Examination of Witnesses (Questions 60-79)
MR BRIAN BENDER CB AND MRS JULIE FLINT
WEDNESDAY 19 JUNE 2002
60. Can I just clarify, Mr Bender, on this subject of sites, on page 45, the little sort of panel six, PSA target, the document says "Bring into favourable condition by 2010 95 per cent of all nationally important wildlife sites," then it says "compared to", where it should actually say "compared with", "60 per cent of sites currently estimated . . .", and you just gave a figure of 561/2, I think?
(Mr Bender) I did. I was reading from a bit of paper I have got, and I would like just to reconcile it and come back to the Committee, rather than you watch me trying to reconcile it now.
61. You have very helpfully supplied some preliminary answers to one or two of the areas on finance, but I just want to work my way through Chapter Five of your Report and ask one or two questions arising from it. We now live in the era of resource accounting, and the Comptroller and Auditor General provided an unfavourable report on your last set of accounts, and I was interested to know, in financial management terms, how you had actually strengthened your organisation to deal with the onset of resource accounting, an adverse report and a bringing together of the two Departments? And, having just read some of the information which you furnished us with in the last sort of few hours, there is a paragraph that I would like to probe you on, and I quote. "Whilst the changes offer no guarantee of DEFRA securing an unqualified audit opinion, it is evident that we are much further forward on compilation than this time last year. It does also seem that the key issues have been isolated and that there is scope for devoting extra resource in these key areas to improve the quality of financial information submitted for NAO scrutiny." Well now let me ask you about the language, "It does also seem . . ." it is a bit tentative; are you actually certain that you have found out what the key issues are, or not, and, if you are, what are they?
(Mr Bender) Can I say, first of all, that, self-evidently, but I will say it all the same, I take very seriously, as I must do, the Comptroller and Auditor General's qualification of the accounts; that is the first point. The second thing is, there are, I think, a variety of reasons that that arose, none of them justifiable, I am not making excuses, but a variety of reasons. One which faced all Departments was the complexity, and whether the right skills were being put in place at the right time to deal with that, and there were particular issues around assets that my Department was falling behind in. The second was then the Machinery of Government change, and thirdly foot and mouth disease, which between them caused an understandable diversion of effort, as well as a complication; so the unacceptable situation that arose arose for that combination of reasons. Now what I have done is, first of all
62. Just before we get to that, let me just ask you, the Public Accounts Committee, in July 1998, produced some examples and information about the way in which Departments should deal with resource accounting; so, in other words, Government was preparing, long before 1998, the White Paper I seem to recall came out during my days in the Treasury. So we are about seven years on from resource accounting having trundled its way down the Government track, and yet here we are, if you like, debating about the implications for your Department of this, and, agreed, there are additional complexities because of the bringing together, but do you not think, in accounting terms, you should have been a bit more prepared for all this?
(Mr Bender) Yes. I am not seeking to make excuses; what happened was not acceptable. And there are two or three main things we have done. First of all, I have strengthened the finance team in the Department, bringing in professional skills, professional accountancy skills, at various levels in the Finance Directorate. Secondly, we are strengthening financial training across the Department, because, as I am sure you would well know, this is not simply an issue for the finance part of an organisation, it needs the proper priority given to financial management, financial forecasting and budgeting in the constituent businesses, and that training programme is, if the Chairman will forgive me using the word again, being rolled out across the Department. And, thirdly, and this links in with the phrase you read out, "much further forward on compilation . . ." We have worked up a programme of milestones that we need to achieve at each stage during the year, so that we do not end up with a sort of last-minute rush, to try to meet the requirements. We have discussed that plan with the National Audit Office, who, for what it is worth, have an increased level of confidence in our ability; but it is not something I
63. On a scale of 0 to 10, how would you rate their previous level of confidence, and where do you think it is now; because it might have been at 1 and you had got to 2, which I suppose is a 100 per cent improvement, but it still does not take you very far up the scale?
(Mr Bender) I think it was low, and it is a lot higher.
