Examination of Witnesses (Questions 20-39)
MR BRIAN BENDER CB AND MRS JULIE FLINT
WEDNESDAY 19 JUNE 2002
20. I note that you have appointed some external non-executive members of your Management Board, whom you claim have experience of this; can you say briefly what it is?
(Mr Bender) Two of the non-execs we have on the Board, one no longer works for, but did work for, KPMG, and had therefore advised public and private sector on a number of issues, including change, that is Elizabeth Ransom; the other did work for the oil and gas company Amerada Hess, where she led the change work within that organisation. So they can bring to bear, and do bring to bear, their experience. In addition, we have sought specific advice from individual areas of expertise, and more recently we have been working with the Office of Public Service Reform, one of the units set up in the centre after the last election, to have a look at our Change Programme and work with us, jointly, on where it should go next.
21. Presumably, you have got, you have referred to, a Change Programme, you had a document which sets out how you intend to achieve change in this organisation?
(Mr Bender) We produced something with a dozen or so work streams immediately after the election, called Developing DEFRA, which was a combination of transitional issues, like accommodation, like finance, like IT, like pay, and some of the longer-term cultural issues. What we are now doing is, and the Management Board is looking at that in the course of the next month, defining the detail of the next phase of the Change Programme, in the light of the advice we have had from the Office of Public Service Reform; and that next stage, I hope, will have some hard milestones in it.
22. What did the Office of Public Service Reform say to you on your achievement so far?
(Mr Bender) Taking where the Chairman began, the challenging circumstances in which we were set up, we had made a good start. Sorry, can I just back-track a bit. This was a joint exercise, and what they said was jointly agreed with us, and I agreed with what they said, so I would not want to put this into somebody else's mouth. That we had made a good start, but if we wanted to be among the best, as opposed to okay, then we really needed to make further significant step changes. And the four areas we are going to be looking at, in particular, in the period ahead, are strategy development, getting a much better link between policy development right through to delivery, which links perhaps back to one or two of the earlier questions, ensuring that we have the corporate systems that not only underpin what we are trying to do in a supportive way but actually help drive change, and, fourthly, ensuring that we have the best-skilled, best-equipped people, the people side of it. So those will be the four themes in the period ahead, and I hope we will have milestones as well.
23. Those seem absolutely critical to not just an okay organisation but to one that works at all?
(Mr Bender) Well it is a question of degree, really, and we are not starting from minus ten, on these.
24. Okay. One of the things that arose immediately, but I just question whether you had identified it as an issue, was staff pay; did you spot that before it appeared over the horizon? You had been in charge of MAFF before and would have known, even someone like me was aware of pay grievances within MAFF before DEFRA was formed, so I assume you spotted this liner coming over the horizon and heading for the iceberg pretty quick?
(Mr Bender) I think the speed with which it hit the iceberg was perhaps more surprising, but its existence was not. It was clear to me, from my time as head of MAFF, my 12 months, that, following the delegation of pay by the Treasury to Departments a decade or so earlier, MAFF had gravitated, if that is the right phrase, towards the bottom quartile of the Whitehall pay league, and I was conscious that Environment, Transport and the Regions, for a variety of reasons, not just enlightened management, were towards the top quartile. What then happened was that, in pay negotiations, which had been concluded in the Ministry of Agriculture before the election; one of the unions rejected the outcome before the election, the Machinery of Government change came about, and, for a variety of reasons and very legitimate concerns, that fed into a strong grievance that became an industrial dispute between the Department and the PCS union.
25. You settled that, at the cost of, the memo. you sent us last night, an additional £15 million, roughly?
(Mr Bender) Perhaps I can just clarify the figures. The total pay bill of the Department is about £220 million, the additional costs of the awards made in the course of the last year, and there were two stages to that, was the £24.4 million that is in the memorandum. In normal years, we would expect to have paid about £9 million, so that is the additional 15. Of the £24 million, a little over half was absorbed through a variety of management efficiency reasons, and a small amount of the 15, I think it was about £6 million, was cut from the programme, with Treasury agreement.
26. Separately, do not do it now, could you just set out which programmes bit the bullet of paying for the pay award?
(Mr Bender) We will provide a note on how best we can answer that.
27. You have had, in spite of the pay award, some difficulty in retaining staff, and, perhaps not surprisingly, from the change management process in the regional service centres, as were, who are, under the RPA programme, heading towards their demise?
(Mr Bender) Yes. The figures in the note that came across yesterday illustrate that, actually, the average annual turnover for the Department as a whole was not significantly different from what it was in MAFF in the previous 12 months, it was 9.2 per cent for the Department as a whole up to May 2002, then it was actually over 10 per cent in the Department previously.
28. Can I just say that 9.2, or 10, is a startlingly high turnover rate for any organisation that I have ever been involved in?
(Mr Bender) As you will see, it is a fairly grade-sensitive issue; but there is clearly an issue around about how we recruit and retain staff. The problem in the regions varies, as the note says. I think, in the Rural Payments Agency, one of the issues is going to be actually ensuring retention, as you implied, in offices that are downsizing, and, at the moment, that has been far less of a problem than we had feared, and, as the note said, turnover remains low. And, interestingly, performance in some of the offices that are due to downsize has remained very good, and in one or two cases better than others; so it is encouraging, in that sense.
29. Although the RPA performance, at least from the feedback we get from our farmers, has been not particularly creditable in some respects of ensuring timely payments?
