Oral evidence

Taken before the Environment, Food and Rural Affairs Committee

on Wednesday 18 June 2003

Members present:

Mr David Curry, in the Chair
Mr David Borrow
Mr Colin Breed
Mr David Drew
Mr Michael Jack
Mr David Lepper
Mr Austin Mitchell
Mrs Gillian Shephard
Alan Simpson
Paddy Tipping
Mr Bill Wiggin

__________

Memoranda submitted by the Department for Environment, Food and Rural Affairs

Examination of Witnesses

Witnesses: SIR BRIAN BENDER, KCB, Permanent Secretary, Defra, MR PAUL ELLIOTT, Rural Economies and Communities Director, Defra, MR ANDREW BURCHELL, Finance Director, Defra and MR DAVID BILLS, Director General, Forestry Commission, examined.

Q1  Chairman: Gentlemen, welcome to the Committee. First of all, Sir Brian, congratulations on becoming a greater man since you were here last year.

Sir Brian Bender: Thank you, Chairman.

Q2  Chairman: You see what appearing before the Select Committee does for you. For the record, you are the Permanent Secretary at Defra; Paul Elliott is in charge of rural economies and he is the Communities Director; Andrew Burchell is a Finance Director and Mr David Bills is the Director General of the Forestry Commission. We are delighted to see Mr Bills's contribution to last year's report, which tends to be the tail wagging the dog, has now been reduced to an economical ten pages. That seems to me to be about right but we may wait for the film! Sir Brian, can I begin by asking you a question which I think has troubled this Committee in the course of a number of our inquiries and that is about the actual capacity of Defra to deliver in practical terms the policies which the politicians decide on. What I mean by that is when we did our waste inquiry we came across a series of concerns that the Department just simply did not have the expertise to deliver the sort of economic models and the forecasting which was a necessary part of the way the waste programmes work. We know there is a couple of areas where national legislation to transfer into European Union directives have not yet been laid even though the European Union directives are in force. It may well be that this is a problem across Government but our responsibilities obviously are with Defra. The question is not intended to be an aggressive question. Is there a problem now within Government of getting hold of the people with the expertise to deal with the extraordinarily complex areas which, for example, environment legislation now poses and the translation of that into accessible legislation which the people who have got to operate it can understand, assimilate, implement and apply?

Sir Brian Bender: Can I come back to your point about legislation at the end of the answer because the essence of what we are trying to do with our changed programme is to increase the Department's capacity and the capacity to deliver what the Government has said the Department should do. That is what it is all about and a crucial part of that is the process of delivery planning. So we have targets - and no doubt you will want to ask questions about some of those later on - and delivery plans are then worked through what is needed to be done in terms of the analysis, the skills, the people in place, the people we have to work with through local government or through other departments, or with other departments or other agencies or our own DPPs to make it happen. That delivery planning process I would say, frankly, across Government was patchy up until the end of the 2002 Spending Review and one of the themes of the 2002 Spending Review was actually for all departments to raise their game and their capacity to deliver. As I say, the purpose of the delivery planning is to bring these various issues together. So if you take an area like waste - and I have, of course, read the Committee's report and the Department will be giving its response to it soon - we have a delivery plan now in place. We have been examining the skills needed and we have brought in someone as a programme director to lead that work who has external experience. We have brought in from within the Department a programme manager who has expertise in programme and project management and we are running the waste programme on a programme project basis. We are setting up a steering committee which, will be chaired by Mr David Varney, to bring in some external expertise to drive and make it happen and we are working on the links with local government and what actually makes a good local government perform well. An interesting example is the area of Sunderland, which is a high performing local authority under comprehensive performance assessment but has a very low performance on recycling. So the general answer to your question is the purpose of our changed programme is to increase our capacity. We are focussing that attention in the first instance in the priority areas of the PSA targets but we are trying to do it across the board. Coming back to your specific question about environmental legislation, I do not think it is a question primarily of skills, although I think that is probably a part of it. I think it is a matter of ensuring that the Department and the implementers (in most cases the Environment Agency) work well together and that there is a better (again using these words) programme management relationship between the departmental lawyers and the administrators through a negotiating process and through the implementation so that the lawyers are not brought in too late into the game. I think the history is that too often the lawyers have been playing catch-up on these issues. So I would not like to give the impression that everything is rosy. What I am trying to say to the Committee is that we recognise these sorts of issues and we have a lot of action in hand to improve them and there is an internal assessment process of the Department's delivery plans by the Treasury, which they will be doing again in October, to see how our performance shapes up and is likely to be shaping up.

Q3  Chairman: I will forebear on commenting on whether the fact that the Treasury is doing it gives me any confidence. So many of the targets set by the Treasury seem to be fantasist, somewhat remote from the real world. On the Civil Service, which you now manage a significant chunk of, how would you describe the difference between the skills it needs now and perhaps the Civil Service you entered?

Sir Brian Bender: I think it is very different. The sorts of skills needed now include - the word "leadership" had not been invented in 1973 when I joined the Civil Service. Management became a theme during the 70s and 80s, the issue of what makes an effective leader, whether it is in a school, a hospital or a government department, at many levels. So the whole issue of leadership skills is crucial. I have mentioned already the issue of programme project management skills. In many cases the reason for failed Government projects is because of a lack of skills within the organisation, so up-skilling in that area. Skills around what I call partnership working, working through others, and that is an area again where Defra certainly needs to raise its game because so much of our activity is done through local government, through the regional development authorities, through local communities of one sort or another. I think there are skills that are different, so it is not the sort of mandarin Civil Service that I joined where if you are good at giving policy advice that was the main criteria. You still need to be able to give good policy advice.

Q4  Chairman: But technical skills as well? The skills you have just described tend to be skills of process in a sense but there are also sheer technical skills, economic and metric skills, modelling skills, are there not now, which so much depends on?

Sir Brian Bender: Well, we need legal skills in all departments, we need sufficiency or access to economic statistical skills. A department like Defra needs to have and have access to scientific skills, self-evidently, veterinary skills. Again, in the Civil Service I joined human resources was handled by bright people seconded there for a while, who learned it on the job. Professionalising the internal services like human resources, finance, communications and of course like IT, having people who have those skills. Those things have changed certainly over the last ten years and increasingly over a longer period.

Q5  Chairman: We will obviously want to talk about Lord Haskins's recommendations and indeed this time next week Lord Haskins will be sitting where you are so we will have the opportunity to ask him about it. So I am not going to pursue that now, although quite clearly the implications of what he suggested, as anybody who listened to the Farming programme this morning heard - which Mr Jack, I have to tell you, did so and has been kind enough to inform the Committee about this particular discovery - has got very wide implications. You are going to have to throw the whole lot up in the air if that was implemented, are you not?

Sir Brian Bender: I suppose the slightly facetious answer to your question is we asked for it, that is to say we recognised a little over a year ago that there was an issue around the way in which the Department's rural policies and services were delivered in rural communities. Therefore, we wanted a study led by someone external to look at that because the delivery organisations, the bodies had grown up historically, some to Environment, Transport and the Regions, some to Defra and therefore we wanted a review and the terms of reference were how to simplify or rationalise the existing organisation and establish clearer roles and responsibilities so that everybody is involved. He has not yet made recommendations. He referred on Farming Today to his thinking and he has referred more widely to his thinking. The only thing he has published at the moment are some guiding principles, one of which is devolution, that the delivery of economic and social policy must be devolved in accordance with the principle of public service reform. Devolution away from central departments rather more is actually something that both the Prime Minister and the Chancellor have mentioned in various speeches, the notion of separating out from a core department the responsibility for delivery but then ensuring there are good and close links of accountability back. If he makes recommendations that follow that through to its logical conclusion there will be fairly profound implications for bits of the Department, yes.

Q6  Chairman: We will wish to explore it. Can you just put something to rest really in one word. I have picked up the feeling that there is still some debate as to which department should handle energy policy. Is there still a debate as to that?

Sir Brian Bender: I will not answer in one word, if I may. The Energy White Paper was a joint White Paper between Patricia Hewitt and Margaret Beckett. The implementation of the Energy White Paper is being pursued by a network based in the DTI but involving people from a number of departments, including our own, working on a programme management basis across Government in the same sort of a way as we are pursuing the farming food strategy across Government. Ultimately the lead is with DTI but we have a strong shared interest in following it through and making it happen and we are very much involved in that.

Q7  Chairman: Finally, in this initial batch, can I come to one of my little sort of bête noir, which is these PSA targets, because I do sometimes feel that the targets are either imposed upon you or agreed with you, which do make an enormous amount of assumptions, many of which are not under your control. If we look back to page 57, which is the CSR target: "Cut the overall cost of the CAP to European Union (EU) consumers and taxpayers from its current level of 88 billion ecus (£62 billion) a year." That of course was in the 1998 PSA target and then that has been slightly modulated (or whatever the fashionable word might be), modernised I suppose I ought to say when you get to page 73, where it says: "Secure agreement, by March 2004, to reforms that reduce the cost of the Common Agricultural Policy (CAP) to consumers and taxpayers." The only inconvenience of this is that of course it does rather depend on what fourteen other Member States say, does it not? Why does the Treasury sort of stick in targets which, quite frankly, have no realistic sense at all? We all want to reduce the cost of the CAP but you are no more capable of delivering that unilaterally than the man in the Moon is capable of delivering it unilaterally. As far as I know, Mrs Beckett has disappeared to Luxembourg about a week ago and has not been seen since. She may still be there for all I know but not much is coming out.

Sir Brian Bender: Well, she is there, although she did appear in the interim and there was a new Presidency compromise tabled this morning, which is still from the United Kingdom's point of view looking encouraging, but there are hard negotiations still to go.

Q8  Chairman: Are these really useful tools or, quite frankly, are they simply saying something which any sane department would do in any case and are they not just becoming a liability for you?

Sir Brian Bender: I think if you have got sensible targets and targets which actually focus the mind, a focussed effort, recognising that actually some of the levers (like this one) are beyond our control but we can still influence them and sort of try and pull them a bit I have no problem with the target providing the Treasury and commentators recognise that our ability to deliver the result is not entirely within our control. Nonetheless, if Margaret Beckett comes back from Luxembourg with an agreement that does not involve some form of satisfactory CAP reform but is still an agreement then in a way it does not matter whether there is a target that says it or not. You and colleagues in Parliament may well criticise the outcome and the media may. So it is a way of encapsulating what it is we are trying to achieve. It is a difficult one, but if you look at the one on waste we have to implement that through local government, through industry, with other players in Government.

