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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1071-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE ENVIRONMENT, FOOD AND RURAL AFFAIRS COMMITTEE (SUB-COMMITTEE ON THE RURAL PAYMENTS AGENCY)
Monday 24 April 2006 MR RICHARD MACDONALD, MR MARTIN HAWORTH, MR REG
HAYDON MR CHRISTIAN BISHOP, MR GLENN FORD and MS NORINA O'HARE Evidence heard in Public Questions 1- 124
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Environment, Food and Rural Affairs Committee on Monday 24 April 2006 Members present Mr Michael Jack, in the Chair Mr David Drew James Duddridge Daniel Kawczynski Lynne Jones David Taylor Mr Roger Williams ________________ Memorandum submitted by The National Farmers' Union and The Tenant Farmers' Association Examination of Witnesses
Witnesses: Mr Richard Macdonald, Director General, and Mr Martin Haworth, Director of Policy, National Farmers' Union, Mr Reg Haydon, National Chairman, and Mr George Dunn, Chief Executive, Tenant Farmers' Association, gave evidence.
Q1 Chairman: Good afternoon, ladies and gentlemen. Those of you who were up early this morning listening to Farming Today or the Today programme will be left in no doubt as to why we are all here: to start our inquiry into events which have affected the payment of the Single Farm Payment. Can I warmly welcome Richard Macdonald, Director General of the National Farmers' Union, supported by Martin Haworth, Director of Policy, and from the Tenant Farmers' Association, Reg Haydon, their National Chairman, and George Dunn, their Chief Executive. Gentlemen, you are old friends of the Committee, if you do not mind the word "old" being applied to you. Can I thank you for the written evidence that you have provided to us both in terms of the initial inquiry that informed our interim report on this subject and for the supplementary submissions that you have made. Before we go into questioning, I would like to make a short statement to those here today about the future form of this inquiry. As I said on the radio this morning, the Committee is acutely aware that we do not want to do anything that in any way, shape or form could be said to be slowing up the processes of making certain that hard-pressed farmers are receiving their payments at the earliest opportunity. To that end, the Committee received representations from the IT partner of the Rural Payments Agency, Accenture, to postpone their evidence from 8 May because of the work that they are now undertaking with the introduction, through the Secretary of State's announcement last week, of interim payments. The Committee has readily agreed to that request and in their place next Monday at 4.30 we will be hearing from the Country Land and Business Association. In framing the remaining timetable of our inquiries, we will obviously be minded to take into account this question of doing nothing to upset the work that is going on, quite rightly, to try and speed up the process of payments to farmers. I wanted to make that entirely clear at the outset of this inquiry. If we look at the events which have led up to where we are, one can go back to April 2001 when the RPA Change Programme was established in order to rationalise the structure of their office and introduce their new IT systems. This Committee commented on that matter in a report in October 2003. In looking at this current situation, we are obviously conscious that there is a certain amount of history to what has happened. I have described this inquiry "as forensic as possible" and so I would be grateful if witnesses would not demur in giving us detail because that is exactly what we are after. What we want to get to is fundamentally who, whether organisationally or in the shape of people or both, has caused the present problems to occur, what lessons does that teach us, who is responsible for these matters and what implications does it have for the future operation of Defra. I wonder if I could start with the National Farmers' Union and say to you, have you yet formed a view as to where the present débâcle started, where did it start to go wrong and have you yet formed a view as to who should take a responsibility for what has happened to date? Mr Macdonald: Thank you very much, Chairman. It is a short question and perhaps it requires a fairly detailed answer, and I will try to do that for you. I think, as you say, we need to go back in time. If I can go back to the decisions that were taken in the middle of 2003 concerning the changes to the CAP - I am very happy to go back before that, if you would like to do that - during that time, as you know, the CAP was reformed and we moved to a decoupled payment system. I will shorthand, Chairman, but if you want to pick me up on any of the detail on this, I am very happy to do it. I have been around, as you know, throughout all of that period and was involved in much of this myself. At the time of decoupling, I think we were under the pretty strong impression that the Government was going to implement a historic payment system and that was certainly the background discussion that took place during all of that. We learnt I think in January 2004, when Lord Whitty spoke to the Oxford Farming Conference, that they had in fact decided to move to this regional hybrid model. I have to say, looking back on that, we were surprised at that decision given many of the discussions we had had with ministers and civil servants up to that time. I think it is fairly clear that that was the first decision which was made that added significantly to the complexity of the implementation of all of this. I think the first sort of chronological point in our mind is that decision and the consequences of that decision for implementation. Thereafter, over time, I think there were clearly significant issues and I would describe the period from early-mid 2004 through to recently in two stages. The first stages of that were in relation to the capacity of the IT to deliver all of this and, as I said in our written evidence, certainly I would see the then Permanent Secretary on a very regular basis and other people, and other NFU staff would see other people from Defra on a regular basis, and much of our discussions was, "Is the IT capable of delivering?" You will understand, given the history which you have referred to, why we would ask those questions and things like the cattle database and our reasons why we would be concerned. I would think a summary of that would be Defra at a senior level and downwards realised that that was a significant issue, but we were assured that with a high level of intervention from Accenture and others that ultimately it would deliver. I think the second phase of the period of that was what you might describe as after the assurances of our IT and where we came to the implementation of the policy. Again, a summary of that would be that I think from early last autumn onwards we were asking what we thought were some pretty searching questions based on what we saw as the compilation of the data coming forward or not coming forward, maybe more appropriate at times, as to whether they were still confident of delivery. You will know from your own chronology that the due dates slipped in time. I think one of the things that was fundamentally wrong with this is it was a task-based system and not a customer-based system. Therefore, it was very process-driven rather than outcome-driven. What that means, from the point of view of an outsider - I hope that we would consider ourselves to be informed outsiders but nevertheless we are outsiders - is that it is difficult to penetrate through the question that is ultimately all of these tasks will come together and hey, presto, payments will be made. That, of course, was very repetitively and constantly what we were informed would be the case. Latterly, of course, there are the issues about where we still are now, and perhaps you may want to come on to that in due course. If you break that down, who is responsible for the complexities, I suppose that must mean that the early decisions were political responsibilities, to go for a hybrid model against some people's wishes and, certainly, us drawing attention to the fact this was hugely complex. Secondly, the decisions about the IT and, thirdly, I think quite importantly, the interface between Defra and the RPA. I would particularly draw attention to the fact that I think there was significant managerial and administrative interface with the RPA, but I am not totally sure to what extent there was policy interface. In this context, we are implementing hugely complex policy into an IT system with, of course, continuing need to ensure that the rules are being followed. Q2 Chairman: George or Reg, would you like to answer the same question? Mr Haydon: I will go first, Chairman. I have got a particular interest in this business because I am the only farmer on the panel this afternoon. I farm as separate businesses, in two places: one is in Sussex in England, where I have received so far no money whatsoever; the other is in a hill farm in the Brecon Beacons, where we were paid, you will be pleased to know, last December with the final partial payment at the end of February. There is a wonderful example of how the historic system really does work. I think you were asking us, Chairman, where we thought this thing went wrong. We have submitted to you a rough chronology of our evidence today which has pinpointed lots of different points and I hope that has been a help to you or will be. We have singled out certain individuals, who perhaps need to be described, and we found that in the early part of the discussions between all the organisations the general consensus of opinion at the time was that we should go down the historic route. We thought this was going along very nicely. The first time when things did not appear to be going quite our way, and I am talking about the TFA now, was on 19 September 2003 when we wrote to Lord Whitty expressing concern there was support for the regional average area payments which were being strongly proposed by the CLA and the RSPB. This negotiation went on from then, not making too much progress, and then roughly around November of that year we, the TFA, George Dunn and the CAAV met Lord Whitty and got the feeling that there had been a veering away from the historic system. We did not know why at the time. Evidence from the staff at the RPA was giving us the feeling that they knew there were going to be complications if anything less than a historic system was implemented, so going down any sort of hybrid system was going to cause them a lot of trouble. The Minister at the time, Lord Whitty, spoke at the Oxford Farming Conference early in 2004 and he said he was very much against the implementation of a historic system on its own. We were obviously not pleased with this and had two or three meetings with him to try and see if we could change things, but he seemed fairly set in his ways on the way it was going to be done. Sure enough, very quickly after that, on 5 February, the Secretary of State, Mrs Beckett, spoke to me personally at home and said she felt she ought to warn me that the situation was changing and they were more likely to be going down what we were then told was a dynamic hybrid. This was reinforced about a week later when Lord Whitty again phoned me personally and said, "I am afraid it is bad news from your point of view but we are going to go for the dynamic hybrid." That was it, it was a fait accompli. Lots of negotiation had gone on. I think it is fair comment to say the TFA, the NFU and the CAAV were very much altogether on seeking a historic system, whereas the CLA were quite adamant they wanted what they called a static hybrid, which eventually got changed to a dynamic hybrid. Since then it has been downhill all the way, promises which have been made and never kept - there is a whole string of them which I am sure George will be able to tell you about. Now we are in the situation, as you well know, Chairman, where there have been five meetings with the industry, where a very good joint approach has been made by the NFU, the TFA and the CLA in trying to get some sense out of this terrible situation. Many farmers, as you well know, are in very serious financial trouble. We pressed right from the beginning that a partial payment would be a way of ameliorating the situation and I am very pleased to say, as we all know, the Minister saw sense last week and the system has been changed. That basically is what I would say in a nutshell is what has happened so far. Mr Dunn: The issue of where blame lies in this is a very complex matter. Certainly from my own perspective, 12 February 2004 was a dark day and if you were to speak to any of my staff, friends and family, I was pretty low because I felt I had let my members down by not being able to persuade the Government to go down the historic route. I was concerned what we had ahead of us was going to be a very difficult task, particularly in the light of comments made by an RPA official at a Defra stakeholder meeting when he said that if we went down anything other than a simple historic or a simple regional average system it would be a nightmare for the RPA to administer. Subsequent to that at a further stakeholder meeting, when I asked, "How come the RPA's advice has not been taken on board?" I was told by David Hunter, who was the official chairing that meeting, that the RPA will do what the RPA is told to do. I personally myself felt I could have done more to persuade the Government to go down the simple historic route. Going back in time, it appeared to me to be going swimmingly well until about the summer of 2003 when it appeared to us that every organisation apart from some of the environmental ones and the CLA were pushing for the historic system, civil servants were pushing for the historic system, and that we were on track heading for historic. Indeed I had a conversation with people who said, "It looks like you have won." Then when we came to September it appeared the ground had shifted considerably and at that time the CLA requested from the Government a list of potential models that the UK could use to implement the Single Payment System and that list started with simple history, went through simple regional average payments and ended up with dynamic hybrids. I remember the meeting where that paper was discussed and the same official, David Hunter, made the comment, "If you really want to make life complicated, if you really want to get into difficulties, let's look at the dynamic hybrids", and that is where we have indeed ended up. Then to complicate that was the decision to open up the system to those people with pony paddocks, with small acreages, to add 40,000 new applicants to an already complicated scheme, and then to allow people, who were not legally occupying land but may be deemed to have it at their disposal by being the landlord of land, into the system overly complicated it. So I think there are a large number of layers where you can say that issue was laid upon issue upon issue to make what was initially going to be a very simple system into something which was completely unmanageable. Q3 Chairman: When do you think it became clear to the RPA exactly what model ministers wanted to administer? Richard, in your evidence, you said you had been having a lot of discussions with Defra and its officials about