First supplementary memorandum submitted
by Defra
BACKGROUND
1. This document includes questions the
Committee did not have time to raise with the Permanent Secretary
in the 16 November oral evidence session on Defra's Departmental
Report 2005. Defra's response to these questions will be circulated
to Members of the Committee and published with Defra's written
evidence to the Committee.
FINANCIAL ISSUES
2. In its preliminary written questions,
the Committee asked Defra to explain several discrepancies identified
in Tables 1 and 5 in the DAR (page 277 and 284). Defra provided
comprehensive answers to the Committee's questions.
3. Problems with Defra's forecasting processes
were also highlighted in Defra's 2004-05 resource accounts. On
page 18 of the accounts, the Statement on Internal Control (SIC)
refers to weaknesses in Defra's forecasting, which results in
the Department's underspends against estimates. The SIC states:
"Defra has taken some steps to improve its
financial forecasting but it also commissioned Ernst and Young
to undertake a review of its planning and forecasting processes.
The Management Board accepted the review's recommendations which
the Department is implementing."[22]
Q1. How fully have improvements to the Department's
financial forecasting been implemented so far?
4. Defra has made considerable improvements
to the Department's financial forecasting capabilities, including
significant progress on all the recommendations in the Ernst and
Young Report, for example:
— The Department has clarified
accountability and responsibility for budgets. Detailed controls
are in place to manage all changes and provide a full audit trail
for the NAO whilst at the same time ensuring that the budget holders
remain accountable for differences between their budget and actual
spend. All budget details including ring-fenced items are held
on the single finance system.
— The Department has also formalised
the processes by which decisions on recycling and re-prioritising
budgets can be allowed. Budget holders may switch budgets around
within their control totals, subject to policy constraints. It
may be necessary for the Department to restrict this freedom from
time to time depending upon the overall position but this requires
the approval of the Accounting Officer.
— Communication has been improved
with the financial management community within Defra through the
use of regular seminars and monthly business meetings. This has
allowed us to clarify roles and responsibilities, explain upcoming
developments and keep all the community updated with the Departmental
position. Selective use has been made of professional interim
financial managers to provide technical support whilst work continues
to enhance the financial skills of the core-Department business
areas in particular.
— All budget holders and their
financial managers (along with central finance)—some 800
staff—have access to a standard suite of monthly variance
reports that cover all expenditure, budgets and forecasts. These
reports come directly off the Department's single finance system
without modification or intervention.
— The Department has launched
the new Management Board Finance Report that focuses on significant
variances from budget as shown by the standard variance report.
This report is reviewed monthly by the full Management Board (including
non-executive members). It is subsequently shared with the NAO
and Treasury and distributed widely across the Department. It
includes commentary from the Finance Director on the overall financial
position that has been informed by explanations given by all parts
of the Department. Defra is currently working on cascading this
report down to the individual business areas, Animal Health and
Departmental Operations being the first.
— Actuals, budgets and forecasts
are now all collected on the single Departmental finance system
so the Department has established a "single version of the
truth". Previously, forecasts were collected off-system which
was inefficient and open to too much error. This finance system
provides standard templates for the collection of Budget and Forecast
data as well as the reports mentioned above. As the Department
becomes more used to forecasting on-system, the flexibility over
budgets will be tightened and even greater emphasis placed on
the ability to explain variances at a detailed level. Improvements
are made to this process each month.
5. Defra recognises that by their very nature
some areas require more work to come to fruition:
— The use of "zero based"
or "bottom up" budgeting is not yet applied systematically
across the Department. However, the first phase of the Comprehensive
Spending Review 2007 requires Defra to agree with Ministers and
Treasury the key areas to which a zero based budget approach should
be applied.
— As a key part of the on-going
finance change programme the Department is documenting a business
information model that sets out what financial information is
required by whom and by when to make what decisions. Such a model
is required to properly inform the future development of the information
systems, reporting tools and the skills required of those who
hold budgetary responsibility. This model will allow the Department
to plan for continuing improvements in a coherent and co-ordinated
way and not simply as a reaction to unexpected adverse events.
— Having established the single
finance system, Defra is now also working on the implementation
a suite of reporting and workflow tools that will improve the
control and efficiency of the monthly review processes as well
as the longer range planning and budgeting exercises.