Chairman: Mr Jack, as a reward for having listened to the Farming programme (and I suspect he was probably jogging at the time), gets a brief supplementary and then we go to Mr Wiggin.

Q9  Mr Jack: It is not about that yet, Chairman, but I just wanted to follow on the point you were making about the way that this report deals with some of these PSA targets. I refer you to page 75. Here we see the bold statement which says: "Achieve a reduction of 10 per cent in the unit cost of administering CAP payments by March 2004, and 95 per cent electronic service delivery capability for such payments by March 2004." A strong, definite target. In the slightly greener box next to it, it says: "Some slippage. Target has been revised in the Spending Review 2002," and leaves us with the tantalising question as to what and to why, so perhaps you could fill in the missing bits?

Sir Brian Bender: I hope the Committee received a note that we provided yesterday which actually I think did answer this question, but in this particular case the slippage was primarily as a result of the diversion of staff, the impact of Foot and Mouth duties on the people in the Rural Payments Agency who should have been working on this. So there is about a six month slippage in the programme and that is why the 2002. That is why the Spending Review 2002 period has a similar results target but a slipped timetable target and we are on track (he said, with fingers crossed) for achieving that.

Q10  Mr Jack: Just to tantalise me with the answer, what is the new target?

Mr Burchell: It has moved back by one year.

Q11  Mr Jack: So it is 10 per cent but one year later?

Sir Brian Bender: Yes.

Q12  Mr Wiggin: I am sorry you are not wearing the uniform of your predecessor but it is a hot day! On 2 May 2003 you launched a strategy called "a more sustainable future for everyone"but this strategy is not allied to your PSA objectives so it cannot be regarded as a coherent strategy for the delivery of PSA targets. I believe the Animal Health and Welfare strategy is not included either and that is planned for later on this year. When will the Animal Health and Welfare strategy be published?

Sir Brian Bender: We hope it will be published as a basis for further consultation in July, although that is a matter for our Ministers.

Q13  Mr Wiggin: How are your strategies integrated with the Department's PSA objectives and targets?

Sir Brian Bender: We published a document, I think it was the one you referred to, which identified six strategic priorities, which six of our PSA targets relate to in one way or another and then there are others that come in in various ways underneath that. The document I think you are referring to highlighted the areas where the Ministers in our Department attach most priority to achieving progress over the next few years. As I say, all the PSA targets come, one way or another, under them; some more obviously than others. So the rural one comes very obviously under the rural issue; the one on sustainable farming and food comes under what is said there. Some of the ones on countryside access, on SSSIs and so on, come in in different ways in relation to what we are trying to do on biodiversity, for example.

Q14  Mr Wiggin: I believe you are also undertaking a number of initiatives to improve and develop the service provided to customers. Who are your customers?

Sir Brian Bender: We have been debating that quite a lot in the Department. In this context what we mean are our direct customers, those for whom Defra provides services directly. So, for example, farmers whom we pay money to through the Rural Payments Agency, farmers who will have agri-environment schemes or the fishing industry in relation to the fisheries' work. They are not customers in the sense that they may necessarily be satisfied with the policy. So in some respects we are actually paying to change their behaviours, as we are in agri-environment schemes. But for these purposes we mean the direct customers. Many of the issues the Department deals with are - there are 58 million indirect customers who are looking at something like air quality. We are talking about the whole nation and indeed we are looking at climate change, which is rather more grandiose than that. But in this context we are primarily referring to the Department's direct customers.

Q15  Mr Wiggin: So how do you assess the requirements of these people?

Sir Brian Bender: Through feedback, through dialogue with them, through knowing their views and therefore having a customer feedback process. Some parts of the Department have got fairly sophisticated arrangements in place. The State Veterinary Service and the Rural Development Service are only beginning to have these arrangements in place.

Q16  Mr Lepper: Am I right that the overall budget of Defra is just under £3 billion?

Mr Burchell: Around £3 billion, yes.

Q17  Mr Lepper: There is a report on the 2002/2002 resource account, I think, by the Comptroller and Auditor General's office last year and that was critical of some areas of Defra's financial management, I believe. It did highlight, I think, a significant underspend which it was suggested from some weaknesses in financial management. I think another issue which was raised in that report was the ability of the Department to respond quickly and effectively in terms of allocating resources when changes in public policy or priorities arose. Could you tell us what has been done over the last year to ensure that there is greater flexibility in terms of financial and human resources in the Department?

Sir Brian Bender: Can I first just comment, if I may, Mr Lepper, on the qualification by the Comptroller and Auditor General. It was plainly disappointing. However, our own view in discussion with the National Audit Office was that given the previous starting point of the accounts for the previous year, which were heavily qualified primarily because of the complications with Foot and Mouth disease. This was a lesser qualification. It was within the same scope as the previous one and smaller and the Comptroller and Auditor General was clear that the progress being made provided a sound basis for unqualified accounts in the period ahead and the Comptroller and Auditor General acknowledged a number of improvements. You can ask me next year whether we have achieved that. In terms of resource allocation, the most important exercise we are doing at the moment, which will not be completed until after the summer, is actually looking at all our activities - the jargon is an activity baseline review - and breaking down all our spend so that we are clear what is being spent on, I think, about 6,000 different activities and with the help of some experts who have done this in other organisations trying to allocate that to the outcomes we are trying to achieve. The purpose of that exercise is to work out with our Ministers whether we are spending the right sums of money on the right sorts of things, are there things we should be spending less on, are there things we should be grouping together in different ways or stopping, and part of the purpose of that would be to create headroom to spend money on other priorities. This will also enable us, knowing exactly where the money is being spent, to have a greater ease for flexibility. Meanwhile, our internal resource allocation for the present financial year which was conducted through last winter had, by its nature, to be a fairly interim process until that had been done. So we did business planning for this year on a one year basis reflecting the sorts of priorities which are in the strategy document and which Ministers had agreed in principle last summer. Those priorities were recognised in the way we allocated resources for the current financial year, but still having business planning on a one year basis is not satisfactory and we are planning to move through this autumn for two years through the current Spending Review period.

Q18  Mr Lepper: So what you have just described to us should increase that flexibility and make the Department more responsive?

Sir Brian Bender: Correct.

Q19  Mr Lepper: You are inviting us to expect, we hope, an unqualified report from the Auditor General's office next year?

Sir Brian Bender: I certainly expect it and my finance director knows!

Q20  Mr Lepper: Would Mr Burchell wish to add anything?

Mr Burchell: Perhaps I could refer back to the accounts for the year before and the Comptroller and Auditor General's opinion then, which was actually more serious in the nature of a disclaimer. He did refer then to the measures that we were starting to take even during the course of last year to deliver further training to embed resource accounting and budgeting, the action I took to set out more formally the financial responsibilities for senior managers within the organisation over budgetary control and monitoring, and indeed when you look at the qualification on the 2001/2002 accounts I think it is fair to say that he refers there to further progress on embedding resource accounting and budgeting. I think the action we took last year has been reflected in the improved nature of the qualification, although still disappointing. I think having a true and fair opinion on the closing balance sheet for last year does actually provide us with a very robust basis for moving to unqualified outcome for the 2002/2003 accounts. In terms of the work we are doing on embedding resource accounting and budgeting, we are effectively tackling that through three strands. On people we have developed a financial competency framework whereby all staff within the Department who have a finance element to their jobs have to assess themselves against a competency matrix on different levels and identify the training requirements. We are in the process of up-skilling the finance function both within the finance directorate and throughout the organisation. The Comptroller and Auditor General's report also referred to the need to improve our systems. At the moment we run two systems on accounting and on budgeting and we are moving this year towards a single integrated system. Also, we are improving our processes in terms of our period end processes at the end of each month, which should improve the quality and timeliness of the financial monitoring information we get in the management accounts each month. Therefore, taking those three things and building on the unqualified opinion in relation to the closing balance sheet, we are cautiously optimistic that we are moving in the right direction.

Q21  Mr Lepper: Could I just ask one thing there. The underspend was part of what was commented on. If a director of a particular department within Defra sees his or her department heading for an underspend how does the system ensure that that cash gets redistributed, as it were, or used throughout the system?

Sir Brian Bender: Shall I begin and then again Mr Burchell may want to supplement. We have monthly financial management information which goes to budget holders and the management board. We have quarterly reviews and a mid-year review, which is a bit serious in the sense that if there are underspends against profile we would expect re-allocation unless the part of the Department underspending has a very good reason. The other issue is of course the possibility of endo-flexibility. In the case of 2001/2002 because we had made a rather massive claim on the reserve the Treasury rules say you cannot carry money forward from one year to the next. If we do not make a claim on the reserve we can carry money forward and it may be that we would prefer to carry money forward than actually re-allocate it. So that would be a decision that would be taken, probably around the end of the third quarter, that it is better to carry it forward rather than re-allocate it from the director at A to the director at C. For example, if the underspend was in the Rural Development Programme we might take the view that it was better not to lose it from that but to try and catch up the following year.

Mr Burchell: Perhaps I could just add in relation to underspends, the issue is probably more acute in relation to capital programmes. That is not unique to our Department, it is unique across Government, I think, as reports pick up. One way to tackle that is when one is allocating funding to different projects and programmes, on capital in particular, you take a very close look at the capacity of the organisation to actually do all of that work in terms of the skills required and the business analysis because very often, if you take IT as an example, very often it is not a technical solution it is more a business solution, which may be IT driven in some cases. Certainly this year when we are putting together a capital programme, on the IT in particular we have taken a hard look at the capacity to actually carry out all these projects and manage a portfolio in a way that therefore should help to mitigate the risk of underspend.

Mr Lepper: Thank you.

Q22  Mr Jack: Your Department, if I have understood the numbers correctly, has got a 2 per cent increase over the next two years in terms of your resource budget. If that is the case, you are facing a real terms reduction in the resources that you have available and yet so far you have laid out an impressive list of things that you would like to achieve. Clearly that means internal savings. Could you just give the details to the Committee as to how those savings are to be achieved and how much in cash terms will that result?

Sir Brian Bender: I will answer the last part of your question but I will ask Mr Burchell to comment on the opening point first, perhaps.

