.
The NAO said the timetable for the implementation of the scheme became very tight following required changes to the original specification of the computer system. The agency expected core IT infrastructure development would be completed by December 2004. But by that date the agency had identified 23 modifications to the systems that were necessary because of changes to government decisions and EU regulations, and legal clarifications of those regulations.
To keep to a revised timetable, the agency implemented key aspects of the IT system "without adequate assurance that every component was fully compatible with the rest of the system and supporting business processes", the NAO report said.
The agency did not have time to test the system as a whole before it began making payments, and while each key element of the system was tested before introduction, problems - such as screens "freezing" - arose afterwards as the testing of each system in isolation could not fully simulate the real world environment.
And despite "limited confidence" the system would be ready on time, development work on the computer system continued and no contingency plan was invoked, the report found.
Head of the NAO, Sir John Bourn, said in a statement: "Foremost among the agency's priorities now must be to determine if the administrative and computer systems for mapping land and processing claims are really up to the job. Until that happens, there is little prospect the problems will be remedied in time to deal with the 2006 claims."