— At a more detailed level, the
Department now have standard monthly reports from the single finance
system that report the Actuals, Budgets and Forecasts for the
capital expenditure of the core-Department. More work is planned
over the coming months to improve the quality of this data and
expand the capital reporting capabilities.
Q2. Has the Department's performance in financial
forecasting to date during 2005-06 improved? Have any significant
errors in forecasting or potential underspends in 2005-06 been
identified?
6. The primary purpose of Defra's financial
forecasting process is to predict the out-turn for the year so
as to be able to either recycle any potential underspends to deliver
more benefit elsewhere or to plan for an underspend to use the
following year (via End Year Flexibility) when pressures may be
greater. At this point last year the Department forecasted the
out-turn for 2004-05 to be an underspend of £162 million
versus an actual out-turn of £146 million. The difference
was only £16 million—less than 0.5% of the Department's
DEL budget. This compared to differences of 5% and 9% in the preceding
two years—clear evidence of improvements in the reliability
of its out-turn forecasts.
7. Defra remain confident that a similar
accuracy will be achieved in this and future years. The Department
has not found any significant errors in forecasting the out-turn
so far this year. However, its drawdown of End Year Flexibility
this year has been restricted so the Department is not currently
forecasting any underspend against DEL budget. Defra is currently
holding a 1% over-allocation of DEL budget centrally to balance
out the underspends that can reasonably be expected to emerge
between now and the end of the year. There are some significant
risks that the Department is managing on a weekly basis eg the
costs of emergency preparedness for an outbreak on Avian Influenza
and the relaxation of the Over 30 Months cattle culling rule.
The overspend against the year-to-date budget as shown by the
October results is currently less than 2%, which is consistent
with forecasting an out-turn to budget.
RESOURCE ACCOUNTS
2004-05
8. Schedule 5 in the 2004-05 Resource
accounts shows significant changes in gross expenditure and
income for some objectives.[23]
Q3. Can the Department provide explanations
for:
— the 216% increase in gross expenditure
and 253% increase in income against objective 2 (Promote sustainable
rural areas); and
9. The commentary below Schedule 5 on page
31 of the Department's resource accounts reveals that the "2003-04
figures have been restated where there has been a re-assessment
of the apportionments to reflect more accurate allocations than
those used in the previous year". This comment applied to
the core-Department only rather than the whole of the Defra group.
For the agencies, especially RPA, a number of changes were made
in 2004-05 to the apportionment of their programmes to the objectives
that did not trigger the re-statement of the previous year's figures.
These changes were the primary cause of the increases in gross
expenditure and income showing against objective 2 and the decreases
showing against objective 3. Further detail is set out below.
10. Gross expenditure and income allocated
to objective 2 rose by £152 million and £52 million
respectively in 2004-05 when compared to the previous year for
the following reasons:
|
| Income (£ million)
| Expenditure (£ million)
|
|
| Reallocation of part of the Common Agricultural Policy (CAP) scheme for arable area payments from objective 3 to objective 2.
| 28 | 28
|
| Reallocation of part of the CAP Rural Enterprise from objective 5.
| 12 | 12
|
| An additional share of the CAP income and expenditure by the other Paying Agents shown under this objective resulting from the change above.
| 17 | 17
|
| Reallocation of part of the contribution to the DTI "single pot" for the Regional Development Agencies from the other objectives.
| | 24 |
| Reallocation of part of the contribution to the Countryside Agency from the other objectives.
| | 39 |
| Reallocation of part of a number of smaller schemes from the other objectives.
| | 11 |
| Increased allocation of administration costs, other indirect costs and frontline services as a result of the changes above.
| | 21 |
| Total | 52
| 152 |
|
— the 63% decrease in both gross expenditure
and income against objective 3 (Promote safe food supply chain)?