Mr Burchell: I think we need to draw a distinction between the SR 2002 outcome which, as the report said, indicated an increase in our departmental expenditure limit of 2.7 per cent per annum, which is a real terms increase, with the actual bottom line resource numbers here. It is possible to reconcile the SR 2002 figures with the resource tables but budgets are not static. The numbers which are reported in the departmental report are on total resource budget terms and therefore do also include annual managed expenditure as well as departmental expenditure and the annual managed expenditure (which is principally CAP support payments) was forecast to go down over the planned period and that is why it looks as if our total resource budget is going down, which indeed it is, but that is principally due to a decline in the forecast of the annual managed expenditure rather than the departmental expenditure limit. Similarly, in terms of the reconciliation between the Spending Review figures and the resource totals at the bottom. Typically the Treasury, when they publish Spending Review settlement outcomes, strip out one-off time limited items, such as investor safe budgets, capital modernisation fund budgets and also they tend to strip out inter-departmental budget transfers. When you add all these things back in then the numbers change compared with the outcome. Also, since the Spending Review last year the Treasury has reduced the cost of capital from 6 per cent to 3.5 per cent, so again that impacts on the numbers. So it is quite a complex process of reconciliation to move through from a departmental expenditure limit, which is the focus of the SR 2002 outcome, to the figures here.

Sir Brian Bender: However, we would like to find more money to fund the things that the Department and Ministers would like to do and that is the purpose of the activity baseline review that I was describing earlier to Mr Lepper. How much we will find from that I would not like to say at this stage but one area where we are looking to make some savings would be on the over 30 months scheme, which is part of the Department's expenditure limit, rather than annually managed expenditure starting this financial year and if the Food Standards Agency recommend (as they are consulting on doing) radically changing it then while we would still be required to test animals the cost of that testing would be significantly less than the cost of administering the over 30 months scheme. So that is an area where we would look for some savings over the period.

Q23  Mr Jack: Are you not able to give us a figure for a target for, for example, your overall cost improvements in whatever way you are going to derive that because that might give us an indication as to your efficiency gains?

Sir Brian Bender: Yes.

Q24  Mr Jack: What would that number be?

Sir Brian Bender: We are committed (says my brief) to making efficiency savings over the three financial years of £16 million, £38 million and £85 million and much of that will be sought from the administration budget. Therefore, in order to do that each directorate is looking for 3 per cent efficiency savings year on year, but that is the administration budget. The answer I was giving earlier related additionally to the programme budget where there would be, we would hope, larger sums involved. We do not have at this stage a target for the savings we are looking for from the activity baseline review. That is actually one of the things we are discussing now and we are discussing next week with our Ministers. It is an exercise which will be concluded in the autumn.

Q25  Mr Jack: I have to say as an observation you may be following Treasury rules on how certainly the resources section, chapter 5, is laid out but it does not provide you with an easy to read commentary about what you are doing. For example, you talk about the Curry Commission, funding will rise to £200 million, but when you try and pick out in this plethora of detail where Curry appears and what is happening it is very difficult to do and yet it is an absolute flagship part of your Department's programmes because if I look at chapters 1 - 4 there is very little in the way of relationship, in the way the report is laid out, to any of the financial information that is contained in chapter 5. So we really cannot put activity and funding together in an easy format. Is there any reason why we are getting this sort of confusing picture?

Mr Burchell: I think part of the difficulty we had when we had the Spending Review outcome is that many of the strategies which were being formed to inform business plans were still in the process of being developed. For example, work is still continuing within the Curry implementation group within the Department through programme management to actually put the definition on the precise budget allocations and linking those to activities in the same way that we are still working on the Animal Health Strategy, which is part of the strategy on farming and food, again developing the policies, the activities and the expenditure requirements to actually inform that. Part of the difficulty is that we have not got the level of dis-aggregation going forward because not all the work and the strategy development has been completed to actually provide that amount of definition.

Sir Brian Bender: If I understand your question - and no doubt the Committee will reach a formal view on this - one of the issues you would like us to consider for next year is dis- aggregating in what is currently the activity chapter rather than the financial chapter at least some of the main headlines.

Q26  Mr Jack: Yes. For example, I took one topic, which was flood protection, and I tried to find out what Defra was doing and I found on p.107 a reference to a further allocation of 15 million in 2004/5, 40 million in 2005/6 and then it is going to have 150 million the third year, so I think is this a cumulative figure or an annual figure? Then I turn up table 3 and I find capital resources down there. Then I turn to another page, 116, and I find a third set of figures talking about resources in some unnamed currency for flood and coastal defence. It is quite interesting that pounds is only discoverable in this by the time you get to page 117. Perhaps you could tell us what currency Defra are working in?

Sir Brian Bender: Pounds.

Q27  Mr Jack: Why is it that if I want to get a complete picture of both capital and resources for your expenditure on flood and coastal defence, which as you will know has been a key area of public concern, I have to say I find it impossible to get that picture from this document.

Mr Burchell: First of all, let me illustrate by means of flood defence and then move to the more general criticism. In relation to flood defence the actual sources of funding are quite complex. Apart from the capital grant from Defra, much of the funding comes from local authority levies and are not therefore part of our departmental expenditure limit. So there is clearly a disconnection between the spend that actually goes on flood defence through the Environment Agency and our departmental resources.

Q28  Mr Jack: With respect, I thought we were in the era of joined-up Government?

Mr Burchell: Yes. What I think your comment (which is fairly made) does highlight is the need for us in the future, particularly in relation to both reporting on past progress and also putting forward future plans, to provide a more thematic commentary around some of our core strategies. Part of the problem we faced over the last year was that we were working on what our corporate strategy was and I think now we have got the corporate strategy which identifies the key things which we need to concentrate on together with the work we have been doing on delivery planning, which actually provides an indication of all the things we are doing to support achievement of a particular target. It also indicates the relative importance of those activities. I think we need to work harder to provide a more thematic commentary and also give you a bit more light and dark about what are the important things we have achieved rather than a list.

Q29  Mr Jack: One of the themes we have taken up is the overall rural responsibility of Defra and trying to bring some of these factors together so that this annual report gives us an overview would be welcome. Just as an aside, on page 116 under "Support for LFAs" I do not understand the strange symbol which appears in there. What does that mean?

Mr Burchell: It says in the footnote it represents less than £500,000.

Q30  Mr Jack: I see. Let me just move on to one final thing. The Chairman alluded to Lord Haskins and listening to him this morning you could well be what is left of Defra! So given that you will have an awful lot of capital land, I see that the Department's fixed assets value is £507 million but I note that in each of the next five years your target for disposal of sales of any of that is £5 million a year, which I reckon is about 3 per cent of your total asset sale. What are you doing to make your Department light on its feet in case you do have to make some changes in the use of your land and buildings, which I think forms the bulk of your fixed assets? As I say, flexibility is the key word forward. What are you doing to become more flexible in the use of this capital base?

Mr Burchell: In terms of the figures over the planned period on land and buildings, much of that increase reflects the work of the Valuation Office Agency in terms of revaluation where in some---

Q31  Mr Jack: I am sorry, Mr Burchell, you may not have understood my question and forgive me if I did not pose it properly. Mine was a very simple one. The net book value was £507 million, as stated on page 108, and on the same page you are talking about assets being disposed of at a rate of £5 million a year for the next three years from sales of its surplus assets. So my conjecture was that is 3 per cent of your assets over the next three years. If you are going to have to be more flexible are you taking steps, for example, to go into the field of sale and leaseback or other arrangements so that if you do not need all your future capital and if there are only four of you who are going to be running Defra in the future you can dispose of this asset?

Mr Burchell: In relation to land and buildings, we did cover asset utilisation in our departmental Investment Strategy published in December. The land and buildings - our track record on utilisation is very good. Approximately only 3 per cent of our space was vacant in March 2002. In relation to what happens if you end up with a change in the organisational structure of the Department, of course these buildings are actually occupied by people who may under future organisational changes be transferred to another organisation, in which case assets get transferred as opposed to being disposed of. So the consequences of an organisational change, in the same way as a machinery of Government change, would lead to asset reallocation and transfer rather than disposal.

Q32  Paddy Tipping: Let me put things in a slightly different way. Let me see if I have got this right. There is no real development money in the Department so you are trying to generate it by looking at your activities, reviewing your activities and making 3 per cent savings year on year in administrative costs. Is that it in a nutshell?

Sir Brian Bender: The increase overall in real terms in the 2002 Spending Review was, I think, just under 2.8 per cent, which in Whitehall league table terms was not bad considering we were not the Department of Health or the Department for Education and Skills but we are a department with a large agenda and therefore what we are looking to do is to see how we could reallocate to what are the priorities, because with the fiscal situation as it is it would be certainly unwise of us to look forward to massive increases in the 2004 Spending Review.

Q33  Paddy Tipping: Tell us about these 3 per cent year on year administrative savings. Those are larger than many other departments have tried to achieve in the past, without any success I have to say. Is it achievable?

Mr Burchell: A large proportion of the efficiency savings actually occurs in year 3 as a consequence of ---

Q34  Paddy Tipping: They always do. They are always at the back end!

Mr Burchell: In relation to the regional restructuring programme and the creation of the RPA and Spending Review 2000 and the changed programme currently underway both in respect of the RPA IT system, and also the ERDP IT system, we expect those two to deliver the bulk of the efficiency savings over the planned period and they actually materialise in the third year and then actually roll out further, particularly in the case of ERDP IT.

Q35  Paddy Tipping: If I have got it right, across this year and next year you are looking for staff savings (yourself and your agents) of 11 per cent for 1300 jobs. That sounds quite a lot and most of those are in the RPA, but you have just told me that the RPA savings are not going to come until year 3.

Mr Burchell: There are RPA savings occurring even between 3/4 and 4/5. I think you must be referring to table 6 of chapter 5, where we do have a decline in the number of full-time equivalents. That is essentially due to reductions of the RPA which are planned already under the regional restructuring programme as per the Spending Review before last and also the consequences of outsourcing our IT.

Sir Brian Bender: The RPA is, for example, closing its Cambridge operation in the months remaining in this calendar year.

Q36  Paddy Tipping: You will not need reminding that big IT projects are perilous at times. The RPA and change programme is not your direct responsibility but I think, Sir Brian, you are on the management board. Is it going to happen on time as planned?

