Dr. Kevin Smyth:

Paud Evans will deal with some of the detailed areas that have been mentioned. I will put this in the overall context. The Commission auditors are coming over to us next month and, basically, they want to close off five years of audits for Ireland. They have done it to many other member states. They have visited the state, looked at the LPIS system and in virtually all the member states the Commission is not happy with the land parcel identification system. It has introduced a series of disallowances for member states and has taken massive amounts of money from those states. It has taken £240 million from England, £80 million from Northern Ireland and it is threatening the French with a three-year disallowance of 5%, which will amount to €1.1 billion. That is the position.

There are two ways in which we can deal with this. The Commission has identified weaknesses in our system and it wants some of its money back. It says the system has not been operated properly. It is particularly worried about the way we have been dealing with ineligible features. It is telling us we have two choices. We can take the disallowance route and the disallowance can be 2%, 5% or 10%. Over five years a 2% disallowance would be approximately €160 million. That is the minimum disallowance. It could be 5%, which is €400 million.

The other way of dealing with it, which is the approach we are taking and which is relatively innovative, is to look at every land parcel in the country and take out all the ineligible features. That will result in a more personalised approach, in the sense that we will identify individual farmers. We will also be able to quantify what the risk to the fund was. We will say where the problems were and we will show them. We have done much of that work. The Commission is coming over and I do not wish to talk about figures until it has verified our work, but we are hoping that by taking that approach, the bill will be much smaller. However, money is owed to the European Union, and there is no way out of that.

Deputy Ó Cuív asked about percentages. Just over 70% of farmers do not have a problem. They have either put in the right area or they claimed a lesser area, so they cannot be accused of over-claiming. They have allowed for it. Approximately 20% of farmers have an ineligible area of less than 3%. They will not be penalised on that. The area will simply be taken away. This is the 2,500 farmers we mentioned and the €1 million in that regard. Then we get to the problem area. Approximately 6% of farmers have an over-claim of between 3% and 20%. There are penalties arising from that.

Finally, there is a category of 400 farmers who have an over-claim of over 20%. The problem under the EU rules, and they are very strict and brutal, is that once one has an over-claim of over 20% one is entitled to no payment whatsoever. It is that simple. An over-claim of over 20% means no payment, and there are 400 of those cases. These are the cases we have prioritised. I referred to the verification checks. We have checked them out both by getting our best people to look at the maps to see if there is any way to get the percentage down, and by sending inspectors just to look at the farm and see if there is anything there, for example, different types of scrub where we can make a difference and try to get the figures down. That is what we are dealing with at present.