Select Committee on Agriculture First Special Report


The Agriculture Committee has agreed to the following Special Report:—

The Committee has received the following memorandum from the MAFF, constituting the Government's Reply to the Ninth Report from the Committee of the 1999-2000 Session, MAFF/Intervention Board Departmental Report 2000, made to the House on 2 August 2000. A letter to the Chairman from the Minister of Agriculture, Fisheries and Food in response to a request for clarification is appended.

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Paragraph 6: However, it is a serious error for a Government Department to make and creates a bad impression of the efficiency with which this Report, an annual exercise after all, was prepared. This must not happen again.

 1.  The Government accepts that the failure to lay the Departmental Report properly before the House was a serious error, but welcomes the Committee's recognition that it was an "honest mistake". Action has been taken within the Department to ensure that it does not happen again.

Paragraph 6: Above all else, MAFF must aim at accuracy in producing its annual return to Parliament and we expect more effective checking procedures to be put in place before future reports are sent for publication.

 2.  The Government recognises the need for accuracy and is reviewing its checking procedures to improve quality assurance before the Report is printed.

Paragraph 9: We recommend that the Business Plan also include a summary of the hierarchy of objectives, PSA targets and output and performance measures. This would be useful as an addition and would help MAFF staff in particular by giving an overview of the Department.

 3.  The Government accepts this recommendation.

Paragraph 15: The funding of the aid packages exercised us greatly when we examined each of them at the time. It is vital, especially whilst individual farmers are facing very difficult situations, that trumpeted announcements are adequately financed and that the source of funding is clearly marked. This is a key area for improvement in the future, and the Committee will carefully monitor progress.

 4.  The Government notes the Committee's comments but does not believe that recent announcements on the funding of aid packages have been unclear: the sources of funding have always been clearly marked.

Paragraph 19: We recommend that MAFF produce a timetable within three months for a systematic audit of all regulations that are currently applied to the agriculture and fishing industries, setting out dates for the completion of each stage of the audit. We also urge that the Red Tape Review Groups be invited to review progress on implementing agreed outcomes and publish a progress report on a quarterly basis.

 5.  We have considered this recommendation very carefully as the Government recognises the need for continued vigilance over the content and effect of regulations on industry to ensure that they are still needed, meet modern conditions and technologies and do not impose disproportionate burdens on the industry. For regulations which are already in place, the Red Tape Reviews over the last year have focused on all those areas of regulation which were identified by the industry as placing unnecessary burdens on industry. The recommendations which were accepted are now being implemented. Further reviews picking up other recommendations, and announced in the Action Plan on 30 March, are making progress: the Better Regulation Task Force is working on a review of the impact of environmental regulations, and an independent review group chaired by Sir John Marsh, is conducting a review of the dispensing of veterinary medicines. We are currently considering the possibility of wider review of agricultural input issues.

The Government fully recognises the importance of continuing to monitor the effectiveness of regulations with all stakeholders and, where appropriate, to seek changes to domestic or European legislation to minimise the burdens on industry. However, we believe that a review of the 480 plus statutory instruments affecting agriculture and fisheries (not all of which impose burdens on industry) will be very costly not only to the Government but also to the industry who would need to be involved.

 6.  The Committee suggested inviting the Review Groups to consider progress on their recommendations. Implementation now forms part of the Strategy for Agriculture which in itself is subject to regular monitoring and review. We also plan to offer the IACS and Intervention Groups a meeting one year after their reports were considered for a review of progress so far.

 7.  Further, we are working on creating a culture with other member states and the European Commission to minimise regulatory burdens. The conclusions of the Lisbon Special Council should help achieve this objective since it was recognised that further efforts are required to lower costs on business and remove unnecessary red tape.

Paragraph 20: The benefits of a commercially­oriented agriculture sector are consistently underlined by the Government, with our full endorsement. Whilst it is important constantly to review programmes to make sure they represent value for money, we do not believe that reductions in expenditure of almost 40% in two years in the programme aimed at Food Industry and Competitiveness are in keeping with this aim. If the money is not being spent effectively, then it should not be spent at all; if it is effective, it is difficult to see the rationale for a 40% cut, particularly in light of the new PSA target to achieve an increase in the competitiveness and consumer focus of the food chain.

 8.  The apparent decline in expenditure under programme TM:120 is due to the run down of payments under marketing schemes that are now closed to new entrants. Since the Departmental Report was finalised, further funds have been made available for new schemes, so expenditure will therefore rise.

 9.  New expenditure that has been announced includes:

10.  The closed schemes, where payments are declining, are:

    (i)  The Processing and Marketing Grant (PMG). This was withdrawn by the last administration in 1996, but claims from projects accepted under the scheme continued until 1999/2000.

    (ii)  The Marketing Development Scheme (MDS). This was subsumed into Sector Challenge by the last administration in 1996. The last claims should be paid in 2001/02.

    (iii)  Sector Challenge. This scheme was the responsibility of the Department of Trade and Industry, but the Ministry is responsible for administering payments to the agri-food industry. Only one round of the scheme was held. The last claims should be paid in 2001/02.

Paragraph 21: There is an urgent need to say how this (difficulty for IBEA in use of productivity index to measure performance against targets) will be addressed, either in the annual report or subsequent to publication.

11.  The Government accepts the Committee's conclusion. The work of IB is regulatory, non­discretionary and demand led. It is largely operational, derived from EU requirements and the activity levels for many of its schemes are dependent on market conditions such as production and trade levels, world prices and decisions taken by the EU. These operational parameters require a flexible organisation whilst maintaining high standards of compliance with EU obligations and control requirements in order to avoid disallowance.

12.  IB's productivity is sensitive to changes in its workload that comprises peaks and troughs that are difficult to predict. Where a scheme ends, a sharp reduction in outputs ensues, whilst the manpower and overheads reduce far less rapidly. This is due to the fact there are always residual tasks needed to end a scheme and the few remaining claims are, of course, the most difficult, time-consuming and costly to finalise. The converse of this is that as new schemes emerge there are set up costs and staff requirements needed well before any measurable outputs are delivered.

13.  IB regularly reviews its key performance indicators which includes productivity and efficiency and is developing a new management information system to provide closer linkage between corporate governance, risk management, business planning and business efficiency.

14.  IB's productivity improvement programme planned through investment in new IT systems and processes under the "Modernising Government" agenda, is convergent with the planned merger between IB and MAFF's Regional Service Centres. MAFF/IB are committed to delivering a 10% improvement in unit costs through the creation of a combined paying agency and the introduction of new systems, procedures and a new organisation.

Paragraph 23: It is important that schemes such as the OTMS are regularly reviewed and if savings can be made, they should be made. However, as we have seen before, when the cost to the industry overall is neutral there are bound to be gainers and losers. In such cases careful assessment of the cost and competitiveness implications must be made.

15.  The Government accepts the Committee's conclusion. The review of the OTMS abattoir arrangements produced savings to the Exchequer of between £5 million and £6 million. In deciding on the award of contracts, however, cost was not the only factor. Care was taken to ensure that sufficient capacity was provided in the areas where it was needed.

Ministry of Agriculture, Fisheries and Food
20 October 2000

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