11. Gross expenditure and income allocated to objective
3 fell in 2004-05 by £710 million and £606 million
respectively when compared to the previous year for the following
reasons:
|
| Income (£ million)
| Expenditure (£ million)
|
|
| End of the CAP Dairy Premium Scheme in 2003-04.
| 52 | 52
|
| Reallocation of part of the CAP farm based schemes from objectives 1 and 2 (includes item 1 from the question above).
| 276 | 276
|
| Reallocation of a part CAP Trader based schemes from objective 5:
| | |
| —Sugar and isoglucose | 40
| 40 |
| —Processed goods | 20
| 20 |
| —Milk and milk products | 10
| 10 |
| Lower EAGGF clearance costs in 2004-05. |
| 14 |
| Reallocation of part of a number of smaller schemes from the other objectives.
| 40 | 50
|
| An additional share of the CAP income and expenditure by the other Paying Agents shown under this objective resulting from the change above.
| 168 | 187
|
| Reduced allocation of administration, other indirect costs and frontline services as a result of the changes above.
| | 61 |
| Total | 606
| 710 |
|
PAYMENT PERFORMANCE
12. Standard contractual terms of payment require that
valid invoices are paid within 30 days of satisfactory receipt
of goods and services. Core-Defra's current payment performance
target is for 100% of all valid payments to be made in this timescale.
Its performance in 2004-05—excluding the Rural Payments
Agency (RPA)—was 92.97%. This is a reduction from the 2003-04
level of 94.61%, despite a decrease in the total number of invoices
this year. For the RPA, the figure is 83.35% (administrative expenditure
only).[24]
13. Defra is 34th out of 46 in the "league table"
of Government Departments' payments of bills.[25]
Q4. Why has the Department's performance in paying invoices
on time fallen during 2004-05? What has been done to address this
issue?
14. The Department's prompt payment performance dipped
slightly from 94.61% for 2003-04 to 92.97% for 2004-05. The main
reasons for this are:
— the use of electronic back office processes
for the receipt and on-line approval of high volume, low value
invoices from a number of suppliers has reduced the number of
invoices processed by in excess of 13,000 in the core-Department
(8.6% of invoices processed). The majority of these invoices would,
in previous years have been paid on time. The comparisons are
therefore distorted the comparisons by approximately 0.6%. Increased
use of Defra's eProcurement system (buy4defra) through and beyond
2005-06, together with increased use of electronic processes and
the centralisation of Accounts Payable transaction processing,
are expected to address and improve performance, certainly for
the 2006-07 financial year; and
— the introduction by the Centre for Environment
Fisheries and Aquaculture Science (CEFAS) of new financial systems
during the 2004-05 financial year had a negative impact on their
prompt payment performance for that year which also contributed
to Defra's overall performance.
Q5. What has been done in particular to improve the Rural
Payments Agency's performance relating to the payment of invoices?
15. The Rural Payment Agency (RPA) has identified that
manual processes were the fundamental problem in delaying payments.
Investing in smart systems, advising suppliers that all invoices
needed to include a purchase order reference plus implementing
a training programme in line with giving staff access to its Oracle
system has ensured the timely matching off invoices to purchase
orders.
16. The agency also moved the supplier payment process
to a dedicated team focusing purely on paying administrative expenditure
invoices.
17. As a result of these improvements RPA payment performance
in month for October 2005 was 97%.
— The RPA paid 83.35% of all invoices relating
to administrative expenditure within 30 days.[26]
What percentage of invoices relating to non-administrative expenditure
were paid within 30 days?
18. The RPA non-administrative expenditure relates to
scheme money. The targets for these payments are regulatory and
are by and large set by the EU. The 30 day period does not apply
in these instances. However the RPA has two key targets in 2004-05,
namely:
— To process and pay at least 96.14% of valid
IACS (farm based schemes) claims by value within the EU deadline.
19. RPA succeeded in paying 97.5% of valid claims by
value.
— To process and pay at least 80% of valid
non-IACS claims (trader based schemes) by volume within ministerial
guidelines and 99% within the set EU Commission deadlines or in
their absence 60 days.
20. RPA succeeded in processing and paying 95.29% trader
based claims by volume within ministerial guidelines and 99.67%
within EU deadlines or in their absence 60 days.
EFFICIENCY SAVINGS
21. At the oral evidence session, the relationship between
Defra and local government was discussed. Page 19 of the DAR states
that £300 million of the £610 million target for efficiency
gains will be achieved by local government, "mostly though
efficiency gains on waste services". Local authorities are
left to achieve their target efficiency gains in any areas they
choose.
Q6. What action is taken if a local authority reaches its
overall planned efficiency saving figure, but in doing so under-achieves
against a target in one policy area, such as waste, while achieving
or over-achieving against another target?