this. I would be interested to know whether you picked up any of the beginning debate and dialogue at that time over what the model for payment could be. George and Reg, in your evidence, you mentioned the RPA's misgivings about the dynamic hybrid. Did you get the impression, could you point to the fact that the RPA had effectively evaluated formally to ministers the different options and the implications of those options for their ability to deliver and the practical matters which would be involved? Mr Dunn: There was, Chairman, a report sent to stakeholders prior to a meeting of 12 September 2003 where obviously the RPA had been asked to provide cost estimates of the various options. There is a reference to a minute from Bill Duncan about the cost of various options, so there was some discussion going on at that stage about how much this was going to cost and some of those figures were astronomical. There must have been some discussion but we were not aware of it. Mr Haworth: There must have been some advice from RPA to Defra about the various models and the one which was chosen. We have not seen that. The Secretary of State did promise she would release all the correspondence there had been between the RPA and Defra and we would be very interested to see that, but we have not seen that and I am sure the TFA have not. Q4 Chairman: When did the Secretary of State make that statement? Mr Macdonald: At the time Johnston McNeill left RPA, so relatively recently. Q5 Lynne Jones: You mentioned David Hunter, Mr Dunn. I understand he is the senior responsible officer for delivering the programme. Mr Dunn: Yes. Q6 Lynne Jones: What was his relationship to Johnston McNeill? You have said he was quite adamant this was a very complicated system and it would be madness to go down the hybrid route. If he is the senior responsible officer for delivering the programme and he was saying that, is it not reasonable to assume that he must have been saying that to Defra? The Defra official, John O'Gorman, was present at that meeting. Mr Dunn: Let us be clear, this was an industry stakeholder meeting at which RPA was represented in the shape of Bill Duncan, who has now retired from the RPA. Johnston McNeill, to my knowledge, never attended any of those stakeholder meetings, unless anybody else can correct me. Bill Duncan from the RPA was the one who represented the RPA's interests at those meetings, and I have to say that Bill was excellent in terms of the advice he was giving to us and to Defra. It was at a meeting that Bill Duncan said that if we chose something other than a simple historic or a simple regional average system it would be a nightmare to administer. Bill was a member of RPA staff. David Hunter is a Defra official but David did have the responsibility for making sure the programme was delivered. Q7 Lynne Jones: So David Hunter is Defra not RPA? Mr Dunn: David Hunter is the senior responsible officer within Defra. Bill Duncan was employed by the RPA. Q8 Lynne Jones: So as far as you are concerned, the senior staff in both the RPA and Defra thought that this dynamic hybrid was a nightmare? Mr Dunn: What I would say is that what Bill Duncan said at that stakeholder meeting was, "If we choose anything other than simple history or simple regional average payment, we will have a nightmare on our hands." That was said in the presence of stakeholders and in the presence of senior Defra officials. Whether or not Defra officials shared that view, I cannot say. Q9 Lynne Jones: Even if they had gone down the dynamic hybrid route, they could have deferred going to that new model for 12 months, is that correct? Mr Dunn: I think we were already on a rollercoaster that was taking us into the implementation of SPS quickly. Q10 Lynne Jones: It was possible to have kept to the historic model for another year whilst you worked out how you could implement this more complex model? Mr Haworth: With respect, that is not possible, because the regulation says you have to choose a model and then implement it. You cannot choose one and then move to another. Mr Dunn: We could have delayed the whole thing. Mr Haworth: We could have delayed the whole process. That was possible. Q11 David Taylor: It is the same thing. Mr Haworth: It is not the same thing, no, with respect. We could have delayed the whole implementation of the CAP reform for a year and continued with coupled payments for another year, something which we would not have been in favour of, and then moved to the dynamic hybrid. With hindsight, frankly, we would have no more confidence that an extra year would have enabled them to deal with the problems which have been posed by that system. So that was a possibility. What we could not have done is start off with a historic model and then moved to a regional model, because the regulation does not allow it. By the way, that highlights one of the underlying problems here, that ministers seemed to have changed their mind in the middle of the process. They negotiated the CAP reform imagining they were going to introduce a historic model and then introduced a dynamic hybrid, they did not take the steps they should have done to introduce into the regulation various measures which would have made it easier to implement a dynamic hybrid model. They failed to do that. Q12 Chairman: You have used the collective word "they". Is that UK ministers or all the Council of Ministers? Mr Haworth: What I am saying is that the English ministers in this respect had in our view entered the CAP reform negotiations imagining they were going to introduce a historic model. They then subsequently changed their mind. All the regulations which were effectively completed in the autumn of 2003 were basically about implementing a historic model. Had they realised at the time they were going to implement a different kind of model, I am sure ministers and civil servants would have sought to introduce extra flexibility into the regulation which would have made it easier to implement a dynamic hybrid. Q13 Chairman: Can I press you on that point. The regulation is the creature of the Council of Ministers? Mr Haworth: Yes. Q14 Chairman: Are you effectively saying that when this was being negotiated English ministers did not press the case for an inclusion in that regulation-devising process of the elements that would have made a dynamic hybrid model work better? Mr Haworth: Precisely. Q15 Chairman: George, you are disagreeing? Mr Dunn: No, I shook my head in agreement. Q16 Chairman: Your head normally goes up and down when you agree! Mr Dunn: I apologise! Mr Macdonald: I think, Chairman, that goes back to my original point, and that is in June 2003 when this was being negotiated, all the assumptions and discussions were that in England as well as in the rest of the UK we would be implementing a historic model, and that was the assumption behind all the discussions. I do not think there was a Secretary of State speech saying, "We are going for a historic model", but I do not think any of us had really seriously thought there was any alternative. Q17 Chairman: Just to conclude this line of inquiry, once it became apparent that English ministers had changed their minds, did they then have to go back to either the Commission or the Council and ask for something that was not there when everybody else had agreed the policy? Mr Haworth: No, because the opportunity had gone because the regulation was complete. Everyone had agreed that it had been so difficult to get the regulation agreed that it was impossible to unpick it, but the opportunity had been missed by then. Q18 Lynne Jones: What sorts of changes could they have made, had they been aware that this was an option? Mr Haworth: There were many different opportunities they would have had to make it more manageable, but I will pick out one single one. One of the consequences of having a regional model, as we know now, was that 40,000 extra claimants came forward because these were people who were not farmers but who now met the new definition of "farmer" and were able to claim the payment. It would have been possible for Defra to argue that there should have been a minimum land area which would make you eligible, that you needed, in order to make a claim. In the Council regulation, that is 0.3 of a hectare. Had they known they were going to do this, I am sure they would have wanted to get that possibility increased to, let us say, five hectares. Q19 Mr Williams: It seems to me that Defra was instrumental really in going for a radical reform of the Common Agricultural Policy and, as a result, could see the real benefits of decoupling coming from an area system rather than a historic system. Therefore, they were committed to an area system of payment. Presumably, with your organisations making the representations for a historic system, do you see, then, the dynamic hybrid as one of achieving what they wanted in principle and mitigating the redistribution of support that your members were very concerned about? Mr Dunn: I do not think, Mr Williams, that you can put those thoughts into the heads of ministers at the time that the agreement was put together. The big prize that we trumpeted in the TFA, which the NFU and the CLA trumpeted, was decoupling. We had got an agreement within Brussels which decoupled the payment. That was the big win, that was the thing that everybody was really excited about, that we had decoupled. From that point on, until the summer of 2003, everybody associated with the implementation was saying, "This is about a historic system". It was not in ministers' minds then to go down a regional route, as you suggested. It was not until the autumn when we were told that ministers had "their own mind" on these matters and wanted to test the waters considerably. I do not think that we can say that ministers had in their heads when they were negotiating the June package that they wanted to go down an area route. Mr Haworth: Perhaps there is a more fundamental answer to Lynne Jones' previous question here. Had they known they wanted to go eventually to a regional payment system, then the sensible thing to do would have been to go on a historic model until, let us say, 2010 and then introduce a regional model, but by the time it was agreed the regulation did not allow them to do that. Mr Macdonald: I am absolutely certain that in the summer of 2003 the only aim was decoupling. I was in many of those meetings and discussions around the Council meetings in Luxembourg and so on. Whether that was put in their minds by other people, the CLA and environmental bodies, whether it was a political, philosophical point about redistribution or about the ideology of purity coupling, I am not sure I know that or anybody knows that. Q20 Mr Williams: The Secretary of State said in Defra Questions last Thursday she believed that her policy of area regional payments is the proper way to establish decoupling. Given those cases, where do you think the idea of the dynamic hybrid came from? What is the source of it? Mr Dunn: It came from this list. Q21 Mr Williams: How did it get on the list? Mr Dunn: It was one of the options that was available within the Council of Ministers' regulation which was pushed and pulled at its last moments to create various options for various Member States to be able to cope with what they wanted to do. I do not think from my perspective - I do not know what the NFU's perspective was - there was any serious consideration given to anything other than straight regional average payments or straight history until we had seen that list produced by Defra in October which said that there were a number of hybrid options that could be used as well. I say again that there was great mirth when we had the meeting on that paper when we looked at the dynamic hybrid options. It was said by officials, "If you really want to get things messy, let us look at these options at the bottom of the paper". Mr Haworth: If you look at the ideological case for a regional payment, it is clearly a more pure form of decoupling, and you cannot deny that. Defra were certainly at all levels aware that going to a straight average system would cause a great redistribution of the current pattern of payments. They had told us that all during the negotiations, so when there came an option which enabled them to combine those two concerns, that is to say to move gradually to a regional payment, I think they latched on to that because it did enable them to square that particular circle or tension between redistribution and ideology, but they did that at the expense of introducing a huge degree of complexity into the system. Q22 Mr Drew: Are you happy to make available to us the correspondence, lobby materials and notes on meetings relating to this key point of how we go from, obviously, a preference for the historic system to the dynamic hybrid? Because I am completely confused, and I think this is the crux, without going into detail, which is the point I made in a previous briefing in advance of this meeting. I want to be assured who came up with this idea and who did the strategic thinking. There must have been some mechanism whereby somebody took ownership of this and was able, therefore, to propagate it as an answer. It may not have been the best answer; it was a fudge, but it was a fudge that somebody had to have done some work on. Obviously we are asking Defra and the RPA to do likewise, but somebody somewhere has got to be able to track this audit trail to where this idea comes from and how somebody had to then take ownership of it. Mr Dunn: As you can imagine, David, our files are quite thick on this whole area, but I am sure that we would be perfectly happy to lay them open to you to look at, so you can see from our perspective at least what went on from the TFA. Mr Haydon: We would appear to have correspondence starting roughly around 19 September 2003 when we wrote to Lord Whitty expressing our concern and there will be subsequent letters which will follow on. Q23 Lynne Jones: Have you got a copy of the options paper? Mr Dunn: We can let you have a copy of the options paper. Q24 Chairman: Your correspondence files are the key ingredients, because clearly for us reading through, not having been party to the meetings that subsequently happened, it would be difficult to pick out the key ingredients. In trying to understand the process, who said what to whom and what decisions were subsequently reached, it would be extremely helpful to have that information in the form of some supplementary evidence to the Committee. Mr Macdonald: Can I say, Chairman, that of course we are very happy to do that and you can sift through them, but I still think you may find when you see all of that, it will be difficult to nail the precise moment and answer the question as to who did what in terms of analysis because, from our perspective, we were sitting outside that process and we were clearly asking many questions - George and I, or between us, can go through the chronology of events - as to precisely who did what. This was very ministerially-driven in the end. Chairman: If I may say, as you rightly said, this is a very public process and, as Defra always sends somebody to observe what happens on these occasions, I am sure they will make a very careful note that this will be an area to which the Committee will wish to return to find out the answers to precisely the questions that you have put forward. Q25 Daniel