(Mr Bender) There have been two sets of problems, on timely payments. One was directly a result of the industrial dispute, and was deeply regrettable; and the other, which was announced recently, which was the bovine schemes, is the result of the need now, in order to avoid disallowance, to do cross checks between one database that the RPA have and another database that the Cattle Movement Service have. And incorrect entries, many of which, regrettably, are resulting from those who put the entries on in the first place, I mean the farmer; but it is deeply regrettable that it has happened.
30. Although you draw attention, again in your note, to the still fairly poor and, in historical terms, however, better record on the Cattle Movement Service and their accuracy, because that has been an area of complaint as well?
(Mr Bender) Yes, and I am glad you noted that it is getting better.
31. It has got better, but, again, the error rate is still poor in this sort of activity of large-scale data collection and data input. I have to say, going back to the turnover issue, any organisation with a turnover of around 10 per cent, you would have to say, indicates a major morale problem and concerns about the quality of the organisation and the way in which it operates?
(Mr Bender) We are concerned about it, but I repeat that it varies across the country, and, taking the Cattle Movement Service, there is very little turnover and working for a number of reasons.
32. That may be a very good reason why people stay working there, in Workington, but in other parts of the country where there are more options about where people might work, I think you should not be satisfied that in an area where are very few alternatives you had managed to retain them?
(Mr Bender) I do not want to give the Committee the impression that the figures on turnover are ones that I find satisfactory; there is a cost, plainly, in having a turnover that high.
33. I do not want to hog the show, but I think I am hinting to you that you have an organisation which, just from several of the questions I have asked, is showing signs of major performance problems, morale difficulties in staff, and you have, on top of that, a Change Programme which is momentous. I honestly cannot share your smiles and confidence about how this is going?
(Mr Bender) I can assure the Committee I am not complacent about how it is going. We were set up at a very challenging time. The day that the Prime Minister announced the creation of DEFRA, my understanding is that we still had about 5,000 people employed on foot and mouth activity; we still have many hundreds, as part of the clean-up and financial reconciliation. So it is a Department where the staff have performed heroically, been through very hard times, and also been battered, in reputational terms. The challenge that we face, the management faces, I face and Ministers face, is a huge one, in terms of improving performance and in terms of the change; and I am not at all complacent, it is an enormous challenge. I genuinely believe in the last 12 months we have made progress; but I hope I did not give the Committee the impression that I thought we were there, we are not, we have to make major step changes further in the period ahead.
34. As a major Whitehall employer, how much will the increase in employer's National Insurance costs cost your Department and where will the money be found?
(Mr Bender) I do not have that figure to hand; we will provide a note to the Committee on it.
35. One of the ways of pulling the Department together and perhaps improving staff morale is, as you acknowledge in the report, setting up cross-sectoral, interdisciplinary teams; can you give us an example of what you have done?
(Mr Bender) First of all, we have one or two areas of work of the sort I described earlier; the work on regulating agriculture is a cross-departmental team. We have set up two projects internally, one on actually what is the role of a Department like ours on sponsorship of the various industries it "sponsors", and what is good practice around Whitehall. We set up another one of diffuse pollution from agriculture, so looking across at the water quality side and through to the farming side. More generally, increasingly it seems to me that the internal organisation of any Department is never going to be right, and therefore an increasing number of issues, I think, we need to manage on a programme basis. So, for example, the CVO is planning that the major priorities in the animal health and welfare field will be identified and carried forward on a programme basis, bringing in those other parts of the Department and external stakeholders, so identifying ten or 12 key programmes and managing them that way. And I see that as an increasing way forward, of having a vertical structure that has to exist, of some sort, but then having cross-cutting teams; the trick is to try to manage that in a way that brings in the right people, makes the right links and avoids excessive bureaucracy.
36. I think that is right, I think those task-orientated programme teams are a way forward. I just wonder how far, when you look at the two Departments that make up the present Department, they have become integrated; have there been movements between the various sectors within the Department?
(Mr Bender) Some; so, for example, inside the Environment Protection DG, there is one Director, out of four, who was in MAFF before the election, and the person who led the delegation when the Secretary of State was in Marrakesh, on climate change, came from the former MAFF, so at senior Civil Service level. In the Land Use and Rural Affairs side of the Department, it is a complete mixture of people. On the Food and Farming side, we actually have one person at director level who came from outside the Department altogether. We need to do a lot more interchange within the Department, we need to bring in more external skills; so we need a lot more of both, but we have made progress on actually moving people around, which is, after all, the best way of sharing practice and behaviours and histories.
37. And at lower levels within the Department, are people now moving around?
(Mr Bender) Some, but not enough, is my view. I think we need to do a lot more, and, in fact, we have a sub-committee of the Board that looks at human resources, and I have asked them recently to produce proposals for ensuring significant interchange between the former elements across the Department.
38. Have you set yourself some targets on this, do you know where you want to get to on this?
(Mr Bender) That is what I have asked the HR sub-committee, not only to set targets and work it out, but make rules for how it will happen.
39. In the interim, preliminary answers that we received moments ago, I am turning now to the area of IT: "It describes DEFRA's vision for transforming itself into a fully joined-up and customer service focused e-business with all of its key services capable of being delivered electronically by 2005." This sort of gobbledegook can only have been written by Alastair Campbell, can it not?
(Mr Bender) We take full responsibility for it.