22. There are no targets set for individual local authorities—the
targets relate to a national position. However the priorities
for each local authority rest with that local authority, and Defra
has no sanctions to impose if local authorities fail to meet the
targets. The Department does however work closely with the Office
of the Deputy Prime Minister (ODPM) to try to ensure that its
proposals are reasonable. The ODPM may be better placed to answer
this question.
— What impact will these efficiency savings
have on the level of waste management services provided by local
authorities?
23. This is not an easy question to answer since Defra
has no direct control over the actions taken by the local authorities.
Defra does however make clear that savings should not be achieved
at the cost of front line services.
24. Of course local authorities have the additional challenge
of meeting the recycling and Landfill Directive targets and are
encouraged to consider new approaches such as collaborative deals.
It is hoped that this will not only offer efficiencies but also,
in some cases, have potential to offer service improvements.
— Has the Department made an assessment of
what impact a significant event such as an outbreak of Foot and
Mouth or Avian Flu would have on its ability to deliver efficiencies?
25. The Department has not made a detailed assessment
of the impact of a disease outbreak on its capacity to deliver
efficiencies. An assumption spelt out in both editions of Defra's
Efficiency Technical Note is that delivery hinges upon no major
outbreaks. A major outbreak of disease could delay the delivery
of efficiencies, particularly if staff had to be redeployed. However,
all the programmes and projects in the efficiency portfolio are
fully funded and could be brought back to full resourcing levels
once the outbreak was under control. In the event that programmes
within the portfolio are affected by such an outbreak, the Department
would look to ensure that the underlying contingency enabled us
to honour its SR04 commitments.
SHARED SERVICES
AMONGST DEFRA
AND ITS
AFFILIATED BODIES
26. Defra has a considerable number of subsidiary bodies.
The 2004-05 resource accounts list six executive agencies, 17
executive non-departmental public bodies (NDPBs), 31 advisory
NDPBs, four tribunal NDPBs, two public corporations and three
other bodies.[27] Two
new Defra delivery bodies were established in 2004-05 (the State
Veterinary Service and the Gangmasters Licensing Authority) and
two more are due to be launched from 1 October 2006 (the Government
Decontamination Service and the Marine Fisheries Agency). Another
new body, Natural England is due to be established in October
2006.[28]
27. The Cabinet Office recently published a strategy
on using technology to transform government. It stated government
must move to a "shared services culture . . . in the front-office,
in the back-office, in information and in infrastructure . . .
and release efficiencies by standardisation, simplification and
sharing".[29]
Q7. What progress has the Department and its subsidiary
bodies made towards developing shared services "in the front-office,
the back-office, in information and in infrastructure", as
recommended in the recent Cabinet Office publication Transformational
Government?
28. Defra's proposals on sharing back office services
are progressing well in close collaboration with the Cabinet Office
Shared Services Team. Integrated HR, Finance and procurement services
are already being delivered to the core-Department and to a number
of its Agencies and its Estates management requirements are already
being delivered as a shared service to many in the Defra family.
29. Over the course of the next 12 months the Department
intends implementing further system and process changes to reflect
best practice and maximise the advantages that standardisation
on its Oracle infrastructure make possible. As part of this process
Natural England (a new NDPB being created for 1 October 2006)
has confirmed its agreement that it will take all its transactional
back office services from the Defra Shared Services Organisation
(SSO).
— Has the Department attempted to identify
what scope there is for further sharing of services?
30. The approach, that will begin with the migration
of Natural England to the Defra SSO, will be extended to the wider
Defra family and discussions are already in hand with its Executive
Agencies and its major NDPBs. In addition the Department is seeking
to extend the range of services it currently delivers to non-Defra
organisations like the Meat Hygiene Service and the Joint Nature
Conservation Council.
31. In respect of IT services, delivery of these was
outsourced to IBM during the course of 2004. Since contract signature
that service has been extended to other organisations within the
Defra family so that the Department can maximise the benefits
of sharing. Further "opt ins" from others in the family
are being considered.
Q8. Defra has over 60 subsidiary bodies. What work has
the Department done to identify opportunities to generate efficiencies
by merging bodies?
32. Two areas where the Defra family is being brought
together are through the Hampton Review and through the SSO.
33. The Hampton Review will create new thematic agencies.
As work is done to identify changes to delivery body roles or
locations, the Department will identify the opportunities for
generating efficiencies. Hampton has recommended that detailed
plans on structures should be ready by September 2006.