Kawczynski: I think all four of you are being extremely professional, polite and diplomatic, but that is not what we are here for. I think Mr Haydon came the closest out of the four of you to expressing a little bit of the frustration and passion that this total failure has caused to farmers and yet the rest of you are seen to be almost apologists for Defra. Personally, I feel very angry, as do my farmers in Shrewsbury, about the way they have been treated and I would like to ask Mr Haydon, what was your reaction when you received the telephone call from Margaret Beckett? Did you feel that Mrs Beckett was on top of her brief and doing her job correctly? Mr Haydon: I think at the time we still clung to the hope that we were going to go down the historic route but obviously, as the other speakers have said, they were perhaps more involved in the meetings than I was, a lot of it was going on behind closed doors and certainly the farming public were way out of it. I have a feeling that decisions were taken which certainly were wrong for the industry. It is very easy to say that in hindsight because people make mistakes every day, but, unfortunately, what happens in agriculture - and I have seen it many times before having been here a long time - ministers make decisions and then ministers move on, they retire or they go to another job and somebody else comes along has to pick up the mess. I have got some sympathy for the present minister who, let us face it, was not even in office when all of this was decided. Lord Bach had nothing to do with this and he is carrying a bit of flak now that maybe should not be really intended towards him. There are individuals in the past and you can pick them out, if you like. Lord Whitty was a big player in this, so was the Secretary of State, Mrs Beckett, and various leaders in Defra who have been named by my colleagues here. Yes, it has turned out to be a total disaster. Where I feel strongly about it is - I am in a slightly unique position having farms in two countries and therefore combined the system - and you would not believe - I think Mr Williams is from Wales and will know the same as I do - the whole historic system which applies in Wales and Scotland is so simple, it is unbelievable. It is a question of a few maps, which were very quickly sorted out, tick boxes and the whole thing went through on the nod. They said they would pay at certain times; they were absolutely on the nail, they made no mistakes, even at the end of it, the Welsh equivalent of the ELS scheme is terribly simple and much easier to get into than the present one. That has shown itself in England - and this is a little off the subject - where only 22 per cent of the ELS scheme applications have been taken up so far. What we have got here is two different systems: one horrendously complicated which has caused us enormous problems, ministers to make promises they cannot keep and a lot of stress in the RPA; there are many people there, and I have some sympathy for them and the people who are in charge, trying to do a job which was not very easy for them to do, but of course it has caused enormous problems in the industry. As George Dunn will tell you, in our case we were receiving up to last week up to 70 or 80 calls a day from farmers who are in great distress, in financial problems and so forth. It is very much akin to what it was in the foot and mouth situation. Chairman: We will come back to that in due course. Q26 David Taylor: I will put to Mr Haydon, Chairman, that simplicity has its obvious attractions in terms of cost, certainty and so on, but sophisticated, political and environmental objectives do not necessarily lend themselves to simple systems, do they? Mr Haydon: No, but what I could say is, why did the devolved administrations in Scotland and Wales take it up? They obviously thought that it was going to be better for their topography. Those two countries are, shall we say, more on a livestock side; there is not a tremendous amount of arable in Wales, there is in Scotland, but they went down that route and it certainly proved the right one for them. There were some costs which George Dunn referred to. One of the Defra people said that the additional cost of running this scheme could be anything between £37 and £63 million over the four years, and after that, when it was taken up, you would still be looking at a possible cost of £1.8 to £8.7 million. These are not my figures, these are figures one of the Defra officials submitted. Q27 David Taylor: I understand that and your colleague, George Dunn, painted a very vivid word picture of when you thought there were two options on the table, the historic and the regional average model, and then hybrids were suggested by the civil servants who then laughed like the robot in a Smash advert saying that no one would surely want to follow that route. That is what you were saying, is it not, Mr Dunn? Mr Dunn: There was certainly great mirth at the idea we would go down any of the dynamic hybrid options. But let us be clear, in July, right after the 26 June decision by the Council of Ministers, in response to a question raised by my colleagues in the NFU, Lord Whitty said to us in terms of implementation that simplification was the key; that it had to be simple to implement this. I would ask, what have we gained from the environmental, from the rural economic, from the social aspects, of this system? I think we have lost considerably. I do not recognise the comment that we are apologists for Defra, for the RPA. If you want us to be passionate, we can be passionate about the calls we are taking from our members, about the tears people are crying, about the suicides we have had. I thought this was a forensic investigation and we are trying to provide the Committee with a blow-by-blow account of where exactly we think issues happened and where they occurred. If you want passion, we can give you that. Chairman: Your interpretation of what we are after is entirely correct. Q28 David Taylor: Could Mr Dunn confirm or otherwise that one of the hybrid options would have been to have a dynamic hybrid but in year one to have zero per cent regional average content to it? Mr Macdonald: No. Q29 David Taylor: Was that absolutely verboten? Mr Macdonald: The point that Martin Haworth raises is, once you go into a dynamic hybrid, it has to be dynamic. Q30 David Taylor: It would still roll out 100 per cent over a six year period, say. Mr Haworth: You have to make the step in year one. Q31 David Taylor: You have to make a step. Mr Macdonald: We could have delayed, as Lynne Jones said. Q32 David Taylor: It has the same effect surely? Mr Haworth: No. Q33 David Taylor: Does it not? Mr Haworth: No. Q34 David Taylor: Why? Mr Haworth: Because you are still coupled. Mr Macdonald: You would have paid the old coupled payment. Mr Dunn: You would still have the Beef Special Premium Schemes - the Suckler Cow Premium Scheme, and the Sheep Annual Premium Scheme - all those schemes would have still operated, and then we would have made the choice. Mr Macdonald: There are some downsides and there were some downsides to that, and we did have a separate discussion, "Should we seek to have this delayed until 2006". There were a number of difficulties in that. Everybody knew what the decoupled system was, and we would have had land stagnation, we would have had an inability for transactions, we would have had a system which was agreed in 2003 but not implemented for three years. If I can go back to an earlier point, we feel hellish passionate and frustrated about this by every phone call we get. The forensic point on this, and I think we are just trying to answer your questions factually, is that we did make very clear in the autumn of 2003 and the beginning of 2004 that we thought it was wrong to go to a dynamic hybrid. We thought it was right to stick to a historic model for a variety of reasons and we did point out this would be hugely complex. But, and this is a constant which runs throughout this, we were constantly being reassured that the analysis had taken place and that it would work. Q35 Chairman: You said you made representations, to whom did you make them and what kind of reply did you receive? Mr Macdonald: To the Secretary of State, to Lord Whitty. Q36 Chairman: Was that by means of correspondence or meetings? Mr Macdonald: I am trying to think. If there is correspondence, you can see it all, but certainly in meetings. Mr Haworth: And in our formal submission to the Defra consultation. Mr Dunn: From our perspective, we spoke to Uncle Tom Cobbley and all. Whoever we felt had an influence on this issue, we spoke to, we wrote to, and we dealt with it in meetings and in correspondence. Q37 Chairman: Can I clear up one point? The National Farmers' Union was not an entirely united house when it came to deciding the type of system of payments. Were you in fact authors partly of your own downfall in that your Horticultural Committee, under the leadership of Mr Graham Ward, ran a passionate campaign to seek payment for land which hitherto under the historic payment scheme, if I have understood it correctly, would not have benefited, but under other schemes was brought into payment? Clearly within the realms of the NFU, you were unable to resolve a policy difference between two parts of your organisation. Did that inhibit your ability to try and achieve what you thought was the simplest system or did you in fact introduce complexity by virtue of default? Mr Macdonald: I think in part, Chairman, you have answered the question yourself. Clearly that passionate campaign, as you have put it, did occur. The NFU had a very thorough debate about this, looking at all the ins and outs of it. At the end of that, we had a council meeting, the council were asked to determine which way it wanted to go and we clearly and very unequivocally stated we wanted to go for historic payment. As Martin Haworth says, that was our submission. Ben Gill, who was president at the time, made that point to the Secretary of State and, as George says, we repeatedly made that to Uncle Tom Cobbley and all. Q38 Chairman: Just to be entirely clear, the NFU's official policy position did not agree with the group led by Mr Ward? Your official position was of one of straightforward simplicity, historic model, full stop? Mr Macdonald: As you know, Chairman, there are many different interests in the NFU so often there are debates in the NFU, but the ultimate position taken after that debate was the single position that we should go for historic payments. Q39 Chairman: So we have the horticulture group and the CLA, who in your judgment, if I have understood it correctly from your earlier evidence, were campaigning for an alternative model, and unanimity amongst the TFA and the NFU about the historic payments scheme? Mr Macdonald: And the environmental groups. Q40 Mr Drew: Perhaps we can move on to the issue of the dramatic increase in numbers of potential claimants. I have been very interested in this because nobody has yet been able to tell me, apart from those people who kept horses, who this now increased group by 50 per cent of the total are. Can you tell me? Mr Dunn: From our perspective, there were two principal groups. Certainly those individuals with horse grazing, pony paddocks, were by far the bulk of that group of 40,000, but also, as I alluded to before, there was a new group of claimants - people who would have previously let land for grazing purposes to a tenant to graze sheep maybe on a grazing licence, or what is called a profit of pasturage basis, or on an informal basis where you are allowed to keep sheep there on some form of oral agreement - and all of a sudden this new system opened up the opportunity for the owner of that ground to be the claimant for the Single Farm Payment, and the user of that ground, ie the grazier or the person with the crop on the ground, not to be the claimant. So in previous years for the sheep annual premium and the beef special premium and the arable area payments it was the person who was actually doing the arable, the sheep, the beef who was the claimant, now it was a new category of claimant created by people who owned the land, did not necessarily farm it themselves but had some responsibility for the cross-compliance of that ground. So they were new applicants as were the horse owners, and that is where the bulk of the 40,000 came from. Mr Haworth: There were some other categories, and they would be fruit and vegetable producers who also were not making historic claims. So people who grew just fruit and vegetables who did not have cereals. People with outdoor pigs would be another one. By the way, we talk about pony paddocks, there are some pretty big pony paddocks; we are talking about the Newmarket Stud with 2,000 acres which is now claiming. Q41 Mr Drew: At what stage did you become aware that we were not just talking about 80,000, but potentially talking about 120,000 claimants? Given, of course, the system is that you have to get the wedding cake to divide it up, at what stage did you become aware that not only were we dealing with a complex system but dealing with a system which would involve many more people than presumably originally anticipated? Mr Dunn: As soon as the Secretary of State had made a decision to go for a dynamic hybrid, which would end up as a regional average payment, we knew that everybody who had any land at all would be trying to get into the system in order to get on to the treadmill to get up to that 100 per cent regional payment. Q42 David Taylor: You knew it and you stated it publicly? Mr Dunn: We did. It was confirmed on 2 November 2004 when Alun Michael announced that horse graziers could enter freely. Mr Haworth: We could not work out how many there would be, we did not know there were 120,000, but what we did know was the potential land area which could be claiming it. I have to say that probably 120,000 would have been beyond our expectation but we did know that about 9 per cent of extra land would be claiming and so it has proved. This was stated repeatedly in the stakeholder meetings, in particular by the agricultural valuers who are not here today who said time and again, "If you operate a system based on land, then you will get more land coming into the system." Q43 Mr Drew: Did Defra realise that this was a sequitur of their original decision, or did they then go back? There is something about going to the Agricultural Council to get clarification on what we meant by a land holding. Also, did they ever talk to you about a de minimis level, because some of these payments are going to be, let us be honest, very small and are going to completely grind the process down even though, without being pejorative, most of the people do not need the money, do not necessarily want the money other than they are now being told to claim? Where are we in the dynamics of the dynamic hybrid? Mr Haworth: I did make the point earlier that the regulation says you cannot deny anybody who has 0.3 hectares from claiming. Our point is, had they known they were going to introduce such a system in England, they could have argued within the Council for getting that de minimis up to five hectares, let us say, and that would have significantly reduced the burden they are faced with. Q44 Chairman: Can I, for the record, make certain that the "they" you are talking about is Defra ministers? Mr Haworth: This is probably not something which would have been dealt with by Defra Ministers, this is a technical issue which would have been dealt with in the special committee on agriculture or the other special committees which were set up to talk about the technicalities of the CAP reforms. Q45 Chairman: Can I pin you down further? Would it not be reasonable to have expected that when ministers decided on the dynamic hybrid model that the people to whom you have just adverted, namely on the technical committee, would have or would have been in a position to have advised ministers of the implications of the decision that they were taking? Mr Haworth: That must be the case, yes, although obviously we do not know that. Mr Dunn: Chairman, there was quite a discussion through the stakeholder groups following the announcement of the hybrid system about the sorts of land uses which would be permitted on land within the scheme. I remember there was a long list of land uses which the CLA put together - would clay pigeon shooting be included, would off-road cars be included, would grazed orchards, would horses be in. So there was a need to clarify with the Commission what was meant by "a farmer" under the terms of the regulation, and a farmer was somebody who was keeping land in good agricultural and environmental condition, and some of those uses were therefore ruled out but some were ruled in. So grazed orchards came in, horses came in, but some of the other non-agricultural uses were clearly out. Mr Haydon: One of the things Defra forgot was that in the horse sector, which is a very large sector of the industry and it is a growing diversification within agriculture and people are encouraged by Defra to do this, there are very professional bodies who run this. I can name one or two - the Thoroughbred Breeders' Association, the British Horse Society - and they very quickly got in on this act. I have a wife who is interested in that sector and she was deluged from all sorts of organisations saying, "You can join. Now is your chance to get on the bandwagon." These leaflets were pouring through my door and I was trying desperately to keep the wife out of it! Chairman: Very wise! Daniel Kawczynski: This is a very personal question for me. Chairman: It is not about your wife, is it? Q46 Daniel Kawczynski:
It is actually! Until we moved to Shrewsbury last week, my wife was the owner
of an equestrian centre and she was in a very similar position to Mr Dunn: I do not think you can blame individuals for getting onto a system that was made available to them to use. You cannot have half as many claimants again in a complicated scheme that has never been run before with a computer system that has never been tested before, with some of those 40,000 being very small indeed, much below the 42 acres we are talking about in your case, without having a major impact on the way in which that scheme is delivered. The mapping, the registration of those people as new customers, the digitisation of all the parcels on those holdings, the sending in of those application forms, the validation of those claims, all of that, if you take half the number again, must have had a huge impact on the ability of the RPA to cope. I would be interested to know where the break-even point was in terms of the money that they were paying out to those individuals compared with the cost of processing those applications, and I imagine it would be somewhere nearer to the top of the 40,000 smallest claimants. Mr Haydon: What they could have done was kept those people separate, because when we got into desperate trouble over these payments, in the meetings that the three organisations have had with the minister it very quickly became apparent that one of the easiest ways of freeing up the system was to take the horse people or the pony paddocks out of it. That is basically what has been done. A lot of them were paid early in the system, only because it was convenient to do; they were small claimants, they were easy, there were no great problems. If you have 42 or 50 acres or less, it is fairly easy to check that compared with a farm of, shall we say, 350 with all sorts of other problems. They got paid quite quickly, or some of them did, but they created a log jam. When we got deep in with the minister and said, "Look, something has got to be done or nobody is going to get paid until October", Mark Addison, who is the new person in charge who seems quite competent, said, "We will put these on one side", and that is what they have done. Q47 Mr Williams: Just to check if my understanding is correct, new applicants could also be specialist sheep farmers who could have claimed the sheep annual premium without filling an IACS form in and specialist dairy farmers who could have operated and perhaps just used the slaughter premium without an IACS? How many specialist sheep and dairy farmers would be amongst the 40,000? Mr Macdonald: The vast bulk of these people are very small holders. Q48 Mr Williams: How many of the 40,000 are specialists in dairy and sheep? Mr Dunn: It would not be that many. I have not got the figures, but it would not be that many. It is not just the specialist boys, it is the specialist ones who did not fill an IACS form. Of course, the specialist dairy boys would have filled an IACS form out in 2004 to get the dairy premium in the first year, so you are talking about vanishing small numbers in comparison to the total that came in with pony paddocks and other land. Q49 Chairman: I want to move on in a second to your observations about the IT system, but to conclude on this, Mrs Beckett said at Defra Questions last week effectively that Defra could not have predicted the volume of additional claimants; is that a fair claim? Mr Dunn: I do not think she could have predicted the 40,000 new applicants that turned up on her doorstep but, as Martin said, the CAAV, us and the NFU were predicting from the word go that any system, which includes a regional basis to it, will mean everybody with a bit of land will be wanting to get in on the game. There was at least at that stage an understanding that there would be a lot more people banging on the door than there were originally. Q50 Chairman: Did anybody make a cockshy as to what the extra number of claims might be over and above the number of claimants, for example who had been paid under the old IACS system? Mr Haydon: I do not think so. I think they got the shock of their lives when it turned out to be 120,000, that is what I think. Mr Dunn: They were certainly pretty shocked. Mr Haworth: We knew the land area. Mr Macdonald: We knew it was nine per cent and certainly we were saying, "This is not going to be a four-figure number of people, it will be five figures". Q51 David Taylor: While we are in the area of IT, obviously volume does have a significant impact on the capacity to deliver new information systems, would it have been possible - do you agree with me perhaps, Mr Macdonald - for Defra to have taken one or two small sample areas in the country, to survey them in some detail to find out numbers that would result from those typical areas and then aggregate them to something which would approach the sort of scale which landed on her doorstep, to use your phrase? Would that have been possible in theory? Mr Macdonald: Yes, it would have been possible. We had to make a number of assumptions as to the test that Defra had applied in order to assure itself that it could go down this route. I think you need to view us in the position of people who are outside the system but making forewarnings about what could and could not happen, asking questions and giving reassurances. A constant reassurance that we were given throughout all of that period was yes, it was being taken seriously, yes, there were concerns, yes, they understood the complexity, but it would work. You have seen those same reassurances yourself. Q52 David Taylor: I forget which one it was, Chairman, but one of our witnesses said earlier on or suggested that the 0.3 hectare de minimis could have been lifted to five hectares. Was there any estimate made of what that might have done to the volume of claimants, had there been that de minimis, approximately? Mr Macdonald: No, to my knowledge, I do not think so. Q53 David Taylor: If there is such information, it would be useful to receive it in writing at a later time[1]. You said - and this was you, Mr Macdonald - earlier on and you just referred to it almost in the same words a moment or two ago, that you were assured that in relation to the complexity that there would be a high level of intervention by Accenture and everything would be okay. I am paraphrasing you accurately, am I? Mr Macdonald: Yes. Q54 David Taylor: Who is the "they" who gave you those reassurances? Mr Macdonald: I would have regular meetings with Brian Bender, the Permanent Secretary, at those meetings and indeed I would imagine at every NFU meeting at every level we would have asked the question about the ability of the IT system to deliver. You will remember, Chairman, you alluded to us being through and scarred by the cattle database and various other exercises, so we were concerned about the ability of this to deliver. The meetings that they were having in Accenture I know were at the very highest level - no doubt they will say this when they come to give evidence to you - and I seem to recall that the vice‑president of Europe, or whatever his title at Accenture was, was being flown in on a fairly regular basis to give reassurances. It was not just being dealt with at a local UK level, to my knowledge. When you are given assurance after assurance, at some stage you either have to believe it, find another tack or give up. Q55 David Taylor: I am not suggesting for a moment you do that. I am just trying to find out who gave you the assurance. You are suggesting Brian Bender or the senior officials? Mr Macdonald: Brian Bender, of course, was Chairman of the Management Board of the RPA. Q56 David Taylor: In October 2004 there were details of the CAP implementation regulations published, and the RPA have said to us because of that publication they had to make 60 different changes to its IT systems. I am not asking you to confirm that, they will when they appear in front of us, but that is highly likely to result in a very substantial amount of effort in terms of tailoring a large-scale IT system but, if you could form an opinion re the RPA, did you feel they had got the necessary in‑house resources to accommodate that scale of change that was happening at CAP level? Mr Macdonald: I think one needs to distinguish, when you talk about resources, between volume and skill, and the assurance that we were given both by the then Permanent Secretary and by RPA was that they had the people to deliver this. Q57 David Taylor: Or Accenture had the people? Mr Macdonald: Between them, collectively. I am afraid I cannot tell you exactly who did which bit of which process but that was there. You would imagine at the time because of our very deep concerns about this - to come back to your point of passion, there is a huge amount at stake on this and we are very deeply concerned about it - that we asked that question repeatedly. I think in hindsight what we can say is that there may well have been the resources in terms of the number of people but it is questionable as to whether there was the skill there to do it. Q58 David Taylor: Those reassurances would have appeared in writing as well as in conversations of the kind you are describing? Mr Macdonald: We can let you have that. There would have been more in meetings. I think I have said this to you before, Chairman, that I have regular meetings with the Permanent Secretary; they are not always recorded. I keep notes of those meetings but they are not verbatim, I am on my own on this. Q59 David Taylor: Are they deliberately not recorded? Mr Macdonald: No, I do not have the ability to write and talk at the same time. Q60 Chairman: Did you, as a unit, seek any internal or external expert advice to review what you were being told about the IT capability of the RPA? Mr Macdonald: From an external IT or other consultant, no. Q61 David Taylor: Can I conclude my line of questioning, Chairman. A sister organisation to whom you have already referred, the CAAV, has noted that, although the detailed shape of the mid-term review could not be forecast when the computer contract was let in 2002, the ambitions were already clear in autumn 2002; you would agree with that observation, I am sure. They go on to express surprise really, that is my word not theirs, that the system seems designed in a way that does not readily accommodate the inevitable changes and subtleties of policy. Is that a fair assessment? Mr Dunn: It is interesting you should raise that question because I am a member of the RPA's Industry Forum, which is a sexy term for a stakeholder group. I recall, prior to the implementation of the CAP reform that was agreed in June 2003, raising at those Industry Forum meetings that, of course, you need to be aware of the changes that are coming with CAP reform, that they will have a different mechanism of paying the money out and that you need to be closer to Defra on those aspects. We were given assurances at that time that RPA and Defra were talking to one another and that the computer systems would be made so that they could cope with that sort of change, but essentially they were first brought in to deal with the legacy systems that the RPA had from the Change Programme announced in 2001. Q62 David Taylor: On 21 January 2003 the draft legislative proposals for the 2003 CAP reform were published; ten days later, Accenture was formally appointed. This is three years or more ago. Do you find it surprising, and the CAAV certainly do, that the RPA pressed ahead with an IT contract with Accenture based on a policy environment which was already destined for the dustbin of history? Are you surprised by that, as they are? Mr Dunn: The RPA, let us be clear, were being driven by a Defra-inspired Change Programme to implement new systems, implement new ways of working to close offices, to move away from 'customer to official' contact. They had to have new systems anyway if that is the way they were being driven by the Office of Government Commerce and Defra to upgrade the way in which their systems were operating. You had your own inquiry into that at the time. We said we were going too fast too soon. Q63 David Taylor: The normal impact of an internal review: the legislative proposals were there, they were published, they had been on the table previously and here we are contracting on the basis that is historic in every sense. Mr Dunn: Whether that is the fault of the RPA or Defra, I cannot tell you. Q64 David Taylor: I am putting the criticism to you to see if you agree with it. Mr Dunn: It would appear strange that a system was put in place that could not cope with a major reform to the CAP which was imminently to occur. Mr Macdonald: Perhaps it is worth making one small point, I think that to go back to the dates you mentioned, Mr Taylor, in mid-2002 we were talking about a mid-term review then, so I think the scale of the change that was coming about did not become apparent for some months after that. Q65 David Taylor: We are now in late January 2003. Mr Macdonald: By then it was certainly clear that things were going to get fairly serious. Mr Haworth: To repeat our earlier point, the Commission's initial idea of