Sir Brian Bender: I am entirely confident that I am accountable to this Committee and to the Public Accounts Committee for its success, even if I can delegate some of that accountability to Johnston McNeil. The Government has set up a process with the office of Government Commerce for reviewing through a gateway review process, peer reviewing major change, particularly IT projects, and the Rural Payments Agency project went through the third gateway, the one necessary before signature of contract, around the turn of the year (I think it was January) and got a green light. I did actually cross-examine the head of the review team saying that given it is inherently high risk and complex surely an amber light would be more realistic. The answer was that their view was the risk management and the skills in the team handling this were as good as they could be. They have now placed the contract with Acentura, as I imagine Johnston McNeil told you when he was before the Committee. I am absolutely not complacent about a programme like that and will continue to keep a careful eye on it.

Q37  Paddy Tipping: Leaving the RPA on one side, what is the turnover of staff like in the Department? What is the percentage turnover? It will vary from level to level but say at the lower paid levels in the Department?

Sir Brian Bender: I think when I was before this Committee last year the data we had at the time was around 9 per cent between the beginning of June 2001 to 30 May 2002 at the lower grades and at that same level of grade, the least well paid administrative grades, from 1 April 2002 to the end of March it fell to 7.7 per cent. If you take the Department as a whole, the figure for all staff (permanent and casual) for the year ending at the end of March 2003 was 7.2 per cent. If you exclude the casuals then the turnover for all staff was 4.3 per cent, which as a figure is not one that inherently worries me. There may then be more geographical changes and clearly the turnover does get higher, so at grade 7 level up to March it was under 1 per cent and at the administrative assistant level for permanent staff it was about 8 per cent.

Q38  Paddy Tipping: One of the things that we tend to forget is that this is still a young and youthful department which has had some difficulties getting together. How do you enthuse the people there? How do you make sure that everybody is on board on this enterprise?

Sir Brian Bender: That is one of the essential elements of the change programme. I will give you some indicators first and then try and answer the direct question. I think I may have said this when the Secretary of State and I appeared before this Committee in December. In the staff survey we carried out last year 57 per cent of staff said they enjoyed working for Defra, 15 per cent disagreed; 62 per cent said they were satisfied with their current job, 20 per cent were dissatisfied and 85 per cent said it was a friendly and cooperative working environment. So that is the first indicator. The second indicator is, we have been for the last few months going through the process of re-accreditation as an Investor in People and we have just had a very gratifying report back from the lead assessor: "Defra is a very different organisation to the one I previously assessed. Being accredited as an Investor in People is a real success and one that not all Government departments have been able to emulate." Those are two indicators. How do we enthuse people? I think actually the portfolio enthuses people. I think it is an interesting and exciting portfolio whether one is looking at the environment, sustainable development more generally, rural or the agricultural bit of it. Then these things come down to the qualities of management and leadership, how people in teams can be clear about what it is they are doing, whether and how they understand that fits into what the Department is trying to do. The anecdote on this is the story of the man sweeping leaves in the car park in NASA and when asked what he was doing he said, "I'm trying to get a man on the Moon." I do not think Defra can quite do that in that sort of a way but in its own way that is what managers should be trying to do, explaining to people where their work fits in, the clarity of the job and I think then building on the natural enthusiasm for a lot of people in the public service.

Chairman: Lord Haskins is going to cast a little ray of sunshine over all that, is he not? Alan Simpson.

Q39  Alan Simpson: Sir Brian, I just want to focus on this capacity to deliver, chapter 4. I was very interested to see on page 100 that your reference to the introduction of a multi-year pay settlement was designed to "signal a significant move towards rewarding and valuing performance in the delivery of objectives and the acquisition and use of skills and competencies." It is a bit early in the process to ask you whether that is working or not, but how would we know?

Sir Brian Bender: If I may, could I just come back on the Chairman's further comment about Lord Haskins. I do think our people in many respects are used to coping with ambiguity and as a matter of fact the staff, for example, in the Rural Development Service, will not know either what Lord Haskins is going to recommend until, say September, or what the Government's decision is until as brief a period as practical after that. Certainly in the two Rural Development Service locations I have been around in the last few weeks of course staff are aware of it but they are getting on with the job and they are used to working in an environment of, as I say coyly, ambiguity and the question again comes down to management and leadership. If there is to be a change will the managers and leaders lead their people into it or will they feel victims of it? Good leaders, assuming they are convinced of the reason for the change, will lead their people into it. No doubt you will make a few more comments during the hearing on that but I take very seriously the issue of motivating our front-line staff during this period of intense uncertainty.

Q40  Chairman: You are very welcome to attend the hearing next week.

Sir Brian Bender: I will certainly have a spy or two in the public area, if I may. Coming back to the question on pay, I think it is too early because we are only now part way through and we are just actually, I think, about to table, having had Treasury approval, our pay offer for the current year and therefore the second year of the multi-year deal. There are three elements of it which are aimed at better performance. One was more use of non-consolidated bonuses to the better performers, the second was accelerated progression up pay scales for those performers and the third was the use of special bonus schemes for additional contributions. But I think at this stage it is too early to say. On the question of how would we know, I will give a non-reply to that. We will need to set out mechanisms for capturing back what we are getting for the money in terms of performance. It may come back to the efficiency-type arguments earlier. It may be simply that areas are delivering better or more effectively against their targets, there may be a number of different indicators but the Department's pay and workforce strategy will need to have a means of capturing what is being gained for the increased pay apart from a removal of discontent, which was not a mean issue.

Q41  Alan Simpson: Could you just clarify one technical point for me. The pay workforce strategy, is that something which is just to be confined to the central department or will it address the differing pay and conditions throughout Defra and its agencies and sponsored bodies?

Sir Brian Bender: It is certainly not just London-based, it would be the core department, but I cannot answer the question as to whether it covers the other bodies. We can come back to the Committee on that point.

Chairman: You can come back to us on that.

Q42  Alan Wilson: I heard my colleague mentioning when you were going through your previous answer, "It sounds as though there are an awful lot of carrots and I'm not sure how many sticks there are." The issue about what you deliver - and you made reference to the word "targets" - it seems to me that in some respects one of the problems that you face and that we face as a committee is addressing the culture that you inherited and the prospect that that culture was a "No can do" culture. My own experience and that of some of my colleagues last year on the Warm Homes and Energy Conservation Bill was that the role of your own senior officials was by and large to frustrate any attempts to set targets. I note that at the bottom of page 100 you have also thrown in a sentence there, which says, "Leadership is essential in making change happen." Sir Brian, I wonder if you would be kind enough, not necessarily now but to come back to the Committee and just say something about the leadership that you yourself offer in respect of the role the Department is playing in this year's Sustainable Energy Bill. I say that just because up until last week, when Brian Wilson was Minister at the DTI, we had an agreement between the two departments about delivering the reasonable steps to achieve carbon savings in respect of this and as soon as he left your own senior officials came in to scupper that and said, "No, we just don't think it can be done." I would like you to have a look at your role in delivering a change of culture into delivering a change agenda, because it seems to me that the danger, on what you have just said, is that you can provide all sorts of incentives for people to move up the ladder but if the culture of the senior management team that you are responsible for is a non-delivery culture how do we change that?

Sir Brian Bender: I will look into the specific issues of the bill and come back to the Committee on that, but I would hope that the Department's attitude towards a piece of legislation like that was one that was determined by Ministers on the advice of the Department, not decided on by the Department, and my recollection at least in relation to last year's legislation was that the view of the politicians and the Ministers was that the costs associated with the targets envisaged was one that the Government did not wish to pay and therefore the attitude of frustrating was not one led by officials. But I will come back on the specific bit of legislation. As far as my own role on this is concerned, perhaps I can make a number of points. The management board of the Department contains nobody on it who was on either the Ministry of Agriculture management board or the Department of the Environment, Transport and the Regions management board on 7 June 2001 apart from me. So we have a team of people, some of whom have come up from inside the Department, like my colleague on my right, and some of whom have come in from outside the Department who do not feel as much legacy and feel a shared commitment to making a success of the enterprise. You will have seen in the media distorted coverage of a leadership development programme that we are running. That, I think, was incorrectly characterised as "Bonfire of the Mandarins" earlier this year. But the top 550 of the Department, everyone from grade 7 upwards including me, is going to go through this programme (we are piloting it at the moment) between now and next summer and it will involve two days of working and testing at a development centre and a follow up twelve month development programme addressing gaps. The purpose of that is to raise people's gains on leadership against a leadership profile that we have prepared which incorporates the senior Civil Service leadership characteristics. For some people I would expect that the conclusion they will reach at the end of this is that the Department is not for them and the Department does have some money for early retirement, and indeed tomorrow my senior managers and I are considering a first tranche of early retirements against some criteria which match the leadership profile but are not directly linked to this programme; that has not properly started yet. For some people I would expect we will be in a situation where they have scarce skills but they are not leaders and we may therefore want to move them, if you like, off-line but not lose them. So there is a lot going on in the Department on raising our game, on leadership and on skilling in the sort of areas that I was answering the Chairman's question earlier and I see my role as crucial to making that happen.

Q43  Alan Wilson: I can see the way in which specific incentives can play a role in both setting the targets and delivery on objectives. Can you just tell me in what ways you think a multi-year pay settlement will help you in that process? We are talking as politicians about a much shorter time-frame for setting the targets and the delivery of those targets and I was just wondering how you saw that being advantageous to you to be working within a multi-year pay settlement framework.

Sir Brian Bender: We were keen last year to try, if practicable and if affordable, to get the issue of pay off the agenda for a period. The Committee will recall we had five months of selective industrial action by the PCS Union through the summer and autumn of 2001 and some serious grievances that I remember the Committee asking me about, about issues of equality or lack of it in pay. Therefore, we saw benefits of a multi-year pay deal in its own right in trying to remove the issue as a sore off the agenda and indeed moving towards equality between the different parts of the former department and the pay differentials in the main will have disappeared by 2005/6. We are not the only department to have done multi-year deals, the Ministry of Defence did, I think the DTI did and a number of others did, but clearly it is not intended as and should not be simply a matter of buying peace, which is why I identified in my earlier answer some of the elements of the deal which are intended to incentivise good performance. The flip side of that should be that through rigorous appraisals there may be some people who get very small or no increases as a result of performance and again one of the things we will be looking at later this year is our appraisal performance system, how it has worked this year and what we need to do to revise it and improve it as a means of managing performance.