34. Work on creating an SSO has already started and it
is intended that the SSO will be up and running from 1 October
2006. This is to coincide with the launch of Natural England who
have indicated their intention to receive a range of shared services
from their 1 October vesting day with a rolling programme of further
transfer thereafter. These milestones will lead to the creation
of the SSO as an autonomous agency in 2007. Once the SSO is embedded,
potential extension to other parts of the Defra family and other
customers will be considered.
35. Defra has also just taken receipt of the final report
of the Review of the Agricultural and Horticultural Levy Bodies
and will be considering how the Department might take forward
it's recommendations. Finally, the relationship between Veterinary
Laboratories Agency and the Institute for Animal Health is also
under review.
STAFFING ISSUES
36. In 2002, Defra set itself new diversity targets for
2005 for the representation of women (30%), ethnic minorities
(4%) and those with disabilities (3%) at Senior Civil Service
grades. The Committee noted in its previous report into the DAR
that diversity of staff in senior grades was still lagging behind
diversity of staff elsewhere in the Department, and urged Defra
to do more in order to meet its targets.[30]
In its response, Defra said it was employing a "variety of
strategies" to address this issue.[31]
37. This year's DAR shows a considerable increase in
the last year in the proportion of women in senior grades. The
target of 30% of women in SCS grades by 2005 (30%) has been met.
However, there has been very little change in the figures for
ethnic minorities and people with disabilities. Those targets
(4% and 3%) have not been met, as shown in Table 1.[32]
Q9. Why did you fail to achieve the targets set in 2002
for the proportion of people from ethnic minority backgrounds
and people with disabilities in Senior Civil Service posts?
38. The Department note the Committee's comments with
regard to the apparent lack of progress made against the targets
set for people from minority ethnic backgrounds and people with
disabilities at the most senior levels. In part this lack of progress
could be due to under-declaration, ie staff failing to complete
a disability or ethnicity questionnaire. There are a number of
reasons for this, and the Department is taking steps to address
these issues in a variety of ways for instance, the introduction
(in August 2005) of self-service elements to the electronic HR
system. This allows individuals to declare a disability without
reference to managers or Human Resource staff. Defra is also looking
to change the policy of voluntary ethnicity declaration to mandatory
declaration for new staff joining Defra, the Department hope that
the declaration of ethnicity will be seen as a normal procedure
and a condition of taking up a post in the organisation. The Department
will clearly state why Defra is doing this and promoting the benefits
of having a diverse workforce and being able to see where people
are allows us to track and manage their promotion and development
more effectively. It also allows us to identify areas where there
may be discrimination.
39. Disability data produced for the core Department since
April 2005, indicates that 3% of the SCS have declared a disability;
this is in line with the targets set for 2005. (This figure is
higher than that quoted previously due to a few problems with
data capture for the new electronic HR system which are currently
being resolved.) Substantial progress was also made against the
target set for ethnicity; the appointment of two more individuals
to the SCS grade would have led to the core Department meeting
the 2005 targets. A higher response rate to the questionnaires
should further improve these figures. However, whilst this progress
is encouraging it must be borne in mind that the targets set for
2005 (and 2008) relate to Defra and all it's Executive Agencies.
The inclusion of data for the Executive Agencies has a downward
influence on the figures, as generally there is greater under-representation
of minority groups in these organisations. There are a number
or reasons for this eg their size, location, and specialist nature
which impose restrictions on the pools from which they can recruit
staff. However, all Defra Agencies operate programmes that take
diversity and equality issues into account and a number of them
are covered by core Defra's Diversity Strategy and Equality Schemes.
— What do you intend to do in the next year
to encourage further diversity in senior grades, particularly
with regards to people from ethnic minority backgrounds and people
with disabilities?
40. The Department has developed an Implementation Plan which
supports the Diversity Strategy and 10 Point Plan for Delivering
a Diverse Senior Civil Service and is designed to take Defra into
the next stage of developing and embedding stronger diversity
management into the culture and fabric of the business of the
Department. A key element of this is achieving greater representation
of minority groups in the SCS and the feeder grades. Actions have
been designed to address key areas such as Under-representation,
Recruitment and Selection and Training and Development. These
were identified as particularly key areas for Black and Minority
Ethnic (BME) and disabled staff.