this reform was it was entirely historic and the regional basis was very much an after-thought put in at the request of the German Government at the time. The idea that we would get anything as complicated as a dynamic hybrid at that time would have been purely fanciful. Q66 Mr Williams: Of course it was not just the Single Farm Payment which was being introduced then as the responsibility of the Rural Payments Agency, it was also the new Environmental Stewardship Scheme with the requirement to map field features such as hedges and ditches but also the whole farm appraisal as well. Was that too much - it appears to be too much - for the Rural Payments Agency? Mr Macdonald: I think in hindsight, Mr Williams, quite clearly so. I think with hindsight, if we were asked the question now, "Would you have wanted these to happen?" the answer would be "No." Two points to make. Clearly the Entry Level Scheme has a number of potential benefits to it, it brings money to farmers, it enables us to deal with some of the environmental regulatory issues like the Framework Directive and to bring about some changes, so there are numbers of big pluses in it. At the time we sought the assurance, "Is this deliverable?" I am sorry this is a repeated theme but, believe me, it was a repeated theme from us time and time again in terms of this, and the assurance we were given at the beginning was that this was deliverable. In hindsight, as you say, if I knew what I know now, I would have done something different. Mr Dunn: I would concur with that. We had the introduction of the new Environmental Stewardship Schemes, we had the major Change Programme going on in the RPA already, we had a complex system of implementing what should have been a very simple CAP reform. We added to that the 40,000 new customers who came along by opening up a system to a bunch of new people. That was bound to create problems. When we were consulted on when should the CAP reform be implemented, we said, "As soon as possible, so long as you go for the historic system." If they had suggested to us at the time they were going for something more complex, we would have asked them to put it off. Chairman: I want to move on to a line of questioning about mapping and the Rural Land Register. Q67 Mr Drew: This seems to be the crux of where the logistical problems have come. At what stage did you, given you were not in favour of this system anyway, become aware there was going to be a significant problem over who would map, how it would be mapped and that there would be a lot of argument over the accuracy of this mapping? Mr Dunn: I would go back to the answer I gave earlier, as soon as the Government announced it was going for a regional average system ultimately, following a period of a dynamic hybrid, we knew then the mapping issues were going to be huge, that people were going to have to register new parcels of land, people who had not been used to schemes of assistance before and may not be able to provide the RPA with the sort of information which the 80,000 returning customers could have provided. It became clear as the 2005 claim forms were being completed that the system the RPA had chosen to use was causing some major problems - fields were apparently disappearing when they were there before and areas were changing - and people with well-planned out systems were being thrown out by the digitisation process. So our fears about the system became reality when farmers were talking to the RPA Helpline following the issuing of the 2005 claims forms. Mr Haworth: I think there are two problems. One is the one George has referred to, which is the additional volume because of course all these new people who registered had never been mapped before and this added to the complexity. Secondly, the Entry Level Scheme required a whole set of new parcels of land to be digitally mapped, and things like woodlands to be mapped which had never been mapped before. So that was one element of the problem. The other element of the problem is that the digital mapping system, for whatever reason, never seemed to cope very successfully with new entrants on to the system. It seems to have been too sensitive in some respects. That caused what should have been a fairly simple process of digitally mapping an area of land, checking it and entering it on to the registry, to be enormously complicated because of what has been alluded to, that when changes were made they were not immediately apparent to the applicant or they altered other aspects of the same area. That caused what should have been a simple, one-step process to become three, four, five, or in many cases a process which is still not yet complete even now. We are still in this circle of people saying their corrections have not been effectively registered on the registry. Mr Macdonald: We should be able to give you more details, but my notes tell me that we started noting this in early 2005. Although it has manifested itself in a huge way, and no doubt you have all heard of endless people whose mapping sagas have gone back and forwards, this has been going on for quite a long time now. Mr Haydon: As far as I know there are very, very few farmers who have had a clean-cut application with no problems with the maps. We personally in our application had great problems. Somehow digitising the mapping process creates a problem whereby fields get lifted out into another parish, so you suddenly find you have four fields which do not belong to you, and after deep investigation you find they are about five miles away. This has been going on all time with people receiving extra land out of the county. That is why, as at last Wednesday, there were 62,000 applications which have not been validated. Unfortunately, when you get one of these it does not tell you the reason why you are invalidated, it gives about six options. So far we have not found out why we are not validated. Q68 Chairman: Can I ask factually if either organisation was told the RPA had in some way trialled the digital mapping system? Mr Dunn: We have not been told they trialled it, no. Mr Macdonald: I do not think so. Mr Dunn: The line the RPA had given us all along was that the Rural Land Register was working, that 98 per cent of land parcels were on the system and correct, but the understanding from what we were hearing from our members, and I am sure the NFU and the CAAV were the same, was that that was far from the case on the ground. We were not aware it was ever trialled. Q69 Mr Drew: Can I look at this issue to do with the Single Farm Payment and the Environmental Stewardship Scheme. Clearly, Defra - I presume it is Defra and not the RPA - changed the priority between the two late in the game. What was your view on how you could balance those two sets of mapping priority? Did you have any view on this or were you consulted on this? Were they separate initiatives and you saw them as a separate line of activity? Mr Dunn: It was one of those situations which came long which you had to deal with at the time, and we were getting calls from members saying, "We cannot get our maps sorted out for ELS purposes, we need to get them sorted out." People had been applying to the RPA for map changes on the old IACS 22 forms and of course the RPA was building up a healthy backlog of cases they had to deal with alongside all the issues they were dealing with on the Single Farm Payment. So from an operational perspective, whilst we were not necessarily happy with the decision they made, I can understand why they had to make the decision, "Anybody who has applied for mapping changes up to this point will be kept in a priority queue and we will sort them out for you. Anybody else who is making changes for ELS reasons only will have to wait until we sort out the SPS débâcle." We were not exactly thrilled with that but I can understand why they had to make that decision. Mr Haworth: I think this is another example of a much repeated story. We were assured in the first place that they could do both and they would do both and there would not be a problem. We carried on being assured of that after it must have been clear to them they could not. At that point we were faced with a really difficult choice, "What do you want to do?" I cannot remember if we were formally consulted but we certainly had to acquiesce in them putting the priority on to the Single Farm Payment, which we did. As George said, we did not do that with any great gladness, I really think we had no alternative. The underlying story here is of repeated assurances being given way beyond the time when, in our view, they should have been given. Mr Haydon: I think the practical situation is that most farmers with the problems they have with the Single Farm Payment have been very reluctant to get into the ELS scheme until they saw the main thing, the money, sorted out. That is borne out by the take-up which at the moment is only 22 per cent of people who have actually applied for the ELS. Q70 James Duddridge: I would like to look at some of the lessons learned about the relationship between Defra and the agencies. How much of the problems over payment can be put down to poor information flow between RPA and ministers? Mr Haydon, you mentioned Lord Bach had been given something of a hospital pass in terms of the mistakes having been made, but would you agree with me, whilst I am sympathetic he was passed a difficult problem, he has not acted in a competent way demanding the right information and grasping this problem and dealing with it when he entered the Ministry? Mr Haydon: It is very easy to criticise people when they have picked up something they did not exactly start off. The worst thing is the broken promises. One of the classics for us at the TFA is that we invited Johnston McNeill, who was the head of the RPA at the time, to come and speak at our AGM and he stood up then in front of the audience and assured everybody that everything in the garden was lovely, and that was on 21 February and he got the sack on 13 March, which was not too long afterwards. He was in charge, so was he telling us a pack of lies or did he not know the true situation? Since he has gone, there have been lots of management changes which Mark Addison has brought in and obviously there is close liaison between the RPA and the Minister now week by week. There was not much progress last week except for the good news about the implementation of the partial payments. Easter always affects things. There is a meeting tomorrow so we shall see how things have changed and whether there is an improvement. It has not been easy for the people in charge, I can appreciate that. Q71 James Duddridge: Would it be fair to say Lord Whitty has created this mess, Lord Bach did not identify it and now Margaret Beckett is promising to sort it out and it is all happening too late? Mr Haydon: I think it would, yes. Maybe a combination of the Secretary of State and Lord Whitty have something to answer for. Mr Dunn: I certainly had a very short but terse exchange of views with Lord Whitty after the end of the second anniversary of the Curry Report when he was speaking at that event. We had just had the call from him that morning that he had spoken to Reg and I said, "This is going to be a disaster" and that is why we had the meeting about eight days later with him. Lord Bach I think has had a difficult issue to face but, let us be clear, whilst the RPA appear to have had all the forms scanned on to the system, they have keyed all the data and they have got it all on to the computer system ready to push the button for validation, this was the first time this system was ever used in anger, and for the RPA then to press the button to start making definitive establishments of the type as of 14 February and then do the validation, no one knew if the system was going to work. I was clearly aware that senior figures in the RPA were saying, "We hope to do this, we want to do this, this is what we are aspiring to, but we cannot be sure because the system has never been run before." So in a sense there was a groping in the dark by ministers, a groping in the dark by RPA senior managers. This was the first time the system was operated in anger, "What is going to happen when we push the button? Oh no, it has gone pear-shaped. Now what do we do?" Whether or not you can say that was the fault of an individual or a group of people, I am not sure, but there was clearly a huge systems failure that was only apparent when they pushed the button to start validating claims. Mr Macdonald: Let me try and answer the question in the forensic spirit of it. You have seen the public statement the NFU has made about ministers and, therefore, you can take it - I am conscious of your comment about lack of passion and being too polite - that there is certainly none of that. In terms of the RPA, I think you can say, there was a very poor information flow from RPA to Defra/ministers, that is clear. I find it pretty difficult to conceive that the RPA and senior managers at RPA did not know - or if they did one has to question their ability and competence - that there were very significant difficulties taking place. I have to say that we, NFU, TFA and others drew attention to the RPA and a whole host of difficulties that were taking place going back months. The repeated answer that we were given was it would happen; you have seen the delays that took place, the changes and the lack of contingency time that was available but (a) that it would happen, and (b) and I am repeating the point I made earlier that this was a task-based system, ultimately, there would be a great crescendo and hey, presto, it would all happen. We had, to put it mildly, very serious doubts as to whether that was going to take place. I am almost asking the questions that I guess, Chairman, you will have to ask in due course. The second question is, to what extent should Defra have known? I think it is fair to say we were drawing these issues to their attention. Secondly, if they did know, what more could they do than ask RPA repeatedly and get the same sort of answers we did? I think there are question marks there. I think there is an issue that I alluded to right at the beginning which - forgive me, I am not here to pose your questions for you - is what is the structure of the interface between Defra and the RPA, because I think that you may find that the majority of the effort, for a lot of reasons, is based on trying to ensure their process and system is working as opposed to asking, "Are we achieving the policy goals that we set out?" Therefore, a significant number of the people in Defra who are involved in the interface with RPA are systems, process and management people as opposed to policy people and what we have here is a huge policy, a very complex policy issue that has to be implemented. If you are a manager or a systems person and not a policy person, you do not necessarily see the difficulties in the same way. Therefore, I think that there are, at the very least, some significant questions as to whether the structure of the interface had the right people. That is not a resource one, that is an issue of the right expertise constantly looking into this. I think if you were often to talk to Defra policy people, they would say this is a systems issue going back. Again, in hindsight I think that that is wrong and certainly an awful lot of the issues we have been raising questions on for the last six or