On behalf of the Government, Statskontoret (the Swedish Agency for Public Management) has analysed the conditions of the Swedish Board of Agriculture for carrying out its commission within the current financial framework.
The Swedish Board of Agriculture is in a vulnerable financial position
The Swedish Board of Agriculture is in a vulnerable financial position. The reason for this is that the costs of developing an administrative system for EU support in the programming period 2014–2020 are estimated to be just over SEK 300 million more than what was initially calculated by the Board. Although the Board has received temporary increases in appropriations to finance these development costs, it still needs to finance a large part of the costs within the framework of its ordinary financing.
By the end of 2016, the Board expects to have financed just over half the total of SEK 600 million that the development work is estimated to cost. The SEK 260 million still requiring financing until 2022 relates to direct development costs in 2017 and to amortisation. In addition, the Board’s administrative costs will increase when the new systems are taken into use. The Board estimates that the administrative cost for the new administrative system will amount to nearly SEK 240 million in 2017–2019.
Farmers have to wait for support payments
The new administrative system largely consists of an IT support system that the Swedish Board of Agriculture and the county administrative boards have begun to use when disbursing subsidies. However, several functions in the IT systems for processing and decision-making have not been finalised. This makes it more complicated and resource-intensive than previously for the county administrative boards to process support. Ultimately, the delays mean that some recipients of support, i.e. especially farmers, have to wait longer than usual to have their support disbursed.
The Swedish Board of Agriculture has failed in its development work
Statskontoret’s analysis shows that the delays and cost over-runs that have arisen are due both to the late notification of regulations and to deficiencies in the Swedish Board of Agriculture’s development work. According to Statskontoret, the Board did not sufficiently analyse the benefit of the IT support and the risks entailed by major projects. The implementation of the development work was deficient in parts of its internal steering and communication, and the Board became overly dependent on consultants. In addition, the Board’s internal audit had a passive role, which meant that they have not audited the development work at the Board.
Reduction in the scope of promotion and support activities
In order to finance the development costs, the Swedish Board of Agriculture has reduced the scope of its promotion and support activities. Statskontoret assesses that the Board will need to give lower priority to these activities throughout the programming period 2014–2020. Statskontoret has not understood the Government to have changed the Board’s commission, which means that the division between administrative, support and promotion activities should be fairly constant over time. The Board should therefore strive to reduce its costs for the administration of EU support in the next programming period. The Board can do this by giving greater consideration to the benefit of various development initiatives in relation to what they cost.
Agricultural and rural policy is at risk of becoming less effective in the long term
The promotion and support tasks that the Swedish Board of Agriculture has needed to make a lower priority mainly consist of work in relation to the EU and international organisations, support to county administrative boards, development work, analysis of policy effectiveness and administration of the regulations for which the Board is responsible. This means a decrease in the scope of the Board’s knowledge production, which ultimately risks leading to a decrease in the effectiveness of agricultural and rural policy. For the Board, the cost cuts mean that its experts in different areas will not be able to maintain their competence in the same way as before. It will also become difficult to finance personnel replacements.
The administration costs for EU support continue to increase
The Swedish Board of Agriculture’s annual costs for the administration of EU support increased by SEK 130 million between the beginning of the programming period 2007–2013 and 2014. Statskontoret assesses that the Board’s costs will be even higher in the coming years as a result of the Board’s initiatives to develop the administrative supports. At the end of the period 2014–2020, there will be conditions for being able to reduce the county administrative boards’ administrative costs for agricultural support as a result of a greater element of automation. However, it is not currently possible to assess whether reduced administrative costs can ultimately compensate for the resources invested by the Board in developing the administrative systems.
Simplifications, savings and better IT steering can free resources in the long term
Statskontoret does not assess the Swedish Board of Agriculture to have any greater opportunities to free resources by streamlining existing operations in the coming years. This assessment is based on our review of the Board’s internal steering, follow-up and organisation. Furthermore, Statskontoret believes that the Board has the right focus in its work to prevent errors in the administration of EU support, but the Board needs to develop its accounting in order to make it possible to assess whether this work is being conducted in a cost-effective manner. According to Statskontoret, it is above all simplified regulations, cost savings and better IT steering that can reduce costs at the Board.
The regulations need to be simplified in order for the costs to decrease
One explanation for the increase in the administration costs for EU support is that the regulations introduced by the EU and the Government have demanded more administration. Statskontoret believes that ahead of the next programming period the Government should weigh the benefit of having detailed support in relation to the administrative costs arising from this.
The steering of major IT projects needs to be improved
Statskontoret believes that the Swedish Board of Agriculture needs to develop its steering of major IT projects. The Board needs to prepare the work better, the Board’s management needs to take a clear hold of the work and the focus of internal audit needs to be broadened to also cover ongoing development work. It is, according to Statskontoret, urgent for the Government to monitor how the Board will design its development work ahead of the next programming period.
The Government should monitor the effects of savings
In this report, Statskontoret makes a number of proposals to the Government, including the Swedish Board of Agriculture reporting how the administration costs for EU support are allocated and can be reduced in the future. Statskontoret believes that the Government should monitor how the savings implemented by the Board affect the Board’s performance. This presupposes that the Board develops its performance reporting so that the Government can better monitor the effects that the increased administration costs for EU support have on other operations. In the area of environmental and resource-efficient industries, the Board should also show a clearer link between its performance and the goals that the Board is itself able to influence.
The Swedish Board of Agriculture has the conditions for carrying out its commission
If the Swedish Board of Agriculture continues with the introduced savings and improves its steering and control of the development work, Statskontoret’s overall conclusion is that the Board will be able to carry out its commission within the financial framework proposed by the Government in the 2017 Budget Bill. In the long term, however, the Board’s costs for the administration of EU support must decrease. Otherwise, the Board will find it difficult to carry out its promotion and support activities.