64. I do not want to go into detail now, but I think it would actually be quite interesting to have a note on the changes, particularly in the context of the quality of the people, because, interestingly, there is no mention in the Annual Report of anything to do with, as far as I could see, in the section in Chapter Five, "How we spend our money", to indicate that you were improving for the accounting of the spending of that money, and we will come back to that in a moment or two? Right; well having now dealt with that, let us just have a look at some of the things that are in Chapter Five. Page 33, it tells me that "Our strategic plans for new investment and existing asset use are set out in our Departmental Investment Strategy." More details can be found on your website. So I clicked away, and first I was told I could not gain access because I punched in the address that is in here, so, not to give up, I go back through the main DEFRA website and I find it; and what do I find, it is not the DEFRA investment plan, it is the MAFF investment plan. Why have you not got the whole departmental investment plan where it says I will find one?
(Mr Bender) I thought we did have; we should have, and I will make sure we do have.
65. But it does worry me that you have got in this Report that indication; somebody must have said "it is perfectly acceptable to have a MAFF plan when we are now DEFRA." You have been DEFRA for quite a long time now?
(Mr Bender) I cannot answer the question. I mean, I cannot answer further than I have done.
66. I think it goes back to colleagues' questions about the IT system, because whoever is responsible for dealing with that bit has not got you integrated in the way that you would feel comfortable in the light of the questions that I am asking. One of the things that you mentioned in your opening comments was that you have veered away from points of detail; but I have to say that when you look at Chapter Five, let me just ask this question, do you regard Chapter Five as the equivalent of the financial section of the annual report that you would expect for a plc, or does it do something else? And I ask that in the context of, now, the requirements under resource accounting and the reporting of public accounts.
(Mr Bender) I would be interested in the Committee's views, obviously, of what detail they would wish to have. I think there is a discussion to be had about whether the breakdown of consumption of resources is best done by function or by objective, because, in resource accounting, it ought to be, I would have thought, by objective. In the light of some media coverage recently, I should say to the Committee that there are some errors in Table 5.1, including the line on animal health and welfare, which has not gone down, as it appears on the fourth line, on page 34.
67. Now what was the first one?
(Mr Bender) We were criticised in the past for having too much detail in these reports; we can, though subject to your last comment, and do, put more information on our website. I would be very happy to put more information in this Report on key programme areas, if that is something the Committee would think we should do.
Mr Jack: I was looking in various areas for what I call sort of a "notes on accounts" section, and the best that we can get to that is some notes on page 43, which deal with staff numbers; there is very little to explain anything about how these numbers are put together, what picture they are telling us. For example, if I turn to the "Capital Employed" section, in Table 5.4, I learn, in the last financial year, that you estimate that you will have "Fixed Assets, Land and buildings" of over £400 million; well I know nothing about your estate, your estate management, your land holdings, the use of resources.
Mr Todd: If you look at the "Creditors", I think you might ask a further question on that.
68. My colleague, indeed, poses a very importantI was going to come on to that, but he poses another question. This is the point, that there is little explanation to help us understand it. The Government told us, some years ago, it was conducting a sort of Domesday-book exercise on the assets of Departments, and therefore one could have concluded, from that, that people were going to be asked about the assets that they had, their use of them, etc; well, I might, by now, have expected a bit more detail in the Annual Report, but there is nothing there?
(Mr Bender) As I understand it, advised from a colleague behind, the detail in these Tables is in accordance with Treasury guidelines, in other words, this is something that obviously can be changed in the future and more can be put on the Department's website, but the level of detail in this, I think I am right in saying, was something that was set by the Treasury. And, clearly, if Parliament considers that to be unsatisfactory then that
69. So you are following every Treasury guideline with an absolute sort of interpretation of it, are you?
(Mr Bender) The question earlier I think one member of the Committee asked was, what is the purpose of this Report; the purpose is to inform Parliament and the stakeholders of the Department's performance, but it is done in a way that is set within a Treasury-proposed, Treasury set of guidelines and instructions for how it is done. That was the response to the earlier question, too, about why there is an imbalance with the two bodies, Forestry Commission and OFWAT.
70. Well, apart from those two, why, for example, do not these accounts information contain anything on your departmental expenditure on Non-Departmental Public Bodies; you are responsible for lots of these?
(Mr Bender) We are, yes.