Q44  Mr Drew: I am intrigued that in the public sector at the moment we are still trying to justify job cuts through early retirement. In these days when it is actually quite difficult to get skilled people is there not a mechanism within Defra where people who may feel that they have reached the end of a particular job profile could be realigned to work elsewhere? I am afraid I have a particular problem with early retirement and I am just disappointed that the public sector continues to see this as the way of solving short-term financial problems.

Sir Brian Bender: Forgive me, it is not in a way of solving short-term financial problems; it is quite expensive. We have £3 million in our budget this year to pay towards early departures and these would not be job cuts, the metaphor is "making space" and bringing in people more fitted or with greater aptitude for the post in question. So it is not an issue of job cuts. There may well be people with scarce skills whom we would not want to lose for that reason, and indeed there was someone who reached the age of 60, who worked for Mr Burchell earlier, who retired a few months ago and we brought her back for two or three assignments because she has skills, she has wisdom and she has something to contribute. So I do not see these in the terms that you presented the issue.

Q45  Mr Borrow: Could I just move on to the issue of diversity within the staff. It is my understanding that in terms of the senior Civil Service grades the last survey produced a figure of about 20 per cent for women and 3 per cent for ethnic minorities. I would be interested in what targets the Department has set for achieving greater diversity, particularly in terms of women, ethnic minorities and people with disabilities and what programme is in place to actually achieve those targets.

Sir Brian Bender: The targets for women in the senior Civil Service is 30 per cent by 2005. I think the figure is 21 per cent but it is more or less what you said. For people from ethnic minority backgrounds the target figure for 2005 is 4 per cent and the current figure is, I think, around 2 per cent. There are similar figures for people with disabilities. The target figure is 3 per cent and we are around 1 per cent for the senior Civil Service, so we have work to do. The numbers of course are fairly small so if you take the issue of women, on current staff numbers in that level we are talking about an additional 16 and obviously a corresponding reduction in the number of men. So they are not vast numbers and therefore for people from ethnic minorities we are really talking about 2 or 3 people. It is an issue which does trouble me and I have recently asked for a paper especially on the issue of women because I think across the Civil Service there will be the greater difficulty in meeting the target for women in the senior Civil Service by 2005 than for people from ethnic minority backgrounds. The issues are around how we recruit and retain people, whether the appraisal systems and promotion systems, and so on, are fair but without of course moving towards reverse discrimination or not selecting the best people on merit. It may well be that through some of the early departures, on which I was replying to Mr Drew's question, they will create some spaces and at grade 7 level the number of women in the Department is at the moment 29 per cent, so still not very high but there may be some through that. Then one has positive action as against positive discrimination, ensuring that the right sort of training and coaching is available to people for them to advance. But these things are not easy and I do not want to kid the Committee that I think they are.

Q46  Mr Borrow: I understand that Defra has published a draft Race Equality Scheme, which seems to focus mainly on the issue of bullying and harassment in the workplace. I wonder what steps the Department is taking to actually eliminate that and whether or not that is a problem which is actually affecting achieving the targets on diversity as well.

Sir Brian Bender: I hope and believe our Race Equality Scheme is significantly wider than that but one of the issues from our last staff survey, the one I referred to earlier, I do not think I have the figures with me but the levels of people who felt there was bullying and discrimination were unsatisfactory and what we have done as part of a follow up to that in addition to re-issuing guidance is to actually ask each senior manager to discuss the reasons for it in their teams. The reasons may vary from one team to another, some may be local, some may be another part of the Department, relationships, but it is an issue we are taking seriously and we are tackling it. Whether it is linked to people's progression, either gender or racial background, I do not know, but it is an issue any employer must take very seriously.

Q47  Mr Borrow: To what extent are you in discussion on these issues with the trades unions involved?

Sir Brian Bender: We are in discussion with them. It is an issue where whatever differences one may have in other aspects of industrial relations in principle we ought to be on the same side on these issues. I have monthly meetings across the board, informal meetings with the chair of the trades unions' side and we are having a meeting on how we can carry forward a partnership in the Department, I think next month, but this is an issue which is on our agenda. There are not straightforward answers, otherwise we would have cracked them some time ago.

Q48  Mr Borrow: On a slightly different issue, when the old Department of Agriculture disappeared and Defra was born one of the aspects of the new Department was the breadth of issues that were being dealt with and obviously a decision was made by the Prime Minister at that point in time to appoint a certain number of Ministers to cover the responsibilities of the Department. So at the moment we have got five Ministers covering that range of responsibilities. Have you any views as to whether or not five is adequate given the range of responsibilities and the fact that there are certain areas where public opinion and parliamentarian opinion is certainly putting pressure on your Department to increase the amount of work you do, particularly on the environmental side?

Sir Brian Bender: I have thought about it and I have actually discussed it with Margaret Beckett. It is quite tough and tight with five but not so tight that I would launch an impassioned appeal to Number Ten or the Cabinet Secretary for the next re-shuffle, so to speak, or for the last re-shuffle. Without wanting to sound obsequious to our Ministers, we have some hardworking Ministers in the Department and they get through the work. So they manage that level but there is not a lot of slack in it with four Ministers below the Cabinet Minister.

Q49  Mr Borrow: If the Prime Minister in his next re-shuffle decided to increase the number from five to six, given the changes and that he may have the odd spare place floating around as a result of some of the shared jobs which exist now, that is something you would welcome rather than regard as unnecessary?

Sir Brian Bender: I would not regard it as unnecessary. I am not sure at this stage I would say, "Wow! That's really good. We needed that." But my response would not be, "Well, I don't know what we're going to find for this person to do." So I am sort of mid-way between your two.

Mr Borrow: I see where you are coming from.

Chairman: It would take Elliott Morley about six weeks to come down from the euphoria of getting rid of fisheries at last, will it not?

Q50  Mr Jack: I was intrigued by Lord Haskins, who seemed to want to go further than "I will speak to the world in September," this morning. As I say, he gave us a very clear steer that he could see all kinds of abandonment of Defra activity to the extent that he had your entire activity sub-contracted to a whole raft of agents with this hard core of people left in Smith Square busy creating policy. Was this just kite flying by Lord Haskins or does it bear some resemblance to the sort of lines of inquiry which he has no doubt confided in you he is pursuing?

Sir Brian Bender: As you said earlier, he will speak for himself next week. I read earlier the terms of reference for his inquiry. The main thrust of what he is looking at is the way in which delivery is organised and its relationship with the Department and therefore it may well be that his final recommendations will say that this part, which is currently delivering agri-environment or delivering some other operation which is part of the core department, should be separated more from the core department in some way and may be aligned with some other organisation. That is the sort of thing he is talking about. They would still be accountable back to the Department if that happened and I would still be accountable to Parliament for the expenditure, say, on agri-environment schemes. What he is saying - and that is consistent, as I said earlier, with what the Chancellor said in his Budget statement and what the Prime Minister said on a number of occasions - is that it is right to devolve the delivery more away from core headquarter departments. Then the question arises of what is the better organisation to do that, but some more separation and looking for a smaller policy core. That is the direction he is exploring and discussing and then we get into the relationship between Defra's direct delivery arms like the Rural Development Service and some of the non-departmental public bodies like the Countryside Agency and English Nature which are also involved in activities to do with rural policies and rural services.

Q51  Mr Jack: From your standpoint one of the areas he is looking at is this question of the number of non-departmental bodies, public bodies/quangos, agencies and the like, all of whom seem to roughly occupy the same territory. Do you think you have got too many? Will some have to go? Will they be amalgamated?

Sir Brian Bender: If we did not think it was untidy we would not have asked him to do it and I repeat, his terms of reference were how to simplify or rationalise the existing organisation of rural delivery in England. That is the first part of his terms of reference. It became increasingly clear to Margaret Beckett and to me around Easter 2002 that from the point of view of the customer, in most cases farmers who were receiving our rural services, it was a fairly confusing picture. Whether that means bodies are got rid of, whether they are aligned better in some way, whether there is some merger, that is the sort of issue we were asking him to look at and it would be wrong of me to express a view at this stage because we set up an independent person to look at it and give a kind of business perspective from a business process point of view back to the Department. So he will be making his recommendations on it certainly formally after the summer.

Mr Jack: Okay.

Q52  Paddy Tipping: Where has this got to, because all we have seen in the public domain are these seven principles, these seven pillars of wisdom? Is it right that you have had an interim report from Lord Haskins?

Sir Brian Bender: He shared some interim thinking with our Ministers, to which Margaret Beckett's response was, "Thank you. Now carry on working it up with the evidence to underpin." But he and she agreed that the issue for publication was the principles that he is following and that is the press notice which was released on 5 June. Margaret Beckett gave her reaction in that press notice.

Q53  Paddy Tipping: So people are living with ambiguity through to September?

Sir Brian Bender: Yes, and later because of course ---

Q54  Paddy Tipping: What is the timescale after that then?

Sir Brian Bender: As soon as practicable is what we are saying. I hope it will be a matter of weeks rather than months.

Q55  Paddy Tipping: That is quite ambiguous, is it not?

Sir Brian Bender: It is ambiguous. It depends on the complexity of his proposals. Defra Ministers will need to reach a view and then there will need to be some collective decision making within Government. So I think I would be pretty unwise to give a precise timetable. My firm hope is that we are talking of weeks rather than months.

Q56  Paddy Tipping: Do you think this is dysfunctional, this review?

Sir Brian Bender: No. I think Lord Haskins has his style of doing things but he has run businesses and we asked him to look at it knowing that he would do it from a business process point of view. He is talking to a lot of people, he is gathering evidence, so I do not think it is dysfunctional. I know there are a lot of anxieties out there but I do not think he can be criticised for not consulting and engaging with people.

Q57  Paddy Tipping: One of the principles which he talked about is dividing policy from delivery. The point you made earlier on, Sir Brian, was that in the old days senior officials were good at policy and were not very good at looking at the results of policy and learning from the lessons of policy to see what is happening on the ground. If there is a sharp distinction between policy and delivery how are you going to keep these wheels rolling, as it were?