41. Proposed actions to improve representation, recruitment
and progression include: improving BME awareness of accepted routes
to promotion eg experience in Private Office and possibly greater
use of secondments within these areas; Widening recruitment/selection
pools through extending the external diversity website targeting
recruitment fairs, developing outreach programmes and head hunters;
identifying the perceived barriers relating to progression for
BME and disabled staff and providing specific training to give
them the skills necessary to make the maximum use of the competence
based selection procedures.
42. In order to improve opportunities for women to benefit
from training and development opportunities the Department plans
to extend the Elevator Partnership to staff at SEO level. Although
initially the Scheme will be open to women, it will, if successful,
be rolled out to other minority groups. In addition the Department
will take action to increase awareness of the Professional Skills
for Government (PSG) agenda and ensure that it is accessible to
BME and disabled staff.
43. These actions, and others set out the Implementation Plan
will enable the Department to create a diversity culture in which
everyone can develop, and help Defra meet the challenging diversity
targets set centrally by the Cabinet Office, especially at the
senior level.
PSA 7—FUEL POVERTY
Q10. This PSA target is shared with the Department for
Trade and Industry. In practice, how have Defra and the DTI worked
together to address problems in meeting this shared PSA target?
44. Defra has established effective working relationships
at official level with colleagues in DTI, with regular communication
and contact a feature of these relationships. The Department ensure
that its relative areas of expertise are able to complement one
another (ie Defra's running of fuel poverty programmes and knowledge
of energy efficiency allied with DTI analytical expertise, particularly
in relation to energy prices).
45. DTI are represented on Defra's PSA Management Board, and
DTI and Defra share secretarial responsibilities for the Fuel
Poverty Advisory Group, the non-Departmental Advisory Body whose
role it is to advise Government on matters relating to fuel poverty
policy. Reporting arrangements—such as Departmental Reports
and the publication of annual progress reports on the UK Fuel
Poverty Strategy, are all taken forward in a co-ordinated fashion
that ensures messages are consistent. The Department also work
closely in analysing future resource requirements and policy responses
that may be needed to meet its fuel poverty targets.
GANGMASTERS
46. Page 156 of the DAR states that Defra has been working
to prepare the food supply chain for the new licensing system:
it contributed to the launch of a Code of Practice in November
2004, which sets out voluntary best practice standards that will
"help ensure labour provider businesses can operate within
the law".
Q11. How successful has the Code of Practice for labour
providers been since its launch a year ago?
47. The Code of Practice for labour providers was developed
by the Ethical Trading Initiative Temporary Labour Working Group
(TLWG) with Defra's support. The code has the support of all the
major supermarkets which have made a successful audit against
the code a condition of doing business in the fresh produce supply
chain. The Association of Labour Providers has also made an audit
against the code a condition of membership. Audits against the
code are voluntary and cost some £1,500 to £2,000. The
cost of an audit is met by the labour provider although Defra
has provided funding to reduce the cost of an audit by £250
for the first 250 labour providers to book an audit.
48. To date some 782 labour providers have registered their
intention to be audited. Some 214 audits have been completed to
date and a further 152 audits have been booked. The audits conducted
have highlighted a number of key weaknesses common to most labour
provider businesses including, health and safety issues, an absence
of employment contracts and illegal deductions from pay leading
to a failure to pay the minimum wage. The audits have also identified
a significant number of instances of bonded labour. They have
also revealed potential breaches of the working time regulations,
regulations regarding the employment of children and young workers
and those concerning the right to work of foreign workers. Follow-up
visits at the request of workers have identified cases of intimidation
of workers in their homes to prevent them speaking freely to TLWG
members. The audits also indicate that those labour providers
who operate exclusively through a mobile telephone and use sub
contractors to supply labour are more likely to fall below the
standards in the code.
49. The audits conducted against the code are therefore starting
to provide a comprehensive picture of the way labour providers
conduct their business. This information will help labour providers
improve their performance and will help the Gangmasters Licensing
Authority (GLA) develop the new licensing arrangements. In general,
the GLA will recognise a successful TLWG audit in lieu of a GLA
inspection. However, a high proportion of TLWG audits identified
significant non-compliance, and the GLA is working with the ETI
to work with these businesses to bring as many as possible up
to standard before next Spring when the GLA regime begins. It
is expected that between 70 and 80% of TLWG-audited businesses
will be exempt a GLA inspection. The GLA is also considering whether
it would be appropriate to include a discount for labour providers
who have had a TLWG audit in its licence fee structure. These
issues are subject to ongoing consultation.