seven months, whatever it is, more probably, are policy-based. Mr Dunn: There was also another review which was carried out, which I have never seen the report on, which I think was the Office of the Government Gateway Review of the RPA's performance in its Change Programme and delivery of the SPS. I certainly gave some evidence to that on 8 February this year. I understand that a report was drawn up; I do not know where that report is, who has got it or what it says, but that was looking at some of the processes and some of the systems issues and IT concerns that you were talking about, so if it was possible to find out where that has got to, it might be useful for the Committee. Q72 Chairman: Can I ask you, sometimes organisations like the TFA and the NFU form, on a person to person basis, some private relationships of a very proper nature, but nonetheless private relationships, that help to communicate what is going on under difficult circumstances, such as the ones we have been discussing for the last hour and a half. When you started to see the wheel falling off this process, did you, Richard, Martin, George or Reg, pick up the telephone to speak to anybody quietly and privately in the RPA and say candidly, "What the hell is going on? Is it going to work or is the wheel going to come off?" Did you have any insight like that? Mr Haydon: We thought that if we asked the head of the RPA down to speak at our AGM, because things began to look not too good around February time, by having the person in charge he would be able to give us the truth and the up to date situation. He stood up and said, "Gentlemen, everything is fine. We are about to start tomorrow, the computers will roll, the button will be pressed and money will be coming out", so we thought, "Hoorah, fantastic"; it all turned out to be an absolute load of nonsense. What more could you do? Mr Dunn: It is true that private conversations took place with senior individuals in the RPA and, from my perspective, they never differed from what they were telling us publicly at stakeholder meetings and within the RPA Industry Forum. It was always couched in terms of we were aiming, ie the RPA was aiming, to get the payments out as soon as possible in the payments window which was opened on 1 December, as you know, but that was always couched in terms of "This is an untested policy. There are lots of changes yet to come from the Commission that we need to implement. We are not sure whether the technology is going to work for us", et cetera, so they were always saying, "We hope to achieve this, but we do not think that we can say for absolute certainty that it will happen". Even when we had the start date in February and the bulk by the end of March, senior figures in the RPA were saying to us in meetings and privately in conversations that we were having, "We cannot say for sure this will happen. This is what we are aspiring to, this is what we can see so far we are getting to, but there are some huge risks here that we may not get the system implemented in time". When we had similar conversations with Defra, the line we got from Defra was, "The RPA are telling us they can do it". Mr Macdonald: The answer, Chairman, is yes, both publicly and, as you say, in less formal meetings and discussions. I can look back and know that we, in terms of NFU people at various levels, and I have quite clearly fielded the difficulties but given a very similar line throughout. I think one of the issues is it does come to the point of process that you are looking at, which is, ultimately, which one person held the ring and pulled all these things together? Quite often, what one did is talk to somebody, who said, "I need to tell somebody else" or "I am assured by somebody else". I suppose the charitable way of looking at it is this is a very process-driven system, you have a whole variety of different players on this and we are waiting for it to come together. Q73 Chairman: Gentlemen, thank you very much indeed. You have marked our card, particularly in those closing words about where else we must seek the truth about what is happening. I suppose like the best of the soap operas we close with the words, "Well, why did Mr Johnston McNeill say it was going to be all right on the night, when in actual fact from within his organisation there was a trembling and a worry that it would not be?" No doubt in further episodes of this thrilling investigation, we will get to the bottom of that and perhaps our next set of witnesses will be able to assist us in that. Thank you very much indeed. There are a number of questions that we did not reach, which we will put in writing to you, and there may be further things that arise during the course of our inquiry that we would like to come back to. Thank you very much for your candour and information, much appreciated.
Memorandum submitted by The Public & Commercial Services Union Examination of Witnesses
Witnesses: Mr Christian Bishop, Trade Union Side Chair, Mr Glenn Ford, PCS Defra Group Vice-President, and Ms Norina O'Hare, PCS National Officer, Public & Commercial Services Union, gave evidence.
Q74 Chairman: Can I now welcome the representatives of the Public & Commercial Services Union. We have got Christian Bishop, the Trade Union Side Chair, Glenn Ford, the PCS Defra Group Vice‑President, and Norina O'Hare, the PCS National Officer. Can I first thank you very much for your patience in waiting. It is inevitable when you get started on something as detailed as this that it takes longer than you had anticipated; so your patience is much appreciated. May I also put on record my appreciation for the help you were able to give us when we did our interim report; I know my colleagues who are the rapporteurs much valued your union's input. Obviously, from your point of view, you have a seat at ringside. You and your members will have seen many of the problems evolving, I am sure. I think it might just be useful to open our questioning, if I may, by simply asking you in the same way I asked the farming unions, when did you start to see the wheel fall off as far as the preparations for the introduction of the Single Farm Payment were concerned? Mr Ford: I think one of the earliest ones when we saw the wheel coming off was not really due to the Single Farm Payment scheme, but it was the start of the Change Programme in the RPA in April 2001 when the Agency was separated from core Defra. That was really the start of the major troubles because that brought with it a scale of economies that needed to be made. RPA was set up deliberately to administer the CAP schemes at a reduced cost to the Government under the Defra set‑up. The main aim was to reduce the number of staffing, that was the efficiency saving, by bringing in an all-singing, all-dancing computer system that would be able to replace the manual computer data inputting that the staff had been doing on previous schemes. That was really where the wheel started to fall off because at that stage nobody knew what the future was bringing and a computer system was set up with the existing legacy schemes, the old schemes, the IACS schemes and the sheep premium, the cattle schemes, so it was run on that basis. The number of staff that was needed was very much a guesstimate at that stage based on the assumptions that they thought were going to happen to the schemes. At that stage the change in the CAP programme had not really been built into it. It was based on the number of staff and that number of staff has only just been settled on, so it has been a long period of time where the staff have been unsure of what is going to be happening to them and what their future was, and that was where it started to go wrong right back in April 2001. Q75 Chairman: When you start on a complex Change Programme, normally there is some kind of milestone mapping process that takes place. Were your members involved in such a process and, if so, at what point into that process did one start to see the potential for change that has now become the Single Farm Payment scheme being worked up? Mr Bishop: It is difficult for us to respond to that question, Chairman. Certainly sitting listening to the submissions from the National Farmers' Union and the Tenant Farmers' Association, they were certainly privy to much more information and there were certainly many more meetings going on than there were with us. We certainly do not get phone calls from Margaret Beckett at home. Certainly throughout the process our key involvement in this has been about the RPA organisation's design. As Glenn said at the outset, this was a driver for it, for the RPA Change Programme throughout: ie the reduction of the number of staff involved. Our involvement was throughout that, and that was a driver for the programme. In fact, what you saw was it was driven by those efficiencies in terms that each area that was dealing with work, was dealing with much reduced staff figures rather than the actual staff you would need to administer an area[2]. Q76 Chairman: When did the process of number reduction start to bite in human terms? Mr Bishop: The initial work started in about 2002, but office closures started in 2003. Q77 Chairman: What I am trying to establish is, if you like, the relationship between this diminishing workforce, the arrival of a new policy framework and the arrival of a new IT partner for the organisation in terms of Accenture. What difference did their arrival mean, because they signed up to the contract on 31 January 2003? Did changes in personnel follow at a faster rate from that time? Mr Ford: The signing of the contract with Accenture was part of the Change Programme. Staff knew that would be happening but in 2002 they knew what the target figure of staff was going to be for RPA by the end of December 2006. That is when the process started of looking at office closures, whether there was a need for voluntary redundancies, whether there would be a need for compulsory redundancies. So the signing of the contract with Accenture had very little input into what was happening. The signing of the contract with Accenture was there to enable those staff numbers to be reduced and staff knew that, so whether it was a contract with Accenture or anybody else they knew their jobs were on the line. What then happened of course was that Accenture and RPA were not able to deliver the computer system which was first envisaged and that is where the numbers started to create problems. Q78 Chairman: When you say they were not able to deliver the computer system as they envisaged, what was envisaged and what could they not deliver? Mr Ford: The computer programme which was envisaged covered everything from the start of the application process right the way through to the payments, that there would be very little, if any, manual input into it at all. You would have a document management unit which was set up in Newcastle where electronic claims would come in or claims which came in on paper would be scanned in and then put on to the electronic system. There would also be a customer service centre, so there would be no contact with the farming public apart from the customer service centre. Staff who would be used to the processing side would have work either pushed to them by the computer system, so that when they logged on a claim would come up on to the screen and they would deal with that claim, or they would pull work down from the computer system. What has never happened is that the document management unit has fully functioned. There were a lot of problems in 2005 when, instead of the applications coming in being optically read, they had to be manually put in, which was not something which was envisaged in the first place. The customer service centre could not handle the number of calls because, as we know, the number of applicants went from 78,000 up to 120,000, so there were problems there. The idea was that all the schemes would have been on the one computer system but, because of the delays and the problems, page 4 of the computer system is no longer being looked at, so some of the old legacy schemes - the trader schemes, school milk and things like that - will still continue on the old legacy systems and will not go on to the new reader system. Q79 David Taylor: I want to preface this by saying that at every stage of this process, following Roger Williams' and my visit to Reading in particular, I have taken pains to exonerate staff at Reading, and by implication elsewhere, from the problems which have manifested themselves, and in fact I have been quick to praise the work you were able to do against the backdrop of redundancies, outsourcing, rapid changes in specification and so on. Perhaps the Chairman is old enough to remember the Danny Kaye song, The King's New Clothes whereby silver-tongued salesmen sold an invisible suit of clothes to the King saying it was only visible to those with sophistication and intelligence, and the courtiers around the King were slow, indeed reluctant, to point out he was in fact totally naked, and a little boy came along and pointed out what was happening. Not drawing the parallel too far, I see the silver-tongued salesmen being the Accentures of this world, the King being the top management of Defra, and the courtiers as the staff. Were staff quick to point out the flaws in what was being proposed by Accenture, because otherwise there is a small amount of complicity in all of this, is there not? Mr Bishop: Just picking up on one of the points you made there, we would certainly hold Accenture partly responsible for what has gone on here, but we should not forget that prior to the RPA setting up there was initial work done in terms of mergers, because RPA itself is a merger of different government departments. Certainly early on there were cultural issues which needed to be dealt with internally as well. Turning to your question, were they quick to tell? Possibly. Staff did not see much change early on, it has only really been in the last two years that change has impacted on them. As we said earlier, in terms of organisation design, that was meaning that people were moving around - not in all areas - taking up their jobs and it was causing some problems early on. Q80 David Taylor: They were not too deferential to Defra top management - no pun intended there - in terms of the direction they were taking? They were able and in fact encouraged to contribute their observations? Roger must speak for himself but I am sure he will agree with what I am about to say, we were assured there would be Defra staff integrated at every level of the system development to keep the whole thing on track, to keep it realistic and to ensure it delivered the objectives which were set for it. I am not at all sure when we talked to staff there that there were sufficient experienced Defra professionals working with the Accenture IT people. Is that how you see it? Mr Bishop: In terms of key personnel, I do not recall anybody from Defra involved in the actual day-to-day process work of the Change Programme. Mr Ford: Certainly when the contract was signed with Accenture there were RPA staff who were involved in working with Accenture on what was needed but they did not necessarily have the computer or the IT expertise to challenge what Accenture were doing. They knew what the schemes were and how the schemes were administered and what was needed there, that is what their experience was and that is what they