Sir Brian Bender: It is hugely important, it is not unique to this issue and it is not unique to Defra, it applies right across Government. There are three aspects of it. One is ensuring clarity of what is being expected from the delivery body, so a clear performance framework, performance targets and measuring the right thing. The Passport Agency when it went belly-up was achieving all its targets, I seem to recall, so it is quite important to set the right targets. So the first thing is clarity on that. The second is having some form of, I will use the term "audit" but it may not be as formal as that, to ensure that the delivery body is doing what it says it is doing. The third is making sure there is actually a feedback loop between the two so that actually, coming back to my first point, when the policy is being determined and the framework set somebody from the operational side is in the room, able to comment on whether it is practical. This is a real lesson for Government of ensuring that there is that loop and that policy is not created in an ivory tower in the Westminster area.

Q58  Chairman: You will be very mindful of course of the creation of the Rural Payments Agency and the serious problem of the actual delivery which was occasioned by the organisation getting over-technical?

Sir Brian Bender: I am, but I would say that actually the problems they have had and which the farms have suffered were not primarily as a result of the creation of the Rural Payments Agency. I know you have cross-examined Johnston McNeil on it and I have read your report but the problems arose because there were two different databases, one owned and developed by the British Cattle Movement Service for animal ID and tracing purposes and the other developed by the Rural Payments Agency for subsidy payment purposes. While they were in different parts of the organisation and owned by different people and prepared for different purposes, reconciling those was the problem and it really was not directly connected with the setting up of the RPA or its changed programme. That does not make it any less important to get it absolutely right and I fervently hope that progress is being made on that. Actually, the merger of the British Cattle Movement Service with the Rural Payments Agency was intended to ease the resolution of it and actually avoid farmers who rang one organisation being told they really should be speaking to the other because it should not be of any interest to farmers who they need to speak to. So I believe progress is being made on avoiding similar problems this year and a lot of lessons have been learned.

Q59  Mr Lepper: Back at the beginning of this year Alun Michael was asked about the costs of developing the new logo for the Department and the figure that he gave in the House, I think in a debate, on 7 January was £137,510. Then last week a story appeared in The Sun claiming that the cost of the logo had escalated to £500,000 and it said in The Sun story "a firm of image consultants was hired to devise the symbol [...] but the cost spiralled after Tony Blair threw out the first version." Had The Sun got it right?

Sir Brian Bender: Not entirely, Mr Lepper. I think a colleague used the phrase in a completely different context this morning of someone not letting the facts get in the way of the story. The most recent information was actually in Parliament in an answer to Norman Baker on 3 June. There is a Parliamentarian question, I think it is number 111, Order Book 16 May, which will help the Committee identify it, and that had the figure of £329,000. That is not the cost of the logo. That is the cost of creating a new organisation. When the Prime Minister set up Defra one of the things he said in a letter to Margaret Beckett was that he wanted a single identity with a markedly new culture and being a new organisation we wanted to work out how to make our communications more efficient, how to understand and target stakeholders better and actually how to create a new culture. So there was a series of activities, of which developing the logo was one and the direct cost of that, which actually was in a PQ, I think to a member of this Committee, Diana Organ, at the end of the year. The cost of that was £24,000 and that has not changed. The reason for the change between £137,000 and the £329,000 which was in the more recent answer is that the December answer represented invoices already received. So people for us have not done £200,000 of work, invoices have come in since December, quite a lot of that work done beforehand. So that is the background. Now, how do you get from there to £500,000? There is another £200,000 which is about changing the signs from MAFF to Defra on 200 offices and in 200 locations around the country. For example, when I was in Reading last week at our operation there I noticed when we drove into the car park you could still see through something papered up "MAFF". There was then a paper version of what the experts called "the interim brand" and in due course there will be something which looks and says Defra rather more clearly without MAFF showing through and the cost of all that across the whole estate, 200 locations, comes to £200,000 internally and externally. It sounds a lot of money but it is actually £1,000 per location internally and externally. So that is how we get to the £500,000, of which, as I say, the direct cost of the logo is £24,000.

Q60  Mr Lepper: I am always glad to see The Sun corrected! I can understand why you need to change the names on buildings, etcetera. This Committee has deliberated for the last two years on the ways in which the merging of MAFF and the other departments was going along and how important it was to establish that new identity. I can understand that, but we are talking still about £300,000-odd on developing a strategy for communicating with stakeholders and customers. Was that done by engaging an outside firm of consultants to tell you how to do it?

Sir Brian Bender: Some of the costs were larger than they might otherwise have been because we did not have the capacity in-house so we used consultants, some of whom we would have used anyway, and we used a bit more consultancy because we did not have the resource available in-house but it included not simply a communication strategy but actually testing with stakeholders, testing with staff, testing with customers and so there was a programme of research along the way, not just design, if I can put it that way.

Q61  Mr Lepper: Has that all now reached the stage where you are happy with the way in which communication is carried out, for the time being at least?

Sir Brian Bender: I am happy that the work on the identity, as the experts call it "the corporate branding", has reached a stage where we just need to now ensure it happens. Am I happy with the way the Department communicates? Well, never entirely, no. There is always room for improvement on these issues.

Q62  Mr Lepper: Could I just throw one other comparative figure into this just to make sure I have got the facts right again and have not been misled by The Sun. We are indeed talking about an overall sum of £500,000, and you have broken that down helpfully for us in a variety of ways now.

Sir Brian Bender: Yes.

Q63  Mr Lepper: What is the financial contribution of the Department towards the debate on GM which got underway on 3 June?

Sir Brian Bender: Mr Burchell thinks it is £300,000.

Mr Burchell: There is a total budget, I believe, held by the Central Office of Information of £500,000, of which we have contributed, I believe, £300,000.

Q64  Mr Lepper: So £300,000 for developing a strategy for communication and £300,000 contribution to the GM debate?

Sir Brian Bender: Can I repeat, it is not simply developing a strategy of communication, it is actually forging the identity of a new department and how that is communicated.

Mr Lepper: All right. We will consider those comparative figures. Thank you.

Q65  Mr Drew: I am going to ask you about PSAs in a minute, but if we are talking about budgets I put a parliamentary question in the other day and I have to be careful how I phrase this but I was told that because of the overspend on the Rights of Way mechanism that the Vital Villages programme had had to be reduced. I will start with the specific, I would like to know if that is true, but is this a particular problem with this Department, that it seems when one thing goes wrong what some of us would see as a pretty important part and a symbolic statement of the sort of things we do in a rural area immediately just gets left off the edge?

Sir Brian Bender: Perhaps Mr Elliott can respond.

Mr Elliott: It is true that the Countryside Agency has had to prioritise its expenditure within the budget we have given it for the year and one of their decisions was to scale back on Vital Villages by, I think, 2 - £3 million for this year. The Countryside Rights of Way Act expenditure is clearly a high priority. None of us is happy that Vital Villages had to be scaled back but it is a continuing programme so it may be possible to catch up, as it were, next year.

Q66  Mr Drew: That takes me into PSAs and I suppose the targeting of the Department. If I could start with just a general observation. I ask that question with a purpose and that is that looking at the PSAs they do not seem to pick up very coherently much to do with rural issues. There is a lot of stuff on agriculture, quite a number of environmental targets to meet the PSAs, but the rural domain does seem to be rather left out. I suppose the argument is, "Well, we've given a clear steer to the Countryside Agency and in their annual report they will approve this," so you have got the tag "rural affairs" as part of the Ministry and I just wonder ---

Sir Brian Bender: I am sorry, I did not mean to interrupt. We have a Public Service Agreement target on rural affairs, which is target number 4, which relates both to rural productivity, to improve economic conditions in the poorest performing areas, the least well performing quartile of rural areas and also the other half of that same target is about rural services. So that is intended to address the rural dimension. Whether that is the right target, whether it is a perfect one, we will be working on in the context of the next Spending Review.

Q67  Mr Drew: So I suppose the issue there would be to what extent are the PSA targets helping you manage the Department in a way different to that which you used to and is this an evolving process so that when people like myself say we do not think the rural issue is being correctly highlighted and that that ought to be beefed up in terms of a clearer PSA and targets which follow from it you can respond to that?

Sir Brian Bender: The first thing I would say is that I certainly would not pretend that the PSAs cover the activities of the Department. We do not have a PSA target on fisheries and we do not have a PSA target on Water, both of which are very important parts of the Department. So they are a selection of activity but are certainly priorities and not the only priorities. That is a discussion we have had with the Treasury and that as a matter of logic and fact they have to accept. However, they do identify priorities and the way we tackle them, as I tried to say earlier, was through them having delivery plans for the way we will make these things happen. So there is a delivery plan for the target on rural productivity, the sub-target on rural productivity and the sub-target on rural services, and there are particular elements of the second of those in relation to things like rural transport, rural education and so on, which we then discuss and put pressure on the department primarily responsible in those areas for making it happen. Of course we need to respond then to what it is like out there, whether through elected representatives or other means coming back. So the target is not the only thing but it is a guide and a way in which the Department is accountable.

Q68  Mr Drew: So those areas which do not have PSAs in place at the moment, is that because they are too difficult to assign PSAs to or is this something you will be moving to in due course so we can expect to see a PSA for water, and I know Austin would love to see a PSA for fisheries?

Sir Brian Bender: The guidance from the Treasury in the last Spending Review was that departments should not have more than ten PSA targets. We have a set of objectives and water and fisheries and other activities that members of the Committee may identify which are not picked out in targets are part of our objectives. Therefore, we are not going to stop activity on fisheries simply because we do not have a PSA target on it. But the targets are the ones which in the course of the Spending Review discussions are identified as particular priorities worth picking out. Now, this is an imperfect process but do we attach importance to the other areas? Yes. Do we have arrangements in place and performance indicators? We do. For example, in the area of Flood and Coastal Defence we do not have a PSA target, we have a Service Delivery Agreement target and I think we are about to publish on our website a summary of our delivery plan to achieve it. I think I have probably said all I can at this stage.

Q69  Mr Drew: I suppose again from what you have said, Sir Brian, there would be an issue of how you communicate that within the Department?

Sir Brian Bender: Yes.

Q70  Mr Drew: So that people who may not be working according to a PSA know that they are working to a delivery target. But then you have got to try and communicate that externally as well, not just to the Treasury but to people who may be interested in why you have chosen these PSAs to target activity and not others?

Sir Brian Bender: I agree entirely.