50. The TLWG code of practice has played an important role
in raising awareness amongst labour providers and labour users
about their responsibilities as employers and about the forthcoming
regulation. The TLWG code was introduced through regional briefing
events, and regular updates have been provided to the 780 contacts
on the database. The TLWG website has also been visited frequently.
— What response has there been from UK-based
labour provider organisations to the new legislation?
51. Labour providers are generally supportive of the new legislation.
They see licensing as a way of eliminating unfair competition
from illegal labour providers who undercut those businesses who
seek to operate legally. However labour providers argue that licensing
will only be effective if the licensing arrangements and existing
legislation is enforced effectively and if licence conditions
target the key drivers of unfair competition eg tax and VAT fraud.
The Recruitment and Employment Confederation (who represent the
"high street" employment agencies) argue that their
sector is already regulated under the Employment Agencies Act
and that licensing for them is an unnecessary additional regulatory
burden.
52. Most labour providers think the fees proposed by the Gangmasters
Licensing Authority (an average fee of £2,300 per annum)
are too high and that the proposed licence conditions include
too many "best practice" requirements. Labour provider
views on the scope of the licensing arrangements are mixed. The
Association of Labour Providers supports the application of licensing
to all agricultural and food processing activities while the Recruitment
and Employment Confederation support a restriction to on-farm
activities. Consultation is ongoing on all these issues.
LEVY BOARDS:
OUTCOME OF
INDEPENDENT REVIEW
53. In March 2005, the Government announced a review of the
five agricultural and horticultural levy bodies, led by Rosemary
Radcliffe. The bodies involved are the British Potato Council,
Home-Grown Cereals Authority, Horticultural Development Council,
Meat and Livestock Commission, and the Milk Development Council.
54. The Review, published on 11 November, has found that
there is still a case for statutory levies to address issues of
market failure in the sectors in question. The review's recommendations
include proposed arrangements for improving governance, flexibility,
focus in activities undertaken, levy collection arrangements,
and operations and service delivery, to increase overall value
for money for, and accountability to the levy payer.
55. The Government has launched a consultation on the
report so that the views of stakeholders, and in particular levy
payers, can be taken into account before formal policy proposals
are developed. The consultation will run for 12 weeks.
Q12. The DAR sets out a huge range of programmes and strategies,
alongside plans for efficiency savings and staff cuts. The review
of the levy boards notes a large number of actions where Defra
(with the devolved administrations) is in the lead (see schedule
V.1, page 109-10). Are you confident you have the resources necessary
for managing this major change to the levy bodies?
56. The consultation on the levy board report started
on 11 November and will conclude on 3 February 2006, following
which, Ministers will take decisions on the way forward. The resources
needed to implement any changes and timescales, are clearly factors
to be considered in reaching such decisions.
57. Officials are carrying out some preliminary work to provide
an accurate assessment of the likely resources required for full
implementation of the review's recommendations.
22
Defra, 2004-05 Resource accounts, HC 445 p 18. Back
23
Defra, 2004-05 Resource accounts, HC 445 p 31. Back
24
Defra, 2004-05 Resource accounts, HC 445 p 12 (2003-04 figurers
from 2003-04 Resource accounts p 12). Back
25
"FCO trails in bill payment league table", e.Politix.com,
8 November 2005, www.epolitix.com/EN/news Back
26
Defra, 2004-05 Resource accounts, HC 445, p 12. Back
27
Defra, 2004-05 Resource accounts HC 445, notes 33 and
34. Back
28
Defra, 2004-05 Resource accounts HC445, page 20 (SIC). Back
29
Cabinet Office, Transformational Government: Enabled by Technology,
Cm 6683, November 2005, p 7. Back
30
Fifteenth Report of Session 2003-04, The Departmental Annual
Report 2004, HC 707, Recommendation 12. Back
31
Environment, Food and Rural Affairs Committee, First Special
Report of Session 2004-05, The Departmental Annual Report 2004:
Government Reply to the Committee's Report, HC100, Recommendation
12. Back
32
Selected data taken from Figure 49 in: Defra Departmental
Report 2005, Cm 6537, p 271. Back
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