were feeding into Accenture, but as you say Accenture would then sell them whatever package --- Q81 David Taylor: That is the whole point. Mr Ford: The other thing is, to use your analogy of The King's New Clothes, whilst Accenture might well have been the salesmen, the customer actually was the Government with the Government cuts which were needed to be made throughout the Defra family, and RPA was the place where that was going to be done. So whilst Accenture might well have been the salesmen, the customer was the Government who wanted those cuts made. Q82 Chairman: Just a point of clarification: where does IBM fit into this? They were the old IT partner, were they not, before Accenture? Mr Ford: We used to have our own internal IT system set up. That was outsourced to IBM who now are our outsource partners dealing with the hardware. Q83 Chairman: So they are process as opposed to policy and systems design, which is Accenture? Mr Ford: Yes. Chairman: Thank you. Q84 David Taylor: To complete and then file away for good the analogy I have drawn, the little boy is Mark Addison because he seems to have been praised for analysing the situation and recommending a new direction, which contains some pretty obvious things to do which should have been there from day one. We were shown, and Roger Williams will perhaps confirm this, the task-based system almost in the sense of "This is good, isn't it?" when the claim-based system which is now in operation was an obvious step to try and extract the RPA from the problems which beset it, was it not? Were you ever doubtful? There were as many as ten different people working on a claim in five different locations and it was being said, almost with approval, "This is what technology can do. We have people in Newcastle and Reading and elsewhere, Exeter perhaps, working on Mr Bloggs' claim" and I am not at all sure that was the right attitude. This is not hindsight, we were saying it at the time. Mr Bishop: We do not disagree with that. We had a discussion earlier about where RPA has come in its five or six years. Basically we have almost come full circle. Mark has come in and looked at the task-based system and moved it on to a claims-based system. Q85 David Taylor: Has that move now taken place? Mr Bishop: It is in hand. That is how it was done before. Pre-RPA, targets were always met. We have come five years down the line, at a cost of £X million, looked at reducing the staff, staffing levels are about the same but we have closed four offices, so in those five years we have not come very far. Ms O'Hare: When we met with Mark Addison, immediately after Johnston McNeill being removed from office, we made exactly that point, which is that when we had regional offices, we had staff working in those regional offices who were dealing with claims direct and who were dealing with the claims manually often, who were making the calculations, and in fact Glenn said to Mark Addison, "In 2001 when we were operating in regional offices, we could have delivered the Single Farm Scheme on time." We have the same number of people working on the RPA system but because it was a task-based system we were told at the time we could not revert back to manual payments, so we have been tied into not only an IT system but a process-driven system which was designed to reduce the number of staff and which has fundamentally failed. It has failed the farmers and it has also failed the staff because the staff have been working extremely hard over a very long period of time, working very long hours, and yet they have no satisfaction of actually completing a single piece of work. Q86 David Taylor: I understand that. Sorry to cut you off but my abiding impression of that visit four months ago is that the RPA staff were absolutely committed to a high quality customer service and were frustrated this had tailed off in a catastrophic way. We have heard in evidence from the Tenant Farmers' Association and others that what had previously been a pretty positive and rosy assessment of the quality of service provided went downhill quickly, not least when the customer service centre was buttressed by untrained managers and staff brought in to tackle the huge volume of calls. At that point, what was your reaction when customer service was going down the pan? Mr Bishop: To revert to an earlier question about the key point, I think that was a key point at that time. We had a meeting and invited Johnston McNeill to an IT meeting in the middle of all of that - he was going up and down to Newcastle where the customer service centre was so we invited him to our meeting in Sheffield - and you could see then what was happening at the customer service centre was pretty much a microcosm of what was happening in the rest of RPA at that time. It was crisis management, quite honestly. I think since then, within the last year, things have gone downhill quite rapidly. Q87 Chairman: Did Mr McNeill accept your invitation to come to your meeting? Mr Bishop: Yes, he did. Q88 Chairman: Did you confront him with the fact you had identified that crisis management was the order of the day? If so, what did he say? Mr Bishop: Absolutely. We reminded him during this last year of that discussion, because we were worried about what was happening. We could see quite early on what was happening. We asked the question on a number of occasions about the contingency and it is interesting hearing the earlier evidence. The Tenants Farmers' Association, the National Farmers' Union, were getting the same message, ie we were committed to making payments, and they will be made. That was the message all the way through the year, and the same message was given to us as it was to these other bodies early in February this year as well. Q89 Mr Williams: I would like to confirm David Taylor's view, when we visited Reading, we were always impressed with the commitment of the staff, working in quite difficult conditions. The ministers in Defra and senior executives in RPA exuded confidence that the targets were going to be achieved. Did the staff share that confidence? Mr Ford: No, the staff did not share that confidence. The staff had been concerned, I think, from very early on that the targets were never going to be made. They have raised the situation time and time again that the computer system was not functioning well, there was so much down time when more people tried to log on than the bandwidth could take, there was a lot of down time. They were also concerned that it was a very complex scheme and got frustrated because it was being dealt with better in the devolved establishments. They were concerned that they were letting down the farming public in England and they did know that it was not going to work but nobody was listening. Q90 Mr Williams: You say "at an early time". Was there one specific point in which you can say the staff knew in their heart of hearts that these targets were not going to be achieved? Mr Ford: I think at the meeting which Christian mentioned when we invited Johnston McNeill to that one, we had an idea then and the delegates around the room from the different offices had a feeling then that it was not going to work. Q91 Chairman: When was that meeting? Mr Bishop: That was February 2005. Mr Ford: It was just coming up to getting the applications in. They could see that the system was not there and the staff numbers and hours were having to be increased so all of the data could be put into the system and they could see it was in difficulty then. Q92 Mr Williams: Applications were only just starting to come in then? Mr Ford: Yes. Q93 Mr Williams: Because the deadline for applications was 15 May 2005? Mr Ford: They realised at that stage because that was when the customer service centre was beginning to get overloaded and was being sent out to BT call centres to take calls. Then staff were being encouraged to work over the weekends so they could ring back farmers who had made calls during the week. They could see that there were not going to be enough resources from that very early stage. Q94 Mr Williams: At that particular meeting, were you, on the staff side, as explicit to the management as you have been to us today? Mr Bishop: Absolutely. One of the difficulties we had at that meeting was he came and made 'a speech', but he was talking about external customers and we were quite frustrated, in actual fact, that there was no discussion or he had no idea about some of the internal impacts on staff. We got quite angry with him at one point because we were not getting any answers from him. Q95 Chairman: You put to him all these reservations. Did he agree to come back to you with any kind of response later or did he just say, "I do not believe what you are saying. Everything will be all right". Mr Ford: Yes, in as much as he was saying that was not the message he was getting from his senior management team, that there were not any problems. Q96 Chairman: Just to be specific, you mentioned three things a moment ago: down time, a bandwidth issue and nobody was listening. In the case of the down time - and the bandwidth is quite a technical issue, you have got to understand how a system works to understand when there is a bandwidth constraint - how did you formally communicate that back to the senior management of the RPA? Mr Bishop: I think it was in Johnston's evidence at the interim hearing he referred to the fact that we sit on executive board meetings, and we do. Certainly, there are monthly meetings and it is our opportunity to present whatever issues we have got. Certainly, at those meetings, we were raising these sorts of issues regularly. In terms of the Whitley structure of the RPA as well, we have twice-yearly meetings, but we were doing it on a regular basis. Q97 Chairman: The executive, is that the management structure that runs the RPA? Mr Bishop: Yes. Q98 Chairman: Who is on that executive? Mr Bishop: Predominantly RPA directors. Q99 Chairman: RPA directors, and do you appear before it or are you part of it? Mr Bishop: We appear before it. Q100 Chairman: Do you see the minutes of those meetings? Mr Bishop: Yes. Q101 Chairman: Did the minutes of the subsequent meetings to your alerting the RPA that there were these problems indicate there had been any discussion or action taken as a result of what you said? Mr Bishop: Some minutes did but not all of them. We can check back through the minutes about what we did raise and when we raised it. Q102 Chairman: Were you getting feedback from your members about, if you like, the degradation that was occurring as the system ran slower and slower and problems were known? Did they feed back to you? I do not know if you have a fact-gathering mechanism. Mr Ford: Certainly, they were feeding back to us. We meet on a quarterly basis and there were representatives of all the branches at those meetings and they report back. There is also a lot of communication with branches: Christian works in the Reading office, I work in the Exeter office, our Secretary works in the Newcastle office. We have officers in each of the offices as well. We are on the ground knowing what is happening. The frustrating thing has always been that whenever we have raised the issues, we have had the same feedback that the previous witnesses had, "No, everything is fine. Your members are only seeing a small part of it, they are not seeing the wider picture. The wider picture will be that we will be fine in the end and get the payments through". It was almost as though everything you were saying was being dismissed. Q103 James Duddridge: Did you have any direct communications with ministers or have you any evidence that your views were forwarded to ministers? Mr Ford: No, we have had nothing. Mr Bishop: In actual fact the Defra Trade Union side has had quite a bad experience really in terms of organising meetings with ministers and certainly Margaret Beckett is reluctant to meet on a number of issues. Q104 James Duddridge: You have asked for those meetings? Mr Bishop: Certainly DTUS has on a number of occasions, yes. Q105 James Duddridge: She has said no? Mr Bishop: She has been reluctant to meet. I do not know whether she knows, but she has certainly been reluctant to meet. Q106 James Duddridge: Have ministers visited your site? Mr Bishop: We do get occasional visitors. Occasionally, we do get an opportunity to meet them but that is not very frequent. Q107 Chairman: When I was a minister and used to go around different government offices for which I had responsibility, one of the most valuable things I used to do was to sit down with the staff who would tell me very straightforwardly what was good and what was bad. I learned a lot from them. Did Lord Bach or his predecessor, Lord Whitty, come and sit down with any groups of your staff and hear it straight from the horse's mouth about what was going on? Mr Bishop: Certainly, I do not remember him coming to Reading and speaking to us. He spoke to sections of staff but he did not speak to trade unions. Q108 Chairman: It is perhaps conjecture but nonetheless, I will ask the question, did you get any feedback that those sections of staff had told him of the kind of problems they were encountering? Mr Ford: I cannot remember any formal meetings with ministers. Q109 Chairman: Or even informal? Mr Ford: I think there might well have been one or two informal ones, but, how can I say, it would not have been an open forum. Chairman: One thing I would be grateful for, in the light of your observations, would be if you make some inquiries of any members who had even just conversations with the minister because it would be helpful to us to know whether in fact when he said, "How are things going?", because that is the normal sort of ordinary ministerial opening gambit, what kind of issues were discussed? David, there are some issues about the staff you want to follow up on? Q110 David Taylor: You have reiterated again, quite rightly, the things you put to Roger Williams and myself in December about the working environment, the pressure of working around the clock, seven days a week et cetera and then, a moment or two ago, the staff were being encouraged to work weekends. Were they bullied and intimidated into working weekends? Mr Ford: That is a very difficult one to answer. From a trade union perspective, we would say yes, there was certainly intimidation, there is bullying and there is pressure. When we have spoken with the executive board on this, they dispute it completely because they look at bullying as how many cases have been taken through the RPA's formal procedures on bullying. The answer to that, of course, is none, but when you ask the staff and our members, as we did after the last meeting through a quick, unofficial email survey whether they felt there was a bullying and intimidation culture, we got 40 per cent of our members responding to that email question. Out of the 40 per cent that responded, 73 per cent of those said yes, which equates to nearly 30 per cent of our membership felt there was a culture of bullying and intimidation. Whether that is actual bullying and intimidation or whether it is a perception, our view is that even if it is a perception that 73 per cent of those who responded said yes, they felt there was, then the perception has to be dealt with and there must be something in that to go along with. Q111 David Taylor: Johnston McNeill, it has to be said, hotly refuted that allegation, but nevertheless, whoever is