Q71  Mr Drew: Is that just something that you take as part of the day job or is this something where you have to steel yourself to come before people like ourselves to try and explain?

Sir Brian Bender: No, it is part of the business planning process. If you take the area of floods as an example - and we are about to bring that area together with the Water directorate in the Department - the business plan in that area will make it clear what it is they are trying to achieve over the period ahead and the senior management of that part of the Department is responsible for ensuring it happens, and they know that. So it is part of the day job in the way you put the question.

Q72  Mr Drew: The final question. When you are actually moving between PSAs, which obviously you do over time, how easy is that to manage in terms of staff accepting that they have come to the end of one sphere of activity and they are moving on to something else? Traditionally this is an area where people have not necessarily moved that easily, partly because of course you had a lot of offices in parts of the country where people will tend to want to continue living. Is this something which is causing you particular difficulties or is this something which can easily be built in?

Sir Brian Bender: It is not easy because essentially one may be dealing with well-motivated staff to whom we are saying this is no longer a priority. In any business planning process choices are being made and there will be parts of the Department where in the current financial year activities will be being run down in order to release resources for other areas and motivating those staff and making it clear to them that they have been doing a good job but this is less of a priority is part of the job of management. So this is not an issue which relates to PSAs specifically, it relates generally to how one re-allocates resources in an organisation while keeping people motivated and it comes back to some of the earlier questions about qualities of management and leadership.

Q73  Paddy Tipping: You carried some PSA targets through from the Spending Review 2000 that in a sense you have inherited?

Sir Brian Bender: Yes.

Q74  Paddy Tipping: Could I just quiz you on a couple of them. One is on air quality, where you say there is "some slippage". I am ambivalent about this because the Air Quality Expert Group's draft report on nitrogen dioxide in the UK suggests that you are going to be a long way off this target. What is your current thinking on this?

Sir Brian Bender: In most respects we are moving in the right direction, so nearly all pollutants have fallen in the last decade. I think the headline indicator for 2002 does show a continued long-term downward trend but there are some (of which nitrogen dioxide is one) where there are problems and that is addressed in these delightful words "some slippage" in the departmental report. We are now at the stage where we are actually considering and discussing within Government what can be done about it and there is a number of different areas. There is the review of the 10 year transport plan and what role can that play, and this is the target which is jointly owned with the Department for Transport. There is the review of the climate change programme. There are issues around EU and international negotiations and there is a review of the Air Quality Strategy itself. So in those various fora and in those discussions we are looking at what other policy instruments we might bring to bear to try and get it better on track.

Q75  Paddy Tipping: One of the Chairman's initial points was that some of the targets are not entirely in your gift, as it were, that you have got to work across Government?

Sir Brian Bender: Yes. I am not sure I would say there are any which are entirely in our gift in the sense that we sort of snap our fingers and they happen, but there are some which are more directly our responsibility. Most of them either involve some sharing in some way across Government or actually involve some delivery through bodies which are not Defra. I suppose the only one which is almost entirely in our control is the one on the Rural Payments Agency, the unit cost of the CAP. We have discussed earlier the risks associated with that. But all the targets involve other players and indeed we recently prepared a table which I sent round to other departments to alert them to the areas where we were looking to them to help support the delivery of our PSA targets.

Q76  Paddy Tipping: Yes. Let us talk about one which again is shared but which you are the lead player on, which is waste and the target of 17 per cent for recycling or composting by next year. You say you are on course for that target. Are you going to meet it?

Sir Brian Bender: Challenging.

Q77  Paddy Tipping: Yes, I think so.

Sir Brian Bender: Very challenging. The latest data for 2001/2 says we are at 12.4 per cent in that year. Since then we have published the Government's response to the Strategy Unit report, which has a number of proposed policy instruments. We have got the Waste and Emissions Trading Bill going through Parliament at the moment. The Chancellor has announced the changes to the landfill tax and we are going to be reviewing in September or October what impact we think those changes are having through some of the sort of economic analyses the Chairman was asking about earlier, what effect those are having on the predictions. My brief uses the phrase "The targets through to 05/06 remain within reach though very challenging."

Q78  Paddy Tipping: So I think it is a no, you are not going to meet it?

Sir Brian Bender: No, I would not say that. The intermediate milestone is 15 per cent for 2002/3. We will have the early results available, I think later this month, and we will have a better idea at that stage. It is not impossible. It is an important area, not only for the recycling shorter term but for the landfill directive target for 2010.

Q79  Mr Jack: A quick question on air quality. I was intrigued by the comment you made a moment ago on the fact that you were going to do some economic analyses in these areas. Would you be including in that economic analysis any valuation of the factors which have yet to see a serious uptake, for example the production of bio-diesel and bio-ethynol in this country, because clearly they would make their contribution to your air quality targets but there are some barriers to their universal adoption? The agricultural community has made that clear. So what is Defra's economic analysis, or if it is not available when will you publish it?

Sir Brian Bender: The direct answer to that, which is not a very helpful one, is that the Department for Transport, as their part of the shared target, would do the analysis of the impact they would expect bio-diesel to make. I cannot answer as to where we have go to on that.

Q80  Mr Jack: Given that it could have a very significant effect on agricultural activity and indeed rural life, is there not something a little more specific with the Defra label on it dealing with this, because you must obviously have some idea of the factors which are inhibiting the current development in this area?

Sir Brian Bender: Yes.

Q81  Mr Jack: For example, if British Sugar were to invest in a bio-ethynol plant, given the locations of their existing plants that would have a pretty big effect. It would have a big effect on rural employment issues, for example?

Sir Brian Bender: Yes.

Q82  Mr Jack: I am just intrigued that you have sort of passed the ball to the Department for Transport.

Sir Brian Bender: No, we did do some economic analysis in the run-up to the Budget and I am happy to look at that and see what we can provide the Committee with. I cannot remember at the moment what it showed but clearly it is important for greenhouse gas emissions, it is important for air quality, it is important for land use and activity in rural areas so it is something of importance to the Department. What I cannot recall is exactly what the analysis showed.

Q83  Mr Jack: It would be very helpful if that could be made available because clearly at the heart of the matter is the question of the duty level.

Sir Brian Bender: Absolutely.

Q84  Mr Jack: It would be very interesting to see what your assessment is of what the discount should be.

Sir Brian Bender: I will see what I can provide, Chairman.

Q85  Alan Simpson: One of the areas that you do have direct responsibility for is in terms of carbon savings and domestic energy efficiency. Can I just get you to address two points. On page 62, in terms of the carbon targets you talk about having a target of "reducing greenhouse gas emissions by 12.5 per cent from 1990 levels and moving towards a 20 per cent reduction in CO2 emissions by 2010," and then going on to say how you are on course for delivering this in respect specifically, I suppose, of cutting carbon dioxide emissions by 2010 by 19 per cent. Given that you are able to be so specific about that, I wonder if you would be kind enough not necessarily to come back with an answer for me now but to come back at some stage with an explanation of why only in the last couple of days your officials have responded to the clause which had been agreed with the DTI in the Sustainable Energy Bill, which talked about taking reasonable steps to achieve the carbon saving aims in energy efficiency in residential accommodation, with the comment that these were unattainable and that the clause could not be delivered? I suspect this ties in with my earlier question about leadership, Sir Brian, and I would be grateful if you could just note that.

Sir Brian Bender: You will get a note. The Committee will get a note from us.

Q86  Alan Simpson: Thank you very much. In the specific ones about the Fuel Poverty Strategy you have got down as your aim, on page 67, to reduce fuel poverty amongst vulnerable households and you set out that by 2002 470,000 households received assistance. That is slightly different from the objective, which is to end fuel poverty by vulnerable households by 2010. Do you feel that you are on target to deliver that?

Sir Brian Bender: As you say, we are on target to deliver a different thing, which is the precise target of assisting 600,000 households by 2001 - 2004. We are doing some reviews. There are two major reviews underway to look at exactly your question and I think in some informal conversation a few weeks ago we indicated in terms of fuel poverty this is not a very meaningful target. I think the National Audit Office is likely to say something rather similar in their report to be published, I think next week. So we are reviewing the schemes and I would expect in the context of the next Spending Review we will be looking at what the right target was to address fuel poverty against the background, as indicated in some of the earlier questioning, of actually what the prospects are of achieving it. The Government remains committed to eradicating fuel poverty as far as originally achievable, as set out in the UK Fuel Poverty Strategy. We are spending significant sums of money on this issue but whether it is targeted in absolutely the right way and measured in the right way for fuel poverty as opposed to assisting households is clearly something which needs more thinking about and more work and this Committee may well have views. I know the National Audit Office has views.

Q87  Alan Simpson: I am glad you recall the conversation that we had at Defra a few weeks ago. You will also be aware that the Fuel Poverty Advisory Group's comment on this was that the programme appeared to have a "disturbingly low" impact in terms of lifting the fuel poor out of fuel poverty. That is why I was keen to get you to address the adequacy of what you are doing now. It does not help you any more than it helps us to have one set of targets and then produce answers which shift things to a more convenient set of targets and I think we will all end up with some degree of discredit if we go down that path. Have you made any progress yet on looking at this apparent contradiction where the current scheme appears to be more effective at delivering assistance to those who are not in fuel poverty than those who are?

Sir Brian Bender: The answer is, we are making progress at present continuous so we are doing cross-checking against benefits to encourage greater take-up of the right households (if I can put it that way), the households on which the scheme should be targeted through Warm Front with the intention of ending up with a clearer measurement of the impact of the scheme on those most in need. The way my briefing on this is phrased, I would say it is being investigated rather than being implemented at this stage.

Q88  Alan Simpson: Can I just press you a bit on that. As far as I am aware, the issue is not that of take-up but that the rules of the scheme currently disproportionately favour assisting those who are not in fuel poverty as opposed to those who are.

Sir Brian Bender: Yes. Understood.

Q89  Alan Simpson: I know that when we raised this with the Department last time what we were asking was what you were doing in leadership terms to shift the focus of the scheme so that it did what the Government wanted it to do.

Sir Brian Bender: Yes. Forgive me, the first review that I described is including the eligibility criteria and the measures so that it is targeted on the genuinely fuel poor. So that is being reviewed as part of the process to deal with exactly that point.

Q90  Alan Simpson: Has there been any progress on it?