71. It is like a sort of blank void in this document. What do you spend, what is the global figure on expenditure on Non-Departmental Public Bodies?
(Mr Bender) I do not have that, off the top of my head.
72. But do you not think that an Annual Report should tell us about what you are spending the public's money on, in the areas for which you have responsibility, in the line in there?
(Mr Bender) I take that point away, and I accept the point.
73. Right; well let us just have a look at some of the numbers questions. You indicated that there were some errors in this; just help me out, because I am prepared to accept that, occasionally, printing errors can occur, but what caused these errors?
(Mr Bender) There is a reconciliation error in the Table 5.1, on page 34, and the reconciliation error resulted from a switch from providing our data by objective, of the Department, into providing it by function; as a result, I am sorry to inform the Committee that the rows above the total contain errors. So, for example, on "Animal Health and Welfare", the outturn figures are not as indicated; if we net off the effects of foot and mouth disease, the figures for 1999-2000 onwards would be 152, 183, 159, 206, so it has not gone down, as the Table implies. Those errors will be corrected when a Supplementary Estimate is put in, and it resulted from, I mean it was complicated by the changes in the Department's objectives, the Machinery of Government change and foot and mouth disease, but the fundamental errors arose from switching from an objectives basis to a functional basis, on Treasury data, at the last minute. So there are errors in those Tables, and I apologise.
74. It may be that what I am about to ask you about falls into the same category, but in the line that says "Executive Agencies" we see, under 2000-01 a near £59 million figure, and then the "Estimated outturn" for the current financial year almost doubles: why?
(Mr Bender) I cannot answer that. Can I just come back to your earlier point about the detail, because the Fifth Cavalry behind me pointed out the Supply Estimates do have detail in them; this Report seeks to summarise that detail. Now, if it was oversummarised then . . .
75. I accept that, but, for example, where you have got significant changes, such as the one I have identified, a small note, even referring one to that further detail, would have been of some help, because I have no idea what that particular number is all about. Let us move on. "Consumption of resources by activity:" why are there not any numbers in the 2002-03, 2003-04, column, this is on page 35, it says "Plans" but there do not appear to be any?
(Mr Bender) May I ask Mrs Flint to respond to that?
76. Yes. Step forward, Mrs Flint. A smiling Mrs Flint takes the chair.
(Mrs Flint) Is it Table 5.5 that you mean?
77. This is the continuation of Table 5.1, on page 35, in which the Table continues "Consumption of resources by activity:" and it gives us lots of information up to the "Estimated outturn" for 2001-02, but then it has got "Plans" and there are just a lot of little dots?
(Mrs Flint) We did have a difficulty, as far as 2002-03 is concerned, our plans, we did not conclude our business planning exercise until the end of March 2002. Now the information in these Tables is drawn from the Treasury database, which has to be completed by January/February, in order for the Estimates to be produced; so, in some cases, our plans were not finalised and we did not have information on those already entered onto the Treasury database. Now what we need to do is update the Treasury database in time for the Supplementary Estimate to be produced, and that then will produce updated Tables for this Report.
Mr Jack: But this makes the point, Mr Bender; that was a perfectly reasonable explanation, whatever we may think of the timing of these things, but to put in these two columns with "Plans" a load of blanks does not exactly send out a sort of well-organised message about what DEFRA has been up to, or what it is going to do in the future.
Mr Todd: It is the current financial year.
78. Indeed. So I think somebody ought to go back. But if you are following Treasury guidelines you have been left high and dry with all of this, because you are just a bit behind when they have got their deadline, you have probably got numbers now, somewhere, on a piece of paper?
(Mr Bender) Yes.
79. And it is not there. I think it just makes the point that perhaps questions of timing of the production of these reports need to be synchronised better, so that when people say, "Well what are they going to do in this area of "Plans"?" we might actually have some answers; because it just sends out completely the wrong message, and there is no note whatsoever. Let us move on, on this, with the Chairman's agreement, and let us move on to Table 5.2, "Water services, Consumption of resources by activity:" it says. Why do we suddenly leap from an "Estimated outturn" 2001-02, from just a fraction over £30 million, to £53 million; there must be a reason for that?
(Mr Bender) I will provide a note to the Committee on that. I cannot answer that now.