right, how do you feel this alleged body and culture must have affected the delivery of this SPS system? Mr Bishop: Can I make one point, David. Certainly, yes, we were aware that Johnston did refute that at the interim hearing. We first raised this in December at the main RPA Whitley committee meeting - we put it on the agenda because these were the concerns we were getting from our members. Johnston was not at that meeting; I think it is the first meeting of a Whitley committee I have known of where the chief executive is not present. Of course, when he went to the hearing early in January, he was not aware of it; he should have been aware of it, he should have been at the meeting. Certainly none of his directors who were present at the meeting reported back to him. Yes, we were quite horrified quite honestly when we read the minutes of the hearing to say that he had no knowledge of bullying in the RPA. Q112 David Taylor: My final question is, it sounds a bit of a disingenuous question really, if a bullying culture existed, how do you feel it impacted on the delivery of the SPS system? Ms O'Hare: You could look at it in two different ways, one of which is the fact that you have got a highly complex system, process, being introduced in a very short period of time with an IT system which is web-based, therefore not allowing all the people who are employed to be able to access it all of the time, and pressures from middle managers to meet targets. That is where you get the culture of bullying and people feeling pressured to go behind their line managers all the way up the chain to do more and more work, to come in, to work longer hours and to do overtime. Management will say overtime is voluntary, and in the terms and conditions of the service, yes, it is, but if you are constantly being told you have to meet targets, and those targets are really crucial, and each office is being told that nobody can fail - Grade 7s are told, "We will not tolerate being told that you cannot deliver" - that creates, right the way through the organisation, a sense that you cannot speak out, you cannot speak out as civil servants. Civil servants should be able to say to ministers, to their senior civil servants, "What you are asking for is not going to be possible for this reason." People in RPA at lower levels, our members have been telling us, we, as their representatives, have been telling the executive board and the chief executive and the Permanent Secretary of our concerns about whether or not it was going to be achieved. Q113 David Taylor: It was not compulsion but it was fully-fledged coercion? Ms O'Hare: I think what we have seen is a culture develop which has been because of the timescales and people not being willing to say at key points, "We may well have to go back to ministers and tell them we are not going to deliver this on time." Q114 Chairman: Thank you, that is very helpful. One of the antidotes to this problem was, as we understand it, the introduction of a vast swathe and army of agency staff. Why was it they had to take on these large numbers of staff? When did that process begin? Mr Bishop: First of all, I think it is worth making the point that not all of the RPA has a huge number of agency staff. I am not sure what the latest figure is but in terms of contingent workers it was something in the region of 1,500 at one point. The bulk of them came across with the British Cattle Movement Service merger with RPA, so there were about 400 of them for that. Slowly, over time, there have been an increase in contingent workers, and that is made up of agency staff, fixed term appointees, casual staff, and that number is fluctuating all the time. It is still a very vast figure. Ms O'Hare: The one reason why I think there is a huge increase in agency staff, notwithstanding what Christian has said about the fact there was a big group coming over from the British Cattle Movement Service, is that it comes out of operational costs and not the staffing figure. It is not staff-in-post figures. If you ask the RPA how many staff they employ directly, it will be something in the region of 1,500. They have more agency staff than they have permanent staff in RPA and it is because it does not count, it does not have a headcount figure, it is a service which is being procured. Q115 Chairman: So the Change Programme might be reducing the number of stated permanent staff but it is not reducing the wage bill? Ms O'Hare: No. Q116 Chairman: Because, as we understand it, the labour costs of the IT system in relation to the RPA introduction have effectively doubled from the initial estimate. I presume that must be reflected by the temporary staff who have been brought in. What functions were these temporary staff being invited to do that clearly the permanent staff could not do themselves because there were not enough of them? Mr Ford: The majority of the agency staff have been brought in at the admin officer level to do data inputting because the computer system was not able to do that. One of the reasons --- Q117 Chairman: Sorry, when you say "the computer system was not able to do that", is that because - you mentioned earlier about the automaticity of what they hoped to do - the original system as designed did not work? Mr Ford: Yes, because the document management unit was not able to cope with the scanning-in of all the 120,000 applications last year, and all the details which were on those forms had to be manually typed in. Q118 Chairman: Can you confirm if there was any testing of any part of this new system prior to it going live, when the window opened for applications to be made for the first tranche of Single Farm Payments? Mr Ford: As far as I know, and I would not be able to confirm it, there was some testing going on but it was not ready at that stage. They are hoping the full optical-reader will be ready for 2006 now. What happened, and again this is only what I heard, was that the development team who were put on for the optical-read were then taken off to do the policy changes and the computer changes which were needed because it was to become a single payment scheme. So where you had a team working on one area of it, they would move to another area which was deemed to be the priority which was to get the policies right. Q119 Chairman: When ministers agreed what has now become the dynamic hybrid model, was there a noticeable change in pace of activity so that this more complex arrangement could be incorporated onto your system? Mr Ford: I would not have seen any changes because the changes would have been taking place in the back whilst the majority of the staff were still working on the old legacy schemes. Q120 Chairman: I presume that all of this sea of people flowing in on a temporary basis, the concerns the staff had for the way which things were going were not exactly making the RPA the happiest place to be working. Did you do any surveys of staff morale during this time? Mr Bishop: Not a survey as such. Certainly, as Glenn referred to earlier, at quarterly TUS meetings we were getting regular reports back from branches around RPA and offices at the TUS, and on visit sites we were getting first-hand information about morale at that time. An honest assessment is it fluctuates. Certainly in some of the sites that were closing, morale was quite high, but on some of the sites where there was maintained work, it did vary. Certainly, what we have seen, as Norina was referring to earlier, is there has been this climate of fear. If you look at the customer service centre fiasco, we had senior managers going up there threatening to close the site, but currently some of the sites live in that fear. If you speak to any one of the six RPA sites, they are all fearful of closure. Q121 David Taylor: I think we can deduce or infer your attitude to the agency work of different kinds, but taking this much more broadly, what is the PCS's general position on outsourcing activities like ICT? Ms O'Hare: As we represent most of the IT staff who have been transferred into the private sector as a result of Civil Service IT outsourcing, we have been opposed to it. We have been opposed to it on the basis that prior to the start of that whole move to buying in from private sector IT companies, we had staff within the Civil Service across all the ponds who had IT skills in both software design and hardware and what that meant was you also had managers at senior levels who were able to talk with knowledge to IT providers about what the salesmen were telling you. The biggest problem, from our point of view, is that you have lost that skill in the Civil Service so you do not have a big enough career-base now for IT staff in the Civil Service to be able to ask the hard-nosed questions and the candid questions and to say, "You are talking rubbish, sorry, but why would you propose a web-based system for this particular sort of payments scheme?" It is because they could talk with the detailed technical knowledge that they could then ask those hard-nosed questions. I think from our point of view, from the PCS point of view, all of the major fiascos in terms ICT outsourcing - and there have been so many - have been because you are transferring specialist staff to the private sector and you are losing your ability to be able to then purchase those services and to get the right product back. It seems to me that is fundamental. That has been a fundamental problem with central government IT procurement and we believe it is because of the outsourcing process we have lost that sort of ability to manage. Q122 David Taylor: Has this significant scepticism towards the principle of outsourcing trickled down so that your members working in the RPA with Accenture staff have impaired the cordial working relationship? In fact, is there a working relationship in any way? Ms O'Hare: I cannot answer that, Glenn or Christian would be better placed. Mr Ford: When we talk about our members and the RPA staff working with Accenture staff, as I said earlier, you have got the computer programmers, the Accenture people, who are the technical people, and then the RPA staff, who are user-testers to see if that works. The working relationship between the two sides of staff has caused problems because, of course, they work on different levels. You have got a group of civil servants who are being paid their rate of pay and then you have got very expensive IT consultants who are working opposite them and working with them and there is very much a case sometimes that rather than RPA running the show, that it is Accenture who is putting it forward as to, "This is what you will have", and, "Yes, okay, we will go with that". Q123 David Taylor: Finally, Norina's point is that they should directly employ a core of people that have ICT knowledge or special confidence to challenge decisions that are made either by top management or by Accenture but that critical mass is disappearing? Mr Ford: Yes. Q124 Mr Drew: We could look at the dispute in Exeter in some detail, but I am just surprised with this level of ill-feeling, which has obviously built up over a number of years not just since the RPA was created, there was not more formal industrial action. I know the pay dispute has been rumbling on for some time, but this is, in a sense, more important than pay; it is about people's dignity at work. We heard all the evidence from two colleagues who visited that this was a very unhappy place to work, people may have hung in there, but may not hang in there for any other reason than this was a job and not one that gave a great deal of satisfaction. Ms O'Hare: When you have more agency, casual, fixed-term appointee staff than you have permanent staff, that is going to destabilise the workplace in that people will live in fear of whether or not they are going to have their contracts renewed, whether they are going to have a job. Some of the sites are in areas where there is no other kind of work of a similar nature so those people are and were very unhappy. We did have a pay dispute in the RPA which ran on for both 2005 and 2006 where staff's unhappiness is reflected in the fact they were willing to reject pay offers and were willing to lose a day's pay to take action. They were also conscious that what they are doing is making payments to another group of the public, who are the farmers, and if the farmers do not get their payments then they are creating misery for another group. I think they have, despite the fact they have worked in very difficult circumstances, acted professionally as civil servants and are keen to know they are going to have a future. At the moment the Hunter Review is looking at the RPA in detail and their fear is that RPA will either not exist in the form it does at the moment or that it will outsource its problem; that Ministers and Defra will decide the problem has to be dealt with in some way. We know, despite your interim Report's recommendation that RPA should give some indication to all the temporary staff what their future might be, staff who are on fixed-term appointments who have been continuously employed by the RPA for four years are being told they will have their contracts extended but they will not be made permanent. They are using the current situation over the Single Payment Scheme to argue there is an objective justification for not making them permanent, and that seems to fly in the face of both your recommendation as a Committee at the interim stage and it goes against the regulations on the employment of fixed-term employees. It is against that background that they have a fear of not having a job if they make too much complaint, if they raise their concerns, or indeed if they take industrial action. We have always had to balance up those things all the time in dealing with disputes and the problems, both the processes and pay within RPA. Mr Bishop: In terms of the industrial action, it is worth making this quite important point, particularly in relation to pay. Our pay as an executive agency of Defra is less than Defra. That is an unsatisfactory situation given that this is Defra's number one priority. We are now being managed by Mark Addison who is a Defra member of staff and it has caused problems. It is also worth reflecting on the fact that over the last couple of years RPA was the only civil service department to issue formal redundancy notices on top of threats to pensions as well. This is important background information in terms of setting the scene. Chairman: Thank you very much indeed for giving us an insight from the staff's standpoint about what has been going on. It will be very helpful when we come to talk to the IT partner and indeed the senior management to have had the insights you have provided this afternoon both in your oral evidence and indeed in your earlier submissions. Thank you very much indeed and thank you again for your patience in waiting.
[1] The National Farmers' Union has indicated that while this information is not currently available, once all the 2005 claims have been validated the RPA will be able to determine this information.
[2] Note by witness: RPA Programme was driven by efficiencies. This was shaped by a Organisation Design which significantly reduced the size of the workforce. This meant that sections were to be run on reduced staff because of the reliance on IT. PCS was involved in the Organisation Design process although our key objective was the avoidance of redundancies. |