Sir Brian Bender: Perhaps I can come back to the Committee on timing in any follow up note on when we expect this to be actually doing something as opposed to being reviewed.

Chairman: We will have the Secretary of State of course in front of us in a little while so some of these questions which are somewhat political may well be asked of her.

Q91  Mr Mitchell: Can I just come back to fishing, which seems to be a very minor preoccupation of the Department. I expressed my disappointment last year at the attention given to it in the report. There is not much more this year. Forestry does a lot better. Can I just ask as a general question, does that represent a kind of passive role on the part of the Department? It struck me when we went to Spain and talked to the Spanish Fishing Ministry, which is both national and regional, the regional ministries took some of the enforcement role but the national ministry seemed to view itself as a kind of lobbying organisation for fishing to milk every cent it could out of the European Union. It always strikes me that Defra does not have that role; it is a passive enforcer for decisions taken elsewhere?

Sir Brian Bender: On the first part of your question, Mr Mitchell, the Department does attach priority to fisheries. There is a directorate of significant size which deals with it and a Minister (who is now no longer responsible) spent a lot of time last year and earlier this year dealing with the issue, including important negotiations in Brussels which culminated in December on both the Common Fisheries Policy and on recovery arrangements in the North Sea. So it is an important area. It is a very difficult area, you do not need me to tell you that. I do not have any data to hand on what grants we do secure access to. Some are clearly regional grants to assist on land and the Department, as you will well know, was also doing a decommissioning scheme to help remove some of the excess capacity in the industry. So it is an area where there is a lot of action and a lot of activity and a lot of energy.

Q92  Mr Mitchell: So the lack of mention or the paucity of the coverage does not indicate any lessening of the importance of fishing?

Sir Brian Bender: Correct.

Q93  Mr Mitchell: Let me move on because you mention decommissioning and I see the Public Service Agreement targets makes one of your Public Service Objectives, it seems to me as I read it, to get rid of the fishing fleet, certainly to reduce the fishing effort. You say that most of the targets in that respect were achieved by the end of 2001 (this is the resource budget details on page 113), which is presumably why spending on fishing peaked at 119 (presumably millions) in 1999 - 2000. But now you have got another round of decommissioning, which is probably going to be bigger and yet expenditure projected ahead does not rise to meet that obligation.

Sir Brian Bender: The large figure you quoted I think was dominated by Factortame, the costs of the settlement of the Factortame claims, which did not of itself help the fisheries industry. Again, you do not need me to say that to you. The target from the 2000 Spending Review was achieved. However, we still have too many fishermen chasing too few fish in the sea, that is the problem. Therefore, we have undertaken a further scheme. As I understand it, the decommissioning effort up to 2002, between 1996 and 2002, reduced in percentage terms for vessels over 10 metres by about 28 per cent, but we have a further scheme in place now following the agreement in the Council in December.

Q94  Mr Mitchell: Which is not as generous, is it?

Sir Brian Bender: I think it is comparable to what we did a couple of years ago, again when we only found about £5 million in 2001, I think.

Mr Burchell: The Spending Review 2002 settlement provides an additional £10 million a year over the planned period and in 2003/4 we have currently allocated £5 million towards our contribution to the UK Decommissioning Initiative.

Q95  Mr Mitchell: You mention, I am not sure where, that there was additional effort required because of the kind of re-negotiation of the CAP, which ran out and had to be renewed on an annual basis. I read in the European Constitution as it emerged from the Convention that there is going to be an exclusive EU responsibility of the marine resources of the sea and a shared responsibility on conservation. Is that going to require re-organisation on your part and what does it mean?

Sir Brian Bender: Despite some of my past experience I am not an expert on what is going on in the European Convention, so I have to plead some ignorance. I would be surprised if it involved re-organisation. Plainly within Defra the people working on marine need to work very closely with the people working on fisheries, but actually the people working on marine also need to be part of the team on water because the way it is being approached at European level is to in effect extend what was done on the water framework directive out into marine waters. So that working has to happen but I do not think that of itself requires a reorganisation. As far as whether something would be the exclusive competence of the European Union or not, it would still require the United Kingdom to negotiate and to implement in some way and the Common Fisheries Policy currently is a matter of exclusive competence in the sense that where there is EU law on it there is no place for United Kingdom law. But the exact implications of the Convention and indeed what will follow it through an inter-governmental conference I am not an expert on - well, no one is an expert on the second bit because it has not happened yet.

Q96  Mr Mitchell: Just one final question. I remember earlier this year when the fishing industry came down steaming and angry, feeling slightly paranoid if only because it is being persecuted, they had a meeting at Number Ten and came out happy because the Prime Minister had said he was going to take over the responsibility for driving fishing forward. How does that impinge on the Department?

Sir Brian Bender: Well, I did not quite interpret it that way, him taking it over, but given the inherent difficulties of conserving the stocks while having an industry where there is too much fishing effort chasing too limited a supply what is actually happening is that the Number Ten Strategy Unit is doing a report on fisheries and what alternative options there may be in the way forward. We have a member of the Department seconded to the scheme.

Q97  Mr Mitchell: That is alternative employment?

Sir Brian Bender: I do not know. I have not recently seen the precise framework for it but I think it is not simply alternative employment, it is actually what strategy should one have towards fishing given the problems, given where we are following the negotiations at the end of December, given the projections for the future of the industry and indeed where we are on fish stocks. Normally the Strategy Units carry out their exercises with quite a wide degree of public consultation and I can certainly make sure the Committee is aware of where they have got to and at what stage there would be some possibility of engagement and feeding in views. The Strategy Unit usually, as I say, carries out these studies deliberately in a very open way to get views.

Q98  Chairman: Sir Brian, we have almost finished. Just on the general report, because in the past we have criticised the report itself, just a couple of comments on that. I must say, I have some doubts about the picture on the front, which if you are anxious to convey some dynamic, thrusting department, a slightly battered sign which at least has the merit of not having a third direction attached to it I suppose is something for which we should all be grateful.

Sir Brian Bender: I am waiting for the comment about whether the Department knows which direction it is going in.

Chairman: As the thought has occurred to you, you have saved me from making the comment itself. Just in general on the report, I think it is a great improvement. It is much more accessible. Just a couple of comments I would make about it. I have sometimes wondered whether there really was a consistent format there. There is quite a variation in the level of reporting between different agencies and divisions. Secondly, the achievements chapter is a bit vague and inconsistent. A lot of it is process and perhaps rather less on outcomes. So really the question is, are we getting value for money from Defra? If it was not there would we have to invent it, or not, is actually quite a useful disciplinary question. But with those caveats I would say that there has been a consistent in the report. We do not want Mr Bills to sit there the whole of the afternoon and feel entirely redundant merely because he has shrunk from however many pages it was to ten pages, so we have got a special sort of valedictory question from Mr Tipping just to make him feel that his journey has been worthwhile.

Q99  Paddy Tipping: I just want to ask you two different questions. First of all, you split policy from delivery quite some time ago so where do you figure in the Haskins recommendations? Are you going to be part of this big landscape agency? Are you safe? Are you going to continue? What are you arguing for?

Mr Bills: Just on the first bit, policy and delivery, I am not sure that any of the comments that Haskins has said has to be split within different departments or different areas within Government. I think he is really talking about the accountability or the responsibility for a policy should be broken off quite clearly from delivery, and we have aimed to do that within the Government structure of the Forestry Commission and it works quite well. I also was interested to read in the general review of agencies that there was some general concern that some agencies were drifting too far away from the sponsored departments therefore there was a kind of inertia in implementing policy and we make sure that does not happen within the Forestry Commission in the way we run it. I have to say, being a small organisation that is relatively easy. As far as Haskins is concerned, I think he is interested in where Forestry fits into this. There has been a review of the way Forestry works within England, which is currently underway. Part of that is a strong economic analysis and that has been published, the so-called Crabtree, which basically substantiates that a lot of what we are doing is worth doing, but I think he will be wanting to think more of the mode of delivery of Forestry within the context of whatever he is recommending when that report is finished. But if you ask what we are arguing for, the Forestry Commission still sees benefit in maintaining an overarching GB or even UK approach and clearly one of the downsides for us if there were major changes in England is that it may well undermine that.

Q100  Paddy Tipping: Let me just ask you a more specific question, which is about your economic regeneration role. In the annual report I am disappointed that of the three targets set there you are not meeting any of them. I just speak with local knowledge in that many of the former colliery sites in Nottinghamshire the Commission had done a marvellous job and indeed the Chairman is going to come and walk a site with me next month. But these are really vital projects. They are turning mud heaps back into Sherwood Forest. Why are you not achieving this? This really is dead important.

Mr Bills: It is a new game for us, of course. We took it on shortly after I arrived in this job and with the Nottingham colliery we could see a great need there. It is a game which requires a lot of working with partners and the Forestry Commission in history was not always good at working in partners. We are a pretty single-minded and well-focussed group of people putting trees in for other purposes. So we have had to change our culture to deal with that. I think that is under our belt now. I asked my people the fundamental question on this particular target that you are looking at and we would put it down, I think, to two things. There is still a lot of nervousness about the liability issues and you see that we are looking at working up a land restoration trust with other partners. The other factor has been out of our control, I guess, it happens to me too, and that is that English Partners has been under review and they have been finding it difficult, I think, to perhaps partner us in the way that was originally intended, through no fault of their own either.

Q101  Paddy Tipping: You mentioned the national forest and the community forest targets not being met for planting there and indeed the Countryside Agency seems to want to back out of community forests. Are you going to keep these important initiatives going in some ways?

Mr Bills: I do want to back out but I know that in the integration of our activities with Defra there is discussion going on about us perhaps taking more of a direct role in the community forests. Some of the targets we have missed in the community forests. Foot and Mouth stopped a lot of that. It made it very difficult. But we believe that we will meet those targets by the end of the three years. We will be in catch-up mode on those targets.

Paddy Tipping: Thank you.

Chairman: The forthcoming attractions, Wednesdays, usual prices: Lord Haskins next week. I recommend a quick review of the annual report of northern foods, particularly the biscuits division, if I may say so, in preparation for that! Then we have the Secretary of State, I think a fortnight after that. Sir Brian and your team, thank you very much for coming here today and we will no doubt see you on a number of occasions before the annual report time but we will look forward to seeing the continued progress and photographs indeed of the annual report next year. Thank you very much.